Joseph Lee Smith v. Margie Lee Smith (mem. dec.) ( 2017 )

MEMORANDUM DECISION
FILED
Pursuant to Ind. Appellate Rule 65(D), this Sep 01 2017, 8:17 am
Memorandum Decision shall not be regarded as CLERK
precedent or cited before any court except for the Indiana Supreme Court
Court of Appeals
purpose of establishing the defense of res judicata, and Tax Court
collateral estoppel, or the law of the case.
ATTORNEY FOR APPELLANT ATTORNEY FOR APPELLEE
Joseph A. Christoff Michael T. Yates
Christoff & Christoff More Miller & Yates
Fort Wayne, Indiana Fort Wayne, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Joseph Lee Smith, September 1, 2017
Appellant-Petitioner, Court of Appeals Case No.
02A03-1612-DR-2724
v. Appeal from the Allen Superior
Court.
The Honorable Charles F. Pratt,
Margie Lee Smith, Judge.
Appellee-Respondent. The Honorable Sherry A. Hartzler,
Magistrate.
Trial Court Cause No.
02D07-0211-DR-770
Friedlander, Senior Judge
[1] Joseph Lee Smith appeals the trial court’s award of damages to him, claiming
the award is insufficient and should not be payable in installments. He further
appeals the trial court’s refusal to hold his ex-wife Margie Lee Smith in
contempt of court. We affirm in part, reverse in part, and remand with
instructions.
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[2] Joseph and Margie married in 1991 and separated in 2002. They did not have
any children together. On November 15, 2002, Joseph filed a verified petition
for dissolution of marriage. The parties engaged in settlement negotiations and
filed a written settlement agreement. The trial court approved the agreement on
January 14, 2005, and incorporated it into a decree dissolving the parties’
marriage. Among other provisions, the agreement required Margie to pay
Joseph twenty-five percent of her “gross monthly” pension payments from the
State of Indiana’s Public Employees Retirement Fund (PERF) and to disclose
to Joseph on an annual basis the amount PERF paid her per month.
Appellant’s Appendix Vol. II, p. 23.
[3] On February 27, 2015, Joseph filed a Verified Information for Contempt,
Alternatively Breach of Contract. He amended the Verified Information on
June 5, 2015. Joseph claimed Margie had missed several monthly payments.
He further claimed Margie received additional pension funds as enhancements
to her monthly check or as standalone extra payments at the end of the year but
was not giving him his twenty-five percent share of those additional funds.
Finally, Joseph argued Margie had failed to disclose to him on an annual basis
the amount that PERF paid her per month. Margie did not dispute that she
had failed to make several monthly payments to Joseph but claimed he was not
entitled to a share of her additional payments.
[4] The trial court held an evidentiary hearing. On June 20, 2016, the court issued
an order determining Margie had failed to comply with the agreed judgment by
missing several payments and by paying Joseph from her net pension income
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rather than her gross monthly payments. The court declined to find she was in
contempt of court. The court further determined Margie was not required to
pay Joseph a share of her additional funds from PERF. Finally, the court
ordered Margie to pay Joseph $3,287.85 in damages at the rate of twenty-five
dollars per month, plus $4,512.50 in attorney’s fees at the rate of fifty dollars per
month.
[5] Next, Joseph filed a motion to correct error. The court corrected a scrivener’s
error in the judgment but otherwise denied the motion. This appeal followed.
[6] Joseph raises four issues, which we restate as: (1) whether the trial court erred
in determining Joseph was not entitled to a share of Margie’s additional
pension payments; (2) whether the trial court erred in ordering Margie to pay
damages and attorney’s fees in installments; (3) whether the trial court abused
its discretion in concluding that Margie was not in contempt of court; and (4)
whether Joseph is entitled to appellate attorney’s fees per the settlement
agreement.
1. Additional Pension Payments
[7] Joseph argues Margie is obligated under their settlement agreement to give him
a portion of her additional pension payments. Margie responds that she is
required to give him a share of her regular monthly pension payments and
nothing more.
[8] When dissolving a marriage, the parties are free to craft an agreement providing
for the disposition of property. Bailey v. Mann, 895 N.E.2d 1215 (Ind. 2008).
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Settlement agreements become binding contracts when incorporated into the
dissolution decree. Id. A trial court may entertain requests to clarify and
interpret a settlement agreement after it has been incorporated into a dissolution
decree, pursuant to ordinary contract law principles. Beaman v. Beaman, 844
N.E.2d 525 (Ind. Ct. App. 2006). Interpretation of a settlement agreement, as
with any other contract, presents a question of law and is reviewed de novo.
Bailey, 895 N.E.2d 1215.
[9] The terms of a settlement agreement will be given their plain and ordinary
meaning unless they are ambiguous. Pherson v. Lund, 997 N.E.2d 367 (Ind. Ct.
App. 2013). Where the terms are clear and unambiguous, we will not construe
the contract or look at extrinsic evidence. Magee v. Garry-Magee, 833 N.E.2d
1083 (Ind. Ct. App. 2005). The terms of a contract are ambiguous only when
reasonably intelligent persons would honestly differ as to the meaning of those
terms. Bressler v. Bressler, 601 N.E.2d 392 (Ind. Ct. App. 1992). If there is an
ambiguity, parol evidence is considered to clarify the ambiguity. Magee, 833
N.E.2d 1083. The goal is to determine the intent of the parties when they made
the agreement. McDivitt v. McDivitt, 42 N.E.3d 115 (Ind. Ct. App. 2015), trans.
denied.
[10] The parties’ settlement agreement provides: “The subject matter of this
Agreement is the settlement of the respective rights of Husband and Wife to all
property, both real and personal, now in their name and/or possession.”
Appellant’s App. Vol. II, p. 20. The contract further states:
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Wife shall pay to Husband on a monthly basis, an amount equal
to twenty-five percent (25%) of her gross monthly payment from
Wife’s pension from the State of Indiana Public Employees
Retirement Fund. Provided however, the first two such
payments·from Wife to Husband shall be in an amount equal to
fifty percent (50%) of Wife’s net payment from said pension and
thereafter said payments shall be in an amount equal to twenty-
five percent (25%) of her gross monthly payment from said
pension. Such payments shall commence October 15, 2004 and
shall be paid by Wife to Husband on the 15th of each month
thereafter until terminated as indicated herein. Such payments
shall terminate upon the earliest occurrence of the following: 1.
The expiration of 20 years of the date of the decree of dissolution
in this cause; 2. The death of Wife; or 3. The death of Husband.
Wife shall provide to Husband written documentation of the
amount of said monthly pension payment to Wife on an annual
basis. Should Wife make any other subsequent withdrawals from
such pension, she shall pay to Husband an amount equal to
twenty-five percent (25%) of any such other gross withdrawal or
any other available death benefit. Husband shall be entitled to
receive, from Wife’s estate, twenty-five percent (25%) of any such
other gross withdrawal or any other available death benefit from
said pension.
Id. at 23.
[11] As noted above, PERF issued to Margie her additional pension payments by
two methods: (1) as funds added to her “gross monthly payment;” and (2) a
standalone payment at the end of the year. Based on the plain language of the
settlement agreement, any funds added to Margie’s “gross monthly payment”
should have been included in calculating the monthly twenty-five percent share
Margie owed to Joseph. Margie is obligated to pay Joseph twenty-five percent
of her gross monthly payment, regardless of amount, and the settlement
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agreement does not exclude any additional funds that PERF may add to the
monthly payments.
[12] As for the standalone additional annual payments, the settlement agreement
does not mention them, focusing instead on Margie’s gross monthly payments.
The agreement purports to dispose of the parties’ rights to all marital property,
and the additional pension payments would appear to be marital property. See
Ind. Code § 31-9-2-98 (1997) (marital property includes “a present right to
withdraw pension or retirement benefits” and “the right to receive pension or
retirement benefits . . . that are vested . . . but that are payable after the
dissolution of marriage”). The agreement is ambiguous as to whether Joseph is
entitled to a twenty-five percent share of the standalone payments. See Shepherd
v. Tackett, 954 N.E.2d 477 (Ind. Ct. App. 2011) (divorce decree ambiguous as to
husband’s obligation to make mortgage payments for marital home).
[13] We may consider parol evidence to resolve the ambiguity. The parties did not
present to the trial court any evidence as to their intent with respect to the
1
standalone payments at the time they drafted the agreement. At the time the
agreement was drafted the parties anticipated monthly pension payments, but it
is unclear whether they were aware Margie would receive additional payments.
The trial court erred in concluding Joseph is not entitled to twenty-five percent
1
Joseph claims that Margie drafted the agreement and argues that it should be interpreted against her.
During oral argument on Joseph’s motion to correct error, his counsel conceded “we were both involved
involved [sic] in the drafting [and Margie’s counsel] was just the primary drafter.” September 12, 2016
Hearing Tr. p. 5. We decline to construe the agreement against Margie.
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of the standalone pension payments because the record is inadequate to
determine the parties’ intent. We reverse and remand for the court to: (1)
calculate Joseph’s share of the additional amounts that PERF added to
Margie’s gross monthly payments and adjust the damages award accordingly;
and (2) hear evidence as to the parties’ intent at the time the agreement was
drafted with respect to standalone additional payments from PERF and
determine whether the payments are subject to the settlement agreement.
2. Installment Payments
[14] Joseph argues the trial court lacked the authority to allow Margie to pay
damages and attorney’s fees in installments. Margie responds that the court
acted appropriately due to her limited economic circumstances. Resolving this
issue requires application of the governing statute. We apply a de novo
standard of review to questions of statutory interpretation. G.S. v. M.S., 69
N.E.3d 500 (Ind. Ct. App. 2017).
[15] The trial court had the authority to impose installment payments in the original
divorce decree. See Ind. Code § 31-15-7-4 (1997) (a court shall divide marital
estate “in a just and reasonable manner,” including ordering one spouse to pay
an amount where necessary, “either in gross or installments”). Joseph argues
that he presents a simple claim of breach of contract, and the court’s installment
plan prevents him from being made whole in a reasonable manner because it
will take years for Margie to pay off the judgment and attorney’s fees award in
increments of twenty-five and fifty dollars. He further claims the court should
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have simply entered a judgment for the total amounts Margie owed him and
allowed him to pursue proceedings supplemental to collect.
[16] The statute that governs enforcement of dissolution decrees provides:
Notwithstanding any other law, all orders and awards contained
in a dissolution of marriage decree or legal separation decree may
be enforced by:
(1) contempt;
(2) an income withholding order; or
(3) any other remedies available for the enforcement of a court
order;
except as otherwise provided by this article.
Ind. Code § 31-15-7-10 (2006).
[17] The statute grants the trial court wide discretion to ensure meaningful
compliance with a dissolution decree. For example, in Cope v. Cope, 846 N.E.2d
360 (Ind. Ct. App. 2006), the parties executed a decree that provided wife
would receive a portion of husband’s military pension, in installments, through
a qualified domestic relations order (QDRO) or other method approved by the
military. The military refused to recognize the QDRO, and husband refused to
make payments on his own. Wife sought to enforce the settlement agreement,
and the trial court garnished husband’s wages. A panel of this court affirmed
the trial court’s decision, concluding the trial court acted appropriately because
garnishment was the “only practical recourse.” Id. at 363.
[18] In this case, the court concluded Margie breached the agreement, but she was
seventy-four years old and “of meager means and resources.” Appellant’s App.
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Vol. II, p. 12. The court did not err in attempting to balance the parties’
interests by establishing a realistic payment plan.
[19] Joseph argues the court unfairly prevented him from seeking to enforce the
judgment through proceedings supplemental. We disagree. Nothing in the
court’s order prevents Joseph from seeking to enforce the judgment if Margie
misses an installment payment for damages or attorney’s fees.
[20] Joseph further claims the installment plan is, in substance, an inappropriate
modification of the terms of the agreement. “Orders concerning property
disposition” in an action for dissolution of marriage “may not be revoked or
modified, except in case of fraud.” Ind. Code § 31-15-7-9.1 (1998). A court
retains jurisdiction to interpret the terms of the decree and decide questions
pertaining to its enforcement. Shepherd, 954 N.E.2d 477. Clarifying a
settlement agreement, consistent with the parties’ intent, is not the same as
modifying the agreement. Id.[21] We cannot agree that the court modified the settlement agreement by ordering
payment of damages and attorney’s fees on an installment basis. None of the
terms of the agreement have changed. Margie still owes Joseph twenty-five
percent of her monthly payments and must compensate him for missed
payments. The court merely devised a plan that Margie can afford and is most
likely to result in compliance with the settlement agreement. See id. at 482 (trial
court did not modify decree but instead clarified terms under which husband
was to make monthly payments to wife).
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3. Contempt
[22] Joseph claims the trial court should have held Margie in contempt because she
disregarded the settlement agreement. Margie responds that the trial court
acted appropriately because she did not willfully violate the agreement.
[23] A person engages in “indirect contempt of court” when he or she “is guilty of
any willful disobedience of any process, or any order lawfully issued.” Ind.
Code § 34-47-3-1 (1998). Whether a party is in contempt of court is a matter for
the trial court’s discretion, and its decision will be reversed only for an abuse of
discretion. In re Paternity of M.F., 956 N.E.2d 1157 (Ind. Ct. App. 2011). A
court abuses its discretion when its decision is against the logic and effect of the
facts and circumstances or is contrary to law. Id. We will neither reweigh the
evidence nor judge the credibility of witnesses. Piercey v. Piercey, 727 N.E.2d 26(Ind. Ct. App. 2000).
[24] The trial court determined, and Margie does not dispute, that she violated the
settlement agreement by missing several monthly payments to Joseph and by
paying him from her net pension income rather than in gross pension income.
The record demonstrates Margie failed to make ten payments because she
experienced unexpected financial difficulties, including being unable to work
for several weeks in 2014-15 due to illness. Although she receives pension
payments and a paycheck, her income is limited. Further, Margie did not
appear to understand the difference between gross and net income. Despite
these factors, Margie had otherwise managed to make monthly payments to
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Joseph for almost a decade. This evidence supports a conclusion that she did
not willfully disobey the dissolution decree.
[25] Joseph points out that Margie also failed to give him an annual statement of the
amount she received from PERF per month, in violation of the settlement
agreement. Margie testified that Joseph never requested a statement until he
filed his petition for contempt, ten years after the agreement was executed.
Margie was solely responsible for fulfilling her obligations under the agreement,
but the trial court could have reasonably determined that Margie’s failure to
provide an annual statement was not a willful, material violation if her
noncompliance was unobjectionable for a decade. The trial court did not abuse
its discretion. See Topolski v. Topolski, 742 N.E.2d 991 (Ind. Ct. App. 2001) (no
abuse of discretion in failing to find husband in contempt of divorce decree;
husband missed some child support payments but paid much of child’s college
expenses).
4. Appellate Attorney’s Fees
[26] Joseph argues he is entitled to appellate attorney’s fees per the terms of the
2
settlement agreement. The trial court awarded attorney’s fees to Joseph due to
Margie’s breach of the settlement agreement.
2
He does not present a claim for appellate attorney’s fees under Indiana Appellate Rule 66(E).
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[27] Each party pays his or her own attorney’s fees absent an agreement between the
parties, statutory authority, or a rule to the contrary. Fackler v. Powell, 891
N.E.2d 1091 (Ind. Ct. App. 2008), trans. denied. A contractual clause that
allows for the recovery of attorney’s fees will be enforced according to its terms
unless it violates public policy. Steiner v. Bank One Indiana, N.A., 805 N.E.2d
421 (Ind. Ct. App. 2004).
[28] The portion of the settlement agreement that governs attorney’s fees provides as
follows:
G. INDEMNIFICATION.
Each party agrees to indemnify and save and hold the other
harmless from all damages, losses, expenses (including attorney’s
fees), costs and other fees incurred by reason of the other’s
violation or breach of any of the terms and conditions hereof.
Appellant’s App. Vol. II, p. 25.
[29] In Fackler, the parties to a dissolution of marriage case negotiated a settlement
agreement. The agreement included an indemnification clause that is almost
identical to the clause at issue here, replacing the word “other’s” with
“indemnitor’s.” 891 N.E.2d at 1098. Wife argued that Husband failed to pay
her money she was owed under the settlement agreement. Husband prevailed
in the trial court. On appeal, this Court determined the trial court erred and
Husband had breached the agreement by failing to fully compensate Wife. The
Court further determined that, pursuant to the indemnification clause, Husband
owed Wife attorney’s fees because of his breach, in an amount to be determined
by the trial court.
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[30] In the current case, we affirm the trial court’s decision that Margie was not in
contempt, but we also conclude Joseph is entitled to at least a portion of the
additional pension payments Margie received. Margie breached the settlement
agreement to a greater extent than the trial court determined, and Joseph is
entitled to an award of appellate attorney’s fees pursuant to the indemnification
clause. The trial court shall calculate the amount of the attorney’s fees on
remand.
[31] For the reasons stated above, we affirm the judgment of the trial court in part,
reverse in part, and remand for further proceedings not inconsistent with this
opinion.
[32] Judgment affirmed in part, reversed in part, and remanded with instructions.
Riley, J., concurs in part and concurs in result in part with separate opinion.
Najam, J., concurs in part and dissents in part with separate opinion
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IN THE
COURT OF APPEALS OF INDIANA
Joseph Lee Smith, Court of Appeals Case No.
02A03-1612-DR-2724
Appellant-Petitioner,
v.
Margie Lee Smith,
Appellee-Respondent.
Riley, Judge concurring in result on Issue I, and concurring in Issues II, III,
and IV.
[33] I concur in result on Issue I, and concur in Senior Judge Friedlander’s lead
opinion on Issues Two, Three, and Four. Unlike Judge Najam, I cannot
conclude that the settlement agreement is unambiguous with respect to the
standalone retirement payments Margie receives at the end of the year. While
analyzing the issue differently, I concur with Senior Judge Friedlander that the
Issue should be remanded to the trial court for further evidence.
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[34] The explicit language of the settlement agreement, which was accepted by both
parties, states clearly that Margie has to pay Joseph “twenty-five percent of her
gross monthly” pension payments. (Appellant’s App. Vol. II, p. 23). As the
standalone payment is paid to Margie on a yearly basis, and not on a monthly
basis, I would conclude that, under the terms of the settlement agreement,
Joseph is not entitled to a twenty-five percent share thereof. Nevertheless, as
this particular clause of the settlement agreement is subject to three different
legal interpretations, the agreement, by definition, must be ambiguous. For that
reason, I concur in result and agree to remand Issue I to the trial court to allow
the parties to present further evidence on their intent with respect to the
standalone payment at the time of drafting the agreement. I concur with the
majority in all other respects.
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IN THE
COURT OF APPEALS OF INDIANA
Joseph Lee Smith Court of Appeals Case No.
02A03-1612-DR-2724
Appellant-Petitioner,
v.
Margie Lee Smith,
Appellee-Respondent.
Najam, Judge, concurring in part and dissenting in part.
[35] I concur in Senior Judge Friedlander’s lead opinion on Issues Three and Four
but respectfully dissent on Issue One. On that issue, I would hold that the
settlement agreement is unambiguous and that judgment should be entered for
Husband. Thus, I would also instruct the trial court on remand to recalculate
the installment payments discussed in Issue Two of the lead opinion.
[36] The settlement agreement states as follows:
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Wife shall pay to Husband on a monthly basis[] an amount equal to
twenty-five percent (25%) of her gross monthly payment from Wife’s
pension from [PERF]. . . .
Wife shall provide to Husband written documentation of the amount
of said monthly pension payment to Wife on an annual basis. Should
Wife make any other subsequent withdrawals from such pension, she shall pay
to Husband an amount equal to twenty-five percent (25%) of any such other
gross withdrawal or any other available death benefit. Husband shall be
entitled to receive, from Wife’s estate, twenty-five percent (25%) of any such
other gross withdrawal or any other available death benefit from said pension.
Appellant’s App. Vol. II at 23 (emphases added).
[37] By its plain terms, the agreement provides both that Husband is entitled to
twenty-five percent of gross monthly payments as well as to twenty-five percent
of “any other subsequent withdrawals.” It is immaterial whether distributions
from Wife’s PERF account are called “payments” or “withdrawals.” The
purpose of the agreement’s provisions is clear: Husband is entitled to twenty-
five percent of whatever gross sums Wife receives from her PERF account
whether those sums are distributed as regular or irregular payments or
withdrawals, without exception. This is further confirmed by the final sentence
in the last paragraph above, which provides that Husband is entitled to receive
from Wife’s estate twenty-five percent of any such other gross withdrawal or
any other available death benefit from Wife’s PERF pension.
[38] In this agreement, the terms “payments” and “withdrawals” are used
interchangeably. This is apparent from the phrase, “any other subsequent
withdrawals.” (Emphasis added.) Here, “any” plainly means “all.” And, here,
“other . . . withdrawals” refers directly to “gross monthly payments,” which is
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the only possible antecedent. The text demonstrates that “gross monthly
payments” are deemed withdrawals and that “other . . . withdrawals” are
deemed payments. The agreement provides that Husband is entitled to twenty-
five percent of “any such other gross withdrawal” (emphasis added); that is, in
addition to the gross monthly payments, he is entitled to a share of any “other”
gross withdrawal. This is the only interpretation that gives meaning to the
word “other,” which is used three times in the same paragraph.
[39] The words “other” and “such other” require an antecedent. Otherwise, those
words are surplusage and meaningless. But we may not excise those words
from the agreement. Our Supreme Court has been clear that, in reading
contracts, our ultimate goal is to determine the intent of the parties at the time
that they made the agreement. Citimortgage, Inc. v. Barabas, 975 N.E.2d 805, 813
(Ind. 2012). “We begin with the plain language of the contract, reading it in
context and, whenever possible, construing it so as to render each word, phrase,
and term meaningful, unambiguous, and harmonious with the whole.” Id. By
using the word “other” to modify the word “withdrawal,” there is no question
that the parties considered payments to be withdrawals and that they
contemplated and provided for the payment of twenty-five percent of “any”
withdrawals “other” than monthly payments to be made to Husband.
[40] The agreement connects the words “payments” and “withdrawals” and uses
them interchangeably. The phrases “any other subsequent withdrawals,” “any
other gross withdrawal,” and “any such other gross withdrawal” are catch-all
provisions that refer back to the only “other” withdrawals mentioned in the
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agreement: the gross monthly payments. These catch-all provisions
demonstrate the parties’ intent that Husband is to receive twenty-five percent of
“any” gross distributions from Wife’s PERF account.
[41] Any distribution other than the monthly payments—including any standalone,
additional annual payment—is an “other gross withdrawal” and, thus, falls
squarely within the plain language of the agreement. And, significantly, the
agreement does not say that husband is entitled only to twenty-five percent of
the “gross regular monthly payment.” The word “regular” does not appear in
the agreement. See B&R Oil Co. v. Stoler, ___ N.E.3d ___, 2017 WL 22334035(Ind. Ct. App. May 30, 2017) (we “must interpret the contract as written, not as
it might have been written”), trans. pending.
[42] In sum, I would reverse the trial court’s judgment for Wife on Issue One.3 The
plain meaning of the settlement agreement demonstrates the parties’ intent to
have Husband receive twenty-five percent of all gross distributions from the
PERF account. Thus, I would also remand with instructions for the trial court
to recalculate the installment payments due to Husband that are discussed in
3
If the agreement were ambiguous, as the lead opinion concludes, then the proper disposition would be to
affirm the trial court’s judgment. Husband appeals from a negative judgment, which requires him to show
that “the evidence leads to but one conclusion and the trial court reached an opposite conclusion.” Burnell v.
State, 56 N.E.3d 1146, 1150 (Ind. 2016). If the agreement were ambiguous, then Husband had the
opportunity to present evidence to the trial court, and, having failed to meet his burden of proof, Husband
would not be entitled to a remand.
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Issue Two of the lead opinion. I concur in Senior Judge Friedlander’s
resolution of Issues Three and Four.
.
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