Court Opinion

ID: 1077200
Source: CourtListenerOpinion
Date Created: 2013-10-09 20:22:04.468318+00
Date Added: 2024-06-11T12:06:55.201547
License: Public Domain

COURT OF APPEALS OF VIRGINIA

Present: Chief Judge Moon, Judges Benton and Elder
Argued at Richmond, Virginia

DANIEL T. STREET
                                              MEMORANDUM OPINION * BY
v.        Record No. 1940-95-4                 JUDGE LARRY G. ELDER
                                                 JANUARY 21, 1997
JOYAL C. STREET

            FROM THE CIRCUIT COURT OF FAIRFAX COUNTY
                   Rosemarie Annunziata, Judge

          M. Lee Anne Washington (Surovell, Jackson,
          Colten & Dugan, P.C., on briefs), for
          appellant.

          Richard J. Byrd (Byrd, Mische, Bevis, Bowen,
          Joseph & O'Connor, P.C., on brief), for
          appellee.

     Daniel T. Street (husband) appeals the trial court's orders

denying his motion to modify pendente lite support and awarding

equitable distribution, spousal support and child support in his

divorce from Joyal C. Street (wife).     For the reasons that

follow, we affirm.

                                  I.

                                 FACTS

     The parties were married in 1969, separated in 1992 and

divorced in 1995.    They had five children, two of whom were

unemancipated at the time of the divorce.    In February, 1993, the

trial court entered a pendente lite support order that directed

husband to pay $2,000 per month for spousal and child support,
     *
      Pursuant to Code § 17-116.010 this opinion is not
designated for publication.
$200 per month for utilities in the marital home, and the entire

monthly mortgage payment on the marital home.   In August, 1994,

husband moved the trial court to decrease his pendente lite

support obligations.   During a meeting in chambers with the trial

judge, both parties proffered their evidence regarding the

motion.   Husband proffered that he had experienced a change in

his financial ability to make his pendente lite support payments

because his business had declined and less cash was available.

Wife proffered that the original pendente lite order was the
result of a counseled agreement between the parties, that the

needs of herself and the children had not changed, and that she

was unable to work due to her continuing treatment for cancer.

The trial court denied husband's motion to modify pendente lite

support and moved the case to a final hearing, stating that its

general policy regarding such motions was to refrain from

modifying pendente lite orders and to instead schedule a final

hearing for the resolution of all issues in the case.    Husband

did not object to the trial court's ruling.

     On April 24, 25, and May 2, 1995, the trial court heard

evidence on the issues of equitable distribution, spousal support

and child support.   The only marital assets for the purposes of

equitable distribution were the husband's carpet installation

business (business) and the marital home.   On May 18, the trial

court ruled from the bench that the business had a value of

$160,000 and that the marital home was worth $142,000.   It

                                -2-
awarded the business to husband, the house to wife, and ordered

husband to pay the difference, minus wife's share of a joint tax

liability, in monthly installments.      The trial court also found

that husband's monthly income was $7,639, comprised of $6,139

from his business and an additional $1,500 from "side jobs" not

reported on the books of his business.     The trial court found

that wife had no income.     Based on these figures, the trial court

ordered husband to pay $2,300 per month in spousal support and

$921 per month in child support.
                                   II.

               MODIFICATION OF PENDENTE LITE SUPPORT

     Husband contends that the equitable distribution award

should be reversed and remanded for a new hearing because the

trial court erroneously denied his motion to modify pendente lite

support, and this error adversely affected the valuation of his

business.   Specifically, husband argues that the trial court

abused its discretion when it refused to hold a hearing on his

motion.   We disagree.

     Divorce courts have statutory authority to make pendente
lite orders to provide for inter alia spousal and child support.

 See Code § 20-103.      An order for pendente lite support is an

interlocutory order.      See Pinkard v. Pinkard, 12 Va. App. 848,

851, 407 S.E.2d 339, 341 (1991); Beatty v. Beatty, 105 Va. 213,

215, 53 S.E. 2, 3 (1906).     A trial court has the power to modify

an interlocutory order prior to the entry of a final order in a

                                   -3-
case.     See Richardson v. Gardner, 128 Va. 676, 685, 105 S.E. 225,

228 (1920); see also Pinkard, 12 Va. App. at 853, 407 S.E.2d at

342 (stating that "[t]he matter of pendente lite support remains

within the control of the court and the court can change its mind

while the matter is still pending before it").    However, an order

of pendente lite support has the effect of res judicata as to the

facts existing at the time the motion for such support was made,

and a spouse seeking modification of pendente lite support must

show a material change of circumstances subsequent to the entry

of the pendente lite order that warrants the relief sought.     See

24 Am. Jur. 2d Divorce and Separation § 583 (1983).     In addition,

unlike a motion to modify a final order of spousal or child

support, "the reopening of [an interlocutory order] is not a

matter of right, but rests in the sound discretion of the [trial

court]."     Hurley v. Bennett, 163 Va. 241, 250, 176 S.E. 171, 174

(1934).

        Assuming without deciding that husband preserved his appeal

of this issue, we hold that the trial court did not abuse its

discretion when it denied husband's motion to modify pendente
lite support without holding a hearing.    On appeal, a final order

in a divorce case will not be reversed because of a trial court's

decision regarding pendente lite support unless the record shows

that the pendente lite decision was an abuse of discretion and

that this error adversely affected the final order in the case.
See Pinkard, 12 Va. App. at 853, 407 S.E.2d at 341.     The record

                                  -4-
does not indicate that the trial court's decision was arbitrary.

First, husband did not proffer that his purported change in

circumstances warranted a modification of the pendente lite

order.   Although husband proffered that a decline in his business

had reduced his ability to pay his pendente lite support

obligations, the trial court could not determine from his proffer

either the substantive nature of his current ability to pay or

whether his inability to pay was caused by his own voluntary act

or neglect.   In addition, wife proffered that her needs and the

needs of the children were unchanged and that she was unable to

support herself because of her ongoing treatment for cancer.

Finally, at the time of husband's motion, the case had been

pending for over a year and a half.   Based on the proffers of the

parties and the trial court's legitimate concern for the

efficient resolution of the case, we cannot say that the trial

court abused its discretion when it declined to reopen the issue

of pendente lite support and instead moved the case to a final
hearing.   See Richardson, 128 Va. at 685, 105 S.E. at 228

(stating that interlocutory orders are generally reconsidered

only "when considerations of justice require it").

                               III.

           PRESERVATION OF ISSUES FOR APPEAL BY HUSBAND

     Regarding the trial court's valuation of the marital home,

the record shows that husband stated a general exception in the

final decree of divorce to the trial court's award of equitable

                                -5-
distribution "and the bases set forth therefore."   The award of

the trial court states numerous findings on which it based its

decision, and the record reveals no instance in which husband

stated that a ground for his objection was that the trial court

improperly valued the marital home.   Significantly, both the

transcript of the proceedings and husband's motion for

reconsideration contain no argument by husband's counsel on this

issue.   Husband's vague exception to the "bases" for the trial

court's award, without more, was inadequate to provide the court

with the opportunity to rule intelligently on the correctness of

its valuation.   Although counsel for a party may satisfy Rule

5A:18 by including an objection and reasons therefor in the trial

court's final order, a mere statement in an order that it is

"seen and objected to" is insufficient.   Lee v. Lee, 12 Va. App.
512, 515-16, 404 S.E.2d 736, 738 (1991); Konefal v. Konefal, 18
Va. App. 612, 615, 446 S.E.2d 153, 154-55 (1994) (statement in

final order stating that husband "duly excepts" with no other

indication in the record of the grounds for his objection fails

to satisfy Rule 5A:18).

     On the other hand, we hold that husband properly preserved

his appeal regarding the trial court's finding of income from

side jobs, child and spousal support, and its valuation of his

business.   Unlike the issue involving the value of the marital

home, the record shows that husband adequately made known to the

trial court his position regarding these issues.
          Arguments made at trial via written pleading,

                                -6-
          memorandum, recital of objections in a final
          order, oral argument reduced to transcript,
          or agreed written statement of facts shall,
          unless expressly withdrawn or waived, be
          deemed preserved therein for assertion on
          appeal.

Code § 8.01-384 (emphasis added).     Regarding income from side

jobs, husband's counsel argued to the trial court in his closing

argument on May 2 that the evidence was insufficient to prove

that husband regularly received income from jobs not reported on

the books of his business.   This argument, which was reduced to

transcript, in combination with the exception taken by husband's

counsel and noted by the trial court in the final decree gave the

trial court the opportunity to rule intelligently on the issue

and satisfied the purpose of Rule 5A:18.     Kaufman v. Kaufman, 12
Va. App. 1200, 1204, 409 S.E.2d 1, 3 (1991) (holding that appeal

not barred where appellant made known to trial court his position

through memoranda and other written correspondence and court

noted general objection in decree).    Obviously, the determination

of husband's monthly income had a direct effect on spousal and

child support.

     Similarly, following the testimony of husband's expert on

the valuation of the business, husband's counsel argued to the

trial court that the value of negative working capital was

actually greater than the figure stated in the report of

husband's expert because husband's expert mistakenly omitted

certain liabilities from his calculation that were included in

the report of wife's expert.   In his closing argument, husband's

                                -7-
counsel argued that husband's expert justifiably adjusted the

value of the business downward to account for the key man problem

and its low profitability.    In addition, husband's counsel

endorsed the final decree "seen and . . . partly excepted to as

set forth above" and marked his initials next to the paragraph in

which the trial court states its valuation of the business. 1

Again, this combination of oral argument reduced to transcript

and an objection noted by the trial court in the final decree was

sufficient to make known husband's objection to the valuation of

his business in accordance with Rule 5A:18.
                                   IV.

         EQUITABLE DISTRIBUTION:   VALUE OF HUSBAND'S BUSINESS

     "Code § 20-107.3 requires a trial court to value the

parties' separate and marital property before making a monetary

award.    The trial court's valuation cannot be based on 'mere

guesswork.'    However, the burden is on the parties to provide the

trial court sufficient evidence from which it can value their

property."    Stratton v. Stratton, 16 Va. App. 878, 883, 433
S.E.2d 920, 922 (1993) (citing Bosserman v. Bosserman, 9 Va. App.
1, 5, 384 S.E.2d 104, 107 (1989)).       "Fashioning an equitable

distribution award lies within the sound discretion of the trial

judge and that award will not be set aside unless it is plainly

     1
      Husband's initials appear in the original version of final
decree that was first entered on July 20, 1995. This version
contained minor errors that were subsequently corrected by the
trial court on February 2, 1996.

                                   -8-
wrong or without evidence to support it."   Srinivasan v.

Srinivasan, 10 Va. App. 728, 732, 396 S.E.2d 675, 678 (1990).

     We hold that the trial court's valuation of the business was

neither plainly wrong nor without evidence to support it.

Husband contends that the trial court erred in valuing his

business because it failed to use the negative working capital

amount that was agreed upon by both parties, which he alleges was

approximately -$100,000.   However, the record shows that the

experts did not agree that this figure was the amount of negative

working capital.   Both experts agreed that working capital was

determined by subtracting current liabilities from current assets

and that, in the case of husband's business, this amount was a

negative number.   Wife's expert testified that she used the

negative working capital in husband's expert's report, -$36,708,

because she did not have access to either husband or his

bookkeeper.   Husband's expert testified that, although he

initially estimated negative working capital to be -$36,708, he

had recently discovered additional liabilities and that negative

working capital was probably closer to -$100,000.   The trial

court merely resolved this disputed evidence in favor of the

initial estimate of husband's expert.
     Husband also argues that the trial court erred when it

failed to adjust the value of the business downward to account

for its purported key man problem and low profitability.     Again,

the testimony of the experts conflicted regarding whether the

                                -9-
computations derived from the Bizcomps data should be adjusted

downward to account for these factors.   The trial court found one

of the experts to be more credible, and that finding is supported

by the evidence.   Reid v. Reid, 7 Va. App. 553, 563, 375 S.E.2d
533, 539 (1989) (court's finding that one expert's valuation of

wife's interest in travel agency was more credible than others

supported by evidence).

                                V.
   HUSBAND'S INCOME FROM SIDE JOBS:   CHILD AND SPOUSAL SUPPORT

     Husband contends that the evidence was not sufficient to

support the trial court's finding that husband's income included

$1,500 per month from side jobs not reported on the books of his

business.   "Decisions regarding 'spousal support . . . rest

within the sound discretion of the trial court and will not be

reversed on appeal unless plainly wrong or unsupported by the

evidence.'"   Konefal, 18 Va. App. at 614, 446 S.E.2d at 154

(citation omitted).   Wife testified that husband made an

additional $1,500 to $3,000 a month from side jobs.   In addition,

two of the parties' children and two former employees of the

business testified that husband received income from side jobs

that was unreported on the business' books.   It cannot be said

that the trial court's conclusion regarding the husband's monthly

income from side jobs was plainly wrong or without evidence to

support it.   Furthermore, contrary to husband's assertion, the

trial court did not impute income to husband when it made its

                               -10-
finding of income from side jobs.     A trial court "imputes" income

when it assigns income for the purposes of calculating support

payable by an individual found to be voluntarily unemployed or

underemployed.   Bennett v. Commonwealth, 22 Va. App. 684, 691,

472 S.E.2d 668, 672 (1996); Code § 20-108.1(B)(3).    In this case,

the trial court did not conclude that husband was voluntarily

underemployed and instead found that the income from side jobs

was income actually earned by husband.
     In view of this Court's holding that the trial court did not

err in finding "side job" income of $1,500 per month, in addition

to the $6,139 monthly income from his business, we cannot say

that the trial court abused its discretion or is plainly wrong in

awarding monthly spousal support of $2,300.    Likewise, the

monthly child support award of $921 was based on the application

of the child support guidelines to a monthly income of $7,639.

     Based on the foregoing, we affirm the decision of the trial

court.
                                                           Affirmed.

                               -11-
Benton, J., dissenting.

     The record reveals that eighteen months after the pendente

lite award was entered, the husband filed a motion to modify the

award.   At a hearing on August 22, 1994, husband's counsel

proffered evidence that the husband's business was failing and

that the husband did not have sufficient income to pay support as

ordered.   Ruling that it was not his "policy" to modify pendente

lite orders, the judge declined to hear evidence on the motion.

A year later, the trial judge heard evidence ore tenus regarding
the divorce issues.   The trial judge then entered a final order

setting support.   The husband's appeal from that final order

includes a challenge to the judge's refusal to consider the

husband's motion for a modification of the pendente lite support

award.

     I would hold that by making a motion to modify the pendente

lite support order, the husband adequately brought before the

judge the issue that he now raises on appeal.   Because the judge

accepted proffers from the parties and decided against hearing

the motion to modify, we are not in the position of considering

this issue for the first time on appeal.   Moreover, requiring the

husband to object after the trial judge overruled his motion

would result in reargument of issues already decided, unnecessary

delay, and fostering a climate of contentiousness at trial.     When

the judge overrules a party's motion, the moving party obviously

objects to the adverse ruling for the reasons stated in the

                               -12-
motion and motion argument.   See Code § 8.01-384.

     In addition, requiring the husband to object to the denial

of his motion "would, in effect, recreate the requirement of

noting an exception to a final adverse ruling of the trial

judge."   Martin v. Commonwealth, 13 Va. App. 524, 530, 414 S.E.2d
401, 404 (1992).   By statute, the husband was not required to

take exception to the trial judge's denial of his motion for

modification of the pendente lite order.     "Formal exceptions to

rulings or orders . . . shall be unnecessary; but . . . , it

shall be sufficient that a party, at the time the ruling or order

. . . is made or sought, makes known to the court the action

which he desires the court to take."    Code § 8.01-384.
     I would therefore hold that the husband is not barred from

appealing this issue after entry of the final decree.

Furthermore, this appeal properly brings before this Court for

consideration issues relating to the effect of the judge's

refusal to reconsider the pendente lite order.     We have

previously ruled that "[i]f, after entry of the final order in

the case, the appellant alleges that the final judgment was

adversely affected by the failure of the trial judge to grant
pendente lite support . . . , [the appellant] may appeal the

final order and seek a new trial."     Pinkard v. Pinkard, 12 Va.

App. 848, 853, 407 S.E.2d 339, 342 (1991).

     The written statement of facts recites that, in support of

his motion, the husband's counsel proffered "that [the husband's]

                               -13-
business was not doing well, that less cash was available, and

that [the husband] could not make the pendente lite support

payments."   The wife's counsel merely "proffered that the

marriage was a long one, that the needs of the wife and children

had not changed, that the wife was unable to work because she was

still being treated for cancer, and that the original pendente

lite order had been agreed upon by the parties at a . . .

conference with counsel present."      The wife's counsel did not

refute the avowal of the husband's changed financial condition.

Thus, the husband's "counsel's avowal, the truth of which was

unchallenged . . . , constituted a proper proffer."      Whittaker v.

Commonwealth, 217 Va. 966, 969, 234 S.E.2d 79, 81-82 (1977).

     Based upon the husband's proffer of financial distress and

the long duration of the pendente lite order, "considerations of

justice require[d]" the trial judge to hear the evidence and

grant the husband's motion for relief.      Richardson v. Gardner,

128 Va. 676, 685, 105 S.E. 225, 228 (1920).     The record proved

that the judge invoked a "policy" of the court in refusing to

consider the husband's motion for modification of the pendente
lite support award.   That ruling was not based upon a sound

exercise of discretion or a consideration of the financial

distress that the husband's counsel proffered in support of his

request for a hearing.   The trial judge's refusal because of

"policy" to consider a modification of the pendente lite order

was error as a matter of law.   See Newton v. Wilson, 199 Va. 864,

                                -14-
868-69, 102 S.E.2d 299, 302 (1958) ("The refusal of the lower

court to hear . . . evidence on the issues raised by the [motion

for revocation of the interlocutory order] . . . was error.").

     I disagree with the majority's view that the trial judge's

ruling tended to promote an efficient resolution of the case.

The pendente lite order had been in effect for more than a year.

 Another year lapsed after the motion to modify the pendente lite

award was filed in July 1994 and before the final order was

entered in July 1995.    The trial judge therefore had ample time

to hear the motion without prolonging the final disposition of

the matter.
     The husband alleges that the failure to grant a modification

of the pendente lite support award affected the valuation of the

husband's business and the final property distribution award.

The evidence eventually admitted at the April, 1995 ore tenus

hearing revealed that the circumstances of the husband's business

at the time of his motion to modify the pendente lite award amply

supported the husband's proffer.   The ore tenus evidence proved
that the husband operated his carpeting business as a sole

proprietorship.    The wife's own expert stated that the business'

liabilities exceeded its assets, the business had a negative net

worth, and the business had a negative cash balance of $15,194 at

the end of 1994.   The evidence further proved that the husband

drew funds from his business in excess of profits to pay the

pendente lite support.    The wife's expert stated that "[the

                                -15-
husband] has not limited his draw and cash taken out for personal

use to the level of profits.    The working capital has been

depleted and liabilities have risen."

     The husband's expert assessed the business loss to be

greater than the amount proved by the wife's expert.   The report

submitted by the husband's expert showed that since the entry of

the pendente lite support order in February, 1993, the business'

cash flow had declined dramatically.    Moreover, the business'

liabilities had increased from $117,054 in 1992 to $183,090 at

the end of 1993.   Indeed, at the time of the husband's motion to

modify the pendente lite award, the wife did not dispute the
husband's allegations that the business had deteriorated.

     The trial judge found that the business' tax debts continued

to grow partly due to the husband's diversion of funds to pay

support and divorce costs.    Specifically, the trial judge found

that "the evidence in the case supports the conclusion that some

of [the husband's] growing debt to the IRS resulted from the fact

that the funds which would otherwise be used to pay the tax

liability were used to pay [the husband's] divorce-related fees

and costs for attorneys, accountants, and support."

     Thus, the evidence proved that after the trial judge refused

to consider the husband's motion to modify the pendente lite
support award, the husband continued to draw money from the

business in excess of profits in order to pay the support and

other costs of the divorce.    In effect, the husband encumbered

                                -16-
marital property to pay marital expenses.    No evidence proved,

however, that the husband deliberately encumbered the business in

order to diminish the value of the wife's equitable distribution

award.    Nevertheless, the trial judge "found it inappropriate to

consider personal liabilities as part of a business' current

liabilities."

        In Marion v. Marion, 11 Va. App. 659, 401 S.E.2d 432 (1991),

this Court explicitly stated that when valuing marital property,

"the amount of the indebtedness must be deducted from the gross

value of the property to determine the net value for purposes of

equitable distribution."     Id. at 667, 401 S.E.2d at 437.   Only if

the spouse deliberately encumbered the property to reduce the

equitable distribution award may the judge refuse to consider the

debt.     See Trivett v. Trivett, 7 Va. App. 148, 152, 371 S.E.2d
560, 562 (1988).    In addition, "expenditure of funds for items

such as living expenses, support, and attorney's fees,

constitutes a valid marital purpose and is not dissipation or a

deliberate attempt to affect a monetary award."     Decker v.

Decker, 17 Va. App. 12, 19, 435 S.E.2d 407, 412 (1993).

Therefore, debts incurred to pay personal and marital expenses,

including support, properly must be used to reduce the value of

the encumbered property.     See id.

        After erroneously failing to consider the husband's request

for modification of pendente lite support payments, the trial

judge penalized the husband for his compliance with the pendente

                                 -17-
lite order by excluding the marital debt in valuing the sole

proprietorship.   Because the record does not establish that the

husband had any other source of meeting his court ordered

obligations, I would hold that the trial judge erred in failing

to consider the effect of her orders in diminishing the value of

the sole proprietorship, a marital property.   The trial judge's

valuation of the business was plainly wrong.

     Because I believe that the valuation of the business was

flawed by the failure to consider the impact of refusing to

reduce the pendente lite support and the consequential drain of
the business' assets, I would reverse the valuation and remand

for reconsideration of the equitable distribution award.

                               -18-