Bettinger v. Bettinger

• Decision Date: 17 July 1990
• Docket Number: No. 19382,19382
• Citation: Bettinger v. Bettinger, 396 S.E.2d 709, 183 W.Va. 528 (W. Va. 1990)
• Parties: , 10 A.L.R.5th 945 Robert BETTINGER v. Marie Militzer BETTINGER.
• Court: West Virginia Supreme Court

Page 709

396 S.E.2d 709

183 W.Va. 528, 10 A.L.R.5th 945

Robert BETTINGER v.Marie Militzer BETTINGER.

No. 19382.

Supreme Court of Appeals of West Virginia.

July 17, 1990.

Syllabus by the Court

1.A measure of discretion is accorded to a family law master in making value determinations after hearing expert testimony.However, the family law master is not free to reject competent expert testimony which has not been rebutted.This statement is analogous to the rule that " '[w]hen the finding of a trial court in a case tried by it in lieu of a jury is against the preponderance of the evidence, is not supported by the evidence, or is plainly wrong, such finding will be reversed and set aside by this Court upon appellate review.' "Syllabus Point 1, in part, George v. Godby, 174 W.Va. 313, 325 S.E.2d 102(1984), quotingSyllabus Point 4, Smith v. Godby, 154 W.Va. 190, 174 S.E.2d 165(1970).

2.A buy-sell agreement in a closely held corporation setting the stock value for equitable distribution purposes should not be considered as binding, but rather should be weighed along with other factors in making a determination as to the value of such stock.

3.Both Section 1041 of the Internal Revenue Code,26 U.S.C. § 1041(1988), andW.Va.Code, 48-2-32(i), specifically exempt from federal and state taxes transfers of property between spouses which arise incident to a divorce.

4.The tax implications of a future sale of property to a third party are too speculative to allow for a tax deduction against the other spouse's share unless it can be ascertained under the court's decree that such sale will actually occur.

5. W.Va.Code, 48-2-32(d)(7)(A) through (E), contain a variety of options that are available to a trial court to provide for payment of a party's equitable distribution share in a divorce proceeding.

6.Where there are substantial nonliquid assets that are subject to equitable distribution, there may be no other recourse than for a trial court to order installment payments for a spouse's share.

7.Where the value of an equitable distribution asset is payable over a term of years, interest should be paid at the going rate in the absence of some special hardship factor shown by the obligor.

8.The valuation for equitable distribution purposes of a vested defined contribution plan is the present actual value of the contributions made and the accumulated earnings thereon.There is no need to discount this value because it represents the actual present value.

9."When a family law master or a circuit court enters an order awarding or modifying child support, the amount of the child support shall be in accordance with the established state guidelines, set forth in 6 W.Va.Code of State Rules§§ 78-16-1 to 78-16-20(1988), unless the master or the court sets forth, in writing, specific reasons for not following the guidelines in the particular case involved.W.Va.Code, 48A-2-8(a), as amended."Syllabus, Holley v. Holley, 181 W.Va. 396, 382 S.E.2d 590(1989).

10.The term "SOLA" means "standard of living adjustment."6 W.Va. C.S.R. § 78-16-2.6.Under the child support formula, there are two calculations for child support.The first calculation is to determine the primary child support, which essentially covers the basic needs of the children.The SOLA calculation is then made based on defined percentages for the number of children.

11. 6 W.Va. C.S.R. § 78-16-2.7.2 of the child support guidelines allows a family law master or circuit court, in the exercise of sound discretion, to apply less than the full SOLA percentages for child support if one support obligor has a discretionary income above $6,000 a month or both support obligors have a combined discretionary income of $8,000 per month.

12.A decision not to follow the SOLA percentages must be undertaken in light of the legislative preference in W.Va.Code, 48A-2-8(b)(1989), that child support should be keyed to "the level of living such children would enjoy if they were living in a household with both parents present."If the family law master or circuit court determines that SOLA percentages under 6 W.Va. C.S.R. § 78-16-2.7.2 should not be used, an explanation must be given.

13."There are three broad inquiries that need to be considered in regard to rehabilitative alimony: (1) whether in view of the length of the marriage and the age, health, and skills of the dependent spouse, it should be granted; (2) if it is feasible, then the amount and duration of rehabilitative alimony must be determined; and (3) consideration should be given to continuing jurisdiction to reconsider the amount and duration of rehabilitative alimony."Syllabus Point 3, Molnar v. Molnar, 173 W.Va. 200, 314 S.E.2d 73(1984).

14.The purpose of W.Va.Code, 48-2-13(a)(4)(1986), is to enable a spouse who does not have financial resources to obtain reimbursement for costs and attorney's fees during the course of the litigation.

15.Reimbursement for reasonable expert witness fees is permissible under similar financial considerations as those used in awarding attorney's fees.

William J. Leon, Vorbach & Gianola, L.C., Morgantown, for Marie Militzer Bettinger.

Clark Frame, Wilson, Frame & Metheney, Morgantown, for Robert Bettinger.

MILLER, Justice:

This is an appeal from a final order of the Circuit Court of Monongalia County in a divorce case.Marie Militzer Bettinger asserts that the family law master and the circuit court made a number of errors in evaluating her husband's assets for equitable distribution purposes.Mrs. Bettinger contends that the trial court erred in attaching a value to Mr. Bettinger's interest in a professional corporation known as Western Pennsylvania Anesthesia Associates, Limited(WPAA).The controversy in this regard centers on the effect of a corporation stock buy-sell agreement, the fixing of a value for accounts receivable, and whether a potential tax liability should have been deducted.

Mrs. Bettinger also claims that her interest in her husband's pension and profit sharing plan with WPAA was undervalued.A similar claim is asserted as to her interest in a retirement benefits program, referred to as the Teachers Insurance and Annuity Association--College Retirement Equities Fund (TIAA-CREF), resulting from his employment with West Virginia University.Mrs. Bettinger asserts that both plans are "defined contribution" plans rather than "defined benefit" plans, and, as a result, there should have been no discounting to present day value.

Two final errors center on more traditional grounds, i.e., inadequate awards of alimony and child support and the refusal to award Mrs. Bettinger attorney's fees and expert witness fees.

I.

Robert Bettinger and Marie Militzer Bettinger were married in February, 1976, while he was completing his anesthesiology residency.At the time, Marie Bettinger was working as an occupational therapist.She ceased working at the end of 1976 when their first child was born.At the time of the divorce, Mrs. Bettinger was forty-five years old, and the parties' two children were ten and twelve years of age.

In 1977, Mr. Bettinger became employed at the West Virginia University Medical Center as an associate professor.In October, 1983, he entered into an employment agreement with WPAA.He terminated his relationship at the Medical Center when he began full-time employment with WPAA in January, 1984.

In 1983, his last year of employment with the Medical Center, Mr. Bettinger earned $93,747.Following his employment at WPAA, he earned $113,657 in 1984; $164,947 in 1985; and $228,320 in 1986, the year of the separation.These wages do not include his contributions to the WPAA pension and profit sharing plan.Further facts will be developed as they bear upon the particular issue raised.

II.VALUATION OF HUSBAND'S INTEREST IN PROFESSIONAL CORPORATION

Mr. Bettinger's interest in the professional corporation is a marital asset.The experts for the parties, while using different methods of calculation, do not widely disagree as to the net tangible assets of the corporation.Mr. Bettinger's expert gave a figure of $175,000 without any factor for the accounts receivable or goodwill.Mrs. Bettinger's expert gave a figure of $187,676, which included the accounts receivable, ¹ but no goodwill.

A.Accounts Receivable Valuation

The family law master refused to accept the net tangible asset figure of Mrs. Bettinger's expert because of the manner in which the expert had calculated the value of the accounts receivable.Her expert, who testified as to his familiarity with similar medical corporations, stated that customarily the accounts receivable of a medical corporation amount to approximately 40 percent of the annual gross receipts.In 1986, WPAA's gross receipts were $3,414,028.Forty percent of that figure would be $1,365,611.The expert deducted from the latter figure income taxes in the amount of $273,122, leaving a net after tax value of $1,092,489 for the accounts receivable.As there were seven equal shareholders in the corporation, Mr. Bettinger's share of the accounts receivable was set at one-seventh of this figure.

The family law master rejected this calculation and instead concluded, without offering any reason, that the value of the accounts receivable was only one-twelfth of the gross receipts of the corporation.The deferred taxes were then deducted from this lower figure.

As a preliminary matter, we note that part of the problem in determining the value of the accounts receivable was due to the fact that Mrs. Bettinger had been unable to compel disclosure of the financial records of the corporation.The only information made available were the corporate income tax returns which did not provide sufficient individualized accounting data.In the past, we have reversed cases on the ground that the failure to disclose relevant financial data makes a fair equitable distribution impossible.SeeLambert v. Lambert, 180 W.Va....