Title: Stalb v. Stalb

State: vermont

Issuer: Vermont Supreme Court

Document:

Stalb v. Stalb  (96-537); 168 Vt. 235; 719 A.2d 421

[Filed 4-Sep-1998]

       NOTICE:  This opinion is subject to motions for reargument under
  V.R.A.P. 40 as well as formal revision before publication in the Vermont
  Reports.  Readers are requested to notify the Reporter of Decisions,
  Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
  any errors in order that corrections may be made before this opinion goes
  to press.

                            No. 96-537

Alan Stalb                                   Supreme Court

                                             On Appeal from
    v.                                       Washington Family Court

Aglaia Stalb                                 February Term, 1998

  Mary Miles Teachout, J.

       Kimberly B. Cheney of Cheney, Brock & Saudek, P.C., Montpelier, for
  Plaintiff-Appellant.

       John R. Durrance, Jr., of Gaston, Durrance & Fairbanks, Montpelier,
  for Defendant-Appellee.

PRESENT:  Amestoy, C.J., Dooley, Johnson and Skoglund, JJ., and Allen,
          C.J. (Ret.), Specially Assigned

       DOOLEY, J.   Defendant wife Aglaia Stalb raises several challenges to
  the trial court's decision to amend its final order reducing the amount
  that plaintiff husband Alan Stalb was required to pay wife in order to
  equalize the parties' investment in the Northfield Inn.  Husband, in turn,
  argues that the mortgage loan buydown option in the corrected and amended
  notice of decision should be deleted, but that the rest of the order should
  be affirmed.  We agree with husband and thus strike down the mortgage loan
  buy-down option and affirm the corrected and amended notice of decision in
  all other respects.

                                     I.

       Husband and wife are both in their fifties and were married before. 
  They both worked in management positions at a New York aerospace company
  and earned similar salaries.  The parties met in 1981, began living
  together in 1982 and married in 1984.  The parties entered into an
  antenuptial agreement in the State of New York to settle property
  distribution issues if their relationship ended in death or divorce.  The
  agreement stated that all jointly-held property would

 

  be divided equally between them and all property held in the individual
  name of either party would remain the property of that individual party. 
  The agreement also provided that the terms of the agreement could be
  changed or modified only by a written instrument.

       At the time of their marriage, the parties lived in a house owned
  partly by the wife and partly by her children. Both parties owned real
  property and pensions.  On January 19, 1989, wife's job was abruptly
  terminated as a result of corporate downsizing.  Wife looked extensively
  for similar work but was unable to find employment.  As a result, the
  parties decided to invest in real estate which wife could manage, providing
  employment for her and potential retirement income for them both.  On a
  trip to Vermont, the parties found an old Victorian house which they
  decided to purchase and develop into a bed and breakfast.  In February of
  1990, the parties purchased the property, took title in joint names,
  re-named it the Northfield Inn, and began renovating it.  The parties
  agreed that the budget for the project would be $400,000 and that each
  would contribute one-half of the investment.  The plan called for wife to
  live in Vermont and manage the Inn, while husband would remain in New York,
  continue working at the same company, and commute to Vermont on the
  weekends to help with the operation of the Inn.

       The expenses for purchasing and renovating the Inn went significantly
  over budget.  In fact, wife contributed $302,670, husband contributed
  $189,651, and the parties obtained a mortgage loan for the Inn through the
  Northfield Savings Bank for $166,256.  Husband continued to make payments
  out of his income in order to cover expenses, but began to complain about
  wife's lack of accounting procedures and her extravagant spending on the
  Inn.  The parties' relationship began to deteriorate and wife became
  secretive about the financial affairs of the Inn.

       In July of 1994, the parties separated, and husband filed for divorce. 
  Husband stopped traveling to Vermont and providing money for expenses of
  the Inn.  In November of 1994, husband was notified that his company was
  downsizing and he would be terminated in January. He has been unable to
  obtain similar employment since that time.

 

       There are three judicial decisions and two master's reports in this
  case.  The family court appointed a master to determine the fair market
  value of the parties' property, the expenses of the Northfield Inn, its
  profit or loss in 1995, and the contribution of each of the parties to the
  Inn, and to make a recommendation regarding spousal maintenance.  He did so
  in reports in August and December 1995.  The family court upheld the
  antenuptial agreement and accepted the master's findings in May 1996.  The
  family court issued its notice of decision, findings and conclusions on
  September 13, 1996.  In its notice of decision, the court attempted to
  equitably divide the parties' property, giving effect to the antenuptial
  agreement.  The trial court concluded, nevertheless, that it would be
  grossly inequitable for husband to receive a one-half share of the
  Northfield Inn when he had contributed only $189,651 and wife had
  contributed $302,671.  The court held that it would be in contravention of
  the parties' "specific agreement to be equal investors in the Northfield
  Inn . . . . to enforce the antenuptial agreement in a literal and technical
  manner" because husband would realize a windfall profit simply because he
  chose to pursue divorce before the parties had equalized their investment.

       The court ordered husband to pay wife $113,020 to equalize the
  parties' investment in the Inn and then awarded wife sole ownership of the
  Inn.  At the time of the divorce, the Inn had a going concern value of
  $300,000, with a mortgage debt of $166,256 and an equity value of $133,744. 
  The court allocated to husband the three jointly-owned Florida properties,
  which were valued at $139,002 and then ordered husband to pay wife $2,629
  to equalize the property distribution.  Thus, husband was required to pay
  wife a total of $115,649.

       The court next considered wife's claim for spousal maintenance under
  15 V.S.A. § 752(a)(1) and (2).  The court determined that wife, as owner
  and manager of the Inn, would derive from it an annual income of $12,433,
  including the value of the housing it provided her. The court recognized
  that this was not sufficient to meet her expenses, but found that the $800
  monthly shortfall could be eradicated if husband's $115,649 payment to wife
  was applied to the principal of the mortgage on the Inn.  The court
  calculated that this payment would reduce the

 

  outstanding mortgage loan to $50,607 and the monthly payments from $1200 to
  $400.  The reduction in the mortgage payments would bring wife's annual
  income to $22,003, an amount sufficient to provide for her reasonable
  needs.  On this basis, the court denied wife maintenance but required
  husband to pay wife's monthly health insurance premiums until she became
  eligible for Medicare.

       At this point in the litigation, husband appealed the court's
  decision, arguing mainly that the antenuptial agreement prevented the court
  from finding a subsequent oral agreement existed with respect to the
  Northfield Inn.  While the case was on appeal, the trial court decided that
  it had miscalculated the amount husband had to pay to equalize investments
  in the Northfield Inn, a point husband raised in his appeal.  Upon leave of
  this Court, pursuant to V.R.C.P. 60(a), the family court issued an amended
  order reducing the amount husband owed wife from $115,649 to $59,139 and
  allowing wife to elect either (1) a mortgage buy-down option whereby
  husband must pay $113,020 to the Northfield Savings Bank to reduce the
  mortgage on the Northfield Inn, and in turn wife must pay to husband the
  sum of $53,881, or (2) a payment from husband of $59,139 directly to her. 
  Wife appealed this decision claiming that (1) the family court made changes
  that affected the substantive rights of the parties, beyond that authorized
  by Rule 60(a); (2) the antenuptial agreement between the parties is
  unconscionable and cannot be enforced under Vermont law; (3) husband's
  income is marital income, which should be split between the parties and
  cannot be used to pay for his investment share in the Northfield Inn; (4)
  the court found as fact that wife could refinance the Northfield Inn
  mortgage, and reduce the payment amount, with no evidence to support this
  finding; (5) the family court failed to make findings regarding maintenance
  and abused its discretion by lowering the amount of the property settlement
  without considering whether a rise in maintenance payments was necessary to
  offset increased expenses; and (6) the court abused its discretion in not
  reopening the evidence. Husband responded that the amended order should be
  affirmed as long as the mortgage buy-down option is deleted.  If the
  mortgage buy-down option is not deleted or issues in the amended

 

  order are reversed, the husband returns to his original appeal issues: (1)
  the antenuptial agreement must be enforced; (2) oral modifications to the
  antenuptial agreement should not be enforced; (3) if oral modifications to
  the antenuptial agreement are given effect, then the parties' entire oral
  agreement regarding investment in wife's West Islip, New York house and
  Northfield Inn should be enforced; and (4) the order requiring him to pay
  $10,000 of wife's attorney's fees should be vacated.  We do not reach
  husband's alternative arguments because we delete the mortgage buy-down
  option and affirm the amended order in all other respects.

                                     II.

       We start with the amendments the family court made to the final order
  while the case was on appeal because these are at the heart of wife's
  appeal issues.  The amendments were based on a mistake the court made in
  equalizing the parties' investments in the Northfield Inn.  The court found
  that wife had invested $113,020 more than husband.  In its decision, the
  court stated that it would require husband to increase his investment in
  the Inn by this amount; but in its order, it directed that husband pay
  $113,020 to wife.  This order had the effect of increasing husband's
  investment in the Inn while decreasing wife's investment, creating a
  disparity in favor of the wife.

       The family court recognized its mistake, and reduced the amount
  husband had to pay wife on account of the Inn, from $113,020 to $56,510. 
  The court also recognized, however, that the payment reduction would reduce
  the income available to wife and attempted to ameliorate the impact by
  creating an option for wife to require husband to buy down the mortgage by
  $113,020, thereby reducing the mortgage payments, and to equalize the
  investment by a payment from wife to husband.  Both parties oppose this
  buy-down option, although for very different reasons.  Because the
  corrected order reduces wife's property settlement by $56,510, with no
  offsetting increase in maintenance, she is now the appealing party, with
  husband defending the amended order as long as the buy-down option is
  eliminated.

       Wife's first argument is that the family court in its corrective order
  went beyond its

 

  limited power under Rule 60(a) and made changes that affect the substantial
  rights of the parties. See Greenmoss Builders, Inc. v. Dunn & Bradstreet,
  Inc., 149 Vt. 365, 367,