Michele K. Hyde v. Matthew J. Howells

CourtCourt of Appeals of Virginia
DecidedSeptember 16, 2025
Docket2043234
StatusUnpublished

This text of Michele K. Hyde v. Matthew J. Howells (Michele K. Hyde v. Matthew J. Howells) is published on Counsel Stack Legal Research, covering Court of Appeals of Virginia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Michele K. Hyde v. Matthew J. Howells, (Va. Ct. App. 2025).

Opinion

COURT OF APPEALS OF VIRGINIA UNPUBLISHED

Present: Judges Ortiz, Raphael and Senior Judge Annunziata Argued by videoconference

MICHELE K. HYDE MEMORANDUM OPINION* BY v. Record No. 2043-23-4 JUDGE DANIEL E. ORTIZ SEPTEMBER 16, 2025 MATTHEW J. HOWELLS

FROM THE CIRCUIT COURT OF FAIRFAX COUNTY John M. Tran, Judge

Demian J. McGarry (Curran Moher Weis, P.C., on brief), for appellant.

Andrew R. Tank (Miles D. Franklin; The Law Offices of Miles D. Franklin, LLC, on brief), for appellee.

In 2021 Michele Hyde (“wife”) and Matthew Howells (“husband”) were divorced after

nearly two decades of marriage. Although we expect no divorce to be simple, in this case

husband’s atypical financial circumstances have spurred significant litigation, which is how the

matter comes before this Court. Appealing the trial court’s modification of child support, wife

challenges the court’s interpretation of her marital settlement agreement, and several other

procedural rulings. Specifically, she contends that the trial court erred by excluding husband’s

significant “additional income,” in the form of stock options, from his gross income for purposes

of calculating child support. We agree that the plain language of the agreement includes

husband’s additional income as part of his gross income for purposes of calculating child

support, and therefore reverse.

* This opinion is not designated for publication. See Code § 17.1-413(A). BACKGROUND1

Husband and wife married on July 15, 2000. They have three children together, two of

which are emancipated. Husband is an employee of Palantir Technologies; in 2021 his salary

was $347,400, but his total income exceeded $1.8 million due to the redemption of stock he

received as an employment benefit. During the marriage, wife did not work outside the home.

Wife filed for divorce on February 19, 2021, maintaining that she and husband had

entered into a marital settlement agreement (“the agreement”) on April 1, 2020, which

“resolve[d] all custody, support, and equitable distribution issues pending between the parties.”

The Fairfax County Circuit Court granted the divorce on March 2, 2021, and ratified and

incorporated the agreement into its decree.

The relevant provisions of the agreement are as follows. Section 6(a) provides that

husband will pay wife 27% of his “gross income” in spousal support. The agreement

incorporates Code § 20-108.2’s definition of gross income,2 but Section 6(a) of the agreement

notes that “any Additional Income . . . shall not be considered part of Husband’s gross income.”

Section 4(g) states that “Additional Compensation may be in the form of stock options, restricted

stock units, or any other device intended to provide husband with income/assets related to the

value of his employer or his performance, which may or may not vest over a period of time.”

1 On appeal, we take the evidence in the light most favorable to husband, the prevailing party below. See D’Ambrosio v. D’Ambrosio, 45 Va. App. 323, 335 (2005). 2 Code § 20-108.2 states that gross income

means all income from all sources, and shall include, but not be limited to, income from salaries, wages, commissions, royalties, bonuses, dividends, severance pay, pensions, interest, trust income, annuities, capital gains, social security benefits except as listed below, workers’ compensation benefits, unemployment insurance benefits, disability insurance benefits, veterans’ benefits, spousal support, rental income except as listed below, gifts, prizes, or awards. -2- Section 6(c) lays out the timeline and requirements for recalculating spousal support. It provides

that,

[e]ach year, . . . [o]n or before May 1, the parties shall recalculate Wife’s spousal support using the formula above and agree to the new spousal support figure on or before May 15th. . . . If the parties cannot agree on the new spousal support figure, the issue may be litigated on a Motions Day in the appropriate Court and any order shall be retroactive to June 1st.

Although husband’s additional income is excluded from spousal support, Section 4(g) requires

that 30% “of the net of taxes of any such Additional Compensation when it becomes taxable” to

husband be placed in a trust for the health, education, maintenance and support of the children

(commonly known as a HEMS trust); Section 6(d) likewise requires that wife receive 25% of the

same.

Finally, Section 8 of the agreement governs child support. It provides that

[t]he parties agree that guideline child support is appropriate. If, as, and when spousal support is recalculated pursuant to Section 6 above, the parties shall likewise re-run the child support guidelines to determine the appropriate figure to begin June 1. Using the current spousal support figures, Husband shall pay to Wife the sum of $2,428.00 per month for the support and maintenance of their minor children . . . .

Husband’s additional income and its role in the provisions discussed above is central to

this case. Husband receives stock options and restricted stock units (“RSUs”) as a benefit of his

employment with Palantir.3 He was granted 40,000 stock options when he was hired by Palantir

in 2015, and then another 36,126 stock options in 2016. Husband is taxed on the RSUs when

3 A restricted stock unit is a form of employee compensation that vests to an employee after certain requirements are met, such as length of employment. RSUs are taxed when they vest in accordance with I.R.C. § 83(A), which states that property transferred “in connection with the performance of services” “shall be included in the gross income of the person who performed such services in the first taxable year” in which it vests. -3- they vest; he generally sells some to pay taxes and retains the remainder, which he can sell

whenever he sees fit.

Palantir went public in September 2020, resulting in husband receiving $747,038 in

immediately taxable RSUs and stock options. Pursuant to the agreement, husband paid wife

$91,298 (25%) and placed $109,557 (30%) in a HEMS trust for the children. In June 2021 when

husband and wife were due to recalculate spousal and child support, they disagreed as to whether

the RSUs and stock options factored into husband’s total gross income for child support under

Section 8.

On August 27, 2021, husband filed a motion to recalculate child support, arguing that his

receipt of stock options, even if immediately taxable, should not be included in child support

calculations until sold. He argued that the court retained jurisdiction over his claim (although

more than 21 days had passed since entry of the final divorce decree) because the agreement

allowed any disagreement stemming from the annual recalculation of spousal support to be

“litigated in a Motions Day hearing.” He noted that, while Section 6(a) excluded his additional

income from spousal support, 6(d) provided that wife would receive 25% of the additional

income. But there was no “parallel exclusion” of additional income from child support in

Section 8, even though 4(g) provided that the children would receive 30% of additional income

via the HEMS trust. Therefore, he argued, including additional compensation in child support

“would result in ‘double counting’ the RSUs.” The trial court, with a different judge presiding,

denied husband’s motion to recalculate, holding that the agreement did “not provide for any

deviation from the Virginia child support guidelines, and so must include each party’s income

from all sources.”

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