Wally Hall v. Cherryl H. Hall

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CA 03-941

MAY 19, 2004




[NO. DR 02-2513]




John B. Robbins, Judge

Appellant Wally Hall appeals the March 12, 2003 divorce decree entered by the Pulaski County Circuit Court. Wally specifically asserts that the trial judge erred by denying his motion to enforce a divorce-settlement agreement and setting alimony for appellee Cherryl Hall. We affirm.

Wally and Cherryl Hall were married for twenty-three years when divorce proceedings commenced in May 2002. Each party sought a divorce from the other. Wally worked as sports editor for the Arkansas Democrat-Gazette earning approximately $92,000 annually and also hosted a cable television sports program that added $20,000 to $25,000 to his annual income. The cable show contract was negotiated yearly. Cherryl was employed as a fourth-grade teacher at a private school earning approximately $27,000 annually. Both parties were in their fifties, and their only child was in college.

Wally told Cherryl that he was uncertain if he would continue to have the television show. Wally completed an affidavit of financial means in June 2002, which estimated that

if his show continued, he would earn an additional $20,000 to $25,000 per year. The affidavit listed only the newspaper as his current employer. On August 22, 2002, his continued hosting became a certainty, but he did not disclose this to Cherryl. The June affidavit was not transmitted by his attorney to her attorney until September 4, 2002. On September 4, 2002, Comcast cable ran television advertisements that Wally Hall's sports show would air that fall; however, Cherryl did not see them. On September 5, 2002, in lieu of Wally's deposition that was scheduled for this date, a settlement negotiation took place. After several hours, the parties reached an agreement, which was recorded by the court reporter in attendance. In that agreement, Cherryl chose to settle for a greater share of the marital property instead of alimony.1

In his newspaper column published on September 6, 2002, Wally announced that he would be hosting the television show for the coming year. As the divorce was not final nor had the agreement been accepted by the court, Cherryl's counsel moved the trial court to reset the divorce trial, which was scheduled for September 17, and to exercise its discretion to disapprove the agreement because she had been convinced by Wally that he would not continue to host the show. Cherryl asserted that Wally withheld this information from her, despite their repeated conversations about how to settle the divorce, and that it materially affected her decision to enter into the settlement. Wally moved to enforce the agreement, asserting that he fully disclosed his income over the years including that earned from the show up to the summer of 2002. Wally denied that they had ongoing discussions about whether the show would continue for the next year, but he acknowledged that he did not offer the information to her after it became a certainty in late August 2002.

The trial court conducted a hearing on both motions, after which the judge found in Cherryl's favor. The trial court reasoned that the settlement agreement was based upon the disclosures made in June, accurate at that time but inaccurate at the time a settlement was reached. The trial court concluded that it could exercise its discretion to refuse to enforce the agreement, given the lack of a full and fair disclosure of assets, liabilities, and income upon which to negotiate a settlement agreement. The judge specifically declined to find that Wally attempted to conceal, trick, mislead, or defraud anyone, and she acknowledged that the settlement itself was fair. The motion to reset the divorce trial was granted.

At the trial on the merits, Cherryl was imputed a gross annual income of $36,000, which the trial court found Cherryl could earn given her education and experience, or by adding a summer job when on summer break from the private school.2 Prior to alimony, Cherryl's actual net monthly income was computed to be $1,864.90. Wally's net monthly income was determined to be $5,138. Based upon her financial need and his ability to pay, the trial judge awarded Cherryl $1,500 per month in alimony, which would terminate upon either party's death or her remarriage. The trial judge recognized that Wally would receive a tax deduction whereas Cherryl would have to pay taxes on this income. The judge concluded by saying, "I have left him in possession of about a thousand dollars a month more than her, but I think that's fair." If either party's income changed in the future, the judge said she would consider reducing it. The trial judge proceeded to divide the parties' assets equally. This appeal resulted. Wally argues two points for reversal: (1) that the trial court erred by refusing to enforce the property-settlement agreement where Cherryl simply changed her mind, and (2) that the trial court erred in its award of alimony. We affirm.

Our standard of review in this case is de novo. Dalrymple v. Dalrymple, 74 Ark. App. 372, 47 S.W.3d 920 (2001). In Middleton v. Lockhart, 344 Ark. 572, 43 S.W.3d 113 (2001), our supreme court concluded that a court of equity is a court of conscience that should consider the relative position of the parties and render a decree that does substantial justice to all. We will not reverse the trial judge unless the findings are clearly erroneous. Bagwell v. Bagwell, 282 Ark. 403, 668 S.W.2d 949 (1984). Due deference is given to the chancellor's superior ability to determine the credibility of the witnesses and the weight to be accorded their testimony. Dalrymple, supra (citing Hunt v. Hunt, 341 Ark. 173, 15 S.W.3d 334 (2000)). The law on divorce settlement agreements is well established. A trial court is not bound by a stipulation entered into by the parties; rather, it is within the sound discretion of the court to approve, disapprove, or modify the agreement. Rutherford v. Rutherford, 81 Ark. App. 122, 98 S.W.3d 842 (2003). In Pryor v. Pryor, 88 Ark. 302, 114 S.W. 700 (1908), the supreme court held that the trial court is not, in the first instance, bound by the agreement of the parties because the court is moved to action by principles of justice and equity. In McCue v. McCue, 210 Ark. 826, 832, 197 S.W.2d 938, 941 (1946), our supreme court stated, "[C]ertainly the Court is not bound by an agreement [that a] disputing husband and wife may enter into, in order to terminate a controversy; and this is true even in the absence of fraud or coercion." See also Womack v. Womack, 16 Ark. App. 108, 110, 697 S.W.2d 930, 931 (1985). However, in Bachus v. Bachus, 216 Ark. 802, 227 S.W.2d 439 (1950), the supreme court set forth the well-known principle that if the parties to a divorce action agree to a settlement contract, and the court approves the settlement, there is then no power to modify the decree at a later date. Id. Thus, when a stipulation dictated into open court covers all the rights and liabilities of the parties in a total and complete agreement, it will have the full force and effect of a binding agreement, and it will not be modifiable. Bishop v. Bishop, 60Ark. App. 164, 961 S.W.2d 770 (1998) (holding that the chancellor did not abuse his discretion in rejecting a subsequent motion to deny enforcement of a settlement agreement prior to the entry of the decree, where aggrieved party was not misinformed, the agreement was read into the record in open court, and the parties requested the court to approve it). In the instant case, the Halls' settlement had not yet been read into the record of open court, nor had it yet been accepted and approved by the trial court.

Cherryl cites to a particularly instructive and persuasive passage from Krapf v. Krapf, 439 Mass. 97, 103-104, 786 N.E.2d 318 (2003):

[S]pouses who enter into agreements with each other are held to standards higher than those we tolerate in the arm's-length transactions of the marketplace. Parties to a separation agreement stand as fiduciaries to each other, and will be held to the highest standards of good faith and fair dealing in the performance of their contractual obligations. Moreover, a separation agreement is a "judicially sanctioned contract" that is valid and enforceable only if and as approved by the judge. (Citations omitted.)

Other states hold the same view: that the trial judge has the discretion, in keeping with the duty to divide the marital estate fairly, to review, scrutinize, accept, or reject a settlement agreement. See, e.g., In re Marriage of Button, 131 Wis.2d 84, 388 N.W.2d 546 (1986); Edelkind v. Boudreaux, 271 Ga. 314, 519 S.E.2d 442 (1999); Schneider v. Schneider, 110 Ohio App.3d 487, 674 N.E.2d 769 (1996); Stockton v. Stockton, 435 N.E.2d 586 (Ind. App. 1982). The trial judge herein did not abuse her discretion when she found that fair and reasonable disclosure of financial status is a significant aspect of the parties' ability to negotiate a settlement and that without it, she would not approve of the agreement.

We now consider the award of alimony and whether it manifests an abuse of discretion. Contrary to Wally's assertion, we see no reversible error. The purpose of alimony is to rectify, insofar as is reasonably possible, the frequent economic imbalance in the earning power and standard of living of the divorced parties in light of the particular factsof each case. Holaway v. Holaway, 70 Ark. App. 240, 16 S.W.3d 302 (2000). The primary factors to be considered in awarding alimony are the need of one spouse and the other spouse's ability to pay. Id.

In fixing the amount of alimony, the courts consider many factors, including (1) the financial circumstances of both parties, (2) the couple's past standard of living, (3) the value of jointly owned property, (4) the amount and nature of the parties' income, both current and anticipated, (5) the extent and nature of the resources and assets of each of the parties, (6) the amount of income of each that is spendable, (7) the earning ability and capacity of each party, (8) the property awarded or given to one of the parties, either by the court or the other party, (9) the disposition made of the homestead or jointly owned property, (10) the condition of health and medical needs of both husband and wife, (11) the duration of the marriage, and (12) the amount of child support, if any. Boyles v. Boyles, 268 Ark. 120, 594 S.W.2d 17 (1980). Neither this court nor the supreme court has ever attempted to reduce the amount of alimony to a mathematical formula. Mitchell v. Mitchell, 61 Ark. App. 88, 964 S.W.2d 411 (1998). Presumably, it has been thought that the need for flexibility outweighs the corresponding need for relative certainty. Id. Alimony and property divisions are complementary devices that a trial judge employs to make the dissolution of a marriage as equitable as possible. Davis v. Davis, 79 Ark. App. 178, 84 S.W.3d 447 (2002). On appeal, we will not reverse a trial judge's decision to award alimony absent an abuse of that discretion. Anderson v. Anderson, 60 Ark. App. 221, 963 S.W.2d 604 (1998).

The evidence demonstrated that there was a significant disparity between the parties' income and that this was a twenty-three-year marriage. The parties' marital property was equally divided. Though Cherryl had a stable work history and was imputed a greater income than she actually earned, she still lagged significantly behind Wally's potential for earning. It is undisputed that Cherryl completed further education than Wally, but this education had not translated into greater earning capacity at any point in their marriage. This evidence is sufficient to show her financial need and his ability to pay; thus, the awarding of alimony was not an abuse of discretion.

To the extent that Wally argues that some amount of alimony was justified but that this award was excessive, we disagree. Wally asserts that the alimony award is equivalent to a 30% portion of his income, far in excess of that awarded in other cases such as Anderson v. Anderson, supra (finite period of alimony of 5% of husband's income), and far more than could be awarded under a temporary support order for a dependent spouse pursuant to the family-support chart, up to 20%. Cherryl counters that because she has to pay taxes on the income, and Wally receives a tax deduction on the alimony payments, then the actual percentage of his monthly income reserved for alimony is 19%. When we consider that the marital property was equally divided, and alimony is a complementary device used to rectify the imbalance between the parties, Wally has not demonstrated that the alimony award constituted an abuse of discretion. The trial judge can make an award of alimony that is reasonable under the circumstances. See Mulling v. Mulling, 323 Ark. 88, 912 S.W.2d 934 (1996). Wally also argues that the award should not have been open-ended. However, alimony awards not made pursuant to contract are subject to revision upon changed circumstances, which the judge specifically announced from the bench. See, e.g., Benn v. Benn, 57 Ark. App. 190, 944 S.W.2d 555 (1997).

We affirm.

Stroud, C.J., and Gladwin, J., agree.

1 The parties estimated that the marital property was valued at $667,432. Under their agreement, Cherryl would receive approximately $373,316, and Wally would receive $293,716. Thus, Cherryl took about $80,000 greater value of the assets.

2 This was $9,000 more per year than her actual income.