Jessica Lyn Hofhine ( 2014 )

IN THE SUPREME COURT, STATE OF WYOMING
2014 WY 86APRIL TERM, A.D. 2014
July 3, 2014
JESSICA LYN HOFHINE,
Appellant
(Plaintiff),
v. No. S-13-0225
MIKE DAVID HOFHINE,
Appellee
(Defendant).
Appeal from the District Court of Uinta County
The Honorable Dennis L. Sanderson, Judge
Representing Appellant:
John A. Thomas and Ammon E. Francom, John A. Thomas Law Office, Evanston,
Wyoming.
Representing Appellee:
Farrah L. Spencer, Long, Reimer, Winegar, Beppler, LLP, Park City, Utah;
Monica J. Vozakis, Long, Reimer, Winegar, Beppler, LLP, Evanston, Wyoming.
Before BURKE, C.J., and HILL, KITE*, DAVIS, and FOX, JJ.
*Chief Justice at time of expedited conference.
NOTICE: This opinion is subject to formal revision before publication in Pacific Reporter Third. Readers
are requested to notify the Clerk of the Supreme Court, Supreme Court Building, Cheyenne, Wyoming
82002, of any typographical or other formal errors so that correction may be made before final publication in
the permanent volume.
BURKE, Chief Justice.
[¶1] Appellant, Jessica Lyn Hofhine, challenges the district court’s order denying her
“Motion for Enforcement of Judgment and Decree of Divorce.” She asserts she is
entitled to an “income equalization” payment under the terms of the parties’ divorce
decree. She also contends the district court erred in awarding attorney’s fees to Appellee.
We affirm.
ISSUES
[¶2] Ms. Hofhine presents the following issues:
1. Whether the district court erred in its interpretation and
application of the legal documents governing the property
distribution between Appellant and Appellee, and the
equalization of their incomes.
2. Whether the district court violated Appellant’s right to due
process of law when it did not allow any party or witness
testimony at the hearing on Appellant’s motion to equalize
income.
3. Whether the district court’s order awarding attorney’s fees
should be reversed.
Mr. Hofhine presents an additional issue:
1. Whether Husband is entitled to attorney’s fees incurred on
appeal.
FACTS
[¶3] The parties were married in 2001. Ms. Hofhine filed for divorce in September,
2010. At that time, Mr. Hofhine was the president and sole shareholder of New Tech
Inspection Service (New Tech), and Ms. Hofhine worked for the company as an office
manager and bookkeeper. In November, 2010, after Ms. Hofhine submitted a motion for
temporary spousal support, the district court entered an “Order Setting Current Salaries,”
which provided that both parties would “continue to be employed by New Tech
Inspection Service at their current salaries of $5,200.00 gross each per each semi-monthly
pay period.” The order also stated that “any additional compensation from New Tech
Inspection Service in the form of draws, or otherwise, shall not be paid to either party
without the written consent of both parties or by court order.”
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[¶4] In September, 2011, the parties entered into a property settlement agreement. The
“Stipulation and Agreement” provided that Mr. Hofhine would pay to Ms. Hofhine “a
total cash settlement for any and all interest in New Tech Inspection Service [in] the sum
of $375,000.” Paragraph 18 of the Stipulation and Agreement stated that “This
agreement is intended to be and shall be a full, final and complete property settlement
between the parties and neither party shall make any property claim against the other
except as herein provided and set forth.”
[¶5] The Stipulation and Agreement was subsequently incorporated into the Decree of
Divorce entered by the district court on September 23, 2011. On October 27, the court
entered a Judgment and Decree of Divorce Nunc Pro Tunc to correct a typographical
error in the original Decree. Paragraph 11ac of the Decree Nunc Pro Tunc provided that
Ms. Hofhine
shall have as her sole and separate property . . . An amount to
be paid by Defendant to Plaintiff to equalize the incomes of
the parties to the date of termination of Plaintiff’s
employment as set forth above, pursuant to the provisions set
forth in the Order Setting Current Salaries . . . filed by the
Court on November 5, 2010 which equalized the salaries of
both parties.
Ms. Hofhine’s employment with New Tech ended in October, 2011.
[¶6] In May, 2012, Ms. Hofhine filed a “Motion for Enforcement of Judgment and
Decree of Divorce.” A hearing was held on the motion and during that hearing
Ms. Hofhine claimed that Mr. Hofhine had withdrawn approximately $182,000.00 from
the company in the form of dividends, special pay, and draws, and that these withdrawals
should have been equalized under Paragraph 11ac of the Decree Nunc Pro Tunc.
Following the hearing, the district court entered an order denying Ms. Hofhine’s motion.
The court concluded as follows:
4. Paragraph 4 of the Decree of Divorce clearly and
unambiguously provided that Plaintiff be paid a total of
$375,000 as a complete and final cash settlement for any and
all interests that Plaintiff had in New Tech Inspection
Services. Therefore, Plaintiff has no claim to any additional
compensation for any interest Plaintiff now claims to have in
New Tech Inspection Services.
...
7. The Order Setting Salaries required only that the
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parties’ salaries from New Tech Inspection Services be
equalized so that both parties received a salary of $10,400.00
per month, which Plaintiff did not dispute that she received
until her termination date. The Order Setting Salaries did not
require that any dividends, special pay, or draws be equalized.
Additionally, the court noted that “as of June 2011, Plaintiff knew of the dividends,
special pay, and draws she now claims should be equalized but Plaintiff did not ask the
Court for compensation or equalization of such payments before the Decree of Divorce
was entered on September 23, 2011.” The court concluded that “because Plaintiff had
knowledge of the payments that she now argues should have been equalized but failed to
request such equalization, Plaintiff waived any claim she may have had to such
equalization when the final Decree of Divorce was entered.” The court also entered an
order awarding attorney’s fees to Mr. Hofhine, as permitted under the Decree Nunc Pro
Tunc. Ms. Hofhine filed a timely appeal from the district court’s orders.
DISCUSSION
[¶7] In her first issue, Ms. Hofhine contends the district court erred in concluding that
she was not entitled to equalization of income under the parties’ divorce decree. She
asserts that Mr. Hofhine received compensation from New Tech in the form of dividends,
special pay, and draws for personal use. She claims that this additional compensation
must be considered income for tax purposes, and should also be considered “income” that
is subject to the equalization requirement under Paragraph 11ac of the decree. It is
undisputed that the funds which Ms. Hofhine seeks to have equalized were paid to
Mr. Hofhine prior to entry of the decree. Mr. Hofhine asserts that only salary was
required to be equalized and that Ms. Hofhine received all salary required to be paid to
her pursuant to the decree.
[¶8] In order to resolve this issue, we must interpret the provisions of the decree, the
parties’ Stipulation and Agreement, and the Order Setting Current Salaries. We have
repeatedly held that interpretation of contracts is a question of law, which we review de
novo. Knight v. TCB Constr. & Design, LLC, 2011 WY 27, ¶ 7, 248 P.3d 178, 181
(Wyo. 2011).
[¶9] In interpreting a property settlement agreement, we attempt to ascertain the
parties’ intent by looking to the specific language of the agreement:
As with all contracts, a court reviewing a property
settlement agreement incorporated into a divorce decree must
attempt to ascertain the parties’ intent by first looking to the
specific wording of the agreement. If the language is clear
and unambiguous, the court should restrict its review to the
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four corners of the document. That is, a court should not
resort to extrinsic or parol evidence or rules of contract
construction to avoid or enlarge the clearly expressed intent
of the parties. It may, however, confirm its understanding of
otherwise seemingly unambiguous language by reviewing
evidence which, although extrinsic to the contract,
complements that language by clarifying the context in which
the agreement was drawn.
Dowell v. Dowell (In re Dowell), 2012 WY 154, ¶ 18, 290 P.3d 357, 361 (Wyo. 2012)
(citations omitted).
[¶10] Ms. Hofhine’s claim that she is entitled to payments equaling Mr. Hofhine’s
withdrawals from New Tech is based on the language of Paragraph 11ac of the parties’
divorce decree. As noted above, that paragraph provides that Ms. Hofhine
shall have as her sole and separate property . . . An amount to
be paid by Defendant to Plaintiff to equalize the incomes of
the parties to the date of termination of Plaintiff’s
employment as set forth above, pursuant to the provisions set
forth in the Order Setting Current Salaries . . . filed by the
Court on November 5, 2010 which equalized the salaries of
both parties.
Ms. Hofhine asserts that the term “income,” as used in this paragraph, includes all
payments received by Mr. Hofhine from New Tech including payments received prior to
entry of the decree. As support for her definition of the term “income,” Ms. Hofhine
relies on our decision in Teeples v. Teeples, 2012 WY 127, ¶ 11, 286 P.3d 134, 136
(Wyo. 2012), in which we noted that, under Section 301(c)(1) of the United States
Internal Revenue Code, “If a corporation makes a distribution of property to a
shareholder with respect to that shareholder’s stock, the portion of the distribution which
is a dividend must be included in the shareholder’s income as well.” Ms. Hofhine’s
reliance on our decision in Teeples, however, is misplaced. In Teeples, the appellant
received a payment from the appellee pursuant to the parties’ Property Settlement
Agreement. The appellee paid the appellant with funds from an S corporation he
received in the divorce. The appellant claimed that because she had previously been a
shareholder in the S corporation, the payment constituted a dividend and impermissibly
increased her income tax liability. We concluded, however, that under Section 26
U.S.C.A. § 301(c)(1) of the Internal Revenue Code, the appellant was taxed properly on
“income” earned by the S corporation. Id., ¶ 11, 286 P.3d at 136. Unlike Teeples,
resolution of the dispute in the present case does not depend on interpretation of the
Internal Revenue Code. In this case, the parties’ agreement unambiguously equates
“income” with “salary.”
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[¶11] The term “income” is not defined in the Decree of Divorce, the parties’ Stipulation
and Agreement, or the Order Setting Current Salaries. The manner in which the term is
employed in the Decree of Divorce, however, unambiguously indicates that the term is
intended to be synonymous with the term “salary.” First, we note that Paragraph 11ac
states that Ms. Hofhine is entitled to an amount equalizing the “incomes” of the parties
“to the date of termination of Plaintiff’s employment.” The reference to termination of
Ms. Hofhine’s employment suggests that the equalization of “income” is intended to
mean equalization of the parties’ salaries. This meaning of “income” is also suggested by
Paragraph 8 of the decree, which provides that, until Mr. Hofhine satisfied his obligations
under the terms of the decree, Ms. Hofhine would “continue to work for New Tech
Inspection Service at her present monthly income.” Further, Paragraph 11ac states that
equalization of income is “pursuant to the provisions set forth in the Order Setting
Current Salaries.” That order, as indicated by its title, related to the parties’ salaries and
provided that the parties would “continue to be employed by New Tech Inspection
Service at their current salaries of $5,200.00 gross each per each semi-monthly pay
period . . . .”
[¶12] Ms. Hofhine notes that the Order Setting Current Salaries also states, in Paragraph
2, that “any additional compensation from New Tech Inspection Service in the form of
draws, or otherwise, shall not be paid to either party without the written consent of both
parties or by court order.” Ms. Hofhine suggests that this language indicates that such
additional compensation is required to be equalized under the divorce decree. We do not
agree. The plain language of Paragraph 2 contains no requirement that any additional
compensation be equalized, and there is nothing in the Order that provides for
equalization of additional compensation as a remedy for violation of the Order.
Accordingly, pursuant to the Order Setting Current Salaries, which is incorporated into
the divorce decree by explicit reference in Paragraph 11ac, only the parties’ salaries were
required to be equalized. The divorce decree confirms this interpretation by stating that
the Order Setting Current Salaries “equalized the salaries of both parties.”
[¶13] Additionally, under Ms. Hofhine’s interpretation of the term “income,” she would
be entitled to payments equalizing Mr. Hofhine’s withdrawal of dividends from New
Tech. The effect of Ms. Hofhine’s interpretation, however, would be directly
contradictory to the parties’ Stipulation and Agreement, which provides that Mr. Hofhine
would pay to Ms. Hofhine “a total cash settlement for any and all interest in New Tech
Inspection Service [in] the sum of $375,000.” The Stipulation also states that the
agreement “is intended to be and shall be a full, final and complete property settlement
between the parties and neither party shall make any property claim against the other
except as herein provided and set forth.” These provisions were incorporated into the
Decree of Divorce. Ms. Hofhine’s claim that she is entitled to additional compensation to
equalize dividend payments made to Mr. Hofhine would effectively circumvent these
provisions by allowing her to receive an additional interest in New Tech beyond the
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$375,000 paid to her for “any and all interest” in the company. Ms. Hofhine’s claim to
additional compensation under the decree also contradicts her counsel’s statements in a
letter to opposing counsel following entry of the original decree. In that letter, which was
introduced into evidence at the hearing, Ms. Hofhine’s counsel stated that “It appears that
your client has satisfied all of the requirements of the Judgment and Decree of Divorce so
that my client can cease working for New Tech Inspection Service at her present monthly
income . . . .”
[¶14] We conclude that the plain language of the parties’ divorce decree unambiguously
required only the parties’ monthly salaries from New Tech to be equalized. The district
court did not err in denying Ms. Hofhine’s request for additional compensation. Because
we have found that additional payments received by Mr. Hofhine from New Tech were
not required to be equalized under the decree, we need not determine whether
Ms. Hofhine waived her claim to equalization of those payments.
[¶15] In her next issue, Ms. Hofhine contends the district court violated her due process
rights by refusing to permit the parties or witnesses to testify at the hearing on her
motion. She claims that she should have been allowed to testify and “to call witnesses to
explain the surrounding circumstances, the subject matter, and the purposes of the
provisions at issue in the Order Setting Current Salaries, the Stipulation, and the Decree
Nunc Pro Tunc.” Whether a court’s action has violated a party’s right to due process is a
question of law which we review de novo. Verheydt v. Verheydt, 2013 WY 25, ¶ 20, 295
P.3d 1245, 1250 (Wyo. 2013).
[¶16] As we have previously stated, an opportunity for hearing in accordance with due
process must be “appropriate to the nature of the case.” JKS v. AHF (In re ARF), 2013
WY 97, ¶ 28, 307 P.3d 852, 858 (Wyo. 2013). “The party claiming an infringement of
his right to due process has the burden of demonstrating both that he has a protected
interest and that such interest has been affected in an impermissible way. The question is
whether there has been a denial of fundamental fairness.” DH v. Wyo. Dep’t of Family
Servs., 2003 WY 155, ¶ 38, 79 P.3d 997, 1008 (Wyo. 2003) (citation omitted). In the
present case, the purpose of the hearing was to determine whether Ms. Hofhine was
entitled to additional compensation under the parties’ divorce decree, and if so, to
determine the amount of such additional compensation. At the hearing, both parties were
allowed to present argument and to introduce and explain exhibits. Ms. Hofhine did not
object to the procedure, did not seek to introduce any testimony, and did not provide an
offer of proof indicating the content of any proposed testimony. Additionally, the
determination as to whether Ms. Hofhine was entitled to additional compensation was a
purely legal issue. As we have previously discussed, the district court properly
determined that the agreement was unambiguous. Under the circumstances, admission of
evidence extrinsic to the parties’ agreement would not have been appropriate. The
district court did not violate Ms. Hofhine’s due process rights.
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[¶17] In her third issue, Ms. Hofhine challenges the award of attorney’s fees to
Mr. Hofhine. A district court’s grant or denial of attorney’s fees is reviewed for abuse of
discretion. Sterrett Props., LLC v. Big-D Signature Corp., 2013 WY 154, ¶ 8, 314 P.3d
1155, 1157 (Wyo. 2013). Ms. Hofhine concedes that the award of attorney’s fees to the
prevailing party is authorized under Paragraph 18 of the Decree Nunc Pro Tunc. That
paragraph provides:
In the event any subsequent action should be commenced by
either party against the other involving any of the provisions
which are the subject matter of this proceeding and any future
orders and decrees filed herein, then the losing party to such
action as evidenced by an order or judgment against the
person shall pay all the successful party’s attorney’s fees and
costs in such action, unless otherwise ordered by the court.
Ms. Hofhine’s argument that the district court abused its discretion in awarding
attorney’s fees to Mr. Hofhine is contingent on her success in this appeal. According to
Ms. Hofhine,
A reversal of the district court’s Findings of Fact,
Conclusions of Law, and Order on Hearing that dismisse[d]
Wife’s claim to equalize income will mean Husband was not
the prevailing party below, and therefore is not entitled to
attorney’s fees pursuant to the Decree Nunc Pro Tunc. In
other words, if Wife prevails on this appeal, the award of
attorney’s fees to Husband, as the losing party, would become
an abuse of discretion that should be reversed by this Court.
As set forth above, the district court properly denied Ms. Hofhine’s Motion for
Enforcement of Judgment and Decree of Divorce. Accordingly, we find no basis to
reverse the award of attorney’s fees. The district court did not abuse its discretion in
awarding attorney’s fees to Mr. Hofhine.
[¶18] Finally, with respect to Mr. Hofhine’s claim for attorney’s fees incurred in this
appeal, we conclude that he is entitled to those fees under Paragraph 18 of the Decree
Nunc Pro Tunc. As we have previously noted, “Attorney’s fees are recoverable if
expressly provided for by statute or contract. Where a contract allows the award of
attorney’s fees, that includes fees incurred on appeal.” Kinstler v. RTB South Greeley,
LTD., LLC, 2007 WY 98, ¶ 13, 160 P.3d 1125, 1129 (Wyo. 2007) (citation omitted). We
will determine the appropriate sum to be awarded after counsel submits proper
documentation.
[¶19] Affirmed.
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