Court Opinion

ID: 4572283
Source: CourtListenerOpinion
Date Created: 2020-10-02 14:06:01.255718+00
Date Added: 2024-06-11T13:30:47.197340
License: Public Domain

RENDERED: OCTOBER 2, 2020; 10:00 A.M.
                         TO BE PUBLISHED

            OPINION OF SEPTEMBER 25, 2020, WITHDRAWN

                Commonwealth of Kentucky
                         Court of Appeals

                            NO. 2019-CA-1116-MR

MAUREEN O’MEARA HOLLAND                                          APPELLANT

               APPEAL FROM JEFFERSON FAMILY COURT
v.            HONORABLE LAUREN ADAMS OGDEN, JUDGE
                      ACTION NO. 15-CI-502475

JOHN ELKAN HERZFELD, III                                           APPELLEE

                                  OPINION
                                 AFFIRMING

                                 ** ** ** ** **

BEFORE: CLAYTON, CHIEF JUDGE; TAYLOR AND L. THOMPSON,
JUDGES.

CLAYTON, CHIEF JUDGE: Maureen O’Meara Holland (“Holly”) appeals from

two orders of the Jefferson Family Court denying her motion to modify or

terminate her maintenance obligation to her former husband, John Elkan Herzfeld,
III (“John”). Upon review of the record and applicable law, we affirm the decision

of the family court.

                                 BACKGROUND

             Holly and John were married in 1984. The marriage was dissolved by

a decree entered on April 6, 2016. During the course of the marriage, Holly was

employed as a writer, book editor, and consultant. In 2011, she started teaching

Pilates out of her home. At the time of the divorce, her annual income was

$63,630. John was employed as a full-time teacher until 2012, when he was

diagnosed with congestive heart failure. He worked as a substitute teacher until

2015, when he was diagnosed with Parkinson’s disease and began receiving Social

Security disability benefits. In 2015, he received approximately $30,000 in

disability benefits and $15,216 from part-time employment. His total income that

year was $49,879.

             On March 28, 2016, Holly and John entered into a property settlement

agreement (“PSA”) that was subsequently incorporated into the final decree of

dissolution. Under the terms of the PSA, Holly retained a vehicle, bank accounts

with balances totaling $55,000, life insurance policies, and various small business

proprietorships. John retained a vehicle, bank accounts totaling $49,000,

individual retirement accounts, various stocks and mutual funds, personal property,

and art. The PSA equally divided various qualified retirement assets, personal

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property, and a Janus account with a total value of $27,456. Holly retained the

marital residence and obtained a mortgage which enabled her to transfer $135,000

to John for his share of the property. John invested this sum. Holly used her share

of the mortgage proceeds to open a Pilates studio.

            With respect to the issue of maintenance, the PSA states:

            Holly and John acknowledge that each of them are able-
            bodied persons capable of working and contributing to
            their own support, or have access to funds for his or her
            support. John has been determined to be partially
            disabled and entitled to SSDI and, for some period of
            time, disability payment from a private disability plan.
            Additionally, he acknowledges his ability to work (most
            recently working full time) at least part time and
            contribute to his support. Nonetheless, Holly
            acknowledges John meets the statutory requirements for
            maintenance, and the parties agree as follows: Holly will
            pay John maintenance in the amount of $800 per month
            until such time that John is able to draw full Social
            Security Retirement benefits at age 66½ years of age.
            The maintenance may be modifiable during the fixed
            term as provided by KRS 403.250, only in the event of
            changed circumstances so substantial and continuing as
            to make the terms of the award unconscionable, which
            may include (these possibilities are NOT exclusive)
            significant changes in either party’s income or assets.
            The term of the maintenance may not be extended and
            shall terminate in the event of the death of either party,
            John attaining age 66 and ½, or John’s remarriage.

            In 2017, John was able to return to full-time employment as a grant

writer, earning $44,823. His investment income that year was $10,276. By the fall

of 2018, he had resumed full-time teaching with an annualized income of $50,000

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and he stopped receiving disability benefits. Holly’s Pilates studio has been

financially successful, and her annual income following the divorce ranged from

$70,000 to $75,000.

             On May 1, 2018, Holly filed a motion seeking modification of her

maintenance obligation to John with an accompanying affidavit stating she

believed John’s disability was substantially, if not completely, resolved, and he

was consequently capable of earning sufficient income to meet his reasonable

needs. Both parties attended mediation as prescribed by the PSA but were unable

to reach an agreement.

             The family court conducted an evidentiary hearing in January 2019, at

which Holly placed into evidence John’s 2017 tax returns which showed that, in

addition to his salary, he had earned $8,533 in interest and dividend income and

realized $1,743 in capital gains. He reduced his total income that year from

$74,338 to an adjusted gross income of $65,838 by contributing $6,500 to an IRA.

John testified that he lives in a 900-square-foot apartment which is substantially

smaller than the marital residence and has curtailed his lifestyle because of

uncertainty about his future economic circumstances. He also testified about his

health, explaining that he suffers from heart failure, Parkinson’s disease, bipolar

disorder, and hearing loss.

                                         -4-
             The family court found that although Holly and John had both

experienced a substantial and continuing change in circumstances since entry of

their PSA, their respective incomes remained disparate. It denied Holly’s motion

to modify the maintenance obligations in the PSA because the current maintenance

award was not “manifestly unfair or inequitable.”

             On April 8, 2019, Holly timely filed motions requesting the family

court to make additional findings of fact, amend the findings of fact, and alter and

amend its earlier order, arguing that it had failed to consider John’s additional

income from interest, dividends, and capital gains. John timely filed an objection

to these motions on May 1, 2019, pointing out that his current employment at a

higher salary was recent and by no means guaranteed to continue in light of his

ongoing and serious health problems. He also contended that the sale of assets

which generated capital gains in the amount of $1,743 in 2017 could not be

characterized as continuing income.

             On June 13, 2019, the family court entered an order amending its

findings of fact to acknowledge that John was likely to meet his monthly living

expenses with his current salary and investment income. It reiterated, however,

that the terms of the PSA awarding him maintenance were not unconscionable and

denied Holly’s motion to modify or terminate her maintenance obligation. This

appeal by Holly followed.

                                          -5-
                                     ANALYSIS

a. Standard of Review

             Holly and John’s PSA incorporated the statutory standard for

modification of maintenance, which states in pertinent part that “the provisions of

any decree respecting maintenance may be modified only upon a showing of

changed circumstances so substantial and continuing as to make the terms

unconscionable.” Kentucky Revised Statutes (KRS) 403.250(1). “Maintenance

becomes unconscionable if it is manifestly unfair or inequitable. To determine

whether the circumstances have changed, we compare the parties’ current

circumstances to those at the time the court’s separation decree was entered.”

Tudor v. Tudor, 399 S.W.3d 791, 793 (Ky. App. 2013) (internal quotation marks

and citations omitted).

             A family court’s refusal to modify maintenance is reviewed for abuse

of discretion. Id. “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) (citations

omitted). “An appellate court is not authorized to substitute its own judgment for

that of the trial court where the trial court’s decision is supported by substantial

evidence.” Bickel v. Bickel, 95 S.W.3d 925, 928 (Ky. App. 2002) (citation

omitted).

                                          -6-
b. Discussion

             Holly argues that the family court abused its discretion when it

refused to modify or terminate her maintenance obligation when, according to its

own findings of fact, John was capable of providing for his own reasonable living

expenses through his employment and investment income.

             In its order of March 29, 2019, the family court found that both John

and Holly had experienced an increase in their incomes. John had returned to full-

time employment, earning $50,000 per year, or $35,000 more than at the time of

the PSA, and was no longer receiving disability benefits. Holly earns

approximately $75,000 per year from her Pilates business, approximately $12,000

more than she earned at the time of the PSA. The court concluded, however, that

the parties’ incomes remained disparate because John could not meet his

reasonable monthly living expenses of $3,778 without drawing on the substantial

savings he received from the PSA. It also noted that John is sixty-two years of age

and his medical conditions, while currently stable, will ultimately deteriorate. The

family court calculated that the current maintenance payment results in an adjusted

income of $65,400 for Holly and $59,600 for John. It concluded that the current

maintenance award was not unconscionable under KRS 403.250.

             In its subsequent order addressing Holly’s motions for additional

findings and/or to alter, amend, or vacate the previous order, the family court

                                         -7-
addressed Holly’s contention that John’s investment income was sufficient to meet

the shortfall between his current salary and monthly living expenses. It agreed

John could meet his monthly expenses in this manner but emphasized that the

question was not whether his current circumstances would entitle him to an award

of maintenance. Rather, the question was whether the parties’ agreement for Holly

to pay John maintenance had become unconscionable. The family court concluded

that it had not.

              Holly argues that the family court abused its discretion because it

failed to consider the statutory principles governing an initial award of

maintenance. KRS 403.200(1) provides in pertinent part that the court may grant

maintenance to either spouse only if it finds that the spouse seeking maintenance

“(a) Lacks sufficient property, including marital property apportioned to him, to

provide for his reasonable needs; and (b) Is unable to support himself through

appropriate employment[.]” KRS 403.200(1). Holly argues that if this standard

was applied to John’s current financial situation, an award of maintenance would

not be justified because John can provide for his reasonable needs and the disparity

between his and Holly’s assets is modest.

              But, in the PSA, Holly agreed to pay maintenance under the financial

facts as they were at that time. She also expressly agreed that any modification of

that maintenance would be governed by KRS 403.250, not by KRS 403.200(1).

                                          -8-
Had Holly wished any future modification of maintenance to be governed by the

latter standard, she should have sought to incorporate it into the PSA. The family

court applied the correct standard, as mandated by the PSA, of changed

circumstances and unconscionability under KRS 403.250 in assessing whether a

modification of maintenance was warranted. Holly’s assertion that John would not

currently be entitled to maintenance under KRS 403.200(1) does not render his

continued receipt of maintenance unconscionable.

                                  CONCLUSION

             The family court applied the correct legal standard in deciding

whether to terminate or modify maintenance. Its decision is supported by

substantial evidence in the record that the incomes of the parties remain disparate

and that John’s income is contingent upon his progressive medical conditions

remaining stable. For the foregoing reasons, its orders are affirmed.

             ALL CONCUR.

BRIEF FOR APPELLANT:                     BRIEF FOR APPELLEE:

B. Mark Mulloy                           Christopher Harrell
Louisville, Kentucky                     Louisville, Kentucky

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