The Virginia Court of Appeals issued unpublished opinions recently in Mustafa, Davis, Schuman, Harrison and Trimble. They cannot be cited as legal authority; but they are useful reminders of established principals of law. I will review each decision.

 

            Mustafa (April 13, 2010). This is a sad case and an expensive misadventure for Mr. Mustafa. He went to Asia three times (for courtship, wedding and a honeymoon) before getting his bride and stepdaughter to the States. Then his wife refused sexual relations with him even after consulting three therapists.

            Mustafa filed suit for annulment (to declare the marriage void). At trial, the wife said that the parties had consummated the marriage (by having sex) but Mustafa claimed they hadn’t. How could a judge decide who was telling the truth?

            The most interesting aspect of this decision is how Loudoun County Circuit Judge Thomas D. Horne established Mustafa’s credibility in four different ways: (1) There was no evidence of physical affection; (2) Wife insisted her daughter and a male friend of hers accompany the newlyweds on their honeymoon; (3) Wife told Mustafa’s ex-wife she never intended to have sex with Mustafa; and (4) Mustafa’s son testified his dad often slept in a separate bedroom from his new bride.

            Mustafa obtained an annulment by proving a fraudulent marriage. But his ex was not through with him yet. He still had to pay a lawyer to defend him against the ex’s appeal, to make sure his trial court victory got affirmed.

  

            Davis (April 13, 2010). This is a come-from-behind custody victory for dad. At the time of the parties’ initial separation, dad threatened to kill himself, mom took off with the child, and dad did not see the child for six months. Dad’s case for primary custody had to appear bleak at that point. However, from that moment forward he did everything right and mom did a couple of important things wrong.  He went to his therapy and treatment and cooperated with the custody evaluator. Mom attempted to sabotage visitation, and a communications glitch resulted in her not receiving the evaluator’s home visit.

            At trial, what a turn-around! Both the evaluator and the GAL recommended joint legal and primary physical for dad. The judge touched on all the statutory factors, and proposed that the parties waive rebuttal following closing arguments. Mom’s counsel did not object to giving up her right to rebuttal, so the issue was unavailable on appeal.

            The Court of Appeals affirmed with its oft-repeated pronouncement that trial rulings are inviolate unless plainly wrong or lacking evidence of record. What impressed me about Davis is how far the father came in rehabilitating himself between the date of separation and the date of trial. Way to go, dad!

 

            Schuman (April 20, 2010). Most premarital agreements (“PMA’s”) are in case of divorce. Here, only three PMA provisions applied at divorce while the rest were triggered by the death of a party.  None of the three divorce provisions talked about equitable distribution. Fairfax Circuit Judge Gaylord Finch correctly incorporated the PMA into the final decree (recognizing that the PMA expressly called for that); but he mistakenly found the PMA contained an ambiguity, and then applied the PMA formula to divide certain items of marital property.

            The Court of Appeals wrote that “The [trial] court did not state the basis of its finding that ‘some of the terms are ambiguous,’ nor did it identify the terms the court found ambiguous or the testimony upon which it relied that clarified their meaning.” Further, the contract was not ambiguous just because the parties disagreed about the meaning of certain language.

            Each PMA provision Judge Finch invoked at ED was silent as to divorce. Moreover, the appellate court continued, “[t]he trial court’s construction fails to consider the Agreement as a whole and ignores the clear meaning of the same words used in other parts of the Agreement which the court, tellingly, concluded required the application of the Agreement solely upon death.” Finally, “we note the trial court’s construction essentially and improperly treats as meaningless the words of bequest…”

            The appellate court tagged the wife for $15,000.00 of waste. Husband established she withdrew that amount when the marriage was in trouble, and she presented no “verifiable” explanation of what happened to it.

            So many appeals seem fail due to attorneys not making a record in front of the trial judge. Lawyers are required to announce the trial judge’s alleged error of law or procedure before they appeal; thereby providing an opportunity for the lower court to rectify it.  A Schuman footnote mentions the four ways to keep issues viable: a motion to strike, closing argument, a motion to set aside a (jury) verdict, and a motion to reconsider. Maybe the Court of Appeals or the State Bar should publish a checklist.

  

            Harrison (April 27, 2010).

Rule 5A:20(e) mandates that appellant’s opening brief include "[t]he principles of law, the argument, and the authorities relating to each question presented . . . ."  Husband did not comply with Rule 5A:20(e) because his opening brief did not contain any principles of law or citation to legal authorities to fully develop his argument.

            The question to me is not so much how appellate counsel could make such a catastrophic drafting omission, but rather how this error happens so often.

            Trimble (April 27, 2010). Divorcing parties agreed in a property settlement agreement (“PSA”) to convey title to Wife and freeze husband’s share of equity in the marital home as of the signing date, with Wife to pay him off months later. Wife intended to refinance and keep the house. Absent her timely payment, the house had to be listed for sale. This arrangement is common to divorcing couples; but it is uncommon is for the fair market value of the former marital home to nose dive between the date of the agreement and the refinance.

 

            Wife foresaw that her refinance proceeds might be dramatically inadequate to pay Husband what she owed him. Therefore, instead of letting the refinance deadline pass and become forced to sell the home she hoped to preserve for herself and her child, she chose to do something clever; she filed a declaratory judgment action.

            Fairfax Circuit Court Judge Dennis J. Smith, distinguished adjunct professor at George Mason School of Law and one of the foremost family law judges in Virginia, correctly denied Husband’s demurrer, thereby allowing Wife’s action to proceed. But in a rare and deferentially worded reversal of Judge Smith, the Court of Appeals (Elder, J.) concluded that he had failed to properly construe the parties’ contract.

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            The PSA contained paragraphs describing what Husband would receive from equity (”Payout”); followed by paragraphs addressing consequences of a forced sale and a shortfall in sales proceeds (“Shortfall”):

 

Payout Language: 

Wife shall pay Husband $148,895.00 by June 1, 2009. Husband shall transfer title to Wife at PSA signing. [Judge Smith and the Court of Appeals agree that from the PSA signing forward, Wife was exclusively responsible for any loss of equity, and was the sole beneficiary of any gain in equity.]

 

 

Shortfall Language:

If Wife fails to pay Husband $148,895 by June 1, 2009, she must list the house for sale. The PSA describes the method of allocating proceeds from a forced sale; it says if there is not enough money from the sale to pay off the mortgage and closing costs, then Wife is solely responsible for both of those expenses and must hold Husband harmless.

 

 

The “Shortfall” paragraph says nothing about Wife owing Husband any money in the event that there is not enough cash to pay settlement costs out of sale proceeds.

 

Legal Position of Husband, Adopted by the Virginia Court of Appeals:

 

The “Shortfall” paragraphs add to the “Payout” paragraphs; they are not contradictory. In other words, the “Shortfall” paragraphs are absolute; Husband is entitled to the same share of equity on the specified payment date regardless of whether the house value rises or falls between the PSA date and June 1, 2009.

 

 

Legal Position of Wife, Adopted by the Trial Judge, Dennis J. Smith:

 

The “Payout” and “Shortfall” paragraphs are different methods for calculating the amount of money Husband shall receive.

 

“{T}he trial court’s reliance on the principle of contract construction, "expressio unius est exclusio alterius," … provides that "’if a [written instrument] covers particular or express matters, the intention may be inferred to exclude other subjects which the general words of the [instrument] may [otherwise] have been sufficient to include.’" In other words, if the parties had intended for Husband’s payout to remain the same in the event of a forced sale and shortfall, they would have said so. Since the parties identified other recipients of shortfall proceeds without mentioning Husband, the parties intended by implication (and by application of the rule of contract construction) for Husband to receive nothing in that circumstance.

 

            The Court of Appeals ruled in favor of Husband because the “Shortfall” paragraph defined the nature and amount of Wife’s obligation to the Husband, and because the “Shortfall” paragraph addressed indemnity payments under different contracts (the listing contract and the mortgage) without addressing the Husband and Wife contract which was the PSA.

            This is a correct assessment and certainly justifies the ruling, but I think the Court of Appeals could have made a stronger argument. It could have referred to the principal of contract construction that when presented with a choice between reading paragraphs in harmony and reading them in contradiction, they should be read in a manner consistent with each other. Otherwise, interpretation of the PSA required an inference of terms that the parties did not include themselves. (That presumptively inferred language – which would be required by Judge Smith’s interpretation of the PSA — consists of prefacing the “Shortfall” paragraph with the modifying word “however”; or adding a sentence at the end of the paragraph saying “In case of a shortfall, Husband shall receive nothing.”)

            Moreover, the Court of Appeals might have mentioned that Judge Smith misapplied the “exclusion unius” principle of contract construction that he relied upon. That principle is designed for interpreting a single sentence, paragraph, or agreement. It does not create a balancing test based on the extent to which parties mention or omit items in a multitude of places.

            Another rule of contract interpretation states applicable here is that it is wrong as a matter of law to re-write an unambiguous contract by inserting language parties left out. Here, the language read into the PSA imposed a contingency: Husband had to gamble his equity stake on the rise or fall in property values between the date of the PSA and the date of Wife’s payment to him. This is harsh. A shortfall of as little as one dollar under Wife’s legal theory reduces Husband’s equity share from $148,895.00 to zero. It is implausible Husband would have agreed to that, and surprising a court would impose such draconian language out of whole cloth.

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            The parties could have avoided this controversy with an extra sentence in the “Shortfall” paragraph stating whether it was intended to modify Husband’s share or not. We know that lawyers drafting contracts do not think of everything. That is why we have rules of contract construction, occasional errors in their application by trial courts, and corrective appellate decisions like this one.