George C. Pappas v. Catherine E. Pappas ( 2004 )

COURT OF APPEALS OF VIRGINIA
Present: Judges Clements, Felton and McClanahan
Argued at Alexandria, Virginia
GEORGE C. PAPPAS
MEMORANDUM OPINION * BY
v. Record No. 2351-03-4 JUDGE WALTER S. FELTON, JR.
AUGUST 17, 2004
CATHERINE E. PAPPAS
FROM THE CIRCUIT COURT OF FAIRFAX COUNTY
Leslie M. Alden, Judge
Dennis M. Hottell (Christopher Malinowski; Angela M. Cross;
Dennis M. Hottell & Associates, P.C., on briefs), for appellant.
Peter M. Fitzner (Matthews, Snider, Norton & Fitzner, on brief),
for appellee.
George C. Pappas (husband) appeals the judgment of the trial court modifying the amount
of spousal support previously awarded to Catherine E. Pappas (wife) in the parties’ property
settlement agreement (PSA) which was incorporated, but not merged, into their final decree of
divorce. Husband contends that the trial court erred in considering the provisions of the PSA and
the parties’ pre-PSA negotiations relating to spousal support in computing the modified support
award; that it erred in imputing income to husband; in ordering husband to pay the modified support
award retroactive to April 1, 2003 when payment of spousal support had been suspended by a prior
court order; and in ruling that it lacked authority to modify the duration of wife’s support award
under the provisions of the PSA. Finding no error, we affirm the judgment of the trial court.
*
Pursuant to Code § 17.1-413, this opinion is not designated for publication.
BACKGROUND
George C. Pappas (husband) and Catherine E. Pappas (wife) were married on June 18,
1989. No children were born of the marriage. On May 24, 2002, they entered into a property
settlement agreement (PSA), which resolved all issues of spousal support and equitable
distribution. The PSA was affirmed, ratified and incorporated, but not merged, into the final
decree dissolving the parties’ marriage.
Under the provisions of the PSA, husband agreed to pay wife $5,700 per month from
December 2001 until June 2002, and thereafter $4,000 per month for twelve years and four months,
unless terminated due to wife’s remarriage, her habitual cohabitation analogous to marriage, or the
death of either party. Pursuant to the PSA, husband received marital property valued at $35,000 and
wife received assets, including the marital residence, valued at $397,585. The PSA also provided
that “either party may hereafter petition any court of competent jurisdiction for an increase or
decrease of spousal support and maintenance pursuant to § 20-109 . . . .”
At the time the parties entered into the PSA, husband was the President and CEO of Plesk,
Inc., an information technology company, where he had been employed since June 2001 at an
annual salary of $190,000. Both parties anticipated husband’s employment would continue when
they entered into the PSA. On December 16, 2002, husband’s employment at Plesk was terminated
as the result of financial difficulties experienced by his employer.
Immediately following his termination, husband began seeking comparable alternative
employment in the information technology sector. Due to a poor market, employment opportunities
consistent with his former level of employment were largely unavailable. Meanwhile wife, who had
not been employed during the marriage, obtained employment earning approximately $46,000
annually.
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On December 31, 2002, less than seven months after the entry of the final decree of divorce
incorporating the parties’ PSA, husband filed a motion to modify spousal support. He
simultaneously filed a pendente lite motion to suspend the support payments, which the trial court
granted on January 10, 2003.
On July 23, 2003, the trial court heard evidence ore tenus. Both parties presented expert
testimony related to husband’s job search following his loss of employment. The trial court
admitted the parties’ PSA into evidence, as well as evidence of the parties’ pre-PSA negotiations
regarding spousal support.
The trial court found that the PSA provided authority for it to determine modification of
spousal support. It concluded that husband’s termination of employment resulting from his
employer’s financial difficulties was a material change in circumstances not reasonably
contemplated by the parties at the time they entered into the PSA. It also found that its authority to
modify the spousal support was limited to modifying the amount of support, but not its duration;
that the evidence supported an imputation of $100,000 annual income to husband; and that after
considering all the factors of Code § 20-107.1(E), husband’s monthly spousal support payments
should be reduced from $4,000 a month to $2,500 a month, retroactive to April 1, 2003, and payable
at that rate for the duration established by the parties’ PSA. It denied wife’s request for an award of
attorney’s fees. On August 6, 2003, the trial court entered a final order reflecting its decision of July
23, 2003. Husband’s motion to reconsider was also denied on August 6, 2003.
ANALYSIS
I.
On appeal, we review the evidence, and all reasonable inferences fairly deducible from it,
in the light most favorable to the prevailing party below. Alphin v. Alphin, 15 Va. App. 395,
399, 424 S.E.2d 572, 574 (1992). When a trial court hears the evidence ore tenus, its findings
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are entitled to great weight and will not be disturbed on appeal unless “plainly wrong or without
evidence to support it.” Pommerenke v. Pommerenke, 7 Va. App. 241, 244, 372 S.E.2d 630, 631
(1988). “The determination whether a spouse is entitled to [a reduction or increase in spousal]
support, and if so how much, is a matter within the discretion of the [trial] court and will not be
disturbed on appeal unless it is clear that some injustice has been done.” Dukelow v. Dukelow, 2
Va. App. 21, 27, 341 S.E.2d 208, 211 (1986).
II.
Husband contends that the trial court erred in considering the provisions of the PSA and
the parties’ pre-PSA negotiations related to spousal support in modifying the spousal support
award. He argues that the trial court erred because this evidence relates to past financial
circumstances of the parties rather than their current financial circumstances.
Code § 20-109(B) provides in pertinent part that:
Upon consideration of the factors set forth in subsection E of
§ 20-107.1, the court may increase, decrease or terminate the
amount or duration of the award upon finding that (i) there has
been a material change in the circumstances of the parties, not
reasonably in the contemplation of the parties when the award was
made . . . .
“The moving party in a petition for modification of support is required to prove both a
material change in circumstances and that this change warrants a modification of support.”
Schoenwetter v. Schoenwetter, 8 Va. App. 601, 605, 383 S.E.2d 28, 30 (1989). “The material
change in circumstances must have occurred after the most recent judicial review of the award,
and ‘must bear upon the financial needs of the dependent spouse or the ability of the supporting
spouse to pay.’” Moreno v. Moreno, 24 Va. App. 190, 195, 480 S.E.2d 792, 795 (1997) (quoting
Hollowell v. Hollowell, 6 Va. App. 417, 419, 369 S.E.2d 451, 452 (1988)). “In [modifying]
spousal support, the [trial court] . . . is guided by the . . . factors that are set forth in Code
§ 20-107.1. When the [trial court] has given due consideration to these factors, [its]
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determination will not be disturbed on appeal except for clear abuse of discretion.” Collier v.
Collier, 2 Va. App. 125, 129, 341 S.E.2d 827, 829 (1986).
The trial court concluded that husband’s loss of employment resulting from his
employer’s financial difficulties was a material change in circumstances not reasonably
anticipated by the parties when they entered into the PSA setting spousal support. It noted that
both the PSA and the parties’ pre-PSA negotiations demonstrated the parties’ expectations that
husband would continue to be employed at a substantial annual income. Husband conceded in
his reply brief that a proper consideration of Code § 20-109(B) requires the trial court to consider
this evidence in determining whether a material change in circumstances not contemplated by the
parties had occurred.
Once a material change in circumstances warranting modification has been established,
Code § 20-109(B) requires the trial court to consider the factors set forth in Code § 20-107.1(E)
to determine the amount of the award. In reducing the amount of husband’s monthly spousal
support obligation, the trial court stated that it based its decision on the evidence presented,
including the property and support provisions contained in the PSA, the argument of counsel,
and all the factors enumerated in Code §§ 20-107.1(E) and 20-109.
Husband argues that the trial court erred in considering the PSA property and support
provisions, as well as the parties’ pre-PSA negotiations regarding support, in determining the
amount of the modified support payments, because those matters related to the parties’ past
financial circumstances rather then their current financial circumstances. The trial court ruled
that Code § 20-107.1(E)(7) and (13) permitted it to “consider the agreement that the parties made
and the property interests that resulted from that.” Code § 20-107.1(E)(7) requires the court to
consider “the property interests of the parties, both real and personal, tangible and intangible.”
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Code § 20-107.1(E)(13), the “catch-all” provision, requires it to consider “[s]uch other
factors, . . . as are necessary to consider the equities between the parties.”
The PSA contained the agreed distribution of the parties’ personal property, retirement
accounts, marital home, provisions for life and health insurance, as well as their agreement on
spousal support. The trial court considered the provisions of the PSA relevant to the original
division of the parties’ property in determining whether, and to what degree, modification of the
existing spousal support award might be appropriate. It ruled that Code § 20-107.1(E)(13)
permitted it to consider other financial factors established by the PSA. We conclude that the trial
court did not err in considering the PSA, as its provisions established financial factors the court
was required to consider under Code § 20-107.1(E)(7) and (13).
The PSA established the lifestyle the parties expected husband to financially maintain for
wife following the dissolution of the marriage, namely the lifestyle which she was accustomed to
during the marriage. Stubblebine v. Stubblebine, 22 Va. App. 703, 710, 473 S.E.2d 72, 75
(1996) (en banc) (citations omitted).
Moreover, the trial court explicitly stated that it based its modification decision not only
upon the financial factors in the PSA, but also on the current financial and other circumstances of
the parties as required by Code § 20-107.1. The trial court noted that it considered all of the
factors in Code § 20-107.1(E). It specifically found both parties were employable. It found that
husband had a college degree, and a long history of well-paid employment in the information
technology industry. It found that he had a wide range of experience in sales, marketing, and
executive positions. It concluded that husband “could and should be working at a job that pays
$100,000” annually, and it imputed that income to him. It also found that, while wife essentially
was not employed outside the home during the twelve-year marriage, she was currently employed,
earning approximately $46,000 annually. This Court has previously said that in determining a
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modification in spousal support, a trial court must consider the statutory factors of Code
§ 20-107.1, but that it is not “required to quantify or elaborate exactly what weight or
consideration it has given to each of the statutory factors.” Woolley v. Woolley, 3 Va. App. 337,
345, 349 S.E.2d 422, 426 (1986).
We find from the record before us that the trial court properly considered the required
statutory factors in its decision to modify husband’s spousal support payments. We also find that
the trial court did not abuse its discretion in considering the property and support provisions of
the PSA in its determinations. Because the trial court based its modification of support decision
on credible evidence in the record, we conclude that the trial court did not err in its modification
of husband’s spousal support obligations. See id.
III.
Husband contends that the trial court erred in imputing an annual income of $100,000 to
him. He argues that the evidence failed to show that he was voluntarily foregoing gainful
employment.
“In setting or modifying spousal support or child support, a court may impute income to a
party voluntarily unemployed or underemployed.” Blackburn v. Michael, 30 Va. App. 95, 102,
515 S.E.2d 780, 783 (1999); see Stubblebine, 22 Va. App. at 708, 473 S.E.2d at 74. The party
seeking imputation of income has the burden of proving that the other party is voluntarily
underemployed or is voluntarily foregoing gainful employment. Blackburn, 30 Va. App. at 102,
515 S.E.2d at 784. Whether to impute income lies within the sound discretion of the trial court,
and its decision will not be reversed unless plainly wrong or without evidence to support it. See
Blackburn, 30 Va. App. at 102, 515 S.E.2d at 784 (citing Saleem v. Saleem, 26 Va. App. 384,
393, 494 S.E.2d 883, 887 (1998)).
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The record contains credible evidence from which the trial court could reasonably
conclude husband was voluntarily foregoing gainful employment and that his education, training
and experience warranted imputing to him an annual income of $100,000. See id.
The record shows that husband possessed a college degree, had twenty years of work
experience in sales and marketing, and had been employed by various technology companies as
an executive. Moreover, wife presented expert testimony from a vocational rehabilitation
consultant that husband was in fact employable at an annual salary between $100,000 and
$175,000, and there were jobs available within the area for which husband was qualified and for
which he had not applied. Husband presented evidence of his efforts to locate employment from
the time he lost his job, including providing logs of his employer contacts and records of his job
search. He presented evidence that positions comparable to that he held at the time the PSA was
entered were scarce as a result of the downturn in the technology industry. Wife’s expert
testified that husband’s efforts were inadequate based on the number of contacts that he had
made, many of which were essentially networking contacts from his previous employment, and
few of which were for actual available positions. Wife’s expert also testified that husband’s job
search since March 2003 had not been aggressive and required “more volume.” Wife’s expert
also testified that there were executive positions available in the area that were similar to
husband’s past experience in business development, marketing, and sales with annual salaries
between $125,000 and $175,000. The expert opined that husband should lower his expectations
and seek positions earning $100,000 annually; and that there were positions available as sales
executive, account manager, and marketing director paying salaries of “$100,000 plus per year.”
Based on the evidence before it, the trial court concluded, “that [husband] could and
should be working in a job that pays at least $100,000,” and imputed an annual income of
$100,000 to husband in determining the modified spousal support award. We affirm the
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judgment of the trial court imputing an annual income of $100,000 to husband based on the
record before us.
IV.
Husband also asserts that the trial court erred in ordering that the modified spousal support
payments be made retroactive to April 1, 2003. He argues that the trial court’s previous grant of his
pendente lite motion on January 10, 2003, suspending his spousal support payments until the
modification determination had been made, barred the retroactive support.
Husband argues that Code § 20-103 grants the court authority to “make any order
proper . . . to enable a party to carry on a suit . . .” including petitions to modify spousal support. He
asserts that the pendente lite order suspending his support obligation temporarily was to enable him
to engage in proceedings to modify his support obligation to meet his changed financial
circumstances. He argues that the court was without authority to order the modified support to be
made retroactively to a period when it had suspended the support payments, arguing that any
modification must be prospective from the final order disposing of the petition to modify. We
disagree.
Code § 20-112 provides that a spousal support award “may be [retroactively] modified
with respect to any period during which there is a pending petition for modification, but only
from the date that notice of such petition has been given to the responding party.” (Emphasis
added.); see Reid v. Reid, 245 Va. 409, 414, 429 S.E.2d 208, 211 (1993) (holding that the trial
court has authority to award spousal support retroactively to the period when the suit was
pending).
The trial court’s order suspending support payments temporarily, without prejudice, was
not an order eliminating husband’s obligation to make those payments altogether. It was simply
an order suspending his requirement to make those payments until his petition for modification
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had been heard, and a decision regarding modification was made. 1 On July 23, 2003, the trial
court reduced the amount of spousal support husband was required to pay wife from $4,000
monthly to $2,500 monthly, and made the modified payments retroactive to April 1, 2003, a date
within the period the modification proceedings were pending. The effect of the trial court’s
order temporarily suspending husband’s obligation to pay spousal support did not limit the trial
court’s ability to order the modified support payments to be effective retroactively.
[W]hether to make modification of a support order effective during
a period when a petition is pending is entirely within the discretion
of the trial court. Its decision in this regard will not be disturbed
on appeal absent an abuse of discretion.
O’Brien v. Rose, 14 Va. App. 960, 965, 420 S.E.2d 246, 249 (1992).
Because the trial court had the authority to suspend husband’s payments during the
period pending its ruling on modification, as well as to require him to make these payments
pending its decision, we find it did not abuse its discretion in ordering the modification reducing
the amount of support to be effective April 1, 2003.
Accordingly, we conclude that the trial court did not err in ordering husband to pay the
modified spousal support obligation retroactive to April 1, 2003.
V.
Husband further contends that the trial court erred when it concluded that the provisions
of the PSA did not permit it to modify the duration of the spousal support award. He argues that
because the PSA reserves the right to the parties to seek support modification pursuant to the
provisions of Code § 20-109, the trial court had authority to modify not only the amount of the
support payments, but their duration as well. See Code § 20-109(B).
1
The status of the support payments payable under the PSA from the date of the order
suspending the payments to the retroactive effective date of the modified payments is not before
us, and we express no opinion concerning them.
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The PSA provides in pertinent part that:
It is specifically agreed . . . that either party may hereafter petition
any court of competent jurisdiction for an increase or decrease of
the spousal support and maintenance, pursuant to § 20-109 of the
1950 Code of Virginia, as amended. The power, jurisdiction and
authority of the court to entertain and adjudicate such a petition,
pursuant to § 20-109, are expressly reserved and retained.
(Emphasis added.)
The parties do not contest that the PSA provides for a defined duration spousal support
award.
Code § 20-109(B) provides that “a court may consider a modification of an award of
spousal support for a defined duration upon a petition of either party filed within the time
covered by the duration of the award” and that after considering the appropriate factors, “the
court may increase, decrease, or terminate the amount or duration of the award” on a finding
that there has been a material change of circumstances not contemplated by the parties.
(Emphasis added.)
Code § 20-109(C) provides that where the parties have entered into a stipulation or
contract regarding payment of spousal support made part of the final decree, “no decree or order
directing the payment of support and maintenance for the spouse . . . shall be entered except in
accordance with that stipulation or contract.” Thus, for husband to prevail on his argument, he
must establish that the trial court had authority under the PSA to alter the duration of the spousal
support award.
“Support agreements that are voluntarily made by the parties are subject to the same rules
of construction applicable to contracts generally.” Goldin v. Goldin, 34 Va. App. 95, 107, 538
S.E.2d 326, 332 (2000) (citing Tiffany v. Tiffany, 1 Va. App. 11, 15, 332 S.E.2d 796, 799
(1985)). “‘The guiding light in the construction of a contract is the intention of the parties as
expressed by them in the words they have used, and courts are bound to say that the parties
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intended what the written instrument plainly declares.’” Wilson v. Holyfield, 227 Va. 184, 187,
313 S.E.2d 396, 398 (1994) (quoting Magann Corp. v. Electrical Works, 203 Va. 259, 264, 123
S.E.2d 377, 381 (1962)). Where an agreement is plain and unambiguous in its terms, we will not
substitute, include or ignore words to change the plain meaning of the agreement. See
Southerland v. Estate of Southerland, 249 Va. 584, 590, 457 S.E.2d 375, 378 (1995).
We find no ambiguity in the plain language the parties used in the PSA establishing the
right of either party to seek judicial modification of the support award. While the PSA provided
each the right to “petition any court of competent jurisdiction for an increase or decrease of
spousal support and maintenance, pursuant to § 20-109,” the plain language of the PSA does not
authorize the trial court to either terminate the spousal support award or to change the term of
duration of the support payments. (Emphasis added.) The PSA specifically provides that
payments of spousal support terminate “after 155 consecutive payments have been made, . . . if
not earlier terminated as a result of one or more of the occurrences specified” in the agreement.
None of the specified occurrences, namely: the death of either party, wife’s remarriage or
habitual cohabitation with another person in a relationship analogous to marriage, were alleged
to have occurred or occurred in fact.
The trial court lacked authority to award spousal support contrary to the terms of the
parties’ agreement. See Pendleton v. Pendleton, 22 Va. App. 503, 507, 471 S.E.2d 783, 784
(1996). Accordingly, we find no error in the trial court’s decision that it lacked authority under
the terms of the PSA to modify the duration of wife’s spousal support award.
VI.
Both parties seek an award of attorney’s fees on appeal.
The rationale for the appellate court being the proper forum to
determine the propriety of an award of attorney’s fees for efforts
expended on appeal is clear. The appellate court has the
opportunity to view the record in its entirety and determine
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whether the appeal is frivolous or whether other reasons exist for
requiring additional payment.
O’Loughlin v. O’Loughlin, 23 Va. App. 690, 695, 479 S.E.2d 98, 100 (1996).
Reviewing the record of the proceedings as a whole, we conclude that each party should
be responsible for their respective attorney’s fees incurred on appeal.
CONCLUSION
For the above reasons, we conclude that the trial court did not err in modifying the spousal
support award by considering the parties’ PSA and pre-PSA negotiations or in imputing $100,000
annual income to husband. We also conclude that the trial court did not err in making the modified
spousal support award retroactive to April 1, 2003, or in concluding that it was barred from
modifying the duration of the award. Accordingly, we affirm the judgment of the trial court.
Affirmed.
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