Courtney R. Herbert v. Guy R. Joubert ( 2018 )

COURT OF APPEALS OF VIRGINIA
Present: Judges Beales, Decker and AtLee
Argued at Richmond, Virginia
UNPUBLISHED
COURTNEY R. HERBERT
MEMORANDUM OPINION* BY
v. Record No. 1384-17-4 JUDGE MARLA GRAFF DECKER
AUGUST 14, 2018
GUY R. JOUBERT
FROM THE CIRCUIT COURT OF FAIRFAX COUNTY
Randy I. Bellows, Judge1
Scott A. Surovell (Tanisha M. Harris; Mark A. Barondess; Surovell
Isaacs & Levy PLC; Funk & Bolton, PA, on briefs), for appellant.
Lawrence D. Diehl (Barnes & Diehl, P.C., on brief), for appellee.
Courtney R. Herbert (the wife) appeals a final order resolving equitable distribution issues in
the course of her divorce from Guy R. Joubert (the husband). She contends that the circuit court
erroneously determined how much of the increase in value of the husband’s interest in a particular
business was marital property. She argues that the court misapplied the burden of proof and that the
evidence and the court’s findings fail to support its determination that only a portion of the increase
was marital property. For the reasons that follow, we affirm the circuit court’s decision.
Additionally, we deny the parties’ respective requests for attorney’s fees and costs incurred on
appeal.
*
Pursuant to Code § 17.1-413, this opinion is not designated for publication.
1
Judge Bellows issued the final order in this case. Judge Pro Tempore Stanley P. Klein
ruled on the equitable distribution issues that are the subject of this appeal. See Code § 17.1-110
(vesting the judge pro tempore with the “same power and authority” as the circuit court).
I. BACKGROUND2
The parties were married in 2007. Prior to the marriage, the husband co-founded a
company called Resonant Legal Media (RLM), which created “visual design[s] and trial
technology for use in litigation.” The parties separated in 2015 and sought a divorce and
equitable distribution. They agreed to a valuation date for RLM of December 31, 2015, at which
time the husband owned 30% of the company. It was undisputed that the husband’s share of
RLM was his separate property when the parties married. It was also undisputed that the
husband made significant contributions of personal efforts to RLM during the course of the
marriage and that his interest in the property substantially appreciated in value. However, the
parties disputed the extent to which the husband’s personal effort caused the value to increase
and, accordingly, how much of the increase in the value of RLM should be classified as marital
property.
A. Key Testimony of Expert Witness Harold Martin
The husband hired Harold Martin, a certified public accountant, to determine the increase
in value of the husband’s interest in RLM due to the personal efforts of the husband and wife.
Martin testified that in order to calculate this figure, he “used . . . a residual approach.” Martin
“start[ed] with 100[%] appreciation” and “then looked at” two components: (1) market forces
and (2) the efforts of third parties. He explained that “whatever is leftover [sic] after allocating
to those two components would be attributable to” the personal efforts of the husband and wife.3
2
The record was sealed by the circuit court pursuant to Code § 20-124. Nevertheless, the
appeal necessitates unsealing relevant portions of the record for purposes of resolving the issues
raised by the wife. Consequently, “[t]o the extent that this opinion mentions facts found in the
sealed record, we unseal only those specific facts, finding them relevant to the decision in this
case. The remainder of the previously sealed record remains sealed.” Levick v. MacDougall,
294 Va. 283, 288 n.1, 805 S.E.2d 775, 777 n.1 (2017).
3
The wife does not dispute the circuit court’s finding that the evidence did not prove that
she engaged in any significant personal efforts that contributed to the increase in value.
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Martin provided detailed testimony about the market forces he considered, including the
volume of patent litigation, the primary field to which RLM provided services. Based upon
those considerations, he opined that market forces accounted for 48% of the total appreciation in
value of the company between 2008 and 2014. The judge sustained an objection to the
calculations as speculative.
Martin performed a second set of calculations that were based solely on the personal
efforts of RLM’s principals and did not include any impact from market forces. As to these
personal efforts, Martin elaborated that he examined two major factors, control and management
contributions.
Regarding the factor of control, he considered the various ownership percentages.
Undisputed evidence established that the husband owned a 30% interest in the company and that
his three partners owned the remaining 70% interest. Regarding the factor of management
contributions, Martin looked to the various owners’ supervisory responsibilities and their
recruitment of new employees. He also considered the owners’ contributions to the direct
generation of revenue.
The evidence showed that the husband shared supervisory duties in roughly equal
proportions with two of the other three owners. According to Martin, all of RLM’s principals
helped grow the company by “recruiting key professional staff.” Additionally, the husband and
his partners all originally contributed to the growth in value of the company through their direct
marketing efforts. In later years, however, the husband’s role shifted to managing the company’s
financial department and overseeing operational matters.
Martin further testified regarding the husband’s generation of revenue for RLM and its
impact on the company’s increase in value. He calculated that the husband’s partners held
ownership interest of 70% and generated 77% of the company revenue, averaging those figures
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to conclude that 73.5% of the increase in value of the husband’s interest was due to the efforts of
third parties and the remaining 26.5% was attributable to the husband’s personal efforts.
Martin also performed a third set of calculations, in which he considered market forces,
the personal efforts of others, and the husband’s personal efforts. He concluded that the
husband’s personal efforts accounted for 14% of the increase.
B. The Circuit Court’s Ruling
In a letter opinion dated March 30, 2017, the judge found, “[a]fter full consideration of all
the evidence presented at trial,” that the increase in value of the husband’s separate property
interest in RLM between the date of marriage and the date of the evidentiary hearing was
$2,212,730. He noted Martin’s opinion that 48% of the increase in value of the husband’s
interest during the marriage resulted from passive factors, including market forces and patent
litigation. However, the judge rejected that opinion and found that the husband’s evidence as a
whole was insufficient to establish the extent to which market forces and other passive factors
contributed to the increase in value of his share of the company. Accordingly, the judge held
that the husband failed to meet his burden on the subject of market forces and other passive
factors, and he refused to reduce the presumption that 100% of the increase was marital based on
those factors. At the same time, the judge found that Martin’s conclusion that the husband’s
personal efforts “contributed to only 14% of the increase” was “materially understated.”
The judge next considered the evidence regarding the impact of active factors—the
personal efforts of the husband and others. He found that Anthony Canzanella, a co-owner of
RLM, “was attempting to help [the husband] . . . during his testimony at trial.” Nevertheless, the
judge did not reject Canzanella’s testimony in its entirety, specifically finding that he did not
slant his testimony “nearly to the extent implied by [the wife’s] counsel during his
cross-examination.” The judge further found the husband’s testimony “generally credible” in the
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portion of the hearing involving his own contributions toward the increase in value of RLM. He
noted, however, that the husband “did not differentiate between the extent of his contribution to
RLM in comparison to the contribution[s] of others.”
The judge then evaluated the testimony of expert witness Martin on the subject of the
husband’s personal efforts. He noted that Martin “relie[d] principally on the direct generation of
revenue figures” provided by the husband. The judge also pointed out that the husband, who had
previously been the company’s “primary rainmaker,” took on a more managerial role in 2011
and his direct revenue production declined as a result. He rejected Martin’s theory that this
change in duties and the associated reduction in direct revenue generation negatively impacted
the amount of the increase in value that was attributable to the husband’s efforts. The judge
reasoned that the principals of RLM obviously “agreed that the company would be better served
by [the husband’s] taking on more managerial and [fewer] revenue producing responsibilities.”
He further noted that the husband served as managing partner during a time when RLM’s
workforce doubled and it “became the largest company in its industry.” Additionally, the judge
disagreed with Martin’s position that the husband’s personal efforts had “no effect on the
appreciation of the non-operating assets of RLM.”
The judge concluded his assessment of Martin’s testimony by again rejecting Martin’s
opinion regarding the impact of market forces on the increase in value of the company during the
relevant period. However, he expressly distinguished Martin’s opinion regarding the husband’s
personal efforts, making clear that he did not reject Martin’s testimony on that subject.4
Finally, the judge analyzed the evidence in conjunction with the relevant case law in an
effort to correctly determine the impact of the evidence on the calculation of the percentage of
4
The judge wrote that Martin’s analysis was “insufficient[]. . . to provide adequate
support for his opinion on the effect of forces other than [the husband’s] personal efforts on the
increase in value of RLM during that period.” (Emphasis added).
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the marital share. He noted that four managers controlled RLM and that the husband’s
“proportionate” share of the business was 30%. The judge ruled that the husband’s proportionate
ownership share should govern the classification issue and, accordingly, “that 30% of the
husband’s share of the increase in value of the company” was marital property. Based on the
evidence, he calculated the total “increase in value” as $2,212,730.5 Although the judge
specifically stated his ruling that only 30% of that sum was the marital share of the increase, he
inserted the full figure of $2,212,730 in a chart in the letter opinion listing the “marital assets”
that each party had in his or her possession for purposes of effecting the equitable distribution,
indicating that it represented the “RLM Value Increase” that was marital property.
C. Motions for Clarification and Reconsideration
The husband filed a motion for clarification due to clerical error, indicating that the
circuit court erred in listing the full $2,212,730 as marital property rather than 30% of that sum.
At the hearing on that motion, the judge agreed that he had made a mathematical error in the
chart of marital assets. Consequently, he issued an amended letter opinion calculating that 30%
of the increase was $663,819.
The wife filed a motion for reconsideration, arguing that the husband failed to meet his
burden of proving what percentage of the increase in value of his share of RLM resulted from
personal efforts during the marriage and what portion did not. She contended that the court erred
in using the husband’s 30% ownership interest as a “proxy” for such evidence instead of
weighing “all of the variables that play[ed] a role in apportioning the increase in value between
marital effort and other factors.” The wife suggested to the court that it found that the record did
5
On appeal, the parties do not contest the stipulated values of the husband’s interest on
the date of the marriage and the date of the evidentiary hearing.
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not contain credible evidence concerning these variables and that, in the absence of such
evidence, the court should have held that the entire increase in value was marital property.
At the hearing on the motion for reconsideration, the judge clarified his rationale for
ruling that 30% of the increase in value of the husband’s interest in RLM was marital. While
acknowledging the wife’s argument, the judge made clear that he did not use a formula and,
instead, “consider[ed] everything . . . in evidence,” in particular the husband’s role as “managing
partner.” Following entry of an order denying the motion for reconsideration, the wife noted this
appeal.
II. ANALYSIS
The wife raises five assignments of error. The first alleges that the circuit court improperly
“value[d] and equitably distribute[d] the marital asset of [the husband’s] interest in RLM.” The
remaining four assignments of error allege more specific ways in which she argues that the circuit
court’s related findings and distribution were legally and factually erroneous. The husband suggests
that these final four assignments of error are critically flawed and urges this Court to dismiss them.
A. Scope of the Appeal
The husband asserts that assignments of error two through five challenge a ruling that the
circuit court did not make. All four depend, in part, on the wife’s claim that the court rejected the
entirety of the husband’s evidence as “unpersuasive” and held that he did not meet his statutory
burden of proof. These assignments of error suggest that, as a result of these alleged conclusions,
the record fails to support the court’s ultimate ruling that the marital share of the increase in value of
the husband’s interest in RLM was less than 100%.
In support of dismissal, the husband relies on Rule 5A:12(c)(1), which applies to petitions
for appeal. The rule provides, in pertinent part, that an “assignment of error which does not address
the findings or rulings in the [lower] court . . . is not sufficient” and that “[i]f the assignments of
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error are insufficient, the petition shall be dismissed.” The husband acknowledges that Rule 5A:12
does not apply to civil appeals of right, but he relies upon the recent decision of this Court in
Geouge v. Traylor, 68 Va. App. 343, 808 S.E.2d 541 (2017). In Geouge, the Court stated that
litigants “in appeals of right would be well-served by observing [the] requirements [of Rule
5A:12(c)] in drafting assignments of error.” Id. at 373 n.12, 808 S.E.2d at 555 n.12. On that
basis, it declined to consider a claim of “error to a ruling that the circuit court did not make.” Id.
at 373, 808 S.E.2d at 555.
We wholeheartedly agree with the observation in Geouge that civil litigants should adhere to
the requirements of Rule 5A:12(c) in formulating their assignments of error. It is only logical that
this Court will not consider an assignment of error to a ruling when no such ruling was made. See
Culpeper Reg’l Hosp. v. Jones, 64 Va. App. 207, 212 n.2, 767 S.E.2d 236, 239 n.2 (2015). As
discussed later in this opinion, the circuit court did not reject all of the husband’s evidence or rule
that the husband did not meet his statutory burden of proof. Consequently, to the extent that the
wife’s claims of error rely upon hypothetical rulings that the court simply did not make, we decline
to consider them. However, we address the remaining portions of the wife’s challenges in
assignments of error two through five that necessarily relate to assignment of error one and are
subsumed in it. Accordingly, we deny the husband’s motion to dismiss, and we proceed to examine
only the wife’s challenge to the rulings that the circuit court actually made.
B. Marital Share of RLM
The wife alleges that the circuit court erroneously determined the marital portion of the
husband’s interest in RLM. She notes that she met her burden of production under the equitable
distribution statute, entitling her to the presumption that 100% of the increase in value of the
husband’s share of the company during the marriage was marital. She maintains that because the
burden shifted to the husband, he was required to prove that some specific lesser percentage of the
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increase was marital. According to the wife, the circuit court misapplied the burden of proof and
erroneously concluded that the husband met that burden.
1. Standard of Review
A decision involving equitable distribution may be overturned only upon a showing that
the circuit court abused its discretion. Owens v. Owens, 41 Va. App. 844, 853, 589 S.E.2d 488,
493 (2003). In reviewing the court’s equitable distribution ruling, this Court views the evidence
“in the light most favorable to the prevailing party, granting [that party] the benefit of any
reasonable inferences.” Hamad v. Hamad, 61 Va. App. 593, 596, 739 S.E.2d 232, 234 (2013)
(quoting White v. White, 56 Va. App. 214, 216, 692 S.E.2d 289, 290 (2010)). To the extent that
the appeal requires an examination of the proper interpretation and application of Code
§ 20-107.3 (the equitable distribution statute) and the shifting burdens of production and
persuasion, it involves issues of law, which the Court reviews de novo on appeal. See David v.
David, 287 Va. 231, 237, 754 S.E.2d 285, 289 (2014); see also Owens, 41 Va. App. at 853, 589
S.E.2d at 493 (explaining that making an erroneous legal ruling is an abuse of discretion).
However, whether the evidence satisfies those burdens and supports the circuit court’s findings
are questions of fact, and we defer to the circuit court’s findings of fact unless plainly wrong or
without evidence to support them. See Congdon v. Congdon, 40 Va. App. 255, 262, 578 S.E.2d
833, 837 (2003).
The classification and valuation of an asset for purposes of equitable distribution,
including any relevant portion of that asset, are “issue[s] of fact, not law.” See Howell v.
Howell, 31 Va. App. 332, 340, 523 S.E.2d 514, 518 (2000) (valuation); see also Ranney v.
Ranney, 45 Va. App. 17, 31, 608 S.E.2d 485, 492 (2005) (classification). Additionally, “[i]t is
well established that the trier of fact ascertains a witness’ credibility, determines the weight to be
given to [his or her] testimony, and has [the] discretion to accept or reject any of the witness’
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testimony.” Layman v. Layman, 62 Va. App. 134, 137, 742 S.E.2d 890, 891 (2013) (quoting
Street v. Street, 25 Va. App. 380, 387, 488 S.E.2d 665, 668 (1997) (en banc)). We do not disturb
the circuit court judge’s “factual findings . . . on appeal unless no ‘rational trier of fact’ could
have come to the conclusions he did.” Boyd v. Cty. of Henrico, 42 Va. App. 495, 525, 592
S.E.2d 768, 783 (2004) (en banc) (quoting Kelly v. Commonwealth, 41 Va. App. 250, 257, 584
S.E.2d 444, 447 (2003) (en banc)).
It is in the context of these principles that we examine the statutory scheme and address
the circuit court’s rulings.
2. The Statute and Burden-of-Proof Principles
Code § 20-107.3(A) requires a circuit court effecting an equitable distribution to
“determine . . . the ownership and value of all property” and to “consider which of such property
is separate property, which is marital property, and which is part separate and part marital.”
“The [circuit] court’s valuation cannot be based on mere guesswork.” Hoebelheinrich v.
Hoebelheinrich, 43 Va. App. 543, 557, 600 S.E.2d 152, 158 (2004) (quoting Bosserman v.
Bosserman, 9 Va. App. 1, 5, 384 S.E.2d 104, 107 (1989)). However, “it is well established that a
circuit ‘court has discretion to resolve conflicting expert testimony to determine an asset’s
value.’” Patel v. Patel, 61 Va. App. 714, 723, 740 S.E.2d 35, 40 (2013) (quoting Howell, 31
Va. App. at 341, 523 S.E.2d at 519). Additionally, a court “may . . . choose among conflicting
assessments of value,” whether based upon expert testimony or other evidence, “as long as its
finding is supported by the [record].” McDavid v. McDavid, 19 Va. App. 406, 413-16, 451
S.E.2d 713, 718-19 (1994); see Zipf v. Zipf, 8 Va. App. 387, 395, 382 S.E.2d 263, 268 (1989).
Pursuant to Code § 20-107.3(A)(3)(a), an increase in the value of separate property
during the marriage is classified as marital property if the increase is brought about by the
personal efforts of either spouse and certain additional conditions, uncontested here, are met.
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“Personal efforts,” in order to qualify, “must be significant and result in substantial appreciation
of the separate property.” Code § 20-107.3(A)(3)(a). The non-owning spouse must first prove
that (i) one or both of the spouses contributed personal effort to the separate property during the
marriage and (ii) the separate property increased in value. David, 287 Va. at 239, 754 S.E.2d at
290. Upon meeting this burden, the non-owning spouse is entitled to a presumption that the
personal effort caused the full increase in value. Id. The burden then shifts to the owning spouse
to prove that other factors caused the increase. Id.; see also Stockdale v. Stockdale, 33 Va. App.
179, 184, 532 S.E.2d 332, 335 (2000) (discussing the burdens of production and persuasion).
The owning spouse may prove that other factors caused some or all of the increase. See,
e.g., Rowe v. Rowe, 24 Va. App. 123, 134, 480 S.E.2d 760, 765 (1997). If the owning spouse
produces no evidence or if his evidence is rejected by the circuit court, the non-owning spouse is
entitled to have the entire increase classified as marital based on the statutory presumption. See
David, 287 Va. at 239, 754 S.E.2d at 290. However, if the owning spouse produces evidence
that is accepted by the circuit court and establishes that some defined portion of the increase
resulted from passive factors or from the efforts of third parties, the owning spouse is entitled to
have the percentage of the increase classified as marital adjusted downward accordingly. See
Rowe, 24 Va. App. at 134, 480 S.E.2d at 765.
3. Application of the Statute and the Findings in this Case
It is undisputed that the wife met her burden of proving that the husband made significant
contributions of personal effort to RLM during the course of the parties’ marriage and that his
interest in the property substantially appreciated in value. See Code § 20-107.3(A)(3)(a). The
circuit court so found, and the husband does not dispute this conclusion on appeal. Accordingly,
the wife met her burden and was entitled to the rebuttable presumption that the full amount of the
increase in value of the marital share resulted from the personal efforts of the husband, the
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owning spouse. See David, 287 Va. at 239, 754 S.E.2d at 290. At that point, the burden shifted
to the husband to produce evidence proving to the satisfaction of the circuit court as fact finder
that some lesser percentage of the increase in value resulted from his personal efforts.6 See id.
The wife contends that the circuit court expressly (a) found that the husband failed to
meet his burden and (b) rejected all of his evidence on the subject. She argues that, as a result,
the court, in its original letter opinion, properly listed 100% of the increase in value of the
husband’s share of RLM during the marriage as marital property. She further contends that
when the husband filed a motion for clarification, the court, which she maintains had rejected all
of the husband’s evidence, erred by arbitrarily basing the percentage of the increase in value
attributable to his personal efforts on his 30% ownership share. The wife suggests that by doing
so, the court improperly relieved the husband of his burden of proof. A review of the record,
however, reflects that the wife’s claims are based on her misinterpretations of what transpired
below. Contrary to her suggestions, the record, viewed under the proper standard, reflects that
the circuit court resolved the factual disputes challenged on appeal either explicitly or implicitly
in favor of the husband, and the evidence supports the court’s rulings.
First, the record does not establish that the court ruled in its initial letter opinion that
100% of the increase in the value of the husband’s share of RLM was marital property. The
court, in both its first and second letter opinions, expressly ruled that the total “increase in value”
of the husband’s interest was $2,212,730 and that 30% of this sum was the marital share of the
increase. In the first letter opinion, where the court listed the dollar amount of that share with the
other marital assets to be included in the equitable distribution, it inserted the full amount of the
6
Subsection II.A.2 of the wife’s opening brief asserts that she “conclusively proved that
RLM’s increase in value was marital property.” (Emphasis added). However, in her argument,
she asserts only that she met her burden “to show significant marital effort and an increase in
value.” Meeting that burden entitled her to the benefit of the presumption in the statute; it did
not amount to conclusive proof.
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husband’s interest of $2,212,730 without calculating the 30% marital share. When the husband
filed a motion for clarification, the judge expressly acknowledged his error, explaining that when
he transferred the number to the list of marital assets, he failed to perform the additional
calculation necessary to determine 30% of the $2.2 million figure that represented the marital
share. The judge’s amended letter opinion properly reflects the figure of $663,819 that he
expressly stated he had intended to include.
Additionally, the record does not reflect a finding by the circuit court that the husband
wholly failed to meet his burden of proving that some amount less than 100% of the increase in
value of his interest in RLM was marital property. It does quite the contrary.
It is true that the court was critical of certain aspects of the husband’s evidence. It found
that his lay and expert witness testimony was not sufficient to establish that passive factors
contributed to the increase in value. The court determined that market forces could have
contributed to RLM’s increase in value but that “to determine whether, and if so, a reasonable
estimate of the extent of such an effect” would require “pure speculation.” Consequently, the judge
recognized that Code § 20-107.3(A)(3)(a) and the holding in David placed the burden of proof on
that issue on the husband, and he specifically found that the husband failed to meet that burden
with regard to market forces.7
However, despite that ruling, the record also reflects that the court did not reject Martin’s
evidence regarding the impact of the personal efforts of RLM’s other principals on the increase
in the company’s value, which was a proper consideration under the law. See Rowe, 24
Va. App. at 134, 480 S.E.2d at 765. Even after rejecting the portions of Martin’s testimony that
were based in part on his calculations regarding market forces, the court still had before it
7
Based on the court’s rejection of Martin’s evidence regarding the impact of market
forces, it concluded that Martin’s opinion that the husband’s personal efforts accounted for only
14% of the increase in value of the husband’s interest was “materially understated.”
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Martin’s opinion concerning the independent impact of the personal efforts of the husband and
his partners on the increase in value. Cf. Patel, 61 Va. App. at 721-22 & n.5, 740 S.E.2d at 39 &
n.5 (holding the wife’s claim “that the circuit court ‘rejected’” certain expert testimony was
incorrect where the record showed the court “clearly accepted” part of it). Martin opined that
73.5% of the increase in value was attributable to the personal efforts of the partners and the
remaining 26.5% was attributable to the husband’s personal efforts. In finding that the
husband’s personal efforts were responsible for 30% of the company’s growth, the circuit court
noted that Martin’s testimony, which included his slightly lower calculation of 26.5%, supported
its own finding.
In the amended letter opinion, the judge expressly explained that he considered “all of the
evidence” and based the valuation on that evidence, including portions of the testimony and
reports of Martin. Additionally, at the hearing on the motion for reconsideration, the judge again
emphasized that he considered all of the evidence and that his decision was not simply a
“formulaic approach.” He also stated that he took into account not only the husband’s
percentage ownership interest in RLM but also his managerial role with the company. The
record reflects that the judge examined all of the evidence, determined what he believed and
what he did not believe, and made his rulings based on the evidence he accepted. Contrary to the
wife’s assertion, the judge never ruled that the husband failed to meet his burden of proof.
Further, in choosing a contribution percentage based on personal efforts that was higher
than Martin’s asserted value of 26.5%, lower than the maximum of 100%, and equal to the
husband’s percentage ownership interest in the company, the court did not abuse its discretion.
See Zipf, 8 Va. App. at 395, 382 S.E.2d at 268 (recognizing that a judge valuing marital assets
may select a value within a range of conflicting opinions and affirming the judge’s choice of “a
figure somewhere between the ceiling price” and “the lowest estimate provided”). Martin
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himself considered the husband’s ownership interest percentage but opined that it should be
discounted based on the husband’s average revenue generation percentage of 23%. Additional
evidence, however, reflected that the husband contributed to the company’s revenue by
generating 63% of its direct sales in RLM’s earlier years. Moreover, even though the husband’s
direct contribution to revenue generation decreased to 7% in later years, the court specifically
found that the husband’s indirect contributions as managing partner contributed to the company’s
appreciation, thereby supporting its decision to reject Martin’s discounting of the 30% figure.
The circuit court’s amended letter opinion recognizes that the court’s decision regarding
the “classification of the marital versus separate components of the increase in value of RLM”
during the marriage was informed by Rowe, 24 Va. App. 123, 480 S.E.2d 760, and Decker v.
Decker, 17 Va. App. 12, 435 S.E.2d 407 (1993). Relying on David, 287 Va. 231, 754 S.E.2d
285, the wife claims that the court erroneously held that “Rowe and Decker precluded it from
[classifying as] marital property the full increase [in] the value of [the husband’s] ownership
share.” We disagree with this interpretation.
In David, the Supreme Court merely clarified that the owning spouse bears the ultimate
burden of proof regarding the proper classification of the increase in value of separate property
during a marriage. 287 Va. at 239-41, 754 S.E.2d at 290-91. In deciding David, the Supreme
Court held that the Court of Appeals incorrectly applied the burden of proof in that case and
others. See id. at 239-40, 754 S.E.2d at 290-91. The Court also “overrule[d] those portions of
any [Court of Appeals] decisions” interpreting the statute in an inconsistent manner. Id. at 241,
754 S.E.2d at 291. However, in deciding David, the Supreme Court did not mention Decker or
Rowe. Additionally, it did not purport to address the type or amount of evidence that a circuit
court might accept as adequate to satisfy the owning spouse’s burden of proof.
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Consequently, the circuit court’s consideration of the categories of evidence relied upon
by the courts in Decker and Rowe was entirely consistent with David and was not error. Both
cases were decided under the current version of Code § 20-107.3(A)(3)(a), which places on the
owning spouse the burden of proving the causation of the increase in value of separate property
during the marriage. See Rowe, 24 Va. App. at 133-34, 480 S.E.2d at 764-65; Decker, 17
Va. App. at 17-18, 435 S.E.2d at 411-12.
The wife also contends that the judge misapplied Decker and Rowe by using those cases
to support a formulaic approach to determining how the value of RLM increased due to the
personal effort of the husband. The record refutes this contention. The judge explained his use
of these cases as a starting point for his consideration of the classification and valuation of the
property. See Yarborough v. Commonwealth, 217 Va. 971, 978, 234 S.E.2d 286, 291 (1977)
(holding that a reviewing court “will not fix upon isolated statements of the trial judge taken out
of the full context in which they were made[] and use them as a predicate for holding the law has
been misapplied”). Further, while discussing case law, the judge specifically stated that he “did
not use a formulaic approach” to classify the asset. He “consider[ed] everything that was in
evidence,” which included the husband’s contributions to both direct revenue generation and
management, factors also considered in Decker, 17 Va. App. at 17-18, 435 S.E.2d at 411-12.
The circuit court applied the law correctly, and its factual findings are supported by the
record. For these reasons, we hold that the court did not err in determining what portion of the
increase in value of the husband’s share of RLM was marital property.
C. Attorneys’ Fees and Costs on Appeal
Each party seeks an award of attorney’s fees on appeal. The husband also requests an award
of costs incurred on appeal.
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Pursuant to Rule 5A:30, in specified cases in which attorney’s fees are recoverable under
Title 20 of the Code of Virginia, the Court of Appeals may award some or all of the fees requested
or “remand the issue to the circuit court . . . for a determination thereof.” Rule 5A:30(b)(1), (2).
Whether to award fees is discretionary. See id. In determining whether to make such an award, the
Court may consider factors including whether the requesting party has prevailed, whether the appeal
was “fairly debatable” or frivolous, and whether other reasons exist to support an award of
attorney’s fees and costs. See Rule 5A:30(b)(3), (4); Brandau v. Brandau, 52 Va. App. 632, 642,
666 S.E.2d 532, 538 (2008); O’Loughlin v. O’Loughlin, 23 Va. App. 690, 695, 479 S.E.2d 98, 100
(1996). In addition, Rule 5A:30(b)(3) specifically directs this Court to “consider all the equities of
the case.”
Considering all the factors set out in Rule 5A:30 and the applicable case law, we see no
reason that either the husband or the wife should be required to pay the other party’s attorney’s fees
and costs in this case. Accordingly, in the exercise of our discretion, we decline to make an award
of attorney’s fees and costs to either party.8 See, e.g., Wright v. Wright, 61 Va. App. 432, 470, 737
S.E.2d 519, 537-38 (2013).
III. CONCLUSION
Under the assignments of error properly before the Court, we hold that that the record,
viewed under the proper standard, supports the circuit court’s ruling regarding the calculation of the
marital share of the increase in value of the husband’s interest in RLM. Consequently, we affirm
8
In addition, the wife seeks “remand for an award of attorney’s fees relating to [her]
efforts to oppose the Motion to Reconsider” in the circuit court. She does not assign error to the
circuit court’s refusal to award such fees below. See Culpeper Reg’l Hosp., 64 Va. App. at 212
n.2, 767 S.E.2d at 239 n.2 (holding that an argument not encompassed by any assignment of
error is “barred”). Moreover, our authority to award attorney’s fees extends only to those fees
“incurred in the appeal of the case.” Rule 5A:30(b). Although we may calculate those fees
ourselves or remand to the circuit court for any necessary findings, we are not authorized to take
either action for activity that occurred prior to appeal. See id.
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the challenged equitable distribution award. Additionally, we deny the parties’ requests for
attorneys’ fees and costs in this appeal.
Affirmed.
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