Court Opinion

ID: 1065547
Source: CourtListenerOpinion
Date Created: 2013-10-09 19:21:02.833955+00
Date Added: 2024-06-11T12:59:02.940183
License: Public Domain

COURT OF APPEALS OF VIRGINIA

Present: Judges Benton, Coleman and Lemons*
Argued at Richmond, Virginia

CHARLES S. ROWE

v.   Record No. 0981-99-2

MARY ANN ROWE                                    OPINION BY
                                          JUDGE SAM W. COLEMAN III
MARY ANN ROWE                                 AUGUST 22, 2000

v.   Record No. 1028-99-2

CHARLES S. ROWE

         FROM THE CIRCUIT COURT OF THE CITY OF FREDERICKSBURG
                Richard H. C. Taylor, Judge Designate

            Carl F. Bowmer (Christian & Barton, L.L.P.,
            on briefs), for Charles S. Rowe.

            E. Duncan Getchell, Jr. (Robert H.
            Patterson, Jr.; Richard Cullen; Paul G.
            Watson, IV; McGuire, Woods, Battle and
            Boothe, L.L.P., on briefs), for Mary Ann
            Rowe.

     Both Charles S. Rowe and Mary Anne Rowe appeal the circuit

court's order, which essentially reaffirmed and reinstated the

trial court's prior equitable distribution and spousal support

awards that we reversed in an earlier appeal and remanded for

reconsideration.    See Rowe v. Rowe, 24 Va. App. 123, 480 S.E.2d

     *
       Justice Lemons participated in the hearing and decision of
this case prior to his investiture as a Justice of the Supreme
Court of Virginia.
760 (1997).   For the reasons set forth below, we again reverse

the trial court and remand the case for further proceedings in

accordance with the following rulings.

                           I.   BACKGROUND

     The pertinent underlying facts are set forth in our prior

opinion.    See 24 Va. App. at 130-34, 480 S.E.2d at 763-64.

     Husband and wife were married on May 1, 1970.     The parties'

major assets were obtained with funds received from husband's

position as co-editor, co-publisher, and a principal stockholder

of the Free Lance-Star, a family-owned newspaper in

Fredericksburg.    After husband and his brother inherited the

newspaper from their father in 1949, they divided its operation

between them; husband assumed responsibility for the

news-editorial side, while his brother served as business

manager.    Over the years, the newspaper grew substantially and

profited.   Husband's expert witness calculated that the

newspaper's stock increased in value from $500 per share in 1970

to $9,500 per share in 1991.     Also, during the course of the

parties' marriage, husband received $14,000,000 in salary and

dividends from the newspaper.     When the parties married, they

moved into husband's home on Ingleside Drive.    Four years later,

husband sold the Ingleside Drive property for $82,000, and the

parties purchased the marital home on Hanover Street, in which

                                - 2 -
husband invested the $82,000 proceeds from the Ingleside Drive

home.

        The parties were divorced by final decree on December 1,

1993.    In March 1996, the circuit court entered its equitable

distribution and spousal support decree.    The trial court made

an equitable distribution award to wife of $4,204,530, awarded

wife $10,000 per month in spousal support, and awarded her

$50,000 for attorney's fees and court costs.    In doing so, the

trial court affirmed the Commissioner in Chancery's report,

which recommended that one-half, or $41,000, of the Ingleside

Drive sale proceeds remain husband's separate property.    Both

parties appealed from that decree.     We reversed the trial

court's rulings on several issues and remanded the case with

instructions.    On remand, the trial judge, with few exceptions,

reaffirmed his prior rulings and the equitable distribution and

spousal support awards.    The trial judge's disregard of our

opinion and mandate on remand has prompted and necessitated the

parties' second appeal.

        To place matters in a proper context, we note that in the

parties' first appeals, wife asserted, inter alia, that the

trial court erred by accepting husband's valuation of the

newspaper stock.    Husband asserted that the trial court erred by

classifying the entire increase in value of the newspaper stock

between 1970 and 1991 as marital property.    He argued the

                               - 3 -
$14,000,000 in salary and stock dividends that he received as

compensation from the newspaper during the marriage represented

the actual value of his marital effort and, thus, precluded

classification of the entire increase of the stock appreciation

as a marital asset.   Husband also contended the trial court

erred by classifying only $41,000 in value of the parties'

marital residence as his separate property because the entire

$82,000, constituting the proceeds from the sale of his

premarital home, was the value of his separate interest.   He

also asserted the trial court erred in determining the amount of

the monthly spousal support award.

     On appeal, we held that:   (1) the trial court did not err

in the valuation of the newspaper stock; however, it erred in

classifying the entire increase in value of husband's stock as

marital property because fifty percent or more of the increase

was attributable to the efforts of husband's brother and/or

passive economic factors; (2) the amount of compensation paid to

husband by the newspaper for his services, whether inadequate or

excessive, was but a factor to consider in determining the

amount of marital wealth attributable to marital effort; (3) the

trial court erred in treating only $41,000 of the $82,000 of the

Ingleside Drive sale proceeds invested in the parties' marital

home as gifted, marital property; (4) the court properly refused

to award wife one-half of husband's retirement benefits and the

                             - 4 -
court had the power to order the husband to pay wife's designee,

if wife predeceased husband; (5) the court erred in classifying

all of husband's post-separation pension contributions as

marital but did not err in refusing wife's proffer concerning

husband's separate contributions because wife failed to timely

offer supplemental evidence; and (6) the trial court correctly

deducted wife's litigation expenses from her list of other

expenses in valuing her accounts because she failed to timely

present evidence concerning her litigation expenses.   Because

the trial court had to reconsider, on remand, classification of

the increase in the value of husband's stock and distribution of

the $82,000 proceeds from the Ingleside Drive home gifted by

husband, we also held that the spousal support award must be

reconsidered.

     While the case was pending on appeal, husband sold his

newspaper stock for an amount far in excess of that valued by

the experts in 1991.   On remand, wife filed a motion for

re-valuation of the stock.   The trial court denied that motion.

In denying wife's motion for re-valuation of the stock, the

trial judge ruled, "The change in value of the Free Lance-Star

stock based upon Husband's sale of the Free Lance-Star stock to

his brother long after the separation, divorce and opinion by

the Court of Appeals does not affect the value as determined by

the Commissioner and set forth in the distribution order."    The

                             - 5 -
trial judge specifically noted that we had ruled the trial court

erred by finding "the entire increase in [value of] Husband's

stock was due to his personal efforts" and that we instructed

the trial court to consider on remand, as a factor in

determining the extent to which husband's personal efforts had

contributed to the increase in value of his stock, the fact that

husband may have been overcompensated for his efforts by

receiving $14,000,000 in salary and stock dividends during the

marriage.   Disregarding our decision, the trial judge held that

"[b]ecause the Commissioner and [the trial court] considered

both factors and with sufficient evidence, the ultimate finding

[that the entire increase in value of the stock was marital] was

a judgment call properly considered and supported."

     Additionally, the trial court ruled on remand that:

(1) husband shall pay wife 25.6 percent of each of his pension

payments; (2) the "entire sum of $82,000.00 invested in 'Hanover

Street' by Husband and classified by the Court of Appeals as

marital property shall be distributed to Wife"; (3) wife's

motion for updated discovery and valuation of marital assets was

denied; and (4) the "findings concerning spousal support,

litigation expenses, and post-separation deposits and

withdrawals have been reconsidered, and the Court FINDS that the

original determination as set forth in the Final Decree of

                             - 6 -
March 15, 1996 constitutes a distribution which is fair and

equitable to each party."

     A trial judge is bound by a decision and mandate from this

Court, unless we have acted outside our jurisdiction.   A trial

court has no discretion to disregard our lawful mandate.   When a

case is remanded to a trial court from an appellate court, the

refusal of the trial court to follow the appellate court mandate

constitutes reversible error.   See 1B Michie's Jurisprudence

Appeal and Error § 349 (M.J. Divine & G.E. Legner eds. 1995);

see also Nassif v. Board of Supervisors, 231 Va. 472, 480, 345
S.E.2d 520, 525 (1986) (stating that "[w]hen this Court rules

that the judgment of a trial court is erroneous it does not

matter whether that judgment is erroneous for one reason or ten;

it is no longer viable").

     Furthermore, a trial judge violates his or her oath of

office by willfully refusing to abide by the rulings of an

appellate court concerning the very case on appeal from the

trial court, regardless of how erroneous the trial judge may

consider the appellate ruling to be.   Moreover, the Canons of

Judicial Conduct provide that "[a] judge shall be faithful to

the law . . . ," Canons of Judicial Conduct for the State of

Virginia Canon 3(B)(2) (1999), and "[a] judge should respect and

comply with the law and shall act at all times in a manner that

promotes public confidence in the integrity and impartiality of

                            - 7 -
the judiciary."   Canon 2(A).         Here, the trial judge expressly

refused to follow or abide by our opinion, mandate, and

instructions on remand.

                                II.     ISSUES

     In the present appeal, husband contends the trial court

erred in its remand decree:       (1) by classifying a portion of the

increase in value of the Free Lance-Star stock as marital

property; (2) in awarding wife the entire sum of $82,000,

representing the proceeds from the sale of husband's separate

property, which he invested in the marital home; and (3) in

failing to modify its previous spousal support award.         Wife also

appeals, contending that the trial court erred by:         (1) failing

to re-value the Free Lance-Star stock to determine the actual

fair market value because husband had sold the stock while the

case was pending on appeal; (2) failing to determine the

post-separation increases in value of other marital assets;

(3) failing to reconsider the award of attorney's fees; and

(4) refusing to allow discovery or to conduct an evidentiary

hearing.

                               III.    ANALYSIS

           A.   Appreciation in Value of Newspaper Stock

                          1.    Classification

     The trial judge classified the entire $3,933,000 increase

in value of the newspaper stock during the marriage as marital

                                  - 8 -
property and awarded wife one-half of that increased value or

$1,966,500.   We held in the first appeal that "the trial court

erred in classifying the entire increase in the value of

husband's stock as marital property because fifty percent or

more of the increase was attributable to the efforts of

husband's brother and/or passive economic factors."    Rowe, 24

Va. App. at 129-30, 480 S.E.2d at 763.

     Husband contends that the foregoing ruling became the law

of the case and, based on that holding, no more than fifty

percent of the increase in value of the stock can be considered

marital property.    Husband contends that the trial court erred

on remand in failing to abide by that holding.   Husband also

asserts that the trial court erred on remand by failing to give

proper consideration to the extent to which the marital estate

was overcompensated by husband having received $14,000,000 in

salary and dividends during the marriage.   Husband contends

that, when properly considered, this factor reduces the extent

to which his personal efforts should account for the increase in

the stock's value.

     We held in the first appeal that a substantial portion of

the increase in the stock's value was attributable to the growth

in value of husband's original separate investment due to market

forces and the efforts of third parties.    We concluded that the

increase in value was not entirely attributable to husband's

                              - 9 -
personal efforts and, therefore, intimated that a substantial

portion of the increase in value was attributable to the passive

growth of husband's original separate asset at the time of the

marriage.   We expressly pointed out that "Code

§ 20-107.3(A)(3)(a) provides that '[i]n the case of the increase

in value of separate property during the marriage, such increase

in value shall be marital property only to the extent that

marital property or the personal efforts of either party have

contributed to such increases."   Id. at 133, 480 S.E.2d at 764

(emphasis added).   It was clear on the record before us in the

prior appeal that husband's personal efforts did not solely

account for the increase in value of his stock from $500 per

share in 1970 to $9,500 per share in 1991.   We directed that on

remand the "increase classifiable as marital should reflect only

that [appreciation] attributable to husband's personal efforts

and not those of husband's brother or passive efforts, such as

population growth and minimal inflation."    Id. at 134, 480

S.E.2d at 765.

     At trial, husband contended and presented evidence that a

significant portion of the increase in value of the stock was

not attributable to his personal efforts, but rather was

attributable to the increase in the circulation of the

newspaper, the dramatic population growth in the Fredericksburg

area, and slow inflation.   Husband also asserted that his

                             - 10 -
brother was more responsible for the increase in the value of

the newspaper's stock than he was.      Husband produced evidence

that during the marriage his responsibilities at the newspaper

had steadily decreased as he became more involved in "national

newspaper activities," which took him away from the

Fredericksburg area and away from the Free Lance-Star.      He

contends that those efforts should not be considered marital

efforts attributable to his duties with the Free Lance-Star or

affecting the increase in value of his interest in the

newspaper.    Husband also introduced evidence that, during this

period, his brother's efforts and duties at the newspaper had

increased.    As we previously noted, "Husband's brother was

solely responsible for the three expansions of the newspaper

plant and was in charge of every other activity and function of

the paper, with the exception of the news department."      Id. at

134, 480 S.E.2d at 765.    Indeed, we further noted that "Wife

indicated at trial that husband's brother was at least equally

responsible for the increase in the value of the paper."         Id.

From that evidence, the panel held as follows:

             [W]e hold that the trial court erred in
             finding that the entire increase in the
             value of husband's Free Lance-Star stock was
             due to his personal efforts. The increase
             classifiable as marital should reflect only
             that attributable to husband's personal
             efforts and not those of husband's brother

                               - 11 -
           or passive factors, such as population
           growth and minimal inflation.

Id.

      Despite our holding, on remand, the trial court held that

"the ultimate finding [in the prior decision] was a judgment

call properly considered and supported."   In a letter opinion

dated June 8, 1998, the trial judge stated:

           The Court of Appeals failed to recognize the
           weight of the factor of excessive
           compensation balanced the finding as to the
           value of the increase in [husband's] stock
           during marriage. Having taken days to review
           the inordinate amount of evidence, this Court
           is convinced that those factors were
           appropriately considered in the original
           findings.

      It is clear from the record that the trial judge, on

remand, did not re-examine the issue or make any effort to

classify how much of the appreciation in value was marital and

how much separate.   In fact, it appears the trial judge did not

comprehend that a significant portion of the increase in value

of the stock, based on the facts in this record, necessarily had

to be based on a passive increase in value of the original

investment, even if the evidence showed that the brothers'

personal efforts in expanding the paper in 1980 and 1990 were

the major factors causing the appreciation in value.

      Under the law of the case doctrine, we and the parties are

bound by our previous determination that the trial court erred

by finding the entire increase in value of husband's stock was

                             - 12 -
due to his personal efforts and that the "increase classifiable

as marital should reflect only that attributable to husband's

personal efforts."

               "The [law of the case] doctrine,
          briefly stated, is this: Where there have
          been two appeals in the same case, between
          the same parties, and the facts are the
          same, nothing decided on the first appeal
          can be re-examined on a second appeal.
          Right or wrong, it is binding on both the
          trial court and the appellate court, and is
          not subject to re-examination by either.
          For the purpose of that case, though only
          for that case, the decision on the first
          appeal is law."

American Filtrona Co. v. Hanford, 16 Va. App. 159, 164, 428
S.E.2d 511, 514 (1993) (quoting Steinman v. Clinchfield Coal

Corp., 121 Va. 611, 620, 93 S.E. 684, 687 (1917)).   To allow a

trial judge to disregard the holding of a previous panel would

be an inefficient administration of justice, increasing the

"labor of appellate courts and the costs to litigation,"

Steinman at 621, 93 S.E.2d at 687, and would promote uncertainty

in a court's decision.

     Without deciding the extent to which husband's active

personal efforts over the years increased the value of his

stock, we remanded the case with instructions to the trial court

to consider the extent to which the increase in value was

attributable to factors other than husband's personal efforts.

On remand, however, the trial court disregarded our holding and

                            - 13 -
instructions. 1   Accordingly, the trial court's ruling on remand

was erroneous, and we again reverse and remand the issue of the

classification of the appreciation in value of husband's

newspaper stock.

                          2.   Re-valuation

     While the case was on appeal, husband sold the newspaper

stock in 1997 for $41,184.04 per share as compared to the

estimated value of $9,500 per share in 1991, which the trial

court had accepted for valuation purposes.    Upon remand, wife

filed a motion for re-valuation of the stock because in the

interim, her interest in the marital share of the stock had sold

for a much higher price and she had not received her share of

the stock or the proceeds from the stock.     She claimed that she

was entitled to the increase in value of this marital asset

which husband continued to hold.

     1
       We note that in the preliminary summary of the case, the
panel held as follows: "the trial court erred in classifying
the entire increase in the value of husband's stock as marital
property because fifty percent or more of the increase was
attributable to the efforts of husband's brother and/or passive
economic factors." Rowe, 24 Va. App. at 129-30, 480 S.E.2d at
763. While this statement was not based on a factual finding by
the trial court, it clearly was a summary of our analysis of the
evidence and our "hold[ing] that the trial court erred in
finding that the entire increase in value of husband's . . .
stock was [attributable] to [husband's] personal efforts." Id.
at 134, 480 S.E.2d at 765. As we further held, "The increase
classifiable as marital should reflect only that attributable to
husband's personal efforts and not those of husband's brother or
passive factors, such as population growth and minimal
inflation." Id. at 134, 480 S.E.2d at 765.

                               - 14 -
     In a letter opinion dated June 8, 1998, the trial judge

stated:

               Stock is what you can get for it. Here
          the memorandum of the [wife] establishes a
          baseline. This was paid for by [husband].
          But what made it happen was the employment
          of the evaluator by [husband] and
          [husband's] position that if you don't buy
          at that price, you must sell and whoever
          wins gets all control. This is what
          establishes the value and none of it can be
          assigned to any cause or person other than
          [husband].

     The trial court ruled in its final decree after remand that

"[t]he change in value of the Free Lance-Star stock based upon

Husband's sale of the . . . stock to his brother long after the

separation, divorce and opinion by the Court of Appeals does not

affect the value as determined by the Commissioner and set forth

in the distribution order."

     We hold that the trial judge abused his discretion and

erred by failing to re-value the stock on remand when the asset

had been held by one party for such a lengthy period of time and

its value, including the value to which wife was entitled, had

greatly changed.   "We have stressed that the trial judge in

evaluating marital property should select a valuation 'that will

provide the Court with the most current and accurate information

available which avoids inequitable results.'"   Gaynor v. Hird,

11 Va. App. 588, 593, 400 S.E.2d 788, 790-91 (1991) (quoting

Mitchell v. Mitchell, 4 Va. App. 113, 118, 355 S.E.2d 18, 21

                              - 15 -
(1987)); see also Wagner v. Wagner, 16 Va. App. 529, 531, 431
S.E.2d 77, 78 (1993) (en banc) (stating that "the reasons for

re-valuation on remand are the same as in the original hearing

-- to obtain the most accurate valuation and equitable

distribution").   We held that because the Code "does not fix a

date for determining the value of [the parties' assets], the

trial court must select a valuation date if the parties cannot

agree to one."    Mitchell, 4 Va. App. at 118, 355 S.E.2d at 21.

The 1998 amendments to Code § 20-107.3(A) codified the rule

announced in Mitchell.    Code § 20-1047.3(A) provides:

          The court shall determine the value of any
          such property as of the date of the
          evidentiary hearing on the evaluation issue.
          Upon motion of either party made no less
          than twenty-one days before the evidentiary
          hearing the court may, for good cause shown,
          in order to attain the ends of justice,
          order that a different valuation be used.

     In Wagner, the trial court valued husband's pension

benefits before the first appeal and, on remand, the trial court

re-valued the property.   On appeal, husband argued that the

trial court erred in re-valuing the property because the

increase in value was due to his efforts.   We held that the

trial court did not err in re-valuing the asset to obtain the

most accurate valuation at the time of the equitable

distribution of the asset.    See Wagner, 16 Va. App. at 531-32,

431 S.E.2d at 78-79.

                              - 16 -
     In the present case, we find that the trial judge erred in

failing to re-value the stock on remand.   Where an asset that is

subject to equitable distribution is retained by one of the

parties for a period of time after valuation but before the

equitable division occurs and the asset significantly increases

or decreases in value during that time through neither the

efforts or fault of either party, neither party should

disproportionately suffer the loss or benefit from the windfall.

Under those circumstances, a trial court abuses its discretion

by failing to re-value the property when a party has made a

timely motion to do so and is prepared to present evidence on

the issue.   Here, the value of the stock was readily

ascertainable because husband sold the stock in 1997.    Not only

did the value of the stock increase, but in those six years it

increased more than four times the value estimated by the expert

witnesses in 1991.   Generally, there can be no better guide to

determine an asset's worth than the price it commanded in an

arm's-length sale.   While a trial court will usually have

discretion to determine the date on which an asset will be

valued, the date chosen "should be one that will provide the

Court with the most current and accurate information available

which avoids inequitable results."    Mitchell, 4 Va. App. at 118,

355 S.E.2d at 21.

                             - 17 -
     In his letter opinion dated June 8, 1998, the trial judge

found that the appreciation in value of the stock, since its

$9,500 per share value in 1991 and its $41,184.04 per share

value in 1997 when it was sold, was due solely to husband's

active efforts in employing an evaluator and his hard-line

bargaining with his brother to avoid bringing a stranger into

the company.   This evidence does not support the trial judge's

finding that the increase in value was due to husband's active

efforts.   Merely bargaining to obtain the best price for an

asset is not the type of active effort that adds intrinsic value

to an asset or increases its worth.   No evidence supports the

trial judge's conclusion that husband's efforts caused the stock

to increase in value between 1991, the date it was valued for

equitable distribution purposes, and 1997, when it was sold.

     The evidence is consistent with the conclusion, however,

that the increase was due to passive economic factors and the

fact that the sale between the brothers as major stockholders in

the closely-held corporation enabled husband to demand and

receive a premium price for the stock.   "Where marital property

appreciates pending the appeal because of inflation, market

forces, or other passive cause, . . . both parties should share

in the gain in value."   Brett R. Turner, Equitable Distribution

of Property § 7.02, at 430 (2d ed. Supp. 1999).   While the sales

price may reflect the value the stock could command in this

                             - 18 -
particular situation, rather than an actual appreciation in

value in those six years, the issue is the value of the stock to

these parties when the asset is divided between them.    One clear

measure of the true value to them obviously is the value for

which it sells.   We, therefore, instruct the trial judge on

remand, after determining what portion of the stock is

classified as marital in accord with our holding in Part 2, to

receive evidence of the actual sales price of the stock in

determining its value for purposes of the equitable distribution

award.

     Furthermore, because the evidence has changed concerning

the value of the stock in light of its being sold, the law of

the case doctrine does not apply in determining the appreciation

in value of the stock, which includes the estimated value of the

stock in 1970 when the parties married.   We note that in the

first appeal, we held that the trial judge did not abuse his

discretion in accepting husband's expert's valuation that the

stock was valued at $500 per share in 1970 and $9,500 per share

in 1991 and that the expert's valuations were not plainly wrong.

See Rowe, 24 Va. App. at 140-41, 480 S.E.2d at 768.     However,

where material facts have changed between the first appeal and

the second, the law of the case doctrine is inapplicable.

          Nothing is more common than a material
          difference between the facts presented on a
          second trial from those shown on the first
          trial, and the "law of the case" is

                             - 19 -
          applicable to the state of facts existing at
          the time the law is announced. There is
          nothing in the rule to inhibit a party, on a
          second trial, from supplying omitted facts
          or from averring a different state of facts.

Steinman, 121 Va. at 622, 93 S.E.2d at 688 (citation omitted).

     The previously-determined values in 1970 and 1991 were

based upon the opinions and estimates of expert witnesses and

were, according to the witnesses, deflated values, in part

because the stock was discounted due to generally limited

marketability of stock in a closely-held corporation.    As it

developed, the fact that the brothers in this closely-held

corporation did not want strangers owning stock in the

corporation resulted in the stock being sold at a premium price,

rather than a discounted price.   It is the premium price that we

are requiring the court to consider on remand for purposes of

determining the appreciated value of the stock.   However, it

would be manifestly unfair on remand for the court to use the

discounted estimated value of $500 per share as the basis for

determining how much the stock appreciated in value between 1970

and 1997 and to deduct that value from the premium sales price

of $41,184.04 per share in 1997 in order to determine how much

the stock appreciated.   To the extent the estimated value of the

stock at the time of the marriage in 1970 should bear some

relationship to its actual sales price twenty years later, we

hold that, on remand, the trial court shall reconsider and

                             - 20 -
determine the premium value of the stock at the time of the

marriage in 1970.    To do otherwise would unjustifiably inflate

the amount the stock had appreciated between its estimated

discounted value in 1970 and the premium sale price value in

1997.

                      B.   Hanover Street Property

        After their marriage, the parties lived in husband's home

on Ingleside Drive.    Four years later, the parties moved to a

new home on Hanover Street, in which husband invested the

$82,000 sale proceeds from the Ingleside Drive home.     The

parties held the Hanover Street home as joint tenants.     For

equitable distribution purposes, the Hanover Street property was

valued at $512,992.

        The trial court found that $41,000 of the Hanover Street

property was husband's separate property.     The balance of

$41,000 was marital property.     Husband argued that the entire

$82,000 from the sale of the Ingleside Drive home should be

treated as separate property.     We held in the first appeal that

the trial court erred in finding that only $41,000 of the sale

proceeds was gifted marital property, and we held that the

entire $82,000 was marital property.      See Rowe, 24 Va. App. at

138, 480 S.E.2d at 767.     Although the entire $82,000 was

retraceable as property husband owned before marriage, it was

                                - 21 -
marital because husband had made a gift of one-half undivided

interest in the Hanover property to wife.   We stated that,

          the parties purchased the home to serve as
          their home and that the new home was
          purchased in order to accommodate the
          parties' growing family. Husband placed no
          reservations on the transfers of title
          permitting him to reclaim the property upon
          divorce or any other circumstance. Further,
          wife testified that husband had said to her
          that his property was also her property.
          These circumstances, in combination with the
          fact that the house was conveyed by joint
          title, are evidence that a gift was intended
          and therefore that the entire sum of $82,000
          was marital property.

Id. at 137-38, 480 S.E.2d at 766-67.

     While we found that the entire $82,000 was marital

property, we specifically held that, on remand, "the trial court

was not bound to make an equal distribution of the property."

Id. at 138, 480 S.E.2d at 767.   We remanded the issue to the

trial court to properly classify the entire asset as marital

property and then to determine how the asset should be equitably

distributed.   Moreover, by ruling that the court erred in

classifying $41,000 as husband's separate property, we did not

hold or imply that husband was not entitled to a portion of that

marital asset.   We stated that, "[t]he trial court must give

careful consideration to the gifted status of martial property,

but the equitable award of marital property is ultimately to be

determined by the trial court's consideration of the evidence

and application of the Code § 20-107.3(E) factors."   Id.

                             - 22 -
     On remand, the trial judge, in a letter opinion dated

January 20, 1999, stated:

          The Court of Appeals found that the entire
          sum of $82,000.00 invested in "Hanover
          Street" by husband was originally separate
          property, then gifted to wife becoming
          marital property, but the division should be
          reexamined. Considering factors necessary
          to arrive at a fair and equitable award, and
          examining the evidence in that light, this
          Court finds that the entire $82,000.00,
          classified as marital, must be distributed
          to wife.

Without considering the statutory factors of Code § 20-107.3(E)

in determining how to distribute marital property, in

particular, the rights and equities of the parties, the trial

judge merely awarded wife the entire marital asset of $82,000.

     Although the trial judge stated that he considered the

"factors necessary to arrive at a fair and equitable award,"

nothing in the record suggests that the trial court considered

or applied the statutory factors.    See generally Theismann v.

Theismann, 22 Va. App. 557, 568, 471 S.E.2d 809, 814 (1996),

aff'd en banc, 23 Va. App. 697, 479 S.E.2d 534 (1996).   We,

therefore, find that the trial judge again erred in distributing

the $82,000 portion of the Hanover property.   Accordingly, on

remand, we instruct the trial judge to consider the evidence and

the factors set forth in Code § 20-107.3(E) in distributing the

$82,000, which is a discreet marital asset apart from the

remaining value of the Hanover home.

                            - 23 -
                     C.   Spousal Support Award

     Husband argues that, on remand, the trial court erred in

reaffirming its prior spousal support award, after being

directed by us to reconsider the award.   Specifically, he argues

that the trial judge failed to consider the "income generating

potential of the marital award."

     In the first appeal, we found that, although the trial

judge heard evidence addressing the factors in Code § 20-107.1, 2

it was "unclear from the record whether the court considered the

impact of the final . . . equitable distribution award on the

spousal support needs of wife."    Rowe, 24 Va. App. at 139, 480

S.E.2d at 767.   We noted that failure to consider the factors

set forth in Code § 20-107.1 constitutes reversible error, see

Woolley v. Woolley, 3 Va. App. 337, 344, 349 S.E.2d 422, 426

(1986), and we instructed the court to consider "the income

generating potential of the marital award as well as other

income and expenses generated by the asset assignment

constituting the equitable distribution award."    Rowe, 24

Va. App. at 139, 480 S.E.2d at 767.    We also held that because

"the trial court erred in classifying the full appreciation of

husband's Free Lance-Star stock as marital property, a new

     2
       Code § 20-107.1(8) provides that in determining the amount
of a spousal support award, the court shall consider the
provisions made with regard to the marital property under Code
§ 20-107.3.

                              - 24 -
equitable distribution award must be made, requiring

reconsideration of the spousal support award."      Id.

     On remand, the trial court stated that the spousal support

award had been reconsidered and found that "the original

determination as set forth in the Final Decree of March 15, 1996

constitutes a distribution which is fair and equitable to each

party."   (Emphasis added.)   Apparently, because the trial court

left its original equitable distribution award intact, other

than effectively awarding wife an additional $41,000 from the

value of the Hanover property, the trial court determined that

it was unnecessary to reconsider the spousal support issue.

Because the trial court must reconsider the classification of

the increase in value and must re-value the newspaper stock, the

court will necessarily be required to reconsider spousal support

as provided by Code § 107.1(8).

           D.   Value Post-Separation Increase in Assets

     Wife contends that, on remand, the trial judge failed to

value the post-separation increase in the marital assets,

including dividends from the Free Lance-Star stock as well as

the parties' investment accounts.      We held in the first appeal

that if "property or some portion thereof which generated the

dividends was marital, the dividends attributable to the marital

property would properly be classified as marital."        Id. at 143,

480 S.E.2d at 769.   Accordingly, because the stock had not been

                              - 25 -
distributed or the cash equivalent disbursed to wife, we

instruct the trial court as stated in part A, to determine what

portion of the appreciation in the stock's value is marital and

what portion is husband's separate property and then to classify

the earnings attributable to the martial portion as marital.

     Husband concedes that the trial court erred by failing to

include the post-separation dividends received on the marital

share of the Free Lance-Star stock.     However, husband argues

that re-valuation of other marital assets, specifically the

investment accounts, would be improper because those accounts

were equitably distributed between the parties by agreement and

distributed pursuant to the final decree by wife having received

the value of those accounts.    Thus, he asserts, the rights of

wife in the funds extinguished when she was paid her share and

she is not entitled to the increase in value of those funds.

Husband argues that the "assets have lost their character as

marital property, and are no longer subject to further division

or valuation."   Wife asserts that the "reversed award valued the

assets at issue instead of distributing them and awarded cash

equivalents."

     In the March 1996 final decree, the trial judge noted that

"[a]lthough the Commissioner's report directed that the marital

assets are to be divided equally, the Report fails to value and

classify certain assets and to specify how the division of

                               - 26 -
marital assets shall be accomplished."    At the trial judge's

direction, the parties prepared a proposed plan of distribution,

which they designated as Schedule A.    Schedule A classified and

valued all of the marital assets.     The trial judge ordered that

the assets be valued, classified, and distributed in the manner

set forth in the document, stating that "the interest of each

party in the property distributed or ordered transferred to the

other is hereby extinguished."

     We cannot ascertain on this record which of the assets have

been distributed or liquidated or which assets have been valued

and the cash equivalents paid.   To the extent the assets have

not been distributed or the cash equivalent has not been

disbursed, the trial judge on remand shall consider whether

re-valuation is appropriate to determine the most accurate

valuation and equitable distribution.     See Gaynor, 11 Va. App.

at 593, 400 S.E.2d at 790-91.    In the event that remaining

assets have not been disbursed or the cash equivalent has not

been paid, then the asset retains its character as marital

property and, therefore, any increase or decrease in the value

of the marital portion should be determined and proportionately

attributed to the parties.   However, to the extent the assets or

the cash equivalents have been distributed in accordance with

the equitable distribution award, the assets should not be

re-valued.

                             - 27 -
                    E.   Award of Attorney's Fees

     Wife argues that the trial court erred in failing to

reconsider its award of attorney's fees on remand.      Wife asserts

that, although we found that the trial court's failure to deduct

wife's litigation expenses from the valuation of her accounts

was not reversible error and that the award of $50,000 in

attorney's fees was not inadequate, the trial court was

instructed to reconsider the award of attorney's fees on remand.

Wife contends the trial court should again be instructed to

reconsider the award of attorney's fees.

     On appeal, we held that the trial judge did not abuse his

discretion in refusing to receive additional evidence after the

close of the record.     We stated, however, that "in view of our

remand of the equitable distribution award and the spousal

support award, the trial court should reconsider the attorney's

fees award."   Rowe, 24 Va. App. at 146, 480 S.E.2d at 771.     We,

therefore, instruct the trial court to reconsider the award of

attorney's fees on remand from this appeal.

               F.   Discovery and Evidentiary Hearing

     Wife contends the trial court erred by refusing to allow

discovery and by refusing to conduct an evidentiary hearing

regarding the re-valuation of the newspaper stock, the

post-separation increase in the value of other assets, and the

award of attorney's fees.    Wife asserts that she was "not given

                               - 28 -
time to develop evidence through discovery and was not permitted

to present evidence to the trial court because the trial court

unexpectedly ruled on all issues before allowing for any discovery

or an evidentiary hearing."   Wife requests that, on remand, the

trial judge be directed to permit discovery and hold an

evidentiary hearing.

     "Generally, the granting or denying of discovery is a matter

within the discretion of the trial court and will not be

reversed on appeal unless 'the action taken was improvident and

affected substantial rights.'"   O'Brian v. Langley School, 256
Va. 547, 552, 507 S.E.2d 363, 366 (1998) (quoting Rakes v.

Fulcher, 210 Va. 542, 546, 172 S.E.2d 751, 755 (1970)).    Because

we reverse and remand the case to the trial court for

re-valuation of the stock and reconsideration of the spousal

support and equitable distribution awards, we need not address

whether the court erred in the last remand in failing to permit

additional discovery or to conduct an evidentiary hearing.

However, because the value of the stock and the classification

of the stock's appreciation are material and relevant issues on

remand, the parties will necessarily need to conduct discovery

and the trial court will necessarily need to conduct an

evidentiary hearing.

                              - 29 -
     For the foregoing reasons, we reverse and remand the case

to the trial court for such further proceedings as are necessary

in accordance with this opinion.

                                           Reversed and remanded.

                            - 30 -