Justices remand divorced couple’s property squabble to trial court

The CNMI Supreme Court has vacated a Superior Court order distributing all interests of a business to a woman’s ex-husband, saying the trial court did not make a valuation of the business in question before awarding it to him.

The Supreme Court justices disagreed with the trial court’s order of distribution to Hyung Kuen Oh of the Korean Business Center and ruled that the trial court failed to support its award to Oh with specific findings of fact.

KBC provides bookkeeping, accounting, tax preparation, and document handling services.

“We remand to the trial court for a proper valuation of KBC and for an equitable distribution thereof based on specific findings of fact,” states the high court opinion issued on Dec. 30.

Associate justice Alexandro C. Castro penned the opinion and it was concurred by associate justice John A. Manglona. Former chief justice Miguel S. Demapan heard the oral argument but he retired prior to the issuance of the opinion.

According to court records, Kang Won Hee and her husband, Oh, married in Korea in 1979. The couple has three children. Oh moved to Saipan in 1986 and Hee followed with their children the next year. In 1987, the couple opened KBC. Over the next several years, the couple opened another business known as Oasis Corp. and acquired real properties on Saipan and Korea. Oh has worked at KBC since its incorporation and Hee began to work at KBC in 1992.

In May 2007, Hee filed for divorce, alleging cruel treatment, neglect, and personal indignities. Oh moved out of the family home, but both continued to work at KBC.

Before the divorce, but after the parties became legally separated, Hee incorporated her own business, Provenance Inc., doing business as Hanmi Professional Services.

Oh filed a motion to remove Hee from KBC, claiming that his former wife was diverting customers and business to Hanmi.

The Superior Court in February 2008 issued a decree of divorce distributing some of the marital property pursuant to stipulations. However, this decree did not address the parties’ three corporations: KBC, Oasis, and Hanmi.

In November 2010, the Superior Court issued an amended order distributing the three corporations. The trial court equally distributed the stock of Oasis between Hee and Oh; awarded all interests in Hanmi to Hee since Hee formed Hanmi after the couple separated; and awarded all interests in KBC to Oh.

Neither party contested the trial court’s distribution of Oasis, Hanmi, or any other martial property apart from KBC.

In refusing to distribute any interest in KBC to Hee, the trial court indicated that the “main factor” that influenced its decision was that Hee diverted several clients from KBC to Hanmi before the court ordered her to vacate KBC.

Based on Oh’s testimony, the trial court found that the clients who left KBC for Hanmi represented more than half of KBC’s annual revenue.

The trial court reasoned out that, by effectively taking clients representing half of KBC’s revenue, Hee de facto distributed the business between herself and her former husband.

The trial court ruled that distribution of half of KBC’s stock to Hee would result in a “double award.”

Hee, through counsel, G. Anthony Long, appealed. She argued that the trial court erred by distributing all interests in KBC to her former husband.

Oh, through counsel Stephen Nutting, argued that the Supreme Court cannot find the trial court erred in distributing KBC because Hee failed to submit an adequate record on appeal.

In vacating the trial’s court order, the justices said since this is a question of law, they do not need a transcript to decide the issue. The justices said that marital property should be divided equally unless there are strong circumstances that warrant an unequal division, such as fraud or waste.

“Here, there are no circumstances that warrant an unequal division,” the justices said.

Thus, the justices said, Hee has an undivided one-half interest in all marital property and is entitled to an equitable distribution.

Without proper valuation, the justices said, the trial court would have no ability to equitably divide marital property between the parties when, as is the case with KBC, the value of an asset is not immediately apparent.

“Even assuming that the clients [Hee] took constituted half of KBC’s annual revenue, this alone is insufficient to support the trial court’s distribution of all interests in KBC to Oh,” the justices said.

The justices, however, stressed that they do not suggest that the trial court must distribute KBC equally between Hee and Oh on remand of the case.

On the contrary, the justices said, a determination of the total equity value of KBC at the time of divorce may show that the clients who left KBC and followed Hee to Hanmi truly provide Hee with an equitable distribution of the company.

“However, without a proper valuation of all of KBC’s assets, the trial court had no ability to determine that the distribution was equitable,” the justices said in the footnote of their judgment.