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McGeehan v. McGeehan

Court of Appeals of Maryland

August 10, 2017

ANN MCGEEHAN
v.
MICHAEL MCGEEHAN

          Argued: June 2, 2017

         Circuit Court for Howard County Case No: 13-C-14-101752

          Barbera, C.J., Greene, Adkins, McDonald, Watts, Getty, Battaglia, Lynne A. (Senior Judge, Specially Assigned), JJ.

          OPINION

          Battaglia, J.

         We are asked to consider whether an agreement entered into during the course of a marriage made manifest by three deeds by which title was transferred to the wife, Ann McGeehan, Petitioner, by her husband, Michael McGeehan, Respondent, was sufficient to exclude those properties from consideration as marital property under Section 8-201(e) of the Family Law Article of the Maryland Code (1984, 2012 Repl. Vol.).[1] We granted certiorari to address the following question:

Did the Court of Special Appeals err in affirming the trial court's determination that the parties' oral agreement, with consideration, that property deemed Wife's sole and separate property did not constitute a "valid agreement" under the requirements of [the Family Law Article] § 8-201(e)?

McGeehan v. McGeehan, 451 Md. 580 (2017).

         In October of 2014, Ann and Michael McGeehan separated after an eighteen year marriage, during which they had eight children. Two months later, Mr. McGeehan filed for divorce in the Circuit Court for Howard County, and an acrimonious debate ensued, which culminated in a divorce in December of 2015. The one year battle consumed volumes of the record, but our analysis will be focused on only that which engenders the discussion of three pieces of real property: property located on Embassy Park Road in Washington, DC ("Embassy Park"), purchased in December of 1998 and titled initially in both names as tenants by the entirety; another property located in Mason Neck, Virginia ("Mason Neck"), purchased in 2000 and titled initially in the husband's name; and property located on Farside Road in Ellicott City, Maryland ("Farside"), purchased in 2002 and titled as tenants by the entirety.

         A fourth property located at Log Jump Trail in Ellicott City, Maryland ("Log Jump"), purchased in September of 2013 by the McGeehans and titled as tenants by the entirety is relevant, because proceeds of sales of the Farside and Embassy Park properties apparently were rolled into the Log Jump purchase. Only the Log Jump and Mason Neck properties were owned by the parties at the time of their divorce.[2]

         The present dispute between the parties before us was queued up in April of 2005 when a series of events occurred that were encapsulated by the Circuit Court Judge in her findings:

[I]n the year 2000, wife learned the husband had taken $50, 000 out of her sole bank account without her knowledge or permission to purchase a piece of property in [Mason Neck], Virginia. Husband told her afterward he had taken the money to purchase the property but wife now says she doesn't know if that's why he took the money.

         The judge then discussed Mr. McGeehan's stock trading, which ultimately lead to the April 2005 real property transactions:

Husband testified he accessed many of wife's accounts and that she was aware that he did so since it was he who handled the family finances. In addition, he had changed the document that wife had signed to allow him to take $5, 000 out of her premarital security account and he changed it to read $15, 000. Throughout the parties' marriage, from time to time -- from the time husband worked for Merrill Lynch, husband would invest in the stock market. He made a lot of money early on but lost as much as he had earned when the dot com bubble burst. Husband discontinued stocking trading for a period of time when the family lived in Europe but resumed in about 2008 and continued to trade for several years. His last trade was about six months ago. It appears from the evidence that husband has lost significantly more in the stock market than he has profited.

         The judge then described the circumstances of the transfer in April of 2005 that lead to this embroilment:

In 2005, wife discovered that husband had been trading her premarital stock account and she discovered that when she got a tax bill from the State of Virginia for over $592, 000. This was a time of crisis for the couple and at that time it led them both to contemplate the future of their marriage. Wife made a new will leaving everything to her children and had her family's estate attorney write up a waiver of the statutory share for her husband to sign. Wife lost trust in husband, demanded that he transfer the parties' Embassy Park Drive home, Farside home in Ellicott City and the property in Virginia into her sole name. Husband alleges that this was done for estate planning purposes due to his risky employment but it's more credible that it was done to appease wife who was distraught over losing her inherited stock portfolio. The parties continued in the marriage after this. Husband continued to be in charge of the parties' finances.

         The judge also found that, "All of the premarital funds had been co-mingled at that point."

         The gravamen of the question raised by Ms. McGeehan, however, arises as a result of the judge's determination that the Mason Neck property retitled in 2005 to Ms. McGeehan's name was marital property:

The [Mason Neck], Virginia property was disputed property. It was initially titled in husband's name. It was transferred to wife's name in 2005 at a time when wife had recently learned her premarital estate had been traded away in the stock market. It would seem that it was the parties' mutual agreement that the property would be wife's property. Under the law of Maryland, even though property is titled in the name of one party or another party, it remains marital property and can be excluded by agreement of the parties. But the law is clear that to do that, and I just learned this, the agreement has to be specific not just that it's my sole and separate property but it is my sole and separate property and will be excluded from marital property in the future. It has to be explicitly stated. It was not explicitly stated. I've seen no evidence that it was. So, under the cases of Golden versus Golden and Falise versus Falise, the property is now marital. However, it's titled in wife's name. Wife is the only person as the titled owner who can give an opinion as to its value and since the property was not appraised, I have to find that the value of that property is $600, 000.00.

         The Judge also determined that the Log Jump property, titled as tenants by the entirety upon purchase, was marital property, without any discussion of whether any portion of it was excluded by valid agreement or any consideration of its financial underpinnings or source of funds[3]:

There is a house on Log Jump Trail, 11640 Log Jump Trail. It is titled tenants by the entireties. It is marital property. Its value is $1, 568, 200.00. There is a debt against that property of $445, 000. So the value of that property is . . . $1, 123, 200.

         The "gift deed" executed and recorded in 2005 between the McGeehans with respect to the Mason Neck property conveyed the property to Ms. McGeehan as her "sole separate and equitable estate":

THIS DEED, made and entered into this 11th day of April, 2005, by and between Michael S. McGEEHAN, a married man, GRANTOR, and Ann O. McGEEHAN, a married woman, as and for her sole separate and equitable estate, GRANTEE:
WHEREAS, Michael S. McGeehan acquired an interest in the property described herein by deed dated May 5, 2000 and recorded May 8, 2000, in Deed Book 11343 at Page 1378, among the land records of Fairfax County, Virginia; and
WHEREAS, Michael S. McGeehan, Grantor, desires to convey all his rights, title and interests in said property described herein to his wife, Ann O. McGeehan, the Grantee, in fee simple.

         The "gift deed" conveying the couple's Embassy Park property to Ms. McGeehan similarly provided that the property would be "her sole separate and equitable estate":

THIS DEED, made and entered into this 11th day of April, 2005, by and between Michael S. McGEEHAN, a married man, GRANTOR, and Ann O. McGEEHAN, a married woman, as and for her sole separate and equitable estate, GRANTEE:
WHEREAS, Michael S. McGeehan acquired an interest in the property described herein along with his wife An [sic] O. McGeehan, as tenants by the entirety with full common law right of survivorship, by deed dated November 18, 1998 and recorded December 2, 1998, as Instrument Number 9800092930, among the land records of the District of Columbia; and
WHEREAS, Michael S. McGeehan, Grantor, desires to convey all his rights, title and interests in said property described herein to his wife, Ann O. McGeehan, the Grantee, in fee simple.

         With respect to the Farside property, the deed transferring the property from "Husband and Wife to Wife"[4] provided:

This Deed, made this 11th day of April, 2005, by and between MICHAEL S. MCGEEHAN and ANN O. MCGEEHAN, parties of the first part, Grantors; and ANN O. MCGEEHAN, party of the second part, Grantee.
- Witnesseth -
THIS IS A TRANSFER FROM HUSBAND AND WIFE TO WIFE AND IS EXEMPT UNDER 12-1098(d) OF TAX PROPERTY ARTICLE OF THE ANNOTATED CODE OF MARYLAND.
THAT for an in consideration of the sum of NO AND 00/100 DOLLARS ($.00), which includes the amount of any outstanding Mortgage or Deed of Trust, if any, the receipt whereof is hereby acknowledged, the said Grantors do grant and convey to the said ANN O. MCGEEHAN, as sole owner, in fee simple, all that lot of ground situate in Howard County, Maryland . . . .

         At trial, Ms. McGeehan testified that the Embassy Park property was sold in "2012 or 2013, " and the proceeds from that sale yielded "a little bit more than $400, 000.00":

Q. Now, concerning the property on Embassy, there came a time when you sold that, right?
A. Yes.
Q. The D.C. property. And to the best of your recollection, approximately when was that home sold?
A. To the best of my recollection, around it was the summertime, it was either 2012 or 2013. And then it went into escrow, the proceeds, while I looked for an investment property.
Q. Now and do you remember what the approximate amount was from the proceeds of the sale of that property?
A. Approximately $440, 000.00. Around $400, 000.00, a little bit more than $400, 000.00. We had purchased it for $200, 000.00 something it was . . . sold for about $650, 000.00 and there was - and uh, yeah.

         Ms. McGeehan further testified that Farside was sold in 2014, and the proceeds of Embassy Park and Farside were used to purchase Log Jump:

Q. And with regard to the purchase of your current property [Log Jump], were there uh, was any portion of the - well the property was sold, correct? The [Farside] property was sold?
A. Yes it was.
Q. And do you remember the approximate amount it was sold for?
A. It was approximately sold, approximately $800, 000.00.
Q. And when it was sold do you know how the proceeds were applied, if at all, to the purchase of the Log Jump property?
A. My husband told me that we were rolling all of the proceeds into the Log Jump property because the Log Jump property was about - it's $400, 000.00 more expensive and that was the same amount of the $439, 500.00 proceeds. So we were combining in the two ultimately to move them -
Q. When you say combining the two, what two are you referring to?
A. In other words, the [Embassy Park] property, the properties are listed on my - the [Embassy Park] property, the properties are listed on my - the [Embassy Park] and the 11777 [Farside] Road. Both of those properties were sold. And both my understanding and what my husband definitively told me is that the full sum of those two properties which were in my name, would be transferred into the property to have a bigger house for the kids, you know, for us to live in.

         The issue raised by Ms. McGeehan before us is, thus, queued up. Did the 2005 Mason Neck gift deed from Mr. McGeehan act not only to transfer title to Ms. McGeehan but also to remove Mason Neck from consideration as marital property? Likewise, did the 2005 deeds from husband to wife relating to Embassy Park and Farside make them nonmarital property, such that their subsequent sales and contribution of their proceeds to the purchase of Log Jump render any portion of the value of Log Jump nonmarital? Although both parties present the decisions by the Court of Special Appeals in Golden v. Golden, 116 Md.App. 190 (1997), and Falise v. Falise, 63 Md.App. 574 (1985), as dispositive to our analysis, we, as will be seen, disagree.

         Before the Court of Special Appeals, Ms. McGeehan raised a number of issues, among which she argued that Circuit Court Judge had erred in classifying Mason Neck and, implicitly, Farside as marital property because there was a "valid agreement" under Section 8-201(e) of the Family Law Article excluding the two pieces of real property from marital property.[5] Mr. McGeehan, conversely, contended that there had never been an agreement that Mason Neck and Farside, as well as Embassy Park, were nonmarital property, and, thus, Log Jump was appropriately designated as marital property. He argued that there was no evidence of an explicit agreement to designate Mason Neck as "nonmarital" and that, not only did the trial judge expressly find that Log Jump had been purchased with co-mingled funds, but, even if Farside and Embassy Park were wife's nonmarital property, the trial court had the discretion to ignore that fact in the determination of the monetary award.

         The Court of Special Appeals agreed with Mr. McGeehan and relied on the trial court's rationale for its observation that:

Although, as the trial court noted, the deed for the property and the oral agreement between the parties evidenced an intent to transfer the property into [Ms. McGeehan's] name alone, they did not express an intent to remove the Mason Neck property from marital property status or to exempt it from application of the Marital Property Act. The trial court, citing Golden v. Golden, carefully noted that that an agreement must explicitly state that the property is to be excluded from marital property and that the agreement between [Ms. McGeehan] and Mr. McGeehan had no such statement. The trial court concluded that the testimony and the documents did not support a finding that the parties were contemplating the future division of property and wanted to remove the Mason Neck property from the scope of the Marital Property Act. Similarly, the trial court did not believe that Ms. [McGeehan's] use of gift funds to pay off the mortgage converted Mason Neck into nonmarital property. We see no error in the trial court's analysis.

McGeehan v. McGeehan, September Term, 2015, No. 2445, at 13-14 (October 26, 2016).

         Before us, Ms. McGeehan argues that the trial court misapplied Golden and Falise to require that the deeds needed to specify that the properties would be nonmarital and that the words "sole" and "separate" as well as "sole owner" contained in the deeds were not sufficient to exclude the properties from marital property. Mr. McGeehan, on the other hand, maintains that the transfers of the three properties to Ms. McGeehan did not constitute a valid agreement to exclude any portion of the value of the properties or proceeds from the sale of the properties from the marital cauldron, because the deeds and oral agreements were not specific enough to exempt them from marital property.

          The gravamen of the Maryland property division scheme upon divorce is an attempt to ensure that the value of both real and personal property is distributed in a fair and equitable manner. Cynthia Callahan & Thomas C. Ries, Fader's Maryland Family Law § 13-2 (6th ed. 2016).[6] The initial determination by a trial judge centers on whether the property is marital, such that its value is attributable to both spouses, or nonmarital and attributable to one spouse. Section 8-203(a) of the Family Law Article.[7] Once the values of the marital and nonmarital properties have been identified, [8] a monetary award is tabulated as an adjustment of the equities and rights of the parties concerning marital property:

(a) Grant of award. - (1) Subject to the provisions of subsection (b) of this section, after the court determines which property is marital property, and the value of the marital property, the court may . . . grant a monetary award . . . as an adjustment of the equities and rights of the parties concerning marital property . . . .
* * *
(b) Factors in determining amount and method of payment or terms of transfer. - The court shall determine the amount and the method of payment of a monetary award . . . after considering each of the following factors:
(1) the contributions, monetary and nonmonetary, of each party to the well-being of the family;
(2) the value of all property interests of each party;
(3) the economic circumstances of each party at the time the award is to be made;
(4) the circumstances that contributed to the estrangement of the parties;
(5) the duration of the marriage;
(6) the age of each party;
(7) the physical and mental condition of each party;
(8) how and when specific marital property or interest in property described in subsection (a)(2) of this section, was acquired, including the effort expended by each party in accumulating the marital property or the interest in property described in subsection (a)(2) of this section, or both;
(9) the contribution by either party of property described in § 8-201(e)(3) of this subtitle to the acquisition of real property held by the parties as tenants by the entirety;
(10) any award of alimony and any award or other provision that the court has made with respect to family use personal property or the family home; and
(11) any other factor that the court considers necessary or appropriate to consider in order to arrive at a fair and equitable monetary award or transfer of an interest in property described in subsection (a)(2) of this section, or both.
(c) Award reduced to judgment. - The court may reduce to a judgment any monetary award made under this section, to the extent that any part of the award is due and owing.

Section 8-205 of the Family Law Article.

         Section 8-201(e) of the Family Law Article defines "marital property, " provides that real property titled as tenants by the entirety is marital property, unless excluded by valid agreement, and also allows all other property "excluded by valid agreement" to be excluded from marital property:

(e) Marital property. - (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 ...

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