Bell v. Bell

BELL_V_BELL.92-107; 162 Vt. 192; 643 A.2d 846

[Opinion Filed May 20, 1994]

[Motion for Reargument Denied June 17, 1994]

 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. 92-107 and 92-635


 Susan M. Bell                                Supreme Court

                                              On Appeal from
      v.                                      Chittenden Family Court

 David C. Bell                                October Term, 1993




 Amy Marie Davenport, J.  (divorce)

 Alden T. Bryan, J.  (motion to stay)

 Nancy Corsones of Corsones & Corsones, Rutland, for plaintiff-appellant

 John J. Bergeron and Norman C. Smith of Bergeron, Paradis, Fitzpatrick &
   Smith, Burlington, for defendant-appellee


 PRESENT:  Gibson, Dooley, Morse and Johnson, JJ.



      JOHNSON, J.    Plaintiff wife appeals from a divorce order, contesting
 the Chittenden Family Court's award of marital property and maintenance.  We
 affirm in part and reverse in part, and remand for further proceedings based
 on our conclusion that the trial court did not assign all of the marital
 assets and denied a cost-of-living adjustment award for an inadequate
 reason.
      The parties were married in 1960 and separated in the Fall of 1989.
 They had three children, including a son who died when he was 18.  At the
 time of the final hearing, wife was 53 years old.  She had completed three

 

 years of college and, for approximately ten years during the marriage, she
 co-owned and worked in a women's apparel store, which she eventually sold.
 She then performed accounting and bookkeeping for her husband's business for
 about a year and a half, until the separation.  She is in good physical
 health, but suffers from depression.  At the time of trial, wife was
 unemployed.  After taking into account wife's work experience and emotional
 health, the court concluded that wife's earning capacity is between $7,000
 and $10,000.
      At the time of the final hearing, husband was 54 years old and also in
 good physical health, although he had a kidney removed because of cancer
 within the year prior to trial.  Throughout the marriage, he was employed as
 a life insurance agent, earned far more than wife and enjoyed extensive
 travel, a boat, and an airplane.  Husband's 1990 business income for tax
 purposes was $76,218 and his gross income was $166,753.
      The parties enjoyed a comfortable standard of living during their
 marriage, based on income from husband's business, various real estate
 investments, income generated from land husband inherited during the
 marriage, borrowed money, and life insurance proceeds received on their
 son's death.  The court found, however, that the parties had no current
 investments other than an IRA account, a life insurance policy, and a
 $45,000 promissory note on a property on College Street in Burlington
 ("College Street note").  Based on this evidence, the court found that the
 parties were living beyond their means.
      The court found that husband was at fault in the breakup of the
 marriage because of numerous infidelities and that wife was "psychologically

 

 devastated" by the separation and her repeated discoveries of the
 infidelities.
      The sole issues before the court were maintenance and property
 division.  After the final hearing, the court awarded the following to the
 wife:
           IRAs                                       $ 33,294
           54.5% of husband's pension                   60,000
           Car                                          10,000
           Home Furnishings                             12,000
           Equity in Home                               37,000

           TOTAL                                      $152,294

 The Court awarded the following to the husband:
           "Split-Dollar" Life Insurance (cash value) $ 19,000
           45.5% of husband's pension                   50,000
           Car                                          10,000
           Boat (partial interest)                       3,500
           Airplane (partial interest)                   6,500

           TOTAL                                      $ 89,000

 The court also awarded husband his business and all assets owned by the
 business.  In addition, husband was directed to pay debts for which he
 states the total was $47,626.  The court specifically directed how the
 proceeds from the $45,000 College Street note should be disbursed.
      Wife requested $3,500 per month in maintenance, and husband proposed
 $1,500.  The court ordered maintenance for wife of $2,500 per month until
 February 1, 2002 and $1,000 per month thereafter.  The court did not provide
 for cost-of-living increases.  The court ordered husband to maintain wife as
 the beneficiary on the split-dollar life insurance policy and group life
 insurance policy until husband was 65 years old or to obtain another life
 insurance policy with an equivalent death benefit with wife as the
 beneficiary.  Pursuant to V.R.C.P. 59(e), wife moved to amend the judgment

 

 on numerous grounds.  The court issued an order amending some findings, but
 declined to reconsider its decisions regarding the cost-of-living clause and
 the value of the marital home.
      Wife appealed the order, and thereafter moved to stay husband's receipt
 of the proceeds of the College Street note.  That motion was denied, and the
 appeal from that denial has been consolidated with the divorce appeal.(FN1)
                                     I.
      Wife argues first that the court erred in failing to amend its November
 8, 1991 finding valuing the marital home at $315,000, because the home
 subsequently sold for only $310,000.  The result was a reduction in net
 proceeds from sale of the house from $37,000 to $32,000, and thus a
 reduction in wife's property award.
      We have stated that "[a]s a general proposition, marital assets should
 be valued as close to the date of trial as possible."  Albarelli v.
 Albarelli, 152 Vt. 46, 48, 564 A.2d 598, 599 (1989).  The concern addressed
 by the Albarelli rule, however, is that courts not rely on appraisal
 evidence that is stale at the time of trial.  The rule does not address
 changes that occur after issuance of the court's initial order.  The purpose
 of motions to amend the judgment is to examine the correctness of matters
 before the court at trial.  See In re Robinson/Keir Partnership, 154 Vt. 50,
 54, 573 A.2d 1188, 1190 (1990) (Rule 59(e) supports "'reconsideration of
 matters properly encompassed in a decision on the merits.'") (quoting White
 v. New Hampshire Dep't of Employment Sec., 455 U.S. 445, 451 (1982)).

 

      The unopposed evidence at trial was that there had been an oral offer
 to purchase the home for $315,000 -- evidence that was received very close
 to the transaction that followed issuance of the initial findings and order.
 The parties thereafter mutually agreed to lower the sale price by $5,000,
 and the record does not indicate any understanding between the parties about
 the impact of that decision on the court's order.  Most importantly, the
 court's order was not framed with a specific dollar award to wife from sale
 of the house, but rather stated: "The net proceeds from the sale of the
 marital home after payment of all costs associated therewith are awarded to
 Plaintiff."  Because the court's initial valuation was not in error, it did
 not abuse its discretion in declining to amend that finding after the actual
 sale was completed at a modestly lower price.
                                     II.
      Wife next argues that the court erred by overestimating the marital
 debt that was to be paid from the proceeds of the College Street note and
 husband retained the remaining proceeds, though they were not assigned to
 him.  The provision of the order relating to the College Street note stated:
           The $45,000 payment from the College Street property due
           on November 1, 1991, shall be allocated to pay debts of
           the parties as follows:  the anticipated tax indebted-
           ness resulting from the payment; the outstanding debt to
           Plaintiff's therapist; all property tax arrearages on
           the marital home.  Out of the remaining funds, $8,000
           shall be allocated to Plaintiff to pay for her moving
           expenses, as reimbursement for improvements to the
           marital home, and to assist her with the cost of her
           litigation expenses in this matter.  The remainder of
           the funds shall be allocated towards payment of the
           parties' income tax obligations for 1990.

 Wife argues the court erred in finding that the arrearage in property taxes
 was $6,000 when it was actually $2,720, including a penalty assessment, and

 

 that the amount due on the 1990 income tax was not $27,000, but rather
 $12,493.
      Husband's response is similar to his argument concerning the court's
 finding as to the value of the house as of the date of the initial order  --
 that the findings were sound at the time they were made and were not tainted
 by later events.  We agree that the court's findings were supported by
 evidence in the record.  Unlike that part of the order relating to the
 proceeds of the house sale, however, the provision in the order awarding the
 proceeds of the College Street note failed to deal adequately with a
 possible remainder.
      The provision contains an implicit assumption that after the stated
 allocations, no funds would remain.  Wife argues that because the 1990 tax
 obligation was only $12,493 and the property tax only $2,720, the total
 funds expended from the $45,000 payment was between $34,343 and $36,343 (the
 difference depending on the exact amount of the tax indebtedness resulting
 from receipt of the $45,000 itself).  As a result of the same calculations,
 husband retained between $8,600 and $10,600 -- which sum was never specifi-
 cally awarded to him under the order.  Though the record does not allow us
 to determine specific amounts, we agree with wife's basic argument.  While
 the court was not required to forecast the precise amount of the property
 tax and 1990 income tax to be paid after the decision, it was required to
 allocate all of the assets.  Cf. Hendrick v. Hendrick, 142 Vt. 357, 361, 454 A.2d 1251, 1253 (1982) (incomplete and unreviewable division resulted from
 court's failure to evaluate all assets).  The foregoing language in the
 court's order does not do this.

 

      Husband's only response is that he should be entitled to retain the
 difference between expected tax payments and actual payments because he
 "made efforts to reduce that debt before the $45,000 second mortgage money
 became available."  That argument is not reflected in the order.  Unlike the
 provision for sale of the house, there was no assignment by the court of the
 net proceeds of the note and no common agreement between the parties as to
 the transactions affecting the amount of net proceeds.  Consequently, the
 matter must be remanded for further proceedings to determine the amount of
 the net proceeds from the payment of the College Street note and to award
 these proceeds, within the court's discretion.
      In a related claim, wife asserts that husband unilaterally assumed
 control over monthly interest payments of $400 on the $45,000 College Street
 note until the note was paid in full.  This question was the subject of
 wife's post-appeal stay motion.  It is unclear on the present record:
 whether wife raised this issue at the divorce trial; whether husband in fact
 retained the interest payments; if so, whether these funds were accounted
 for and presented to the court for consideration; and how the court
 allocated or accounted for this fund, if at all.  Because these issues are
 integrally related to the question of the disposition of the balance of the
 $45,000 principal payment on the College Street note and that issue is to be
 considered on remand, the court shall also consider the issues concerning
 the interest payments.
                                    III.
      Wife argues next that the court abused its discretion in awarding her
 only 60% of the marital property and $2500 per month alimony up to age 65.
 Wife does not point to specific factors reflecting an abuse of discretion,

 

 but attempts to reweigh the evidence before the trial court under all the
 statutory factors.  The court has considerable discretion in ruling on these
 matters, and the party seeking to overturn a property and maintenance award
 must show that there is no reasonable basis to support it.  Klein v. Klein,
 150 Vt. 466, 472, 555 A.2d 382, 386 (1988); Quesnel v. Quesnel, 150 Vt. 149,
 151, 549 A.2d 644, 646 (1988).  Our purpose on appeal is simply to determine
 "whether [the court's] exercise of discretion was proper."  Richard v.
 Richard, 146 Vt. 286, 287, 501 A.2d 1190, 1190 (1985).
      If there is a theme that underlies wife's arguments, it is that husband
 earned annual gross income of more than $160,000 in the four years prior to
 the divorce, that his business deductions are higher than average, and that
 he thus has a higher standard of living than wife.  The evidence showed that
 husband's business expenses were a greater percentage of his gross income
 (50%) than the average for the insurance business (40 to 45%).  The court
 concluded the difference was not significant and wife does not attack this
 finding on appeal.  Without more, such as a demonstration that husband's
 business expenses meet his basic needs to such an extent as to make full
 deduction of them inappropriate for determining income available for
 maintenance, it was not an abuse of discretion for the trial court to rely
 on husband's net rather than gross income.(FN2)
       With respect to wife's abuse of discretion claim, we cannot find that
 the lower court abused its discretion.  Wife correctly points to evidence in
 the record of her nonmonetary contribution as spouse and homemaker to the
 "acquisition, preservation, and . . . appreciation in value of the

 

 respective estates."  15 V.S.A. { 751(b)(11).  Her brief recounts the
 "classic scenario" in which one spouse earns the income and the other does
 what is required and expected to maintain the household.  What she does not
 explain is how or why the court's findings and conclusions fail to recognize
 this scenario.  The court specifically found: "At the beginning of the
 marriage, Plaintiff worked for a few years at a medical center.  After four
 years she left her job and assumed primary responsibility for raising the
 children and caring for the home.  Her responsibilities as a homemaker
 included entertaining Defendant's business friends and associates."  Based
 on her lengthy time away from the job market and on findings that wife had
 had problems maintaining employment because of her emotional state, the
 court rejected husband's contention that wife had the potential to earn
 $24,000 per year.  Thus, the court made positive findings as to wife's
 nonmonetary contributions and rejected husband's argument concerning her
 potential post-judgment earning capacity.  The property division was well
 within the court's discretion and should not be disturbed on appeal.
      We draw a similar conclusion on the maintenance award.  Wife asserts
 she is living a "radically lowered" standard of living due to the award,
 compared to life during the marriage when the parties "took exotic vaca-
 tions, drove top of the line vehicles, and lived in a very spacious home in
 a premier residential community in Vermont."  The lower court specifically
 addressed the parties' standard of living:
        There is no question in this case that the parties enjoyed a
      very comfortable standard of living during the marriage.  There is
      also no question that they could not have maintained their
      standard of living on the parties['] earned income alone.  Their
      income was consistently supplemented through the sale of assets,
      their son's life insurance benefits and the indebtedness which
      they accumulated on the marital home.  These additional sources of
      income are no longer available and it is reasonable to conclude

 

      that had the parties not separated, they would have had to curtail
      their style of living considerably in order to live within their
      means.

 (Emphasis added.)  The court found that granting wife's request for $3,500
 per month in maintenance would result in husband's "passing automatically
 from prosperity to misfortune," while limiting maintenance to $1,500 per
 month, as requested by husband, would have the reverse effect.  Under 15
 V.S.A. { 752(b)(3), the proper focus was on "the standard of living
 established during the marriage."  Klein, 150 Vt. at 476, 555 A.2d  at 388.
 The court was not barred, however, from examining circumstances or
 conditions during the marriage that were not likely to persist after it
 ended.  See DeGrace v. DeGrace, 147 Vt. 466, 469-70, 520 A.2d 987, 990
 (1986) (court's finding on future earning capacity not supported by record
 where court did not consider undisputed evidence that pre-divorce income
 resulted from tremendous overtime during a strike).  The lower court weighed
 the past and the future properly in this case.  Its finding that the
 parties' standard of living would have declined, with or without dissolution
 of their marriage, was supported by the record.
                                     IV.
      Wife also appeals the trial court's refusal to include a cost-of-living
 clause in the maintenance order.  The trial court denied a cost-of-living
 award because it found that "there was no evidence to support an expectation
 that [husband's] income would rise on a regular basis" and that "there was
 as much possibility that his income would decrease as it would increase."
      Wife argues that the issue is whether the recipient spouse, the spouse
 with the limited income, should have to incur the expense of a modification
 petition to obtain a cost-of-living adjustment when such expense will most

 

 likely negate the benefit of modification.  This argument, however, would
 apply in every case and, in essence, is for a presumption in favor of cost-
 of-living adjustment awards.  This argument is properly addressed to the
 Legislature, rather than this Court.
      Nonetheless, we reverse and remand this issue to the trial court for
 reconsideration because the reason given to deny the award was inadequate.
 Under 15 V.S.A. { 752(b)(7), the trial court must consider "inflation with
 relation to the cost of living" when fashioning a maintenance order.  In
 Roya v. Roya, 145 Vt. 488, 494 A.2d 132 (1985), this Court upheld the
 validity of automatic adjustments for the cost of living, id. at 490, 494 A.2d  at 134, but specifically required that such an award "provide for
 situations in which the payor's income does not keep pace with inflationary
 increases in the cost of living," id. at 491-92, 494 A.2d  at 135.  In other
 words, even an "automatic" cost-of-living award may not be effectuated in
 the absence of an increase in the payor's income, and the award must
 incorporate some mechanism for handling this circumstance.  Thus, the
 court's finding that there was no evidence husband's income would increase
 in the future is not a reason to deny the award, because a valid cost-of-
 living adjustment award meets that concern.
                                     V.
      Wife also claims that the court abused its discretion in failing to
 secure the maintenance award with sufficient life insurance.  We held in
 Justis v. Rist, ___ Vt. ___, ___, 617 A.2d 148, 150 (1992), that 15 V.S.A. {
 752 does not reflect legislative intent to override the long-established
 rule that the obligation to pay maintenance ceases upon the death of either
 party.  It was, of course, within the court's discretion to order a party to

 

 maintain life insurance naming the other party as beneficiary.  See Quesnel,
 150 Vt. at 152, 549 A.2d  at 647 (when insurance policy is already in effect,
 court has authority to order insured party to maintain policy for benefit of
 spouse).  Vermont law does not, however, require life insurance to effect
 indirectly what { 752 does not mandate directly -- the continuation of
 maintenance after the death of either party.  Husband was ordered to
 continue an existing life insurance policy, or an equivalent policy, with
 wife as beneficiary until he was 65 and it was not an abuse of discretion to
 decline to order more.
                                     VI.
      Finally, wife argues that the court also erred in allowing payment of
 taxes on the liquidation of a deferred compensation fund out of proceeds of
 the College Street note, while in an earlier temporary order, the taxes due
 on the liquidation of this fund were to have been paid from the proceeds of
 that fund.  As this issue was not raised in wife's requested findings or
 motion to amend and does not otherwise appear to have been raised at trial
 or preserved for appeal, we will not consider it.
      Reversed and remanded for further consideration of issues concerning
 the College Street note and a cost-of-living award; otherwise affirmed.



                                    FOR THE COURT:


                                    _______________________________
                                            Associate Justice
         
------------------------------------------------------------------------------
                                Footnotes

FN1.   In view of our remand on the question of the note proceeds, infra, the
 issue of whether the court should have granted wife's motion for stay is now 
 moot.

FN2.   Counsel stated at oral argument that wife is not claiming that
husband's business deductions were illegitimate under IRS rules.

------------------------------------------------------------------------------

                                  Concurring

 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. 92-107 and 92-635


 Susan M. Bell                                Supreme Court

                                              On Appeal from
      v.                                      Chittenden Family Court

 David C. Bell                                October Term, 1993



 Amy Marie Davenport, J.  (divorce)

 Alden T. Bryan, J.  (motion to stay)

 Nancy Corsones of Corsones & Corsones, Rutland, for plaintiff-appellant

 John J. Bergeron and Norman C. Smith of Bergeron, Paradis, Fitzpatrick &
    Smith, Burlington, for defendant-appellee


 PRESENT:  Gibson, Dooley, Morse and Johnson, JJ.


      MORSE, J., concurring.   In my opinion, sound public policy and common
 sense ordinarily call for inclusion of a cost-of-living adjustment (COLA) to
 maintenance.  If specific circumstances dictate, the family court has
 discretion to do otherwise.
      A presumption in favor of COLAs is not an issue to be left in the first
 instance to the legislature.  The legislature could hardly have intended
 that maintenance awards be left to erode in an inflationary economy.


                                    ______________________________
                                    Associate Justice