Olson v. Olson

• Decision Date: 27 May 2003
• Docket Number: Docket No. 237244,Docket No. 230588,Docket No. 237288.
• Citation: 256 Mich. App. 619,671 N.W.2d 64
• Parties: Linda OLSON, Plaintiff-Appellee, v. John M. OLSON, III, Defendant-Appellant.
• Court: Court of Appeal of Michigan — District of US

671 N.W.2d 64

256 Mich. App. 619

Linda OLSON, Plaintiff-Appellee, v. John M. OLSON, III, Defendant-Appellant.

Docket Nos. 230588, 237244, 237288.

Court of Appeals of Michigan.

Submitted March 18, 2003, at Detroit.

Decided May 27, 2003, at 9:05 a.m.

Released for Publication July 14, 2003.

Henry Baskin, P.C. (by Henry Baskin) and Allan Falk, P.C. (by Allan Falk), Birmingham, Okemos, for the plaintiff.

Butzel Long (by Edward D. Gold, John H. Dudley, Jr., and Michael F. Smith), Detroit, for the defendant.

Before: O'CONNELL, P.J., and FITZGERALD and MURRAY, JJ.

FITZGERALD, J.

In Docket No. 230588, defendant John M. Olson, III, appeals as of right and contests the manner in which the trial court divided certain property and the award of spousal support in this acrimonious and litigious divorce action. In Docket No. 237244, defendant appeals by leave granted the order entered by Wayne Circuit Judge Cynthia Stephens, acting as chief judge pro tem, denying his motion to disqualify Wayne Circuit Judge Richard B. Halloran, Jr., from entertaining postjudgment motions filed by attorney Henry Baskin on behalf of plaintiff Linda Olson. In Docket No. 237288, defendant appeals as of right the August 14, 2001, "Judgment and Award of Costs and Attorney Fees" by which Judge Halloran awarded plaintiff additional attorney fees and costs in the amount of $573,729.¹

The parties were married in 1978 and have two children, only one of whom was a minor at the time this action was filed. The marital estate was substantial, including a 15,000 square-foot house in Grosse Pointe Farms and defendant's closely owned corporation, J.M. Olson Corporation ("the corporation"). Defendant owned the corporation before the marriage. Originally, the corporation built fast-food restaurants and convenience stores. In 1984, the corporation moved into commercial construction and developed a relationship with Ford Motor Company. The corporation, a Subchapter S corporation, now engages in general contracting and construction management. Defendant owns 71.85 percent of the stock and is the chairman of the corporation.²

During the marriage, the parties acquired substantial assets in addition to the corporation. The parties stipulated the values of other assets, including the marital home valued at $2.18 million, various automobiles, boats, investment and retirement accounts, life-insurance policies and annuities, and business interests. The total value of the other assets to which the parties stipulated (excluding the corporation and various other properties) was $5,948,519.

Following a twenty-one-day trial, the court made findings of fact and conclusions of law and entered a judgment of divorce on September 15, 2000. On August 14, 2001, a "Judgment and Award of Costs and Attorney Fees" was entered.

I. Property Distribution

Defendant does not dispute that the trial court properly awarded each of the parties approximately fifty percent of the marital estate. Defendant does argue, however, that the trial court erred by dividing defendant's interest in the stock of the corporation, rather than setting a value on defendant's interest in the stock and awarding plaintiff one-half of the value of the stock.³

This Court reviews a property distribution in a divorce case by first reviewing the trial court's factual findings for clear error, and then determining whether the dispositional ruling was fair and equitable in light of the facts. Hanaway v. Hanaway, 208 Mich.App. 278, 292, 527 N.W.2d 792 (1995). In its findings of fact and conclusions of law, the trial court noted the discrepancies in the testimony of the parties' expert witnesses with regard to the proper method of valuing the business, as well as the large discrepancy between the experts' valuations. The trial court then ruled with regard to the valuation of the business:

At this time the court will not set it's [sic] own value on Defendant-Husband's interest in the John M. Olson Corporation. Instead, the court will award Plaintiff-Wife one-half of Defendanthusband's stock in the John M. Olson Corporation. This will not cause any problems in running the Corporation since she will be a minority shareholder. Defendant-Husband and the other shareholders will retain a 64.08% controlling interest in the Corporation.

Further, since this will be an involuntary transfer on the part of Defendant-Husband the provisions in the Stock Redemption Agreement as Amended will not apply. If there are any impediments to this transfer, then as a Stockholder and the Controlling Stockholder of the Corporation, Defendant-Husband will cause the Stock Redemption Agreement as Amended to be further amended to carry out the ruling of this court and cause the transfer of one-half of his stock interest to the Plaintiff-Wife.

If the Defendant-Husband enters into a purchase agreement with the Plaintiff-Wife's [sic] for her shares in the John M. Olson Corporation the actual involuntary transfer of the shares to the wife will not have to occur.

This provision was included in the September 15, 2000, judgment of divorce.

Defendant thereafter filed a motion for stay of the transfer of the stock. At the hearing on the motion, the trial court stated:

The Court feels that it has the authority to award half the stock and that's what the Court did with the provision with the thought in the background that either Mr. Olson or Mrs. Olson might enter into negotiation to buy the stock back from her. Or to leave it in place.

The court ultimately granted the stay, noting:

But since no one provided the Court with what the Court thought was a situation where we could make a sound basis. We thought maybe what will happen then is the parties will agree on a sale price and by [sic] Mrs. Olson out.

Now, it appears to the Court that we're not going to do that. But instead we're going to the court of appeals. We're going to spend a year or two getting to the court of appeals, which if this Court is reversed, there [sic] going to say, "Court, you have to decide how much this is worth." So the Court comes back and by then who knows what it will be worth.

And at that point, the Court will set a figure. And Mr. Olson will then pay that cash to Mrs. Olson. And two years down the road we'll be at the point where we could be today if, once again, the attorneys or the parties could just agree on how much to buy Mrs. Olson's share of the stock.

The trial court stayed its own stockdivision order for nearly four months. The trial court thereafter dissolved the stay, and defendant sought emergency relief in this Court. This Court ordered the trial court to hold a hearing and issue a decision on the motion for stay. The trial court thereafter granted a stay.

In support of his argument that the trial court erred by failing to place a value on defendant's interest in the stock and instead ordering the division of the stock, defendant relies on Kurtz v. Kurtz, 34 Mich.App. 34, 190 N.W.2d 689 (1971). In Kurtz, the trial court ordered a property division that included an equal division of the stock in Concrete Black & Products Company, a company that was solely owned by the plaintiff before the marriage. The division of property was made after extensive testimony and the submission of voluminous business records to the trial judge. This Court, noting that the plaintiff's contributions to the management of the company were great, and noting that the parties agreed that the order resulted in a "totally impossible situation regarding the management of the company," held that "it is better to place a money value on the parties' respective interest in this company rather than to leave the division in the form of an award of shares of stock." Id. at 36,190 N.W.2d 689.

The trial court distinguished Kurtz on the ground that the order in Kurtz gave each party fifty percent of the stock and, therefore, "forced the corporation to cease to exit [sic] because there was no majority to vote." However, there is no language in Kurtz suggesting that the court's ruling was based on the percentage of stock awarded to a party. Rather, the court focused on the "impossible situation regarding the management of the company." It appears that the "impossible" situation referred to arose from the facts that the plaintiff owned the company before the marriage, that the plaintiff had contributed to the management of the company, and that it was impossible for the parties to continue in a business relationship. Indeed, in Schaffer v. Schaffer, 37 Mich.App. 711, 713, 195 N.W.2d 326 (1972), a case in which the trial court awarded the wife a substantial cash award in lieu of stock in a closely held family corporation, this Court stated:

In Kurtz v. Kurtz, 34 Mich.App. 34, (1971), this Court had ample opportunity to observe the myriad of problems that can arise in a divorce suit where the parties each owned stock in a close-knit family corporation after a judgment of divorce has been granted to the parties.

Here the chancellor quite properly awarded all of the stock to the husband and compensated the wife by a substantial cash award, payable over a period of years. The record in the instant case discloses expert testimony presented by the plaintiff wife and defendant husband as to the valuation of the stock in question. The court's assessment of value of the corporation was much higher than that of the defendant husband's expert and much lower than that of the plaintiff wife's expert. In Young v. Young, 354 Mich. 254, 257, (1958), Justice Voelker, writing for the Court in a case similar to the instant one, stated:

"There is no mathematical formula in Michigan for the settlement of this vexing problem; rather it is wisely left to the broad discretion of the learned chancellor who has the benefit—and often dubious pleasure—of having the feuding parties wrangle in his presence. See, generally, Johnson v. Johnson, 346 Mich. 418, (1956). With his closer view of the entire situation he is

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