Persaud v. Goad
| Decision Date | 19 November 2018 |
| Docket Number | No. 1125,1125 |
| Parties | ROBERT PERSAUD v. SONDRA GOAD |
| Court | Court of Special Appeals of Maryland |
Circuit Court for Baltimore City
Case No. 24-D-16-000644
UNREPORTED
Nazarian, Arthur, Shaw Geter, JJ.
Opinion by Arthur, J.
*This is an unreported opinion, and it may not be cited in any paper, brief, motion, or other document filed in this Court or any other Maryland Court as either precedent within the rule of stare decisis or as persuasive authority. Md. Rule 1-104.
The parties to this appeal, during their marriage, founded several companies for the purpose of acquiring real estate and operating food-service businesses at the Belvedere, a condominium building in Baltimore City that was once a famous luxury hotel. Upon their divorce, the husband sought a monetary award, largely based on the value of companies owned by his wife. The Circuit Court for Baltimore City ultimately awarded him $763,150, to be paid in monthly installments of $10,000.
The husband has appealed, challenging the determinations of the value of the companies, the amount of the award, and the method of payment. For the reasons explained in this opinion, we reject his contentions that the circuit court committed reversible error or abused its discretion when it determined the monetary award.
Sondra Goad and Robert Persaud first met in 1998, through their mutual employment with Southwest Airlines. Ms. Goad was working as a flight attendant at that time; Mr. Persaud was a pilot.
In 1999, the couple began living together in Maryland. Their first and only child was born in December 2000. Ms. Goad remained an employee of Southwest Airlines, but she significantly reduced her work hours so that she could devote time to caring for the child. Mr. Persaud continued working full time as a pilot.
In 2001, Ms. Goad purchased a house in Bethesda, titled solely to her and financed through mortgages in her name. The family lived together in that house until 2006, when they moved to a more expensive house. They later sold the second house at a loss. Ms.Goad continued to own the first house and to rent it to tenants.
In addition to working as a pilot, Mr. Persaud devoted much of his time to a real estate venture known as Mount Vernon Properties, LLC ("MVP"). Through his efforts, MVP acquired dozens of brownstone houses in Baltimore City. As part of that transaction, Mr. Persaud assumed some personal liability. He defaulted, and in 2002 a judgment was entered against him in the principal amount of $553,606.25. The debt continued to grow over time, because the interest on the judgment exceeded the payments that the judgment-creditor received from garnishing Mr. Persaud's wages.1 For several years, Mr. Persaud managed MVP and used it as a financial resource for the family.
In 2009, Mr. Persaud acquired a business opportunity at the Belvedere, a condominium building in Baltimore City.2 The seller owned three residential condominium units and a collection of commercial and retail units, which included kitchens, dining areas, offices, ballrooms, parlors, and a parking lot. The seller operated three food-service businesses out of those spaces: the "Owl Bar," a bar and restaurant on the lobby level; the "13th Floor," a night club on the observation level; and a catering company with the exclusive right to use the building's ballrooms and parlors for events.
To acquire those assets, Mr. Persaud set up three limited liability companies. The first company, Belvedere Real Estate, LLC ("BRE"), purchased the underlying real estate for $4.29 million. BRE financed about half of the purchase through a loan from a credit union and about half through a take-back loan from the seller. Mr. Persaud set up Belvedere Restaurant Group II, LLC ("BRG-II"), as the new operating company for the Owl Bar and 13th Floor. He set up Truffles at the Belvedere, LLC ("TATB"), as the new operating company for the catering business. The seller sold the food-service businesses together for $10,000 in cash. Because Mr. Persaud wanted to shield these assets from his judgment creditor, the new companies were titled in the names of Mr. Persaud's brother and sister.3
Mr. Persaud and Ms. Goad were married on June 1, 2009. Over the next few years, both spouses contributed labor and capital to their venture at the Belvedere. Mr. Persaud limited his flying schedule so that he could manage the new businesses. He withdrew or borrowed large sums from his other venture, MVP, to cover closing costs and to obtain working capital.4 Ms. Goad officially retired from her former career as a flight attendant and took charge of the sales office for the catering business. She contributed to the businesses by borrowing against her retirement savings and later by liquidating her retirement assets altogether. The family moved into a rentedcondominium unit at the Belvedere, in part because they were spending so much time working at the building.
During the first few years of the parties' business venture at the Belvedere, Mr. Persaud's brother and sister transferred their ownership of the food-service businesses. Mr. Persaud's brother and sister assigned their respective interests in TATB (the catering company) to Ms. Goad for $100 each. Mr. Persaud's brother assigned his interest in BRG-II (the operating company for the Owl Bar and 13th Floor) in exchange for $300,000, which the parties paid to him in small monthly increments. Mr. Persaud's sister assigned her interest in BRG-II for no consideration.
In 2013, the parties restructured and effectively refinanced their real estate holdings. Mr. Persaud set up two companies to acquire the properties that were then owned by BRE. The first such company, S&H Belvedere Realty, LLC ("S&H"), purchased the commercial and retail units used by the food-service businesses. S&H borrowed slightly more than $4 million, using the properties as security. As a condition for the loan, the lender required that Mr. Persaud (who had a prior judgment against him) not be a member of S&H. Nevertheless, the lender required him to be a personal guarantor for the loan, along with his wife. BRE conveyed the remaining properties, most of which were residential, to a second company known as Belvedere & Co. Real Estate, LLC ("BCRE"). As with S&H, Ms. Goad was the sole member of BCRE.
Beginning in 2011, companies titled to Ms. Goad continuously acquired condominium units at the Belvedere at the direction of Mr. Persaud. BCRE acquired twostorage units and 13 more residential units, which the parties renovated and rented out to tenants. A new entity known as "Truffles, LLC" acquired two units on the basement levels, which the parties left vacant. "Belvedere R4, LLC" acquired a first-floor space used for storage and as a personal gym.5 Mr. Persaud used the income and borrowing power from the parties' other businesses to fund these acquisitions. Although Ms. Goad acquiesced in his decisions, she did not feel entirely comfortable accumulating the debt associated with the properties. The parties' conflicting attitudes towards debt became a source of tension in the marriage.
In addition to debt obligations, these purchases resulted in recurring expenses in the form of condominium fees and property taxes. At the same time, each unit came with more voting power on the board for the condominium association, which has the authority to impose use restrictions and special assessments.6 In total, Ms. Goad's holdings account for approximately 45 percent of the square footage at the Belvedere and allow her to control a majority of the seats (four out of seven) on the board of the condominium association. It is undisputed that her control over the board enhances the value of her holdings to some extent, but the parties have not attempted to quantify theenhanced value.
The parties separated in July 2014, when Ms. Goad moved Mr. Persaud's belongings out of the family's rented condominium unit and into a one-bedroom unit owned by BCRE. Mr. Persaud continued to work actively in the businesses owned by his wife, but over time they experienced more frequent and more serious disagreements. By the fall of 2015, Ms. Goad assumed nearly exclusive control over management and began implementing some significant changes. Among other things, she converted the 13th Floor from a restaurant run by BRG-II into an event space for the catering company, TATB. She also hired a new accountant to replace Mr. Persaud's long-time accountant. Meanwhile, Mr. Persaud, no longer needing to work long hours at the Belvedere, increased his flying time with Southwest Airlines.
After Ms. Goad assumed control, Mr. Persaud still had access to various bank accounts owned by the businesses. In February 2016, he withdrew a total of $290,000 from three business accounts. In response, Ms. Goad revoked his access to those accounts, as well as his authorization to use her American Express credit card, which they had used for personal expenses throughout the marriage. She allowed him to continue to occupy the one-bedroom condominium at the Belvedere, rent-free, throughout 2016.
On February 26, 2016, Mr. Persaud filed a complaint in the Circuit Court for Baltimore City, seeking an absolute divorce on the ground of a one-year separation. He asked the court to determine the value of all marital property and to grant him a monetary award as an adjustment to the equities and rights of the parties concerning maritalproperty. He requested joint legal custody and shared physical custody of the parties' minor child, child support, and counsel fees. Ms. Goad counterclaimed, seeking an absolute divorce and other relief similar to the relief requested by Mr. Persaud.
Through their joint property statement, the parties stipulated that almost all of their assets, even some assets that they first acquired before the marriage, should be classified as marital property. They agreed that Ms. Goad owned $316,235 of equity in the Bethesda house (an appraised value of...
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