Turner v. Turner
809 A.2d 18, 2002 Md. App. LEXIS 175, 147 Md. App. 350 (2002)
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Rule of Law:
An appellate court will vacate and remand a trial court's alimony award, monetary award, and related financial determinations in a divorce case if the trial court's calculations are based on erroneous factual findings, insufficient explanation of investment income potential, or an incorrect understanding of financial contributions. Furthermore, while the 'unclean hands' doctrine may bar equitable relief when a party seeking relief has engaged in related misconduct, its application must demonstrate a clear nexus, and piercing the corporate veil is an extraordinary remedy requiring proof of fraud or paramount equity.
Facts:
- E. Diane Turner and Donald Turner married in October 1966 and later had one child.
- Donald Turner developed a lighting business, which incorporated as Baltimore Stage Lighting, Inc. (BSL) in August 1976.
- Diane Turner was actively involved in BSL from its inception, working full-time in management and finance, but Donald Turner held 65 shares to her 10 and received a significantly higher salary.
- From 1976 until 1994, both Turners jointly diverted unrecorded "NC" funds from BSL for personal use and to pay employees, a practice they agreed to stop in 1994 after a threat of exposure to the IRS.
- In 1995, Donald Turner resumed the "NC" practice without Diane Turner's knowledge or consent, ultimately diverting approximately $112,000 from BSL by March 1999.
- In January 1997, Diane Turner discovered Donald Turner's cocaine use, relationship with another woman, and that he was removing cash from BSL.
- The couple separated in June 1997, at which point Donald Turner withdrew $48,000 from a joint bank account, leaving an equal amount for Diane Turner.
- Diane Turner subsequently wrote a check to herself for $30,000 from BSL, stating it was to prevent Donald Turner from using company money for drugs.
Procedural Posture:
- July 15, 1997: E. Diane Turner (appellant) filed a divorce case (initially alleging desertion, later amended to adultery) and a corporate suit against Donald Turner (appellee) and Baltimore Stage Lighting, Inc. (BSL) in the Circuit Court for Baltimore County, which were later amended.
- November 1999: The Circuit Court for Baltimore County held a trial for the divorce case.
- December 16, 1999: The Circuit Court issued an Order addressing temporary alimony and attorney's fees, reducing Donald Turner's alimony obligation and ordering a contribution to Diane Turner's attorney's fees.
- March 2000: The Circuit Court held a trial for the corporate case.
- April 17, 2000: The Circuit Court issued a Memorandum Opinion (the “Corporate Opinion”) addressing the corporate claims.
- June 5, 2000: The Circuit Court issued an Order consolidating the divorce and corporate cases for all purposes.
- June 9, 2000: The Circuit Court issued a Memorandum Opinion (the “Divorce Opinion”) regarding the divorce case.
- July 19, 2000: A Judgment of Absolute Divorce was docketed, granting Diane Turner a divorce, valuing marital property at $1,555,821.85, making a monetary award of $495,038 to Diane Turner, and awarding indefinite monthly alimony.
- July 25, 2000: Diane Turner filed a post-trial motion to alter or amend judgment.
- July 31, 2000: Donald Turner filed a motion to alter or amend and a response to Diane Turner's motion.
- September 20, 2000: The Circuit Court denied both motions to alter or amend, except for a minor correction to the monetary award, increasing it to $500,588.
- September 26, 2000: The Circuit Court entered judgment against Donald Turner for $80,000 for non-payment of the first portion of the monetary award.
- September and November 2000, and January 2001: Diane Turner filed contempt petitions against Donald Turner for non-payment of the monetary award and alimony.
- February 9, 2001: A judgment was entered against Donald Turner for the balance of the monetary award ($350,588).
- October 13, 2000: Diane Turner noted this appeal to the Court of Special Appeals of Maryland.
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Issue:
Did the trial court err or abuse its discretion in determining the amount of indefinite alimony, the monetary award, credits for contribution, the extent of marital dissipation, and attorney's fees, and in applying equitable doctrines to corporate claims in a consolidated divorce and business dispute?
Opinions:
Majority - Hollander, Judge
Yes, the trial court erred or abused its discretion in several key financial determinations (alimony, monetary award, contribution, dissipation, and attorney's fees) and erred on one corporate claim (wrongful discharge), warranting remand, but did not err in applying the "unclean hands" doctrine to most corporate claims or in refusing to pierce the corporate veil, and was justified in limiting inspection rights. First, the appellate court denied the appellees' motion to dismiss the appeal based on the acquiescence doctrine. It clarified that accepting judgment benefits does not bar an appeal when the benefits (like the monetary award here) are necessary for support, the opposing party does not cross-appeal the benefit, and the appellant seeks only to increase an undisputed minimum. Since Ms. Turner was unemployed, needed the funds for support, and sought an increase in alimony without a cross-appeal from Mr. Turner, the doctrine did not apply. Furthermore, the partial payment of the monetary award did not equate to acceptance of the entire judgment. Regarding financial awards, the court found the trial court abused its discretion in its alimony award. It held that the trial court's finding of Mr. Turner's annual income ($175,000-$200,000) was not supported by evidence, as his 1999 W-2 showed $263,763, and his income potential had increased after the divorce. The trial court also failed to specify the anticipated investment income stream from Ms. Turner's monetary award, which was a crucial factor in reducing her alimony. The court affirmed the trial court's imputation of $35,000 annual income to Ms. Turner, finding her employable. However, it vacated the alimony award and remanded for reconsideration of Ms. Turner's actual and projected expenses and the disparity in the parties' economic positions. The court also vacated and remanded the denial of "Crawford credits" for Ms. Turner's payment of mortgage and taxes, finding the trial court's reasoning unclear and potentially based on an erroneous understanding of how mortgage payments were covered by alimony. The dissipation claim was remanded for reconsideration, as Mr. Turner's invocation of the Fifth Amendment regarding the use of a portion of a joint account withdrawal, coupled with other evidence (drug use, relationships, ample income), could support an adverse inference. Similarly, the attorney's fees award was vacated and remanded because the trial court's calculation was based on an erroneous assumption that Mr. Turner separately paid the mortgage in addition to alimony, reducing Ms. Turner's available funds. For corporate claims, the court affirmed the denial of an accounting, constructive trust, and piercing the corporate veil based on the "unclean hands" doctrine. It found Ms. Turner's prior complicity in the "NC" scheme, even if it ended before Mr. Turner resumed it, provided a sufficient nexus for the doctrine to apply. The court found no fraud or paramount equity to warrant piercing the corporate veil, noting BSL was a solvent, viable corporation that Ms. Turner had consistently treated as a separate entity. However, the wrongful discharge claim against BSL was vacated and remanded, as the motions court had only dismissed it against Mr. Turner, leaving the claim open against the company itself. Finally, the court affirmed the limitation on Ms. Turner's inspection rights, deeming it a reasonable exercise of discretion given her disruptive behavior.
Analysis:
This case significantly clarifies the appellate review standards for divorce financial awards, emphasizing that trial courts must provide thorough, factually supported reasoning, particularly when imputing income or relying on speculative investment returns to justify alimony reductions. It serves as a strong reminder that the factors for alimony, monetary awards, and attorney's fees are interrelated and must be re-evaluated holistically upon remand of any one. Furthermore, the decision on corporate claims reinforces the stringent requirements for applying equitable doctrines like 'unclean hands' and 'piercing the corporate veil,' highlighting the need for a direct nexus between the misconduct and the relief sought, or clear evidence of fraud or profound inequity. The remand of the wrongful discharge claim, citing Wholey, signals an increasing judicial willingness to protect employees reporting illegal activities, even in closely held family businesses.
