Stacy v. Stacy

• Decision Date: 09 December 2008
• Docket Number: Record No. 0863-07-3.
• Citation: 53 Va. App. 38,669 S.E.2d 348
• Parties: Deborah Ann STACY v. William Leslie STACY.
• Court: Virginia Court of Appeals

669 S.E.2d 348

53 Va. App. 38

Deborah Ann STACY v. William Leslie STACY.

Record No. 0863-07-3.

Court of Appeals of Virginia, Richmond.

December 9, 2008.

Robert J. Breimann (Street Law Firm, on briefs), Grundy, for appellant.

Gerald L. Gray (Gerald Gray Law Firm, on brief), Clintwood, for appellee.

Present: FELTON, C.J., ELDER, FRANK, HUMPHREYS, CLEMENTS, KELSEY, McCLANAHAN, HALEY, PETTY, BEALES and POWELL, JJ.

ELIZABETH A. McCLANAHAN, Judge.

UPON A REHEARING EN BANC

Deborah Ann Stacy (wife) appeals the trial court's order terminating, pursuant to Code § 20-109(A), the obligation of William Leslie Stacy (husband) to make payments on a mortgage on the former marital home under the terms of the parties' property settlement agreement (PSA). Wife contends the court erred in finding the payments constituted spousal support under the PSA and, therefore, had no authority under Code § 20-109(A) to terminate husband's mortgage payment obligation. Wife also claims she is entitled under the PSA to an award of attorney's fees and costs for this appeal and the proceedings below.

A panel majority of this Court affirmed the decision of the trial court. We granted a petition for rehearing en banc and stayed the mandate of the panel decision. Upon rehearing en banc, we reverse the trial court and remand for the trial court's consideration of wife's request for attorney's fees and costs under the PSA.

I. BACKGROUND

Husband and wife divorced in 2001 after entering into a PSA, wherein the parties expressly "waive[d]" spousal support. The parties also agreed that wife would receive the marital home and husband would be solely responsible for payment of the "remaining mortgage indebtedness" on the home. The trial court approved the parties' PSA and incorporated it by reference into the final decree of divorce. Upon entry of the final decree, husband, pursuant to the PSA, transferred his interest in the marital home to wife and "refinanced the [b]ank mortgage obligation into a [p]romissory [n]ote solely in his name."¹

In 2006, husband, citing Code § 20-109, filed a petition seeking to terminate his mortgage payment obligation under the PSA based on the claim wife had been cohabitating with an individual in a relationship analogous to marriage for several years. Under Code § 20-109(A), spousal support is subject to termination under certain circumstances, including the payee's cohabitation analogous to marriage for a year or more.² In response, wife stipulated to her involvement in the alleged relationship for more than a year. She argued, however, that under the express terms of the PSA husband's mortgage payment obligation was not spousal support; rather, it was part of the parties' equitable distribution, thus negating Code § 20-109(A)'s applicability and the court's authority to terminate the obligation.

Neither party argued that the PSA was ambiguous, and the trial court found the PSA was unambiguous.³ The court then "classifie[d]" husband's third party mortgage payments as spousal support, and thereby terminated the obligation to the bank (a non-party) pursuant to Code § 20-109(A) on cohabitation grounds. In doing so, the court relied on language in paragraph 9 of the PSA in which the parties stipulated that, while husband's mortgage payments "were not direct support payments being made to wife," they were "in the nature of support," and therefore "non-dischargeable" by husband in any bankruptcy proceeding.⁴

II. ANALYSIS

A. Termination of Husband's Mortgage Payment Obligation

Wife argues the trial court erred in "re-writ[ing]" the parties' PSA when it characterized husband's third party mortgage payments as "spousal support," contrary to the express terms of the PSA, and in terminating the obligation under Code § 20-109(A) based on that erroneous interpretation. We agree.

The trial court's interpretation of the PSA is an issue of law that we review de novo. Palmer & Palmer Co., LLC v. Waterfront Marine Constr., Inc., 276 Va. 285, 289, 662 S.E.2d 77, 80 (2008) (citation omitted); Henderlite v. Henderlite, 3 Va.App. 539, 541, 351 S.E.2d 913, 913-14 (1987); see Eure v. Norfolk Shipbuilding & Drydock Corp., 263 Va. 624, 631, 561 S.E.2d 663, 667 (2002) (an appellate court has "`an equal opportunity to consider the words of the contract within the four corners of the instrument itself'") (quoting Wilson v. Holyfield, 227 Va. 184, 188, 313 S.E.2d 396, 398 (1984)).

Code § 20-109(A) is subject to the statutory proviso, under subsection C, that no order "shall be entered except in accordance with [the PSA]." Code § 20-109(C). "[T]his requires the trial judge to examine the parties' agreement to ascertain whether the relief sought by the moving party is encompassed within the terms of the agreement." Rutledge v. Rutledge, 45 Va.App. 56, 63, 608 S.E.2d 504, 508 (2005) (citing White v. White, 257 Va. 139, 144-45, 509 S.E.2d 323, 326 (1999)). Accordingly, a PSA is governed by the same rules of construction applied to other contracts. Plunkett v. Plunkett, 271 Va. 162, 166, 624 S.E.2d 39, 41 (2006); White, 257 Va. at 144, 509 S.E.2d at 325; Irwin v. Irwin, 47 Va.App. 287, 292-93, 623 S.E.2d 438, 441 (2005). When applying these rules, the court's function is to

"construe the contract made by the parties, not to make a contract for them. The question for the court is what did the parties agree to as evidenced by their contract. The guiding light in the construction of a contract is the intention of the parties as expressed by them in the words they have used, and courts are bound to say that the parties intended what the written instrument plainly declares."

Irwin, 47 Va.App. at 293, 623 S.E.2d at 441 (quoting Wilson, 227 Va. at 187, 313 S.E.2d at 398). That is, "[w]hen a contract is clear and unambiguous, it is the court's duty to interpret the contract, as written." Palmer & Palmer Co., 276 Va. at 289, 662 S.E.2d at 80 (citation omitted); see PMA Capital Ins. Co. v. U.S. Airways, Inc., 271 Va. 352, 360-61, 626 S.E.2d 369, 374 (2006) (reversing trial court on contract interpretation after concluding the court "essentially re-wrote the [contract] and made a new contract" in derogation of its "plain language").

Applying these principles, our Supreme Court and this Court have rejected arguments that mortgage payments constituted spousal support under the respective settlement agreements at issue. In White, 257 Va. 139, 509 S.E.2d 323, an agreement of the husband to pay the mortgage on the marital home conveyed to the wife was ratified by the trial court and incorporated into the parties' final divorce decree. The decree stated that "`[Mr. White] entered into [the] agreement ... with respect to maintenance and support.'" Id. at 142, 509 S.E.2d at 324. Three years after the divorce, Ms. White sold the home, at which time the balance due on the mortgage was paid from the proceeds of the sale. Though Mr. White made the payments to the mortgagee bank as called for under the agreement until the time of sale of the home, Ms. White filed a complaint seeking an order requiring Mr. White to show cause why he should not be held in contempt for failure to then make payments to her in the amount of the mortgage payments. Id. The trial court ruled in Ms. White's favor on her petition, holding that the agreement to pay the mortgage constituted a lump sum award to her payable in installments as "maintenance and support" under the terms of the divorce decree. Id. at 143, 509 S.E.2d at 325.

The Supreme Court reversed the trial court's decision, ruling as follows:

The agreement clearly obligates Mr. White to pay the $30,000 mortgage on the house ... to [the] Bank in 120 monthly installments. It contains no provision for Mr. White to make any payments to Mrs. White. Moreover, and of particular significance in this case, nothing within the express terms of the agreement evinces any intent of the parties that Mr. White's obligation would survive the satisfaction of the mortgage debt, regardless of the manner in which that debt was extinguished.

Accordingly, we hold that the agreement obligated Mr. White to make payments on the mortgage on the marital home so long as that debt existed, but did not obligate him to pay a fixed sum to the wife in installments with interest, as she alleged in her bill of complaint and as the trial court subsequently found in the show cause hearing.

Id. at 145, 509 S.E.2d at 326. The Court concluded that "[t]he language of the final decree of divorce referencing the agreement as `an agreement ... with respect to maintenance and support' could not, and did not, alter the intent of the parties as expressed in the agreement." Id. (emphasis added).

Similarly, in Owney v. Owney, 8 Va.App. 255, 260, 379 S.E.2d 745, 748 (1989), this Court held that the trial court erred in "characteriz[ing]" as "spousal support" the husband's obligation, under the parties' property settlement agreement, to make mortgage payments on the marital home. Like the instant case, the parties' agreement in Owney required that husband convey his interest in the marital residence to wife and that he assume the mortgage payments on the first deed of trust held by the mortgagee bank. The agreement also "specifically release[d] the husband and wife `of any claim either might have for alimony or support.'" Id. After husband defaulted on the mortgage, wife paid off the obligation and petitioned the trial court to require husband to make the payments to her as spousal support under the parties' PSA. The trial court granted wife's petition as requested. Id. at 257-58, 379 S.E.2d at 747. On appeal, we reversed the trial court and remanded the case for further consideration of husband's continuing liability on the mortgage obligation, if any. In doing so, however, we concluded that the trial court's characterization of husband's third party debt obligation as spousal support, and its award of those debt payments to wife as support, "controvene[d] the plain...