COURT OF APPEALS OF VIRGINIA
Present: Judges Baker, Bray and Overton
Argued at Norfolk, Virginia
MERI DELL SHARBUTT-RIDGE
v. Record No. 0736-97-1
JAMES JOSEPH RIDGE
MEMORANDUM OPINION * BY
and JUDGE NELSON T. OVERTON
FEBRUARY 24, 1998
JAMES JOSEPH RIDGE
v. Record No. 0870-97-1
MERI DELL SHARBUTT-RIDGE
FROM THE CIRCUIT COURT OF THE CITY OF NORFOLK
Marc Jacobson, Judge
Priscilla M. Rae; Louis W. Kershner (Kershner
and Hawkins, P.C., on briefs), for Meri Dell
Sharbutt-Ridge.
J. Barry McCracken (Cook & McCracken, on
briefs), for James Joseph Ridge.
Mrs. Meri Dell Sharbutt-Ridge (wife) and James Joseph Ridge
(husband) appeal an order of the City of Norfolk Circuit Court
denying wife's motion to reopen their divorce decree. Wife
asserts that the trial court erred when it refused to increase
her share of her husband's military pension, refused to require
that husband pay federal income taxes on her share of the pension
and refused her request for attorney's fees. Husband has
appealed only that portion of the order denying him his
*
Pursuant to Code § 17-116.010 this opinion is not
designated for publication.
attorney's fees. For the reasons set forth below, we affirm in
part and remand for reconsideration.
The parties were married on June 25, 1960, separated on
April 18, 1985 and divorced on October 14, 1988. Their divorce
decree incorporated the parties' separation agreement. The
agreement disposed of all the marital assets including the
pension husband received after retiring from thirty-one years of
service in the United States Navy. It classified the pension as
a "personal property right authorized under 10 U.S.C.A. 1408 et
seq. ('Uniformed Service Former Spouses Protection Act')"
(USFSPA). Under the terms of the agreement, wife would receive
thirty-nine percent (39%) of the "gross retirement to which he is
then entitled."
Beginning on June 1, 1988 the United States Navy paid wife
39% of husband's retirement pay minus applicable federal income
taxes. Husband characterized the payment as alimony on his
federal tax returns; deductible to the payor, included by the
payee. At the same time, wife characterized her share as a
property split incident to divorce; excluded from her taxable
income. In 1990, the Internal Revenue Service assessed over six
thousand dollars in back taxes, penalties and interest against
her. Wife paid the assessment and has paid taxes on her share
ever since.
Wife filed her motion to reopen on December 12, 1994
alleging the intent of the separation agreement was for her to
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receive her share before his taxes had been deducted, not after.
Additionally, she claimed that he was responsible for past and
future payments of the taxes levied on her share. Husband
claimed that the definition of "disposable retired or retainer"
pay existing at the time of the agreement allowed payment of her
share only after his taxes had been deducted. Additionally, he
disputed the jurisdiction of the circuit court to hear what was
essentially an appeal of the decision of a federal administrative
agency, the IRS.
The trial court denied wife's motion to reopen on March 27,
1997. Both parties have appealed that decision.
USFSPA
The main bone of contention between the parties is the
intended effect of USFSPA on the incorporated separation
agreement they created in 1988. USFSPA authorizes state courts
to treat a retiree's "disposable retired or retainer pay . . .
either as property solely of the member or as property of the
member and his spouse in accordance with the law or the
jurisdiction of such court." 10 U.S.C. § 1408 (1988). In 1988
"disposable retired pay" was defined by 10 U.S.C. § 1408(a)(4) as
the total monthly retired or retainer pay to
which a member is entitled less amounts which
. . . (C) are properly withheld for Federal,
State, or local income tax purposes, if the
withholding of such amounts is authorized or
required by law to the extent such amounts
are withheld are not greater than would be
authorized if such member claimed all
dependents to which he was entitled.
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USFSPA was amended on November 5, 1990. The amendment
removed subsection C from the definition of "disposable retired
or retainer pay." The effect was to allow courts to divide
military pensions before taxes were withheld and award a
percentage of this net amount to spouses. However, the amendment
was not retroactive, applying only to divorces effective 90 days
after the amendment. 10 U.S.C. § 1062(a) (1990).
The trial court looked to the definition in effect at the
time the divorce was decreed. It concluded that the trial court
at that time could not have had jurisdiction to award more than
what was encompassed by the statute. Thus, in order to interpret
the agreement in accord with the decreeing court's jurisdiction,
the trial court found that wife's 39% share came from the net,
not the gross, amount. It held that the 1990 amendment was
irrelevant to the case because it was not retroactive.
When a judgment is based upon the construction or
interpretation of a contract, an appellate court is not bound by
the trial court's construction of the contract's provisions. See
Smith v. Smith, 3 Va. App. 510, 513, 351 S.E.2d 593, 595 (1986).
An appellate court is equally able to construe the meaning of
the provisions of an unambiguous contract. See Wilson v.
Holyfield, 227 Va. 184, 188, 313 S.E.2d 396, 398 (1984). The
rules of construction that apply to contracts also apply to
settlement agreements. Tiffany v. Tiffany, 1 Va. App. 11, 15,
332 S.E.2d 796, 799 (1985).
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We agree with the trial court's ruling that USFSPA did not
authorize the decreeing court in 1988 to award more than was
defined by the federal law. If the decreeing court had acted in
conflict with the definition of USFSPA, it would have done so
without jurisdiction. A decree rendered by a court which lacked
jurisdiction is void ab initio. Rook v. Rook, 233 Va. 92, 95,
353 S.E.2d 756, 758 (1987). We affirm that portion of the trial
court's decision.
There is a separate issue, however, which the trial court
apparently failed to address. Wife has argued that the amendment
to USFSPA was a change contemplated by the parties when they
created the agreement. Thus, even though the statute does not
make itself retroactive, the parties may have done so by
operation of contract. "A quid pro quo of entering into a
comprehensive agreement is the 'possibility that the law may
change in one's favor.'" Bragan v. Bragan, 4 Va. App. 516, 519,
358 S.E.2d 757, 759 (1987) (citations omitted). The separation
agreement does expressly tie wife's share to the definition of
"disposable retired pay" from 10 U.S.C. § 1408. It is possible
that by this express reference to the United States Code they
intended to do by contract what Congress did not see fit to do by
legislation, make any change in USFSPA applicable to computation
of wife's property right. See Cook v. Cook, 18 Va. App. 726,
730-31, 446 S.E.2d 894, 896 (1994) (holding that the parties
could contract around the ten-year marriage requirement contained
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in 10 U.S.C. § 1408(d)(2)). While we do not here express an
opinion as to whether the parties did so intend, we remand the
issue back to the trial court for determination.
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Tax Treatment
Wife's second ascription of error is that the trial court
failed to assign husband the duty of paying the federal income
taxes due on her share of his pension. She asserts that if the
government has levied improper taxes, then it becomes the
responsibility of husband to reimburse her both retroactively and
prospectively. Because this position is without support in law
or in the terms of the agreement, we reject it.
We look to the four corners of the agreement for any
indication that the parties sought to address tax liability on
their respective shares of husband's pension. See Blunt v.
Lentz, 241 Va. 547, 551, 404 S.E.2d 62, 64 (1991) (citing Ross v.
Craw, 231 Va. 206, 212, 343 S.E.2d 312, 316 (1986)). Upon a
careful reading of the agreement, we find no support for wife's
contention that the last lines of Paragraph 14 require husband to
pay her taxes. Those lines read, "Should the United States Navy
Finance Center or other appropriate United States Government
agency fail to pay Wife hereunder, the Husband must pay wife
direct on all his obligations under this paragraph." No organ of
the federal government has failed to pay her the funds to which
she claims she is entitled. Therefore the paragraph does not
address the question at issue: whether one party must give back
some of the money in the form of taxes.
Nowhere in the agreement are the tax burdens of the parties
mentioned, much less apportioned. We would, in theory, agree
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with wife's position that the pension is a property division, not
alimony and is, therefore, a tax-neutral event for which she
should not owe income tax. However, it is not within the
jurisdiction of this Court to order the IRS to cease collecting
taxes. Nor do we "rewrite contracts to insert provisions that
have been omitted by the parties." Jones v. Harrison, 250 Va.
64, 68, 458 S.E.2d 766, 769 (1995) (citing Westbury Coal Min.
Partnership v. J.S. & K. Coal Corp., 233 Va. 226, 229, 355 S.E.2d
571, 572-73 (1987)). Wife's remedy for overpayment of federal
income taxes lies not in an appeal to the state courts, but in a
prompt challenge to the IRS in the appropriate federal forum.
Attorney's Fees
The separation agreement provides that if either party
retains counsel for the purpose of "enforcing or preventing the
breach of any provision hereof, then the prevailing party shall
be entitled to be reimbursed by the losing party." The trial
court, however, decided to leave each party responsible for its
own attorney's fees.
"An award of attorneys fees is a matter submitted to the
trial judge's sound discretion and is reviewable on appeal only
for an abuse of discretion." Graves v. Graves, 4 Va. App. 326,
333, 357 S.E.2d 554, 558 (1987) (citing Ingram v. Ingram, 217 Va.
27, 29, 225 S.E.2d 362, 364 (1976)). The record indicates that
neither party has asserted frivolous arguments or false
allegations. None of the litigation has been motivated by bad
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faith or a desire to hinder or delay the other party. While
suits involving separation and divorce are always emotional,
hotly-contested affairs, we find no special circumstances which
would lead us to conclude that the trial court's decision was not
warranted. We, therefore, affirm his decision and refuse to
award attorney's fees for the expenses of trial or appeal.
Conclusion
Because it appears that the trial court did not consider
wife's contention that the parties had, through contract, tied
the computation of wife's property interest to a future amendment
to USFSPA, even where Congress had chosen not to make the change
retroactive, we remand to the trial court with instructions to
reopen the decree and examine that possibility. On the issues of
tax liability and attorney's fees, we affirm.
Affirmed in part,
remanded in part.
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