Fern Mae Allocca v. Francis Anthony Allocca

COURT OF APPEALS OF VIRGINIA
Present: Chief Judge Moon, Judges Benton and Elder
Argued at Richmond, Virginia
FERN MAE ALLOCCA
OPINION BY
v. Record No. 0185-96-2 JUDGE JAMES W. BENTON, JR.
DECEMBER 10, 1996
FRANCIS ANTHONY ALLOCCA
FROM THE CIRCUIT COURT OF SPOTSYLVANIA COUNTY
J. Peyton Farmer, Judge
Robert B. Machen for appellant.
R. Scott Pugh for appellee.
This is an appeal from a final divorce decree that affirmed,
ratified, and incorporated by reference a Property Settlement
Agreement. Fern M. Allocca seeks to set aside the Agreement and
argues that: (1) her husband repudiated the Agreement by
obtaining discharge in bankruptcy; (2) the Agreement is
unconscionable; and (3) the trial judge erred by admitting into
the evidence, over a best evidence rule objection, a photocopy of
the Agreement. For the reasons that follow, we affirm the decree
incorporating the Agreement.
I.
After this divorce action was filed by the wife on December
19, 1994, she presented the husband with a proposal to settle
their property rights. The husband refused that proposal and
asserted that all marital property rights had been decided in
1989 when the parties entered into a Property Settlement
Agreement. The husband filed a crossbill for divorce and
requested that the 1989 Agreement be affirmed, ratified, and
incorporated into the final decree.
At a hearing to determine the validity of the 1989
Agreement, the evidence proved that the parties signed the
Agreement on December 18, 1989. The circumstances of signing the
Agreement were disputed. The wife testified that she had never
seen the Agreement before signing, that the husband came to her
place of employment with the Agreement, and that she signed the
Agreement in the parking lot moments later. The husband
testified that the parties discussed the Agreement thoroughly,
caused the Agreement to be modified, and signed the Agreement at
a local bank in the presence of a notary public. The notary
public testified at the hearing and corroborated the husband's
testimony regarding the signing of the Agreement.
The evidence also proved that after the husband and wife
separated and signed the Agreement, they sold their marital
residence. As required by the agreement, they distributed the
proceeds of the sale between them. Because they had performed
all other agreed obligations, nothing remained to be done under
the Agreement.
During a brief reconciliation, the husband and wife
purchased a residence in 1991 and signed a deed of trust note.
When they again separated, the husband made the monthly payments
on the deed of trust note.
Several days after the wife filed this divorce action, the
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husband filed for bankruptcy. The husband listed the wife on the
bankruptcy schedules as a co-debtor on the deed of trust note.
She received notice of the bankruptcy filing with other
creditors. The husband was discharged in bankruptcy on April 19,
1995 while the divorce action was pending.
Following the ore tenus hearing, the trial judge ruled in
the divorce proceeding that the Agreement was not unconscionable
and was valid. In the final decree of divorce, entered on
December 22, 1995, the trial judge awarded the husband a divorce
and incorporated the Agreement into the final decree.
II.
The wife argues that the husband's discharge in bankruptcy
constituted a repudiation of the Agreement, giving her a right to
rescind the Agreement. In support of her position, the wife
relies upon Carter v. Carter, 18 Va. App. 787, 447 S.E.2d 522(1994).
In Carter, the husband filed for bankruptcy after he
separated from the wife. See id. at 788, 447 S.E.2d at 523. He
listed the wife as a creditor and identified his obligation to
the wife under the parties' property settlement agreement. See
id. At the time he sought discharge, the husband had not fully
performed his obligations under the agreement and owed money to
the wife. See id. Although the wife objected to the discharge,
the bankruptcy judge ruled that the obligation was not in the
nature of support and discharged the husband's debt to the wife
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under the agreement. See id.
While the bankruptcy was pending, the wife filed the Carter
divorce action in the circuit court. See id. Upon the wife's
motion, the judge in the divorce proceeding ordered rescission of
the parties' agreement and ordered the husband to pay the wife
additional sums of money. See id. On appeal from the final
decree in Carter, this Court affirmed the decree and stated that
"[b]y seeking and accepting discharge from his obligation under
the agreement, [the husband] repudiated the agreement. He
thereby failed in the due performance of his obligation
thereunder, giving [the wife] the right to seek rescission
pursuant to paragraph 22(a) [of the agreement]." Id.
This case is distinguishable. Here, the husband did not
seek discharge from his obligations under the Agreement. He
sought discharge in bankruptcy from the deed of trust note for
which he and the wife were jointly and severally liable. The
Agreement did not assign to the husband the specific obligation
to pay the deed of trust note, which was executed more than a
year after the Agreement was signed. Moreover, unlike in Carter,
when the husband in this case filed for bankruptcy, he had
performed all obligations that he owed to the wife under the
Agreement. He owed no debt to the wife that could be attributed
to the Agreement.
The wife argues that she was entitled to rescind the
Agreement because the husband's bankruptcy was a breach of the
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Agreement's indemnification clause and constituted a repudiation
of the entire Agreement. We disagree.
Preliminarily, we note that in Carter, this Court affirmed
the rescission of the agreement because a specific provision in
the parties' contract called for rescission upon breach. See
Carter, 18 Va. App. at 790, 447 S.E.2d at 523. The Agreement in
this case, however, contained no provision mandating rescission
for breach or failure to perform. Indeed, the Agreement stated
that a modification or rescission could be executed only in a
written agreement signed by both parties.
Although the Agreement in this case contained an
indemnification clause, the evidence failed to prove a material
breach. In the indemnification clause, the husband agreed "that
he will not hereafter contract nor incur any debts, charges or
liabilities for which his wife is, may be or may become liable,
and . . . further covenants and agrees that he shall hold the
wife free, harmless and indemnified of and from any and all
debts, charges or liabilities, past, present or future, which are
his debts, charges or liabilities." The wife made the identical
agreement. By subsequently signing the deed of trust note,
however, either the parties jointly violated the indemnification
clause by creating a joint and several liability, or the
indemnification clause did not apply to the deed of trust note
because the note was a joint debt and not "his debt" or "her
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debt." We cannot conclude that the indemnification clause, as
worded in the Agreement, contemplated that the parties later
would voluntarily create a joint and several liability.
In any event, we need not decide whether the husband
breached the indemnification clause because the evidence failed
to prove that the wife suffered any loss as a result of the
husband's bankruptcy. No evidence proved that any money was owed
to the deed of trust creditor following the bankruptcy and
foreclosure on the property. In addition, no evidence proved
that the wife made payments to the deed of trust creditor after
the husband ceased payments. Moreover, the husband performed all
of his other obligations under the Agreement. Thus, the evidence
failed to prove that the breach, if any, was material.
In Jennings v. Jennings, 12 Va. App. 1187, 409 S.E.2d 8(1991), we confronted a similar rescission argument. The
agreement in Jennings included promises by the wife to seek a
no-fault divorce and to pay her own attorney's fees. See id. at
1190-91, 409 S.E.2d at 11. Later, the wife sought a fault-based
divorce and claimed that the husband should pay for her
attorney's fees. See id. at 1198, 409 S.E.2d at 11. We stated:
We find no merit in the husband's argument
that the wife breached her only executory
obligations under the Agreement and,
therefore, that the Agreement should be
rescinded. The writing evidences an
intention to effect an equal distribution of
the parties' property instead of protracted
equitable distribution proceedings. The
considerations involved in a property
distribution include the wife's contributions
to the well-being and maintenance of the
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marriage, the duration of the marriage, the
circumstances surrounding the marriage
dissolution, and sundry other factors. . . .
The obvious reach of the Agreement recognized
much more than the wife's executory promises.
. . . We conclude the alleged breaches were
immaterial and did not amount to an
abandonment of the Agreement.
Id. at 1198-99, 409 S.E.2d at 15-16.
Like the agreement in Jennings, the Agreement in this case
was intended to settle all marital rights between the parties.
The indemnification provision was just one of many considerations
involved. Assuming arguendo that the husband's discharge in
bankruptcy was a breach of the indemnification clause, an issue
we need not decide today, we hold that this alleged breach did
not constitute a repudiation of the entire Agreement. No
evidence proved that the wife suffered any loss resulting from
the alleged breach. Furthermore, the husband otherwise fully
performed. "'Ordinarily, rescission will not be granted for
breach of a contract which is not of such substantial character
as to defeat the object of the parties in making the contract.'"
Neale v. Jones, 232 Va. 203, 207, 349 S.E.2d 116, 119 (1986)
(citation omitted). Accordingly, we affirm the trial judge's
refusal to order rescission of the Agreement. 1
1
For the reasons stated in his dissenting opinion in Carter,
see 18 Va. App. at 790-94, 447 S.E.2d at 524-26, Judge Benton
would hold that any debt the husband owed to the wife, including
indemnification, was discharged in bankruptcy by virtue of 11
U.S.C. § 727(b). See Judd v. Wolfe, 78 F.3d 110 (3d Cir. 1996);
In re Beezley, 994 F.2d 1433, 1434-41 (9th Cir. 1993)
(O'Scannlain, J., concurring); In re Doughty, 195 B.R. 1 (Bankr.
D. Me. 1996). In this case, the evidence proved the wife received
notice of the bankruptcy proceeding and was listed as a co-debtor
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III.
The wife also argues that the Agreement is unconscionable.
In Drewry v. Drewry, 8 Va. App. 460, 383 S.E.2d 12 (1989), this
Court stated the following:
When a court considers whether a contract
is unconscionable, adequacy of price or
quality of value transferred in the contract
is of initial concern. If a "gross disparity
in the value exchanged" exists then the court
should consider "whether oppressive
influences affected the agreement to the
extent that the process was unfair and the
terms of the resulting agreement
unconscionable."
Id. at 472-73, 383 S.E.2d at 18 (citation omitted). As the party
seeking to have the Agreement voided as unconscionable, the wife
bore the burden of "prov[ing] the allegations by clear and
convincing evidence." Derby v. Derby, 8 Va. App. 19, 26, 378
S.E.2d 74, 77 (1989).
On appeal, this Court must review the evidence in the light
on the bankruptcy schedules. Furthermore, no evidence proved that
the wife filed a timely complaint in bankruptcy to contest the
dischargeability of the debt or the indemnification obligation.
See 11 U.S.C. § 523; Fed. Rule Bankr. P. 4007. Therefore, the
bankruptcy order was final. An order by the trial judge
rescinding the Agreement would have violated the bankruptcy stay.
Thus, for this additional reason, Judge Benton would affirm the
trial judge's refusal to order rescission of the Agreement.
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most favorable to the husband because he was the prevailing party
below. See id. So viewed, the Agreement provided that all
property the husband or wife obtained before the marriage, or
during the marriage by gift or bequest, was to remain separate.
They waived all rights to marital property, including their
rights to each other's profit sharing, pension, and retirement
plans. The marital home was to be sold and the proceeds used to
satisfy all debts owed by the parties, except a debt on one
automobile, which was to remain the husband's sole
responsibility. The remaining proceeds from the sale of the home
and the remaining balance in the parties' joint bank account were
to be divided evenly between the parties. Finally, they both
waived rights to spousal support.
The evidence further proved that when the parties signed the
Agreement in 1989, the husband had completed approximately
eighteen years of service toward his pension. His pension would
vest after two more years of service. The wife had completed
five to seven years of service under her pension plan. Each
agreed to waive marital rights in the other's pension, and they
evenly divided the other marital property.
Although the husband's pension was probably worth more than
the wife's, no evidence proved the difference in values.
Moreover, no evidence proved that the differences in the pensions
"represent[ed] such a disparity in values to indicate that no
reasonable person would have so contracted." Jennings, 12 Va.
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App. at 1196, 409 S.E.2d at 14. The wife's evidence of a
probable disparity in the values of the parties' pension plans
was insufficient to prove by clear and convincing evidence a
"gross disparity" in the entire values exchanged under the
Agreement. See Drewry, 8 Va. App. at 473, 383 S.E.2d at 18;
Jennings, 12 Va. App. at 1196, 409 S.E.2d at 14.
Because the evidence failed to prove a gross disparity in
the values exchanged, we need not decide whether the process of
forming the Agreement was unfair. See Drewry, 8 Va. App. at 473,
383 S.E.2d at 18. Accordingly, we hold that the evidence was
sufficient to support the trial judge's finding that the
Agreement was not unconscionable.
IV.
The wife argues that the best evidence rule barred the
admission into the evidence of a photocopy of the Agreement. We
disagree.
"[T]he best evidence rule requires that, to prove the
contents of a document, the 'original must be produced unless it
be shown that the original is unavailable, in which case
secondary evidence may be introduced.'" Mostyn v. Commonwealth,
14 Va. App. 920, 923, 420 S.E.2d 519, 521 (1992) (quoting Myrick
v. Commonwealth, 13 Va. App. 333, 339, 412 S.E.2d 176, 179
(1991)). However, if a copy can properly be treated as a
"duplicate original," the copy is admissible without regard to
the availability of the original. See Frere v. Commonwealth, 19
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Va. App. 460, 466-67, 452 S.E.2d 682, 686-87 (1995) (treating a
photocopy as a duplicate original and admitting it into evidence
without requiring proof that the original was unavailable); 4
John H. Wigmore, Wigmore on Evidence 548 (1972) ("[A] duplicate
. . . may be used without accounting for the nonproduction of
[the original].") (emphasis omitted). This Court has noted that
proper circumstances exist to treat a photocopy as a duplicate
original when the accuracy of the photocopy is not disputed. See
Frere, 19 Va. App. at 466, 452 S.E.2d at 686-87 (emphasizing that
the appellant never asserted that the photocopy was inaccurate);
Myrick, 13 Va. App. at 339, 412 S.E.2d at 179; Wigmore on
Evidence at 434 ("Production of the original may be dispensed
with, in the trial court's discretion, whenever in the case in
hand the opponent does not bona fide dispute the contents of the
document and no other useful purpose will be served by requiring
production.") (emphasis omitted).
In this case, proper circumstances existed to treat the
photocopy as an original. The wife's counsel never asserted that
the photocopy was inaccurate; counsel merely stated that "if [the
husband] has the original, I'd like for him to put it in." The
husband's counsel acknowledged that the original Agreement was
extant but argued that a copy should nevertheless be admitted
because, in her response to a request for admissions, the wife
admitted that the photocopy was a true copy of the Agreement.
Based on these arguments and circumstances, the trial judge
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admitted a copy of the Agreement. We hold that the photocopy
could be treated as a duplicate original and that the trial judge
did not err in considering the wife's response to the request for
admissions to establish that fact. Therefore, the copy was
admissible without regard to the availability of the original.
For these reasons, we affirm the final decree.
Affirmed.
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