                            STATE OF MICHIGAN

                            COURT OF APPEALS



SCOTT P. GYORKE,                                                     UNPUBLISHED
                                                                     April 25, 2017
               Plaintiff-Appellee,

v                                                                    No. 330375
                                                                     Wayne Circuit Court
                                                                     Family Division
SHELLY B. GYORKE,                                                    LC No. 14-110624-DM

               Defendant-Appellant.


Before: SAWYER, P.J., and SAAD and RIORDAN, JJ.

RIORDAN, J. (concurring).

        At first glance, it appeared that defense counsel’s persuasive oral argument could carry
the day. However, after further review of the record, I agree with the majority that the trial court
did not err when it failed to award defendant half of the $38,000 “refund.” I write separately to
clarify my understanding of the underlying question in this appeal and to note several additional
reasons that support the majority’s conclusion.

        The core issue in this case is whether the parties modified defendant’s tax liability for the
first three quarters of 2015 through the status quo provisions of the divorce settlement
agreement. The parties advocate opposite answers to this question on appeal. Plaintiff
essentially argues that defendant agreed, under the settlement agreement signed in August 2015,
to remain jointly liable for the parties’ tax liability for the duration of the status quo order,
despite the fact that she would be considered divorced for all of 2015 for tax purposes if they
divorced at any point in 2015. Defendant essentially argues that she never was liable for the
amount paid for first quarter estimated taxes in April 2015 based on divorce-related tax laws,
meaning that she is entitled to half of the overpayment or “refund” that was applied to the first
quarter estimated taxes.

        As defendant emphasizes on appeal, the parties’ accountant unequivocally testified that
the overpayment or “refund” from the 2014 tax payment only benefited plaintiff in the end given
his sole liability, following the divorce, for the taxes related to his income in 2015. While I may
agree with defendant under different circumstances, defendant’s position fails given the language
of the status quo order and the undisputed calculations and reasoning behind plaintiff’s combined
payment of the parties’ 2014 tax liability and first quarter estimated taxes.



                                                -1-
        The parties’ settlement agreement clearly provided that plaintiff and defendant were to
continue to pay incurred expenses until the status quo provision expired. Specifically, the
settlement agreement states the following under the “Financial Status Quo” heading: “The
financial status quo shall continue through September 30, 2015; any and all expenses accrued
through said date shall be paid. The following credit cards shall be paid off in full: Community
Choice Visa credit card, United Mileage Visa, Delta Sky Miles card; any joint cards shall be
closed upon payment.” (Emphasis added.) Later, under the “Property Settlement” heading, the
settlement agreement provides, “The balances in the marital bank accounts shall be equally
divided between the parties, once all financial status quo expenses are paid. Husband shall
provide the updated ‘tox’ [sic] bank account monthly statement for [the] past six (6) months
within 30 days of Judgment.” (Emphasis added.) Accordingly, pursuant to the settlement
agreement, the parties were authorized to pay any expenses incurred, consistent with the
financial status quo, through September 30, 2015, using the marital bank accounts, after which
time the marital accounts would be divided. Notably, at the November 2015 trial, defendant’s
attorney expressly acknowledged that plaintiff “could keep making estimated [quarterly]
payments” under the status quo provision.1

        In Butler v Simmons-Butler, 308 Mich App 195, 211-222; 863 NW2d 677 (2014), this
Court discussed the tax liability of divorcing parties and how tax consequences may influence
the terms of a divorce settlement agreement or a trial court’s division of property. This Court
noted that married couples have the option of filing a joint tax return, and “[i]t is generally
understood that a husband and wife obtain a much more advantageous tax rate when filing a joint
tax return.” Id. at 213. However, both spouses are jointly and severally liable for the tax owed
in conjunction with a joint return. 26 USC 6013(d)(3); Butler, 308 Mich App at 219.

        Here, in light of these considerations, it is apparent that plaintiff and defendant agreed to
maintain the financial status quo of quarterly estimated tax payments—which had been made in
conjunction with the parties’ prior filings of joint tax returns, presumably to secure a more
advantageous tax rate and to avoid penalties—when they entered into a settlement agreement
that maintained the financial status quo until September 30, 2015. See id. at 213. As such, even
though plaintiff and defendant would not be able to reap the benefits of a joint tax return for the
tax year in which they divorce, 26 USC 6013(g)(4)(C), it appears that both parties agreed to
remain jointly liable, in effect, for the tax liability incurred through the end of the financial status
quo order, regardless of the fact that plaintiff was the sole wage-earner. Stated differently, since
the parties historically made quarterly estimated payments related to their joint tax return, it
appears that defendant agreed to remain jointly liable for the taxes incurred during the first
quarter of 2015, consistent with the status quo, since the financial status quo provision remained
in effect until September 30, 2015, several months later.


1
   Additionally, an ex parte temporary custody and financial status quo order entered on
September 29, 2014, states, “IT IS ORDERED that pending this matter, and while the parties
continue to reside together with the minor children, they shall continue to maintain the financial
status quo in the maintenance of the marital estate and household expenses, until further order.”
The trial court also entered an ex parte property injunction on that date.


                                                  -2-
         Initially, I was persuaded by defense counsel’s written and oral argument that plaintiff’s
request for an extension constituted a violation of the status quo order, or otherwise made it
possible for him to obtain an inequitable benefit from an overpayment of the parties’ 2014 tax
liability. However, there is no evidence in the record supporting defendant’s claim that
plaintiff’s filing of an extension violated the status quo order or constituted “divorce planning.”
It is undisputed that defendant never saw a prepared tax form until August 2015, but plaintiff
testified below that he only filed the extension because defendant never responded to his request
to sign the 2014 tax return. Defendant never rebutted this testimony or proffered evidence
identifying another reason for the extension. As a result, the only evidence in the record
concerning this issue indicates that plaintiff filed for an extension solely because defendant had
failed to respond or cooperate with plaintiff’s communication regarding the tax filing. To the
extent that defendant suggests that this was not the actual reason for the extension, that was a
matter of credibility for the trial court, and “[w]e defer to the trial court’s credibility
determinations given its superior position to make these judgments.” Shann v Shann, 293 Mich
App 302, 305; 809 NW2d 435 (2011). Thus, for all of these reasons, I am not convinced that
plaintiff’s filing of an extension can be viewed as a “violation” of the status quo on plaintiff’s
part or an event that entitled defendant to a greater share of the marital property.

        Further, and most importantly, defendant fails to recognize on appeal that the application
of the $38,000 overpayment or “refund” to the first quarter estimated taxes had no practical
effect on the division of marital property. Although plaintiff technically made an overpayment
for the 2014 taxes, which was then applied to the 2015 first quarter estimated payment, the
accountant’s undisputed testimony clarifies the circumstances of the “overpayment.” In reality,
plaintiff did not make an overpayment that was unexpected and inconsistent with the status quo.
Instead, for simplicity’s sake, the parties’ accountant suggested that plaintiff write a combined
check in April 2015 for the amount owed by the parties for their 2014 taxes and the first quarter
estimated taxes for 2015, as those payments were due at the same time. The accountant’s
testimony plainly indicates that the same amount would have been withdrawn from the marital
account for the first quarter estimated payment if the overpayment or “refund” resulting from the
combined check had not been applied. Put another way, it is undisputed that plaintiff would
have made a separate payment of approximately $38,000 for the first quarter estimated taxes
from the marital estate in April 2015 if he had not simply paid for the parties’ 2014 taxes and the
first quarter estimated taxes for 2015 all at once.

        In sum, the record shows that plaintiff’s filing of an extension for the parties’ 2014 taxes
and his combined payment of the parties’ 2014 tax liability and estimated taxes for the first
quarter of 2015 had no practical effect on the share of the marital estate that would ultimately be
distributed to defendant. Because marital funds, regardless of their form, would have been used
to pay the first quarter estimated tax payment—consistent with the status quo—defendant has
failed to demonstrate that the trial court erred when it denied her request for half of the 2014 tax
“refund.”

       For all of these reasons, I agree with the majority.



                                                              /s/ Michael J. Riordan

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