Demont v. Demont
2011 Fla. App. LEXIS 10906, 67 So.3d 1096, 2011 WL 2698685 (2011)
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Rule of Law:
A payment received by a spouse after the dissolution of marriage, in exchange for a promise to forbear from future competition with a former employer, is not a marital asset subject to equitable distribution because it compensates for future conduct rather than for labor performed during the marriage.
Facts:
- Elizabeth McDonald Demont (Wife) and Michael E. Demont (Husband) were married in November 1989.
- During the marriage, the Husband worked as an attorney and later became the president of Suddath Van Lines (Suddath), earning a substantial income, while the Wife, by mutual agreement, was a homemaker and parent.
- The parties separated in the spring of 2008.
- In November 2008, Suddath eliminated the Husband's position due to an economic downturn and the high cost of his compensation.
- As part of his termination, the Husband entered into an agreement with Suddath that included payments for Stock Appreciation Rights (SARs) and severance based on his past employment.
- The agreement also provided for separate installment payments in exchange for the Husband's promise not to compete with Suddath or solicit its employees or customers post-termination.
- The final non-compete payment of $165,000 was scheduled to be paid to the Husband in March 2010, approximately eight months after the parties' marriage was dissolved in July 2009.
Procedural Posture:
- Michael E. Demont (Husband) filed a petition to dissolve his marriage to Elizabeth McDonald Demont (Wife) in a Florida circuit court (the trial court) in October 2007.
- After a trial, the court entered an amended final judgment of dissolution in July 2009.
- The trial court's judgment classified a future $165,000 payment to the Husband under a non-compete agreement as a marital asset subject to equitable distribution.
- The judgment also awarded the Wife bridge-the-gap alimony and nominal permanent alimony, and found that the Husband had not improperly dissipated marital assets.
- The Wife, as appellant, appealed the alimony award and the dissipation finding to the Florida First District Court of Appeal.
- The Husband, as cross-appellant, appealed the trial court's classification of the $165,000 non-compete payment as a marital asset.
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Issue:
Does a payment from a former employer, which is due to be received after the dissolution of a marriage and is given in exchange for a spouse's promise to forbear from future competition, constitute a marital asset subject to equitable distribution?
Opinions:
Majority - Lewis, J.
No, a payment from a former employer due after a marriage is dissolved, given in exchange for a promise of future forbearance from competition, does not constitute a marital asset. The court reasoned that marital assets are defined as those acquired during the marriage, typically as compensation for labor or services performed during the marriage. This non-compete payment was distinct from severance or retirement benefits, as it did not compensate the Husband for past labor. Instead, it was payment for his future conduct—specifically, his promise to refrain from competing with Suddath after the marriage had ended. The fact that the payment was not due until well after the final judgment of dissolution further supported the conclusion that it was for post-marital forbearance and, therefore, was the Husband's non-marital property.
Analysis:
This decision clarifies the distinction between marital assets earned through labor during a marriage and non-marital assets earned for post-dissolution conduct. It establishes that the classification of payments from a non-compete agreement depends on what the payment compensates for: past labor (marital) or future forbearance (non-marital). This precedent is significant for family law practitioners when dividing complex executive compensation packages, emphasizing that the purpose and timing of a payment are determinative of its character. The ruling prevents the non-earning spouse from claiming a share of income that is generated by the other spouse's conduct after the marriage has legally ended.
