In re Marriage of Wilson

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No. 100,780

IN THE COURT OF APPEALS OF THE STATE OF KANSAS


IN THE MATTER OF THE MARRIAGE OF:

SHANNON M. WILSON,
Appellee,

AND

BRUCE A. WILSON,
Appellant.

SYLLABUS BY THE COURT

1.
Appellate courts review an award of child support for abuse of discretion. The
district court necessarily abuses its discretion when it makes a legal error.

2.
Kansas divorce statutes authorize an award of child support until the child reaches
age 18 or, if still in high school, until June 30 of the school year in which the child turns
18. No greater duty exists under the common law: a parent's common-law duty to
support a child ends at majority. Thus, absent a parent's written agreement, the parent
cannot be ordered to provide support after the child reaches 18 and has graduated from
high school.

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3.
A district court may not order that child-support payments be placed into a trust
fund that may be used by the child after the parent's duty to support the child has ended.

4.
Appellate courts review a sanction order for abuse of discretion. The district court
necessarily abuses its discretion when it makes a legal error. If no legal error is made, an
appellate court will uphold an order of sanctions if any reasonable person would agree
with the district court's order, while giving consideration to the restrained approach that a
court should take when entering sanctions.

5.
When a party to litigation is required to disclose information to the court, the court
may sanction that party if it omits facts that would be necessary to make that party's other
statements not misleading to the court.

Appeal from Johnson District Court; THOMAS E. FOSTER, judge. Opinion filed
January 29, 2010. Affirmed in part, reversed in part, and remanded with directions.


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Frederick K. Starrett and Matthew K. Corbin, of Lathrop & Gage LLP, of
Overland Park, for appellant.

Robert S. Caldwell, of Caldwell & Moll, L.C., of Overland Park, for appellee.

Before McANANY, P.J., ELLIOTT and LEBEN, JJ.

LEBEN, J.: Bruce Wilson appeals two orders the district court made in Bruce's
divorce from his wife, Shannon. First, he argues that the district court's child-support
order went beyond the court's authority because $3,500 per month goes into a trust
account that could be used by the parties' child after he reaches majority. We agree:
Kansas law doesn't require a parent to provide support to a child after majority, and the
district court's order effectively does so. Second, Bruce argues that the district court
wrongly sanctioned him for his misleading and evasive responses during trial and in his
required financial affidavit. We disagree: the district court has the inherent power to
sanction a divorce litigant who provides misleading information in financial information
that the law required to be disclosed as part of that divorce action.







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I. The District Court's Child-Support Order Is Beyond the Court's Authority
Because It Provides Post-Majority Support.

The district court ordered Bruce to pay $6,000 per month in child support for the
benefit of the parties' only child, Finley, who was almost 5 years old when the case was
tried. The district court ordered that Shannon place $3,500 of that amount each month
into a trust fund for Finley's special needs or future education. The written journal entry
setting out the judge's orders provided that Shannon place the $3,500 "into a trust account
for the benefit of the Child or, if agreed by both parties, in the Child's existing 529
Educational Account." The journal entry also provided that child support would cease
when Finley turned 18.

We review the district court's award of child support for abuse of discretion. In re
Marriage of Winsky, 42 Kan. App. 2d 69, Syl. ¶ 4, 208 P.3d 355 (2009). The district
court necessarily abuses its discretion when it makes a legal error, so we also review its
orders for such errors. See In re Marriage of Kunzle, 2007 WL 3146683, at *4 (Kan.
App. 2007) (unpublished opinion). When interpreting the applicable statutes and child-
support guidelines, we do so independently, without any required deference to the district
court. In re Marriage of Brown, 279 Kan. 282, 285, 109 P.3d 1212 (2005); Winsky, 42
Kan. App. 2d 69, Syl. ¶ 4.


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Bruce contends that the district court exceeded its authority by requiring him to
pay child support to be used after Finley reaches majority. The Kansas divorce statutes
authorize an award of child support until the child reaches age 18 or, if still in high
school, until June 30 of the school year in which the child turns 18. K.S.A. 60-
1610(a)(1). No greater duty exists under the common law: a parent's common-law duty
to support a child ends at majority. See Arche v. United States of America, 247 Kan. 276,
291, 798 P.2d 477 (1990); In re Marriage of Risley, 41 Kan. App. 2d 294, 299-300, 201
P.3d 770 (2009). Thus, absent a parent's written agreement, the parent cannot be ordered
to provide support after the child reaches 18 and graduates from high school (though
support may continue through June 30). See K.S.A. 60-1610(a)(1); Elrod & Buchele, 2
Kansas Family Law § 14.41(1) (1999).

Shannon suggests that the court's order was proper because the funds could be
used before Finley reaches 18. That would indeed have been within the district court's
authority. See Ferguson v. Ferguson, 6 Kan. App. 2d 287, 291, 628 P.2d 234 (1981).
But that does not seem likely here given the lack of evidence of special educational needs
at present, the amount of money being placed into trust, and most important the apparent
intention of the district court. The district judge's oral ruling showed an intention that
Bruce's $3,500-per-month contribution to the trust account could be used for educational
expenses after Finley reaches 18: the court said that the $3,500 per month would be

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placed "into a trust for—a spend-thrift type trust for special needs or future education—
special education, or education past majority." (Emphasis added.)

While the written journal entry doesn't specifically mention use of the trust fund
for education past majority, it doesn't say anything that conflicts with that intention
either. The district court's child-support award thus appears to have been based upon an
intention that some of the money could be used for education after Finley turns 18, which
is not allowed by court order (except for finishing high school). Thus, the district court's
child-support award is based upon an error of law—that the district court could require
that Bruce send money to Shannon to be put into an account to be used for education past
majority.

Bruce asks us simply to strike the $3,500 amount, leaving Shannon with a child-
support award of $2,500 per month. We cannot do so because we do not know that the
district court considered $2,500 per month an adequate overall child-support award. The
district court has authority to order some portion of the child support be used for a
specific purpose, as took place in Ferguson, so long as it's not for use past majority. The
district court did not state that all of the trust funds would be used after Finley turned 18;
the court merely indicated an intention that some of the funds might be used that way.


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We must respect the district court's role in establishing the proper amount of child
support. That decision rests within the discretion of the district court, and an appellate
court, which has not heard directly from any of the witnesses, should not make that
discretionary call. We therefore reverse the district court's award of child support and
remand the case for the district court to determine, from the date support was initially
awarded, the proper amount.

II. The District Court's $30,000 Sanction Against Bruce Was Within the Court's
Authority in Light of Bruce's Attempt to Mislead the Court.

The district court sanctioned Bruce $30,000—to be paid to Shannon—based upon
Bruce's attempt to mislead the court about his income and assets. Bruce contends that he
had no duty to update the court about a large increase in his income; that the court's
sanction was excessive under constitutional double-jeopardy grounds since the court had
already separately awarded one asset to Shannon based upon Bruce's failure to disclose
information about it; and that any fault for failing to disclose the information was that of
his attorney, not Bruce.

We review the district court's sanction orders for abuse of discretion. Stone v. City
of Kiowa, 263 Kan. 502, 518, 950 P.2d 1305 (1997). Once again, since the district court
necessarily abuses its discretion when it makes a legal error, we also review its orders for
such errors. Kunzle, 2007 WL 3146683, at *4. To the extent that the district court's

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sanction order is based upon its factual findings, we must accept those findings if
substantial evidence supports them. See In re Marriage of Wherrell, 274 Kan. 984, 987,
58 P.3d 734 (2002). We first look then to determine whether the facts support the district
court's conclusion that Bruce intentionally misled the court about his income and one
specific asset.

If the district court's order is based on a valid finding that Bruce intentionally
misled the court, we would then turn to the legal issues that Bruce has raised. As to legal
matters, we must first determine whether the district court had the authority to sanction
Bruce for the conduct at issue. If so, we must determine whether the sanction violated
double-jeopardy rules, as Bruce claims. Our last review, if the district court's sanction
order has passed those first two, will be for reasonableness: a district court abuses its
discretion when no reasonable person would agree with its ruling. Stone, 263 Kan. at
518.

A. The District Court's Factual Finding that Bruce Intentionally Misled the Court
Is Amply Supported in the Record.

Based on Bruce's testimony throughout the trial, the district court found that Bruce
tried to mislead the court about his current income and about the existence of one asset,
the repayment of part of a loan Bruce had made to a friend. Since the entirety of his
testimony is critical to our review, we have included all of the relevant portions as an

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appendix to this opinion. After reviewing Bruce's testimony, the district court concluded
that Bruce and his attorney had "orchestrated such deception" and that Bruce's deception
was thus intentional. Based on these findings, the district court sanctioned Bruce
$30,000, to be paid to Shannon, "as a matter of equity and as a form of sanctions."

The trial began—and all testimony was presented—on January 8, 2008. Bruce
had filed his first domestic relations affidavit in September 2007; it listed his gross
income from self-employment as $294,448 per year. Less than a month before trial, in a
pretrial questionnaire, Bruce continued to say that his average gross income from 2004
through 2006 had been $294,448. At trial, Bruce presented an amended domestic
relations affidavit dated January 7, 2008; it listed his gross income as $472,500 but had
an asterisk leading to additional information: "All figures are based on 2006 income tax
return."

After admission of the amended domestic relations affidavit, Bruce's attorney
asked him some questions about his income. Bruce emphasized that his income could
fluctuate from year to year and that he'd had some years in which he had no income.
After explaining years in which he made little or no money, his attorney asked whether
2007 was an unusual year. Bruce, a commodities trader, said it was unusual because
wheat had doubled in value. His attorney then moved on—without asking how much he

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made in 2007—to ask whether Bruce anticipated that conditions would stay the same in
2008. Bruce said he didn't know, then said his income for 2008 was down:

"Q: Do you anticipate that [the situation] would continue to be the case in
2008 as it was in 2007?
"A: I don't know.
"Q: Thus far this year, have you—is your income up or down?
"A: Down.
"Q: And have there been in fact significant losses?
"A: Yeah."

In sum, before cross-examination, Bruce had provided an updated domestic
relations affidavit, dated January 7, 2008, that listed his income as $472,500 based solely
on his 2006 income tax return. On direct examination, Bruce had said that his income
varied from year to year, that it had been up in 2007, but that it was down thus far for
2008. Bruce never provided an estimate of his 2007 income, and only 5 trading days had
passed in 2008 when Bruce testified that his 2008 income was "down."

On cross-examination, Shannon's attorney began with the straightforward question
of what Bruce earned in 2007. Bruce replied that he hadn't done his "final books yet" but
that he "definitely made as much in '07 as [he] made in '06." In response to additional
questions, Bruce said that he didn't know what his taxable income would be for 2007
because he didn't know what his lawful deductions would be. He then admitted in

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response to further questions that he had "an idea" of what his 2007 gross income was:
$2 million. In a follow-up hearing held in February 2008, Bruce admitted that he had
earned $2,169,134 in 2007.

Bruce's testimony about the loan and its repayment also began with reference to a
document Bruce had provided; that document listed the parties' assets and liabilities.
Bruce's attorney asked him whether the document was accurate, and Bruce said that it
wasn't—the document omitted a $37,500 personal loan Bruce had made to a friend in
Chicago to start a business. In response to questions from his attorney, Bruce requested
that whatever might be repaid on that loan be assigned to him—though he didn't expect to
receive anything:

"Q: It is your request that [the loan] would be set aside to you, is that
correct, should you receive any repayments?
"A: Yes.
. . .
"Q: And is it your expectation that you would receive that—these monies
back?
"A: No."

On cross-examination, though, Bruce admitted that he'd already received $19,000
in two repayments on the loan. Bruce had received one in the mail on January 1 or 2, and

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he'd received the other the day before trial. The court later determined that Bruce had
received $19,820 in loan repayments.

It's readily apparent that Bruce tried to deceive the court about the $19,820 he'd
already received on the loan to his Chicago friend. Bruce hadn't included the loan on his
list of assets, and he corrected that list in testimony that his attorney elicited only to
include the loan, not the repayments. Moreover, he said that he had no expectation that
he would receive any repayment even though he'd been repaid more than half of the
principal amount of the loan during the 7 days before he testified. Bruce's
counterargument that he didn't deceive anyone because he admitted to the repayments on
cross-examination does not change the analysis—the information Bruce provided to the
court about the loan on direct examination was false: though he denied expectation of
repayment, he'd already been repaid $19,820. His testimony was also misleading: he
asked that any repayments that might be made be assigned to him while indicating that
the likely value of that assignment was negligible. Given the timing of the repayments
and Bruce's admission about them on cross-examination, the district court fairly
concluded that Bruce's misrepresentations about the loan were intentional.

Bruce makes a more plausible argument that he didn't deceive anyone regarding
his income. The footnote to his domestic relations affidavit clearly said that the income
figure he reported there was based solely on his 2006 tax return. As Bruce notes, the

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district court, citing that footnote, said in its initial oral ruling that the affidavit wasn't
false and that "there was no false testimony." But the court also said orally that Bruce
"was trying to hide [his 2007 income] hoping that he would not have to disclose the
information." The court further concluded in its final written order—entered after the
court had ordered a transcript of Bruce's testimony—that Bruce "was intentionally
misleading" about his income and that he had "attempted to mislead the court" about it.
The court's written order found that Bruce had failed to disclose his 2007 income and that
in doing so Bruce had intentionally attempted to mislead the court.

In other contexts, the law recognizes that a person may mislead another by
omission. Since 1934, federal securities laws have made it a crime, in connection with
the sale of a security, to omit any material fact that's necessary to make the statements
that are made not misleading. See 15 U.S.C. § 78j (2006); 17 C.F.R. § 240.10b-5 (2009).
Kansas has similar provisions providing criminal penalties for material omissions in the
sale of securities and in transactions by loan brokers. See State v. Bryant, 40 Kan. App.
2d 308, 312-13, 191 P.3d 350 (2008), rev. denied 288 Kan. ___ (2009); State v. Fritz, 261
Kan. 294, 304, 933 P.2d 126 (1997).

The district court found that Bruce had misled the court in just this way. Bruce
voluntarily disclosed his $472,500 in income for 2006, but his failure to disclose his
$2.17 million income for 2007 made Bruce's disclosures misleading when the issue

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before the district court was the determination of Bruce's current earnings and future
earning potential. See K.S.A. 60-1610(b)(1). We agree with the district court that Bruce
misled the court about his income, and the district court's conclusion that Bruce did so
intentionally was a fair one based upon the evidence.

We recognize that a claim of civil fraud by silence requires more than mere
omission of a material fact. That civil claim also requires proof that the other party
couldn't have discovered the omitted fact with reasonable diligence, among other
elements. See Miller v. Sloan, Listrom, Eisenbarth, Sloan & Glassman, 267 Kan. 245,
260, 978 P.2d 922 (1999). Here, Shannon discovered Bruce's 2007 income by having
her attorney ask him questions on cross-examination, so the information was obtained
through reasonable diligence. But the district court did not find that Bruce had
committed civil fraud by silence; it found that Bruce had intentionally misled the court, a
conclusion fairly made based on the evidence. We consider in the next section whether
that conclusion is sufficient as a basis for sanctions.

B. The District Court Has Authority to Sanction a Party in a Divorce Action Who
Intentionally Misleads the Court Regarding Income or Assets.

The district court did not cite any specific statute or court rule as a basis for its
sanction against Bruce. But no specific statute or court rule need be violated for the
district court to enter sanctions against a party: the court has the inherent authority to

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enter sanctions reasonably necessary for the administration of justice so long as those
sanctions aren't inconsistent with relevant statutes. Wilson v. American Fidelity Ins. Co.,
229 Kan. 416, 421, 625 P.2d 1117 (1981); Larson Operating Co. v. Petroleum, Inc., 32
Kan. App. 2d 460, 471-72, 84 P.3d 626 (2004).

Sanctions have been upheld in other cases for inaccurate or evasive discovery
responses. In Larson Operating Co., our court upheld sanctions against a party for its
initial discovery response, which the district court found could have been more accurate
"with minimal diligence." 32 Kan. App. 2d at 464, 472. More recently, in
Comprehensive Health of Planned Parenthood v. Kline, 287 Kan. 372, 420-23, 197 P.3d
370 (2008), our Supreme Court sanctioned an attorney in part for evasive and incomplete
answers to written questions, along with other violations.

The context in which Bruce's attempt to mislead the court occurred—a divorce
case—is worth noting. About 14,000 divorce cases are filed each year in Kansas, and the
judges who handle these cases have a duty to divide property and, when appropriate,
award maintenance in a just and equitable manner. See K.S.A. 60-1610(b)(1),(2);
Nicholas v. Nicholas, 277 Kan. 171, 178, 83 P.3d 214 (2004). To accomplish that,
Kansas court rules require that each party in a divorce case file a domestic relations
affidavit. Supreme Court Rule 164(a) (2009 Kan. Ct. R. Annot. 238). The rules provide
a specific form for the affidavit, which must include information about income and

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assets, with the information sworn by each party to be "true and complete." See Rule
164(a) (requiring affidavit be in form found in appendix to Kansas Child Support
Guidelines); Kansas Child Support Guidelines, Appendix III (2009 Kan. Ct. R. Annot.
152-57). Our court has previously emphasized the importance of this affidavit: without
it or comparable information, the district court may not approve a divorce settlement
agreement because the court would lack the information needed to determine whether
that settlement was just and equitable. In re Marriage of Kirk, 24 Kan. App. 2d 31, 33-
34, 941 P.2d 385, rev. denied 262 Kan. 961 (1997).

So Bruce was required to disclose his income to the court, and that information
was critical to the court's ability to do its job of providing a fair resolution of the issues
before it. When a party is required to disclose information to the court, that party cannot
omit material facts that are necessary to avoid misleading the court about what has
otherwise been disclosed by that party. The district court had inherent authority to enter
sanctions in this circumstance.

We reject Bruce's argument that because this is litigation he may present a wholly
one-sided set of facts and decline to provide other information until someone asks for it.
Court rules required that Bruce disclose income and assets, and when the rules require
disclosure, an intentionally misleading disclosure does not suffice.


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C. The District Court's Sanction in this Case Did Not Violate Double-Jeopardy
Rules.

Bruce objects that the district court sanctioned him twice for the same conduct.
He asserts that this violates the constitutional prohibition against double jeopardy.

The district court did arguably enter a sanction in addition to the $30,000 award:
the court awarded Shannon the full $19,820 that had been repaid against the loan. Had
that loan repayment been treated like most of the parties' other property, the amount
would have been equally divided between them. The court did equally divide any future
repayments that might be received against that loan.

Under Bruce's argument, the district court's $30,000 sanction was based both on
the failure to disclose the loan repayments and the attempt to deceive the court about
Bruce's income. Thus, since the court already sanctioned Bruce by disproportionately
awarding Bruce's share of the $19,820 to Shannon, the court entered two sanctions
against Bruce for the same conduct.

But in order for double-jeopardy protection to apply, the punishments must be
criminal. Hudson v. United States, 522 U.S. 93, 98-99, 139 L. Ed. 2d 450, 118 S. Ct. 488
(1997); see State v. Harris, 284 Kan. 560, 571, 162 P.3d 28 (2007) (double-jeopardy
provision in Kansas Constitution provides same protection as provided under United

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States Constitution). In determining whether a sanction is criminal in nature, courts
consider whether it involves some affirmative disability or restraint, whether it has
historically been regarded as a punishment, whether it comes into play only on a finding
of knowing conduct, whether it promotes the traditional punishment objectives of
retribution and deterrence, whether the behavior is itself criminal, whether there's an
alternative noncriminal purpose to the sanction, and whether it appears excessive in
relation to that alternative purpose. 522 U.S. at 99-100.

Under these factors, Bruce has not demonstrated that the sanction against him rises
to the level of criminal punishment. Although a court arguably imposes a monetary
sanction to punish a party for his actions and to deter him from similar future conduct, the
court didn't restrain Bruce's freedom of movement. Under Kansas law, bad faith is not
required before a court may sanction a party for litigation misconduct. Larson Operating
Co., 32 Kan. App. 2d 460, Syl. ¶ 9. Moreover, the district court itself noted an alternative
purpose for the sanction—making sure that the case was resolved in an equitable manner
and reimbursing Shannon for some of her attorney's fees.

We note that the district court decided to have the parties present some additional
information, based on rulings made at the end of the initial day of trial, before the court
made a final decision. Thus, a second hearing was held about a month later. At that
hearing, Bruce revealed his actual 2007 income. Had that income been revealed in

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Bruce's amended domestic relations affidavit, perhaps the issues could have been fully
resolved on a single trial date, and Shannon would not have incurred attorney's fees for a
second hearing.

We say perhaps because we do not know the full argument Shannon made in
support of a request for attorney's fees and sanctions; her written motion, listed in the
docket entries as a motion for attorney's fees and sanctions, is not included in the
appellate record. We do know that the district court noted in its oral ruling that Shannon
could "use part of that [$30,000] to pay her attorney's fees."

An appellant has a duty to provide a record sufficient to establish the claimed
error; without a sufficient record, the claim fails. City of Mission Hills v. Sexton, 284
Kan. 414, Syl. ¶ 16, 160 P.3d 812 (2007). Based on the appellate record, Bruce has not
demonstrated that the sanction was in the nature of a criminal penalty. See Mine
Workers v. Bagwell, 512 U.S. 821, 833, 129 L. Ed. 2d 642, 114 S. Ct. 2552 (1994)
(judicial sanctions such as striking pleadings, assessing costs, and even entering default
judgment to penalize a party's failure to comply with conduct rules in litigation have
"never been considered criminal"). Accordingly, we find no double-jeopardy violation.






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D. The District Court Did Not Abuse Its Discretion in Its Sanction Order.

We must take two legal standards into account in considering whether the district
court abused its discretion in entering the $30,000 sanction award against Bruce. First, a
district court abuses its discretion only when no reasonable person would agree with the
district court's decision. Larson Operating Co., 32 Kan. App. 2d at 471. Second, when a
court exercises its inherent power to sanction a party, the court should act with restraint
and only after proper notice and an opportunity for a hearing. 32 Kan. App. 2d at 472.
Thus, we consider whether the district court abused its discretion mindful of the
restrained approach that a district court should take when considering sanctions.

Notice and a hearing were provided. Shannon's motion for sanctions gave Bruce
notice of the issue, and the court provided a hearing on the motion. Bruce's attorney
indicated at the start of that hearing that Bruce wanted all issues heard and resolved that
day, even though he hadn't filed a written response to the sanctions motion.

As to the reasonableness of the $30,000 sanction, Bruce had income in excess of
$2 million in 2007; though that was atypical, he had earnings above $200,000 in all but 1
year from 2002 through 2007. The parties had overall assets of about $1.7 million, which
were generally divided equally between them. In the context of Bruce's income and

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assets, the sanction was within reasonable bounds for the conduct. The district court did
not abuse its discretion.

Bruce also argues that it was an abuse of discretion to sanction him because his
attorney was responsible for the sanctioned conduct. But that's not a defense here.
Whether the attorney knew that the information was false or misleading is not the issue
before us on appeal. Under Kansas law, a party to litigation may be sanctioned for things
like discovery abuse even without bad faith. Larson Operating Co., 32 Kan. App. 2d
460, Syl. ¶ 9. Here, though, the district court found that Bruce was intentionally
deceptive, and the evidence supported that conclusion. Bruce answered falsely regarding
the loan-repayment issue, and he attempted to dodge multiple questions before finally
admitting that he had "an idea" of what his 2007 income had been. This is not a case like
Canaan v. Bartee, 272 Kan. 720, 737-38, 35 P.3d 841 (2001), which Bruce cites, where
the most severe sanction available—default judgment—was set aside because the
discovery failure was the sole fault of the attorney and the clients had no apparent
knowledge of the attorney's actions.

The judgment of the district court is reversed with respect to its order of child
support and is affirmed in all other respects. The case is remanded to the district court to
enter a child-support award in a manner consistent with this opinion.


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APPENDIX
Direct Examination
Q. Mr. Wilson, I'm going to show you what has previously been marked and
entered into evidence as Exhibit 50. Is this your statement of assets and liabilities?
A. Yes.
Q. And does that document accurately and completely reflect all of the assets
as of the time of the filing of this action?
A. No.
Q. Is there one item that was failed to be included in that document?
A. Yes.
Q. And can you tell the Court what that is?
A. It was a personal loan that I made to a friend in Chicago to start a business.
Q. And approximately when was that money loaned to your friend?
A. January 2006.
Q. Was your wife aware that the loan had been made?
A. I believe so.
Q. And have you—has your friend's business been successful?
A. No.
Q. And in fact, has he lost the majority of those monies?
A. Yes.

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Q. You—was it—tell the Court why that asset was not reflected on this
statement, or that liability.
A. When Shannon and I were talking about splitting up, we had—I had asked
if that would be something that I could have, and under the assumption that it just be you
know, just something that extra, you know, for me, I guess, and that I would—that I
originally I believe on one of the DRA's I submitted very early in the process, it was on
there as an asset. The last one when we met in [Shannon's attorney's] office, we had
not—we just did not talk about it. So, it was somewhat of an oversight then.
Q. It is your request that that would be set aside to you, is that correct, should
you receive any repayments?
A. Yes.
Q. That was simply—
THE COURT: How much was it?
Q. . . . How much was the original loan?
A. 37,500.
Q. And is it your expectation that you would receive that—those monies back?
A. No.
Q. And again, that was an item that had been discussed earlier. We just failed
to reflect it on this most recent statement; is that correct?
A. Correct. Correct.

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Q. Simply an oversight. Let's talk a little bit about your employment. What is
your line of work?
A. I'm a commodities trader.
. . . .
Q. Going to show you what's been marked as Exhibit 51, and is this your
domestic relations affidavit which corresponds to the assets and liabilities which were
reflected in Exhibit 50 as well as your income and your expenses?
A. Yes.
. . . .
Q. Now, in your work as a commodities broker, has there been a great
difference in your income from year to year?
A. Yes.
Q. Can you explain to the Court why your income would change from year to
year?
A. You know, the biggest reasons are having, you know, the years that I've
made a good living, I've had the right positions on and were able to, you know, buy and
sell wheat and wheat options at a profit, and the years that I've not made money or less
money, I've had bad positions on, and not been able to maximize gains and not been able
to cut losses fast enough.
Q. Now, I'm going to show you what's been marked as Exhibit 54, and can you
identify this document for the Court?

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A. It's a social security statement that I receive on a yearly basis.
Q. And does it reflect your Medicare wages from 1983 through and including
2006?
A. Yes.
. . . .
Q. If you would turn your attention to the second page of this document. Have
there been years recently where you earned no income whatsoever as a commodities
broker?
A. Yes.
Q. And what years?
A. 1998 to 2001.
Q. Now, the last then for two years you made a pretty significant income; is
that correct?
A. Correct.
Q. Then what happened in 2004?
A. I lost a significant amount of money in a two-week period, and spent the
rest of the year trying to recoup my losses, and this adds up to that number.
Q. Is that fairly common in your area of your field?
A. It can be.
Q. Now, was 2007 an unusual year?
A. Yes.

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Q. In what way?
A. Price of wheat more than doubled in value.
Q. And why was that?
A. Well, a lot of reasons. One reason would be the advent, I guess, of a lot of
exchange commodity index funds which are trying to hedge against inflation. So, they
end up having a formula that says we think that these eight commodities bought in the
correct percentages will make us a return of whatever, X percent, you know, versus, you
know, what would happen. Maybe the stock market broke down. So it was a way for
people basically to investment in big commodity pools. They throw around enormous
size orders in all the—all the commodity pits that they trade in gas, oil, Kansas City
wheat, which you know, dramatically moves the market. It also means that other funds
that are trading on a trend-following basis get signals to either buy or sell wheat futures at
certain times. So you've got a big influx of capital, and big-time capital, not a million
dollars, 500 million dollars; billions of dollars. On top of that you had a situation in last
couple of years where the crops have actually—the crop size or harvest has actually been
less. So you've got kind of a little bit of a perfect storm. In this case where you have a
LOW supply, you've got fund money pushing markets higher, and because of the lower
supply, you're getting increased demands, and the prices have, you know, obviously gone
up, and gone up quite a bit.
Q. Do you anticipate that that would continue to be the case in 2008 as it was
in 2007?

27
A. I don't know.
Q. Thus far this year, have you—is your income up or down?
A. Down.
Q. And have there been in fact significant losses?
A. Yeah.
Q. What—
THE COURT: Are you talking about 2008?
[Bruce's attorney]: I am.
THE COURT: Which is, I don't know; how many trading days have
been in 2008?
THE WITNESS: Five.
THE COURT: Go ahead. I want[ed] to make sure that's what we're
talking about.
. . . .

Cross-Examination
Q. The loan that was provided to your friend for $37,500, you haven't received
any payment back on that, have you?
A. I have.
Q. How much have you received?
A. $19,000.

28
Q. And when did you receive that?
A. I received—I received one check yesterday, and I received another check
like the—when I got back in town from vacation after January 1st or 2nd when I picked
up my mail.
Q. I thought you just indicated this was a debt you didn't anticipate getting
paid back on?
A. I didn't anticipate getting paid back on it.
Q. As we sit here today, you got $19,000 in your pocket toward this debt?
A. Yes.
Q. And your position is you want it all set aside for you?
A. I would ask the Court for that, yes.
Q. You don't think that should rightfully be divided with Mrs. Wilson?
A. I have no objections if it is divided with Mrs. Wilson. The 19—the 19,000
and change.
Q. Is that—other than this $19,000, [are] there any other accounts or monies
being held by somebody for you?
A. No.
Q. Everything that you're aware of that you own that's an asset of yours is
contained on that spreadsheet, and then this $19,000, correct?
A. In addition to the 19—yes.

29
Q. I just don't want to be surprised there's something else out there.
A. There's not.
Q. In '07, what I believe I heard was it was a banner year?
A. For some people.
Q. Okay. How about you? What did you earn in '07? We've been basing this
on '06 tax returns. I wonder what you earned in '07?
A. I haven't done my final books yet. I would say I definitely made as much in
'07 as I made in '06.
Q. Now, we agreed that we would get this divorce before the end of the year to
help you on your tax situation. Would you agree with that?
A. Yeah.
Q. Okay. Do you have some idea what the tax savings were?
A. No.
Q. Okay. Did your accountant give you some general idea of how much you
made this year?
A. No.
Q. Would it be—I'm assuming you made, say, over $500,000 in '07. You
would know that, compared to '06?
A. Yes.
Q. And you have some idea?
A. I have some idea.

30
Q. Give me that some idea. I want to make sure we're being fair here.
A. Well, I—I mean, are you asking for my taxable income?
Q. Yeah.
A. I have no idea, because I don't know what I can write off against.
Q. Do you know what your gross—I'm sorry. I didn't mean to interrupt. Do
you know what your gross is?
A. I have an idea.
Q. What's that?
A. About two million dollars.
Q. Okay let's go look at your '06, if I could get that real quick, '06 tax return.
Thank you. Maybe you can help me, but if I look at Exhibit Five, maybe I'm wrong; was
your gross in '06 $472,498?
A. Yes.
Q. And so, now it's at two million in '07.
A. Yeah.
Q. When do you anticipate having your tax returns done?
A. I don't know. I mean, obviously I'll have to file something by April 15th,
but I—
Q. Your estimated?
A. Yeah.