COURT OF APPEALS OF VIRGINIA
Present: Judges Beales , Chafin and Malveaux Argued at Norfolk, Virginia

JANE ARLENE FRAKES MEMORANDUM OPINION * BY v. Record No . 1951-16-1 JUDGE MAR Y BENNETT MALVEAUX AUGUST 1, 2017 DANNY JOE FRAKES

FROM THE CIRCUIT COURT OF THE CITY OF NORFOLK Joseph A. Miglio zzi, Jr., Judge Barbara A. Fuller (Fuller, Had eed & Ros-Planas, PLLC, on brie f), for appellant. Samuel R. Brown, II (Samuel R. Brown, II, PLLC, on brief), fo r appellee.

Jane A. Frakes (“wife”) appeals a final order of the circuit c ourt on the issue of equitable distribution upon the termination of her marriage to Danny J. F rakes (“husband”). She argues that the circuit court erred in cla ssifying a parcel of Michigan rea l estate as separate property because the court relied on parol evidence to contradict the deed. She als o argues that the court erred in giving husband both sole title to the marital home and a monetary awar d, which reflected the money he invested in the home as well as its negative valu e. We conclud e that the trial court did not err in classifying the Michigan home. H owever, we hold that the circu it court erred by failing to classify much of the remaining property and debt at issue. Consequently , we reverse and remand for further proceedings.

* Pursuant to Code § 17.1-413, this op inion is not designated fo r publication.UNPUBLISHED- 2 - I. BACKGROUND We review the evidence in the light most favorable to husband, who prevailed below. See Congdon v. Congdon, 40 Va. App. 255, 258, 578 S.E.2d 833, 8 35 (2003). Husband and wife married in Augus t 2010 in South Dakota. Short ly thereafter, the couple moved to Norfolk, Virgini a. In January 2014, wife moved out of the marital home. A year later, the spouses filed cro ss-petitions for divorce. The circuit court ultimately ruled that wife had deserted husband and ent ered a decree of divorce on th ose grounds. The court also heard evidence re lated to the couple’s assets i n anticipation of equitable distribution. In addition to evi dence related t o each spouse’s various savings and retirement accounts, the court heard eviden ce regarding two different parc els of real property that are at issue in this appeal. A. The Michigan Property In 2000, husband inherited a home in M ichigan from his mother. According to both parties, he collected all income that the property generated. In April 2013, husband and wife both e xecuted a quit claim dee d that essentially transferred title in the property to themselves. The deed iden tified the grantors as “Danny J. Frakes, a married man, and Jane A. Frakes, his wife.” The gran tees named in the instrument, meanwhile, are “Danny J. Frakes and Jane A. Frakes, husband and wife.” Husband and wife stipulated that the deed was properly recorded. Wife never resided at the Mi chigan home. She did, however, dr ive to Michigan with husband to clean out the propert y. After they spent about two weeks cleaning the home, they sold it for $42,000. At trial, husband testified that wife had asked to be added to the deed to eliminate any doubt that the property would pass to her if he died, and he ag reed to do so. He testified that he- 3 - did not realize that he was conveyi ng a present interest in the property to his wife. He claimed that he did not understand the difference between a gift and ot her types of transfers. B. The Norfolk Marital Home Prior to their marriage, hus band and wife began looking for a home in Norfolk, eventually settling on a two-sto ry duplex. According to wife, the property was a “fixer-upper”; its wood was rotting in places, there were holes in the ceiling , and it was infested with black mold. Husband and wife nevertheless agreed that they should buy and renovate the property. In February 2010, husband purchased t he Norfolk residence as i ts sole owner for a contract price of $160,000. To compl ete the tran saction, husba nd withdrew $35,000 from his Individual Retirement Account ( “IRA”) to cover the down paymentand closing costs. Wife did not contribute any money towards p urchasing the home. Husband financed the balance of the purchase by taking out a $128,000 mortgage. Wife moved into the home aft er she moved to Norfolk. About tw o months after their wedding, husband transferred the pr operty into both his and wif e’s names through a deed of gift. In April 2013, husband contracted with a home improvement comp any to remodel the home for a contract price of $60,000. According to the contrac tor, all of the work was completed within about three months. Husba nd testified that he withdrew approximately $68,500 from his IRA to pay for these improveme nts. Wife, meanwhile, did not co ntribute any money towards improving the property. Despite these improvements, William Callahan, an appraiser, te stified at trial that the home was in “disarray” and that the home’s second floor was uni nhabitable because it was, in essence, “completely unfinished.” He also testified that the d ownstairs space had numerous issues to resolve before it coul d be considered “marketable.”- 4 - Consequently, husband and wife have negative equity in the hom e. Callahan appraised the home’s value at about $90,500 as of July 21, 2016. After r efinancing the mortgage, however, the outstanding balance on t he loan as of July 2016 was $113,86 3. C. The Equitable Distribution Order In a final order, the circuit court concluded that the Michig an property belonged to husband as his separate propert y. The court found that there w as insufficient evidence of his intent to make an inter vivos gift of the property and determine d that he had instead retitl ed the property for purposes of pl anning his estate. In contrast, the court found t hat the evidence unambiguously d emonstrated husband’s donative intent when he retitle d the Norfolk home under both hi s and wife’s names in a deed that is self-described as a “DEED O F GIFT.” In distributing this ma rital asset, the court awarded the husband sole ownership of the hom e. Moreover, the court found that husband had invested a total of $88,000 from his own IRA i nto the marital home, a figu re that included both $30,000 for his down payment and $58,000 for subsequent repairs. Additiona lly, the court found that the home had an appraised value of negative $23,000, in light of th e fact that the balance on the mortgage exceeded the market value as appraised by Callahan. A dding all of these figures together, the court found that the husband had invested a net s um of $111,000 into the marital home. The court ordered wife to pay husband forty percent of t his net investment—a lump-sum monetary award of $44,400. The only other asset of definite value distributed by the cour t was a truck worth about $2,675, which the court awarded to wife. The court declined to make any further award, including spousal support and attorney’s fees.- 5 - II. ANALYSIS
A. The Circuit Court Did Not Err i n Considering Parol Evidence Reg arding the Retitled Michigan Home Because the Deed D id Not Demonstrate Unambiguous Donative Intent Wife’s first assignment of error relates to the circuit court’ s classification of the Michigan home as husband’s separate prop erty, which was based on its fin ding that husband did not intend to retitle the property as a gi ft. Her only argument is that t he court should not have considered husband’s testimony about his intentwhen retitlin g the Michiga n home because the parol evidence rule bars such extrinsic evidence. Generally speaking, “property titled in the names of both parti es, whether as joint tenants, tenants by the entirety or otherw ise,” is classified as marital property subject to equitable distribution. Code § 20-107.3(A)(2). This rule usually extend s to one spouse’s separate property that is retitled in the names of both spouses jointly; such pro perty is “deemed transmuted to marital property.” C ode § 20-107.3(A)(3)(f). The Code provides an exception, ho wever, for retitled separate property if it is traceable by “a preponderance of the evi dence and was not a gift.” Id. In such cases, “the retitled property shall retain its original cla ssification.” Id. The spouse who owned the separate property need not prove the absence of a gift to i nvoke this exception; rather, t he spouse who seeks to establish a gift bears the burden of proving e ach of the required elements— delivery, acceptance, and donative intent—by clear and convinc ing evidence. Prizzia v. P rizzia, 58 Va. App. 137, 163, 707 S.E.2d 461, 473-74 (2011). While “[n]o presumption of gift arises from the fact that . . . property was retitled,” Theismann v. Theismann, 22 Va. App. 557, 565, 471 S.E.2d 809, 8 13, aff’d on reh’g en banc, 23 Va. App. 697, 479 S.E.2d 534 (1996), the deed’s contents can sometimes prevent a donor from presenting extrinsic evide nce that the conveyance was not a gift. If the deed is “unambiguous on its face, both for the purpose of retitling and proof of donati ve intent, parol evidence surrounding- 6 - its execution [is] not admissibl e” to prove a contrary intent. Utsch v. Utsch, 266 Va. 124, 127, 581 S.E.2d 507, 508 (2003). Whether a deed is ambiguous presen ts a question “not . . . of fact but of law.” Id. at 129, 581 S.E.2d a t 509. We review such qu estions de novo . Pocahontas Mining LLC v. CNX Gas Co., LLC, 276 Va. 346, 352, 666 S.E.2d 52 7, 530 (2008). Here, we find that the Michig an deed is not unambiguous either “for the purpose of retitling” or for “proof of dona tive intent.” Utsch, 266 Va. a t 127, 581 S.E.2d at 508. Wife overlooks a crucial problem with t he deed: the document lists her and husband together both as grantees and as grantors . Thus, it is impossible to tel l from the face of the instrume nt whether any new interest was conveyed to w ife, let alone whether such t ransfer was a gift. Although Michigan generally presum es that a conveyance to two or more persons creates a tenancy in common unless expre ss language creating a joint te nancy is used, see Mich. Comp. Laws § 554.44, its law provides an exception for any grant to a husband and wife, see Mich. Comp. Laws § 554.45. 1 Moreover, Michigan’s “longsta nding common law provides that, when a deed is conveyed to a husband and wife , the property is held as a tenancy by the entirety.” Thomas v. Dutkavich, 803 N.W.2d 352, 358 (Mich. Ct. App. 2010) (quoting Walters v. Leech, 761 N.W.2d 143, 146 (Mich. Ct. App. 2008)). Here, the deed lists both spous es together as grantors, descri bing them as “a married man” and “his wife.” This languag e is sufficient under Michiga n law to indicate that they already jointly owned the propert y in a tenancy by the entirety . And while we acknowledge that this is almost certainly the res ult of a scrivener’s error, tha t is irrelevant. What matters is that

1 Although Virginia courts mus t apply Code § 20-107.3(A)(3)(f) i n determining whether retitled real estate should be classified as marital or separat e property, the terms of a deed to real property must be interpreted a ccording to the law of the situs state. See generally 4A Michie’s Jurisprudence, Conflict of Law s, Domicile and Residence § 30 (2 016) (“The lex rei sitae governs as to contracts relating to real estate, as to the rights of pa rties thereto, the mode of transfer and alienation and the nature and extent of the interest therein.”) . We therefore rely on Michigan law to determine whether a donative transfer is unambiguously appar ent from the face of this deed.- 7 - one cannot discern whether any new interest was conveyed to wif e without reference to an extrinsic source—specifically, the prior deed in the chain of t itle. Thus, the deed is not “unambiguous on its face . . . for t he purpose of retitling” th e property. Utsch, 266 Va. at 127, 581 S.E.2d at 508. And without a transfer apparent from the fa ce of the document, we also cannot conclude that it “show[ed] the donative intent of Husban d in making the transfer.” Id. at 129, 581 S.E.2d at 509. As we find that the deed does not clearly and unambiguously sho w a donative transfer, we conclude that the parol evid ence rule did not bar the trial court from considering husband’s testimony about the instrument. B. Classification and Valuation of Remainder of the Spouses’ P roperty and Debt Wife’s remaining two assignments of error relate to the circuitcourt’s disposition of their Norfolk home. “On appeal, a trial court’s equitable distributi on award will not be overturned unless the Court finds ‘an abus e of discretion, misapplication or wrongful application of the equitable distribution statute , or lack of evidence to support the award.’” Wiencko v. Takayama, 62 Va. App. 217, 229-30, 745 S.E.2d 168, 174 (2013) (quoting Mc Ilwain v. McIlwain, 52 Va. App. 644, 661, 666 S.E.2d 538, 547 (2008)). Wife and husband disagree over whether, under Fox v. Fox, 61 Va . App. 185, 195, 734 S.E.2d 662, 667 (2012), property encu mbered by excessive debt c an be equitably distributed between two spouses at all. Additi onally, wife ch allenges the court’s monetary award to husband on two different grounds. She first argues that becaus e negative equity provides no basis for a monetary awar d, see Hodges v. Hodges, 2 Va. App. 50 8, 515, 347 S.E.2d 134, 138 (1986), the court should not have i ncluded the home’s negative equity when calculating its award. And she suggests that because husband had already recei ved the home itself,- 8 - compensating him for part of the funds he spent purchasing and improving the property is tantamount to a double recovery. Husband’s counterargument depe nds upon a very different interpr etation of the order. In his view, the order does not pay hi m for property he already re ceived. Rather, he suggests that its purpose was to facilitate the distribution of the rest of t he marital estate, which—he asserts— includes part of wife’s 401(k) and banking accounts. We find that we cannot resolve these arguments because the circ uit court did not properly classify and value all of the spouses’ property. Contrary to husband’s unsupported assertion on brief, the final orde r concerning equitabl e distribution contai ns no findings class ifying wife’s financial assets as marital property, separate property, or hyb rid property. Instead, the order merely recites the parties’ ar guments regarding those assets. 2 The order also does not classify any of husband’s financial assets . Further, the order does not address whether the mortgage on the Norfolk home is separa te debt or marital debt. These omissions, in and of themsel ves, represent a “misapplicat ion or wrongful application of the equitable di stribution statute.” Wiencko, 6 2 Va. App. at 230, 745 S.E.2d at 178 (quoting McIlwain, 52 Va. A pp. at 661, 666 S.E.2d at 547). Code § 20-107.3 mandates a three-step procedure in fashioni ng an equitable distribution aw ard, the first of w hich requires a court to classify all proper ty according to ownership: There are three stages to ma king an equitable distribution of property. The court first mustclassify the property as . . . separate or marital [or hybrid property] . The court then must assign a value to the property based upon evide nce presented by both parties.

2 At oral argument, husband conceded that the trial court “doesn ’t come out and say ‘this is marital property,”’ but he ar gued that the court made the ne cessary findings by implication when it “went as far [as] to make a determination as to the inc rease in value during the marriage.” The words the cour t actually used, h owever, were th at the “ Defendant argues that Wife’s . . . account increased substantially during the marriag e.”- 9 - Finally, the court distributes the property to the parties, tak ing into consideration the factors presented in Code § 20-107.3(E). Marion v. Marion, 11 Va. App. 659, 665, 401 S.E.2d 432, 436 (19 91). 3 Because those steps were not followed here, the trial court er red in making the monetary award. We therefore reverse and remand for the trial court to classify and value all of the assets and debt consistent with t he statutory scheme.
III. CONCLUSION Although the circuit court correc tly classified the Michigan h ome as separate property and the Norfolk home as marital pr operty, the court’s failure t o classify the rest of the property at issue was in error. We reverse and remand for proceedings cons istent with this opinion and the requirements of Code § 20-107.3. The court shall also reconsid er the issues of spousal support and attorney’s fees in l ight of any new considerations that flo w from these further proceedings. See Robinson v. Robinson, 46 Va. App. 652, 671, 621 S.E.2d 147, 156 (2005) ( en banc ); Stumbo v. Stumbo, 20 Va. App. 685, 694, 460 S.E.2d 591, 596 (19 95). Affirmed in part, rever sed in part, and remanded.

3 The Code prescribes a similar pr ocedure for apportioning debts between spouses. First, the court must “determine the na ture of all debts of the partie s, or either of them, and shall consider which of such debts is s eparate debt and which is mari tal debt.” Code § 20-107.3(A). The court then must “determine the amount of any such debt as o f the date of the last separation of the parties . . . and the exten t to which such debt has incr eased or decreased from the date of separation.” Id. The court the n may apportion marital debts a fter considering the factors in subsection E.