Wasyluszko v. Wasyluszko

250 Md.App. 263

250 A.3d 271

Andrew WASYLUSZKO

v.Lisa WASYLUSZKO

No. 2220, Sept. Term, 2019

Court of Special Appeals of Maryland.

April 28, 2021

Argued by: Julius M. Blattner of Towson, MD, for Appellant

Argued by: Rebecca S. Trevillian of Severn, MD, for Appellee

Panel: Fader, C.J., Reed, Beachley, JJ.

Beachley, J.

The principal issue in this case is whether the Circuit Court for Baltimore County erred in characterizing four retirement and non-retirement accounts owned by appellant Andrew Wasyluszko as marital property. As to three of the four accounts in dispute, we conclude that a portion of those accounts constituted non-marital property because the uncontroverted evidence demonstrated that, at the time of the divorce, Mr. Wasyluszko still owned shares that he acquired prior to marrying appellee Lisa Wasyluszko. We shall therefore vacate the circuit court's judgment and remand for further proceedings.

BACKGROUND

The parties married on August 22, 1998, and have two minor children. To their credit, they were able to reach a comprehensive agreement concerning the legal and physical custody of their children. In light of the parties’ custody agreement, essentially two issues remained for the circuit court to decide: Ms. Wasyluszko's requests for a monetary award and a contribution toward her attorney's fees. As we will discuss in more detail infra , at the time of the divorce, Mr. Wasyluszko owned, in his sole name, various retirement and non-retirement accounts with an aggregate value of slightly less than two million dollars. Mr. Wasyluszko claimed that all or part of the funds in various accounts constituted non-marital property. The court ultimately agreed that two accounts—Fidelity Funds #3334 and Touchstone Investments #5992, collectively worth approximately $116,000—were exclusively Mr. Wasyluszko's non-marital property. That determination is not at issue in this appeal. However, relevant to this appeal, the court determined that all funds in four other accounts—Fidelity 403(b), Janus Henderson, DWS Equity Fund, and Fidelity IRA #3342—constituted marital property and, accordingly, could be considered for equitable distribution via a monetary award. The court prepared a "Marital Property Schedule," which it incorporated by reference in its bench opinion, that identified and valued each item that it determined to be marital property:

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After considering the factors enumerated in Section 8-205(b) of the Family Law Article, the court granted Ms. Wasyluszko a monetary award of $840,000.

In this timely appeal, Mr. Wasyluszko contends that the court erred in determining that the four accounts mentioned above constituted marital property in their entirety because the evidence demonstrated that a portion of each account is directly traceable to his pre-marital contributions. He therefore asks us to vacate the $840,000 monetary award, as well as the court's $15,000 attorney's fee award in favor of Ms. Wasyluszko.

DISCUSSION

I. THE MONETARY AWARD MUST BE VACATED BECAUSE THE COURT ERRED IN FINDING THAT THREE OF MR. WASYLUSZKO'S ACCOUNTS WERE ENTIRELY MARITAL PROPERTY

Because the focal point of this appeal involves the court's determination that four of Mr. Wasyluszko's accounts were entirely marital property, we begin our analysis with the relevant statute, Md. Code (1984, 2019 Repl. Vol.), § 8-201(e) of the Family Law Article ("FL"), which defines marital property as follows:

(e) (1) "Marital property" means the property, however titled, acquired by 1 or both parties during the marriage.

(2) "Marital property" includes any interest in real property held by the parties as tenants by the entirety unless the real property is excluded by valid agreement.

(3) Except as provided in paragraph (2) of this subsection, "marital property" does not include property:

(i) acquired before the marriage;

(ii) acquired by inheritance or gift from a third party;

(iii) excluded by valid agreement; or

(iv) directly traceable to any of these sources.

"Ordinarily, it is a question of fact as to whether all or a portion of an asset is marital or non-marital property. Findings of this type are subject to review under the clearly erroneous standard embodied by Md. Rule 8-131(c) [.]" Collins v. Collins , 144 Md. App. 395, 408–09, 798 A.2d 1155 (2002) (quoting Innerbichler v. Innerbichler , 132 Md. App. 207, 229, 752 A.2d 291 (2000) ). We review the ultimate decision to grant a monetary award for an abuse of discretion. Abdullahi v. Zanini , 241 Md. App. 372, 407, 211 A.3d 510 (2019). We shall separately examine each of the four accounts in dispute.

A. Baltimore Symphony Orchestra 403(b) Account

Through his employment with the Baltimore Symphony Orchestra ("BSO"), Mr. Wasyluszko participated in a retirement savings plan BSO sponsored pursuant to 26 U.S.C. § 403(b). Mr. Wasyluszko produced evidence that as of July 31, 1998 (the account statement immediately preceding his August 22, 1998 marriage), the BSO 403(b) plan was worth $107,690.04. This $107,690.04 valuation consisted of two components:

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It is this evidence of Mr. Wasyluszko's pre-marital contributions to the BSO 403(b) plan that forms the basis of his non-marital property claim.

There is no dispute that at the time of trial the BSO 403(b) account had substantially increased in value to $1,403,889.13:

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In its bench opinion, the court made the following findings concerning the BSO 403(b) plan:

Another one of the significant assets is the Fidelity BSO Retirement [403(b)] account. The current value provided by the parties is one million four hundred three thousand eight hundred and eighty-nine dollars.

Mr. Wasyluszko established that account prior to the marriage. The value of the account as of the date of marriage was $107,690. Employee contributions during the marriage were $224,074.

There were dividends and interest paid during the marriage, those amounts have been provided, they added up to $587,768.

The total contributions during the marriage were $811,842, that includes not only employee contributions but dividends and interest paid during that time.

Mr. Wasyluszko, purporting to use a "source of funds" theory, argued that twelve percent of the 403(b) plan was non-marital property. He reached that conclusion by using the pre-marital value of the account ($107,690) as the numerator and the sum of all non-marital and marital contributions, including dividends and interest, ($919,532) as the denominator.² Mr. Wasyluszko makes the same argument on appeal.

In rejecting Mr. Wasyluszko's claim that part of the BSO 403(b) account constituted his non-marital property, the court concluded that "the funds are not directly traceable to a non-marital source" because "[t]he funds ... have been commingled between the premarital and post-marital contributions and dividends and interest earned on the premarital and post-marital contributions and are, therefore, entirely marital property."

Although we concur with the circuit court's rejection of Mr. Wasyluszko's source of funds analysis,³ we nevertheless hold that the court erred in characterizing the BSO 403(b) account as wholly marital property. Mr. Wasyluszko produced documentation showing every contribution, dividend, and capital gain accumulated in the BSO 403(b) account between August 1998 and September 2018.⁴ Significantly, with a minor exception, the shares in the BSO 403(b) account only increased during the twenty-year period between 1998 and 2018.⁵ Accordingly, the records verify that, even though the number of shares dramatically increased during the marriage, Mr. Wasyluszko still owned the original 1,290.380 Contrafund shares and 1,429.846 Low Priced Stock shares from before the marriage. To be sure, the values of those shares fluctuated during the twenty-year marriage, as reflected in the account statements, but the number of shares never decreased.⁶ In short, Mr. Wasyluszko's pre-marital Contrafund and Low Priced Stock shares remained in the account at the time of divorce.

In summary, the court properly valued the BSO 403(b) account at $1,403,889, which consisted of the following:

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Using the per-share values at the time of divorce, we calculate the value of Mr. Wasyluszko's non-marital shares:

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Our analysis is consistent with Wilen v. Wilen , 61 Md. App. 337, 348–49, 486 A.2d 775 (1985) (holding that stock splits directly traceable to husband's pre-marital stock are non-marital).

On remand, the court should appropriately adjust its "Marital Property Schedule" and "Andrew Wasyluszko's Schedule of Non-Marital Property" concerning the BSO 403(b) account to reflect Mr. Wasyluszko's $84,633.67 non-marital share.

B. Janus Henderson Account

Mr. Wasyluszko's Janus Henderson Non-Retirement Account contains two funds: 1) the Forty Fund and 2) the Research Fund.⁷ He opened this account prior to the marriage and the last account statement before the date of marriage (August 3, 1998) verifies that he owned 195.9540 Forty Fund shares and 457.2410 Research Fund shares. Mr. Wasyluszko produced documentation verifying every transaction for the Forty and Research Funds from January 1996 to December 2017. The parties stipulated that the only contributions Mr. Wasyluszko made during the marriage were $50.00 per month to each account from September 3, 1998 to April 3, 2002. The court found that Mr. Wasyluszko established the Janus Henderson account prior to the marriage, that the account was worth $18,155 as of the date of marriage, and that Mr. Wasyluszko made $4,300 in contributions to the account during the marriage. At the time of the divorce, the account was valued at $83,887. Again utilizing a source of funds theory, Mr. Wasyluszko contended that 81% of the account value, or $67,948, constituted his non-marital property.⁸

The court determined that the entire Janus Henderson account, consisting of the Forty and Research Funds, constituted marital property. As with the BSO 403(b) account, we hold that ...