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In re Marriage of Shinn, No. 4-99-0695

4th District, 15 May 2000

JUSTICE KNECHT delivered the opinion of the court:

In April 1999, after a lengthy hearing, the trial court issued a written judgment order in the dissolution of Nancy and RobertShinn's marriage. The trial court made final determinations with respect to child support, property and debt apportionment,maintenance, and attorney fees, ordering petitioner ex-wife to pay $1,500 monthly maintenance to respondent ex-husband,subject to review after 24 months, and respondent's reasonable attorney fees.

In August 1999, the trial court held a hearing on the issue of reasonable attorney fees. At the conclusion, the trial judgedenied respondent his reasonable attorney fees, finding respondent failed to present sufficient evidence to establish theamount of the fees. The trial court denied a motion to reopen the fee issue to allow respondent's counsel to reconstruct herfees.

Petitioner filed a timely notice of appeal with this court, arguing the trial court abused its discretion by ordering her to paymaintenance. Respondent cross-appealed, arguing the trial court abused its discretion in denying his reasonable attorneyfees and by not allowing counsel to reconstruct her billing records. For reasons set forth below, we affirm in part andreverse in part and remand with directions.

I. BACKGROUND

John and Nancy Shinn married in May 1982. The parties had two children during their marriage, born in October 1985 andin May 1988.

Petitioner's family owns Mettam Safety Supply, Inc. (Mettam Safety), a safety equipment distributorship. In June 1982,petitioner's parents hired respondent as a salesman for Mettam Safety. Respondent later became a field sales manager forthe company. In 1984, petitioner also took a position with Mettam Safety, starting as a telemarketing manager and laterascending into an upper management position. Eventually, petitioner became majority shareholder in Mettam Safety.

In the spring of 1997, petitioner filed for dissolution of marriage. The trial court granted the dissolution in September 1997and reserved the determination of ancillary issues.

In May 1998, after a contested hearing, the trial court awarded petitioner primary residential custody of the two childrenduring the school year, with respondent getting visitation one night a week and on alternating weekends. The trial courtawarded respondent primary residential custody during the children's summer break from school, with the petitioner gettingalternate weekends for visitation during that period. The court specified a schedule for holiday visitations. During July andAugust 1998, the court held five days of hearings on the financial issues. The court ordered respondent to pay $572 permonth in child support (i.e., $285.70 biweekly), with that responsibility abating during the summer months while thechildren were in respondent's custody. The court ordered petitioner to pay the cost of the children's lessons, activity fees,tuition, books, uniforms, lunches, and other special events related to their attendance at parochial school, even during thesummer months when the children were with respondent. In addition, the trial court ordered petitioner to pay for thechildren's health insurance and other incidental medical costs, since they would be covered under her policy at MettamSafety.

The parties had three major assets: (1) the marital home, valued between $233,000 and $255,000; (2) petitioner's 401(k)plan through Mettam Safety, valued at about $167,244; and (3) respondent's 401(k) plan through Mettam Safety, valued atabout $202,025. The court awarded the marital home to petitioner, as well as the responsibility of paying the balance of themortgage (estimated to be between $133,000 and $147,000). The court awarded each party his or her respective 401(k)plan.

In addition, the court awarded petitioner ownership of the parties' Tennessee walking horse and mixed breed pony, as wellas 205.5 shares of Mettam Safety stock that had been gifted to her by her family. The court divided the remainder of theparties' bank accounts, life insurance policies, and personal property. However, to achieve an equitable distribution of themarital estate, the court ordered petitioner to pay respondent $25,000. Neither party challenges the trial court's orderregarding custody and the division of assets.

Petitioner testified her 1997 salary from Mettam Safety was $58,143.82. Petitioner was the majority shareholder in MettamSafety (which the parties stipulated was worth between $2 and $3 million) and was entitled to her share of distributionstaken from the corporation's profits. In 1997, in addition to her annual salary, petitioner was entitled to $343,541 indistributions from Mettam Safety; petitioner's tax return reflected she actually received $180,000 in distributions. Petitionerstated she was required to pay taxes on her entire share of the distribution, whether or not she actually received the moneyin hand. According to petitioner, the $180,000 she actually received was not primarily spendable income but was used topay her tax liability for that year, which totaled $118,536. In 1996, the parties jointly paid $130,534 in taxes.

Rex H. Kallembach, a certified public accountant, also testified concerning petitioner's income from Mettam Safety. He toldthe court Mettam Safety was a "subchapter S corporation" (see 26 U.S.C.