Chapin v. Chapin

EKATERINA A. CHAPIN v. BRYAN THEODORE CHAPIN

Record No. 1541-15-4

COURT OF APPEALS OF VIRGINIA

AUGUST 29, 2017

UNPUBLISHED

Present: Judges Alston, O'Brien and Russell

Argued at Fredericksburg, Virginia

MEMORANDUM OPINION^* BY JUDGE ROSSIE D. ALSTON, JR.

FROM THE CIRCUIT COURT OF WARREN COUNTY

Ronald Lewis Napier, Judge

Andrew J. Muzic (Marilyn Ann Solomon; Solomon Law Group, on briefs), for appellant.

Norman A. Thomas (John G. Cadden; Norman A. Thomas, PLLC; John G. Cadden, P.C., on brief), for appellee.

Ekaterina A. Chapin ("wife") appeals several of the trial court's rulings related to the parties' divorce. She specifically challenges evidentiary and discovery rulings, equitable distribution rulings regarding the classification and valuation date of certain property, and the trial court's decision not to award her attorney's fees. Bryan T. Chapin ("husband") assigns cross-error, arguing that the trial court erred in overruling his plea in bar and refusing to enforce the terms of the parties' prenuptial agreement. We disagree with both parties' assignments of error, and affirm the trial court's ruling.

BACKGROUND

The parties met in 2001, via an online agency that pairs American men with Russian women for potential marriage. After some initial correspondence, the parties met face to face on multiple occasions, discussing, among other things, their plans to marry and husband's desire fora prenuptial agreement. After obtaining a "fiancé visa" to come to the United States, wife arrived at husband's home in Middletown, Virginia, in September 2001.

At his request, husband's attorney prepared a prenuptial agreement. The agreement's terms "reserved to each party their separate property, allowed [husband] to protect his retirement savings and children's inheritances, and waived spousal support." On November 20, 2001, the parties met with a translator who also served as a notary public. During this meeting, the translator translated the terms of the agreement for wife from English to Russian. Although wife seemed upset after hearing the translation, she declined husband's offer of additional time to consider the agreement. The parties then signed the agreement, and the translator notarized it.

Both parties provided financial disclosures in the agreement; husband valued his assets at a total of $1,795,800, while wife valued hers at $500. Neither party disclosed any income or liabilities. In 2001, husband's liabilities totaled $545,974.76. If husband's liabilities (in addition to his total adjusted gross income of $46,131) had been factored into the total value of his assets, the total value would have been $1,295,956.44.

The parties were married on November 29, 2001, and separated on February 19, 2011, when wife left the marital home. Wife filed for divorce on April 26, 2013, and sought spousal support, equitable distribution, and an attorney's fee award.¹ On July 2, 2013, husband answered wife's complaint and filed a plea in bar based on the parties' November 20, 2001 prenuptial agreement. Husband asserted that the agreement barred wife from receiving equitable distribution, support, or fees.

A. PRETRIAL MATTERS

The pretrial history of this matter is significant and critical to appellate review of this matter.

On April 15, 2014, in advance of trial, the trial court heard evidence regarding husband's plea in bar asserting the validity of the prenuptial agreement signed by both parties and seeking the enforcement of its provisions. At the hearing, wife testified that she was not provided with a copy of the prenuptial agreement in Russian and that she did not understand the legal terms of the agreement or its waiver. She also stated that she never discussed the agreement with an attorney because she could not afford one. Husband testified that he did not offer to financially assist wife to ensure that she understood the terms of the agreement. The trial court issued a letter opinion on May 27, 2016, concluding that it was persuaded by the analysis of a sister circuit court in the case of Odom v. Odom, CH22323, 2003 Va. Cir. LEXIS 110 (Va. Cir. Ct. June 11, 2003). It further stated:

[A]s was the case in Odom, the Chapin prenuptial agreement contains factual recitals that are incorrect. The agreement references Exhibit A attached thereto and states that [husband] has made a full and accurate disclosure of "the nature, extent and probable value of his property, income, assets and liabilities." On the contrary, no statement was made regarding his income or liabilities. If one is to assume that absence of any recital of liabilities means that there are none, then by the same standard, one must assume that the husband here has no income. Given his disclosed wealth, that would be an absurd conclusion.

Ultimately, the trial court found that the terms of the agreement were unconscionable, noting that the disparity in assets between the parties "shocks the conscience." In support of its decision, the trial court also cited wife's limited English vocabulary, and the fact that wife did not have the means to pay for an attorney. The trial court entered an order overruling the plea in bar on June 16, 2014, and husband's objections were noted.

Husband filed a motion to reconsider in April 2015 regarding the trial court overruling his plea in bar, which the trial court denied. In its letter opinion, dated June 26, 2015, the trial court stated: "[Husband]'s disclosure of his financial condition was incomplete and that, together with the unconscionability of the agreement (I have previously found), renders the agreement unenforceable." The trial court entered an order denying the motion on July 9, 2015, and husband's objections were noted on the order.

On May 21, 2015, wife filed a motion to value certain assets, including bank accounts and stocks, as of the date of separation. In support of her motion, wife stated that husband sold the stock after their separation. In regard to the bank accounts, wife contended that such accounts were marital in nature and that they contained substantial sums at the time of the separation, but were liquidated by husband following the separation. Wife argued that it would be "inequitable to value these particular marital assets [and accounts] as of the date of trial because [husband] disposed of them and kept the money, depriving the marital estate of hundreds of thousands of dollars."

In addition, wife filed a motion in limine on July 1, 2015, seeking to exclude husband's expert witness, Stuart Rosenberg. Wife argued that husband's identification of his expert witness was in violation of the scheduling order and the parties' subsequent agreement to extend the expert deadline. Specifically, wife argued that the expert witness should be allowed to opine as to business valuation, but not the source(s) of funds used to purchase marital assets. On July 6, 2015, wife filed a memorandum in support of the motion. Wife also filed a motion for attorney's fees, focusing significantly on the delay caused by husband and husband's refusal to provide complete responses to wife's discovery requests. Husband disputed that the expert had not been timely disclosed.

Ultimately, the trial court permitted Rosenberg to testify.

B. TRIAL EVIDENCE

The trial was held on July 9, 10, and 13, 2015. At the outset, the trial court admitted wife's exhibits into evidence and Rosenberg's report. At that time wife stated, somewhat contrary to her pretrial position, that she had no objection to the report, but reserved the right to cross-examine Rosenberg about it. Wife also confirmed that she had no objection to Rosenberg testifying. Wife renewed her request that the trial court value particular assets as of the date of separation because husband had disposed of them prior to that date. In response, husband argued that he could prove through his expert that those assets existed in the form of another asset. Wife responded that she had not received in discovery "any evidence [supporting husband's assertion as to] where [the] money went." She further argued that good cause existed to change the valuation date for certain property because husband "sold the assets. He took them. And they're not . . . there anymore." Husband stated that he provided an explanation as to where the assets were in his findings of fact and conclusions of law. The trial court denied wife's motion regarding her request for an alternative valuation date.

During the trial, the trial court heard evidence that the parties married on November 29, 2001, and separated on February 19, 2011. Wife testified that she has not worked since she came to the United States from Russia to marry husband. While married to husband, wife took care of the parties' minor child and the duties related to up keeping their household.

At the time of the parties' marriage, husband owned stock in a company called Applied Software, Inc. (ASI). Husband worked at ASI throughout the marriage, receiving an annual salary of between $20-30,000 from ASI. Because of his stock holdings in ASI, which predated the marriage, husband also received distributions from the company. Wife received a salary from ASI during the marriage as well. Wife's annual salary from ASI was $6,000 per annum. Both parties' ASI salaries were deposited into a Sandy Spring Bank checking account thathusband maintained prior to the parties' marriage. This account was used to pay the parties' routine household expenses. Testimony established that the parties used their ASI salaries to pay all of their household and living expenses, and only once the salaries had been exhausted, would they use other funds, such as husband's ASI distributions.

Certain accounts and pieces of property are pertinent to this appeal: specifically, brokerage accounts denominated UBS 072 and 073 (which husband testified he opened in 2009), two ASI notes that were paid down during the marriage, real property located at 229 Serenity Lane, and items of personalty, including...