Court Opinion

ID: 4186149
Source: CourtListenerOpinion
Date Created: 2017-07-14 11:09:18.117446+00
Date Added: 2024-06-11T14:39:50.225824
License: Public Domain

STATE OF MICHIGAN

                             COURT OF APPEALS

THADDEUS J ANDRUSZ,                                                    FOR PUBLICATION
                                                                       July 13, 2017
               Plaintiff-Appellant,                                    9:00 a.m.

v                                                                      No. 331339
                                                                       Oakland Circuit Court
JACQUELINE R ANDRUSZ,                                                  LC No. 2008-744224-DM

               Defendant-Appellee.

Before: RIORDAN, P.J., and RONAYNE KRAUSE and SWARTZLE, JJ.

RONAYNE KRAUSE, J.

         Plaintiff appeals by leave granted the trial court’s order clarifying the terms of the parties’
consent judgment of divorce; which in relevant part ordered plaintiff to pay defendant a sum of
money that the court concluded he had underpaid, ordered plaintiff to obtain a life insurance
policy in favor of defendant, and declined to reduce the spousal support award. On
reconsideration, the trial court clarified that plaintiff may craft the life insurance policy to avoid
making potentially posthumous payments to defendant. We affirm in part, reverse in part, vacate
in part, and remand for further proceedings.

        The parties were married in 1984 and had two children, twins born in 1995. The parties’
relationship apparently broke down as a result of defendant’s psychological illnesses,
culminating in a hospitalization in 2008. Plaintiff had been aware of her mental illnesses during
the marriage, and it is undisputed that defendant has serious mental and physical health
problems. Defendant did not work at all after the children were born, and apparently has worked
“very little” since the divorce. The parties arrived at a consent judgment of divorce that was
entered in 2009. At issue in the instant proceedings is primarily the interpretation of certain of
plaintiff’s obligations thereunder.

       In relevant part, the consent judgment provided as follows:

              3.      Defendant is awarded modifiable spousal support that shall
       terminate upon the death or remarriage of the Defendant. Commencing January
       1, 2009, Plaintiff shall pay $6,000 per month from Plaintiff’s salary directly to
       Defendant on the first of each month based on Plaintiff’s base income of
       $204,000 annually and Defendant having no income. Additionally, in the event

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       Plaintiff’s salary from employment is greater than $204,000 in a given year
       (January 1 through December 31), he shall pay 25% of said amount from
       employment-related bonus or commission via electronic fund transfer to
       Defendant as additional spousal support within 7 (seven) days of receiving same.
       This shall not include any NBC retention bonus Plaintiff may receive in 2009.
       Regarding any potential NBC retention bonus Plaintiff may receive, 33.3% of any
       gross amount of this retention bonus shall be paid to Defendant immediately as it
       is received by Plaintiff, as a one-time additional spousal support payment by
       Plaintiff to Defendant. All spousal support paid by plaintiff shall be taxable as
       income to Defendant and tax deductible from Plaintiff’s income for purposes of
       income taxes in accordance with IRS regulations. Plaintiff shall secure his
       spousal support obligation with existing life insurance on Plaintiff’s life or in a
       life insurance trust naming Defendant as an irrevocable beneficiary of said life
       insurance. Plaintiff shall provide proof of said security/insurance in compliance
       with this provision on a yearly basis to Defendant. A Uniform Spousal Support
       Order shall enter in accordance with this provision.

As the trial court recognized, the center of the instant controversy is the phrase “salary from
employment.”

        The instant dispute began when defendant reviewed plaintiff’s W-2 forms and concluded
that plaintiff had “shortchanged” her because he consistently earned more than $204,000 but
calculated the 25% he owed from the excess based on reported taxable income instead of
“Medicare income,1” “thereby not accounting for his earned income that he deferred into his
401K [sic].” She also contended that he had not properly verified the existence of the required
life insurance or trust securing his spousal support obligations. Plaintiff contended that
defendant was misrepresenting or misunderstanding the terms of the consent judgment because
his actual “salary from employment,” as specified in the consent judgment, was considerably less
than $204,000, and the language regarding excess payment pertained to his base salary rather
than gross income.

        At the time of the parties’ divorce, plaintiff received a total income of “$565,000.00 and
change,” consisting of a base salary of $203,894 and the remainder from commissions. He was
laid off shortly thereafter, and his substitute employment initially provided a base salary of
$143,000 plus eligibility for commissions and bonus. By the time of the instant proceedings,
defendant’s base salary had increased to $187,455.84, with an additional car allowance, a
company credit card for certain business expenses, and up to 30% beyond his base salary in
possible commission bonuses and a “speculative” possible additional bonus. Plaintiff put some
percentage of his compensation into a 401(k) account, but because of the fluctuation in his total

1
  In the lower court, defendant consistently made references to “Medicare income” with the
apparent intent to refer to plaintiff’s total earned income rather than his taxable income, although
this terminology usage generated some confusion.

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compensation, he did not know exactly how much. There has been no suggestion that plaintiff is
not in good faith endeavoring to maximize his earning capacity.

        It appears that defendant testified, but for unexplained reasons her testimony was not
transcribed. Plaintiff does not dispute the trial court’s summary that defendant “testified that she
would like to work but currently has back and leg problems and is fearful of mental instability”
and has approximately $6,100.00 in monthly expenses. The consent judgment did not require
either parent to contribute to the support of their children after they reached the age of majority,
but plaintiff nevertheless continued paying the entirety of the children’s substantial college
expenses and unspecified other expenses. Plaintiff testified that he had asked defendant to help,
but she did not.

        Plaintiff testified that he understood the consent judgment required him to pay defendant
$6,000.00 a month if his salary was $204,000.00 a year, and that “salary” referred to his “base
salary.” He noted that he had paid the $6,000.00 even though his base salary had been below
that amount every year other than in 2009, and he also voluntarily overpaid her an additional
amount calculated on the basis of 25% of his entire compensation above $204,000.00 “because
[he] wanted to address some of the issues with [defendant] and the kids.” The trial court found,
accurately insofar as we can determine, that plaintiff’s total income had been reduced by more
than half. Plaintiff asked the trial court to reduce his spousal support obligations accordingly and
“uphold the original decree which states clearly that it is based on my salary,” but sought no
reimbursement.

        The trial court concluded that “the plain language of the [judgment of divorce], and the
intent and actions of the parties commands that the Plaintiff pay the Defendant 25% of any
earned income over $204,000.00 as a result of his employment” and that that included “taxable
and non-taxable income.” The trial court did not deem plaintiff’s car allowance or expense
account to be “income,” but it did conclude that between 2012 and 2014, the years for which tax
information had been provided, plaintiff had underpaid defendant by a total of $15,591.67.
Despite observing that plaintiff’s total income had decreased by more than half and that plaintiff
was solely paying for the parties’ children’s expenses, it declined to reduce plaintiff’s spousal
support obligation, noting in particular that plaintiff was not legally obligated to support the
children. The trial court finally ordered plaintiff to maintain a life insurance policy in favor of
defendant, the value of which plaintiff does not appeal.

        As an initial matter, plaintiff inexplicably contends that the trial court’s order requiring
him to obtain a life insurance policy would effectively grant defendant a potential posthumous
award. This issue was rendered moot in the trial court’s order denying reconsideration. As
noted, the trial court expressly clarified that because the consent judgment unambiguously
terminated any of plaintiff’s obligations in the event of defendant’s death, plaintiff was free to
craft the life insurance policy such that it would also terminate upon her death. The only way for
defendant to receive a posthumous award would be if plaintiff crafts the life insurance policy to
do so, which is now entirely optional, as defendant accurately concedes.

      Primarily, plaintiff argues that the trial court inappropriately re-wrote the parties’ consent
judgment, a contract, by replacing the word “salary” with “income.” We disagree, but we do

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find that the trial court erred by including the entirety of plaintiff’s earned income beyond his
taxable income in calculating his spousal support obligations.

        A trial court’s award of spousal support is reviewed for an abuse of discretion, but any
underlying factual findings are reviewed for clear error, and the award “must be affirmed unless
[this Court is] firmly convinced that it was inequitable.” Gates v Gates, 256 Mich App 420, 432-
433; 664 NW2d 231 (2003). “In reviewing de novo equity cases, this Court may modify
otherwise final judgments to rectify mistakes, clarify and interpret ambiguities, and alleviate
inequities.” Hagen v Hagen, 202 Mich App 254, 258; 508 NW2d 196 (1993). Consent
judgments of divorce are contracts and treated as such. In re Est of Lobaina, 267 Mich App 415,
417-418; 705 NW2d 34 (2005). We review de novo as a question of law the proper
interpretation of a contract, including a trial court’s determination whether contract language is
ambiguous. Klapp v United Ins Group Agency, Inc, 468 Mich 459, 463; 663 NW2d 447 (2003).

        Defendant’s position is that trial courts have the authority to modify judgments of divorce
to reach equitable results. This is true to a certain extent and in certain contexts, but it is not
applicable to this case. This Court has so held, but in the context of a divorce judgment entered
by the court after a contested action, not in the context of tampering with the parties’ consent
judgment. Hagen, 202 Mich App at 256-258. Rather, a consent judgment can only be modified
with the consent of the parties, at least in the absence of fraud, mistake, illegality, or
unconscionability. Blaske v Blaske, 33 Mich App 201, 212; 189 NW2d 713 (1971); Greaves v
Greaves, 148 Mich App 643, 646; 384 NW2d 830 (1986). The trial court may, however, fill
voids in an incomplete consent judgment, and in so doing must balance the equities insofar as is
possible under the circumstances. Greaves, 148 Mich App at 646-647. The consent judgment at
issue in this matter is a contract and must be treated as such pursuant to ordinary principles of
contract interpretation. Lobaina, 267 Mich App at 417-418.

        Unambiguous contracts must simply be enforced as they are written, absent a handful of
extremely unusual circumstances like fraud, duress, or illegality. However, if provisions of a
contract irreconcilably conflict or can be reasonably understood as meaning different things, the
contract is ambiguous as a matter of law and its proper meaning therefore becomes a question of
fact. Coates v Bastian Bros, Inc, 276 Mich App 498, 503-504; 741 NW2d 539 (2007). The
courts may in that event consider extrinsic evidence to resolve the ambiguity, but the overarching
goal, to which any rule of interpretation must bow, is to determine the intent of the parties. Shay
v Aldrich, 487 Mich 648, 660; 790 NW2d 629 (2010). The trial court’s finding that the consent
judgment was not ambiguous is incompatible with its reliance on extrinsic evidence. However,
because we find that the consent judgment is, in fact, ambiguous, the trial court’s reliance on
extrinsic evidence was ultimately proper.

        The second sentence of the relevant paragraph in the consent judgment appears to treat
“salary” and “base income” as synonymous. The third sentence appears to treat “salary from
employment” and “employment-related bonus or commission” as being at least related. If the
phrase “salary from employment” was intended to refer exclusively to plaintiff’s base salary,
explicitly requiring the additional 25% to come from his “employment-related bonus or
commission” is nonsensical. Plaintiff’s “base income” ostensibly appears to be a reference to
what he described as his “base salary.” However, plaintiff is correct in stating that as a general
matter, where words are undefined, a dictionary should be consulted, and not only do the various

                                                -4-
words have distinct meanings, but different words are presumed to have distinct meanings in any
event. See Citizens Ins Co v Pro-Seal Service Group, Inc, 477 Mich 75, 84; 730 NW2d 682
(2007); Lickfeldt v Dep’t of Corrections, 247 Mich App 299, 306; 636 NW2d 272 (2001). Thus,
the use of different words makes it unclear from the four corners of the contract whether the
word “salary” in the third sentence of the paragraph is intended to be a reference to his “base
salary” or his “income,” and both understandings would be reasonable. On the facts of this case,
the parties’ consent judgment is therefore ambiguous as a matter of law.

        Having so found, the trial court’s consideration of the parties’ conduct was a proper way
of determining the parties’ intent. The trial court accurately observed that, in practice, plaintiff
had been consistently paying defendant 25% of everything he brought home over $204,000,
strongly suggesting that the parties always intended “salary from employment” to refer to
“income.” Plaintiff contends that he voluntarily overpaid, and his so doing should not be held
against him. “[W]hile generally a course of performance is highly persuasive evidence of proper
contract interpretation when introduced against the party so performing, the law also recognizes
that a party may undertake a wrong interpretation of the words of a contract and the other party
should never be permitted to profit by such mistake in the absence of an estoppel arising from a
prejudicial change of position in good-faith reliance on such performance.” Schroeder v Terra
Energy, Ltd, 223 Mich App 176, 191-192; 565 NW2d 887 (1997). The trial court did not
explicitly express any views about the credibility of either party, but by inference it did not
believe plaintiff’s contention that he voluntarily overpaid. To the extent a factual determination
turns on the credibility of a witness, this Court generally defers to the trial court. McGonegal v
McGonegal, 46 Mich 66, 67; 8 NW 724 (1881). We have no reason not to do so here.

        Therefore, we find that the trial court properly concluded that plaintiff was obligated by
the parties’ consent judgment to pay 25% of his income over $204,000 to defendant as his
spousal support obligation. However, the trial court’s determination that he was obligated to pay
out of his earned income, rather than only his taxable income, is clearly erroneous. Such a
finding conflicts with its reliance on course of performance, creates a potential double-dipping
problem with computing spousal support upon plaintiff’s presumed eventual retirement, would
seem to discourage financial responsibility, and is inconsistent with balancing monies actually
available to the parties. There is nothing in the record from which we could infer bad faith on
plaintiff’s part. The trial court’s order lays out no analysis explaining how it arrived at the
conclusion that the parties’ actions and intentions reflected the inclusion of all earned income in
addition to taxable income in computing his spousal support obligations. We therefore find that
the trial court clearly erred in including all of plaintiff’s earned income beyond his taxable
income in calculating his spousal support obligations, and we reverse the trial court’s order to
that extent.

        Plaintiff also contends that the trial court should have reduced his spousal support
obligation in recognition of his significantly reduced income. We find that the trial court erred in
failing to recognize that plaintiff’s support of the parties’ children was a fact that it could
consider, and consequently we decline to resolve this issue specifically in either party’s favor,
but rather remand for reconsideration by the trial court.

       Although the trial court correctly observed that plaintiff was under neither a legal nor a
contractual obligation to support the parties’ adult children’s college expenses, the trial court

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erroneously regarded that support as something it could not consider as an equitable concern.
See Elahham v Al-Jabban, ___ Mich App ___, ___; ___ NW2d ___ (2017) (Docket No.
326775), slip op at pp 10-11. A trial court necessarily abuses its discretion if it fails to recognize
that it has discretion to exercise and so does not exercise it. Rieth v Keeler, 230 Mich App 346,
348; 583 NW2d 552 (1998); People v Merritt, 396 Mich 67, 80; 238 NW2d 31 (1976). The trial
court therefore committed an abuse of discretion by disregarding plaintiff’s support of the
parties’ children as per se irrelevant.

        The case defendant relies on to the contrary, Lesko v Lesko, 184 Mich App 395, 405; 457
NW2d 695 (1990), was decided prior to November 1, 1990, and is therefore not strictly binding
pursuant to the “first-out rule,” MCR 7.215(J)(1).2 Furthermore, Lesko involved a situation in
which the trial court’s order effectively required the plaintiff to support the children through the
defendant, contrary to the law prohibiting courts from ordering payment of child support for
adult children. Lesko, 184 Mich App at 403-405. We think the Lesko Court disregarded its own
citation to authority explicitly listing “whether either [party] is responsible for the support of
others” as a factor to consider. “Responsibility for the support of others” appears to have
originally been derived from Bialy v Bialy, 167 Mich 559, 566; 133 NW 496 (1911), which did
not obviously distinguish between voluntarily-assumed responsibility and legally-obligated
responsibility. Lesko is not binding on us, but we conclude that it was, in any event, wrongly
decided. Whether a party—either party, in an appropriate case—has “responsibility for the
support of others,” irrespective of why, is a proper equitable consideration.

       Defendant contends that so concluding raises the possibility that a party could somehow
evade spousal support obligations altogether by choosing to support someone else instead. Such
a concern is patently ridiculous: support of another is an equitable concern, not a dispositive

2
  The precedential nature of Court of Appeals opinions has a potentially confusing history.
Published opinions of the Court of Appeals have always been binding on trial courts, but were
not originally binding on other panels of the Court of Appeals except in “law of the case”
scenarios or, obviously, on our Supreme Court. CAF Investment Co v Saginaw Twp, 410 Mich
428, 453-455; 302 NW2d 164 (1981); Matter of Hague, 412 Mich 532, 552-553; 315 NW2d 524
(1982); Tebo v Havlik, 418 Mich 350, 362-363, 379-381; 343 NW2d 181 (1984) (no majority
opinion, but agreed to by a majority of the Justices); Hackett v Ferndale City Clerk, 1 Mich App
6, 11; 133 NW2d 221 (1965). In 1987, MCR 7.215(C)(2) was added to the Court Rules, but it
was understood by the courts as only affecting whether an opinion of the Court of Appeals had
any immediate effect while an appeal was pending before our Supreme Court, not whether any
such opinion bound another panel of the Court of Appeals. See Johnson v White, 261 Mich App
332, 348-349; 682 NW2d 505 (2004). Thus, an opinion of the Court of Appeals was still
regarded as only imposing binding precedent on trial courts. People v Doyle, 451 Mich 93, 111;
545 NW2d 627 (1996). It was not until the passage of the “first-out rule,” now MCR
7.215(J)(1), that Court of Appeals opinions became binding on other Court of Appeals panels.
See Catalina Marketing Sales Corp v Dep’t of Treasury, 470 Mich 13, 23; 678 NW2d 619
(2004). Therefore, although Lesko might have been binding on the trial court in the absence of
Elahham, it is not binding on us in any event, nor was the Elahham panel obligated to follow it.

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one. Furthermore, we fully expect trial courts to consider the extent to which such support is
either legally or morally obligatory, the extent to which it might be naturally expected by long-
standing ties of friendship or family, whether it is a sham or otherwise in bad faith, and any other
appurtenant factor. In any event, a court sitting in equity is expected to balance the equities: the
fact that it should consider one party’s responsibilities does not exclude it from considering the
other party’s needs.3 And although we are not impressed by defendant’s implied argument that
she is impoverished despite receiving at least $72,000.00 a year and, as the trial court noted,
having non-trivial cash reserves, there is no dispute that her expenses, presumably largely
medical in nature, are quite substantial. Balancing the equities necessarily involves declining to
ignore any of them.

        Furthermore, we decline to address whether the trial court should have reduced plaintiff’s
spousal support obligations, although we do find the trial court’s stated reasoning insufficient.
Plaintiff accurately cites case law to the effect that a reduction in income can per se support a
reduction in a spousal support obligation, and there may not be “an absolute duty to support the
wife regardless of the circumstances of the husband.” Pohl v Pohl, 13 Mich App 662, 665-666;
164 NW2d 768 (1968). However, Pohl is no more binding on us than Lesko, and even at face
value would merely permit, not mandate, a reduction in spousal support. “The main objective of
[spousal support] is to balance the incomes and needs of the parties in a way that would not
impoverish either party.” Ackerman v Ackerman, 197 Mich App 300, 302; 495 NW2d 173
(1992). The trial court’s largely unsupported conclusion, and defendant’s contention, that a
more-than-half reduction in total income was essentially a triviality defies sense in isolation.
However, because “all the circumstances of the case” must be considered, McCallister v
McCallister, 205 Mich App 84, 87-88; 517 NW2d 268 (1994) (emphasis in original), plaintiff’s
equally unsupported contention that the trial court abused its discretion by failing to reduce his
spousal support obligation just because his income had been reduced also fails.

        Nothing in this opinion should be construed as any manner of dictation to the trial court
as to how it should balance the parties’ equities beyond the following: the trial court’s disregard
of the substantial reduction in plaintiff’s total income warrants some articulation of the trial
court’s reasoning, and the trial court abused its discretion by deeming plaintiff’s support of the
parties’ children to be an impermissible or improper equitable consideration. Furthermore, we
note that plaintiff’s income had increased every year since he changed his employment, so on
remand, it would be proper for the trial court, should it and the parties so desire, to take new
evidence and evaluate the situation as it presently stands.

3
  Additionally, we find it somewhat disingenuous that defendant urges us to consider equity to
re-write the parties’ contract, but urges us to focus narrowly on strict legal obligations in
evaluating what is fundamentally an equitable matter. Likewise, we find it very difficult to
accept the implication that supporting the parties’ children is somehow inappropriate.

                                                -7-
        The trial court’s order is reversed to the extent it includes the entirety of plaintiff’s earned
income beyond his taxable income in calculating his child support obligations. The trial court’s
order is vacated to the extent it denied plaintiff’s request to reduce his spousal support
obligations. In all other respects, we affirm. This matter is remanded for further proceedings
consistent with this opinion. No costs, neither party having prevailed in full. 4 MCR 7.217(A).

                                                               /s/ Amy Ronayne Krause
                                                               /s/ Michael J. Riordan
                                                               /s/ Brock A. Swartzle

4
  Defendant requests attorney fees from plaintiff, contending that she is unable to bear the
expense of the appeal. In light of defendant’s substantial income and our perception that her
arguments on appeal are no more or less disingenuous or misplaced than plaintiff’s, we decline.

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