Kellner v. Kellner

Kellner v. Kellner (2003-190); 176 Vt. 571; 844 A.2d 743

2004 VT 1

[Filed 05-Jan-2004]

                                 ENTRY ORDER

                                  2004 VT 1

                      SUPREME COURT DOCKET NO. 2003-190

                             OCTOBER TERM, 2003

  Jeanne R. Kellner	               }	APPEALED FROM:
                                       }
                                       }
       v.	                       }	Chittenden Family Court
                                       }	
  Charles Kellner	               }
                                       }	DOCKET NO. F 96-2-96 CnDm

                                                Trial Judge: Linda Levitt

             In the above-entitled cause, the Clerk will enter:

       ¶  1.  Plaintiff appeals the denial of her motion to enforce the terms
  of a stipulated Amended Final Order for property settlement and child
  support.  The order sets a schedule for property settlement and child
  support payments and includes an avoidable late fee provision triggered by
  defendant's failure to pay within the timetables and grace periods
  established by the order.  The family court refused to enforce the late fee
  provisions contained in its own order.  We reverse without reviewing the
  grounds of the family court's decision because the doctrine of res judicata
  precludes defendant from collaterally attacking the validity of the order. 
  We reverse and remand for enforcement of the order.

       ¶  2.  The parties were divorced by the family court's Final Order
  and Decree of Divorce in December 1996.  The relevant provisions of that
  order require defendant to pay child support and spousal maintenance
  beginning in December 1996, and a total of $143,600 in property settlement
  over a six year period that commenced December 1, 1998.  Interest on
  arrearages ran at six percent annually for the first three years, and seven
  percent thereafter.

       ¶  3.   In April 1998, plaintiff filed the first of two Motions for
  Contempt and Judgment against defendant because of his repeated failure to
  timely pay spousal maintenance and child support.  Defendant had
  established a pattern of making payments more than a month after they were
  due, and plaintiff claimed that defendant's tardiness caused her financial
  difficulties.  The record does not indicate how the first motion was
  resolved, but by March 1999 plaintiff was again forced to move for contempt
  and judgment, this time because of nonpayment.  Plaintiff's motion detailed
  defendant's failure to make any of the property settlement payments. 
  Defendant had also stopped making child support and spousal maintenance
  payments.
   
       ¶  4.  While the second contempt  motion was pending, the parties
  reached a new agreement and stipulated to an amended order.  The Chittenden
  Family Court incorporated this stipulation into its Amended Final Order on
  June 6, 1999.  The amended order established a schedule for the payment of
  the property settlement balance - all of which was still owing and part of
  which was in arrears at the time - plus interest.  In an attempt to secure
  compliance with this timetable, and avoid future contempt issues with
  regard to maintenance and child support, the amended order provided for the
  assessment of late fees.  For all late payments, defendant would be charged
  a fee calculated at eight percent of the monthly sum owed - both principal
  and interest.  The fees are capped at $11,100 over the life of the
  agreement.  Defendant could avoid the late fees by on-time payment. If
  defendant successfully made all the required payments within thirty days of
  their due dates, the amended order provided that plaintiff would forgive
  the last four property settlement payments for a possible total of $11,100.

       ¶  5.  Defendant subsequently failed to make several of the
  scheduled payments.  Plaintiff moved to enforce the terms of the Amended
  Final Order, seeking the missing payments, late fees, and attorney's fees. 
  Defendant responded with a motion to strike the late fee provision arguing
  that it was usurious.  In a subsequent ruling, the same judge who had
  signed the Amended Final Order that plaintiff is currently trying to
  enforce denied plaintiff's motion.  The judge ruled that the late fee
  provision was inapplicable to child support payments because there is
  already a separate statutory scheme for enforcing child support orders. 
  With respect to the property settlement, the judge ruled that the state's
  lending laws, 9 V.S.A. §§ 41a, 42, 44, barred the late fees that the court
  termed as "unreasonable, if not unconscionable."  This appeal followed.

       ¶  6.  We conclude that the doctrine of res judicata precluded the
  family court from refusing to enforce the Amended Final Order.  In so
  doing, we reaffirm the principles recently articulated in Johnston v.
  Wilkins, 2003 VT 56, 830 A.2d 695, a case that we decided after the family
  court's decision in the instant case.  In Johnston, the parties settled a
  commercial dispute by stipulating to a settlement that the trial court
  incorporated into its final dispositive order.  The stipulation and order
  contained a non-competition agreement that Johnston sued to enforce when it
  appeared that Wilkins was violating the agreement.  The trial court
  re-examined the noncompetition covenant and determined that it was not
  commercially reasonable.  This Court reversed without reviewing the trial
  court's decision as to commercial reasonableness, holding that a stipulated
  settlement that is reduced to an unappealed final judgment can only be
  disturbed pursuant to the procedure and criteria set forth in V.R.C.P.
  60(b).   Johnston 2003 VT 56, at  8.

       ¶  7.  Defendant's argument against the application of the late fee
  provision amounts to an improper collateral attack on the order.  Defendant
  did not directly appeal the Amended Final Order at the time it was issued
  because he voluntarily agreed to the provision he now argues is usurious
  and barred by statute.  He stipulated, with the aid of counsel, to the
  Amended Final Order that added the late fee provision so as to resolve
  contempt motions pending against him because of his ongoing failure to make
  payments required by the original divorce order.  Furthermore, defendant,
  like the defendant in Wilkins, did not move for relief from the judgment
  under V.R.C.P. 60(b).  He did not voice any opposition to the judgment
  until plaintiff moved to enforce it against him in response to his admitted
  failure to abide by its terms.

       ¶  8.  "Res judicata bars litigation of a claim or defense if there
  exists a final judgment in former litigation in which the parties, subject
  matter, and causes of action are identical or substantially identical." 
  Lamb v. Geovjian, 165 Vt. 375, 379-80, 683 A.2d 731, 734 (1996) (internal
  quotations and citations omitted).  Res judicata bars parties from
  litigating claims that were raised in previous adjudicative proceedings as
  well as those that should have been raised.  Id. at 380, 683 A.2d  at 734.  
        
       ¶  9.  The stipulation at issue here was incorporated into a final
  order.  The parties are identical.  The subject matter -  securing timely
  payment of the sums owed pursuant to the original final order - was central
  to the litigation of the contempt motions that the stipulated amended order
  resolved.  Defendant argues that res judicata is improper here because
  plaintiff initiated the motion that led to the family court order now on
  appeal.  This argument is unavailing because res judicata applies equally
  to claims and defenses.  The family court order on review is based entirely
  on defenses that defendant argued below.  

       ¶  10.  " 'The doctrine of res judicata serves vital public interests
  beyond any individual judge's ad hoc determination of the equities in a
  particular case.' " Id. at 382, 683 A.2d  at 736 (quoting Federated Dep't
  Stores, Inc. v. Moitie, 452 U.S. 394, 401 (1981)).  Stipulated settlements
  are commonplace in Vermont courts.  They save the judicial system valuable
  time and money by freeing trial judges to focus on those disputes that
  litigants are unable to resolve themselves.  They also permit litigants
  greater control over the disposition of their cases because they represent
  the result of the bargaining process.  See Damone v. Damone, 172 Vt. 504,
  511, 782 A.2d 1208, 1214 (2001).  Allowing collateral attacks like
  defendant's will deter litigants from employing such stipulated orders out
  of fear that they will not be given the preclusive effect of judgments
  drafted exclusively by the trial court.  Furthermore, litigants could
  settle cases in bad faith with the knowledge that they could wait to deploy
  any legal arguments against the settlement until such time as the other
  party attempts to enforce its terms. 

       ¶  11.  The doctrine's purpose is to deliver finality and repose -
  the very things that plaintiff thought she was securing when she stipulated
  to the late fee provision in exchange for her agreement to drop the
  contempt and judgment motion.  Res judicata required defendant to bring
  forth all of his objections to the order before it became final, and if
  necessary, to renew them immediately on direct appeal.

       ¶  12.    Finality and repose sometimes must yield to the interests
  of justice, however.  We have consistently stated that aside from direct
  appeals to this court, V.R.C.P. 60(b) is the exclusive avenue for relief
  from judgments in family court.  See Trahan v. Trahan, 2003 VT 100, at  11,
  14 Vt. L. Wk. 335  (mem.); Tudhope v. Riehle, 167 Vt. 174, 177, 704 A.2d 767, 7XX (1997).  Assuming arguendo that the family court had treated
  defendant's opposition to the enforcement motion as a motion under Rule
  60(b), relief still would have been inappropriate.  The first five
  provisions of V.R.C.P. 60(b) are inapplicable as defendant has not raised
  any of the grounds enumerated therein.  Instead, defendant's argument that
  the late fee provisions are barred by statute and are, therefore,
  unconscionable would find refuge only under V.R.C.P. 60(b)(6).  Rule
  60(b)(6) is a catch-all provision that allows courts to grant relief to a
  party from a final judgment for any other reason than those set forth in
  other sections of the rule, so long as the request for relief is made
  within a reasonable time.  V.R.C.P. 60(b)(6).  "Rule 60(b)(6) may not
  substitute for a timely appeal or provide relief from an ill-advised
  tactical decision or from some other free, calculated, and deliberate
  choice of a party."  Riehle v. Tudhope, 171 Vt. 626, 627, 765 A.2d 885, 887
  (2000)(mem.); see also Richwagen v. Richwagen, 153 Vt. 1, 4, 568 A.2d 419,
  421 (1989) (rule provides no relief from "tactical decisions which in
  retrospect seem ill-advised").  
   
       ¶  13.  The stipulation entered into by the parties here, and
  subsequently incorporated into the court's amended final order, represents
  the essence of a calculated tactical decision.  Defendant was facing a
  second contempt and judgment motion for nonpayment at the time.  He
  apparently concluded that it was to his advantage to resolve the contempt
  issue by settling for a new payment schedule with the possibility of
  additional fees for late payment.  In return, plaintiff agreed to drop the
  contempt and judgment motions and add a  provision to the order that would
  have freed defendant (if he faithfully made payments) from having to pay up
  to $11,100 in property settlement that he otherwise would have owed under
  the previous order.  This is not a case where defendant acted under duress,
  and there is no suggestion that there was anything improper about the
  bargaining process that yielded the stipulation.  See, e.g., Putnam v.
  Putnam, 166 Vt. 108, 115, 689 A.2d 446, 450 (1996) (judgment reopened in
  case where wife stipulated to separation agreement because she feared
  physical abuse from husband, thus "normal boundaries of negotiation and
  compromise were exceeded"). 

       ¶  14.   Rule 60(b)(6) also requires the party seeking relief to
  bring the motion within a reasonable amount of time from judgment.  In this
  case, defendant waited more than three years before raising the late fee
  issues.  The Amended Final Order is dated June 6, 1999; the memorandum of
  law where defendant first raises the issue in court is dated March 5, 2003. 
  When a party has delayed so long in seeking relief under V.R.C.P. 60(b)(6),
  that party bears the burden of showing that extraordinary circumstances
  caused that delay.  Riehle, 171 Vt. at 629-30, 765 A.2d  at 889. 
  Defendant's arguments, and the trial court's conclusions, that the late
  fees are barred by statute do not rest on changes to the statutes that
  occurred subsequent to the Amended Final Order.  As far as we can discern,
  defendant could have made the same arguments against the late fees in 1999,
  but he chose not to.  Defendant must live with his choices.  

       Reversed and remanded for enforcement of the Chittenden Family Court's
  Amended Final Order dated June 6, 1999.


                                       BY THE COURT:



                                       _______________________________________
                                       Jeffrey L. Amestoy, Chief Justice

                                       _______________________________________
                                       John A. Dooley, Associate Justice

                                       _______________________________________
                                       Denise R. Johnson, Associate Justice

                                       _______________________________________
                                       Marilyn S. Skoglund, Associate Justice

                                       _______________________________________
                                       Paul L. Reiber, Associate Justice