ZULA BEWLEY COWLES v. BILL COWLES
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RENDERED: OCTOBER 5, 2007; 10:00 A.M.
NOT TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2006-CA-001832-MR
ZULA BEWLEY COWLES
v.
APPELLANT
APPEAL FROM WARREN CIRCUIT COURT
HONORABLE MARGARET RYAN HUDDLESTON, JUDGE
ACTION NO. 04-CI-01421
BILL COWLES
APPELLEE
OPINION
AFFIRMING
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BEFORE: DIXON AND VANMETER, JUDGES; GRAVES,1 SENIOR JUDGE.
DIXON, JUDGE: Appellant, Zula Bewley Cowles, appeals from a judgment of the
Warren Circuit Court setting aside a settlement agreement and dividing marital property
in this dissolution action. Finding no error, we affirm.
Zula and Bill Cowles were married on August 18, 1956. The parties'
marriage was dissolved by a decree entered in the Warren Circuit Court on February 14,
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Senior Judge J. William Graves sitting as Special Judge by assignment of the Chief Justice
pursuant to Section 110(5)(b) of the Kentucky Constitution and Kentucky Revised Statutes
(KRS) 21.580.
2005. The parties thereafter participated in a mediation on April 7, 2005, wherein a
settlement agreement was reached. On June 3, 2005, Bill filed a motion to set aside the
settlement agreement. However, health problems prevented him from attending several
scheduled hearings on the motion and on July 26, 2005, the trial court ordered the
enforcement of the agreement.
On July 28, 2005, Bill filed a motion to alter, amend or vacate the trial
court's order on the grounds that the settlement agreement was unconscionable. During a
hearing conducted on August 17, 2005, Bill testified that he had been in poor health for
some time and, as a result, was unable to attend the scheduled court dates. Further, he
claimed that although he was present at the mediation session, he was quite sick and
unable to meaningfully participate or appreciate the consequences of the agreement
reached therein. Bill's daughter, Yvonne Cowles, also testified to his health problems.
On November 30, 2005, the trial court ordered that its previous order and
judgment regarding the settlement agreement be held in abeyance until the parties could
be heard regarding the conscionability of the agreement. A hearing was thereafter held in
January 2006, after which the trial court declared the agreement unconscionable. The
trial court noted,
The Petitioner argues that the settlement agreement reached
by the parties during mediation should be set aside because he
was ill the day of the mediation and was, therefore, unable to
appreciate the consequences of his actions. KRS 403.180(2)
provides in relevant part:
[t]he terms of [a] separation agreement . . . are
binding upon the court unless it finds, after
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considering the economic circumstances of the
parties and any other relevant evidence
produced by the parties, . . . that the separation
agreement is unconscionable.
It is proper for a trial court to refuse to confirm a separation
agreement where it was not made freely, voluntarily, or with
an appreciation by the party of their rights. Peagram v.
Peagram, 219 S.W.2d 772 (Ky. 1949).
The Petitioner is seventy-six years of age and his health is
failing. He testified that he only signed the settlement
agreement on the day of the mediation because he was not
well the day the mediation took place, and after five
continuous hours of trying to reach an agreement, his
overriding concern was going home. The Court finds that the
Petitioner did not enter into the settlement freely or with an
appreciation of his rights. Therefore, the Court finds that the
parties' settlement agreement entered into on April 7, 2005, is
unconscionable and should not be enforced.
The trial court thereafter restored the parties' nonmarital property and divided the marital
property. It is from that judgment that Zula appeals.
Zula first argues that the trial court's decision to set aside the property
agreement as unconscionable was not supported by the evidence and was an abuse of
discretion. We disagree.
“Unconscionable” is defined as “manifestly unfair or inequitable.”
Shraberg v. Shraberg, 939 S.W.2d 330, 333 (Ky. 1997); Wilhoit v. Wilhoit, 506 S.W.2d
511, 513 (Ky. 1974). A finding of unconscionability requires only a “showing of
fundamental unfairness as determined 'after considering the economic circumstances of
the parties and any other relevant evidence.' KRS § 403.180(2).” Bratcher v. Bratcher,
26 S.W.3d 797, 799 (Ky.App. 2000). This Court has held that under the totality of the
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circumstances, “the trial judge is in the best position to determine whether a particular
settlement agreement is manifestly unfair or inequitable.” Shraberg, supra, at 335. And
a trial court's finding on the issue of conscionability “should not be set aside on appeal
unless there is some evidence of fraud, undue influence, overreaching, or evidence of a
change in circumstances since the execution of the original agreement.” Peterson v.
Peterson, 583 S.W.2d 707, 712 (Ky.App. 1979).
In the instant matter, Bill testified that he was not well on the day of the
mediation, and only signed the settlement agreement after five continuous hours of
discussion because his primary concern was going home. In fact, his health prevented
him from attending the hearings scheduled on his motion to set aside the settlement
agreement. Bill's daughter confirmed that her father was in poor health, and was
confronted with the possibility of losing sight in one of his eyes. Yvonne testified that on
the day of mediation, her father was suffering from fluctuating blood pressure, primarily
caused by the stress of the proceedings. Further, Bill introduced a note from Dr. Stuart
Yeoman, detailing Bill's inability to participate in the July 15, 2005, hearing because of
his illness.
A trial court is not prohibited from considering factors such as the mental
distress of a party to a separation agreement, or the emotional state of the complaining
party when determining whether a separation agreement should be held unconscionable.
McGowan v. McGowan, 663 S.W.2d 219 (Ky.App. 1983); Shraberg, supra, at 333
(citing Clark v. Clark, 192 S.W.2d 968, 970 (Ky. 1946)). A determination that a
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separation agreement was “not made freely or voluntarily or with an appreciation of [a
party's] rights” substantiates a showing of fundamental unfairness, and would sustain a
finding of unconscionablilty. Peagram v. Peagram, 219 S.W.2d 772, 775 (Ky. 1949).
We conclude that the trial court was well within its discretion in determining that Bill's
medical condition on the day of the mediation rendered the resulting settlement
agreement unconscionable.
Zula next argues that the trial court erred in ruling that a 40-acre tract of
land was Bill's nonmarital property. The record establishes that Bill purchased the 40
acres in 1950, prior to his marriage to Zula. According to the terms of the note, Bill was
to have paid the mortgage in full by 1953. However, the note bore a stamp indicating
that it was not paid until December 17, 1956, after the parties' August 1956 wedding.
Nevertheless, the trial court held,
The Petitioner testified that he paid the debt associated with
the 40-acres in 1953 and then borrowed additional money
from the bank to purchase farm equipment. It appears that
rather than release the Petitioner from the note associated
with the purchase of the land, the bank retained the note and
loaned the Petitioner additional monies. Therefore, the Court
finds that the Petitioner purchased the 40 acres in question in
1950 and owned said real estate free of any mortgage in 1953.
Hence, the Court finds that these 40 acres are the Petitioner's
nonmarital property, as the parties were not married until
August 15, 1956.
Thus, the trial court restored the 40 acres to Bill as his nonmarital property.
KRS 403.190 provides, in pertinent part,
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2) For the purpose of this chapter, "marital property" means
all property acquired by either spouse subsequent to the
marriage except:
(a) Property acquired by gift, bequest, devise, or descent
during the marriage and the income derived therefrom unless
there are significant activities of either spouse which
contributed to the increase in value of said property and the
income earned therefrom;
(b) Property acquired in exchange for property acquired
before the marriage or in exchange for property acquired by
gift, bequest, devise, or descent;
(c) Property acquired by a spouse after a decree of legal
separation;
(d) Property excluded by valid agreement of the parties; and
(e) The increase in value of property acquired before the
marriage to the extent that such increase did not result from
the efforts of the parties during marriage.
(3) All property acquired by either spouse after the marriage
and before a decree of legal separation is presumed to be
marital property, regardless of whether title is held
individually or by the spouses in some form of co-ownership
such as joint tenancy, tenancy in common, tenancy by the
entirety, and community property. The presumption of
marital property is overcome by a showing that the property
was acquired by a method listed in subsection (2) of this
section.
In a dissolution proceeding, a party claiming property acquired after
marriage as his/her nonmarital property bears the burden of overcoming the presumption
found in KRS 403.190(3). Hunter v. Hunter, 127 S.W.3d 656 (Ky.App. 2003). Further,
property acquired prior to the marriage retains its non-marital character even if marital
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funds are used to enhance value of that property. Overstreet v. Overstreet, 144 S.W.3d
834 (Ky.App. 2003).
The trial court herein engaged in a detailed and thorough analysis of
standard by which a party can rebut the presumption found in KRS 403.190(3).
However, it concluded that Bill produced sufficient evidence to prove that the property in
question was paid in full prior to the parties' marriage. As the property was not acquired
“subsequent to the marriage,” there is no need to engage in an analysis under KRS
403.190(2). Clearly, the 40 acres in question was nonmarital property.
In reviewing issues in an action for dissolution of marriage, we must defer
to the considerable discretion of the trial court unless it has committed clear error or has
abused that discretion. Herron v. Herron, 573 S.W.2d 342, 344 (Ky. 1978). The trial
court as finder of fact is in the best position to determine the credibility of the witnesses
and to resolve conflicting evidence. Janakakis-Kostun v. Janakakis, 6 S.W.3d 843, 852
(1999). An appellate court “cannot disturb the findings of a trial court in a case involving
dissolution of marriage unless those findings are clearly erroneous.” Cochran v. Cochran,
746 S.W.2d 568, 569-70 (Ky.App.1988). We conclude that the trial court herein did not
abuse its discretion.
The decision of the Warren Circuit Court is affirmed.
ALL CONCUR.
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BRIEF FOR APPELLANT:
BRIEF FOR APPELLEE:
Steven O. Thornton
Bowling Green, Kentucky
Matthew J. Baker
Bowling Green, Kentucky
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