Court Opinion

ID: 4687572
Source: CourtListenerOpinion
Date Created: 2021-05-17 19:15:10.908503+00
Date Added: 2024-06-11T08:04:41.903658
License: Public Domain

05/17/2021
               IN THE COURT OF APPEALS OF TENNESSEE
                          AT KNOXVILLE
                                 April 14, 2021 Session

 MARY HANES LANCASTER LOCKETT v. MARC KEVIN RUNYAN SR.

              Appeal from the Chancery Court for Washington County
                  No. 19-DM-0305 John C. Rambo, Chancellor
                      ___________________________________

                            No. E2020-01343-COA-R3-CV
                        __________________________________

Appellant/Wife filed a petition for civil contempt against Appellee/Husband alleging that
Husband failed to make payments on a debt owed to Wife as required under the parties’
Marital Dissolution Agreement (“MDA”). The trial court: (1) held that the MDA was
ambiguous; (2) entered judgment for Wife in the amount of $14,636.66; (3) held that
Husband was not in contempt of the MDA; and (4) denied Wife attorney’s fees and costs
under the MDA. We conclude that the MDA was not ambiguous and that the trial court
erred in allowing parol evidence of payments Husband allegedly made prior to executing
the MDA. Accordingly, we: (1) reverse the trial court’s finding that the MDA is
ambiguous; (2) reverse and modify the trial court’s entry of judgment for Wife in the
amount of $14,636.66; (3) vacate the trial court’s finding that Husband was not in
contempt; and (4) reverse the trial court’s denial of Wife’s request for attorney’s fees and
costs. We remand the case for: (1) entry of judgment in favor of Wife in the amount of
$82,000.00 plus post-judgment interest; (2) reconsideration of the question of Husband’s
contempt; and (3) calculation of Wife’s reasonable attorney’s fees, costs, and expenses
incurred in the litigation, including this appeal, and entry of judgment on same.

        Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court
                  Reversed in Part, Vacated in Part, and Remanded

KENNY ARMSTRONG, J., delivered the opinion of the court, in which FRANK G. CLEMENT,
JR., P.J., M.S., and J. STEVEN STAFFORD, P.J., W.S., joined.

Jason A. Creech and Matthew Fisher Battis, Johnson City, Tennessee, for the appellant,
Mary Hanes Lancaster Lockett.

David N. Darnell, Kingsport, Tennessee, for the appellee, Marc Kevin Runyan, Sr.
                                        OPINION

                                     I. Background

       Appellant Mary Hanes Lancaster Lockett (“Wife”) and Appellee Marc Kevin
Runyan, Sr. (“Husband”) married on February 25, 2014. During the marriage, Wife loaned
Husband approximately $200,000.00, and Husband paid approximately half of this amount
back to her during the marriage.

       On April 23, 2019, Wife and Husband executed an MDA, which was incorporated
by reference into the Chancery Court of Washington County’s (“trial court”) Final Decree
of Divorce, which was entered on June 25, 2019. As is relevant to the instant appeal, the
MDA provides:

      9.     DEBTS. Husband acknowledges he owes Wife the sum of
      $100,000.00 for a personal loan Wife made to Husband during the marriage.
      Husband shall be responsible for paying back said loan in monthly
      installments in the amount of $2,500.00 per month beginning May 1, 2019
      and on the 1st of each month thereafter until such time as the loan is paid off.
      Husband shall set up payment of said monthly payment by auto-withdrawal
      from his Bank of Tennessee account to Wife’s Merrill Lynch account. Wife
      agrees to waive the previously agreed upon 10% interest rate.

       On July 5, 2019, Wife filed a Petition for Civil Contempt against Husband, wherein
she alleged that Husband was in contempt for failure to make the $2,500.00 payments in
May and June of 2019. Based on Husband’s failure to pay the required amounts, Wife
asked the trial court to: (1) hold Husband in contempt; (2) award her arrears for the two
missed payments; and (3) award her attorney’s fees.

       On August 19, 2019, Husband filed a response to Wife’s motion for contempt.
Therein, Husband did not deny failing to make the required payments in May and June
2019. Rather, Husband averred that he had suffered a “significant decline in business
income” and was, thus, unable to make his monthly payments of $2,500.00. Husband
disclaimed any contempt because his actions were not willful and asked the trial court to
temporarily reduce his monthly payments to $1,000.00 for 6 months, beginning September
2019. On September 16, 2019, the trial court entered an agreed order allowing Husband
to pay $1,000.00 per month for a period of 6 months. The trial court specified that the
agreed order was not meant to alter or modify the parties’ MDA or the Final Decree of
Divorce.

      On August 21, 2020, Wife filed a “Supplement to Petition for Civil Contempt and
Motion to Enforce Marital Dissolution Agreement,” wherein she alleged that,

                                           -2-
      [t]o date, Husband was supposed to have paid Wife the total sum of $31,000
      from May 1, 2019 to August 1, 2020. However, Husband has paid only
      $18,000 as follows:

      a. May 2019—$0 (stopped payment)
      b. June 2019—$0 (stopped payment)
      c. July 2019—$2,500
      d. August 2019—$2,500
      e. September 2019—$2,500
      f. October 2019—$3,500
      g. November 2019—$3,500
      h. December 2019—$3,500
      i. January 2020—$0
      j. February 2020—$0
      k. March 2020—$0
      l. April 2020—$0
      m. May 2020—$0
      n. June 2020—$0
      o. July 2020—$0
      p. August 2020—$0
      q. September 2020—unknown as of the date of the filing of this motion.

            For a period of three months, Husband was inadvertently paying both
      the $1,000 modified payment and his regular $2,500 payment. Upon
      Husband’s discovery of this issue, Husband stopped his monthly payment.

Based on the foregoing averments, Wife asked the trial court to award her judgment for the
amount of Husband’s arrears, interest, and attorney’s fees and costs.

       On August 31, 2020, Husband filed an “Amended Response to Petition for
Contempt and Motion by Defendant/Respondant for Court to Determine if Any Funds are
Owed to the Plaintiff Pursuant to the MDA.” Therein, Husband reiterated his previous
claim that, due to the change in his income, he was unable to pay $2,500.00 per month.
Furthermore, for the first time, Husband alleged that he had, in fact, overpaid Wife on the
loans she made to him during the marriage. Specifically, Husband alleged that he “had
paid prior to the MDA being signed $90,400 on the past loan from [Wife]. The MDA
contemplated only paying what was owed on the $100,000.00 original loan from [Wife].
Since the signing of the MDA[, Husband] has paid $18,000 toward the loan balance and
has overpaid [Wife].” In support of his contention, Husband attached, to his response, a
chart depicting payments he made to Wife in varying amounts dating back to 2014. All
but five of these payments occurred prior to the execution of the MDA.

                                           -3-
       On September 4, 2020, Wife filed a response, wherein she argued that “any prior
agreements the parties may have had during the divorce proceeding or marriage were
superseded by the [MDA],” and if “[Husband] had any objection to the payment obligation
in the MDA based on other debts or agreement made during the marriage, he should have
explored that during the divorce proceeding” before he signed the MDA.

      Following a hearing on September 8, 2020, the trial court entered an order on
September 21, 2020, wherein it held that the MDA was ambiguous. Based on parol
evidence, the trial court determined that Husband had made payments toward the
$100,000.00 loan prior to the execution of the MDA, such that the balance owed was
$14,636.66. The trial court declined to hold Husband in contempt because his monthly
income rendered him unable to make the required payments. The trial court also denied
Wife’s request for attorney’s fees under the MDA. Wife appeals.

                                         II. Issues

       Wife raises five issues for review as stated in her brief:

   1. Whether the trial court erred in finding the parties’ contract was “ambiguous.”

   2. Whether the trial court erred in considering parol evidence to alter, vary, and/or
      contradict the terms of the parties’ contract.

   3. Whether the trial court erred in rewriting the parties’ contract for them based on
      parol evidence.

   4. Whether the trial court erred in failing to make a finding of civil contempt.

   5. Whether the trial court erred in failing to award attorney fees.

      In the posture of Appellee, Husband contends that his remaining debt obligation to
Wife should be reduced to $7,136.66.

                                 III. Standard of Review

       We review a non-jury case de novo upon the record, with a presumption of
correctness as to the findings of fact unless the preponderance of the evidence is otherwise.
See Tenn. R. App. P. 13(d); Bowden v. Ward, 27 S.W.3d 913, 916 (Tenn. 2000). We
review questions of law de novo with no presumption of correctness. Bowden, 27 S.W.3d
at 916 (citing Myint v. Allstate Ins. Co., 970 S.W.2d 920, 924 (Tenn. 1998)); see also In
re Estate of Haskins, 224 S.W.3d 675, 678 (Tenn. Ct. App. 2006).

                                            -4-
          IV. Whether the Parties’ MDA is Ambiguous and Parol Evidence

       Marital dissolution agreements are contractual and, once approved by the trial court,
“become legally binding obligations on the parties.” Long v. McAllister-Long, 221
S.W.3d 1, 8-9 (Tenn. Ct. App. 2006), perm. app. denied (Tenn. Jan. 29, 2007) (explaining
that “the agreements in a marital dissolution agreement are enforceable contract
obligations”). We review issues of contract interpretation de novo. See Dick Broad. Co.
of Tenn. v. Oak Ridge FM, Inc., 395 S.W.3d 653, 659 (Tenn. 2013). As this Court has
previously explained:

       In resolving a dispute concerning contract interpretation, our task is to
       ascertain the intention of the parties based upon the usual, natural, and
       ordinary meaning of the contract language. Planters Gin Co. v. Fed.
       Compress & Warehouse Co., Inc., 78 S.W.3d 885, 889-90 (Tenn. 2002)
       (citing Guiliano v. Cleo, Inc., 995 S.W.2d 88, 95 (Tenn. 1999)). A
       determination of the intention of the parties “is generally treated as a question
       of law because the words of the contract are definite and undisputed, and in
       deciding the legal effect of the words, there is no genuine factual issue left
       for a jury to decide.” Planters Gin Co., 78 S.W.3d at 890 (citing 5 Joseph M.
       Perillo, Corbin on Contracts, § 24.30 (rev. ed. 1998); Doe v. HCA Health
       Servs. of Tenn., Inc., 46 S.W.3d 191, 196 (Tenn. 2001)). The central tenet
       of contract construction is that the intent of the contracting parties at the time
       of executing the agreement should govern. Planters Gin Co., 78 S.W.3d at
       890. The parties’ intent is presumed to be that specifically expressed in the
       body of the contract. “In other words, the object to be attained in construing
       a contract is to ascertain the meaning and intent of the parties as expressed
       in the language used and to give effect to such intent if it does not conflict
       with any rule of law, good morals, or public policy.” Id. (quoting 17 Am.
       Jur. 2d, Contracts, § 245).

Kafozi v. Windward Cove, LLC, 184 S.W.3d 693, 698 (Tenn. Ct. App. 2005), perm. app.
denied (Tenn. Jan. 30, 2006). To fully ascertain the parties’ intent, courts must first
determine whether the contract, or particular language therein, is ambiguous. See Planters
Gin Co. 78 S.W.3d at 890. “Contractual language ‘is ambiguous only when it is of
uncertain meaning and may fairly be understood in more ways than one.’” Allstate Ins.
Co. v. Watson, 195 S.W.3d 609, 611 (Tenn. 2006) (quoting Planters Gin Co., 78 S.W.3d
at 890). If the contract language in question is unambiguous, the contract is considered
fully integrated, and the literal meaning controls the outcome of the dispute. Watson, 195
S.W.3d at 611. However, when contractual language is ambiguous, the parol evidence rule
allows pre-contract negotiations or actions to give meaning to the ambiguous language. Id.
at 612.

                                             -5-
       The trial court concluded that the language, “Husband acknowledges he owes Wife
the sum of $100,000.00 for a personal loan Wife made to Husband during the marriage,”
created an ambiguity in Section 9 of the MDA. Specifically, the trial court held:

      The Court finds that Section 9 of the Marital Dissolution Agreement is
      ambiguous as written because:

      a. Section 9 uses the singular “loan” rather than referencing various loans
         as was testified to by the parties. Section 9 should have stated the
         existence of multiple loans rather than a singular loan, and as such, it
         lacks clarity.

Respectfully, the trial court’s reasoning is flawed. “Contractual language ‘is ambiguous
only when it is of uncertain meaning and may fairly be understood in more ways than
one.’” Id. at 611 (quoting Planters Gin Co., 78 S.W.3d at 890). The fact that the MDA
uses the “singular ‘loan’ rather than referencing various loans” is not material to the
question of what Husband owed to Wife at the time of the execution of the MDA. Whether
the amount owed was comprised of several loans or one, Husband clearly acknowledge
that, at the time of the MDA, he owed Wife $100,000.00, i.e., “Husband acknowledges he
owes Wife the sum of $100,000.00.” Contrary to the trial court’s finding, the gravamen is
the amount owed by Husband to Wife at the time of the execution of the MDA and not
how that amount came to be. The contractual language is not ambiguous as it clearly
established that Husband owed Wife $100,000.00 at the time he executed the MDA. This
Court previously held that an MDA was unambiguous even though it failed to state the
balance owed on a loan and significant dates regarding that loan. See Ament v. Wynne,
No. M2004-01876-COA-R3-CV, 2007 WL 2376333, *4-5 (Tenn. Ct. App. Aug. 20, 2007)
(holding that, even though the MDA failed to reference loan numbers or dates, the
agreement was still unambiguous).

       Despite the fact that the amount owed under the MDA was not ambiguous, the trial
court found that:

          The evidence presented from Exhibits 2 and 3, as well as the testimony
          of Ex-Husband, showed that during the marriage, prior to the execution
          of the Marital Dissolution Agreement, Ex-Husband paid Ex-Wife
          $90,400. After execution of the Marital Dissolution Agreement, Ex-
          Husband paid Ex-Wife payments totaling $18,000. Most payments made
          prior to the parties’ execution of the Marital Dissolution Agreement were
          for $2,500.00 per month, which was consistent with the payments as
          indicated in the Marital Dissolution Agreement of $2,500.00 per month.
          This is the best evidence that Section 9 is ambiguous.

                                          -6-
Respectfully, the trial court erred in allowing Husband to introduce parol evidence in the
form of payments he allegedly made prior to the execution of the MDA, i.e., Exhibits 2
and 3. Only if contractual language is determined to be ambiguous, may parol evidence,
or pre-contract negotiations, be used “to guide the court in construing and enforcing the
contract.” Watson, 195 S.W.3d at 612. The parol evidence rule’s applicability is highly-
restricted if the contract is fully integrated. See Individual Healthcare Specialists, Inc. v.
BlueCross BlueShield of Tennessee, Inc., 566 S.W.3d 671, 695-96 (Tenn. 2019)
(explaining that even negotiations “within the scope of the agreement in a way that would
supplement or limit its terms” are not considered). Regardless of whether the contract is
partially or fully integrated, the parol evidence rule cannot be used to contradict the
contract’s terms. Id. Here, the MDA is clear. Husband acknowledged a debt of
$100,000.00 when he signed the MDA, and he agreed to pay “back said loan in monthly
installments in the amount of $2,500.00 per month beginning May 1, 2019 and on the 1st
of each month thereafter until such time as the loan is paid off . . . .” (Emphasis added).
Relying on Husband’s parol evidence, the trial court found that “prior to the execution of
the Marital Dissolution Agreement, Ex-Husband paid Ex-Wife $90,400.” Based on the
fact that the $90,400.00 in payments was comprised of monthly payments of $2,500.00,
the trial court inferred that these payments should be applied to the $100,000.00
contemplated in the MDA. We disagree. The plain language of the MDA states that
Husband’s repayment of the $100,000.00 will commence on May 1, 2019. There is nothing
in the MDA to suggest that Husband owed anything less than $100,000.00 at the time of
its execution or that he had made any payments toward this amount prior to May 1, 2019.
So, not only did the trial court err in allowing parol evidence concerning any payments
made prior to May 1, 2019, but it also erred in inferring that Husband owed less than
$100,000.00 when the parties executed the MDA.

        The record shows that Wife, in fact, loaned Husband approximately $200,000.00
during the marriage. The evidence further shows that the $90,400.00 in payments Husband
made prior to the execution of the MDA went toward paying off the $200,000.00 debt such
that the $100,000.00 amount stated in the MDA represents the remaining amount Husband
owed on the initial $200,000.00 debt at the time the parties executed the MDA.
Nonetheless, the trial court held that

       Ex-Husband presented proof that he paid Ex-Wife $90,400 from November
       2014 through the date of the Marital Dissolution Agreement, and he further
       paid $18,000 after execution of the Marital Dissolution Agreement. Ex-
       Husband testified and presented evidence that, if the Court takes into account
       his total payments to date of $108,400 at 10% interest per annum from
       November 2014, when he first began such payments, Ex-Husband only owes
       Ex-Wife the sum of $14,636.66 pursuant to Section 9 of the Marital
       Dissolution Agreement, subject to post-judgment interest to accrue at 10%
       interest per annum.

                                            -7-
By erroneously allowing parol evidence of payments Husband made prior to the May 1,
2019 commencement date contemplated in the MDA, the trial court credited Husband with
payments on a debt that ostensibly had not yet been created. The trial court’s reading not
only ignores the plain language of Section 9, but it also ignores Section 13(l) of the MDA,
which states that, “This Agreement constitutes the entire understanding of the parties, and
it supersedes any and all prior agreements between them.” (Emphasis added). Under
the plain language of the MDA, regardless of any payments or agreements made prior to
the execution of the MDA, Husband owed Wife $100,000.00 as of the date of the execution
of the MDA. The parties agreed that Husband would pay this debt in monthly installments
of $2,500.00 commencing on May 1, 2019. These terms are not ambiguous, and Husband
is entitled to reduction of the $100,000.00 debt only for payments made on or after May 1,
2019.

       Exhibit 2, which was tendered by Husband, shows that Husband’s payments after
May 1, 2019 totaled $18,000.00. As such, Husband still owes Wife $82,000.00 on the
$100,000.00 debt. Accordingly, we reverse and modify the trial court’s judgment in the
amount of $14,636.66 and remand for entry of judgment for Wife in the amount of
$82,000.00. To the extent that neither party raises an issue concerning the trial court’s
application of post-judgment interest in the amount of 10% per annum, we leave that
portion of the trial court’s order undisturbed. On remand, the trial court should apply post-
judgment interest to the $82,000.00 judgment.

                                       V. Contempt

      Wife appeals the trial court’s determination that Husband was not in contempt of
the MDA. Specifically, the trial court held that

       [e]ven if Section 9 of the Marital Dissolution Agreement is unambiguous,
       Ex-Husband is not earning enough money to pay Ex-Wife $2,500 per month
       and thus does not have the ability to pay because he presently only earns
       approximately $4,000 per month from his businesses. Therefore, Ex-
       Husband is not “willfully” in contempt of Section 9 of the Marital
       Dissolution Agreements, as incorporated into the Final Decree of Divorce.

“With respect to a trial court’s findings of civil contempt, the factual issues of whether a
party violated an order and whether a particular violation was willful, are reviewed de novo,
with a presumption of correctness afforded the trial court’s findings.” Lovlace v. Copley,
418 S.W.3d 1, 17 (Tenn. 2013) (citing Konvalinka v. Chattanooga-Hamilton Cnty. Hosp.
Auth., 249 S.W.3d 346, 356-57 (Tenn. 2008)). The decision to hold a party “in civil
contempt is reviewed using the abuse of discretion standard.” Id. “A court abuses its
discretion when it causes an injustice to the party challenging the decision by (1) applying
an incorrect legal standard, (2) reaching an illogical or unreasonable decision, or (3) basing
its decision on a clearly erroneous assessment of the evidence.” Lee Med., Inc. v. Beecher,
                                             -8-
312 S.W.3d 515, 524 (Tenn. 2010).

       To prevail on a civil contempt claim, the plaintiff must establish four elements: (1)
the order alleged to have been violated is lawful; (2) the order alleged to have been violated
must be clear, specific, and unambiguous; (3) the plaintiff must prove by preponderance of
the evidence that the defendant actually violated the order; and (4) the defendant violated
the order willfully. See Cowan v. Cowan, No. W2019-00179-COA-R3-CV, 2020 WL
1966322, at *3 (Tenn. Ct. App. Apr. 24, 2020) (citing Konvalinka, 249 S.W.3d at 354-55);
Scobey v. Scobey, No. M2016-00963-R3-CV, 2017 WL 4051085, at *3 (Tenn. Ct. App.
Sep. 13, 2017).

        Having determined above that the parties’ MDA is not ambiguous, the trial court is
not precluded from finding Husband in contempt of that agreement. It is undisputed that
Husband consistently failed to make the $2,500.00 payments under the terms of the original
MDA; he also consistently failed to pay the reduced amount of $1,000.00 under the agreed
order. Nonetheless, the trial court held, supra, that Husband’s failure to make these
payments was not contemptuous because it was not willful. In making this finding, the
trial court focused solely on Husband’s monthly income, but it did not consider any of his
other assets. This was error. Accordingly, we vacate the trial court’s finding that Husband
was not in contempt of the MDA and remand for the trial court to reconsider the question
of Husband’s contempt in view of his income and assets.

                                    VI. Attorney’s Fees

       Section 13(g) of the MDA provides, in relevant part, that:

       Should either party fail to abide by or perform the agreements herein, he or
       she shall be liable to the other party for all reasonable attorney fees, costs,
       and expenses incurred by the other in securing performance.

        The trial court denied Wife’s request for attorney’s fees and costs; specifically, the
trial court held that, “The request for attorney’s fees and prejudgment interest . . . by Ex-
wife is denied because Section 9 is ambiguous.” Having determined that the MDA is not
ambiguous, we reverse the trial court’s denial of Wife’s attorney’s fees and costs. As noted
above, it is undisputed that Husband consistently failed to make the required payments
toward the $100,000.00 debt; as such, Section 13(g) of the MDA is triggered, and Wife is
entitled to her “reasonable attorney fees, costs, and expenses” incurred in the litigation
including costs of this appeal. We remand the case to the trial court for determination of
Wife’s reasonable attorney’s fees, costs and expenses and entry of judgment for same.

                                            -9-
                                     VII. Conclusion

       For the foregoing reasons, we: (1) reverse the trial court’s finding that Section 9 of
the MDA is ambiguous; (2) reverse and modify the trial court’s $14,636.66 judgment in
favor of Wife; (3) vacate the trial court’s finding that Husband was not in contempt; and
(4) reverse the trial court’s denial of Wife’s request for attorney’s fees, costs and expenses
incurred in the litigation. This case is remanded for: (1) entry of judgment in favor of Wife
in the amount of $82,000.00 plus post-judgment interest; (2) reconsideration of the
question of Husband’s contempt; (3) calculation of Wife’s attorney’s fees, costs, and
expenses incurred in the litigation, including the appeal, and entry of judgment for same.
Costs of the appeal are assessed to the Appellee, Marc Kevin Runyan, Sr., for all of which
execution may issue if necessary.

                                                          s/ Kenny Armstrong
                                                     KENNY ARMSTRONG, JUDGE

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