Country club membership not marital property

A nontransferable country club membership with an $80,000 price tag is not marital property that could be equitably distributed in a divorce case, the Court of Appeals has held.

The only conclusion that may be reached is that the Club membership cannot be sold, transferred, exchanged, redeemed, inherited, or liquidated in any way, Judge Glenn T. Harrell wrote for the court, agreeing with Michael F. Solomon that his membership in the prestigious Congressional Country Club in Bethesda was not marital property.

The question was one of first impression in Maryland. While the decision affirms the Court of Special Appeals, the intermediate appellate court's opinion was unreported.

Although he lost on this point, Chevy Chase attorney James G. Nolan, who represented wife Nancy L. Solomon, called it an interesting issue.

It certainly comes up in suburban Baltimore and D.C., Nolan said. You can't sell the membership and at the end of the day, you don't get anything back. That was very difficult to surmount.

Nevertheless, he points out that the membership was paid for with marital funds. You can spend $80,000 of marital money and you get to walk away with it, he notes.

Though Michael paid $25,000 to become a member in the 1980s, the initiation fee was $80,000 by the time of trial, according to the opinion.

Club memberships that can be sold, transferred or redeemed may be distributed as marital property, the court conceded; however, Mr. Solomon's non-equity membership does not partake of these abilities, Harrell wrote.

The court thus refused to count the nontransferable membership among those intangible items - like workers' compensation awards, pension rights, and stock options - that appellate courts have found to constitute marital property for purposes of fashioning a monetary award. Instead, the court likened Solomon's membership to a professional degree or license, which can never be sold for monetary value.

The Solomons divorced in 2002. Besides the marital award and a $50,000 grant in attorney's fees, the circuit court ordered Michael to pay $6,000 per month in rehabilitative alimony for three years and $5,000 per month in indefinite alimony thereafter.

The Court of Special Appeals reversed the circuit court's finding that the country club membership was marital property. It also vacated the award of indefinite alimony, concluding that the amount would still leave a great disparity between the parties' incomes income.

While the top court refused to adopt a numerical percentage figure in determining whether an unconscionable disparity existed, it nonetheless noted that the wife's annual income would be still be only 8.5 percent of the husband's when all was said and done.

Compared with the 35 percent differential in Turner, the post- divorce disparity of income and standard of living present here is far greater, Harrell wrote, referring to the court's 2002 case of Turner v. Turner, the only reported Maryland case where a trial court's indefinite alimony award was reversed for inadequacy. The court thus rejected Michael's assertion that the Court of Special Appeals erred in vacating the award.

Other funds available

Michael was also unsuccessful in contending on appeal that the circuit court, in making the monetary award, should have considered the tax consequences he would face in prematurely liquidating his retirement accounts to pay the award.

The court noted that tax liabilities may be a factor to be considered in the determination of a marital property award only if they are immediate and specific. Michael's tax liabilities did not meet this test, the court concluded, since both the lower courts believed he did not have to dip into his retirement accounts to meet his financial obligations.

Both the Circuit Court and the Court of Special Appeals were persuaded that Mr. Solomon's financial profile indicated he had several other funding sources available, Harrell wrote.

Finally, the court rejected Nancy's contention that Michael had improperly dissipated his interest in an orthopedic systems company.

Though his client's monetary award will now end up being $40,000 less than the circuit court had ordered, the decision wasn't a death knell, according to Nolan, who noted that each party prevailed on two of the four appellate issues.

I wish we'd won all four, he said, But I'm glad we won two.

Michael Solomon, who represented himself on appeal, did not return a telephone call for comment by press time.

WHAT THE COURT HELD

Case:

Solomon v. Solomon, CSA No. 116, Sept. Term 2003. Opinion by Harrell, J. Filed September 13, 2004.

Issue:

Did the CSA err in: (1) failing to consider the tax consequences to the husband when making a $550,000 marital award to a wife in a divorce case; 2) vacating an award of indefinite alimony; 3) concluding that the husband had not dissipated his assets; and 4) declining to treating a non-equity, nontransferable country club membership as marital property?

Holding:

No; affirmed. 1) Tax liabilities may be considered when distributing a marital property award only when they are immediate and specific; 2) the award did not alleviate the unconscionable disparity existing between the parties' incomes; 3) although the husband's forfeiture of his interest in a company was unusual it was not unreasonable; 4) the membership cannot be converted into a monetary amount that could be distributed between the parties.

Counsel:

Petitioner/cross-respondent pro se; James G. Nolan for respondent/ cross-petitioner.

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