Court Opinion

ID: 1069472
Source: CourtListenerOpinion
Date Created: 2013-10-09 19:34:29.621146+00
Date Added: 2024-06-11T15:40:09.444666
License: Public Domain

COURT OF APPEALS OF VIRGINIA

Present: Judges Willis, Bumgardner and Agee
Argued at Salem, Virginia

EARL DEAN ROBERTS
                                         MEMORANDUM OPINION * BY
v.   Record No. 0095-01-3                 JUDGE G. STEVEN AGEE
                                            OCTOBER 23, 2001
PATRICIA LEE ROBERTS

               FROM THE CIRCUIT COURT OF LEE COUNTY
                      Birg E. Sergent, Judge

          Lonnie L. Kern (Kern & Kern, P.C., on brief),
          for appellant.

          Charles L. Bledsoe for appellee.

     Earl Dean Roberts (husband) appeals the December 14, 2000

decision of the Lee County Circuit Court on the issue of

equitable distribution upon the termination of his marriage to

Patricia Lee Roberts (wife).   Husband contends on appeal that

the circuit court erred by accepting the appointed

commissioner's findings and determinations as to the equitable

distribution of the parties' property.   It is his contention

that the commissioner failed to properly classify real property

in Kentucky, failed to properly value real and personal property

in the marital estate, and made the equitable division without

considering the mandatory factors in Code § 20-107.3.     As the

     * Pursuant to Code § 17.1-413, this opinion is not
designated for publication.
commissioner's report, which was adopted by the circuit court,

fails in most instances to fully specify the marital, separate

and hybrid interests of the parties in all properties in

dispute, with attendant values, and because we do not find

support in the record that the statutory factors were properly

considered or applied in this matter, we remand this matter for

further consideration.   Certain aspects of the court's decree

are affirmed as set out below.

     As the parties are fully conversant with the record in this

case (such as it is) and because this memorandum opinion carries

no precedential value, only those facts necessary to a

disposition of this appeal are recited.       The Court notes the

preparation of the record made disposition of this case

unnecessarily difficult.

                            I.   BACKGROUND

     Husband and wife have been involved in an acrimonious

divorce proceeding for several years.     On August 9, 1999, the

circuit court appointed a special commissioner to consider the

basis for the divorce, to determine equitable distribution and

spousal support.   The parties submitted depositions to the

commissioner for her consideration, and she presented her final

report on March 15, 2000.    Exceptions were filed, and various

hearings held during 2000 over claimed deficiencies in the

commissioner's report.

                                 - 2 -
        The commissioner's report set out an equitable distribution

scheme to which both parties initially objected.      The parties'

property in Lee County was valued at $120,700, based on the only

submitted appraisal at the time, with a secured deed of trust

lien against it in the amount of $52,000 1 at the time of

separation.      While husband paid approximately $12,000 toward

that secured debt during the separation, the commissioner added

the total amount of the payments to the equity determined by

appraisal of that property.      Then, the commissioner recommended

the parties equally divide the revised "equity" of $80,700.

Husband was given the option to purchase wife's interest in that

property and declined.      The commissioner determined real

property in Middlesboro, Kentucky, to be the separate property

of wife.

        The commissioner and the circuit court failed to classify

the personal property but proceeded to divide it.      Wife was

awarded a 1990 Ford pickup truck valued at $6,200, a Honda

four-wheeler valued at $4,500, a horse trailer valued at $5,000,

three horses collectively valued at $4,000, the horses' tack

valued at $2,500, and one-half the cow herd valued at $275 a

head.       In addition, wife was awarded the following items, which

        1
       It appears that the assigned number of secured claims and
the amount of secured indebtedness against the property at the
time of separation was clearly erroneous and was actually much
greater. Apparently the parties agree this is marital property
although neither the commissioner nor the circuit court made a
finding of its classification.

                                   - 3 -
were not classified as marital or separate property nor were

they valued by the commissioner:    a salt holder, stall mats, a

cherry bedroom suite, a cedar chest, a set of dishes, quilts, a

clown collection, a Mr. and Mrs. Claus set, a computer, a

tobacco setter, and everything else in her possession.

        Husband was awarded a 1989 Bronco valued at $4,000, a 1986

Ford pickup truck valued at $750, a Kawasaki four-wheeler valued

at $2,000, a hay baler valued at $4,000, farm equipment valued

collectively at $8,000 and one-half the cow herd.    In addition,

husband was awarded all furniture and furnishings in the marital

home not specifically awarded to wife.    These items were not

identified nor were they valued.

        Each party was to "share equally in the retirement benefit

of the other accrued during the course of the marriage."

However, no values were assigned.

        The commissioner determined that all debt in either of the

parties' names at the time of separation was marital debt and

made the following division:    wife was responsible for $12,050

of the indebtedness, with husband to be responsible for the

remaining $30,500.    No rationale was given for the allocation of

debt.

        By a final order dated May 22, 2000, the circuit court

awarded both parties a divorce a vinculo matrimonii, yet

referred the equitable distribution determination back to the

commissioner for further consideration regarding the

                                 - 4 -
identification, classification, valuation and distribution of

the parties' assets and liabilities pursuant to Code § 20-107.3.

A more specific referral order to the commissioner was entered

May 26, 2000.   However, no changes were made by the commissioner

to her initial report, and there is no evidence in the record

that the matter was given any further consideration other than

the commissioner's testimony before the court, on July 24, 2000,

that she felt she had "covered all the required factors to be

reviewed between the parties" and she was "not prepared to

modify [her] opinion unless there [was] new evidence that . . .

changes what [was] reviewed."   Nothing appears in the record to

reflect the disposition of the specific assignments in the

circuit court's May 26, 2000 order.

     After several additional hearings regarding husband's

objections to the commissioner's findings, the circuit court

judge stated, on December 13, 2000, that he saw "no reason that

the marital property should not be divided equally, 50/50

. . . . I have considered the statutory factors set out in [Code

§ 20-107.3]" and "in considering all the statutory factors of

the contributions, monetary and non-monetary of each party to

the well being of their family, this is a successful family."

He also found "most of [the] debts were made during the

marriage, and like assets, anything acquired during the marriage

is presumed to be marital property and marital liabilities."

Finally, the judge stated, "it was the finding of the

                                - 5 -
[c]ommissioner, and [it is] the finding of the court that

[husband and wife] should share equally insofar as possible."

     On December 14, 2000, an order was issued providing as

follows:

           [T]he Court FINDS the Special Commissioner's
           Report to be reasonable and consistent with
           the provisions of Section 20-107.3 of the
           Code of Virginia, as amended, and more
           particularly, the factors enumerated in
           20-107.3(e) [sic] were considered and
           addressed by the Special Commissioner
           . . . .

                      II.    STANDARD OF REVIEW

     On appeal, we review the evidence in the light most

favorable to the party prevailing below.     See, e.g., Anderson v.

Anderson, 29 Va. App. 673, 678, 514 S.E.2d 369, 372 (1999).

Where the evidence was considered by a commissioner and not ore

tenus by the circuit court, the decree is not given the same

weight as a jury verdict, but if the decision is supported by

substantial, competent and credible evidence in the depositions,

it will not be overturned.     McLaughlin v. McLaughlin, 2 Va. App.
463, 466-67, 346 S.E.2d 535, 536 (1986) (citations omitted).

See also Collier v. Collier, 2 Va. App. 125, 127, 341 S.E.2d
827, 828 (1986) (a decree based upon depositions rather than

evidence heard ore tenus nonetheless is presumed correct and

will not be overturned if supported by the evidence).     Moreover,

a judgment of the circuit court will not be set aside on the

ground that it is contrary to the law and the evidence unless it

                                 - 6 -
appears from the evidence that such a judgment is plainly wrong

or without evidence to support it.       Code § 8.01-680.

                          III.    ANALYSIS

     In any equitable distribution proceeding, the circuit court

must follow three basic steps.    First, the court must classify

the property (the assets and liabilities) as separate, marital,

or hybrid (part separate and part marital property).        A value

must then be assigned to every item or portion deemed martial

property, and the value must be based upon evidence presented by

the parties.   Finally, the court is to divide the property

between the parties, taking into consideration all the

specifically enumerated factors in Code § 20-107.3(E).       It is

reversible error for the court not to do so.       Alphin v. Alphin,

15 Va. App. 395, 405, 424 S.E.2d 572, 577 (1992).

     A circuit court may assign a commissioner in chancery to

receive and consider the evidence for equitable distribution.

The commissioner, upon consideration of the statutory factors,

will then make a recommendation to the court for the appropriate

disposition of the martial estate.       Generally, the court should

affirm a commissioner's report unless the evidence does not

support the findings.   Price v. Price, 4 Va. App. 224, 355
S.E.2d 905 (1987).   However, when the court refers a case to a

commissioner, it does not delegate its judicial functions to the

commissioner, but rather, "the court must review the evidence,

apply the correct principles of law, and make its own

                                 - 7 -
conclusions as to the appropriate relief required."        Dukelow v.

Dukelow, 2 Va. App. 21, 26-27, 341 S.E.2d 208, 211 (1986).       We

cannot say that standard has been met in this case.

                           A.   CLASSIFICATION

     We consider husband's contentions on appeal in the order in

which they would arise pursuant to a proper equitable

distribution process.

                      1.   Kentucky Real Property

     We begin with husband's contention that the commissioner

and circuit court erroneously classified real property in

Middlesboro, Kentucky, as separate property belonging to wife.

For the following reasons we find the court did not commit

reversible error in making this classification.

     Marital property is all property titled in the names of

both parties and all other property acquired by each party

during the marriage, which is not separate property (received

during the marriage by bequest, devise, descent, survivorship or

gift from someone other than the spouse).        Code

§ 20-107.3(A)(2).    "All property . . . acquired by either spouse

during the marriage . . . is presumed to be marital property in

the absence of satisfactory evidence that it is separate

property."   Id.    This presumption applies to the debt

liabilities of the parties as well.

     For property claimed by the other spouse as separate

property, the non-owning spouse bears "the burden of proving

                                  - 8 -
that (i) contributions of marital property or personal effort

were made and (ii) the separate property increased in value."

Code § 20-107.3(A)(3)(a).

     The Middlesboro property was formerly titled to wife's

mother and father, who deeded it into wife's name alone during

the parties' marriage.   A current deed of trust, in both

parties' names, is a lien on the property.   However, wife's

parents, who reside on the property, make the payments.     Due to

this debt liability, and husband's voluntary payment of one

insurance bill, 2 husband contends the property was transmuted

from wife's separate property by gift to marital property and,

therefore, the commissioner's classification as separate

property was in error.   We disagree.

     The depositions presented to the commissioner and the court

reflect that the property was purposefully conveyed only to

wife, during the marriage, as a gift from her parents.    Thus

there was evidence in the record to rebut the presumption the

Kentucky real estate was marital property.   The burden then

shifted to husband to prove marital contributions were made,

which increased the value of the property.   While husband may

have made a de minimus monetary and labor contribution, we

cannot say the court erred in finding that husband did not meet

     2
       Husband paid one bill during the separation without the
knowledge of wife or her parents.

                               - 9 -
his burden to show a transmutation of the separate property to

marital or hybrid property.

     There was evidence that wife's parents made all the

mortgage payments, paid for all maintenance and improvements to

the home and land, with the exception of one insurance payment

made by husband unbeknownst to them during the parties'

separation.    There is no evidence that the property was acquired

by wife in exchange for valuable consideration, i.e., that wife

obtain a mortgage on the property and pay the loan funds over to

her parents.   In addition, the evidence showed that wife only

purchased a replacement dishwasher for the home when it was

needed, just as the parents had purchased furniture and

appliances for the parties' home in Virginia; and folded laundry

or helped in the flower garden when she visited.   Husband helped

to install a ceiling fan and the dishwasher at the Kentucky

property.

     The co-signing of a loan against the property and the

purchase of the replacement dishwasher for the parents' use are

not substantial and did not measurably increase the property

value.   There is no evidence that wife commingled debt

liability, funds, and joint income with regard to the Kentucky

property, as to change the nature of the property from separate

to marital.    Services performed by the parties with regard to

the property were not substantial, and the commissioner and the

court did not err in finding them insufficient to establish

                               - 10 -
transmutation.   See Lambert v. Lambert, 6 Va. App. 94, 103-05,

367 S.E.2d 184, 190-91 (1988); Code § 20-107.3(A)(1) (personal

efforts must be significant and result in substantial

appreciation).

                          2.   Other Property

     Husband also complains that the equitable distribution

award is erroneous because the commissioner failed to classify

other items distributed as either marital or separate.     We

agree.   Upon a review of the record, it was wife's contention

that several items, including bedroom suites, dishes,

collectibles, etc., were gifts to her and should be classified

as her separate property.      These items were awarded to wife, but

we are unable to determine whether the commissioner or court

determined their classification.

     Prior to the equitable distribution of property, the

circuit court must classify the parties' property as marital,

separate, or hybrid.     See Code § 20-107.3(A).   If no evidence is

presented upon which the court can properly classify each item,

faced with the statutory presumption and the lack of

satisfactory evidence to rebut it, the property should be

classified as marital.     Stainback v. Stainback, 11 Va. App. 13,

396 S.E.2d 686 (1990).    Neither the commissioner's report nor

the court's orders classify any of the parties' personal

property.   As we reverse the award on other issues for further

                                 - 11 -
consideration, on remand the circuit court should determine the

classification of each asset.

                             B.   VALUATION

     Husband also contends that the commissioner and court erred

in assigning value to certain property and in failing to assign

any value to other items, which is required if classified as

marital property.     We agree.

     We will not disturb a finding of value of an asset,

however, unless the finding is plainly wrong or unsupported by

the evidence.   See Traylor v. Traylor, 19 Va. App. 761, 763-64,

454 S.E.2d 744, 746 (1985).

                 1.    The Lee County Real Property

     In this case, conflicting expert appraisals of the real

property in Lee County were presented to the commissioner and

court.   The commissioner and court chose to accept the first

appraisal submitted.    Husband, who disliked the first appraisal

and submitted a second, contends the commissioner and the court

arbitrarily disregarded the credible evidence of his appraisal.

He argues the court's acceptance of the commissioner's valuation

was error.   We disagree with the contention that the acceptance

of the original appraisal was error; however, the determination

of equity was plainly wrong.

     A court may "choose among conflicting assessments of value

as long as its finding is supported by the evidence."    McDavid

v. McDavid, 19 Va. App. 406, 413, 451 S.E.2d 713, 718 (1994);

                                  - 12 -
see also Reid v. Reid, 7 Va. App. 553, 563, 375 S.E.2d 533, 539

(1989) (commissioner may find one of several conflicting expert

appraisals more credible so long as credible evidence supports

selected appraisal); Brown v. Brown, 11 Va. App. 231, 236, 397
S.E.2d 545, 548 (1990) ("The commissioner has the authority to

resolve conflicts in the evidence and to make factual

findings.").

     The chosen value was based on an expert appraisal, with

credible evidence of value.   We cannot say that the court was

plainly wrong or without evidence to select the initial

valuation.   The court was not required to reject the appraisal

merely because husband believed his "evidence might be more

accurate, convincing, desirable, or persuasive."   Bowers v.

Bowers, 4 Va. App. 610, 618, 359 S.E.2d 546, 551 (1987); see

also Zipf v. Zipf, 8 Va. App. 387, 395, 382 S.E.2d 263, 268

(1989).

     While the selection of the appraisal was not reversible

error, we do hold the valuation of equity in the property is

plainly wrong.   There is credible evidence in the record of a

lower net equity amount than computed by the commissioner and

adopted by the court.   There is credible evidence of additional

secured loans to Southwest Farm Credit against the property not

addressed by the fact finder and clear evidence that the total

amount of husband's post-separation loan payments were added to

the "marital" equity, without any allocation between principal

                              - 13 -
and interest to accurately reflect decreased liability and

increased equity.   In response to our inquiry at oral argument

as to whether the husband's representation of indebtedness was

correct, wife's counsel gave three separate responses:

"correct," "incorrect" and "don't know."   It is very clear from

the record there is a discrepancy in fact between the

commissioner's determination and actual equity.   The record does

not indicate this discrepancy was addressed.

     On remand, the court should make specific findings as to

the secured debt against the property and the lien balances as

it determines the proper equity amount as of the valuation date.

As more fully discussed in Section C, the court should also make

findings as to the change in equity created by husband's

post-separation secured lien payments and whether that portion

of the equity attributable to such payments is marital, separate

or hybrid property.   The court should also make findings as to

the valuation and classification of that portion of husband's

post-separation secured lien payments, which are not found to be

part of the Virginia real property's equity.

     This process may require the taking of additional evidence

caused by the passage of time while additional payments have

been made, but that is a determination best made by the trial

court.

                              - 14 -
                         2.    Other Property

     We further find that is was error to make the equitable

distribution without valuing all the martial property.

Obviously, this was made difficult by the failure to classify

all the property as previously discussed.       The circuit court on

remand should specify the properties and associated values for

every marital asset and liability in the new award.       See

Gottlieb v. Gottlieb, 19 Va. App. 77, 95, 448 S.E.2d 666, 677

(1994).    The values of the assets and liabilities should be

based on credible evidence provided by both parties if they so

choose.    The valuation assigned to marital property cannot be

based on "mere guesswork." 3    Bosserman v. Bosserman, 9 Va. App.
1, 5, 384 S.E.2d 104, 107 (1989).     However, where the parties

have been given a reasonable opportunity to provide the

necessary evidence to prove valuation and through their lack of

diligence have failed to do so, the court may make an award

without giving consideration to the value of every item of

property.    Bowers, 4 Va. App. at 618, 359 S.E.2d at 551.

Therefore, assets such as the bedroom suite, dishes, etc., if

deemed martial property during the classification stage, should

be assigned a value based on submitted evidence from the

parties.

     3
       For example, it appears under the court's award, which was
based on the commissioner's report, husband was allocated all of
the Southwest Farm Credit debt, but it was not taken into
account in computing the equity of the Lee County property.

                                 - 15 -
               C.   CONSIDERATION UNDER § 20-107.3

     Finally, husband contends the circuit court erred in

accepting the commissioner's report without evidence that it

considered all the appropriate factors in Code § 20-107.3.    He

requests that the award be remanded for further consideration.

As we are unable to find identifiable support in the record that

the statutory factors were considered, we agree that the

equitable distribution award should be reversed and remanded.

     The appropriate consideration of the factors by the

commissioner and the circuit court entails more than a mere

recitation in the record or decree that all the statutory

factors have been considered or reviewed.

          The enumerated factors are intended to guide
          the court's exercise of discretion, and
          substantive consideration of these factors
          should be incorporated into the
          decision-making process. See Woolley v.
          Woolley, 3 Va. App. 337, 345, 349 S.E.2d
422, 426 (1986). "This does not mean that
          the [circuit] court is required to quantify
          or elaborate exactly what weight or
          consideration it has given to each of the
          statutory factors." Id. However, when [the
          circuit court] fails to articulate
          sufficiently the consideration he or she has
          given to the statutory criteria, "we must
          examine the record to determine if the award
          is supported by evidence relevant to those
          factors." Gibson v. Gibson, 5 Va. App. 426,
          435, 364 S.E.2d 518, 523 (1988).

Alphin, 15 Va. App. at 405, 424 S.E.2d at 578.   Based on the

record before us, such as it is, we cannot determine how or if

                              - 16 -
the commissioner or the court applied the Code § 20-107.3(E)

factors to this case.

     Except for general, non-specific statements that the

statutory factors were considered, the record does not reflect

that the commissioner or the court considered and applied Code

§ 20-107.3(E) to distribute the marital estate.    Few findings

were made, and the court's deliberative process is not

identified so as to facilitate appellate review.   It is

difficult, if not impossible, for an appellate court to review

the statutory requirements as applied in equitable distribution

proceedings when the circuit court announces only the end

product of its deliberations.    We cannot tell upon what evidence

the recommended distribution was based or why.    While the court

is not expected to do a law review article on the rationale for

the equitable distribution award, it needs to give some

identifiable written rationale.    For example, we cannot find in

the record where the issues referred to the commissioner, by the

May 26, 2000 order, were answered.

     While the asset division may be adequate based on the fact

that each worked during the marriage and all income earned was

spent by the parties, the failure to classify and value all the

assets does not allow for verification that the court's intended

division was properly done.   We cannot determine that the

liability division is supported by substantial and credible

                                - 17 -
evidence. 4   While husband does not specifically complain of this

assignment, and while it is within the court's discretion to

make such a division, it is evident to us that the court failed

to identify adequate consideration of the statutory factors.

     Under such circumstances, we are unable to conduct a proper

appellate review of the disputed award and must reverse the

award and remand for further consideration by the court, guided

by Code § 20-107.3. 5   "There must be a proper foundation in the

record to support the granting of an award and the amount of the

award."     Stumbo v. Stumbo, 20 Va. App. 685, 693, 460 S.E.2d 591,

595 (1995).

     An indication of the inadequate assessment of the statutory

factors is an absence in the record of any consideration given

to husband's request for a credit in recognition of his

post-separation mortgage payments.       We find it was an abuse of

discretion for the commissioner and court to fail to consider

husband's request for a credit for these post-separation

payments.     The separate contribution of one party to the

acquisition, care, and maintenance of marital property is a

factor that the court must consider when making its award of

     4
       The debt division proposed by the commissioner's report
and adopted by the court seems contrary to the court's bench
statements about equal division.
     5
       Our disposition does not presuppose that the present
division is erroneous but results only from the inability to
conduct a proper appellate review.

                                - 18 -
equitable distribution.   Upon remand, the court should give due

consideration of these payments in its equitable distribution

award. 6

     Accordingly, the decree appealed from is affirmed in part

as noted above and reversed in part.   The case is remanded for

such further proceedings as the circuit court considers

appropriate to make an award concerning the property of the

parties that is consistent with the principles expressed in this

opinion.

                                              Affirmed in part,
                                              reversed in part,
                                              and remanded.

     6
       We note, however, Code § 20-107.3 does not mandate that
the circuit court award a corresponding dollar-for-dollar credit
for such contributions. von Raab v. von Raab, 26 Va. App. 239,
249-50, 494 S.E.2d 156, 161 (1997).

                              - 19 -