COURT OF APPEALS OF VIRGINIA

Present: Chief Judge Fitz patrick, Judges Elder and Kelsey Argued at Richmond, Virginia

JOSEPH RICHARD VILSECK, JR. OPINION BY v. Record No. 1207-04-2 JUDGE D. ARTHUR KELSEY MAY 17, 2005 SHIRLEY NEALE VILSECK

FROM THE CIRCUIT COURT OF HENRICO COUNTY Gary A. Hicks, Judge James C. Roberts (Peter A. Gilbert; Troutman Sanders LLP, on briefs), for appellant. Donald K. Butler (Mary Beth Joachim; ButlerCook LLP, on brief), for appellee.

Joseph Richard Vilseck, Jr. appe als a final divorce decree that equitably distributed property he claims to have acqui red and titled separately during th e marriage. The plain meaning of his premarital agreement, V ilseck argues, excluded this propert y from equitable distribution. The chancellor reached the opposit e conclusion, holding that the pl ain meaning of the agreement included such property within the equ itable distribution scheme. Upon our de novo review of the agreement, we find the contractual language ambiguous and remand the case for the chancellor to consider the parties’ extrinsic evidence in support of their respective interpretations.

I.

A. T HE P REMARITAL A GREEMENT Joseph Vilseck married Shirley Neale Wiatt in 1983. Both had been married before and had children. Before marrying each other, they retained legal counsel and negotiated a premarital agreement. As most do, the agreement begins with a prefatory series of recitals- 2 - followed by the transition phrase “Now, therefore . . . Vilseck and Wiatt agree as follows.” Some twenty numbered paragraphs, many with s ubparagraphs, then go into detail setting out the parties’ contractual rights and liabilities. 1 The introductory recitals state that each part y was “aware that the other owns substantial

assets” and each acquired all of his or her “Separate Property,” as defined herein, independently of and without the a ssistance of the other. Each is aware of the rights and interests in and to the Separate Property of the other to which he or sh e might otherwise be entitled by virtue of the marriage. (Emphasis added). Thus, whatever the meaning of “‘Separate Property,’ as defined herein,” the context of the recital limited it to separate property owned by either pa rty before marriage. In this respect, the contractual meaning paralle ls the usual meaning employed by th e equitable distribution statute.

See Code § 20-107.3(A)(1)(i) (def ining separate property as including all property acquired “before the marriage”). One of the rights each party became entitled to “by virtue of the marriage” was the legal capacity to renounce the other’s will and to claim minimum threshold rights of inheritance in the deceased spouse’s separate property. 2 As it concerns premarital property, therefore, the phrase “Separate Property” in the recital demonstrates the parties’ intent to shield such property from spousal inheritance rights. That result clears the way for paragraph 8, entitled “Provisions Upon Death of Vilseck,” which sets out inheritance rights Wiatt would have by contract (not by “virtue

1 For convenience sake, Joseph Richard Vilsec k, Jr. will be referred to as Vilseck. Shirley Neale Vilseck will be refe rred to by her maiden name, Wia tt, as used in the premarital agreement.

2 Prior to 1991, when the legislature enact ed statutory election provisions in Code §§ 64.1-13 to 64.1-16.4, the doctrines of dower a nd curtesy guaranteed certain minimum inheritance rights to the surviving spouse. See Chappell v. Perkins , 266 Va. 413, 417, 587 S.E.2d 584, 586 (2003).- 3 - of the marriage”) under various s cenarios depending on who died fi rst, the number of surviving children, and the value of the estate. The premarital agreement also includes a provision entitled “Retention of Separate Property.” Paragraphs 2(A) and (B) read: Except as provided herein, each of the parties shall retain sole ownership of all of his or her Se parate Property and shall have the exclusive right to sell, convey . . . or otherwise dispose of any and all of his or her Separate Property and any right or interest therein during lifetime by inter vivos transfer or upon de ath by will, or by any other method of disposition, free from interference by or of any right or interest of the other therein, in such manner as shall be determined in his or her sole di scretion and as if the marriage had not taken place. As used in this agreement, the te rm “Separate Property” shall mean all real and personal property of each of the partie s and all rights and interests in such property of whatever kind and wherever located, regardless of whether su ch property is now owned or hereafter acquired. Except for the very last clause of the last sent ence, these provisions fit comfortably within the statutory meaning of separate property and the co ntext of the earlier rec ital protecting premarital property from spousal inheritance claims. By recognizing the possibility of property “h ereafter acquired,” howev er, the last clause of paragraph 2(B) implies that contractual “Separate Property” can be acquired at any time, even during marriage. That would not be ordinarily true of statutory separa te property under Code § 20-107.3(A)(1)(i), which includes only property acquired “before the marriage.” But it could be true for inherited property received during marriage, Co de § 20-107.3(A)(1)(ii), property acquired in exchange for, or from the pro ceeds of, preexisting separate property, Code § 20-107.3(A)(1)(iii), and any separate prop erty component of hybrid property, Code § 20-107.3(A)(1)(iv) & (A)(3).- 4 - Paragraph 5 of the premarital agreement deal s with jointly titled property and deems each party to own an undivided half in terest in such property “[n]otw ithstanding any other provisions of this agreement” to the contrary. Under this provision, no matter how one interprets separate property, once it has been jointly titled it becomes jointly owned in equal shares. Paragraph 7 addresses “Spousal Support and Mone tary Award.” It states that, despite the upcoming nuptials, the parties recognize the possibili ty of a divorce within five years of marriage. If that happened, Wiatt waives under paragraph 7( B)(1) any “spousal support or monetary award (whether payable in a lump su m or in periodic payments or over a period of time in fixed amounts) which Wiatt might otherwise have the right to receive in accordance with applicable law.” If they divor ce after five years, paragraph 7(C) provides that Wiatt would receive whatever the law allowed “subject, however , to all of the provisions of this agreement, including, without limitation, the definition of ‘Separate Property’ contained herein.”

B. T HE T RIAL C OURT P ROCEEDINGS Wiatt filed for divorce in 1999 and reque sted spousal support and an equitable distribution award pursuant to C ode § 20-107.3. In response, Vilseck asserted that the premarital agreement should be interpreted to deem all pr operty acquired and titled individually during the marriage to be characterized as contractual “Separate Prop erty” wholly immune from the equitable distribution statute. Wiatt argued that the agreement addressed “Separate Property” to protect premarital property from spousal inheritance claims. The contractual reference to property “hereinafter acquired,” Wiatt reasoned, merely broadened th e protection to propert y purchased during the marriage with premarital separate funds, prope rty inherited during marriage, and whatever separate property components existed within hybrid property

⎯ each tracking the limited- 5 - categories of statutory separa te property that could be acquired during marriage. See Code § 20-107.3(A)(1)(ii), (A)(1)(iii) , (A)(1)(iv) & (A)(3).

Both Vilseck and Wiatt claimed that their mutually exclusive interpretations had the textual support of the plain mean ing of the premarital agreement. But each was also quick to acknowledge, however, that extrinsic evidence should be cons idered if the ch ancellor rejected their plain meaning arguments and deemed the agreement ambiguous. The chancellor held the agreement, as a ma tter of law, unambiguously endorsed Wiatt’s interpretation of “Separate Prope rty” and thus found no need to c onsider any extrinsic evidence from either party. “While the use of the phr ase ‘Separate Property’ may be ambiguous on the face of the document,” the chancellor held, “the plain meaning of these words are found [sic] by a reading of the whole instrument .” After ruling on the meaning of the premarital agreement, the chancellor appointed a judge pro tempore to conduct an evidentiary hearing to distribute the marital assets pursuant to the approved interpretation.

II. On appeal, Vilseck argues that the plain meaning of the premarital agreement supports only his interpretation and expressly rejects the interpretation advanced by Wiatt and adopted by the chancellor. In the alternative, Vi lseck contends, “if the Court, in its de novo review, determines that the language of the agreem ent is ambiguous, it should remand the case for the presentation of evidence.” We reject Vils eck’s primary argument, but accept his alternative

contention. Under settled principles, the “law presum es property acquired during a marriage to be marital, not separate, property.” Smith v. Smith , 43 Va. App. 279, 286-87, 597 S.E.2d 250, 254 (2004) (citing Code § 20-107.3(A)(2 )). Contractual parties “may defeat that presumption by agreement.” Id. “Contracts seeking to do this before marriage, like the prenuptial agreement in- 6 - this case, should be interpreted and enforced no diffe rently than any other type of contract.” Id. (citations omitted). “Thus, we employ ‘rules of construction applicable to contracts generally, including the applicatio n of the plain meaning of unambi guous contractual terms.’” Id. (quoting Pysell v. Keck , 263 Va. 457, 460, 559 S.E.2d 677, 678 (2002); King v. King , 40 Va. App. 200, 206, 578 S.E.2d 806, 809 (2003)). Virginia law resolves “contractual vagaries in one of three ways.” Smith , 43 Va. App. at 287, 597 S.E.2d at 254. “First, if no pa tent or latent ambiguities ex ist, a court should enforce the plain meaning of the contractual language w ithout resort to extrinsic evidence.” Id. “Second, if an ambiguity exists, a court shoul d still enforce the contract if the real meaning of the ambiguous provision can be discerned from extrinsic evidence.” Id. “Third, if an ambiguity renders the alleged agreement too indefinite — even after th e consideration of extrinsic evidence — for the court to determine the parties’ in tent, the contract cannot be enfo rced due to the absence of any discernable meeting of the minds.” Id. 3 An agreement should be deemed “ambiguous if it may be understood in more than one way or when it refers to two or more things at the same time.” Video Zone, Inc. v. KF&F Props. , 267 Va. 621, 625, 594 S.E.2d 921, 923 (2004) (citations and internal quotation marks omitted). Such a conclusion, however, does not follow “simply because the parties to the contract disagree about the meaning of its language.” Pocahont as Mining L.L.C. v. Je well Ridge Coal Corp. , 263 Va. 169, 173, 556 S.E.2d 769, 771 (2002). Instead, it must be objectively reasonable to understand the contractual language “in more than one way” or to conclude that it “refers to two

3 Absent the necessity to consider extrinsic evidence, “appellate cour ts review trial court interpretations of contractual texts de novo because we have an equal opportunity to consider the words within the four corners of the disputed provision.” Smith , 43 Va. App. at 288 n.2, 597 S.E.2d at 255 n.2 (citations and internal quotatio n marks omitted). As a result, “whether a contract provision is ambiguous presents a questi on of law, not of fact.” Video Zone, Inc. v. KF&F Props. , 267 Va. 621, 625, 594 S.E.2d 921, 923 (2004).- 7 - or more things at once.” Id. 4 Our task on appeal is not to determine which of the competing interpretations is the better of the two

⎯ but whether both, though cont radictory, are nonetheless

reasonable. In this case, we find the plain meaning of the agreement is not nearly as plain as either party asserts. To begin with, the definition of “Separate Proper ty” in paragraph 2(B) does not say (as Vilseck translates it to say) that all property separately ac quired and titled during marriage must necessarily be placed outside the r each of the equitable distribution statute. The actual text says considerably less than that. To be sure, the ostensible definition involves somewhat of a tautology, for it states “the term ‘Separate Property’ shall mean all real and personal property of each of the parties”

⎯ which is little more than saying separate property is property of each separate party. True enough, the “property of each” tautology needs no explanation for property owned separately prior to the marriage. Her car is he rs, his boat is his, and so on. After marriage, however, it is not so easy to distinguish between th e two. But that is exactly what the remainder of the sentence requires, for it a dds the possibility that, whatever contractual “Separate Property” may be, it can be property either “n ow owned or hereafter acquired.”

4 If an obvious conflict exists between “prefatory or recital language” and “the obligatory provisions” in an otherwise una mbiguous contract, Virginia law enforces the latter, United Va. Bank/Nat. v. Best , 223 Va. 112, 115, 286 S.E.2d 221, 223 (1982), because “this is regarded as the more vital and important of the two,” Scott v. Albemarle Horse Show Ass’n , 128 Va. 517, 526, 104 S.E. 842, 846 (1920). Even so, the recitals are “often helpful in the construction of contracts and throw light on the meaning and intent of the parties.” Scott , 128 Va. at 526, 104 S.E. at 846. For this reason, recitals may be cons idered in determining whether the contract as a whole suffers from a patent ambiguity warrant ing the admission of extrinsic evidence. See id. at 527-29, 104 S.E. at 846 (considering the “preambl e” along with extrinsic evidence to resolve contractual ambiguity); cf. Miller v. Miller , 555 P.2d 1246, 1250 (Or. 1976) (“ If, in the particular fact context, the recitals appear to be inconsistent with the operative clauses, as a matter of common sense there is an ambiguity or question a bout the intent of the pa rties, and evidence of the circumstances under which the contract was ma de should therefore be admitted as an aid in determining the parties’ a ssumed or actual intent.”).- 8 - On brief, Vilseck fills in this ambiguity with the caveat that contractual “Separate Property” acquired during marriage applies only to property separa tely acquired and titled. At oral argument, Vilseck added that fungible sala ry income from his medical practice, though not subject to a document of title, would be “Separate Pr operty” as soon as he placed it in his separate checking account. That assertion, wh ich we need not dwell on, merely begs the question. Suffice it to say, nothing in the contractual text states that separa tely titled property has a contractual immunity fro m equitable distribution. Vilseck disagrees, arguing that any interpre tation other than his would render the contractual definition of “Separate Property” su perfluous. Wiatt points out, however, that the

contractual definition

⎯ even if it had no effect on equitable distribution

⎯ would still play a vital role in protecting premarital assets from spou sal inheritance claims. Both the recital and the body of the agreement support this interpretative inference. Under Wiatt’s interpretation, the “now owned or hereinafter acquired” phrase prot ects not only premarital assets (as the recital contemplates), but also propert y acquired during marriage that th e equitable distribution statute would accept as separate (as paragr aph 2(B) contemplates). See generally Code § 20-107.3(A)(1)(ii), (A)(1)(iii) , (A)(1)(iv) & (A)(3). We find equally unpersuasive, however, Wiatt’s assertion that the plain meaning of the “Separate Property” definition necessarily exclud es Vilseck’s interpretation. As Vilseck points out, the structure of the agreement juxtaposes contractual “Separate Pr operty” and its opposite: contractual “Joint Property” defi ned in paragraph 5 as property jo intly titled. In the context of this agreement, Vilseck argues, it would not be unreasonable to insert the title qualifier of the joint property definition into its contractual antonym. Add to this the ambiguity caused by paragr aph 7(C), which contemplates a “monetary award” after five years of marriage. Vilseck note s that the proviso says any such award must be- 9 - “subject” to the “definition of ‘Separate Property’ contained he rein.’” If that contractual definition serves only to shield property from spousal inheritance rights, he contends, one would not expect the proviso to appear in a paragraph addressing only e quitable distributio n rights. On the other hand, Wiatt argues, if separate property includes property acquired by one spouse during marriage, and joint property includes prop erty acquired jointly during marriage (subject only to a later partition of the undivided half interests), there would be nothing much left to distribute under the equita ble distribution statute

⎯ thereby making the whole paragraph largely

irrelevant. In short, both Vilseck and Wiatt can carry on such point-counterpoint debates in far more detail and for far longer than present purposes re quire. We offer no opinion on which of the two competing interpretations is the better one. We hold only that both a ppear reasonable on their face, and thus, neither can credibly claim the invi ncibility of the plain meaning rule. Because an ambiguity exists within the four corners of the ag reement, the parties should have been given an opportunity to present extrinsic evidence in support of their re spective interpretations. The

chancellor erred in c oncluding otherwise. On remand, the chancellor should “consider paro l evidence to ascertain the intent of the parties.” Video Zone, Inc. , 267 Va. at 626, 594 S.E.2d at 924. Th is evidence “is admissible, not to contradict or vary contract terms, but to esta blish the real contract be tween the parties.” Id. (citation omitted). In doing s o, the chancellor should give “great weight” to the parties’ own “interpretation and dealings with regard to contract terms” if otherwise compatible with the law.

Id. at 627, 594 S.E.2d at 924. “Thus, uncertain rights of parties may be determined and fixed by their practical dealings with each other.” Id.- 10 - III. We hold the plain meaning of the premarital agreement does not necessarily exclude Vilseck’s interpretation or embrace Wiatt’s. Gi ven this textual ambiguity, the chancellor should

consider on remand whatever admissible extrinsic evidence exists on the proper construction of the agreement and reinterpret it in light of this additional evidence.

Reversed & remanded.