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REPORTED IN THE COURT OF SPECIAL APPEALS OF MARYLAND No. 2614 September Term, 2001

CHRISTOPHER R. McCLEARY

v.

MARI KATHLEEN McCLEARY

Davis, Adkins, Rodowsky, Lawrence F. (retired, specially assigned), JJ.

Opinion by Davis, J.

Filed: December 27, 2002

Appellant Christopher R. McCleary appeals an order issued by the Circuit Court for Anne Arundel County that granted appellant an Absolute Divorce and awarded appellee Mari Kathleen McCleary a marital property award totaling $2,100,000, indefinite alimony in the amount of $5,000 per month, and a $150,000 contribution toward appellee's attorney's fees. On appeal, appellant presents for our

consideration four issues,1 which we have rephrased and combined into three questions as follows: I. Did the trial court err in granting appellee a $2,100,000 marital property award? Did the trial court err in finding that appellant had dissipated $964,175 of the marital assets?

II.

III. Did the trial court err in awarding appellee attorney's fees? We answer appellant's questions one and two in the affirmative and question three in the negative, thereby vacating the judgment of the trial court.

FACTUAL BACKGROUND
The parties were married in 1978. Three children were born of the marriage, all of whom are still minors. undergraduate degrees. In August 1978, shortly after their marriage, the parties moved to Arnold, Maryland, and purchased a townhouse in which they Both parties have

We combine appellant's fourth issue, which deals solely with the court's valuation of the Annapolis Helicopter Service, LLC (AHS), with appellant's broader issue dealing with whether the marital award was erroneous.

1

- 2 resided. Appellant was employed at American Seamless Tubing, Appellee was an elementary

earning a salary of $18,000 per year. school teacher at St. Jane Frances.

In 1979, the parties moved into a house that they built in the Chartridge Community in Severna Park, Maryland. Arnold townhouse as investment rental property. They kept the Appellee was

employed as a waitress at the Crofton Country Club and eventually became the banquet manager. It was at the country club that she The parties

engaged in an extramarital affair with a co-worker. separated and later reconciled.

The parties began a series of moves spanning from 1981 through 1993, which were dictated by appellant's movement up the ladder in the corporate and financial world. The cities in which the parties lived included Fairfax, Virginia, Houston, Texas, Cincinnati, Ohio, Washington, D.C., and Reston, Virginia. Appellee was employed with various hotel chains until the birth of their first child, Caitlin, in 1986. The parties decided

that appellee would resign from her employment to be Caitlin's primary caretaker. Kelsey, the parties' second child, was born in

1989. Approximately five years later, Caroline, the parties' third child was born. In January 1996, appellant accepted employment as the

President and Chief Executive Officer of Digex in Beltsville, Maryland, at a salary of $150,000 per year plus bonus. In 1997,

when Digex was sold, appellant was earning $250,000 per year plus bonus and had stock options worth $8.4 million. After the sale,

- 3 appellant resigned in contemplation of starting his own company and exercised his stock options. Consequently, in 1997, appellant had

income of $9,161,265 and the family's net worth increased to more than $6 million. Appellant began planning the structure of the company that would become USinternetworking, Inc. (USi), an application service provider leasing application software over the internet. Along

with two other individuals, appellant founded USi, incorporating on January 4, 1998. Appellee, who wanted to return to the workplace,

began working as Vice President of Corporate Relations at USi, although she did not receive a salary. The parties, therefore,

employed Alice Drinnon as a full-time housekeeper and nanny. Additional nannies were hired to care for the children throughout the day. In 1998, the parties had a joint income of $584,685, of which $131,455 was appellant's salary and $367,000 was interest and capital gains on the Digex funds. In August 1998, the parties

purchased 37 Boone Trail at a cost of $865,000, with a mortgage of $700,000. The property was extensively renovated and redecorated

at a cost of $1,176,854. In January 1999, appellant formed McCleary Maritime

Properties, LLC (MMP) to purchase an Annapolis marina for $2.1 million. Appellant did not discuss the purchase with appellee Appellant formed Wildcat

until after he had bought the property.

Marine Operating Co., Inc., later renamed McCleary's Pier 4 Marina,

- 4 Inc., to operate the marina. Appellee managed the operation of the marina and office rentals. On April 4, 1999, USi made its initial public offering. In

December 1999, appellant exercised an option to buy 375,000 shares at $20.50 for a total of $2,250,000. Appellant financed the option exercise by borrowing $2.25 million from USi. The loan was

represented by a promissory note dated September 24, 1999. Because the option exercise resulted in taxable income of more than $5 million, USi lent appellant another $1,900,000 to cover his

additional tax obligation.

This loan was also represented by a Both loans were later

promissory note dated December 21, 1999.

consolidated into a single loan of $4,284,744 represented by a promissory note dated July 24, 2000, bearing nine percent annual interest, payable on demand with ninety-days' notice. In February 2000, appellant sold 313,968 of his USi shares for $18,841,220. The parties placed $3.4 million of the Digex funds

into brokerage accounts at Merrill Lynch, Legg Mason and Credit Suisse First Boston (CSFB). On March 15, 2000, appellant purchased a twenty-five percent timeshare interest in a Citation II aircraft from Flight Option for $684,866. The parties also purchased

property at Ferry Farms for $2,034,836. On June 2, 2000, appellant formed AHS to develop a charter helicopter service. AHS purchased a helicopter for $1.45 million In March 2001, AHS

in cash with funds advanced by appellant.

negotiated a $1 million loan from General Electric Capital (GE Capital), secured by the aircraft and by appellant's individual

- 5 guaranty. The proceeds went to McCleary Capital Group, LLC (MCG)

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