Separate property ruling was error

Where wife received funds from husband’s family before the parties were married, the trial court erred by crediting those funds to husband as his separate property to determine his share of equity in the marital home.

Issue and ruling

“Code § 20-107.3(A)(1)(i) defines separate property in part as ‘all property, real and personal, acquired by either party before the marriage.’ … Thus, based on this statutory definition, the dispositive question in the instant case is which party ‘acquired’ the $70,020 prior to the parties’ marriage. …

“Based on the undisputed facts in the record, we conclude that wife gained possession or control of, or obtained, the $70,020 prior to the parties’ marriage and thus the funds were her separate property.”

Discussion

“Here, it is undisputed that the $70,020 used toward the down payment on the marital residence came from husband’s family. It is further undisputed that these funds came directly to wife in the form of a wire transfer.

“This wire transfer was introduced into evidence and reflected that the funds were sent to wife’s bank account on November 12, 2009, prior to the parties’ marriage. Thus, the stipulated evidence clearly demonstrates that wife obtained and gained possession of the funds prior to the marriage.

“While is clear from the record that wife obtained legal title to the funds when they were transferred to her from husband’s father, we acknowledge that ‘[h]ow the property is titled generally is not dispositive of its classification.’ …

“Instead, ‘[a] court equitably classifies property based upon statutory guidelines, not according to which party holds legal title.’ … In this case, it is not simply wife’s holding title to the funds that leads us to determine that they were her separate property.

“Rather, the statutory guidelines themselves compel us to conclude that the court misclassified the $70,020, as wife was the party that acquired the funds prior to the parties’ marriage. Based upon the plain language of Code § 20-107.3(1)(A)(i), we must conclude that the circuit court erred in not classifying the $70,020 as wife’s separate property contribution to the equity in the marital residence.”

Husband’s testimony

“In reaching this conclusion, we also acknowledge husband’s testimony that the $70,020 was his own money that his father was holding for him in Iran. The circuit court, in determining that the funds were husband’s separate property, must have credited this testimony.

“However, even accepting husband’s testimony as true, in viewing the evidence in the light most favorable to husband as the prevailing party on appeal, we conclude that the court erred in classifying the funds as husband’s rather than wife’s separate property.

“Assuming that the initial source of the funds was husband’s own earnings and savings, these funds were at some point given to husband’s father, who then transferred the money directly to wife prior to the parties’ marriage.

“Therefore, pursuant to the statute, these funds were wife’s separate property, as she acquired them prior to marriage. Accordingly, we conclude that the circuit court’s classification of the property was plainly wrong.”

Remand

“The first step a court must take in equitable distribution is to classify the parties’ property. … [T]he court erred in this initial step, and we therefore reverse and remand its equitable distribution award for reconsideration consistent with the holding of this opinion.”

Reversed and remanded.

Leyrer v. Hajiha, Record No. 0585-21-4, Jan. 18, 2022. CAV (Malveaux) from the City of Alexandria Circuit Court (Clark). Katelin T. Moomau for appellant. Sharon Voyles Filipour for appellee. VLW 022-7-013, 10 pp. Unpublished.