Court Opinion

ID: 4191511
Source: CourtListenerOpinion
Date Created: 2017-08-01 16:08:29.089543+00
Date Added: 2024-06-11T07:46:57.070733
License: Public Domain

MAINE	SUPREME	JUDICIAL	COURT	                                          Reporter	of	Decisions	
Decision:	    2017 ME 171                           	
Docket:	      BCD-16-555	
Submitted	
		on	Briefs:	 June	29,	2017	
Decided:	     August	1,	2017	
	
Panel:	       SAUFLEY,	C.J.,	and	ALEXANDER,	MEAD,	GORMAN,	JABAR,	HJELM,	and	HUMPHREY,	JJ.	
	
	
                                 TIMOTHY	W.	HARPER		
                                          	
                                         v.	
                                          	
                                  SHERYL	E.	HARPER	
	
	
JABAR,	J.	

	      [¶1]	 	 Timothy	 W.	 Harper	 appeals	 from	 a	 judgment	 entered	 in	 the	

Business	 and	 Consumer	 Docket	 (Horton,	 J.)	 partially	 denying	 his	 motion	 to	

reconsider	and	amend	a	previously-entered	divorce	judgment	distributing	his	

and	Sheryl	E.	Harper’s	assets.		We	affirm	the	judgment.		

                                    I.		BACKGROUND	

	      [¶2]	 	 The	 following	 facts	 are	 derived	 from	 the	 court’s	 final	 amended	

divorce	judgment	and	are	supported	by	evidence	in	the	record.		See	Berntsen	

v.	Berntsen,	2017 ME 111,	¶	2,	---	A.3d	---.		Timothy	and	Sheryl	were	married	

in	New	York	in	1978.		During	their	approximately	thirty-seven-year	marriage,	

the	couple	amassed	considerable	assets	and	managed	several	businesses.		The	
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operation	 of	 two	 of	 those	 businesses	 is	 of	 particular	 importance	 for	 the	

purposes	of	this	appeal.1		

A.	      Northeastern	Seafood,	Inc.		

	        [¶3]		Northeastern	Seafood,	Inc.	(NES)	is	a	commercial	lobster	business	

operating	 from	 a	 wharf	 in	 Southwest	 Harbor.	 	 NES	 purchases	 lobsters	 from	

fishermen	and	resells	the	lobsters	to	either	commercial	or	individual	buyers.		

Sheryl	 was	 NES’s	 original	 proprietor,	 starting	 the	 business	 in	 1986	 and	

developing	it	into	a	successful	enterprise	over	time.				

	        [¶4]	 	 Beginning	 sometime	 between	 1997	 and	 2005,	 Timothy	 began	

managing	 NES,	 while	 Sheryl	 assumed	 a	 less	 active	 role.	 	 After	 taking	 over	

operation	 of	 NES,	 Timothy	 instituted	 a	 number	 of	 changes,	 including	

implementing	 a	 separate	 and	 additional	 bookkeeping	 system	 and	 removing	

the	 credit	 card	 processing	 infrastructure.	 	 Timothy	 removed	 the	 credit	 card	

systems	for	the	purpose	of	retaining	cash	that	NES	received	for	retail	lobster	

sales	 without	 recording	 it	 as	 corporate	 income.	 	 He	 also	 decided	 to	 sell	

lobsters	 to	 only	 two	 commercial	 buyers,	 thereby	 significantly	 decreasing	

NES’s	profits.		While	in	control	of	NES,	Timothy	opened	and	drew	down	upon	

two	lines	of	credit	that,	at	the	time	of	the	divorce	proceeding,	carried	a	total	

     1		The	parties	have	stipulated	that	these	businesses	are	marital	assets.				
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balance	 of	 approximately	 $350,000.	 	 This	 was	 in	 stark	 contrast	 to	 Sheryl’s	

management	of	the	company;	when	she	gave	up	control	of	the	business,	NES	

operated	with	limited	debt	and	substantial	cash	reserves.				

B.	       The	Dictator,	Inc.	

	         [¶5]	 	 The	 Dictator,	 Inc.	 (Dictator)	 is	 a	 corporation	 of	 which	 Timothy	 is	

the	sole	shareholder.		It	is	a	profitable	business	that	owns	a	scallop	boat	and	

associated	 fishing	 permits,	 which	 have	 a	 collective	 value	 of	 approximately	

$4,500,000.	 	 Between	 2012	 and	 2015,	 Timothy	 engaged	 in	 a	 series	 of	

transactions	 using	 Dictator	 operating	 accounts	 that	 were	 not	 related	 to	 the	

business,	 including	 purchasing	 automobiles	 and	 recreational	 vehicles	 for	 his	

personal	use.		He	also	used	Dictator	income	to	pay	himself	year-end	bonuses	

of	$150,000	and	$200,000.2				

C.	       Separation	and	Divorce	Proceedings	

	         [¶6]	 	 The	 parties	 separated	 in	 July	 2012,	 and	 on	 January	 8,	 2013,	

Timothy	filed	a	complaint	for	divorce	in	the	District	Court.		On	April	1,	2014,	

the	District	Court	(Augusta,	Stanfill,	J.)	entered	an	interim	order	granting	each	

party	exclusive	possession	of	certain	real	estate	and	allocating	between	them	

      2		Timothy	testified	that	these	funds	were	used	to	pay	the	parties’	taxes	for	tax	years	2012	and	

2013	 and	 argues	 that	 the	 court	 therefore	 erred	 in	 concluding	 that	 those	 payments	 constituted	
economic	 misconduct.	 	 However,	 as	 the	 trier	 of	 fact,	 the	 court	 was	 at	 liberty	 to	 “believe	 or	
disbelieve”	this	testimony.		Huber	v.	Williams,	2005 ME 40,	¶	15,	869 A.2d 737.			
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responsibility	for	operating	their	various	businesses.		The	order	provided	that	

Timothy	 would	 be	 responsible	 for	 operating	 NES	 and	 Dictator	 during	 the	

pendency	of	the	divorce	proceedings.			

	     [¶7]	 	 Almost	 two	 years	 after	 the	 divorce	 complaint	 was	 filed,	 on	

November	 19,	 2014,	 the	 matter	 was	 transferred	 to	 the	 Business	 and	

Consumer	Docket.		There,	the	court	conducted	a	hearing	on	the	complaint	in	

two	 phases,	 the	 first	 of	 which	 began	 on	 January	 28,	 2015.	 	 Before	 the	

conclusion	 of	 the	 first	 phase,	 on	 February	 26,	 2015,	 the	 court	 entered	 a	

divorce	 judgment	 notwithstanding	 the	 pendency	 of	 other	 claims.	 	 See	 M.R.	

Civ.	P.	115(b).		The	following	day,	the	court	entered	an	amended	interim	order	

that,	inter	alia,	appointed	a	referee	to	begin	the	process	of	selling	some	of	the	

parties’	assets	and	to	oversee	the	management	of	their	businesses	pending	the	

entry	of	a	final	divorce	judgment.			

	     [¶8]	 	 The	 second	 phase	 of	 the	 hearing	 took	 place	 over	 four	 days	

beginning	on	April	7,	2016.		At	the	conclusion	of	the	second	phase,	the	court	

issued	 a	 forty-one-page	 amended	 divorce	 judgment	 distributing	 the	 parties’	

assets	 and	 directing	 the	 referee	 to	 oversee	 the	 liquidation	 of	 the	 properties	

and	businesses	described	in	the	judgment.				
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	       [¶9]	 	 The	 court	 found	 that	 Timothy	 engaged	 in	 economic	 misconduct	

while	operating	NES	and	Dictator,	which	resulted	in	the	marital	estate	being	

deprived	 of	 “at	 least	 $800,000	 from	 what	 should	 have	 been	 shared	 income	

from”	 the	 two	 companies.3	 	 Accordingly,	 when	 fashioning	 a	 property	

distribution	 award,	 the	 court	 imputed	 to	 Timothy	 the	 receipt	 of	 $800,000.		

See	19-A	M.R.S.	§	953(1)	(2016).		

	       [¶10]		The	judgment	also	ordered	Timothy	to	reimburse	Sheryl	$50,000	

in	 attorney	 fees	 after	 concluding	 that	 Timothy	 engaged	 in	 conduct	 that	

unnecessarily	prolonged	litigation	and	that	he	improperly	used	marital	funds	

“in	 which	 [Sheryl]	 had	 a	 reasonable	 expectancy	 and	 interest”	 to	 pay	 his	

attorneys.				

	       [¶11]	 	 Timothy	 subsequently	 filed	 a	 motion	 to	 reconsider	 and	 amend	

the	 judgment,	 which	 the	 court	 granted	 in	 part	 and	 denied	 in	 part.	 	 He	 now	

appeals.				

                                         II.		DISCUSSION	

A.	     Economic	Misconduct	

	       [¶12]	 	 On	 appeal,	 Timothy	 challenges	 the	 court’s	 finding	 that,	 through	

his	 operation	 of	 NES	 and	 Dictator,	 he	 committed	 economic	 misconduct	

    3		The	court	also	found	that	Sheryl	committed	economic	misconduct	related	to	her	management	

of	one	of	the	parties’	businesses	that	resulted	in	the	marital	estate	being	deprived	of	$30,000.		
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resulting	 in	 the	 diminution	 of	 the	 marital	 estate	 by	 approximately	 $800,000.		

“A	court’s	finding	that	a	party	to	a	divorce	did	or	did	not	engage	in	economic	

misconduct	is	reviewed	for	clear	error.”		Catlett	v.	Catlett,	2009 ME 49,	¶	31,	

970 A.2d 287  (quotation	 marks	 omitted).	 	 We	 will	 not	 disturb	 a	 divorce	

court’s	 finding	 of	 economic	 misconduct	 if	 that	 finding	 is	 “supported	 by	

competent	evidence	in	the	record.”		Efstathiou	v.	Aspinquid,	Inc.,	2008 ME 145,	

¶	35,	956 A.2d 110.		Here,	where	Timothy	failed	to	request	further	findings	of	

fact	 pursuant	 to	 M.R.	 Civ.	 P.	 52(b),	 should	 there	 be	 any	 “gaps”	 in	 the	 court’s	

factual	 analysis,	 we	 will	 “assume	 that	 the	 trial	 justice	 found	 all	 of	 the	 facts	

necessary	 to	 support	 the	 decision.”	 	 Murray	 v.	 Murray,	 529 A.2d 1366,	 1368	

n.1	(Me.	1987).		

	      [¶13]		There	is	competent	evidence	in	the	record	to	support	the	court’s	

finding	 that	 Timothy	 engaged	 in	 economic	 misconduct	 while	 operating	 NES	

and	 Dictator.	 	 His	 actions	 in	 unilaterally	 incurring	 significant	 liabilities,	

implementing	a	separate	accounting	procedure,	systematically	retaining	cash	

from	 retail	 lobster	 sales,	 and	 refusing	 to	 sell	 lobsters	 to	 more	 than	 a	 few	

commercial	 buyers	 while	 managing	 NES	 are	 well	 documented	 in	 the	 record.		

These	 changes	 had	 a	 detrimental	 impact	 on	 the	 marital	 estate,	 and	 Timothy	

provided	no	legitimate	business	purpose	for	instituting	them.		Likewise,	as	the	
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court	 correctly	 noted,	 allegations	 that	 Timothy	 engaged	 in	 economic	

misconduct	while	managing	Dictator	are	substantiated	by	voluminous	records	

containing	 evidence	 of	 “largely	 undisputed	 transactions”	 through	 which	 he	

unreasonably	diminished	the	value	of	that	marital	asset.				

	     [¶14]	 	 Further,	 we	 are	 not	 persuaded	 by	 Timothy’s	 argument	 that,	 to	

prove	 economic	 misconduct,	 Sheryl	 was	 required	 to	 trace	 the	

misappropriated	 funds	 into	 the	 hands	 of	 third	 parties.	 	 In	 Catlett,	 the	 case	

upon	which	Timothy	relies	to	make	this	argument,	we	upheld	the	trial	court’s	

finding	that	a	spouse	did	not	engage	in	economic	misconduct	after	concluding	

that	 “[w]hile	 [the	 spouse]	 may	 not	 have	 a	 good	 recollection	 as	 to	 how	 the	

money	 was	 spent,	 there	 was	 no	 evidence	 that	 she	 spent	 the	 money	 in	 an	

inappropriate	 manner.”	 	 2009 ME 49,	 ¶	 32,	 970 A.2d 287  (emphasis	 added).		

Not	so	here.		Unlike	the	circumstances	in	Catlett,	where	there	was	no	evidence	

to	corroborate	the	allegations	of	economic	misconduct,	here	there	was	ample	

record	evidence	detailing	the	numerous	transactions	Timothy	engaged	in	that	

unreasonably	and	inappropriately	diminished	the	value	of	the	marital	estate.			

	     [¶15]	 	 Similarly,	 Timothy’s	 argument	 that	 a	 party	 must	 violate	 a	 court	

order	 to	 commit	 economic	 misconduct	 is	 unpersuasive.	 	 Apart	 from	 the	 fact	

that	 we	 have	 upheld	 trial	 courts’	 findings	 of	 economic	 misconduct	 in	 the	
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absence	 of	 a	 violation	 of	 a	 court	 order,	 see,	 e.g.,	 Quin	 v.	 Quinn,	 1997 ME 131,	

¶¶	7-9,	 696 A.2d 432;	 Berntsen,	 2017 ME 111,	 ¶¶	3,	 16-18,	 ---	 A.3d	 ---,	

restricting	 the	 application	 of	 economic	 misconduct	 to	 only	 those	 instances	

where	 a	 party	 has	 violated	 a	 court	 order	 may	 have	 the	 detrimental	 effect	 of	

encouraging	 savvy	 litigants	 contemplating	 divorce	 to	 strategically	 deplete	

marital	assets	before	initiating	the	action.		Therefore,	the	court	did	not	err	in	

finding	 that	 Timothy	 engaged	 in	 economic	 misconduct	 that	 deprived	 the	

marital	estate	of	approximately	$800,000.			

B.	    Attorney	Fees	and	Appointment	of	Referee	

	      [¶16]	 	 Finally,	 Timothy	 argues	 that	 the	 court	 abused	 its	 discretion	 in	

ordering	 him	 to	 pay	 a	 portion	 of	 Sheryl’s	 attorney	 fees	 and	 erred	 in	

“appointing”	a	referee	in	its	final	judgment	because,	upon	the	issuance	of	the	

judgment,	the	case	was	no	longer	“pending”	for	the	purposes	of	M.R.	Civ.	P.	53.		

We	 discern	 no	 abuse	 of	 discretion	 in	 the	 court’s	 decision	 to	 award	 Sheryl	 a	

portion	of	her	attorney	fees.		See	Estate	of	Ricci,	2003 ME 84,	¶	30,	827 A.2d
817  (stating	 that	 a	 court,	 in	 awarding	 attorney	 fees	 in	 a	 divorce	 proceeding,	

may	 consider,	 among	 other	 factors,	 “whether	 the	 conduct	 of	 a	 party	 has	

contributed	to	the	duration	of	litigation”	and	“all	factors	that	reasonably	bear	

on	 the	 fairness	 and	 the	 justness	 of	 the	 award”	 (quotation	 marks	 omitted)).		
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Similarly,	the	court	did	not	err	in	instructing	the	previously-appointed	referee	

to	 oversee	 distribution	 of	 the	 parties’	 assets	 because	 this	 function	 is	

contemplated	by	the	Rule.		See	M.R.	Civ.	P.	53(c).	

         The	entry	is:	

                            Judgment	affirmed.		
	
	     	     	     	     	      	
	
Susan	Schultz	McEvoy,	Esq.,	Portland,	for	appellant	Timothy	W.	Harper	
	
Kristin	A.	Gustafson,	Esq.,	Gustafson	Family	Law,	Augusta,	for	appellee	Sheryl	
E.	Harper	
	
	
Business	and	Consumer	Docket	docket	number	FM-2014-02	
FOR	CLERK	REFERENCE	ONLY