Parrish v. Jessee

Citations: 464 S.E.2d 141; 250 Va. 514; 1995 Va. LEXIS 130Docket: Record 950044

Court: Supreme Court of Virginia; November 3, 1995; Virginia; State Supreme Court

Original Court Document: View Document

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Sandra T. Parrish, as the current guardian for her husband Douglas Parrish, who was severely injured in an automobile accident on August 9, 1985, is appealing a prior court-approved settlement agreement executed by a former guardian. This appeal is filed over a year after the initial approval from the Circuit Court of the City of Richmond, which had jurisdiction over the underlying tort claim against Mega Contractors, Inc., the at-fault party. The Goochland County Circuit Court, where Parrish serves as guardian, is overseeing the appeal.

After the accident, which rendered Douglas incompetent, Sandra was appointed guardian on October 18, 1985. She subsequently filed a lawsuit for damages against Mega Contractors. A settlement agreement was reached and submitted to the Richmond court, which included detailed provisions for funding through an insurance carrier and a long-term annuity, along with schedules for deferred benefit funds and a distribution plan. 

The Richmond court initially approved the settlement on July 28, 1987, after questioning its authority to approve payments to third parties rather than directly to the guardian. The court ultimately allowed payments to third parties as part of the agreement. However, the settlement's benefit schedule did not initially identify specific payees. To clarify this, the Richmond court issued a subsequent order on August 24, 1987, which designated payees for the various funds and required an addendum to the agreement.

The settlement included several funds with designated monthly payments for Douglas's maintenance, transportation, support, and rehabilitation, with specific values and payees outlined for each fund.

Housing payments of $2,202 monthly for 20 years totaling $528,480 are designated for Douglas A. Parrish, with guardian Sandra T. Parrish and joint payee Alicia K. Parrish. The Richmond court's intent to correct a prior order nunc pro tunc is acknowledged, and its validity is accepted for the appeal despite being entered over 21 days after the final order. Emergency funds amount to $40,000 annually for five years ($200,000 total), discretionary funds of $50,000 annually for the period 1988-1992, and further amounts escalating to $900,000 by 2017 are also allocated. Personal maintenance is set at $2,000 monthly for five years ($120,000 total), medical costs at $2,000 annually for ten years ($20,000 total), and educational costs are $25,000 annually for four years ($100,000 total) for Alicia K. Parrish. Legal fees are mentioned but deemed irrelevant to the appeal.

During her guardianship, Parrish received $90,000 from joint funds, depositing $45,000 into a guardianship account and using the other $45,000 for personal expenses, including paying off a car loan and purchasing property. On January 14, 1989, she arranged for Douglas to move in with his sister E. Ann Jessee, who became his guardian following a court order on March 17, 1989. This order modified payment designations, allowing Parrish to continue receiving personal maintenance payments while redirecting joint funds to the court for administration, with Jessee as the payee for Douglas' benefit. On July 17, 1990, Parrish filed a motion to vacate portions of the March 1989 order, and Jessee subsequently filed a motion asserting that parts of the initial settlement agreement were void, citing statutory requirements for future payments to be adequately secured.

On October 11, 1994, the Goochland court issued a final order stating that the benefits from a settlement agreement were to be vested solely in Douglas, rendering the designation of payees other than Douglas' guardian improper under Code § 8.01-424. Consequently, all funds due under the settlement were ordered to be paid to Jessee, Douglas' guardian, or to the court. The court mandated that Jessee pay child support to Parrish, with a $45,000 offset for prior disbursements by Parrish. Additionally, Parrish was required to provide a final accounting of her guardianship to the Commissioner of Accounts. The court dismissed Parrish's challenge to the reformation of the agreement from a prior order as moot.

On appeal, Parrish contested the Goochland court's legal and factual findings, particularly its jurisdiction to override the Richmond court's approved settlement agreement. Jurisdiction is a critical issue; if the lower court lacked jurisdiction, its actions would be null and not subject to review. The Goochland court's jurisdiction was challenged based on Jessee's claim that the Richmond court's order was void due to misapplication of Code § 8.01-424. However, the appellate court found that any errors in the Richmond order would only render it voidable, not void ab initio. A judgment is void ab initio only if it involves extrinsic fraud or is issued without jurisdiction. The appellate court emphasized that challenges regarding statutory application constitute trial errors rather than jurisdictional issues. Thus, if the lower court had subject matter jurisdiction, any mistakes made do not invalidate its judgment. Jessee's assertion did not demonstrate a lack of jurisdiction in the Richmond court regarding Parrish’s actions as guardian.

Jessee did not claim that the Richmond court's approval of the settlement agreement was obtained through collateral or extrinsic fraud but instead contested the court's application of Code § 8.01-424, which pertains to its jurisdiction. The issue raised by Jessee pertains to a voidable judgment rather than a void judgment, and therefore, the Richmond court's judgment was not subject to collateral attack in the Goochland court. Consequently, Jessee's motion was improperly considered, rendering the Goochland court's judgment null and void, as supported by Morrison v. Bestler and Rook cases. Jessee, acting as guardian, should pursue any remedies against Parrish through proper channels rather than challenging a competent court's judgment.

Furthermore, Parrish argued that the Goochland court erred in dismissing her challenge to the reformation of the agreement from the March 17, 1989 order regarding her individual payments for Douglas' support. However, the Goochland court maintained that it has jurisdiction over Douglas' estate as the appointed guardian and that all funds designated for his benefit are under its control. The settlement agreement specified that the joint payments were for housing, emergencies, and discretionary spending for Douglas and his family, not for Parrish's personal maintenance. Joint payees do not automatically divide payments equally; their rights depend on the agreement creating the obligation. Although Parrish retains an interest in the joint funds, she does not have an inherent right to a fixed percentage for her support. The court's direction to manage these funds ensures they are used appropriately, preserving both Parrish's and Douglas' guardian's access to the funds based on future needs as determined by the court.

The action taken in this case was necessary to protect Douglas' estate for the benefit of himself, his wife, and his child. A specific component of the March 17, 1989 order was found problematic, as payments designated in the settlement agreement for Alicia, through her mother as natural guardian, were improperly included in the estate of a person under a disability. Without evidence of any abuse of statutory capacity by Parrish, she remains entitled to receive these payments. The Goochland court lacked jurisdiction to invalidate any part of the approved settlement agreement in its October 11, 1994 order, which will be vacated. Other matters addressed by the court regarding child-support payments to Parrish and offsets for her misuse of joint funds were deemed appropriate. The court’s directive for the supervision of joint funds was also upheld; however, payments intended solely for Alicia should be made directly to her natural guardian. 

Justice Poff dissented, arguing that the majority's ruling ignored established legal precedent allowing for partial validity of orders. Poff contended that Jessee’s motion indicating part of the Richmond court's order was void was valid and that the Goochland court misapplied Code § 8.01-424, which governs the approval and disbursement of compromise settlements. The dissent emphasized the necessity for substantial compliance with statutory requirements for jurisdiction to avoid nullifying proceedings, highlighting the legislative intent to ensure proper payment of compromise settlement proceeds to a qualified fiduciary when the recipient is under disability.

The statute's application requirements are explicit and obligatory, meaning any deviation is not simply a minor error but renders the action null and void. When a court exercises special statutory powers, its authority is limited to what the statute grants; any judgment beyond that is considered void, regardless of the court's jurisdiction over the subject matter and parties involved. In this instance, while the Richmond court could approve the settlement between the tortfeasor and the victim, it lacked the authority to direct payment of the settlement proceeds to anyone other than Douglas's duly qualified fiduciary. Therefore, the Richmond court's order, to the extent it exceeded its authority, was void from the outset and could be contested in any court at any time. The judgment of the Goochland court, recognized as the overseer of Douglas's estate, should be affirmed.