Linda S. FRAZER v. James Douglas FRAZER
Record Nos. 1699-95-2, 1975-95-2
Court of Appeals of Virginia, Richmond
Oct. 29, 1996
477 S.E.2d 290
FITZPATRICK, Judge.
Affirmed.
Murray J. Janus, Richmond (Deanna D. Cook; Bremner & Janus, on brief), for appellee.
Present: BENTON, COLEMAN and FITZPATRICK, JJ.
FITZPATRICK, Judge.
Linda S. Frazer (wife) appeals the trial court‘s decisions on equitable distribution, spousal support, and child support. She argues, inter alia, that the trial court erred in: (1) valuing the business of James Douglas Frazer (husband); (2) dividing the partiеs’ Merrill Lynch accounts; (3) crediting husband with his separate property; (4) dividing the parties’ Harmony Hills property; (5) ordering each party to pay fifty percent of extraordinary medical expenses for their son; (6) failing to award wife additional pendente lite spousal support and awarding permanent spousal support beginning one month after entry of the final decree; (7) determining husband‘s gross income for spousal support purposes; (8) calculating spousal support; (9) modifying the child support award after wife had appealed the final decree to this Court; (10) including wife‘s spousal support in her income for child support purposes; (11) the distribution to husband of his First Penn life insurance policy valued at $12,000; (12) the division of the
BACKGROUND
The parties were married on December 16, 1978. After their marriage, husband adopted wife‘s daughter from her first marriage, and their son Ben was born on February 5, 1980. The parties separated when husband left the marital residence on October 7, 1992.
Husband filed a bill of complaint for divorce on December 31, 1992. A pendente lite hearing was held January 20, 1994, and the trial court awarded wife custody of the parties’ son, $1,704 per month in child support, and $1,000 in spousal support for three months. Evidence on equitable distribution and support issues was taken by deposition, and each party submitted exhibits to the trial court.
The evidence established that, when the parties married in 1978, husband worked for Litton Industries. In 1984, husband left Litton, and the parties started Frazer Sales & Associates, Inc., with husband as the sole shareholder. Husband‘s monetary contributions to the marriage were far greater than wife‘s. His monthly salary was approximately $18,000. Husband‘s nonmonetary contributions included coaching Ben‘s soccer team, cleaning the house, and maintaining the yard. Wife‘s nonmonetary contributions to the marriage included maintaining the home, cooking, caring for the children, and doing the family‘s laundry and shopping. She also was involved in community activities, helped husband with his business, аnd entertained his clients. The standard of living established during the marriage was high. The parties lived in a large home and owned luxury vehicles, a sport fishing boat, and a condominium in Hampton, Virginia.
The trial court issued its first letter opinion on October 6, 1994, and a subsequent letter opinion on October 28, 1994,
Wife appealed the final decrеe to this Court on August 1, 1995. On August 3, 1995, the trial court reduced husband‘s child support obligation to comply with the new legislative guidelines enacted July 1, 1995. On August 30, 1995, wife noted her appeal of the August 3, 1995 order. By order of this Court dated September 19, 1995, the two appeals were consolidated for briefing and argument.
VALUATION OF HUSBAND‘S BUSINESS
Husband is the sole stockholder of Frazer Sales & Associates, Inc., a manufacturer‘s representative business. Wife‘s expert, who was qualified in valuing similar businesses, valued husband‘s business at $423,500 and prepared a detailed written report. In evaluating the business, wife‘s expert relied upon the business’ tax returns and information obtained from wife about the history of the business until she left the business in 1991. He also considered the customers and the general operation of the business. Wife‘s expert had no contаct with husband, his employees, or customers in gathering information about the business.
Husband‘s expert, the accountant for the business, reviewed corporate books and records and had prepared the business’ 1993 tax return. In determining the value of the business, he examined its capital assets and current income and expenses. Husband‘s expert valued the assets of the business at $75,000 and opined that the business had “perhaps as much as $150,000.00 in value.” Husband‘s expert emphasized the personal nature of husband‘s relationships with his clients and the importance of husband‘s participation to the business’ contin-
Wife argues that the trial court erred in accepting husband‘s expert‘s value of Frazer Sales and in rejecting wife‘s expert‘s detailed analysis.
“Conflicting expert opinions constitute a question of fact....” McCaskey v. Patrick Henry Hosp., 225 Va. 413, 415, 304 S.E.2d 1, 2 (1983). The trial court‘s “province alone, as the finder of fact, [is] to assess the credibility of the witnesses and the probative value to be given their testimony.” Richardson v. Richardson, 242 Va. 242, 246, 409 S.E.2d 148, 151 (1991). In determining the value of marital property, “the finder of fact is not required to accept as conclusive the opinion of [any] expert.” Stratton v. Stratton, 16 Va.App. 878, 883, 433 S.E.2d 920, 923 (1993) (quoting Lassen v. Lassen, 8 Va.App. 502, 507, 383 S.E.2d 471, 474 (1989)). Additionally, the trial court, as fact finder, “‘has a right to weigh the testimony of all the witnesses, experts and otherwise.‘” Bell Atlantic Network Servs. v. Virginia Employment Comm‘n, 16 Va.App. 741, 746, 433 S.E.2d 30, 33 (1993) (emphasis added) (quoting Pepsi-Cola Bottling Co. v. McCullers, 189 Va. 89, 99, 52 S.E.2d 257, 261 (1949)).
In the instant case, the trial court accepted the valuation of husband‘s expert after weighing the valuations presented by both experts and the basis for each expert‘s opinion. Husband‘s expert was clearly familiar with the daily workings of the business and its records and assets, and based his opinion in part on the importance of husband‘s personal contributions to the success of the business. Although wife‘s expert had valued similar businesses and prepared a detailed analysis of the business’ value, he relied primarily on outside information obtained from wife. The trial court was not required to accept his valuation and could “weigh the testimony of all the experts.” Bell Atlantic, 16 Va.App. at 746,
MERRILL LYNCH ACCOUNTS
In wife‘s Exhibit 1 submitted May 3, 1994, she listed three Merrill Lynch accounts totaling $132,827 as marital assets: (1) a $69,168 account in the name of husband‘s business; (2) a $10,360 account in husband‘s name; and (3) a $53,299 account in wife‘s name. Husband testified in his deposition on April 27, 1994 that he had two accounts with Merrill Lynch, one personal and one corporate, and that the parties shared a joint bond account. However, in husband‘s Exhibit 4 submitted May 24, 1994 and during his deposition taken that day, he indicated a single Merrill Lynch account in wife‘s possession with a value of $132,827. In the trial court‘s first letter opinion dated October 6, 1994, the court classified all of the accounts as marital property and valued them at $132,827.
On October 18, 1994, wife filed a motion to reconsider, arguing that husband omitted certain investments from his exhibit. She submitted an account statement that showed an additional value in husband‘s personal Merrill Lynch account of $33,180, dated November 27, 1992, two years before either husband or wife submitted exhibits to the court. At the October 20, 1994 hearing, the trial court refused to hear additional evidence regarding the accounts and ruled that “there must be a limit on the time in which evidence can be submitted.” In its final letter opinion of March 3, 1995, the trial court assigned the value of the accounts—$101,101 to wife and $31,726 to husband. In the final decree entered July 7, 1995, the court ordered the parties to “sign whatever paрers are necessary to effectuate the transfers of vehicles, partnerships and other property,” and ordered wife to pay husband a monetary award of $31,726.
Wife contends that the trial court erred in refusing to allow her to present additional evidence of the value of the Merrill Lynch accounts after the evidence was concluded
Wife also argues that the trial court erred in failing to determine the actual ownership of each account.
Upon decreeing the dissolution of a marriage, and also upon decreeing a divorce from the bond of matrimony, or upon the filing with the court as provided in subsection J of a certified copy of a final divorce decree obtained without the Commonwealth, the court, upon request of either party, shall determine the legal title as between the parties, and the ownership and value of all property, real or personal, tangible or intangible, of the parties and shall consider which of such property is separate property, which is marital property, and which is part separate and part marital property in accordance with subdivision A 3.
(Emphasis added). ”
In the instant case, the record fails to show that the trial court followed the steps required by
HUSBAND‘S SEPARATE PROPERTY
Before the parties married in 1978, husband worked for Litton Industries and had a retirement plan with that company. After the parties married, husband continued working for Litton for six years until 1984. When husband left Litton, he rolled over his $40,000 Litton retirement plan, a portion of which had accrued prior to the marriage, into his pension with Frazer Sales. Husband testified that he had “no idea” what the value of the Litton retirement plan was at the time of his marriage to wife. Husband estimated the current value of the Litton retirement plan to be $72,000. The trial court awarded the $72,000 retirement plan to husband as his separate property.
Wife argues that the trial court erred in awarding the entire Litton retirement plan to husband as his separate property when undisputed evidence clearly established that a portion of the plan was marital and a portion was separate.
All property including that portion of pensions, profit-sharing or deferred compensation or retirement plans of whatever nature, acquired by either spouse during the marriage, and before the last separation of the parties, if at such time or thereafter at least one of the parties intends that the separation be permanent, is presumed to be marital property in the absence of satisfactory evidence that it is separate property.
(Emphasis added). “Separate property” includes “all property, real and personal, acquired by either party before the marriage.”
The evidence established that husband‘s employment with Litton began before the marriage and that husband continued working for Litton for six years after the parties married. Under
HARMONY HILLS PROPERTY
The parties owned a jointly-titled property in Harmony Hills in Richmond, Virginia valued at $135,000. Neither party wanted the property, and the court ordered the property sold and the proceeds divided $109,500 (eighty-one percent) to wife and $25,500 (nineteen percent) to husband. In the final decree, the court ordered that any proceeds from the sale of the property exceeding $135,000 be divided in the same percentage.
Wife argues that the trial court erred in dividing the proceeds from the sale of the Hаrmony Hills property in a manner inconsistent with the joint ownership of the parties, i.e., failing to divide the sale proceeds fifty-fifty. Although the trial court awarded wife the greater portion of the sale proceeds, she contends that this award will subject her to greater capital gains tax liability than husband, and that the court erred in failing to consider the tax consequences of its unequal division of the sale proceeds.
The court may, based upon the factors listed in subsection E, divide or transfer or order the division or transfer, or both, of jointly owned marital property, or any part thereof.
As a means of dividing or transferring the jointly owned marital property, the court may transfer or order the transfer of real оr personal property or any interest therein
to one of the parties, permit either party to purchase the interest of the other and direct the allocation of the proceeds, provided the party purchasing the interest of the other agrees to assume any indebtedness secured by the property, or order its sale by private sale by the parties, through such agent as the court shall direct, or by public sale as the court shall direct without the necessity for partition.
The trial court had authority to order the sale of the parties’ Harmony Hills property pursuant to
In dividing jointly owned marital property, the trial court must consider the specified factors in
EXTRAORDINARY MEDICAL EXPENSES
At the hearing on February 2, 1995, wife asked the court to order husband to pay his “share of the extraordinary health care costs of our son, including those for orthodontic treatment and prescriptions for ritilin (on-going expense).” In the final opinion letter dated March 3, 1995, the trial court ordered husband to maintain the orthodontic care of the parties’ son and the parties to “divide equally the extraordinary medical expenses not covered by insurance.” The record
Wife asserts that the trial court erred in ordering the parties to divide equally the extraordinary medical expenses not covered by insurance because these expenses should have been divided according to the child support obligation of each party.
Any extraordinary medical and dental expenses for treatment of the child or children shall be added to the basic child support obligation. For purposes of this section, extraordinary medical and dental expenses are uninsured expenses in excess of $100 for a single illness or condition and shall include but not be limited to eyeglasses, prescription medication, prostheses, and mental health services whether provided by a social worker, psycholоgist, psychiatrist, or counselor.
(Emphasis added). “A primary rule of statutory construction is that courts must look first to the language of the statute. If a statute is clear and unambiguous, a court will give the statute its plain meaning.” Loudoun County Dep‘t of Social Servs. v. Etzold, 245 Va. 80, 85, 425 S.E.2d 800, 802 (1993).
This Court has held that
Although not specifically on point, our decision in Carter upheld the division of extraordinary medical expenses according to “the percentages owed by each party toward [the] daughter‘s support.” Id. at 506, 453 S.E.2d at 299. The plain meaning of
While the record in this case established that the parties’ son suffered from a condition requiring an on-going presсription for ritilin, no evidence indicated the exact nature of his condition or whether the prescription expenses were over $100. Thus, insufficient evidence supports the trial court‘s award of extraordinary medical expenses. Additionally, considering the plain meaning of
(1) Pendente Lite Spousal Support and Timing of Permanent Spousal Support
After a hearing on January 20, 1994, the trial court awarded wife pendente lite spousal support of $1,000 per month for three months, commencing February 1, 1994. The trial court gave no reason for limiting wife‘s pendente lite support to three months. Husband continued to pay wife spousal support until October 1994. On February 2, 1995, wife requested an award of spousal support retroactive to October 6, 1994. The trial court issued its final letter opinion on March 3, 1995, awarding wife permanent spousal support commencing one month from the date of the final decree. The final decree was not entered until July 7, 1995. From October 1994 to August 1995, wife received no spousal support.
Wife argues that the trial court erred in refusing to extend her pendente lite spousal support beyond the original three-month period and in ordering permanent spousal support to commence one month after entry of the final decree.
We recognize that the decision “[w]hether to grant pendente lite support lies within the sound discretion of the trial judge.” Weizenbaum v. Weizenbaum, 12 Va.App. 899, 905, 407 S.E.2d 37, 40 (1991). Although a trial court may in its discretion limit the duration of a pendente lite support award to the period of time reasonably necessary for the parties to conclude their litigation, nevertheless, in this case, the trial judge after finding a need for support gave no reason for limiting wife‘s pendente lite support to three months. If husband had stopped paying pendente lite spousal support after the three-month period ended in April 1994, wife would have been without any spousal support for ovеr one year. Because wife showed a need for spousal support, and the record reflects no rationale for the time limitation imposed, we
Additionally, “the trial court [has] discretion to enter the award of spousal support effective any time after the date of the commencement of the suit.” Konefal v. Konefal, 18 Va.App. 612, 614, 446 S.E.2d 153, 154 (1994). Under the circumstances in this case, the trial court abused its discretion in ordering permanent spousal support to begin one month from entry of the final decree. The trial court found that wife had established a need for permanent spousal support at the March 1995 hearing. However, its timing of the award of permanent spousal support combined with the earlier discontinuance of pendente lite support left her without any support for approximately ten months.
(2) Husband‘s Voluntary Contributions to a Retirement Account and Amount of Permanent Spousal Support
Husband submitted evidence that showed his income to be $18,167 per month. His evidence included a W-2 form, showing a monthly salary of $17,895, and Exhibit 11, which indicated that he drew $10,000 per month in salary and averaged $8,167 per month in commissions. Wife‘s expert determined husband‘s average monthly income to be $22,330 by using a six-year weighted average, and his monthly income for 1993 to be $27,084.
Husband admitted that he voluntarily contributed $30,000 from his gross income to his retirement plan in 1993. Husband‘s accountant confirmed that husband added $30,000 to his retirement account in 1993 and that, if husband had not рut the money into his retirement plan, he could have taken “it as additional compensation in the form of a bonus, or additional salary.” The trial court excluded the voluntary retirement contributions from the calculation of husband‘s gross income and determined husband‘s monthly income to be $18,167. Wife‘s monthly income was established as $2,260. Wife‘s evidence indicated that her monthly expenses were over $11,000, and included monitoring of her ongoing health prob-
Wife argues that the trial court erred in failing to include husband‘s voluntary contributions to his retirement plan in his gross income for the purposes of determining spousal support.
We find no reason to calculate gross income for the determination of spousal support in a manner diffеrent from the calculation of gross income in the child support context when
For purposes of this section, “gross income” shall mean all income from all sources, and shall include, but not be limited to, income from salaries, wages, commissions, royalties, bonuses, dividends, severance pay, pensions, interest, trust income, annuities, capital gains, social security benefits except as listed below, workers’ compensation benefits, unemployment insurance benefits, disability insurance benefits, veterans’ benefits, spousal support, rental income, gifts, prizes or awards. Gross incоme shall be subject to deduction of reasonable business expenses for persons with income from self-employment, a partnership, or a closely held business. “Gross income” shall not include benefits from public assistance programs as defined in § 63.1-87, federal supplemental security income benefits, or child support received.
(Emphasis added). Under
While the statutory language does not specify the same scheme in а spousal support calculation, the same rationale is applicable. Thus, we hold that a spouse‘s voluntary contributions to a retirement account should be included in his or her gross income for both spousal and child support purposes. A spouse and/or parent should not be allowed to voluntarily divert funds for retirement in order to exclude that income from consideration in determining spousal or child support.
The evidence established that husband voluntarily placed $30,000 per year in his retirement account with Frazer Sales. Husband unilaterally chose to contribute $30,000 of actual income into a retirement scheme of his own choosing and for his sole benefit. Wife‘s spousal support award was less than fifteen percent of the husband‘s voluntary contribution to his retirement. Although a support award is based upon a balancing of the parties’ incomes and earning capacities and their respective needs, under these circumstances, the trial court erred in failing to include husband‘s voluntary contributions to his retirement account in his gross income for purposes of determining spousal and child support.
Wife also contends that the trial court awarded an inadequate amount of spousal support. Because we hold that the trial court should have included husband‘s voluntary contributions to his retirement plan in his income, on remand, the trial court shall reconsider its award of spousal support to wife in accordance with the factors of
CHILD SUPPORT
(1) Modification after Appeal to Court of Appeals
The final decree in this case was entered on July 7, 1995, and wife filed her notice of appeal in this Court on August 1, 1995. The legislature enacted new statutory guidelines for child support effective July 1, 1995. In an August 3, 1995 order, the trial court found that the legislative change in the guidelines was a material change in circumstances and reduced husband‘s child support obligation.
Wife contends that the trial court erred in modifying the child support award after the final decree had been appealed to this Court.
“The orderly administration of justice demands that when an appellate court acquires jurisdiction over the
In this case, wife filed her first notice of appeal in the clerk‘s office of this Court on August 1, 1995, challenging the trial court‘s final decree of July 7, 1995. At that point, this Court acquired jurisdiction over the case. On August 3, 1995, two days after this Court acquired jurisdiction over the case, the trial court modified husband‘s child support obligation based upon the legislature‘s changes in the child support guidelines. Thus, the trial court had no jurisdiction to modify the child support award without leave from this Court.
(2) Wife‘s Spousal Support as Income
Finally, wife asserts that the trial court erred in including her spousal support in her income when it calculated husband‘s child support obligation.
In the instant case, the trial court did not err in including wife‘s spousal support in her income for child support purposes. The trial court should follow a three-step process in resolving issues of equitable distribution, spousal support, and child support. Because in determining child support under
INSURANCE POLICIES
We find no error in the trial court‘s equitable distribution decision concerning the life insurance policies. The record clearly supports the trial court‘s resolution of these issues. In the absence of a showing of an abuse of discretion, we uphold these deсisions. Srinivasan v. Srinivasan, 10 Va.App. 728, 732, 396 S.E.2d 675, 678 (1990).
Accordingly, the trial court‘s rulings on the value of husband‘s business, the division of the Harmony Hills property and the insurance policies are affirmed. On remand, the trial court must reconsider equitable distribution, spousal support, and child support in accordance with this opinion.
Affirmed in part, reversed in part, and remanded.