Nack v. Dickerson - Nos. 2219-06-3, 2288-06-3, 2007 Va. App. LEXIS 339 (Ct. App. Sep. 11, 2007)

Rule:

Va. Code Ann. § 20-107.3(A)(2)(i) defines marital property as all property titled in the names of both parties, whether as joint tenants, tenants by the entirety or otherwise, except as provided by § 20-107.3(A)(3), which recognizes the concept of part marital and part separate, or "hybrid" property. Section 20-107.3(A)(3) presupposes that separate property has not been segregated but, rather, combined with marital property. When such assets are combined by the contribution of one to another, resulting in the loss of identity of the contributed property, the classification of the contributed property shall be transmuted to the category of property receiving the contribution. However, to the extent the contributed property is retraceable by a preponderance of the evidence and was not a gift, such contributed property shall retain its original classification. Va. Code Ann. § 20-107.3(A)(3)(d).

Facts:

Steven Douglas Nack ("husband") appealed from a final divorce decree entered by the trial court, arguing that the trial court erred by classifying: (1) a Legg Mason investment portfolio; (2) a 1987 Mercedes-Benz; and (3) a 1993 Lexus, buffalo, and assorted farm equipment as marital property. The wife cross-appealed, arguing that the trial court erred in holding that the parties' prenuptial agreement barred her from an award of attorney's fees.

Issue:

1. Did the trial court err in classifying the investment portfolio, the Mercedes-Benz, and a 1993 Lexus, buffalo, and assorted farm equipment as marital property?
2. Did the parties’ prenuptial agreement bar the wife from an award of attorney’s fees?

Answer:

1) Yes, with respect to the vehicles. 2) Yes.

Conclusion:

The appeals court found that the trial court did not abuse its discretion by classifying the investment portfolio as marital property pursuant to Va. Code Ann. § 20-107.3(A)(2)(i), as the identity of the husband's separate funds had been lost in countless unspecified transactions involving marital funds, resulting in the irreversible transmutation of separate into marital property. The parties' prenuptial agreement provided that the first vehicle remain the husband's separate property, and the trial court erred in classifying it as marital property. The second vehicle remained the husband's separate property, and the trial court abused its discretion in classifying it as marital property. Because the parties purchased the farm equipment and buffalo with marital property, and because the husband did not meet his burden of retracing his separate funds from these purchases, (Va. Code Ann. § 20-107.3(A)(3)(d)), the property was properly classified as marital. Finally, the court noted that the prenuptial agreement plainly stated that in the event of the dissolution of marriage, the parties agreed to be responsible for their own respective attorney's fees and costs. According to the court, the prenuptial agreement was clear and unambiguous in that neither party was responsible for the fees of the other. Therefore, the wife was not entitled to collect attorney's fees from the husband.