WEST v. WEST




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the Virginia Court of Appeals.


WEST

v.

WEST


COURT OF APPEALS OF VIRGINIA

Present: Judges Elder, Bumgardner and Senior Judge Overton

Argued at Richmond, Virginia

Record No. 0075-03-2

GEORGE THOMAS WEST, JR.

v.

PATRICIA WEST

 

MEMORANDUM OPINION[1]BY
JUDGE LARRY G. ELDER

OCTOBER 14, 2003

FROM THE CIRCUIT COURT OF HENRICO COUNTY

George F. Tidey, Judge

Terrence R. Batzli (Ann Brakke Campfield; Barnes & Batzli,
P.C.,

on briefs), for appellant.

Murray J. Janus (Bremner, Janus, Cook & Marcus, on brief),
for

appellee.

George Thomas West, Jr., (husband) appeals from the trial
court’s decision equitably

distributing the property from his marriage to Patricia West
(wife) and calculating the amount

due to wife for the support of the parties’ minor daughter. We
hold the trial court erroneously

failed to classify and value certain items of property and
considered improper factors in

determining how to divide the property. Thus, we reverse in part
and remand for further

proceedings without reaching husband’s claim that the ultimate
division of property was an abuse

of discretion. Based on these errors, we also remand the issue
of attorney’s fees and costs for

consideration anew in light of the ultimate resolution of the
equitable distribution. Finally, we

hold the trial court did not abuse its discretion in finding
that the child care expense claimed by

wife was reasonable and necessary, and we affirm that part of
the court’s ruling.

I. EQUITABLE DISTRIBUTION

On appeal,

"we view [the] evidence and all reasonable inferences in
the light

most favorable to the prevailing party below. . . ." [T]he
trier of

fact ascertains [witnesses'] credibility, determines the weight
to be

given their testimony, and has the discretion to accept or
reject any

of the [witnesses'] testimony[, in whole or in part].

Street v. Street, 25 Va. App. 380, 387, 488 S.E.2d 665, 668
(1997) (en banc) (quoting Martin v.

Pittsylvania County Dep’t of Soc. Servs., 3 Va. App. 15, 20, 348
S.E.2d 13, 16 (1986)). An

equitable distribution award must be reversed if "[the
chancellor] has not considered or has

misapplied one of the statutory mandates[] or . . . the evidence
fails to support the findings of

fact underlying his resolution of the conflict in the
equities." Smoot v. Smoot, 233 Va. 435, 443,

357 S.E.2d 728, 732 (1987).

A. CLASSIFICATION AND VALUATION OF PROPERTY

1. Court’s Duty to Classify and Value Property

When a court formulates an equitable distribution award, the
award "must go beyond

mere guesswork. There must be a proper foundation in the record
to support the granting of an

award and the amount of the award. When considering whether to
make an award, the court

must first classify and value the parties’ marital and separate
property." Stumbo v. Stumbo, 20

Va. App. 685, 693, 460 S.E.2d 591, 595 (1995) (citations
omitted); see Code ? 20-107.3(A)

(noting property may be classified as separate, marital, or
hybrid).

Here, the trial court formulated a "scheme of
distribution" that listed various assets in a

column beneath husband’s name and various other assets in a
column beneath wife’s name.

Implicit in the trial court’s ruling was that it classified as
wholly marital the assets included on

the "scheme of distribution" sheet. Thus, the court
complied with the requirement of Code

? 20-107.3 that it classify the parties’ property.[2]However,
before allocating those assets between

the parties, the court had a duty to value them. Here, the trial
court expressly stated that it

fashioned the equitable distribution award "just on an
asset basis
," without giving any indication

that it first valued any of the property, as required by Code ?
20-107.3. (Emphasis added). The

court’s failure to make such findings in a case in which the
values of the marital portions of

multiple items of property were hotly contested was reversible
error. See Stumbo, 20 Va. App.

at 693, 460 S.E.2d at 595; see also Brinkley v. Brinkley, 5 Va.
App. 132, 137-38, 361 S.E.2d

139, 141 (1987).

2. Motion for Alternate Valuation Date

Code ? 20-107.3(A) provides that

[t]he court shall determine the value of [marital and hybrid]

property as of the date of the evidentiary hearing on the
evaluation

issue. Upon motion of either party made no less than twenty-one

days before the evidentiary hearing the court may, for good
cause

shown, in order to attain the ends of justice, order that a
different

valuation date be used.

The trial court, in its November 13, 2002 letter, indicated that
"[t]he valuation date was the date

of the hearing," thereby denying husband’s motion for an
alternate valuation date for specified

assets.

Husband contends the ends of justice required the court to use a
different valuation date

because, by using the date of the hearing, "the trial court
was, in essence, classifying [husband's

post-separation] deposits [into the contested accounts] as
marital property." We disagree. Even

using the date of the hearing as the valuation date for the
contested assets, the court had a duty to

properly classify those assets. Property acquired by a party
after the last separation is presumed

to be separate property, although that presumption is
rebuttable. Code ? 20-107.3(A); Dietz v.

Dietz, 17 Va. App. 203, 211-12, 436 S.E.2d 463, 468-69 (1993).
Thus, absent evidence from

wife to the contrary, husband’s post-separation contributions to
his retirement accounts, his

Hunton & Williams capital account, and the Crestar/SunTrust
checking account, were his

separate property. To the extent that husband submitted evidence
of the amount of those

contributions, he was entitled to have the trial court classify
the accounts as hybrid property,

regardless of its denial of his motion to value those accounts
as of the date of the parties’

separation. Valuing the marital portion of hybrid assets as of
the date of separation would have

deprived wife of her share of any appreciation in those
accounts.

3. Classification and Valuation of Specific Items of Property

"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). "A partner in a marriage owes his labor
during the marriage to the marital

partnership[;] [t]he fruits of that labor, absent express
agreement, are marital property."

Stainback v. Stainback, 11 Va. App. 13, 24, 396 S.E.2d 686, 693
(1990). Conversely, property

acquired by a party after the last separation is presumed to be
separate property, although that

presumption is rebuttable. Code ? 20-107.3(A); Dietz, 17 Va.
App. at 211-12, 436 S.E.2d at

468-69.

a. Wife’s Pension

Under the "immediate offset approach" to dividing a
pension, the trial court determines

the present value of the marital share of the benefits and
considers this value in making the

monetary award. Torian v. Torian, 38 Va. App. 167, 176, 562
S.E.2d 355, 360 (2002). The

party requesting an award under the immediate offset approach
bears the burden of proving the

present value of the pension. Johnson v. Johnson, 25 Va. App.
368, 375, 488 S.E.2d 659, 662

(1997). The court must determine present value even
"[w]here an award of the entire pension is

made to the owning spouse." Id. at 374, 488 S.E.2d at 662.

Here, wife asked the court to award her the entire present value
of her Virginia

Retirement System (VRS) pension and a portion of husband’s
retirement benefits in an amount

that would result in her receiving half the combined value of
the two accounts. The court in fact

awarded wife the VRS pension. Because the court made no present
value finding for the VRS

pension, its award of all of that asset to wife via the
immediate offset approach was error.

b. Hong Kong Bank Account

The trial court expressly found that the parties "last
cohabited on May 19, 1999." Under

husband’s testimony, the Hong Kong account was opened with money
received after the May

1999 separation. Property acquired by a party after the last
separation is presumed to be separate

property, although that presumption is rebuttable. Code ?
20-107.3(A); Dietz, 17 Va. App. at

211-12, 436 S.E.2d at 468-69. Thus, if the trial court credited
husband’s testimony, the property

was presumed separate because it was acquired after the parties’
last separation on May 19, 1999,

and wife did not present evidence to rebut the presumption.

Alternatively, even if the trial court rejected husband’s
testimony, no evidence established

when or with what funds husband opened the Hong Kong account,
only that the account was

opened before the valuation hearing, which occurred after the
divorce in these bifurcated

proceedings. In the absence of any evidence that the account was
opened before the parties

separated or that the funds used to open it were attributable in
any part to husband’s work for

employer during the marriage, the trial court lacked authority
to classify it as marital. Thus, on

the evidence in the record, the trial court’s classification of
the Hong Kong account as marital

was error.

c. Marital Residence

"[T]he 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). "This process involves two steps: a party must
first (1) establish the identity of a portion

of hybrid property and (2) directly trace that portion to a
separate asset." Rahbaran v. Rahbaran,

26 Va. App. 195, 208, 494 S.E.2d 135, 141 (1997). "If the
party claiming a separate interest in

the transmuted property proves retraceability, the burden shifts
to the other party to prove that

the transmutation of the separate property resulted from a
‘gift.’" von Raab, 26 Va. App. at 248,

494 S.E.2d at 160.

Per Code ? 20-107.3(A)(3)(g), "[n]o presumption of gift
arises from the fact that the

property was retitled." Theismann v. Theismann, 22 Va. App.
557, 565, 471 S.E.2d 809, 813,

aff’d on reh’g en banc, 23 Va. App. 697, 479 S.E.2d 534 (1996).
The party claiming the

existence of a gift must prove by clear and convincing evidence
"(1) intention on the part of the

donor to make a gift; (2) delivery or transfer of the gift; and
(3) acceptance of the gift by the

donee." Id. at 566, 471 S.E.2d at 813. If the party
claiming a separate interest proves

retraceability and the other party fails to prove transmutation
of the property by gift, "the Code

states that the contributed separate property ‘shall retain
its original classification.’" Hart v. Hart,

27 Va. App. 46, 68, 497 S.E.2d 496, 506 (1998) (quoting Code ?
20-107.3(A)(3)(d), (e))

(emphasis in Hart).

Here, as in Holden v. Holden, 31 Va. App. 24, 29-30, 520 S.E.2d
842, 845 (1999), the

evidence established that husband retraced his contribution to
the down payment. Husband

testified that he deposited into the parties’ SunTrust account
$52,000 that he inherited from his

father’s estate and the couple used almost the entire account
balance to make the down payment.

Wife conceded as much, arguing only that the evidence
established husband intended to make a

gift of that contribution to wife. However, the mere fact that
husband and wife were joint

owners of the account from which they withdrew funds to purchase
the jointly titled residence

did not establish that husband intended to make a gift of the
funds to wife. Theismann, 22 Va.

App. at 565, 471 S.E.2d at 813. Further, neither husband nor
wife offered any evidence that

husband ever expressed such an intent, either contemporaneously
with the transfer of funds or at

any other time. Thus, the evidence failed to support the trial
court’s finding that the amount

husband contributed to the down payment had become marital
property, and we hold the trial

court should have classified as husband’s separate property the
portion of the value of the marital

residence attributable to husband’s original $52,000
contribution. On remand, we direct the court

to calculate the value of husband’s share and to take that value
into consideration in fashioning

the equitable distribution award.

d. SunTrust Account

Husband failed to satisfy his burden of retracing the $15,000
inheritance he claimed to

have deposited into the parties’ SunTrust account in 1994. A
court commits reversible error in

refusing to classify as separate property a spouse’s inheritance
where the spouse proves he

deposited the inheritance into a joint account from which the
parties subsequently made no

withdrawals. See Hart, 27 Va. App. at 68, 497 S.E.2d at 506.
"Under these circumstances, the

Code mandates that [the spouse's] deposit be classified as
separate property." Id. at 68, 497

S.E.2d at 507. However, where a spouse makes a deposit of
separate funds into a joint account

into which

unspecified sums of marital funds were thereafter deposited and

withdrawn . . . , [with] the balance regularly ebbing and
flowing

for months[,] . . . the identity of [the spouse's] separate
funds ha[s]

been lost in countless unspecified transactions involving
marital

funds, resulting in the irreversible transmutation of separate
into

marital property. Under such circumstances, [a] court [is] unable

to properly trace and preserve the integrity of [the spouse's]

separate property.

Asgari v. Asgari, 33 Va. App. 393, 403, 533 S.E.2d 643, 648
(2000).

Here, assuming the trial court accepted as credible husband’s
uncontradicted testimony

regarding the initial deposit of the inherited funds in 1994,
the record does not contain complete

statements for that account, and the statements that are in the
record–which cover July 2000,

June 2001, and March 2002–show deposits into and withdrawals
from that account for taxes and

other unspecified purposes. Husband admitted on brief that this
was the account into which he

deposited his income, a marital asset during the marriage, and
from which he paid his living

expenses and taxes. Thus, the evidence establishes that the
account was marital and supports the

trial court’s implicit finding that husband failed to retrace
his separate contribution.

In addition, husband failed to establish the amount of his
post-separation contributions to

that account and the net earnings attributable to those
contributions. Instead, he offered evidence

of the balance in the account as of the date of separation, sums
allegedly deducted from the

account to satisfy marital tax obligations, and an interest rate
on the balance at 0.45%. As set out

above, he did not offer complete statements for that account. In
the absence of complete account

information from which the trial court could determine the
amount of his post-separation

contributions to the account and their earnings, the trial court
did not err in failing to classify

these sums as husband’s separate property.

e. Husband’s Retirement Account

Husband offered evidence of the value of his Hunton &
Williams retirement account as

of May 1, 1999, January 1, 2001, and January 4, 2002. He offered
evidence of contributions and

earnings for the year 2001. Husband offered no evidence of the
value of that account as of the

date of the hearing and no evidence of the amount of
post-separation contributions to or

withdrawals from that account, made by him or on his behalf, or
the earnings thereon during the

portion of 1999 following the separation or for the year 2000 or
2002. In the absence of such

evidence, the trial court was unable to calculate the total
increase in the value of that account

since the date of separation or to determine what portion of the
increase was marital property.

Due to this lack of evidence, the trial court’s failure to
classify as husband’s separate property his

post-separation contributions and their earnings was not error.

f. Husband’s Interest in Hunton & Williams

Husband contends that the trial court’s reference in the scheme
of distribution to his

"interest" in Hunton & Williams establishes it
erroneously held he had an ongoing equity interest

in the firm. He argues the court should instead have listed his
capital account because the

evidence established that his capital account was the only
law-firm-related asset in which he

retained an interest.

We hold the trial court’s reference to husband’s
"interest" in Hunton & Williams does not

exclude the possibility that it referred to the value of his
capital account rather than his equity

partnership interest, which he testified he no longer had. Thus,
we cannot conclude that the trial

court’s reference to husband’s "interest" was a
rejection of his uncontradicted testimony regarding

his partnership status, and we need not consider whether, on
this record, such a rejection would

have been error.

g. Personal Property

The trial court was entitled to disbelieve husband’s evidence
that some of the property

still in the marital residence was husband’s separate property
and to accept wife’s representations,

via her schedule of marital assets, that the $57,765 of personal
property still in the marital

residence was marital property. Second, the trial court was not
required to distribute the personal

property as husband represented the parties had agreed. Husband
did not ask wife at the hearing

whether she approved of the personal property classification and
distribution contained in his

exhibit twelve. Wife did testify that she would allow husband to
remove from the marital

residence additional items of marital property of which she
approved. She also testified,

however, that she had asked husband to come to the residence to
do so on numerous prior

occasions and that he had failed to avail himself of the
opportunities she offered.

Further, based on the undisputed values placed on the property
by the appraiser and

wife’s representations via her exhibits, wife had possession of
$57,765 of personal property, all

of which was marital, and husband had possession of $11,947 of
marital personal property. With

the additional personal property "adjustment" made by
the court in its scheme of distribution,

husband received $24,000 more of another marital asset, the
Crestar/SunTrust account, than wife

received in order to partially compensate him for the disparate
division of personal property. As

a result, husband received $35,947 in cash and property as
compared to wife’s retention of

$57,765 in property. Although we do not here review the fairness
and propriety of the overall

award because we remand for reconsideration on other grounds, we
hold that the trial court’s

treatment and division of these particular assets, standing
alone, was not an abuse of discretion.

B. DIVISION OF MARITAL ASSETS

Code ? 20-107.3(F) specifically provides that "[t]he court
shall determine the amount of

any [equitable distribution] award without regard to maintenance
and support awarded for either

party." See also Reid v. Reid, 7 Va. App. 553, 565, 375
S.E.2d 533, 540 (1989). Thus, the trial

court erred in considering as "a significant factor . . .
that [wife] would not receive spousal

support from [husband]."

Similarly, we hold the trial court erred in considering
"the life styles of the parties and

their children." Although "the standard of living
established during the marriage" is a factor for

consideration in assessing a request for spousal support, see
Code ? 20-107.1(E)(2), the equitable

distribution statute contains no similar provision, see Code ?
20-107.3(E). As is the case with a

spouse’s earning capacity, we hold that the parties’ standard of
living during the marriage has no

relevance to determining how to "distribut[e] . . . the
accumulated marital wealth between the

marital parties." Reid, 7 Va. App. at 565, 375 S.E.2d at
540.

Accordingly, we hold the court erred in considering the parties’
standard of living and

earning capacities in fashioning the equitable distribution
award.

II. CHILD CARE EXPENSES

Code ? 20-108.2(F) provides that "[a]ny child-care costs
incurred on behalf of the child

or children due to employment of the custodial parent shall be
added to the basic child support

obligation. Child-care costs shall not exceed the amount
required to provide quality care from a

licensed source." In a child support proceeding,
"[t]he primary issue before a trial judge is the

welfare and best interests of the child, not the . . . personal
preference of a parent." Hur v. Dep’t

of Soc. Servs., 13 Va. App. 54, 60, 409 S.E.2d 454, 458 (1991).

Here, the evidence, viewed in the light most favorable to wife
and the parties’ child,

supported the court’s finding that, given the nature of wife’s
job, "the welfare and best interests"

of the parties’ fourteen-year-old daughter were served by
employing a sitter who could help her

with homework, oversee her activities after school and during
school vacations, care for her

when she became ill, and take her to medical and other
appointments as necessary. But for

wife’s employment, wife would have been available to do these
things. Thus, the evidence

supported a finding that the contested "child-care costs
[were] incurred on behalf of the child or

children due to employment of the custodial parent."

We also reject husband’s contention that the claimed child care
costs are "far in excess of

the cost of any reasonable licensed daycare provider for the
limited number of hours per day"

that the sitter is with the child. Husband’s calculations as to
the sitter’s hourly rate do not appear

to take into account wife’s testimony that the sitter is with
the child for more than

two-and-one-half hours per day when the child is sick, when the
child has a day off from school,

and during the summer months when the child "did not go to
school" at all. Husband’s

calculations also do not take into account expenses incurred by
the sitter to drive the child to and

from medical appointments and to take her home from school when
she is sick. Further, these

figures do not take into account any federal or state taxes that
wife may be required to pay on the

sitter’s wages and does not include any expenses for mileage
that wife might pay the sitter.

Finally, husband offered no evidence of what reasonable licensed
daycare would cost.

Thus, the evidence supports the trial court’s finding that
"[t]he daycare figure is

necessary."

III.

We hold that the trial court erroneously failed to classify and
value certain items of

property and considered improper factors in determining how to
divide the property. Thus, we

remand for further proceedings without reaching husband’s claim
that the ultimate division of

property was an abuse of discretion. Based on these errors, we
also remand the issue of

attorney’s fees and costs for consideration anew in light of the
ultimate resolution of the equitable

distribution. Finally, we hold the trial court did not abuse its
discretion in finding that the child

care expense claimed by wife was reasonable and necessary under
Code ? 20-108.2(F), and we

affirm that part of the court’s ruling. Thus, we affirm in part,
reverse in part, and remand for

further proceedings consistent with this opinion.

Affirmed in part,

reversed in part,

and remanded.

 

FOOTNOTES:

[1]Pursuant to
Code ? 17.1-413, this opinion is not designated for publication.

[2]We address the
accuracy of some of those classifications infra in Part I.A.3.


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