ROWE v. ROWE



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subject to formal revision. If you find a typographical error or
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ROWE

v.

ROWE


AUGUST 22, 2000

Record No. 0981-99-2

Record No. 1028-99-2

Present: Judges Benton, Coleman and Lemons[1]

Argued at Richmond, Virginia

CHARLES S. ROWE

v.

MARY ANN ROWE

MARY ANN ROWE

v.

CHARLES S. ROWE

FROM THE CIRCUIT COURT OF THE CITY OF
FREDERICKSBURG


Richard H. C. Taylor, Judge Designate

OPINION BY JUDGE SAM W. COLEMAN III

Carl F. Bowmer (Christian & Barton, L.L.P.,
on briefs), for Charles S. Rowe.

E. Duncan Getchell, Jr. (Robert H.
Patterson, Jr.; Richard Cullen; Paul G. Watson, IV; McGuire,
Woods, Battle and Boothe, L.L.P., on briefs), for Mary Ann Rowe.

Both Charles S. Rowe and Mary Anne Rowe appeal
the circuit court’s order, which essentially reaffirmed and
reinstated the trial court’s prior equitable distribution and
spousal support awards that we reversed in an earlier appeal and
remanded for reconsideration. See Rowe v. Rowe, 24
Va. App. 123, 480 S.E.2d 760 (1997). For the reasons set forth
below, we again reverse the trial court and remand the case for
further proceedings in accordance with the following rulings.

I. BACKGROUND

The pertinent underlying facts are set forth in
our prior opinion. See 24 Va. App. at 130-34, 480 S.E.2d
at 763-64.

Husband and wife were married on May 1, 1970.
The parties’ major assets were obtained with funds received from
husband’s position as co-editor, co-publisher, and a principal
stockholder of the Free Lance-Star, a family-owned
newspaper in Fredericksburg. After husband and his brother
inherited the newspaper from their father in 1949, they divided
its operation between them; husband assumed responsibility for
the news-editorial side, while his brother served as business
manager. Over the years, the newspaper grew substantially and
profited. Husband’s expert witness calculated that the
newspaper’s stock increased in value from $500 per share in 1970
to $9,500 per share in 1991. Also, during the course of the
parties’ marriage, husband received $14,000,000 in salary and
dividends from the newspaper. When the parties married, they
moved into husband’s home on Ingleside Drive. Four years later,
husband sold the Ingleside Drive property for $82,000, and the
parties purchased the marital home on Hanover Street, in which
husband invested the $82,000 proceeds from the Ingleside Drive
home.

The parties were divorced by final decree on
December 1, 1993. In March 1996, the circuit court entered its
equitable distribution and spousal support decree. The trial
court made an equitable distribution award to wife of $4,204,530,
awarded wife $10,000 per month in spousal support, and awarded
her $50,000 for attorney’s fees and court costs. In doing so, the
trial court affirmed the Commissioner in Chancery’s report, which
recommended that one-half, or $41,000, of the Ingleside Drive
sale proceeds remain husband’s separate property. Both parties
appealed from that decree. We reversed the trial court’s rulings
on several issues and remanded the case with instructions. On
remand, the trial judge, with few exceptions, reaffirmed his
prior rulings and the equitable distribution and spousal support
awards. The trial judge’s disregard of our opinion and mandate on
remand has prompted and necessitated the parties’ second appeal.

To place matters in a proper context, we note
that in the parties’ first appeals, wife asserted, inter alia,
that the trial court erred by accepting husband’s valuation of
the newspaper stock. Husband asserted that the trial court erred
by classifying the entire increase in value of the newspaper
stock between 1970 and 1991 as marital property. He argued the
$14,000,000 in salary and stock dividends that he received as
compensation from the newspaper during the marriage represented
the actual value of his marital effort and, thus, precluded
classification of the entire increase of the stock appreciation
as a marital asset. Husband also contended the trial court erred
by classifying only $41,000 in value of the parties’ marital
residence as his separate property because the entire $82,000,
constituting the proceeds from the sale of his premarital home,
was the value of his separate interest. He also asserted the
trial court erred in determining the amount of the monthly
spousal support award.

On appeal, we held that: (1) the trial
court did not err in the valuation of the newspaper stock;
however, it erred in classifying the entire increase in
value of husband’s stock as marital property because fifty
percent or more of the increase was attributable to the efforts
of husband’s brother and/or passive economic factors;
(2) the amount of compensation paid to husband by the
newspaper for his services, whether inadequate or excessive, was
but a factor to consider in determining the amount of marital
wealth attributable to marital effort; (3) the trial court
erred in treating only $41,000 of the $82,000 of the Ingleside
Drive sale proceeds invested in the parties’ marital home as
gifted, marital property; (4) the court properly refused to
award wife one-half of husband’s retirement benefits and the
court had the power to order the husband to pay wife’s designee,
if wife predeceased husband; (5) the court erred in
classifying all of husband’s post-separation pension
contributions as marital but did not err in refusing wife’s
proffer concerning husband’s separate contributions because wife
failed to timely offer supplemental evidence; and (6) the
trial court correctly deducted wife’s litigation expenses from
her list of other expenses in valuing her accounts because she
failed to timely present evidence concerning her litigation
expenses. Because the trial court had to reconsider, on remand,
classification of the increase in the value of husband’s stock
and distribution of the $82,000 proceeds from the Ingleside Drive
home gifted by husband, we also held that the spousal support
award must be reconsidered.

While the case was pending on appeal, husband
sold his newspaper stock for an amount far in excess of that
valued by the experts in 1991. On remand, wife filed a motion for
re-valuation of the stock. The trial court denied that motion. In
denying wife’s motion for re-valuation of the stock, the trial
judge ruled, "The change in value of the Free Lance-Star
stock based upon Husband’s sale of the Free Lance-Star stock to
his brother long after the separation, divorce and opinion by the
Court of Appeals does not affect the value as determined by the
Commissioner and set forth in the distribution order." The
trial judge specifically noted that we had ruled the trial court
erred by finding "the entire increase in [value of] Husband’s stock was due to his personal efforts" and that we
instructed the trial court to consider on remand, as a factor in
determining the extent to which husband’s personal efforts had
contributed to the increase in value of his stock, the fact that
husband may have been overcompensated for his efforts by
receiving $14,000,000 in salary and stock dividends during the
marriage. Disregarding our decision, the trial judge held that
"[b]ecause the Commissioner and [the trial court] considered
both factors and with sufficient evidence, the ultimate finding
[that the entire increase in value of the stock was marital] was
a judgment call properly considered and supported."

Additionally, the trial court ruled on remand
that: (1) husband shall pay wife 25.6 percent of each of his
pension payments; (2) the "entire sum of $82,000.00
invested in ‘Hanover Street’ by Husband and classified by the
Court of Appeals as marital property shall be distributed to
Wife"; (3) wife’s motion for updated discovery and
valuation of marital assets was denied; and (4) the
"findings concerning spousal support, litigation expenses,
and post-separation deposits and withdrawals have been
reconsidered, and the Court FINDS that the original determination
as set forth in the Final Decree of March 15, 1996
constitutes a distribution which is fair and equitable to each
party."

A trial judge is bound by a decision and
mandate from this Court, unless we have acted outside our
jurisdiction. A trial court has no discretion to disregard our
lawful mandate. When a case is remanded to a trial court from an
appellate court, the refusal of the trial court to follow the
appellate court mandate constitutes reversible error. See
1B Michie’s Jurisprudence Appeal and Error ? 349
(M.J. Divine & G.E. Legner eds. 1995); see also
Nassif v. Board of Supervisors, 231 Va. 472, 480, 345
S.E.2d 520, 525 (1986) (stating that "[w]hen this Court
rules that the judgment of a trial court is erroneous it does not
matter whether that judgment is erroneous for one reason or ten;
it is no longer viable").

Furthermore, a trial judge violates his or her
oath of office by willfully refusing to abide by the rulings of
an appellate court concerning the very case on appeal from the
trial court, regardless of how erroneous the trial judge may
consider the appellate ruling to be. Moreover, the Canons of
Judicial Conduct provide that "[a] judge shall be faithful
to the law . . . ," Canons of Judicial Conduct for
the State of Virginia Canon 3(B)(2) (1999), and "[a] judge
should respect and comply with the law and shall act at all times
in a manner that promotes public confidence in the integrity and
impartiality of the judiciary." Canon 2(A). Here, the trial
judge expressly refused to follow or abide by our opinion,
mandate, and instructions on remand.

II. ISSUES

In the present appeal, husband contends the
trial court erred in its remand decree: (1) by classifying a
portion of the increase in value of the Free Lance-Star
stock as marital property; (2) in awarding wife the entire
sum of $82,000, representing the proceeds from the sale of
husband’s separate property, which he invested in the marital
home; and (3) in failing to modify its previous spousal
support award. Wife also appeals, contending that the trial court
erred by: (1) failing to re-value the Free Lance-Star
stock to determine the actual fair market value because husband
had sold the stock while the case was pending on appeal;
(2) failing to determine the post-separation increases in
value of other marital assets; (3) failing to reconsider the
award of attorney’s fees; and (4) refusing to allow
discovery or to conduct an evidentiary hearing.

III. ANALYSIS

A. Appreciation in Value of Newspaper Stock

1. Classification

The trial judge classified the entire
$3,933,000 increase in value of the newspaper stock during the
marriage as marital property and awarded wife one-half of that
increased value or $1,966,500. We held in the first appeal that
"the trial court erred in classifying the entire increase in
the value of husband’s stock as marital property because fifty
percent or more of the increase was attributable to the efforts
of husband’s brother and/or passive economic factors." Rowe,
24 Va. App. at 129-30, 480 S.E.2d at 763.

Husband contends that the foregoing ruling
became the law of the case and, based on that holding, no more
than fifty percent of the increase in value of the stock can be
considered marital property. Husband contends that the trial
court erred on remand in failing to abide by that holding.
Husband also asserts that the trial court erred on remand by
failing to give proper consideration to the extent to which the
marital estate was overcompensated by husband having received
$14,000,000 in salary and dividends during the marriage. Husband
contends that, when properly considered, this factor reduces the
extent to which his personal efforts should account for the
increase in the stock’s value.

We held in the first appeal that a substantial
portion of the increase in the stock’s value was attributable to
the growth in value of husband’s original separate investment due
to market forces and the efforts of third parties. We concluded
that the increase in value was not entirely attributable to
husband’s personal efforts and, therefore, intimated that a
substantial portion of the increase in value was attributable to
the passive growth of husband’s original separate asset at the
time of the marriage. We expressly pointed out that "Code
? 20-107.3(A)(3)(a) provides that ‘[i]n the case of the
increase in value of separate property during the marriage, such
increase in value shall be marital property only to the extent
that marital property or the personal efforts of either party
have contributed to such increases
." Id. at 133,
480 S.E.2d at 764 (emphasis added). It was clear on the record
before us in the prior appeal that husband’s personal efforts did
not solely account for the increase in value of his stock
from $500 per share in 1970 to $9,500 per share in 1991. We
directed that on remand the "increase classifiable as
marital should reflect only that [appreciation] attributable to
husband’s personal efforts and not those of husband’s brother or
passive efforts, such as population growth and minimal
inflation." Id. at 134, 480 S.E.2d at 765.

At trial, husband contended and presented
evidence that a significant portion of the increase in value of
the stock was not attributable to his personal efforts, but
rather was attributable to the increase in the circulation of the
newspaper, the dramatic population growth in the Fredericksburg
area, and slow inflation. Husband also asserted that his brother
was more responsible for the increase in the value of the
newspaper’s stock than he was. Husband produced evidence that
during the marriage his responsibilities at the newspaper had
steadily decreased as he became more involved in "national
newspaper activities," which took him away from the
Fredericksburg area and away from the Free Lance-Star. He
contends that those efforts should not be considered marital
efforts attributable to his duties with the Free Lance-Star
or affecting the increase in value of his interest in the
newspaper. Husband also introduced evidence that, during this
period, his brother’s efforts and duties at the newspaper had
increased. As we previously noted, "Husband’s brother was
solely responsible for the three expansions of the newspaper
plant and was in charge of every other activity and function of
the paper, with the exception of the news department." Id.
at 134, 480 S.E.2d at 765. Indeed, we further noted that
"Wife indicated at trial that husband’s brother was at least
equally responsible for the increase in the value of the
paper." Id. From that evidence, the panel held as
follows:

[W]e hold that the trial court erred in finding
that the entire increase in the value of husband’s Free
Lance-Star
stock was due to his personal efforts. The
increase classifiable as marital should reflect only that
attributable to husband’s personal efforts and not those of
husband’s brother

or passive factors, such as population growth
and minimal inflation.

Id.

Despite our holding, on remand, the trial court
held that "the ultimate finding [in the prior decision] was
a judgment call properly considered and supported." In a
letter opinion dated June 8, 1998, the trial judge stated:

The Court of Appeals failed to recognize the
weight of the factor of excessive compensation balanced the
finding as to the value of the increase in [husband's] stock
during marriage. Having taken days to review the inordinate
amount of evidence, this Court is convinced that those factors
were appropriately considered in the original findings.

It is clear from the record that the trial
judge, on remand, did not re-examine the issue or make any effort
to classify how much of the appreciation in value was marital and
how much separate. In fact, it appears the trial judge did not
comprehend that a significant portion of the increase in value of
the stock, based on the facts in this record, necessarily had to
be based on a passive increase in value of the original
investment, even if the evidence showed that the brothers’
personal efforts in expanding the paper in 1980 and 1990 were the
major factors causing the appreciation in value.

Under the law of the case doctrine, we and the
parties are bound by our previous determination that the trial
court erred by finding the entire increase in value of husband’s
stock was due to his personal efforts and that the "increase
classifiable as marital should reflect only that attributable to
husband’s personal efforts."

"The [law of the case] doctrine, briefly
stated, is this: Where there have been two appeals in the same
case, between the same parties, and the facts are the same,
nothing decided on the first appeal can be re-examined on a
second appeal. Right or wrong, it is binding on both the trial
court and the appellate court, and is not subject to
re-examination by either. For the purpose of that case, though
only for that case, the decision on the first appeal is
law."

American Filtrona Co. v. Hanford, 16 Va.
App. 159, 164, 428 S.E.2d 511, 514 (1993) (quoting Steinman v.
Clinchfield Coal Corp.
, 121 Va. 611, 620, 93 S.E. 684, 687
(1917)). To allow a trial judge to disregard the holding of a
previous panel would be an inefficient administration of justice,
increasing the "labor of appellate courts and the costs to
litigation," Steinman at 621, 93 S.E.2d at 687, and
would promote uncertainty in a court’s decision.

Without deciding the extent to which husband’s
active personal efforts over the years increased the value of his
stock, we remanded the case with instructions to the trial court
to consider the extent to which the increase in value was
attributable to factors other than husband’s personal efforts. On
remand, however, the trial court disregarded our holding and
instructions.
[2] Accordingly, the trial
court’s ruling on remand was erroneous, and we again reverse and
remand the issue of the classification of the appreciation in
value of husband’s newspaper stock.

2. Re-valuation

While the case was on appeal, husband sold the
newspaper stock in 1997 for $41,184.04 per share as compared to
the estimated value of $9,500 per share in 1991, which the trial
court had accepted for valuation purposes. Upon remand, wife
filed a motion for re-valuation of the stock because in the
interim, her interest in the marital share of the stock had sold
for a much higher price and she had not received her share of the
stock or the proceeds from the stock. She claimed that she was
entitled to the increase in value of this marital asset which
husband continued to hold.

In a letter opinion dated June 8, 1998, the
trial judge stated:

Stock is what you can get for it. Here the
memorandum of the [wife] establishes a baseline. This was paid
for by [husband]. But what made it happen was the employment of
the evaluator by [husband] and [husband's] position that
if you don’t buy at that price, you must sell and whoever
wins gets all control. This is what establishes the value and
none of it can be assigned to any cause or person other than
[husband].

The trial court ruled in its final decree after
remand that "[t]he change in value of the Free Lance-Star
stock based upon Husband’s sale of the . . . stock
to his brother long after the separation, divorce and opinion by
the Court of Appeals does not affect the value as determined by
the Commissioner and set forth in the distribution order."

We hold that the trial judge abused his
discretion and erred by failing to re-value the stock on remand
when the asset had been held by one party for such a lengthy
period of time and its value, including the value to which wife
was entitled, had greatly changed. "We have stressed that
the trial judge in evaluating marital property should select a
valuation ‘that will provide the Court with the most current and
accurate information available which avoids inequitable
results.’" Gaynor v. Hird, 11 Va. App. 588, 593, 400
S.E.2d 788, 790-91 (1991) (quoting Mitchell v. Mitchell, 4
Va. App. 113, 118, 355 S.E.2d 18, 21 (1987)); see also
Wagner v. Wagner, 16 Va. App. 529, 531, 431 S.E.2d 77, 78
(1993) (en banc) (stating that "the reasons
for re-valuation on remand are the same as in the original
hearing — to obtain the most accurate valuation and equitable
distribution"). We held that because the Code "does not
fix a date for determining the value of [the parties' assets],
the trial court must select a valuation date if the parties
cannot agree to one." Mitchell, 4 Va. App. at 118,
355 S.E.2d at 21. The 1998 amendments to Code ? 20-107.3(A)
codified the rule announced in Mitchell. Code
? 20-1047.3(A) provides:

The court shall determine the value of any such
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 be used.

In Wagner, the trial court valued
husband’s pension benefits before the first appeal and, on
remand, the trial court re-valued the property. On appeal,
husband argued that the trial court erred in re-valuing the
property because the increase in value was due to his efforts. We
held that the trial court did not err in re-valuing the asset to
obtain the most accurate valuation at the time of the equitable
distribution of the asset. See Wagner, 16 Va. App.
at 531-32, 431 S.E.2d at 78-79.

In the present case, we find that the trial
judge erred in failing to re-value the stock on remand. Where an
asset that is subject to equitable distribution is retained by
one of the parties for a period of time after valuation but
before the equitable division occurs and the asset significantly
increases or decreases in value during that time through neither
the efforts or fault of either party, neither party should
disproportionately suffer the loss or benefit from the windfall.
Under those circumstances, a trial court abuses its discretion by
failing to re-value the property when a party has made a timely
motion to do so and is prepared to present evidence on the issue.
Here, the value of the stock was readily ascertainable because
husband sold the stock in 1997. Not only did the value of the
stock increase, but in those six years it increased more than
four times the value estimated by the expert witnesses in 1991.
Generally, there can be no better guide to determine an asset’s
worth than the price it commanded in an arm’s-length sale. While
a trial court will usually have discretion to determine the date
on which an asset will be valued, the date chosen "should be
one that will provide the Court with the most current and
accurate information available which avoids inequitable
results." Mitchell, 4 Va. App. at 118, 355 S.E.2d at
21.

In his letter opinion dated June 8, 1998, the
trial judge found that the appreciation in value of the stock,
since its $9,500 per share value in 1991 and its $41,184.04 per
share value in 1997 when it was sold, was due solely to husband’s
active efforts in employing an evaluator and his hard-line
bargaining with his brother to avoid bringing a stranger into the
company. This evidence does not support the trial judge’s finding
that the increase in value was due to husband’s active efforts.
Merely bargaining to obtain the best price for an asset is not
the type of active effort that adds intrinsic value to an asset
or increases its worth. No evidence supports the trial judge’s
conclusion that husband’s efforts caused the stock to increase in
value between 1991, the date it was valued for equitable
distribution purposes, and 1997, when it was sold.

The evidence is consistent with the conclusion,
however, that the increase was due to passive economic factors
and the fact that the sale between the brothers as major
stockholders in the closely-held corporation enabled husband to
demand and receive a premium price for the stock. "Where
marital property appreciates pending the appeal because of
inflation, market forces, or other passive cause, . . .
both parties should share in the gain in value." Brett R.
Turner, Equitable Distribution of Property ? 7.02,
at 430 (2d ed. Supp. 1999). While the sales price may reflect the
value the stock could command in this particular situation,
rather than an actual appreciation in value in those six years,
the issue is the value of the stock to these parties when the
asset is divided between them. One clear measure of the true
value to them obviously is the value for which it sells. We,
therefore, instruct the trial judge on remand, after determining
what portion of the stock is classified as marital in accord with
our holding in Part 2, to receive evidence of the actual sales
price of the stock in determining its value for purposes of the
equitable distribution award.

Furthermore, because the evidence has changed
concerning the value of the stock in light of its being sold, the
law of the case doctrine does not apply in determining the
appreciation in value of the stock, which includes the estimated
value of the stock in 1970 when the parties married. We note that
in the first appeal, we held that the trial judge did not abuse
his discretion in accepting husband’s expert’s valuation that the
stock was valued at $500 per share in 1970 and $9,500 per share
in 1991 and that the expert’s valuations were not plainly wrong. See
Rowe, 24 Va. App. at 140-41, 480 S.E.2d at 768. However,
where material facts have changed between the first appeal and
the second, the law of the case doctrine is inapplicable.

Nothing is more common than a material
difference between the facts presented on a second trial from
those shown on the first trial, and the "law of the
case" is applicable to the state of facts existing at the
time the law is announced. There is nothing in the rule to
inhibit a party, on a second trial, from supplying omitted facts
or from averring a different state of facts.

Steinman, 121 Va. at 622, 93 S.E.2d at
688 (citation omitted).

The previously-determined values in 1970 and
1991 were based upon the opinions and estimates of expert
witnesses and were, according to the witnesses, deflated values,
in part because the stock was discounted due to generally limited
marketability of stock in a closely-held corporation. As it
developed, the fact that the brothers in this closely-held
corporation did not want strangers owning stock in the
corporation resulted in the stock being sold at a premium price,
rather than a discounted price. It is the premium price that we
are requiring the court to consider on remand for purposes of
determining the appreciated value of the stock. However, it would
be manifestly unfair on remand for the court to use the
discounted estimated value of $500 per share as the basis for
determining how much the stock appreciated in value between 1970
and 1997 and to deduct that value from the premium sales price of
$41,184.04 per share in 1997 in order to determine how much the
stock appreciated. To the extent the estimated value of the stock
at the time of the marriage in 1970 should bear some relationship
to its actual sales price twenty years later, we hold that, on
remand, the trial court shall reconsider and determine the
premium value of the stock at the time of the marriage in 1970.
To do otherwise would unjustifiably inflate the amount the stock
had appreciated between its estimated discounted value in 1970
and the premium sale price value in 1997.

B. Hanover Street Property

After their marriage, the parties lived in
husband’s home on Ingleside Drive. Four years later, the parties
moved to a new home on Hanover Street, in which husband invested
the $82,000 sale proceeds from the Ingleside Drive home. The
parties held the Hanover Street home as joint tenants. For
equitable distribution purposes, the Hanover Street property was
valued at $512,992.

The trial court found that $41,000 of the
Hanover Street property was husband’s separate property. The
balance of $41,000 was marital property. Husband argued that the
entire $82,000 from the sale of the Ingleside Drive home should
be treated as separate property. We held in the first appeal that
the trial court erred in finding that only $41,000 of the sale
proceeds was gifted marital property, and we held that the entire
$82,000 was marital property. See Rowe, 24 Va. App.
at 138, 480 S.E.2d at 767. Although the entire $82,000 was
retraceable as property husband owned before marriage, it was
marital because husband had made a gift of one-half undivided
interest in the Hanover property to wife. We stated that,

the parties purchased the home to serve as
their home and that the new home was purchased in order to
accommodate the parties’ growing family. Husband placed no
reservations on the transfers of title permitting him to reclaim
the property upon divorce or any other circumstance. Further,
wife testified that husband had said to her that his property was
also her property. These circumstances, in combination with the
fact that the house was conveyed by joint title, are evidence
that a gift was intended and therefore that the entire sum of
$82,000 was marital property.

Id. at 137-38, 480 S.E.2d at 766-67.

While we found that the entire $82,000 was
marital property, we specifically held that, on remand, "the
trial court was not bound to make an equal distribution of the
property." Id. at 138, 480 S.E.2d at 767. We remanded
the issue to the trial court to properly classify the entire
asset as marital property and then to determine how the asset
should be equitably distributed. Moreover, by ruling that the
court erred in classifying $41,000 as husband’s separate
property, we did not hold or imply that husband was not entitled
to a portion of that marital asset. We stated that, "[t]he
trial court must give careful consideration to the gifted status
of martial property, but the equitable award of marital property
is ultimately to be determined by the trial court’s consideration
of the evidence and application of the Code ? 20-107.3(E)
factors." Id.

On remand, the trial judge, in a letter opinion
dated January 20, 1999, stated:

The Court of Appeals found that the entire sum
of $82,000.00 invested in "Hanover Street" by husband
was originally separate property, then gifted to wife becoming
marital property, but the division should be reexamined.
Considering factors necessary to arrive at a fair and equitable
award, and examining the evidence in that light, this Court finds
that the entire $82,000.00, classified as marital, must be
distributed to wife.

Without considering the statutory factors of
Code ? 20-107.3(E) in determining how to distribute marital
property, in particular, the rights and equities of the parties,
the trial judge merely awarded wife the entire marital asset of
$82,000.

Although the trial judge stated that he
considered the "factors necessary to arrive at a fair and
equitable award," nothing in the record suggests that the
trial court considered or applied the statutory factors. See
generally Theismann v. Theismann, 22 Va. App. 557,
568, 471 S.E.2d 809, 814 (1996), aff’d en banc,
23 Va. App. 697, 479 S.E.2d 534 (1996). We, therefore, find that
the trial judge again erred in distributing the $82,000 portion
of the Hanover property. Accordingly, on remand, we instruct the
trial judge to consider the evidence and the factors set forth in
Code ? 20-107.3(E) in distributing the $82,000, which is a
discreet marital asset apart from the remaining value of the
Hanover home.

C. Spousal Support Award

Husband argues that, on remand, the trial court
erred in reaffirming its prior spousal support award, after being
directed by us to reconsider the award. Specifically, he argues
that the trial judge failed to consider the "income
generating potential of the marital award."

In the first appeal, we found that, although
the trial judge heard evidence addressing the factors in Code
? 20-107.1,
[3] it was "unclear from the record whether the court
considered the impact of the
final . . . equitable distribution award on
the spousal support needs of wife." Rowe, 24 Va. App.
at 139, 480 S.E.2d at 767. We noted that failure to consider the
factors set forth in Code ? 20-107.1 constitutes reversible
error, see Woolley v. Woolley, 3 Va. App. 337, 344,
349 S.E.2d 422, 426 (1986), and we instructed the court to
consider "the income generating potential of the marital
award as well as other income and expenses generated by the asset
assignment constituting the equitable distribution award." Rowe,
24 Va. App. at 139, 480 S.E.2d at 767. We also held that
because "the trial court erred in classifying the full
appreciation of husband’s Free Lance-Star stock as marital
property, a new equitable distribution award must be made,
requiring reconsideration of the spousal support award." Id.

On remand, the trial court stated that the
spousal support award had been reconsidered and found that
"the original determination as set forth in the Final Decree
of March 15, 1996 constitutes a distribution which is fair
and equitable to each party." (Emphasis added.) Apparently,
because the trial court left its original equitable distribution
award intact, other than effectively awarding wife an additional
$41,000 from the value of the Hanover property, the trial court
determined that it was unnecessary to reconsider the spousal
support issue. Because the trial court must reconsider the
classification of the increase in value and must re-value the
newspaper stock, the court will necessarily be required to
reconsider spousal support as provided by Code ? 107.1(8).

D. Value Post-Separation Increase in Assets

Wife contends that, on remand, the trial judge
failed to value the post-separation increase in the marital
assets, including dividends from the Free Lance-Star stock
as well as the parties’ investment accounts. We held in the first
appeal that if "property or some portion thereof which
generated the dividends was marital, the dividends attributable
to the marital property would properly be classified as
marital." Id. at 143, 480 S.E.2d at 769. Accordingly,
because the stock had not been distributed or the cash equivalent
disbursed to wife, we instruct the trial court as stated in part
A, to determine what portion of the appreciation in the stock’s
value is marital and what portion is husband’s separate property
and then to classify the earnings attributable to the martial
portion as marital.

Husband concedes that the trial court erred by
failing to include the post-separation dividends received on the
marital share of the Free Lance-Star stock. However,
husband argues that re-valuation of other marital assets,
specifically the investment accounts, would be improper because
those accounts were equitably distributed between the parties by
agreement and distributed pursuant to the final decree by wife
having received the value of those accounts. Thus, he asserts,
the rights of wife in the funds extinguished when she was paid
her share and she is not entitled to the increase in value of
those funds. Husband argues that the "assets have lost their
character as marital property, and are no longer subject to
further division or valuation." Wife asserts that the
"reversed award valued the assets at issue instead of
distributing them and awarded cash equivalents."

In the March 1996 final decree, the trial judge
noted that "[a]lthough the Commissioner’s report directed
that the marital assets are to be divided equally, the Report
fails to value and classify certain assets and to specify how the
division of marital assets shall be accomplished." At the
trial judge’s direction, the parties prepared a proposed plan of
distribution, which they designated as Schedule A. Schedule A
classified and valued all of the marital assets. The trial judge
ordered that the assets be valued, classified, and distributed in
the manner set forth in the document, stating that "the
interest of each party in the property distributed or ordered
transferred to the other is hereby extinguished."

We cannot ascertain on this record which of the
assets have been distributed or liquidated or which assets have
been valued and the cash equivalents paid. To the extent the
assets have not been distributed or the cash equivalent has not
been disbursed, the trial judge on remand shall consider whether
re-valuation is appropriate to determine the most accurate
valuation and equitable distribution. See Gaynor,
11 Va. App. at 593, 400 S.E.2d at 790-91. In the event that
remaining assets have not been disbursed or the cash equivalent
has not been paid, then the asset retains its character as
marital property and, therefore, any increase or decrease in the
value of the marital portion should be determined and
proportionately attributed to the parties. However, to the extent
the assets or the cash equivalents have been distributed in
accordance with the equitable distribution award, the assets
should not be re-valued.

E. Award of Attorney’s Fees

Wife argues that the trial court erred in
failing to reconsider its award of attorney’s fees on remand.
Wife asserts that, although we found that the trial court’s
failure to deduct wife’s litigation expenses from the valuation
of her accounts was not reversible error and that the award of
$50,000 in attorney’s fees was not inadequate, the trial court
was instructed to reconsider the award of attorney’s fees on
remand. Wife contends the trial court should again be instructed
to reconsider the award of attorney’s fees.

On appeal, we held that the trial judge did not
abuse his discretion in refusing to receive additional evidence
after the close of the record. We stated, however, that "in
view of our remand of the equitable distribution award and the
spousal support award, the trial court should reconsider the
attorney’s fees award." Rowe, 24 Va. App. at 146, 480
S.E.2d at 771. We, therefore, instruct the trial court to
reconsider the award of attorney’s fees on remand from this
appeal.

F. Discovery and Evidentiary Hearing

Wife contends the trial court erred by refusing
to allow discovery and by refusing to conduct an evidentiary
hearing regarding the re-valuation of the newspaper stock, the
post-separation increase in the value of other assets, and the
award of attorney’s fees. Wife asserts that she was "not
given time to develop evidence through discovery and was not
permitted to present evidence to the trial court because the
trial court unexpectedly ruled on all issues before allowing for
any discovery or an evidentiary hearing." Wife requests
that, on remand, the trial judge be directed to permit discovery
and hold an evidentiary hearing.

"Generally, the granting or denying of
discovery is a matter within the discretion of the trial court
and will not be reversed on appeal unless ‘the action taken was
improvident and affected substantial rights.’" O’Brian v.
Langley School
, 256 Va. 547, 552, 507 S.E.2d 363, 366
(1998) (quoting Rakes v. Fulcher, 210 Va. 542, 546, 172
S.E.2d 751, 755 (1970)). Because we reverse and remand the case
to the trial court for re-valuation of the stock and
reconsideration of the spousal support and equitable distribution
awards, we need not address whether the court erred in the last
remand in failing to permit additional discovery or to conduct an
evidentiary hearing. However, because the value of the stock and
the classification of the stock’s appreciation are material and
relevant issues on remand, the parties will necessarily need to
conduct discovery and the trial court will necessarily need to
conduct an evidentiary hearing.

For the foregoing reasons, we reverse and
remand the case to the trial court for such further proceedings
as are necessary in accordance with this opinion.

Reversed and remanded.

FOOTNOTES:

[1] Justice Lemons participated in
the hearing and decision of this case prior to his investiture as
a Justice of the Supreme Court of Virginia.

[2] We note that in the preliminary
summary of the case, the panel held as follows: "the trial
court erred in classifying the entire increase in the value of
husband’s stock as marital property because fifty percent or more
of the increase was attributable to the efforts of husband’s
brother and/or passive economic factors." Rowe, 24
Va. App. at 129-30, 480 S.E.2d at 763. While this statement was
not based on a factual finding by the trial court, it clearly was
a summary of our analysis of the evidence and our "hold[ing] that the trial court erred in finding that the entire increase in
value of husband’s . . . stock was [attributable] to
[husband's] personal efforts." Id. at 134, 480 S.E.2d
at 765. As we further held, "The increase classifiable as
marital should reflect only that attributable to husband’s
personal efforts and not those of husband’s brother or passive
factors, such as population growth and minimal inflation." Id.
at 134, 480 S.E.2d at 765.

[3] Code ? 20-107.1(8) provides that in determining
the amount of a spousal support award, the court shall consider
the provisions made with regard to the marital property under
Code ? 20-107.3.

 

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