Tracey v. Gaboriault

Tracey v. Gaboriault  (95-639); 166 Vt. 269; 691 A.2d 1056

[Filed 21-Feb-1997]


       NOTICE:  This opinion is subject to motions for reargument under
  V.R.A.P. 40 as well as formal revision before publication in the Vermont
  Reports.  Readers are requested to notify the Reporter of Decisions,
  Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
  any errors in order that corrections may be made before this opinion goes
  to press.


                                     No. 95-639


Joadi Tracey (Gaboriault)                              Supreme Court

                                                       On Appeal from
     v.                                                Washington Family Court

Thomas Gaboriault, Jr.                                 January Term, 1997


Mary Miles Teachout, J.

       Mary G. Kirkpatrick and Christiana A. Jensen of Lisman & Lisman,
  Burlington, for plaintiff-appellant

       M. Jerome Diamond and Earl F. Fechter of Diamond & Associates, P.C.,
  Montpelier, for defendant-appellee


PRESENT:   Gibson, Dooley, Morse and Johnson, JJ., and Allen, C.J.
           (Ret.), Specially Assigned


       JOHNSON, J.   In this appeal of a final divorce order, plaintiff wife
  challenges the family court's distribution of marital property, its child
  support and maintenance awards, and various aspects of its contempt
  sanction against defendant husband.  Husband cross-appeals, also raising
  issues pertaining to the contempt sanction.  We modify the contempt
  sanction slightly and reverse the child support determination, but
  otherwise affirm the order.

                                   I.

       The parties, both forty-four years old at the time of the final
  divorce hearing in June 1995, had been married for twenty-two years when
  they separated in September 1993.  They have two daughters, the first born
  on May 10, 1979 and the second born on May 31, 1982.  The parties met in
  college and married shortly after husband obtained an associate's degree in
  hotel and restaurant management.  Wife did not finish her degree.

       The year after their marriage, the parties moved to Vermont and
  purchased a restaurant and inn, which they operated for ten years before
  turning the building into a residential care

 

  home.  The parties worked long hours but struggled financially during the
  first ten to fifteen years of their marriage.  Wife worked outside the
  business during three separate time periods when the parties needed extra
  money -- twice as a bookkeeper and once selling cosmetics.  By 1987, the
  parties' business was beginning to prosper.  In 1994, the final full year
  before the divorce, the business's cash flow exceeded $115,000.

       During their marriage, the parties worked as a team.  Wife handled the
  bookkeeping and other financial matters, while husband managed the
  business's day-to-day operation -- overseeing the staff and interacting
  with the residents.  Wife was generally more responsible for the care of
  the children, but husband was also involved in caring for the girls.  After
  their separation, the parties continued to run the business together.

       In July 1994, the parties stipulated to a temporary order regarding
  debt obligations and child support for wife, who was to have custody of the
  children.  A companion agreement, also incorporated into the temporary
  order, made husband responsible for (1) paying himself and his wife
  specified monthly salaries as well as rent for the business's use of the
  commercial real estate and the parties' van, and (2) dividing between the
  parties the business's accounts receivable.  The parties found it more and
  more difficult to work together, however, and in January 1995, husband
  fired his wife and discontinued her salary and certain rent payments.

       A three-and-one-half-day final divorce hearing took place in June
  1995.  The family court issued a sixty-one-page decision in which it (1)
  divided the parties' $650,000 in marital assets equally, with wife keeping
  the marital residence and husband retaining the business while having to
  pay wife one-half the value of the commercial real estate over a ten-year
  period at a 6% interest rate; (2) awarded wife temporary rehabilitative
  maintenance beginning at $20,000 annually for the first two years and
  decreasing to $18,000 in the third year, $16,000 in the fourth year,
  $14,000 in the fifth year, $10,000 in the sixth year, and $5000 in the
  seventh year; (3) ordered husband to pay wife $1029 per month in child
  support; and (4) found husband in contempt and required him to pay wife
  $10,387 for failing to make payments to her in accordance with the
  stipulation incorporated into the July 1994 temporary order.

 

       On appeal, wife claims that the court erred in (1) not requiring
  husband to pay her an additional five and one-half months of van rent
  payments as part of the contempt sanction; (2) failing to value and
  distribute as marital property the equity derived by husband from real
  estate purchased by his father before the parties divorced; (3) failing to
  award her permanent maintenance; and (4) determining husband's gross income
  for purposes of calculating his spousal and child support obligations by
  first deducting payments that he was required to make to wife pursuant to
  the court's distribution of property.  In his cross-appeal, husband argues
  that the court erred in (1) finding that he had the financial ability to
  comply with the July 1994 temporary order, and (2) requiring him to pay
  wife's full salary under that order during a period for which she had
  collected unemployment compensation.

                                  II.

       We first consider the court's contempt sanction.  The court found that
  the July 1994 order, among other things, obligated husband to pay his wife
  $250 per month for the business's use of their van.  The court also found
  that there was no termination date for the arrangement under the order, and
  that in February 1995 husband unilaterally, without good cause, stopped
  making the required payments.  The court then determined that husband owed
  wife $500 for not making the van rent payments in February and March. 
  Although the court explained why other payments would be calculated for a
  limited time period, it failed to explain why the van payments would be
  calculated for only the two months.

       On appeal, wife argues that she was entitled to an additional five and
  one-half months of van payments as part of the contempt sanction to
  compensate her for the lack of payments from April 1995 until the court's
  final order.  Husband counters that wife did not present evidence of his
  failure to make the payments after March 1995, and that the court exercised
  its discretion by not requiring him to make payments beyond April 18, 1995,
  the date he filed his motion to modify the temporary order.

       Neither of husband's arguments holds up.  Wife explicitly requested
  that the court award van rent payments for the entire period that the
  temporary order was in effect, up to the time of

 

  the court's final order.  Further, the evidence plainly demonstrated that
  husband had made no van payments to her after January 1995.  Nor can
  husband prevail on this issue by claiming that the court had the discretion
  to limit the award to the date he filed his motion to modify.  The court
  denied husband's motion before the final hearing was held, and further, in
  its September 1995 decision, denied his motion to reconsider that ruling. 
  The court stated that the appropriate contempt sanction was for husband to
  pay wife the sums due under the temporary order, which was in effect until
  the court's final decision in September 1995.  The court's failure to
  include the additional five and one-half months of van payments appears to
  have been an oversight, and in any case payment was required by the court's
  own findings and conclusions.  Accordingly, we conclude that payment to
  purge the contempt sanction must be increased by $1375.

       We reject husband's cross-appeal argument that the court erred by
  concluding that he had the ability to make the payments at the time they
  were due.  The court found that the business was in good shape during the
  period in which husband failed to make the required payments to his wife,
  that his willful failure to make those payments resulted from his
  misperceived concerns over finances rather than his inability to pay, and
  that in fact he had the ability to make the required payments.  These
  findings are supported by the evidence.

       We also reject husband's second cross-appeal argument that $9185 in
  unpaid salary awarded to wife as part of the contempt sanction should have
  been reduced by $4620, the amount of unemployment compensation wife
  received during the period in question.  We agree with the trial court that
  whether wife is required to repay the unemployment compensation she
  received following the court's award is a matter between her and the
  Department of Employment and Training.  See 21 V.S.A. § 1347 (any person
  who receives remuneration in wages for period in which unemployment
  benefits were received is liable for amount of overpaid benefits).

                                  III.

       We now move to the property distribution.  Wife argues that the court
  erred by failing to value and distribute husband's alleged theft of the
  business's opportunity to purchase adjoining real estate.  We disagree.

 

       In May 1993, four months before they separated, the parties placed a
  bid on a duplex that adjoined their commercial property.  Although the
  duplex was assessed at $87,000 and listed for $69,000, the parties' bid was
  between $25,000 and $30,000.  As part of the compensation for the property,
  the parties offered to name the duplex "The Mary Baird House" and use it
  for elderly housing.  The offer was rejected.  As early as August 1993,
  husband discussed with his father purchasing the house; two months later,
  husband's father purchased the property for $48,000 with the same
  conditions previously offered by the parties.  Having recently separated
  from wife, husband moved into one side of the duplex, paid rent to his
  father, and began to care for an elderly couple that rented the other side
  of the duplex.

       Wife asked the family court to treat a component of the value of the
  Baird House -- the difference between its listing price and sales price
  ($21,000) as an asset of the marriage.  The court rejected this request,
  stating that the sale was an arms-length transaction, and that the parties'
  business acquired no enforceable interest from the sale.  We find no abuse
  of discretion.

       We disagree with wife that this situation is similar to situations in
  other cases where one spouse had placed assets in third persons' names to
  avoid distribution to the other spouse.  See Soutiere v. Soutiere, 163 Vt.
  265, 270-71, 657 A.2d 206, 209 (1995) (where husband placed money in his
  girlfriend's checking account and used money to purchase condominium,
  titling it in girlfriend's name alone, case fell squarely in line of recent
  decisions giving family court power to include within marital assets
  property that had been placed in names of third parties to avoid
  distribution to spouse).  Here, the undisputed evidence was that husband's
  father purchased the Baird House, and that husband had no enforceable legal
  interest in the property.

       Nor did the court abuse its discretion in refusing to increase the
  value of the parties' business as the result of the purchase of the Baird
  House, or in refusing to award wife greater assets because husband "stole"
  the business's opportunity to purchase the Baird House.  Apart from
  evidence of minor instances where husband provided the Baird House elderly
  couple with services from the parties' business without reimbursing the
  business, there was no evidence demonstrating that the Baird House purchase
  enhanced the value of the parties' business, or that

 

  husband "stole" an opportunity that would otherwise have been available to
  the business.  There was no evidence that the business would have been
  willing or able to purchase the Baird House for the same sum paid by
  husband's father, which was nearly double that offered by the business only
  six months earlier.

                                  IV.

       Next, wife argues that the court erred by basing its maintenance and
  child support calculations on husband having an annual gross income of
  approximately $65,000.  The court determined that (1) the income from the
  parties' business in 1994, the last full year before the final divorce
  hearing, was $115,000 not including $8000 in one-time divorce expenses -- a
  full $20,000 higher than any previous year; (2) the business's future
  success was uncertain because it is a small, closely held corporation whose
  past success was the result of the parties' combined efforts; and (3)
  husband's projected income from running the business without wife would
  have to be reduced by $10,000 for the loss of wife's bookkeeping services,
  an additional $10,000 to $15,000 for the loss of her management services,
  approximately $6000 for the loss of income from upcoming vacancies, and
  $17,000 for lost revenue resulting from husband's payments to wife for her
  share of the commercial real estate awarded to her as part of the property
  settlement. Wife argues that the evidence does not support the deductions
  for upcoming vacancies and for her management services.  She also argues
  that it was inappropriate, particularly with respect to the child support
  calculations, for the court to deduct husband's "mortgage" payments before
  arriving at his gross income available for support.

       We conclude that the evidence supported deductions for upcoming
  vacancies and the loss of wife's management services.  While the court
  noted that husband had found ways to fill vacancies in the past, there was
  testimony that vacancies could be a problem in the near future. Further,
  the evidence leaves no doubt that wife's contributions to the business were
  far more valuable than $10,000 for bookkeeping services.  Essentially, the
  court's valuation of wife's services to the business was based on her most
  recent W-2, which claimed wages of $22,000. This was, if anything, a
  conservative estimate of the replacement value of her services.

 

       Further, given all the facts and circumstances of this case, the court
  acted within its broad discretion in finding that husband's income
  available for spousal maintenance should not include the "mortgage"
  payments that he was required to pay wife.  The court-ordered payments,
  which represented one-half of the net value of the parties' commercial real
  estate, were awarded to wife as part of the property settlement.  The case
  wife relies on, Clapp v. Clapp, 163 Vt. 15, 22-23, 653 A.2d 72, 75 (1994)
  (affirming family court's order requiring obligor spouse to sell marital
  home to ensure that he prioritize maintenance payments over residential
  mortgage payments), is inapposite and does not require a different result.

       On the other hand, the family court was required to include the
  mortgage payments as part of husband's gross income in determining his
  child support obligation.  Under the child support statute, "gross income"
  includes the gross receipts of a closely held business operation, minus
  ordinary and necessary business expenses.  See 15 V.S.A. § 653(5)(D). 
  Although the wife holds a mortgage on the parties' commercial real estate,
  the mortgage payments are part of the property settlement and cannot be
  considered business expenses.  It may well be that the child support
  calculation approved by the family court was equitable, but the child
  support statute requires that all of the parents' income be accounted for
  first in calculating support under the guidelines before any deviation from
  the guidelines is permitted.  See 15 V.S.A. § 654 (child support guidelines
  are based on concept that children should receive same proportion of
  parental income after parents' divorce as they would have received had
  parents remained together); 15 V.S.A. § 659(a) (if court finds that child
  support order based on guidelines would be inequitable, court shall
  establish support after considering all relevant factors, including those
  listed therein).

                                  V.

       Finally, wife argues that the court abused its discretion by failing
  to award her permanent maintenance.  Upon review of the record, we conclude
  that the court acted within its broad discretion in denying wife permanent
  maintenance.  See Johnson v. Johnson, 155 Vt. 36, 40, 580 A.2d 503, 506
  (1990) (family court has considerable discretion in ruling on maintenance).

       In expressly declining to award permanent maintenance, the court first
  acknowledged that

 

  the most important factors in determining whether maintenance should be
  time-limited or permanent are the length of the marriage, the role played
  by the recipient spouse during the marriage, and the income that the
  recipient spouse is likely to achieve in relation to the standard of living
  established during the marriage.  Delozier v. Delozier, 161 Vt. 377, 383,
  640 A.2d 55, 58 (1994).  Examining these factors, the court stated that
  although the parties had been married a long time, wife had not been a
  traditional homemaker during the marriage.  Rather, in the court's view,
  wife had been a fully active partner in the parties' businesses, and had
  successfully worked outside the family business in three different jobs. 
  Further, although wife had been the primary caregiver for her daughters,
  husband had contributed significantly to raising the girls, and wife's care
  of the children had not prevented her from participating fully in the
  business and developing her skills.

       In addition, the court noted that the parties' standard of living had
  varied over the years, and had been dependent on the contributions of both
  parties.  The court concluded, based on wife's demonstrated ability to
  excel at the work she had done throughout the course of the marriage, that
  she was capable of immediately earning $20,000 to $22,000 per year as a
  bookkeeper, and that eventually she would be able to start her own
  business.  In the court's view, wife had at least twenty years of a
  productive working life ahead of her, and her parental responsibilities to
  her teenage daughters would not prevent her from working immediately and
  eventually taking advantage of her entrepreneurial skills.

       Comparing the parties' post-divorce situations, the court estimated
  that husband's annual income from the business would be approximately
  $65,000.  After deducting maintenance and child support payments, husband's
  available annual income would be roughly $33,000 in the first two years and
  then would gradually return to the $65,000 figure, assuming he continued
  the business and the business continued to be successful without wife's
  contributions.  The court concluded, however, that it would not be
  reasonable to project too far into the future a particular income for
  husband, considering that the business is a small, closely held enterprise
  that had been dependent on the parties' joint efforts and that continued to
  be dependent on an industry subject

 

  to change and a high degree of regulation.

       On the other hand, according to the court, wife would be able to earn
  at least $20,000 per year right away in addition to over $6000 a year in
  interest from the property settlement.  Thus, adding maintenance, her
  income would be approximately $45,000 per year in the first two years, with
  gradually declining support over the next seven years.  The court concluded
  that within those seven years, wife would be able to use her business
  skills and experience to approach or attain the standard of living
  established during the marriage.

       At the heart of the wife's challenge to the maintenance award is
  whether the evidence supports the court's conclusion that within seven
  years she will be able to attain the standard of living established during
  the marriage.  See Klein v. Klein, 150 Vt. 466, 476, 555 A.2d 382, 388
  (1988) (rehabilitative maintenance alone is insufficient in long-term
  marriage unless court can find, based on evidence, that recipient spouse
  will be able to support herself at standard of living established during
  marriage).  Wife complains that assuming she possessed the skills
  attributed to her by the court, she was not awarded enough capital to
  enable her to take advantage of those skills by starting her own business.

       Upon review of the record, we cannot conclude that the evidence
  compelled the court, as a matter of law, to award wife permanent
  maintenance.  The evidence supported the court's findings and conclusions
  that (1) the standard of living established by the parties over the course
  of the marriage varied depending upon the financial state of their
  businesses; (2) the parties' standard of living was highest during the last
  couple of years before their divorce; (3) the success of the small family
  business was the result of a combination of husband's and wife's individual
  efforts and talents; (4) though capable of doing so, wife was not
  interested in running the family business; (5) given the parties' breakup
  and the nature of the business, there was no guarantee that the business
  would prosper in the future; and (6) it would be unrealistic to project
  continued future income from the business at the 1994 level.

       These and other findings and conclusions mentioned above provide a
  reasonable basis for the court's view that, under the circumstances, it
  would be unfair to require husband to generate

 

  a permanent fixed income for wife.  Although there were no hard facts
  demonstrating unequivocally that in seven years wife would enjoy the
  standard of living achieved by the parties toward the end of their
  marriage, the court's maintenance award was reasonable in light of all the
  facts and circumstances of this case.  See Delozier, 161 Vt. at 381, 640 A.2d  at 57 (family court has broad discretion in determining amount and
  duration of maintenance award, which will be set aside only when there is
  no reasonable basis to support it).  None of the cases cited by wife
  militate against affirming the award.  See Soutiere, 163 Vt. at 272, 657 A.2d  at 210 (affirming permanent maintenance award where wife was
  unemployable at time of divorce due to poor health and had remained at home
  to care for parties' children during twenty-seven-year marriage); Delozier,
  161 Vt. at 380, 386, 640 A.2d  at 56-57, 59-60 (where marital assets were
  insufficient to compensate wife for fourteen years during which she stayed
  home to care for parties' special-needs daughter rather than further her
  own career, court had discretion to provide wife with maintenance award
  that included rehabilitative and permanent components); Strauss v. Strauss,
  160 Vt. 335, 341-42, 628 A.2d 552, 555-56 (1993) (family court abused its
  discretion by not awarding at least some permanent maintenance to
  forty-eight-year-old wife with limited employment prospects who stayed home
  and raised parties' children during twenty-eight-year marriage).

       Nor are we persuaded by wife's claim that the assets she was awarded
  in the property settlement are insufficient for her to take advantage of
  her business skills by starting her own business.  The court found that
  both parties had received substantial assets in the property distribution
  from which they could meet their and their children's future needs. 
  Although wife was not awarded a significant amount of income-producing
  property, she was awarded $330,000 in marital assets that she can use
  toward initiating or obtaining a business, if that is what she chooses to
  do.

 

       The child support determination is reversed, and the case is remanded
  for further consideration on that point.  In all other respects, the family
  court's final divorce order is affirmed, except that paragraph 12 of the
  November 9, 1995 order is amended to require husband to pay wife $11,762
  instead of $10,387 as part of the contempt sanction.



                                 FOR THE COURT

                                 _________________________________
                                 Associate Justice