Domestic Law Case and Legislative Update

1. Domestic Law Case and Legislative Update Cheryl Howell Institute of Government October 2003

2. Custody • Rosero v. Blake – NC Supreme Court (June 2003) • Between mother and father of illegitimate child, no presumptions apply • Best interest test determines custody • At least where father has acknowledged paternity and “acted consistent with his right to care for and control child”

3. Custody • David v. Ferguson (COA Aug. 2003) • Trial court used best interest to give father custody • COA reversed, citing Rosero (COA) • Supreme Court remanded, citing Rosero (NC) • COA upheld best interest without evidence of father’s acknowledgment

4. CustodyBest Interest Test • Rosero (NC June 2003) • Trial court has discretion to interpret evidence; upheld if findings – based upon evidence – support conclusion of best interest • McRoy v. Hodges (COA Sept. 2003) • Finding that father had no present relationship with child but would establish one under terms of order held insufficient to support conclusion of best interest

5. CustodyTemporary Orders • To be temporary, order must state “clear and specific reconvening time, and the time between hearings must be reasonably brief” • Brewer, 139 N.C. App. 222 (2000)(1 year not reasonably brief) • Cox, 133 N.C. App. 221 (1999)(5 months OK)

6. CustodyTemporary orders • McRoy v. Hodges (COA Sept. 2003) • Award of “temporary custody to plaintiff for 4 months, then permanent custody to defendant” held to be a final order • Lamond v. Mahoney (COA Aug. 2003) • “Order regarding permanent custody, visitation and support” was temporary where it ordered evaluations and review in 7 months

7. CustodyAppeals • Evans v. Evans (COA June 2003) • Custody order is interlocutory if alimony and ED remain pending • No substantial right affected unless child’s “health or safety is in jeopardy” • Compare McConnell, 151 NC App 622 (2002) • Civil Procedure Rule 54(b): judge can certify “no just reason to delay the appeal”

8. Child SupportModification • Orange County ex. Rel. Harris v. Keys (COA June 2003) • VSA included order to pay $1,272 ($20 per month) reimbursement of past paid public assistance • Trial court forgave repayment as part of modification of VSA after finding debt accrued before obligor knew about birth of child

9. Child SupportModification • Orange County ex rel Harris v. Keyes • COA reversed – held modification of “vested arrears” must comply with GS 50-13.10 • GS 50-13.10: payments become vested when due; modification allowed only if requested before payments due • After vesting, obligor must show “compelling reason” why change not requested before payments due

10. Child SupportImputing Income • Cannot impute income without finding “bad faith”: finding of intentional reduction is not sufficient • Cook v. Cook (COA Aug. 2003). Obligor left job voluntarily and restructured investments: insufficient to impute • Pataky v. Pataky (COA Sept 2003): left job to return to school – COA said record “wholly lacks evidence of bad faith”

11. Child SupportSeparation Agreement • Pataky (COA Sept. 2003) • Amount of support in unincorporated agreement is presumed a “just and reasonable” amount of support • If presumption not rebutted, application of guidelines is “inappropriate” and support is set in amount of agreement • Rebut presumption with evidence of needs of children at time of hearing and factors set out in GS 50-13.4(c)

12. Child Support Legislation • Collection of arrears • S.L. 2003-288, effective July 4, 2003 • Amends GS 50-13.4(c): If arrearage exists when support obligation terminates, payments continue in same total amount until all arrearages and fees are satisfied

13. Equitable DistributionRice v Rice (COA Aug. 2003) • House purchased with down payment and mortgage before marriage • Mortgage paid during marriage with marital and separate funds • Improvements made during marriage with marital and separate funds • Passive appreciation added value during marriage • How classify house?

14. Equitable Distribution • Mixed assets classified using source of funds doctrine • Each estate is entitled to an interest in the property in the ratio its contribution bears to the total investment in the property. • Wade, 72 NC App 372 (1985) • Mishler, 90 NC APP 72 (1988)

15. Equitable Distribution • To classify a mixed asset: • Identify total marital contribution • Identify total separate contribution • Divide passive appreciation between the 2 estates based upon the relative contribution of each

16. Equitable Distribution • Rice v. Rice (COA Aug 2003) • In determining total marital contribution – for purpose of identifying marital component of passive appreciation – must include marital improvements as well as marital mortgage payments

17. Equitable DistributionDistributive Awards 50-20(e) • In-kind distributions presumed equitable • Presumption rebutted by greater weight of evidence, or of evidence of property “not susceptible to in-kind distribution” • If rebutted, distributive award allowed to “facilitate, effectuate, or supplement distribution” • Can be paid over time/secured with lien

18. Distributive Awards • Embler v. Embler (COA July 2003) • Defendant ordered to pay $24,876 within 60 days • COA held trial court erred by not identifying how defendant would satisfy award where defendant had no “obvious liquid assets.” • See also Shaw v. Shaw, 117 NC App 552 (1995) • Ability to pay is not the issue

19. Distributive AwardsEmbler v. Embler • If court cannot identify liquid assets to pay award, must identify non-liquid source of funds • Ex. retirement funds or loans • If non-liquid source used, court must consider “adverse financial ramifications” as distribution factors • 50-20(c)(9): must consider liquid/non-liquid character of assets • 50-20(c)(11): must consider tax consequences of distribution

20. Equitable DistributionEmbler v. Embler • Court’s findings regarding distribution factors were insufficient • Identified factors lacked detail – examples: • Husband paid debts, but amount not identified • Husband had separate property, but no finding whether liquid or non-liquid • No QDRO desired, but no finding re tax consequences of “dipping into” retirement account • Statement that court “also considered the other factors” created ambiguity

21. Equitable DistributionPension classification • Award of pension determined using proportion of time marriage existed (up to date of separation), simultaneously with employment which earned the pension, to the total amount of time of employment. • GS 50-20.1(d) • Referred to as the “coverture fraction” • Bishop, 113 NC App 725 (1994) • Lewis, 83 NC App 438 (1986)

22. Pension classification • Embler v. Embler • Entire pension classified as marital even though 8 years (1/3 of total in this case) accumulated before marriage because defendant failed to introduce evidence of the value of the pension on the date of marriage • Compare Gagnon, 149 NC App 194 (2002) and Atkinson v. Chandler, 130 NC App 561 (1998) – both holding coverture fraction is required even when value actually earned by pre-marital effort.

23. Domestic ViolenceEagle v. Johnson (COA Aug 2003) • Court’s dismissal of 50B claim in another county may bar subsequent 50B action based on same facts • Res judicata applies if defendant proves • Final judgment entered in earlier case • Identical causes of action in both cases • Identical parties (or parties in privity) in both case

24. ContemptMiddleton (COA July 2003) • Civil contempt appropriate where defendant “thwarted sale of marital residence” thereby violating the “spirit and intent” of ED order • Compare Scott v. Scott (COA May 2003) • No contempt for conduct not specifically prohibited by custody order

25. Civil Procedure • Chillari (COA Aug. 2003) • Objection to venue waived if not filed within 30 days of service of process • Scruggs v. Chavis (COA Sept. 2003) • When notice of hearing and final motion calendar conflict, motion calendar controls • “Fundamental principle: civil calendars set by court and not by lawyers”

26. Collaborative law • S.L. 2003-371 creates new GS 50-70 through 79: “Collaborative Law Proceeding” • Effective October 1, 2003 • Voluntary settlement procedure for all issues arising from divorce except absolute divorce

27. Collaborative Law • Parties and counsel agree in writing to make good faith attempt to resolve all issues without court intervention • If successful, parties entitled to judgment to effectuate terms of agreement • If unsuccessful, can continue or initiate court proceedings

28. Collaborative Law • If process is not successful: • Attorneys are prohibited from representing parties in future court proceedings, and • Attorney and expert work product and communications not admissible in litigation without agreement of parties

29. Collaborative Law • If case pending in court when agreement to collaborate is signed, notice must be filed with court • Upon filing of notice, “the court shall take no further action in the case, including dismissal” until notified that procedure is complete

30. Collaborative Law • A valid agreement to engage in the collaborative procedure tolls “all legal time periods applicable to legal rights and issues under law between the parties” while agreement remains in effect – including • Statutes of limitations • Filing deadlines • Discovery and scheduling orders