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Stoney v. Stoney

Court of Appeals of South Carolina

July 27, 2016

Lori Dandridge Stoney, Appellant,
v.
Richard S.W. Stoney Sr., Defendant/Respondent, and Theodore D. Stoney Jr., Third-Party Intervenor/Respondent. Appellate Case No. 2011-203410

          Heard November 12, 2014.

         Appeal From Orangeburg County Peter R. Nuessle, Family Court Judge

          J. Michael Taylor, of Taylor/Potterfield, and Peter George Currence, of McDougall & Self LLP, both of Columbia, for Appellant.

          Charles H. Williams, of Williams & Williams, of Orangeburg, for Respondent Theodore D. Stoney Jr.

          Donald Bruce Clark, of Donald B. Clark, LLC, of Charleston, and James B. Richardson Jr., of Columbia, for Respondent Richard S.W. Stoney Sr.

          MCDONALD, J.

         In this marital litigation, Lori Dandridge Stoney (Wife) contends the family court erred in (1) permitting Theodore D. Stoney Jr. (Brother) to intervene or, in the alternative, failing to control the extent of this intervention; (2) denying Wife's motion to reopen on the basis of newly discovered evidence; (3) imputing income of only $100, 000 per year to Richard S.W. Stoney Sr. (Husband); (4) failing to award Wife alimony; (5) failing to make a proper child support determination; (6) failing to require that Husband maintain life insurance/other security; (7) erroneously apportioning the marital property in several respects; (8) failing to find Wife has a special equity in certain businesses; (9) declining to hold Husband in contempt; (10) failing to grant Wife a divorce on the ground of adultery; and (11) failing to award Wife attorney's fees. We reverse and remand for a new trial.

         FACTUAL BACKGROUND

         On October 12, 1996, Husband and Wife married in Berkeley County. Prior to the marriage, the parties entered into a prenuptial agreement.[1] The parties have one child together (Child).[2]

         At the beginning of the marriage, Husband and Wife practiced law together; however, Wife began her own practice in 1997. Around this time, the parties opened a restaurant called the Boathouse at Breach Inlet (BHBI)[3] on the Isle of Palms, and Husband eventually stopped practicing law to focus on the restaurant.

         Wife's practice of law also became subordinate to the family's needs and operation of the parties' business ventures.[4]

         BHBI was very successful from the time it opened, and it became the source from which Husband financed his other ventures. Husband purchased four other restaurants and various businesses during the course of the marriage, making "loans" from BHBI to the new entities. These businesses were managed by Husband's company, Crew Carolina.

         The couple's second restaurant was the Boathouse at East Bay Street (BHEB) in downtown Charleston. Although BHEB broke even, Husband closed the restaurant in January 2009. As of December 31, 2008, BHEB had a net asset value of negative $141, 048. Husband and Brother jointly owned the real property on which BHEB was located.[5]

         In 2003, the couple opened the Boathouse at Lake Julian (BHLJ) in Asheville, North Carolina, which closed in July 2008. As of December 31, 2008, BHLJ had a net asset value of negative $1, 297, 939, which included an allocation of $474, 792.78 of a Carolina First/DI Carolinas consolidation loan. In 2004, the couple purchased Carolinas, an existing restaurant located on Exchange Street in downtown Charleston, which they subsequently renovated. As of December 31, 2008, Carolinas had a net asset value of $89, 539. Husband sold Carolinas[6] in January 2010 for over $550, 000.[7] Additionally, Husband advanced funds and assisted a third-party with opening Choto, a restaurant in Knoxville, Tennessee.[8]

         In February of 2009, the parties opened their final restaurant, the Boathouse at Ellis Creek (BHEC), which burned to the ground one month later. Husband received over $850, 000 in insurance proceeds during the first year the parties were separated; however, he did not use this money to rebuild the restaurant.[9] Instead, these funds were used to satisfy obligations to other creditors and business partners. This account was drained by the time of trial. In his testimony, Husband explained, "every dime that I received for Ellis Creek was used to offset the massive amount of debt we had, and I believe that the forensic accountants have well covered that fact. . . . I am doing everything I can to rebuild Ellis Creek." Throughout the trial, Husband referred to "robbing Peter to pay Paul" to keep creditors at bay and allow certain businesses to continue operating.

         Husband started three additional businesses shortly after Wife filed for divorce: Amen Street Fish & Raw Bar, J & S Fish, LLC, and Rice Market.

         PROCEDURAL BACKGROUND

         On April 23, 2009, Wife filed an action for divorce seeking sole custody of Child, child support, alimony, equitable division, and other relief. By consent order dated May 15, 2009, the family court approved a change of venue from Charleston County to Orangeburg County. That same day, the family court approved a consent order sealing the record.

         On June 18, 2009, Husband filed an answer and counterclaim, seeking joint custody of Child, enforcement of a prenuptial agreement, equitable division of the marital property and debt, and certain other relief. In addition, Husband sought the imputation of income to Wife and to pay reasonable child support pursuant to the South Carolina Child Support Guidelines.

         On July 10, 2009, Wife filed a reply and counterclaim, admitting she had signed a prenuptial agreement, but alleging it had been lost. On this same date, the Honorable Anne Gue Jones entered a temporary order. This temporary order adopted an agreement titled, "Consent Order Regarding Certain Child Issues, " which, among other things, awarded custody to Wife and prohibited Husband from exposing Child to his paramours. The other issues raised remained contested. The court granted Wife exclusive use and possession of the couple's condominium in Charleston, and required Husband to pay Wife approximately $22, 000 per month for Wife and Child's expenses. On February 26, 2010, a supplemental temporary order was issued, relieving Husband of certain obligations required by the July 10, 2009 temporary order.

         On January 5, 2010, Brother filed a motion to intervene to protect his interests in certain real property, business concerns, and debts he asserts he is owed. The court granted Brother's motion to intervene by order dated February 22, 2010, finding "[Brother]'s interest in this action outweighs any privacy interest that [Wife] asserts. . . . [T]he interests of [Brother] and the property which is the subject of this action cannot be adequately protected because of the [Husband]'s tenuous financial condition."

         On March 4, 2010, Brother filed a third-party complaint, requesting, among other things, a determination by the court that his loans to Husband (and to the parties on behalf of Husband) constituted marital debt. Husband answered Brother's complaint on March 4, 2010, admitting all of Brother's claims and joining in the relief sought by Brother. Wife answered on March 29, 2010, asserting that she had insufficient information to admit or deny the allegations. On August 2, 2010, the family court issued a consent order relieving Husband's counsel. From this point through the two-week trial, Husband acted pro se.

         During the pendency of this action, Husband was held in willful contempt with regard to four petitions and one supplemental petition for rules to show cause, and an additional rule remains unresolved. Specifically, Wife initially filed two petitions for rules to show cause (Rule 1 and Rule 2a), and a supplemental petition (Rule 2b). Rule 1, Rule 2a, and Rule 2b were resolved by order dated February 25, 2010, in which the family court found Husband in willful contempt for failing "to make payments under the Temporary Order, while he had funds to pay for other personal expenses on his behalf."

         Wife filed a third rule to show cause (Rule 3) against Husband on January 11, 2010, regarding a criminal domestic violence situation involving Brother and Husband that resulted in physical injury to Wife in Child's presence. On March 29, 2010, the family court found Husband to be in willful contempt. Additionally, the court required counseling for Husband and Child, appointed a parenting coordinator, and authorized Wife to tape her phone conversations with Husband.

         Wife filed two additional petitions for rules to show cause (Rule 4 and Rule 5). In Rule 4, issued on June 29, 2010, Wife alleged that Husband failed to pay her regime fees, Wife and Child's uncovered medical/dental expenses, Child's private school expenses, and certain credit card obligations. In Rule 5, issued on October 8, 2010, Wife alleged Husband exposed Child to his paramour in violation of a specific restraining order.[10] Both Rule 4 and Rule 5 were resolved by order dated January 6, 2011, in which the family court again held Husband in willful contempt. Husband was sentenced to ninety days, suspended upon payment of the required expenses mentioned above, as well as a payment of $3, 000 in attorney's fees to Wife's counsel.

         Several motions, including Husband's January 25, 2011 motion to declare contempt purged, were resolved by order dated March 24, 2011. In the March 24th order, the family court accepted Wife's agreement that Husband could purge his contempt sentence, based upon his assertion that he had made arrangements for support payments, as well as Husband's payment of the $3, 000 in attorney's fees previously ordered. In that same order, the court denied Husband's motion to sell or pledge up to ten percent of his interest in BHBI as well as Wife's motion to either purchase BHBI or be awarded complete control over the day-to-day operations of the business. In a separate order, the family court required Husband and Wife to each contribute $5, 000 toward a joint court-appointed CPA by March 25, 2011.

         The two-week trial was held March 28-April 1, 2011, and May 23-27, 2011. When the trial started, Wife had complied with her $5, 000 obligation to the CPA, but Husband had not. Wife filed another petition for rule to show cause (Rule 6) on May 10, 2011, alleging Husband had failed to pay the previously ordered CPA fees and attorney's fees.[11] Despite Wife's requests, these contempt issues were never resolved. On June 17, 2011, after the trial concluded, but before the final order was issued, Wife filed a motion to reopen the case based on newly discovered evidence.

         On July 18, 2011, the family court entered an interim order, addressing the divorce only. Despite Wife's request for a divorce on the ground of adultery, the court granted dissolution on the ground of one year's continuous separation. On September 22, 2011, Wife moved to alter or amend the interim order pursuant to Rules 52, 59, and 60, SCRCP, and Rule 2(a), SCRFC. The family court denied this motion by order dated October 15, 2011. Wife appealed on November 18, 2011.

         On July 25, 2011, the family court emailed counsel for Brother, requesting that he submit two proposed orders to the court: one order denying Wife's motion to reopen and another setting out the trial court's final order in the case on all remaining issues. Instead, Brother's counsel drafted a single order (Final Order), incorporating both the family court's denial of Wife's motion to reopen as well as its rulings on the remaining property and support issues.

         Upon receipt of the Final Order, Wife's counsel emailed and wrote the family court and opposing counsel, requesting an opportunity to respond to Brother's proposed order. However, the family court ignored this request and without making any changes to Brother's submitted proposed order, the court issued its Final Order on September 6, 2011.

         On September 22, 2011, Wife timely filed a motion to alter or amend the Final Order, which the family court denied by order dated November 30, 2011. Wife appealed that Final Order on January 6, 2012. The two appeals have subsequently been consolidated.

         ISSUES ON APPEAL

         I. Did the family court err in allowing Brother to intervene and in failing to control the extent of Brother's intervention?

         II. Did the family court err in denying Wife's motion to reopen the case as a result of newly discovered evidence?

         III. Did the family court err in imputing income of only $100, 000 per year to Husband?

         IV. Did the family court err in failing to award Wife alimony?

         V. Did the family court err in its child support determination?

         VI. Did the family court err in failing to require Husband to maintain life insurance and other security for alimony and child support?

         VII. Did the family court err in identifying, valuing, and apportioning marital assets and debts?

         VIII. Did the family court err in failing to find Wife has a special equity in businesses funded with marital funds by Husband after the date of filing?

         IX. Did the family court err in failing to hold Husband in contempt?

         X. Did the family court err in failing to grant Wife a divorce on the ground of adultery?

         XI. Did the family court err in failing to award Wife attorney's fees and litigation costs?

         STANDARD OF REVIEW

         "The family court is a court of equity" Lewis v. Lewis, 392 S.C. 381, 386, 709 S.E.2d 650, 652 (2011). In appeals from the family court, the appellate court reviews factual and legal issues de novo. Smmons v. Simmons, 392 S.C. 412, 414, 709 S.E.2d 666, 667 (2011). "De novo review permits appellate court fact-finding, notwithstanding the presence of evidence supporting the trial court's findings." Lewis, 392 S.C. at 390, 709 S.E.2d at 654-55 (emphasis omitted). "However, this broad scope of review does not require an appellate court to disregard the factual findings below or ignore the fact that the trial judge is in the better position to assess the credibility of the witnesses." Pinckney v. Warren, 344 S.C. 382, 387, 544 S.E.2d 620, 623 (2001). "Moreover, the appellant is not relieved of his burden of convincing the appellate court the trial judge committed error in his findings." Id. at 387-88, 544 S.E.2d at 623. Accordingly, we will affirm the decision of the family court unless its decision is controlled by some error of law or the appellant satisfies the burden of showing the preponderance of the evidence actually supports contrary factual findings by this court. See Lewis, 392 S.C. at 389-90, 709 S.E.2d at 654-55.

         LAW/ANALYSIS

         I. ...


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