Virginia Lawyers Weekly VA Lawyers Weekly
The circuit court did not err in classifying only 30 percent of a litigation-support company’s increase in value during the course of an owner’s marriage as marital property. The court considered evidence as to whether the increase was due to the owner’s personal efforts as opposed to passive or market factors.
Background
Prior to the parties’ marriage in 2007, Husband co-founded a company called Resonant Legal Media. When the parties separated in 2015, they agreed to a valuation date for the company of December 31, 2015, at which time Husband owned 30 percent of the company.
The parties agreed that Husband made significant contributions of personal efforts to Resonant Legal Media during the course of the marriage and that his interest in the property substantially appreciated in value. But they disputed the extent to which Husband’s personal effort caused the value to increase and, accordingly, how much of the increase in the company’s value should be classified as marital property.
The circuit court held that Husband’s expert testimony did not show that market forces and other passive factors rebutted the presumption that a full 100 percent of the company’s increase in value was marital. However, based on Husband’s ownership share and expert testimony as to his personal efforts to increase the company’s value, the circuit court classified 30 percent of the increased value as marital. Wife has appealed.
Scope of appeal
As this court stated in Geouge v. Traylor, 68 Va. App. 343 (2017), litigants in appeals of right should observe the requirements of Supreme Court Rule 5A:12(c) in drafting their assignments of error. It is only logical that this court will not consider an assignment of error to a ruling when no such ruling was made.
Here, the circuit court did not reject all of Husband’s evidence or rule that Husband did not meet his statutory burden of proof. Thus, to the extent that Wife’s claims of error rely on these rulings, this court declines to consider them. While Husband’s motion to dismiss the appeal will be denied, the court proceeds to examine only Wife’s challenge to the rulings the circuit court actually made.
Marital share of business
Wife was entitled to the rebuttable presumption that the full amount of the increase in value of the marital share of Resonant Legal Media resulted from Husband’s personal efforts, as the owning spouse. When she met her burden, it shifted to Husband to prove that some lesser percentage of the increase resulted from his personal efforts.
A review of the record reveals that Wife’s claims are based on misinterpretations of what transpired below. Contrary to her suggestions, the record reflects that the circuit court resolved the factual disputes challenged on appeal either explicitly or implicitly in favor of Husband, and the evidence supports those rulings.
First, the circuit court expressly ruled that the total “increase in value” was about $2.2 million and that 30 percent of that sum was the marital share of the increase. In a letter opinion specifically addressing the issue of total versus marital share, the circuit court identified $663,819 as the correct figure.
In addition, the record does not reflect a finding that Husband wholly failed to meet his burden to prove that some lesser amount of the increase in value of his interest in Resonant Legal Media was marital property. It does quite the contrary. Though it rejected portions of Husband’s expert testimony that were based in part on his calculations as to market forces, the circuit court still had before it the expert’s opinion concerning the independent impact of Husband’s personal efforts, and those of his partners, on the increase in value. The expert opined that 73.5 percent of the increase in value was attributable to the partners’ personal efforts and the remaining 26.5 percent was attributable to Husband’s efforts.
In finding that Husband’s personal efforts were responsible for 30 percent of the company’s growth, the circuit court examined all of the evidence, determined what it believed and did not believe, and made rulings based on the evidence it accepted. The circuit court never ruled that Husband failed to meet his burden of proof.
Finally, the court disagrees with Wife’s interpretation of David v. David, 287 Va. 231 (2014). David merely clarified that the owning spouse bears the ultimate burden of proof as to the proper classification of the increase in value of separate property during a marriage. It did not purport to address the type or amount of evidence that a circuit court might accept as adequate to satisfy the owning spouse’s burden. It also did not preclude the circuit court’s consideration of the categories of evidence relied on in Decker v. Decker, 17 Va. App. 12 (1993), and Rowe v. Rowe, 24 Va. App. 123 (1997), both of which were decided under the current version of Code § 20-107.3(A)(e)(a).
Affirmed.
Herbert v. Joubert, Record No. 1384-17-4, Aug. 14, 2018. CAV (Decker), from Fairfax Cir. (Bellows). Scott A. Surovell for Appellant; Lawrence D. Diehl for Appellee. VLW No. 018-7-210, 18 pp.
