LAW MARKS: Mark Johnson's occasional--and occasionally irreverent--review of recent developments in family law and civil procedure. For February 2003, topics include dismissal of an appeal for noncompliance with the judgment under appeal, distributing a business with a negative value, the rate of return on cash assets, and the creation of a security interest in a retirement plan.
The Court of Appeals, applying a principle from the criminal law, dismissed an appeal in Pruett and Pruett. The father appealed a judgment holding him in contempt for failure to pay child support. The court observed that the father had "deliberately and repeatedly flouted the trial court's contempt judgments by failing to surrender to authorities to serve his jail sentence."
The court held that the father should not be allowed to have the benefit of an appeal while attempting to avoid his obligations under the judgment. The court acknowledged that a similar principle might apply in any case where a judgment debtor takes an appeal and fails to bond or satisfy the judgment. It viewed the decision as a discretionary exercise of inherent authority, appropriate in these circumstances because the underlying judgment was for child support.
Courts and practitioners considering divorce cases are occasionally vexed by the question of how best to distribute the debts of a business that, for all practical purposes, has a negative value. The Court of Appeals confronted this problem in Ashlock and Ashlock. "As a general rule," the court held, "when a court awards a business entirely to one party, the debts associated with that business should go with it." The court modified the property division to assign those debts exclusively to the husband and without any compensating adjustment.
In Bounds and Bounds, the Court of Appeals refused to presume a rate of return on cash assets awarded to the wife, holding that specific evidence of the rate of return was required before the assets could be considered as a source of income for support purposes.
The IRS has issued a private letter ruling approving the creation of a security interest in an ERISA-qualified retirement plan to secure performance of a marital property division. The taxpayers proposed to use a second QDRO that would have the effect of creating a lien against the husband's interest in the plan. ERISA's anti-alienation provisions would ordinarily prohibit such an arrangement, but the Service ruled that the security interest could be created as long as it was done by QDRO.
Mark Johnson is an appeals attorney practicing in Portland, Oregon. He also provides attorney coaching, consulting, and collaboration on a wide range of family law issues. Mark is available to act as a reference judge in Oregon family law cases.
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