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Smith v. McGill

Supreme Court of Kentucky

September 27, 2018



          COUNSEL FOR APPELLANT: Louis Irwin Waterman Goldberg Simpson, LLC Allison Spencer Russell Goldberg Simpson LLC, Megan Keane Goldberg Simpson LLC.

          COUNSEL FOR APPELLEE: Michael Richard Slaughter Westport, KY.



         I. BACKGROUND

         Appellant, Laura Faye Smith, and Appellee, Jimmy Howard McGill, married in 1994 and divorced in 2005 in Arkansas. The Arkansas trial court awarded Laura with primary residential custody of their three children, with Jimmy having unsupervised visitation. Laura subsequently moved to Kentucky and filed the decree in Jefferson Family Court in 2009.[1] The parties' custody and support action has since been in that court. The matter currently before the Court arose when Jimmy filed a motion to become the primary residential custodian of his and Laura's two youngest daughters (the oldest having already been emancipated). The Jefferson Family Court denied Jimmy's motion for primary custody in an order dated January 21, 2016.

         After the trial court's January 21 order, Laura made a motion for attorney's fees. On June 3, 2016, the court ordered Jimmy to pay the full amount of Laura's attorney's fees, totaling $26, 352.23. Jimmy moved the court to alter, amend or vacate both the January 21 order denying him primary residential custody and the June 3 order awarding Laura's attorney's fees. On August 12, 2016, the court denied Jimmy's motion to alter, amend, or vacate its January 21 custody order. However, the court amended the June 3 order awarding attorney's fees. Upon reviewing Laura's annual income of $41, 900 t and Jimmy's annual income of $32, 500, the court found it improper to order Jimmy to pay Laura's full attorney's fees and reduced the amount to $10, 000. Jimmy appealed this order to the Court of Appeals. The Court of Appeals affirmed the trial court's decision pertaining to the custody of the children and Jimmy did not appeal that ruling to this Court. However, the Court of Appeals reversed and remanded Laura's award of attorney's fees determining that no actual disparity existed between Laura's and Jimmy's income to justify an award of attorney's fees to Laura pursuant to KRS 403.220. The Court of Appeals held that the trial court is free to issue an order for attorney's fees pursuant to CR 37, if it believes it is necessary and if the record supports such a measure. Laura asked this Court for discretionary review, which we granted. We now reverse the Court of Appeals.

         II. ANALYSIS

         In its order granting Laura's motion for attorney's fees, the trial court cited KRS 403.220 and Gentry v. Gentry, 798 S.W.2d 928, 938 (Ky. 1990). Jimmy moved the court to alter, amend, or vacate its order awarding attorney's fees. In its order on Jimmy's motion, the trial court stated it was under the mistaken belief that Laura was not employed. Therefore, the court believed Laura had no income when it initially analyzed the parties' financial resources. The court then stated that Laura's annual income was actually $41, 900 and Jimmy's annual income was $32, 500. The order stated that "it was improper to order Respondent to pay Petitioner's full attorney's fee" and went on to quote Gentry, which states "many of the costs and fees were unnecessary in the sense that a good deal of the court's time and a substantial part of the costs and fees assessed could have been avoided by candor and cooperation." 798 S.W.2d at 936. Preceding the citation to Gentry, the court amended the award of attorney's fees to $10, 000 as a more appropriate sum.

         Laura asserts that "Jimmy, th[r]ough his actions, subjected not only Laura but also the Minor Children to litigation and an I FA [Issue Focused Assessment] all of which were very expensive . . . ." Laura contends that Jimmy behaved in such a way that would allow the court to sanction him through an award of attorney's fees.

         In Gentry, the husband, Tom, argued that the trial court erred by awarding attorney's fees and costs to his wife, Kathy. This Court stated "[i]n this instance, financial inequality justifies the award, KRS 403.220. Tom's obstructive tactics and conduct, which multiplied the record and the proceedings, justify both the fact and the amount of the award." Gentry, 798 S.W.2d at 938. Further, "the circuit court found that a significant portion of the attorney's fees was incurred as a result of Tom Gentry's obstructive tactics and refusal to cooperate in the proceedings." Id. However, much of the discussion of attorney's fees in Gentry seems to be based primarily upon an award of expenses pursuant to CR 37.01, which deals with discovery. The Court of Appeals held that the present case should be remanded to the trial court to determine if attorney's fees were justified pursuant to CR 37; however, the parties' arguments are not based on discovery. Therefore, that rule has no applicability here.

         Laura argues that the plain language of KRS 403.220 does not require a financial imbalance for an award of attorney's fees. She insists the statute merely requires the trial court to consider the financial resources of both parties in determining the reasonable amount for attorney's fees. Jimmy contends that the requisite factors did not exist for an award of attorney's fees. Further, he contends that case law prohibits the court from awarding attorney's fees based on KRS 403.220 without a finding of disparity of income. The Court of Appeals held that: "[a]s even Gentry holds, an actual disparity must exist before an award based also upon a party's conduct can be made. No such disparity existed according to the evidence the trial court cited and relied upon for the award of attorney's fees to Laura." For the following reasons, we agree with Laura and hold that the trial court need not find a financial disparity before awarding attorney's fees-that it must only consider the financial resources of the parties.

         For more than forty years, this Court has interpreted KRS 403.220 to require a disparity of income as the threshold requirement in awarding attorney's fees. For example, in Sullivan v. Levin, 555 S.W.2d 261, 263 (Ky. 1977), this Court stated "[i]n other words, the allowance is authorized by the statute [KRS 403.220] only when it is supported by an imbalance in the financial resources of the respective parties." In that case, the Sullivans divorced and reconciled, and the wife's attorney brought an action for his fees. The Court allowed the fees.

         Sullivan was overruled by Hale v. Hale,772 S.W.2d 628 (Ky. 1989), on the issue of whether attorney's fees could be paid directly to counsel. However, Hale upheld Sullivan's interpretation requiring a financial imbalance in order for a court to award attorney's fees pursuant to KRS 403.220. This Court held "[t]he contention of the respondent is that KRS 403.220 is solely for the benefit of the client and not the attorney; that its purpose is simply to permit recovery of a part or ...

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