Velez v. Lizardi
| Decision Date | 03 March 2015 |
| Docket Number | Record No. 0899-14-4 |
| Court | Virginia Court of Appeals |
| Parties | SHEILA M. VELEZ v. CARLOS M. LIZARDI |
UNPUBLISHED
Present: Judges Humphreys, Beales and McCullough
Argued at Alexandria, Virginia
FROM THE CIRCUIT COURT OF FAIRFAX COUNTY
1
Katherine Martell (Meredith M. Ralls; FirstPoint Law Group, P.C., on brief), for appellant.
Christopher Wm. Shinstock (Kyle F. Bartol; Cottrell Fletcher Schinstock Bartol & Cottrell, P.C., on brief), for appellee.
On April 16, 2014, the circuit court entered a final decree of divorce between Sheila M. Velez (wife) and Carlos M. Lizardi (husband), which incorporated the parties' December 2010 property settlement agreement (PSA). On appeal, wife argues that that the PSA is invalid and unenforceable on the ground that husband committed constructive fraud and on the ground that the PSA's terms are unconscionable. Wife also challenges the circuit court's decision to award husband $23,580.90 of his attorneys' fees and costs under the PSA's enforcement provision. For the following reasons, we affirm the circuit court. In addition, given the terms of the PSA, we mustremand the matter for a determination of husband's reasonable attorneys' fees and costs that he incurred in his successful litigation of this appeal.
Under settled principles of appellate review, we view the evidence in the light most favorable to husband, as the party prevailing below, Chretien v. Chretien, 53 Va. App. 200, 202, 670 S.E.2d 45, 46 (2008), and we grant to husband "all reasonable inferences fairly deducible therefrom." Anderson v. Anderson, 29 Va. App. 673, 678, 514 S.E.2d 369, 372 (1999). In this case, the parties were married in 1986, and they separated in July 2005. After initially residing in the basement of the parties' marital home immediately following the parties' separation, husband began living in another residence later in 2005. However, husband continued making payments toward the mortgage of the marital home. The record establishes that the parties had an understanding following the separation that husband would pay wife $5,000 per month. It is undisputed that $1,000 of this amount was intended to be child support for the parties' youngest son and $1,500 was intended to be spousal support to wife. The record is in conflict whether husband paid wife the remaining $2,500 for the sole purpose of making the monthly mortgage payment on the marital home (which wife claimed at trial) - or whether husband instead expected wife to pay the mortgage and then wife was free to use the remainder of that $2,500 as she pleased (which husband claimed at trial).
According to the record on appeal, the parties each retained counsel after they separated and attempted to negotiate a property settlement agreement. The parties agreed at trial that they did not come to an agreement in 2007 and 2008 because wife did not agree with the amount of spousal support and the amount of husband's military retirement benefits2 that husband proposed that he payher. The record also reflects that it was very important to wife that she remain in the marital home. Although the negotiations in 2007 and 2008 were heated and the parties never contemplated reconciling, the parties nevertheless interacted well enough together that wife was given access to husband's separate checkbook to ensure that his bills were paid on time when work required him to be overseas. Husband continued to pay wife $5,000 per month for several years after the parties separated - and, during that time, no divorce proceedings were initiated and no pendente lite order was entered.
On December 24, 2010, husband attended a Christmas Eve dinner at the marital residence at wife's invitation and with many family members in attendance. After dinner had concluded, husband spoke to wife in private and asked her to sign a document. Wife quickly scanned - but did not read - the document. She testified at trial that husband had told her that the document related to his attempts to purchase a house in Maryland and that the bankers required that her signature be on the document. The circuit court accepted wife's testimony on this point, although it rejected her testimony that the document was only two pages rather than seven pages long. The record on appeal establishes that this seven-page document is entitled "Property Settlement and Separation Agreement" and that wife signed the document on December 24, 2010. This document is the PSA that husband drafted on his own and that husband later presented to the circuit court for incorporation into the parties' divorce decree.
Under the terms of the PSA that wife signed on December 24, 2010, wife receives sole title to the parties' marital residence (and the residence's furnishings) as well as the parties' Mercedes Benz automobile and holds husband harmless for the debts on those assets. Wife also receives $1,000 in monthly child support for the parties' youngest son and an additional $1,500 in monthlyspousal support. Furthermore, the PSA essentially provides that the $1,500 monthly spousal support award terminates after five years - when wife then begins receiving $1,500 per month from husband's military retirement benefits. In other words, the PSA states that wife cannot receive $1,500 in monthly spousal support and $1,500 in monthly military retirement benefits concurrently. Moreover, the PSA provides that the parties agree that the PSA is a contract between the parties, that they agree to incorporate the PSA into a future divorce decree, and that neither party will "oppose such incorporation" into a divorce decree.
On April 19, 2012, husband filed a divorce complaint in circuit court. During the course of the divorce litigation, husband moved to incorporate the PSA into the circuit court's final divorce decree. Wife opposed incorporating the PSA into a divorce decree. She argued that the PSA was invalid and unenforceable on the ground that husband committed constructive fraud and on the ground that the PSA's terms were unconscionable. The circuit court heard testimony on November 8, 2012 and December 20, 2012 - when wife and husband both testified. While the circuit court found that husband misrepresented the purpose of the document that he presented to wife at the Christmas Eve dinner on December 24, 2010 and that wife relied on this misrepresentation, the circuit court ultimately concluded that constructive fraud had not been proven by clear and convincing evidence because the evidence supported a finding that the parties were operating "at arm's length" at that time. In addition, the circuit court found that wife failed to meet the burden of showing that the PSA was unconscionable. The circuit court noted that the PSA's terms were favorable to husband and unfavorable to wife - but found that there was not a "gross disparity" in those terms, as was required to prove that the PSA was unconscionable. Therefore, on January 22, 2013, the circuit court entered written orders denying wife's motion challenging the PSA's validity and granting husband's motion to incorporate the PSA into the final divorce decree.
Subsequently, on February 26, 2014, the circuit court heard evidence and argument addressing whether husband was entitled to an award of attorneys' fees and costs under the PSA's enforcement provision. The April 16, 2014 final divorce decree reflects that the circuit court awarded husband $23,580.90 in attorneys' fees and costs under this provision.
In her first and second assignments of error, wife argues that the PSA signed by the parties on December 24, 2010 is invalid on the grounds (1) that it was procured through constructive fraud3 by husband and (2) that the terms of the PSA are unconscionable. "'Marital property settlements entered into by competent parties upon valid consideration for lawful purposes are favored in the law and such will be enforced unless their illegality is clear and certain.'" Webb v. Webb, 16 Va. App. 486, 491, 431 S.E.2d 55, 59 (1993) (quoting Cooley v. Cooley, 220 Va. 749, 752, 263 S.E.2d 49, 52 (1980)). Since wife challenged the validity of the parties' PSA in the circuit court, she assumed the burden "to prove by clear and convincing evidence the grounds alleged to void or rescind the agreement." Drewry v. Drewry, 8 Va. App. 460, 463, 383 S.E.2d 12, 12 (1989) (citing Winn v. Aleda Construction Co., 227 Va. 304, 308, 315 S.E.2d 193, 195 (1984); Gill v. Gill, 219 Va. 1101, 1106, 254 S.E.2d 122, 125 (1979)). "Clear and convincing" evidence is "that measure or degree of proof which will produce in the mind of the trier of facts a firm belief or conviction as tothe allegations sought to be established." Seemann v. Seemann, 233 Va. 290, 293 n.1, 355 S.E.2d 884, 886 n.1 (1987).
This Court has explained:
Fraud is generally determined by reviewing the conduct of the parties in relation to their legal and equitable duties to one another; unconscionability is more concerned with the intrinsic fairness of the terms of the agreement in relation to all attendant circumstances, including the relationship and duties between the parties. A party may be free of fraud but guilty of overreaching or oppressive conduct in securing an agreement which is so patently unfair that courts of equity may refuse to enforce it.
Derby v. Derby, 8 Va. App. 19, 28, 378 S.E.2d 74, 78 (1989).
Wife alleges in her first assignment of error that the circuit court erred when it found that "a special or confidential relationship was lacking" between wife and husband on December 24, 2010, when wife signed the PSA.4 Constructive fraud is a "'breach of legal or equitable duty which, irrespective of moral guilt, is declared by law to be fraudulent because of its tendency to deceive others or violate confidence.'" Wells v. Weston, 229 Va. 72, 77, 326 S.E.2d 672, 675-76 (1985) (quoting Nuckols v. Nuckols, 228...
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