Preview:

COURT OF APPEALS OF VIRGINIA
Present:   Chief Judge Fitzpatrick, Judges Bumgardner and Frank
Argued at Salem, Virginia
                                                                                                   DARLEE FRITH SHELTON FOWLKES
                                                                                                                                  OPINION BY
v.                                                                                                 Record No. 1544-03-3           JUDGE ROBERT P. FRANK
DECEMBER 23, 2003
WINFORD CALVIN FOWLKES
FROM THE CIRCUIT COURT OF THE CITY OF MARTINSVILLE
Charles M. Stone, Judge
John L. Gregory (Young, Haskins, Mann, Gregory & Smith, on
brief), for appellant.
Philip G. Gardner (Gardner, Gardner, Barrow & Sharpe, on brief),
for appellee.
Darlee Frith Shelton Fowlkes (wife) appeals an equitable distribution award to Winford
Calvin Fowlkes (husband).  The award was based on husband’s contribution of his separate
property to the building of an addition onto the wife’s house, which she owned prior to the
marriage.  On appeal, she contends the trial court erred in classifying the improvements as
marital property, thereby converting her separate property to part marital and part separate
property.  She further maintains the trial court erred in awarding the husband $25,000 when
expert testimony opined the improvements increased the fair market value of the house by
$20,000.1  For the reasons stated, we find the trial court erred in determining that any marital
property existed.
1 Husband initially filed a cross-assignment of error, alleging the trial court erred in not
awarding him $31,800, which he claimed was traceable to his separate contributions.  At oral
argument, husband withdrew this assignment of error.




I.  BACKGROUND
Prior to their marriage on September 23, 2000, wife owned a home in Martinsville,
Virginia.  The parties expected that husband would sell his house and they would spend their
married life in wife’s home.  In anticipation of husband moving into wife’s house, the parties
decided to make certain improvements, including an addition with a new bathroom and
additional closet space, a bay window, new decking, and new roofing (referred to collectively as
“the addition”).
On August 4, 2000, some six weeks prior to the marriage, husband executed a contract
with Fred Martin for construction of the addition.2  The total contract price was $36,840, plus
$2,340 for additional roofing work.  The work began prior to the marriage and was completed in
December 2000.  While the testimony conflicted regarding wife’s involvement in the planning
and design of the addition, she did not oppose the construction.  Since husband worked out of the
area, wife was responsible for the daily decisions involved in the construction.
Husband began making payments on the addition after the wedding.3  Husband testified
he ultimately paid Martin approximately $24,800 with funds from his retirement account.  He
also purchased items for use in the construction from vendors such as Lowe’s and Noland
Company.  The parties agree these amounts were paid with his separate funds.  Wife made the
final payment of $16,000 to Martin, using funds that she acquired prior to the marriage.
Husband testified that neither party had performed significant personal efforts that added
to the value of wife’s home.  In addition, neither party claimed any marital property rights in the
2 Husband and wife never signed a contract establishing the rights and responsibilities of
the parties regarding the additions to the house.  Wife never changed the title to her home to
include husband as a co-owner.  Wife did not sign the contract with Martin.
3 Before the marriage, husband did purchase several items for use in the construction.
- 2 -




other’s home resulting from mortgage payments made on their own respective homes during
their short marriage.
Husband’s real estate appraiser testified that the fair market value of wife’s home with
the addition was $160,000.  He opined that the addition constituted approximately $20,000 of
that value.  He also testified that, using a replacement “cost approach,” the addition’s value was
$42,024.  The trial court found the latter value “better reflected the intrinsic value of the
addition” and was more “equitable.”
The trial court found husband contributed approximately $30,000 of his separate property
to the addition and wife contributed $16,000 of her separate property.  The trial court further
found each party made non-monetary contributions to the addition.
The trial court concluded the addition was marital property, having been acquired during
the marriage:
Under [Code § 20-107.3] Subsection A3d the addition previously
classified as marital under Subsection A2 was necessarily
commingled with the separate house resulting in the loss of
identity of the addition as a separate entity and, except for its
capacity to be retraced, it would have been transmuted into
separate property.  However, since the addition was not a gift and
because [its] value is retraceable, it retains its original
classification as marital property.  The resulting home is thus part
marital and part separate under Subsection A3.  The Court is
addressing the distribution of the house and not the distribution of
the parties’ individual contributions to the addition.  The individual
contributions are taken into account in determining the monetary
award.
*                                                                                                    *   *   *   *   *   *
The Court has considered the factors set forth in Subsection E and
has placed special emphasis on Numbers 2, 3, 5, 6, and 8.  The
contributions of the parties to the addition have been proved with
specificity; the marriage was of very short duration - 3 months; the
dissolution of the marriage and husband’s subsequent desertion
resulted from the parties’ inability to resolve a simple economic
disagreement; the addition was acquired with the expectation that
husband’s equity in his separate house would be contributed to
- 3 -




wife’s house; and the resulting addition is totally non-liquid.  The
rights, interests, and equities of each party require that wife pay a
monetary award to husband in that she retains title to the real
estate.
The trial court concluded:
The Court finds that the house is titled in the name of the wife; that
it is part marital and part separate property; and that its value is
$160,000.00.  The Court further finds that the marital component
of the house has a value of $42,000.00.  Taking into consideration
the rights, interests, and equities of the parties and the statutory
factors, the Court sets the monetary award at $25,000.00.
II.  ANALYSIS
On appeal, wife claims the trial court erred in awarding husband $25,000 as an equitable
distribution monetary award for his contribution of separate property to the improvements made
to wife’s house.  She cites two specific errors.  First, she challenges the trial court’s finding that
the addition was marital property, thus converting the classification of her house from separate
property to part separate and part marital property.  Second, she challenges the amount of the
award, arguing that the addition added only $20,000 to the fair market value of the house.
Wife contends the applicable statute is Code § 20-107.3(A)(1), which mandates an
increase in value of separate property remains separate property unless:
marital property or the personal efforts of either party have
contributed to such increases and then only to the extent of the
increases in value attributable to such contributions.  The personal
efforts of either party must be significant and result in substantial
appreciation of the separate property if any increase in value
attributable thereto is to be considered marital property.
She maintains that the addition to the home remained separate property and was not subject to
equitable distribution under Code § 20-107.3.
The parties and the trial court agreed that wife’s home was separate property prior to the
building of the addition.  The parties and the trial court also agreed that separate property was
- 4 -




used to pay for the addition.  The issue before us, then, concerns the classification of an
originally separate home, which the parties improved using separate funds.
Code § 20-107.3(A) requires that a trial court, at the request of the parties, determine “the
ownership and value of all property, real or personal, tangible or intangible, of the parties and
shall consider which of such property is separate property, which is marital property, and which
is part separate and part marital property.”  In subsection A(1), the statute defines separate
property, in part, as “(i) all property, real and personal, acquired by either party before the
marriage; . . . (iii) all property acquired during the marriage in exchange for or from proceeds of
sale of separate property, provided that such property acquired during the marriage is maintained
as separate property.”  Subsection A(2) defines marital property, in part, as “(iii) all other
property acquired by each party during the marriage which is not separate property.”  Subsection
D permits a trial court to make a monetary award, “based upon (i) the equities and the rights and
interests of each party in the marital property, and (ii) the factors listed in subsection E.”
The parties agree that wife’s home without the addition was her separate property and
remained her separate property even after husband and wife paid for the addition with their
separate funds.  The trial court found the addition was marital property as it “was acquired
during the marriage and is not separate property.”  The court also found, as this marital property
was commingled with the separate house, the addition lost its characterization as marital property
and was transmuted into the separate property of wife.  The trial court then held, because the
addition was not a gift and was “retraceable,” it retained its original character as marital property
under Code § 20-107.3(A)(3)(d).  The court then applied the principles of equitable distribution
and ordered a monetary award of $25,000 to husband.
As all property acquired during a marriage is presumed marital property, the party who
claims the property should be classified as separate bears the burden of rebutting this
- 5 -




presumption.  Stratton v. Stratton, 16 Va. App. 878, 882, 433 S.E.2d 920, 922 (1993).  On
appeal, we will not overturn a trial court’s monetary award of marital property unless we find an
abuse of discretion, misapplication or wrongful application of the equitable distribution statute,
or lack of evidence to support the award.  von Raab v. von Raab, 26 Va. App. 239, 246, 494
S.E.2d 156, 159 (1997).  Here, we find the trial court misapplied the statute when determining
the nature of the addition.
The parties agree that, although purchased after the marriage, separate funds were used to
construct the addition.  No evidence suggests marital funds were used to make mortgage
payments on the house or for the addition.  Under Code § 20-107.3(A)(1)(iii), if such property is
“maintained as separate property,” it retains that classification and is not subject to equitable
distribution.  The Supreme Court, addressing this issue under a previous statute, explained,
“[W]hen . . . a spouse fails to segregate and instead, commingles, separate property with marital
property, the [court] must classify the commingled property as marital property subject to
equitable distribution.”  Smoot v. Smoot, 233 Va. 435, 441, 357 S.E.2d 728, 731 (1987).  This
Court stated under the existing statute, “Code § 20-107.3(A)(3) addresses hybrid property, that
is, property which is by definition part marital and part separate.  The concept of hybrid property
presupposes that separate property has not been segregated but, rather, combined with marital
property.”  Rahbaran v. Rahbaran, 26 Va. App. 195, 207, 494 S.E.2d 135, 141 (1997).  We find
wife did keep the home and the addition segregated from any marital property.
The relevant facts are not in dispute.  Wife received the addition to her home during the
marriage, but she did not use any marital funds for its purchase.  Cf. Lambert v. Lambert, 6
Va. App. 94, 101-02, 367 S.E.2d 184, 188-89 (1988) (explaining transmutation of property from
separate to marital occurs when separate and marital property are commingled).  Additionally,
she held sole title to the home and the addition throughout the marriage, consistently refusing to
- 6 -




put the home in husband’s name.4  See Stratton, 16 Va. App. at 882, 433 S.E.2d at 922 (finding
real estate was husband’s separate property where it was purchased after the marriage, but with
separate funds and titled solely in husband’s name).  She did not take any actions indicating an
“intent to turn [her] separate property over to the marital estate.”  Stainback v. Stainback, 11
Va. App. 13, 21, 396 S.E.2d 686, 691 (1990).  To the contrary, she resisted husband’s demands
to transfer title, resulting in the end of the marriage.  The addition, which was attached to and
part of wife’s original home, was maintained as part of wife’s original, separate home.
Husband, although he paid for a substantial portion of the addition, never received title to
the house or the addition, which is one method for transmuting separate property into a marital
asset.  See Code § 20-107.2(A)(3)(f).  Neither party used marital funds to pay for the
construction, so the separate property was not commingled with marital property, which could
transmute the character of the contributed property.  See Code § 20-107.3(A)(3)(d) & (e).5  The
trial court did find “[e]ach party made non-monetary contributions to the construction of the
addition,” which can alter the classification of separate property under Code § 20-107.3(A)(3)(a).
However, the trial court did not find these contributions were significant and resulted in
substantial appreciation of wife’s home, as required by Code § 20-107.3(A)(3)(a) before finding
the character of the property has changed.  In fact, the husband conceded in his direct testimony
that he did not “perform any personal effort” to build the addition, beyond the outlay of his
personal funds.
4 Although the trial court found that, prior to the marriage, wife had agreed that husband
would pay $40,000 toward the costs of the addition and, in return, she would jointly title the
home, wife consistently refused to retitle the home after the marriage.
5 Both of these subsections require the commingling of “marital property and separate
property” (emphasis added) before the character of the contributed property is transmuted.  Here,
the parties commingled separate property with separate property.
- 7 -




As the parties built the addition with separate funds, continued to treat the separate
property as separate property, and never commingled separate property with marital property, the
addition was not marital property.  The trial court incorrectly found the addition was marital
property and then misapplied the commingling provision of subsection A(3).  Without marital
property to evaluate, the trial court was not empowered under the principles of equitable
distribution to grant a monetary award to husband.  See Code § 20-107.3(D); McDavid v.
McDavid, 19 Va. App. 406, 413, 451 S.E.2d 713, 718 (1994) (noting that the value of separate
property is irrelevant and immaterial to equitable distribution decisions).
We find the trial court erred in finding marital property existed and in granting a
monetary award based on equitable distribution of marital property to husband.  Equitable
distribution is not the proper method to adjust the equities between these parties.  We remand the
case for entry of an order consistent with these findings.  In making this finding, we do not
comment on the equity action before the trial court, which was consolidated with this divorce
case for evidentiary hearing purposes only.  The equity action is not before this Court on appeal.
Reversed and remanded.
- 8 -

Download 1544033.pdf

Virginia Law