Court Opinion

ID: 8210672
Source: CourtListenerOpinion
Date Created: 2022-09-30 14:06:08.356515+00
Date Added: 2024-06-11T16:41:55.545294
License: Public Domain

RENDERED: SEPTEMBER 23, 2022; 10:00 A.M.
                      NOT TO BE PUBLISHED

                Commonwealth of Kentucky
                          Court of Appeals

                             NO. 2021-CA-1184-MR

PAULA MCCORMICK AYER                                                 APPELLANT

                  APPEAL FROM MCLEAN CIRCUIT COURT
v.                 HONORABLE BRIAN WIGGINS, JUDGE
                         ACTION NO. 18-CI-00113

DAVID AYER                                                             APPELLEE

                                    OPINION
                                  REMANDING

                                  ** ** ** ** **

BEFORE: CLAYTON, CHIEF JUDGE; CETRULO AND THOMPSON, K.,
JUDGES.

CETRULO, JUDGE: The McLean Circuit Court granted Appellee David Ayer’s

(“David”) motion to terminate maintenance to Appellant Paula McCormick Ayer

(“Paula”). Paula filed a motion to alter, amend, or vacate the order terminating

maintenance, which the circuit court denied. Paula appealed.
                BACKGROUND AND PROCEDURAL HISTORY

              After 31 years of marriage, Paula and David filed for divorce. In

December 2018, the parties entered into a property settlement agreement

(“Agreement”), which detailed the division of their real property, personalty, and

marital debts; and established that David would pay Paula maintenance in the

amount of $400 per month until her death or remarriage. The last provision of the

Agreement contained a catch-all, non-modification statement in the

“DISCLOSURE TO COURT” section, which stated that “no party shall have

standing to obtain modification of this Agreement or the final decree entered

pursuant thereto, except for issues of child support, custody and visitation, as

allowed by law.” The circuit court incorporated the Agreement into the dissolution

decree entered in January 2019.

              Two years later, in April 2021, David filed a motion to terminate

maintenance because Paula had been cohabiting with her paramour. The fact that

Paula cohabited with her paramour was not disputed. David claimed that her

“household partner” had added resources to Paula’s income, which constituted a

“substantial change in circumstance that is continuing in nature.”1

1
  The motion also asserted that Paula’s circumstances had significantly changed because she had
sold the marital house she had received in the dissolution, received a portion of David’s 401k
since the divorce, and had started working. The circuit court did not take these additional
arguments into account when ruling on David’s motion; therefore, we need not address these
arguments.

                                              -2-
             In July 2021, the circuit court heard David’s motion to terminate

maintenance. Paula testified that she had been cohabiting with a third party with

whom she was romantically involved. She also explained that she planned to

continue the relationship and cohabitation. Paula testified that she shared a bank

account with her paramour and that he deposited his paychecks into their joint

account. She explained, however, that he used those deposited funds to pay only

his bills and did not use them for household expenses. Paula also testified that her

account balances had decreased since her divorce, despite her cohabitation and

depositing her wages and house proceeds in her accounts.

             Following the hearing, both parties submitted memoranda in support

of their positions. In July 2021, the circuit court entered its order granting David’s

motion. The circuit court analyzed Lockhart v. Lockhart, 566 S.W.3d 571 (Ky.

App. 2018), and found that Paula was cohabiting with a man with whom she was

romantically involved; that it was a long-term relationship; and that they shared a

bank account, into which her paramour deposited his paycheck. Therefore, the

circuit court concluded that Paula’s new living situation constituted a change in

circumstances that rendered David’s continued maintenance payments

unconscionable.

             In September 2021, Paula moved to alter, amend, or vacate the circuit

court’s July order, which the circuit court denied. Paula now appeals, arguing (1)

                                         -3-
that KRS2 403.180(6) prohibits the circuit court from modifying or terminating

maintenance when the Agreement stated that its terms were non-modifiable; and

(2) that the circuit court abused its discretion when it determined that Paula’s

cohabitation constituted a new financial resource that made David’s continued

payments unconscionable.

                                STANDARD OF REVIEW

                The first issue, regarding the interpretation of KRS 403.180(6), is a

matter of law and subject to de novo review. Harms v. Chase Home Finance, LLC,

552 S.W.3d 516, 519 (Ky. App. 2018) (citing Wheeler & Clevenger Oil Co., Inc. v.

Washburn, 127 S.W.3d 609, 612 (Ky. 2004)).

                The second issue, regarding the circuit court’s determination on the

motion to modify maintenance, is reviewed for an abuse of discretion. Block v.

Block, 252 S.W.3d 156, 159 (Ky. App. 2007) (citing Bickel v. Bickel, 95 S.W.3d

925, 927-28 (Ky. App. 2002)). “The test for abuse of discretion is whether the trial

judge’s decision was arbitrary, unreasonable, unfair, or unsupported by sound legal

principles.” Holland v. Herzfeld, 610 S.W.3d 360, 363 (Ky. App. 2020) (citation

omitted). If there is substantial evidence supporting the circuit court’s

determination, this Court cannot substitute its judgment for that of the circuit

court. Id. (citation omitted).

2
    Kentucky Revised Statute.

                                            -4-
                                   ANALYSIS

             First, Paula argues that KRS 403.180(6) prohibits the circuit court

from modifying or terminating maintenance when the Agreement stated that its

terms were non-modifiable. KRS 403.180(6) provides that “[e]xcept for terms

concerning the support, custody, or visitation of children, the decree may expressly

preclude or limit modification of terms if the separation agreement so provides.

Otherwise, terms of a separation agreement are automatically modified by

modification of the decree.”

             Kentucky Courts have routinely interpreted that to mean that KRS

403.180(6) permits the enforcement of non-modifiability clauses in separation

agreements and thereby does not permit modification in such cases. Lockhart, 566

S.W.3d at 574 (“by enacting KRS 403.180(6), our legislature permits the

enforcement of a non-modifiability clause in a separation agreement.”); Jaburg v.

Jaburg, 558 S.W.3d 11, 13 (Ky. App. 2018) (“Under KRS 403.180(6), the parties

to a dissolution of a marriage ‘may expressly preclude or limit modification of

terms if the separation agreement so provides.’”).

             However, in Lockhart, this Court distinguished cases in which the

payee (here, Paula) cohabited following a dissolution, even where the settlement

agreement specifically listed remarriage – not cohabitation – as the threshold

action to terminate maintenance. Lockhart, 566 S.W.3d at 571. There, the circuit

                                        -5-
court had upheld the maintenance schedule under KRS 403.180(6) because the

settlement agreement, like here, contained a catch-all non-modification provision.

Id. at 573. Affirming the circuit court, in part, this Court previously found that the

non-modification provision was valid, and the agreement precluded modification.

Id.

             Importantly, though, this Court’s analysis did not end there. This

Court also reversed the circuit court in part, concluding that the circuit court had

erred when it found that the payee’s “cohabitation was not a ground to terminate

maintenance under the terms of the [a]greement.” Id. at 575. The Lockhart Court

remanded in part and instructed the circuit court to address whether the payee’s

“cohabitation would be grounds to terminate maintenance[,]” under Combs v.

Combs, 787 S.W.2d 260 (Ky. 1990). Lockhart, 566 S.W.3d at 576.

             Here, the circuit court determined that the Agreement contained a

catch-all non-modification provision but held that, like Lockhart, there was a

question as to whether the payee’s cohabitation with her paramour had created a

new financial resource. Using Lockhart, the circuit court herein stated that it had

conducted the cohabitation analysis under Combs and found that Paula’s

cohabitation was grounds for termination of her maintenance. Paula disagrees,

arguing that the circuit court abused its discretion when it made that determination.

                                          -6-
             Thus, we must turn to Combs for further guidance. In Combs, the

Kentucky Supreme Court concluded that the receiving spouse’s cohabitation could

render continued maintenance “unconscionable” if the nature of the cohabitation

constituted a new financial resource. Combs, 787 S.W.2d at 262. Although

Combs did not involve a non-modification provision, this Court, in Lockhart, relied

on Combs’ cohabitation analysis as a second step of its maintenance review. As

such, this Court turned to the Kentucky Supreme Court’s six-factor Combs test to

determine whether it should terminate maintenance due to the payee cohabiting.

Lockhart, 566 S.W.3d at 576.

             In Combs, the Kentucky Supreme Court explained that a circuit court

should analyze certain factors to determine “whether the cohabitation of a spouse

who is receiving maintenance entitles the obligor to a termination of maintenance.”

Id. at 575 (citing Combs, 787 S.W.2d at 262). The factors included: (1) the

duration of the relationship; (2) the economic benefit to the receiving spouse from

the relationship; (3) the intention of the parties; e.g., whether the cohabiting spouse

is avoiding remarriage to keep maintenance and whether the couple intends to

establish a “lasting relationship”; (4) the nature of the living arrangements; (5) the

nature of the financial arrangements; and (6) the likelihood of a continued

relationship. Combs, 787 S.W.2d at 262.

                                          -7-
             Here, Paula does not deny that she cohabited with her paramour, nor

that she shared a bank account with him, into which he deposited his paychecks.

However, the circuit court found only that she was in a long-term relationship. The

court did not make findings as to what it considered “long-term” or how long Paula

had actually cohabitated. There was no consideration of the intention of the

parties, including whether Paula was avoiding remarriage in order to keep

receiving maintenance or whether the couple intended to establish a “lasting

relationship.” Most importantly, the opinion does not indicate that the “scope and

extent of the economic benefit [was] closely scrutinized.” Id. The court’s only

findings on financial issues were that “[s]he shares a bank account with this man,

and he deposits his paycheck into the account.” Such initial findings do not tell us

how much money this man deposits, how the money is used, or if such deposits

inured to Paula’s benefit in any significant manner.

             As stated above, this Court may only reverse the circuit court when

there is an abuse of discretion; this Court may not substitute its own findings of

fact in place of the circuit court. Holland, 610 S.W.3d at 363. However, despite

the statement that the circuit court had analyzed the substantial evidence “in light

of the factors set out in Combs[,]” we do not believe there are sufficient findings

for the Court to have concluded that David’s maintenance obligation should end.

Specifically, applying the factors in Combs, the circuit court must determine

                                         -8-
whether her cohabitation constituted such a change in circumstances as to render

continued maintenance payments unconscionable under KRS. 403.250(1).3

              Here, the circuit court seemingly ignored the important fact that the

parties had been married for 31 years. “[I]n situations where the marriage was

long term, the dependent spouse is near retirement age, the discrepancy in incomes

is great, or the prospects for self-sufficiency appears dismal,” our family courts

award maintenance for longer periods or in greater amounts. Clark v. Clark, 782

S.W.2d 56, 61 (Ky. App. 1990) (emphasis added). Based upon the length of her

marriage alone, Paula could potentially have been awarded more maintenance by

the circuit court had she not agreed to the (non-modifiable) maintenance amount of

$400.00 per month. Furthermore, we have no way of knowing whether or not she

accepted future maintenance payments from David in lieu of significant marital

property interests. The circuit court has not given us any of the findings to support

its ruling. We know very little about the parties, their resources, or their needs.

Thus, we believe the circuit court’s ruling does appear “unreasonable, unfair, or

unsupported by sound legal principles.” Holland, 610 S.W.3d at 363.

              While the court below stated that it considered the Combs factors,

there is no indication of that in the order under appeal. As in Lockhart, we remand

3
 “(1) Except as otherwise provided in subsection (6) of KRS 403.180, 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.”

                                            -9-
this matter to the court below to address those factors and whether Paula’s co-

habitation would be grounds to terminate maintenance under Combs.

                                 CONCLUSION

             Therefore, we REMAND for findings consistent with this Opinion.

             CLAYTON, CHIEF JUDGE, CONCURS.

             THOMPSON, K., JUDGE, DISSENTS AND FILES SEPARATE
OPINION.

             THOMPSON, K., JUDGE, DISSENTING: Respectfully, I dissent.

The non-modification clause found in the parties’ marital settlement agreement

should be recognized as controlling and enforced. David Ayer did not present

evidence of either fraud or bad faith in order to avoid the agreement under basic

contract principles. Furthermore, he did not provide evidence sufficient to find the

agreement’s continuing enforcement to be “unconscionable” as that term is

understood in the Commonwealth. Since the record is devoid of substantial proof

in either category, David should not be allowed to avoid the terms of the

agreement.

             With the narrow exceptions of “terms concerning the support,

custody, or visitation of children,” KRS 403.180(6) recognizes parties’ rights to

enter separation agreements that “expressly preclude or limit modification of

terms” for all other matters including maintenance. The language of this statute is

clear and so are the terms of the parties’ agreement. Pursuant to the clear and

                                        -10-
unambiguous language of the parties’ agreement, the only matters which could

ever be revisited by the court were “child support, custody and visitation, as

allowed by law[;]” those last clauses being nothing more than the parties’

acknowledgment of the courts’ continuing authority over those three issues and the

specific language of KRS 403.180(6). If David had any expectation that

maintenance would also be modifiable, he should have specifically included

maintenance as a fourth area of potential modification following child support,

custody, and visitation. At a minimum, the last clause “as allowed by law” (which

only addresses child support, custody, and visitation in the preceding clause) could

have been changed to “or as allowed by law” which would then at least give an

indication that other terms of the settlement agreement would remain open to

statutory or judicial modification.

             “A fundamental rule of contract law holds that, absent fraud in the

inducement, a written agreement duly executed by the party to be held, who had an

opportunity to read it, will be enforced according to its terms.” Conseco Finance

Servicing Corp. v. Wilder, 47 S.W.3d 335, 341 (Ky.App. 2001) (citing Cline v.

Allis-Chalmers Corp., 690 S.W.2d 764 (Ky.App. 1985)).

             Settlement agreements “are a type of contract and therefore are

governed by contract law[.]” Frear v. P.T.A. Industries, Inc., 103 S.W.3d 99, 105

(Ky. 2003) (citation omitted). Absent an ambiguity in the contract, which is not

                                        -11-
present here, a contract will be “enforced strictly according to its terms[.]” Id. at

106. In negotiating the terms of a marital settlement agreement, “the parties may

settle their affairs with a finality beyond the reach of the court’s continuing

equitable jurisdiction elsewhere provided.” Brown v. Brown, 796 S.W.2d 5, 8 (Ky.

1990) (emphasis added). The parties’ arms-length agreement, originally accepted

by the court in its decree, should have been recognized as “final” on the issue of

maintenance and Paula is entitled to enforcement of the settlement agreement.

             The only way maintenance would terminate in accordance with the

parties’ agreement would be by death or remarriage, neither of which has occurred.

David could have specified in the agreement that cohabitation could also be

considered by the court as grounds for modification, but he did not. This is where

the court’s analysis should have stopped and it should have denied David’s motion

to modify or terminate his maintenance obligation.

             If, despite the presence of a non-modification clause, courts find

themselves tempted to rewrite an arms-length settlement agreement, they must be

cautioned to do so only under extreme circumstances where continued enforcement

by our courts would be so unjust, so wholly inequitable, as to be “unconscionable.”

             While I agree with the majority’s instructions for family courts in

such circumstances to apply each of the factors in Combs v. Combs, 787 S.W.2d

260 (Ky. 1990), to determine whether cohabitation constitutes “changed

                                         -12-
circumstances so substantial and continuing as to make [continued maintenance]

unconscionable[,]” id. at 261, under KRS 403.250(1), in my opinion such

admonition does not go far enough.

                In Combs, the Kentucky Supreme Court was faced with the situation

where a former spouse who had been awarded maintenance, subsequently was

cohabitating. The Court looked to KRS 403.250(1), which provides in relevant

part as follows: “[T]he provisions of any decree respecting maintenance or support

may be modified only upon a showing of changed circumstances so substantial and

continuing as to make the terms unconscionable[.]” Combs, 787 S.W.2d at 261.

                The Court did not determine that cohabitation equated to remarriage

under KRS 403.250(2) (termination upon remarriage), instead it concluded that a

spouse’s cohabitation could render continued maintenance “unconscionable” under

KRS 403.250(1), if the nature of the cohabitation constituted “a new financial

resource as contemplated in KRS 403.200(2)(a).”4 Id. at 262 (internal quotation

marks omitted). Importantly though, there was no non-modification provision, like

the one Paula and David entered, present in the Combs case.

4
    KRS 403.200(2)(a) provides:

                The maintenance order shall be in such amounts and for such
                periods of time as the court deems just, and after considering all
                relevant factors including . . . [t]he financial resources of the party
                seeking maintenance, including marital property apportioned to
                him, and his ability to meet his needs independently[.]

                                                 -13-
             I must now note that the opinion cited by the majority in

Lockhart v. Lockhart, 566 S.W.3d 571 (Ky.App. 2018) (Lockhart II), had a

significant procedural history which casts light on its rare decision to only

potentially ignore a non-modification clause. Our Court had seen the Lockharts

before and held that their non-modifiable agreement was just that, non-modifiable.

Lockhart v. Lockhart, No. 2012-CA-000219-MR, 2013 WL 5969839 (Ky.App.

Nov. 8, 2013) (unpublished) (Lockhart I). However, in that first appeal we noted

one potential safeguard that the husband may still be able to assert an impossibility

defense to any motion for contempt arising from his failure to pay maintenance.

Lockhart I, 2013 WL 5969839, at *2. That is precisely what transpired. The

husband was later found in contempt and faced jail.

             After Mr. Lockhart was found in contempt for failure to pay

maintenance, this Court in Lockhart II determined to extend the analysis of a

spouse’s cohabitation beyond the “unconscionability standard” set forth in KRS

403.250(1) and Combs, and determined to conduct a review despite there being an

otherwise enforceable non-modification clause like those recognized by KRS

403.180(6). In doing so, this Court quoted part of Judge Miller’s previous dissent

in the matter of Lydic v. Lydic, 664 S.W.2d 941 (Ky.App. 1983) (Miller, J.,

dissenting), where he stated:

             However, “[t]here is something distasteful in requiring
             one to subsidize a former spouse, in his or her subsequent

                                         -14-
             cohabitation.” Id. at 261, (quoting Lydic v. Lydic, 664
             S.W.2d 941, 943 (Ky.App. 1983) (Miller, J., dissenting)).

Lockhart II, 566 S.W.2d at 575.

             It is important to note that when Judge Miller wrote his dissent in

Lydic, there was no non-modification agreement present and therefore, as in

Combs, Judge Miller was not discussing the discontinuance of maintenance

payments despite there being an enforceable non-modification agreement under

KRS 403.250(2) or KRS 403.180(6).

             Further distinguishing our present case is that both the opinion in

Lockhart II, and Judge Miller’s dissent in Lydic, were written under extreme

factual circumstances not present in this case. In his dissent in Lydic, Judge Miller

noted the full nature of the particular cohabitation arrangement at issue:

             True, Mrs. Lydic has not remarried in a traditional sense,
             but has chosen a lifestyle having the attributes of
             marriage. She is [cohabitating] with a member of the
             opposite sex and has placed her townhouse, a significant
             part of her estate, in survivorship with her male
             cohabitor. Every indication is that her cohabitation is
             intense and of contemplated endurance. In short, it is as
             permanent as a matrimonial affair. Indeed, if her
             relationship with her nonmarital cohabitor is to be
             dissolved, it may well involve a judicial determination of
             property rights.

Lydic, 664 S.W.2d at 944.

             In fact, at the time of the Lydic’s separation agreement, Judge Miller

noted, and was “considerably influenced” by, the fact that cohabitation was then

                                         -15-
illegal which should have ruled out cohabitation as a future possibility at the time

the parties entered their settlement agreement.

             Moreover, I am considerably influenced in my
             conclusion by the fact that at the time of the separation
             agreement nonmarital cohabitation was condemned as
             illegal under a criminal statute then in existence. KRS
             436.070 (now repealed). In agreeing to the maintenance
             provision, Mr. Lydic was not bound to anticipate the
             engagement of Mrs. Lydic in an illegal act.

Id.

             In Lockhart II, like Lydic, there too was the allegation that the ex-wife

was “deliberately circumventing the agreement” by choosing to cohabitate instead

of remarrying. Lockhart II, 566 S.W.3d at 574. Not only that, but the Court of

Appeals in Lockhart II also found itself in a situation where the husband was

facing a 180-day sentence for contempt if he would not pay a lump sum of

$25,000, $2,000 per month toward the arrearage, and the $3,000 per month for his

ongoing maintenance obligation; all under circumstances where such payments

could have been financially impossible for him. Id. at 573-574.

             I believe that it was only under this acute convergence of factors: (1)

a spouse knowingly, and in bad faith, enjoying substantial financial benefits of a

union that had all hallmarks of a marriage except for licensing; and (2) the other

spouse being financially unable to pay maintenance and avoid jail, that the Court

                                        -16-
of Appeals determined to (potentially) ignore non-modification clause and

“remand this matter for additional findings of fact[.]” Id. at 576.

             In the context of the present situation where: (1) cohabitating is now

legal and commonplace; (2) there has not been a remarriage; (3) there is no

substantial evidence of a spouse attempting to circumvent the agreement by not

remarrying; (4) there is no issue of fact regarding the impossibility of the other

spouse being able to pay to avoid contempt; and (5) there exists an enforceable

non-modification clause, I believe that the parties’ agreement must be enforced

without modification in accord with KRS 403.180(6). To hold otherwise could

condemn former spouses like Paula to lives of permanent solitude just so they can

keep receiving maintenance and afford to live.

             I must also point out that here, the circuit court never made an

independent analysis as to the propriety or amount of maintenance; it had only

adopted the parties’ settlement agreement pursuant to KRS 403.180.

Consequently, there have never been any findings of fact on which the family

court, or this Court, could adjudge Paula’s prior need for, or right to, maintenance.

             Therefore, if a family court is tempted to set aside a non-modifiable

maintenance agreement, the first step should be an equitable examination of the

original marital settlement agreement, removing the agreed upon maintenance. By

this I specifically mean an analysis of whether, at the time of the decree, the

                                         -17-
settlement would have been fair to Paula had it not contained an award of

maintenance.

             Since the family court did not make its own findings of fact and award

Paula maintenance, we have no means by which to presently appreciate or weigh

the parties’ original circumstances. At one time the parties both agreed that Paula

was entitled to continuing, non-modifiable, maintenance in the amount of $400.00

per month. We simply have no context or basis for that agreement. Based upon

the length of her marriage alone, Paula might have been awarded considerably

more maintenance by the family court had she not entered the property settlement

agreement. Also, we have no way of knowing whether she only accepted future

maintenance payments from David in lieu of her full share of marital property

interests or restitution of her non-marital interests. Here again we find another

reason for courts not to invade the province of the parties’ negotiations and

contractual agreements

             I believe the circuit court must consider each of the factors set forth in

KRS 403.200(2), including Paula’s financial resources, her age, physical and

emotional condition, and the “duration of the [thirty-one year] marriage.” Such an

analysis is in comportment with Tudor v. Tudor, 399 S.W.3d 791, 793 (Ky.App.

2013), which held that for a lower court to determine an unconscionable,

                                         -18-
substantial, and continuing change, it must first, “compare the parties’ current

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

             Therefore, in addition to the majority’s admonitions, in order for the

Court of Appeals to affirm an order which modifies an otherwise non-modifiable

marital settlement agreement, there must also be sufficient findings evidencing:

(1) a substantive analysis of the specific facts found and relied upon by the circuit

court which would warrant setting aside a contract, and (2) a complete analysis and

findings of fact regarding the financial resources of the parties at the time they

entered the agreement.

             Accordingly, I dissent and would vacate the family court’s order.

 BRIEF FOR APPELLANT:                       BRIEF FOR APPELLEE:

 Donna Dant                                 Ryan Bennett Driskill
 Calhoun, Kentucky                          Greenville, Kentucky

                                         -19-