Marriage of Orr , 389 Mont. 400 ( 2017 )

11/28/2017
DA 17-0095
Case Number: DA 17-0095
IN THE SUPREME COURT OF THE STATE OF MONTANA
2017 MT 291IN RE THE MARRIAGE OF:
DANIEL E. ORR,
Petitioner and Appellant,
v.
MELINDA J. ORR,
Respondent and Appellee.
APPEAL FROM: District Court of the Fourth Judicial District,
In and For the County of Missoula, Cause No. DR 13-426
Honorable Robert L. Deschamps, III, Presiding Judge
COUNSEL OF RECORD:
For Appellant:
Jamie J. McKittrick, Thomas H. Stanton, Wells & McKittrick, P.C.;
Missoula, Montana
For Appellee:
Raymond P. Tipp, Tipp Coburn Schandelson, P.C.; Missoula, Montana
Submitted on Briefs: October 11, 2017
Decided: November 28, 2017
Filed:
__________________________________________
Clerk
Justice Jim Rice delivered the Opinion of the Court.
¶1 Daniel E. Orr (Daniel) appeals the order denying his motion to modify maintenance,
entered in the Fourth Judicial District, Missoula County. We affirm, and address the
following issue:
Did the District Court err when it determined that maintenance, incorporated into
the decree from the marital property settlement agreement, was not modifiable by the
court?
FACTUAL AND PROCEDURAL BACKGROUND
¶2 Daniel and Melinda Orr, k/n/a Melinda Koffler, (Melinda) were married in 1985
and have three adult children. Daniel filed a petition for dissolution of marriage in July
2013. Both parties were represented by counsel and engaged in lengthy negotiations that
ultimately resulted in a Marital and Property Settlement Agreement (the Agreement) on
May 16, 2014, in which the parties consented to entry of a Decree of Legal Separation.
The District Court entered a Final Decree of Legal Separation the same day, incorporating
the Agreement and, although the record before us does not include the transcript of the
hearing, the Decree states the District Court found the Agreement was reasonable,
equitable, and not unconscionable.
¶3 The Agreement divided assets and debts between the parties. Section 11 addressed
maintenance, and section 13 distributed property, including the couple’s business, Iron Orr
Welding, Inc. (the business).1 The Agreement provided that if the matter remained a legal
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Daniel’s motion to modify maintenance attributed the $170,841 in adjusted gross income on the
parties’ 2013 federal income tax return to their welding business.
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separation, Melinda was entitled to 30% monthly distributions from the business, but
would receive no maintenance. However, if the matter was converted into a marriage
dissolution, then Melinda would relinquish her interest in the business and Daniel would
pay Melinda $3,000 per month in maintenance for a period of three and one-half years.
Section 21 stated as follows, including a provision regarding modification:
21. ENTIRE AGREEMENT: This Agreement contains the entire
agreement of the parties. There are no representations, warranties,
covenants, or any other undertakings of any sort of nature other than those
expressly set forth or discussed herein. Time is of the essence of the terms
and condition of this Agreement. This Agreement may not be amended or
modified except by an agreement in writing, duly subscribed and
acknowledged with the same formality that has been employed in the
execution of this Agreement.
(Underline and bold in original, emphasis added.)
¶4 On November 19, 2014, on Daniel’s motion, the District Court converted the Decree
of Legal Separation to a Decree of Dissolution of Marriage, triggering Melinda’s
relinquishment of her interest in the business and Daniel’s obligation to pay her $3,000
monthly maintenance payments, beginning December 2014. At that time, Daniel was
operating the business in the Bakken oil fields in North Dakota, and he made maintenance
payments to Melinda for six months, totaling $18,000. However, when the oil market
declined, Daniel was unable to find work in North Dakota, and he moved back to Montana.
He then began employment in a non-welding position, earning about $3,000 per month in
take-home pay.
¶5 Citing a change in circumstances, Daniel moved the court to modify the
maintenance provision in the Agreement in March 2016, asking that he be completely
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relieved of any maintenance obligation. The matter was assigned to a Standing Master,
who conducted a hearing. Melinda testified that she agreed to relinquish her share in the
business, which she had helped to build, only because of the maintenance provision. She
testified she was paying off significant debts assigned to her under the Agreement, and
without the maintenance money, she would have to file for bankruptcy. For his part, Daniel
testified that “I had to make this deal in order for [Melinda] to sign the divorce and [I] kept
telling everybody that the oil field was not going to last.” Daniel testified he had almost
no assets and no retirement savings, and he was living in a fifth-wheel trailer for which he
was making payments. Daniel also testified his welding business was now in poor financial
condition, and believed he was earning more in his non-welding job than he would earn if
he returned to welding.
¶6 The Standing Master reduced the maintenance, citing her equitable powers, ordering
Daniel to pay $500 a month for 24 months. The Standing Master also ordered Daniel to
sell a broken-down race car he owned for a minimum of $4,000, and pay Melinda the
proceeds. These provisions would have relieved Daniel of approximately $96,000 he still
owed to Melinda in maintenance under the Agreement.
¶7 Melinda objected, requesting review of the Standing Master’s decision by the
District Court. The District Court first reasoned that the Agreement is a contract, which
must, under § 28-3-401, MCA, be construed according to its “clear and explicit language,”
and concluded “[w]hile the [non-modification] provision is in fact one sentence out of a
larger paragraph, it is still quite ‘clear and explicit’ that the [Agreement] cannot be
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modified absent a written agreement of the parties.” The District Court also reasoned that
§ 40-4-201(6), MCA, and Montana case law, precludes a District Court from modifying
maintenance when an agreement prohibits modification. Daniel appeals.
STANDARD OF REVIEW
¶8 The construction and interpretation of a written agreement are questions of law that
we review for correctness. Moore v. Goran, LLC, 2017 MT 208, ¶ 7, 388 Mont. 340,
400 P.3d 729 (citations omitted).
DISCUSSION
¶9 Did the District Court err when it determined that maintenance, incorporated into
the decree from the marital property settlement agreement, was not modifiable by the
court?
¶10 We affirm the District Court’s holding, but on an alternate basis. Regarding
modification of maintenance, Daniel argues the District Court erred as a matter of law
because the non-modification language in the clause titled “Entire Agreement” does not
preclude judicial modification of maintenance. Referencing various authorities, Daniel
offers that the purpose of an “entire agreement” or “merger” clause is to “avoid litigation
over the questions of whether there were oral representations made outside the written
agreement . . . .” (quoting 17A Am. Jur. 2d Contracts § 378 (2008)). Daniel thus argues
that non-modification language contained in a merger clause is merely intended to prevent
extrinsic evidence from being used to modify the terms of the Agreement, and does not
operate to foreclose judicial modification of maintenance on the ground of changed
circumstances. Melinda responds that the District Court correctly applied the law, and that
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the plain language of the Agreement prevents modification, regardless of where the
language was placed in the Agreement, a principle consistently upheld by this Court.
¶11 The Legislature has addressed judicial modification of maintenance provisions.
Section 40-4-208, MCA, provides:
(1) Except as otherwise provided in 40-4-201(6), a decree may be modified
by a court as to maintenance or support only as to installments accruing
subsequent to actual notice to the parties of the motion for modification.
. . .
(2) (b) [W]henever the decree proposed for modification contains provisions
relating to maintenance or support, modification under subsection (1) may
only be made:
(i) upon a showing of changed circumstances so substantial and continuing
as to make the terms unconscionable. . . .
(Emphasis added.) However, this provision cross-references § 40-4-201(6), MCA, which
provides an exception allowing decrees of dissolution to preclude or limit future
modification upon the parties’ agreement:
[E]xcept for terms concerning the support, parenting, or parental contact with
the children, the decree may expressly preclude or limit modification of terms
set forth in the decree if provided for in the separation agreement. Otherwise,
terms of a separation agreement set forth in the decree are automatically
modified by modification of the decree.
(Emphasis added.) Consequently, we have held that “where a separation agreement
expressly precludes modification or limitation of maintenance, a District Court is barred
from later modifying the terms of the agreement.” In re Marriage of Bolstad, 203 Mont.
131, 135, 660 P.2d 95, 97 (1983); see also Rowen v. Rowen, 199 Mont. 315, 320, 649 P.2d
1259, 1262 (1982) (when a separation agreement does not expressly limit modification, the
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district court has the power to modify maintenance); In re Marriage of Johnson, 252 Mont.
258, 261-62, 828 P.2d 388, 391 (1992) (judicial modification of maintenance precluded by
language in the agreement that specifically prevented a court from modifying the
agreement); In re Marriage of Pearson, 1998 MT 236, ¶ 34, 291 Mont. 101, 965 P.2d 268(general non-modification clause sufficient to preclude the court from modifying
maintenance).
¶12 Bolstad cited approvingly In re Marriage of Thompson, 640 P.2d 279 (Colo. App.
1982). Thompson reasoned that when parties negotiate an agreement, one side may agree
to pay greater maintenance in return for a larger share of property, and thus they should be
free to preclude modification of maintenance, explaining:
Indeed, the waiver of the right to seek modification in and of itself could well
be the consideration for a concession in the amount or duration of
maintenance, or in the property received by a party. Thus, to permit
reconsideration of the amount of maintenance contracted for, without also
reopening the property division, would be inequitable.
Thompson, 640 P.2d at 280. This Court has likewise held that when maintenance is
accepted in exchange for relinquishing rights in other property, the maintenance obligation
is not subject to modification for changed circumstances, and is instead viewed as part of
the total property disposition:
[I]f support provisions have been made an inseverable part of the Agreement
between husband and wife to divide their property, and the court in the
[dissolution] action approves the agreement, the provisions of such
agreement cannot thereafter be modified without the consent of both of the
contracting parties.
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In re Marriage of Robertson, 237 Mont. 406, 410, 773 P.2d 1213, 1216 (1989) (citing
Washington v. Washington, 162 Mont. 349, 356, 512 P.2d 1300, 1304 (1973)). In
Robertson, the husband sought modification of the maintenance he agreed to pay in a
marital property settlement agreement, arguing it was unconscionable. Robertson,
237 Mont. at 409, 773 P.2d at 1215. Under the terms of the Robertson agreement, the wife
had relinquished claims against the husband’s retirement, savings, and profit-sharing
accounts, accepting maintenance in lieu of her share of that property. Robertson,
237 Mont. at 410, 773 P.2d at 1216. We thus held that the wife’s maintenance was an
inseverable part of the property settlement arrangements, and that the maintenance
obligation was undertaken by the husband in exchange for the wife’s forbearance of certain
property in the marital estate. Robertson, 237 Mont. at 410, 773 P.2d at 1216.
¶13 We conclude that such is the case here. The Agreement provided that Melinda
would receive distributions from the business while the parties were legally separated, and
would receive no maintenance. However, upon dissolution, Melinda would relinquish her
interest in the business and would receive maintenance payments. Consistent with the
Agreement, Melinda’s uncontested testimony confirmed that she agreed to give up her
interest in the business only because she was assured she would receive maintenance
payments. While denominated as maintenance, these payments were, in effect, a structured
purchase of Melinda’s share of the business. As Melinda argues, “Dan received extra
property in the marital settlement Agreement in exchange for his non-modifiable promise
to pay maintenance to Melinda for 3 ½ years.” The record and our holding in Robertson
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establish that the maintenance provision is an inseverable part of the property distribution
provided in the Agreement, and cannot be separately modified by a court upon Daniel’s
motion.
¶14 Daniel also argues that it would be unconscionable for him to fulfil the maintenance
provision, given his change in circumstances. We acknowledge that the present situation
makes this a harsh result for Daniel, but under the Agreement, he assumed both the risk of
business failure as well as the possibility of business success if the oil economy continued
to boom. Upon dissolution, Melinda gave up the chance at business success in exchange
for certain maintenance payments. Further, the parties’ decision to place the risk of
business failure and the possibility of business success on Daniel, who would be acting as
the sole owner and sole employee of the business, and responsible for its operation, was
not unreasonable. Therefore, we conclude that enforcement of the parties’ agreement is
not unconscionable.
¶15 Affirmed.2
/S/ JIM RICE
We concur:
/S/ JAMES JEREMIAH SHEA
/S/ LAURIE McKINNON
/S/ BETH BAKER
/S/ DIRK M. SANDEFUR
2
Having affirmed on these grounds, we need not reach the issue of whether the non-modification
language of the subject Agreement is merely part of an integration clause, or if it precludes all
judicial modification of the Agreement.
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