Opinion
NO. 2011-CA-001521-MR
10-05-2012
ROBERT L. DALLAS APPELLANT v. MICHELLE HENRY APPELLEE
BRIEF FOR APPELLANT: Bryan Gowin Louisville, Kentucky BRIEF FOR APPELLEE: Earl C. Mullins, Jr. Louisville, Kentucky
NOT TO BE PUBLISHED
APPEAL FROM JEFFERSON FAMILY COURT
HONORABLE PAULA SHERLOCK, JUDGE
ACTION NO. 94-FP-002421
OPINION
REVERSING AND REMANDING
BEFORE: CAPERTON, LAMBERT, AND MOORE; JUDGES. LAMBERT, JUDGE: Robert Dallas has appealed from the order of the Jefferson Family Court finding an outstanding balance of $36,637.94 on a 1995 child support arrearage judgment. The original amount of the arrearage was $15,828.94. We have considered the record, including the hearings the court conducted, and we hold, based upon the doctrine of laches, that the family court abused its discretion in awarding this sum. Hence, we reverse the family court's order.
Robert Dallas and Michelle Henry, who never married, have one child in common: Peter Joseph Michel, born December 4, 1990, in Louisville, Kentucky. Michelle continues to live in Kentucky, while Robert currently lives in New Orleans and works as a tug boat captain. The child was emancipated in 2008. In 1994, Michelle filed a complaint against Robert in the Jefferson Circuit Court, Paternity Division, requesting that Robert be declared the child's father and that he be ordered to pay child support and daycare costs retroactively to the date of his birth, health insurance, and for the costs of her pregnancy. In 1995, the new Jefferson Family Court entered a judgment of paternity declaring Robert to be the child's father; ordered Robert to pay child support in the amount of $102.09 per week effective July 5, 1995, through the Jefferson County Attorney, Child Support Division; and ordered Robert to reimburse Michelle the sum of $300.00 for her share of the blood test. A wage assignment order was entered the same day.
Several months later, the family court considered Michelle's motion for arrearages in child support. The court held a hearing on October 20, 1995, and entered an order on October 27, 1995, related to the arrearage amount due. Although Michelle admitted she had rejected all offers of child support from Robert, with the exception of one $60.00 payment, the court determined that Michelle was entitled to child support pursuant to the guidelines beginning January 1, 1991, as well as a proportionate share of the day care expenses from and after July 15, 1994. The court calculated that from 1991 through June 29, 1995, less the $60.00 credit, the arrearage totaled $15,828.94. The court then stated:
This Court finds it equitable to allow the Respondent to pay the sum of $150.00 per month toward the arrearage until said arrearage is paid in full, but notes that Petitioner is entitled to interest at the judgment rate upon the unpaid balance of said judgment from and after the date of this order.
Fourteen years later, on October 18, 2009, Michelle, through the Jefferson County Attorney's Office, filed an affidavit for a writ of non-wage garnishment to obtain funds from an account Robert held at Fifth Third Bank. The affidavit stated that the amount due on the arrearage 1995 judgment was $7,596.48. Robert challenged the non-wage garnishment, stating that he had documentation to establish that he had reduced the arrearage significantly, if not completely, through direct payments to Michelle. He requested that the funds be held in escrow until the matter was decided. The court heard Robert's motion on December 8, 2009, and ordered the funds in the account to be held, and not disbursed, pending a hearing. At the next hearing date of March 9, 2010, the court was notified that the Division of Child Support mistakenly sent Michelle a check; she was to return the check when and if she received it. The assistant county attorney representing Michelle's interests and Robert's attorney indicated that they were working to settle the matter off docket.
The parties were unable to settle their differences by the next court date of June 8, 2010. At that time, the court took proof from the parties regarding the amounts Robert had paid over the years on the arrearage. Robert produced documentation establishing that by the time he stopped making arrearage payments in 2006, he had paid $14,450.00 directly to Michelle on the $15,828.94 arrearage judgment as well as $373.05 through the Division of Child Support for a total of $14,823.05. Michelle did not believe that Robert had paid her the sum he claimed, but she could not dispute the records he provided to the court. It was also established during the hearing that Michelle obtained $4,126.30 through the non-wage garnishment. Michelle wanted to keep the funds from the non-wage garnishment, while Robert offered to split that amount with her to resolve the issue. An additional $2,999.00 in federal and state tax refunds had also been intercepted, which Michelle agreed to and in fact did return. The parties also discussed the issue of interest and a potential statute of limitations problem. At the conclusion of the testimony, the court indicated that the proof was very unclear and that it was unlikely to order interest on a debt that could not be conclusively proven. The parties were again encouraged to reach a compromise due to the difficulty of proof on both sides.
By the next hearing date of July 7, 2010, the County Attorney's Office was no longer representing Michelle's interests because the assistant county attorney and Michelle were in conflict regarding the position Michelle wanted to take. Michelle then retained an attorney, who appeared on her behalf at the next court date on August 3, 2010, and requested a continuance to gather documentation regarding the arrearage and the interest due. Michelle, through her attorney, indicated that she was no longer contesting the payments Robert had claimed he made, but was now seeking the interest she claimed she was owed. Michelle produced calculations showing that the arrearage balance plus accrued interest equaled in excess of $50,000.00, less the payments Robert had made. Robert objected to the continuance, noting that the court had already ruled that no interest would be payable due to lack of proof. The court granted the continuance as a courtesy, but again encouraged the parties to reach a compromise. The court also stated it would review its prior rulings, both on the record and in writing, related to interest.
The court held another hearing on November 30, 2010. At this hearing, the court heard arguments from the attorneys related to the interest issue. While Robert contended that Michelle waived her right to seek additional funds by returning the tax refund, Michelle argued that the 1995 judgment clearly awarded interest and interest was payable pursuant to KRS 360.040. Michelle then presented the court with several schedules adopting and utilizing the payment information Robert had provided. Based upon these calculations and taking into account payments Robert made and credits he received, Michelle claimed that Robert owed her $36,637.94, the majority of which was interest that had accrued over the years. The parties also discussed the court's statement in its June 8, 2010, ruling that interest would not be ordered as the proof was unclear due to the elapse of time. Robert argued that the fair and reasonable solution was to not award this sum of interest, while Michelle argued that the court merely did not have enough information before it in June to decide the issue. The court indicated that it had not obtained the file from archives when it made the ruling in June, but would review the 1995 order as well as the rest of the record before it made a decision.
On December 21, 2010, the court entered an order ruling as follows:
On October 27, 1995, the Jefferson County Family Court Division 2 entered an arrearage judgment against [Robert] on behalf of [Michelle] in the amount of $15,828.94. The Court allowed [Robert] to pay the judgment at a rate of $150.00 per month; however, it was noted in the Court's order that [Michelle] would be entitled to interest on the judgment at the judgment rate which is twelve percent (12%) on the unpaid balance. The parties have stipulated that [Robert] has paid in total $14,823.05 toward the arrearage judgment. However, since the judgment was entered, interest has been accruing at a rate of 12%. Based upon the testimony given and evidence presented as of July 25, 2010 the amount of the judgment plus interest remaining outstanding was $36,637.94. [Robert] contends that [Michelle] waived her right to any outstanding interest payments because she did not contest the return of the state tax intercept of approximately $2,999.00 to [Robert] and she is therefore estopped from requesting future payments. The Court does not find this argument persuasive.
It is clear, that it was the Court's intention that while allowing [Robert] to pay the arrearage judgment at a rate of $150.00 per month that said judgment would accrue interest at a rate of 12%. Therefore, [the] Court finds that [Robert] has an outstanding balance on the judgment in the amount of $36,637.94 as of July 25, 2010. [Robert] shall pay [Michelle] $500.00 per month until the amount is paid in full. The Court declines to order [Robert] to pay interest on the interest owed to [Michelle].
On May 3, 2011, Robert filed a Kentucky Rules of Civil Procedure (CR) 60.02 motion to vacate the court's prior order because it had not been served on counsel for either party. Robert also argued the affirmative defenses of laches, waiver, estoppel, release, and res judicata, and pointed out the court's prior order that no interest was owed. Robert also stated that Michelle's initial non-wage garnishment provided that the total amount she was claiming on the arrearage equaled $7,596.48. Alternatively, Robert requested that the court make the prior order final and appealable. The court made the December 21, 2010, order final and appealable by calendar order entered June 1, 2011. Robert filed a subsequent CR 59.05 motion requesting the court to vacate its orders based upon the same affirmative defenses raised in the earlier motion. Robert also requested a hearing pursuant to CR 59.01. The court denied the CR 59.05 motion on July 27, 2011, and this appeal follows.
On appeal, Robert contends that the family court abused its discretion in holding that he owed Michelle $36,637.94. He argues that Michelle's right to claim in excess of $7,596.48 in child support arrearages was barred by the applicable statute of limitations, as well as by the doctrines of waiver and laches. Michelle disputes each of these arguments in her responsive brief.
Robert's first argument addresses whether Michelle's claim is barred by the applicable statute of limitations. Robert argues that because Michelle did not seek to collect any more than $7,596.48 before the fifteen-year limitations period elapsed, she was restricted from claiming anything more than that amount. Michelle, on the other hand, claims that once she executed on the 1995 judgment by filing the non-wage garnishment during the statutory period, she reset the fifteen-year limitations period.
Robert appropriately cites to Kentucky Revised Statutes (KRS) 413.090(1), which provides for a fifteen-year statute of limitations for "[a]n action upon a judgment or decree of any court of this state or of the United States, or of any state or territory thereof, the period to be computed from the date of the last execution thereon[.]" Robert also cites to Schmidt v. Forehan, 549 S.W.2d 320, 323 (Ky. App. 1977), for the proposition that the limitations period does not begin to run until the child support arrearage or delinquency is reduced to a lump sum payment. Because Michelle did not seek any funds in excess of $7,596.48 before the limitations period ended, he asserts that she was barred from doing so.
We note that the Supreme Court of Kentucky effectively overruled the statement of the law in Stewart v. Raikes, 627 S.W.2d 586, 589 (Ky. 1982), that the additional step of reducing the amount of past due support to a lump sum is necessary before executing may issue: "It appears that over-emphasis is placed on the need to reduce the unpaid child support payments to a lump sum judgment. As a matter of fact, each installment of child support becomes a lump sum judgment, unchangeable by the trial court when it becomes due and is unpaid." See also Bollengier v. Charlet, 141 S.W.3d 14, 16 (Ky. App. 2004).
Michelle cites to Slaughter v. Mattingly, 155 Ky. 407, 159 S.W. 980, 982 (1913), to argue that her filing of the non-wage garnishment within the fifteen-year period acted to reset the limitations period:
[T]he judgment creditor has two ways to keep the judgment alive: He may keep it alive indefinitely by causing executions to issue on it from time to time within the period prescribed by the statute, or he may keep it alive indefinitely by commencing an action on the judgment under section 439 of the Civil Code within theShe also points out that the General Assembly has shown a preference to allow for continued collection efforts on child support arrearages through its amendment to KRS 413.090(5). Accordingly, Michelle contends that she is not barred by the statute of limitations from seeking additional funds as her filing of the non-wage garnishment in 2009 effectively set a new expiration date of October 2024.
time and in the manner prescribed by said section, and keeping the action on the docket.
We must agree with Michelle that she restarted the fifteen-year statute of limitations when she filed the non-wage garnishment in 2009, fourteen years into the statutory period. While we appreciate Robert's argument that Michelle is limited to recover only up to the amount she claimed in the non-wage garnishment, which was filed prior to the expiration of the limitations period, but not the additional interest funds, which she sought more than fifteen years from the 1995 judgment, the statute and applicable case law do not include this limiting language. Rather, the language of the statute simply provides that the fifteen-year period "is to be computed from the date of the last execution thereon[.]" Because Michelle executed on the 1995 judgment within the limitations period, her claim for interest arising from the arrearage judgment is not barred by operation of KRS 413.090(1).
Next, Robert asserts that Michelle waived her right to claim any additional funds from him when she voluntarily relinquished the $2,999.00 in intercepted funds from his income tax refund. He claims that her conduct represented an express or implied waiver of her right to claim any additional funds in excess of $471.28. In support of this argument, Robert cites to Goffinett v. Goffinett, 247 Ky. 698, 57 S.W.2d 674 (1933), for a definition of waiver. Michelle, in her brief, cites to Harris Bros. Const. Co. v. Crider, 497 S.W.2d 731, 733 (Ky. 1973), in which the former Court of Appeals defined waiver as follows:
On the question of waiver we find the general authority to be that a waiver exists only where one with full knowledge of a material fact does or forbears to do something inconsistent with the existence of the right or of his intention to rely upon that right. Knowledge of the existence of the right on the part of the party claimed to have made the waiver is an essential prerequisite to its relinquishment. No one can be said to have waived that which he does not know, or where he has acted under a misapprehension of the facts.Based upon this definition, which requires knowing action on the part of the waiving party, Michelle argues that her relinquishment of the tax refund intercept was not made with knowledge of the full extent of the funds she later claimed were owed her. Therefore, Michelle contends, she cannot be held to have waived her rights due to the return of the tax refund.
We agree with Michelle that her action in returning the tax refund intercept does not act as a waiver of her right to collect all of the funds she could establish were due her. She did not have full knowledge of what was owed her until Robert provided a list of past payments, to which she could then apply the interest calculation. Accordingly, we hold that Michelle's actions did not constitute a waiver of her right to request funds in excess of $471.28.
Finally, Robert argues that Michelle's claim for any funds in excess of $7,596.48 is barred by the doctrine of laches. He states that Michelle did nothing from October 27, 1995, through October 8, 2009, to try to collect on the 1995 judgment, and when she did so, she did not know exactly what was paid or remained owing. She merely thought $7,596.48 was a fair number. Michelle contends that Robert was the cause of the delay by failing to timely pay on the arrearage and that she did not cause any injury to him by waiting until 2009 to collect on the judgment. We agree with Robert that the doctrine of laches acts to bar Michelle's right to claim the entire amount awarded.
Robert relies upon the opinion of the former Court of Appeals in Barrowman Coal Corp. v. Kentland Coal & Coke Co., 302 Ky. 803, 196 S.W.2d 428 (1946), to support this argument. In Barrowman, the Court recognized that the "defensive plea of laches . . . is bottomed upon the maxim, 'Equity aids the vigilant, not those who have slept on their rights[.]'" Id. at 432-33. In other words,
A court of equity will refuse its aid and decline to give relief where a party has slept on his rights or has failed to exercise reasonable diligence, during which period of slumber material changes in conditions or the relations of the parties were induced or resulted, and where it would be unjust and inequitable to the adverse party to disturb the status quo thus created.Id. at 432. Relying on Pomeroy's Equity Jurisprudence, the Barrowman Court addressed the application of this equitable doctrine, stating:
'What constitutes reasonable diligence can be determined by no established rule, for the question must be determined upon the circumstances of each case. What may be inexcusable delay in one case will not be inconsistent with diligence in another.' Pomeroy, Section 419c. Time is only one element in the doctrine of laches. In some cases it is the prime or controlling element, e.g., in the assertion of a long standing claim that has became stale through the passing of the years, with a loss of evidence or obscuration of the facts. In other cases, as in this one, the lapse of time may be brief, but the injurious consequenses of the delay may be great.
Id.
Michelle relies upon the Supreme Court of Kentucky's more recent opinion in Plaza Condominium Ass'n, Inc. v. Wellington Corp., 920 S.W.2d 51, 54 (Ky. 1996). In Plaza Condominium, the Supreme Court states that the doctrine of laches "serves to bar claims in circumstances where a party engages in unreasonable delay to the prejudice of others rendering it inequitable to allow that party to reverse a previous course of action." Id. at 54. The Court goes on to state that, "[p]rior to the expiration of the limitation period, however, one claiming a bar based on delay must also show prejudice." Id. Relying on Denison v. McCann, 303 Ky. 195, 197 S.W.2d 248, 249 (1946), the Court stated:
What is the equity of the case is the controlling question. Courts of chancery will not become active except on the call of conscience, good faith, and reasonable diligence. The doctrine of laches is, in part, based on the injustice that might or will result from the enforcement of a neglected right.Plaza Condominium, 920 S.W.2d at 54.
Based upon the equities in this case, we must agree with Robert that the family court abused its discretion as a court of equity in awarding Michelle $36,637.94, or any sum in excess of $7,596.48, less any credits for later payments Michelle received. While the 1995 judgment included an award of interest on the arrearage amount, the court only required Robert to pay $150.00 per month related to the arrearage and offered nothing regarding the effect of the interest award. The situation would be different, in our opinion, if Robert had paid Michelle nothing at all or very little on the arrearage judgment. However, based upon his payment records, which were adopted by Michelle, showing that he had definitively paid $14,823.05 on the arrearage, Robert had paid nearly all of the principal by the time Michelle filed the non-wage garnishment in 2009. Taking into account the $4,126.30 Michelle received through the non-wage garnishment, Robert had paid far in excess of the principal amount owed.
The effect of the family court's ruling is that Robert is required to pay an amount well in excess of twice the original amount of the arrearage, the majority of which represented interest, or close to five times the amount she claimed was due in her non-wage garnishment filing. This is clearly prejudicial to Robert, especially because Michelle delayed seeking interest until 2010, fifteen years after the 1995 judgment was entered, and the amount was well in excess of the $7,596.48 which she claimed to be due. We hold that the circumstances of this case meet the prejudice requirement as set forth in Barrowman and Plaza Condominium, and that the family court abused its discretion as a court of equity in awarding an amount in excess of $7,596.49, less any other funds Michelle received following her 2009 execution on the judgment, including the $4,126.30 she obtained through the non-wage garnishment.
For the foregoing reasons, the December 21, 2010, order of the Jefferson Family Court is reversed, and this matter is remanded to the family court for further proceedings in accordance with this opinion.
MOORE, JUDGE, CONCURS.
CAPERTON, JUDGE, CONCURS IN PART, DISSENTS IN PART, AND FILES SEPARATE OPINION.
CAPERTON, JUDGE, CONCURRING IN PART AND DISSENTING IN PART: I concur on the well-reasoned opinion of the majority on all issues except the majority's opinion that of the doctrine of laches bars collection of any additional amounts under the judgment, on that issue I dissent. I see no evidence of prejudice to Robert other than the payment of money and I fail to see how the payment of money rises to the level of prejudice under the facts sub judice. I would affirm on all issues. BRIEF FOR APPELLANT: Bryan Gowin
Louisville, Kentucky
BRIEF FOR APPELLEE: Earl C. Mullins, Jr.
Louisville, Kentucky