Hartley v. Hartley

50 So. 3d 1102, 2010 Ala. Civ. App. LEXIS 135, 2010 WL 2071444
Court of Civil Appeals of Alabama·Decided May 21, 2010·No. 2080898·Published·Cited by 2 cases

Opinions

PER CURIAM.

This extraordinary-writ petition arising from a divorce action in the Mobile Circuit Court involves the scope of discovery as to a spouse’s interest in a professional corporation.

In June 2008, Alesia G. Hartley (“the wife”) sued Jeffrey J. Hartley (“the husband”), seeking a divorce and requesting, among other things, “an equitable division of the assets and liabilities acquired during the marriage” and awards of periodic alimony and alimony in gross. During the course of those proceedings, the wife caused to be issued a subpoena directed to the managing partner of the law firm of which the husband was a member, Helms-ing, Leach, Herlong, Newman & Rouse, P.C. (“the law firm”); that subpoena, as amended, sought the production of “all personnel records, payroll records, and copies of contracts of employment” involving the husband, including information regarding any retirement plan in which the husband had participated and “records evidencing the ownership by [the husband] of any interest in the [law] firm.” The law firm then filed a motion to intervene as a party, asserting that the wife had sought discovery of information that was, the law firm said, “confidential and proprietary in nature”; the wife filed a response in opposition to that motion. The trial court entered an order denying the motion to intervene; in that order, the trial court directed that certain documents were to be made available to the wife’s attorney and were otherwise to be kept absolutely confidential, including “any records of monies that are due to [the husband] and a reasonable amount of the partnership records so that [the wife’s attorney] may have an idea of what the [husband’s] partnership interest may be worth for purposes of this divorce.”

Among the documents produced in response to the wife’s subpoena and the trial court’s order denying intervention was a “buy-sell agreement” adopted by the law firm in 1997 that, in pertinent part, provided (1) that no shareholder in the law firm was to convey any shares of the law firm to any person not connected to the law firm; (2) that, upon the death, retirement, or termination of the employment by the firm of any shareholder, the shareholder would be required to sell his or her shares to the law firm for $10 each; and (3) that all future shareholders of the law firm would be bound by the agreement. The wife’s attorney subsequently sought the issuance of a second subpoena to the law firm directing the production of documents showing, for example, the husband’s hours worked, the law firm’s principal clients, the law firm’s accounts receivable and unbilled work, the law firm’s financial statements and records of bonus payments, and details of shareholder buybacks for the preceding 10 years. The husband objected to the second subpoena on the basis that the buy-sell agreement rendered irrelevant, as an evidentiary matter, the materials sought from the law firm. After a hearing, the trial court received written briefs from the parties; the husband contended that “valuation of a professional spouse’s interest in a law firm must be based on the formula or calculation set forth in the stock purchase agreement,” whereas the wife posited that the value of an interest in a closely held business, such as the law firm, is not limited to the value stated in a buy-sell agreement, and she argued that all evidence concerning the value of the [1104]*1104husband’s interest in the law firm was relevant.

The trial court entered an order on May 22, 2009, sustaining the husband’s objection to the second subpoena except as to the matter of “the financial compensation of the husband,” indicating its agreement with the husband’s view. That order provided, in pertinent part:

“For purposes of the trial, the Court does note that the relevant information for a fair division of assets is the husband’s compensation from the firm. If he stays at the firm, the husband has no significant benefit in being a partner beyond his monetary compensation, benefits which will be reflected in his tax returns and job security. If he leaves the firm, he has contractually agreed to get $1000.00. If the firm dissolves in the future, the speculative value of any profit or loss cannot be determined at this point.”

The wife sought mandamus review of that order in this court within a presumptively reasonable time (see Rule 21(a)(3), Ala. R.App. P.), and we directed the filing of answers and briefs.

“Mandamus is an extraordinary remedy and will be granted only where there is ‘(1) a clear legal right in the petitioner to the order sought; (2) an imperative duty upon the respondent to perform, accompanied by a refusal to do so; (3) the lack of another adequate remedy; and (4) properly invoked jurisdiction of the court.’ [An appellate court] will not issue the writ of mandamus where the petitioner has ‘ “full and adequate relief’ ’ by appeal.
“Discovery matters are within the trial court’s sound discretion, and [an appellate court] will not reverse a trial court’s ruling on a discovery issue unless the trial court has clearly exceeded its discretion. Accordingly, mandamus will issue to reverse a trial court’s ruling on a discovery issue only (1) where there is a showing that the trial court clearly exceeded its discretion, and (2) where the aggrieved party does not have an adequate remedy by ordinary appeal. The petitioner has an affirmative burden to prove the existence of each of these conditions.
“... In certain exceptional cases, however, review by appeal of a discovery order may be inadequate, for example, ... when the trial court ... denies discovery going to a party’s entire action or defense so that ... the outcome has been all but determined, and the petitioner would be merely going through the motions of a trial to obtain an appeal. ... The burden rests on the petitioner to demonstrate that its petition presents such an exceptional case — that is, one in which an appeal is not an adequate remedy.”

Ex parte Ocwen Fed. Bank, FSB, 872 So.2d 810, 813-14 (Ala.2003) (citations omitted).

The husband contends that mandamus is not an appropriate vehicle for review of the trial court’s order, and he suggests that the wife should be required to await an appeal from a final judgment of divorce. We believe, however, that the trial court’s order essentially forecloses any further discovery, as well as any further presentation of evidence at trial, concerning the issue of the value of the husband’s interest in the law firm. Because one of the principal components of the relief sought by the wife in her divorce action was, as is true in many divorce actions, an equitable distribution of property acquired by the parties during the marriage, and because the trial court’s order, in essence, refused to acknowledge the existence of any potential grounds for dispute as to the value of what may prove [1105]*1105to be a significant marital asset, we conclude that the order challenged by the wife falls within the exception noted in Ocwen pertaining to “discovery going to a party’s entire action or defense so that ... the outcome has been all but determined.” 872 So.2d at 813-14.

Under Rule 26(b)(1), Ala. R. Civ.

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Hartley v. Hartley, 50 So. 3d 1102, 2010 Ala. Civ. App. LEXIS 135, 2010 WL 2071444 (Ala. Ct. App. 2010).

50 So. 3d 1102 (Hartley v. Hartley) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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