Opinion
Record No. 2506-93-1
Decided: January 10, 1995
FROM THE CIRCUIT COURT OF THE CITY OF VIRGINIA BEACH, Frederick B. Lowe, Judge
Charles R. Hofheimer (Charles R. Hofheimer, P.C., on brief), for appellant.
James R. McKenry (Lisa L. Howlett; Jason E. Dodd; Heilig, McKenry, Fraim Lollar, on brief), for appellee.
Present: Judges Baker, Willis and Elder
Pursuant to Code Sec. 17-116.010 this opinion is not designated for publication.
Virginia Barkley Martin (wife) appeals from the trial court's equitable distribution and support and monetary awards. Wife contends the trial court erred: (1) in the classification and valuation of the marital assets that were the foundation of the court's awards; (2) in failing to order a monetary award in favor of wife; (3) in failing to award wife attorney's fees and costs; and (4) in failing to award wife adequate spousal support. Because the trial court did not classify the parties' property, we reverse on all issues and remand to the trial court.
We reverse and remand to the trial court on the issue of the classification and valuation of assets, which were the foundations of the court's equitable distribution order and other awards. In reaching the merits of this issue, we find evidence in the record (1) that wife excepted to the classification and valuation aspects of the commissioner's report, and (2) this issue was argued at trial and preserved for appeal. See Dukelow v. Dukelow, 2 Va. App. 21, 24, 341 S.E.2d 208, 209-10 (1986) (stating when a party does not file any exceptions to the commissioner's report, the party may not raise a question for the first time on appeal unless there is error appearing on the face of the report).
In reaching our decision, we are guided by certain principles of equitable distribution.
Where an equitable distribution award is appropriate, then all of the provisions of Code Sec. 20-107.3 must be followed. . . . The court must "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 and which is marital property." Code Sec. 20-107.3(A). . . . This determination must go beyond mere guesswork. . . . Once the marital property is identified and valued, then the court is authorized to make a monetary award based on all the factors enumerated in Code Sec. 20-107.3(E).
Artis v. Artis, 4 Va. App. 132, 136, 354 S.E.2d 812, 814 (1987) (citations omitted) (emphasis deleted). See also Kaufman v. Kaufman, 7 Va. App. 488, 495, 375 S.E.2d 374, 378 (1988); Robinette v. Robinette, 4 Va. App. 123, 128, 354 S.E.2d 808, 810 (1987).
We hold the trial court violated the directives of Code Sec. 20-107.3. As wife contends, there is no indication in the record that the commissioner or chancellor segregated corporate assets and liabilities from marital assets and liabilities. The record reveals certain liabilities listed on Exhibit D-6 were solely corporate liabilities. Furthermore, the court's failure to differentiate between marital and non-marital assets led to "double-dipping." In Trivett v. Trivett, 7 Va. App. 148, 158, 371 S.E.2d 560, 565 (1988) (Coleman, J. concurring), Judge Coleman, in his concurring opinion, stated that the value of marital property should not be reduced when non-marital property serves as collateral for the debts of a third party. In this case, the commissioner and chancellor based the valuations of the marital property, in part, on the marital property's mere contingent liability for Century 21's debts. There is evidence that many of the Exhibit D-6 debts are associated solely with husband's bankruptcy reorganization and are scheduled to be assumed by third party (Century 21) assets, as opposed to marital assets.
We recognize the difficulty with which trial courts are faced in cases such as this, where debts are cross-collateralized by corporate entities with personal endorsements by the parties. However, trial courts cannot avoid their statutory mandate to classify each asset as marital, separate, or part separate and part marital. The trial court must also place a value on the assets, including the stock of the realty company.
In view of our holding regarding classification and valuation of the assets it is not necessary to address the other issues in detail. Any monetary award and spousal support are contingent upon the proper classification and valuation of the parties' assets. The decision to award attorney's fees is in the trial court's sound discretion after consideration of the circumstances and equities of the case. Davis v. Davis, 8 Va. App. 12, 17, 377 S.E.2d 640, 643 (1989). However, the trial court should consider the behavior of one party which may cause the other to incur unusual attorney's fees. See Via v. Via, 14 Va. App. 868, 872, 419 S.E.2d 431, 434 (1992).
For the foregoing reasons we reverse and remand to the trial court for further proceedings consistent with this opinion.
Reversed and remanded.