BEVERLY A. STEVENS v. CHARLES THOMAS STEVENS
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RENDERED: June 12, 1998; 2:00 p.m.
NOT TO BE PUBLISHED
NO. 97-CA-0178-MR
AND
NO. 97-CA-0249-MR
BEVERLY A. STEVENS
v.
APPELLANT/CROSS-APPELLEE
APPEAL FROM UNION CIRCUIT COURT
HONORABLE TOMMY CHANDLER, JUDGE
CIVIL ACTION NO. 92-CI-000091
CHARLES THOMAS STEVENS
AFFIRMING IN
APPELLEE/CROSS-APPELLANT
OPINION
PART - REVERSING AND REMANDING IN PART
* * * * *
BEFORE:
ABRAMSON, GARDNER and GUIDUGLI, Judges.
GUIDUGLI, JUDGE.
This is an appeal from the Union Circuit Court
which (1) reduced the amount of maintenance owed from $2,500 to
$1,700 per month; and (2) denied to the appellant arrearages in
maintenance in the sum of $14,400 plus interest.
We affirm in
part, reverse and remand in part.
Appellant/cross-appellee, Beverly A. Stevens (Beverly)
and appellee/cross-appellant, Charles Thomas Stevens (Charles),
were divorced on May 3, 1994.
The parties entered into a signed
and notarized settlement agreement which was incorporated into
and made a part of the decree of dissolution of marriage by
reference.
The separation agreement amicably resolved issues of
distribution of marital and non-marital assets and liabilities;
child custody, visitation and support; and maintenance payments
to the wife, as well as, other matters not relevant to this
appeal.
Specifically, as it relates to maintenance the agreement
stated:
Husband shall pay Wife monthly payments in
the amount of $2,500.00 for maintenance, such
maintenance payments to continue for a period
of five (5) years after date of divorce
unless the Wife dies or remarries, in which
event the maintenance payments shall
terminate.
Husband understands that Wife may seek
employment following the divorce. If Wife
becomes so employed Husband agrees that for a
period of one (1) year following the divorce
he will not use Wife's employment as a ground
for modification of maintenance under KRS
403.250. After one (1) year from divorce
maintenance may be modified only upon a
showing of changed circumstances so
substantial and continuing as to make the
terms in this section unconscionable.
As previously stated, the decree of dissolution of
marriage which incorporated the settlement agreement was entered
by the court on May 3, 1994.
Beginning in February, 1995,
Charles reduced the maintenance payments from $2,500 per month to
$1,700 per month.
Beverly cashed each monthly check.
In May and
June of 1996, Charles did not make any maintenance payments to
Beverly.
Eventually, after Beverly hired an attorney, Charles
resumed making the $1,700 per month payments.
In July, 1996,
Charles filed a motion to modify his maintenance obligation and
Beverly then filed a motion for contempt claiming Charles'
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failure to make agreed upon maintenance payments of $2,500 per
month resulted in a $13,600 arrearage at that time.
The matter was referred to a Domestic Relations
Commissioner (DRC) and a hearing before the DRC was held on
August 13, 1996.
After a short hearing, the DRC recommended that
(1) since Charles had shown a change in circumstances since the
entry of the final decree so substantial and continuing as to
make the terms of the settlement agreement unconscionable, he was
entitled to a reduction from the original $2,500 per month to
$1,700 per month effective August 1, 1996; and (2) that since
there was no "definite concrete agreement to (orally) modify (the
agreement)" that a judgment for maintenance arrearage be issued
against Charles in the amount of $14,400 through July, 1996.
Charles filed exceptions to the DRC's report and
recommendation.
Each party submitted a memorandum to the trial
court setting forth his/her position as to law and facts of the
case.
Thereafter, on January 2, 1997, the Union Circuit Court
entered its opinion and order in this matter.
The trial court
affirmed the DRC's recommendation to reduce maintenance from
$2,500 to $1,700 per month effective July, 1996.
However, the
trial court found the issue of arrearage to be a problem and
accordingly sustained Charles' exceptions and found that no
arrearage was due and owing since the parties had entered an oral
modification effective February, 1995.
The trial court found:
As to the second contention, i.e. the
arrearages, the Court has a problem. As
always, oral modification causes problems
because they usually cannot be clearly
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substantiated. The parties always disagree
as to the whens and whys when the issue
finally gets to the Court. Like the
appearance of evil, this Court places the
burden on both parties to avoid the
appearance of oral modification if there has
in fact been no such modification. In the
absence of absolute proof, the Court can only
look at the surrounding circumstances of the
alleged modification. Here, we see Charles
reducing his payments to $1,700.00 per month
in February, 1995, and Beverly accepting that
substantial reduction for over a year until
May, 1996, without objection or court action.
That certainly gives the appearance of oral
modification. As so often happens in these
cases, it was only after Charles failed to
make any payment at all that the issue was
raised along with a motion for contempt.
This appeal and cross-appeal followed.
On appeal, Beverly contends the trial court erred in
finding an oral modification existed and in failing to apply the
correct standard of review to determine whether such alleged
modification should be judicially approved.
Charles
cross-appeals claiming that the trial court erred by reducing the
maintenance to $1,700 per month when it should have been
terminated based upon evidence which indicated he had no income
at the time of the hearing.
KRS 403.250 deals specifically with modification or
termination of provisions for maintenance.
Pursuant to KRS
403.250(1), "...the provisions of any decree respecting
maintenance may be modified only upon a showing of changed
circumstances so substantial and continuing as to make the terms
unconscionable."
In the case sub judice both the DRC and the
trial court found that Charles had shown a change in
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circumstances so substantial and continuing as to make the terms
of the settlement agreement unconscionable, thus meeting the
standards set forth in KRS 403.250(1).
At the time of the
original decree Charles earned approximately $100,000.
Since
that time Charles has suffered several business losses and had no
earned income for the year 1996.
However, it was also shown that
he had in excess of $68,000 in cash, had invested $9,000 in a new
business venture, paid over $82,000 to cover expenses of his
interest in the Mazzio restaurants, bought his son a new car and
was actually working for nothing for Mazzio.
Based upon these
facts, it cannot be said that the trial court's decision to
reduce but not terminate the maintenance owed was clearly
erroneous or an abuse of its discretion, the standard to be
applied on review by this Court.
CR 52.01; Whicker v. Whicker,
Ky. App., 711 S.W.2d 857 (1986); Mudd v. Mudd, Ky. App., 903
S.W.2d 533 (1995).
However, we, like the trial court, find the issue as to
the maintenance arrearage much more troublesome.
The trial court
found that because Beverly accepted the reduced payments for over
one (1) year without objection or court intervention and only
sought a contempt finding after Charles had failed to pay
anything for two months and had moved for a reduction in
maintenance that her conduct "certainly gives the appearance of
oral modification."
We do not agree that Charles met his burden
of proof nor did the court apply the proper standard in
determining whether an oral modification was effected.
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Initially, it should be pointed out that the parties
agreed that the settlement agreement was fair and not
unconscionable.
Additionally, the parties stated in the preamble
that they agreed and understood the terms and conditions set
forth therein.
Under item number seven - Maintenance Payments To
Wife - Charles agreed to pay monthly maintenance payments of
$2,500 per month for a period of five (5) years.
Furthermore, he
agreed not to use the Wife's employment as a ground for
modification during the first year nor to seek modification until
one (1) year from the date of dissolution and "then only upon a
showing of changed circumstances so substantial and continuing as
to make the terms in this section unconscionable."
Testimony of the parties as to the alleged February
oral modification was contradictory.
Before the DRC, Charles
stated that when the parties discussed the issue of maintenance
in February, 1995, he told her he was having financial troubles
and asked her about a reduction in maintenance.
The following is
a portion of Charles' response to questions from his attorney
during the hearing:
Wh
9.at did you ask in way of a reduction?
A.
I told Beverly, I said Beverly, I really need to
get this thing dropped down here. I said I'd like
to put it down to half to $1250. She didn't agree
to that. I said okay, fine, what do you think
would be fair since she was working at that time
too. And she said, I don't know -- $1700 or
$1800, and anyway we agreed to $1700 and she
accepted that until this present date in time.
10.
All right. Now you mentioned she was working.
Was she working when you signed the property
settlement agreement in April of '94?
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A.
No.
11.
And in February of '95, where was she working?
A.
I believe she was working at Kentucky Bank.
12.
First Kentucky ...
A.
First Kentucky Bank.
13.
All right. Was that a consideration in your
discussion with Beverly?
A.
It was to me. She had another income other than
what I was paying her plus I was paying child
support too at the same time.
As can be seen from the testimony of Charles, the
modification was made within one year (decree entered May, 1994
and oral modification February, 1995), and one of the
considerations for said reduction was Beverly's recent
employment.
Both conditions were violations of the agreement
which had been knowingly, and voluntarily entered.
When Beverly testified as to the oral modification, she
emphatically denied that she agreed to accept a reduction to
$1,700.
She stated that she expected him to pay the full $2,500
per month once he sold his business and had money available.
She
added that, "I thought he would continue to pay $2,500 as soon as
he sold the store."
In response to how the $1,700 amount was
reached, she said, "Well, we discussed different amounts in the
garage and I said that really wouldn't meet the obligations that
I already had and he said, well, this is all I can give so I
tried to work with him."
Later, on cross-examination, she again
denied she agreed to the reduction and said, "I was trying to
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work with him and I had this coming in so I took what he was able
to give me."
The controlling case on oral modification of a
settlement agreement is Whicker v. Whicker, Ky. App., 711 S.W.2d
857 (1986):
With the foregoing discussion in mind, we
hold that oral agreements to modify child
support obligations are enforceable, so long
as (1) such agreements may be proved with
reasonable certainty, and (2) the court finds
that the agreement is fair and equitable
under the circumstances. In order to enforce
such agreements, a court must find that
modification might reasonably have been
granted, had a proper motion to modify been
brought before the court pursuant to KRS
403.250 at the time such oral modification
was originally agreed to by the parties.
Furthermore, in keeping with prior decisions,
such private agreements are enforceable only
prospectively, and will not apply to support
payments which had already become vested at
the time the agreement was made. See Dalton
v. Dalton, Ky., 367 S.W.2d 840, 842 (1963).
Parties who decline to use the procedures
set out in KRS 403.250 run the risk of having
their private agreements declared invalid by
a court when the parties attempt to have the
agreements judicially enforced. These
agreements which attempt to accomplish
privately what a court could not order
legally will be declared invalid and will not
be enforced.
Id. at 850.
Applying the standard set forth in Wicker to the facts
of this case, we believe the trial court erred in finding that an
oral modification was effectively entered into and that
modification would have been granted had the appropriate motion
been brought before the court.
First, the mere acceptance of a
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lesser amount by Beverly is not tantamount to acceptance of a
reduction.
Nor is the fact that appellant did not immediately
proceed with legal action against Charles.
If this was the case,
then any individual without the financial ability or intestinal
fortitude to race to the courthouse would be deemed to have
accepted modification when in reality such modification was
unilateral.
Instead of encouraging parties to work together,
every change in a financial situation or short-term crisis would
necessitate court action and intervention.
Surely, this is not
the intent of KRS Chapter 403 nor the prevailing case law.
Secondly, although the trial court found "that the modification
was fair and equitable under the circumstances" there was no
finding to substantiate its conclusion.
Neither party presented
adequate evidence as to the financial standing of Charles in
February 1995.
Apparently there was no discovery undertaken in
this case and there were no exhibits introduced at the hearing
(at least, there is nothing in the record to this effect).
However, we do know from the testimony that Charles was the owner
of a Druther's Restaurant which eventually sold for $250,000,
that he had a one-third (1/3) interest in three Mazzio
restaurants in which he invested an additional $82,500 since
April, 1994, that he invested $9,000 in another business venture,
that he received three payments of $17,000 from a settlement with
Druther's restaurants, that he bought his son a new car, and that
he continued to maintain his standard of living and had money in
the bank.
Furthermore, at the time the settlement agreement was
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entered Charles was aware of some of the business hardships
coming his way.
Finally, the trial court made no finding as required
under Wicker that had a proper motion been filed to modify in
February, 1995, that that request might reasonably have been
granted.
As previously pointed out, the maintenance section of
the agreement provided that no modification could be undertaken
for one year and that Beverly's employment could not be grounds
for modification during that period.
However, Charles
specifically stated that the fact that Beverly had another income
(employment) was a consideration that entered in his attempt to
orally modify the agreement.
Under the terms of the settlement
agreement and based upon Charles' own testimony, the trial court
erred in finding an oral modification took place when it could
not have been granted had Charles filed the proper motion to
modify and proceeded to a hearing before the court.
Based upon the foregoing reasons, the Union Circuit
Court's opinion and order is affirmed as to the reduction in
maintenance effective July, 1996, and reversed as to the oral
modification and subsequent resulting maintenance arrearage.
This case is remanded to that trial court for entry of judgment
in favor of Beverly A. Stevens and against Charles Thomas Stevens
for a maintenance arrearage in the amount of $14,400 as evidenced
by Charles' failure to make full payment during the period
February, 1995 through July, 1996.
ALL CONCUR.
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BRIEF FOR APPELLANT/CROSSAPPELLEE:
BRIEF FOR APPELLEE/CROSSAPPELLANT:
Brucie W. Moore
Morganfield, KY
Stephen M. Arnett
Morganfield, KY
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