July 25, 2012 1 Comment
A few moons ago when I was in law school, Shelton Hand taught Domestic Relations. The class covered most of the actions (legal actions, not crazy behavior of clients) that occur in Chancery Court. More than a few times, he would make a point about a subject and then say “This is serious bidness” with a little southern drawl. He was absolutely correct. The practice of law with respect to marriage, divorce, and child custody is serious bidness that should not be taken lightly.
Within that area of law, there is often no singularly more important document than the 8.05 financial statment submitted by the parties. Chancellor Primeaux recently emphasized the importance of 8.05 statements in Tip 6 and Tip 9 of his “Top Ten Tips to Impress a Chancellor at Trial” series.
An 8.05 should be prepared by each party with assistance from their attorney and if needed, other professionals. Full disclosure is required. No hiding the ball. More appropriately, I guess I should say no hiding the income or assets. Nobody hides debt unless it is in the name of the other party. However, when it comes time to discuss income and assets in the setting of a divorce, clients sometimes develop what I call “Chancery Amnesia.” For so long as the case is proceeding, they can’t remember diddly about money. Show them a check stub and ask them if it is accurate and the response will be something along the lines of “I guess” “maybe” or “I am not sure.” They will however, testify with absolute certainty about expenses, debt and that the other spouse is the cause of the expenses and debt.
In Rogers v. Rogers handed down yesterday from the Court of Appeals, it appears Charles Rogers played fast and loose with his financial disclosures. The Chancellor initially granted a divorce to the parties along with an equitable distribution. Later, contempt issues were brought back before the court. Then came a 60(b) motion for relief from the final judgment based on alleged misrepresentations on the part of Mr. Rogers with respect to disclosure of his gross income. The problem? His 8.05 didn’t match his income tax return and his testimony was anything but clear.
The Chancellor found fraud and modified the alimony award. In fact, the modification increased the amount of rehabilitative alimony from $400 a month to $1000 a month. Ouch. A majority at the Court of Appeals noted the high burden of proving fraud by clear and convincing evidence and reversed the Chancellor’s fraud decision.
Although Charles’s Rule 8.05 statement incorrectly reflected his monthly salary, the record shows that he explained the discrepancy several times in his trial testimony. As a result, we find that the chancellor erred in considering Charles’s Rule 8.05 statement only, and not also his trial testimony, in determining that Charles’s misrepresentation of his income rose to the level of fraud. In her July 6, 2010 judgment, the chancellor erroneously found that Julianne proved by clear and convincing evidence that Charles perpetrated a fraud upon the court. Therefore, the chancellor erred in vacating the prior decree and revising the final divorce decree by increasing the alimony award.
On the other hand, Judge Barnes, joined by Judges Griffis and Fair, dissented and found it
reasonable for the chancellor to have relied on Charles’s Rule 8.05 statement, rather than try to weigh and determine which portion of his testimony was true or was not true. At no time during the original hearing did Charles indicate that the Rule 8.05 statement’s representation of “gross monthly income” was inaccurate.
Rogers, at paragraph 38. All of this mess could have been avoided had Mr. Rogers provided an accurate 8.05 financial statement with the following supporting documents required by 8.05:
copies of the preceding year’s Federal and State Income Tax returns, in full form as filed, or copies of W-2s if the return has not yet been filed; and, a general statement of the providing party describing employment history and earnings from the inception of the marriage or from the date of divorce, whichever is applicable.
Look for this case to make a trip to the Mississippi Supreme Court before it is over with. I hate to see a rule allowing a party to flat out lie on an 8.05 financial statement and get away with it. Of course, it is hard to prove fraud on the Court by clear and convincing evidence where there is reference to three different gross incomes, but the Chancellor chooses to believe only one of them. What is the Chancellor to believe?