Long v. Long

THIEME, Judge. Lynn L. Long (“Wife”) brings this appeal on a ruling by the Circuit Court for Anne Arundel County regarding property and alimony issues for a divorce action filed over three years ago. Wife filed her initial complaint for absolute divorce on November 15, 1996. Melvin C. Long, Sr. (“Husband”), answered and filed a counter-complaint on December 6.

Discovery proceedings took up 1997. After a three-day trial ending on January 2, 1998, the parties submitted proposed findings of fact and trial memoranda. In a memorandum opinion dated August 31, 1998, the chancellor made his findings of fact, and the court granted Wife a divorce based on Husband’s adultery. The court awarded Wife a monetary award of slightly less than 20 percent of the total marital property, but denied Wife’s request for indefinite alimony.

Instead, it granted her rehabilitative alimony for four years. It also awarded Wife $6,000 in attorney’s fees. Wife filed a motion for clarification of judg ⁵⁵⁸ ment in September 1998, and, after a hearing on December 9, the chancellor issued a memorandum opinion on February 12, 1999. The court declined to alter the other awards, but increased Wife’s attorney fees to $20,000.

She now appeals and presents questions two through five that follow. Husband counter-appeals on question one. 1. Did the trial court err in its valuation of Husband’s business? 2 Did the trial court err when it found that the entire increase in the value of Husband’s business was marital property? 3. Did the trial court err when it granted Wife a monetary award of less than 20 percent of the marital property? 4.

Did the trial court err or abuse its discretion, given Wife’s age, employment history, and medical condition, when it denied her request for indefinite alimony and instead awarded her alimony of $3,000 per month? 5. Did the trial court err in failing to award Wife a share of Husband’s pension fund? We answer “no” to the first, second, and fifth questions and “yes” to the third and fourth, and we explain. Facts A Background Information Husband and Wife, both age 52, were married in Dallas, Texas, on February 14, 1988.

It was a second marriage for both parties. No children were born of the marriage, although both parties have children from their previous marriages. Wife resided in Dallas, where she lived for approximately 20 years, at the time she met Husband there. Before her marriage to Husband, she owned an automotive touch-up business for approximately 15 years, and she also helped her former husband establish a business.

She has three children, ⁵⁵⁹ now adults, from her first marriage. She was in the process of a divorce from her former spouse when she met Husband. Husband, who had founded a commercial photographic processing business, Photographic Processing, Inc. (“PPI”), in Maryland with his then-estranged wife in 1969, had moved to Texas to start a new business. There, he entered into a partnership with Sheila White, Wife’s close friend, who was also engaged in photo processing.

The business venture did not succeed, but after Ms. White’s introduction, Husband married Wife on February 14, 1988. Eventually, Husband and Wife, together with Wife’s two daughters, moved to Maryland. Husband had retained an interest in PPI, and on December 15, 1988, he bought out his ex-wife’s 500 shares of PPI stock for $250,000. At present, Husband’s business continues to make payments on that purchase and will do so until 2004.

Two years later, Husband filed documentation with the State to change the name of PPI to “MCL Holding, Inc.” At the time, he also applied to form a new corporation called Photographic Processing, Inc. (“PPI/MCL”) No assets were acquired by PPI/MCL at that time. During testimony, Husband stated that the reshuffling of business names and assets was for estate planning purposes. The new corporate entity continued to grow during the marriage. Before and during the marriage, indeed from his childhood, Husband has avidly collected model trains, a past-time in which Wife also participated during the marriage, by frequently attending model train shows and conventions with her husband and manning the family display table.

Husband estimated the value of his extensive collection to be $200,000, based on a recognized evaluation tool, but Wife’s estimator calculated that the collection was worth $406,428. The train collection is not insured, and there exists no inventory or valuation pre-dating those prepared for trial. At trial, Husband sought to convince the chancellor that he already owned 95 percent of the present collection at the time of his marriage to Wife. He could produce no records, ⁵⁶⁰ receipts, log books, inventories, or even specific recollections of his purchases to substantiate his claim.

He insisted, however, that the numerous boxes of trains in his collection followed him from Maryland to Dallas and back again. Wife, her daughters, and a family friend testified that the collection at the time of the marriage consisted of eight to ten boxes of trains occupying one corner of one small bedroom. Husband recounts that he moved to Dallas using his Lincoln automobile to tow a U-Haul trailer. Husband and his children claimed that he moved 65 to 75 boxes of trains in that trailer and that the trains occupied a full bedroom in the family home.

Another witness and fellow collector, Ron Borsella, testified that Husband’s train collection in 1985 was quite large and opined that a train collection close to the 1985 size or present size would not fit into the largest U-Haul trailer available. Whether Husband sold a significant number of trains during his first marriage, temporarily diminishing the size of his collection, is unclear; however, he did testify that two of his automobiles were purchased using proceeds from pre-marital train sales. Wife’s mental health was also an issue at trial. Wife testified that she suffers from agoraphobia, a mental disorder characterized by abnormal fear of open spaces, public places, and the out-of-doors.

She claims to have suffered from this malady for 20 years, and that the disease has affected her life, marriage, and ability to engage in normal employment, social affairs, and such everyday activities as driving a car for any significant distance or time. Agoraphobia is associated with severe or recurrent major depression, fear of contact with unfamiliar people or places, and panic disorder. Wife testified that she has been in treatment with a psychiatrist and a psychologist for years and that she must take larger-than-prescribed doses of medication to engage in any outdoor activity or even to drive. Wife’s expert witness and treating psychologist, Dr. Scott Smith, testified that Wife’s phobia predated the marriage.

Her condition has varied over the years and, at present, she is healthier than she has been at some points in the past. Dr. Smith testified, however, that ⁵⁶¹ her illness was likely to continue indefinitely and will probably prevent her future employment. He has recommended that she apply for Supplemental Security Income. Husband acknowledged Wife’s mental health problems during his deposition on April 4, 1997, but at trial he sought to minimize his knowledge of her condition, contending that she does not suffer “one bit” from any debilitating condition.

He and his witnesses pointed out that Wife has held various jobs and traveled by air to visit family members, has attended conventions, family outings, and company functions with Husband, and has taken vacations. He also presented evidence of Wife’s trips to shopping malls, exercise studios, and church, including photographs of her driving a car. According to her psychologist, however, part of Wife’s treatment plan includes efforts to leave the house and engage in various activities. Wife’s employment history, in contrast, has been spotty.

Although she worked in a photographic laboratory immediately after her marriage, she had not been employed for several years before this litigation. At the request of Husband, Wife gave up her automotive touch-up business in Texas. After moving to Maryland, she initially tried to open another touch-up company but, in her words, the laws are “different here” than in Texas and she failed to turn a profit. She obtained a job at Gantos in Marley Station Mall, but soon quit.

Later, a friend offered, and she accepted, a job managing a Frederick’s of Hollywood store at the same mall. She soon quit that job as well. She also worked for a mortgage banking company in Rockville, and she has maintained a cosmetology license for 29 years. Wife testified, however, that Husband requested that she not work, because she “was costing him money.” 1 Wife has also never worked for PPI/MCL, having been barred from association with the company by an agreement between Husband and his ex-wife, Sharon Long.

At the time of the trial, Husband was paying $3,000 per month to wife under a pendente lite order, in addition to ⁵⁶² paying the monthly mortgage on the marital home in Pasadena. The parties owned six vintage vehicles and home furnishings valued at $60,000. Husband has a $500,000 life insurance policy with Great Western, the current value of which is $8,578.48. In addition, he owns a pension, described as the “PPI Money Purchase Plan,” to which he has contributed since 1974.

It is undisputed that assets and interest were added to the pension plan during the marriage. Wife owns some jewelry, including a $6,000 diamond ring and a $10,000 replacement stone for her wedding ring, along with china and crystal. At separation, Wife took sums in the joint checking accounts for her own use. She also made use of a bank credit line for $10,000.

Wife considered these sums, totaling $54,000, as necessary for living expenses and divorce litigation costs. The trial court ultimately dissolved the marriage because of Husband’s adultery. Husband asked Wife for a divorce on October 19, 1996. The parties separated on October 22, when Wife, who had suspected that Husband had multiple adulterous affairs, insisted that he leave the marital home.

When confronted with surveillance reports by private investigators, Husband did not deny at trial that he had an extramarital affair. He admitted at trial that his testimony about adultery at his April 4, 1997, deposition had been false; thus, he admitted his perjury. Also, Husband’s business is making payments on a $60,000 settlement of a sexual harassment suit which was brought against the business and against Husband by several female employees as a result of his unwanted sexual advances. That suit was filed in February 1996 and settled in February 1997.

B The Trial Court’s Opinion In its memorandum opinion, the court valued the following property for the purpose of isolating the marital assets: ⁵⁶³ i) PPI/MCL — $340,005.00, representing the increase in value of the business during the marriage as established by Wife’s expert, Brace Hushes; ii) PPI Money Purchase Plan — $102,649.12; iii) Marital residence — $243,500.00; and iv) Train collection — $406,428.00. The court found the train collection to be marital property, as well as the entire increase in the value of the business since the marriage, and the pension plan. The total value of all marital property, including the items stated and vehicles, jewelry, furnishings, and bank accounts, was determined to be $1,135,103.33. Of this, the court found that $275,471.21 was jointly titled, $849,282.12 was titled in Husband’s name, and $10,350.00 was titled in Wife’s name.

With respect to Husband’s business, the court found that he had transferred the interest in PPI to another corporation he established, PPI/MCL, and that this transfer occurred during the marriage. It adjudged that “no new assets were added when PPI was re-incorporated and that the re-incorporation was for estate planning only.” The court also determined, however, that the increase in value of the corporation as it existed at the time of the marriage to the time of the divorce would be considered marital property, because, in part, of Wife’s care for the marital home while Husband worked long hours in the business. To arrive at the amount of the increase, experts calculated the value of PPI/MCL both before and after the marriage. PPI/MCL was valued at $670,750 by Wife’s expert, based on a review of normalized earnings over a five-year period.

Under the normalized earning formula, Wife’s expert testified that the value of the business in 1988 was $330,745. In the alternative, Wife’s expert found that the business was worth $742,365 at the time of trial, based on three-year normalized earnings. Husband’s expert testified that the pre- and post-marriage values of the business were $310,778 and $430,921, respectively. The chancellor held that Wife’s five-year valuation was the most accurate estimate and determined that the ⁵⁶⁴ business had increased in value by $340,005 during the marriage.

Thus, the portion of the business attributable to marital property was $340,005. As for the train collection, the court took note of Husband’s failure to substantiate or document the details of his acquisition of this extensive collection and concluded (citations omitted): Inability to trace property acquired during a marriage directly to a non-marital source means that all property acquired was marital. If a spouse chooses to commingle marital and non-marital funds to the point that direct tracing is impossible, his or her property may lose its non-marital status. This Court finds that this analysis applies in the present case. [Husband] commingled the train collection to the point that direct tracing is impossible.

He kept no record as to which trains he acquired prior to the marriage and which were obtained during the marriage. Therefore, this Court finds that the entire collection is marital property. As for the other assets, the court found that the PPI Money Purchase Plan was worth $273,731. The marital share was found to be %ths, or $102,649.12.

It accepted Wife’s valuation of $243,500 for the marital home and determined that sum to be part of the marital assets. The court noted that Wife sought a monetary award of $413,423.24. It first reviewed the monetary factors cited in Maryland Code (1984, 1999 Repl.Vol.), § 8-205(b) of the Family Law Article. It then noted Wife’s circumstances, specifically, that she had not worked for any length of time outside the home; that she had in her own name only $10,350 of marital property totaling more than $1 million; that she was “currently ... unable to work outside the home to earn any income”; that she had a high school education; that the nine-year marriage failed because of Husband’s adultery; that she presently suffered emotional distress over the breakup of her marriage; and that she suffers from agoraphobia.

The court also referenced other statutory factors, such as the age of the ⁵⁶⁵ parties, before concluding without any explanation that Wife was entitled to $225,000, about half the monetary award that she sought and less than one-fifth of the marital property. Turning to alimony, the court likewise reviewed the circumstances and factors relating to an award of alimony. The court noted that Husband’s salary from the business is about $150,000 per annum, whereas Wife is unemployed and has no income. Further, Wife lives in a home valued at over $230,-000, and her monthly expenses are $1,800.

She has no pension. Husband’s monthly expenses are $7,290, including mortgage payments of $1,730 per month, from a net income of $9,020 per month. As to other factors, including Wife’s ability to be self-supporting, the court said, “Her ability to acquire and maintain a job outside the home is questionable because of her alleged bouts with agoraphobia. She is in therapy, however and has been successful at jobs before.” Although the court pointed out that indefinite alimony was sometimes indicated when the parties’ standards of living after a period of rehabilitation will remain unconscionably disparate, it did not award Wife indefinite alimony.

Instead, citing her history of employment and demonstrated job skills, it found that she could likely earn over $2,000 per month and enjoy a standard of living comparable to the one she enjoyed during marriage. Without further reasoning, the court concluded that the parties’ respective standards of living would not be unconscionably disparate, and it awarded rehabilitative alimony in the amount of $3,000 per month for four years. Finally, the trial court awarded $6,000 in legal fees to Wife, noting that of the $54,000 she had withdrawn from marital bank accounts, over $35,000 had been used for legal expenses. C Revisory Motion and Opinion Following the court’s opinion of August 31, 1998, with an accompanying Judgment of Divorce, Wife sought clarification of the court’s opinion.

Husband filed a response. The court ⁵⁶⁶ reconsidered the matter and denied Wife’s motion, except that it increased her award of attorney’s fees from $6,000 to $20,000. The court stated that the monetary award was “fair and equitable,” considering such factors as the “economic circumstances of the parties, the relatively short duration of the marriage and how and when specific marital property was acquired.” As for the train collection, the court stated that, although it was marital property, “there is no doubt that [Husband] is the owner of the collection.” Under section 8-202(a)(3) of the Family Law Article, the court further said that it was unable to transfer “ownership of personal property, including marital property, from one party to another” and “absent the consent of the parties ... may not order the sale of property owned solely by one spouse with the proceeds going to the other.” It thus would not split or require sale of the trains to augment Wife’s monetary award. Likewise, the court declined to award any portion of the pension plan to Wife, even though the plan was found to be part of the marital property.

Wife had asked the court about the manner and method of distribution for the plan. The court responded, “The value of the marital portion of the PPI Money Purchase Plan (the pension) was included in the total value of the marital- property titled in [Husband’s] name. Furthermore, the value of the pension was considered in the calculation of [Wife’s] monetary award. Consequently, this Court will not mandate that [Wife] be awarded a portion of the pension plan upon [Husband’s] retirement.” Both parties noted timely appeals from those determinations.

Discussion In matters related to the distribution of marital property and the payment of alimony, we generally give the chancellor’s findings broad discretion. He or she has the opportunity to assess the demeanor of witnesses before the bench and weigh the various financial statements and other documents each party brings to court. On review, we “assume the truth of all evidence tending to support the findings ⁵⁶⁷ of the trial court, and ... simply inquire ‘whether there is any evidence legally sufficient to support those findings.’ ” Skrabak v. Skrabak, 108 Md.App. 633, 650 , 673 A.2d 732 (quoting Weisman v. Connors, 76 Md.App. 488, 500 , 547 A.2d 636 (1988)), cert. denied, 342 Md. 584 , 678 A.2d 1048 (1996). Yet when the chancellor’s stated findings of fact, i.e., the evidence the court accepts as true for controverted issues, conflicts with the ultimate award of property and maintenance, we must take a closer look.

We do so here, and we now question whether the chancellor’s findings of fact support his conclusions. We will vacate the specific provisions of the Judgments of August 31, 1998, and February 12, 1999, and we remand this case to the trial court for additional proceedings consistent with this opinion. I Monetary Award We first treat all questions pertaining to marital property, since all of them relate to the same issue, the overall distribution of that property by means of a monetary award. We evaluate each of the chancellor’s findings for clear error only.

If there is any basis in the record for reaching a given finding, we allow that finding to stand. A Valuation of Husband’s Business As for the valuation of Husband’s business, we find that Husband does not show that the chancellor clearly erred in accepting Wife’s calculations, nor did the chancellor err when, according to Wife, he wrongly attributed to marital property only the growth in the business since the marriage. The chancellor found the marital property share of PPI/MCL to be $340,000, which is the difference between the current value of the companies, $670,750, and the value of the predecessor company in 1987, $330,745. Wife’s expert CPA, using capitali ⁵⁶⁸ zation of earnings methodology for a five-year period, presented the valuation accepted by the court at the trial.

Husband argues that the court’s basis for determining the marital portion of the asset was wrong. First, using the “excess earnings” methodology, his CPA testified, and Husband maintains, that the company’s growth in value was only $119,513. Husband also contends that the remaining debt to his ex-wife diminishes the company’s value, a factor not specifically considered by Wife’s expert. Second, Husband argues that the chancellor wrongly attributed any of the business’s value to marital assets, because i) Husband established the current company after the marriage for estate-planning purposes only, ie., its assets were purchased exclusively with stock from a predecessor business established 19 years before the marriage, and ii) no marital assets were used when Husband bought out his ex-wife’s shares in predecessor business, ie., the corporation, rather than Husband himself, is paying off the debt created by the stock redemption.

He claims in his brief that “the redemption debt [is] outstanding and not due to be paid in full until the year 2004,” implying that the buy-out of his ex-wife’s stock will actually post-date the divorce. Husband further contends that, because Wife did not participate directly in the affairs of the corporation and its repayment of the redemption debt, none of its significant increase in value should be attributed to marital property; that Wife “received the benefits of a good life” during her marriage should be quite enough. 2 ⁵⁶⁹ Husband’s remarks about Wife’s role, however, are somewhat disingenuous. First, if Wife had wanted a hands-on role at PPI/MCL, Husband’s own agreement with his ex-wife would have barred her involvement. Second, at some point Husband asked Wife not to work at all, foreclosing her opportunity to add assets to the household fund which might have been used, indirectly, to help capitalize the company.

Third, Wife actively managed the family home and even helped raise Husband’s children from a previous marriage while they resided there, making it easier for Husband to devote long hours to growing the business. Wife was hardly the passive beneficiary of Husband’s largesse; instead, she was an active partner in the marriage whose presence enhanced her husband’s success in increasing the value of the business. In turn, Wife argues that the entire value of PPI/MCL should be counted as marital property. She notes with suspicion that Husband provided no evidence to support his position that the renaming and re-incorporation of his company in 1990 was for the purpose of estate planning.

Like Husband, Wife discounts a significant fact — that no marital assets were added at the re-incorporation of PPI/MCL. Husband’s interest in the company prior to his ex-wife’s redemption neatly traces back to the period before the marriage. See Md.Code (1984, 1999 Repl.Vol.), § 8-201(e)(3)(i) & (iv) of the Family Law Article; Harper v. Harper, 294 Md. 54, 80 , 448 A.2d 916 (1982) (articulating the “source of funds” theory for property partly acquired using both marital and non-marital funds, that “a spouse contributing nonmarital property is entitled to an interest in the property in the ratio of the nonmarital investment to the total ... investment”). Further, there is no reason for the court to have believed that the reincorporation ⁵⁷⁰ in 1990 would have been for any purpose other than estate planning.

The reincorporation thus holds no legal significance in the calculation of marital property. Instead, we find that the chancellor did not err in his valuation of the company and allocation to marital property. First, the strength of the methodology relative to the accuracy of the analysis performed by the expert is immaterial under the clearly erroneous standard of review. Strauss v. Strauss, 101 Md.App. 490, 509 , 647 A.2d 818 (1994), cert. denied, 337 Md. 90 , 651 A.2d 855 (1995).

Under that standard, the chancellor has discretion to accept or reject evidence to arrive at valuations for determining marital property. See Goldberg v. Goldberg, 96 Md.App. 771, 780 , 626 A.2d 1062 , cert. denied, 332 Md. 381 , 631 A.2d 451 (1993). “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.” Quinn v. Quinn, 83 Md.App. 460, 470 , 575 A.2d 764 (1990). As for Husband’s contention about his company’s indebtedness to his ex-wife, we note that business valuation is far more complex than the chancellor’s unassisted efforts to place a price tag on other marital assets. That he would leave this task to experts is understandable.

Cf. Gravenstine v. Gravenstine, 58 Md.App. 158, 180 , 472 A.2d 1001 (1984) (holding that chancellor erred when he failed to subtract the debt owing on husband’s truck from the purchase price). It was thus no abuse of discretion for the court to accept the valuation of one party’s expert over the expert of the other, as both were grounded in fact. See Fox v. Fox, 85 Md.App. 448, 459 , 584 A.2d 128 (1991) (holding that chancellor did not abuse discretion by accepting valuation of wife’s expert, when the witness explained in detail how he arrived at his opinion and the court did not find his opinion devoid of reason or logic).

Second, our cases firmly support the chancellor’s allocation of the company’s growth during the marriage to marital property under the facts at hand. Although Husband owned in his individual capacity half of the shares of what is now PPI/MCL, the company’s ongoing buy-back of the ex-wife’s ⁵⁷¹ shares has occurred after the marriage with funds generated during the marriage. Under section 8-201(e)(l), marital property “means the property, however titled, acquired by 1 or both parties during the marriage.” Under Harper v. Harper, 294 Md. at 80 , 448 A.2d 916 , “acquired” means “the ongoing process of making payment for property.” Harper goes on to say that “characterization of property as nonmarital or marital depends upon the source of each contribution as payments are made.” Id. Here, the funds used for the acquisition of the ex-wife’s stock came from PPI/MCL’s earnings during the marriage.

Because Husband’s control over the company is absolute, the same funds could have just as easily flowed into Long family bank accounts in the form of increased salary and bonuses. Wife contributed to Husband’s success to the degree that she was able, so the funds must be considered marital property. See Brodak v. Brodak, 294 Md. 10, 25-27 , 447 A.2d 847 (1982) (trailers added during the marriage to park that husband received from parents were marital property even though husband was sole proprietor, because wife had helped with business); Fox, 85 Md.App. at 456 , 584 A.2d 128 (shares of capital stock in closely held firm acquired during marriage, even if company had been formed prior to the marriage for the eventual acquisition of shares); Gravenstine, 58 Md.App. at 174 , 472 A.2d 1001 (entire value of stock purchased from dividends received from nonmarital stock was marital property, when both parties had decided to reinvest funds rather than use them for other purposes). In his brief, Husband expounds at length on Wilen v. Wilen, 61 Md.App. 337, 348 , 486 A.2d 775 (1985), claiming that the instant facts are a replay of that case.

We find that the evidence adduced here distinguishes this case from Wilen and that the facts more closely resemble Gravenstine and Brodak . As in those cases, the parties here seem to have made a conscious decision regarding the parameters of Wife’s role in the family business. Although Wife had work experience in a photography lab, Husband contracted with his ex-wife that Wife would play no role in the business. Further, the evi ⁵⁷² dence shows that Husband was sole stockholder, which gave him full authority to set his own compensation and the degree to which marital earnings would be reinvested in the business.

Wilen , which describes the husband as the “salaried president” of his company, implies that the husband had no such authority. 61 Md.App. at 349 , 486 A.2d 775 . It was reasonable for the chancellor to infer that the Longs’ decision to have Wife play a supporting role in the home was in fact like the Gravenstines’ “conscious decision to reinvest the [investment] dividends instead of using the money for household needs.” Id. at 348 , 486 A.2d 775 . Furthermore, any additional increase in value of PPI/ MCL during the marriage over and above the stock purchase must be considered marital property. In McNaughton v. McNaughton, 74 Md.App. 490 , 538 A.2d 1193 (1988), we held that in determining the value of marital stock for a closely held corporation like PPI/MCL, trial courts must “take into consideration the fair market value of the corporate assets from the time the stock became marital property until the time of the issuance of the decree of divorce.” Id. at 497 , 538 A.2d 1193 .

Further, that increase in the value of non-marital business assets during the marriage may be considered marital property, when the spouse seeking that consideration shows that his or her non-monetary contribution allowed the other spouse to work harder toward the growth of the business. See Brodak, 294 Md. at 25-27 , 447 A.2d 847 . Cf. Wilen v. Wilen, 61 Md.App. at 348-49 , 486 A.2d 775 (amount of increase in husband’s non-marital investment holdings because of stock split properly was excluded from marital assets); Mount v. Mount, 59 Md.App. 538, 545-50 , 476 A.2d 1175 (1984) (stock issued as a dividend that was directly traceable to shares of stock acquired by husband before marriage was properly excluded from marital assets).

Wife shows and Husband admits that she managed the home and family while Husband worked long hours and that Husband was satisfied