Ann M. Santos v. Robert O. Santos ( 2000 )

COURT OF APPEALS OF VIRGINIA
Present: Judges Elder, Annunziata and Lemons
Argued at Alexandria, Virginia
ANN M. SANTOS
MEMORANDUM OPINION * BY
v. Record No. 2712-98-4 JUDGE ROSEMARIE ANNUNZIATA
MARCH 7, 2000
ROBERT O. SANTOS
FROM THE CIRCUIT COURT OF FAIRFAX COUNTY
Kathleen H. MacKay, Judge
Peter M. Fitzner (Matthews, Snider, Norton &
Fitzner, on brief), for appellant.
Ronald L. Eakin (Ronald L. Eakin, P.C., on
brief), for appellee.
Anne M. Santos (wife) appeals from the decision of the
Fairfax County Circuit Court which, upon her divorce from
Robert O. Santos (husband), interpreted the meaning of the
parties' post-nuptial property agreement. On appeal, wife
contends the court erred in valuing husband's real property and
civil service retirement pension under the terms of the
agreement. We hold the trial court did not err in valuing the
contested assets, and we affirm.
VALUATION OF REAL ESTATE
"Property settlement . . . agreements are subject to the
same rules of construction and interpretation applicable to
* Pursuant to Code § 17.1-413, recodifying Code
§ 17-116.010, this opinion is not designated for publication.
contracts generally." Fry v. Schwarting, 4 Va. App. 173, 180,
355 S.E.2d 342, 346 (1987). "[O]n appeal if all the evidence
which is necessary to construe a contract was presented to the
trial court and is before the reviewing court, the meaning and
effect of the contract is a question of law which can readily be
ascertained by this court." Id."The construing court must give effect to all of the
language of [the instrument] if its parts can be read together
without conflict." Kelln v. Kelln, 30 Va. App. 113, 125, 515
S.E.2d 789, 795 (1999) (quoting Berry v. Klinger, 225 Va. 201,
208, 300 S.E.2d 792, 796 (1983)). "[A] unilateral mistake . . .
will not be rescinded or reformed absent evidence of fraud by
the other party." J & D Masonry, Inc. v. Kornegay, 224 Va. 292,
295, 295 S.E.2d 887, 889 (1982). When "the trial court fully
approve[s] the report of a commissioner in chancery . . . the
trial court's decree will not be reversed on appeal unless it is
plainly wrong." Chaney v. Haynes, 250 Va. 155, 158, 458 S.E.2d
451, 453 (1995).
We hold the trial court did not err in approving the
commissioner's report on the value of husband's real estate and
in determining the fair market value by taking into account the
amount of the outstanding mortgages. Wife contends the court
should have based its valuation of the real estate on a
dictionary definition of "fair market value," which, she
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contends, does not reflect consideration for outstanding liens
or encumbrances on the subject property. 1 We disagree.
The parties' intent in employing the term "fair market
value" in their marital agreement must be determined from the
contract itself. Marital agreements are contracts and are
subject to the same rules of construction that govern contracts
generally. See Douglas v. Hammett, 28 Va. App. 517, 523, 507
S.E.2d 98, 101 (1998) (separation agreements and property
settlement agreements are contracts); Tiffany v. Tiffany, 1
Va. App. 11, 15, 332 S.E.2d 796, 799 (1985) ("[W]e must apply
the same rules of interpretation [to property settlement
agreements as are] applicable to contracts generally."). "It is
the function of the court to construe the contract made by the
parties, not to make a contract for them." Wilson v. Holyfield,
227 Va. 184, 187, 313 S.E.2d 396, 398 (1984) (citations
omitted). The applicable rules of construction require us to
construe all provisions of the contract together and to
determine the meaning in this fashion where possible. See
Kelln, 30 Va. App. at 125, 515 S.E.2d at 795 (citing Berry, 225
Va. at 208, 300 S.E.2d at 796.)
1
"Fair Market Value" is defined as "[a]n amount at which
property would change hands between a willing buyer and a
willing seller, neither being under any compulsion to buy or
sell and both having reasonable knowledge of the relevant
facts." Black's Law Dictionary 537 (5th ed. 1979).
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Here, the property values used in husband's 1981 schedule
of assets (attached to the PSA) clearly resulted from a
calculation of the fair market value of the property less the
outstanding mortgage balance. Indeed, wife stipulated that the
value placed on the property at that time was "net of any
encumbrances." We cannot say from the evidence that the trial
court's decision to approve the report of the commissioner in
chancery on this issue is plainly wrong. We accordingly
conclude that the trial court correctly construed the agreement
as a whole, including the attached schedules of assets, to
determine the parties' intent and that the court properly
calculated the value of husband's real estate in 1991 in light
of the methods actually used to determine the value of husband's
real estate in 1981.
Accordingly, we affirm the trial court's valuation of
husband's real estate under the agreement.
VALUATION OF PENSION
We also hold that the trial court did not err in rejecting
the commissioner's report on the issue of husband's pension and
in concluding that husband's right to receive retirement
benefits on a monthly basis until his death was not an asset
under the terms of the parties' agreement. "When a chancellor
refers a cause to a commissioner for assistance and relief from
certain duties incidental to the progress of a cause . . . [h]e
is not bound by the commissioner's recommendations. It is the
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chancellor's duty to review the evidence according to the
correct principles of law and arrive at his own conclusions."
Lawrence v. Lawrence, 212 Va. 44, 47, 181 S.E.2d 640, 643 (1971)
(citing Green v. Green, 199 Va. 927, 931, 103 S.E.2d 202, 204-05
(1958)). If the trial court determines that the commissioner's
findings are not supported by the evidence, the court should
reject them. See Jones v. Jones, 26 Va. App. 689, 694, 496
S.E.2d 150, 153 (1998).
"[W]here the chancellor has disapproved the
commissioner's findings, [an appellate
court] must review the evidence and
ascertain whether, under the correct
application of the law, the evidence
supports the findings of the commissioner or
the conclusions of the trial court. Even
where the commissioner's findings of fact
have been disapproved, an appellate court
must give due regard to the commissioner's
ability, not shared by the chancellor, to
see, hear and evaluate the witnesses at
first hand."
Id. (quoting Hill v. Hill, 227 Va. 569, 576-77, 318 S.E.2d 292,
296-97 (1984) (additional citations omitted)).
Husband's list of assets, which was made part of the
agreement, indicated that his retirement fund had a value of
$25,820.90 at the time the parties executed the agreement. The
value established was the cash value of the account based on
husband's contributions to it. The uncontradicted evidence also
established that husband withdrew his cash contributions and
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their earnings when he retired in 1989. 2 The trial court valued
the husband's pension using the method of valuation used by the
parties themselves in the agreement and found, based on the
evidence, that husband's retirement did not have any value at
the time of the parties' divorce. The court's underlying
premise was that any other construction would contravene the
intent of the parties as exhibited by the method of valuation
used in 1981. Because the parties' agreement required valuation
and division of the parties' assets upon termination of the
marriage and made no provision for division of future benefits,
the trial court lacked the authority to order a division of such
funds under the terms of the agreement. While such a
construction of the agreement may result in a windfall to
husband, "[c]ourts cannot relieve one of the consequences of a
contract merely because it was unwise . . . [or] rewrite a
contract simply because the contract may appear to reach an
unfair result." Pelfrey v. Pelfrey, 25 Va. App. 239, 245, 487
S.E.2d 281, 284 (1997) (citation omitted).
2
The trial court found the agreement ambiguous and held
that the commissioner properly accepted parol evidence to aid in
interpreting the agreement. On appeal, neither party objects to
this evidence.
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For the reasons stated in this opinion, we affirm the
court's ruling on both the real estate and pension valuation
issues.
Affirmed.
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Elder, J., concurring, in part, and dissenting, in part.
I concur in the portion of the majority opinion which
affirms the ruling of the trial court on the real property
valuation issue. However, I would hold that the majority errs
in affirming the trial court's ruling on the pension valuation
issue. Therefore, I respectfully dissent.
I would hold the trial court erred in failing to give
proper deference to the commissioner's recommendation that
husband's right to receive monthly retirement benefits of $2,020
was an asset with a value of $390,938 under the parties'
agreement. The trial court acknowledged the proper standard but
failed to apply it:
While the report of a commissioner in
chancery does not carry the weight of a
jury's verdict, Code § 8.01-610, it should
be sustained unless the trial court
concludes that the commissioner's findings
are not supported by the evidence. This
rule applies with particular force to a
commissioner's findings of fact based upon
evidence taken in his presence, but is not
applicable to pure conclusions of law
contained in the report. On appeal, a
decree which approves a commissioner's
report will be affirmed unless plainly
wrong; but where the chancellor has
disapproved the commissioner's findings,
this Court must review the evidence and
ascertain whether, under a correct
application of the law, the evidence
supports the findings of the commissioner or
the conclusions of the trial court. Even
where the commissioner's findings of fact
have been disapproved, an appellate court
must give due regard to the commissioner's
ability, not shared by the chancellor, to
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see, hear, and evaluate the witnesses at
first hand.
Hill v. Hill, 227 Va. 569, 576-77, 318 S.E.2d 292, 296-97 (1984)
(citations omitted); see Jones v. Jones, 26 Va. App. 689,
694-95, 496 S.E.2d 150, 153 (1998).
Here, the parties' agreement listed husband's "Retirement"
as an asset having a value of $25,820.90 as of January 1981.
Contrary to the detail provided in the real estate schedule, the
agreement provided no indication of how the value of husband's
retirement was calculated. At the hearing before the
commissioner, husband testified that the value he placed on his
retirement as of 1981 was how much he had contributed, which was
equal to the pension's "cash out value" if he terminated
employment. He also testified that when he retired on December
30, 1989, he took the cash value of the account in a lump sum of
about $55,000, which equaled his contributions to the account,
and that the account had no cash value after that time.
Wife introduced conflicting evidence of the pension's
value. She offered the testimony of Thomas Borzilleri, an
economic consultant accepted by the commissioner as an expert on
pension valuation. Borzilleri explained that, even after
husband took the $55,000 lump sum payment on his retirement, he
was entitled to $2,020 per month for the remainder of his life.
Borzilleri then opined that husband's pension benefit had a
market value of $390,938 as of the date of the parties' divorce
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based on "the price the Federal Government would have to pay in
today's financial markets, to discharge its pension liability to
[husband], by purchasing a replacement contract to pay the
promised benefit."
The commissioner construed the agreement and the attached
property value charts together as one complete agreement and
concluded that, because husband's value chart listed his
retirement, the parties must have intended to include the value
of the retirement in their agreement. He then accepted the
expert testimony of value offered by wife as "the only competent
evidence of value of the pension." Implicit in this statement
is that the commissioner rejected husband's testimony about the
parties' method of valuing the pension when the agreement was
executed and his method of valuing the pension as of the
parties' divorce. This rejection is consistent with the
principle that ambiguous contractual provisions should be
strictly construed against the contract's drafter, see Jennings
v. Jennings, 12 Va. App. 1187, 1194, 409 S.E.2d 8, 13 (1991),
--in this case, husband.
The trial court, in rejecting the commissioner's
recommendation, credited husband's testimony as to the parties'
method of valuing the pension in the agreement and as to the
value of the pension at the time of the divorce. On review of
this ruling, as set out above, we "must give due regard to the
commissioner's ability, not shared by the [trial court], to see,
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hear and evaluate the witnesses at first hand." Jones, 26 Va.
App. at 694, 496 S.E.2d at 153. Under this standard, I would
hold that the evidence, including the implicit credibility
determinations made by the commissioner, supports the
commissioner's recommendation. Here, as in Jones, "[t]his is
not to say there is no evidence to support the trial court's
conclusion. However, the commissioner's report came to the
trial court with a presumption of correctness, and the trial
court made no finding that the commissioner's report was
unsupported by the evidence." Id. at 695, 496 S.E.2d at 153(citations omitted). Further, as set out above, the evidence
supports the commissioner's recommendation.
For this reason, I would reverse the ruling of the trial
court on the pension valuation issue and remand to the trial
court for a ruling that wife is entitled under the agreement, in
addition to the amount the trial court already awarded wife, to
half the value of husband's civil service retirement benefit as
determined by the commissioner. Therefore, I respectfully
dissent from the majority's affirmance of this issue.
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