Case Name: Leslie Tschaikowsky v. James Tschaikowsky
Court: Vermont Supreme Court
Jurisdiction: Vermont
Decision Date: 2014-08-01
Citations: 197 Vt. 303
Docket Number: No. 13-216
Parties: Leslie Tschaikowsky v. James Tschaikowsky
Judges: Present: Reiber, C.J., Dooley, Skoglund and Crawford, JJ., and Morris, Supr. J. (Ret.), Specially Assigned
Reporter: Vermont Reports
Volume: 197
Pages: 303–315

Head Matter:
2014 VT 83
Leslie Tschaikowsky v. James Tschaikowsky
[103 A.3d 943]
No. 13-216
Present: Reiber, C.J., Dooley, Skoglund and Crawford, JJ., and Morris, Supr. J. (Ret.), Specially Assigned
Opinion Filed August 1, 2014
Peter F. Langrock of Langrock Sperry & Wool, LLP, Middlebury, for Plaintiff-Appellee.
Pamela Gatos of Tepper Dardeck Levins & Gatos, LLP, Rutland, for Defendant-Appellant.

Opinion:
Skoglund, J.
¶ 1. James and Leslie Tschaikowsky were married in 1999, and are now in the process of divorcing. In between, the parties legally separated, agreeing on terms of separation that were formally incorporated into a final order issued by the family court on October 12, 2007. This appeal follows husband James's request that the family court enforce the terms of the separation agreement in the divorce proceedings through summary judgment, which the court denied. We agree with husband that the agreement is binding and enforceable as a matter of law, and reverse the family court's denial of summary judgment.
¶ 2. Having lived separately for the requisite six-month period, the parties filed for separation in the fall of 2007. Both represented by counsel, the parties waived their rights to a hearing and requested that the family court incorporate the agreement into a final order of separation pursuant to Vermont Rule for Family Proceedings 4(e), and the court complied. The agreement addressed the terms of their separation, including parental rights and responsibilities, support, and education for their two minor children, as well as "the final settlement of their property rights." Containing clauses for both real and personal property, the agreement divided the property owned by the parties at the time. The agreement also included a provision entitled "Subsequent Divorce," which stated that:
In the event any such [divorce] action is instituted, the parties shall be bound by all the terms of this agreement. If consistent with the rule or practice of the court granting a decree of absolute divorce, the provisions of this agreement, or the substance thereof, shall be incorporated in such decree .
¶ 3. Following the court's issuance of a final separation order incorporating the terms of the agreement, husband moved to England where he resided until April 2010, when he returned to the United States. In June 2010, wife filed for divorce. A copy of the separation agreement accompanied wife's divorce complaint, which stated that "[s]aid Separation Agreement resulted in a Final Order and Decree granting [wife] therein a Divorce from Bed and Board" and requested "a complete and total Divorce from the Bonds of Matrimony." A few days later, husband filed a motion to modify the separation agreement regarding parental rights and responsibilities of the parties' two minor children, which the court held a hearing on and ultimately ordered a new parenting schedule. Father also filed a motion to modify child support, but the parties eventually came to an agreement and the court issued a new child support order in the fall of 2012.
¶ 4. Husband then motioned for summary judgment, seeking enforcement of the terms of the separation agreement for the division of marital property in the impending divorce proceedings. The family court denied husband's motion, stating that "[t]he issues pertaining to the grant of a final divorce must be determined at the time of the final divorce." We disagree on grounds that the terms of the parties' separation agreement were incorporated into a final order by the family court in 2007 and the distribution of property under those terms cannot be modified except on grounds sufficient to overturn a judgment.
¶ 5. On appeal, this Court reviews summary judgment decisions de novo. O'Brien v. Synnott, 2013 VT 33, ¶ 9, 193 Vt. 546, 72 A.3d 331. Summary judgment is appropriate where there is no genuine dispute of material facts and the moving party is entitled to judgment as a matter of law. V.R.C.P. 56(a). A fact is only material where it "might affect the outcome." O'Brien, 2013 VT 33, ¶ 9 (quotation omitted).
¶ 6. Husband contends that he is entitled to judgment as a matter of law, and wife disagrees on the basis that the family court has not litigated the parties' divorce and therefore has not evaluated the agreement for equity and fairness. This Court does not appear to have addressed the enforceability of a stipulated agreement that has been incorporated into a final separation order in a subsequent divorce.
¶ 7. Legal separation has rarely been before this Court. Vermont's statutes contain a separate section for legal separation, but it provides limited guidance in its one-sentence length, stating only that: "A legal separation forever or for a limited time may be granted for any of the causes for which an absolute divorce may be granted." 15 V.S.A. § 555. What is evident from the statute is that a legal separation can be granted by order of the court where the proper grounds have been met. Here, the court granted just such an order, explicitly incorporating the parties' stipulation agreement which was intended by the parties to be the "final settlement of their property rights." No issues were raised by either party or by the family court regarding the equitability of the agreement's terms at the time of the separation, and the parties waived their right to a final hearing. This resulted in a final order. See V.R.F.P. 4(e)(1) (stating that in an action for legal separation, the court "may grant a final judgment" without a hearing where requested by the parties and accompanied by a separation agreement, parenting agreement, and proposed final order).
¶ 8. Once an agreement is incorporated into a final judgment, it too is final. In re Dunkin Donuts S.P. Approval, 2008 VT 139, ¶ 12, 185 Vt. 583, 969 A.2d 683 (2000) (mem.) ("We have often indicated that a stipulated agreement incorporated into a court order has the same preclusive effect as a final judgment on the merits."); Pouech, 2006 VT 40, ¶ 20 ("Once a stipulation is incorporated into a final order, concerns regarding finality require that the stipulation be susceptible to attack only on grounds sufficient to overturn a judgment."). Thus, for wife to wish to overturn the property settlement within the agreement, it would have to be on Rule 60(b) grounds, none of which were raised below. See V.R.C.P. 60(b) (offering limited relief from judgment or order for mistakes, inadvertence, excusable neglect, newly discovered evidence, fraud, or other such grounds); Riehle v. Tudhope, 171 Vt. 626, 627, 765 A.2d 885, 887 (2000) (mem.) (recognizing that in wife's attempt to overturn separation agreement incorporated into divorce order, her only avenue for relief was V.R.C.P. 60). Summary judgment was therefore appropriate, as the terms of the separation agreement regarding the marital property in 2007 were enforceable as a matter of law.
¶ 9. Our holding is in line with public policy and an interest in encouraging stipulations within the family court context that has been consistently reiterated in our previous decisions. See, e.g., Pouech, 2006 VT 40, ¶ 17 ("[W]e have assumed that agreements reached by the parties are preferable to those imposed by a stranger to the marriage — the court."); Adamson v. Dodge, 174 Vt. 311, 327, 816 A.2d 455, 468 (2002) ("[I]n domestic relations matters, we assume that any agreement reached voluntarily by the parties is preferable to a court-imposed order"). In divorce actions, we have upheld the parties' right to negotiate for themselves the terms-of their marriage dissolution, and — subject to judicial approval — to have those terms honored under the ordinary rules of contract. Duke v. Duke, 140 Vt. 543, 546, 442 A.2d 460, 462 (1982). The same interest in negotiating terms of marriage dissolution exists for couples entering a legal separation, which by statute can last as long as a divorce — forever. 15 V.S.A. §555.
¶ 10. Were we to hold that the terms of an agreement that have been incorporated into a final separation order were not subject to the same rules as a final judgment upon a subsequent divorce, we would be robbing separation under § 555 of virtually any legal significance. Unlike divorce, legal separation is not necessarily a permanent status. The terms of a separation order must therefore provide enough finality to last a lifetime for some parties, and, for others, provide only a temporary solution. The parties here made a tactical decision to ask the court to adopt terms for the "final settlement of their property rights," and they did so in express consideration of the fact that they might later get divorced — as evidenced by the section for "Subsequent Divorce" in the agreement by which the parties explicitly agreed that they would still be bound by the agreement's terms. The court complied with the parties' wishes and incorporated the terms that they designed for their marriage dissolution. For this Court to hold that the terms of the agreement are now subject to modification nearly seven years later because the parties have chosen to take a step they directly addressed in the separation agreement would undermine our preference for stipulations, finality in final judgments, and general principles of contract law.
¶ 11. Furthermore, wife's argument that our holding otherwise denies her the opportunity for a court to examine the agreement for fairness and equity ignores the fact that the family court has already conducted just such an examination. Family Rule 4(e)(1) states that "[ujpon the filing of all documents required . . . , the court may grant and enter the final order without a hearing after the court has reviewed all of the documents and has determined that the terms and conditions of the parties' agreement are fair and equitable." As the court granted the parties a final separation order without a hearing, it naturally follows that the court found the terms of the separation agreement to be fair and equitable.
¶ 12. Similarly, in denying husband's motion for summary judgment, the family court stated that "it is only upon the termination of the bonds of matrimony that a court may decide what is a fair and equitable distribution of property, and whether spousal maintenance should be awarded," citing two specific hypothetical examples in support of that conclusion: (1) what if one party inherited one million dollars after the legal separation but before the divorce, and (2) what if a party contracted a serious and debilitating illness after separation but before divorce? To answer the first, any property acquired after the legal separation but before the divorce would be outside the bounds of the separation agreement, and subject to property distribution under the divorce statute, 15 V.S.A. § 751. The property contemplated within the separation agreement remains distributed by terms of the agreement, as those terms have already been evaluated for fairness and equity by the family court. See Pouech, 2006 VT 40, ¶ 22-24 (stating that family court's statutory role is to "assure a fair and equitable dissolution" of marriage and that it should only set aside stipulation agreements where it provides "adequate findings" why agreement is unfair or inequitable). As to the second hypothetical posed by the court, if one party was to develop a serious or debilitating illness, that would provide grounds for assertion of a real, substantial and unanticipated change of circumstances that would allow the family court to change any existing terms for spousal maintenance to ensure fairness and equity at that point. 15 V.S.A. § 758. However, neither circumstance is presented on the record of this case.
¶ 13. To be sure, the family court was correct in observing that a final order of legal separation that includes terms for the distribution of property, spousal maintenance, and the division of costs and responsibilities for any children significantly alters the landscape of what the family court can do in a subsequent divorce. Nonetheless, that is part of the analysis that parties must engage in for themselves when deciding whether to request a legal separation, with its particular benefits and costs, or proceed to an outright divorce. Legal separation is a middle ground of sorts between marriage and divorce, but it is legal ground, and only entered by final order of the court. The parties here presumably engaged in such an analysis when they filed for legal separation and are now bound by the consequences of the final order that they received.
¶ 14. We therefore reverse the family court's denial of summary judgment and hold that husband is entitled to enforcement of the property settlement terms incorporated into the final separation order.
Reversed.
Our holding is limited to the terms of the separation agreement that address the parties' real and personal property. As the parties have already modified the separation agreement with respect to parent-child contact and child support, there is no issue with the court's authority to modify aspects of a stipulation agreement dealing with children. See 15 V.S.A. § 660(a)(1) ("[U]pon a showing of a real, substantial and unanticipated change of circumstances, the court may annul, vary, or modify a child support order, whether or not the order is based upon a stipulation or agreement."); id. § 668 (allowing court to modify order of parental rights and responsibilities "upon a showing of real, substantial and unanticipated change of circumstances").
From the outset, we note that this case is not questioning the family court's authority to review or reject stipulation agreements made between parties in the divorce context. See Pouech v. Pouech, 2006 VT 40, ¶ 22, 180 Vt. 1, 904 A.2d 70 (holding that trial court may reject stipulation agreement as unfair or inequitable when challenged by a party before final hearing or incorporation into divorce order). Rather, this case presents the limited question of whether a stipulation agreement addressing marital property distribution that has been incorporated into a final separation order stands as a final judgment, or whether it is subject to modification by the trial court in divorce proceedings.
The dissent's reliance on Pouech, post, ¶ 24, is misplaced. In Pouech the stipulation was filed in anticipation of a pending divorce, not as a distinct legal separation.