Court Opinion

ID: 1068520
Source: CourtListenerOpinion
Date Created: 2013-10-09 19:30:01.961771+00
Date Added: 2024-06-11T12:39:06.546330
License: Public Domain

COURT OF APPEALS OF VIRGINIA

Present: Chief Judge Fitzpatrick, Judges Elder and Humphreys
Argued at Alexandria, Virginia

DIANA M. L. TURONIS
                                         MEMORANDUM OPINION * BY
v.   Record No. 2110-02-4                 JUDGE LARRY G. ELDER
                                              MARCH 11, 2003
JOHN J. TURONIS

             FROM THE CIRCUIT COURT OF FAIRFAX COUNTY
                    Marcus D. Williams, Judge

          Douglas E. Bywater (Tate & Bywater, Ltd., on
          briefs), for appellant.

          David H. Fletcher (Gannon & Cottrell, P.C.,
          on brief), for appellee.

     Diana M.L. Turonis (wife) appeals from an order equitably

distributing property from her marriage to John J. Turonis

(husband) and denying her request for spousal support.    On

appeal, she contends the trial court erroneously (1) found a

portion of the equity in the marital home was husband's separate

property or, in the alternative, improperly calculated the

amount that was separate; (2) required her to pay a portion of

husband's credit card debt; (3) failed to treat as separate

property monies wife received from the sale of two parcels of

real property; (4) failed to divide the parties' respective

     * Pursuant to Code § 17.1-413, this opinion is not
designated for publication.
military pensions; (5) failed to award spousal support; and (6)

failed to award attorney's fees. 1

     We hold the trial court erroneously calculated the equity

in the marital residence by allowing the deduction of selling

expenses absent evidence the home was likely to be sold, and we

remand for division of the equity in the marital residence in

keeping with this opinion.    We affirm on all others issues but

direct the court to reconsider the spousal support and equitable

distribution awards as necessary based on its ultimate

distribution of the equity in the marital residence.

                                 I.

                      EQUITABLE DISTRIBUTION

     On appeal from an equitable distribution award, 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).

           Unless it appears from the record that the
           chancellor has abused his discretion, that
           he has not considered or has misapplied one
           of the statutory mandates, or that the
           evidence fails to support the findings of
           fact underlying his resolution of the
           conflict in the equities, the chancellor's
           equitable distribution award will not be
           reversed on appeal.

Smoot v. Smoot, 233 Va. 435, 443, 357 S.E.2d 728, 732 (1987).

     1
       Wife also claimed the trial court erred by ordering her to
sign a deed transferring the marital residence to husband
without requiring husband to assume the mortgage indebtedness.
However, wife concedes this issue is now moot.

                                - 2 -
                                 A.

 VALUATION AND CLASSIFICATION OF EQUITY IN THE MARITAL RESIDENCE

     On appeal, wife contends the trial court erroneously (1)

concluded that husband retraced the $60,000 in the A.G. Edwards

account and that she failed to prove a gift of that money to

her; (2) used the Brandenburg formula to divide the increase in

value of the home; and (3) reduced the equity it divided by

$46,800 in alleged selling costs.

                 1.   Tracing and Evidence of Gift

     "[T]he party claiming a separate interest in transmuted

property bears the burden of proving retraceability."    von Raab

v. von Raab, 26 Va. App. 239, 248, 494 S.E.2d 156, 160 (1997).

"This process involves two steps: a party must first (1)

establish the identity of a portion of hybrid property and (2)

directly trace that portion to a separate asset."    Rahbaran v.

Rahbaran, 26 Va. App. 195, 208, 494 S.E.2d 135, 141 (1997).      "If

the party claiming a separate interest in the transmuted

property proves retraceability, the burden shifts to the other

party to prove that the transmutation of the separate property

resulted from a 'gift.'"   von Raab, 26 Va. App. at 248, 494

S.E.2d at 160.

     Wife contests the retraceability of husband's separate

contribution to the extent that she and husband were jointly

liable on a short-term loan for $48,000, the proceeds from which

were used to purchase the marital residence.   Wife appears to

                               - 3 -
contend that her legal liability on that note, for however brief

a time, entitles her to have "that portion of the equity

purchased with the proceeds of the joint loan . . . categorized

as marital property."   We disagree.     Adopting wife's argument

would require us to ignore uncontradicted evidence that husband

used funds from the A.G. Edwards account to pay off the

short-term loan when the treasury note in that account matured

less than a month after closing and would deprive husband of the

share of equity retraceable to that separate contribution.        Wife

has failed to prove what portion of the equity, if any, is

attributable to the fact that she was jointly liable on the

$48,000 loan for one month.   See, e.g., Moran v. Moran, 29

Va. App. 408, 512 S.E.2d 834 (1999).      In the absence of such

proof, we hold the evidence supports the trial court's

conclusion that husband retraced the subject contributions by a

preponderance of the evidence.

     Wife also contends that husband gifted to her the $60,000

he put into the A.G. Edwards account, which was titled jointly,

and various other jointly held accounts before using the funds

to purchase the marital residence.       Per Code

§ 20-107.3(A)(3)(g), however, "[n]o presumption of gift arises

from the fact that the property was retitled."      Theismann v.

Theismann, 22 Va. App. 557, 565, 471 S.E.2d 809, 813, aff'd on

reh'g en banc, 23 Va. App. 697, 479 S.E.2d 534 (1996).      The

party claiming the existence of a gift "must prove by clear and

                                 - 4 -
convincing evidence '(1) intention on the part of the donor to

make a gift; (2) delivery or transfer of the gift; and (3)

acceptance of the gift by the donee.'"     Utsch v. Utsch, 38

Va. App. 450, 458, 565 S.E.2d 345, 349 (2002) (quoting

Theismann, 22 Va. App. at 566, 471 S.E.2d at 813).

        Thus, the fact that husband and wife were joint owners of

the A.G. Edwards account and that some of the funds husband

claimed as separate were subsequently placed in other accounts

jointly owned by the parties and ultimately used to purchase the

jointly titled residence did not establish that husband intended

to make a gift of the funds to wife.     Further, husband expressly

denied intending to make a gift of the funds to wife, and wife

offered no evidence that husband ever expressed such an intent,

either contemporaneously with the transfers or at any other

time.    Wife testified merely that husband never said that the

subject funds were "his separate money" or that "either of

[them] [had] any more of an interest in [the] house than the

other."    This evidence established, at most, that husband was

silent on the issue of whether he intended a gift of the funds

to wife.    The fact that wife participated in discussions with

husband and the A.G. Edwards broker when the account was first

opened as to how the money should be invested does not compel

the conclusion that husband intended to make a gift of the funds

to the marriage.    The fact that wife was jointly obligated with

husband on the short-term loan, the proceeds from which were

                                 - 5 -
used to purchase the marital residence and which husband

subsequently paid off with funds from the A.G. Edwards account,

also does not compel such a conclusion.     Thus, the evidence was

sufficient to support the trial court's finding that wife failed

to meet her burden of proving husband's intent to make a gift by

clear and convincing evidence.

          2.   Use of Brandenburg Formula to Calculate Equity

     Wife also contends the trial court's use of the Brandenburg

formula is inequitable because the parties signed a note for

almost eighty percent of the purchase price of the property and

because wife's "superior income enabled the parties to take on

such an obligation."     We disagree.

     As wife concedes, we have held "that the Brandenburg

formula is an acceptable method of tracing and determining the

value of the marital and separate property components of hybrid

property under Code § 20-107.3(A)(3)."     Hart v. Hart, 27

Va. App. 46, 66, 497 S.E.2d 496, 505 (1998) (citing Brandenburg

v. Brandenburg, 617 S.W.2d 871 (Ky. Ct. App. 1981)).     The

Brandenburg formula does not take into account the extent to

which the parties are obligated on a loan used to purchase the

property; it considers only the degree to which payment on that

loan reduces the loan principle, thereby resulting in the

acquisition of equity, marital or nonmarital, in the property.

See id.

                                 - 6 -
     Although we have recognized methods other than the

Brandenburg formula also may be used to retrace separate

contributions and apportion equity in marital property, see id.

at 66 n.4, 497 S.E.2d at 505 n.4, we have never held that proper

application of the Brandenburg formula was unfair in a

particular case.    Under the facts of this case, where the

parties had roughly the same annual income at the time the

mortgage was obtained and made a down payment on the residence

of approximately twenty percent, we conclude the trial court's

application of the Brandenburg formula to calculate the parties'

respective shares of the equity was not error.

                   3.   Deduction of Selling Expenses

     We hold the court erred in allowing a deduction for selling

expenses.   Deductions for "[e]xpenses of sale, such as a

broker's fee in the sale of real estate" are improper unless

"the asset is actually being sold or is likely to be sold."

Peter N. Swisher, Lawrence D. Diehl & James R. Cottrell,

Virginia Family Law § 11-25(a), at 492 (3d ed. 2002).

     Our holdings in Arbuckle v. Arbuckle, 22 Va. App. 362, 470

S.E.2d 146 (1996), and Barnes v. Barnes, 16 Va. App. 98, 428

S.E.2d 294 (1993), cited by husband, support this result.

Arbuckle involved the valuation of a dental practice for

purposes of equitable distribution.       22 Va. App. at 366, 470

S.E.2d at 147.   The valuation was hypothetical only; no evidence

indicated that "a sale would occur in the near future" or even

                                  - 7 -
that Mr. Arbuckle desired to sell his practice.      Id. at 365-66,

470 S.E.2d at 147-48.   Under these circumstances, we held that

consideration of the potential tax consequences of a sale, which

the trial court expressly recognized "indulged a 'legal

fiction[,]' . . . were too speculative to be considered."      Id.

Further, in Arbuckle, we distinguished our holding in Barnes, 16

Va. App. at 105-06, 428 S.E.2d at 300, in which we recognized

that awarding the marital residence to husband shifted to him

the potential capital gains tax liability wife would have

incurred if the sale had occurred while she retained an

ownership interest.   We noted in Arbuckle that "potential

liability for capital gain tax upon sale . . . is a proper

consideration in the determination of a property division and an

award, if it is not speculative."      Arbuckle, 22 Va. App. at 367,

470 S.E.2d at 148 (emphasis added).     Thus, Arbuckle and Barnes

stand for the proposition that the deduction of selling expenses

constitutes error where sale is unlikely and, therefore,

speculative.

     Here, although husband testified he was seeking selling

expenses, he never testified that he intended to sell the house,

and his attorney represented in both opening and closing that

husband wanted to keep the house.   Finally, the trial court

ruled that husband could purchase the house because "[the court

doesn't] believe that fixing [up] the house and public sale of

the house is . . . financially feasible."     Husband represented

                               - 8 -
in his brief filed December 26, 2002, that he still owns the

home and has obtained a new mortgage in his name alone.

     Because the sale of the house was speculative at best, 2 we

hold the trial court erred in deducting selling expenses in

calculating the equity in the property, and we remand to the

trial court to divide equity of $340,997 in the marital

residence in a manner consistent with this opinion.

                                  B.

                   APPORTIONMENT OF CREDIT CARD DEBT

     "The court shall . . . have the authority to apportion and

order the payment of the debts of the parties, or either of

them, that are incurred prior to the dissolution of the

marriage, based upon the [ten] factors listed in [Code

§ 20-107.3(E)]."    Code § 20-107.3(C).   Those factors include

"the basis for such debts and liabilities" and "[s]uch other

factors as the court deems necessary or appropriate."    Code

§ 20-107.3(E)(7), (10).

     Wife contends the court's ruling holding her responsible

for $2,200 of the debt on husband's Chase credit card "lacked

any evidentiary basis."    We disagree.   Although the card was in

husband's name, husband represented that approximately $8,350 of

the debt on the card, the balance at the time of separation, was

     2
       Wife also contends husband failed to offer evidence to
support his claim that selling expenses would equal eight
percent. Because wife failed to object on this ground at trial,
we hold this issue is barred by Rule 5A:18.

                                 - 9 -
marital debt.    Wife does not expressly dispute that the debt was

marital and argues only that she paid off the credit cards she

held in her name only, implying that husband should be required

to do the same.    She also claims that husband, without her

knowledge or permission, transferred a $9,000 balance of his own

to one of her accounts.    However, husband denied wife's claim.

Under these circumstances, we hold the trial court did not abuse

its discretion in holding wife responsible for approximately

twenty-five percent of the remaining marital credit card debt.

                                  C.

                PROCEEDS FROM WIFE'S REAL ESTATE SALES

     The evidence established that wife owned two pieces of real

estate prior to the parties' marriage and sold both shortly

after the parties were married.    In 1993, she sold an Illinois

property and received $19,074.11, which she used to pay back a

loan she had taken from the trust of one of her children from

her first marriage and also to pay off the costs of the parties'

wedding and honeymoon.    Wife's exhibit 7 represented these funds

as monetary contributions to the parties' marriage, but no other

evidence indicated that the loan from the trust was used for a

marital purpose or, assuming the wedding and honeymoon costs

were marital and the trust loan was not, what portion of the

loan proceeds were used for which purpose.    Thus, the trial

court did not abuse its discretion in failing expressly to award

                                - 10 -
wife a credit for these separate funds in the equitable

distribution.

     In 1994, wife sold a Florida property for $34,851.71, which

she used to purchase a 1995 Chevrolet Surburban while husband

was overseas.   In the equitable distribution, the trial court

stated that wife "shall receive the 1995 Chevrolet Suburban

. . . free and clear of any claims of [husband], with a value of

$13,125.00."    Thus, contrary to wife's claim that the trial

court gave her no credit for the funds she used to buy the

vehicle, the trial court awarded the vehicle to her in the

equitable distribution.   It also awarded wife $22,000 more of

the marital equity in the residence than it awarded to husband.

Under these facts, we hold the court's failure expressly to

credit wife for the contribution of funds used to purchase the

Suburban did not constitute an abuse of discretion.

                                 D.

                  DISTRIBUTION OF MILITARY PENSIONS

     Code § 20-107.3(A) provides that the trial court "upon

request of either party, shall determine the . . . value of all

property, real or personal, tangible or intangible, of the

parties."   Subsection (G)(1) provides that "[t]he court may

direct payment of a percentage of the marital share of any

pension, profit-sharing or deferred compensation plan or

retirement benefits, whether vested or nonvested, which

                               - 11 -
constitutes marital property and whether payable in a lump sum

or over a period of time."

     "We have recognized two methods for valuing and dividing a

defined benefit plan . . . ."    Torian v. Torian, 38 Va. App.

167, 176, 562 S.E.2d 355, 360 (2002).    Under the "'immediate

offset approach,'" the trial court determines the present value

of the marital share of the benefits and considers this value in

making the monetary award.   Id. (quoting Gamer v. Gamer, 16

Va. App. 335, 342-43, 429 S.E.2d 618, 624 (1993)).   The court

must determine present value even "[w]here an award of the

entire pension is made to the owning spouse."    Johnson v.

Johnson, 25 Va. App. 368, 374, 488 S.E.2d 659, 662 (1997).

     Under the "deferred distribution approach," the court

awards "a percentage of the marital share of the pension, in

which case payment is to be made only as retirement benefits are

paid."   Gamer, 16 Va. App. at 342-43, 429 S.E.2d at 624.      "If a

trial court orders deferred distribution of the marital share of

the pension, it need not determine the pension's present value."

Torian, 38 Va. App. at 177, 562 S.E.2d at 360.

     Here, the parties offered no evidence of present value.      As

a result, wife contends, the trial court was required to divide

the pensions under the deferred distribution method.   Under the

facts of this case, we disagree.    Both parties had defined

benefit military pensions, and the only evidence as to value was

wife's testimony that, as a starting point, her pension as a

                                - 12 -
Navy Reservist was half that of husband's as an active duty

member of the Navy.   She admitted other factors such as points

earned or months of service affected the ultimate benefit

calculation but provided no evidence of the actual benefit

amount either could expect to receive.    Although the record

contained sufficient evidence to allow the trial court to award

each party a percentage of the marital share of the other's

pension without abusing its discretion, we hold that its

decision not to make an award, based on a lack of evidence of

the respective values of the pensions, also was not an abuse of

discretion.   See, e.g., Bowers v. Bowers, 4 Va. App. 610, 618,

359 S.E.2d 546, 551 (1987).   Nevertheless, the trial court

remains free to make a different distribution of the pension

when it revisits the equitable distribution on remand.

                                 II.

                          SPOUSAL SUPPORT

     In awarding spousal support, the trial court must consider

the factors set out in Code § 20-107.1.     Decisions concerning

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."    Calvert v. Calvert, 18 Va. App.

781, 784, 447 S.E.2d 875, 876 (1994).

     A spouse's voluntary underemployment may serve as a basis

for imputing income to the underemployed spouse when calculating

spousal support.   See Code § 20-107.1; see also Stubblebine v.

                                - 13 -
Stubblebine, 22 Va. App. 703, 708, 473 S.E.2d 72, 74 (1996) (en

banc).    The fact that the spouse has custody of a minor child

and wishes to stay home with that child rather than work does

not prevent a court from imputing income to that spouse for

purposes of determining whether an award of spousal support is

appropriate.    Cf. Bennett v. Dep't of Soc. Servs., 22 Va. App.

684, 692-93, 472 S.E.2d 668, 672 (1996) (in case involving

imputation of income for purposes of calculating child support,

recognizing that "the trial court shall impute income to a

custodial parent who is voluntarily unemployed or underemployed

where the age of the child and circumstances permit the

custodial parent to be gainfully employed" but holding principle

did not apply under facts of case, which involved "profoundly

disabled" child).

     On brief, wife contends solely that her age and the age of

her child justify her voluntary unemployment.   When the final

decree was entered on July 24, 2002, wife was 46 years old and

the parties' minor child was 19 months old.   Wife asserts that

Code § 20-107.1(E)(4) and (5), which require the court to

consider the age, physical and mental condition of the parties

and age, physical and mental condition, and special

circumstances of the child, compel an award of spousal support

so that she will be able to stay at home until the child enters

school.

                               - 14 -
     We disagree.   In imputing income to wife and denying her

request for spousal support, the trial court specifically stated

that it considered all the statutory factors.   It found that

wife was "intelligent," "eminently qualified to work" and "has

done extremely well" in the work force.   It observed further,

          This is not a case of a child with special
          needs, nor was this a marriage involving a
          stay-at-home mom, [n]or was there an
          agreement in this marriage that [wife] would
          be a stay-at-home mom. Indeed, she has
          worked and brought home a substantial amount
          of the income during the marriage, . . .
          [which was one] of short duration [7 years
          and 8 months] . . . .

The trial court also commented, "Given the financial stress of

both parties, [wife] has no choice but to work."   The court

acknowledged evidence that wife had ongoing health problems but

found "none have [rendered her] in any way debilitated or

incapacitated," and wife does not challenge this finding on

appeal.

     The court heard evidence that wife was capable of earning

$100,000 to $130,000 per year in the Washington, D.C., area,

where she and husband resided at the time of their separation,

and $75,000 per year in the Atlanta, Georgia, area, where she

moved after the parties' separation in order to be closer to her

family.

     Based on the evidence, we hold the trial court did not

abuse its discretion in imputing $75,000 in income to wife.

However, because we reverse and remand the trial court's

                              - 15 -
equitable distribution award, we direct the trial court to

reconsider wife's spousal support request in light of its final

resolution of the equitable distribution.    See Code

§ 20-107.1(E)(8).

                                 III.

                         ATTORNEY'S FEES

     Whether to award attorney's fees is left to the sound

discretion of the trial court.    See, e.g., Lightburn v.

Lightburn, 22 Va. App. 612, 621, 472 S.E.2d 281, 285 (1996).

Here, the trial court found wife was capable of earning $75,000

per year, and the evidence established that wife earned more

than husband during the majority of their marriage.     Husband

substantially prevailed on the disputed equitable distribution

and spousal support issues.   Finally, husband incurred

attorney's and expert witness fees totaling $116,121.25, whereas

wife concedes on brief her attorney's fees and costs were only

"a fraction" of husband's.    Under these circumstances, we hold

the trial court did not abuse its discretion in ordering that

the parties be responsible for their own attorney's fees.

However, we direct the trial court to reconsider this ruling, if

necessary, in light of its resolution of the equitable

distribution and spousal support issues on remand.

                               - 16 -
                               IV.

     For these reasons, we hold the trial court erroneously

calculated the equity in the marital residence, and we remand

for further proceedings consistent with this opinion.

                                                Affirmed in part,
                                                 reversed in part
                                                    and remanded.

                             - 17 -