Case Law Update

By Vic Valmus

Attorney’s Fees

Moore v Hullander, A18A00592 (April 25, 2018)

The parties were divorced in 2005. Hullander (mother) was awarded primary custody of the children and $250 per month in child support. Several years later, the trial court entered an order modifying child support to $450 per month. In 2016, Moore (father) filed a petition for Modification of Custody based upon a 14-year old’s election. The mother answered and counterclaimed for contempt, alleging the father’s failure to pay child support. During the hearing, the father paid the child support arrearage in the full amount of $16,400. The mother stated she did not intend to go forward with her contempt, because the father paid the arrearage in full. At the conclusion of the hearing, the trial court declined to modify custody during the remaining weeks of the school year, but indicated that the court would revisit the issue of custody before the end of the summer at the final hearing. A temporary order was never issued by the trial court. Months later, the child changed her mind about the election and the father decided in September of 2016 that he would dismiss his petition. However, the father did not file his voluntary dismissal until March of 2017. The mother filed a Motion seeking attorney’s fees and expenses under O.C.G.A. §§ 9-15-14 (b); 13-6-11; 19-6-2 (a); and 19-9-3 (g). The billing statements were $6,201. The court awarded the mother $4,000 in attorney’s fees, but the subsequent written order did not specify the statutory basis. The court found the mother entitled to partial reimbursement of attorney’s fees based on the fact that the father was found in contempt for being substantially behind on his child support payments and that the father unreasonably delayed the resolution of this matter by his actions or lack thereof.

On appeal, the father argues that the trial court erred in awarding of attorney’s fees in part on the prior finding of contempt for failure to pay child support because no such finding had actually been made. The mother stated at a temporary hearing that she did not intend to go forward with her contempt motion in light of the father’s full payment of the child support arrearage and the court never entered a written order after the temporary hearing. Because the mother did not pursue her contempt action, the issue of contempt was never adjudicated. Accordingly, the trial court abused discretion by awarding attorney’s fees based on the erroneous finding that it had previously held Moore in contempt for failure to pay child support.

The father also argues that the court erred, because the court failed to set forth a statutory basis or significant factual findings to support the award. The trial court did not specify a statutory basis for its award of attorney’s fees in its Order, but the mother moved for attorney’s fees on several statutory grounds. One ground was O.C.G.A. § 19-6-2, but that statute is expressly for actions for alimony or divorce and alimony or contempt of an order arising out of an action for alimony or divorce and alimony. O.C.G.A. § 19-6-2 does not apply to petitions for modification of child custody or contempt proceedings. In this case, it is not applicable because the contempt is based on non-compliance with a modification order and not the original decree.

The mother also moved for attorney’s fees under O.C.G.A. § 13-6-11, but those apply only if it can be established that a defendant has acted in bad faith in the underlining transaction which pertains to a transaction and dealings out of which the cause of action arose—and not to the Defendant’s conduct after the cause of action began. The trial court did not award attorney’s fees based on the finding of bad faith by the father prior to litigation, but rather on a finding that the father had unreasonably delayed the resolution to the case.

Attorney’s Fees/Declaratory Judgement

Belcher v Belcher, A18A0362 (June 6, 2018)

This is a second appeal of the attorney’s fees award pursuant to O.C.G.A. § 9-15-14 which was vacated and remanded to the trial court. The Appellant, husband, was required to pay $500 per month in alimony until the wife’s death or remarriage. In Dec. 2013, the husband stopped making alimony payments, because he was uncertain about the health status of the wife. Wife’s attorney contacted the husband assuring him that she was alive and to resume the payments. However, the husband refused to pay the overdue funds and resume the alimony payments until he was provided adequate proof of her current health status. The husband filed a subsequent petition for declaratory judgment seeking that the wife to verify her health status. The wife filed an answer and a motion to dismiss. After the wife appeared in court, the trial court dismissed the husband’s declaratory judgment for failure to state a claim. The court entered an order awarding the wife $2,500 in attorney’s fees under both the declaratory judgment statute, O.C.G.A. § 9-4-9, and § 9-15-14. The Supreme Court reversed the award under O.C.G.A. § 9-4-9 and remanded the award under O.C.G.A. § 9-15-14 for express findings of the abusive conduct. On remand, the trial court entered a new order granting the wife’s motion awarding $2,500 and attorney’s fees under O.C.G.A. § 9-15-14 without identifying which applicable subsection. The husband appeals and the Court of Appeals affirms the attorney’s fees award but remands for further proceedings.

An award under O.C.G.A. § 9-15-14 must specify either subsection (a) or (b) and the court must make express findings of facts and conclusions of law of the conduct authorizing the award. However, if the trial court’s language substantially tracks the wording of O.C.G.A. § 9-15-14(a) or (b), the trial court’s failure to specify a subsection does not constitute reversible error. Here, the court tracked the language of section (a) in that there was a complete absence of any justiciable Issue of law of fact. The husband argues the trial court erred because the declaratory judgment action presented a justiciable issue of law and fact. A declaratory judgment is one which simply declares the rights of the parties or expresses an opinion of the court on a question of law without ordering anything to be done. Such an action is therefore distinguished from other actions in that it does not seek execution or performance from the parties. Declaratory judgment is an appropriate means of ascertaining one’s rights and duties under a contract and decree of divorce. Here, the husband sought verification through a declaratory judgment of the wife’s health status. The record shows that the husband did not appeal the trial court’s order dismissing his petition for declaratory judgment for failing to show he was entitled to relief. The trial court found that the Final Judgment and Decree was clear and unambiguous as to the requirements of alimony payments. And, the husband, without exercising any due diligence, unilaterally and without the authority of the trial court, determined that the wife was no longer entitled to receive alimony payments based upon his arbitrary terms. Therefore, the husband was not entitled to any of the information requested in the declaratory judgment petition. The husband’s actions caused the wife to retain counsel and incur fees, costs and expenses.

The husband also argues trial court erred in awarding a lump sum attorney’s fee. The record showed the wife requested $3,880 in attorney’s fees but the court awarded her $2,500. Even though the trial court’s award of $2,500 in attorney’s fees may have been reasonable, in cases involving O.C.G.A. § 9-15-14(a), the trial court must limit the fee award to those fees incurred because of the sanctionable conduct. Lump sum attorney’s fees award are not permitted in Georgia. The trial court must show the complex decision-making process necessary in reaching a particular dollar figure and articulate why the amount awarded was $2,500 as opposed to any other amount.

Attorney’s Lien

Edward N. Davis, P.C. v Watson, A18A0087 (June 6, 2018)

A Final Divorce and Decree awarded Robert Cartwright (husband) a warehouse building and a 1966 Ford Mustang and ordered that he pay $200,000 in attorney’s fees and $150,217 in contempt arrearages to Mindy Cartwright (wife). Warner Bates represented the wife and Edward Davis represented the husband. On June 11, 2014, Warner Bates filed with Taylor County an attorney’s lien in the amount of $200,000 against the warehouse and the wife recorded the deed on July 24, 2014. During the divorce action, in a separate lawsuit, on July 21, 2014, a jury found against husband in the amount of $9,667,149, and on Aug. 6, 2014, the plaintiff in that suit, Fuji, filed a Writ of Fieri Facias in Taylor County for the full amount of the judgment. The wife, Warner Bates and Fuji disputed the priority of their respective claims against the husband, but Fuji agreed to waive any rights to husband’s real property and the wife and Warner Bates waived any right to husband’s personal property. In July 2016 at the request of Fuji, the Taylor County Sheriff’s Office conducted the sale of the property. After the seizure of the property, Davis contacted Fuji’s counsel on July 7, 2016, and asserted an attorney’s lien in the unspecified amount against the property. The Sheriff filed a petition for Interpleader and paid the funds into the registry of the court. Several parties filed answers claiming priority. The court granted summary judgment in favor of Fuji and the wife and denied summary judgment to Davis. Davis appeals and the Court of Appeals affirms.

Attorney’s liens are governed by O.C.G.A. § 15-19-Attorneys at law shall have a lien for their fees on the property recovered superior to all liens except liens for taxes. Davis admits he never recorded or filed an attorney’s lien in any amount in Taylor County, but argues that O.C.G.A § 15-19-14 allows him to assert a lien in the Interpleader action and his lien is superior to every other lien except for a tax lien. In order to render the lien of an attorney binding upon a bona fide purchaser, it is incumbent upon the attorney to file his claim of lien but such a filing is not essential to the validity of a lien as between the attorney and his client or between him and other creditors of the client. However, this rule is limited to the client’s existing creditors at the time the property is recovered and has no application to future creditors. Therefore, only a properly filed attorney’s lien binds all persons including future lien holders and purchasers for value including bona fide purchasers. Because Davis did not file the attorney’s lien within 30 days of the date he recovered property for the husband, his lien does not bind future lien holders, including the wife and Fuji, who became creditors after the husband recovered the property.

Contempt

Morton v McCatee, A18A0514, A18A0515 (May 15, 2018)

The parties were married in 2011 and separated in 2015. At the time of separation, the parties had separate IRA accounts and shared a Keogh Retirement account and a joint savings account designated as the emergency fund account. In the court’s final judgment regarding the retirement accounts (emergency fund, joint emergency fund, except for IRA/Keogh) the amount to be divided was $390,403. Morton’s (the wife’s) one-half interest was reduced by $30,000 to give the husband credit for his con- tributions to the marital property and the home equity line of credit. In addition, the wife’s interest is reduced by another $10,000 to give the husband credit for charges the wife made to the American Express card, bringing her total half interest down to $155,256.50. The husband was awarded attorney’s fees in the amount of $7,056.20 and the expenses of litigation of $500, bringing the wife’s half interest further down to $147,690.30. The husband was ordered to pay this amount in full to his attorney’s escrow account and his attorney to then disperse the amount in full to the wife within 30 days of the date the order was signed.

Thereafter, the husband insisted the wife accept the $147,690.30 in the form of a transfer from his IRA to her IRA on the basis he would suffer tax consequences if he withdrew the amount from his IRA. The wife refused. The parties contacted the court for clarity for which the court stated that its findings were that no one party would bear the tax liability on the tax deferred money, nor would any one party get the benefit of only taking his or her share from the already taxed proceeds. After which, the husband again requested the wife to transfer from the IRA to IRA account. Thereafter, the husband filed a contempt seeking to have the wife held in contempt for failing to sign the transfer form to the IRA account. Multiple contempts were filed, but the court declined to hold either party in willful contempt. The trial court, among other things, acknowledged that the Divorce Decree was silent as to potential tax liability. The court then ordered the wife’s $147,690.30 be paid by the emergency fund containing $110,000 be split equally. The wife’s IRA account was awarded to her, which contained approximately $44,032, and the remaining balance owed to the wife of approximately $48,108.80 was ordered paid from either the Keogh account or the husband’s SEP account or both in order to transfer these funds in such a way as to not create a tax liability for either party if possible. If there is an unavoidable tax penalty, then the burden was to be shared equally between the parties. The wife appealed and the Court of Appeals affirmed in part and vacated and remanded in part.

The wife appeals, among other things, that the court’s Contempt Order constituted impermissible modification of the divorce decree. It is well settled that a court may not modify a divorce decree in a contempt order but may interpret and clarify its previous decree. When the trial court awards an asset in a contempt proceeding that is different from the award in a divorce decree, the reviewing court looks to the nature of the asset awarded to determine whether it is equivalent to the asset awarded in the divorce proceedings. If it was, in essence, the same, the court did not improperly modify the terms of the agreement. Conversely, if the court used the contempt proceeding to substantially alter the Final Decree, it amounted to an unauthorized modification. Here, the Final Divorce Decree was plain and unambiguous. The husband was to pay $147,690.30 in full to his attorney’s escrow account and his attorney was then to disperse the money in full to the wife within 30 days. It is undisputed the order was drafted by the husband’s attorney; thus, he is responsible for any failure to consider the tax implications of the plain and unambiguous wording of the divorce decree or in his arguments and presentation of evidence during the trial. Here, the court’s order on the competing motions for contempt did not merely construe the relevant portions of the divorce decree which awarded a lump sum of $147,690.30 to the wife with no reference to tax implications to be paid in full to an escrow account and then dispersed to her in full thereafter. Instead, the contempt proceeding and its resulting order substantially altered the Final Decree by not only altering the amounts to be paid to the wife, (due to tax considerations) but also in the manner for which the amount was to be dispersed. Therefore, it was an unauthorized modification of the Final Decree and does not relieve the husband’s obligation to transfer to the wife $147,690.30 as required by the Divorce Decree.

Modification

O’Dwyer v Schuler, A18A0710 (March 29, 2018)

The parties were divorced in 2007 and entered into a Settlement Agreement, with O’Dwyer (the mother) having primary physical custody. In 2014, the mother graduated from college and the parties discussed the children staying with Schuler (the father) because the mother was in a period of transition in which she sold her house and began to work full time. So, in August 2014, the parties essentially flipped the agreement. The children moved in with the father and registered in the father’s school district. Father changed jobs so he no longer had to travel. Father’s sister-in-law and her daughters also moved from Ohio to live with father to ensure that an adult would be present in the house when the father was away. The parties’ agreement was never memorialized in a written document. In November 2016, the father filed a petition to modify custody, visitation and child support to formalize the arrangement. The trial court granted the petition, concluding at the hearing that there was a material change of condition that has occurred which affects the best interest and welfare of the minor children to support the children residing with their father as primary physical custodial parent. The mother appealed and the Court of Appeals affirmed.

The mother argues the trial court erred and abused its discretion because there was no material change in condition which affected the children. However, the evidence showed 2007 Divorce Decree was the last custodial award for which the court had to determine whether the conditions have changed. Here, the children began residing with the father and had enrolled in the father’s district. This court has previously held that children’s enrollment in school was a material change of the condition affecting the children’s welfare. Therefore, the trial court did not err by granting the father’s petition to change custody.

Prenuptial Agreement

Brantley v Brantley, A18A0343 (May 8, 2018)

The parties began dating in 1999 and were engaged to be married in 2002. In Dec. 2002, they jointly purchased a home which required each party to provide his and her respective financial information for the loan application. On Dec. 27, 2002, three days before their wedding day, they executed a prenuptial agreement which provided, inter alia, that in the event of divorce, both parties waived any claims for alimony. In addition, the agreement refer-enced attached financial disclosures from the parties. The parties agreed and stipulated that they had made a full and fair disclosure of his or her current financial worth. The pre- nuptial agreement also stated that the parties were “fully acquainted with and/or aware of the financial circum- stances of the other party.” In 2017, the husband filed a complaint for divorce and filed a motion to enforce the prenuptial agreement. The trial court denied the husband’s motion, ruling that the prenuptial agreement was unen- forceable because he had failed to provide full disclosure of his income. This court granted an interlocutory appeal and the Court of Appeals vacates and remands.

The husband contends the trial court erred by applying an erroneous legal theory in that the prenuptial agreement was unenforceable because he had not disclosed his income within the four corners of the agreement. Here, only the first column of the Scherer test applies, which requires the party seeking enforcement to show that there was a full and fair disclosure of the assets of the parties prior to the execution of prenuptial agreement, and that the party opposing enforcement entered into the agreement freely, voluntarily and with full understanding of the terms and being offered an opportunity to consult with counsel. Mutual disclosure of material facts is a precondition for entering into a prenuptial agreement. The prenuptial agreement attached financial disclosures from both the husband and the wife which provided information regarding the parties’ current financial worth and income. The husband claims he disclosed his income on three separate forms that were part of the loan application that the parties completed prior to purchasing their home. The husband also argues that he disclosed his income to the wife prior to execution of the prenuptial agreement and that she was aware of his financial status because of their stays in expensive hotel, meals at expensive restaurants and his recounting of vacations and hunting trips to Alaska and Hawaii as well as other foreign destinations. The court found the husband should have disclosed in the agreement and not outside of the contract. However, there are many cases and examples where the courts have reviewed evidence beyond the four corners of the prenuptial agreement in order to determine whether that there was full and fair disclosure of the parties’ financial condition prior to the execution of the agreement.

UCCJEA

Gorelik v Gorelik, A18A0707 (June 26, 2018)

The parties were married in Turkey in 2009. The mother was raised in Turkey and possesses a green card to live in the U.S. The husband is a naturalized U.S. citizen. In February 2013, their son was born in Turkey. Then the family moved to Austria. In May 2015, the family moved to New York and in May 2016, the family moved to Georgia. The parties signed a one-year lease; however, the mother never obtained a Georgia license or registered to vote to Georgia and did not enroll the child in school in Georgia. After having lived in Georgia for 22 days, on June 12th, the mother and child traveled to Turkey. The mother filed for a divorce and custody in Turkey and, on Aug. 15, 2016, the Turkish court awarded her custody. It is not clear whether the father received proper notice. Afterwards, the father filed for divorce in Georgia and the trial court awarded the father custody in an emergency order. Afterwards, the mother moved to dismiss the order for lack of subject matter jurisdiction. After a hearing, the court denied the motion finding that the child had no home state and no other state had jurisdiction and that the parties demonstrated their intent to make Georgia their home. The trial court noted there was no evidence to establish how the Turkish court had reached its decision and the trial court declined to consider whether the child had a significant connection with Turkey. The wife appeals and the Court of Appeals reverses.

On appeal, the mother raises several related errors and, among other things, that the trial court lacked jurisdiction. UCCJEA is heavily dependent on the question of the child’s home state and, as the court correctly found, neither Turkey nor Georgia would be the home state. Next, the court turns to other jurisdictional considerations of the UCCJEA when there is no home state which the child or the child’s parents, or the child and at least one parent or a person acting as a parent has a significant connection with this state, other than mere physical presence, and substantial evidence is available in this state concerning the child’s care, protection, training and personal relationships. However, a court of this state may not exercise its jurisdiction if at the time of the commencement of the proceeding, a proceeding concerning the custody of the child has been commenced in the court of another state having jurisdiction substantially and in conformity with the UCCJEA. The court considers jurisdiction in a foreign nation in the same matter as if it were a sister state. Because the Turkish case was commenced prior to the Georgia action, Turkey’s custody determination must be enforced if it was made under factual circumstances and substantially in conformity with the jurisdictional standard of the UCCJEA. Here, the court erred when it concluded there was no evidence that, when awarding custody to the mother, there was not a substantial conformity with the UCCJEA. Even though the Turkish court does not expressly state the basis for its assertion of jurisdiction, it was demonstrated that the child was born in Turkey, the child has lived in Turkey longer than in any other place, the mother was raised in Turkey; and so it is apparently clear that the child and the child’s parent have a significant connection with Turkey. The child and the mother’s connection is definitely a stronger connection than with Georgia. There is also substantial evidence in Turkey concerning the child’s care, protection, training and personal relationships that predates the 2016 trip to Turkey.

UCCJEA/Child Support Arreage

Weiss v Grant, A18A0002 (June 12, 2018)

In 2011 the parties entered into a divorce in Paulding County. There were 2 minor children and the mother and the children were residents of South Carolina. There was a pending child custody action where a final order awarded Weiss (the mother) primary physical custody and awarded Grant (the father) one week of visitation per month. Shortly afterward, the husband failed to return the children to the mother and moved them to different homes, concealing their locations from the mother. In 2012, South Carolina entered a custody order finding the father had fled with the children, that they were still missing, and granted sole custody of the children to the mother and suspending the father’s visitation. In October 2012, the husband and children were found in Alabama. The husband was arrested on the South Carolina warrants and the children were returned to the mother. The father pled guilty to the misdemeanor charge of interference with custody. In 2015 the husband filed a complaint in Paulding County for modification of the South Carolina order which awarded sole custody to the mother and had suspended his visitation. The mother filed an answer, counterclaim for contempt and a motion to dismiss for lack of jurisdiction. The court denied the Motion to Dismiss finding it did have jurisdiction. Over a year later, the court held that there were no issues that would prevent the husband from having a full relationship with the children. In 2017, the trial court entered a final order modifying the South Carolina order and found that there was a significant change of condition. The court found the father in contempt for non-payment of previously ordered child support with arrearages in the amount of $27,270. The court ordered the father to pay $100 per month until such time as the entire support arrearage was paid off. The court granted joint legal custody with the mother having primary physical custody and awarded the husband visitation rights. The wife appealed and the Court of Appeals affirmed in part and reversed in part.

The mother appealed, among other things, that the trial court lacked jurisdiction to modify the South Carolina custody order. The trial court expressly found in its 2017 Final Order, that the husband had lived in Georgia since 2012 and that at the time the action was filed, the mother and the children were residents of Paulding County and Georgia was the home state of the children. The trial court found that at the time the law suit was filed, and up until the time of the trial, Georgia was and has remained the home state of the children. The mother argues on appeal that no determination was ever made that Georgia was the home state of the children at the time the complaint was filed, but the record showed the trial court made that determination multiple times. Therefore, neither the children nor any parent resides in South Carolina, and Georgia was the home state of the children at the time the action was filed.

The mother also appealed that the provisions for the father to repay the child support arrearage of $27,270 at the rate of $100 per month as erroneous because, at that rate, it would take over 18 years to pay the entire amount. The trial court’s order required the father to pay only $100 per month. In a portion of the decision, the Court of Appeals reversed, holding that this amount improperly limited the mother’s ability to collect the child support due by postponing the payment of much of the child support until after the children reach the age of 18.