Innerbichler v. Innerbichler
132 Md. App. 207, 752 A.2d 291 (Md. Ct. Spec. App. 2000)

Facts:

  • The parties were married in January 1984, had a daughter in 1986, and divorced in 1998.
  • In October 1982, appellant (husband) co-founded TAMSCO, a company that provided technical and management services to federal government agencies as well as the private sector.
    • He owned 51%.
  • In June 1983, appellant submitted an application on behalf of TAMSCO to the United States Small Business Administration to obtain “8(a) certification.”
    • The “8(a) program” assists small businesses owned and controlled by socially and economically disadvantaged persons, and enables them to obtain lucrative government contracts.
    • Appellant was Hispanic.
  • On April 14, 1984 (after the parties’ marriage), TAMSCO obtained the desired 8(a) certification.
  • For fiscal year 1983, the company reported approximately $52k in revenues. However, by 1997, revenues totaled $51 million, with husband making $650k annually.

History:
The circuit court awarded the wife half the appreciation of husband’s interest in the business – $2.88 million (which was reduced to around $2.58 million following post-trial motions) – and monthly alimony of $8k for five years, followed by indefinite monthly alimony of $6k.

  • Based on the opinion of the Wife’s expert, the court concluded that TAMSCO had a fair market value of $8.3 million and that husband’s pre-marital interest was worth only $153k.

Issue:
Whether the trial court erred in finding that the increase in value in TAMSCO was marital property.

Holding:
No. Affirmed.

Reasoning:

  • Property that is initially non-marital can later become marital.
  • When a party petitions for a monetary award, the trial court must first follow a three-step procedure:
    • First, for each disputed item of property, the court must determine whether it is marital or nonmarital;
    • Second, the court must determine the value of all marital property; and
    • Third, the court must decide if the division of marital property according to title will be unfair; if so, the court may make a monetary award to rectify any inequity created by the way in which property acquired during marriage happened to be titled.
  • When a court makes a monetary award to rectify inequity, statutory factors to consider, among others, are:
    • The contributions, monetary and nonmonetary, of each party to the well-being of the family;
    • The value of all property interests of each party;
    • The economic circumstances of each party at the time the award is to be made;
    • The circumstances that contributed to the estrangement of the parties; and
    • The duration of the marriage.
  • Here, the court held that the trial court was NOT clearly erroneous:
    • Although it is undisputed that TAMSCO was created before the marriage, the evidence…supported the court’s conclusion that TAMSCO’s value soared after the marriage;
    • Husband, who served as president and chief executive officer of corporation from its inception, was the dominant force in the corporation’s success;
    • Husband was responsible for the estrangement of the parties by committing adultery during the marriage and later deserting wife; and
    • Husband had a gambling problem.

Active Appreciation / Marital Effort Rule: Appreciation of separate property due to active effort/contribution during marriage converts it into marital property.

  • Conversely, passive appreciation occurs when neither the titled spouse nor the non-titled spouse has made any active contribution that caused the asset to appreciate. In that case, the property may remain separate.