Friedman v. Friedman

NANCY MARCELLETTE FRIEDMAN, Plaintiff, v. GERALD JAY FRIEDMAN, Defendant.

Case No.: CL16-1639

CIRCUIT COURT OF THE CITY OF NORFOLK

June 30, 2017

ORDER REGARDING ADVANCEMENT OF SUMS FOR ATTORNEY'S FEES AND COSTS AND SALE AND DISBURSEMENT OF CERTAIN MARITAL ASSETS

THIS CAUSE came to be heard on June 20, 2017, upon the Motion for Advancement of Sums for Attorney's Fees and Costs and Sale and Disbursement of Certain Marital Assets (the "Motion") filed by Defendant Gerald Friedman ("Gerald"). Based on the pleadings, the argument ore tenus, and applicable authorities, the Court GRANTS IN PART and DENIES IN PART the Motion and ORDERS the parties as follows.

Background

Plaintiff Nancy Friedman ("Nancy") filed her Complaint for divorce on February 12, 2016, seeking, inter alia, equitable distribution of "both legal and equitable interests in a variety of assets and debts." (Compl. ¶ 16.) Gerald filed a Cross-Complaint on March 11, 2017. Pursuant to subsequent pendente lite orders, Gerald was ordered to pay Nancy temporary spousal support payments. (Jan. 4, 2017, & Jan. 27, 2017, Orders.) As of the most recent pendente lite order, Gerald also had ongoing monthly health care costs exceeding $3,000. (Jan. 27, 2017, Order.) Although the parties have significant joint assets,¹ some of which provide shareholder distributions to the parties, such distributions are sporadic and cannot be relied upon.

In response to Gerald's December 15, 2016, Motion for Advancement of Attorney's Fees, the Court found that (i) there were no liquid joint assets presented to the Court from which monies could be drawn, and (ii) there currently was no suggested asset before the Court from which disbursement could be made. (Jan. 24, 2017, Order re Advancement of Att'y Fees.) The Court therefore denied the motion, without prejudice, and granted Gerald leave to file a future motion if he could identify an asset with sufficient equity from which to derive funds for attorney's fees, including the possibility of allowing a loan against such an asset. (Id.) Gerald filed a subsequent Motion for Advancement of Sums from Assets for Advancement of Attorney's Fees on March 6, 2017. Therein, Gerald asserted that he sought—through counsel—to identify a marital asset with liquid funds and proposed selling 4137 Virginia Dare Trail (located in Kitty Hawk, North Carolina), a joint asset, but allegedly was informed that Nancy "does not agree to sell any properties at this time." (Def.'s Mot. Advancement of Sums from Assets for Advancement of Att'y's Fees ¶¶ 3-4.) The Court directed the parties at a later hearing to confer about how they could utilize joint assets to create cash flow; the parties were unable to reach an agreement on this matter, however. Gerald filed a third motion seeking advancement of funds on June 21, 2017, which now is before the Court, styled as a Motion for Advancement of Sums for Attorney's Fees and Costs and Sale and Disbursement of Certain Marital Assets.Therein, Gerald asserts—through counsel—that he, inter alia, suggested to Nancy's counsel the possibility of taking a loan or line of credit against a certain North Carolina property owned by the parties but received no response. (Def.'s Mot. Advancement of Sums for Att'y's Fees and Costs and Sale and Disbursement of Certain Marital Assets ("Mot. Advancement of Sums") ¶ 7.) At a May 24, 2017, hearing, the Court recommended that the parties arrange for distributions of $15,000 to each party from the "Four Seasons" property and $10,000 to each party from the North Carolina "Finalee" property and that the parties attempt to acquire a loan or line of equity on the Finalee property. (May 24, 2017, Ruling Tr. 4-5.) According to Gerald, although the $15,000 Four Seasons distribution was made, the $10,000 Finalee distribution was not,² and Gerald alleges that Nancy "stated that she will not and 'will never' complete an application for a loan against the North Carolina ["Finalee"] property." (Mot. Advancement of Sums ¶¶ 9-10.) Gerald's counsel further contends that she suggested to opposing counsel that the parties sell a jointly owned property and that she has made a good-faith attempt—without success—to reach agreement with Nancy's counsel to identify marital assets from which the parties can acquire advanced funds. (Id. ¶¶ 12-13.)

Gerald also asserts that $3,500 is needed for Gerald to retain an expert to review the recent mental health evaluation of Gerald and that $15,000 is needed for an initial "retainer" for a business valuation expert, (id. ¶¶ 14-15), which the Court has identified as necessary (see June 22, 2017, Order for Accounting, CL16-1182).

Gerald in his latest motion for advancement of funds requests that the Court order the parties to sell certain jointly owned assets (referred to as "Ocean Hill Properties," "thecondominiums known as at [sic] 905 and 907 located at 500 Pacific Avenue," and "all properties and assets owned by Four Seasons Resort, Inc."). (Mot. Advancement of Sums, at 5-8.) He also requests that (i) the Court order $2,000 monthly disbursements to each party from Four Seasons until the Four Seasons properties are sold, (ii) the parties be ordered to cash out their UBS accounts and split the proceeds, and (iii) when Hague Park distributions are made, Nancy be required to pay to Gerald one half of her distributions as an advancement of attorney's fees and costs. (Id. at 7-8.)

The Court held a telephonic hearing on June 20, 2017, after which it granted the parties leave to submit post-hearing briefs.

Legal Standard

The Virginia Supreme Court has repeatedly declared that "jurisdiction in divorce suits is purely statutory and 'cannot be acquired by the courts inferentially or through indirection.'" Lapidus v. Lapidus, 226 Va. 575, 578, 311 S.E.2d 786, 788 (1984) (quoting Johnson v. Johnson, 224 Va. 641, 645, 299 S.E.2d 351, 353 (1983)).

The Code of Virginia specifies available pendente lite relief in divorce suits. It provides, in pertinent part, as follows:

In suits for divorce, . . . the court having jurisdiction of the matter may, at any time pending a suit pursuant to this chapter, in the discretion of such court, make any order that may be proper (i) to compel a spouse to pay any sums necessary for the maintenance and support of the petitioning spouse [or] (ii) to enable such spouse to carry on the suit . . . .

Va. Code Ann. § 20-103(A) (2016 Repl. Vol.).

"To enable judges to respond adequately to the needs of [divorcing] spouses, the legislature gave broad discretion to judges to award attorney's fees and did not limit in a strict manner the time in which attorney's fees could be awarded. The only statutory requirement isthat the [divorce] suit must be pending." Wilson v. Wilson, 25 Va. App. 752, 765, 492 S.E.2d 495, 501 (1997).

"The key to a proper award of counsel fees is reasonableness under all the circumstances." Lightburn v. Lightburn, 22 Va. App. 612, 621, 472 S.E.2d 281, 285 (1996). In making such an award, a trial court must consider "the circumstance of the parties," Barnes v. Barnes, 16 Va. App. 98, 106, 428 S.E.2d 294, 300 (1993), and the "equities of the entire case," Davis v. Davis, 8 Va. App. 12, 17, 377 S.E.2d 640, 643 (1989).

The Code of Virginia provides for the equitable distribution of marital property "upon decreeing a divorce from the bond of matrimony." Va. Code § 20-107.3(A). "As a means of dividing or transferring the jointly owned marital property, the court may transfer or order the transfer of real or personal property or any interest therein to one of the parties, permit either party to purchase the interest of the other . . . or order its sale by private sale by the parties, through such agent as the court shall direct, or by public sale as the court shall direct without the necessity for partition." Id. § 20-107.3(C).

The Virginia Court of Appeals has held that "it is clear . . . that no decree of equitable distribution can be made before the parties are divorced." Parra v. Parra, 1 Va. App. 118, 124, 336 S.E.2d 157, 160 (1985).

Discussion

As an initial matter, the Code gives the Court broad authority to fashion pendente lite orders at any time pending a suit to, inter alia, compel a spouse to pay for maintenance and support of the other spouse or to enable a spouse to carry on the suit. Va. Code Ann. § 20-103 (2016 Repl. Vol.). Virginia courts have relied on this provision to order a party to pay his or her spouse's attorney's fees. See, e.g., MacDougall v. Levick, 66 Va. App. 50, 782 S.E.2d 182 (2016)(affirming award of $291,288 in attorney's fees); Thomas v. Thomas, 1996 Va. App. LEXIS 738, at *15 (Nov. 26, 1996) (affirming award of $66,326.39 in attorney's fees).³

The primary question before the Court is whether the Code authorizes—prior to entry of a final divorce decree—the sale of joint marital assets, including real estate, for purposes of paying court-ordered spousal support and/or enabling a spouse to carry on a divorce suit. Although there apparently are no Virginia published decisions directly on point, appellate courts from other jurisdictions have recognized the authority of trial courts to order a pre-decree sale of marital property. See, e.g., Randazzo v. Randazzo, 875 A.2d 916, 924 (N.J. 2005) (finding that a pre-decree sale "was necessary for the financial maintenance of the parties"); Watega v. Watega, 143 P.3d 658, 664 (Alaska 2006) (recognizing the court's ability to order a pre-decree sale of real estate but finding that, under the circumstances present, "the sale of the property did nothing to increase or preserve the assets of the marital estate" and therefore was not necessary for the financial maintenance of the parties).

Nancy argues that the Court lacks the authority to order the sale of marital property prior to entry of a final divorce decree by equating Gerald's requested relief to equitable distribution of marital property. (Pl.'s Post-Hr'g Br. 3.) Nancy relies primarily on Mayers v. Mayers, 15 Va. App. 587...