Jensen v. Jensen

• Decision Date: 28 August 2002
• Docket Number: No. 1D01-4731., No. 1D01-4024
• Court: Florida District Court of Appeals
• Parties: Phillip JENSEN, Appellant, v. Laura JENSEN, Appellee.

824 So.2d 315

Phillip JENSEN, Appellant, v. Laura JENSEN, Appellee.

Nos. 1D01-4024, 1D01-4731.

District Court of Appeal of Florida, First District.

August 28, 2002.

Paula L. Walborsky, Esq., Mari M. Presley, Esq., and Mary A. Kane of Walborsky, Presley and Kane, P.A., Tallahassee, for Appellant.

Joseph R. Boyd, Esq. of Boyd, Lindsey & Sliger, P.A., Tallahassee, for Appellee.

LEWIS, J.

Appellant, Phillip Jensen, appeals the final judgment of dissolution of his marriage to Laura Jensen, appellee. Appellant raises three arguments on appeal. Appellant first argues that the trial court erred in holding the unvested stock options, received by appellant from his employer during the marriage, to be marital property subject to equitable distribution. We affirm, holding that appellant's unvested stock options acquired during the marriage prior to the date of the filing of the petition for dissolution of marriage constitute marital property subject to equitable distribution. In his second argument, appellant contends that the trial court erred in not applying the substantial parenting formula to his secondary parenting of the parties' two children, resulting in an incorrect child support obligation determination. As to this issue, we reverse and remand to the trial court for adjustment of appellant's child support obligation pursuant to section 61.30(11)(b)10., Florida Statutes (2001). Finally, appellant argues that the trial court erred in ordering him to pay a portion of appellee's attorney's fees and costs. On cross-appeal, Laura Jensen argues that the trial court improperly granted additional parenting time to appellant. We affirm appellant's third issue and the issue on cross-appeal without further discussion.

The parties were married for approximately seven years. Early in the marriage, appellee worked for a government agency, earning $29,000 per year. Appellant worked as a computer technician, earning $41,000 per year. Appellant later became employed with Cisco Systems and began earning a base salary of $158,000 per year, plus stock options. Appellee voluntarily left full-time employment in order to stay home with the parties' two children, who were four and six at the time of trial.

During the marriage, Cisco Systems granted several thousand stock options to appellant. These stock options greatly increased appellant's income. For the years 1998, 1999, and 2000, the parties' income was $198,019, $387,547, and $434,341 respectively. The trial court divided the vested stock options, or those capable of being exercised, between the parties without dispute. The trial court found that, prior to the time of the filing of the dissolution petition, Cisco Systems had also granted appellant 23,700 unvested stock options, of which 8,876 had vested prior to the dissolution proceedings.

Pursuant to a standard option contract between appellant and his employer, these unvested options, while granted to appellant in recognition of past commendable service, are contingent upon appellant's continued service with either Cisco Systems or any of its subsidiaries. Thus, if Cisco Systems had terminated appellant's employment one day following the filing of the dissolution petition, or if appellant had voluntarily terminated his employment, the entitlement to such options would have been rescinded. However, if appellant were to pass away, the options could be exercised by his estate. Moreover, if appellant were to become disabled, he would then be entitled to exercise such options.

During the dissolution proceeding, both parties' expert witnesses testified that the unvested stock options could not be valued or transferred due to their nature. The trial court, after considering such evidence, ruled that the unvested stock options were marital property subject to equitable distribution. The trial court divided the 23,700 unvested options equally between the parties by imposing a constructive trust upon appellant for appellee's benefit. Pursuant to such order, as the options become vested, appellant must inform appellee by writing and exercise all or a part of the options as directed by appellee. Appellee is to be responsible for all federal income taxes incurred by appellant in exercising the options. In imposing a constructive trust on appellant, the trial court expressly retained jurisdiction over the parties until the expiration of all unvested options. The trial court's equitable distribution totaled $521,761 to appellant and $472,629 to appellee. The trial court denied appellee's request to order appellant to pay a lump sum amount to equalize the marital assets. The trial court predicated this denial upon its determination that the unvested stock options constituted marital property.

Regarding the child custody issue, the trial court ordered shared parental responsibility. Appellant is to have the children on alternate weekends, Friday after school through Monday morning. Appellant is also to have the children each Wednesday night. While the trial court's normal parenting schedule does not include awarding Wednesday nights, the trial court awarded such after appellant's many requests. For Spring Break and Thanksgiving, the children are to be with appellant in odd-numbered years and with appellee in evennumbered years. For Christmas recess, the parties are to each have the children for one week. During the summers, each party has the right to the children in alternating weeks.

Subsequent to the termination of the bridge-the-gap alimony, the trial court ordered appellant to pay $1,820 per month in child support. The court, noting that its normal parenting schedule did not equate to substantial parenting time for purposes of adjusting the child support obligation, ruled that its modified parenting schedule, even with the additional Wednesday nights, did not constitute substantial parenting time either. Following the dissolution order, the court denied appellant's Motion for Rehearing regarding this issue. This appeal followed.

The issue of whether unvested stock options may constitute marital assets is an issue of first impression in Florida. Appellant argues on appeal that the unvested stock options are not marital assets because they are incapable of being valued or transferred. Appellant further argues that the Legislature did not provide for such treatment in its definition of "marital assets."

Pursuant to 61.075(5)(a), Florida Statutes (2000), "marital assets and liabilities" include:

1. Assets acquired and liabilities incurred during the marriage, individually by either spouse or jointly by them;

2. The enhancement in value and appreciation of nonmarital assets resulting either from the efforts of either party during the marriage or from the contribution to or expenditure thereon of marital funds or other forms of marital assets, or both;

3. Interspousal gifts during the marriage;

4. All vested and nonvested benefits, rights, and funds accrued during the marriage in retirement, pension, profitsharing, annuity, deferred compensation, and insurance plans and programs; and

5. All real property held by the parties as tenants by the entireties, whether acquired prior to or during the marriage, shall be presumed to be a marital asset.

(emphasis added).

"Nonmarital assets and liabilities" include:

1. Assets acquired and liabilities incurred by either party prior to the marriage, and assets acquired and liabilities incurred in exchange for such assets and liabilities;

2. Assets acquired separately by either party by noninterspousal gift, bequest, devise, or descent, and assets acquired in exchange for such assets;

3. All income derived from nonmarital assets during the marriage unless the income was treated, used, or relied upon by the parties as a marital asset; and

4. Assets and liabilities excluded from marital assets and liabilities by valid written agreement of the parties, and assets acquired and liabilities incurred in exchange for such assets and liabilities.

§ 61.075(5)(b), Fla. Stat. (2000).

While the Legislature did not expressly provide for the treatment of stock options in sections 61.075(5)(a)-(b), Florida Statutes, Florida courts have been called upon to determine the nature of vested stock options in the realm of dissolution proceedings. In Seither v. Seither, 779 So.2d 331, 333 (Fla. 2d DCA 1999), the Second District, in upholding the trial court's determination that vested stock options could be considered as income for alimony purposes instead of being treated as assets, noted that section 61.075(5)(a)4., Florida Statutes, broadly defines "marital assets." See also Brown v. Brown, 591 So.2d 1043, 1044 (Fla. 1st DCA 1991) (finding no abuse of discretion in trial court's order that distributed husband's vested stock options); Langevin v. Langevin, 698 So.2d 601, 602 (Fla. 4th DCA 1997); Griffing v. Griffing, 722 So.2d 979, 980 (Fla. 5th DCA 1999). Thus, because section 61.075(5)(a)4., Florida Statutes labels "nonvested" benefits, rights and funds as marital assets and the courts' determinations that vested stock options fall within the purview of section 61.075(5)(a)4., we hold that appellant's unvested stock options that accrued during the marriage also come within the definition of "marital assets."

While both expert witnesses in this case testified that appellant's unvested stock options were incapable of being valued or transferred as of yet, the stock options were granted to appellant during the marriage. Contrary to appellant's argument, these stock options are not analogous to personal goodwill, but instead represent appellant's past commendable employment service to Cisco Systems that he provided during the marriage. Appellant's employer sought to reward appellant for his past commendable service, while at the same time, adding incentive for appellant to remain with the company in order to exercise such options. Yet, in the unfortunate circumstance of appellant's death, the option period...