Stalb v. Stalb, 96-537.

• Citation: 719 A.2d 421
• Decision Date: 04 September 1998
• Docket Number: No. 96-537.,96-537.
• Court: United States State Supreme Court of Vermont
• Parties: Alan STALB v. Aglaia STALB.

719 A.2d 421

Alan STALB v. Aglaia STALB.

No. 96-537.

Supreme Court of Vermont.

September 4, 1998.

Kimberly B. Cheney of Cheney, Brock & Saudek, P.C., Montpelier, for Plaintiff-Appellant.

John R. Durrance, Jr., of Gaston, Durrance & Fairbanks, Montpelier, for Defendant-Appellee. Before AMESTOY, C.J., DOOLEY, JOHNSON and SKOGLUND, JJ., and ALLEN, C.J. (Ret.), Specially Assigned.

DOOLEY, Justice.

Defendant wife Aglaia Stalb raises several challenges to the trial court's decision to amend its final order reducing the amount that plaintiff husband Alan Stalb was required to pay wife in order to equalize the parties' investment in the Northfield Inn. Husband, in turn, argues that the mortgage loan buydown option in the corrected and amended notice of decision should be deleted, but that the rest of the order should be affirmed. We agree with husband and thus strike down the mortgage loan buydown option and affirm the corrected and amended notice of decision in all other respects.

I.

Husband and wife are both in their fifties and were married before. They both worked in management positions at a New York aerospace company and earned similar salaries. The parties met in 1981, began living together in 1982 and married in 1984. The parties entered into an antenuptial agreement in the state of New York to settle property distribution issues if their relationship ended in death or divorce. The agreement stated that all jointly-held property would be divided equally between them and all property held in the individual name of either party would remain the property of that individual party. The agreement also provided that the terms of the agreement could be changed or modified only by a written instrument.

At the time of their marriage, the parties lived in a house owned partly by the wife and partly by her children. Both parties owned real property and pensions. On January 19, 1989, wife's job was abruptly terminated as a result of corporate downsizing. Wife looked extensively for similar work but was unable to find employment. As a result, the parties decided to invest in real estate which wife could manage, providing employment for her and potential retirement income for them both. On a trip to Vermont, the parties found an old Victorian house which they decided to purchase and develop into a bed and breakfast. In February of 1990, the parties purchased the property, took title in joint names, renamed it the Northfield Inn, and began renovating it. The parties agreed that the budget for the project would be $400,000 and that each would contribute one-half of the investment. The plan called for wife to live in Vermont and manage the inn, while husband would remain in New York, continue working at the same company, and commute to Vermont on the weekends to help with the operation of the inn.

The expenses for purchasing and renovating the inn went significantly over budget. In fact, wife contributed $302,670, husband contributed $189,651, and the parties obtained a mortgage loan for the inn through the Northfield Savings Bank for $166,256. Husband continued to make payments out of his income in order to cover expenses, but began to complain about wife's lack of accounting procedures and her extravagant spending on the inn. The parties' relationship began to deteriorate, and wife became secretive about the financial affairs of the inn.

In July of 1994, the parties separated, and husband filed for divorce. Husband stopped traveling to Vermont and providing money for expenses of the inn. In November of 1994, husband was notified that his company was downsizing and he would be terminated in January. He has been unable to obtain similar employment since that time.

There are three judicial decisions and two master's reports in this case. The family court appointed a master to determine the fair market value of the parties' property, the expenses of the Northfield Inn, its profit or loss in 1995, and the contribution of each of the parties to the inn, and to make a recommendation regarding spousal maintenance. He did so in reports in August and December 1995. The family court upheld the antenuptial agreement and accepted the master's findings in May 1996. The family court issued its notice of decision, findings and conclusions on September 13, 1996. In its notice of decision, the court attempted to equitably divide the parties' property, giving effect to the antenuptial agreement. The trial court concluded, nevertheless, that it would be grossly inequitable for husband to receive a one-half share of the Northfield Inn when he had contributed only $189,651 and wife had contributed $302,671. The court held that it would be in contravention of the parties' "specific agreement to be equal investors in the Northfield Inn ... to enforce the antenuptial agreement in a literal and technical manner" because husband would realize a windfall profit simply because he chose to pursue divorce before the parties had equalized their investment.

The court ordered husband to pay wife $113,020 to equalize the parties' investment in the inn and then awarded wife sole ownership of the inn. At the time of the divorce, the inn had a going concern value of $300,000, with a mortgage debt of $166,256 and an equity value of $133,744. The court allocated to husband the three jointly-owned Florida properties, which were valued at $139,002 and then ordered husband to pay wife $2,629 to equalize the property distribution. Thus, husband was required to pay wife a total of $115,649.

The court next considered wife's claim for spousal maintenance under 15 V.S.A. § 752(a)(1) and (2). The court determined that wife, as owner and manager of the inn, would derive from it an annual income of $12,433, including the value of the housing it provided her. The court recognized that this was not sufficient to meet her expenses, but found that the $800 monthly shortfall could be eradicated if husband's $115,649 payment to wife was applied to the principal of the mortgage on the inn. The court calculated that this payment would reduce the outstanding mortgage loan to $50,607 and the monthly payments from $1200 to $400. The reduction in the mortgage payments would bring wife's annual income to $22,003, an amount sufficient to provide for her reasonable needs. On this basis, the court denied wife maintenance but required husband to pay wife's monthly health insurance premiums until she became eligible for Medicare.

At this point in the litigation, husband appealed the court's decision, arguing mainly that the antenuptial agreement prevented the court from finding a subsequent oral agreement existed with respect to the Northfield Inn. While the case was on appeal, the trial court decided that it had miscalculated the amount husband had to pay to equalize investments in the Northfield Inn, a point husband raised in his appeal. Upon leave of this Court, pursuant to V.R.C.P. 60(a), the family court issued an amended order reducing the amount husband owed wife from $115,649 to $59,139 and allowing wife to elect either (1) a mortgage buydown option whereby husband must pay $113,020 to the Northfield Savings Bank to reduce the mortgage on the Northfield Inn, and in turn wife must pay to husband the sum of $53,881, or (2) a payment from husband of $59,139 directly to her. Wife appealed this decision claiming that (1) the family court made changes that affected the substantive rights of the parties, beyond that authorized by Rule 60(a); (2) the antenuptial agreement between the parties is unconscionable and cannot be enforced under Vermont law; (3) husband's income is marital income, which should be split between the parties and cannot be used to pay for his investment share in the Northfield Inn; (4) the court found as fact that wife could refinance the Northfield Inn mortgage, and reduce the payment amount, with no evidence to support this finding; (5) the family court failed to make findings regarding maintenance and abused its discretion by lowering the amount of the property settlement without considering whether a rise in maintenance payments was necessary to offset increased expenses; and (6) the court abused its discretion in not reopening the evidence. Husband responded that the amended order should be affirmed as long as the mortgage buydown option is deleted. If the mortgage buydown option is not deleted or issues in the amended order are reversed, the husband returns to his original appeal issues: (1) the antenuptial agreement must be enforced; (2) oral modifications to the antenuptial agreement should not be enforced; (3) if oral modifications to the antenuptial agreement are given effect, then the parties' entire oral agreement regarding investment in wife's West Islip, New York, house and Northfield Inn should be enforced; and (4) the order requiring him to pay $10,000 of wife's attorney's fees should be vacated. We do not reach husband's alternative arguments because we delete the mortgage buydown option and affirm the amended order in all other respects.

II.

We start with the amendments the family court made to the final order while the case was on appeal because these are at the heart of wife's appeal issues. The amendments were based on a mistake the court made in equalizing the parties' investments in the Northfield Inn. The court found that wife had invested $113,020 more than husband. In its decision, the court stated that it would require husband to increase his investment in the inn by this amount, but in its order, it directed that husband pay $113,020 to wife. This order had the effect of increasing husband's investment in the inn while decreasing wife's investment, creating a disparity in favor of the wife.

The family court recognized its mistake, and reduced the amount husband had to pay wife on account of the inn, from $113,020 to $56,510. The court also recognized, however, that the payment reduction would reduce the income...