Attorney Fees Awarded For Husband’s Contempt Of Temporary Orders in Oklahoma Divorce

    Assume your divorce case is pending.  You have a temporary order in place directing the other party to pay child support and make the car payment.  The other party does not follow the court orders, and you cite the other party for contempt of court.  If you are successful, can you ask for a judgment for attorneys fees?  In Buckingham v. Buckingham, the Oklahoma Court of Civil Appeals says yes, you can ask.

Mrs. Buckingham filed her divorce petition.  The assigned judge issued a temporary order.  The order directed Mr. Buckingham to pay child support and make car payments.  Mrs. Buckingham filed an application for contempt alleging Mr. Buckingham failed to pay as ordered.  The court held a jury trial.  The jury found Mr. Buckingham guilty of contempt for failure to pay on the car as ordered (but not guilty as to child support payments).  The divorce was still pending.

Mrs. Buckingham’s attorneys filed her motion to assess attorneys fees regarding the contempt action.  The contempt judge (who was not the divorce judge) heard evidence on the motion before the divorce judge granted a decree of dissolution, and granted the judgment for attorneys fees related to the contempt action after the other judge entered a decree of dissolution.  Mr. Buckingham appealed.  He argued there is no statutory authority for an award of attorney fees to enforce a temporary order in a domestic case.

The American Rule regarding attorney fees is that each party pays their own unless there is a contract or a statute authorizing a different outcome.  The appellate court holds that 43 O.S. §110(E) authorizes awarding attorney fees related to enforcement of a temporary order.


Sooner State Court Resolves Dueling Child Support Orders Dilemma

Two states claim jurisdiction to enter an initial child support order.  In this case, the Minnesota order is over $500.00 per month more than the Oklahoma order.  The Uniform Interstate Family Support Act (UIFSA) provides the means to resolve disputes over child support jurisdiction.  In Hanger v. Hanger, the Oklahoma Court of Civil Appeals defers to the child support order entered in Minnesota.

The mother in Hanger moved from Oklahoma to Minnesota.  The date of her move proved a critical factor in resolving this dispute.  Mother claimed she and the children had been Minnesota residents for 6 months when she filed there for divorce, child custody and child support. Father claimed Mother and the children had only been in Minnesota for 5 months.  Husband filed his own petition to dissolve the marriage, and establish custody in Oklahoma. Husband filed his Oklahoma petition 6 days before Mother filed in Minnesota.  Wife served husband with her petition before he served her.

The Minnesota court determined after a hearing that the children had lived in Minnesota for 6 months before mother filed her petition.  This made Minnesota the home state of the children.  Father did not appeal that decision.

Decisions in both states determined that Minnesota had subject matter jurisdiction over child custody, and that Oklahoma was an inconvenient forum for custody issues.

The states entered conflicting orders regarding child support.  Minnesota entered the first order, claiming that responsibility because father’s Oklahoma petition did not specifically ask for a child support order.  The trial court in Oklahoma determined that father was first to file a petition, and the petition raised by inference the issue of child support.  The Oklahoma judge ruled that child support should be determined in the home state of the obligor parent.  Wife appealed the Oklahoma decision.

UIFSA, adopted in all 50 states, contains rules to resolve competing orders establishing child support.  The Oklahoma Court of Civil Appeals resolved this particular dispute using Section 204 of UIFSA.  The Oklahoma Court held on appeal that it should defer to the Minnesota court because

  • Mother filed her Minnesota action before the Oklahoma case was at issue
  • Mother raised a timely challenge to the Oklahoma support order, and
  • Minnesota is the home state of the children.

UIFSA supports a preference for initial child support jurisdiction in the home state of the child.  This same preference controls subject matter jurisdiction in the Uniform Child Custody Jurisdiction and Enforcement Act, and the federal Parental Kidnapping Prevention Act.  This increases the likelihood of one court assuming continuing exclusive jurisdiction of child custody and support issues.  If the child has no home state, the Comment to UIFSA Section 204 suggests “first filing” will continue to control.

by David Tracy

Dad Fails In Effort To Transfer Case, Remove Judge

What do you do if both parents have moved from the county where a divorce action is pending, and you don’t like the assigned judge?   You try to move the case to another court.  The father in Chacon v. Chacon did not succeed in an effort to move his case.

Both parents in Chacon were West Point graduates and veterans.  They had 2 children, and one more on the way, when the wife filed to dissolve the marriage in Creek County, Oklahoma, where they lived.  The parties entered an agreed temporary order giving wife custody of the children, and setting specified time for father to spend with the kids.  Three months later, husband filed a motion to modify the temporary order in Creek County.  Mother wanted to relocate to Pennsylvania to be close to her family, and return to school.  After a hearing, the trial judge allowed mother to relocate to Pennsylvania with the children.  The parents agreed to a modified parenting time schedule.

After mother and the kids moved to Pennsylvania, father moved in with his girlfriend in Pittsburg County.  Six months after the relocation order, father filed a motion to transfer venue, that is, move the case to Pittsburg County, as everyone had moved from Creek County.  Mother responded that father was forum shopping, and had waived any objection to venue by participating in the case to this point.  The trial court denied the motion without a hearing.

The matter went to trial in front of the original judge.  That judge entered final orders granting mother custody, ordering supervised visitation for the father, dividing marital property, and awarding wife support alimony.  In ordering supervised visits, the court cited father’s failure to follow court orders while the case was pending.  The Court found father’s conduct particularly unacceptable in light of “his West Point training to follow orders.”

Before a hearing on wife’s request for attorneys fees, father asked the trial judge to recuse, or step aside from the case.  The trial judge denied that request, and awarded wife a substantial attorneys fee award.  Father appealed.

The Oklahoma Court of Civil Appeals held the trial court properly denied the change of venue.  The opinion states that father waived any objection to venue by participating in the case, and asking for affirmative relief in Creek County.  The appellate court did lift the requirement for supervised visitation.  It affirmed the trial court in all other respects, and granted wife’s request for appeal-related attorney fees and costs.

Judges have a lot of discretion to decide cases before them.  This father felt the trial judge was prejudiced against him.  A series of adverse rulings does not by itself provide grounds to change judges, or to remove a judge from your case.  However a judge feels toward you, and however you feel toward the judge, it is never a good idea to fail or refuse to follow the judge’s orders.

by David Tracy

“For Better Or Worse” Includes Accepting the Baggage of Your Spouse’s Obligations to a Prior Family

Suppose you married someone who owes child support from a prior marriage. The support checks to the prior family go out each month, drawn on an account containing funds earned during your marriage.  Then the second relationship sours.  Can you recover an equitable share of marital funds used by your spouse to pay a pre-existing support obligation?  The Oklahoma Court of Civil Appeals says you cannot.

The Husband in Pounders v Pounders used marital monies to pay child support and other expenses for the children of his previous marriage. Wife knew of the payments and wrote the checks for some of them.  In the subsequent divorce action, Wife asked the court to compensate her for the joint funds used to pay Husband’s support obligation to his prior family. The trial judge awarded Wife more than $20,000 in “restitutionary alimony.”   Husband appealed.

Wife argued to the lower court that his use of marital money to pay a separate obligation unjustly enriched Husband.  She asked the court to apply the logic used in cases by Oklahoma women who helped their husbands through medical school, only to find themselves in divorce court shortly after graduation.  The Oklahoma Court of Civil Appeals held the cases involving professional degrees are limited to their facts.  Ms. Pounders knew her husband had ongoing obligations to his prior family when she married him. She knew the obligations would be part of her marriage to him.  Her consent during marriage prevents her from recovering when the marriage ends.

The Pounders case addresses only court-ordered obligations.  It does not address premarital debt such as student loans or credit card debt one spouse may bring into the marriage. Whether the holding of this case would extend from court-ordered obligations to general debt, or obligations not disclosed before marriage, must be decided in a future case.

by David Tracy

Dividing Stock Options In A Divorce – Part II

In Part I of this topic, I discussed the characterization of stock options as marital or separate property.  After determining the marital and separate property component of each stock option, the next step is to value and divide the option. The following Part II of this topic addresses the valuation and distribution of stock options in divorce actions.

The primary method of dividing stock options in divorce is to defer distribution until the employee exercises the option.  The proceeds, net of taxes to the employee, are divided according to a set percentage established in the decree.  The stock price on the date of exercise sets the value of the option.  This is called the deferred distribution, or “as, if and when” approach to valuation and division.

A second approach is to establish a present value for the options and award them all to the employee spouse.  The other spouse receives different assets of comparable value.  This is called the “immediate offset” approach.  The problem with this approach is the number of assumptions one must make to assign a present value to a contingent asset.

One present value option simply compares the strike price and the market value of the stock on the date of valuation.  The difference between strike price and market value is called the “intrinsic value.”  Using intrinsic value deprives the non-employee spouse of the right to benefit from the anticipated rise in stock price before the employee exercises the option.  The employee spouse receives no discount for lack of transferability of the option, the risk that the option will never be exercised, or that the price of the stock might go down.

The Statement of Financial Accounting Standards adopts the Black-Sholes Option Pricing Model to value stock options.  This is a complicated formula requiring expert analysis and testimony.  Accountants use this method to estimate stock option values on company financial statements.  The SEC and IRS also make limited use of the Black-Sholes method for disclosure statements, and gift and estate tax valuations.  The formula requires use of assumptions and hypotheticals, however, and has been rejected by some courts as too speculative.

In an ideal world, employees would be allowed to divide stock options in divorce like retirement accounts.  A spouse could receive options on a certain number of shares as an alternate participant in the plan.  If the conditions for vesting and exercise are met by the employee, the alternate participant could directly exercise the option.  In the real world, stock option plans rarely, if ever, allow direct assignment of a stock option to a spouse.  I have never seen it.  Employers naturally want discounted stock to remain with the employee, even if the assignment remains in the family unit.  Stock options carry tax consequences that could be manipulated in divorce situations.  This detracts from the original purpose the employer intends in granting the option.

Part III of this topic will discuss the information the parties should exchange in a divorce to develop a plan to characterize, value and divide stock options.

by David A. Tracy

Dividing Stock Options In A Divorce – Part 1

An employee stock option gives an employee the right to buy a specified number of shares of stock in the employer-corporation at a specified price (strike price) at a specified future time.  The goal is to give the employee an incentive for the stock price to go up, making the stock option more valuable.  Companies generally grant stock options to reward years of service, or to induce an employee to remain with the company.  Options change in value with the stock price.  They are not generally assignable.  For all of these reasons, stock options are difficult to characterize, value and divide as spouses go their separate ways.

In this first of a two-part discussion of stock options, I explore the issue of characterization of stock options as marital or separate property.

Characterization – Marital property in Oklahoma is property acquired by the parties during marriage through joint industry.  Spouses contribute to joint industry in various ways, including maintaining the marital home, caring for children, sacrificing a career to further the career of a spouse, as well as earning income through employment.  Stock options granted during marriage are considered marital property in Oklahoma.  See Duty v. Duty.  Stock options granted after a decree of divorce are the separate property of the employee spouse in Oklahoma.  See Ettinger v. Ettinger.

It is possible that stock options granted during marriage are partly marital and partly separate property.  There are several relevant dates to consider in analyzing stock options.

  • Grant date – the date an employer awards a stock option to an employee
  • Vesting date – the date an employee can exercise a stock option
  • Expiration date – the date a vested stock option expires if not exercised by the employee

A divorce can occur at any point along this time line and affect the characterization of the stock option as partly marital and partly separate property.  Consider options granted during marriage, but which vest after joint industry ends. What if the options are granted before marriage and vest during marriage?

Stock options granted but not yet vested are contingent assets.  Their value will be realized in the future.  Taking a cue from how courts treat retirement accounts in divorce, these contingent assets are still considered marital property, even though they require continued employment, or expire on the occurrence or non-occurrence of some future event.

The reason a company grants a stock option can also affect its characterization in divorce.  One must always determine why a company grants a stock option.  Is it a reward for past service?  Is it an incentive to remain with the company?  Is it a bonus or a form of deferred compensation? Each case is fact specific.

Parties and courts must fashion a time rule in each case to equitably allocate the marital or separate property components of each stock option award.  The time rule is a ratio, or fraction,  based on the number of months between various dates such as the date of marriage, date of employment, date the option is granted, date joint industry terminates, vesting date, and exercise date.  It is interesting to note that in the Duty case, the Oklahoma Court of Civil Appeals affirmed an award to the wife of one-third of husband’s stock options.  Neither the trial court or appellate court explained how it arrived at the one-third figure, except to note that the husband had to continue to work after the marriage to make the options vest.

In part two of this topic, I will explore the valuation and division of stock options in an Oklahoma divorce.

by David Tracy