Virginia Family Law Appeals

Third party's mortgage payments were marital; sole custody justified, GAL report evidence; sole-named debt can be weighed AND ordered paid -- Harrop II v. Harrop

THIRD-PARTY MORTGAGE PAYMENTS WERE MARITAL:

A church's payment's of a divorcing couple's joint mortgage obligations were marital-property contributions to the home's equity, even though the husband was the sole occupant and solicited the church's assistance, the Virginia Court of Appeals ruled in Harrop II v. Harrop, unpublished, March 7, 2023. He presented no  evidence of what the church's intent was, so he did not overcome the presumption that paying a jointly-titled debt was a gift to both spouses, not just him.

That's all straightforward and sounds right. What's troubling is the court's footnote to this, which seems to mean that its holding is not really going to be the rule in similar future cases where such payments are made post-separation:

We recognize that because the property at issue was acquired after the date of the parties’ last separation, husband would have been entitled to a presumption that the property was separate property. See Luczkovich v. Luczkovich, 26 Va. App. 702, 708 (1998) (“Property acquired after the last separation is presumed to be separate unless the party claiming otherwise proves that the property ‘was acquired while some vestige of the marital partnership continued or was acquired with marital assets.’” (quoting Dietz v. Dietz, 17 Va. App. 203, 211-12 (1993))). However, because husband did not make this argument to the trial court or to this Court on appeal, we treat it as waived. Coward v. Wellmont Health Sys., 295 Va. 351, 367 (2018) (“[I]t is not the role of the courts, trial or appellate, to research or construct a litigant’s case or arguments for him or her, and where a party fails to develop an argument in support of his or her contention or merely constructs a skeletal argument, the issue is waived.” (quoting Bartley v. Commonwealth, 67 Va. App. 740, 746 (2017) (applying Rule 5A:20(e)))).

Does "the property at issue was acquired after the date of the parties’ last separation" mean that the home -- the property being divided -- was acquired post-separation, or that the church's contributions to the mortgage were "property" the husband "acquired"? The latter, apparently, because the husband was already making mortgage payments on the home for the same month when the parties separated. So the footnote strongly implies that the payments were property, and were acquired by the husband, even though they were third-party payments of a debt that was in both spouses' names. And that if only he had made that argument, he would have won that point, unless the wife could present proof that the church intended a gift to both spouses.

SOLELY-TITLED DEBTS:

The court also reconciled two things the equitable distribution statute says about debts that are in only one party's name: Code § 20-107.3(C) says “the court shall have no authority to order the division or transfer of . . . marital debt, which is not jointly owned or owed.” It also says the 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 [equitable distribution] factors listed in subsection E.” 

Therefore, "the court could account for the debts in the course of equitably distributing the property under Code § 20-107.3(E)."

But not only that, "Code § 20-107.3(C) ... still gives courts the option to account for those debts by ordering one spouse to pay debts in the other spouse’s name."  However, that was not actually an issue in the case. The court was simply upholding the trial court's allocation to each party of that party's own debts that were already in that party's sole name.

That apportionment, which left the husband with debts elevenfold greater than the wife's, was not a blind refusal to consider such debts: it was correctly done by considering the equitable distribution factors, e.g., "the cumulative effect of the extra-marital conduct ... was devastating and ... a significant negative nonmonetary contribution," and "wife’s positive contributions to the family, including raising the parties’ children and spending substantial time educating herself on how best to care and advocate for the child with autism."

The trial court also properly considered the “debts and liabilities of each spouse” as a factor, and  "accounted for holding husband responsible for most of the marital debts by awarding wife less of the marital property than she had sought." 

CUSTODY:

The court also approved of the trial court's reasons for awarding sole legal custody: The father was "'mostly resistant and uninvolved'", "'quick-to-anger'", “'resistant to engage in a dialogue with [wife] about child-related decisions' and lacked 'willingness to collaborate with her over the past three years'  ... 'even if an agreement is reached in the moment, [husband] takes steps afterwards to frustrate the process and recharacterize the outcome.'”  These observations in the Guardian ad Litem's report also "'coincide closely with'" the trial judge's firsthand observations.

Why was the Guardian ad Litem's report admissible evidence? The Court emphatically rejected the father's argument that "a guardian ad litem report is entitled to no more weight than a closing argument. See Wiencko v. Takayama, 62 Va. App. 217, 233 (2013) (finding that the abuse of discretion standard 'affords the trial court appropriate flexibility in determining to what extent it should rely on the recommendation of the guardian ad litem'); Bottoms v. Bottoms, 249 Va. 410, 420 (1995) (reversing trial court’s custody determination for failing to consider guardian ad litem report)."

And the trial court had authority to order sole legal custody even though the mother's pleadings did not expressly request it: "a court may award relief it deems appropriate, even if that form of relief was not specifically requested by that party. ... D’Ambrosio v. D’Ambrosio, 45 Va. App. 323, 336 (2005) ... Cloutier v. Queen, 35 Va. App. 413, 424 (2001)." And the father comprehensively  "put the question of custody before the court in his counterclaim for divorce when he asked the court to 'adjudicate issues of child custody, visitation and support of the parties’ minor children.'”

Appeals court overturns finding that $10,000 payment was a gift to child, not part of what payor owed payee and was being sued for

Father owed mother back support and a delayed ED monetary award. He paid up after she sued, but she claimed one $10,000 payment to her was not for back support or ED, but was an extra gift to their adult son for his medical expenses and other needs. There was evidence to support her interpretation, including the son's name on the memo line, and the father's texting the son about the check, saying the mother could use if for the son's needs. The trial court refused to hold the father in contempt, but ordered him to pay $10,000 to finish paying what he owed.The Court of Appeals reverses in Monds v. Monds, 5/8/18.

It is exciting to see the Court encounter a trial court finding of fact that is so unbelievable that they reverse it. But the Court explains that whether something is a gift is not a fact question, it is "a question of law that we review de novo on appeal. Smith v. Mountjoy, 280 Va. 46, 53, 694 S.E.2d 598, 602 (2010)." And the presumptions and burdens are all against it:

“It is well settled that the law does not presume a gift and where a donee claims title to personal property by virtue of a gift inter vivos, the burden of proof rests upon him to show every fact and circumstance necessary to constitute a valid gift by clear and convincing evidence.” Rust v. Phillips, 208 Va. 573, 578, 159 S.E.2d 628, 631 (1968) (quoting Grace v. Virginia Trust Co., 150 Va. 56, 142 S.E. 378 (1928)). Therefore, in order to establish the existence of a gift, wife was required to prove, by clear and convincing evidence “(1) the intention on the part of the donor to make the gift; (2) delivery or transfer of the gift; and (3) acceptance of the gift by the donee.” Robinson v. Robinson, 46 Va. App. 652, 665, 621 S.E.2d 147, 154 (2005) (en banc) (quoting Theismann v. Theismann, 22 Va. App. 557, 566, 471 S.E.2d, 809, 813, aff’d on reh’g en banc, 23 Va. App. 697, 479 S.E.2d 534 (1996)). Furthermore “[a] clear and unmistakable intention on the part of the donor to make a gift of his property is an essential requisite to a gift inter vivos. And this intention must be inconsistent with any other theory.” Matthews v. Hanson, 145 Va. 614, 619, 134 S.E. 568, 569-70 (1926).

The mother claimed it was a gift to the adult son, and the Court of Appeals finds this inconsistent with the fact that the father wrote the check to her and deposited it into her account. It matters not that the son was a "linked" name on all her accounts, which the father may or may not have known. If he wanted to give the son a check he would have written it to him.

The notion that husband would have entrusted wife and his ex-mother-in-law – the joint owners of the account – with these funds instead of paying them directly to his adult child is particularly unbelievable in light of the circuit court’s finding that there was a “total lack of trust between the two of them [husband and wife].”

And "the state of husband’s financial affairs was inconsistent with any intention by husband to make a gift." He was way behind on child support, and was very worried about it, and the mother was reminding him of it and threatening to take him to court. And the deadline to pay a $100,000 monetary award loomed.

In addition, the text messages exchanged between husband and Zach indicate that husband was aware that he was paying this money to wife with only the hope that she would then choose to give this money to Zach. On the day husband made the deposit, he texted Zach, stating, “Deposit made today . . . PLEASE READ UR MOMS TX TO ME . . . . . I HOPE SHES TELLING THE TRUTH . . . BUT DOUBT IT . . . LOVE YAA.” This text message is consistent with husband’s testimony that he hoped wife would give the money to their son, Zach, but he feared that she would not. Husband also texted Zach on February 21, 2017, telling his son, “Hey zach i wud like to help u with ur bills . . . . even if ur mom gave u the 10GRAND LIKE SHE SAID SHE wud . . . . .” The message shows husband’s recognition that the money belonged to wife and that it was her choice whether to give the money to Zach. 

Although “[i]ntent is a question to be determined by the fact finder,” Cirrito v. Cirrito, 44 Va. App. 287, 305, 605 S.E.2d 268, 276 (2004), the circuit court here was plainly wrong in finding the required clear and convincing evidence of husband’s donative intent.

Mother claimed father could not appeal, because of Virginia's common-law rule that a refusal to hold someone in contempt cannot be appealed. That would be absurd, the Court of Appeals says. He was appealing not the refusal to hold him in contempt, but the ruling that he still owed $10,000.

Father, conversely, argued that the trial court did not have the power to enforce the obligation in another way once it refused to hold him in contempt. The Court of Appeals replies that the trial court always has the power to enforce its monetary awards, which is not surprising, but its reasoning might be:

“Monetary awards that arise in the context of a divorce differ from other monetary judgments. They compensate a party for his or her rights, equities, and interests in marital property.” Kahn v. McNicholas, 67 Va. App. 215, 226, 795 S.E.2d 485, 490 (2017). “When a monetary award is included in a separation or property settlement agreement, it oftentimes also provides compensation for the waiver of a party’s right to receive spousal support.” Id. at 226-27, 795 S.E.2d at 490. As a result of the unusual nature of monetary awards arising out of divorce, trial courts are vested with the “continuing authority and jurisdiction to make any additional orders necessary to effectuate and enforce any order entered” under Code § 20-107.3(K) ...

For the same point it cites Shoup v. Shoup, 31 Va. App. 621, 525 S.E.2d 61 (2000) and Green v. Robertson, (Va. Ct. App. Mar. 20, 2018). 

Father also argued that he did not have notice that other remedies would be considered, but the Court says the petition for a rule to show cause gave him adequate notice that she was trying to enforce everything that he still owed at the time it was filed. It asked for him to be held in contempt "'and compelled to comply with this Court’s orders'." And a money judgment is one of the remedies that may result from a petition for a rule to show cause, under Shoup and M. Morgan Cherry & Assocs. v. Cherry, 38 Va. App. 693, 703, 568 S.E.2d 391, 396 (2002).

Fees: The Court of Appeals says it cannot award fees to the father, because the agreement only provides for fees for enforcement, not for successfully defending against enforcement.