Goldberg v. Goldberg

⁷⁷⁵ MOTZ, Judge. Gary I. Goldberg, now 44, and Anita M. Goldberg,- now 41, were married in 1971. They have two children: Nicole, born June 13, 1976, and Jeffrey, born July 25, 1979. During their marriage, Mr. Goldberg worked long hours outside the home — first for a family trucking company and then as a real estate developer and investor and as the chief executive officer of a clothing manufacturer.

On the other hand, Ms. Goldberg, although employed part time as a travel agent, spent most of her married life in equally long hours working in activities centered around the home involved with being a wife and mother. The parties accumulated substantial assets during their marriage. When the trial of this case began on January 22, 1992, the parties agreed that they had been separated since October 14, 1989, and that the separation was mutual and voluntary with the express intent and purpose of ending their marriage. Virtually every other issue, except for custody of their children, was vigorously contested.

As to custody, it was agreed that Mr. and Ms. Goldberg would have joint custody of Nicole and Jeffrey; Nicole’s primary residence would be with her mother and Jeffrey’s would be with his father. After seven days of testimony, this agreement was repudiated by Jeffrey’s counsel and by Ms. Goldberg and so the custody and primary residence of Jeffrey also became a contested issue. Judge Dana Levitz of the Circuit Court for Baltimore County heard a total of nine days of testimony from numerous witnesses including four experts, and received into evidence 115 exhibits. At the conclusion of the testimony the court reviewed extensive proposed findings of fact submitted by the parties and heard closing argument for approximately three hours.

On March 4, 1992, Judge Levitz issued a sensitive, well reasoned, 31 page opinion in which he meticulously made numerous findings of fact, explained the basis for those find ⁷⁷⁶ ings, and carefully applied the law to the facts. 1 Mr. Goldberg appeals, raising five questions: 1. Did the lower court err in the monetary award A. By adding all values and then subtracting the total of the marital debt father than subtracting marital debt from the value of each item of marital property and then totalling the net values? B. By utilizing incorrect appraisals or methods? 2. Did the court err in determining alimony, child support and the monetary award A. Did the court err in finding as a fact husband’s ability to earn $400,000.00 a year when husband’s employment ended without fault of husband?

B. Was child support based upon erroneously attributed income? C. Was alimony based upon erroneously attributed income? 3. Should custody of the son have been awarded to husband? 4. Was the removal of husband as custodian of Uniform Gifts to Minors Act Accounts in error? 5.

Was the award of counsel fees and costs to wife excessive? Ms. Goldberg cross appeals, conditionally, asking us to consider the following issues only if we determine a remand is necessary because of the questions raised by Mr. Goldberg’s appeal: 6. Did the trial court err when it subtracted appellant’s debt from marital property without first determining that it was marital debt and was appellant harmed by the error? 7. Did the trial court err when it failed to award indefinite alimony to appellee? ⁷⁷⁷ 8.

Did the trial court err in failing to award more of appellee’s counsel fees and costs to her? (i) Mr. Goldberg initially asserts that the circuit court erred in two respects in making a monetary award to Ms. Goldberg. Both involve the valuation of the marital assets. Mr. Goldberg’s principal claim of error is that the court relied upon “incorrect appraisal methodology” in determining the value of marital property.

In making the monetary award, the circuit court first determined which assets were marital property and then individually valued each of the assets. See Md.Code (1957, 1992 Repl. Vol., 1992 Supp.), §§ 8-203, 8-204 of the Family Law Article. Specifically, the court found that Ms. Goldberg’s total assets had a value of $240,000, that she had “no significant debts” and that “the marital portion of those assets is $163,000; the non-marital portion is $75,000.” 2 It found that Mr. Goldberg had assets of $2,950,000 and liabilities of approximately $996,-000 for a net worth of $1,954,000; it further found that $1,899,000 of Mr. Goldberg’s “net worth is marital [assets] and $55,000 is non marital.” Mr. Goldberg claimed below that certain assets titled in his name were his property alone; the circuit court rejected this claim, finding all five of these disputed assets marital property.

On appeal Mr. Goldberg does not assert that the court erred in any way in determining which property was marital and which was non-marital. Mr. Goldberg does vehemently assert, however, that the circuit court erred in valuing some of the marital property. Approximately $1 million of the marital property, titled in Mr. Goldberg’s name, was real estate and bank accounts, marketable securities, or other liquid assets; Mr. Goldberg does not dispute the value given to this portion of the marital property. The remainder of the marital assets that were titled in Mr. ⁷⁷⁸ Goldberg’s name were interests in partnerships or closely held corporations or demand notes owed by the closely held corporations to Mr. Goldberg.

It is the values the circuit court placed on some of these interests that Mr. Goldberg claims is error. We note at the-outset that many witnesses — including Mr. Goldberg’s own accountant — testified that Mr. Goldberg was, as the circuit court found, “an astute, diligent and cautious investor.” His net worth statements indicated that in the recent past virtually all of his assets were liquid. The parties came to own “illiquid” assets because, as the circuit court noted, “[sjince 1987 when [Mr. Goldberg] first suggested a divorce ... he has invested approximately two million dollars of liquid assets into businesses and ventures that are extremely illiquid and whose values in the interim appear to be depressed because of the current economy.” Judge Levitz further found that Mr. Goldberg was astute enough when he invested to believe that the effect of these investments would cause their value to appear to be less in the short term for the purposes of these proceedings. We have carefully reviewed the enormous record — there is certainly substantial support for these findings.

Mr. Goldberg’s own expert conceded on cross examination that over the “course of the last two years” Mr. Goldberg “took $2jé to $3 million in liquid assets” and put them into partnerships and closely held corporations. Mr. Goldberg’s net worth statements also reflect this change in investment strategy. Perhaps for those reasons, Mr. Goldberg does not directly challenge these findings. He does assert, however, that the circuit court improperly valued these illiquid assets.

The lower court heard extensive testimony from Mr. Goldberg and four experts as to the value of these assets. The court noted that it had considered and found “helpful” the testimony of all four experts, and believed “some, but not all of the testimony of each of the expert witnesses.” The valuations found by the circuit court reflect ⁷⁷⁹ precisely this. Thus, although only Mr. Goldberg asserts that the circuit court’s valuation of these “illiquid” assets was error, the circuit court did not by any means accept all the evaluations placed on them by Ms. Goldberg’s expert, Dennis Weiner. Indeed, Judge Levitz accepted the valuations of Mr. Goldberg’s expert as to a number of assets. 3 The circuit court remarked that it was “particularly impressed with the professional manner in which Mr. [Dennis] Weiner [Ms. Goldberg’s expert] testified.” Again, the record contains a sound basis for this finding.

Mr. Weiner, a certified public accountant, was a friend of both Mr. and Ms. Goldberg. He had worked as Mr. Goldberg’s accountant in the past and was able to testify only because Mr. Goldberg waived the possible conflict. Mr. Weiner testified that, when he reviewed Mr. Goldberg’s records for the divorce case, he found them in “disarray” and they were given to him “helterskelter,” although in the past when he worked for Mr. Goldberg, the records had always been “very orderly and organized.” Mr. Weiner testified that in valuing these properties he attempted to determine their fair market value, which he defined as “what a willing buyer would pay and a seller accepts, neither being compelled to enter into the transaction.” In formulating his valuations, he interviewed Mr. Goldberg, his accountants, and Gary Gomber, Mr. Goldberg’s comptroller. Mr. Weiner examined all of the records provided to him, which included bank statements, cancelled checks, working papers of Mr. Goldberg’s accountants, copies of tax returns, agreements, correspondence, and “reams of [other] papers.” Mr. Weiner testified that he was not provided all the information that he had requested and that, if he had been, his valuations would probably have been higher. ⁷⁸⁰ Mr. Weiner further explained that his methodologies for valuing the assets — i.e., adjusted historical cost, capitalization of earnings, etc. — were set forth in a manual “subjected to a peer review and accepted by the practice [sic] companies practice section and the SEC practice section of ... the American Institute of CPAs,” of which he was a member.

He specifically described the reason for using a particular methodology for a particular piece of property. Many of the valuations disputed by Mr. Goldberg were based on an adjusted historical cost methodology. Mr. Weiner explained that when companies were newly formed or being developed by Mr. Goldberg, there was no past income or earnings on which to base a value. Because these investments were recently made by Mr. Goldberg, in an arms length transaction, and because Mr. Goldberg was known as an astute, cautious business investor, Mr. Weiner determined to value these properties at their adjusted historical cost — i.e., how much Mr. Goldberg had recently invested in the corporation or partnership.

This methodology was a “most conservative” one, Mr. Weiner asserted, because it assumed that Mr. Goldberg would only recover his costs and make no profit at all on any of these investments. We have reviewed the record and find, as the circuit court did, that Mr. Weiner’s testimony was, indeed, “impressive”; his valuations appear to be solidly based on the facts available to him and a recognized methodology. It well may be that adjusted historical cost is not often an appropriate valuation method. This method, however, appears an entirely appropriate way to evaluate some of the assets at issue in this case, involving as they did, interests in newly formed companies without any earning or profit history, recently purchased by a sophisticated, cautious investor in arms length transactions.

As Mr. Goldberg acknowledges, a trial court is afforded “discretion ... in accepting or rejecting evidence to arrive at valuations for determining marital property.” In Quinn v. Quinn, 83 Md.App. 460, 470 , 575 A.2d 764 (1990) we noted: ⁷⁸¹ Where, as here, there are two experts, the trier of fact must evaluate the testimony of both of them and decide which opinion, if any, to accept. Judge Levitz did precisely this. There was no error in his valuations of the marital property. 4 Mr. Goldberg’s only remaining argument as to the monetary award is that the circuit court erred in adding all the marital assets together and then subtracting all the marital debts. This is not precisely what the circuit court did.

What the court did was value the assets of each party and determine which of those assets were marital property and then subtract the marital debt in each party’s name from the marital assets in that party’s name. In Mr. Goldberg’s case it determined that $2.9 million of his assets were marital property and that $996,000 in debts owed by him were marital debts. The court then subtracted the marital debts in Mr. Goldberg’s name from the marital property in his name to conclude that $1,899,000 was his marital “net worth.” The court found that the marital assets in Ms. Goldberg’s name worth $163,000 and because she had no significant debts her marital “net worth” was $163,000. The court then determined to “adjust the equities of the parties”: awarding Ms. Goldberg a $861,000 ⁷⁸² monetary award plus a $39,123 award to equalize their IRAs (Mr. Goldberg does not challenge the IRA award) so that Mr. Goldberg and Ms. Goldberg would each be left with “just 1 about $900,000.” There was certainly logic in what the circuit court did; however it did not follow the procedure mandated by the Court of Appeals.

See Zandford v. Wiens, 314 Md. 102 , 549 A.2d 13 (1988). What the circuit court should have done after it valued each marital asset was to subtract from the value of the marital asset any debt that is attributable to that asset. Id. at 108 , 549 A.2d 13 . Here, Mr. Goldberg’s accountant testified as to Mr. Goldberg’s debts, as follows: a liability to Maryland National Bank for $125,000 related to Thirty-one Twenty-one St. Paul Street, $550,000 related to Ritters Lane, and $300,000 related to Republic National Bank on Parnés Feinstein.

The circuit court valued Mr. Goldberg’s total interests in 3121 St. Paul Street as a marital asset with a value of $168,365; it should have subtracted the marital debt attributable to that asset, $125,000, to arrive at a net value of $43,365. Similarly, the lower court valued Mr. Goldberg’s total interest in 61 Ritters Lane, Inc. as marital property with a value of $94,000; it should have subtracted the marital debt attributable to that asset, $550,000, to arrive at a net value of zero. As to Parnés Feinstein, the circuit court valued Mr. Goldberg’s total interest in it as marital property with a value of $580,324; it should have subtracted the marital debt attributable to that asset, $300,000, to arrive at a net value of $280,324. If the circuit, court had used the method mandated in Zandford then the amount of total marital property would have increased approximately $450,000 because the debt attributable to 61 Ritter Lane, Inc. was approximately $450,000 greater than the value of the asset and “marital debt cannot be transferred from one item of marital property to another.

If the marital debt exceeds the value of the marital property acquired as a result of incurring the debt, the result is a zero value for the marital property acquired; marital property cannot have a negative ⁷⁸³ value.” Kline v. Kline, 85 Md.App. 28, 45 , 581 A.2d 1300 (1990), cert. denied, 322 Md. 240 , 587 A.2d 246 (1991). This error, however, as Mr. Goldberg’s counsel straightforwardly conceded at oral argument, has not in any way prejudiced Mr. Goldberg. Judge Levitz determined, based on the erroneous calculation that net marital assets were $2,062,000 ($1,899,000 in Mr. Goldberg’s name and $103,-000 in Ms. Goldberg’s name), that a proper, equitable, monetary award to Ms. Goldberg was $861,000. If Judge Levitz had correctly calculated the net marital assets, they would have totalled $450,000 more or $2,512,000.

That might have led the court to have increased the amount of the monetary award payable to Ms. Goldberg; it certainly would not have led to a decrease in the award. In view of the fact that Mr. Goldberg does not challenge the Fam.Law Art. § 8-205 determination that an $861,000 monetary award was proper 5 when marital assets were improperly calculated at approximately $2 million dollars, he can hardly maintain it was error because marital assets should properly have been calculated at approximately $2.5 million. Indeed, Mr. Goldberg was arguably benefitted by the judge’s error. (Of course, the court could have determined that an $861,000 monetary award was appro ⁷⁸⁴ priate even though marital assets were $450,000 greater).

In any event, as he has conceded, he was not aggrieved by it. It has long been established that only the party aggrieved by a judgment can appeal it. Pattison v. Corby, 226 Md. 97, 101 , 172 A.2d 490 (1961); Buchwald v. Buchwald, 175 Md. 103 , 114 — 15, 199 A. 795 (1938); Salmon v. Pierson, 8 Md. 297, 300 (1855). See Board of Trustees of Baltimore County Comm.

Colleges v. RTKL Assoc., Inc., 80 Md.App. 45, 51 , 559 A.2d 805 (1989). (ii) Mr. Goldberg’s next argument is that the monetary award, alimony ($4,000 a month for 120 months), and child support award ($1,000 per month per child) were erroneous. Mr. Goldberg does not claim that no award of alimony and child support would be appropriate or that Ms. Goldberg or his children are self-supporting or have the ability to be self-supporting without these awards, or that there was not a gross disparity between his earning ability and assets and theirs. Rather, his sole claim on this point is that the awards were erroneous because they were based on a finding that he was able to earn $400,000 a year.

Mr. Goldberg initially maintains that specific findings are necessary to support a conclusion that he voluntarily impoverished himself. That argument misses the point. Judge Levitz did not find that Mr. Goldberg had impoverished himself— voluntarily or involuntarily. What Judge Levitz found was that Mr. Goldberg had