Willey v. Willey

Willey v. Willey  (2005-251); 180 Vt. 421; 912 A.2d 441

2006 VT 106

[Filed 03-Nov-2006]

  NOTICE:  This opinion is subject to motions for reargument under V.R.A.P.
  40 as well as formal revision before publication in the Vermont Reports. 
  Readers are requested to notify the Reporter of Decisions, Vermont Supreme
  Court, 109 State Street, Montpelier, Vermont 05609-0801 of any errors in
  order that corrections may be made before this opinion goes to press.


                                 2006 VT 106

                                No. 2005-251


  Carol J. Willey                           Supreme Court

                                            On Appeal from
       v.                                   Washington Family Court


  Philip Willey                             May Term, 2006


  Geoffrey W. Crawford, J.

  David F. Kidney of Rubin, Kidney, Myer & DeWolfe, Barre, for
  Plaintiff-Appellee.
  
  Brian K. Valentine of Downs Rachlin Martin PLLC, Burlington, for
  Defendant-Appellant.


  PRESENT:  Reiber, C.J., Dooley, Johnson and Skoglund, JJ., and Toor,
            Supr. J., Specially Assigned

       ¶ 1.  REIBER, C.J.   Husband Philip Willey appeals from the family
  court's final divorce decree awarding wife Carol Willey $210,000 and
  incorporating other terms of an oral settlement agreement reached by the
  parties during their divorce trial.  Husband also appeals from the family
  court's subsequent order awarding wife attorney's fees and temporary
  maintenance.  Because the family court's finding that the parties intended
  to be bound by the oral settlement agreement was not clearly erroneous, and
  because its decision to award attorney's fees and temporary maintenance was
  not an abuse of discretion, we affirm.
   
       ¶ 2.  The parties were married in 1989; before marrying they executed,
  with advice of counsel, a prenuptial agreement.  That agreement recited
  husband's "intent and desire . . . to provide adequately and fairly for
  [wife] and her minor children by a previous marriage," and also contained a
  seemingly-conflicting provision concerning "Marital Dissolution," which
  provided that "[i]n the event of a separation or divorce, the parties shall
  have no right against each other by way of claims of support, alimony,
  maintenance, compensation or division of any property . . .."

       ¶ 3.  Following their marriage, husband and wife built a home in Barre
  where they lived until separating in the summer of 2003.  At all times
  during the marriage, husband owned a construction company from which he
  derived significant income; wife was employed at times in the construction
  company offices, and that employment was terminated when the parties
  separated.

       ¶ 4.    During the subsequent divorce proceedings, husband filed a
  motion for specific performance of the prenuptial agreement and for partial
  summary judgment based on that agreement.  The family court, after an
  evidentiary hearing in May 2004, issued a decision concluding that the most
  plausible reading of paragraph 2(b) (which recited husband's intent to
  "provide adequately" for wife and her children) was as "an expression of
  [husband's] agreement to 'provide adequately' for [wife] during and,
  especially, after the marriage."  The court based this interpretation on
  the fact that paragraph 2(b) was the only change wife proposed to the draft
  prenuptial agreement and further concluded that "[t]o provide adequately
  means to make payments of money."  The court then concluded, in light of
  the prenuptial agreement's severability clause, that the agreement's
  paragraph 8 (purporting to bar any claim by wife for maintenance or
  support) would be set aside "in order to give meaning to [husband's]
  expressed intent to provide adequately for his wife" in paragraph 2(b).  
   
       ¶ 5.  The divorce case proceeded to a final hearing on September 22
  and 23, 2004.  Before the second day of the hearing, husband's attorney
  initiated settlement negotiations with wife's attorney, proposing to pay
  wife a lump sum, in exchange for which she would waive any further claim to
  the Barre house or to spousal maintenance.  After wife's attorney consulted
  with wife, the parties orally agreed that husband would pay wife $210,000
  and she would waive any claim to maintenance or to the house.  Among other
  things, the parties also agreed to keep the $210,000 payment confidential,
  as husband was concerned about keeping his financial dealings as private as
  possible.  The parties did not immediately reduce this agreement to a
  formal writing, but the meeting did result in a "term sheet" containing the
  basic terms of the agreement, annotated with notes made by husband's
  counsel.  In addition, the parties prepared a list of wife's personal
  property left at the Barre house; each entry on the list was accompanied by
  "yes" or "no" in husband's handwriting to denote whether that item was to
  be removed by wife.

       ¶ 6.  Following the settlement negotiations on September 23, counsel
  for both parties advised the family court in chambers that they had reached
  a settlement and the divorce trial could be terminated.  The parties
  further advised the court that they would reduce the agreement to a writing
  "shortly."  Before leaving the courthouse that day, husband's attorney
  handed wife's attorney a check for $50,000 made out to wife and signed by
  husband; the memorandum line on the check read "Toward Settlement." 
  Neither husband nor his attorney stated that the check should be held in
  escrow pending execution of a written settlement agreement.  Wife
  immediately deposited the check in her personal account, without objection
  from husband or his attorney.  
   
       ¶ 7.  In the next few days, wife's attorney sent two drafts of the
  settlement agreement to husband's attorney.  Husband's counsel responded,
  on October 4, with a letter proposing several changes to the draft, none of
  which varied the terms of the draft as to the lump-sum payment, the
  quitclaim deed, or the need for confidentiality.  On October 7, wife's
  attorney sent husband's attorney a new draft incorporating most of the
  changes proposed in the October 4 letter.  Husband did not reply to this
  draft, and on October 22 new counsel filed her notice of appearance for
  husband.  Since that date husband has maintained that he never intended to
  be bound by the September 23 negotiations.

       ¶ 8.  After it became clear that husband did not intend to sign the
  settlement agreement sent on October 7, wife filed a motion to enforce the
  terms of the settlement agreement.  After an evidentiary hearing on the
  motion, the family court issued findings of fact and conclusions of law on
  April 27, 2005.  The court found, in pertinent part, that husband's
  assertion that he did not intend to be bound by the oral negotiations was
  "not credible," that he had partly performed the agreement before later
  "chang[ing] his mind," and that the court would therefore enforce the
  settlement agreement.  The family court directed counsel for wife to
  prepare a draft final divorce decree based on the April 27 findings of fact
  and conclusions of law.

       ¶ 9.  A final decree of divorce was filed on June 1, 2005.  By that
  decree, husband was awarded-and wife was required to quitclaim any interest
  in-the home the parties built together in Barre.  Husband also retained
  sole ownership of his construction company and certain real estate in
  Calais.  The decree mandated that husband would pay wife $210,000 "in the
  nature of a property settlement."  Further, both parties renounced any
  claim against the other for attorney's fees incurred prior to October 7,
  2004.  Husband appealed from this order.
   
       ¶ 10.  The first question presented for our review is whether the
  parties' oral settlement agreement, coupled with the attorneys' notes,
  unexecuted drafts, and other surrounding circumstances, created an
  enforceable agreement.  Husband argues, first, that the family court erred
  in construing the prenuptial agreement to allow wife to make any claim for
  maintenance.  Second, husband contests the family court's finding that the
  parties intended to be bound by their oral agreement on September 23, 2004. 
  Finally, husband asks us to set aside the award of attorney's fees to wife,
  contending that the family court failed to properly consider wife's
  financial resources.   We consider the second argument first.

       ¶ 11.  Whether husband and wife will be bound by their oral settlement
  agreement depends on their intent at the time of the oral settlement, which
  is a question of fact.  Bixler v. Bullard, 172 Vt. 53, 58, 769 A.2d 690,
  694 (2001).  We view the family court's factual findings in the light most
  favorable to the prevailing party below, disregarding the effect of
  modifying evidence, and will set aside factual findings only when they are
  clearly erroneous.  Catamount Slate Prods., Inc. v. Sheldon, 2003 VT 112, ¶
  14, 176 Vt. 158, 845 A.2d 324.  The findings will stand if there is any
  reasonable and credible evidence to support them.  Id.  As discussed below,
  we conclude that there was ample evidence supporting the family court's
  findings.
   
       ¶ 12.  In arriving at its findings, the family court relied on the
  four factors we adopted in Catamount to aid in determining whether parties
  intended to be bound by an oral agreement absent a fully-executed document. 
  See id. ¶ 17 (citing four factors used in Winston v. Mediafare Entm't
  Corp., 777 F.2d 78, 80 (2d Cir. 1985)).  First, we consider whether either
  party has expressly reserved the right not to be bound before the agreement
  is written down and executed; second, whether either party has partially
  performed the contract; third, whether all "substantive" terms have been
  agreed upon; and, fourth, whether the agreement is of a sort that is
  typically committed to writing.  Id.  Each of these factors, while not
  independently dispositive, provides "significant guidance."  Ciaramella v.
  Reader's Digest Ass'n, Inc., 131 F.3d 320, 323 (2d Cir. 1997).  

       ¶ 13.  As to the first factor, there is nothing in the facts before us
  to suggest that either husband or wife expressly reserved the right not to
  be bound to the oral settlement agreement.  Husband argues that the mere
  fact that the parties (and the family court) anticipated that the agreement
  would ultimately be set down in writing should be considered an express
  reservation of the right not to be bound to the oral agreement.  We
  rejected such a broad rule in Catamount, however, and we decline to adopt
  it now.  See Catamount, 2003 VT 112, ¶ 26 (declining to adopt a per se rule
  that settlement agreements be unenforceable absent a writing, and stating
  that "parties to a . . . settlement are free to enter into a binding oral
  contract without memorializing their agreement in a fully executed
  document, even if they intend to subsequently reduce their agreement to
  writing") (emphasis added).
   
       ¶ 14.  The express reservation husband claims he made in this case
  would have us apply the logic of Catamount to very different facts.  In
  Catamount, the parties submitted to binding mediation in order to settle
  several pending lawsuits between them.  Id. ¶ 2.   Prior to that mediation,
  the judge in one of the underlying cases drafted, and both parties
  received, a "Mediation Agreement" which mandated that no statements made
  during the mediation would be "binding upon either party unless reduced to
  a final agreement of settlement," and also provided that such a final
  agreement "must be in writing and signed by every party sought to be
  charged."  Id. ¶ 3.  Our decision in Catamount relied, first, on this
  express pre-negotiation language in finding that the parties had reserved
  the right not to be bound until a final agreement had been reduced to
  writing and signed.  Id. ¶ 18.  Second, we noted that the parties'
  correspondence following the mediation was "further evidence" that they
  believed they were not yet bound.  Id. ¶ 19.  Third, and "[e]ven more
  compelling," was the fact that a lease payment required by the purported
  oral settlement was escrowed until the agreement became "final."  Id. ¶ 20. 

       ¶ 15.  Husband contends that the parties' actions and correspondence
  after the oral settlement agreement also reflect an express reservation of
  the right not to be bound.  We cannot agree.  Husband characterizes his
  failure to object when the family court congratulated the parties on
  reaching a settlement as "entirely reasonable" in light of his earlier
  experiences with the court.  Be that as it may-and we express no opinion
  here-his mere silence, however justifiable, does not amount to an express
  reservation of the right not to be bound.  The post-settlement
  correspondence cited, particularly when viewed in light of the parties'
  earlier actions-which are more fully discussed below-also does not satisfy
  the standard we articulated in Catamount.  As the family court found, even
  husband's attorney characterized the written back-and-forth as a process of
  "fine-tuning" the "details" of the agreement, and advised wife's counsel
  that "[a]t this point that does it."  As noted above, the changes husband
  proposed did not materially alter the central terms of the agreement. 
  Finally, the fact that husband did not expressly require that the $50,000
  check be put in escrow is evidence that he intended to be bound.  The
  family court had sufficient credible evidence to find that husband did not
  clearly and unmistakably communicate his intent not to be bound by the oral
  settlement agreement.
   
       ¶ 16.  The second Catamount factor, partial performance, also supports
  the family court's finding that the parties intended to be bound by the
  oral agreement.  First, the family court found that, immediately following
  the oral settlement negotiations, husband's counsel handed wife a check for
  the $50,000 payment required by the agreement; the check was marked "Toward
  Settlement."  Wife deposited this check immediately, without objection from
  husband or his counsel.  At no time did husband or his counsel state that
  the check should be held in escrow pending a more final agreement.  We see
  no error in the family court's conclusion that this was part performance of
  the oral settlement agreement.  Also, following the oral settlement
  agreement, the case was removed from the family court docket and wife
  removed certain agreed-upon personalty from husband's house.  Both of these
  actions were part performance of the oral agreement.  See Brown v. Brown,
  343 A.2d 59, 62 (D.C. 1975) (holding that an oral agreement, partially
  performed by the agreed-upon withdrawal of a countersuit, was enforceable);
  see also Schank v. Jones, 229 F.2d 31, 32 (D.C. Cir. 1956) (holding that
  "the compromising of legal proceedings and the relinquishment of rights in
  connection therewith (here, the alleged abandonment by appellant of her
  appeal in the divorce proceeding) are such part performance of an oral
  agreement" as to render it enforceable). 
   
       ¶ 17.  Although the third Catamount factor-"whether all of the terms
  of the alleged contract have been agreed upon"-does not weigh as heavily in
  favor of enforcement, neither does this factor militate very strongly
  against it.  As the family court found, the parties had agreed on all the
  significant terms of the settlement.  Although husband has contended, since
  October 22, 2004, that the drafts prepared by wife's attorney were
  deficient in failing to provide sufficient teeth in the confidentiality
  provision, he did not object to those provisions at the time, nor did he
  propose alternative terms.  Husband's reliance on Catamount is misplaced
  here; in Catamount the terms remaining at issue during the drafting process
  included, among other things, the term of the disputed lease, the amount of
  property to be leased, and whether the parties' underlying claims would be
  dismissed without prejudice upon execution of the agreement.  2003 VT 112,
  ¶ 22.  We held that "[r]esolution of these issues was clearly important
  enough to forestall final execution until the language of the documents
  could be agreed upon."  Id.  The issues raised by the attorneys'
  correspondence following the negotiations are hardly as material or central
  as the unresolved terms in Catamount, and there was sufficient evidence to
  support the family court's finding that the terms of the contract had been
  agreed upon during the September 23 negotiations.

       ¶ 18.  The fourth Catamount factor has two aspects: first, whether the
  agreement at issue is of a type that is "usually committed to writing" and,
  second, whether the agreement is so complex that the parties could not
  reasonably have expected to be bound without a writing.  Id. ¶¶ 17, 23.  
   
       ¶ 19.  As to the first, the family court stated correctly that marital
  settlement agreements are invariably reduced to writing, and that the
  quitclaim deed renouncing wife's interest in the marital home would have to
  be in writing.  12 V.S.A. § 181(5).  The family court went on to conclude
  that the statute of frauds did not bar enforcement of the oral agreement. 
  Husband argues, first, that there were significant factual disputes about
  the terms of the oral agreement and, second, that the term sheet, supra ¶
  5, does not satisfy the statute of frauds.  We have already dispensed with
  the first argument.  Supra, ¶ 16.  We find the second argument unpersuasive
  as well.  The statute of frauds is a rule of evidence, and does not make
  oral agreements per se void.  Troy v. Hanifin, 132 Vt. 76, 80, 315 A.2d 875, 878 (1974).  Because it is a rule of evidence, the statute of frauds
  may be waived by the party who would benefit from its application. 
  Chomicky v. Buttolph, 147 Vt. 128, 131, 513 A.2d 1174, 1176 (1986).  Here,
  husband argues only that the statute of frauds applies to that portion of
  the oral settlement by which wife agreed to give husband a quitclaim deed
  to the marital home as part of the consideration for his paying her the
  $210,000.  Wife does not dispute that she must, under the agreement she
  seeks to enforce, execute the deed to husband in exchange for the $210,000. 
  Husband does not raise any material dispute about the consideration he
  would give in exchange for the deed, although he contends that the absence
  of a writing setting forth: (1) the date for payment, (2) the tax status of
  the payment, and (3) who should prepare the deed, is fatal to the
  agreement.  As the family court found, however, husband raised only minor
  drafting points in response to the draft settlement agreements prepared by
  wife.  The record supports this finding.  It would be an elevation of form
  over function to allow husband to use the statute of frauds to invalidate
  the entire settlement agreement under these facts.  We decline to do so,
  and find no error in the family court's conclusion that the statute of
  frauds does not preclude enforcement of the oral settlement agreement.(FN1)

       ¶ 20.  As to the second aspect-the complexity of the agreement-husband
  argues that the length of the draft agreements circulated between the
  parties compels the conclusion that the agreement was so complex that the
  parties could not reasonably have expected to be bound in the absence of a
  writing.  The parties' draft agreement was almost ten pages long and
  included both an appendix and a supplemental agreement.  The obligations
  imposed by the agreement were, in large part, to be discharged within
  thirty days of its execution, but the agreement also contained provisions
  binding the parties further into the future (e.g., an obligation to
  cooperate in any future tax audits of the other spouse).
   
       ¶ 21.  As we noted in Catamount, agreements of similar length and
  complexity to this one "warrant the expectation of a writing."  2003 VT
  112, ¶ 23 (finding settlement agreement with "numerous, very specific terms
  governing the detailed operation of a slate quarry" and imposing
  obligations lasting several years sufficiently complex to require a
  writing); see also Ciaramella, 131 F.3d  at 326 (finding that the complexity
  of an eleven-page settlement agreement with provisions applying "into
  perpetuity" militated in favor of requiring a formally executed writing);
  Winston, 777 F.2d  at 83 (finding same as to a four-page agreement imposing
  obligations over several years).  The family court's resolution of this
  factor in wife's favor appears to turn on the fact that, although the
  agreement was complex, there were no substantive differences between the
  parties about the terms orally agreed to on September 23, 2004.  As was
  more fully discussed above in connection with the third Catamount factor,
  supra ¶ 17, there was sufficient evidence for the family court to find that
  the material terms of the contract were agreed to on September 23 and that
  the complexity of the agreement should therefore not stand in the way of
  enforcing it.

       ¶ 22.  In connection with the fourth factor, we also stated in
  Catamount that, where the parties to a purported oral settlement are
  adversaries in litigation, it is reasonable to suppose that "the parties
  would assume [the agreement] would be in writing."  2003 VT 112, ¶ 24.  As
  a general matter, this is true, but it is not an inviolate principle. 
  Rather, as the Winston court noted, it is a rule of "prudence."  777 F.2d 
  at 83.  In this case, the purposes-ease of enforcement and avoidance of
  litigation, id.-underlying this rule of prudence will be served at least as
  well by enforcement of the oral settlement.  The agreement at issue here,
  in contrast to the lease in Catamount, is readily enforceable without
  imposing the requirement that the parties set down a more formal written
  agreement.
   
       ¶ 23.  On balance, we conclude that the family court did not err in
  finding that the parties intended to be bound by their oral agreement on
  September 23, 2004.  We therefore affirm the family court's final divorce
  decree incorporating the terms of that agreement.  Because we affirm the
  final divorce decree, we need not consider husband's argument that the
  prenuptial agreement barred wife's claim for maintenance.

       ¶ 24.  Husband next challenges the family court's award of $19,221.50
  to wife for attorney's fees she incurred attempting to enforce the terms of
  the oral settlement agreement.  Husband's principal argument is that the
  family court's failure to consider the parties' ability to pay, or to make
  findings concerning the parties' respective financial abilities, was an
  abuse of discretion.  We disagree.

       ¶ 25.  Husband is correct that, in awarding attorney's fees in divorce
  proceedings (denominated "suit money" by 15 V.S.A. §§ 606, 607),
  consideration should be given to the parties' ability to pay.  However, we
  do not require the family court to conduct a separate hearing and take
  additional evidence about the relative financial positions of the parties
  because those positions have typically been subject to extensive judicial
  scrutiny during the hearing on the merits.  Turner v. Turner, 2004 VT 5, ¶
  9, 176 Vt. 588, 844 A.2d 764 (mem.) ("In the usual, and vast majority of
  [divorce] cases such allowance borders on judicial routine, and is
  supported by evidence bearing on the circumstances of the parties
  generally.") (quoting Ely v. Ely, 139 Vt. 238, 242, 427 A.2d 361, 364
  (1981)).  Here, although the divorce proceeding was dismissed after the
  first of two scheduled days, the family court had already heard evidence
  concerning the parties' respective financial circumstances at an earlier
  hearing on wife's claim for temporary maintenance.  Accordingly, we do not
  agree with husband that the family court failed to adequately consider
  wife's ability to pay, or that any further proceedings or  findings were
  required before attorney's fees could be awarded.
   
       ¶ 26.  Further, husband seems to misapprehend the nature of the
  ability-to-pay inquiry; the question is not simply whether the requesting
  party has the bare ability to pay, as husband implies.  Rather, the inquiry
  is an equitable one, Nevitt v. Nevitt, 155 Vt. 391, 399, 584 A.2d 1134,
  1139 (1990), and the family court has discretion to award attorney's fees
  even to a party who has received an award in the underlying action
  sufficient to pay the fees.  See, e.g., Downs v. Downs, 159 Vt. 467, 468,
  472, 621 A.2d 229, 230, 232 (1993) (affirming award of attorney's fees to
  wife who had received over $200,000 in maintenance in underlying divorce
  action).  We will affirm an award of attorney's fees unless it is an abuse
  of discretion.  Cleverly, 151 Vt. at 358, 561 A.2d  at 103.

       ¶ 27.  Here, the order awarding attorney's fees stated that "Mr.
  Willey owns and operates a successful . . . company," that he "has
  virtually no debt," and that he has "certificates of deposit with local
  banks with a total value of close to $1,000,000."  PC 9.  The family court
  further noted that wife had the "capacity" to earn approximately $30,000
  per year as an office manager and was receiving $1,875 per month in
  temporary maintenance but had very few other assets.  These facts amply
  support the award of attorney's fees to wife.  We find no abuse of
  discretion.  

       Affirmed.

  FOR THE COURT:



  _______________________________________
  Chief Justice

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                                  Footnotes

FN1.  Wife also argues that the doctrine of judicial admissions takes the
  oral settlement agreement outside of the statute of frauds.  Even if that
  doctrine had been adopted by this Court, which it has not, it would not
  apply to admissions made in chambers off the record.  Accordingly, because
  the doctrine would not affect our disposition of any issue were we to
  follow it, we express no opinion as to whether the doctrine applies
  generally in Vermont.