Opinion ID: 2402348
Heading Depth: 2
Heading Rank: 1

Heading: The Proper Date for Valuation of Assets

Text: It is well established in Rhode Island that [t]he equitable-distribution process requires three steps. First, the trial justice must determine which of the parties' assets are marital property and which are nonmarital property. Second, the trial justice must consider the factors enumerated in § 15-5-16.1. Third, he or she must distribute the marital property. Vanni v. Vanni, 535 A.2d 1268, 1270 (R.I. 1988). The threshold issue raised in the present appeal concerns the first step of this process. We must determine the proper terminal date of this marriage for the purpose of identifying which assets were eligible for equitable distribution. See id. Rosemarie contends that the Family Court erred by limiting evidence of the valuation of marital assets to December 31, 2001, based on an alleged agreement between the parties that plaintiff disputed ever occurred, rather than using the date that the final divorce decree was entered, December 16, 2002, as the terminal date for equitable distribution. In this state, parties to a divorce action remain as husband and wife until the entry of the final decree of divorce. Vanni, 535 A.2d at 1270. Accordingly, this Court repeatedly has reaffirmed that assets acquired at any time until the entry of a final divorce decree are marital property subject to equitable distribution. See, e.g., Gervais v. Gervais, 688 A.2d 1303, 1308 (R.I.1997); Giha v. Giha, 609 A.2d 945, 948-49 (R.I.1992); Saback v. Saback, 593 A.2d 459, 461 (R.I.1991); Vanni, 535 A.2d at 1270. The final decree date is the terminal date for equitable distribution absent an express agreement to the contrary. Janson v. Janson, 773 A.2d 901, 904 (R.I.2001). Parties may make an express agreement to change the terminal date for equitable distribution under Rule 1.4 of the Family Court Rules of Practice, which provides: All agreements of parties or attorneys touching the business of the court shall be in writing, unless orally made or assented to by them in the presence of the court when disposing of such business, or they will be considered of no validity.  (Emphases added.) Although this Court has not had occasion to address this particular Family Court rule of practice, we have interpreted Rule 1.4 of the Superior Court Rules of Practice, which is identical in language to the Family Court rule. See Super.Ct.R.Prac. 1.4. In interpreting the Superior Court version of the rule, this Court has equated the language that oral agreements must be made in the presence of the court with a requirement that oral agreements must be made on the record to be valid. See, e.g., E.W.H. & Associates v. Swift, 618 A.2d 1287, 1288-89 (R.I.1993). [4] For example, in Swift, one party attempted to enforce an oral settlement agreement allegedly made during out-of-court negotiations, which included terms that the other party disputed on appeal. Swift, 618 A.2d at 1288. We held that unless an alleged agreement is in writing or on the record, a court may not compel parties to abide with it when the parties do not agree about its terms. Id. at 1289. We said that there are two ways for parties to preserve their agreements in accordance with the rules of practice: (1) by placing them on the record; or (2) by reducing them to agreed-upon writings. Swift, 618 A.2d at 1289; see also DiLuglio v. Providence Auto Body, Inc., 755 A.2d 757, 776-77 (R.I.2000) (declining to uphold an alleged agreement to bifurcate that was not in writing or on the record); Melucci v. Berthod, 687 A.2d 878, 879 (R.I.1997) (holding unenforceable a purported settlement agreement because it was never placed on the record or reduced to an agreed-upon writing). This Court's reasoning was that [r]equiring stipulated agreements either to be placed on the record or to be reduced to an agreed-upon writing ensures that the agreement itself does not become a source of further controversy and litigation. Swift, 618 A.2d at 1288-89. In this bifurcated proceeding, a decree dissolving the parties' marriage was entered on December 16, 2002, and the financial aspects of the divorce were resolved by an order entered on December 29, 2003. The Family Court, however, applied December 31, 2001 as the date to classify and value the parties' marital and nonmarital assets. The general magistrate based his ruling on a representation made to him by defendant's attorney that the parties had agreed that December 31, 2001 would be the date of valuation for purposes of equitable distribution. [5] Because the record is devoid of any written stipulation [6] or agreement, however, any such agreement was of no validity. The Family Court, therefore, improperly restricted evidence concerning the valuation of assets to December 31, 2001. This conclusion necessitates a remand for a revaluation of the marital assets. Accordingly, we discuss briefly the impact on such proceedings of the recently decided case of Cardinale v. Cardinale, 889 A.2d 210 (R.I.2006). In Cardinale, the parties and trial justice agreed to a bifurcated divorce. Id. at 214. After a lengthy and rather convoluted procedural history, the Family Court justice made an equitable distribution in Cardinale, purportedly based upon the date of the parties' final decree of divorce. Id. at 217. The financial portion of the bifurcated proceeding, however, was not resolved until more than a year after the final decree was entered, allowing the husband to stonewall the discovery process and ultimately frustrate the timely equitable distribution of the marital estate by accumulating and dissipating substantial marital assets in the interim. Id. at 218, 220. To ensure that divorce litigants would not be able to continue this practice in the future, this Court held that a bifurcated procedure was inappropriate in divorce cases. Cardinale, 889 A.2d at 228. We declared unequivocally that, except in extraordinary cases and then only with respect to issues involving children, all the issues between the parties shall be adjudicated in a single proceeding. Id. In addition, this Court held that the date of the final divorce decree was not the proper valuation date in Cardinale. We said that the parties' interests should not arbitrarily be limited to the date of the `final decree' of divorce when issues concerning equitable distribution were not resolved until more than a year later. Cardinale, 889 A.2d at 220. Our rationale was that the first portion of a so-called bifurcated divorce proceeding does not result in a final decree of divorce, because the case remains pending in the Family Court until all issues have been decided. Id. at 227. [7] Accordingly, in Cardinale, this Court used the date of the final judgment, when all the equitable issues were purported to be resolved, as the terminal date for equitable distribution. Id. at 228. We believe that a similar disposition is warranted in the present case, in which the appropriate valuation date is one of the very issues on appeal. [8] Here, a final decree of divorce was entered on December 16, 2002, without resolution of the financial aspects of the divorce. According to the Cardinale rationale, therefore, the Ruffels' divorce was not final on December 16, 2002, but rather still was pending in the Family Court until all aspects of the divorce were resolved. See Cardinale, 889 A.2d at 227. We hold, therefore, that December 29, 2003, when the final order resolving the Ruffels' equitable-distribution issues was entered, is the proper terminal date in this case.