Solomon v. Solomon
Decision Date | 13 September 2004 |
Docket Number | No. 116,116 |
Citation | 383 Md. 176,857 A.2d 1109 |
Court | Maryland Court of Appeals |
Parties | Michael F. SOLOMON v. Nancy L. SOLOMON. |
Michael F. Solomon, Potomac, for Petitioner/Cross-Respondent.
James G. Nolan (Furey, Doolan & Abell, L.L.P., on brief), Chevy Chase, for Respondent/Cross-Petitioner.
Argued before BELL, C.J., RAKER, WILNER, CATHELL, HARRELL, BATTAGLIA, and GREENE, JJ.
In 2000, Michael Solomon, Petitioner, and Nancy L. Solomon, Respondent, then husband and wife, initiated proceedings in the Circuit Court for Montgomery County seeking an absolute divorce, determinations as to child custody and support, and a resolution of the financial aspects of their marriage and divorce. The Circuit Court, among other things, examined the financial characteristics and lifestyle of the parties and identified and valued their marital property. Of particular relevance to the case before us, the Circuit Court, in August 2002, granted a marital award of $550,000 and $50,000 in attorney's fees to Mrs. Solomon, and ordered Mr. Solomon to pay her $6,000 in monthly rehabilitative alimony for three years, to be followed by $5,000 in monthly indefinite alimony.
Mr. Solomon appealed to the Court of Special Appeals. Mrs. Solomon filed a cross-appeal. In an extensive unreported opinion, the Court of Special Appeals affirmed the Circuit Court's judgment in part and reversed in part. Both parties petitioned this Court to grant a writ of certiorari. We granted both petitions. Solomon v. Solomon, 379 Md. 225, 841 A.2d 339 (2004). The following four questions are presented for our consideration.
By Mr. Solomon:
By Mrs. Solomon:
The Solomons married on 26 May 1986. Three children were born during their marriage: John, Michael, and Hayden.1 The Circuit Court ordered joint legal custody of the children as part of the divorce, with Mr. Solomon maintaining primary physical custody of John and Mrs. Solomon having primary physical custody of Hayden and Michael. Mr. Solomon also has a daughter from a previous marriage.2
At the time of the parties' marriage, Mr. Solomon owned a home in Potomac, Maryland. He had been a tax attorney with a law firm for ten years before the marriage, at an annual salary of almost $500,000. Prior to her marriage to Mr. Solomon, Mrs. Solomon completed three years of college, but did not obtain a degree. She lived with her parents during college and earned income sporadically in various administrative support positions.
During the marriage, Mr. Solomon's annual income grew steadily, reaching $1,050,000 in 2001. Mrs. Solomon and Mr. Solomon agreed that Mrs. Solomon would not work during the marriage. With Mrs. Solomon at home and Mr. Solomon as the breadwinner, the Solomons enjoyed a relatively luxurious lifestyle — they purchased a home on eleven acres, employed a housekeeper, took frequent vacations, acquired an expansive wine collection, and sent their children to private school. Despite Mr. Solomon's income, the parties lived beyond their means during the marriage and accumulated more than $2,000,000 in secured and unsecured debt.3 At trial, Mr. Solomon was attempting to pay off this marital debt and professed that he would continue to do so.
The Circuit Court valued the Solomons' marital assets at a minimum of $1,364,217.554 in its Amended Opinion and Order of 20 August 2002.5 Mr. Solomon held $959,217.55 of the marital property titled in his name. His retirement accounts alone contained $445,731 of the marital assets. In comparison, Mrs. Solomon had only $10,000 of the marital property titled in her name.
At trial, the Circuit Court found that Mr. Solomon was 49 years old with a guaranteed annual income of $1,050,000. Mrs. Solomon was 40 years old and not working outside the home. The Circuit Court adopted an employment assessment supplied by a court-appointed expert that stated Mrs. Solomon had a reasonable earning capacity between $25,000 and $28,000 per year. Although she had not obtained employment as of the time of trial in this case, Mrs. Solomon, the Circuit Court held, had the "potential" to increase her earnings with additional education and work experience.
Mr. Solomon managed several trusts for friends and clients prior to and at the time of trial. One trust in particular, that of Mr. Solomon's social friend, Steve Goldstein, often lent money to Mr. Solomon, with Goldstein's permission. Mr. Solomon paid those loans back with interest. Mr. Solomon also managed several trusts for wealthy, longtime friend Marc Abramowitz, who also allowed Mr. Solomon to borrow money from these trusts.
During the parties' marriage, Mr. Solomon was involved in a business venture with Mr. Abramowitz, purchasing a minority interest in Orthopedic Systems International, Inc. ("OSI") in 1992. In 1995, Mizuho, a Japanese corporation, purchased a majority interest6 in OSI. At that time, the minority shareholders, including Mr. Solomon and Mr. Abramowitz, were issued a "put" right which obligated Mizuho to buy out the minority shareholders for a price based on the fair market value of OSI at the time the "put" right was exercised.
In 1999, the minority shareholders attempted to exercise their "puts," but were unable to agree with Mizuho on a fair market value of OSI. The minority shareholders filed a complaint in California Superior Court to enforce their "put" rights on September 7, 2000. After court-ordered arbitration, an independent arbitrator valued OSI, on a "going concern" basis, at $82,144,101 on 15 May 2001. Thus, under this valuation, Mr. Solomon's 1.3188% interest would be worth $1,083,334.
Other estimates of OSI's value presented to the Circuit Court varied between $55,000,000 by a court appointed accountant to approximately $100,000,000 by PriceWaterhouseCooper. As a result, Mr. Solomon's interest in OSI would have been valued between $725,340 and $1,300,000. In contrast, Mr. Solomon valued his shares of OSI in a March 2000 statement at $600,000.
The Circuit Court, however, did not resolve the value of Mr. Solomon's OSI shares. Mr. Solomon conveyed his OSI shares to one of Mr. Abramowitz's trusts in December 2000. In April of 2000, Mr. Solomon signed a $200,000 promissory note to the trust, using the proceeds to pay a $150,000 loan from 1997 from another of Mr. Abramowitz's trusts and applied the remainder for his personal use. He pledged his interest in OSI as collateral for the April 2000 note,7 but, in the event that he defaulted on the note, retained the right to any surplus from the sale of the stock after satisfying whatever might then be owed on the $200,000 obligation.
In June and September of 2000, Mr. Solomon failed to make two required interest payments of $5,062.50 each on the note. After the trust notified him of default, Mr. Solomon conveyed his shares of OSI to the trust on 29 December 2000 in accordance with the pledge agreement, and in full satisfaction of the obligation. He also transferred all right, title, and interest in the shares, including the right to the surplus proceeds from a future sale of the stock. Mr. Solomon testified that he believed the value of his interest in OSI to be equal approximately to the debt amount at the time he transferred his OSI shares. Using the independent arbitrator's appraisal from the Mizuho/minority shareholder action in California, Mrs. Solomon's expert witness, as part of her evidence regarding Mr. Solomon's claimed dissipation of this asset, valued his now-forfeited interest in the eventual proceeds at $867,759.
Prior to the marriage, Mr. Solomon applied for membership in the Congressional Country Club ("the Club"), generally regarded as a prestigious social and recreational organization. He was admitted as a "summer" member in 1980, and maintained this status for several years. Shortly after marrying Mrs. Solomon in 1987, he was granted full membership in the Club. The entire Solomon family enjoyed use of the Club's facilities. Mr. Solomon paid a $25,000 initiation fee to become a full member. At the time of trial, the initiation fee for a new, full member in the Club was $80,000.
Additional facts will be supplied as necessary to our analysis of the issues.
In July and September of 2000, respectively, the Solomons initiated the present litigation by filing cross-complaints in the Circuit Court for Montgomery County. In May and June of 2002, a four-day trial was held in the Circuit Court. On 20 August 2002, the Circuit Court issued its final judgment in an Amended Opinion and Order granting Mrs. Solomon a $550,000 marital property award, without any specific judgment ordering the sale or disbursement of the marital property titled in Mr. Solomon's name. The Circuit Court also awarded Mrs. Solomon $6,000 in monthly rehabilitative alimony for three years. After determining that the difference between Mr. Solomon and Mrs. Solomon's lifestyle would remain unconscionably disparate after the expiration of the period of rehabilitative alimony, the Circuit Court ordered $5,000 in monthly indefinite alimony. Both parties filed post-judgment motions. On 28 October 2002,...
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