On February 2, 2021, the Virginia Court of Appeals, in the case of *, a published opinion, ruled that the trail court did not err in imposing sanctions or awarding wife attorney’s fees where husband was properly served with the rule to show cause and evidence was sufficient to find appellant in willful contempt.
After a 14-year marriage, husband and wife were divorced by final decree entered in 2016. The divorce decree incorporated the parties’ property settlement and support agreement (“PSA”). The divorce decree required husband to pay the mortgages on the parties’ two condominiums.
The PSA provided that the condominiums would be sold, and the aggregate net sale proceeds would be divided equally. If husband failed to pay the mortgages, then it would be charged against his share of the net proceeds and paid to the wife. Further, the PSA specified that husband would pay $5,000 of wife’s attorney’s fees “upon the sale of the first of the real properties to sell.”
Significantly, the divorce decree listed a street address in Woodland, Washington as husband’s residential address and required that the parties “give each other and this court at least thirty days[’] advance written notice of any change of address.”
In a paragraph entitled “Knowledge of Residence,” the PSA specifically required the parties to notify each other of a change in residential address: “For so long as any obligation of this [PSA] remains unexecuted and either party still has obligations hereunder, each shall keep the other informed of his or her address of residence.”
Husband failed to pay the mortgages on the condominiums resulting in foreclosure on the properties. As a result, wife filed a show cause against him. The show cause was served upon husband’s “mother-in-law/co-resident” at the Washington address husband provided in the divorce decree in 2018.
However, after the divorce decree was entered, husband had emailed the wife in 2017 and told her he had a new address: a P.O. Box in Saudi Arabia.
Wife took the position that husband never provided her with an updated residential address as required by the divorce decree.
Husband filed a special appearance and moved to quash service of process and dismiss the show cause rule for lack of service. At the hearing, husband argued that the Washington residence might have been “the place [he] was last found” and “the last address that [he] submitted to the court,” but it was not his “usual place of abode” as required by Code § 8.01-296(2)(a). Husband emphasized that he informed wife of his move to Saudi Arabia in July 2017, well before she attempted personal service on him at the Washington address in December 2018. Husband’s evidence consisted of a de bene esse deposition transcript of his father-in-law, resident owner of the Washington address, who testified equivocally about husband’s residence. Although his father-in-law testified that husband “moved out of our house when he got the job in Saudi [Arabia],” he further stated that husband’s intent was to remain in Saudi Arabia only as long as he “could handle it” and husband had returned to the Washington residence in summer 2018 and winter 2017. Husband did not introduce any other evidence demonstrating that he abandoned the Washington abode or established a new residence elsewhere.
The trial court held that service of process on husband was valid and denied his motion to quash. Specifically, the court ruled that husband was properly served pursuant to Code § 8.01-296(2)(a), which provides for substituted service by delivering pleadings to a family member at a person’s “usual place of abode.” The court found that the process server delivered the show cause rule to husband’s mother-in-law in December 2018 at the Washington address listed in the divorce decree. The court further found that although husband emailed wife in July 2017 that he was working in Saudi Arabia and provided a post office box, he did not notify wife or the court of any change in his residential address as required by the divorce decree, and therefore the Washington address remained his usual place of abode.
The VCA upheld the ruling of the trial court noting that Code § 8.01-274.1 states that a “rule to show cause entered by the court shall be served on the person alleged to have violated the court order, along with the accompanying motion or petition and any affidavit filed with such motion or petition.”
Husband asserts that because the statute uses the words “served on the person,” the amended show cause rule and accompanying affidavit must be hand-delivered to him.
However, the phrase “served on the person” refers to the multiple methods for obtaining in personam (“personal”) jurisdiction over a party, which include substituted service pursuant to Code § 8.01-296(2).
Code § 8.01-296(2) provides the requirements for service of process “upon natural persons” as follows:
“2. By substituted service in the following manner:
“a. If the party to be served is not found at his usual place of abode, by delivering a copy of such process and giving information of its purport to any person found there, who is a member of his family, other than a temporary sojourner or guest, and who is of the age of [sixteen] or older; or”
“b. If such service cannot be effected under subdivision [(2)(a)], then by posting a copy of such process at the front door or at such other door as appears to be the main entrance of such place of abode[.]”
Either method of substituted service — on a family member or by posting — is valid service upon a “natural person[]” if it occurs at the party’s “usual place of abode.” Under Code § 8.01-296(2), substituted service at a party’s usual place of abode may give a court jurisdiction over that person.
Because husband was a nonresident, Virginia’s long-arm statute applied and supported a conclusion that substituted service of the show cause rule was valid in this case. See generally Code § 8.01-328.1. The long-arm statute permits a Virginia court to exercise personal jurisdiction over certain nonresidents, such as husband, who have spousal support obligations in Virginia. See Code § 8.01-328.1(A)(8)(i)-(ii). These provisions of the long-arm statute do not require personal service on the nonresident. See id. Therefore, substituted service in Washington was sufficient to give the Virginia court personal jurisdiction over husband and thus satisfy the requirement of Code § 8.01-274.1 that a show cause rule be “served on the person.” See also Code § 8.01-107.3(K)(2).
Here, the court found that the Washington address was husband’s usual place of abode. The show cause order and sworn petition were served on husband’s mother-in-law at the Washington address that husband provided in the divorce decree as his residential address of record. See Code § 8.01-326 (stating that the return of service by a private process server “shall be evidence of the facts stated therein”). The court found insufficient evidence that husband had permanently abandoned that usual place of abode. Husband never notified wife or the court of any change in his residential address as required by the divorce decree. Although he sent wife an email entitled “change of address” in July 2017, he merely provided a post office box for a company in Saudi Arabia and not a new residential address. Further, the court found that the deposition testimony from husband’s father-in-law demonstrated that husband returned to the Washington residence on multiple occasions, as recently as summer 2018. Husband did not produce a driver’s license or bank account with another address, and he did not testify that he resided at a new address. The record therefore supports the court’s factual finding that husband’s presence in Saudi Arabia was temporary and that the Washington address remained his usual place of abode.
Because husband did not comply with his financial obligations, the condominiums sold at foreclosure auctions for less than their fair market values. Pursuant to the parties’ PSA, the court ordered that each party would receive half of the net proceeds from the foreclosure sales. Additionally, as a contempt sanction for husband’s violation of the divorce decree, the court ordered that wife receive half of the difference between what the properties would have sold for at non-foreclosure sales (i.e., fair market value) and the actual foreclosure sale prices. In calculating the sanction amount, the court deducted the commissions actually earned by the commissioner of sales at foreclosure, as well as the commissions that would have been earned by a realtor in hypothetical sales on the open market.
Husband contends that the court erred by considering the difference between the foreclosure prices of the condominiums and their fair market values. According to husband, the PSA limited the court’s authority to equally divide the proceeds of $6,067.55 that remained after the condominiums were sold at foreclosure.
A court has broad discretion to fashion a sanction upon finding a party in contempt. “Upon a finding of contempt, a trial judge has discretionary power to enforce decrees of the court.” “This includes the power, in the court’s ‘sound discretion,’ to determine the ‘degree of punishment.’”
Paragraph 7(E) of the PSA states that “net proceeds” from the sale of the properties shall be paid in equal shares to the parties after the payment of any commissions and liens or other expenses of sale. It further provides that any delinquent payments made by a party “shall be charged against his or her share of the net proceeds and paid to the other party.” Husband argues that because this provision of the PSA expressly addressed sales proceeds and delinquent payments, the court’s sanction inappropriately rewrote the parties’ agreement.
However, the matter before us is a sanction for contempt, not an appeal from an award of spousal support or modification of a property settlement agreement. Accordingly, these cases do not support husband’s contention that the parties’ PSA limited the court’s authority to fashion a sanction for contempt. Here, at the time that the PSA was executed, the parties intended that the condominiums would be sold for their fair market value and the proceeds would be divided equally. However, because of husband’s noncompliance, the properties were sold at foreclosure, resulting in reduced proceeds. The court enforced Paragraph 7(E) of the PSA by ordering that the net proceeds of the foreclosure sale be divided in half and distributed to each party.
Contrary to husband’s argument, however, Paragraph 7(E) of the PSA did not preclude the court’s discretionary authority to order an additional monetary award to wife — consisting of the difference between the properties’ fair market values and the foreclosure proceeds — as a sanction for husband’s noncompliance with his financial obligations under the divorce decree. See Kahn v. McNicholas, 67 Va. App. 215, 228-29 (2017) (holding that the equitable distribution statute, Code § 20-107.3(K)(2), authorizes enforcement of monetary awards through circuit court’s contempt power).