COURT OF APPEALS OF VIRGINIA
Present: Chief Judge Moon, Judges Fitzpatrick and Annunziata Argued at Alexandria, Virginia
MARY ANNE ROWE
v. Record No. 0843-96-2
CHARLES S. ROWE OPINION BY CHIEF JUDGE NORMAN K. MOON CHARLES S. ROWE FEBRUARY 4, 1997
v. Record No. 0845-96-2 MARY ANNE ROWE
FROM THE CIRCUIT COURT OF THE CITY OF FREDERICKSBURG Richard H.C. Taylor, Judge
Donald K. Butler (Ann Brakke Campfield; Morano, Colan & Butler, on briefs), for Mary Anne Rowe.
Carl F. Bowmer (Christian & Barton, on briefs), for Charles S. Rowe.
Charles S. Rowe ("husband") and Mary Anne Rowe ("wife") each
appeal the circuit court's order affirming the commissioner in
chancery's equitable distribution and spousal support award.
Husband contends (1) the trial court erred by classifying the
entire increase in value of husband's newspaper stock as marital
property; (2) the $14,000,000 in salary and stocks received by
husband as compensation from the paper, which was more than fair
compensation for husband's efforts, precludes classification of
the stock appreciation as a marital asset; (3) the trial court
erred in treating all but $41,000 of the parties' marital
residence as marital property; (4) the trial court erred in awarding wife $10,000 per month in spousal support without
considering the division of marital property as a factor in
making the support award.
We hold that: (1) the trial court erred in classifying the
entire increase in the value of husband's stock as marital
property because fifty percent or more of the increase was
attributable to the efforts of husband's brother and/or passive
economic factors; (2) compensation by the paper, whether
inadequate or excessive, is but a factor in determining the
amount of marital wealth attributable to marital effort; and (3)
the trial court erred in treating only $41,000 of the Ingleside
Drive home proceeds invested in the parties' marital abode as
gifted property. Because the trial court must reconsider
classification of the increase in the value of husband's stock
and distribution of the $82,000 proceeds of the Ingleside Drive
home, the spousal support award must also be reconsidered. Wife contends in her appeal that: (1) the trial court erred
by accepting husband's valuation of his newspaper stock; (2) the
trial court erred in failing to order a distribution of husband's
retirement benefits consistent with the commissioner's finding
that wife was entitled to one-half of the marital share of the
retirement benefits; (3) the trial court erred in giving husband
credit for post-separation contributions to various marital
accounts while not requiring husband to account for
post-separation withdrawals from the accounts; and (4) the trial
court erred by valuing wife's marital accounts without deduction
- 2 - for her litigation expenses.
We find that: (1) the court did not err in evaluating the
newspaper stock; (2) the court properly refused to award wife
one-half of husband's retirement benefits and/or be allowed to
name an alternate beneficiary; (3) the court erred in classifying
all of husband's post-separation contributions as marital but did
not err in refusing wife's proffer concerning husband's separate
contributions as wife failed to timely offer supplemental
evidence; and (4) the trial court correctly deducted wife's
litigation expenses in valuing her accounts because she failed to
timely present evidence concerning her litigation expenses. Husband and wife married on May 1, 1970. A no-fault final
decree of divorce was entered on December 1, 1993. On March 15,
1996, the circuit court entered its equitable distribution and
spousal support decree, confirming the recommendations of the
commissioner in chancery.
The vast majority of the parties' assets was generated by
virtue of husband's position as a principal stockholder,
coeditor, and copublisher of the Free Lance-Star, a family-owned
newspaper in Fredericksburg, Virginia. Husband and his brother
became coeditors and copublishers of the Free Lance-Star upon
their father's death in 1949. They divided the duties of the
paper. As coeditor, husband was responsible for the
news-editorial side of the paper while husband's brother served
as business manager, overseeing all other aspects of the
operation, including advertising, production, circulation,
- 3 - distribution, accounting, as well as operation of the paper's
radio station. The paper profited substantially under their
control and expanded as the Fredericksburg area experienced rapid
population growth. The paper's plant, under the supervision of
husband's brother, was expanded in 1965, 1980 and in 1990.
Husband's expert calculated the paper's stock increased in value
from $500 per share in 1970 to $9,500 per share in 1991.
In addition to running the paper, both brothers were heavily
involved in outside activities. Husband was involved in state
and national level newspaper organizations. He served as
president of the Associated Press Managing Editors Association in
1969 and was elected to the Board of Directors of the American
Society of Newspaper Editors. He was also elected to the
Associated Press Board in 1976 and served as director until 1985.
Wife accompanied him to all major board meetings and conventions
and was described as "an integral part of the life of the board."
As a result of husband's heavy involvement with these and other
newspaper organizations, a managing editor was hired in 1975.
The managing editor assumed responsibility for the day-to-day
news responsibilities at the paper, leaving husband free to
devote additional time to his national newspaper activities. No
evidence showed that the stock increased in value due to these
activities by husband. During the course of the parties' marriage, husband received
$14,000,000 in salary and dividends. These funds were used to
support the parties and their children from prior marriages. At
- 4 - the time of their marriage, the parties moved into husband's home
on Ingleside Drive. Four years later, they acquired a new home
at 501 Hanover Street in Fredericksburg. Husband invested the
$82,000 proceeds from the sale of his Ingleside home in the
purchase and/or refurbishing of the Hanover residence, which was
conveyed to the parties by joint title. In the ensuing years,
husband spent an additional $250,000 to $300,000 for improvements
and maintenance of the Hanover Street home. Wife oversaw
refurbishing and decoration of the home and subsequently oversaw
a major addition to the home. At the time of the hearing, the
net value of the home was calculated at $512,992. The parties
also acquired, with funds from husband's salary and dividends, a
home on John's Island, Florida. Husband left the marital home in November, 1991. Wife
subsequently learned that husband had been having an affair
during the time leading up to the separation and had engaged in
another affair during the course of the marriage. Husband filed
for divorce on February 18, 1993, on the ground that the parties
had been living separate and apart for more than one year. Over
the wife's objection, a decree of divorce was entered on December
1, 1993. Issues of spousal support and equitable distribution
were referred to a commissioner in chancery and following
extensive discovery, a hearing was conducted by the commissioner
in June, 1994. The commissioner's report and recommendation was
filed August 14, 1995. The final decree of the trial court was
entered on March 15, 1996.
- 5 - During the interim between the parties' separation and entry
of the final decree, husband paid many of wife's expenses
directly, but did not pay wife's legal expenses. Consequently,
wife paid her litigation expenses with funds withdrawn from her
marital accounts. Husband also continued to receive his salary
and stock dividends during this time and continued to make
deposits, withdrawals and transfers to and from the marital
accounts. The trial court made an equitable distribution award to wife
of $4,204,530 and a monthly spousal support award of $10,000.
HUSBAND'S ASSIGNMENTS OF ERROR
Increase in Value of Stock
Husband argued that the trial court erred in classifying the
entire increase in the husband's newspaper stock as marital
property. He asserted that his brother was more responsible for
the increase in value of the stock and that the marital portion
should have been considerably reduced in light of the fact that
from 1970 to 1991, the value of the stock increased dramatically
as a result of passive, external factors.
Code § 20-107.3(A)(3)(a) provides that "[i]n the case of the
increase in value of separate property during the marriage, such
increase in value shall be marital property only to the extent
that marital property or the personal efforts of either party
have contributed to such increases . . . ." If husband proved
that passive factors, such as the rapid population growth in the
Fredericksburg area and low inflation rates accounted for a - 6 - portion of the increase in the value of his stock, such increase
cannot be properly classified as marital property. Similarly, we
have concluded that where third parties contribute to the
increase in value of separate property, the marital portion is to
be reduced proportionately. Decker v. Decker, 17 Va. App. 12,
435 S.E.2d 407 (1993).
Here, husband produced evidence that from 1971 to 1991 the
population in the Fredericksburg area increased from 77,425 to
180,500; the circulation of the newspaper grew from 16,490 to
41,161; and gross income increased from $1,175,539 to
$14,890,035. Husband's expert, Mr. Lee Dirks, who has
participated in sixty-five sales of privately owned newspapers,
testified that the most important factor in the increase in the
value of the stock was the dramatic increase in the number of
households in the Fredericksburg area over a twenty-one year
period. Wife's experts also agreed that the dramatic population
growth in the market area was one of the most important factors
in the increase in the paper's value. In addition, husband's
experts testified that slow inflation contributed to the increase
in the paper's value. Husband also produced evidence that his brother was more
responsible for the increase in value of the paper than husband.
During husband's marriage, his newspaper duties decreased, most
notably after the managing editor was hired in 1975, while
husband's brother's duties increased substantially from 1970 to
1991. Husband's brother was solely responsible for the three - 7 - expansions of the newspaper plant and was in charge of every
other activity and function of the paper, with the exception of
the news department. Wife indicated at trial that husband's
brother was at least equally responsible for the increase in the
value of the paper. In addition, wife and husband spent
considerable time away from Fredericksburg, engaged in "national
newspaper activities," which consumed a significant portion of
husband's time and detracted from his involvement with the Free
Lance-Star. The evidence also proved that a managing editor was
hired because of husband's national newspaper activities.
Based on this evidence, we hold that the trial court erred
in finding that the entire increase in the value of husband's
Free Lance-Star stock was due to his personal efforts. The
increase classifiable as marital should reflect only that
attributable to husband's personal efforts and not those of
husband's brother or passive factors, such as population growth
and minimal inflation. Compensation as Fair Return on Increase in Separate Property
Husband also argued at trial that assuming, arguendo, that
his personal efforts were entirely responsible for the increase
in the value of the Free Lance-Star stock, the $14,000,000 he
received in salary and stock dividends constituted more than
adequate return to the marital estate for his efforts and
consequently classification of the entire increase as marital
should not be permitted as this would constitute double recovery
for the marital estate. While we have not addressed this
- 8 - argument in the context of the modern statutory scheme, we
concluded in Huger v. Huger, a divorce case filed under the
unitary property scheme, that the evidence indicated that the
husband's separate property stock was not transmuted into marital
property as the parties' efforts which enhanced the stock's value
had been fully compensated for by the corporation. Consequently,
we held the stock was not transmuted into marital property. 16
Va. App. 785, 789, 433 S.E.2d 255, 258 (1993). Here, as discussed above, husband has introduced evidence
indicating that the appreciation of the Free Lance-Star stock was
a result not only of his efforts, but also of passive market
forces, i.e., economic conditions and the efforts of his brother.
Husband was very well compensated for his efforts, earning a
total of $14,000,000 in salary and stock dividends between 1970
and 1991. The adequacy of this compensation is not in dispute,
as evidenced by wife's expert, who testified that both husband
and his brother were in fact overcompensated; each receiving a
salary roughly twice the industry standard for positions of equal
standing. Wife's expert estimated that husband and his brother
were each paid roughly $100,000 more per year in salary than was
appropriate according to the industry standard.
In light of this evidence, in classifying the increase in
stock value, in addition to considering the impact of passive
economic factors and the efforts of husband's brother, the trial
court should consider the extent to which the marital estate has
already been adequately compensated for the husband's efforts. - 9 - 501 Hanover Street Home
Husband argues that the trial court erred in treating all
but $41,000 of the Hanover Street property as marital property.
Husband asserts the $82,000 generated by the sale of his
Ingleside home, which husband subsequently invested in the
Hanover Street home, should be treated as separate property
because wife did not prove it was gifted to her. Further,
husband asserts that a sum of the appreciated value of the home
proportionate to husband's $82,000 contribution should also be
treated as separate property. Under Code § 20-107.3(A)(3)(d), "when marital property and
separate property are commingled by contributing one category of
property to another, resulting in the loss of identity of the
contributed property, the classification of the contributed
property shall be transmuted to the category of property
receiving the contribution. However, to the extent the
contributed property is retraceable by a preponderance of the
evidence and was not a gift, such contributed property shall
retain its original classification."
Here, it is undisputed that in anticipation of the parties'
relocation to the Hanover Street home, husband sold his separate
residence on Ingleside Drive for $82,000. Wife argues the
commissioner's finding of one-half of the $82,000 as marital
property is justified because she contributed her pre-marital
cash resources, as well as time and energy, in refurbishing the
Ingleside Drive home prior to its sale. However, the record - 10 - contains no evidence of the value of wife's contributions.
Accordingly, as prescribed by Code § 20-107.3, her contributions
were transmuted into husband's separate property when they were
commingled with husband's separate property.
The $82,000 was subsequently invested in the Hanover Street
home, which was conveyed to the parties by joint title. Although
husband and wife disagree as to the exact use of the $82,000 in
the Hanover Street property, it is evident from the record that
the entire $82,000 was invested in some manner in the property,
as the commissioner concluded, "to reduce the mortgage and/or
renovation costs of the property." This evidence is sufficient
for purposes of Code § 20-107.3(A)(3)(d) to retrace the property
claimed as separate by husband. Having found the $82,000 was husband's separate property,
the commissioner further concluded that husband "made a gift of
those separate sale proceeds to [wife] . . . ." While the
Hanover Street home was conveyed by joint title to the parties,
no presumption of gift arises from the mere fact that the
property was jointly titled. Code § 20-107.3(A)(3)(g). The fact
that property is jointly titled must be considered by the trial
court in determining if a gift was made, but alone, it is
insufficient proof of a gift. To have found that a gift
occurred, the trial court must have found that wife met her
burden of proving the three elements of a gift: (1) intention on
the part of the donor to make a gift; (2) delivery or transfer of
the gift; and (3) acceptance of the gift by the donee. Theismann
- 11 - v. Theismann, 22 Va. App. 557, 566, 471 S.E.2d 809, 813 (1996).
Here, the only element disputed by the parties is the element of
husband's intent.
Husband argues that he did not intend to make a gift of the
$82,000 invested in the acquisition of the parties' marital home
and that there is no evidence of such intent in the record. 1 The
record shows that the parties purchased the home to serve as
their home and that the new home was purchased in order to
accommodate the parties' growing family. Husband placed no
reservations on the transfers of title permitting him to reclaim
the property upon divorce or any other circumstance. Further,
wife testified that husband had said to her that his property was
also her property. These circumstances, in combination with the
fact that the house was conveyed by joint title, are evidence
that a gift was intended and therefore that the entire sum of
$82,000 was marital property. See id. Accordingly, we find the
trial court erred in determining that only $41,000 of the
property was gifted marital property. 1 Husband argues that our holding in Lightburn v. Lightburn, 22 Va. App. 612, 472 S.E.2d 281 (1996), where we reversed the trial court's order awarding wife a one-half interest in a tract of jointly titled marital property, supports husband's assertion that the trial court erred by finding a gift on the facts of this case. Husband misconstrues our ruling in Lightburn. In Lightburn, we reversed on the basis that the trial judge failed to determine or address the statutorily prescribed "equities and the rights and interests of each party in the marital property," in determining the wife's share of the retitled property. 22 Va. App. at 619, 472 S.E.2d at 284. There was no issue, as there is here, as to whether a gift had occurred, as we "accept[ed] the trial court's finding and the appellant's concession that an interest in the marital property was a gift to the wife." Id. at 617, 472 S.E.2d at 283.
- 12 - However, while we find that the entire $82,000 is
properly classified as marital, the trial
court was not bound to make an equal
distribution of the property. Id. at 568,
471 S.E.2d at 814. The trial court must give
careful consideration to the gifted status of
marital property, but the equitable award of
marital property is ultimately to be
determined by the trial court's consideration
of the evidence and application of the Code §
20-107.3(E) factors. Id. The gifted status
of the property is relevant to several of the
factors in subsection (E), in particular Code
§ 20-107.3(E)(6) and (10), which require
consideration of "[h]ow and when specific
items of such marital property were acquired"
and "[s]uch other factors as the court deems
necessary or appropriate to consider in order
to arrive at a fair and equitable monetary
award."
Id. As the trial court erred in determining that only $41,000 of
the gifted property was marital, we remand for reconsideration of
the equitable distribution of the entire $82,000 consistent with
our holding herein.
Spousal Support
- 13 - Husband was ordered to pay wife $10,000 a month in spousal
support. Husband argues this sum was reached in error by both
the trial court and the commissioner because each failed to
consider provisions made with regard to marital property, as
required by Code § 20-107.1(8).
Code § 20-107.1(8) provides that "[i]f the court determines
that an award should be made, it shall, in determining the
amount, consider . . . the provisions made with regard to the
marital property under § 20-107.3 . . . ." Here, the
commissioner found $10,000 the appropriate support amount prior
to quantifying the equitable distribution award. In addition,
the "Value Chart" prepared by the commissioner did not include
nine assets of the parties, having a total value of $641,838.
The trial court affirmed the support award at the October 30,
1995 hearing, four and one-half months before Schedule A, 2
quantifying the equitable distribution award, was adopted by the
court in its final decree on March 15, 1996. The trial court
heard evidence addressing the factors in Code § 20-107.1;
however, it is unclear from the record whether the court
considered the impact of the final $4,204,530 equitable
distribution award on the spousal support needs of wife.
Wife argued that a significant portion of the $4,204,530 was
2 The trial court, recognizing that the Value Chart prepared by the commissioner did not include all of the parties' assets, directed counsel to prepare "Schedule A," a classification and valuation of all assets and proposed division thereof for the court.
- 14 - to be conveyed in the form of non-income producing assets,
including the parties' residence and wife's automobile and
jewelry. However, $1,872,834 of the award is a monetary award.
Wife dismissed this sum as being owed to wife and not available
to her because of this appeal. In determining spousal support,
the commissioner and trial court must consider all factors
contained in Code § 20-107.1; failure to do so constitutes
reversible error. Woolley v. Woolley, 3 Va. App. 337, 344, 349
S.E.2d 422, 426 (1986). Accordingly, when determining spousal
support, the trial court must consider the income generating
potential of the marital award as well as other income and
expenses generated by the asset assignment constituting the
equitable distribution award. As we have found the trial court erred in classifying the
full appreciation of husband's Free Lance-Star stock as marital
property, a new equitable distribution award must be made,
requiring reconsideration of the spousal support award.
Accordingly, we remand for reconsideration of the spousal support
award consistent with this opinion. WIFE'S ASSIGNMENTS OF ERROR
Valuation of the Free Lance-Star Stock
Extensive evidence was presented by both parties with regard
to the value of husband's Free Lance-Star stock and each party
presented significantly different valuations. Wife contends that
the commissioner "devoted only one sentence in his Report to the
actual valuation issue. . . . He simply commented that - 15 - `[husband's] experts are more competent as to the valuation
process due to their experience and consistent testimony.'" Wife
further notes that in setting out the values of the marital
assets in the Value Chart, the commissioner calculated a value
for husband's stock of $5,517,125, achieved by averaging the
values presented by husband's and wife's experts. When the
inconsistency in the Chart and the commissioner's report were
brought to his attention, he issued a clarification letter,
stating that "the value of the stock should be value as stated by
[husband's] expert and should not be the value that I have
listed." On the basis of these observations, wife argues the
commissioner erred in accepting husband's valuations. Wife also argues that the court erred in accepting the
valuations because the trial court should not delegate to the
commissioner its judicial functions or its duty to make factual
determinations.
Where experts offer conflicting testimony, it is within the
discretion of the trial court to select either opinion. Reid v.
Reid, 7 Va. App. 553, 563, 375 S.E.2d 533, 539 (1989). Here, the
commissioner heard considerable evidence from both parties'
experts regarding the proper value of husband's stock. In his
report, the commissioner concluded that based on the evidence
presented, "[husband's] experts are more competent as to the
valuation process due to their experience and consistent
testimony." The trial court accepted the commissioner's findings
and having done so, the findings are presumed to be correct when
- 16 - reviewed on appeal and are to be given "great weight" by this
Court. Pavlock v. Gallop, 207 Va. 989, 994, 154 S.E.2d 153, 157
(1967). The findings will not be reversed on appeal unless
plainly wrong. Chaney v. Haynes, 250 Va. 155, 158, 458 S.E.2d
451, 453 (1995).
Wife did not object to qualification of husband's witnesses
as expert. Rather, wife asserts that her witnesses were more
qualified than husband's to determine the value of husband's
stock. The relative qualification of expert witnesses goes to
the weight of the evidence presented by the expert, but is not
determinative of the matter. The trial court also properly exercised its discretion in
accepting the commissioner's findings. The commissioner's
findings are supported by credible evidence and consequently, the
findings, as approved by the trial court, must be affirmed. Id.
at 158, 458 S.E.2d at 453.
Division of Marital Share of Retirement Benefits Wife argues that the trial court erred in failing to order
that she receive a portion of husband's survivor benefits under
his Free Lance-Star Retirement Plan. Husband asserts that
because the commissioner found wife was entitled to 25.6% of
husband's survivor benefits, 3 and the husband's retirement plan
only allows for survivor benefits in 50%, 75% and 100%
3 The commissioner recommended Wife receive one-half of the marital portion of Husband's Free Lance-Star Retirement Plan pension, which constitutes 25.6% of husband's pension.
- 17 - designations, the trial court properly found it could not order
relief not permitted under the plan.
Federal law prohibits the trial court from "requir[ing] a
plan to provide any type or form of benefit, or any option, not
otherwise provided under the plan." 26 U.S.C. § 414(p)(3). Code
§ 20-107.3(G)(1) provides that: [t]he court may direct payment of a percentage of the marital share of any pension, profit-sharing or deferred compensation plan or retirement benefits whether vested or nonvested, which constitutes marital property and whether payable in a lump sum or over a period of time. The court may order direct payment of such percentage of the marital share by direct assignment to a party from the employer trustee, plan administrator or other holder of the benefits. However, the court shall only direct that payment be made as such benefits are payable.
(Emphasis added). Accordingly, while the trial court has no
authority to order direct payments from a retirement plan in
contravention of that plan's provisions, Code § 20-107.3(G)(1)
does not mandate that payments come directly from the retirement
plan. The court is free to order that husband, not the plan, pay
wife her share of husband's retirement benefits. Consequently,
if the court desires to award benefits to wife in a manner not
encompassed by the plan, the court may require husband to make a 4 lump sum payment out of his share of the martial estate or to 4 Such a lump sum payment is permitted under Code § 20-107.3(G) which permits a trial judge to determine the present value of the marital portion of the pension and in dividing that portion, to include the awarded amount in a monetary award under Code § 20-107.3(D). Gamble v. Gamble, 14 Va. App. 558, 421 S.E.2d 635 (1992).
- 18 - pay wife a percentage of the retirement benefits as he receives
those benefits. See Gamble v. Gamble, 14 Va. App. 558, 421
S.E.2d 635 (1992).
Wife also contends that the trial court erred in not
requiring that she be allowed to name an alternate beneficiary
for her portion of the marital share of husband's retirement
benefits. Husband argues that wife's request to be allowed to
name an alternate beneficiary was properly denied by the trial
- 19 - court under both state and federal law because his retirement
plan does not allow for the naming of an alternate beneficiary.
"Under federal law, qualified domestic relation orders
[(QDROs)] are an exception to ERISA's proscription against
alienation and assignment of pension benefits." Wilson v.
Wilson, 18 Va. App. 193, 200, 442 S.E.2d 694, 698 (1994). In
order to qualify as a QDRO, a domestic relations order must "not
require a plan to provide any type or form of benefit, or any
option, not otherwise provided under the plan," and must "not
require the plan to provide increased benefits." 26 U.S.C.
§ 414(p)(3). Here, because husband's retirement plan does not
make provisions for payment by the plan to an alternate
beneficiary, the court cannot order such payment from the plan.
However, as noted above, this does not preclude the court from
exercising its discretion to have the payments made from husband,
either in lump sum or as the benefits are paid to him, instead of
directly from the plan. Accordingly, not only may the court
require that husband pay wife 25.6% of his retirement benefits,
in the event that wife predeceases husband, the court may also
instruct husband, not the plan, to pay wife's designee. On remand the trial court, in reconsidering the marital
award, should consider whether to order that a lump sum or
payments equal to the wife's share of the retirement benefits due
her under the equitable distribution award be made to wife or her
beneficiary.
- 20 - Post-Separation Deposits and Withdrawals
Wife argues that the commissioner and trial court erred in
awarding husband credit for post-separation contributions to
various marital accounts. The post-separation deposits were made
with distributions from the husband's Free Lance-Star stock, the
appreciation of which was classified as part marital and part
separate. Accordingly, a portion of the post-separation
distributions which husband deposited were earnings on the
marital stock and therefore should have been classified as
marital property. Code § 20-107.3(A)(2) addresses the classification of
property acquired post-separation: Marital Property is . . . all property . . . acquired by either spouse during the marriage, and before the last separation of the parties, if at such time or thereafter at least one of the parties intends that the separation be permanent, is presumed to be marital property in the absence of satisfactory evidence that it is separate property.
Dividends received post-separation from husband's separate
property are properly classified as non-marital. However, if the
property or some portion thereof which generated the dividends
was marital, the dividends attributable to the marital property
would be properly classified as marital. Here, we have remanded
for reconsideration the classification of the increase in the
value of husband's stock. Once the trial court determines what
portion of the appreciation is marital and what portion is
husband's separate property, the trial court must also classify - 21 - earnings attributable to the marital portion as marital.
Wife also argues that husband made post-separation
withdrawals from the accounts and that the trial court erred by
failing to require husband to account for these withdrawals.
Wife argues that because of the complex tracing involved in order
to verify husband's figures regarding the various account
balances, she did not discover the numerous discrepancies in the
multiple accounts in time to present evidence at the June 29,
1994 hearing. A subsequent motion for leave to present
supplemental evidence was denied. Wife proffered that husband
made numerous post-separation withdrawals and transfers and that
in total while making $285,000 in post-separation contributions,
he withdrew $372,562. Wife argues that the commissioner and
trial court erred in failing to accept her proffer and in failing
to require husband to account for the $87,562 net discrepancy. The granting or denying of a motion to hear additional
evidence is within the sound discretion of the trial court. See Morris v. Morris, 3 Va. App. 303, 307, 349 S.E.2d 661, 663
(1986). In Morris the trial court refused to reopen the
proceedings at the wife's request to hear additional evidence
concerning an asset the wife asserted should not have been
classified as marital property. Id. We concluded that since the
request to hear additional evidence "came six weeks after the
evidentiary hearing consisting of two full days of testimony
during which each party had ample opportunity to present
evidence, it was within the court's discretion to refuse to take
- 22 - further evidence . . . ." Id. (citations omitted).
Here, the wife's motion for leave to present supplemental
evidence was made nine weeks after the hearing. Wife asserts
that she was unable to present evidence at the hearing regarding
discrepancies in the accounts because husband failed to fully
disclose information about some of the Fidelity accounts until a
few days prior to the hearing. Assuming, arguendo, that wife's
assertions accurately represent the facts, such untimeliness in
providing wife with the account information may have excused
wife's failure to present evidence on this matter at the hearing;
however, it does not explain wife's nine week delay in moving for
leave to present additional evidence. Consequently, we find that
neither the trial court nor the commissioner erred in rejecting
wife's proffer, as the decision was within the sound discretion
of the court. Deduction of Litigation Expenses
Wife argues that the trial court erred in failing to deduct
her litigation expenses from the valuation of wife's accounts.
Alternatively, wife argues that if she is not given credit for
her litigation expenses, husband should be ordered to pay all of
her litigation fees and costs, not merely the $50,000 awarded by
the trial court.
The trial court and commissioner could have properly
considered evidence in the record of the depleted value of wife's
marital accounts attributable to her litigation expenses. This
is especially true because some four years and four months passed - 23 - between the time of separation and entry of a final decree.
However, at the extensive hearing wife did not address the
stipulated values and subsequent depletion due to significant
legal fees. Rather, wife sought to have this evidence admitted
nine weeks after the hearing. Both parties had ample opportunity
during the hearing to present evidence regarding the value of
accounts and the costs of litigation.
The trial court's and commissioner's decision to receive
additional evidence after the close of the record is within the
discretion of the court. Morris, 3 Va. App. at 307, 349 S.E.2d
at 663. The commissioner exercised his discretion not to do so
and given wife's opportunities to address this matter on the
record, we find no abuse of discretion.
Wife's alternate argument is also unpersuasive. The
commissioner indicated that in considering the sizable legal fees
claimed by wife and in light of the equitable distribution and
spousal support awards, $50,000 was an appropriate payment to
wife for her legal expenses. Wife presents no argument that
suggests the commissioner or trial court abused their discretion
in ordering payment of $50,000 and no evidence in the record
suggests that as a matter of law, a larger sum should have been
awarded. However, in view of our remand of the equitable
- 24 - distribution award and the spousal support award, the trial court
should reconsider the attorney's fee award. Affirmed in part, reversed in part, and remanded.
- 25 -