Burns & Levinson Wins Second Major Appellate Victory in $20 Million Post-Divorce Asset Dispute
BOSTON, May 24, 2019 /PRNewswire/ -- Burns & Levinson has won another major appellate victory in the Massachusetts Appeals Court for Craig Irish, precluding his ex-wife, Dawn, from sharing in a $20 million bonus he received two and a half years after the parties' divorce. Craig had already prevailed in the United States Court of Appeals for the First Circuit when it vacated a $6 million award in Dawn's favor on a breach of contract claim that the bonus was marital property she should have shared in the divorce. Burns & Levinson partner Robert J. O'Regan has led the complex case through nearly seven years of hard-fought litigation at both federal and state levels.
On May 21, 2019, the Massachusetts Appeals Court affirmed the Probate and Family Court's decision to dismiss Dawn's complaint for post-divorce property division of the $20 million bonus that she filed after Craig won dismissal of her suit in federal court. Craig received this payment when the closely-held company he worked for was sold two and a half years after the parties' divorce. In the divorce, Dawn received a portion of the 6% interest in the company that Craig had acquired during his years of employment. The company manufactured, sold and serviced control equipment for nuclear power plants. Craig was vice president of sales. The company's founder, president and owner of nearly 90% of the company's stock credited him for a large increase in sales, and a higher value for the company, following the Fukushima, Japan nuclear power plant meltdown in 2011 – a disaster that occurred after the divorce.
O'Regan and his team worked vigorously to uphold the property division that was very carefully and diligently negotiated. The separation agreement that Dawn's attorney drafted contained language that required Craig to pay Dawn 20% of anything he ever received, at any time, upon sale of the company. All of that language was stricken through and deleted before the agreement was filed and approved in the divorce, and the strike-outs appear on the agreement as it was approved by the divorce judge. The results that Dawn sought in the litigation would have revived the deleted language.
The Appeals Court held that Probate and Family Court Judge Theresa Busenius correctly ruled that the parties' separation agreement and divorce judgment barred Dawn's claims, and that she did not meet any of the criteria to re-open the divorce both based on the merits of her claim and because she was too late. The Appeals Court noted that Craig's interest in the company was disclosed, and that her claim "is that she was not fully informed of the extent or value of the husband's equity." The decision followed O'Regan's arguments that all of the information about a purported "side deal" giving rise to Dawn's complaint for post-divorce property division had been available during the divorce case but she did not conduct discovery. He also argued that Dawn's claims did not establish that the potential for a future, discretionary bonus was property, and that no sale of the company was in play at the time of the divorce.
Dawn's "litigation decisions" to sue in federal court instead of state court drew significant attention from the Appeals Court on Dawn's attempt to re-open the divorce judgment. The Appeals Court summarized the First Circuit's rulings of how she "bypassed the Probate and Family Court" noting that in 2014 Dawn never filed anything in state court after the federal District Court judge had closed the case and ordered Dawn to file her claims there. Quoting from the First Circuit's opinion, the Appeals Court observed that "she reported to the Federal judge that the clerk declined to accept the remand order and informed her of the need 'to file a new action and start over.'"
When the First Circuit vacated the District Court decision, Judge Sandra Lynch wrote that the District Court "compounded" a series of errors in the case by entering the award for Dawn without having jurisdiction to do so. The First Circuit observed that what Dawn really sought was a ruling by a federal judge about what she should have received in marital property division, which is outside the subject matter jurisdiction of federal courts. The First Circuit's decision has since been cited extensively by courts across the country. It effectively closed the doors to the federal courts against future claims from disgruntled ex-spouses who try to get around their state court divorce rulings.
"We are pleased that the Appeals Court agreed with the First Circuit that Dawn had no business filing her case in federal court," said O'Regan. "This was forum shopping at its worst, and caused our client to be subjected to years of unnecessary, expensive and stressful litigation. If Dawn had filed this case in the Probate and Family Court, where she should have gone in the first place, it would have been thrown out a long time ago. This decision should mean that the case has now made it through the final check-out stand in Dawn's forum-shopping spree."
About Burns & Levinson LLP
At Burns & Levinson, we provide high-level, client-centric and results-oriented legal services to our regional, national and international clients. We are a full-service law firm with over 125 lawyers in Boston, Providence and other regional offices. Our areas of expertise include: business/finance, business litigation, divorce/family law, venture capital/emerging companies, employment, estate planning, government investigations, intellectual property, M&A/private equity, probate/trust litigation, and real estate. We partner with our clients to solve their business and personal legal issues in a collaborative, creative and cost-effective way. For more information, visit Burns & Levinson at www.burnslev.com.
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