COURT OF APPEALS OF VIRGINIA

Present: Judges Kels ey, Haley and Beales Argued at Chesapeake, Virginia

CATHERINE C. BURKE OPINION BY v. Record No. 1799-07-1 J UDGE RANDOLPH A. BEALES JUNE 24, 2008 CHARLES R. BURKE

FROM THE CIRCUIT COURT OF THE CITY OF PORTSMOUTH James A. Cales, Jr., Judge Diane Pomeroy Griffin for appellant. Monica Taylor Monday (Gentry Locke Rakes & Moore, on brief), for appellee.

Catherine R. Burke (wife) appeals from a trial court order that reformed a property settlement agreement (PSA) which had previously been incorporated into a final decree that granted her a divorce from Charles R. Burke ( husband). She argues the trial court’s remedy for husband’s fraud failed to adequately compensate her, and she argues the trial court erred in denying her request for attorney’s fees. 1 Husband counters that, pursuant to a provision in the PSA, neither party can appeal the tr ial court’s decision; therefore, he asks this Court to dismiss wife’s appeal. Alternatively, he claims the trial court erred in finding he committed fraud. Finding the PSA precludes appellate re view, we dismiss wife’s appeal.

BACKGROUND Husband and wife separated in 2003 and, in anticipation of a divorce, began to formulate an agreement regarding their prop erty. Wife consulted an atto rney, whom she had first hired

1 Wife does not argue that the trial court erred by refusing to rescind the entire PSA.- 2 - approximately five years earlier when the par ties had contemplated a separation. Husband, who was a former JAG officer and is currently a licen sed attorney in Virginia , did not consult with another lawyer. Husband served in the military for over twen ty years, and he and wi fe received benefits from the military, including health insurance. Given wife’s medical problems and the thoroughness of the health insurance plan, she want ed to continue her coverage under this plan

after the divorce. Husband told wife duri ng their negotiations on th e PSA that she could continue to receive health insurance through the military after the divorce, and he sent her a copy of 10 U.S.C. § 1078a 2 to review. Although husband served in the military for tw enty-two years, only seventeen of those years were after the parties married. Therefor e, under 10 U.S.C. § 1072(2)(F), wife was not

entitled to health insurance th rough the military once the divorce decree was entered. Wife’s attorney tried to explain to her that she woul d be ineligible for military insurance after the divorce, but wife chose to believe husband’s repr esentations that she woul d continue to receive

coverage. Although husband drafted several versions of a PSA, wife’s attorney drafted the final version that both parties signed. Section 6 of the PSA said: Wife shall continue to benefit from military health care programs as provided by law and until Wife reaches age 65 and eligible for TriCare For Life Husband shall cont inue to insure Wife with the [MOAA] supplement to TriCare standard coverage.

2 This statute, “Continued health benefits c overage,” appears to de scribe the eligibility requirements for such benefits, but does not explic itly include the requirement that twenty years of the military service must have occurred during the marriage in order for an ex-spouse to continue to receive coverage. That provisi on is found in 10 U.S.C. § 1072(2)(F), which is referenced in 10 U.S.C. § 1078a(b)(3).- 3 - This PSA also included a final provision, not f ound in husband’s drafts, stating that each party agrees that any matter arising out of this agreement shall be de cided by any judge of the Circuit Court of the City of Portsm outh, Virginia in a summary non- jury proceeding and that the decision of that judge shall be fi nal, conclusive and non-appealable and binding upon the parties. After they both signed the PSA, wife filed fo r divorce, and the trial court entered a final decree on September 13, 2004 that approved, ratified, affirmed, and incorporated the PSA. Less than a month later, husband sent a letter to four military organizations stating that the parties were divorced and noting that the organizations needed to “delist” wife from her military benefits, including health insurance. He noted in the letter that he was of the opinion that wife was entitled to these benefits while they negot iated the PSA, but further research had “proven [him] to be in error.” Upon receipt of this letter, wife filed a bill of complaint, stating the PSA was based on “a mutual mistake of fact that renders performance of the agreement impossible.” She asked for an “adequate remedy . . . including but not limited to an order for payment” of her medical expenses

“or in the alternative” that the PSA be “set aside.” At trial, wife presented the court with a “very specific proposal” for damages, asking that husba nd be ordered to pay to her the value of the military insurance over her lifetime, approximately $150,000, plus her costs expended on medical care since the divorce and attorney’s fees. After taking evidence and heari ng argument, the trial court en tered two orders. The first order, dated February 22, 2007, st ated “there is clear and conv incing evidence to find” husband “deliberately misled” wife and concealed “material facts” about “her future health care coverage, on which she relied to her detriment” when signi ng the PSA. The court vacated the health care benefits provision and reformed it, requiring th at husband pay wife’s insurance premium as well as her deductibles and any uncovered medical costs, so that wife received “adequate- 4 - consideration for the loss of health care coverage.” The second order reaffirmed the earlier findings and ordered husband to pay wife $3,674.15 for “her costs incurred in connection with

this matter.” The court order stated that atto rney’s fees were not aw arded to either party.

ANALYSIS Husband argues that the parties’ PSA specifi cally precludes appellate review of the trial court’s rulings on any matter related to the PSA a nd, therefore, this Court should dismiss wife’s appeal. Wife argues that the no-appeal provision is void as against public policy. 3 The Virginia appellate courts have not previous ly addressed the viability of this specific type of provision in a

PSA. PSAs are analyzed as contractual ag reements between divorcing parties. Douglas v.

Hammett , 28 Va. App. 517, 523, 507 S.E.2d 98, 101 (1998). Th erefore, when considering wife’s argument, we are mindful that, “although contract s that violate public po licy are void, courts are averse to holding contracts unenf orceable on the ground of public po licy unless their illegality is

clear and certain.” Estes Express Lines, Inc. v. Chopper Express, Inc. , 273 Va. 358, 364, 641 S.E.2d 476, 478 (2007). We long have recognized that a party may enter into an agreement in which he waives a significant right. Generally, a party may waive by co ntract any right conferred by law or contract. If the party be ing charged with relinquishment of a right had knowledge of the right and intended to waive it, the waiver will be enforced.

3 Wife also argues that husband did not pres erve his argument under Rule 5A:18. In this case, however, husband had no effective opportunity to make this argument previously because a trial court has no authority to pr event a party from appealing its decision. Thus, the trial court could not have ruled and preven ted this appeal even if husband had raised the issue. While husband could have filed a separa te motion with this Court to dismiss this appeal, nothing requires that he do so. We find Rule 5A:18 does not apply here to exclude husband’s argument. We note wife does not argue th at the no-appeal provision in the contract was tainted by any fraud on the part of husband nor does sh e argue that the provision is unclear.- 5 - Gordonsville Energy, L.P. v. Va. Elec. & Power Co. , 257 Va. 344, 355-56, 512 S.E.2d 811, 818 (1999) (citations omitted). While our appellate courts have previously discussed the voiding of contract clauses on public policy grounds, no Virginia case law directly addresses the issue presented here – whether parties to a PSA can waive their right to appeal by including a specific provision that gives the trial court final review of any dispute. Howeve r, the rationales provided in the earlier cases on void contract clauses suggest various principles that this Court should consider when determining whether a clause limiting appellat e rights is void on public policy grounds. These cases do not create a standard rule for voiding a contract clause on publ ic policy grounds, but instead suggest a general a pproach to this issue.

In Estes Express , 273 Va. at 365, 641 S.E.2d at 479, the Supreme Court discussed contract clauses that exempt a party from all lia bility for future negligence. The Supreme Court found these clauses are void because they leave plaintiffs “with no possible recovery for the defendant[s’] alleged negligence and those sa me defendants would have been, essentially, judgment-proof despite their negligence.” Id. at 366, 641 S.E.2d at 479; see Hiett v. Lake Barcroft Community Ass’n , 244 Va. 191, 196, 418 S.E.2d 894, 896 (1992). Therefore, a contract clause generally is void if it leaves on e party with no means to litigate or otherwise

receive redress for a breach of the contract. Here, however, the conteste d clause did not leave the parties without a means of r ecovery. In fact, wife litigated and essentially won her case in the Portsmouth Circuit Court, as contemplated by the PSA, so the principle expressed in Estes Express does not apply here.

In Kelley v. Kelley , 248 Va. 295, 298, 449 S.E.2d 55, 56 (1994), the Supreme Court found, based on public policy reasons, that a clause in a PSA essent ially eliminating the father’s responsibility to pay child support was void “becaus e it [was] violative of clearly established- 6 - law.” The Court explained that the provision did more than limit wife’s rights, it also “substantially abridged” the ch ildren’s rights to receive s upport from both parents and

“diminished” the trial court’ s “power to decree support.” Id. Thus, based on Kelley , a clause is

void if it restricts a child ’s right to support from the parents or limits the legisla tive authority of the trial courts to order such support. Here, however, those principles do not apply. The parties waived only their own individual right to appeal . The PSA did not address any child custody or child support issues, and the authority of the trial court was not limited in any manner. The Supreme Court has also found a contract provision void on public policy grounds if it expressly violates the Code. See Blake Constr. Co./Poole & Kent v. Upper Occoquan Sewage

Auth. , 266 Va. 564, 576-77, 587 S.E.2d 711, 718 (2003). Here, however, the Code does not limit the subject matter of PSAs. See Code §§ 20-147 through 20-155. Code § 20-150(8) allows divorcing parties to “contract with respect to” “[a]ny other matter, including their personal rights and obligations, not in violation of public polic y or a statute imposing criminal penalty.” A clause limiting appellate rights does not expressly violate this code section. In addition, no other statute in the Code explicitly prohibits contract cl auses that curtail appellate rights. Therefore,

the clause in the PSA here does not violate any Virginia law. In 1935, the Supreme Court addressed the right to “appeal to the court” in Campbell v.

Brotherhood of Locomoti ve Firemen & Enginemen , 165 Va. 8, 14, 181 S.E. 444, 446 (1935). There, Campbell, a member of the Brotherhood, applied for disability benefits from that association, which the Brothe rhood eventually denied. Id. at 10, 181 S.E. at 444. Pursuant to the association’s constitution, Campbell appeal ed this decision through the Brotherhood’s organization. Id. Campbell then sued in the circuit court, where his claim was dismissed

because the board of directors of the Brotherhoo d had “definitely rejected” his claim and because the constitution of the organization vested the board “with power to give final judgment.” Id. at- 7 - 11, 181 S.E. at 445. The Supreme Court concluded that the contract was vague, so Campbell had not waived his right to take hi s grievance with the Brotherhood to court. However, the Court noted in reaching its decision, “The weight of authority is to the e ffect that the right of ultimate appeal to the court is an ina lienable right, and since it is ina lienable it can not be bargained away.” Id. at 13, 181 S.E. at 446. The Court referen ced two principles in support of this

conclusion. It is against public policy to deny the right of appeal to courts where property is involved. Thos e who sit in judgment do not truly represent both parties and the c ontract if it be a contract is to settle a dispute which has not ye t arisen and whose character can not be known in advance. Id. at 14, 181 S.E. at 446. Clearly, the Supreme Court in Campbell was not using “appeal” as a reference to the appellate court, but instead to refere nce the right to take a contr oversy and “appeal” it to a court

– the trial court. Campbell involved a contract between Ca mpbell and the Brotherhood that divested members of all rights to present a case before a neutral tribunal, not the right to appellate review from a trial co urt’s ruling. Therefore, while Campbell limits the ability of parties to restrict review by a trial court, 4 it does not support wife’s proposition here that all clauses limiting appellate review are void as against public policy. Some federal appellate courts have consider ed this issue and found no-appeal clauses are binding on the parties. See e.g. , In re Lybarger , 793 F.2d 136, 139 (6th Cir. 1986) (“[W]e hold

4 How far the holding in Campbell goes is questionable, as the opinion itself states, “We confine this decision to the pa rticular facts before us.” Id. at 16, 181 S.E. at 447. Certainly, the Code currently allows arbitration clauses in cont racts as an alternative to review by the trial courts. See Code § 8.01-581.01. In short, since Campbell was decided in 1935, much has transpired, and been upheld by th e courts, regarding ar bitration and other a lternative means of dispute resolution. See e.g. , Allied-Bruce Terminix Cos. v. Dobson , 513 U.S. 265 (1995) (discussing the traditional hostility of the courts to arbitration agreements, passage of the Federal Arbitration Act, and the impact of that Act on state law).- 8 - that plaintiff waived her right to appeal the District Court’s determination regarding the amount of attorney’s fees in the Consent Decree.”); United States Consol. Seeded Raisin Co. v.

Chaddock & Co. , 173 F. 577, 579 (9th Cir. 1909) (“[I]t seems to be universally held that, where such an agreement is made upon a valid and legal cons ideration, either before or after trial, it will be enforced in an appellate court, and the appeal, if taken, will be dismissed . . . .”). Courts in

our sister states also have considered “nonappealable” clauses and found them binding. See e.g. , Elliott & Ten Eyck P’ship v. City of Long Beach , 67 Cal. Rptr. 2d 140, 145 (Cal. Ct. App. 1997) (“But the parties can agree to waive some normal trial procedures, such as . . . the right to appeal.”); C. G. Horman Co. v. Lloyd , 499 P.2d 124, 125 (Utah 1972) (considering “whether one by agreement cannot waive his right to appeal on the grounds of public po licy” and holding that “the parties effectively did waiv e their right to appeal and that such agreement should be binding on the parties”); Harmina v. Shay , 137 A. 558 (N.J. 1927) (“The gene ral rule, however, is that a party may, by express agreement or stipulation be fore trial, or judgment, waive his right to appeal, and such agreements or stipulations will be enforced . . . . Such agreements are upheld upon the ground of public policy in encouraging litigan ts to accept as final de cisions of courts of original jurisdiction. 3 Corp. Ju r. 661 § 533.”). Our Supreme Cour t seemed to agree with these courts when it opined in dicta th at a party to a settlement agreem ent can contract away the right to appellate review. Martin v. Basham , 216 Va. 914, 916, 223 S.E.2d 899, 901 (1976) (recognizing, as valid consideration for a settleme nt contract, “forbearance of the right to rely upon a favorable decision or forbearance of the ri ght to pursue and appeal from an adverse decision”).

While none of the cases supra involve exactly the type of s ituation presented by this case, the Ohio appellate court has considered a no-appeal clause in a PSA. In Brown v. Brown , 172 N.E. 416, 417 (Ohio Ct. App. 1930), the Ohio cour t held the parties in their PSA “expressly- 9 - agreed that each party should be bound” by the ruling of the common pleas court on issues of support modifications. 5 The court then considered whether such a provision was enforceable: “Though there are a few cases to the contrary, the rule prevailing in the great majority of the jurisdictions is that an agreement, based on a sufficient consideration, not to appeal or take a writ of error, or a release of errors, is valid and binding, and when properly pleaded will constitute a bar to proceedings taken in violation of the agreement.” 2 Ruling Case Law, “Appeal and Error,” § 39, page 59. * * * * * * * In an action to contest a will, th e parties entered into a written agreement by which they settled the case; the agreement provided that, “if any question should hereafter arise between the parties hereto as to the construction and enforcement of this agreement, the same shall be submitted for decision to this court and its decision shall be final.” It wa s urged that such agreement was invalid because it ousted the reviewi ng courts of jurisdiction; but it was held that, as the agreemen t did not oust all courts of jurisdiction, but on the c ontrary required the de cision of a court of competent jurisdiction, it was valid and binding on the parties, and it was stated by the court in conc luding the opinion that “we think on grounds of public policy litigan ts should be encouraged to accept as final the decisions of cour ts of original jurisdiction.” Hoste v. Dalton , 137 Mich. 522, 100 N. W. 750, 752. See, also, U.S. Consol. Seeded Raisin Co. v. Chaddock & Co. (C. C. A.) , 173 F. 577, 19 Ann. Cas. 1054. Id. at 417-18. The Ohio court then dismissed the appeal. Id. at 418. We find this reasoning persuasi ve. A no-appeal clause, partic ularly in the context of a PSA, forces the parties to realize that the litigation must end and th at the ruling of the trial court

is final. Given the contentious nature of some of these cases, such provi sions protect both parties by resolving the dispute more quickly and minimizi ng costs. The provision in this case did not

5 Brown initially involved both spous al and child support. The opinion does not consider whether the two types of support should be treated differently when addr essing the enforceability of a clause limiting appellate review. As the cas e before us does not invo lve child support, the issues raised in Kelley , 248 Va. at 298, 449 S.E.2d at 56, need not limit our consideration of Brown ’s application here.- 10 - waive the rights of anyone other than the parties, it allowe d neutral review of their dispute, and it did not violate any Virginia stat ute. We hold that public policy does not prevent the parties to a PSA from contracting away their right to appellate review of matters addressed therein. Such provisions of a property settlement agr eement are not against public policy.

CONCLUSION We find the no-appeal clause in the PSA signe d by the parties before us is binding on the parties. Therefore, this appeal is hereby dismissed. 6

Dismissed.

6 We deny both parties’ requests for atto rney’s fees related to this appeal.