Court Opinion

ID: 1071011
Source: CourtListenerOpinion
Date Created: 2013-10-09 19:40:16.832283+00
Date Added: 2024-06-11T12:59:26.002341
License: Public Domain

COURT OF APPEALS OF VIRGINIA

Present: Chief Judge Fitzpatrick, Judges Elder and Bray
Argued at Chesapeake, Virginia

BARRI L. FERRARO

v.   Record No. 1117-99-1

GLENN ROBERT FERRARO                      MEMORANDUM OPINION * BY
                                          JUDGE LARRY G. ELDER
GLENN ROBERT FERRARO                          MARCH 7, 2000

v.   Record No. 1180-99-1

BARRI L. FERRARO

              FROM THE CIRCUIT COURT OF YORK COUNTY
                  N. Prentis Smiley, Jr., Judge

          John F. Rixey for Barri L. Ferraro.

          Donald K. Butler (Ann Brakke Campfield;
          LeeAnn N. Barnes; Morano, Colan & Butler, on
          briefs), for Glenn Robert Ferraro.

     Barri L. Ferraro (wife) and Glenn R. Ferraro (husband) have

filed cross-appeals from the ruling of the York County Circuit

Court granting them a divorce and making spousal support and

equitable distribution awards.   We find no reversible error and

affirm the ruling of the trial court.

     We note at the outset that, on appeal, we consider the

evidence on a particular issue in the light most favorable to

the party who prevailed on that issue in the trial court.     See

     * Pursuant to Code § 17.1-413, recodifying Code
§ 17-116.010, this opinion is not designated for publication.
Wilson v. Wilson, 12 Va. App. 1251, 1254, 408 S.E.2d 576, 578

(1991).   "The judgment of a trial court sitting in equity, when

based on evidence heard ore tenus, will not be disturbed on

appeal unless plainly wrong or without evidence to support it."

Peple v. Peple, 5 Va. App. 414, 423, 364 S.E.2d 232, 237 (1988).

                                I.

                WIFE'S APPEAL, RECORD NO. 1117-99-1

     Wife contends on appeal that the trial court erred in (1)

holding wife solely responsible for $49,947 in credit card debts

incurred post-separation; (2) admitting evidence of husband's

1998 income in a March 15, 1999 hearing when that evidence had

not previously been provided to wife in discovery; and (3)

reducing wife's expenses and determining that she could earn

$3,700 per month on assets received in the equitable

distribution such that she needed only $3,000 per month in

spousal support.

                                A.

                         CREDIT CARD DEBT

     Code § 20-107.3(C) provides that "[t]he 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 subsection E" of that same code section.     Id.

(emphasis added).   Those factors include "the basis for such

debts and liabilities," and "[s]uch other factors as the court

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deems necessary or appropriate to consider in order to arrive at

a fair and equitable monetary award."       Id. (E)(7), (10).   Where

a party claims a post-separation debt is marital, "'the burden

is on the party who last had the funds to establish by a

preponderance of the evidence that the funds were used for

living expenses or some other proper purpose.'"       Luczkovich v.

Luczkovich, 26 Va. App. 702, 714, 496 S.E.2d 157, 163 (1998)

(quoting Clements v. Clements, 10 Va. App. 580, 587, 397 S.E.2d

257, 261 (1990)).

     Here, wife bore the burden of establishing that the debt of

almost $50,000 she incurred on various credit cards, which she

obtained after the parties' separation and in her name only,

resulted from her payment of living expenses or some other

proper purpose.     See id.   Although wife testified about the

items she purportedly charged, she provided no credit card

account statements to support her testimony.      She gave general

testimony about the types of items she purchased but was unable

to quantify what percentage of the debt resulted from any

particular type of expenditure.     Further, she admitted that some

of the medical expenses she claimed to have charged were

reimbursed and could not establish which expenses were not.       We

hold the trial court did not abuse its discretion in concluding

that the record contained "no evidence, that the court can

relate to, that would identify any specific item as a legitimate

marital debt under the definition."       Therefore, we reject wife's

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invitation to reverse the ruling of the trial court on this

ground.

                                  B.

          ADMISSIBILITY OF HUSBAND'S 1998 INCOME FIGURES

     Determining "the admissibility of evidence is within the

broad discretion of the trial court, and a ruling will not be

disturbed on appeal in the absence of an abuse of discretion."

Blain v. Commonwealth, 7 Va. App. 10, 16, 371 S.E.2d 838, 842

(1988).   Evidence is generally admissible if it is both relevant

and material.     See Evans-Smith v. Commonwealth, 5 Va. App. 188,

196, 361 S.E.2d 436, 441 (1987).       Here, the trial court was

under a duty to determine the current financial status of the

parties for purposes of calculating husband's support

obligation.     See, e.g., Jacobs v. Jacobs, 219 Va. 993, 995, 254

S.E.2d 56, 58 (1979) (decided under former Code § 20-107); see

also Code § 20-107.1(1), 1994 Va. Acts ch. 518. 1     It also was

required to consider the tax consequences insofar as "necessary

to consider the equities between the parties."      Code

§ 20-107.1(9).    Therefore, husband's 1998 income figures, the

     1
       Although Code § 20-107.1 was amended in 1998, the
legislature specifically provided that those amendments "shall
apply only to suits for initial spousal support orders filed on
or after July 1, 1998." 1998 Va. Acts ch. 604. Wife's request
for spousal support was made in her 1996 bill of complaint.
Therefore, the 1998 amendments to that code section do not
apply. See 1994 Va. Acts ch. 518 (version of Code § 20-107.1
preceding 1998 amendments).

                                 - 4 -
most current income information then available, was relevant for

the court's consideration.

     In addition, Gregory F. Lawson's information regarding the

tax consequences of a spousal support award set at a figure

between $3,000 and $5,000 was probative of the amount of the

award to be set in spite of the fact that this amount was lower

than the sum husband previously had paid wife voluntarily.

Husband's evidence established that wife could earn investment

income on her equitable distribution award, which income the

court was required to consider in determining husband's spousal

support obligation.   See Code § 20-107.1(1), (8); see Rowe v.

Rowe, 24 Va. App. 123, 129, 480 S.E.2d 760, 767 (1997).

Although a spouse may not be required to invade funds or other

assets received pursuant to the equitable distribution, a court

must consider any income the award may produce.    See Rowe, 24

Va. App. at 129, 480 S.E.2d at 767.    Finally, wife would have

been entitled to cross-examine the expert to determine the tax

consequences to husband of a spousal support obligation set at

higher levels more similar to the sums husband actually had been

paying.   For these reasons, we conclude that the challenged

evidence was relevant and unquestionably admissible if timely

produced.

     We assume without deciding that husband's production of his

1998 income figures on the last day of testimony on the issue of

                               - 5 -
spousal support constituted a violation of a continuing duty to

produce such records as imposed by the court.   However,

          "Rule 4:12 gives the trial court broad
          discretion in determining what sanctions, if
          any, will be imposed upon a litigant who
          fails to respond timely to discovery." And
          a trial court's decision to admit evidence
          that is not timely disclosed, rather than
          impose the sanction of excluding it, will
          not be reversed unless the court's action
          amounts to an abuse of discretion.

Rappold v. Indiana Lumbermens Mutual Ins., 246 Va. 10, 14, 431

S.E.2d 302, 305 (1993) (quoting Woodbury v. Courtney, 239 Va.

651, 654, 391 S.E.2d 293, 295 (1990)).

     Here, although wife likely was surprised by the 1998 income

figures, the only sanction she requested was exclusion.     She did

not request a continuance in order to review and prepare a

response to those figures, even after the trial court denied her

motion to exclude the evidence.    Under these circumstances,

given the relevance of the 1998 income figures to an accurate

determination of husband's ability to pay spousal support, we

hold the trial court did not abuse its discretion in refusing to

exclude the evidence.

                                  C.

                        SPOUSAL SUPPORT AWARD

     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).

                                - 6 -
In awarding spousal support, the trial court must consider the

factors set out in Code § 20-107.1. 2   "Those spouses deemed

entitled to support have the right to be maintained in the

manner to which they were accustomed during the marriage, but

their needs must be balanced against the other spouse's

financial ability to pay."    Dukelow v. Dukelow, 2 Va. App. 21,

26, 341 S.E.2d 208, 210 (1986).   "When the record discloses that

the trial court considered all of the statutory factors, the

court's ruling will not be disturbed on appeal" absent a clear

abuse of discretion.    Gamble v. Gamble, 14 Va. App. 558, 574,

421 S.E.2d 635, 644 (1992).

     Wife challenges the trial court's ruling that both the

amount of spousal support husband was able to pay and the amount

of spousal support wife needed were lower than wife represented.

Viewing the evidence in the light most favorable to husband, as

we must on appeal, we hold that the trial court's rulings did

not constitute an abuse of discretion.    At the March 15, 1999

hearing, the trial court heard extensive evidence from the

parties and explained his consideration of each of the statutory

factors in detail at the March 15, 1999 hearing.

     This evidence, viewed in the light most favorable to

husband, supported the trial court's "adjustments" to wife's

expense sheet, based on its finding that the expenses were

"overstated" and that "she [was] unable to justify . . . or

     2
         See supra note 1.
                                - 7 -
explain the numbers."    We also find no abuse of discretion in

the trial court's determination that wife's need for spousal

support was reduced by the investment income she could earn on

her share of the equitable distribution.     Although a spouse may

not be required to invade funds or other assets received

pursuant to the equitable distribution, a court must consider

any income the award may produce.     See Rowe, 24 Va. App. at 129,

480 S.E.2d at 767.

        Balancing wife's need against husband's ability to pay

support does not alter our holding.      We reject wife's argument

that husband's income and level of support in 1997 and previous

years was more probative of the parties' lifestyle and husband's

ability to pay support than his income and level of support in

1998.    Husband testified that some of his corporations had

suffered business reversals in 1998, thereby reducing their

profitability.    He also explained that the amount of money he

received from the corporations in 1997 was not an accurate

reflection of their profitability and that he took more than

just profits out of the corporations in an effort to keep pace

with wife's requests for money.    Finally, contrary to wife's

testimony, husband indicated that they did not have a lavish

lifestyle while married.

        For these reasons, we hold that the evidence supported the

trial court's spousal support award and that the trial court did

not abuse its discretion in determining the amount of the award.

                                 - 8 -
                               II.

             HUSBAND'S APPEAL, RECORD NO. 1180-99-1

     Husband contends on appeal that the trial court erred in

(1) valuing husband's business interests because it credited a

portion of the testimony of wife's expert, failed to apply

certain discounts to value based on husband's minority ownership

interest and the lack of marketability of his interest, and

considered the parties' opinions as to value; (2) ruling that

the value of all marital property, including husband's business

interests, should be divided equally when husband originally

agreed to an equal division but changed his mind and disputed

such division prior to the court's equitable distribution

hearing, and (3) refusing to allow him to cross-examine wife on

her contributions to husband's acquisition and maintenance of

his business interests.

                               A.

            VALUATION OF HUSBAND'S BUSINESS INTERESTS

     "When 'a determination of the value of marital property is

dispositive of the amount of a monetary award, that

determination by the trial court must be reviewable and have a

foundation in the evidence presented.'"   Jacobs v. Jacobs, 12

Va. App. 977, 979, 406 S.E.2d 669, 670 (1991) (quoting Trivett

v. Trivett, 7 Va. App. 148, 155, 371 S.E.2d 560, 564 (1988)).

However, in reviewing such an award on appeal, "we recognize

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

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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).

     We hold first that husband waived any right to contest the

trial court's consideration of his or wife's opinions as to the

value of husband's interest in the sporting goods stores because

he made no contemporaneous objection when the trial court

elicited that testimony.    See Gelletly v. Commonwealth, 16 Va.

App. 457, 460-61, 430 S.E.2d 722, 725 (1993).    Once that

testimony was admitted without objection, the trial court did

not abuse its discretion in considering it.

     We also conclude that the evidence supports the trial

court's finding that husband's ownership interest in the

sporting goods stores had a value of $1,300,000.   Although

husband attacked the trial court's reliance on the testimony of

wife's expert, Dian Calderone, nothing in the record requires a

finding that the portions upon which the trial court relied were

plainly wrong, and it was within the court's discretion to rely

on those figures.   Further, the portions of Calderone's

testimony on which the court relied were very similar to the

testimony of husband's expert, Gregory Lawson.   Both experts

calculated a book value for the entire corporate entity at

approximately $3,700,000.   What the trial court did, in essence,

was to use husband's figures under the method of valuation

                               - 10 -
called capitalization of excess earnings which included

husband's figure for goodwill.   Application of this method

resulted in a value of approximately $1,400,000 for husband's

thirty-four percent share.   This was the same value Lawson

obtained before applying discounts for husband's minority

ownership and the lack of marketability of the stock.

     In essence, then, what husband contests is the trial

court's refusal to apply the minority and marketability

discounts.   Under the facts of this case, we hold the trial

court did not abuse its discretion in refusing to apply these

discounts.   As to the marketability discount, husband's expert

represented that the capitalization of excess earnings valuation

method represented the total fair market value of a business.

Further, no evidence established that husband intended to or

would be required to sell any of his ownership interest in order

to obtain the funds to pay wife her share of the equitable

distribution award.   Therefore, we find no error in the court's

refusal to apply the marketability discount.   See Zipf v. Zipf,

8 Va. App. 387, 395, 382 S.E.2d 263, 267-68 (1989) (upholding

equitable distribution award which did not reflect requested

marketability discount).

     Likewise, we hold the trial court did not abuse its

discretion in refusing to discount the value of the stock due to

husband's minority ownership interest.   The evidence established

that husband owned minority interests in most of the stores but

                              - 11 -
that no other person owned a majority interest in any of these

stores either.   Although husband testified that other minority

shareholders routinely voted together to control the group of

corporations, the trial court was free to reject husband's

testimony and conclude that husband's minority ownership did not

diminish the value of this asset.    Compare Jacobs, 12 Va. App.

at 979-80, 406 S.E.2d at 670-71 (holding that court erred in

failing to consider non-liquidity of wife's minority interest in

closely held corporation where, although husband had equal

minority ownership interest, husband's father owned the

remainder and husband admitted that he had complete control over

the corporation, rendering wife's stock "essentially worthless

until the corporation is dissolved and its assets liquidated").

     For these reasons, we hold that the trial court did not

abuse its discretion in valuing husband's interest in the

sporting goods business at $1,300,000.

                                B.

             PERCENTAGE DIVISION OF MARITAL PROPERTY

     The parties' attorneys agreed in proceedings before the

court to the equal division of husband's business property, and

the parties posed no objection to this agreement.   When wife

prepared an order for entry by the court embodying the issues

resolved in that hearing, including the parties' agreement

regarding the equal division of marital property, husband's

attorney endorsed it without objection.   The trial court found

                              - 12 -
no mistake of fact or misunderstanding existed over the

agreement.    Further, husband admits his original agreement to

the equal division but argues that he was entitled to change his

mind.    Under Richardson v. Richardson, 10 Va. App. 391, 394-98,

392 S.E.2d 688, 689-91 (1990), we disagree.    The evidence

manifests a meeting of the minds and a certainty of terms

sufficient to render the agreement binding, see id., especially

in light of the court's entry of an order embodying the ruling,

to which husband posed no timely objection.    Therefore, we

affirm the trial court's equal division of marital property

based on the parties' agreement to same.

                                  C.

CROSS-EXAMINATION OF WIFE ON CONTRIBUTIONS TO BUSINESS INTERESTS

        Assuming without deciding that husband properly preserved

for appeal his objection to the denial of cross-examination, and

assuming further that the denial constituted error, we

nevertheless hold any error was harmless.    An error of

constitutional dimension is "harmless [if] the reviewing court

is 'able to declare a belief that it was harmless beyond a

reasonable doubt.'"     Lavinder v. Commonwealth, 12 Va. App. 1003,

1005, 407 S.E.2d 910, 911 (1991) (en banc) (quoting Chapman v.

California, 386 U.S. 18, 24, 87 S. Ct. 824, 828, 17 L. Ed. 2d

705 (1967)).

        Husband asserts on brief that the subject matter on which

he sought to cross-examine wife was her contributions to

                                - 13 -
husband's business interests, which he contends were negative

contributions.   The only equitable distribution issue on which

wife's contributions to husband's business interests was

relevant was the court's determination of the proper division of

marital property.   See Code § 20-107.3(E).   However, because we

affirm the trial court's division of property pursuant to the

parties' agreement and not pursuant to the trial court's

evaluation of the statutory factors, see discussion supra

Section II.B., wife's contributions, positive or negative, to

the "acquisition and care and maintenance" of the marital

property were not relevant to the trial court's ruling.

Therefore, we conclude that the denial of cross-examination was

harmless beyond a reasonable doubt under the facts of this case.

                               III.

                            CONCLUSION

     For these reasons, we affirm the ruling of the trial court

in both wife's appeal, Record No. 1117-99-1, and husband's

cross-appeal, Record No. 1180-99-1.

                                                           Affirmed.

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