Year: 2016

May accrued rent of the former marital residence kept by husband be treated as waste of a joint asset in equitable distribution proceedings in Virginia?

In the Virginia Circuit Court case of Penza v. Penza, Case No: CL07-92, in the Circuit Court of Rappahannock County, the divorce court judge held that the accrued rent that was kept by the husband, who was not occupying the property and did not intend to retain it, was waste of a joint asset.

The parties were married for approximately seventeen years.  The husband was the primary breadwinner, earning a substantial income, while wife was a stay at home mom.  Most of the evidence was received by the judge from wife’s divorce lawyer, as husband had represented himself and not well.   The Virginia judge recognized the wife’s attorney for providing the documentation and organizing the material effectively to support a decision. The most valuable asset of the parties was the former marital residence, a single family house valued at $525,000 at the time of the equitable distribution hearing in the divorce case, with a mortgage of $267,000, leaving marital equity of $258,000.  After the parties separated, husband left the marital residence and rented it out to tenants.  The husband collected rent from the property, but did not pay the mortgage, as ordered by the divorce court judge at the pendente lite hearing.  Neither party listed the accrued rent on their schedules of assets.  At the conclusion of the Virginia divorce case, the judge took the matters of equitable distribution, spousal support, child support, and attorney’s fees under advisement, meaning the judge took the matters under consideration, without giving an immediate decision.

In his written opinion, the judge directed that the former marital residence be sold with the equity divided equally between the husband and wife.  If the parties could not agree on a real estate broker, the court appointed a special commissioner of sale to list the property with a broker.  The judge provided that any sales contract would have to be approved by the court.  If the property did not sell within six months, then it would be sold at auction.  The husband was ordered to pay half of the accrued rent in the amount of $10,500 to wife.  All future rents were to be paid to the wife, to be received by her until half the accrued rent was repaid.  Upon full repayment, the wife would then send half the rent each month to husband.

With regard to the personal property, the court ordered that the husband and wife conduct an auction between themselves of all the personal property.  The court would determine the net difference between the sums bid, and divide those equally between the parties, with the parties receiving the items of property after the bidded sums were paid.

With regard to spousal and child support, the Virginia divorce court found that the husband’s monthly income was $18,500, of which he was ordered to pay $4,600 per month to wife as spousal support for seven years, to be reduced by 50% absent a material change in circumstances.  The husband was not required to provide health insurance to wife upon entry of the divorce decree.  The husband was ordered to pay 2,062 a month in child support to wife, with a credit for required health insurance coverage for the two children.

Can a divorced lawyer husband reduce spousal support in Virginia to his ex-wife upon his self-employment?

In the unpublished case of Amberly v. Amberly, Record No. 1783-09-4, (Va. App., February 2, 2010), the Virginia Court of Appeals upheld the trial court judge denial of the attorney husband’s motion to modify support and award to wife of her attorney’s fees.  .

Husband was an attorney working in trademark and patent litigation, making approximately $100,000 a year.  When the husband and wife divorced in Virginia, the divorce court judge ordered husband to pay $2,200 a month in spousal support to wife for fifteen years.  Husband was concerned about losing his job and starting looking for employment.  When husband could not find a job, he started his own firm as a self-employed attorney-at-law.  The lawyer husband filed a motion in the Virginia Circuit Court to modify his spousal support obligation due to his self-employment.  During the three and a half months prior to the hearing on modifying support, husband earned approximately $1,300 a month from his self-employment as a lawyer and paid no support to his wife.  The divorce court denied the husband’s motion to modify spousal support and ordered husband to pay $10,000 in attorney’s fees to wife for defending the motion.  The husband appealed.

The Virginia Court of Appeals reviewed the law applicable to the case.  Under Section 20-109 of the Code of Virginia, a party may modify the amount or duration of an order for spousal support or maintenance as the circumstances may make proper.  The party asking for a modification of support must prove a material change in circumstances and that this change warrants a modification in support.  The material change must bear upon the financial needs of the dependent spouse or the ability of the supporting spouse to pay.  Street v. Street,  25 Va. App. 380, 488 S.E.2d 665 (1997).  The trial court has the discretion to determine whether a spouse is entitled to a modification of support, and that determination will not be overturned unless it is clearly unjust.

In this case, the lawyer husband introduced only his own testimony that he was involuntarily unemployed, with little documentary support or other witnesses.  In addition, the attorney husband had failed to pay his court ordered support even before he lost his job.  The trial court judge had noted that the husband made his motion to modify support only a year after the final hearing in the divorce case.  On top of that, the judge doubted the credibility and completeness of the husband’s presentation concerning his reduction in income.  Consequently, the trial court judge found that the reduction in husband’s income was his own fault, and not a material change in circumstances since the last support order.

The Virginia Court of Appeals found no error in the trial court judge’s fact findings or application of the law.  Although there was some evidence that wife’s income had increased, the court restated the rule that not every material change in circumstances justifies a modification of support, citing Blackburn v. Michael, 30 Va. App. 95, 515 S.E.2d 780 (1999).  Further, the Virginia Court of Appeals did not find an abuse of discretion in the trial court’s award of $10,000 in attorney’s fees to wife, as she incurred more than three times that amount in defending the motion while husband represented himself pro se and husband had offered little documentary evidence of his financial condition.

You should consult with your Virginia divorce lawyer concerning whether spousal support may be modified in your circumstances.

Is a domain name bought by husband in a bankruptcy proceeding marital property subject to equitable distribution in a Virginia divorce?

Yes, the proceeds of the sale of the domain name are marital property, even though the domain name was purchased by husband and the proceeds were deposited into an account in his sole name during the marriage.  In Kirkendale v. Kirkendale, Loudoun County Circuit Court Case No: 53171 (January 13, 2010), the husband filed for divorce based on constructive desertion.  The wife filed a cross-complaint based on cruelty and/or constructive desertion.  During the two day, fully contested, divorce trial, the husband amended his complaint, as permitted under Section 20-121.02 of the Code of Virginia, to a divorce based on having lived separate and apart without cohabitation and without interruption for one year.  The judge granted a divorce to the husband on this no-fault basis.

During the marriage, husband had bought the domain name “choice.com” for $6,500 during a bankruptcy proceeding of the previous owner.  Five years later, after the husband and wife separated, husband sold it for $175,000.  The proceeds were deposited into a money market account in husband’s name.  At the time of the equitable distribution hearing, the balance in the account was approximately $50,000.  Although counsel for the wife had filed a motion for an alternate valuation date as permitted by Virginia Code Section 20-107.3 twenty-one days in advance of the evidentiary hearing, the motion was never argued at the equitable distribution hearing, and the divorce court judge found that wife had waived her request.  Furthermore, the judge held that the wife did not make an argument of waste, that is, that husband had dissipated marital funds in anticipation of separation or divorce or after the date of last separation of the parties.  After considering the equitable distribution factors, the judge divided the remaining proceeds equally, awarding wife a monetary award of $25,000.

The husband offered evidence on four credit card accounts of the parties, which evidence was not rebutted by the wife.  The wife received checks from her sister totaling some $32,000 to cover the parties’ living expenses.  The judge found these debts to be marital debt, but the majority of these debts were time barred from enforcement by the applicable three year statute of limitations for an oral contract found in Section 8.01-246(4).   Consequently, the divorce court judge found that there was only $4,500 of marital debt still owed to wife’s sister.  The judge held the husband was responsible for his business loan and a loan secured by his motorcycle and equally divided the remainder of the debt, which consisted of unpaid taxes, credit card bills, and the debts to the sister, 50% to husband and 50% to wife.

With regard to custody, the parties had previously agreed to joint legal custody of their three children with primary physical custody to the husband father.  At trial, the husband opposed joint legal custody because he believed it would limit his choice of daycare providers.  The wife opposed the husband’s choice of daycare provider, who was the daughter of his girlfriend.  There was no evidence of any harm to the children by this choice.  The court continued joint legal custody, but ruled that the parties did not have to agree on the daycare provider, allowing husband to choose.  The divorce court judge further ruled that the custodial parent had inherent authority to select the daycare provider while that parent has custody, is working, and is paying for the daycare.

With regard to spousal support, the judge considered the factors in Section 20-107.1, which it noted are very similar to the equitable distribution factors, and awarded wife a permanent spousal support award of $2,500 a month for three years.

The husband was awarded child support of approximately $450 a month according to the sole custody guidelines, as wife had less than 90 days a year of visitation.  Each party had to bear his or her own attorney’s fees of $16,500 to husband and $30,000 to wife.

You should consult with a Virginia divorce lawyer to discuss whether particular proceeds of property are marital, separate or hybrid property subject to equitable distribution.

 

 

Is husband’s refusal to pay for health insurance under a separation agreement after wife remarries contempt of court in Virginia?

The Virginia Court of Appeals in the case of McCoy v. McCoy, No. 3087-08-3 (January 12, 2009) http://www.courts.state.va.us/opinions/opncavwp/3087083.pdf , upheld the trial court’s decision that the husband’s refusal to pay for health insurance under a separation agreement after the wife remarried was in contempt of the court’s order.

The husband and wife entered into a separation agreement or property settlement agreement with a number of different sections.  In one section, there was a mutual waiver of spousal support by the parties, with a condition to wife’s waiver that husband perform all his obligations under the agreement and a provision that the husband could not discharge his obligations in bankruptcy.  In another section, husband assumed responsibility for the payment of certain debts, including the mortgage.  In still another section, husband agreed to maintain health insurance coverage for the wife until she obtained employment offering comparable insurance.

The husband and wife were divorced in Virginia and the separation agreement was incorporated into the final decree of divorce.  Five years later, the husband stopping paying for the wife’s health insurance coverage.  The wife paid the premiums to maintain coverage and remarried approximately a year and half later.  The wife filed a motion to show cause against the husband for failure to provide health insurance.  The Virginia divorce court judge held that the health insurance was not spousal support which would terminate upon wife’s remarriage and that husband was in contempt of court for failing to cover wife.  The husband was sentenced to six months in jail, the imposition of which was suspended by the divorce court judge to give husband the opportunity to purge himself of contempt by paying wife back for the premiums she paid, providing health insurance for wife again, and paying for wife’s attorney’s fees and costs.  The husband appealed this contempt order and moved the court to vacate its order.  The trial judge subsequently granted husband’s motion to vacate its order.

The Virginia Court of Appeals first noted that the trial court lacked jurisdiction, or the power to decide, to vacate its order once husband filed an appeal.  The court also noted that both parties (and the trial court) found the separation agreement was unambiguous, but disagreed on its meaning.  The Virginia Court of Appeals agreed with wife’s interpretation of the separation agreement that health insurance was not spousal support terminated by her remarriage because it was in a different section than spousal support with several sections in between, and because health insurance coverage was due immediately upon signing the agreement, unlike spousal support which only became due if husband breached the agreement or filed bankruptcy.  Although a divorce court judge could not unilaterally order a husband to provide health insurance coverage to his wife upon divorce under Section 20-107.1 http://leg1.state.va.us/cgi-bin/legp504.exe?000+cod+20-107.1 or Section 20-107.3 http://leg1.state.va.us/cgi-bin/legp504.exe?000+cod+20-107.3 of the Code of Virginia, in this case, the parties had agreed to coverage in a property settlement agreement.  The Court of Appeals recognized that a divorce court judge is required to give effect to the terms of a valid separation agreement or property settlement agreement between the parties under Section 20-109.1 of the Code of Virginia:  http://leg1.state.va.us/cgibin/legp504.exe?000+cod+20-109.1 .  Since the husband’s obligation to maintain health insurance on his wife was not spousal support, it did not terminate upon her remarriage under Section 20-109 of the Code of Virginia:  http://leg1.state.va.us/cgi-bin/legp504.exe?000+cod+20-109 .

You should consult with your Virginia divorce lawyer regarding how to structure your separation agreement or property settlement agreement in accordance with your wishes.