Virginia Family Law Appeals

Voluntary retirement from 145K job at 58, active volunteering, don't prove earning capacity at 62

The Court of Appeals upholds a refusal to impute income to a 62-year-old retiree who had earned about $150,000 until four years earlier, and is "an active volunteer," in Collins v. Leeds, published, 5/29/18. Husband, a Navy retiree, had worked for Accenture and then as a civilian for the Navy, voluntarily retired from the government at 58, and not looked for employment after that. But the appellant had not offered any other evidence of current earning capacity. "wWife presented no evidence of employment positions currently available to husband or the income he could make in those positions based on his present circumstances." At the time of the trial, "his security clearances had expired, he had not worked in approximately four years, and he was approaching the age when many individuals retire."

The Court points out that the income used for imputation in Stubblebine (1996) had been just five months before the trial, and that it had reversed an imputation based on income just over one year before trial in Harber v. Harber (unpublished 2008). It also says that the Stubblebine imputation was upheld not because of the payor's vigorous unpaid work, which showed only his "physical and mental capacity to be gainfully employed," but because of his recent actual earnings.

Wife also appealed the trial court's alleged failure to consider $311,000 in recent fruitless legal expenses that affected her ability to make ends meet. She had sued a physical therapist for injuring her, and lost at every level, spending about $110,000. She still owed expert witnesses $20,500. She had spent $87,000 unsuccessfully suing her divorce lawyer for malpractice. The other $100K+ was spent in abortive litigation about marital assets several years after the divorce. Wife had translated these expenses into $6,000 per month on her income-expense sheet, but the trial court disregarded them because they were past, not current, expenses.

Wife argues that the trial court was required to consider her “financial resources” pursuant to Code § 20-107.1(E)(1), and her financial resources were “depleted by the hundreds of thousands of dollars in recent litigation costs.” She further argues that, because husband did not produce an expert witness to testify that the lawsuits she filed were frivolous or that the expenses she incurred were unreasonable, the legal expenses should have been included by the trial court as part of her total monthly expenses.

As the party seeking a modification of the spousal support or, as in this case, additional spousal support following the termination of the initial support period, wife bore the burden of showing, “in addition to a material change in circumstances, that the change ‘warrants a modification of support.’” Driscoll v. Hunter, 59 Va. App. 22, 33, 716 S.E.2d 477, 482 (2011) ... Since wife bore the burden of proving the legitimacy and need for these expenses and of their impact on her - 12 - current financial need, the trial court did not abuse its discretion in excluding the expenses incurred in these legal proceedings, which wife repeatedly – and unsuccessfully – chose to pursue. 

Fees: "Because wife’s appeal is so lacking in merit, we grant husband’s request for a reasonable amount of appellate attorney’s fees." 

Unilateral sales violating pendente lite order were waste, though apparently in good faith and necessitated by marital debt

The Court of Appeals upholds a finding of waste against a husband sold many items during the ten-year separation, though there was a court order saying not to, in Moret v.  Moret 5/08/2018. He argued that the parties' overwhelming marital debts justified it.

 “[T]he burden is on the party who last had the funds to establish . . . that the funds were used for living expenses or some other proper purpose. If the party is unable to offer sufficient proof, the [trial] court must value the property at a date other than the date of the evidentiary hearing so as to achieve an equitable result.” Clements v. Clements, 10 Va. App. 580, 588, 397 S.E.2d 257, 261 (1990).

The Court upholds an "alternate valuation date" to account for these sales, and the use of husband's loan application to determine those alternate values, even though the items sold for less than those values. The trial court found that he "failed to realize the best price for personal property upon sale, resulting in a significant wasting of marital assets.” It thus ordered him to pay the wife half the values given on the loan application. When he objects that the actual sales were a better measure of value, the Court responds that "the linchpin of the problem" with all of it was his failure to get the wife's agreement to the sales.

"Although the sales do not appear to be illegitimate, that is not a mitigating factor under Code § 20-107.3(E)(10) that either the trial court or this Court must consider, thus appellant’s reliance on his alleged good faith business dealings carries no weight."

The Court likewise upholds the trial court's refusal to give husband any credit for reducing the marital debts with the proceeds of these sales.

It also upholds imputation of income from a business, a spousal support award, and a refusal to recalculate arrearages back to before a pendente lite modification. 

When imputing income, hypothetical child care costs counteracted by other parent's availability to be with kids

Wife argued that when the trial court imputed income to her, it needed to deduct the child care costs she would have if she worked. The Court of Appeals points out that “[w]here appropriate,” the court calculating child support “shall consider the willingness and availability of the noncustodial parent to provide child care personally in determining whether child-care costs are necessary or excessive.” Code § 20-108.2(F). If a court can do this with actual child care costs, it can also do so with hypothetical ones in this situation, the Court says.

If the court determines that the husband is willing and able to provide necessary childcare, the court does not abuse its discretion in considering this fact in weighing the “obligations, needs and financial resources of the parties” for purposes of spousal support. See Code § 20-107.1(E)(1)

The Court approvingly lists several specific facts which the trial court considered relevant to this:

The evidence established that at the time of the evidentiary hearing, the wife’s part-time job provided her with the flexibility both to work from home and to take her younger child to the office with her on occasion as needed. Further, the evidence established that although the parties’ daughter was ten years old, their son was fourteen at the time of the evidentiary hearing and almost fifteen at the time of the hearing on the motions to reconsider and rehear. Additionally, the husband testified that he had “complete control” of his schedule. He said that he could turn down promotional work in order to care for the children and would be available any evenings necessary if the wife obtained the job identified by the vocational expert. The circuit court found simply that “[t]here are no work-related childcare costs due to [the wife’s] control over her current and anticipated work schedule” and “the nature of [the husband’s] . . . career” moving forward.

Henderson v. Henderson, 5/15/2018, Record No. 1402-17-2. (A separate opinion issued the same day, with a different case number, addressed husband's appeal of various rulings.) The opinion in "1407" addressed so many different issues that I am describing them in separate posts.

 

Courts don't have to give spouse any survivor benefit, nor half the marital share of retirement

The Court of Appeals upholds a divorce order that let a severely disabled military retiree keep 55% of the marital share of his retirement. Pederson v. Pederson, Va. Ct. App. Unpub. 8/2/16 His incapacity alone would justify that, the Court says, and the wife was able to earn $100,000 per year while the husband was unemployable. It also cited evidence of the wife contacting his superiors, which judges around here don't like, these days:

Evidence related to wife’s inappropriate e-mail exchanges with husband’s superior officer, her reports to authorities of alleged professional misconduct by her husband (reports that ultimately were deemed unsubstantiated by those authorities), and the circumstances surrounding husband’s decision not to accept the promotion to Wing Commander provided a sufficient basis for a reasonable factfinder to conclude that wife was less than supportive of husband’s career.

The Court also upheld the refusal to include in the retirement-division order a requirement to indemnify the wife for reducing disposable retired pay by electing disability.  Though that was considered legal at that time, nothing required the trial court to do so. 

Survivor benefits: Code § 20-107.3(G)(2) gives the court discretion to award any survivor benefit, or not to.

The opinion includes many other points about appellate procedure, life insurance beneficiary designations, and conservatorship, but I don't believe they break any new ground.

Wife can be awarded spousal support when her pleadings didn't ask for it but husband's asked that "the Court make an appropriate award of spousal support."

Ruane v. Ruane, 2016 Va. App. LEXIS 320 (November 22, 2016): Husband's complaint specifically requested that "the Court make an appropriate award of spousal support," and this open-ended request "was sufficient to permit the circuit court to award spousal support to wife in the final decree of divorce, even though it was husband who made the request to the court.

State failed to meet burden of showing parent failed to remedy conditions; no-show GAL who phoned-it-in failed to protect child

The Court of Appeals overturns a parental rights termination, and a change of goals from reunification to adoption, for lack of evidence that the mother was unwilling or unable to remedy what caused the child's removal, in Sternberg v. Spotsylvania DSS, 5/8/18. Mother had a history of some very non-extreme acts of abuse and neglect, and some cognitive disabilities, but complied almost completely with recommendations, visitations, safety plans and reunification plans, and complied with all court orders. She proved able to meet her child's needs and was beginning to bond and be an effective authority figure to the child. 

However, the DSS changed the plan to termination and adoption. An evidentiary hearing in Circuit Court, with the mother representing herself, nonetheless revealed how flimsy their grounds for this were. The DSS witness cited her "defensiveness and argumentativeness" and that there were “incidents with safety” -- but the Court notes that these

"were not situations involving any type of physical or emotional abuse or even corporal punishment. Rather, they involved circumstances such as D.S. continuing to run at a pool after his mother had instructed him to stop doing so and crossing a Wal-Mart parking lot in a manner deemed unsafe."

The DSS was concerned about how the mother responded to information about unspecified criminal charges against her pastor, though they could not point to anything like the mother leaving the child alone with him. They also noted "dysregulation" and a lack of follow-through with discipline of the child.

The Circuit Court rightly dismissed the DSS's concerns about relatively trivial and everyday imperfections, but said that the child was taken away in the first place because of "physical abuse" and the mother had not done anything to acknowledge or remove the causes of that, and so terminated her parental rights. However, (1) it had refused to let the mother introduce evidence of what exactly led to the child's removal in the first place, and (2) what the Court found the mother had failed to do was not at all what the  safety plans, recommendations, court orders, etc. had told her to do.

The Court of Appeals says it is unnecessary to address the trial court's refusal to hear evidence of what led to the child's removal, because, it says, there was absolutely no evidence to show, as Code § 16.1-283(C)(2) requires,

"clear and convincing evidence, that it is in the best interests of the child and that . . . [t]he parent or parents, without good cause, have been unwilling or unable within a reasonable period of time not to exceed 12 months from the date the child was placed in foster care to remedy substantially the conditions which led to or required continuation of the child’s foster care placement ...

In other words, the burdens of production and proof, regarding remedying the conditions, are on the state, not the parent.

The Department asked the Court to affirm on the grounds that there was other evidence in the record supporting other grounds for termination, but the Court notes that the Circuit Court had, rightly, found such evidence of poor parenting skills immaterial. Accordingly, "we reverse the decision of the circuit court and vacate both its order terminating mother’s parental rights to D.S. and its order approving the change in goal for the foster care plan from “return home” to “adoption.”"

The Court also finds that the guardian ad litem failed to provide effective representation, though it does not affect its decision. The GAL sent a colleague from another firm to represent her at the circuit court trial and present her recommendation, "after reaching her conclusions regarding the case without the benefit of the evidence at the hearing," the Court notes with concern.

"Accordingly, no guardian, whether appointed or serving as a substitute, offered an opinion that was formed based on all of the evidence. Thus, D.S. was denied a fully informed guardian to represent his interests, and the circuit court, in reaching its decision, was denied the benefit of a validly formed opinion of a guardian ad litem."

Corporate balance sheet doesn't determine business value -- Henderson v. Henderson

 The Court of Appeals upholds valuation of a business based on the net value of its assets, not the capital figure on its balance sheet, in Henderson v. Henderson, 5/15/2018, Record No. 1402-17-2. (A separate opinion issued the same day, with a different case number, addressed husband's appeal of various rulings.) The opinion in "1407" addressed so many different issues that I am describing them in separate posts.

 Husband owned a minority share of a partnership whose only asset was a piece of real estate. He testified that the loan on it exceeded its value, so the court valued it at zero. Wife argued that husband should be bound by the "Total Capital" figure on a balance sheet for the company. The Court holds that the trial court had the discretion to believe the husband, or to find that no adequate evidence of value had been presented, and that the wife had the burden of proving the asset's value because it was she who was seeking equitable distribution and valuation of the asset.

Although a court “may not arbitrarily refuse to classify or evaluate marital or separate property where sufficient evidence to do so is in the record,” it is the duty of the court in the first instance to determine whether the record contains “credible evidence of value.” See id. “[W]here the corporation is a real estate holding company,” valuation based upon the fair market value of “the corporation’s net assets has gained wide acceptance.” Bosserman v. Bosserman, 9 Va. App. 1, 8-9, 384 S.E.2d 104, 109 (1989).

Even though it found no value in the asset, the trial court still needed to classify it as harmless error, but this was harmless error since no value was proven, the Court says.

The wife's lawyer tried to get the husband to give lay testimony of the value of his own property by showing him the balance sheet and having him read it. That doesn't do the trick, the Court says. Besides, the sheet was over two years old and there was no testimony about the context in which it was created, which the Court says could make it legitimately different from an appropriate valuation for divorce purposes.

Wife preserved issue for appeal, but didn't proffer after-discovered evidence to justify reconsideration

 The Court of Appeals upholds a refusal to reconsider a ruling based on after-discovered evidence which was not offered to the court properly, nor stipulated to -- the wife's lawyer said he had documents in front of him, but did not hand them up. And the descriptions he gave of their contents were too iffy and speculative to prove that they would be material evidence that would change the result of the trial. Henderson v. Henderson, 5/15/2018, Record No. 1402-17-2. (A separate opinion issued the same day, with a different case number, addressed husband's appeal of various rulings.)  The opinion in "1407" addressed so many different issues that I am describing them in separate posts.

Proffering after-discovered evidence: 

In order for after-discovered evidence to be admissible, the record must establish that: (1) the evidence [was] discovered after the record was closed; (2) it could not have been obtained prior to the closing of the record through the exercise of reasonable diligence; (3) it is not merely cumulative, corroborative, or collateral; and (4) it is material, and as such, should produce an opposite result. Joynes v. Payne, 36 Va. App. 401, 418, 551 S.E.2d 10, 18 (2001).

The party seeking to reopen the record bears the burden of proof. Williams v. People’s Life Ins. Co., 19 Va. App. 530, 533, 452 S.E.2d 881, 883 (1995). Whether to grant such a motion rests within the sound discretion of the circuit court. Shooltz v. Shooltz, 27 Va. App. 264, 269, 498 S.E.2d 437, 439 (1998). ... when the circuit court denies such a motion, “the aggrieved party must make a proper proffer of the [evidence] to preserve the ruling for appellate review.” Klein v. Klein, 11 Va. App. 155, 160, 396 S.E.2d 866, 869 (1990). Such a proffer “may consist of a unilateral representation of counsel, if unchallenged, or a mutual stipulation of the proffered [evidence]. Absent such representation of counsel, or stipulation, the ruling will not be considered on appeal.” Id.

Preserving error for appeal:

Raising this issue in a written motion and oral argument, while the court still had jurisdiction to do something about it, was sufficient to preserve the issue for appeal.

Man broke into his daughter's room in co-parent's home late at night, convicted of unlawful entry

Jennings v. Commonwealth (Frank) No. 1625-15-1, Oct. 18, 2016; Norfolk Cir. Ct. (Lannetti) J. Barry McCracken, APD, for appellant; Benjamin H. Katz, AAG, for appellee. VLW 016-7-245(UP), 6 pp. 

The defendant and the victim had a child together. He entered the woman’s home at 3:30 a.m. by forcing the air conditioner out of the bedroom window, and went into the daughter’s bedroom. At the time he entered the house, defendant knew the woman had terminated their relationship and had banned him from the house. It is reasonable to infer he knew that the children and their mother would be asleep and any invasion would be frightening and disruptive to the quiet enjoyment of her property. The woman had the right to enjoy the serenity of her home. A rational fact finder could conclude that defendant, who was estranged from the mother and who had recently assaulted her, would be aware that his late-night, surreptitious invasion into the woman’s unlit home would cause her and her children to be fearful and would interfere with her privacy and peaceful enjoyment of her home. Taking into account the history of the relationship between defendant and the woman, as well as his threatening actions following his entry, the evidence was sufficient to uphold his conviction under Va. Code § 18.2-121. The Court of Appeals affirms defendant’s conviction of unlawful entry upon the property of another, for entering his ex-girlfriend’s home, despite defendant’s claim that the evidence did not prove he intended to interfere with the woman’s right to use the property. 

Divorce court must account for income effects of property division when setting support; value assets net of secured debt; require strict tracing

Income calculation must include effects of ED award

The Court of Appeals agrees with a husband who says the trial court's income calculation for child and spousal support needed to account for income from accounts that were transferred from him to the wife, and reverses, in Henderson v. Henderson, 5/15/2018, Record No. 1364-17-2. (A separate opinion issued the same day, with a different case number, addressed wife's appeal of various rulings.)

Valuation: Secured Debt

The Court also reverses a valuation that did not subtract the amount of debt secured by the asset. An account had a lien against it for an equity line of credit in the husband's name. The trial court valued the account at its full value, not counting the lien, and divided it equally, then left the debt entirely to the husband. That sounds wrong, but what makes it absolutely wrong under the ED Statute?

Code § 20-107.3 requires a court effecting an equitable distribution to proceed in an orderly fashion: Specifically, it must (1) “classify the property,” (2) “assign a value” to the property, and (3) “distribute the property to the parties, taking into consideration the factors listed in Code § 20-107.3(E).” Theismann v. Theismann, 22 Va. App. 557, 564, 471 S.E.2d 809, 812, adopted upon reh’g en banc, 23 Va. App. 697, 479 S.E.2d 534 (1996). Code § 20-107.3(E) requires the circuit court, when distributing the marital property during the final phase of the process, to consider the “debts and liabilities of each spouse, the basis for such debts and liabilities, and the property which may serve as security for such debts and liabilities.” Code § 20-107.3(E)(7). “However, to the extent that a valid indebtedness which is secured creates an encumbrance on the legal title” of marital property, we have held that this “indebtedness must be considered” by the circuit court at an earlier stage in the process, when “determining the value of the marital property.” Trivett v. Trivett, 7 Va. App. 148, 151, 371 S.E.2d 560, 562 (1988)

However, "On remand, the court should once again apply the subsection (E) factors to determine the distribution of the account." So the trial court might do something on remand that arrives at the same result.

Tracing

Husband had two accounts created during the marriage, which he and bank employees testified were funded solely from a pre-marriage account that contained 100% pre-marriage funds. But there were three years during the marriage, about 15 years ago, for which no statements from that old were available. Thus he failed to meet his burden of proof that the new account, created during the marriage, was separate property. The trial court had the discretion not to believe husband's testimony that no marital funds had been added to the old account, so its classification of the accounts as marital is upheld. 

But the husband was able to show that what was already in the account at the time of marriage was sufficient to account for what was put into the new accounts. That doesn't matter: "The mere fact that the husband was able to prove that he had pre-1999 earnings and bonuses in an amount sufficient to fund account #0410, the amount he claims to have traced, was insufficient to meet his burden of proof." 

Disability Retirement

Husband was a retired professional athlete and was receiving disability pension payments under a retirement plan. But there was no evidence that the payments were analogous to a "pain and suffering" personal injury award: they replaced wages and regular retirement benefits, and so they were marital. The timing of husband's employment should have made them hybrid, so it is possible, though not spelled out, that the trial court found the disability portion of already-received payments to be entirely marital because they were considered "wage replacement", not "deferred compensation."