Canisius v. Morgenstern

87 Mass.App.Ct. 759

35 N.E.3d 385

Peter CANISIUS, Jr.

v.Erin Joy MORGENSTERN.

No. 14–P–341.

Appeals Court of Massachusetts, Suffolk.

Argued Dec. 2, 2014.

Decided Aug. 6, 2015.

Michael P. Friedman, Boston, for the husband.

William Sanford Durland, III, Boston, for the wife.

Present: RAPOZA, C.J., VUONO, & MEADE, JJ.¹

Opinion

RAPOZA, C.J.

Peter Canisius, Jr. (Peter), the former husband of Erin Joy Morgenstern (Erin), appeals from a judgment of divorce of the Probate and Family Court. He argues that the judge erred in treating Erin's vested contractual rights to future payments resulting from the best-selling novel, The Night Circus, which she authored, as too speculative for inclusion in the divisible marital estate. He also argues that the judge erred by finding that the parties' contributions to the marital estate were unequal, and making an unequal division of the marital estate based on that erroneous finding.

We fail to discern error in the judge's determination that the parties' contributions to the marital estate were not equal. We agree with Peter, however, that the judge committed an error of law by excluding from the marital estate subject to division under G.L. c. 208, § 34, Erin's contractual rights to future payments arising from her novel. Our review of this issue is de novo. As explained more fully, infra, we vacate the judgment, in part, and remand the matter to the Probate and Family Court for further proceedings consistent with this opinion.

1. Background. Peter and Erin began to live together in August, 2004, some two years prior to their marriage. Early on, they established a pattern that continued throughout their cohabitation and marriage: Erin handled the cooking for the couple while Peter performed the cleaning duties. During this early period, Erin was unhappy with her employment situation and wished to pursue artistic endeavors. After discussing the issue with Peter, the parties decided that they would no longer share equally their living expenses (as they had been) until Erin's income from the arts would allow her to do so. By June, 2005, Erin had ceased working outside of the creative arts, and by February, 2006, Peter had begun to pay for virtually all of the parties' expenses. The parties were married on October 13, 2006.

During the marriage, the parties lived a “simple lifestyle” on a limited budget. Peter, a chemical engineer, worked long hours to pay the parties' expenses, including those expenses directly related to Erin's creative pursuits. He also paid off Erin's then existing student loan debt. Erin, for her part, engaged in writing as well as the creation of various pieces of art. Certain of Erin's writing projects ultimately evolved into the novel, The Night Circus.²

In May, 2010, Erin obtained an agent (who provided her with numerous suggestions to improve her novel) and, in November, 2010, the agent negotiated a contract with Doubleday, a division of Random House, Inc., for the disposition of the publishing rights to The Night Circus. Other rights, including the right to make a movie, were optioned to Summit Entertainment (Summit) in December, 2010.³ Although Summit has retained a screenwriter

and producer for the movie project, the film has no timetable for production. In 2011, Erin transferred the copyright to The Night Circus to Night Circus LLC, which she owns. Erin received substantial initial payments from both Doubleday and Summit.

As The Night Circus began to find success, the parties' marriage, which had experienced some tension, continued to deteriorate and, in July, 2011, the parties separated. Subsequent to the parties' separation, Erin engaged in significant publicity and promotional work for the novel which, the judge found, was important to the success of the book. Erin continues to build her “brand” by marketing herself “through blurbs and other means, including social media.”

By the time of trial on Peter's complaint for divorce, The Night Circus had grossed over $3 million in royalties and between November, 2010, and October 9, 2013 (the last day of trial), Erin received net income derived from The Night Circus of $2,853,281.⁴ Nonetheless, the judge found that the gross amount of royalties was decreasing as sales were decreasing. The judge also stated that Erin's future earnings from The Night Circus are unpredictable. “It may become a highly successful movie, theater production etc., which will provide a large income stream for [Erin] for years to come, or it may not, and [Erin] may have to rely on the past financial success of The Night Circus to support her for a lifetime.”⁵

Peter earns approximately $95,000 per year as an engineer. Both parties have retirement plans. They do not own any real property. Neither party sought alimony from the other at trial.

2. The judge's decision. The judge found that once The Night Circus was accepted in final form by Doubleday, the contract with Doubleday had “value and the full economic value of the contract is dependent only upon how many books are sold worldwide. The Night Circus is marital property.” Nevertheless, the judge stated in his “Conclusions of Law” that “[t]he Court may properly conclude on the evidence that the present value of future income of intellectual property is too speculative to consider, as was the case with patents on artificial skin. See Yannas v. Frondistou–Yannas, 395 Mass. 704, 714 [481 N.E.2d 1153] (1985).” Continuing, the judge stated in his “Rationale:”

“Wife is the author of The Night Circus which has been hugely financially successful due to her talent. The financial success of the work was also enhanced by her efforts and abilities in promoting the book. The book is the sole creation of Wife. Husband admitted that not a word of the book is his creation. However, the court notes that it seems clear from the evidence that this work is not solely created by the author but rather created by the author and a team of others. In this case, the team was her agent, the agent's staff, her editor, her critique partner, beta readers and the Husband. The value Husband added, if any, to this editorial process compared to other members of the team was minimal. However, Husband's editorial contributions to this book are not his sole value to this book. Husband's contribution to The Night Circus began well before a word of this book was written or even conceived by Wife. Husband worked full-time and significant overtime to allow the Wife to pursue her dream of pursuing a successful career in the arts without the concern for putting a roof over her head or food on the table. In a sense, Wife was not a starving artist due to Husband['s] efforts to fully provide for both of their needs. Husband also served as an emotional support and companion to Wife during the research and writing process and his reading of drafts and offering some feedback or encouragement in difficult times certainly impacted Wife's on-going efforts to produce a marketable manuscript. It would not be equitable in any sense of the word to deny Husband a portion of the fruits of this marriage, which in this case is The Night Circus.

“...

“The Husband provided Wife with financial and emotional support in her efforts to pursue the creative arts. Wife then created the world of The Night Circus from her imagination and used her skill (and others) to develop that into a book that has grossed over three million dollars in royalties. These contributions are not equal. Therefore, considering all the admissible evidence and inferences reasonable therefrom, the court is persuaded that an unequal division of the marital estate is equitable in this case. I find after careful consideration of the section 34 factors that payment of [$628,000] from Wife to Husband would be an equitable division of the marital estate.”⁶

The judge issued a judgment of divorce on December 19, 2013, which contains provisions that effectuate his stated rationale, including an order directing Erin to make a lump sum payment to Peter of $570,000 (which takes into account previous advancements of attorney's fees to Peter in the amount of $58,000) as “his share of the royalty and book-related earnings she has received to date from the publication of [her] novel ...” (emphasis supplied).

3. Discussion. a. Future payments/marital estate. Peter argues that the judge erred in treating Erin's “vested contractual rights” to future payments resulting from her successful novel as too speculative for inclusion in the marital estate. Put another way, he states that it was “clear error for the judge to exclude from the divisible marital estate all future compensation received by [Erin] after the trial and into the future under the Doubleday and Summit contracts.”^{7 , 8}

General Laws c. 208, § 34, as amended through St. 1990, c. 467,

provides, in part, that the “court may assign to either husband or wife all or any part of the estate of the other, including but not limited to, all vested and nonvested benefits, rights and funds accrued during the marriage....” In S.L. v. R.L., 55 Mass.App.Ct. 880, 882–883, 774 N.E.2d 1179 (2002), we summarized the general principles bearing upon the inclusion of an asset or interest in, or the exclusion of an asset from, the marital estate:

“General Laws c. 208, § 34, defines the scope of a trial judge's discretion to assign interests in the marital estate to the wife or husband, based on a number of specified factors.... Separate from the division of assets within the estate is the question whether certain assets properly are considered a part of the estate. In making the determination of what to include in the estate, the judge is not bound by traditional concepts of title or property. ‘Instead, we have held a number of intangible interests (even those not within the complete possession or control of their holders) to be part of a spouse's estate for purposes of § 34.’ Baccanti v. Morton, 434 Mass. 787, 794 [752 N.E.2d 718] (2001), quoting from Lauricella

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