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Gleason v. Gleason

Court of Appeals of Virginia
Feb 3, 2009
(Va. Ct. App. Feb. 3, 2009)

Opinion

February 3, 2009.

Appeal from the Circuit Court of Roanoke County — CL06-770.

Charles B. Phillips, Esq., Phillips Phillips, Salem, Virginia.

I. Ray Byrd, Jr., Esq., Salem, Virginia.


Dear Counsel:

Husband and Wife separated after twenty years of marriage. They have three children, one over the age of eighteen and in college. Wife remains in the former marital residence and has primary physical custody of the two remaining teenage children. Husband and Wife share joint legal custody and Husband has visitation rights. The parties were granted a no-fault divorce in March 2008. Wife has worked part-time throughout the marriage and now works three days per week. Husband has been the primary breadwinner throughout the entire marriage, frequently working six or seven days per week. Both parties have inherited funds that they routinely use to supplement their living expenses, and have done so during their entire marriage. It does not appear that they have ever lived within their earned income.

REAL ESTATE

The parties own one parcel of real estate, that being the former marital residence currently in the possession of Wife. Prior to marriage, Husband purchased it in his sole name and made monthly payments on the purchase money deed of trust note. After marriage, Husband continued as the sole fee simple owner of the land. He continued making monthly payments on the purchase money deed of trust note, but at that time he was using money he earned during marriage to make those payments. Wife gave Husband approximately $20,000.00 of her inherited funds to pay off the purchase money deed of trust note. Thereafter, by deed of gift dated June 3, 1994, Husband conveyed the entire fee simple estate unto himself and Wife as tenants by the entirety with right of survivorship as at common law. The recitation in the deed declared: "This conveyance is a gift between Randolph C. Gleason and Dorothy M. Gleason, and therefore, in accordance with Section 58.1-811(D) of the Code of Virginia of (1950), as amended, no recordation tax is required on this deed." The parties borrowed $145,838.30 against the house for home improvements, as evidenced by a deed of trust dated September 19, 2003. Approximately $133,000.00 is still owed on that debt.

As a result of their divorce, the parties now each own a one-half undivided interest in the real estate as tenants in common. Husband's expert appraised the marital home at $330,000.00 as of November 20, 2007. Wife's expert valued it at $310,000.00 as of July 17, 2007. Other than Husband's totally uncorroborated statement at the July 8, 2008 hearing that the house was worth $100,000.00 when the parties were married and he owed about $25,000.00 against it then, no other valuation was offered. There was no evidence presented concerning what its value was when the deed of gift was recorded, nor was there evidence as to what its value was prior to the building of the addition and making the various improvements. Ostensibly, the parties used the $145,838.30 they borrowed in 2003 for these home improvements. Husband testified that he spent $72,759.30 of his separate funds, paying Excalibur Design Services Inc. for design, furniture, and construction materials for the home improvements. However, no evidence was presented that valued any appreciation to the real estate that can be attributed to these expenditures.

Having reviewed all of the evidence and arguments concerning the real estate, the Court finds that the language of the deed of gift is clear, unambiguous and explicit, and shows the intent to jointly title the marital residence as well as the donative intent of Husband in making the transfer. See Utsch v. Utsch, 266 Va. 124 (2003). That deed made the parties owners of the real estate as tenants by the entireties with the right of survivorship as at common law. Husband gave one half of the real estate to Wife at that time. As a result of the divorce, the parties now each own a one-half undivided interest in the real estate as tenants in common, without survivorship, pursuant to § 20-111, Code of Virginia (1950), as amended. Husband's payments of his separate property to the purchase money deed of trust note, as well as Wife's payment of $20,000.00 to Husband to pay off that note, all became moot upon execution and recordation of the deed of gift.

Husband's claim that he has added value to the residence by his many separate property contributions, and especially for his separate money paid to Excalibur Design Services, Inc., does not change the marital residence to hybrid property. In order for it to be classified as hybrid property, Husband needed to have proven the value of the increase in the equity attributable to his contributions. "Under settled principles, it is the value that improvements add to the property, not their cost, that is the proper consideration because the court is apportioning the equity in the hybrid property when it traces the sources of contributions to that property. Further, all property acquired during the marriage is presumptively marital, and the party claiming separate interest in the hybrid property from these improvements bears the burden of proving their value to the satisfaction of the trial court." Rinaldi v. Rinaldi, 669 S.E.2d 359, 2008 Va. App. LEXIS 540 at *16-17 (December 16, 2008). No such proof was forthcoming. Accordingly, the Court finds, as a matter of fact and law, that the jointly owned home is not hybrid property, but is totally marital.

The parties each had the real estate valued by separate appraisers and the appraisals have been filed. Wife's appraisal is set out in Wife's Exhibit 1, A, 1, dated 3/17/08, and valued the residence at $310,000.00. Husband's appraisal is filed in Husband's Exhibit A, J-1-17, dated 7/8/08, and valued the residence at $330,000.00. Although the appraisers themselves did not testify, the Court was able to evaluate the differences in the adjustments made on the comparison properties by the appraisers, review the photographs of the neighborhood and the residence, read the appraisals, hear the parties describe their home and consider the addition to the house and the quality of materials used. Accordingly, the Court finds the marital residence to be valued at $330,000.00. There is a lien against the property as set forth in Husband's Exhibit A-I, dated 7/8/08. The net value is $330,000.00 less the current lien payoff.

SEPARATE PROPERTY FROM GIFTS, INHERITANCE AND PREMARITAL EARNINGS, AND THEIR APPRECIATIONS

Both Husband and Wife claim separate property in accounts funded by gifts, inheritances and/or earnings they received before and during marriage, and in tangible items of personal property acquired before marriage and/or by gift or inheritance. Each argue that some or all of the other's claimed separate properties have lost their identity as separate property and have been transmuted to marital property, or at least partially changed into hybrid property. Their arguments include: that personal effort, activity or marital funds were used to change the character of, or to increase the value of, the separate property during marriage; that the funds have been co-mingled with marital funds and have lost their separate identity; that gaps exist in the tracing or proof that the property has been kept separate; that appropriate tracing has not occurred to properly identify separate property expenditures; and that the property was actually acquired during marriage with marital effort.

Although the lawyers were contacted after the filing of their memoranda to determine if additional evidence should be presented as to the separate property of the parties, the Court has decided to proceed on the evidence previously presented. The Court accepts, from the testimony of the parties and the evidence presented, that Wife's separate funds are those in her Wachovia account and her IRA, as shown in Wife's Exhibit 1, B, 4 5, dated 3/17/08. Husband's separate funds are those contained in his Merrill Lynch account as shown in Wife's Exhibit 1, A, 5 dated 3/17/18. The values of these separate assets are as set forth in these exhibits. No evidence of significance was presented that convinced the Court that either parties separate funds increased in value, and accordingly, the question of whether marital effort was expended in managing those funds so that hybrid property is created, is moot as well as unproven. See § 20-107.3 (A)(3)(a), Code of Virginia (1950), as amended. All other funds alleged to be separate property were not proven to be so.

FURNITURE AND FURNISHINGS

The only evidence the Court has concerning the separate marital furniture and furnishings, other than very limited testimony concerning the following exhibits, is contained in Husband's Exhibit A, L, 1-8, dated 7/8/08, and in Husband's separate property list contained in Husband's Exhibit E, dated 9/30/08. In oral testimony, Husband added the following items of furniture to his separate property list: chair with rose fabric, blanket stand, pine kitchen table and miscellaneous lamps. The Court finds that all of the furniture and furnishings listed in Husband's Exhibit E, dated 9/30/08, and the items set forth above that he added to the list in his oral testimony, are the Husband's separate property.

Husband's Exhibit A, L 1-8, dated 7/8/08, lists furniture and furnishings, some of which have been valued and some of which have been declared in that exhibit to be the separate property of Husband or Wife. To the extent that those items can be identified and do not conflict with the designations in Husband's Exhibit E, the Court will accept those declarations as to which is Wife's separate property and which is Husband's. The Court finds that the values of these items of property are as set forth in Husband's exhibits.

REMAINING MARITAL PROPERTY

All of the remaining property of the parties acquired by either of them prior to their separation that has not been classified herein as separate property is marital property. The marital property includes the jointly owned marital residence, and all of the items listed in Wife's Exhibit #1, A, 3-4, 6-15, and Wife's Exhibit 1, C D. Also included as marital property are those items of furniture and furnishings listed in Husband's Exhibit A, L 1-8, which have not been designated separate property. The values of these assets are as set forth in the herein listed exhibits.

MARITAL DEBT

No marital debt has been proven except for the deed of trust note on the house. See Husband's Exhibit A-I, dated 7/8/08. Husband has made all of the $989.00 monthly note payments, the real estate tax payments of $256.00 per month and the homeowner's insurance payments of $107.00 per month since the separation of the parties. The July 2006 house payments were made before the separation of the parties. His payments for the thirty months thereafter through January 2009 amount to $40,560.00. These payments have been made either from Husband's separate funds or from his after-separation earned income. They were made in accordance with the Court's order requiring that marital debt to be paid so as to maintain the marital real estate until such times as equitable distribution could address the issue.

EQUITABLE DISTRIBUTION OF MARITAL PROPERTY

Upon joint motion of the parties, after a final decree of divorce was entered by order dated 3/17/08 on "no-fault" grounds after a twelve-month separation, this matter was retained on the docket to adjudicate the equitable distribution issues. The Court has now heard all of the evidence of the parties, both ore tenus and by stipulation, and has reviewed and studied the numerous exhibits filed in this cause. The written arguments and authorities submitted by counsel have been read and the dictates of § 20-107.3, Code of Virginia (1950), as amended, including all of the factors set forth in subsection E of that code section have been considered. The Court has also observed the various witnesses on the stand and has been able to judge their credibility and weigh their testimony accordingly. The evidence given by both of the parties was frequently biased and caused a slanted view of the actual facts to emerge. A large part of the testimony of the parties was persuasive, although some was not believed. In reaching its decision as to equitable distribution of marital property, the Court has considered all of the facts of this case, including but not limited to the following:

Both parties contributed all of their earned income and some of there separate property to the well being of the family, Husband more so than Wife. Each party contributed the majority, if not all, of their spare time and effort to their marriage and to the raising of their family. Husband was a workaholic who spent six and seven days per week at his place of employment, ultimately rising to the position of president of the family initiated business. He cared for the children when Wife was going to school to get her masters degree. He cooked meals, shopped for groceries, did the yard work and paid the bills. Wife took care of the children when Husband worked late and on weekends. She also cooked, shopped for groceries and became involved in, and attended the majority of the children's' after school athletic events. Wife worked part time during the majority of the marriage and earned less income than Husband. Both of them contributed all of their income to the marriage. Husband owned a large portion of the marital assets before marriage, and gifted one half of the house to Wife. Husband contributed much more of his separate assets to the acquisition of the marital property than did Wife. They were married for approximately twenty years. Both parties are in reasonably good physical and mental health. Husband is age 55 and Wife is age 54. This is the second marriage for each of them. They have three children, one is emancipated and attending college full time, and two are teenagers who live at home and attend school.

Both parties tried, unsuccessfully, to show that the few and mutual physical assaults by the other contributed directly to the break-up of their marriage. In fact, the parties had long term problems that included, but were not limited to, disagreements about money, separate bank accounts, arguments about Wife not working enough and Husband working too much, and differences regarding child raising philosophies. Despite the strong and sometimes rancorous positions held by each party, neither convinced the Court that a solid fault ground existed against the other. They simply lost interest in each other. Their marriage became prosaic.

The facts surrounding the acquisition of the marital assets and their liquid and non-liquid character have been set out earlier in this opinion. Neither party has improperly used or dissipated marital assets in anticipation of divorce or otherwise. The tax consequences to the parties have been referred to in some of the exhibits and to a certain extent, were discussed by the Court in the marital debt section of this opinion.

Accordingly, there being no particular reason to decide otherwise, the Court finds that equity is best served by dividing the marital assets and debts equally between the parties.

PHYSICAL DIVISION OF MARITAL AND SEPARATE ASSETS

Each party shall retain their own separate property accounts. Husband shall be entitled to, forthwith, retrieve his separate furniture and furnishings that are located in the former marital residence. Wife will keep the marital furniture currently in her possession and Husband will be credited with one half of its value. To the extent that there exists marital furniture on that list that is not valued, Husband shall choose one article of furniture, and then Wife shall choose one, and the parties will make alternate choices until all of the remaining furniture and furnishings has been divided. The Court would prefer that the lawyers arrange this division as set forth above, but if that cannot be done, the parties can schedule a hearing for the Court to oversee the division in court.

Insofar as the real estate is concerned, its value and debt will be divided equally between the parties. Both Husband and Wife expressed a desire to purchase the house. If either is willing to purchase the others interest in the residence at the value found by the Court, he or she will be able to do so. The deed of trust note will have to be satisfied at the time of sale. If both parties want to purchase the other's interest, then the parties should schedule a hearing so they can bid on the house. If neither wants to purchase the other's interest, then it will be placed on the market for sale, forthwith, in the most commercially reasonable manner, at the value found by the Court. If either of the parties resides in the house prior to its sale, effective February 2009, he or she will be responsible for 100% of the house note, taxes and insurance, without contribution from the other. If neither resides in the house, those costs will be split equally between the parties until sale. Wife will be required to reimburse Husband the sum of $20,280.00, which represents one half of his expenditures on the monthly house note, insurance and taxes through January 2009. No adjustments are made with regard to any other court ordered payments of marital bills, except that they cease with this decision.

If the parties, with the help of their lawyers, are unable to effectuate this division along the lines of the formula outlined herein, the Court will do so. The Court assumes that an equitable distribution award will not be necessary in order to equally divide the assets between the parties because of the large amount of cash that should be available from the sale of the house. If that is not correct, such an award will be ordered. Any joint credit accounts that may have existed between the parties should have already been cancelled. Neither party will charge anything to the account of the other from the date of this letter opinion, and for all dates in the future.

SPOUSAL SUPPORT

Husband started this divorce case as the president and board member of the business he had been employed in his whole life. He was earning $72,000 annual salary plus $4,800.00 director's fees per year. That totaled $76,800.00 annually. Because of an internal reorganization led by other stockholders, Husband lost his position as president and he lost his seat on the board of directors. It is obvious that an active attempt is being made to remove him entirely from the business. He has been demoted more than once, his salary has been reduced with each demotion and his employee benefits have been curtailed. As of the last evidentiary hearing, Husband's income was $50,000.00 per year.

The reduction in his income and the potential loss of his current job is a serious setback to Husband. The Court notes that he fought to keep his position within the company, and his demotion is certainly not voluntary. He is college educated, well regarded in his industry and capable. With those attributes, he should be able to regain his position and status in the business community in the near future

Wife is voluntarily underemployed. She has a masters degree in speech therapy and works three days per week. She has refused full time employment because she wanted to remain at home to be available to her two teenage children, to assist in transporting them to their various after school sporting events and activities, to chaperone them, and to watch their games. Her part-time hourly rate is $32.00 per hour. Her full time hourly rate is up to $40.00 per hour. If she worked full time, her annual income would be between $66,000.00 per year and $82,000.00 per year. As the person requesting spousal support, she has a duty to work to her fullest in order to reduce her former husband's spousal support obligation. Srinivasan v. Srinivason, 10 Va. App. 728, 734 (1990).

After considering the equities of the parties, the grounds for divorce, the statutory mandates, the facts as set forth herein, the budgets submitted, the standard of living established during marriage, and recognizing that the parties always used inherited or gifted funds to supplement their income, the Court finds that each party has a right to receive spousal support from the other. Currently the Wife is residing in the jointly owned residence. She will incur substantial additional living expenses in the near future due to her need to maintain the joint marital residence. She will also be adjusting her life style and incurring additional costs while obtaining and maintaining full time employment. Despite the claims to the contrary, her living expenses, which continue in the style to which the parties were accustomed to during their marriage, greatly exceed those of Husband. She currently has a need for spousal support and Husband has the ability to pay the same. Accordingly, the Court fixes Husband's spousal support obligation to Wife at $85.00 per month, and reserves spousal support for the benefit of Husband should the need arise in the future. The change in the monthly spousal support payment will become effective for the month of February 2009, and continue until altered by a future order of the Court.

CHILD SUPPORT

In fixing child support, the Court has followed the child support guidelines set forth in § 20-108.2, Code of Virginia (1950), as amended, and finds no reason to deviate from them. Based on the earlier finding that Mother is voluntarily underemployed, full time earned income is imputed to her at the rate of $66,000.00 per year, or $5,500.00 per month. Her income for purposes of the child support guidelines calculation is deemed to be $5,585.00 per month. That figure includes her monthly spousal support. Father's income is found to be $50,000.00 per year, or $4,166.66 per month. After deducting his monthly spousal support payment, Father's monthly income for purposes of the child support calculation is $4,081.66. He currently pays $876.00 for health insurance. The Court cannot determine whether that is for just the children, or whether it is for himself and the children. If the lawyers can agree that a lesser figure applies to the children's monthly health insurance costs, please substitute that in the formula instead of the $876.00 figure that was presented in evidence.

In accordance with the child support guidelines worksheet, a copy of which is attached hereto, the combined monthly gross income of the parties is $9,666.66. The chart in § 20-108.2 calls for $1,554.00 monthly support for two children, plus their health insurance costs of $876.00. That totals $2,430.00 per month for child support from both Father and Mother. Rounding off the percentages, Father makes 42% of the income and will pay 42% of the child support obligation, or $1,020.60 per month. He will pay that child support obligation by keeping the children's health insurance in effect and paying the sum of $144.60 each month to Mother, who makes 58% of the gross monthly income. Her share of the monthly child support obligation is $1,409.40. As the custodial parent, she will be responsible for the first $250.00 of medical bills per child that is not paid by the health insurance, per year, and the parties will divide the remaining costs, with Father paying 42% and Mother paying 58%. This change in child support will be effective for the month of February, 2009, and for all dates in the future that Father is obligated by statute to pay child support, until further order of the Court. No special changes are made from the Internal Revenue Regulations for child support deductions for income tax purposes.

It may be possible in this case for Mother to obtain health insurance through her place of employment for the benefit of the children at a lesser rate than what Father is now paying. If she is able to do so, the calculations would cause Father to pay less child support and put more money in Mother's pocket. That option should be explored.

ATTORNEY FEES AND COSTS

Husband shall pay $2,500.00 of Wife's attorney fees within thirty days of the entry of the equitable distribution order, directly to her attorney. Wife shall pay, or reimburse to Husband if he advanced the funds, the entire bill submitted by Phyliss Brice for her appraisal of the furniture in the marital home. Each party shall pay their own costs for the real estate appraisals. Husband shall be entirely responsible for the cost of the vocation rehabilitation expert. All other costs shall be born by the party incurring the same.

The Court anticipates a financial change for both parties to occur shortly. Due to the quantity of evidence heard over the last two and a half years in this case, it would be a mistake to ask another tribunal to relitigate support until the incomes and costs of the parties stabilize. Therefore, this matter will not be transferred to the Juvenile and Domestic Relations District Court at this time.

Counsel for Wife should prepare an appropriate order, incorporating this letter opinion by reference, and present it for entry after first obtaining endorsement of counsel.


Summaries of

Gleason v. Gleason

Court of Appeals of Virginia
Feb 3, 2009
(Va. Ct. App. Feb. 3, 2009)
Case details for

Gleason v. Gleason

Case Details

Full title:Re: Dorothy M. Gleason v. Randolph C. Gleason

Court:Court of Appeals of Virginia

Date published: Feb 3, 2009

Citations

(Va. Ct. App. Feb. 3, 2009)