SILBERBLATT v. SILBERBLATT

SILBERBLATT v.
SILBERBLATT

(unpublished)

AUGUST 11, 1998
Record No. 1793-97-3

ENRIQUE ANDRES SILBERBLATT

v.

LORI ANN SILBERBLATT

MEMORANDUM OPINION[1]
BY JUDGE RUDOLPH BUMGARDNER, III
FROM THE CIRCUIT COURT OF BOTETOURT COUNTY

George E. Honts, III, Judge
Present: Judges Bray, Overton and Bumgardner
Argued by teleconference

Cheryl Watson Smith (G. Marshall Mundy; Mundy, Rogers &
Frith, L.L.P., on briefs), for appellant.

Terry N. Grimes (King, Fulghum, Snead, Nixon &
Grimes, P.C., on brief), for appellee.

The trial court granted a final decree of divorce June 27,
1997 and decreed equitable distribution of the marital estate.
The husband appealed on six specific grounds, five of which
assert error in classification or valuation of various items of
property. The husband also appealed the action of the trial court
in increasing the award of permanent support because the husband
was not expected to pay the lump sum award during the pendency of
this appeal. The wife appealed arguing the trial court improperly
considered proceeds she received from the sale of the marital
home when decreeing equitable distribution and erred in not
awarding her attorney’s fees.

The trial court has sound discretion to make equitable
distribution determinations, and its decisions will not be
disturbed on appeal unless plainly wrong or unsupported by the
evidence. See McDavid v. McDavid, 19 Va. App. 406,
407?08, 451 S.E.2d 713, 715 (1994); McClanahan v. McClanahan,
19 Va. App. 399, 401, 451 S.E.2d 691, 692 (1994). "The goal
of equitable distribution is to adjust the property interests of
the spouses fairly and equitably." Booth v. Booth, 7
Va. App. 22, 27, 371 S.E.2d 569, 572 (1988). See Gamble
v. Gamble, 14 Va. App. 558, 570, 421 S.E.2d 635, 642 (1992).

Enrique and Lori Silberblatt were married on November 19,
1988. They had met in Birmingham, Alabama where the husband was
completing a fellowship in hand surgery and the wife was working
as a nurse. The couple started dating in February 1985. Before
the marriage, the husband was engaged in starting up his own
plastic surgery practice in Roanoke, Virginia. Preparations to
establish the practice began in September 1987, and the practice
began accepting patients in January 1988. The practice was formed
as a professional corporation and titled in the husband’s name
alone. It was quickly successful earning gross receipts of
$438,000 in the first year of its existence. The largest part of
the receipts was earned before the parties were married.

Before the marriage, the wife helped the husband to establish
his practice by sending him sample forms and documents which she
acquired from the practice in Alabama where she worked. After the
marriage, she worked for one year at the husband’s new practice.
She performed duties as a nurse and office manager and received a
salary. After the first year, she worked part?time but no longer
received a salary. The wife testified that the fair value of the
services she performed was $15,000 per year for five years, or
$75,000. It was the husband’s routine to withdraw all retained
earnings not necessary for operation of the business at the end
of the year. Thus, the marital estate received all of the
distributable profits from the business.

The husband’s main objection to the decisions of the trial
court was that it included the value of his medical practice in
the calculations of the marital estate. Husband contends that the
trial court abused its discretion in classifying his medical
practice as marital property. He argues that the practice was
acquired before the marriage and thus was separate property. See
Code Sect. 20?107.3(A)(1)(a). He argues that the only evidence
of the value of the practice at the time of the marriage was the
opinion of his expert who said the practice was worth $192,000 at
the end of 1988. The husband argues the wife could not have
acquired any marital interest in the practice because the value
at the time of divorce was only $165,000. Since the practice was
worth more at the time of marriage than at the time of divorce,
she could not claim to have contributed to an increase in the
value of separate property by making substantial contributions
during marriage which increased the value. Simply, because there
was no increase in value after the marriage, there was no
increase for her to claim. This argument depends on limiting
consideration of the wife’s efforts toward establishing and
building the husband’s professional practice to those efforts
made after their marriage. It further is based on the assumption
that the entire present value of his private medical practice was
accomplished solely during the first eleven months he opened his
practice and nothing was attributable to the next eight years of
operation.

The trial court found that the wife significantly contributed
to the development of the medical practice. The contributions
began during their engagement before the practice was opened. The
wife was a registered nurse and worked in the same field in which
the husband was specializing. The trial court was not limited to
looking at the relationship of the parties to building the family
business after the marriage ceremony. "Nothing in Code Sect.
20?107.3 limits consideration of the various subsection (E)
factors to the time frame of the marriage." See Floyd
v. Floyd, 17 Va. App. 222, 227, 436 S.E.2d 457, 460 (1993).
"To disregard the parties’ contributions to the acquisition
and maintenance of the property and how and when they
acquired rights and equities in the property ? whether pre? or
post?marital ? is to disregard the mandate of the
statute." Id. (emphasis added). If there are
significant contributions to a business before a marriage,
failure to consider these contributions would create a windfall
for the husband. See id. at 226?27, 436 S.E.2d at
460. Non?monetary contributions are considered along with
monetary ones. See Code Sect. 20?107.1(6); L.C.S. v.
S.A.S., 19 Va. App. 709, 721, 453 S.E.2d 580, 586 (1995), cert.
denied, 517 U.S. 1124 (1996). Further, "legal
title . . . has little or no bearing upon how
[marital wealth] . . . is to be equitably
distributed by a monetary award under Code Sect. 20?107.3."
Lightburn v. Lightburn, 22 Va. App. 612, 616, 472 S.E.2d
281, 283 (1996). See Garland v. Garland, 12 Va.
App. 192, 195, 403 S.E.2d 4, 6 (1991).

In reviewing an equitable distribution, we must consider the
couple’s relationship, their interests in the "family
business," and their respective contributions to it. In this
case, the practice was never exclusively the husband’s. During
their engagement, they worked together to open the husband’s
private practice. After it was opened, they worked together; he
as the doctor, she as his nurse and office manager. This
continued until they began their family. As the trial court
found, she was very much a "junior partner" in helping
him establish his practice.

With her assistance he was able to network professionally with
other surgeons, to develop the necessary forms and procedures to
operate the practice, and to benefit from her personal experience
in a similar, established office. Not only did she work in the
medical office and assist in maintaining the business, she also
traveled with the husband, continued her own nursing education in
his field of expertise, served as host to his associates, and
took care of both their home and children. We find that the trial
court properly determined that the contributions the wife made to
the medical practice, both before and during the marriage, were
significant. See Gottlieb v. Gottlieb, 19 Va. App.
77, 91?92, 448 S.E.2d 666, 674?75 (1994); Barnes v. Barnes,
16 Va. App. 98, 104?05, 428 S.E.2d 294, 299 (1993).

Because the trial court was not limited to looking at her
contributions after the date of the marriage, it could look at
the entire history of the business, beginning when it first
opened and had generated no value. The wife’s efforts began
before the practice opened, and the court found that she made
significant contributions to it during the first year. The court
could find that the entire value of the medical practice was
marital property. Therefore, we find that the trial court did not
err in classifying the practice as marital property and including
its entire value in its calculations of equitable distribution.

The husband also objects to the court’s determination that the
value of the business is $160,000 and complains that the court
improperly used a factor called "sweat equity" in
making its valuation. Both parties had an accountant testify to
the value of the medical practice. Both experts acknowledged that
valuing an individual private professional practice was
difficult. The husband’s expert set the value at $147,000 while
the wife’s expert set it at between $150,000 and $200,000. There
was not a great deal of evidence presented as to the method of
evaluating the practice. Basically both experts adjusted the
depreciation allowed on the personal property and discounted the
face value of the receivables.

Neither expert assigned any value for goodwill. Both experts
agreed that the income of the practice is less than the
statistical norm for this type of practice. The husband testified
that he was receiving reduced reimbursement from health insurers,
Medicare and Medicaid, that HMOs were increasingly unwilling to
pay for elective surgery, and that concern over adverse side
effects of breast implants caused a significant reduction in this
area of the practice. A review of the practice’s gross receipts
also shows that receipts have been declining in recent years. The
wife disputed the weight of some of these factors, but she was
unable to offer any other explanation why the earnings of the
practice were less than average. The wife alleged that the
husband was voluntarily underemployed, but the downward trend in
income began in 1992, long before divorce was on the horizon.

The values assigned to the practice by the experts were not
substantially different. The primary difference was that the
wife’s expert felt that the true value must reflect some
additional value greater than simply valuing equipment and
receivables. During cross?examination, counsel characterized the
component as "sweat equity." The term was used to label
the opinion that there was additional value in this business
because it was an established professional practice. When the
trial court referred to "sweat equity," it was not
introducing a new factor into the evaluation process. It merely
referred to the term when explaining why it placed greater weight
on the opinion of the wife’s expert than that of the husband’s
expert. The finding that the medical practice was worth $165,000
fell within the range of values presented by the two experts. We
cannot say that this was an abuse of discretion. "Where
experts offer conflicting testimony, it is within the discretion
of the trial court to select either opinion." Rowe v.
Rowe, 24 Va. App. 123, 140, 480 S.E.2d 760, 768 (1997).

The husband also contends that the court erred in classifying
interspousal gifts as separate property in violation of Code
Sect. 20?107.3. A gift from one spouse to the other will be the
separate property of the donee if (1) the donor has the intention
to make the gift, (2) the gift is delivered or transferred, and
(3) the donee accepts the gift. See Theismann v.
Theismann, 22 Va. App. 557, 566, 471 S.E.2d 809, 813, aff’d
en banc, 23 Va. App. 697, 479 S.E.2d 534 (1996). The gifts in
question are anniversary presents, furs and jewelry. The evidence
supports the finding that they were completed gifts intended to
be the property of the wife. These gifts were "as complete
and irrevocable as the ring given at the marriage ceremony and,
like that ring, . . ., [they] may not be reclaimed
in a divorce proceeding." McClanahan, 19 Va. App. at
405, 451 S.E.2d at 694. We find the court did not abuse its
discretion in classifying the gifts as separate property of the
wife.

Windsor House is the name of the building where the husband
conducted his medical practice. Title was vested in a corporation
named Windsor House, Inc. The husband complains that the court
erred in not reducing the net value of this property by $16,714
which was owed by the corporation to him individually. The note
was payable to the husband and was classified a marital asset and
included in the marital estate. The husband argues that it should
also have been deducted from the net value of the building. There
was little evidence presented about the corporate structure or
financial condition of this entity. It is only assumed that the
husband was the sole stockholder. The only evidence of the value
of the corporation was the testimony of the husband concerning
the value of the building. He stated he had bought the property
for $165,000 and had spent $235,000 on improvements. He indicated
that he did not know what it was really worth but did state that
he would not sell it for $400,000. The trial court valued the
business property at $400,000 offset by the mortgage on the
property, which left a value of $58,158.

On the basis of the limited evidence of the full financial
condition of the corporation, the trial court accepted the
evidence of value that was available and offset the debt against
the property. To have ruled any further on the net worth of the
corporation as an entity would have been speculation. There was
no evidence of the other assets and liabilities. The evidence
does support the finding that the corporation’s value was the
value of the building. The mortgage indebtedness was deducted
from that, and the net difference of $58,158 was included as a
marital asset.

The value of the note owed to the husband by the corporation
was included as a marital asset. As the trial court noted, the
corporation was a separate entity and liable for payment of the
note to the husband. The husband could have presented clearer and
more complete evidence of the corporation, and the trial court
could then have determined net worth of the corporation according
to accounting procedures. Since the trial court had to make its
decision on the evidence as presented, we find that the record
supports the decision and the trial court did not err.

The husband contends that the court erred in declining to
impute income to the wife. He argues that income should have been
imputed to her on at least a part?time basis. The children were
in pre?school three days per week, and the wife admitted that
employment opportunities were available. The trial court refused
to impute income finding that "it was the established
agreement of the parties that wife would be a full?time
mother" and that she was fulfilling that role as she had
when the couple was still married. The court recognized her
desire to be a homemaker. A "trial court shall impute income
to a custodial parent who is voluntarily unemployed or
underemployed where the age of the child and circumstances permit
the custodial parent to be gainfully employed." Bennett
v. Dep’t of Social Servs., Div. of Child Support Enforcement,
22 Va. App. 684, 692, 472 S.E.2d 668, 672 (1996). Given the age
of the children and the parties’ agreement, the trial court did
not abuse its discretion.

The husband contends that the court erred in identifying and
valuing the parties’ personal property. He complains that the
list of personal property is incomplete and that some values
assigned to the various items of personal property are wrong. The
record consists primarily of various lists with values assigned
by the parties. Having reviewed these, we find that there is
evidence to support the findings made by the trial court.

During the divorce proceedings, the parties agreed that the
wife would receive the net proceeds from the sale of their
residence. The amount, $69,000, was not to be considered by the
trial court in making an equitable distribution under Code Sect.
20?107.3. In her cross?appeal, the wife alleges the trial court
erred by considering that amount while determining equitable
distribution. The court designated the entire amount as separate
property, and did not include it in the marital estate. The
agreement of the parties was not introduced, so we do not know
the precise wording of it. The record presents only the
characterizations of the agreement that were made by the
witnesses. The trial court acknowledged it was aware of the
agreement but noted that it was only considering the $69,000 when
explaining why it did not consider the wife’s new mortgage debt
under Code Sect. 20?107.3(7) or considering the $69,000 under
Code Sect. 20?107.3(10). Considering the limited manner in which
the trial court did consider the property, we cannot say that it
violated the terms of the agreement.

The wife contends that the court erred in failing to award her
attorney’s and expert witnesses’ fees. The record shows that the
matter was considered fully by the court. It had previously made
an award to the wife of partial attorney’s fees. It did award her
costs to include the costs of court reporters. In denying further
attorney’s fees after decreeing equitable distribution, the court
was aware that the wife would have assets of approximately
$200,000. "An award of attorney’s fees is a matter submitted
to the trial court’s sound discretion and is reviewable on appeal
only for an abuse of discretion." Graves v. Graves, 4
Va. App. 326, 333, 357 S.E.2d 554, 558 (1987). The court’s goal
is to make a determination which is reasonable under all the
circumstances. See McGinnis v. McGinnis, 1 Va. App.
272, 277, 338 S.E.2d 159, 162 (1985). We cannot find that the
denial of additional attorney’s fees was an abuse of discretion.

After the court had announced its decision by letter opinion
but before the final order had been entered, the wife moved the
court to amend the award of support. She alleged that the husband
had indicated that he would not pay the lump sum award of
$127,000. She requested the increase to "bridge the
gap" in income until he paid the award. The trial court had
awarded permanent spousal support of $2,250 per month. In
response to the motion of the wife, the court increased the
support to $3,477 and designated it as permanent support. The
husband objects to the award being permanent and argues the
increase should only have been awarded pendente lite
until the husband pays the lump sum. The husband does not object
to the increase if it is limited to the period when the lump sum
award is not paid. We find that the court erred in granting the
increase as a permanent award. To the extent the award exceeds
the temporary relief requested in the motion, it is error. The
case is remanded for entry of an order that terminates the
increased portion of spousal support upon payment in full of the
lump sum award. In all other respects, the trial court is
affirmed.

Affirmed in part,

reversed in part,

and remanded.

FOOTNOTES:

[1] Pursuant to Code Sect.
17?116.010 this opinion is not designated for publication.