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Pepper Robinson v. Curtis Robinson
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MAINE SUPREME JUDICIAL COURT Reporter of Decisions
Decision: 2000 ME 101
Docket: Han-99-163
Argued: November 4, 1999
Decided: May 26, 2000
Panel:WATHEN, C.J., and CLIFFORD, RUDMAN, DANA, SAUFLEY, ALEXANDER, and
CALKINS, JJ.
PEPPER L. ROBINSON
v.
CURTIS S. ROBINSON
CLIFFORD, J.
[¶1] Pepper Robinson appeals from a divorce judgment entered in the
Superior Court (Hancock County, Mead, J.). Pepper contends, inter alia,
that the court erred (1) when it ordered a closely held corporation, Thistle
Productions, Inc., incorporated in Arizona and owned by the parties, but not
itself a party in the case, to pay spousal support to Curtis along with the
costs of the divorce; (2) when it ordered that Pepper pay any support that
Thistle Productions failed to pay; and (3) when it ordered that Curtis remain
a fifty percent shareholder of Thistle Productions as security for payment of
all sums due Curtis under the divorce judgment. Finding no error or abuse
of discretion, we affirm the judgment.
[¶2] Pepper and Curtis were married on February 4, 1984. During
the course of their marriage they had three children. After separating,
Curtis moved from Arizona to Maine, and filed a complaint for divorce here
on July 20, 1995.
[¶3] The major marital asset was stock ownership in Thistle
Productions, a closely held media production company organized under
Arizona law and generally operated in Arizona.{1} From 1989 to 1995, both
Pepper and Curtis were employed full time by the corporation. Each owns a
fifty percent interest in the corporation. The corporation had gross income
of only $5,000 in 1984, and grew rapidly, with $1,182,000 in gross receipts
in 1995.
[¶4] The trial court noted that the Robinsons had been using
corporate funds to pay their personal expenses, and then debiting these
expenses as salary against their respective accounts. In an interim order,
the court determined that Pepper should remain in control of the
corporation, and that the practice of using corporate funds should continue
pending the divorce. The court ordered that each party receive one-third of
the corporation's net receipts. The remaining one-third of net receipts was
ordered into an escrow account. Upon written agreement of both parties,
the court authorized funds from this account being used to pay expenses
related to the divorce and their children. The interim order also required
that the corporation continue to pay the Robinsons' respective personal
expenses, allocating such payments as salary.
[¶5] In its final order, the court found that Pepper, as the party in
control of Thistle Productions, had failed to comply with the interim order
and ordered her to pay Curtis $249,000 in arrearage. The final order
imposed no obligations on Thistle Productions.
[¶6] The court found that much of the corporation's value derived
from Pepper's creative talents and Curtis's managerial skill. Although the
corporation was successful, the court found that it lacked liquidity. Based on
income and salary figures, profit and loss statements, balance sheets, and
expert appraisals, the court valued the corporation at $500,000. Because
the effort of both parties was integral to the establishment and expansion of
the corporation, the court determined that the value of the corporation
should be divided equally. The court, therefore, ordered that Curtis be paid
for his $250,000 share of the corporation. Because a single lump sum
payment would "devastate" the corporation, the court ordered that Pepper
pay $75,000 to Curtis every year until he was fully paid in full. In the
interim, Curtis was to remain a fifty percent shareholder in the corporation.
[¶7] The court went on to provide for the division of other marital
property, and in addition, entered several orders relating to custody of and
visitation with the children, provisions that are not challenged in this appeal
filed by Pepper.
I. JURISDICTION OVER THISTLE PRODUCTIONS
[¶8] Pepper contends that the court erred when it ordered that
Thistle Productions make payments to Curtis because Thistle Productions
was a separate legal entity that was neither a named party before the trial
court nor otherwise a party over which that court could properly exercise
jurisdiction.
[¶9] Generally, courts are afforded a very broad discretion when
determining property division and alimony in divorce cases, and such
determinations are reviewed for an abuse of that discretion. See Arey v.
Arey, 651 A.2d 351, 353 (Me. 1994). "Absent a violation of some positive
rule of law, we will overturn the trial court's decision 'only if it results in a
plain and unmistakable injustice, so apparent that it is instantly visible
without argument.'" Williams v. Williams, 645 A.2d 1118, 1123 (Me. 1994)
(quoting Anderson v. Anderson, 591 A.2d 872, 874 (Me. 1991)).
[¶10] Pepper relies on our decision in Sweeney v. Sweeney, 534 A.2d
1290 (Me. 1987), to contend that because Thistle Productions is an Arizona
corporation with no connection to Maine, the court had no jurisdiction over
the corporation, and accordingly, had no authority to impose upon it an
obligation of support for which Pepper is responsible. In Sweeney, the trial
court had ruled upon the ownership of certain property pursuant to a
divorce. See id. at 1292. The property at issue was in the possession of the
wife's father, a Connecticut resident, who claimed ownership but was not a
party in the case. See id. The trial court found that the property was owned
by the couple's minor daughter, also not a party. On appeal, we concluded
that, because neither of the persons who claimed ownership were before the
court, such a determination was improper. See id. Pepper contends that
any distinct legal entity, such as Thistle Productions, must be a named party
within a court's jurisdiction before that court may make rulings concerning
the entity. We disagree.
[¶11] Here, stock in Thistle Productions was the main source of
marital wealth. The court had given Pepper exclusive control of the
corporation. All business decisions were made by her. As such, Pepper
alone is the real party-in-interest, and Thistle Productions was represented
in all but name before the court. The trial court acted on the reasonable
assumption that Thistle Productions and Pepper were essentially the same
party.{2} Moreover, in its final order, the court made no attempt to impose
any obligation on Thistle Productions.
II. VALUATION OF THISTLE PRODUCTIONS
[¶12] Pepper also contends that the trial court erred when it
concluded that the value of Thistle Productions was $500,000. We review
the trial court's determination of the value of marital property for clear
error. See Sewall v. Saritvanich, 1999 ME 46, ¶ 22, 726 A.2d 224, 229.
Pepper's expert valued the corporation at $184,000, while Curtis's expert
testified that the value of the corporation was $800,000. We have previously
held that "any estimate that is within the range of expert opinion is valid
provided the presiding justice reached his own conclusion through an
independent review of the evidence." Shirley v. Shirley, 482 A.2d 845, 849
(Me. 1984). Here, the trial court took several factors into account, including
income and salary figures, corporate balance sheets, profit and loss
statements, the loss of two recent accounts, offers to purchase the
corporation, and the two expert appraisals. Because the court determined
that value of the corporation after an independent review of the evidence,
and because that value is within the range of expert opinion, the court's
decision was not clearly erroneous.
III. DIVISION OF STOCK OWNERSHIP
[¶13] Pepper argues that the trial court erred when it ruled that both
Pepper and Curtis were to remain fifty percent owners of Thistle until Curtis
had been cashed out. We disagree. In divorce proceedings, the trial court
"shall divide the marital property in proportions the court considers just
after considering all relevant factors." 19p;A M.R.S.A. § 953(1)(1998).
"Issues arising out of a divorce action, such as property division, alimony,
custody and child support, are within the court's sound discretion, and the
judgment of the court on such matters is entitled to substantial deference."
Knight v. Knight, 680 A.2d 1035, 1037 (Me. 1996) (internal citations
omitted).
[¶14] We have recently indicated that when dividing marital property
the "court should endeavor to divide the marital property in such a manner
as to avoid continued financial interaction between the parties." Berry v.
Berry, 658 A.2d 1097, 1099 (Me. 1995). We have also dealt specifically with
the situation in which a close corporation, owned equally by a husband and
wife, was divided at the time of their divorce, and ruled that maintaining an
arrangement in which the parties were financially intertwined was to be
avoided. See Smith v. Smith, 1997 ME 29, ¶ 4, 690 A.2d 970, 972. It is
within the trial court's discretion, however, to order that a party give the
other a security interest in property. See Baker v. Baker, 444 A.2d 982, 986
(Me. 1982).
[¶15] Here, the court ordered that Curtis remain a fifty percent
owner of Thistle Productions until such time as he is paid for his interest in
the corporation. The order in effect provides Curtis with a security interest
while facilitating the stock purchase and avoiding the destruction of the
business. Pepper remains in control of the corporation, avoiding action that
could paralyze the operation of the business. The court has set clear limits
on the duration and scope of the arrangement. The majority of the
corporation's value is not liquid, it is unrealistic to order that Curtis be paid
for his share in the corporation in a single sum. Accordingly, in these
circumstances, the court acted within its discretion when it concluded that
Curtis remain a fifty percent shareholder until such time as Pepper fully
purchased his interest.
[¶16] The remaining contentions raised by Pepper are without merit.
The entry is:
Judgment affirmed.
Attorney for plaintiff:
C. Peter Bos, Esq., (orally)
Gray & Palmer
6 State Street, suite 407
Bangor, ME 04401-5104
Attorney for defendant:
Judy Potter, Esq., (orally)
356 Spurwink Avenue
Cape Elizabeth, ME 04107
FOOTNOTES******************************** {1} . The parties contest whether
Thistle Productions owns property or ever did business in Maine. Curtis
points to his exhibit 8; this exhibit, however, is a list of the property
owned by Pepper, Curtis, and Thistle Productions, and does not by itself
support the contention that any of the property ascribed to Thistle Productions
was located in Maine. {2} . There was no formal finding by the court that
Pepper is effectively the "alter ego" of Thistle Productions.
See 1 William Meade Fletcher, Fletcher Cyclopedia of the Law of Private
Corporations § 41.70, at 686 (Rev. ed. 1999).
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