Opinion
NO. 2014-CA-001498-ME
06-05-2015
STEPHANIE M. KEHRT APPELLANT v. WILLIS R. REESE APPELLEE
BRIEFS FOR APPELLANT: Mark T. Miller Nicholasville, Kentucky BRIEF FOR APPELLEE: Charlotte A. Nickerson Lawrenceburg, Kentucky
NOT TO BE PUBLISHED APPEAL FROM MERCER CIRCUIT COURT
HONORABLE BRUCE PETRIE, JUDGE
ACTION NO. 04-CI-00203
OPINION
AFFIRMING
BEFORE: DIXON, JONES AND NICKELL, JUDGES. NICKELL, JUDGE: This is an appeal from an order of the Mercer Family Court denying Stephanie M. Kehrt's motion to establish a child support arrearage due to her former husband's alleged failure to automatically increase his child support payments as his gross income increased. Having reviewed the record, the briefs and the law, we affirm.
Kehrt argues under Illinois law, the amount of child support owed automatically rises—without a court order modifying the amount—when the obligor's gross income rises to remain at a steady percentage of income—in this case twenty percent. However, no legal authority for this theory is offered and the written agreement executed by the parties specified an amount of monthly child support, not just twenty percent of his income.
Kehrt and Willis R. Reese married in 1992 in Lexington, Kentucky. A son was born to them in 1995. Three years later, their union was dissolved on February 6, 1998, by a judgment entered in DuPage County, Illinois. Said judgment incorporated a marital settlement agreement Kehrt and Reese had reached in Elmhurst, Illinois. The written agreement specified the following terms regarding child support—the sole focus of this appeal:
11. The amount of child support to be paid by the HUSBAND shall be in the amount of $568.80, per month, representing 20% of his net income, in accordance with the guidelines and provisions set forth in the Illinois Marriage and Dissolution of Marriage Act or any guidelines that may be enacted subsequent to the entry of this judgment and in force at the time that the maintenance is terminated, until the child reaches his majority, graduates high school or is otherwise emancipated, whichever occurs last. Child support payments shall be paid in this fashion until the emancipation of the child. Upon the emancipation of a child of the parties, the HUSBAND's obligation to pay child support shall terminate instanter without the need for further Court Order. The FATHER will furnish evidence of his income to the MOTHER on an annual basis no later than the 15th of every January of his income by supplying W-2's and current paycheck stubs for the prior six (6) month period.[Emphasis added]. Although not reflected in the written agreement, Reese maintains he and Kehrt orally agreed his child support obligation would not commence until the marital residence was sold. In return for delaying his child support payments, Reese testified he paid substantially all expenses for the family —including mortgage, food, property and health insurance, taxes, utilities, etc.—while he, Kehrt and their son, continued living—albeit separately—in the marital home until a sale occurred in June of 1999—from which Kehrt received the proceeds. Kehrt denies any such oral agreement was ever reached. Reese's child support obligation ceased on May 24, 2013, when the child had turned eighteen and graduated from high school.
In June 2004 Reese moved the Mercer Family Court to register the Illinois judgment and exercise jurisdiction. At the time, Reese was living in California, and the child was living with Kehrt in Burgin, Kentucky. Reese asked for confirmation of joint custody status, specific summer visitation, modification of the child sharing agreement, allocation of a portion of child support to the child's college education, and various other items. Attached to the motion was an affidavit from Reese in which he asked that child support be calculated "under the Kentucky child support guidelines[.]" Kehrt objected, arguing Kentucky lacked jurisdiction and any modification should occur in Illinois unless and until the DuPage Circuit Court declined to exercise jurisdiction. The Kentucky court registered the foreign judgment, but took no other action until Illinois declined to exercise jurisdiction, which it did on August 4, 2004, dismissing all pending matters Kehrt had filed in Illinois. Thereafter, an active motion practice erupted between the parties in Kentucky with the Mercer Family Court entering an order on Reese's motion on November 8, 2004; that order withheld ruling on the request to recalculate child support until current income information was exchanged between the parties.
Kentucky Revised Statutes (KRS) 403.211 et seq.
On May 26, 2005, Kehrt moved the Mercer Family Court to establish a child support arrearage, hold Reese in contempt and establish visitation parameters. Importantly, her motion did not allege Reese had failed to pay child support during the first seventeen months after the divorce had become final. Whether Reese was obligated to pay child support during these seventeen months is the sole subject of this appeal. The allegation of nonpayment did not surface until Kehrt's attorney sent a letter to Reese in April 2012 in which he wrote,
it has been discovered that you failed to pay Gunnar's child support for the first seventeen (17) months following the entry of your divorce decree. Therefore you owe [Kehrt] back support of $9,669.60 (i.e. $568.80 per month x 17 months). Additionally per Section 2 Public Act 91-0397 - an Illinois act concerning interest on unpaid child support you owe interest on the unpaid sums at nine percent (9%) per annum. Applying simple interest for fourteen (14) years equals $12,183.64 in interest for a total due of $21,853.24.
Whether Illinois or Kentucky law governs the calculation of child support between these parents is critical because under Illinois guidelines, the amount of child support owed is based solely on a percentage of the obligor's income. 750 Ill. Comp. Stat. Ann. 5/505. However, under Kentucky law, the amount owed is a reflection of income of both parents "in proportion to their combined monthly adjusted parental gross income." KRS 403.212(5). While Kehrt's motion to establish an arrearage was pending, on July 15, 2005, Reese moved for partial summary judgment to clarify that any child support modification would be controlled by Kentucky Child Support Guidelines.
Under the Illinois statute, the minimum amount of support to be paid for a single child is twenty percent of the obligor's net income.
Following a hearing, on August 9, 2005, the court entered an interlocutory order finding:
The hearing occurred on August 2, 2005, but was not designated as part of the appellate record. As the appellant, it was Kehrt's responsibility to submit a complete record for our review. Commonwealth v. Thompson, 697 S.W.2d 143, 145 (Ky. 1985). Having failed to do so, we assume the missing recording supports the trial court's ruling.
Kentucky law applies to the modification of child support and the Court will apply Kentucky law on that issue. The matter now before the Court is not a UIFSA action.Being interlocutory, this order was not appealed. CR 54.01.
Uniform Interstate Family Support Act. KRS 407.5101 et seq. (Footnote added).
On October 25, 2005, the Mercer Family Court entered another order resolving more motions filed by both parties, but there was still no allegation of an arrearage dating back to 1998. Regarding child support, the trial court wrote:
2) The provisions for child support contained in numbered paragraph 11 of the parties' Marital Settlement Agreement are modified pursuant to the provisions of KRS §403.213 and §403.212 to the sum of $1,020.00 per
month payable from [Reese] to [Kehrt], effective with the October 2005 payment. This sum is based upon [Reese's] current income and [Kehrt's] income, imputed at seven ($7.00) dollars per hour. The support amount established herein is based upon the application of the Kentucky Child Support Guidelines [KRS §403.212(7)] in a non-UIFSA case.[Emphasis added]. This order was never appealed.
3) [Reese] has voluntarily been paying [Kehrt] the sum of One Thousand Four Hundred Dollars and 00/100 ($1,400.00) per month in child support. The only existing Court Order however is the Illinois Judgment for Dissolution of Marriage which incorporated paragraph 11 of the parties' agreement, in which support was set at $568.80 per month. [Reese] has requested reimbursement of the difference between the $1,400.00 sum and the modified amount of $1,020.00 retroactive to date of the filing of the original Motions herein. Said Motion is overruled. The modified amount exceeds the only existing court ordered amount and any sum voluntarily paid in excess of the existing court ordered sum is considered a gift.
Additionally, [Kehrt] had moved to establish an arrearage amount from [Reese] based upon [Reese's] failure to modify support in prior years, to then appropriate levels based upon the Illinois Decree. There being no legal authority for such a retroactive modification this Motion is overruled with the agreement of [Kehrt].
This ruling is consistent with Clay v. Clay, 707 S.W.2d 352, 353 (Ky. App. 1986), holding modifications of child support operate prospectively only. (Footnote added).
In 2013, Kehrt filed lengthy pro se motions which the Mercer Family Court addressed in lengthy orders. In an order entered on November 18, 2013, the trial court wrote in response to Kehrt's request for reimbursement of overdraft fees resulting from two late child support payments:
[t]here is no present child support arrearage and child support ceased permanently by Order entered June 5, 2013.Kehrt moved the trial court to alter, amend or vacate the order on various grounds, but said nothing about an alleged child support arrearage stemming from 1998 and 1999.
Then, on February 10, 2014, Kehrt's attorney again moved the trial court to determine a child support arrearage and enter a judgment so Kehrt could register the judgment in Arizona where Reese was living at the time. For the first time, a motion filed with the court alleged Reese had paid no child support between February 1998 and January 2000—the first twenty-four months of the dissolution—amounting to an arrearage of $47,656.07 inclusive of prejudgment interest at a rate of nine percent per annum. The motion went on to allege for the next twenty-three months—February 2000 through December 2001—Kehrt was unable to substantiate any payments and was seeking $38,277.30 in back child support, inclusive of prejudgment interest at nine percent per annum, with appropriate deductions for any principal and interest on payments Reese could prove he had made. Ultimately, Kehrt claimed an arrearage—with interest—of $85,933.37. The motion continued to argue Illinois law governed the calculation of child support under KRS 407.5604—part of UIFSA—even though the trial court had previously held this was not a UIFSA case and that Kentucky law applied.
In response, Reese submitted proof from the Arizona Department of Economic Security, Division of Child Support Enforcement, showing an arrears balance of $0.00 as of February 16, 2014. He freely admitted he had paid no child support during the seventeen months between the date of dissolution and the date the marital home was sold, but explained none was owed due to the oral agreement he had with Kehrt that child support payments would be suspended until the home was sold. Citing Whicker v. Whicker, 711 S.W.2d 857, 859 (Ky. App. 1986), Reese argued Kentucky courts recognize private modifications of child support judgments made by parties without judicial intervention so long as they are proved with "reasonable certainty" and the trial court deems the terms to be "fair and equitable under the circumstances." Id. Reese argued Kehrt's sixteen-year delay in making the claim was substantial evidence the oral agreement existed—especially since Kehrt did not hesitate to allege Reese was in arrears for other periods of time. Reese also noted that had an arrearage existed, his overpayment of $28,285.60 between January 2003 and September 2005 would have canceled any such arrearage.
The motion was heard on June 11, 2014. Reese and Kehrt were the only witnesses. Reese testified Kehrt had tried to litigate the alleged arrearage in Illinois, Kentucky, Arizona and possibly California—all to no avail. During the hearing, the trial court pointed out that no one had previously alleged the prior arrearage despite the case being active and prolonged, and as a result, the trial court had treated subsequent overpayments by Reese as a gift to the child. The trial court found it odd that the issue was not timely raised. At the hearing, Kehrt's attorney argued Reese was supposed to be paying twenty percent of his salary each month, even though the only court order that had been entered specified a monthly payment of $568.80; Kehrt argued—without citing authority—Reese's monthly payments should have automatically adjusted with increases in Reese's income. The trial court noted no order modifying the original child support terms had been entered by any court before it entered an order in 2005 increasing Reese's obligation to $1,020.00 per month.
On August 20, 2014, the trial court entered an order finding in pertinent part: Reese admitted he paid no support from February 6, 1998, until June 7, 1999; Reese explained he paid nothing during these months in reliance on an oral agreement between himself and Kehrt that his obligation would not commence until the marital home was sold since both continued living there while the home was being marketed and he financially supported both Kehrt and their son; once he and Kehrt began living apart, Reese began paying child support; upon review of Reese's bank records, Kehrt modified her demand to allege only that $39,222.31 was due for the months of February 1998 through August 1999; while ordered to pay only $568.80 per month, until a hearing in September 2005, Reese had paid more than that amount each month; by order entered in October 2005, Reese's obligation was raised to $1,020.00 per month; and, Kehrt admitted no arrearage accrued after entry of the October 2005 order. After setting out its findings, the trial court held: no child support arrearage existed and therefore, the request to set an arrearage must be denied; Kehrt did not allege an arrearage for the 1998-1999 period prior to or during the September 2005 hearing when a different alleged child support arrearage was explored; had the current allegation been raised in the prior hearing, Reese "would have been entitled to the difference between the overpayments and the arrearages[;]" and, there was no need to determine whether child support payments were suspended during the first nineteen months of the divorce (in 1998 and 1999) because the trial court had already determined no arrearage existed after 2004. It is from this order that Kehrt appeals.
Appended to the order was the trial court's month-by-month calculation using a first in-first out accounting method and spanning February 1998 through April 2004, showing that if Kehrt was correct and no oral agreement suspending payments while the marital home was being marketed existed, Reese's overpayments would have erased any arrearage by April 2004.
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Kehrt poses two questions: should Illinois law have been applied instead of Kentucky law, and should Reese's voluntary overpayments have been allowed to erase any alleged child support arrearage. In addressing these two questions, we have set forth the facts in great detail and they lead us to one inescapable conclusion. Kehrt did not pursue her claims in a timely manner and her delay is fatal.
On August 9, 2005, the trial court entered an order stating it would apply Kentucky law and it would not treat the matter as a UIFSA action. While that was an interlocutory order and not appealable under CR 54.01, it was followed by an order entered on October 25, 2005, which built upon the August order and applied Kentucky law and specified the Kentucky Child Support Guidelines were being applied because this was not a UIFSA case. Importantly, the October order stated, "[t]here being no justifiable cause for delay, this Order is final and appealable." Under CR 73.02, Kehrt had thirty days to appeal that order. She did not. By failing to appeal that order the application of Kentucky law is res judicata and no longer subject to attack. Yeoman v. Commonwealth, Health Policy Bd., 983 S.W.2d 459, 464 (Ky. 1998). If we were to now consider Kehrt's claim, a decade of litigation in the Mercer Family Court and now this Court, will have been for naught. All subsequent decisions were built upon the orders entered in August and October 2005. If the earlier orders were flawed, any orders that followed were likely also flawed. Kehrt's tactics are troubling to us because precious time and resources—of both the judiciary and the litigants—have been devoted to this case, and for all intents and purposes—wasted.
Having determined the application of Kentucky law is res judicata, we have no need to decide Kehrt's other argument that by applying Illinois law a different result would have been reached. However, the argument is deserving of comment. If no oral agreement to suspend child support payments was ever reached, and Reese was to pay monthly child support in 1998 and 1999, Kehrt knew this from the moment the divorce became final. Like the trial court, we find it curious that Kehrt took no steps to recoup this alleged debt for her son's benefit for sixteen years, especially when she actively pursued other alleged arrearages.
For the foregoing reasons, we affirm the order of the Mercer Family Court.
ALL CONCUR. BRIEFS FOR APPELLANT: Mark T. Miller
Nicholasville, Kentucky
BRIEF FOR APPELLEE: Charlotte A. Nickerson
Lawrenceburg, Kentucky