John P. McPherson v. Betty M. McPherson ( 1999 )

COURT OF APPEALS OF VIRGINIA
Present: Chief Judge Fitzpatrick, Judge Bray and
Senior Judge Overton ∗
Argued at Norfolk, Virginia
BETTY M. McPHERSON
MEMORANDUM OPINION ∗∗ BY
v. Record No. 1022-98-1 JUDGE RICHARD S. BRAY
MARCH 2, 1999
JOHN P. McPHERSON
JOHN P. McPHERSON
v. Record No. 1037-98-1
BETTY M. McPHERSON
FROM THE CIRCUIT COURT OF YORK COUNTY
N. Prentis Smiley, Jr., Judge
Lawrence D. Diehl for Betty M. McPherson.
Scott L. Reichle (Donald J. Reichle; Reichle &
Reichle, P.C., on briefs), for John P.
McPherson.
The instant cause was initiated in the trial court by
Betty M. McPherson (wife), praying for a divorce and related
relief from John P. McPherson (husband). The matter was referred
to a commissioner in chancery (commissioner), and an extensive
report was lodged with the court following several evidentiary
hearings. Both parties excepted to specific findings and
∗
Judge Overton participated in the hearing and decision of
this case prior to the effective date of his retirement on
January 31, 1999 and thereafter by his designation as a senior
judge pursuant to Code § 17.1-401, recodifying Code
§ 17-116.01:1.
∗∗
Pursuant to Code § 17.1-413, recodifying Code
§ 17-116.010, this opinion is not designated for publication.
recommendations of the commissioner, ore tenus arguments were
heard by the court and the final decree, which aggrieved both
parties, was entered on April 8, 1998.
Wife complains on appeal that the court erroneously (1)
classified her separate property, Bethel Manor Dairy Queen (Dairy
Queen) and related realty, as hybrid property and incorrectly
determined and valued the resulting separate and marital shares,
(2) failed to classify Yorktown Industries (Yorktown) as marital
property either by transmutation or agreement of the parties, and
(3) fixed the monetary award. Husband, on cross-appeal, contends
that the court improperly (1) awarded wife spousal support, (2)
failed to hold wife accountable for waste of marital assets, (3)
classified the “marital home,” 226 Bacon Street (Bacon Street), as
wife’s separate property, (4) determined wife’s separate property
interests in Dairy Queen, (5) classified monies in certain
business accounts of the parties, and (6) awarded wife a portion
of her attorney’s fees.
Finding substantial error in the court’s classification and
valuation of significant assets in issue, we reverse the decree
and remand the proceedings. The parties are fully conversant with
the voluminous record, and a recitation of the facts is
unnecessary to this memorandum opinion.
Guided by familiar principles, we view [the] evidence and
all reasonable inferences in the light most favorable to the
prevailing party on an issue below. Although a decree based upon
depositions is "'not as strong and conclusive as one based on
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evidence heard ore tenus, [it] is presumed to be correct . . .
[and] will not be reversed if . . . reasonably supported by
substantial, competent and credible evidence.'" Martin v.
Martin, 202 Va. 769, 773, 120 S.E.2d 471, 474 (1961) (citations
omitted). Thus, we defer to the chancellor’s "'resolution of the
conflict in the equities'" in adjudicating equitable distribution
and will disturb a decree only when the court has abused its
discretion, departed from statutory mandate or acted without
support in the evidence. Banagan v. Banagan, 17 Va. App. 321,
326, 437 S.E.2d 229, 231-32 (1993) (citation omitted). "[T]he
burden is on him who seeks to overturn [a decree] to show that it
is manifestly wrong." Canavos v. Canavos, 200 Va. 861, 866, 108
S.E.2d 359, 363 (1959).
I.
There are three stages to making an
equitable distribution of property. The
court first must classify the property as
either separate or marital. The court then
must assign a value to the property based
upon evidence presented by both parties.
Finally, the court distributes the property
to the parties, taking into consideration the
factors presented in Code § 20-107.3(E).
Marion v. Marion, 11 Va. App. 659, 665, 401 S.E.2d 432, 436
(1991); see Code § 20-107.3.
Code § 20-107.3(A) defines both separate and marital
property, expressly designating increases in the value of
separate property during marriage as separate property, unless
attributable either to marital property or substantial and
resulting from the "significant" "personal efforts" of either
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party. Code § 20-107.3(A)(1). Property appreciated by marital
effort or assets becomes "part marital . . . and part separate,"
with the marital portion comprised of the marital contributions
to enhancement. Code § 20-107.3(A)(3); see Code
§ 20-107.3(A)(1). The burden is upon the "nonowning spouse" to
prove marital interest enhanced separate property, but, once
established, the "owning spouse" must show that such increase is
attributable neither to marital property nor effort. 1 Code
§ 20-107.3(A)(3)(a). Manifestly, whenever enhancement is the
wealth in issue, the court cannot properly conduct a
classification and value analysis without first ascertaining the
amount of appreciation. See, e.g., Martin v. Martin, 27 Va. App.
745, 501 S.E.2d 450 (1998); Rowe v. Rowe, 24 Va. App. 123, 480
S.E.2d 760 (1997); Decker v. Decker, 17 Va. App. 12, 435 S.E.2d
407 (1993).
Here, the record discloses neither the values of Dairy Queen
and Bacon Street, wife’s properties, nor the values of certain
Yorktown assets, husband’s holdings, at the time of marriage.
Thus, the court’s determination of marital and separate interests
in these otherwise separate assets, together with attendant
values, was unsupported by evidence and in error. Further, the
consideration of such findings in an equitable distribution
1
Similarly, separate property commingled with marital
property in a "newly acquired" asset may be saved from
transmutation by tracing, with enhancements in value subject to
like analysis. Code § 20-107.3(A)(3)(e); see Martin v. Martin,
27 Va. App. 745, 751-52, 501 S.E.2d 450, 453 (1998).
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analysis and award infected the entire adjudication and
compounded the error. See Code § 20-107.3(E). Accordingly, we
must reverse the disputed decree and remand the proceedings to
the trial court for reclassification and revaluation of
enhancements in the property interest of the parties and
determination of an award guided by Code § 20-107.3 and this
opinion.
II.
We must now address several remaining issues on appeal which
may arise on remand.
Relying upon an alleged oral "agreement to reconcile," wife
claims a contractual one-half interest in Yorktown. Assuming,
without deciding, that such agreements are cognizable in divorce
proceedings, "the same rules generally applicable to contracts
control the issue" of validity. Richardson v. Richardson, 10 Va.
App. 391, 395, 392 S.E.2d 688, 690 (1990). "To be valid and
enforceable, the terms of an oral agreement must be reasonably
certain, definite, and complete to enable the parties and the
courts to give the agreement exact meaning." Id. (citation
omitted). "[T]he proponent of [an] oral contract has the burden
of proving all elements" of the contract. Id. at 396, 392 S.E.2d
at 690 (citation omitted).
The commissioner found no "meeting of the minds" or
sufficient "proof . . . of such agreement," a finding
specifically "sustained" by the court. Our deferential review of
the record reveals no definitive agreement between the parties as
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a matter of law and we, therefore, decline to reverse the court’s
conclusion that wife’s evidence failed to sufficiently prove a
contract.
In addition to marital effort, husband claims certain direct
monetary contributions to both the Bacon Street and Dairy Queen
properties in support of his claim to a marital interest in these
assets. However, the record is silent on any increased value of
the properties resulting from such expenditures. "The term
'contribution of marital property' within the . . . statute
contemplates an improvement, renovation, addition, or other
contribution which, by its nature, imparts intrinsic value to the
property and materially changes the character thereof." Martin,
27 Va. App. at 756, 501 S.E.2d at 455 (citation omitted).
Evidence of cost does not sufficiently establish such value. 2
Id. at 756-57, 501 S.E.2d at 455-56.
Husband contends that wife wasted certain marital assets
following separation "to pay for attorney’s fees and other costs"
without a full accounting. "However, expenditure of funds for
items such as living expenses, support and attorney’s fees,
constitutes a valid purpose and is not dissipation . . . ."
Decker, 17 Va. App. at 19, 435 S.E.2d at 412. The record
supports the court’s conclusion that wife’s expenditures of the
funds in issue did not constitute waste or dissipation, and this
determination will not be disturbed on appeal.
2
We defer to the court’s assessment on remand of husband’s
other marital contributions to enhancement of these properties.
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Husband next complains that the court considered certain
marital cash on deposit in his "corporate business accounts,"
while excluding like monies held by wife in Dairy Queen. The
record indicates that this Yorktown asset was not included with
other evidence of Yorktown’s worth, while the total value of
Dairy Queen was before the court as a recent sales price. Such
evidence supports the inference that the Dairy Queen cash account
was included in that transaction and, therefore, also considered
by the court.
Husband further argues that the court improperly awarded
wife "lump sum spousal support." In awarding spousal support,
the court must consider numerous statutory factors, including the
"provisions made with regard to the marital property under [Code]
§ 20-107.3." Code § 20-107.1(E). Because the disputed decree is
reversed and remanded to the trial court on issues of equitable
distribution, we must also reverse and remand the spousal support
award for redetermination by the court under the circumstances
then pertaining.
Lastly, husband complains that the trial court erroneously
awarded wife $10,000 attorney's fees and costs, and both parties
seek attorneys’ fees incidental to these appeals. It is well
established that the award of attorney’s fees rests with the
sound discretion of the trial court and will not be disturbed on
appeal, absent abuse of such discretion. Rowand v. Rowand, 215
Va. 344, 346-47, 210 S.E.2d 149, 151 (1974). Finding no error in
this instance, we affirm the award to wife. With respect to fees
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arising from the respective appeals, we have determined, after
review of the record and consideration of the issues and
attendant circumstances, to deny an award to both parties.
Accordingly, we reverse the disputed decree and remand the
cause to the trial court for reconsideration of the relevant
issues before the court, together with such additional evidence
as the court deems appropriate to a just adjudication consistent
with statute and this opinion.
Affirmed in part,
reversed in part,
and remanded.
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