M. CHERRY & ASSOCIATES v. Cherry

• Decision Date: 22 January 2002
• Docket Number: Record No. 2854-00-4.
• Citation: 558 S.E.2d 534,37 Va. App. 329
• Court: Virginia Court of Appeals
• Parties: MORGAN CHERRY & ASSOCIATES, LTD., v. Natalie W. CHERRY.

558 S.E.2d 534

37 Va. App. 329

MORGAN CHERRY & ASSOCIATES, LTD., v. Natalie W. CHERRY.

Record No. 2854-00-4.

Court of Appeals of Virginia, Alexandria.

January 22, 2002.

Vernon W. Johnson, III, Vienna, (James A. Allen, Washington, DC; Jackson & Campbell, P.C., Vienna, on briefs), for appellant.

Michael Miller, (Marcia M. Maddox, Vienna; Cynthia A. King, Norfolk; Law Office of Maddox & Cole, P.C., on brief), for appellee.

Present: BENTON and ANNUNZIATA, JJ., and HODGES, Senior Judge.

ANNUNZIATA, Judge.

The appellant, M. Morgan Cherry & Associates, Ltd. (MMCA), appeals the award of a judgment against it in the amount of $9,900. The judgment stemmed from an alleged violation of a court order, issued pursuant to Code § 20-79.1, directing MMCA to withhold and pay out of the disposable income of M, Morgan Cherry, an employee and shareholder of MMCA, a deducted amount for spousal support due the appellee, Natalie W. Cherry. The trial court found that MMCA had violated the income deduction order and entered judgment against it. For the following reasons, we affirm.

BACKGROUND

Under familiar principles, we state the evidence in the light most favorable to Ms. Cherry, the party prevailing below. Richardson v. Richardson, 30 Va.App. 341, 349, 516 S.E.2d 726, 730 (1999). MMCA is a Virginia corporation that provides private investigation services. Mr. Cherry owns 60% of the outstanding stock of MMCA. MMCA's other two shareholders, Robert M. Puglisi and Thomas G. Byrne, each own 20% of the stock. Puglisi and Byrne are not related to Mr. Cherry.

Ms. Cherry filed her bill of complaint for divorce against Mr. Cherry on January 31, 2000. The parties entered into a Consent Pendente Lite Support Order on May 8, 2000, which provided that Mr. Cherry would pay Ms. Cherry $3,300 per month in spousal support. Mr. Cherry ceased making spousal support payments in July 2000. On July 17, 2000, Mr. Cherry instructed MMCA to stop paying him a salary and they complied.

On August 28, 2000, at Ms. Cherry's request, the court issued an income deduction order pursuant to Code § 20-79.1. The income deduction order identified MMCA as the "employer" and required MMCA to withhold and pay out of the disposable income of Mr. Cherry a deducted amount for spousal support for Ms. Cherry. It also provided that MMCA "shall be liable for payments which [it] fails to withhold or mail as specified in the Order." The amount of the deduction was set at $3,300 per month, subject to a limitation based on Mr. Cherry's disposable income. Thus, depending upon the amount of disposable income it paid to Mr. Cherry, MMCA would be obligated to make payments of up to $3,300 per month.

On September 22, 2000, Ms. Cherry filed a motion for satisfaction of judgment by defendant's interest in his corporate entities. By that motion, Ms. Cherry asked the court to require MMCA to directly satisfy, in whole or in part, judgments and other obligations of Mr. Cherry in the case. The court denied the motion without prejudice, holding that it could not be heard on an abbreviated motions day.

Ms. Cherry proceeded to an equitable distribution hearing before the trial court on October 31, 2000. MMCA tiled a motion to intervene to protect itself against discovery requests served by Ms. Cherry. It claimed that Ms. Cherry sought privileged and confidential information relating to the company. The trial court denied the motion, and MMCA did not participate in the hearing. As part of the equitable distribution hearing, Ms. Cherry again asked that the court require MMCA to pay judgments entered against Mr. Cherry. The court again denied the request without prejudice, holding that Ms. Cherry had to file a separate lawsuit to pursue the relief sought.

At the hearing, the trial court also sua sponte issued a rule to show cause why MMCA should not be held in contempt for its failure to comply with the income deduction order. The trial court set a return date of November 3, 2000 for the rule to show cause hearing.

The trial court conducted the show cause hearing on November 3 and November 17. The evidence proved that Mr. Cherry had instructed MMCA to stop paying a salary to him on July 17, 2000 and that MMCA complied, but that Mr. Cherry continued as an employee of MMCA.

Ms. Cherry contended that MMCA had a continuing liability to Mr. Cherry. She relied, in part, on the testimony of Puglisi, MMCA's sole witness. Puglisi acknowledged that MMCA had approved the response to the income deduction order filed on September 1, 2000, which stated that "Mr. Cherry instructed [MMCA] not to make any further payments of salary or any other amounts to him. Mr. Cherry is still an employee of [MMCA]." Further, Puglisi testified that Mr. Cherry is co-founder and majority shareholder of the company, that some clients choose MMCA based on Mr. Cherry's reputation, that Mr. Cherry may have clients that he solicits, and that he has marketing responsibilities.

Counsel for Ms. Cherry indicated three times throughout the show cause proceeding that she was basing her argument, in part, on the testimony of Ms. Cherry from the equitable distribution hearing.¹ No transcript of evidence from the equitable distribution hearing was introduced, however. MMCA did not object to the references by counsel and did not produce the evidence referred to by Ms. Cherry's counsel on appeal.

Ostensibly treating the referenced evidence from the prior hearing as before her, the trial court judge specifically stated that, in entering judgment against MMCA, she was relying upon it, including, inter alia, the evidence regarding "the nature of [MMCA's] business, the kind of work that it does, its ownership, its structure, and. . . the way Mr. Cherry operates with respect to his multiple identities, passports, et. cetera." MMCA failed to object, on due process or other grounds, to the court's consideration of this evidence.

The trial judge concluded that "MMCA continues to be liable to Max Cherry for his salary whether MMCA is paying it or not ... and inasmuch as it's an obligation that MMCA owes to Mr. Cherry, it's an obligation that MMCA under this Court's income deduction order owes to Ms. Cherry." The trial judge did not find MMCA in contempt, but entered judgment against MMCA for $9,900, representing the amount the court deemed due from MMCA to Ms. Cherry under the income deduction order for the months of September, October, and November 2000. MMCA objected to the amount of the judgment.

Thereafter, the trial court refused to allow MMCA to post a supersedeas bond. We reversed that ruling on December 22, 2000, and an appropriate supersedeas bond was set and posted by MMCA.

MMCA now appeals the trial court's entry of judgment against it.

ANALYSIS

I. Threshold Issues

Although Ms. Cherry presented three threshold issues for our consideration, one of them is moot.² We address the remaining issues. First, Ms. Cherry maintains that we lack subject matter jurisdiction to hear MMCA's claims. We disagree. We find that we have jurisdiction pursuant to Code § 17.1-405, which states, "Any aggrieved party may appeal to the Court of Appeals from ... [a]ny ... domestic relations matter arising under Title 16.1 or Title 20." The court issued the income deduction order pursuant to Code § 20-79.1. Therefore, this appeal involves a domestic relations matter arising under Title 20 and comes within our jurisdiction.

Second, Ms. Cherry contends that, to the extent MMCA attempts to appeal the trial court's denial of its motion to intervene in the divorce case, the appeal is untimely. We need not address this issue because we find MMCA did not appeal the denial of its motion to intervene.

MMCA couches the question as one involving a violation of its due process rights, stating, "MMCA's rights were violated in that it was denied the opportunity to cross-examine the evidence received against it [in the equitable distribution hearing]." However, MMCA moved to intervene for the limited purpose of defending itself against certain discovery requests by Ms. Cherry in the divorce proceeding.³ It did not seek to intervene in the evidentiary hearing on equitable distribution. Thus, had the court granted MMCA's motion to intervene in the divorce proceeding, its participation would have been limited to discovery issues, i.e. the relief requested in its motion. See Johnson v. Buzzard Island Shooting Club, Inc., 232 Va. 32, 37, 348 S.E.2d 220, 223 (1986) (holding that trial court may not grant relief to a party inconsistent with the case alleged in the party's pleading); cf. Rule 2:15 (referring to one who intervenes as a "party" to the proceeding and motions to intervene as a "pleading" to intervene and providing that motions to intervene are governed by the Rules applicable to all pleadings); see also United States v. AT & T, 642 F.2d 1285, 1295 (D.C.Cir.1980) (permitting MCI to intervene for the limited purpose of appealing discovery order, as requested in motion to intervene); Sackman v. Liggett Group,. 167 F.R.D. 6, 23 (E.D.N.Y.1996) (limiting intervention to issue of whether certain documents are discoverable, as requested in motion to intervene); Rosado v. Bridgeport Roman Catholic Diocesan Corp., 60 Conn.App. 134, 758 A.2d 916, 927 (2000) (granting "intervention for the unique purpose of contesting the disclosure of private, confidential files and issues relating to this interest," as requested in motion to intervene). It would not have had the opportunity to cross-examine evidence tending to prove that it owed a debt to Mr. Cherry. Thus, MMCA waived any due process right to cross-examine the evidence at the equitable distribution hearing.

In short, because MMCA never sought to intervene in the evidentiary hearing, its due process argument that it was deprived of its right to cross-examine evidence does not raise the denial of its motion to intervene on appeal and the issue is not before us.

II. MMCA's Appeal

MMCA contends on appeal...