King v. King

• Decision Date: 01 April 2003
• Docket Number: Record No. 2071-02-4.
• Citation: 40 Va. App. 200,578 S.E.2d 806
• Parties: Dennis G. KING v. Marian R. KING.
• Court: Virginia Court of Appeals

578 S.E.2d 806

40 Va. App. 200

Dennis G. KING v. Marian R. KING.

Record No. 2071-02-4.

Court of Appeals of Virginia, Alexandria.

April 1, 2003.

Christine Mougin-Boal (Paice & Mougin-Boal, P.C., on briefs), Leesburg, for appellant.

Peter W. Buchbauer (James J. McGuire; Buchbauer & McGuire, P.C., on brief), Winchester, for appellee.

Present: FITZPATRICK, C.J., and ELDER and HUMPHREYS, JJ.

FITZPATRICK, Chief Judge.

In this domestic appeal, husband contends the trial court erred in awarding wife (1) one half of the parties' 1999 federal and state tax refunds; (2) a reimbursement of $921.66 for personal property; and (3) a portion of her attorney's fees. For the reasons that follow, we affirm the trial court's personal property award; we reverse the trial court's award of the 1999 tax refunds and attorney's fees, and remand for an award consistent with this opinion.

"On appeal, we construe the evidence in the light most favorable to wife, the prevailing party below, granting to her evidence all reasonable inferences fairly deducible therefrom." Donnell v. Donnell, 20 Va.App. 37, 39, 455 S.E.2d 256, 257 (1995) (citing McGuire v. McGuire, 10 Va.App. 248, 250, 391 S.E.2d 344, 346 (1990)).¹ The essential facts are undisputed. The parties were married on September 19, 1998, and they have one child. Prior to the marriage, on January 10, 1998, the parties executed a comprehensive Pre-Marital Agreement (agreement), which expressly outlined their intention to maintain their separate property as separate after the marriage.²

Husband's separate estate included any and all income and earnings³ acquired during the marriage, as well as a house in Kure Beach, North Carolina⁴ (beach property). Additionally, the parties expressly agreed that any appreciation in the beach property or any additional property acquired from the proceeds, equity or income from the beach property would remain husband's separate property. The parties further agreed that any liabilities arising from the beach property would be husband's separate responsibility and would be paid with separate funds. The beach property sustained substantial damage in 1999 during Hurricane Floyd, resulting in a $127,317 diminution in value and a $25,000 loss of rental income. The parties separated on March 7, 2000. Despite their separation, the parties filed joint tax returns with the federal and state taxing authorities for tax year 1999.⁵ On the joint returns, the parties claimed the loss to the beach property. By claiming this loss, the parties generated a federal tax refund of $25,447 and a state refund of $8,526. They agreed to claim the loss on their joint tax returns after they calculated their taxes without including the loss and determined they would have had a tax liability of at least $9,779 if they did not claim the loss.⁶ Both the federal and state refund checks were issued to the parties jointly. Because they could not agree on how the refunds should be allocated, the parties had not negotiated the refund checks when wife filed the instant divorce suit.

Wife filed her bill of complaint for divorce on September 2, 2001 and requested that the trial court determine, inter alia, a proper division of: the 1999 federal and state tax refunds, the cost of a mower deck for a tractor purchased during the marriage, and some shelving and storage containers. At their ore tenus hearing, both parties asked the trial court to make an award of the disputed property pursuant to the terms of the agreement. At the hearing, husband offered two joint tax returns into evidence, one calculating the liability without claiming the loss to the beach property and the one the parties filed, which generated the disputed refunds. Additionally, husband offered into evidence "dummy" tax returns using the "Married, filing separate" tax status that showed that husband would have received a federal refund of $14,987 and a state refund of $6,006 for tax year 1999 had he filed separately. Husband also contested the value of the personal property.

In a letter opinion, the trial court found that even though the losses that gave rise to the refund were generated by husband's separate property, the tax refunds were jointly-titled marital property that were equally owned by the parties, pursuant to the terms of the agreement. Although the trial court acknowledged that this award was not "fair" and possibly not compelled by the express terms of the agreement, it "fe[lt] compelled to decide this issue as argued by the parties." The trial court further ordered husband to pay wife a total of $921.66 for the mower deck and the storage items. Finally, the trial court awarded wife a portion of her attorney's fees as the prevailing party, as provided for in the agreement. Husband appealed.

I. 1999 Income Tax Refunds

Husband first contends that the trial court erred in finding that the federal and state tax refunds were equally owned marital property. Husband argues that because the refunds are directly attributable to the losses sustained by his separate property, he was entitled to the entire refund in accordance with paragraph 8 of the agreement. Wife counters that the checks themselves, regardless of the reason for the refund, were issued in joint names. Thus, the funds became joint property acquired during the marriage and entitled her to an equal division of the refunds in accordance with paragraph 14(a). Wife's argument, however, fails to give effect to the express terms of the parties' agreement, specifically paragraphs 10 and 13.

"Antenuptial agreements, like marital property settlements, are contracts subject to the rules of construction applicable to contracts generally, including the application of the plain meaning of unambiguous contractual terms." Pysell v. Keck, 263 Va. 457, 460, 559 S.E.2d 677, 678 (2002). "When a written marital agreement is presented, a court applies the same rules of formation, validity and interpretation used in contract law, except where specified by the Code." Shenk v. Shenk, 39 Va.App. 161, 170, 571 S.E.2d 896, 901 (2002) (internal citations and quotations omitted).

A well-settled principle of contract law dictates that where an agreement is complete on its face, is plain and unambiguous in its terms, the court is not at liberty to search for its meaning beyond the instrument itself. A contract is not deemed ambiguous merely because the parties disagree as to the meaning of the language they used to express their agreement."

Ross v. Craw, 231 Va. 206, 212-13, 343 S.E.2d 312, 316 (1986) (internal citations and quotations omitted). Furthermore, "courts cannot read into contracts language which will add to or take away the meaning of words already contained therein." Pysell, 263 Va. at 460, 559 S.E.2d at 678. "In reviewing the agreement, we must gather the intent of the parties and the meaning of the language ... from an examination of the entire instrument, giving full effect to the words the parties actually used." Layne v. Henderson, 232 Va. 332, 337-38, 351 S.E.2d 18, 22 (1986) (emphasis added).

Under the express terms of the agreement, each party clearly retained as his or her separate property all the assets owned at the time they executed the agreement. The designation of separate property extended to all increases in value and changes in form. Specifically, Paragraph 8 states:

DENNIS G. KING and MARIAN R. KERN agree that any interest, present or future, legal or equitable, vested or contingent, in all property, real, personal or other, wherever situated, including without limitation, the property set out in the attached schedules belonging to DENNIS G. KING at the commencement of the marriage and any property acquired by DENNIS G. KING during the marriage by gift, bequest, devise, survivorship, descent, purchase, as the beneficiary of a trust or by any other means, including property that is acquired during the marriage as Separate Property in Paragraphs 10 and 14, shall be and remain his Separate Property. The parties further acknowledge and agree that all interest, dividends, rents, issues, profits, increases, appreciation, and income from the Separate Property of DENNIS G. KING and any other assets purchased or otherwise acquired with the foregoing assets or proceeds shall be and remain DENNIS G. KING's separate property. The parties agree that a change in the form of DENNIS G. KING's assets as a result of the sale, exchange, investment, reinvestment, hypothecation, or other disposition of such assets, or a change of form of doing business shall not constitute any change of property characterization, and such assets shall remain DENNIS G. KING's Separate Property regardless of any change of form. MARIAN R. KERN shall have no right, title, interest, lien, or claim under the laws of any state or foreign country in or to any of DENNIS G. KING's Separate Property assets.

* * * * * *

The co-mingling of any property with the Separate Property of MARIAN R. KERN shall not cause the loss of the identity of the property, and it shall remain DENNIS G. KING's Separate Property.

The parties understand and agree that it is impossible to foresee all appreciation, changes in value or income. The lack of foreseeability shall not be the basis to avoid provisions of this Agreement.

Pre-Marital Agreement ¶8.⁷ The agreement further stipulates that each party will retain his or her income as separate property during the marriage.

The parties agree that any earnings or income of either party of whatsoever nature, kind or source before and after the marriage, including but not limited to distributions from trusts, salary, increases in value, appreciation, capital gains, interest, dividends, bonuses, stock options, deferred compensation, and pension, profit-sharing and retirement benefits shall be the Separate Property of the party earning or acquiring such earnings or income as though the contemplated marriage had never occurred. There shall be no allocation made

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