The Arkansas Supreme Court decided the appeal in Tammye Hall v. Justin Hall by a 4-3 vote last week (September 19, 2013).   A link to the decision and dissent is here:

This is the second reported decision in this case.  See Hall v. Hall, 2012 Ark. 429 (Dismissing cross appeal because of voluntary partial payment of judgment).

The Supreme Court recited the trial court’s finding that Justin Hall willfully concealed marital funds in order to decrease the amount of money to be divided in the divorce, and that his actions were egregious, calculated, and a direct affront to the court and to Tammye.  But in addition to the division of hidden marital funds that Tammye won, she was also seeking increased child support based on Justin’s hidden income.  The trial court denied the increase in child support, reasoning that it could not determine if the hidden funds were regular sources of income or one time payments.

All seven Justices agreed this was “clearly a misstatement of the law…” (Id. at 5; Dissent at 4).

Income for purposes of child support is intentionally broad and designed to encompass the widest of sources.  For purposes of child support, even one-time income such as judgments, gifts, retirement payments, and gambling winnings are included as income.  Despite the clearly erroneous statement of law by the trial court, the majority (Danielson, Hannah, Hart, and Hoofman) held that other factors justified the denial of the motion to increase child support, and affirmed.  Specifically, the four-justice majority cited to that fact that Tammye entered into an agreement on child support because she knew it would be difficult to determine Justin’s income from his self-employment (Hall Engineering), and that the fraudulently hidden funds were derived in 2009 and 2010.

The dissent by Justice Goodson (joined by Corbin and Baker) quotes the verbatim language of the trial court’s order, and the arguments made by Tammye on appeal on what the majority characterized as alternative holdings.  First, Tammye raised the fact that her agreement on child support (which was premised on Justin’s fraud) is not binding.  The trial court always has authority to modify child support even if the parties have entered into an agreement.  Rockefeller v. Rockefeller, 335 Ark. 145 (1998).  Tammye also argued that any agreement premised on a fraudulent disclosure is void.

Finally, the majority’s reliance on the date of the hidden income is misplaced.  Tammye and Justin were divorced in March of 2010 (based on an agreement entered in December 2009).   Tammye filed her motion for increased child support in May of 2011.  The majority opinion cites the fact that the hidden income was derived in 2009 and 2010 as justification for denying the motion.  Yet Tammye made a specific argument supported by caselaw that increased child support should be retroactive to the date of the date of the fraud – December 2009.  Administrative Order 10(c) says child support for self-employed payors shall be calculated based on the last two years’ income and the current year’s quarterly estimates.  Applying the Supreme Court’s Administrative Order, Tammye was obligated to produce proof of Justin’s income in 2009 and 2010 to calculate the support due under the chart guidelines for 2011.   The fact that Justin hid income from 2009 and 2010 favors Tammye’s position, not Justin’s.   How could income from 2010 not be relevant to calculating the true support that should have been paid in 2010?

More broadly, it is troubling that this decision may carve out a peculiar fact-based exception to the longstanding policy of the State to protect the interests of children by broadly defining income for child support purposes and preventing litigating parents from bargaining away the support that is due under the law for a child.  It also seems to reward Justin’s fraud by refusing to impute as income for child support purposes the funds he fraudulently hid from Tammye and the trial court.  Perhaps these issues can be clarified if the Supreme Court grants rehearing.

I was pleased to represent Tammye on appeal, but Justice Goodson properly credited Tammye and her trial attorney, Lucas Rowan, on their determination in this case:  “It took a Herculean effort to unravel Justin’s deceit and to produce an accounting of Justin’s income.”  Id. at 5.

Tim Cullen

September 23, 2013