Newborn v. Newborn

SALMON, Judge. If one spouse suffers personal injury prior to separation, do the proceeds from the settlement of that claim constitute marital property? That is one of the questions that must be answered in this case. Surprisingly, there is no reported opinion in Maryland that has decided that issue.

In this case, we shall hold that part of the proceeds from the personal injury settlement are marital and part are not. The issue had its provenance in a suit for absolute divorce filed by Donnie Newborn (“Ms. Newborn”) in the Circuit Court for Anne Arundel County against Herbert Newborn. On March 26, 1998, the lower court, after two days of trial, announced that it would dissolve the Newborns’ marriage by granting an absolute divorce. The court, however, held sub curia the issue of whether it would make a monetary award.

On September 8, 1998, a final judgment of absolute divorce was docketed by the clerk. Fifty-five days later, on October 30, 1998, the trial judge filed an opinion and order granting Ms. Newborn a monetary award in the amount of $50,000. On November 28, 1998, Mr. Newborn filed an appeal to this Court, presenting four questions for our resolution, viz: I. Did the trial court have jurisdiction to make a monetary award?

II

Did the trial court err when it failed to find that the parties had made their own division of the proceeds from the personal injury settlement? ⁶⁹ III. Did the trial court err by finding that a portion of the proceeds from a personal injury settlement constituted marital property?

IV

Did the trial court err by finding that the appellee met her burden in proving that a portion of the settlement was marital property? Ms. Newborn has filed a motion to dismiss this appeal. She contends that the appeal was filed more than thirty days after the judgment of absolute divorce was docketed—and was thus filed too late. That contention has no merit.

We will explain why in conjunction with our resolution of appellant’s first question. I. GENERAL BACKGROUND The Newborns married on September 6, 1953, when he was seventeen and she was thirteen. Four children were born of the marriage, all of whom are now emancipated adults. The parties permanently separated on August 12,1996.

For thirty-three years of the forty-five-year marriage, Mr. Newborn worked as a longshoreman affiliated with the Steamship Trade Association of Baltimore. 1 He retired as a longshoreman in November 1997. Mr. Newborn was involved in a serious automobile accident on March 28, 1978. A car in which he was a passenger was rear-ended by a school bus. He suffered a displaced fracture of the left tibia and fibula; a fractured right pelvis; a dislocated left hip; and an injury to the sciatic nerve that caused a diminished sensation on the right leg below the knee, along with the complete absence of feeling in his right foot.

In addition, he experienced urethal trauma. ⁷⁰ After the accident, Mr. Newborn was homebound for about two years. During part of that time, he used a wheelchair. While he was at home, Mis. Newborn was his sole caretaker.

As a result of the accident, the Newborns filed suit against the driver and owner of the school bus. Included in the suit was a joint claim by the Newborns for loss of consortium. Discovery was conducted, and in June 1981 the defendants’ insurer settled with the Newborns for $339,000. A check in that amount was made payable to “Herbert and Donnie Newborn individually, and as Husband and Wife [and their attorneys].” After payment of attorneys’ fees and costs, $220,000 remained.

The Newborns immediately purchased two automobiles, leaving a $200,000 balance. Mr. Newborn invested the $200,000 with the Legg Mason investment firm; $190,000 was put in an account in Mr. Newborn’s name alone, and $10,000 was invested in Ms. Newborn’s name. Between 1981 and August 1996 when the parties separated, the Legg Mason accounts experienced little growth because most of the dividends were spent for family purposes. Moreover, in 1988, Mr. Newborn purchased and registered in his own name a mobile home for $80,000 from Legg Mason funds.

As a result of this large purchase, there was only approximately $137,000 in Mr. Newborn’s Legg Mason account when the parties separated. In late 1996 or early 1997, Mr. Newborn was unable to work for several months due to depression. He withdrew money from his Legg Mason account and proceeded to waste $130,000 on gambling and whiskey. By the time he went back to work in the spring of 1997, he had spent all the money he had in his investment account.

TRIAL JUDGE’S DECISION CONCERNING THE MONETARY AWARD On March 26, 1998, the evidentiary phase of the case was completed. Ms. Newborn took the position that the $80,000 mobile home and the $130,000 her spouse had dissipated were marital property because their source was monies received ⁷¹ from the personal injury settlement. Not surprisingly, Mr. Newborn took the opposite view and contended that none of the monies or properties that had their origins in the settlement was marital. In the alternative, he contended that the parties had agreed between themselves that the settlement monies should be divided ninety-five percent/five percent—in his favor.

The trial judge wrote a preliminary opinion dated April 2, 1998, in which he recognized that he was presented with an issue of first impression. He acknowledged that Judge Chasanow’s concurring opinion in Blake v. Blake, 341 Md. 326 , 670 A.2d 472 (1996), was not binding because five members of the Court declined to join in the concurring opinion. Nevertheless, he quoted the part of that opinion that said that a settlement of a personal injury claim could result in the injured spouse receiving both non-marital and marital property. Blake, 341 Md. at 348-49 , 670 A.2d 472 .

He also quoted the following excerpt: Examples of non-marital contributions which flowed from Mr. Blake’s inchoate [sic] personal injury claim include the loss of his leg, the pain and suffering attendant thereto, and a loss of earnings for the period after dissolution of the marriage. See Queen v. Queen, 308 Md. 574, 587 , 521 A.2d 320, 327 (1987)---- On the other hand, loss of consortium, medical expenses directly or indirectly paid by the marital entity, and lost wages prior to the break-up of the marriage could constitute marital property. Id. at 346-47, 670 A.2d 472 . At that stage, the trial judge did not say whether he would follow the view expressed in Judge Chasanow’s concurring opinion or whether he would adopt the argument of Mr. Newborn.

He merely observed that the marital property award issue was so complex that both sides ought to be given the opportunity to show the components of the award. Perhaps the Court file in the tort case, or the attorneys’ correspondence, will do so. In any event, we will give the parties twenty ⁷² days to suggest any such proof. If necessary, we can have another hearing.

The trial judge went on to say that, in his opinion, “the property [at issue] is sufficiently traceable to remain non-marital if in fact it was in the first place.” As the trial judge suggested, counsel for Mr. Newborn, post-trial, sent the judge certain documents that he evidently believed related to the issue to be decided. Those documents were: (1) demand letter dated January 28, 1980, to St. Paul Insurance Company from the attorney who represented the Newborns in their tort action; (2) Herbert Newborn’s interrogatory answers filed in the personal injury suit; (3) a letter dated June 15,1981, from the defense attorney in the tort case to the Newborns’ attorney, suggesting various structured settlement options; and (4) a Social Security benefit information letter, dated August 8, 1980, which was sent to Mr. Newborn. The last two mentioned documents provided no useful information, but the first two did contain material of interest. The demand letter from, the Newborns’ tort counsel said that Mr. Newborn earned $8.80 per hour (presumably on the date he last worked).

He gave no current lost-wage information but said that Mr. Newborn, then age forty-three, had twenty-two years remaining in his expected work life. Counsel calculated Mr. Newborn’s future lost wages as $264 per week ($8.80 X 30) or $13,728 per year (52 X $264). Based on those figures, he projected future lost wages of $302,000 ($13,728 X 22). Like most demand letters, the letter from the Newborns’ attorney made no effort to downplay the seriousness of the injuries suffered by his clients.

Counsel said: This case involves grievous personal injuries sustained by Herbert Newborn when the vehicle in which he was a passenger, that was stopped behind a school bus, was hit from the rear by another school bus. Mr. Newborn’s injuries are set forth above and have resulted in a complete disruption of not only his own personal life but his marital life as well. Taking into consideration his medical expenses ⁷³ to date, medical expenses he will have in the future, past and future wage loss, painful and disabling nature of his injuries, the damage it has done to the marital relationship and the wife’s loss of income, we hereby submit our demand for settlement of this case in the amount of $1,500,000.00. The letter explained that, although Ms. Newborn was not employed when the accident occurred, she would have sought employment but for the March 28, 1978, accident and would have earned between $7,657 and $7,957 annually.

Counsel put no dollar figure on loss of consortium damages but said: DAMAGE TO MARITAL RELATIONSHIP Enclosed you will also find a copy of the report of Baltimore City Hospital dated January 25, 1980.[ 2 ] This report sets forth not only the effect that this horrendous accident has had on Mr. Newborn, but the effect that it has had on Mrs. Newborn and their life together. Their sex life has been greatly disrupted due to Mr. Newborn’s injuries, and most specifically due to the urethral trauma. To this date, they have not yet resumed normal marital relations which they had enjoyed for over 20 years of married life. The exact date that Mr. Newborn’s interrogatory answers were signed in the Newborns’ tort action does not appear in the record in this case, but it is evident that these answers were filed after September 1980—when Mr. Newborn went back to work as a longshoreman.

Presumably because he had already returned to work, no claim for future lost wages was mentioned in the interrogatory answers, nor did Mr. Newborn claim that he would incur future medical expenses. The interrogatory answer listed past medical expenses of $13,-726.55, and a claim for past lost wages was also mentioned. But the exact amount of that wage-loss claim cannot be ascertained because material relevant to it was attached to the ⁷⁴ original interrogatory answer but not attached to the answers provided to the trial judge in the ease at bar. The court in the subject suit resolved the marital property issues by an opinion and order dated October 30, 1998, which adopted the reasoning of Judge Chasanow set forth in Blake .

The trial judge said: [W]e find that the proper measure of marital interest in the settlement is the loss of consortium, medical expenses directly or indirectly paid by the [marital] entity, and lost wages prior to the breakup of the marriage. Our next question is to apportion the amount of the settlement to reflect what is marital and non-marital. The medicals schedule clearly indicates $13,659 in medicals. The demand letter seeks $302,016 in lost wages, which would be both marital and non-marital, but, as usual, this is not reflected dollar for dollar in the settlement.

The courts in Bandow v. Bandow, 794 P.2d 1346 (Alaska[ 1990]), and Landwehr v. Landwehr, [ 111 N.J. 491 ] 545 A.2d 738 (1988), indicate that the mathematical allocation may not be precise, but we can make a reasonable apportionment. In this case, considering the length of the marriage after the award was received, we believe an allocation of 55% of the amount received after deduction for attorney’s fees etc. is a fair allocation, albeit not an exact one. As indicated, much of the lost wages would have occurred during marriage. As set forth in the prior opinion, dissipated stocks and bonds and the motor home are directly traceable to the settlement.

This remains non-marital.[ 3 ] We also find they have been dissipated by gambling after the break up of the marriage. As best we can tell at this point, the marital assets are as follows: ⁷⁵ His Hers 701 Cecil Ave. $110,000 $110,000 Geo Automobile 5,000 Family Use Personal Property 7,350 7,350 Dissipated Stocks and Bonds 71,500 ($130,000 X 55%) Recreational Vehicle 44,000 ($80,000 X 55%) Cadillac Automobile 14,500 _ $247,350 $122,350[ 4 ] The next question is how much ought to be awarded her as a monetary award. We will place this at $50,000, which is to be paid from the sale of the proceeds of the home if available. ISSUE I A. Did the trial court have jurisdiction to make a marital property award?

Section 8-202 of the Family Law Article (“FA”) of the Maryland Code (1999 Repl.Vol.) prescribes procedurally how a court makes a marital property determination. As it pertains to our discussion, that section reads: (a) in a proceeding for an annulment or an absolute divorce, if there is a dispute as to whether certain property is marital property, the court shall determine which property is marital property: ⁷⁶ (1) when the court grants an annulment or an absolute divorce; (2) within 90 days after the court grants an annulment or divorce, if the court expressly reserves in the annulment or divorce decree the power to make the determination; or (3) after the 90-day period if: (i) the court expressly reserves in the annulment or divorce decree the power to make the determination; (ii) during the 90-day period, the court extends the time for making the determination; and (iii) the parties consent to the extension. FA § 8-203(a) (emphasis added). Mr. Newborn claims that the trial court lacked jurisdiction to grant a monetary award to Ms. Newborn because the ninety-day rule was violated.

According to appellant, the judgment of absolute divorce became final on April 3, 1998, and therefore the monetary award, which was made in October 1998, was filed too late because, without the consent of the parties, the judgment exceeded the ninety-day limit by approximately four months. At the conclusion of each party’s closing argument on March 26,1998, the trial judge said: I don’t think it was a perfect marriage on either side’s behalf, but the only evidence I have is that she left. That isn’t refuted and is corroborated. So we will find her as a desertion.

Where that leaves us beyond that is. sort of doubtful, but, in any event, we will grant the divorce on the counter-complaint based on all of that. The other matters we will take under advisement. (Emphasis added.) Shortly thereafter, the following colloquy occurred between the court and Ms. Newborn’s trial counsel: THE COURT: Certainly if you need a QUADRO, which I think you will, prepare it. ⁷⁷ [APPELLEE’S COUNSEL]: Okay. So I need it prospectively though from the date of the divorce, which I am assuming the court is announcing today.

THE COURT: Yes. One week later, on April 2, 1998, the trial judge sent an opinion letter to counsel. In this letter, he said, inter alia, “We have already granted the divorce____” Mr. Newborn uses the just-quoted “already granted a divorce” language to support his conclusion that the judgment of absolute divorce beeame final, at the latest, on April 3, 1998, when the clerk made a docket entry referring to the April 2 nd letter. A judgment is “any order of the court final in its nature and entered pursuant to these rules.” Md. Rule l-202(n).

How the judgment is recorded is governed by Maryland Rule 2-601, entitled Entry of Judgment, which states: (a) Prompt Entry—Separate Document. Each judgment shall be set forth on a separate document. Upon a general verdict of a jury or upon a decision by the court allowing recovery only of costs or a specified amount of money or denying all relief, the clerk shall forthwith prepare, sign, and enter the judgment, unless the court orders otherwise. Upon a special verdict of a jury or upon a decision by the court granting other relief, the court shall promptly review the form of the judgment presented and, if approved, sign it, and the clerk shall forthwith enter the judgment as approved and signed.

A judgment is effective only when so set forth and when entered as provided in section (b) of this Rule. Unless the court orders otherwise, entry of the judgment shall not be delayed pending determination of the amount of costs. (b) Method of Entry—Date of Judgment. The clerk shall enter a judgment by making a record of it in writing on the file jacket, or on a docket within the file, or in a docket book, according to the practice of each court, and shall record the actual date of the entry.

That date shall be the date of the judgment. ⁷⁸ (c) Recording and Indexing. Promptly after entry, the clerk shall (1) record and index the judgment, except a judgment denying all relief without costs, in the judgment records of the court and (2) note on the docket the date the clerk sent copies of the judgment in accordance with Rule 1-524. Md. Rule 2-601 (emphasis added). The Court of Appeals, in Davis v. Davis, 335 Md. 699, 710 , 646 A.2d 365 (1994), discussed the interaction of Rule l-202(n) and 2-601: Read in conjunction, Rule l-202[ (n) ] and Rule 2-601 make clear that two acts must occur for an action by a court to be deemed the granting of a judgment: the court must render a final order and the order must be entered on the docket by the clerk.

These two required acts—rendition of a judgment by the court and entry of the judgment by the clerk—are discrete occurrences. Rendition of judgment is the judicial act by which the court settles and declares the decision of the law on the matters at issue. In other words, rendition is the court’s pronouncement, by spoken, word in open court or by written order filed with the clerk, of its decision upon the matter submitted to it for adjudication. The second act required under Maryland law—the clerk’s entry of the judgment on the docket—is the purely ministerial act by means of which permanent evidence of the judicial act of rendering the judgment is made a record of the court.

See Doehring v. Wagner, 311 Md. 272 , 533 A.2d 1300 ; Corey v. Carback, 201 Md. 389 , 94 A.2d 629 (1953). A judgment is therefore not granted until it is both properly rendered and properly entered. The trial court did render 5 a judgment at the conclusion of the March 26, 1998, hearing when it said: “[W]e will grant the divorce on the counter-complaint____” ⁷⁹ This brings us to the question of whether the clerk made a proper docket entry regarding the judgment of absolute divorce prior to September 8, 1998. Mr. Newborn says there was such an entry.

He points to a docket entry dated April 3, 1998, which reads in its entirety as follows: “Opinion by Judge Cawood (copies to Attys. Smith and Doud).” Mr. Newborn reasons that because the opinion letter referenced in the docket states that “[w]e have already granted the divorce,” the April 3rd entry satisfies the requirements of Maryland Rule 2-601. It does not. The “date of entry” of a judgment is a term of art that is especially significant in calculating the time periods for reviewing and enforcing judgments.

It triggers the time for filing post judgment motions, for filing an appeal, and for enforcing judgments. It establishes the date of a lien on real property. For reasons such as these, the procedures for entering a judgment and for determining its date of entry are precise and certain. P. Niemeyer & L. Schuett, Maryland Rules Commentary, 445 (2d Ed.1992).

Under this rule, there is no doubt about the date when a judgment is entered. Litigants and third persons can look at the file or docket to determine when the judgment was entered, and they are entitled to rely on that date as a public record. Id. at 446 . Waller v. Maryland Nat’l Bank, 332 Md. 375, 378-79 , 631 A.2d 447 (1993).

A docket entry is supposed to make clear to all who read it the disposition of a claim or claims. Board of Liquor License Com’rs v. Fells Point Cafe, Inc., 344 Md. 120, 133 , 685 A.2d 772 (1996). The April 3 rd entry falls far short of that requirement. One cannot tell by reading the April 3rd entry how the trial judge disposed of any claim.

The only docket entry that does alert the public as to the grant of the divorce is the one entered on September 8,1998, which reads: “Judgment of Final Divorce signed by Judge Cawood. Certified copies to Attorney’s [sic] Smith and Doud.” ⁸⁰ We therefore conclude that the date of the judgment of divorce is September 8,1998. The October 30,1998, judgment dealing with the monetary award was made within ninety days of September 8th. 6 B. Motion to Dismiss Appeal Appellee argues that appellant did not timely file an appeal from the September 8,1998, judgment of absolute divorce and therefore is precluded from presenting any issue regarding the monetary award. Ms. Newborn posits that because appellant did not file his appeal within thirty days of September 8 he is barred from raising any issues on appeal.

She relies on Maryland Rule 8-202, which states that the notice of appeal shall be filed within 30 days after entry of the judgment or order from which the appeal is taken. Section 8-213 of the Family Law Article reads: Enforcement. (a) Enforcement under Maryland Rules.—Any order, award, or decree entered under this subtitle may be enforced under the Maryland Rules. (b) Appeal.—Any decree of annulment or of limited or absolute divorce in which, the court reserves any power under this subtitle is final and subject to appeal in all other respects.

(Emphasis added.) Section 8-213, as applied to, this case, means that, if either Mr. or Ms. Newborn took the position that the judgment of absolute divorce should not have been granted, that party had thirty days from September 8, 1998, to file an appeal from the grant of divorce. Mr. Newborn, of course, ⁸¹ does not challenge the judgment of absolute divorce—the judgment was granted in his favor. Section 8-213, by its plain language, does not mean that when a trial court grants a judgment of absolute divorce and reserves on the issue of what property is marital, a party must appeal the monetary award within thirty days of the entry of the judgment of divorce. If the law were as appellee contends, the results would be absurd.

A person in Mr. Newbom’s position would be required to appeal a monetary award prior to any announcement by the trial court as to what, if any, monetary award was being granted. Accordingly, we hold that Mr. Newborn had thirty days from the date the monetary award became final to file an appeal on that issue. He met that deadline. Therefore, the motion to dismiss the appeal shall be denied.

ISSUE II ALLEGED AGREEMENT Mr. Newborn asserts that the trial judge erred “when he failed to recognize that the parties made their own division of the proceeds of the personal injury settlement.” In support of this allegation, appellant accurately says: Appellant testified, and [ajppellee was forced to admit that, following receipt in 1981, the bulk of the settlement funds were deposited in investment accounts directed by [ajppellant, but separately titled in the individual names of the parties. Appellant’s account consisted of 95% of the settlement proceeds, while that of [ajppellee accounted for 5%. These ratios remained fixed and constant throughout the years to come and the parties received regular statements indicating the respective values of their shares. (References to record extract omitted.) Appellant goes on to argue that the way the funds were treated during the marriage constituted a “shared recognition” by the parties that the settlement proceeds belonged ninety-five percent to him and five percent to his former spouse. ⁸² One way to prevent assets acquired during the marriage from meeting the definition of “marital property” is to exclude them by valid agreement.

See FA § 8-201(e). Although appellant does not say so explicitly, he evidently contends that the parties mutually agreed that the settlement property was not to be treated as marital property. The trial judge did not err in the manner appellant alleges. First of all, Mr. Newborn’s testimony that the parties agreed as to how the accounts should be titled was rebutted by the testimony of Ms. Newborn.

According to her testimony, Mr. Newborn acted alone when he decided to title the Legg Mason accounts ninety-five percent to five percent in his favor. Second, even if the parties did agree as to how the accounts were to be titled, that agreement would not be determinative as to whether the property was marital. See FA § 8-201(e). 7 What would be determinative under FA section 201(e) would be an agreement by the couple to exclude as marital property certain (or all) of the proceeds from the personal injury settlement. Here, there was no evidence of such an agreement.

ISSUE III Appellant’s principal contention in this case is that, as a matter of law, no portion of the monies received from the settlement of a suit for personal injuries should be considered marital property. In support of this argument, he relies on Unkle v. Unkle, 305 Md. 587 , 505 A.2d 849 (1986). ⁸³ A. Maryland Case Law In Unkle , the husband, William, suffered personal injuries in an accident occurring after he separated from his wife but before the two divorced. Id. at 589 , 505 A.2d 849 . As a result of the accident, William broke both legs, was out of work for seven and a half months, and incurred $1,824.26 in medical expenses.

Id. While convalescing from his injuries, William lived with his parents and received no assistance from his estranged wife. Id. William hired a lawyer to handle his personal injury claim, but by the time his divorce case was heard, no personal injury suit had been filed.

The trial judge in the domestic relations case ruled that any proceeds William received in the tort suit would be considered marital property and that the proceeds should be divided on an “if, as, and when” basis of eighty percent to William and twenty percent to his former spouse. Id. In Unkle , Chief Judge Robert Murphy, speaking for the Court, construed the word “property” as used in the definition of “marital property” contained in FA section 8-201(e). After analyzing the Act’s legislative history, as well as precedent from other jurisdictions, he wrote: In view of the aforegoing, we do not think that any part of William’s unliquidated personal injury claims fits within the legislatively intended definition of marital property in § 8-201(e).

On the contrary, the claim is uniquely personal to the holder. And while it may have some attributes of personal property, the claim was not, within the ambit of the statutory language, “acquired” during the marriage by one or both spouses. It arose from purely fortuitous circumstances and not from any on-going marital initiative to acquire marital assets. The claim simply accrued to the injured spouse as a result of an accident and was his separate property.

Nothing in the statute suggests that the General Assembly intended that such a claim would constitute marital property subject to equitable distribution upon divorce by a monetary award. In so concluding, we recognize that the statute’s broad purpose requires that it be ⁸⁴ liberally construed to protect the interest of a spouse who makes nonmonetary contributions, during the 'marriage. Harper v. Harper, supra, 294 Md. at 64, 448 A.2d 916 . As we have said, however, the claim is simply not the type of resource contemplated by the statutory definition of marital property even though, in part at least, payment of the claim would produce monies which would replenish marital assets previously diminished through payment of medical expenses and the loss of wages.

Id. at 596, 505 A.2d 849 . Appellant’s reliance upon Unkle is understandable. But there are several factual differences in the case at bar that distinguish it from Unkle, viz: (1) Unkle involved an inchoate claim, whereas in the case sub judice, the claim was not inchoate since suit was settled prior to the dissolution of the marriage; (2) Mr. Unkle’s accident and his recuperation occurred after he and his spouse separated; (3) in their lawsuit, the Newborns made a joint claim for loss of consortium; and (4) Ms. Newborn helped her husband during his period of recuperation—in fact, she apparently missed approximately two years of employment while helping her husband during his recovery. Ten months after the Unkle decision was announced, the Court of Appeals decided Queen v. Queen, 308 Md. 574 , 521 A.2d 320 (1987).

The main issue in Queen was whether a lump sum workers’ compensation