Mahan v. Mahan: Joint Owned Businesses and Divorce

Posted by Steven D. Eversole | Apr 14, 2015 | 0 Comments

Mahan v. Mahan, a divorce case from the Supreme Court of Alaska, involved a couple who owned a commercial fishing boat together during their marriage. Their divorce decree and marital property dissolution agreement included a provision the ex-spouses would share their profits from the commercial fishing operation after fuel costs and canning expenses had been deducted.

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While this dissolution order seemed appropriate on its face, the parties had a dispute over the meaning of profits. Both ex-spouses were arguing the other owed them money. There was a Master's hearing, and the court determined profits to mean total profits from the cannery after fuel, dues, and any other advancements were subtracted from gross revenue.

As our Birmingham divorce attorneys can explain, when spouses own and operate a business together, this can make property division a lot more complicated. The best thing you can do if you are in this situation is make sure your attorney has experience dealing with these types of cases and is familiar with the issues necessary to assist you in getting the best possible outcome with respect to your personal financial issues, as well as your business.

In Mahan, the parties were married in 2004 and filed for divorce in 2011. The couple had one child of the marriage who suffered from serious medical conditions. During the marriage, husband was the primary income earner with an annual salary of around $137,000, while wife earned around $16,000. The couple earned about $31,000 on any given year from their commercial fishing business.

The parties agreed they would maintain the marital home together until 2012 and the commercial fishing boat until that time and would split the profits. After that point, husband would keep the boat and commercial permits outright, and wife would get the marital home.

While the agreement seemed okay to the court, trouble started, and wife filed a motion to enforce the property dissolution agreement, claiming husband was wrongly taking property that belonged to wife out of the marital home. Wife also argued husband had not given her the proper share of profits from the commercial fishing operation.

Husband objected and claimed, based upon his definition of the term profits, he had paid her 50 percent. He was first reimbursing himself for the thousands of dollars he claimed to have spent out-of-pocket before the boat even hit the water at the beginning of the fishing season.

After a hearing, Master ordered husband to pay wife $15,000, but husband argued wife was not paying her fair share of expenses, and he had made an advancement, which should be deducted before profits are calculated.

Husband appealed this decision to the state supreme court. On appeal, the court reviewed the matter under an abuse of discretion standard, meaning the court would not reexamine the facts and would only turn over the lower court's ruling if it was convinced judge had interpreted the facts in an unreasonable manner. Ultimately, the appellate court affirmed lower court's ruling, holding it had not committed a prejudicial error.

Additional Resources:

Mahan v. Mahan, March 27, 2015, Alaska Supreme Court

About the Author

Steven D. Eversole

J.D., Samford University's Cumberland School of Law, Birmingham, Alabama B.A., University of Alabama, Tuscaloosa, Alabama


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