by Susan Rieger
MEMORANDUM
Attorney Work Product
From: Sophie Diehl
To: David Greaves
RE: Matter of Durkheim: Draft Bottom-Line Settlement Counteroffer
Date: May 7, 1999
Attachments: Settlement Breakdowns:
Summary, Income & Expenses, Assets & Liabilities
Ms. Meiklejohn and I came up with the following bottom-line settlement proposal. At the end, I’ve attached a series of charts summarizing the proposal. Their purpose is to provide snapshot views of the various allocations and distributions. Their redundancy is offset, I hope, by their usefulness. (I’m being maniacally zealous, aren’t I?) Our counteroffer will be larger, not outrageous but excessive. Ray Kahn needs to win some, so we’ll need room to retreat. I’ll draft it after you’ve reviewed this.
CUSTODY
Ms. Meiklejohn will ask for joint legal custody and sole physical custody of their daughter, Jane, with generous visitation for Dr. Durkheim, including weekends and holidays. Given the demanding schedule he follows at work, joint physical custody would not be in Jane’s best interests.
INCOME & EXPENSES ALLOCATION
Child Support
Ms. Meiklejohn will ask for $72,000 in child support for the first year, the amount to increase (or decrease) after that, proportionate to the increases (or decreases) in Dr. Durkheim’s income. As an example, if Dr. Durkheim’s salary increases by 8% next year, child support will increase by 8%. Out of this allotment, Ms. Meiklejohn will pay for Jane’s school fees, clothes, food, vacations, and other ordinary expenses. Child support will continue until April 23, 2011, Jane Durkheim’s 23rd birthday, or the last day of the month of her graduation from college, whichever event comes first. These alternative termination dates allow Jane to go through college on the five-year plan.
The child support figure represents just under 20% of Dr. Durkheim’s gross income. Narragansett has Child Support Guidelines, but they do not apply if the family income is above $40,000 a year. At $40,000, the amount payable for four or more children under the guidelines is 30% of the family’s gross income, with each parent paying a part of the total, proportionate to his or her income. The figure for one child is 20%.
College Costs
Dr. Durkheim will pay the cost of tuition for the college of Jane’s choice; Ms. Meiklejohn will pay the cost of room, board, and expenses. Any contribution from one of the party’s employers will be credited to the obligation of that party, reducing his or her payment accordingly. For example, if Dr. Durkheim’s employer contributes $10,000 toward tuition totaling $35,000 (estimated tuition for Mather University in 2006, Jane’s projected freshman year), Dr. Durkheim will be required to pay only $25,000. If Ms. Meiklejohn’s future employer contributes $10,000 toward tuition, that amount will be deducted from her obligation for room and board (estimated at $20,000), reducing her payment to $10,000. If both parties, as now, are employed by a single employer who gives only one scholarship per child annually, each party will be credited with one-half the total, regardless of who made the formal application; in our example, each will be credited with $5,000.
Each year on her birthday, Jane has received a gift of $10,000 from her grandfather, Bruce Meiklejohn. By the time she is 18 and ready for college, that fund, if he continues to make the annual gift, should be worth $350,000 or so. Dr. Durkheim may insist that this money be used for college, reducing both his and his former wife’s obligation.
Traditional Alimony or Spousal Support
Ms. Meiklejohn will ask for $48,000 in alimony for seven (7) years, to compensate her for the lost income and employment opportunities of the last seven (7) years. The seven-year cutoff also coincides with Jane’s graduation from high school. Alimony will automatically cease upon her death, remarriage, or employment at an annual salary of $48,000 or more. (This dollar figure was pegged to her highest salary, $47,000, which she earned in 1991.)
Rehabilitation Alimony
Ms. Meiklejohn will ask for rehabilitation alimony of a maximum of $30,000/year for three (3) years ($90,000 total) to pay law school tuition at Mather (less at Narragansett). There will be no automatic cessation event such as marriage, except not attending law school or dropping out.
Compensatory or Reimbursement Alimony
Ms. Meiklejohn is willing to relinquish all claims to compensatory or reimbursement alimony, including any claim for compensation for Dr. Durkheim’s medical degree, in the final settlement if the other terms are satisfactory.
Summary on Impact of Spousal and Child Support Offers
Under this proposal, Ms. Meiklejohn would receive a total of $150,000 a year from Dr. Durkheim in alimony (including law school tuition in the form of rehabilitation alimony) and child support, of which the $78,000 in spousal support and rehabilitation alimony would be taxable to her. After taxes of approximately $20,000, her net income would be $130,000. Ms. Meiklejohn’s expenses post-divorce are estimated at $173,300, $42,300 more than her net income. The difference will be made up by the interest income on her investments, reductions in expenses for travel and clothes, and summer employment during law school.
Having paid his wife $150,000, Dr. Durkheim would have $220,000 left. He would have to pay taxes on the $72,000 child support, but not on the $78,000 in alimony, which would be taxable to Ms. Meiklejohn. His total tax bill would probably be $60,000 (assuming deductions for property taxes, mortgage, and alimony), giving him an after-tax income of approximately $160,000. With his living expenses estimated at $162,500, he has a shortfall of only $2,500. I spoke with Ms. Meiklejohn about hiring a forensic accountant to do precise tax and interest analyses, but these rough figures show that Dr. Durkheim would not have to curtail his standard of living or give up the house. Ms. Meiklejohn would take over many of the expenditures that formerly came out of the pooled family income.
Medical Insurance
Ms. Meiklejohn will pay $3,200 for a COBRA account to continue her coverage under Dr. Durkheim’s plan. Jane will continue on Dr. Durkheim’s policy.
Automobiles
Ms. Meiklejohn will take the 1997 Saab, the car she normally drives. It is two years old and has two years left on its loan. Its original cost was $32,000. Its current value is $22,000. Dr. Durkheim can keep the 1999 Audi, which is under a four-year lease. The car cost $68,000. It is worth now more than $60,000.
SEPARATE ASSETS
Property acquired by inheritance and/or before marriage is the parties’ separate property and shall remain so. It is not subject to equitable distribution.
Ms. Meiklejohn’s Separate Assets
Before her marriage, Ms. Meiklejohn inherited a house on Martha’s Vineyard from her mother. She owns this house as a tenant in the entirety under a trust with her father. Her interest is not transferable, nor is it vested; it depends on her outliving her father, a statistical likelihood undercut by the fact that her mother died in 1979, at age 46, of breast cancer.
Dr. Durkheim’s Separate Assets
In October 1998, Dr. Durkheim inherited from his mother $16,000 in cash and a 1989 Honda, which he donated to a charity. The money was deposited in a joint savings account. It will be subtracted from the total amount in the joint savings account prior to division and given to Dr. Durkheim.
JOINT ASSETS
The governing principle in the division of joint assets and liabilities is equitable distribution. Title does not determine ownership. All the assets to be divided were acquired during the marriage. In making the division, we recognize the parties’ intentions and expectations during the marriage, Ms. Meiklejohn’s lost income and employment opportunities, her financial contributions in the early years of their marriage, and Bruce Meiklejohn’s annual $20,000 gifts to the couple for 16 years.
Family Residence: $240,000
The family residence at 404 St. Cloud cost, with the land, $375,000 to build. Dr. Durkheim and Ms. Meiklejohn put down $125,000 and took out a 30-year 8% mortgage for the remainder of $250,000. To date, vir
tually none of the principal has been paid off. Since they built the house, land values in New Salem have increased greatly, and the current value of the home, according to Laura Bucholtz of RealProperties Inc., is now $525,000. If the home were sold this year and the mortgage paid off, the Durkheim-Meiklejohns would recover their $125,000 down payment and realize a clean profit of $115,000 (the difference of $150,000, less the Realtor’s fee of $31,500, calculated at 6% of the sale price, and closing costs of approximately $3,500), giving them $240,000 cash in hand. Ms. Meiklejohn is willing for Dr. Durkheim to keep the house, but she would like to recoup some of the down payment of $125,000 and realize some of the profit of $115,000. She will ask for $120,000, half the current equity. In lieu of forcing a sale, she suggests receiving this amount from stock market investments. Under this arrangement, Dr. Durkheim assumes the mortgage.
Stock Market Investments: $700,000
These investments should be divided equally, each receiving $350,000. If Dr. Durkheim wishes to keep the house, Ms. Meiklejohn suggests recouping her proposed $120,000 share of the equity in the St. Cloud Street house from these investments. This amount should be subtracted from Dr. Durkheim’s share of $350,000 and added to her share of $350,000, leaving him with $230,000 and her with $470,000.
Dr. Durkheim’s 401(k) Plan: $300,000
This account should be divided equally, each party receiving $150,000.
Dr. Durkheim’s TIAA-CREF Retirement Accounts: $600,000
This account should be divided equally between the parties, given the assumption during the marriage that Dr. Durkheim would accumulate a retirement fund for both himself and his wife. Each party receives $300,000.
Treasury Bills: $90,000
These investments should be divided equally, each party receiving $45,000.
Joint Savings Accounts: $80,000
In principle, these accounts should be divided equally after subtracting $16,000, which represents Dr. Durkheim’s inheritance from his mother, giving Dr. Durkheim $48,000 and Ms. Meiklejohn $32,000. In fact, this account holds only $16,000, the remaining $64,000 having been withdrawn by Ms. Meiklejohn to cover her expenses during the negotiation period in response to Dr. Durkheim’s decision to close their joint checking account. The $16,000 goes to Dr. Durkheim.
Household Furnishings, Objects & Artworks: $100,000
The value of the household furnishings is skewed by the value of three items that Ms. Meiklejohn thinks she and her husband will both want: a Persian rug ($45,000), a Jenny Holzer piece, and a Cindy Sherman photograph. They also own some very good paintings by other artists (a Wolf Kahn, an Ephraim Rubenstein, a Robert Sweeney, a Boris Chaliapin) and some ’50s modern furniture (a particularly nice Eames shelf), but Ms. Meiklejohn expects they will be able to divide them without too much acrimony. Ms. Meiklejohn would give up the Persian rug (which was a wedding gift from her grandparents) for the other stuff. She doesn’t think Dr. Durkheim likes either the Holzer or Sherman (she bought them in the late ’80s), but he knows their value. Bruce Meiklejohn will want his daughter to keep the rug and will, she believes, be annoyed (and incredulous) at her choice.
EQUITABLE DISTRIBUTION WITH SALE OF FAMILY RESIDENCE
Item Marital Assets Husband Wife
Family Residence Sold $ 240,000 120,000 120,000
TIAA-CREF 600,000 300,000 300,000
401(k) Plan 300,000 150,000 150,000
Stock Market Investments 700,000 350,000 350,000
Treasury Bills 90,000 45,000 45,000
Savings Accounts 16,000 16,000 0
TOTAL $1,946,000 $981,000 $965,000
Maria Mather Meiklejohn and Daniel E. Durkheim
Settlement Breakdown: Income & Expenses 1998
INCOME Family 1998 Pre-Divorce Husband Post-Divorce Wife Post-Divorce
Husband’s Salary 370,000 370,000
Taxes, Soc Sec (100,000) (60,000)
Wife’s Salary 14,000
Taxes, Soc Sec (4,000)
Child Support (72,000) 72,000
Alimony
Spousal support (48,000) 48,000
Rehabilitation Alimony (30,000) 30,000
Taxes (20,000)
NET Income 280,000 160,000 130,000
EXPENSES Family 1998 Pre-Divorce Husband Post-Divorce Wife Post-Divorce
House (404 St. Cloud) 51,600 51,600
House for Ms. Meiklejohn 24,000
Housekeeper 26,000 13,000 13,000
Tuition (Jane) 13,000 13,000
Tuition (MMM) 30,000
Automobiles
Audi 9,600 9,600
Saab 7,200 7,200
Medical
Insurance 1,800 1,800 3,200
Office Visits 1,200 600 600
Prescriptions 800 200 600
Eyeglasses 1,800 900 900
Psychoanalysis MMM 13,000 13,000
Food 15,600 7,600 8,000
Clothing 12,000 7,500 4,500
Debt
Entertainment 12,000 7,500 4,500
Travel, Vacations 36,000 16,000 20,000
Pets 1,200 800 400
Spending Money 20,800 10,400 10,400
Savings
Investments 35,000 20,000 10,000
401(k) DED 20,000 15,000 10,000
TOTAL Expenses $278,600 $162,500 $173,300
Expenses & Income $2,000 ($2,500) ($42,300)
Dissed by Fiona
* * *
From: Sophie Diehl
To: Maggie Pfeiffer
Date: Fri, 7 May 1999 10:17:11
Subject: Dissed by Fiona 5/7/99 10:17 AM
Dear Maggie,
I just had a very unsettling conversation with Fiona. Well, not exactly a conversation; I was too dumbfounded to say anything. She’s being honored by the University of Narragansett Law School on June 5, at its annual alumni dinner. The dean (who clerked for Judge Howard) invited all the partners and associates at Traynor, Hand, and the firm purchased four tables. We all regarded it as a command performance. She poked her head into my office (a first!) and said, “Look, I don’t expect you want to attend the dinner on the 5th. I told the dean it was unlikely you could make it.” Poof. She was gone.
David and Proctor were awful, not consulting her on the divorce case, reprimanding her the way they did, but instead of going after them, she seems to have decided it’s my fault. Or maybe she can’t uninvite them?
WWFWD? I’m working on that.
xoxoxo,
Sophie
Harry
* * *
From: Sophie Diehl
To: Maggie Pfeiffer
Date: Sat, 8 May 1999 16:23:09
Subject: Harry 5/8/99 4:23 PM
Dear Mags—
I don’t know where to begin. I finally saw Harry today. He called last night, after three weeks of silence (not counting that single phone message). He said he couldn’t talk then—he was too tired—but asked me to meet him tomorrow (today now) at Golightly’s at noon. He sounded awful. I got a dreaded sense of deja vu. “Shit,” I thought, “he’s going to break up with me there, in public, in front of everyone.” What next for Golightly’s? Someone getting fired?
Harry’s married; he’s separated—not legally but “geographically, physically, and emotionally,” was the way he put it—but nonetheless married. Her name is Tessa Gregg; she’s an actress/waitress in New York. They were married in 1994 and separated in July 1997, at her instigation. She decided she didn’t want to go to New Salem with him and didn’t want to commute. It was a precipitous break. Two days after she told him she wasn’t moving with him, she moved out—and moved in with someone else, an actor/bartender named Sly Slammer (or Spanner or Scanner—I didn’t catch the name and didn’t think I needed to). Harry was devastated. He went off to the drama school and proceeded then to sleep with every actress in the first- and second-year programs except you. The famous fuck-cure.
Harry and Tessa met in 1992 at an acting class in the city. After a few months of dating, she got p
regnant. She had an abortion. They kept going out. After two years she told him she wanted to get married or break up. He was crazy about her. They got married. He had felt terrible about the abortion, but I don’t think that’s why he married her. I think he married her because she was beautiful, unreliable, careless, and sexually imaginative. (This is my summary of a much longer narrative.) He said he married her because she made him feel more alive than he’d ever felt. My heart sank. His description reminded me of Monkey in Portnoy’s Complaint. We bill payers don’t stand a chance against those girls.
About a year ago Tessa called him to say that she was going to speak with a lawyer about getting a divorce. Harry said okay. He didn’t hear from her—or about her—again until midnight on the 18th, when you were all striking the set. He got a call from a resident at New York Hospital telling him that his wife had attempted suicide and was in the intensive care unit. She had taken 60 Tylenol with a pint of gin, apparently a lethal combo. Your liver shuts down. It was touch and go for three days, but she pulled through. For the last three weeks he’s been mostly in New York. He’s been trying to sort out Tessa’s affairs and get her settled. She took the pills because she and Sly broke up and she felt lost; he left her for a model. (Apparently, no one has ever walked out on Tessa before; she’s the bolter.) She has no money, no health insurance, no job. Her parents flew in from Minnesota, but they are straight out of Lake Wobegon and didn’t have a clue about their daughter or her life. They’ve been helping out with money, thank God, but leaning on Harry to make all the arrangements. (They are grateful for his help; they knew that Tessa and Harry had separated for now.) Harry got her into Austen Riggs. She says she wants to go to California. She said it wasn’t a serious attempt, only a “gesture.” Sly never called or showed up.
Harry apologized for not getting in touch with me sooner, but said he was too distracted by everything and wasn’t ready to talk about Tessa. I asked him if he was over her. He said he didn’t know how he felt about her, but he knew he needed to get away from her permanently. He asked me to find him a divorce lawyer. “Not Fiona,” he said, smiling wanly, the only smile I got from him at lunch.