Opinion ID: 1467335
Heading Depth: 3
Heading Rank: 2

Heading: Allocation of the Increase in Value to the Marital Estate

Text: [¶ 28] When analyzing whether the appreciation resulted from marital labor, the referee stated, the critical analysis is whether a spouse had a significant and substantial role in the business such that it is reasonable to relate that spouse's efforts to the business' success. The referee found that Claude expended substantial effort and labor during the marriage working in significant management positions for Bushmaster, and that Claude, being responsible for product design and manufacturing, played a key role in Bushmaster's success. On this basis, the referee concluded that the increase in value of Bushmaster stock was attributable to Claude's marital labor and therefore constituted marital property. [¶ 29] Claude argues that the referee erred in treating the increase in value as marital property because he holds only a minority interest in the company and never influenced the financial direction of the company. The fact that Claude owned only a minority interest in the company is not significant. A key employee's efforts can increase a company's value. It is not necessary that the employee have control over the company's financial direction. Claude himself testified that he, with others, made the company what it is today and that Bushmaster was his whole life. [¶ 30] Claude next contends that the referee erred in failing to distinguish between compensated and uncompensated marital labor. The referee found that the company's profits were not diverted from the marital estate back into the business, but instead, were distributed to shareholders and employees, including Claude, by means of generous wages and distributions. As a result, Claude contends, the marital estate has already been rewarded for his labor, and there is no need to blur the distinction between marital and nonmarital property to award Jenny a share of the increase in value of his nonmarital stock. [¶ 31] The fact that the marital estate was compensated for Claude's labor with wages and distributions does not compel the conclusion that the appreciated stock value did not result from marital labor. Reimbursement for the diversion of marital funds is not the sole reason for including appreciated value of nonmarital property in the marital estate. Pursuant to section 953(2)(E)(2)(b), the marital estate is entitled to wages earned and appreciation of separate property resulting from the labor of either spouse, even if both wages and appreciation result from the same marital efforts. [¶ 32] In Knowles v. Knowles, 588 A.2d 315, 317 (Me.1991), decided prior to the amendments to section 953(2)(E), the trial court had attributed all of the increase in value of the husband's separate video equipment business to the marital estate. The husband argued on appeal that because he had been adequately compensated during the marriage, the increase in value of his separate business should remain separate. Id. We rejected that argument, stating [b]y attributing all of the increase in value to marital efforts, the court rendered the issue of compensation irrelevant. Id. [¶ 33] There is ample support in the record, including Claude's own testimony, for a finding that Claude's dedication of time and skills to the company during the marriage increased the value of the stock. Claude had the burden of proof to demonstrate that the appreciated value of the stock was nonmarital, thus it was not error to include the appreciated stock value within the marital estate.