Rock v. Rock
| Docket Number | 22-AP-259 |
| Decision Date | 04 August 2023 |
| Citation | 2023 VT 42 |
| Parties | Kerry-Ellen Rock v. James D. Rock |
| Court | Vermont Supreme Court |
On Appeal from Superior Court, Chittenden Unit, Family Division May Term, 2023 Megan J.Shafritz, J.
Evan Barquist and Kristen J. E. Connors of Montroll, Oettinger & Barquist, P.C., Burlington, for Plaintiff-Appellee,
Erin Miller Heins of Langrock Sperry & Wool, LLP, Burlington for Defendant-Appellant.
PRESENT: Reiber, C.J., Eaton, Carroll, Cohen and Waples, JJ.
¶ 1. Husband appeals from the final divorce order issued by the family division of the superior court. He argues that the court erred in declining to enforce the parties' premarital agreement concerning property division. He also challenges a condition imposed by the court pertaining to his contact with the parties' minor daughter and argues that the court erred in denying his motion for a new trial. We conclude that the court's findings and conclusions are supported by the record and that it acted within its discretion, and therefore affirm. I. Facts
¶ 2. The family court made the following findings in its order. Wife and husband met in 1990. At the time, wife was twenty-one and husband was thirty-five. Wife had a high-school degree and worked at an insurance company. Husband had attended college at the University of Vermont and earned a master's degree in business administration from St Michael's College. He then worked for his father's plumbing business, which he purchased from his father in 1990.
¶ 3. After the parties dated for several years, wife raised the issue of marriage. Husband insisted on a premarital agreement. The agreement, which was drafted by husband's attorney, stated that each party waived any interest in property owned by the other party at the time of the marriage, as well as any interest in property acquired by the other party during the marriage. It stated that any joint purchases or investments made by the parties "shall be divided between the parties based on the percentage of the contribution made by each party to the value of the property." The agreement provided that on January 1 of each year, the parties would determine the percentage of after-tax income each party had contributed to their collective income for the previous year, and would use that figure to pay a corresponding percentage of living expenses during the following year. It also provided that each party waived any claim for spousal maintenance.
¶ 4. Wife consulted with an attorney, who advised her not to sign the agreement because it was too one-sided. She decided to sign because she was in love and wanted to get married. The parties signed the agreement in December 1994. They married in June 1996. Both parties testified that they put the agreement in a drawer and did not think about it.
¶ 5. In 1996, husband purchased his childhood home from his mother, and the parties began residing there. The following year, husband executed a quitclaim deed conveying the residence to himself and wife as tenants by the entirety.
¶ 6. Wife continued to work at the insurance company after the parties married. She had earned her sales license and began selling policies to customers. She also attended night classes at Champlain College, eventually earning an associate degree in business administration.
¶ 7. In 1999, husband's employees quit to start a competing company, which threatened to put him out of business. Husband testified that his company was nearly bankrupt at that time. Husband told wife that she needed to quit her job and come work for him to save the business.
¶ 8. Wife began running the office while husband dealt with customers and performed the field work. Wife worked from 7 a.m. to 5 p.m. five or six days a week. She handled paperwork and performed bookkeeping and accounting tasks. Over the next eight years, the parties rebuilt the company into a successful business, increasing annual sales from $300,000 to over $1 million.
¶ 9. Wife was not paid any wages during her first two years working for the company. In subsequent years, husband and his accountant would determine at the end of the year how much wife needed to be paid to cover federal payroll tax and other employment taxes. A check would be made out for that amount for husband to sign, and he would then deposit it in his investment account. Wife never received a weekly paycheck from the business. Her Social Security statements showed that she earned between $7000 and $11,000 a year from 2001 to 2006, and had no income in 2007. Wife testified that she worked long hours to support the business because she viewed it as a joint project that would eventually benefit and improve both parties' lives.
¶ 10. Husband received $1000 per week from the business. When the business began generating net profits at the end of the year, wife or the business's bookkeeper issued checks to husband for the profits, which ranged from $250,000 to $300,000 annually. Husband deposited the checks into his investment account, which he maintained separately from the parties' other accounts. Based on wife's pay structure and contributions to the business, the court found that wife reasonably believed these profits belonged to her as well. Husband created separate pension accounts for himself and wife, which were managed by husband and his investment advisor. The parties also had conventional IRA accounts.
¶ 11. In 1997, husband built a commercial building in Williston to house the plumbing business. He also leased space to other corporate tenants. The building is owned by a limited liability company (LLC) formed in 2003, of which husband is the sole member. In addition to wife's work for the plumbing business, wife prepared leases and other documents, collected rents, and worked with tenants for the LLC. She did not receive income for this work. Following the parties' separation, husband paid a bookkeeper $40 per hour for similar services.
¶ 12. The parties had a joint checking account that wife used to pay household bills. Husband's paychecks were deposited into this account. Wife did not receive income from the business, so she did not contribute to household expenses. The parties never attempted to calculate their percentage share of household expenses as expected by the premarital agreement. The joint checking account was linked to husband's investment account, which husband maintained solely in his name.
¶ 13. In 2007, husband sold the plumbing business for over $930,000 and deposited the proceeds in his investment account. Husband wished to retire and travel the world. Wife stopped working, and the parties traveled to Asia, Africa, and other locations. They lived off the income from husband's investment account and the rents collected from the LLC. Their average monthly income was $12,000 to $15,000.
¶ 14. During the 2008 financial crisis, husband's investment account lost approximately $1 million in value. Husband worked to rebuild the account through careful investment strategies. The account was worth over $2 million at the time of the divorce.
¶ 15. The parties' only child, a daughter, was born in 2012. Husband wanted to see the United States, so the parties bought a motorhome in 2015 and traveled around the country for four years. The motorhome was purchased under both parties' names using a mortgage on the marital residence. When daughter began elementary school, the parties began spending more time in Vermont. They sold the motorhome in 2019 for $230,000. The proceeds were deposited into husband's investment account. The court found that this was not a gift from wife to husband but rather a continuation of husband's practice of controlling the parties' finances.
¶ 16. The parties disagreed over how best to parent their daughter, and these tensions were exacerbated by the COVID-19 pandemic. In August 2020, wife moved out of the marital home with daughter and filed for divorce. Husband moved for partial summary judgment, arguing that the court was required to enforce the premarital agreement in dividing the marital assets. In response, wife moved to set aside the agreement as unconscionable. Alternatively, she argued that the parties had abandoned it by acting inconsistently with its terms during the marriage. The court denied husband's motion, concluding that the relevant material facts were disputed, and deferred ruling on wife's motion until after the final evidentiary hearing.
¶ 17. After a two-day hearing in December 2021, the court issued a final divorce order. The court first addressed the premarital agreement. The agreement contemplated that the parties would maintain separate property and contained a list of husband's separate assets at the time of marriage which included the plumbing business. However, the court found that over the years the parties had consolidated all their assets, other than the marital residence and the LLC, into a single investment account and associated checking account. Although the investment account was held in husband's name, its growth was due in part to funds earned by wife and profits from the business, to which wife had made significant contributions, and therefore it was not simply husband's property. The court found that it did not have sufficient evidence to determine what portion of the investment account was traceable to separate property owned or acquired by husband. Because the mortgage to the LLC was apparently funded from the investment account, the court found that wife had contributed to the LLC as well, making it a joint asset. The marital residence was also joint property because although husband purchased it with his own funds, he subsequently conveyed to himself and wife as tenants by the entirety. The court found that it could not...
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