The Kentucky Supreme Court rendered one published family law opinion last Thursday and the Kentucky Court of Appeals handed down one on Friday. Digests of both and links to the opinions were posted today.
No. 2009-SC-000442-DG on review of COA No. 2008-CA-001059-MR
The questions presented in this case include 1) whether a trial court could enforce through its contempt powers, an obligation to pay a creditor on a marital debt after the obligor received a post-decree bankruptcy discharge and his former wife failed to institute an adversary proceeding in bankruptcy court; 2) whether a motion for modification of child support was properly denied when child support established in divorce decree was based upon parent’s imputed income as a result of a finding of voluntary underemployment; and 3) an award of attorney fees.
The parties’ divorce decree provided for joint custody of their minor child with husband required to pay child support calculated from his recent history of earnings as a federal prison guard. Husband testified that the parties agreed he should quit his job at the prison because the wife was also employed there as a guard. The wife denied making such an agreement.
The decree also assigned to husband liability for a National City loan on a Dodge Durango which had been repossessed by the time of the decree.
A little more than a year after the decree, husband filed a motion to reduce child support claiming changed circumstances, including health problems, inability to locate correctional work and filing for bankruptcy. Wife countered with motion for attorney fees and to hold husband in contempt for failure to pay the debt on the repossessed Durango. Wife acknowledged she received notice of the bankruptcy and that she did nothing to challenge discharge of the debts. Husband admitted that under the decree, he was responsible for the Durango debt.
The trial court found husband to be in contempt for failure to pay the debt on the Durango, denied his motion to modify child support, and ordered him to pay $500 of wife’s attorney’s fees.
The Court of Appeals affirmed on all issues, as did the Supreme Court.
With respect to child support modification, the court found that the standard for modification was not met because his affidavit did not definitively establish a material and continuing change of circumstances post-decree. The court explained that KRS 403.212(2)(d) specifically states that a parent may be voluntarily unemployed or underemployed without finding that the parent intended to avoid or reduce the child support obligation. In order to prevail, husband needed to show a material, substantial, and continuing change of circumstances existing post-decree which made him less capable of attaining his former income level than existed at the time of the decree. The trial court did not find the requisite showing, the Court of Appeals agreed, and the Supreme Court affirmed.
The trial court held husband in contempt for his failure to pay the loan on the Durango. The bankruptcy statute was amended in 2005 to provide that a Chapter 7 discharge does not discharge a debtor from an obligation incurred in the course of a divorce or separation. In addition, since state court has concurrent jurisdiction to determine the dischargeability of a debt, Kentucky state courts have jurisdiction to determine whether the husband’s obligation on the Durango was discharged in his bankruptcy.
Following BAPCPA amendments to the bankruptcy statutes, a non-support divorce debt is excepted from discharge and there is no requirement that a spouse or child participate in the bankruptcy for the debt to be excepted from discharge. Husband’s payments on the loan were part of the division of marital property and debts, even though in this case there was no hold harmless provision.
Finally, the trial court is not required to make findings on financial resources when awarding attorney’s fees. The statute requires only that the trial court must simply consider the parties’ finances before awarded fees.
Husband appeals from a post-dissolution QDRO dividing his pension benefits with his ex-wife, arguing that the trial court erroneously interpreted the parties settlement agreement and relied upon inapplicable legal doctrines.
The parties had been married nearly thirty years when they were divorced in 2000. In their settlement agreement which was handwritten by the wife, they divided husband’s two retirement accounts: an employer-funded pension fund plan and a 401(k) tax-deferred savings plan. Husband took the handwritten document to his attorney who drafted a formal agreement based on the handwritten agreement. Both parties signed the new settlement agreement and it was incorporated into the decree of dissolution. The agreement provided that the wife would receive one-half the pension at the 20 years of service rate, payable when the pension became payable, and one-half the 401(k) calculated as of the date of dissolution.
In 2009, due to health problems, the husband retired ten years earlier than expected. He submitted two QDROs, one for the 401(k) and one for the pension. The division of the 401(k) was acceptable to the wife, but she objected to the QDRO dividing the pension because it used the decree date to calculate her share rather than the date of husband’s retirement, resulting in zero benefit to her.
The Mercer Family Court found that husband had intentionally introduced an ambiguity into the agreement and the doctrine of contra proferentem allowed an inference to be drawn against him. The trial court held that the implied covenant of good faith and fair dealing required that inferences be drawn against husband with respect to the ambiguity, and further held that husband invoked attorney-client privilege to prevent his lawyer from testifying, providing additional grounds to construe the ambiguity in favor of the wife. Thus, wife was entitled to one-half the twenty-year rate, calculated at retirement. The husband appealed on several grounds.
The Court of Appeals reviewed the agreement de novo, giving no deference to the trial court. It found the agreement was ambiguous and attempted to glean the intention of the parties from the contract and surrounding circumstances. It was clear that the wife had an intent formed about her entitlement to a portion of the pension even though she did not have a detailed awareness of the plan’s payout chart.
The husband argued that Kentucky law requires division as of the date of divorce, but the court pointed out that the law requires that a pension be valued as of the decree date. Husband ignored the fact that parties may contract for any division of property they choose, so long as the terms are not unconscionable.
Husband also argued that application of the doctrine of contra proferentem and the implied covenant of good faith and fair dealing were inapplicable and the trial’s reliance was error.
The Court disagreed, finding that husband’s intentional introduction of an ambiguity into the contract would be unconscionable and counter to public policy, noting that the law does not allow an individual to benefit from his own fraud in drafting or procuring a contract and that the clean hands maxim bars relief to those guilty of improper conduct.
Dad appealed TC’s decision registering a foreign child support order from Georgia and holding a prior KY child support judgment void as a matter of law.
Mom and Dad were divorced in GA in 2002. Decree provided that Child would live with Mom and ordered Dad to pay child support to Mom. Mom was incarcerated in 2003 and Child went to live with Dad. Dad filed a Motion for Child Support 3 months later in July 2003 and issued a summons to Mom. This summons was returned unserved, but Mom was personally served in KY a few weeks later. In August 2003, Child was removed from Dad’s home and placed in foster care. In September 2003, a default judgment was entered requiring Mom to pay Dad child support of $180 per month. Mom regained custody of Child in 2004 and Child has lived in GA since then. In December 2008, GA child support office requested KY to enforce child support arrears against Dad in amount of $16,711 but no judgment accompanied the request. In January 2009, GA CFC filed a UIFSA petition in KY to register the GA Order for child support, seeking to enforce child support orders only for the period when Child lived with Mom. TC found that KY action should have been filed as a UIFSA action for GA to enforce, and therefore the KY judgment was void as a matter of law; that KY was required to honor the GA child support order and UIFSA petition from GA; and that if Dad wanted to modify child support or dispute arrearages, he could do so only in GA. TC registered the GA order and ordered Dad to pay an additional $100 towards his arrearage in addition to his monthly amount of $311.
CA held that had GA Petition to register child support order been filed prior entry of KY order, then KY would have had no authority to modify child support in this case. However, CA held that since UIFSA only allows a court to either register and enforce an order or register and modify an order, Kentucky was free to modify the order if it otherwise had jurisdiction to do so. KY TC had subject matter jurisdiction over matters of child support and KY TC had personal jurisdiction over Mom. CA held that although KY TC may not have had “particular case jurisdiction” over the case, Mom waived that argument by not challenging the order or particular case jurisdiction at the time the motion was filed in KY. Lack of particular case jurisdiction renders a judgment voidable, not void ab initio, and a voidable judgment is subject to consent, waiver, and estoppel.
CA also noted that KY TC should not have registered a foreign judgment for child support arrearages that had not been reduced to a judgment in GA, as this impermissibly deprived Dad of the opportunity to challenge the arrearage and thus deprives him of due process of law.