Court Opinion

ID: 4440524
Source: CourtListenerOpinion
Date Created: 2019-09-23 14:06:04.211889+00
Date Added: 2024-06-11T14:26:52.120840
License: Public Domain

FIFTH DIVISION
                          MCFADDEN, C. J.,
      MCMILLIAN, P. J., and SENIOR APPELLATE JUDGE PHIPPS

                   NOTICE: Motions for reconsideration must be
                   physically received in our clerk’s office within ten
                   days of the date of decision to be deemed timely filed.
                               http://www.gaappeals.us/rules

                                                                  September 6, 2019

In the Court of Appeals of Georgia
 A19A0858. BERRY v. BERRY.

      MCMILLIAN, Presiding Judge.

      We granted the application for discretionary appeal filed by Kelly Randall

Berry (the “Wife”) of the trial court’s order directing her to pay one-half of the

amount due at closing on the sale of the former marital residence. Because we find

that the trial court’s order improperly modified the terms of the parties’ divorce

decree, we reverse and remand the case to the trial court for further consideration.

      In 2008, the trial court granted a final judgment and decree of divorce, which

incorporated a settlement agreement signed by both parties, to the Wife and Darren

Heath Berry (the “Husband”). As for the marital residence, the settlement agreement

provided that the Wife could remain in the residence for a specified time and that the

Husband would be responsible for paying the mortgage. The agreement further
provided that the Husband had the right to refinance the loan if interest rates dropped

to a point that it would be “fiscally responsible to refinance the existing mortgage[.]”

However, any refinancing “must be completed in such a manner as to fully protect

[the] Wife’s equity position in the Marital Residence” and “in no event shall [the]

Wife be required to go on the mortgage with [the] Husband as a borrower, co-signer,

guarantor, or in any other capacity.”

      Once the Wife vacated the marital residence, the settlement agreement

provided the parties three options: (1) the Husband could buy the Wife’s interest in

the marital residence for $25,000; (2) the Wife could buy the Husband’s interest in

the marital residence for an agreed upon price; or (3) if neither party exercised these

options, the marital residence would be sold, with the Wife receiving the first $25,000

of the net sales proceeds and assuming the risk that the marital residence would not

net $25,000. Under the third option, the settlement agreement provided that the

marital residence would be listed for sale with a real estate broker or agent and that

the list price would be mutually agreed upon by the parties or absent agreement,

would be determined by a licensed real estate appraiser.

      Sometime in or around 2014, the Husband apparently failed to meet some of

the monthly mortgage payments, and in June 2014, he opted to refinance the loan

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through a loan modification agreement. By this time, the Wife had vacated the marital

residence, and neither the Husband nor the Wife chose to exercise the option to buy

the other’s interest in the property. Therefore, the parties were required under the

settlement agreement to sell the residence.

      However, by 2014, the value of the marital residence was below the

outstanding mortgage balance, resulting in negative equity. To avoid paying this

mortgage shortfall at closing, the Husband proposed in a series of correspondence

that the Wife transfer the marital residence to him or to the couple’s son, who would

then assume the mortgage. The Husband eventually offered the Wife up to $3,600 to

agree to his proposal. The Wife rejected these evolving proposals and countered with

a proposal that she assume the mortgage on the marital residence and that the

Husband pay her $25,000, arguing that the Husband’s missed mortgage payments and

refinancing increased the mortgage amount, which she contended was a violation of

the parties’ settlement agreement. Over time, the Wife reduced the monetary demand

on her proposal down to $8,000.

      During the course of these negotiations, the Husband filed a motion asserting

the Wife should be held in contempt for declining his proposed solution to the

negative equity issue. In response, the Wife filed a counterclaim arguing the Husband

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should be held in contempt for increasing the principal amount of the mortgage

contrary to the terms of the settlement agreement and that he should be solely

responsible for the mortgage deficiency.

        After an initial hearing, the trial court entered an interim order directing that

the marital residence be sold. After a second hearing on the cross-motions to consider

the issue of the mortgage deficiency, the trial court entered a second interim order,

finding that the Wife had not acted equitably in refusing to agree with the Husband’s

proposal that she transfer the marital residence to their son in exchange for the

Husband’s monetary offer. As a result, the trial court declined to find the Husband in

contempt and further declined “to reallocate any portion of the deficiency in the

principal balance owed on the existing mortgage between the parties.” Instead, the

trial court ordered the parties to appear at the hearing with the funds required to

complete the closing, which the trial court estimated to be approximately $12,000

each.

        The marital residence was subsequently sold to the son for the appraised value

of $75,000, which was more than $17,000 below the remaining mortgage balance,

and the parties, as sellers, were required to pay a total of $24,851.51 at closing, which

included the mortgage payoff and closing costs. The Husband and Wife each paid one

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half of this amount. In its final order, the trial court refused to reallocate these

amounts between the parties and found that they were each responsible for their own

attorney fees. This appeal followed.

      1. On appeal, the Wife contends the trial court’s order erroneously modified the

parties’ divorce decree by ordering the Wife to pay one half of the mortgage

deficiency because their settlement agreement provides that the Husband was

responsible for the mortgage debt. We agree.

      “[W]hile the trial court has broad discretion to determine whether a divorce

decree has been violated and has authority to interpret and clarify the decree, it does

not have the power in a contempt proceeding to modify the terms of the decree.”

(Citation and punctuation omitted.) Greenwood v. Greenwood, 289 Ga. 163, 164 (709

SE2d 803) (2011). “The test to determine whether an order is clarified or modified

is whether the clarification is reasonable or whether it is so contrary to the apparent

intention of the original order as to amount to a modification.” (Citation and

punctuation omitted.) Pollard v. Pollard, 297 Ga. 21, 23 (771 SE2d 875) (2015). “It

is the function of the court to construe the contract as written and not to make a new

contract for the parties.” (Citation and punctuation omitted.) Friday v. Friday, 294

Ga. 687, 693 (4) (755 SE2d 707) (2014).

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      The parties’ settlement agreement provides that the Wife was entitled to live

in the marital residence after the divorce until August 2015 at the latest, and after she

moved out of the residence, she was financially responsible for any damages to the

property beyond normal wear and tear. However, nothing in the agreement provided

that the Wife was ever to be responsible for any mortgage indebtedness. To the

contrary, the settlement agreement provided that the Husband would pay the full

monthly mortgage amount while she resided in the residence. The settlement

agreement also entitled the Husband to refinance the mortgage so long as he fully

protected the Wife’s equity interest, and if he chose to refinance the Wife was not to

be made a party to that new mortgage. In July 2014, the Husband made the decision

to refinance the debt on the marital residence and signed a new mortgage solely in his

own name; therefore, as the settlement agreement provided, the Wife was under no

legal obligation to repay that loan.

      Additionally, the settlement agreement specifically addressed the risk the Wife

was to bear with regard to any sales transaction, providing that she bore the risk that

the sale would not net $25,000 and that the Husband had no obligation to pay her that

amount if it did not. However, nothing in the agreement stated that she also shared

in the risk that the sale would not result in sufficient proceeds to cover the mortgage

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that the Husband took out in his own name. Although the settlement agreement

defined the net proceeds of the sale as the amount remaining after the “costs of the

sale of the Marital Residence which the sellers agreed to pay as part of the transaction

as well as the balance owed on any mortgage that is in effect” were deducted from the

gross proceeds, nothing in the agreement requires the Wife to pay any portion of the

mortgage balance. Rather, the Husband, individually, agreed to repay the refinanced

mortgage on the marital residence, and thus he alone bore the risk that the subsequent

sale of the property would not cover the remaining balance. We find, therefore, that

the portion of the trial court’s order requiring the Wife to assume liability under the

Husband’s mortgage was an improper modification of the divorce decree.

      We note, however, that the settlement agreement does not address the payment

of any closing costs associated with the sale of the property, other than the cost of an

appraiser, which the parties were to share equally. Therefore, the payment of closing

costs was not governed by the final divorce decree, and to the extent that the trial

court’s order directed the parties to split such costs, it did not violate the divorce

decree.

      Based on the foregoing, we reverse and remand the case to the trial court for

further proceedings consistent with this opinion.

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      2. The Wife also argues that the trial court impermissibly modified the

settlement agreement by permitting the Husband to erode the Wife’s equity position

in the residence by failing to pay mortgage payments and by increasing the principal

balance through the refinancing. Although the Wife argues in her appellate brief that

the Husband’s actions increased the principal balance from to $90,563.41 to

$93,391.46, a difference of less than $3,000, the mortgage shortfall in this case

exceeded $17,000. Therefore, any addition to the mortgage balance did not affect the

Wife’s ability to recover equity upon the sale of the property. Moreover, as we have

found that the Wife has no obligation to repay the mortgage balance on the marital

residence, any violation of the settlement agreement did not result in damages to the

Wife. Accordingly, we need not address the issue on appeal.

      Judgment reversed, and case remanded. McFadden, C. J., and Senior

Appellate Judge Herbert E. Phipps concur.

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