Dhawan v. Dhawan
| Docket Number | 0887-22-4 |
| Decision Date | 01 August 2023 |
| Parties | RAKESH KUMAR DHAWAN v. BONITA DHAWAN |
| Court | Virginia Court of Appeals |
FROM THE CIRCUIT COURT OF LOUDOUN COUNTY JEANETTE A. IRBY, JUDGE
Samuel A. Leven (The Baldwin Law Firm, LLC, on briefs), for appellant.
Brandy M. Poss (Barnes & Diehl, P.C., on brief), for appellee.
Present: Judges Athey, Ortiz and Senior Judge Clements Argued at Leesburg, Virginia
Rakesh Kumar Dhawan (husband) appeals a final order of divorce which the circuit court entered on May 17, 2022. Husband argues that the circuit court erred when "it placed prohibitions and restrictions on the parties' business." Husband further contends that the circuit court erred in distributing assets of the business and ordering husband "to personally pay debts belonging to the parties' business" "despite said business being a separate corporate entity." Husband also challenges the circuit court's distribution of the business "when there was no evidence in the record as to the valuation of the business." In addition, husband argues that the circuit court erred in determining his income for spousal support and child support purposes and ordering that the support be retroactive. Husband asserts that the circuit court erred in ordering husband to pay Bonita Dhawan (wife) $6,400 for her "post-separation paychecks." Finally, husband contends that the circuit court abused its discretion by ordering him to pay wife's attorney fees "when the award was based at least in part on other erroneous rulings and was not justified by the equities of the case." For the reasons stated below, we affirm the circuit court's decision in part, reverse in part, and remand this case to the circuit court for further proceedings consistent with this opinion.
"When reviewing a trial court's decision on appeal, we view the evidence in the light most favorable to the prevailing party granting it the benefit of any reasonable inferences." Shah v. Shah, 70 Va.App. 588, 591 (2019) (quoting Congdon v. Congdon, 40 Va.App. 255, 258 (2003)). Here, wife is the prevailing party, so we consider all the evidence in the light most favorable to her.
The parties married in 1995 and had two children. During the marriage, the parties started Falco eMotors, Inc., an American corporation, (Falco) and Falco eMotors Private Limited, an Indian company (Falco India).[1] Falco "markets and sells electric bike conversion systems"; whereas Falco India "manufactures and sells commercial fans" from India. Husband owned 79% of the Falco shares, and wife owned 21%. Both parties also served as directors of Falco; husband was the president, and wife was the vice president.
On August 1, 2019, the parties separated, and approximately three months later, husband advised wife that she was "terminated" from Falco. He blocked her access to Falco and its emails. Husband also withdrew funds from Falco for personal expenses. Wife subsequently filed a complaint for divorce and an emergency motion to enjoin husband from "disposing [of] and/or encumbering any assets" and "taking any adverse action against [her] with regard to her position" with Falco. After wife filed her pleadings, husband removed wife as a director of Falco claiming that she stole money from the company. Husband opposed wife's emergency motion and denied her claims that he was "wasting" corporate funds. On January 31, 2020, the parties appeared before the circuit court for argument on wife's emergency motion. Husband agreed "to provide a full detailed accounting for any funds dispersed from the company accounts" and represented that the accounting would be provided in discovery. In addition, husband agreed to not "take[] any steps . . . to economically isolate [wife] by blocking her access and/or use of the parties' financial accounts or assets." Husband and wife also agreed to a mutual injunction against the "waste of marital assets."
Then the parties each presented their arguments regarding husband's management of Falco's assets and liabilities and wife's involvement in the business. In her motion, wife had requested an order enjoining husband from "selling, gifting, transferring, pledging and/or otherwise disposing and/or encumbering any assets . . . or otherwise diminishing the marital estate or increasing marital debt . . ., except as necessary in the ordinary course of business and only as mutually and expressly agreed to by the [p]arties." Acknowledging that the circuit court could order husband "not to waste" a business asset, husband argued that there was "no authority" to allow wife to "control" how he used business funds because as president and majority shareholder, only he managed the business. Over husband's objections, the circuit court granted wife's request. The circuit court did not address wife's request to reinstate her as vice president of Falco.
After the hearing, both parties sought clarification of the circuit court's ruling, and husband moved for reconsideration, which the circuit court denied.[2] Furthermore, Falco, by special appearance of counsel, moved to intervene and challenge the circuit court's jurisdiction to "enter an order regarding the assets and interests of Falco." The circuit court denied Falco's motion because it had not yet entered an order after the hearing on wife's emergency motion and "therefore there [was] no order controlling corporate assets that are not marital property." Several months after the hearing, the circuit court entered an order memorializing its ruling on wife's emergency motion. As part of its order, the circuit court "reserved for further adjudication" wife's request to enjoin husband from "taking any adverse action against [her] with regard to her position with the [c]ompany and to reinstate her as [v]ice [p]resident thereof."[3]
In addition to the orders regarding Falco, the circuit court entered a pendente lite support order, directing husband to pay $4,317 per month for spousal support and $1,508 per month for child support, as of September 1, 2020.[4] In addition, the circuit court granted wife's request for "retroactive" spousal and child support for the period between December 2, 2019 and August 31, 2020, and ordered husband to pay a lump sum amount totaling $52,425.
After the entry of the pendente lite order, wife filed a petition for a rule to show cause, arguing that husband was not complying with the injunction order.[5] Wife alleged that husband had transferred and/or disposed of assets without "the mutual and express agreement" of the parties and "[n]ot within the ordinary course of business." Claiming that husband had transferred funds from Falco to pay his retroactive support obligations, wife sought an order requiring husband to "restore" the money he took and enjoin him from using marital funds to pay his support obligations. In response, husband reiterated that wife "improperly allege[d] that the assets of the corporation in the ordinary course of business are subject to the [c]ircuit [c]ourt's jurisdiction in the divorce matter." Acknowledging that the "shares of the company may be considered marital assets," husband argued that "categorization [did] not reach to the assets of the corporation, or to any actions taken by the corporation via its fiduciaries." After hearing evidence and argument, the circuit court found that the evidence was sufficient to find husband in contempt of the injunction order, but it declined to hold him in contempt. The circuit court ordered husband to "consult" with wife "regarding all the withdrawals, expenditures and pledges" of Falco as of July 31, 2020, and to "replenish any funds he withdrew and/or transferred and/or pledged" from Falco which wife believed were "not in the ordinary course of business and/or which were not necessary business expenses from July 31, 2020 forward."
Less than four months later, husband again requested relief from the circuit court's orders, specifically that he needed wife's approval "for every company expenditure." He alleged that because wife would "not approve regular and necessary business expenses, the businesses [were] nearing collapse." Wife responded that husband had not complied with the circuit court's order to provide her with "complete access" to Falco's books, which "gravely inhibited" wife's ability to approve expenditures. At a review hearing, the circuit court found husband in contempt and ordered him to "replenish the sum of $86,834.91," which represented personal expenses, to Falco's business account and "make available" to wife all of the companies' "electronic and other databases, records and bank accounts." The circuit court found that wife approved business expenses "on many occasions," but also was "frozen out," especially when she questioned "figures appearing in the Falco account and then ending up in the personal accounts." It concluded that wife "should not have to fight and fight and fight and fight for information." It also ordered husband to "provide written confirmation to all employees," advising them that they were to "immediately" cooperate with wife by answering her questions and providing her with information she requested.
In preparation for trial, both parties submitted written pleadings regarding the equitable distribution factors and their proposals for custody, visitation, and support.[6] Husband and wife agreed that Falco was a marital asset. Husband asserted that it had "little intrinsic value," and wife simply stated that the value had not yet been determined.
Thereafter on February 4, 2022, the circuit court entered an order incorporating the parties' "Partial Marital Agreement," in which they agreed to list the marital residence for sale, pay for "all...
To continue reading
Request your trial