Opinion
No. 05-06-00966-CV
Opinion Filed May 10, 2011.
On Appeal from the 301st Judicial District Court Dallas County, Texas, Trial Court Cause No. 03-12312-T.
Before Chief Justice WRIGHT and Justices MOSELEY and LANG-MIERS.
MEMORANDUM OPINION ON REMAND
The complicated procedural history of this case is detailed in our prior opinion and will not be repeated here. See Hidalgo v. Hidalgo, 279 S.W.3d 456 (Tex. App.-Dallas 2009), rev'd, 310 S.W.3d 887 (Tex. 2010) (per curiam). The supreme court reversed our prior judgment and remanded the case to us to permit appellant Leila Regenia Brown Hidalgo (Leila) "to argue to the court of appeals the substantive reasons she believes the trial court's judgment was erroneous." Hidalgo, 310 S.W.3d at 889. We have afforded the parties an opportunity to file briefs on these matters.
We issue this memorandum opinion because the background of the case and the evidence adduced in the trial court are well known to the parties and all dispositive issues are settled in law. See Tex. R. App. P. 47.2(a), 47.4. We reverse the trial court's order denying Leila's motion to enforce the judgment, render judgment that Alvin Steve Hidalgo (Steve) shall maintain, at his sole expense, term life insurance with a face value of $2,000,000 (two million dollars) on his life with Leila as irrevocable beneficiary until she dies, and remand the case for further proceedings to determine the amount of policy premiums Steve is obligated to reimburse to Leila for policy premiums she paid to maintain the life insurance policy and whether Leila is entitled to an award of reasonable attorney's fees.
Leila and Steve were divorced in California and the divorce decree incorporated their marriage settlement agreement (contract). The contract requires Steve to pay spousal support to Leila in the amount of fifty percent of his annual gross compensation (including all income received as a benefit of his employment) payable in monthly installments. The contract provides: "This spousal support shall continue on the first day of the month and thereafter until the death of either party, or further Order of the Court." Steve agreed not to retire before age 58 and if he elected to retire after age 58, Leila agreed to waive her right to seek a court order that Steve seek other employment or that imputes income to him based on his earning capacity. The contract's provisions for spousal support "shall not be subject to modification or revocation by any court, with the exception of Wife's death."
The provision at issue here is set forth in the parties' contract under the heading "Security for Spousal Support Obligation and Disability." It states:
Husband shall maintain, at his sole expense, term life insurance with a face value of $2,000,000 (two million dollars) on his life with Wife as irrevocable beneficiary until Wife dies. Husband acknowledges that Wife has requested security in the amount of $3,000,000 three million dollars. Husband shall apply for and cooperate in obtaining the additional life insurance for Wife's security. Husband shall provide proof of all such insurance coverage upon request from Wife. Wife shall pay the cost of this additional one million ($1,000,000) in coverage.
The contract also terminates Steve's right to ask for spousal support and divides the couple's property, including Steve's retirement benefits. The contract assigns all retirement plans to Steve and Leila in equal shares and states that Leila will continue to have a one-half interest in any retirement benefits Steve may accrue in the future. The contract recites that although a former spouse's interest in retirement benefits extends only to benefits accrued as of the date of separation and the contract disposition greatly increases Leila's share of the employee benefit plans, Steve nevertheless agrees to the specified disposition of the retirement benefits.
The contract states that it is the final agreement of the parties with respect to its terms and may not be contradicted by evidence of prior or contemporaneous agreements. The contract provides it was made voluntarily with full knowledge of its legal effect, and states that it shall be governed by and construed in accordance with California law.
In 2003, Leila filed the decree in Texas as a foreign judgment, see Tex. Civ. Prac. Rem. Code Ann. § 35.003 (West 2008), and sought to enforce the spousal support provisions of the contract. Those disputes were later settled and the Texas trial court signed an agreed order on March 14, 2005. This agreed order is not disputed by the parties.
Steve retired December 31, 2004 at age 58. He stopped paying the premiums on the life insurance. To maintain the policy in effect, Leila began paying the premiums. She filed a motion to enforce the divorce decree seeking an order that Steve resume paying the premiums and reimburse her for the premiums she paid to maintain the policy. She also requested attorney's fees under California law. Ultimately the trial court denied Leila's motion. Leila appeals.
We review a trial court's ruling in an suit to enforce a divorce decree for an abuse of discretion. Hollingsworth v. Hollingsworth, 274 S.W.3d 811, 815 (Tex. App.-Dallas 2008, no pet.); see also Tex. Fam. Code Ann. § 9.001 (West 2006). However, we review the trial court's construction of an unambiguous contract de novo. First Trust Corp. v. Edwards, 172 S.W.3d 230, 233-34 (Tex. App.-Dallas 2005, pet. denied).
Leila's sole issue on appeal asserts that this Court should reverse and render a decision that the contract between the parties requires Steve to maintain the life insurance policy on his life until Leila dies, and remand for a determination of the amount of policy premiums that are past due and owing and for a determination of the amount of her reasonable and necessary attorney's fees. Steve responds that the requirement in the contract to maintain the life insurance policy was intended only as security for his support obligation and that once the support obligation ended when he retired, there was no longer any need for the security. He argues that Leila is not entitled to recover attorney's fees because the motion to enforce was properly denied.
Both parties agree the contract is unambiguous. Leila construes the contract to require Steve to maintain the life insurance policy with her as beneficiary until she dies. Steve construes the contract to provide that he must maintain the life insurance policy until he retires or until his support obligation ends.
The contract provides that it is governed by and shall be construed according to California law. We normally give effect to contractual choice of law provisions. Midwest Med. Supply Co. v. Wingert, 317 S.W.3d 530, 536 (Tex. App.-Dallas 2010, no pet.). Although the parties now appear to dispute whether Texas or California law controls, we conclude that under either law, the contract means what it says and is not ambiguous.
A contract is ambiguous if its meaning is uncertain or it is reasonably susceptible to more than one meaning. Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983); In re Marriage of Iberti, 64 Cal. Rptr. 2d 766, 769 (Cal. Ct. App. 1997) ("A term of the agreement is ambiguous if it is susceptible of more than one reasonable interpretation."). An unambiguous contract will be enforced as written according to the plain meaning of the words used and "regardless of whether one or more of the parties contracted wisely or foolishly, or created a hardship for himself." Wooten Props., Inc. v. Smith, 368 S.W.2d 707, 708-09 (Tex. Civ. App.-El Paso 1963, writ ref'd); see Iberti, 64 Cal. Rptr. 2d at 769 (court will enforce the express language of clear and unambiguous marriage settlement agreement).
Courts are not authorized to rewrite agreements by inserting additional terms, definitions, or provisions that the parties could have included themselves but did not, or by implying terms for which the parties have not bargained. Tenneco, Inc. v. Enter. Prods. Co., 925 S.W.2d 640, 646 (Tex. 1996). In other words, courts cannot make contracts for the parties. HECI Exploration Co. v. Neel, 982 S.W.2d 881, 888 (Tex. 1998). California law is the same. See Rosen v. State Farm Gen. Ins. Co., 70 P.3d 351, 353 (Cal. 2003) ("[W]e do not rewrite any provision of any contract, [including an insurance policy], for any purpose.") (quoting Certain Underwriters at Lloyd's of London v. Superior Court, 16 P.3d 94, 108 (Cal. 2001)); DVD Copy Control Ass'n, Inc. v. Kaleidescape, Inc., 97 Cal. Rptr. 3d 856, 879 (Cal. Ct. App. 2009) ("The court may not remake the bargain to the advantage of one party for no reason other than that the party has become dissatisfied with the agreement.").
The contract is unambiguous; it requires Steve to maintain at his sole expense a life insurance policy on his life with Leila as irrevocable beneficiary until she dies. Steve's contractual obligation to maintain the policy until Leila dies is unconditional. There is no provision in the contract releasing the obligation to maintain the life insurance policy on Steve's retirement or otherwise. At the same time, there are several provisions in the contract dealing with Steve's retirement and his retirement benefits. Reading the contract as a whole and giving effect to all of its provisions, we conclude the parties did not intend for the obligation to maintain the life insurance policy to end when Steve retired. Rather, the contract indicates that the life insurance policy is to be maintained with Leila as irrevocable beneficiary until she dies. If the insurance policy was conditioned on the spousal support obligation as Steve contends or subject to release upon any event other than Leila's death (such as Steve's retirement), the contract would have included express language to that effect. It does not. To accept Steve's argument would require us to rewrite the contract the parties made. We cannot do so. See Tenneco, 925 S.W.2d at 646; Rosen, 70 P.3d at 353.
Steve argues the contract refers to the life insurance as "security" for Leila's spousal support three times, but only uses the phrase "until Wife dies" once in connection with the life insurance. He also contends Leila judicially admitted the life insurance policy was to secure Steve's spousal support obligation. However, the life insurance policy is still security even if it must be maintained until Leila's death. Indeed, if Steve had died before he retired, Leila would have been entitled to the proceeds of the policy even though Steve's support obligation ended with his death. And if Steve returns to work before he reaches age 65, he would again be required to pay Leila spousal support pursuant to their agreement. There is nothing inconsistent with referring to the life insurance policy as security and concluding the contract as a whole requires Steve to maintain the policy with Leila as irrevocable beneficiary until she dies. In other words, the security for the support obligation under the contract is a life insurance policy with Leila as beneficiary until she dies, not a life insurance policy with Leila as beneficiary until Steve retires.
Steve's argument would write out of the contract the express term that he maintain a life insurance policy on his life "with Wife as irrevocable beneficiary until Wife dies." Nowhere does he explain how that provision can be given effect under his interpretation of the contract. We cannot ignore express terms of a contract; rather we must give effect to the contract as a whole. See Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 662 (Tex. 2005) ("[C]ourts should examine and consider the entire writing in an effort to harmonize and give effect to all the provisions of the contract so that none will be rendered meaningless."); accord Cal. Civ. Code § 1641 (West, Westlaw through Ch. 20 of 2011 Reg. Sess.); Ticor Title Ins. Co. v. Rancho Santa Fe Ass'n, 223 Cal. Rptr. 175, 177 (Cal. Ct. App. 1986).
Further, Steve's arguments are based on the premise that his support obligation has ended or been satisfied. The support obligation, however, has not terminated; the contract provides that Steve's support obligation continues until the death of one of the parties or further order of the court. Steve is no longer receiving income on which to base the contractual calculation of spousal support because he has retired, but that does not mean the support obligation has terminated. The obligation continues, as per the contract, until the death of one of the parties or further order of the court.
To support his argument that his support obligation has ended or been satisfied, Steve relies on language in the March 14, 2005 agreed order on the earlier enforcement motion. However, that order states only that "as of May 31, 2005" the parties were in agreement that Steve's obligation for monthly support obligations had been satisfied and the parties were "even" as of that date with no amounts owed based on income received by Steve as of that date. Thus the agreed order recognizes that Steve has satisfied his obligation up to a specific date. It does not terminate the support obligation (assuming that were possible under the no modification term of the contract). In fact, the agreed order contains provisions clarifying terms relating to the support obligation in the future. It clarifies terms in the contract relating to Steve's "potential income subject to spousal support," and requires, "for every year in which there is a spousal support obligation," that Steve provide certain documentation to Leila of all income received by Steve. Finally, the agreed order provides that all terms of the contract not clarified by the order "shall remain in full force and effect."
Steve argues it is unreasonable to require him to maintain a term life insurance policy, with the cost of premiums rising as he ages, when he owes no support obligation. However, we cannot rewrite the bargain the parties made because Steve is now dissatisfied with the agreement or insert words he now wishes were there. DVD Copy Control, 97 Cal. Rptr. 3d at 879; Vons Cos., Inc. v. United States Fire Ins. Co., 92 Cal. Rptr. 2d 597, 601 (Cal. Ct. App. 2000).
The contract will be enforced as it is written without regard to whether the parties contracted wisely or foolishly or created a hardship on themselves. See Wooten Props., 368 S.W.2d at 708-09. The unambiguous language of the contract requires Steve to "maintain, at his sole expense, term life insurance with a face value of $2,000,000 (two million dollars) on his life with Wife as irrevocable beneficiary until Wife dies." The trial court erred by denying Leila's motion to enforce the contract as incorporated into the divorce decree.
Leila requested attorney's fees in her motion to enforce, but the trial court denied the request when it denied the motion. The recovery of attorneys' fees is a substantive, not a procedural, issue and will be governed by the law governing the substantive issues. Midwest Med. Supply Co. v. Wingert, 317 S.W.3d 530, 537 (Tex. App.-Dallas 2010, no pet.); Rapp Collins Worldwide, Inc. v. Mohr, 982 S.W.2d 478, 487-88 (Tex. App.-Dallas 1998, no pet.). Here that law is California's. Because we reverse the trial court's order denying the motion to enforce, we remand to the trial court to determine whether Leila is entitled to an award of attorney's fees under California law and, if so, the amount of reasonable attorney's fees to award. See Cal. Fam. Code §§ 271, 3557 (West, Westlaw through Ch. 20 of 2011 Reg. Sess.).
Accordingly, we sustain Leila's issue. We reverse the trial court's order denying her motion to enforce the decree, render judgment that Steve shall maintain, at his sole expense, term life insurance with a face value of $2,000,000 (two million dollars) on his life with Leila as irrevocable beneficiary until Leila dies, and remand this case to the trial court to (1) determine and award to Leila the amount of insurance policy premiums Leila paid to maintain the life insurance policy in effect, and (2) determine whether Leila is entitled to an award of attorney's fees under California law and, if so, to determine and award that amount to Leila.