“Questions Presented: Family Law. Interest on money judgment. KRS 360.040. Application of KRS 360.040, governing interest on a judgment in a domestic relations case.”

Husband owed wife $24,277.02 for a 1998 property equalization settlement. Wife attempted to garnish Husband’s funds ultimately getting a judgment lien on his property in 2008 after he failed to pay. In 2012, Husband filed a motion to prohibit the collection of interest on the Judgment which the family court granted. Wife appealed and the Court of Appeals held that “the granting of interest pursuant to KRS 360.040 is within the trial court’s discretion.” On remand, the family court again denied any interest. Wife appealed and the Court of Appeals affirmed. The Supreme Court granted discretionary review.

The Supreme Court first turns to Husband’s argument that the law of the case precluded review because Wife failed to appeal the first Court of Appeals case holding that because the “Court of Appeals’ holding was clearly erroneous, causing a manifest injustice, the law of the case doctrine does not preclude review” of the present case.

The Supreme Court holds that “The plain language of KRS 360.040 is clear. A judgment shall bear interest. The trial court has discretion in the amount of interest awarded in two situations: (1) when the judgment is for an unliquidated amount (and if equity favors a lower amount) and (2) if the interest is provided for in a written obligation.” The Supreme Court then considers whether or not Husband’s obligation was liquidated holding the award was clearly unliquidated until it was reduced to a judgment, as the claim is controlling the amount was unliquidated. Thus, “interest on liquidated and unliquidated claims is mandatory and liquidated claims must bear interest at the statutory rate. Trial courts do have some discretion, however, in setting the amount of interest on unliquidated claims.” The family court did not have discretion to deny interest, but did have discretion to balance the equities and set interest at something other than the statutory rate.

The Supreme Court goes on to address the equities in the matter at hand holding the family court’s findings “were unreasonable and an abuse of discretion as an award of the statutory interest rate was more than appropriate in this case.” The family court inappropriately considered the length of time between Wife’s attempts to collect the judgment, Husband’s attempts to settle child support, the property lien and Husband’s alleged belief he didn’t have to pay the settlement until child support was settled. Moreover, the family court ignored Husband’s failure to comply with Court order and the length of time Wife was deprived of use of her funds.

Justice Cunningham dissents arguing the trial court did not abuse its discretion.

Digested by Elizabeth M. Howell

The post Interest on money judgment – published family law opinion from Ky Supreme Court appeared first on Goldberg Simpson - Family Law Group.

Wife obtained a common law judgment for attorney fees against Husband and his company in divorce action. Subsequently, Husband formed a new company. Wife obtained an order of garnishment for the new company’s bank account. Husband filed a motion to quash, which was denied by the family court. The family court found that the new company was Husband’s “alter ego.” Husband appealed arguing the garnishment was void ab initio because it was ordered before Wife had any final judgment against the new company. The Court of Appeals affirmed the family court’s order holding that the family court acted properly under KRS 425.501 in finding the new company was “a judgment debtor in its capacity as an ‘alter ego’” of Husband.

Digested by Elizabeth M. Howell.

The post New company was “alter ego” of husband and subject to garnishment of divorce debt for wife’s attorney fees – Published Opinion from Ky Court of Appeals July 15, 2016 appeared first on Goldberg Simpson - Family Law Group.

Medical Vision Group, et al. v. Hon. Timothy Philpot, et al., –S.W.3d—(Ky. 2008)
2008-SC-000017-MR

The underlying action in this case is a dissolution proceeding. Dr. and Ms. Dudee divorced in 2006. The court found that two business entities, MVG and Schatzie, were marital property and included their value in the marital estate. The court awarded the businesses to the husband and ordered the husband to pay to the wife $3600 per month in child support, an equalizing property payment of $1,299,038, and $5600 per month in maintenance until the equalizing payment was paid or the youngest children began kindergarten, whichever occurred first.
The following year, the husband failed to pay any of the equalizing payment and stopped paying maintenance. At a contempt hearing, the husband asked the court to appoint a receiver to audit the businesses if it doubted his ability to pay. The court did not rule on the motion for receiver, but found that the husband had the ability to pay and held him in contempt. The court directed the husband to pay $15,000 per month toward the outstanding judgment, sentenced him to 90 days jail time, and permitted him to participate in work and timesharing release. The wife then asked the court to appoint a receiver to operate the businesses, because the husband refused to participate in the work release program or pay any monies owed. The husband ultimately agreed with the appointment of the receiver, and the court appointed one. The role and authority of the receiver changed over time due to motions by both parties. Ultimately, the Court ordered the receiver to pay from MVG’s accounts the following items in the following order of priority: 1) child support, 2) maintenance, 3) necessary and reasonable expenses of the business. Both businesses filed a writ of prohibition with the COA to prevent the court from further imposing any more control over the businesses based on the dissolution action. The COA found that the court had jurisdiction over the corporate assets because the businesses were alter-egos of the husband. Both businesses appealed.
The SC found the issue of the receiver moot, as the lower court had discharged the receiver due to a change in circumstances in the interim of the appeal. However, the SC answered the question of whether a trial court can exercise control over business entities to effectuate a dissolution decree. The Court held that both businesses could be joined under KRS 403.150(6) based on two facts: 1) the husband’s continued failure to abide by the court’s orders to pay the wife and 2) the businesses are owned by the parties (there are no innocent third party shareholders that would be harmed).
DISMISSED AS MOOT.
Digested by Sarah Jost Nielsen, Diana L. Skaggs + Associates

The post Medical Vision Group, et al. v. Hon. Timothy Philpot, et al., Appointment Of Receiver Post-Dissolution appeared first on Goldberg Simpson - Family Law Group.

Mickler v. Mickler, ___ S.W.3d___(Ky. App.2008)

Husband appealed an order denying his challenge to a garnishment served by his former Wife on several insurance providers who owed money to Husband’s medical practice. Husband argued that the accounts receivable were monies owed for professional services he performed. Therefore, he asserted the funds constituted wages meaning, pursuant to KRS 427.010(2)(a), 75% of those funds were exempt from garnishment.
CA opined that his argument was more appropriately based on KRS 427.005, which defines earnings. The CA held that accounts receivable that are owed due to personal services and labor of the debtor do constitute wages and are 75% exempt from garnishment. However, the CA further reasoned that the TC was correct in its holding that the funds due Husband were not only for his services but were also due for the services of his staff. Further, it was not the TC’s function, as Husband had asserted, to develop a formula for segregating the funds owed to Husband for his services from those owed due to the efforts of his staff. Instead, the burden of proof was on Husband to prove what portion of the accounts receivable were owed solely due to his personal services. Husband failed to meet this burden. Therefore, the TC correctly denied his motion challenging the garnishment.
Digested by Linda Dixon Bullock, Diana L. Skaggs + Associates

The post Mickler v. Mickler, Ky Collection Of Judgment From Medical Practice appeared first on Goldberg Simpson - Family Law Group.