Jennifer Lynn Bartlett v. Anthony Dean Rennier ( 1996 )

COURT OF APPEALS OF VIRGINIA
Present: Chief Judge Moon, Judge Bray and Senior Judge Duff
Argued at Alexandria, Virginia
JENNIFER LYNN BARTLETT
MEMORANDUM OPINION * BY
v. Record No. 2639-95-4 CHIEF JUDGE NORMAN K. MOON
JULY 16, 1996
ANTHONY DEAN RENNIER
FROM THE CIRCUIT COURT OF FAIRFAX COUNTY
J. Howe Brown, Judge
Sharon Gregory Jacobs (Morchower, Luxton and
Whaley, on briefs), for appellant.
Melinda S. Norton (Marcia F. Ruff; Shoun &
Bach, P.C., on brief), for appellee.
Jennifer Lynn Bartlett appeals the final decree of divorce
from Anthony Dean Rennier. Ms. Bartlett objects to the decree
insofar as it awards 100 percent of a business established during
the marriage to Mr. Rennier, awards lump sum spousal support with
no reservation of the right to petition for periodic support, and
fails to apportion marital debt. We affirm in part, reverse in
part, and remand the case to the trial court.
The parties were married on June 23, 1990. Ms. Bartlett was
twenty-six years old at the time of trial, and has a bachelor's
degree in physics. Mr. Rennier was thirty-four and has
bachelor's and master's degrees in electrical engineering. The
trial court found that theirs was "a short, not very happy, and
somewhat unusual marriage." Ms. Bartlett had experienced
*
Pursuant to Code § 17-116.010 this opinion is not
designated for publication.
emotional difficulties since childhood, and these contributed to
the problems in the marriage. The parties separated on June 14,
1993.
When the parties were married, Mr. Rennier was employed by
The Analytic Sciences Corporation (TASC) and earning
approximately $59,500 per year. Ms. Bartlett had just graduated
from college. Shortly after the marriage, she formed Elephant
Information Services (EIS), which managed lists of Republican
voters in Arlington County. Mr. Rennier encouraged Ms. Bartlett
in this venture and provided technical assistance. Despite this
assistance and her own hard work, Ms. Bartlett received no income
from EIS during the marriage, and the company is now defunct.
In the spring of 1992, Mr. Rennier and two of his colleagues
established Blacksmith, a computer software development company.
Creation of the company was made possible by a $100,000
investment by Ms. Bartlett's father, who is an attorney. Mr.
Rennier had sought other investors but found none. Ms.
Bartlett's father was willing to invest in the venture with no
requirement of a business plan. He testified that he intended to
benefit his daughter by making the investment, that he "probably"
would not have invested in the company had family not been
involved, and that the risk in the investment was "non-trivial."
He also testified that the investment was a good one and that he
was "in it for the long haul."
Mr. Bartlett received Blacksmith stock in return for his
investment. He advanced a $2,000 retainer for legal services,
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which was returned to him in the form of additional stock. He is
corporate counsel for Blacksmith, and has been "very gentle" in
billing for his services.
During the marriage, Mr. Rennier drew a $30,000 salary from
Blacksmith, $29,500 less than he had earned at TASC. Despite
this loss of income, Ms. Bartlett encouraged her husband in the
new undertaking and participated in the discussions with her
father that culminated in the $100,000 investment. She also
provided limited assistance in forming the business and getting
it off the ground. She served as corporate secretary, which
involved ministerial tasks such as signing the corporate minutes.
She obtained the home occupancy permit and the business license,
edited written materials about the company, and provided
administrative support such as purchase of supplies. She was not
involved in product development or other substantive aspects of
the business.
By January 1993, it was apparent that EIS would not be
financially productive. Ms. Bartlett took a job as a legislative
aide in Richmond for the 1993 session. She testified that her
goal in taking the position was to provide income for the family
and to assist her in finding another position. She returned from
Richmond in February, and took a part-time position with the
Northern Virginia Planning Commission in April.
The parties' first marital residence was a townhouse owned
by Mr. Rennier prior to the marriage. The parties lived there
over a year, and then purchased a home in Arlington. They made a
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$50,000 down payment, contributed by Ms. Bartlett's parents, and
financed $184,000. Ms. Bartlett's parents shared ownership of
the home as tenants in common with Ms. Bartlett and Mr. Rennier.
Mr. Bartlett understood that any loss or profit realized through
sale of the home would be shared in proportion to the money
contributed. However, Mr. Rennier testified that in the event of
a loss, he and Ms. Bartlett would reimburse the $50,000 down
payment first.
The parties realized a $36,000 profit on sale of the
townhouse. They placed $30,000 of this amount into a joint
account along with $17,000 of Ms. Bartlett's savings. After
separation, Mr. Rennier withdrew $30,000 of the approximately
$37,000 remaining in this account. He then paid Ms. Bartlett
$8,000 of the amount he withdrew, leaving him with $22,000. The
court found the account to have been marital property.
After separation, Mr. Rennier paid the mortgage on the
marital residence for two months. Ms. Bartlett and her father
then refinanced the house to secure a lower monthly payment. Ms.
Bartlett paid the refinancing costs. During this process, Mr.
Rennier's name was removed from the mortgage. The house is being
rented, but the monthly payment does not cover the mortgage and
Ms. Bartlett pays the deficiency, as well as the cost of
maintaining the property. The parties stipulated that the
listing price of the marital residence at the time of the hearing
was $231,000. The parties purchased the home for $230,000. The
parties agree that the housing market in Arlington is slow at
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present.
Ms. Bartlett is now living in Amherst, Virginia and is
employed full-time as a legislative aide at a salary of
approximately $24,000. Mr. Rennier earned $48,000 in 1994, and
was going to earn more than $50,000 in 1995.
EQUITABLE DISTRIBUTION
"[A] trial court has broad discretion in determining the
equitable distribution of the marital property so long as it uses
the guidelines set forth in Code § 20-107.3 and the evidence
supports the court's decision." Kaufman v. Kaufman, 12 Va. App.
1200, 1206-07, 409 S.E.2d 1, 5 (1991). Where one or more of the
statutory factors cannot be reconciled with the award or where
the award is inexplicable on the facts, this constitutes an abuse
of discretion. See Donnell v. Donnell, 20 Va. App. 37, 42, 455
S.E.2d 256, 258 (1995); Trivett v. Trivett, 7 Va. App. 148,
153-54, 371 S.E.2d 560, 563 (1988). The award must not be
arbitrary or punitive. O'Loughlin v. O'Loughlin, 20 Va. App.
522, 528, 458 S.E.2d 323, 326 (1995).
The primary assets to be considered for equitable
distribution were the marital home, Blacksmith, EIS, the funds
from the joint account, Mr. Rennier's IRA of approximately
$17,000, and household furnishings. The trial court ordered Mr.
Rennier to transfer his interest in the marital home to Ms.
Bartlett and her parents. The court allowed Ms. Bartlett to
retain the household furnishings already in her possession as
well as the $8,000 Mr. Rennier returned to her from the joint
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account. The court ordered that both parties retain ownership of
their respective businesses. Ms. Bartlett received no interest
in the IRA.
Blacksmith was by far the most valuable marital asset. The
parties stipulated that Blacksmith was worth $900,000 at the time
of the hearing. Mr. Rennier's share was worth $300,000. The
company had cash assets of $262,000 and $353,000 in accounts
receivable, against a liability of only $74,000. Ms. Bartlett's
expert testified that the company was in strong financial health.
The court awarded Ms. Bartlett no share in Blacksmith. In
support of its decision, the court stated that "[w]ife's claim
that she contributed to the success of the business is
unconvincing, at best." The court also found that in order to
raise cash from the business, Mr. Rennier would have to offer his
shares to the other owners, and that he could not sell his
business "without losing that way of earning his living." The
court also found that Mr. Rennier had made greater monetary and
nonmonetary contributions to the well-being of the family.
As discussed above, Ms. Bartlett's contributions to start-up
and operation of Blacksmith were limited. Nevertheless, they
were positive rather than negative. Further, in evaluating the
parties' relative contributions to this marital asset, the trial
court disregarded Ms. Bartlett's support for the risky endeavor
of starting a business and the connection between that support
and her father's, Mr. Bartlett's, investment.
First, Ms. Bartlett supported her husband in his taking
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nearly a fifty percent reduction in salary in order to start the
business (from $59,500 to $30,000). Second, Ms. Bartlett's
father decided to invest $100,000 in the business--which was
still in the early planning stages--based on discussions with his
daughter and son-in-law. He listened to "the vision that the
children had" about forming a software company. His decision to
invest was based on the couple's mutual enthusiasm for the
project, and he intended the investment to benefit his daughter.
Other investors had been sought; none were found. The
investment was risky. Had Ms. Bartlett not supported her
husband's undertaking, Blacksmith would likely not exist at all.
The record does not support that the lack of liquidity of
Blacksmith was sufficient to deny an award based upon its value.
The trial court apparently did not consider that a monetary
award may be ordered paid in installments. See Mallery-Sayre v.
Mallery, 6 Va. App. 471, 474-75, 370 S.E.2d 113, 115 (1988); Ray
v. Ray, 4 Va. App. 509, 513, 358 S.E.2d 754, 756 (1987).
The trial court found that both parties made a "valiant
effort" to get the failed EIS business going. The trial court
awarded both EIS and the marital home to Ms. Bartlett. EIS is
defunct and has no value. At present the home has no value to
Ms. Bartlett either, and indeed is a liability. The rent
received on the home does not cover the mortgage payments. The
home has not appreciated in value since it was acquired, and even
if Ms. Bartlett could sell it, any small profit would go to her
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parents.
In effect, the trial court awarded Mr. Rennier 100 percent
of the only marital asset of significant value, the Blacksmith
interest.
The court also concluded that Ms. Bartlett was in better
financial condition after the marriage than before. The record
does not support such a finding. She had $17,000 cash when she
married and ended up with $8,000 of it. She ended up with
furniture of between $5,000 and $10,000 in value, but also had
attorneys' fees to pay. She was awarded a worthless business and
a rental dwelling that was not worth the debt against it and had
a negative cash flow inadequate to pay its mortgage.
Here we find that the awards to husband and wife were so
disproportionate that the court's failure to award the wife any
portion of the value of the computer business constituted an
abuse of discretion. See Donnell, 20 Va. App. at 42-43, 455
S.E.2d at 258; Blank v. Blank, 10 Va. App. 1, 9, 389 S.E.2d 723,
727 (1990). The trial court should reconsider the award in light
of the fact that this marriage was a partnership between the two
parties. Although it was proper to give the husband credit for
having been more successful in his business, Aster v. Gross, 7
Va. App. 1, 7-8, 371 S.E.2d 833, 837 (1988), it was plainly wrong
to find that the wife was entitled to nothing. Here both parties
pursued business interests with the approval and support of the
other. In any partnership there are generally some successes and
some failures. It does not follow that the partner who is more
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successful obtains all the profits, leaving nothing to the
partner who worked at an unsuccessful part of the endeavor.
It is of some significance that the interest in Blacksmith
was 100 percent the result of marital effort. It was not an
asset brought to the marriage that merely transmuted into marital
property. It was created by the sacrifices of both parties in
current marital income, albeit the husband's, for the future
benefit of the marriage.
The trial judge should reconsider the equitable award giving
weight to the wife's efforts to contribute to the marital
partnership as opposed to focusing on what she did not contribute
that she claimed to have contributed. The court should consider
whether she did for the marital partnership the best she could
under the circumstances and not punish her for what she may not
have achieved, unless the failure was willful or because of
dereliction, which the record does not support. Furthermore, the
court should consider whether the ability to order an award
payable in installments overcomes problems of lack of liquidity
of Mr. Rennier's interest in Blacksmith.
SPOUSAL SUPPORT
On remand for reconsideration of equitable distribution, the
trial court must reconsider the spousal award as well. See Code
§ 20-107.1(8); Mitchell v. Mitchell, 4 Va. App. 113, 121, 355
S.E.2d 18, 23 (1987). To assist the trial court in its
reconsideration of this issue, we address the issue of lump sum
support.
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"Although Code § 20-107.3 grants the trial court discretion
in deciding whether to award either periodic or lump sum
payments, periodic payments are the preferred form." Mosley v.
Mosley, 19 Va. App. 192, 197, 450 S.E.2d 161, 164 (1994).
"Generally, when courts do make lump sum spousal support awards
they do so because of special circumstances or compelling
reasons, and appellate courts uphold such awards where the record
clearly reflects the court's rationale for finding that the award
will adequately provide for contingencies." Blank, 10 Va. App.
at 5, 389 S.E.2d at 725. Compelling reasons for making a lump
sum award include the payee spouse's immediate need for a lump
sum to maintain herself or himself or to satisfy debts. Kaufman,
12 Va. App. at 1205, 409 S.E.2d at 4.
Ms. Bartlett has obtained full-time employment. Although
she claims that her expenses exceed her income, she has managed
to save money since the separation. She is young and in good
physical health, and the marriage was of short duration. The
trial court awarded support based on Ms. Bartlett's desire to
pursue a graduate degree--plans she claims to have put on hold
when Mr. Rennier formed Blacksmith. This is the type of
circumstance that the court may properly take into account in
deciding to award lump sum support.
The trial court did not reserve for Ms. Bartlett the right
to petition for periodic support. The court is not required to
reserve this right in every instance. Poliquin v. Poliquin, 12
Va. App. 676, 681, 406 S.E.2d 401, 404 (1991); Blank, 10 Va. App.
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at 6; 389 S.E.2d at 726. Ordinarily, however, "a modest lump sum
award should not defeat the right to petition for additional
support in the event of changed circumstances." Blank, 10 Va.
App. at 4-5, 389 S.E.2d at 725.
In Poliquin, we reversed the trial court's failure to
reserve the right to modify a lump sum award because the parties'
future circumstances, including the wife's earning potential and
the husband's depressed current earnings, were uncertain. In
reconsidering spousal support here, the trial judge should
consider whether any uncertain elements require a reservation of
the right to petition for periodic support.
MARITAL DEBT
Ms. Bartlett argues that the trial court erred in failing to
take marital debt into account, either directly by apportioning
it, or indirectly by taking it into account as a factor in the
equitable distribution. The two debts she complains of are the
mortgage on the marital home and $8,900 in counseling expenses
incurred by Ms. Bartlett after separation.
When Ms. Bartlett and her father refinanced the marital home
several months after the separation, they removed Mr. Rennier's
name from the mortgage. That marital debt was extinguished. The
counseling expenses were incurred after separation, and the trial
court did not err in failing to apportion or otherwise take them
into account.
For the foregoing reasons, the case is reversed in part,
affirmed in part, and remanded to the trial court for
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reconsideration of equitable distribution and spousal support.
Affirmed in part,
reversed in part,
and remanded.
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Bray, J., dissenting.
The majority decides that the trial court abused its
discretion and was plainly wrong in awarding Ms. Bartlett no
interest in Blacksmith. This conclusion is supported by an
analysis of the marital estate and the evidence relevant to its
equitable distribution which differs from the rationale adopted
by the trial court. Because I find the reasoning sound in either
instance, I would affirm the decree.
In reviewing a disputed equitable distribution award, we
have acknowledged that the "trial court's job is a difficult one"
and requires reliance on the "discretion of the trial judge in
weighing the many considerations and circumstances that are
presented in each case." Artis v. Artis, 4 Va. App. 132, 137,
354 S.E.2d 812, 815 (1987). Thus, "'[u]nless it appears from the
record that the chancellor has abused his discretion, . . . not
considered or . . . misapplied [a] statutory mandate[], or that
the evidence fails to support the findings of fact underlying his
resolution of the conflict in the equities, the chancellor's
equitable distribution award will not be reversed . . . .'"
Robinette v. Robinette, 10 Va. App. 480, 486, 393 S.E.2d 629, 633
(1990) (citations omitted).
Here, I concur that the evidence supported a disposition of
the marital interests in Blacksmith more favorable to Ms.
Bartlett. However, I also find that the decision of the trial
court is consistent with both the record and the law. I am,
therefore, unable to conclude that the trial court was either
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plainly wrong or abused its discretion and would affirm the
decree. See Reece v. Reece, 22 Va. App. 368, 377, 470 S.E.2d
148, 153 (1996) (Baker, J. concurring).
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