On August 23, 2016, the New Hampshire Supreme Court issued an opinion in Ross and Ross. It is a fascinating case about adultery and new relationships during a divorce. The outcome is a cautionary tale for persons seeking fault grounds for divorce.  

The Facts

Husband and wife met in dental school and later married. Husband, who had his own endodontist practice, helped his wife open and build her orthodontist practice. Considerable money was put into the venture. The couple separated the day that husband discovered wife was having an affair with another dentist. Wife filed for divorce 5 days after the parties separated alleging both fault and irreconcilable differences as grounds. Husband cross-petitioned for divorce on fault-based grounds, due to the wife’s alleged adultery and irreconcilable differences. The parties had been married for 9 years at the time they filed for divorce.

Approximately 11 months after the divorce was file, husband began a sexual relationship with the ex-wife of the dentist wife was dating. Wife filed a motion to dismiss the adultery grounds pled against her. She argued the defense of recrimination, or in other words that the husband was no longer an “innocent spouse” because of his own adultery. The trial court agreed with wife and dismissed the husband’s fault grounds. The trial court issued a decree of divorce based on irreconcilable differences that divided the property with an intent to split it equally.

The Appeal

Husband appealed the dismissal of the fault-based ground in his cross-petition for divorce, arguing that his sexual relationship, which occurred eleven months after the parties’ separation, could not be used as a basis for the defense of recrimination. Husband asserted that such a holding would require parties to remain celibate during years of litigation in a contentious divorce. Wife argued the trial court did not err in granting the motion to dismiss because the respondent was not an “innocent party” within the meaning of the statute. RSA 458:7 (2004).

The Court examined RSA 458:7, which states that a divorce “shall be decreed in favor of the innocent party.” The statute requires that one be an “innocent party” at the time of the decree. The statute makes no exception for fault based grounds that arise prior to the final decree, regardless of whether they arise before or after the filing of the divorce petition. Therefore, the trial court correctly considered Husband’s post-petition conduct when deciding the motion to dismiss.
The Court further stated the fact that Husband’s adultery did not lead to the breakdown of the marriage does not bar recrimination as a defense, stating “Causation is not an element of the defense of recrimination.”

The Court affirmed the trial court’s decision to dismiss the fault grounds and grant a divorce on irreconcilable differences.

The Takeaway

The conclusion of husband’s brief, artfully written by Attorney Joshua Gordon, argues: “It is not reasonable to suggest, in these times of protracted discovery and litigation, that a party to a divorce must remain celibate for the duration of the proceedings – here already longer than four years.” I happen to agree with him. Litigation can be a long and arduous process. While most divorces will settle within 6 months to 1 year, a small percentage can drag on. The longest divorce I have seen from start to finish has been 5 years. That is a long time to wait to date.

Why pursue the adultery grounds in the first place? It appears in this case that there was some significant bad blood between the parties. Husband had helped wife open her orthodontic practice and contributed financially and emotionally to that endeavor. In return, wife carried on an affair with a colleague for approximately five years. Wife changed the locks to the house two days after husband left. Husband may have been pursuing the emotional victory of a fault based divorce for wife’s cheating.

Husband may also have been pursuing the adultery grounds for the financial benefit. RSA 458:16-a, II provides that a court may divide property unequally when it would be appropriate and equitable to do so after considering one more of the statutory factors. One of the factors reads:  “The fault of either party as specified in RSA 458:7 if said fault caused the breakdown of the marriage and: (1) Caused substantial physical or mental pain and suffering; or  (2) Resulted in substantial economic loss to the marital estate or the injured party.” With the dental practices, marital home and savings and investments on the line, an uneven split make a substantial difference in the outcome.

However, in my experience, most judges are not persuaded to award a significantly higher portion of the property to the “innocent spouse,” even if they can prove that the adultery caused the breakdown of the marriage and substantial economic loss to the marriage or injured spouse. More than a 45/55 split without other contributing factors would be unusual.

The moral of this story is that there must be a careful cost benefit analysis when filing adultery. Is the litigant willing to remain celibate no matter how long the litigation takes? Is there substantial property up for division that would make even a small deviation from 50/50 worthwhile? Is the time, money and celibacy for a finding that the other spouse cheated sensible?

 

In my years practicing family law, I have heard a lot of misconceptions about what is marital property. While the definition of marital property may differ between states, in New Hampshire marital property is anything and everything owned by the parties.

I hear questions such as "Only my name is on the house, so that is off the table right?" Wrong. It does not matter how the house is titled. It can be in either name individually or owned jointly. Another statement often made is "I owned the house before the marriage so I get to keep it." This is also wrong. It does not matter when or how the property was purchased, everything goes into the pot to be divided.

The definition of marital property is found at RSA 458:16-a. The statute states:

Property shall include all tangible and intangible property and assets, real or personal, belonging to either or both parties, whether title to the property is held in the name of either or both parties. Intangible property includes, but is not limited to, employment benefits, vested and non-vested pension or other retirement benefits, or savings plans. To the extent permitted by federal law, property shall include military retirement and veterans’ disability benefits.

However, just because everything is subject to division by the courts, that does not mean that it will be. RSA 458:16-a also says that the court can deviate from an equal division based on variety of factors, including the length of the marriage, what property was owned prior to the marriage, and the contributions of each party to the marital property. Each case is based on the specific facts and circumstances of the couple.

In the Matter of Susan Spenard and David Spenard was decided on October 17, 2014

The Facts
Husband and Wife married in 1998. During the marriage the Husband worked in real estate and owned several businesses and the Wife worked as an entertainer. Before the parties’ divorce decree was issued, the Husband sold a promissory note that he had failed to disclose on his financial affidavit. During the divorce trial, the Wife argued that she could no longer work at all due to medical issues. She failed to present any expert testimony to back up her claim, however, and the Court found that she was voluntarily unemployed. The Wife filed a Motion to Reconsider and sought to present new evidence of her medical issues. The Court denied her Motion.

The Appeal
The Wife appealed on three grounds. First, the Wife argued that RSA 458-C:2 requires an express finding of under or unemployment when presented with evidence supporting such a claim. Second, she argued that the lower Court erred in refusing to reopen her case based on her newly discovered medical evidence supporting her claim that she cannot work. Third, the Wife argued that the Husband’s promissory notes were marital property, and, therefore, subject to equitable distribution.

The Holding
First, the Court held that whether or not a party is voluntarily under or unemployed is a question of fact for the fact-finder, and RSA 458-C:2 does not require an express finding of voluntary under or unemployment when presented with evidence of such a claim. Second, the Court held that a party who seeks to reopen a case to submit new evidence must demonstrate that s/he was not at fault for failing to present such evidence at the hearing. Mere difficulty or financial expense of obtaining such evidence is not sufficient to overcome this burden. Third, the Court held that promissory notes are marital property and thus must be listed on financial affidavits and are subject to equitable distribution.

 

“All human beings have three lives: public, private, and secret.” 
― Gabriel Garcí­a Márquez, Gabriel García Márquez: a Life

The public thirsts for gossip, apparent in websites like TMZ and Perz Hilton. Celebrity splits are big news such as Tom Cruise and Katie Holmes to Mariah Carey and Nick Cannon. While most of us do not enjoy celebrity status, the small town rumor mill can be just as virulent as celebrity gossip. Divorce litigants should beware the rules regarding public access to their divorce file. Anyone can head down to the local courthouse and view all the happenings in the neighbor’s divorce or co-worker’s custody battle.  

The prominent case on this issue is the Petition of Keene Sentinel issued by the New Hampshire Supreme Court on August 27, 1992. During the 1990 political campaign for New Hampshire’s Second congressional seat, The Keene Sentinel sought to gain access to one of the incumbent’s, Charles Douglas III’s divorce records. The clerk granted the Keene Sentinel only some of the divorce records, citing privacy concerns. The Keene Sentinel brought suit and Charles Douglas III sought to intervene, asking the Superior Court to dismiss the suit. The Superior Court ultimately denied the Keene Sentinel’s request.

The Keene Sentinel appealed, arguing that “disclosure should have been permitted pursuant to RSA chapter 91-A, the Right to Know Law.” The Supreme Court held that a party in a divorce proceeding cannot have the records sealed simply for the sake of general privacy concerns.  The Court held that “[b]efore a document is ordered sealed, the trial judge must determine that no reasonable alternative to nondisclosure exists.” If a trial judge does make such a determination, it must use the least restrictive means available to secure the parties’ privacy rights.

This generally requires that the orders, pleadings and other materials in the file are open to the public for viewing. An exception is a financial affidavit. A party is required by the court to complete and submit a sworn financial affidavit, detailing all income, property and debts. This document usually contains very personal information such as social security numbers, bank information and paystubs. Family Division Rule 2.16 and RSA 458:15-b requires financial affidavits to be confidential for non-parties. In practice, this means that the court file contains an envelope which the clerk will remove if you are not a party to the case. Financial affidavits filed in divorce, legal separation, annulment, or parenting petition cases shall be confidential to non-parties. Access to such financial affidavits shall be pursuant to Family Division Rule 1.30. However, a person not otherwise entitled to access may file a motion under Family Division Rule 1.30 to gain access to the financial affidavit. 

The Associated Press v. NH gives some context to the rule regarding financial affidavit confidentiality. The New Hampshire Supreme Court issued its holding in this case on December 30, 2005.   After RSA 458:15-b took effect on August 10, 2004, which, inter alia, made financial affidavits in divorce proceedings only accessible to parties to the proceeding and their attorneys of record, the Associated Press filed suit claiming the law was unconstitutional. The Associated Press argued that the law “violated the public’s right of access to court records” under the State Constitution, and that it was an impermissible restraint on freedom of speech per the State and Federal Constitutions.  The trial court determined that the law was not unconstitutional, and dismissed The Associated Press’ suit. The Associated Press appealed the trial court decision, arguing that the trial court erred in finding that the law was constitutional.

 The Supreme Court agreed with the trial court, and finding RSA 458:15-b constitutional. The Court ruled that although the public has a right to access government documents, including court documents, the right is not unlimited.  It opined that "the right of access may be overcome when a sufficiently compelling interest for nondisclosure is identified,” which included the compelling interest to prevent exposing divorce litigants to identify theft and fraud. The Court’s ruling was narrow, however, and only applied to keeping financial affidavits sealed. 

In general, the Court may upon request consider keeping confidential case-related materials for collateral cases that are already confidential pursuant to New Hampshire law. These include termination of parental rights, adoption, juvenile criminal records and abuse/neglect cases and DCYF records.  

 

The New Hampshire Supreme Court issued in the Matter of Janice E. Maves and David L. Moore on August 14, 2014

The Facts

Husband and Wife divorced in 2004.  At the time of the divorce, Husband was awarded the parties’ Farm, which was initially used as a commercial campground and contained condos that were rented seasonally. The Farm was an S-type corporation, with Husband as primary shareholder.  At the time of the divorce, Husband was ordered to pay $650 per month in child support for their only child, which was increased to $950 in 2008.  The parents shared parenting time.

In 2011 Husband changed the Farm’s business model to condo sales.  As a result, the Farm’s 2011 tax return showed an income of $1,000,389 as capital gains.  Husband gave himself a line of credit from the corporation.  As a result of the increase in the Farm’s capital gains and the extended line of credit, Wife sought an upward modification of child support based on materially changed circumstances.  Husband argued that capital gains are not income for the purposes of child support, and even if they were, the Farm, not Husband, earned the capital gains.  Family court disagreed with Husband and increased his monthly child support payments to $2,411.  The Court also ordered Husband to pay $9,644 in arrears.  The Court based this finding on a conclusion that the Farm’s capital gains were irregular income that should be included in Husband’s gross income.  The Court used Husband’s adjusted gross income to calculate support.

The Appeal

Husband and Wife both appealed.  Wife argued that the line of credit should be counted as income, the capital gains should be “regular” income, and family court should have used gross income minus legitimate business expenses in determining Husband’s income, not adjusted gross income.  Husband argued that the Farm’s capital gains were not his income or personal profits, the Farm was part of the divorce settlement and therefore not able to be the basis for child support payments, that capital gains were not income for the purposes of child support calculations, and that the amount he was ordered to pay was grossly excessive.

The Holding

The Supreme Court held that capital gains are considered income for the purposes of child support calculations. The Court also held that the line of credit was not income, because “[t]he capital gains were treated as [Farm] funds, which, in turn, [Husband] drew down as a line of credit.”  The Court further held that although the Farm was awarded to Husband as part of a property settlement, it was a business, and therefore any capital gains were income for child support purposes.  Lastly, the Court held that courts should not solely rely on a payer’s adjusted gross income on tax returns to prove income.  Rather, the Court held that the “proper measure of gross income is to deduct legitimate business expenses from business profits.”

The Takeaway

There have been many cases over the years arguing about what income may be used for child support purposes. It is worth reading the definition provided in RSA 458-C:2,IV.   

"Gross income” means all income from any source, whether earned or unearned, including, but not limited to, wages, salary, commissions, tips, annuities, social security benefits, trust income, lottery or gambling winnings, interest, dividends, investment income, net rental income, self-employment income, alimony, business profits, pensions, bonuses, and payments from other government programs (except public assistance programs, including aid to families with dependent children, aid to the permanently and totally disabled, supplemental security income, food stamps, and general assistance received from a county or town), including, but not limited to, workers’ compensation, veterans’ benefits, unemployment benefits, and disability benefits; provided, however, that no income earned at an hourly rate for hours worked, on an occasional or seasonal basis, in excess of 40 hours in any week shall be considered as income for the purpose of determining gross income; and provided further that such hourly rate income is earned for actual overtime labor performed by an employee who earns wages at an hourly rate in a trade or industry which traditionally or commonly pays overtime wages, thus excluding professionals, business owners, business partners, self-employed individuals and others who may exercise sufficient control over their income so as to recharacterize payment to themselves to include overtime wages in addition to a salary. 

 

It is certainly an interesting argument to make that income derived from a business awarded to a party in a divorce is not income for the calculation of child support but rather property settlement. It was doomed to fail though, as the result would produce absurd result. Any self-employed person would avoid having their income considered for child support. A person’s investments that derive income would similarly be discounted. The intent and plain meaning of the statute is to capture all income for the purposes of child support. 

 

Before your final trial, the court will conduct a pretrial hearing. Learn here what will happen at the hearing and what needs to be prepared and filed at the hearing. 

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I am always surprised when a potential client comes in to meet with me and says “there’s no such thing as alimony in New Hampshire, right?” Be assured, there is alimony in New Hampshire. 

Alimony is governed by RSA 458:19. The law says that the recipient must have the need for alimony, and the payor must have the ability to pay. The alimony award must take into account the lifestyle of the parties during the marriage. In determining the amount of alimony, the court must consider the length of the marriage; the age, health, social or economic status, occupation, amount and sources of income, the property awarded to either party, vocational skills, employability, estate, liabilities, and needs of each of the parties; the opportunity of each for future acquisition of capital assets and income; the fault of either party as defined in RSA 458:16-a, II(l); and the federal tax consequences of the order.

Things to know about alimony:

  • Alimony is gender neutral. Men and women can receive alimony.
  • The court has broad discretion when awarding alimony, and there is no formula in New Hampshire for either an amount or a term.
  • Alimony cannot be waived in a divorce stipulation. The law provides either spouse with the right to petition for alimony within 5 years of the date of the divorce decree, or if alimony has been ordered for a definite time period, within 5 years from the date of the last payment.
  • Alimony is tax deductible to the payor, and is taxable income to the recipient.
  • The primary purpose of alimony is rehabilitative, meaning the support is intended to allow the recipient time to become self-supporting. However, the court has the authority to order alimony for an indefinite period of time where appropriate.
  • Agreements that contain a provision for the payment of alimony often include language about the terminating alimony upon the recipient’s remarriage or cohabitation with a romantic partner. 

Unbundled legal services, also known as limited scope representation, allow you to hire a lawyer to do certain parts of your case, instead of the traditional soup to nuts representation. Some clients choose unbundled services because they cannot afford full representation, and some advice is better than no advice. Other clients feel capable of handling certain parts of the case, but need assistance with other portions.

Unbundled services can be customized to fit your needs, and can include

  • Representation at a specific hearing, such as a temporary hearing
  • Draft proposed orders or pleadings
  • Attending mediation
  • Assisting with discovery preparations
  • Consulting during your case to provide assistance and advice  

Payment arrangements for unbundled services can be tailored to the specific service. For example, paying a small retainer for ongoing advice, or paying for an hour at the end of a meeting to prepare documents.

Lawyers providing unbundled services will ask the client to sign a consent form that clearly spells out what services are, and are not, going to be provided, in addition to a fee agreement. 

Divorce can be a tumultuous time spent worrying about your kids, your money and your future. Estate planning is usually not high on the to do list. However, addressing your estate plan is an important piece of a divorce. Attorney Jan Myskoski’s recent New Hampshire Bar News article Get Out of My Will: Estate Planning and Divorce reviews the planning process before, during and after. 

Important take-aways from Attorney Myskoski’s article include:

  • Disinheriting a spouse is difficult, but you can limit an inheritance to the statutory share provided under RSA 560:10.
  • The anti-hypothecation issued in a divorce prevents a party from "selling, transferring, encumbering, hypothecating, concealing, or in any manner whatsoever disposing of any property." However, the recent case of Elter-Nodvin v. Nodvin made clear that the anti-hypothecation does not restrain changes to life insurance beneficiaries, wills, and durable powers of attorney because there is no transfer of ownership while the party is alive. 
  • While RSA 551:13 revokes provisions in a will or revocable trust in favor of a former spouse, changes to durable powers of attorney and beneficiary designations under life policies, retirement accounts and the like must be directly modified. Otherwise, under Kennedy v. Plan Administrator, your former spouse will inherit your money.