CARLEEN BRUNETTI v. DENNIS KEITH SHELBY
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RENDERED: December 4, 1998; 10:00 a.m.
NOT TO BE PUBLISHED
C ommonwealth O f K entucky
C ourt O f A ppeals
No. 1997-CA-000176-MR
CARLEEN BRUNETTI
v.
APPELLANT
APPEAL FROM McCRACKEN CIRCUIT COURT
HONORABLE R. JEFFREY HINES, JUDGE
ACTION NO. 96-CI-000735
DENNIS KEITH SHELBY
APPELLEE
OPINION
AFFIRMING IN PART - REVERSING AND REMANDING IN PART
* * * * *
BEFORE:
GUIDUGLI, JOHNSON and KNOPF, Judges.
GUIDUGLI, JUDGE.
Carleen Brunetti appeals from a judgment
denying her interest and attorney’s fees in her action to enforce
the terms of a Tennessee divorce decree against her ex-husband, a
Kentucky resident.
Appellant is entitled to interest under
Kentucky statutes granting full faith and credit to out-of-state
judgments.
We, therefore, reverse the trial court’s denial of
interest and affirm the denial of attorney’s fees.
The fourteen year marriage of Carleen Brunetti [Shelby]
(Carleen) and Dennis Keith Shelby (Dennis) was ended by “Final
Decree of Divorce” in Davidson County, Tennessee on September 29,
1988.
The divorce decree incorporated by reference a “Marital
Dissolution Agreement” negotiated by the parties, which the court
affirmatively found to be “equitable.”
This action concerns
paragraph twelve of that agreement, which states:
12. A. Husband shall pay directly to
Wife for the support and maintenance of Wife
as periodic alimony the sum of $75.00 per
month on or before the first of each
succeeding month for a period of 13 months
[$975.00] following the entry of a Final
Decree of Divorce or until she remarries,
whichever event shall first occur.
B. Husband agrees that he shall reimburse
Wife for those funds previously advanced by
her in the maintenance of the parties
mortgage indebtedness in the amount of
$2,970.00, which shall be paid directly to
Wife at the rate of $165.00 per month
commencing on the 15th day of each
consecutive month with the first payment to
be made within thirty (30) days following the
sale of the residential real property
referred to in Paragraph No. 1 above, for all
of which let execution issue if necessary.
(Emphasis added).
Paragraph B, above, recites that Carleen had advanced monies
which benefited the parties for “the maintenance of the parties
mortgage indebtedness in the amount of $2,970" for some period of
the marriage.
Dennis cannot dispute that he agreed to pay
Carleen $3,945.00 ($975.00 + $2,970), the amounts listed in
paragraph 12.
Additionally the agreement provided for
“execution” if necessary.
Dennis never paid anything on either
one of these obligations.
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On August 5, 1996, Carleen’s counsel filed a complaint
against Dennis in the McCracken Circuit Court seeking to enforce
the Tennessee judgment and for an award of interest and
attorney’s fees.
Dennis filed a pro se answer on August 22,
1996, denying he owed Carleen any money.
Carleen’s counsel filed
a motion for a hearing before Mr. Bill Flynn, the McCracken
County Domestic Relations Commissioner (DRC), and a hearing date
was set for September 23, 1996.
A month later, on the day of the
hearing, the DRC recused himself stating that he had known Dennis
“for over 30 years and he is a close neighbor.”
The case was
transferred to the circuit court which, on October 8, 1996,
scheduled a hearing for November 1, 1996.
Two days before the scheduled hearing, newly retained
attorney for appellant made an appearance on behalf of Dennis and
requested a continuance.
The hearing was reset for November 22,
1996, and subsequently was held on that date.
The court heard
proof as will be discussed more fully herein, none of which
involved a defense for Dennis’ failure to pay.
After the hearing
on December 3, 1996, but before the court could rule, Dennis
finally paid Carleen $3,945 by cashier’s check.
This was the
exact principal amount Carleen had claimed Dennis owed her and
which Dennis had denied owing.
By order entered December 20, 1996, the trial court
denied Carleen’s motion for interest, indicating this result was
“in accordance with Courtenay v. Wilhoit, 655 S.W.2d 41 (Ky.App.
1983).”
The court also denied Carleen’s motion for attorney’s
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fees because “...this action is not brought under KRS Chapter
403, and there is no legal authority to award attorneys fees.”
Lastly, the court recited that it was giving “full faith and
credit” to the Tennessee decree, but having been informed that
the “underlying claim” had been paid, “all other motions would be
moot.”
Carleen filed a notice of appeal on January 17, 1997.
WHETHER CARLEEN WAS ENTITLED TO INTEREST
The issue of interest on a foreign judgment is governed
by statute in Kentucky.
KRS 360.050 states, “Any indebtedness
incurred or judgment rendered out of this state is presumed to
bear interest in accordance with the provisions of KRS 360.040.”
The trial court denied Carleen’s motion for interest, citing
Courtenay v. Wilhoit, Ky. App., 655 S.W.2d 41 (1983).
In
Courtenay, supra, the Court stated the issue:
The single issue presented for
determination is whether a decree of
dissolution of marriage, which incorporates
by reference a separation agreement providing
for paying of a fixed sum of money in
periodic payments, requires interest to be
paid on the fixed-sum where the agreement and
decree are silent on the issue.
In Courtenay, the trial court had denied the motion for
interest because the wife, in a separation agreement, had agreed
to receive some of the marital assets to which she was entitled
over time, and that the payments would be treated as maintenance.
The trial court viewed the motion for interest as one “modifying”
the separation agreement and denied the motion.
This Court
affirmed, holding “Because [Appellee] has kept his payments
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current, there is no judgment to which KRS 360.040 can apply.”
Id. At 43.
Obviously the case at bar is distinguishable on the
facts because Dennis never paid any of the periodic fixed
payments which he agreed to pay when they were due.
Dennis did
not pay until Carleen sued him, a hearing was held, and the court
was about to rule.
The Court in Courtenay did address the situation
presented in this case, stating that when a party missed a
payment due under the separation agreement the party due the
payment would become a judgment creditor of the party owing the
payment.
“KRS 360.040 would then become operative and interest
would run on the past due payment from its due date until paid.”
Id. at 42.
As long as there were no factors making an award of
interest inequitable, it would be allowed at the statutory rate.
Id.
The Court pointed out that the purpose of KRS 360.040 is to
encourage judgment debtors, like Dennis in this case, “to fulfill
the obligations he incurred in the agreement.”
Id. at 43.
We
cannot think of a single reason why an award of interest in this
case would be “inequitable.”
See also, Hardin v. Hardin, Ky.
App., 711 S.W.2d 864, 865 (1986).
There can be no doubt in this case that the Davidson
County, Tennessee “Final Decree of Divorce” which incorporated by
reference the parties’ “Marital Dissolution Agreement” was a
“judgment” to which KRS 360.040 applies.
It was the “final order
adjudicating all the rights” of the parties.
CR 54.01;
Petrilli’s Kentucky Family Law, §§ 24.1; 24.23 (1988).
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The
parties even negotiated that “if necessary”, “execution” could
issue to collect the $3,945 specified in paragraph 12.
“Execution” is a legal term of art meaning, “the legal process of
enforcing the judgment, ususally by seizing and selling property
of the debtor.”
Black’s Law Dictionary p. 568 (6th Ed. 1990).
THE APPLICABLE RATE OF INTEREST
Having determined Carleen is entitled to interest on
the judgment, the next issue is the applicable interest rate.
Dennis argues that if Carleen is entitled to interest, the
Kentucky judgment rate of interest set forth in KRS 360.040 of
twelve percent (12%) compounded annually should not apply.
Dennis argues instead that the Tennessee judgment rate of ten
percent (10%) is all that Carleen should be entitled to.
We
disagree.
First, Dennis did not submit anything to the trial
court regarding the Tennessee judgment rate.
The only Tennessee
law in the record is contained in Carleen’s memorandum to the
trial court which cites Tennessee Code Annotated 47-14-121 as
providing a 10% judgment rate.
Neither party submitted a copy of
the statute to the trial court or to this Court.
Secondly,
Dennis moved to Kentucky and reestablished Kentucky residency
after his Tennessee divorce.
By this act, Dennis became subject
to the laws of this Commonwealth.
Kentucky to execute against Dennis.
Carleen was forced to come to
KRS 360.050 is very clear
that foreign judgments, such as the Tennessee judgment at issue,
are presumed to bear interest at the Kentucky judgment rate.
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We
hold Carleen’s judgment entitles her to 12% interest compounded
annually until the entire balance of principal and interest is
paid in full.
ATTORNEY’S FEES
One of the fundamental principles in the American legal
system is that parties are responsible for their own attorney’s
fees.
In Louisville Label, Inc. v. Hildesheim, Ky., 843 S.W.2d
321, 326 (1992), our Supreme court pronounced:
Except for fee-shifting statutes which
provide that a trial court may assess an
attorney’s fee for one party against the
other, such as provided for in Civil Rights
Act litigation by KRS 344.450 and in divorce
litigation by KRS 403.220, the obligation to
pay one’s own attorney falls upon the person
employing the attorney rather than upon the
opposing litigant.
In this case, Carleen argues that the laws governing Kentucky
divorces should apply because the equities cry out that she can
only be made whole by recovery of principal, interest and her
attorney’s fees.
As sympathetic as we may be to Carleen’s
plight, we cannot grant what the law does not allow.
We
therefore affirm the trial court’s denial of Carleen’s motion for
attorney’s fees but reverse the trial court’s denial of Carleen’s
motion for interest and remand with the following directions.
On remand, counsel for the parties shall calculate
interest on each of the principal payments called for in
paragraph 12 of the marital dissolution agreement, at the rate of
12% per annum, compounded annually, from the date due until the
date when Dennis tendered the cashier’s check for $3,945.
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The
amount paid by Dennis ($3,945) shall be subtracted from the total
due on that date.
The remaining balance due on that date shall
continue to accrue interest at the rate of 12% per annum,
compounded annually, until paid in full.
For the foregoing reasons, we affirm in part and
reverse and remand in part the judgment of the McCracken Circuit
Court.
ALL CONCUR.
BRIEF FOR APPELLANT:
BRIEF FOR APPELLEE:
John T. Reed
Paducah, KY
Mark L. Ashburn
Paducah, KY
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