Paradiso v. Paradiso

• Decision Date: 01 September 1990
• Docket Number: No. 1647,1647
• Citation: 88 Md.App. 343,594 A.2d 1200
• Parties: , 60 USLW 2251 Riccardo PARADISO v. Chantal A. PARADISO. ,
• Court: Court of Special Appeals of Maryland

Page 343

88 Md.App. 343

594 A.2d 1200, 60 USLW 2251

Riccardo PARADISO v. Chantal A. PARADISO.

No. 1647, Sept. Term, 1990.

Court of Special Appeals of Maryland.

Sept. 6, 1991.

Certiorari Denied December 20, 1991.

Harvey S. Wasserman (Joel L. Katz, P.A., on the brief), Annapolis, for appellant.

Stephen J. Britz, Annapolis, for appellee.

Argued before BISHOP, ROSALYN B. BELL and CATHELL, JJ.

CATHELL, Judge.

Riccardo Paradiso appeals from a judgment of the Circuit Court for Anne Arundel County which granted an absolute divorce to Chantal A. Paradiso. In addition to the divorce, the trial court granted appellee custody of and support for the minor children, exclusive use and possession of the family home and family use property, and a monetary award in the amount of $117,300. Alleging error in the judgment as to the monetary award, Mr. Paradiso raises these questions:

1. Whether the trial court abused its discretion in granting Appellee a monetary award?

2. Whether the trial court erred in calculating the amount of the monetary award granted Appellee? ¹

Because we believe the trial judge failed to classify what is marital property and to follow the established guidelines in determining whether a monetary award is appropriate, we shall reverse and remand.

Facts

The parties were married on February 21, 1976. During their marriage, they gave birth to two children: Andrea and Nina, who were born on August 9, 1977 and May 3, 1980, respectively.

Mr. Paradiso was employed in the large appliance/electronics industry until 1987, from which he earned approximately $25,000 to $30,000 per year. During his employment he also earned, through various sales contests and promotions, home appliances which were used for family purposes. Mr. Paradiso owned a nonmarital real property in Italy, which he sold in 1978 for approximately $40,000. He used the proceeds for "family use" purposes.

Mrs. Paradiso, at the time of the marriage, was a school teacher earning approximately $12,000 per year. Several months into the marriage, she quit. In 1979, she went to work for her family business, the Dittmar Corporation (Dittmar). She worked two days per week and earned anywhere from a low of $5,000 per year, when she first started, to a high of $11,000 per year at the time of the divorce.

In 1976, the parties purchased an unimproved building lot for $45,000, exclusively paid for with Mrs. Paradiso's undisputed nonmarital funds. The parties' home was built on the lot for $77,500. ² The cost of building the home was financed by a deed of trust dated July 31, 1978, $30,000 of which was later forgiven by Mrs. Paradiso's mother, thereafter leaving a net face value of the mortgage on the home of $47,500. By the time of trial, the principal balance had been reduced to approximately $36,860. According to an appraisal obtained jointly by the parties, the real property was valued at $530,000--$350,000 for the land and $180,000 for the improvements thereon.

In 1986, Mrs. Paradiso's stepfather died. She inherited, through the operation of a trust, an ownership interest in various large residential condominium/apartment complexes developed, owned, and maintained by Dittmar. According to Mrs. Paradiso, her interest in the business was valued at two million dollars. As profits realized from her interest in the business, she received approximately $80,000 to $90,000 per year. The two Paradiso children also inherited trust interests established by her stepfather, which produced $30,000 per year.

The parties' relationship started to deteriorate after Mrs. Paradiso's inheritance. In light of Mrs. Paradiso's increased income, the parties attempted to go into business on their own. Mr. Paradiso quit his job in appliance sales, and the parties went into a partnership with another individual in the home building industry. The business, however, proved to be a failure after a year or so.

The parties then attempted another business venture, involving exclusive marketing rights to a patented, wooden folding chair. As before, Mr. Paradiso worked full-time at this new business. The marketing business was also unsuccessful. Mr. Paradiso then began looking for employment, and eventually, at the time of trial, was working for Circuit City, selling large appliances and earning approximately $25,000 per year. From 1986 to 1988, Mr. Paradiso's income to the family was insignificant: in 1986, he received $4,095 from unemployment compensation; in 1987, he earned $2,385; in 1988 none; and in 1989, approximately $2,200. Further, he was unemployed from July 1987 through March 1989.

After Mrs. Paradiso received her inheritance, she began to receive psychological counselling on a regular basis; she testified at trial that she began paying more attention to herself and less to Mr. Paradiso, and that his behavior throughout the marriage now became a major problem for her.

Mr. Paradiso testified that normal sexual relations ended in the spring of 1987 and that Mrs. Paradiso began to talk of divorce in the fall of 1987. In the spring or summer of 1988, Mr. Paradiso began an extramarital relationship which continued through April of 1990. Upon discovery of her husband's relationship, Mrs. Paradiso filed for divorce in April of 1989.

Monetary Award

The relevant law is contained in Fam.Law Code Ann. §§ 8-201 to -213, ³ otherwise known as "The Marital Property Act" (Act). One of the remedial purposes of granting a monetary award is to protect the interests of spouses who make nonmonetary contributions to the marriage; that is, to end the "inequity inherent in Maryland's old 'title' system of dealing with the marital property of divorcing spouses." Harper v. Harper, 294 Md. 54, 63, 448 A.2d 916 (1982) (quoting Report of The Governor's Comm'n on Domestic Relations Laws, at 1 (1982)). The preamble to the Act, in relevant part, states:

The General Assembly declares further that it is the policy of this State that when a marriage is dissolved the property interests of the spouses should be adjusted fairly and equitably, with careful consideration being given to both monetary and nonmonetary contributions made by the respective spouses to the well-being of the family, and further, that if there are minor children in the family their interests must be given particular and favorable attention.

1978 Md.Laws, ch. 794 at 2305 (Preamble). To achieve this broad remedial purpose, the Court of Appeals has held that the Act should be liberally construed. Harper, 294 Md. at 64, 448 A.2d 916. See also Deering v. Deering, 292 Md. 115, 128, 437 A.2d 883 (1981); Keesling v. State, 288 Md. 579, 589, 420 A.2d 261 (1980); James v. Prince George's County, 288 Md. 315, 335, 418 A.2d 1173 (1980) (remedial statutes to be liberally construed).

The late Judge Davidson, for the Court, in Harper v. Harper, 294 Md. 54, 64, 448 A.2d 916 (1981), after discussing at length the purposes of the act, concluded, "Here we shall construe the Act broadly with respect to whether real property, paid for in part before marriage and in part during marriage, as well as a marital residence constructed upon that real property during marriage, constituted marital property." The court rejected the "inception of title theory" then espoused in several states and adopted for Maryland the "source of funding" theory then applied in California. The source of funds theory remains the law in Maryland. See Pope v. Pope, 322 Md. 277, 587 A.2d 481 (1991). The Harper court, however, rejected any legislatively created "preference" for marital as opposed to nonmarital classification: "[W]e are not persuaded that ... our Act ... indicates a legislative preference for the classification of property as marital." Id. 294 Md. at 79, 448 A.2d 916. The Court then said, at 80, 448 A.2d 916: "We recognize that in order to apply the source of funds theory in Maryland, it is necessary to adopt ... an interpretation that defines the term 'acquired' ... as the on-going process of making payment for property...." As we shall later see, in the present case we are concerned, in part, with a unique payment process--a payment by way of debt forgiveness to the marital unit during the marriage.

We shall first briefly discuss the mechanics of granting a monetary award. The Act requires that, before a monetary award is granted, the following three-step process occur: (1) If an equitable adjustment over and above the distribution of the spouse's property in accordance with its title is an issue, the court shall determine which property is marital property, Md.Fam.Law Code Ann. § 8-203 (1984 & Supp.1990); (2) the court shall then determine the value of all marital property, § 8-204; and finally, (3) the court may make a monetary award as an adjustment of the parties' equities and rights "concerning marital property whether or not alimony is awarded," § 8-205.

If an award is deemed appropriate, the court then must consider each of the ten factors enumerated in section 8-205. Harper, 294 Md. at 79, 448 A.2d 916; Wilen v. Wilen, 61 Md.App. 337, 355, 486 A.2d 775 (1985); Ward v. Ward, 52 Md.App. 336, 339, 449 A.2d 443 (1982). See also Quinn v. Quinn, 83 Md.App. 460, 464, 575 A.2d 764 (1990); Melrod v. Melrod, 83 Md.App. 180, 574 A.2d 1, cert. denied, 321 Md. 67, 580 A.2d 1077 (1990).

Turning to the case at bar, we see that the trial court failed to follow these statutory guidelines. The court stated, with regard to the granting of the monetary award, that:

[T]he major if not only serious matter here is the marital home that certainly by all stretch of the imagination was built and paid for largely through the efforts of Mrs. Paradiso's financing. There is no question that he has made some non economic contributions to the home in the course of the twelve years they've been there, but if you actually look at what has been paid on the mortgage or the deed of trust, it has only been reduced about ten thousand six hundred dollars ... if you don't count...