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A legal education can be expensive

I love contempt. See Enforcement (or Defending Enforcement) of Family Court Orders.  Folks tend to forget (if they ever realized) that court orders aren’t simply laudatory proclamations suggesting what people should or should not do but judicially-created law that carries the authority of police powers behind it.  Nothing brings out the venal, mendacious and dysfunctional elements of human beings like a contempt trial.  Observing people explain and justify their misbehavior, and violation of court orders, is almost always entertaining.  And when it’s not entertaining, it’s usually tragic.  Sometimes it’s both.   If The Great American Novel is written daily in America’s divorce courts, the dark, brooding (Russian?) version is being written in our contempt hearings.

But contempt is like Kenny Rogers’ “The Gambler”: “You got to know when to hold em, know when to fold em, Know when to walk away and know when to run.”  Yesterday’s Court of Appeals opinion in Tracy v. Tracy, 384 S.C. 91, 682 S.E.2d 14 (Ct.App. 2009) demonstrates what happens when you forget this.

Mr. Tracy and his wife reached a court-approved agreement at the time of their divorce in which she would pay a great deal of past-due taxes owed from the parties’ joint returns and provide Mr. Tracy a mortgage as security for funds he loaned her (in part to pay these taxes).  Mr. Tracy, possibly still seething from his now ex-wife’s adultery, appears to have spent the next few years concocting methods of frustrating Ms. Tracy’s compliance with that agreement.

He failed to provide her with information she needed to complete the mortgage.  Six times he changed the address where the taxing authorities sent information from his ex-wife’s address to his address–while complaining that his ex-wife was not upholding the agreement to pay these taxes.  When his ex-wife was in negotiations with the IRS to enter into an Offer In Compromise (OIC) on the amount of back taxes, he informed the IRS that she had money in an escrow account, seemingly in an effort to thwart the OIC acceptance.  He also called the tax agencies to inform them that his ex-wife had enough money to pay the taxes in full.  The IRS eventually accepted ex-wife’s OIC.  Mr. Tracy then filed his rule to show cause because his ex-wife hadn’t provided him the mortgage or paid the taxes in full.

Despite finding that Ms. Tracy had not completely complied with the court order, the family court refused to find her in contempt and Mr. Tracy appealed.  The Court of Appeals refused to find Ms. Tracy in contempt either.  What does it all mean?

Two lessons: First, have clean hands.  When seeking a finding of contempt, make sure you haven’t frustrated the other party’s compliance.  Many of Mr. Tracy’s complaints about his ex-wife’s non compliance were caused–at least in part–because he took steps to frustrate her compliance.

Second lesson: don’t file a contempt action until you suffer damage, especially if it might seem the contempt request is vindictive.  Only if and when the IRS comes after him for any unpaid taxes (not likely to ever happen if Ms. Tracy complies with the OIC) will he have suffered damages.  Mr. Tracy appears to have brought this rule because he was unhappy that his ex-wife had negotiated her way out of some of their debt that she had agreed to be responsible for.   However, her gain was not his loss; Mr. Tracy suffered no damage when his ex-wife reached a compromise with the IRS on the amount of back taxes.

Both Tracys have now incurred substantial attorneys fees to no benefit whatsoever.  A legal education can be expensive.

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