Opinion
Civil Docket No.: CL11-7691-01
10-14-2020
Re: Melissa L. Martinovich v. Jeffrey A. Martinovich
Ameet I. Habib, Esquire
Wolcott Rivers Gates
200 Bendix Road, Suite 300
Virginia Beach, Virginia 23452 Jeffrey A. Martinovich
128 Seekright Drive
Yorktown, Virginia 23693 Dear Mr. Habib and Mr. Martinovich:
Today the Court decides a rule to show cause issued based on a petition filed by Petitioner Melissa Martinovich ("Wife") asking that Respondent Jeffrey Martinovich ("Husband") show why the Court should not hold him in contempt for failing to satisfy his spousal support obligations as ordered in the parties' final divorce decree. The Court also rules on Husband's "Motion to Modify Divorce Decree and Settlement," which seeks to retroactively amend his spousal support obligations. The issues before the Court are (1) whether Husband's spousal support obligations were stayed while he was incarcerated, (2) whether the Court should hold Husband in contempt for failing to pay spousal support while incarcerated and since his release, and (3) whether the Court can modify Husband's spousal support obligations based on a material change in circumstances of the parties.
The Court finds that (1) Husband's incarceration did not stay his spousal support obligations; (2) because Husband was unable to comply with the ordered spousal support provisions, the Court does not find him in contempt, although it establishes a spousal support arrearage amount of $489,239.35 as of June 30, 2020 and will enter judgment in that amount; and (3) the Court is not authorized to modify Husband's spousal support obligations because the parties voluntarily agreed to those terms in property settlement agreements that predated their 2013 divorce.
The Court therefore DISMISSES the rule to show cause; sets spousal support arrearages at $489,239.35 as of June 30, 2020, and AWARDS JUDGMENT TO WIFE in that amount; and DENIES the motion to amend spousal support.
Background
This Court divorced Husband and Wife on February 19, 2013, (Final Decree Divorce, CL11-7691 (Feb. 19, 2013).) Prior to entry of their divorce decree, they entered into three separation agreements, which were incorporated into the decree and included express spousal support provisions. (Tr. 15; Pet'r's Ex. 1.) Specifically, the parties ultimately agreed that Husband would pay $5,000 per month to Wife beginning in May 2013. (Tr. 19; Pet'r's Ex. 1.) The divorce decree also ordered all subsequent spousal support matters transferred to the Juvenile and Domestic Relations District Court of the City of Williamsburg "for enforcement of the Decree of this Court, or for the modification or revision thereof, as the circumstances may require." (Final Decree Divorce 7.)
There are additional provisions regarding spousal support applicable prior to May 2013, as well as increases in spousal support based on Husband's potential income, which are not relevant to this opinion letter.
Husband was indicted on unrelated federal criminal charges before executing the most recent separation agreement—which included the relevant spousal support provision—and was tried in April 2013. (Tr. 23.) He was found guilty of certain criminal charges, sentenced to a period of incarceration, and reported to prison in November 2013. (Tr. 24.) Husband was convicted of additional criminal charges in 2016, which resulted in an additional prison sentence. (Tr. 25-26.) As a result of his criminal convictions, he has federal restitution orders totaling more than $2.47 million and an IRS lien of approximately $87,000. (Tr. 30; Resp't's Ex. 4.) Husband was released from prison in May 2020. (Tr. 35.)
Since his release, Husband has earned approximately $3,600 per month. (Tr. 36.) He testified that he has been ordered to make two $400 federal restitution payments per month and that he remains subject to the IRS lien. (Tr. 90.) He claims that he currently has no assets or other financial resources. (Tr. 52.) Husband made no spousal support payments while incarcerated, and since his release, he has made three spousal support payments totaling $300. (Tr. 21-22.)
Although Husband testified at the Hearing that his income is approximately $3,600 per month, he presented an income and expense spreadsheet that indicates his monthly income is $4,167. (Resp't's Ex.2.)
Wife subsequently moved to reinstate the divorce case and petitioned for a rule to show cause, alleging that Husband failed to comply with the spousal support provisions incorporated into the divorce decree. The Court then held a hearing (the "Hearing") on the rule to show cause. At the conclusion of the Hearing, the Court granted the parties leave to file post-Hearing briefs. Husband later filed a motion to modify his spousal support obligations.
In addition to seeking a reduction or termination of his spousal support obligations, Husband appears to seek rescission of the property settlement agreements based on unconscionability, duress, coercion, undue influence, and legal incapacity. This is the first time Husband has mentioned such relief during this litigation, and it therefore is not ripe for consideration. Further, the Court notes that, in addition to Husband having signed each of the three agreements, he signed the last agreement on the date of the divorce in 2013, he signed the divorce decree that incorporated the agreements, he was represented by counsel throughout the divorce process and at the final divorce hearing, and the statute of limitations has passed for any challenge of the agreements under the conditions present here. Va. Code § 8.01-246.
Positions of the Parties
Wife's Position
In her petition for rule to show cause, Wife argues that Husband violated the terms of the divorce decree, which incorporated spousal support obligations the parties agreed to in their separation agreements. (Pet. Rule Show Cause 1.) She asserts that Husband agreed to pay her $5,000 per month and that he currently owes her $489,239.35 in unpaid spousal support. (Id. at 1-2).
Wife argues that Virginia has no statutory provision providing for the automatic stay of spousal support obligations during the obligor's incarceration, as Husband claims. (Pet'r's Post-Hr'g Br. 1.) Further, she asserts that courts cannot retroactively modify spousal support under Virginia law and that, although incarceration may constitute a material change in circumstances, Husband's actions leading up to his imprisonment were voluntary. (Id.)
Wife asks that this Court enter judgment in her favor and award attorney's fees. (Pet. Rule Show Cause 3.)
Husband's Position
Husband asserts that his prior incarceration, which he claims constitutes an unanticipated material change, justified his failure to pay spousal support. (Resp't's Mot. Show Mr. Martinovich Not Held Contempt & Modify Divorce Decree & Settlement ("Resp't's Resp.") 8-9, Resp't's Mot. Modify Divorce Decree & Settlement ("Resp't's Mot. Modify") 4.) He maintains that the Court's 2013 spousal support order, which requires that he pay $5,000 per month to Mrs. Martinovich, "did not anticipate seven (7) years of incarceration with an hourly wage of sixteen cents ($.16) per hour, followed by Home Confinement and continued [Bureau of Prison] custody until October 2025." (Resp't's Mot. Modify 2.) He also argues that, although now out of prison, his financial circumstances have drastically changed since he agreed to the spousal support obligations in the separation agreements, thereby supporting a modification of the property settlement agreements based on changed circumstances. (Id. at 6-7; Resp't's Resp. 8-9.)
The 2013 order was issued by a different judge of this Court.
Husband relies on caselaw from other jurisdictions—which he claims stands for the proposition that spousal support obligations are automatically stayed when the obligor is incarcerated—to support his argument that his obligations were similarly suspended during his time in prison. (Resp't's Mot. Modify 3, 7.) He also argues that the Court should retroactively amend his spousal support obligations as of the start of his incarceration. (Tr. 98.) He contends that his confinement constitutes a material change in circumstances and that the Court should modify his support obligations due to his inability to pay the ordered amount both while incarcerated and since his release. (Resp't's Resp. 2.) He further argues that this case meets the increased standard of "countervailing equities," a doctrine that he claims a court may consider when analyzing incorporated agreements. (Resp't's Mot. Modify 6). Relying on caselaw from other jurisdictions, Husband asserts that this countervailing equities standard requires that "1) the change occurred since the entry of the last judgment, and 2) the significant material changes are to the extent that enforcement is nearly impossible, or at a minimum highly improbable." (Id.)
Husband next argues that the Court should not hold him in contempt because a finding of willful contempt requires "proof of willful disregard of a court order," and he never exhibited such behavior. (Id. at 2.) Husband claims that willful contempt "means that the contemnor was aware of the court order, had the ability to follow the specifics of the order and chose not to without any mitigating circumstances." (Id.) He also asserts that "there is zero evidence that [he] has willfully disregarded the divorce agreement since its inception immediately preceding his trial and incarceration." (Id.)
Husband further asserts that although Virginia courts considered incarceration to be voluntary unemployment before 2016, the U.S. Supreme Court's 2011 decision in Turner v. Rodgers "prohibited state support programs from treating incarceration as voluntary unemployment," requiring states to provide safeguards to reduce the risk of deprivation of liberty in civil contempt cases. (Id. at 2-3 (citing 564 U.S. 431 (2011)).) For support, he points to the federal Office of Child Support Enforcement's modification of its family support programs in 2016 and Louisiana's amendment of its statute in 2019. (Id.)
Finally, Husband claims that he was not obligated to file a petition to amend his spousal support obligations while incarcerated because his confinement made him a "person under a disability" and because the "Virginia Code treats incarceration, incapacitation, and disabled synonymously, and specifically tolls required actions and statute of limitations while the inmate is incarcerated." (Id. at 4-5.)
Analysis
Legal Standard
Upon entry of a decree of divorce, "the court may make such further decree as it shall deem expedient concerning the maintenance and support of the spouses." Va. Code § 20-107.1(A). The court also may incorporate by reference into the divorce decree any agreements or provisions between the parties. See id. § 20-109.1.
A court may exercise the power of contempt for persons who have refused to pay court-ordered child or spousal support. See id. § 20-115. Courts have discretion regarding whether to find a party who violates a property settlement agreement in contempt. See Wells v. Wells, 12 Va. App. 31, 36, 401 S.E.2d 891, 894 (1991). However, "a court may not hold a person in contempt 'when it is clearly established that the alleged contemnor is unable to comply with the terms of the order.'" Carrano v. Carrano, 2016 WL 308586, at *5 (Va. App. 2016) (quoting Turner v. Rogers, 564 U.S. 431, 432 (2011)).
The court may increase, decrease, or terminate a spousal support award when petitioned by either party if "(i) there has been a material change in the circumstances of the parties, not reasonably in the contemplation of the parties when the award was made or (ii) an event which the court anticipated would occur during the duration of the award and which was significant in the making of the award, does not in fact occur through no fault of the party seeking the modification." Va. Code § 20-109(B).
Before July 1, 2018, Virginia law provided that "if a stipulation or contract signed by the party to whom such relief might otherwise be awarded is filed before entry of a final decree, no decree or order directing the payment of support and maintenance for the spouse . . . shall be entered except in accordance with that stipulation or contract." Id. § 20-109(C) (1987) (amended 2018). The current statute, however, includes an additional provision that provides that "[n]o request for modification of spousal support based on a material change in circumstances or the terms of stipulation or contract shall be denied solely on the basis of the terms of any stipulation or contract that is executed on or after July 1, 2018, unless such stipulation or contract expressly states that the amount or duration of spousal support is non-modifiable." Id. § 20-109(C) (2020) (effective July 1, 2018).
A party seeking to modify a support payment "must also show that his lack of ability to pay is not due to his own voluntary act or because of his neglect." Edwards v. Lowry, 232 Va. 110, 112-13, 348 S.E.2d 259, 261 (1986). Incarceration has been determined by some Virginia courts to be a voluntary act. See, e.g., Layman v. Layman, 25 Va. App. 365, 368, 488 S.E.2d 658, 659 (1997).
Under Virginia law, no spousal support order "may be retroactively modified . . . [except] with respect to any period during which there is a pending petition for modification in any court, but only from the date that notice of such petition has been given to the responding party." Va. Code § 20-112. An exception is that spousal support ceases upon the remarriage of the party receiving support. See id. § 20-110.
Discussion
The Court has considered the pleadings, oral argument at the Hearing, and applicable authorities.
As an initial matter, the Court has jurisdiction to address issues of spousal support. Although the divorce decree ordered the transfer of subsequent spousal support matters, the Court retained concurrent jurisdiction and may exercise that jurisdiction if it so chooses. See Crabtree v. Crabtree, 17 Va. App. 81, 87, 435 S.E.2d 883, 887 (1993).
A. Husband's Incarceration Did Not Stay His Obligation to Pay Spousal Support.
Husband argues that he was not required to pay spousal support while he was incarcerated. He asserts, without citing any Virginia authorities, that his spousal support obligations automatically ceased upon his incarceration. Wife, by contrast, argues that there is no such automatic stay under Virginia law. The Court agrees with Wife.
The Court is not aware of any Virginia decisions that have considered whether incarceration automatically terminates support obligations, and no Virginia statute provides that spousal support orders or obligations are stayed upon incarceration. Of note, some jurisdictions have statutes that automatically suspend child support obligations when a party is incarcerated under certain circumstances. See, e.g., La. Stat. § 9:311.1 (suspending child support orders after the obligor has been incarcerated for 180 consecutive days unless certain conditions exist); N.C. Gen. Stat. § 50-13.10 (precluding child support arrearages from accruing for an incarcerated obligor without resources to make payments); N.D. Cent. Code § 14-09-09.38 (terminating child support obligations "upon incarceration of the obligor under a sentence of one hundred eighty days or longer" absent certain conditions); Md. Code § 12-104.1 (precluding child support payments from accruing during a period of incarceration exceeding 180 days unless specific conditions are present).
Virginia law allows for the increase, decrease, or termination of spousal support obligations when there is a "material change in the circumstances" of the parties. Va. Code § 20-109. Such a change cannot have been reasonably contemplated by the parties when they agreed to the support provision. See id. Although incarceration of the party paying spousal support arguably constitutes a material change in circumstances, here there is evidence that Husband's incarceration was reasonably contemplated by the parties, as he already had been indicted when the parties voluntarily entered into the most recent support agreement. Despite Husband's opinion that he was not facing a substantial risk of conviction and associated incarceration, the possibility was certainly known to the parties. The parties could have addressed that contingency in their spousal support agreement but apparently chose not to.
Additionally, some Virginia courts have held that if an obligor's voluntary actions or negligence create the changed circumstances—especially actions that affect the obligor's ability to meet his current support obligation—those actions cannot form the basis for modifying the obligation. For instance, the Virginia Supreme Court in Edwards v. Lowry reversed a trial court's decision to reduce a child support obligation when the obligor was fired from his job for stealing, finding that the changed circumstances resulted from a "voluntary, wrongful act." 232 Va. 110, 113, 348 S.E.2d 259, 261 (1986). As the court noted, it would not support "an effort by a former husband to shift to his wife . . . the consequences of his own wrongdoing." Id.; see also Hammers v. Hammers, 216 Va. 30, 32, 216 S.E.2d 20, 21-22 (1975) (finding that a husband did not prove that his failure to pay his income tax, which he claimed impacted his ability to pay his child support obligations, "was not due to his own voluntary act or neglect"). Other Virginia appellate courts have acknowledged that incarceration can constitute a material change in circumstances but nevertheless held that amending a support agreement was not appropriate because the incarceration resulted from a voluntary act. See, e.g., Layman v. Layman, 25 Va. App. 365, 368, 488 S.E.2d 658, 659 (1997) (holding that "a parent's incarceration may be found to constitute voluntary unemployment . . . and, consequently, it may preclude a reduction of a support obligation based on a loss of income resulting from that incarceration.").
Even if Husband's incarceration constituted a material change in circumstances that would justify a reduction in spousal support, arguendo, the Court lacks the authority to retroactively modify support obligations. Va. Code §§ 20-108, 112. Once the parties have agreed on the support obligation, "the statutes and case law specifically limit the divorce court's authority to retroactively modify that amount, absent fraud." Reid v. Reid, 245 Va. 409, 414, 429 S.E.2d 208, 211 (1993). Further, payments agreed to in the final decree of divorce "become vested as they accrue and the court is without authority to make any change as to past due installments." Richardson v. Moore, 217 Va. 422, 423, 229 S.E.2d 864, 866 (1976) (quoting Cofer v. Cofer, 205 Va. 834, 838, 140 S.E.2d 663, 666 (1965)). Stated differently, the obligation is to pay the amounts agreed to in the final divorce decree, and if conditions change, the proper remedy is to move the court for relief. See id. Courts simply do not have the authority to alter obligations prior to a party filing a modification motion. See id. Here, Husband failed to file a motion to terminate or decrease his spousal support obligations while in prison, and he only filed the current motion on September 15, 2020.
In the absence of statutory authority or controlling caselaw, the Court holds that Husband's spousal support obligations did not cease upon his incarceration. Under the circumstances present here, it also appears that Husband's incarceration was either reasonably contemplated by the parties or the result of his voluntary actions, such that the requisite material change in circumstances is absent. The Court need not reach that issue, however, as the Court lacks the authority to retroactively amend Husband's spousal support obligations.
B. The Court Does Not Find Husband in Contempt but Does Find That He Owes $489,239.35 in Spousal Support Arrearages.
In response to Wife's petition for a rule to show cause why the Court should not hold Husband in contempt for failing to pay ordered spousal support, the Court issued a rule against Husband. Under Virginia law, a court may find a person in contempt if he fails to pay court-ordered spousal support. Va. Code § 20-115. However, courts have discretion on whether to find a party in contempt if he breaches a property settlement agreement that is incorporated into a divorce decree. See Wells v. Wells, 12 Va. App. 31, 36, 401 S.E.2d 891, 894 (1991). It is well established that, as a matter of due process, "a court may not hold a person in contempt 'when it is clearly established that the alleged contemnor is unable to comply with the terms of the order.'" Carrano v. Carrano, No. 0693-15-4, 2016 WL 308586, at *5 (Va. Ct. App. Jan. 26, 2016) (quoting Turner v. Rogers, 564 U.S. 431, 442 (2011)).
As is appropriate, the Court does not consider the unpublished Court of Appeals Opinion to hold precedential value. The Court instead considers the rationale offered by the Court of Appeals to the extent that the Court finds it persuasive, which is permissible. See Fairfax Cnty. Sch. Bd. v. Rose, 29 Va. App. 32, 39 n.3, 509 S.E.2d 525, 528 n.3 (1999).
As a result of his incarceration and the evidence regarding his assets both while incarcerated and since his release, the Court finds that Husband was unable to comply with the ordered spousal support provisions in the divorce decree and incorporated property settlement agreements. The Court therefore does not find Husband in contempt. Nevertheless, Husband's obligation for back support is not extinguished. As of June 30, 2020, Husband owed Wife $489,239.35 in unpaid spousal support, the calculation of which Husband did not contest. The Court establishes a spousal support arrearage amount of $489,239.35 against Husband as of June 30, 2020, and judgment against Husband and in favor of Wife will be entered in that amount. Va. Code § 20-78.2. The Court denies Wife's request for attorney's fees.
C. The Court Lacks the Authority to Amend Husband's Spousal Support Obligations as He Requests.
After the Hearing, Husband filed a motion to amend his current spousal support obligation. It is well established that Virginia circuit courts are generally authorized to modify a spousal support obligation upon finding a material change in circumstances that justifies such a modification. Va. Code § 20-109(B).
Husband previously moved for a modification of his spousal support obligations more generally in his response to the Rule to Show Cause. (Resp't's Resp. 9.)
Before July 1, 2018, Virginia law made it clear that such a spousal support modification could not contradict the terms of a property settlement agreement executed prior to the parties' divorce decree. Specifically, the statute provided that "if a stipulation or contract signed by the party to whom such relief might otherwise be awarded is filed before entry of a final decree, no decree or order directing the payment of support . . . for the spouse . . . shall be entered except in accordance with that stipulation or contract." Id. § 20-109(C) (1987) (amended 2018).
The Virginia Court of Appeals in 2016 aptly summarized the judicial interpretation of this statutory provision in an opinion in which it reversed a trial court's modification of the parties' property settlement agreement obligations, including spousal support:
This provision . . . limits the authority of a trial court to make or modify spousal support awards when an agreement exists. In such cases, the intent of the parties as expressed in the agreement controls, and the agreement is treated as a contract and construed in the same manner as all contracts. The statute was enacted to require that decrees for support honor agreements made by the parties; it prevents a court from rewriting the parties' contract.Carrano, 2016 WL 308586, at *3-4 (quoting Doering v. Doering, 54 Va. App. 162, 171-72, 676 S.E.2d 353, 357 (2009)). The court went on to note that "[a]bsent equitable grounds warranting rescission, a [property settlement agreement] cannot be judicially modified or terminated at the unilateral request of a contract party unless the agreement expressly authorizes such relief." Id. at *4 (quoting Newman v. Newman, 42 Va. App. 557, 568-69, 593 S.E.2d 533, 539 (2004)); see also White v. White, 257 Va. 139, 144, 509 S.E.2d 323, 325 (1999) (holding that the provision "inhibits the power of the court to award or consider modification of the decree to the extent that spousal support and maintenance are provided for in the incorporated agreement of the parties"); Blackburn v. Michael, 30 Va. App. 95, 100, 515 S.E. 2d 780, 783 (1999) ("Code § 20-109(A) empowers trial courts to modify a spousal support award, but Code § 20-109(C) expressly limits the court's authority to modify an agreed upon spousal support award according to the terms of a stipulation or contract signed by the parties.").
The Virginia spousal support statute was radically changed by the General Assembly in 2018, however. The current statute includes an additional sentence, which provides as follows:
No request for modification of spousal support based on a material change in circumstances or the terms of stipulation or contract shall be denied solely on the basis of the terms of any stipulation or contract that is executed on or after July 1, 2018, unless such stipulation or contract expressly states that the amount or duration of spousal support is non-modifiable.Va. Code 20-109(C). One law firm article summarized the impact of the change as follows: the Virginia legislature replaced a "presumption by a court . . . that the [spousal support] award was fixed and could not be revisited or modified" with a "presumption . . . that the spousal support award will always be modifiable based upon a material change in circumstances." Changes to Virginia Spousal Support Law Effective July 1, 2018, Livesay & Myers (May 17, 2018), https://www.livesaymyers.com/changes-virginia-spousal-support-law-july-1-2018/ (last visited Sept. 26, 2020) (second emphasis added).
Here, Husband seeks to modify the terms of property settlement agreements that predate the parties' divorce decree. The agreements and decree are silent with respect to subsequent spousal support modifications. Under the earlier version of the statute, those terms are not modifiable. Under the current statute, however, there is a presumption that courts can modify pre-divorce-decree property settlement agreement terms. However, the new provision relates only to property settlement agreements executed on or after July 1, 2018. Here, all of the parties' relevant agreements were executed prior to their February 19, 2013, divorce, years before the specified statutory date. Hence, the Court is not authorized to modify Husband's spousal support obligations as he requests. The parties' voluntary agreements regarding spousal support remain in effect.
Conclusion
The Court finds that, in light of the absence of Virginia law providing for an automatic suspension of spousal support and the well-established caselaw barring courts from retroactively modifying spousal support, Husband's incarceration did not affect his spousal support obligations. The Court further finds that because Husband was unable to comply with the ordered spousal support provisions during and since his incarceration, Husband is not in contempt, but the Court establishes spousal support arrearages. Finally, the Court holds that it is not authorized to modify Husband's spousal support obligations because the parties voluntarily agreed to those terms in property settlement agreements that predated their 2013 divorce.
The Court therefore DISMISSES the rule to show cause; sets spousal support arrearages at $489,239.35 as of June 30, 2020, and AWARDS JUDGMENT TO WIFE in that amount; and DENIES the motion to amend spousal support.
The Court directs counsel for Petitioner to prepare and circulate an Order consistent with the ruling in this Opinion and submit it to the Court for entry within fourteen days.
Sincerely,
/s/
David W. Lannetti
Circuit Court Judge DWL/bds