Court Opinion

ID: 9951008
Source: CourtListenerOpinion
Date Created: 2024-03-15 15:18:10.159656+00
Date Added: 2024-06-11T14:35:53.940154
License: Public Domain

RENDERED: MARCH 8, 2024; 10:00 A.M.
                   NOT TO BE PUBLISHED

          Commonwealth of Kentucky
                   Court of Appeals

                      NO. 2022-CA-0983-MR

RONALD LUCE                                         APPELLANT

          APPEAL FROM JEFFERSON FAMILY COURT
v.        HONORABLE GINA KAY CALVERT, JUDGE
                 ACTION NO. 17-CI-502419

TERESA LUCE AND ARMAND
JUDAH                                               APPELLEES

AND

                      NO. 2023-CA-0297-MR

RONALD LUCE                                         APPELLANT

          APPEAL FROM JEFFERSON FAMILY COURT
v.        HONORABLE GINA KAY CALVERT, JUDGE
                 ACTION NO. 17-CI-502419

TERESA LUCE                                          APPELLEE
                                     OPINION
                                    AFFIRMING

                                   ** ** ** ** **

BEFORE: ACREE, COMBS, AND ECKERLE, JUDGES.

ECKERLE, JUDGE: These appeals arise from orders and a judgment of the

Jefferson Family Court in the dissolution of the marriage of Ronald Luce

(“Appellant”) and Teresa Luce (“Appellee”). In his first appeal, Appellant argues

that the Family Court abused its discretion by holding him in contempt for failure

to make payments to Appellee required by Court Orders. We find substantial

evidence to support the Family Court’s conclusions that Appellant’s failure to

make those payments was unjustified, and that he had the ability to meet the purge

conditions at the time the Family Court imposed the contempt.

             In his second appeal, Appellant challenges the Family Court’s

division of property and debt relating to the marital business. We conclude that the

Family Court did not abuse its discretion by declining to give Appellant a credit for

his prior payments because his actions caused a substantial loss to the value and

income of the business. Likewise, we conclude that the Family Court did not

abuse its discretion by assigning Appellant sole responsibility for the tax debt

incurred by the business during the period he was its sole shareholder. Hence, we

affirm in both appeals.

                                         -2-
   I.    Facts and Procedural History

             The parties were married in 2002 and separated in 2014. No children

were born of the marriage. During the marriage, the parties established a business,

RML Properties (“RML”), which managed rental properties. The parties operated

RML out of their residence on Rockford Lane in Louisville, Jefferson County,

Kentucky. Appellant performed or coordinated the labor associated with the

business, while Appellee performed the office work and bookkeeping.

             Appellant filed a petition for dissolution of the marriage on August 1,

2017. Over the next three years, the parties attempted to reach agreement over

disputed issues. Their business relationship also deteriorated during this time, and

Appellant took full control of RML. Although the parties used the RML bank

account to pay certain personal expenses, Appellant discontinued paying

Appellee’s expenses. In addition, RML had accrued significant tax liabilities for

which both parties were personally liable.

             On February 13, 2020, the Jefferson Family Court signed an Agreed

Order (“the 2020 Agreed Order”) addressing these issues. In pertinent part, the

2020 Agreed Order required that: (1) the parties immediately contact their

accountant to resolve any tax issues by March 1, 2020; (2) the parties discontinue

using the RML account for “any questionable expenses,” meaning mostly personal,

non-business expenses; (3) the parties set aside 30% of RML’s gross revenue in a

                                         -3-
separate escrow account for tax purposes, with the other legitimate, business

expenses taking priority after taxes; (4) each party take $3,000.00 from the

remaining balance of the RML account as a distribution “or perhaps income;” and

(5) the parties sell the marital residence within 60 days.

             Appellant did not comply fully with the terms of the 2020 Agreed

Order. Appellant states that RML lost considerable revenue due to the COVID-19

pandemic. The escrow account was never established, and the 30% of gross

revenues were not set aside. Appellant cut off Appellee’s access to the RML

accounts. In September 2020, Appellant unilaterally reduced Appellee’s draw on

the account to $1,200.00 per month. Appellee entered into a contract to sell the

marital residence, but the sale could not proceed due to outstanding state and

federal tax liens.

             Appellee filed a motion to hold Appellant in contempt for his failure

to comply with the 2020 Agreed Order. Appellant responded with a motion to

modify the 2020 Agreed Order due to changed circumstances. The Family Court

held a hearing on the motions on June 15, 2021. But following the hearing, the

parties reached an agreement, which was entered as an Agreed Order on June 21,

2021 (“the 2021 Agreed Order”). Although the Family Court entered the

agreement as simply an “Order,” it contained the following language:

                   Each Party testified and affirmed the above
             accurately expresses their temporary agreement. Each

                                          -4-
              stated he or she had adequate time to consult with an
              attorney and is satisfied with the advice received. Each
              said he or she understands the terms of the above
              agreement this [sic] will be entered as a Court Order that
              cannot be later modified.

              The 2021 Agreed Order required Appellant to pay Appellee $2,250.00

per month, with the option of either paying the entire amount directly to Appellee

or paying $750.00 to the mortgagee on the marital residence and the remaining

$1,500.00 paid directly to Appellee. The 2021 Agreed Order also required the

parties to conduct a business valuation and determine the amount of their debts.

Appellant was required to advance the costs of the valuation. The 2021 Agreed

Order also set forth terms requiring the parties to consult a Certified Public

Accountant to determine the tax debt owed and addressing the tax liens against the

marital residence.

              On August 10, 2021, Appellee filed a motion to hold Appellant in

contempt for his failure to make the payments required under the 2021 Agreed

Order. She also asserted that Appellant was still paying his own, non-business

expenses from the RML account. On September 13, 2021, Appellee filed another

contempt motion, stating that Appellant refused to sign a contract for the business

evaluation.

              Appellant moved to cancel the business evaluation and modify the

2021 Agreed Order regarding the payments to Appellee. He stated that all of

                                          -5-
RML’s receipts are subject to the claims of third-party creditors. He further

alleged that neither he nor RML had the resources to pay for the business

evaluation or to make the payments required under the 2021 Agreed Order. The

Family Court denied this motion without a hearing on November 1, 2021.

             The Family Court scheduled a hearing on the remaining motions for

January 18, 2022. On February 9, 2022, the Family Court entered an order finding

Appellant in contempt. First, the Court found that Appellant failed to sign the

contract and pay the fee for the business evaluation as required by the 2021 Agreed

Order. The Court found that he provided no reasonable excuse for this failure and

that his actions slowed the advance of the dissolution action, wasted the Court’s

time, and prevented a timely resolution of the property-distribution issues.

             Second, the Family Court found that Appellant failed to make the

payments required by the 2021 Agreed Order, and that he failed to provide any

legitimate excuse for this failure.

                    [Appellant] admits his failure to pay in accordance
             with the June 21, 2021 Order. [Appellant] admits that he
             is making the entire monthly mortgage payments on the
             property purchased in 2019 with his girlfriend and the
             payment is current. [Appellant] admits that he did not set
             aside escrowed funds for back taxes (estimating that up
             to 2015, the Parties have back tax liability exceeding
             $100,000.00), or even open the escrow account Ordered
             in February 2020; although the clear intent of the Parties
             in the February 13, 2020 Agreed Order was to cooperate
             to put aside money and negotiate a settlement of back
             taxes with the IRS, [Appellant] testified that he did not

                                         -6-
do it, because the Court Order did not specify that the
money would be for back taxes. [Appellant] admits and
his exhibits demonstrate that RML is currently setting
aside and making advance payments to the IRS of
[Appellant]’s own quarterly estimated income taxes.
([Appellant]’s Exhibits, Tabs 20-23). [Appellant]
testified [he] did not previously set aside quarterly
estimated taxes in the past. [Appellant] has been to
Florida three times or more in 2021, though he insisted
that one trip was paid for by his girlfriend’s family as a
gift. [Appellant] admits gambling multiple times with
the RML bank card. He said he takes “business people”
gambling, so it is not really a personal use, but
[Appellant] showed no evidence of claiming his
gambling as a business expense. [Appellant] denies
taking a “full draw” from RML at any time since June,
2021, but he admits using the RML account for personal
expenses, his own housing (RML is operated out of the
residence purchased by [Appellant] and his girlfriend,
and he admits the girlfriend does not contribute to the
payment), his individual income taxes, his pharmacy,
mall shopping, on vacations, food, cell phone, car
insurance, gambling, and multiple other expenses.
[Appellant] admits taking large cash withdrawals from
RML’s account, but explains that those are business
expenses, because they could be “used to pay TJ under
the table.“ [Appellant] admitted that even when RML
lost fees from the client who took property management
in-house in 2020, it resulted in only a $1,000.00 drop in
monthly management fees earned by RML, and RML
still earns $5,000.00 per month in fees from that client
alone. [Appellant] pointed to his bank statements, like
the August 31, 2021 bank statement located at
[Appellant]’s Tab 23, indicating that RML is still making
payments for [Appellee]’s car insurance and cell phone,
which RML has always done, while deposits were only
$11,000.00, down from nearly $20,000.00 in July, 2021,
and over $15,000.00 per month the two previous months
(see [Appellant]’s Tab 22, 21, and 20). [Appellant]
provided no bank statements past August, 2021, but he

                           -7-
                testified that “since June, 2021, the business has lost
                money every month” saying the loss has been “probably
                two to three thousand dollars” per month. This Court has
                many times been urged to believe in the remarkable
                coincidence of a jointly-created business failing rapidly,
                just at the very time when the managing spouse has been
                ordered to make payments to the other spouse. The
                Court does not find that the documentary evidence and
                testimony here provide even colorable support for the
                occurrence of such a remarkable coincidence in this case,
                much less clear and convincing evidence. Paying his
                own optional expenses before paying those Ordered by
                this Court is not making all reasonable efforts to comply;
                it is an act of contempt for the authority of this Court and
                its Orders. The Court finds [Appellant] in contempt of
                Court for failure to make the payments required by the
                June 21, 2021 Order without legal justification.

February 9, 2022, Order, pp. 7-9. Record on Appeal (“ROA”) 118-120.

                In fashioning a remedy for the contempt, the Family Court ordered

Appellant to: (1) complete the contract with the business valuation expert and

advance the fee within five days of entry of the Order; (2) resume monthly

payments to Appellee effective with the payment due February 5, 2022; (3) pay

$10,700.00 in past-due amounts owed to Appellee and add an additional $1,070 to

the next ten monthly payments due under the 2021 Agreed Order; and (4) pay

attorney fees to Appellee’s counsel in the amount of $4,770.00 on or before

February 11, 2022 (“Contempt Order”). Thereafter, Appellant filed a CR1 59.05

1
    Kentucky Rules of Civil Procedure.

                                            -8-
motion to set aside the finding of contempt, which the Family Court denied on

March 3, 2022.

            Appellee then filed a new motion to hold Appellant in contempt,

stating that he had failed to comply with the Contempt Order. Appellant

responded with a motion to stop the business advance payments required under the

2021 Agreed Order, alleging that RML had a negative value, and that any

additional advances would exceed the likely value of the business. Appellee

disputed Appellant’s characterization of the payments as an advance on the

property distribution, arguing that they represented her share of income from RML.

            The pending matters again came before the Family Court at a hearing

on June 21, 2022. The Family Court entered an order on the contempt issues on

July 15, 2022. The Family Court rejected Appellant’s claims that it was

impossible for him to make the payments required under the prior orders. The

Family Court further questioned Appellant’s insistence on continuing to expend

efforts on RML, given his claims that RML had a negative value and was unable to

pay his salary. Consequently, the Family Court directed Appellant to resume

compliance with its orders set out in the February 9, 2022, order. The Family

Court again held Appellant in contempt for his failures to comply with previous

orders. The Family Court ordered that Appellant pay all sums due, plus an

additional $2,800.00 for Appellee’s attorney fees, no later than 60 days from entry

                                        -9-
of the order. Finally, the Family Court specified that, if Appellant “has not

completely complied with this Order” by that date, he shall be sentenced to 60 days

in jail.

              Appellant filed a Notice of Appeal from this Order.2 On November

29, 2022, the Family Court conducted an evidentiary hearing on the remaining

matters in the parties’ dissolution proceeding. On December 16, 2022, the Family

Court issued findings of fact, conclusions of law, and a decree dissolving the

parties’ marriage.

              The findings relevant to this appeal concern the Family Court’s

conclusions regarding the valuation of RML and the division of its equity and debt.

Based on the business evaluation conducted by the Family Court-appointed expert,

the Family Court found that RML had a value of $21,000.00 as of December 31,

2021. The Family Court noted that RML is a marital asset, having been built

through the joint efforts of the parties from 2006 through 2014. However, the

2
  After the 60-day period had passed, the Family Court conducted a hearing to impose the
sentence previously announced for non-compliance. Appellant argued that the Family Court lost
jurisdiction to hold the sentencing hearing because the contempt issue was on appeal. The
Family Court disagreed, but it allowed Appellant additional time to file motions for emergency
and intermediate relief in the Court of Appeals. On October 6, 2022, this Court denied his
motion for emergency relief. And on October 31, 2022, this Court denied Appellant’s motion for
intermediate relief to stay the contempt Order, concluding that his impending incarceration did
not constitute an irreparable injury. On October 26, 2022, the Family Court imposed the 60-day
sentence of incarceration with ten days to serve from jail with work release and 50 days to serve
on the home incarceration program with the same release. Although Appellant still challenges
the finding of contempt, he does not appeal from the Order imposing the sentence.

                                              -10-
Family Court also found that Appellant has been the sole shareholder of RML

since January 2015. The Family Court further found that Appellant “has been

undermining the business since at least December, 2019 and taking funds that

could be directed into the business for himself.” Consequently, the Family Court

awarded Appellee 30% of the remaining value of the business, or $6,300.00.

             The Family Court recognized that the parties will be jointly liable for

all tax debts, penalties, fines, and interests levied against RML through December

31, 2014. The Family Court also noted that each party is individually liable for

individual tax debts on flow-through profits from RML up to that date. Likewise,

Appellant remains responsible for taxes on flow-through profits after January 1,

2015, and Appellee is responsible for her tax liability as an employee from that

point. But since Appellant became the sole shareholder of RML in January 2015,

the Family Court assigned him sole responsibility for penalties, fines, and interest

from that date forward. To this end, the Family Court directed that Appellant hold

Appellee harmless for any of these liabilities.

             On December 22, 2022, Appellant filed a motion to “alter, amend, or

vacate” the December 16, 2022, Judgment, but specifically cited CR 59.01(a), (d),

(e), (f), & (h). The Family Court denied the motion in an Order entered on

February 15, 2023. The Family Court concluded that Appellant failed to establish

any grounds for a new trial under that rule. Appellant then filed a notice of appeal

                                         -11-
from the December 16, 2022, Judgment and the February 15, 2023, Order. This

Court denied Appellee’s motion to consolidate the appeals, but directed that that

they be heard together pursuant to RAP3 2(G). Additional facts will be set forth

below as necessary.

      II.    Appeal No. 2022-CA-0983-MR

                In his first appeal, Appellant argues that the Family Court abused its

discretion when it found him in contempt for violating the 2020 and 2021 Agreed

Orders. While he concedes that he failed to comply with those Orders, he

maintains that his violation was not willful because it was due to circumstances

beyond his control. He also argues that he lacked the ability to comply with either

of the Agreed Orders or the purge conditions. On this latter ground, he takes issue

with the Family Court’s reliance on RML’s gross receipts as evidence of his

income and the resources available to him.

                This Court recently discussed the requirements for a finding of civil

contempt in Cabinet for Health & Family Services v. R.C., 661 S.W.3d 305 (Ky.

App. 2023).

                      In Cabinet for Health and Family Services v.
                J.M.G., 475 S.W.3d 600 (Ky. 2015), the Kentucky
                Supreme Court extensively discussed the nature and
                scope of a Court’s contempt authority. As an initial
                matter, the Court defined contempt as “the willful

3
    Kentucky Rules of Appellate Procedure.

                                             -12-
disobedience toward, or open disrespect for, the rules or
orders of a court.” Id. at 610 (quoting Poindexter v.
Commonwealth, 389 S.W.3d 112, 117 (Ky. 2012) and
Commonwealth v. Burge, 947 S.W.2d 805, 808 (Ky.
1996)). All Courts have the authority to sanction
contempt and to insist upon respect for its processes and
compliance with its rulings and judgments. Id. at 611
(citations omitted). Thus, the power of Courts to punish
contempt is implicit in the judicial function, “is a
necessary and integral part of the independence of the
judiciary, and is absolutely essential to the performance
of the duties imposed on them [sic] by law.” Id. at 611
(citations omitted).

       The Court in J.M.G. then went on to discuss the
often-elusive distinction between civil and criminal
contempt. Generally, sanctions imposed to benefit an
adverse party – coercive sanctions, for example, or
compensatory ones – are deemed civil and are sought and
imposed through civil proceedings between the original
parties, very often as part of the underlying cause. Id.
(citations omitted). On the other hand, punitive sanctions
– unconditional sanctions not subject to purgation
through compliance with an order and that are imposed
principally if not purely to vindicate the authority of the
Court – are deemed criminal. Id. Criminal penalties for
contempt require the full range of constitutional due
process protections. Id. at 611-12. Furthermore, indirect
contempt – that is, contempt occurring out of Court or
not immediately apparent to the Court – requires an
evidentiary hearing. Id. at 612. Summary adjudication
of indirect contempt is prohibited. Id.

....

. . . As noted above, sanctions for civil contempt “are
meant to benefit an adverse party either by coercing
compliance with the order or by compensating for losses
the noncompliance occasioned.” Nienaber v.
Commonwealth ex rel. Mercer, 594 S.W.3d 232, 236

                           -13-
(Ky. App. 2020) (emphasis added). In the case of the
former, the contemnor must, at the time the sanction is
imposed, have the ability to purge the contempt. Id. But
a Trial Court still has discretion to fashion compensatory
sanctions, even if they cannot be purged by subsequent
compliance with the prior order. Commonwealth,
Cabinet for Health & Fam. Servs. v. Ivy, 353 S.W.3d
324, 332 (Ky. 2011). Rather, payment of the
compensatory sanction purges the contempt.

      The Court in Ivy further discussed the standard of
proof for civil contempt.

              In a civil contempt proceeding, the
      initial burden is on the party seeking
      sanctions to show by clear and convincing
      evidence that the alleged contemnor has
      violated a valid court order. See, e.g., Roper
      v. Roper, 242 Ky. 658, 47 S.W.2d 517
      (1932). If the party is seeking
      compensation, it must also prove the
      amount. Once the moving party makes out a
      prima facie case, a presumption of contempt
      arises, and the burden of production shifts to
      the alleged contemnor to show, clearly and
      convincingly, that he or she was unable to
      comply with the court’s order or was, for
      some other reason, justified in not
      complying. Clay v. Winn, 434 S.W.2d 650
      (Ky. 1968). This burden is a heavy one and
      is not satisfied by mere assertions of
      inability. Dalton v. Dalton, 367 S.W.2d 840
      (Ky. 1963). The alleged contemnor must
      offer evidence tending to show clearly that
      he or she made all reasonable efforts to
      comply. Id. If the alleged contemnor makes
      a sufficient showing, then the presumption
      of contempt dissolves and the trial court
      must make its determination from the

                           -14-
                     totality of the evidence, with the ultimate
                     burden of persuasion on the movant.
             Id. at 332.

R.C., 661 S.W.3d at 314-16.

             We review the Family Court’s imposition of civil contempt for abuse

of discretion, but we apply the clear error standard to the underlying findings of

fact. Crandell v. Cabinet for Health & Fam. Servs. ex rel. Dilke, 642 S.W.3d 686,

689 (Ky. 2022). The Family Court’s discretion to impose sanctions for contempt is

by no means unlimited, and this Court should not apply a deferential standard of

review. J.M.G., 475 S.W.3d at 624. “The test for abuse of discretion is whether

the trial judge’s decision was arbitrary, unreasonable, unfair, or unsupported by

sound legal principles.” Commonwealth v. English, 993 S.W.2d 941, 945 (Ky.

1999). More specifically, a Court abuses the discretion afforded it when “(1) its

decision rests on an error of law . . . or a clearly erroneous factual finding, or (2) its

decision . . . cannot be located within the range of permissible decisions.” Miller v.

Eldridge, 146 S.W.3d 909, 915 n.11 (Ky. 2004) (emphasis omitted).

             Appellant admits that he failed to comply with the 2020 and 2021

Agreed Orders. He also does not dispute the amount owed. Thus, he had the

burden of proving that he was unable to comply with those Orders or was

otherwise justified in not complying. “An inability to comply must be shown

clearly and categorically by the defendant, and the defendant must prove that he

                                          -15-
took all reasonable steps within his power to insure compliance with the order.”

Blakeman v. Schneider, 864 S.W.2d 903, 906 (Ky. 1993) (citing Campbell County

v. Kentucky Corrections Cabinet, 762 S.W.2d 6, 10 (Ky. 1989)).

             It was within the Family Court’s province as the fact-finder to

determine the credibility of the witnesses and the weight given to the evidence.

Frances v. Frances, 266 S.W.3d 754, 756 (Ky. 2008). The record here clearly

shows that Appellant agreed to the provisions of the 2020 and 2021 Agreed Orders

and then immediately failed to comply fully with those provisions. He blamed

RML’s declining fortunes and increasing tax debts for his failures. While he

proffered evidence to support this claim, the evidence neither categorically showed

his inability to comply nor that he was taking all reasonable steps to adhere to his

obligations under the Agreed Orders.

             Appellant argues that the Family Court erred by relying on RML’s

gross receipts as proof of his ability to make the payments required by the Agreed

Orders. He correctly notes that gross receipts merely indicate the total amounts

that RML took in and were substantially offset by the company’s obligations.

Appellant contends that the Family Court disregarded evidence of his limited

personal resources and lack of income from RML. Appellant further contends that

the Family Court’s reliance on the gross receipts improperly attributed income and

resources that were unavailable to him.

                                          -16-
             But, as quoted above, the Family Court merely used the gross receipts

to cast doubt on Appellant’s claim that RML suffered a serious reduction in

income, at least by 2021. The recorded loss of management fees did not fully

account for Appellant’s claim that RML lost substantial income after 2019. The

Family Court found Appellant’s explanations regarding RML’s additional losses

were not credible. In this regard, the Family Court analysis of the gross receipts

was not clearly erroneous.

             Similarly, Appellant takes issue with the Family Court’s comment in

2022 that he “could earn more money working at a fast-food restaurant[.]” He

contends that it was unreasonable for the Family Court to criticize him for

continuing to expend efforts on a clearly failing business. However, the Family

Court’s point was that Appellant’s efforts were not consistent with taking all

reasonable steps to comply with his obligations under the Agreed Orders.

             Moreover, the Family Court believed that Appellant was actively

undermining RML to render himself incapable of complying with the Agreed

Orders. The Family Court noted that he continued to pay personal expenses out of

the RML account even after he agreed to suspend such payments. The Family

Court pointed out that Appellant had diverted an RML client to his own personal

business. This action resulted in more than $50,000.00 of additional income to

Appellant, which he failed to report to the Family Court. And Appellant

                                        -17-
prioritized payment of personal and business taxes in a manner that most benefited

him at the expense of RML and Appellee. Under the circumstances, the Family

Court did not clearly err in finding that Appellant failed to meet his burden of

proving that his failures to comply with the Agreed Orders were justified.

             In the alternative, Appellant argues that, even if the contempt findings

were proper, the Family Court’s purge conditions were impossible for him to meet.

The purpose of civil contempt is to coerce compliance rather than to punish.

Blakeman, 864 S.W.2d at 906. The defining characteristic of civil contempt is that

contemnors “carry the keys of their prison [sentence] in their own pockets.” Id.

“For the punishment to retain its civil character, the contemnor must, at the time

the sanction is imposed, have the ability to purge the contempt by compliance and

either avert the punishment or at any time bring it to an end.” Ivy, 353 S.W.3d at

334-35. Consequently, the Family Court must also make specific findings of fact

concerning the contemnor’s ability to pay at the time the sanction is imposed.

Crandell, 642 S.W.3d at 690. And no matter the Family Court’s finding on a

present ability to pay, it must not threaten alleged contemnors with coercive

remedies for future conduct. Id. (citing Ivy, 353 S.W.3d at 335).

             Here, the Family Court conducted multiple hearings and issued

several Orders holding Appellant in contempt, but merely giving him an additional

opportunity to comply with prior Orders. In its February 9, 2022, Order, the

                                        -18-
Family Court directed Appellant to complete the contract with the business

valuation expert, resume monthly payments to Appellee, make additional payments

on past-due amounts, and pay Appellee’s attorney fees. The Family Court issued

similar directives in its July 15, 2022, Order, with the added direction that

Appellee may be subject to incarceration for failure to comply within 60 days.

             As noted above, Appellant filed his Notice of Appeal after the Family

Court found him in contempt but before it imposed the sentence for his failure to

make the payments as ordered. He did not separately appeal from the Family

Court’s Order imposing the 60-day sentence. As a result, we are not directly

presented with the question of whether the Family Court abused its discretion by

imposing that sentence.

             Rather, the question before us is whether the Family Court made

sufficient findings in its July 15, 2022, Contempt Order regarding his then-present

ability to pay the contempt sanction. The Family Court stated that Appellant “did

not present clear and convincing evidence that it was impossible for him to purge

himself of this Court’s contempt finding.” Appellant did not request additional

findings on this question pursuant to CR 52.04. Moreover, Appellant bore the

burden of proving that he was unable to pay the purge amount either at the time of

the Order or within the 60 days allotted. Crandell, 642 S.W.3d at 690 (citing Ivy,

353 S.W.3d at 333).

                                         -19-
             In examining his testimony and the business records he introduced,

the Family Court characterized Appellant’s claims of inability to pay as

“disingenuous.” Appellant does not show that these findings were clearly

erroneous. Furthermore, Appellant does not point to evidence that would have

compelled a finding that it was impossible or even impractically difficult for him to

satisfy the purge conditions.

             “If the courts are to have the power to control participants in the

judicial process and effectively administer justice, the power of contempt must be

more than a hollow threat.” Murphy v. Commonwealth, 50 S.W.3d 173, 186 (Ky.

2001). See also Lanham v. Lanham, 336 S.W.3d 123, 129 (Ky. App. 2011). In

this case, the Family Court had ample basis to find that Appellant persistently

refused to comply with his obligations under numerous Orders. The Family Court

found that his failures were not justified or excused by an inability to pay. The

Family Court determined that the imposition of civil contempt was the only

remaining remedy to coerce compliance with its Orders. Even then, the Family

Court allotted him additional time to meet his admittedly significant obligations.

In light of all these findings, which were supported by substantial evidence, we

find no abuse of discretion.

             In his last argument in this appeal, Appellant maintains that Appellee

breached her duty to mitigate damages. Failure to mitigate damages is a contract

                                         -20-
defense designed to reduce damages because the nonbreaching party failed to make

reasonable and required efforts to minimize its losses. Dennis J. Wall, “Failure to

mitigate damages.” Litig. & Prev. Ins. Bad Faith § 5:28 (3rd ed.). Appellant does

not cite to any dissolution case in which a party has been required to mitigate

damages so a former spouse could avoid being held in contempt. Crowder v.

Rearden, 296 S.W.3d 445, 452 (Ky. App. 2009).4 In any case, the mere fact that

Appellee made the mortgage payments that Appellant was ordered to pay does not

amount to a failure to mitigate damages.

    III.   Appeal No 2023-CA-0297-MR

               In his second appeal, Appellant challenges the Family Court’s

division of marital property and debts in its December 16, 2022, Judgment. As an

initial matter, Appellant argues that the Family Court abused its discretion when it

refused to consider his December 22, 2022, motion under CR 59.05 rather than CR

59.01. He states that the motion was clearly styled a “motion to alter, amend, or

4
  Appellant cites to language in Crowder suggesting that there could be circumstances in which a
failure to mitigate damages would be a defense to civil contempt. “Kimberly has not given us
good reason to require James to mitigate damages in this scenario.” Id. at 452 (emphasis added).
However, the panel in Crowder expressly stated that there was no dissolution case that allowed a
party to assert failure to mitigate damages as a defense to civil contempt. Likewise, this Court
has not found any authority allowing this defense in this situation. Furthermore, the assertion of
such a defense would be inconsistent with the purpose of civil contempt as a means to enforce a
lawful Court Order. At most, failure to mitigate damages could only serve as a defense to the
amount owed and not as a basis to justify non-compliance with a Court Order.

                                              -21-
vacate,” and the citation to the CR 59.01 was merely a typographical error. He

contends that the Family Court should have addressed the merits of the motion

under CR 59.05, and its refusal to do so amounts to an abuse of discretion.

            But as the Family Court noted, Appellant’s motion never cited to CR

59.05. Indeed, the body of the motion did not reference any of the standards set

out in CR 59.05. The motion specifically referenced CR 59.01(a), (d), (e), (f), and

(h). The Family Court could not have “clearly known” that he intended the motion

to be filed under CR 59.05.

            Furthermore, Appellant does not show that this issue was ever

presented to the Family Court. Finally, even if the Family Court had reason to

know the motion was mistakenly filed under CR 59.01, we cannot say the Family

Court was compelled to treat it as a motion to alter, amend, or vacate under CR

59.05. And because Appellant failed to establish grounds for a new trial under CR

59.01, the Family Court did not abuse its discretion by denying the motion for a

new trial. Gibson v. Fuel Transport, Inc., 410 S.W.3d 56 (Ky. 2013).

            In any event, Appellant directly challenges the Family Court’s rulings

in its December 16, 2022, Judgment. Generally, a party cannot appeal from the

denial of a CR 59.05 motion because that denial does not alter the underlying

judgment. Ford v. Ford, 578 S.W.3d 356, 366 (Ky. App. 2019). And in large part,

the Family Court’s February 15, 2023, Order addressed the merits of Appellant’s

                                        -22-
arguments, albeit under CR 59.01 rather than CR 59.05. Consequently, the Family

Court’s decision to treat his post-trial motion as a motion for a new trial is not

determinative to this appeal.

             Appellant next argues that the Family Court erred when it classified

his prior payments as income distributions, rather than as advance distributions of

equity from RML as set out in the Agreed Orders. In its Order denying

Appellant’s motion for a new trial, the Family Court addressed this issue in detail:

                   First, the [Appellant] requests more specific
             findings as to the prior payments made to [Appellee] and
             the subject of the prior contempt finding. The
             [Appellant] maintains the Court never made a “decision”
             regarding the payments made to the [Appellee] by the
             [Appellant] pursuant to the parties’ February 2020
             Agreed Order. Were the payments distributions or
             income?

                    The [Appellant] argues that if the payments were
             distributions (payouts in equity to owners in a business)
             from the business, RML, then the [Appellee]’s award of
             $6,300 as her percentage of equity in the business should
             be subtracted from the monies that [Appellant] owes
             [Appellee] pursuant to the parties’ February 2020 Agreed
             Order, and [Appellee] should owe the [Appellant]
             $33,722.48 - $6,300.00 = $27,422.48. On the other hand,
             if the February 2020 Agreed Order distributions were
             deemed income, the [Appellee] should receive a 1099 on
             those funds and be responsible for taxes owed on that
             income.

                   The [Appellant] further argued that the June 2021
             Agreed Order specified the payments made to the
             [Appellee] were for “temporary advance division of
             property.” Accordingly, the $14,750.00 in payments

                                         -23-
made to [Appellee] by [Appellant] pursuant to this Order
should have been credited to the [Appellant] as an
advance division of property. And the [Appellant]
should either be credited a[n] additional $33,722.48 in
payment of equity in the business, or the [Appellee]
should be responsible for income taxes on those monies.

       The [Appellant] requests that the Court amend its
Decree and in its division of assets credit the [Appellant]
for the $14,750.00 he has already paid to the [Appellee].
The [Appellant] further requests a finding regarding the
funds allocated to the [Appellee] in the February 2020
Order; those funds are either a business distribution in
which case [Appellant] should be credited an additional
$33,722.48 or income to the [Appellee] in which case she
should be responsible for the taxes on those monies.

      Insofar as the Court is concerned the $33,722.48 is
income to the [Appellee]. That is supported by the
[Appellant]’s testimony and the [Appellant]’s tax
accountant’s testimony. Both witnesses testified that the
[Appellant] was the sole owner of the business since
2014 and the [Appellee] was an employee.

       The “temporary advance division of property”
from the June 2021 Agreed Order was offset by the
[Appellant]’s inability to be honest with this Court.
[Appellant] earned an additional $60,000.00, or more,
income that he repeatedly failed to disclose while arguing
to this Court, under oath, that he wasn’t making enough
money to meet the obligation he set for himself in the
Parties’ 2021 Agreed Order and supporting his testimony
with documents showing much reduced income from the
business.

      The [Appellant] blocked the [Appellee]’s access to
the business (she was office manager) in January 2020.
He concealed the existence of an enormous tax debt
against the former location of the business, the Rockford
Lane [marital residence] property.

                           -24-
      The [Appellant] agreed on the record at the parties’
February 2022 contempt hearing that he had used RML’s
income as his own personal income; paying the full
mortgage on the home he purchased with his girlfriend;
paying for vacations; taking cash advances; paying
personal bills; and gambling using the RML credit card.
The [Appellant], per his own testimony, treated RML’s
income as his own personal treasure chest, admittedly
using funds from the business for a myriad of personal
expenses so he had no monies left to pay [Appellee] her
income from the business.

      Since the [Appellee]’s income from the business
was abruptly ended, the [Appellant] agreed to a monthly
payment to her. This payment decreased because of the
COVID-19 shutdown – work from home scenario of
many of their clients. The [Appellee] agreed to accept
less money. The [Appellant] was still “unable” to make
those payments. The [Appellee] was left in a large
financial hole that the [Appellant] dug for her. The
[Appellant] always managed to pay himself and his
personal expenses, just not the [Appellee]’s.

       Knowledge of the terms of the February 13, 2020
Agreed Order are helpful in understanding the provisions
of the June 21, 2021 Order and the extent to which
[Appellant] has procured settlement with promises made
on the eves of hearings scheduled in this matter, then
failed to comply with his own agreements, incorporated
into Court Orders.

      At the November 29, 2022 hearing it was
discovered that the [Appellant] was actively undercutting
the business, RML, by accepting a personal contract with
one of the RML’s clients; funneling monies that should
have gone into the company’s coffers to himself. The
[Appellant] admitted lying to the Court under oath about
the very existence of this underhanded activity and its
income. He also apparently lied to the IRS and actively
attempted to hide this transaction from the Court because

                          -25-
                he received no records of that income for the tax year
                2021, by agreement with the contractor.

                       The Court has many times been urged to believe in
                the remarkable coincidence of a jointly-created business
                failing rapidly, just at the very time when the managing
                spouse has been ordered to make payments to the other
                spouse.

February 15, 2023, Order Denying Motion for New Trial. ROA 389-92.

                Appellant urges that the Family Court “interjected false facts into the

record to support its ruling.” However, he does not demonstrate that the Family

Court’s factual findings were clearly erroneous or unsupported by the record.

Appellant further argues that the Agreed Orders amount to settlement agreements,

and the Family Court was not authorized to modify the parties’ express agreements

regarding those payments. Consequently, he contends that the Family Court erred

in modifying the parties’ Agreed Orders to recharacterize the advance property

distribution payments as income distribution payments.

                But in his December 22, 2022, motion, Appellant did not assert that

the classification of the payments in the Agreed Orders constituted an adoption of a

settlement agreement under KRS5 403.180(2). He merely argued that he was

entitled to a credit for those payments against the prospective division of equity in

RML. Because this question was not raised or adjudicated before the Family

5
    Kentucky Revised Statutes.

                                           -26-
Court, Appellant cannot raise it for the first time on appeal. Fischer v. Fischer,

197 S.W.3d 98, 102 (Ky. 2006).

             Furthermore, the parties reserved the ultimate issues concerning the

division of marital property and debt for the Family Court to adjudicate finally.

KRS 403.190(1) directs Courts to divide the marital assets in “just proportions,”

considering all relevant factors including: “(a) [c]ontribution of each spouse to

acquisition of the marital property, including contribution of a spouse as

homemaker; (b) [v]alue of the property set apart to each spouse; (c) [d]uration of

the marriage; and (d) [e]conomic circumstances of each spouse when the division

of property is to become effective[.]” However, the statute does not specify how

much weight should be given to each factor. In addition, a “just” division is not

necessarily an equal division. Stipp v. St. Charles, 291 S.W.3d 720, 726 (Ky. App.

2009); and Lawson v. Lawson, 228 S.W.3d 18, 21 (Ky. App. 2007). The Family

Court has broad discretion to divide marital assets, and its determination of what

constitutes a just division will not be disturbed on appeal absent an abuse of that

discretion. Hempel v. Hempel, 380 S.W.3d 549, 553 (Ky. App. 2012).

             As set forth above, RML was a marital asset subject to division.

Without doubt, the business suffered substantial losses in value during the

pendency of the dissolution action. By the time the Family Court held the

evidentiary hearing on November 29, 2022, the value of RML was greatly

                                         -27-
diminished, leaving very little marital interest to divide. In addition, these losses

and Appellant’s failure to comply with the 2020 Agreed Order resulted in a

substantial loss of income that would otherwise have gone to Appellee.

             The Family Court expressly found that Appellant was responsible for

those losses either through mismanagement of the business or by deliberately

undermining the business. Although Appellee did not make an express dissipation

claim, the Family Court could legitimately consider Appellant’s conduct in causing

the losses to RML. Under these circumstances, the Family Court was not required

to accept the 2021 Agreed Order’s characterization of the prior payments as

“temporary advance division[s] of property.” Therefore, we cannot find that the

Family Court abused its discretion by declining to give Appellant a credit for the

partial payments he made under the 2020 and 2021 Agreed Orders.

              Finally, Appellant argues that the Family Court abused its discretion

in awarding Appellee a portion of RML but making Appellant solely responsible

for its debt. We review a trial court’s decisions regarding division of marital debt

for abuse of discretion. Neidlinger v. Neidlinger, 52 S.W.3d 513, 523 (Ky. 2001),

overruled on other grounds by Smith v. McGill, 556 S.W.3d 552 (Ky. 2018).

Furthermore, there is no presumption that debts incurred during the marriage are

marital. Rather, the party claiming that a debt is marital has the burden of proof.

Id. In making this determination, the Family Court should consider receipt of

                                         -28-
benefits, the extent of participation, whether the debt was incurred to purchase

assets designated as marital property, whether the debt was necessary to provide

for the maintenance and support of the family, and any economic circumstances

bearing on the parties’ respective abilities to assume the indebtedness. Id.

             Appellant argues that the RML’s tax liability should be considered

marital, and that it was inequitable to assign that debt wholly to him. The Family

Court agreed that the IRS will probably hold both parties liable for the debt. But

the Family Court also noted that Appellant is listed as the sole shareholder of RML

after December 31, 2014, and Appellee was only an employee after that point. The

Family Court concluded that the post-2014 tax liability was incurred solely through

the actions of Appellant, and therefore he alone should be assigned that debt.

             We agree with the Family Court’s analysis. At the hearing,

Appellant’s accountant testified that RML is a “Subchapter S” corporation,

meaning that any profits or losses flow through to individual shareholders and are

reported on their tax returns. See 35 Am. Jur. 2d Federal Tax Enforcement § 408.

However, RML is required to file taxes and to report those profits or losses to the

IRS. The accountant testified that Appellant was allocated all flow-through profits

from RML from 2014 to 2017. He also testified that Appellant was required to

report any of his personal expenses paid by RML as income.

                                        -29-
             While Appellant was required to pay taxes on those profits and

expenses, both parties admitted to joint responsibility for the tax debt. But as

noted, Appellant was the sole shareholder of RML after 2014, and he locked

Appellee out of the business operations after 2019. In addition, Appellant failed to

set aside revenue to pay the tax debt as required by the 2020 Agreed Order. The

Family Court reasonably concluded that Appellant was responsible for the

incursion of the tax debt, interest, and penalties. Therefore, the Family Court did

not abuse its discretion by requiring Appellant to hold Appellee harmless for

RML’s tax liabilities.

   IV.   Conclusion

             Accordingly, we affirm the July 15, 2022, Order of the Jefferson

Family Court holding Appellant in contempt, and the December 15, 2022,

Judgment of the Jefferson Family Court dividing the marital property and debts.

Given this ruling, we deny Appellant’s motion to strike as moot.

             ALL CONCUR.

                                         -30-
BRIEFS FOR APPELLANT:       BRIEFS FOR APPELLEE TERESA
                            LUCE:
Allison Spencer Russell
Shanna R. Ballinger         Armand I. Judah
Louisville, Kentucky        Louisville, Kentucky

                          -31-