Thea Rachel Anthony v. Paul Skolnick-Lozano ( 2014 )

COURT OF APPEALS OF VIRGINIA
Present: Judges Huff, Chafin and Decker
PUBLISHED
Argued at Richmond, Virginia
THEA RACHEL ANTHONY
OPINION BY
v. Record No. 1270-13-2 JUDGE MARLA GRAFF DECKER
MARCH 4, 2014
PAUL SKOLNICK-LOZANO
FROM THE CIRCUIT COURT OF ALBEMARLE COUNTY
Cheryl V. Higgins, Judge
Jason P. Seiden (Michie Hamlet Lowry Rasmussen & Tweel, PLLC,
on briefs), for appellant.
Steven S. Biss for appellee.
Thea Rachel Anthony (the wife) appeals a final order of the circuit court awarding
equitable distribution of property. On appeal, she argues that the circuit court erred by awarding
Paul Skolnick-Lozano (the husband) $14,000 for reimbursement of his contribution to the
purchase of the marital residence. The husband counters that the circuit court correctly applied
Code § 20-107.3(A)(3)(g) in reimbursing him the amount that he contributed before the marriage
to buy the marital home. The husband assigns as cross-error the circuit court’s ruling that there
was no resulting trust.
We hold that although the circuit court properly considered the husband’s pre-marital
contribution eligible for reimbursement, the husband failed to meet his burden of proof as to the
value of his contribution as of the date of the evidentiary hearing. We further hold that the
circuit court did not have the authority to declare a resulting trust over the wife’s separate
property. Finally, we deny the wife’s request for costs incurred in this matter. Accordingly, we
reverse and remand for further proceedings consistent with this opinion.
I. BACKGROUND
The parties married on February 6, 2004. They separated in 2011, and the husband filed
for divorce. Much of the equitable distribution hearing on divorce was devoted to determining
the parties’ respective interests in a six-acre piece of real property. The purchase occurred before
the parties married. The property contained a main house, a workshop, and a cottage. At the
time of purchase, the parties intended to occupy the main house together after their marriage.
The husband contributed $14,000 to the purchase price, and the wife contributed $15,000. The
property was titled in the wife’s name. The mortgage also was taken in the wife’s name because
she had established credit, while the husband had none. The wife refinanced the property during
the marriage, and that mortgage was also taken solely in her name. Although the parties used
their combined incomes to pay utilities and the mortgage, the wife’s mother also periodically
paid the monthly mortgage. The cottage served as rental property. The husband made
improvements to both the main residence and the cottage. The lease listed the husband and the
wife as the landlords. On April 5, 2011, a fire destroyed the marital residence on the property.
The wife collected the insurance proceeds.1
As part of the equitable distribution proceeding, the husband asked the circuit court to
impose a resulting trust over the rent received from the cottage tenant. The husband additionally
asked that the rent and insurance proceeds be classified as marital property for the purposes of
equitable distribution. The wife argued that the husband did not adequately plead a resulting
trust and, further, that such a trust was not allowed by law. The wife asked the circuit court to
find that the property was her separate property and not make any award to the husband.
The circuit court found that although the parties bought the property intending to use the
house as their marital home, the property was the separate property of the wife. The court also
1
The wife signed the check over to the mortgage company to pay the remainder of the
mortgage, and then she received the remaining balance of the insurance payments.
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found that the husband retraced his $14,000 contribution of his separate property to the marital
home. The court noted that the parties did not offer any evidence of the contemporary value of
the land. It nevertheless found that the combined property had a value of $145,000 at the time of
the evidentiary hearing. This conclusion was based upon the sum that the wife paid the
mortgage company to satisfy the balance of the mortgage after the fire. The circuit court ordered
the wife to pay the husband $15,000.
Following the hearing, the court issued a letter opinion reversing its decision on the value
of the property, because it had failed to take into consideration that the house had completely
burned down. In a second letter opinion, the court reasoned that it could not determine the value
of the wife’s separate property and, therefore, could not make an award to the husband based on
his personal contributions of time and money to the marital residence during the marriage. The
court additionally ruled that no resulting trust existed because the husband did not assume
“payment of all or part of the purchase money prior to or at the time of [the] purchase.”
In the final divorce decree, the circuit court found that the husband retraced his
pre-marital $14,000 contribution to the marital home. As part of the equitable distribution
award, the court ordered the wife to reimburse the husband the $14,000, rather than the earlier
$15,000 figure.
II. ANALYSIS
On appeal of the circuit court’s final decree, the wife asks this Court to reverse the
portion of the divorce decree awarding the husband $14,000. She argues that the commingling
occurred before the parties married and the husband failed to prove the value of the marital
residence at the time of the evidentiary hearing. The wife additionally requests that we award
her costs incurred in this matter. The husband contends that the circuit court erred by holding
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that a resulting trust did not exist and, alternatively, that he sufficiently retraced his contribution
to the property and was thus entitled to the $14,000 awarded by the circuit court.
A. Commingling Before Marriage
The circuit court awarded the husband $14,000 as reimbursement for his contribution to
the purchase of the marital home. The wife argues that the court erred by reimbursing the
husband for separate assets commingled before the marriage, because Code § 20-107.3(A)
encompasses only commingling of separate property that occurs during the marriage.
“On appeal, a trial court’s equitable distribution award will not be overturned unless the
Court finds ‘an abuse of discretion, misapplication or wrongful application of the equitable
distribution statute, or lack of evidence to support the award.’” Wiencko v. Takayama, 62
Va. App. 217, 229-30, 745 S.E.2d 168, 174 (2013) (quoting McIlwain v. McIlwain, 52 Va. App.
644, 661, 666 S.E.2d 538, 547 (2008)). We review “pure questions of law concerning statutory
interpretation . . . de novo.” Gilliam v. McGrady, 279 Va. 703, 708, 691 S.E.2d 797, 799 (2010).
It is well settled that:
When the language of a statute is unambiguous, we are bound by
the plain meaning of that language. Furthermore, we must give
effect to the legislature’s intention as expressed by the language
used unless a literal interpretation of the language would result in a
manifest absurdity. If a statute is subject to more than one
interpretation, we must apply the interpretation that will carry out
the legislative intent behind the statute.
Conyers v. Martial Arts World of Richmond, Inc., 273 Va. 96, 104, 639 S.E.2d 174, 178 (2007)
(citations omitted). Consistent with this standard, “‘[t]he plain, obvious, and rational meaning of
a statute is to be preferred over any curious, narrow, or strained construction.’” Meeks v.
Commonwealth, 274 Va. 798, 802, 651 S.E.2d 637, 639 (2007) (alteration in original) (quoting
Commonwealth v. Zamani, 256 Va. 391, 395, 507 S.E.2d 608, 609 (1998)). In other words,
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“[t]his Court must determine the General Assembly’s intent from the words contained in the
statutes.” Tharrington v. Commonwealth, 58 Va. App. 704, 710, 715 S.E.2d 388, 390 (2011).
Code § 20-107.3(A) provides, in pertinent part, that “upon decreeing a divorce . . . the
court . . . shall determine the legal title as between the parties, and the ownership and value of all
property . . . 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.” The statute defines “all
property . . . acquired by either party before the marriage” as separate property. Code
§ 20-107.3(A)(1). Further, the statute explains:
When the separate property of one party is commingled into the
separate property of the other party, or the separate property of
each party is commingled into newly acquired property, to the
extent the contributed property is retraceable by a preponderance
of the evidence and was not a gift, each party shall be reimbursed
the value of the contributed property in any award made pursuant
to this section.
Code § 20-107.3(A)(3)(g) (emphasis added).
Code § 20-107.3(A)(3)(g) does not provide a time-frame limiting the instances of
commingling that are entitled to reimbursement. In contrast, the General Assembly delineated
time-frames of “before the marriage” and “during the marriage” in Code § 20-107.3(A)(1) and
(A)(2), which define separate property and marital property. Likewise, Code
§ 20-107.3(A)(3)(a), governs income received from separate property or an increase in value of
separate property occurring “during the marriage.” Additionally, subsections (4) and (5) of
Code § 20-107.3(A), which encompass separate and marital debt, specify “before the marriage,”
“after the date of the last separation of the parties,” and “after the date of the marriage and before
the date of the last separation of the parties.”
Clearly, throughout this section of the Code, the General Assembly provides limiting
language regarding specific time-frames that are applicable to different aspects of equitable
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distribution of property. Thus, had the legislature intended to limit Code § 20-107.3(A)(3)(g) to
commingling of separate property occurring “during the marriage,” it would have done so. See
Wiencko, 62 Va. App. at 231, 745 S.E.2d at 175 (limiting interpretation of Code § 20-107.3(E)
to its actual text). Pursuant to the plain language of the statute, under Code§ 20-107.3(A)(3)(g),
we hold that circuit courts may consider commingling of property that occurs before the
marriage of the parties in fashioning an equitable distribution award.
The wife relies on Floyd v. Floyd, 17 Va. App. 222, 436 S.E.2d 457 (1993), for the
proposition that circuit courts may consider only pre-marital contributions made to marital
property, not pre-marital contributions made to separate property. In Floyd, this Court held that
“Code § 20-107.3 does not prevent the trial court from considering premarital contributions to
the acquisition or maintenance of property later deemed marital property in fashioning an
equitable distribution.” Id. at 226-27, 436 S.E.2d at 460. However, by holding in Floyd that
circuit courts could consider pre-marital contributions to marital property, this Court did not
exclude courts from considering pre-marital contributions made to property used as marital
property but titled as separate property. Id. The record shows that the parties purchased the
house with the intention of living in it as their marital home. They leased the cottage to a tenant
as joint landlords. The husband made repairs to the home and cottage. Although the separate
property did not actually transmute into marital property, the parties utilized it as marital
property. Consequently, the property was accumulated by the parties for the benefit of the
marriage.
We hold that Code § 20-107.3(A)(3)(g) encompasses commingling of separate property
that occurs before the marriage. Thus, the circuit court did not err in finding that the husband
commingled his separate property with the wife’s separate property in acquiring the marital
home and the related property.
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B. Reimbursement Value
The wife contends that the circuit court erred in awarding the husband the $14,000
because he failed to prove the value of the property at the time of the evidentiary hearing. She
argues that Code § 20-107.3(A)(3)(g)’s use of “the value” in instructing that “each party shall be
reimbursed the value of the contributed property in any award made pursuant to this section”
means the value of the contribution combined with the appreciation or depreciation of that
property. The husband counters that the plain language of “value of the contributed property”
means reimbursement of the exact amount contributed.
“[A] statute should be read and considered as a whole, and the language of a statute
should be examined in its entirety to determine the intent of the General Assembly from the
words contained in the statute.” Dep’t of Med. Assistance Servs. v. Beverly Healthcare, 268 Va.
278, 285, 601 S.E.2d 604, 607-08 (2004); see also Prince William Cnty. Sch. Bd. v. Rahim, 58
Va. App. 493, 500, 711 S.E.2d 241, 245 (2011), aff’d, 284 Va. 316, 733 S.E.2d 235 (2012).
“Whenever possible . . . it is our duty to interpret the several parts of a statute as a consistent and
harmonious whole so as to effectuate the legislative goal.” Va. Elec. & Power Co. v. Bd. of
Cnty. Supervisors, 226 Va. 382, 387-88, 309 S.E.2d 308, 311 (1983); see also Rice v. Rice, 49
Va. App. 192, 206, 638 S.E.2d 702, 709 (2006).
Although subsection (A)(3)(g) does not provide a method for calculating “the value of
the contributed property,” subsection (A) provides, in pertinent part:
[T]he 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 . . . . The court
shall determine the value of any such property as of the date of the
evidentiary hearing on the evaluation issue.
Code § 20-107.3(A) (emphasis added).
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Considering the separate subsections of Code § 20-107.3 together, we hold that when
ordering reimbursement of contributed separate property under subsection (A)(3)(g), a court
shall determine the value of the contributed property as of the date of the evidentiary hearing.2
See, e.g., Oraee v. Breeding, 270 Va. 488, 498, 621 S.E.2d 48, 53 (2005) (construing together
subsections A and B of Code § 8.01-581.18); Hart v. Hart, 27 Va. App. 46, 66, 497 S.E.2d 496,
505 (1998) (holding that in determining the value of a party’s non-marital contribution to hybrid
property under Code § 20-107.3(A)(3), the important factor “is the value that improvements add
to the property, not their cost”). This interpretation makes good sense because reimbursing the
husband the exact value of his contribution would not take into account any passive losses or
gains. Ordering the precise reimbursement of the husband’s $14,000 contribution would create a
danger that the husband would either receive a windfall or suffer an unnecessary loss. A
valuation date as of the hearing obviates these problems. Thus, we hold that the circuit court
2
We note that the proper interpretation of the term “value” as used in Code
§ 20-107.3(A)(3)(g) has been contemplated in a manner consistent with this holding:
It is submitted that based upon the intent and language of the other
subsections regarding commingling, and to have consistent
statutory interpretations for each of the related subdivisions
contained in the section, as well as promoting the policy of
appreciation “attributable” to such contributions that is applied to
other commingling fact patterns, . . . the better interpretation of the
new term “value” should not [be] limited to the exact amount of
the contribution itself, but should include passive gains or losses as
applied to other contribution patterns with other marital property
contributions. In fact, the new provision does not state that the
reimbursement shall be limited to an amount “equal” to the value
of said contributions. Therefore a liberal interpretation of such
language is encouraged for consistency of statutory interpretation
and policy considerations. The term “value” of said contribution
should mean the amount of the contribution plus or minus growth
or appreciation or other passive changes that have occurred to said
contribution to the date of the hearing or other appropriate
valuation date set by the court.
Peter N. Swisher, Lawrence D. Diehl & James R. Cottrell, Virginia Practice--Family Law:
Theory, Practice and Forms § 11:5 (2013 rev. ed.).
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misapplied the statute in concluding that ordering reimbursement under Code
§ 20-107.3(A)(3)(g) did not require a finding as to the value of the contributed property at the
time of the hearing.
In this case, the husband, as the party who moved for equitable distribution, had the
burden of proving the value of his contribution to the property. See Bowers v. Bowers, 4
Va. App. 610, 618, 359 S.E.2d 546, 551 (1987) (noting that the party who moved for equitable
distribution “had the burden of proof on classification and valuation issues”). The husband’s
burden of proof was a preponderance of the evidence. See Code § 20-107.3(A)(3)(g) (providing
that the contributed property must be “retraceable by a preponderance of the evidence” to merit
reimbursement). “When the party with the burden of proof on an issue fails for lack of proof, he
cannot prevail on that question.” Bowers, 4 Va. App. at 617, 359 S.E.2d at 550.
The husband did not present sufficient evidence from which the circuit court could
determine the value of the property at the time of the hearing. Although the purchase price was
in evidence, the record also shows that a fire destroyed the main house. The evidence did not
provide a basis for determining the value of the remaining property or whether the insurance
proceeds fully compensated for the loss. Consequently, based on the limited evidence before it,
the circuit court was unable to determine the value of the husband’s contribution to the property
at the time of the hearing and erred by ordering the wife to reimburse the husband the $14,000
that he contributed to the marital home. Accordingly, we reverse and remand the case on this
issue for the entry of an order consistent with this opinion.
C. Resulting Trust
The husband assigns as cross-error that the circuit court incorrectly ruled that he failed to
prove a resulting trust. He argues that this Court should hold that there is a resulting trust and
that he is a beneficial owner of one half of the property. The wife counters that the circuit court
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erred in ruling on the matter at all because the husband failed to provide notice and the court
lacked the authority to consider the husband’s resulting trust argument during an equitable
distribution hearing. The wife further contends that the husband failed to prove a resulting trust
by clear and convincing evidence.
“‘[W]e give deference to the trial court’s factual findings and view the facts in the light
most favorable to the prevailing part[y,]’ but we review the trial court’s application of the law to
those facts de novo.” Tuttle v. Webb, 284 Va. 319, 324, 731 S.E.2d 909, 911 (2012) (emphasis
added) (quoting Caplan v. Bogard, 264 Va. 219, 225, 563 S.E.2d 719, 722 (2002)).
A resulting trust is an indirect trust which arises from the
intention of the parties, or the nature of the transaction. It is not
dependent on any express declaration of trust. In order for a
resulting trust to arise, the would-be beneficiary must pay for the
property, or assume payment of all or part of the purchase money
prior to or at the time of purchase, and have legal title conveyed to
another without any mention of a trust in the conveyance. In
addition, he must have paid the purchase money as his own, and
not as an agent of the title holder, nor as a loan to the latter.
Finally, in instances where the would-be beneficiary has obligated
himself to pay purchase money prior to or at the time of purchase,
he must have upheld this commitment.
Tiller v. Owen, 243 Va. 176, 180, 413 S.E.2d 51, 53 (1992) (citations omitted).3
The key issue before the Court is whether under Code § 20-107.3, the circuit court had
the authority to declare a resulting trust. “‘A suit for divorce . . . does not involve an appeal to
3
In Tiller, the parties lived together. Tiller was the sole purchaser on the contract for the
house and the only debtor to the mortgage. However, Owen paid a significant amount toward
the down payment and made some of the mortgage payments. The Supreme Court held that a
resulting trust did not arise because Owen was not at any point financially obligated on the
house. The Court explained, “Owen did not obligate himself to purchase all or part of the
property in question. He did not sign the sales contract or become obligated on the mortgage.
Further, he signed no other documents binding him to pay all or part of the purchase.” Tiller,
243 Va. at 180, 413 S.E.2d at 54. For examples of where the evidence sufficiently proved the
existence of a resulting trust outside of the context of equitable distribution, see Morris v. Morris,
248 Va. 590, 449 S.E.2d 816 (1994), and Gifford v. Dennis, 230 Va. 193, 335 S.E.2d 371(1985).
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the general jurisdiction of the equity forum.’” Reid v. Reid, 245 Va. 409, 413, 429 S.E.2d 208,
210 (1993) (quoting McCotter v. Carle, 149 Va. 584, 592, 140 S.E. 670, 673 (1927)).
As we have often said, jurisdiction in divorce suits is purely
statutory. . . . Such jurisdiction of a court of equity does not
inherently extend to the disposal of the personal property of the
husband [or wife]. . . . And even though the court has jurisdiction
of both the subject matter and the parties, a decree may
nevertheless be void if “the character of the judgment was not such
as the court had the power to render, or [if] the mode of procedure
employed by the court was such as it might not lawfully adopt.”
Anthony v. Kasey, 83 Va. 338, 340, 5 S.E. 176, 177 (1887).
Watkins v. Watkins, 220 Va. 1051, 1054, 265 S.E.2d 750, 752-53 (1980) (citations omitted).
Code § 20-107.3 limits the circuit court’s powers to divide property of the divorcing
parties. Specifically with regard to separate property, Code § 20-107.3(C) states, “except as
provided in subsection G, the court shall have no authority to order the division or transfer of
separate property or marital property, or separate or marital debt, which is not jointly
owned . . . .”4 The statute also delineates the circuit court’s power to divide or transfer jointly
owned marital property. See Code § 20-107.3(C), (E), (G)-(H).
Thus, in Code § 20-107.3, the legislature addressed the division of property in an
equitable distribution award without any provision for a resulting trust. Because “the jurisdiction
of a court in equity is ‘entirely statutory and limited’ in divorce matters,” we conclude that in the
context of the equitable distribution proceeding, the circuit court was limited to application of
equitable distribution principles and did not have the authority to declare a resulting trust or,
along with it, that the husband was a beneficial owner of one half of the property. See Reid, 245
Va. at 414-15, 429 S.E.2d at 211 (quoting McCotter, 149 Va. at 592, 140 S.E. at 673) (holding
that the circuit court did not have the statutory or inherent authority to order restitution in part
4
Code § 20-107.3(G) does not pertain to this case, as it applies to pensions, profit-sharing
plans, deferred compensation plans, retirement benefits, survivor benefit plans, and annuity
plans.
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because the statutes did not envision such an obligation); see also Watkins, 220 Va. at 1054-55,
S.E.2d at 752-53 (holding that the circuit court’s statutory power in a divorce suit did “not
inherently extend to the disposal of the personal property” of a party).
The circuit court ruled that a resulting trust did not exist. However, that circuit court’s
authority in this case did not extend to considering whether a resulting trust existed. Therefore,
the husband’s assignment of cross-error must fail.5
D. Appellate Costs
The wife asks for an award of “costs incurred in this matter.” “‘The appellate court has
the opportunity to view the record in its entirety and determine whether [an] appeal is frivolous
or whether other reasons exist for requiring additional payment.’” Wright v. Wright, 61
Va. App. 432, 470, 737 S.E.2d 519, 537 (2013) (quoting O’Loughlin v. O’Loughlin, 23 Va. App.
690, 695, 479 S.E.2d 98, 100 (1996)) (alteration in original). Having reviewed the entire record,
we do not find a sufficient basis to warrant an award of costs. See, e.g., id. at 470, 737 S.E.2d at
537-38 (denying both parties’ requests for attorneys’ fees and costs on appeal). Therefore, we
deny the wife’s request for costs.
III. CONCLUSION
We hold that the circuit court did not err in finding that the husband commingled his
separate property with the wife’s separate property as contemplated by Code § 20-107.3(A)(3)(g)
with regard to the marital residence. We also hold, however, that the husband failed to meet his
burden of proving the value of his pre-marital contribution to the wife’s separate property.
Further, we conclude that the circuit court did not have the authority under Code § 20-107.3 to
5
In light of this holding, we do not consider the husband’s challenge regarding the merits
of the ruling that there was no resulting trust, nor do we reach the wife’s argument that the
husband insufficiently pleaded his claim of a resulting trust through his single mention of
“resulting trust” in his affirmative defenses.
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determine whether a resulting trust existed. Finally, we deny the wife’s request for costs
incurred in this matter.
We reverse and remand for further proceedings consistent with this opinion, for the
purpose of the circuit court entering an order removing the $14,000 award to the husband from
the final award.
Reversed and remanded.
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