Julie Werner Crowe v. Michael James Crowe ( 2023 )

RENDERED: JANUARY 6, 2023; 10:00 A.M.
NOT TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2020-CA-1507-MR
JULIE WERNER (FKA JULIE CROWE) APPELLANT
APPEAL FROM DAVIESS FAMILY COURT
v. HONORABLE JOHN M. MCCARTY, JUDGE
ACTION NO. 17-CI-00039
MICHAEL JAMES CROWE APPELLEE
OPINION
AFFIRMING
** ** ** ** **
BEFORE: ACREE, DIXON, AND K. THOMPSON,1 JUDGES.
THOMPSON, K., JUDGE: Julie Werner (FKA Julie Crowe) appeals two orders of
the Daviess Family Court. The first order, entered March 26, 2020, denied her
Kentucky Rules of Civil Procedure (CR) 60.02 motion to set aside the family
court’s decree regarding Werner’s division of marital property with her now ex-
1
Judge Kelly Thompson authored this Opinion before his tenure with the Kentucky Court of
Appeals expired on December 31, 2022. Release of this Opinion was delayed by administrative
handling.
husband, appellee Michael James Crowe. The second order, entered October 23,
2020, denied Werner’s additional motion for a declaration of rights regarding two
Merrill Lynch accounts which were not divided in the decree. We affirm because
it was not unconscionable for the family court to rely on the parties’ waiver of their
rights in agreeing to the property settlement without more judicial oversight,
Werner has not alleged fraud but rather appears to “second-guess” the wisdom of
entering into a property settlement agreement and waiving her additional rights to
judicial oversight, and the parties consented to Merrill Lynch accounts being
awarded to Crowe.
On January 11, 2017, Werner filed a verified petition in family court
to dissolve her marriage with Crowe. Crowe answered shortly afterward, and
nothing more was filed over the course of roughly the next sixteen months. At all
relevant times, both parties were represented by counsel.
On July 11, 2018, Werner and Crowe then filed of record: (1) sworn
answers to one another’s discovery interrogatories; (2) a verified property
settlement agreement (PSA); (3) a joint motion for the entry of a decree dissolving
their marriage and incorporating their PSA; and (4) a joint, verified
acknowledgement and motion for waiver indicating that they “waived exchanging
signed and notarized Verified Disclosure Statements,” “the filing of verified
disclosures with the record,” and “the right to a final hearing and further
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proceedings.” Later that month, the family court granted their motions; it also
entered a dissolution decree incorporating their PSA, finding it to be “not
unconscionable.”
Roughly a year later, Werner filed a CR 60.02 motion arguing the
PSA was unconscionable and that the family court erred in failing to so rule. She
sought to have the PSA and the decree incorporating it either set aside or modified.
The family court denied Werner’s motion. Werner now appeals,
arguing: (1) the family court should have set aside the decree pursuant to CR
60.02 because (a) the family court failed to follow its statutory mandate to
determine the conscionability of the PSA; and (b) Crowe’s out of court conduct
amounted to “fraud affecting the proceedings”; or, alternatively, (2) that the family
court had no jurisdiction to effect a post-decree modification of her property
division with Crowe that encompassed two Merrill Lynch accounts that were not
addressed in the PSA.
The reopening of a judgment under Kentucky law is governed by CR
60.02. Relief under CR 60.02 is exceptional and is to be granted cautiously and
available “only under the most unusual and compelling circumstances.” Age v.
Age, 340 S.W.3d 88, 94 (Ky. App. 2011). The decision to grant or to deny a CR
60.02 motion lies within the sound discretion of the family court and we will not
disturb its decision absent an abuse of that discretion. Age, 340 S.W.3d at 94.
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Only a decision that is “arbitrary, unreasonable, unfair, or unsupported by sound
legal principles” constitutes an abuse of discretion. Id. (quoting Commonwealth v.
English, 993 S.W.2d 941, 945 (Ky. 1999)).
In relevant part, CR 60.02 sets forth six grounds upon which relief
from a final judgment may be granted. Werner does not connect what she alleges
were procedural errors with any specific ground identified in CR 60.02. In her
appellate brief, she summarizes her argument as follows:
The Trial Court failed to follow its statutory mandate
under [Kentucky Revised Statutes] KRS 403.180 to
determine the conscionability of the parties’ PSA as it
was legally and factually impossible to do so given the
failure of the parties to neither exchange and file
mandatory preliminary verified disclosure statements nor
final verified disclosure statements.
However, Werner’s arguments that the family court “failed to follow
its statutory mandate” and did something “legally and factually impossible”
involved facts that should have been known to her prior to when she asked the
family court to approve her PSA with Crowe and enter its decree. Accordingly,
these are issues she could have raised in a direct appeal; and it is well-established
that CR 60.02 relief is only available for issues that could not be raised in a direct
appeal. McQueen v. Commonwealth, 948 S.W.2d 415 (Ky. 1997). Indeed, Werner
devotes much of her brief to the premise that the family court’s assessment of
“conscionability” was indicative of “clear error,” which is not a ground for relief
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under CR 60.02, but rather a standard that would have applied to direct appellate
review of the family court’s decree. See CR 52.01.
To the extent Werner’s argument in this vein could involve any of the
CR 60.02 grounds, it at most appears to implicate subsection (e), which permits a
trial court to vacate a “void” judgment. However, Werner cites no authority – and
we have found none – favoring the proposition that insufficiency of evidence
supporting an unconscionability determination or the failure to file or exchange
verified disclosure statements can render a property division decree void.
Kentucky encourages the amicable resolution of a divorce action by
settlement agreement. KRS 403.250(1) provides that such agreements
incorporated into a decree of dissolution of marriage “may not be revoked or
modified, unless the court finds the existence of conditions that justify the
reopening of a judgment under the laws of this state.”
Pursuant to KRS 403.180, a family court must determine whether a
property settlement agreement “is unconscionable prior to approval of that
agreement.” Peterson v. Peterson, 583 S.W.2d 707, 711 (Ky. App. 1979).
However, making such a determination in the context of an uncontested divorce
proceeding can lead to an issue:
In such cases, the trial court is presented with an
agreement which, on its face at least, appears to be
reasonable. Since the dissolution proceeding is
“uncontested,” the parties offer no proof of economic
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circumstances. Although the trial court could request
such proof on its own motion, KRS 403.180 does not
require it to do so. Such a request is apparently rare,
perhaps because the court views the case as agreed. The
trial court then approves the agreement as conscionable
without really knowing the underlying facts. Sometime
thereafter, the silent party appeals to this Court for relief
contending that the agreement is unconscionable and that
the trial court erred in failing to so rule.
Id.When the family court assessed the conscionability of the parties’
PSA, nothing in KRS 403.180 prohibited it from simply relying upon the parties’
sworn interrogatory answers and statements set forth in the PSA, all of which
supported their joint assertion that their division of property was not
unconscionable. The dissolution proceeding was uncontested, and the parties
offered all required necessary proof regarding their respective economic
circumstances.
Likewise, regarding Werner’s point about “the failure of the parties to
neither exchange and file mandatory preliminary verified disclosure statements nor
final verified disclosure statements,” Werner explicitly waived exchanging verified
disclosure statements with Crowe, and the family court was authorized to grant her
motion to further waive the filing of verified disclosures with the record. See
Kentucky Family Court Rules of Procedure and Practice (FCRPP) 2(1)(e)
(permitting the family court to enter an order permitting the parties to not file a
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Final Verified Disclosure Statement); see also FCRPP 2(3) (providing that
Preliminary Mandatory Disclosures “shall not be filed in the record unless ordered
by the court or required by local rule.”).2 In short, Werner presents nothing in this
respect indicating the family court committed error that would subject its final
decree to collateral attack through a CR 60.02 motion.
Werner’s second argument relative to CR 60.02 is that the decree
regarding her division of property with Crowe should be set aside due to Crowe’s
out-of-court conduct, which she contends amounted to “fraud affecting the
proceedings” – a ground CR 60.02(d) encompasses. Regarding this aspect of the
CR 60.02 motion she filed below, Werner asserted that several months after the
family court entered its decree incorporating her PSA with Crowe, she came to
2
In her brief, Werner notes that the local rules of at least one judicial circuit in Kentucky
specifically require parties to file verified disclosure statements with the record. She emphasizes
that the 14th Family Court Rules of Procedure (14th FCR) 701 of the Bourbon, Scott, and
Woodford Family Court provides, in relevant part, that:
A Preliminary Verified Disclosure Statement, Form AOC-238, shall never be
waived. If the parties enter into a settlement agreement, each shall attach to the
agreement a copy of a completed Preliminary Verified Disclosure Statement,
Form AOC-238 for consideration by the Court assessing the conscionability of
the terms of the agreement.
Her point is irrelevant. This action was resolved in Daviess Family Court, and the only local rule
relating to FCRPP 2, Rules of the Daviess Circuit Court (RDCC) 506, provides in relevant part:
If the parties reach an agreement on all issues, a decree of dissolution may be
obtained without a hearing by filing a motion or agreed order to submit for decree
of dissolution of marriage. Counsel shall comply with FCRPP 2 and 3 and file the
documents with the Clerk for entry[.]
It does not require the filing of any verified disclosure statement before an agreed decree
of dissolution may be obtained.
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believe Crowe had concealed or undervalued marital assets. She argued that if
Crowe had in fact done so, then he had fraudulently induced her to enter the PSA.
The word “if” is emphasized for a reason: because the parties conducted no formal
discovery prior to settling their division of marital property, Werner remained
uncertain whether Crowe had undervalued or concealed any assets. Instead, as
Werner set forth in her CR 60.02 motion, she had “grave suspicions.” In the
relevant part of her motion, she argued:
The parties’ PSA appears to be unconscionable,
but this Court cannot be certain without knowing the
extent of the parties’ marital and nonmarital estate.
...
At a minimum, this Court must require these parties to
submit verified financial disclosures, which set values on
the numerous business entities and the assets held within
each. Without this information, the Court cannot
possibly decide whether the parties’ PSA is conscionable.
On its face, the PSA may appear as a conscionable
agreement because Ms. Werner received a multimillion
dollar share of the marital estate. However, without
verified disclosure statements before it, the court still
could not determine whether the agreement was
conscionable. Ms. Werner has grave suspicions that the
agreement was unconscionable since Dr. Crowe retained
100% of Owensboro Dermatology Associates, P.S.C.;
Dermatology Property Management, LLC; and Microcap
Insurance Company, Inc., and none of those businesses
were ever valued by Dr. Crowe under oath for this
Court’s review. Vicky Lang, a certified public
accountant who is accredited in Business Valuation by
the American Institute of Certified Accountants was
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recently retained by Ms. Werner. Exhibit B – Vicky
Lange’s Resume. Having reviewed the 2016 income tax
return for Owensboro Dermatology Associates, P.S.C.,
Vicky Lange found as follows:
Given that the revenues of the
dermatology practice approximated $9.7
million and wages to staff exceeded $3.1
million, this is a very large practice with
multiple non-physician owner services
providers, such as nurse practitioners
providing direct patient care and procedures.
In dermatology practices, procedures such as
BOTOX are often performed by nurse
practitioners and other mid-level providers.
The large practice revenues and
salaries suggest that a portion of Owensboro
Dermatology PSC’s goodwill is enterprise
goodwill.
Another indication of value pertains
to fact [sic] that the practice owns
depreciable assets (equipment, fixtures,
improvements, etc.) with a cost (or other
depreciable basis) of $4,226,477) (Schedule
L, line 10a). This is an indication that the
practice likely has a tangible value in
addition to the goodwill value.
Exhibit C – Vicky Lange’s Affidavit. Further,
Dr. Crowe was allotted $253,672 of income from
Dermatology Property Management in 2016, alone,
which suggests this asset also has value. In addition,
numerous businesses [sic] entities were not discussed in
the parties’ PSA, and Dr. Crowe has effectively retained
the entire marital interest in same. Vicky Lange’s
affidavit identifies at least six (6) additional businesses
owned by the parties per their 2016 tax return that went
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unaddressed in the PSA. Mrs. Lange concluded that the
parties owned the following businesses in 2016:
a. EXECUTIVE BENEFIT
INVESTMENTS (Supporting schedule –
Line 28 of Sch. E)
b. CROWES NEST CAPTIVE LLC
(Supporting schedule – Line 28 of Sch. E)
c. CROWES NESTS INVESTMENTS LLC
(Ky Form 725)
d. ADVANCED AESTHETICS LLC (KY
Form 725)
e. HENDERSON DEMATOLOGY [sic]
PLLC (KY Form 725)
f. ADVANCED AESTHETICS LLC (KY
Form 725).
As Ms. Werner’s attached affidavit attests (Exhibit
D), she has had nothing to do with and does not know
what has been done with these assets post-decree. It is
indisputable that she has received nothing from them.
...
By all accounts, Dr. Crowe has retained and controlled
each of these businesses and its assets post decree. It is
unknown both to Ms. Werner and this Court whether
these businesses have any value. As such, on its face, it
appears that this Court likely would not have found the
agreement to be conscionable had it known the true value
of all the marital assets because Dr. Crowe has walked
away with a grossly inequitable share of the marital
estate. Until this Court requires Dr. Crowe to submit a
Final Verified Disclosure, Ms. Werner will not be able to
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adequately and specifically address full [sic] extent of the
inequitable nature of the PSA.
To allay her “grave suspicions,” Werner also filed what she styled as a
“motion to permit discovery while 60.02 motion is pending.” There, after largely
restating the substance of her CR 60.02 motion set forth above, she asked the
family court:
[T]o permit her to conduct discovery and to obtain
appraisals so that this court can ascertain the values and
relevant facts of each business entity owned by the
parties, under oath, at the time of dissolution that either
were undervalued or undisclosed. Without same, this
Court could not possibly determine the conscionability of
the parties’ PSA.
At a February 17, 2020 hearing, the family court questioned Werner’s
counsel about Werner’s “motion to permit discovery while [a] 60.02 motion is
pending.” It asked whether the goal of her motion was, paradoxically, to reopen
the underlying proceedings for the purpose of allowing Werner to conduct open-
ended discovery that might lead to evidence of fraud which, in turn, might justify
reopening the underlying proceedings based upon fraud. The relevant part of their
exchange was as follows:
COURT: In essence, what you’re asking me is saying,
“Please set it aside,” then we’re going to look at it again,
then – to decide whether or not it should be set aside or
not.
COUNSEL: Well, I look at it a little differently. I mean,
my – and I thought if I were a judge trying to look at this
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case, I’d say, well, tell me what I – you keep telling me
what I should have had when the decision of
conscionability was made, and so if we took a little
discovery, we could tell the court. This is what you
would have had or should have had when the decision
was made, although I understand, of course, you were not
part of that. But you at least have a list of assets under
oath so we know that there’s not a million dollars in a
foreign country, for example. I don’t think there is. I
don’t want to imply that there is, but you at least have a
list of assets with people swearing to a complete
disclosure, and then you would have some discovery that
would – through documentation, would provide the
numbers so that you could do a comparison and say,
“Yes, this was conscionable,” or “This was not
conscionable at the time.” “Yes, there was
misrepresentation” or “there wasn’t a misrepresentation.”
I think that would be helpful.
In summary, Werner acknowledged that during her roughly sixteen
months of pre-settlement negotiations with Crowe, while she was represented by
counsel, Crowe had provided her documentation regarding the extent of their
marital estate, and that she had never questioned it or otherwise sought formal
discovery. Werner also recognized that in the interrogatories and verified
acknowledgement she filed with the family court prior to its final decree, she had
sworn under oath that she and Crowe had fully disclosed to one another all
information relevant to their marital assets and debts. Nevertheless, approximately
one year after the family court had resolved the division of their marital estate
through a final decree, Werner then represented to the family court that, contrary to
her pre-decree sworn statement, she had no way of knowing the value of any
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marital assets associated with Crowe’s businesses. Further, Werner represented
that she had hired an accountant to review the documents Crowe had provided her
during their negotiations, as well as the tax return that she had jointly filed with
Crowe in 2016; and the accountant’s resulting opinion had caused her to suspect
Crowe may not have divulged the full extent or proper value of their marital estate
during their pre-settlement negotiations. Therefore, Werner was invoking CR
60.02 to reopen discovery and garner evidence to ascertain, in the words of her
counsel, whether “there was a misrepresentation or there wasn’t a
misrepresentation.”
Upon consideration, the family court denied Werner’s motion. Before
discussing the substance of its reasoning, however, it is important to revisit what
Werner was required to demonstrate below, and the limitations upon granting this
type of relief:
A party alleging fraud under CR 60.02(d) has the burden
of proving, by clear and convincing evidence, that the
opposing party’s procurement of the court’s prior order
was achieved by fraud or deceit. See Rice v. Dowell, 322
S.W.2d 468 (Ky. 1959). The moving party must
essentially prove that the opposing party’s conduct
outside of the trial itself somehow prevented the moving
party from appearing or presenting fully and fairly its
side of the case. See 7 Ky. Prac. R. Civ. Proc. Ann. Rule
60.02 (6th ed. 2012).
Ipock v. Ipock, 403 S.W.3d 580, 585 (Ky.App. 2013). Additionally, relief under
CR 60.02:
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is an extraordinary and residual remedy to correct or
vacate a judgment upon facts or grounds, not appearing
on the face of the record and not available by appeal or
otherwise, which were discovered after the rendition of
the judgment without fault of the party seeking relief.
Harris v. Commonwealth, 296 S.W.2d 700, 701 (Ky. 1956). The Kentucky
Supreme Court has further stated that:
The purpose of CR 60.02 is to bring before a court errors
which (1) had not been put into issue or passed on, and
(2) were unknown and could not have been known to the
moving party by the exercise of reasonable diligence and
in time to have been otherwise presented to the court.
Young v. Edward Technology Group, Inc., 918 S.W.2d 229, 231 (Ky.App. 1995).
If the party pursuing relief under CR 60.02 could have raised the issue prior to
judgment or could have followed the appropriate channels for a direct appeal but
neglected to do so, relief from judgment under CR 60.02 is not available. Board of
Trustees of Policemen’s and Firemen’s Retirement Fund of City of Lexington v.
Nuckolls, 507 S.W.2d 183, 186 (Ky. 1974).
With that said, the substance of the family court’s ruling, as set forth
in its March 26, 2020 dispositive order, focused upon several points. First,
Werner’s post-decree claim of ignorance about the extent and value of the marital
estate she shared with Crowe conflicted with her pre-decree sworn statements of
record to the contrary. Second, Werner’s complaints about the omissions or
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valuations of the various business entities were matters that could and should have
been raised prior to the entry of the decree. The family court explained:
[Werner] claimed only three (3) businesses were
addressed in the PSA, but that she hired an expert CPA
who found six additional businesses based on the 2016
tax returns that were not addressed by the PSA and that
[Crowe] retained 100% of these businesses. However,
both [Werner] and her attorney had copies of the 2016
tax returns so they had constructive, if not actual,
knowledge of these businesses and never said anything
about them not being listed all during the months of
negotiations. In addition, [Werner] even made
corrections and notes on drafts of the PSA and never
made a note or asked why those other businesses were
not included or asked that they BE included.
In her motion, [Werner] also argued that there were no
values listed for the three businesses that were included
in the PSA and now claims they were deliberately
undervalued. However, the Court notes that [Werner’s]
own expert CPA affidavit cites documents between the
parties’ attorneys that discuss the value of the
businesses.[3] Again, she never mentioned this lack of
valuation in her notes or corrections or additions to the
PSA drafts and never asked that values be included.
Third, the family court found Werner failed to carry her burden to
demonstrate Crowe had prevented her from appearing or presenting fully and fairly
her side of the case. In that respect, its analysis addressed Werner’s additional
3
As indicated, in support of her opinion, Lange (Werner’s expert accountant) examined the
parties’ joint 2016 income tax return, as well as the 2016 income tax return of Owensboro
Dermatology PSC. There is no contention that Werner was not provided these documents prior
to when the family court entered its decree.
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contention, as set forth in her CR 60.02 motion and an accompanying self-serving
affidavit, that she had executed the PSA due to Crowe’s “coercion,” explaining:
[Werner] does say that she was the victim of undue
influence and overreaching when it came to her
agreement to the PSA. She claims [Crowe] pressured her
into signing, that he would e-mail her directly and tell her
not agreeing to the PSA would mean “chronic litigation”
that would hurt her in the long run, and that there would
be no “large check to buy a house” and that she would
end up living in a small apartment. She claims he also
told her that she would never see a “significant payout”
of their assets for one to two years, and that he copied
their adult children on these e-mails to try to pressure her
to agree. She also claims that he tried to cause a rift
between her and her attorney so that she would disregard
advice of counsel, that he threatened to withdraw the
payment check if she did not agree, and said they would
be forced into “a public, court mandated divorce.”
[Werner] further claimed in an affidavit that she suffered
from PTSD and depression, that [Crowe] had always
been verbally abusive to her, and that he typically used
their children to manipulate her into doing what he
wanted.
In his Response to [Werner’s] Motion to Vacate,
[Crowe] makes the point that she was represented by “an
experienced and very competent family law attorney”
and received a lump sum of $1,000,000 plus five annual
payments of $100,000 via a promissory note and no
marital debt. He argued that neither a preliminary or
final Verified Disclosure Statement was required to be
filed in the record and that at any rate, they had both
agreed to waive the filing. He stated that he had
provided her with documents relating to all assets,
including the 2016 tax returns, and he was aided by his
accountant in this.
...
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[Crowe] goes on in his Response to cite text
messages from [Werner] that show she knew about all
marital assets and even had a copy of a rough draft of the
PSA where she had made notes and corrections and even
added in things she wanted included. He notes that
[Werner] did this herself and sent it to him directly and
bypassed both attorneys. He argues that they exchanged
documents and negotiated for sixteen (16) months and
she had all the information she needed during that time.
Now on appeal, Werner argues the family court abused its discretion
by refusing to reopen the decree based upon CR 60.02(d) and what she asserted in
her motion in that respect. Werner argues the facts of this case are analogous to
those presented in Terwilliger v. Terwilliger, 64 S.W.3d 816 (Ky. 2002). There,
the Kentucky Supreme Court determined that a decree was properly reopened on
the basis of CR 60.02(d) where, during dissolution proceedings, a husband had
persuaded his wife to (1) proceed without counsel; (2) enter a settlement agreement
that he had drafted; and (3) enter the agreement less than three months after he had
filed the dissolution petition after representing to her that she needed to do so
immediately or risk losing her home to creditors. Id. at 817-18. A decree was
entered consistently with their agreement, and the wife’s share of the marital
property consequently consisted of the marital residence, valued at $67,000 and
subject to a $51,000 mortgage; a vehicle valued at $1,800; $2,550 in other cash and
assets; some stock valued by her husband at $11,000; and $6,000 in credit card
debt. Id. at 817. The husband received ninety percent of the stock of several
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corporations, which he valued at $100,000. Thereafter, in her post-judgment
motion to set aside the decree based upon CR 60.02(d), the wife presented
evidence demonstrating that her husband had knowingly undervalued marital
assets. Specifically, within two weeks of the signing of the settlement agreement
and before the divorce decree was entered, the husband told a potential buyer that
one of the corporations was worth $1.7 million dollars, and after the dissolution
was final, he sold it for $1.6 million. Terwilliger, 64 S.W.3d at 817.
We disagree, and we find no abuse of the family court’s discretion.
Terwilliger is distinguishable from this case for several reasons. Here, for
example, Werner initiated the underlying divorce proceedings. She was
represented by separate counsel at all relevant times. The evidence of record
demonstrates, as the family court noted, that the PSA Werner entered was a
collaborative endeavor in which she participated. Werner’s decision to enter the
PSA was also not immediate, nor the product of what evidence – as opposed to
speculation or belief – demonstrates was a false threat of insolvency. Indeed, what
Werner presents as evidence of “coercion” or undue influence – namely, Crowe’s
alleged threats of delays, disappointments, or embarrassments that might result
from “chronic litigation” or “a public, court mandated divorce” – cannot be
considered legally sufficient to warrant setting aside a judgment. All parties
considering settlement do so based upon a consideration of the adverse
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consequences that might result if the action proceeds and they do not prevail on the
merits.
The most critical difference, however, is that in support of her CR
60.02 motion, the wife in Terwilliger presented evidence that her husband had
knowingly undervalued a marital asset during their divorce proceedings to induce
her to enter their property settlement agreement. Werner, on the other hand,
presents only her “grave suspicions” stemming from an expert opinion which
reexamined evidence that had been available to her prior to the family court’s
decree. That is not enough to warrant reopening a decree – or to warrant reopening
discovery to determine whether a decree should be reopened – because fraud is not
presumed, speculation and conjecture are insufficient to warrant CR 60.02 relief,
and a new opinion reexamining previously available evidence is not itself new
evidence capable of invoking the rule. See United Parcel Service Co. v. Rickert,
996 S.W.2d 464 (Ky. 1999) (regarding fraud); Foley v. Commonwealth, 425
S.W.3d 880, 887-88 (Ky. 2014) (explaining “mere speculation or conjecture”
cannot be the basis of CR 60.02 relief).
Largely illustrating this point is a case the Terwilliger Court discussed
in the context of its analysis, McMurry v. McMurry, 957 S.W.2d 731 (Ky.App.
1997). See Terwilliger, 64 S.W.3d at 819. There, Mrs. McMurry’s CR 60.02(d)
motion to reopen was found to have been properly denied by the trial court. Mrs.
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McMurry alleged that she had relied to her detriment upon her husband’s
misrepresentations concerning the true value of the couple’s marital assets.
Roughly analogous to what Werner asserts relative to Crowe, Mrs. McMurry
contended that her husband, Gordon,
misrepresented to her that his medical practice had no
value, that the couple’s marital residence and real estate
had a negative value, and that his income in 1991 was
substantially lower than it had been in previous years.
She claim[ed] that Gordon took advantage of her
emotional state and led her to believe that they were on
the verge of bankruptcy. She maintain[ed] that she relied
on his misrepresentations in assenting to the property
settlement agreement.
McMurry, 957 S.W.2d at 732. Despite Mrs. McMurry’s claims about her
“emotional state,” however, this Court affirmed the circuit court’s denial of Mrs.
McMurry’s motion to reopen because, as we explained:
The record does not support her contention that Gordon
attempted to or concealed and misrepresented any
information relating to the medical practice or the
couple’s finances. This information was discoverable
and could have been obtained through formal discovery
if Mary had elected to do so in lieu of entering into the
property settlement agreement without conducting an
independent inquiry of her own. There is no evidence in
the record—nor is any offered by the appellant—to
indicate that Gordon acted in a fraudulent manner. Bare
allegations will not suffice to establish “fraud affecting
the proceedings.” In the case sub judice, Mary has not
met her burden of proving that Gordon’s actions rise to
the level of fraud.
Id. at 733.
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Here, as indicated, the crux of the family court’s ruling was that if
Werner had exercised reasonable diligence, the issues she raised in her CR 60.02
motion could and should have been raised prior to the entry of its decree or in a
direct appeal. Specifically, Werner knew or should have known, prior to the entry
of the decree, that: (1) Crowe had not provided her a sworn valuation of his
interests in Owensboro Dermatology Associates, P.S.C., Dermatology Property
Management, LLC, and Microcap Insurance Company, Inc.; and (2) the “marital
assets” allegedly omitted from the PSA existed (i.e., the six “additional businesses
owned by the parties per their 2016 tax return” that accountant Vicky Lange
identified in her affidavit, which Werner acknowledged possibly had no value), as
they were listed in the 2016 tax return Werner filed jointly with Crowe that had
been in her attorney’s possession during their months of pre-settlement
negotiations.
Accordingly, Werner had the same reasons to conduct formal
discovery, insist upon verified disclosures, and litigate the conscionability of the
PSA before the family court entered its decree as she did after the family court
entered its decree. Werner produces no evidence indicating Crowe prevented her
from conducting formal discovery, or that he otherwise denied any request she
made to him for relevant documentation. By electing not to conduct formal
discovery, Werner placed herself in the position she now finds herself post-
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judgment in which she is entertaining “grave suspicions” that Crowe
misrepresented or concealed assets and asking the family court to reopen discovery
to allow her to find proof in service of her theory. As McMurry illustrates, this
does not justify CR 60.02 relief.
Over the course of the CR 60.02 proceedings, Werner also raised two
points that the family court did not specifically address in any order. In Werner’s
“motion to permit discovery while 60.02 motion is pending,” she questioned the
validity of a $1.6 million debt that the PSA recited Crowe owed to the Crowe
Dynasty Trust – a debt that factored into their division of assets. In her subsequent
CR 59.05 motion, she also represented:
Dr. Crowe’s businesses are the subject of IRS lawsuits
wherein the IRS has found that Dr. Crowe has
underreported income by reason of captive insurance
premium deductions disallowed to the tune of hundreds
of thousands of dollars resulting in an increase in tax of
$210,147 for the tax year 2015, which means the values
of the businesses Owensboro Dermatology Associates,
PSC and Dermatology Property Management, LLC are
even greater than Dr. Crowe suggests.
That said, Werner was aware of the $1.6 million debt in question prior
to the entry of the decree, passed on the opportunity to contest it at that time, and
presents no evidence – new or otherwise – disputing its legitimacy. As for the
“IRS lawsuits” concerning Crowe’s business interests, she likewise indicates those
lawsuits remain pending and offers nothing with respect to whether or how they
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may have concluded. In short, these are more examples of speculation and
conjecture that have no bearing upon our analysis. We find no error or abuse in the
family court’s decision to deny Werner’s CR 60.02 motion.
The final issue Werner raises on appeal concerns two Merrill Lynch
accounts that were titled in her name and Crowe’s as tenants in common. They
were not specifically disposed of in the PSA or the decree, but the family court
subsequently awarded them to Crowe pursuant to an October 23, 2020 order. As
Werner represents in her appellate brief:
[T]hese accounts were the Merrill Lynch Joint Checking
#XXX-31266 titled “Michael J. Crowe MD AND Ms.
Werner W. Crowe TIC” (tenants in common) valued at
$5,909.96 on July 18, 2020, and Merrill Lynch Joint
Long-Term Growth #XXX-31267 titled “Michael J.
Crowe MD and Ms. Werner W. Crowe TIC” (tenants in
common) valued $227,639.87 as of July 18, 2018.
Werner argues that because the PSA and decree did not specifically
address these accounts, they remained marital property; and that because neither
she nor Crowe directly appealed the non-inclusion of these accounts in the decree,
“the Trial Court lost jurisdiction to enter a subsequent order to award these assets
to Dr. Crowe.”
We disagree. To be sure, Werner correctly notes that the PSA and
decree did not address these accounts. However, the remainder of her argument
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lacks merit. When the family court “awarded” these accounts to Crowe, its
explanation was as follows:
The Court finds that the parties, in open Court at the
January 28, 2019 hearing, agreed that two (2) Merrill-
Lynch cash management accounts were included in
Paragraph 3.1 of the July 5, 2018 Property Settlement
Agreement, and were awarded to [Crowe] and considered
when calculating the money paid and to be paid to
[Werner] as an equalization of marital assets. The Court
further finds that it inadvertently omitted mentioning
these accounts in its February 18, 2019 Order following
the January 28, 2019 hearing. [Werner’s] Motion for
Declaration of Ownership and Equal Distribution of Two
Merrill Lynch Accounts not Divided in PSA and Motion
for Account Division of these accounts is DENIED.
Again, Werner’s argument is only that the family court lacked
jurisdiction to amend its decree consistently with their open-court settlement.
However, her argument is misguided. Utilizing CR 60.02 is not the only means of
reopening or modifying a decree; Werner and Crowe were also permitted to reopen
or modify it “by a voluntary, arms-length settlement;” and the family court had
continuing, equitable jurisdiction to effectuate their settlement so long as “such a
settlement is proved to the satisfaction of the trial court with reasonable certainty.”
Brown v. Brown, 796 S.W.2d 5, 8 (Ky. 1990). Werner does not contest the
substance of what the family court related in its order, i.e., that in open court,
during the January 28, 2019 hearing, she and Crowe settled this issue. Therefore,
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she provides this Court no reason to disturb the family court’s decision in this
regard.
Accordingly, we affirm the Daviess Family Court’s denial of
Werner’s motion for CR 60.02 relief to set aside the decree dividing Crowe’s and
Werner’s marital property.
ALL CONCUR.
BRIEFS FOR APPELLANT: BRIEF FOR APPELLEE:
Allen P. Dodd III Christopher G. Safreed
Allen McKee Dodd Owensboro, Kentucky
Louisville, Kentucky
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