Carole Ann Berg v. Roy Timothy Young , 2015 Fla. App. LEXIS 13077 ( 2015 )

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT
CAROLE ANN BERG,
Appellant,
v.
ROY TIMOTHY YOUNG,
Appellee.
No. 4D13-2364
[September 2, 2015]
Appeal and cross-appeal from the Circuit Court for the Fifteenth
Judicial Circuit, Palm Beach County; David E. French, Judge; L.T. Case
No. 502010DR009452 SB FY.
Nancy W. Gregoire of Kirschbaum, Birnbaum, Lippman & Gregoire,
PLLC, Fort Lauderdale, and Howard S. Friedman of Fischler & Friedman,
P.A., Fort Lauderdale, for appellant.
Andrew A. Harris of Burlington & Rockenbach, P.A., West Palm Beach,
and Curtis L. Witters of Glickman, Witters & Marell, P.A., West Palm
Beach, for appellee.
LEVINE, J.
The main issue for our consideration is the interpretation of the
prenuptial agreement, specifically whether the wife was entitled to an
equitable distribution of the husband’s interest in a company acquired
from his father during the marriage. Ultimately, the trial court found that
the husband’s interest was a separate, non-marital asset and not subject
to equitable distribution. Further, the trial court ordered each party to
bear their own attorneys’ fees. The wife appeals the trial court’s ruling,
and the husband cross-appeals the trial court’s denial of attorneys’ fees.
We find that although the trial court erred in its interpretation of the
agreement, the final judgment may be affirmed because the trial court did
not award the wife any interest in the company. However, we reverse and
remand on the issue of fees.
Roy Timothy Young, the husband, worked at Delray Motors, Inc., an
automobile dealership. The husband’s father owned 40% of the dealership
and created a trust for the benefit of the husband that held a 30% interest
in the dealership. Prior to the parties’ marriage in 1996, they executed a
prenuptial agreement (the “agreement”). In 2002, the husband purchased
half of his father’s interest in Delray Motors (the “Delray 20%”). In 2010,
Carole Ann Berg, the wife, petitioned for dissolution, challenging the
validity of the agreement and claiming an equitable distribution interest in
the Delray 20%. The husband asserted the agreement was valid and
enforceable, and that under the agreement, the wife waived any interest in
the Delray 20%.
The initial trial judge bifurcated the proceedings, such that the first
part would address the validity and the construction of the agreement, and
the second part would address all other issues. After the conclusion of
the first part, the initial judge entered an order upholding the agreement
and interpreting some of the agreement’s terms. Both parties moved for
an award of prevailing party attorneys’ fees and for rehearing. On
rehearing, the initial judge entered an order clarifying that the wife had a
“right to equitable distribution of the increase in the value or enhancement
in value of all separate assets which have appreciated due to the active
marital efforts of the husband,” which “may include premarital assets or
assets acquired during the marriage solely titled in the Husband’s name.”
The initial judge denied both parties’ requests for fees, finding the husband
prevailed on validity and the wife prevailed on interpretation.
A successor trial judge presided over the second part. Testimony
revealed that the husband’s income consisted of his salary, commissions,
and trust stock distributions, all from Delray Motors. These incomes were
dependent on the dealership’s success. The wife also worked at the
dealership on a salary basis during most of the parties’ marriage and
received rent from tenants in a duplex she owned. Pursuant to the
agreement, the parties deposited their respective earnings into separate
accounts, not a joint account and never into the other spouse’s account.
In 2002, the husband obtained a loan to purchase the Delray 20% for
$1,650,000.00. The purchase price was determined based on a business
valuation report created by a firm hired by the husband to appraise the
fair market value of the dealership. The husband paid the loan off from
his separate accounts. In 2004, Delray Motors paid off a loan to purchase
the land upon which the dealership is located. The loan was paid with
Delray Motors monies, including retained earnings not distributed to the
husband and/or other shareholders. The dealership did not purchase any
more land and did not make any improvements to buildings or build any
new buildings between 2002 and 2010. The husband testified that Delray
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Motors had been “[s]ignificantly less” profitable since 2002, as sales had
decreased while expenses and costs had increased.
A personal property appraiser hired by the wife testified that the
tangible assets of Delray Motors were worth over $2 million. A real estate
appraiser hired by the wife testified that the value of the Delray Motors
real property, including the buildings and improvements thereon, was
more than $17 million. A CPA hired by the wife testified that there was a
$1,850,000.00 increase in the value of the Delray 20% based on his 2010
valuation of Delray Motors, which he conceded used a different method
than the firm that created the 2002 valuation report.
An automobile dealership financial advisor hired by the husband
testified that the dealership owned too much land, and claimed no one
would purchase the dealership for the approximately $19 million value
given by the wife’s experts, because the gross profit was not there to
warrant the investment. The advisor appraised Delray Motors’s 2010
value to be $2,750,000.00. By this determination, the husband’s interest
in the Delray 20% decreased in value. The husband’s CPA also testified
that the value in Delray Motors as well as the husband’s Delray 20%
interest actually decreased in value from 2002 to 2010, based on the CPA’s
independent valuations and appraisals.
The wife also requested additional fees pursuant to section 61.16,
Florida Statutes. Prior to the final hearing, the trial court had awarded to
the wife temporary attorneys’ fees totaling $51,000.00, litigation costs
totaling $5,000, and temporary accounting fees totaling $27,250.00. At
trial, the wife’s financial affidavit prepared at the commencement of the
action was introduced into evidence. The affidavit showed a monthly gross
income of $3,527.67. The wife did not produce an updated financial
affidavit, but testified that she was unemployed, that her only income
sources were unemployment and rent from the duplex she owned, and
that she had no other assets. The husband’s amended financial affidavits
introduced at trial showed two different monthly gross income amounts,
one for $27,504.00 and one for $38,117.00. No additional testimony or
evidence was presented regarding either of the parties’ need and/or ability
to pay attorneys’ fees and costs. The wife’s CPA testified that he was owed
approximately $135,000.00. The husband’s CPA testified that the wife’s
records demonstrated that she paid approximately $125,273.00 in
attorneys’ and accountant fees, and that this total did not include the
$93,000.00 in payments the husband made directly. No other testimony
regarding the fees for either party was presented to the trial court.
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The successor trial judge subsequently entered the final judgment of
dissolution of marriage. The successor judge found that “[v]irtually all of
the assets of the parties are titled solely in the name of either the Husband
or the Wife, including the Delray Motors stock,” and under the agreement,
“assets which are titled in the name of one of the parties are the separate
asset of the party holding title.” However, the successor judge ruled that
“the Wife did not waive her right to equitable distribution of the increase
in the value or enhancement in value of all separate assets which have
appreciated due to the active marital efforts of the Husband.” This ruling
was consistent with the initial trial judge’s conclusion in the orders on the
agreement from the first part of the proceedings.
The trial court then made certain findings of fact regarding the Delray
20%, including that “[a]ll the payments made by the Husband upon the
Bank of America loan taken to acquire his stock of Delray Motors, Inc.
were [] paid with his separate non-marital funds.” Thus, contrary to the
wife’s position, the trial court found the case of Kaaa v. Kaaa, 58 So. 3d
867 (Fla. 2010), “not applicable to the facts of this action” because no
marital assets were used to pay for the Delray 20%. Further, the trial
court found that appreciation of the Delray 20%, if any, “is a result of the
passive increase in the value of the underlying land and buildings at
Delray Motors and not the result of the active marital efforts of the
Husband.” Accordingly, the trial court found that the Delray 20% “is the
separate non-marital property of the Husband and there is no appreciation
in the value of that stock which would be subject to equitable distribution”
and denied the wife’s request for equitable distribution of the Delray 20%.
The trial court also ordered each party to bear their own attorneys’ fees
without any further explanation.
“A trial court’s interpretation of a prenuptial agreement is reviewed de
novo, as such agreements are governed by the law of contracts.” Taylor v.
Taylor, 1 So. 3d 348, 350 (Fla. 1st DCA 2009). “The standard of review of
a trial court’s determination of equitable distribution is abuse of
discretion. However, ‘[a] trial court’s legal conclusion that an asset is
marital or nonmarital is subject to de novo review.’” Bell v. Bell, 68 So. 3d
321, 328 (Fla. 4th DCA 2011) (citations omitted). Likewise, “[t]he standard
of review of a trial court’s application and interpretation of Florida law is
de novo.” Anthony v. Gary J. Rotella & Assocs., P.A., 906 So. 2d 1205,
1207 (Fla. 4th DCA 2005).
The wife argues that the trial court erred in finding there was no active
appreciation in the Delray 20% and in denying her request for equitable
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distribution of said appreciation.1 The husband responds that the wife
waived any interest in the Delray 20% under the agreement, and it was a
non-marital asset not subject to equitable distribution. Alternatively, the
husband argues that the trial court correctly found there was no active
appreciation in the value of the Delray 20%.
Initially, we consider whether the trial court correctly interpreted the
agreement. In Kaaa, the Florida Supreme Court held that “the passive
appreciation of a nonmarital asset, such as [a] marital home, is properly
considered a marital asset where marital funds or the efforts of either party
contributed to the appreciation.” 58 So. 3d at 870. Accordingly, this court
has held that “[w]here a prenuptial agreement does not address the right
to enhanced value of a non-marital asset, that value is subject to equitable
distribution.” Weymouth v. Weymouth, 87 So. 3d 30, 34 (Fla. 4th DCA
2012).
In Weymouth, the wife agreed in a prenuptial agreement to “remise,
release and quit claim all right, title and interest she might have . . . to any
property owned [by the husband] prior to marriage . . . .” Id. at 32
(emphasis added). Conversely, the prenuptial provided that “all ‘property
acquired by either of them during the marriage . . .’ is marital property.”
Id. (emphasis added). This court affirmed the trial court’s determination
“that the passive appreciation of the [marital] home [which the husband
owned prior to the marriage] was marital property subject to equitable
distribution” because the “boilerplate reference to a ‘quit claim’ . . . referred
to the wife’s waiving her interest in the property at the time the agreement
was entered into” and “does not mean that the agreement governed
enhancement value.” Id. at 35.
1 The wife also argues that the successor trial judge erred in not applying the
initial trial judge’s findings of fact and conclusions of law regarding the agreement
because “a successor judge may not review, modify, or reverse, upon the merits,
on the same facts, the final orders of his predecessor, absent mistake or fraud.”
Burdick v. Burdick, 399 So. 2d 410, 412-13 (Fla. 3d DCA 1981) (emphasis added).
However, this argument is without merit for multiple reasons. First, it appears
that the successor trial judge did, in fact, adopt the same interpretation of the
agreement as the initial trial judge. Second, even if the successor trial judge’s
interpretation was different, the initial trial judge’s orders regarding the
agreement were interlocutory in nature and subject to review by the successor
judge. See Sell v. Sell, 870 So. 2d 833, 833-34 (Fla. 3d DCA 2003). Thus, the
successor trial judge was “free to revisit during the proceedings or at the final
hearing” the findings of fact and conclusions of law made by the initial trial judge
in the “order approving the prenuptial agreement” because said order was non-
final. Id. at 834 (Cope, J., concurring).
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In Hahamovitch v. Hahamovitch, 133 So. 3d 1008 (Fla. 4th DCA 2014),
the prenuptial agreement contained multiple releases and waivers of
interest by the wife and specifically addressed property acquired during
the marriage. Specifically, the parties agreed to “keep and retain sole
ownership, control, enjoyment and power of disposition with respect to all
property, real, personal or mixed, now owned or hereby acquired by each of
them respectively, free and clear of any claim by the other. . . .” Id. at 1012.
Further, “each party agrees that neither will ever claim any interest in the
other’s property and that the property of every kind, nature and description
which either one has on the date of the marriage will remain the respective
separate property of each after said marriage . . . .” Id. Finally, a “title
presumption” paragraph provided that if both parties’ names were on the
title, each party would have equal interest in said property; but “[i]f [the
husband] purchases, acquires, or otherwise obtains, property in his own
name, then [the husband] shall be the sole owner of same.” Id.
This court concluded “that under the plain language of the prenuptial
agreement, the wife waived and released claims to property or assets
owned by the husband at the time of the agreement, or acquired in his
own name thereafter, including any enhancement in the value of such
property.” Id. at 1015. “The language of the agreement was broad enough
to waive the wife’s right to any asset titled in the husband’s name that was
acquired during the marriage or that appreciated in value due to marital
income or efforts during the marriage.” Id. This court explained:
[T]he title presumption provision in paragraph 17 of the
prenuptial agreement . . . when read together with the other
provisions of the prenuptial agreement, is sufficient to waive
future enhancement of non-marital property, even if it is due
to marital earnings or labor. To hold otherwise would read
the title presumption provision out of the agreement. If the
prenuptial agreement is to effectively shield the husband’s
assets from the wife’s claims, it must also include any
appreciation in value.
Id. at 1015-16. This court also distinguished Weymouth because the
prenuptial there “did not address the future acquisition of property,” and
“specifically provided that property acquired by either spouse during the
marriage . . . was marital property.” Id. at 1016.
In the instant case, the parties’ agreement provides that “any and all
real, personal, intangible, mixed, or other property owned by either party
prior to the marriage, shall be and remain hereafter the separate property
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of such party, including other property purchased with the proceeds
thereon and increases in value during the marriage or changes in form.”
The parties agreed to “establish and maintain accounting procedures and
records and bank accounts to preserve the separate character of their
separate funds” and “not to commingle joint property with separate
property.” Further, the wife agreed to waive “every interest, claim or
demand of whatever kind or description, in law or in equity, that may
accrue to her . . . in the event of separation or dissolution proceedings,”
including “any right to any special equity, equitable distribution, or any
other interest in any property of Husband of any kind whatsoever.”
Finally, another paragraph contains a “title presumption” provision that
provides that “any and all real, personal, intangible, mixed, or other
property acquired during the marriage in the name of one party alone shall
be and remain the separate property of the party in whose name title is
taken,” and that “[e]ach party waives any claim of a special equity,
equitable distribution, or any other claim against any such asset.”
The provisions of the instant agreement and the prenuptial in
Hahamovitch are strikingly similar. Specifically, both agreements contain
a “title presumption” provision, a waiver to any interest in separate
property owned by the other party prior to the marriage, and a waiver to
any interest in property acquired by the other party and titled solely in
that party’s name during the marriage. See 133 So. 3d at 1012. Thus, as
in Hahamovitch, the instant agreement’s title presumption provision
“when read together with the other provisions of the prenuptial
agreement,” including those related to property acquired during the
marriage, “is sufficient to waive future enhancement of non-marital
property, even if it is due to marital earnings or labor.” Id. at 1015. The
trial court’s interpretation to the contrary inappropriately reads those
provisions “out of the agreement.” Id. at 1016.
Even though the trial court’s interpretation of the agreement was
erroneous, the trial court’s conclusion that the appreciation in the Delray
20%, if any at all, was passive and not subject to equitable distribution,
was correct and is supported by competent, substantial evidence.2 Thus,
2 Because this court also affirms the trial court’s final judgment on this
alternative basis, there is no need to certify the same question raised in
Hahamovitch and currently pending before the Florida Supreme Court. See 133
So. 3d at 1017 (“Where a prenuptial agreement provides that neither spouse will
ever claim any interest in the other’s property, states that each spouse shall be
the sole owner of property purchased or acquired in his or her name, and
contains language purporting to waive and release all rights and claims that a
spouse may be entitled to as a result of the marriage, do such provisions serve to
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the wife’s argument that the trial court erred in failing to apply a Kaaa
analysis and equitably distribute the Delray 20% is without merit.
In Kaaa, the Florida Supreme Court outlined a “fact-intensive” method
“a trial court should employ as it determines whether a nonowner spouse
is entitled to a share of the passive appreciation and calculates the proper
allocation.” 58 So. 3d at 872. The method includes valuating the asset,
determining whether there has been appreciation in that value during the
marriage, and whether such appreciation was the result of active marital
efforts thereby subjecting the appreciation to be equitably distributed. Id.
Here, the trial court found that the husband’s purchase of the Delray
20% was made “during the marriage of the parties with funds earned by
the Husband and deposited in his separate bank account.” Additionally,
the trial court found that “any change in the value of the [Delray 20%]
stock is a result of the passive increase in the value of the underlying land
and buildings at Delray Motors and not the result of the active marital
efforts of the Husband.” These findings are supported by competent,
substantial evidence in the record. The monies the husband used to pay
off the loan that financed the purchase of the Delray 20% came from his
separate checking account. That account, titled solely in his name,
contained non-marital monies, pursuant to the agreement, consisting of
the husband’s trust distributions, salary, and commissions from Delray
Motors. There was trial testimony that the portion of the business that
the husband oversaw, new car sales, had decreased since 2002, when the
husband purchased the Delray 20%. Additionally there was testimony
and evidence that any increase in the value of the land the dealership
owned was the result of market factors and not due to any improvement
or enhancement through marital efforts of the husband.
The trial court was correct in concluding that the Delray 20% “is the
separate non-marital property of the Husband and there is no appreciation
in the value of that stock which would be subject to equitable distribution.”
See Kaaa, 58 So. 3d at 872 (“If a separate asset is unencumbered and no
marital funds are used to finance its acquisition, improvement, or
maintenance, no portion of its value should ordinarily be included in the
marital estate, absent improvements effected by marital labor.”) (citation
omitted); Anson v. Anson, 772 So. 2d 52, 55 (Fla. 5th DCA 2000) (“Simply
because a shareholder-spouse devotes work efforts to a corporation during
waive a spouse’s right to any share of assets titled in the other spouse’s name,
even if those assets were acquired during the marriage due to the parties’ marital
efforts or appreciated in value during the marriage due to the parties’ marital
efforts?”); Hahamovitch v. Hahamovitch, 145 So. 3d 824 (Fla. 2014).
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marriage should not transform the entire appreciation of the stock into a
marital asset.”).
In summary, the trial court erred in its interpretation of the agreement
by finding that the wife did not waive, and was entitled to, interest in any
value or appreciation of the Delray 20% by virtue of the husband’s active
marital efforts. However, in light of the fact that the trial court did not
award the wife any interest in the Delray 20% upon finding it to be the
husband’s “separate, non-marital property” and finding that there was no
appreciation in value of the Delray 20% subject to equitable distribution,
the final judgment may be affirmed pursuant to the tipsy coachman
doctrine because the trial court “reache[d] the right result, but for the
wrong reasons.” Advanced Chiropractic & Rehab. Ctr. Corp. v. United Auto.
Ins. Co., 103 So. 3d 866, 869 (Fla. 4th DCA 2012) (citation omitted).
Lastly, both parties appeal the trial court’s denial of their fees requests.
The wife argues that the trial court erred in not awarding her fees in light
of the great disparity between the net worth of the parties. A trial court’s
ruling on attorneys’ fees in family law actions is reviewed for an abuse of
discretion. See Canakaris v. Canakaris, 382 So. 2d 1197, 1203 (Fla.
1980). “Any determination regarding an appropriate award of attorney’s
fees in proceedings for dissolution of marriage, support, or child custody
begins with section 61.16, Florida Statutes.” Rosen v. Rosen, 696 So. 2d
697, 699 (Fla. 1997). “The purpose of this section is to ensure that both
parties will have a similar ability to obtain competent legal counsel,” and
“assure that one party is not limited in the type of representation he or she
would receive because that party’s financial position is so inferior to that
of the other party.” Id. (citation omitted). “It can be an abuse of discretion
to grant only a partial attorney’s fee award where, on balance, there is a
substantial disparity between the parties’ incomes. But the trial court
cannot award fees based solely on disparity of income.” Fichtel v. Fichtel,
141 So. 3d 593, 596 (Fla. 4th DCA 2014) (citation omitted). Furthermore,
[i]t is critical that the trial court makes “specific findings of
fact—either at the hearing or in the written judgment—
supporting its determination of entitlement to an award of
attorney’s fees and the factors that justify the specific amount
awarded. . . . [V]ague findings present an obstacle to
meaningful appellate review.”
Id.
Here, the final judgment contains no findings of fact regarding the trial
court’s fees determination. Because the trial court “did not address the
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substantial disparity between the parties’ incomes or provide specific
factual findings” regarding its determination of the parties’ fees requests,
this court is precluded from “any meaningful review of this issue.” Id.
The husband argues the trial court erred in not awarding him prevailing
party fees for the first part of the trial pursuant to the agreement. Contrary
to the wife’s argument, we find the husband’s request for fees was
preserved. The Florida Supreme Court has held that “prenuptial
agreement provisions awarding attorney’s fees and costs to the prevailing
party in litigation regarding the validity and enforceability of a prenuptial
agreement are enforceable.” Lashkajani v. Lashkajani, 911 So. 2d 1154,
1160 (Fla. 2005). Any such provisions control the issue of fees in a
dissolution case over the parameters of section 61.16, subject to the
limitations of disclosure outlined in Florida case law. See id.
Here, the agreement provides that “[i]f either party brings an action or
other proceeding to seeking to void this agreement, in whole or part, the
party seeking to avoid the terms of this agreement shall be liable for all of
the attorneys fees and costs incurred by the other party.” The wife sought
to void the agreement during the first part of the proceedings. The trial
court upheld the agreement, but denied both parties’ requests for
prevailing party fees ruling that the husband prevailed on validity, but the
wife prevailed on interpretation. The clear, unambiguous terms of the
agreement do not provide for an award of fees to the party prevailing on
the “interpretation” of the agreement. Thus, the husband, as the
prevailing party in the wife’s action “seeking to void this agreement” was
entitled to an award of fees against the wife who was “the party seeking to
avoid the terms of this agreement.” Thus, the trial court erred in denying
the husband’s request for fees in the first part of the proceedings.
In summary, we reverse the trial court’s rulings on both parties’
requests for an award of attorneys’ fees. We remand with directions that
the trial court award the husband prevailing party fees for services in
connection with the first part of the proceedings regarding the validity of
the agreement. We also remand for the trial court to reconsider the wife’s
request for additional fees under section 61.16 and make findings of fact
sufficient to permit review of the trial court’s decision.
Affirmed in part and reversed and remanded in part.
STEVENSON and FORST, JJ., concur.
* * *
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Not final until disposition of timely filed motion for rehearing.
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