Hutchinson v. Hutchinson

• Decision Date: 09 December 2014
• Docket Number: Record No. 0392-14-3
• Court: Virginia Court of Appeals
• Parties: ANN M. HUTCHINSON v. JOHN E. HUTCHINSON, III

ANN M. HUTCHINSON v. JOHN E. HUTCHINSON, III

Record No. 0392-14-3

COURT OF APPEALS OF VIRGINIA

DECEMBER 9, 2014

UNPUBLISHED

Present: Judges Huff, Decker and Senior Judge Annunziata

Argued at Lexington, Virginia

MEMORANDUM OPINION^* BY JUDGE GLEN A. HUFF

FROM THE CIRCUIT COURT OF NELSON COUNTY

J. Michael Gamble, Judge

Edward D. Barnes (Anne Brakke Campfield; Brandy M. Poss; Barnes & Diehl, P.C.; The DeFazio Law Firm, P.C., on briefs), for appellant.

Brian R. Moore (Phillips, Morrison, Johnson, and Ferrell, on brief), for appellee.

Ann M. Hutchinson ("appellant") appeals an order of the Circuit Court of Nelson County ("trial court") directing appellant to escrow $1,400,000 pursuant to the final divorce decree and ordering each party to pay his/her own attorney's fees. Appellant presents the following assignments of error on appeal:

1. The trial court erred in requiring that [a]ppellant escrow the amount of $1,400,000 . . . because it was an impermissible modification of the parties' Agreement because Virginia Code Section 20-109(C) prohibits the court from amending the Agreement and Final Decree . . . [and] it was an impermissible modification of the parties' Final Decree in contravention of Rule 1:1 of the Rules of the Supreme Court of Virginia which prohibits a modification after 21 days from the date of the Final Decree.

2. The trial court erred in finding that no funds are due to the [a]ppellant from the sale of the Merritt-Hutchinson properties ["MH properties"] until all the [MH properties]

have been sold because pursuant to the parties' Final Decree of Divorce and Agreement, the properties are titled solely in the [a]ppellant's name and she is the owner of the funds until all the [MH properties] have been sold.

3. The trial court erred in failing to award the [a]ppellant her attorney's fees and costs in this matter because she substantially prevailed, the [a]ppellee pursued remedies not provided for in the parties' Agreement, and because the [a]ppellee filed a show cause petition even though he admitted that the [a]ppellant was not in contempt of court.

4. The [a]ppellant should be awarded her attorney's fees and costs related to this appeal proceeding.

In response, John E. Hutchinson, III, ("appellee") presents three assignments of cross-error on appeal:

1. The trial court erred when it held that a condition precedent is created by the word "all" as used in the phrase "if, as and when all the [MH properties] sell" and as a result failed to order [appellant] to immediately pay $1.4 million plus the legal rate of interest thereon from the date she received the proceeds from the sale of a portion of all the properties. . . .

2. The trial court erred when it held that any interest or accretion in value on the $1,400,000.00 to be held in escrow shall be the property of [appellant] because the agreement plainly states that only the proceeds remaining after payment of the obligation are her sole and separate property.

3. The trial court erred when it failed to award [a]ppellee his attorney's fees and costs because he substantially prevailed and the [a]ppellant was in violation of the parties' agreement.

Appellee also requests attorney's fees and costs on appeal. For the following reasons, this Court reverses in part and affirms in part the rulings of the trial court.

I. BACKGROUND

"When reviewing a trial court's decision on appeal, we view the evidence in the light most favorable to the prevailing party, granting it the benefit of any reasonable inferences."Congdon v. Congdon, 40 Va. App. 255, 258, 578 S.E.2d 833, 835 (2003). "That principle requires us to 'discard the evidence' of [appellant] which conflicts, either directly or inferentially, with the evidence presented by [appellee] at trial." Id. (quoting Wactor v. Commonwealth, 38 Va. App. 375, 380, 564 S.E.2d 160, 162 (2002)). So viewed, the evidence is as follows.

Appellant and appellee were married on June 3, 1953. On September 1, 2006, the parties were divorced pursuant to final decree of divorce entered by the trial court. The final divorce decree stated "that the parties have entered into an oral separation agreement by recorded testimony dated May 30, 2006 ["agreement"], pursuant to § 20-155 . . . ."

At the May 30, 2006 hearing, the parties agreed that "all the property referenced and referred to as Merritt-Hutchinson Resort in Lynch Station, Virginia, Campbell County, . . . shall be transferred to and become the separate property of [appellant] as of today." Moreover, the parties indicated that "[appellant] will pay to [appellee] $1.4 million without interest. The evidence of that obligation will be this agreement and a final decree of divorce, that obligation will be in the final decree of divorce, without interest, to be paid to him if, as, and when all the [MH properties] sell." Moreover, in the final divorce decree, both parties agreed to the following terms:

[Appellant] shall pay to the [appellee] ONE MILLION FOUR HUNDRED THOUSAND and 00/100 dollars ($1,400,000.00), if, as, and when all of the real estate that makes up the aforementioned [MH properties] is sold. In the event that the [appellee] is not living when all of the property has been sold, then the ONE MILLION FOUR HUNDRED THOUSAND and 00/100 dollars (1,400,000.00) shall be paid to the parties' children per stirpes. No interest whatsoever shall accrue on the ONE MILLION FOUR HUNDRED THOUSAND and 00/100 dollars ($1,400,000.00). The ONE MILLION FOUR HUNDRED THOUSAND and 00/100 dollars (1,400,000.00) will be paid at the closing of the properties and the remaining net proceeds from the sale shall be the [appellant's] sole and separate property.

On June 7, 2012, appellee submitted a petition for civil contempt to the trial court alleging that "on October 22, 2011 [appellant] sold without any notice to [appellee] all of said property with the exception of a 43.904 acre tract of unimproved real estate . . . . The unsold real estate is the only real estate left in the [MH properties] and is assessed by the County at $70,200.00." Specifically, appellee indicated that appellant "did not pay any of the net proceeds of the sale to [appellee] or notify him of the sale . . . ." On June 15, 2012, the trial court entered a show cause order as to "why she should not be punished for contempt."

On April 30, 2013, appellant filed a motion to dismiss show cause because appellee was not due any money pursuant to agreement because all of the MH properties were not sold. Additionally, appellant requested that she be reimbursed all attorney's fees and costs she incurred while defending the show cause.

On June 3, 2013, the trial court heard evidence regarding appellee's show cause motion and also took appellant's motion to dismiss under advisement. At trial, both parties stipulated that the final divorce decree was not ambiguous and no parol evidence would be admitted. Furthermore, appellee indicated "I want to say that I don't believe that she's in contempt of court unless and until Your Honor rules that she has the duty to give him the 1.4 million, or to escrow the 1.4 million . . . ." Accordingly, the trial court informed the parties that "I'm going to rule that this is going to be a proceeding to interpret the divorce decree today." After hearing arguments from both parties, the trial court granted both parties additional time to file briefs.

On July 23, 2013, the trial court issued its opinion letter. Specifically, the trial court found "the obligation of [appellant] pursuant to the property settlement agreement is to pay [appellee] ONE MILLION FOUR HUNDRED THOUSAND DOLLARS ($1,400,000) from the sale of the [MH properties] when all the properties have sold. However, $1,400,000 of the proceeds from the properties already sold shall be escrowed." Additionally, the trial courtdirected that "[a]ny interest that accrues from the escrowed money shall be paid to [appellant] at the time the $1,400,000 is actually distributed to [appellee]." The trial court ruled that each party was responsible for his/her own attorney's fees and costs.

Subsequently, both parties filed motions to reconsider. On October 22, 2013, the trial court heard arguments on the parties' motions. In denying each party's motion, the trial court held "the word 'all' in the first sentence convinces me that the $1,400,000.00 cannot be distributed to [appellee] until all of the property has been sold." Furthermore, the trial court indicated

Next, the third sentence provides that the $1,400,000.00 "will be paid at the closing of the properties and the remaining net proceeds from the sale shall be [appellant's] sole and separate property." This statement clearly anticipates that the proceeds from each sale will be paid to someone other than [appellant]. If it is not paid to [appellant], then the money must be paid in escrow.

On February 4, 2014, the parties presented proposed orders to the trial court. On the same day, the trial court entered an order memorializing the rulings contained in the July 23, 2013 and October 23, 2013 opinion letters. Additionally, the trial court dismissed the show cause against appellant. Specifically, the trial court held that "no funds are due to [appellee] from the sale of any of the [MH properties], pursuant to the parties' Final Decree of Divorce and Agreement, until all the [MH properties] have been sold." Additionally, the trial court ruled that appellant "shall escrow $1,400,000 of the proceeds from the [MH properties] that have already been sold." This appeal followed.

II. ANALYSIS

A. Escrow Award

On appeal, appellant contends the trial court erred in requiring that appellant escrow the amount of $1,400,000. Appellant argues that the trial court's decision to escrow the amount was an impermissible modification of the parties' agreement in that Code § 20-109(C) prohibits the trial court from amending the final divorce decree. Additionally, appellant asserts that the escrow requirement is in contravention of Rule 1:1 of the...