Daniel J Hughes v. Madonna Marie Hughes ( 2001 )

COURT OF APPEALS OF VIRGINIA
Present: Judges Bray, Bumgardner and Senior Judge Hodges
Argued at Chesapeake, Virginia
DANIEL J. HUGHES
MEMORANDUM OPINION * BY
v. Record No. 1745-00-1 JUDGE WILLIAM H. HODGES
JUNE 19, 2001
MADONNA MARIE HUGHES
FROM THE CIRCUIT COURT OF THE CITY OF VIRGINIA BEACH
H. Thomas Padrick, Jr., Judge
Kenneth A. Moreno (Louis W. Kershner &
Associates, P.C., on brief), for appellant.
Deborah C. Sagedy for appellee.
Daniel Hughes (husband) appeals the trial court's order which
increased the amount of spousal support husband is obligated to
pay Madonna Marie Hughes (wife). On appeal, husband contends the
trial court erred in making the following findings: (1) there was
a mutual mistake of fact in the separation agreement (the
agreement); (2) wife's entitlement to military health benefits was
not the foundation of the agreement; (3) the remaining terms of
the agreement were valid; (4) the parties contemplated that wife
would receive military health benefits; and (5) wife's
ineligibility to health benefits was a change in circumstance
* Pursuant to Code § 17.1-413, recodifying Code
§ 17-116.010, this opinion is not designated for publication.
warranting increased spousal support. For the reasons that
follow, we affirm.
BACKGROUND
Husband and wife were married on September 20, 1970, and
separated on October 3, 1997.
Before entry of the final decree of divorce, the parties
negotiated and drafted a Stipulation and Agreement. In Paragraph
12 of the early draft agreement, husband agreed "to maintain the
current medical and dental insurance for Wife through his current
employer and Champus, until entry of a final Decree of Divorce."
The draft also contained the following:
After entry of the Final Decree, Wife shall
be entitled to full military privileges,
including but not limited to, medical and
dental insurance, as the parties have been
married more than 20 years, and the Husband
performed at least 20 years of service
creditable for retired pay, and there was a
20 year overlap of the marriage and military
service. Husband will cooperate and do
whatever is necessary to ensure that Wife
has medical and dental insurance through the
military.
In that same early version of the agreement, husband
indicated that he "was in the United States Navy for twenty (20)
years, and . . . retired from the military in November of 1990."
That date was redacted and replaced by a handwritten notation
indicating December 1989 as his date of retirement. The final
version of the agreement included the November 1990 retirement
date and did not include the earlier avowal that "there was a 20
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year overlap of the marriage and military service" and that
"[h]usband will cooperate and do whatever is necessary to ensure
that Wife has medical and dental insurance through the military."
The final signed agreement contained the following section
relating to Medical Insurance:
Until entry of the Final Decree of Divorce,
Husband shall provide medical insurance for
Wife through the military. After entry of
the Final Decree, Husband shall cooperate to
do whatever is necessary to ensure that Wife
has medical insurance and other benefits she
may be entitled to through the military.
In the final version of the agreement, husband agreed to pay
wife $700 per month "as spousal support and maintenance, beginning
July 1, 1998." The trial court incorporated the final agreement
into the December 28, 1998 final decree. In the final decree, the
trial court transferred "all matters pertaining to spousal
support" to the juvenile court "for the enforcement of this decree
or for the modification or revision thereof as the circumstances
may require."
On March 15, 2000, wife filed a petition for an "increase in
spousal support or for [husband] to pay [her] health insurance."
On June 12, 2000, the trial court conducted a hearing at
which husband argued there had been no material change of
circumstances warranting increased spousal support. He also
argued that he never included the wrong retirement date, but
merely advised his attorney when he discovered that the date was
incorrect. According to husband's attorney, wife's attorney
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prepared the final copy without including the proper retirement
date and husband signed it without being aware that it still
contained the incorrect retirement date.
Wife's attorney argued that, as a result of the mistake in
the agreement, wife "has an additional $500 to $600 worth of
[monthly medical] expenses" that she must meet. According to
wife's attorney, "That's a changed circumstance."
At the June 12, 2000 hearing, husband's attorney told the
trial court, "[T]his is not . . . a change of circumstance, Your
Honor. This is just a mistake." (Emphasis added.) By order
dated June 12, 2000, the trial court ruled that "husband's
retirement date of 1990 resulted from a mutual mistake of fact
assumed by both parties" and that wife's "entitlement of military
health benefits was not the foundation of the agreement." The
trial court explained that the mistake "fail[ed] to reach the
basis of the separation agreement itself," which was "to effect a
settlement and adjustment of rights and questions arising from
their marital status and Separation." Because wife was unable to
obtain "military health benefits as contemplated by the parties,"
the trial court found "a change in circumstances warranting
revision of spousal support paid by the husband to the wife."
DISCUSSION
"The judgment of a trial court sitting in equity, when
based upon an ore tenus hearing, will not be disturbed on appeal
unless plainly wrong or without evidence to support it." Box v.
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Talley, 1 Va. App. 289, 293, 338 S.E.2d 349, 351 (1986).
However, "property settlement and support agreements are subject
to the same rules of construction and interpretation applicable
to contracts generally." Fry v. Schwarting, 4 Va. App. 173,
180, 355 S.E.2d 342, 346 (1987). "In Virginia property
settlement agreements are contracts and subject to the same
rules of formation, validity and interpretation as other
contracts." Smith v. Smith, 3 Va. App. 510, 513, 351 S.E.2d
593, 595 (1986) (citation omitted).
One of the tools available to a court of equity is the
equitable remedy of reformation, which "provides relief against
a [mutual] mistake of fact in a written instrument . . . where
both parties sign an instrument mistakenly believing it reflects
their antecedent bargain." Gibbs v. Price, 207 Va. 448, 449-50,
150 S.E.2d 551, 552 (1966); see also Boone v. Scott, 166 Va.
644, 652-53, 187 S.E. 432, 436 (1936) (equity should and will
reform instrument to make it conform to real intent of the
parties at time it was executed; noting that reformation is
available when one party obtains more than he or she intended to
gain and the other party is forced to relinquish that which he
or she did not intend to relinquish); Wilkinson v. Dorsey, 112
Va. 859, 869, 72 S.E. 676, 680 (1911) (under its equitable
jurisdiction, trial court may give relief on the ground of
mistake in connection with written instrument if "there has been
an innocent omission or insertion of a material stipulation,
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contrary to the intention of both parties, and under a mutual
mistake").
"In determining whether a mutual mistake of fact existed at
the time of the agreement, the inquiry is not, . . . who
initially made the mistake, but rather, whether each party held
the same mistaken belief with respect to a material fact at the
time the agreement was executed." Collins v. Dept. of Alcoholic
Beverage Control, 21 Va. App. 671, 681, 467 S.E.2d 279, 283,
aff'd on reh'g en banc, 22 Va. App. 625, 472 S.E.2d 287 (1996).
When the mutual mistake constitutes "the very basis or essence"
of the contract, rescission rather than reformation is the
proper remedy. See Seaboard Ice Company v. Lee, 199 Va. 243,
252, 99 S.E.2d 721, 727 (1957); see also Lee v. Laprade, 106 Va.
594, 597-98, 56 S.E. 719, 720 (1907) (rescinding deed in which
lot conveyed by seller was part of public street, explaining
that court of equity has jurisdiction to rescind as long as
mistake is material in its character and does not go to the very
substance of the contract). Clear and convincing evidence is
required to support reformation of an instrument because of a
mutual mistake of fact. See Boone, 166 Va. at 653, 187 S.E. at
436.
The record contains clear and convincing evidence to
support the trial court's decision that inclusion of the
incorrect date of retirement was a mutual mistake of fact.
While drafting the agreement, husband and wife consistently
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referred to and relied upon the 20-year overlap of husband's
service with the marriage. The spousal support figure that the
parties agreed upon was certainly based on the parties'
continued belief that wife was entitled to health benefits
through the Navy. Moreover, nothing in the record suggests that
husband intended to include the wrong date of retirement and
place upon wife the burden of paying for costly private
insurance.
Husband and wife entered into the stipulation and agreement
"in order to finally settle their property rights" and any other
issues "arising from their marital status and separation." In
addition to spousal support, the agreement provided that wife
receive one-half of husband's military retirement, and it
attempted to settle the parties' respective rights as to real
property, personal property and debts. Therefore, the mistake
did not go to the very foundation or essence of the agreement;
instead, the mistake only affected wife's health benefits.
Because the record supports the trial court's decision of a
mutual mistake of fact, the chancellor properly reformed that
portion of the agreement that failed to conform to the parties'
understanding that wife was eligible to receive military health
benefits and their desire that she be able to maintain such low
cost coverage. Accordingly, the decision of the trial court is
affirmed.
Affirmed.
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