Danette K. Lopez v. Robert N. Lopez ( 2004 )

COURT OF APPEALS OF VIRGINIA
Present: Judges Annunziata, Frank and McClanahan
Argued at Chesapeake, Virginia
DANETTE K. LOPEZ
MEMORANDUM OPINION∗ BY
v. Record No. 2400-03-1 JUDGE ELIZABETH A. McCLANAHAN
JUNE 29, 2004
ROBERT N. LOPEZ
FROM THE CIRCUIT COURT OF GLOUCESTER COUNTY
William H. Shaw, III, Judge
Stephen A. Palmer for appellant.
Kenneth R. Yoffey (Yoffey & Turbeville, on brief), for appellee.
Danette K. Lopez appeals from a decision denying her spousal support from her
ex-husband, Robert N. Lopez. Wife contends that the trial court erred in (1) considering wife’s
inheritance as income; and (2) failing to consider the income-generating potential of husband’s
equitable distribution monetary award, when determining whether to award wife spousal support.
For the reasons that follow, we affirm in part and reverse in part and remand to the trial court for
a reconsideration of the spousal support award.
I. Background
When reviewing a chancellor’s decision on appeal, we view the evidence in the light
most favorable to the prevailing party, granting him the benefit of any reasonable inferences.
Congdon v. Congdon, 40 Va. App. 255, 258, 578 S.E.2d 833, 835 (2003). Danette Lopez and
Robert Lopez married in 1986. After an ore tenus hearing, by letter opinion dated June 20, 2003,
the trial court granted husband a divorce on the grounds that the parties had lived separate and
∗
Pursuant to Code § 17.1-413, this opinion is not designated for publication.
apart for more than one year. The letter opinion also included the chancellor’s rulings on, inter
alia, equitable distribution and spousal support.
With regard to the equitable distribution of the marital residence, the chancellor wrote,
“Wife may purchase Husband’s interest in the marital residence, provided that she obtains new
financing . . . and pays off the existing indebtedness secured by the property. Further, she shall
pay Husband $25,000 for his interest.”
For purposes of spousal support and child support, the chancellor found husband’s gross
income to be $6,129 per month, “entirely a product of his employment income.” He found
wife’s income to be $5,495 per month, “a product of several factors,” including wife’s income
from employment, the monthly income from her rental home, and a monthly share of wife’s
inheritance from her mother’s estate, “amortized over 24 months.” The trial court listed wife’s
inheritance from her mother’s estate to include some bank and investment accounts, proceeds
from a life insurance policy, an automobile, which was given to wife’s sister, furniture, a
condominium, the sale proceeds from which were deposited in a certificate of deposit, and a
partnership in a real estate venture. The court noted that wife and her sister shared equally in the
proceeds of the balance of the estate.
After detailing wife’s inheritance, the chancellor wrote, “Having amortized the principal
[of wife’s inheritance], no allowance is made for income earned.” He then ruled, “No spousal
support is awarded to Wife at this time, however spousal support is reserved to her and she may
seek a change in support upon a material change.” Further, “although Wife’s share of the
equitable distribution award is less liquid than Husband’s, her request for the marital residence
has been granted and she has the means to fund the award.”
Wife filed a motion to reconsider, assigning four errors to the court’s decision on spousal
support. First, that the court erroneously relied on Goldhamer v. Cohen, 31 Va. App. 728, 525
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S.E.2d 599 (2000), with regard to the calculation of gross income for the purposes of
determining spousal support, arguing that case exclusively dealt with determining gross income
for the purposes of child support. Second, that the court failed to take into consideration the
$25,000 monetary award that husband received for his interest in the marital residence. Third,
that the court erroneously considered wife’s inheritance as income and amortized it over
twenty-four months, requiring her to invade and deplete her own estate to relieve husband of his
spousal support obligation. And fourth, that the court should only consider the
income-generating potential of an asset in determining spousal support and not the asset itself.
The trial judge denied the motion to reconsider, but responded to wife’s motion seriatim
in a letter dated July 28, 2003. He wrote, first, that “[a]lthough Goldhamer v. Cohen involved
the determination of gross income for child support purposes, the same considerations should be
used to determine spousal support.” Second, “[t]he overall equitable distribution award was
considered in determining the support issues, even if not expressly addressed.” Third, that the
inheritance was treated “like other non-recurring income, such as bonuses or prizes. The
inheritance is largely liquid or readily capable of becoming liquid, and has been received or is
reasonably capable of being received over two years.” And fourth, that the “inheritance is not an
asset subject to equitable distribution. Nevertheless, while the income generated by an asset may
be the appropriate factor to consider, I deem most of the inheritance as income.” The
chancellor’s rulings were incorporated into the final decree of divorce entered on August 22,
2003. This appeal followed.
II. Analysis
“Whether spousal support should be paid is largely a matter committed to the sound
discretion of the trial court, subject to the provisions of Code § 20-107.1.” Moreno v. Moreno,
24 Va. App. 190, 194, 480 S.E.2d 792, 794 (1997) (quoting McGuire v. McGuire, 10 Va. App.
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248, 251, 391 S.E.2d 344, 346 (1990)). The trial court’s decision can be overturned only by a
showing of an abuse of that discretion. Northcutt v. Northcutt, 39 Va. App. 192, 196, 571 S.E.2d
912, 914 (2002). “An abuse of discretion can be found if the trial court uses ‘an improper legal
standard in exercising its discretionary function,’” Congdon, 40 Va. App. at 262, 578 S.E.2d at
836 (citation omitted), because “a trial court ‘by definition abuses its discretion when it makes an
error of law.’” Shooltz v. Shooltz, 27 Va. App. 264, 271, 498 S.E.2d 437, 441 (1998) (quoting
Koon v. United States, 518 U.S. 81, 100 (1996)).
A. Wife’s Inheritance as Income
Code § 20-107.1(E), governing the decree of maintenance and spousal support, lists the
factors that the trial court must consider in making that determination. The first factor listed is
“[t]he earning capacity, obligations, needs and financial resources of the parties, including but
not limited to income from all pension, profit sharing or retirement plans, of whatever nature.”
Thus, Code § 20-107.1 requires the trial court to consider wife’s inheritance as a financial
resource.
While the trial court was required to consider the inheritance, its reliance on Goldhamer
is misplaced. Goldhamer involved the computation of gross income with regard to child support.
The General Assembly has set out in Code § 20-108.2(C) the definition of gross income for the
purposes of child support. That statute clearly confines the definition to child support
calculations. The General Assembly has not set out the definition of gross income for the
purposes of determining spousal support. See Code § 20-107.1. And this Court has said, “Child
support and spousal support are separate and distinct obligations based on different criteria.”
Lambert v. Lambert, 10 Va. App. 623, 629, 395 S.E.2d 207, 210 (1990).
The courts generally have discretion in deciding what constitutes income. In this case,
the trial court decided that wife’s inheritance was similar to a prize or gift and, therefore,
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amounted to income. It then required her to invade the inheritance as a source of income for her
support.
Wife’s receipt of monies from an inheritance does not amount to income to her. Income
entails a recurrent benefit. An inheritance is not income. A dividend or interest payment from
an invested sum, which is a recurrent benefit, is income. Black’s Law Dictionary defines income
as “[the] return of money from one’s business, labor or capital invested; gains, profits, salary,
wages, etc.” Black’s Law Dictionary 524 (abridged 6th ed. 1991). Income is proceeds from the
capital, but is not the capital itself.
Moreover, even if we were to import the definition of gross income from Code
§ 20-108.1(C) for the purposes of determining spousal support, and consider wife’s inheritance
in the “gifts, prizes or awards” category, the definition in that statute clearly states that it is the
income from the source, not the source itself. Here, the court was requiring wife to invade the
principal of her asset for her support. “The law does not require the spouse who seeks support to
exhaust his or her own estate in order to qualify, relieving the other spouse of all obligation of
support until that estate is depleted.” Zipf v. Zipf, 8 Va. App. 387, 398-99, 382 S.E.2d 263, 269
(1989) (citing Ray v. Ray, 4 Va. App. 509, 514, 358 S.E.2d 754, 757 (1987)); see also Klotz v.
Klotz, 203 Va. 677, 680, 127 S.E.2d 104, 106, (1962).1 “Spousal support involves a legal duty
flowing from one spouse to the other by virtue of the marital relationship.” Dotson v. Dotson, 24
Va. App. 40, 44, 480 S.E.2d 131, 132 (1997) (quoting Brown v. Brown, 5 Va. App. 238, 246,
1
The question of whether a spouse may be required to invade his or her estate in order to
pay spousal support is not before us on appeal; however, it is a closely related issue and is
relevant to our analysis. We note that the Virginia Supreme Court long ago stated, “Alimony is
usually an allowance in money out of the husband’s estate, but not the estate itself.” Lovegrove
v. Lovegrove, 128 Va. 449, 451, 104 S.E. 804, 804 (1920), and Bray v. Landergren, 161 Va.
699,703-704,172 S.E. 252, 253 (1934); see also Barker v. Barker, 27 Va. App. 519, 530-31, 500
S.E.2d 240, 245 (1998). While alimony is now referred to as spousal support and either spouse
may be required to pay it, as circumstances require, the concept is the same.
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361 S.E.2d 364, 368 (1987)). “[T]he law imposes upon the [supporting spouse] the duty, within
the limits of [his or her] financial ability, to maintain [his or her] former [spouse] according to
the station in life to which [he or she] was accustomed during the marriage.” Via v. Via, 14
Va. App. 868, 870, 419 S.E.2d 431, 433 (1992) (quoting Klotz, 203 Va. at 680, 127 S.E.2d at
106.) “‘[T]he law does not require [wife] to invade [her] estate to relieve the obligation of her
former husband whose actions have brought an end to their marriage.’” Ray, 4 Va. App. at 514,
358 S.E.2d at 757 (quoting Klotz, 203 Va. at 680, 127 S.E.2d at 106). See also Zipf, 8 Va. App
at 398-99, 382 S.E.2d at 269-70.
Husband contends that wife’s inheritance is similar to the contribution to a savings or
deferred contribution plan considered as gross income in Frazer v. Frazer, 23 Va. App. 358,
378-79, 477 S.E.2d 290, 300 (1996). We disagree. Voluntary contributions to a retirement
account are actual earnings that are merely set aside for the future, and such contributions are
still income, albeit deferred. An inheritance, on the other hand, is a one-time bequest, and is not
income.
Wife maintains that the court should have only considered the income-generating
potential of the inheritance as income for the purposes of determining spousal support. We
agree. A court must consider any income the parties’ assets are able to produce. See Rowe v.
Rowe, 24 Va. App. 123, 139, 480 S.E.2d 760, 767 (1997). It is appropriate for the court to
consider the income-generating potential of any asset when determining whether to award
spousal support. Because we hold that income includes earnings from an asset, and not the asset
itself, we reverse and remand for the court’s reconsideration of the spousal support award.
B. The Income-Generating Potential of Husband’s Equitable Distribution Monetary Award
Wife argues that the court’s ruling on the marital residence created for her an additional
obligation that had to be paid out of her inheritance, thereby reducing the amount of her
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inheritance available for income, and increasing the resources available to husband for use in
paying spousal support. She contends that when determining spousal support, the court failed to
take into consideration that husband was provided with an additional $25,000 for his interest in
the marital residence.
To the contrary, in response to wife’s motion to reconsider, the trial court stated in its
July 28, 2003 letter to the parties that “[t]he overall equitable distribution award was considered
in determining the support issues, even if not expressly addressed.” Clearly, then, the court
considered husband’s monetary award with regard to the spousal support award. We presume
the court correctly applied the law. McGinnis v. McGinnis, 1 Va. App. 272, 277, 338 S.E.2d
159, 161 (1985). See also Barker v. Barker, 27 Va. App. 519, 543, 500 S.E.2d 240, 252 (1998)
(“Unless a party can show evidence to the contrary, we presume that the trial court properly
applied the law to the facts.”); Yarborough v. Commonwealth, 217 Va. 971, 978, 234 S.E.2d
286, 291 (1977) (appellate court presumes the trial court correctly applied the law to the facts).
Wife asserts that the court’s ruling on the marital residence created for her an additional
obligation that had to be paid out of her inheritance. We disagree. The court stated in its ruling,
“Wife may purchase Husband’s interest in the marital residence, provided that she obtains new
financing . . . and pays off the existing indebtedness secured by the property.” Therefore, the
trial court allowed wife to purchase husband’s interest in the marital residence. It did not order
wife to pay for the marital residence out of her inheritance. In fact, the court assumed wife
would obtain new financing. It was wife’s decision to pay for husband’s interest in the marital
residence from her inheritance.
III. Conclusion
We hold that the trial court erred in considering wife’s inheritance as income for the
purposes of determining spousal support. However, the income-generating potential from that
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asset is an appropriate consideration when determining gross income for purposes of spousal
support. We affirm the trial court’s decision with regard to its consideration of husband’s
equitable distribution monetary award for his interest in the marital residence. Accordingly, we
affirm in part, reverse in part, and remand for a reconsideration of the spousal support award.
Affirmed in part,
reversed in part,
and remanded.
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