Wife sanctioned for violating property settlement agreement

A wife who twice violated terms of a property settlement agreement was sanctioned by the court.  A third sanction was vacated, however, because it was a criminal contempt sanction in what the circuit court maintained was a civil contempt proceeding.

Background

The parties were divorced by final decree dated May 20, 2015. The final decree

incorporated the parties’ property settlement agreement, or PSA, which included terms governing issues related to their two children.

In April and June 2018, husband filed a motion to show cause alleging that wife had violated sections of the PSA. Wife denied that she had willfully violated any provision of the PSA. Additionally, she filed a motion for sanctions arguing that the show cause related to section 6.1 of the PSA had been filed in bad faith.

Ultimately, the circuit court held a hearing on the motions to show cause. Prior to the hearing, wife withdrew her motion for sanctions. Husband sought a total of $5,130 in attorney’s fees for having to litigate to obtain the benefits he was entitled to under the PSA, which included the costs associated with preparing to defend against the sanctions motion.

The circuit court found wife in civil contempt. The court then awarded $5,130, “representing reasonable attorney’s fees,” to husband. The court denied wife’s motion to reconsider.

Analysis

Section 6.1 of the PSA obligated wife “to maintain in full force and effect the existing policy or policies of life insurance insuring her life, providing coverage of at least $50,000 and to name and maintain the children as the irrevocable sole primary beneficiaries thereof, until the youngest child turns age 25.”

It is undisputed that, with the PSA in effect, wife “cashed in” that policy and that, at the time of the hearing, she no longer had that policy. Based on the undisputed evidence, the circuit court found wife in violation of her obligations under section 6.1 and in contempt of the court’s order incorporating the PSA.

Wife asserts that she did not violate section 6.1. She argues that, at the time of the hearing, she had in place a term insurance policy, provided to her as a benefit of employment, that provided $50,000 in coverage. From this, she reasons that she did not violate section 6.1. Such an argument ignores the plain language of section 6.1.

By way of sanction, the circuit court ordered wife “to obtain, within thirty days … a whole life insurance policy that … include[s] a death benefit of not less than $50,000 [and] name[s] and maintain[s] the children as the irrevocable sole primary beneficiaries thereof, until the youngest child turns age 25.” The circuit court did not err by imposing this sanction.

Section 8.2 of the PSA governed the parties’ ability to claim their children as dependents on the income tax returns. It is undisputed that husband was entitled to claim the younger child as a dependent for tax purposes for the 2016 tax year. Furthermore, it is undisputed that wife claimed the younger child as a dependent for tax year 2016, preventing husband from claiming him, which cost husband $1,066.

Wife argues that contempt did not lie because she was unaware that the elder child was no longer eligible to be claimed as a dependent, and therefore, her failure to comply with the agreement was not willful. If believed, wife’s version of events might be a defense to the contempt charge. However, the circuit court, having the opportunity to see and hear the witnesses testify, rejected wife’s story. There was sufficient evidence to support the circuit court’s conclusion. Accordingly, the circuit court did not err in holding her in contempt of the court’s order incorporating the PSA.

Wife also challenges the circuit court’s finding of contempt based on its conclusion that she “intentionally interfered with the love, affection, and respect of the children for” husband in violation of section 2.3 of the PSA. She argues that the circuit court erred in finding that the evidence was sufficient to establish a violation of the provision and by imposing a criminal contempt sanction in what the circuit court maintained was a civil contempt proceeding. We agree the circuit court erred in imposing a criminal sanction in what it maintained was a civil contempt proceeding.

On remand, the circuit court must determine what portion of its award of attorney’s fees related to section 2.3 of the PSA and to deduct that amount from its award of attorney’s fees to husband. The circuit court shall also take evidence on the question of attorney’s fees on appeal and award husband the reasonable and necessary attorney’s fees he incurred on appeal related to sections 6.1 and 8.2 of the PSA

Affirmed in part, reversed in part and remanded.

Mills v. Mills, Record No. 1630-18-2, May 14, 2019. CAV (Russell) from Richmond Cir. Ct. (Hairston). Eileen McNeil Newkirk for Appellant, Benjamin R. Rand for Appellee. VLW No. 019-7-092, 18 pp.