Darrell E. Noell v. Deborah H. Noell ( 2000 )


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  •                    COURT OF APPEALS OF VIRGINIA
    Present: Judges Coleman, Frank and Senior Judge Hodges
    Argued at Salem, Virginia
    DARRELL E. NOELL
    MEMORANDUM OPINION * BY
    v.   Record No. 0918-99-3                 JUDGE WILLIAM H. HODGES
    FEBRUARY 15, 2000
    DEBORAH H. NOELL
    FROM THE CIRCUIT COURT OF BEDFORD COUNTY
    James W. Updike, Jr., Judge
    Lance M. Hale (Kenneth N. Hodge; Lance M.
    Hale & Associates, on briefs), for appellant.
    Valeria L. Cook for appellee.
    Darrell E. Noell (husband) appeals the final decree of
    divorce entered by the circuit court.   Husband contends that the
    trial court abused its discretion by (1) classifying the marital
    residence as marital property; (2) classifying a $60,000 second
    deed of trust on the marital residence as husband's separate debt;
    (3) classifying a $30,000 note as husband's separate debt;
    (4) classifying the business Jordantown Market as husband's
    separate property; (5) classifying the business Happy Hair Salon
    as the separate property of Deborah H. Noell (wife) and
    determining that the business had only nominal value; and (6)
    calculating wife's annual income for purposes of determining child
    * Pursuant to Code § 17.1-413, recodifying Code
    § 17-116.010, this opinion is not designated for publication.
    and spousal support.   In her response, wife contends that the
    trial court erred by (1) ordering an assets-only evaluation of
    Jordantown Market; and (2) classifying any portion of the marital
    residence as husband's separate property.   We find no error by the
    trial court requiring reversal of its decisions on equitable
    distribution or support.   Therefore, we affirm.
    On appeal, "[t]he judgment of a trial court sitting in
    equity, when based upon an ore tenus hearing, will not be
    disturbed on appeal unless plainly wrong or without evidence to
    support it."    Box v. Talley, 
    1 Va. App. 289
    , 293, 
    338 S.E.2d 349
    ,
    351 (1986).    "Fashioning an equitable distribution award lies
    within the sound discretion of the trial judge and that award will
    not be set aside unless it is plainly wrong or without evidence to
    support it."    Srinivasan v. Srinivasan, 
    10 Va. App. 728
    , 732, 
    396 S.E.2d 675
    , 678 (1990).
    Classification of Marital Residence
    Husband contends that the trial court abused its discretion
    by classifying the marital residence as primarily marital
    property.   In support of his contention, husband presented
    evidence that he purchased the house on November 5, 1976, a month
    before the parties' marriage, and that the home remained titled
    solely in his name throughout the marriage.   Husband claimed that
    he made a down payment, which the trial court determined to be
    $2,700, towards the purchase price of $38,500.     The first mortgage
    amount of $35,800 was reduced to $19,334 by the time of the
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    equitable distribution hearing.    While the trial court found that
    husband "exclusively made the payments on the first mortgage from
    his income from his employment," the court noted that income
    earned during the marriage is marital property.   See Code
    § 20-107.3(A)(1) and (2)(iii).    The marital residence had a value
    of $107,000 at the time of the hearing.   Using the Brandenburg
    formula, the court computed the equity attributable to husband's
    separate property as $12,349.90 and that attributable to marital
    property as $75,316.10.   See generally Hart v. Hart, 
    27 Va. App. 46
    , 64-66, 
    497 S.E.2d 496
    , 504-06 (1998).
    We find no error in the trial court's classification of the
    marital residence as part separate property and part marital
    property.   Mortgage payments made during the marriage using income
    earned during the marriage were contributions of marital, not
    separate, property.   See Code § 20-107.3(A)(2)(iii).   Therefore,
    the trial court properly viewed the reduction in the mortgage
    during the marriage as marital contributions.   While wife contends
    that husband failed to produce evidence supporting his claim that
    he made a contribution of separate property by a down payment at
    the time the property was purchased, we cannot say that the trial
    court's determination that husband contributed $2,700 is
    unsupported by the evidence.   Therefore, we affirm the trial
    court's hybrid classification of the marital residence.
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    Second Deed of Trust Equity Loan
    Husband contends that the trial court erred when it
    determined the value of the marital residence because the court
    failed to reduce the residence's equity by $53,889, which was
    the remaining value of a second deed of trust equity loan.
    Husband cites Trivett v. Trivett, 
    7 Va. App. 148
    , 
    371 S.E.2d 560
    (1988), to support his contention that the trial court should have
    reduced the equity of the marital residence by the amount of this
    outstanding debt secured by the residence.   In Trivett, this Court
    reversed and remanded a monetary award because the record failed
    to demonstrate whether the trial court considered the effect of
    an outstanding deed of trust on the value of a piece of marital
    property.   Under the circumstances of this case, we find no
    grounds to reverse the trial court's decision regarding the second
    deed of trust.
    The evidence established that the second deed of trust was
    not fraudulent or incurred for any improper purpose.    See
    generally Hodges v. Hodges, 
    2 Va. App. 508
    , 
    347 S.E.2d 134
    (1986).   It was incurred during the marriage in order to obtain
    funds for the Jordantown Market.   Husband characterized the
    equity loan in his Summation and Arguments memorandum prepared
    for the trial court as part of the "Total Jordantown Market
    Debt" of $85,889 in order to reduce the net equity value of
    Jordantown Market.   At trial, he requested that he receive the
    Jordantown Market as his separate property and wife agreed.
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    While the second deed of trust was secured by the marital
    residence, the funds so obtained were used for the property
    which by agreement was awarded to husband.    But for the parties'
    agreement to this classification, the debt and its corresponding
    asset would have been appropriately characterized as marital.
    These factual circumstances are distinguishable from those of
    Trivett.
    Code § 20-107.3(C) provides that "[t]he court shall also have
    the authority to apportion and order the payment of the debts of
    the parties, or either of them, that are incurred prior to the
    dissolution of the marriage, based upon the factors listed in
    subsection E."   Thus, the trial court had the discretionary
    authority under the statute to apportion between the parties their
    marital and separate debts.    Under the circumstances of this case,
    where the practical effect of the parties' agreement that husband
    would receive the Jordantown Market as his separate property was
    to separate the second deed of trust from its corresponding asset,
    we find no error in the trial court's decision not to reduce the
    value of the marital residence by the amount of the second deed of
    trust.
    $30,000 Note
    Husband also contends that the trial court abused its
    discretion when it assigned to him the $30,000 note to his father.
    The parties did not contest the fact that the note was signed
    shortly before the parties' final separation or that the note was
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    intended to finance the Jordantown Market.     Husband does not
    contend that the funds were used for any other purposes, but
    contends that wife as co-signer should bear some liability for the
    note.    The trial court was acting within its statutory authority
    in apportioning this debt to husband.    We find no abuse of
    discretion in the decision to allow the unsecured liability to
    follow the corresponding assets.    See Code § 20-107.3(C).
    Jordantown Market
    Because operation of the Jordantown Market was begun during
    the marriage using marital assets, it could properly be classified
    as a marital asset.    See Code § 20-107.3(A)(2).   However, the
    parties agreed that the market would be husband's separate
    property.    While wife contends that the trial court erred by
    valuing the business solely on an assets-only basis rather than as
    an ongoing business, she agreed at trial that the business would
    be awarded to husband as his separate property.     Therefore, any
    error in the trial court's valuation of the business is irrelevant
    to the equitable distribution issues on appeal.     Moreover, we
    agree with husband that wife failed to preserve any objection to
    the court's decision to value the business on an assets-only
    basis.
    Happy Hair Salon
    Husband contends that the trial court erred by classifying
    the Happy Hair Salon as wife's separate property and by
    determining that the salon had only nominal value.    We find no
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    error.   The evidence indicated that wife worked as an apprentice
    with a licensed hair stylist until after the parties separated.
    Only in March 1997, after the final separation in December 1996,
    did wife sit for her state boards and open her salon.      See Code
    § 20-107.3(A)(1).
    We find no error in the trial court's determination that
    wife's hair salon had minimal value.    Husband conceded in his
    post-hearing memorandum that the salon had few assets.      He argued,
    however, that the salon should be valued based upon its cash flow
    and goodwill.   Husband relied largely on extrapolations based upon
    one year's income.   He presented no evidence as to any value
    attributable to goodwill.    The trial court ruled that the earning
    capacity represented by the stream of income was more
    appropriately considered under the spousal support factors set out
    in Code § 20-107.1(E).   We find no error in the trial court's
    decision to value the hair salon on an assets-only basis.
    Spousal Support
    Husband contends that the trial court erred by failing to
    impute income to wife for purposes of calculating child support
    and spousal support.   We find no error.      In its opinion letter,
    the trial court detailed why it found no merit in husband's
    contention that wife had substantially higher earnings in previous
    years.   Husband argued that wife's income should be based upon the
    gross sales and bonuses received by wife as a Tupperware sales
    executive, without any diminution for the costs of the items sold.
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    The trial court noted that, using the same logic, husband's
    "income" would jump to $705,377 based upon the net sales of
    Jordantown Market prior to a reduction for the costs of goods.
    Wife presented evidence that her current income was approximately
    $611 a month.   Based upon the statutory factors, the trial court
    awarded wife $650 in monthly spousal support.
    Accordingly, the decision of the trial court is affirmed.
    Affirmed.
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Document Info

Docket Number: 0918993

Filed Date: 2/15/2000

Precedential Status: Non-Precedential

Modified Date: 10/30/2014