Court Opinion

ID: 4349282
Source: CourtListenerOpinion
Date Created: 2018-12-11 17:46:55.152479+00
Date Added: 2024-06-11T13:30:30.958013
License: Public Domain

COURT OF APPEALS OF VIRGINIA

              Present: Chief Judge Huff, Judges Petty and Chafin
              Argued at Norfolk, Virginia
UNPUBLISHED

              MICHAEL B. EBERHARDT
                                                                              MEMORANDUM OPINION* BY
              v.     Record No. 0662-18-1                                      JUDGE TERESA M. CHAFIN
                                                                                 DECEMBER 11, 2018
              KIMBERLY A. EBERHARDT

                             FROM THE CIRCUIT COURT OF THE CITY OF VIRGINIA BEACH
                                               James C. Lewis, Judge1

                               Meghan M. Casey (Brandon H. Zeigler; Parks Zeigler, PLLC, on
                               briefs), for appellant.

                               Emily K. Miller (Julia E. Keller; Keller Law Group, on brief), for
                               appellee.

                     On March 23, 2018, the Circuit Court of the City of Virginia Beach entered a final decree

              of divorce dissolving the marriage of Michael B. Eberhardt (“the husband”) and Kimberly A.

              Eberhardt (“the wife”) and dividing their marital property. On appeal, the husband maintains

              that the circuit court erred by distributing certain property in a manner that contradicted the terms

              of an agreement between the parties. Specifically, the husband contends that the circuit court

              erred by (1) dividing a Fidelity Roth IRA with an account number ending in 7600 between the

              parties, and (2) awarding the wife half of the value of two escrow refund checks issued following

              the sale of marital property. The husband also argues that the circuit court erred by refusing to

              award him a $20,000 credit based on a payment that he made for the wife’s attorney’s fees

                     *
                         Pursuant to Code § 17.1-413, this opinion is not designated for publication.
                     1
                       Although a different judge entered the final decree of divorce in this case, Judge Lewis
              presided over the December 21, 2017 hearing and made the decisions at issue on appeal.
before the parties entered into their agreement. For the following reasons, we affirm the circuit

court’s decision in part, reverse the circuit court’s decision in part, and remand this case for the

entry of an order consistent with this opinion.

                                          I. BACKGROUND

       “When reviewing a [circuit] court’s decision on appeal, we view the evidence in the light

most favorable to the prevailing party, granting it the benefit of any reasonable inferences.”

Congdon v. Congdon, 40 Va. App. 255, 258, 578 S.E.2d 833, 835 (2003). Most of the relevant

facts in this case, however, are undisputed.

       The parties were married on June 20, 1987. On July 30, 2015, the wife filed a complaint

for divorce. The husband filed a counterclaim for divorce with leave of the circuit court on

December 16, 2015. The parties then engaged in discovery and otherwise prepared for divorce

litigation for approximately two years.

       The parties reached an agreement in this matter on January 19, 2017, the date that a full

evidentiary hearing was scheduled in the circuit court. Pursuant to Code § 20-155,2 the parties

read their agreement into the record. The first line of the agreement stated that “[t]he parties by

counsel have reached an agreement with regard to all issues in this matter.” The agreement then

       2
           In pertinent part, Code § 20-155 states as follows:

                 Married persons may enter into agreements with each other for the
                 purpose of settling the rights and obligations of either or both of
                 them, to the same extent, with the same effect, and subject to the
                 same conditions, as provided in [Code] §§ 20-147 through 20-154
                 for agreements between prospective spouses, except that such
                 marital agreements shall become effective immediately upon their
                 execution. If the terms of such agreement are . . . recorded and
                 transcribed by a court reporter and affirmed by the parties on the
                 record personally, the agreement is not required to be in writing
                 and is considered to be executed.
                                                  - 2 - 
discussed spousal support and the division of the parties’ marital property. Notably, the

agreement did not contain a provision addressing any omitted or nondisclosed property.

       Among other things, the parties’ agreement divided several investment and bank accounts

and addressed the payment of the parties’ credit card debt. The agreement also provided that the

husband would make the mortgage payments on the parties’ marital home and a rental property.

These payments included the cost of insurance and the taxes associated with the properties. The

agreement awarded the husband a credit for any “principal paydown” on the marital home

accruing from the mortgage payments he made from February 1, 2017, until the sale of the

property.

       The agreement also stated that the husband would pay the wife $65,000 for attorney’s

fees. While the agreement initially stated that the husband would make this payment within

ninety days, the parties modified this term as their agreement was read into the record. The

parties agreed that the husband would make the $65,000 payment as he cashed out certain life

insurance policies, with the full balance of the payment due within 120 days of the sale of the

parties’ marital home and rental property. When counsel finished reading the parties’ agreement

into the record, the parties personally affirmed that they agreed to the stated terms.

       On May 19, 2017, the circuit court entered an order affirming the entirety of the parties’

January 19, 2017 agreement. On August 14, 2017, the circuit court entered two additional orders

affirming specific aspects of the same agreement. At some point following the entry of the

August 14, 2017 orders, the wife requested the circuit court to divide an additional retirement

account between the parties. The wife maintained that a Fidelity Roth IRA with an account

number ending in 7600 had been omitted from the parties’ January 19, 2017 agreement because

the husband failed to disclose the account during discovery. The wife requested the circuit court

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to divide the account evenly between the parties in a manner similar to the retirement accounts

addressed in the parties’ agreement.

       On December 14, 2017, the wife filed a motion to compel the husband to pay her half of

the value of two escrow refund checks that he received following the sale of the parties’ marital

home and rental property. The wife noted that these checks were refunds for tax and insurance

payments associated with the properties. As the checks were written to both the husband and the

wife, the wife claimed that she was entitled to half of their value.

       The husband maintained that the wife was not entitled to receive any portion of the

Fidelity Roth IRA or the refund checks. As the Fidelity Roth IRA was not addressed by the

parties’ January 19, 2017 agreement and it was held in the husband’s name alone, the husband

argued that the IRA was his property. The husband also argued that the refund checks simply

compensated him for overpayments regarding the taxes and insurance on the parties’ marital

home and rental property that he made from his post-separation income. Therefore, the husband

claimed that the refund checks were also his property.

       Additionally, the husband requested a credit for a $20,000 payment that he made for the

wife’s attorney’s fees before the parties entered into the January 19, 2017 agreement. While the

husband acknowledged that he was obligated to pay $65,000 for the wife’s attorney’s fees

pursuant to the parties’ agreement, he argued that the $20,000 payment reduced this obligation to

$45,000. Alternatively, the husband requested a credit for the $20,000 payment pursuant to the

provision of the January 19, 2017 agreement addressing the parties’ credit card debt. The

husband argued that the credit card debt provision applied to the $20,000 payment at issue

because the payment was directly applied to the balance on a credit card that the wife used to pay

her attorney’s fees.

                                                - 4 - 
       The circuit court held a hearing regarding the remaining issues in the parties’ divorce

case on December 21, 2017. After hearing argument from the parties, the circuit court equally

divided the Fidelity Roth IRA between them. The circuit court then noted that the refund checks

at issue resulted from the dissolution of an escrow account following the sale of the parties’

marital home and rental property. As the parties agreed to split the net proceeds resulting from

the sale of the properties in their January 19, 2017 agreement, the circuit court divided the refund

checks equally between the parties. The circuit court also refused to award the husband a credit

for the previous $20,000 payment that he made for the wife’s attorney’s fees.

       On February 27, 2018, the circuit court entered an order memorializing its decision from

the December 21, 2017 hearing. On March 23, 2018, the circuit court held another hearing to

resolve disputes between the parties regarding the language of their final decree of divorce. At

the beginning of the hearing, counsel for the parties confirmed that an equitable distribution

hearing had not occurred in this case because the parties resolved that matter by agreement. The

circuit court entered a final decree of divorce at the conclusion of the hearing setting forth the

terms of the parties’ January 19, 2017 agreement and the February 27, 2018 order. This appeal

followed.

                                          II. ANALYSIS

       On appeal, the husband contends that the circuit court erred by distributing the parties’

marital property in a manner that contradicted the terms of their January 19, 2017 agreement.

The husband maintains that the circuit court went beyond the terms of the parties’ agreement by

distributing half of the Fidelity Roth IRA to the wife. As the agreement did not address this

account, the husband argues that the circuit court added a term to the parties’ agreement when it

divided the account equally between the parties. Additionally, the husband argues that the circuit

court erred by dividing the escrow refund checks between the parties.

                                                - 5 - 
       The husband also contends that the circuit court erred by refusing to award him a $20,000

credit based on the payment that he made for the wife’s attorney’s fees before the parties entered

into the January 19, 2017 agreement. The husband argues that this $20,000 payment reduced the

$65,000 attorney’s fees obligation set forth in the parties’ agreement to $45,000. Alternatively,

the husband contends that he was entitled to a credit for the payment at issue pursuant to the

provision of the January 19, 2017 agreement addressing the parties’ credit card debt.

       For the following reasons, we conclude that the circuit court erred by distributing the

Fidelity Roth IRA in a manner that contradicted the terms of the parties’ January 19, 2017

agreement. However, we also conclude that the parties’ agreement did not entitle the husband to

receive the entirety of the escrow refund checks or a credit for the previous $20,000 payment that

he made for the wife’s attorney’s fees.

                A. THE EFFECT OF THE JANUARY 19, 2017 AGREEMENT

       As an initial matter, we must determine whether the parties intended for the January 19,

2017 agreement to constitute a comprehensive agreement resolving all of the issues in the

present case. Accordingly, we must construe the terms of the parties’ agreement as it was

expressed on the record. “Property settlement agreements are contracts, and the rules of

interpretation for contracts in general apply” to them. Recker v. Recker, 48 Va. App. 188, 192,

629 S.E.2d 191, 193 (2006). Questions involving the interpretation of a contract present issues

of law that we review de novo on appeal. Plunkett v. Plunkett, 271 Va. 162, 166, 624 S.E.2d 39,

41 (2006).

       “A court’s primary focus in considering disputed contractual language is to determine the

parties’ intention, which should be ascertained, whenever possible, from the language the parties

employed in their agreement.” Pocahontas Mining LLC v. CNX Gas Co., 276 Va. 346, 352, 666
S.E.2d 527, 531 (2008). “Contracts are construed as written, without adding terms that were not

                                               - 6 - 
included by the parties. Where the terms in a contract are clear and unambiguous, the contract is

construed according to its plain meaning.” Plunkett, 271 Va. at 167, 624 S.E.2d at 42 (citations

omitted) (quoting TM Delmarva Power, L.L.C. v. NCP of Va., L.L.C., 263 Va. 116, 119, 557
S.E.2d 199, 200 (2002)). “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.” Stacy v. Stacy, 53 Va. App. 38,

44, 669 S.E.2d 348, 351 (2008) (en banc) (quoting Irwin v. Irwin, 47 Va. App. 287, 293, 623
S.E.2d 438, 441 (2005)).

                      In giving effect to the intention of the parties “as expressed
               by them in the words they have used,” Irwin, 47 Va. App. at 293,
               623 S.E.2d at 441 (citation and internal quotation marks omitted),
               we are not to treat any word or clause in the [contract] “as
               meaningless if a reasonable meaning can be given to it, and there is
               a presumption that the parties have not used words needlessly,”
               Dominion Sav. Bank, FSB v. Costello, 257 Va. 413, 417, 512
S.E.2d 564, 567 (1999).

Id. at 48, 669 S.E.2d at 352-53.

       The first line of the January 19, 2017 agreement stated that “[t]he parties by counsel have

reached an agreement with regard to all issues in this matter.” (Emphasis added). Thus, the

plain terms of the parties’ agreement clearly established that they intended for the agreement to

be comprehensive. The parties intended to resolve “all issues” pertaining to the matter of

equitable distribution in the January 19, 2017 agreement, and they relied on that agreement

throughout the proceedings to distribute their marital property. With the exception of certain

photographs and an art print, the parties did not introduce evidence regarding their marital

property in the hearings before the circuit court. Moreover, the circuit court did not conduct an

equitable distribution hearing in this case.

       It is well established that a court must honor an agreement between parties addressing the

distribution of their marital property. In pertinent part, Code § 20-109(C) states as follows:
                                                - 7 - 
               In suits for divorce, . . . if a stipulation or contract signed by the
               party to whom such relief might otherwise be awarded is filed
               before entry of a final decree, no decree or order directing the
               payment of support and maintenance for the spouse, suit money, or
               counsel fee or establishing or imposing any other condition or
               consideration, monetary or nonmonetary, shall be entered except in
               accordance with that stipulation or contract.

Although Code § 20-109 is a statute that primarily addresses spousal support, Code § 20-109(C)

also applies to agreements regarding the equitable distribution of property. See Parra v. Parra, 1
Va. App. 118, 128, 336 S.E.2d 157, 162 (1985); see also Code § 20-107.3(I) (referencing Code

§ 20-109). “[T]o the extent that the parties have already stipulated to a particular disposition of

their property, the court may not decree an equitable distribution award that is inconsistent with

that contract.” Parra, 1 Va. App. at 128, 336 S.E.2d at 162-63. Therefore, in the present case,

the circuit court could not distribute the parties’ marital property in a manner that contradicted

the terms of the January 19, 2017 agreement.

       Having determined that the parties intended for the January 19, 2017 agreement to be a

comprehensive resolution of the matters presented in this case and that the circuit court was

bound by the terms of that agreement,3 we will now address the circuit court’s distribution of the

particular assets at issue on appeal.

                                  B. THE FIDELITY ROTH IRA

       The husband contends that the circuit court erred by distributing half of the value of the

Fidelity Roth IRA to the wife because that account was not included in the parties’ January 19,

2017 agreement. We agree with the husband’s argument.

       In the first line of the January 19, 2017 agreement, the parties stated that they had

resolved “all issues in this matter,” including the matter of equitable distribution. As the parties

       3
        We note that neither party argued that the January 19, 2017 agreement was
unconscionable or moved to set aside the agreement on other grounds.
                                              - 8 - 
intended for the agreement to be a comprehensive resolution of the matter of equitable

distribution, the circuit court was prohibited from distributing property that was not addressed in

the agreement. Although the agreement failed to expressly distribute all of the parties’ marital

property, the circuit court could not supplement the terms of the agreement by distributing

property that the parties failed to address. To do so would add terms to the parties’ agreement

and render its first term meaningless. See Plunkett, 271 Va. at 167, 624 S.E.2d at 42; Stacy, 53

Va. App. at 48, 669 S.E.2d at 352-53.

           While the wife contends that the husband failed to disclose the Fidelity Roth IRA before

the parties entered into the January 19, 2017 agreement, the parties did not include a term in the

agreement addressing omitted or nondisclosed property. Rather, the parties stated that the

January 19, 2017 agreement was a comprehensive resolution of the issues between them. The

parties had engaged in discovery for approximately two years before they entered into the

January 19, 2017 agreement, and the agreement addressed the distribution of several other

investment and bank accounts.

           As the plain language of the parties’ agreement established that they intended to resolve

the entire matter of equitable distribution in their January 19, 2017 agreement, the circuit court

could not expand the terms of the agreement by distributing an asset that the agreement failed to

address. Accordingly, the circuit court erred by dividing the Fidelity Roth IRA between the

parties.

                                C. THE ESCROW REFUND CHECKS

           The husband also contends that the circuit court erred by distributing half of the value of

the escrow refund checks to the wife. As previously stated, these checks were issued following

the sale of the parties’ marital home and rental property to compensate the parties for the

overpayment of taxes and insurance costs associated with the properties. The husband argues

                                                   - 9 - 
that he was entitled to receive the entirety of the refund checks because he made the mortgage

payments regarding the marital home and rental property pursuant to the terms of the January 19,

2017 agreement. As the mortgage payments included the tax and insurance payments that led to

the refunds, the husband maintains that the refund checks constituted his separate property.

        We acknowledge that the January 19, 2017 agreement did not specifically address the

escrow refund checks at issue. Unlike the Fidelity Roth IRA, however, the refund checks were

generally addressed by a provision of the parties’ agreement. In the January 19, 2017 agreement,

the parties agreed to equally divide the proceeds of the sale of the marital home and rental

property. Under the circumstances of the present case, we conclude that the refund checks were

proceeds from the sale of these properties.

        The refund checks at issue resulted from the dissolution of an escrow account following

the sale of the parties’ marital home and rental property. Although the refund checks

compensated the parties for payments that were made before these properties were sold, the

funds held in escrow were only realized upon the sale of the properties and were only available

to the parties following the sale. As the refunds were obtained by virtue of the sale of the

parties’ real property, the circuit court did not err by determining that they were proceeds of the

sale.

        While the husband contends that he was entitled to the entirety of the refund checks

because the January 19, 2017 agreement required him to make the mortgage payments regarding

the parties’ real property, the agreement only entitled the husband to a limited credit for these

payments. Specifically, the agreement only entitled the husband to receive a credit for any

“principal paydown” resulting from the mortgage payments on the parties’ marital home.

Notably, the husband was not entitled to receive a credit or other form of reimbursement for the

remainder of the mortgage payments pursuant to the terms of the parties’ agreement, including

                                               - 10 - 
the portion of the mortgage payments that were held in escrow for the payment of the taxes and

insurance costs associated with the properties. Therefore, the husband was not entitled to the

entirety of the escrow refund checks pursuant to the January 19, 2017 agreement, and the circuit

court did not err by dividing them equally between the parties.

        D. THE HUSBAND’S PREVIOUS $20,000 ATTORNEY’S FEES PAYMENT

       The husband acknowledges that he was obligated to pay the wife $65,000 for attorney’s

fees pursuant to the parties’ January 19, 2017 agreement. The husband, however, contends that

he was entitled to receive a $20,000 credit for a payment that he made for the wife’s attorney’s

fees before the parties entered into the agreement. The husband notes that the January 19, 2017

agreement simply required him to pay the wife “the amount of $65,000 for attorney’s fees.” As

the agreement did not specify that the husband owed the wife an “additional” $65,000 for

attorney’s fees, the husband maintains that he was entitled to receive a credit for his previous

payment. Alternatively, the husband argues that he should have received a credit for the prior

$20,000 payment pursuant to the provision of the January 19, 2017 agreement addressing the

payment of the parties’ credit card debt. We disagree with both of the husband’s arguments.

       As previously stated, the plain language of the January 19, 2017 agreement established

that the parties intended for it to be a comprehensive resolution of all of the matters presented in

this case, including attorney’s fees, and the circuit court was bound by the terms of that

agreement. See Code § 20-109(C). Although the January 19, 2017 agreement failed to expressly

state that the husband was required to pay the wife an “additional” $65,000 for attorney’s fees,

the agreement also did not expressly award the husband a credit for any prior payments on his

attorney’s fees obligation. In the absence of a term in the parties’ agreement awarding the

husband a credit for the $20,000 payment at issue, the circuit court could not award the husband

a credit for the payment without impermissibly adding a term to the parties’ agreement.

                                               - 11 - 
       Nevertheless, we note that the husband made the $20,000 payment at issue before the

parties entered into the January 19, 2017 agreement. Accordingly, the parties could have easily

addressed the payment in the agreement if they intended for the husband to receive a credit for it.

The failure of the parties to include a provision regarding the $20,000 payment under these

circumstances implied that the parties did not intend for the husband to receive a credit for that

payment.

       Furthermore, we note that the parties’ agreement established that the husband would

satisfy the attorney’s fees obligation at some point following the execution of the agreement.

Initially, the parties agreed that the husband would pay the wife $65,000 for attorney’s fees

within ninety days. The parties then modified this term by agreeing that the husband would

make the $65,000 payment in installments as he cashed out certain life insurance policies, with

the full balance of the payment due within 120 days of the sale of the parties’ real property.

These terms implied that the husband would pay the wife an additional $65,000 at some point

after the parties entered into the January 19, 2017 agreement.

       While the husband contends that he was also entitled to receive a credit for the $20,000

payment pursuant to the provision of the January 19, 2017 agreement addressing the payment of

the parties’ credit card debt, this argument is without merit. Although the $20,000 payment was

applied to the balance on the credit card that the wife used to pay her attorney’s fees, the

provision at issue did not apply to this credit card debt.

       The credit card debt provision of the January 19, 2017 agreement addressed the debts on

four specific credit cards and provided values for the debts owed on each card as of the date of

the parties’ separation. Specifically, the provision referred to: (1) an American Express card

with a balance of $7,122; (2) an American Express card with a balance of $3,055; (3) a Citi

MasterCard with a balance of $246; and (4) a Chase MasterCard with a balance of $78. The

                                                - 12 - 
provision clarified that “[t]hose are the four debts that existed as of the date of separation that

were not otherwise paid by agreement.” The provision then stated,

               To the extent that either party has paid those debts off, there can be
               an offset on payments that are otherwise owed by the parties with
               respect to like accounts, non-investment accounts. So for instance,
               if the defendant owes the plaintiff $10,000 from a money market
               account but the plaintiff owes the defendant $5,000 for payment of
               debts that were just referenced, the defendant’s obligation to the
               plaintiff would be reduced by $5,000.

(Emphasis added).

       The plain terms of the credit card debt provision limited its application to the four

specific debts that it referenced. While the provision allowed the husband or the wife to receive

an offset or credit if he or she paid the referenced credit card debts, the offset provision did not

extend to the payment of other debts. In fact, the provision indicated that the parties’ other debts

had been “paid by agreement.” As the $20,000 payment at issue on appeal was applied to a

credit card debt that was not referenced in the credit card debt provision of the January 19, 2017

agreement, the husband was not entitled to a credit based on the payment.

       We conclude that the circuit court did not err by refusing to award the husband a credit

for the $20,000 payment that he made for the wife’s attorney’s fees before the parties entered

into the January 19, 2017 agreement. The parties’ agreement did not contain a provision

awarding the husband a credit for the payment, and the circuit court could not add a term to the

agreement to achieve that result.

                      E. APPELLATE ATTORNEY’S FEES AND COSTS

       Both parties request an award of the attorney’s fees and costs incurred in connection with

this appeal. “The decision of whether to award attorney’s fees and costs incurred on appeal is

discretionary.” Friedman v. Smith, 68 Va. App. 529, 545, 810 S.E.2d 912, 919-20 (2018); see

also Rule 5A:30(b). In determining whether to award appellate attorney’s fees and costs to a

                                                - 13 - 
party, we consider a number of factors, including “whether the requesting party prevailed,

whether the appeal was frivolous, whether either party generated unnecessary expense or delay

in pursuit of its interests, as well as ‘all the equities of the case.’” Friedman, 68 Va. App. at 546,

810 S.E.2d at 920 (quoting Rule 5A:30(b)(3)-(4)); see also O’Loughlin v. O’Loughlin, 23
Va. App. 690, 695, 479 S.E.2d 98, 100 (1996). As each party prevailed on certain issues

presented on appeal, we conclude that an award of appellate attorney’s fees and costs is not

warranted. Therefore, we deny each party’s request.

                                        III. CONCLUSION

       In summary, we conclude that the parties intended for the January 19, 2017 agreement to

be a comprehensive resolution of all the matters presented in this case. As the Fidelity Roth IRA

was not addressed by the parties’ agreement, the circuit court erred by dividing it between the

parties. The circuit court did not err, however, by dividing the escrow refund checks equally

between the parties as proceeds of the sale of the parties’ real property. As the husband was not

entitled to a credit for the previous $20,000 payment that he made for the wife’s attorney’s fees

pursuant to the January 19, 2017 agreement, the circuit court did not err by refusing to award the

husband a credit for the payment. Accordingly, we affirm the circuit court’s decision in part,

reverse the circuit court’s decision in part, and remand this case for the entry of an order

consistent with this opinion.

                                                  Affirmed in part, reversed in part, and remanded.

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