Hoffman v. Hoffman

FISCHER, Judge. Roy C. Hoffman, appellant, and S. Diann Hoffman, appellee, were married on July 6, 1974. Mr. and Ms. Hoffman have two children; one child was bom of this marriage, and Mr. Hoffman adopted a child of Ms. Hoffman. 1 On June 20, 1986, Ms. Hoffman filed a complaint in the Circuit Court for Harford County seeking a “Limited Divorce and Financial Settlement.” A pendente lite hearing was held and the master filed a report on October 20, 1986. Pursuant to the ⁷⁰⁹ master’s report, the circuit court order of November 20, 1986 required Mr. Hoffman to: pay $60 per week per child, give use and possession of a car to the eldest child, pay the child’s car insurance, and to pay Ms. Hoffman $200 reimbursement for the hearing.

Due to various delays, the trial on the divorce did not occur until March, 1990. At trial, Ms. Hoffman orally amended her complaint to request an absolute divorce based on a two-year separation. By a Judgment for Absolute Divorce filed on July 29, 1991, the trial judge ordered: 1. The parties should be granted an absolute divorce. 2.

Ms. Hoffman should be granted custody of the minor child of the parties with the right of reasonable and liberal visitation to Mr. Hoffman. 3. The attorneys for the parties be appointed as co-trustees to sell both the marital home and the Alabama property. 4. Upon the sale of the marital home and after the payment of all costs of the sale, Mr. Hoffman shall receive a “credit” for $8,997.00 and the balance of the proceeds shall be divided equally between the parties. 5. Unless the parties agree otherwise, attorneys for the parties are appointed as co-trustees to sell the personal property of the parties and distribute the proceeds equally- 6.

Upon the sale of the Alabama property and after the payment of all costs of sale, Mr. Hoffman shall receive a credit of $35,377.00 and the balance of the proceeds shall be divided equally between the parties. 7. Ms. Hoffman shall receive a “marital award” of $8,901.00 as her share of Mr. Hoffman’s military retirement pay or in the alternative that she receive 14.4% of that pay if and when received. 8. Ms. Hoffman shall receive a “marital award” of $21,-502 as her share of Mr. Hoffman’s pension or in the alternative that she receive 30% of the pension if and when received. ⁷¹⁰ 9. Mr. Hoffman shall receive a “marital award” in the amount of $1,798.95 as his share of Ms. Hoffman’s pension. 10.

Mr. Hoffman shall pay to Ms. Hoffman the sum of $450 per month as child support. 11. Mr. Hoffman be ordered to pay to Ms. Hoffman $2,000 as contribution toward attorney’s fees. 12. Both parties are denied alimony. On appeal, Mr. Hoffman presents the following issues: 1.

Whether the trial court erred in its calculation of the marital and nonmarital portions of specific marital assets and, if there was error, would it require the case to be remanded. 2. Whether the trial court erred in awarding specific “credits” out of the proceeds of sale of the Maryland and Alabama homes in lieu of one monetary award. 3. Whether the trial court erred in awarding Ms. Hoffman a lump-sum amount of Mr. Hoffman’s United States Civil Service Retirement System Pension or, in the alternative, that Ms. Hoffman receive 30% of that pension if and when received. 4. Whether the trial court abused its discretion in only awarding Mr. Hoffman $1,798.95 of Ms. Hoffman’s pension. 5.

Whether the trial court abused its discretion in refusing to consider the $17,000.00 that Ms. Hoffman withdrew from the parties’ joint savings account, in its consideration of the amount of the monetary award. 6. Whether the trial court erred in its award of contribution to Mr. Hoffman for expenses he paid to maintain the Alabama property. 7. Whether the trial court abused its discretion in awarding retroactive child support to Ms. Hoffman. 8. Whether or not the trial court abused its discretion in failing to consider the vast sums of money spent by Mr. Hoffman toward’s Ms. Hoffman’s car payment, insurance, and the child's car, providing the child with a car, ⁷¹¹ and payments towards the marital home, pursuant to the November 20,1986 court order under the “other factors” provision of the Annotated Code of Maryland, Family Law Article, Section 8-205(b)(10).

At the time of the marriage, Mr. Hoffman was 39 years of age and a Captain in the National Guard, and Mrs. Hoffman was 22 years of age and employed as a respiratory therapy technician. After the birth of their child in November, 1974, Ms. Hoffman ceased working until she graduated from nursing school in 1981. She is currently employed as a registered nurse and earns approximately $30,000 annually. Mr. Hoffman retired from the National Guard as a Lieutenant Colonel with thirty-four years of service and a pay level of GS-12.

He is currently a civilian employee of the Federal Government and earns approximately $42,000 per year. During the marriage, Mr. and Ms. Hoffman acquired two pieces of real property, one in Aberdeen, Maryland and the other in Enterprise, Alabama. Mr. Hoffman provided, from an inheritance he received, a down payment of $8,997.35 for the Aberdeen property. Mr. Hoffman sold a pre-marital residence in Washington state and used the proceeds of $28,532 to purchase the Alabama property.

I. and II. Mr. Hoffman avers that the trial judge failed to determine properly which property is marital and which property is nonmarital. We agree. The relevant law is contained in Md.Fam.Law Code Ann., §§ 8-201 to 8-213, otherwise known as the “Marital Property Act” (Act).

The purpose of the Act is to divide equitably and fairly the property interests of spouses by giving consideration to the monetary and non-monetary contributions of each spouse. Harper v. Harper, 294 Md. 54 , 448 A.2d 916 (1982). In order to alleviate any inequities between the parties, the Act provides for a monetary award to be granted. The granting of this monetary award, however, seems to generate a great deal of confusion. ⁷¹² As we summarized in Paradiso v. Paradiso, 88 Md.App. 343, 349-350 , 594 A.2d 1200 (1991), and illustrated in Blake v. Blake, 81 Md.App. 712, 723-726 , 569 A.2d 724 (1990), the Act requires a three-step process to be completed before a “single” 2 monetary award may be granted.

The steps to be completed are: (1) If an equitable adjustment over and above the distribution of the spouse’s property in accordance with its title is an issue, the court shall determine which property is marital property, § 8-203; (2) the court shall then determine the value of all marital property, § 8-204; and (3) the court may make a monetary award as an adjustment of the equities and rights of the parties, § 8-205. If, under § 8-205, the court decides it is appropriate to make a monetary award, it must consider these ten factors: 1. the contributions, monetary and nonmonetary, of each party to the well-being of the family; 2. the value of all property interests of each party; 3. the economic circumstances of each party at the time the award is to be made; 4. the circumstances that contributed to the estrangement of the parties; 5. the duration of the marriage; 6. the age of each party; 7. the physical and mental condition of each party; 8. hów and when specific marital property or interest in the pension, retirement, profit sharing, or deferred compensation plan, was acquired, including the effort expended by each party in accumulating the marital property or the interest in the pension, retirement, profit sharing, or deferred compensation plan, or both; 9. any award of alimony and any award or other provision that the court has made with respect to family use personal property or the family home; and ⁷¹³ 10. any other factor that the court considers necessary or appropriate to consider in order to arrive at a fair and equitable monetary award or transfer of an interest in the pension, retirement, profit sharing, or deferred compensation plan, or both. Harper, 294 Md. at 79 , 448 A.2d 916 ; Paradiso, 88 Md.App. at 349-350 , 594 A.2d 1200 ; Wilen v. Wilen, 61 Md.App. 337, 355 , 486 A.2d 775 (1985); Ward v. Ward, 52 Md.App. 336, 339 , 449 A.2d 443 (1982); See also Quinn v. Quinn, 83 Md.App. 460, 464 , 575 A.2d 764 (1990); Melrod v. Melrod, 83 Md.App. 180, 185 , 574 A.2d 1 cert. denied, 321 Md. 67 , 580 A.2d 1077 (1990). Unfortunately, the trial judge failed to follow these steps and granted two or more monetary awards, which he erroneously termed “marital” awards.

As we have stated many times, “[S]ave for certain employee benefits, the court cannot give more than one monetary award.” Rock v. Rock, 86 Md.App. 598, 623 , 587 A.2d 1133 (1991); See also, Ward, 52 Md.App. at 343, 449 A.2d 443 . Apparently, the trial judge found that a monetary award was necessary, in view of the dispositions made and consideration of each of the factors listed in § 8-205. The award was, however, incorrectly calculated. Following the statutory guidelines, the trial court is to determine which property is marital.

Section 8-201 defines marital property to be property, however titled, acquired by one or both parties during the marriage but does not include property: (i) acquired before the marriage; (ii) acquired by inheritance or gift from a third party; (iii) excluded by valid agreement; or (iv) directly traceable to any of these sources. When property is acquired by an expenditure of both nonmarital and marital property, the trial court must use the source of funds analysis to allocate properly the property as partially marital and partially nonmarital. Grant v. Zich, 300 Md. 256, 268-269 , 477 A.2d 1163 (1984); Harper, 294 Md. at 82 , 448 A.2d 916 . “The property is ⁷¹⁴ nonmarital in the ratio that the nonmarital investment in the property bears to the total nonmarital and marital investment in the property, and its value is not subject to equitable distribution.” Grant, 300 Md. at 269 , 477 A.2d 1163 . Applying step one of the analysis, the court must characterize all property as either marital or nonmarital.

In this case, Mr. and Ms. Hoffman stipulated, among other things, that: 1) Mr. Hoffman’s pre-marital investment in the Aberdeen property amounted to $8,997.35 and 2) his premarital investment in the Alabama property was $28,532.81. The court below, however, awarded Mr. Hoffman “credits” of $8,997 and $35,377 to be obtained from the proceeds of the sale of these properties. As the appellate courts of Maryland have stated on several occasions, the spouse contributing nonmarital funds is entitled to a fair and equitable return on his or her investment. Harper, 294 Md. at 80 , 448 A.2d 916 ; Bangs v. Bangs, 59 Md.App. 350, 364 , 475 A.2d 1214 (1984); Dobbyn v. Dobbyn, 57 Md.App. 662, 674 , 471 A.2d 1068 (1984).

Step two requires the calculation of the nonmarital portion of the property. In Blake we referred to examples which properly calculated the nonmarital portion of property. We relied on an example given by the Court of Appeals which stated: A husband and wife acquired real property for a purchase price of $40,000. The wife contributed a down payment of $10,000 from property that she acquired prior to marriage.

The remaining $30,000 was financed by a mortgage signed by both the husband and the wife. One-quarter of the value of the property is the wife’s nonmarital property and three-quarters of the value of the property is marital property. If, at the time of the dissolution of the marriage, the property has appreciated in value to a fair market value of $60,000 and the mortgage indebtedness has been reduced to $20,000 by the payment of $10,000 of marital funds, the following division would be appropriate. One- ⁷¹⁵ quarter of the $60,000 fair market value of the property, or $15,000, would be the wife’s nonmarital property, not subject to equitable distribution.

From the remaining $45,000, $20,000, representing the unpaid mortgage balance, would be deducted leaving $25,000 as the net value of the marital property subject to equitable distribution. Grant, 300 Md. at 276, n. 9 , 477 A.2d 1163 . In the present case, the Hoffmans agreed that Mr. Hoffman had contributed money, which was not marital property, to purchase the couple’s Aberdeen home. The Hoffmans also stipulated that the property was purchased on January 18, 1977 for $74,500; the fair market value of the home is $110,000 and, the present mortgage value is $56,876.

Mr. Hoffman’s nonmarital investment, of $8,997.35, was approximately twelve percent of the purchase price. Therefore, Mr. Hoffman is entitled to twelve percent of the fair market value of the Aberdeen home or $13,200. Thus, $13,200 of the $110,000 market value of the Aberdeen home is nonmarital property and $39,924 is marital property available for equitable distribution. 3 The same calculation should also be performed for the Alabama property. The parties stipulated that: 1) Mr. Hoffman’s pre-marital investment was $28,532.81; 2) the purchase price was $76,700; 3) the present market value is $86,000, and 4) the present mortgage is $55,216.46.

Mr. Hoffman’s pre-marital investment was thirty-seven percent of the purchase price. Consequently, his nonmarital portion of the Alabama property is $31,820, and $54,180 represents the marital portion. 4 Obviously, the trial judge failed to or did not adequately calculate Mr. Hoffman’s nonmarital por ⁷¹⁶ tion of the properties. The source of funds method of categorization should be used for each piece of property owned by the couple so that a summation of the marital and nonmarital property may be made. See Freese v. Freese, 89 Md.App. 144, 150-151 , 597 A.2d 1007 (1991), for a detailed analysis of the trial court’s responsibilities.

Ms. Hoffman contends the trial court was not erroneous in its distribution of the property because she believes the court simply and equitably divided the property by applying § 8-202 of the Family Law Article. She argues that the trial court “did not desire to make a monetary award to [Mr. Hoffman] to adjust any inequities which would occur if the real properties were sold and the post sale proceeds were divided according to title.” Section 8-202 states: (a)(2) When the court grants an annulment or an absolute divorce, the court may resolve any dispute between the parties with respect to the ownership of real property. (3)(b) When the court determines the ownership of personal or real property, the court may: (1) grant a decree that states what the ownership interest of each party is and (2) as to any property owned by both of the parties, order a partition or a sale instead of partition and a division of the proceeds. We do not agree with Ms. Hoffman’s evaluation of the trial court’s division of the property.

Under § 8-202, the trial court is merely provided with a means of resolving ownership claims to property. In Ward v. Ward, 48 Md. App. 307 , 426 A.2d 443 (1981), we held that the precursor to § 8-202, Title 3, subtitle 6A — Property Disposition in Divorce and Annulment — of Md.Cts. & Jud.Proc.Code Ann. (1980 RepLVol.), which allowed the trial court to “resolve any dispute between spouses with respect to the ownership of real property,” only applies when the ownership right to property is in dispute. In this case, as in Ward, the trial court was not required to determine the legal ownership of the Alabama and Aberdeen real properties. Both proper ⁷¹⁷ ties were properly titled tenants by the entireties which conferred to Mr. and Ms. Hoffman an undivided one-half interest in each property.

Thus, § 8-202 does not apply in this situation. The personal property belonging to the Hoffmans was also improperly characterized. The trial court stated, “[T]he value for the marital property in the possession of [Ms. Hoffman] is $2,811.50 and that the value of the personal property in the possession of [Mr. Hoffman] is $22,-030.00.” Again, the Act requires that all of the personal property be apportioned as either marital or nonmarital property. We cannot decipher from the court’s opinion which portion of the personal property is marital and which portion is nonmarital.

III

Third, Mr. Hoffman avers that the trial court erroneously awarded Ms. Hoffman a portion of his civil service pension benefits. Mr. Hoffman believes that “any award of this [civil service pension] treats him differently than most of the general population.” Mr. Hoffman claims that, if he had elected to receive Social Security benefits instead of a civil service pension, then the trial court would not have been able to grant an award. Consequently, he believes the trial court should not have awarded any amount from