Darrell E. Noell v. Deborah H. Noell

• Court: Court of Appeals of Virginia
• Decided: February 15, 2000
• Docket: 0918993
• Status: Unpublished

Opinion

COURT OF APPEALS OF VIRGINIA

Present: Judges Coleman, Frank and Senior Judge Hodges Argued at Salem, Virginia

DARRELL E. NOELL MEMORANDUM OPINION * BY v. Record No. 0918-99-3 JUDGE WILLIAM H. HODGES FEBRUARY 15, 2000 DEBORAH H. NOELL

FROM THE CIRCUIT COURT OF BEDFORD COUNTY James W. Updike, Jr., Judge

Lance M. Hale (Kenneth N. Hodge; Lance M. Hale & Associates, on briefs), for appellant.

Valeria L. Cook for appellee.

Darrell E. Noell (husband) appeals the final decree of

divorce entered by the circuit court. Husband contends that the

trial court abused its discretion by (1) classifying the marital

residence as marital property; (2) classifying a $60,000 second

deed of trust on the marital residence as husband's separate debt;

(3) classifying a $30,000 note as husband's separate debt;

(4) classifying the business Jordantown Market as husband's

separate property; (5) classifying the business Happy Hair Salon

as the separate property of Deborah H. Noell (wife) and

determining that the business had only nominal value; and (6)

calculating wife's annual income for purposes of determining child

* Pursuant to Code § 17.1-413, recodifying Code § 17-116.010, this opinion is not designated for publication. and spousal support. In her response, wife contends that the

trial court erred by (1) ordering an assets-only evaluation of

Jordantown Market; and (2) classifying any portion of the marital

residence as husband's separate property. We find no error by the

trial court requiring reversal of its decisions on equitable

distribution or support. Therefore, we affirm.

On appeal, "[t]he judgment of a trial court sitting in

equity, when based upon an ore tenus hearing, will not be

disturbed on appeal unless plainly wrong or without evidence to

support it." Box v. Talley, 1 Va. App. 289, 293, 338 S.E.2d 349,

351 (1986). "Fashioning an equitable distribution award lies

within the sound discretion of the trial judge and that award will

not be set aside unless it is plainly wrong or without evidence to

support it." Srinivasan v. Srinivasan, 10 Va. App. 728, 732, 396

S.E.2d 675, 678 (1990).

Classification of Marital Residence

Husband contends that the trial court abused its discretion

by classifying the marital residence as primarily marital

property. In support of his contention, husband presented

evidence that he purchased the house on November 5, 1976, a month

before the parties' marriage, and that the home remained titled

solely in his name throughout the marriage. Husband claimed that

he made a down payment, which the trial court determined to be

$2,700, towards the purchase price of $38,500. The first mortgage

amount of $35,800 was reduced to $19,334 by the time of the

- 2 - equitable distribution hearing. While the trial court found that

husband "exclusively made the payments on the first mortgage from

his income from his employment," the court noted that income

earned during the marriage is marital property. See Code

§ 20-107.3(A)(1) and (2)(iii). The marital residence had a value

of $107,000 at the time of the hearing. Using the Brandenburg

formula, the court computed the equity attributable to husband's

separate property as $12,349.90 and that attributable to marital

property as $75,316.10. See generally Hart v. Hart, 27 Va. App.

46, 64-66, 497 S.E.2d 496, 504-06 (1998).

We find no error in the trial court's classification of the

marital residence as part separate property and part marital

property. Mortgage payments made during the marriage using income

earned during the marriage were contributions of marital, not

separate, property. See Code § 20-107.3(A)(2)(iii). Therefore,

the trial court properly viewed the reduction in the mortgage

during the marriage as marital contributions. While wife contends

that husband failed to produce evidence supporting his claim that

he made a contribution of separate property by a down payment at

the time the property was purchased, we cannot say that the trial

court's determination that husband contributed $2,700 is

unsupported by the evidence. Therefore, we affirm the trial

court's hybrid classification of the marital residence.

- 3 - Second Deed of Trust Equity Loan

Husband contends that the trial court erred when it

determined the value of the marital residence because the court

failed to reduce the residence's equity by $53,889, which was

the remaining value of a second deed of trust equity loan.

Husband cites Trivett v. Trivett, 7 Va. App. 148, 371 S.E.2d 560

(1988), to support his contention that the trial court should have

reduced the equity of the marital residence by the amount of this

outstanding debt secured by the residence. In Trivett, this Court

reversed and remanded a monetary award because the record failed

to demonstrate whether the trial court considered the effect of

an outstanding deed of trust on the value of a piece of marital

property. Under the circumstances of this case, we find no

grounds to reverse the trial court's decision regarding the second

deed of trust.

The evidence established that the second deed of trust was

not fraudulent or incurred for any improper purpose. See

generally Hodges v. Hodges, 2 Va. App. 508, 347 S.E.2d 134

(1986). It was incurred during the marriage in order to obtain

funds for the Jordantown Market. Husband characterized the

equity loan in his Summation and Arguments memorandum prepared

for the trial court as part of the "Total Jordantown Market

Debt" of $85,889 in order to reduce the net equity value of

Jordantown Market. At trial, he requested that he receive the

Jordantown Market as his separate property and wife agreed.

- 4 - While the second deed of trust was secured by the marital

residence, the funds so obtained were used for the property

which by agreement was awarded to husband. But for the parties'

agreement to this classification, the debt and its corresponding

asset would have been appropriately characterized as marital.

These factual circumstances are distinguishable from those of

Trivett.

Code § 20-107.3(C) provides that "[t]he court shall also have

the authority to apportion and order the payment of the debts of

the parties, or either of them, that are incurred prior to the

dissolution of the marriage, based upon the factors listed in

subsection E." Thus, the trial court had the discretionary

authority under the statute to apportion between the parties their

marital and separate debts. Under the circumstances of this case,

where the practical effect of the parties' agreement that husband

would receive the Jordantown Market as his separate property was

to separate the second deed of trust from its corresponding asset,

we find no error in the trial court's decision not to reduce the

value of the marital residence by the amount of the second deed of

trust.

$30,000 Note

Husband also contends that the trial court abused its

discretion when it assigned to him the $30,000 note to his father.

The parties did not contest the fact that the note was signed

shortly before the parties' final separation or that the note was

- 5 - intended to finance the Jordantown Market. Husband does not

contend that the funds were used for any other purposes, but

contends that wife as co-signer should bear some liability for the

note. The trial court was acting within its statutory authority

in apportioning this debt to husband. We find no abuse of

discretion in the decision to allow the unsecured liability to

follow the corresponding assets. See Code § 20-107.3(C).

Jordantown Market

Because operation of the Jordantown Market was begun during

the marriage using marital assets, it could properly be classified

as a marital asset. See Code § 20-107.3(A)(2). However, the

parties agreed that the market would be husband's separate

property. While wife contends that the trial court erred by

valuing the business solely on an assets-only basis rather than as

an ongoing business, she agreed at trial that the business would

be awarded to husband as his separate property. Therefore, any

error in the trial court's valuation of the business is irrelevant

to the equitable distribution issues on appeal. Moreover, we

agree with husband that wife failed to preserve any objection to

the court's decision to value the business on an assets-only

basis.

Happy Hair Salon

Husband contends that the trial court erred by classifying

the Happy Hair Salon as wife's separate property and by

determining that the salon had only nominal value. We find no

- 6 - error. The evidence indicated that wife worked as an apprentice

with a licensed hair stylist until after the parties separated.

Only in March 1997, after the final separation in December 1996,

did wife sit for her state boards and open her salon. See Code

§ 20-107.3(A)(1).

We find no error in the trial court's determination that

wife's hair salon had minimal value. Husband conceded in his

post-hearing memorandum that the salon had few assets. He argued,

however, that the salon should be valued based upon its cash flow

and goodwill. Husband relied largely on extrapolations based upon

one year's income. He presented no evidence as to any value

attributable to goodwill. The trial court ruled that the earning

capacity represented by the stream of income was more

appropriately considered under the spousal support factors set out

in Code § 20-107.1(E). We find no error in the trial court's

decision to value the hair salon on an assets-only basis.

Spousal Support

Husband contends that the trial court erred by failing to

impute income to wife for purposes of calculating child support

and spousal support. We find no error. In its opinion letter,

the trial court detailed why it found no merit in husband's

contention that wife had substantially higher earnings in previous

years. Husband argued that wife's income should be based upon the

gross sales and bonuses received by wife as a Tupperware sales

executive, without any diminution for the costs of the items sold.

- 7 - The trial court noted that, using the same logic, husband's

"income" would jump to $705,377 based upon the net sales of

Jordantown Market prior to a reduction for the costs of goods.

Wife presented evidence that her current income was approximately

$611 a month. Based upon the statutory factors, the trial court

awarded wife $650 in monthly spousal support.

Accordingly, the decision of the trial court is affirmed.

Affirmed.

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