Trim v. Trim, No. 2007-CA-01648-COA (Miss. App. 4/21/2009)
| Decision Date | 21 April 2009 |
| Docket Number | No. 2007-CA-01648-COA.,2007-CA-01648-COA. |
| Parties | GEORGE E. TRIM, APPELLANT v. LISA MOSLEY TRIM, APPELLEE. |
| Court | Mississippi Court of Appeals |
ATTORNEYS FOR APPELLEE: RANDALL HARRIS, KIMBERLY PINE TURNER.
EN BANC.
ROBERTS, J., FOR THE COURT:
¶ 1. Lisa Trim (Lisa) filed a petition to set aside a final judgment of divorce and property settlement agreement. She asserted that her ex-husband, George Trim (George), had fraudulently understated the value of his assets in his Uniform Chancery Court Rule 8.05 statement during their divorce proceeding. The chancellor agreed and found that George had fraudulently listed the value of his company stock and awarded Lisa half of its value. George now appeals the chancellor's ruling arguing that: (1) Lisa's motion was untimely, and (2) he did not fraudulently list the value of his company stock. A thorough review of the record and applicable case law reveals that the chancellor erred when he failed to treat Lisa's claim as untimely and when he treated her petition to set aside the final judgment of divorce and/or property settlement agreement as a motion to modify a property settlement agreement. Accordingly, we reverse and render.
FACTS AND PROCEDURAL HISTORY
¶ 2. On November 16, 1990, George and Lisa were married in Hinds County, Mississippi. No children were born to the marriage. Over the course of their marriage, Lisa worked as a sales representative for the Berry Company selling yellow page advertisements, and George was self-employed in a computer networking and cabling business, Business Communications, Inc., (BCI). In 1993, George and Tony Bailey (Bailey) partnered to form (BCI), which is a closely-held subchapter S for profit corporation. Bailey owned fifty-one percent of the stock, with George owning a minority share of forty-nine percent.
¶ 3. George and Lisa continued to live as husband and wife until their separation in September 1999. Around the time of their separation, George and Lisa discussed their financial status. George thought that the value of his stock in BCI was worth $100,000, and Lisa owned a retirement account valued at $120,000. The equity in George and Lisa's home was $30,000. George proposed that Lisa keep her retirement account; he keep his BCI stock and their home; and he pay Lisa $5,000 to make up the difference. In essence, the couple divided their marital assets equally. After this, on September 24, 1999, Lisa signed a property settlement agreement reflecting the couple's decision.
¶ 4. George and Lisa did not file for divorce until seven months later. On April 10, 2000, George and Lisa filed a Joint Complaint and Consent to Divorce based on irreconcilable differences. They also attached the above property settlement agreement to their complaint. Pursuant to Uniform Chancery Court Rule 8.05 (hereinafter 8.05), each party submitted a financial statement of their assets and liabilities to the court. In his 8.05 statement, George again listed the value of his BCI stock at $100,000. On June 14, 2000, the Hinds County Chancery Court entered a final judgment granting a divorce to George and Lisa and ratified the property settlement agreement attached in the divorce complaint.
¶ 5. Following the divorce, in 2001, the business relationship between George and Bailey began to deteriorate. In July 2001, at a board of directors' meeting, Bailey and a third director voted to fire George as president of the company and reduce his management responsibilities and salary. As a result of being "squeezed out" of the company, George filed suit against Bailey and BCI alleging breach of fiduciary duty and wrongful breach of minority rights. He sought to have the company dissolved. Pursuant to statutory requirements, the Madison County Chancery Court held a hearing to determine the value of George's BCI stock, and the court determined that the better result, rather than to dissolve the company, was to have BCI pay George for his stock and for George to relinquish any rights in BCI. The stock valuations presented in that hearing spurred the present litigation between Lisa and George.
¶ 6. During the litigation between George and Bailey, each party presented expert testimony to determine the value of George's stock, and the chancellor adopted George's expert's finding that the stock was worth $1,186,000 as of August 14, 2001. During the Trim v. Bailey1 litigation, the chancellor expressed dissatisfaction with the determined values because of the disparity of findings between the parties' experts. However, due to the parties' unwillingness to hire a third expert, he felt bound to choose one of the amounts, so he chose the higher value. It is clear that difficulty existed in placing a definitive monetary value on the stock. Rather, determinations were based on numerous factors that were not easily discernible and resulted in vastly different valuations.2
¶ 7. Lisa waited until November 19, 2004, to file suit against George claiming that he had fraudulently misrepresented the value of his stock when they were discussing their property settlement agreement over five years earlier in September 1999. In the Trim v. Trim3 litigation, Lisa hired a third expert, which presented yet another opinion concerning the value of George's stock. Lisa's expert valued George's stock at $694,000 at the time of George and Lisa's divorce. The chancellor accepted this opinion and awarded Lisa 25% of this amount. In other words, Lisa received an additional $148,000 plus attorneys' fees and costs. The judgment from that litigation is now the subject of this appeal.
STANDARD OF REVIEW
¶ 8. This Court has established:
The standard of review by this Court in domestic relations cases is well-settled. Chancellors are vested with broad discretion, and this Court will not disturb the chancellor's findings unless the court was manifestly wrong, the court abused its discretion, or the court applied an erroneous legal standard. However, we will not hesitate to reverse should we find that a chancery court was manifestly wrong, abused its discretion, or applied an erroneous legal standard.
Pulliam v. Smith, 872 So. 2d 790, 793 (¶5) (Miss. Ct. App. 2004) (internal citations omitted)
(emphasis added).
¶ 9. Although the chancellor believed that George had "wilfully, knowingly, and fraudulently undervalued his income and the value of 49% stock in Business Communications, Inc.," the record does not fully support that determination. "Fraud is `a knowing misrepresentation of the truth or concealment of a material fact to induce another to act to his or her detriment.'" Mitchell v. Nelson, 830 So. 2d 635, 639 (¶13) (Miss. 2002) (quoting Black's Law Dictionary 670 (7th ed. 1999)). "Additionally, the elements of fraud must be prove[n] by clear and convincing evidence." Id. at 639 (¶13). As the Mississippi Supreme Court has recited:
The elements of fraud, which must be proven by clear and convincing evidence, include: 1) a representation; 2) its falsity; 3) its materiality; 4) the speaker's knowledge of its falsity or ignorance of its truth; 5) his intent that it should be acted upon by the person and in the manner reasonably contemplated; 6) the hearer's ignorance of its falsity; 7) his reliance on its truth; 8) his right to rely thereon; and 9) his consequent and proximate injury.
In re Estate of Law, 869 So. 2d 1027, 1029 (¶4) (Miss. 2004).
¶ 10. It is not entirely clear from the record that George knowingly misrepresented the truth to Lisa regarding the value of his stock, nor is it entirely clear that Lisa had a right to rely on George's opinion. As stated, the record reveals that during the litigations following George and Lisa's divorce, three different experts valued George's stock with a low of $111,000 and a high of $1,186,000. There is no consensus concerning the value of George's stock in BCI. In order to find that George fraudulently misled Lisa, it must be shown that he knew that his stated value of the stock was wrong, and that he intended for Lisa to rely on a false representation. Also, it must be shown that Lisa was ignorant of any misrepresentation by George. It is not evident from the record that the elements of fraud have been met. First, we will address George's representation of his stock's value, and second, we will address Lisa's naivete, or the lack thereof, in her acceptance of George's belief concerning the value of his BCI stock.
¶ 11. In determining that George had misrepresented the value of his stock, the chancellor seemed to place great emphasis on a 1999 financial statement that George signed prior to the divorce. The financial statement was prepared in order to maintain a revolving line of credit for the company, and the company submitted such financial statements for George and Bailey each year. On George's financial statement, it was stated that the value of the stock was $1,100,000. Obviously, this amount is in stark contrast to George's personal estimation given in his 8.05 financial statement.4 However, uncontradicted testimony by George reveals that the personal financial statement, which was presented to the bank, was not completed by him, but rather by BCI office personnel in order to renew BCI's revolving line of credit; he simply signed it. George testified that he signed it even though he thought it was incorrect. There is no way to know for certain whether this account is accurate. However, when attempting to discern the veracity of George's testimony, which was that he merely signed off on the forms prepared by others, it is relevant to note that George was relatively uneducated and quit school at the age of sixteen.5
¶ 12. George also testified that ...
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