Digges v. Digges

HOLLANDER, Judge. This case is before us for the second time. It arises from the dissolution of the marriage of Edward S. Digges, Jr., appellant/cross-appellee, and Wendy W. Digges, appel-lee/cross-appellant. The parties were divorced on July 28, 1995, after twenty-six years of marriage, on the ground of a two year separation.

See Md.Code (1984, 1991 Repl-VoL), § 7-103(5) of the Family Law Article (“F.L.”). In conjunction with the divorce, the court awarded sole custody of the couple’s three minor children to Ms. Digges. For purposes of calculating child support and alimony, the trial court found that Mr. Digges had voluntarily impoverished himself, and ordered him to pay 1) child support in the amount of $1,312.62 per month; 2) indefinite alimony in the amount of $2,250 per month; and 3) and appellee’s counsel fees, in the amount of $25,000. Thereafter, in an unreported, per curiam, opinion, this Court affirmed the lower court’s determination that appellant had voluntarily impoverished himself.

Nevertheless, we determined that the trial court erred in its conclusion as to appellant’s earning potential. Accordingly, we remanded the matter to the trial court to re-compute appellant’s potential income, and to reconsider appellant’s obligations for child sup ³⁶⁴ port, alimony, and attorney’s fees. Digges v. Digges, No. 493, September Term, 1996, 114 Md.App. 720 (filed February 25, 1997)(hereinafter, “Digges I ”). Appellant now challenges the trial court’s rulings on remand, and presents several issues for our review, which we have rephrased and consolidated: I. Did the court err in using appellant’s potential income in determining the awards for child support, alimony, and attorney’s fees, rather than his actual income?

II

Did the court err in awarding indefinite alimony to appellee? In her cross appeal, appellee presents one issue for our consideration, which we have also rephrased: For purposes of determining the amount of the award of indefinite alimony, did the court err by including income from appellee’s part-time job? We answer each question in the negative. Accordingly, we shall affirm.

Factual Background 1 Mr. and Ms. Digges were married on May 31, 1969. Five children were born to the couple: Courtney, bom October 3, 1974; Edward III, born April 27, 1976; Ashley, born October 27, 1979; John Bradford, born May 17, 1981; and Brittany Anne, born September 19,1982. Appellant holds a bachelor’s degree from Princeton University and a law degree from the University of Maryland School of Law. After his admission to the bar, Mr. Digges began a successful and lucrative career as a commercial litigator with a distinguished Baltimore law firm.

In 1984, appellant founded and became the managing partner of the Annapolis law firm of Digges, Wharton, and Levin, earning a substantial income. After Mr. Digges founded the Annapolis firm, the Digges ³⁶⁵ family lived on a waterfront property in Kent County, Maryland called “Hinchingham.” Ms. Digges received her bachelor’s degree in elementary education from Towson State University in 1970. Between 1970 and 1974, she taught in Baltimore City and Anne Arundel County. When the couple’s first child was born in 1974, appellee left her job as a school teacher and became a full-time homemaker.

In November 1989, appellant was indicted in federal court on six counts of mail fraud. Those charges stemmed from an allegation that Mr. Digges fraudulently overbilled one of his firm’s clients, Dresser Industries, Inc. (“Dresser”). On January 16, 1990, appellant voluntarily consented to disbarment. Digges subsequently pled guilty to one count of mail fraud and was incarcerated at the Federal Correctional Institution in Morgantown, West Virginia from May 7, 1990 until April 27, 1992.

In addition, Mr. Digges was fined $80,500, and ordered to pay one million dollars in restitution to Dresser. Dresser industries ultimately obtained a judgment of three- and-one-half million dollars against appellant and his two law partners, jointly and severally. Although Mr. Digges filed for bankruptcy, the judgment was not discharged. On September 28, 1992, Ms. Digges was diagnosed with multiple sclerosis.

Notwithstanding the news, appellant left the marital home the next day. It was later discovered that appellee suffers from a “stress related condition,” but not multiple sclerosis. On August 30,1994, appellant filed a complaint for absolute divorce in the Circuit Court for Kent County. Thereafter, on October 11, 1994, appellee filed a counterclaim, alleging desertion and adultery.

Ms. Digges sought rehabilitative and indefinite alimony, sole custody of the couple’s children, child support, a monetary award, costs, and attorney’s fees. Trial was held from May 25,1995 through June 1,1995. At trial, Martin Kranitz, an expert in vocational evaluation, testified on behalf of Ms. Digges. He opined that appellant could ³⁶⁶ potentially earn from $60,000 — $75,000 as a non-attorney representative for Social Security clients.

On July 28, 1995, the court filed a written Memorandum Opinion, Order and Judgment. The court prefaced its discussion of the background facts with the following statement: [E]xcept for her ability to give a fair market value on property, the court gives full credibility to the testimony of Wife. On the other hand, the court does not find Husband to be as creditable [sic] a witness. In making its rulings as to alimony, child support, and counsel fees, the court found that, in 1994, Ms. Digges earned approximately $3,200.00.

The court observed that appellee “is looking for full-time employment as a teacher where she would probably earn approximately $30,000.00 per year.” The court also recognized that Mr. Digges “has not maintained regular employment since his release from prison in 1992, [but] he either directly or through his family was able to provide approximately $5,000.00 per month to [Ms. Digges] for the support and maintenance of the family.” That support, however, “ended coincidentally with the filing of [Ms. Digges’s] Response to the Complaint in October of 1994.” Moreover, the court concluded that since his incarceration, Mr. Digges had “chosen to deprive himself of resources with the intention of avoiding financial obligations, which not only include the Dresser judgment, but include child support and spousal obligations.” The court examined each of the factors prescribed in F.L. § ll-106(b) regarding alimony. In a section entitled “[t]he ability of the party from whom alimony is sought to meet that party’s needs while meeting the needs of the party seeking alimony”, see F.L. § ll-106(b)(9), the court stated: Husband claims he is unable to obtain gainful employment until after he has completed his master’s degree from the University of Pittsburgh. He claims that he is unable to work in the field of law as anything more than a paralegal, due to his conviction for mail fraud. At the time of his conviction, Husband surrendered his license to practice law. ³⁶⁷ Since his release from prison, Husband has occasionally worked as a consultant, where at one point he was paid $75,000.00.

He has also assisted his father and other family members by giving advice and by helping to maintain the family properties. While not all mail fraud convictions result in disciplinary sanctions being imposed by the Court of Appeals, the facts of this case which indicate fraudulent billings to clients would likely indicate the imposition of sanctions. It is understandable why Husband surrendered his license to practice law prior to sanctions being sought. That does not, however, explain why Husband has not sought gainful employment.

Husband uses his conviction as a reason for not having employment. He has no history of rejection from application for employment. He also uses his current enrollment in a Master’s for Business Administration as a reason for not being employed. There has been no proof that the program in which he is enrolled is a full-time program which would prohibit him from maintaining employment while completing his additional education.

The program appears to be designed for the working student. This court is convinced that Husband refuses to maintain gainful employment because he has no intention of satisfying the judgment lodged against him by Dresser. Presumably, if he has no visible earnings, Dresser has nothing to garnish or attach. Clearly husband has chosen to deprive himself of resources with the intention of avoiding financial obligations, which would not only include the Dresser judgment, but include child support and spousal obligations.

In making this finding, the court has considered the following: a. Husband’s current physical condition is good; b. Husband is a graduate of Princeton; he holds a Law degree and is soon to have a Master’s in Business Administration’ ³⁶⁸ c. Husband’s employment as an attorney changed at the time of his conviction, however, he has had three years since his release in which to obtain gainful employment; d.

Husband, either directly or indirectly, provided for his wife and family prior to her response to his complaint for divorce. e. Husband has shown no effort toward finding or retaining employment; f. Husband is seeking a Master’s in Business Administration, a form of retraining, however, he is making no effort toward obtaining employment while seeking that retraining; g. Husband has not supported his children or maintained his spouse since October of 1994; h.

Husband was a very successful attorney and since his release from prison has held himself out to be a “consultant” with one client having paid him $75,000.00; i. Husband’s official address is at the Hinchingham farm in Kent County, however, at any given time he can be found at family property in Southern Maryland or with a friend in Baltimore County. The court finds that the Husband’s job market would encompass the mid-Atlantic region. The court finds that there is room in the market for business consultants such as someone with Husband’s credentials; j.

The court will also consider at this time that Husband maintains a comfortable life style, including his membership at the Princeton Club in New York City. See John O. v. Jane O., 90 Md.App. 406, 422 , 601 A.2d 149 (1992). Husband has voluntarily impoverished himself. Therefore, the court finds that Husband has the ability to meet his own needs while meeting the needs of his Wife.

Husband earns $75,000.00 from one client, therefore, the court finds Husband is capable of earning at least $75,000.00 per year from outside sources and that he receives at least $25,000.00 per year “compensation” for services rendered to his family, albeit that compensation has been labeled as ³⁶⁹ “loans” and “gifts.” The court finds that Husband is capable of earning at least $100,000.00 per year in total. (Emphasis added). As we noted, the court found that after appellant’s release from prison, he earned $75,000.00 from one client, for consulting services. This finding was based on evidence that while appellant was in prison, he provided consulting services to Gary VanWaeynberge, a fellow inmate.

Appellant testified that he offered VanWaeynberge “ ‘advice relative to ventures that he [VanWaeynberge] was attempting to get under way here in the United States one way or the other.’ ” Digges I, slip op. at 7. The court then calculated appellant’s child support obligation based on an estimated annual salary of $100,000.00 for him, and a salary of $6,000.00 per annum for appellee. On August 30, 1995, the court amended its judgment, concluding that, as of June 30, 1995, appellant was $11,813.58 in arrears in child support, and $20,250.00 in arrears in alimony. Although the court originally ordered rehabilitative alimony, it revised the award by making the alimony permanent.

The court explained that “[a]fter [Ms. Digges] will have made as much progress toward becoming self-supporting as can reasonably be expected, the respective standards of living of the parties will be unconscionably disparate.” See F.L. § 11-106(c)(2). Appellant subsequently appealed to this Court. He argued, inter alia, that the trial court was clearly erroneous in finding that he had voluntarily impoverished himself. In appellant’s view, “the only reason for his current state of ‘impoverishment’ is his conviction, incarceration, and surrender of his license to practice law.” Digges I, slip op. at 9.

Appellant also challenged the court’s awards, arguing that they were improperly based on an erroneous finding that he had an earning potential of $100,000.00. In Digges I, we affirmed the court’s ruling that appellant had voluntarily impoverished himself. We held that “the evidence was sufficient to show that the primary cause of ³⁷⁰ appellant’s impoverishment was not his incarceration nor the loss of his law license but his total lack of interest or effort in attempting to find and secure regular, gainful employment.” Further, we said: Slothfully, [appellant] waited for more than a year after his release from prison to start graduate school and even then he selected a part-time educational program designed for a person who held a part-time job. By showing initiative, Digges, like his fellow students, could have worked and attended college.

We are persuaded that a rational trier of fact could have found that Digges was voluntarily impoverished. Id., slip op. at 11. Nonetheless, we reversed the court’s finding that appellant had a potential income of $100,000.00. That income figure was based in large measure on the court’s determination that, subsequent to Digges’s release from prison, one client had paid him $75,000.00 for consulting services.

We concluded, however, that the trial judge erred in finding that appellant had earned the $75,000. We explained: “Apparently, the trial judge confused the $75,000.00 figure with the actual figure of $87,500.00 and then assumed the money was paid for services rendered while imprisoned and not as a loan.” We also found that even if appellant had earned $75,000.00 as a consultant in prison, “there was no evidence to support the assumption that he could continue to earn that amount of income on a regular basis” when released. Accordingly, we remanded “for a reevaluation of Digges’s potential income and for a re-determination of the appropriate level of child support based upon the guidelines.” Id., slip op. at 14. Further, we indicated that, “[o]n remand, the trial court, in its discretion, may receive additional evidence regarding potential income, inclvding testimony as to appellant’s income since the case was originally tried.” Id.

(Emphasis added). Significantly, we rejected appellant’s claim that the award of alimony could not be calculated based on appellant’s potential income. To the contrary, we said that potential income is ³⁷¹ relevant to a consideration of “[t]he ability of the party from whom alimony is sought to meet that party’s needs while meeting the needs of the party seeking alimony.” See F.L. § 11 — 106(b)(9). With respect to the award of attorney’s fees, we also noted that F.L. § 11 — 110(b) requires the court to consider “the financial resources and financial needs of both parties.” We observed that “[t]he factors underlying awards of alimony, monetary award, and counsel fees are so interrelated that, when a trial court considers a claim for any one of them, it must weigh the award of any other.” Slip op. at 17 (quoting Doser v. Doser, 106 Md.App. 329 , 335 n. 1, 664 A.2d 453 (1995)).

From October 20, 1997 through October 22, 1997, the circuit court conducted a remand hearing. Ms. Digges testified about her ordeal in securing adequate housing and providing for her children during the pendency of the divorce proceedings. She explained that Hinchingham had originally been titled to the parties as tenants by the entireties, but claimed that her name was removed from the deed without her consent. Although appellee’s signature appeared on a deed conveying her interest in the property, she averred that the deed was notarized by one Loretta M. Poole, a woman whom Ms. Digges claims she never met.

Around the time that appellant’s legal troubles began, appellant, who was then the sole owner of the property, conveyed Hinchingham to his father. 2 Although appellant’s father allowed Ms. Digges and the children to live at Hinchingham until October 1994, economic assistance from the Digges family ceased when Ms. Digges filed her counterclaim for absolute divorce. Consequently, in October 1994, appellee and the children moved to a rental property. Then, on May 26, 1995, the family was evicted from the rental property, and they were forced to live rent free at a local church. Subsequently, Ms. Digges and the children moved to a two-bedroom apartment in Chestertown.

Appellee testified that she slept on a mattress on the floor in the living room so that her two youngest children could sleep ³⁷² in the bedrooms. As a result of the family’s eviction and economic uncertainty, appellee claimed at trial that she suffered from anxiety, sleeplessness, and severe allergies. She also acknowledged that she is particularly afraid of being evicted again. Charles Smolkin, an expert witness in the field of vocational assessment and income potential, testified for appellee.

Smol-kin did not testify at the first trial. In Smolkin’s view, appellant’s background was best suited to the field of telecommunications consulting. Citing the 1996-1997 edition of the Licensing Occupational Outlook Handbook, published by the U.S. Department of Labor, Bureau of Labor Statistics, Smol-kin stated that appellant “fit the profile of a junior or senior partner in a consulting firm.” The average salary in 1994 for such a position was $194,000.00. Smolkin opined that appellant is capable of annual earnings ranging between $120,000 and $194,000.

In this regard, Smolkin explained that given appellant’s work as a telecommunications consultant, he is capable of overcoming much of the stigma associated with his disbarment and mail fraud conviction. The following colloquy is relevant: [ATTORNEY FOR APPELLEE]:. What role or influence do you feel that the felony conviction and the disbarment play in terms of his work in the area of consulting? SMOLKIN: [3] The disbarment is important because I had to consider whether he’s likely to be readmitted to the bar anytime soon, which, of course, would negate my having to make a judgement [sic] because he has already demonstrated his abilities in that arena.

And I have no evidence that he is going to be readmitted to the bar anytime in the near future. [ATTORNEY FOR APPELLEE]: With regard to the felony conviction as it relates to the type of work that he’s ³⁷³ doing and as it dovetails with his history of employment, how do you feel that that plays a role if at all? SMOLKIN: Do you know, in talking to him, if I didn’t know the reality, I would say there’s no felony conviction. And I think that is important because he’s ... as a ... as a consultant, he is dealing with a field that does not require licensing and there’s no necessary objective standard. And as he explained it to me, it appeared very logical that he had ... was an outstanding attorney who, through a gross misunderstanding of the billing method at a time when they weren’t necessarily so contractual, ended up being a victim and serving time because he was a victim not because he did anything wrong.

Now, I know that facts of the case. [ATTORNEY FOR APPELLEE]: Do you believe ... do you believe that, based on your interview, he’s able to portray the victim role in a way that is convincing in terms of sales and marketing? SMOLKIN: Yes. I ... I believe that he can ... he can take this conviction and explain it in a very logical manner and make the bad guy the government and the good guy Mr. Digges. [ATTORNEY FOR APPELLEE]: Do you believe that ... the felony conviction is a significant hurdle or obstacle?

SMOLKIN: It’s an obstacle that would be significant for most people but not for Mr. Digges, not in this field. Mr. Digges’s income tax returns reflected income in 1995 of $10,617.00. In 1996, he reported $29,558 on his income tax return. On December 9,1997, the court issued its written opinion, in which it discussed, seriatim, each of the factors set forth in F.L. § 11 — 106(b) regarding alimony.

Six pages of the court’s analysis on remand concerned the question of whether Mr. Digges could meet his own needs while meeting the needs of appellee and the couple’s children. In addition, the court focused on Smolkin’s testimony. ³⁷⁴ In its opinion, the court made the following findings regarding appellant’s employment history: [T]he evidence revealed that Mr. Digges was employed by the law firm of Piper/Marbury in 1971. By 1977, he was a partner for that firm. In 1984, he earned approximately $375,000 spending half of his efforts in marketing and developing the firm’s client base.

At the end of March, 1984, he left that firm and became managing partner for his own firm, Digges, Whorton [sic], and Levin. In 1988, Mr. Digges earned approximately $750,000. According to Mr. Smolkin’s research, this figure is almost seven times more than the average yearly salary of the most experienced lawyers in private industry in 1993. Except for doing work for his family, he was not employed during 1992, 1993, and 1994, the years following his felony conviction.

During 1995 and the main part of 1996, Mr. Digges worked as a part-time consultant for a telecommunications company called Telvest. From the end of 1996 to the present he has been employed as a consultant with Corcom. [4] The court also found that appellant has continued to avoid finding new employment. It stated: Mr. Digges has made little or no effort at finding and retaining meaningful employment. Although the Court acknowledges that Mr. Digges currently works part-time for Corcom, testimony revealed that his position evolved out of casual conversations between himself and the owners, who are social friends, rather than any real effort to secure employment.

Those facts are consistent with the answers that Mr. Smolkin received when he asked Mr. Digges how ³⁷⁵ he hopes to obtain consulting positions. Mr. Digges apparently answered that “he lets it be known” that he is seeking employment in the consulting field. To date, Mr. Digges has yet to prepare a curriculum vitae or fill out even one application for a job. In Mr. Smolkin’s opinion, Mr. Digges will never fill out an employment application because he considers such a task to be “beneath” him.

When asked why he had not prepared a curriculum vitae, Mr. Digges told Mr. Smolkin that he has been working on obtaining his MBA. However, Mr. Digges’s transcript from the University of Pittsburgh reveals that he is enrolled in a Flex Program designed for working adults. The program requires residence for only two weeks out of twelve. Despite the liberal schedule, Mr. Digges has completed the requirement for only eight credits toward his MBA.

He has failed to meet the minimum standards on three credits, he had failed three credits, and he has twenty-five credits with unfinished work. Mr. Smolkin testified that given his academic achievements, Mr. Digges’s performance at the University of Pittsburgh is almost incomprehensible. Thus, Mr. Smolkin concluded that [appellant’s] poor performance further evidences is [sic] lack of effort at finding or obtaining employment. Further, the court noted that appellant “expects to earn approximately $50,000 in the upcoming year.” Notwithstanding his mail fraud conviction, the court also found that appellant had an annual earnings potential of $150,000.00.

Nevertheless, the court conceded that appellant could not immediately reach the $150,000 plateau, stating: In reaching this decision, this Court accepts the proposition that someone entering a new field, even with Mr. Digges’s extraordinary capabilities, will require a period of time during which he can reestablish his contacts. Therefore, the Court finds that from October 31, 1994 to October 30, 1996, Mr. Digges had the potential to earn $85,000 per year; from October 31,1996 to October 30, 1997, he had the potential to earn $100,000; from October 31, 1997 to October 30, 1998 he has the capability to earn $125,000 until ³⁷⁶ finally reaching his full earning potential of $150,000 per year on October 31,1999. In addition, the court recognized that appellant “has an extensive support system”. The court also observed that appellant “continues to have memberships in the Princeton Club and the Mid-Ocean Club in Bermuda despite his limited income.” As to Ms. Digges’s income, the court found that since the time of the first trial, she had obtained full-time employment as a teacher at the Radcliffe Creek School in Kent County, earning a salary of $27,000 per year.

She was certified to teach special education using the “Ortin Gillinham” method. Additionally, Ms. Digges earned an additional sum of $2,230.00 by teaching during the summer vacation. The court also found that appellee “continues to earn approximately $240/ month by tutoring privately.” A financial statement completed by Ms. Digges on October 20, 1997 indicated that, on the eve of the remand hearing, she had expenses of $30,912 per year. 5 The court found, however, that the October 1997 figure was too low, and represented an “unrealistic indieation[ ] of what Mrs. Digges should spend per month in order to procure adequate housing and sustenance for herself and the Digges children.” Accordingly, the court found that beginning in October 1997, Ms. Digges required $39,000.00 per year to meet her expenses. The court calculated appellant’s child support obligation based on appellant’s graduated “potential” incomes, and Ms. Digges’s “actual” incomes.

The court summarized its findings regarding the parties’ incomes in the following chart: ³⁷⁷ [[Image here]] Because the court used a progressive scale to calculate appellant’s potential income, his child support obligation varied from year to year. The child support also fluctuated because the court took into account that Ashley would turn eighteen in October 1997, that John would turn eighteen in May 1999, and that Brittany would reach her majority in September 2000. The court again utilized a chart to set out its ruling: ³⁷⁸ [[Image here]] With regard to alimony, the court found that “an award of alimony for an indefinite period of time is proper in this case.” The court stated: Mrs. Digges has made as much progress toward become self-supporting as can reasonably be expected given her medical condition and her current educational background. She can only increase her income by obtaining a Master’s Degree in Education.

Yet even if she does obtain a graduate degree, testimony revealed that her yearly earnings will only increase by approximately $5,000. That increase would place her estimated yearly earnings between $30,000 to $35,000. Mr. Digges [sic] maximum earning potential beginning in 1999 is $150,000 or five times as much. The ³⁷⁹ respective standards of living of the parties will be unconscionably disparate.

Another chart distilled the court’s ruling as to alimony: [[Image here]] Additionally, the court awarded Ms. Digges $76,000 in attorney’s fees, which represented % of the $99,102.93 appellee claimed she had incurred. The attorney’s fees were to be paid in monthly installments of $1,000.00. In sum, then, appellant was ordered to pay: 1) child support according to the graduated chart that appears on page 17 of this opinion, as well as arrears of $15,619.33; 2) indefinite alimony of $1,875 per month from October 31, 1994 through October 31, 1995; $1,625 per month from October 31, 1995 through October 30, 1996; $741.67 per month thereafter; and arrears of $31,078.38; 3) attorney’s fees and expenses of $76,000, and interest commencing from the date of the order; and 4) all open court costs. We will include additional facts in our discussion of the issues.

Discussion I. The “Scarlet Letter” of Voluntary Impoverishment Appellant contends that, on remand, the court erred in “perpetuating” a “scarlet letter” of voluntary impoverishment, ³⁸⁰ ignoring the “dynamic”, “fluid”, and “evolving” circumstances that occurred following the original trial. Asserting his “scarlet letter” argument with respect to the awards of alimony, child support, and counsel’s fees, appellant asks: [I]s a conclusion of “voluntary impoverishment” relative to a certain timeframe [sic] to be a “branding” that becomes inescapable even though economic circumstances change and evolve into more crystal-like terms so as to ease the mechanical application process for purposes of child and spousal support? In particular,