                   COURT OF APPEALS OF VIRGINIA


Present: Judges Coleman, Bray and Bumgardner
Argued at Chesapeake, Virginia


JEFFREY WARREN AINSLIE
                                         MEMORANDUM OPINION * BY
v.   Record No. 2030-99-1               JUDGE SAM W. COLEMAN III
                                              JUNE 6, 2000
CYNTHIA GAYE MORRIS AINSLIE


       FROM THE CIRCUIT COURT OF THE CITY OF VIRGINIA BEACH
                     Frederick B. Lowe, Judge

          James R. McKenry (J. Andrew Basham; Heilig,
          McKenry, Fraim & Lollar, P.C., on brief), for
          appellant.

          Henry E. Howell, III (Richard H. Doummar;
          Doummar & Howell, on brief), for appellee.


     Jeffrey Ainslie appeals the trial court's order

interpreting and enforcing the parties' oral property settlement

agreement which was incorporated by reference in the final

divorce decree.   He argues that the court erred in declining to

enforce the portion of the property settlement agreement that

provides he is to receive a credit for the value of all property

taken by Cynthia Ainslie from the itemized list of assets,

including the value of property that had previously been

designated as Cynthia Ainslie's separate property.     We agree and



     * Pursuant to Code § 17.1-413, recodifying Code
§ 17-116.010, this opinion is not designated for publication.
reverse and remand the case with direction that the court

enforce the terms of the agreement as hereinafter set forth.

                            BACKGROUND

     On July 26, 1986, the parties were married, and on July 9,

1998, a final decree of divorce was entered.   An initial hearing

was held in November 1997 before a Commissioner in Chancery to

resolve issues concerning the division of marital property.       At

the request of the Commissioner, the parties produced an

itemized list of all of their real and personal property to aid

in the division of the assets.   In addition to listing the

estimated value of each item, the list also designated whether

the party preparing it considered the item to be separate or

marital property.   After preparing the list, the parties

tentatively agreed on a settlement.   However, a dispute arose

regarding the interpretation of the settlement agreement and a

series of hearings were held in order to equitably distribute

the property.

     At one of those hearings in the circuit court on May 19,

1998, the parties again reached a settlement agreement.     The

parties agreed that Jeffrey Ainslie would give Cynthia Ainslie

$450,000, less $20,000 that he had previously paid to her and

that Cynthia Ainslie, as a credit against the $450,000, could

take whatever property she desired at its itemized value from

the list.   The final decree affirmed, ratified, and incorporated


                              - 2 -
the settlement agreement between the parties "set forth in the

hearing on May 19, 1998."   The court ordered that:

          [Cynthia Ainslie] shall receive a
          combination of lump sum spousal support and
          as equitable distribution of assets. The
          total amount that [Cynthia Ainslie] is to
          receive is $450,000.00 subject to a credit
          of $20,000.00 which was previously paid by
          [Jeffrey Ainslie]. [Cynthia Ainslie] may
          then choose from the list referenced and
          utilized at the Court's hearing on May 19,
          1998. [Cynthia Ainslie] may select assets
          by giving written notice to [Jeffrey
          Ainslie] from the list above referenced and
          shall be deducted from the remaining
          $430,000.00. [Cynthia Ainslie] shall
          receive the sum of $180,000.00, which shall
          be a combination of cash and assets selected
          by [Jeffrey Ainslie] from the asset list
          pursuant to the settlement agreement, on or
          about June 30, 1998.

     A dispute again arose regarding the interpretation of the

settlement agreement.   The disagreement concerned, in part,

Cynthia Ainslie's refusal to credit Jeffrey Ainslie the designated

value of some items from the list that were retained by her and

also concerned damage to the marital residence Jeffrey Ainslie

alleged occurred while Cynthia Ainslie occupied the residence.    In

December 1998, the trial court held another hearing at which

Cynthia Ainslie testified that she had a "side agreement" with

Jeffrey Ainslie, the terms of which were that she would be

entitled to take all items on the list designated as her

separate property in addition to other items on the list.      Under

these terms, Jeffrey Ainslie would receive credit against the


                              - 3 -
$430,000 for only those items that Cynthia Ainslie retained that

were designated as marital property.      Items on the list that were

designated as Cynthia's Ainslie's separate property, included

furs, jewelry, linens, oriental rugs, and porcelain collectibles.

     The trial court held another hearing in April 1999.     As a

result of that hearing, the trial court ruled that the parties had

not entered into a second or "side agreement" modifying the

earlier agreement that had been approved and ratified in the final

divorce decree.    Nevertheless, the court construed the earlier

agreement to provide that the property designated on the list as

Cynthia Ainslie's separate property was not part of the marital

estate and that she was entitled to retain the property as her

separate estate.   Accordingly, the court ruled that under the

ratified agreement, Jeffery Ainslie would not receive credit for

the value of those items designated as Cynthia Ainslie's separate

property.

                               ANALYSIS

     On appeal, Jeffrey Ainslie argues that the trial court

erred in refusing to credit him for the value of those items

retained by Cynthia Ainslie which were designated on the list as

her separate property.    He asserts that the oral settlement

agreement, which was recorded at the May 1998 hearing, was a

valid and enforceable oral contract and that the settlement

agreement provided that he was to receive credit for the value


                               - 4 -
of all property retained by Cynthia Ainslie from the list,

notwithstanding the item's classification as marital or

separate. 1   We agree.

     "Property settlement agreements are contracts; therefore, we

must apply the same rules of interpretation applicable to

contracts generally."     Tiffany v. Tiffany, 1 Va. App. 11, 15, 332

S.E.2d 796, 799 (1985).    "[A]n oral agreement which comprises and

settles the property and equitable distribution issues in pending

divorce litigation may be a valid and binding contract without

being reduced to writing."     Richardson v. Richardson, 10 Va. App.

391, 394, 392 S.E.2d 688, 689 (1990).    "To be valid and

enforceable, the terms of an oral agreement must be reasonably

certain, definite, and complete to enable the parties and the

courts to give the agreement exact meaning."    Id. at 395, 392

S.E.2d at 690 (citation omitted).

     "When a writing is not a prerequisite to contract formation

and where the terms are exact and complete, the remaining

question is whether there was a meeting of the minds of the

parties to the terms of the oral contract."     Richardson, 10 Va.

App. at 396, 392 S.E.2d at 690-91 (citation omitted).       "A


     1
       Jeffrey Ainslie also argues that, to the extent that the
settlement agreement was a partial agreement, the court erred in
reforming the contract. He asserts that absent a showing of
fraud or mistake, a partial contract is invalid and
unenforceable. Because we find that the oral settlement
agreement was valid, we do not address this contention.


                                - 5 -
meeting of the minds requires a manifestation of mutual assent,

and a party's mental reservation does not impair the contract he

purports to enter."   Wells v. Weston, 229 Va. 72, 79, 326 S.E.2d

672, 676 (1985) (citation omitted).   "The standard for

determining the intent of the parties to an oral contract is one

of reasonable expectation -- that is, the meaning which the

party using the words should reasonably have expected them to be

given by the other party."   Foreign Mission Board v. Wade, 242

Va. 234, 237-38, 409 S.E.2d 144, 146 (1991) (citations omitted).

          Whether the interpretation of the contract
          [is a matter of law or a question of fact]
          depends on whether the evidence on that
          issue was clear or ambiguous. If, from the
          evidence presented, reasonable people could
          draw different conclusions as to reasonable
          expectations of the parties, the question of
          the meaning of the contract is properly
          presented to a [fact finder] for resolution.

Id. at 238, 409 S.E.2d at 146 (citation omitted).

     At the May 1998 hearing, counsel for Jeffrey Ainslie stated

the terms of the oral settlement agreement on the record.    The

court questioned Cynthia Ainslie and heard extensive argument

from counsel regarding the agreement.   In describing the list of

assets and its division, counsel for Jeffrey Ainslie stated,

"Now, the next thing speaks of what they are going to keep, and

it is clearly understood that whatever they keep comes off

-- whatever Mrs. Ainslie keeps comes off of the gross figure of




                             - 6 -
430 with the values assigned in the net equity debt/lien

. . . ."   In response, the following colloquy occurred:

           THE COURT:   Is that true of all of these
           items?

           [COUNSEL FOR JEFFREY AINSLIE]:    Yes, sir.

           THE COURT: Even the items that are
           obviously jewelry items that belong to her?

           [COUNSEL FOR JEFFREY AINSLIE]:    Yes, sir.

            *      *       *      *      *       *       *

           THE COURT: So anything that she chooses to
           decide to keep off of this list would come
           off of the balance owing on the $430,000 at
           the rate of whatever the figure shown in the
           net equity column is?

           [COUNSEL FOR JEFFREY AINSLIE]:    That's
           correct.

           THE COURT:   Is that your understanding?

           [COUNSEL FOR CYNTHIA AINSLIE]: There is one
           problem there having to do with the
           clothing, and it just came up, if we could
           have a moment to talk about it.

            *      *       *      *      *       *       *

           [COUNSEL FOR CYNTHIA AINSLIE]: I apologize,
           Your Honor. The clothing issue we were
           looking towards are things other than
           clothing. Everything else except for the
           clothing we agree to.

            *      *       *      *      *       *       *

           [COUNSEL FOR JEFFREY AINSLIE]: May I just
           explain? Mr. Ainslie could care less about
           clothing. His hobbies are electronics and
           they are all on here, and they are his
           personal things.



                               - 7 -
THE COURT: I assume they were taken into
consideration when you came up with the
$430,000?

[COUNSEL FOR JEFFREY AINSLIE]: Yes, sir.
They are all in here. If we're going to
start doing that, then if we start pulling
out this, that, or the other, its not going
to work.

 *      *       *      *      *       *      *

THE COURT: Is it true that was all taken
into consideration when you came up with the
450?

[COUNSEL FOR JEFFREY AINSLIE]:    Yes.

THE COURT:   Minus the 20?

[COUNSEL FOR CYNTHIA AINSLIE]:    The 450,
yes. This list, D-1, yes.

 *      *       *      *      *       *      *

THE COURT: I want to talk about the
clothes. From what you are telling me, is
that theoretically under this fact situation
-– and I want to make sure nobody is going
into this thing blind. Theoretically, under
this settlement, you are talking about Mrs.
Ainslie can say, "The heck with the
clothes, they are not worth $20,000 to me,
I'll take the additional $20,000 and buy
myself a whole new wardrobe?

[COUNSEL FOR JEFFREY AINSLIE]:    Yes.

 *      *       *      *      *       *      *

THE COURT: Okay. Now, Mrs. Ainslie, do you
understand clearly the terms of the
agreement that has been hammered out and
dictated into the record here this
afternoon?

MRS. AINSLIE:   Yes, I believe so.   Yes.



                    - 8 -
     Here, the terms of the agreement, which were stated on the

record at the May 19, 1998 hearing, were clear and definite.

During the hearing, the court questioned both counsel and

Cynthia Ainslie regarding the terms of the agreement.     The court

then specifically inquired whether Cynthia Ainslie understood

that the value of any item that she retained from the list

designated as Exhibit D-1 would be credited to the balance owed

to her by Jeffrey Ainslie.    Cynthia Ainslie agreed with the

court's recitation of the terms of the agreement.     The court

also inquired as to whether the agreement included "items that

are obviously jewelry items that belong to [Cynthia Ainslie],"

and counsel replied, "Yes."   Counsel for Jeffrey Ainslie

informed the court that in drafting the property list and in

determining the gross value of the estate, all of the parties'

assets were listed, including items that are the parties'

separate assets.   Finally, the court clarified and summarized

the terms of the agreement.

     We find that there is no evidence to support a finding that

the parties contemplated that Jeffrey Ainslie would not receive

a credit for the value of the items retained by Cynthia Ainslie

that were her separate property.      Further, there is no evidence

to support a finding that the notations on the asset list,

designating the property as separate or marital, were considered

in determining the distribution of the assets.     The wife's, as


                              - 9 -
well as the husband's, separate property was included in the

parties' estate and in valuing their assets.   No reasonable

person could conclude that, although the value of the wife's

assets was used in valuing the estate, they would not be

considered when dividing the estate.

     Based on the extensive colloquy between the court, counsel,

and the parties, the terms of the oral settlement agreement, to

which both parties assented, are clear and unambiguous.    The

trial court approved and ratified the agreement and the parties

have not amended it.   Accordingly, under the terms of the

agreement, we find that the trial court erred in failing to

credit Jeffrey Ainslie the value of the items retained by

Cynthia Ainslie, including those items that were her separate

property in accordance with the agreement.   The judgment of the

trial court is reversed and the case remanded for entry of an

order in accordance with this decision.

                                          Reversed and remanded.




                             - 10 -
