COURT OF APPEALS OF VIRGINIA 

Present: Judges Benton, Coleman and Elder 

Argued at Richmond, Virginia 

EUGENIE STERLING TROTTER 

 MEMORANDUM OPINION* BY 

v. Record No. 1707-96-2 JUDGE LARRY G. ELDER 

 AUGUST 5, 1997 

JOHN C. MAXWELL, JR. 

FROM THE CIRCUIT COURT OF THE CITY OF RICHMOND 

Donald W. Lemons, Judge 

 Sylvia Clute for appellant. 

 James C. Roberts (William F. Etherington; 

Mays & Valentine, L.L.P.; Beale, Balfour, 

Davidson & Etherington, P.C., on brief),

 for appellee. 

 Eugenie Sterling Trotter (wife) appeals an order of the 

trial court denying her claim that John C. Maxwell, Jr. (husband) 

violated the trial court's earlier order enforcing the alimony 

provision of the parties' property settlement agreement 

(agreement). She contends that the trial court erred when it 

concluded that the doctrine of collateral estoppel did not 

preclude the parties from litigating whether husband had properly 

excluded the income he earned from the distribution of his market 

share reports from the calculation of his alimony payment in 

1988, 1989, 1990, 1991, and 1994. In the alternative, wife 

contends that the trial court erred when it concluded that 

husband did not violate the alimony provision of the agreement in 

 

 *Pursuant to Code § 17-116.010 this opinion is not 

designated for publication. 
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these years. For the reasons that follow, we reverse and remand. 

 I. 

 FACTS 

 The parties married in 1953 and divorced in 1975. Since the 

late 1950's, husband has worked as a research analyst in the 

stock brokerage industry and has built a national reputation as 

an expert in the food, beverage, and tobacco industries. 

Throughout his employment as a research analyst, husband has 

prepared for the investor-clients of his employers reports (stock 

recommendation reports) that analyze the recent performance of 

individual companies in the food, beverage, and tobacco 

industries and recommend whether their stock should be bought, 

sold, or held. Since 1960, husband's professional activity has 

also included preparing reports (market share reports) about 

recent trends in the food, beverage, and tobacco industries and 

the current market share of companies competing in these 

businesses. Historically, husband has earned income (market 

share income) from sales of his market share reports to both 

trade magazines and corporations whom he also consults.1 

 Prior to their divorce, the parties entered into the 

agreement on April 1, 1975. The agreement addressed numerous 

 1Throughout the proceedings below, the parties referred to 

the income earned by husband from his market share reports as 

"hard dollar income" because this income was paid directly to 

husband and was not subject to any contingency. For the sake of 

clarity, we will refer to this income as "market share income" 

because it arose from husband's writing and consulting activities 

that involved the distribution of his market share reports. 
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issues between the parties, including the payment of alimony by 

husband to wife. The relevant portion of the alimony provision 

states: 

 6. ALIMONY

 * * * * * * * 

 Beginning January 1, 1976, Husband 

agrees to pay to Wife as alimony twenty-eight 

per cent (28%) of the first Three Hundred 

Sixty Thousand and 00/100 Dollars 

($360,000.00) gross income he may earn from 

his employment per calendar year. 

* * * * * * * 

 [Husband] agrees not to divert any funds 

which he might receive from said employment 

for the purpose of circumventing and/or 

avoiding payment of alimony, except Husband 

may defer compensation, provided that such 

deferred compensation shall be treated as 

gross income for the purpose of the 

computation of alimony. 

In 1976 and 1977, the trial court ordered, among other things, 

that husband "continue to pay in a current fashion his alimony 

obligations to [wife] under the April 1, 1975 Agreement between 

the parties." 

 In 1984, wife filed a lawsuit in the Federal District Court 

for the Southern District of New York (federal court) to enforce 

the agreement's alimony provision. Wife contended that husband 

underpaid her in 1982 by failing to include his market share 

income in his "gross income . . . from his employment" for the 

purpose of calculating his alimony obligation. The federal court 
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held (1) that the parties intended "gross income . . . from his 

employment" to mean the income husband earned "as an employee" 

and (2) that husband violated the agreement in 1982 because his 

market share income earned while working for Lehman Brothers was 

from his employment and should have been included in the 

calculation of his alimony obligation. 

 In late 1987, husband began his current employment with 

Wheat First Butcher Singer. Prior to beginning this employment, 

husband negotiated a contract with Wheat that formally 

distinguished his "business" of distributing his market share 

reports from his employment relationship with Wheat. The 

contract permitted husband to continue preparing and distributing 

his market share reports to trade magazines and corporations as 

an "independent contractor" and did not require that husband's 

market share income flow through Wheat's accounting system. The 

contract did require husband to make a periodic accounting of his 

market share income, to terminate any relationship with any 

client upon Wheat's request, and to "conduct [himself] in such a 

way that no confusion exists as to the relationship between 

[husband's business] and Wheat." 

 After commencing his employment with Wheat, husband 

exclud[ed] his market share income from his "gross income . . . 

from his employment" when calculating his alimony payment to 

wife. In 1992 and 1993, wife received the maximum amount of 

alimony possible under the agreement so that any exclusion of 
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husband's market share income from his employment income was not 

an issue. However, in 1988, 1989, 1990, 1991, and 1994, husband 

earned less than $360,000 in salary from Wheat. His market share 

income during these years was substantial. In each of these 

years, husband excluded his market share income from his alimony 

calculation and instead paid wife 28% of his salary from Wheat. 

 In August, 1995, wife filed a motion for judgment and a 

petition for a rule to show cause to enforce both the alimony 

provision of the agreement and the trial court's orders from 1976 

and 1977. Wife alleged, among other things, that husband had 

violated the agreement and the trial court's orders by 

underpaying her in 1988, 1989, 1990, 1991 and 1994. She argued 

that husband committed a breach when he excluded his market share 

income from the calculation of his alimony obligation. After a 

hearing, the trial court concluded that husband had not violated 

the alimony provision of the agreement. It first concluded that 

the federal court's holding that husband's market share income in 

1982 was earned by him "as an employee" had no preclusive effect 

on this case. It then reasoned that: 

 the [market share income] earned by [husband] 

at Wheat is not income earned from his 

employment. Therefore, [husband's] failure 

to include the Wheat [market share income] 

for the purpose of determining alimony in 

1988, 1989, 1990, 1991, and 1994 does not 

violate the [alimony provision of the 

agreement].2

 

 2The trial court adjudicated numerous other issues litigated 

by the parties that are not the subject of this appeal. 
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 II. 

 PRECLUSIVE EFFECT OF THE FEDERAL COURT'S DECISION 

 Wife contends that the trial court erred when it concluded 

that the federal court's decision did not control the outcome of 

this case. Specifically, she argues that the federal court's 

decision that husband violated the agreement in 1982 by excluding 

his market share income from his employment income while at 

Lehman Brothers should have collaterally estopped husband from 

arguing that the exclusion of his market share income from his 

employment income at Wheat did not violate the agreement. We 

disagree. 

 "The doctrine of collateral estoppel precludes the same 

parties to a prior proceeding from litigating in a subsequent 

proceeding any issue of fact that was actually litigated and 

essential to a final judgment in the first proceeding." Glasco 

v. Ballard, 249 Va. 61, 64, 452 S.E.2d 854, 855 (1995) (citing 

Bates v. Devers, 214 Va. 667, 671, 202 S.E.2d 917, 921 (1974)). 

Collateral estoppel applies only if the following requirements 

are met: 

 (1) the parties to the two proceedings must 

be the same, (2) the issue of fact sought to 

be litigated must have been actually 

litigated in the prior proceeding, (3) the 

issue of fact must have been essential to the 

prior judgment, and (4) the prior proceeding 

must have resulted in a valid, final judgment 

against the party against whom the doctrine 

is sought to be applied. 

Glasco, 249 Va. at 64, 452 S.E.2d at 855 (citing Bates, 214 Va. 
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at 671, 202 S.E.2d at 921). 

 We hold that the trial court did not err by holding that the 

federal court's decision that husband violated the agreement in 

1982 had no preclusive effect on the issues here. The factual 

issue in this case -- whether husband violated the agreement in 

1988, 1989, 1990, 1991, and 1994 by excluding his market share 

income from his employment income at Wheat -- was not actually 

litigated in the federal proceeding. "The true test of the 

conclusiveness of a former judgment with respect to particular 

matters is identity of issues." Graham v. VEPCO, 230 Va. 273, 

277, 337 S.E.2d 260, 263 (1985) (citations omitted). "[A]n 

appropriate test for determining the identity of issues involved 

in former and subsequent actions is 'whether the same evidence 

will support both actions.'" Id. (citation omitted). The 

factual issue resolved by the federal court was distinct from the 

issue of fact before the trial court in this case because the two 

cases dealt with husband's relationship with different employers 

in different years. The evidence regarding husband's employment 

with Lehman Brothers and his market share income in 1982 did not 

establish the relationship between his market share income and 

his income as an employee of Wheat in 1988, 1989, 1990, 1991, and 

1994. Likewise, the evidence of husband's employment with Wheat 

would not have supported his case before the federal court. 

Because the identical factual issue before the trial court was 

not actually litigated in the federal proceeding, the trial court 
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correctly concluded that the federal court's decision that 

husband violated the agreement in 1982 did not preclude it from 

deciding whether he violated the agreement in 1988, 1989, 1990, 

1991, or 1994. 

 III. 

VIOLATION OF THE AGREEMENT 

 Wife argues that, even if the federal court's decision did 

not bar litigation regarding the husband's employment at Wheat, 

the trial court erred when it concluded that husband's alimony 

payments in 1988, 1989, 1990, 1991, and 1994 did not violate the 

agreement. She argues that husband violated the agreement when 

he calculated his alimony payment in these years without 

including his market share income in his "gross income he 

[earned] from his employment." She asserts that the trial court 

erred when it concluded that husband's market share income was 

not income earned from his employment with Wheat. We agree. 

 In reaching its conclusion that husband's market share 

income was not earned as an employee of Wheat, the trial court 

considered husband's duties as a research analyst, Wheat's view 

of husband's market share activities and income, and the actual 

financial cost and benefit to Wheat arising from husband's 

production of his market share reports. The trial court found 

that husband's income from his market share reports was not 

income from his employment because his market share reports do 

not contain investment advice, are not within the scope of his 
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duties as a research analyst, and are of little interest to 

Wheat's clients. It also reasoned that Wheat views husband's 

distribution of his market share reports as an activity distinct 

from his employment and that Wheat neither pays husband to 

produce his market share reports nor receives any income from 

their distribution. 

 Under the agreement, husband is required to pay wife 28% of 

the first $360,000 "gross income he may earn from his employment 

per calendar year." As the trial court noted, neither party 

contests the federal court's conclusion that they intended to 

limit the reach of this clause to the income that husband earns 

"as an employee." Logically, employment includes both income 

paid directly to an employee by his or her employer and income 

derived from other sources that compensates work within the scope 

of his or her employment. An employee's activity is generally 

within the scope of his or her employment if 

 (1) it was expressly or impliedly directed by 

the employer, or is naturally incident to the 

business, and (2) it was performed . . . with 

the intent to further the employer's 

interest, or from some impulse or emotion 

that was the natural consequence of an 

attempt to do the employer's business, "and 

did not arise wholly from some external, 

independent, and personal motive on the part 

of the [employee] to do the act upon his [or 

her] own account." 

Kensington Assoc. v. West, 234 Va. 430, 432, 362 S.E.2d 900, 901 

(1987) (citation omitted). 

 Whether a breach of contract has occurred is a mixed 
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question of law and fact. 

 It is a question of law whether particular 

facts constitute a performance or breach of a 

contract; whether such facts have occurred 

is, on conflicting evidence, a question of 

fact. 

17A C.J.S. Contracts § 630(a) (1963). Thus, the trial court's 

findings regarding husband's relationship with Wheat and the 

distribution of his market share reports are questions of fact, 

while the issue of whether husband breached the agreement by 

excluding his market share income from his employment income for 

the purpose of calculating his annual alimony payment is a 

question of law. 

 We hold that the trial court erred when it concluded that 

husband did not violate the agreement in 1988, 1989, 1990, 1991, 

and 1994 when he calculated his alimony payment without including 

his market share income. We hold that husband's market share 

income was part of his "gross income he [earned] from his 

employment" in these years because husband earned this income 

from an activity that was within the scope of his employment as a 

research analyst at Wheat. Husband's work preparing and 

distributing his market share reports was incidental to his 

employment as a research analyst, performed during his hours of 

employment at Wheat, and partially intended to benefit Wheat's 

business. 

 First, husband's work preparing and distributing his market 

share reports was a natural incident to his employment as 
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research analyst with Wheat. This activity was incidental to 

husband's employment because it established his national 

reputation as an expert analyst, which consequently assisted him 

in attracting both brokerage and underwriting business to Wheat. 

 The record established that husband built and then 

maintained his national reputation as an expert in the food, 

beverage, and tobacco industries in part through writing his 

market share reports and distributing them first to trade 

magazines and later to corporations seeking his counsel. Hundley 

Davenport, an officer with Wheat, testified that husband's market 

share reports "establish[ed] his overall presence in the industry 

as being an authority." Husband's reputation in the industry was 

important to his duties as a research analyst with Wheat. Mr. 

Davenport testified that Wheat hired husband in 1987 because it 

expected his reputation as an expert in the food, beverage, and 

tobacco industries to help build Wheat's research department. 

Husband likewise testified that his expert reputation was vital 

to his duty as an analyst to convince institutional investors to 

use Wheat as their stock broker. He testified: 

 I'm sort of a traveling salesman, whether 

with Wheat or Morgan. I've got to go out and 

sell my products, brains or whatever you want 

to call it to the various institutional 

clients which we were trying to get business. 

The maintenance of husband's reputation through the distribution 

of his market share reports was incidental to his employment also 

because it enhanced the stature of Wheat's underwriting business 
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with prospective corporate clients. Mr. Davenport testified that 

 the key in [corporate] financing is it is 

important that you have an analyst that 

follows a particular industry and company. 

[Husband] has been an institutional all 

American analyst 15, 20 times in various 

groups, and it is certainly known by these 

industry participants that he is an expert in 

these areas . . . . 

 The incidental relationship between husband's market share 

reports and his employment with Wheat was also indicated by the 

manner in which Wheat and husband agreed to package the market 

share reports. Despite Wheat's and husband's initial agreement 

that husband conduct the "business" of distributing his market 

share reports in a manner that avoided "confusion" regarding 

husband's independence from Wheat in this capacity, both Wheat 

and husband agreed to label his market share reports so that 

recipients would believe that they were produced by husband in 

the course of his employment with Wheat. The market share 

reports contained the names and telephone numbers of Wheat's 

research staff and also bore Wheat's logo, which Davenport 

testified would lead both husband's clients and Wheat's 

institutional clients who received them "to think that Wheat is 

associated with the document." In addition, many of the reports 

contained the following disclaimer clause: "While the 

information herein has been obtained from sources we believe to 

be reliable, Wheat First Securities does not guarantee its 

accuracy or completeness." Although the subscription fees for 
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the market reports were paid directly to husband rather than to 

Wheat under the terms of his employment contract, the costs of 

preparing, printing, and disseminating the report were borne by 

Wheat. In addition, husband prepared the report during the hours 

of his employment at Wheat. 

 Husband's work distributing his market share reports was at 

least partially motivated by a desire to benefit Wheat's 

business. The evidence in the record established that husband's 

effort to prepare and distribute his market share reports was 

prompted by a synergy of personal benefit to himself and 

commercial gain to Wheat: as husband built his reputation as an 

expert in the food, beverage, and tobacco industries, he not only 

profited from his increased market share income, he was also able 

to conduct more brokerage business for Wheat. At the hearing, 

husband testified that, as a research analyst employed by Wheat, 

he is essentially a "salesman" and that his ultimate purpose is 

to "cause" stock transactions, "either buy or sell," to occur. 

Although husband's market share reports do not themselves include 

investment advice, the evidence in the record indicates that 

husband intended their distribution to enhance his reputation as 

an analyst and consequently to increase his ability to "cause" 

more transactions, and thus profits, for Wheat's brokerage 

business. Husband's intent to benefit his employer's business 

through the production of his market share reports was also 

indicated by his apparent acquiescence to Wheat's requests for 
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permission to send these reports to its institutional clients. 

 Although the employment contract stated that in his capacity 

of producing the market share reports the husband was an 

independent contractor, that characterization is not dispositive 

of whether the income the husband earned was earned "as an 

employee." The employment contract stated that the husband was 

required (1) to report to Wheat the revenue he earned from the 

reports, (2) to submit an audit, and (3) to provide a subscriber 

list. Most significantly, husband prepared the report during his 

working hours at Wheat. This involvement and oversight by Wheat 

represents significant control over the husband's production of 

the market share reports. Accordingly, the statement in the 

contract that the husbnad was an independent contractor is not 

dispositive of the character of the income. 

 Because husband's market share income was earned from an 

activity within the scope of his employment, we conclude that 

husband violated the alimony provision of the agreement in 1988, 

1989, 1990, 1991, and 1994 when he calculated his alimony payment 

to wife without including this income as part of the "gross 

income he [earned] from his employment." 

 For the foregoing reasons, we reverse the judgment of the 

trial court denying wife's claim that husband violated its order 

enforcing the alimony provision of the agreement and remand for 

proceedings consistent with this opinion. 

 Reversed and remanded.