Elaine C. Waguespack VS George K. Waguespack

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NOT DESIGNATED FOR PUBLICATION STATE OF LOUISIANA COURT OF APPEAL FIRST CIRCUIT 2009 CA 1478 ELAINE C WAGUESPACK VERSUS d GEORGE K WAGUESPACK Judgment Rendered AUG 2 0 2010 APPEALED FROM THE TWENTYTHIRD JUDICIAL DISTRICT COURT IN AND FOR THE PARISH OF ASCENSION STATE OF LOUISIANA DOCKET NUMBER 75139 DIVISION A THE HONORABLE RALPH TUREAU JUDGE David J Calogero Attorney for Plaintiff AppelleeAppellant Lafayette Louisiana Elaine C Waguespack Marcus T Foote Attorney for DefendantAppellant Appellee Baton Rouge Louisiana George K Waguespack BEFORE PARRO KUHN AND McDONALD JJ WDONALD J This is an appeal of a judgment partitioning the community property belonging to George K Waguespack and Elaine C Waguespack The Waguespacks were married on August 17 1991 and had two children The Waguespacks were divorced on September 9 2004 Their community property regime was terminated on May 8 2003 the date of the filing of the original petition for divorce The primary issues at trial were the valuation of the community interest in Gaudin Mr Waguespack former law practice Waguespack s Waguespack APLC Gaudin and the classification of payments from cases that were tried or settled after termination of the community property regime Waguespack Gaudin was organized on June 19 2002 and Mr Waguespack and his law partner Gary Gaudin were each fifty percent shareholders In November 2004 the Waguespack Gaudin law firm split up and Mr Waguespack established a new law firm Waguespack and Associates APLC Mr Gaudin established his own firm also Waguespack Gaudin clients were given the choice of which attorney would continue to represent them in their ongoing cases Approximately 80 percent chose Mr Gaudin and the rest went with Mr Waguespack On August 4 2005 Mr Waguespack and Mr Gaudin reached an agreement to compensate each other for the value oftheir ownership interests in Waguespack Gaudin agreeing that as the cases from Waguespack Gaudin settled fifty percent of the fee would go to whichever of their new law firms handled the case The other fifty percent would be divided by agreement and if no agreement could be reached the funds would be placed in trust In accordance with the agreement Mr Gaudin paid Mr Waguespack 241 Mr Waguespack paid Mr Gaudin 85 294 55 432 9 A large balance was carried in Mr Gaudin trust account for the s 2 disputed fees Mr Waguespack put all of his funds received from the cases into the operating account of his new firm Waguespack and Associates On January 31 2007 Mr Waguespack was transferred to disability inactive status by the Louisiana Supreme Court He had not actively practiced law for some period of time before that date due to health problems Ultimately no amicable resolution of the dissolution of Waguespack Gaudin could be reached and Mr Gaudin filed a petition for an accounting and involuntary dissolution against Mr Waguespack Mr Waguespack failed to answer the suit and a confirmation of default judgment was obtained by Mr Gaudin on March 26 2008 Kliebert Jr Waguespack In that judgment rendered by Judge Thomas J Gaudin was dissolved as of November 1 2004 an accounting was made for assets retained by each owner and Mr Waguespack was awarded 129 representing his interest in the former law practice 65 141 The award included an offset for onehalf of the attorney fees and expenses recovered but never accounted for by Mr Waguespack to Mr Gaudin Mr Waguespack appealed that judgment and on appeal this court found that the district court judgment went beyond the relief requested in the petition found the district court judgment null and void reversed the district court ruling and remanded the case to the district court for a new hearing Gaudin v Waguespack 20090218 La App 1st Cir 9 unpublished 09 11 The judgment of Judge Kliebert was used by the district court in this case in determining the value of the community interest in Waguespack Gaudin The district court accepted Judge Kliebert findings as to the value of the community s interest and that asset 129 was ultimately allocated to Mrs Waguespack 65 141 in the community property partition Mr Waguespack appealed the judgment partitioning the community property and Mrs Waguespack answered the appeal Mr Waguespack makes seven assignments of error which are summarized below K 1 The district court committed legal error by adopting ajudicial decision from a separate corporate dissolution suit which judgment was not final and was subsequently reversed as the foundation for two portions of its judgment 2 The district court committed legal error by utilizing the accounting procedures used in a corporation dissolution suit as the basis for the valuation of a community business pursuant to La R 9 S 2801 3 The district court committed legal error by classifying 129 in the 65 141 escrow account as community property 4 The district court committed legal error by awarding Mrs Waguespack 42 647 120 in reimbursements for funds received after termination of the community 5 The district court committed legal error by failing to recognize that Mrs Waguespack admitted through judicial confession that 241 in post 85 294 termination income was the separate property of Mr Waguespack 6 The district court committed legal error by categorizing the Travelers Life and Annuity Company annuity number 982ONW55450 as a community s asset 7 The district court committed legal error by awarding Mrs Waguespack any interest in the Travelers Life and Annuity Company annuity number s 9820NW55450 Mrs Waguespack asserts seven assignments of error summarized below 1 The district court erred in failing to find a community interest in former Waguespack Gaudin files from which referral fees were anticipated 2 The district court erred in failing to determine that dividends paid to Mr Waguespack after termination of the community were community property 3 The district court erroneously calculated Mrs Waguespack reimbursement s claim for the value of improvements to Mr Waguespack sseparate property located at 42399 R Waguespack Road 4 The district court erred in failing to find a community interest in Waguespack Gaudin cases handled by defendant but not accounted for Gaudin dissolution prior to the Waguespack 5 The district court erred in failing to find a community interest in fees and expenses retained by Mr Waguespack on Waguespack Gaudin files 6 The district court erred in failing to allocate the law building to Mrs Waguespack 7 The district court erred in failing to award Mrs Waguespack costs 10 STATUTORY LAW Louisiana Revised Statute 9 provides in pertinent part 2801 A When the spouses are unable to agree on a partition of community property or on the settlement of the claims between the spouses arising either from the matrimonial regime or from the coownership of former community property following termination of the matrimonial regime either spouse as an incident of the action that would result in a termination of the matrimonial regime or upon termination of the matrimonial regime or thereafter may institute a proceeding which shall be conducted in accordance with the following rules 4 The court shall then partition the community in accordance with the following rules a The court shall value the assets as of the time of trial on the merits determine the liabilities and adjudicate the claims of the parties b The court shall divide the community assets and liabilities so that each spouse receives property of an equal net value MR WAGUESPACK ASSIGNMENTS OF ERROR S NUMBERS ONE AND TWO In assignments of error numbers one and two Mr Waguespack asserts that the district court committed legal error in using a nonfinal decision of Judge Kliebert which was later reversed as the foundation for part of his judgment and in using the shareholder scorporate liquidation procedures to value the community business In determining the value of Waguespack Gaudin the district court had in addition to the judgment of Judge Kleibert the testimony of Terez LeBlanc CPA regarding the firm book value and the dividend values the testimony of Mr s Gaudin regarding the firm fee sharing and compensation plans Mr Gaudin s s exhibits from the valuation stestimony Waguespack trial Mr Waguespack s testimony and Mrs A review of the record shows that there was ample examination of the valuation of the firm done independently of Judge Kliebert s E findings and the district court had access to all of the information used by Judge Gaudin Kliebert in the valuation of Waguespack The trial court determination of the value of a community business is a s factual one which will not be disturbed absent manifest error Ellington v Ellington 36 p 7 La App 2d Cir 3 842 So 1160 1166 writ 943 03 18 2d denied 2003 1092 La 6 847 So 1269 As long as the trial court is 03 27 2d careful to value the interest in the corporate entity not just the assets of the business itself the factfinder operates appropriately within his discretion See Rao v Rao 2005 0059 p 14 La App I Cir 11 927 So 356 365 writ 05 4 2d denied 2005 2453 La 3925 So 1232 06 24 2d The district court examined the parties descriptive lists adjudged each asset and liability as separate or community property and assigned value The interest in the corporate entity was valued not just its assets We find no abuse of discretion and no legal error or manifest error by the district court in the valuation of the law practice MR WAGUESPACK ASSIGNMENTS OF ERROR S NUMBERS THREE AND FOUR In assignments of error numbers three and four Mr Waguespack asserts that the district court committed legal error in finding the escrow account to be community property and in granting Mrs Waguespack reimbursement for post termination funds Mr Waguespack asserts that the trial court erred in failing to use the burden of proof set out in Lanza v Lanza 20041314 La 3 898 So 280 05 2 2d In Lanza the court discussed issues of status of property as separate or community for the purposes of partition as well as which spouse has the burden of proof in making that case to the factfinder In Lanza the court analyzed the post community income Mr Lanza earned from renewal commissions generated by rol insurance policies written during the marriage insurance policies commissions were things that could Mrs Lanza argued that the produce fruits renewal The issues raised in Lanza are similar to those in these two assignments of error that is which party had the burden of proving whether certain payments to Mr Waguespack were separate or community The Lanza court found that only that portion of revenue received during the community was presumed to be community property Thus Mrs Lanza had the burden of proving by a preponderance of the evidence which portion of post community revenue should be attributed to labor performed during the existence of the community Lanza 20041314 at p 17 898 So at 290 291 2d In the case before us Mr Waguespack asserts that the district court s determination that 129 held in escrow following Judge Kliebert 65 141 sruling in Gaudin v Waguespack is community property does not meet the requirements of Lanza This assertion is without merit At trial the district court accepted testimony and evidence regarding the value of Mr Waguespack interest s in Waguespack Gaudin during the existence of the community property regime The witnesses and evidence offered by Mrs Waguespack demonstrated that the funds in question Mr Waguespack share of the value of the law corporation s were attributable to effort exerted during the community property regime In a similar vein Mr Waguespack argues that Mrs Waguespack did not meet the Lanza standard in regard to 120 in post termination funds 42 647 awarded to her in the form of reimbursement However the district court s evaluation of the testimony in regard to those funds properly takes into account Mrs Waguespack requirements for proof s determination cannot be disturbed Absent manifest error this The link between Mr Waguespack effort s I This reimbursement was based on the court classifying as community property the s 85 294 241 payment to Mr Waguespack by Mr Gaudin when the cases formerly handled by Waguespack Gaudin were settled 7 during the community property regime and those funds was established in the record Thus we find no legal or manifest error in this decision MR WAGUESPACK ASSIGNMENT OF ERROR NUMBER FIVE S In assignment of error number five Mr Waguespack asserts that the district court committed legal error by failing to recognize a judicial confession by Mrs Waguespack that the 241 posttermination payment was the separate 85 294 property of Mr Waguespack The district court found that Mr Waguespack fifty percent interest in s Waguespack Gaudin was a community asset as ownership in the law firm was acquired during the community Thus the 241 payment made to Mr 85 294 Waguespack representing Mr Waguespack sonehalf interest in Waguespack s Gaudin fees and expenses was community property and as such Mrs Waguespack was entitled to a reimbursement of onehalf of that amount or 42 647 120 We find no legal or manifest error in that district court determination MR WAGUESPACK ASSIGNMENTS OF ERROR S NUMBERS SIX AND SEVEN In assignments of error numbers six and seven Mr Waguespack argues that the district court committed legal error by categorizing and allocating the Travelers Life and Annuity Co annuity contract number 9820NW55450 as a community asset and by awarding Mrs Waguespack an interest in that annuity Although the annuity was not purchased until September 22 2004 the annuity was funded by proceeds from a Waguespack Gaudin case We find no legal or manifest error in the district court determination that the annuity was a s community asset Thus we cannot say the district court erred in finding that Mrs Waguespack had an interest in this asset MRS WAGUESPACK SASSIGNMENT OF ERROR NUMBER ONE In this assignment of error Mrs Waguespack asserts that the district court erred in failing to find a community interest in former Waguespack Gaudin files from which referral fees would be received at a later date Although these files were originally acquired during the existence of the community property regime payment for referral contracts if any would occur after termination Thus Mrs Waguespack had the burden of proving which funds were community property and the district court found that Mrs Waguespack failed to establish how much work was done on these files during the existence of the community property regime Further the district court found that to state a value or fee for those contracts would be speculative considering that these cases were being handled by other attorneys due to Mr Waguespack disability status s After a thorough review of the record we cannot say that the district court erred in this determination MRS WAGUESPACK ASSIGNMENT OF ERROR NUMBER TWO S In this assignment of error Mrs Waguespack asserts that the district court erred in failing to determine that 256 paid to Mr Waguespack by 599 Waguespack property Gaudin after termination of the community was community The district court found that Mr Waguespack only income after the s termination of the community until the time that Waguespack Gaudin ceased doing business consisted of the amounts paid by the law corporation to Mr Waguespack and that this was his salary at the time which was his separate property After a thorough review of the record we cannot say that the district court committed legal or manifest error in this determination 6 MRS WAGUESPACK ASSIGNMENT OF ERROR NUMBER THREE S In this assignment of error Mrs Waguespack asserts that the district court erroneously calculated her reimbursement claim for the value of improvements to 42399 R Waguespack Road Mr Waguespack separate property s She argues that the evidence shows that between 70 and 85 in 000 000 community funds were used to improve the home and land but that the district court erroneously found that only 55 of community funds were used for those 000 improvements Thus Mrs Waguespack argues her reimbursement should have been higher than the 27 awarded to her by the district court 500 A review of the record shows that Mrs Waguespack offered testimony on the amounts she believed the improvements to Mr Waguespack separate s property were worth However she did not have any receipts or documentation and she admitted that some of the work was done in trade by Mr Waguespack s family and friends apparently in return for legal work done by Mr Waguespack and that only Mr Waguespack knew the amounts spent on the property The party claiming the reimbursement has the burden of proof Sherrod v Sherrod 97 907 p 7 La App 5 Cir 3 709 So 352 356 writ denied 98 1121 La 98 25 2d 98 5 6 720 So 687 2d Mr Waguespack testified that the total amount spent on the property was 000 50 to 55 excluding the movable appliances but including the barn the 000 driveway and everything else The district court apparently interpreted 50 to 000 000 55 to be around 53 for the house barn and driveway with another 500 500 1 added for movable appliances for a total of 55 We cannot say that 000 the district court committed manifest error in this calculation MRS WAGUESPACK ASSIGNMENT OF ERROR NUMBER FOUR S In this assignment of error Mrs Waguespack asserts that the district court erred in failing to find a community interest in Waguespack 10 Gaudin cases handled by Mr Waguespack but not accounted for prior to the Waguespack Gaudin dissolution The district court found that Mrs Waguespack failed to meet the burden of proving how much work was done prior to the termination of the community and as such was not entitled to reimbursement for that item After a thorough review of the record we find no error by the trial court in that determination MRS WAGUESPACK SASSIGNMENT OF ERROR NUMBER FIVE In this assignment of error Mrs Waguespack asserts that the district court erred in failing to find a community interest in fees and expenses retained by Mr Waguespack on Waguespack Gaudin files The district court found that these fees and expenses were the separate property of Mr Waguespack We find no error in that determination This assignment of error has no merit MRS WAGUESPACK ASSIGNMENT OF ERROR NUMBER SIX S In this assignment of error Mrs Waguespack claims the district court erred in failing to allocate the law office building to her She asserts that the district court determined that her share of the community property equaled 195 10 011 and the law building was valued at 195 Thus the district court should have 000 awarded her the law building in the partition especially since she is a single mother with two high school aged children she gets little or no child support from Mr Waguespack and the law building rental payments would provide her with an income In allocating the community assets and liabilities the court may divide a particular asset or liability equally or unequally or may allocate it in its entirety to one of the spouses The court must consider the nature and source of the asset or liability the economic condition of each spouse and any other circumstance the court deems relevant La R 9 S 2801A Ellington v Ellington 36 at p c 4 943 5 842 So at 1165 2d 11 The law office building which was purchased from Mr Waguespack s parents was formerly used by Mr Waguespack as his office While Mrs Waguespack disagrees with the district court decision to award the law office s building to Mr Waguespack she does not show an abuse of discretion by the district court in awarding that asset to Mr Waguespack MRS WAGUESPACK SASSIGNMENT OF ERROR NUMBER SEVEN In this assignment of error Mrs Waguespack asserts that the district court erred in failing to award her costs The court may render judgment for costs or any part thereof against any party as it may consider equitable La C art P 1920 We find no abuse of discretion in the district court declining to award Mrs s Waguespack costs DECREE Therefore for the foregoing reasons the district court judgment is affirmed Costs of this appeal are assessed onehalf to Mr Waguespack and onehalf to Mrs Waguespack AFFIRMED 12 NOT DESIGNATED FOR PUBLICATION STATE OF LOUISIANA COURT OF APPEAL FIRST CIRCUIT 2009 CA 1478 ELAINE C WAGUESPACK VERSUS GEORGE K WAGUESPACK BEFORE PARRO KUHN AND McDONALD JJ PARRO J dissenting Based on my reading of the record and the district court reasons for judgment s in this case it appears the court was attempting to make an equitable division of the former community property in an extremely complicated and difficult situation While I appreciate that effort I cannot agree with the majority that this judgment should be affirmed for the following reasons First in this suit to partition community property the value of George s Waguespack interest in his former law firm was according to the district court reasons s for judgment based entirely on the default judgment confirmed before Judge Kleibert in the dissolution case That judgment was later reversed by this court and the record does not indicate whether there has been any attempt to conclude the valuation of the interests of Mr Waguespack and Mr Gaudin in the law firm in the dissolution case I believe this court should not affirm this partition judgment when a major portion of the judgment is based on a valuation that to our knowledge has not been completed Second it appears that the district court was inconsistent in its treatment of funds distributed to George Waguespack after the termination of the community As none of those funds can be presumed to be community property the same analysis and burden of Proof should have been applied to each of those distributions A simple reading of the sreasons for judgment demonstrates the inconsistencies court Finally were we to attempt to affirm certain portions of the judgment we could still not allocate the former community property between the parties until the valuation of Mr Waguespack sinterest in the law firm is complete Therefore we could only render a partial judgment Therefore I would set aside the district court judgment in its entirety and s remand this matter for further proceedings to take place after the valuation of the interests of Mr Waguespack and Mr Gaudin in the law firm is complete and the related judgment is final and definitive Accordingly I respectfully dissent 2

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