Innerbichler v. Innerbichler
| Decision Date | 01 September 1999 |
| Docket Number | No. 0149,0149 |
| Citation | 749 A.2d 251 |
| Parties | (Md.App. 2000) NICHOLAS RAYMOND INNERBICHLER v. CAROLE JEAN INNERBICHLER |
| Court | Court of Special Appeals of Maryland |
Argued before Murphy, C.J., Hollander, Adkins, JJ.
Opinion by Hollander, J.
This appeal arises from the dissolution of the marriage of Nicholas R. Innerbichler, appellant, and Carole Jean Innerbichler, appellee.1 After more than fourteen years of marriage, the parties were granted a divorce by the Circuit Court for Prince George's County, pursuant to an order dated July 27, 1998, and modified on January 13, 1999. Two aspects of the court's orders are at the heart of this appeal: 1) the monetary award to appellee, in the amount of $2,581,864.75, which was based, in part, on the court's determination that the appreciation in value of appellant's 51% interest in Technical and Management Services Corporation ("TAMSCO") constituted marital property; and 2) the court's award to appellee of monthly alimony of $8000.00 for five years, followed by indefinite monthly alimony of $6,000.00.
Appellant poses several questions for our consideration, which we have rephrased slightly:
I. Did the trial court err in granting the monetary award to appellee by:
A. Improperly finding that the increase in value in TAMSCO was marital property?
B. Failing to consider the tax liabilities of TAMSCO?
C. Improperly calculating the premarital value of TAMSCO?
II. Did the trial court err in the manner in which it required payment of the monetary award?
III. Did the trial court err in its granting of alimony to appellee?
For the reasons stated below, we conclude that the court erred only with respect to its valuation of appellant's pre-marital interest in TAMSCO. For that reason, we shall vacate the judgment and remand for further proceedings in accordance with this opinion.
The parties were married on January 21, 1984, when Mr. Innerbichler (the "Husband") was 41 years old and appellee (the "Wife") was 33. Although appellant had been married twice before, it was appellee's first marriage. The parties have one child, Michelle Nicole, who was born on May 1, 1986. Appellant also has three adult children from prior marriages.
In 1995, after eleven years of marriage, the Husband moved out of the marital home.2 On September 12, 1995, he filed a Complaint for Limited Divorce, and the Wife filed a countersuit, seeking an absolute divorce on the ground of adultery. Her suit was later amended in court to include a two year separation as an additional ground for divorce.
Trial consumed almost eight days in January and February 1998, and culminated in a divorce based on the two-year separation. At the time of trial, appellant was 55 years old and appellee was 47. The Husband then resided with his paramour in a home that he purchased for about $600,000.00, and financed with a mortgage and a loan from his business.
During trial, the court heard testimony from thirteen witnesses, including: the parties; Raymond Grossman, an economist who testified for appellant as an expert in business valuation and appraised TAMSCO; Larry Stokes, an accountant for TAMSCO; William Bilawa, appellant's business partner; Charles Smolkin, appellee's vocational expert; Lawrence J. Eisenberg, an ERISA and pension benefits expert who testified for the Husband; and Douglas S. Land, an expert in the field of business valuation who testified for the Wife. Numerous exhibits were also admitted into evidence. What follows is a summary of the evidence pertinent to the issues.
In October 1982, more than one year prior to the parties' marriage, appellant co-founded TAMSCO with his friend and colleague, William Bilawa. At the time, appellant was employed by Lockheed Corporation, and remained employed there until June 1983; in the evenings, appellant worked for TAMSCO. The company provides technical and management services to agencies of the federal government and to the private sector in various disciplines, including program management, integrated logistics support, software development, and data management. At the relevant time, appellant owned 51% of TAMSCO, while Bilawa owned a 49% interest in the company.3
When TAMSCO was founded, appellant was married to Barbara Innerbichler ("Barbara"). In 1983, as part of his divorce settlement with Barbara, appellant claimed that he waived his interest in the home that they occupied, allegedly worth about $300,000.00, in exchange for Barbara's agreement to waive her claim to TAMSCO, which appellant contends was worth at least as much as the home.4
In June 1983, about six months before appellant's marriage to appellee, appellant submitted an application on behalf of TAMSCO to the United States Small Business Administration ("SBA") to obtain "8(a) certification." According to appellant, who is an Hispanic American, the "8(a) program" was established during the Nixon years to assist small businesses owned and controlled by socially and economically disadvantaged persons. In order to qualify for such certification, the applicant company must demonstrate reasonable prospects for business success as well as financial stability and viability. Moreover, the disadvantaged individual upon whom eligibility is based must own at least 51% of the business.
In his brief, appellant maintains that, at the time of TAMSCO's application for 8(a) certification, TAMSCO "had already completed contracts of significant value and had other contracts pending, all of which established its viability to the SBA." He also alleges that the company had a line of credit for $500,000.00. Yet TAMSCO was clearly in its fledgling stages of development. TAMSCO operated from Bilawa's kitchen until August 1984, when it opened its first office in Fort Monmouth, New Jersey. Moreover, according to the 8(a) application, TAMSCO was "a new business," it had only two employees, and TAMSCO's operating equipment consisted of two electric typewriters, a bookcase, a file cabinet, a conference table, and chairs, having a total value of less than $2,000.00. Further, in its SBA application, TAMSCO listed only two contracts that it had completed in the past three years: a $13,000.00 contract commenced in February 1983 and a $6,000.00 contract completed in May 1983. The application also identified a contract of $131,000.00, and described it as "In Progress." Additionally, the 8(a) application anticipated projected sales of approximately $99,000.00 by the end of fiscal year 1983, and $2,086,680.00 in total sales by the end of fiscal year 1984. The application also reflected that financing was "generally unavailable" to TAMSCO, either for working capital or long term loans, and vendors would not extend "normal credit terms."
According to appellant, TAMSCO was notified in October 1983 that it had "won" a non-8(a) contract with the Army, worth in excess of one million dollars, which was actually "awarded" on January 1, 1984, shortly before the parties' marriage. Performance of the Army contract did not begin until the summer of 1984, however.
On April 14, 1984, some 83 days after the parties' marriage, TAMSCO obtained the desired 8(a) certification. It is undisputed that the 8(a) program enabled TAMSCO to obtain lucrative sole source government contracts, the first of which was awarded to TAMSCO in September 1984.
TAMSCO grew rapidly after the parties' marriage and the award of 8(a) certification. The company reported approximately $52,000.00 in revenues for fiscal year 1983, and $188,000.00 in revenues for fiscal year 1984. But, by the end of fiscal year 1992, TAMSCO had been awarded contracts totaling $356,439,719. For 1995, TAMSCO generated revenues of $46 million, and employed over 500 people. In 1996, TAMSCO earned $47,000,000.00 in revenues, followed by $51,000,000.00 for fiscal year 1997.
Appellant acknowledged that, from 1984 through 1989, approximately 85% of TAMSCO's work was in connection with 8(a) contracts, and from 1989 until 1993, approximately 75% of TAMSCO's work derived from those contracts. When TAMSCO left the 8(a) program in 1993, it had already received approximately $356,000,000.00 in 8(a) revenue. By the time of the divorce trial, however, TAMSCO was no longer eligible to participate in the Section 8(a) program, although it still had residual 8(a) business. According to appellant, because TAMSCO could no longer "pursue contracts in a non-competitive marketplace," its business position had declined. Nevertheless, at the time of trial, appellant was earning in excess of $650,000.00 in annual salary.
Appellant conceded that most of TAMSCO's lucrative contracts were obtained and performed after his marriage to appellee. Nevertheless, he maintained that neither TAMSCO nor the post-marriage apprection in the company's value constituted marital property, because the company was created before the marriage and its success was directly linked to the Army contract awarded before the marriage. He claimed that over 97% of TAMSCO's government contracts were "traceable to contracts won at the company's inception and prior to the marriage." To support his position, appellant submitted an exhibit at trial depicting the success of TAMSCO as a "family tree," with the 8(a) Army contract as the trunk. The branches of the tree refer to numerous other contracts with the government, including the Coast Guard and the Air Force, which generated millions of dollars in revenue for TAMSCO.
For her part, appellee steadfastly insists that when the parties were first married, TAMSCO was in its "embryonic stages." In addition to what has already been set forth, she notes that TAMSCO's income tax return for 1983 revealed that the company had only $52,076 in gross receipts and $41,268.00 in assets. Moreover, she underscores that TAMSCO did not receive 8(a) certification until after the marriage; the 8(a) contracts were all...
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