Ann M. Santos v. Robert O. Santos

• Court: Court of Appeals of Virginia
• Decided: March 7, 2000
• Docket: 2712984
• Status: Unpublished

Opinion

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will not be rescinded or reformed absent evidence of fraud by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

- 2 - 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).

- 3 - 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

- 4 - 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

- 5 - 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.

- 6 - For the reasons stated in this opinion, we affirm the

court's ruling on both the real estate and pension valuation

issues.

Affirmed.

- 7 - 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

- 8 - 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

- 9 - 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,

- 10 - 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.

- 11 -