Gregory R. Banks v. Sharon E. Banks ( 2001 )

COURT OF APPEALS OF VIRGINIA
Present: Judges Willis, Bray and Clements
Argued at Alexandria, Virginia
GREGORY R. BANKS
MEMORANDUM OPINION * BY
v. Record No. 0414-00-4 JUDGE JEAN HARRISON CLEMENTS
JULY 31, 2001
SHARON E. BANKS
FROM THE CIRCUIT COURT OF FAIRFAX COUNTY
Leslie M. Alden, Judge
John M. DiJoseph (Ted Kavrukov; Kavrukov &
DiJoseph, L.L.P., on briefs), for appellant.
Edward V. O'Connor, Jr. (Byrd Mische P.C., on
brief), for appellee.
Gregory R. Banks (husband) appeals from the final decree of
divorce entered by the trial court on January 28, 2000. In that
decree, the trial court made equitable distribution and spousal
support awards to Sharon E. Banks (wife). On appeal, husband
contends the trial court erred in (1) classifying the business as
marital property, (2) denying him credit for the $50,000 in
separate funds used to purchase stocks in a marital account, (3)
denying him credit for his post-separation mortgage payments on
the marital home, (4) awarding wife $2,600 per month in spousal
support and making the award permanent, and (5) awarding wife
* Pursuant to Code § 17.1-413, this opinion is not
designated for publication.
attorney's fees. For the reasons that follow, we affirm the
judgment of the trial court.
As the parties are fully conversant with the record in this
case and because this memorandum opinion carries no precedential
value, this opinion recites only those facts and incidents of the
proceedings as necessary to the parties' understanding of the
disposition of this appeal. On appeal, we view the evidence and
all reasonable inferences therefrom in the light most favorable to
wife, the prevailing party below. See McGuire v. McGuire, 10 Va.
App. 248, 250, 391 S.E.2d 344, 346 (1990).
I. EQUITABLE DISTRIBUTION
"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). Furthermore, we will not disturb an
award "unless it appears from the record that the [trial court]
. . . has not considered or has misapplied one of the statutory
mandates, or that the evidence fails to support the finding of
fact underlying resolution of the conflict in the equities."
Smoot v. Smoot, 233 Va. 435, 443, 357 S.E.2d 728, 732 (1987).
A. Classification of the Business as Marital Property
Husband first contends the trial court erred in ruling that
the business, Bio-Prosthetic Orthotic Laboratory, Inc., which
was created by husband prior to the marriage, was marital
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property. Husband argues that wife's routine, insignificant,
non-managerial contributions to the business "did not add to the
intrinsic value of [the business]." According to husband, his
"personal, individual artistic skill" was the "essence" of the
business.
In fashioning an equitable distribution award, the trial
court is required to consider the statutory factors set forth in
Code § 20-107.3(E). See Marion v. Marion, 11 Va. App. 659, 665,
401 S.E.2d 432, 436 (1991). Code § 20-107.3(E)(1) provides, in
pertinent part:
The increase in value of separate property
during the marriage is separate property,
unless . . . the personal efforts of either
party have contributed to such increases and
then only to the extent of the increases in
value attributable to such contribution.
The personal efforts of either party must be
significant and result in substantial
appreciation of the separate property if any
increase in value attributable thereto is to
be considered marital property.
* * * * * * *
"Personal effort" of a party shall be deemed
labor, effort, inventiveness, physical or
intellectual skill, creativity, or
managerial, promotional or marketing
activity applied directly to the separate
property of either party.
The trial court found that the business was marital
property
based upon the evidence presented that
shortly after the marriage began, the
business had a negative value and that, from
that time on, both parties worked and
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contributed to the building and increasing
the value of the business, and that at the
time that [wife] began contributing to the
business, it otherwise would have fallen
apart, and that she performed office work,
bookkeeping, and managerial work, and that
she made substantial efforts which
contributed to the increase and the value of
the business over the years.
The evidence amply supports the trial court's finding. The
record discloses that the parties were married in 1984. Husband
established the business prior to the marriage; however, in
1985, shortly after the birth of their first child, the parties
learned during an extended leave of absence by the business'
secretary that the bookkeeping and other business records were
in "total chaos." The parties also learned at the time, when
contacted by the IRS and other creditors, that the business,
with few assets of any value, was over $50,000 in debt.
The parties had to take out a personal loan for $50,000
against their house and the business to cover the debt.
Moreover, wife, who originally had intended, with husband's
consent and encouragement, to be strictly a full-time mother,
took over the administration of the business. She set up a home
office where she reviewed and organized the business'
bookkeeping records. She then devised and implemented a new
system to coordinate the business' billing and manufacturing
procedures. She also handled the business' banking, managed its
payroll and patient billing, and established a list to keep
track of the delivery of ordered supplies. She additionally
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developed new patient forms, maintained and improved the office,
initiated and oversaw activities to improve office morale,
processed the mail, ordered supplies, met with patients, worked
with the business' attorney and accountant, and performed the
responsibilities of absent employees.
In 1989, the business, having recovered financially and
"really grown," expanded into a new office. Wife set up the new
office and continued to supervise the administration of the
business. She acted in that capacity until husband fired her in
1998 after she filed for divorce. In the years of wife's
service, the business flourished and afforded the parties a
sizeable income. Clearly, while husband's talents may have been
the "essence" of the business, wife's considerable
administrative and organizational skills and efforts salvaged
the business when it was in debt and disorder and caused it to
increase in value.
We hold, therefore, that the trial court did not err in
concluding that the entire value of the business was marital
property on the basis that the business had a negative value
when wife began contributing to it and wife's significant
personal efforts applied directly to the business contributed to
the substantial appreciation of the business.
B. Credit for the Sale of Separate Property
Husband next contends the trial court erroneously
classified the Paine Webber Resource Management Account as
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entirely marital property. He argues that he was entitled to
receive as his separate property that percentage of the value of
the account corresponding to the $50,000 in his separate funds
the parties used, along with marital funds, to purchase the
securities in that account.
The trial court found that the entirety of the Paine Webber
Resource Management Account was marital property because
husband's separate funds were commingled with marital funds and
transmuted to marital property and were not retraced by a
preponderance of the evidence.
Code § 20-107.3(A)(3)(e) provides that,
[w]hen marital property and separate
property are commingled into newly acquired
property resulting in the loss of identity
of the contributing properties, the
commingled property shall be deemed
transmuted to marital property. However, to
the extent the contributed property is
retraceable by a preponderance of the
evidence and was not a gift, the contributed
property shall retain its original
classification.
We have explained the requirements of tracing relative to
commingled property under Code § 20-107.3(A)(3)(e) as follows:
In order to trace the separate portion
of hybrid property, a party must prove that
the claimed separate portion is identifiably
derived from a separate asset. This process
involves two steps: a party must (1)
establish the identity of a portion of
hybrid property and (2) directly trace that
portion to a separate asset.
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Rahbaran v. Rahbaran, 26 Va. App. 195, 208, 494 S.E.2d 135, 141
(1997) (citing Code § 20-107.3(A)(d)-(f)).
Hence,
[i]f . . . separate property is . . .
contributed to the acquisition of new
property, . . . and suffers a "loss of
identity," the commingled separate property
is transmuted to marital property. In other
words, if a party "chooses to commingle
marital and non-marital funds to the point
that direct tracing is impossible," the
claimed separate property loses its separate
status. Even if a party can prove that some
part of an asset is separate, if the court
cannot determine the separate amount, the
"unknown amount contributed from the
separate source transmutes by commingling
and becomes marital property."
Id. at 208-09, 494 S.E.2d at 141 (citations omitted). "The
party claiming a separate interest in transmuted property bears
the burden of proving retraceability." von Raab v. von Raab, 26
Va. App. 239, 248, 494 S.E.2d 156, 160 (1997).
Assuming without deciding that husband's $50,000 from the
sale of the house he purchased prior to the marriage was
separate property, we hold that the trial court did not err in
finding that husband failed to present sufficient evidence to
retrace his separate property. Viewed in the light most
favorable to wife, the evidence neither directly traced the
claimed separate portion of the hybrid property to a separate
asset nor established the identity of the claimed separate
portion.
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While it is incontroverted that husband contributed the
proceeds of the sale of his separate house to the purchase of
$300,000 worth of jointly owned stocks, 1 there is no evidence
directly connecting the $50,000 to the purchase of the stocks in
the parties' Paine Webber Resource Management Account. Neither
party testified that any of the stocks purchased with the
separate $50,000 were in that account. Nor did either party
testify that any, much less all, of the $300,000 worth of stocks
purchased by the parties were in that account. Likewise, the
sole exhibit in the record relating to the Paine Webber Resource
Management Account, an account statement from December 1999,
shows that all of the 12,628 shares of stocks in the account
were purchased between the months of March 1996 and October
1997, inclusive, at a total cost of approximately $220,000, not
$300,000. Thus, the record discloses no direct tracing of the
claimed separate portion of the commingled assets in the Paine
Webber Resource Management Account to husband's separate
$50,000.
Furthermore, even if some part of the Paine Webber Resource
Management Account were traceable to a separate asset, the
identity of the separate part cannot be accurately established.
Husband provided no evidence that allowed the trial court to
1
Wife conceded at trial that the proceeds from the sale of
the house husband bought prior to the marriage were a part of
the $300,000 the parties spent to purchase stocks.
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identify that portion of the account that corresponds to
husband's separate $50,000 contribution.
For example, husband produced no evidence indicating when
the parties used the $50,000 to purchase a portion of the
$300,000 worth of stocks. As noted above, the stocks in the
Paine Webber Resource Management Account were purchased on
different dates over at least an eighteen-month period.
Obviously, the ratio between the value of the respective marital
and separate contributions to the hybrid account would vary
depending on when the contribution of the separate property was
made. For instance, assuming a healthy stock market, husband's
share would likely be less than the one sixth he suggests he is
entitled to if the proceeds from the sale of husband's separate
house were not available to purchase stocks until October 1997,
eighteen months after a portion of the $250,000 marital
contribution had been made. Other factors, including the actual
stocks purchased with the $50,000, the respective rates of
growth of the stocks in the account, and the amount and nature
of any withdrawals from the account might also need to be
considered in establishing the identity of the separate portion
of the hybrid property. No such evidence was presented here,
however.
Accordingly, the trial court did not err in finding that
husband failed to meet his burden of proving retraceability of
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the claimed separate portion of the Paine Webber Resource
Management Account.
C. Credit for Post-Separation Mortgage Payments
Husband also contends that the trial court erred in not
awarding him credit for his post-separation mortgage payments on
the marital home. We disagree.
We have stated that,
[a]lthough the separate contribution of one
party to the acquisition, care, and
maintenance of marital property is a factor
that the trial court must consider when
making its award of equitable distribution,
Code § 20-107.3 does not mandate that the
trial court award a corresponding
dollar-for-dollar credit for such
contributions.
von Raab, 26 Va. App. at 249-50, 494 S.E.2d at 161. Here, the
record indicates the trial court considered husband's
post-separation mortgage payments. The record also discloses
that husband was the primary wage earner during the marriage and
retained exclusive use of the property after the parties
separated. The continued mortgage payments on the marital home
benefited both parties. Furthermore, husband presented no
evidence showing that the funds used to make the post-separation
mortgage payments were his separate property. Likewise, husband
provided no evidence establishing the amount by which the equity
in the marital home increased due to the post-separation
payments. Under these circumstances, we find no abuse of
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discretion in the trial court's decision not to award husband
credit for his post-separation mortgage payments.
II. SPOUSAL SUPPORT
Husband contends the trial court erred in awarding wife
$2,600 per month in spousal support and in making the support
permanent. He argues the amount of the award is excessive and
unwarranted because the trial court failed to make express
findings of facts and to discuss how every factor in Code
§ 20-107.1(E) upon which the court relied in making the award
supported the award, as required by Code § 20-107.1(F). He
further argues that, given husband's poor health and plan to
retire soon, the trial court erred in making the spousal support
award "permanent" rather than for a defined duration.
These arguments were not raised at trial. In his
exceptions to the trial court's final decree of divorce, husband
objected to the court's spousal support award to wife solely on
the grounds that the award was "unreasonable and would require
that [husband] deplete his award of assets in order to pay
spousal support."
Pursuant to Rule 5A:18, we will not consider on appeal an
argument that was not presented to the trial court. Ohree v.
Commonwealth, 26 Va. App. 299, 308, 494 S.E.2d 484, 488 (1998).
Furthermore, "Rule 5A:18 requires that objections to a trial
court's action or ruling be made with specificity in order to
preserve an issue for appeal." Collado v. Commonwealth, 33 Va.
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App. 356, 367, 533 S.E.2d 625, 631 (2000). The purpose of Rule
5A:18 is to ensure that the trial court and opposing party are
given the opportunity to intelligently address, examine, and
resolve issues in the trial court, thus avoiding unnecessary
appeals and reversals. Kaufman v. Kaufman, 12 Va. App. 1200,
1204, 409 S.E.2d 1, 3-4 (1991); Lee v. Lee, 12 Va. App. 512,
514, 404 S.E.2d 736, 737 (1991) (en banc).
Accordingly, Rule 5A:18 bars our consideration of this
assignment of error on appeal. Moreover, we find no reason in
the record to invoke the "good cause" or "ends of justice"
exceptions to Rule 5A:18.
III. ATTORNEY'S FEES
Husband lastly contends the trial court erred in awarding
attorney's fees to wife. He argues that, in light of wife's
having obtained $30,000 from marital assets prior to trial for her
attorney's fees and considering her large equitable distribution
award, she had no need for an award of attorney's fees. Moreover,
husband argues, his due process rights were violated when the
trial court awarded wife's attorney's fees based on the unsworn
written statement of wife's counsel. According to husband, such a
process did not allow him the "opportunity to contest his
adversary's claim."
These arguments, like husband's spousal support arguments
discussed above, were not raised before the trial court.
Husband's sole objection to the final decree of divorce regarding
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the award made therein of attorney's fees to wife reads:
"[Husband] also objects to the award of attorney's fees."
Thus, husband is barred from raising these arguments for
the first time on appeal. See Rule 5A:18; Collado, 33 Va. App.
at 367, 533 S.E.2d at 631; Ohree, 26 Va. App. at 308, 494 S.E.2d
at 488; see also Cottrell v. Commonwealth, 12 Va. App. 570, 574,
405 S.E.2d 438, 441 (1991) (holding that Rule 5A:18 bars
consideration of even constitutional claims not raised in the
trial court). Furthermore, the record reflects no reason to
invoke the "good cause" or "ends of justice" exceptions to Rule
5A:18.
For these reasons, we affirm the judgment of the trial
court.
Affirmed.
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