Opinion
NO. 2014-CA-001043-MR NO. 2015-CA-001584-MR
08-25-2017
JAMES ROY REESE, JR. APPELLANT v. MELISSA REESE APPELLEE
BRIEF FOR APPELLANT: W. Jeffery Scott Brandon M. Music Grayson, Kentucky NO BRIEF FOR APPELLEE.
NOT TO BE PUBLISHED APPEALS FROM GREENUP CIRCUIT COURT
HONORABLE JEFFREY L. PRESTON, JUDGE
ACTION NO. 13-CI-00539 OPINION
AFFIRMING
** ** ** ** **
BEFORE: JONES, J. LAMBERT, AND MAZE, JUDGES. JONES, JUDGE: These consolidated appeals arise out of two orders entered by the Greenup Circuit Court as part of a dissolution of marriage action between the Appellant, James Roy Reese, Jr., and the Appellee, Melissa Reese. The first order concerns the circuit court's denial of James's motion to set aside the parties' settlement agreement as unconscionable. The second order concerns the circuit court's calculation of the child support arrears owed by James to Melissa for the parties' two minor children. The Appellee has not filed a brief. For the reasons more fully explained below, we affirm with respect to both orders.
I. BACKGROUND
James and Melissa were married in Huntington, West Virginia, on March 25, 2000. Two children were born to the couple during their marriage. On September 6, 2013, Melissa, acting with the assistance of counsel, filed a petition for dissolution of marriage in the Greenup Circuit Court. According to Melissa's petition, the children were ten and twelve at the time she filed her petition. James filed a pro se response. On the same day, the parties filed a written Separation Agreement with the circuit court, which each of them had signed. In relevant part, the Agreement provides as follows:
3.1 The Respondent [James] is currently drawing unemployment. The parties agree that while he is drawing unemployment, the Respondent [James] shall pay to the Petitioner [Melissa] for the support of the minor children the sum of Four Hundred Fifteen ($415.00) every two weeks, effective the date of the signing of this Agreement. The Respondent [James] shall notify the Petitioner [Melissa] within forty-eight (48) hours of any employment.
. . .
6.1 The Respondent [James] shall supply a vehicle for the Petitioner [Melissa], which is to [sic] year after 2008 with less than 30,000 miles, and that she agrees to accept.
. . .
7.1 The Respondent [James] shall pay off all joint/marital debts before this dissolution of marriage action is final, and each party shall be responsible for any remaining debts in his/her separate name.
. . .
8.1 The Petitioner [Melissa] shall receive one-half of any retirement account/s of the Respondent [James].
. . .
9.1 The Respondent [James] shall pay maintenance to the Petitioner [Melissa] in the amount of $1,200.00 per month for a period of two years. However, the payment of maintenance shall not commence until the Respondent [James] obtains employment. The parties agree that the Petitioner [Melissa] has been at [sic] stay at home mother. The parties acknowledge that she is currently trying to obtain an education and should have the financial ability to do so. The parties agree that the Petitioner [Melissa] shall be able to utilize the GI Bill to obtain her college education, and that any balance of the GI Bill will be applied towards the children.
. . .
12.1 This agreement not be modified by any court oral agreement, except as to custody, visitation, and child support.
. . .
13.2 Each party acknowledges that this agreement is a full, fair, just, and final settlement of all matters of property between the parties. Each party acknowledges that she or she has discussed this agreement with his or her attorney, if so desired, and fully understands all of the provisions therein.
13.3 This agreement contains the entire agreement between the parties. There are no warranties, representations, understandings, arrangements, agreements, contracts, or inducements whatsoever except as set forth in the herein agreement. Each party acknowledges that he or she is not relying on any representation, statement or inducement which is not set forth in this instrument.(R. 6-10).
On November 5, 2013, acting with the assistance of counsel, James filed a motion with the circuit court requesting an order setting aside the Separation Agreement. James argued that the Settlement Agreement should be set aside as unconscionable because its financial terms were manifestly unfair to him. James also pointed out that he did not have his own counsel at the time he agreed to the terms contained in the Settlement Agreement because Melissa only wanted the parties to use one attorney. Melissa objected to James's motion. She argued that James signed the Settlement Agreement of his own free will, and had simply changed his mind about some of the terms he voluntarily agreed to.
Following a hearing, the circuit court denied James's motion in an order entered on February 10, 2014. Therein, the circuit court made the following factual findings and conclusions of law:
The parties separated in May 2013. At that time, the Respondent [James] left the residence in which the parties were living in Greenup County, Kentucky and moved in with his parents in Huntington, West Virginia. The Petitioner [Melissa] remained in the residence with
her family with whom the parties had been residing since the Respondent [James] separated from the military through an honorable discharge. For the period of time from the date of separation in May 2013 through September 2013, the Respondent [James] paid no child support on behalf of the minor children. The parties made a decision to file for divorce and to do an uncontested divorce. The Respondent [James] complains that he was not able to add terms to the agreement, but states that he was able to remove terms from the agreement while the parties were at the home of the Petitioner [Melissa].
The Petitioner [Melissa] then hired Rhonda M. Copley to prepare documentation for the completion of the divorce action. Both parties acknowledge that they discussed the agreement that was to be reached. The Petitioner [Melissa] signed the Separation Agreement on or about August 28, 2013. The Respondent [James] signed the Separation Agreement in the Law Offices of Rhonda M. Copley in front of a notary public, Lisa Gray, on or about September 2, 2013. The Respondent [James] acknowledges that he had the opportunity to review all documents prior to signing. The Respondent [James] did not ask to remove any document from the law office prior to signing, but was given a copy of the Separation Agreement at the time of signature.
During testimony, the Respondent [James] testified that with respect to the issue of child support in Section 3 of the Separation Agreement, he decided upon the amount of $415.00 every two weeks based upon the unemployment that he received, and it was one-half of his unemployment check. Once he began working at Pilkington, he voluntarily began paying child support in the amount of $700.00 every two weeks, and he acknowledges that this is an amount that he voluntarily agreed to pay. The Respondent [James] also acknowledges that he and the Petitioner [Melissa] discussed the division of property and the purchase of the vehicle which he agreed would be a year after 2008 with
less than 30,000 miles. Based upon his testimony, maintenance is the only issue that the Respondent [James] appears to object to, and that being the amount of $1200.00 per month for a period of two years. The Petitioner [Melissa] claims that the Respondent [James] is the one who decided upon the amount of maintenance, and that was the amount that he agreed to pay. Further, the parties acknowledge they agreed that payment of maintenance would not begin until after he began working. Both parties acknowledge that the Petitioner [Melissa] was a stay at home mother, she only worked the last year of the 13 year marriage, and that she has some recent health problems requiring two back surgeries, and anticipated a third surgery to her neck at the time that the Respondent [James] separated from the military.
The Respondent [James] acknowledges that he is a college graduate, separated from the military at the rank of major, was a commander of military personnel, he can read and write, and he knew how to contact any attorney and chose not to do so.
CONCLUSIONS OF LAW
Pursuant to KRS 403.180 parties may enter into a separation agreement to settle the issues of the marriage. Both parties must sign the document. In order for the document to be accepted, the Court must make a finding that the agreement is not unconscionable. In this case, the Respondent [James] argues that the agreement is unconscionable and it must be set aside.
In Peterson v. Peterson, 582 S.W.2d 707 (Ky. App. 1979), the appellate court found that a separation agreement may be set aside based upon fraud, undue influence or overreaching; however, the agreement cannot be set aside because it is a bad agreement. In this case, the Respondent [James] has not alleged any fraud, undue influence or overreaching. The Respondent
[James] has admitted he participated in the negotiations of the agreement, that he had a chance to review the agreement, and the only issue that he disputes is the issue of maintenance.(R. 29-32).
In order for an agreement to be unconscionable, it must be manifestly unfair. The Respondent [James] argues the only unfair term is the maintenance obligation. In this case, the parties were married over 13 years and the Petitioner [Melissa] had been a stay at home mother, had only worked the last year, and has had health problems requiring surgery. The Respondent [James] failed to demonstrate that the agreement is manifestly unfair. The Respondent [James] is now employed, earning approximately $6,000.00 per month, and he agreed that the maintenance obligation would not begin until he began employment. The maintenance obligation is for two (2) years. Therefore, the agreement is not manifestly unfair.
Kentucky Revised Statutes.
James filed a motion to alter or amend or vacate, which included a request for additional findings by the circuit court regarding why the agreement was not unconscionable. The circuit court overruled James's motion. On April 20, 2014, the circuit court entered a decree of dissolution of marriage incorporating the parties' Settlement Agreement, along with its February 2014 order finding the Settlement Agreement not to be unconscionable. James filed his first appeal from this order.
Next, on December 11, 2014, James filed a motion for modification of his child support and maintenance obligations. The court held a hearing on James's motion in January 2015. James provided that the parties had previously agreed upon a modification of child support in September 2014, wherein James would pay $1,000.00 per month for child support and $1,000.00 per month for maintenance. He testified that while both parties signed the agreement, the agreement was never filed with the court. James testified that he was fired on October 12, 2014, and filed for unemployment in November 2014. He testified that he was receiving unemployment compensation at the rate of $830.00 every two weeks. On January 16, 2015, the circuit court granted James's motion based on his lack of income and entered an order reducing his child support to $408 per month and maintenance to $408 per month until further order of the court.
That agreement was entered as an exhibit at the January 2015 hearing.
Next, the Greenup County Child Support Office filed a motion directing James to make all payments to their office on February 6, 2015. Thereafter, on March 26, 2015, James filed a motion alleging that the Greenup County Child Support office improperly entered an Administrative Order deducting more than $2,000 per month from his wages. In his motion, James referenced the circuit court's January 16th order reducing his child support and maintenance obligations to a combined $816.00 per month.
On April 13, 2015, Melissa filed a motion asking the circuit court to reconsider its January order lowering James's maintenance and child support obligations. Next, on April 16, 2015, James filed an addendum to his prior motion. Therein he made several arguments regarding the arrearage amounts calculated by the Greenup County Child Support Office. James explained that he believed the Child Support Office's calculations were made based upon Melissa's representations only without consideration of the amounts he was actually ordered to pay by the circuit court.
Based upon our extensive review of the record this is the first motion to modify support filed by Melissa.
The issue of arrearages and other miscellaneous issues came before the circuit court on June 24, 2015. Following the hearing, the court ordered the Child Support Office and James to submit memos as to the amount of child support arrearage James owed along with calculations supporting that amount.
Following consideration of the memos submitted by the parties, the circuit court entered the following order on August 27, 2015, accepting the Child Support Office and Melissa's calculation of arrears:
The Respondent [James] acknowledges that he owes arrearages but he doesn't agree with the amounts that the Petitioner [Melissa] has set forth. The Petitioner [Melissa] alleges that the Respondent [James] owes a total of $21,117.59 in arrearages of which $12,675.75 is child support and $8,442.02 is spousal support. The arrearages are through June 2015. The Respondent [James] admits that the amount owed by the Respondent [James] is $5,347.07 through May 2015 for maintenance and child support. Both parties acknowledge that the difference in the arrearages would rely upon the interpretation by this Court of whether or not when the Respondent [James] orally agreed to pay $700.00 per month that it superseded a Court Order which required him to pay $415.00. The Respondent [James] argues that the Respondent's [James's] agreement to pay more child support and his failure to pay that additional amount
would not result in an arrearage since it would not supersede the original Court Order. The Petitioner [Melissa] argues that the agreement to pay additional monies, as has been acknowledged by the Respondent [James] is enough to result in the higher amount of arrearage.(R. at 233-34).
The Respondent's [James's] assertion that he cannot be held to his oral modification of child support is not supported by case law. It is well been established by the Kentucky Courts that private agreements between parties to modify child support obligations will be enforced if the modification can be proven with reasonable certainty. And would have been approved or Ordered by the Court if a motion had been filed. This is Price v. Price, 912 S.W.2d 44(Ky. 1995).
Therefore, it is the finding of this Court that the Respondent [James] agreed to pay the higher amount of child support and that same would have been approved by the Court if a motion had been filed. Therefore, it is the JUDGMENT AND ORDER of this Court that the Respondent [James] is in arrears in the amount of $21,117.59 through June 2015.
James moved to alter, amend, or vacate this order. Therein, James requested specific factual findings regarding what agreement the circuit court relied upon in determining that James agreed to pay $700 in child support every two weeks. The circuit court overruled James's motion. James appealed to our Court.
II. ANALYSIS
A. Separation Agreement
KRS 403.180 sets forth that parties may enter into a separation agreement:
(1) To promote amicable settlement of disputes between parties to a marriage attendant upon their separation or the dissolution of their marriage, the parties may enter into a written separation agreement containing provisions for maintenance of either of them, disposition of any property owned by either of them, and custody, support and visitation of their children.
(2) In a proceeding for dissolution of marriage or for legal separation, the terms of the separation agreement, except those providing for the custody, support, and visitation of children, are binding upon the court unless it finds, after considering the economic circumstances of the parties and any other relevant evidence produced by the parties, on their own motion or on request of the court, that the separation agreement is unconscionable.
(3) If the court finds the separation agreement unconscionable, it may request the parties to submit a revised separation agreement or may make orders for the disposition of property, support, and maintenance.
(4) If the court finds that the separation agreement is not unconscionable as to support, maintenance, and property:
(a) Unless the separation agreement provides to the contrary, its terms shall be set forth verbatim or incorporated by reference in the decree of dissolution or legal separation and the parties shall be ordered to perform them; or
(b) If the separation agreement provides that its terms shall not be set forth in the decree, the decree shall identify the separation agreement and state that the court has found the terms not unconscionable.
(5) Terms of the agreement set forth in the decree are enforceable by all remedies available for enforcement of a judgment, including contempt, and are enforceable as contract terms.Id.
(6) Except for terms concerning the support, custody, or visitation of children, the decree may expressly preclude or limit modification of terms if the separation agreement so provides. Otherwise, terms of a separation agreement are automatically modified by modification of the decree.
The statute requires the court to ascertain whether the separation agreement is unconscionable prior to incorporating the agreement into the final divorce decree. KRS 403.180(2); Peterson v. Peterson, 583 S.W.2d 707, 711 (Ky. App. 1979). A separation agreement may be set aside as unconscionable if it is "manifestly unfair or inequitable," Wilhoit v. Wilhoit, 506 S.W.2d 511, 513 (Ky. 1974), or if it is the result of fraud, undue influence, or overreaching. Peterson, 583 S.W.2d at 712. In ascertaining whether a separation agreement is unconscionable, the court must consider "the economic circumstances of the parties and any other relevant evidence . . . ." KRS 403.180(2). The party challenging the agreement bears the "definite and substantial" burden of proof. Peterson, 583 S.W.2d at 711.
James challenges the court's finding that the parties' settlement agreement was not unconscionable. Specifically, James argues that the court failed to consider the economic circumstances of the parties in ascertaining whether the parties' settlement agreement is unconscionable. Further, James argues that the court failed to make specific findings of fact as to the economic circumstances of the parties.
Prior to rendering its decision, the circuit court held a hearing wherein the parties had the opportunity to testify about their financial circumstances. Following the hearing, the court issued an order wherein it found that the parties' settlement agreement was not unconscionable. In its order, the court explained, in pertinent part, that:
[T]he Petitioner had been a stay at home mother, had only worked the last years, and has had health problems requiring surgery. The Respondent failed to demonstrate that the agreement is manifestly unfair. Respondent is now employed, earning approximately $6,000 per month, and he agreed that the maintenance obligation would not begin until he began employment. The maintenance obligation is for two (2) years. Therefore, the agreement is not manifestly unfair.Considering such language, we cannot conclude that the court's order is devoid of any evidence of consideration of the parties' economic circumstances. The circuit court found that because the maintenance obligation only lasted for two years and was contingent on James being employed, which would allow him to pay the maintenance obligation, the agreement was not manifestly unfair. We agree.
Importantly, James has not alleged any fraud, undue influence or overreaching. James participated in the negotiations of the agreement and signed the agreement in front of a notary public. There is no evidence that James did not understand the consequences of his decision when the agreement was executed or that he was unaware of his financial obligations or income at the time of the agreement. See Peterson, 583 S.W.2d at 712. While James subsequently became dissatisfied with the parties' agreement, it cannot be found "unconscionable solely on the basis that it is a bad bargain." Id.
The circuit court is in the superior position to determine whether a separation agreement is unconscionable. Shraberg v. Shraberg, 939 S.W.2d 300, 333 (Ky. 1997). On appeal, we defer to the circuit court's sound judgment and will not disturb the family court's conscionability determination absent an abuse of discretion. See id.; Peterson, 583 S.W.2d at 712. James willingly entered into the Settlement Agreement. There is no evidence James was unaware of his obligations at the time he signed the order. In sum, we simply cannot say that the circuit court abused its discretion in concluding the Settlement Agreement was not manifestly unfair or unreasonable and, accordingly, not unconscionable.
B. Child Support Modification
Next, James argues that the circuit court erred in its calculation of the child support arrears owed by him. The circuit court entered an order on August 27, 2015, which imputed a child support obligation on James of $700.00 every two weeks, to be used in calculating his arrearage amount. In its order, the circuit court acknowledged that the difference in the arrearage amounts depended upon whether James orally agreed to pay the higher amount. The court concluded that James orally agreed to the higher amount and that such amount would have been approved by it had a motion been filed.
The court's order incorrectly states that the issue is whether James orally agreed to pay $700.00 a month, but based upon the parties' arguments and the calculations, the court meant to say $700.00 every two weeks, which is the amount that the court ultimately imputed. --------
Generally, KRS 403.213 defines when and upon what circumstances a child support order may be modified. The statute explicitly states that "[t]he provisions of any decree respecting child support may be modified only as to installments accruing subsequent to the filing of a motion for modification and only upon a showing of a material change in circumstances that is substantial and continuing." However, we have recognized that many parents do agree, without the aid of the courts, as to modifications of custody and child support. In those instances, a court has the power to recognize the modification of the child support obligation and calculate the arrearages accordingly. Mauk v. Mauk, 873 S.W.2d 213 (Ky. App. 1994); Whicker v. Whicker, 711 S.W.2d 857 (Ky. App. 1986); Tinnell v. Tinnell, 681 S.W.2d 918 (Ky. App. 1984). A court will enforce an oral agreement between parties to modify support if: (1) the agreement is proven with reasonable certainty; (2) the court finds that the agreement is fair and equitable under the circumstances; and (3) modification might reasonably have been granted if a proper motion had been made. Price v. Price, 912 S.W.2d 44, 46 (Ky. 1995) (citing Whicker, 711 S.W.2d at 859).
Having reviewed the record, we cannot ascertain any error by the circuit court. The circuit court made the necessary findings and conclusions. First, the circuit court determined that James voluntarily agreed to pay $700.00 based on his reemployment. It then determined that this was a reasonable amount. Finally, it determined that it would have modified its prior order had the parties moved for a modification. While James disagrees with the circuit court's conclusions, substantial evidence supported them. Therefore, we must affirm.
IV. CONCLUSION
For the aforementioned reasons, we affirm the Greenup Circuit Court.
ALL CONCUR. BRIEF FOR APPELLANT: W. Jeffery Scott
Brandon M. Music
Grayson, Kentucky NO BRIEF FOR APPELLEE.