A former husband and wife both challenged a final judgment dissolving their 17-year marriage recently in Florida. During the marriage, the Husband operated several marine-related businesses. His wife was a stay-at-home mom. They enjoyed a comfortable middle-class lifestyle throughout the marriage.
From the start of the dissolution proceedings, the Husband was “less than cooperative” in providing the wife with adequate discovery as to the value of his business interests and income…especially his boat-chartering business, Dykoke Enterprises. In his financial affidavits, he claimed that he earned no income from the charter business and didn’t assign a value to his interest in the business. Despite the wife’s numerous requests for production as well as the trial court’s order compelling him to produce the requested records, the Husband didn’t give up invoices or bank records relating to his charter business.
At trial, the wife testified that after filing for divorce, she started working as a housekeeper and earned $20,000 a year. She said that after factoring in the cash the husband earned from his charter business, he actually earned more than double what he was reporting in his tax returns and financial affidavits. She testified that over the last four years, he chartered an average of four trips a week and charged upwards of $1,000 per trip. Based on his statements to her during their marriage, the wife believed he earned $70,000 a year in cash operating the charter business. She didn’t have proof of this but said it was because the husband refused to provide her with the records she requested.
The husband’s accounting expert testified that the only asset of Dykoke Enterprises as of the date of the wife’s petition was a bank account with $99. Although the accountant didn’t review any tax returns for the company, he opined that the husband didn’t earn any income from the charter business and testified that his average annual income was roughly $66,000. The husband testified that his charter business didn’t generate any revenue beyond the cost of the boat’s upkeep. Despite the fact that he admitted to having clients like National Geographic and the University of Miami that he charged $1,500-$3,000 a day.
The trial court denied the wife’s request for permanent periodic alimony. Although the court found that the wife had a need for alimony, it also found, after making a balancing payment and paying child support, the husband wouldn’t have enough liquidity or leftover income to pay alimony. The trial court found that the husband’s net monthly income for purposes of determining his ability to pay alimony was $4,325. The judge didn’t consider any income from the husband’s charter business, citing insufficient proof—despite the court’s findings that the husband’s testimony was “incredulous” and that the lack of proof was because he didn’t provide the invoices or all the bank statements in discovery necessary to determine the actual earnings of his charter boat business.
Judge Dorian K. Damoorgian of the District Court of Appeal held that that the trial court’s determination of the husband’s ability to pay was in error.
Section 61.08, Florida’s alimony statute, provides that when determining the proper type and amount of alimony, the court must consider “[a]ll sources of income available to either party.” Florida Statute § 61.046 broadly defines “income” as:
[A]ny form of payment to an individual, regardless of source, including, but not limited to: wages, salary, commissions and bonuses, compensation as an independent contractor, worker’s compensation, disability benefits, annuity and retirement benefits, pensions, dividends, interest, royalties, trusts, and any other payments, made by any person, private entity, federal or state government, or any unit of local government. United States Department of Veterans Affairs disability benefits and reemployment assistance or unemployment compensation, as defined in chapter 443, are excluded from this definition of income except for purposes of establishing an amount of support.
Judge Damoorgian went on to note that courts in Florida have long recognized that self-employed spouses—as opposed to salaried employees—can control and regulate their income. Their testimony, tax returns, and business records may not reflect their true earnings, earning capability, and net worth. So, when the circumstances suggest that a self-employed spouse has failed to accurately report his or her income, the court may properly assign a higher income value than that what’s claimed by the spouse. This is especially true, Judge Damoorgian said, when the spouse fails to comply with discovery orders and doesn’t disclose all pertinent financial information.
The Court of Appeal found that it was clear that the husband was earning some income from his charter business. Although the actual amount of income wasn’t established at trial, this was because of his wrongful conduct in failing to comply with the wife’s discovery requests and the court’s orders. As such, it was error for the trial court not to consider the husband’s charter business income when making its alimony determination.
The case was reversed and remanded for a redetermination by the trial court of the husband’s ability to pay alimony. The Court of Appeal also stated that the trial court should enforce its prior discovery orders, and if he refused to comply, the judge should assign a value to his charter business income as equity requires. Newman v. Newman, 2017 Fla. App. LEXIS 7828, 42 Fla. L. Weekly D 1244 (Fla. DCA 4th May 31, 2017).
Florida Rules require that the parties exchange certain financial documents within a specified time frame. If they don’t, the judge may dismiss the divorce or not consider that party’s requests. Get help you with all the issues you will commonly face in divorce, such as property division and alimony. Our legal representation will help you get better results more quickly. Call the DeVoe Law Firm now for a free consultation.