As detailed in our CFL course, in divorce cases, evidence of hidden assets sometimes comes to light. The Florida appeals court case of Rowe-Lewis v. Lewis is a great example of how, in the process, findings of fact can be vital for reaching a fair verdict. The former wife appealed an order denying her motion to set aside the final judgment based on the ex-husband’s falsely reported income.
After a hearing on Thelma Rowe-Lewis’s divorce petition, the trial court entered its final judgment, which denied her alimony request. It found that she didn’t have a substantial need and her former husband, Horace Lewis, lacked the ability to pay. The court considered all of the statutory factors over alimony. But, of the eight alimony factors, the judgment listed specific findings only for section 61.08(2)(j): “Any other factor necessary to do equity and justice between the parties.” Under that section, the trial court had considered Thelma’s steady employment history.
The ruling let each party keep their respective assets and liabilities. Horace could retain his company vehicles, but there was no reference to the distribution or valuation of his former business, a towing company organized as a solely-owned S-corporation.
Thelma motioned to set aside the final judgment under rule 12.540(c), claiming that Horace’s financial affidavit and corresponding testimony were fraudulent. She named undisclosed assets and income sources, including payments deposited into the towing company’s primary business checking account, which she said Horace used for personal expenses. Thelma also submitted proof of those payments. She alleged that if Horace had reported this financial information accurately, the court might have found that he could pay retroactive and ongoing spousal support and that his business was a marital asset subject to equitable distribution.
Despite her allegations, the trial court treated Thelma’s motion as a motion for rehearing and reconsideration and didn’t hold an evidentiary hearing.
Thelma appealed the denial to set aside the final judgment based on Horace’s fraud in not disclosing all of his assets and the court’s rejection of her alimony claim.
District Court of Appeal of Florida, Fourth District
In its decision, the appeals court cited Florida Rule of Civil Procedure 1.540(b) on the issue of whether to hold an evidentiary hearing over the fraud allegations. It also noted that the record indicated a hearing was necessary.
“Although we make no determination about the veracity of Rowe-Lewis’s claims, they were neither boilerplate nor merely conclusory; instead, they were alleged with particularity and with supporting documentation, presenting a colorable entitlement to relief.
Furthermore, sufficiently pled fraud allegations are ordinarily not suitable for summary disposition and require a full explanation of the facts and circumstances of the alleged wrong.”
As such, if Thelma’s claims were found to be true after an evidentiary hearing, the trial court would need to determine whether Horace’s business income was kept for business or personal reasons. If it was the corporation’s “pass-through” income (for non-business purposes), it may be reportable for alimony proceedings.
On the issue of alimony, the appeals court cited past cases and mentioned sections 61.08(1) and 61.08(2) regarding the factors a trial court must weigh to reach a decision. The appellate court decided that the trial court had considered the required statutory factors, but suggested that it should have conducted findings of fact to make a ruling on alimony.
In the end, the appeals court sided with Thelma on the trial court’s failure to hold an evidentiary hearing over her fraud claim and on findings of fact for alimony. It returned the case to the trial court to address those issues, and whether Horace’s former business is a marital asset that should be distributed equally based on findings over its valuation and distribution.
The AACFL is the only organization by and for divorce lawyers and judges that focuses on increasing the level of financial knowledge in the family law community. We’re proud to announce that our organization continues to grow. We recently launched a chapter in Palm Beach, Florida and recognize and applaud the commitment of its founding members.
Our Certified Financial Litigators (CFL) course helps divorce lawyers learn more about business valuation, hidden assets, and a range of other topics. Find out how your legal knowledge can combine with a sound financial education to elevate your law practice in our free information packet today.