In Loutts v Loutts, the Michigan Court of Appeals rejected various aspects of the trial court's judgment of divorce, holding that the trial court had abused its discretion. Most significantly, the Court held that the trial court erred by holding that double dipping among spousal support and property division is never appropriate as a matter of law. The Court emphasized that Michigan law favors a case-by-case approach to spousal-support calculations, and such a bright-line rule was inappropriate.
The Court found that the trial court had abused its discretion with regard to two issues. The trial court failed to address the issue of attorney and expert fees, despite the defendant's repeated requests for such fees, and the trial court's failure to exercise discretion constituted an abuse of discretion. Additionally, the trial court determined the defendant's earning capacity based on mere speculation, without adequate evidentiary support. The Court remanded on these issues.
The Court went on to reject a bright-line rule regarding 'double dipping' in calculating spousal support. Double dipping occurs when the value of a business is used for calculating both the division of property and spousal support. In determining the plaintiff's income for the purpose of spousal support, the trial court refused to consider the value of the plaintiff's business, because it had already been factored into the parties' property distribution. The Court rejected this categorical approach, holding that courts should not unquestioningly avoid double dipping but rather must address the issue on a case-by-case basis to achieve a just and reasonable outcome.
The Court also upheld a noncompete clause in the judgment of divorce, prohibiting the defendant from competing with the plaintiff's company for three years, on the grounds that both parties had initially requested it.
Judge Donofrio filed a concurring opinion to address the noncompete clause further. He argued that the noncompete clause was necessary to ensure an equitable property division, particularly considering the defendant's desire and ability to compete with the company. Because the restriction was reasonable in duration and scope, it was properly upheld.