DICKINSON, Presiding Justice, for the Court:
¶ 1. A judgment creditor served writs of execution on two corporations whose restricted stock was owned by the judgment debtor, who then sold his stock back to the corporations. The chancellor dismissed the writs, holding that the sale of stock rendered them moot.
¶ 3. These three consolidated appeals — all springing from a divorce granted in 1994 — present thirty-eight issues including one of first impression. Because we are reversing the chancellor on three issues and remanding for a new trial; and because the chancellor's resolution of those issues may affect the outcome of others, we hold that all issues not specifically resolved in this opinion may be presented by the parties to the chancellor for adjudication.
¶ 4. When Charles Timothy West ("Tim") and Deborah Gayle Thornton West ("Debbie") divorced in November 1994, their property settlement agreement ("Agreement") required Tim to pay child support and to make "bi-weekly periodic payments of one-half of [his] income" as alimony. Debbie was also "entitled to and shall be vested with one half (½) of all existing marital assets."
¶ 5. At the time of the divorce, Tim was employed by West Quality Food Services, Inc. ("West Quality"); he owned stock in West Quality and Coastal Express, Inc. ("Coastal"); and he held limited partnership interests in West Leasing Company, West Brothers Leasing Company, and West Family Leasing Company ("the West Leasing Companies"). All of these entities ("West Entities") are closely-held family businesses.
¶ 6. After five years had passed, relying on advice of counsel, Tim reduced his alimony payments according to calculations provided by West Quality's accounting firm, Horne, LLP. Debbie filed a contempt action, and Tim counterclaimed, arguing that the Agreement's alimony and property-division provisions were ambiguous and unenforceable; and that — because the Agreement did not define the term "marital assets" — Debbie was not entitled to an ownership interest in half of his business assets.
¶ 7. On April 30, 2002, the chancellor entered an interlocutory judgment, finding that Tim and Debbie never actually had reached an agreement on alimony and division of property, and that the issue should be presented to the court anew. Debbie filed an interlocutory appeal, arguing the trial court erred in (1) holding the provisions of the Agreement null and void; (2) failing to determine that $411,000 in corporate loans to Tim were actually distributions, in which she was entitled to share; (3) failing to determine that Tim breached his obligations under a predivorce death-benefit agreement. Debbie also argued that she was entitled to attorneys fees, and that — absent the parties' consent — the chancellor had no jurisdiction or authority to void the Agreement and start over.
¶ 8. We granted Debbie's application for interlocutory appeal. We held that the portion of the Agreement titled "Support and Division of Income for Wife" was ambiguous, and we resolved the ambiguity by finding it awarded Debbie periodic alimony.
¶ 9. After we remanded, Debbie filed an amended complaint, adding the West Entities as defendants, claiming they had conspired with Tim to deprive her of her portion of distributions to Tim by disguising the distributions as "loans" from Coastal Express and West Quality. Following extensive discovery, the chancellor dismissed the West Entities as parties and, finding Debbie had no reasonable basis to pursue a claim against West Entities, ordered Debbie to pay their attorneys' fees.
¶ 10. At the conclusion of the trial, the chancellor issued an extensive, fifty-two-page opinion and final judgment, in which he found that:
¶ 11. From the chancellor's order, both Tim and the West Entities appealed, and Debbie cross-appealed.
¶ 12. While the appeal of West II was pending, Debbie filed discovery requests
¶ 13. On November 18, 2008, Debbie attempted to collect her judgment for past-due alimony and attorneys' fees by filing a writ of execution on Tim's distributions from, and shares of stock in, West Quality and Coastal. Tim and West Quality responded with motions to stay, dismiss, or quash the writ, pointing out the prohibitions in the West Quality bylaws and stock agreement. The chancellor stayed the writ of execution and requested briefs on the effect of the restrictions.
¶ 14. Meanwhile, the corporation demanded repayment of the loans they had made to Tim. Tim responded that he would have to sell his stock to pay the loans, so he sold his West Quality stock back to West Quality for $1,552,804, and his Coastal stock to back Coastal for $87,953. West Quality retained the bulk of the stock-sale proceeds-$1,172,205-in satisfaction of Tim's debt. The corporations satisfied the balance of the purchase price of Tim's stock by executing separate promissory notes at 2.96% interest, payable in annual installments.
¶ 15. As a result of the stock sale, the chancellor denied Debbie any relief on her writ of execution, finding it was nullified by his previous stay order and the stock sale. Debbie appealed this decision. We have consolidated all of these appeals.
¶ 16. Our standard of review for the issues we address today is well-understood: We will affirm a chancellor's findings of fact when they are supported by substantial evidence, unless the chancellor abused his or her discretion, was manifestly wrong, was clearly erroneous, or applied an erroneous legal standard.
¶ 17. In considering the alimony issue initially, the chancellor expressed understandable frustration with the Agreement's unusual alimony provisions. He held they were ambiguous and void. But for reasons stated in West I, we reversed and remanded, finding that the provisions were enforceable, and that the alimony was periodic.
¶ 18. Upon remand (West II), Tim argued a reduction in his income justified a corresponding reduction in alimony. But the chancellor refused to consider any reduction in alimony, stating:
¶ 19. Tim appeals, arguing that the chancellor should have considered and applied the Armstrong
¶ 20. We indeed held in West I that the Agreement's alimony provisions were enforceable.
¶ 21. In this case, the Agreement's alimony provision — which this Court determined in West I to be periodic alimony — served as a guideline for the chancellor to determine appropriate alimony. But when the Agreement was incorporated into the final divorce decree, its alimony provisions became an enforceable court award of periodic alimony, subject to modification upon a proper showing of a material change in circumstances.
¶ 22. Periodic-alimony awards are based on need and ability to pay — not contract law.
¶ 23. For the reasons stated, we reverse the chancellor and remand for a determination of whether a material change in circumstances exists and, if so, whether it merits a change in the chancellor's award of periodic alimony. And we instruct the chancellor to apply the Armstrong factors to make the determination.
¶ 24. Under the Agreement's "Division of Marital Property" language, Tim agreed — and the chancellor approved — the following provision:
¶ 25. Unlike periodic alimony, this provision divided the Wests' property as it existed at the time of the divorce. It is not subject to change.
¶ 26. Tim argues that, because the provision does not include or mention the word "distribution," the chancellor erred by finding that Debbie was entitled to half of his distributions from the entities that existed at the time of the divorce. We disagree.
¶ 27. Tim cannot credibly argue that he did not intend to transfer to Debbie an equitable interest in all of the business interests he held at the time the agreement was signed. These business interests included his stock and his ownership in the limited partnerships. An equitable title provides a "beneficial interest" in property,
¶ 28. The Agreement provided that Tim would share with Debbie all benefits, including distributions, that resulted from his ownership interest in the stock and partnerships that existed at the time the agreement was signed. Tim's salary, on the other hand, was not a benefit of his ownership interest, but rather his pay for work. His salary — and any change in Debbie's financial condition — may certainly be considered in evaluating Tim's ongoing periodic-alimony obligation. But Debbie was awarded an equitable interest in Tim's stock and other business interests — as they existed at the time the Agreement was signed. And we cannot say the chancellor erred in this regard.
¶ 29. Tim argues that, because of transfer restrictions, the chancellor should have voided the Agreement's provisions that purported to transfer to Debbie an interest in his stock. His brief is riddled with such statements as: "The chancellor should have voided the provision of the Agreement whereby [he] attempted to transfer and lien his interest in West Quality ...," and "The West Quality shareholder agreement provides that a shareholder may not dispose of his stock nor can the shareholder lien his interest in the stock," and "a transferee acquires no right in the shareholder's stock absent compliance with this agreement."
¶ 30. We have carefully reviewed Debbie's arguments before the trial court, her writs of execution, and her briefs before this Court; and we do not find that she
¶ 31. The Agreement clearly recognized that Tim would remain the legal owner of the stock, but it just as clearly announced Tim's intent to grant Debbie half of every benefit that resulted from his ownership interests in the businesses. This is consistent with the Agreement's specific language: "Husband acknowledges, and it is the intention of both parties, to make a present transfer to Wife of a one-half (½) vested equitable ownership interest in said properties as a division of marital assets, while married...." The chancellor found this agreement to be reasonable when he granted the divorce and incorporated the property-settlement agreement into the decree.
¶ 32. Tim now argues that the provision is void because his stock was restricted. But he provides us no reason why the restricted nature of his stock prevents him from dividing the financial benefits of the stock with whomever he pleases. Because Debbie's claim is to an equitable interest in — not legal title to — Tim's stock and business interests, we hold that Tim's transfer of an equitable interest in his business holdings was valid, binding, and enforceable; and this issue is without merit.
¶ 33. The Agreement, referencing a life-insurance policy with Franklin Life Insurance Company, provides that Tim and Debbie would each pay half of the $260 monthly premium. Tim stopped paying the premiums and allowed the accumulated cash value to pay the premiums. Also, Debbie withdrew some cash value without Tim's consent. These decisions were contrary to a provision in the Agreement that prohibited use of cash value, absent agreement of both parties.
¶ 34. The chancellor mistakenly held that — because the Agreement did not provide what would happen if one party withdrew cash value without the consent required by the Agreement — Debbie did not violate the Agreement by withdrawing cash value without Tim's consent. In this regard, the chancellor overlooked the fact that, when he incorporated the property-settlement agreement into the divorce decree, its provisions regarding child support, property settlement, and alimony ceased being contractual in nature and became part of an enforceable court order.
¶ 35. We find, however, that both parties violated the provision, and the chancellor fashioned a reasonable and equitable remedy whereby Tim is required to obtain a term-life policy with the same premium required by the Agreement. We do not find the chancellor's decision was an abuse of discretion, and we affirm the chancellor on this issue.
¶ 36. Tim argues that chancellor should have held Debbie in contempt for withdrawing part of the life-insurance cash value without his consent, as required by the Agreement/court order. While we hold the chancellor incorrectly found Debbie did not violate the Agreement by withdrawing cash value, we find the chancellor's remedy was fair and equitable. As stated above, both Debbie and Tim violated the Agreement by wrongfully withdrawing cash value. The chancellor may, at his discretion, revisit this issue on remand.
¶ 37. The chancellor stated in his findings of fact that "Tim has the duty to keep Debbie informed of his financial status as required by the Agreement and that he has breached that duty." Tim argues that the chancellor provided no basis for this statement and holding. We agree. We find nothing in the chancellor's findings of fact or orders that establishes when or how Tim breached his duty to provide financial information.
¶ 38. Although the chancellor did not hold Tim in contempt, Tim is entitled to know what facts support a finding that he breached his obligation under the Agreement. We reverse the chancellor's finding that Tim was in breach of the Agreement for failing to provide financial information to Debbie. If necessary, the issue may be presented to the chancellor anew on remand.
¶ 39. Debbie claims that her equitable interest in Tim's stock entitled her to half of certain constructive distributions West Entities made to Tim, or for his benefit. These distributions were made in three forms: First, West Quality made direct loans to Tim. Second, West Quality loaned Tim money which he, in turn, loaned to Coastal. Third, West Quality paid various expenses for Tim, including income taxes and attorneys' fees, which it carried on its books as an account receivable. The parties refer to this account receivable as the "113 account."
¶ 40. In West I, we remanded Debbie's constructive-transfer issue with instructions to the chancellor to decide if $411,000 in transfers from West Quality to Tim were loans or constructive distributions.
¶ 41. On remand, the chancellor held that these transfers to Tim were legitimate loans — not distributions. As we suggested in West I,
¶ 42. Absent an abuse of discretion or clearly erroneous findings, we decline to disturb the chancellor's decision, which, on this issue, was supported by substantial evidence. So on this issue, we affirm the chancellor's finding that the transfers to Tim were legitimate loans.
¶ 43. On November 19, 2008, in an attempt to collect judgments in excess
¶ 44. At a hearing on the motions, the chancellor — after hearing lengthy arguments from counsel concerning whether Debbie could execute on restricted stock — said:
¶ 45. The chancellor then stated that he was abating execution on the writs "[t]o give [Debbie's counsel] an opportunity to submit some authority to the Court on the question-and law on the question." One of Coast Entities' counsel requested, and was granted, an opportunity to respond to the brief to be submitted by Debbie's counsel. With respect to the West Entities' motions to quash the writs, the chancellor entered an order on December 1, 2008, finding that "the Writ of Execution is stayed and abated until further order of this Court." On December 15, 2008, he entered a similar order with respect to Tim's motion to stay the writs.
¶ 46. The chancellor ordered briefing, with Tim's brief (after an extension was granted) due on February 6, 2009. But a few days before his brief was due, Tim sold his West Quality and Coastal stock back to the respective companies. Rather than paying Tim the $1,552,804 purchase price for its stock, West Quality applied $1,172, 205 to satisfy Tim's loans and other debts to the company, and gave him a promissory note for the $380,599 balance. Coastal gave Tim a promissory note for the entire $87,953 purchase price of its stock. Then, rather than providing briefs on the question of whether Debbie could execute on restricted stock, West Quality and Coastal filed answers to Debbie's writ of execution, claiming the writs were mooted by their purchases of Tim's stock.
¶ 47. On October 20, 2009, the chancellor held a hearing on the issues surrounding Debbie's writs of execution. His order, entered the following month, held that the motion to quash the writ of execution was moot because
¶ 48. After the chancellor entered the order, Debbie moved for Rule 52
¶ 50. So when Debbie served the writs, she was entitled to execute on Tim's "stock, shares and interest" in both West Quality and Coastal, and her right to the proceeds to satisfy her judgment was and is a matter of the law of priority of liens. This issue was never addressed by the trial court.
¶ 51. Upon receipt of service of the writs, West Quality and Coastal had the statutory duty to deliver "a written statement in writing, under oath, of the particulars demanded by the officer, and of the value of the defendant's stock, shares, or interest....."
¶ 52. So, prior to the stock sale, West Quality and Coastal had an obligation to report Tim's stock holdings. After the sale, they had a duty to report that they were holding the proceeds, and to make them available to Tim's creditors, according to the rules of priority of liens. This they did not do. We therefore must remand this matter for the chancellor to review the facts and apply the law of priority of liens.
¶ 53. On remand, the chancellor awarded Debbie $570,792 in past-due alimony and simple interest at seven percent per annum. Tim appeals, arguing that the chancellor should not have granted Debbie prejudgment interest on her alimony award, because the amount was disputed. He cites Microtek Medical, Inc., v. 3M Co. in which this Court stated that the trial judge has the discretion to award prejudgment interest if the damages amount is fixed and liability is undisputed, but the court will deny interest when there is a bona fide dispute concerning the amount of damages and the liability.
¶ 54. Debbie correctly points out that we recently clarified the Microtek holding, making clear that "prejudgment interest may be allowed in those cases where the amount due is liquidated when the claim is originally made or where the denial of a claim is frivolous or in bad faith."
¶ 55. During the hearing on the West Entities' motion to dismiss, the chancellor asked Debbie's counsel to explain the specific things the West Entities did or failed to do that caused them to be a party to a fraudulent conveyance. Debbie's counsel answered, "They loaned the money. They gave the money." Her attorney went on to say that "[w]hat we alleged in the amended complaint, and the relief we sought relating to [the fraudulent conveyance count] is a determination that those sums are in fact a fraudulent conveyance." The chancellor granted the motion to dismiss, explaining that "[t]he fact that a corporation loaned money to a stockholder in and of itself would be insufficient for the Court to determine that they've participated in a fraudulent conveyance."
¶ 56. On appeal, Debbie argues that the chancellor erred in granting the West Entities' motion to dismiss and their motion for attorneys' fees. Reviewing these issues de novo, we affirm the dismissal of the West Entities and the award of attorneys' fees to be paid by Debbie.
¶ 57. Debbie asserts that the chancellor erred in awarding fees for services prior to the filing of her complaint against them, and that he failed to consider the McKee
¶ 58. Debbie filed her amended complaint — joining the West Entities as defendants and asserting the transfers between them and Tim were fraudulent conveyances — on April 21, 2006. The chancellor's award of attorneys' fees included services rendered from August 2005. We disagree that the chancellor erred in awarding fees for services performed before Debbie filed or served the complaint officially joining the Entities as parties, because the West Entities incurred attorneys' fees for producing numerous documents in response to subpoenas issued by Debbie in 2005, and they continued to incur fees because of Debbie's motion to amend her complaint in September 2005. Although the trial judge did not include an analysis of the McKee
¶ 59. The parties have raised numerous other issues. We find that all issues raised which are not specifically adjudicated in this opinion are remanded for presentation to the chancellor anew. The chancellor's determination of these issues will necessarily depend, to some degree, on his determination of the priority issue with respect to Debbie's writs of inquiry, and on Tim's issue with respect to alimony.
¶ 60. We affirm in part, reverse in part and remand for a new trial. The parties may present to the chancellor — for a decision on the merits — any issue not specifically resolved by this opinion. We reverse and remand for the chancellor to determine whether a material change in circumstances merits a change in Tim's periodic-alimony obligation. We affirm the chancellor's decision finding that Debbie is entitled
¶ 61.
CARLSON, P.J., LAMAR, PIERCE AND KING, JJ., CONCUR. KITCHENS, J., CONCURS IN PART AND DISSENTS IN PART WITH SEPARATE WRITTEN OPINION JOINED BY WALLER, C.J., AND CHANDLER, J. RANDOLPH, J., NOT PARTICIPATING.
KITCHENS, Justice, concurring in part and dissenting in part:
¶ 62. I respectfully disagree with the majority's reversal of the periodic alimony award. In West I, 891 So.2d 203, 213 (Miss.2004), this Court held that the following provision in the property settlement agreement should be considered periodic alimony:
¶ 63. In West I, 891 So.2d at 211, this Court clearly held that "the general purpose of the agreement was for Tim to provide one-half of his various forms of income to Debbie...." However, this Court directed the trial court to determine on remand "whether there was a material change in circumstances which clearly resulted in an inability to pay, justifying Tim's refusal to pay periodic alimony to Debbie." Id. at 219.
¶ 64. On remand, Tim argued that he should not be required to provide Debbie one-half of his income, based on his reduction in income and decrease in earning capacity. The chancellor rejected Tim's argument, finding that the agreement was self-modifying. As an example, the chancellor noted that "while Tim's income has been reduced by the elimination of payments for board fees, his obligation to Debbie has been equally reduced by virtue of the PSA which is based on a percentage of income rather than a set monthly amount." Because Debbie's alimony is based on a percentage of Tim's income, a genuine reduction in his income would result in a reduction in his obligation to her; therefore Tim is attempting to relitigate issues already decided by this Court. I would affirm the chancellor's periodic alimony award, and therefore concur in part and dissent in part.
WALLER, C.J., AND CHANDLER, J., JOIN THIS OPINION.