Opinion
NO. 2015-CA-000550-MR
04-15-2016
ANGELA A. ROWLAND APPELLANT v. BARRY D. ROWLAND APPELLEE
BRIEF FOR APPELLANT: Sandra J. Reeves Corbin, Kentucky BRIEF FOR APPELLEE: David M. Mills Barbourville, Kentucky
NOT TO BE PUBLISHED APPEAL FROM KNOX CIRCUIT COURT
HONORABLE STEPHEN JONES, JUDGE
ACTION NO. 94-CI-00328 OPINION
AFFIRMING BEFORE: DIXON, MAZE AND STUMBO, JUDGES. STUMBO, JUDGE: Angela A. Rowland ("Appellant") appeals from an Order of the Knox Circuit Court denying her Motion for Summary Judgment on her claim for interest accruing from a child support arrearage. She maintains that even if the trial court never specifically entered a prior Order awarding interest on child support arrearages and judgments, she is nevertheless entitled to interest by operation of Kentucky Revised Statute (KRS) Chapter 360. Because an award of interest arising from a child support arrearage is discretionary rather than mandatory, we find no error and AFFIRM the Order on appeal.
On October 14, 1994, Barry Rowland ("Appellee") filed a petition in Knox Circuit Court to dissolve his marriage with Appellant. At the time of the filing, the parties had one minor child under the age of two. By the end of 1994, the parties had executed an Agreed Order awarding temporary custody of the child to Appellant, and directing Appellee to pay monthly child support in the amount of $198.24. A Decree of Dissolution and child support order incorporating the Agreed Order were rendered on January 20, 1995. On August 6, 1996, another Agreed Order was rendered increasing Appellee's monthly child support obligation to $282.72.
An extensive procedural history followed over the following two decades. According to Appellant, the Appellee paid no child support from the time of the entry of the original Agreed Order until approximately 2008. Over the years that followed, Appellant filed numerous motions seeking contempt orders, and various orders and arrest warrants were issued. On February 6, 2006, the Knox Circuit Court rendered an order adjudging Appellee to be $32,933.12 in arrears.
According to Appellant, Appellee began making regular payments toward the child support arrearage beginning in 2012 which continued until September 2014. When Appellee believed that he had completed paying the arrearage, he filed an Affidavit with the court asserting that his obligation was paid in full.
During this same period, it was determined that the Knox Circuit Clerk was unable to locate a large portion of the circuit court record. The clerk filed an affidavit on June 2, 2015, acknowledging that video records going back to 2007 could not be located. Additionally, the clerk stated that its computer system was irreparably damaged by a computer technician resulting in the loss of all digital records from 2011 to 2013. Thus, the Knox Circuit Clerk and the parties acknowledge that large portions of the extensive record cannot be recovered.
The parties appear to agree that the principle balance was paid in full by September 2014. Shortly thereafter, Appellant renewed a motion to fix and quantify interest on a November 2005 arrearage judgment, and on arrearages accruing after that date. Appellant computed a dollar amount which she submitted to the court for consideration.
On February 25, 2015, the court conducted a hearing to address the question of whether Appellee owed any interest on the arrearage, and if so in what amount. The matter was styled as Appellant's Motion for Summary Judgment on the Issue of Interest. After considering the motion, the court rendered an Order on March 31, 2015, denying Appellant's Motion for Summary Judgment on the issue of interest. The court rejected Appellant's contention that interest was mandatory and accrued as a matter of right. Rather, the court determined that KRS 407.5101(21) provides that the Court may in its discretion award interest and other relief. It found that the court's prior Judgment rendered in November 2005, made no provision for interest. It went on to note that while the court previously entered Orders granting relief in connection with the enforcement of the child support obligation, such as incarceration and the reimbursement of Appellee's attorney fees, the court never applied interest to the Judgment. Finally, the court rejected Appellant's reliance on Gibson v. Gibson, 211 S.W.3d 601 (Ky. App. 2006), upon finding that Gibson recognized the discretionary nature of an award of interest on a child support arrearage. The court ultimately determined that it would be inequitable to render an award of interest. It denied Appellant's motion, and this appeal followed.
KRS 407.5101 was amended on June 24, 2015, after the trial court's order at issue. The current version of KRS 407.5101(21) is KRS 407.5101(28).
Appellant now argues that the Knox Circuit Court erred in denying her motion for interest on the child support arrearage. She first argues that even though a substantial portion of the record is missing, there is nevertheless ample evidence that the trial court awarded interest on the arrearage judgments, and that the parties were aware of this ruling. She directs our attention to portions of the existing record wherein interest was mentioned, including a Commonwealth of Kentucky Child Support Division Report, as well as a conversation between the parties' respective counsels at a May 30, 2007 hearing wherein interest was discussed.
Appellant goes on to argue that even if the trial court never specifically rendered an order awarding interest, she was entitled to interest by operation of KRS 360.040 when Appellee missed his first child support payment. Finally, she contends that the trial court abused its discretion in failing to identify factors that would make it inequitable to require Appellee to pay interest on the arrearage judgments.
Appellant acknowledges that the record is void of any order directing Appellee to pay interest on the accrued child support obligation. The first question for our consideration is whether the extant record, including any existing documentary evidence and conversations between counsels, demonstrates that the missing portion of the record contained an award of interest. We must answer this question in the negative. Appellant cites a conversation occurring at the May 30, 2007 hearing, as well as a document stating the rate of interest should it be awarded. However, neither of these occurrences, nor anything to which Appellant directs our attention, is sufficient to prove that the Knox Circuit Court rendered an award of interest which is not found in the record.
According to Appellant, a newly elected Family Court Judge took jurisdiction over this case in January 2015, who had no direct knowledge of the proceedings prior to this date. --------
Appellant goes on to argue that even if no award of interest was rendered, she is nevertheless entitled to interest by operation of KRS 360.040 which states,
[a] judgment shall bear twelve percent (12%) interest compounded annually from its date. A judgment may be for the principal and accrued interest; but if rendered for accruing interest on a written obligation, it shall bear interest in accordance with the instrument reporting such accruals, whether higher or lower than twelve percent (12%). Provided, that when a claim for unliquidated damages is reduced to judgment, such judgment may bear less interest than twelve percent (12%) if the court rendering such judgment, after a hearing on that question, is satisfied that the rate of interest should be less than
twelve percent (12%). All interested parties must have due notice of said hearing.At first blush, this provision appears to impose interest on all judgments. However, a panel of this Court has previously held that,
Kentucky courts have . . . held interest is not always required despite the mandatory language of KRS 360.040. Rather, the statute simply requires that a trial court must impose the statutory rate of interest once it determines that interest is appropriate. Courtenay v. Wilhoit, 655 S.W.2d 41, 42 (Ky. App. 1983). Nonetheless, the trial court may find that the statutory interest rate is not appropriate given the equities of the particular case and may deny post-judgment interest altogether. Id. See also Young v. Young, 479 S.W.2d 20, 22 (Ky. 1972), and Guthrie v. Guthrie, 429 S.W.2d 32, 36 (Ky. 1968).Ensor v. Ensor, 431 S.W.3d 462, 477 (Ky. App. 2013).
Pursuant to Ensor, then, 1) interest is not always required despite the mandatory language of KRS 360.040; 2) the statute merely requires the imposition of the statutory interest rate if the court first determines that interest is appropriate; and 3) the court may deny post-judgment interest altogether. Applying these principles to the facts before us leads us to conclude that the Knox Circuit Court properly rejected Appellant's contention that KRS 360.040 operates to require an award of interest. Rather, Courtenay and Ensor recognize that the award of interest is discretionary rather than mandatory, and the Knox Circuit Court properly so found.
Finally, Appellant argues that the trial court abused its discretion in failing to weigh the equities and identify factors that would make it inequitable to require Appellee to pay interest on the arrearage judgments. Citing Hardin v. Hardin, 711 S.W.2d 863 (Ky. App. 1986), Appellant contends that because it took Appellee some 21 years to pay off his arrearage judgment, it would be inequitable not to render an award of interest.
The trial court is vested with discretion in awarding interest on a child support arrearage. Gibson, supra. Abuse of discretion is found where the court's decision is "arbitrary, unreasonable, unfair or unsupported by sound legal principles." Commonwealth v. English, 993 S.W.2d 941, 945 (Ky. 1999). Additionally, nothing in the case law or statutory law requires the trial court to enumerate the factors leading to its conclusion that an award of interest would be inequitable. Rather, the court may merely find that such an award is inequitable. Gibson, supra. In the matter at bar, the court noted that Appellee had made payment in the amount of $51,309.92, and that the minor child had now reached the age of majority. As such, and because the record is void of any judgment or order imposing interest, the court exercised its discretion in denying Appellant's claim for interest. Because the record and the law support the Knox Circuit Court's denial of Appellant's motion, we find no error.
For the foregoing reasons, we AFFIRM the Order of the Knox Circuit Court.
ALL CONCUR. BRIEF FOR APPELLANT: Sandra J. Reeves
Corbin, Kentucky BRIEF FOR APPELLEE: David M. Mills
Barbourville, Kentucky