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Kogod v. Cioffi-Kogod

Supreme Court of Nevada

April 25, 2019

DENNIS KOGOD, Appellant/Cross-Respondent,
v.
GABRIELLE CIOFFI-KOGOD, Respondent/Cross-Appellant. DENNIS KOGOD, Appellant/Cross-Respondent,
v.
GABRIELLE CIOFFI-KOGOD, Respondent/Cross- Appellant.

          Consolidated appeals and cross-appeals from a divorce decree and post-divorce decree order concerning attorney fees and costs. Eighth Judicial District Court, Family Court Division, Clark County; Bryce C. Duckworth, Judge.

          Law Office of Daniel Marks and Daniel Marks and Nicole M. Young, Las Vegas, for Appellant/Cross-Respondent.

          Radford J. Smith, Chartered, and Radford J. Smith and Garima Varshney, Henderson, for Respondent/Cross-Appellant.

         BEFORE THE COURT EN BANC

          OPINION

          PICKERING, J.

         This is a divorce action with a $47 million community property estate, in which the district court awarded alimony not based on need and also unequally distributed the parties' community property due to one spouse's extramarital affairs, gifts to family, and excess spending. In this opinion, we recognize that alimony can be just and equitable even when not based on financial need, but we reverse the alimony award in this case because the receiving spouse's share of community property will produce passive income sufficient to maintain her marital standard of living. We also hold that community funds spent on extramarital affairs are dissipated such that the district court has a compelling reason to make an unequal disposition of community property. Finally, this opinion addresses whether monetary sanctions were appropriate for expenditures in violation of the automatic joint preliminary injunction ordering the parties not to spend money outside the usual course of business; whether expert witness and attorney fees were warranted; and when a community property estate properly ends. We affirm in part, reverse in part, and remand.

         I.

         Dennis Kogod and Gabrielle Cioffi-Kogod married in 1991 in New York City. They lived in various cities throughout their marriage, moving each time to advance Dennis's career in the healthcare industry. In 2003, Dennis and Gabrielle moved to Las Vegas. Dennis worked for a healthcare company based in southern California and Gabrielle worked part-time in Las Vegas as a nurse consultant. Dennis traveled frequently for work and spent his weekdays either traveling or at his office in southern California. He spent most weekends with Gabrielle in Las Vegas.

         Dennis and Gabrielle considered themselves upper-middle class until 2004, when Dennis took a more senior role at his company. By 2009, Dennis was promoted to Chief Operating Officer of a Fortune 500 healthcare company. With his new promotion, he earned an average base salary of $800, 000 per year, but received bonuses that put his average annual income at almost $14, 000, 000. Gabrielle, as a part-time nurse consultant, earned approximately $55, 000 per year. Dennis describes this time period after he and Gabrielle moved to Las Vegas as one in which they were essentially living separate lives, but Gabrielle disputes Dennis's characterization and claims that they spoke every day, sometimes multiple times a day.

         Unknown to Gabrielle, Dennis had started a separate family in southern California. He met Nadya in November 2004 and by June 2005 they participated in a wedding-type ceremony in Mexico. Shortly after, Dennis informed Nadya he was already married. Despite this, Dennis and Nadya remained together and, after participating in in-vitro fertilization, had twin girls in 2007. Dennis paid for all of Nadya's and his daughters' expenses, including a condominium in southern California, luxury cars, shopping trips and vacations, cosmetic surgery, and Nadya's college classes-he even invested in a business on Nadya's behalf. Dennis and Nadya remained together until 2015 when Nadya discovered that Dennis had another girlfriend.

         Dennis initially filed for divorce from Gabrielle in 2010, but the action was dismissed and the couple instead became informally separated as of July 2010. Gabrielle then filed this divorce action in December 2013, at which time she still did not know about Dennis's extramarital family. Had Dennis and Gabrielle divorced in 2010 when they informally separated, just one year after Dennis was promoted to COQ, the marital estate would have been significantly smaller than the approximately $47 million ultimately divided by the district court.

         The district court entered its divorce decree in August 2016. Because the district court previously awarded more than $6 million to each Gabrielle and Dennis as separate property throughout the divorce proceedings, $35 million of community property remained in the marital estate. Due to Dennis's expenditures on extramarital affairs, gifts to his family during the divorce proceedings, and spending in excess of his self-declared expenses, the district court found that Dennis dissipated $4, 087, 863 in community property and unequally divided the parties' community property on that basis. The district court also awarded Gabrielle alimony in the lump sum of $1, 630, 292 to compensate for economic losses as a result of the marriage and divorce, but recognized that she did not need alimony to support herself. In total, Gabrielle, 58 years old, received nearly $21 million in the divorce decree and Dennis, 57 years old, received just under $14 million. Gabrielle received mostly cash assets, which she does not contest can passively earn her between $500, 000 and $800, 000 per year, whereas Dennis's assets largely consist of real property.

         In addition to the unequal disposition of community property and the alimony award, the district court sanctioned Dennis $19, 500 for purported violations of an automatic joint preliminary injunction and awarded $75, 650 in expert witness costs to Gabrielle to pay for the forensic accounting firm that analyzed over 27, 200 of her and Dennis's financial transactions from between 2008 and 2016. Dennis appealed from the district court's orders, and Gabrielle cross-appealed.

          II.

         Dennis first challenges the award of alimony to Gabrielle. Permanent alimony is financial support paid from one spouse to the other for a specified period of time, or in a lump sum, following a divorce. NRS l25.l50(1)(a); Rodriguez v. Rodriguez, 116 Nev. 993, 999, 13 P.3d 415, 419 (2000) ("Alimony is financial support paid from one spouse to the other whenever justice and equity require it."). When granting a divorce, a district court may award alimony to either spouse "as appears just and equitable." NRS l25.150(1)(a). The decision of whether to award alimony is within the discretion of the district court. Buchanan v. Buchanan, 90 Nev. 209, 215, 523 P.2d 1, 5 (1974) ("In determining whether alimony should be paid, as well as the amount thereof, courts are vested with a wide range of discretion.").

         When determining if alimony is just and equitable, a district court must consider the eleven factors listed in NRS 125.150(9).[1] See DeVries v. Gallio, 128 Nev. 706, 711-13, 290 P.3d 260, 264-65 (2012). The district court may also consider any other relevant factor, but it must not consider the marital fault or misconduct, or lack thereof, of the spouses. Rodriguez, 116 Nev. at 999, 13 P.3d at 419 ("Alimony is not a sword to level the wrongdoer. Alimony is not a prize to reward virtue.").

         NRS 125.150(9)'s authorization to award alimony as appears just and equitable is amorphous and does not explain the purpose of alimony. See David A. Hardy, Nevada Alimony: An Important Policy in Need of a Coherent Policy Purpose, 9 Nev. L.J. 325, 330 (2009) ("Nevada does not provide a coherent policy rationale for why, when, and how alimony should be awarded."); Robert Kirkman Collins, The Theory of Marital Residuals: Applying an Income Adjustment Calculus to the Enigma of Alimony, 24 Harv. Women's L.J. 23, 23 (2001) ("Statutes simply list factors for trial courts to consider without providing any guidance as to how the judge should weigh or apply them."). Leaving the purpose of alimony nebulous makes alimony awards unpredictable for parties and their attorneys, and leaves courts uncertain as to when, and in what amount, alimony should be awarded. Marshal Willick, In Search of a Coherent Theoretical Model for Alimony, Nev. Law., Apr. 2007, at 41 (noting that alimony is "the last great crapshoot in family law" because "it is a category of remedy without any substantive underlying theoretical rationale").

         The parties' arguments in this case highlight the undefined nature of alimony awards. Dennis argues that a judge's discretion to award alimony is limited to instances of financial need, and that no Nevada case or statute extends alimony beyond financial need. Gabrielle responds that alimony may be awarded to equalize post-divorce earnings or maintain the marital standard of living, regardless of need. Our previous cases often addressed alimony without discussing its purpose or scope in express terms. But after examining the historical underpinnings of alimony and our prior case law, we now hold that alimony can be "just and equitable" both when necessary to support the economic needs of a spouse and to compensate for a spouse's economic losses from the marriage and divorce, including to equalize post-divorce earnings or help maintain the marital standard of living.

         A.

         Alimony, in its most elementary form, is based on the receiving spouse's need and the paying spouse's ability to pay. When alimony originated in England, a woman's legal rights, including ownership of property and the ability to work and keep her wages, were subsumed by her husband under the doctrine of coverture. See Collins, The Theory of Marital Residuals, 24 Harv. Women's L.J. at 28-29 ("Married women were barred by the doctrine of unity from holding certain property, signing contracts, working at many professions, or retaining their own earnings when they did work....") (footnotes omitted). And absolute divorce, where the marital relationship was terminated, was exceedingly difficult to obtain. See id. Rather than absolute divorce, spouses could seek a "'divorce' from bed and board," where the spouses lived apart without actually terminating the marriage or the wife being released from coverture. Id. This meant the husband had an ongoing legal and moral obligation to continue to provide for his wife, despite the "divorce," because she could not support herself. Id. at 29; see also Manby v. Scott (1663) 86 Eng. Rep. 781, 784 (Exch.) ("[T]he law having disabled the wife to bind herself by contract, therefore the burthen shall rest upon the husband, who by law is bound to maintain her . . . ."). Despite finding its origins in the scarcity of absolute divorce and the law of coverture, courts continued to award alimony even after absolute divorce became available, seemingly out of economic necessity. Collins, The Theory of Marital Residuals, 24 Harv. Women's L.J. at 30-31.

         Alimony to remedy the economic-power imbalance between husband and wife is recognized in Nevada's earliest cases. See In re application of Phillips, 43 Nev. 368, 373, 187 P. 311, 311-12 (1920) (recognizing alimony as "a duty which sound public policy sanctions to compel one who is able so to do, possibly as a result of the cooperation (during coverture) of his former wife, to prevent such former wife from becoming a public charge or dependent upon the charity of relatives or friends"); see also Wilde v. Wilde, 2 Nev. 306, 307 (1866) (noting that a married woman's "property is generally entirely under the control of the husband"). Indeed, some cases treat the receiving spouse's need and the paying spouse's ability to pay as the sole alimony determinants. See, e.g., Applebaum v. Applebaum, 93 Nev. 382, 386, 566 P.2d 85, 88 (1977) (affirming a denial of alimony where the spouse "had adequate resources with which to support herself); Foy v. Estate of Smith, 58 Nev. 371, 376, 81 P.2d 1065, 1067 (1938) (stating that the right to alimony "is solely that of support"); Greinstein v. Greinstein, 44 Nev. 174, 174, 191 P. 1082, 1082 (1920) (affirming an award of alimony where "the wife was without sufficient means, and unable physically to maintain and support herself, and . .. the husband was financially able to pay"); Lake v. Bender, 18 Nev. 361, 410, 7 P. 74, 80 (1884), modified on reh'g (stating that a court should award alimony based on "the financial conditions of the husband and the requirements of the wife"), abrogated on other grounds by Johnson v. Johnson, 89 Nev. 244, 246, 510 P.2d 625, 626 (1973).

         NRS 125.150, which authorizes alimony, directs a district court to consider several factors that help the court to understand the spouses' financial needs and abilities to pay. See NRS 125.150(9). A district court must consider: "[t]he financial condition of each spouse," NRS l25.150(9)(a); "[t]he nature and value of the respective property of each spouse," (9)(b); "[t]he income, earning capacity, age and health of each spouse," (9)(e); "[t]he award of property granted by the court in the divorce ... to the spouse who would receive the alimony," (9)(j); and "[t]he physical and mental condition of each party as it relates to the financial condition, health and ability to work of that spouse," (9)(k). After considering these factors, and any other relevant circumstance, our case law makes clear that a district court may award alimony to ensure that an economically powerless spouse receives sufficient support to meet his or her needs. See Gilman v. Gilman, 114 Nev. 416, 423-24, 956 P.2d 761, 765 (1998) ("The Nevada legislature created spousal support awards to, inter alia, keep recipient spouses off the welfare rolls.").

         If a district court awards alimony to address a spouse's financial need, the basis for an award is clear-cut when one spouse is unable to meet the basic necessities of life such as food, clothing, and habitation. But such an award becomes less certain and predictable when the divorced spouse is able to meet his or her basic needs. A court can "reach very different figures for a spouse's 'needs,' depending on whether those needs are measured at a subsistence level, a level that the court believes to be objectively reasonable, or the actual subjective marital standard of living." Brett. R. Turner, Spousal Support in Chaos, 25 Fam. Advoc, Spring 2003, at 14, 17. Alimony based on economic necessity, then, requires a policy decision regarding when a divorced spouse's "needs" are met. See Principles of the Law of Family Dissolution: Analysis and Recommendations § 5.02 cmt. a (Am. Law Inst. 2002) (hereinafter Family Dissolution) ("Some judicial opinions find the alimony claimant in 'need' only if unable to provide for her basic necessities, others if the claimant is unable to support himself at a moderate middle-class level, and still others whenever the claimant is unable to sustain the living standard enjoyed during the marriage even if it was lavish."). As it stands, the Legislature has placed that decision-making power in the hands of district courts to award alimony "as appears just and equitable." NRS l25.150(1)(a).

         B.

         In addition to economic need, alimony may also be awarded to compensate for economic loss as the result of a marriage and subsequent divorce, particularly one spouse's loss in standard of living or earning capacity. See Mary Kay Kisthardt, Re-thinking Alimony: The AAMUs Considerations for Calculating Alimony, Spousal Support or Maintenance, 21 J. Am. Acad. Matrim. Law. 61, 69 (2008) (describing the wave of reform to alimony statutes as compensation "for loss of human capital by virtue of non-market work engaged in by the claimant during the marriage"); see also Collins, The Theory of Marital Residuals, 24 Harv. Women's L.J. at 49 C'[T]here should be some degree of sharing of post-divorce incomes to reflect the returns flowing from efforts made while the marital joint venture was operational-an equitable sharing of the residual economic benefits from work done during the marriage."). Given the contractual and cooperative undertakings implicit in a marriage, alimony might be seen as a remedy fashioned for the economic losses resulting from splitting one household into two through divorce. See Family Dissolution § 5.02 cmt. a (recognizing that divorce creates financial losses for spouses that, "[w]ithout reallocation, . . . are not likely to fall equitably as between them"). Such a loss could come in the form of lower income-earning potential due to forgoing career opportunities for the sake of the marriage, see Ira Mark Ellman, The Theory of Alimony, 77 Cal. L. Rev. 3, 51 (1989) (describing alimony as compensation for marital investment, i.e., "conduct giving rise to a compensable loss in earning capacity" upon divorce), or a lower standard of living than reasonably expected due to the early termination of the marriage, see generally Collins, The Theory of Marital Residuals, 24 Harv. Women's L.J. at 49-50 (recognizing that the return from efforts made during the marriage may not materialize until after the divorce). As a remedy, a court can award alimony to make the "spouse whole at the end of the marriage by rewarding efforts in homemaking, childrearing, interruption of a career, or contributions to the success of the other." Id. at 39-40.

         Our case law's concern for maintaining a spouse's standard of living post-divorce is reflected in this rationale for alimony. Enabling the lower-income-earning spouse to maintain a lifestyle as close as possible to the lifestyle enjoyed during the marriage has consistently been an important aim of this court. See, e.g., Wright v. Osburn, 114 Nev, 1367, 1369, 970 P.2d 1071, 1072 (1998) (deeming the spousal support award insufficient because the wife would not be able to "maintain the lifestyle she enjoyed during the marriage or a lifestyle commensurate with" her former husband); Sprenger v. Sprenger, 110 Nev. 855, 860, 878 P.2d 284, 287 (1994) (remanding with instructions to award alimony such that the spouse may "live as nearly as fairly possible to the station in life she enjoyed before the divorce") (internal quotation marks omitted); Gardner v. Gardner, 110 Nev. 1053, 1058, 881 P.2d 645, 648 (1994) (increasing alimony by ten years because the wife's "contribution to the community over many years [was] not fairly recognized by the two-year alimony award"); Rutar v. Rutar, 108 Nev. 203, 208, 827 P.2d 829, 832 (1992) (increasing the alimony award where the previous award only provided "a standard of living far below that to which [the wife and children] have been accustomed"). This court reaffirmed this goal in Shydler v. Shydler, 114 Nev. 192, 954 P.2d 37 (1998), by noting that two of the primary purposes of alimony "are to narrow any large gaps between the post-divorce earning capacities of the parties and to allow the recipient spouse to live 'as nearly as fairly possible to the station in life [ ] enjoyed before the divorce.'" Id. at 198, 954 P.2d at 40 (alteration in original) (citations omitted) (quoting Sprenger, 110 Nev. at 860, 878 P.2d at 287-88).

         Like the need-based factors, NRS 125.150(9) codifies some factors to help a district court assess the economic losses caused by the marriage and subsequent divorce. A district court must consider: "[t]he duration of the marriage," NRS l25.l50(9)(d); "[t]he income, earning capacity, age and health of each spouse," (9)(e); "[t]he standard of living during the marriage," (9)(f); the spouse's career before the marriage, (9)(g); specialized education or training obtained during the marriage, (9)(h); and "[t]he contribution of either spouse as homemaker," (9)(i). After considering these factors, and any other relevant circumstance, the district court may award alimony under NRS l25.150(1)(a) to compensate a spouse for nonmonetary ...


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