Miller v. Wilson, 16-0587

CourtSupreme Court of West Virginia
Writing for the CourtChief Justice Allen H. Loughry II Justice Robin Jean Davis Justice Margaret L. Workman Justice Menis E. Ketchum Justice Elizabeth D. Walker
Docket NumberNo. 16-0587,16-0587
PartiesDonna Miller, f/k/a Donna Wilson, Petitioner Below, Petitioner v. Leon Hunter Wilson, Respondent Below, Respondent
Decision Date16 June 2017

Donna Miller, f/k/a Donna Wilson, Petitioner Below, Petitioner
Leon Hunter Wilson, Respondent Below, Respondent

No. 16-0587


June 16, 2017

(Berkeley County 05-D-486)


Petitioner Donna Miller, f/k/a Donna Wilson, by counsel James P. Campbell, appeals the Circuit Court of Berkeley County's May 17, 2016, order denying her motion for reconsideration of a March 22, 2016, order regarding equitable distribution. Respondent Leon Hunter Wilson, by counsel Richard G. Gay, filed a response. Petitioner filed a reply. This appeal centers on the lower courts' valuation of certain "manager fees" that were earned as of the parties' May 31, 2005, separation. Following an evidentiary hearing, the family court determined, and the circuit court affirmed, that petitioner owed more than $627,000 to respondent.

This Court has considered the parties' briefs and the record on appeal. The facts and legal arguments are adequately presented, and the decisional process would not be significantly aided by oral argument. Upon consideration of the standard of review, the briefs, and the record presented, the Court finds no substantial question of law and no prejudicial error. For these reasons, a memorandum decision affirming the circuit court's order is appropriate under Rule 21 of the Rules of Appellate Procedure.

Factual and Procedural Background

This divorce case has been ongoing for more than ten years, having previously reached this Court on appeal in 2010. By way of brief background, the parties were married in 1990 and petitioner filed for divorce on June 1, 2005. The parties stipulated to May 31, 2005, as the date of their separation. There were no children born from the marriage.

In 1993, the parties formed Hunter Company of West Virginia, for the purpose of conducting real estate development. Each party separately owned one half of the Hunter Company stock. Beginning in 1993, Hunter Company was chosen by a Massachusetts company, National Land Partners ("NLP"), to conduct real estate development in West Virginia. The management of each development project was governed by a Management Agreement. Under each Management Agreement, Hunter Company was paid a "manager fee" that was defined as any net profit remaining after twelve and one-half percent of the gross sales were paid to NLP and all project expenses are paid. It was stipulated that, unless the project made a profit, Hunter Company did not receive any compensation; in fact, it was responsible for any shortfall.

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At the time of the parties' May 31, 2005, separation, Hunter Company was the manager of six real estate projects that were in various stages of completion. By 2008, the parties had divided their personal property and had agreed to the valuation and distribution of their marital property, except with respect to the valuation of the manager fees. Absent an agreement regarding the valuation of the manager fees as of the time of separation, the parties stipulated that the net value of the marital estate was $9,536,682.14, and respondent advanced petitioner $4,317,737.62 toward her share of the marital estate.

In 2008, the family court conducted a hearing on the valuation of the manager fees and determined their value to be $8,927,959.00. This determination was based primarily on the testimony of petitioner's expert at that time. Based on the valuation of the manager fees, the family court ordered respondent to pay petitioner an additional sum of more than $4 million. Respondent appealed the family court's final order to the circuit court. In a March 25, 2009, order, the circuit court reversed the final order of the family court and found that the value of the manager fees was actually in the negative by over $2 million. The circuit court, therefore, determined that the actual value of the martial estate was lower than the parties' stipulated amount, which resulted in petitioner having been overpaid by almost $900,000. As a result, the circuit court ordered petitioner to pay respondent the amount of the overpayment.

Petitioner appealed the circuit court's March 25, 2009, order to this Court. In Wilson v. Wilson, 227 W. Va. 157, 706 S.E.2d 354 (2010), this Court affirmed in part, and reversed in part, the circuit court's order, and remanded the case to the family court with the following direction:

Upon remand, the family court shall hold a hearing for the sole purpose of determining an accurate value of Hunter's manager fees at the time of the parties' May 31, 2005, separation. After the evidence is taken, the trial court should make thorough findings of fact and conclusions of law in reaching its valuation, and should then proceed to the division of any such fees that are ascertained to be marital property.

Id. at 179, 706 S.E.2d at 376. We explained our reasoning as follows:

"Equitable distribution . . . is a three-step process. The first step is to classify the parties' property as marital or nonmarital. The second step is to value the marital assets. The third step is to divide the marital estate between the parties in accordance with the principles contained in [former] W.Va. Code, 48-2-32 [now W.Va.Code § 48-7-103]." Syllabus Point 1, in part, Whiting v. Whiting, 183 W.Va. 451, 396 S.E.2d 413 (1990). Unfortunately, as discussed herein, the parties submitted little credible evidence as to the value of Hunter's manager fees. It is the responsibility of the parties, not the court, to propose values to marital property and the parties are bound by the evidence they present. As we said in Syllabus Point 8 of Mayhew v. Mayhew, 197 W.Va. 290, 475 S.E.2d 382 (1996), "[t]he burden is on both parties to the litigation to adduce competent evidence on the values to be assigned in equitable distribution cases." Likewise, in Syllabus Point 3 of Roig v. Roig, 178 W.Va. 781, 364 S.E.2d 794 (1987), this Court stated, "When the issue in a divorce proceeding is the equitable distribution of marital

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property, both parties have the burden of presenting competent evidence to the trial court concerning the value of such property."

Wilson, 227 W. Va. at 178, 706 S.E.2d at 375.

Upon remand, the family court conducted a hearing on May 11 and 12, 2015, to take evidence concerning the value of the manager fees as of the parties' separation on May 31, 2005. The family court heard testimony from petitioner, respondent, petitioner's expert witness Kenneth Apple, CPA, respondent's expert witness Jack Lantzy, CPA, and NLP representative Tim Smith by deposition. The family court found that, as of May 31, 2005, there were six pending projects: (1) Crossings on the Potomac, (2) Ashton Woods, (3) The Springs at Shepherdstown, (4) Overlook at Greenbrier, (5) The Point, and (6) Westvaco. Mr. Apple's methodology focused on the time that respondent individually, as opposed to Hunter Company, had spent on a project. He compiled a chart that listed twenty-three tasks for four of the six pending projects, and indicated whether that task had been completed. Mr. Lantzy, on the other hand, compiled a chart that reflected the total manager fees from each project; the percentage of completion as May 31, 2005; the manager fee income or loss as of May 31, 2005; manager fees paid prior to May 31, 2005; and whether there was a marital asset or liability. Mr. Apple concluded that the value of the marital portion of the manager fees was $2,154,255.00. Mr. Lantzy concluded the value to be a negative $2,291,256.00.

The family court considered the testimony and documentary evidence submitted by both experts and found respondent's expert's calculations, which were based on respondent's specific efforts that had been undertaken on each project, to be more compelling and practical than petitioner's expert's methodology, which was based simply on the amount of time respondent had spent on each project. With regard to Mr. Apple's methodology, the family court found as follows:

While Mr. Apple's approach of weighing all tasks equally represents an honest attempt to offer an objective analysis, the Court finds it to be essentially an artificial construct that is not reality based, insofar as the time and effort involved in each of the 23 categories [of work performed on each project] simply is not equivalent.

As noted above, based on Mr. Lantzy's calculations, the family court determined that, as of May 31, 2005, the manager fees due Hunter Company from the six projects pending at that time to be in the negative in the amount of $2,291,256.00. When deducted from the stipulated amount of the marital estate, the marital estate's net value became $7,245,426.00. The family court then divided the net equitable estate in...

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