                   COURT OF APPEALS OF VIRGINIA


Present: Judge Bray, Senior Judges Cole and Overton
Argued at Richmond, Virginia


STEPHEN WILSON PAULETTE
                                           MEMORANDUM OPINION * BY
v.   Record No. 0577-99-2                   JUDGE RICHARD S. BRAY
                                              FEBRUARY 22, 2000
RUGENE SEATON PAULETTE


              FROM THE CIRCUIT COURT OF HENRICO COUNTY
                   Buford M. Parsons, Jr., Judge

           Lawrence H. Framme, III (Susan H. Call;
           Framme Law Firm, P.L.C., on briefs), for
           appellant.

           Terrence R. Batzli (M. Alicia Finley; Barnes
           & Batzli, P.C., on brief), for appellee.


     Dr. Stephen Wilson Paulette (husband) appeals an order of the

trial court finding him "in breach of [the Separation and Property

Settlement] Agreement" (agreement) with his former wife, Rugene

Seaton Paulette (wife), and assessing attendant damages, fees, and

costs.   Husband argues that the court erroneously relied upon

certain evidence provided by wife's accountant/witness in

determining such issues.    We agree and reverse the order.

     The parties are fully conversant with the record, and this

memorandum opinion recites only those facts necessary to a

disposition of the appeal.


     * Pursuant to Code § 17.1-413, recodifying Code
§ 17-116.010, this opinion is not designated for publication.
                                 I.

     Husband and wife executed the subject agreement, dated

November 27, 1985, incidental to their separation and divorce.

The agreement obligated husband, in pertinent part, to "pay to

wife 20% of his net income for spousal support" and was

incorporated into the final decree, entered December 23, 1986.     On

May 29, 1997, wife moved the trial court to "reinstate this matter

on the active docket," and "review the amount of spousal support

and maintenance [husband] is currently paying."   Thereafter, by

further motion, wife alleged that husband had failed to pay

spousal support in accordance with the agreement and prayed the

court, inter alia, to ascertain the "arrearage" and enter an

appropriate judgment, "with interest . . ., attorney's fees and

costs."

     In proof of her claim, wife presented the evidence of

William K. Stephens, III, an accountant retained by her to conduct

an "analysis . . . to determine if the net income reported by

[husband] to [wife], for purposes of determining the amount due to

her according to [the] agreement, is a fair and accurate

representation of his share of the income of the [professional]

practice" conducted by husband, an oral surgeon, and his current

wife, Dr. Kathryn A. Biery-Paulette (Dr. Biery), a

dentist/anesthesiologist.   In performing his task, Stephens

reviewed "all of the pertinent data" with respect to "two major

areas of concern . . . that have a material impact on the

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outcome:"   (1) "the overall net income available for distribution

between the two doctors," and (2) "how that . . . net income was

distributed to the two."   Recognizing that "[b]oth components

represent opportunities for . . . manipulation, which . . .

directly affects payments" to wife, Stephens compared the

"activity [of husband and Dr. Biery] to reliable industry

statistics" for professional "peer groups" to "determine the

reasonableness of the . . . allocation of income between the two

doctors" during the targeted time period, January 1, 1993 to

December 31, 1997.

     Stephens' efforts culminated in a lengthy report, introduced

into evidence, together with detailed schedules, appendices and

related testimony.   Guided by "information in his head" and

"different sources that are recognized sources for percentages of

profit, . . . of overhead, productivity norms,"1 Stephens'

analysis evinced a convoluted methodology.   Without needlessly

detailing his formulations, several factors were critical to the

validity of the evaluation, including the "normal profit

percentage[s] for general dentistry . . . and oral surgery," 34.1%

and 46.8%, respectively, and husband's contribution to the "gross

receipts" of the practice.   Applying such "industry averages" to

receipts attributable to husband and Dr. Biery for the years under



     1
       Stephens specifically identified two "industry sources"
which provided "industry averages," "industry data," "norms,"
benchmarks indispensable to his analysis.

                               - 3 -
scrutiny, Stephens determined a "fair allocation and distribution

of collections and overhead" to ascertain an appropriate net

income for each.   He then compared such standardized net income to

the actual salaries of husband and Dr. Biery for the subject years

to conclude that husband was grossly underpaid, while Dr. Biery

enjoyed a substantial "overage" in compensation.

     Aided by further evidence pertaining to husband's transfer of

certain assets to Dr. Biery, including his interests in the

professional corporation which operated the practice and in a

partnership which owned the condominium it occupied, at an

"inflated rent[]," Stephens resolved that husband had breached the

agreement, colluding with Dr. Biery in a "plan," a "strategy,"

"over a period of years," to reduce his "net income" chargeable

with wife's spousal support.   Stephens then determined the

resulting arrearage by recalculating and otherwise adjusting

husband's "net income" to that amount "the industry feels that

[husband] should be able to pay himself" for the years, 1993-1997,

offset by that support already paid to wife based upon

"underreported net income."

                                II.

     "In Virginia property settlement [and separation] agreements

are contracts and subject to the same rules of formation, validity

and interpretation as other contracts."   Smith v. Smith, 3 Va.

App. 510, 513, 351 S.E.2d 593, 595 (1986).   "The essential

elements of a cause of action for breach of contract are:     (1) 'a

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legal obligation of a defendant to the plaintiff,' (2) 'a

violation or breach of that right or duty,' and (3) 'a

consequential injury or damage to the plaintiff.'"    Westminster

Investing Corp. v. Lamps Unlimited, 237 Va. 543, 546, 379 S.E.2d

316, 317 (1989) (quoting Caudill v. Wise Rambler, 210 Va. 11, 13,

168 S.E.2d 257, 259 (1969)).

     "While it is true upon the breach of a valid and binding

contract the law infers nominal damages, it does not infer or

presume substantial or compensatory damages.    The latter must be

proven by competent evidence."    Orebaugh v. Antonious, 190 Va.

829, 834, 58 S.E.2d 873, 875 (1950).     The party alleging a breach

has an "obligation to establish his damages with reasonable

certainty by the best evidence which is available."    White Sewing

Mach. Co. v. Gilmore Furniture Co., 128 Va. 630, 650, 105 S.E.

134, 140 (1920).   "Proof with mathematical precision is not

required, but there must be at least sufficient evidence to permit

an intelligent and probable estimate of the amount of damage."

Hailes v. Gonzales, 207 Va. 612, 614, 151 S.E.2d 388, 390 (1966).

     In adjudicating a contractual dispute, evidence provided by

an expert is "admissible . . . if it will assist the fact finder

in understanding the evidence[,]" Tittsworth v. Robinson, 252 Va.

151, 154, 475 S.E.2d 261, 263 (1996), but it must "be based on an

adequate foundation."   Kessee v. Donigan, ___ Va. ___, ___, ___

S.E.2d ___, ___ (2000).   "[E]xpert testimony is [not relevant and



                                 - 5 -
probative] if it is founded on assumptions that have an

insufficient factual basis."   Id. at ___, ___ S.E.2d at ___.

     Here, the trial court expressly "accepted [Stephens']

evaluation" and opinions, both with respect to the alleged breach

and related arrearages, and fashioned the disputed order

accordingly.   However, much of Stephens' methodology was

problematic, oftentimes remote from and without appropriate

consideration of circumstances specific to the instant cause.     Of

particular concern, Stephens' analysis relied upon an attribution

to husband of a fixed percentage of the total gross receipts of

husband and Dr. Biery for each of the five years in issue, derived

from actual data for only seven successive months in 1997 and

1998, a year otherwise excluded from his calculations.    Thus,

several months during the final year of the five under examination

provided a pivotal component in Stephens' computations, thereby

clearly infecting his analysis and attendant opinions with

temporal bias.   Similarly, Stephens' strict adherence to "industry

averages," without consideration of regional variables and the

specific expenses, operational and other factors peculiar to

husband's practice, provided an inadequate foundation for relevant

conclusions.




                               - 6 -
     Accordingly, we reverse the disputed order and remand these

proceedings for further consideration of that evidence properly

before the court and attendant redetermination of the issues.

                                      Reversed and remanded.




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