2013 VT 32


Felis v. Felis (2012-077)
 
2013 VT 32
 
[Filed 24-May 2013]
 
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 by email at: JUD.Reporter@state.vt.us or by
mail at: 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.
 
 

2013 VT 32

 

No. 2012-077

 

Kenneth Felis


Supreme Court


 


 


 


On Appeal from


     v.


Superior Court, Lamoille Unit,


 


Family Division


 


 


Vickie-Lee Felis


September Term, 2012


 


 


 


 


Dennis
  R. Pearson, J.


 

Kenneth P. Felis, Pro Se, South Burlington,
Plaintiff-Appellant.
 
Robert D. Rachlin of Downs Rachlin Martin PLLC, Burlington,
for Defendant-Appellee.
 
 
PRESENT:   Reiber, C.J., Dooley, Skoglund and
Burgess, JJ., and Zimmerman, Supr. J.,
                    
Specially Assigned
 
 
¶ 1.            
DOOLEY, J.   Husband appeals a final divorce order
issued by the Lamoille Superior Court, Family Division, arguing that the court
abused its discretion in setting parent-child contact, dividing the marital
estate, and awarding wife nominal maintenance and attorney’s fees.  We
affirm the parent-child contact order, the award of nominal maintenance, and
the partial award of attorney’s’ fees out of the marital estate to wife. 
As to the property award, we affirm in part and reverse in part.
¶ 2.            
At the time of the final divorce order, husband was fifty-eight years
old, and wife was fifty-seven years old.  The parties had married in 1978
and separated in 2006, almost six years before the final divorce order issued
in December 2011.  The parties had five children during the course of the
marriage, only one of whom was a minor at the time of the divorce
proceedings.  Their youngest son was thirteen years old when the final
divorce order issued.
¶ 3.            
During the marriage, wife did not work outside the house but rather was
a full-time homemaker who provided the primary care for the parties’
children.  Husband was a successful businessman and entrepreneur who
amassed at least fifteen million dollars in assets over the course of the
marriage.  The multi-year divorce proceedings centered on determining
parental rights and responsibilities with respect to the parties’ youngest son
and on valuing and distributing a marital estate valued at approximately nine
million dollars and consisting of two closely-held businesses and substantial
real estate holdings, including a multi-million-dollar marital residence, land
holdings, and commercial properties.
¶ 4.            
During several days of hearings held in October 2009 and January 2010,
the parties presented expert testimony and submitted voluminous
documents.  In December 2011, the family court issued a sixty-four-page,
single-spaced decision that included 144 detailed findings and ten pages of
legal conclusions.  Following the issuance of the final order, the court
denied husband’s motions for a new trial and to amend the findings and
judgment.  In relevant part, with respect to this appeal, the family
court: (1) granted wife sole parental rights and responsibilities over the
parties’ youngest son, with husband having parent-child contact every other
week from Thursday after school until Sunday afternoon; (2) awarded wife
approximately fifty-seven percent and husband approximately forty-three percent
of the nine-million-dollar marital estate; and (3) awarded wife one dollar per
year in maintenance.
¶ 5.            
Husband first argues on appeal that the family court erred in reducing
his parent-child contact below that which the parties had been following since
a temporary order was issued in December 2007.  According to husband,
there is a “disconnect” between the family court’s findings and conclusions on
this issue.  Husband points out that in its findings the court correctly
describes the temporary order as allowing him parent-child contact every other
weekend through Monday morning, but then in its conclusions mistakenly refers
to the temporary order as allowing him contact every other weekend until only
Sunday afternoon.  Husband asserts that the court’s failure to explain why
it deviated from the temporary order demonstrates that the court intended to
leave in place the schedule set forth in that order.
¶ 6.            
We disagree.  At trial, wife proposed a schedule that would have
the parties’ son return to his primary home on Sunday afternoon rather than
Monday morning to facilitate the transition to the school week.  Husband
asked for a fifty-fifty split in parent-child contact without setting forth any
proposed schedule.  In its decision, the court noted that wife’s proposed
schedule “generally” tracked the temporary order.  In fact, wife’s
proposed schedule did “generally” track the schedule in the temporary order,
except that she wanted the parties’ son to return home on Sunday afternoon
rather than Monday morning to ease his transition into the school week. 
The court specifically stated that it was adopting the schedule wife proposed
at the final hearing, not the schedule set forth in the temporary order. 
We presume that the court knew the difference and the basis for that
difference, as expressed by wife in her testimony at the final hearing. 
See Davis v. Davis, 128 Vt. 495, 498, 266 A.2d 466, 468 (1970) (“It will
also be presumed on appeal, the contrary not appearing, that all the evidence
was considered by the trial court with impartial patience and adequate
reflection.”).  Accordingly, we find no abuse of discretion with respect
to the court’s parent-child contact order.  See Payrits v. Payrits,
171 Vt. 50, 52-53, 757 A.2d 469, 472 (2000) (“The family court has broad
discretion in awarding custody, and its findings will not be overturned unless
clearly erroneous.”).
¶ 7.            
Next, husband raises several claims of error challenging the family
court’s property distribution.  As husband acknowledges, he must overcome
a deferential standard of review to prevail on these claims of error.  See
Cabot v. Cabot, 166 Vt. 485, 500, 697 A.2d 644, 654 (1997) (“[P]roperty
division is not an exact science, and the trial court has broad discretion in
considering the statutory factors and fashioning an appropriate order.”).
¶ 8.            
Husband first contends that the court abused its discretion by crediting
wife for expenditures made by him even though those expenditures had already
been accounted for in determining the size of the marital estate.  The
bulk of the expenditures to which husband refers are two loans and a $100,000
payment to his secretary made by husband during the pendency of the divorce
action.  The first loan was for $145,000 to a restaurant owner who became
husband’s girlfriend.  The owner defaulted on the loan.  The other
loan was for $5000 to another woman.
¶ 9.            
These expenditures were among those cited by wife in her January 2009
motion to freeze the marital accounts to prevent husband’s wasteful dissipation
of the marital estate.  Following an evidentiary hearing on the motion
before a different judge than the one who presided at the final divorce
hearing, the court in a March 2009 temporary order determined that wife had
failed to establish that husband had (1) engaged in “money laundering” through
his girlfriend or secretary or any other person or business or (2) “paid
unexplained, unanticipated, and excessive compensation of his assistant when
compared with her historical compensation.”  In so ruling, the court noted
the parties’ agreement that the appropriate standard for determining whether
husband’s spending was excessive involved comparing his expenditures to the
$3500 per week wife was receiving from husband under the temporary order. 
According to the court, it could not conclude that husband’s expenditures were
excessive or wasteful “if the standard of comparison is the one adopted by the
parties and without further evidence of the marital standard of living.”
 Nonetheless, the court thereafter capped husband’s use of marital funds
for personal, household, and discretionary spending at $3500 per week, and
further prohibited either party from incurring “a personal or business
obligation in excess of $10,000.00 without first providing notice to the other
party of the amount to be incurred, the purpose of the obligation, to whom it
will be owed, and any security that will be provided for repayment.”
¶ 10.        
Wife raised the issue anew in the final divorce hearing, and the judge
presiding at that hearing again addressed it.  The court first noted that
wife’s new evidence on the subject related to expenditures before the temporary
order imposed a cap on expenditures by both husband and wife, and, therefore,
wife was trying to relitigate claims already decided against her.  As to
the personal notes, the court said “now to tag [husband] . . . with those items
as ‘disallowed’ expenditures” would arguably “be double counting.”  The
court declined to reopen the question of “unaccounted for expenditures” during
the period before the expenditure cap order “for purposes of the final tally of
marital assets actually available for allocation as of January 2010, and
August 2, 2011.”
¶ 11.        
Despite the above analysis, the court, in distributing the parties’
various assets, listed as husband’s asset $275,891,[1] which no longer exists and consists
primarily of money in the cash account that was expended for the two loans and
payment to his secretary as discussed above.  The court explained as
follows:
  By tagging
[husband] with a total of $275,891 in unexplained, or disputable expenditures
using marital funds . . . the court has essentially acknowledged, and taken the
sting out of [wife’s] “wasteful expenditure” claims.  Although those
claims were never proven to the court’s satisfaction, nonetheless there is here
some equitable recognition that a lot of cash under [husband’s] nominal control
had been expended in a somewhat loose fashion with no formal accounting to
[wife].
 
¶ 12.        
In response to husband’s motion to amend the court’s findings and
judgment, the court dismissed husband’s assertion that its rejection of the
wasteful dissipation claims was inconsistent with its decision to treat the
spent money as an asset available to husband.  The court explained that
while the expenditures at issue “may not have been ‘wasteful disposition,’
still there was beneficial use of, or expenditure of marital assets that had to
be accounted for.”
¶ 13.        
On appeal, husband argues that the court abused its discretion by
counting the disputed expenditures against him.   According to
husband, this treatment of those expenditures was inconsistent with the
previous judge’s temporary order concluding that there was no wasteful
dissipation of marital assets.  In short, husband asserts that the court
committed reversible error by revisiting the already litigated issue of his
alleged wasteful dissipation of the marital estate.
¶ 14.        
We separate the issue into two parts: (1) whether the court may consider
an asset transferred out of the marital estate as available to the party who
transferred it, and if so, under what circumstances, and (2) whether the court
could so consider it here.   In addressing the first part of the
issue, we emphasize that the applicable statute provides a broad definition of
marital property subject to the jurisdiction of the superior court: “All
property owned by either or both parties, however and whenever acquired, shall
be subject to the jurisdiction of the court.”  15 V.S.A. § 751(a). 
There is no question that the funds in the joint accounts from which the
payment to the secretary and the loans were made were marital property within
the jurisdiction of the court.  The expenditures in question were made
after the commencement of the divorce and acted to reduce the assets available
for distribution.
¶ 15.        
In a number of cases, this Court has held that the trial court can count
as a marital asset any property—including funds—previously transferred from the
marital estate for the purpose of reducing the marital property available to
the other spouse.  The leading decision is Clayton v. Clayton, 153
Vt. 138, 569 A.2d 1077 (1989),[2]
in which, after the initiation of a divorce action,  husband transferred
his shares in a family corporation to his parents, without consideration and
pursuant to an agreement created to ensure that none of the shares would ever
be distributed to wife.  The trial court included in the marital estate
some of the assets husband had transferred away to the parents, in order to
award a monetary sum, reflecting part of those assets, to wife.
¶ 16.        
This Court found that the agreement under which husband transferred the
assets without consideration to his parents was of a type that had “long been
contrary to public policy and unenforceable as a fraudulent transfer.”  Id.
at 142, 569 A.2d at 1079.  We held that it was the court’s responsibility
to consider “the bona fides of the transfers” and husband had the burden to
present evidence that the transfers were “bona fide and not undertaken for the
purpose of diminishing the value of the marital estate.”  Id. at
142-43, 569 A.2d at 1080.  We upheld the trial court decision that husband
“could not legally benefit from voluntarily reducing his income and assets
where there appeared to be no rational business purpose and where the result
would be in derogation of the rights of his wife and child.”  Id.
at 144, 589 A.2d at 1081; see also Wall v. Moore, 167 Vt. 580, 581, 704
A.2d 775, 777 (1997) (mem.) (concluding that trial court did not err in
considering as marital asset stock portfolio given to husband as part of family
inheritance, even though husband sold substantial portion of stock, where
husband violated divorce order freezing all assets); Soutiere v. Soutiere,
163 Vt. 265, 271, 657 A.2d 206, 209 (1995) (affirming trial court’s
determination that condominium purchased by husband from family gifts of money
and titled to husband’s girlfriend was marital asset, noting that case fell
“squarely within a line of recent decisions giving family court judges the
power to include within marital assets property which has been placed in other
names to avoid distribution to a spouse”); Nevitt v. Nevitt, 155 Vt.
391, 400-01, 584 A.2d 1134, 1140 (1990) (concluding that trial court properly
included in marital estate house transferred to husband’s mother, without
consideration, where court found transfer was made to deprive wife of fair
portion of marital assets).  In Begins v. Begins, 168 Vt. 298,
304-05, 721 A.2d 469, 474 (1998), we affirmed the trial court’s refusal to
apply the Clayton rule to consider as a marital asset a $10,000 raise in
husband’s salary turned down by husband because there was no finding that
husband turned down the raise for the purpose of reducing the marital assets
available to wife.
¶ 17.        
Husband relies on a more recent application of the Clayton
principle in Jenike v. Jenike, 2004 VT 83, 177 Vt. 502, 857 A.2d 798
(mem.).  In Jenike, husband depleted an investment account by
buying and selling stock in a declining market, after the divorce was filed and
despite a preexisting asset freeze order.  The trial court valued the
account at an amount before the stock transactions depleted it on the theory,
accepted in Wall, that the violation of the freeze order authorized that
action.  We reversed, holding that the stock purchases and sales were business
activity allowed by the freeze order.  Id. ¶¶ 16-17.  We
added, however, “the court can review the investment decisions made and
determine if they were reasonable or if they were done for purposes that would
not support a finding of prudent management, that is, to deliberately deplete
the marital property.”[3] 
Id. ¶ 17.  It is this language on which wife relies.
¶ 18.        
We recognize that the situation here is comparable to Jenike but
different from the bulk of our Clayton line of cases.  Wife’s claim
is that husband dissipated the cash assets wastefully, and not necessarily to
reduce the marital assets available to her for distribution. 
Nevertheless, the Clayton line of cases, and this case, both involve
what is known broadly as the “dissipation doctrine” which allows a court to
return to the marital estate dissipated assets where the dissipation amounted
to wrongful depletion of the estate.  See L. Becker, Conduct of a
Spouse that Dissipates Property Available for Equitable Property Distribution:
A Suggested Analysis, 52 Ohio St. L.J. 95, 97-99 (1991).  Although
most jurisdictions recognize the doctrine in some form, there is considerable
variation in what constitutes dissipation such that a court can include the
dissipated asset in the marital estate.  See id. at 111-16.
¶ 19.        
A review of recent decisions demonstrates the variations in the adopted
standard.  See, e.g., Ethelbah v. Walker, 225 P.3d 1082, 1090
(Alaska 2009) (holding that dissipation occurs if assets are “wasted,
dissipated, or converted to non-marital form” and not “expended ‘for marital
purposes or normal living expenses’ ” (quoting Jones v. Jones, 942 P.2d
1133, 1139 (Alaska 1997)); Gershman v. Gershman, 943 A.2d 1091, 1096-97
(Conn. 2008) (holding that dissipation “at a minimum . . . requires financial
misconduct involving marital assets, such as intentional waste or a selfish
financial impropriety, coupled with a purpose unrelated to the marriage”); Omayaka
v. Omayaka, 12 A.3d 96, 101 (Md. 2011) (holding that “dissipation occurs
where one spouse uses marital property for his or her own benefit for a purpose
unrelated to the marriage at a time where the marriage is undergoing an
irreconcilable breakdown” (quotation omitted)); Reed v. Reed, 763 N.W.2d
686, 695 (Neb. 2009) (holding that dissipation “is defined as one spouse’s use
of marital property for a selfish purpose unrelated to the marriage at the time
when the marriage is undergoing an irretrievable breakdown”); Larsen-Ball v.
Ball, 301 S.W.3d 228, 235 (Tenn. 2010) (holding that dissipation occurs
when spouse “wastes marital property” or where funds are used “for purpose
unrelated to the marriage,” and concluding that courts must distinguish between
“dissipation and discretionary spending”).
¶ 20.        
Jenike suggested that the dissipation doctrine would apply to
some expenditures but did not define a precise application standard. 
Nonetheless, as noted, it suggested that expenditures of the marital property
would fit into one of two categories: (1) “reasonable” ones; or (2) ones “done
for purposes that would not support a finding of prudent management,” which we
equated with “deliberately deplet[ing] the marital property.”  Jenike,
2004 VT 83, ¶ 17.  Of the standards from other courts, we conclude that
the definition of dissipation in the Connecticut case Gershman v. Gershman
best describes that dichotomy.  Thus, the answer to our first question is
that the trial court could return the disputed assets to the marital estate for
purposes of equitable distribution if it found the expenditures involved
financial misconduct, such as intentional waste or selfish financial
impropriety, coupled with a purpose unrelated to the marriage.
¶ 21.        
This brings us to the second question: whether the court could consider
the expenditures in this case to be dissipation.  As an initial matter,
findings are required to support such a determination.  Here, there are no
findings of financial misconduct or intentional waste.[4]  Indeed, the court observed that it
could not find that the expenditures were wasteful.  The biggest
expenditure was for a now-uncollectible loan to husband’s girlfriend to start a
restaurant.  We recognize that the relationship of the recipient of the
loan to husband raises suspicion.  We also note the conclusion of the
court in Gershman that “[p]oor investment decisions, without more,
generally do not give rise to a finding of dissipation.”  943 A.2d at
1095.  In this context, it was necessary for the court to make findings on
whether the loan was fiscally prudent when made and the reason why the
restaurant failed.  There are no such findings.[5]   
¶ 22.        
There are similar difficulties in accepting the inclusion of the amount
of the $100,000 payment to husband’s secretary in the marital estate. 
Husband justified this payment based primarily on the secretary’s work in
responding to discovery requests.[6] 
The court found that during some periods of time “it did appear that [the
secretary] . . . was working almost full-time on responding to discovery, and
producing records and documents, and preparing financial analyses, that were
entirely related only to this litigation.”
¶ 23.        
The court included the payment amount back into the marital
assets.  Its decision to do so is cryptic and comes right after the court
award wife an additional $300,000 in attorney’s fees: “However, the court will
also allocate an additional $100,000 against
[husband], . . . as the value of litigation support efforts
paid for primarily out of marital funds, for his assistant.”  Although it
is not entirely clear, we understand that the court’s rationale was that
husband’s litigation costs, including the payment to the secretary, were
unreasonable.  There is, however, no finding to that effect because
husband was not seeking an award of attorney’s fees or litigation support costs
from wife or from marital assets.[7]
¶ 24.        
We also note that expenses a litigant necessarily incurs in responding
to discovery or other information requests are not the same as expenses for
legal representation or expert witnesses.  The litigant is required to
respond to the information requests with accurate and complete
information.  At least to some extent, the secretary’s work benefited wife
by disclosing husband’s financial situation.  Moreover, the attorney’s fee
and litigation expense awards to wife were much larger and came from marital
assets before they were allocated between the parties.  The court’s act of
adding the amount paid to the secretary and awarding the amount solely to
husband meant that only he bore the burden of these expenses.[8]  We conclude that the Gershman
standard should also apply to the payments to the secretary.  The amount
of the payment raises questions, but there are no answers.  Since we do
not know what work was done for the money, the hours of work, the normal
compensation rate, etc., we have no way to judge whether the payments can be
added to the marital estate under the Gershman standard.  
Again, there are no findings to justify the court’s action in placing in the
marital property a sum equal to the payment to the secretary.
¶ 25.        
We conclude that the dissipation doctrine is broad enough to encompass
the kinds of expenditures made here, but the findings do not support the
application of that doctrine in this case.  Thus, the trial court erred
when it concluded that it would add $250,000 to the marital estate to reflect
the value of improper expenditures and award the non-existent asset to husband
as part of the equitable division of the property.[9]  Because the court erred in
determining the elements of the marital estate, and its value, and, as a result
the property award, we must reverse and remand the property award. 
Because the other issues raised by husband may arise again on remand, we address
them here.
¶ 26.        
Husband also argues that the superior court abused its discretion by
deviating from an equal split of the marital assets and by giving wife a
nominal maintenance award based on his early retirement.  In husband’s
view, given the size of the marital estate, the fact that he has chosen to
retire early should have had little, if any, bearing on the distribution of
property or an award of maintenance.  According to husband, the court
demonstrated its bias against him by obsessing over his financial success and
ability to retire early, as evidenced by findings in which the court: (1)
suggested that his early retirement might be “entirely selfish” and “socially
repugnant”; and (2) noted that he planned to stay retired “and remain a member
of the landed gentry.”  Husband also argues that bias on the part of the
court is demonstrated by the court’s decision (1) to skew the property
distribution in wife’s favor based on his early retirement and her need for
marital property in lieu of maintenance, but then to award wife maintenance on
top of the property award; and (2) to make him solely responsible for the
marital debt obligations.
¶ 27.        
Notwithstanding the two unfortunate, but isolated, remarks in the
court’s lengthy decision noted by husband, there is no evidence of bias toward
husband by the court in this case.  Both remarks were made in the context
of the court finding that wife had failed to present evidence sufficient to
impute income to husband.  Indeed, the court found in favor of husband on
several disputed issues addressed by the parties’ experts, particularly
regarding the value of certain marital assets.  For the most part,
husband’s claim of pervasive bias is based on his dissatisfaction with the
court’s conclusions with respect to property distribution and
maintenance.  “However, adverse rulings alone do not show bias,” Dartmouth
Coll. v. Kozaczek, 2010 VT 113, ¶ 15, 189 Vt. 593, 19 A.3d 1236 (mem.), and
nothing else in the record indicates bias on the part of the court in this
case.  See In re Wildlife Wonderland, Inc., 133 Vt. 507, 513, 340
A.2d 645, 649 (1975) (noting presumption that “all evidence bearing upon issues
considered by the trier was heard with impartial patience and adequate
reflection,” and stating that “[a] decision contrary to the desires of a party
does not denote bias”).
¶ 28.        
The trial court did not give wife a larger share of the marital property
to punish husband for his early retirement, as he claims.  Rather, the
trial court based wife’s larger share on statutory factors such as: (1) the
great disparity in the parties’ opportunity to acquire future assets and
income, considering wife’s homemaker role throughout the course of the long
term marriage; and (2) the fact that wife was receiving marital property in
lieu of a maintenance award.  See 15 V.S.A. § 751(b).  An award of
approximately fifty-seven percent of the marital estate to wife was well within
the court’s discretion, given the import of those factors in this case. 
See Goodrich v. Goodrich, 158 Vt. 587, 593, 613 A.2d 203, 206 (1992)
(noting that equitable distribution of marital assets must be equitable but not
necessarily equal); cf. Cabot, 166 Vt. at 500-01, 697 A.2d at 654
(noting that court has discretion to make property award in lieu of maintenance
and upholding court’s decision to provide financial independence to parties by
awarding wife property from “substantial” marital estate in lieu of
maintenance).
¶ 29.        
Husband also argues that the court demonstrated bias by assigning to him
all of the liability associated with an aging commercial property used as a
manufacturing facility for one of his businesses.  The court found the
debt on that property to be approximately $600,000.  The family court
rejected the opinion of wife’s expert that the property was worth $1.9 million,
concluding that the property must be valued at $0 because there was no
persuasive means of calculating a credible fair market value.  In
assigning the debt solely to husband, the court noted the possibility of the
property eventually turning a profit and also wife’s outstanding attorney’s fee
obligation beyond that awarded by the court.  Husband speculates that he
will most certainly wind up incurring the full debt of the property in
question, while wife surely will not have to pay attorney’s fees beyond that
ordered by the court, given the court’s assessment that the fees were
excessive.  Notwithstanding husband’s speculations as to what the parties
will actually wind up paying with respect to their respective debts, we find no
abuse of discretion.  Husband has failed to demonstrate that there is no
credible basis underlying the court’s reasoning.  There is no indication
that it was motivated by bias against husband.
¶ 30.        
Finally, with respect to the property award, husband argues that the
court abused its discretion by failing to attribute fault for the break-up of
the marriage to wife based on her “serial infidelity.”  The point of this
argument is that husband claims that the last factor in the statutory list of
permissive factors—“the respective merits of the parties”—should have been
weighed against wife and affected the distribution of the property.  See
15 V.S.A. § 751(b)(12).  We emphasize that the superior court has broad
discretion in fashioning a property award and in weighing the statutory
factors.  Molleur v. Molleur, 2012 VT 16, ¶ 15, 191 Vt. 202, 44
A.3d 763.
¶ 31.        
The court found that wife had three episodes of secretive marital
infidelity during the marriage.  The court further found that husband’s
suspicions of her marital infidelity in 2005, which she denied, appeared to
have been the precipitating factor in hastening the parties’ divorce.  But
the court also found that at times throughout the marriage husband had been “distant,
aloof, over-bearing, controlling, dictatorial, and sometimes verbally angry,
cursing and aggressive.”  The court concluded that “fault” was not a
“decisive, or even significant factor in this case,” noting the conduct on each
side.  We decline to disturb the assessment of the factfinder on this
issue, in light of the standard of review.
¶ 32.        
Husband next argues that the court erred in awarding wife nominal
maintenance in the amount of one dollar per year.  He asserts that there
is no basis to support the court’s nominal maintenance award because wife’s
property award is more than sufficient to meet her reasonable needs over her
lifetime.  He further contends that the court compounded its error by
calculating reasonable needs based on wife not having to invade the principal
of her property award.  We find these arguments unavailing. 
¶ 33.        
We have held that “a court may award maintenance in a nominal amount, to
preserve the court’s ability to modify the award later in the event of a real,
substantial, and unanticipated change of circumstances.”  Arbuckle v.
Ciccotelli, 2004 VT 68, ¶ 8, 177 Vt. 104, 857 A.2d 324 (quotation
omitted).  In Henry v. Henry, 162 Vt. 613, 643 A.2d 845 (1994)
(mem.), we affirmed an award of nominal maintenance where the recipient-spouse
had had emotional problems in the past and the court was concerned that if they
reoccurred, the recipient would be unable to support himself.  We noted
that any increase in the maintenance would have to based on a “real, substantial,
and unanticipated change of circumstances,” 15 V.S.A. § 758, and the
obligor-spouse could resist the modification then “rather than at this
time.”  Henry, 162 Vt. at 613, 643 A.2d at 846.
¶ 34.        
In this case, wife sought an award of substantial maintenance. 
Husband’s position was that he had retired and would not in the future earn any
income from employment.  In light of the size of wife’s property award,
the court concluded that wife could not demonstrate sufficiently compelling
circumstances to require the court to consider imputing income to husband and
forcing him to liquidate much of his property award to provide her
maintenance.  Nonetheless, the court, albeit with expressed trepidation
given the parties’ litigious history, imposed the nominal maintenance award in
the event unanticipated circumstances justified a later maintenance
award—specifically that husband would come out of retirement and again begin
earning substantial income.  We believe that the court’s rationale fits
within our holding in Henry and that the award of nominal maintenance
was within the court’s discretion.  As we said in Henry, should
wife seek greater maintenance in the future, she faces a significant hurdle
under the changed circumstances standard.  Husband can oppose a substantial
maintenance award at that time, if it ever arises.[10] 
¶ 35.        
The last issue involves the award of litigation expenses to wife. 
Husband argues that the family court abused its discretion in awarding wife a
significant portion of her litigation expenses.  In faulting the court,
husband cites both the inordinate amount of wife’s litigation costs as well as
the trial court’s failure to acknowledge the entire amount of wife’s litigation
costs that he paid during the pendency of the divorce.
¶ 36.        
Several pages of the court’s lengthy decision are dedicated to
considering wife’s request for attorney’s fees and other litigation
expenses.  The court essentially agreed with husband’s assessment that
wife’s litigation costs, which included $815,000 in attorney’s fees and another
$300,000 in expert fees and expenses, were excessive.  The court opined
that, even for a spouse such as wife with limited access to the other spouse’s
financial records in a vigorously contested and factually complex divorce
contest, litigation costs would normally be around $300,000.  The court
stated that litigation costs up to that amount could be considered reasonable
and necessarily incurred and that it would also allocate against husband an
additional $100,000 in litigation costs based payments he made to his assistant
out of marital funds for litigation support, a subject we addressed
above.  In its final decree, the court ordered husband to pay wife
$300,000 “off the top” out of an account in the marital estate before it was
distributed to the parties.
¶ 37.        
In his motion to amend the findings and judgment, husband pointed out
that the court had recognized only $100,000 out of the $210,000 in litigation expenses
that he had been required to pay wife under previous orders of the court. 
In its order denying the motion to amend, the court acknowledged its failure to
recognize the full amount of wife’s litigation costs previously paid husband,
but stated that its mistake did “not fundamentally change the court’s view of
achieving a realistic, equitable and final resolution as to the available
marital assets” in light of its “overriding goal . . . to achieve a
distribution which would allow the parties to live separately and
independently, taken as a whole, going forward.”
¶ 38.        
As husband acknowledges, in the end the court effectively awarded wife
$510,000 “off the top” of the marital estate in attorney’s fees, thereby requiring
him to pay half of those fees, or roughly $255,000.  Husband does not
challenge the court’s conclusion that $300,000 in litigation costs for wife
would be reasonable.  Indeed, he asks this Court to limit his payment of
wife’s litigation costs to $300,000.  Yet, as noted, husband appears to
acknowledge that his earlier payments for wife’s litigation costs, as with the
$300,000 awarded in the final order, were “off the top” of the marital
estate.  In short, husband paid out of his share of the marital estate
only $255,000 of wife’s litigation costs, less than the $300,000 limit he
requested as reasonable. [11]
¶ 39.        
Wife sought from husband over one million dollars in lawyer and related
fees for the merits trial and additional hundreds of thousands of dollars under
temporary orders.  She received only a relatively small portion of the
requests because the court required her to pay fifty percent of the fees it
recognized as reasonable and found a large portion of the request not to be
reasonable.  The court has substantial discretion in making an award of
attorney’s fees.  Begins, 168 Vt. at 305, 721 A.2d at 474.  We
find no abuse of discretion here.
           
The judgment of the superior court with respect to parent-child contact,
maintenance and attorney’s fees is affirmed.  The judgment with respect to
the division of marital property is affirmed in part, and reversed in part, and
remanded for proceedings consistent with this opinion.
 
 

 


 


FOR THE COURT:


 


 


 


 


 


 


 


 


 


 


 


Associate
  Justice

 





[1] 
The $275,891 includes $25,891 that was paid to husband as part of a purchase of
a business and is otherwise accounted for.  Husband attempted to explain
the disposition of the money, but the court rejected the explanations.  In
the absence of an explanation of its disposition, the court treated it as still
available to husband and part of the marital estate.  Husband has not
contested that treatment on appeal.


[2] 
Clayton was preceded by Culver v. Culver, 133 Vt. 191, 332 A.2d
799 (1975), a case with similar facts but involving withdrawals from bank
accounts transferred to husband’s mother after the commencement of the divorce
action. See id. at 194, 332 A.2d at 801.  There is little
explanation in the opinion for the basis for the decision.


[3] 
We also noted that some of the withdrawals from the account were not for stock
trading, but instead for personal purposes—for example, to pay income taxes and
to pay off a mortgage on husband’s property.  We added that these
withdrawals could be added back to marital property and justify the property
award.  Jenike, 2004 VT 83, ¶ 17.  This was possible because
the withdrawals for personal purposes were done in violation of the asset
freeze order. 


[4] 
The trial court did not rely on a theory that husband violated an order
freezing the assets and, thus, prohibiting expenditures from the bank and
brokerage accounts.  See Jenike, 2004 VT 83, ¶¶ 13-15; Wall,
167 Vt. at 581, 704 A.2d at 777 (court could consider asset as part of marital
estate, although expended and no longer available, where spouse sold the asset
in violation of an order freezing the assets of the parties).  While there
was an order in this case, both parties were drawing on the bank and brokerage
accounts for living and discretionary expenses.  In the pretrial
proceeding that resulted in a limit on how much each spouse could draw from the
accounts, the court ruled that husband’s expenditures were not out of line of
those of wife.  Thus, there never was a ruling that husband violated the
asset freeze order, and any such ruling would have had to acknowledge that wife
also violated the order.
 


[5] 
There are also no findings with respect to the small, $5000, loan, and we
reverse the decision to add this amount to the marital assets for the same
reason.
 


[6] 
In the temporary order, in response to wife’s motion to deny husband credit for
the expenditure on the secretary, the court responded that the secretary
performs “an array of personal and professional tasks for [husband]” and her
compensation reflects her long employment working for husband, her management
of one of husband’s properties and her availability “on an approximately 24/7
basis.”  This is the only finding explaining what the secretary did for
her compensation.  It is unclear how much of her work for the compensation
in issue was for the above responsibilities and not for activities directly
connected to the litigation.  For purposes of our analysis in the text, we
assume the compensation was only for work connected to the litigation.  We
stress this is an assumption, and there are no findings on the point.
 


[7] 
The court’s discussion assumes that none of the attorney’s fees or costs of
expert witnesses have been paid by a litigant before the court’s
judgment.  If they were paid, the money necessarily came from marital
assets and wholly upsets the court’s fairness equation.
  


[8] 
Husband’s argument that there was double counting appears to be based first on
the adding the sum to marital property and then awarding it to husband as if it
has value.  We would not call that double counting.  The adding of
the non-existent asset to marital property is, alone, harmless.  It is the
award that produces the effect to which husband objects.
 


[9]  We note that, for good reason, husband
has not relied upon the doctrines of collateral estoppel or law of the case in
arguing that the court erred by revisiting the “wasteful dissipation” question
and counting certain past expenditures in distributing the marital
assets.  See State v. Passino, 154 Vt. 377, 383 n.2, 577 A.2d 281,
285 n.2 (1990) (“The doctrines of res judicata and collateral estoppel do not
prevent reconsideration of a pretrial ruling.”); Trepanier v. Getting
Organized, Inc., 155 Vt. 259, 265, 583 A.2d 583, 587 (1990) (citing
elements of collateral estoppel, including that “the issue was resolved by a
final judgment on the merits”).
 


[10] 
Husband argues that under the property award, maintenance would never be justified
in this case because wife’s reasonable needs are already met.  As the
court explained, the property award was sufficient only if wife significantly
downsized her home and that future circumstances could erode the scenario that
was likely at the time of the decision.  Again, we conclude that arguments
about whether substantial maintenance might be appropriate in the future should
await an attempt to modify the nominal award, should that ever occur.


[11] 
We recognize that another $100,000 was assessed against husband so that he
would absorb the amounts he paid his secretary.  We have reversed and
remanded that charge above.



