Appellate court’s property division decision is puzzling

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Gregg Herman

Last week in this column, I discussed the holding of a recent, and somewhat perplexing, Wisconsin Court of Appeals decision in Grumbeck v. Grumbeck, No. 2005AP2512 (Wis. Ct. App. Sept. 13, 2006) (recommended for publication). This week, I will examine the potential implications of this holding.

In the case, the appellate court affirmed in part and reversed in part a judgment of divorce rendered by Kenosha County Circuit Court Judge Bruce E. Schroeder concerning an unequal division of the marital estate to the wife in light of excluding substantial gifted assets to the husband (as well as a maintenance issue related to income earned due to one of the gifted assets).

Wisconsin law provides trial courts with discretion in most areas of family law. At point in Grumbeck is the discretion to deviate from an equal division of the marital estate after considering a list of factors, ending in a catchall “[S]uch other factors as the court may in each individual case determine to be relevant.” Wis. Stat. Sec. 767.255(3)(m). It would seem that by making the factors so broad, a trial court has very wide discretion to do what it deems fair in an individual case. Yet, when the trial court in Grumbeck utilized the specific factor, “[S]ubstantial assets not subject to division,” as allowed by Wis. Stats. Sec. 767.255(3)(c), the appellate court reversed. In addition, rather than remanding the case for further proceedings by the trial court, the appellate court remanded with specific instructions to divide the marital estate without regard to the gifted property.

What message is the appellate court sending here? Past decisions seemed to have made clear that a trial court has discretion in fashioning a property division award that takes into account the facts of an individual case. Dutchin v. Dutchin, 2004 WI App 94, 273 Wis. 2d 495, 681 N.W.2d 295. Utilizing a statutory standard certainly appears to be an appropriate exercise of discretion.

As a result, Grumbeck is a puzzling decision. In addition to being specifically allowed by statute, there is nothing inherently unfair in dividing a marital estate unequally because one spouse has substantial separate assets. Consider, for example, a hypothetical case where the marital estate is $100,000, but one spouse has $2 million in separate assets. It seems perfectly fair for a trial court to divide the $100,000 unequally, reasoning that the spouse with the large separate estate does not need the extra $50,000 nearly as much as the other spouse.

Also curious is the unusual remand by the appellate court. One of the anomalies of family law is the Bacon-Bahr rule, whereby a “victory” on appeal means a return trip to the very same trial court that was reversed. Under the Bacon-Bahr line of cases, there is no right of a substitution in family law cases on remand for reconsideration.

In Grumbeck, the appellate court gave specific instructions to the trial court that it was not to reconsider the application of the other factors of Wis. Stat. Sec. 767.255, but rather, to divide the marital estate equally without considering the gifted assets. In other words, the appellate court was not going to give the trial court another chance to create the same result by making more detailed findings. By doing so, the appellate court stripped the trial court of any discretion on remand and dictated a specific result.

	Related Article Court affirms exclusion of gifted property from division

I have to wonder whether the appellate court is warning trial courts not to use a “backdoor” to avoid separating non-divisible assets, by using the factors set forth in Wis. Stat. Sec. 767.255. If so, we wish the Court of Appeals would have limited the holding to the particulars of the instant case. As suggested before in this column, if the Court of Appeals is going to have an absurd rule that its own cases can have no precedential value, at least use the rule for cases that would, if published, create uncertainty for courts and family law practitioners alike.

Confusion arises if the holding in Grumbeck is read broadly. If the court of appeals, rather than warning about use of a “backdoor,” as suggested by the remand order, is limiting trial court discretion, such a result would be highly problematic. Given the wide variety of factual situations in family law cases, not allowing wide discretion to trial courts would undoubtedly result in having to squeeze round pegs into square holes. I hope that the court of appeals decision was not intended to effectuate such a result.

Gregg Herman is a shareholder with Loeb & Herman S.C. in Milwaukee, which practices exclusively family law. Herman can be reached by e-mail at gherman@ loebherman.com.