McInnis and McInnis

Oregon Judicial Department Appellate Court Opinions

FILED: April 20, 2005

IN THE COURT OF APPEALS OF THE STATE OF OREGON

In the Matter of the Marriage of

POLLY ANN MCINNIS,
nka Polly Ann Pattee,

Respondent,

and

DAVID ALEXANDER MCINNIS,

Appellant.

9401-60507; A118748

Appeal from Circuit Court, Multnomah County. Merri Souther-Wyatt, Judge. Argued and submitted July 1, 2004. Thomas A. Bittner argued the cause for appellant. With him on the supplemental opening brief and the reply brief was Schulte, Anderson, Downes, Aronson & Bittner P.C. On the opening brief were Mark Johnson and Bennett, Hartman, Morris & Kaplan, LLP. Ivan M. Karmel argued the cause and filed the briefs for respondent. Before Landau, Presiding Judge, and Brewer, Chief Judge, and Armstrong, Judge.

LANDAU, P. J.

Judgment modifying spousal support reversed; judgment of contempt vacated and remanded for reconsideration.

LANDAU, P. J.

Husband appeals a judgment modifying spousal support and an amended judgment imposing sanctions for contempt. He advances a number of assignments of error, two of which we conclude are well-taken: (1) the trial court erred in refusing to enforce the terms of a marital settlement agreement that it had previously approved and incorporated into the dissolution judgment; and (2) the court erred in awarding wife her attorney fees. We therefore reverse the judgment modifying spousal support, vacate the judgment of contempt, and remand for reconsideration. The facts relevant to the disposition of the appeal are not in dispute. The parties were married in 1972, and they separated in 1991. Wife petitioned for dissolution, and the case went to trial in 1994. Each party was represented by counsel. After several days of trial, the parties entered into a detailed, 25-page marital settlement agreement. Among other things, the parties agreed that husband would pay wife spousal support of $5,000 per month for approximately seven years. The agreement also provided that "[a]ll spousal support payments as provided herein shall be non-modifiable." The agreement then restated that intention in four different ways. First, the agreement expressed the parties' intention in terms of a waiver of the right to seek modification: "Both parties waive any and all rights to modify the spousal support provision in this Agreement." Second, the agreement expressed the same intention in terms of estoppel: "Wife is estopped to modify the spousal support by increasing or extending the payments. Husband is estopped from reducing or terminating the spousal support payments except upon payment as provided herein." Third, the parties restated their intention with an indemnification clause: "Notwithstanding the non-modifiability of the spousal support payments as provided herein, if Wife is successful in convincing a Court that the spousal support should be modified, then Wife shall indemnify and hold Husband harmless from any loss, additional payments or damages incurred by any such court ruling, including any attorney fee expense." Finally, the parties stated yet again their intention, this time in terms of altering the authority of the court: "It is the intent of each party to divest the Court of the jurisdiction conferred upon it pursuant to the provisions of ORS 107.135 pertaining to modification of spousal support. While the parties understand that the Court cannot normally be divested of such jurisdiction to modify the spousal support provisions of a Judgment, in entering into this Agreement, they specifically rely on the Court's ruling[s] in the following cases: "Hurner and Hurner, 179 Or 349, 355[, 170 P2d 720] (1946); "Pearce and Pearce, 82 Or App 714[, 728 P2d 974 (1986), rev den, 303 Or 172 (1987)]." The parties also included in the agreement a severability clause, which provides, in part: "In the event any provision of this Agreement is deemed to be void, invalid or unenforceable, that provision shall be severed from the remainder of this Agreement so as not to cause the invalidity or unenforceability of the remainder of this Agreement. All remaining provisions of this Agreement shall continue in full force and effect." The parties signed the agreement and submitted it to the court. The court, in turn, entered a "Stipulation and Judgment of Dissolution of Marriage," which contained provisions concerning the court's approval of the marital settlement agreement, including the following statement concerning the nonmodifiability of spousal support: "11. The parties' Marital Settlement Agreement * * * is adopted and approved by the Court as just, proper, equitable and fair in all respects. "12. The court specifically approves, ratifies and validates the spousal support agreement of the parties that such spousal support payments shall be non-modifiable by the parties or the Court. Petitioner is estopped to modify the spousal support by increasing or extending the payments. Respondent is estopped from reducing or terminating the spousal support except upon death of the parties or payment as provided herein." Several months before husband's spousal support obligation was scheduled to end, wife filed a motion to modify, in which she asked the court to extend indefinitely husband's obligation to pay spousal support of $5,000 per month. The trial court entered a show-cause order. Husband responded by asserting that, among other things, the dissolution judgment that had been approved by the court precluded modification of spousal support. On the basis of that provision of the dissolution judgment, husband moved for dismissal or, in the alternative, judgment on the pleadings and enforcement of the settlement agreement. The trial court denied husband's motion. In its order, the court explained its decision in the following terms: "The provisions in the parties['] Property Settlement Agreement and Judgment of Dissolution that attempted to divest this court of jurisdiction to modify spousal support and to require wife to indemnify and hold husband harmless from any modification to the terms of the Judgment for Dissolution that the court might hereinafter order are void as against public policy in conformance with the holding in Hearn and Hearn, 128 Or App 259, 875 P2d 508 (1994). The court finds that said provisions conflict with the statutory powers of the court and are accordingly unenforceable." Discovery ensued. Wife served a request for production of documents, with which husband did not fully comply. Wife filed a motion to compel. The trial court granted the motion and ordered husband to produce certain materials; husband failed to do so. Wife then moved for an order finding husband in contempt and imposing sanctions. Among other things, wife sought to have husband pay her attorney fees for the support modification litigation. The court issued a show-cause order regarding the contempt. Following several hearings on the spousal support modification issue and the contempt issue, the court entered two judgments. In its "Judgment Modifying Spousal Support," the court modified the spousal support award to require husband to pay wife $6,000 per month indefinitely. In addition, the judgment included the following provisions: "2. Pursuant to the petitioner's Rule 68 submission previously submitted to this Court, and the respondent's objection thereto, and hearing thereon being held on July 17, 2002, it is hereby ORDERED that petitioner shall have money judgment against respondent on account of her attorney fees in the sum of $19,553 and $579.56 in costs. "3. The court having found the respondent to be in willful contempt of court for disobeying this court's order to compel, and the court having previously indicated in that order it was deferring imposition of sanctions until the hearing on the merits it is hereby ORDERED that in addition to those statutory factors recited by the court on July 17, 2002, as the basis for its award of attorney fees to the petitioner, that the court further finds that the award of attorney fees to petitioner is intended as a remedial sanction that it had previously deferred. The court makes its finding that its award of attorney fees to petitioner is based upon all the reasons set forth in petitioner's attorney's Rule 68 Affidavit. By way of further sanctions, the court strikes the provision of the Decree signed 12/1/94 and in the Marital Settlement Agreement incorporated therein, ¶5, that requires the wife to indemnify and hold husband harmless from any court ruling that modifies spousal support as the court has found that * * * modification provision to be void as against public policy and further that this provision was one-sided, unconscionable, reprehensible, and a result of over-reaching by husband in that the Decree and Marital Settlement Agreement were drafted to benefit the husband." The court entered an "Amended Judgment of Contempt." The court found that husband's failure to provide discovery was willful and that none of his excuses for not providing discovery as ordered was credible. The court stated that it had "found that an independent basis for the award of attorney fees was this court's previous finding of contempt. * * * The award of [attorney fees and costs in the initial judgment] is found by this court to be an appropriate remedial sanction for respondent's contempt of court." The court imposed no further sanction "beyond those set forth in that money judgment." On appeal, husband first assigns error to the trial court's decision to modify the spousal support provisions of the original dissolution judgment, which incorporated the parties' marital settlement agreement. He advances a number of arguments in support of his contention that the trial court erred in modifying the judgment. We find dispositive his argument that the court erred in failing to give effect to the provision in the marital settlement agreement--which the court previously had approved--waiving any right to seek a modification of spousal support. The parties' arguments on this point appear to talk past one another. Husband relies on the portion of the agreement in which both parties waived any right to seek a modification of the support obligation: "The parties bargained and agreed in their [marital settlement agreement] that each of them waived any claim to future modification of spousal support, that they released each other from any claim for support not specified in the agreement, and that each was estopped to assert any future claim for support modification. The dissolution court 'adopted and approved' and 'confirmed and ratified' the agreement and incorporated it into the dissolution judgment. "Despite those facts, the same trial judge on modification held the judgment unenforceable because 'it conflict[ed] with the statutory powers of the court[.]'" According to husband, particularly in light of the legislature's express approval in ORS 107.104 of marital settlement agreements in general and the use of ordinary contract remedies in particular, "the parties' waiver and their release of future modification rights in their 1994 agreement, having been approved by the court at that time and incorporated in the dissolution judgment, are enforceable as a matter of contract law" under that statute. In response, wife essentially ignores husband's waiver argument and seizes on the portion of the agreement in which the parties purport to divest the trial court of authority to modify support: "The trial court did not err. The parties could not lawfully, by contract, agree to divest the court of its jurisdiction to modify support. The principle that courts cannot enforce agreements that conflict with the statutory powers of the court remains good law and is not inconsistent with modern statute or case law that have preserved the exception to the general rule of enforceability of marital settlement agreements * * * where such agreements conflict with the statutory powers of the court." We begin our disposition of the foregoing arguments by setting out the relevant rules of law. It is well established that the parties to a dissolution proceeding "may and often do enter into separate agreements regarding the terms of the dissolution." Webber v. Olsen, 330 Or 189, 194, 998 P2d 666 (2000). The trial court is not obligated to approve such agreements; they always are subject to the court's review for fairness and equity under the circumstances. McDonnal and McDonnal, 293 Or 772, 779, 652 P2d 1247 (1982). Once approved by the court, however, "agreements entered into by the parties are to be enforced as a matter of public policy." Id. The Supreme Court has explained the nature of that public policy in terms of the freedom of parties to enter into contracts: "'It is axiomatic that public policy requires that persons of full age and competent understanding shall have the utmost liberty of contracting, and that their contracts, when entered into freely and voluntarily, shall be held sacred and shall be enforced by courts of justice; and it is only when some other overpowering rule of public policy intervenes, rendering such agreements unfair or illegal, that they will not be enforced.'" Id. (quoting Eldridge et al v. Johnson, 195 Or 379, 405, 245 P2d 239 (1952)); see also Prime v. Prime, 172 Or 34, 40, 139 P2d 550 (1943) ("The obligation of contracts must be respected and their terms enforced."); Edwards and Edwards, 73 Or App 272, 276, 698 P2d 542 (1985) ("when the parties voluntarily enter into a property and support agreement, and the agreement is approved by the court and incorporated into the decree, countervailing principles of public policy prevail and the parties' agreement generally will be given effect"). The court also has described the public policy in terms of fairness and equity to parties who enter into such agreements with the understanding that they are enforceable: "Where parties have foregone their opportunity to litigate disputes and have chosen instead to enter into an agreement, their reliance on the agreement can be presumed. Inequity may result if this court adopts a policy of less than full enforcement of mutually agreed upon property and support agreements." McDonnal, 293 Or at 779; see also