Opinion
Record No. 1120-93-1
Decided: November 29, 1994
FROM THE CIRCUIT COURT OF THE CITY OF WILLIAMSBURG AND COUNTY OF JAMES CITY, William L. Person, Jr., Judge
Reversed and remanded.
Lawrence D. Diehl for appellant.
Willafay McKenna (McKenna Associates, on brief), for appellee.
Present: Judges Benton, Willis and Bray
Pursuant to Code Sec. 17-116.010 this opinion is not designated for publication.
On this appeal from a final divorce decree, Paul Rein contends that the trial judge erred in decreeing as to the property of the parties and in determining child and spousal support awards. We reverse the decree as to those issues and remand to the trial judge for reconsideration.
Upon the wife's bill of complaint for divorce alleging willful desertion and the husband's cross-bill alleging that the parties lived separate and apart without cohabitation for a period of more than one year, a Commissioner in Chancery recommended that the divorce be granted on the ground that the parties lived separate and apart for over a year. Code Sec. 20-91(9) (A). In addition, the commissioner determined issues of equitable distribution of the parties' property, spousal and child support, and custody of the minor children. The trial judge confirmed the commissioner's report with modifications and entered a final degree.
I.
The husband contends that the trial judge erred in classifying as marital property an interest he inherited in three trailer parks. We agree.
The evidence proved that the husband and wife jointly owned an interest in three mobile home parks. In addition, the husband inherited an interest in three other mobile home parks. Although the parties received income from all the mobile home parks, title to this inherited real estate interest was never transferred to the wife.
The parties agreed that the total value of the interests in all the trailer parks was $80,000. The husband's uncontradicted estimate of the value of the interest he inherited in the mobile parks was $40,000. Both the commissioner and the trial judge classified and valued as marital property the entire $80,000 interest in the trailer parks.
Separate property includes property acquired during the marriage by bequest or devise. Code Sec. 20-107.3(A) (1). If separate and marital property are commingled, resulting in the loss of identity of the property, it may either be transmuted to marital property or retraceable by a preponderance of the evidence to its original classification. See Code Sec. 20-107.3(A) (3) (d) and (e). Absent evidence that the parties commingled separate and marital property or intended to convert separate property to the marital estate, the separate property cannot be considered transmuted to marital property. See Stainback v. Stainback, 11 Va. App. 13, 21, 396 S.E.2d 686, 691 (1990) (where the property in dispute is stock which the husband retained in his own name). In making this determination, "[g]reat consideration should be given to the actions, or non-action, of the parties with regard to exercising control over the property in question." Id.
Although the evidence proved that the income the husband and wife received from their interests in the trailer parks was "committed to family use, it is equally clear that the husband never surrendered dominion and control of the corpus." Id. The husband's inherited interests in the trailer parks were separate property when acquired. No evidence proved that his interests were transmuted to marital property. Accordingly, we hold that the trial court erred in classifying the husband's inherited interest in the trailer parks to be marital property. The evidence did not prove that the inherited property became transmuted to marital property or was not retraceable by a preponderance of the evidence.
II.
The husband argues that the trial judge also erred in determining the value of a motor vehicle, furniture, and jewelry. He contends that these errors affected the determination of the monetary award. We agree only as to the value of the jewelry.
The husband testified that he gave his wife jewelry valued at $5,000 during the course of the marriage. The commissioner omitted the jewelry completely from the property that was valued for purposes of making an equitable distribution award. The wife argues that the jewelry should have been excluded because it is "personal paraphernalia" and, thus, is exempt as a gift under Code Sec. 55-3. We reject the wife's argument.
Separate property includes "all property acquired during the marriage by bequest, devise, descent, survivorship or gift from a source other than the other party." Code Sec. 20-107.3(A) (1) (ii) (emphasis added). Marital property includes "all other property acquired by each party during the marriage which is not separate property as defined above." Code Sec. 20-107.3(A) (2) (iii). By these definitions the jewelry is marital property.
In addition to classifying property, the trial judge must determine the ownership and value of all real and personal property of the parties. Code Sec. 20-107.3; Hodges v. Hodges, 2 Va. App. 508, 516, 347 S.E.2d 134, 139 (1986). In some cases, where the parties have been given a reasonable opportunity to provide the necessary evidence to prove valuation and through their lack of diligence have failed to do so, the trial judge may make a monetary award without giving consideration to the value of every item of property. Bowers v. Bowers, 4 Va. App. 610, 618, 359 S.E.2d 546, 551 (1987). However, a trial judge may not arbitrarily refuse to classify or evaluate marital or separate property where sufficient evidence to do so is in the record. Id. The record in this case contains evidence as to the value of the jewelry. The trial judge erred in not including an amount representing the value of the jewelry in determining the award.
Unlike the jewelry, the Range Rover vehicle was considered by the commissioner. The commissioner listed the vehicle in his report and gave it a value of $0. The trial judge agreed that the vehicle should be valued at that amount. While the evidence of value conflicted, we cannot say that the trial judge erred in finding that the value of the vehicle did not exceed the balance owed on the loan the parties obtained for the purchase of the vehicle. Thus, the trial judge did not err in deciding that the vehicle had no value which would enhance the value of the marital estate.
Thomas Wood, who testified as an appraisal expert, valued the home furnishings at $28,075. The husband testified that the value of the furnishings was $125,000. Although the husband testified that several of the items of home furnishing appreciated rather than depreciated, he did not identify them or provide a basis to support his conclusion. The trial judge accepted the commissioner's findings that the furnishings were valued at $30,000.
In Zipf v. Zipf, 8 Va. App. 387, 395, 382 S.E.2d 263, 268 (1989), we recognized that a trial judge may select a value within a range of conflicting opinions. The trial judge had credible evidence of value to base a finding and was not required to reject it merely because the husband believed his "evidence might be more accurate, convincing, desirable, or persuasive." Bowers, 4 Va. App. at 618, 359 S.E.2d at 551. By attributing a value to the property comparable to the testimony that was deemed credible, the trial judge did not err.
III.
The husband also argues that the trial judge overvalued the marital estate by erroneously including the value of his life insurance policy twice. We agree.
The uncontradicted evidence established that the cash surrender value of the husband's life insurance policy was $8,362 and was included in the total value of his profit sharing account. However, the commissioner included as a part of the marital estate the cash value of $8,362 in addition to the total value of the profit sharing plan. The trial judge affirmed that determination. Both at the hearing in the trial court and at oral argument in this Court, wife's counsel conceded, however, that the amount of the cash value was included twice. The evidence is consistent with that concession. Accordingly, we conclude that the evidence establishes error in determining the monetary award.
IV.
The husband's next contention is that the trial judge erred in valuing certain bank accounts at the time of the separation date rather than the date of the hearing. We agree.
At the evidentiary hearing, the wife testified that when the parties separated in May 1991, the joint checking account contained $48,485.33, the savings account contained $30,138.34, and the husband had $31,500 in cash. She presented no evidence of the value of the funds at the time of the evidentiary hearing.
The husband testified that they had two savings account. He said that his wife had taken $7,500 out of one account, leaving a balance of $12,500, which he put in a certificate of deposit. He testified that after payment of attorney fees the other savings account had a then current value of $23,000. Furthermore, he testified that he had previously changed the joint checking account to his sole account and that it was then valued at $21,000. The husband also testified that he transferred funds from other accounts to his business checking account which he used for business expenses, living expenses, and support payments.
Code Sec. 20-107.3(A) fixes the date of the evidentiary hearing as the date that the court shall determine the value of property. Only upon motion of a party made no less than twenty-one days before the evidentiary hearing and upon a finding of good cause, in order to attain the ends of justice, may the trial judge change the valuation date. Id. No such motion was made in this case.
Although the commissioner stated at the evidentiary hearing that "the hearing date is the valuation date," the commissioner's report used the date of separation when valuating these accounts. In addition, citing both Clements v. Clements, 10 Va. App. 580, 397 S.E.2d 257 (1990), and Booth v. Booth, 7 Va. App. 22, 371 S.E.2d 569 (1988), the commissioner and the trial judge found no evidence of waste of the marital assets by either party. Thus, the record contains no basis for valuing the property at the separation date. The trial judge erred in confirming the commissioner's findings of value because they are based upon a misapplication of a statutory mandate. Brown v. Brown, 5 Va. App. 238, 244, 361 S.E.2d 364, 368 (1987).
V.
The husband also contends that the trial judge erred in awarding a lump sum monetary payment to the wife that was based upon future projections of the husband's income.
In addition to a property division awarding $384,687 to each party, the commissioner recommended granting the wife a monetary award of $161,622 payable in thirty-six monthly installments of $4,487. The commissioner derived this award from a calculation that involved subtracting spousal support, child support, and taxes from the earned income of the husband. The commissioner discounted the resulting figure over 16 years at a rate of 7.5%. The commissioner "then determined the monetary award to be 15% of that amount . . . in recognition of the fact that . . . [the wife] provided the moral support, devotion to her husband and the refuge of a stable family environment while [the husband] was positioning himself to earn what he earns from the medical practice."
In Reid v. Reid, 7 Va. App. 553, 375 S.E.2d 533 (1989), a commissioner recommended a monetary award of $50,000 in favor of the wife, which partly was based on the "superior earning capacity" of the husband. Id. at 563, 375 S.E.2d at 539. In holding that Code Sec. 20-107.3(E) (11) does not contemplate consideration of a spouse's earning capacity, this Court stated that "Code Sec. 20-107.3(D) provides for the equitable distribution of the accumulated marital wealth between the marital parties; it does not contemplate consideration of the future ability of one spouse to accumulate what will be separate property or the future needs of the other spouse." Id. at 565, 375 S.E.2d at 540.
In this case, as in Reid, the commissioner's rationale is "expressly embodied in Code Sec. 20-107.1" and more applicable to an award of spousal support. Id. Indeed, the wife in this case argues in her brief that this award is "clearly an award of spousal support." The final decree, however, contains a separate designation of payment that is called "spousal support," and the final decree clearly designates this payment of $161,622 as "a lump sum monetary award." Accordingly, we hold that the trial judge erred, and we reverse the award.
VI.
The husband next contends that the trial judge erred in failing to impute income to the wife when calculating child and spousal support.
At the time of the evidentiary hearing, the wife was living in the life style to which she became accustomed during the marriage. The wife testified that she is involved in several charitable organizations, plays sports, cleans the house, and does yard work with the help of a hired employee. She also testified that she has responsibility for their children, ages 14 and 11, when the children are not in school.
The evidence proved that the wife is licensed as a registered nurse. However, she had not worked at any time during the marriage and had not sought employment following the separation. A job placement expert testified that employment in the nursing field is widely available and that the hourly rate for a nurse in that area where the wife lived ranged from $15.00 to $27.00 per hour.
This Court has held as follows:
A court may under appropriate circumstances impute income to a party seeking spousal support. This conclusion logically flows from the principle that one who seeks spousal support is obligated to earn as much as he or she reasonably can to reduce the amount of the support need. A spouse may not choose a low paying position that penalizes the other spouse. Code Sec. 20-107.1 directs the trial court to consider as a factor, in setting the amount of spousal support, the earning capacity of the "parties." A plain meaning of the word "parties" indicates that the legislature intended to include the earning capacity of the payee spouse as well as the payor.
Srinivasan v. Srinivasan, 10 Va. App. 728, 734, 396 S.E.2d 675, 679 (1990) (citations omitted). This Court further stated that the trial judge "in setting support awards, must look to current circumstances and what the circumstances will be 'within the immediate or reasonably foreseeable future,' not to what may happen in the future." 10 Va. App. at 735, 396 S.E.2d at 679.
On remand, the trial judge shall consider whether the wife has unreasonably refused to seek employment and whether the wife is entitled under all of the circumstances to additional time before she must secure employment. Id.
VII.
The husband argues that the trial judge further erred in including mortgage payments and automobile expenses in the child and spousal support calculations after the trial judge awarded the wife those properties in the final decree.
In Gamble v. Gamble, 14 Va. App. 558, 421 S.E.2d 635 (1992), this Court reversed a decree in which the trial judge fashioned the husband's spousal support payments to include the money necessary to satisfy the mortgage on the marital home which the trial judge awarded to the wife. "In short, the appropriate separation between considerations of spousal support and considerations of an equitable distribution of marital wealth prevents a 'double dip' by a spouse who . . . receives encumbered marital property under Code Sec. 20-107.3 and . . . receives spousal support under Code Sec. 20-107.1." Id. at 577, 421 S.E.2d at 646-47.
In explaining the basis of the spousal support award, the commissioner included in the calculation the exact amount of the mortgage payment on the house and the monthly debt payment for the Range Rover. As in Gamble, these items were also distributed to the wife in the equitable distribution division. Consistent with the Gamble case, we reverse and remand the issue of the spousal support amount.
In addition to the "double dip" that is referred to in Gamble, we also direct that the trial judge on remand consider the interrelation between spousal support and child support. The spousal support award was fashioned to include 100% of housing mortgage debt expenses, automobile expenses, utilities, and other household expenses. However, the child support award was determined from the presumptive support tables without deviation and, therefore, reflects consideration of housing costs and other expenses for which the wife received 100% payment in the spousal support award.
Because we must remand these issues for reconsideration, we do not address husband's further assertion that the court erred in its determination of the husband's 1992 salary in its computation of support. The husband contends that his 1992 salary was corroborated by his accountant and was uncontradicted. The evidence on remand should consider this issue.
VIII.
The trial judge also awarded to the wife spousal support payable monthly for a period of three years. Only at the end of the three year period may either party petition for review alleging changed circumstances. The record contains no evidence that this future review date was based upon any special factors in this case.
Spousal support awards "must be based upon the circumstances in existence at the time of the award . . . [and may not be] 'premised upon the occurrence of an uncertain future circumstance." Payne v. Payne, 5 Va. App. 359, 363, 363 S.E.2d 428, 430 (1987) (quoting Jacobs v. Jacobs, 219 Va. 993, 995, 254 S.E.2d 56, 57 (1979)). Because the parties are entitled to have a support award "redetermined in light of new circumstances," Jacobs, 219 Va. at 995, 254 S.E.2d at 57, the trial judge erred by limiting to an arbitrary future date the parties' ability to seek review of the award due to a change in circumstances.
For all of these reasons, we reverse the awards of equitable distribution, child support, and spousal support and remand the case for reconsideration of these issues accordingly.
Reversed and remanded.