Term Paper on "Divorce Negotiation"

Term Paper 13 pages (4047 words) Sources: 5

[EXCERPT] . . . .

married, Daphne built a highly successful career with the Jonestown Museum of Art in Jonestown. In January of 1994, she was offered two different jobs. One was as the general manager of the Jonestown Museum of Art and the other was with the prestigious Chicago Art Museum. She would have preferred the Chicago Museum of Art because it had better career potential. By that time however, she had already met and fallen in love with Richard, a local Jonestown artist. Richard made it clear that he was not moving to Chicago and therefore, Daphne took the Jonestown job.

Richard had only mild commercial success as an artist when he met Daphne. His parents were wealthy and generously endowed him with money as he needed it, so he was not overly financially motivated. Between Daphne's nice job at the Museum and Richard's family support, neither were struggling financially.

Richard and Daphne were married in 1995. As a token of their optimism and hope, Richard's parents gave Richard and Daphne $50,000.00 as a down payment on their first home. Knowing they wanted a family sooner than later, Richard and Daphne bought a four-bedroom house in a nearby suburb. The house cost $240,000.00 and both Richard and Daphne were on the deed and signed the promissory note and mortgage.

A few months later, Richard and Daphne decided that they wanted to open their own art gallery in Jonestown. They asked Richard's parents for another $50,000.00 in start-up capital. Richard's parents were skeptical of their son's ability and his wife's motives, so they only agreed to give the money in exchange for a 50% silent interest in the business. Richard and Daphne agreed on the condition that they could buy out his parents' interest at any time by repaying the $50,000.00.

In 1997 the couple opened up their first gallery, called simply Richard's. In order to afford the prime location they secured, they signed a 15-year lease which required a $30,000.00 down payment and on-going payments of $2,500.00 per month for the term of the lease. Although, Richard and Daphne formed a valid corporation to run the gallery, they were required to each sign the lease personally, as joint and several lessees along with the corporation. The reason for this was their lack of a track record as entrepreneurs.

After breaking even for a year, Richard's began to flourish in 1999. At the end of 2000, Richard's showed a profit of $114,000.00. As Richard and Daphne each had also drawn a salary that year of over $60,000.00, the profit was truly disposable income. The couple disagreed on what to do with the surplus. Daphne wanted to use it to it pay off Richard's parents (they were entitled to half anyway as per their initial advance of $50,000.00) and to re-invest the remainder into Richard's. Richard wanted to use the profit to open another gallery, this one across the state in Wellsborough's Art Deco district.

Richard prevailed and in 2001 the two signed a 10-year lease requiring a $42,000.00 deposit and ongoing monthly payments of $3,500.00. Because of their debt to income margin, they were again required to sign the lease personally. This gallery also did very well, producing a total profit of over $200,000.00 by the end of 2004.

With these profits, the couple bought a vacation property in the mountains of western North Carolina. The purchase price of the house was $360,000.00 for a property that was appraised a year earlier for $212,000.00. The couple paid $80,000.00 down and took a mortgage with joint liability for the remaining $280,000.00. With the rest of the profits from Wellsborough gallery, the couple opened a third gallery, this time of state. They purchased the property for this gallery, putting $100,000.00 and signing a mortgage together with joint tenant liability for $320,000.00. With the purchase of each of these properties, Richard had to persuade Daphne that this was the better option to repaying Richard's parents and re-investing these dividend in the two galleries they already operated.

In 2006, the bottom dropped out of the art and real estate market. For the next two years, the galleries did well enough sustain the lifestyle the couple was used to, but they were no longer earning a profit. The vacation home and the commercial property were upside down due to the plunging real estate market.

In 2008, as economic conditions worsened, Richard became severely depressed and withdrew altogether from his wife and kids (two boys, now ages 12 and 9, and one girl, now age 8). To make matters worse, Richard began having an affair with one of the employees at the Wellsborough gallery, and there is evidence of the affair on the video surveillance inside the gallery and from over five witnesses who have told Daphne they will testify as such. After an initial unsuccessful attempt to resolve matters, Daphne filed for divorce in 2009. The divorce has become hotly contested with each side seeking custody and child support and a lion's share of the marital assets.

Family Mediation

Opening Positions And Analysis

Richard and Daphne have both retained lawyers for the divorce proceedings. They have come to mediation hoping to resolve the issues that are being contested. At the opening session each lawyer outlines for the mediator what their respective client's goals are for the mediation. They have several common pursuits. They both want the divorce finalized as quickly as possible, with as little spent in legal fees and as little disruption to the children's lives as possible. They both want to sever their collective business interests and their property interests. There are, of course, also several contested issues, mostly regarding the implementation of the above goals.

Richard's Position

Richard wants shared custody of the children. He would like the children to live with him during the summer months and during two of the three 'school breaks,' i.e. Christmas or winter break, Thanksgiving and spring break. He feels he does not owe Daphne alimony because she is in position to support herself through her education and career experience. He is not opposed to child support, but he feels that he should only be responsible for half of the expenses due to Daphne's financial security.

Richard desires to divide the marital assets as follows: Daphne receives the marital home and is solely responsible for remaining mortgage payments. He receives the North Carolina home and the out of state commercial property. The cash and other personal property (valued at approximately $600,000.00) are to be divided 50/50 and the businesses (the three galleries) should be valued and then either party can buy out the other or they will be up for sale. He will assume sole liability for the $50,000.00 debt to his parents for their investment in the couple's first gallery.

Richard's rationale for this position is that Daphne will be receiving a $100,000.00 benefit and that essentially makes the distribution even. Specifically, his parents put up the $50,000.00 down payment for the marital home and she will receive the benefit of that. Also, his parents' $50,000.00 advance made their business possible and she will receive one half of the proceeds of the sale of the business without being liable for repayment of the $50,000.00 to his parents. Thus, his receiving the vacation home and the commercial property is an even wash in light of this $100,000.00 benefit.

Daphne's Position

Daphne wants full custody of the children. Richard should have custody for two weeks every summer and on certain rotating holidays. Daphne wants the children to have a relationship with their father, but does not feel he is responsible or dedicated enough, in light of his past behavior, to have liberal custody or visitation. In light of the trauma caused to the children by Richard's abandonment, she feels that it is important that she be a stay at home mom, and thus requires alimony and full child support.

Daphne wants the Marital home put in her name and for Richard to make the ongoing mortgage payments. She has no interest in the commercial property or the vacation home but she feels that she is entitled to both of the Florida galleries. She also wants Richard to be required to pay back his parents and for her to own Richard's outright. She wants one half of all marital cash and personal property.

Analysis Of Negotiation Strategies Used At Beginning of Mediation

The initial approach to the mediation by both parties reflects positional bargaining. Both parties brought a bottom line of what they would accept to the mediation and both sides overstated to the other, and the mediator what the bottom line was. This is a very common initial negotiating tool. Two of the preeminent negotiation theorist, Fisher and Ury, were adamantly opposed to positional bargaining. A principal drawback of positional bargaining they argued is that requires a party to defend their position once it has been attacked. Once this has happened, the goal of the party either is replaced… READ MORE

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