THE COURT OF APPEALS OF VIRGINIA
BERNARD GOODWYN, JUSTICE.
appeal, we consider whether the Court of Appeals erred in
affirming a circuit court judgment that denied a request to
retroactively modify a pendente lite spousal support
April 26, 2016, Kathryn Tawes (Tawes) filed a complaint for
divorce in the Circuit Court of the City of Williamsburg and
James City County against James Everett, II (Everett). Tawes
also filed a motion for temporary spousal support pursuant to
Virginia Ninth Judicial Circuit guidelines and moved for a
pendente lite hearing on the matter.
circuit court held a hearing on the motion for spousal
support pendente lite on October 13, 2016. At that
hearing, Tawes testified that she has monthly expenses of
approximately $11, 700. Everett's tax returns were
presented to the court. They showed that his average gross
monthly income was approximately $33, 000.
by profession, Everett testified that he is a member of
multiple limited liability corporations (LLCs) that run
several restaurants in the Williamsburg area. He stated that
he earns income from his hours spent at these restaurants via
a "guaranteed payment to management," which totals
$10, 000 per month. He explained that for purposes of
taxation, he has to report his share of ordinary income
allocated to him from the LLCs, even if he does not actually
receive a cash distribution from the LLCs. Everett testified
that the $33, 000 gross monthly income figure inflated the
amount of cash income he actually received because he did not
directly receive the ordinary income allocated to him as an
LLC member, and the distributions he in fact received from
the LLCs were primarily to pay his personal tax liability on
the pass-through income allocated to him.
circuit court commented that it needed an expert to
understand Everett's tax returns. Tawes noted that,
regardless of Everett's assertion regarding his actual
cash flow, the Ninth Judicial Circuit spousal support
guidelines require using the amount of gross income in
determining the appropriate amount of spousal support.
December 12, 2016, the circuit court entered a pendente
lite order, which required Everett to continue to pay
the mortgage and expenses for the marital home and Tawes'
car payments and insurance, which totaled approximately $5,
900 per month. The order also awarded Tawes an additional $7,
831 per month in cash spousal support, retroactive to May 1,
2016. The circuit court calculated that Everett owed an
arrearage of $46, 986 upon entry of the order.
paid the mortgage and car payment obligations, but only a
portion of the cash spousal support obligation due and owing
for December 2016 through March 2017, and none of the
arrearage. Tawes subsequently requested, and the circuit
court issued, a rule to show cause to Everett because of his
failure to pay as required by the pendent lite
order. In response, Everett filed a motion for the circuit
court to reconsider the pendente lite spousal
support award, arguing that the award amount improperly
exceeded his ability to pay and Tawes' needs.
March 28, 2017, the circuit court held a hearing on the rule
to show cause and motion to reconsider the pendente
lite spousal support amount. Everett once again testified
that all of the LLC members have to pay tax according to
their ownership interests in the LLCs and that they are
allocated income from the LLCs for taxation purposes, but are
not necessarily paid those allocations.
presented expert testimony concerning the income reported on
his tax return. David Damiani (Damiani), a certified public
accountant, testified that Everett's tax forms show his
share of the LLCs' "net ordinary business
income," but that those shares do not represent actual
cash received by Everett. Damiani explained that the
restaurant LLCs do not pay state and federal taxes
themselves, and those taxes pass through to the LLC members.
He testified that, where an LLC member receives no
distributions or guaranteed payments from the LLC, the member
would still have to pay taxes on his or her share.
conclusion of the evidence, Everett argued that, without any
distributions, which are not guaranteed and are primarily
used to pay taxes owed on his income from the LLCs, he
regularly receives only his guaranteed payment of $10, 000 a
month. Therefore, the current pendente lite spousal
support award was excessive. He also asserted that the
circuit court had the authority to retroactively modify the
pendente lite order.
argued that the circuit court had spoken through the
pendente lite order "as it exists now."
The circuit court responded to Tawes:
I understand that. And that is creating an issue for
me. Gentlemen, I do find it offensive to come in and
imply that somebody's income is $600, 000 [when] he is
living in an outbuilding and there is absolutely no evidence
of a lavish lifestyle or anything else and to come in and to
point to certain areas in a tax return and say, see, you
know, there is a lot more money here than meets the eye, when
there is not, absolutely no external evidence of that
circuit court declined to find Everett in contempt and
dismissed the rule to show cause. The circuit court observed
that the amount of pendente lite spousal support
awarded and the arrearage it created was an
"injustice." Unsure whether it had the authority to
retroactively change the pendente lite spousal
support it previously ordered, the circuit court deferred
ruling on the motion to reconsider, pending further briefing
from the parties on whether a circuit court can retroactively
modify a pendente lite spousal support order.
the requested briefing, the circuit court held a hearing on
June 6, 2017. At that hearing, concerning the circuit
court's inquiry about its authority to retroactively
modify a pendente lite spousal support order, the
circuit court noted that there is "no answer to this
question." The circuit court indicated that it preferred
to avoid answering the question regarding its authority to
modify the pendente lite order. It stated it would
consider any unjust pendente lite arrearage or
payments when ruling on equitable distribution.
circuit court conducted a four-day trial on equitable
distribution and spousal support beginning on July 25, 2017.
At the conclusion of the evidence, before closing argument,
the circuit court noted that the $66, 437 owed pursuant to
the pendente lite order
is an arrearage . . . . Whether or not I have the authority
to vacate that is just ground I don't want to cover. And
as far as I know, the appellate courts have never addressed
the authority to vacate that. And I don't want to do
something at the expense of this family.
After closing argument, the circuit court stated from the
The arrearage of $66, 437 remains. I am not going to change
the pendente lite order . . . . That put Mr. Everett in a
position where he flat out almost didn't have the ability
to pay and allow himself anything to live on. I can only
surmise that arguing Mr. Everett's . . . tax return is
what caused this and gave an inaccurate ability - inaccurate
picture of his ability to pay. But that arrearage stays in
November 1, 2017, the circuit court entered a final divorce
decree,  ordering Everett to pay $4, 800 in spousal
support per month, declining to modify the pendente
lite order retroactively, and ordering Everett to pay
$66, 437 in pendente lite spousal support
appealed to the Court of Appeals, which affirmed the judgment
of the circuit court and stated that the circuit court
"did not err in denying [Everett's] request to
modify the pendente lite order retroactively."
The Court of Appeals premised its holding on the
"settled" notion that "support payments vest
as they accrue and may not be modified retroactively."