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McDiarmid v. McDiarmid

October 24, 1994

ROBERT C. MCDIARMID, APPELLANT
v.
RUTH MCDIARMID, APPELLEE



Appeal from the Superior Court of the District of Columbia; (Hon. Sylvia Bacon, First Trial Judge), (Hon. Henry F. Greene, Second Trial Judge)

Before Terry, King, and Sullivan, Associate Judges.

The opinion of the court was delivered by: Sullivan

SULLIVAN, Associate Judge: This case is before the court for the second time. In the first appeal, McDiarmid v. McDiarmid, 594 A.2d 79 (D.C. 1991) (McDiarmid I), a division of this court concluded that an order entered December 22, 1988 by Judge Sylvia Bacon, the first trial Judge, granting appellee's complaint for absolute divorce, awarding her alimony, child support, and joint custody of the parties' minor child, and establishing values on marital assets subject to distribution, was not final and therefore not appealable. Accordingly, the court dismissed the appeal for want of jurisdiction. Id. Pending before the court now is an appeal from an order entered July 10, 1992 by Judge Henry F. Greene, the second trial Judge, (1) granting appellee's motion for entry of judgment based on Judge Bacon's order of December 22, 1988, and (2) awarding attorney fees to appellee. In view of the finality of Judge Greene's order, we now review the issues raised by appellant in McDiarmid I, as well as Judge Greene's award of attorney fees to appellee. We affirm in part, reverse in part, and remand for further proceedings.

I

The parties to this action were married on December 22, 1963. They separated in late 1985, and, in July of 1986, appellee filed a complaint seeking an absolute divorce, alimony, custody, child support and distribution of property. At the trial before Judge Bacon in July 1987, the parties stipulated to the identity and value of some marital and non-marital assets, as well as to the custody of their two children and responsibility for various expenses related to them. The contested issues included whether appellee should be awarded additional child support and alimony, whether she was entitled to a share of appellant's interest in his family partnership, McDiarmid Associates, which interest was gifted to him during the marriage, and the value of appellant's law firm partnership interest. The divorce was not otherwise contested.

On December 22, 1988, seventeen months after the trial had concluded, Judge Bacon entered Findings of Fact, Conclusions of Law and a Judgment of Absolute Divorce. Judge Bacon concluded that appellant's law firm partnership interest had a value of $428,197, including a goodwill value of $63,824; that appellant's "retained earnings" in his family partnership (but not the partnership interest itself) were marital property valued at $71,180; that appellee was entitled to alimony of $1,000 per month; and that she was entitled to additional child support of $500 per month for the younger child, retroactive to the date of the filing of the complaint. Judge Bacon concluded that the marital property should be divided equally between the parties and suggested that this be accomplished by awarding appellant his law firm interest, including goodwill, retirement plans, and "retained earnings" and awarding the balance of the parties' assets, including the marital home, to appellee. This distribution plan was suggested, but not ordered, by Judge Bacon, who retained jurisdiction over the case in the event the parties were unable to agree upon a distribution of assets.

On January 4, 1989, appellant filed a motion to reconsider and amend Judge Bacon's Findings of Fact and Conclusions of Law due to what he maintained were "substantial changes in the circumstances relating to marital property" during the eighteen months between the trial and the court's decision, in particular, the value of the marital home. Appellant averred that the value of the marital home had increased in value and presented a current appraisal ("Kidwell appraisal") of the marital home which appellant argued reflected appreciation of that property in excess of $200,000 in the interval between trial and judge Bacon's decision. The parties' attorneys attempted to work out a settlement and agreed that no opposition to appellant's motion would be filed during settlement negotiations. Unfortunately, the parties' efforts at settlement were unsuccessful, and appellee filed her opposition to the motion for reconsideration on June 30, 1989. Six months later, on December 15, 1989, Judge Bacon issued an order stating that she would consider the Kidwell appraisal for the limited purpose of showing one opinion on the change in value of the marital home. On that same day, she also issued an order denying appellant's motion to reconsider and amend her Findings of Fact, Conclusions of Law and Judgment of Absolute Divorce.

Appellant appealed Judge Bacon's order; following our dismissal of the appeal in McDiarmid I, supra, appellee filed a motion in the trial court for entry of judgment of Judge Bacon's order. In view of Judge Bacon's intervening retirement, the case was reassigned to Judge Henry F. Greene, who ordered the specific property distribution suggested by Judge Bacon, entered judgment based upon Judge Bacon's Findings of Fact and Conclusions of Law, and awarded attorney's fees to appellee in the amount of $65,318. The present appeal ensued.

II.

The first issue to be addressed is whether the trial court abused its discretion in failing to revalue certain marital assets when a specific proffer was made by appellant that the substantial passage of time after trial, and before decision, had resulted in substantial fluctuations in the values of those assets. The law in the District of Columbia does not specify the valuation date to be utilized by a trial court for the valuation of marital property subject to distribution upon the entry of a divorce decree. Moreover, D.C. Code § 16-910 (1989) does not impose a duty on a trial court to distribute marital and separate property within a prescribed period after the trial court receives evidence of its value. The statute does, however, require the trial court to distribute all property accumulated during marriage "in a manner that is equitable, just and reasonable." Id.

The Supreme Court of Pennsylvania, in Sutliff v. Sutliff, 518 Pa. 378, 543 A.2d 534 (Pa. 1988), interpreting its divorce statute, 23 Pa. Cons. Stat. Ann. § 3502 (1993), which contains no express provision governing the proper date for valuation of marital property subject to equitable distribution, held that it was "implicit . . . in the statutory provisions governing equitable distribution that a valuation date reasonably proximate to the date of distribution must, in the usual case, be utilized." Sutliff, supra, 543 A.2d at 536. The Pennsylvania statute, with its enumeration of factors to be considered in distributing marital property, is virtually identical to D.C. Code § 16-910 in both language and spirit. Examining the language of the statute, the Pennsylvania court held that "it is inconceivable that the requirement that the distribution be made in such proportions as the court deems 'just' could be satisfied without reference to the current values of the assets." Id. Remanding the case for determination of revised asset valuation, the court concluded that

to distribute property without regard to fluctuations would be illogical, and would undermine the legislative intent of making the equitable distribution process responsive to the contemporaneous needs and financial situations of the parties.

Id. at 537; see also Malseed v. Malseed, 388 Pa. Super. 214, 565 A.2d 453, 455 (Pa. Super. Ct. 1989) (trial court erred in not basing the equitable distribution upon the market value of the marital home at the time of distribution).

We find the rationale of the Pennsylvania court persuasive. The distribution of property upon dissolution of marriage should be responsive to the parties' then current needs and circumstances. An equitable distribution requires the court to consider the current values of the marital property, such that upon distribution, each party's needs are adequately addressed. We recognize that it is within the trial court's discretion to "adopt a date for valuation which best works economic Justice between the parties." McNaughton v. McNaughton, 412 Pa. Super. 409, 603 A.2d 646, 649 (Pa. Super. Ct. 1992). Thus, we do not endeavor to establish as a matter of law a valuation date to be used in every situation. Nonetheless, there are circumstances in which the distribution of assets based on stale valuations violates the provisions of D.C. Code § 16-910, requiring that the distribution be equitable, just and reasonable. The case before us today presents such a circumstance.

For instance, at the trial in 1987, the value of the marital home that is the subject of this appeal was stipulated by the parties to be $320,000. Appellant's appraiser, Robert Kidwell, performed an updated appraisal of the property in 1989 and concluded that it was worth $565,000. This appraisal report, which was not controverted by appellee, was submitted to Judge Bacon in appellant's motion for reconsideration. Although ...


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