Can a Judge Award Assets in a Divorce Based Upon One Spouse Losing a Lawsuit?

Full question:

Divorce case the husband, a resident of Florida, owned an inherited percentage of a Florida family partnership from which he derived a sizable annual income. In Florida, spouses are not entitled to inherited income. During earlier years the husband had borrowed substantial amounts of money from his parents and since he no way to satisfy his debt, his father and mother sued for his share of the partnership. The father had promissory notes to prove the debt and the Florida Judge ruled in their favor. The husband was later sued for divorce in the state of Michigan where his spouse had been residing. The husband was still a resident of Florida. There was a prenuptial agreement that stated the wife would receive 20% of the husband___s income. The Michigan divorce judge ruled that the husband acted in bad faith in allowing his partnership percentage to be taken and therefore overruled the decision by the Florida Judge. He treated the husband___s former income as imputed income and based the amount to be paid to the wife on the imputed income.In a divorce case can a Michigan court (judge) over rule an earlier judicial decision made by a Florida court?

• Category: Divorce
• Subcategory: Property Settlements
• Date: 04/07/2025
• State: Florida

Answer:

It’s not clear that the MI judge overruled an order of a FL court. A contract claim and a divorce complaint are two separate matters. It is not uncommon in a divorce case for a judge to award one spouse assets based upon a court judgment against the other spouse that caused a depletion of marital assets. What you have described sounds more like a case where the judge used FL contract claim judgment against the husband to find a bad faith dissipation of assets occurred as a basis for a property/support award to the wife, rather than declaring the FL judgment unenforceable. Judges have discretion in divorce cases to make awards based on the facts and circumstances in each case and may divide property and support awards according to subjective determinations of fairness. Please read the case law below for guidelines on when income may be imputed to a spouse in a divorce proceeding. We suggest you contact a local attorney who can review all the facts and documents involved.

Please see the following MI case law:

MOORE v. MOORE, 242 Mich. App. 652 (2000)
619 N.W.2d 723
JUDY MOORE, Plaintiff-Appellee, v. DAVID MOORE, Defendant-Appellant.
No. 213457.
Michigan Court of Appeals.
Submitted August 2, 2000, at Detroit.
Decided September 26, 2000, at 9:10 a.m.

Appeal from Oakland Circuit Court, LC No. 94-486529-DM.

Cameron Miller & Associates, P.C. (by Cameron A. Miller and Michael
Bartnicki), for the plaintiff. Plymouth
Page 653

Miller and Shensky, P.L.L.C. (by Katherine Wainwright Shensky), for the
defendant. Bloomfield Hills

Before: Owens, P.J., and Jansen and R. B. Burns*, JJ.

PER CURIAM.

This case presents a question of first impression in Michigan. We are
asked to decide whether pension benefits that a payee chooses not to
receive may be imputed to the payee for the purpose of computing the
amount of alimony to which the payee is entitled. The trial court
determined that the pension benefits should not be imputed to plaintiff,
but that this income would be considered when plaintiff actually received
it. The court also determined that plaintiff was not obligated to
exercise her right to receive these benefits. We remand for further
proceedings.

The parties' nearly thirty-year marriage ended in divorce on December
19, 1995. The divorce judgment provided, among other things, that
plaintiff be awarded a fifty percent interest in that amount of
defendant's General Motors pension that accrued from the date of their
marriage, April 16, 1966, to the date of the judgment. The judgment also
provided that plaintiff be awarded alimony of $100 a week, to be
reevaluated and adjusted "commensurate with the parties incomes" when
child support for the parties' minor son ceased.

In August of 1997, plaintiff filed a motion for review of alimony
alleging that defendant's obligation to pay child support had ceased and
that the trial court had intended that plaintiff's alimony be
Page 654
increased accordingly. The matter was referred to the friend of the
court for an investigation, which recommended that defendant pay
alimony of $237 a week. Defendant objected to the recommendation and
requested that the court terminate alimony, arguing that plaintiff was
entitled to collect over $1,000 a month from defendant's pension
pursuant to the divorce judgment and that this sum should be imputed
to plaintiff as income, thus obviating her need for alimony. The court
disagreed and entered an order adopting the friend of the court
recommendation of alimony in the amount of $237 a week, plus $25
toward defendant's arrearage. The trial court found that the parties'
income should be considered when determining alimony, but held that
it would not consider the pension as income to either party until
they elected to receive the pension benefits.

The main objective of alimony is to balance the incomes and needs of
the parties in a way that will not impoverish either party. Ackerman v
Ackerman, 197 Mich. App. 300, 302; 495 N.W.2d 173 (1992). Alimony is to
be based on what is just and reasonable under the circumstances of the
case. Maake v Maake, 200 Mich. App. 184, 187; 503 N.W.2d 664 (1993). An
alimony award can be modified upon a showing of changed circumstances.
McCallister v McCallister, 205 Mich. App. 84, 86; 517 N.W.2d 268 (1994).
The modification of an alimony award must be based on new facts or
changed circumstances arising since the judgment of divorce. Ackerman,
supra at 301.

We review the trial court's factual findings relating to the award or
modification of alimony for clear error. Mitchell v Mitchell,
198 Mich. App. 393, 396; 499 N.W.2d 386 (1993). A finding is clearly
erroneous if the
Page 655
appellate court is left with a definite and firm conviction that a
mistake has been made. Id. If the trial court's findings are
not clearly erroneous, this Court must then decide whether the
dispositional ruling was fair and equitable in light of the facts.
Id.

The voluntary reduction of income may be considered in determining the
proper amount of alimony. Healy v Healy, 175 Mich. App. 187; 437 N.W.2d 355
(1989). If a court finds that a party has voluntarily reduced the party's
income, the court may impute additional income in order to arrive at an
appropriate alimony award. Id.

In this case, in determining whether imputing income to plaintiff was
appropriate, the court should have considered whether plaintiff could
elect to draw her share of the pension now without any reduction in
benefits. If this is the case, we believe that plaintiff would be
voluntarily reducing her income. Under this situation, Healy applies and
the income should be imputed to plaintiff, if she did not receive the
benefits currently. On the other hand, if by taking her share of the
pension now she would receive a reduced amount, it is inappropriate to
impute the pension benefits as income. For plaintiff to defer election of
pension benefits to a later date when the benefits would be larger should
not be viewed as a voluntary reduction in income, but rather as a
possibly prudent investment strategy.

Accordingly, we remand for further proceedings consistent with this
opinion. We do not retain jurisdiction.

MYLAND v. MYLAND, 292868 (Mich.App. 11-23-2010)
KIMBERLY SUE MYLAND, Plaintiff/Counter-Defendant-Appellant, v.
THOMAS EDWARD MYLAND, Defendant/Counter-Plaintiff-Appellee.
No. 292868.
Michigan Court of Appeals.
November 23, 2010 at 9:05 a.m.

Appeal from Kalamazoo Circuit Court, LC No. 08-006024-DM.

Before: M. J. KELLY, P.J., and K. F. KELLY and BORRELLO, JJ.

K. F. KELLY, J.

This appeal from a divorce judgment requires us to determine
whether the trial court's application and use of an arbitrary
formula to calculate an award of spousal support was fair and
equitable under the circumstances of this case. We hold
that MCL 552.23 prohibits the use of rigid and arbitrary formulas
that fail to account for the parties' unique circumstances and
relative positions and reaffirm the mandate that a trial court
awarding spousal support must consider the relevant
factors. Further, we must also determine whether a trial court
may disregard MCR 3.206(C)(2)(a) when considering a request
for attorney fees based on need, and merely rely on whether or not a
party engaged in either egregious conduct or wasteful litigation.
Under these circumstances, we conclude that the trial court failed
to apply the proper needs based analysis. Accordingly, we reverse
and remand.

I. SPOUSAL SUPPORT

Plaintiff first argues that the trial court erred by failing to
adequately consider the parties' ages, health, and abilities to
work; their respective abilities to pay alimony; their needs; and,
their prior standard of living. Plaintiff also asserts that the
trial court clearly erred by imputing $7,000 in income to her and by
failing to consider the costs of her Consolidated Omnibus Budget
Reconciliation Act (COBRA) health insurance. We agree. We review a
trial court's findings of fact related to an award of spousal
support for clear error. Moore v Moore, 242 Mich App 652, 654;
619 NW2d 723 (2000). "A finding is clearly erroneous if the
appellate court is left with a definite and firm conviction that a
mistake has been made." Id. at 654-655. "If a trial court's
factual findings are not clearly erroneous, this Court must then
decide whether the dispositional ruling was fair and equitable in
light of the facts." Berger v Berger, 277 Mich App 700, 727;
Page 2
747 NW2d 336 (2008). We must affirm the trial court's dispositional
ruling unless we are firmly convinced that it was inequitable.
Id.

A trial court has discretion to award spousal support under
MCL 552.23. Korth v Korth, 256 Mich App 286, 288;
662 NW2d 111 (2003). The primary purpose of spousal support is to
"balance the incomes and needs of the parties in a way that will not
impoverish either party" based on what is "just and reasonable under
the circumstances of the case." Moore, 242 Mich App at 654.
Among the factors to be considered are:

(1) the past relations and conduct of the
parties, (2) the length of the marriage, (3) the
abilities of the parties to work, (4) the source
and amount of property awarded to the
parties, (5) the parties' ages, (6) the abilities
of the parties to pay alimony, (7) the present
situation of the parties, (8) the needs of the
parties, (9) the parties' health, (10) the prior
standard of living of the parties and whether
either is responsible for the support of
others, (11) contributions of the parties to the
joint estate, (12) a party's fault in causing the
divorce, (13) the effect of cohabitation on a
party's financial status, and (14) general
principles of equity [Olson v Olson,
256 Mich App 619, 631;
671 NW2d 64 (2003) (citations omitted).]

"The trial court should make specific factual findings regarding the
factors that are relevant to the particular case." Korth,
256 Mich App at 289.

Here, the trial court determined that defendant's income was
$62,500 per year and imputed $7,000 in income to plaintiff. It then
awarded plaintiff $13,875 of spousal support per year
($1,156 per month), after only considering the length of the
parties' marriage. To reach this number the trial court applied a
mechanistic formula, [fn1] noting that "[it] has a formula that it
has utilized in the past, and I am using that as a guideline. . . ."
Accordingly, it multiplied defendant's income less plaintiff's
imputed income ($62,500-$7,000 = $55,000) by .25. The trial court
used .25 apparently based on the number of years the parties were
married — 25 years.

This limited, arbitrary, and formulaic approach is without any
support in the law. It totally fails to consider the unique
circumstances of the parties' respective positions and fails to
reach an outcome that balances the parties' needs and incomes. In
short, we cannot sanction the use of such a blunt tool in any
spousal support determination and the trial court's use of this
formula here is an error of law. Given the trial court's use and
application of its formula, it is not surprising that it failed to
consider the factors relevant to an award of spousal support, aside
from the length of the parties' marriage and their relative
incomes. Indeed, this formula does not adequately account for the
factors that were highly relevant to this proceeding, including the
parties' ages, health, abilities to work, their needs, their
previous standard of living, and whether one of them would be
supporting a dependant. None of these required factors were
considered by the trial court in the instant proceeding.
Page 3

Moreover, the trial court clearly erred by imputing to plaintiff
an income of $7,000. As noted, the trial court made no explicit
finding regarding plaintiff's health or her ability to work, nor did
it make any finding that plaintiff voluntarily reduced her income.
Only after the trial judge simply cited excerpts of plaintiff's
doctor's deposition and considered his own personal medical
ailments, did the trial court conclude that plaintiff could work and
could earn $7,000 per year. This finding was clearly
erroneous. First, parties to a divorce action "are entitled to
individual consideration based on the law and facts applicable to
their case, not on anecdotal experiences of the trial court." Cf.
Brausch v Brausch, 283 Mich App 339, 354; 770 NW2d 77 (2009).
Thus, the trial judge's commentary, that despite his ailments, he is
going to work until he is "not able to do anything" and "when you
don't have any options and you gotta [sic] work, you gotta [sic]
work," was an entirely irrelevant and inappropriate basis on which
to conclude that plaintiff herself had the ability to work. Second,
after a review of plaintiff's doctor's deposition and plaintiff's
testimony, it is clear that plaintiff does not have the ability
to work or to earn $7,000 per year due to her progressive multiple
sclerosis (MS). Plaintiff testified that she could not work and
that she suffered numbness in her extremities, blurred vision,
clumsiness, confusion, lack of bladder control, chronic fatigue,
drowsiness, vertigo, and depression. Plaintiff's doctor, Dr. Phillip
Green, testified that plaintiff suffered from weakness, clumsiness,
decreased cognition, and confusion, and that her condition would
worsen over time. According to Dr. Green, plaintiff's intelligence
quotient scored in the 23rd percentile, and her cognitive ability to
process information and act on the information scored in the eighth
percentile. Dr. Green testified that plaintiff was not capable of
full-time employment and indicated that part-time employment was
"possible . . . but not probable," especially because of the
progressive nature of her MS. Further, plaintiff's
only work experience is childcare and waitressing — two physically
demanding jobs that plaintiff could not reasonably be expected to
perform — and she lacks any valuable job skills that would qualify
her for skilled employment. Based on this evidence, and a lack of
any evidence that plaintiff voluntarily reduced her income, we have
a definite and firm conviction that the trial court made a mistake
by concluding that plaintiff had the ability to work and to earn an
income, and by imputing her a $7,000 income.

We also note, as plaintiff points out, that the trial court erred
by failing to consider plaintiff's needs, specifically her health
care costs, and determining that plaintiff should not be awarded any
additional support to cover those costs. Presently, plaintiff pays
$383 a month for COBRA benefits. The trial court determined
that plaintiff could pay for COBRA from her spousal support and
would not be awarded any additional amount to cover her health care
costs. However, in making this determination, the trial court
ignored the disparate economic positions of the parties. As noted,
plaintiff suffers from a severe physical impairment that will become
worse with time and she
has no meaningful work experience, no specialized training,
and no real potential to earn any income. In comparison, defendant
is healthy, he earns about $62,500 (approximately $5,200 per month)
per year in a field where he has years of experience, and he has a
retirement account and health care coverage for $41 per month. In
consideration of the parties' relative positions and plaintiff's
needs, it would not have been inequitable for the trial court to
require defendant to maintain plaintiff's health insurance. See
Voukatidis v Voukatidis, 195 Mich App 338, 339;
489 NW2d 512 (1992). The trial court, however, failed to even
address
Page 4
the parties' relative positions. The trial court also over-looked
the fact that its spousal support award would not even cover all of
plaintiff's living expenses.[fn2] Although the trial court likely
expected plaintiff to make up the difference through her separate
individual earnings, we have already concluded that the trial court
clearly erred by determining that plaintiff had the ability
to work and to earn an income. Accordingly, on remand, the trial
court must specifically consider plaintiff's needs, and specifically
her health related needs, in light of the fact that she
has no earning potential and no ability to work.

In summary, an application of the general principles of equity,
within the confines of the applicable statute and relevant case law,
supports a conclusion that plaintiff is entitled to a greater amount
of spousal support than the trial court awarded. Plaintiff
has no earning ability, has severe health problems, and has
significant costs associated with her health care, while defendant
is relatively young, in good health, employed, earns a decent
salary, and has relatively low living expenses. The trial court's
award of spousal support, in light of plaintiff's health condition
and earning ability, was deficient and clearly inequitable. On
remand, the trial court must consider the relevant factors as they
pertain to the parties and make specific findings of fact in support
of its ultimate award of spousal support. In doing so, it must keep
in mind that its goal is to reach a result that is just and
reasonable under the circumstances and that "balance[s] the incomes
and needs of the parties in a way that will not impoverish either
party. . . ." Moore, 242 Mich App at 654. Finally, given the
statutory mandate of MCL 552.23, we must emphasize that there
is no room for the application of any rigid and arbitrary formulas
in determining the appropriate amount of spousal support like the
one applied in this matter and the trial court on remand must
proceed accordingly.

II. STIPULATION

Next, plaintiff argues that the trial court erred by failing to
enforce a stipulation between the parties that required defendant to
sell his 1969 Pontiac Firebird and use the proceeds to pay marital
debt. We disagree. "A settlement agreement, such as a stipulation
and property settlement in a divorce, is construed as a contract."
MacInnes v MacInnes, 260 Mich App 280, 283;
677 NW2d 889 (2004). The same legal principles that govern the
construction and interpretation of a contracts, govern the parties'
purported settlement agreement in a divorce case. Id. The
existence and interpretation of a contract involves a question
of law that this Court reviews de novo. Kloian v Domino's Pizza,
LLC, 273 Mich App 449, 452; 733 NW2d 766 (2006).

Under MCR 2.507(G), "[a]n agreement or consent between the parties
or their attorneys respecting the proceedings in an action,
subsequently denied by either party, is not binding unless it was
made in open court . . . subscribed by the party against whom the
agreement is offered or by that party's attorney." Further, "[i]t is
a well-settled principle of law that courts are
Page 5
bound by property settlements reached through negotiations and
agreement by parties to a divorce action, in the absence of fraud,
duress, mutual mistake, or severe stress which prevented a party
from understanding in a reasonable manner the nature and effect of
the act in which she was engaged." Kyser v Kyser,
182 Mich App 268, 269-270; 451 NW2d 587 (1990).

Here, the record does not support a conclusion that the parties
entered into a binding stipulation that required defendant to sell
the Firebird to pay the marital debt. Rather, the parties merely
agreed that the Firebird would be considered defendant's separate
property and that, should defendant decide to sell it, plaintiff
would be entitled to receive an accounting of the sale and the
proceeds would be applied to the marital debt. Thus, whether to sell
the Firebird remained in defendant's sole discretion and,
subsequently to plaintiff' detriment, he decided not to sell it.
Accordingly, contrary to plaintiff's position, the trial court did
not err by adhering to the parties' stipulation and excluding the
Firebird from the distribution of the assets.

Further, we note that although plaintiff advances an alternative
interpretation of the stipulation, she does not even argue that she
entered into the stipulation due to a mutual mistake. And, absent
any other indication of fraud, duress, or severe stress, the
stipulation must be enforced according to its plain terms. Plaintiff
does not assert that any of these foregoing circumstances exist and
her interpretation of the stipulation has no support in the record.
Her argument on appeal is simply an attempt to avoid the effect of
the stipulation and to regain that which she forfeited by agreeing
to it: An adjudication of whether the Firebird constituted
defendant's separate property and if so, whether it could be invaded
under MCL 552.23. No relief is warranted on this basis.

III. ATTORNEY FEES

Plaintiff also asserts that the trial court abused its discretion
by denying her need based request for attorney fees. We agree. We
review a trial court's decision whether to award attorney fees for
an abuse of discretion. Reed v Reed, 265 Mich App 131, 164;
693 NW2d 825 (2005). Findings of fact are reviewed for clear error
and questions of law are reviewed de novo. Stallworth v
Stallworth, 275 Mich App 282, 288; 738 NW2d 264 (2007).

The applicable court rule, MCR 3.206(C)(2)(a),
states:

A party who requests attorney fees and expenses
must allege facts sufficient to show that

(a) the party is unable to bear the expense of
the action, and that the other party is able to
pay. . . .

This Court has interpreted this rule to require an award of attorney
fees in a divorce action "only as necessary to enable a party to
prosecute or defend a suit." Gates v Gates,
256 Mich App 420, 438; 664 NW2d 231 (2003). With respect to a
party's ability to prosecute or defend a divorce action, a party
should "not be required to invade her assets to satisfy attorney
fees when she is relying on the same assets for her support."
Maake v Maake, 200 Mich App 184, 189; 503 NW2d 664 (1993).
Further, a party may sufficiently demonstrate an inability to
pay attorney fees when that party's yearly income is less than the
amount owed in attorney fees. Stallworth,
275 Mich App at 288-289.
Page 6

Here, the trial court opined that it only awards attorney fees
where a party engages in egregious conduct or wasteful litigation
and indicated that plaintiff could use her spousal support to pay
her attorney, stating:

With regard to attorney fees, this Court has
never granted attorney fees unless the Court felt
that there was an egregious — egregious conduct
by the part of one of the litigants or
wastefulness with regard to their actions. I
always believe that everyone should, you know,
with whatever allocation of assets pay
their attorney fees. And so, I'm denying the
invitation to assess attorney fees.

This basis for denying plaintiff attorney fees constitutes an error
of law. See Maake, 200 Mich App at 189; Gates,
256 Mich App at 438. Rather, it was incumbent upon the trial court
to consider whether attorney fees were necessary for plaintiff to
defend her suit, including whether, under the circumstances,
plaintiff would have to invade the same spousal support assets she
is relying on to live in order to satisfy her attorney fees, and
whether, under the specific circumstances, defendant has the ability
to pay or contribute to plaintiff's fees. See Gates,
256 Mich App at 438; MCR 3.206(C)(2)(a). Thus, on remand, the trial
court must apply the correct legal analysis, giving special
consideration to the specific financial situations of the parties
and the equities involved. In addition, the trial court must also
consider whether plaintiff is entitled to appellate attorney fees
pursuant to MCR 3.206(C)(1), applying the same analysis.

Reversed and remanded for proceedings consistent with this
opinion. We do not retain jurisdiction.

[fn1] The trial court offered no legal authority in support of this
particular formula and we have found no legal authority
that supports such a formula.

[fn2] Under the division of property, plaintiff was responsible for
half of the marital debt and the marital home's mortgage until the
home is sold — approximately $1000 per month. Housing and COBRA
alone, totaling $1,383 per month, would cost more than the $1,156 in
monthly support that the trial court awarded.