Alice Jin-Yue Guan v. Bing Ran
0968164
| Va. Ct. App. | Feb 7, 2017Background
- Alice Guan and Bing Ran divorced; their December 15, 2006 Parenting, Support and Property Settlement Agreement (PSA) (incorporated into the final decree) awarded Guan a lump-sum spousal support of $250,000 payable $50,000/year starting July 5, 2008, and addressed distributions from their company AdSTM.
- Guan unilaterally took large distributions (~$2.4M) from AdSTM in early 2008; parties later executed an October 15, 2008 amendment which (a) stated those 2008 distributions and related taxes were Guan’s sole property, (b) purported to void Ran’s spousal support obligation and waive Guan’s right to claim it, and (c) provided equal salary/bonus/profit distribution terms and a covenant not to sue tied to corporate-document disputes.
- The amendment included a punitive clause: breach of the amendment would reinstate the original PSA as governing; Paragraph 16 of the PSA provided prevailing-party attorney’s fees for enforcement actions.
- In 2014 Guan sought court enforcement of the PSA spousal support and other payments; Ran moved (in 2015) to modify the divorce decree to conform to the 2008 amendment. After evidentiary hearings, the circuit court incorporated the 2008 amendment and (inter alia) held that Guan had waived spousal support, had breached the amendment by suing, and denied attorneys’ fees to both parties; the court also rejected Ran’s claim for a ~$2.46M offset based on Guan’s 2008 distributions.
- On appeal, the Court of Appeals reviewed contract interpretation issues de novo and reached mixed conclusions about waiver, breach, setoff, and attorneys’ fees, reversing some circuit court rulings and remanding for recalculation and reconsideration of fees.
Issues
| Issue | Plaintiff's Argument (Guan) | Defendant's Argument (Ran) | Held |
|---|---|---|---|
| Whether the Oct. 15, 2008 amendment effectively waived/terminated the court-ordered lump-sum spousal support | Amendment voided Ran’s spousal support; waiver effective under parties’ agreement | Waiver valid and should eliminate the $250,000 obligation | Reversed circuit court: waiver ineffective as to vested lump-sum support; Guan entitled to full $250,000 (court cannot retroactively waive/modify vested lump-sum without judicial approval) |
| Whether Guan breached the amendment by filing suit to collect spousal support | She did not breach; waiver was ineffective so enforcement was lawful; covenant not-to-sue limited to corporate-document/business disputes and public policy forbids enforcing it to bar enforcement of court-ordered support | Filing suit violated the amendment’s no-litigation / no-claim language and triggered reinstatement of PSA under breach clause | Reversed circuit court: Guan did not breach by suing to enforce vested support; covenant not-to-sue read in context limited to business-document disputes and cannot bar enforcement of a court-ordered support judgment |
| Whether Ran was entitled to a $2,462,083 setoff for distributions Guan took in 2008 | Those 2008 distributions were declared Guan’s sole property by the amendment; no retroactive setoff | Paragraph 7’s equal profit/distribution language obligates equalization; Ran entitled to offset | Affirmed circuit court: Ran not entitled to the $2.462M setoff—Paragraph 2’s alternative definition of “income” (salary/bonus only), the PSA’s separate setoff language, and parties’ conduct show no setoff was intended |
| Whether prevailing-party attorneys’ fees should be awarded under PSA and who prevailed | Guan: she prevailed on key issues (spousal support, breach, distribution) and is entitled to fees (including on appeal) | Ran: prevailed on more issues below; fees should be denied to Guan | Vacated/reversed-in-part: remanded to reconsider fees in light of appellate holdings; appellate fees awarded to Guan and trial court to re-determine reasonable trial fees and costs consistent with opinion |
Key Cases Cited
- Plunkett v. Plunkett, 271 Va. 162 (contract construction rules apply to marital agreements)
- Mallery-Sayre v. Mallery, 6 Va. App. 471 (lump-sum award vests at decree and is not retroactively modifiable)
- Cass v. Lassiter, 2 Va. App. 273 (support installments vest as they accrue; no retroactive modification of past-due installments)
- Radford v. Radford, 16 Va. App. 812 (Code § 20-109 does not apply to lump-sum awards)
- Sheets v. Castle, 263 Va. 407 (definition of "prevailing party" for fee awards)
- Ulloa v. QSP, Inc., 271 Va. 72 (invalidation of contract provisions contrary to law/public policy)
- Capell v. Capell, 164 Va. 45 (court must sanction modifications of alimony decrees)
- Casilear v. Casilear, 168 Va. 46 (public character of alimony obligations; courts’ power over alimony)
- West Square, L.L.C. v. Commc'n Techs., Inc., 274 Va. 425 (prevailing party not entitled to fees for unsuccessful claims)
- Stacy v. Stacy, 53 Va. App. 38 (contract construed as a whole; remand for reconsideration of fees when appellate holdings change prevailing-party status)