93 A.3d 184 (Del.Fa. 2013), CN11-04649, Danberger v. Danberger

Docket Nº:FILE CN11-04649, PETITION : 11-29330
Citation:93 A.3d 184
Opinion Judge:ROBERT BURTON COONIN, JUDGE
Party Name:JANE P. DANBERGER [*], Petitioner, v. DARYL A. DANBERGER, Respondent
Judge Panel:Before the HONORABLE ROBERT BURTON COONIN, JUDGE Of The Family Court of the State of Delaware.
Case Date:December 09, 2013
Court:Family Court of Delaware
 
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93 A.3d 184 (Del.Fa. 2013)

JANE P. DANBERGER [*], Petitioner,

v.

DARYL A. DANBERGER, Respondent

FILE NO. CN11-04649, PETITION NO.: 11-29330

Family Court of Delaware, New Castle

December 9, 2013

Before the HONORABLE ROBERT BURTON COONIN, JUDGE Of The Family Court of the State of Delaware.

OPINION

Decision on: Tracing of Corporate Assets

ROBERT BURTON COONIN, JUDGE

NATURE OF THE PROCEEDINGS

This is the Court's decision regarding the tracing of Jane P. Danberger's (hereinafter " Wife" ) business held in corporate form to determine if it is premarital in nature and therefore excluded from equitable property division. Wife is represented by Leslie B. Spoltore, Esquire. It is Wife's position that her advertising agency,

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Danberger Associates, Inc., is wholly traceable to premarital assets and therefore should be excluded from the marital estate. Daryl A. Danberger (hereinafter " Husband" ), who is represented by David C. Gagne, Esquire, contends that Danberger Associates, Inc. is a marital asset and accordingly should be subject to equitable property division. In the interest of judicial economy, the Court held a separate evidentiary hearing on this matter prior to the final hearing on matters ancillary to divorce hearing. The Court heard evidence from both parties regarding this matter October 17, 2013 and October 18, 2013.

PROCEDURAL HISTORY

The parties were married on June 10, 1984. Wife filed a Petition for Divorce on September 2, 2011. In her Petition for Divorce, Wife alleges that the parties separated in March of 2010. Husband filed an Answer to the Petition for Divorce in which he claims the parties did not separate until July 1, 2011. At this stage in the proceedings, the Court need not determine when the parties separated, because the date of separation has no impact on the issue of tracing of corporate assets. A final Divorce Decree was entered on January 26, 2012. The Court retained jurisdiction over matters ancillary to the divorce, namely, property division, permanent alimony, counsel fees, and court costs.

Wife is the president, chief executive officer, and sole shareholder of a branding, advertising, and marketing agency in corporate form currently named Danberger Associates, Inc. It is Wife's position that her ownership interest in Danberger Associates, Inc. is not subject to property division, because the corporation was initially funded by the transfer of assets from a premarital sole proprietorship. Husband argues that Danberger Associates, Inc. is a marital asset, created during the marriage, and therefore is subject to property division. Pursuant to a Scheduling Order entered on December 28, 2012, the Court determined that it would be in the interest of judicial economy to hold a separate evidentiary hearing prior to the final ancillary hearing to determine whether Danberger Associates, Inc. is a marital asset.

On April 30, 2013, Wife filed a Motion to Dismiss and for Sanctions or in the Alternative for an Adverse Inference and for Sanctions. In her Sanctions Motion, Wife averred that there was a filing cabinet located in the marital home, which, among other things, contained tax returns and supporting documents. Wife argued that these documents would have support her contention that Danberger Associates, Inc. is a premarital asset. At a deposition held on March 26, 2013, Husband admitted that sometime in February or March of 2012 he destroyed documents contained in the filing cabinet, after the parties separated and were divorced. However, Husband claimed that the only documents destroyed were bank statements from a closed joint checking account. Wife gained access to the martial home on April 4, 2013 and discovered that the filing cabinet was empty, with the exception of a few electrical cords and some scraps of paper. The Motion for Sanctions asked the Court to grant a default judgment, whereby, Husband's claim that Danberger Associates, Inc. is a marital asset would be dismissed. Alternatively, the Motion for Sanctions requested that the Court apply an adverse inference against Husband, whereby the Court would presume that the destroyed evidence would have supported Wife's claim that Danberger Associates, Inc. is a premarital asset.

A hearing was held on July 1, 2013 and October 15, 2013 to consider Wife's Motion for Sanctions. Following the hearing, the

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Court issued a Decision dated December 9, 2013 (hereinafter " Sanctions Decision" ) finding that Husband had destroyed relevant evidence. The Court imposed sanctions on Husband, namely an adverse inference that the documents destroyed by Husband would have supported Wife's position that Danberger Associates, Inc. is traceable to premarital assets. Accordingly, the Court shall apply this adverse inference to the findings of fact in this matter.

FINDINGS OF FACT

The Court will not restate all of the testimony and evidence presented at the hearing but will note some of the relevant evidence in support of its findings.

Wife initially attended the Philadelphia College of Pharmacy and Science, but later transferred to Lehigh University. Wife graduated from Lehigh University in 1980 with a bachelor's degree in Journalism and Science Writing. Wife stated that her objective after graduating college was to become a successful advertising and marketing professional.

Wife was first employed at Wilmington Trust from July 1980 to October 1980 in the bank's marketing training program. Wife left Wilmington Trust to work at Sonobond Corporation as a Writer and Project Manager. Wife remained with Sonobond from October 1980 to October 1981. In late 1981, Wife testified that during this time, she began creating a portfolio of her advertising work so she could seek her own clients.

In late 1981 or early 1982, Wife was approached by a representative of the DuPont Corporation regarding an opportunity to provide marketing and advertising services to DuPont. Starting in 1982, Wife performed branding, marketing, and advertising services for DuPont and several other corporations through the Krell Corporation. Approximately 80% of the work that Wife completed during this time period was for various divisions of DuPont. The Krell Corporation was an employee leasing organization or professional employee organization (" PEO" ), which provided professional services to large corporations like DuPont. Wife billed her hours through the Krell Corporation for the work she completed for the client and was remunerated accordingly. Wife claims that she never had her own office at the Krell Corporation, nor did she receive any employee benefits from the Krell Corporation, nor did Krell exercise any supervisory function over Wife or her work product. However, the Krell Corporation is listed as Wife's employer on her 1982, 1983 and 1984 tax returns.

Starting in 1983, Wife began to market herself as an independent provider of branding, advertising, and marketing services. Wife held herself out as " The Technical Writers" for her marketing work in the science, engineering, and allied technical fields. Additionally, Wife used the name, " The Copywriters" for her more generic marketing work. In the fall of 1983, Wife approached her former college roommate, Paulette Stine, about possibly forming a partnership to provide marketing services. After considering this opportunity, Ms. Stine declined the invitation at that time. Wife also obtained a computer in 1983 to assist in her marketing and advertising work. Wife purchased this computer using a loan that was cosigned by her father.

In January 1984, Wife...

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