Chris Carney v. Heather Carney (n.K.A. Foster) ( 2020 )

RENDERED: SEPTEMBER 18, 2020; 10:00 A.M.
NOT TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2019-CA-001134-ME
CHRIS CARNEY APPELLANT
APPEAL FROM MCCRACKEN CIRCUIT COURT
v. HONORABLE DEANNA WISE HENSCHEL, JUDGE
ACTION NO. 11-CI-01059
HEATHER CARNEY (N/K/A
FOSTER) APPELLEE
OPINION
AFFIRMING
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BEFORE: ACREE, KRAMER, AND TAYLOR, JUDGES.
ACREE, JUDGE: Chris Carney appeals the McCracken Circuit Court’s June 24,
2019 order granting Heather Carney’s motion for contempt, ordering Chris to
indemnify her from a debt incurred during the marriage, and sanctioning him by
denying his access to an Edward Jones account until Heather is indemnified.
Finding no error, we affirm.
BACKGROUND
The parties divorced on July 5, 2012. However, the circuit court
bifurcated the decree. All issues were eventually resolved in a supplemental
decree issued on November 15, 2012. In that decree, Chris retained his business,
Carneeds, Inc., including the real estate the business occupied. He was ordered to
use his best efforts to release Heather from liens on the business loans, but the
circuit court recognized it may not be possible to release Heather from notes she
signed because the business was then losing money and the parties’ residence was
in foreclosure. (Trial Record (T.R.) at 238.) Regardless, Chris was to use his best
efforts to accomplish these measures.
Soon thereafter, the parties filed a joint motion to supplement the
decree regarding their agreement about the marital residence. The relevant portion
reads as follows:
Chris Carney further agrees that as to debts on the former
marital residence he will indemnify and hold Heather
Carney harmless thereon. Chris Carney agrees to use his
best efforts to refinance the house so as to release Heather
Carney from any liability. Heather Carney acknowledges
that as the house is in foreclosure, Chris Carney may not
be able to immediately refinance, but that he shall use his
best efforts to refinance the house long term, so as to
remove Heather Carney from any remaining liability on
the note and mortgage.
(T.R. at 247.)
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In 2019, seven years after the divorce was finalized, Heather received
a notice concerning a Small Business Administration (SBA) loan Chris had taken
for his business for which Heather was a co-signer. A balance of some $251,000
was due. Chris then filed for bankruptcy protection, but that only addressed
Chris’s liability and not Heather’s liability. Heather filed a motion for rule, and a
hearing was held on June 12, 2019.
The circuit court concluded that Chris attempted to refinance in 2014
but was unable to do so and, since that time, had failed to make any efforts to
refinance or keep the loan current. Yet, Chris purchased a Corvette, boats, and
other luxury items within the previous year. Ultimately, the circuit court found
Chris did not use reasonable efforts to refinance this debt and held him in
contempt. The circuit court ordered Chris to indemnify and hold Heather harmless
on any claims made against her regarding the SBA loan and to pay Heather’s
attorney fees for filing the motion. To facilitate Chris’s compliance, the circuit
court’s order prohibited Chris from cashing out or transferring any funds in his
Edward Jones financial account, until further orders of the court, except to the
extent those funds could be used in satisfying Chris’s obligation to indemnify
Heather. This appeal followed.
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STANDARD OF REVIEW
Trial courts have broad authority to enforce orders, including the
conducting of contempt proceedings when necessary. Commonwealth, Cabinet for
Health and Family Services v. Ivy, 353 S.W.3d 324, 332 (Ky. 2011). The standard
for reviewing a trial court’s use of its contempt powers is abuse of discretion, and
the clear-error standard is applied to findings of fact. Id. Factual findings “shall
not be set aside unless clearly erroneous[.]” CR1 52.01. “Findings of fact are not
clearly erroneous if supported by substantial evidence.” Janakakis-Kostun v.
Janakakis, 6 S.W.3d 843, 852 (Ky. App. 1999) (citation omitted).
ANALYSIS
Chris argues the circuit court abused its discretion in finding him in
contempt and issuing sanctions because he was unable to refinance his loan. We
disagree.
KRS2 403.180(5) provides: “Terms of the agreement set forth in the
decree are enforceable by all remedies available for enforcement of a judgment,
including contempt, and are enforceable as contract terms.” There is an implied
covenant of good faith and fair dealing in every contract, “and contracts impose on
the parties thereto a duty to do everything necessary to carry them out.” Farmers
1
Kentucky Rules of Civil Procedure.
2
Kentucky Revised Statutes.
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Bank and Trust Co. of Georgetown, Kentucky v. Willmott Hardwoods, Inc., 171
S.W.3d 4, 11 (Ky. 2005) (citation omitted).
When a contract does not fix a time for performance of the
contract or of any act or duty of the parties to it, there is no
fixed rule to determine what constitutes a reasonable
period. Rather, what is a reasonable time is to be
determined by the facts and circumstances of each case.
Ultimately, a court must make a subjective determination
of what constitutes a reasonable period.
Liggett Group, Inc. v. Commonwealth, 232 S.W.3d 559, 563 (Ky. App. 2007)
(citations omitted). Along those lines, in Crowder v. Rearden, this Court said:
A trial court has inherent power to punish individuals for
contempt, Newsome v. Commonwealth, 35 S.W.3d 836,
839 (Ky. App. 2001), and nearly unfettered discretion in
issuing contempt citations. Smith v. City of Loyall, 702
S.W.2d 838, 839 (Ky. App. 1986). We will reverse a
finding of contempt only if the trial court abused its
discretion in imposing the sentence. Meyers v. Petrie, 233
S.W.3d 212, 215 (Ky. App. 2007).
296 S.W.3d 445, 450 (Ky. App. 2009).
Chris seems to argue that refinancing the loan is an impossible task
because of his financial situation. He contends his financial situation has actually
worsened over the years, yet admitted he purchased luxury items because “it was
something I wanted.” (Video Record (V.R.) 06/12/2019; 02:25:00.) Chris has not
attempted to refinance the loan in seven years and failed to make any payments
during that time. Regardless, the circuit court chose to have him, at the very least,
indemnify Heather from the SBA loan as was agreed in the supplemental decree in
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2012. We reiterate that the implied covenant of good faith and fair dealing in
every contract imposes a duty to do everything necessary to carry it out. Farmers
Bank and Trust, 171 S.W.3d at 11. We find no error.
We also conclude it was not an abuse of discretion for the circuit court
to prohibit Chris from cashing out or transferring funds from his Edward Jones
account until further orders. The circuit court stated the money can be used to
protect Heather on any indebtedness. “The purpose of civil contempt is to coerce
rather than punish. Ultimately, then, the defining characteristic of civil contempt is
the fact that contemnors ‘carry the keys of their prison in their own pockets.’”
Blakeman v. Schneider, 864 S.W.2d 903, 906 (Ky. 1993). The primary purpose
was not to punish, but rather to urge his obedience to and respect for an order of
the court. Hardin v. Summitt, 627 S.W.2d 580, 581-82 (Ky. 1982).
The sanction was merely a tool to compel compliance. If Chris
chooses to refinance or indemnify Heather in another way, then the circuit court
would revisit the order.
CONCLUSION
Finding no error, we affirm the McCracken Circuit Court’s June 24,
2019 order.
ALL CONCUR.
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BRIEF FOR APPELLANT: BRIEF FOR APPELLEE:
Heather L. Jones Alisha Kay Bobo
Paducah, Kentucky Paducah, Kentucky
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