Eure v. NORFOLK SHIPBUILDING & DRYDOCK

Decision Date19 April 2002
Docket NumberRecord No. 011633
Citation561 S.E.2d 663,263 Va. 624
CourtVirginia Supreme Court
PartiesLouise Roberts EURE v. NORFOLK SHIPBUILDING & DRYDOCK CORPORATION, INC., et al.

Robert C. Nusbaum (Cynthia A. King; Jeffrey L. Stredler; Hofheimer Nusbaum, on briefs), Norfolk, for appellant.

Kristina H. Vaquera (Thomas M. Lucas; McGuireWoods, on brief), Norfolk, for appellees.

Present: All the Justices.

Opinion By DONALD W. LEMONS, Justice.

In this appeal, we consider whether the trial court erred in finding the language of an agreement to provide health care coverage to Louise Roberts Eure ("Mrs. Eure") unambiguous and in not considering parol evidence to determine the intent of the parties to the agreement. We further consider whether the trial court properly dismissed a holding company, United States Marine Repair, Inc., ("U.S. Marine Repair") as a party in `a suit against its subsidiary, Norfolk Shipbuilding & Drydock Corporation, Inc. ("Norshipco").

I. Facts and Proceedings Below

Mrs. Eure entered into an agreement and general release (the "Agreement") with Norshipco on April 3, 1992. The Agreement was part of a settlement of a debt owed to Norshipco by Charles H. Eure, Jr., Mrs. Eure's deceased husband. As part of the Agreement, Mrs. Eure agreed to give up certain valuable rights and assets owed to her by Norshipco, and Norshipco agreed to provide Mrs. Eure with health care coverage at Norshipco's expense for the remainder of her life.

Paragraph 2 of the Agreement provides for Mrs. Eure's health care coverage and states in pertinent part:

Mrs. Eure will be afforded health care at Norshipco's expense throughout her remaining lifetime, under the existing Norshipco health plan and any future enhancements available to key executives, or any replacement plan which provides to her coverage substantially equivalent to that which would be available if Mr. Eure were living and holding office as President of Norshipco.

At the time the Agreement was made, Mrs. Eure was receiving benefits under two plans. Norshipco provided basic medical insurance through Blue Cross,1 and also provided an "Officers' Medical Expense Reimbursement Plan" ("reimbursement plan") that paid for certain expenses Blue Cross did not cover.

U.S. Marine Repair acquired Norshipco in October of 1998, Mrs. Eure subsequently received a letter from John Humphreys of Norshipco informing her that as of December 15, 1998, the reimbursement plan was being terminated for all officers.

On February 18, 2000, Mrs. Eure filed an amended motion for declaratory judgment against both Norshipco and U.S. Marine Repair. She requested that the trial court declare:

[T]hat the coverage promised [to her] under the provisions of paragraph 2 of the Agreement is to be determined by the coverage in effect at the time of the Agreement, and not be diminished or discontinued in part simply because the executive health plan at that time has subsequently been discontinued by Defendants.

Norshipco filed a motion for summary judgment and alleged that paragraph 2 of the Agreement was clear and unambiguous; therefore, the trial court should not consider parol evidence when interpreting the Agreement. In her brief in opposition to Norshipco's motion for summary judgment, Mrs. Eure asserted that the Agreement "provides her with the medical coverage which was in effect at the time of the Agreement and that the coverage cannot be diminished or discontinued." She maintained that "the agreement [was] clear in this respect." The trial Court denied Norshipco's motion for summary judgment because it found that the Agreement was ambiguous. Norshipco subsequently renewed its motion for summary judgment, claiming that "discovery has established that the Plaintiff cannot point to any parol evidence or witness testimony which would clarify the meaning beyond the written words of the instrument." The trial court again overruled the motion.

U.S. Marine Repair filed a demurrer, asserting that it bought the stock of Norshipco on September 30, 1998, and "in essence, is a holding company of the stock of Norshipco as an investor." U.S. Marine Repair explained that Norshipco remains a freestanding legal entity, and U.S. Marine Repair was not a party to the Agreement between Mrs. Eure and Norshipco.

The trial court allowed the introduction of parol evidence at trial to determine the intent of the parties with respect to the health care benefits clause of the Agreement. E.L. Carlyle ("Carlyle"), who was Senior Vice President and Chief Financial Officer of Norshipco in 1992 and signed the Agreement, testified on behalf of Mrs. Eure. In response to the question whether the health care benefits were "supposed to be retractable by Norshipco," Carlyle testified that he "believe[d] it was the intent that Mrs. Eure was to have these benefits for the rest of her life."

Furthermore, during cross-examination of Mrs. Eure, Norshipco admitted two letters into evidence. The first was a letter dated March 23, 1992, to Robert C. Nusbaum ("Nusbaum"), Mrs. Eure's attorney, from Walter B. Martin, Jr. ("Martin"), Norshipco's attorney. The letter outlined the "terms and conditions of the settlement" between Mrs. Eure and Norshipco. With respect to the health care coverage, the letter stated that "Mrs. Eure will be maintained under the Norshipco health care plan, or a plan providing equal coverage, until her death." The second letter was the response from Nusbaum to Martin, dated March 27, 1992. In this letter, Nusbaum informed Martin that "Mrs. Eure and I interpret paragraph # 2 of your March 23 letter to require the continuation of coverage of the kind now in force, or the substantial equivalent."

Finally, Ellen Vinck ("Vinck"), Director and Vice President for U.S. Marine Repair, testified as to her interpretation of the Agreement. Vinck reviewed the Agreement at the time U.S. Marine Repair terminated the reimbursement plan. She testified that her "interpretation of the agreement was that Mrs. Eure should have medical coverage at any time as covered by the current plan, and she does. [Her coverage] was not canceled." Vinck further testified that she believed that "the officers medical reimbursement plan [was] a perk." She did not believe that canceling the reimbursement plan violated the Agreement because the basic coverage, under Sentara, was not canceled.

In a letter opinion, the trial court recognized that it had "previously held the [health care benefits] clause to be ambiguous, but on further consideration," the trial court did "not believe it" was ambiguous; therefore, it did not consider the parol evidence in reaching its decision. The trial court interpreted the medical benefits provision of the Agreement as follows:

The clause at issue allows a change in benefits but it must be under a "replacement plan which provides to her coverage substantially equivalent to that which would be available if Mr. Eure were living and holding office as President of Norshipco." I find that the clause refers to future events, and that it ought to be construed as if Mr. Eure were the president of Norshipco at the time the replacement plan is provided. The term "replacement plan" in this context necessarily suggests a possible future event. The phrase "would be available" when used with "replacement plan" indicates a possible future condition. If the intent had been to require that a replacement plan be substantially equivalent to present coverage, a present tense verb, not a conditional tense, would have been used. Such an intent could have been stated " ... coverage substantially equivalent to that which she now has."

Accordingly, the trial court held that Norshipco was not required to continue to provide Mrs. Eure with the health care benefits under the company's former reimbursement plan after the date that plan was terminated. The trial court further held that U.S. Marine Repair was not liable for the debts of Norshipco because there was "insufficient evidence to apply the alter ego doctrine." Mrs. Eure subsequently filed a motion to reconsider, which the trial court overruled. On April 25, 2001, the trial court entered a decree memorializing its decision. Mrs. Eure appeals the adverse ruling of the trial court.

On appeal, Mrs. Eure argues that the language in the Agreement was ambiguous and the trial court should have considered parol evidence to determine the intent of the parties. She further argues that the trial court erred in ruling that Norshipco was not required to provide her with benefits "equivalent" to those provided under the former reimbursement plan. Finally, she claims that the trial court erred in dismissing U.S. Marine Repair as a party because Norshipco has no board of directors and operates under the direction of the chief operating officer of U.S. Marine Repair.

Norshipco maintains that the Agreement is unambiguous and the trial court correctly interpreted its plain meaning. Furthermore, Norshipco asserts that the trial court properly dismissed U.S. Marine Repair as a party because Mrs. Eure failed to demonstrate that Norshipco was merely the "alter ego" of the corporation.

II. Standard of Review

This appeal presents questions of both law and fact. The question whether the language of a contract is ambiguous is a question of law which we review de novo. Langman v. Alumni Assn of the Univ. of Va., 247 Va. 491, 498, 442 S.E.2d 669, 674 (1994). Accordingly, on appeal we are not bound by the trial court's interpretation of the contract provision at issue; rather, we have an equal opportunity to consider the words of the contract within the four corners of the instrument itself. Wilson v. Holyfield, 227 Va. 184, 187-88, 313 S.E.2d 396, 398 (1984).

The question whether the plaintiff introduced sufficient evidence to hold a parent company liable for the debts of its subsidiary is a question of fact. Beale v. Kappa Alpha Order, 192 Va. 382, 399, 64 S.E.2d 789, 798 (1951). Accordingly, we will only...

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