Jefferson Circuit Court

Robert Waggoner filed a petition for a Domestic Violence Order (“DVO”) against his ex-wife, Christina, after a dispute at their former marital home occurred. An Emergency Protective Order (“EPO”) was entered and a DVO hearing was set. Preceding the hearing, counsel for both parties discussed a potential settlement agreement that would allow all parties to access the marital home, dismiss the DVO petition, and set the matter for mediation. At the hearing, counsel made the court aware of these settlement discussions, and requested the matter be continued. The family court obliged, and recorded the following on the docket sheet:

“[P]ass 1 wk to 6-29-2021 @ 8:30 a.m. Mutual NUC [no unlawful contact] A.O. [agreed order] to be circulated b/w parties’ counsel/parties on divorce case to get [Christina] back in her house + to allow [Robert] to get tools . . . mediation to occur w/ Vish or Bowles.”

At the next appearance of the parties, Robert’s attorney informed the family court that Robert had changed his mind about proceeding with the agreement, based around Christina’s recent emptying of the parties’ joint bank accounts. Again, the matter was passed, and at the next hearing, Robert explained that he had additional concerns about entering a settlement agreement and dismissing the DVO petition, as Christina had “threatened to kill [him] and burn down the house multiple times[.]” As a result, Robert refused to dismiss the petition. Christina filed a motion to dismiss the DVO and enforce the settlement agreement. The family ultimately denied her motion, explaining that the agreement was not expressly adopted by both attorneys and the record, and thereafter entered a DVO. Christina appealed.

The Court found no exchange on the record that would enforce a contractual agreement. The presentation to the family court by the parties was that the agreement was only ever “a work in progress” with exact terms never being read into the record and “conditional and contingent terms” being used when discussing the agreement. Likewise, while the family court wrote an aforementioned summary of the potential settlement, such writing was insufficient to create a binding agreement. Thus, the family court’s orders denying the motion to dismiss and granting the DVO were affirmed.

K. Spencer Pierson

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The parties entered into a marital settlement agreement, which was incorporated into a Decree of Dissolution of Marriage entered on June 27, 2012. The parties amended the agreement and a supplemental decree was entered on March 6, 2013. In 2017, the parties revisited the issue of Husband’s retirement accounts. A QDRO was prepared and filed with the Court on January 20, 2018. The Court entered an agreed Order, which stated that the valuation date of the retirement account for purposes of division was July 20, 2012. The Agreed Order further stated that the parties agreed to use Husband’s retirement plan for the equalization of assets, and that Wife was “to receive $26,790 additional monies to equalize the marital assets.” The parties did not agree whether Wife was entitled to receive gains and losses on her equalization portion of $26,290. The trial court found that the parties reached an agreement that Wife was entitled to a fixed amount representing asset equalization and that the court could not order a new sum resulting from either gains or losses. Wife appealed.

The Court of Appeals affirmed the trial court’s decision holding that the QDRO did not allow for Wife’s equalization payment to be subject to gains or losses. The parties agreed to a sum certain for Wife’s share of Husband’s retirement account and the parties’ documents were silent regarding gains and losses of this asset.

Digested by Emily T. Cecconi

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Trial court refused to set aside a handwritten Mediation Agreement Order signed by the parties and their attorneys and incorporated into the dissolution decree. The Agreement was never formalized into a typewritten document. The parties did not have any appraisals of their residential and commercial real property performed to aid in dividing up their property at mediation and instead relied on their own estimates of property values. Under the terms of the Agreement, Wife received 53% of the value of the parties’ marital assets.

Wife filed a motion requesting the trial court to vacate the Agreement and to declare the Agreement unconscionable. Wife also filed a CR 59.05 motion to alter, amend or vacate the trial court’s Order. The Trial Court denied Wife’s CR 59.05 motion without holding a full evidentiary hearing where she could present new evidence and testimony regarding appraised values of the real property.

The Court of Appeals held that the trial court did not err when it ruled on Wife’s CR 59.05 motion without first holding a full evidentiary hearing. The Court of Appeals reasoned that the value of the real estate was available for Wife to discover well before the Trial Court entered its final judgment. The Court of appeals also found that the Trial Court did not err by finding that the agreement was not unconscionable as Wife received 53% of the parties’ marital estate under the terms of the Agreement.

Digested by: Emily T. Cecconi

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Former husband and Former Wife executed a “bullet-point” written mediation agreement which listed several agreements related to the division of the couple’s property. Former Wife’s attorney was physically absent from the mediation for one hour, although her Attorney remained in contact with Former Wife during this period. Prior to reaching an agreement, the Mediator relayed an offer from Former Husband to Former Wife in which Former Husband would allow Former Wife to claim their minor child on her tax returns if she would accept Former Husband’s valuation of his business interests. The mediator informed Former Wife that the tax credit would offset the disparity between the couple’s valuations of Former Husband’s business interests. Subsequent to mediation, Former Wife refused to sign a formal proposed Separation and Property Settlement Agreement claiming that the communications made by the mediator were inaccurate and that she relied upon those communications when she accepted Former Husband’s offer. Upon motion of Former Husband, the trial court ordered the terms of the “bullet-point” mediation agreement to be incorporated by reference into its divorce decree.

On appeal, Former wife argued that the mediation agreement did not qualify as a separation agreement as defined by KRS 403.180(1) and that mediator misconduct and attorney misconduct rendered the mediation agreement unconscionable.

The Court of Appeals held that it was not improper for the “bullet-point” mediation agreement to be enforced or incorporated into the decree of dissolution. The Court reasoned that KRS 403.180(1) only requires such an agreement to be in writing and that neither the mediator nor the attorney rendered the agreement procedurally unconscionable.

Digested by: Emily T. Cecconi

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Parties entered into a property settlement agreement which required Former Husband to make monthly mortgage payments on the marital residence until such time that Former Wife “decided to sell” the property. Former Wife listed the marital residence for sale, but did not receive any offers. Former Husband ceased making mortgage payments, resulting in foreclosure. Family Court denied Former Wife’s motion to hold Former Husband in contempt. Former Wife argued Former Husband was required to make the mortgage payments until Former Wife accepted an offer or until the marital residence actually sold while Former Husband argued his obligation ended when Former Wife listed the property for sale.

The Court of Appeals found that “the act of listing property for sale with a real estate broker is proof only of the owner’s decision to solicit offers, and not proof of her decision to sell” and that “a property owner’s decision to sell is evidenced by acceptance of an offer to purchase.” The Court of Appeals held that the property settlement agreement was unambiguous as to when the husband’s obligation to pay the mortgage terminated and that the Family Court erred when it denied Former wife’s motion to hold Former Husband in contempt.

Digested by Emily T. Cecconi

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BAAS V. BAAS

Husband and Wife entered into a bullet-pointed informal mediated agreement. Wife signed based on the mediators representations that a tax credit Wife would receive in the agreement offset the difference in Wife’s valuation and Husband’s valuation of his businesses. When Husband’s attorney put together a formal agreement, Wife refused to sign as “the mediator’s assurances regarding the value of the tax exemption were not accurate, and that the separation agreement addressed issues not previously discussed or agreed upon.” Husband motioned the Family Court to enforce the mediated agreement. After the hearing, the Family Court granted Husband’s motion and “ordered the mediated agreement incorporated by reference into the decree.”

Wife appealed arguing the mediated agreement was unenforceable either because “the misconduct of her attorney rendered the result of mediation unconscionable” or because “her reliance on inaccurate material representations by the mediator limited her ability to assent to the terms of the agreement.”

The Court of Appeals starts by recognizing the well-settled contract rule 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,” going on to note the exception that “A reviewing court may set aside a settlement agreement if the agreement is manifestly unfair or unreasonable.”

Looking to Wife’s argument about the absence of her counsel,even though the lawyer later returned, the Court of Appeals holds that the Mediator should have stopped the mediation when Wife’s attorney left. Just like a court proceeding, mediation is effectively over when Counsel is no longer present. The absence of Wife’s attorney rendered the contract unenforceable.

Next the Court of Appeals looks to the conduct of the Mediator holding that the “misconduct of the mediator prevented the parties from reaching a true and voluntary meeting of the minds.” The Court of Appeals is very concerned with the mediator’s conduct, especially the legal advice to Wife

regarding the value of the income tax exemption, ultimately holding: “… in quasi-judicial proceedings like court ordered mediation, the third party

neutral must observe and abide by the Kentucky Supreme Court Rules(“SCR”) regarding professional responsibility for lawyers (SCR 3.130 et seq.), the Kentucky Code of Judicial Conduct (SCR 4.300 et seq.), the applicable provisions of the Kentucky Rules of Civil Procedure (“CR”), and the Kentucky Family Court

Rules of Procedure and Practice (“FCRPP”).”

Thus, as the mediator in this case violated the professional standards, Wife “lacked any real opportunity to effectively negotiate a bargain at all.” The Court of Appeals concludes that the Family Court’s order enforcing the agreement must be set-aside and reexamined in light of their ruling. While the bullet point agreement “satisfied KRS 403.180… the underlying process by which it was obtained was improper.”

Digested by Elizabeth M. Howell

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Husband and Wife entered into a Marital Settlement Agreement in North Carolina. Wife had an attorney. Husband did not have an attorney, but participated in the five drafts of the document. Both parties moved to Kentucky after Husband’s retirement from the military. Wife filed a motion to ratify the Separation Agreement. Husband requested the family court set aside the Separation Agreement as unconscionable and made various motions to modify. The family court ratified the Separation Agreement and denied Husband’s motion to set it aside or modify it with exception of custody and the parties’ parenting time schedule. Husband appealed on multiple grounds.

The Court of Appeals first addresses Husband’s argument that the family court erred by failing to find that “he entered into the Separation Agreement as a result of duress, fraud, and undue influence.” The Court of Appeals affirmed the family court, as the court did not abuse its discretion. It properly found Wife’s testimony more compelling than Husband’s and Husband participated in the drafting process. The Court of Appeals noted it was clear Husband’s motive in signing the agreement was for Wife to “shut up” and go away.

The Court of Appeals next addresses Husband’s argument that the Separation Agreement is unconscionable. The Court of Appeals again affirmed the family court. While Husband may have made a bad bargain, the agreement does not render him destitute. He agreed to pay maintenance and child support in excess of the guidelines, but the amounts were not “shocking to the conscious” or outside of his “reasonable fiscal means.” He understood the terms of the agreement and anticipated changes in his employment.

Finally, Husband argues that the court erred in denying his motion to modify maintenance and to deduct maintenance for tax purposes. The Court of Appeals found that the family court erred when it denied Husband’s motion to modify maintenance based upon Wife’s alleged cohabitation holding nothing in the Separation Agreement or in Kentucky jurisprudence prevent the court from exercising its authority on these matters. Thus, the Court of Appeals reversed and remanded.

Digested by Elizabeth M. Howell

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Husband and Wife obtained divorce and entered into an agreement which provided that Wife would execute a special warranty deed conveying the marital home to Husband and required him to execute a will devising the home and its contents to Wife at his death. Husband died leaving the home to his sons. Wife filed an action seeking specific performance of the MSA and a conveyance to her of the marital home and its contents. The trial court found that the parties “had agreed and orally modified the MSA with respect to marital residence” denying Wife’s claim.

 The Court of Appeals affirmed the trial court holding that an “oral modification to an MSA will be enforced if the terms of the agreement can be reasonably established and the agreement is fair and equitable under the circumstances.” Wife argued that the parties settled with finality and the MSA specifically precluded modification. The Court of Appeals disagreed noting Wife did not cite “any precedent or statutory provision denying parties the right to settle post-decree issues nor requiring judicial intervention to modify agreements such as the MSA in issue here.” Notably, the Court of Appeals does not address several of Wife’s arguments that were not preserved at the trial court level.

 Digested by Elizabeth M. Howell.

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During the marriage Husband obtained a loan from PNC Bank for his business which wife signed as a guarantor. The parties subsequently entered into a Marital Settlement Agreement which provided each party would be responsible for debt solely in their name and Husband would hold harmless and indemnify Wife for business any debts. Husband defaulted on the business loan and PNC sued Wife in her individual capacity. Wife asked the family court of compel Husband to “indemnify her ‘for any monies paid to PNC and for all costs and attorney fees associated with defending said action and also all costs and attorney fees associated with filing this Motion in family court.’” After a hearing, the family court granted Wife’s motion.

Husband appealed arguing that because Wife personally guaranteed the note she should be obligated to pay the PNC debt. The Court of Appeals affirmed the family court holding that the family court’s finding were not clearly erroneous and based on substantial evidence, notably the MSA clearly stated Husband was responsible for the business debt “absent any exceptions.”

Digested by Elizabeth M. Howell

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Wife signed an employment contract with attorney which gave him a lien on all of her assets. Parties subsequently entered into a Marital Settlement Agreement which provided Husband would buyout Wife’s interest and receive marital home. It further provided each would pay his or her own attorney fees, but Husband would pay $1,500 of Wife’s fees. After the entry of the divorce decree, Wife’s attorney placed a lien on the marital home. The trial court Judge set aside the lien and was upheld by the Court of Appeals. Attorney moved for review and the Supreme Court granted discretionary review.

Attorney first argues that he is entitled to a fee under the attorney fee lien statute, KRS 376.460, which does not require notice. The Supreme Court holds that the attorney’s fee lien statutes “does not apply to property assigned or divided in divorce proceedings.” KRS 376.460 allows an attorney to place a lien on fees that were recovered by the attorney. In a dissolution of marriage, marital property is already owned. The court merely divides just shares of the marital estate to one party or the other. Thus, no new interest is being created and KRS 376.460 does not apply.

Second, attorney argues that he has a contractual agreement with Wife that is enforceable against third parties without notice. The Supreme Court holds that an attorney may obtain a contractual lien against a client, but cannot enforce that lien against third parties without timely notice. While attorney had a valid lien, it could only be enforced against Husband if he was provided timely notice of the lien. Attorney-client privilege does not allow Wife to hide the encumbrance from Husband. Ultimately, the Supreme Court affirms the lower court decision in setting aside the lien on the marital home retained by Husband.

Justice Venters writes a separate concurrence to note a difference in his interpretation of KRS 376.460 which he would read broadly to include all claims for recovery of money or property, but not to include the division of a marital estate.

Justice Keller writes a separate concurrence arguing KRS 376.460 should be interpreted to allow for the recovery of marital property, but agreeing in result as in this case the lien was only perfected after the Wife had lost all interest in the marital residence.

Digested by Elizabeth M. Howell

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