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Court Can Recognize Premarital Commingling

A divorce court did not err in holding that husband commingled his separate property with wife’s when they purchased a six-acre tract with a main house, cottage and outbuilding, prior to their marriage, but the Court of Appeals says husband had no evidence of the value of the property at the time of the hearing, after the main house had burned down, and the lower court erred in awarding husband his $14,000 down payment at the time of purchase.

On appeal, the wife argues the circuit court erred in awarding husband $14,000 as reimbursement for his contribution to purchase of the marital home. She contends the court erred by reimbursing the husband for separate assets commingled before the marriage, because Va. Code § 20-107.3(A) encompasses only commingling of separate property that occurs during the marriage.

Code § 20-207.3(A)(3)(g) does not provide a time-frame limiting the instances of commingling that are entitled to reimbursement. Throughout this section of the Code, the General Assembly provides limiting language regarding specific time frames that are applicable to different aspects of equitable distribution of property. Had the legislature intended to limit the statute to commingling of separate property occurring “during the marriage,” it would have done so. Pursuant to the plain language of the statute, under Code §20-107.3(A)(3)(g), we hold that circuit courts may consider commingling of property that occurs before the marriage of the parties in fashioning an equitable distribution award. The circuit court did not err here in finding that husband commingled his separate property with the wife’s separate property in acquiring the marital home and the related property.

Wife also contends the circuit court erred in awarding the husband the $14,000 because he failed to prove the value of the property at the time of the evidentiary hearing.

Considering the separate sections of Code § 20-107.3 together, we hold that when ordering reimbursement of contributed separate property under subsection (A)(3)(g), a court shall determine the value of the contributed property as of the date of the evidentiary hearing. This interpretation makes good sense because reimbursing the husband the exact value of his contribution would not take into account any passive losses or gains. Ordering the precise reimbursement of husband’s $14,000 contribution would create a danger that husband would either receive a windfall or suffer an unnecessary loss. A valuation date as of the hearing obviates these problems. Thus, we hold the circuit court misapplied the statute in concluding that ordering reimbursement under Code § 20-107.3(A)(3)(g) did not require a finding as to the value of the contributed property at the time of the hearing.

Here, the husband did not present sufficient evidence from which the circuit court could determine the value of the property at the time of the hearing. Although the purchase price was in evidence, the record also shows a fire destroyed the main house. Based on the limited evidence before it, the circuit court was unable to determine the value of the husband’s contribution to the property at the time of the hearing and erred by ordering the wife to reimburse the husband the $14,000 that he contributed to the marital home. We reverse and remand the case on this issue.

On husband’s cross-appeal, we reject husband’s contention that the circuit court incorrectly ruled that he failed to prove a resulting trust that would allow him to claim he is a beneficial owner of one-half of the property. In the context of the ED proceeding, the circuit court was limited to application of equitable distribution principles and did not have the authority to declare a resulting trust or, along with it, that the husband was a beneficial owner of one-half of the property.

Reversed and remanded.

Anthony v. Skolnick-Lozano (Decker) No. 1270-13-2, March 4, 2014; Albemarle County Cir.Ct.  (Higgins) Jason P. Seiden for appellant; Steven S. Biss for appellee. VLW 014-7-059, 13 pp.

VLW 014-7-059

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