The Lawletter Vol 37 No 3

Fred Shackelford, Senior Attorney, National Legal Research Group

Proving that the common law continues to evolve, the Virginia Supreme Court has recognized a new cause of action for tortious interference with parental rights.  In Wyatt v. McDermott, ___ Va. ___, 725 S.E.2d 555 (2012), an unmarried woman allegedly conspired with attorneys, an adoption agency, and a Utah couple to place her newborn child up for adoption without the knowledge or consent of the child's father.  The father sued the couple, the attorneys, and the agency for tortiously interfering with his parental rights, and the Wyatt court was called upon to decide whether this tort exists in Virginia.  Noting that no statute provided the answer, the court recognized that the parent-child relationship is a constitutionally protected and valuable right.

The court observed that under English common law, a cause of action existed to provide a father with recourse for abduction of a son or heir who was rendering services.  The court also noted that the overwhelming majority of courts in other states have allowed a cause of action for tortious interference with the parent-child relationship.  Although the General Assembly has abolished the cause of action for alienation of affections, Va. Code Ann. § 8.01-220, the Wyatt court distinguished the two torts:

"Tortious interference with parental or custodial relationship" intimates that the complaining parent has been deprived of his/her parental or custodial rights; in other words, but for the tortious interference, the complaining parent would be able to exercise some measure of control over his/her child's care, rearing, safety, well‑being, etc.  By contrast, "alienation of affections" connotes only that the parent is not able to enjoy the company of his/her child; this cause of action does not suggest that the offending party has removed parental or custodial authority from the complaining parent.

___ Va. at ___, 725 S.E.2d at 562 (internal quotation marks omitted).

The court concluded that a cause of action for tortious interference with parental rights is consistent with existing common law, and set forth its elements as follows:

(1) the complaining parent has a right to establish or maintain a parental or custodial relationship with his/her minor child; (2) a party outside of the relationship between the complaining parent and his/her child intentionally interfered with the complaining parent's parental or custodial relationship with his/her child by removing or detaining the child from returning to the complaining parent, without that parent's consent, or by otherwise preventing the complaining parent from exercising his/her parental or custodial rights; (3) the outside party's intentional interference caused harm to the complaining parent's parental or custodial relationship with his/her child; and (4) damages resulted from such interference.

Id. (internal quotation marks omitted).

The Lawletter Vol 37 No 3

Sandra Thomas, Senior Attorney, National Legal Research Group

Courts in several states have interpreted their child support guidelines to allow an order that directs the custodial parent to pay support to the noncustodial parent under appropriate circumstances.  Among these is the Supreme Court of Indiana.  In Grant v. Hager, 868 N.E.2d 801 (Ind. 2007), that court, with two of the five justices dissenting, held that "there is a rebuttable presumption that a custodial parent is not required to make child support payments under these circumstances but that a trial court has authority to deviate from that presumption in accordance with the Indiana Child Support Rules and Guidelines."  Id. at 802.

In Grant, the marriage of the parties was dissolved in 2003.  The parents were granted joint legal custody of their two children, with the mother receiving primary physical custody, and, in accordance with the Indiana guidelines, the father was ordered to pay $108 in child support.  Two years later, the father filed a petition to modify his support obligation.  The father submitted a worksheet showing the mother's annual income of approximately $106,000 and the father's annual income of approximately $56,000; the mother earned 65.4% of the total combined income, and the father earned 34.6%.

The Indiana guidelines directed a total weekly child support obligation for both parents of $517.  Calculating the support obligation of each parent in accordance with that parent's percentage of total income, the mother was responsible for $338, and the father for $179.

Under the guidelines, the father was entitled to a Parenting Time Credit in the amount of $216 based on the number of overnights the children spent with him during the year, and he was entitled to a credit of $55 for health insurance premiums paid by him.  The total of the father's credits, $271, exceeded his $179 share of the weekly support by $92.

The trial court recognized that the mother was the primary custodial parent but concluded that the guidelines produced a "negative credit" that required modification of the existing support order.  The trial court ordered the mother, the custodial parent, to pay child support to the father, the noncustodial parent, in the amount of $92 per week.

The mother appealed, arguing that "the Guidelines cannot result in a custodial parent paying support to the non-custodial parent."  Id. at 802-03.  The court of appeals agreed with the mother and reversed the child support award to the father.  The Indiana Supreme Court granted review.

The supreme court agreed with the court of appeals that the guidelines did not authorize the payment of child support from a custodial to a noncustodial parent.

Rule 2 of the guidelines states a rebuttable presumption that the amount of the award that would result from application of the guidelines is the correct amount.  Applying this presumption to the case before it, the court found that there was a rebuttable presumption that neither party owed support to the other.  However, Rule 3 of the guidelines provides that if the court concludes that the amount of the award reached through application of the guidelines "would be unjust," the court "shall enter a written finding articulating the factual circumstances supporting that conclusion."  Id. at 803.

The court concluded:

The Lawletter Vol 37 No 2

Sandra Thomas, Senior Attorney, National Legal Research Group

One of the frequently overlooked sections of the Uniform Interstate Family Support Act ("UIFSA") provides that an award of spousal support can be modified only in the court in which the original order was entered.

The purpose of UIFSA is to provide a means for interstate enforcement of support orders and to address the problem of conflicting support orders by placing continuing exclusive jurisdiction to modify a child support order in the court that has issued the original order so long as the payor, the payee, or the child is still a resident of the original state, or if all parties have consented to the exercise of continuing jurisdiction.  The detailed provisions of the Act govern the enforcement and modification of child support provisions in cases in which all parties have left the original jurisdiction.  The provisions of the Act can be found at Uniform Interstate Family Support Act 2008 §§ 101-905.

Under 42 U.S.C. § 666, which took effect in 1996, States were required to adopt UIFSA by January 1, 1998 or face loss of federal funding for child support enforcement. Every U.S. State has adopted either the 1996 or a later version of UIFSA, though with some variations.

One of the provisions that is contained in the Act, but has not been universally adopted by the States, is § 211, titled "Continuing, Exclusive Jurisdiction to Modify Spousal-Support Order."  That section provides:

(a)        A tribunal of this state issuing a spousal-support order consistent with the law of this state has continuing, exclusive jurisdiction to modify the spousal-support order throughout the existence of the support obligation.

(b)        A tribunal of this state may not modify a spousal-support order issued by a tribunal of another state or a foreign country having continuing, exclusive jurisdiction over that order under the law of that state or foreign country.

(c)        A tribunal of this state that has continuing, exclusive jurisdiction over a spousal-support order may serve as:

(1)        an initiating tribunal to request a tribunal of another state to enforce the spousal-support order issued in this state; or

(2)        a responding tribunal to enforce or modify its own spousal-support order.

Unif. Interstate Family Support Act 2008 § 211 (emphasis added).

Unlike the child support provisions, which provide a means for transferring jurisdiction if all parties have left the State that issued the original order, § 211 states that continuing exclusive jurisdiction to modify spousal support exists only in the court that issued the original order.

A recent case that demonstrates the impact of this provision is Sootin v. Sootin, 41 So. 3d 993 (Fla. Dist. Ct. App. 2010).  In Sootin, the parties were divorced in Florida in 1998, and the Florida court ordered the husband to pay permanent alimony.  The wife subsequently moved to Tennessee.  The husband later also moved to Tennessee.  He then filed a petition in a Tennessee court to register and modify the Florida judgment.

The Lawletter Vol 36 No 12

Brett Turner, Senior Attorney, National Legal Research Group

Can a property division order be reopened for mistake when a marital asset turns out to be worth much less than the parties and the court believed at the time of divorce?

This issue recently came before the highest court of New York in a case which received significant media attention.  In Simkin v. Blank, the parties signed a separation agreement in which they divided their marital property.  Each spouse generally received ownership of property titled in his or her name.  Because more marital property was titled in the husband's name, he agreed to pay to the wife just over $6 million to equalize the division.  The separation agreement was incorporated into a divorce decree.

Unfortunately for the husband, one of the assets titled in his name alone was a $5.4 million investment account.  The account was with Bernard L. Madoff Investment Securities.  After the divorce, Madoff's entire operation was revealed as an enormous Ponzi scheme, Madoff was imprisoned for fraud, and the account became worthless.

Two years after the divorce, the husband filed a motion to reopen the decree and reform the agreement, arguing that $2.7 million of the payment he made to the wife represented her share of the Madoff account, which was actually worth zero at the time of divorce but was valued at $5.4 million due to mutual mistake.  The trial court dismissed the husband's motion.  The New York Appellate Division reversed, holding that the husband had pleaded a valid claim of mutual mistake.  Simkin v. Blank, 915 N.Y.S.2d 47 (App. Div. 2011).

On further appeal, the New York Court of Appeals reinstated the trial court's judgment dismissing the complaint.  The court relied first on the fact that the separation agreement did not even mention the Madoff account:

[H]usband's claim that the alleged mutual mistake undermined the foundation of the settlement agreement, a precondition to relief under our precedents, is belied by the terms of the agreement itself.  Unlike the settlement agreement in True that expressly incorporated a "50-50" division of a stated number of stock shares, the settlement agreement here, on its face, does not mention the Madoff account, much less evince an intent to divide the account in equal or other proportionate shares (see Centro, 17 N.Y.3d at 277, 929 N.Y.S.2d 3, 952 N.E.2d 995 [explaining that "courts should be extremely reluctant to interpret an agreement as impliedly stating something which the parties have neglected to specifically include" (internal quotation marks and citation omitted)]).  To the contrary, the agreement provides that the $6,250,000 payment to wife was "in satisfaction of [her] support and marital property rights," along with her release of various claims and inheritance rights.  Despite the fact that the agreement permitted husband to retain title to his "bank, brokerage and similar financial accounts" and enumerated two such accounts, his alleged $5.4 million Madoff investment account is neither identified nor valued.  Given the extensive and carefully negotiated nature of the settlement agreement, we do not believe that this presents one of those "exceptional situations" (Da Silva, 53 N.Y.2d at 552, 444 N.Y.S.2d 50, 428 N.E.2d 382 [internal quotation marks and citation omitted]) warranting reformation or rescission of a divorce settlement after all marital assets have been distributed.

The Lawletter Vol 36 No 11

Fred Shackelford, Senior Attorney, National Legal Research Group

What is the potential liability of a testing laboratory that incorrectly analyzes a DNA sample?  This was the issue before the Oklahoma Supreme Court in Berman v. Laboratory Corp. of America, 2011 OK 106, 268 P.3d 68.  In the Berman case, the plaintiff sought assistance from the Department of Human Services ("DHS") to determine the paternity of her child and to collect child support.  The agency arranged for the defendant laboratory (LabCorp) to conduct a DNA test. LabCorp tested the sample twice and both times incorrectly reported that a particular individual, Herbert White Jr., was not the child's father.

However, after a different laboratory performed a DNA test and found that White was in fact the father, the plaintiff sued LabCorp for having negligently tested the DNA sample.  She sought damages for the loss of past and future child support payments that White would have been required to pay if the paternity test results had been correctly reported.  After the court disposed of an immunity defense, it addressed an issue of first impression in Oklahoma: "[D]oes LabCorp owe Berman, as the parent seeking to prove the paternity of her child, a duty of care to conduct accurate DNA testing which was ordered by DHS for child support purposes?"  Id. ¶ 16.

The Lawletter Vol 36 No 10

Sandra Thomas, Senior Attorney, National Legal Research Group

The Supreme Court of Pennsylvania has very recently addressed the issue of paternity by estoppel, examining the issue in the context of a complaint for child support.  K.E.M. v. P.C.S., No. 67 MAP 2011, 2012 WL 573635 (Pa. Feb. 21, 2012).  The mother of the minor child in that case filed a complaint seeking child support from the man she believed to be the biological father, P.C.S.  He responded with a motion to dismiss, relying on the mother's intact marriage to her husband to establish a presumption of the husband's paternity, and further relying on the husband's assumptions of parental responsibilities as implicating paternity by estoppel.

At a hearing on the motion, the mother testified that she had told her husband of her affair with P.C.S. and that the husband did not wish to be identified as the father on the birth certificate.  Genetic testing excluded the husband as the biological father of the child.  The mother testified that after she had received those results, she had asked P.C.S. to submit to testing.  He refused, although he acknowledged the child as his.  The mother testified that during the four years of the child's life, P.C.S. had undertaken some degree of involvement in the child's life, giving the mother money to buy Christmas presents, providing unsigned cards and gifts of his own, visiting parks and playgrounds, and providing the mother with a cell phone to assure her and the child's safety.  The mother testified that the child referred to both the husband and P.C.S. as "Daddy."  Id. at *1.

By the time of trial, P.C.S. had ended the relationship with the mother; at about the same time, the husband separated from the mother.  The trial court granted P.C.S.'s motion to dismiss the support action, finding that the presumption of paternity was controlling and, in the alternative, that the husband should be regarded as the child's father under the doctrine of paternity by estoppel.  The intermediate appellate court affirmed, differing with the trial court on the issue of whether the presumption of paternity should apply in a case in which the marriage was not being protected because the husband knew that the child was not his, but agreeing that paternity by estoppel applied, based on the husband's actions of holding the child out as his own and providing support.   The Pennsylvania Supreme Court allowed an appeal to consider application of the doctrine of paternity by estoppel to the case.

The mother argued that the child already knew P.C.S. as his father and that there was therefore "no concern over deleterious impact from a judicial determination to such effect," and questioned the "application of a legal fiction in a circumstance in which all parties involved fully apprehend the true state of affairs, a circumstance which is becoming increasingly common."  Id.  The mother also "asks that Pennsylvania law be modified to consider genetic testing, along with other factors, in determining paternity on a case-by-case basis."  Id.

In his argument, P.C.S. focused on the husband's continued participation in the marriage and the relationship with the child during the first four years of the child's life.  P.C.S. argued that application of paternity by estoppel remains appropriate "because it recognizes the importance, in a child's life, of a 'psychological father' who has provided nurturing and life's necessities."  Id.

March 6, 2012

Brett Turner, Senior Attorney, National Legal Research Group

As most divorce attorneys know, federal law prevents state courts from treating veterans' disability benefits or military disability benefits as marital or community property.  Mansell v. Mansell, 490 U.S. 581 (1989).

But what about temporary disability pay?  Under federal law, if a service member has a disability rating of at least 30%, but the disability has not yet been determined to be permanent, the member is placed on the Temporary Disability Retired List ("TDRL").  10 U.S.C. § 1202 (Westlaw current through P.L. 112‑89 [excluding P.L. 112‑55, 112‑74, 112‑78, and 112‑81], approved 1‑3‑12).  The service member can remain on the list for as long as five years, after which he or she must be either returned to active duty, retired normally (if he or she has sufficient years of active service), or retired for disability.

While on the TDRL, service members receive temporary disability pay.  Temporary disability pay is the larger of (1) 2.5% of the member's monthly base pay for each year of prior service, or (2) the member's base pay times his or her disability percentage.  Id. § 1401(a).

Is temporary disability pay subject to equitable distribution?  The question was presented to a Colorado court in In re Marriage of Poland, 264 P.3d 647, 648 (Colo. App. 2011).  The power of state courts to divide military benefits is set forth in the Uniformed Services Former Spouses Protection Act, 10 U.S.C. § 1408.  That statute generally provides that state courts can divide only "disposable retired pay."  But the definition of "disposable retired pay" does not include,

in the case of a member entitled to retired pay under chapter 61 of this title, [amounts that] are equal to the amount of retired pay of the member under that chapter computed using the percentage of the member's disability on the date when the member was retired (or the date on which the member's name was placed on the temporary disability retired list)[.]

Id. § 1408(a)(4)(C).  Temporary disability pay is paid under 10 U.S.C. § 1202, which is part of chapter 61 of title 10.  By expressly stating that amounts based upon the service member's initial disability rating are not disposable retired pay, § 1408(a)(4)(C) implicitly states that amounts received above that level are disposable retired pay.  The Colorado court so held:

We conclude, based on 10 U.S.C. § 1408(a)(4)(C), that an amount equal to the amount of TDRL pay, as calculated based on husband's percentage of disability when he was placed on the TDRL, must be excluded from the marital property, but that any amounts in excess of that amount may be divided under the decree.

264 P.3d at 649.  The amount of temporary disability, based on the member's disability rating, is essentially the second of the two formulas set forth above.  The first formula, however, does not use the member's disability rating.  Thus, where the first formula produces a larger result than the second, it would appear that the difference can be treated as marital property.  The difference was significant in Poland, as the husband was actually eligible for normal retirement benefits, so that a portion of his temporary disability pay was essentially a form of retirement pay.

March 6, 2012

Brett Turner, Senior Attorney, National Legal Research Group

As most divorce attorneys know, federal law prevents state courts from treating veterans' disability benefits or military disability benefits as marital or community property.  Mansell v. Mansell, 490 U.S. 581 (1989).

But what about temporary disability pay?  Under federal law, if a service member has a disability rating of at least 30%, but the disability has not yet been determined to be permanent, the member is placed on the Temporary Disability Retired List ("TDRL").  10 U.S.C. § 1202 (Westlaw current through P.L. 112‑89 [excluding P.L. 112‑55, 112‑74, 112‑78, and 112‑81], approved 1‑3‑12).  The service member can remain on the list for as long as five years, after which he or she must be either returned to active duty, retired normally (if he or she has sufficient years of active service), or retired for disability.

While on the TDRL, service members receive temporary disability pay.  Temporary disability pay is the larger of (1) 2.5% of the member's monthly base pay for each year of prior service, or (2) the member's base pay times his or her disability percentage.  Id. § 1401(a).

Is temporary disability pay subject to equitable distribution?  The question was presented to a Colorado court in In re Marriage of Poland, 264 P.3d 647, 648 (Colo. App. 2011).  The power of state courts to divide military benefits is set forth in the Uniformed Services Former Spouses Protection Act, 10 U.S.C. § 1408.  That statute generally provides that state courts can divide only "disposable retired pay."  But the definition of "disposable retired pay" does not include,

in the case of a member entitled to retired pay under chapter 61 of this title, [amounts that] are equal to the amount of retired pay of the member under that chapter computed using the percentage of the member's disability on the date when the member was retired (or the date on which the member's name was placed on the temporary disability retired list)[.]

Id. § 1408(a)(4)(C).  Temporary disability pay is paid under 10 U.S.C. § 1202, which is part of chapter 61 of title 10.  By expressly stating that amounts based upon the service member's initial disability rating are not disposable retired pay, § 1408(a)(4)(C) implicitly states that amounts received above that level are disposable retired pay.  The Colorado court so held:

We conclude, based on 10 U.S.C. § 1408(a)(4)(C), that an amount equal to the amount of TDRL pay, as calculated based on husband's percentage of disability when he was placed on the TDRL, must be excluded from the marital property, but that any amounts in excess of that amount may be divided under the decree.

264 P.3d at 649.  The amount of temporary disability, based on the member's disability rating, is essentially the second of the two formulas set forth above.  The first formula, however, does not use the member's disability rating.  Thus, where the first formula produces a larger result than the second, it would appear that the difference can be treated as marital property.  The difference was significant in Poland, as the husband was actually eligible for normal retirement benefits, so that a portion of his temporary disability pay was essentially a form of retirement pay.

The Lawletter Vol 36 No 8

Brett Turner, Senior Attorney, National Legal Research Group

Steven Walsh and Janet Schaberg were divorced in New York in 2006.  They had a substantial marital estate, which they divided in a property settlement agreement.  Given the size of her property award, Schaberg agreed to waive maintenance.

Several years after divorce, a federal investigation revealed that Walsh had been engaged in a long-standing scheme to defraud investors in various funds he managed.  In fact, much of the parties' marital estate was a product of Walsh's fraud.

Two federal agencies, the Commodity Futures Trading Commission and the Securities and Exchange Commission (hereinafter "the agencies"), filed suit in federal court, seeking to recover the proceeds of Walsh's fraud not only from Walsh, but also from Schaberg.  The Second Circuit held that the agencies could recover the proceeds from Schaberg if she "lacks a legitimate claim" to the funds.  Commodity Futures Trading Comm'n v. Walsh, 618 F.3d 218, 225 (2d Cir. 2010).

Schaberg, who had been entirely unaware of Walsh's wrongdoing, argued that she had such a legitimate claim under New York state marital property law.  Because state law was involved, the Second Circuit certified two questions to the New York Court of Appeals:  (1) whether "marital property" can ever include the proceeds of fraud, and (2) if so, whether the wife nevertheless had an obligation to return the funds because she had not paid fair consideration for them in good faith.

In a 2011 opinion, the New York court answered both questions.  Commodity Futures Trading Comm'n v. Walsh, 951 N.E.2d 369 (N.Y. 2011).  It answered the first question with a yes, holding that the proceeds of fraud can constitute marital property.  They are certainly property acquired during the marriage through the active, if dishonest, efforts of the guilty spouse.  They belong to the guilty spouse unless and until the victims take legal action to recover them.  If a postdivorce attempt to recover the proceeds of fraud retroactively erases those funds from the marital estate, property-division judgments will never be final, and the policy of finality of judgments is very strong.  The court therefore held that the proceeds of fraud can constitute marital property.

The second question defied a simple and easy answer.  The agencies argued that the wife had acquired her share of the proceeds of fraud in exchange for waiving her interest in the husband's share of the proceeds of fraud.  The New York court agreed that fair "consideration cannot be predicated on a spouse's relinquishment of a claim to a greater share of the proceeds of fraud."  Id. at 377.  In other words, fair consideration must be something beyond an interest in the proceeds of fraud themselves.