Ramon v. Ramon

• Decision Date: 23 December 2008
• Docket Number: No. 598, 2007.,No. 524, 2007.,524, 2007.,598, 2007.
• Citation: 963 A.2d 128
• Parties: C. Lawrence RAMON, Respondent Below, Appellant, v. Justine L. RAMON, Petitioner Below, Appellee.
• Court: Supreme Court of Delaware

963 A.2d 128

C. Lawrence RAMON, Respondent Below, Appellant, v. Justine L. RAMON, Petitioner Below, Appellee.

No. 524, 2007.

No. 598, 2007.

Supreme Court of Delaware.

Submitted: October 22, 2007.

Decided: December 23, 2008.

Court Below: Family Court of the State of Delaware in and for New Castle County, File No. CN05-01941.

Upon appeal from the Family Court.

AFFIRM

in part,

REVERSE

in part, and

REMANDED.

Kathryn J. Laffey, Kelleher & Laffey, Wilmington, DE, for appellant.

Jeanne M. Hanson, Wilmington, DE, for appellee.

Before STEELE, Chief Justice, HOLLAND and JACOBS, Justices.

STEELE, Chief Justice:

This matter involves consolidated appeals from the Family Court. Respondent-Appellant, C. Lawrence Ramon ("Husband") appeals the Family Court's award in favor of Petitioner-Appellee Justine L. Ramon ("Wife") regarding the division of certain corporate assets ancillary to their divorce proceeding. Husband raises three arguments on appeal. First, he contends that the issue of retained earnings was improperly raised in the Family Court. Second, he argues that the Family Court improperly applied 13 Del. C. § 1513 as the assets are not marital property and the Family Court did not have jurisdiction to distribute the nonparty corporate assets. We find no merit to Husband's first two arguments. Alternatively, he argues, and we agree, that the Family Court, on remand, improperly calculated the retained earnings subject to the marital property division.

Wife appeals the Family Court's order dismissing her Motion for Reargument concerning the division of certain real property in Lewes, Delaware. Wife contends that the Family Court erred in its calculation of the marital value of the real property and should have corrected its error pursuant to Family Court Rule of Civil Procedure 60(a). We find no merit to this claim.

Accordingly, we affirm in part, reverse in part, and remand with instructions to reduce Wife's share of the retained earnings.

FACT AND PROCEDURAL BACKGROUND

Husband and Wife married on December 10, 1987. Husband had been previously married and divorced, with three adult children. He owned two businesses during his first marriage, which he retained following the first divorce: Brookstone Pension Consultants and Harkins Agency. It is undisputed that both Brookstone and Harkins were not marital property. Husband acquired an initial 50% interest in Brookstone in 1969 and Harkins in 1974, but acquired the entire interest in both businesses as part of his first divorce settlement.

Harkins was a broker dealer, involved in investments of securities, stocks, and bonds. Brookstone was a pension consulting firm that performed administration and accounting for independent pension plans for employers. Both entities were incorporated. The two assets in dispute in this appeal are Brookstone's stock account and Harkins's brokerage account. Both accounts were separate assets of the respective corporations (Brookstone Pension Consultants and Harkins Agency) and accounted for their income and assets on their corporate tax returns. Both accounts were transferred from one bank or brokerage company to another before and during the marriage; the name and legal ownership on both accounts, however, remained the same throughout the marriage.

Husband also owned beach property in Lewes, Delaware, which he and his first wife acquired in 1978. He obtained the entire interest as part of the first divorce settlement. The parties primarily lived in Newark during their marriage and vacationed at the Lewes property. In 1994, the parties consolidated and paid off the outstanding mortgage on the Lewes property, which had a stated value of $275,000. The Lewes property remained solely in Husband's name, until Wife filed her first Petition for Divorce in March 2005. After she dismissed that petition, Husband conveyed the Lewes property into their joint names in May 2005. At that time, the property was valued at $862,500.

In January 2000, Husband and Wife separated, as that term is defined by 13 Del C. § 1503(7).¹ They continued to reside together and maintained joint finances until their divorce in January 2006, following Wife's second Petition for Divorce which was filed in August 2005. The Family Court held a pretrial conference on January 16, 2007 and a final ancillary hearing on May 11, 2007. In its Ancillary Opinion and Order issued July 17, 2007, the Court concluded that the parties were in relatively equal financial circumstances and divided most of the marital estate equally. The Court equally divided the equity in most of the marital estate; except that the Court divided the Lewes property and the business accounts 60/40 in favor of Husband. It found that the divorce value of the Harkins account was $288,865 (after subtracting an outstanding credit line of $50,000) and that the divorce value of the Brookstone account was $4,000.

Husband filed a Motion for Reargument on July 27, 2007 and on August 1, Wife filed her response in which she addressed "retained earnings" for the first time. Because Wife did not address retained earnings at the initial hearing, and Husband, therefore, had no opportunity to present evidence on that issue. The Court issued a Final Order on August 31, 2007, adjusting Husband's share of the Lewes property to 65% and upholding its previous decision to split the business accounts 60/40, based on its finding that the accounts represented retained marital earnings.

On September 10, 2007, Wife filed a Motion for Reargument regarding the August 31, 2007 Order granting Husband an additional 5% interest in the Lewes property. Husband moved to dismiss the Motion for Reargument on September 19, 2007. The Court granted Husband's Motion to Dismiss, concluding that the Family Court Civil Rules of Procedure did not permit a reargument of a reargument and, alternatively, that the Court had not erred.

The parties filed separate appeals to this Court, which we consolidated on February 27, 2008. After hearing oral argument on May 14, 2008, we remanded the matter to the Family Court with directions to hold a hearing in accordance with our decision in J.D.P. v. F.J.H.² The Family Court held a supplemental hearing on July 21, 2008. On August 11, 2008, the Court issued its order, finding that a portion of the Harkins account represented retained earnings ($177,425), as did all of the Brookstone account ($4,000). This appeal followed.

DISCUSSION

I. Husband's Appeal

On appeal from a Family Court decision dividing marital property, we review the facts and the law, as well as the inferences and deductions made by the trial judge.³ We review conclusions of law de novo.⁴ If the Family Court judge applied the law correctly, we review the decision for an abuse of discretion.⁵ We will not disturb findings of fact unless they are clearly wrong and justice requires that those facts be overturned.⁶

Marital Property and Section 1513(b)

Husband contends that the Family Court erred by treating the Brookstone Account and the Harkins Account as marital property. He argues that, because both corporate investment accounts are assets of businesses he established and owned well before marrying Wife, 13 Del. C. § 1513(b) expressly excludes those accounts from marital property.⁷ He claims that the statute excludes any premarital businesses as well as any increase in the value of those businesses.

In Horning v. Horning,⁸ we examined the effects of Section 1513(b) on premarital businesses assets. We affirmed the Family Court's holding that the replacement equipment that the husband had obtained during the marriage in his premarital landscaping business's name, along with increases in the business's client accounts and gross income, were not marital property under Section 1513.⁹ We explained:

Husband's business as it existed during the marriage was merely a continuation of his premarital business.... In fact, husband maintained the business as an asset separate from the marriage. As for wife's claim regarding the increased number of client accounts and the expanded gross income, these items merely reflect an increase in the business's value, and are thus exempt from distribution under 13 Del. C. § 1513(b)[4].¹⁰

We also noted that "[t]his application of Section 1513(b)[] is in keeping with the Court's broad equitable powers and does justice to the parties."¹¹

In this case, Husband incorporated and fully owned both Brookstone Pension and Harkins Agency before his marriage to Wife. The Harkins Account and the Brookstone Account are assets of two separate corporations. Therefore, 13 Del. C. § 1513(4), at first glance, would appear to exclude these assets from the marital property.

Retained Earnings

Wife contended, and the Family Court agreed, that the corporate accounts represent more than a mere increase in the businesses' value protected by Section 1513; rather, Wife argued that the accounts represent retained marital earnings properly includable in the marital estate. Husband contends that because Wife presented the issue of retained earnings only after the hearing in her response to Husband's Motion for Reargument, she waived this argument. In the alternative, Husband argues, and Wife concedes, that the Family Court made a clerical error when calculating the marital value of the Harkins account.

We conclude that Husband's argument that the Family Court improperly considered Wife's retained earnings argument is without merit. Although Wife did not raise the issue of retained earnings until after the hearing, the status of the corporate accounts was properly before the Family Court at the ancillary hearing. Under Family Court Civil Rule 52(e), which applies to ancillary actions, the Court may take certain action, including precluding the claim or defense, if one of the parties fails to submit the proposed findings and conclusions required by Rule 52(d).¹² Since the issue of retained earnings was before the Court at the ancillary...