Wasyluszko v. Wasyluszko

Andrew Wasyluszko v. Lisa Wasyluszko, No. 2220, September Term 2019. Opinion by Beachley, J. DIVORCE – MONETARY AWARD – NON-MARITAL PROPERTY – TRACEABLE FUNDS DIVORCE – MONETARY AWARD – MANDATORY FACTORS – COURT EXPLANATION Facts: The parties were married on August 22, 1998, and at the time of divorce Mr. Wasyluszko owned several retirement and non-retirement accounts. Relevant to this appeal are the following four accounts: Fidelity 403(b), Janus Henderson, DWS Equity Fund, and Fidelity IRA # 3342. For purposes of its monetary award analysis, the trial court determined that the four accounts listed above constituted marital property, and would therefore be considered for equitable distribution as part of the court’s monetary award.

Mr. Wasyluszko appealed, arguing that the accounts were non-marital because the evidence showed that they were directly traceable to his pre-marital contributions. Mr. Wasyluszko also argued that the court erred in issuing its monetary award by failing to explain how its consideration of factors in Md. Code (1984, 2019 Repl. Vol.), § 8-205(b) of the Family Law Article (“FL”) led to its ultimate decision to award $840,000. Held: Monetary award and attorney’s fees vacated.

The trial court erred in treating three out of the four accounts as exclusively marital property. Although there was insufficient evidence to show that the Fidelity IRA # 3342 account was non-marital property, there was sufficient evidence concerning the remaining three accounts to show that at least some of the funds were non-marital. Regarding the Fidelity 403(b) account, the evidence showed that, although the value of the shares fluctuated during the course of the marriage, the number of shares did not decrease. Accordingly, the shares that were accounted for prior to the marriage still existed at the time of the divorce and should have been treated as non-marital property.

Similarly, the shares in the Janus Henderson account never decreased during the marriage, although the value of those shares fluctuated. As with the Fidelity 403(b) account, the shares that were shown to exist prior to the marriage should have been treated as non- marital property. Lastly on this point, regarding the DWS Equity fund shares, the evidence showed what the balance of the account was prior to the marriage, and the parties stipulated that Mr. Wasyluszko made five $200.00 contributions during the marriage. Because the evidence showed that Mr. Wasyluszko never made any withdrawals from the account during the marriage, his pre-marital interest in the account (82.9%) survived and should have been treated as non-marital property.

Additionally, the trial court was not required to explain how its consideration of the FL § 8-205(b) factors resulted in its monetary award. To be sure, consideration of these factors is mandatory, but we are aware of no cases holding that a court must explain its calculation of the monetary award based on its treatment of the FL § 8-205(b) factors. A court is not required to articulate every step in its thought process, and judges are presumed to know the law and apply it correctly. Rather, a court commits reversible error when its distribution of marital property yields a substantial disparity, and its consideration of the FL § 8-205(b) factors fails to justify that disparity.

Finally, because a court’s monetary award and award of attorney’s fees are so closely interrelated, we must vacate the court’s award of attorney’s fees in addition to its monetary award. Turner v. Turner, 147 Md. App. 350, 400 (2002). Circuit Court for Baltimore County Case No. 03-C-13-014795 REPORTED IN THE COURT OF SPECIAL APPEALS OF MARYLAND No. 2220 September Term, 2019 ______________________________________ ANDREW WASYLUSZKO v. LISA WASYLUSZKO ______________________________________ Fader, C.J., Reed, Beachley, JJ. ______________________________________ Opinion by Beachley, J. ______________________________________ Filed: April 28, 2021 Pursuant to Maryland Uniform Electronic Legal Materials Act (§§ 10-1601 et seq. of the State Government Article) this document is authentic. 2021-04-28 10:46-04:00 Suzanne C. Johnson, Clerk The principal issue in this case is whether the Circuit Court for Baltimore County erred in characterizing four retirement and non-retirement accounts owned by appellant Andrew Wasyluszko as marital property. As to three of the four accounts in dispute, we conclude that a portion of those accounts constituted non-marital property because the uncontroverted evidence demonstrated that, at the time of the divorce, Mr. Wasyluszko still owned shares that he acquired prior to marrying appellee Lisa Wasyluszko.

We shall therefore vacate the circuit court’s judgment and remand for further proceedings. BACKGROUND The parties married on August 22, 1998, and have two minor children. To their credit, they were able to reach a comprehensive agreement concerning the legal and physical custody of their children. In light of the parties’ custody agreement, essentially two issues remained for the circuit court to decide: Ms. Wasyluszko’s requests for a monetary award and a contribution toward her attorney’s fees.

As we will discuss in more detail infra, at the time of the divorce, Mr. Wasyluszko owned, in his sole name, various retirement and non-retirement accounts with an aggregate value of slightly less than two million dollars. Mr. Wasyluszko claimed that all or part of the funds in various accounts constituted non-marital property. The court ultimately agreed that two accounts—Fidelity Funds #3334 and Touchstone Investments #5992, collectively worth approximately $116,000—were exclusively Mr. Wasyluszko’s non-marital property. That determination is not at issue in this appeal.

However, relevant to this appeal, the court determined that all funds in four other accounts—Fidelity 403(b), Janus Henderson, DWS Equity Fund, and Fidelity IRA #3342—constituted marital property and, accordingly, could be considered for equitable distribution via a monetary award. The court prepared a “Marital Property Schedule,” which it incorporated by reference in its bench opinion, that identified and valued each item that it determined to be marital property: Marital Property Title Value Husband Wife 1. CGM Funds H $9,144 $9,144 Roth IRA #5254 2. CGM Roth IRA H $9,137 $9,137 #0803 3.

CGM Funds IRA W $1,995 $1,995 #833 4. CGM Funds IRA W $1,188 $1,188 #5428 5. Jackson IRA W $40,865 $40,865 #9255 6. Fidelity Roth IRA H $50,037 $50,037 #2233 7.

Edelman Financial H $16,341 $16,341 IRA #0807 8. 2016 Hyundai W $11,706 $1,137[1] 9. 2 Weyanoke Ct. H $39,631 $39,631 10. Fidelity BSO H $1,403,889 $1,403,889 Retirement 403B 11. Fidelity Funds H $196,028 $196,028 IRA #3342 12. Buffalo Funds H $35,957 $35,957 #9758 13.

Janus Henderson H $83,887 $83,887 #1398 14. DWS Equity H $27,343 $27,343 Fund 15. AFME Pension H If, as, when TOTAL $1,871,394 $45,185 After considering the factors enumerated in Section 8-205(b) of the Family Law Article, the court granted Ms. Wasyluszko a monetary award of $840,000. 1 The $1,137 figure represented the value of the 2016 Hyundai less $10,569 indebtedness on the vehicle. 2 In this timely appeal, Mr. Wasyluszko contends that the court erred in determining that the four accounts mentioned above constituted marital property in their entirety because the evidence demonstrated that a portion of each account is directly traceable to his pre-marital contributions. He therefore asks us to vacate the $840,000 monetary award, as well as the court’s $15,000 attorney’s fee award in favor of Ms. Wasyluszko.

DISCUSSION I. THE MONETARY AWARD MUST BE VACATED BECAUSE THE COURT ERRED IN FINDING THAT THREE OF MR. WASYLUSZKO’S ACCOUNTS WERE ENTIRELY MARITAL PROPERTY Because the focal point of this appeal involves the court’s determination that four of Mr. Wasyluszko’s accounts were entirely marital property, we begin our analysis with the relevant statute, Md. Code (1984, 2019 Repl. Vol.), § 8-201(e) of the Family Law Article (“FL”), which defines marital property as follows: (e) (1) “Marital property” means the property, however titled, acquired by 1 or both parties during the marriage. (2) “Marital property” includes any interest in real property held by the parties as tenants by the entirety unless the real property is excluded by valid agreement.

(3) Except as provided in paragraph (2) of this subsection, “marital property” 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. 3 “Ordinarily, it is a question of fact as to whether all or a portion of an asset is marital or non-marital property. Findings of this type are subject to review under the clearly erroneous standard embodied by Md. Rule 8-131(c)[.]” Collins v. Collins, 144 Md. App. 395 , 408–09 (2002) (quoting Innerbichler v. Innerbichler, 132 Md. App. 207, 229 (2000)). We review the ultimate decision to grant a monetary award for an abuse of discretion. Abdullahi v. Zanini, 241 Md. App. 372, 407 (2019).

We shall separately examine each of the four accounts in dispute. A. Baltimore Symphony Orchestra 403(b) Account Through his employment with the Baltimore Symphony Orchestra (“BSO”), Mr. Wasyluszko participated in a retirement savings plan BSO sponsored pursuant to 26 U.S.C. § 403 (b). Mr. Wasyluszko produced evidence that as of July 31, 1998 (the account statement immediately preceding his August 22, 1998 marriage), the BSO 403(b) plan was worth $107,690.04. This $107,690.04 valuation consisted of two components: Fidelity Contrafund 1,290.380 shares @ $54.79 = $70,699.92 Fidelity Low Priced Stock 1,429.846 shares @ $25.87 = $36,990.12 It is this evidence of Mr. Wasyluszko’s pre-marital contributions to the BSO 403(b) plan that forms the basis of his non-marital property claim.

There is no dispute that at the time of trial the BSO 403(b) account had substantially increased in value to $1,403,889.13: 4 Contrafund 64,157.905 shares @ $12.50 = $801,973.81 Low Priced Stock 12,563.459 shares @ $47.91 = $601,915.32 In its bench opinion, the court made the following findings concerning the BSO 403(b) plan: Another one of the significant assets is the Fidelity BSO Retirement [403(b)] account. The current value provided by the parties is one million four hundred three thousand eight hundred and eighty-nine dollars. Mr. Wasyluszko established that account prior to the marriage. The value of the account as of the date of marriage was $107,690.

Employee contributions during the marriage were $224,074. There were dividends and interest paid during the marriage, those amounts have been provided, they added up to $587,768. The total contributions during the marriage were $811,842, that includes not only employee contributions but dividends and interest paid during that time. Mr. Wasyluszko, purporting to use a “source of funds” theory, argued that twelve percent of the 403(b) plan was non-marital property.

He reached that conclusion by using the pre-marital value of the account ($107,690) as the numerator and the sum of all non- marital and marital contributions, including dividends and interest, ($919,532) as the denominator.2 Mr. Wasyluszko makes the same argument on appeal. In rejecting Mr. Wasyluszko’s claim that part of the BSO 403(b) account constituted his non-marital property, the court concluded that “the funds are not directly traceable to a non-marital source” because “[t]he funds . . . have been commingled between the 2 This $919,532 does not account for changes in the value of shares during the marriage. 5 premarital and post-marital contributions and dividends and interest earned on the premarital and post-marital contributions and are, therefore, entirely marital property.” Although we concur with the circuit court’s rejection of Mr. Wasyluszko’s source of funds analysis,3 we nevertheless hold that the court erred in characterizing the BSO 403(b) account as wholly marital property. Mr. Wasyluszko produced documentation showing every contribution, dividend, and capital gain accumulated in the BSO 403(b) account between August 1998 and September 2018.4 Significantly, with a minor exception, the shares in the BSO 403(b) account only increased during the twenty-year period between 1998 and 2018.5 Accordingly, the records verify that, even though the number of shares dramatically increased during the marriage, Mr. Wasyluszko still owned 3 Mr. Wasyluszko’s source of funds theory as applied to the 403(b) plan and the other accounts is inherently flawed. As to the 403(b) plan, Mr. Wasyluszko’s theory used the gross pre-marital value of the account ($107,690) as a static numerator without regard to the substantial fluctuations in the dollar value per share over the course of twenty years.

Moreover, Mr. Wasyluszko’s theory failed to account for his regular purchase of shares during the marriage that reflected a distinct share price and concomitant number of shares for each transaction. The example the Court of Appeals provided in Grant v. Zich, 300 Md. 256, 276, n.9 (1984), applying the source of funds theory to a parcel of real property is not applicable to the investments in this case where there are multiple purchases of shares over many years, each with its unique price per share and number of shares acquired. The instant case is further complicated by dividend and interest reinvestments in the accounts that are related to both marital and non-marital shares. Nevertheless, we do not rule out the possibility that a similar theory could prevail if supported by a more sophisticated analysis and expert testimony, but no such evidence was presented here. 4 Mr. Wasyluszko stopped making employee contributions to the BSO 403(b) account after the pendente lite hearing in 2014. 5 The only occasion when the number of shares decreased was when Fidelity imposed service fees on the Contrafund portion of the account, amounting to a total of 8.283 shares during the marriage. 6 the original 1,290.380 Contrafund shares and 1,429.846 Low Priced Stock shares from before the marriage.

To be sure, the values of those shares fluctuated during the twenty- year marriage, as reflected in the account statements, but the number of shares never decreased.6 In short, Mr. Wasyluszko’s pre-marital Contrafund and Low Priced Stock shares remained in the account at the time of divorce. In summary, the court properly valued the BSO 403(b) account at $1,403,889, which consisted of the following: Contrafund 64,157.905 shares @ $12.50 = 801,973.81 Low Priced Stock 12,563.459 shares @ $47.91 = 601,915.32 Total Value $1,403,889.13 Using the per-share values at the time of divorce, we calculate the value of Mr. Wasyluszko’s non-marital shares: Contrafund 1,290.380 shares @ $12.50 = 16,129.75 Low Priced Stock 1,429.846 shares @ $47.91 = 68,503.92 Total Non-Marital Value $84,633.67 Our analysis is consistent with Wilen v. Wilen, 61 Md. App. 337 , 348–49 (1985) (holding that stock splits directly traceable to husband’s pre-marital stock are non-marital). On remand, the court should appropriately adjust its “Marital Property Schedule” 6 Mr. Wasyluszko does not contend that the dividend and interest reinvestment accumulations in any of the accounts are non-marital. 7 and “Andrew Wasyluszko’s Schedule of Non-Marital Property” concerning the BSO 403(b) account to reflect Mr. Wasyluszko’s $84,633.67 non-marital share. B. Janus Henderson Account Mr. Wasyluszko’s Janus Henderson Non-Retirement Account contains two funds: 1) the Forty Fund and 2) the Research Fund.7 He opened this account prior to the marriage and the last account statement before the date of marriage (August 3, 1998) verifies that he owned 195.9540 Forty Fund shares and 457.2410 Research Fund shares.

Mr. Wasyluszko produced documentation verifying every transaction for the Forty and Research Funds from January 1996 to December 2017. The parties stipulated that the only contributions Mr. Wasyluszko made during the marriage were $50.00 per month to each account from September 3, 1998 to April 3, 2002. The court found that Mr. Wasyluszko established the Janus Henderson account prior to the marriage, that the account was worth $18,155 as of the date of marriage, and that Mr. Wasyluszko made $4,300 in contributions to the account during the marriage. At the time of the divorce, the account was valued at $83,887.

Again utilizing a source of funds theory, Mr. Wasyluszko contended that 81% of the account value, or $67,948, constituted his non-marital property.8 7 When Mr. Wasyluszko opened this account, the two funds were known as the “Twenty Fund” and the “Mercury Fund.” There is no contention that the funds’ name changes have any bearing on whether the account is marital or non-marital. 8 Mr. Wasyluszko used the pre-marital value of $18,155 as the numerator and $22,455 ($18,155 plus $4,300) as the denominator to support his claim that 81% of the account was non-marital. As we explained in footnote 3 regarding the BSO 403(b) account, Mr. Wasyluszko’s source of funds theory for the Janus Henderson account is similarly flawed. 8 The court determined that the entire Janus Henderson account, consisting of the Forty and Research Funds, constituted marital property. As with the BSO 403(b) account, we hold that the court erred. Our meticulous review of the Forty Fund and Research Fund account