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Selvage v. Moire

Supreme Court of Hawaii

May 15, 2017

ANTHONY K. SELVAGE, Respondent/Plaintiff-Appellee,
LAURA MOIRE, Petitioner/Defendant-Appellant.


          Samuel P. King for petitioner

          Peter Van Name Esser and Brian J. De Lima for respondent



          RECKTENWALD, C.J.

         This case requires us to review the Family Court of the Third Circuit's (family court) division and distribution of marital property during the divorce action between Anthony Selvage (Selvage), a 71-year-old retired musician and trust fund beneficiary, and Laura Moire (Moire), a 56-year-old emergency room doctor.

         After prolonged and contentious divorce proceedings, the family court[1] awarded two parcels of real property and over $2.8 million in inheritance monies and other assets--virtually all of the spouses' property--to Selvage, who was also receiving court-ordered spousal support from Moire. The family court stated in its oral ruling that it found Selvage the more credible party, whereas Moire provided no credible evidence of either her assets or debts, and repeatedly ignored or disobeyed court orders. Furthermore, the court found that Moire was younger than Selvage, a doctor, and earned over $6, 000 a month; Selvage, on the other hand, was unemployed, about 15 years older, and living off of social security and his inheritance. Thus, the court found that Moire had significantly higher future earning potential than Selvage.

         On appeal, the Intermediate Court of Appeals (ICA) affirmed the family court's decision in a Summary Disposition Order (SDO), reasoning that the family court did not abuse its discretion in declining to deviate from the partnership model of property division. In a concurring and dissenting opinion, Judge Lisa Ginoza concluded that there were sufficient valid and relevant considerations[2] such that the family court should have exercised its discretion and deviated from the partnership model.

         We conclude that remand to the family court is necessary. The vast financial inequity left between the parties constitutes an equitable consideration that may have warranted a deviation from the partnership model of marital property division. The family court's written decision does not adequately indicate that it considered Moire's proposed equitable considerations justifying deviation, and it is unclear why the family court rejected Moire's request to deviate from the partnership model.

         I. Background

         A. Divorce Proceedings in Family Court

         The parties were married on December 22, 1985, and separated on December 22, 2006. Selvage filed a Complaint for Divorce on August 27, 2008. The complaint alleged that the marriage was "irretrievably broken, " that Selvage and Moire had two adult daughters together who were still dependent on them for support while attending college on the mainland, and that Selvage was entitled to alimony from Moire. Selvage stated that he was retired and living in Mountain View on Hawai'i island, and that Moire was a medical doctor living in Topanga, California.

         In his first asset and debt statement, Selvage indicated that he owned two properties: an apartment in Topanga, California, worth $600, 000 that he owned individually and rented out, and a house in Mountain View, Hawai'i, worth $390, 000 that he owned jointly with Moire. Selvage's financial assets totaled $263, 000.[3] Selvage further listed his art collection and his musical instruments, which he valued at about $10, 000 each. He also noted his status as a beneficiary of a Sternoff Trust worth $2-3 million.

         On August 29, 2008, Selvage filed a motion requesting a fluctuating amount to pay Moire's bills and $1, 600 per month in spousal support "to make ends meet without [him] drawing down on [his] inheritance as [he has] no retirement" or income beyond social security of $563 per month. He explained that he is "a minority beneficiary of a trust established by [his] parents, yet [has] had to loan [his] Wife's corporation approximately $55, 000 to pay for the financial shortfalls."

         In July 2009, Selvage filed updated Income and Expense and Asset and Debt Statements. He noted $11, 200 in cash and bank accounts, as well as $116, 500 in inheritance funds, and $12, 000 in securities held jointly with Moire.[4] He estimated that the value of both properties had fallen significantly. According to Selvage, the value of the Sternoff Trust had almost doubled, and he was debt-free, but he alleged without explanation that Moire owed $39, 500 to him personally and another $79, 000 to the Sternoff Trust.

         Moire shortly thereafter filed her own income, expense, asset, and debt statements with the family court. Moire stated that she only had a $1, 000 monthly income and $2, 835 in "regular monthly expenses." Moire's estimated real property values were significantly different from Selvage's: she estimated that the Topanga property was worth $1.2 million (where Selvage declared that it was worth $450, 000), and the Hawai'i island property was worth $500, 000 (where Selvage declared that it was worth $300, 000). Moire listed several outstanding debts, including credit card debts of $36, 181.

         At the following court hearing, Selvage's attorney submitted a request for spousal support, alleging that Moire was "not being forthright in her filings with the court" and was stringing the trial along "waiting for [Selvage] to die[.]" Moire's attorney responded that his understanding was "that Mr. Selvage is the beneficiary of a rather large trust and he can withdraw as he wishes." He also added that although Selvage correctly identified Moire's "gross numbers, " he failed to take into account the fact that the nature of her work as a traveling doctor required more expenditures like airline transportation, temporary housing, rental cars, and "more expensive food." He also added that Moire had lost her full-time job at Kahuku Hospital, and the lack of jobs available in Hilo put her in a "financial scramble."

         The court stated that "it is not clear to me that Dr. Moire has been all together straight forward [sic] with the Court." The court also found that Selvage's income, "although not nonexistent, [is] quite limited[, ]" and "Dr. Moire has a vastly more significant income of earning capacity. And again, the precise extent to which she is generating income is difficult to assess." The court then ordered Moire to pay temporary spousal support to Selvage in the amount of $1, 500 a month, with Selvage "entitled to a credit back to the date of the initial filing[, ]" totaling $22, 500.

         Several months later, Selvage filed motions asserting that Moire had not paid him any court-ordered spousal support and that he needed financial assistance from Moire to help fund their daughter's college tuition and living expenses. After a hearing on Selvage's motions, the court entered judgment in favor of Selvage and against Moire for $36, 000 in delinquent spousal support and ordered the parties to "equally share the expenses for [Daughter]'s college expenses.

         In his second updated income and expense statement, Selvage listed $29, 010 in personal bank accounts, $6, 587 in a Bank of Hawai'i account belonging to Daughter, and $336, 686 in a Wells Fargo Portfolio Management Account. He also listed $1, 566, 227 in the Sternoff Trust. Selvage stated that the value of the Topanga property had risen from $450, 000 to $490, 000, but the value of the Mountain View property had fallen even farther, from $300, 000 to $135, 000.

         Moire also filed an updated Income and Expense Statement, in which she listed her total monthly income as $3, 100 and her total monthly expenses as $10, 514 (including $7, 633 in monthly debt servicing payments). Moire's and Selvage's statements continued to differ drastically. She listed the Topanga property as valued at $800, 000, but listed no value for the Mountain View property, stating instead that the property had not been appraised. Her debts jointly held with Selvage included $5, 223.58 to the State of Hawai'i in taxes; $13, 472 for their daughter's Chase credit card; $47, 500 to "NAMASTE"; and $20, 000 in a 1999 tax lien to the State of California. Her individual debts included $34, 795 in credit card debt and $19, 000 to "E.M.H.P."

         Relevant to the issues at hand, Selvage testified to the following during the trial: that he wanted Moire to equally share Daughter's college expenses with him, that he had put about $112, 000 over time from his trust into Moire's corporation and had only received $17, 000 back, that he had recently received a "bulk figure" of $1, 540, 000 in inheritance, that he spent $135, 000 in arbitration and $225, 000 in attorneys' fees in litigation over his inheritance with his half-sister through "owner draws" on his trust account, that Moire came into the marriage with "around $90, 000" of student loan debt, and that Moire had removed Selvage's posters and two of his violins from the Topanga property.

         Moire testified that although she did not recall the exact amount of student loan debt, it had been much less than the $90, 000 Selvage had testified to, and that at least $30, 000 of the debt had been paid off as a personal gift to her.[5] Moire further testified that she had received $276, 000 in compensation for a hand injury, which she later invested in extensive construction on the Mountain View property. In addition, Moire testified that half of the Mountain View property was purchased "out of [her] earnings." She denied that she had removed the violins, and she claimed to have left the posters in a storage area. When asked why Moire had not included any documentation for her claimed credit card debt, she testified that she had, in fact, supplied her "several different attorneys" with the relevant documents. Finally, Moire testified that there was at least $200, 000 worth of personal and joint property within the Mountain View home, but that she had been unable to appraise any of it because of a restraining order against her.

         After the trial, Selvage filed a Proposed Findings of Fact (FOF), Conclusions of Law (COL), and Decision of the Court. On the same day, Moire filed her Written Closing Argument in place of a proposed decision. Moire argued that she should be awarded the Hawai'i property because it was bought during the marriage, and it would be equitable for both parties to have residences. She also argued that the court should deny Selvage's claim seeking Category 3 reimbursement for the money he spent on litigation over his trust inheritance. She argued that Selvage's interest in the trust vested when his mother passed away in 2004. According to Moire, "any appreciation of income from that point forward would be construed as category 4 property subject to division [ . ] "

         Moire also argued that deviation from Hawaii's standard partnership model of property division was warranted given the circumstances of this case and "the condition that each party will be left in at the conclusion of this case." Noting that "Hawai'i law requires the distribution to be equitable, and does not limit the Court to an equal division, " she added that "this was a very long marriage with substantial assets at stake. Wife worked and paid the bills, and when could not, paid them with her disability settlement. ... If Husband's requests are followed, it will result in Husband receiving all, or a disproportionate share of the marital estate."

         The court ruled against Moire on the majority of the issues. Specifically, the court stated that it found "[Selvage] to be more--[Selvage]'s testimony to be credible. And [found] that [Moire]'s just reference [sic] to the Income and Expense and Asset and Debt Statement is not to be [sic] sufficient for this Court to award her any type of credit regarding those accounts as well as debts." The court made no comment on Moire's request for deviation in her closing argument and did not explain how it arrived at its property divisions.

         In its FOFs relevant to this appeal, the court determined that Moire was a licensed physician with a monthly income of $6, 666, and Selvage was unemployed. The court repeatedly stated that it declined to assign debts or assets to Moire because it did not find her testimony credible and because the court had not received evidence of them. The court also found that Moire's failure to provide a password for a website to Selvage was "another example of how [Moire] fails to cooperate and ignores court Orders." Regarding Moire's student loans, the court found the value at $30, 000. The court further found that Selvage had been gifted $251, 940 from his parents, which had been used for "marital expenses as as [sic] well as to supplement and support [Moire]'s business when [Moire] failed to have sufficient funds in her professional corporation." The final relevant FOF was that Selvage had received inheritance in the amount of $2, 270, 199.90 and been gifted personal property valued at $52, 000 in October 2010, which "is [Selvage]'s category three claim."

         The only relevant COLs were the following:

B. Property Division Chart/Allocation of Assets/Debts/Equalization Payment:
All Category 1 and Category 3 assets and debts are allocated as noted in Property Division Chart attached hereto as Exhibit 1. It should be noted that for the purposes of this chart, the Court included assets/debts of [Moire] even though there was no evidence of such asset and debt other than the mere reference in [Moire]'s recent asset/debt statement.
C. Alimony/Spousal Support:

[Moire] has a judgment of $36, 000 for spousal support arrearage [previously entered on August 24, 2010], which is noted in FOF 21. [Moire] owes a present balance of $37, 400 to [Selvage] pursuant to FOF 26. Alimony is terminated as of the date of trial.

         The court then issued its Divorce Decree and distributed the relevant property as follows: Selvage was awarded the Topanga property "inasmuch as [he] owned this property prior to marriage[, ]" the Mountain View property, and all interest in the Sternoff Trust. The family court also awarded Selvage an equalization payment from Moire in the amount of $29, 219.76.

         Based on the family court's Property Division Chart, it appears that Moire's equalization payment was based on the court's calculation that Moire was responsible for a $34, 000 decrease in net value of the partnership during the marriage, based on $30, 000 in student loans and $4, 000 for Selvage's art collection posters and musical instruments that Moire removed from the Topanga property during the time leading up to the trial. The family court appears to have utilized a formula located at the bottom of the chart, which resulted in Moire receiving a total value of $37, 059.II.[6] When the alimony judgment against Moire for $37, 400 is factored in, she is essentially left no assets or cash and owes Selvage $340.89.

         B. Moire's Appeal and the ICA's Decision

         In her appeal to the ICA, Moire alleged three points of error by the family court:[7]

(1) The trial court erred in failing to deduct [Selvage's] costs of litigation from the award of ...

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