Meredith A. Challoner v. Cynthia P. Challoner ( 1997 )

COURT OF APPEALS OF VIRGINIA
Present: Judges Baker, Willis and Bray
Argued at Norfolk, Virginia
MEREDITH ALEXANDER CHALLONER
v. Record No. 1847-96-1
CYNTHIA PRESSON CHALLONER MEMORANDUM OPINION * BY
JUDGE JERE M. H. WILLIS, JR.
MEREDITH ALEXANDER CHALLONER APRIL 1, 1997
v. Record No. 2294-96-1
CYNTHIA PRESSON CHALLONER
FROM THE CIRCUIT COURT OF THE CITY OF NEWPORT NEWS
Verbena M. Askew, Judge
Player B. Michelsen (Donald K. Butler;
Morano, Colan & Butler, on briefs), for
appellant.
John F. Rixey (Rixey and Rixey, on brief),
for appellee.
Meredith A. Challoner appeals from a final decree granting
his wife, Cynthia P. Challoner, a divorce, and from an order
denying his petition for modification of support. Mr. Challoner
contends that the trial court erred (1) in classifying certain
stock as marital property, (2) in fashioning the equitable
distribution award, (3) in determining spousal and child support,
(4) in denying his petition for modification of support, and (5)
in awarding Ms. Challoner attorney's fees. Because the trial
court erred in classification of the parties' property, we
*
Pursuant to Code § 17-116.010 this opinion is not
designated for publication.
reverse on all issues and remand to the trial court.
Mr. Challoner contends that the trial court erred in finding
that stock in Hampton Roads Chemical Corporation (HRCC), a
family-owned business, was transmuted from separate property to
marital property. The parties were married December 16, 1972.
In 1972, prior to the marriage of the parties, Mr. Challoner
received five shares of HRCC from his father. In 1974, Mr.
Challoner began working for HRCC. Thereafter, he received stock
in HRCC as follows: thirty-nine shares in 1984; ten shares in
1987; eleven shares in 1988; and eleven shares in 1989. Mr.
Challoner argues that the stock was a gift, and, therefore, his
separate property.
The trial court erred in classifying the five premarital
shares as marital property, determining that this separate
property had been transmuted into marital property. Plainly, the
five shares of stock acquired by Mr. Challoner prior to his
marriage were separate property. See Code § 20-107.3(A)(1).
Despite the significant nonmonetary contributions made by Ms.
Challoner to the marital relationship, the statutory framework of
Code § 20-107.3 prevents the transmutation of the stock into
marital property.
Prior to equitable distribution, a trial court must classify
the parties' property as marital, separate, or part marital and
part separate. See Code § 20-107.3(A). The so-called "hybrid,"
or part marital and part separate, property classification
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permits the retention of separate property by the acquiring
spouse, while simultaneously affording the marital partner the
increase in value attributed to the separate property during the
course of the marital relationship. See Code § 20-107.3(A)(3).
However, the non-owning spouse must prove that the separate
property increased in value due to contributions of marital
property or the personal efforts of either party. Id. While the
trial court found that Mr. Challoner's personal efforts led to a
significant increase in the value of the HRCC stock, no evidence
was presented regarding the premarital value of the stock shares
acquired by Mr. Challoner. Therefore, we cannot determine the
amount, if any, of the value of the shares that constitutes
marital property.
We have previously held that: "prior to the 1990 amendment
to Code § 20-107.3 . . . if the non-owning spouse nevertheless
makes significant monetary or nonmonetary contributions to the
marital relationship, that contribution is sufficient to
transmute what was separate business property into marital
property where the owning spouse devotes his efforts throughout
the marriage to working in the business." Barnes v. Barnes, 16
Va. App. 98, 104-05, 428 S.E.2d 294, 299 (1993) (emphasis added).
See Lambert v. Lambert, 6 Va. App. 94, 367 S.E.2d 184 (1988).
Citing Barnes, the trial court found that Ms. Challoner:
Made significant non-monetary contributions
to the marital relationship which allowed
[Mr. Challoner] to spend an enormous amount
of time developing and enhancing the
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business. Based on the evidence, the Court
finds that HRCC was transmuted to marital
property.
The 1990 amendment to Code § 20-107.3 limits the potential
transmutation of separate property to marital property to
include: (1) retention of the classification of the receiving
property when separate and marital property commingle, with a
resulting loss of identity of the contributed property; (2)
acquisition of new property through the commingling of marital
and separate property resulting in the loss of identity of the
contributed properties; and (3) retitling separate property in
the joint names of the parties. See Code § 20-107.3(A)(3)(d-f).
In this case, the shares of stock owned by Mr. Challoner prior
to his marriage were not retitled in the parties' joint names,
commingled with marital property to acquire new property, or
commingled with marital property in such a manner as to lose its
separate identity. Therefore, the five shares of stock in HRCC
owned prior to marriage were not transmuted and remain Mr.
Challoner's separate property.
As for classification of the remaining shares, all property
acquired by either spouse during the marriage "is presumed to be
marital property in the absence of satisfactory evidence that it
is separate property." Code § 20-107.3(A)(2); Bowers v. Bowers,
4 Va. App. 610, 615, 359 S.E.2d 546, 549 (1987). Thus, if the
donee presents "sufficient evidence," and the other party
presents no evidence to the contrary, the statutory presumption
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of marital property is rebutted. See Huger v. Huger, 16 Va. App.
785, 788, 433 S.E.2d 255, 257 (1993).
In this case, Mr. Challoner failed to rebut the statutory
presumption. While he testified that the shares were gifts, the
commissioner found, and the trial court accepted, that the shares
received during marriage were marital property. The commissioner
noted that: "While a gift by definition is normally transferred
'without consideration,' the stock interests conveyed to the
husband were not in reality 'gifts,' but were in return for the
services he rendered" to HRCC. See Brett R. Turner, Equitable
Distribution of Property, § 5.16 (2d ed. 1994).
Because the parties' assets were improperly classified, the
trial court must reconsider its equitable distribution, child
support, and spousal support awards. While we recognize that our
reversal abrogates the trial court's award of attorney's fees to
Ms. Challoner for the hearing on Mr. Challoner's petition to
modify his support obligations, we note that the decision to
grant attorney's fees lies in the trial court's sound discretion
with the key being reasonableness under all of the circumstances.
Graves v. Graves, 4 Va. App. 326, 333, 357 S.E.2d 554, 558
(1987); McGinnis v. McGinnis, 1 Va. App. 272, 277, 338 S.E.2d
159, 162 (1985).
In addition, we recognize that the trial court may be called
upon to reconsider whether to deviate from the child support
guidelines to accommodate the tuition costs for the parties'
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children's attendance at private schools. While not addressing
this issue specifically on appeal, we suggest the following as
guidance to assist the trial court in resolving this matter.
"Implicit in the [child support] statutory scheme is that
educational expenses are included in the presumptive amount of
child support as calculated under the Code." Smith v. Smith,
18 Va. App. 427, 435, 444 S.E.2d 269, 275 (1994). See Code
§ 20-108.1(B)(6). "Code § 20-108.1(B) expressly provides that
when a trial court deviates from the presumptive amount
recommended by the guidelines, it must provide written findings
of fact that 'shall give a justification of why the order varies
from the guidelines.'" Solomond v. Ball, 22 Va. App. 385, 391,
470 S.E.2d 157, 159-60 (1996) (citation omitted).
In the final decree of divorce, the trial court deviated
from the child support guidelines to include the private school
expenses of the parties' children. In justifying the increase in
support, the trial court opined that:
[T]he presumptive amount of child support
. . . would be unjust and inappropriate in
this case based upon the standard of living
of the family established during the
marriage, the particular problems of one or
more of the children, the indicated desires
of both parties to continue with the private
education of the children, and the earning
capacity, obligations, needs and financial
resources of both parties . . . .
In Ball, the trial court failed to consider whether the
father was required to pay for his children's transfer from one
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private school to a more "preferred," and, expensive, private
school. In reversing that judgment, we noted that "the trial
court must consider, together with each parent's ability to pay,
whether a reason or need is shown to justify a change of schools
before increasing a noncustodial parent's support obligation."
Ball, 22 Va. App. at 392, 470 S.E.2d at 160. In determining
whether requiring a parent to pay for a child to transfer to a
more expensive school is justified, relevant factors include:
the availability of satisfactory public schools, attendance at
private school prior to the separation and divorce, special
emotional or physical needs, religious training and family
tradition. Id. at 391-92, 470 S.E.2d at 160.
In this case, the trial court grounded its decision to
deviate upward from the child support guidelines upon the
parties' standard of living, earning capacity and the "particular
problems of one or more children." See Code § 20-108.1(B)(6),
(10) and (11). Prior to the separation, the parties' children
attended private school, with tuition costs estimated at $11,050
in 1993. However, since the parties' separation, one child moved
to a different private school, and the eldest child went to
boarding school. The evidence showed that tuition expenses
totaled $23,790. The trial court modified the presumptive
monthly child support obligation from $2,487 to $3,787 per month,
which included health care coverage.
In deviating from the presumptive child support guidelines,
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the trial court should consider what specific circumstances
justified requiring Mr. Challoner to pay for significantly
increased tuition costs resulting from the transfer of the
parties' children to different, and more expensive, private
schools.
For the foregoing reasons, we reverse and remand to the
trial court for further proceedings consistent with this opinion.
Reversed and remanded.
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