MELINDA HUFF KELLY v. BRADFORD STEVEN KELLY
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RENDERED: JUNE 24, 2005; 10:00 a.m.
NOT TO BE PUBLISHED
Commonwealth Of Kentucky
Court of Appeals
NO. 2004-CA-001406-MR
MELINDA HUFF KELLY
v.
APPELLANT
APPEAL FROM FAYETTE CIRCUIT COURT
HONORABLE TIMOTHY NEIL PHILPOT, JUDGE
ACTION NO. 97-CI-03661
BRADFORD STEVEN KELLY
APPELLEE
OPINION
VACATING AND REMANDING
BEFORE:
JUDGE.1
** ** ** ** **
COMBS, CHIEF JUDGE; GUIDUGLI, JUDGE; MILLER, SENIOR
GUIDUGLI, JUDGE:
Melinda Huff Kelly appeals from two orders of
the Fayette Circuit Court, Family Division, which reduced a
maintenance award entered at the time of dissolution from $2,400
per month to $2,000 per month and ordered further review of the
maintenance award twelve (12) months thereafter.
We vacate and
remand.
1
Senior Judge John D. Miller sitting as Special Judge by assignment of the
Chief Justice pursuant to Section 110(5)(b) of the Kentucky Constitution and
KRS 21.580.
The facts leading to this appeal, while not seriously
in dispute, are unusual and present an issue not previously
addressed by this Court.
On October 17, 1997, Melinda filed a
petition for dissolution of marriage from her husband, Bradford
Stephen Kelly.
The petition indicated that the parties had been
married on September 10, 1983, and that a separation agreement
had been entered.
The petition indicated that the separation
agreement resolved the marital issues relative to the
dissolution and that it should be approved by the court.
The
signed separation agreement was filed with the petition.
Bradford also signed a waiver of formal service that was filed
on that date.
Several months later, on March 16, 1998, Melinda
filed a motion for an uncontested dissolution hearing date with
a certification of service that was sent to Bradford.
The
dissolution hearing took place on April 3, 1998, before Fayette
Circuit Court Judge, John R. Adams.
Bradford was not
represented and did not appear at the hearing.
Melinda testified under oath as to the requirements
necessary to obtain dissolution.
She further testified that a
separation agreement had been entered into that resolved the
issues of custody, child support, maintenance, and property
division.
Following Melinda’s testimony, Judge Adams found the
separation agreement to be conscionable and granted the
dissolution.
As to the separation agreement, the judge stated:
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“The court finds that it has jurisdiction, that a decree should
be entered dissolving the marriage between the parties, that the
agreement entered December 17, 1997, is approved and made a part
of this decree by reference and the court finds that it is not
unconscionable.”
The court then added that Ms. Kelly is to have
custody of the children and that Mr. Kelly is to pay child
support in the sum of $1,000 per month and that Ms. Kelly is to
receive maintenance as set forth in the agreement.
No appeal
was taken from the decree which was entered the same day as the
hearing, April 3, 1998.
The next filing in the record is Melinda’s “Memorandum
in opposition to motion to set aside separation agreement” filed
April 7, 2004.
Unfortunately, the record does not contain
Bradford’s motion to set aside the separation agreement, which
is the basis for this appeal.
Although the motion is not in the
record, a hearing was held before the Fayette Circuit Court
Family Division, Judge Timothy N. Philpot, on April 12, 2004.
The video recording of the hearing is included in the record and
has been reviewed by this Court.
Following the April 12, 2004, hearing, the Family
Court entered an order on May 13, 2004, which we set out in
full:
The Respondent (hereinafter Husband)
has filed a Motion to set aside a portion of
the Original Separation Agreement, which
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requires him to pay $2,400 monthly in
permanent maintenance. No Motion has been
made to alter any other terms of the
Agreement. The grounds for the Motion are
essentially that the Agreement itself is
“unconscionable” as defined by Kentucky Law.
The Court conducted a hearing on April 12,
2004. Having heard the evidence and
reviewed the record, the Court finds the
following:
1.
It is clear that “the law favors
the stability in such
settlements”. Peterson v Peterson
583 S.W.2d 707. It is important
to parties to these agreements and
the Court itself be able to rely
upon the finality of these
decisions mutually agreed upon by
the parties. Only in extreme
circumstances should agreements be
set aside.
2.
KRS 403.180(2) is clear that an
agreement is binding unless it is
“unconscionable”.
3.
The definition of “unconscionable”
is somewhat subjective, but help
is found in Wilhoit v Wilhoit, 506
S.W.2d 707, which defines it as
“manifestly unfair or
inequitable”. The Court was clear
that just because one party enters
into a bad bargain does not mean
that the Agreement is
“unconscionable”.
4.
Sharberg v. Sharberg, 939 S.W.2d
330, expounded upon this
definition by stating that
unconscionability requires “a
showing of fundamental
unfairness”.
5.
Several factors actually weigh in
favor of this particular Agreement
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not being found unconscionable.
These factors include:
a)
Time to Review: The
amount of time that the
Husband had to review
the Agreement before
approving it indicates
that his decision was
contemplated and
deliberate, after
adequate weighing of all
the consequences of his
action. Specifically,
he had a total of seven
months from the time of
the initial handwritten
Agreement until the
Final Decree was issued
by the Court. This
provided the Husband
with ample time to
consider the Agreement,
seek advice about its
contents, and negotiate
its provisions. In
fact, several people,
including his Wife’s
attorney, advised him to
seek legal advice on the
matter and he chose not
to do so.
b)
Time Since Decree: The
Husband has been able to
comply with the original
Agreement for the past six
years without defaulting a
single payment. This
indicates that the Agreement,
although harsh, can be met.
He has not “complained” until
nearly seven years after the
Agreement.
c)
The Husband is a
professional, well-educated
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man: He works in Human
Resources. He earns a
professional salary. He was
capable of recognizing the
inherent inequity of this
Agreement. The fact that he
did not object in(sic)the
time it was being created,
when it was entered into, or
in the following six years
indicates that he believed he
could live with it.
d)
Husband’s Desire to Keep
Family “As Is”: The
Husband’s testimony indicated
that he wanted the
circumstances to stay the
same for his former wife and
their daughters. In order
for this to be accomplished,
he would have to sacrifice
greatly. He was willing to
do that.
e)
Fraud, Deceit or Undue
Influence: There is nothing
in the record or alleged by
either party to indicate that
fraud or undue influence was
a factor in the decision to
enter into the Agreement.
f)
Husband’s Therapist: The
testimony of the Husband’s
current therapist had little
weight in the decision of
this Court. Dr. James Ross
was able to provide little
relevant insight into the
Husband’s state of mind at
the time the Agreement was
made. He stated only that
the Husband suffered from
severe guilt for his affair,
and wanted to “atone for his
sins”.
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g)
h)
$300 to Live On: Husband has
testified that he slept in
his car, showered at the
YMCA, and otherwise has lived
destitute for most of the
past 6 years. However, in
the Peterson case, the
agreement was found to not be
unconscionable, even though
the Husband’s total income
was $970 monthly and he had
agreed to pay $700 monthly to
the Wife.
i)
6.
Later Events: Finally, the
Court also notes that the
Husband only began contesting
the conscionability of the
Agreement after his financial
situation worsened following
his second divorce and award
of support to his second
wife. He is now required to
pay over $500 per month for
another child.
Judge Adams’ Review: The
Court must further presume
that Judge Adams reviewed the
original Settlement Agreement
and found it to be
conscionable.
However, despite all the above, it
is apparent to this Court that the
Agreement is more than a bad
bargain. The Husband in this case
had an affair which ended his
marriage. The Wife was
devastated. Due to the strong
moral and religious feelings of
both parties, the Wife applied
pressure on the Husband, and he
agreed, to a settlement that was
more than a bad bargain. The
handwritten agreement even made
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reference to the Husband’s
“affair”. The agreement was
“manifestly unfair”. Agreements
can only be set aside if extreme
circumstances exist. It is an
extreme circumstance when the
Husband essentially agrees to give
virtually all of his income and
property to the Wife. Temporary
maintenance was probably
appropriate for a term of years,
but permanent maintenance was
probably not, in light of the
Wife’s abilities and the Husband’s
limitations.
7.
The Wife is a CPA who has not
worked since the children were
born. The handwritten Agreement
seems to indicate that the Wife
anticipated returning to work at
some point. The handwritten
agreement clearly anticipated the
possibility of the Wife going back
to work. Paragraph 22 even seems
to indicate she “does not need to
be employed for 2 more years
(until late fall of 1999, October
1999)...”
8.
If the Wife is able to work, the
payment of permanent maintenance
would be “unconscionable”. This
Court should now consider the
Wife’s ability to maintain
herself.
9.
The Court will conduct a hearing
to determine the duration and
amount of maintenance, if any,
that should be paid, said hearing
to begin on June 7, 2004 and to be
completed on June 8, 2004. The
Respondent will continue to pay
maintenance as agreed until
further Orders of this Court.
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Signed and dated this 11th day of May 2004.
Following the entry of this order, the court set
another hearing date “to determine the duration and amount of
maintenance, if any, that should be paid....”
At that hearing,
both parties testified and presented evidence relating to their
income, expenses and medical, physical, mental and emotional
well-being.
After considering the testimony and evidence
presented at the hearing, as well as the deposition of William
D. Weitzel, M.D.,2 the Family Court entered an order on June 21,
2004, setting maintenance at $2,000 per month.
The order, in
relevant part, states:
The parties appeared before the Court,
with counsel, on April 12, 2004, on the
Respondent/[Husband’s] Motion to Set Aside
the Property Settlement Agreement. After
hearing the testimony of the parties, and
reviewing the record in its entirety, the
Court entered an Order, dated May 13, 2004.
Such Order stated that if the wife was able
to maintain herself, the Property Settlement
Agreement was in fact unconscionable and
should be set aside on the issue of
maintenance.
The parties appeared before the Court,
with counsel, on June 7 and June 8, 2004, to
address the issue of the Petitioner/Wife’s
ability to provide for herself, and to
determine if, and to what extent, the Court
should stray from the Property Settlement
Agreement on the issue of maintenance.
2
At the hearing the parties indicated that they would take Dr. Weitzel’s
deposition and make that part of the record. Dr. Weitzel’s deposition is not
part of the record supplied to this Court, but the court order of June 21,
2004, does refer to the doctor’s deposition.
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FINDINGS OF FACT
1.
The Husband/Respondent’s annual income
is $81,392, according to
Husband/Respondent’s Exhibits 1 and 2.
2.
The Wife/Petitioner’s annual income is
$13,780, based on her hourly wage and
the number of hours worked per week.
3.
The Wife/Petitioner has several
physical and emotional conditions,
which cause her to be partially
disabled. According to Dr. Weitzel’s
deposition, she has major depression, a
generalized anxiety disorder, a
personality disorder, and
hypothyroidism. The Wife/Petitioner
cannot independently maintain herself,
which becomes evidence after
examination of KRS 403.200(2)(e)
allowing consideration of “the physical
and emotional condition of the spouse
seeking maintenance”. Also per Dr.
Weitzel’s deposition, the
Wife/Petitioner’s disability could
improve in the future with appropriate
treatment. This would likely include
“cognitive therapy” which the Court
believes should be conducted under the
supervision of Dr. Coleman.
4.
The Wife/Petitioner’s expenses of
$4,491 per month are reasonable.
5.
The Husband/Respondent’s expenses of
$3,717 per month are also reasonable.
6.
There is not enough income generated to
make either party whole.
7.
Currently, the Husband/Respondent has
$1,079 each month after meeting all
obligations for child support and
maintenance, including the $588 for the
child from his second marriage.
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CONCLUSIONS OF LAW AND ORDER
The Husband/Respondent shall pay the
Petitioner $2,000 each month in permanent
maintenance. The $400 reduction from the
previous order can be attributed to the
Wife/Petitioner’s employment and current
income. The Court will review this matter in
12 months to determine if the situation has
changed through successful treatment of the
Petitioner, adjusted income of either party,
or other considerations.
This appeal followed.
On appeal, the Court is presented with several issues
which makes a meaningful review impossible.
First, Melinda’s
introduction to her brief states that “[t]his is an appeal from
the modification of a maintenance order.”
(Emphasis added).
Yet, nowhere in her brief does she address KRS 403.250, the
statute that addresses modification of maintenance and property
division.
On the other hand, Bradford claims that he filed a
Motion for Modification of Maintenance (appellee’s brief, page
4), but then argues that the trial court had authority to
examine the conscionability of the separation agreement because
Judge Adams made “no written finding as to conscionability of
the Separation Agreement” (appellee’s brief, page 6). (Emphasis
added).
However, this statement ignores the statement made by
Judge Adams at the conclusion of the hearing on the dissolution
on April 3, 1998, when he stated, “that the agreement entered
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December 17, 1997, is approved and made a part of this decree by
reference and the court finds that it is not unconscionable.”
After a thorough review of the record, it is not clear
whether the Family Court order in this matter was a modification
of the original maintenance set forth in the separation
agreement or a de novo determination that the separation
agreement was unconscionable.
If the order was based upon the
finding that the separation agreement was unconscionable, the
order does not indicate upon what basis the court had the legal
authority to address the issue.
A determination had been
previously rendered by Judge Adams in 1998, which was not
appealed.
If the order was based upon the modification statute,
it does not so state nor does it address the fact that the
separation agreement is not subject to modification as was
acknowledged by Bradford’s attorney in his subsequent
dissolution action.
While our review of this case clearly shows that the
Family Court Judge attempted to resolve this matter in a fair,
reasonable and equitable manner, we can find no legal basis upon
which the court’s intervention and order is based.
As such, we
must vacate the order entered by the Fayette Circuit Court,
Family Division, and remand this matter for further proceedings.
Upon remand, the Family Court shall determine if this is a
modification of an existing maintenance order or a determination
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of whether the original separation agreement is unconscionable.
Once this determination is made, the court shall then state upon
what legal basis its decision is based.
ALL CONCUR.
BRIEF FOR APPELLANT:
BRIEF FOR APPELLEE:
John Kevin West
Lexington, KY
Linda W. Covington
Lexington, KY
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