Harold Francis Sheppard v. Cynthia Caudle Sheppard

COURT OF APPEALS OF VIRGINIA
Present: Judges Willis, Annunziata and Senior Judge Cole
Argued at Richmond, Virginia
HAROLD FRANCIS SHEPPARD
MEMORANDUM OPINION * BY
v. Record No. 0571-95-2 JUDGE MARVIN F. COLE
APRIL 9, 1996
CYNTHIA CAUDLE SHEPPARD
FROM THE CIRCUIT COURT OF HENRICO COUNTY
George F. Tidey, Judge
Carolyn P. Carpenter (Carpenter, Woodward &
Wagner, P.L.C., on briefs), for appellant.
Jeffrey L. Galston (Hyder, Lowe & Galston, on
brief, for appellee.
Harold Francis Sheppard, appellant, appeals from a final
order entered in the Henrico County Circuit Court on February 15,
1995. He presents the following issues for our review:
1. Whether the trial court erred by including in
its judgment $17,071.67 awarded by a North Carolina
court, when wife had registered the foreign decree and
begun execution;
2. Whether wife's claim for $17,071.67, plus
interest, is barred by the doctrine of res judicata;
3. Whether the trial court erred in applying the
doctrine of specific performance to enforce the foreign
judgment;
4. Whether there was sufficient evidence to
support the trial court's finding that husband failed
to pay $900 per month on the Central Carolina Bank
loan; and
5. Whether the trial court erred by failing to
*
Pursuant to Code § 17-116.010 this opinion is not
designated for publication.
give husband credits allowed him under the North
Carolina order.
In addition to the above issues, Cynthia Caudle Sheppard,
appellee, presents for our review the following:
1. Whether the trial court failed to give the
North Carolina order full faith and credit; and
2. Whether the trial court erred in failing to
recognize the North Carolina court order of specific
performance.
Cynthia Caudle Sheppard (wife) and Harold Francis Sheppard
(husband) were married in Guilford County, North Carolina, on
March 11, 1987. They separated on or about April 16, 1989. They
negotiated and executed a property settlement agreement dated
May 26, 1989. The agreement was incorporated by reference into a
divorce decree on November 30, 1990, in North Carolina Guilford
County District Court. Later, husband brought an action against
wife in the same court for rescission of the agreement on the
ground that the agreement had been entered into under duress and
undue influence, alleging that wife had breached the agreement.
Wife filed a counter-suit, alleging that husband had breached the
agreement and asking for specific performance of the agreement.
A jury trial was held on February 24, 1993, and the jury
determined that the agreement was not entered into under duress
or undue influence and that wife had not breached the agreement.
The jury further determined the amount that husband owed wife
under the terms of the agreement. In an order, nunc pro tunc on
May 24, 1993, the court adjudged, ordered and decreed as follows:
1. Husband was ordered to pay to wife the sum of
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$17,071.67, together with interest at the legal rate,
from May 5, 1993, for arrearages due under the
agreement.
2. Both parties were ordered not to make any
further withdrawals from the equity line account at
First Home Federal Savings and Loan Association (now
Central Carolina Bank) and that all future payments
made to the account would be applied to principal and
interest owed on the account.
3. Specific performance of the agreement was
decreed to the following extent:
(a) Effective March 1, 1993, husband was
ordered to pay the principal and interest
monthly payment on three loans encumbering
wife's residence: City of Greensboro loan;
HUD loan (now Windover Funding); and First
Home Federal Savings and Loan Association
(now Central Carolina Bank) loan.
(b) Husband was ordered to pay to wife
$145.00 monthly toward utilities.
(c) Husband was ordered to pay to wife
$227.50 monthly for spousal support, subject
to a credit for any auto liability insurance
premiums paid by husband on behalf of wife
subsequent to June 30, 1991, and subject to a
credit for rent received on wife's residence.
(d) Husband was ordered to pay $300
monthly to wife's attorneys as payment toward
an award of $10,000 attorney's fees.
Husband moved from North Carolina to Henrico County,
Virginia. On May 26, 1994, wife filed a Bill of Complaint in the
Henrico County Circuit Court in an equity suit, seeking recovery
of the amount of the North Carolina judgment as well as
additional costs and arrearages since the entry of the North
Carolina order on May 24, 1993. The prayer of her Bill of
Complaint was that specific performance of the agreement and the
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Guilford District Court's order be decreed and ordered, and that
other general equitable relief be granted to her, including civil
contempt and attorney's fees. Husband filed an Answer and
special pleas of Res Judicata and/or Collateral Estoppel. Upon
trial of the issues, wife was granted a recovery of $37,348.89,
based upon the North Carolina outstanding judgment of $17,071.67,
together with interest in the amount of $2,048.60, additional
arrearages in the amount of $13,228.62, and $5,000 in attorney's
fees. Husband has appealed the court's decision.
In addition to the suit, wife registered the North Carolina
judgment order in the clerk's office of the Henrico Circuit Court
under the provisions of Code § 8.01-465.2.
Husband contends that the trial court erred when it entered
a judgment in the amount of $17,071.67 against him because a
judgment in the same amount arising out of the same facts had
been granted in North Carolina, making two judgments against him
for the same cause of action. He concludes that the doctrine of
res judicata bars this Court from entering a second judgment.
Furthermore, he alleges that the North Carolina judgment has been
registered in the Henrico County Circuit Court and a second
judgment in Virginia is improper. In this case, a North Carolina
court has entered a valid judgment against the husband and has
decreed specific performance of the terms of a valid property
settlement agreement. The status of the North Carolina agreement
has been determined in North Carolina and a North Carolina court
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has ordered specific performance of the agreement. Payment of
the arrearages and future installment payments have become
absolute and vested in North Carolina.
Even if the courts of Virginia were not compelled to do so
under the full faith and credit clause of the federal
constitution, "upon principles of comity they may establish as
their own decree a foreign decree . . ., with the same force and
effect as if it had been entered in Virginia, provided, of
course, the foreign decree violates no public policy of
Virginia." See McKeel v. McKeel, 185 Va. 108, 113, 37 S.E.2d
746, 749 (1946). Moreover, such a result now seems required by
the Uniform Interstate Family Support Act, Code § 20-88.32, et
seq. See also Code § 8.01-465.2; Alig v. Alig, 220 Va. 80, 84,
255 S.E.2d 494, 497 (1979). We find no merit to the husband's
contention. Furthermore, we find the doctrine of res judicata
not applicable. The Henrico Circuit Court has not entered a
separate and independent judgment against husband. The
proceeding here is ancillary to the North Carolina judgment in an
effort to enforce the terms of a judgment of a sister state.
Both husband and wife raise the issue whether the trial
court should have applied the doctrine of specific performance.
As we view the record, the court did not grant specific
performance of the property settlement agreement or the North
Carolina judgment. In a letter to counsel, the trial judge
stated he assumed husband would comply with the terms of the
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agreement. The North Carolina order decreed specific performance
of the agreement.
Our Supreme Court has upheld the wife's right to sue for
specific performance of a contract for spousal support,
emphasizing that equitable relief extended to collection of
arrearages and "to 'relief to cover payments thereafter falling
due.'" Chattin v. Chattin, 245 Va. 302, 307-08, 427 S.E.2d 347,
351 (1993) (citation omitted). The Court further stated:
The wife did not have an adequate remedy at law because
she either would have to sue on the contract each time
the husband failed to make a payment, or wait until a
significant arrearage had accumulated before filing
suit. Under either option, her legal remedy would be
inadequate to "reach the whole mischief." Further, the
husband's support arrearages were great and the trial
court had no reason to believe that his future
compliance would be forthcoming.
Id. at 308, 427 S.E.2d at 351 (citation omitted). See also Hupp
v. Hupp, 239 Va. 494, 391 S.E.2d 329 (1990).
In accordance with the same principles, we hold that the
trial court abused its discretion in failing to decree specific
performance of the property settlement agreement as was done in
the North Carolina order.
Husband contends that the evidence was insufficient to
support the trial court's finding that he should pay $900 monthly
on the equity line loan with Central Carolina Bank, successor to
First Home Federal Savings and Loan Association. The North
Carolina judgment requires that husband pay "the principal and
interest required pursuant to the terms of the equity line loan."
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The record establishes that Central Carolina Bank requires only
the interest payment at the present time and does not require any
contribution toward principal. Therefore, we hold that the trial
court erred in assessing an additional $400 monthly charge
against husband. Husband is entitled to an adjustment of $400
per month for each month that is included within the arrearage of
$13,228.62. If the bank should adjust its requirements in the
future, the amount to be paid by the husband shall likewise be
adjusted. In other words, husband is required to pay "the
principal and interest required pursuant to the terms of the
equity line loan." Since the record does not reflect the number
of months charged to the husband, we remand the case back to the
trial court to make such determination and give credit to the
husband for the amount included, if any.
Husband claims that the trial court's decision fails to give
him credits for rent on the wife's residence, liability insurance
on her automobile, mortgage interest tax deduction received by
wife, and payments he made to her in the amount of $1,887.23.
The North Carolina judgment provides that "any rent proceeds
which the [wife] should henceforth receive from a boarder in her
home should be a credit against any amounts payable by the
[husband] under the aforesaid separation agreement and property
settlement." Husband asserts that he should be given a credit at
the rate of $350 per month for the period March 1993 through
October 1994 totaling $7,000. He also contends that he should
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receive a credit of $350 per month for the period from August
1993 to March 1994 when she provided free room and board for her
nephew. This amounts to $2,800, making a total credit of $9,800
for rent.
The wife testified that she gave husband a credit of $250
monthly from March 1993 through June 1993. Her boarder changed
jobs and could not pay $250 monthly. In order to keep her, the
rent was reduced to $100 monthly from July 1993 through June
1994. In June 1994 wife found out that her residence was in a
historic district and that she could not charge rent because it
was a one-family unit. Thereafter, she received no rent but
permitted her boarder to remain because she was scared to live
there alone. In her calculations, husband was given a credit of
$1,700 for rent. She made no charge to her nephew for rent. We
find credible evidence in the record to support the conclusion
that wife has given a credit to husband for all sums she received
as rent. The agreement did not require her to rent any part of
her residence or make any attempt to fix the rent she would
charge.
Husband claims that he is entitled to a credit of $755.59
that he paid on behalf of wife for automobile liability insurance
from March 1993 until October 1994. He claims a similar credit
of $1,045.77 for sums he paid from June 30, 1991 to March 1993,
making a total of $1,801.36.
The agreement dated May 26, 1989, provided the wife was
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entitled to possession of the Acura automobile from the date of
the agreement until husband purchased a new car for wife, at
which time the Acura was to be transferred to husband. Husband
agreed to purchase a new car comparable to a new 1989 Honda
Accord for wife within six months from the date of the agreement.
Husband also agreed to pay the automobile insurance on the car
for one year from the date of purchase of the new vehicle.
The new car was purchased on June 30, 1990, and husband paid
the liability insurance through June 30, 1991. Husband claims he
is entitled to a credit for liability insurance premiums he paid
on behalf of wife after June 30, 1991. The trial judge found
that he did not prove this claim by a preponderance of the
evidence.
Husband's exhibit 7 documents insurance coverage for the
period ending January 14, 1991, which is irrelevant to the period
involved in this claim. The two other exhibits related to
husband's claim are confused and erroneous. Therefore, we find
credible evidence in the record to support the decision of the
trial court that this claim for credit was not proved.
Husband contends that he is entitled to a credit of
$1,472.27, the value of the tax benefit received by wife for a
mortgage interest tax deduction. The record establishes that
husband was not entitled to a tax deduction for interest paid on
the residence mortgage, although he made the mortgage payment,
because he did not own or reside in the home. Therefore, husband
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agreed to wife taking the deduction. She never agreed to give
him a credit and he was not entitled to the deduction. The trial
court did not err in refusing to grant a credit to husband for
the tax deduction.
Husband claims that he made payments to wife pursuant to the
terms of the property settlement agreement in the amount of
$1,887.23. The claims presented do not prove that they represent
expenses for which wife is responsible under the terms of the
agreement.
For the above reasons, we reverse the decision of the trial
court and remand for further proceedings for modification of its
decree as follows: (1) award specific performance in accordance
with the terms of the North Carolina decree; (2) adjust the
arrearage figures to reflect any credit due husband for amounts
he paid in addition to the $500 monthly interest payment on the
Central Carolina Bank loan; (3) modify the decree to include
interest at the North Carolina legal rate from October 31, 1994,
until paid; and (4) adjust the decree to include a reasonable
attorney's fee and court costs to wife for this appeal.
Reversed and remanded for
further proceedings.
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