Opinion
SUPREME COURT DOCKET NO. 2012-054
08-31-2012
Whitney Calkins v. Kenneth P. Smith
Note: Decisions of a three-justice panel are not to be considered as precedent before any tribunal.
ENTRY ORDER
APPEALED FROM:
Superior Court, Chittenden Unit, Family Division
DOCKET NO. 700-8-10 Cndm
Trial Judge: Mary G. Harlow,
Specially Assigned
In the above-entitled cause, the Clerk will enter:
Husband appeals the court's final divorce order. On appeal, husband challenges the court's parent-child contact and property division decisions. We affirm.
The parties met in 2002. At the time, wife was living and working as a medical doctor in Arizona and husband lived in Vermont. Although they married in 2005, wife continued to live in Arizona. In 2006, wife sold an investment property, her house and her interest in her medical practice in Arizona, and moved to Vermont. Using a portion of these proceeds as a down payment, the parties purchased the home owned by husband's mother for $595,000. The marriage produced two daughters, born in November 2005 and June 2007. The older daughter lived with wife in Arizona from birth until May 2006 when they moved to Vermont.
Husband is a building contractor and real estate developer. He owns three commercial properties in South Burlington. Two of his properties are at 81 Ethan Allen and 49 Commerce St. Before the parties were married, wife loaned husband $135,000 to help him finance a third property at 57 Commerce St. Husband executed a promissory note with 15% interest and made monthly payments on the debt until the parties were married. Wife made an additional investment of $155,000 in husband's business over the course of the relationship. Husband paid the gas, water and electric bills. In addition, beginning in 2008, he contributed to the household and family expenses.
After selling her Arizona medical practice in 2006 and moving to Vermont, wife did not work professionally and looked after the parties' two young children. During that time, wife paid for the majority of the family's expenses, including the mortgage, cable, telephone, groceries and children's expenses, using the proceeds from the sale of her home and medical practice. In October 2009, wife returned to work as a doctor. Wife became employed as an assistant professor at the University of Vermont College of Medicine and also at Fletcher Allen Health Care. Wife has several retirement accounts.
The parties separated in November 2010. Wife and the children continued to live in the marital home and husband lived in an apartment in one of his commercial buildings. Husband visited the children at the marital home in the evening after work. He had scheduled time on Monday, Tuesday, Thursday, and Friday evenings, and sometimes Sunday. Wife claimed that he was unreliable and would miss visits or come late and disrupt the children's dinner and bedtime routines. She kept a log of his missed or late visits.
A final contested hearing was held in July and October 2011 on the issues of parental rights and responsibilities and property division.
At trial, both parties testified. Wife sought sole legal and physical rights and responsibilities. She suggested a visitation schedule of every Tuesday and Friday evening plus two weekend days a month. Wife testified that the house is worth $450,000. Wife did not think the girls were ready for overnight contact with their father. Wife requested that she be reimbursed for the amounts that she had invested in husband's business.
Husband also testified. He claimed that he did not know what the marital home was worth, but agreed that the property had declined in value since they purchased it. Husband testified that wife should get some money back for what she invested into his commercial properties and her contributions to the marital estate. Husband requested contact with the children two nights per week and every other weekend.
The court issued a written decision. After considering the best interests factors in 15 V.S.A. § 665, the court granted wife sole legal and physical parental rights and responsibilities. The court concluded that three factors favored wife—the ability to provide for the children's food, clothing and medical care; the ability to meet the children's present and future developmental needs; and mother's role as primary caregiver. The other factors either did not favor either parent or were not applicable. The court awarded husband parent-child contact every other weekend from Friday afternoon to Sunday at 5 p.m., and after-school contact every Wednesday until 7 p.m.
In dividing the marital property, the court noted that it was a relatively short marriage, and that both parties are well educated, in good health, and able to financially provide for themselves. See 15 V.S.A. § 751 (listing factors for court to consider in dividing marital property). Thus the court explained it would "attempt to return the parties to their financial positions prior to marriage." The court also emphasized wife's financial contribution to the husband's business endeavors and husband's greater ability to acquire assets and income in the future given his commercial property holdings. Taking all of these factors into account, the court granted wife the marital home, subject to an interest only mortgage in the amount of $520,800, and ordered husband to make a payment of $650,000 to wife. The court explained that this amount was equitable given that wife had contributed to the marital estate both by investing in husband's commercial properties, which had grown in equity during the marriage, and by paying for household expenses during the marriage, which allowed husband to reinvest in and grow his business. The court found that husband now owned property with $1.7 million in equity. Husband filed a timely notice of appeal.
On appeal, husband first challenges the court's decision on parent-child contact. Husband argues that the court's decision was an abuse of discretion and violates the legislative policy in 15 V.S.A. § 650 that "it is in the best interests of [parents'] minor children to have the opportunity for maximum continuing physical and emotional contact with both parents."
The trial court has broad discretion in crafting a parent-child contact schedule in the best interests of the child, and its decision will not be reversed unless clearly unreasonable or based on unfounded considerations. Gates v. Gates, 168 Vt. 64, 74 (1998). We review findings of fact for clear error, and we will uphold the court's conclusions where supported by the findings. Spaulding v. Butler, 172 Vt. 467, 475 (2001). "As the trier of fact, it [is] the province of the trial court to determine the credibility of the witnesses and weigh the persuasiveness of the evidence." Cabot v. Cabot, 166 Vt. 485, 497 (1997).
We conclude the parent-child contact schedule does not violate the Legislature's statutory directive in 15 V.S.A. § 650 to maximize contact with both parents. Under the order, husband has contact alternating weekends from Friday at 4 p.m. to Sunday at 5 p.m. and one weekday from after school or 4 p.m. until 7 p.m., plus half of major holidays and vacation time. Husband attempts to separate the weekend and weekday contact, asserting the weekend time is sufficient and uncontested, but that the weekday contact is insufficient. There is no basis for such a division. In the interim period, husband did not have overnight or set weekend contact and his visits were limited to evening contact with the children in the marital home. Husband knew this schedule would change since even he was requesting weekend visits and overnight contact outside the marital home. The court considered the children's best interests and concluded that "[a] schedule where the children are with their mother the majority of the work week but with shared time for the children with their parents on the weekends and vacations provides the children the stability they need." This schedule does not violate the Legislature's directive to maximize contact with both parents. Although husband will not see the children as frequently as he did under the temporary arrangement, he will now have longer visits and overall at least the same number of hours with his children in a two-week period. See Bancroft v. Bancroft, 154 Vt. 442, 449 (1990) (concluding that contact schedule whereby the father had "fifty percent of the children's time on weekends and school vacations, and approximately twenty-five percent of their time overall" did not offend the statutory directive).
The order granted husband contact Wednesday evenings. Husband's brief emphasizes that Wednesday is not a convenient time for contact since wife is free that day, but works other evenings. Given wife's uncontested representation that the parties have already agreed to move husband's evening contact from Wednesday to Thursday, we do not reach husband's argument that the court abused its discretion in awarding contact on Wednesdays.
Further, the schedule did not amount to an abuse of discretion. The court's decision is supported by its findings that the children's best interests require a stable schedule of being primarily with wife during the week and then having shared contact on the weekends and holidays, especially in light of the court's finding that husband has been less than stellar in his consistency and promptness of his contact time with the children, missing opportunities due to work or his own activities. Husband asserts that the court's decision is erroneous because the children are scheduled to have contact with wife during periods when she is working. Even accepting husband's portrayal of the facts, we find no error. The children's need for stability on weeknights is achieved even if their mother is not at home for the entire evening. In sum, while husband did not receive the schedule he desired, the court did not abuse its discretion in adopting the schedule it ordered. See Kasper v. Kasper, 2007 VT 2, ¶ 7, 181 Vt. 562 (mem.) (explaining that in reviewing custody determinations, we do not consider "[w]hether the . . . court had other effective options," rather we determine whether the court "abused its discretion in choosing the option it did").
Next, husband challenges the court's division of property. The family court has discretion in distributing marital property "and we will uphold the court's distribution unless its discretion was abused, withheld, or exercised on untenable grounds." DeLeonardis v. Page, 2010 VT 52, ¶ 12, 188 Vt. 94 (quotation omitted). Father contends that the court miscalculated the value of the marital home and one of his commercial properties and did not equitably divide the property.
We first consider the issue of valuation. "We will affirm the family court's valuation of assets if the court's discretion was exercised within the range of presented evidence." Id. Here, we conclude that the court's valuation of both challenged properties was supported by record evidence and not an abuse of discretion. As to the marital home, husband asserts that the court erred in accepting the value submitted by wife rather than using the price the parties paid in 2006. Wife was competent to testify to the value of the home, 12 V.S.A. § 1604, and stated that it was worth $450,000. Husband did not challenge this valuation during his testimony and agreed that the property's value had likely declined since the parties purchased it. In fact, husband's own financial disclosure form valued the home at $450,000. There was no error in the court's acceptance of wife's valuation. It is for the trial court, not this Court, to weigh the evidence and assess the credibility of the evidence. See Kanaan v. Kanaan, 163 Vt. 402, 405 (explaining that trial court's findings entitled to wide deference on review because it is in unique position to assess the credibility of witnesses and weigh the evidence presented). Especially given husband's failure to offer any countervailing evidence, the court did not abuse its discretion in setting the value of the marital home at $450,000.
Husband also argues that the court's valuation of the 57 Commerce Avenue property was erroneous. Husband contends that the court erred in valuing the property at $800,000, derived from tax returns for the LLC that owns the property. Husband owns the LLC. He posits that the court should instead have relied on his testimony that the property has a fair market value of $600,000. At trial, husband testified that the 57 Commerce Avenue property was worth about $600,000. In admitted tax returns for the years 2007, 2008, and 2009, the entity owning that property documented investment of around $800,000 in that property. Husband claims that tax returns do not accurately reflect fair market value, and, in support, cites to property tax decisions from other jurisdictions. See, e.g., In re Ames Shopping Plaza Wellsboro Borough, 476 A.2d 1001, 1004 (Pa. Commw. Ct. 1984) (explaining that depreciated value reported on federal income tax return "is not fairly comparable to market value").
We recognize that a company's balance sheet does not necessarily reflect the actual market value of the company's property, especially as market changes and depreciation allowances increase the potential chasm between purchase price and improvement costs and the actual value of property. Given the unique circumstances of this case, we cannot conclude that the trial court abused its discretion in considering the LLC's investment in the property in estimating its reasonable value. There was a general paucity of evidence regarding the value of husband's business, and, in particular, the commercial properties he owned. Neither party engaged an expert to do an appraisal of the properties or to value the business as a whole. Husband testified to the worth of the properties, but with little explanation. Wife introduced the tax returns to demonstrate the income production of the properties and attempted to use this income to arrive at a value for the properties through an income capitalization method. See Beach Props., Inc. v. Town of Ferrisburg, 161 Vt. 368, 372 (1994) (explaining income capitalization method is calculated by dividing the net income by the capitalization rate). This was unsuccessful, however, because the information was introduced through husband, who refused to offer or agree on a reasonable rate of return. On the other hand, husband testified that the properties provided consistent net income and, as the court found, did not raise vacancies as a problem. Under these circumstances, the court's consideration of all the evidence, including the balance sheets, in valuing the property was not an abuse of discretion.
Finally, husband generally asserts that the court's property division was inequitable because he claims the court aimed to place wife in her pre-marriage financial position without regard to the impact on husband's financial position. As part of this argument, husband claims the court improperly viewed wife as an investor in husband's business rather than an equal marital partner and that the court mistakenly treated this situation as if wife had an ante-nuptial agreement.
We conclude there was no error. While husband focuses on what he perceives as the court's unfair emphasis on returning wife to her pre-marital financial position, at no point does husband argue that the order will place him in a worse financial position. Furthermore, the court's decision was supported by the record. The court's statutory duty is to "equitably divide and assign" the marital property in light of a number of factors, including the length of the marriage, the age, health, income, and earning power of the parties, the source of the property, and the parties' respective contributions, monetary as well as nonmonetary. 15 V.S.A. § 751(a), (b). Here, the court properly considered the relevant statutory factors. Id. § 751(b). Of most relevance, the court found the following: wife made monetary contributions towards husband's business; husband had a high value of assets; husband had a greater potential for future acquisition of capital assets and income; and wife made a greater contribution towards maintenance of the marital estate. While the court at times described wife as an investor or her contributions to husband's business as investments, the court did not simply reimburse her as a normal investor, but properly viewed her contributions in the context of the statutory factors. At trial, even husband agreed that wife should be compensated in some manner for the investments she had made to husband's business. Therefore, there was no error in ordering husband to pay a sum to wife.
Husband fails to show that the amount was inequitable. The court found that wife brought $770,000 in liquid assets into the marriage, which were depleted, and that a large portion of this went to either expenses for the family or direct investment into husband's business. The court explained that the $650,000 payment
compensates [wife] for her investment in the commercial business in an amount which approximates what her investment would have brought her had she made bank type commercial loans to [husband]. It also compensates her for her contribution to the household over the years and places her approximately back to the same position she was in when she entered the marriage. It recognizes that some of her use of assets was for her own living expenses. It recognizes that [husband] also contributed some of his income to the household.The court provided sound reasons for its decision, and husband has not demonstrated that the result was so unequal as to amount to an abuse of discretion. See Myott v. Myott, 149 Vt. 573, 578 (1988).
Affirmed.
BY THE COURT:
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Marilyn S. Skoglund, Associate Justice
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Brian L. Burgess, Associate Justice
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Beth Robinson, Associate Justice