Edwin Hissa was a physician who, by the time he enters our story, was allegedly engaged in seemingly the #1 extracurricular activity of physicians throughout the United States, which was trying to cheat his ex-spouse, Joanne, out of her share of their marital assets.
Usually, the physician just fights for a while, enriches the lawyers on both sides, and then gives in to a settlement that was not nearly as good as he or she would have gotten in the first place if anything like a fair attempt to divvy up assets had been made. Then, the physician goes back to practice, bitter at the system, and blaming everybody except himself or herself for the outcome. I've only seen that happen maybe 500 times in my 25-year career.
This divorce was especially contentious, which really says something. Edwin had been held in contempt on about a half-dozen occasions, and twice had his driver's license taken away as punishment. In a moment of perhaps astronomic stupidity, Edwin testified that he had titled his house in his girlfriend's name to "avoid his creditors", but not to keep Joanne from collecting on the approximately $143,032 that he owed her.
The Court ordered Edwin to start paying $3,000 per month to Joanne to reduce the judgment, and also (one can easily envision this as more punishment) to sell his prized wine cooler and split the proceeds with Joanne.
Edwin did neither, and the Court finally sentenced him to 15 days in jail, without access to the wine cooler, and also ordered him to perform 125 hours of community service. Edwin appealed on a variety of grounds, all of which went down in flames, including the only one of particular interest to us here -- Edwin claims that it was impossible to comply with the Court's payment order so as to purge the contempt.
Here, the Court lays out Ohio law, but it is pretty typical of the law on contempt throughout the United States:
Any sanction for civil contempt must allow the party who is in contempt an opportunity to purge the contempt. Carroll v. Detty, 113 Ohio App.3d 708, 712, 681 N.E.2d 1383 (4th Dist.1996). A trial court abuses its discretion by ordering purge conditions that are unreasonable or where compliance is impossible. Burchett v. Miller, 123 Ohio App.3d 550, 704 N.E.2d 636 (6th Dist.1997). The party who is in contempt bears the burden of presenting sufficient evidence at the contempt hearing to establish that the trial court's purge conditions are unreasonable or impossible for him or her to satisfy. Whitman v. Monastra, 8th Dist. Cuyahoga No. 76633, 2000 Ohio App. LEXIS 4637 (Oct. 5, 2000).
In other words, the burden of proving the impossibility defense is on the person asserting it (the "contemnor") as a defense. Note that this is a pretty high standard, as the contemnor has to affirmatively prove an impossibility, which some would say is impossible to prove.
The truth is that it is not impossible to prove an impossibility so as to purge the contempt. To illustrate, let's say that a judge holds somebody in contempt, and orders them to return a specific painting that was destroyed in a fire. Obviously, the contemnor cannot comply, since the painting was destroyed. In that case, the Impossibility Defense would work.
The problem for Edwin, and for similar debtors, is that this defense pretty much never work with a money judgment, since the debtor would have to prove (keeping in mind the contemnor/debtor bears the burden of proof) that the debtor has no ability to pay the judgment.
Here, Edwin gave it his best shot, and tried to argue that he didn't have the money on hand to start making payments to Joanne. This was an uphill battle, since he only owed her $149,032 plus some interest, while Edwin himself testified that he had grossed over $1.5 million in earnings between 2008 and 2010, and expected to earn another $500,000 in 2011.
Edwin nonetheless claimed, apparently with a straight face, that he was flat, busted and broke, and was forced to live in his girlfriend's house (which, it will be recalled, he had deeded to her earlier), but of course that little tidbit also indicated that against his high income he had no housing expense to cover. Moreover, Edwin refuse to produce any records to document his income, such as pay stubs, investment account information, etc.
Thus, the Court of Appeals could only reach one conclusion:
The magistrate found that Edwin's claims of inability to pay were not credible and we agree. With evidence of a projected gross income over $2 million from 2008–2011 and without any evidence that he was unable to fulfill his debt obligations to Joanne, Edwin failed to demonstrate that the trial court's requirements were unreasonable to purge his contempt.
Edwin's Impossibility Defense having shown itself impossible for Edwin to prove, he lost, and the Court tacked on $30,000 in attorney's fees awarded to Joanne as a going away gift.
ANALYSIS
The Impossibility Defense is something that is much talked about in the asset protection world, since some strategies at their core rely on it; that is, at the critical time the debtor plans to testify that he has no money available to pay the judgment, and so therefore should not be locked up.
However, the cases where the Impossibility Defense has been successful are very few and very far between. In fact, one is about as likely to win the MegaMillions lottery as they are to successfully assert the Impossibility Defense. This is particularly true of affluent persons, such as Edwin, where the Court can see that while the creditor is going unpaid, the debtor is maintaining their previous lifestyle, thus indicating that they have access to some funds somewhere. Further, to successfully assert the impossibility defense as a debtor, the debtor must totally come clean on all financial and tax information, etc., and most debtors don't want to do this as that information could lead to hidden or protected assets.
Thus, one might suggest that any asset protection plan that fundamentally relies upon a successful assertion of the Impossibility Defense is an asset protection plan that has a deep and significant flaw, and that in the end analysis may prove almost impossible, if not outright impossible, to win on against a determined creditor.
And let's hope that you don't have to go to jail to figure that one out.
CITE AS:
Hissa v. Hissa, 2014 WL 1407952 (Ohio, April 10, 2014). http://goo.gl/INZgI2
This article at http://onforb.es/QArJXf and http://goo.gl/xcBQyG
