Berg v. Young

• Decision Date: 02 September 2015
• Docket Number: No. 4D13–2364.,4D13–2364.
• Citation: 175 So.3d 863
• Parties: Carole Ann BERG, Appellant, v. Roy Timothy YOUNG, Appellee.
• Court: Florida District Court of Appeals

175 So.3d 863

Carole Ann BERG, Appellant

v.Roy Timothy YOUNG, Appellee.

No. 4D13–2364.

District Court of Appeal of Florida, Fourth District.

Sept. 2, 2015.

Nancy W. Gregoire of Kirschbaum, Birnbaum, Lippman & Gregoire, PLLC, Fort Lauderdale, and Howard S. Friedman of Fischler & Friedman, P.A., Fort Lauderdale, for appellant.

Andrew A. Harris of Burlington & Rockenbach, P.A., West Palm Beach, and Curtis L. Witters of Glickman, Witters & Marell, P.A., West Palm Beach, for appellee.

Opinion

LEVINE, J.

The main issue for our consideration is the interpretation of the prenuptial agreement, specifically whether the wife was entitled to an equitable distribution of the husband's interest in a company acquired from his father during the marriage. Ultimately, the trial court found that the husband's interest was a separate, non-marital asset and not subject to equitable distribution. Further, the trial court ordered each party to bear their own attorneys' fees. The wife appeals the trial court's ruling, and the husband cross-appeals the trial court's denial of attorneys' fees. We find that although the trial court erred in its interpretation of the agreement, the final judgment may be affirmed because the trial court did not award the wife any interest in the company. However, we reverse and remand on the issue of fees.

Roy Timothy Young, the husband, worked at Delray Motors, Inc., an automobile dealership. The husband's father owned 40% of the dealership and created a trust for the benefit of the husband that held a 30% interest in the dealership. Prior to the parties' marriage in 1996, they executed a prenuptial agreement (the “agreement”). In 2002, the husband purchased half of his father's interest in Delray Motors (the “Delray 20%”). In 2010, Carole Ann Berg, the wife, petitioned for dissolution, challenging the validity of the agreement and claiming an equitable distribution interest in the Delray 20%. The husband asserted the agreement was valid and enforceable, and that under the agreement, the wife waived any interest in the Delray 20%.

The initial trial judge bifurcated the proceedings, such that the first part would address the validity and the construction of the agreement, and the second part would address all other issues. After the conclusion of the first part, the initial judge entered an order upholding the agreement and interpreting some of the agreement's terms. Both parties moved for an award of prevailing party attorneys' fees and for rehearing. On rehearing, the initial judge entered an order clarifying that the wife had a “right to equitable distribution of the increase in the value or enhancement in value of all separate assets which have appreciated due to the active marital efforts of the husband,” which “may include premarital assets or assets acquired during the marriage solely titled in the Husband's name.” The initial judge denied both parties' requests for fees, finding the husband prevailed on validity and the wife prevailed on interpretation.

A successor trial judge presided over the second part. Testimony revealed that the husband's income consisted of his salary, commissions, and trust stock distributions, all from Delray Motors. These incomes were dependent on the dealership's success. The wife also worked at the dealership on a salary basis during most of the parties' marriage and received rent from tenants in a duplex she owned. Pursuant to the agreement, the parties deposited their respective earnings into separate accounts, not a joint account and never into the other spouse's account.

In 2002, the husband obtained a loan to purchase the Delray 20% for $1,650,000.00. The purchase price was determined based on a business valuation report created by a firm hired by the husband to appraise the fair market value of the dealership. The husband paid the loan off from his separate accounts. In 2004, Delray Motors paid off a loan to purchase the land upon which the dealership is located. The loan was paid with Delray Motors monies, including retained earnings not distributed to the husband and/or other shareholders. The dealership did not purchase any more land and did not make any improvements to buildings or build any new buildings between 2002 and 2010. The husband testified that Delray Motors had been “[s]ignificantly less” profitable since 2002, as sales had decreased while expenses and costs had increased.

A personal property appraiser hired by the wife testified that the tangible assets of Delray Motors were worth over $2 million. A real estate appraiser hired by the wife testified that the value of the Delray Motors real property, including the buildings and improvements thereon, was more than $17 million. A CPA hired by the wife testified that there was a $1,850,000.00 increase in the value of the Delray 20% based on his 2010 valuation of Delray Motors, which he conceded used a different method than the firm that created the 2002 valuation report.

An automobile dealership financial advisor hired by the husband testified that the dealership owned too much land, and claimed no one would purchase the dealership for the approximately $19 million value given by the wife's experts, because the gross profit was not there to warrant the investment. The advisor appraised Delray Motors's 2010 value to be $2,750,000.00. By this determination, the husband's interest in the Delray 20% decreased in value. The husband's CPA also testified that the value in Delray Motors as well as the husband's Delray 20% interest actually decreased in value from 2002 to 2010, based on the CPA's independent valuations and appraisals.

The wife also requested additional fees pursuant to section 61.16, Florida Statutes. Prior to the final hearing, the trial court had awarded to the wife temporary attorneys' fees totaling $51,000.00, litigation costs totaling $5,000, and temporary accounting fees totaling $27,250.00. At trial, the wife's financial affidavit prepared at the commencement of the action was introduced into evidence. The affidavit showed a monthly gross income of $3,527.67. The wife did not produce an updated financial affidavit, but testified that she was unemployed, that her only income sources were unemployment and rent from the duplex she owned, and that she had no other assets. The husband's amended financial affidavits introduced at trial showed two different monthly gross income amounts, one for $27,504.00 and one for $38,117.00. No additional testimony or evidence was presented regarding either of the parties' need and/or ability to pay attorneys' fees and costs. The wife's CPA testified that he was owed approximately $135,000.00. The husband's CPA testified that the wife's records demonstrated that she paid approximately $125,273.00 in attorneys' and accountant fees, and that this total did not include the $93,000.00 in payments the husband made directly. No other testimony regarding the fees for either party was presented to the trial court.

The successor trial judge subsequently entered the final judgment of dissolution of marriage. The successor judge found that “[v]irtually all of the assets of the parties are titled solely in the name of either the Husband or the Wife, including the Delray Motors stock,” and under the agreement, “assets which are titled in the name of one of the parties are the separate asset of the party holding title.” However, the successor judge ruled that “the Wife did not waive her right to equitable distribution of the increase in the value or enhancement in value of all separate assets which have appreciated due to the active marital efforts of the Husband.” This ruling was consistent with the initial trial judge's conclusion in the orders on the agreement from the first part of the proceedings.

The trial court then made certain findings of fact regarding the Delray 20%, including that “[a]ll the payments made by the Husband upon the Bank of America loan taken to acquire his stock of Delray Motors, Inc. were [ ] paid with his separate non-marital funds.” Thus, contrary to the wife's position, the trial court found the case of Kaaa v. Kaaa, 58 So.3d 867 (Fla.2010), “not applicable to the facts of this action” because no marital assets were used to pay for the Delray 20%. Further, the trial court found that appreciation of the Delray 20%, if any, “is a result of the passive increase in the value of the underlying land and buildings at Delray Motors and not the result of the active marital efforts of the Husband.” Accordingly, the trial court found that the Delray 20% “is the separate non-marital property of the Husband and there is no appreciation in the value of that stock which would be subject to equitable distribution” and denied the wife's request for equitable distribution of the Delray 20%. The trial court also ordered each party to bear their own attorneys' fees without any further explanation.

“A trial court's interpretation of a prenuptial agreement is reviewed de novo, as such agreements are governed by the law of contracts.” Taylor v. Taylor, 1 So.3d 348, 350 (Fla. 1st DCA 2009). “The standard of review of a trial court's determination of equitable distribution is abuse of discretion. However, ‘[a] trial court's legal conclusion that an asset is marital or nonmarital is subject to de novo review.’ ” Bell v. Bell, 68 So.3d 321, 328 (Fla. 4th DCA 2011) (citations omitted). Likewise, “[t]he standard of review of a trial court's application and interpretation of Florida law is de novo.” Anthony v. Gary J. Rotella & Assocs., P.A., 906 So.2d 1205, 1207 (Fla. 4th DCA 2005).

The wife argues that the trial court erred in finding there was no active appreciation in the Delray 20% and in denying her request for equitable distribution of said appreciation.¹ The husband responds that the wife waived any interest in the Delray 20% under the agreement, and it was a non-marital asset not subject to equitable distribution. Alternatively, the husband argues that the trial court...