Arbuckle v. Arbuckle

COURT OF APPEALS OF VIRGINIA

Present: Chief Judge Fitzpatrick, Judge Benton and
Senior Judge Duff
Argued at Alexandria, Virginia

NORMA JEAN ARBUCKLE
OPINION BY
v. Record No. 2480-97-4 JUDGE JAMES W. BENTON, JR.
JUNE 16, 1998
GARY R. ARBUCKLE

FROM THE CIRCUIT COURT OF FAIRFAX COUNTY
Thomas S. Kenny, Judge

James A. Watson II (Surovell, Jackson,
Colten & Dugan, P.C., on briefs), for
appellant.
James Ray Cottrell (Gannon, Cottrell & Ward,
P.C., on brief), for appellee.

This appeal arises from a decree granting Norma Jean

Arbuckle a monetary award as an equitable distribution of the

parties' property upon divorce. In a prior appeal to this Court,

we held that the trial judge erred in considering the tax

consequence of a hypothetical sale when valuing the dental

practice of Dr. Gary R. Arbuckle, the husband. See Arbuckle v.

Arbuckle, 22 Va. App. 362, 366, 470 S.E.2d 146, 148 (1996). On

this appeal, the wife contends the trial judge committed the same

error following the remand. We disagree and affirm the decree.

I.

A brief review of the prior proceedings will place the issue

in proper perspective. This matter was initially before the

trial judge in 1995 upon a bill of complaint for divorce,

equitable distribution of property, and spousal support. The

trial judge entered a decree granting a divorce and reserving
jurisdiction to enter further orders as to the parties' property.

See Code § 20-107.3(A). During the equitable distribution

proceeding, the trial judge was required to determine the value

of the parties' property as mandated by Code § 20-107.3(A). In

valuing the husband's dental practice, the trial judge found that

the practice was then worth $281,000. However, based upon

capital gains taxes of 33.7% that would have been imposed if the

dental practice was sold, the trial judge reduced the valuation

of the practice to a net value of $186,303. After determining

the value of all the property, the trial judge applied the

factors in Code § 20-107.3(E) in fixing the wife's monetary

award. The wife appealed from that decree.
Ruling that the trial judge erred in valuing the dental

practice when he deducted the estimated capital gains tax on the

hypothetical sale of the practice, see Arbuckle, 22 Va. App. at

366, 470 S.E.2d at 148, we reversed the decree. On remand, the

parties stipulated that the value of the dental practice was

$281,000. In view of the stipulated value of the dental

practice, the trial judge reviewed the factors contained in Code

§ 20-107.3(E) for determining a monetary award, including "[t]he

tax consequences to each party," see Code § 20-107.3(E)(9), and
made a monetary award to the wife. The wife appeals from that

decree.

II.

Often in our equitable distribution decisions, we have

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discussed the procedural requirements imposed upon trial judges

by Code § 20-107.3. See Brinkley v. Brinkley, 5 Va. App. 132,

135-37, 361 S.E.2d 139, 140-41 (1987); see also Arbuckle, 22 Va.

App. at 365, 470 S.E.2d at 147.
There are three stages to making an equitable
distribution of property. The court first
must classify the property as either separate
or marital. The court then must assign a
value to the property based upon evidence
presented by both parties. Finally, the
court distributes the property to the
parties, taking into consideration the
factors presented in Code § 20-107.3(E).

Marion v. Marion, 11 Va. App. 659, 665, 401 S.E.2d 432, 436

(1991). The subsections of Code § 20-107.3 identify the stages

the trial judge must consider in the process.

In the prior Arbuckle appeal, the question we decided

concerned the trial judge's valuation decision under Code

§ 20-107.3(A) because "[t]he trial [judge] reduced [the]

valuation of the dental practice by the amount of capital gain

tax liability that would have accrued had the practice then been

sold." 22 Va. App. at 364, 470 S.E.2d at 147 (emphasis added).

"Code § 20-107.3[(A)] requires a trial [judge] to value the

parties' separate and marital property before making a monetary

award." Bosserman v. Bosserman, 9 Va. App. 1, 5, 384 S.E.2d 104,

107 (1989). Thus, when the parties in an equitable distribution

proceeding request the trial judge to decree as to their

property, the trial judge must "determine the value of any such

property as of the date of the evidentiary hearing on the

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evaluation issue." Code § 20-107.3(A) (emphasis added). We held

that "[t]he trial [judge] erred in considering the tax

consequences of a hypothetical sale when valuing the dental

practice." Arbuckle, 22 Va. App. at 366, 470 S.E.2d at 148

(emphasis added). We reasoned that "the tax consequences of a

hypothetical sale were too speculative to be considered by the

trial [judge] in determining the present value of Dr. Arbuckle's

dental practice." Id. (emphasis added).
The Arbuckle holding is consistent with the well established

principle that "[t]he trial judge's valuation cannot be based on

'mere guesswork.'" Bosserman, 9 Va. App. at 5, 384 S.E.2d at

107. See also Hodges v. Hodges, 2 Va. App. 508, 516, 347 S.E.2d

134, 139 (1986). After the valuation process is completed, the

statutory scheme recognizes, however, that a degree of

imprecision will be inevitable in applying the factors of Code

§ 20-107.3(E). Thus, under Code § 20-107.3(E), "[t]he amount of

any division or transfer of jointly owned marital property, and

the amount of any monetary award, the apportionment of marital

debts, and the method of payment shall be determined by the court

after consideration of [ten specified] factors[.]" Those factors

specifically include "[t]he tax consequences to each party."

Code § 20-107.3(E)(9).

In Arbuckle, we noted that "[w]e perceive[d] no disagreement

between the holding in Barnes [v. Barnes, 16 Va. App. 98, 428

S.E.2d 294 (1993),] and our decision . . . [because] Code

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§ 20-107.3(E)(9) directs consideration of the tax consequences to

each party in the fashioning of an equitable distribution scheme

and award." Arbuckle, 22 Va. App. at 366, 470 S.E.2d at 148.

Simply put, Barnes did not address valuation of property pursuant

to Code § 20-107.3(A); it involved the review of a trial judge's

decision that applied the factors of Code § 20-107.3(E) in making

a monetary award.

On remand from Arbuckle, the trial judge accepted the

stipulated value of the dental practice and reconsidered the

award based upon the factors specified in Code § 20-107.3(E).

The judge's consideration included "[t]he tax consequences to

each party" as proved by evidence in the record. Code

§ 20-107.3(E)(9). In accordance with our usual standard of

review, "unless it appears from the record that the trial judge

has abused his discretion, that he has not considered or has

misapplied one of the statutory mandates, or that the evidence

fails to support the findings of fact underlying his resolution

of the conflict in the equities, the equitable distribution award

will not be reversed on appeal." Blank v. Blank, 10 Va. App. 1,

9, 389 S.E.2d 723, 727 (1990). The record establishes no

reversible error. Accordingly, we affirm the decree.

Affirmed.

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