Subscriber Benefit
As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe Now
A husband was entitled to summary judgment on whether cryptocurrencies owned through he and his wife’s company were subject to division in a property settlement agreement resulting from their divorce, the Court of Appeals of Indiana ruled Friday in reversing a trial court’s decision.
The appellate court also found the husband waived his claims for attorney’s and expert witness fees in the case.
According to court records, Christi Wohlt and August Wohlt married in 2007 and owned and operated Echo Systems Inc. which was in the business of mining and trading cryptocurrency.
Christi was the chief financial officer of Echo, and the company was owned in her name.
During the marriage, Echo owned 6.21 units of Bitcoin and 1,000 units of Ethereum Classic.
In July 2015, Christi filed a petition for dissolution from her husband, August.
While the parties exchanged information, Christi didn’t conduct formal discovery during the dissolution proceedings.
In June 2016, the parties engaged in mediation resulting in the property settlement agreement.
The agreement provided that the parties close Echo within 30 days and “Husband shall retain all assets of the business, except for the following items: Wife’s Mac computer and printer, iPhone, iPad and laptop.”
The agreement did not specifically address the cryptocurrencies owned by Echo.
At the time of the mediation, the Bitcoin and ETC units had a combined value of approximately $18,000.
In June 2016, the Delaware Circuit Court issued a decree of dissolution approving the agreement and finding that “it was entered into fairly, without fraud, duress or undue influence and was fair and equitable.”
After the divorce, in July 2016, ETC was “forked” into two cryptocurrencies, ETC and Ethereum. August came into possession of 1,000 units of ETH.
August later searched the Echo computer hardware and software and discovered records pertaining to the ownership of the cryptocurrencies, which confirmed he was still in possession of the ETC units.
He alerted his counsel to the cryptocurrencies.
August’s counsel reached out to Christi’s counsel and provided notice that the husband had become aware of the existence of the Bitcoin and ETC cryptocurrencies.
In May 2020, Christi filed her “Verified Motion to Address Asset Omitted from the Marital Estate and Child Support Matters.”
Christi alleged that August had “failed to disclose” the Bitcoin and the ETC.
She later also filed a request for relief pursuant to Indiana Trial Rule 60(B) in which she reiterated the allegations of her previous verified motion but also acknowledged that August disputed whether the Bitcoin and ETC were subject to division.
The trial court held a hearing in the instant litigation.
August testified that during the mediation of the dissolution, he had forgotten about the Bitcoin and ETC Echo owned.
Christi also testified that she also had forgotten about it.
In January 2021, August filed for partial summary judgment and designation of evidence on the issues of Christi’s request to divide the cryptocurrencies, which included the ETH units acquired by August as a result of the “forking” of the cryptocurrencies which occurred after the execution of the proposed settlement agreement, and her request to modify child support from 2017 forward.
He also argued that he was unambiguously awarded those assets by the proposed settlement agreement and that due to the agreement’s disclosure provisions, Christi could not request that the cryptocurrencies should be divided.
He claimed Christi was precluded by long-standing Indiana precedent from seeking a support modification for any time period prior to the filing of her petition for modification and that there weren’t any exceptions.
Christi responded in opposition to summary judgment and her designation of evidence.
After a hearing, the Delaware Circuit Court denied August’s motion.
Before the fact-finding hearings scheduled for Christi’s petition, August filed a motion to compel discovery pertaining to Christi’s expert witness, who was to testify regarding cryptocurrency issues. He also filed a motion to continue the matter and to set a Daubert hearing on the scientific reliability of Christi’s expert evidence.
The trial court denied August’s motions.
At the hearings, Erik Min testified regarding the forking of the ETH from the ETC cryptocurrency and his verification of the information regarding the Bitcoin acquisition and sale.
His report was admitted as evidence.
In April 2022, the trial court entered its order equally dividing the value of the cryptocurrencies, resulting in an award to Christi of $1,842 for the Bitcoin, $14,000 for the ETC, and $208,441.63 for the ETH, for a total of $224,283.63.
Later that month in another order, the trial court denied Christi’s request to increase August’s support obligation retroactive to the filing of her petition, finding that it could not find any authority for doing so.
The trial court also adopted the parties’ pre-hearing support modification agreement.
The trial court later held a hearing to address Christi’s motion for expert witness and attorney’s fees. August incurred $50,011.60 in attorney fees and Christi incurred $551,636.
Min requested $42,000 for his services. At the hearing Christi requested August pay some of her fees, but he didn’t make any similar request.
The trial court ordered August to pay $15,042 of Christi’s attorney fees, which it calculated by applying the parties’ income allocations for purposes of child support (husband 64%/wife 36%) to the total attorney’s fees incurred by both parties.
August was also ordered to pay $21,000 of Min’s fees.
By awarding the expert witness fees, the trial court found Christi was not required to take August’s word about the cryptocurrencies and that Min’s report and testimony was helpful.
August appealed the trial court’s entry of judgment in favor of Christi.
The Court of Appeals affirmed in part, reversed in part and entered summary judgment for August.
On appeal, the first issue August brought to the appellate court is whether he was entitled to summary judgment as a matter of law on the issue of whether certain cryptocurrencies were subject to division.
In addressing the proposed settlement agreement interpretation, the appellate court found that there was no genuine issue of material fact precluding summary judgment to August on the issue.
“Because the PSA’s terms are unambiguous, we must apply the plain terms of the agreement, and we cannot credit Wife’s argument concerning what the parties might or might not have intended when entering into the PSA because that would entail looking beyond the four corners of the unambiguous contract,” Judge Patricia Riley wrote.
Next, the appellate court looked at the constructive fraud aspect of the issue.
Finding August was unambiguously awarded the cryptocurrencies at issue and that he owed Christi no duty to find and disclose the cryptocurrencies so as to support a claim of constructive fraud, the appellate court reversed the denial of summary judgment and entered summary judgment in favor of August.
The second issue brought to the court was whether the trial court abused its discretion when it ordered August to pay expert witness and attorney’s fees.
The court found August waived his claim pertaining to attorney fees and Min’s fees.
“In contravention of the Indiana Appellate Rules, Husband has not provided us with a standard of review applicable to an award of expert witness fees, nor has he cited any statutes or caselaw in support of his challenge demonstrating that a trial court errs in awarding expert fees under these circumstances,” Riley wrote.
Addressing the denial of summary judgment on retroactive child support, the court found August hadn’t addressed his argument to the trial court’s findings and conclusions regarding the award of attorney fees and failed to demonstrate that the trial court abused its discretion.
The case is August Wohlt v. Christi Wohlt, 22A-DR-2685.
Please enable JavaScript to view this content.