Smith v. Smith

• Decision Date: 24 May 1994
• Docket Number: No. 1220-93-2,1220-93-2
• Citation: 18 Va.App. 427,444 S.E.2d 269
• Parties: Veronica G. SMITH v. R. Gordon SMITH. Record
• Court: Virginia Court of Appeals

Page 269

444 S.E.2d 269

18 Va.App. 427

Veronica G. SMITH v. R. Gordon SMITH.

Record No. 1220-93-2.

Court of Appeals of Virginia.

May 24, 1994.

Lawrence D. Diehl, Hopewell, for appellant.

James C. Roberts, Richmond (Mays & Valentine, on brief), for appellee.

Present: MOON, C.J., and COLEMAN and ELDER, JJ.

ELDER, Judge.

Veronica G. Smith, wife, appeals from the trial court's equitable distribution and child support awards in her divorce from R. Gordon Smith, husband. On appeal, wife contends the trial court erred in fashioning the equitable distribution in ruling that she failed to prove her husband dissipated marital assets in support of his extramarital relationship, and in modifying the final decree to allow husband to satisfy the equitable distribution award in periodic payments rather than through one lump sum payment, as initially ordered. She also contends the trial court erred in its calculation of the child support award in failing to include husband's capital gains income in its determination of the presumptive amount of child support, and in failing to require husband's payment of the cost of their son's private education expenses in addition to the amount of presumptive child support. Husband contends that the assignments of error concerning the child support award are barred by Rule 5A:18. For the reasons that follow, we affirm the equitable distribution and child support awards.

The parties married in 1969, separated in 1990, and filed for divorce in 1991. During the divorce proceedings, husband admitted to a fifteen-year extramarital affair with a woman, whom he saw at least once a year in a variety of locations, sometimes on business trips for which he was partially reimbursed. As to his income, husband testified that, during 1991, he conducted six different transactions in which he sold marital stocks, realizing approximately $165,000 in capital gains. The record contains no evidence that husband had any capital gains income after September 30, 1991. Husband testified that he used $40,000 of the gains realized to make a down payment on a condominium he purchased in 1991, which he stipulated was a marital asset for purposes of calculating the equitable distribution award. The remainder of the money was used to pay various marital debts.

The evidence also showed that the parties' son has a learning disability. Prior to the commissioner's hearing, husband had been paying directly to the school $788 per month for private school tuition and tutoring for his son. Based on the parties' incomes, the court ordered husband to pay wife the presumptive amount of monthly child support--$2,095. Although husband had voiced a desire to continue paying his son's educational expenses, the court stated that wife had to pay the child's educational expenses in the amount of $788 per month out of the $2,095 child support award.

The trial court ordered husband to satisfy the equitable distribution award of $325,000 by making one lump sum payment to wife within ninety days of the entry of the award. Ultimately, however, the trial court granted husband's request to modify the decree to permit husband to pay the award and interest in four annual installments.

I.

A.

Wife contends that the trial court erred in fashioning the equitable distribution award by refusing to consider husband's dissipation of marital assets, which she alleges occurred as a result of and during the course of his fifteen-year extramarital affair. Ordinarily, when making an equitable distribution award under Code § 20-107.3(A), a court determines the value of marital property "as of the date of the evidentiary hearing on the evaluation issue." The Code also provides that, up until twenty-one days before the hearing, either party may move the court to use a different valuation date "for good cause shown, in order to attain the ends of justice." Id.

One recognized justification for altering the evaluation date is a showing of dissipation of marital assets.

Dissipation occurs "where one spouse uses marital property for his own benefit and for a purpose unrelated to the marriage at a time when the marriage is undergoing an irreconcilable breakdown." Once the aggrieved spouse shows that marital funds were either withdrawn or used after the breakdown, the burden rests with the party charged with dissipation to prove that the money was spent for a proper purpose.

Clements v. Clements, 10 Va.App. 580, 586, 397 S.E.2d 257, 261 (1990) (emphasis added) (citation omitted).

Our case law uniformly holds that the challenged use of funds must be "in anticipation of divorce or separation ... [and] at a time when the marriage is in jeopardy." Booth v. Booth, 7 Va.App. 22, 27, 371 S.E.2d 569, 572 (1988); see Alphin v. Alphin, 15 Va.App. 395, 402, 424 S.E.2d 572, 576 (1992) (involving withdrawal of funds from joint account shortly after separation); Amburn v. Amburn, 13 Va.App. 661, 664-66, 414 S.E.2d 847, 849-51 (1992) (involving wife's post-separation use of assets for living expenses and child's educational expenses, necessitated by husband's breach of separation agreement); Stroop v. Stroop, 10 Va.App. 611, 615, 394 S.E.2d 861, 863 (1990) (involving transfer of property from wife to her brother eight months before institution of divorce suit and for less than adequate consideration). Wife is correct in her assertion that the Court in Booth defined waste only "generally" and did not purport to set forth "an exclusive definition." Booth, 7 Va.App. at 27, 371 S.E.2d at 572. Nevertheless, to date, Virginia's appellate courts have applied this rule only to funds spent contemporaneously with the marital breakdown, ¹ and we will not expand the definition to cover expenditures made for a fifteen-year period which were not specifically for the purpose of depleting the marital estate and where there was no evidence that there was an irreconcilable breakdown of the marriage. Accordingly, we conclude that the trial court did not err by finding that wife failed to show that husband's pre-separation expenditures constituted dissipation of marital assets.

Our holding does not allow the husband to benefit financially from his continuing deceit. We agree with the commissioner that, under the existing statutory scheme, husband's pre-separation use of marital funds in pursuit of his extended extramarital affair would be "more appropriately addressed with the circumstances and factors which contributed to the dissolution of the marriage," as required under Code § 20-107.3(E)(5), to the extent that it had any significant impact on the value of the marital estate. See Aster v. Gross, 7 Va.App. 1, 5-6, 371 S.E.2d 833, 836 (1988). The court may also consider the negative impact of the affair on the well-being of the family, see Code § 20-107.3(E)(1), and the mental condition of the parties. See Code § 20-107.3(E)(4).

Finally, although statutory and case law permit the wife to receive credit for marital funds expended by husband after the formal marital breakdown, the evidence presented in this case is insufficient to justify such an award. Although husband admitted that his paramour accompanied him periodically on trips, he testified that some of these were reimbursed business trips. Wife's evidence failed to show which post-separation trips involved husband's paramour and of those that did, whether they were reimbursed business expenses or paid for out of marital funds. Therefore, we cannot conclude that the trial court erred in refusing to hold that husband dissipated marital funds either before or after the separation.

B.

Wife also contends that the trial court erred in modifying the final decree to allow husband to pay the equitable distribution award in four periodic payments rather than in one lump sum, as it had originally ordered in the final decree of divorce. We are guided by the following principles:

The chancellor is necessarily vested with broad discretion in the discharge of the duties the statute [Code § 20-107.3] imposes upon him. Unless it appears from the record that the chancellor 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 chancellor's equitable distribution award will not be reversed on appeal.

Brown v. Brown, 5 Va.App. 238, 244-45, 361 S.E.2d 364, 368 (1987) (quoting Smoot v. Smoot, 233 Va. 435, 443, 357 S.E.2d 728, 732 (1987)).

After careful review of the record, we conclude that the chancellor did not abuse his discretion in modifying the final divorce decree. First, the trial court acted within its authority because it modified the final decree within twenty-one days of its entry, as allowed under Rule 1:1. In addition, Code § 20-107.3(D) permits the court to make any monetary award under this section "payable either in a lump sum or over a period of time in fixed amounts." No showing of a change in circumstances was required to justify the modification.

II.

Wife presents two assignments of error dealing with the calculation of the child support award. She contends that the trial court erred in failing to include husband's 1991 capital gains in calculating his gross income for purposes of determining the presumptive amount of support and in failing to require husband to continue paying their son's private school tuition and tutoring expenses.

Husband asserts that wife's appeal of these issues is barred under Rule 5A:18 because she failed to raise them in a timely manner at the trial level. We conclude that wife properly preserved both issues for appeal. As to the capital gains issue, wife filed a timely motion to reconsider following entry of the final decree of divorce on May 24, 1993. On June 8, 1993, during the twenty-one day period within which the trial court retained jurisdiction over the final order, wife filed a motion to reopen or modify the...