You could not have the ability to minimize your residing bills in case your voluntary sale of your small business reduces your earnings Fox Rothschild LLP

More and more doctors’ practices are being bought up by hospitals, large medical companies and venture capitalists who combine the practices into mega-practices or networks. In these cases, one doctor in a group often has no authority to stop the sale even if he wanted to. ) But what if a solo or small practice is sold voluntarily, which reduces the professional’s ability to pay child support and child support. Can this specialist go to court to obtain a reduction in his maintenance obligations?

This is exactly the scenario that emerged in the case of Oshidar v. Oshidar, an unpublished (unprecedented) decision of the Appeals Chamber that was published on October 26, 2021. In this case, the parties were divorced in 2012 after nearly 20 years of marriage. The husband, a dentist in his own practice, was earning $ 428,127 a year at the time. Just two years after the divorce, the husband sold his practice for $ 570,000 (received a down payment and then $ 96,300 per year for 5 years). He then took a job as a dentist (clerk) in a dental clinic and earned about half of what he previously earned. Not long afterwards, he filed a motion to reduce his support obligations. In February 2015, “the court dismissed the defendant’s request for a reduction in alimony, dismissed his argument of change in circumstances, and found that his change of job was” both voluntary and temporary. “

Husband worked in the clinic for 2 years before opening a new private dental practice in 2016 (sounds like there was a non-compete clause in the terms of sale – although the statement doesn’t mention it) in late 2019, he made another motion Reduction of his maintenance, which the wife contradicted. Based on the submitted papers, the court found that the husband had shown a change in circumstances and ordered a plenary hearing. At the beginning of the plenary hearing, the trial judge ruled out a statement as to whether the circumstances had changed and said: “… you don’t have to talk about it.” When the self-represented wife tried to ask the husband “whether the accused“ voluntarily “Has decided to” sell ” [his] lucrative practice to start a new one[]“, The regional court ruled out this issue. At the end of the hearing, the trial judge reduced the alimony from $ 12,500 per month to $ 8,000 per month.

The wife appealed and the Appeals Department overturned the finding that the husband had even demonstrated a change in circumstances. The case contains a good discussion, if not an introduction, of the law governing the application for a change in maintenance, particularly of a self-employed debtor. The Appeals Department agreed with the wife’s arguments on the question whether the voluntary sale of the company could be challenged. The court found:

Plaintiff argues that the court of first instance overlooked important legal principles by failing to conduct a thorough analysis of the defendant’s motivation, appropriateness and good faith in selling its dental practice and then upholding the defendant’s objection when the plaintiff attempted to resolve the issue herself address by bringing the defendant to the plenary hearing. Do we agree?

The file, including the January 2020 trial order, shows that the court has failed to adequately examine the motivation, appropriateness and good faith of the defendant’s career choices after the divorce. The court made no meaningful attempt to distinguish between amendments 2015 and 2020 on these important issues, despite the denial of the 2015 motion and the grant of the 2020 motion.

The Appeals Department liked the voluntary sale to a voluntary quit. The law is pretty clear that in most cases, debtors will not voluntarily change jobs or careers and then receive a cut in support, even if the change is made in good faith. Here the appeals department stopped:

We conclude that the first instance court’s finding that the defendant fulfilled his burden of proof of changed circumstances was “apparently unsupported” by the file. Although this did not exactly fit a “job assignment” because the defendant sold his business, and although he did not technically switch careers because he remained a dentist, the changes in the defendant’s employment status in the years after the divorce fell into the realm of what that Court saw it as a voluntary change in circumstances. As a result of its finding, the court of first instance was obliged to further investigate the motivation, appropriateness and good faith of the defendant in making these critical life decisions. This preliminary investigation was necessary to determine whether the defendant was actually able to cope with the burden of the preponderance of credible evidence of changed circumstances. Only then would a second Zinken-Lepis analysis be carried out to determine whether a reduction in maintenance is justified. Additionally, the court of first instance should have allowed the plaintiff to cross-examine the defendant to testify to the defendant’s motives, reasonableness and good faith. Without the steps outlined above, the court of first instance cannot support its judgment and its decision constitutes a misuse of judgment.

This is not the end of the story as the matter has been referred back to a new plenary session.

Well, maybe the husband’s reasons for selling were legitimate. It was simply not addressed in the opinion and may not have been addressed in the motion papers below. There can be many business, personal, or health reasons why such a change makes sense. Perhaps there was an expectation that income would not change significantly that was not fulfilled. Perhaps there was more competition, lower insurance reimbursements, or other reasons why the revenues for this type of practice, with or without sales, could be lower. Who practices family law, is not representing a doctor or surgeon who has made high six or seven digit amounts in the past only to make much less now because the practice has changed? One of those changes is what I mentioned in the first paragraph, which has resulted in many doctors losing their jobs and / or significantly reducing their incomes.

Furthermore, although not mentioned in this opinion, prima facie (first) signs of a change in circumstances are not decisive, but are essentially rebuttable presumptions. The reason for this is obviously that there is no discovery or way to cross-examine a party on an application. Either way, it will be interesting how this case ends up in the end.

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