Jennifer Lynn Bartlett v. Anthony Dean Rennier

• Court: Court of Appeals of Virginia
• Decided: July 16, 1996
• Docket: 2639954
• Status: Unpublished

Opinion

COURT OF APPEALS OF VIRGINIA

Present: Chief Judge Moon, Judge Bray and Senior Judge Duff Argued at Alexandria, Virginia

JENNIFER LYNN BARTLETT MEMORANDUM OPINION * BY v. Record No. 2639-95-4 CHIEF JUDGE NORMAN K. MOON JULY 16, 1996 ANTHONY DEAN RENNIER

FROM THE CIRCUIT COURT OF FAIRFAX COUNTY J. Howe Brown, Judge Sharon Gregory Jacobs (Morchower, Luxton and Whaley, on briefs), for appellant.

Melinda S. Norton (Marcia F. Ruff; Shoun & Bach, P.C., on brief), for appellee.

Jennifer Lynn Bartlett appeals the final decree of divorce

from Anthony Dean Rennier. Ms. Bartlett objects to the decree

insofar as it awards 100 percent of a business established during

the marriage to Mr. Rennier, awards lump sum spousal support with

no reservation of the right to petition for periodic support, and

fails to apportion marital debt. We affirm in part, reverse in

part, and remand the case to the trial court.

The parties were married on June 23, 1990. Ms. Bartlett was

twenty-six years old at the time of trial, and has a bachelor's

degree in physics. Mr. Rennier was thirty-four and has

bachelor's and master's degrees in electrical engineering. The

trial court found that theirs was "a short, not very happy, and

somewhat unusual marriage." Ms. Bartlett had experienced * Pursuant to Code § 17-116.010 this opinion is not designated for publication. emotional difficulties since childhood, and these contributed to

the problems in the marriage. The parties separated on June 14,

1993.

When the parties were married, Mr. Rennier was employed by

The Analytic Sciences Corporation (TASC) and earning

approximately $59,500 per year. Ms. Bartlett had just graduated

from college. Shortly after the marriage, she formed Elephant

Information Services (EIS), which managed lists of Republican

voters in Arlington County. Mr. Rennier encouraged Ms. Bartlett

in this venture and provided technical assistance. Despite this

assistance and her own hard work, Ms. Bartlett received no income

from EIS during the marriage, and the company is now defunct. In the spring of 1992, Mr. Rennier and two of his colleagues

established Blacksmith, a computer software development company.

Creation of the company was made possible by a $100,000

investment by Ms. Bartlett's father, who is an attorney. Mr.

Rennier had sought other investors but found none. Ms.

Bartlett's father was willing to invest in the venture with no

requirement of a business plan. He testified that he intended to

benefit his daughter by making the investment, that he "probably"

would not have invested in the company had family not been

involved, and that the risk in the investment was "non-trivial."

He also testified that the investment was a good one and that he

was "in it for the long haul."

Mr. Bartlett received Blacksmith stock in return for his

investment. He advanced a $2,000 retainer for legal services,

- 2 - which was returned to him in the form of additional stock. He is

corporate counsel for Blacksmith, and has been "very gentle" in

billing for his services.

During the marriage, Mr. Rennier drew a $30,000 salary from

Blacksmith, $29,500 less than he had earned at TASC. Despite

this loss of income, Ms. Bartlett encouraged her husband in the

new undertaking and participated in the discussions with her

father that culminated in the $100,000 investment. She also

provided limited assistance in forming the business and getting

it off the ground. She served as corporate secretary, which

involved ministerial tasks such as signing the corporate minutes.

She obtained the home occupancy permit and the business license,

edited written materials about the company, and provided

administrative support such as purchase of supplies. She was not

involved in product development or other substantive aspects of

the business. By January 1993, it was apparent that EIS would not be

financially productive. Ms. Bartlett took a job as a legislative

aide in Richmond for the 1993 session. She testified that her

goal in taking the position was to provide income for the family

and to assist her in finding another position. She returned from

Richmond in February, and took a part-time position with the

Northern Virginia Planning Commission in April.

The parties' first marital residence was a townhouse owned

by Mr. Rennier prior to the marriage. The parties lived there

over a year, and then purchased a home in Arlington. They made a

- 3 - $50,000 down payment, contributed by Ms. Bartlett's parents, and

financed $184,000. Ms. Bartlett's parents shared ownership of

the home as tenants in common with Ms. Bartlett and Mr. Rennier.

Mr. Bartlett understood that any loss or profit realized through

sale of the home would be shared in proportion to the money

contributed. However, Mr. Rennier testified that in the event of

a loss, he and Ms. Bartlett would reimburse the $50,000 down

payment first. The parties realized a $36,000 profit on sale of the

townhouse. They placed $30,000 of this amount into a joint

account along with $17,000 of Ms. Bartlett's savings. After

separation, Mr. Rennier withdrew $30,000 of the approximately

$37,000 remaining in this account. He then paid Ms. Bartlett

$8,000 of the amount he withdrew, leaving him with $22,000. The

court found the account to have been marital property.

After separation, Mr. Rennier paid the mortgage on the

marital residence for two months. Ms. Bartlett and her father

then refinanced the house to secure a lower monthly payment. Ms.

Bartlett paid the refinancing costs. During this process, Mr.

Rennier's name was removed from the mortgage. The house is being

rented, but the monthly payment does not cover the mortgage and

Ms. Bartlett pays the deficiency, as well as the cost of

maintaining the property. The parties stipulated that the

listing price of the marital residence at the time of the hearing

was $231,000. The parties purchased the home for $230,000. The

parties agree that the housing market in Arlington is slow at

- 4 - present.

Ms. Bartlett is now living in Amherst, Virginia and is

employed full-time as a legislative aide at a salary of

approximately $24,000. Mr. Rennier earned $48,000 in 1994, and

was going to earn more than $50,000 in 1995.

EQUITABLE DISTRIBUTION

"[A] trial court has broad discretion in determining the

equitable distribution of the marital property so long as it uses

the guidelines set forth in Code § 20-107.3 and the evidence

supports the court's decision." Kaufman v. Kaufman, 12 Va. App.

1200, 1206-07, 409 S.E.2d 1, 5 (1991). Where one or more of the

statutory factors cannot be reconciled with the award or where

the award is inexplicable on the facts, this constitutes an abuse

of discretion. See Donnell v. Donnell, 20 Va. App. 37, 42, 455

S.E.2d 256, 258 (1995); Trivett v. Trivett, 7 Va. App. 148,

153-54, 371 S.E.2d 560, 563 (1988). The award must not be

arbitrary or punitive. O'Loughlin v. O'Loughlin, 20 Va. App.

522, 528, 458 S.E.2d 323, 326 (1995).

The primary assets to be considered for equitable

distribution were the marital home, Blacksmith, EIS, the funds

from the joint account, Mr. Rennier's IRA of approximately

$17,000, and household furnishings. The trial court ordered Mr.

Rennier to transfer his interest in the marital home to Ms.

Bartlett and her parents. The court allowed Ms. Bartlett to

retain the household furnishings already in her possession as

well as the $8,000 Mr. Rennier returned to her from the joint - 5 - account. The court ordered that both parties retain ownership of

their respective businesses. Ms. Bartlett received no interest

in the IRA.

Blacksmith was by far the most valuable marital asset. The

parties stipulated that Blacksmith was worth $900,000 at the time

of the hearing. Mr. Rennier's share was worth $300,000. The

company had cash assets of $262,000 and $353,000 in accounts

receivable, against a liability of only $74,000. Ms. Bartlett's

expert testified that the company was in strong financial health. The court awarded Ms. Bartlett no share in Blacksmith. In

support of its decision, the court stated that "[w]ife's claim

that she contributed to the success of the business is

unconvincing, at best." The court also found that in order to

raise cash from the business, Mr. Rennier would have to offer his

shares to the other owners, and that he could not sell his

business "without losing that way of earning his living." The

court also found that Mr. Rennier had made greater monetary and

nonmonetary contributions to the well-being of the family.

As discussed above, Ms. Bartlett's contributions to start-up

and operation of Blacksmith were limited. Nevertheless, they

were positive rather than negative. Further, in evaluating the

parties' relative contributions to this marital asset, the trial

court disregarded Ms. Bartlett's support for the risky endeavor

of starting a business and the connection between that support

and her father's, Mr. Bartlett's, investment.

First, Ms. Bartlett supported her husband in his taking

- 6 - nearly a fifty percent reduction in salary in order to start the

business (from $59,500 to $30,000). Second, Ms. Bartlett's

father decided to invest $100,000 in the business--which was

still in the early planning stages--based on discussions with his

daughter and son-in-law. He listened to "the vision that the

children had" about forming a software company. His decision to

invest was based on the couple's mutual enthusiasm for the

project, and he intended the investment to benefit his daughter.

Other investors had been sought; none were found. The

investment was risky. Had Ms. Bartlett not supported her

husband's undertaking, Blacksmith would likely not exist at all.

The record does not support that the lack of liquidity of

Blacksmith was sufficient to deny an award based upon its value.

The trial court apparently did not consider that a monetary

award may be ordered paid in installments. See Mallery-Sayre v.

Mallery, 6 Va. App. 471, 474-75, 370 S.E.2d 113, 115 (1988); Ray v. Ray, 4 Va. App. 509, 513, 358 S.E.2d 754, 756 (1987).

The trial court found that both parties made a "valiant

effort" to get the failed EIS business going. The trial court

awarded both EIS and the marital home to Ms. Bartlett. EIS is

defunct and has no value. At present the home has no value to

Ms. Bartlett either, and indeed is a liability. The rent

received on the home does not cover the mortgage payments. The

home has not appreciated in value since it was acquired, and even

if Ms. Bartlett could sell it, any small profit would go to her

- 7 - parents.

In effect, the trial court awarded Mr. Rennier 100 percent

of the only marital asset of significant value, the Blacksmith

interest.

The court also concluded that Ms. Bartlett was in better

financial condition after the marriage than before. The record

does not support such a finding. She had $17,000 cash when she

married and ended up with $8,000 of it. She ended up with

furniture of between $5,000 and $10,000 in value, but also had

attorneys' fees to pay. She was awarded a worthless business and

a rental dwelling that was not worth the debt against it and had

a negative cash flow inadequate to pay its mortgage. Here we find that the awards to husband and wife were so

disproportionate that the court's failure to award the wife any

portion of the value of the computer business constituted an

abuse of discretion. See Donnell, 20 Va. App. at 42-43, 455

S.E.2d at 258; Blank v. Blank, 10 Va. App. 1, 9, 389 S.E.2d 723,

727 (1990). The trial court should reconsider the award in light

of the fact that this marriage was a partnership between the two

parties. Although it was proper to give the husband credit for

having been more successful in his business, Aster v. Gross, 7 Va. App. 1, 7-8, 371 S.E.2d 833, 837 (1988), it was plainly wrong

to find that the wife was entitled to nothing. Here both parties

pursued business interests with the approval and support of the

other. In any partnership there are generally some successes and

some failures. It does not follow that the partner who is more

- 8 - successful obtains all the profits, leaving nothing to the

partner who worked at an unsuccessful part of the endeavor.

It is of some significance that the interest in Blacksmith

was 100 percent the result of marital effort. It was not an

asset brought to the marriage that merely transmuted into marital

property. It was created by the sacrifices of both parties in

current marital income, albeit the husband's, for the future

benefit of the marriage. The trial judge should reconsider the equitable award giving

weight to the wife's efforts to contribute to the marital

partnership as opposed to focusing on what she did not contribute

that she claimed to have contributed. The court should consider

whether she did for the marital partnership the best she could

under the circumstances and not punish her for what she may not

have achieved, unless the failure was willful or because of

dereliction, which the record does not support. Furthermore, the

court should consider whether the ability to order an award

payable in installments overcomes problems of lack of liquidity

of Mr. Rennier's interest in Blacksmith.

SPOUSAL SUPPORT

On remand for reconsideration of equitable distribution, the

trial court must reconsider the spousal award as well. See Code

§ 20-107.1(8); Mitchell v. Mitchell, 4 Va. App. 113, 121, 355

S.E.2d 18, 23 (1987). To assist the trial court in its

reconsideration of this issue, we address the issue of lump sum

support. - 9 - "Although Code § 20-107.3 grants the trial court discretion

in deciding whether to award either periodic or lump sum

payments, periodic payments are the preferred form." Mosley v.

Mosley, 19 Va. App. 192, 197, 450 S.E.2d 161, 164 (1994).

"Generally, when courts do make lump sum spousal support awards

they do so because of special circumstances or compelling

reasons, and appellate courts uphold such awards where the record

clearly reflects the court's rationale for finding that the award

will adequately provide for contingencies." Blank, 10 Va. App.

at 5, 389 S.E.2d at 725. Compelling reasons for making a lump

sum award include the payee spouse's immediate need for a lump

sum to maintain herself or himself or to satisfy debts. Kaufman,

12 Va. App. at 1205, 409 S.E.2d at 4.

Ms. Bartlett has obtained full-time employment. Although

she claims that her expenses exceed her income, she has managed

to save money since the separation. She is young and in good

physical health, and the marriage was of short duration. The

trial court awarded support based on Ms. Bartlett's desire to

pursue a graduate degree--plans she claims to have put on hold

when Mr. Rennier formed Blacksmith. This is the type of

circumstance that the court may properly take into account in

deciding to award lump sum support.

The trial court did not reserve for Ms. Bartlett the right

to petition for periodic support. The court is not required to

reserve this right in every instance. Poliquin v. Poliquin, 12

Va. App. 676, 681, 406 S.E.2d 401, 404 (1991); Blank, 10 Va. App.

- 10 - at 6; 389 S.E.2d at 726. Ordinarily, however, "a modest lump sum

award should not defeat the right to petition for additional

support in the event of changed circumstances." Blank, 10 Va.

App. at 4-5, 389 S.E.2d at 725.

In Poliquin, we reversed the trial court's failure to

reserve the right to modify a lump sum award because the parties'

future circumstances, including the wife's earning potential and

the husband's depressed current earnings, were uncertain. In

reconsidering spousal support here, the trial judge should

consider whether any uncertain elements require a reservation of

the right to petition for periodic support. MARITAL DEBT

Ms. Bartlett argues that the trial court erred in failing to

take marital debt into account, either directly by apportioning

it, or indirectly by taking it into account as a factor in the

equitable distribution. The two debts she complains of are the

mortgage on the marital home and $8,900 in counseling expenses

incurred by Ms. Bartlett after separation.

When Ms. Bartlett and her father refinanced the marital home

several months after the separation, they removed Mr. Rennier's

name from the mortgage. That marital debt was extinguished. The

counseling expenses were incurred after separation, and the trial

court did not err in failing to apportion or otherwise take them

into account.

For the foregoing reasons, the case is reversed in part,

affirmed in part, and remanded to the trial court for - 11 - reconsideration of equitable distribution and spousal support. Affirmed in part, reversed in part, and remanded.

- 12 - Bray, J., dissenting.

The majority decides that the trial court abused its

discretion and was plainly wrong in awarding Ms. Bartlett no

interest in Blacksmith. This conclusion is supported by an

analysis of the marital estate and the evidence relevant to its

equitable distribution which differs from the rationale adopted

by the trial court. Because I find the reasoning sound in either

instance, I would affirm the decree. In reviewing a disputed equitable distribution award, we

have acknowledged that the "trial court's job is a difficult one"

and requires reliance on the "discretion of the trial judge in

weighing the many considerations and circumstances that are

presented in each case." Artis v. Artis, 4 Va. App. 132, 137,

354 S.E.2d 812, 815 (1987). Thus, "'[u]nless it appears from the

record that the chancellor has abused his discretion, . . . not

considered or . . . misapplied [a] statutory mandate[], or that

the evidence fails to support the findings of fact underlying his

resolution of the conflict in the equities, the chancellor's

equitable distribution award will not be reversed . . . .'" Robinette v. Robinette, 10 Va. App. 480, 486, 393 S.E.2d 629, 633

(1990) (citations omitted).

Here, I concur that the evidence supported a disposition of

the marital interests in Blacksmith more favorable to Ms.

Bartlett. However, I also find that the decision of the trial

court is consistent with both the record and the law. I am,

therefore, unable to conclude that the trial court was either

- 13 - plainly wrong or abused its discretion and would affirm the

decree. See Reece v. Reece, 22 Va. App. 368, 377, 470 S.E.2d

148, 153 (1996) (Baker, J. concurring).

- 14 -