Very happy wife; Very unhappy girlfriend

Posted Saturday, January 22nd, 2011 by Gregory Forman
Filed under Equitable Distribution/Property Division, Of Interest to Family Law Attorneys, South Carolina Appellate Decisions, South Carolina Specific

I wonder how Pamela Buck feels about her boyfriend now that they jointly owe his ex-wife $262,000.  That was the holding in the January 19, 2011 Court of Appeals decision in Reiss v. Reiss, 391 S.C. 286, 705 S.E.2d 84 (Ct. App. 2011).

The story of this $262,000 combines elements of shrewd investing and Three-card Monte. Evidently Husband sold investment property located on Seabrook Island shortly before Wife filed for divorce.  This was done without his Wife’s knowledge.  For reasons the opinion does not indicate, Wife had previously deeded her interest in this property to Husband.

After selling this property, Husband used some of the proceeds to purchase a vehicle, and deposited $362,000 in a joint account with Buck.  He and Buck then invested these funds in Florida real estate.  They then formed a holding company, transferred title of the Florida property to the holding company, and, one day after the family court issued its temporary order, transferred title of this property to Buck.  The next month the Florida property was sold at a $20,000 profit to Husband [remember the days when folks could quickly flip properties for a profit?].  Out of the $362,000 from Husband’s original investment, $100,000 was paid to Wife as part of the temporary order, $252,000 was deposed into a CD owned by Buck and $10,000 was unaccounted for.  The $252,000 was then invested into a second Florida property.

Wife made Buck a party to this action in order to retrieve what Wife contended was marital funds from the sale of the Seabrook property.  At trial, the family court concluded the proceeds from the sale of the Seabrook Property equaled $436,210 and credited Husband $100,000 for the advance on the equitable distribution that he paid pursuant to the temporary order.  The family court ordered $336,210 shall be paid to Wife by Husband and Buck provided, however, Buck’s joint and several responsibility to return and to pay such sum to Wife shall be limited to $262,000.  Buck appealed.

The Court of Appeals’ opinion affirms the family court’s ruling but clarifies that Buck is only liable to Wife for $262,000.  There’s nothing surprising in this holding.  Plenty of South Carolina case law states that marital property disposed of in anticipation of litigation can be considered part of the marital estate.  Further in this case, the funds from the sale of Seabrook property were traceable.  There’s also some case law holding that when a third-party is holding onto such previously marital property, it’s appropriate to join that third-party into the marital litigation for the purpose of making him or her return that property.  The Court of Appeals didn’t even see the need to cite authority for these two propositions of law.

Still, the Reiss opinion offers a few interesting, and unanswered, questions:

1. Why was Wife entitled to 100% of proceeds from the sale of the Seabrook Island property?  Even with substantial marital fault recent appellate case law hasn’t approved equitable distribution awards for longer marriages at a more extreme distribution than 60/40.

2. Given that there were plenty of other marital assets subject to equitable [thanks go out to Emily Johnston, Ms. Buck’s attorney, who provided me a copy of the family court opinion] why award Wife the assets that were being held by Buck?  It seems like the decision unnecessarily entangles Buck. Is Buck being punished for going into default or for being the other woman , especially an “other woman” who helped Husband secrete marital assets?

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