Welsh v. Welsh

DAVIS, Judge. Appellant Mary S. Welsh was granted a Judgment of Absolute Divorce from appellee Timothy E. Welsh in the Circuit Court for Carroll County on September 27, 1999. Appellant initially filed an action for divorce on grounds of adultery in the spring of 1994 in the Circuit Court for Howard County. The case was subsequently transferred to the Circuit Court for Carroll County in June 1994 because all of the circuit court judges sitting in Howard County recused themselves. 1 Appellee filed a counterclaim for divorce on grounds of a two-year separation.

The court ordered that appellee pay appellant $500 per week as pendente lite alimony and permit her use of a condominium owned by the parties. On December 6, 1996, appellant filed an interlocutory appeal protesting three rulings on motions made by the court. We filed an unreported opinion in the matter, Welsh v. Welsh, 117 Md.App. 756 , No. 103, September Term 1996, (October 15, 1997), and thereafter the case proceeded to trial on the merits on each parties’ amended complaint in March 1999 and again in June 1999. The circuit court’s Judgment of Divorce was issued on Sep ³⁵ tember 27, 1999 and both parties filed separate Motions to Alter or Amend Judgment on September 6 and 7, 1999, respectively.

The court denied both motions on October 26, 1999 and this appeal ensued. Appellant raises five questions for our review and appellee filed a cross-appeal raising six questions. Because some of these questions address the same issues we list them together, rephrased and renumbered as follows: I. Did the circuit court err in denying appellant alimony?

II

Did the circuit court err in denying either party an award of attorney’s fees?

III

Did the circuit court err in calculating the monetary award to appellant and denying appellee a monetary award?

IV

Did the circuit court err in granting appellee an award of development fees relating to the marital real property? V. Did the circuit court err in granting appellant an award of one-half of the attorney’s fees appellee expended in another lawsuit using marital funds?

VI

Did the circuit court err in granting appellant one-half of appellee’s retirement on an “as, if, and when” basis?

VII

Did the circuit court err in ordering appellant liable for any future judgment or settlement relating to possible litigation with the Bassler Hunt Partnership?

VIII

Did the circuit court err in allowing the court-appointed trustee to retain the same powers conceiving the sale of the marital home and an accompanying building as set forth in an Order dated August 81,1995?

IX

Did the circuit court err in vacating the Order of December 2, 1996 after the interlocutory appeal, thereby violating the mandate of this Court? ³⁶ XI. Did the circuit court err in granting appellant a divorce based on a two-year separation, instead of awarding the divorce to appellee? We answer questions one through six and eight through ten in the negative and question seven affirmatively, thereby affirming in part and reversing in part the judgment of the circuit court. FACTUAL BACKGROUND The parties were married in 1961 and four children were born of the marriage, all of whom are now emancipated.

In 1972, the couple purchased a twenty-two acre property with a twenty-two room manor home known as Font Hill Manor Farm (Font Hill), with accompanying buildings, one of which is known as the Dairy Bam/Chilling House, which appellee uses as an office. Appellee is sixty-one years of age and holds an undergraduate accounting degree and a law degree. From 1961 to 1966 he worked for the Internal Revenue Service while earning his law degree and thereafter he opened his own. law practice. From 1969 to 1973, appellee was employed as an Assistant State’s Attorney for Howard County and, from 1979 through 1987, he was the Howard County Solicitor.

He taught business, law, and accounting courses from 1968 to 1996 at Catonsville Community College in Baltimore County. Additionally, he holds a real estate broker’s license and is president of the Welsh Company, of which he owns eighty-five percent; the couple’s only daughter owns fifteen percent. The value of appellee’s stock in that company is a reported $1,062.50. Appellant is fifty-nine years of age and holds a high school degree with one year of practical nursing training.

She has not worked in the nursing field for thirty-five years and primarily cared for the children and marital home throughout the marriage. After leaving Font Hill on April 10, 1994, appellant filed for divorce. The case was subsequently transferred from the Circuit Court for Howard County to the Circuit Court for Carroll County. In May 1996, the court ³⁷ ordered that appellee pay appellant $500 per week in pendente lite alimony and also provided that she occupy a condominium, known as Vantage Point, owned by the couple, with expenses for that dwelling to be paid by the court-appointed trustee.

Appellee continued to reside in the Font Hill home. In 1993, the marital property was rezoned into three parcels. The first parcel (Section One) consisted of ten single-family dwelling lots; the second parcel (Section Two) consisted of twenty-six single-family dwelling lots, including the Dairy Barn/Chilling House; the third parcel (Section Three) consisted of 3.32 acres on which the Font Hill home was located. The parties entered into a contract in 1994 to sell the lots in Section One and received a total of $923,927.50.

In February 1999, the parties entered into a contract to sell the lots in Section Two, for which they received a total of $1,812,-500. Additional facts will be provided as they become relevant to our discussion of the issues raised in this appeal. DISCUSSION I Appellant first contends that the court erred when it denied her request for permanent alimony. She explains that, despite the proceeds received from the sale of the lots on the Font Hill property and from the eventual sale of the Font Hill marital home, she is not in a position to become self-supporting.

Additionally, she contends that appellee is in a superior financial position due to various tax benefits he will receive and, therefore, the parties’ financial status will be unconscionably disparate, thus warranting an award of alimony. Appellant first argues that the court could have awarded appellant the divorce based on her claims of adultery because she provided sufficient evidence to prove appellee’s adulterous activities. In its opinion, however, the court specifically states that appellant’s evidence “failed to establish the disposition and opportunity to commit adultery required by ³⁸ Pohzehl v. Pohzehl, 205 Md. 395 , 109 A.2d 58 (1954) and its progeny.” We note that the court went on to conclude specifically that, at trial, appellee conceded that his relationship with a woman had progressed to a sexual one after the parties had separated. It is ultimately up to the court, based on its fact finding, to declare the grounds for divorce.

It is not reasonable that the court be obligated to grant the divorce on the grounds requested when the judge is more persuaded that it is more likely than not that other grounds for the divorce are more justified. The court explained in its opinion that it found that the relationship between appellant and appellee had deteriorated long before appellant actually left the marital home in April 1994. Indeed, the court comments that the couple did not have sexual relations for nearly two decades and opines that the marriage evolved into one “of convenience.” Although appellee acknowledged having sexual relations with another woman while the couple was separated, it is clear that the court was not satisfied by the evidence presented that appellee had engaged in adulterous activities while the couple was still living together. Even more significant, the court did not believe that appellee’s relations with another woman were, in fact, the reason for the break up of the marriage.

Based on the evidence presented, we do not perceive any error in the court awarding appellant the divorce based on a two-year separation, rather than adultery. Appellant apparently argues the issue of adultery in the hopes that a divorce based on those grounds would favor an award of indefinite alimony. The Court of Appeals, however, has specifically held that alimony is “never a punitive measure.” Danziger v. Danziger, 208 Md. 469, 474 , 118 A.2d 653 (1955). Adultery is merely one factor to be considered when the court addresses an award of alimony in determining the circumstances that contributed to the breakup of the marriage.

Md.Code (1999 Repl.Vol.), Fam. Law (F.L.) § 11-106(b)(6). What is significant in the instant case is the court’s evaluation of this factor. Its opinion states that “[tjestimony ³⁹ revealed that the parties’ relationship had deteriorated long before [appellant] left the marital home in April of 1994.” Despite appellant’s attempts to emphasize appellee’s adulterous behavior, the court was convinced that the relationship between the parties did not end because of any adulterous activities on the part of appellee.

The trial court is in the best position to observe the witnesses and judge their credibility; as we see it, the court’s analysis of the deterioration of the parties’ relationship was not clearly erroneous. See Mix Rule 8-131 (2000). Appellant additionally contends that the court erred in failing to award alimony because it ignored the criteria set forth in F.L. § 11-106. To the contrary, the court separately enunciated each of its findings under a heading for each factor to be considered.

The court stated that, “[a]fter careful consideration of all the factors necessary for a fair and equitable alimony award determination, including the above factors, the [e]ourt declines to award [appellant] rehabilitative or indefinite alimony, primarily due to the significant amount of assets involved in this case.” It is not mandatory that the court provide a formal checklist of each factor, as was provided in the instant case. Gallagher v. Gallagher, 118 Md.App. 567, 586 , 703 A.2d 850 (1997), cert. denied, 349 Md. 495 , 709 A.2d 139 (1998). The court must, however, demonstrate consideration of the required factors. Id.

The court clearly made the proper considerations as mandated by the statute and beyond. We cannot say it abused its discretion. In its evaluation of factor one—“the ability of the party seeking alimony to be wholly or partly self-supporting”—the court wrote: The parties to the actions have substantial personal assets. Both parties received a significant amount of money from the Pulte Contract of Sale, and will receive additional large sums of money from the sale of the marital home and [CJhilling [H]ouse.

The [c]ourt therefore finds that [appellant] has the ability to be wholly self-supporting. ⁴⁰ The court found under factor two—“[t]he time necessary for the party seeking alimony to gain sufficient education or training to enable that party to find suitable employment”— that, “based upon the substantial assets involved in this case, [appellant] may not need to seek employment.” The court also observed that appellant’s financial statement revealed that her monthly expenses were minimal. Appellant contends that these findings are erroneous and that the court did not properly take into consideration the tax benefits derived by appellee, not available to appellant, and that the evidence showed that she is clearly not self-supporting. Appellant explains that, because appellee continued to occupy the marital home, he will be entitled to a significant tax benefit. That benefit, in combination with other tax benefits, will result in appellee realizing a tax exemption of about $600,000, whereas appellant will not receive any such tax exemptions for the money she received or will receive for the sale of the marital home or the other income generated to her for the sale of the couple’s marital real property.

Appellant contends that, as a result of these tax benefits, her income will be unconscionably disparate from appellee’s income and he will be able to afford alimony and, therefore, she is entitled to an award of indefinite alimony. We disagree. Family Law Article § ll~106(c) provides that the court may award indefinite alimony in only two circumstances. The first addresses the infirmity or disability of one of the parties, which is inapplicable here.

The second applies when the party seeking alimony makes as much progress as possible toward becoming self-supporting and, despite those efforts, the parties’ respective standards of living will be unconscionably disparate. The fact that appellant -will not receive the same tax benefits as appellee does not necessarily mean that their standards of living will be unconscionably disparate. Nor does the fact that appellant would be in a position to afford alimony mean the court will order it. The court determined that the amounts appellant received in the contract for the development of Section Two of the Font ⁴¹ Hill marital property, in addition to the proceeds that she will receive from the sale of the marital home at Font Hill and the Dairy Barn/Chilling House, will place her in a position to sustain her standard of living.

In other words, with or without tax benefits, the amounts received are sufficient for the parties to sustain their standards of living. Appellant provided the court with evidence of the tax benefits of which appellee could take advantage and we assume that the court correctly weighed that evidence in the context of determining if the parties’ standards of living would be unconscionably disparate. Moreover, the court evaluated the income in relation to the parties’ financial reports, which showed appellee made no income in 1995,1996,1997, and 1998, and showed that appellant, while also earning no income in those years, had minimal expenses. In Holston v. Holston, 58 Md.App. 308, 323 , 473 A.2d 459 (1984), we observed that a large disparity in the standards of living will not necessarily mandate an award of indefinite alimony; rather, the court has the discretion to make such an award upon such a finding.

Appellant clearly did not prove to the court’s satisfaction that the parties’ standards of living would be so different that it would warrant an award of indefinite alimony under F.L. § 11—106(c)(2) and we do not find the court’s ruling to be clearly erroneous. As we explain infra, however, it is clear from the record that the monetary award and alimony may have been affected by the court’s imposition of potential liability of the Bassler Hunt Partnership on appellant. Accordingly, we remand this case for reconsideration of the monetary award, which will also require a redetermination of alimony. Rogers v. Rogers, 80 Md.App. 575, 588 , 565 A.2d 361 (1989).

II Both parties dispute the trial court’s decision not to award either party attorney’s fees. Concerning appellant’s legal fees of more than $200,000, the court stated: ⁴² [T]he [c]ourt does find that [appellant’s counsel’s] bill is unreasonable because [appellant] was billed for two attorneys at nearly every stage of this case, thus making the hourly rate $350____ The [c]ourt wholeheartedly agrees with the following assertion by [appellee’s] counsel in his closing argument: “Many of [appellant’s] attorney’s fees were incurred as a result of her own counsel’s refusal to make a good faith effort at settlement and his desire to obstruct all attempts at an amicable resolution of any issue which has arisen in this case over the last five (5) years.” Thus, many of [appellant’s] legal bills should not have been incurred at all, regardless of their hourly rate. The court went on to conclude that appellant’s counsel became inappropriately personally involved in the instant case and, as a result, unnecessarily protracted the litigation. The court proceeded to consider the factors required F.L. § 11—110(c): 1) the financial resources and financial needs of both parties, and 2) whether there was substantial justification for prosecuting or defending the proceeding.

The court concluded that there was substantial justification, although it made a point to state that “the [c]ourt falls just short of finding a lack of substantial justification on [appellant’s] part in prosecuting and defending (against [appellee’s] counterclaim) the proceeding.” Concerning both parties, the court observed that' the substantial assets involved created several discovery disputes and recognized that, when one party makes allegations, the other party must defend. Consequently, the court declined to award attorney’s fees to either party for the divorce proceedings. Appellant argues that she met the two criteria required of F.L. § 11-110(e) and is, therefore, entitled to an award of attorney’s fees. Appellant’s disagreement with the findings of the court, however, does not warrant a reversal.

Appellant points out that appellee also had two counsel working on his case, in addition to his own appearance entered on his behalf and that the case was vigorously defended, which added to the necessary legal expenses. According to the record, this was a contentious and bitterly fought proceeding. Appellant accuses ⁴³ the trial court of being biased against appellant, alleging that appellee’s aggressive conduct throughout the litigation also unnecessarily protracted the litigation, including two years for appellant to receive a hearing on her pendente lite alimony request. It is clear from the court’s opinion that it was convinced that appellant created most of the delays in this case.

We note, however-, that, despite these observations, the court took pains to review objectively the criteria required of F.L. § 11—110(c) and, indeed, it concluded that there was substantial justification for prosecuting and defending the case, albeit just short of a finding of lack of substantial justification. The court’s finding, however, appears to apply to both parties. In other words, both parties had substantial justification for prosecuting and defending the case. Accordingly, the more crucial factor is the financial resources and needs of the parties.

Appellant points to the court’s observation that appellant was at a financial disadvantage in the beginning of this litigation to demonstrate that she had a financial need. The court’s observation, however, does not consider the subsequent proceeds appellant received and will receive as a result of the sale of the marital properties at Font Hill. The court, after careful evaluation, did not perceive either party at a significant financial disadvantage to warrant an award of attorney’s fees. Appellee claims that he is entitled to an award of attorney’s fees because he properly demonstrated his financial need.

He explains that his financial statement reflected a deficit each month and that appellant is in a better position to pay his attorney’s fees. While appellee asserted that appellant is in a better “position” to pay his attorney’s fees, the court determined that his financial resources or needs were insufficient to warrant an award of attorney’s fees. Despite the court’s acknowledgment that appellant generated unnecessary litigation in the instant case, the court additionally noted that there were several discovery disputes initiated by both sides. The court found that both parties contributed to delays and that ⁴⁴ both parties were in a financial position where they could independently afford their attorney’s fees.

It is within the court’s sound discretion to award such fees and we shall only disturb the court’s ruling upon a showing of an abuse of that discretion. Holston, 58 Md.App. at 326 , 473 A.2d 459 . The court’s opinion demonstrates a careful evaluation of the statutory criteria and we see no abuse of discretion in its final determination that neither party is entitled to legal fees. Ill The court ordered that the trustee sell the Font Hill home and that the proceeds of the sale be equally divided among the parties after certain expenses were met.

Additionally, a monetary award of $16,441.25 was made to appellant as an adjustment of the equities and rights of the parties. Appellant contends that the monetary award is insufficient and does not constitute an equitable adjustment between the parties. Appellee counters that the court erred in granting appellant any monetary award because it incorrectly weighed the efforts he made to increase the value of the marital property at Font Hill. As explained, infra, we remand this case for reconsideration of the monetary award in light of the potential Bassler Hunt Partnership liability.

We will, however, address the parties’ other concerns relating to the monetary award. Appellant bases her contention on the fact that the court’s lack of award of alimony was in error and because the award of alimony must be adjusted, so must the monetary award. It is well established that, if there is an adjustment of alimony on appeal, the monetary award must also be reconsidered. Rogers, 80 Md.App. at 588 , 565 A.2d 361 ; Prahinski v. Prahinski, 75 Md.App. 113, 138 , 540 A.2d 833 (1988), aff'd, 321 Md. 227 , 582 A.2d 784 (1990).

Because of the error in the determination of the monetary award based on other factors, the lower court will have an opportunity to reconsider it on remand. We further address appellee’s contention that the court erred in granting any monetary award at all. ⁴⁵ He particularly points to factor eight of the eleven factors that the court must consider in determining a monetary award. Factor eight reads: (8) how 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; F.L. § 8-205(b)(8). Appellee posits that he exerted all the effort to prepare the Font Hill property for subdivision and development and it was those efforts that reaped the purchase prices for the two sections.

He contends that much of his effort in preparing and selling Section Two was made after the parties separated and that appellant made no contributions— monetary or non-monetary—to the process. Appellee points out that the statute specifically requires consideration of how and when the marital property was acquired and suggests that, since his effort after the separation of the parties is what increased the value of the property, the court improperly divided the value of the property equally among the parties. We observed in Wilen v. Wilen, 61 Md.App. 337, 354-55 , 486 A.2d 775 (1985), that [t]he extent to which the efforts of one spouse may have led to acquisition of property or an increase in its value without any monetary or non-monetary contribution by the other spouse after the parties separated can, and should, be taken into account in determining what would constitute an equitable monetary award. (Emphasis added.) The Court of Appeals, in Alston v. Alston, 331 Md. 496, 507 , 629 A.2d 70 (1993), stated that “the eighth factor should be given greater weight than the others.” The Court further noted, however, that the circumstances of each case will dictate when more emphasis on this factor is warranted.

Id.; see also Skrabak v. Skrabak, 108 Md.App. 633, 654-56 , 673 A.2d 732 , cert. denied, 342 Md. 584 , 678 A.2d 1048 (1996). In Alston , the Court emphasized factor eight because, ⁴⁶ [wjhere one party, wholly through his or her own efforts, and without any direct or indirect contribution by the other, acquires a specific item of marital property after the parties have separated and after the marital family has, as a practical matter, ceased to exist, a monetary award representing an equal division of that particular property would not ordinarily be consonant with the history and purpose of the statute. Alston, 331 Md. at 507 , 629 A.2d 70 . The circumstances of this case, however, are wholly distinguishable from Wilen, Alston, and Skrabak .

In all three of those cases, there was no dispute that the efforts of the party who acquired the property or increased the value of existing marital property were solely his or her own and that the other party made no direct or indirect contribution to the acquisition or increase in value. The question for the trial court to answer in deciding how heavily it should weigh factor eight, therefore, is whether the increase in value was “dependent in any way on the joint effort of the parties or their shared life, past or present.” Alston, 331 Md. at 508 , 629 A.2d 70 . In the case sub judiee, the trial court found that appellee’s efforts were not so independent that appellant made no contributions to the increase in the value of the Font Hill property. The court noted that the property was acquired by the parties in 1972 and there is no dispute that Font Hill is marital property.

The court also observed that the funds appellee used in handling the rezoning and ultimate purchase by developers were marital funds. In his discussion concerning the court’s error in granting the monetary award, appellee fails to address the development fees he was awarded by the court. Appellee received a judgment of $135,937.50 against appellant for payment of development fees for his efforts in having the Font Hill property rezoned and subsequently bought by developers. This award was specifically for his efforts in rezoning and ultimately selling the property.

Appellee argues that he should receive a monetary award as consideration for his actions that resulted in an increase in the property’s value. Although the court’s award of $135,937.50 to appellee is in the ⁴⁷ form of a separate judgment and is not labeled a “monetary award,” it nonetheless compensates appellee for his efforts in preparing the property for development. We hasten to add that the court’s consideration of factor eight was not in error in that the marital property was acquired in 1972 and, in 1993, before the couple separated, they executed a contract for the sale of Section One. The parties were in agreement and appellee had willingly made efforts during the marriage to rezone and sell off portions of the property, which occurred in part before appellant left the marital home.

Additionally, the funds used to help appellee’s efforts in preparing the sections for sale were marital funds, which is further evidence that the preparation to sell Section Two was a joint effort between the parties. Although it is true that appellee participated in the day-to-day efforts necessary to prepare the property for sale, appellant did not have the expertise to participate in every aspect of the transaction. Appellant did not prevent the marital funds from being used and she executed the necessary paperwork to complete the transaction. We hold, therefore, that the court appropriately weighed factor eight in the context of the other factors.

IV As discussed, supra, appellee received a judgment of $135,937.50 against appellant for payment of development fees for his efforts in having the Font Hill property rezoned and subsequently bought by developers. Appellant argues that the court erred in calculating the amount because the court based the fee on a percentage of the total purchase price, but appellee only performed one-half of the work necessary for the development of the lots. Appellant does not dispute the court’s use of a development fee of seven and one-half percent of the price, based on expert testimony as to how much such fees run, but instead takes issue with the amount, claiming the court erroneously calculated the fee based on the total purchase price. She explains that the contract entered into with Pulte Homes for the ⁴⁸ purchase of Section Two called for “unfinished” lots, which meant that all physical development of the property was to be performed by the purchaser, Pulte Homes, and not appellee.

Appellant posits that a fee based on the total purchase price would have only been appropriate if appellee had participated and executed the full development of the property. Because appellee only performed one-half of the development work (getting it prepared for physical development), and he also received one-half of the proceeds of the sale, appellant claims that the court erred and the maximum fee to which appellee is entitled is twenty-five percent of the purchase, which would total $33,984.37. Appellant states that a developer fee is normally charged when the developer is working on behalf of a third party, but in this case, appellee was working for his own benefit and received one-half of the purchase price. Therefore, he is not entitled to the full developer’s fee because 1) he did not perform full development services, and 2) he received one-half of the proceeds of the sale.

We disagree. The expert testimony reveals that the amount of the development fee will vary depending on the job, averaging from five to ten percent of the purchase price. The court’s opinion indicated that, in making the award of development fees to appellee, it considered the testimony of David Carney, the trustee in the case, and Kevin Rodgers, a developer who bid on the Section Two property of Font Hill and was familiar with the efforts expended by appellee to develop the property. Rodgers testified that the development process is often seen as a three-step process: 1) from raw ground to obtaining proper zoning, 2) from zoning to engineering, and 3) the development.

The Pulte contract states that the “sale involves the responsibility of the Buyer to undertake and complete all of the development work as required by the Developer Agreements and necessary to deliver finished single family building lots consistent with the construction drawings prepared by Benchmark Engineering ...” which included sediment control, grading, storm water management, sewer and water installation and public road and storm drain construction. During his direct examination, Rodgers stated that a ten ⁴⁹ percent fee would be a reasonable fee to develop fully Section Two of Font Hill. The court ultimately settled on awarding appellee a development fee of seven and one-half percent. It did not award a fee of ten percent for full development, but decreased it in consideration of his contributions to prepare the property for physical development.

Appellee and another witness, Garnett Y. Clark, Jr., testified that appellee’s efforts included extensive meetings with Howard County zoning officials and members of the neighborhood to address their concerns about development, including private meetings and public hearings before the county zoning board, writing contracts, coordinating and accepting bids for the development work, and various other matters. Appellant does not dispute that appellee actually performed these functions, but argues that he is not entitled to the full amount awarded by the court because he owned the property and, therefore, received payment for his efforts through his half of the purchase price. The only fee he is due under appellant’s approach is seven and one-half percent of her half of the proceeds from the sale. The court’s determination that appellee was entitled to a fee of seven and one-half percent was not an abuse of discretion.

The evidence revealed the various efforts expended by appellee in preparing the property for development. The court did not award him the maximum fee of ten percent for full development of the lots, but reduced it based on his development of the property from raw land through the engineering process. This was a reasonable assessment based on the evidence presented. Additionally, appellee would not be entitled to a separate fee because he additionally received proceeds from the sale of the property.

The fact that he owned the property did not diminish the various duties he accepted and carried out to develop the property. The expert testimony did not indicate that the fees were only paid to third parties. We, therefore, perceive no abuse of discretion in the court’s decision to award appellee a separate development fee based on the full