COURT OF APPEALS OF VIRGINIA
Present: Judges Frank, McClanahan and Senior Judge Coleman
Argued at Richmond, Virginia
ELIZABETH G. SCOTT
MEMORANDUM OPINION* BY
v. Record No. 2804-02-4 JUDGE SAM W. COLEMAN III
JANUARY 6, 2004
MICHAEL R. SCOTT
FROM THE CIRCUIT COURT OF FAIRFAX COUNTY
Jonathan C. Thacher, Judge
Sean P. Kelly (Dov M. Szego; Condo, Masterman, Kelly & Roop,
P.C., on briefs), for appellant.
Michael R. Scott, pro se.
Elizabeth G. Scott (wife) appeals the trial court’s equitable distribution ruling that was
incorporated by reference into the final decree awarding Michael R. Scott (husband) a divorce.
On appeal, wife contends the trial court erred by (1) determining a condominium in San Diego,
California was husband’s separate property, (2) failing to award her an equitable share of the
condominium, (3) failing to award her attorney’s fees and costs, (4) failing to award her a
monetary award for a share of the parties’ 2000 tax refund, (5) failing to award her a monetary
award for her share of a $7,000 outstanding loan made during the parties’ marriage, (6) imputing
income to wife for spousal support calculation purposes, and (7) awarding her only $3,000
monthly spousal support. For the reasons that follow we affirm in part and reverse and remand
in part.
* Pursuant to Code § 17.1-413, this opinion is not designated for publication.
BACKGROUND
On appeal, we view the evidence and all reasonable inferences in the light most favorable
to appellee as the party prevailing below. See McGuire v. McGuire, 10 Va. App. 248, 250, 391
S.E.2d 344, 346 (1990).
So viewed, the evidence proved the parties married on August 29, 1981 and separated on
May 25, 2001. They remained separate and apart, without interruption or cohabitation, after that
date.
During the marriage, husband worked as an airline pilot and as an officer in the Navy
reserves. Wife worked as a flight attendant. In 1996, wife stopped working and stayed at home
with the parties’ three children, one of whom was emancipated at the time of the hearing.
Husband purchased the San Diego condominium in 1978 prior to the marriage for
$85,000, of which he financed $68,000. Husband refinanced the property once before the
marriage and twice during the marriage. At the second refinancing, husband, by executing a
deed of conveyance, retitled the condominium as jointly owned with wife, as required by the
lender.
At the time of trial, husband earned $17,000 monthly. Wife worked part-time as a sales
clerk earning ten dollars per hour. Expert testimony indicated wife is employable at salary
ranges exceeding $30,000. The court imputed to wife a $30,000 salary. Based upon the imputed
income and wife’s reasonable expenses of $5,488 per month, the court awarded wife $3,000 per
month in spousal support.
Analysis
I. and II.
Wife asserts the trial court erred in its equitable distribution ruling by classifying the San
Diego condominium as husband’s separate property.
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“In reviewing an equitable distribution award on appeal, we have recognized that the trial
court’s job is a difficult one, and we rely heavily on the discretion of the trial judge in weighing
the many considerations and circumstances that are presented in each case.” Klein v. Klein, 11
Va. App. 155, 161, 396 S.E.2d 866, 870 (1990). “A decision regarding equitable distribution . . .
will not be reversed unless it is plainly wrong or without evidence to support it.” Rahbaran v.
Rahbaran, 26 Va. App. 195, 205, 494 S.E.2d 135, 139 (1997).
Code § 20-107.3, which governs equitable distribution awards, requires a trial court to
classify and evaluate the parties’ marital and separate properties. The court is not required to
classify property as all separate or all marital. See Smoot v. Smoot, 233 Va. 435, 357 S.E.2d 728
(1987). Applying Code § 20-107.3(A), the court may classify the property as separate or marital,
or part separate and part marital. See Hart v. Hart, 27 Va. App. 46, 65-66, 497 S.E.2d 496, 505
(1998) (approving a formula that apportions the marital and separate components of hybrid
property in the same percentages as the parties’ contributions to the total equity of the property).
Marital property includes “all property titled in the names of both parties” and property
acquired by either spouse during the marriage “in the absence of satisfactory evidence that it is
separate property.” Code § 20-107.3(A)(2). Separate property is:
(i) all property, real and personal, acquired by either party before
the marriage; (ii) all property acquired during the marriage by
bequest, devise, descent, survivorship or gift from a source other
than the other party; (iii) all property acquired during the marriage
in exchange for or from the proceeds of sale of separate property,
provided that such property acquired during the marriage is
maintained as separate property; and (iv) that part of any property
classified as separate pursuant to subdivision A 3.
Code § 20-107.3(A)(1).
Significantly, Code § 20-107.3(A)(3)(f) provides:
When separate property is retitled in the joint names of the parties,
the retitled property shall be deemed transmuted to marital
property. However, to the extent the property is retraceable by a
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preponderance of the evidence and was not a gift, the retitled
property shall retain its original classification.
Also, Code § 20-107.3(A)(3)(e) allows the trial court to find separate property exists,
when marital and separate property are commingled “to the extent the contributed property is
retraceable by a preponderance of the evidence and was not a gift.”
Here, the trial court did not find that the rights and equities of the parties in the San Diego
condominium justified awarding the entire property to husband, but instead classified the
condominium as separate property. The court concluded the condominium was “simply separate
property of the husband,” without making a finding that either the deed was not a deed of gift or
husband had retraced the jointly titled property to separate property. The facts do not support
that classification.
The condominium, which had been purchased by husband prior to the marriage, was later
jointly titled during the marriage and, therefore, pursuant to Code § 20-107.3(A)(2) was
presumed to be marital property. At that point, the trial court was required to determine whether
husband had proven that the deed retitling the property was not a deed of gift. The trial court did
not address whether the husband had satisfied his burden of proof on that issue and made no
finding thereon. But, accepting for our analysis that the husband carried his burden of proof that
the deed was not a gift, the burden remained on husband in order to establish that the
condominium was his separate property to establish that all of the funds used to pay for and
acquire the property during the marriage could be traced to his separate funds. See Rexrode v.
Rexrode, 1 Va. App. 385, 392, 339 S.E.2d 544, 548 (1986). Although the trial court found that
“[n]o marital funds were spent to maintain or increase the value of [the condominium] . . . [t]o
the contrary, this asset provided funds to the marriage from excess rents received on the property
after payment of the mortgage,” the evidence showed the contrary.
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While husband had purchased the condominium prior to marriage and had established
considerable separate equity in the property prior to marriage, the funds used to pay the mortgage
were not shown to be his separate funds. See Code § 20-107(A)(3)(d) and Moran v. Moran, 29
Va. App. 408, 413, 512 S.E.2d 834, 836 (1999) (finding that “[t]he ‘acquisition’ of property
refers to the process of purchasing and paying for property” and that when “marital funds were
used to pay the mortgage, the trial court did not err in classifying the . . . property as hybrid
. . .”). Husband testified that at all times the rental income from the property was more than
enough to meet the mortgage payments, except for brief periods that the condominium may have
been unoccupied. However, he further testified that the rental payments were deposited and
commingled in an account with other marital funds from which wife paid other marital expenses.
He further explained that he paid the mortgage from a separate marital account that he controlled
which contained marital funds. Thus, the rental funds were not maintained in a separate and
discrete fund from which we can say or the trial court could conclude that the purchase money
mortgage was serviced exclusively from separate funds. Therefore, while husband may have
adequately retraced the rental payments to accounts used to pay the mortgage payments, the
husband failed, as a matter of law, to retrace the funds as his separate property. Thus, the
evidence failed to rebut the marital property presumption and the court erred in classifying the
condominium as the husband’s separate property. Therefore, we reverse the trial court’s
classification of the San Diego condominium as separate property, and remand for the court to
reclassify the property and to equitably distribute the value of the condominium according to the
rights and equities of the parties. See Code § 20-107.3(A), Hart, 27 Va. App. at 65-66, 497
S.E.2d at 505, and Rahbaran v. Rahbaran, 26 Va. App. 195, 494 S.E.2d 135 (1997) (addressing
hybrid property).
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III.
Wife contends the trial court abused its discretion by failing to award her 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). “[T]he key to a proper award of counsel fees [is] . . .
reasonableness under all of the circumstances revealed by the record.” McGinnis v. McGinnis, 1
Va. App. 272, 277, 338 S.E.2d 159, 162 (1985).
Wife contends she was forced to incur high attorney’s fees due to husband’s
“unreasonable positions on spousal support and equitable distribution.” She further asserts that
because husband earns significantly more than she does, that he “has the ability to pay such fees
far in excess of [her] ability” to pay them. The trial court found that both parties “incurred legal
debt as a result of the divorce proceedings in this case.” We cannot say that the court’s refusal to
award wife attorney’s fees was unreasonable or that the trial judge abused his discretion.
IV.
Wife contends the trial court erred by failing to award her a portion of the joint tax refund
which husband received for the tax year 2000.
Husband testified he and wife agreed that husband would receive the entire tax refund for
2000 in return for husband assuming sole responsibility for 2001 capital gains taxes on the sale
of marital property in Georgia. Husband used the money from the tax refund to pay a portion of
the parties’ son’s college expenses and other marital bills.
While the trial court may have accepted husband’s account of the agreement, the court
did not address the issue and made no disposition of this marital asset. Accordingly, on remand
the trial court shall address and decide this issue.
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V.
Wife also asserts “the trial court erred by failing to require husband to reimburse wife for
her share of the funds given to his brother from the marital Schwab account.”
Husband loaned his brother $7,000 from the parties’ joint marital Schwab account.
Husband claimed his brother repaid the debt. However, the record includes only a check from
husband’s brother that was returned for insufficient funds. Although husband asserted his
brother repaid the money in smaller increments and that husband then deposited the amounts into
the Schwab account, he was unable to produce any documentary evidence to support his claim.
Husband acknowledged at oral argument that the loan was not repaid. Because the $7,000 loan
remains as a marital asset, on remand the trial court shall decide how to equitably distribute that
asset.
VI. and VII.
Wife contends the trial court erred in its spousal support determination.
Imputation of Income
“[A] court may impute income to a party who is voluntarily unemployed or
underemployed. Imputation of income is based on the principle that a spouse should not be
allowed to choose a low paying position that penalizes the other spouse or any children entitled
to support.” Calvert v. Calvert, 18 Va. App. 781, 784-85, 447 S.E.2d 875, 876-77 (1994)
(citations omitted).
Whether a person is voluntarily unemployed or
underemployed is a factual determination. In evaluating a request
to impute income, the trial court must “consider the [parties’]
earning capacity, financial resources, education and training,
ability to secure such education and training, and other factors
relevant to the equities of the parents and the children.”
Blackburn v. Michael, 30 Va. App. 95, 102, 515 S.E.2d 780, 784 (1999) (citation omitted).
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Wife worked full time for fifteen years of the parties’ nineteen-year marriage. David
Beckerman, a vocational counselor, testified as an expert on vocational issues. He concluded
that based upon wife’s experience as a flight attendant, in which she assisted with labor disputes
and supervised a crew of flight attendants, she was currently “considerably underemployed.”
Beckerman found there were no economic or medical reasons for her underemployment and that
she would need “very little training” to enter the labor force at a “somewhat higher level of
employment.” Beckerman estimated that without any additional training, wife could earn
between $22,520 and $33,360 per year in an entry level position commensurate with her
experience and abilities.
“Imputation of income is within the trial judge’s discretion . . . .” Sargent v. Sargent, 20
Va. App. 694, 704, 460 S.E.2d 596, 601 (1995). The evidence supports the trial court’s
imputation of a $30,000 salary to wife.
Spousal Support
Because the trial court is required on remand to reconsider the equitable distribution
award, and because the award is a factor that the court must consider in determining spousal
support, see Code § 20-107.1(E)(8), the trial court shall also reconsider on remand the effect of
its equitable distribution award upon spousal support.
Wife has requested attorney’s fees for matters relating to this appeal. Upon consideration
of the record, we hold that wife is entitled to reasonable attorney’s fees for prosecuting her
appeal; the trial court shall determine that amount upon remand.
For the foregoing reasons, we affirm the trial court in part but reverse and remand for
consideration of the foregoing issues.
Affirmed in part,
reversed and
remanded in part.
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