Coffey v. Coffey , 888 N.W.2d 805 ( 2016 )


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  • #27721-a-JMK
    
    2016 S.D. 96
    IN THE SUPREME COURT
    OF THE
    STATE OF SOUTH DAKOTA
    ****
    DEBRA R. TECH COFFEY,                        Plaintiff and Appellee,
    v.
    MICHAEL F. COFFEY,                           Defendant and Appellant.
    ****
    APPEAL FROM THE CIRCUIT COURT OF
    THE FIRST JUDICIAL CIRCUIT
    MCCOOK COUNTY, SOUTH DAKOTA
    ****
    THE HONORABLE TIMOTHY W. BJORKMAN
    Judge
    ****
    TRESSA ZAHRBOCK KOOL of
    Lockwood & Zahrbock Kool Law Office
    Sioux Falls, South Dakota                    Attorneys for plaintiff
    and appellee.
    MICHAEL E. UNKE
    Salem, South Dakota                          Attorney for defendant
    and appellant.
    ****
    CONSIDERED ON BRIEFS
    ON AUGUST 29, 2016
    OPINION FILED 12/21/16
    #27721
    KERN, Justice
    [¶1.]        Debra R. Tech Coffey sought a divorce from Michael F. Coffey. They
    entered into a stipulation and agreement (Agreement) to resolve all issues and
    divide their property and debt. Paragraph 2 of the Agreement awarded the marital
    home to Michael, divided responsibility for the two mortgages on the home, and
    declared that should the home be sold, the proceeds from the sale would first be
    used to pay off any sum remaining on the mortgages.
    [¶2.]        Michael sold the home in April 2015 and used the proceeds of the sale
    to pay off both mortgages. He requested reimbursement from Debra for the
    mortgage debt assigned to her. She refused to reimburse him. Michael filed a
    motion for an order to show cause, asking the circuit court to hold Debra in
    contempt and enter a judgment against her for the amount he paid on her mortgage
    plus interest. The circuit court denied his motion. Michael appeals. We affirm.
    BACKGROUND
    [¶3.]        Michael and Debra married on February 14, 1987. On February 18,
    2010, they entered into the Agreement, which divided their property and debt.
    Debra’s counsel drafted the Agreement. This case concerns the first two sections of
    Paragraph 2 of the Agreement:
    Defendant shall be awarded the marital residence . . . . The
    Plaintiff will be responsible for the 1st mortgage at Bank of
    America and shall have the length of the loan to either pay it off
    or refinance it. Plaintiff will save and hold harmless the
    Defendant from any liability on said mortgage. Defendant will
    be responsible for the second at Service First Credit Union and
    shall have the length of the loan to either pay it off or refinance
    it. Defendant will save and hold harmless the Plaintiff from any
    liability on said mortgage. Defendant agrees to be responsible
    for the taxes and insurance on said property.
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    If Defendant would sell the home prior to the 1st or 2nd
    mortgage being paid in full, then upon sale of the home these
    mortgages will be paid in full first out of the proceeds of the
    home.
    On February 23, 2010, the circuit court signed a judgment and decree of divorce,
    which incorporated the Agreement.
    [¶4.]        On April 10, 2015, Michael sold the home and used the proceeds from
    the sale to extinguish both mortgages. He immediately sought reimbursement from
    Debra for the $56,040.35 he paid to satisfy the remaining balance on the first
    mortgage. Debra refused to pay him.
    [¶5.]        On August 17, 2015, Michael filed a motion for an order to show cause,
    seeking to have Debra held in contempt. He requested judgment against Debra in
    the amount of $56,040.35 plus prejudgment interest accrued from the date of sale
    and attorney’s fees. In November 2015, with the parties’ consent, the court held a
    hearing on the interpretation of the contract but did not address the contempt
    portion of the motion because notice was inadequate. The court told the parties if it
    determined the contract was ambiguous, it would hold a hearing to take evidence of
    the parties’ intent and on the issue of contempt. On December 28, 2015, the court
    issued a memorandum decision and order denying Michael’s motion. The court
    held: (1) the Agreement was unambiguous, and its plain meaning did not require
    Debra to reimburse Michael; (2) reimbursement would constitute an improper
    modification of the property division; and (3) because Debra had no duty to
    reimburse Michael, she was not in contempt. Michael appeals.
    [¶6.]        We restate Michael’s issues as follows:
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    1. Whether the circuit court erred in its interpretation of the
    Agreement as unambiguous and not requiring reimbursement.
    2. Whether the circuit court erred in holding that an order for
    reimbursement would constitute an impermissible modification of a
    final property settlement.
    3. Whether the circuit court erred in denying Michael’s motion for an
    order to show cause.
    STANDARD OF REVIEW
    [¶7.]        We review a circuit court’s findings of fact under the clearly erroneous
    standard, while conclusions of law are reviewed de novo. Hamilton v. Sommers,
    
    2014 S.D. 76
    , ¶ 17, 
    855 N.W.2d 855
    , 861. Contract interpretation is a question of
    law reviewed de novo. Lillibridge v. Meade Sch. Dist. #46-1, 
    2008 S.D. 17
    , ¶ 9,
    
    746 N.W.2d 428
    , 431 (citing Hanson v. Vermillion Sch. Dist. #13-1, 
    2007 S.D. 9
    , ¶
    24, 
    727 N.W.2d 459
    , 467).
    ANALYSIS
    1.     Whether the circuit court erred in its interpretation of the
    Agreement as unambiguous and not requiring reimbursement.
    [¶8.]        “Divorce stipulations are governed by the rules of contract; their
    interpretation is a matter of law for the courts to decide.” Hisgen v. Hisgen,
    
    1996 S.D. 122
    , ¶ 4, 
    554 N.W.2d 494
    , 496. “[I]n determining the proper
    interpretation of a contract the court must seek to ascertain and give effect to the
    intention of the parties.” 
    Id. (quoting Malcolm
    v. Malcolm, 
    365 N.W.2d 863
    , 865
    (S.D. 1985)). “In order to ascertain the terms and conditions of a contract, we must
    examine the contract as a whole and give words their ‘plain and ordinary meaning.’”
    Gloe v. Union Ins. Co., 
    2005 S.D. 30
    , ¶ 29, 
    694 N.W.2d 252
    , 260 (quoting Elrod v.
    Gen. Cas. Co. of Wis., 
    1997 S.D. 90
    , ¶ 15, 
    566 N.W.2d 482
    , 486). Further, we do not
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    “interpret language ‘in a manner that renders a portion of [the contract]
    meaningless.’” Tri-City Assocs., L.P. v. Belmont, Inc., 
    2014 S.D. 23
    , ¶ 11, 
    845 N.W.2d 911
    , 915 (quoting Estate of Fisher v. Fisher, 
    2002 S.D. 62
    , ¶ 14, 
    645 N.W.2d 841
    , 846). “Instead, we interpret the contract to give ‘a reasonable and effective
    meaning to all [its] terms.’” 
    Id. (quoting Casey
    Ranch Ltd. P’ship v. Casey, 
    2009 S.D. 88
    , ¶ 11, 
    773 N.W.2d 816
    , 821).
    [¶9.]        “When the meaning of contractual language is plain and unambiguous,
    construction is not necessary. If a contract is found to be ambiguous the rules of
    construction apply.” Pesicka v. Pesicka, 
    2000 S.D. 137
    , ¶ 6, 
    618 N.W.2d 725
    , 726.
    Ambiguity requires more than mere disagreement:
    A contract is not rendered ambiguous simply because the parties
    do not agree on its proper construction or their intent upon
    executing the contract. Rather, a contract is ambiguous only
    when it is capable of more than one meaning when viewed
    objectively by a reasonably intelligent person who has examined
    the context of the entire integrated agreement.
    Dowling Family P’ship v. Midland Farms, 
    2015 S.D. 50
    , ¶ 13, 
    865 N.W.2d 854
    , 860
    (quoting Pesicka, 
    2000 S.D. 137
    , ¶ 
    10, 618 N.W.2d at 727
    ). “This Court has said
    that ‘[a]mbiguities arising in a contract should be interpreted and construed against
    the scrivener.’” Advanced Recycling Sys., LLC v. Se. Props. Ltd. P’ship, 
    2010 S.D. 70
    , ¶ 19, 
    787 N.W.2d 778
    , 785 (quoting Campion v. Parkview Apartments, 
    1999 S.D. 10
    , ¶ 34, 
    588 N.W.2d 897
    , 904).
    [¶10.]       Both parties argue that the Agreement is unambiguous, but they reach
    markedly different conclusions as to its proper meaning. Debra submits the circuit
    court did not err in finding the Agreement unambiguous and not requiring
    reimbursement. Debra argues her obligation was contingent upon Michael
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    retaining ownership of the home. Michael, on the other hand, argues “the
    Agreement and exhibit 1 are not ambiguous when construed together.” But Michael
    concludes that the plain language of the Agreement obligates Debra to reimburse
    him for his satisfaction of the first mortgage. In Michael’s view, to hold otherwise
    would be inequitable and result in an ambiguity.
    [¶11.]       The alleged ambiguity arises from a document titled “Spread Sheet
    Asset – Liability” (Exhibit 1) that was attached to the Agreement. Michael claims
    Exhibit 1 was incorporated into the Agreement because it is referenced three times
    in the Agreement. Exhibit 1 is a spread sheet that lists Debra’s and Michael’s total
    assets and liabilities from their property settlement. It provides for an equalizing
    payment by Debra to Michael in the amount of $3,383. This payment is required by
    Paragraph 30 of the Agreement. Because Exhibit 1 lists the first mortgage as a
    liability assignable to Debra that was used to equalize the division of property,
    Michael now submits that Debra must reimburse him for the amount he paid from
    the sale proceeds to satisfy the first mortgage. Michael argues that if Paragraph 2
    is interpreted to extinguish part of Debra’s total liabilities, the division of property
    is unequal. Such a resolution, Michael contends, results in a direct ambiguity
    within the Agreement as to Debra’s net assets: $230,825 under Exhibit 1 or
    $174,785 (the net assets in Exhibit 1 less the $56,040.35 used to pay off the first
    mortgage) under the terms of Paragraph 2. To avoid such an ambiguity, Michael
    advances his view that the Agreement is unambiguous and requires Debra to
    immediately reimburse him for his payment of the first mortgage. In the
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    alternative, both parties request remand to the circuit court for an evidentiary
    hearing on the parties’ intent should this Court find the Agreement ambiguous.
    [¶12.]       We agree with the circuit court that the Agreement is unambiguous,
    and its plain meaning does not require Debra to reimburse Michael. Paragraph 2
    states: “The Plaintiff [Debra] will be responsible for the 1st mortgage at Bank of
    America and shall have the length of the loan to either pay it off or refinance it.” It
    also requires that Debra “will save and hold harmless the defendant [Michael] from
    any liability on said mortgage.” This language contemplates that Debra will be
    solely responsible for the first mortgage and would prevent Michael from incurring
    any liability for nonpayment of the mortgage. There are, however, two provisions in
    this opening paragraph that contextualize Debra’s obligation. First, it begins:
    “Defendant shall be awarded the marital residence located at 25037 444 Ave in
    Salem, South Dakota.” Second, the paragraph ends: “Defendant agrees to be
    responsible for the taxes and insurance on said property.” Debra’s obligation to
    save and hold Michael harmless from liability for the first mortgage is embedded
    between statements granting Michael possession of the home and requiring him to
    pay standard expenses for the home. Thus, the duty to hold Michael harmless on
    the first mortgage is moored to Michael’s continued possession of the home.
    Further, Paragraph 2 gives Debra a specific timeframe to pay off or refinance the
    loan (i.e., “the length of the loan”). Although Debra does have a duty to shield
    Michael from liability for the first mortgage, that duty was created as part of the
    arrangement awarding Michael possession of the home.
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    #27721
    [¶13.]         The duty to shield Michael from liability on the first mortgage is
    modified by a conditional provision in Paragraph 2. The provision states: “If the
    Defendant would sell the home prior to the 1st or 2nd mortgage being paid in full
    then upon the sell [sic] of the home these mortgages will be paid in full first out of
    the proceeds of the home.” (Emphasis added.) The use of “first” removes this
    language from the realm of possible ambiguity. “First” 1 indicates a demarcation of
    priority; it divides the universe of payment methods into different sets. The
    Agreement plainly requires the mortgages to be paid first from the proceeds from
    the sale of the home.
    [¶14.]         A contract is not ambiguous because it fails to explicitly cover all
    possible situations upon the occurrence of a conditional provision. Rather, “a
    contract is ambiguous only when it is capable of more than one meaning when
    viewed objectively by a reasonably intelligent person who has examined the context
    of the entire integrated agreement.” Pesicka, 
    2000 S.D. 137
    , ¶ 
    10, 618 N.W.2d at 727
    (quoting Singpiel v. Morris, 
    1998 S.D. 86
    , ¶ 16, 
    582 N.W.2d 715
    , 719). The
    Agreement requires proceeds from the sale of the home to be used first to pay off
    any remaining mortgages on the home. It is necessary to draw upon other funds for
    repayment only after proceeds from the sale of the home are used. 2 Paragraph 2
    1.       The American Heritage College Dictionary offers two common meanings of
    “first” that are relevant here: “2. The one coming, occurring, or ranking before
    or above all others. 3. The beginning; the outset; at first.” American Heritage
    College Dictionary 513 (3rd ed. 1997).
    2.       The circuit court cited two cases from other jurisdictions for the proposition
    that the plain meaning of a provision in a contract is controlling. See Roe v.
    Roe, 
    742 P.2d 203
    (Wyo. 1987); Walker v. Pfeiffer, No. 1872-99-2, 2000 WL
    (continued . . .)
    -7-
    #27721
    sets forth an arrangement that allowed Michael to live in the home and required
    Debra to pay the first mortgage while holding Michael harmless from liability for
    the same. Michael had the right to sell the home, but his decision altered this
    arrangement.
    [¶15.]       Equally important as the use of the word “first” is the absence of a
    reimbursement provision. The “save and hold harmless” clause does not operate to
    require reimbursement. Rather, Debra’s obligation to save and hold Michael
    harmless from the first mortgage was the status quo at the time of the initial
    division of property. The conditional language altered Debra’s obligation but only
    because Michael chose to sell the home before the first mortgage was paid off. This
    provision alters the earlier obligations, not the other way around.
    [¶16.]       Additionally, reading the Agreement to require reimbursement even
    after the conditional provision was triggered would render the language
    superfluous. We must interpret the Agreement to give “a reasonable and effective
    meaning to all [its] terms[.]” Casey, 
    2009 S.D. 88
    , ¶ 
    11, 773 N.W.2d at 821
    (quoting
    In re Dissolution of Midnight Star Enters., L.P. ex rel. Midnight Star Enters., Ltd.,
    
    2006 S.D. 98
    , ¶ 12, 
    724 N.W.2d 334
    , 337). If the Agreement required
    reimbursement because Debra’s duty to save and hold harmless was not altered by
    the conditional provision, the language would merely force Michael to use proceeds
    from the sale of the home instead of other personal funds to pay off the mortgages.
    __________________
    (. . . continued)
    34617836 (Va. Ct. App. July 11, 2000). Although neither case is directly on
    point, they are persuasive for the proposition that a court must interpret the
    plain meaning of the contract before it.
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    This reading strains credulity. A reading of the language of the Agreement that
    gives effect to all the terms of the Agreement is that upon effectuating the
    conditional provision, Michael was first required to use the proceeds from the sale of
    the home to extinguish the first mortgage. Michael was not required to sell the
    home but chose to do so, and the Agreement required the proceeds of the home to
    first be used to pay off the mortgages, leaving nothing for which Debra was liable. 3
    3.    Contrary to the dissent’s assertion, we have not “add[ed] two unwritten
    ‘conditions’” to the Agreement. Infra ¶ 26. The first “unwritten condition”
    the dissent discusses is that “Debra’s hold-harmless obligation was first
    conditioned on Michael’s ‘continued possession of the home.’” 
    Id. The dissent,
    however, mischaracterizes our language in ¶ 12 of this opinion. To
    interpret the Agreement, “we must examine the contract as a whole.” Gloe,
    
    2005 S.D. 30
    , ¶ 
    29, 694 N.W.2d at 260
    . The first section of Paragraph 2, as
    explained by ¶ 12 of this opinion, creates a baseline of duties and rights
    associated with the two mortgages and possession of the home. The next
    section of Paragraph 2, which contains the conditional provision, creates an
    exception to the duties and rights spelled out in the first section upon the sale
    of the home. Read together, these two sections in Paragraph 2 of the
    Agreement reveal that the conditional provision in section two modifies the
    duties and rights set forth in section one of Paragraph 2.
    The second alleged “unwritten condition” is that “Debra’s obligation to pay
    the mortgage debt was ‘modified by [a] conditional provision’ in the home-sale
    clause that discharged her obligation if Michael sold the home.” Infra ¶ 26.
    We have not added this “condition” but rather given effect to the plain
    meaning of the Agreement. The second section of Paragraph 2 uses
    conditional language: if Michael sold the home before either mortgage debt
    was paid off, then those mortgages will be paid first from the proceeds of the
    sale. This language is a conditional statement because it sets forth a
    condition (i.e., selling the home), which triggers subsequent obligations. The
    parties chose to use the words “if” and “then” in a paragraph immediately
    following a paragraph that set forth rights and duties. The only reasonable
    interpretation of the language in Paragraph 2 is that the if–then statement
    modifies the parties’ previously stated rights and duties. While conditions in
    contracts should be strictly construed, we cannot ignore the meaning of the
    words “if” and “then.”
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    [¶17.]         One of the necessary linchpins of Michael’s argument is the assertion
    that Exhibit 1 is incorporated into the Agreement, which he contends gives rise to
    an ambiguity. Although Defendant claims that “[m]ost courts would consider
    [Exhibit 1] as part of the contract,” he cites no South Dakota case law for this
    proposition. Instead, Michael cites a 1954 federal-district-court decision from
    California that refers to a flexible process of incorporation by reference. 4 This Court
    has not adopted a test for the incorporation of other documents into a contract and
    declines to do so in this case as it is not necessary to resolve the issue presented. 5
    4.       See United States v. Outer Harbor Dock & Wharf Co., 
    124 F. Supp. 337
    , 343
    (S.D. Cal. 1954) (“It is the law of contracts of California that a contract may
    refer to another contract for details or conditions. When this is done, the
    contracts referred to must be considered as a part of the contract in which the
    reference is made. And it is not necessary that language be used
    incorporating them into the second contract or that they be attached to it.”).
    5.       In a civil case based on diversity jurisdiction, the United States District
    Court for the District of South Dakota, citing the United States Court of
    Appeals for the Eighth Circuit, held that “[a] contract ‘may incorporate
    another document if the terms of the incorporated document are known or
    easily available to the contracting parties.’” Dakota Foundry, Inc. v. Tromley
    Indus. Holdings, Inc., 
    891 F. Supp. 2d 1088
    , 1099 (D.S.D. 2012) (quoting
    Halbach v. Great-West Life & Annuity Ins. Co., 
    561 F.3d 872
    , 876 (8th Cir.
    2009). The district court relied upon the reasoning of the Supreme Court of
    Michigan for the following principle:
    Although neither physical attachment nor specific language is
    necessary to incorporate a document by reference, the
    incorporating instrument must clearly evidence an intent that
    the writing be made part of the contract. When the question of
    whether another paper or term has been incorporated by
    reference depends on the ‘exercise of speculation, surmise and
    conjecture’ the court will refuse to rewrite the contract.
    
    Id. (quoting Forge
    v. Smith, 580 N.W.2d, 876, 882 n.21 (Mich. 1998)).
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    [¶18.]         Even if we were to adopt such a test and find Exhibit 1 incorporated
    into the Agreement, it would not change the analysis. 6 This is because we find
    significant the Agreement’s lack of a reimbursement provision or other related
    language. In the first section of Paragraph 2, Debra is given the life of the loan to
    extinguish or refinance the mortgage debt. The agreement is silent as to the details
    of any dollar amount or terms of reimbursement for Michael for proceeds from the
    sale of the home used to pay off the first mortgage. We cannot add terms to the
    language of the Agreement but rather “are bound by the words chosen by the
    parties.” Pesicka, 
    2000 S.D. 137
    , ¶ 
    12, 618 N.W.2d at 727
    . It is true that Exhibit 1
    provides an itemized list and proposed valuations of the parties’ assets and
    liabilities as described in the Agreement and as such, evinces the parties’ rights and
    obligations at the time the Agreement was entered into. But “we must examine the
    contract as a whole[.]” Gloe, 
    2005 S.D. 30
    , ¶ 
    29, 694 N.W.2d at 260
    . The conditional
    6.       The dissent alleges the Agreement is ambiguous because it does not address
    the “question of ultimate liability.” Infra ¶ 24. Regarding the ultimate
    liability, there is no ambiguity because the conditional language does not
    eliminate the save-and-hold-harmless clauses. If the proceeds from the sale
    of the home were insufficient to extinguish Debra’s obligation on the first
    mortgage, then it would still be her duty to save and hold Michael harmless
    from that debt. Thus, the only way an ambiguity is reached on the ultimate-
    liability issue is by reading the provisions as mutually exclusive. Nothing in
    the Agreement suggests that the second section wipes out the rights and
    duties spelled out in the first section. Rather, the second section’s conditional
    language modifies the first section’s rights and duties in a specific instance
    and for a specific purpose. Accordingly, there is no need for the Agreement to
    spell out what “was to come second,” as the dissent argues. Infra ¶ 24
    (emphasis omitted). Hence, the Agreement is not ambiguous.
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    language altered 7 the parties’ obligations when Michael sold the home. Debra is
    not required to reimburse Michael because the Agreement is clear in what it
    demands and conspicuous in what it does not.
    2.     Whether the circuit court erred in holding that an order for
    reimbursement would constitute an impermissible modification
    of a final property settlement.
    [¶19.]         The circuit court did not err in holding that Michael’s request for
    reimbursement would constitute an impermissible modification of a final property
    settlement. “The long-standing law of this State is ‘that the division of property
    pursuant to a divorce decree is not subject to modification.’” Hiller v. Hiller,
    
    2015 S.D. 58
    , ¶ 12, 
    866 N.W.2d 536
    , 541 (quoting Sjomeling v. Sjomeling, 
    472 N.W.2d 487
    , 489 (S.D. 1991)). The Agreement divided the parties’ property
    pursuant to the divorce decree, and as such, it is not subject to modification unless
    indeterminate language is used in the Agreement. See Hisgen, 
    1996 S.D. 122
    , ¶ 
    9, 554 N.W.2d at 497
    (“While a property division is irrevocably fixed by the terms of
    the divorce decree and cannot be later modified, if indeterminate language was
    employed, a court may clarify its decree . . . .”). But the language of Paragraph 2 is
    7.       The dissent contends that our opinion is “not supported by the language of
    the agreement.” Infra ¶ 26. But our reading is fully supported by the text of
    the Agreement. The use of conditional language creates a foreseeable future
    that may not come to pass. Michael did not have to sell the home, but after
    five years, he chose to do so. This decision triggered the conditional
    provision, which had the effect of modifying the parties’ rights and duties as
    spelled out by the Agreement and as detailed in Exhibit 1. The dissent’s
    reading would invalidate the use of conditional language in this contract. We
    are bound by the words the parties chose, and they explicitly set forth a
    conditional provision that Michael could trigger, thereby altering the
    property settlement.
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    determinate, setting forth the specific manner in which the first mortgage should be
    resolved without reference to reimbursement to Michael. Five years after execution
    of the Agreement, Michael chose to set the conditions of repayment in motion by
    selling the home, and we will not relieve him of the consequences of his decision or
    rewrite the parties’ Agreement.
    3.     Whether the circuit court erred in denying Michael’s motion for
    an order to show cause.
    [¶20.]       The circuit court did not err by denying Michael’s motion for an order
    to show cause seeking to hold Debra in contempt for failing to reimburse him. “The
    purpose of the civil contempt proceeding is to force a party ‘to comply with orders
    and decrees issued by a court in a civil action for the benefit of an opposing party.’”
    Sazama v. State ex rel. Muilenberg, 
    2007 S.D. 17
    , ¶ 23, 
    729 N.W.2d 335
    , 344
    (quoting Wold Family Farms, Inc. v. Heartland Organic Foods, Inc., 
    2003 S.D. 45
    , ¶
    14, 
    661 N.W.2d 719
    , 723). The four elements of contempt are: “(1) existence of an
    order, (2) knowledge of that order, (3) ability to comply with the order, and (4)
    willful or contumacious disobedience.” Talbert v. Talbert, 
    290 N.W.2d 862
    , 864
    (S.D. 1980). Debra cannot be held in contempt because she did not engage in willful
    or contumacious disobedience of the order dividing marital property. Debra was not
    required to reimburse Michael after the proceeds from the sale of the home were
    used to pay off the first mortgage. Thus, the circuit court did not err in denying
    Michael’s motion for an order to show cause.
    CONCLUSION
    [¶21.]       The circuit court did not err by finding the Agreement was
    unambiguous. Nor did it err in its interpretation of the Agreement. The plain
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    language of the Agreement does not require Debra to reimburse Michael. And the
    circuit court correctly determined that Michael’s request for an order requiring
    repayment from Debra would result in an impermissible modification of a final
    property settlement. Accordingly, the circuit court did not err when it denied
    Michael’s motion for an order to show cause. We affirm.
    [¶22.]       GILBERTSON, Chief Justice, and SEVERSON and WILBUR,
    Justices, concur.
    [¶23.]       ZINTER, Justice, dissents.
    ZINTER, Justice (dissenting).
    [¶24.]       The circuit court’s judgment incorporated the divorcing parties’
    property-settlement agreement that provided for an equal division of their net
    worth. Under the agreement, Michael was awarded the home and Debra was
    obligated to pay the first-mortgage debt. A hold-harmless clause provided that
    Debra was to “save and hold [Michael] harmless” for “any liability” on that debt.
    She was also given the entire length of the mortgage to pay the debt. However, a
    separate home-sale clause provided that if Michael sold the home before the
    mortgage was satisfied, the mortgage was to “first” be satisfied from the sale
    proceeds. The dispute in this case arose because although the separate home-sale
    clause provided that the parties were to first use sale proceeds to satisfy the
    mortgage, the parties neglected to include language as to what was to come second.
    Because the agreement fails to address this question of ultimate liability for the
    mortgage, the agreement is ambiguous. Because the agreement is ambiguous, we
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    should, as the parties have requested, remand for an evidentiary hearing to
    determine the parties’ intent.
    [¶25.]       The majority correctly states the law governing the interpretation of
    ambiguous agreements. However, the Court erroneously concludes that this
    agreement is “unambiguous” and that its “plain meaning” discharges Debra’s
    obligation, making Michael ultimately liable for the mortgage debt. See supra
    ¶¶ 12-13. As is readily apparent, there is no transfer or discharge-of-liability
    language in the agreement. Further, considering Debra’s contractual right to pay
    the debt over the entire length of the mortgage, the home-sale clause can be
    reasonably interpreted to simply enable a sale of the home by satisfying recorded
    mortgages without affecting Debra’s ultimate liability for the mortgage debt.
    Because the agreement is subject to different, reasonable interpretations, it is
    ambiguous. See Pankratz v. Hoff, 
    2011 S.D. 69
    , ¶ 16, 
    806 N.W.2d 231
    , 237.
    [¶26.]       The Court determines that the contract unambiguously discharges
    Debra’s obligation and transfers the mortgage liability to Michael only by adding
    two unwritten “conditions” to the agreement. According to the Court, Debra’s hold-
    harmless obligation was first conditioned on Michael’s “continued possession of the
    home.” Supra ¶ 12 (asserting that Debra’s obligation was “moored to Michael’s
    continued possession” because it is “embedded between” a sentence providing
    “Defendant shall be awarded the marital residence” and a sentence providing
    “Defendant agrees to be responsible for the taxes and insurance on said property”).
    But those sentences contain no language tying those provisions to Debra’s mortgage
    liability or the hold-harmless clause. They contain no language referencing—let
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    alone modifying—the hold-harmless clause. The Court also claims that Debra’s
    obligation to pay the mortgage debt was “modified by [a] conditional provision” in
    the home-sale clause that discharged her obligation if Michael sold the home. See
    supra ¶¶ 13, 15. But the home-sale clause is in a different paragraph than the
    mortgage and hold-harmless clauses. Moreover, there is nothing in the language
    (requiring that the mortgages “be paid in full first out of the proceeds” if Michael
    sold the home) that purports to modify ultimate liability for the debt. Thus, the
    Court’s claimed “conditions” are not supported by the language of the agreement.
    [¶27.]       Conditions are not favored by law and must be construed strictly.
    Weitzel v. Sioux Valley Heart Partners, 
    2006 S.D. 45
    , ¶ 38, 
    714 N.W.2d 884
    , 895-96;
    Point Dev., LLC v. Enter. Bank & Tr., 
    316 S.W.3d 543
    , 546-47 (Mo. Ct. App. 2010);
    17A Am. Jur. 2d Contracts § 453, Westlaw (database updated Nov. 2016). “[A]n act
    or event designated in a contract will not be construed as a condition unless that
    clearly appears to be the intention of the parties.” 17A Am. Jur. 2d Contracts § 443.
    “The document as a whole must be examined and it must be determined that the
    intent of the parties was to pre-agree that the happening or nonoccurrence of the
    stated event after the contract becomes binding would cause the” contractual
    obligation to terminate. Weitzel, 
    2006 S.D. 45
    , ¶ 
    38, 714 N.W.2d at 896
    .
    [¶28.]       Here, the parties’ intent is not clearly reflected in the agreement. The
    agreement included provisions for an award of the home, payment of taxes, liability
    for the first- and second-mortgage debt, and immediate satisfaction of the
    mortgages in the event of a sale. Although the home-sale clause provided for the
    immediate satisfaction of the mortgages “first out of the” sale proceeds, the
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    #27721
    agreement never addresses ultimate liability. The parties also failed to include
    express language either discharging Debra’s responsibility for the mortgage or
    transferring that liability to Michael. Without such language, the hold-harmless
    clause can be reasonably read to remain effective after the sale. Rather than
    adding unwritten conditions to the agreement, we should hold that the agreement is
    ambiguous and remand for the circuit court to determine the parties’ intent.
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