Court Opinion

ID: 1076709
Source: CourtListenerOpinion
Date Created: 2013-10-09 20:20:04.725991+00
Date Added: 2024-06-11T13:20:36.227887
License: Public Domain

COURT OF APPEALS OF VIRGINIA

Present: Judges Fitzpatrick, Overton and Senior Judge Duff
Argued at Alexandria, Virginia

JAMES H. MANVELL
                                      MEMORANDUM OPINION * BY
v.   Record No. 2023-96-4              JUDGE CHARLES H. DUFF
                                           JUNE 10, 1997
KATHLEEN M. MANVELL

             FROM THE CIRCUIT COURT OF FAIRFAX COUNTY
                       J. Howe Brown, Judge
           William F. Wall for appellant.

           James A. Watson II (Surovell, Jackson,
           Colten & Dugan, P.C., on brief), for
           appellee.

      James H. Manvell (husband) appeals the decision of the

circuit court classifying as marital property an investment

account titled in husband's name.   Husband contends that an

agreement signed by Kathleen M. Manvell (wife) converted the

account to his separate property.   In the alternative, husband

argues that the account contained funds which he received as an

inheritance from his mother and, thus, over half the account was

traceable as his separate property.   Finally, husband contends

that the trial court erred in dividing the parties' investment

accounts in such a way that husband received the riskier

investments while wife received the more conservative ones.     Wife

appeals the trial court's failure to find waste in husband's

transfer of $56,000 of the parties' funds to the parties' son and
      *
      Pursuant to Code § 17-116.010 this opinion is not
designated for publication.
withdrawal of $16,500 of the parties' funds, made within days of

the parties' separation.    Wife also appeals the trial court's

denial of attorney's fees.    We now affirm.

                              Background

        The parties were married in 1967 and separated in June 1995

when wife left the marital residence.      Husband worked throughout

the marriage until he lost his job in 1989.     Husband had managed

the family's finances throughout the marriage, but became

increasingly active in managing the family's investments after

1989.    By agreement, wife did not work outside the home for most

of the marriage, but she returned to work after husband lost his

employment.
        The parties experienced increasing marital difficulties

beginning in 1990, in part because wife refused to support

husband's plan to buy a business.      In 1994, husband proposed that

he and wife should start separating their finances.     On July 14,

1994, wife signed a statement authorizing Paine Webber to

"journal all assets and monies in my joint account . . . to an

account titled in my husband's name only" and providing "I

realize I will be giving up all ownership and control of these

assets."    Subsequently, on July 21, 1994, both parties signed a

statement authorizing Paine Webber to "journal all assets and

monies from my joint account . . . to a single account in my

husband's name only . . . ," and providing "I realize I will no

longer have an interest in the assets held in my husband's name

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only."    On July 21, 1994, Paine Webber transferred $377,660.20

from the parties' joint account into an account in husband's

name.    This money subsequently was transferred to a Smith Barney

account and had a balance of $398,220 at the time of trial.

        Wife testified that she had little understanding of or

access to the investment information and that she trusted husband

who told her that this document would make his handling of the

investments easier and more "flexible" so he could better support

the family.    She did not understand this document to strip her of

any claim to the funds.    Wife testified that husband agreed to

transfer other assets to wife to "equalize" their holdings,

although that never happened.    Husband testified that the parties

talked about transferring an account to wife's name.    However,

husband also testified that wife knew enough about the funds to

know their value and to know that separate title was not

necessary to flexibly manage the joint assets.
        Husband testified that he received over $88,000 in gifts and

inheritance from his mother between 1986 and 1991, which he

assumed he deposited into the existing joint investment accounts,

although he could not recall specifically which accounts received

his inherited funds.

        Between May 29 and May 31, 1995, husband transferred $56,000

from the Smith Barney account to the parties' eldest child to

equalize money previously spent on the other children.    Husband

characterized the payment as one from marital funds.    Husband

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admitted that the impending separation influenced him to transfer

the funds sooner.   While wife testified at trial that she

objected to the transfer, she indicated that she was concerned by

the fact that husband did not consult with her prior to

transferring the funds because she wanted to be sure each of

their three children received an equal amount.

     On June 1 and June 4, 1995, husband wrote checks to himself

from joint accounts totalling $16,500, which he lost gambling in

Atlantic City.
     The trial court ruled that the July 1994 agreement was

intended only to change the name on the brokerage firm's records

and not to transfer ownership solely to husband.   Therefore,

funds held in the Smith Barney account remained marital property.

The trial court rejected husband's alternative claim that at

least half of the Smith Barney account was his separate property

inherited from his mother, finding that "there was not sufficient

proof of the amount [of inheritance] received, or what happened

to the funds after they were commingled with the marital

funds . . . ."

     In dividing the Smith Barney investments, the court awarded

wife the more conservative and stable accounts and husband the

high-risk investments.   In its order denying husband's motion for

reconsideration, the trial court indicated it awarded the

high-risk investments to husband because of his greater

investment skill.

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     The trial court found that husband's expenditures within

days of the parties' final separation were not waste, as they

were not made in contemplation of divorce.

                        Equitable Distribution

     The evidence was received by the trial court ore tenus.       "In

reviewing an equitable distribution award on appeal, we recognize

that the trial court's job is a difficult one.    Accordingly, we

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

many considerations and circumstances that are presented in each

case."     Artis v. Artis, 4 Va. App. 132, 137, 354 S.E.2d 812, 815

(1987).    The judgment of a trial court sitting in equity, "when

based upon an ore tenus hearing, is entitled to great weight and

will not be disturbed on appeal unless plainly wrong or without

evidence to support it."     Simmons v. Simmons, 1 Va. App. 358,

361, 339 S.E.2d 198, 199 (1986).

     Husband contends that the July 21, 1994 statement signed by

wife and husband constituted a valid agreement transferring to

him as his separate property the funds held in the Paine Webber

account.    The trial court ruled the writing did no more than

change the title of the account in the records of the investment

brokerage firm, but did not convert the marital funds into

husband's separate property.

     While husband testified that wife clearly knew that the

funds were to be his alone, he acknowledged that he had managed

the family's finances throughout the marriage, that he had the

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greater knowledge and sophistication about the finances in

general and the investments in particular, and that wife trusted

him.   Husband testified that he intended to use the funds in this

account now titled only in his name for family purposes:
          I made it very clear to her that that would
          become my account and I could do anything I
          wanted with it and that my intentions were to
          continue to contribute and work it to the
          benefit of the family to pay the college
          education and major costs and our mortgage.

                   *    *    *    *    *    *    *
            I said that as long as we're working together
            as family -- like anything else for the
            benefit of the family. And the itemizations
            that were mentioned were the major expenses
            that she could not cover with her salary --
            mortgage, college educations, large items. I
            also informed her I could lose it.

The parties admitted that husband solely controlled the financial

transactions.   There was evidence that with husband's

increasingly more active stock transactions, he had needed to

obtain wife's signature more often.   Wife testified that she was

relinquishing control to increase husband's flexibility in making

the stock transactions, but denied that she intended to forego

her marital interest to approximately one-half million dollars.

       In the alternative, husband contends that he deposited over

$88,000 in separate funds inherited from his mother which, with

investment earnings over the years, account for over half the

value in the Smith Barney account.    Separate property includes

"all property acquired during the marriage by bequest, devise,

descent, survivorship or gift from a source other than the other

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party."   Code § 20-107.3(A)(1)(ii). Nevertheless,
           [w]hen marital property and separate property
           are commingled by contributing one category
           of property to another, resulting in the loss
           of identity of the contributed property, the
           classification of the contributed property
           shall be transmuted to the category of
           property receiving the contribution.
           However, to the extent the contributed
           property is retraceable by a preponderance of
           the evidence and was not a gift, such
           contributed property shall retain its
           original classification.

Code § 20-107.3(A)(3)(d).    Husband could not recall into which

funds he deposited these amounts and admitted that "at that time

I felt it not necessary to segregate" these funds from the

parties' marital property.   The trial court found that husband

failed to provide sufficient evidence to identify any separate

property received from his mother or her estate.   That finding is

not clearly wrong.
     Finally, husband contends that the trial court violated Code

§ 20-107.3 because it did not divide the current value of the

parties' marital assets but instead relied on husband's future

ability to invest the stocks attributed to him.    Code

§ 20-107.3(C) provides that, "[e]xcept as provided in subsection

G, the court shall have no authority to order the division or

transfer of separate property or marital property which is not

jointly owned."   The account containing the riskier investments

was marital property not jointly owned.   Thus, the court lacked

authority to order the division of that account.   Working with

these limitations, the court's equitable distribution award gave

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the parties approximately equal shares of the marital assets.

The court noted that it considered the tax consequences when

reaching its decision.    Moreover, while husband complains that he

received the riskier investments, the court's decision to award

him these investments can hardly be described as an abuse of

discretion in light of husband's admittedly greater knowledge and

past practice.

                                Waste
     Wife contends that the trial court erred when it failed to

find waste in husband's transfer of $56,000 to their son and

withdrawal of $16,500 in cash made shortly before she left the

marital residence.   "'[W]aste' may be generally characterized as

the dissipation of marital funds in anticipation of divorce or

separation for a purpose unrelated to the marriage and in

derogation of the marital relationship at a time when the

marriage is in jeopardy."    Booth v. Booth, 7 Va. App. 22, 27, 371
S.E.2d 569, 572 (1988).   The trial court found that the transfers

were not made in contemplation of separation.   That finding is

supported by the evidence.   While husband admitted he withdrew

the cash and lost it gambling in Atlantic City, there was no

evidence that he intended to spend those funds in a way harmful

to the marriage or in anticipation of a possible divorce.

     Moreover, wife's testimony demonstrated that she did not

object to the fact of the transfer to the parties' son, but was

concerned whether each of the parties' children received an equal

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amount.   Therefore, the evidence indicated that that transfer was

not for a purpose unrelated to, or in derogation of, the

marriage.

                          Attorney's Fees

     "An award of attorney's fees is a matter submitted to the

trial court's sound discretion and is reviewable on appeal only

for an abuse of discretion."   Graves v. Graves, 4 Va. App. 326,

333, 357 S.E.2d 554, 558 (1987).       The trial court noted that, as

husband was unemployed while wife was employed, wife had the

greater earning potential.   Wife also received a fair share of

the marital assets.   We find no abuse of discretion in the

court's denial of wife's request for attorney's fees.
     Accordingly, the decision of the circuit court is affirmed.

                                             Affirmed.

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Fitzpatrick, J., concurring in part and dissenting in part.

     I agree with the majority's holdings on all issues except

that of the dissipation of marital funds.    I respectfully

disagree with the majority's conclusion that husband's withdrawal

of $16,500 in cash days before the parties' separation was not a

dissipation of marital assets.

     Parties are "free to spend marital funds" at least until

they contemplate divorce.   Booth v. Booth, 7 Va. App. 22, 27, 317
S.E.2d 569, 572 (1988).   The record establishes that husband

acknowledged that the pending separation of the parties was an

impetus to the withdrawal of the marital funds.    Waste is often

"characterized as the dissipation of marital funds in
anticipation of divorce or separation for a purpose unrelated to

the marriage and in derogation of the marital relationship at a

time when the marriage is in jeopardy."     Booth, 7 Va. App. at 27,

371 S.E.2d at 571 (emphasis added).   Additionally, we have found

as follows:
          Dissipation occurs "where one spouse uses
          marital property for his own benefit and for
          a purpose unrelated to the marriage at a time
          when the marriage is undergoing an
          irreconcilable breakdown." Once the
          aggrieved spouse shows that marital funds
          were either withdrawn or used after the
          breakdown, the burden rests with the party
          charged with dissipation to prove that the
          money was spent for a proper purpose.

Smith v. Smith, 18 Va. App. 427, 430, 444 S.E.2d 269, 272 (1994)

(quoting Clements v. Clements, 10 Va. App. 580, 586, 397 S.E.2d
257, 261 (1990)); see also Alphin v. Alphin, 15 Va. App. 395,

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403-04, 424 S.E.2d 572, 576 (1992) (no dissipation where party

establishes that expenditures were for a proper purpose, e.g.,

"living expenses, medical bills and other necessities of life").

     There are few, if any, clearer ways to squander marital

resources than to gamble them away.   Specifically, I disagree

with the majority's finding that "there was no evidence that

[husband] intended to spend those funds in a way harmful to the

marriage or in anticipation of a possible divorce."   In the

instant case, husband knew that the marriage was irrevocably

"broken down" at the time he withdrew the marital funds and

incurred the gambling debt of $16,500.   He knew that the parties'

separation was imminent.   It is undisputed that the funds at

issue were not used in furtherance of a proper purpose or to

promote the success of the marital relationship.   Thus, I would

hold that, following the breakdown of the marital relationship,

in gambling away $16,500, husband committed a waste of marital

assets.

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