Gaffney v. Gaffney

• Decision Date: 24 May 2005
• Docket Number: Record No. 1286-04-4.
• Citation: 45 Va. App. 655,613 S.E.2d 471
• Court: Virginia Supreme Court
• Parties: James Edward GAFFNEY v. Roseanne GAFFNEY.

613 S.E.2d 471

45 Va. App. 655

James Edward GAFFNEY v. Roseanne GAFFNEY.

Record No. 1286-04-4.

Court of Appeals of Virginia, Alexandria.

May 24, 2005.

COPYRIGHT MATERIAL OMITTED

Stacy M. Davis (Daniel G. Dannenbaum; The Lewis Law Firm, on briefs), Washington, DC, for appellant.

Marcia M. Maddox (Katharine W. McGregor; Melannie J. Hutzelman; Maddox Cole & Miller, P.C., on brief), Vienna, for appellee.

Present: FITZPATRICK, C.J., CLEMENTS, J., and COLEMAN, Senior Judge.

JEAN HARRISON CLEMENTS, Judge.

James Edward Gaffney (husband) appeals from the trial court's equitable distribution award. On appeal, husband contends the trial court erred in (1) deciding he and Roseanne Gaffney (wife) had entered into a valid and binding property settlement agreement and incorporating the terms of that purported agreement into the final decree of divorce, (2) granting wife attorney's fees of $15,000, and (3) ordering him, in conjunction with its award to wife of fifty percent of the marital share of his United States Public Health Service pension, to indemnify wife for any future diminution of that award resulting from his waiver of retirement pay in order to receive additional disability pay. For the reasons that follow, we hold the trial court erred in deciding the parties had entered into a valid and binding property settlement. Accordingly, we reverse and remand the issues of equitable distribution and attorney's fees.

I. BACKGROUND

"On appeal, we construe the evidence in the light most favorable to wife, the prevailing party below, granting to that evidence all reasonable inferences fairly deducible therefrom." Wright v. Wright, 38 Va.App. 394, 398, 564 S.E.2d 702, 704 (2002).

So viewed, the evidence established that husband and wife married in 1977 and separated in December 2000. No children were born of the marriage. In July 2002, wife filed for divorce requesting, inter alia, spousal support, attorney's fees, and equitable distribution of the parties' marital assets. In November 2002, husband filed an answer and cross-bill for divorce also seeking spousal support, attorney's fees, and equitable distribution. An ore tenus hearing was scheduled for October 21, 2003.

On October 16, 2003, wife's counsel sent husband's counsel a letter via e-mail setting forth the terms of a proposed property settlement agreement. The first sentence of the letter read, "Pending [husband's] response to our latest proposal as to the pension issue, the following is the agreed settlement of property, which will be bifurcated from the issues of pension and spousal support at court." The first fourteen paragraphs of the proposed agreement described how the parties' real property, personal property, debts, and obligations were to be distributed. The last three paragraphs set forth proposals for settling the outstanding issues of husband's pension, spousal support, and the further incurrence of attorney's fees. The same day, husband's counsel responded via e-mail, "I can't sign the letter, per se, but I confirm by this e-mail that the portion of the letter describing the settled terms [set forth in paragraphs one through fourteen] accurately reflects our agreement."

Prior to the October 21, 2003 hearing, wife's counsel presented husband's counsel with a formal "Separation and Property Settlement Agreement" signed by wife. The proposed agreement encompassed all of the terms set forth in wife's counsel's October 16, 2003 e-mail, contained additional boilerplate language and details regarding the implementation of those terms, and noted that the issues of spousal support, husband's pension, and further incurred attorney's fees were to be submitted to the trial court for resolution at the October 21, 2003 hearing.

On the morning of the October 21, 2003 hearing, husband's counsel informed wife's counsel that husband had not yet signed the proposed agreement but he "intended to obtain his signature following the proceedings." Although he believed the "agreement set forth a settlement between the parties" and that he "had authority from [husband] to enter into the agreement" on husband's behalf, husband's counsel was not sure at the time that husband would actually sign the proposed agreement.

At the commencement of the October 21, 2003 hearing, the trial court noted that both parties were represented by counsel and that the case was before the court for equitable distribution. In her opening statement, wife's counsel asserted that the parties had "accumulated nearly $920,000 ... in non-retirement assets" and "$44,000 in retirement savings." She then stated:

Those assets have been divided by agreement fifty/fifty and each side has prepared a chart of the agreed assets each will receive. The only difference in the charts is that we differ in the value of the condo that [wife] will receive.

And [husband] places a $25,000 figure on twenty-six year old furniture that [wife] has in her possession. Other than that, I don't believe there's any dispute.

Wife's counsel then asserted that the only outstanding issues needing determination by the court were the division of husband's United States Public Health Service pension, spousal support, and attorney's fees related to the October 21, 2003 hearing.

In his opening statement, husband's counsel's confirmed wife's counsel's remarks regarding the parties' purported settlement: "The parties have — as [wife's counsel] has indicated — resolved the issue of property division, with the exception of the pension. And we're going to each submit exhibits to Your Honor showing what we believe the parties['] property settlement to be worth. And there's clear differences in the values."

Both parties then testified and presented exhibits with respect to the outstanding issues of husband's pension, spousal support, and attorney's fees. Much of that evidence regarded the parties' projected incomes and expenses and the value of the assets divided under the terms of the parties' purported settlement. To the extent it showed the division of the parties' property, such evidence was not inconsistent with the basic terms of the proposed agreement signed by wife and presented to husband's counsel, although not all the terms of that agreement were reflected in the evidence.

On direct examination, wife testified that her Exhibit 1 was a chart "of the division of property for the settled part of this case." Wife's Exhibit 1 listed the value and allotment of certain of the parties' assets and liabilities and showed a lump-sum payment to wife of $15,000. Later in the hearing, wife testified that the value of the parties' furniture, which was allotted to her under "the terms of the settlement," was worthless and that she "was required to pay in terms of the settlement" the debt incurred during the marriage on five credit cards, which totaled $43,417. She also testified that, "[a]s part of the settlement," she had agreed to cooperate if husband wished a continuation of health insurance. On cross-examination, wife testified that, under the terms of the settlement, she was to receive title to the marital home and would assume responsibility for the $47,000 in back taxes she owed.

On direct examination, when shown his Exhibit 1 and asked, "Is that your evaluation of the value of the settlement," husband responded, "Basically, yes, it is." Like wife's Exhibit 1, husband's Exhibit 1 listed the value and allotment of certain of the parties' assets and liabilities and showed a lump-sum payment to wife of $15,000. Husband further testified that, "as part of the settlement," he relinquished a credit of $53,000 he was originally to have received. Husband also testified that his Exhibit 2 represented "a description of the income producing portion of the asset settlement that he and [wife] reached" and that, "as part of the settlement," he agreed to pay $10,000 of wife's attorney's fees and a lump sum of $15,000. At no point during the hearing did husband object to any of the numerous references to the settlement.

The parties presented additional evidence during the hearing regarding wife's request for half of the marital portion of husband's pension and their requests for an award of attorney's fees and spousal support. At the conclusion of the evidence and argument by counsel, the trial court awarded wife half of the marital share of husband's pension, granted both parties a reservation of the right to seek spousal support in the future, and denied the parties' requests for attorney's fees.

On November 19, 2003, wife filed a motion requesting that the terms of the "settlement of property issues reached and affirmed by the parties" at the October 21, 2003 hearing be incorporated into a final decree of divorce. Wife additionally asked for an award of her attorney's fees "incurred as a result of [husband's] refusal to sign" the property settlement agreement.

Shortly thereafter, husband filed an objection to wife's motion and a motion seeking a declaratory judgment that the purported settlement was not a binding and enforceable settlement agreement. Citing the need for his testimony at the hearing on husband's motion, husband's attorney filed a motion to withdraw as counsel. Husband's new counsel was subsequently substituted for his original counsel.

The trial court conducted a hearing on wife's and husband's motions on March 24, 2004. At that hearing, wife called husband's former counsel as a witness to testify as to the existence of a settlement agreement between the parties. When asked by wife's counsel if, prior to the October 21, 2003 hearing, "there was a settlement of all property issues, with the exception of the pension," husband's former counsel responded, "You and I reached terms for settlement of the issues that were pending before the Court, between us." Husband's former counsel further testified, on cross-examination, that "there was never an occasion during [the October 21, 2003] hearing when we specifically spread...