LAURI A NEILL V RAYMOND E SCHMOKE MD
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STATE OF MICHIGAN
COURT OF APPEALS
LAURI A. NEILL, f/k/a LAURI A. SCHMOKE,
UNPUBLISHED
April 7, 2011
Plaintiff-Appellant,
v
No. 294878
Manistee Circuit Court
LC No. 02-011013-DM
RAYMOND E. SCHMOKE, M.D.,
Defendant-Appellee.
Before: FITZGERALD, P.J., and O’CONNELL and METER, JJ.
PER CURIAM.
Plaintiff appeals as of right from an order that denied, in part, her motion to enforce
judgment and granted, in part, defendant’s motion for relief from judgment. This appeal stems
from a provision in the parties’ consent judgment of divorce that provided for defendant to pay
plaintiff $1,074,000 in exchange for her share of the parties’ marital residence. We reverse and
remand.
We review a trial court’s decision to grant or reject relief from judgment for an abuse of
discretion. Fisher v Belcher, 269 Mich App 247, 262; 713 NW2d 6 (2005). An abuse of
discretion occurs when a trial court selects an outcome that lies outside the range of reasonable
and principled outcomes. Maldonado v Ford Motor Co, 476 Mich 372, 388; 719 NW2d 809
(2006). The interpretation of divorce judgments and court rules are questions of law, which are
subject to de novo review. Holmes v Holmes, 281 Mich App 575, 587; 760 NW2d 300 (2008);
Henry v Dow Chem Co, 484 Mich 483, 495; 772 NW2d 301 (2009).
The relevant provision from the judgment of divorce provided:
IS FURTHER ORDERED AND ADJUDGED that Defendant shall pay to
Plaintiff the sum of [$1,074,000] upon the sale of the marital premises or within
five years of the entry of the judgment whichever occurs earlier, and said sum
shall be considered a money judgment fully executable thereon after five years
from the entry of this judgment. Upon sale of the property, all outstanding
amounts owed for spousal support and the buy-out of Defendant’s practice shall
be fully satisfied from the proceeds of the sale. If Defendant receives an offer to
purchase the home for less than $3.2 million, then he may approach Plaintiff
suggesting a lesser cash sum, and Plaintiff intends to remain open to the
possibility of less, especially if the property sells quickly. [Emphasis in original.]
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The marital residence did not sell, and after five years, a money judgment was entered in
favor of plaintiff for the amount above.1 Defendant subsequently moved for relief from
judgment, essentially attacking the above provision of the judgment of divorce. Defendant relied
on contractual defenses—frustration of purpose and impossibility—to support his position. The
trial court accepted the issue as framed by defendant and granted his motion on the grounds
asserted by defendant.
However, once a provision in a judgment of divorce is reduced to a money judgment, the
money judgment is fixed and not subject to modification. See McMath v McMath, 174 Mich
App 576, 586; 436 NW2d 425 (1989), and Corley v Corley, 79 Mich App 499, 501-502; 261
NW2d 65 (1977). The trial court failed to analyze defendant’s motion under the appropriate
court rule with respect to the $1,074,000 money judgment, instead concentrating its analysis on
whether relief should be granted from a provision in the judgment of divorce. This was
erroneous because plaintiff sought to enforce the money judgment and, regardless of defendant’s
arguments, defendant sought relief from that money judgment. Thus, the trial court abused its
discretion by granting defendant’s motion from relief from the $1,074,000 money judgment;
indeed, it considered the wrong judgment and misapplied the relevant law. Bynum v ESAB
Group, Inc, 467 Mich 280, 283; 651 NW2d 383 (2002) (“[w]here the trial court misapprehends
the law to be applied, an abuse of discretion occurs”). The money judgment, unlike the consent
judgment of divorce, was not a contract and was not subject to the contractual defenses on which
the trial court relied to grant relief.
Moreover, on this record, we conclude that defendant was not entitled to relief as a matter
of law from the money judgment on any of the grounds specified in MCR 2.612(C)(1). A trial
court may relieve a party from a final judgment “[o]n motion and on just terms,” on the
following grounds:
(a) Mistake, inadvertence, surprise, or excusable neglect.
(b) Newly discovered evidence which by due diligence could not
have been discovered in time to move for a new trial under MCR
2.611(B).
(c) Fraud (intrinsic or extrinsic), misrepresentation, or other
misconduct of an adverse party.
(d) The judgment is void.
(e) The judgment has been satisfied, released, or discharged; a
prior judgment on which it is based has been reversed or otherwise
1
A $125,000 money judgment was also entered in favor of plaintiff at that time for her share of
defendant’s medical practice.
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vacated; or it is no longer equitable that the judgment should have
prospective application.
(f) Any other reason justifying relief from the operation of the
judgment. [MCR 2.612(C)(1).]
The record does not reveal that relief was warranted on grounds of mistake, inadvertence,
surprise, or excusable neglect, because the plain language of the consent judgment of divorce
made clear that the parties intended for the sum owed to plaintiff to become a money judgment
after five years. MCR 2.612(C)(1)(a). Further, there was no newly discovered evidence
presented and no evidence of fraud, misrepresentation, or other misconduct by plaintiff. MCR
2.612(C)(1)(b) and (c). Additionally, the judgment was not void. MCR 2.612(C)(1)(d).
Moreover, the judgment had not been satisfied, released, or discharged; a previous judgment on
which the money judgment was based had not been reversed or vacated; and money judgments
do not have prospective application. MCR 2.612(C)(1)(e); see Kalamazoo River Study Group v
Rockwell Int’l Corp, 355 F3d 574, 587 (CA 6, 2004). As such, the only remaining ground on
which to grant defendant’s motion would have been MCR 2.612(C)(1)(f).
In order for relief to be granted under MCR 2.612(C)(1)(f), the following
three requirements must be fulfilled: (1) the reason for setting aside the judgment
must not fall under subsections a through e, (2) the substantial rights of the
opposing party must not be detrimentally affected if the judgment is set aside, and
(3) extraordinary circumstances must exist that mandate setting aside the
judgment in order to achieve justice. [Heugel v Heugel, 237 Mich App 471, 478479; 603 NW2d 121 (1999).]
As noted, subsections a through e were inapplicable. With respect to the second element,
it is clear that plaintiff’s substantial rights would be detrimentally affected if the money judgment
were to be set aside. Indeed, the parties entered into a consent judgment of divorce wherein
plaintiff specifically conveyed her interest in the marital residence to defendant. In exchange,
plaintiff was to receive an express sum of money either when that property sold or after five
years, whichever occurred earlier. After the five-year period passed, plaintiff had a fully
executable money judgment. Plaintiff is entitled to receive the benefit of the contract she
negotiated.
The trial court improperly modified the consent judgment of divorce, purportedly to
rebalance the contractual equities struck by the parties. See Rory v Continental Ins Co, 473 Mich
457, 461; 703 NW2d 23 (2005) (“[w]e reiterate that the judiciary is without authority to modify
unambiguous contracts or rebalance the contractual equities struck by the contracting parties
because fundamental principles of contract law preclude such subjective post hoc judicial
determinations of ‘reasonableness’ as a basis upon which courts may refuse to enforce
unambiguous contractual provisions”). This case is somewhat analogous to Zeer v Zeer, 179
Mich App 622, 625; 446 NW2d 328 (1989), wherein we concluded that the opposing party’s
“substantial rights in the excess proceeds on sale of the marital residence were clearly quite
detrimentally affected by [the trial court’s] modification [of a judgment].” The trial court in the
present case gave no regard to whether plaintiff’s substantial rights would be detrimentally
affected if the money judgment were to be set aside. Heugel, 237 Mich App at 478-479. Just as
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in Zeer, 179 Mich App at 625, plaintiff’s substantial rights in the $1,074,000 money judgment,
transmuted from the judgment of divorce by passage of time, were detrimentally affected by the
setting aside of the judgment.
With respect to the third element, the trial court, in discussing the doctrine of frustration
of purpose, suggested that the collapse of the real-estate market in Michigan was an
extraordinary circumstance. However, the consent judgment of divorce provided that the parties
contemplated that the marital residence might not sell quickly, or even after several years, as
evidenced by the inclusion of the five-year limit to sell that property, after which plaintiff’s right
to the $1,074,000 money judgment was to take effect. There is no indication that plaintiff took
advantage of the marital relationship, as in Heugel, 237 Mich App at 481, or engaged in any
other misconduct to obtain the money judgment.2 “Generally, relief is granted under subsection f
only when the judgment was obtained by the improper conduct of the party in whose favor it was
rendered.” Id. at 479; see also Altman v Nelson, 197 Mich App 467, 478; 495 NW2d 826 (1992).
While the real-estate market downturn was unfortunate, it cannot be characterized as
entirely unforeseeable or extraordinary. When parties make a deliberate, strategic decision to
settle, they cannot be relieved from such a decision merely because their assessment of the
consequences was incorrect. United States v Bank of NY, 14 F3d 756, 759 (CA 2, 1994).
Moreover, two equally positioned parties negotiated the provision at issue in the judgment of
divorce, which included a term that transmuted the sum owed to plaintiff into a money judgment
after the passage of time. Absent any misconduct on the part of plaintiff, we are loath to set
aside the money judgment. Marshall v Marshall, 135 Mich App 702, 712; 355 NW2d 661
(1984). We conclude that there was no “extraordinary circumstance” sufficient to allow the
setting aside of the money judgment. Heugel, 237 Mich App at 478-479. Even assuming that
the collapse of the real-estate market was an “extraordinary circumstance,” it was insufficient to
overcome the detrimental effect on plaintiff’s substantial rights that would result by setting aside
the money judgment. See id.
We note that there are public-policy considerations that favor the finality of judgments.
See Wayne Creamery v Suyak, 10 Mich App 41, 51; 158 NW2d 825 (1968). After analyzing the
applicable facts and law, we find that the trial court abused its discretion by granting defendant’s
motion.
Although not strictly necessary for our disposition of this appeal, we also note that the
trial court misapplied the doctrines of frustration of purpose and impossibility. Because the
2
Further, we note that the marital residence was lost in foreclosure after defendant stopped
making mortgage payments in 2008. The trial court found that this occurred because defendant
was forced to take out a mortgage with unfavorable terms. However, it must be noted that
defendant voluntarily increased his total debt at various points and purposefully took on various
additional expenses.
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money judgment was not executory and the decline of the real-estate market was not
unforeseeable, the doctrine of frustration of purpose did not apply. See Liggett Restaurant
Group, Inc v City of Pontiac, 260 Mich App 127, 134-135; 676 NW2d 633 (2003). With respect
to the doctrine of impossibility, the trial court opined that defendant’s age of 57 necessarily
precluded him from satisfying plaintiff’s $1,074,000 money judgment. However, even though
defendant was entering the later stages of his career as a physician, he earned more than
$290,000 each year from 2006 to 2008. Moreover, he has a substantial sum in a retirement
account. “Subsequent events which in the nature of things do not render performance
impossible, but only render it more difficult, burdensome, or expensive, will not operate to
relieve the contractor.” Chase v Clinton Co, 241 Mich 478, 484; 217 NW 565 (1928). There
was no indication that defendant’s earning potential would be reduced in the near future, other
than by his desire to retire. The trial court erroneously used the doctrine of impossibility as a
justification to grant defendant’s motion. Id.
We reverse and remand for proceedings consistent with this opinion. We do not retain
jurisdiction.
/s/ E. Thomas Fitzgerald
/s/ Peter D. O’Connell
/s/ Patrick M. Meter
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