Opinion
NO. 2017-CA-001936-MR
05-31-2019
TINA J. SCHELL APPELLANT v. CHRISTOPHER G. SCHELL APPELLEE
BRIEFS FOR APPELLANT: J. Gregory Troutman Louisville, Kentucky BRIEF FOR APPELLEE: Carol S. Petitt Adam E. Fuller Pewee Valley, Kentucky
NOT TO BE PUBLISHED APPEAL FROM OLDHAM CIRCUIT COURT
HONORABLE DOREEN S. GOODWIN, JUDGE
ACTION NO. 09-CI-00524 OPINION
AFFIRMING
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BEFORE: COMBS, NICKELL, AND K. THOMPSON, JUDGES. NICKELL, JUDGE: Tina J. Schell ("Tina") appeals from an order releasing a judgment lien entered by the Oldham Circuit Court, Family Division, following her divorce from Christopher G. Schell ("Christopher"). Tina contends the family court, in releasing the lien, erroneously determined Christopher's payment of $16,138.27 should apply toward repayment of a custodial account in the name of their minor child, rather than toward other debts she alleges were owed to her. After careful consideration, we affirm.
The parties' divorce has been contentious, and this is the fourth time Tina has appealed to this Court on various issues relating to the dissolution. We shall, therefore, confine ourselves to only the most pertinent facts relating to the current appeal. Christopher and Tina were married on September 23, 1993, in Oldham County, Kentucky. The parties had one minor child at the time of dissolution. Christopher filed a petition for dissolution of the marriage in Oldham Circuit Court, Family Division, on June 1, 2009. Prior to the divorce proceedings, in 2006, Tina suffered a severe back injury in an accident which left her unable to work. As part of the settlement relating to her subsequent negligence suit, Tina began receiving annuity payments. In January 2009, Tina was adjudged disabled by the Social Security Administration (SSA) and began receiving disability payments as well.
As a result of the SSA action, the parties' minor child began receiving derivative benefit payments, and the parties deposited these funds into a custodial account. At the time Christopher vacated the marital residence in May 2009, the balance of the custodial account stood at $29,938.43. Christopher, who was the named custodian of the account, used the bulk of the funds for his attorney fees and personal expenses in the process of exiting the marriage. In the course of the dissolution proceedings, the family court determined Christopher should reimburse the custodial account for these improper personal expenditures.
In 2013, the family court ordered a judgment lien against Christopher's real property to secure Tina's interest in three separate financial judgments stemming from the dissolution. In its final order releasing the lien, which is the subject of the instant appeal, the family court described the judgments secured by the lien as follows:
[t]he first judgment arose from [Christopher's] obligation to restore certain non-marital property to [Tina]. The second judgment was related to [Christopher's] child support arrearages. The third judgment arose from [Christopher's] obligation to restore funds withdrawn from a custodial account established for the parties' son.
Tina's first two appeals to this Court involved several child support and marital property issues not directly relevant to the current action. Following each appeal, we remanded the matter to the family court for further proceedings. After the second appeal, the family court entered a final order on November 19, 2015, which disposed of the remaining financial issues in this case. The order encompassed the following issues: (1) valuation of Tina's non-marital interest in a vehicle awarded to Christopher; (2) accrual of post-judgment interest on amounts owed to Tina; and (3) application of Christopher's previous payment, in the amount of $19,129.52, toward the various debts owed to Tina. With regard to the first two issues, the family court determined Tina was not entitled to additional money owed on the vehicle, nor was she entitled to post-judgment interest. Regarding the third issue, the family court ordered the $19,129.52 tendered by Christopher to be applied first toward the amount owed on unpaid child support, thereby fully satisfying the child support judgment. The remainder would be credited toward Christopher's only outstanding debt, the custodial account judgment. After factoring in these remaining funds, the family court considered the equities and made the following determination:
[i]f [Christopher] makes the full payment of $16,138.27 to the custodial account of the minor child within the six months, the Court shall hold the imposition of all additional interest in abeyance. If full payment is not made within six months, 12% interest shall continue to attach to all unpaid amounts and shall be retroactive to June 12, 2014.
Tina subsequently filed her third notice of appeal, this time stemming from the November 19, 2015, order. Shortly thereafter, Christopher tendered a check to Tina, dated February 5, 2016, in the amount of $16,138.27. Tina then moved to dismiss her pending third appeal on March 30, 2016, alleging she had received "payment which satisfies the amounts she sought to recover by way of a reversal of the Trial Court's November 19, 2015 Final Order." We granted Tina's motion to dismiss her third appeal on May 11, 2016.
The record reflects no further activity in this case until October 7, 2016, when Christopher moved the family court to remove the judgment lien, asserting he had paid the custodial account judgment within six months as required by the November 19, 2015, order. At this point, the original family court judge had resigned and was no longer sitting on the bench, and the new family court judge was not yet familiar with the parties and their issues. Tina's counsel initially argued the court should deny the motion because Christopher had presented no proof of payment. In a hearing on the motion, held January 6, 2017, Christopher produced a copy of the court's November 19, 2015, order; copies of his checks for $19,129.52 and $16,138.27, each of which bore Tina's endorsement; and a certified mail receipt for the latter check addressed to Tina's counsel's office. At the time, Tina's counsel appeared to be entirely unaware of the existence of the $16,138.27 check. At the end of the hearing, the family court gave Tina ten days to provide proof to the court of her receipt of the funds and where the funds were deposited.
Following the hearing, Tina filed a supplemental response to the motion to release the judgment lien. In her response, Tina conceded the check for $16,138.27 existed and had been cashed. However, she asserted the check did not specify what debt it was intended to pay, and, therefore, the funds were applied toward the other amounts she believed were owed to her as part of the now- dismissed third appeal. In other words, she applied the $16,138.27 to the non-marital property restoration and interest payments which had been denied in the November 19, 2015, order, rather than toward the $16,138.27 owed on the custodial account pursuant to that same order. Finally, she contended if Christopher did not intend for the check to pay the debts asserted in the third appeal, he should have "immediately objected to Tina's Motion" to dismiss, and he should be equitably estopped from now claiming the check was intended for the custodial account debt.
On October 26, 2017, the family court entered an order denying Tina's motion, finding her arguments unconvincing on two levels. First, the family court viewed her efforts as an improper attempt to revive arguments previously adjudicated by the family court in the November 19, 2015, order. Second, the family court noted Christopher's check for $16,138.27 paid the exact amount required by the court's November order to satisfy the debt to the custodial account, and the family court did not consider this to be mere coincidence. The family court declined to consider Tina's equitable estoppel argument. This appeal followed.
ANALYSIS
"In a dissolution action, the well-settled standard of review of a trial court's legal findings is de novo." Jones v. Livesay, 551 S.W.3d 47, 50 (Ky. App. 2018) (citing Hunter v. Hunter, 127 S.W.3d 656, 659 (Ky. App. 2003)). A trial court's factual findings, however, may be set aside only if those findings are clearly erroneous, i.e., unsupported by substantial evidence. Id. at 50-51 (citing Moore v. Asente, 110 S.W.3d 336, 354 (Ky. 2003)). "Substantial evidence is [e]vidence that a reasonable mind would accept as adequate to support a conclusion and evidence that, when taken alone or in the light of all the evidence . . . has sufficient probative value to induce conviction in the minds of reasonable [people]." Gullett v. Commonwealth, 514 S.W.3d 518, 523 (Ky. 2017) (citation and internal quotation marks omitted). Furthermore,
trial courts are afforded broad discretion in dividing marital property and marital debt. We will not disturb a trial court's rulings on these issues in the absence of an abuse of its discretion or clearly erroneous factual findings. An abuse of discretion generally implies arbitrary action or capricious disposition under the circumstances, at least an unreasonable and unfair decision.Jones, 551 S.W.3d at 51 (citations and internal quotation marks omitted).
Tina presents two arguments on appeal. First, she contends the family court erroneously determined the February 2016 check for $16,138.27 applies toward and fully satisfies the custodial account. Second, she contends the family court erroneously failed to find Christopher was equitably estopped from challenging Tina's application of his February 2016 check.
For her first issue, Tina argues the family court erroneously determined the $16,138.27 payment (1) applied solely toward the custodial account debt, and (2) served as full satisfaction of that claim. Regarding the first part, whether the check applied toward the custodial account, both parties cite Straub v. Chemical Bank, 608 S.W.2d 71 (Ky. App. 1980). In Straub, we stated:
it is the rule that a creditor receiving payments from his debtor, without any direction as to their application, may appropriate them to any legal debt which he holds against his debtor, a creditor holding secured and unsecured claims may apply an undirected payment in an unsecured claim.Id. at 73 (quoting Wilkes v. Kitchen, 187 Ky. 211, 218 S.W. 718, 719 (1920)). Based on Straub, Tina argues she was entitled, as the creditor, to apply the February 2016 check to the amounts in contention in her pending third appeal. For his part, Christopher asserts these disputed amounts were not "legal debts" owed under Straub.
We agree with Christopher and hold there was no legal debt, aside from the custodial account, toward which his February 2016 check could apply at the time it was tendered. Our previous high court discussed the nature of legal debt and held its defining characteristic was the certainty of the putative obligation.
The basic idea of 'debt', as a legal term, is that an obligation has arisen out of contract, express or implied, which entitles the creditor unconditionally to receive from the debtor a sum of money which the debtor is under legal, equitable, or moral obligation to pay without
regard to any future contingency. 26 C.J.S., Debt, p. 2. The elements of debt are discussed in 26 C.J.S., Debt, p. 4, as follows:Evans v. Kroh, 284 S.W.2d 329, 330-31 (Ky. 1955) (emphasis added). At the time Tina filed her notice of appeal stemming from the November 19, 2015, order, the only debt Christopher owed as a legal matter, without any uncertainty, was the $16,138.27 payment to the custodial account. Tina's attempt to characterize her other claims pending on appeal as legal debts is unpersuasive because she could not be certain of a successful outcome in the action.
'Every debt must be either solvendum in praesenti, or solvendum in futuro—must be certainly, and in all events, payable; whenever it is uncertain whether anything will ever be demandable by virtue of the contract, it cannot be called a 'debt,' since debt is a liquidated demand, the payment of which is not dependent on the happening of any contingency or the performance of any condition. While the sum of money may be payable upon a contingency, yet in such case it becomes a debt only when the contingency has happened[.]'
In addition, other factual circumstances support the family court's conclusions regarding the proper application of the February 2016 check. The family court did not give any consideration to Tina's argument asserting this payment was in settlement of her other claims and did not clearly err in so doing. Aside from Tina's bare assertion otherwise, there is nothing definitive in the record to support the idea of the check as a settlement in exchange for voluntary dismissal of the third appeal. We also agree with the family court's conclusion finding the amount specified on the check itself to be strong circumstantial evidence as to its intended application. At the time Christopher tendered the $16,138.27 check, his sole obligation under the family court's order was to pay $16,138.27 to the custodial account. The family court found payment in the exact amount required by the order to be highly convincing, and the family court did not err on this point.
For Tina's adjunct argument to her first issue, she asserts the February 2016 check could not be in full payment of the custodial account debt, because the November 19, 2015, order erroneously suspended or otherwise incorrectly calculated the accumulation of interest. The family court considered Tina's arguments to be an improper attempt to revive issues from her dismissed third appeal. We agree. Arguments relating to the essential correctness of the November 19, 2015, order are no longer appropriate.
Arguments not pursued on appeal are deemed waived. Cook v. Popplewell, 394 S.W.3d 323, 327 n.5 (Ky. 2011); Brown v. Commonwealth, 313 S.W.3d 577, 610 (Ky. 2010) ("[A]n extension of the core law-of-the-case doctrine is the rule that precludes an appellate court from reviewing not just prior appellate rulings, but decisions of the trial court which could have been but were not challenged in a prior appeal").Garland v. Commonwealth, 458 S.W.3d 781, 785 (Ky. 2015). Tina could have and should have asserted error as to the calculation of interest in her third appeal, stemming from the November 19, 2015, order. Those assertions of error are now foreclosed to her. Accordingly, the family court did not err in determining Christopher owed only $16,138.27 pursuant to the November 19, 2015, order.
In Tina's second issue on appeal, she argues the family court erroneously failed to find Christopher was equitably estopped from challenging Tina's application of his February 2016 check. Tina argues Christopher should have objected to her motion to dismiss the third appeal, in which she stated she had received "payment which satisfies the amounts she sought to recover by way of a reversal of the Trial Court's November 19, 2015 Final Order." Instead, she alleges Christopher "sat on his hands" and silently permitted this Court to dismiss the appeal.
"Under Kentucky law, equitable estoppel requires both a material misrepresentation by one party and reliance by the other party[.]" Fluke Corp. v. LeMaster, 306 S.W.3d 55, 62 (Ky. 2010). "Estoppel is a question of fact to be determined by the circumstances of each case." Sebastian-Voor Properties, LLC v. Lexington-Fayette Urban County Government, 265 S.W.3d 190, 194 (Ky. 2008) (citation omitted). We review a trial court's findings on equitable estoppel for clear error. Weiand v. Board of Trustees of Kentucky Retirement Systems, 25 S.W.3d 88, 92 (Ky. 2000).
[B]roadly speaking, as related to the party claiming the estoppel, the essential elements are (1) lack of knowledge and of the means of knowledge of the truth as to the facts in question; (2) reliance, in good faith, upon the conduct
or statements of the party to be estopped; and (3) action or inaction based thereon of such a character as to change the position or status of the party claiming the estoppel, to his injury, detriment, or prejudice.Id. at 91 (quoting Electric and Water Plant Board of City of Frankfort v. Suburban Acres Development, Inc., 513 S.W.2d 489, 491 (Ky. 1974)).
Here, Tina's claim of equitable estoppel fails on the first element because there is nothing to indicate she lacked knowledge and the means of knowledge regarding the facts. At the time of her third notice of appeal, she knew Christopher was obligated by court order to pay $16,138.27 toward the custodial account within six months. She received a check in that exact amount less than three months later. Not only is there nothing to suggest Christopher made any material misrepresentations of fact, there is also nothing in the record, as previously discussed, to suggest Christopher's payment was in satisfaction of anything but the custodial account debt. Even if Tina had any question as to how the payment should be applied, she had access to the "means of knowledge regarding the facts" of how to apply this payment. Nothing prevented the parties from drafting a settlement agreement or memorandum prior to dismissal of the third appeal which would have defined application of the February 2016 check. Based on the circumstances of this particular case, the family court did not clearly err in failing to credit Tina's arguments on equitable estoppel.
CONCLUSION
For the foregoing reasons, we affirm the Oldham Circuit Court, Family Division's order entered October 26, 2017.
ALL CONCUR. BRIEFS FOR APPELLANT: J. Gregory Troutman
Louisville, Kentucky BRIEF FOR APPELLEE: Carol S. Petitt
Adam E. Fuller
Pewee Valley, Kentucky
Schell v. Schell, 2011-CA-001386-MR, 2013 WL 1163882 (Ky. App. Mar. 22, 2013); Schell v. Schell, 2013-CA-002164-ME, 2015 WL 2153542 (Ky. App. May 8, 2015), Schell v. Schell, 2015-CA-001961-MR, order granting motion to dismiss entered May 11, 2016.