Is a domain name bought by husband in a bankruptcy proceeding marital property subject to equitable distribution in a Virginia divorce?
Yes, the proceeds of the sale of the domain name are marital property, even though the domain name was purchased by husband and the proceeds were deposited into an account in his sole name during the marriage. In Kirkendale v. Kirkendale, Loudoun County Circuit Court Case No: 53171 (January 13, 2010), the husband filed for divorce based on constructive desertion. The wife filed a cross-complaint based on cruelty and/or constructive desertion. During the two day, fully contested, divorce trial, the husband amended his complaint, as permitted under Section 20-121.02 of the Code of Virginia, to a divorce based on having lived separate and apart without cohabitation and without interruption for one year. The judge granted a divorce to the husband on this no-fault basis.
During the marriage, husband had bought the domain name “choice.com” for $6,500 during a bankruptcy proceeding of the previous owner. Five years later, after the husband and wife separated, husband sold it for $175,000. The proceeds were deposited into a money market account in husband’s name. At the time of the equitable distribution hearing, the balance in the account was approximately $50,000. Although counsel for the wife had filed a motion for an alternate valuation date as permitted by Virginia Code Section 20-107.3 twenty-one days in advance of the evidentiary hearing, the motion was never argued at the equitable distribution hearing, and the divorce court judge found that wife had waived her request. Furthermore, the judge held that the wife did not make an argument of waste, that is, that husband had dissipated marital funds in anticipation of separation or divorce or after the date of last separation of the parties. After considering the equitable distribution factors, the judge divided the remaining proceeds equally, awarding wife a monetary award of $25,000.
The husband offered evidence on four credit card accounts of the parties, which evidence was not rebutted by the wife. The wife received checks from her sister totaling some $32,000 to cover the parties’ living expenses. The judge found these debts to be marital debt, but the majority of these debts were time barred from enforcement by the applicable three year statute of limitations for an oral contract found in Section 8.01-246(4). Consequently, the divorce court judge found that there was only $4,500 of marital debt still owed to wife’s sister. The judge held the husband was responsible for his business loan and a loan secured by his motorcycle and equally divided the remainder of the debt, which consisted of unpaid taxes, credit card bills, and the debts to the sister, 50% to husband and 50% to wife.
With regard to custody, the parties had previously agreed to joint legal custody of their three children with primary physical custody to the husband father. At trial, the husband opposed joint legal custody because he believed it would limit his choice of daycare providers. The wife opposed the husband’s choice of daycare provider, who was the daughter of his girlfriend. There was no evidence of any harm to the children by this choice. The court continued joint legal custody, but ruled that the parties did not have to agree on the daycare provider, allowing husband to choose. The divorce court judge further ruled that the custodial parent had inherent authority to select the daycare provider while that parent has custody, is working, and is paying for the daycare.
With regard to spousal support, the judge considered the factors in Section 20-107.1, which it noted are very similar to the equitable distribution factors, and awarded wife a permanent spousal support award of $2,500 a month for three years.
The husband was awarded child support of approximately $450 a month according to the sole custody guidelines, as wife had less than 90 days a year of visitation. Each party had to bear his or her own attorney’s fees of $16,500 to husband and $30,000 to wife.
You should consult with a Virginia divorce lawyer to discuss whether particular proceeds of property are marital, separate or hybrid property subject to equitable distribution.