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COA: Trial court not required to order interest on equalization payment

March 18, 2019

A woman arguing interest should accrue on marital asset payments from her former husband failed to sway an appellate panel, which concluded the trial court was not required to include interest when reducing an equalization payment to a judgment.

Itamar Cohen was initially granted more than $2 million of the marital estate in the form of income-producing commercial properties in the dissolution of his marriage to Dina Hasten Cohen. That left Dina with $225,630.21 – far less than the statutory presumption of an equal division of assets.

Thus, the Marion Superior Court ordered Itamar to pay Dina an equalization payment of $922,275, paid at a rate of $6,000 per month for six years. Dina would also receive a balloon payment of roughly $490,000 before that time ran out. 

However, Dina noted a catch in the order: Itamar would not be required to pay interest on those payments unless he made an untimely payment. If he missed a payment deadline, interest would begin to accrue.

Dina argued that provision was a mistake, asserting that in failing to include a provision for interest, the trial court’s order failed to take into consideration the time value of money, the risk of non-payment and inflation. Future payments with those factors considered, she argued, would not equal the payments’ current value.

Dina further argued that if a trial court declined to award interest when payments are time-delayed, then it did not truly award an equal share. So, in using an 8 percent interest rate as the discount rate, the current value of the payments awarded to Dina would be less in six years.

Despite noting some mathematical appeal in Dina’s time-value-of-money argument, the Indiana Court of Appeals rejected her assertions in Dina Hasten Cohen v. Itamar Cohen, 18A-DR-2139. The appeals court said it was bound by the Indiana Supreme Court’s holding in Rovai v. Rovai, 912 N.E.2d 374 (Ind. 2009).

In that case, the high court determined “the statute on civil post-judgment interest does not compel interest to run on the various internal elements of dissolution decrees.” Instead, the court held that the dissolution statutes “confer upon trial courts the authority to order interest or not in the course of fashioning a just and reasonable division of property.”

The appellate panel found the present case was “on all fours with Rovai,” and that contrary to Dina’s claims, the trial court was not required as a matter of law to include an award of interest when it reduced the equalization payment to a judgment.

“Instead, the decision to award interest, or not, was wholly within the discretion of the trial court,” Judge Paul Mathias wrote for the panel, with Chief Judge Nancy Vaidik and Judge Terry Crone concurring. “To the extent that Wife argues that the trial court abused its discretion in failing to award interest under the particular facts of this case, we disagree.”

The panel further added that Dina’s failure to provide a transcript of the trial court hearings led to the its inability to review any evidence she presented in support of a discretionary award of interest, and that it found no abuse of discretion on the trial court’s end.

“Wife will still receive $6,000 per month, plus a very large balloon payment,” Mathias concluded. “She will be paid in full within six years, and if Husband is late on any of the payments, interest will then accrue. Such an arrangement was well within the equitable discretion of the trial court in dividing the martial estate.”

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