Campbell v. Campbell

• Court: Virginia Court of Appeals
• Writing for the Court: Cheryl V. Higgins
• Decision Date: 09 August 2011
• Docket Number: Record No. 1629-10-2
• Citation: Campbell v. Campbell, Record No. 1629-10-2 (Va. App. Aug 09, 2011)
• Parties: HARRY D. CAMPBELL v. BETTY J. CAMPBELL

HARRY D. CAMPBELL v. BETTY J. CAMPBELL

Record No. 1629-10-2

COURT OF APPEALS OF VIRGINIA

Dated: August 9, 2011

Present: Judges Elder, Kelsey and Powell^*

Argued by teleconference

MEMORANDUM OPINION^** BY

JUDGE LARRY G. ELDER

FROM THE CIRCUIT COURT OF ALBEMARLE COUNTY

Cheryl V. Higgins, Judge

Donald K. Butler (Player B. Michelsen; Butler Armstrong, LLP,

on briefs), for appellant.

Sidney H. Kirstein for appellee.

In this second appeal from a final decree of divorce, Harry D. Campbell (husband) argues that the trial court erred in: (1) classifying husband's stock in Campbell Lumber Company (CLC) as entirely marital property; (2) classifying husband's stock in Campbell Lumber Company of Appomattox (CLCA) as entirely marital property; and (3) failing to adjust the value of CLC for certain assets the company no longer owned. We hold that (1) the trial court properly classified CLC as marital property because husband did not meet his burden of tracing his separate property into CLC and proving his post-separation efforts caused CLC to appreciate in value; (2) the trial court properly relied on the use of marital property as collateral to purchase CLCA as evidence of transmuting CLCA into marital property; and (3) the trial court did not errin disbelieving husband's testimony regarding the alleged diminutions in CLC's value. Accordingly, we affirm the challenged rulings.

I.BACKGROUND

"We review the evidence in the light most favorable to . . . the party prevailing below and grant all reasonable inferences fairly deducible therefrom." Anderson v. Anderson, 29 Va. App. 673, 678, 514 S.E.2d 369, 372 (1999). So viewed, the evidence establishes that husband and wife married in January 1973 and separated in December 1996. Four children were born of their marital union, all of whom were emancipated at the time of the divorce proceedings. Husband had two children from a previous marriage. Husband filed for divorce on January 29, 1997, on the grounds of constructive desertion, alleging wife shot him following an argument on December 21, 1996. Wife originally indicated she was the shooter, but she claimed in later proceedings that one of the parties' children shot husband.

One of the contested issues in the divorce proceeding was the validity of an agreement that purportedly conveyed CLC to wife if husband proceeded with the divorce. Both parties presented expert witnesses to support their respective theories concerning the enforceability of the agreement, and the trial court ruled that the agreement was binding on the parties such that CLC "shall be the sole and separate property of [wife]."

The trial court issued a letter opinion, memorialized in a final decree of divorce (collectively the 2006 decree) addressing the remaining issues the parties raised. Pertinent to this appeal, the trial court valued the parties' properties and, after consideration of all the evidence, awarded husband seventy-two percent of the marital property and wife twenty-eight percent.

Both parties appealed the 2006 decree. Campbell v. Campbell, 49 Va. App. 498, 500, 642 S.E.2d 769, 771 (2007) (Campbell I). The only issue this Court addressed was whether "the trialcourt erred when it prevented [husband] from cross-examining wife's expert witness and a factual witness" regarding the agreement, id., and held that the circuit court "abused its discretion, as a matter of law, by preventing husband from cross-examining wife's witnesses due to the time limits it imposed," id. at 507, 642 S.E.2d at 774. We did not address the remaining assignments of error "with respect to the agreement itself and the equitable distribution of the remaining marital property" because they "depend[ed] upon the validity of the agreement." Id. at 507 n.5, 642 S.E.2d at 774 n.5. Accordingly, the mandate accompanying Campbell I "reversed and annulled" the 2006 decree and "remanded to the trial court for further proceedings in accordance with the views expressed in [Campbell I]."

On remand, the trial court held an evidentiary hearing to determine the validity of the agreement. The trial court held that wife did not meet her burden of proving the agreement was an enforceable contract, and it scheduled the matter for hearings beginning April 7, 2009, to address the equitable distribution of the marital assets (2009 proceedings). Upon motion by the parties, the trial court held that it would value the real and personal property of the parties based on the appraisals contained within the 2006 decree (2009 valuation order). The trial court noted that the parties did not possess sufficient liquid assets to pay for a new appraisal and a second appraisal would lengthen the litigation that had continued for the past ten years. However, the trial court allowed the parties to "utilize the actual sales price for any and all real estate sold by the parties" since the 2006 decree "to increase or decrease the overall valuation of the said property or entity." Further, husband reserved "the right to show that the sales proceeds . . . from the sales of the real estate tracts . . . were expended," and "to argue that the value of the two corporate entities [CLC and CLCA] . . . should be reduced from the said 2005 valuation due to the loss, sale or dissipation."

At the 2009 proceedings, the parties presented extensive evidence in the form of testimony and documentary exhibits regarding the classification of CLC and CLCA. Further, husband presented evidence relating to several pieces of personal property that he claimed were "broken down" or "removed by wife."

At the conclusion of the evidence, the trial court issued a letter opinion and final decree for divorce (collectively the 2010 decree). Pertinent to this appeal, the trial court classified CLC as entirely marital property. The trial court reasoned that because husband's testimony indicated most of the separate property he owned prior to the marriage was replaced with new equipment throughout the course of the marriage, husband was unable to prove that he maintained separate assets in CLC. Significant to the trial court's classification was its finding that husband's recollections concerning the separate property was not credible.

The trial court further classified CLCA as marital property because CLC provided the funds to make the down payment on CLCA. The trial court found it significant that husband used real estate owned by CLC as collateral to secure a loan to pay the remainder of the purchase price. Thus, even though husband purchased CLCA after the date of separation, the trial court held that the evidence overcame the presumption of separate classification such that wife did not need to trace the marital funds back to CLCA.

Finally, the trial court valued CLC at $5,377,491. The trial court did not specifically address husband's evidence offered to prove CLC's diminution in value, though it reiterated that husband's "memory does not appear to be reliable in this area." Further, the trial court did not explain the discrepancy between the value it assigned to CLC in the 2010 decree and the $5,369,665 value given in the 2005 valuation.

Both parties filed objections and legal memoranda in support of their respective positions. At a hearing on June 14, 2010, the trial court declined to hear additional arguments in the matter and denied all outstanding motions for reconsideration.

This appeal followed.

II.ANALYSIS

"A trial court's decision, when based upon credibility determinations made during an ore tenus hearing, is owed great weight and will not be disturbed unless plainly wrong or without evidence to support it." Douglas v. Hammett, 28 Va. App. 517, 525, 507 S.E.2d 98, 102 (1998). We owe the trial court this deference "[b]ecause the trial court's classification of property is a finding of fact." Ranney v. Ranney, 45 Va. App. 17, 31, 608 S.E.2d 485, 492 (2005). Moreover, "'[t]he credibility of the witnesses and the weight accorded the evidence are matters solely for the fact finder who has the opportunity to see and hear that evidence as it is presented.'" Thomas v. Thomas, 40 Va. App. 639, 644, 580 S.E.2d 503, 505 (2003) (quoting Sandoval v. Commonwealth, 20 Va. App. 133, 138, 455 S.E.2d 730, 732 (1995)).

A.CLASSIFICATION OF ASSETS

Under Code § 20-107.3(A), the trial court must determine "the ownership and value of all property, real or personal, tangible or intangible, of the parties and shall consider which of such property is separate property, which is marital property, and which is part separate and part marital property." We will reverse the trial court's decision only upon a showing of abuse of discretion. von Raab v. von Raab, 26 Va. App. 239, 246, 494 S.E.2d 156, 159 (1997).

1. CLC

It is undisputed that husband began a sawmill business in 1957, which he initially operated as a partnership with his brothers. In 1977, husband began developing a sawmill in a different location, North Garden, and in 1979, that sawmill became his principal place of business. Husband incorporated the North Garden sawmill in 1983 and renamed it CLC.

Husband argues the trial court erred in classifying CLC as entirely marital property because CLC existed under husband's control prior to the marriage. Husband contends the assets he owned prior to the marriage maintained their separate identity when they were commingled with the business that became the North Garden sawmill and again when said sawmill was incorporated into CLC. Husband avers the trial court erroneously focused on the turnover in these assets and instead asserts that he met his burden of tracing distinct assets in CLC to his separate property via the list of separate assets he presented.

The property subject to classification is husband's stock in CLC, which is presumptively marital property because it came into existence in 1983 when CLC became incorporated. Code § 20-107.3(A)(2)(iii) (defining marital property as "all other property acquired by each party during the marriage which is not separate...