Divorce Law Journal

Money v. Money, Ky COA, Modification of Marital Settlement Agreements

Money v. Money, ____S.W.3d____ (Ky. App. 2009)

 

Ex-Husband appealed from TC’s order assigning him additional marital debt subsequent to a marital settlement agreement (“MSA”), arguing that MSA was ambiguous and that TC erred by assigning him additional debt, which he alleged was unknown at the time of MSA. On cross-appeal, Ex-Wife argued that MSA was unconscionable.

 

FACTS:

After parties attended mediation with counsel, MSA was entered and incorporated into the decree of dissolution.  MSA provided that Ex-Wife would receive several investment accounts worth over $100K but would assume indebtedness on real estate and balances owed on two credit cards; Ex-Husband was to pay “all other indebtedness.”  It was later determined that there existed a margin loan account with a negative cash balance of $58,469.52, and this

debt was not reflected in MSA. This margin loan account was placed in Ex-Wife’s name as she received the asset securing the debt.  Ex-Wife filed three motions: (1) to transfer the margin

loan account to Gary’s name; (2) to find MSA unconscionable; and (3) to alter, amend, or vacate the judgment. TC granted the motion to transfer the margin loan account. It denied the other two motions, specifically finding the motion to alter, amend or vacate untimely.

 

ANALYSIS:

Ex-Husband argued that MSA is ambiguous regarding the assignment of the margin loan account and must be interpreted against Ex-Wife because her counsel drafted it.

CA found provision that Ex-Husband was to pay “all other indebtedness” unambiguous and that Ex-Husband must pay it per terms of MSA.

 

Ex-Husband next contended that, per CR 59.02 and 59.05, Ex-Wife’s motion to assign the margin loan account to him was untimely because it occurred more than 10 days after the decree of dissolution was entered. CA disagreed, finding that motion was filed to request enforcement of the terms of the agreement as written and therefore there was no time limit on TC’s jurisdiction to do so. On cross-appeal, Ex-Wife argued that MSA was unconscionable because the proportion of the property division is manifestly unfair.  While noting that

An MSA initially approved by TC may be later modified if the party challenging MSA can demonstrate that it has become unconscionable because of changed circumstances, CA found that Ex-Wife did not allege a change of circumstances that rendered the agreement unconscionable and that a mere discrepancy in the amounts received by each party under a settlement agreement is not enough to render the agreement unconscionable. TC affirmed.

 

Digested by Michelle Eisenmenger Mapes, Diana L. Skaggs + Associates

Lawson v. Lawson, Ky COA, Marital Settlement Agreement, CR 60.02 Corrected)

Oops! Wife received $24 million in the settlement. What's another $20M?

 

 Lawson v. Lawson, ___S.W.3d __ (Ky.App. 2009); 2008-CA-000824-MR

 The parties divorced in 2006.  The wife sought and received an expedited divorce without conducting discovery into the extent of the marital estate.  In the settlement agreement, wife received approximately 4 million dollars of assets and immediately began accepting the benefits of same following the divorce.  Eleven months later, wife filed a CR 60.02 motion challenging the separation agreement based on claims of intimidation, overreaching and/or mental incompetence.  The trial court denied her motion for three reasons:  1) the claims of intimidation, overreaching and/or mental incompetence were unsupported, 2) even if her claims were true, she ratified the agreement by continuing to pursue the benefits of it, and 3) the CR 60.02 motion was not brought within a reasonable amount of time.  Wife appealed.

The COA affirmed.  The trial court did not abuse its discretion in finding that her claims were unsupported or that the motion was not brought within a reasonable time period.  Wife had testified to the trial court that the agreement was fair, the record showed that the parties had negotiated the terms of the agreement, and her attorney had written the wife letters, which wife had signed as well, explaining all the risks of signing an expedited settlement agreement.  The COA did not address whether wife had ratified the agreement by her actions. 

Senior Judge Harris, Concurring opinion:  The majority reached the right result.  However, had the CR 60.02 motion been timely presented, the trial court would have had to grant the wife an evidentiary hearing on her mental capacity claim and then render a specific finding of fact as to her mental capacity at the time she signed the agreement. 

Digested by Sarah Jost Nielsen, Diana L. Skaggs + Associates

Cameron v. Cameron, Ky., Abrogation Of Marital Settlement Agreement

CAMERON V. CAMERON
ABROGATION OF MARITAL SETTLEMENT AGREEMENT
2007-SC-000105-DG
PUBLISHED: AFFIRMING
CUNNINGHAM PRESIDING
COUNTY: NICHOLAS
DATE RENDERED: 9/18/2008
Ex-Husband appealed TC’s Order that separation agreement was not abrogated during period of alleged reconciliation and that agreement was not unconscionable.

FACTS:
Ex-Husband and Ex-Wife were married twice, first in 1988. They lived on a large farm of
approximately 1,200 acres which was managed by Ex-Husband, but owned by his father. Parties divorced in 1998 but property division agreement was never reached. Ex-Husband remarried and divorced. Ex-Husband’s father gifted several farms to him during this time. In 2002, the parties reconciled and remarried and lived together on the real estate gifted to Ex-Husband by his father. Nine months later, Ex-Husband filed for second divorce. A month later, Ex-Husband, who was represented by an attorney, contacted Ex-Wife, who was not represented by an attorney, about the prospects of once again reconciling. Though both parties were serious about the reconciliation attempt, Ex-Wife insisted upon the parties attending marriage counseling. Both parties signed a document entitled "Separation Agreement," which provided that the parties would equally divide all property, whether marital or nonmarital. However, it did not provide for either maintenance or child support. During the attempt toward reconciliation, the parties did not move in together. They spent time together during weekends and took two trips to Mexico together. Several months later, Ex-Wife filed her own divorce action against Ex-Husband. Ex-Husband moved that the separation agreement be set aside because they had reconciled subsequent to the making of it, as well as claiming that it was unconscionable. TC held that the separation agreement was enforceable as not being abrogated by reconciliation nor as being unconscionable.

ANALYSIS:
If there was reconciliation between the parties, the effect of the reconciliation depends on whether the agreement was executed or merely executory. If the agreement had been properly executed, reconciliation does not abrogate the agreement unless the parties intended it to do so. If there is an agreement yet to be executed, as with these parties’ agreement, reconciliation of the spouses and a presumption of cohabitation of the parties nullifies the agreement. SC found no abuse of discretion in TC’s finding that reconciliation was not accomplished between these parties, and there is no bright line rule for making such a finding absent a dismissal of a pending divorce or an express rescission of the agreement. TC should consider at least the following factors in determining whether reconciliation has (1) whether the parties have resumed residing with each other; (2) the nature in which they hold their personal property, including bank accounts; (3) their failure to carry out other executory provisions of the contract; (4) activities of the parties in which normally only married couples participate; and (5) whether the parties attended marriage counseling. SC noted that a guiding light might be that reconciliation occurs where, from all appearances and for a substantial period of time, it seems purely an oversight that the agreement has not been rescinded or the divorce action dismissed.
SC also found no clear error in TC’s finding that agreement was not unconscionable or “manifestly unfair or inequitable.” SC further noted that burden of proof in challenging the agreement was upon Ex-Husband. The separation agreement was prepared by Ex-Husband’s lawyer and signed by both parties, though Ex-Wife had no attorney. Though Ex-Husband divested himself of half his nonmarital property, neither divorce between the parties provided for maintenance or child support. Thus, the agreement was not lopsided.
Digested by Michelle Eisenmenger Mapes, Diana L. Skaggs + Associates.

Cameron Oral Arguments On August 14, 2008

The Kentucky Supreme Court will hear oral arguments in Cameron v. Cameron, digested here, on August 14, 2008 at 11am. You can watch live online. Briefs online: Appellant, Appellee, Reply.

Downs v. Downs, Ky COA, Interpretation of Marital Settlement Agreement Re Life Insurance

Downs v. Downs
2007-CA-000979
PUBLISHED: AFFIRMING
PANEL: CLAYTON PRESIDING; VANMETER AND KNOPF CONCUR
COUNTY: NELSON

At TC, Adult Child argued that per terms of Marital Settlement Agreement between his biological parents, a constructive trust should be imposed on deceased Dad’s life insurance proceeds. Adult Child appealed from TC’s order granting Summary Judgment to Stepmother.

FACTS:
Adult Child was born in 1981 and his biological parents divorced in 1989. Per the terms of the parents’ Marital Settlement Agreement, the parents were to maintain any life insurance policies with “the infant child named as beneficiary.” Dad remarried in 1990 and died in 2002. His three life insurance policies all listed his wife (Stepmother) as beneficiary. Adult Child petitioned TC for imposition of constructive trust of the life insurance proceeds. Stepmother moved for and was granted summary judgment.

Analysis:
Stepmother first argued that Adult Child’s action was time-barred by the statute of limitations as Adult Child was seeking enforcement of a contract, which has a 15 year limitation per KRS 413.090. However, CA noted that the fifteen year period does not begin until the breach of the contract occurs, and that, furthermore, KRS 413.170 extends the time limit for minors to fifteen years from the time that the age of majority is reached. Thus, under either approach, the action was not time-barred.

Stepmother next argued that the words “infant child” were not words of identification but rather limited the referenced requirements to the child’s infancy, and thus Dad was not required to keep Adult Child as beneficiary once he reached the age of majority. TC and CA agreed. CA noted that only ambiguous contracts can be interpreted with the use of extrinsic evidence, and that if a contract can be interpreted with only one reasonable interpretation, it is not ambiguous. CA found that, due to the use of the terms “infant child” and “child” throughout the Marital Settlement Agreement, the only reasonable interpretation was that the parents were to maintain any life insurance policies with the child during his minority. Thus, Dad was not required to list Adult Child as a beneficiary on any of his life insurance policies.

TC affirmed.

Digested by Michelle Eisenmenger Mapes, Diana L. Skaggs + Associates.

Picklesimer v. Mullins (Ky)

Picklesimer v. Mullins, __ S.W.3d. __ (Ky. App. 2008)
2007-CA-000086-ME and 2007-CA-000101-ME

Picklesimer and Mullins were engaged in a 5 year lesbian relationship, during which time they lived together and decided to parent a child together. The parties agreed that Picklesimer would be artificially inseminated. Their child was born in 2005, and their relationship ended in 2006. Before the parties broke up, they entered an agreed order and judgment that established Mullins as a de facto custodian of the child and provided that the parties would share joint custody. The order was entered in a neighboring county to avoid publicity in their own community. The TC entered the order without taking any evidence. No summons was issued, but neither party challenged the lack of notice. After the parties separated in February 2006 and until their relationship disintegrated even further in September 2006, the parties shared equal parenting time with the child.

Picklesimer appealed a TC judgment that awarded joint custody of her minor son to Mullins. Picklesimer argued that the TC lacked jurisdiction and venue to enter custody orders, that Mullins lacked standing, and the TC erred in holding Picklesimer waived her superior right to custody. On cross appeal, Mullins argued that the TC erred in invalidating the agreed judgment of joint custody entered by the two parties.

TC’s jurisdiction and venue to enter custody orders: CA held that Picklesimer had notice of the proceedings since she filed an entry of appearance and never challenged the agreed order establishing Mullins as a de facto custodian. CA also held that venue was waived when both parties filed pleadings with no objection to venue.

Mullins’ standing to pursue joint custody/ Picklesimer’s waiver of her superior right to cusody: A nonparent, who does not qualify as a de facto custodian, may seek custody of a child if the nonparent shows that 1) the parent is unfit by clear and convincing evidence, or 2) the parent has waived his/her superior right to custody. A finding of waiver requires a voluntary and intentional surrender or relinquishment of a known right. A court order granting a nonparent visitation does not constitute a waiver of the parent’s superior right to custody. As Picklesimer did not waive her superior right to custody of the child, Mullins had no standing to pursue custody.

TC error in invalidating the agreed judgment of joint custody: The judgment establishing Mullins as a de facto custodian was entered based on incorrect evidence. Mullins was never the primary caregiver and the primary financial provider for the child, as the statute requires. The pleadings were drafted to convince the TC that a hearing was not necessary on the matter. CA held that the pleadings and conduct constituted a fraud upon the court. The CA found that had the TC held a hearing, the TC would not have signed the order. The judgment declaring Mullins a de facto custodian is invalid.
Digested by Sarah Jost Nielsen, Diana L. Skaggs + Associates

Hoofring v. Fite, Ky Child Support Modification, Agreements, Arrearages

Hoofring v. Fite, ___ S.W.3d ___ (Ky. App. 2008), 2007-CA-001466-ME

The parties, never married, entered into a series of child custody and support agreements. The last agreement in February 2005 provided that Fite have physical custody of the child again. Hoofring was not to pay any child support, but he was to maintain health insurance for the child until the end of 2005. The agreement also released Fite from any liability regarding the child support arrearages she owed to Hoofring.

In 2006 Hoofring insisted that Fite obtain health insurance for the child. Fite then pursued a modification of child support. The TC ordered that Hoofring pay $672.14 per month in child support, retroactive to the February 2005 agreed order, and maintain health insurance for the child. The TC also ordered Fite to pay $5,183.07 in arrearages. Hoofring filed a motion to vacate the order or, in the alternative, hold an evidentiary hearing. In May 2007, after a full evidentiary hearing on all issues, the TC ordered that Hoofring pay $646 per month in child support, retroactive to October 2006, and maintain the child’s health insurance. The TC did not address Fite’s arrearages, but noted that the February 2005 agreed order was an enforceable order. Hoofring appealed.

The COA noted that a party is entitled to modification of child support if he/she can show a material change in circumstances that is substantial and continuing. KRS 403.213. The child support obligation of $646 per month is clearly a 15% increase over the prior amount of $0. Moreover, while parties may enter agreements regarding child support, the terms are not binding on the trial court under KRS 403.180(2). In addition, KRS 403.180(6) prohibits any attempts to preclude modification of agreements concerning child support, custody, or visitation. Therefore, the TC retained jurisdiction over the child support and is not bound by the parties’ agreement. COA held that TC properly exercised its discretion to modify the child support obligation, while properly enforcing the other provisions of the 2005 agreed order, which release Fite from liability for her past arrearage. AFFIRMED.

Digested by Sarah Jost Nielsen, Diana L. Skaggs + Associates

Doerr v. Doerr, KY, Relief From Agreement, Jurisdition To Modify

Doerr v. Doerr, __ S.W.3d. __ (Ky. App. 2008), 2006-CA-000739-MR

The parties were divorced in 1990 and the divorce decree contained a provision regarding the husband’s retirement benefits. In 2005, when the husband retired from the Louisville AFSS Department of Transportation FAA, he noticed that his ex-wife was receiving more than her intended share of the benefits. In order to correct the error, since the settlement agreement failed to adequately address the issue, he filed a motion with the TC to modify the decree. The TC denied the motion finding that it lacked appropriate jurisdiction and recommended that the husband seek relief in federal court. COA found that the TC does have proper jurisdiction under 5 CFR § 838.101 (a), which specifically states that state courts have the authority to resolve disagreements concerning validity or provisions of any court order. Reversed and remanded.
Digested by Sarah Jost Nielsen, Diana L. Skaggs + Associates

Raisor v. Raisor, Ky Mediated Settlement Agreement

Raisor v. Raisor, ___S.W.3d___(Ky. App.)Ex-Wife appealed from TC’s order adopting the Separation and Property Settlement Agreement between Ex-Wife and Ex-Husband. The parties had reached a property settlement agreement at mediation, memorialized by the mediator's handwritten notes, which was signed by the parties, their respective attorneys, and the mediator. Thereafter, Ex-Husband's attorney tendered a formal settlement agreement incorporating the terms of settlement with the mediator’s handwritten notes attached. After Ex-Wife contested Ex-Husband's version of the agreement, DRC concluded that the agreement tendered by Ex-Husband reflected the settlement reached by the parties during mediation and recommended that TC accept the agreement, to which Ex-Wife filed exceptions. TC accepted DRC's recommendations and this appeal followed.

Because she did not make the argument to TC, CA rejected Ex-Wife’s argument that Ex-Husband's tendered settlement agreement could not be proven as a true recitation of the agreed-upon terms because the handwritten mediation notes were ambiguous and did not constitute a “written separation agreement” as required by Kentucky Revised Statutes 403.180(1). In fact, she had argued to TC that the handwritten notes should be accepted as the parties’ agreement. CA declared that Ex-Wife could not “feed one can of worms to the trial judge and another to the appellate court.” CA also rejected Ex-Wife's second argument, that TC’s review was inconclusive because the parties failed to submit financial disclosure statements required by the 53rd Judicial Circuit's local rules, because this argument was also raised for the first time on appeal. TC affirmed.

Digested by Michelle Eisenmenger Mapes, Diana L. Skaggs + Associates

One To Be Published Ky Family Law Case Today, Mediated Settlement Agreement

A full digest will follow shortly, but here's the short version: Raisor v. Raisor, Handwritten settlement outline signed at mediation was incorporated into formal MSA and approved by trial court. Affirmed. At trial court wife wanted outline approved but not MSA prepared by husband. On appeal she claimed outline ambiguous. One can’t “feed one can of worms to the trial judge and another to the appellate court.”

Heskett v. Heskett (Ky) Settlement Agreements, Marital/Nonmarital Property, Dissipation

Heskett v. Heskett, ___S.W.3d___(Ky. App. 2008)

Wife appealed TC’s decision arguing that the court failed to restore her non-marital property. CA reversed and remanded, on a separate issue. CA opined that the TC was correct the property was marital but the TC erred because it failed to consider the issue of dissipation.
Husband and Wife separated in 2002. They drafted a settlement agreement but never signed the agreement. They did, however, divided the property and then began a physical separation. After several months of separation the couple reconciled and bought a house. As a down payment on the house Wife withdrew over $60,000 from CD’s purchased with her share of the previous property division. Husband contributed $8,500 to the purchase of the house from his portion of the property division. Again, however, the couple separated and Wife filed for divorce.
At the conclusion of trial the TC ordered Wife to pay Husband an equal share of the equity in the martial residence. Wife appealed and argued that the settlement agreement from the previous separation should control the classification and distribution of property. Therefore, she argued the money she used as a down payment on the house was her non-marital money and should be restored to her. CA opined that the TC was correct in its determination that the money was marital. CA reasoned that while the parties drafted an agreement during the first separation they never signed the agreement. Therefore, the agreement was not valid under KRS 403.180. Furthermore, when the couple reconciled the previous agreement was voided and not revived by the second separation. However, the CA went on to say that the TC erred because it did not consider the issue of dissipation.
At trial, Wife presented extensive evidence tracing her share of the assets received as a result the first separation. Husband, however, introduce virtually no evidence tracing his share of the assets. In fact, the trial court noted that it was unclear what Husband had done with his share. However, the TC divided the couple’s assets equally. The CA opined that, in the instant case, an equal distribution was not a just distribution. Husband’s inability to account for the majority of his share of the assets received during the first separation constituted dissipation of the marital estate. Therefore, Wife was entitled to have the money she used as a down payment on the marital residence restored to her. Digested by Linda Dixon Bullock, Diana L. Skaggs + Associates

Bailey v. Bailey

Bailey v. Bailey, ___S.W. 3d ___(Ky. App. 2007)

Wife filed an action against Husband seeking to enforce their Separation Agreement which required him to pay for their children’s health and dental insurance and for the parties to split any remaining amounts owed. Also, she sought monetary damages resulting from Husband’s failure to transfer the marital residence to her as required by the Separation Agreement. Finally, she sought reimbursement for half of the funeral expenses incurred due to the death of one of their children.
On appeal, Wife argued that TC erred when it applied principles of equity in its interpretation of enforcing the separation agreement rather than enforcing it as a contract. CA held that TC should have enforced the agreement as contract terms. CA reasoned that the separation agreement was found by the original TC not to be unconscionable. Therefore, the agreement could not be modified unless shown to be unconscionable and there was no such showing. Additionally, by statute the terms of the agreement are enforceable as contract terms.

With regard to the medical bills, CA held that TC erred in its findings that Wife did not present adequate evidence that husband failed to maintain health insurance on the children. Additionally, CA found TC erred in finding that Wife had not provided husband with sufficient notice of the amounts he owed. Wife introduced evidence that the children had received medical treatment and the bills were submitted to Husband’s insurance. However, the bills were not paid because the coverage was not active at the time the treatment was rendered. Also, Wife produced bills showing that she carried health insurance on the children. CA opined that TC’s finding that Wife did not present sufficient evidence to prove her claim that Husband failed to maintain health insurance on the children was clearly erroneous. Furthermore, TC’s holding that it would be inequitable to award Wife damages for past medical bills was in error. Again, CA stated that it was improper to apply principles of equity in interpreting the parties Separation Agreement.

Next, CA addressed the requirement, set forth in the Settlement Agreement, that Husband transfer his interest in the marital residence to Wife. The Settlement Agreement required Husband to sign a quitclaim deed within 10 days of entry of the Decree, which he failed to do. Wife’s employer offered her an opportunity to relocate. As part of the relocation plan, Wife’s employer would pay some of the expenses of selling her home. Husband signed the quitclaim deed in time for the closing on the home. However, this was four years after he was supposed to deed his interest to Wife. Wife claimed this failure cost her a substantial amount of money. TC found that Wife was not entitled to reimbursement because Husband signed the deed in time for the home to be sold and in time for Wife to qualify for reimbursement from her employer. CA held yet again, that the Settlement Agreement was a contract and it was clearly erroneous for TC to find that Husband did not breach the Agreement. CA remanded for a hearing to determine if Husband’s breach of the contract caused Wife to incur economic damages.

Finally, CA held TC’s dismissal of Wife’s claim for half of the funeral expenses was clearly erroneous. The parties signed a contract with the funeral home agreeing that they would each pay half of the funeral expenses. Wife’s family initially paid the funeral home and then wife repaid her family. She argued that Husband had never paid his portion of the expenses. TC dismissed Wife’s claim opining that Husband correctly raised the defense of res judicata. CA reasoned that because res judicata is an affirmative defense it can be waived if not properly asserted. CA found that there was nothing in the record showing Husband raised the affirmative defense of res judicata. Therefore, TC’s holding was clearly erroneous.
Digested by Linda Dixon Bullock, Diana L. Skaggs + Associates.

Cameron v. Cameron

Cameron v. Cameron
Not to be published but accepted for discretionary review.

This divorce action arose out of husband and wife’s second marriage to one another. In the course of divorce proceedings, Husband’s attorney drafted an Agreement dividing all marital and non-marital property equally. Both parties signed the Agreement. Wife was not represented by counsel when she signed. Additionally, the Agreement was not filed at the time of execution. Eventually, Wife filed an answer and counter petition in response to Husband’s petition. She attached the Agreement as an exhibit. Husband contested the Agreement and argued the parties had reconciled after they signed the Agreement or, alternatively, the Agreement was unconscionable. The TC found the parties did not reconcile and the agreement was not unconscionable. The Agreement was incorporated into the final decree. CA affirmed the decision of the TC.
CA reasoned that when an agreement is fully executed, reconciliation does not abrogate the agreement unless that is the parties’ intent. When the terms of an agreement are executory, reconciliation and resumption of cohabitation nullifies the agreement. However, in all instances, “the most important factor in determining whether there has been a reconciliation is the parties’ intentions.”
Husband and Wife had taken a couple of trips to Mexico. Also, Husband testified they had started looking for a house so they could move back in together. Wife testified she had spent the night at husband’s house after the Agreement was signed but her intentions were never to cohabitate again. CA held an attempted reconciliation does not abrogate the Agreement. Therefore, it upheld the decision of the TC.
Also, CA found the Agreement was not unconscionable. Husband argued he thought signing the Agreement would dismiss the divorce action. Wife testified she thought the Agreement explained her portion of the property settlement if they should divorce. CA held that the Agreement may have been a bad bargain, but it was not unconscionable.
Digest by Linda Dixon Bullock, Diana L. Skaggs + Associates

Cameron v. Cameron, Discretionary Review Granted

The Kentucky Supreme Court granted discretionary review last week in Cameron v. Cameron, link here to case. As the Kentucky Court of Appeals designated its decision as "not to be published" it has not been digested here, but we will do so soon. The issues are whether the trial court erred in finding the parties had not reconciled after an agreement was signed and in finding the agreement conscionable.