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Inns of Court Presentation – 01.08.2018 “LUST” CREATIVE REMEDIES IN CASES OF DISSIPATION OF MARITAL ASSETS Andrew Nickolaou Can the Court Force the Dissipating Party to Sell or Encumber an Asset? Roth v. Roth, 973 So.2d 580 (Fla. 2d DCA, 2008) The Court found dissipation and ordered the Husband to make monthly equalization payments, and a mortgage was placed on Husbands non‐marital home to secure the payments. What about non‐parties? Barabas v. Barabas, 923 So.2d 588 (Fla. 5th DCA, 2006) Trial court lacked jurisdiction in marital dissolution proceeding to adjudicate property rights of husband’s mother, who was a non‐party, when deciding whether parcel of real property was marital property and thus subject to equitable distribution; deed indicated that mother quitclaimed property to husband and herself as joint tenants with right of survivorship. Crossin v. Crossin, 979 So.2d 298 (Fla. 4th DCA, 2008) Barabas does not apply to this case because the final judgment did not adjudicate the property rights of a non‐party, but contemplated that a further action would be necessary to do so. The final judgment found that a part of the property at issue was a marital asset. The judge found that the “husband transferred the marital interest in this property to his mother in an effort to diminish the value of the marital estate.” As between the husband and the wife, the court ruled that the wife was entitled to an ownership interest in the property. The court recognized that the wife would have to file a separate action against her mother‐in‐law to force her to transfer title, when it wrote: “Wife shall be entitled to file any appropriate action necessary to effectuate the transfer of this property to her as it is intended in this Final Judgment.”
SLIDE 2 Can the Court impose a lien on the asset or property? Ray v. Ray, 624 So.2d 1146 (Fla. 1st DCA, 1993) Trial court does not have jurisdiction in action to dissolve marriage to adjudicate property rights
Court reversed an equitable lien which the trial court imposed on certain non‐marital property the former husband owns with his brother and mother for the purpose of securing the $70,000
- debt. The rule is clear that the trial court does not have jurisdiction to adjudicate property
rights of non‐parties. Juliano v. Juliano, 991 So.2d 394 (Fla. 4th DCA, 2008) Trial court that ordered the sale of marital residence in dissolution of marriage action could not award trust established by husband $400,000 out of the sale proceeds to satisfy a promissory note executed in connection with the purchase of the residence but, rather, was required to allocate the underlying liability to one or both spouses; trust was not a party to the dissolution action, and its rights could not be adjudicated. A trial court cannot, in a dissolution proceeding, “adjudicate property rights of a non‐party.” Barabas v. Barabas, 923 So.2d 588, 590 (Fla. 5th DCA 2006); see, e.g., Labato v. Labato, 433 So.2d 620, 621 (Fla. 4th DCA 1983) (trial court erred in placing lien on marital home in dissolution action in favor of former wife’s parents to satisfy a loan they had given the couple to improve their home). In this case, as in Labato, the trial court erred in awarding the Trust, an unnamed party, $400,000 from the sale of the Ocean Drive home instead of allocating the debt to one of the parties. Hua v. Tsung, 222 So.3d 584 (Fla. 4th DCA, 2017) Whether a trial court has jurisdiction in a marital dissolution action to adjudicate the rights of a third‐party creditor. Sanchez v. Fernandez, 915 So.2d 192, 192 (Fla. 4th DCA 2005). The trial court awarded Wife the choice of living in the rental property or receiving the gross rental income until the home is sold, either voluntarily or because of one of the triggering conditions already described. The dissolution judgment discussed the equitable distribution of the proceeds from the sale of the rental property, noting that “[u]pon sale of the rental home ... the net sale proceeds shall be divided 50% to the Petitioner [Husband] and 50% to the Respondent [Wife], after satisfying the $260,000 U.S. loan owed to Tsung [Husband’s father].” The trial court also ordered that “[t]he $260,000.00 Tsung debt shall be satisfied at the time that this property is sold.”
SLIDE 3 The trial court erred as a matter of law in directing the parties to repay Husband’s father upon sale of the rental property. “In [a] dissolution action, the trial court does not have jurisdiction to adjudicate property rights of nonparties.” Noormohamed v. Noormohamed, 179 So.3d 379, 380 (Fla. 5th DCA 2015) (alteration in original) (quoting Minsky v. Minsky, 779 So.2d 375, 377 (Fla. 2d DCA 2000)). Although a trial court in a dissolution judgment certainly can identify marital assets and liabilities, and allocate them to the parties pursuant to section 61.075(3), Florida Statutes (2014), it cannot adjudicate a debt. Here, by awarding part of the proceeds of the sale of the rental property to the father, the court essentially placed an equitable lien on the property to allow the father to secure repayment of the loan. The court thus converted him from an unsecured creditor into a secured one. On remand, the father can only pursue the debt, if he so chooses, by instituting a separate action. See Labato v. Labato, 433 So.2d 620, 621 (Fla. 4th DCA 1983) (holding the trial court impermissibly imposed an equitable lien on the property by adjudicating the rights of non‐parties, but reversing without prejudice to allow the non‐parties to institute a separate action). Noormohamed v. Noormohamed, 179 So.3d 379 (Fla. 5th DCA, 2015) In dissolution action, the trial court did not have jurisdiction to order ex‐wife to return jewelry, allegedly owned by her former mother‐in‐law, to the former mother‐in‐law, who was not a party to the dissolution proceeding, or to pay her ex‐husband $50,000 as compensation for the jewelry; trial court actually adjudicated the debt by ordering the return of property to a non‐ party (the same relief that the non‐party mother‐in‐law could have secured in a replevin action), and because the mother‐in‐law was not a party to the action, ex‐wife could comply with the
- rder by giving her ex‐husband $50,000 and still be subject to suit by the mother‐in‐law, who
could argue that she was not a party to the action and could not be bound by the $50,000 valuation, or that no payment between parties to a dissolution action could extinguish ex‐wife’s liability to her. So the Court can force sale, they can encumber an asset, they can impose equitable liens….but ONLY on a party to the divorce action. Can the Court ever bring in a non‐party to the case? YES! Join them in as an indispensable party! Martinez v. Martinez, 219 So.3d 259 (Fla. 5th DCA, 2017) The Fifth District found in Martinez It was proper for Wife to join her step son as a party to the divorce proceedings, when Husband allegedly commingled marital assets with his son, in the guise of loans. Wife argued that Husband and his son planned to diminish Husbands net worth so that Wife would be denied an interest in Husband’s companies in which she had a right to an equitable share. The Fifth District addressed the stepsons Motion To Dismiss For Failure To
SLIDE 4 State a Cause of Action, and reasoned that the matter should not be dismissed because where
- ne spouse has allegedly acted in concert with a third person to dissipate the marital assets,
"[t]here is no need to specify or enumerate a separate cause of action against the third party; instead, the action against the third party is incidental to the divorce). Furthermore, because section 61.075(1)(j) gives the trial court the discretion to claw back marital assets that may have been remotely dissipated by Husband more than two years before Susan's dissolution of marriage petition was filed, it would then be anomalous to preclude the court from making a full and complete adjudication of the spouses' marital property rights to those dissipated assets by dismissing the step son from the litigation based on his statute of limitations defense”. Therefore, 61.075(1)(j) gives the trial court the power to exercise jurisdiction over third parties who have acted in cohorts with a spouse to intentionally diminish or dissipate marital assets. Under principles of equity, a trial court may determine whether a third person has acted with a spouse to deprive the other spouse of his or her share in the marital estate; however, for the court to make a complete determination of the case before it, that person must be joined as a party to the action where the person is claiming an interest in the marital assets because in a dissolution action, the trial court does not have jurisdiction to adjudicate the rights of
- nonparties. Fla. Stat. Ann. § 61.011
The third party must have acted with the wrongdoing spouse to intentionally dissipate the marital asset and must have an ownership interest in the asset or business. Ehman v. Ehman, 156 So.3d 7 (Fla. 2d DCA, 2014) The final judgment awarded the Wife three properties that belonged to Tierra Technologies, LLC: a condominium located in Ogden, Utah; a home in Palmetto, Florida; and a mobile home which appears to be located in Bradenton, Florida. This was improper because Tierra Technologies has never been a party in the dissolution proceedings. A similar situation arose concerning the award of a Mercedes automobile in a marital distribution scheme in Keller v. Keller, 521 So.2d 273 (Fla. 5th DCA 1988). In reviewing this award the Fifth District said: The problem with the award of the Mercedes is that it was owned by a corporation in which the appellant owned 87% of the stock, not by the appellant himself. This corporation was not joined as a party and, thus, the trial court had no power to transfer this corporate asset.
- Id. at 276 (citing Feldman v. Feldman, 390 So.2d 1231 (Fla. 3d DCA 1980)).
Here, Tierra Technologies was never brought in as a party to this dissolution proceeding, and the trial court did not have the power or authority to transfer the property of a corporation without the joinder of that entity. See Mathes v. Mathes, 91 So.3d 207, 208 (Fla. 2d DCA 2012); see also
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Minsky v. Minsky, 779 So.2d 375, 377 (Fla. 2d DCA 2000) (“In this dissolution action, the trial court does not have jurisdiction to adjudicate property rights of nonparties.”); cf. Austin v. Austin, 120 So.3d 669, 674 (Fla. 1st DCA 2013) (“[A] trial court has the power to value and distribute corporate stock determined to be a marital asset.” (citing Mathes, 91 So.3d at 208)). Consequently, because the trial court did not have jurisdiction over Tierra Technologies, it was error to award property owned by Tierra Technologies to the Wife as part of the equitable distribution of marital assets. Buchanan v. Buchanan, 225 So.3d 1002 (Fla. 1st DCA, 2017) While the trial court has the authority to distribute a spouse’s interest in company stock of a non‐joined company in a dissolution of marriage action, it does not have the authority to distribute assets of the non‐joined company itself. Trial court had no authority to distribute assets of non‐joined limited liability company (LLC), in which husband was a partner, to wife as salary in dissolution of marriage proceeding, where wife did not work for the company. So if you do not want to address in a separate action, bring the non‐party into the divorce case as long as they are an indispendable party to the action? BONUS What if the issue is a property or residence titled solely in a non‐party name that used dissipated funds? Can you force the sale or other relief as discussed above? YES. How? Join the non‐party into the action as an indispensable party and file a count for partition under Chapter 64 so there is standing to seek the sale of the property.
