Muse v. Muse

• Decision Date: 13 November 2008
• Docket Number: No. 27,281.,No. 27,177.,No. 27,509.,No. 27,944.,27,177.,27,281.,27,509.,27,944.
• Citation: 2009 NMCA 003,200 P.3d 104
• Parties: Lana Carol MUSE, Petitioner-Appellee, v. Jack Leroy MUSE, Respondent-Appellant.
• Court: Court of Appeals of New Mexico

200 P.3d 104

2009 NMCA 003

Lana Carol MUSE, Petitioner-Appellee, v. Jack Leroy MUSE, Respondent-Appellant.

No. 27,177.

No. 27,281.

No. 27,509.

No. 27,944.

Court of Appeals of New Mexico.

November 13, 2008.

Kraft & Hunter, LLP, Richard L. Kraft, Roswell, NM, for Appellee.

Atkinson & Kelsey, P.A., Thomas J. McBride, Albuquerque, NM, for Appellant.

OPINION

SUTIN, Chief Judge.

{1} Husband Jack Leroy Muse appeals from adverse rulings in an over-seven-year, bitterly fought marital dissolution. We remand on issues relating to Husband's right to receive accountings and relating to his right to review documents and information underlying the special master reports. We also remand on an issue relating to attorney fees. We affirm on all other issues.

BACKGROUND

{2} Just half way through this case, the district court judge presiding at the time stated:

[T]his case is unparalleled in my experience as a trial lawyer and district judge. I have never had a case with such a serious level of discord between the parties. Occasionally child custody cases reach significant levels of discord, but they pale in comparison to the protracted problems that Mr. and Ms. Muse have presented[.]

Over the course of the case, the court found Husband in contempt on five occasions and castigated Husband for his motives and conduct, apart from his contemptuous conduct. To say that the parties engaged in extensive motion practice would be an understatement.

{3} The parties were married in 1964. Wife Lana Carol Muse sought dissolution in December 2000. The court appointed a Rule 11-706 NMRA expert, Bruce Ritter, in May 2001 to report on asset values, debts, tax consequences, and liabilities. The dissolution and property issues were tried in February and March 2004. Important in this appeal are Mr. Ritter's valuation report and his revised summary of entitlements and proposed distributions (revised summary), which placed values on the community estate's net assets and contained a summary of the parties' entitlements and proposed distributions.

{4} Notably, Mr. Ritter's valuation report contained a summary of entitlements and proposed monetary distributions with three possible scenarios including a range of lowest possible, recommended, and highest possible net asset allocations to each party. Mr. Ritter recommended the amount of $357,000, which fell between the lowest, $175,000, and the highest, $425,000, possible scenarios. Anticipating disagreement between Husband and Wife, the valuation report concluded with a recommendation to the court that if the parties did not agree with the settlement proposed by Mr. Ritter, the court should appoint a receiver to oversee a court-ordered liquidation of the community estate. Mr. Ritter suggested that should the community estate be liquidated for a lower amount than the total-value estimate, the net proceeds from the liquidation should be allocated so that Wife had priority to receive her share of the community estate based on the $357,000 value and that Husband would then receive the remaining proceeds. A revised summary presented at trial showed $340,620 instead of $357,000 as Mr. Ritter's recommended net asset allocation for each party.

{5} Following trial, Wife filed requested findings of fact indicating that Mr. Ritter had recommended approximately $340,000 as her share of the community estate, although she offered alternative requested findings that closely conformed to the net asset range of Mr. Ritter's community share values set out in his revised summary. The court entered a March 2004 order dissolving the marriage and a separate March 2004 decision in which the court for the most part adopted Mr. Ritter's findings and recommendations in regard to property valuations and distributions as contained in the valuation report and in the revised summary.

{6} The court also made several findings in regard to Husband's conduct that clearly influenced the March 2004 decision and that appear to have influenced later determinations of the court. The court noted that it had previously found that Husband "exerted undue influence and placed [Wife] under duress when he had her sign an Agreement ... in which she conveyed her interest in [a business] to [Husband]." The court found that Husband "both before and during the pendency of this action ... made threats to [Wife] and conveyed threats to [Wife] through their children that she would get nothing if she hired an attorney, and that he would not work full time at the family businesses to ensure that she got nothing at the conclusion of the divorce." The court found that Husband "made good on his threats to drive down the value of the family businesses and to increase the costs of litigation so that [Wife] would get nothing at the conclusion of their marriage." The court also found that Husband used his control of family businesses to the detriment of Wife.

{7} In further findings, the court indicated that the value of one of the businesses that was community property "plunged precipitously" due in most part to Husband's "unreasonable refusal to shut down" the business. The court also found that Husband made improper payments from one of the business accounts, incurred unreasonable expenses, and that other actions with respect to that business were "inconsistent with his fiduciary duty to manage [the business] during the pendency of the divorce." In addition, the court found that in defending foreclosure actions "[Husband] hired counsel to defend only his interests," paid the attorney fees through one of the businesses, "refused to have his counsel defend [Wife]" and, in addition, refused to settle the foreclosure actions "to keep the pressure on [Wife] to extract a settlement in the divorce proceedings to his benefit." Also in regard to the foreclosures, the court found that Husband's bad faith and breach of fiduciary duties in managing the businesses and in refusing to settle resulted in the loss of substantial savings that would have occurred had settlements been reached. The court further found that Husband had not attempted in good faith to settle the case before the court, thereby dramatically increasing Wife's and his own attorney fees. Finally, the court found that Husband had "failed to comply with multiple [c]ourt orders in this case" and had taken other actions that also increased Wife's attorney fees.

{8} Thus, we believe it is obviously based on Husband's misconduct that the court in the March 2004 decision ordered that if Husband did not accept the proposed distribution of assets and debts set out in the decision, the court would appoint a receiver to take over management of and to liquidate all of the family businesses. The proceeds of liquidation would first be paid to satisfy Wife's share of the community estate, and if that share were not satisfied, Husband's separate estate was to be used to make her whole. The court did not state the specific amount of Wife's share of the community estate. The court reserved jurisdiction to reconsider its awards of spousal support and attorney fees.

{9} Husband chose not to accept the court's proposed distribution and stated that he believed there was no alternative available at that point except the forced liquidation of the parties' assets. Whereupon, in May 2004, the court ordered that the assets to be received by Husband be passed to Wife to manage, oversee, and liquidate. The assets included family businesses, airplanes, and real estate. The court ordered that Wife was to receive her share of the community estate before Husband received his and, further, that if the proceeds from the liquidation were not sufficient to fully satisfy what Wife was to receive as her share of the community estate, Husband's separate estate was to be awarded to Wife to make her whole. Wife was required to provide monthly accountings to Husband of the assets she sold, the debts she paid, and the remaining balances to be applied to her share of the community estate. In addition, the court ordered Husband not to sell or encumber his separate property until it was determined by Wife's accounting that she had received her full share of the community estate.

{10} In September 2004, the court entered an order dividing assets and debts. Noteworthy for the present appeal, in that order, presiding district court judge William Lynch crossed through a finding that stated, "[Husband] shall pay to [Wife] the sum of $337,672 as her share of the community estate." Nowhere else in the order was a figure set out as Wife's share of the community estate.

{11} Although Wife had already been authorized to liquidate the assets, this September 2004 order repeated the language that had appeared in the March 2004 decision that if Husband did not accept the distribution of assets and debts, a receiver would be appointed to take over management of and to liquidate all of the businesses Husband was to receive and to ensure that Wife received her share of the community estate from the sale before Husband received his share. The court again stated that if the proceeds from the liquidation were not sufficient for Wife to receive her share of the community estate, Husband's separate estate would be awarded to Wife to make her whole. Husband sought reconsideration of the court's allocation of assets and debts, complaining about what he perceived to be an unequal distribution favoring Wife. Husband also complained about the liquidation process and Wife's actions in selling and controlling assets.

{12} In October 2004, the court appointed Mr. Ritter as a special master "to review and resolve issues concerning the liquidation of the family businesses." The court granted Mr. Ritter "all the powers granted to Special Masters under Rule 1-053 [NMRA]" and required him to "file a report pursuant to Rule 1-053(E)." Mr. Ritter submitted special master reports and provided information at various times from November 2004 through his June 2007 final...