Rhodes v. Rhodes
| Decision Date | 11 January 2011 |
| Docket Number | No. 2009-CA-00555-COA.,2009-CA-00555-COA. |
| Citation | 52 So.3d 430 |
| Parties | Stacey Anne RHODES, Appellant v. George William RHODES, Jr., Appellee. |
| Court | Mississippi Court of Appeals |
Clifford C. Whitney III, Lee Davis Thames Jr., Vicksburg, attorneys for appellant.
Dean Holleman, Gulfport, Haley Lynn Zelenka, attorneys for appellee.
EN BANC.
MAXWELL, J., for the Court:
¶ 1. The Harrison County Chancery Court granted George William Rhodes Jr. ("Rocky") and Stacey Anne Rhodes an irreconcilable-differences divorce. This case presents several questions regarding the chancellor's classification and distribution of their assets. Stacey argues that the chancellor erred in rejecting her argument that several businesses and real-estate properties were marital assets or increased in value as a result of the parties' active efforts. In particular, she challenges the chancellor's finding that a Florida vacation home Rocky had purchasedthree years before the marriage remained entirely his separate property. She contends the family-use doctrine converted the home to marital property. We agree.
¶ 2. Rocky and, to a much greater extent, Stacey and her daughter used the vacation home substantially during the marriage. The parties also assumed an active role in improving and maintaining the vacation home during the marriage. And mortgage payments were made from the parties' earnings during the marriage. For these reasons, we find that the family-use doctrine applies and that the chancellor erred in determining that the vacation home was entirely Rocky's separate property. Accordingly, we reverse and remand in part for the chancellor to reconsider the equitable division in a manner consistent with this opinion. The chancellor's judgment is affirmed in all other respects.
¶ 3. Rocky and Stacey were married on October 19, 2003. According to Rocky, the relationship began to deteriorate as early as a year later. By January 2005, the parties had begun to discuss divorce. Around this same time, Stacey met with a divorce attorney. But it is undisputed that the parties did not formally separate until March 2007.
¶ 4. Rocky eventually filed for divorce in May 2007. As a result of Stacey's request for temporary relief, the chancellor entered a temporary order on August 17, 2007, which among other things granted Stacey temporary use and possession of the vacation home in Santa Rosa Beach, Florida. The parties eventually withdrew their fault-based divorce grounds and submitted to the court several disputed issues regarding property classification and distribution, alimony, and attorney's fees. The chancellor entered a final judgment of divorce and later an amended judgment in January 2009.
¶ 5. Rocky and Stacey had no children together. Stacey has a daughter from a previous marriage.
¶ 6. One of the disputed properties is Rhodes Carpet & Draperies, Inc. (RCD), a Biloxi-based business started by Rocky's parents in 1947. At the time of the divorce, Rocky served as president of the company and its sole shareholder. Rocky's parents had conveyed their interest in the company to Rocky and his brother, Keith Rhodes, soon after Rocky and Stacey's marriage. These transfers resulted in each brother owning a one-half interest in the company. Keith then redeemed his stock for cash, making Rocky the sole shareholder. The chancellor found RCD to be Rocky's separate property.
¶ 7. Rocky also owned and operated two other companies related to RCD—Rhodes Rental of Ocean Springs, Inc. and Rhodes Capital, LLC. The chancellor found both businesses were Rocky's separate property.
¶ 8. The parties also contest the chancellor's handling of (1) a vacation house in Santa Rosa Beach, Florida; (2) the Ocean Club Condominium; and (3) the marital residence.
¶ 9. Rocky purchased the Florida vacation house in 2000. The parties' marriage ceremony took place on the beach next to the house, and they honeymooned there. As noted by the chancellor, both parties contributed to the upkeep and maintenance of the house, and Stacey redecorated the house. Throughout the marriage, the parties vacationed and spent holidays there. Stacey and her daughter lived inthe house from August 2005 until December 2005 in the aftermath of Hurricane Katrina. In addition, the chancellor's temporary order granted Stacey temporary use and possession of the house. Nevertheless, the chancellor ultimately determined the residence was Rocky's separate property. The chancellor found that "[a]ny significant amount of time spent there by [Stacey was] due to extraordinary circumstances or order of the Court." The chancellor also found that all monetary contributions were made by Rocky, though some payments were made from a joint account.
¶ 10. The parties also dispute the proper classification of the Ocean Club condominium. Rocky testified that a one-third interest in the condo was purchased by RCD as a corporate asset, but it was mistakenly titled in his name. RCD's balance sheets list the condo as an asset. The chancellor considered the condo an asset of RCD and therefore found it was Rocky's separate property.
¶ 11. Stacey also disagrees with the chancellor's award of the marital residence to Rocky. Stacey's parents built the home in 1991, and the parties purchased the home from Stacey's parents in 2004. Although noting Stacey's sentimental attachment to the home, the chancellor refused to award the home to Stacey mainly due to her financial inability to pay the mortgage note.
¶ 12. Stacey's trial counsel offered James Angle, a certified public accountant, as a business-valuation expert. Rocky's counsel objected based on Angle's methodology in forming his opinions. After hearing arguments from both sides, the chancellor excluded Angle from testifying in part because his valuation method included goodwill. The chancellor also noted Angle's inexperience in performing business valuation, having only performed one valuation in a case study for one of his professional certifications.
¶ 13. The chancellor found that Stacey was left with a need following the equitable division and ordered Rocky to pay $2,000 per month for six months in rehabilitative alimony. The chancellor also ordered Rocky to pay one-half of Stacey's health insurance for six months and granted Stacey possession of the Florida vacation home for this same period of time.
¶ 14. The chancellor denied Stacey's request for attorney's fees based in part on her failure to establish an inability to pay.
¶ 15. "Chancellors are afforded wide latitude in fashioning equitable remedies in domestic relations matters, and their decisions will not be reversed if the findings of fact are supported by substantial credible evidence in the record." Henderson v. Henderson, 757 So.2d 285, 289 (¶ 19) (Miss.2000). We will not disturb a chancellor's factual findings unless the chancellor's decision was manifestly wrong or clearly erroneous, or the chancellor applied an improper legal standard. Wallace v. Wallace, 12 So.3d 572, 575 (¶ 12) (Miss.Ct.App.2009). We do not substitute our "judgment for that of the chancellor, even if [we disagree] with the findings of fact and would arrive at a different conclusion." Coggin v. Coggin, 837 So.2d 772, 774 (¶ 3) (Miss.Ct.App.2003). But when reviewing a chancellor's interpretation and application of the law, our standard of review is de novo. Tucker v. Prisock, 791 So.2d 190, 192 (¶ 10) (Miss.2001).
¶ 16. Stacey raises nine issues for our review. She alleges the chancellor erred by: (1) failing to find the Florida vacation home became marital property under the family-use doctrine; (2) finding Stacey was not entitled to any share of Rocky's businesses; (3) finding the one-third interest in the Ocean Club condominium was Rocky's separate property; (4) excluding Stacey's property-valuation expert; (5) improperly applying Armstrong in awarding rehabilitative alimony; (6) denying Stacey's request for attorney's fees; (7) improperly applying Ferguson in ordering an equitable division of the property; (8) granting Rocky possession of the marital home; and (9) denying Stacey's motion for a new trial.
¶ 17. For the reasons set forth below, we reverse and remand issue I, the Florida vacation home. On remand, the chancellor must revisit the issues pertaining to equitable division, issues I and VII. We affirm as to the remaining issues.
¶ 18. In ordering an equitable distribution, chancellors are directed to (1) classify the parties' assets as marital or separate, (2) determine the value of those assets, and (3) divide the marital estate equitably based upon the factors set forth in Ferguson. Larue v. Larue, 969 So.2d 99, 104 (¶ 11) (Miss.Ct.App.2007) (citing Ferguson v. Ferguson, 639 So.2d 921, 928-29 (Miss.1994)).1 With respect to the vacation home, Stacey argues the chancellor improperly applied the first step in this analysis and wrongly found the vacation home was a separate asset owned entirely by Rocky.
¶ 19. The Mississippi Supreme Court has defined marital property as "any and all property acquired or accumulated during the marriage." Hemsley v. Hemsley, 639 So.2d 909, 915 (Miss.1994). Excluded from this definition are assets "attributable to one of the parties' separate estates prior to the marriage or outside the marriage." Id. at 914. For example, property that is "clearly obtained by one spouse through gift or inheritance is nonmarital property not subject to equitable distribution." Larue, 969 So.2d at 106 (¶ 19) (citing Johnson v. Johnson, 650 So.2d 1281, 1286 n. 1 (Miss.1994)).
¶ 20. Though "marital property" is perhaps reducible to a relatively simple definition, there are several corollaries to the general rule. The chancellor must inquire whether any income or appreciation resulted from either spouse's active efforts during the marriage. If so, that...
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