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A Better Partnership
September 06, 2012

COA Opinion: There is no bright-line rule about how the division of a business in a divorce will effect spousal support

In this per curiam opinion, the Court of Appeals address the effect that the division of a business in a divorce action has on the award of spousal support. As a starting point, the trial court had valued the business, formed by plaintiff, at $280,000 and awarded the company to plaintiff, but also awarded the spouse $140,000 as part of the division of marital property. The trial court then found that "double-dipping" - meaning tapping the same dollars twice - was not allowed, and thus the value of the business could not be considered for the purposes of spousal support given that the business had already been accounted for in the property division. Thus, the trial court imputed an income of $130,000 to plaintiff based upon testimony regarding the fair market value of his compensation, instead of the $240,000 he actually earned from the company. The Court of Appeals disagreed with a universal bar against "double-dipping", instead finding that "courts must employ a case-by-case approach when determining whether 'double-dipping' will achieve an outcome that is just and reasonable within the meaning of MCL 552.23(1)." The Court remanded the matter for this individualized consideration. The Court of Appeals made findings with respect to attorney fees and defendant's imputed income for spousal support calculations, and also concluded that a non-compete order prohibiting defendant from competing with plaintiff's business could not be challenged on appeal given that both parties requested it as part of the judgment of divorce. Judge Donofrio also wrote a concurring opinion indicating that the non-compete restriction was a necessary part of the property restriction as it did not prevent defendant from earning a living in her field, but alleviated a legitimate concern that plaintiff's share of the property (the company) could be devalued through competition.

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