CourtListener opinion 1062571

Evidence quotes

Clean opinion text

COURT OF APPEALS OF VIRGINIA

Present: Judges Elder, Humphreys and Senior Judge Annunziata
Argued at Richmond, Virginia

KENT CUSACK
 OPINION BY
v. Record No. 0325-08-4 JUDGE LARRY G. ELDER
 JANUARY 20, 2009
DEBORAH CUSACK

 FROM THE CIRCUIT COURT OF STAFFORD COUNTY
 Gordon F. Willis, Judge

 Ronald Robinson (Robinson Law Office, PLLC, on briefs), for
 appellant.

 (A. Lewis Lowery, Jr.; Rinehart, Lowery, Strentz & Butler, P.L.C.,
 on brief), for appellee. Appellee submitting on brief.

 Kent Cusack (husband) appeals from an equitable distribution award directing payment

to Deborah Cusack (wife) of a portion of his military retirement benefits. On appeal, husband

contends the court erred in directing that wife receive a portion of the marital share of those

retirement benefits commencing on the date of husband's retirement, which occurred after the

parties separated but almost a year before wife filed her bill of complaint for divorce and over

two years prior to the equitable distribution evidentiary hearing. Husband contends the trial

court also erred in directing that, to the extent the designated agent was prohibited by law or

regulation from paying wife the entire amount required by the court's order, husband was

personally responsible for paying wife any shortfall. We reverse that portion of the final decree

ordering that payments of wife's share of husband's military pension were to commence on

May 31, 2005, but hold the trial court had authority to order husband responsible for any
 payments due but not payable directly from the pension. We deny wife's request for attorney's

fees and costs on appeal, and we remand for further proceedings consistent with this opinion.

 I. BACKGROUND

 Husband entered the United States Army in 1979 and married wife in 1992. Wife had

two children from a previous marriage, who resided with the couple throughout their marriage,

and the parties had two children together, both of whom had serious medical conditions and

required multiple surgeries. The couple separated on August 7, 2004, when husband was

arrested for numerous counts of child pornography and unlawful videotaping of a minor

stemming from an incident involving one of his stepchildren. Husband was released on bond

after his arrest and obtained his own apartment.

 Although husband had been a lieutenant colonel for approximately four years prior to his

arrest, he faced the risk of the complete loss of his retirement as a result of the criminal charges

against him. He therefore elected to retire from the last grade in which he had "served

honorably," the lower rank of major, effective May 31, 2005. Husband's gross retirement pay as

a major was approximately $3,200, substantially less than the approximately $9,600 per month

he had grossed while serving as a lieutenant colonel. The marital share of husband's retirement

was 58%, which would yield a gross marital share of approximately $1,860 per month.

 On August 19, 2005, husband pleaded guilty to numerous criminal charges and began

serving an active sentence of 36 months.

 On March 26, 2006, wife filed a bill of complaint for divorce. At the evidentiary hearing

held on October 26, 2007, husband admitted his fault in the breakup of the marriage and

stipulated that wife was entitled to 50% of the marital share of his military retirement.

 Wife testified that from August 2004 through February 2005, husband paid her $1,000

per month for support. Husband testified he also paid the mortgage and other bills averaging

 -2-
 about $5,000 per month. Husband testified that in February 2005, the court ordered him to pay

total spousal and child support of $5,400 per month, at which time he ceased paying the

mortgage. When husband retired effective May 31, 2005, his gross income decreased to

approximately $3,200, and a "[n]ew court order was entered in August of 2005 [requiring him to

pay wife] $1,901" per month in support. Before husband was able to have an order entered

decreasing his support payment, he accrued a support arrearage of $7,000 or $8,000 in back

support, which he paid, along with numerous other expenses, by withdrawing the entire balance

of his $95,000 IRA account. Wife testified that, to her knowledge, the only funds husband had

received during his incarceration were his military retirement benefits. No evidence in the

record indicated whether husband earned any additional income between his retirement on May

31, 2005, and his incarceration in August 2005.

 At the time of the evidentiary hearing on October 26, 2007, the support order for $1,901

remained in effect, and husband was paying support in that amount. Husband testified he was

also paying $230 per month for wife's survivor benefit plan and $200 per month for life

insurance for himself and wife.

 On December 6, 2007, the trial court issued a letter opinion detailing its consideration of

the Code § 20-107.3(E) equitable distribution factors, noting husband's negative nonmonetary

contributions, misconduct causing the dissolution of the marriage, and dissipation of "substantial

marital assets" for a non-marital purpose—"to pay for his bond and attorney fees arising from his

criminal charges, to which he ultimately plead guilty." Considering the Code § 20-107.3(E)

factors, including "how each party utilized marital property post-separation," the court directed

that the marital property be divided as follows:

 A. [Wife] is entitled to receive 50% of the marital share of
 [husband's] military retirement as permitted under VA. Code
 § 20-107.3(G)(1). . . .

 -3-
 B. [Wife] has already received pendente lite, $90,000 of the net
 proceeds from the sale of the marital residence and the Court finds
 that she has appropriately utilized these funds towards paying
 family expenses and debts that arose during the pendency of this
 divorce action. The balance of said proceeds, totaling $106,340.57
 shall be distributed 80% to [wife] and 20% to [husband]. In
 making this division the Court has taken into consideration
 [husband's] withdrawal and use of his IRA funds and [wife's]
 withdrawal and use of her IRA funds. . . .

The court noted wife's expenditure of $22,763.15 in attorney's fees and husband's expenditure

of $26,100 in attorney's fees, and ordered husband to pay $20,000 toward wife's fees and costs,

which was roughly equal to husband's share of equity in the home.

 The court's final order incorporated the letter opinion and provided as follows:

 [Wife] if [sic] entitled to receive 50% of the marital share of
 [husband's] military retirement as permitted under Virginia Code
 Section 20-107.3(G)(1), commencing at the date [husband]
 retired, May 31, 2005. She is further entitled to a continuation of
 the Survivor Benefit Annuity previously selected by [husband],
 which cost shall be paid from the gross proceeds of the retirement.

(Emphasis added.) In the related qualified domestic relations order (QDRO) entered to effect

division of husband's military retirement, the court provided that "[t]o the extent the Designated

Agent is prohibited by law or regulation from paying the entire amount required by this order to

[wife], [husband] shall personally pay any shortfall to [wife]." Husband objected to the trial

court's "grant of retroactive military retirement payments (between date of retirement and date of

equitable distribution trial)" and to the requirement that husband make up any shortfall, and he

noted this appeal.

 II. ANALYSIS

 A. RETROACTIVE PAYMENTS OF THE
 MARITAL SHARE OF PENSION BENEFITS

 When reviewing a trial court's decision on appeal, we view the evidence in the light most

favorable to the prevailing party. Wright v. Wright, 38 Va. App. 394, 398, 564 S.E.2d 702, 704

 -4-
 (2002). An appellate court will not reverse a trial court's equitable distribution "unless it appears

from the record that the chancellor has abused his discretion, that he has not considered or has

misapplied one of the statutory mandates, or that the evidence fails to support the findings of fact

underlying his resolution of the conflict in the equities." Robinette v. Robinette, 10 Va. App.

480, 486, 393 S.E.2d 629, 633 (1990).

 Husband contends the court erred in directing that wife receive the agreed upon 50%

portion of the marital share of his military retirement benefits commencing on the date of his

retirement, which occurred after the parties separated but almost a year before wife filed her bill

of complaint for divorce and over two years prior to the equitable distribution evidentiary

hearing. We agree.

 General principles for the valuation and division of property in equitable distribution

proceedings also apply to the valuation and division of retirement benefits, including the

principle that "[t]he court shall determine the value of any such property as of the date of the

evidentiary hearing on the evaluation issue." Code § 20-107.3(A); see McGinniss v. McGinniss,

49 Va. App. 180, 188-89, 638 S.E.2d 697, 701 (2006) (implicitly applying this principle to the

deferred distribution of retirement benefits in a case in which the owning spouse retired after the

equitable distribution evidentiary hearing, holding the court erred in "‘excluding from the marital

share the income earned by pre- and post-marital contributions to the pension'" because "the

delay in payment to wife of her marital share of husband's pension until he retired and became

eligible to receive his pension ‘diminishe[d] the marital share in relation to the number of years

that pre- and post-marital contributions [were] made'" (quoting Mann v. Mann, 22 Va. App. 459,

465, 470 S.E.2d 605, 607-08 (2006))). This approach comports with "[t]he developing rule" in a

majority of jurisdictions that have considered the issue. 2 Brett R. Turner, Equitable Distribution

of Property § 6:32, at 204 (3d ed. 2005) (noting the general rule that "the court cannot order that

 -5-
 payments begin before the date of classification"). The rationale for this rule is that the entirety

of "payments received from a marital property pension" before the date of classification of

property in an equitable distribution proceeding—i.e., ordinarily the date of the evidentiary

hearing pursuant to Code § 20-107.3(A)—"are no different from salary or any other type of

marital property payments received by a spouse before the date of the property division order."

2 Turner, supra, at 204. They "were marital property when they were received," id., and, thus,

ordinary rules regarding how to treat them in the equitable distribution apply, cf. Robinette, 10

Va. App. at 485, 393 S.E.2d at 632-33 (holding that where funds were "pension and retirement

benefits" as contemplated by Code § 20-107.3(G) when paid to husband, by the time the court

made its monetary award, the funds were under husband's unrestricted control and had lost their

character as "pension and retirement benefits" for purposes of the statutory provision limiting the

court to awarding the non-owning spouse no more than 50% of such benefits). See generally 2

Turner, supra, at 204-05 (suggesting that "[n]one of the past cases" on retroactivity of payments

for the marital share of pensions "have analyzed this issue particularly clearly" and that "[f]uture

cases should resolve the retroactive payment issue by applying a dissipation of assets analysis").

"We have previously held that [using] marital funds . . . for living expenses . . . and other

necessities of life while the parties are separated [is proper and] do[es] not constitute [improper]

dissipation" of marital assets for which the other spouse may be entitled to credit. Anderson v.

Anderson, 29 Va. App. 673, 695, 514 S.E.2d 369, 380 (1999).

 Here, wife advanced no argument that husband dissipated the retirement funds he

received prior to the evidentiary hearing, and the trial court made no such finding. It was

undisputed that husband's gross military retirement was approximately $3,200 per month, from

which the trial court ruled wife was entitled to "a continuation of the Survivor Benefit Annuity

previously elected by [husband], which cost shall be paid from the gross proceeds of the

 -6-
 retirement." The record indicated that the cost of the survivor annuity was $230 per month,

leaving adjusted gross monthly retirement pay of $2,970. Husband testified without objection

that he paid an additional $200 per month for life insurance for him and wife, a reasonable

expenditure given that the parties had two minor children with significant medical problems,

which left pre-tax retirement income of $2,770. The record also established that for the first two

months after husband began receiving his retirement pay, he was under an outstanding award to

pay wife $5,400 per month, a sum roughly twice the amount of his remaining gross monthly

retirement income at that time, leaving no marital funds for him to dissipate during that time.

For the remaining period of approximately twenty-seven months, husband was under an award to

pay wife monthly support of $1,901. Given wife's concession that husband had no income other

than his military pension while incarcerated, the evidence established the remainder of husband's

pension during each of these twenty-seven months, before taxes, was $869. Thus, wife received

approximately 70% of husband's monthly retirement benefit during that twenty-seven-month

period, and wife neither alleged nor offered any evidence that husband dissipated any of the 30%

of the pension payments remaining for him each month between the time of his retirement and

the equitable distribution evidentiary hearing on October 26, 2007.

 The trial court, by contrast, made an express finding of dissipation as to another marital

asset—husband's $95,000 IRA. The court indicated these IRA funds were marital property and

that husband withdrew them all during the separation and used some of them to reimburse his

sister for money she had loaned him to "pay his bond and pay his attorney." It also held that

"[husband's] misconduct and criminal behavior . . . resulted in the dissipation of marital assets

and their being expended for non-marital purposes," "[s]pecifically . . . [the use of] substantial

marital assets . . . to pay for [husband's] bond and attorney fees arising from his criminal

charges." Finally, in awarding 80% of the equity in the marital residence to wife and 20% to

 -7-
 husband, the court indicated it "[took] into consideration [husband's] withdrawal and use of his

IRA funds." The trial court made no similar finding of dissipation related to the $869 gross

income remaining from husband's pension each month.

 Accordingly, we hold the trial court erred in ordering that wife was to receive her share

of husband's military retirement "commencing at the date [husband] retired, May 31, 2005." On

the facts of this case, the date of commencement should instead have been October 26, 2007, the

date of the evidentiary hearing. We hold the court did not err, however, in providing in the

related QDRO of May 5, 2008, that husband was responsible for any shortfall to the extent the

designated agent was "prohibited by law or regulation from paying it." The QDRO was not

entered until May 5, 2008, and provided to the designated agent sometime thereafter, whereas

wife was entitled to her share of each payment made after October 26, 2007, over six months

earlier. See Irwin v. Irwin, 47 Va. App. 287, 295 n.5, 297, 623 S.E.2d 438, 442 n.5, 443 (2005)

(holding that where "wife waived any claim in one-half of the pension payment prior to the date

of the final decree," "[t]he court's refusal to require husband to pay wife directly her one-half

share of the monthly pension payment while the QDRO was pending was an abuse of discretion

upon a finding that she was due payment from the final decree date"). To hold husband could

not be required to make payments the designated agent could not make would deprive wife of

payments to which she is entitled by statute and would encourage husband, as the owning

spouse, to delay voluntary execution of documents related to the QDRO. See id. at 297, 623

S.E.2d at 443 ("Delays in the approval and entering of the QDRO cannot operate to deny wife

her property right in the pension."); 2 Turner, supra, at 206 (discussing non-owning spouse's

entitlement to recoup payments from the owning spouse where retirement occurs after divorce

but direct payments from the plan to the non-owning spouse do not begin in a timely fashion).

 -8-
 B. WIFE'S REQUEST FOR ATTORNEY'S FEES

 Wife requests an award of attorney's fees and costs incurred on appeal. We decline that

request. Husband's appeal addressed "appropriate and substantial issues," Estate of Hackler v.

Hackler, 44 Va. App. 51, 75, 602 S.E.2d 426, 438 (2004), and husband has, in fact, prevailed on

the narrow issue presented. Although the trial court found that husband's criminal wrongdoing

was the cause of the divorce and a drastic decline in the income of both parties, wife received the

bulk of the remaining marital assets in the equitable distribution, and husband was required to

spend all but a few thousand dollars of his share of that award to pay $20,000 of wife's

approximately $23,000 worth of attorney's fees in the trial court. Thus, we conclude it is

appropriate for wife to bear her own fees and costs incurred in this appeal.

 III.

 For these reasons, we reverse that portion of the final decree ordering that payments of

wife's share of husband's military pension were to commence on May 31, 2005, but hold the

trial court had authority to order husband responsible for any payments due but not payable

directly from the pension. We deny wife's request for attorney's fees and costs on appeal, and

we remand for further proceedings consistent with this opinion.

 Reversed and remanded.

 -9-