COURT OF APPEALS OF VIRGINIA
Present: Chief Judge Fitzpatrick, Judges Benton, Willis, Elder,
Bray, Annunziata, Bumgardner, Frank, Humphreys, Clements
and Agee
Argued at Richmond, Virginia
SUSIE VIRGINIA GALLAGHER
OPINION BY
v. Record No. 2443-99-4 JUDGE LARRY G. ELDER
MAY 15, 2001
PATRICK STEPHEN GALLAGHER
UPON A REHEARING EN BANC
FROM THE CIRCUIT COURT OF FAIRFAX COUNTY
R. Terrence Ney, Judge
Marcia M. Maddox (Teresa S. Cole; Cynthia A.
King; Law Office of Marcia M. Maddox, on
briefs), for appellant.
Sharon K. Lieblich (Carolyn M. Grimes;
Sharon K. Lieblich, P.C., on brief), for
appellee.
Susie Virginia Gallagher (mother) appeals from a ruling of
the Circuit Court of Fairfax County (trial court) which awarded
her former husband, Patrick Stephen Gallagher (father), credit
for non-conforming child support payments following the parties'
mediated adjustment of their joint physical custody arrangement.
On appeal, mother contends the trial court erroneously (1)
applied the exception established in Acree v. Acree, 2 Va. App.
151, 342 S.E.2d 68 (1986), to father's court-ordered child
support obligation to effect an improper retroactive
modification of support; (2) admitted into evidence father's
exhibit of comparative household expenditures; and (3) denied
mother's request for attorney's fees. A panel of this Court
disagreed with mother's contentions and, with one judge
dissenting, affirmed the ruling of the trial court. See 32 Va.
App. 714, 530 S.E.2d 913 (2000). We granted mother's petition
for rehearing en banc and stayed the mandate of that decision.
On rehearing en banc, we reverse the ruling of the trial
court insofar as it applied Acree to hold father owed no child
support arrearage. We expressly limit Acree's holding to cases
in which the payee spouse relinquishes physical custody
entirely. Here, because mother and father effected a
less-than-complete shift in physical custody, the trial court
abused its discretion in applying Acree to permit a modification
of the child support award. Thus, father's exhibit of
comparative household expenditures was irrelevant to the
proceedings and was improperly admitted into evidence. However,
because the parties jointly agreed to modify the agreement and
father complied with its terms, we affirm the trial court's
denial of wife's request for attorney's fees pursuant to the
agreement. Thus, we affirm in part, reverse in part, and remand
for further proceedings.
I.
BACKGROUND
Mother and father were divorced by final decree entered
June 20, 1992. The divorce decree affirmed, ratified and
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incorporated the parties' 1991 child custody, support and
property settlement agreement (1991 agreement). The 1991
agreement, inter alia, required father to pay child support for
the parties' two minor children and set the amount of that
support. The 1991 agreement also provided that the parties
initially would share joint physical custody, with mother having
physical custody sixty percent of the time and that, after the
passage of two years, they would divide physical custody evenly
with each party having the children fifty percent of the time.
After an initial period in which father would pay $2,000 in
child support each month, the 1991 agreement provided for an
adjustment to $1,723, and indicated that "no adjustment in child
support payments shall be required" so long as "the parties
continue joint physical custody in which [mother] provides care
for the children fifty percent of the time or more." The 1991
agreement also provided that "[i]f either party shall breach the
terms of [the agreement] and that party is found to be at fault
by a court of competent jurisdiction, then the party at fault
shall pay the legal costs incurred by both parties caused by the
breach."
Subsequently, the parties engaged in mediation, which
included renegotiation of the amount of child support to be paid
by father. In March 1995, they executed an agreement (1995
amended agreement) which provided that they would share physical
custody on an equal basis and that father's child support
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payments would be reduced to $1,100 per month and would "remain
fixed" from September 1994 through December 1997 "so long as the
equal sharing of parenting time continues." The 1995 amended
agreement also provided that father would assume sole financial
responsibility for certain extracurricular expenses. The
parties further agreed that "[n]othing in this amendment shall
bar either [party] from seeking additional child support
adjustment or relief from a court of law. However, the purpose
of this amendment is to avoid the necessity of doing so."
Although the parties began to abide by the terms of the 1995
amended agreement following its execution, they did not submit
the amended agreement to the trial court for approval and
incorporation into the final decree.
In 1999, mother filed the present action, claiming
entitlement to child support arrearages in the amount of
$33,548.91 pursuant to the final decree. In response, father
asserted compliance with the 1995 amended agreement and sought
to have the amended agreement incorporated into the final
decree. He also asserted that he was entitled to have credited
to him as non-conforming payments which satisfied the terms of
the 1992 decree payments he made to third parties under the 1995
amended agreement and the increased costs associated with his
ten-percent increase in custody. Over mother's objection, the
trial court received evidence of father's "separate expenditures
on the children . . . beyond his child support obligations."
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The court held "[t]he sole issue presented . . . is whether
the parties could contractually modify [father's] child support
obligation without an order of [the trial court]." Citing
Acree, it found "(1) the parties have entered into an
unequivocal agreement; (2) the change of custody is permanent;
(3) the agreement has been fully performed; (4) enforcing the
original child support obligations contained in the Final Decree
would unjustly enrich [mother]; [and] (5) enforcing the
agreement would not adversely affect the child support award."
Based on these findings, it held that father's compliance with
the 1995 amended agreement satisfied his child support
obligation. It directed that the 1995 amended agreement be
incorporated into the divorce decree and ordered that the
parties pay their own attorney's fees. Although the trial court
noted that father's "separate expenditures on the children . . .
beyond his child support obligations . . . substantially
[exceeded] the difference between the [$1,100] and the $1,723
obligations," it stated expressly that these excess expenditures
"did not constitute a reason for [its] decision."
II.
ANALYSIS
Under settled principles,
[c]hild support payments required under
a valid court order become vested as they
accrue, and the court is without authority
to make any change as to past due
installments. Generally, the terms of a
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support decree must be strictly complied
with and payments made when due to the
designated payee in accordance with the
terms of the decree. When changed
circumstances dictate a modification of a
support decree, the appropriate remedy is
for the party to petition the court to
modify the decree. The party or parties may
not unilaterally or bilaterally vary its
terms.
However, although a court may not
retroactively modify a child support
obligation, allowing a payor spouse credit
for non-conforming support payments, in the
limited situations where permitted, is not a
modification of a support order. See Acree
v. Acree, 2 Va. App. 151, 152, 345 S.E.2d
68, 69 (1986). A court may, when equitable
and under limited circumstances, allow a
party credit for non-conforming support
payments, provided that the non-conforming
support payment substantially satisfies the
purpose and function of the support award,
see [id.], and to do so does not vary the
support award.
Commonwealth v. Skeens, 18 Va. App. 154, 158, 442 S.E.2d 432,
434-35 (1994) (citations omitted) (emphasis added). "Typically,
two conditions must exist before credits will be given for
non-conforming payments: (1) an agreement by the parties which
modifies the terms or method of payment; and (2) no adverse
[e]ffect on the support award." Wilderman v. Wilderman, 25 Va.
App. 500, 506, 489 S.E.2d 701, 705 (1997). "An agreement which
itself establishes or modifies the support obligation, rather
than only the terms or method of payment, does not meet this
test. Such agreements are not enforceable absent court
approval, because they impinge on the child's right to support
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and the court's continuing jurisdiction to decree it." Id. at
506 n.1, 489 S.E.2d at 705 n.1.
We approved one exception to this rule in Acree, a case we
described as having "unique facts." 2 Va. App. at 152, 342
S.E.2d at 68. Acree involved a bilateral modification agreement
which provided for one of the parties' children, originally in
the custody of her mother, to reside permanently with her father
instead. See id. at 152-53, 342 S.E.2d at 69. In conjunction
with this total change in custody, the parties agreed to a
cessation of father's support payments to mother on behalf of
that child. See id. at 153, 342 S.E.2d at 69. We held that
where a
custodial parent has by his or her own
volition entered into an agreement to
relinquish custody on a permanent basis and
has further agreed to the elimination of
support payments and such agreement has been
fully performed, . . . the purpose to be
served by application of an inflexible rule
denying credit for non-conforming payments
is outweighed by the equities
involved. . . . By assuming [complete]
physical custody and total responsibility
for the support of the child, the husband
fulfilled his obligation under the decree.
Id. at 157-58, 342 S.E.2d at 71-72 (emphasis omitted).
Husband contends that Acree is not and need not be limited
to instances in which the parties have agreed to a total
transfer of custody. We disagree. Acree in fact involved a
total transfer of custody and concomitant cessation of child
support payments. In quoting in Acree from the Indiana case of
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Isler v. Isler, we recognized only "'a narrow exception'" to the
rule prohibiting credit for non-conforming support payments--to
be applied in cases involving the total "relinquish[ment of]
custody on a permanent basis." Acree, 2 Va. App. at 157, 342
S.E.2d at 71 (quoting Isler v. Isler, 425 N.E.2d 667, 670 (Ind.
Ct. App. 1981)) (emphasis omitted from second quotation). To
permit modification of a decree by the parties in a case in
which the change in custody is less than complete will invite
"continuous trouble and turmoil," the exact difficulties the
rule prohibiting credit for non-conforming payments is designed
to avoid. Henderlite v. Henderlite, 3 Va. App. 539, 542, 351
S.E.2d 913, 914 (1987). Our holding in Acree was premised in
part on the fact that when a complete change in custody occurs,
the parent originally obligated to pay support for that child
"'has . . . furnished support in a different manner under
different circumstances easily susceptible of proof.'" Acree, 2
Va. App. at 157, 342 S.E.2d at 71 (quoting Isler, 425 N.E.2d at
670) (emphasis added).
Where the change in custody is less than complete, as
occurred in this case, determining whether the agreed-upon
reduction in support payments properly corresponds to the
greater burden assumed as a result of the increased custodial
time is not so "easily susceptible of proof." The 1995 amended
agreement did more than alter the terms or method of payment; it
impermissibly modified the underlying obligation. Here, the
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parties' reduction of husband's monthly support payment from
$1,723 to $1,100 without contemporaneous judicial approval
constituted an impermissible modification of the underlying
obligation. Thus, the court did not need to reach the second
prong of the non-conforming payments test--whether the parties'
actions had an adverse effect on the support award.
In short, we hold that, absent a complete change in
custody, "the appropriate remedy" in a case in which the parties
have agreed to a modification of support "is for the part[ies]
[timely] to petition the court to modify the decree." Skeens,
18 Va. App. at 158, 442 S.E.2d at 435. Mother's unjust
enrichment is an unfortunate by-product of our decision but,
standing alone, does not compel a different result.
We do not disturb the decision in Skeens, which permits a
court, in its discretion, to allow a dollar-for-dollar credit
against accumulated child support arrearages for indirect
payments made to the payee spouse by a third party on behalf of
the payor spouse. 18 Va. App. at 158-60, 442 S.E.2d at 435-36.
When a trial court grants credit to a payor
parent for Social Security benefits received
by his children on account of his
disability, the court does not alter the
amount of child support that the parent has
been ordered or is required to pay. The
court simply allows a source of funds,
indirectly attributable to a parent, to be
used to satisfy the parent's court-ordered
support obligation. Thus, a circuit court
does not retroactively modify a child
support award or forgive an accumulated
arrearage by crediting a dependent child's
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Social Security benefits to satisfy a
support obligation.
Id. at 159, 442 S.E.2d at 435. However, to the extent our case
law may be interpreted to hold that payments to "third party
vendors" may constitute non-conforming child support payments
for which the payor spouse is entitled to receive credit, see
Wilderman, 25 Va. App. at 503, 509-10, 489 S.E.2d at 703, 705,
we expressly reject such an interpretation. 1
Thus, we limit Acree to its facts and hold that the trial
court abused its discretion in concluding father owed no
arrearages. The 1995 amended agreement constituted an
impermissible modification of the 1992 decree. Absent prior
judicial approval or a complete assumption of physical custody,
father remained obligated to comply with the original decree,
and he was not entitled to a credit for payments to third
parties on the children's behalf. Accordingly, father's exhibit
of comparative household expenditures was not relevant to the
case and was improperly admitted. However, we affirm the trial
court's denial of wife's request for attorney's fees pursuant to
1
We do not disturb the portion of Wilderman awarding the
father a dollar-for-dollar credit for cash sums he paid directly
to the mother rather than to the Department of Child Support
Enforcement as previously ordered by the court. 25 Va. App. at
510, 489 S.E.2d at 706. We overrule Wilderman only insofar as
it may be interpreted to hold that a parent may be entitled, in
the absence of an express agreement approved by the court, to
credit for payments made to "third party vendors" for things
such as "day care, doctor visits [and] food." Id. at 503, 505,
489 S.E.2d at 703, 704.
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the parties' 1991 agreement. The agreement provides that a
party who breaches the agreement and is "found to be at fault"
shall be responsible for all related attorney's fees. Here,
neither party breached the 1991 agreement because, as found by
the trial court, they jointly agreed to modify it, and both
parties complied with the modifications until wife instituted
these proceedings. Thus, father's payment of support in
accordance with the 1995 amended agreement without obtaining
judicial approval violated the terms of the final decree, but it
did not constitute a breach of the underlying agreement.
Accordingly, wife was not entitled to an award of fees pursuant
to the 1991 agreement, and her request was properly denied.
For these reasons, we reverse the trial court's conclusion
that father owed no child support arrearage and its admission
into evidence of the challenged expenditure exhibit, but we
affirm its refusal to award attorney's fees. We remand for
further proceedings consistent with this opinion.
Affirmed in part,
reversed in part
and remanded.
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Annunziata, J., with whom Benton and Bray, JJ., join,
dissenting.
I respectfully dissent from the majority opinion. In Acree
v. Acree, 2 Va. App. 151, 342 S.E.2d 68 (1986), we found that
equitable considerations may support the award of credits
against child support payments otherwise due where the obligated
parent has fulfilled the purpose and function of the award,
albeit in a way that deviates from the express order of the
court. Id. at 157, 342 S.E.2d at 71; see also Carper v. Carper,
228 Va. 185, 189, 319 S.E.2d 766, 769 (1984) (granting father
credit where he had fulfilled purpose of mortgage payment
requirement); Commonwealth v. Skeens, 18 Va. App. 154, 158, 442
S.E.2d 432, 435 (1994) (holding that use of social security
benefits satisfied child support obligation); accord Meyer v.
Meyer, 493 S.W.2d 42, 45 (Mo. Ct. App. 1973) (finding father had
"substantial[ly] compli[ed] with the spirit and intent of the
decree"). Under the Acree holding, where the record
affirmatively shows that a permanent change in the custody
arrangement has been established, that the best interests of the
child are served and that the agreed form of alternate payment
satisfies the purpose and function of the support award, an
impermissible retroactive modification of the award is not
effected. Acree, 2 Va. App. at 157-58, 342 S.E.2d at 71-72; see
also Skeens, 18 Va. App. at 158, 442 S.E.2d at 435.
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The principles set forth in Acree are applicable here. 2
According to Acree, an impermissible retroactive modification
2
Our decision in Acree relied, in part, on Isler v. Isler,
425 N.E.2d 667 (Ind. Ct. App. 1981), an Indiana decision in which
the court stated:
We are of the opinion that a narrow exception
to the rule may exist in a case where the
obligated party, by agreement with the
custodial parent, has taken the child or
children into his or her home, has assumed
custody of them, has provided them with food,
clothing, shelter, medical attention, and
school supplies, and has exercised parental
control over their activities and education
for such an extended period of time that a
permanent change of custody is demonstrated.
In such a case, the court may, in its
discretion, allow credit against the accrued
support for the reason that the obligated
parent has merely furnished support in a
different manner under different
circumstances easily susceptible of proof.
Id. at 670 (quoted in Acree, 2 Va. App. at 157, 342 S.E.2d at
71). Other courts have relied on similar principles in awarding
credit for non-conforming payments when the parents agree to a
full change in custody, as in Acree. See, e.g., In re Harvey,
523 N.W.2d 755, 757 (Iowa 1994) (the court cited the following
factors in deciding to award credit to father for period he had
custody of child: "(1) the claimed arrearage is for a period
during which [father] provided all [child's] support; (2) the
support [father] provided exceeded the amount of his obligation
under the court order; (3) [mother] agreed that the obligations
would be satisfied in this manner; and (4) any amount now
recovered would not inure for [child's] support, but solely for
[mother's] benefit"); Schafer v. Schafer, 621 P.2d 721, 723-24
(Wash. 1980) (the court analyzed the following factors, inter
alia, in deciding to award credit to father when he took custody
of two of the parties' three children: (1) whether the
obligated parent intended the expenditures for care to be in
satisfaction of child support; (2) whether the non-obligated
parent agreed to the change in custody; (3) whether the
non-obligated parent was relieved of any or all of the
reasonable expenses of child support while the child was in the
custody of the obligated parent; (4) the length of time the
child was in the custody of the obligated parent; and (5)
whether a compelling reason exists requiring the obligated
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does not occur when: (1) the parties have entered into an
unequivocal agreement; (2) the change of custody is permanent;
(3) the agreement has been fully performed; (4) enforcing the
original child support obligations contained in the final decree
would unjustly enrich one party; and (5) enforcing the agreement
would not adversely affect the child support award.
In reaching its decision in this case, the trial court
applied an Acree analysis and found as a matter of fact that the
parties' 1995 amendment of the original agreement enlarged the
father's custody from 40% of the time to 50% of the time and
that the change in custody was permanent. The trial court also
found as a matter of fact that enforcement of the 1995 amendment
would not adversely affect the welfare of the children and did
not reduce the amount of support they actually received from the
father; in fact, the children received greater financial support
from the father under the new arrangement. The trial court
noted, in particular, that the mother offered no evidence to
show the reduction in support payments to her was causally
related to the sale of her house, the primary adverse result she
claimed. The trial court further found that the parties' 1995
agreement was unequivocal, that the father fully performed
according to the terms of the amended agreement, and that,
because he assumed a permanent increase in custody and had
parent not only to pay for the child's care while in that
parent's custody, but also to comply with the support order to
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incurred increased expenses on behalf of the children as a
result, enforcement of the provisions of the final decree would
unjustly enrich the mother, whose liabilities the court found
had decreased. The findings of the court are fully supported by
the record and support the conclusion that "[t]he agreement of
the parties as carried out worked to the benefit of the
child[ren] to the same degree that absolute conformity with the
terms of the decree would have." Acree, 2 Va. App. at 158, 342
S.E.2d at 72.
Contrary to the mother's contention in this case, nothing
in Acree limits the reach of its principles to instances when
full custody has been transferred to the obligor; Acree's focus
is not on the form of payment but rather on the purpose to be
achieved by the original support award, viz. the provision of
support that meets the proved needs of the child, who is the
beneficiary of the award. Acree, 2 Va. App. at 158, 342 S.E.2d
at 72; see also Carper, 228 Va. at 189, 319 S.E.2d at 769;
Skeens, 18 Va. App. at 159, 442 S.E.2d at 435.
As the majority acknowledges, where a parent has fulfilled
his or her child support obligation by assuming permanent
custody of the parties' children, an injustice would result if
credit were not given. Accord Beverly v. Beverly, 257 S.E.2d
682, 684 (N.C. Ct. App. 1979) (father allowed credit for
one-quarter of award for each month one of parties' four
make child support payments to the non-obligated parent).
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children lived with him); In re Harvey, 523 N.W.2d 755, 757
(Iowa 1994) (father awarded credit for period when he had
custody of child). Notwithstanding the equitable considerations
that pertain, the majority justifies its decision on the ground
that applying the Acree principles the circumstances of this
case would confront the trial court with difficult problems of
proof. As was made manifest here, however, an analysis based on
Acree factors where a permanent but partial change of custody is
at issue does not necessarily pose an undue evidentiary burden
upon the litigants or the court. While full custodial transfer,
permanent in nature, may facilitate an obligor's ability to
prove that the purpose of the original award has been met, in
cases of partial transfer of permanent custody where the
obligated parent is clearly able to prove substantial compliance
with the award and satisfy the other Acree factors, no
principled basis exists to deny an award of credits for the
payments. Such circumstances may be contrasted with and
distinguished from those arising in cases where the change in
custody is not permanent, the alternative payments are sporadic,
inconsistent, and insufficient, the non-obligated parent does
not agree to the permanent change in the form of payment, and
the non-conforming payments adversely affect the children. Cf.
Henderlite v. Henderlite, 3 Va. App. 539, 542, 351 S.E.2d 913,
914 (1987) (credit not allowed where mother did not agree to the
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alternate payments and there was no finding that the change
would not adversely affect the children).
Further, the well-established principle of law that
requires court approval of any modification of support remains
intact under Acree and is not eroded by extending the Acree
exception to cases in which the change in custody results in a
shared rather than a sole custodial arrangement. The Acree
holding implicitly acknowledges the principle that parties who
enter into agreements for support and implement them without
seeking and obtaining court approval, do so at their peril and
will be held accountable for non-conforming payments when
measured against the Acree factors and the court's ultimate
determination of appropriate support levels during the relevant
periods. See Watkinson v. Henley, 13 Va. App. 151, 158-59, 409
S.E.2d 470, 474 (1991) (holding that after determining
presumptive amount under guidelines, court must determine
whether parties' agreement would better serve child's interest);
Alexander v. Alexander, 12 Va. App. 691, 695, 406 S.E.2d 666,
668 (1991) (holding that trial court must determine presumptive
amount under guidelines before considering other factors).
Extending the Acree exception to cases where the parties have
instituted a permanent but partial change in custody does not
change the foregoing legal principle. Any modification of
support under such circumstances, implemented by agreement prior
to court approval, will be subject to scrutiny by the court and,
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in the absence of evidence proving compliance with the Acree
factors, including but not limited to the finding that
alteration in the mode of payment substantially complied with
the spirit and intent of the decree and served the best interest
of the child, such modification will be disallowed. Kelley v.
Kelley, 248 Va. 295, 298, 449 S.E.2d 55, 56 (1994) (a court
cannot be precluded by agreement between the parties from
exercising its power to decree child support).
Based on the principles set forth in Acree and the evidence
in this case, I would find that "the support provision was not
breached when the parties, by agreement, made a different,
although equally effective, arrangement, to fulfill the purpose
of the decree." Acree, 2 Va. App. at 156, 342 S.E.2d at 71. I
would, therefore, affirm the trial court's award of credit to
the father for his non-conforming payments. 3
3
Accordingly, I would also find the father's exhibit of
comparative household expenditures was relevant and, therefore,
admissible because it proved he satisfied his obligation under
the support award.
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