Court Opinion

ID: 1071341
Source: CourtListenerOpinion
Date Created: 2013-10-09 19:41:27.615607+00
Date Added: 2024-06-11T09:19:01.783294
License: Public Domain

COURT OF APPEALS OF VIRGINIA

Present:   Judges Bray, Annunziata and Frank

MELVIN F. MORRIS
                                            MEMORANDUM OPINION *
v.   Record No. 0850-99-2                       PER CURIAM
                                             OCTOBER 26, 1999
JUDITH HEALY MORRIS

            FROM THE CIRCUIT COURT OF SPOTSYLVANIA COUNTY
                       J. Peyton Farmer, Judge

            (Theodore J. Edlich, IV; J. Scott Kulp;
            Joseph A. Vance, IV; Williams, Mullen,
            Clark & Dobbins; Joseph A. Vance, IV &
            Associates, on briefs), for appellant.

            (Murray M. Van Lear, II; Paul A. Simpson;
            John K. Byrum, Jr.; Scott, Daltan & Van Lear;
            Hirschler, Fleischer, Weinberg, Cox & Allen,
            P.C., on brief), for appellee.

     Melvin F. Morris (husband) appeals from the final decree of

divorce entered by the Spotsylvania County Circuit Court (trial

court).    Husband contends that the trial court erred (1) by

assigning a value to Commonwealth Center, Inc. (CCI), that

exceeded husband's marital interest in the property; (2) by

ordering him to restore $29,093.50 to Meadows Mobile Home Park's

account after transferring these funds to pay a joint obligation

of the parties; (3) by finding that Judith Healy Morris (wife) did

not dissipate assets from Meadows Mobile Home Park (Meadows) and

     * Pursuant to Code § 17.1-413, recodifying Code
§ 17-116.010, this opinion is not designated for publication.
Lee Hill Village Mobile Home Park (Lee Hill); (4) by finding that

Preferred Brokers, Inc. (Preferred), is wife's separate property,

and in its valuation of this property; (5) in awarding wife

$12,226.51 in attorney's fees associated with South Carolina

litigation regarding the parties' Myrtle Beach hotel; and (6) by

awarding Meadows to wife.    Wife contends that the appeal should be

dismissed based on husband's failure to comply with Rules 5A:8 and

5A:10.   Upon reviewing the record and briefs of the parties, we

conclude that the appellate record is sufficient to address the

issues raised by husband, but that this appeal is without merit.

Accordingly, we summarily affirm the decision of the trial court.

See Rule 5A:27.

                              Background

     The parties began co-habiting in 1962, married in 1973, and

separated in March 1993.    For a number of years, the parties

operated several businesses together.      As of the date of

separation, the parties' business operations included two mobile

home parks--Lee Hill and Meadows, a business entity that sold

mobile homes--Jeff Davis Mobile Sales a/k/a Jeff Davis Homes, Inc.

a/k/a Jeff Davis Mobile Homes, Inc. (collectively Jeff Davis), and

a commercial real estate development firm--CCI.     The parties also

acquired, around the time they separated, a hotel in Myrtle Beach,

South Carolina.   The parties stipulated that the marital property

should be divided evenly.

                                - 2 -
        The trial court referred this matter to a commissioner in

chancery who, in dividing the parties' marital property, awarded

wife $2,934,658.70 and awarded husband $3,238,340.67 (less taxes

owed on the CCI). 1   The commissioner awarded Meadows to wife, and

awarded Lee Hill, Jeff Davis, and CCI to husband.    The

commissioner also awarded wife $12,226.51 in attorney's fees she

incurred in South Carolina litigation to void a mortgage husband

had placed against a hotel the parties jointly owned.      The

commissioner charged husband with dissipating $29,083.50 that he

had withdrawn from the Meadows account to pay another obligation,

but found that wife had not dissipated assets from Meadows and Lee

Hill.

        The commissioner found that Preferred, which wife had

incorporated in 1995, was wife's separate property, and valued

wife's one-half interest in that property at $36,709.59.

        The trial court ruled that the commissioner had recommended a

fair and just distribution of the parties' property and

incorporated the commissioner's report into the final decree of

divorce.

                        Wife's Motion to Dismiss

        Wife contends that the appeal should be dismissed pursuant to

Rule 5A:8 based on husband's failure to timely file all

        1
       The trial court ordered husband to execute a note in the
amount of half the difference between the property amounts
awarded the parties and to pay that amount to wife within one
year.

                                 - 3 -
transcripts from the proceedings below.   Husband concedes that

there is no transcript available from the October 23, 1998 hearing

before the trial court where the parties argued their exceptions

to the commissioner's report.   No evidence was taken at the

hearing, and husband's exceptions were preserved elsewhere in the

record.   Accordingly, this transcript is not necessary for an

adjudication of the issues husband has raised on appeal.   See

Goodpasture v. Goodpasture, 7 Va. App. 55, 57, 371 S.E.2d 845, 846

(1988) (if the record on appeal is sufficient despite the absence

of a transcript, the Court of Appeals is free to hear and resolve

the case).

     Wife also contends that husband violated Rule 5A:10(c) by

submitting an abbreviated record without her consent.   Husband did

not file transcripts from hearings held by the commissioner on

August 5, 1996, September 4, 1996, October 3, 1996, November 6,

1996, December 5, 1996, February 11, 1997, April 18, 1997, May

6-7, 1997, June 5 and 25, 1997, July 30, 1997, August 13 and 20,

1997, September 26, 1997, and October 2, 6 and 15-16, 1997.

Husband responds that the transcripts filed as part of the

appellate record were the only transcripts relied upon by the

trial court in deciding this matter.

     Assuming that husband failed to comply with Rule 5A:10(c),

wife has failed to establish that she was prejudiced thereby.

Accordingly, the appeal will not be dismissed.

                                - 4 -
                         Standard of Review

     "We review the evidence in the light most favorable to wife,

the party prevailing below and grant all reasonable inferences

fairly deducible therefrom."   Anderson v. Anderson, 29 Va. App.

673, 678, 514 S.E.2d 369, 372 (1999).   "A commissioner's findings

of fact which have been accepted by the trial court 'are presumed

correct when reviewed on appeal and are to be given "great weight"

by this Court.'"   Barker v. Barker, 27 Va. App. 519, 531, 500

S.E.2d 240, 245-46 (1998) (citation omitted).

     "In reviewing an equitable distribution award on appeal, we

have recognized that the trial court's job is a difficult one, and

we rely heavily on the discretion of the trial judge in weighing

the many considerations and circumstances that are presented in

each case."   Klein v. Klein, 11 Va. App. 155, 161, 396 S.E.2d 866,

870 (1990).   "A trial court's decision regarding equitable

distribution will not be altered on appeal unless plainly wrong or

without evidence to support it."   Moran v. Moran, 29 Va. App. 408,

417, 512 S.E.2d 834, 838 (1999).

                    Ownership and Value of CCI

     Husband asserted that he owned only ten percent of CCI and

that the remaining ninety percent was owned, in equal shares, by

Joe Morris, the parties' son, Jackie Edwards, husband's daughter

born out of wedlock, and Bernice Kahlor, husband's first wife.

Husband introduced into evidence stock certificates dated

December 1988, which were issued in the names of Morris, Edwards

                               - 5 -
and Kahlor.    Husband never distributed the stock certificates to

any of the purported owners.    Edwards and Morris testified that

they were unaware of the stock certificates until approximately

1995.    Morris, Edwards and Kahlor never received any dividends

from the stock, they never served as officers or directors of

the corporation, they were never notified of any shareholders'

meetings, and they did not participate in the operation of the

corporation.

        Wife testified that she and husband each owned fifty

percent of CCI.    They had purchased together with joint funds

the land on which CCI was located, and had then gifted the land

to CCI.    Wife testified that she and husband had equal shares in

all the other businesses they owned.     The parties' tax returns

from 1989 through 1995 reflected that husband and wife each

owned a fifty percent share of CCI.      Husband never told wife

about the purported stock transfer, and never told her that she

did not own any part of CCI.    And when husband and wife borrowed

$300,000 against CCI in 1994, the paperwork listed them as

co-grantors.

        The ownership of stock as reflected in corporate records

and stock certificates is prima facie correct, see Young v.

Young, 240 Va. 57, 62, 393 S.E.2d 398, 400 (1990), and

re-titling of stock certificates may be technically sufficient

to transfer title, see Zink v. Stafford, 257 Va. 46, 50, 509

S.E.2d 833, 835 (1999).

                                 - 6 -
          But . . . "it is quite possible and often
          happens, for reasons of convenience or
          otherwise, that stock held in the name of
          one person really belongs to another. In
          such a case the certificate, though prima
          facie evidence of ownership in the person to
          whom it has been issued, possesses no such
          magic or sacredness as to prevent an inquiry
          into the facts. Sometimes the transferee is
          merely a nominal holder or 'dummy,' and in
          that event, although the transfer may be
          perfectly regular and complete on its
          fac[e], the true ownership remains in the
          transferor, and that fact may be shown."

Id. at 50-51, 509 S.E.2d at 835 (citation omitted).

     A transfer of stock for which no consideration is received

is considered a gift inter vivos and is controlled by the

principles governing such gifts.   See Young, 240 Va. at 62, 393

S.E.2d at 401.

          In order to establish a gift inter vivos,
          the following elements must be shown: (1)
          The gift must be of personal property; (2)
          possession of the property must be delivered
          at the time of the gift to the donee, or
          some other for him and the gift must be
          accepted by the donee; and (3) the title of
          the property must vest in the donee at the
          time of the gift. Further, the gift is
          effective only if the donor has donative
          intent at the time of the gift and if there
          is "such actual or constructive delivery as
          divests the donor of all dominion and
          control over the property and invests it in
          [the] donee."

Id. at 62-63, 393 S.E.2d at 401 (citations omitted).   Moreover,

"[t]he common law requirements of delivery and acceptance are

not removed by those provisions of the Uniform Commercial Code

                              - 7 -
pertaining to the transfer of securities."    Id. at 63, 393

S.E.2d at 401.

     Husband never delivered the shares of stock to the

purported donees, and the donees never accepted these purported

gifts.   Moreover, the evidence proved that husband never

surrendered control of the corporation to any of the purported

donees and that corporate records, including tax returns,

reflected that husband and wife were the corporation's owners.

Accordingly, the trial court did not abuse its discretion when

it held that the transfer was ineffectual, and when it

classified CCI as marital property.

             Husband's Transfer of Funds from Meadows

     Husband stipulated that in January 1998, he instructed

Virginia Heartland Bank to release $29,083.50 from the bank's

Lee Hill and Meadows accounts and that he paid these funds to

TransAmerica.    Wife did not consent to these withdrawals.

     The August 12, 1993 pendente lite decree prohibited such

withdrawals from these accounts without the consent of both

parties.   The decree also prohibited the parties from

dissipating marital assets.   Wife filed a show cause to

determine why husband should not be held in contempt for the

transfers, but no hearing was ever held on the show cause.

Instead, the court, based on the commissioner's recommendation,

directed that husband restore $29,083.50 to Meadows' bank

account.

                                - 8 -
     In their briefs, the parties identify TransAmerica, and

discuss its role in the parties' businesses.   But no such

evidence was ever presented to the commissioner or to the trial

court.   Moreover, husband violated the terms of the pendente

lite decree when he withdrew these funds without wife's consent.

Accordingly, the trial court did not abuse its discretion in

ordering husband to replace the funds withdrawn from Meadows'

bank account.

           Dissipation of Lee Hill's and Meadows' Assets

     Certified public accountant Keith Wampler analyzed the

financial records of Lee Hill and Meadows and testified that the

properties' rent rolls typically exceeded the actual deposits in

1994 and 1995.   Wampler testified that the rent rolls were not

the amounts collected from tenants, but were the amounts that

were expected to be collected.    Stephane McKeever testified that

the rent rolls exceeded deposits from April 1993 through

December 1993.   She admitted, however, that she could not

determine how many people were evicted during this period for

failure to pay rent.   She also could not determine whether any

payments had been made late.

     Wife denied misappropriating any funds from either Lee Hill

or Meadows.   She testified that she was not the person who

actually collected the rents at these properties, and she did

not fill out the deposit tickets.    Wife further asserted that

                                 - 9 -
McKeever's figures for the Lee Hill rent rolls, which were based

on trash collection statistics, were inaccurate.

     It is well established that the trier of fact ascertains

the credibility of the witnesses, determines the weight to be

given to their testimony, and has the discretion to accept or

reject the witnesses' testimony.    See Street v. Street, 25 Va.

App. 380, 387, 488 S.E.2d 665, 668 (1997) (en banc).      "'In

determining whether credible evidence exists [to support the

trial court's findings,] the appellate court does not retry the

facts, reweigh the preponderance of the evidence, or make its

own determination of the credibility of witnesses.'"      Moreno v.

Moreno, 24 Va. App. 190, 195, 480 S.E.2d 792, 795 (1997)

(citation omitted).

     Wife denied misappropriating funds from Lee Hill or

Meadows.    Although husband presented circumstantial evidence

suggesting that wife had dissipated these marital assets, the

trial court believed wife's testimony and rejected husband's

evidence.   The trial court did not err, therefore, when it found

that wife had not dissipated the assets of Meadows and Lee Hill.

              Classification and Valuation of Preferred

     Wife incorporated Preferred on August 29, 1995.      Wife

testified that she capitalized the business with just over

$1,000 she received as her last two paychecks from Jeff Davis.

She denied that she used any Jeff Davis funds to capitalize the

                               - 10 -
business.    Wife owned fifty percent of Preferred, and her son

Theodore Morris owned the other half.

     Preferred is in the business of connecting sellers of

mobile homes with those looking to buy mobile homes.   Although

the company occasionally buys a mobile home to sell, it

primarily acts as a "middle man," for which services it

generally receives the difference between the price it agrees to

pay the seller and the price it negotiates with the buyer.

     As of December 31, 1996, the date of valuation, Preferred

owned no real property and it did not maintain a regular

inventory.   The company leased office space, rented office

equipment, and owned a computer and limited amounts of used

furniture worth $4,500.   Including cash deposits, the company

had assets worth $97,011 and net liabilities of $53,591.83.

Wife estimated that good will was worth $10,000, for a total net

equity of $53,419.77.

     Husband contended that Preferred should be classified as

marital property because it was partially started with marital

funds.   He testified that it would not be possible to capitalize

this type of business with less than $30,000.   Husband presented

evidence that wife had transferred approximately $19,000 from

Jeff Davis to Preferred, and he asserted that she used this

money to capitalize Preferred.   Wife explained that the $19,000

was the proceeds from a Preferred contract that was mistakenly

deposited into Jeff Davis' account.

                               - 11 -
     Husband further asserted that Preferred should be valued at

$607,563.17.   He reached this figure by multiplying his

estimation of Preferred's net income by 2.5.    Husband asserted

in a letter by counsel that Linda Tomlin had an agreement

whereby she was to be paid an annual salary equal to thirty

percent of Preferred's net income and that Tomlin earned nearly

$73,000 from Preferred in 1996.

     The trial court found that wife's one-half interest in

Preferred was separate property.   The court rejected husband's

contention that Preferred had been started with marital funds.

The court valued Preferred at $73,419.17 based on the firm's net

assets and an assigned goodwill value of $30,000.    The

commissioner had noted that this goodwill value "seem[ed]

appropriate given the short existence of the business but [its]

relative success."   The trial court rejected husband's assertion

that Preferred should be valued based on a net income valuation,

noting that Jeff Davis, which was awarded to husband, had also

been valued based on asset valuation.

     Although there is a presumption that all property acquired

during the marriage is marital property, this presumption does

not apply to property acquired after the parties' last

separation.    See Code § 20-107.3(A)(2).   Property acquired after

the parties' last separation should not be classified as marital

property unless marital assets were used to acquire it.     See

Price v. Price, 4 Va. App. 224, 229, 355 S.E.2d 905, 908 (1987).

                               - 12 -
"The burden of proving that property purchased after the last

separation is marital is on the proponent . . . ."      Id.

       In making an equitable distribution of property, the trial

court "must assign a value to the property based upon evidence

presented by both parties."    Marion v. Marion, 11 Va. App. 659,

665, 401 S.E.2d 432, 436 (1991).   "We will not disturb a trial

court's finding of the value of an asset unless the finding is

plainly wrong or unsupported by the evidence."      Shooltz v.

Shooltz, 27 Va. App. 264, 275, 498 S.E.2d 437, 442 (1998).

       Wife formed Preferred two years after the parties' final

separation, and husband failed to prove that any marital assets

were used to capitalize that firm.      Husband asserted that

$19,000 from Jeff Davis had been misappropriated by wife and

used to form Preferred, but he presented no evidence to support

this allegation, and the trial court accepted wife's explanation

of the transfer.   Accordingly, the trial court did not err when

it classified Preferred as wife's separate property.

       The trial court also did not err in valuing Preferred.

Wife presented evidence supporting a valuation based on asset

valuation, which was the same method of valuation used to value

Jeff Davis.   Although there was evidence that Preferred had a

high cash flow, wife testified that net income was relatively

low.   Furthermore, although husband asserts that Preferred

should have been valued based on the firm's net income, he

presented no evidence regarding Preferred's net income, and he

                               - 13 -
failed to establish that this was a proper method for valuing

this business.

            Attorney's Fees from South Carolina Litigation

        The parties jointly owned a hotel in Myrtle Beach, South

Carolina.    After the final date of separation, husband attempted

to transfer the hotel property deed from a corporation the

parties jointly owned, to a corporation of which he was the sole

owner.    When this effort was subsequently voided by a South

Carolina court, husband placed a $500,000 mortgage against the

hotel.    The mortgage was held by a corporation that was solely

owned by husband, but that had not loaned the hotel any money.

        Wife instituted successful litigation in South Carolina and

obtained an order setting aside the mortgage.    She incurred

$12,226.51 in legal fees in this litigation.    The South Carolina

court's order makes no reference to attorney's fees.    Wife had

no recollection whether she asked for or was denied attorney's

fees.

        Husband contends that wife should be collaterally estopped

from claiming attorney's fees because the South Carolina court

denied her request for fees.    We disagree.

        "The doctrine of collateral estoppel precludes parties to a

prior action and their privies from litigating in a subsequent

action any factual issue that actually was litigated and was

essential to a valid, final judgment in the prior action."

Angstadt v. Atlantic Mut. Ins. Co., 249 Va. 444, 446, 457 S.E.2d

                                - 14 -
86, 87 (1995) (emphasis added).   For the doctrine to apply,

there must be an identity of issues litigated.     See id. at 447,

457 S.E.2d at 88.

     The South Carolina order makes no reference to attorney's

fees, and husband has presented no evidence that the issue was

even presented to the South Carolina court.     The doctrine of

collateral estoppel is, therefore, inapplicable.    Accordingly,

the outcome of the South Carolina litigation did not preclude

the trial court from including these funds as part of the

equitable distribution award. 2

                     Award of Meadows to Wife

     As of December 31, 1996, Meadows was valued at $4,020,000.

The debt on the property included a $2,143,375 note and $35,800

in security deposits.   Husband and wife were both listed as

principals on the note.

     One of the conditions on the note imposed by the lender

pertained to transferring ownership interests in Meadows:

          Transfers of no more than forty-nine percent
          (49%) of the ownership interests in
          [Meadows] shall be permitted so long as (a)
          the Principal owns in aggregate, at least
          51% of the ownership interests in [Meadows]
          and (b) [husband] remains the sole decision
          maker of [Meadows].

     2
       Husband also contends that this aspect of the equitable
distribution award violated the general rule that parties are
responsible for their own attorney's fees. The appellate record
does not reflect that husband made this argument to the trial
court, and we will not address it for the first time on appeal.
See Rule 5A:18.

                              - 15 -
The loan documents further provided that the lender could allow

a transfer of majority ownership interest at its discretion,

with the charge of a fee and costs.    In the event of such a

transfer, the transferee would assume all the transferor's

obligations under the loan agreement.

     The deed of trust securing the note further provided that

"[u]pon any such prohibited sale or transfer or if [husband]

fails to continue to control the Grantor's business, then

Beneficiary may, at Beneficiary's option, declare all of the

indebtedness to be immediately due and payable."    (Emphasis

added.)   The deed of trust reiterated that ownership in Meadows

could be transferred at the lender's discretion.

     After classifying and valuing the parties' property, "the

court distributes the property to the parties, taking into

consideration the factors presented in Code § 20-107.3(E)."

Marion, 11 Va. App. at 665, 401 S.E.2d at 436.     "It is precisely

'because rights and interests in marital property are difficult

to determine and evaluate and competing equities are difficult

to reconcile,' that 'the chancellor is necessarily vested with

broad discretion in the discharge of the duties the statute

imposes.'"   Matthews v. Matthews, 26 Va. App. 638, 645-46, 496

S.E.2d 126, 129 (1998) (quoting Smoot v. Smoot, 233 Va. 435,

443, 357 S.E.2d 728, 732 (1987)).   And "[i]n challenging the

court's decision on appeal, the party seeking reversal bears the

                              - 16 -
burden to demonstrate error on the part of the trial court."

Barker, 27 Va. App. at 535, 500 S.E.2d at 248.

     Pursuant to the parties' stipulation, the trial court

evenly divided the parties' marital property.    There was no

evidence that the Meadows note holder was likely to call the

note simply because husband was required to transfer his

ownership interest to wife and surrender control over that

business.   Moreover, wife assumed the obligation on the note,

and husband has not established that he would be prejudiced if

the lender decided to call the note.   Accordingly, husband has

failed to establish that the court abused its discretion when it

awarded Meadows to wife.

     For the foregoing reasons, the judgment of the trial court

is affirmed.

                                                Affirmed.

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