Ranney v. Ranney

• Court: Virginia Court of Appeals
• Writing for the Court: HUMPHREYS.
• Citation: Ranney v. Ranney, 45 Va. App. 17, 608 S.E.2d 485 (Va. App. 2005)
• Decision Date: 01 February 2005
• Docket Number: Record No. 0979-04-4.
• Parties: Carol M. RANNEY v. Timothy RANNEY.

608 S.E.2d 485

45 Va. App. 17

Carol M. RANNEY v. Timothy RANNEY.

Record No. 0979-04-4.

Court of Appeals of Virginia, Alexandria.

February 1, 2005.

Paula W. Rank, Fairfax (Byrd Mische, P.C., on briefs), for appellant.

Raymond D. Battocchi, McLean (Gabeler Battocchi Griggs & Powell, PLLC, on brief), for appellee.

Present: HUMPHREYS and FELTON, JJ., and ANNUNZIATA,¹ S.J.

HUMPHREYS, Judge.

Carol M. Ranney ("wife") and Timothy Ranney ("husband") have each appealed an equitable distribution award entered pursuant to their no-fault divorce. Wife contends that the trial court erred in the classification and valuation of the marital property, and she also argues that the court abused its discretion in the distribution of the marital estate. Husband, in a separate appeal, contends that the trial court erred in failing to reduce wife's equitable distribution award based on her fraudulent inducement of the marriage.² For the reasons that follow, we hold that the trial court did not err in either its classification of the property or the distribution of the marital estate, and we therefore affirm the judgment of the trial court.

I. BACKGROUND

Wife and husband married on April 11, 1998. Although this was wife's fifth marriage, wife indicated on the parties' marriage certificate that she had only been married once before.³ Throughout the first three years of the marriage, husband continued to believe that this was only wife's second marriage. In June 2001, however, husband discovered that wife had, in fact, been married at least twice before. At that point, husband broke off all sexual contact with wife. On April 5, 2002, after husband discovered that wife had actually been married four times before, the parties separated.

Wife filed a Bill of Complaint, seeking a divorce on the fault-based ground of desertion. In January 2003, husband filed a Cross-Bill, alleging post-separation adultery. In light of allegations that both parties were dissipating marital assets, the trial court entered a decree freezing the marital estate.

On March 25, 2003, husband filed a separate action at law, alleging that wife committed actual fraud by "induc[ing] [husband] to marry her through a carefully calculated scheme to defraud." Husband requested compensatory damages consisting of "the more than $500,000 in extravagant expenditures [wife] made during the marriage with money [husband] earned, and the more than $250,000 he paid to compensate [wife] for money she lost in the stock market." Husband also requested an award of punitive damages in the amount of $1,000,000. The trial court in that proceeding granted wife's demurrer, noting that the fraud allegations would be "completely cognizable within the context of the divorce" proceedings and that "the judge in the equitable distribution case can adjust the equitable distribution to address the equities."

Husband then sought to amend his answer to wife's Bill of Complaint, requesting permission to add a fraudulent inducement claim. The trial court denied that motion.

A. The Commissioner's Report

A commissioner in chancery conducted an evidentiary hearing on October 16, 2003. In the commissioner's report, issued after the hearing, the commissioner found that "[husband] deserted [wife] and the marriage on April 5, 2003[sic] with the intention to remain away permanently, and that such intention has continued to the present time." The commissioner also noted, "[Wife] admitted that she committed adultery."

The commissioner observed that, once husband learned in June 2001 "that [wife] had more than one prior marriage, he broke off all sexual contact with [wife]." The commissioner additionally acknowledged that "the parties may not have had much of a sex life with each other prior to June, 2001."

The commissioner also found that, "during the prior three years of the marriage [husband] had earned over $4,000,000, and that the parties had spent money lavishly, and that large sums were spent unilaterally by each of them." The commissioner noted that, "[d]uring the period both before and after [husband's] income ceased, the parties had argued over money."

The commissioner additionally found that, "[a]t the time of the marriage in April, 1998 and for most of the subsequent period prior to the separation, [wife] failed to disclose that she had been married four times previously, rather than only one time as indicated on their marriage record." The commissioner observed:

There is a substantial difference between marrying someone with one former marriage and marrying someone with four. At the very least, the difference is important enough that the other party should have the right to know, to try to understand, and to decide whether to go ahead with the relationship. [Wife] made a material misrepresentation on her marriage certificate, and the Commissioner believes the [husband's] testimony that he did not know at the time of their marriage, and for three years thereafter, that she had more than one prior marriage.

The commissioner, however, declined to hold that wife's misrepresentations about her prior marriages justified husband's desertion, noting that, "[a]lthough this may have been a ground for annulment on the basis of fraud had it been discovered in a timely manner and pursued as such, there is no basis in the Virginia case law for treating this as continuing legal justification for his departure in a divorce action."

Based on these factual findings, the commissioner concluded that three factors led to the dissolution of the marriage: (1) disagreements over financial decisions; (2) sexual matters; and (3) wife's continued active concealment of three of her four prior marriages. As to the disagreements about finances and the sexual matters, the commissioner found that, on both of these matters, "there may be some blame to be attributed to each party, but it would not be appropriate to single out just one party." The commissioner then observed that wife's "most serious fault during the marriage was her continued active concealment of three prior marriages during the three year period when she was enjoying the benefits of the [husband's] then very substantial income." Ultimately, the commissioner left "it to the Court as to what weight to give this matter in regard to the financial issues ... since the Commissioner's findings on this point need to be considered in the context of all of the other evidence, and especially the financial evidence, to be reviewed at the trial."⁴

Ultimately, the commissioner recommended that the trial court award wife a divorce a vinculo matrimonii on the grounds of marital separation for a period in excess of one year. The commissioner did not recommend granting the divorce on grounds of desertion, reasoning that "even though [husband's] reasons for leaving on April 5, 2002 technically do not constitute legal justification, they are nevertheless understandable under the circumstances." The commissioner also recommended "the divorce not be granted on the ground of adultery," reasoning that the adultery "was post-separation and there is absolutely nothing to indicate that it had anything to do with the breakup of the marriage."

B. The Equitable Distribution Proceedings

The trial court conducted an equitable distribution hearing in October 2003. By letter opinion issued on March 4, 2004, the trial court issued its factual findings, classified and valued the parties' assets, and divided the marital property.

In its letter opinion, the trial court found that husband "earned more than $6.3 million in stock options and salary" during the marriage and that wife "came into the marriage with almost $600,000." Also, the court observed that husband "had debts approximating $400,000" at the start of the marriage and that "[t]hose debts were paid off in the course of the marriage." The court further noted that, "[d]uring their first year of marriage the parties principally lived off of [husband's] salary." However, because of a prior disability settlement, wife "had significant funds at her disposal." The court also found that neither party made significant non-monetary contributions to the marriage, observing that wife "made scant non-monetary contributions to the marriage" and that husband "similarly made some, but few non-monetary contributions." The court additionally found that

The evidence persuasively demonstrates that while [wife] was solicitous of [husband's] affections before the marriage, once married her conduct changed. She became largely self-absorbed, dominating, and often threatened divorce. During the marriage, [husband] was principally devoted to his work, lived modestly, and financed his wife's lavish shopping and expenditures without significant objection.

Moreover, the trial court expressly "found [wife's] testimony, unless wholly corroborated, was generally not worthy of belief." By contrast, the court "found [husband's] testimony, though uncorroborated, generally credible."

The court's findings as to the specific property subject to this appeal are discussed in more detail below.

1. The Stock Options

In March 1998, approximately one month before the parties' marriage, husband entered into an employment contract with Network Solutions. As part of that employment contract, husband received 25,000 stock options that were scheduled to vest at various times over the next four years. Of those options, 20,000 were contingent only upon husband's continued employment, with thirty percent to vest at the end of the first year of employment, thirty percent after the second year, twenty percent after the third year, and the final twenty percent after the fourth year. The remaining 5,000 stock options were contingent on the "achievement of certain business production milestones."

During the course of his employment, husband "was awarded the additional 5,000 stock options." Beginning in 1999, the parties began selling husband's stock options....