Harper v. Harper
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Opinion
STATE OF MAINE BUSINESS AND CONSUMER COURT Cumberland, ss. Location: Portland Docl·et No.: BCD-FM-14-02 /
) TIMOTHY vV. HARPER, ) ) Plaintiff ) ) v. ) ) SHERYL E. HARPER, ) ) Defendant )
FINAL DIVORCE JUDG1\1ENT
This Final Divorce Judgment is issued to address certain matters raised in Plaintiffs
Motion for Reconsideration and to Amend Divorce Judgment Pursuant to M .R. Civ. P. 59(e);
the Addendum thereto; Defendant's Objection, and Plaintiffs Reply to Defendant's Objection.
Oral argument on the Motion was held November 10, 2016. Based on the entire record, the
court finds and concludes as follows:
I. Background
Plaintiff Timothy vV. Harper and Defendant Sheryl E. Harper were married in New
York in July 1978. Both are presently in their late fifties. They have four adult children.
During the 36 years of the marriage, 1 they started several businesses and accumulated
substantial real property and other assets. With the exception of certain assets gifted to or
inherited by one party or the other, all of the assets owned separately or jointly by the parties
are marital assets.
The marital businesses are as follows:
I This court issued a divorce in February 2015, on the basis ofM.R. Civ. P. l 15(b), authorizing the court to grant
a divorce notwithstanding the pendency of other claims or counterclaims in the case. • The McKinley Market, a convenience store and gas station in the Bass Harbor
community in the Town of Tremont. In addition to the store, the parties'
marital property includes adjacent parcels occupied by two storage buildings and
two residential buildings. [McKinley Market and the adjacent properties are
collectively sometimes referred to herein as "the Tremont properties"]. The
convenience store/ gas station business is owned by Ruby Red, Inc., a
corporation of which Defendant is the sole shareholder. The Defendant has been
responsible for managing the operation of the convenience store and the rental
of the Tremont properties.
• The Dictator, a scallop fishing boat based in Massachusetts. The boat is owned
by Dictator, Inc., a corporation of which Plaintiff is the sole shareholder. The
Dictator, Inc. assets include permits to fish and several operating accounts. The
debt associated with the Dictator includes a loan from The First as well as a line
of credit. Plaintiff has always been responsible for managing the operations of
Dictator, Inc., although the fishing is handled by a hired captain and crew. f
• North Eastern Seafood, Inc. (NES), an incorporated seafood sales business doing
business under the names of Fish Unlimited and Southwest Lobster, operating
out of a wharf and storage facility located at 126 Clark Point Road, Southwest
Harbor ["the vVharf property"]. Early in the parties' marriage, Defendant
started the Fish Unlimited business by selling fish while Plaintiff worked on the
parties' fishing boat. At some point before this case was brought, Plaintiff took
over primary responsibility for managing the operations of NES, although he
turned over responsibility to the Defendant toward the encl of 2015. The assets
associated with NES include inventory and equipment and several operating
2 accounts. Debt associated with NES consists of t\.vo lines of credit, with Machias
Savings Bank and The First.
• Commercial and residential property on Seawall Road, Southwest Harbor, Maine
["the Seawall property"]. The property consists of a residence, two warehouses
and a large lot ofjust under 10 acres. Plaintiff has been managing the Seawall
property and collecting rents.
• Sheryl Rentals and Harper Rentals, two property rental businesses operated
separately by Defendant and Plaintiff respectively. Each business has an
operating account in the name of the party in question.
Although some of the businesses are owned by corporate entities of which one or both
parties are the sole shareholders, those businesses as well as the parties' rental businesses were
initiated and developed during the parties' marriage, and all of the corporate entities were
formed during the parties' marriage. All of the businesses constitute marital property.
In addition to the businesses, the parties own several real properties and substantial
tangible and intangible personal property, all of which are discussed below. I
II. Procedural History
This case has been pending for almost four years. It was filed in the Ellsworth District
Court in October 2012, and was transferred to the Augusta District Court in September 2013.
The Augusta District Court held hearings in this matter on December 19, 2013 and March 4,
2014. On April 1, 2014, the District Court entered its First Interim Order, awarding
Defendant exclusive possession of the parties' real estate located at 60 Beech Hill Road in
Mount Desert, Maine, and awarding Plaintiff exclusive possession of the parties' real estate
located at 68 Mountain View Road in Sullivan, Maine.
3 The First Interim Order further allocated between the parties responsibility for the
operation of the five marital businesses. The Defendant was assigned responsibility for
operating the McKinley Market business and property, as well as the Sheryl Rentals business.
Plaintiff was assigned the responsibility to operate the NES seafood business; the Harper
Rentals business, and the Dictator, Inc. fishing boat.
The First Interim Order also established responsibilities for payment of health
insurance, automobile insurance, commercial and liability insurance, living expenses, monthly
expenses, necessary repairs, and tax obligations.
In the Second Interim Order, issued on November 14, 2014, the District Court
determined that the parties could each withdraw $30,000 from the NES Investment account for
litigation expenses and that, if the parties agree, they could withdraw the remaining funds of
approximately $8,416 from that account. The Second Interim Order further required a $25,169
tax refund be paid to Defendant and that Plaintiff pay Defendant an additional $19,357 to
equalize the parties' 2013 income.
More than two years after it was filed, this action was transferred to the Business and
Consumer Court in November 2014.
This court divided trial of the case into two phases. Phase I addressed the valuation of
the parties' real estate, the valuation and allocation of intangible non-business personal
property, the extent to which the parties' investments in accounts with H.M. Payson are
marital property, and issues relating to the parties' insurance coverage. All other issues were
reserved for Phase II .
Phase I of the trial was conducted, in part, on January 28 and 29 of 2015. vVhile Phase
II of the trial was scheduled to begin on February 23, it-and the conclusion of Phase I-was
postponed following a conference with the parties and their counsel on that clay. Essentially,
4 the postponement was the result of a change in direction agreed on by the parties, involving the
sale of the Ruby Reel and vVharfproperties and the appointment of a referee whose duties
would include overseeing the marketing and sale of the properties.
Three days later, at the Plaintiffs request, the court held a hearing and granted a final
divorce judgment notwithstanding the pendency of other claims, pursuant to M.R. Civ. P.
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STATE OF MAINE BUSINESS AND CONSUMER COURT Cumberland, ss. Location: Portland Docl·et No.: BCD-FM-14-02 /
) TIMOTHY vV. HARPER, ) ) Plaintiff ) ) v. ) ) SHERYL E. HARPER, ) ) Defendant )
FINAL DIVORCE JUDG1\1ENT
This Final Divorce Judgment is issued to address certain matters raised in Plaintiffs
Motion for Reconsideration and to Amend Divorce Judgment Pursuant to M .R. Civ. P. 59(e);
the Addendum thereto; Defendant's Objection, and Plaintiffs Reply to Defendant's Objection.
Oral argument on the Motion was held November 10, 2016. Based on the entire record, the
court finds and concludes as follows:
I. Background
Plaintiff Timothy vV. Harper and Defendant Sheryl E. Harper were married in New
York in July 1978. Both are presently in their late fifties. They have four adult children.
During the 36 years of the marriage, 1 they started several businesses and accumulated
substantial real property and other assets. With the exception of certain assets gifted to or
inherited by one party or the other, all of the assets owned separately or jointly by the parties
are marital assets.
The marital businesses are as follows:
I This court issued a divorce in February 2015, on the basis ofM.R. Civ. P. l 15(b), authorizing the court to grant
a divorce notwithstanding the pendency of other claims or counterclaims in the case. • The McKinley Market, a convenience store and gas station in the Bass Harbor
community in the Town of Tremont. In addition to the store, the parties'
marital property includes adjacent parcels occupied by two storage buildings and
two residential buildings. [McKinley Market and the adjacent properties are
collectively sometimes referred to herein as "the Tremont properties"]. The
convenience store/ gas station business is owned by Ruby Red, Inc., a
corporation of which Defendant is the sole shareholder. The Defendant has been
responsible for managing the operation of the convenience store and the rental
of the Tremont properties.
• The Dictator, a scallop fishing boat based in Massachusetts. The boat is owned
by Dictator, Inc., a corporation of which Plaintiff is the sole shareholder. The
Dictator, Inc. assets include permits to fish and several operating accounts. The
debt associated with the Dictator includes a loan from The First as well as a line
of credit. Plaintiff has always been responsible for managing the operations of
Dictator, Inc., although the fishing is handled by a hired captain and crew. f
• North Eastern Seafood, Inc. (NES), an incorporated seafood sales business doing
business under the names of Fish Unlimited and Southwest Lobster, operating
out of a wharf and storage facility located at 126 Clark Point Road, Southwest
Harbor ["the vVharf property"]. Early in the parties' marriage, Defendant
started the Fish Unlimited business by selling fish while Plaintiff worked on the
parties' fishing boat. At some point before this case was brought, Plaintiff took
over primary responsibility for managing the operations of NES, although he
turned over responsibility to the Defendant toward the encl of 2015. The assets
associated with NES include inventory and equipment and several operating
2 accounts. Debt associated with NES consists of t\.vo lines of credit, with Machias
Savings Bank and The First.
• Commercial and residential property on Seawall Road, Southwest Harbor, Maine
["the Seawall property"]. The property consists of a residence, two warehouses
and a large lot ofjust under 10 acres. Plaintiff has been managing the Seawall
property and collecting rents.
• Sheryl Rentals and Harper Rentals, two property rental businesses operated
separately by Defendant and Plaintiff respectively. Each business has an
operating account in the name of the party in question.
Although some of the businesses are owned by corporate entities of which one or both
parties are the sole shareholders, those businesses as well as the parties' rental businesses were
initiated and developed during the parties' marriage, and all of the corporate entities were
formed during the parties' marriage. All of the businesses constitute marital property.
In addition to the businesses, the parties own several real properties and substantial
tangible and intangible personal property, all of which are discussed below. I
II. Procedural History
This case has been pending for almost four years. It was filed in the Ellsworth District
Court in October 2012, and was transferred to the Augusta District Court in September 2013.
The Augusta District Court held hearings in this matter on December 19, 2013 and March 4,
2014. On April 1, 2014, the District Court entered its First Interim Order, awarding
Defendant exclusive possession of the parties' real estate located at 60 Beech Hill Road in
Mount Desert, Maine, and awarding Plaintiff exclusive possession of the parties' real estate
located at 68 Mountain View Road in Sullivan, Maine.
3 The First Interim Order further allocated between the parties responsibility for the
operation of the five marital businesses. The Defendant was assigned responsibility for
operating the McKinley Market business and property, as well as the Sheryl Rentals business.
Plaintiff was assigned the responsibility to operate the NES seafood business; the Harper
Rentals business, and the Dictator, Inc. fishing boat.
The First Interim Order also established responsibilities for payment of health
insurance, automobile insurance, commercial and liability insurance, living expenses, monthly
expenses, necessary repairs, and tax obligations.
In the Second Interim Order, issued on November 14, 2014, the District Court
determined that the parties could each withdraw $30,000 from the NES Investment account for
litigation expenses and that, if the parties agree, they could withdraw the remaining funds of
approximately $8,416 from that account. The Second Interim Order further required a $25,169
tax refund be paid to Defendant and that Plaintiff pay Defendant an additional $19,357 to
equalize the parties' 2013 income.
More than two years after it was filed, this action was transferred to the Business and
Consumer Court in November 2014.
This court divided trial of the case into two phases. Phase I addressed the valuation of
the parties' real estate, the valuation and allocation of intangible non-business personal
property, the extent to which the parties' investments in accounts with H.M. Payson are
marital property, and issues relating to the parties' insurance coverage. All other issues were
reserved for Phase II .
Phase I of the trial was conducted, in part, on January 28 and 29 of 2015. vVhile Phase
II of the trial was scheduled to begin on February 23, it-and the conclusion of Phase I-was
postponed following a conference with the parties and their counsel on that clay. Essentially,
4 the postponement was the result of a change in direction agreed on by the parties, involving the
sale of the Ruby Reel and vVharfproperties and the appointment of a referee whose duties
would include overseeing the marketing and sale of the properties.
Three days later, at the Plaintiffs request, the court held a hearing and granted a final
divorce judgment notwithstanding the pendency of other claims, pursuant to M.R. Civ. P.
115(b), reserving jurisdiction to decide all remaining issues and reserving all claims and
defenses of the parties. The following day, February 27, 2015, the court issued an· Amended
Interim Order that, among other things, appointed John Fidrych, CPA, MBA, as Referee and
tasked him with the sale of the Ruby Red and vVharfproperties and oversight of the parties'
businesses, including Dictator, Inc.
Phase I of the trial resumed on April 28, 2015 after which the court entered an Order
addressing issues relating to the H.M. Payson Account numbered #3108 and determined that
only the 700 shares of Apple stock in the Account were Defendant's non-marital property.
Over the next months, the Referee arranged for the Ruby Red and Wharf properties to
be listed for sale through brokers, and eventually an offer was obtained on the vVharf property.
Although the offer was for a price in the range of what the parties deemed the vVharfproperty
to be worth, the Defendant essentially changed her mind about agreeing to sell the vVharf
On August 12, 2015, Defendant filed a motion to amend the February 27, 2015 Interim
Order seeking, amongst other things, to remove Plaintiff from management of Dictator, Inc.
a scallop fishing operation- and to place herself in charge. Plaintiff filed a cross motion to
amend, and the court scheduled a hearing on these motions for November 2, 2015.
On October 20, 2015, Plaintiffs counsel moved to withdraw. On November 3, 2015, the
court granted the motion to withdraw and amended the February 27, 20.15 Amended Interim I
Order to transition operational responsibility for NES from Plaintiff to Defendant by December
5 1, 2015. Based on the Defendant's change of position regarding sale of the vVharfproperty,
the court also modified the Amended Interim Order to postpone the sale of that property and to
reject an outstanding offer to purchase that property. On November 16, 2015, Plaintiffs
current counsel entered her appearance.
On January 7, 2016, Defendant filed a motion to enforce the court's November .'3, 2015
Order alleging that Plaintiff was not cooperating in, and was actively impeding, the effective
transition of control for NES to Defendant. This motion was consolidated for final hearing and
remains pending. On March 7, 2016, Plaintiff filed a petition for distribution offunds to pay
income taxes and his attorney fees. On March 28, 2016, this court ordered an advance of
attorney fees, subject to reallocation. Plaintiffs petition for distribution offunds to pay income
taxes was also consolidated for final hearing and remains pending.
On April 4 through 7 of 2016, Phase II of the trial was conducted. The court requested
that the parties file their proposed findings of fact and conclusions oflaw by May 23, 2016, with
reply memoranda marking up the other's proposed findings by June 6, 20-16. As of June 6,
2016, the court took the case under advisement.
III. Governing Standards
In a divorce action, "the court shall set apart to each spouse the spouse's property and
shall divide the marital property in proportions the court considers just after considering all
relevant factors." 19-A M.R.S.A. § 953(1). In doing so, the court must consider "[t]he
contribution of each spouse to the acquisition of the marital property, including the
contribution of a spouse as homemaker; [t]he value of the property set apart to each spouse;
and [t]he economic circumstances of each spouse at the time the division of property is to
become effective ...." Id.
6 The statute provides for a "just" distribution, which is "not synonymous with an equal
distribution ...." JVarren, 2005 ME 9, ~ 45, 866 A.2d 97. Courts are not required to divide
marital property equally, but are instead required to make the division fair and just considering
all of the circumstances of the parties. Id. (quoting lVIurphy v.1vlurphy, 2003 ME 17, ~· 27, 816
A.2d 814. Thus, the court may consider if one party's contributions to a marital asset were
greater than the other party's in allocating marital property. Bond v. Bond, 2011 ME 54, ~ 17,
17 A.sci 1219.
Furthermore, "the value of marital assets should be determined as of the time they are
distributed without reference to possible future events." Dubord v. Dubord, 1997 ME 7, ~ 12,
687 A.2d 647 (quoting Bayley v. Bayley, 602 A.2d 1152, 1154 (Me. 1992)). Accordingly,
"[u]nless the sale of assets is ordered by the court, or a party makes clear that they intend to
sell the property, future tax consequences need not be considered." Id. Marital debt is
apportioned pursuant to the same considerations as the division of marital property. Arey v.
Arey, 651 A.2d 351, 354 (Me. 1994).
Where the circumstances indicate that a spouse engaged in economic misconduct, this i
behavior may factor into the equitable distribution of property and the award of spousal
support. Ahern v. Ahern, 2008 ME 1, ~ 22, 938 A.2d 35. This issue is discussed further below
in the context of specific allegations of economic misconduct.
IV. The Question ef JVhether to Allocate or Sell the Three Primary 1\!larital Businesses
One of the larger questions in this case is whether the three primary marital
businesses-the McKinley Market convenience store and related real estate; the Southwest
Lobster seafood business and related real estate, and the Dictator, Inc. fishing boat and
associated fishing rights-should be allocated to one party or the other, or should be sold, with
the net proceeds of sale divided. Plaintiff proposes that he be allocated the Dictator, Inc.
7 fishing boat and the associated fishing rights, and that the Defendant be allocated Ruby Reel
and vVharf businesses and related properties. Defendant, however, does not want to be
allocated the Ruby Red and vVharf properties; she, too, would like to be awarded the Dictator,
Inc. business, and in the alternative, she proposes that all three be sold and the proceeds of sale
divided.
Based on the entire record, the court is in agreement that all three of the primary
businesses (and related property) should be sold and the proceeds allocated, for the following
reasons:
• Both parties are in their late fifties. Both have worked hard, and both are entitled to
reap the financial benefits of their efforts over the course of the marriage.
• The convenience store business and the seafood business are both labor-intensive,
requiring extensive time and energy to operate them. Both businesses have struggled
financially for various reasons. Neither party wants to be awarded either the
convenience store business and the related Tremont properties or the seafood business
and the related Wharf property. I
• The value of Ruby Red, Inc. and the Tremont properties is difficult to assess. As noted
above, these properties were listed for sale for some time, with little success. To award
the properties to either party is to saddle that party with an asset of dubious value that
will require large amounts of time to manage, even pending a sale.
• The real estate associated with NES, on the other hand, is marketable .
• The Dictator fishing boat is the plum asset in the parties' marital property portfolio-it
generates very substantial income and requires little time and effort to manage
compared to the NES and McKinley Market businesses, because the fishing is done by a
hired captain and crew.
8 • The values attached to the parties' assets mean that, to achieve a just and equitable
division, one party would have to be avvarded the two businesses that neither party
wants and the other party would have to be awarded the Dictator, Inc. business, which
both parties want.
• Lastly, were the Plaintiff to be awarded the Dictator, Inc. stock outright, ajust and
equitable allocation would require that he pay substantial spousal support for a
substantial period of time. Perhaps in recognition of that potential, Mr. Harper
expressed a clear preference for an allocation that permitted the parties to move into the
future without any continuing financial connection. Selling all three of the primary
businesses enables the court to make a just and equitable allocation of the parties'
marital property without an award of spousal support.
In light of these factors, this Judgment provides for the three businesses to be sold
under the supervision of the Referee, unless the parties stipulate in writing to some other
procedure for sale or disposition of the properties.
Moreover, this Judgment provides for the sales of properties to be conducted under the j '
supervision of the Referee, unless the parties stipulate in writing to a different procedure. The
court recognizes that the Referee's involvement will be an added expense, but the history of
this case, the extent of contested issues and the magnitude of the litigatioi:i effort all argue
strongly against leaving it to the parties to decide how to sell the assets in question. If the
parties come up with a joint detailed alternative and seek to modify this Final Divorce
Judgment accordingly, the court will certainly consider it.
V Stipulated Allocations
The parties have reached a number of stipulations as to the allocation of certain
properties, mortgage debts, and accounts. These stipulated allocations are reflected in the table
9 attached to this decision belovv. The reasonable preferences of the parties should be considered
when dividing marital property. See Norton v. Norton, 443 A.2cl 75, 76 (Me. 1982). The court
concurs with the parties' stipulated allocations as set forth in the attached table and orders the
assets and liabilities in question so divided.
vVhile Defendant stipulates to the allocation and valuations, she requests that the court
take into consideration each party's contribution to the acquisition of their marital real estate.
See Bond v. Bond, 2011 ME 54, ~ 17, 17 A.sd 1219. The court has done so, and finds that the
parties have contributed equally, meaning that no adjustment to the stipulated values is
necessary or appropriate.
VI. The Tremont Properties and Ruby Red, Inc. dlbla lYicKinley Market
Neither Plaintiff nor Defendant wishes to retain possession of the so-called Tremont
Properties which consist ofreal estate located at: 1) 42 Tremont Road-Market and Gas
Station; 2) 44 Tremont Road-2 warehouses; 3) 52 Tremont Road-Residential Duplex; and 4)
21 Harbor Drive-Single Family Residence. Similarly, neither party seeks to retain ownership
of the S-Corporation, Ruby Red, Inc., which operates the McKinley Market located at 42 ' Tremont Road. The Tremont Properties were purchased in 2007 based on the advice of the
parties' accountant to obtain a property that could generate tax losses to offset the income
anticipated from Dictator, Inc. Prior to 2012, Plaintiff and Defendant each owned 50% of the
stock in Ruby Reel, Inc. In 2012, Plaintiff transferred his 50% share to Defendant, apparently
without her knowledge.
Under the supervision of Referee Ficlrych, the Tremont Properties were listed for sale
in 2015 with a call for offers. The only offer received was for a portion of the property-a
"green building" garage and it was not accepted. The Tremont Properties were re-listed at
some point after February 22, 2016, but have yet to attract any offers. The parties agree that
10 Ruby Red, Inc. owes $1,727 under The First Checking Account #5226 and $30,000 under The
First Overdraft #5226. They also agree that Ruby Red, Inc. has assets of $527 in The First
Payroll Account #0394 and that the Tremont Properties are encumbered by a mortgage from
The First in the amount of $7 52,800. The parties dispute, however, the value of the Tremont
Properties and the value of Ruby Red, Inc.'s remaining business assets and liabilities.
Defendant proposes that the Tremont Properties and all assets owned by Ruby Red,
Inc. be sold in a commercially reasonable manner. She proposes that the gains or losses
realized through the sell be split evenly between herself and Plaintiff. Plaintiff proposes that
the Tremont Properties and Ruby Red, Inc. be distributed to Defendant as she is the 100%
shareholder of Ruby Reel, Inc. and has historically controlled the properties.
For the reasons presented in section IV, supra, the court determines that the Tremont
Properties and the assets of Ruby Red, Inc. shall be sold off in a commercially reasonable
manner and that the proceeds of sale (net of applicable commissions and closing costs) shall be
divided between the parties. This is because neither party wishes to retain the assets and the
evidence indicates that the Tremont Properties and Ruby Red, Inc. were purchased by the I
parties as a means to obtain tax benefits. Given that the properties and the corporation were
obtained with the best interests of both parties in mind, given that the parties disagree over the
value of the Tremont properties, and given that neither party wants the properties or assets, a
sell in which the gains or losses are split equally is a just result.
Because the Tremont properties and the assets of Ruby Red, Inc. are to be sold, their
actual value need not be established for purposes of an equitable allocation although it is
relevant to whether there is a need for spousal support and also relevant to the sale of the
properties. Based on the absence of offers on the real estate and based on the historical
performance of the convenience store/gas station, values lower than those established by the
11 parties' appraiser, vVebersinn Appraisal, Inc., are appropriate. For purposes of determining the
need for spousal support to either party only, the court adopts a value of $400,000 for the
Tremont real estate properties, including the market and gas station facilities, and a value of
$200,000 for the ownership interest of Ruby Reel, Inc.
As noted below, the Defendant has appropriated about $30,000 in income from Ruby
Reel, Inc. for her own purposes. This amount is imputed to her in the attached table. Plaintiff
asks that she be required to reimburse him for his presumptive half of the amount. However,
because the court has factored each party's receipt of income from the various businesses into
the overall allocation set forth in the attached table, to require reimbursement would in effect
be double counting. Thus, the net proceeds of sale of the Ruby Red, Inc. assets and the
Tremont real estate will be divided equally between the parties:
The procedure for sale is set forth later.
VII. Northeastern Seafood, Inc. and 126 Clark Point Road
NES is a commercial lobster business in which the parties are both 50% shareholders.
NES operates out of the land and buildings located at 126 Clark Point Road, Southwest
Harbor, Maine (the "vVharf'). NES buys lobsters from fishermen, sells lobsters to commercial
and retail customers, and supplies bait, salt, and fuel to fishermen. Defendant founded the
business in 1986 as Fish Unlimited and mainly through her own effort grew it into a successful
business. Plaintiff contributed to the growth of Fish Unlimited by catching seafood, but it was
mainly Defendant's talent, time and energy that grew the business. Somewhat later, as early as
1997 bL1t perhaps as late as 2005, Plaintiff took over primary responsibility for managing the
business, and did so until this court's November 3, 2015 Interim Order pursuant to which
Defendant was to assume responsibility for the bL1siness operations of NES.
12 During the pendency of the case, the parties agreed that the vVharfproperty be put up
for sale. The listing produced a $1,500,000 offer to purchase the vVharf, but the Defendant
changed her mind abo Lt t selling the vVharf and the property was taken off the market.
Plaintiff asserts that the vVharf s fair market value is $1,950,000, consistent with
Theodore vVebersinn's October 2, 2013 appraisal. Plaintiff claims this valuation is supported
by Defendant's rejection of an offer to buy the vVharffor $1,500,000 as too low. However,
although he values the vVharf property highly, Plaintiff does not propose the property be
allocated to himself, Instead, Plaintiff proposes that the vVharfbe allocated to Defendant as her
sole and exclusive property and that she bear responsibility for all outstanding debt, including
mortgages, equity loans, commercial lines of credit, taxes, insurance and all other costs
associated with the vVharf Plaintiff further proposes that Defendant be allocated full
ownership of NES along with its business assets and liabilities. Plaintiff requests that
Defendant be required to refinance the mortgage debt on the vVharf, or otherwise remove
Plaintiff as a named debtor or guarantor on these loans within 90 days from the entry of this
Order.
For the reasons given in section IV above, the vVharfreal estate and the associated
trucks, trailers and other items will be sold and the other assets ofNES will be liquidated as
well. For purposes only of determining whether there is a need to award spousal support to
either party, the court fixes the value of the vVharfproperty, the net value ofNES, and the
associated structures and equipment at $1,600,000.
As of February 29, 2016, the parties agreed that the balances in the NES checking
accounts are $10,000 in Machias Savings Bank #5990, $2,66, in Bar Harbor Bank & Trust
#7043, and $22,490 in The First #0386. Furthermore, NES owes $248,787 under The First
Line of Credit #1738 and $96,973 under the Machias Line of Credit #3,45. Neither party
13 appears to think that the NES business has any particular value (i.e. goodwill) as a going
concern, independent of the value of the vVharf property.
However, Defendant makes allegations of economic misconduct in connection with the
Plaintiffs operation of NES. These allegations and Plaintiffs response are discussed below.
The funds in the two checking accounts with The First numbered -0386 and -0394 and
the funds Bar Harbor Bank & Trust Account #7043 are operating accounts for use in the
operations ofNES. Any balance left after sale will be equally divided. The tractor-trailer
trucks, refrigerated trailers, and refrigerated box trucks owned by NES be sold with the net
proceeds split equally since neither party wishes to retain them. The remaining assets of NES,
Defendant asserts, consist of office equipment and equipment related to the clock operation,
which are valued at less than $15,460.
VIII. The Dictator, Inc.
Plaintiff is the sole shareholder of Dictator, Inc., which owns a scallop fishing boat and
associated fishing permits. Plaintiff began scallop fishing in 1979 when he and the Defendant
first moved to Maine. Over the years, Plaintiff has developed the Dictator into a profitable
business. He was actively involved in the Dictator's operations, but in recent years has taken
on a managerial role, with a hired captain and crew doing the actual fishing.
The parties agree that the combined fair market value of the fishing vessel Dictator,
including its equipment and federal permit, is $4,500,000. The parties also agree that the vessel
is encumbered by a primary loan to The First for $317,560 as of February 29, 2016 under The
First Account #8249. Furthermore, the parties agree that the Dictator has an operating
account with The First ending in #2028 with a balance of $44,942, a Capital Account with HM
Payson ending in #3171 with $160,049.50, and a Line of Credit with the First ending in #7143.
14 Plaintiff asserts that the amount currently owed on the #7143 Line of Credit is $100,000, while
Defendant asserts it is only $80,000.
Plaintiff proposes that the Dictator, Inc., including all of its assets, be set aside as his
sole and exclusive property. Plaintiff agrees to assume responsibility for all liabilities
associated with the business and will indemnify and hold Defendant harmless against the same.
Plaintiff also argues that the court should take into account the inherent tax on the recovered
depreciation of the boat should it be sold. Plaintiff and Thomas O'Donnell, the accountant at
MacDonald Page, LLC who has done tax work for Dictator, Inc., calculate the tax liability in
the event of a sale to be $504,900. Plaintiff and Mr. O'Donnell further calculate that the 2015
income taxes owed by Plaintiff on the Dictator Inc.'s income is $191,366 . Plaintiff contends
that all of the Dictator's 2015 income was used to finance the parties' expenses and fees in this
matter, the corporate line of credit has been maxed out, and there is no other money available
to pay these taxes. vVhile Plaintiff filed for extensions to pay the taxes, he suspects it may not
be granted and he may be charged a penalty of somewhere between 5% and 25% of the taxes
due per month until his return is filed. This could result in an additional liability of $47,000.
Plaintiff further contends that pursuant to the April 1, 2014 Interim Order, the profits
from Dictator, Inc. were distributed to pay the parties' respective expenses in uneven shares
favoring Defendant. Specifically, Plaintiff received $6,000 per month and Defendant $10,000.
The $4,000 difference between the parties was to cover the mortgage on the residence in which
Defendant resides. In February 2015, the Interim Order was amended to provide Plaintiff and
Defendant with $,,500 each and a payment of $3,645 to Defendant for the mortgage. Plaintiff
contends that since he has received less than 50% of the benefit from all of Dictator Inc.'s
profits, it is fair to include 100% of the tax liability on the income as an obligation of the marital
15 estate and makes sense to reduce the value of Dictator, Inc. by its present and prospective tax
liabilities.
Defendant proposes that the fishing vessel and its permit be sold by a commercial
marine broker at the end of the 2016 fishing season. In support of this position, Defendant
contends that the boat fishes out of Fairhaven, Massachusetts and that Plaintiffs operation and
management of Dictator, Inc. requires minimal time and effort. Defendant further asserts that
Plaintiff has improperly used Dictator, Inc. corporate funds for his personal benefit, claimed
personal expenses as business expenses on the Dictator, Inc.'s corporate tax returns, and
mismanaged the operation of the Dictator, Inc. to the detriment of the marital estate. She
argues that Plaintiffs financial misconduct benefited him, to the detriment of the marital estate,
by approximately $SS0,5S4. Like Defendant's other allegations of economic misconduct, these
allegations are discussed below.
For the reasons indicated above, the assets of Dictator, Inc., including the vessel and all
tangible and intangible property related to it, will be sold under the supervision of the Referee
after the 2016 fishing season, Linless stipulated otherwise by the parties. The Dictator capital ' account (-3171) may be used to fund Dictator's expenses pending sale, and after sale any
balance shall be divided equally between the parties. The court agrees with the Plaintiff that
any and all taxes, interest and penalties due, both with respect to income earned by Dictator,
Inc. and with respect to the sale of the assets of Dictator, Inc., should be shared between the
parties. This is just and equitable only because the court is addressing economic misconduct
on the part of Plaintiff separately.
16 IX. Personal Property
A. Snowmobiles and Motorcycles
Defendant asserts that at the time of Phase I of the Trial in January, 2015, the parties
owned eight snowmobiles. Defendant values these snowmobiles, based on the NADA Guide, at
a total of $85,000. Plaintiff contends that the parties only own seven snowmobiles and
estimates their value to be $43,600. Plaintiff also asserts that any expenditures made on the
snowmobiles were with his own personal debt, for which he has accepted sole responsibility. If
the court does not accept the values Plaintiff proposes, he requests that the five snowmobiles
purchased prior to the divorce be allocated to the Defendant at her estimated value. As
indicated in the attached table, the parties' snowmobiles are awarded to Defendant at the total
value she has assigned to them.
The parties have three motorcycles. Defendant proposes that she receive the 2006
Harley FLSTNl Heritage Softail, while Plaintiff receives the 1986 Harley FXRS Liberty and
2010 Harley FLXH Street Glide. Plaintiff disagrees with her allocation only to the extent the
court accepts Defendant's valuations, in which case Plaintiff requests that all of the motorcycles
be allocated to Defendant. The court has assigned values to the three motorcycles and
accessories and allocated them as shown in the attached table.
B. Power Tools, Hand Tools. and Other Machinery and Equipment
Defendant contends that a conservative estimate of the value of Plaintiff's collection of
tools, equipment, and machinery is $200,000. Plaintiff disputes this value and requests that if
the court accepts Defendant's valuation, the tools and equipment be allocated to Defendant at
said value. The court does not accept Defendant's valuation and finds it just and equitable to
allocate to Plaintiff the tools, equipment and machinery at the value of$50,000 as set forth in
the table attached to this order.
17 C. The Mercedes 280i
Defendant requests that she be awarded a Mercedes 280i as her non-marital personal
property. Plaintiff responds that the car does not belong to either party and was left by
someone in storage who never paid the bill. It is not clear how Plaintiff proposes the car be
allocated or disposed of. The court allocates the Mercedes 280i to Defendant, subject to a
condition that she indemnify the Plaintiff against any liability to any third party associated with
the vehicle. Given that it is either non-marital property or property owned by a third party, no
value needs to be assigned to the Mercedes for purposes of the allocation.
D. Equipment, vVatercraft and Trailers
The attached table contains a list of various equipment, watercraft and trailers. The
court finds it just and equitable to allocate these items at the indicated values as set forth in the
table attached to this order.
Furthermore, the parties agree to sell a 2011 Massey Ferguson Tractor with accessories
in a commercially reasonable manner and to split the proceeds equally. Unless the parties
agree otherwise, Defendant will contact Union Farm Equipment in Union, Maine and Kramer's
Equipment in Sidney, Maine and, on the parties' behalf, sell the tractor to the company who
will pay the higher price.
E. Maps at the Sullivan Camp and Furnishings and Goods from 60 Beech Hill Road
Plaintiff is awarded the maps at the Sullivan Camp located at 68 Mountain Vi.ew Road,
as they were a gift. Except for items allocated by agreement, which are listed in the next
section, Defendant is allocated all goods and furnishings at 60 Beech Hill Road and Plaintiff is
allocated the goods and furnishings at the Sullivan Camp. Any disparity in value between the
goods and furnishings at the Sullivan Camp and 60 Beech Hill Road is not significant.
18 F. Stipulated Distributions ofTan~ible Personal Property
The court allocates the items listed below to the party indicated and at the values stated.
vVhere no value is assigned, it is because the item was a gift to a party or inherited by a party,
or is not of significant value, and thus need not be assigned any value in the table. An X in the
table indicates the item is either non-marital or has no value that would be material to the
overall allocation.
Assets/Liabilities Plaintiff Defendant Coins to Plaintiff $11,414.00
. Tiger Woods Card Collection to Plaintiff $5,000 Grandfather's Saw to Plaintiff x Assorted Silver, China, Pictures and Family x Memorabilia to Defendant Jewelry to Defendant x Plaintiffs Grandfather's Album to Plaintiff x Old Tin Picture of Plaintiffs Family to x Plaintiff Two Push Mowers to Plaintiff $50 Plaintiffs High School Ring to Plaintiff x Chain Saw to Plaintiff x The parties dispute who should receive items referred to in their filings as the Marble
game and the Old Propeller from the Dictator. The Marble Game is awarded to Defendant
and the Old Propeller is awarded to Plaintiff, with neither item having value material to the
X. Intangible Personal Property
A. Funds in Plaintiffs Safe Deposit Box
Defendant asserts that Plaintiff has $50,000 in a safe deposit box. Plaintiff initially
stated that he had $36,000 in the safe deposit box, but then corrected that calculation to
$32,500. Both parties agree that the money in Plaintiffs safe deposit box should be allocated to
19 him. Plaintiffs proposed findings assign a value of $36,000, and awards those funds to him,
and the court agrees .
B. Funds in Defendant's Safe Deposit Box
Plaintiff asserts that Defendant has $200,000 in a safe deposit box. He asserts that this
amount was based on the last time he accessed Defendant's safe deposit box in 1998. Plaintiff
claims that the dates of Defendant's trips to the safe deposit box do not coincide with the dates
and events she asserts the money was taken out for. Accordingly, Plaintiff asserts that
Defendant is in possession of and should be allocated the $200,000 from her safe deposit box.
Defendant responds that since Plaintiffs last entry to the box in 1998, she accessed it
once in November 2001, three times in August and September 2002, once in July 200.'3, and
then not again until February 10, 2014. Defendant's February 10, 2014 visit to the box, she
asserts, was to enable her to respond to an interrogatory inquiring about the contents of the
box. Defendant testifies that she took out money in the safe deposit box in 2001, 2002 and
200.'3, and that there was no money in the box when she went to the box to answer Plaintiffs
interrogatories. Accordingly, she asserts that she should not be allocated any funds for the I
amount in the box, as there is nothing left.
The court accepts Defendant's testimony on this point, and finds that she removed the
funds many years before this divorce case was filed and used the funds for the benefit of both
parties. The court therefore makes no award to either party.
C. H..NL Payson Brokerage Account #s 108
The parties' H.M. Payson Brokerage Account #3108 has a value of $8.'l4,"i28 as of the
date of trial. Of the assets in the account, "iOO shares of Apple, Inc. stock are Defendant's non-
marital property, and the remaining assets are marital.
20 As indicated in this court's October 20, 2015 Order, the Brokerage Account initially
consisted of non-marital assets from Defendant-including the Apple stock-totaling $492,669
and marital assets totaling $150,110. Over time, the value of the account increased by
approximately $220,000. The Order concluded that although Defendant contributed
approximately three-quarters of the value to the Brokerage Account in non-marital funds, the
only non-marital property that had not been extensively commingled over time was the
Defendant's 700 Apple stock. The Order also found and concluded that it was not possible to
determine to a certainty the extent to which the substantial increase in value of the account was
due to the original marital component as opposed to the original non-marital component.
vVith this analysis in mind, the court reaffirms its determination that the 700 Apple
stock are Defendant's non-marital property. However, based on her substantial contribution to
the account of $492,669 in non-marital funds that have been inextricably commingled with the
originally contributed marital funds, the court concludes that it is just and equitable to award
the Defendant 65% of the value in the brokerage account ending in -3108, and to award the
remaining 35% to Plaintiff. 2 (Economic misconduct is not a factor in this determination).
D. H.M. Payson Brokerage Account # 4103
Before Phase II of the Trial, the parties stipulated that the value of H.M. Payson
Brokerage Account #4103 was $583,995. Subsequently, the court ordered payment of $40,000
from this account for attorney fees by Order dated March 28, 2016. Accordingly, Brokerage
Account #4103 has a present value of $543,995. Plaintiff requests that the assets in Account
#•J..103 be used to pay the amounts owed to MacPage, LLC for work performed by it related to
tax years prior to 2015. Plaintiff requests that the remainder be split such that 78% go to
2 Defendant requests that she be awarded her non-marital Apple stock and 76% of the marital funds in the account based on her non-marital contributions of $492,669 being 76% of the total amount originally deposited into the account. However, the Apple stock that is being awarded as a non-marital asset was part of her non-marital contribution, so the actual ratio of her non-marital contribution to the original total amount contributed is less than 76%.
21 Plaintiff and 22% to Defendant. Defendant counters that all of the money in Account #4103
came from money saved by Defendant in a predecessor account during her operation of NES
prior to 2005. She asserts that no further contributions were made after 2005 and, as a result,
the court should allocate the entire amount to Defendant due to her contributions to the
account and Plaintiff's mismanagement and misappropriation of marital property.
Although the evidence does, to an extent, support the Defendant's contention that her
efforts more than Plaintiff's account for the funds in this account, Plaintiff could make the same
argument about the very significant income that the Dictator has generated over the years. It
was his effort, more than Defendant's, that led to the financial success of the Dictator, which
has been far more profitable than either Ruby Red, Inc. or NES in recent years. Accordingly,
Defendant's argument regarding this account is not accepted by the court.
As to MacPage, Defendant asserts that MacPage has not submitted an itemized bill for
services and, as a result, the court should not make any determination of the amount owed or
allocate responsibility for any debt owed MacPage. As to the MacPage debt, the court agrees
that no determination of the amount owed is necessary, but does allocate responsibility to each
party for one-half of the liability to MacPage for accounting work that benefited both parties.
E. The Parties' Individual Accounts
The parties have agreed that the following five individual accounts should be
distributed to the individual in whose name the account was created without consideration of
the account values since they are made up of post-divorce funds:
1. Defendant's The First Savings Account #6651;
2. Defendant's The First Checking Account #247'7;
3 . Defendant's Camden National Bank Account #4957;
4. Plaintiffs The First Checking Account #0822; and
22 5. Plaintiffs Camden National Bank Account #4957.
The parties have also agreed that Plaintiff should be solely responsible for the debts at
Machias Savings Bank Line of Credit # 1165 and Machias Savings Overdraft #72 50. The
parties further agree that these debts should be allocated to Plaintiff without consideration of
the obligations in the allocation of marital property. The court concurs with the parties'
stipulations and orders the above-mentioned accounts so allocated.
F. The Boat Moorings
Plaintiff requests that the parties' boat moorings, one in Somes Sound and one in
Southwest Harbor, be set aside to him as his sole and exclusive property since he is the one who
utilizes them. Defendant requests that she be awarded both moorings and also responds that
Plaintiff should not receive them because he has no connections to Southwest Harbor in light of
his lack of interest in maintaining control ofNES and the vVharf Plaintiff is awarded the
Somes Sound mooring. The Southwest Harbor mooring will be sold with the vVharfproperty
or as an asset of Northeastern Seafood, Inc.
G . Plaintiffs Rental Income from the Camp
Defendant proposes that the Machias Savings Account #7250 be allocated to Plaintiff
without consideration of value, but requests that the court consider the rental proceeds retained
by Plaintiff and not reported to the Referee as rental income when distributing property.
Plaintiff responds that there was no prohibition against Plaintiff renting the camp when he was
not using it and that the rents were used to reduce his personal line of credit. Plaintiff responds
that his rental income has not harmed Defendant and that she could have done the same with
the property at 60 Beech Hill Road if she wished. The court agrees with Plaintiff on this
issue-each party has had the right to use or rent out the property that the parties agreed each
could use, and rental income is simply a substitute for the value of use of a property.
23 Accordingly, the court declines to consider the rental proceeds at issue. Thus, the court
allocates the Machias Savings Account #7250 to Plaintiff without factoring its value into the
H. Sheryl Rentals and Harper Rentals
Each party has operated rental properties, maintained accounts relating to the
properties, and received rental income. Defendant has managed Sheryl Rentals, which is
responsible for managing the Tremont Properties and the house at 252 Seawall Road. Sheryl
Rentals has a checking account with The First #3057 that has a balance of $2,708, as of
February 29, 2016. Plaintiff manages Harper Rentals and is responsible for renting out the
warehouses at 250 Seawall Road. Harper Rentals has a checking account with The First
#9043, with a balance of $6,857 as of February 29, 2016.
Each party uses the funds in their respective accounts to pay the mortgages
encumbering the properties they manage. Defendant asserts that because the balances in these
accounts vary constantly, depending on the expenses of the respective properties and rents
collected, they should be allocated to the party responsible for the account without
consideration of their value.
Plaintiff further responds that NES is obligated to pay Harper Rentals back rent and
maintains that Harper Rentals, not NES, paid the NES mortgage until it was paid off in 2012
and that Harper Rentals has always billed NES for the rent. However, the court concludes that
NES does not owe any money to Harper Rentals because NES paid for the mortgage on the
126 Clark Road property until it was paid off
Here, the court allocates The First Checking Account #3057-valuecl at $2,708
associated with Sheryl Rentals to Defendant. Similarly, the court allocates The First Checking
Account #9043-valuecl at $6857-associatecl with Harper Rentals to Plaintiff. Because both
24 accounts are considered operating accounts rather than assets, they are considered for purposes
of equitable distribution.
I. Cardente Request
On May 26, 2016, the court received a letter from Michael Cardente on behalf of
Cardente Real Estate in which he request the court to consider granting him compensation for
Cardente Real Estate's efforts in connection with the sale of the vVharfproperty. The letter
was not properly authenticated or introduced as evidence. Therefore, the court will not
consider the contents of the letter, or otherwise address Cardente's request. However, the
Referee is free, in his discretion, to list the vVharf property again with Cardente Real Estate.
XI. Nfoney Allegedly Owed Under the First Interim Order
Defendant asserts that Plaintiff owes her $2,733.01 for her payment of the insurance
premium on the Sullivan Camp and Plaintiffs failure to pay health insurance premiums under
the April 1, 2014 First Interim Order. Defendant alleges that the First Interim Order
obligated Plaintiff to pay the homeowners insurance on the Sullivan Camp, but Plaintiff told his
bookkeeper not to pay and instead sent the bill to Defendant. Defendant asserts that she paid
the bill mistakenly thinking it was her obligation only to learn that it was for the Sullivan
Camp and Plaintiffs responsibility. The exhibit Defendant cites to in support ofthis argument
only shows an insurance bill with a minimum due of $375.50. Def Ex. 126. Defendant further
asserts that Plaintiff underpaid Defendant's insurance premiums for eleven months until the
February 27, 2015 order made each party responsible for his or her own health insurance costs.
In support Defendant points to an exhibit showing an alleged underpayment of $55.95 on April
16, 2014 and again on April 30, 2014. The alleged $55.95 underpayment twice a month for
eleven months adds up to $1,230.90. She also asserts that Plaintiff only paid Defendant
$8,257 .94 of the $10,000 clue to her for the first payment covering reasonable expenses under
25 the First Interim Order. In support Defendant points to a check for $8,257.94 to Plaintiff from
April 10, 2014. vVriting on the exhibit, however, notes that an additional $1,500 was received
in March or April and that Plaintiff was only $242.06 short of the requisite payment. In sum,
Defendant requests Plaintiff reimburse her $2,733.01 for the Sullivan Camp insurance premium
and for monies due pursuant to the First Interim Order.
Here, the evidence presented in support of Defendant's argument only indicates that
Plaintiff underpaid her by $729.46. vVithin 60 days, Plaintiff will reimburse Defendant that
amount, which is not shown in the allocation of marital property attached to this Final Divorce
Judgment.
XII. Defendant's Request to Reconsider the First Interim Order
Defendant requests the court reconsider the April 1, 2014 First Interim Order to the
extent it addresses responsibility for business insurance. Specifically, Defendant requests that
Plaintiff reimburse her $7,500 for funds she expended purchasing duplicative insurance
coverage for Ruby Reel, Inc. and the Tremont Properties. Defendant explains that during the
course of the parties' marriage, all vehicles owned by NES and all business property and
liability insurance for NES and Ruby Red, Inc., as well as insurance on the Tremont Properties,
Seawall Road and 126 Clark Road, were consolidated in a package insurance policy issued by
Hanover Insurance Company. On December 12, 2013, the agent for the insurance company
informed Hanover that the parties were going through a divorce and wished to separate NES
and Ruby Reel, Inc. coverage into two separate policies at renewal. Thereafter, Plaintiff
obtained insurance coverage for NES and informed Defendant, just prior to the expiration of
the policy, that it was up to her to find insurance for Ruby Red, Inc., the Tremont Properties,
and her automobiles. Defendant asserts that because the Tremont Properties and McKinley
26 Market were the least favorable risks, she ,vas only able to obtain surplus coverage for Ruby
Red, Inc. and the Tremont Properties. The cost of this insurance to Defendant was $7,500.
Plaintiff does not specifically respond to this argument, but generally denies any charges of
economic misconduct or wrongdoing.
In the First Interim Order, the District Court addressed Defendant's $7,500 payment
for the first three months of replacement coverage by requiring Plaintiff to pay the next three
months of insurance premiums. This was a fair result and the court denies Defendant's request
to revisit the issue.
XIII. Petition.for Distribution ofFunds to Pay 2015 Income Taxes
Plaintiff petitioned the court for a distribution offunds to pay individual 2015 state and
federal income taxes. vVhen Plaintiff filed his motion, he presented the court with a letter from
his accountant providing an estimate of his tax liability. Now, Plaintiff seeks an award of
$18.3,458 for taxes.
Defendant asserts that the draft tax return Plaintiff submitted at trial estimates his tax
liability without considering any losses that may be posted by NES. To complicate matters,
Plaintiff has allegedly refused to prepare a tax return for NES. Defendant asserts that NES's
tax return is necessary to definitely establish Plaintiffs 2015 tax liability.
D efendant further explains that income from Dictator, Inc. is the primary basis for
Plaintiffs 2015 income ta.,'C estimate, but at no point during 2015 did Plaintiff make quarterly
payments toward his tax liability or request permission from the Referee to reserve funds for
income taxes. Defendant further asserts that Plaintiff refused to file ajoint extension with
Defendant because he had issued a 2014 1099-MISC to Defendant for $8.3,780 ..34 from
Dictator, Inc. and a vV-2 for $.3,4.34.12 from NES.
27 Defendant acknowledges that she has received the benefit of income from Dictator, Inc.
and, for 2015, her share was $152,74L.l!.00. Since Plaintiffs draft return indicates his combined
tax rate for 2015 state and federal taxes is 38.5%, the tax on Defendant's court ordered
payments would be $58,806.00. Defendant requests the court take this amount into
consideration in fashioning the equitable division of marital property and allocate the
responsibility for 2015 state and federal income taxes in Plaintiffs name to Plaintiff
This Final Divorce Judgment imputes substantial income from Dictator, Inc. and NES
to Plaintiff Given that fact and the fact that Plaintiff has incurred taxes on income that went
to the benefit of both parties, any and all taxes, penalties and interest incurred by Plaintiff as a
result of his ownership interest in Dictator, Inc. shall be borne equally by the parties. Also,
any capital gains tax or other tax (including transfer tax, if any) triggered by the sale of the
assets of Dictator, Inc. will be borne equally by the parties. However, unless the parties
stipulate otherwise in writing, no distribution to make the tax-related payments will be
ordered. Instead, the taxes will be paid from the proceeds of the sale of the assets of Dictator,
Inc. If Plaintiff proves he has already made payments toward his tax liability, Defendant will
reimburse him for half of what he has paid.
XIV. Spousal Support
The issue of spousal support arises primarily in the context of Defendant's request that
she be awarded spousal support if Plaintiff is awarded Dictator, Inc. Because this Final Divorce
Judgment requires the sale of the assets of Dictator, Inc., that basis for spousal support does not
apply.
However, Defendant further asserts that she is entitled to spousal support because
Plaintiffs management of the businesses owned by the parties has greatly impacted the parties'
entitlement to Social Security. Specifically, she asserts that Plaintiff will be entitled to $2,223
28 per month at his full retirement age-or $3,054 if he waits until age 70, while Defendant is
only entitled to $1,222 per month at full retirement age-or $1,565 per month if she waits until
age 70.
Plaintiff asserts that the parties' age, earning history, and earning capacity are
approximately equal, that each will likely be allocated sufficient assets to support themselves in
the lifestyle to which they are accustomed, and that neither party should pay spousal support to
the other.
An order granting, denying, or modifying spousal support must state:
A. The type or types of support, if any is awarded; B. The method or methods of payment and the term and limitations imposed, if support is awarded; C. If the support awarded is not, in whole or in part, subject to future modification; and D. The factors relied upon by the court in arriving at the decision to award or deny spousal support, if the proceeding was contested.
19-A M.R.S.A. § 951-A(l) (2015). The factors the court must consider when determining an
award of spousal support are:
A. The length of the marriage; B. The ability of each party to pay; C. The age of each party; D. The employment history and employment potential of each party; E. The income history and income potential of each party; F. The education and training of each party; G. The provisions for retirement and health insurance benefits of each party; H. The tax consequences of the division of marital property, including the tax consequences of the sale of the marital home, if applicable; I. The health and disabilities of each party; J. The tax consequences of a spousal support award; K. The contributions of either party as homemaker; L. The contributions of either party to the education or earning potential of the other party; M. Economic misconduct by either party resulting in the diminution of marital property or income; N. The standard ofliving of the parties during the marriage; 0. The ability of the party seeking support to become self-supporting within a reasonable period of time; P. The effect of the following on a party's need for spousal support or a party's ability to pay spousal support:
29 1) Actual or potential income from marital or non-marital property awarded or set apart to each party as part of the court's distributive order pursuant to section 95S;and 2) Child support for the support of a minor child or children of the marriage pursuant to chapter 63; and Q. Any other factors the court considers appropriate.
19-A M.R.S.A. § 95l-A(5). The types of spousal support the court may award include: A)
general support to provide financial assistance to a spouse with substantially less income
potential than the other spouse so that both spouses can maintain a reasonable standard of
living; B) transactional support designed to provide for a spouse's transitional needs; C)
reimbursement support to achieve an equitable result in the overall dissolution of the parties'
financial relationship in response to exceptional circumstances such as economic misconduct, or
substantial contributions by one spouse towards the educational or occupational advancement
of the other during the marriage; and D) nominal support to preserve the court's authority to
grant spousal support in the future. 19-A M.R.S.A. § 951-A(2). The court's order must state
the method or methods of payment that the court determines just including, but not limited to
lump-sum and installment payments. 19-A M.R.S.A. § 951-A(s). The award must also state
the term of and any limitations on the award that the court determines just. Id.
Based on the allocation of the parties' assets and property, the court finds and concludes
that no award of spousal support is necessary or appropriate, even though Plaintiffs Social
Security entitlement will be greater than Defendant's. Both parties will have ample assets and
neither has shown a justification for an award of spousal support, in light of the overall
allocation of the parties' assets, fo1.bilities and property. Any disparity in the parties'
expectancies regarding Social Security is adequately addressed in the allocation of assets and
property.
30 XV Economic 1vfisconduct and Imputed Income
The issue of economic misconduct enters the case mainly as a result of Defendant's
accusations against the Plaintiff, although the Plaintiff makes accusations as well.
Plaintiff asserts that Defendant mismanaged McKinley Market and NES and that she
took $200,000 from a safe deposit box. Although there is some merit to the mismanagement
issue, particularly as to McKinley Market, it does not rise to the level of economic misconduct.
Defendant did appropriate about $30,000 in income from Ruby Red, Inc. for her own benefit
and the attached allocation table at page 4 treats her as having received that income. As to the
$200,000 that had been in the safe deposit box, as noted elsewhere herein, it appears to have
been utilized for the parties' common benefit years ago rather than misappropriated for
Defendant's own benefit.
Defendant's allegations of misconduct fall into three areas, two of which the court finds
meritorious. First, she claims that Defendant charged numerous personal expenses to various
businesses. In fact, both parties have charged personal expenses to the various businesses, so
some of the Defendant's allegations, while valid, apply as much to her as to the Plaintiff This
area of Defendant's claim of economic misconduct does not justify any particular award or
other adjustment to the allocation of the part~es' property and assets.
However, Defendant's allegations with respect to Dictator, Inc. and NES were in fact
proven. Defendant's evidence established that Plaintiff improperly used substantial corporate
funds from NES for his personal benefit while he was managing the business and committed
economic misconduct by not reporting cash received from retail lobster sales between 2007 and
2015. More specifically, Defendant showed that Plaintiff used two separate bookkeeping
systems at NES, one that Plaintiff controlled and used, and one that was handled by his
bookkeeper. Despite the existence of these two systems, Plaintiff has refused to provide records
31 from the system that he personally maintained. In addition, Plaintiff caused NES to stop
accepting credit cards for the retail sale oflobsters and then utilized this change to retain cash
received from lobster sales without recording it as corporate income. In 2012, Plaintiff
stopped NES from selling lobsters except to two customers, causing the income NES derived
from lobster sales to fall dramatically.
Defendant's proposed findings of fact and conclusions oflaw spell out the details of
Plaintiffs mismanagement and misconduct regarding NES in compelling detail. The court
adopts and incorporates by reference Defendant's recitation of this aspect of the evidence. See
Defendant's Proposed Judgment, Finding[s] of Fact And Conclusions of Law at 28-33.
In addition, the evidence clearly establishes that, while he was managing NES, the
Plaintiff took out two lines of credit, the balance of which totals nearly $350,000. Before
Plaintiff took over, NES had only limited debt and had substantial cash
Similarly, Defendant has proved economic misconduct on the part of Plaintiff with
respect to Dictator, Inc. The court adopts the following as its findings from the Defendant's
proposed findings:
In 2012, Mr. Harper used of Dictator, Inc. funds for motorcycle repairs by Lewis Boyle in the amount of $6,000, Def Exh. 104, pg. 6; one payment to Lamont Rice for $4,000 and one to Dana Rice for $1,500 which had no legitimate business purpose, Def Exh. 104. pgs 8,9; an unexplained payment to Bruce Stewart in the amount of $1,200; Def Exh. 104. pg. 18; a payment to Eric Olson of $3,100 for a camp in Rockwood, Def Exh. 104. pg. 20; Bank of America charges for gas, travel, hotels and personal radio for Pandora and Sirius radio. Def Exh. 104. pgs. 2,3,6,10,12,16,17,18; and payment of his personal Capital One credit card from Dictator, Inc. Def Exh. 104, pg. 5. He also took a year-end bonus by payment to the payroll account of $200,000. Def Exh. 104. pg. 20; In 2013, for the entire year the divorce was pending and Mr. Harper was subject to the preliminary injunction prohibiting use of funds except for in the ordinary course of business, he used funds generated by Dictator, Inc .. for his own personal benefit without the knowledge or consent of Sheryl VV. Harper. Dictator's 201.3 Expense Report (Def. Exh. 112) reveals he made a payment for rent of a camp from Eric E. Olson, Jr. in Rockwood for $3,100; made payment to Jackman Power Sports $584 for work on his snowmobiles; made payment to Lewis Boyle $3,000 for motorcycle work; paid River Valley $10,924 for new snowmobile and $350 for a snowmobile warranty; paid his divorce lawyers, Taylor, McCormick & Frame $7,500; paid two payments of
32 $4,030 and $3,700 to TMR as a donation to the Iron Dog Snovvmobile Run in Alaska; and paid the Town of Jackman $7 51 for his snowmobile registration. At year end, Mr. Harper transferred $150,000 to the payroll account to pay himself a bonus. Def. Exh. 104, pg. 41. In 2013, Mr. Harper also expended $20,980 on the corporate credit card. Def Exh. 112. Charges on the Bank of America credit card ending 0852 and 6246 far exceeded the $6,088.39 Bank of America charges in 2012 (Def. Exh. 104, pgs. 2,3,6,10,12,16,17,18) and the $5,047.02 Bank of America charges in 2015. Def Exh. 11 lA. In 2013, Mr. Harper did not make a single trip down to Fairhaven, Massachusetts to the boat between January, 2013 and his deposition in mid-October, 2013. In 2014, Mr. Harper continued his use of Dictator, Inc. corporate funds for his personal benefit, despite the court's order. He paid his experts Dawson, Smith, Purvis & Bassett $7,000, donated $200 to his girlfriend's charity, Literacy Volunteers, paid Richard Nauzerolle $3,785, for a reason Mr. Harper could not remember, and paid $7,000 to Nicholasville Toyota for his daughter's car. Def. Exh. 111, Def. Exh. 105, and Def. Exh. 105B. Further, in 2014, Mr. Harper paid himself in February, 2014, at a time when he had shut down the joint household account, and closed the only credit card Sheryl E. Harper had prior to his snowmobiling trip to Alaska and Sheryl had no access to any income. Def Exh. lllA, pg. 3; Def Exh. 105, pgs 18, 19 of 22. Upon return from his vacation, he paid himself another $8,500 on March 24, 2014. Def. Exh. 105, pg. 17 of 22. In 2015, Mr. Harper's operation of Dictator, Inc. was subject to this Court's Amended Interim Order, elated February 27, 2016, and was under the oversight of the Referee. During that year, gross receipts increased over $500,000 over 2014. See Def. Exh. 112A compared to Def Exh. 111. Even though the Referee was monitoring account activity, Mr. Harper paid $20,800 towards a camper out of Dictator funds on July 15, 2016, (Def. Exh. 105A); managed to pay all auto expenses for his personal use of his Ford truck out of Dictator, Inc. (Def. Exh. 112B), and purchased a brand new 2016 Ford FS50 truck and incurred a new truck loan 10 days after the November 2, 2015, scheduled hearing. Def. Exh. 112D, Def. Exh. 105A. This occurred at a time when Mr. Harper reported to the Referee he needed to draw cash from Dictator's credit line and therefore could not transfer money to the Referee account. Joint Exh. 48E.
Defendant's Proposed Judgment, Finding[s] of Fact and Conclusions of Law at 26-27.
Plaintiff challenges Defendant's allegations of misconduct asserting that they are not
supported by reliable evidence, ignore the fact that both parties aggressively characterized
expenses as business expenses, and ignore the reality that Plaintiff was required to continue
operating NES while divorce proceedings were under way even though he expressed no
interest in doing so. Furthermore, Plaintiff responds that it was Defendant, not he, who
,.,,., .) .) exercised bad faith during the transition ofNES as supported by the trial testimony of Mike
Smith.
The court has weighed the evidence and finds and concludes that Defendant has proved
clearly and convincingly, i.e. that it is highly probable, that Plaintiff has engaged in economic
misconduct to the extent of taking at least $800,000 from what should have been shared income
from NES and Dictator, Inc., of which Defendant's presumptive half-share would have been
about $400,000. The $800,000 figure reflects what the court finds to be substantiated in
largely undisputed transactions.
In some respects, whether Plaintiff is in fact guilty of economic misconduct may be
beside the point-the salient point is that the evidence shows that he appropriated for his own
benefit a marital asset in the form of income.from the Dictator and NES businesses,just as
Defendant used $30,000 from the income from Ruby Red, Inc. for her own purposes. The
attached table of allocated marital property imputes these amounts as income to each of the
parties.
In addition, Defendant demonstrated that the Plaintiff opened and drew clown the two
lines of credit, with The First and Machias Savings Bank, relating to the vVharf property, and
has not explained what happened to most of the amounts drawn on the lines. Based on the
extensive evidence regarding Plaintiffs economic misconduct with respect to NES, this Final
Divorce Judgment allocates responsibility for paying The First line of credit solely to the
Plaintiff, and requires that the line be paid off either by him or from his share of the proceeds of
the sale of the Wharf property and the assets ofNES. The Machias Savings Bank line of credit
will be treated as a joint obligation.
Plaintiffs post-trial motion asserts, among other things, that Defendant was required to
trace the funds that Plaintiff took out of the businesses into the hands of third parties, which
34 admittedly Defendant has not clone as to most of the funds. She has shown that the Plaintiff
rr1acle a number of purchases during the divorce proceeding and to that extent has traced funds.
But Plaintiffs premises that a party seeking to impute the receipt of marital funds must follow
the funds into the hands of third parties is not the law, as the court understands it. vVhat
Defendant had to show is that the Plaintiff more likely than not obtained funds from the
parties' businesses that he has not accounted for in this case, and that she has clone.
Admittedly, her evidence is largely circumstantial, and it rests in part on the adverse inferences
that can be brought from the Plaintiffs decision to dispense with a payment method that can be
readily tracked and go to a cash payment system, coupled with his use of two bookkeeping
systems for the lobster businesses, one of which the Defendant and the referee did not have
access to. These and other facts are sufficient to persuade the court to impute to Plaintiff the
receipt of $800,000 in marital funds for which he has not accounted.
XVI. Attorney Fees
Plaintiff requests that each party be individually responsible for his or her attorney fees.
In addition to her claims of economic misconduct, Defendant asserts that Plaintiff
should. pay Defendant $15,000 to make up for the additional amount he received, pursuant to
court order, for attorney fees from marital funds . Defendant further asserts that Plaintiffs
actions have increased the cost oflitigation, delayed final resolution, and should be calculated
into the court's equitable division of assets and allocation of debt. For example, Defendant
contends she was forced to file a motion to enforce a $10,000.00 payment due to her under the
April 1, 2014 First Interim Order. She contends that Plaintiff claimed he did not have
sufficient funds to pay Defendant, but purchased a new snowmobile on November 26, 2014. Up
to a point, the record confirms Defendant's position. Only after an in-chambers conference did
Plaintiff make the payments owed to Defendant.
35 In addition, Defendant claims that Plaintiff failed to inform the court of the funds he
made during a January, 2015 fishing trip or that he had deposited $60,000 into his personal
account to pay his lawyers and experts. Defendant asks the court to consider this conduct in its
allocation of attorney fees.
The court may order a party to pay another party's reasonable attorney fees, including
costs, for participation in the proceedings. 19-A M.R.S.A. § 105(1). In making this
determination, the court may consider the relevant financial circumstances of the parties and
which party is in a better position to bear the costs oflitigation, whether the conduct of a party
has contributed to the duration of litigation, and any other factors that reasonably bear on the
fairness and justness of the award. Estate of Ricci, 2003 ME 84, ~ SO, 827 A.2d 817 (citations
omitted).
Plaintiffs present and former counsel have submitted affidavits of attorney fees and
costs asserting that Plaintiff incurred a total of $246,174.31 3 in attorney fees and costs
$172,238.01 in attorney fees and $21,856.72 for disbursement reimbursements to Taylor
McCormick & Frame, LLC and $52,079.58 in attorney fees and costs to Susan M. Schultz, LLC.
Defendant's counsel submitted an affidavit asserting that she incurred a total of $243,701.72 in
attorney fees and costs.
Issues of economic misconduct are addressed above, and, although economic misconduct
could in theory justify an order requiring the wrongdoer to pay the victim's attorney fees, the
court does not intend to penalize the Plaintiff twice for the same misconduct. However, the
court agrees with the Defendant up to a point that, even apart from economic misconduct,
Plaintiffs conduct caused her to incur additional attorney fees, and also that Plaintiffs
3If the $21,856.72 for disbursement reimbursements to Taylor McCormick & Frame, LLC are not included in this calculation, the amount of attorney fees and costs is $224,S 17.59.
36 application of $60,000 ,toward his own attorney fees involved funds in which Defendant had a
reasonable expectancy and interest.
Based on the entire record, the court finds and concludes that Defendant is entitled to
have Plaintiff reimburse her for $50,000 of her attorney fees. Plaintiff shall pay Defendant or
her attorney $50,000 from his share of the funds in the parties' accounts at the time the funds
are distributed to the parties. 4
XVII. Just and Equitable Allocation efAssets and Property
The attached table sets forth the court's allocation of the property and assets of the
parties. Property that is to be sold and the proceeds divided is listed and valued, but is not
counted in the allocation. Likewise, non-marital property, post-filing accounts and property of
limited or no value is not counted in the allocation. The $800,000 in NES and Dictator, Inc.
income that the Defendant proved that Plaintiff appropriated from income of NES and Dictator
is imputed to him. Likewise, the $30,000 that Defendant appropriated from income of Ruby
Red, Inc. is imputed to her.
The allocation does not include the proceeds of the sale of the properties to be sold, but
those do not change the allocation ratio because the proceeds of sale are to be divided equally.
The allocation also does not reflect the attorney fee award, because it is conceptually separate
from the allocation of marital property.
Although not equal, the net values of marital assets and property allocated to the parties
are just and equitable. The net value allocated to Defendant is higher than that allocated to
Plaintiff only because the value allocated to her includes 70% of the marital component of the
3108 account to reflect her substantial contribution of $492,669 in non-marital funds to what is
now the marital component of the account. As the last entry on the attached table shows, if
,1The attached table on page 4 shows the amounts previously disbursed by the Referee to the parties. Plaintiff notes that the Referee ha~ disbursed about $24,000 more to Defendant than to him. The court has considered this point in determining the fee award.
37 the -3108 account is excluded from the allocation, the difference in values allocated is less than
$2,000.
XVIII. Transition and Sale efProperties and Disbursement efProceeds
Referee John Ficlrych shall supervise the distribution of the bank and brokerage
accounts listed in this Final Divorce Judgment and the attached table, and confirm that the
various amounts awarded to each of the parties herein are SL1btracted from the other party's
share.
Referee Fidrych is hereby authorized, but is not required, to take immediate and full
control of Dictator, Inc., Ruby Reel, Inc., the Tremont properties and the vVharf properties and
all assets and accounts associated with those properties. The parties are hereby ordered and
enjoined to cooperate fully with the Referee in all respects, including turning over any and all
books, records and other items requested by the Referee.
Any income available for distribution to the parties from any of the businesses, after
payment of all expenses and fees of the Referee, shall be shared equally between them.
The Referee shall sell, in any commercially reasonable manner, including by auction, I
any and all right, title and of interest of either or both parties in the following:
• the fishing vessel Dictator and its licenses and permits, and all other assets of Dictator,
Inc.
• the so-called vVharfproperty and all assets of Northeastern Seafood, Inc .
• the Tremont properties (including McKinley Market) and all assets of Ruby Red, Inc .
Unless the parties agree otherwise in writing, the sale of the Tremont properties shall
be by auction, given the limited interest in the listing of those properties. The sale of the other
properties may be by auction, by listing or any other commercially reasonable means. The sale
of these properties may include any and all equipment, fixtures, vehicles and all tangible and
38 intangible assets associated with any of the properties, except for any items specifically
allocated to a party in this Final Divorce J uclgment or the attached chart.
This Final Divorce Judgment assumes that the sale of the properties will be of assets
rather than sale of the stock of the corporate entities owned by the parties, but a sale of stock
may occur instead if deemed more financially advantageous to the' parties than a sale of
corporate assets. Assuming all assets of.Dietator, Inc., Ruby Reel, Inc. and Northeastern
Seafood, Inc. are sold and all debts are paid, the parties shall cause those corporations to be
dissolved ,
The Referee is authorized to retain, on any commercially reasonable terms, the services
of any broker, consultant, property manager or other service provider to protect the properties
and prepare and list them for sale. Any commission or other compensation, or expense or
reimbursement due to the Referee, or to any broker, consultant, property manager or other
service provider shall be paid through the Referee's account.
If any property is listed for sale and no purchase and sale agreement is signed within the
first three months, the listing price for that property shall be reduced by five percent per month
thereafter, unless the Referee expressly determines otherwise or the parties agree otherwise in
writing.
The Referee is authorized to fund his fees and any costs or expenses associated with his
activities by withholding equal amounts from each party's share of any account or sales
proceeds, in a total amount sufficient to fund the Referee's fees and any costs or expenses.
The Referee shall assure that the parties, directly or through counsel, are informed of
material developments and the terms of all listings, offers and other aspects of the sale process.
The Referee shall deposit the proceeds of any sale, net of closing costs, into the
Referee's account. From the account, the Referee is authorized to satisfy his fee as well as any
39 and all outstanding costs, commissions and expenses associated with the sale of any property.
All taxes and expenses associated with the sale of property shall be considered a joint expense
to the parties.
The parties are hereby ordered and enjoined to cooperate in all transactions,
including but not limited to, the listing and sale of properties, and to execute any documents
associated with any transaction. If either party fails or refuses to execute any document or
engage in any transaction in the course of the sale of a business or any other aspect of this Final
Divorce Judgment, the Referee may apply to the court for authority to act on behalf of that
party. See M.R. Civ. P. 70 ( after notice and opportunity for hearing, court may appoint another
person to execute documents and act on behalf of a party who refuses or fails to execute
documents or act).
XIX. Referee's Authori-ty Pending Sale or Any Appeal
The Referee is hereby authorized to take possession and control of any asset (including
all books and records, permits and accounts) of the parties and to operate it pending sale or
during the pendency of any appeal of this j uclgment. I
To assure that the parties' assets are preserved, the Referee is authorized to transfer
funds from the so-called Fish Unlimited account (ending in -410.3) of the parties into the
Referee's account and to use such funds (1) to defray any expense associated with any marital
asset of the parties, if non-payment of the expense could potentially cause a partial or complete
loss of the property, and (2) to pay the parties' attorney fees to the extent agreed on by the
Conclusion
IT IS ORDERED AND ADJUDGED AS FOLLOvVS:
40 I. The court has previously granted a divorce by means of the Order and Judgment
Granting Divorce elated February 26, 2015.
2. The parties' assets and property are allocated as set forth herein and on the attached
table, which is hereby incorporated by reference.
3. Any property of the parties not allocated herein or in the attached table is awarded
to the party in possession of tangible property or the party in whose name intangible propertY,
is titled.
4. Defendant's Motion to Enforce the November 3, 2015 Order is granted in part, to
the extent set forth herein, and is otherwise denied. Plaintiffs Motion to Strike the affidavit of
Michael Cardente is granted to the extent set forth herein and is otherwise denied.
5. Defendant is awarded $50,000 against Plaintiff toward her attorney fees and costs
in this case. Any costs or expense associated with this case, or with the sale of properties to
third parties, including fees and expenses of the Referee, shall be allocated equally between the
parties, except that any costs or expenses, including fees and expenses of the Referee, associated
with the transfer of property awarded to only one party shall be borne solely by that party.
6. Each party is awarded sole responsibility for any indebtedness associated with the
property and assets awarded to that party, and shall hold harmless and indemnify the other
party against any and all claims, costs 0r liability associated with the debt, inclL1cling costs of
defense and attorney fees incurred as a result of any such claim, cost or liability.
7. Any loan or indebtedness as to which the parties are jointly liable shall be refinanced
or discharged within 120 clays by the party to whom the property encumbered by the loan or
indebtedness is awarded, so as to eliminate the liability of the other party. This paragraph
applies only to property awarded to only one party, and not to property to be sold by the
Referee.
41 8. The parties are hereby ordered and enjoined to cooperate with each other and with
the Referee in implementing the transactions contemplated in this Final Divorce Judgment and
executing any documents associated with such transactions.
9. The court invites counsel to prepare and submit an abstract of this Final Divorce
Judgment for recording if necessary.
Pursuant to M.R. Civ. P. 79(a), the Clerk is hereby directed to incorporate this Final
Divorce Judgment by reference in the docket.
Dated: November 21, 2016 &U!~ A.M. Horton Justice, Business & Consumer Court
En~~~ ·ct 01: the Doc:tG : _/j,.. ti I,. J(p Co .m. $ent v!11 Mr-?11 _ .. E/~/ronlool!y_ ~
42 HARPER V. HARPER, BCD FM-14-02
THE FOLLOWING TABLE IS ATIACHED TO AND INCORPORATED BY REFERENCE IN THE AMENDED JUDGMENT ISSUED IN THIS CASE. IT REFLECTS THE ALLOCATION AND VALUATION OF THE PARTIES' ASSETS, DEBTS AND PROPERTY. Where XXXX is shown in the column below a party, the asset or debt is assigned to the party, in whole or part, without the value being included in the total allocation. For example, the value of properties to be sold rather than allocated is not factored into the total value of property allocated to a party. Similarly, property or accounts to be divided equally is not included in either party's column.
MARITAL ASSET OR ITEM VALUE/DEBT Plaintiff Defendant REAL ESTATE & BUSINESSES Tremont Property All Tremont properties are to be sold by the Referee. 42 Tremont Road: McKinley Market .61 400,00ci xxxx xxxx All debt, taxes and other expenses associated with any of 44 Tremont Road: Warehouses/Garage 400,000 the properties are to be paid from the proceeds of sale
52 Harbor Drive: Duplex (residential) .3: 180,000 and the remainder to be allocated 50/50 to the parties. 21 Harbor Drive: House .74 a 198,000 The FIRST (5119) mortgage -752,800
RUBY RED, INC 140,000 xxxx xxxx Sale of all corporate assets to be arranged by Referee. Equipment and Inventory Any balance to be used to pay accounts payable, debts, The First Checking (5226) 1,727 expenses, taxes, etc. with remainder allocated to The First ODP loan (5226) -30,000 the parties equally, except that $15,000 will be added to Plaintiff's share from Defendant's share. See section VI of the Amended Judgment. Assuming all assets sold, stock awarded to Defendant at no val
SHERYL RENTALS Sheryl Rentals The FIRST (3057) checking Account to be used for Tremont properties pending 2,708 xxxx xxxx sale. Any balance left after sale to be included in net proceeds for purposes of 50/50 allocation.
250 Seawall Road All Seawall properties and debt allocated to Plaintiff at the vall House (residential) and .69 ac. 115,000 Two Warehouses and .93 ac. 438,000 Surplus land 9.879 ac. 175,000 The FIRST (1472) mortgage -190,840 537,160 537,160 ASSET OR ITEM VALUE/DEBT Plaintiff Defendant
HARPER RENTALS Harper Rentals The FIRST (9043) checkin 6,857 xxxx Operating account for Seawall properties allocated to Plaintitt. Value not counted tor purposes ot overall allocation because it is an operating account.
126 Clark Point Road (Dock} 1,600,000 xxxx xxxx Wharf property to be sold by the Referee. Real Estate, Vehicles, Equipment All debt, taxes, arid costs to be paid first. remainder to be allocated 50/50 to the parties.
NORTHEASTERN SEAFOOD, INC
Accounts The FIRST (0386) Checking 22,490 These are current NES operating accounts. Defendant can use The FIRST (0394) Payroll 527 until NES sale. Any balances after sale are awarded to BHBT (7043) Checking 2,667 the parties equally, so accounts are not factored into allocatio1 ,
Machias Savings (5590) 10,000 10,000 Account opened by Plaintiff allocated to him at value shown. The FIRST LOC (1738) -248,787 -248,787 Line of credit to be paid from Plaintiff's share of sale proceeds. Machias Savings LOC (3745) -96,973 xxxx xxxx Line of credit to be paid from both parties' sale proceeds. NES corporation to be dissolved assuming OTHER REAL ESTATE all corporate assets are sold .
12 Maple Lane House/Apartments 400,000 400,000
60 Beech Hill Road Defendant residenc1 915,000 The FIRST (4024) -247,659 The FIRST (8724) -22,999 Net Value 644,342 644,342
Trenton/Ellsworth raw land 430.15 a 281,000 281,000
80 Mountain View camp 1.1 a 278,000 278,000 Mountain View lot 1.9 a 115,000 115,000 ASSET OR ITEM VALUE/DEBT Plaintiff Defendant
DICTATOR, INC Vessel & Federal Permit 4,500,000 All assets of Dictator, Inc. to be sold by Referee. All debt and The FIRST (8249) boat loan -317,560 taxes to be paid out of sale proceeds. Net proceeds to be Net value 4,182,440 xxxx xxxx divided equally between parties. Net income, atter payment ot Reteree tees and other expense: is to be shared equally between the parties pending sale. The FIRST checking (2028) 44,942 xxxx xxxx To be used in operations pending sale; then divided equally. The FIRST LOC (3171) -80,000 xxxx xxxx Line of credit to be paid at closing of sale of Dictator assets.
Dictator stock to Plaintiff at no value assuming all assets sold.
Recreational Vehicles, Equipment, Tools All of the 7 or 8 snowmobiles 85,000 All snowmobiles awarded to Defendant. 1986 Harley FXRS Liberty 15,615 15,615 Accessories 16,000 16,000 2010 Harley FLXH Street Glide 15,570 15,570 Accessories 13,000 13,000 2006 Harley FLSTNl Heritage Softail 10,000 10,000
Truck Bed 105 gallon fuel tank 1,000 1,000 Six Place covered snowmobile trailer 12,000 12,000 Snowmobile trailers to Defendant Four place covered snowmobile trailer 4,000 4,000 with the snowmobiles Motorcycle and snowmobile lift 850 850 2011 Massey Ferguson tractor To be sold xxxx xxxx To be sold and proceeds divided equally. Flatbed trailer for tractor 8,000 8,000 Power, hand tools, machinery & equipm 50,000 50,000
Other Household furniture 60 Beech Road xxxx Furniture values assumed not to be material to value of Household furniture Sullivan xxxx of each party's allocated share. Plaintiff's safe deposit box funds 36,000 36,000 Other personal property (nominal value 16,464 16,464 xxxx for Plaintiff's collections of coins and cards).
Investment accounts/Stock Marital value HM Payson (3108) 760,759 266,266 494,493 65% of marital component to Defendant due to her contributi< brokerage account nonmarital funds to the marital component of this account. Defendant's nonmarital Apple stock in -3108 xxxx Value of nonmarital stock not included in allocation H!\'1 Payson Fish Unlimited (4103) 543,995 271,998 271,997 Fish Unlimited account to be divided equally HM Payson Capital account (3171) 160,049 xxxx xxxx Any balance in capital account to be allocated equally. HM Payson (3162) JWROS brokerage ac< unknown xxxx xxxx To be equally allocated. Defendant's Ameriprise Annuity 106,854 106,854 Plaintiff's AL Group #3 LP stock 10,000 10,000
Retirement accounts HM Payson, (31:29) Defendant SEP IRA 65,907 65,907 HM Payson {3156) Plaintiff SEP IRA 77,538 77,538
Personal accounts Plaintiff Post-filing personal accounts not counted in allocation The First (0822) checking 2,754 xxxx Machias Savings (7250) checking 2,500 xxxx Camden Nat'I (4787) Health Savings 5,312 xxxx Machias Savings (1165) LOC -132,695 xxxx Machias Savings (7250) Overdraft -550 xxxx Defendant The First (6651) Savings 552 xxxx The First (2477) Checking 10,586 xxxx Camden Nat'I (4957) Health Savings 7,297 xxxx Prior Referee Disbursements to Parties 194,500 216,800 Stipulated tax refund to Defendant 25,169
Amount imputed to Plaintiff for income 800,000 of NES and Dictator appropriated by Plaintiff Amount imputed to Defendant for income 30,000 of Ruby Red appropriated by Defendant
Net value allocated to each party 2,452,559 2,679,177 Amounts do not include value of property to be sold.
Net values excluding the -3108 account are almost equal 2,186,293 2,184,684 STATE OF MAINE BUSINESS AND CONSUMER COURT Cumberland, ss. Location: Portland Docket No.: BCD-FM-14-02
) TIMOTHY W. HARPER, ) ) Plaintiff ) ) v. ) ) SHERYL E. HARPER, ) ) Defendant )
AMENDED DIVORCE JUDGMENT
This matter is before the court for decision following trial.
Plaintiff Timothy W. Harper and Defendant Sheryl E. Harper were married in New
York in July 1978. Both are presently in their late fifties. They have four adult children. 1 During the 36 years of the marriage, they started several businesses and accumulated
substantial real property and other assets. With the exception of certain assets gifted to or
inherited by one party or the other, all of the assets owned separately or jointly by the parties
are marital assets .
The marital businesses are as follows :
• The McKinley Market, a convenience store and gas station in the Bass Harbor
community in the Town of Tremont. In addition to the store, the parties'
marital property includes adjacent parcels occupied by two storage buildings and
I This court issued a divorce in February 2015, on the basis ofM.R. Civ. P . l 15(b), authorizing the court to grant a divorce notwithstanding the pendency of other claims or counterclaims in the case. two residential buildings. [McKinley Market and the adjacent properties are
collectively sometimes referred to herein as "the Tremont properties"]. The
convenience store/ gas station business is owned by Ruby Red, Inc., a
corporation of which Defendant is the sole shareholder. The Defendant has been
responsible for managing the operation of the convenience store and the rental
• The Dictator, a scallop fishing boat based in Massachusetts. The boat is owned
by Dictator, Inc., a corporation of which Plaintiff is the sole shareholder. The
Dictator, Inc. assets include permits to fish and several operating accounts . The
debt associated with the Dictator includes a loan from The First as well as a line
of credit. Plaintiff has always been responsible for managing the operations of
Dictator, Inc., although the fishing is handled by a hired captain and crew.
• North Eastern Seafood, Inc. (NES), an incorporated seafood sales business doing
business under the names of Fish Unlimited and Southwest Lobster, operating
out of a wharf and storage facility located at 126 Clark Point Road, Southwest
Harbor ["the Wharf property"]. Early in the parties' marriage, Defendant
started the Fish Unlimited business by selling fish while Plaintiff worked on the
parties' fishing boat. At some point before this case was brought, Plaintiff took
over primary responsibility for managing the operations of NES, although he
turned over responsibility to the Defendant toward the end of 2015. The assets
associated with NES include inventory and equipment and several operating
2 accounts. Debt associated with NES consists of two lines of credit, with Machias
• Commercial and residential property on Seawall Road, Southwest Harbor, Maine
["the Seawall property"]. The property consists of a residence, two warehouses
and a large lot ofjust under 10 acres . Plaintiff has been managing the Seawall
property and collecting rents .
• Sheryl Rentals and Harper Rentals, two property rental businesses operated
separately by Defendant and Plaintiff respectively. Each business has an
Although some of the businesses are owned by corporate entities of which one or both
parties are the sole shareholders, those businesses as well as the parties' rental businesses were
initiated and developed during the parties' marriage, and all of the corporate entities were
formed during the parties' marriage. All of the businesses constitute marital property.
In addition to the businesses, the parties own several real properties and substantial
tangible and intangible personal property, all of which are discussed below.
This case has been pending for almost four years . It was filed in the Ellsworth District
Court in October 2012, and was transferred to the Augusta District Court in September 2013 .
The Augusta District Court held hearings in this matter on December 19, 2013 and March 4,
2014. On April 1, 2014, the District Court entered its First Interim Order, awarding
Defendant exclusive possession of the parties' real estate located at 60 Beech Hill Road in
3 Mount Desert, Maine, and awarding Plaintiff exclusive possession of the parties' real estate
The First Interim Order further allocated between the parties responsibility for the
operation of the five marital businesses. The Defendant was assigned responsibility for
operating the McKinley Market business and property, as well as the Sheryl Rentals business.
Plaintiff was assigned the responsibility to operate the NES seafood business; the Harper
The First Interim Order also established responsibilities for payment of health
insurance, automobile insurance, commercial and liability insurance, living expenses, monthly
expenses, necessary repairs, and tax obligations .
In the Second Interim Order, issued on November 14, 2014, the District Court
determined that the parties could each withdraw $30,000 from the NES Investment account for
litigation expenses and that, if the parties agree, they could withdraw the remaining funds of
approximately $8,416 from that account. The Second Interim Order further required a $25, 169
tax refund be paid to Defendant and that Plaintiff pay Defendant an additional $19,357 to
More than two years after it was filed, this action was transferred to the Business and
This court divided trial of the case into two phases. Phase I addressed the valuation of
the parties' real estate, the valuation and allocation of intangible non-business personal
property, the extent to which the parties' investments in accounts with H.M. Payson are
4 marital property, and issues relating to the parties' insurance coverage. All other issues were
reserved for Phase II.
Phase I of the trial was conducted, in part, on January 28 and 29 of 2015. While Phase
II of the trial was scheduled to begin on February 23, it-and the conclusion of Phase I-was
postponed following a conference with the parties and their counsel on that day. Essentially,
the postponement was the result of a change in direction agreed on by the parties, involving the
sale of the Ruby Red and Wharf properties and the appointment of a referee whose duties
would include overseeing the marketing and sale of the properties.
Three days later, at the Plaintiffs request, the court held a hearing and granted a final
divorce judgment notwithstanding the pendency of other claims, pursuant to M.R. Civ. P.
I 15(b), reserving jurisdiction to decide all remaining issues and reserving all claims and
defenses of the parties. The following day, February 27, 2015, the court issued an Amended
Interim Order that, among other things, appointed John Fidrych, CPA, MBA, as Referee and
tasked him with the sale of the Ruby Red and Wharf properties and oversight of the parties'
Phase I of the trial resumed on April 28, 2015 after which the court entered an Order
addressing issues relating to the H.M. Payson Account numbered #3108 and determined that
only the 700 shares of Apple stock in the Account were Defendant's non-marital property.
Over the next months, the Referee arranged for the Ruby Red and Wharf properties to
be listed for sale through brokers, and eventually an offer was obtained on the Wharf property.
Although the offer was for a price in the range of what the parties deemed the Wharf property
to be worth, the Defendant essentially changed her mind about agreeing to sell the Wharf
5 On August 12, 2015, Defendant filed a motion to amend the February 27, 2015 Interim
Order seeking, amongst other things, to remove Plaintiff from management of Dictator,
Inc.-a scallop fishing operation- and to place herself in charge. Plaintiff filed a cross motion
to amend, and the court scheduled a hearing on these motions for November 2, 2015.
On October 20, 2015, Plaintiffs counsel moved to withdraw. On November 3, 2015, the
court granted the motion to withdraw and amended the February 27, 2015 Amended Interim
Order to transition operational responsibility for NES from Plaintiff to Defendant by December
1, 2015 . Based on the Defendant's change of position regarding sale of the Wharf property,
the court also modified the Amended Interim Order to postpone the sale of that property and to
reject an outstanding offer to purchase that property. On November 16, 2015, Plaintiffs
On January 7, 2016, Defendant filed a motion to enforce the court's November 3, 2015
Order alleging that Plaintiff was not cooperating in, and was actively impeding, the effective
transition of control for NES to Defendant. This motion was consolidated for final hearing and
remains pending. On March 7, 2015, Plaintiff filed a petition for distribution offunds to pay
income taxes and his attorney fees. On March 28, 2106, this court ordered an advance of
attorney fees, subject to reallocation. Plaintiffs petition for distribution offunds to pay income
taxes was also consolidated for final hearing and remains pending.
On April 4 through 7 of 2016, Phase II of the trial was conducted. The court requested
that the parties file their proposed findings of fact and conclusions oflaw by May 23, 2016, with
reply memoranda marking up the other's proposed findings by June 6, 2016. As of June 6,
6 III. Governing Standards
In a divorce action, "the court shall set apart to each spouse the spouse's property and
shall divide the marital property in proportions the court considers just after considering all
relevant factors." 19-A M.R.S.A. § 953( 1). In doing so, the court must consider "[t]he
contribution of each spouse to the acquisition of the marital property, including the
contribution of a spouse as homemaker; [t]he value of the property set apart to each spouse;
and [t]he economic circumstances of each spouse at the time the division of property is to
The statute provides for a "just" distribution, which is "not synonymous with an equal
distribution .... " Warren, 2005 ME 9, ~ 45, 866 A.2d 97. Courts are not required to divide
marital property equally, but are instead required to make the division fair and just considering
all of the circumstances of the parties. Id. (quoting Murphy v. Jllfurphy, 2003 ME 17, ~ 27, 816
A.2d 814. Thus, the court may consider ifone party's contributions to a marital asset were
greater than the other party's in allocating marital property. Bond v. Bond, 2011 ME 54, ~ 17,
17 A.3d 1219.
Furthermore, "the value of marital assets should be determined as of the time they are
distributed without reference to possible future events." Dubord v. Dubord, 1997 ME 7, ~ 12,
687 A.2d 647 (quoting Bayley v. Bayley, 602 A.2d 1152, 1154 (Me. 1992)). Accordingly,
"[u]nless the sale of assets is ordered by the court, or a party makes clear that they intend to
sell the property, future tax consequences need not be considered." Id. Marital debt is
apportioned pursuant to the same considerations as the division of marital property. Arey v.
7 Where the circumstances indicate that a spouse engaged in economic misconduct, this
behavior may factor into the equitable distribution of property and the award of spousal
support. Ahern v. Ahern, 2008 ME 1, ~ 22, 938 A.2d .'35. This issue is discussed further below
in the context of specific allegations of economic misconduct.
IV The Question of rVhether to Allocate or Sell the Three Primary Marital Businesses
One of the larger questions in this case is whether the three primary marital
businesses-the McKinley Market convenience store and related real estate; the Southwest
Lobster seafood business and related real estate, and the Dictator, Inc. fishing boat and
associated fishing rights-should be allocated to one party or the other, or should be sold, with
the net proceeds of sale divided. Plaintiff proposes that he be allocated the Dictator, Inc.
fishing boat and the associated fishing rights, and that the Defendant be allocated Ruby Red
and Wharf businesses and related properties. Defendant, however, does not want to be
allocated the Ruby Red and Wharf properties; she, too, would like to be awarded the Dictator,
Inc. business, and in the alternative, she proposes that all three be sold and the proceeds of sale
Based on the entire record, the court is in agreement that all three of the primary
businesses (and related property) should be sold and the proceeds allocated, for the following
• Both parties are in their late fifties. Both have worked hard, and both are entitled to
reap the financial benefits of their efforts over the course of the marriage.
• The convenience store business and the seafood business are both labor-intensive,
requiring extensive time and energy to operate them. Both businesses have struggled
8 financially for various reasons . Neither party wants to be awarded either the
convenience store business and the related Tremont properties or the seafood business
and the related Wharf property.
• The value of Ruby Red, Inc. and the Tremont properties is difficult to assess. As noted
above, these properties were listed for sale for some time, with little success. To award
the properties to either party is to saddle that party with an asset of dubious value that
will require large amounts of time to manage, even pending a sale.
• The real estate associated with NES, on the other hand, is marketable.
• The Dictator fishing boat is the plum asset in the parties' marital property portfolio-it
generates very substantial income and requires little time and effort to manage
compared to the NES and McKinley Market businesses, because the fishing is done by a
• The values attached to the parties' assets mean that, to achieve a just and equitable
division, one party would have to be awarded the two businesses that neither party
wants and the other party would have to be awarded the Dictator, Inc. business, which
• Lastly, were the Plaintiff to be awarded the Dictator, Inc. stock outright, a just and
equitable allocation would require that he pay substantial spousal support for a
substantial period of time. Perhaps in recognition of that potential, Mr . Harper
expressed a clear preference for an allocation that permitted the parties to move into the
future without any continuing financial connection. Selling all three of the primary
9 businesses enables the court to make a just and equitable allocation of the parties'
In light of these factors, this Judgment provides for the three businesses to be sold
under the supervision of the Referee, unless the parties stipulate in writing to some other
Moreover, this Judgment provides for the sales of properties to be conducted under the
supervision of the Referee, unless the parties stipulate in writing to a different procedure. The
court recognizes that the Referee's involvement will be an added expense, but the history of
this case, the extent of contested issues and the magnitude of the litigation effort all argue
strongly against leaving it to the parties to decide how to sell the assets in question. If the
parties come up with a joint detailed alternative and seek to modify this Amended Judgment
accordingly, the court will certainly consider it.
V. Stipulated Allocations
The parties have reached a number of stipulations as to the allocation of certain
properties, mortgage debts, and accounts. These stipulated allocations are reflected in the table
attached to this decision. below. The reasonable preferences of the parties should be
considered when dividing marital property. See Norton v. Norton, 443 A.2d 75, 76 (Me. 1982).
The court concurs with the parties' stipulated allocations as set forth in the attached table and
orders the assets and liabilities in question so divided.
While Defendant stipulates to the allocation and valuations, she requests that the court
take into consideration each party's contribution to the acquisition of their marital real estate.
See Bond v. Bond, 2011 ME 54, ~ 17, 17 A.sci 1219. The court has done so, and finds that the
10 parties have contributed equally, meaning that no adjustment to the stipulated vah1es is
VI. The Tremont Properties and Ruby Red, Inc. dlbla McKinley Market
Neither Plaintiff nor Defendant wishes to retain possession of the so-called Tremont
Properties which consist ofreal estate located at: 1) 42 Tremont Road-Market and Gas
Station; 2) 44• Tremont Road-2 warehouses; 3) 52 Tremont Road-Residential Duplex; and 4)
21 Harbor Drive--Single Family Residence. Similarly, neither party seeks to retain ownership . of the S-Corporation, Ruby Red, Inc., which operates the McKinley Market located at :H2 1
Tremont Road. The Tremont Properties were purchased in 2007 based on the advice of the
parties' accountant to obtain a property that could generate tax losses to offset the income
anticipated from Dictator, Inc. Prior to 2012, Plaintiff and Defendant each owned 50% of the
stock in Ruby Red, Inc. In 2012, Plaintiff transferred his 50% share to Defendant, apparently
Under the supervision of Referee Fidrych, the Tremont Properties were listed for sale
in 2015 with a call for offers. The only offer received was for a portion of the property-a
"green building" garage and it was not accepted. The Tremont Properties were re-listed at
some point after February 22, 2016, but have yet to attract any offers . The parties agree that
Ruby Red, Inc. owes $1,727 under The First Checking Account #5226 and $30,000 under The
First Overdraft #5226. They also agree that Ruby Red, Inc. has assets of $527 in The First
Payroll Account #0394 and that the Tremont Properties are encumbered by a mortgage from
The First in the amount of $7 52,800. The parties dispute, however, the value of the Tremont
Properties and the value of Ruby Red, Inc.'s remaining business assets and liabilities.
11 Defendant proposes that the Tremont Properties and all assets owned by Ruby Red,
Inc. be sold in a commercially reasonable manner. She proposes that the gains or losses
realized through the sell be split evenly between herself and Plaintiff Plaintiff proposes that
the Tremont Properties and Ruby Red, Inc. be distributed to Defendant as she is the 100%
shareholder of Ruby Red, Inc. and has historically controlled the properties.
For the reasons presented in section IV, supra, the court determines that the Tremont
Properties and the assets of Ruby Red, Inc. shall be sold off in a commercially reasonable
manner and that the proceeds of sale (net of applicable commissions and closing costs) shall be
divided between the parties. This is because neither party wishes to retain the assets and the
evidence indicates that the Tremont Properties and Ruby Red, Inc. were purchased by the
parties as a means to obtain tax benefits. Given that the properties and the corporation were
obtained with the best interests of both parties in mind, given that the parties disagree over the
value of the Tremont properties, and given that neither party wants the properties or assets , an
sell in which the gains or losses are split is a just result.
Because the Tremont properties and the assets of Ruby Red, Inc. are to be sold, their
actual value need not be established for purposes of an equitable allocation although it is
relevant to whether there is a need for spousal support and also relevant to the sale of the
properties. Based on the absence of offers on the real estate and based on the historical
performance of the convenience store/gas station, values lower than those established by the
parties' appraiser, Webersinn Appraisal, Inc., are appropriate. For purposes of determining the
need for spousal support to either party only, the court adopts a value of $400,000 for the
12 Tremont real estate properties, including the market and gas station facilities, and a value of
$200,000 for the ownership interest of Ruby Red, Inc.
As noted below, the Defendant has appropriated about $.30,000 in income from Ruby
Red, Inc. for her own purposes. This amount is imputed to her in the attached table. Plaintiff
asks that she be required to reimburse him for his presumptive half of the amount. However,
because the court has factored each party's receipt of income from the various businesses into
the overall allocation set forth in the attached table, to require reimbursement would in effect
be double counting. Thus, the net proceeds of sale of the Ruby Reel, Inc. assets and the
Tremont real estate will be divided equally between the parties.
NES is a commercial lobster business in which the parties are both 50% shareholders.
NES operates out of the land and buildings located at 126 Clark Point Road, Southwest
Harbor, Maine (the "Wharf').· NES buys lobsters from fishermen, sells lobsters to commercial
and retail customers, and supplies bait, salt, and fuel to fishermen. Defendant founded the
business in 1986 as Fish Unlimited and mainly through her own effort grew it into a successful
business. Plaintiff contributed to the growth of Fish Unlimited by catching seafood, but it was
mainly Defendant's talent, time and energy that grew the business. Much later, around 2007,
Plaintiff took over primary responsibility for managing the business, and did so until this
court's November .3, 2015 Interim Order pursuant to which Defendant was to assume
responsibility for the business operations of NES.
13 During the pendency of the case, the parties agreed that the Wharf property be put up
for sale. The listing produced a $1,500,000 offer to purchase the Wharf, but the Defendant
changed her mind about selling the Wharf and the property was taken off the market.
Plaintiff asserts that the Wharfs fair market value is $1,950,000, consistent with
Theodore Webersinn's October 2, 2013 appraisal. Plaintiff claims this valuation is supported
by Defendant's rejection of an offer to buy the Wharf for $1,500,000 as too low. However,
althoL1gh he values the Wharf property highly, Plaintiff does not propose the property be
allocated to himself, Instead, Plaintiff proposes that the Wharf be allocated to Defendant as her
sole and exclusive property and that she bear responsibility for all outstanding debt, including
mortgages, equity loans, commercial lines of credit, taxes, insurance and all other costs
associated with the Wharf Plaintiff further proposes that Defendant be allocated full
ownership ofNES along with its business assets and liabilities. Plaintiff requests that
Defendant be required to refinance the mortgage debt on the Wharf, or otherwise remove I
Plaintiff as a named debtor or guarantor on these loans within 90 days from the entry of this
For the reasons given in section IV above, the Wharfreal estate and the associated
trucks, trailers and other items will be sold and the other assets of NES will be liquidated as
well . For purposes only of determining whether there is a need to award spousal support to
either party, the court fixes the value of the Wharf property, the net value ofNES, and the
As of February 29, 2016, the parties agreed that the balances in the NES checking
accounts are $10,000 in Machias Savings Bank #5990, $2,667 in Bar Harbor Bank & Trust
14 #7043, and $22,490 in The First #0386. Furthermore, NES owes $248,787 under The First
Line of Credit #1738 and $96,973 under the Machias Line of Credit #3745. Neither party
appears to think that the NES business has any particular value (i.e. goodwill) as a going
concern, independent of the value of the Wharf property.
However, Defendant makes allegations of economic misconduct in connection with the
Plaintiffs operation of NES. These allegations and Plaintiffs response are discussed below.
The funds in the two checking accounts with The First numbered -0386 and -0394 and
the funds Bar Harbor Bank & Trust Account #7043 are operating accounts for use in the
operations ofNES. Any balance left after sale will be equally divided. The tractor-trailer
trucks, refrigerated trailers, and refrigerated box trucks owned by NES be sold with the net
proceeds split equally since neither party wishes to retain them. The remaining assets ofNES,
Defendant asserts, consist of office equipment and equipment related to the dock operation,
VIII. The Dz'ctator, Inc.
Plain tiff is the sole shareholder of Dictator, Inc., which owns a scallop fishing boat and
associated fishing permits . Plaintiff began scallop fishing in 1979 when he and the Defendant
first moved to Maine. Over the years, Plaintiff has developed the Dictator into a profitable
business. He was actively involved in the Dictator's operations, but in recent years has taken
on a managerial role, with a hired captain and crew doing the actual fishing.
The parties agree that the combined fair market value of the fishing vessel Dictator,
including its equipment and federal permit, is $4,500,000. The parties also agree that the vessel
is encumbered by a primary loan to The First for $317 ,560 as of February 29, 2016 under The
15 First Account #8249. Furthermore, the parties agree that the Dictator has an operating
account with The First ending in #2028 with a balance of $44,942, a Capital Account with HM
Payson ending in #3171 with $160,049.50, and a Line of Credit with the First ending in #7143.
Plaintiff asserts that the amount currently owed on the #7143 Line of Credit is $100,000, while
Plaintiff proposes that the Dictator, Inc., including all of its assets, be set aside as his
sole and exclusive property. Plaintiff agrees to assume responsibility for all liabilities
associated with the business and will indemnify and hold Defendant harmless against the same.
Plaintiff also argues that the court should take into account the inherent tax on the recovered
depreciation of the boat should it be sold. Plaintiff and Thomas O'Donnell, the accountant at
MacDonald Page, LLC who has done tax work for Dictator, Inc., calculate the tax liability in
the event of a sale to be $504,900. Plaintiff and Mr. O'Donnell further calculate that the 2015
income taxes owed by Plaintiff on the Dictator Inc.'s income is $191,.'366. Plaintiff contends
that all of the Dictator's 2015 income was used to finance the parties' expenses and fees in this
matter, the corporate line of credit has been maxed out, and there is no other money available
to pay these taxes. While Plaintiff filed for extensions to pay the taxes, he suspects it may not
be granted and he may be charged a penalty of somewhere between 5% and 25% of the taxes
due per month until his return is filed. This could result in an additional liability of $47,000.
Plaintiff further contends that pursuant to the April 1, 2014 Interim Order, the profits
from Dictator, Inc. were distributed to pay the parties' respective expenses in uneven shares
favoring Defendant. Specifically, Plaintiff received $6,000 per month and Defendant $10,000.
The $4,000 difference between the parties was to cover the mortgage on the residence in which
16 Defendant resides. In February 2015, the Interim Order was amended to provide Plaintiff and
Defendant with $7,500 each and a payment of $3,645 to Defendant for the mortgage. Plaintiff
contends that since he has received less than 50% of the benefit from all of Dictator Inc .'s
profits, it is fair to include 100% of the tax liability on the income as an obligation of the marital
estate and makes sense to reduce the value of Dictator, Inc. by its present and prospective tax
Defendant proposes that the fishing vessel and its permit be sold by a commercial
marine broker at the end of the 2016 fishing season. In support of this position, Defendant
contends that the boat fishes out of Fairhaven, Massachusetts and that Plaintiffs operation and
management of Dictator, Inc. requires minimal time and effort. Defendant further asserts that
Plaintiff has improperly used Dictator, Inc. corporate funds for his personal benefit, claimed
personal expenses as business expenses on the Dictator, Inc.'s corporate tax returns, and
mismanaged the operation of the Dictator, Inc. to the detriment of the marital estate. She
argues that Plaintiffs financial misconduct benefited him, to the detriment of the marital estate,
by approximately $330,534. Like Defendant's other allegations of economic misconduct, these
For the reasons indicated above, the assets of Dictator, Inc. , including the vessel and all
tangible and intangible property related to it, will be sold under the supervision of the Referee
after the 2016 fishing season, unless stipulated otherwise by t?e parties. The Dictator capital
account (-3171) may be used to fund Dictator's expenses pending sale, and after sale any
balance shall be divided equally between the parties . The court agrees with the Plaintiff that
any and all taxes, interest and penalties due, both with respect to income earned by Dictator,
17 Inc. and with respect to the sale of the assets of Dictator, Inc., should be shared between the
parties. This is just and equitable only because the court is addressing economic misconduct
IX. Personal Property
Defendant asserts that at the time of Phase I of the Trial in January, 2015, the parties
owned eight snowmobiles. Defendant values these snowmobiles, based on the NADA Guide, at
a total of $85,000. Plaintiff contends that the parties only own seven snowmobiles and
estimates their value to be $43,600. Plaintiff also asserts that any expenditures made on the
snowmobiles were with his own personal debt, for which he has accepted sole responsibility. If
the court does not accept the values Plaintiff proposes, he requests that the five snowmobiles
purchased prior to the divorce be allocated to the Defendant at her estimated value. As
indicated in the attached table, the parties' snowmobiles are awarded to Defendant at the total
The parties have three motorcycles. Defendant proposes that she receive the 2006
Harley FLSTNl Heritage Soft-Tail, while Plaintiff receives the 1986 Harley FXRS Liberty and
2010 Harley FLXH Street Glide. Plaintiff disagrees with her allocation only to the extent the
court accepts Defendant's valuations, in which case Plaintiff requests that all of the motorcycles
be allocated to Defendant. The court has assigned values to the three motorcycles and
accessories and allocated them as shown in the attached table.
B. Power Tools, Hand Tools, and Other Machinery and Equipment
18 Defendant contends that a conservative estimate of the value of Plaintiffs collection of
tools, equipment, and machinery is $200,000. Plaintiff disputes this value and requests that if
the court accepts Plaintiffs valuation, the tools and equipment be allocated to Defendant at said
value. The court does not accept Defendant's valuation and finds it just and equitable to
allocate to Plaintiff the tools, equipment and machinery at the value of $100,000 as set forth in
C. The Mercedes 280i
Defendant requests that she be awarded a Mercedes 280i as her non-marital personal
property. Plaintiff responds that the car does not belong to either party and was left by
someone in storage who never paid the bill. It is not clear how Plaintiff proposes the car be
allocated or disposed of The court allocates the Mercedes 280i to Defendant, subject to a
condition that she indemnify the Plaintiff against any liability to any third party associated with
the vehicle. Given that it is either non-marital property or property owned by a third party, no
value needs to be assigned to the Mercedes for purposes of the allocation.
D. Equipment. Watercraft and Trailers
The attached table contains a list of various equipment, watercraft and trailers. The
court finds it just and equitable to allocate these items at the indicated values as set forth in the
Furthermore, the parties agree to sell a 2011 Massey Ferguson Tractor with accessories
in a commercially reasonable manner and to split the proceeds equally. Unless the parties
agree otherwise, Defendant will contact Union Farm Equipment in Union, Maine and Kramer's
19 Equipment in Sidney, Maine and, on the parties' behalf, sell the tractor to the company who
E. Maps at the SuDivan Camp and Fw-nishings and Goods from 60 Beech Hill Road
Plaintiff is awarded the maps at the Sullivan Camp located at 68 Mountain View Road,
as they were a gift. Except for items allocated by agreement, which are listed in the next
section, Defendant is allocated all goods and furnishings at 60 Beech Hill Road and Plaintiff is
allocated the goods and furnishings at the Sullivan Camp. Any disparity in value between the
goods and furnishings at the Sullivan Camp and 60 Beech Hill Road is not significant.
F. Stipulated Disb·ibutions of Tangible Personal Property
The court allocates the items listed below to the party indicated and at the values stated.
Where no value is assigned, it is because the item was a gift to a party or inherited by a party,
or is not of significant value, and thus need not be assigned any value in the table. An X in the
table indicates the item is either non-marital or has no value that would be material to the
Assets/Liabilities Plaintiff Defendant Coins to Plaintiff $11,414.00
Tiger Woods Card Collection to Plaintiff $5,000 Grandfather's Saw to Plaintiff x Assorted Silver, China, Pictures and Family x Memorabilia to Defendant Jewelry to Defendant x Plaintiffs Grandfather's Album to Plaintiff x Old Tin Picture of Plaintiffs Family to x Plaintiff Two Push Mowers to Plaintiff $50 Plaintiffs High School Ring to Plaintiff x Chain Saw to Plaintiff x
20 The parties dispute who should receive items referred to in their filings as the Marble
game and the Old Propeller from the Dictator. The Marble Game is awarded to Defendant
and the Old Propeller is awarded to Plaintiff, with neither item having value material to the
A. Funds in Plaintiffs afe De:po. it Box
Defendant asserts that Plaintiff has $50,000 in a safe deposit box. Plaintiff initially
stated that he had $36,000 in the safe deposit box, but then corrected that calculation to
$32,500. Both parties agree that the money in Plaintiffs safe deposit box should be allocated to
him. Plaintiffs proposed findings assign a value of $36,000, and awards those funds to him,
and the court agrees.
Plaintiff asserts that Defendant has $200,000 in a safe deposit box. He asserts that this
amount was based on the last time he accessed Defendant's safe deposit box in 1998. Plaintiff
claims that the dates of Defendant's trips to the safe deposit box do not coincide with the dates
and events she asserts the money was taken out for. Accordingly, Plaintiff asserts that
Defendant is in possession of and should be allocated the $200,000 from her safe deposit box.
Defendant responds that since Plaintiffs last entry to the box in 1998, she accessed it
once in November 2001, three times in August and September 2002, once in July 2003, and
then not again until February 10, 2014. Defendant's February 10, 2014 visit to the box, she
asserts, was to enable her to respond to an interrogatory inquiring about the contents of the
box. Defendant testifies that she took out money in the safe deposit box in 2001, 2002 and
21 2003, and that there was no money in the box when she went to the box to answer Plaintiffs
interrogatories. Accordingly, she asserts that she should not be allocated any funds for the
The comt accepts Defendant's testimony on this point, and finds that she removed the
funds many years before this divorce case was filed and used the funds for the benefit of both
C. H.M. Payson Brokerage Account #S108
The parties' H.M. Payson Brokerage Account #3108 has a value of$834,728 as of the
date of trial. Of the assets in the account, 700 shares of Apple, Inc. stock are Defendant's
non-marital property, and the remaining assets are marital.
As indicated in this court's October 20, 2015 Order, the Brokerage Account initially
consisted of non-marital assets from Defendant-including the Apple stock-totaling $492,669
and marital assets totaling $150,110. Over time, the value of the account increased by
approximately $220,000. The Order concluded that although Defendant contributed
approximately three-quarters of the value to the Brokerage Account in non-marital funds, the
only non-marital property that had not been extensively commingled over time was the
Defendant's 700 Apple stock. The Order also found and concluded that it was not possible to
determine to a certainty the extent to which the substantial increase in value of the account was
due to the original marital component as opposed to the original non-marital component.
With this analysis in mind, the court reaffirms its determination that the 700 Apple
stock are Defendant's non-marital property. However, based on her substantial contribution to
the account of $492,669 in non-marital funds that have been inextricably commingled with the
22 originally contributed marital funds, the court concludes that it is just and equitable to award
the Defendant 65% of the value in the brokerage account ending in -3108, and to award the q
remaining 35% to Plaintiff.- (Economic misconduct is not a factor in this determination).
D. H. M. Payson Brokerage Account #4103
Before Phase II of the Trial, the parties stipulated that the value of H.M. Payson
Brokerage Account #4103 was $583,995. Subsequently, the court ordered payment of $40,000
from this account for attorney fees by Order dated March 28, 2016. Accordingly, Brokerage
Account #4103 has a present value of $543,995. Plaintiff requests that the assets in Account
#4103 be used to pay the amounts owed to MacPage, LLC for work performed by it related to
tax years prior to 2015. Plaintiff requests that the remainder be split such that 78% go to
Plaintiff and 22% to Defendant. Defendant counters that all of the money in Account #4103
came from money saved by Defendant in a predecessor account during her operation ofNES
prior to 2005. She asserts that no further contributions were made after 2005 and, as a result,
the court should allocate the entire amount to Defendant due to her contributions to the
account and Plaintiffs mismanagement and misappropriation of marital property.
Although the evidence does, to an extent, support the Defendant's contention that her
efforts more than Plaintiffs account for the funds in this account, Plaintiff could make the same
argument about the very significant income that the Dictator has generated over the years. It
was his effort, more than Defendant's, that led to the financial success of the Dictator, which
2 Defendant requests that she be awarded her non-marital Apple stock and 76% of the marital funds in the account based on her non-marital contributions of $492,669 being 76% of the total amount originally deposited into the account. However, the Apple stock that is being awarded as a non-marital asset was part of her non-marital contribution, so the actual ratio of her non-marital contribution to· the original total amount contributed is less than 76%. 23 has been far more profitable than either Ruby Red, Inc. or NES in recent years. Accordingly,
Defendant's argument regarding this account is not accepted by the court.
As to MacPage, Defendant asserts that MacPage has not submitted an itemized bill for
services and, as a result, the court should not make any determination of the amount owed or
allocate responsibility for any debt owed MacPage. As to the MacPage debt, the court agrees
that no determination of the amount owed is necessary, but does allocate responsibility to each
party for one-half of the liability to MacPage for accounting work that benefited both parties.
The parties have agreed that the following five individual accounts should be
distributed to the individual in whose name the account was created without consideration of
the account values since they are made up of post-divorce funds:
2. Defendant's The First Checking Account #2477;
3. Defendant's Camden National Bank Account #4957;
5. Plaintiffs Camden National Bank Account #4957.
The parties have also agreed that Plaintiff should be solely responsible for the debts at
Machias Savings Bank Line of Credit #1165 and Machias Savings Overdraft #7250. The
parties further agree that these debts should be allocated to Plaintiff without consideration of
the obligations in the allocation of marital property. The court concurs with the parties'
stipulations and orders the above-mentioned accounts so allocated.
24 Plaintiff requests that the parties' boat moorings, one in Somes Sound and one in
Southwest Harbor, be set aside to him as his sole and exclusive property since he is the one who
utilizes them. Defendant requests that she be awarded both moorings and also responds that
Plaintiff should not receive them because he has no connections to Southwest Harbor in light of
his lack of interest in maintaining control ofNES and the Wharf Plaintiff is awarded the
Somes Sound mooring. The Southwest Harbor mooring will be sold with the Wharf property
G. Plaintiffs Rental Income from the Camp
Defendant proposes that the Machias Savings Account #7250 be allocated to Plaintiff
without consideration of value, but requests that the court consider the rental proceeds retained
by Plaintiff and not reported to the Referee as rental income when distributing property.
Plaintiff responds that there was no prohibition against Plaintiff renting the camp when he was
not using it and that the rents were used to reduce his personal line of credit. Plaintiff responds
that his rental income has not harmed Defendant and that she could have done the same with
the property at 60 Beech Hill Road if she wished. The court agrees with Plaintiff on this
issue-each party has had the right to use or rent out the property that the parties agreed each
could use, and rental income is simply a substitute for the value of use of a property.
Accordingly, the court declines to consider the rental proceeds at issue. Thus, the court
allocates the Machias Savings Account #7250 to Plaintiff without factoring its value into the
25 H. Sheryl Rentals and Harper Rental§
Each party has operated rental properties, maintained accounts relating to the
properties, and received rental income. Defendant has managed Sheryl Rentals, which is
responsible for managing the Tremont Properties and the house at 252 Seawall Road. Sheryl
Rentals has a checking account with The First #3057 that has a balance of $2,708, as of
February 29, 2016. Plaintiff manages Harper Rentals and is responsible for renting out the
warehouses at 250 Seawall Road. Harper Rentals has a checking account with The First
Each party uses the funds in their respective accounts to pay the mortgages
encumbering the properties they manage. Defendant asserts that because the balances in these
accounts vary constantly, depending on the expenses of the respective properties and rents
collected, they should be allocated to the party responsible for the account without
Plaintiff further responds that NES is obligated to pay Harper Rentals back rent and
maintains that Harper Rentals, not NES, paid the NES mortgage until it was paid off in 2012
and that Harper Rentals has always billed NES for the rent. However, the court concludes that
NES does not owe any money to Harper Rentals because NES paid for the mortgage on the
Here, the court allocates The First Checking Account #3057-valued at $2,708
associated with Sheryl Rentals to Defendant. Similarly, the court allocates The First Checking
Account #9043-valued at $6857-associated with Harper Rentals to Plaintiff. Because both
26 accounts are considered operating accounts rather than assets, they are considered for purposes
On May 26, 2016, the court received a letter from Michael Cardente on behalf of
Cardente Real Estate in which he request the court to consider granting him compensation for
Cardente Real Estate's efforts in connection with the sale of the Wharf property. The letter
was not properly authenticated or introduced as evidence. Therefore, the court will not
consider the contents of the letter, or otherwise address Cardente's request. However, the
Referee is free, in his discretion, to list the Wharf property again with Cardente Real Estate.
XI. Money Allegedly Owed Under the First Interim Order
Defendant asserts that Plaintiff owes her $2,733.01 for her payment of the insurance
premium on the Sullivan Camp and Plaintiffs failure to pay health insurance premiums under
the April 1, 2014 First Interim Order. Defendant alleges that the First Interim Order
obligated Plaintiff to pay the homeowners insurance on the Sullivan Camp, but Plaintiff told his
bookkeeper not to pay and instead sent the bill to Defendant. Defendant asserts that she paid
the bill mistakenly thinking it was her obligation only to learn that it was for the Sullivan
Camp and Plaintiffs responsibility. The exhibit Defendant cites to in support of this argument
only shows an insurance bill with a minimum due of $375.50. Def Ex. 126. Defendant further
asserts that Plaintiff underpaid Defendant's insurance premiums for eleven months until the
February 27, 2015 order made each party responsible for his or her own health insurance costs.
In support Defendant points to an exhibit showing an alleged underpayment of $55.95 on April
16, 2014 and again on April 30, 2014. The alleged $55 .95 underpayment twice a month for
27 eleven months adds up to $1,230.90. She also asserts that Plaintiff only paid Defendant
$8 ,257 .94 of the $10,000 due to her for the first payment covering reasonable expenses under
the First Interim Order. In support Defendant points to a check for $8,257.94 to Plaintiff from
April 10, 2014. Writing on the exhibit, however, notes that an additional $1,500 was received
in March or April and that Plaintiff was only $242.06 short of the requisite payment. In sum,
Defendant requests Plaintiff reimburse her $2,7.33.01 for the Sullivan Camp insurance premium
Here, the evidence presented in support of Defendant's argument only indicates that
Plaintiff underpaid her by $729.46. Within 60 days, Plaintiff will reimburse Defendant that
amount, which is not shown in the allocation of marital property attached to this Amended
XII. Defendant's Request to Reconsider the First Interim Order
Defendant requests the court reconsider the April 1, 2014 First Interim Order to the
extent it addresses responsibility for business insurance. Specifically, Defendant requests that
Plaintiff reimburse her $7,500 for funds she expended purchasing duplicative insurance
coverage for Ruby Red, Inc. and the Tremont Properties . Defendant explains that during the
course of the parties' marriage, all vehicles owned by NES and all business property and
liability insurance for NES and Ruby Red, Inc., as well as insurance on the Tremont Properties,
Seawall Road and 126 Clark Road, were consolidated in a package insurance policy issued by
Hanover Insurance Company. On December 12, 201.3, the agent for the insurance company
informed Hanover that the parties were going throL1gh a divorce and wished to separate NES
and Ruby Red, Inc. coverage into two separate policies at renewal. Thereafter, Plaintiff
28 obtained insurance coverage for NES and informed Defendant, just prior to the expiration of
the policy, that it was up to her to find insurance for Ruby Red, Inc., the Tremont Properties,
and her automobiles . Defendant asserts that because the Tremont Properties and McKinley
Market were the least favorable risks, she was only able to obtain surplus coverage for Ruby
Red, Inc. and the Tremont Properties. The cost of this insurance to Defendant was $7,500.
Plaintiff does not specifically respond to this argument, but generally denies any charges of
In the First Interim Order, the District Court addressed Defendant's $7,500 payment
for the first three months of replacement coverage by requiring Plaintiff to pay the next three
months of insurance premiums. This was a fair result and the court denies Defendant's request
XIII. Petition for Distribution ofFunds to Pay 2015 Income Taxes
Plaintiff petitioned the court for a distribution of funds to pay individual 2015 state and
federal income taxes. vVhen Plaintiff filed his motion, he presented the court with a letter from
his accountant providing an estimate of his tax liability. Now, Plaintiff seeks an award of
$183,458 for taxes.
Defendant asserts that the draft tax return Plaintiff submitted at trial estimates his tax
liability without considering any losses that may be posted by NES. To complicate matters,
Plaintiff has allegedly refused to prepare a tax return for NES. Defendant asserts that NES's
tax return is necessary to definitely establish Plaintiffs 2015 tax liability.
Defendant further explains that income from Dictator, Inc. is the primary basis for
Plaintiffs 2015 income tax estimate, but at no point during 2015 did Plaintiff make quarterly
29 payments toward his tax liability or request permission from the Referee to reserve funds for
income taxes. Defendant further asserts that Plaintiff refused to file a joint extension with
Defendant because he had issued a 2014 1099-MISC to Defendant for $85,780.34 from
Dictator, Inc. and a W-2 for $.'3,4.'34. 12 from NES.
Defendant acknowledges that she has received the benefit of income from Dictator, Inc.
and, for 2015, her share was $152,744.00. Since Plaintiffs draft return indicates his combined
tax rate for 2015 state and federal taxes is 38.5%, the tax on Defendant's court ordered
payments would be $58,806.00 . Defendant requests the court take this amount into
consideration in fashioning the equitable di~ision of marital property and allocate the
responsibility for 2015 state and federal income taxes in Plaintiffs name to Plaintiff.
This Amended Judgment imputes substantial income from Dictator, Inc. and NES to
Plaintiff. Given that fact and the fact that Plaintiff has incurred taxes on income that went to
the benefit of both parties, any and all taxes, penalties and interest incurred by Plaintiff as a
result of his ownership interest in Dictator, Inc. shall be borne equally by the parties. Also,
any capital gains tax or other tax (including transfer tax, if any) triggered by the sale of the
assets of Dictator, Inc. will be borne equally by the parties. However, unless the parties
stipulate otherwise in writing, no distribution to make the tax-related payments will be
ordered. Instead, the taxes will be paid from the proceeds of the sale of the assets of Dictator,
Inc. If Plaintiff proves he has already made payments toward his tax liability, Defendant will
XIV Spousal Support
30 The issue of spousal support arises primarily in the context of Defendant's request that
she be awarded spousal support if Plaintiff is awarded Dictator, Inc. Because this Amended
Judgment requires the sale of the assets of Dictator, Inc., that basis for spousal support does not
However, Defendant further asserts that she is entitled to spousal support because
Plaintiffs management of the businesses owned by the parties has greatly impacted the parties'
entitlement to Social Security. Specifically, she asserts that Plaintiff will be entitled to $2,223
per month at his full retirement age-or $3,054 if he waits until age 70, while Defendant is
only entitled to $1,222 per month at full retirement age-or $1,565 per month if she waits until
Plaintiff asserts that the parties' age, earning history, and earning capacity are
approximately equal, that each will likely be allocated sufficient assets to support themselves in
the lifestyle to which they are accustomed, and that neither party should pay spousal support to
An order granting, denying, or modifying spousal support must state:
A. The type or types of support, if any is awarded; B. The method or methods of payment and the term and limitations imposed, if support is awarded; C. If the support awarded is ~ot, in whole or in part, subject to future modification; and D. The factors relied upon by the court in arriving at the decision to award or deny spousal support, if the proceeding was contested.
19-A M.R.S.A. § 951-A(l) (2015). The factors the court must consider when determining an
A. The length of the marriage; B. The ability of each party to pay; C. The age of each party; D. The employment history and employment potential of each party;
31 E. The income history and income potential of each party; F. The education and training of each party; G. The provisions for retirement and health insurance benefits of each party; H. The tax consequences of the division of marital property, including the tax conseq Llences of the sale of the marital home, if applicable; I. The health and disabilities of each party; J. The tax consequences of a spousal support award; K. The contributions of either party as homemaker; L. The contributions of either party to the education or earning potential of the other party; M. Economic misconduct by either party resulting in the diminution of marital property or income; N. The standard of living of the parties during the marriage; 0. The ability of the party seeking support to become self-supporting within a reasonable period of time; P. The effect of the following on a party's need for spousal support or a party's ability to pay spousal support: 1) Actual or potential income from marital or non-marital property awarded or set apart to each party as part of the court's distributive order pursuant to section 95.'3; and 2) Child sup port for the sup port of a minor child or children of the marriage pursuant to chapter 63; and Q. Any other factors the court considers appropriate.
19-A M.R.S.A. § 951-A( 5). The types of spousal support the court may award include: A)
general support to provide financial assistance to a spouse with substantially less income
potential than the other spouse so that both spouses can maintain a reasonable standard of
living; B) transactional support designed to provide for a spouse's transitional needs; C)
reimbursement support to achieve an equitable result in the overall dissolution of the parties'
financial relationship in response to exceptional circumstances such as economic misconduct, or
substantial contributions by one spouse towards the educational or occupational advancement
of the other during the marriage; and D) nominal support to preserve the court's aLtthority to
grant spousal support in the future. 19-A M.R.S.A. § 95 I-A(2). The court's order must state
the method or methods of payment that the court determines just including, but not limited to
32 lump-sum and installment payments. 19-A M.R.S.A. § 951-A(s). The award must also state
the term of and any limitations on the award that the court determines just. Id.
Based on the allocation of the parties' assets and property, the court finds and concludes
that no award of spousal support is necessary or appropriate, even though Plaintiffs Social
Security entitlement will be greater than Defendant's. Both parties will have ample assets and
neither has shown a justification for an award of spousal support, in light of the overall
allocation of the parties' assets, liabilities and property. Any disparity in the parties'
expectancies regarding Social Security is adequately addressed in the allocation of assets and
XV. Economic Misconduct and Imputed Income
The issue of economic misconduct enters the case mainly as a· result of Defendant's
accusations against the Plaintiff, although the Plaintiff makes accusations as well.
Plaintiff asserts that Defendant mismanaged McKinley Market and NES and that she
took $200,000 from a safe deposit box. Although there is some merit to the mismanagement
issue, particularly as to McKinley Market, it does not rise to the level of economic misconduct.
Defendant did appropriate about $30,000 in income from Ruby Red, Inc. for her own benefit
and the attached allocation table at page 4 treats her as having received that income. As to the
$200,000 that had been in the safe deposit box, as noted elsewhere herein, it appears to have
been utilized for the parties' common benefit years ago rather than misappropriated for
Defendant's allegations of misconduct fall into three areas, two of which the court finds
meritorious. First, she claims that Defendant charged numerous personal expenses to various
33 businesses. In fact, both parties have charged personal expenses to the various businesses, so
some of the Defendant's allegations, while valid, apply as much to her as to the Plaintiff. This
area of Defendant's claim of economic misconduct does not justify any particular award or other
adjustment to the allocation of the parties' property and assets.
However, Defendant's allegations with respect to Dictator, Inc. and NES were in fact
proven. Defendant's evidence established that Plaintiff improperly used substantial corporate
funds from NES for his personal benefit while he was managing the business and committed
economic misconduct by not reporting cash received from retail lobster sales between 2007 and
2015. More specifically, Defendant showed that Plaintiff used two separate bookkeeping
systems at NES, one that Plaintiff controlled and used, and one that was handled by his
bookkeeper. Despite the existence of these two systems, Plaintiff has refused to provide records
from the system that he personally maintained. In addition, Plaintiff caused NES to stop
accepting credit cards for the retail sale oflobsters and then utilized this change to retain cash
received from lobster sales without recording it as corporate income. In 2012, Plaintiff
stopped NES from selling lobsters except to two customers, causing the income NES derived
Defendant's proposed findings of fact and conclusions oflaw spell out the details of
Plaintiffs mismanagement and misconduct regarding NES in compelling detail. The court
adopts and incorporates by reference Defendant's recitation of this aspect of the evidence. See
Defendant's Proposed Judgment, Finding[s] of Fact And Conclusions of Law at 28-.3.3.
34 In addition, the evidence clearly establishes that, while he was managing NES, the
Plaintiff took out two lines of credit, the balance of which totals nearly $350,000. Before
Plaintiff took over, NES had only limited debt and had substantial cash
Similarly, Defendant has proved economic misconduct on the part of Plaintiff with
respect to Dictator, Inc. The court adopts the following as its findings from the Defendant's
proposed findings :
In 2012, Mr. Harper used of Dictator, Inc. funds for motorcycle repairs by Lewis Boyle in the amount of $6,000, Def. Exh. 104, pg. 6; one payment to Lamont Rice for $4,000 and one to Dana Rice for $1 ,500 which had no legitimate business purpose, Def. Exh. 104. pgs 8,9; an unexplained payment to Bruce Stewart in the amount of $1,200; Def Exh. 104. pg. 18; a payment to Eric Olson of $3,100 for a camp in Rockwood, Def Exh. 104. pg. 20; Bank of America charges for gas, travel, hotels and personal radio for Pandora and Sirius radio. Def. Exh. 104. pgs. 2 ,3 ,6, 10, 12, 16, 17, 18; and payment of his personal Capital One credit card from Dictator, Inc. Def. Exh. 104, pg. 5. He also took a year-end bonus by payment to the payroll account of $200,000. Def. Exh. 104. pg. 20; In 2013, for the entire year the divorce was pending and Mr. Harper was subject to the preliminary injunction prohibiting use of funds except for in the ordinary course of business, he used funds generated by Dictator, Inc .. for his own personal benefit without the knowledge or consent of Sheryl W . Harper. Dictator's 2013 Expense Report (Def Exh. 112) reveals he made a payment for rent of a camp from Eric E. Olson, Jr. in Rockwood for $3, 100; made payment to Jackman Power Sports $584 for work on his snowmobiles; made payment to Lewis Boyle $3,000 for motorcycle work; paid River Valley $10,924 for new snowmobile and $3 50 for a snowmobile warranty; paid his divorce lawyers, Taylor, McCormick & Frame $7,500; paid two payments of $4,0SO and $3,700 to TMR as a donation _to the Iron Dog Snowmobile Run in Alaska; and paid the Town of Jackman $751 for his snowmobile registration. At year end, Mr. Harper transferred $150,000 to the payroll account to pay himself a bonus. Def Exh. 104, pg. 41. In 2013, Mr. Harper also expended $20,980 on the corporate credit card. Def Exh. 112. Charges on the Bank of America credit card ending 0852 and 6246 far exceeded the $6,088 .3 9 Bank of America charges in 2012 (Def Exh. 104, pgs. 2,3,6,10,12,16,17,18) and the $5,047 .02 Bank of America charges in 2015. Def Exh. 11 lA. In 2013, Mr. Harper did not make a single trip down to Fairhaven, Massachusetts to the boat between January, 2013 and his deposition in mid-October, 2013. In 2014, Mr. Harper continued his use of Dictator, Inc. corporate funds for his personal benefit, despite the court's order. He paid his experts Dawson, Smith, Purvis & Bassett $7,000, donated $200 to his girlfriend's charity, Literacy Volunteers, paid Richard Nauzerolle $3,785, for a reason Mr. Harper could not remember, and paid
35 $7,000 to Nicholasville Toyota for his daughter's car. Def Exh. 111, Def. Exh. 105, and Def. Exh. 105B. Further, in 2014, Mr. Harper paid himself in February, 2014, at a time when he had shut down the joint household account, and closed the only credit card Sheryl E. Harper had prior to his snowmobiling trip to Alaska and Sheryl had no access to any income. Def. Exh. 11 lA, pg. 3; Def Exh. 105 , pgs 18, 19 of 22. Upon return from his vacation, he paid himself another $8,500 on March 24, 2014. Def Exh. 105, pg. 17 of 22. In 2015, Mr. Harper's operation of Dictator, Inc. was subject to this Court's Amended Interim Order, dated February 27, 2016, and was under the oversight of the Referee. During that year, gross receipts increased over $500,000 over 2014. See Def. Exh. 112A compared to Def. Exh. 111. Even though the Referee was monitoring account activity, Mr. Harper paid $20,800 towards a camper out of Dictator funds on July 15, 2016, (Def Exh. 105A); managed to pay all auto expenses for his personal use of his Ford truck out of Dictator, Inc. (Def. Exh. l 12B), and purchased a brand new 2016 Ford FS50 truck and incurred a new truck loan 10 days after the November 2, 2015, scheduled hearing. Def Exh. 112D, Def Exh. 105A. This occurred at a time when Mr. Harper reported to the Referee he needed to draw cash from Dictator's credit line and therefore could not transfer money to the Referee account. Joint Exh. 48E.
Defendant's Proposed Judgment, Finding[s] of Fact and Conclusions of Law at 26-27.
Plain tiff challenges Defendant's allegations of misconduct asserting that they are not
supported by reliable evidence, ignore the fact that both parties aggressively characterized
expenses as business expenses, and ignore the reality that Plaintiff was required to continue
operating NES while divorce proceedings were under way even though he expressed no
interest in doing so. Furthermore, Plaintiff responds that it was Defendant, not he, who
exercised bad faith during the transition of NES as supported by the trial testimony of Mike
The court has weighed the evidence and finds and concludes that Defendant has proved
clearly and convincingly, i.e. that it is highly probable, that Plaintiff has engaged in economic
misconduct to the extent of taking at least $800,000 from what should have been shared income
from NES and Dictator, Inc., of which Defendant's presumptive half-share would have been
36 about $400,000. The $800,000 figure reflects what the court finds to be substantiated in
largely undisputed transactions .
In some respects, whether Plaintiff is in fact guilty of economic misconduct may be
beside the point-the salient point is that the evidence shows that he appropriated for his own
benefit a marital asset in the form of income from the Dictator and NES businesses, just as
Defendant used $30,000 from the income from Ruby Red, Inc. for her own purposes. The
attached table of allocated marital property imputes these amounts as income to each of the
In addition, Defendant demonstrated that the Plaintiff opened and drew down the two
lines of credit, with The First and Machias Savings Bank, relating to the Wharf property, and
has not explained what happened to most of the amounts drawn on the lines. Based on the
extensive evidence regarding Plaintiffs economic misconduct with respect to NES, this
Amended Judgment allocates responsibility for paying The First line of credit solely to the
Plaintiff, and requires that the line be paid off either by him or from his share of the proceeds of
the sale of the Wharf property and the assets of NES. The Machias Savings Bank line of credit
Plaintiff requests that each party be individually responsible for his or her attorney fees.
In addition to her claims of economic misconduct, Defendant asserts that Plaintiff
should pay Defendant $15,000 to make up for the additional amount he received, pursuant to
court order, for attorney fees from marital funds . Defendant further asserts that Plaintiffs
actions have increased the cost oflitigation, delayed final resolution, and should be calculated
37 into the court's equitable division of assets and allocation of debt. For example, Defendant
contends she was forced to file a motion to enforce a $10,000.00 payment due to her under the
April 1, 2014 First Interim Order. She contends that Plaintiff claimed he did not have
sufficient funds to pay Defendant, but purchased a new snowmobile on November 26, 2014. Up
to a point, the record confirms Defendant's position. Only after an in-chambers conference did
Plaintiff make the payments owed to Defi=~ndant.
In addition, Defendant claims that Plaintiff failed to inform the court of the funds he
made during a January, 2015 fishing trip or that he had deposited $60,000 into his personal
account to pay his lawyers and experts. Defendant asks the court to consider this conduct in its
allocation of attorney fees .
The court may order a party to pay another party's reasonable attorney fees, including
costs, for participation in the proceedings. 19-A M.R.S.A. § 105(1). In making this
determination, the court may consider the relevant financial circumstances of the parties and
which party is in a better position to bear the costs oflitigation, whether the conduct of a party
has contributed to the duration oflitigation, and any other factors that reasonably bear on the
fairness and justness of the award. Estate cifRicci, 200.3 ME 84, ~ 30, 827 A.2d 817 (citations
Plaintiffs present and former counsel have submitted affidavits of attorney fees and 3 costs asserting that Plaintiff incurred a total of $246, 174.31 in attorney fees and
costs-$172,238.01 in attorney fees and $21,856.72 for disbursement reimbursements to
Taylor McCormick & Frame, LLC and $52,079.58 in attorney fees and costs to Susan M.
'If the $21,856.72 for disbursement reimbursements to Taylor McCormick & Frame, LLC are not included in this calculation, the amount of attorney fees and costs is $224,317 .59. 38 Schultz, LLC. Defendant's counsel submitted an affidavit asserting that she incurred a total of
$243,701.72 in attorney fees and costs.
Issues of economic misconduct are addressed above, and, although economic misconduct
could in theory justify an order requiring the wrongdoer to pay the victim's attorney fees, the
court does not intend to penalize the Plaintiff twice for the same misconduct. However, the
court agrees with the Defendant up to a point that, even apart from economic misconduct,
Plaintiffs conduct caused her to incur additional attorney fees, and also that Plaintiffs
application of $60,000 toward his own attorney fees involved funds in which Defendant had a
Based on the entire record, the court finds and concludes that Defendant is entitled to
have Plaintiff reimburse her for $50,000 of her attorney fees. Plaintiff shall pay Defendant or
her attorney $50,000 from his share of the funds in the parties' accounts at the time the funds
are distributed to the parties.''
XVII. Just and Equitable Allocation ofAssets and Property
The attached table sets forth the court's allocation of the property and assets of the
parties. Property that is to be sold and the proceeds dividE;d is listed and valued, but is not
counted in the allocation. Likewise, non-marital property, post-filing accounts and property of
limited or no value is not counted in the allocation. The $800,000 in NES and Dictator, Inc.
income that the Defendant proved that Plaintiff appropriated from income of NES and Dictator
+ The attached table on page 4 shows the amounts previously disbursed by the Referee to the parties. Plaintiff notes that the Referee has disbursed about $24,000 more to Defendant than to him. The court has considered this point in determining the fee award. 39 is imputed to him. Likewise, the $30,000 that Defendant appropriated from income of Ruby
The allocation does not include the proceeds of the sale of the properties to be sold, but
those do not change the allocation ratio because the proceeds of sale are to be divided equally.
The allocation also does not reflect the attorney fee award, because it is conceptually separate
Although not equal, the net values of marital assets and property allocated to the parties
arejLtst and equitable. The net value allocated to Defendant is higher than that allocated to
Plaintiff only because the value allocated to her includes 70% of the marital component of the
-S 108 account to reflect her substantial contribution of $492,669 in non-marital funds to what
is now the marital component of the account. As the last entry on the attached table shows, if
the -S 108 account is excluded from the allocation, .the difference in values allocated is less than
XVIII. Transition and Sale of Properties and Disbursement ofProceeds
Referee John Fidrych shall supervise the distribution of the bank and brokerage
accounts listed in this Amended Judgment and the attached table, and confirm that the various
amounts awarded to each of the parties herein are subtracted from the other party's share.
Referee Fidrych is hereby authorized, but is not required, to take immediate and full
control of Dictator, Inc., Ruby Red, Inc., the Tremont properties and the Wharf properties. and
all assets and accounts associated with those properties. The parties are hereby ordered and
enjoined to cooperate fully with the Referee in all respects, including turning over any and all
40 Any income available for distribution to the parties from any of the businesses, after
payment of all expenses and fees of the Referee, shall be shared equally between them.
The Referee shall sell, in any commercially reasonable manner, including by auction,
any and all right, title and of interest of either or both parties in the following:
• the fishing vessel Dictator and its licenses and permits, and all other assets of Dictator,
• the so-called Wharf property and all assets of Northeastern Seafood, Inc.
• the Tremont properties (including McKinley Market) and all assets of Ruby Red, Inc.
Unless the parties agree otherwise in writing, the sale of the Tremont properties shall
be by auction, given the limited interest in the listing of those properties. The sale of the other
properties may be by auction, by listing or any other commercially reasonable means. The sale
of these properties may include any and all equipment, fixtures, vehicles and all tangible and
intangible assets associated with any of the properties, except for any items specifically
allocated to a party in this Amended Judgment or the attached chart.
This Amended Judgment assumes that the sale of the properties will be of assets rather
than sale of the stock of the corporate entities owned by the parties, but a sale of stock may
occur instead if deemed more financially advantageous to the parties than a sale of corporate
assets . Assuming all assets of Dictator, Inc., Ruby Red, Inc. and Northeastern Seafood, Inc. are
sold and all debts are paid, the parties shall cause those corporations to be dissolved .
The Referee is authorized to retain, on any commercially reasonable terms, the services
of any broker, consultant, property manager or other service provider to protect the properties
and prepare and list them for sale. Any commission or other compensation, or expense or
41 reimbursement dL1e to the Referee, or to any broker, consultant, property manager or other
service provider shall be paid through the Referee's account.
If any property is listed for sale and no pmchase and sale agreement is signed within the
first three months, the listing price for that property shall be reduced by five percent per month
thereafter, unless the Referee expressly determines otherwise or the parties agree otherwise in
The Referee is authorized to fund his fees and any costs or expenses associated with his
activities by withholding equal amounts from each party's share of any account or sales
proceeds, in a total amount sufficient to fund the Referee's fees and any costs or expenses.
The Referee shall assure that the parties, directly or through counsel, are informed of
material developments and the terms of all listings, offers and other aspects of the sale process.
The Referee shall deposit the proceeds of any sale, net of closing costs, into the
Referee's account. From the account, the Referee is authorized to satisfy his fee as well as any
and all outstanding costs, commissions and expenses associated with the sale of any property.
All taxes and expenses associated with the sale of property shall be considered a joint expense
to the parties .
The parties are hereby ordered and enjoined to cooperate in all transactions, including
but not limited to, the listing and sale of properties, and to execute any documents associated
with any transaction. If either party fails or refuses to execute any document or engage in any
transaction in the course of the sale of a business or any other aspect of this Amended
Judgment, the Referee may apply to the court for authority to act on behalf of that party. See
M.R. Civ. P. 70 (after notice and opportunity for hearing, court may appoint another person to
42 execute documents and act on behalf of a party who refuses or fails to execute documents or
act).
IT IS ORDERED AND ADJUDGED AS FOLLOWS:
1. The court has previously granted a divorce by means of the Order and Judgment
. Granting Divorce dated February 26, 2015.
2. The parties' assets and property are allocated as set forth herein and on the
attached table, which is hereby incorporated by reference.
S. Any property of the parties not allocated herein or in the attached table is
awarded to the party in possession of tangible property or the party in whose name intangible
property is titled.
4. Defendant's Motion to Enforce the November S, 2015 Order is granted in part,
to the extent set forth herein, and is otherwise denied. Plaintiffs Motion to Strike the affidavit
of Michael Cardente is granted to the extent set forth herein and is otherwise denied.
5. Defendant is awarded $50,000 against Plaintiff toward her attorney fees and
costs in this case. Any costs or expense associated with this case, or with the sale of properties
to third parties, including fees and expenses of the Referee, shall be allocated equally between
the parties, except that any costs or expenses, including fees and expenses of the Referee,
associated with the transfer of property awarded to only one party shall be borne solely by that
party.
6. Each party is awarded sole responsibility for any indebtedness associated with
the property and assets awarded to that party, and shall hold harmless and indemnify the other
43 party against any and all claims, costs or liability associated with the debt, including costs of
defense and attorney fees incurred as a result of any such claim, cost or liability.
7. Any loan or indebtedness as to which the parties are jointly liable shall be
refinanced or discharged within 120 days by the party to whom the property encumbered by
the loan or indebtedness is awarded, so as to eliminate the liability of the other party. This
paragraph applies only to property awarded to only one party, and not to property to be sold by
the Referee.
8. The parties are hereby ordered and enjoined to cooperate with each other and
with the Referee in implementing the transactions contemplated in this Amended Judgment
and executing any documents associated with such transactions.
9. The court invites counsel to prepare and submit an abstract of this Amended
Pursuant to M.R. Civ. P . 79(a), the Clerk is hereby directed to incorporate this
Amended Judgment by reference in the docket.
Dated: August 16, 2016 ~~s l~~~~~~~~~~~ A.M. Horton Justice, Business & Consumer Court
44 STATE OF MAINE BUSINESS AND CONSUMER COURT
Cumberland, ss.
TIMOTHY W. HARPER, ) ) Plaintiff ) ) v. ) Docket No. BCD-FM-14-02 v' ) SHERYL E. HARPER, ) ) Defendant )
ORDER ON MARITAL/NON-MARITAL STATUS OF H.M. PAYSON ACCOUNT ENDING IN :nos
This divorce case involves multiple properties and accounts. By agreement of the
parties, certain issues that could be addressed through a discrete presentation of evidence were
heard in what was designated as Phase I of the case. The Phase I trial began January 28, 2015
but was not completed due to a weather-related cancellation of court. The Phase I trial
resumed in February 2015, but was suspended as to issues regarding the parties' commercial
real estate to enable the commercial real estate to be sold instead of awarded to one or the other
of the parties.
Accordingly, the rulings in this order focus primarily on the status of one of the various
accounts maintained in the names of one or both parties with the H.M. Payson-namely an
account in Defendant's name to which H.M. Payson has assigned an account number ending in
s 108 ["the account ending in S 108"]. The issue is the extent to which the funds in the account are nonmarital funds of Defendant. In July 2015, the parties filed proposed findings and
conclusions, with Plaintiff filing initially and also filing a reply to Defendant's filing.
Based on the entire record, the court adopts the following findings and conclusions.
These findings and conclusions likely will be incorporated by reference in the court's final
1 judgment in this case, which must await trial in April 2016, when trial on all remaining issues
is scheduled to occur.
Findings OfFact and Conclusions ofLaw
A. The Parties' Businesses and Accounts
1. Plaintiff Timothy Harper and Defendant Sheryl Harper were married on Julys,
1978. They have four grown children.
2. Shortly after the parties married, they moved to Maine. The parties purchased a
fishing boat, with financial assistance from Sheryl Harper's parents, and Timothy Harper began
taking the boat to sea to harvest scallops. The parties began operating Fish Unlimited, an
unincorporated wholesale seafood business, about so years ago. It began when Mr. Harper
decided to sell the scallops directly to local buyers, rather than through an agent Sheryl
Harper's role was to sell the scallops, operating out of the parties' residence.
s. Over time, the Fish Unlimited business expanded by purchasing seafood from other
fishermen as well, for resale. As the business grew, Mr. Harper built a structure next to the
parties' home to serve as a warehouse for Fish Unlimited. The parties expanded the Fish
Unlimited operations over the years, mainly through Sheryl Harper's efforts: traveling to
various docks throughout New England, buying seafood directly from the boats on the docks,
and then transporting the seafood for sale to restaurants and wholesalers. During these years,
Timothy Harper captained various fishing vessels owned by the parties and, along with other
fishermen, supplied seafood to Fish Unlimited for resale.
4. After the parties purchased a wharf at 126 Clark Road in Southwest Harbor, Fish
Unlimited continued its wholesale seafood operations, expanding to purchasing and selling
retail and wholesale lobsters. At one point Fish Unlimited ran a restaurant on the dock.
2 5. At some point, the parties formed a corporation, Northeastern Seafood, Inc. (NES),
and the operations of Fish Unlimited continued under the auspices ofNES although NES sold
bait, gas, lobster and other items beyond what Fish Unlimited had sold. Mr. Harper was
actively managing NES, although Sheryl Harper continued to manage what had been the
operations of Fish Unlimited.
6. Partly as a result of a downturn in the scallop market, what had been the Fish
Unlimited business effectively ceased operating around 2006-2007, when the parties purchased
McKinley Market and the surrounding properties in Tremont and purchased the Dictator
offshore scallop fishing vessel. At that time, Timothy Harper stopped fishing and began
managing the fishing operations of the Dictator, including hiring a captain to run the vessel
during fishing trips. At the same time, Sheryl Harper began managing McKinley Market and
Timothy Harper took responsibility for operating Northeastern Seafood, with a primary focus
on the purchase and sale oflobsters from the 126 Clark Road dock owned by the parties.
7. While Sheryl Harper was primarily managing the operation of the Fish Unlimited
business, income from the business paid the parties' mortgages, real estate taxes, insurance,
housing expenses, household expenses, clothing, food, transportation and expenses for the
parties' four children. What Timothy Harper earned from fishing mainly went to expenses
associated with the fishing boat and to vehicles associated with the boat and Fish Unlimited.
8. Although both parties have played a substantial role in the significant growth in
their marital assets over the past SO years, Sheryl Harper has historically been more involved
than Timothy Harper in administering the parties' funds and accounts. She appears to have
been the spouse who arranged for accounts to be opened, closed and transferred, and the spouse
who dealt with the managers of the various bank and investment accounts the parties have had
over the decades.
3 9. In the 1990s, she arranged for accounts to be opened in the parties' names at the
former national investment firm known as A.G. Edwards. The A. G. Edwards accounts
included separate IRA accounts for both parties, a joint brokerage account, and an account in
Sheryl Harper's name only. By November 1997, the joint account totaled $90, 787.42. By
November, 1999, Timothy Harper's IRA had a balance of $14,320.55 and Sheryl Harper's two
IRAs totaled $16,073.47.
10. The parties also entered into a series of personal and commercial banking
relationships with a local financial institution, the First National Bank of Bar Harbor. The
trust officer at First National who was assigned to the Harpers' various accounts was Daniel
Lay. At some point, First National Bank formed a wealth management department called First
Advisors, and the parties' accounts were moved to First Advisors, where Mr. Lay continued to
manage them.
11. The account primarily at issue in this Order is an account in Sheryl Harper's name
alone assigned an account number ending in 3463. It was originally opened at The First and
later moved to First Advisors.
12. Also among the accounts opened at The First and moved to First Advisors was an
account in the name of Northeastern Seafood, into which Sheryl Harper deposited funds earned
from Fish Unlimited and then NES. The two IRA accounts at A. G. Edwards were also
transferred to First Advisors to be managed by Mr. Lay.
13. Funds saved from the operation of Fish Unlimited in a deposit account ending
6651 in Sheryl Harper's sole name at First National Bank of Bar Harbor. In January, 2005,
this account had a balance of $623,041.60. On April 1, 2005, $600,000 from this account was
transferred to her First National Bank of Bar Harbor investment account, where it briefly
remained until after the merger forming The First. After the merger, Sheryl Harper opened a
4 new First Advisors investment account ending 6020 in September, 2005 in the name ofNES
d/b/a/ Fish Unlimited. (Def. Exh. 16). On September 23, 2005, Sheryl deposited $414,681.25
from her individual First Advisor account ending 3463 into the NES d/b/a Fish Unlimited
First Advisor account ending 6020. On October 5, 2005, Sheryl deposited $185, 132.11 from
her individual account into the NES d/b/a Fish Unlimited account. The NES d/b/a Fish
Unlimited account had a balance of $615,992.94 on September 8, 2006.
14. In 2006, Mr. Lay left the employ of First Advisors and joined the H. M. Payson
investment firm. In order to maintain his involvement in managing the accounts, the parties
transferred all of their accounts at First Advisors to the H. M. Payson firm, and also
transferred the joint brokerage account at A.G. Edwards.
15. H. M. Payson assigned the IRA accounts for Timothy and Sheryl Harper account
numbers ending in S 156 and S 129 and the parties' H.M. Payson joint account an account
number ending in 3162. H. M. Payson assigned the Northeastern Seafood account an account
number ending in 4103, and assigned the former First Advisors account in Sheryl Harper's
name only an account number ending in 3108. Another H. M. Payson account is the so-called
Dictator capital construction account, with an account number ending in S 171. This account
was funded with deposits from the operations of the Dictator vessel, which are managed by
Timothy Harper.
16. In December 2008, funds in the Northeastern Seafood account ending in 4103 were
transferred to the H.M. Payson joint brokerage account ending in 3162. Aside from reinvested
income and dividends, this deposit of funds from the Northeastern Seafood account has been the
only addition since 2006 to the funds in the parties' joint H.M. Payson account ending in 3162.
17. At all times, Mr. Lay's management of the parties' investment accounts involved the
purchase and sale of securities within the account and reinvestment of interest and dividends to
5 purchase new securities. All purchases were made from either the sale of securities within the
account or from the routine reinvestment of interest and dividends.
Sheryl Harper's Account Ending in 3108
18. With regard to the 3108 account specifically, although Mr. Lay would occasionally
see or talk to Sheryl Harper, Sheryl Harper gave him full discretionary authority to manage the
account. Sheryl Harper did not direct the management of the account. Her actions were
nominal, inconsequential, or sporadic. She did not invest substantial marital time and energy in
managing the assets in the account.
19. The origins of the H.M. Payson account in Sheryl Harper's name only ending in
3108 go back to a gift of stock she received from her parents in the 1990s. The stock was
transferred to the A.G. Edwards account in Sheryl Harper's sole name. No stock certificates
were given to Sheryl Harper. Although she does not recall the individual stocks gifted to her
decades later, she specifically recalls providing her mother with contact information for her
A.G. Edwards broker to facilitate an electronic transfer of the gifted stock to an investment
account in her sole name at A.G. Edwards. No marital funds were deposited in the account
while it was being administered by A.G. Edwards individual account in Sheryl Harper's name.
20. Sheryl Harper received a second gift of stock from her parents between 2001 and
2003. This gift was made by her parents because they had assisted her brother with the
building of his house and decided to make a similar gift to her. The stock was directly
transferred from her parents to the newly opened account in her sole name at the trust
department of First National Bank of Bar Harbor. The stock gift was managed by the trust
department of First National Bank of Bar Harbor. All income from the account was reinvested
in the account to purchase additional securities. No marital funds were deposited into this
account.
6 21. On December S 1, 2004, the value of Sheryl's individual stock and securities account
ending S46S at the First National Bank of Bar Harbor was $205, 165. The same account had a
balance of$21S,S2S on December, Sl, 2005.
22. In June 2006, Sheryl Harper liquidated her individual A.G. Edwards account and
sold the stock her parents had given her as a gift in the 1990s. Thereafter, she transferred the
proceeds of the stock sale to her individual First Advisors investment account ending 3463.
On September 8, 2006, Sheryl Harper's individual First Advisors investment account ending
S46S, had a balance of$SS 1,544. IS. The sole source of these funds was the stock gifted to her
by her parents in the 1990s and originally held in her individual A.G. Edwards account before
its liquidation in June, 2006, and the stock gifted to her by her parents between 2001 and 2003
originally held in her individual First National Bank of Bar Harbor investment account ending
S46S 02 8.
2.S. In September, 2006, when Daniel Lay left First Advisors and began working at
H.M. Payson, all of the investment assets and cash in Sheryl Harper's individual First Advisor
account ending in S46S were transferred in September 2006, to the account endings 108 at
H.M. Payson, still in Sheryl Harper's sole name.
24. Sheryl Harper also saved the parties' earnings money from Fish Unlimited in an
investment account with Royal Alliance. On April 11, 2007, the sum of $69,374.68 was
transferred from Royal Alliance into Sheryl Harper's individual H.M. Payson account ending
S 108.
25. Funds in the amount of$144,962.35 from the H.M. Payson NES d/b/a Fish
Unlimited account ending 410.S were transferred into the parties' joint H.M. Payson account
ending S 162. On February 9, 2009, one-half this amount ($72,481.18) was transferred to Sheryl
Harper's individual H.M. Payson account endings 108
7 26. In 2010, Sheryl Harper withdrew funds from her individual H.M. Payson account
ending S 108 for legal fees related to a dispute over her mother's estate. The balance of the
account prior to withdrawal was $506, 786.17 on March s l, 2010, and the balance of the
account on December S 1, 2010, after the withdrawals was $385,628.78.
27. In March and April, 2011, Sheryl Harper received stock from her mother's estate.
The inherited stock from Sheryl's mother's estate was directly transferred into her individual
H.M. Payson account ending 3108. (Def Exh. 29). The value of the stock inherited by Sheryl
and deposited into her individual account on March 24, 2011, was $202,388.58. The value of
the stock inherited by Sheryl and deposited into her individual account on April 5th and 6th,
2011 was $60,726.80.
28. The balance of Sheryl Harper's individual H.M. Payson account ending S 108 on
June so, 2011 was $684,287.58. All stock inherited by Sheryl Harper, with the exception of 100
shares of Apple stock, 1 was sold within the individual investment account by her investment
manager, Daniel Lay. The proceeds of all of the sales of her inherited stock was exchanged for
other stock purchased and sold in the course of Daniel Lay's management of the account. All
interest and dividend income earned on the inherited stock was routinely reinvested in Sheryl's
individual account.
29. A check in the amount of $98,969.10 received by Sheryl Harper from her mother's
estate was not deposited in her H.M. Payson individual account ending S 108. This nonmarital
inheritance was used to make a $25,000 gift from Sheryl to each of the parties' four children.
I The 100 shares of Apple stock inherited by Sheryl from her mother and deposited in the account on March 24, 2011 has since had a 7-1 stock split on and now consists of 700 shares of Apple.
8 The Legal Framework
30. The court is to follow a three-step analysis in distributing property in a divorce
action. Ayotte v. Ayotte, 2009 ME 20, ~ 6, 966 A.2d 883. The Court must "( 1) determine what of
the parties' property is marital and non-marital, (2) set apart each spouse's non-marital
property, and (3) divide the marital property between them in such proportion as the court
deems just." Id. The divorce statute mandates the court "shall set apart to each spouse the
spouse's property and shall divide the marital property." Miliano v. Miliano, 2012 ME 100 ~ 14,
citing 19-A M.R.S. § 953(1) (2011) (emphasis in original).
31. There is a statutory presumption that all property acquired subsequent to marriage
is marital property regardless of how title is held. 19-A M.R.S. § 953(3). The presumption
may be overcome, however, by a showing the property was acquired by one of the exceptions to
the definition of marital property set forth in 19-A M.R.S §95S(2):
A. Property acquired by gift, bequest, devise or descent;
B. Property acquired in exchange for property acquired prior to the marriage or in exchange for property acquired by gift, bequest, devise or descent;
C. Property acquired by a spouse after a decree ofjudicial separation;
D. Property excluded by valid agreement of the parties; and
E. The increase in value of property acquired prior to the marriage and the increase in value of a spouse's non-marital property as defined in paragraphs A to D.
(I) 11 Increase in value II includes:
(a) Appreciation resulting from market forces; and (b) Appreciation resulting from reinvested income and capital gain unless either or both spouses had a substantial active role during the marriage in managing, preserving or improving the property.
9 (2) "Increase in value" does not include:
(a) Appreciation resulting from the investment of marital funds or property in the nonmarital property; (b) Appreciation resulting from marital labor; and (c) Appreciation resulting from reinvested income and capital gain if either or both spouses had a substantial active role during the marriage in managing, preserving or improving the property.
19-A M.RS §953(2); P.L. 1999 c.665, § L See Warner v. Warner, 2002 ME 156,
807 A.2d 607 (applying the statute to determine whether increase in value was
marital).
32. In Hedges v. Pitcher, 2008 ME 55, 942 A.2d 1217, the Law Court set forth the
allocation of the burden of proving whether appreciation of a non-marital asset is marital or
non-marital. The burden initially falls on the party asserting the property is marital to prove
that non-marital property appreciated in value during the marriage. See Warren v. Warren,
2005 ME 9, ~26, 866 A.2d 97, 103. Proving an increase in value is an essential element of the
burden of proof Miliano at ~25.
SS. If appreciation in value during the marriage is established, the statute creates the
rebuttable presumption that the increase in non-marital property's value is marital. See 19-A
M.R.S. § 953(2),(S). To rebut the statutory presumption, the party asserting the appreciation
in value is non-marital then bears the burden to show appreciation during the marriage remains
non-marital because it resulted from either "market forces,"19-A M.R.S. § 953(2)(E)(1)(a), or
from "reinvested income and capital gain,"id.. § 95S(2)(E)(1)(b). See Warren, 2005 ME 9, ~ 26,
866 A.2d at 103.
34. If the party asserting the property is non-marital meets the burden of proving
market forces caused appreciation in the value of non-marital property during the marriage, the
10 amount of that appreciation remains non-marital, whether or not either spouse played a
substantial active role in managing, preserving or improving the property. Warner v. Warner,
2002 ME 156, ~ 31, 807 A.2d 607, 620.
35. If the Court finds an increase in the value of a non-marital asset resulted from
reinvested income and capital gain, then, and only then, does the issue of whether a spouse
played a substantial active role in managing, preserving or improving the property arise. Id.
(citing 19-A M.R.S. § 953(2)(E)(1)(b),(2)(c)). If this issue is reached, the factors a court should
consider in determining whether there has been a substantial active role in managing,
preserving or improving the property include:
( 1) whether a spouse engaged in routine reinvestment, or instead, actively managed the asset;
(2) whether the actions of a spouse were nominal, inconsequential, or sporadic;
(s) whether a spouse invested substantial marital time and energy in managing the asset;
(4) whether a spouse had an occupation separate from managing that property; and
(5) whether a spouse's knowledge of and involvement with the property is casual or in-depth.
Hedges v. Pitcher, 2008 ME 55 ~ 27, 942 A.2d 1217, 1225.
Application of Law to Fact
36. The core issue is to what extent the funds in the H.M. Payson account in Sheryl
Harper's name ending in S 108 only are marital or nonmarital.
37. The evidence affirmatively establishes the following:
• The funds in the S 108 account derive from Sheryl Harper's nonmarital funds
and the parties' marital funds.
11 • The nonmarital assets and cash transferred into the s 108 account and its
predecessor accounts at First Advisors, The First, First National and A.G.
Edwards total $492,669.
• The marital funds transferred into the account consist of the Royal Alliance
transfer and the transfer from the NES account, totaling $150, 110.
• The 3108 account had a balance of$861,384.75 as of December 31, 2014.
• The only asset in the 3108 account that can definitively be designated as
non marital is the Apple stock. This is because all of the other nonmarital stock
gifted to Sheryl Harper and transferred into the S 108 account has been sold, and
the proceeds of those sales, along with all of the non marital cash that was
deposited into the 3108 account, have been inextricably commingled with
marital cash and used to purchase stock or other types of investments.
• Because of the extensive commingling of marital and nonmarital funds in the
3108 account, it cannot be determined how much of the December 2014 balance
of $861,384. 75 is attributable to nonmarital contributions. In other words,
although the evidence establishes a nonmarital contribution totaling $492,669,
the fact that all of it except for the 700 shares of Apple stock has been
commingled with marital funds and used to pursue a variety of different stocks
and other investments means that how much of the account's current value
stems from the nonmarital contribution is unknown.
• The fact that the S 108 account's December 2014 balance is more than $219,000
greater than the combined marital and nonmarital contributions to the account
clearly supports the inference that the difference reflects an increase in value, but
the extensive commingling of marital and nonmarital funds makes it impossible
12 to determine how much of the increase stems from marital funds versus
nonmarital funds, except for the increase in value of the Apple stock.
• Neither party had a substantial active role in managing the 3108 account or any
of the predecessor accounts at various financial institutions. Al though Sheryl
Harper was more involved than Timothy Harper in all of the parties' various
accounts throughout the time those accounts were at the various financial
institutions or brokerage firms mentioned above, at no time did her involvement
in any of them, including the 3108 account, amount to a substantive active role
for purposes of section 953( 2)(E)( 2)( c). Instead, both parties left active
management and oversight of all of the accounts to Daniel Lay and, before him,
to other managers at the financial institutions or brokerage firms involved.
38. Applying the statutory burden analysis to the 3108 account, the initial issue applies
to whether the assets themselves (independent of any increase) are marital or non-marital.
Because all the assets were acquired during the marriage, Defendant Sheryl Harper has the
initial burden to demonstrate that the assets are in fact non-marital because they were gifted to
her. The only asset in the account that consists of a gifted asset is the Apple stock. Because of
the extensive commingling of marital and non-marital assets and cash that has occurred over
the years, none of the other assets in the 3108 account consists of a gifted asset, nor can any
other asset in the account be specifically traced to a gifted asset. The court finds and concludes
that the only current asset in the 3108 account that has been established to be non-marital is
the Apple stock.
39. With respect to the non-marital Apple stock, Plaintiff Timothy Harper has met
his burden to show an increase during the marriage in the value of the stock, thereby
triggering the statutory presumption at 19-A M.R.S. § 953(3) that the increase is marital.
13 Because the increase in value of the Apple stock was entirely due to market forces or reinvested
income and capital gains, and because she had no active role in managing the s 108 account,
Sheryl Harper has also met her burden to overcome the presumption. Accordingly, the entire
value of the Apple stock will be set aside to her.
40. Although the court has concluded that Defendant Sheryl Harper has not
established that most of the value of the S 108 account consists of non-marital property, the fact
that about three-quarters of the contributions into the account were of Sheryl Harper's
nonmarital funds, coupled with the fact that the account has increased in value by nearly
$220,000, is by no means an irrelevant consideration. Nothing in this order should be deemed
to foreclose any justifiable allocation of the marital component of S 108 account on the basis of
an equitable allocation or economic misconduct. Because these issues will be raised at the trial
scheduled for April 2016, and may be visited earlier at the upcoming interim hearing, the court
will defer allocating the 3108 account other than the nonmarital Apple stock and any proceeds
directly traceable to that stock.
Pursuant to M.R. Civ. P. 79(a), the Clerk is directed to incorporate this Order by
reference in the docket.
Dated October 20, 2015
Justice, Superior Court
14 Timothy W. Harper v. Sheryl E. Harper
BCD-FM-14-02
Plaintiff
Timothy W. Harper., Counsel: Adam Taylor, Esq. H. Teeters Trumpy, Esq. 30 Milk St/ 5th Floor Portland, ME 04101
Defendant • Sheryl E. Harper Counsel: Kristin Gustafson, Esq. 295 Water St. Suite 218 PO Box 2147 Augusta, ME 04338
Related
Cite This Page — Counsel Stack
Harper v. Harper, Counsel Stack Legal Research, https://law.counselstack.com/opinion/harper-v-harper-mesuperct-2016.