Virginia Family Law Appeals

Two wildly different property-tracing methods can be used in the same case

The Virginia Court of Appeals reiterates that courts are free to use the Brandenburg and the Keeling methods of measuring separate-property shares of a home – upholding a trial court that apparently used both methods in successive stages of the same tracing analysis, in a case that illustrates what a huge difference the choice of formula makes. (Scott v. Scott, unpublished 11/5/19)

The trial court used the Brandenburg formula, which looks at the proportions of contributions to net equity, to measure the separate-property share of the proceeds of the couple’s first house that were rolled into the second house:

Dividing his contribution ($192,651) by the parties’ total contribution ($207,914) equals approximately 92.6%. … Multiplying this percentage by the parties’ total equity in the Abingdon house at the time of sale ($306,818) finds the husband’s share of the Abingdon house proceeds ($284,294). The circuit court could reasonably have concluded that the $214,492 down payment on the Taylor Street house, paid with unsegregated proceeds from the Abingdon house, was consequently also … 92.6% [from] the husband’s separate funds, or $198,619.

But when tracing the resulting separate-property contribution through the parties’ next home, it used the Keeling formula, which looks at the ratio of contributions to total purchase price, and treats the borrowing of mortgage debt as a marital contribution, but then applies the resulting ratio not to the total value, but to the net equity:

Here, the circuit court did not expressly describe the method by which it determined the parties’ respective shares in the Taylor Street home. However, the husband’s traceable separate share of the $628,000 purchase price of the Taylor Street house was $208,319 [the number above plus an additional contribution from a purely separate-property source] … one third of the total purchase price. The logical resulting conclusion … is that marital funds comprised the source of the remaining two-thirds of the purchase price.

We can infer, then, that the circuit court likewise determined that the marital share of the equity in the Taylor Street house was two thirds and consequently the husband’s separate share of the equity in the home was the remaining one third. … The circuit court found that the parties’ equity in the Taylor Street house was $529,876. The court awarded the wife $175,000, which equals approximately half of the parties’ two-thirds marital share of the equity in that home.

… As in Rinaldi [53 Va. App. 61, 72 (2008)], application of this classification method achieved an equitable result in light of the facts of this case.

So the Brandenburg analysis only looks at contributions that actually pay money in, and increase the parties’ net equity in the property. Regardless of what mortgage debt the couple may have taken on when they bought the house, they only get credit for the small amount of mortage principal they paid off during the marriage. But in the Keeling analysis, the high purchase price automatically and hugely increased the marital share and immediately diluted the separate share down to one-third. Thus the separate-property share in that home started out as $208,319 and ended up as $176,625. The opinion does not indicate whether the property’s value went up or down, only that the whole down payment was $214,492 (i.e., 97% separate) and the equity at the time of the divorce was $529,876 -- no indication how much of that is from mortgage payments and how much is from the value going up or down.

It would be more consistent to see the mortgage itself as a marital contribution if the court had ended up dividing the remaining mortgage debt equally, but it does not, and that probably never happens except in cases where a house cannot be refinanced and has to be sold or remain “under water” and co-owned in limbo.

Fees

The Court also finds a moderate award of attorneys’ fees to the wife to be reasonable for the usual reasons, and because of “the history of the case, the husband’s arguments regarding the difficulties that the wife caused during litigation, and the fact that the wife was denied spousal support. [And] that the husband had more control over the length of the litigation.”

Modest-income mom of 5 must pay ex's costs for her dishonest appeal; current actual earnings averaged to get presumptive support income

The Court of Appeals rejected an appeal as totally baseless and thus awarded the Appellee father his fees and costs in the appeal in Ranghelli v. Ranghelli (5/7/19). The mother’s commission-based earnings varied greatly, and she had been unemployed or on unpaid leave for parts of the past two years. The trial court used a monthly average of her earnings during her current period of continuous employment, based on her pay stubs, as her income for support purposes. The mother argued on appeal that the trial court had averaged her earnings while working over the past three years, not counting periods when she was not working, and that it thus imputed income to her, which deviated from the “presumptive amount” without making the required written findings to justify that. But the numbers showed that “the court did precisely what is required under the case law and based its presumptive child support” on her “most recent actual income.” And because she based her appeal on alternative facts of the case and “failed to address what the trial court actually did, her arguments are not fairly debatable” and the husband is entitled to his fees and costs for the appeal.

Pro-se lawyer comes to court in shorts, judge makes him go change, keeps on with his trial while he's gone

Barrett v. Minor (Va. Ct. App. unpublished 10/23/18) is a routine affirmation of a fee award in an earlier appeal in extraordinarily typically miserable family law litigation, against a lawyer who was disbarred for things he did in that litigation. The Court says he was extremely litigious and turned even small, routine steps in the process into huge controversies with voluminous briefs. Probably the only remarkable thing about this is that he came to the hearing about attorney's fees in the earlier appeal in shorts and a polo shirt. The judge sent him home to change clothes, and while he was gone, ruled against him on all pretrial motions and heard the other side's opening statement. This too is heartily affirmed.

'The trial court found on the record that father “is or was a lawyer . . . is highly trained . . . and very intelligent and this [appearing at court inappropriately dressed] is just another ploy ...'"

Custody order to consult before major decisions does not include scheduling of uncontested first communion

Failing to tell the other parent when the child's first communion was rescheduled was not contempt of a court order to "consult with each other before making any major decisions regarding the child’s health, education, religion, or well-being,” the Court of Appeals says, reversing a Circuit Court finding of contempt. While taking communion may be a major decision, the exact scheduling of the first communion is not.

The case law is well established that “before a person may be held in contempt for violating a court order, the order must be in definite terms as to the duties thereby imposed upon him and the command must be expressed rather than implied.” Winn v. Winn, 218 Va. 8, 10, 235 S.E.2d 307, 309 (1977) (quoting Wood v. Goodson, 485 S.W. 2d 213, 217 (Ark. 1972)). “[T]he process for contempt lies for disobedience of what is decreed, not for what may be decreed.” Id. (quoting Taliaferro v. Horde’s Adm’r, 22 Va. (1 Rand.) 242, 247 (1822)).

... Here, the divorce decree provided that father would consult with mother regarding J.’s religion, which he had done by discussing with her that J. would enroll in classes to prepare for taking his first communion. Father told mother a month in advance when J.’s first communion ceremony with his class would be held and that J. would take communion on his own the next time he went to church with father if he did not participate with his class. Mother voiced no objection to J. taking communion, but said that he would not be available to do so with his class because she had custody of J. on that day and had other plans. Father’s duty to inform mother of the new date for J.’s first communion may have been implied under his duty to consult, but it was not stated expressly in the decree. If the parties had intended that each parent give the other parent notice of the child’s activities so that the parent could attend or participate, they could have stated that clearly in the decree. Because father’s duty to advise mother of the new date was implied, rather than expressly stated, the trial court abused its discretion in finding father in contempt.

Not contempt, but certainly not very nice, right? Well, actually, in the Court of Appeals's version of the facts, he effectively DID tell her when it was going to happen, and she did not seem interested in attending:

Father is a practicing Catholic; mother is of another faith. However, mother knew that father was raising J. in the Catholic faith and had not objected to J.’s taking religious instruction classes to prepare for his first communion. J.’s class was scheduled to take their first communion as a group on Saturday, May 7, 2016. Because mother had custody of J. that weekend, father sent mother an email on April 13, 2016, telling her about the scheduled first communion and asking if J. could participate with his class. Father also told mother that if J. could not attend on May 7, he would take his first communion on his own the next time he went to church with father. Mother replied that she had plans for that weekend so J. would not be available, but she did not say that she objected to J.’s taking communion, nor did she ask to be informed of any alternative date. Mother knew that father went to church on Sundays. J. took his first communion on May 15, 2016. Mother learned he had done so on May 16, 2016, but she made no complaint for over a year until she sought the rule to show cause.

On fees, the Court upholds the denial of attorney's fees to the father, and declines to award him his fees on appeal.

Aviles v. Lewis, Va. Ct. App. unpublished 7/3/18. Opinion by Senior Judge Rosemarie Annunziata.

Voluntary retirement from 145K job at 58, active volunteering, don't prove earning capacity at 62

The Court of Appeals upholds a refusal to impute income to a 62-year-old retiree who had earned about $150,000 until four years earlier, and is "an active volunteer," in Collins v. Leeds, published, 5/29/18. Husband, a Navy retiree, had worked for Accenture and then as a civilian for the Navy, voluntarily retired from the government at 58, and not looked for employment after that. But the appellant had not offered any other evidence of current earning capacity. "wWife presented no evidence of employment positions currently available to husband or the income he could make in those positions based on his present circumstances." At the time of the trial, "his security clearances had expired, he had not worked in approximately four years, and he was approaching the age when many individuals retire."

The Court points out that the income used for imputation in Stubblebine (1996) had been just five months before the trial, and that it had reversed an imputation based on income just over one year before trial in Harber v. Harber (unpublished 2008). It also says that the Stubblebine imputation was upheld not because of the payor's vigorous unpaid work, which showed only his "physical and mental capacity to be gainfully employed," but because of his recent actual earnings.

Wife also appealed the trial court's alleged failure to consider $311,000 in recent fruitless legal expenses that affected her ability to make ends meet. She had sued a physical therapist for injuring her, and lost at every level, spending about $110,000. She still owed expert witnesses $20,500. She had spent $87,000 unsuccessfully suing her divorce lawyer for malpractice. The other $100K+ was spent in abortive litigation about marital assets several years after the divorce. Wife had translated these expenses into $6,000 per month on her income-expense sheet, but the trial court disregarded them because they were past, not current, expenses.

Wife argues that the trial court was required to consider her “financial resources” pursuant to Code § 20-107.1(E)(1), and her financial resources were “depleted by the hundreds of thousands of dollars in recent litigation costs.” She further argues that, because husband did not produce an expert witness to testify that the lawsuits she filed were frivolous or that the expenses she incurred were unreasonable, the legal expenses should have been included by the trial court as part of her total monthly expenses.

As the party seeking a modification of the spousal support or, as in this case, additional spousal support following the termination of the initial support period, wife bore the burden of showing, “in addition to a material change in circumstances, that the change ‘warrants a modification of support.’” Driscoll v. Hunter, 59 Va. App. 22, 33, 716 S.E.2d 477, 482 (2011) ... Since wife bore the burden of proving the legitimacy and need for these expenses and of their impact on her - 12 - current financial need, the trial court did not abuse its discretion in excluding the expenses incurred in these legal proceedings, which wife repeatedly – and unsuccessfully – chose to pursue. 

Fees: "Because wife’s appeal is so lacking in merit, we grant husband’s request for a reasonable amount of appellate attorney’s fees." 

Appeals court overturns finding that $10,000 payment was a gift to child, not part of what payor owed payee and was being sued for

Father owed mother back support and a delayed ED monetary award. He paid up after she sued, but she claimed one $10,000 payment to her was not for back support or ED, but was an extra gift to their adult son for his medical expenses and other needs. There was evidence to support her interpretation, including the son's name on the memo line, and the father's texting the son about the check, saying the mother could use if for the son's needs. The trial court refused to hold the father in contempt, but ordered him to pay $10,000 to finish paying what he owed.The Court of Appeals reverses in Monds v. Monds, 5/8/18.

It is exciting to see the Court encounter a trial court finding of fact that is so unbelievable that they reverse it. But the Court explains that whether something is a gift is not a fact question, it is "a question of law that we review de novo on appeal. Smith v. Mountjoy, 280 Va. 46, 53, 694 S.E.2d 598, 602 (2010)." And the presumptions and burdens are all against it:

“It is well settled that the law does not presume a gift and where a donee claims title to personal property by virtue of a gift inter vivos, the burden of proof rests upon him to show every fact and circumstance necessary to constitute a valid gift by clear and convincing evidence.” Rust v. Phillips, 208 Va. 573, 578, 159 S.E.2d 628, 631 (1968) (quoting Grace v. Virginia Trust Co., 150 Va. 56, 142 S.E. 378 (1928)). Therefore, in order to establish the existence of a gift, wife was required to prove, by clear and convincing evidence “(1) the intention on the part of the donor to make the gift; (2) delivery or transfer of the gift; and (3) acceptance of the gift by the donee.” Robinson v. Robinson, 46 Va. App. 652, 665, 621 S.E.2d 147, 154 (2005) (en banc) (quoting Theismann v. Theismann, 22 Va. App. 557, 566, 471 S.E.2d, 809, 813, aff’d on reh’g en banc, 23 Va. App. 697, 479 S.E.2d 534 (1996)). Furthermore “[a] clear and unmistakable intention on the part of the donor to make a gift of his property is an essential requisite to a gift inter vivos. And this intention must be inconsistent with any other theory.” Matthews v. Hanson, 145 Va. 614, 619, 134 S.E. 568, 569-70 (1926).

The mother claimed it was a gift to the adult son, and the Court of Appeals finds this inconsistent with the fact that the father wrote the check to her and deposited it into her account. It matters not that the son was a "linked" name on all her accounts, which the father may or may not have known. If he wanted to give the son a check he would have written it to him.

The notion that husband would have entrusted wife and his ex-mother-in-law – the joint owners of the account – with these funds instead of paying them directly to his adult child is particularly unbelievable in light of the circuit court’s finding that there was a “total lack of trust between the two of them [husband and wife].”

And "the state of husband’s financial affairs was inconsistent with any intention by husband to make a gift." He was way behind on child support, and was very worried about it, and the mother was reminding him of it and threatening to take him to court. And the deadline to pay a $100,000 monetary award loomed.

In addition, the text messages exchanged between husband and Zach indicate that husband was aware that he was paying this money to wife with only the hope that she would then choose to give this money to Zach. On the day husband made the deposit, he texted Zach, stating, “Deposit made today . . . PLEASE READ UR MOMS TX TO ME . . . . . I HOPE SHES TELLING THE TRUTH . . . BUT DOUBT IT . . . LOVE YAA.” This text message is consistent with husband’s testimony that he hoped wife would give the money to their son, Zach, but he feared that she would not. Husband also texted Zach on February 21, 2017, telling his son, “Hey zach i wud like to help u with ur bills . . . . even if ur mom gave u the 10GRAND LIKE SHE SAID SHE wud . . . . .” The message shows husband’s recognition that the money belonged to wife and that it was her choice whether to give the money to Zach. 

Although “[i]ntent is a question to be determined by the fact finder,” Cirrito v. Cirrito, 44 Va. App. 287, 305, 605 S.E.2d 268, 276 (2004), the circuit court here was plainly wrong in finding the required clear and convincing evidence of husband’s donative intent.

Mother claimed father could not appeal, because of Virginia's common-law rule that a refusal to hold someone in contempt cannot be appealed. That would be absurd, the Court of Appeals says. He was appealing not the refusal to hold him in contempt, but the ruling that he still owed $10,000.

Father, conversely, argued that the trial court did not have the power to enforce the obligation in another way once it refused to hold him in contempt. The Court of Appeals replies that the trial court always has the power to enforce its monetary awards, which is not surprising, but its reasoning might be:

“Monetary awards that arise in the context of a divorce differ from other monetary judgments. They compensate a party for his or her rights, equities, and interests in marital property.” Kahn v. McNicholas, 67 Va. App. 215, 226, 795 S.E.2d 485, 490 (2017). “When a monetary award is included in a separation or property settlement agreement, it oftentimes also provides compensation for the waiver of a party’s right to receive spousal support.” Id. at 226-27, 795 S.E.2d at 490. As a result of the unusual nature of monetary awards arising out of divorce, trial courts are vested with the “continuing authority and jurisdiction to make any additional orders necessary to effectuate and enforce any order entered” under Code § 20-107.3(K) ...

For the same point it cites Shoup v. Shoup, 31 Va. App. 621, 525 S.E.2d 61 (2000) and Green v. Robertson, (Va. Ct. App. Mar. 20, 2018). 

Father also argued that he did not have notice that other remedies would be considered, but the Court says the petition for a rule to show cause gave him adequate notice that she was trying to enforce everything that he still owed at the time it was filed. It asked for him to be held in contempt "'and compelled to comply with this Court’s orders'." And a money judgment is one of the remedies that may result from a petition for a rule to show cause, under Shoup and M. Morgan Cherry & Assocs. v. Cherry, 38 Va. App. 693, 703, 568 S.E.2d 391, 396 (2002).

Fees: The Court of Appeals says it cannot award fees to the father, because the agreement only provides for fees for enforcement, not for successfully defending against enforcement.

 

Oral order, or written one rejecting motion to reconsider, past 21 days, can't be reviewed, if no judgment stay requested; post-order objections in letters no good.

A mother's letters to the trial court, after a custody and visitation consent order was entered, do not preserve issues for appeal, the Court of Appeals ruled in Bracaloni v. Edge, unpublished 6/2/15. The letters claimed she had been “under duress and forced to sign” the agreement. The trial court treated them as a Motion to Reconsider, held a hearing on that within 21 days after the Order, and ruled from the bench that it denied her motion to reconsider. It did not put that ruling into a written order until after the 21 days had run. Even later than that, the mother filed objections. (Her letters had not asked the court to stay, vacate or suspend the original order. What should matter is whether the court DID stay its order, but perhaps the Court is saying the lack of a written request proves conclusively that the trial court did not do so.)

The Court of Appeals refuses to review the order that was made more than 21 days after the original order, and to consider the late written objections.

Mother indicated that her assignment of error was preserved in her motion to reconsider and her statement of objections, which were not timely. Therefore, mother’s assignment of error was not preserved and will not be considered.

The sentence above is not clear as to whether it was only the "objections, which were not timely", or the motion to reconsider AND the objections were both untimely. As the "motion to reconsider" was two letters written within the 21 days, it is not clear why that would be considered untimely, unless it is because they were not stated before the order was entered.

The Court finds the paternal grandparents "entitled to a reasonable amount of attorney’s fees and costs, and we remand for the circuit court to set a reasonable award of attorney’s fees and costs ... which also should include any additional attorney’s fees and costs incurred at the remand hearing. 

 

What looks like "imputing" income can actually be determining probable actual income, though undocumented; fee award for "chutzpah" in post-divorce litigation

One useful legal holding from Wilson v. Slivka, Va. Ct. App. unpub. 4/3/18, an opinion that mostly just illustrates how miserable, solitary, poor, nasty, brutish and long divorce can be. The opinion also uses the word "chutzpah" as a routine term, without making a big deal of it, putting it in quotes, giving a definition or an example, etc.

On the not-actually-imputation, explaining why the trial court did not fail to calculate the presumptive support using a finding of actual income before proceeding to "impute", the Court explains:

This Court’s holding in Floyd v. Floyd, 17 Va. App. 222, 436 S.E.2d 457 (1993), is noteworthy in the calculation of actual gross income instead of imputation of income. Floyd argued that the trial court imputed income to him before calculating the presumptive amount. Id. at 224, 436 S.E.2d at 458. This Court indicated that Floyd “mischaracterized the proceedings;” what the trial court did was calculate Floyd’s actual gross income. Id. at 229, 436 S.E.2d at 461. The trial court indicated that it found his annual income to be $45,000 “based on the depositions of prior years, the statement in testimony and the statement of money taken out of the business.” Id. at 225, 436 S.E.2d at 459. The trial court first considered that Floyd engaged in a “systematic scheme to hide assets,” had cashed and spent $70,000 in checks, and then determined his child support obligation pursuant to the guidelines. Id. at 229, 436 S.E.2d at 461.

While the trial court is permitted to deviate from the presumptive amount, it did not do so here. The trial court simply calculated appellant’s gross actual income and adhered to the corresponding presumptive amount of child support. This is analogous to Floyd, 17 Va. App. at 222, 436 S.E.2d at 457. The record leaves little room for doubt that the trial court found appellant’s representations less than credible. It noted his “poor track record” and highlighted his chutzpah in asking for an outright elimination of his support obligation in light of the trial court’s extensive familiarity with this case and its facts. Based on the evidence before it, the trial court concluded that appellant’s last known salary of around $141,600 constituted an “accurate reflection of his worth.” Accordingly, the trial court did not “impute” income; rather, it weighed the evidence and credibility to determine appellant’s income. The trial court properly applied the statutory steps and did not deviate from the presumptive amount. Accordingly, no written findings were required.

On fees, "the trial court’s passing reference to appellant not being the 'prevailing party'” -- not the proper standard for a fee award in this type of case -- does not make the fee award error, because it looks from the record as if the judge must have been considering the history of the case, which she recited in other contexts, and which included many facts that properly would justify a fee award, determined "as equity and justice may require.”

It cited a case about fees in "a divorce case and its ancillary proceedings" -- which adds that “This discretionary authority also extends to related post-divorce proceedings.” but which only cited statutes about fees in divorce cases, §§ 20-79 and 20-99. Tyszcenko v. Donatelli, 53 Va. App. 209, 222, 670 S.E.2d 49, 56 (2008), cited in  Mayer v. Corso-Mayer, 62 Va. App. 713, 733, 753 S.E.2d 263, 272 (2014). The present case was a post-decree enforcement and modification case.

But as as for fees on the appeal,

We decline to award attorney’s fees on appeal as the litigation “addressed appropriate and substantial issues and that neither party generated unnecessary delay or expense in pursuit of its interests.” Hackler v. Hackler, 44 Va. App. 51, 75, 602 S.E.2d 426, 438 (2004).

Agreement to pay young adult child's insurance & non-covered medical costs is enforceable, even after child support terminates

The Court of Appeals interprets an agreement to pay non-covered medical expenses as lasting as long as the child is eligible for the father's health insurance, given the wording of the agreement and its lack of anything saying otherwise, and dismisses other challenges to enforcement through contempt of court. Green v. Robertson, unpublished 3/20/18.

The agreement, incorporated in the divorce decree, said:

The Husband [father] agrees to maintain the minor children as a beneficiary of his present medical/hospitalization policy for so long as they may be entitled to said coverage. The parties agree to share equally the cost of any medical or dental expenses (including orthodontic) of the children not covered by said insurance.

 The mother brought a contempt case and also sued for breach of contract, to which the father countered with the widely-feared but little used concept of "merger", borrowed from real estate law -- the idea that the agreement was entirely swallowed up by the divorce decree and no longer exists. The mother nonsuited the breach claim, and her counsel admitted in court that it was "merged", so the Court of Appeals does not get to address that concept.

The trial court made some useful observations about interpreting common wording in family law documents:

The word minor is not limiting in this context ... It is descriptive. It describes the children who are the subject of this provision.  The children who at the time in the execution of the agreement were minors, that word, in its common sense reading, does not limit their entitlement only to the minority, but again simply is descriptive of who we are talking about. The kids were minor [sic] at the time of this agreement. This child being a minor at the time of this agreement, he is still now entitled and is apparently covered by insurance.

The trial court found that the obligation to provide insurance was still in force because the child in question still qualified for it, and that the non-covered costs obligation lasted as long as the obligation to provide insurance, but declined to find the father in willful contempt, or to award attorney's fees, because the father's interpretation was reasonable, though mistaken. But it ordered the father to pay half of some considerable bills for very serious medical problems. 

ENFORCEMENT PROCEDURES

On appeal, the father argued that only contempt was before the court, so the finding of no contempt should have put an end to the case. Mother had not filed any separate motion for enforcement. The Court replies:

We find the distinction between the title of these two motions an inconsequential matter of form. Mother’s affidavit and petition for rule to show cause recited the relevant facts required for the trial court to award her relief ... Most importantly, mother’s affidavit and petition for rule to show cause also specifically requested the relief ultimately granted by the trial court. ... Trial courts have the discretion to enforce decrees based on the filing of a show cause motion, even where no contempt is found.

Also, the agreement's incorporation made it generally enforceable as part of the divorce decree, and also made it a judgment, and the mother's motion sought to have the already-owed part of that judgment restated as a particular dollar amount.

INTERPRETATION

 Father raised several issues of interpretation. One was that the agreement was made long before the Affordable Care Act let children stay on their parents' insurance for several more years. But that does not change the "plain meaning" of “for so long as they may be entitled to said coverage”, the Court replies. 

... the agreement specifically contemplated that the time period for which the children may be provided coverage was subject to change, and it was purposefully drafted to extend father’s obligation to cover that shifting time frame. The agreement did not set a finite end date for the father’s obligation. ... Use of the word “may” suggests that the parties anticipated that the amount of time for which the children would be entitled to coverage would be subject to change and that father’s obligation to provide coverage was subject to those potential changes. 

As for the "minor children" wording discussed above, the Court adds that it would make the “for so long as they may be entitled to said coverage” wording "virtually meaningless" surplusage. It also notes that elsewhere in the agreement, the "minor children" are to remain life insurance beneficiaries until age 22, and to have college paid for.

And "entitled to said coverage", in the context of adult children on parents' health insurance, plainly means "qualified", not "entitled" in some stronger and narrower legal sense. And because there is not any other sense in which any child would be "entitled" to health insurance, to require such a non-existent entitlement would make the whole provision meaningless.

On the non-covered costs,

The reference to “said insurance” refers to the insurance discussed in the prior sentence ... and limits the obligation of the parties to pay for uncovered expenses to the period of time when the children had insurance coverage, regardless of their age.

So if the insurance were no longer available to cover them, the non-covered costs obligation would expire with it; but here, the insurance and the obligation were still in effect.

FEES

Even though the trial court did not think the father should have to pay a fee award, the appeals court said fees for the appeal should be awarded because he had defaulted on performance of the agreement, and the agreement said "the defaulting party will indemnify the other for all reasonable expenses and costs, including attorney’s fees, incurred in successfully enforcing the terms of this Agreement.”

Court stresses limits of "manifest injustice" exception to rule against alimony for adulterers, especially if millionaires

Virginia's Court of Appeals overturned an alimony award that had been made despite the recipient's adultery under the "manifest injustice" exception. The Court said manifest injustice must be obvious, not speculative, and amount to destitution in terms of potentially income-producing assets as well as income, at least in a case where the payor does not share much of the fault during the course of the marriage and its breakdown.

Code § 20-107.1(B) allows alimony despite adultery

if the court determines from clear and convincing evidence, that a denial of support and maintenance would constitute a manifest injustice, based upon the respective degrees of fault during the marriage and the relative economic circumstances of the parties. 

In this case,"Wife admitted to numerous acts of adultery," which the trial court found was the “primary reason for the destruction of the marriage.” The trial court wrote:

counsel for [wife] conceded that there was no significant fault on [husband]’s part. The [c]ourt agrees. [Husband] made nearly all of the monetary contributions to the well-being of the family, and made significant and consistent non-monetary contributions. [Husband] dedicated virtually all of his non-working hours to his family. He was involved in the daily care of the children and made substantial contributions to their extracurricular activities.

As the appeals court recounts,

... wife received assets worth approximately $1.8 million, including about $397,000 in cash and over $1.3 million in retirement funds. Husband’s net worth is about $1 million. Husband received the marital home, which has a net worth of $779,695. Husband also agreed to pay all of the education expenses of the parties’ two children. One of the children was in college, and the other child was in medical school. The trial court relied upon the disparity in earning capacity between husband and wife to find a “manifest injustice.”

That disparity was great. As the husband earned $850,000 a year, the disparity would have been great even if the wife had an ample income and no need for support. The trial court found that the wife had not worked for most of the marriage, but could be earning $22 per hour within a few months, and would earn between $27,500 and $33,000 per year if she worked 25 to 30 hours a week. 

The standard for finding MIJ is "clear and convincing" proof, the Court reminds us. And 

the expression “manifest injustice,” outside of domestic relations law, “has been used synonymously with the phrase ‘miscarriage of justice.’ Harris v. DiMattina, 250 Va. 306, 318, 462 S.E.2d 338, 343 (1995).

Further, this is not a typical "balancing of several factors" test. It is based on only two factors: (i) relative degrees of fault and (ii) economic disparities. Quoting Congdon v. Congdon, 40 Va. App. 255, 263, 578 S.E.2d 833, 837 (2003):

the court must base that finding on the parties’ comparative economic circumstances and the respective degrees of fault.” Barnes v. Barnes, 16 Va. App. 98, 101-03, 428 S.E.2d 294, 298 (1993) (emphasis in original). We italicized the word “and” in Barnes precisely because the statute makes clear that the decision must be rooted in both factors.  

Quoting Giraldi v. Giraldi, 64 Va. App. 676, 685-86, 771 S.E.2d 687, 692 (2015):

“By its very definition, . . . a ‘manifest injustice’ cannot be speculative. See Black’s Law Dictionary 974 (7th ed. 1999) (defining ‘manifest injustice’ as ‘direct, obvious, and observable’).”

The Court continues,

Neither requires proof by clear and convincing evidence independently. Rather, it is the confluence of both streams of evidence—of fault and of relative economic circumstances—that must rise, by the clear and convincing standard, to constitute manifest injustice.

It contrasts the present case with Congdon, which (according to the facts available to it in that case) combined the husband's "twenty years of profane and base behavior" with “extreme disparities” in assets, incomes and earning capacity; it says Mrs. Congdon had no significant "separate assets" and earned $10/hr. as a receptionist.

This wife's potential earnings of $25,000 to $33,000 do not seem that different from those in Congdon, considering that it went to trial around 2000. But the Court notes that at age 55, the wife is very few years away from being able to draw on the retirement accounts she received. Therefore,

We discern the legislative impulse behind the manifest injustice exception is to prevent leaving a spouse destitute as a result of an act of adultery. It would be a manifest injustice to require a faultless spouse to pay support to a work-capable, millionaire spouse, guilty of repeated acts of adultery with several co-respondents. The disparity in earning capacity, on these facts, is not sufficient to rise to the level of a manifest injustice.

An award of reasonable fees for the appeal is appropriate, the Court said.

Mundy v. Mundy, 66 Va. App. 177, 783 S.E.2d 535 (2016)

See also: Court of Appeals reverses alimony reservation award to adulteress; uncertain future cannot be "manifest injustice" (2015)