Ann M. Hutchinson v. John E. Hutchinson, III ( 2014 )

COURT OF APPEALS OF VIRGINIA
Present: Judges Huff, Decker and Senior Judge Annunziata
UNPUBLISHED
Argued at Lexington, Virginia
ANN M. HUTCHINSON
MEMORANDUM OPINION* BY
v. Record No. 0392-14-3 JUDGE GLEN A. HUFF
DECEMBER 9, 2014
JOHN E. HUTCHINSON, III
FROM THE CIRCUIT COURT OF NELSON COUNTY
J. Michael Gamble, Judge
Edward D. Barnes (Anne Brakke Campfield; Brandy M. Poss;
Barnes & Diehl, P.C.; The DeFazio Law Firm, P.C., on briefs), for
appellant.
Brian R. Moore (Phillips, Morrison, Johnson, and Ferrell, on
brief), for appellee.
Ann M. Hutchinson (“appellant”) appeals an order of the Circuit Court of Nelson County
(“trial court”) directing appellant to escrow $1,400,000 pursuant to the final divorce decree and
ordering each party to pay his/her own attorney’s fees. Appellant presents the following
assignments of error on appeal:
1. The trial court erred in requiring that [a]ppellant escrow the
amount of $1,400,000 . . . because it was an impermissible
modification of the parties’ Agreement because Virginia
Code Section 20-109(C) prohibits the court from amending
the Agreement and Final Decree . . . [and] it was an
impermissible modification of the parties’ Final Decree in
contravention of Rule 1:1 of the Rules of the Supreme
Court of Virginia which prohibits a modification after 21
days from the date of the Final Decree.
2. The trial court erred in finding that no funds are due to the
[a]ppellant from the sale of the Merritt-Hutchinson
properties [“MH properties”] until all the [MH properties]
*
Pursuant to Code § 17.1-413, this opinion is not designated for publication.
have been sold because pursuant to the parties’ Final
Decree of Divorce and Agreement, the properties are titled
solely in the [a]ppellant’s name and she is the owner of the
funds until all the [MH properties] have been sold.
3. The trial court erred in failing to award the [a]ppellant her
attorney’s fees and costs in this matter because she
substantially prevailed, the [a]ppellee pursued remedies not
provided for in the parties’ Agreement, and because the
[a]ppellee filed a show cause petition even though he
admitted that the [a]ppellant was not in contempt of court.
4. The [a]ppellant should be awarded her attorney’s fees and
costs related to this appeal proceeding.
In response, John E. Hutchinson, III, (“appellee”) presents three assignments of cross-error on
appeal:
1. The trial court erred when it held that a condition precedent
is created by the word “all” as used in the phrase “if, as and
when all the [MH properties] sell” and as a result failed to
order [appellant] to immediately pay $1.4 million plus the
legal rate of interest thereon from the date she received the
proceeds from the sale of a portion of all the properties. . . .
2. The trial court erred when it held that any interest or
accretion in value on the $1,400,000.00 to be held in
escrow shall be the property of [appellant] because the
agreement plainly states that only the proceeds remaining
after payment of the obligation are her sole and separate
property.
3. The trial court erred when it failed to award [a]ppellee his
attorney’s fees and costs because he substantially prevailed
and the [a]ppellant was in violation of the parties’
agreement.
Appellee also requests attorney’s fees and costs on appeal. For the following reasons, this Court
reverses in part and affirms in part the rulings of the trial court.
I. BACKGROUND
“When reviewing a trial court’s decision on appeal, we view the evidence in the light
most favorable to the prevailing party, granting it the benefit of any reasonable inferences.”
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Congdon v. Congdon, 40 Va. App. 255, 258, 578 S.E.2d 833, 835 (2003). “That principle
requires us to ‘discard the evidence’ of [appellant] which conflicts, either directly or
inferentially, with the evidence presented by [appellee] at trial.” Id. (quoting Wactor v.
Commonwealth, 38 Va. App. 375, 380, 564 S.E.2d 160, 162 (2002)). So viewed, the evidence is
as follows.
Appellant and appellee were married on June 3, 1953. On September 1, 2006, the parties
were divorced pursuant to final decree of divorce entered by the trial court. The final divorce
decree stated “that the parties have entered into an oral separation agreement by recorded
testimony dated May 30, 2006 [“agreement”], pursuant to § 20-155 . . . .”
At the May 30, 2006 hearing, the parties agreed that “all the property referenced and
referred to as Merritt-Hutchinson Resort in Lynch Station, Virginia, Campbell County,
. . . shall be transferred to and become the separate property of [appellant] as of today.”
Moreover, the parties indicated that “[appellant] will pay to [appellee] $1.4 million without
interest. The evidence of that obligation will be this agreement and a final decree of divorce, that
obligation will be in the final decree of divorce, without interest, to be paid to him if, as, and
when all the [MH properties] sell.” Moreover, in the final divorce decree, both parties agreed to
the following terms:
[Appellant] shall pay to the [appellee] ONE MILLION FOUR
HUNDRED THOUSAND and 00/100 dollars ($1,400,000.00), if,
as, and when all of the real estate that makes up the
aforementioned [MH properties] is sold. In the event that the
[appellee] is not living when all of the property has been sold, then
the ONE MILLION FOUR HUNDRED THOUSAND and 00/100
dollars (1,400,000.00) shall be paid to the parties’ children per
stirpes. No interest whatsoever shall accrue on the ONE
MILLION FOUR HUNDRED THOUSAND and 00/100 dollars
($1,400,000.00). The ONE MILLION FOUR HUNDRED
THOUSAND and 00/100 dollars (1,400,000.00) will be paid at the
closing of the properties and the remaining net proceeds from the
sale shall be the [appellant’s] sole and separate property.
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On June 7, 2012, appellee submitted a petition for civil contempt to the trial court
alleging that “on October 22, 2011 [appellant] sold without any notice to [appellee] all of said
property with the exception of a 43.904 acre tract of unimproved real estate . . . . The unsold real
estate is the only real estate left in the [MH properties] and is assessed by the County at
$70,200.00.” Specifically, appellee indicated that appellant “did not pay any of the net proceeds
of the sale to [appellee] or notify him of the sale . . . .” On June 15, 2012, the trial court entered
a show cause order as to “why she should not be punished for contempt.”
On April 30, 2013, appellant filed a motion to dismiss show cause because appellee was
not due any money pursuant to agreement because all of the MH properties were not sold.
Additionally, appellant requested that she be reimbursed all attorney’s fees and costs she
incurred while defending the show cause.
On June 3, 2013, the trial court heard evidence regarding appellee’s show cause motion
and also took appellant’s motion to dismiss under advisement. At trial, both parties stipulated
that the final divorce decree was not ambiguous and no parol evidence would be admitted.
Furthermore, appellee indicated “I want to say that I don’t believe that she’s in contempt of court
unless and until Your Honor rules that she has the duty to give him the 1.4 million, or to escrow
the 1.4 million . . . .” Accordingly, the trial court informed the parties that “I’m going to rule that
this is going to be a proceeding to interpret the divorce decree today.” After hearing arguments
from both parties, the trial court granted both parties additional time to file briefs.
On July 23, 2013, the trial court issued its opinion letter. Specifically, the trial court
found “the obligation of [appellant] pursuant to the property settlement agreement is to pay
[appellee] ONE MILLION FOUR HUNDRED THOUSAND DOLLARS ($1,400,000) from the
sale of the [MH properties] when all the properties have sold. However, $1,400,000 of the
proceeds from the properties already sold shall be escrowed.” Additionally, the trial court
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directed that “[a]ny interest that accrues from the escrowed money shall be paid to [appellant] at
the time the $1,400,000 is actually distributed to [appellee].” The trial court ruled that each party
was responsible for his/her own attorney’s fees and costs.
Subsequently, both parties filed motions to reconsider. On October 22, 2013, the trial
court heard arguments on the parties’ motions. In denying each party’s motion, the trial court
held “the word ‘all’ in the first sentence convinces me that the $1,400,000.00 cannot be
distributed to [appellee] until all of the property has been sold.” Furthermore, the trial court
indicated
Next, the third sentence provides that the $1,400,000.00 “will be
paid at the closing of the properties and the remaining net proceeds
from the sale shall be [appellant’s] sole and separate property.”
This statement clearly anticipates that the proceeds from each sale
will be paid to someone other than [appellant]. If it is not paid to
[appellant], then the money must be paid in escrow.
On February 4, 2014, the parties presented proposed orders to the trial court. On the
same day, the trial court entered an order memorializing the rulings contained in the July 23,
2013 and October 23, 2013 opinion letters. Additionally, the trial court dismissed the show
cause against appellant. Specifically, the trial court held that “no funds are due to [appellee]
from the sale of any of the [MH properties], pursuant to the parties’ Final Decree of Divorce and
Agreement, until all the [MH properties] have been sold.” Additionally, the trial court ruled that
appellant “shall escrow $1,400,000 of the proceeds from the [MH properties] that have already
been sold.” This appeal followed.
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II. ANALYSIS
A. Escrow Award
On appeal, appellant contends the trial court erred in requiring that appellant escrow the
amount of $1,400,000. Appellant argues that the trial court’s decision to escrow the amount was
an impermissible modification of the parties’ agreement in that Code § 20-109(C) prohibits the
trial court from amending the final divorce decree. Additionally, appellant asserts that the
escrow requirement is in contravention of Rule 1:1 of the Rules of the Supreme Court of
Virginia, which prohibits a modification of the final divorce decree after 21 days.
In response, appellee contends the trial court did not err because the order dealt with an
issue that was not addressed by the parties’ agreement.1 Conversely, in an assignment of
cross-error, appellee asserts the trial court erred when it held that a condition precedent was
created by the word “all” as used in the phrase “if, as and when all the [MH properties] sell” and,
therefore, erred in not ordering appellant to immediately pay $1,400,000 plus the legal rate of
interest. Accordingly, this Court first addresses whether the trial court properly interpreted the
property settlement agreement outlined in the final divorce decree.
1. Terms of the Final Divorce Decree & Agreement
“Property settlement agreements are contracts, and the rules of interpretation for contracts
in general apply.” Recker v. Recker, 48 Va. App. 188, 192, 629 S.E.2d 191, 193 (2006). Thus,
“[o]n appeal, the Court reviews a trial court’s interpretation of a contract de novo.” Plunkett v.
Plunkett, 271 Va. 162, 166, 624 S.E.2d 39, 42 (2006) (emphasis added) (citing Eure v. Norfolk
Shipbuilding & Drydock Corp., 263 Va. 624, 631, 561 S.E.2d 663, 667 (2002)).
1
Appellee argues that the trial court’s order answered the question “What is to be done
with sales proceeds when some but not all of the property is sold; if the obligation is to be paid at
closing but [appellee] may only be paid after all the property is sold; and [appellant] is only
entitled to receive any remaining net proceeds?”
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The final divorce decree incorporated terms stipulated by the parties including, in
relevant part, “[Appellant] shall pay to the [appellee] ONE MILLION FOUR HUNDRED
THOUSAND and 00/100 dollars ($1,400,000.00), if, as, and when all of the real estate that
makes up the aforementioned [MH properties] is sold.” In interpreting the contractual language,
the trial court determined that “no funds are due to [appellee] from the sale of any of the [MH
properties], pursuant to the parties’ Final Decree of Divorce and Agreement, until all the [MH
properties] have been sold” but appellant “shall escrow $1,400,000 of the proceeds from the
[MH properties] that have already been sold.”
When interpreting an agreement that “is unambiguous, its meaning and effect are
questions of law. Ordinary words are given their ordinary meaning when construing the
contract.” Recker, 48 Va. App. at 192, 629 S.E.2d at 193 (citing Tiffany v. Tiffany, 1 Va. App.
11, 15, 332 S.E.2d 796, 799 (1985)). Moreover, in Virginia, “‘[i]t is axiomatic that when the
terms in a contract are clear and unambiguous, the contract is construed according to its plain
meaning.’” Cabral v. Cabral, 62 Va. App. 600, 609-10, 751 S.E.2d 4, 9 (2013) (quoting TravCo
Insur. Co. v. Ward, 284 Va. 547, 552, 736 S.E.2d 321, 325 (2012)). Further, “[t]hat meaning . . .
derives from the text as well as the context of the agreement.” Id.Additionally, a contract “is not ambiguous merely because the parties disagree as to the
meaning of the terms used.” TM Delmarva Power, L.L.C. v. NCP of Va., L.L.C., 263 Va. 116,
119, 557 S.E.2d 199, 200 (2002). Contracts, however, “are construed as written without adding
terms that were not included by the parties.” Id. (citing Wilson v. Holyfield, 227 Va. 184, 187,
313 S.E.2d 396, 398 (1984)).
Thus, “‘when considering the meaning of any part of a contract, we will construe the
contract as a whole.’” Cabral, 62 Va. App. at 610, 751 S.E.2d at 9 (quoting Doctors Co. v.
Women’s Healthcare Assocs., 285 Va. 566, 572, 740 S.E.2d 523, 526 (2013)). Consequently,
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“‘[t]he contract must be read as a single document. Its meaning is to be gathered from all its
associated parts assembled as the unitary expression of the agreement of the parties.’” Hale v.
Hale, 42 Va. App. 27, 31, 590 S.E.2d 66, 68 (2003) (quoting Berry v. Klinger, 225 Va. 201, 208,
300 S.E.2d 792, 796 (1983)).
In the current matter, the language of the final decree indicates that appellant “shall pay
to the [appellee] ONE MILLION FOUR HUNDRED THOUSAND and 00/100 dollars
($1,400,000.00), if, as, and when all of the real estate that makes up the aforementioned [MH
properties] is sold.” (Emphasis added). The parties stipulated to the terms of the agreement in
the final divorce decree, and elaborated
[appellant] will pay to [appellee] $1.4 million without interest.
The evidence of that obligation will be this agreement and a final
decree of divorce, that obligation will be in the final decree of
divorce, without interest, to be paid to him if, as, and when all the
[MH properties] sell.
While both parties stipulated that the agreement is not ambiguous, that stipulation is not binding
upon us. Bergman v. Bergman, 25 Va. App. 204, 211, 487 S.E.2d 264, 267-68 (1997) (“whether
a writing is ambiguous is a matter of law, not fact . . . [t]hus we are not bound by the trial court’s
conclusions”). Nevertheless, upon consideration of the terms at issue, this Court agrees that the
words used are not ambiguous and are susceptible to a plain meaning interpretation.
Accordingly, we further agree that no parol evidence would have been needed or appropriate to
determine the meaning of the parties’ agreement. Applying the plain meaning of the words used
by the parties in the context of their agreement, we hold that appellant is not required to pay
appellee $1,400,000 until all of the MH properties are sold.
Appellee, however, contends in his assignment of cross-error that the trial court erred
when it held that a condition precedent was created by the word “all” as used in the phrase “if, as
and when all the [MH properties] sell” and, therefore, failed to order appellant to immediately
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pay $1,400,000 plus the legal rate of interest. In support of his argument, appellee cites to a
string of Virginia cases that utilize “if, as, and when” language and contends that such language
means “gradual payments as installment payments are received.” These cases are
distinguishable, however, because they pertain to retirement benefits and do not utilize the “all”
language, which is critical in the current matter.2
In the current matter, the “if, as, and when” language must be read in conjunction with
“all,” as part of the whole agreement. See Hale v. Hale, 42 Va. App. 27, 31, 590 S.E.2d 66, 68
(2003) (“‘The contract must be read as a single document. Its meaning is to be gathered from all
its associated parts assembled as the unitary expression of the agreement of the parties.’”
(quoting Berry v. Klinger, 225 Va. 201, 208, 300 S.E.2d 792, 796 (1983))). Consequently,
appellant is only required to deliver the $1,400,000 “if, as, and when all the [MH properties]
sell.” Accordingly, appellee’s argument is unsupported by the plain language of the agreement.
The trial court’s requirement that appellant escrow $1,400,000 of the proceeds from the
MH properties that have already been sold, however, is unsupported by the plain language of the
agreement and divorce decree. The court may not add terms or conditions that were not included
by the parties. See TM Delmarva Power, 263 Va. at 119, 557 S.E.2d at 200 (“Contracts are
construed as written, without adding terms that were not included by the parties.” (citing Wilson,
227 Va. at 187, 313 S.E.2d at 398)). The final divorce decree does not provide any instruction
on whether the proceeds from the partial sale of the properties must be escrowed. Rather, the
2
See generally McGinniss v. McGinnis, 49 Va. App. 180, 186-87, 638 S.E.2d 697, 700
(2006) (appellee cites to this Court’s “deferred distribution approach” for retirement accounts
wherein the trial court awards a percentage of the marital share of the pension and payment is
made only as retirement benefits are paid); Dailey v. Dailey, 59 Va. App. 734, 738, 722 S.E.2d
321, 323 (2012) (the relevant language stated “shall receive fifty percent (50%) of the marital
share of the Husband’s gross retirement pay if as and when received by the Husband”); Recker,
48 Va. App. at 191, 629 S.E.2d at 193 (the agreement stated “benefits and/or retirement incentive
bonuses, paid in lump sum if, as, and when he receives the same”).
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final divorce decree and agreement instruct that the $1,400,000 shall be delivered to appellee
“when all of the real estate that makes up the aforementioned [properties] is sold.” (Emphasis
added). Moreover, both parties agreed that appellant is under no requirement to sell the MH
properties. Consequently, under the terms of the agreement, appellant is not required to deliver
the $1,400,000 if she is unable or unwilling to sell all of the MH properties.
Accordingly, by supplementing the contract with the requirement that appellant escrow
the $1,400,000 amount, the trial court effectively required appellant to deliver her separate
property before all of the MH properties were sold. This interpretation adds terms that were not
included by the parties and contradicts the original intention of the parties that the $1,400,000
shall be delivered when all of the MH properties have been sold. “‘It is axiomatic that when the
terms in a contract are clear and unambiguous, the contract is construed according to its plain
meaning.’” Cabral, 62 Va. App. at 609-10, 751 S.E.2d at 9 (quoting Ward, 284 Va. at 552, 736
S.E.2d at 325). The final divorce decree contains no reference to any procedure or instruction
for escrowing the $1,400,000; therefore, the trial court erred when it incorrectly modified the
parties’ agreement. See Cave Hill Corp. v. Hiers, 264 Va. 640, 646, 570 S.E.2d 790, 793 (2002)
(“In order to find such requirement, one would have to insert words into the writing contrary to
the elementary rule that the function of the court is to construe the contract made by the parties,
not to make a contract for them.”).
2. Code § 20-109(C)
Appellant next contends that because the escrow requirement is contrary to the express
terms of the parties’ agreement, Code § 20-109(C) prohibits the court from ordering the escrow
of the $1,400,000. Appellee argues that Code § 20-109(C) does not apply to the current matter
because the trial court’s ruling dealt with an issue that was not addressed within the final divorce
decree.
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Code § 20-109(C) states,
In suits for divorce . . . if a stipulation or contract signed by the
party to whom such relief might otherwise be awarded is filed
before entry of a final decree, no decree or order directing the
payment of support and maintenance for the spouse, suit money, or
counsel fee or establishing or imposing any other condition or
consideration, monetary or nonmonetary, shall be entered except in
accordance with that stipulation or contract.
Moreover, Code § 20-109(C) applies to the equitable distribution of property. Parra v.
Parra, 1 Va. App. 118, 128, 336 S.E.2d 157, 162 (1985). “Specifically, to the extent that the
parties have already stipulated to a particular disposition of their property, the court may not
decree an equitable distribution award that is inconsistent with that contract.” Id. at 128, 336
S.E.2d at 162-63. “If divorce litigants know that they may repudiate, with impunity, valid
property settlement agreements in hopes of getting a better result from the court, or because they
no longer wish to honor their commitments, the usefulness and validity of all such contracts will
be lessened.” Id. at 129, 336 S.E.2d at 163.
As previously determined, the trial court incorrectly modified the parties’ agreement by
adding the requirement that appellant escrow $1,400,000 before all of the properties were sold.
The parties’ agreement and the entirety of the record are silent of any indication that the parties
intended for an escrow provision to be included in the agreement. Accordingly, by inserting a
provision outside of the terms of the agreement, the trial court has effectively amended the
parties’ agreement in contravention of Code § 20-109(C). Furthermore, “[t]o hold otherwise
would not only fail to give full effect to the property division statutes, but would also fail to
support Virginia’s public policy in favor of prompt resolution of property disputes in divorce
cases through voluntary court-approved agreements.” Id.
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Consequently, the trial court violated Code § 20-109(C) when it added the escrow
requirement to the final divorce decree and agreement. Accordingly, this Court finds that the
trial court erred in modifying the final divorce decree and agreement.
3. Rule 1:1
Appellant also argues that the trial court erred by modifying the final divorce decree in
contravention of Rule 1:1 of the Rules of the Supreme Court of Virginia. Specifically, appellant
argues that the trial court’s modification occurred more than seven years after the trial court
entered the parties’ final divorce decree. Appellee contends, however, that the trial court’s
modification is exempted pursuant to Code § 20-107.3(K).
Rule 1:1 provides “[a]ll final judgments, orders, and decrees, irrespective of terms of
court, shall remain under the control of the trial court and subject to be modified, vacated, or
suspended for twenty-one days after the date of entry, and no longer.” Code § 20-107.3,
however, provides continuing jurisdiction in certain situations pertaining to equitable
distribution. Specifically, Code § 20-107.3(K) provides,
The court shall have the continuing authority and jurisdiction to
make any additional orders necessary to effectuate and enforce any
order entered pursuant to this section, including the authority to:
. . . 2. Punish as contempt of court any willful failure of a party to
comply with the provisions of any order made by the court under
this section.
In the current matter, appellee originally filed a petition for civil contempt asserting that
the appellant had not followed the terms of the final divorce decree. Consequently, the trial court
entered a show cause against appellant as to why appellant had not followed the terms of the
final divorce decree. The central issue at the underlying contempt and show cause proceeding
was the interpretation of the provisions in the final divorce decree. Accordingly, as the
interpretation of the divorce decree was an underlying issue in the contempt hearing, the trial
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court informed the parties that the trial court would “interpret the divorce decree today.” While
this Court finds that the trial court erred in its interpretation of the parties’ agreement, the trial
court nevertheless possessed continuing authority and jurisdiction to effectuate and enforce the
decree of divorce. Code § 20-107.3(K). Thus, the trial court did not act in contravention of Rule
1:1 when it endeavored to “interpret the divorce decree.”
B. Separate Property
Next, appellant asserts that the trial court erred in finding that no funds were due to
appellant from the sale of the MH properties until all the MH properties had been sold.
Specifically, appellant contends that, pursuant to the final divorce decree, the MH properties are
appellant’s separate property and she is the owner of the funds until all the properties have been
sold. Appellee argues, however, that appellant’s arguments are procedurally barred under Rule
5A:20(c).3 Conversely, in his assignment of cross-error, appellee asserts that the trial court erred
when it held that any interest or accretion in value on the $1,400,000 to be held in escrow shall
be the property of appellant because the agreement plainly stated that only the proceeds
remaining after payment of the obligation were appellant’s sole and separate property.
On appeal, “[a]bsent the necessity to consider extrinsic evidence, ‘appellate courts review
trial court interpretations of contractual texts de novo because we have an equal opportunity to
consider the words within the four corners of the disputed provision.’” Vilseck v. Vilseck, 45
3
Appellee’s procedural argument is without merit. Rule 5A:20(c) provides “The opening
brief of the appellant shall contain: . . . A statement of the assignments of error with a clear and
exact reference to the page(s) of the transcript, written statement, record, or appendix where each
assignment of error was preserved in the trial court.” In her opening brief, appellant provides
references to her objections before the trial court. Specifically, appellant “objects to the Court’s
finding that no funds are due to her from the sale of any of the [MH properties] until all the [MH
properties] have been sold.” Accordingly, appellant’s argument is not waived under Rule
5A:20(c).
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Va. App. 581, 588 n.3, 612 S.E.2d 746, 749 n.3 (2005) (quoting Smith v. Smith, 43 Va. App.
279, 288 n.2, 597 S.E.2d 250, 255 n.2 (2004)).
Additionally, “contracts must be considered as a whole ‘without giving emphasis to
isolated terms.’” TM Delmarva Power, 263 Va. at 119, 199 S.E.2d at 200 (quoting Am. Spirit
Insur. Co. v. Owens, 261 Va. 270, 275, 541 S.E.2d 553, 555 (2001)). Moreover, “‘[w]hen two
provisions of a contract seemingly conflict, if, without discarding either, they can be harmonized
so as to effectuate the intention of the parties as expressed in the contract considered as a whole,
this should be done.’” Plunkett, 271 Va. at 168, 624 S.E.2d at 42 (quoting Ames v. Am. Nat’l
Bank of Portsmouth, 163 Va. 1, 39, 176 S.E. 204, 217 (1934)). Further, “‘[t]he contract must be
read as a single document. Its meaning is to be gathered from all its associated parts assembled
as the unitary expression of the agreement of the parties.’” Cabral, 62 Va. App. at 610, 751
S.E.2d at 9 (quoting Hale, 42 Va. App. at 31, 590 S.E.2d at 68).
The final divorce decree indicates that appellant “shall receive all property referenced and
referred to as the [MH properties] . . . which includes all property the parties own jointly or
separately in Virginia, as her sole and separate property.” (Emphasis added). Furthermore, the
final divorce decree states “[appellant] shall pay to the [appellee] ONE MILLION FOUR
HUNDRED THOUSAND and 00/100 dollars ($1,400,000.00), if, as, and when all of the real
estate that makes up the aforementioned [MH properties] is sold.” Moreover, on May 30, 2006,
the parties stipulated to the following terms, “all the property referenced and referred to as [MH
properties] in Lynch Station, Virginia, Campbell County . . . shall be transferred to and become
the separate property of [appellant] today.” At the same hearing, the parties further stipulated
that “[appellant] will pay to [appellee] $1.4 million without interest. The evidence of that
obligation will be this agreement and a final decree of divorce, that obligation will be in the final
decree of divorce, without interest, to be paid to him if, as, and when all the [MH properties]
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sell.” Lastly, in an effort to clarify the terms more, appellant indicated “[t]he $1.4 million
obligation of [appellant] is going to be paid solely from the [MH properties’] net sales proceeds,
off the top. In other words, it would be if, as and when the closing occurs at closing.”
In reviewing the contract as a whole, without giving undue emphasis to an isolated term,
we find that the $1,400,000 remains appellant’s separate property until all of the properties sell.
The final divorce decree specifically indicates that the MH properties are appellant’s separate
and sole property. Pursuant to the terms of the agreement on May 30, 2006, appellant is required
to pay the $1,400,000 “if, as, and when all the [MH properties] sell.” This issue was clarified
when appellant reiterated, and counsel for appellee agreed, that “it would be if, as and when the
closing occurs.” Accordingly, the plain language of the agreement states that the $1,400,000
remains appellant’s separate and sole property until closing on all the MH properties. Currently,
appellant has not sold a 43.904-acre tract of the properties; therefore, all of the MH properties
have not sold. Consequently, appellant is currently under no contractual obligation to deliver the
$1,400,000 to appellee because under the terms of the agreement it remains her sole and separate
property.
Additionally, appellee’s assignment of cross-error that the trial court erred by awarding
appellant interest on the $1,400,000 is not supported by the terms of the parties’ agreement and is
mooted by this Court’s rulings. Moreover, the final divorce decree states, “[n]o interest
whatsoever shall accrue on the ONE MILLION FOUR HUNDRED THOUSAND and 00/100
dollars.” Appellee supports his position by arguing that the “agreement plainly states that only
the proceeds remaining after payment of the obligation are her sole and separate property.” To
the contrary, the parties stipulated that all the MH properties shall “become the separate property
of [appellant] as of today.” (Emphasis added). Likewise, the parties agreed that “[appellant] will
pay to [appellee] $1.4 million without interest. The evidence of that obligation will be this
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agreement and a final decree of divorce, that obligation will be in the final decree of divorce,
without interest, to be paid to him if, as, and when all the [MH properties] sell.” (Emphasis
added).
The agreement designated the MH properties as appellant’s separate property and did not
require appellant to deliver $1,400,000 to appellee until all the MH properties sold. Therefore,
appellee’s assignment of cross-error is not supported by the parties’ final divorce decree and
agreement.
C. Attorney’s Fees
Appellant asserts that the trial court erred in failing to award appellant attorney’s fees and
costs in this matter because she substantially prevailed, appellee pursued remedies not provided
for in the parties’ agreement, and because appellant was not in contempt of court. In his
assignment of cross-error, appellee responds by asserting that the trial court erred when it failed
to award appellee attorney’s fees and costs because he substantially prevailed and appellant was
in violation of the parties’ agreement. Appellee argues he should be awarded fees because the
trial court dismissed his petition for civil contempt without prejudice should appellant fail to
comply with the trial court’s order that appellant place $1,400,000 in escrow. Accordingly, both
parties argue that they substantially prevailed before the trial court.
“An award of attorney’s fees is a matter submitted to the trial court’s sound discretion
and is reviewable on appeal only for an abuse of discretion.” Graves v. Graves, 4 Va. App. 326,
333, 357 S.E.2d 554, 558 (1987). Moreover, “[t]he key to a proper award of counsel fees is
reasonableness under all the circumstances.” Lightburn v. Lightburn, 22 Va. App. 612, 621, 472
S.E.2d 281, 285 (1996) (citing McGinnis v. McGinnis, 1 Va. App. 272, 277, 338 S.E.2d 159, 162
(1985)). Furthermore, “[t]he trial court has discretion to compensate a party for costs and
attorney’s fees incurred as a result of the litigation.” Taylor v. Taylor, 27 Va. App. 209, 217,
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497 S.E.2d 916, 920 (1998). “Rather than following a statutory scheme, in determining whether
to award attorney’s fees the trial court considers ‘the circumstance of the parties,’ Barnes v.
Barnes, 16 Va. App. 98, 106, 428 S.E.2d 294, 300 (1993), and the ‘equities of the entire case.’
Davis v. Davis, 8 Va. App. 12, 17, 377 S.E.2d 640, 643 (1989).” Id.In the current matter, the trial court denied both parties’ requests for an award for
attorney’s fees. In denying both motions, the trial court indicated “[b]ecause there has been no
breach of the agreement, but only an effort to have the court interpret their agreement, I deny the
award of attorney’s fees to either side.” On appeal, both parties argue that because they
prevailed at the lower court level, they should be awarded attorney’s fees and costs. Notably,
“[t]he key to a proper award of counsel fees is reasonableness under all the circumstances.”
Lightburn, 22 Va. App. at 621, 472 S.E.2d at 285 (citing McGinnis, 1 Va. App. at 277, 338
S.E.2d at 162). The underlying proceedings were necessary to interpret the agreement and the
final divorce decree, however, as the trial court noted, no party was in breach of the agreement.
The trial court did not abuse its discretion in denying the parties’ requests for an award of
attorney’s fees and costs.
Accordingly, this Court finds that the trial court did not err by denying both parties’
motions for attorney’s fees and costs. This Court also denies an award of attorney’s fees and
costs for both parties on appeal.
III. CONCLUSION
This Court finds that the trial court erred in requiring that appellant escrow the amount of
$1,400,000 because it was an impermissible modification of the parties’ agreement, and
therefore was in violation of Code § 20-109(C). Additionally, this Court holds that the trial court
erred in finding that appellant was not entitled to the proceeds of sale until all the properties were
sold because, under the terms of the agreement, the properties are appellant’s separate property.
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Furthermore, this Court finds that the trial court did not err by holding that the “all” language of
the agreement created a condition precedent. Moreover, the issue of interest accruing on
undistributed proceeds of sale is rendered moot by this Court’s rulings. Lastly, this Court finds
that the trial court did not abuse its discretion in denying attorney’s fees and costs for both
parties, and this Court does likewise as to the appeal. Accordingly, this Court reverses in part
and affirms in part the rulings of the trial court.
Affirmed in part,
reversed in part.
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