1. Domestic Law Case and Legislative Update Cheryl Howell Institute of Government October 2003

2. Custody Rosero v. Blake – NC Supreme Court (June 2003) Between mother and father of illegitimate child, no presumptions apply Best interest test determines custody At least where father has acknowledged paternity and “acted consistent with his right to care for and control child”

3. Custody David v. Ferguson (COA Aug. 2003) Trial court used best interest to give father custody COA reversed, citing Rosero (COA) Supreme Court remanded, citing Rosero (NC) COA upheld best interest without evidence of father’s acknowledgment

4. Custody Best Interest Test Rosero (NC June 2003) Trial court has discretion to interpret evidence; upheld if findings – based upon evidence – support conclusion of best interest McRoy v. Hodges (COA Sept. 2003) Finding that father had no present relationship with child but would establish one under terms of order held insufficient to support conclusion of best interest

5. Custody Temporary Orders To be temporary, order must state “clear and specific reconvening time, and the time between hearings must be reasonably brief” Brewer, 139 N.C. App. 222 (2000)(1 year not reasonably brief) Cox, 133 N.C. App. 221 (1999)(5 months OK)

6. Custody Temporary orders McRoy v. Hodges (COA Sept. 2003) Award of “temporary custody to plaintiff for 4 months, then permanent custody to defendant” held to be a final order Lamond v. Mahoney (COA Aug. 2003) “Order regarding permanent custody, visitation and support” was temporary where it ordered evaluations and review in 7 months

7. Custody Appeals Evans v. Evans (COA June 2003) Custody order is interlocutory if alimony and ED remain pending No substantial right affected unless child’s “health or safety is in jeopardy” Compare McConnell, 151 NC App 622 (2002) Civil Procedure Rule 54(b): judge can certify “no just reason to delay the appeal”

8. Child Support Modification Orange County ex. Rel. Harris v. Keys (COA June 2003) VSA included order to pay $1,272 ($20 per month) reimbursement of past paid public assistance Trial court forgave repayment as part of modification of VSA after finding debt accrued before obligor knew about birth of child

9. Child Support Modification Orange County ex rel Harris v. Keyes COA reversed – held modification of “vested arrears” must comply with GS 50-13.10 GS 50-13.10: payments become vested when due; modification allowed only if requested before payments due After vesting, obligor must show “compelling reason” why change not requested before payments due

10. Child Support Imputing Income Cannot impute income without finding “bad faith”: finding of intentional reduction is not sufficient Cook v. Cook (COA Aug. 2003). Obligor left job voluntarily and restructured investments: insufficient to impute Pataky v. Pataky (COA Sept 2003): left job to return to school – COA said record “wholly lacks evidence of bad faith”

11. Child Support Separation Agreement Pataky (COA Sept. 2003) Amount of support in unincorporated agreement is presumed a “just and reasonable” amount of support If presumption not rebutted, application of guidelines is “inappropriate” and support is set in amount of agreement Rebut presumption with evidence of needs of children at time of hearing and factors set out in GS 50-13.4(c)

12. Child Support Legislation Collection of arrears S.L. 2003-288, effective July 4, 2003 Amends GS 50-13.4(c): If arrearage exists when support obligation terminates, payments continue in same total amount until all arrearages and fees are satisfied

13. Equitable Distribution Rice v Rice (COA Aug. 2003) House purchased with down payment and mortgage before marriage Mortgage paid during marriage with marital and separate funds Improvements made during marriage with marital and separate funds Passive appreciation added value during marriage How classify house?

14. Equitable Distribution Mixed assets classified using source of funds doctrine Each estate is entitled to an interest in the property in the ratio its contribution bears to the total investment in the property. Wade, 72 NC App 372 (1985) Mishler, 90 NC APP 72 (1988)

15. Equitable Distribution To classify a mixed asset: Identify total marital contribution Identify total separate contribution Divide passive appreciation between the 2 estates based upon the relative contribution of each

16. Equitable Distribution Rice v. Rice (COA Aug 2003) In determining total marital contribution – for purpose of identifying marital component of passive appreciation – must include marital improvements as well as marital mortgage payments

17. Equitable Distribution Distributive Awards 50-20(e) In-kind distributions presumed equitable Presumption rebutted by greater weight of evidence, or of evidence of property “not susceptible to in-kind distribution” If rebutted, distributive award allowed to “facilitate, effectuate, or supplement distribution” Can be paid over time/secured with lien

18. Distributive Awards Embler v. Embler (COA July 2003) Defendant ordered to pay $24,876 within 60 days COA held trial court erred by not identifying how defendant would satisfy award where defendant had no “obvious liquid assets.” See also Shaw v. Shaw, 117 NC App 552 (1995) Ability to pay is not the issue

19. Distributive Awards Embler v. Embler If court cannot identify liquid assets to pay award, must identify non-liquid source of funds Ex. retirement funds or loans If non-liquid source used, court must consider “adverse financial ramifications” as distribution factors 50-20(c)(9): must consider liquid/non-liquid character of assets 50-20(c)(11): must consider tax consequences of distribution

20. Equitable Distribution Embler v. Embler Court’s findings regarding distribution factors were insufficient Identified factors lacked detail – examples: Husband paid debts, but amount not identified Husband had separate property, but no finding whether liquid or non-liquid No QDRO desired, but no finding re tax consequences of “dipping into” retirement account Statement that court “also considered the other factors” created ambiguity

21. Equitable Distribution Pension classification Award of pension determined using proportion of time marriage existed (up to date of separation), simultaneously with employment which earned the pension, to the total amount of time of employment. GS 50-20.1(d) Referred to as the “coverture fraction” Bishop, 113 NC App 725 (1994) Lewis, 83 NC App 438 (1986)

22. Pension classification Embler v. Embler Entire pension classified as marital even though 8 years (1/3 of total in this case) accumulated before marriage because defendant failed to introduce evidence of the value of the pension on the date of marriage Compare Gagnon, 149 NC App 194 (2002) and Atkinson v. Chandler, 130 NC App 561 (1998) – both holding coverture fraction is required even when value actually earned by pre-marital effort.

23. Domestic Violence Eagle v. Johnson (COA Aug 2003) Court’s dismissal of 50B claim in another county may bar subsequent 50B action based on same facts Res judicata applies if defendant proves Final judgment entered in earlier case Identical causes of action in both cases Identical parties (or parties in privity) in both case

24. Contempt Middleton (COA July 2003) Civil contempt appropriate where defendant “thwarted sale of marital residence” thereby violating the “spirit and intent” of ED order Compare Scott v. Scott (COA May 2003) No contempt for conduct not specifically prohibited by custody order

25. Civil Procedure Chillari (COA Aug. 2003) Objection to venue waived if not filed within 30 days of service of process Scruggs v. Chavis (COA Sept. 2003) When notice of hearing and final motion calendar conflict, motion calendar controls “Fundamental principle: civil calendars set by court and not by lawyers”

26. Collaborative law S.L. 2003-371 creates new GS 50-70 through 79: “Collaborative Law Proceeding” Effective October 1, 2003 Voluntary settlement procedure for all issues arising from divorce except absolute divorce

27. Collaborative Law Parties and counsel agree in writing to make good faith attempt to resolve all issues without court intervention If successful, parties entitled to judgment to effectuate terms of agreement If unsuccessful, can continue or initiate court proceedings

28. Collaborative Law If process is not successful: Attorneys are prohibited from representing parties in future court proceedings, and Attorney and expert work product and communications not admissible in litigation without agreement of parties

29. Collaborative Law If case pending in court when agreement to collaborate is signed, notice must be filed with court Upon filing of notice, “the court shall take no further action in the case, including dismissal” until notified that procedure is complete

30. Collaborative Law A valid agreement to engage in the collaborative procedure tolls “all legal time periods applicable to legal rights and issues under law between the parties” while agreement remains in effect – including Statutes of limitations Filing deadlines Discovery and scheduling orders