Allison v. Allison

SALMON, Judge. The appellant in this matter is Michael Allison (“Michael”), who was born on May 28, 1958. Appellee, Carol Ann Allison (“Carol Ann”), is twenty years older than Michael. After a marriage of approximately fifteen years, the two were divorced by the Circuit Court for Anne Arundel County.

At the time of the divorce, Michael was forty-four and Carol Ann was sixty-four. The circuit court awarded Carol Ann $2,300 per month in indefinite alimony and a monetary award in the amount of $17,500. 1 Additionally, the court ordered that either Twenty-one Thousand Four Hundred Fifty Dollars and eighteen cents ($21,450.18) or the current balance of ... [Michael’s] 401 (k) account, whichever is the lesser amount, shall be transferred from ... [Michael’s] 401(k) to a pension retirement, profit sharing or deferred compensation plan in ... [Carol Ann’s] name and this shall be accomplished through the entry of a qualified domestic relations order, which shall be submitted to the court by ... [Carol Ann’s] attorney after reviewed by ... [Michael’s] attorney. Michael presents three questions in this appeal, viz: I. Did the trial judge err in finding that appellant dissipated assets when he used the money he borrowed from his 401 (k) plan to make payments toward the parties’ attorney fees?

II

Did the trial judge err by including the amount of appellant’s unpaid loan twice in calculating the value of his 401(k) plan and finding appellee’s marital share of the 401(k) plan was $21,450.18?

III

Should the alimony award be reversed where neither the trial court’s ruling nor the record indicate how the ³³⁴ trial judge exercised her discretion in determining the amount of the indefinite alimony award? Carol Ann filed a cross-appeal, in which she raised two additional questions, which we have reordered: IV. Does a reversal and remand on the issue of a monetary award automatically trigger a reversal on the issue of alimony? V. Can a trial court award “the lesser of’ two sums in a division of assets to be implemented by a Qualified Domestic Relations Order?

BACKGROUND The parties were married in October 1988 and separated about ten years later, on June 28, 1998. Constant “bickering” was the problem in the marriage that ultimately caused the parties to separate. Almost five years passed between the date of separation and April 7, 2003, the date an amended judgment of divorce was entered. Carol Ann suffers from fibromyalgia, bone density loss, late-onset asthma, and migraine headaches.

Additionally, Carol Ann was in a car accident more than twenty years ago, which caused her to undergo a cervical fusion. The sequela of that fusion have caused Carol Ann to have recurring neck problems. Michael has no health problems that interfere with his ability to work and carry on normal activities. He has been employed since 1988 by the Chesapeake Publishing Corporation.

Presently, Michael is the general manager of the Easton Printing Division of Chesapeake Publishing. His gross salary is $83,600 annually or $6,966.67 monthly. After deductions, he nets $4,911.09 per month. As a fringe benefit, Michael’s employer expends $416 per month to lease a car for his use.

Carol Ann is unemployed. Prior to her marriage to Michael, she worked as a secretary. She last looked for work in 1998 — the year the parties separated. During the period of separation, she has tried volunteer work, but, according to her ³³⁵ testimony, the activity caused her pain and made it impossible to do the assigned work.

For that reason she has not sought employment since 1998. Carol Ann worked for nine months at a floor store in Cambridge, making $100 per week in 1992 or 1993. In 1996-1997, for a period of about eighteen months, she drove a school bus, transporting Head Start students for the Talbot County School Board. She earned approximately seven dollars per hour as a bus driver ($14,500 yearly) but was terminated from that job because she had had too many accidents.

According to Carol Ann, she “would love to work” but cannot due to her many health problems. In 2000, at age sixty-two, Carol Ann elected to commence receiving Social Security retirement benefits. Persons who elect to receive benefits at sixty-two receive smaller benefits than those who elect to receive benefits at age sixty-five or later. 2 Her Social Security benefits are currently only $499 per month. Michael testified at trial that he was not familiar with his wife’s present health problems because, since the separation, he almost never sees her.

He believed, however, that Carol Ann was capable of working part-time (twenty-five to thirty hours per week) at one of the senior programs run by WalMart or McDonalds in the local area. Based on his knowledge of the local economy, he opined that Carol Ann could earn between $6.50 and $8 per hour at one of these positions for seniors. The parties jointly own a house in Denton worth $282,500. They have $147,500 equity in that property.

Post-separation, Carol Ann has lived in the Denton residence, but Michael has paid the first mortgage payments on the house in the amount of $1,246 monthly, plus an additional $81 per month owed on a second mortgage secured by the home. Michael, at the time of trial, lived in a one-bedroom apartment in a private home in Easton. He pays rent of $525 per month for that room. ³³⁶ On January 4, 2002, which was more than three years after the parties separated, Michael borrowed $15,500 from his 401(k) plan. He used $4,000 of those funds to make a court-ordered contribution to Carol Ann’s attorney’s fees; the remainder of the borrowed funds was used to pay his attorney in the subject case. 3 Michael later repaid $1,835 to his 401(k) plan.

The unpaid portion is now approximately $13,665. After the loan is deducted from the 401(k)’s value, the plan, as of the October 18, 2002, divorce hearing, had a balance of $15,570.05. QUESTIONS 1 AND 2 The trial judge ruled that Michael had dissipated $13,665 of marital property when he used that sum to pay attorney’s fees. Michael contends that the trial judge erred in making that ruling.

He also contends that the trial judge erred when she concluded that Carol Ann’s fifty percent marital share of the 401(k) plan was worth $21,050.18. At trial, it was undisputed that the gross balance of the 401 (k) plan was $29,235.05 as of June 30, 2002, and that this latter figure included the unpaid loan balance of $13,665.31. In their briefs, both parties agree that the trial judge erred when she added the gross figure of $29,235.05 to the amount of the loan and divided the sum by two, thereby concluding that Carol Ann’s fifty percent share of the 401 (k) plan was worth $21,450.15. Carol Ann contends that a fifty percent share of the 401 (k) plan should have been valued at fifty percent of $29,235.05 or $14,617.53.

Because Michael takes issue with the court’s finding that he dissipated $13,665.31 of marital funds, he contends that the court should have calculated Carol Ann’s fifty percent marital ³³⁷ share of the 401(k) plan at fifty percent of $15,569.84 ($29,-235.05 — $13,665.31) or $7,784.87. In McCleary v. McCleary, 150 Md.App. 448, 462-63 , 822 A.2d 460 (2002), we said: “Dissipation may be found where one spouse uses marital property for his or her own benefit for a purpose unrelated to the marriage at a time where the marriage is undergoing an irreconcilable breakdown.” Sharp v. Sharp, 58 Md.App. 386, 401 , 473 A.2d 499 (1984). We have defined dissipation as expending marital assets “for the principal purpose of reducing the funds available for equitable distribution.” Jeffcoat v. Jeffcoat, 102 Md.App. 301, 311 , 649 A.2d 1137 (1994). (Emphasis added.) The parties have directed us to no Maryland appellate decision, and we have found none, that addresses the issue of whether the use of marital property to pay attorney’s fees constitutes dissipation.

And, among our sister states, there is a split of authority regarding that issue. See, e.g., In re Marriage of DeLarco, 313 Ill.App.3d 107 , 245 Ill.Dec. 921 , 728 N.E.2d 1278, 1284 (2000) (“Expenditures for attorney’s fees out of marital assets are a dissipation of marital assets.”); In re Marriage of Walls, 278 Mont. 413 , 925 P.2d 483, 486 (1996) (It was not an abuse of discretion for the trial court to include monies wife used to pay attorney in calculating her share of the marital estate.). But see Thomas v. Thomas, 40 VaApp. 639, 580 S.E.2d 503, 506 (2003) (Post-separation expenditure of marital funds for items such as attorney’s fees constitutes a valid marital purpose and does not constitute dissipation); Anderson v. Anderson, 514 S.E.2d 369, 380 (VaApp., 1999) (same); Decker v. Decker, 17 VaApp. 12, 435 S.E.2d 407, 412 (1993) (“expenditure of funds for items such as living expenses, support, and attorney’s fees, constitutes a valid marital purpose and is not dissipation or a deliberate attempt to affect a monetary award”); Akers v. Akers, 582 So.2d 1212, 1216-17 (Fla.Dist.Ct.App.1991) (It was incorrect to include amount wife used to pay attorney’s fees in her share of the marital ³³⁸ assets.); Hortis v. Hortis, 367 N.W.2d 633, 636-37 (Minn.Ct.App.1985) (In making a marital property award, it was appropriate for the court to disregard withdrawals by a spouse from a variable annuity savings account, which was marital property, to pay legal fees and expenses.); Harbour v. Harbour, 227 A.D.2d 882, 883-84 , 643 N.Y.S.2d 969 (N.Y.App.Div.1996) (Husband did not dissipate marital funds when he used those funds to pay, inter alia, legitimate counsel fees). In the article, Expenditures for Attorney’s Fees as Dissipation: Spending Marital Funds for Attorney’s Fees (“the Dissipation Article”), the author opines: As a policy matter, attorney’s fees should generally be viewed as a legitimate expenditure of marital funds.

Since the law permits divorce, the law should permit spouses to spend the funds necessary to pay for legal services in divorce proceedings. Divorcing spouses usually do not have their own separate funds to pay their lawyers, so a rule that condemns the use of marital funds for legal services simply does not make sense. The doctrine of dissipation was developed as a tool to prevent and remedy economic misconduct that could frustrate an equitable distribution of partnership assets. Expenditures for legal services cannot be fairly characterized as economic misconduct.

On the contrary, it should be viewed as entirely appropriate for people facing marriage breakdown to obtain the legal advice and assistance needed to equitably distribute marital assets. Furthermore, it wastes resources to require spouses either to seek court permission before spending marital funds to obtain legal assistance or to seek a preliminary award of fees rather than spending the money necessary to obtain counsel. The doctrine of dissipation should remain available, however, to provide an avenue for redress if one spouse spends an unnecessary or unreasonable amount of marital funds on legal fees. 15 No. 8 Equitable Distribution J. 85 (August 1998). We agree with the view just quoted from the Dissipation ³³⁹ Article. 4 The attorney’s fees Michael paid appear to be entirely reasonable, and there was no indication that his expenditures were made with the goal of reducing the amount of monies available for a monetary award.

Michael, after the separation, lived modestly, but after paying Carol Ann $1,400 per month in pendente lite alimony and making mortgage payments of over $1,300 monthly on the house where Carol Ann lived, he had little left over from his net monthly income of $4,911.09 to pay for his own everyday expenses. Unless he sold his personal belongings or was willing to pay a large tax bill for early liquidation of a non-marital IRA worth $18,779.48, Michael had no choice but to pay his attorney’s fees (and those of Carol Ann’s that the court ordered) out of marital property. The same is true with many other couples who divorce. The obvious purposes for expending the funds were two: (1) to avoid representing himself in a case where his spouse sought, among other things, an award of indefinite alimony and (2) to obey a lawful order to pay a portion of his wife’s attorney’s fees.

Michael’s $13,665.31 expenditure did not meet the definition of “dissipation” set forth in Jeffcoat v. Jeffcoat, 102 Md.App. 301, 311 , 649 A.2d 1137 (1994), and reaffirmed recently in McCleary, supra, 150 Md.App. at 462-63 , 822 A.2d 460 , viz: expenditures of marital funds “for the principal purpose of reducing the funds available for equitable distribution.” See also Ledvinka v. Ledvinka, 154 Md.App. 420, 428 , 840 A.2d 173 (2003). We hold that when, as here, a spouse uses marital property to pay his or her own reasonable attorney’s fees, such expenditures do not constitute dissipation of marital ³⁴⁰ assets. Thus, the trial judge erred when she ruled that Michael had dissipated $13,665.31 of marital funds. Because the court made a mathematical error in calculating Carol Ann’s share of the 401(k) plan, and because the court erred when it ruled that Michael had dissipated marital funds, Carol Ann’s fifty percent share of the pension plan equaled $7,785, not $21,050, as the court calculated.

QUESTION III Michael frames his third argument as follows: Because neither the trial court’s ruling nor the record indicates how the trial court exercised its discretion in determining the amount of alimony, the award should be reversed. It is important to note that Michael does not contend that the evidence presented to the trial judge did not support an award of indefinite alimony. We mention what appellant failed to argue because, in her response to the third argument, Carol Ann’s brief completely disregards the argument made by Michael and instead analyzes whether the evidence supported an indefinite alimony award. This approach is unhelpful. ■ The trial judge, in making an indefinite alimony award of $2,300 per month, analyzed, in commendable detail, the first eleven factors set forth in section 11 — 106(b) of the Family Law Article (“FL”) of the Maryland Code (1999 Repl.

Vol.). Among the numerous findings of fact made by the court concerning section 11-106(b), eight are here of particular relevance, viz: (1) Carol Ann’s sole income is from a Social Security check in the amount of $499 monthly; (2) “[d]ue to her age (64) and health problems” Carol Ann “[d]oes not have the present ability to become wholly or partly self-supporting”; (3) it would take “two to four years” for Carol Ann to “gain sufficient education or training and find suitable employment” because she “would have to take secretarial courses or go back to school and get a different degree”; (4) Michael has the ability to earn the net sum of $4,911.09 per month; (5) ³⁴¹ Michael presently has monthly expenses of $5,206.07, but after a divorce is granted and the marital home in Denton is sold, his expenses, excluding alimony, will be $2,560.07; (6) once the house in Denton is sold and Carol Ann moves into an apartment costing $650 per month to rent, her monthly expenses will be $2,750, which, according to the court will cause her “to