CYNTHIA ANN FRANKLIN (now McWATERS) v. GREGORY LEN FRANKLIN
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RENDERED: September 13, 2002; 10:00 a.m.
NOT TO BE PUBLISHED
C ommonwealth O f K entucky
C ourt O f A ppeals
NO. 2001-CA-001171-MR and
NO. 2001-CA-001271-MR
CYNTHIA ANN FRANKLIN (now McWATERS)
APPELLANT/CROSS-APPELLEE
APPEAL FROM MCCRACKEN CIRCUIT COURT
HONORABLE CYNTHIA E. SANDERSON, JUDGE
CIVIL ACTION NO. 93-CI-00268
v.
GREGORY LEN FRANKLIN
APPELLEE/CROSS-APPELLANT
OPINION
AFFIRMING IN PART, REVERSING IN PART
AND REMANDING
** ** ** ** **
BEFORE:
BARBER, HUDDLESTON and MILLER, Judges.
HUDDLESTON, Judge:
Cynthia Ann Franklin appeals from a McCracken
Circuit Court order finding that Gregory Len Franklin’s “obligation
to
make
one-half
of
[Cynthia’s]
mortgage
payment
ceased
and
terminated upon her remarriage and that [Gregory] is not in arrears
in his payment of same.”
Gregory cross-appeals from that portion
of the order denying his motion for a refund of the sums he paid
toward the mortgage pursuant to the parties’ settlement agreement
after Cynthia’s remarriage.
Cynthia and Gregory were married on December 7, 1985, and
separated on March 27, 1993. Kayla Ann Franklin, the couple’s only
child, was born on May 6, 1990.
On April 14, 1993, the parties
entered into a property settlement agreement disposing of all
issues related to the impending dissolution of their marriage,
including the division of marital property and debts, child custody
and
support,
and
maintenance.
Concluding
that
it
was
not
unconscionable,1 the court incorporated the agreement into the
decree of dissolution entered on June 22, 1993.
Under
agreement,
the
subsection
ASSETS
2
of
AND
which
LIABILITIES
is
entitled
section
Marital
of
the
Debts,
“[Gregory] assumes and agrees to pay one-half of the mortgage
payable to the Bank of Marshall County, . . . and [Gregory] agrees
to indemnify and hold the wife harmless with respect thereto.”
That provision also describes the required method of payment and
characterizes the obligation with the following language:
1
Although the conscionability of the agreement is not
challenged here, “[g]iven the nature of our no-fault divorce
statutes, coupled with the desirability of imparting some degree of
finality to settlement agreements,” the provisions for modification
are fairly stringent. Peterson v. Peterson, Ky. App., 583 S.W.2d
707, 712 (1979). “Since the trial court is in the best position to
judge the circumstances surrounding the agreement, its finding on
the issue of conscionability should not be set aside” unless there
is some evidence of “fraud, undue influence, overreaching, or
evidence of change in circumstances since the execution of the
original agreement.” Id.
Here, there is no allegation of fraud, etc. . . .
Accordingly, our guiding principle in resolving the issue presented
will be to give effect to the literal terms of the parties’
agreement.
-2-
In regard to the mortgage indebtedness to the Bank
of Marshall County, [Gregory] agrees to pay one-half of
the note payment each month directly to [Cynthia] on or
before the date each such monthly payment is due to the
bank.
The assumption of one-half of the mortgage payable
to the Bank of Marshall County by [Gregory] shall be
considered
an
obligation
directly
related
to
the
maintenance of [Cynthia],[2] although payments of said
debt shall not be considered deductible or taxable as
alimony or maintenance for income tax purposes.[3]
The
parties further stipulate that they intend that said debt
shall be non-dischargeable under Section 523(a)(5) of the
Bankruptcy Code.
With respect to the mortgage indebtedness, the section
labeled Maintenance provides that:
Each party is able to support himself or herself through
appropriate employment.
Neither party seeks maintenance
and both parties waive any claim to maintenance, present
or future, which he or she may otherwise have asserted.
Except as expressly hereinabove provided in relation to
the payment by [Gregory] of one-half of the mortgage
2
Pursuant to the parties’ agreement, Cynthia is “the sole
and absolute owner of the residence . . .” subject to the mortgage.
3
Maintenance/alimony payments are ordinarily deductible by
the payor and includable in the income of the payee. See 21 United
States Code (U.S.C.) § 71. However, a transfer of cash that the
parties desire to treat as not maintenance/alimony (i.e., as a
property settlement) is not maintenance/alimony if the parties so
designate. See 21 U.S.C. § 71(6)(1)(B).
-3-
indebtedness to the Bank of Marshall County.
Should
[Gregory] default in the payment of one-half of the
balance of said debt, the parties agree that the case may
be reopened in the McCracken Circuit Court and that
maintenance can be assessed against [Gregory] in an
amount sufficient to compensate the wife for any expense
which she has incurred as a result of [Gregory’s] failure
to pay his one-half of the said mortgage indebtedness.
(Emphasis supplied.)
There is no stipulation in the agreement specifying what change in
circumstances, if any, would result in the automatic termination of
Gregory’s obligation to pay one-half of the mortgage debt.
Cynthia remarried on November 14, 1998.
Believing that
her remarriage terminated his obligation to pay maintenance (i.e.,
half of the monthly mortgage payment) under Kentucky Revised
Statutes (KRS) 403.250(2), Gregory ceased making said payments upon
learning of her change in status.
In November 2000, Gregory moved
the court for the “issuance of a rule” against Cynthia, requiring
her to show cause why she should not be held in contempt for
failure to comply with the decree of dissolution relative to
visitation with the parties’ daughter. Shortly thereafter, Cynthia
moved the court to “issue a rule” requiring Gregory to show cause
why he should not be held in contempt for his failure to comply
with the decree.
Specifically, she alleged that he was $2,733.00
in arrears on his one-half of the mortgage payment.4
4
Although Cynthia also alleged that Gregory was delinquent
(continued...)
-4-
Following a hearing, the court agreed with Gregory’s
argument as to the mortgage/maintenance payments, analyzing the
issue as follows:
According to the parties’ Property Settlement Agreement
which was adopted by the Court, [Gregory] was to pay onehalf of the mortgage payment as maintenance to [Cynthia].
The proof established that after learning of [Cynthia’s]
remarriage,
[Gregory]
ceased
making
such
payments
believing such payments to be terminated by the terms of
KRS 403.250(2). [Cynthia] complains that said section is
not applicable, claiming that the payments are in the
nature of a lump sum maintenance award which are not
subject
to
the
provisions
of
KRS
403.250(2).[]
The
agreement specifically states the remedy available to
[Cynthia] in the event [Gregory] ceases to make such onehalf of the mortgage payment.
The agreement provides
that should he fail to make such payment, that [Cynthia]
may then go to Court and seek to reopen the maintenance
issue.
If
reopened,
it
would
be
clear
under
KRS
403.250(2) that her remarriage would, in fact, terminate
any future obligation of maintenance.
4
Therefore, the
(...continued)
on his child support by three months and “habitually delinquent” as
to the payment of Kayla’s health insurance, those issues were
resolved by agreement prior to the hearing (as noted by the court
in the “miscellaneous items” section of its February 2001 order)
and are not raised on appeal. In her response and counter-motion,
Cynthia also requested that Gregory’s visitation with Kayla be
supervised, or, in the alternative, that he be ordered to undergo
counseling. Issues related to visitation were also resolved in the
court’s order and are not the subject of this appeal.
-5-
Court hereby orders that [Gregory’s] obligation to make
one-half
of
[Cynthia’s]
mortgage
payment
ceased
and
terminated upon her remarriage and that [Gregory] is not
in arrears in his payment of same.
Pursuant to Kentucky Rules of Civil Procedure (CR) 59.05,
Cynthia sought to have the court alter, amend or vacate that
portion of its order which relieved Gregory of his obligation to
pay one-half of the mortgage debt.
In support of her motion,
Cynthia submitted an affidavit in which she stated that Gregory
discontinued the payments as of May 1, 1998, rather than upon her
remarriage, also citing this Court’s decision in John v. John.5
In
response, Gregory filed a counter-motion seeking reimbursement of
“all sums paid by him on the mortgage after Cynthia’s remarriage.”
On May 5, 2001, the court denied both motions, reaffirming its
original decision.
In the instant case, the dispositive question is whether
KRS 403.250(2), upon which Gregory and the circuit court rely, is
applicable and, if so, what effect its application has on the facts
presented.
As the construction and application of statutes is a
matter of law, our review is de novo.6
court
misapplied
the
law
to
the
Cynthia argues that the
facts;
this
has
also
been
recognized as a matter which is reviewed de novo.7
5
Ky. App., 893 S.W.2d 373 (1995).
6
Bob Hook Chev. Isuzu v. Transportation Cabinet, Ky., 983
S.W.2d 488, 490 (1998).
7
Id. at 490-491.
-6-
Although the parties disagree as to how the mortgage
payments
at
issue
should
be
classified
and
whether
such
a
determination is even necessary, the court correctly determined
that Gregory’s obligation qualified as maintenance according to the
language of the agreement.
By addressing the subject under both
the marital debt and maintenance sections and using the terms
interchangeably, the parties arguably confused the issue. However,
any conflict is resolved by the explicit expression of their intent
in the latter provision clarifying that both parties waive any
claim to maintenance “Except as expressly hereinabove provided in
relation to the payment by [Gregory] of one-half of the mortgage
indebtedness . . . .”
Likewise,
Gregory’s
assumption
of
one-half
of
the
mortgage “shall be considered an obligation directly related to the
maintenance of [Cynthia].”
No credible argument can be made that
the parties did not view Gregory’s continuing obligation to pay
one-half of the mortgage on the marital residence which was awarded
to Cynthia by virtue of the same agreement as maintenance as
evidenced by that unambiguous language.
reasonable
inference
is
that
this
In fact, an arguably
arrangement
was
mutually
agreeable because it enables Cynthia, the primary residential
custodian of their minor child, to remain in the home, minimizing
the disruption in Kayla’s life as well as Cynthia’s expenses.
Admittedly, the provision dictating the tax/bankruptcy implications
of Gregory’s monthly payments to Cynthia is somewhat unusual but it
further confirms the parties’ intention as to the limited purpose
of the maintenance and its priority.
-7-
Although
we
are
not
directed
to
nor
is
there
any
documentation in the record which specifies exactly what the total
payoff of the mortgage is or the dollar value of the monthly
payments that were divided equally between the parties, common
sense tells us that both amounts are fixed as are the interest
rate,
term
of
the
mortgage,
etc.
.
.
.
Where,
as
here,
“maintenance is in a fixed and determinable amount to be paid
either in a lump sum or is for a specific amount to be paid over a
definite term, unless the power to do so is expressly reserved by
the court,” it has the finality of a judgment and is not subject to
modification on the basis of a change in circumstances.8
As observed in John v. John, Dame v. Dame “unequivocally
holds, noting the purposes of KRS 403.110 and particularly the need
for finality between divorcing parties, that lump-sum maintenance
awards, paid in one installment or many installments, are not
subject to modification.”9
modify
an
award
of
To permit the circuit court to amend or
maintenance
that
is
not
open-ended
would
frustrate the purposes of KRS 403.110 and “do nothing toward
finalizing distasteful litigation.”10
However, our analysis does
not end there.
According to KRS 403.250(2): “Unless otherwise agreed in
writing or expressly provided in the decree, the obligation to pay
8
Dame v. Dame, Ky., 628 S.W.2d 625, 627 (1982). Under Ky.
Rev. Stat. 403.250(1), the provisions of a decree respecting
maintenance “may be modified only upon a showing of changed
circumstances so substantial and continuing as to make the terms
unconscionable.”
9
John, supra, n. 5, at 375.
10
Dame, supra, n. 8, at 627.
-8-
future maintenance is terminated upon the death of either party or
the remarriage of the party receiving maintenance.”
Court
found
that
“[t]he
word
‘expressly’
refers,
In John, this
not
to
the
parties’ agreement, but to a court’s decree,” rejecting the notion
that a property settlement agreement voluntarily entered into
between divorcing parties must expressly provide for continuation
of
maintenance
upon
the
remarriage
of
the
spouse
receiving
maintenance or the obligation terminates automatically.11
In so doing, we emphasized that parties “are allowed to
reach their own agreements concerning all issues regarding their
marital affairs,” and the terms are binding except those providing
for the custody, support and visitation of children, subject only
to the court’s scrutiny for conscionability.12
Contracts entered
into by divorcing parties are as binding and enforceable as any
other contract under KRS 403.180(5).13
add
terms
or
conditions
not
set
Courts are not permitted to
forth
in
the
agreement.14
Accordingly, if any contractual obligation is conditioned on the
other party’s forbearance of the exercise of a particular act or
right, i.e., remarrying, such stipulation must be clearly set forth
in the agreement to be enforceable.15
As with the agreement interpreted in John, the one at
issue here was meant to encompass the parties’ entire understanding
11
Id.
12
Id.
13
Id.
14
Id.
15
Id.
-9-
which they clarified as follows: “The parties desire to settle all
issues
related
to
the
dissolution
of
their
marriage,
.
.
.
irrespective of whether or not a decree dissolving their marriage
is entered.”
John is distinguishable factually, however, in that
the contract provided for termination of the installment payments
only upon the wife’s death; no condition of any kind was imposed in
the parties’ agreement here.
In both cases, the contract, i.e.,
“entire understanding,” of the parties did not contemplate, either
expressly or by implication, that the wife’s remarriage would have
any bearing on her right to receive the total maintenance sum,
payable in installments.16
It is rarely appropriate for a court to order lump-sum
maintenance as the court must award a sum sufficient to sustain the
spouse at the standard of living obtained during the marriage.17
Given the criteria that must be met to establish the requisite need
warranting a maintenance award, it would also be unusual for
maintenance to be awarded upon the death of either party or the
receiving spouse’s remarriage, as indicated by KRS 403.250(2).18
Since there is a public policy that one should not have to provide
financial support for a former spouse who has remarried, a trial
court must expressly state its inclination to so provide in the
decree.19
16
Id.
17
Id. at 376.
18
Id.
19
Id.
-10-
As reiterated in John, parties can agree to terms that a
court could not otherwise impose.20
Noticeably lacking from the
agreement in question is any reference to a condition which would
excuse
compliance
with
the
directive
regarding
maintenance.
However, the statute does not mandate that agreements “expressly”
address the issue of death or remarriage.
“Unlike a decree, it
really makes no difference whether an agreement denominates an
obligation as payment of property or maintenance.
If it is a fixed
sum, it is vested and subject only to the contingencies expressed
or which can be gleaned from the language of the contract itself.”21
Consistent
with
maintenance
obligation
Cynthia’s
the
remarriage
above
was
as
reasoning,
vested
their
and
Gregory’s
was
agreement
not
lump-sum
terminated
contained
no
by
such
contingencies.
However,
determination.
the
circuit
court
went
beyond
that
In finding that Cynthia’s remarriage terminated
Gregory’s maintenance obligation, the court implicitly interpreted
the parties’ language concerning Cynthia’s options in the event
that Gregory defaulted, i.e., “the case may be reopened” and
maintenance can be assessed against Gregory, as providing an
exclusive remedy despite the parties’ use of the permissive term
“may.”
Such an interpretation is inconsistent with the overall
tone of the agreement as it enables Gregory to unilaterally convert
the
agreed
upon
lump-sum
obligation
which
is
not
subject
to
modification into a periodic one, thereby triggering KRS 403.250(2)
20
Id.
21
Id.
-11-
and relieving him of his responsibility.
Given the parties’
treatment of the issue throughout the agreement, that result is
illogical as it serves to render the related terms of their
agreement meaningless.
The provisions of an agreement must be construed in the
context of the agreement in its entirety rather than in isolation,
giving effect to the parties’ intent.
As with virtually any
contract, either party is entitled to seek specific enforcement of
the negotiated agreement. That is precisely what Cynthia has opted
to do here, in lieu of the alternate remedy.
With respect to
default, the parties agreed that “. . . in the event either party
defaults in or breaches any of his or her respective obligations
and duties as contained in this agreement,”
the non-defaulting
party may recover, “in addition to such other damages as any court
may award, all of his or her attorney’s fees, court costs, and
other related expenses incurred to enforce the provisions contained
herein against the defaulting party.”
Although
clarity,
addressing
the
the
agreement
parties
each
of
at
negotiated
the
conscionable by the court.
relevant
issue
is
binding
issues
not
terms,
in
a
a
model
of
ultimately
manner
deemed
Applying the foregoing principles of
interpretation and governing law to the facts presented, the
necessary conclusion is that Gregory’s unequivocal assumption of
one-half of the mortgage indebtedness, a liquidated amount, can
only be characterized as a lump-sum maintenance obligation which,
by its very nature cannot be modified, let alone terminated.
-12-
In
Cynthia’s
finding
sole
403.250(2)
that
avenue
would
of
operate
the
parties’
relief
to
and,
stipulated
by
discharge
remedy
extension
Gregory’s
that
was
KRS
maintenance
obligation, the court erred.
Accordingly, its order is reversed
and
to
this
case
is
remanded
McCracken
Circuit
Court
with
directions to find Gregory in default and to require him to fulfill
his
obligation
consistent
with
the
terms
of
the
settlement
agreement as incorporated in the decree dissolving his marriage to
Cynthia.
In addition, the court shall award Cynthia court costs,
attorney’s fees and any other expenses incurred in enforcing the
provision at issue here.
As
Cynthia’s
remarriage
did
not
terminate
Gregory’s
maintenance obligation, that portion of the order denying his
request for reimbursement of the payments he made in the interim is
affirmed.
BARBER, Judge, CONCURS.
MILLER, Judge, DISSENTS.
MILLER, Judge, DISSENTING: I would affirm the circuit
court on both appeal and cross-appeal.
As to the appeal, I agree that Greg’s obligation to make
one-half the mortgage payment constitutes maintenance. I am of the
opinion, however, the obligation does not constitute a lump sum
maintenance award.
I believe Dame v. Dame, Ky., 628 S.W.2d 625
(1982), holding that a fixed amount to be paid over a definite
period of time is not subject to modification, is inapposite.
-13-
BRIEF FOR APPELLANT/CROSSAPPELLEE:
BRIEF FOR APPELLEE/CROSSAPPELLANT:
John T. Reed
Paducah, Kentucky
Charles W. Brien
PRINCE & BRIEN, PSC
Benton, Kentucky
-14-
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