Carole R. Montgomery v. John W. Montgomery

CourtCourt of Appeals of Virginia
DecidedDecember 5, 2017
Docket0014172
StatusUnpublished

This text of Carole R. Montgomery v. John W. Montgomery (Carole R. Montgomery v. John W. Montgomery) is published on Counsel Stack Legal Research, covering Court of Appeals of Virginia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Carole R. Montgomery v. John W. Montgomery, (Va. Ct. App. 2017).

Opinion

COURT OF APPEALS OF VIRGINIA UNPUBLISHED

Present: Judges Humphreys, Beales and Alston Argued at Richmond, Virginia

CAROLE R. MONTGOMERY MEMORANDUM OPINION* BY v. Record No. 0014-17-2 JUDGE ROBERT J. HUMPHREYS DECEMBER 5, 2017 JOHN W. MONTGOMERY

FROM THE CIRCUIT COURT OF HENRICO COUNTY John Marshall, Judge

Richard L. Locke (Shannon S. Otto; Locke & Quinn, on briefs), for appellant.

Robert L. Harris, Jr. (Barnes & Diehl, P.C., on brief), for appellee.

Carole R. Montgomery (“wife”) appeals the September 29, 2016 decision of the Circuit

Court for the County of Henrico (the “circuit court”) terminating wife’s spousal support from

John W. Montgomery (“husband”) and recalculating child support. Wife argues that the circuit

court erred in (1) terminating wife’s spousal support award based, in part, on its decision to

impute rental income to her without consideration of the expenses associated with the rental

properties, (2) terminating wife’s spousal support award based, in part, on its decision to impute

rental income to her for two pieces of real estate she inherited because the real estate was not

subject to being rented, (3) treating the imputation of income to wife in the order of divorce as an

order requiring her to obtain employment and, as a result, in basing the current imputation of

income to her on the erroneous assumption that she obtained employment in 2011 and received

periodic raises in her income since 2011, and (4) concluding that wife’s expenses “had changed

* Pursuant to Code § 17.1-413, this opinion is not designated for publication. little” when the undisputed evidence established that wife’s expenses had increased significantly

since the prior support award and, as a result, erred in terminating her spousal support based in

part on its unsupported conclusion.

Husband assigns as cross-error that the circuit court erred in (1) failing to include wife’s

spousal support income as part of wife’s gross income when determining child support,

(2) imputing only an additional $5,000 employment income annually to wife, rather than an

additional $25,000 annually as husband’s expert testified at trial, (3) in terminating retroactive

support payments to the first trial date of April 4, 2016, rather than an earlier scheduled (but

continued) trial date of February 8, 2016, and (4) in denying husband’s request for attorney’s

fees and costs.

I. BACKGROUND

Husband and wife married in August 1983. The parties have two children. By final

decree entered on March 21, 2011, husband and wife divorced. At the time of the divorce, the

circuit court found that husband’s income was $15,850 per month. The circuit court also found

that wife was “foregoing gainful employment” at the time and imputed income to wife in the

amount of $3,400 per month—$40,800 per year. Finding that husband and wife “enjoyed a

comfortable standard of living,” the circuit court ordered that husband pay wife $4,100 per

month in spousal support beginning December 1, 2010. The circuit court also ordered that

husband pay wife child support in the amount of $1,123.73 per month.

On July 31, 2014, husband filed a motion to amend child support. Specifically, husband

sought a deduction in his child support obligation based on the emancipation of the parties’

eldest child. Subsequently, on December 31, 2014, husband filed a motion to amend spousal

support seeking termination or modification of his spousal support obligation because wife had

inherited substantial assets that could generate income.

-2- Wife’s inherited assets include a family vacation home and a home in Henrico County,

Virginia (the “residential properties”), both owned by the Rosendorf Revocable Family Trust

(the “Trust”). The Trust also owns a parcel of vacant farmland. Wife is a co-trustee and equal

beneficiary of the Trust with her brother, Michael Rosendorf (“Michael”). The trust was created

by wife’s parents and upon the death of both parents, the Trust documents authorize the trustees

to pay the debts, taxes, and certain other referenced charges. Subsequently, the Trust documents

authorize the trustees to equally distribute the remaining assets to the beneficiaries. The trustees

hold no other powers. At the time of the hearing in circuit court, no distribution of the Trust

assets had occurred. In addition to the two residential properties owned by the Trust, wife

inherited $817,000 in non-real estate assets, which wife holds in an investment account, as well

as an individual retirement account (“IRA”). Aside from the income producing potential

associated with wife’s inherited assets, husband contended that wife was employable, but was

not working, and that the circuit court should increase wife’s imputed income.

On three separate dates—April 4, 2016, July 5, 2016, and September 23, 2016—the

circuit court held hearings on husband’s motions to amend child support and spousal support,

each party’s request for attorney’s fees, and wife’s motion for a reservation of spousal support.

On September 29, 2016, the circuit court issued its opinion letter. The circuit court found that

there was a material change in circumstances and, after considering factors in Code

§ 20-107.1(E), terminated wife’s spousal support award. The circuit court set the effective date

of termination as April 4, 2016, the first hearing date. The circuit court also decreased husband’s

child support obligation below the child support guidelines, citing its decision to impute income

to wife. The circuit court set husband’s final child support obligation at $1,370 per month,

retroactive to July 31, 2014.

-3- Explaining its findings in the September 29, 2016 opinion letter, the circuit court first

acknowledged the two residential properties owned by the Trust. The circuit court concluded

that, under the Trust, wife has a “one-half interest in two [residential properties] and a parcel of

vacant land . . . having the combined assessed value of $1,231,300” with wife’s separate half

interest valued at $615,650. Examining the “income generating potential of the inherited

assets[,]” the circuit court imputed rental income to wife in the amount of $1,975 per month.1

The circuit court also examined wife’s inherited investment account and IRA.

Specifically, the circuit court found that wife could generate $1,838.25 per month in income

from the investment account, using a net annual rate of return of 2.7%, and that wife receives

$278.16 per month from the IRA. Next, the circuit court found that wife did not have a

reasonable basis for remaining voluntarily unemployed since 2011. The circuit court concluded

that “[wife] would be earning at least $45,800 today had she sought employment in 2011 as

directed by the court.” As a result, the circuit court increased wife’s annual imputed income by

$5,000 when compared to the amount imputed to wife during the divorce proceedings.

Combining the value of wife’s inherited assets and imputed income, the circuit court

determined that wife “has $4,508.07 in additional monthly income” since the parties’ divorce.

Finding that wife’s “additional monthly income of $4,508.07 exceed[ed] the monthly amount of

$4,100 owed by [husband]” and that wife’s expenses had “changed little since 2011[,]” the

circuit court terminated wife’s spousal support award.

1 The circuit court did not address the income producing potential of the vacant parcel of land.

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