Louisa W. Henson of the Estate of Theodore Mussler, A/K/A Theodore v. Margaret Mussler A/K/A Margaret E. Mussler ( 2020 )

RENDERED: SEPTEMBER 25, 2020; 10:00 A.M.
NOT TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2018-CA-1530-MR
AND
NO. 2018-CA-1842-MR
LOUISA W. HENSON, EXECUTRIX
OF THE ESTATE OF THEODORE
L. MUSSLER, JR. APPELLANT
APPEALS FROM JEFFERSON CIRCUIT COURT
FAMILY DIVISION
v. HONORABLE A. CHRISTINE WARD, JUDGE
ACTION NO. 91-FD-000314
MARGARET E. MUSSLER AND
HAROLD L. STORMENT APPELLEES
OPINION
AFFIRMING IN PART,
REVERSING IN PART, AND
REMANDING
** ** ** ** **
BEFORE: JONES, MAZE, AND L. THOMPSON, JUDGES.
MAZE, JUDGE: These consolidated appeals challenge orders of the Jefferson
Family Court which denied the decedent Theodore Mussler’s motion to modify
maintenance, granted appellee Margaret Mussler’s motion to hold Mr. Mussler in
contempt for failure to pay maintenance and interest, and awarded attorney’s fees
to Margaret’s counsel, appellee Harold Storment. We affirm in part, reverse in
part, and remand.
FACTS
Pursuant to a property settlement agreement executed in 1992, Mr.
Mussler (hereinafter “Ted”) agreed to pay Margaret the sum of $3,500.00 per
month until her death, remarriage, cohabitation with a non-relative adult male, or
further order of court. In 2011, Ted moved to terminate or modify his maintenance
obligation. After a hearing, the family court entered a 2013 order reducing his
maintenance obligation from $3,500.00 to $2,614.00, stemming in part from
Margaret’s receipt of Social Security benefits. Both parties appealed from the
entry of that order. During the pendency of those appeals, the parties reached a
settlement agreement after which the family court in January 2014 entered an
agreed order reducing Ted’s maintenance obligation to the current amount of
$2,800.00 per month.
Alleging that Ted had unilaterally ceased making maintenance
payments, Margaret garnished Ted’s bank accounts in March 2016. Thereafter,
-2-
Ted filed a May 2016 motion to reduce or terminate his maintenance obligation
alleging that due to deteriorating health, advanced age, and declining income, he
was no longer able to satisfy the obligation. After a series of motions to compel
production of documents and for contempt, as well as a motion by Ted’s then-wife,
appellant Louisa Henson, to quash a subpoena duces tecum concerning her
financial records, the family court conducted three hearings in this matter. A
December 2017 hearing produced an order directing the parties to brief the issue of
how to interpret and apply KRS1 403.250 to Ted’s motion to terminate or reduce
maintenance, specifically whether any change in circumstances was to be
measured from the date of the original decree or the date of the 2014 agreed order
reducing maintenance to the current amount. By order entered in March 2018, the
family court concluded that the appropriate measure was from the most recent
order modifying maintenance.
After conducting additional hearings in March and August 2018, the
family court entered orders 1) denying Ted’s motion to terminate maintenance; 2)
granting Margaret’s motion to hold Ted in contempt for failure to timely satisfy
maintenance payments and awarding Margaret a judgment amounting to
$78,400.00 for previously accrued maintenance payments; 3) granting Margaret’s
motion for contempt for failure to comply with an April 2005 order requiring Ted
1
Kentucky Revised Statute.
-3-
to pay interest on a previous arrearage and awarding Margaret the sum of
$7,932.19 for that arrearage; and 4) awarding Margaret’s counsel the sum of
$37,712.50 in attorney’s fees. Because Ted passed away during the pendency of
his appeals from those orders, Louisa Henson, Ted’s widow and executrix of his
estate, was substituted as appellant.
Louisa advances four arguments to support her contention that the
decision below must be set aside: 1) that the family court erred in evaluating Ted’s
claim of changed circumstances from the date of the 2014 agreed order, rather than
the date of the original decree; 2) that the family court abused its discretion in
refusing to terminate maintenance on the basis of changed circumstances; 3) that
the family court abused its discretion in holding Ted in contempt for failure to
meet his maintenance obligation; and 4) that the award of attorney’s fees was not
only an abuse of discretion, but contrary to law. Because these appeals center on
Ted’s alleged right to be relieved of his maintenance obligation, our review
necessarily focuses upon KRS 403.250(1) and its mandate that “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.” With the dictates of that statute in mind, we turn to an
examination of the arguments pressed for reversal.
-4-
I. DID THE FAMILY COURT USE THE CORRECT MEASURE
IN EVALUATING CHANGED CIRCUMSTANCES?
Louisa first maintains that the family court misconstrued the decision
of this Court in Wheeler v. Wheeler, 154 S.W.3d 291 (Ky. App. 2004), which
addressed the calculation of changed circumstances in terms of res judicata:
As a general rule, res judicata precludes the relitigation
of issues that have been previously decided between two
or more parties. In the context of motions to modify
spousal maintenance, there is considerable support for
the proposition that “[w]here the court has decided one
petition for modification, the order entered in that
proceeding is res judicata, and a second petition for
modification thus cannot be entertained unless it can be
shown that there has been a substantial change of
circumstances since the earlier decision was made.” In
Micheu v. Micheu, [440 So. 2d 240, 242 (La. Ct. App.
1983)], the Louisiana Court of Appeals framed the issue
as follows:
The determination, then, to be made is—has
a substantial change of circumstances
occurred since the award of alimony, or
since the last change in that award? This
analysis is to be made each time either
spouse files a rule to increase, decrease, or
terminate alimony previously granted.
Id. at 293-94 (footnotes omitted). The Wheeler Court further clarified the
rationale for its holding in a footnote to the Micheu citation:
See also Hosford v. Hosford, 362 So. 2d 973, 974 (Fla. Ct.
App. 1978) (holding that “[o]nce the court has found
sufficient change in circumstances to require
modification and thereupon enters an order, the facts and
circumstances supporting that modification may not be
-5-
revisited by the court as a basis for further
modification”); Marriott v. Marriott, 347 Ill. App. 372,
106 N.E.2d 876, 878 (1952) (stating that a previous order
granting a modification of maintenance was res judicata,
and that the circumstances which justified the original
modification could not be used to support a subsequent
motion to modify); and Farnsworth v. Farnsworth, 553
S.W.2d 485, 487 (Mo. Ct. App. 1977) (holding that “the
date of the change of circumstances to be used would
be the last prior modification rather than the
circumstances existing on the date of the original
decree”).
Id. at 294 n.8 (emphasis added). Critical to our inquiry, the Wheeler Court found
that, unlike the situation in Micheu, Hosford, Marriott, and Farnsworth, there had
been no modification of the original decree because the trial court had denied the
motion for an increase in maintenance. In this case, however, an agreed order
decreasing Ted’s maintenance was entered in January 2014. Thus, the family court
correctly applied the holding in Wheeler by using the date of the most recent
modification order to determine whether Ted had demonstrated “changed
circumstances so substantial and continuing” as to make the terms of the most
recent maintenance order unconscionable.
II. DID THE FAMILY COURT ABUSE ITS DISCRETION IN CONCLUDING
THAT TED FAILED TO PROVE CHANGED CIRCUMSTANCES?
Next, Louisa argues that even if the family court used the proper
measure, Ted clearly demonstrated the requisite change of circumstances such that
the family court’s denial of his motion to terminate maintenance constituted an
-6-
abuse of discretion. In explaining its basis for denying Ted’s motion, the family
court noted that while Ted’s evidence supported his contention that his health had
continued to deteriorate since the January 2014 modification, it did not support his
contention that his deteriorating health had rendered him incapable of meeting his
monthly maintenance obligation. The family court made specific reference to the
fact that during this time Ted made a $155,293.98 down payment on a new
residence, secured a loan of $750,000.00, and maintained two homes for over a
year. As to the alleged unprofitability of Ted’s law practice, the family court
found that, despite the contention that there was no cash flow available, Louisa
testified that she withdrew almost $20,000.00 from the business account and
placed it in her personal account to protect it from Margaret’s garnishment. She
also admitted to providing a law office employee with a $1,000.00 bonus around
the same time that Ted stopped making maintenance payments. Contrary to Ted’s
contention that he would have retired and closed the law practice but for his
maintenance obligation, the family court found that the law practice and unrepaid
“loans” Louisa made to that entity provided them with substantial tax deductions
over the years and allowed them the benefits of health insurance and other
resources deductible as expenses to the firm. Most importantly, however, the
family court found that nothing about the viability of the law practice had changed
since the entry of the agreed modification order in 2014.
-7-
Furthermore, the family court found that at the time of the hearing
Margaret was 79 years old, was in poor health having been diagnosed with chronic
obstructive pulmonary disease and congestive health failure, and that she is also
blind in one eye. The court found that in addition to the $2,800.00 maintenance
payments, Margaret receives $974.00 per month in Social Security payments.
Margaret offered proof that an investment account she received as an inheritance
had an opening balance in 2017 of $149,578.27 but due to Ted’s failure to make
his monthly maintenance payments, she has withdrawn approximately $3,000.00
per month to provide for her monthly expenses, reducing the value of the account
to $115,848.31 at the time of the hearing. Margaret’s 2016 Kentucky tax return
showed an income of $30,865.00 with an adjusted gross income of $26,752.00. In
April 2016, Margaret sold the marital residence she was awarded in the divorce for
$545,000.00, using the proceeds to pay off the mortgage on that home and to
purchase a smaller home for $304,000.00 cash. She used part of the remaining
$62,305.19 in proceeds to remodel her new residence.
Finding that Margaret had a reasonable expectation of maintenance
from the entry of the 2014 agreed order, the family court cited Barbarine v.
Barbarine, 925 S.W.2d 831 (Ky. App. 1996), for its recognition of the fact that the
concept of maintaining relative stability underpins KRS 403.250’s stringent
modification requirements. Pertinent to our review, Barbarine makes clear that:
-8-
Evidence for the movant must be compelling for the trial
court to grant the relief requested; the policy of the
statute is for relative stability. The determination of
questions regarding maintenance is a matter which has
traditionally been delegated to the sound and broad
discretion of the trial court, and an appellate court will
not disturb the trial court absent an abuse of discretion.
An appellate court is not authorized to substitute its own
judgment for that of the trial court where the trial court’s
decision is supported by substantial evidence.
Id. at 832 (citations omitted). Because we conclude that substantial evidence
supported the family court’s finding that Ted failed to show changed circumstances
since the 2014 order so compelling as to make the terms of that order
unconscionable, we perceive no basis upon which we might set aside its denial of
Ted’s motion to terminate maintenance.
III. DID THE FAMILY COURT ABUSE ITS DISCRETION IN
FINDING TED TO BE IN CONTEMPT?
Turning now to the contention that the trial court abused its discretion
with respect to contempt, Louisa cites Lewis v. Lewis, 875 S.W.2d 862 (Ky. 1993),
for its holding that the power of contempt cannot be used to compel the doing of an
impossible act. Based upon the same evidence that supported its denial of his
motion to terminate his liability, the family court specifically found Ted’s
assertions that he could not satisfy his maintenance obligation unpersuasive. The
family court was convinced that although Ted retained the ability to make his
maintenance payments, he simply chose not to do so. Appellate courts review a
-9-
trial court’s exercise of its contempt powers for abuse of discretion, Id. at 864, but
apply the clear error standard to the underlying findings of fact. Blakeman v.
Schneider, 864 S.W.2d 903, 905 (Ky. 1993). And, as this Court explained in
Meyers v. Petrie, 233 S.W.3d 212 (Ky. App. 2007):
When a court exercises its contempt powers, it has nearly
unlimited discretion. Smith v. City of Loyall, 702 S.W.2d
838, 839 (Ky. App. 1986). Consequently, we will not
disturb a court’s decision regarding contempt absent an
abuse of its discretion. “The test for abuse of discretion
is whether the trial [court’s] decision was arbitrary,
unreasonable, unfair, or unsupported by sound legal
principles.” Commonwealth v. English, 993 S.W.2d 941,
945 (Ky. 1999) (citations omitted).
Id. at 215. Meyers also explains that “[a]n individual who has refused to abide by
a court’s order has committed civil contempt.” Id. (citing Newsome v.
Commonwealth, 35 S.W.3d 836, 839 (Ky. App. 2001)). We perceive no abuse of
the family court’s wide discretion in holding Ted in contempt. His unilateral
termination of maintenance and interest payments coupled with his failure to
provide an adequate legal basis for failing to comply with his obligation under the
2014 maintenance order and the 2005 order mandating interest payments clearly
fall within the category of contemptuous conduct.
IV. WAS THE AWARD OF ATTORNEY’S FEES ERRONEOUS
AS A MATTER OF LAW?
Finally, we come to the issue of attorney’s fees. The family court
made two separate awards of attorney’s fees: 1) in the amount of $22,712.50 as an
-10-
equitable sanction related to its finding of contempt; and 2) in the amount of
$15,000.00 in prospective attorney’s fees under KRS 403.220. For the reasons that
follow, we reverse the award of attorney’s fees related to the contempt award and
affirm the award of fees under KRS 403.220.
In Seeger v. Lanham, 542 S.W.3d 286 (Ky. 2018), the Supreme Court
of Kentucky clearly set out the circumstances under which an award of attorney’s
fees is appropriate:
Under the American rule, “attorney’s fees in Kentucky
are not awarded as costs to the prevailing party unless
there is a statute permitting it or as a term of a contractual
agreement between the parties.” [Bell v. Commonwealth,
423 S.W.3d 742, 748 (Ky. 2014)]. While attorneys’ fees
are awardable as a sanction “when the very integrity of
the court is in issue,” id. at 749 (emphasis original), “trial
courts may not award attorney’s fees just because they
think it is the right thing to do in a given case.” Id. at
750.
Thus, we take this opportunity to clarify that,
without a sound basis in contract or statute, a trial court
may not award attorneys’ fees. The trial court is still
empowered to order a party to pay attorneys’ fees as
a sanction, but only when the integrity of the court is
at stake.
Id. at 295 (emphasis in bold added). It is clear from a reading of the family court’s
order regarding the award of attorney’s fees as a sanction for contempt that it was
exercising its equitable power to compensate Margaret for losses incurred by
reason of Ted’s contemptuous conduct and not to vindicate its authority or
integrity.
-11-
We note that although “[t]he courts of the Commonwealth were
previously empowered to award attorneys’ fees as an equitable measure, when,
within the discretion of the court, it was deemed appropriate,” Seeger made clear
that in “instances where attorney’s fees are appropriate as a sanction, it is not for
the benefit of the individual plaintiff, but because there has been an intrusion on
the very power of the court.” Bell, 423 S.W.3d at 749. Because the family court
made no finding of any such intrusion on its authority or integrity, we reverse the
award of attorney’s fees amounting to $22,712.50 as a contempt sanction.
Regarding the award of prospective attorney’s fees, however, we find
no error. The family court determined that given Ted’s superior financial situation,
such an award was appropriate, citing Bosnan v. Bosnan, 359 S.W.3d 480 (Ky.
App. 2012), for its holding that attorney’s fees may be advanced under the
authority of KRS 403.220 for the purpose of defending an appeal in a dissolution
action. “[W]here the trial court exercises its discretion, its decision is reviewed for
an abuse of discretion” and “‘[t]he test for abuse of discretion is whether the trial
judge’s decision was arbitrary, unreasonable, unfair, or unsupported by sound legal
principles.’” Weber v. Lambe, 513 S.W.3d 912, 915 (Ky. 2017) (citing Goodyear
Tire and Rubber Co. v. Thompson, 11 S.W.3d 575, 581 (Ky. 2000)). The family
court specifically found that Ted’s assets placed him in a superior position with
regard to the prosecution of an appeal and that an award of prospective attorney’s
-12-
fees was appropriate in order to allow Margaret to “fully and fairly litigate her
case.” Nothing in that determination can be said to be “arbitrary, unreasonable,
unfair, or unsupported by sound legal principles.” As this Court emphasized in
Bosnan, “[i]f a party is denied attorney’s fees to defend or file an appeal, the
purpose of KRS 403.220 would be negated by the party with superior financial
ability to hire counsel at the appellate level.” 359 S.W.3d at 488.
Because this case is being remanded on the issue of attorney’s fees,
we emphasize that nothing in our decision precludes the family court from
reconsidering the amount of prospective attorney’s fees awarded under KRS
403.220 and adjusting the amount awarded to ensure that the goal of its previous
order allowing Margaret to “fully and fairly litigate her case” has been
accomplished. Bosnan carefully explained this very concept:
We are aware that prospective attorney’s fees are
inherently uncertain. However, as the Court in
Neidlinger suggested, the family court retains jurisdiction
to award incremental attorney’s fees.
As with reimbursement of fees already
incurred, an assignment of prospective
attorney’s fees rests in the sound discretion
of the trial court. In the latter instance,
however, this discretion must be even more
carefully exercised. In awarding prospective
attorney’s fees, the trial court should
consider the possibility that the case might
be settled or that the parties might reconcile
before the awarded fee is actually earned.
The statutory language “from time to time”
-13-
anticipates the appropriateness in a
particular case of requiring that the fee,
whether prospective or already incurred, be
paid in increments rather than in a lump
sum. Uniform Marriage and Divorce Act,
supra note 3, § 313, at 450 (Official
Comment).
Id. at 521. Additionally, we point out that after the
appeal is completed, the family court retains the
jurisdiction to alter its previous award, including
reimbursement of any unjustified amounts awarded,
including for a frivolous appeal or if attorney’s fees are
no longer warranted because of the appellate decision.
Id. (emphasis added). That rationale applies equally to an award of additional fees.
CONCLUSION
Accordingly, that portion of the order entered September 24, 2018,
awarding attorney’s fees in the amount of $22,712.50 as a sanction for contempt is
reversed and the case remanded for entry of an appropriate order. In all other
respects, the orders of the Jefferson Family Court are affirmed.
ALL CONCUR.
BRIEFS FOR APPELLANT: BRIEF FOR APPELLEES:
Patrick J. Walsh Harold L. Storment
Newport, Kentucky Louisville, Kentucky
-14-