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Farrell v. Farrell

Court of Appeals of Arkansas, Division I

January 18, 2017




          Davis, Clark, Butt, Carithers & Taylor, PLC, by: Constance G. Clark and William Jackson Butt II, for appellant.

          Ralph C. Williams and Nancy A. Martin; and Smith, Cohen & Horan, PLC, by: Matthew T. Horan, for appellee.

          ROBERT J. GLADWIN, Judge

         Cynthia "Cindy" Farrell and Hansford "Hank" Farrell were divorced by decree entered in November 2011. Cindy appeals for the third time[1] and argues that the Sebastian County Circuit Court should have provided a more equal distribution of the marital assets and that the court erred in denying her requests for alimony and attorney's fees. We agree that the circuit court's division of the marital property was not equitable to either party. Accordingly, we reverse in part, affirm in part, and remand.

         This was a marriage lasting more than thirty years. The parties agreed that all of their substantial amount of property was marital property. The major asset and the crux of this dispute is Hank's minority interest in a conglomerate of closely held family businesses referred to by the circuit court and the parties as the Farrell-Cooper Companies. He also owns an interest in what the parties called the Texas entities or ventures. The circuit court valued the marital interest in the Farrell-Cooper Companies at $9.9 million after applying a discount, with the entire interest being awarded to Hank. Cindy was awarded the remaining marital property, which included the proceeds from the sale of the marital home, another house in Fort Smith, and the parties' IRA and 401K accounts, with a total value of approximately $1.045 million. Cindy was also awarded lifetime alimony to compensate for the unequal property division. Cindy's appeal of the decree led to our opinion in Farrell I.

         Following remand from Farrell I, the circuit court valued the Texas entities at $1.6 million, with each party's share valued at $800, 000. The court then applied a thirty-five percent minority discount to Cindy's share, with her share calculated at $670, 148.58. This brought Cindy's share of the marital estate to approximately $5.2 million. The Texas entities were assigned, in their entirety, to Hank. The court increased Cindy's alimony to $13, 000 per month. Cindy also appealed this decision.

         In Farrell II, we noted lack of clarity in the circuit court's ruling. There was uncertainty as to whether the periodic payments labeled "alimony" were traditional alimony or payments for Cindy's share of the marital property. We noted that the court appeared to make an unequal distribution of the marital estate without stating the basis for such a division, as required by Arkansas Code Annotated section 9-12-315(a)(1)(B) (Repl. 2015). We also stated that the fact Hank was awarded all of the parties' income-producing property while Cindy had to wait many years before she received her full share of the marital estate was a concern. The circuit court was directed to consider whether Hank should be required to obtain a loan to pay Cindy for her share of the marital property. We further suggested that the court consider some type of security for the payments. Finally, we granted the circuit court permission to reconsider whether Cindy should receive "traditional, " need-based alimony and any possible tax consequences.

         Following the remand from Farrell II, the circuit court confirmed that the monthly payments to Cindy were intended to compensate her for her share of the marital estate. The court conducted a hearing on November 12, 2015, to determine whether Hank should be required to obtain a loan to pay Cindy and what security could be provided to Cindy for the payment of the money owed her. During the hearing, the parties presented evidence addressing whether Hank would be able to obtain a loan with which to pay Cindy for her share of the marital estate. Cindy also proposed that Hank sign a note to her in the amount of approximately $4.2 million on very favorable terms.

         At the conclusion of the hearing, the circuit court asked both parties to submit proposed findings of fact and conclusions of law. The court later adopted the findings of fact and conclusions of law submitted by Hank. The court concluded that Hank was unable to obtain a loan from a commercial bank and rejected Cindy's proposal that Hank sign a promissory note in her favor secured by his interest in the family businesses. The court found that such an arrangement would be unfair to Hank. The court also denied Cindy's request for need-based alimony and denied her petition for attorney's fees. A decree incorporating the findings and conclusions was entered on February 4, 2016. This appeal followed.

         In the earlier appeals, we set forth our standard of review as follows:

On appeal, we review divorce cases de novo. We give due deference to the circuit court's superior position to determine the credibility of witnesses and the weight to be given their testimony. With respect to the division of property in a divorce case, we review the circuit court's findings of fact and affirm unless those findings are clearly erroneous. The obligations imposed upon a trial court by our property-division statute are quite exacting. Arkansas Code Annotated section 9-12-315(a) (Repl. 2009) provides that "[a]ll marital property shall be distributed one-half to each party unless the court finds such a division to be inequitable." The court may make some other division that it deems equitable; however, when it decides not to divide the property equally between the parties, it must recite its basis and reasons for the unequal division in its order.

Farrell I, 2013 Ark.App. 23, at 6, 425 S.W.3d at 829 (alteration in original) (citations omitted). We have ...

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