Russell, B. v. Russell, M

J-A20028-16
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
BERNARD J. RUSSELL IN THE SUPERIOR COURT OF
PENNSYLVANIA
Appellant
v.
MARGARET A. RUSSELL
Appellee No. 1778 WDA 2015
Appeal from the Order Dated October 5, 2015
In the Court of Common Pleas of Washington County
Civil Division at No: No. 2006-6151
BEFORE: BOWES, STABILE, and MUSMANNO, JJ.
MEMORANDUM BY STABILE, J.: FILED NOVEMBER 15, 2016
Appellant Bernard J. Russell (“Husband”) appeals from the October 5,
2015 order of the Court of Common Pleas of Washington County (“trial
court”), granting in part Margaret A. Russell’s (“Wife”) petition for special
relief/enforcement and denying his petition to modify. Upon review, we
affirm.
The facts and procedural history underlying this appeal are
undisputed. Briefly, on October 24, 2006, Husband filed a complaint in
divorce against Wife. On December 11, 2007, the parties entered into a
marriage settlement agreement (“MSA”), which Wife filed in the trial court
on December 12, 2007.1 On December 13, 2007, both parties signed and
____________________________________________
1
Paragraph 19 of the MSA, relating to mutual waivers and releases, provides
in part: “Neither party may apply to any court for a modification of this
(Footnote Continued Next Page)
J-A20028-16
filed their respective waiver of notice of intention and affidavits of consent to
effectuate a no-fault divorce under Section 3301(c) of the Divorce Code, 23
Pa.C.S.A. § 3301(c). On December 21, 2007, the trial court issued a final
divorce decree, releasing the parties from the bonds of matrimony under
Section 3301(c). The trial court also incorporated the MSA into the divorce
decree “for enforcement purposes only.” Divorce Decree, 12/21/07.
On May 12, 2015, Wife filed a petition for special relief/enforcement,
alleging that Husband had failed to comply with the terms of MSA. In
particular, she alleged that Husband failed to (1) make alimony payments to
her, and (2) pay her $475,000.00 that represented her interest in Husband’s
business,2 and half of his loyalty bonus or $125,000.00, totaling
$610.000.00. Wife also sought confirmation that Husband maintained two
life insurance policies, $1,000,000.00 and $750,000.00 respectively, listing
her as the sole beneficiary. Finally, Wife requested attorney’s fees pursuant
to the MSA. On May 14, 2015, Husband filed an answer to the enforcement
petition and a concomitant petition to modify the MSA. In his answer,
Husband claimed ineffective assistance of counsel and challenged the
valuation of his business at the time the parties executed the MSA. In his
_______________________
(Footnote Continued)
Agreement, except under Paragraph 11 (Custody) or Paragraph 12 (Child
Support) of this Agreement, whether pursuant to the Divorce Code or any
other present or future statutory authority.”
2
$475,000.00 is the difference between Wife’s $575,000.00 marital interest
in the business, which was valued at $1,150,00.00, and $100,000.00 in
payments received by Wife from Husband. N.T. Hearing, 6/1/15, at 47-48..
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J-A20028-16
petition, Husband requested reformation of the MSA based on mutual
mistake and frustration of purpose as they relate to the valuation of his
business. The trial court conducted a hearing on June 1, 2015, after which it
issued an order granting in part Wife’s enforcement petition and denying
Husband’s modification petition on October 5, 2015. Following the trial
court’s denial of Husband’s reconsideration motion, Husband timely appealed
to this Court on November 4, 2015.3
On appeal,4 Husband raises five issues for our review.
____________________________________________
3
The trial court did not order Husband to file a Pa.R.A.P. 1925(b) statement
of error complained of on appeal. The trial court, however, filed a Pa.R.A.P.
1925(a) opinion addressing issues Husband raised in his reconsideration
motion.
4
In Pennsylvania, we enforce settlement agreements between husband and
wife in accordance with the same rules applicable to contract interpretation.
Osial v. Cook, 803 A.2d 209, 213–214 (Pa. Super. 2002). Thus, our review
is guided by the following standards:
Because contract interpretation is a question of law, this Court is
not bound by the trial court’s interpretation. Our standard of
review over questions of law is de novo and to the extent
necessary, the scope of our review is plenary as the appellate
court may review the entire record in making its decision.
However, we are bound by the trial court’s credibility
determinations.
When interpreting a marital settlement agreement, the trial
court is the sole determiner of facts and absent an abuse of
discretion, we will not usurp the trial court’s fact-finding
function. On appeal from an order interpreting a marital
settlement agreement, we must decide whether the trial court
committed an error of law or abused its discretion.
Kraisinger v. Kraisinger, 928 A.2d 333, 339 (Pa. Super. 2007) (citations
omitted). Furthermore:
this Court must accept findings of the trial court that are
supported by competent evidence of record, as our role does not
(Footnote Continued Next Page)
-3-
J-A20028-16
1. Does the [the trial c]ourt have authority to modify a marriage
settlement agreement that is incorporated but not merged into a
final divorce decree by applying standard contract principles
related to (a) mutual mistake of fact and/or (b) impossibility of
performance?
2. Was there a mutual mistake of fact by the parties regarding
the value of the business to be gained upon sale of the business,
and of the value of Wife’s equitable interest in the business?
3. Is it impossible for Husband to perform the terms and
conditions of the MSA as to division of his business interests,
given the evidence regarding the actual sales value of the
business, the downturn in his income and prospects, and his
other MSA financial obligations?
4. Is the [trial c]ourt nonetheless foreclosed from modifying a
marriage settlement agreement when the mistake particularly is
overvaluation of a closely held business?
5. Is the [trial c]ourt, in consideration of all the facts and
circumstances surrounding this MSA, bound by special equitable
principles to ensure a fair and just determination and settlement
of property rights in divorces, in addition to applying regular
contract principles?
Husband’s Brief at 4-5.5
After careful review of the parties’ briefs, the record on appeal, and
the relevant case law, we conclude that the trial court’s October 5, 2015
opinion and its Rule 1925(a) opinion, authored by the Honorable Michael J.
Lucas, cogently disposes of Husband’s issue on appeal. See Trial Court
Opinion, 10/5/15, at 10-16; Trial Court’s Rule 1925(a) Opinion, 12/28/15,
_______________________
(Footnote Continued)
include making independent factual determinations. In addition,
with regard to issues of credibility and weight of the evidence,
this Court must defer to the trial judge who presided over the
proceedings and thus viewed the witnesses first hand.
Mackay v. Mackay, 984 A.2d 529, 533 (Pa. Super. 2009) (citation
omitted), appeal denied, 995 A.2d 354 (Pa. 2010).
5
We observe that Husband does not challenge the trial court’s calculation of
the amount due to Wife under the October 5, 2015 order.
-4-
J-A20028-16
at 6-8. We, therefore, affirm the trial court’s October 5, 2015 order granting
in part Wife’s enforcement petition and denying Husband’s modification
petition. We direct that a copy of the trial court’s October 5, 2015 opinion
and December 28, 2015 Rule 1925(a) opinion be attached to any future
filings in this case.
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 11/15/2016
-5-
Circulated 10/28/2016 12:40 PM
/
IN THE COURT OF COMMON PLEAS OF WASHING TON COUNTY, PENNS~ VANll\! / ~
CIVIL DIVISION ~i3 ~
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BERNARD J. RUSSELL, o: rn
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PLAINTIFF, -r-, -<
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v. Common Pleas No.CV-200606151
Superior Court No.1778 WDA 2015
MARGARET A. RUSSELL,
DEFENDANT
OPINION PURSUANT TO PA.R.A.P.1925
And now, on this 281h day of December, 2015, the Court provides its
opinion pursuant to Pa.R.A.P. 1925(A).
Procedural History
On October 24, 2006, Bernard Russell filed a Complaint for Divorce in
Washington County, Pennsylvania. He raised counts of divorce and equitable
distribution.
On December 12, 2007, Margaret Russell filed a Marriage Settlement
Agreement ("MSA"). The thirty-five (35) page agreement was signed by both
parties and constituted a complete settlement of all rights and obligations pursuant
to the marriage. On December 13, both parties filed their affidavits of consent
pursuant to 23 Pa.C.S.A. § 3301(c). Mrs. Russell filed a Praecipe to Transmit the
Record. On December 20, 2015, the Honorable Janet Moschetta Bell signed the
·--.
parties' Divorce Decree and incorporated the parties' MSA for enforcement
purposes only.
On May 12, 2015, Mrs. Russell presented a Petition for Special
Relief/Enforcement to the undersigned in Motions Court. Mrs. Russell alleged that
Mr. Russel had failed to follow multiple provisions of the MSA: that he had ceased
paying alimony; that he had made neither the lump sum payment nor all monthly
payments in exchange for Mrs. Russell's share of Mr. Russell's business; and that
he had failed to maintain a life insurance policy. In total, the MSA required Mr.
Russell to make payments to Mrs. Russell totaling $575,000. He had paid a total of
approximately $100,000 at the time Mrs. Russell presented her petition. Mr.
Russell appeared through counsel who orally motioned for a modification of the
MSA at that time. The Court scheduled a hearing for June 1, 2015 for both
requests. Both parties appeared at that time represented by counsel and participated
in a contested hearing.
The Court filed its Order and Opinion on October 5, 2015. The Court
ordered Mr. Russell to fulfill his obligations under the MSA, and established a
schedule that would enable him to do so in a manner that did not require an
immediate $475,000 payment.
On October 27, 2015, Mr. Russell filed a Motion for Reconsideration. The
Motion for reconsideration raised twelve (12) grounds for reconsideration. The
2
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Court denied this motion. Mr. Russell filed his Notice of Appeal on November 4,
2015. The Court provides its opinion pursuant to Pa.R.A.P. 1925(A)(l). In doing
so, this Court incorporates by reference its Order and Opinion of October 5, 2015
because it contains a full discussion of the Court's rationale. (See Exhibit A).
Standard of Review
When interpreting a property settlement agreement, the trial court is the sole
determiner of facts, and absent an abuse of discretion, the [appellate courts] will
not usurp the trial court's fact-finding function. Stamerro v. Stamerro, 889 A.2d
1251 (Pa. Super. 2005), citing Chen v. Chen, 840 A.2d 355, 360 (Pa. Super. 2003).
On appeal from an order interpreting a marital settlement agreement, the
appellate courts must decide whether the trial court committed an error of law or
abused its discretion. Tuthill v. Tuthill, 7 63 A.2d 417, 419 (Pa. Super. 2000).
Martial settlement agreements are "private undertakings between two
parties, each having responded to the 'give and take' of negotiations and bargained
consideration." Stamerro, citing Brower v. Brower, 413Pa. Super. 48, 604 A.2d
726, 731 (1992). "A settlement agreement between [spouses] is governed by the
law of contracts unless the agreement provides otherwise." Stamerro, quoting
Chen v. Chen, 840 A.2d at 360. Because contract interpretation is a question of
law, the Appellate Courts' standard of review over questions of law is de novo, and
to the extent necessary, the scope of review is plenary. Stamerro, citing Wade v.
3
Huston, 877 A.2d 464 (Pa. Super. 2005), Kripp v. Kripp, 578 Pa. 82, 91 n. 5, 849
A.2d 1159, 1164 n. 5 (2004), and Chen, supra at 360.
Discussion
Paragraph 2 of Mr. Russell's Motion for Reconsideration set forth twelve
(12) findings of fact and conclusions of law he alleged this Court made and which
1
he considers "incorrect." First, he alleged that the Court's Order directing
enforcement of the MSA modified the parties' agreement. Second, he contended
the "payback schedule" is "impossible" and requires him to pay in some years an
amount of funds that exceed his annual income. Third, he charged that this Court
"erroneously inferred" he was able to pay$ 285,000 at the time of the sale of his
business. Fourth, Mr. Russell alleged that this Court "ignored" that he had to pay
over $50,000 in Federal Income Tax from the "disposable proceeds from the sale
of his business." Fifth, Mr. Russell indicated that this Court committed legal enor
by concluding there was no evidence of a mutual mistake of fact when the parties
executed their MSA. Sixth, Mr. Russell asserted that this Court erroneously found
that the MSA capped Mrs. Russell's interest in her former husband's business.
Seventh, Mr. Russell stated this Court committed an error of law by requiring Mr.
1
As Mr. Russell's Motion of Reconsideration specifically set forth the "errors" he believed this
Court committed, this Court did not direct him to file a concise statement of errors complained of
on appeal.
4
Russell to prove that Mrs. Russell knew that Mr. Russell "was making a mistake"
when the parties executed the MSA. Eighth, Mr. Russell asserted that this Court
"ignored the glaring errors in the MSA" as committed by the parties and their
counsel who negotiated the MSA. Ninth, Mr. Russell charged that this Court
"disregarded/ignored" his recent income which shows it is impossible for him to
"pay all the money that the MSA requires." Tenth, Mr. Russell asserted that this
Court concluded, in error, that the parties did not intend to divide the estate in
equal shares. Eleventh, Mr. Russell contended that this Court "ignored the fact
that both parties' object in the MSA was to liquidate the business and reap big
rewards, which purpose was so severely frustrated by market forces that neither
party could perform/benefit as anticipated." Twelfth, Mr. Russell advanced that
this Cami's citation to Miller v. Ginsburg, 874 A.2d 93, 99 (Pa. Super. 2008) was
an irrelevant legal citation to any matter at issue in this case.
In support of these twelve claims of error, Mr. Russell provided not one (1)
citation to legal authority to include statutory provisions or case precedent that
would aid this Court in making a determination in his favor. Importantly, Mr.
Russell did not specify a single provision in the MSA that permitted the Court to
modify his obligations due to a change in his economic circumstances.
5
As a starting point in determining these issues, this Court strictly applied the
principle that the terms of a marital settlement agreement cannot be modified by a
court in the absence of a specific provision in the agreement providing for judicial
modification. Brower, supra at 730; 23 Pa.C.S.A. § 3105(c). Stamerro v.
Stamerro, 2005 PA Super 424, ,I 9, 889 A.2d 1251, 1258 (Pa. Super. 2005).
Exhibit I offered at the parties' hearing was a thirty-two page Marriage
Settlement Agreement executed by the parties and their legal counsel. As "Exhibit
A" to the MSA the parties attached a "PROMISSORY NOTE" in which Mr.
Russell agreed to pay Mrs. Russell $525,000.00 by monthly payments of $
2,000.00 per month commencing November 1, 2007 through October 1, 2017 and
by making a "balloon payment" of$ 285,000.00 to Mrs. Russell on November 1,
2017. Paragraph 20 of the parties, MSA provided that no modification or waiver
of the parties' agreement is valid unless in "writing and signed by both parties."
No written modification executed by the parties was offered into evidence. The
parties' MSA contained no provisions that permitted this Comito modify Mr.
Russell's obligations under paragraphs 4.D.2, 10 Band B.l of the agreement.
Paragraph 4.D.2 sub-paragraphs (a) through (e) recited Mr. Russell's duty to pay$
525,000.00 to Mrs. Russell; that such debt would be secured by a promissory note;
and reiterated the specific terms of the promissory note that were already
described. Paragraph 4.D.2 sub-paragraph (t) specifically provided, "Whether or
6
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not any or all of these entities (Mr. Russell's businesses) are sold, the payment of
the Two Hundred Eighty-Five Thousand Dollars ($285,000) lump sum payment
shall be paid by Husband to Wife on or before November 1, 2017."
The lack of an applicable modification clause in the MSA and the express
provisions of Paragraphs 4.D.2, 10 B and B. l and the Promissory Note foreclose
consideration of eight (8) of Mr. Russell's claimed errors. This Court is unable to
consider the parties' current economic circumstances when determining whether to
enforce or modify their MSA. The second, third, fourth, sixth, eighth, ninth, tenth
and eleventh allegations of error described above all were asserted to avoid Mr.
Russell's clear and unambiguous duties to pay Mrs. Russell pursuant to Paragraphs
4.D.2., 10 Band B.l and the Promissory Note.
At argument for reconsideration, Counsel for Mr. Russell persisted in
making his claim that the Court should modify the parties' MSA as a matter of
equity. However, the primary asset to be distributed in the parties' MSA was Mr.
Russell's closely held business. Mr. Russell both at hearing and in his motion for
reconsideration argued that the MSA should be modified because he overvalued
his closely held business. In response, this Court informed Mr. Russell's Counsel
of the Superior Court's decision in Colonna v. Colonna, 2002 PA Super 376, 791
A.2d 353 (Pa. Super. 2001).
7
Specifically, this Court cited the portion of the opinion that stated:
Not surprisingly, we find no Pennsylvania statutory or case law declaring
that overvaluing a closely-held business may render an antenuptial
agreement unenforceable. The valuation of a closely-held corporation is not
an exact science; reasonable minds often disagree on the worth of such a
business, and the agreement evidences just that. ..
Colonna, supra. at 355-56.
Mr. Russell also faulted this Court for not accepting his claim that the
parties' MSA was the product of a mutual mistake of fact regarding the true value
of Mr. Russell's business interests. This Court's discussion of Mr. Russell's claim
of mutual mistake is set forth in detail at pages ten (10) through thirteen (13) of
this Court's original Order and Opinion. For these reasons, Mr. Russell's
assignment of errors fifth, seventh and twelfth as set forth above are without merit.
Finally, Mr. Russell alleged this Court's Order enforcing the MSA modified
the MSA. This Court's Order of enforcement did not direct that Mr. Russell
immediately make all payments due pursuant to Paragraphs 4.D.2.,10 Band B.l.
Instead, an extended schedule of payment was set forth to provide Mr. Russell
additional time to meet his obligations. A complete discussion of this Court's
calculation of the amounts unpaid to Mrs. Russell is set forth on pages four (4)
through eight (8) of this Court's Order and Opinion of October 5, 2015.
8
For these reasons, this Court has found that Mr. Russell was not entitled to
relief when he requested reconsideration of this Court's October 5, 2015 Order and
Opinion.
BY THE COURT
9
j
IN THE COURT OF COMMON PLEAS OF WASHINGTON COUNTY,
PENNSYLVANIA
CIVIL DIVISION
BERNARD RUSSELL,
PLAINTIFF,
v. Case No. 2006-6151
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MARGARET RUSSELL,
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ORDER
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And now, on this 5111 day of October, 2015, after a hearing, oral argument
and review of the parties' written briefs, it is ORDERED, ADJUDGED, and
DECREED that the Plaintiff's motion is DENIED and the Defendant's motion is
GRANTED in part.
On or before October 20, 2015, Mr. Russell shall make all outstanding
alimony payments of$ 1,000.00 per month from March of2015 to date.
Thereafter Mr. Russell shall continue making all monthly alimony payments as set
forth in paragraph 1 O(B )(I) of the parties' marriage settlement agreement ("MSA")
and shall continue making such payments through December 31, 2018.
On November l , 2015, and on the first day of each month thereafter, Mr.
Russell shall make monthly payments of$ 2,000.00 in conformity with paragraph
4(D)(2)(b) of the parties' MSA. On or before April 30, 2016 Mr. Russell shall pay
...........
the sum of $18,000.00 towards the amounts due and owing and shall make five (5)
additional $18,000.00 payments each on August 30, 2016, December 30, 2016,
April 30, 2017 and August 30, 2017. $7,900.00 shall be added to the principal
amount of this obligation and the term of re-payment for this obligation shall be
extended to February 1, 2018 with Mr. Russell being obligated to pay$ 2,000.00
on November 1, 2017, December 1, 2017, January 1, 2017 and $1,900.00 on
February 1, 2018.
On or before November 2, 2015, Mr. Russell shall provide Mrs. Russell with
copies of all life insurance policies presently in force concerning Mr. Russell. Mrs.
Russell shall be declared by Mr. Russell as the beneficiary on all such policies if
the total death benefits payable are equal to or less than $ 1, 7 50,000. On or before
December 31, 2015, Mr. Russell shall apply for and obtain such additional life
insurance naming Mrs. Russell the beneficiary as is necessary to make certain that
upon Mr. Russell's death Mrs. Russell receives$ 1,750,000.
On or before, December 1, 2015 Mr. Russell shall pay Mrs. Russell's
counsel fees in the amount of$ 1775.00 for fees she incurred to enforce the MSA.
Such payment shall be remitted directly to Blackwell and Associates.
On or before November 1, 2017 Mr. Russell shall remit the sum of
$285,000.00 to Mrs. Russell.
2
. -= .
Failure to comply with the provisions of this Order shall subject Mr. Russell
to contempt sanctions by this Court to include compensatory and coercive relief.
Mr. Russell shall have no obligation to pay any monies due to a "loyalty
bonus" from "Siemans" as this Court has found the evidence presented insufficient
to demonstrate that such bonus was paid.
BY THE COURT
~~k-=----.L--_J.
fl
MICHAE LUCAS
Opinion
Before the court is Defendant Margaret Russel's Petition for Special
Relief/Enforcement and Plaintiff Bernard Russell's counter-petition to modify the
parties' marriage settlement agreement.
Procedural History
Bernard Russell filed a Complaint in Divorce on August 24, 2006. He raised
counts of no-grounds divorce and equitable distribution. On December 12, 2007,
counsel for Margaret Russell filed a marriage settlement agreement ("MSA") that
settled the parties' claims. Mrs. Russell filed her affidavit of consent pursuant to 23
Pa.C.S.A. § 330l(c) on December 13, 2007. Mr. Russell filed his affidavit of
3
consent and the Praecipe to Transmit Record on the same day. The Honorable
Janet Moschetta Bell signed a divorce decree on December 20, 2007. She adopted
the parties' MSA in her Order.
On May 12, 2015, Mrs. Russell presented a Petition for Special
Relief/Enforcement. She alleged that Mr. Russell had failed to comply with the
terms of the MSA. Specifically, she alleged that he had failed to pay her a portion
of the vaJuation of his business, failed to make monthly alimony and asset
distribution payments, and failed to make her a beneficiary of his life insurance as
required by the parties' MSA. Mr. Russell responded with his own petition to
modify, claiming the MSA was unenforceable on multiple grounds: that he agreed
to its contents upon mistake, misunderstanding, that it was against public policy,
that its purpose was frustrated, and that he entered into it due to the ineffective
assistance of counsel. A hearing was conducted on June 1, 2015. Both parties
testified.
Without objection the parties stipulated to the admission of their divorce
decree and MSA. (See Exhibit 1) Pursuant to paragraph 4 of the MSA, Mr.
Russell retained his business interests "as his separate property ... " However,
paragraph 4 obligated Mr. Russell to pay Mrs. Russell $ 575,000.00 for her marital
interest in these business interests. Such amount according to Paragraph 4 required
Mr. Russell to:
4
a. Pay Mrs. Russell $50,000.00 upon execution of the Agreement
(Par.4(D.2.a);
b. Commencing November 1, 2007 and ending October 1, 2017 pay
$2,000.00 per month for one hundred and twenty consecutive months
1
(Par.4.D.2.b ); and
c. Pay a lump sum payment of $285,000.00 "when Husband sells
Audilogics, Inc ... " and "whether or not any or all ofthese(Mr. Russell's)
entities are sold, the payment of $285,000 shall be paid on or before
November 1, 2017(Par.4.D.e and f.).
Paragraph 4 of the MSA required Mr. Russell to pay one -half of an anticipated
"loyalty bonus" of$ 250,000.00 from Siemans. Mr. Russell was mandated to
make such payment within thirty days of receipt of the bonus. (See Exhibit l,
par.4.D.3). Paragraph 10 of the MSA requires Mr. Russell to pay alimony of$
2,000.00 per month from January 1, 2011 through December 31, 2013 and$
1,000.00 per month from January 1, 2014 through December 31, 2018. (See
Exhibit 1, par. lOB and B.1) Paragraph 14 provides that Mr. Russell "at no
expense to Wife" shall "maintain" two separate life insurance policies payable
upon death in the amounts of $750,000.00 and $1,000,000.00. The MSA mandates
that Mrs. Russell is the "sole" and "irrevocable" beneficiary of those policies.
1
If such monthly payments were received after the 1 o" day of any month, a 5%
late fee is to be assessed and added to the principal until paid.
5
..,__.i....;..,
The credible evidence presented established that Mrs. Russell has received
two (2) checks of$ 50,000 each from Mr. Russell. Such checks were paid to Mrs.
Russell for the purpose of partial satisfaction of Mr. Russell's obligations under
paragraph 4 of the parties MSA. Mr. Russell never made monthly payments of$
2,000 per month as required by paragraph 4 (D)(2)(b) of the MSA. Mr. Russell
sold his business Audiologies, Inc. on January 13, 2012 to Heather M. Gasparovic
and he presently is paid on a commission basis by her for his work at his former
business. In 2012, Mr. Russell received$ 368,816.25 in cash when he sold his
business and also was relieved of the obligation to pay a personally guaranteed
debt in the amount of$ 279,933.75. (See Exhibit A) Mr. Russell sold his business
in 2012 and did not remit to Mrs. Russell the sum of$ 285,000. The confession of
Judgment that Mr. Russell executed indicated this payment was due on or before
November 1, 2017. (See Exhibitl attached "exhibit a")
Mr. Russell has not been paying the monthly $2,000.00 amount due Mrs.
Russell pursuant to paragraph 4.D.2.b. Mr. Russell offered no sufficient or
credible excuse for this failure. He did pay the sum of $50,000.00 to Mrs. Russell
after the sale of Audiologies, Inc. If such amount is credited towards the monthly
obligation Mr. Russell has not made fifty-four (54) payments and never timely
made a single monthly payment. At the time of June 1, 2015 hearing seventy-nine
6
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monthly payments should have been made, which amounts to $158,000. Mr.
Russell incurred a five percent (5%) late fee for every payment. Such fees totaled
$7,900.00 as of June 1, 2015.
As for Mr. Russell's receipt of a "loyalty bonus" from Siemans, Mrs. Russell
in her testimony conceded that she "did not know" if Mr. Russell had received
such bonus. Mr. Russell credibly testified that he did not receive such bonus. His
tax return for 2008 showed total income of $293,587 and in subsequent years
amounts less than $150,000. However, the returns provided were incomplete and
contained claimed adjustments to income that did not correspond to the MSA.
Mr. Russell has not maintained life insurance in two separate amounts of$
1,000,000 and $750,000 as required by paragraph 14 of the parties' MSA. He
indicated he has one policy in the amount of$ 250,000.
The parties disputed Mr. Russell's payment of alimony in 2014. Mrs.
Russell credibly testified that she was overpaid in the months of January and
February in aggregate amount of $2,000.00. She indicated she did not receive
alimony in November and December of 2014. The evidence demonstrated that as
of the hearing on June 1, 2015 Mr. Russell had paid $2, 000. 00 towards total
alimony due of$ 3, 000. 00 for the months of March, April and May of 2015.
The parties disputed Mrs. Russell's entitlement to alimony. Mr. Russell
claimed that Mrs. Russell is living with another man. Such claim was not proven
7
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credibly or persuasively. Mrs. Russell credibly testified that she lives with her
mother.2
Mrs. Russell incurred counsel fees of$ 775.00 prior to the hearing on June
1, 2015. Her counsel's attendance and participation in the hearing and his brief
following the hearing were necessary to enforce the clear and unambiguous terms
of the parties MSA. Mrs. Russell's fees of$ 775.00 prior to the hearing and$
1,000 in representation at and following the hearing are fair, reasonable and
necessary charges. Counsel has achieved a favorable determination. Such charges
are commensurate with his experience, reputation in the Washington County legal
community and the customary fees charged within the local legal community. The
amounts of fees awarded are appropriate in light of the complexity of the legal
issues presented in this matter.'
2
Additionally, the MSA provided that such alimony payments "shall not be
reduced" because of "Wife's .... cohabitation." (See Exhibit A par. 10 D).
3
Pennsylvania, like a majority of states, follows the rule that parties may
contract to provide for the breaching party to pay the attorney fees of the prevailing
party in a breach of contract case, but that the trial court may consider whether the
fees claimed to have been incurred are reasonable, and to reduce the fees claimed if
appropriate. McMullen v. Kutz, 603 Pa. 602, 613-15, 985 A.2d 769, 776-77
(2009). In determining whether attorney's fees are reasonable, a trial court must
consider numerous factors, including the following:
the amount of work performed; the character of the services rendered;
the difficulty of the problems involved; the importance of the
litigation; ... the degree of responsibility incurred; ... the professional
skill and standing of the attorney in his profession; the result he was
able to obtain; and, very importantly, the amount of money or the
value of property in question.
8
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Standard of Review
Post-nuptial agreements are to be reviewed under the same principles as pre-
nuptial agreements Stoner v. Stoner, 572 Pa. 665, 819 A.2d 529 (2003). Such
agreements are contracts, and are to be evaluated under the same criteria as other
contracts: absent fraud, misrepresentation, or duress, the parties are to be held to
the terms of their agreements. Simeone v. Simeone, 525 Pa. 392, 581 A.2d 162(1990).
The fundamental rule in contract interpretation is to ascertain the intent of
the contracting parties. In cases of a written contract, the intent of the parties is the
writing itself. Lesko v. Frankford Hospital-Bucks County, 609 Pa. 115, 15 A.3d
337 (2011), citing Insurance Adjustment Bureau, Inc. v. Allstate Ins. Co., 588 Pa.
470, 905 A.2d 462 (2006).
When the language of a contract is clear and unambiguous, the intention of
the parties is to be determined from the express language of the agreement and its
express terms will be given effect. Steuart v. McChesney, 498 Pa. 45, 444 A.2d
659, 661 (1982).
Finally, [the Cami] must assume that the parties knew that the law gives to
the words used herein a specific meaning and that the words, therefore, must be
Wigwam Lake Club, Inc. v. Quintero, 426 C.D. 2011, 2012 WL 8677729(Pa.Cmwlth. June 11, 2012), citing In re LaRocca's Estate, 431 Pa. 542,
548-549, 246 A.2d 337, 340.
9
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interpreted in their legal sense. [The Court] must also assume that the parties wrote
this agreement in conformity to these well-established rules of contract
construction. Ruzzi v. Butler Petroleum Co., 527 Pa. 1, 588 A.2d 1 (1991).
Discussion
Defendant, Margaret Russell, asserts in her petition for special relief and
enforcement that Plaintiff, Bernard Russell, violated the terms and conditions of
the parties Marriage Settlement Agreement (MSA). Specifically, she contends that
he has failed to make $ 575,000 in payments as required by paragraph 4D of the
MSA. She further asserts that Mr. Russell has failed and refused to pay agreed
upon alimony at the rate of$ 1,000.00 per month since March 1, 2015. Finally,
she has requested confirmation that Mr. Russell has maintained life insurance
policies in separate amounts of one million dollars and seven hundred and fifty
thousand dollars respectively. Pursuant to the MSA, Mrs. Russell has requested
that the Court award attorneys' fees she incurred in pursuing enforcement. Mr.
Russell urges the Court to reform the parties' agreement on the basis of mutual
mistake and frustration of purpose.
Mistake
The misconception which avoids a contract is necessarily a mutual one, and
a fact which entered into the contemplation of both parties as a condition of their
assent". Ehrenzeller v. Chubb, 171 Pa.Super. 460, 90 A.2d 286, 287 (1952). And,
10
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in Vrabel v. Scholler, 369 Pa. 235, 85 A.2d 858, 860 (1952), the general rule was
again stated thusly: "A contract [made under] a mutual mistake as to an essential
fact which formed the inducement to it, may be rescinded on discovery of the
mistake, if the parties [ can be] placed in their former position with reference to the
subject-matter." (Citation omitted). Lastly, to obtain reformation of a contract
because of mutual mistake, the moving party is required to show the existence of
the mutual mistake by evidence that is clear, precise and convincing. Eugen v. New
York Life Insurance Co., 408 Pa. 472, 184 A.2d 499, 500 (1962) and Gocek v.
Gocek, 417 Pa.Super. 406, 409-10, 612 A.2d 1004, 1006 (1992).
The Court finds no credible or persuasive evidence that the parties' were
mutually mistaken. The evidence revealed no mutual mistake of the parties. Mr.
Russell contends that he, with the benefit of counsel, entered into a comprehensive
MSA but was mistaken as to the value of his business and its future economic
success. Mr. Russell asserts such valuation was mistaken. Mr. Russell claims his
prior counsel was ineffective and the value was not based upon a formal appraisal.
No testimony established that Mrs. Russell entered into the MSA with a mistaken
belief as to the value of Mr. Russell's hearing aid business or an unrealistic
expectation of its future economic success.4 The evidence demonstrated that Mr.
Pennsylvania also recognizes that a party to a contract in limited circumstances
4
may gain relief due to a unilateral mistake. If a party to a contract knows or has
11
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Russell and Mrs. Russell agreed in 2007 that Mr. Russell's business had a value of
$1, 150,000. Mr. Russell advances that he based such valuation on his belief that
his business would grow and expand. The evidence indicated that Mrs. Russell
was willing to accept delayed payments of certain specific sums based upon an
agreed upon value of $1, 15 0,000 for Mr. Russell.' s business.
The parties' intention in the MSA could not be clearer. The value of
Audiologies for the purposes of equitable distribution was capped. Mrs. Russell
could claim no greater amount due her if Audiologies suddenly blossomed into a
twenty (20) location franchise that Mr. Russell testified he charted as the course for
his business.
Mr. Russell's claims would have some persuasive effect if the parties were
presently litigating equitable distribution of their marital estate. However, the
reason to know of a unilateral mistake by the other party and the mistake, as well
as the actual intent of the parties, is clearly shown, relief will be granted to the
same extent as if a mutual mistake existed. Lapio v. Robbins, 729 A.2d 1229(Pa.Super.1999). Lanci v. Metropolitan Insurance Co., 388 Pa.Super. 1, 564 A.2d
972 (1989). In such a situation, Id.; Restatement (Second) of Contracts§ 153. The
evidence in this case did not clearly establish that Mrs. Russell knew or had reason
to know that Mr. Russell was unilaterally mistaken as to the value of his business
when the parties executed the MSA in 2007. Mr. Russell's evidence and
argument contended that events, being the 2008 financial crisis, which occurred
after the MSA was executed demonstrated that the parties were mistaken as to the
future economic prospects of his business. If a mistaken and contractually unstated
belief concerning one's future economic prospects were proper grounds to rescind
one's contractual obligations, commercial relationships and domestic agreements
would have no more permanence than a child's sand castle near the shore of the
Atlantic Ocean while Hurricane Joaquin approaches.
12
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matter to be decided by this Court is not equitable distribution of a marital estate.
The MSA Mr. Russell entered into eight (8) years ago included a mutual waiver
and release of claims including the right to "apply to any court for modification of
this Agreement ... whether pursuant to the Divorce Code or any other present or
future statute or authority." (See Exhibit 1, p.25-26)
Parties are free to enter into agreements that they may later regret. Absent
fraud or duress, however, the agreement is enforceable. See Adams v. Adams, 414
Pa.Super. 634, 607 A.2d 1116 (1992) and Middleton v. Middleton, 2002 PA Super
371, ,r 20, 812 A.2d 1241, 1248 (Pa. Super. 2002).
The credible and persuasive evidence presented in this case demonstrated no
fraud, duress, mutual or unilateral mistake of the parties. The parties entered into a
counseled arm's length transaction that was reduced to a comprehensive written
agreement. Mr. Russell's gamble that such agreement would ultimately be
beneficial to him due to the expected growth of his business proved unwise. Mrs.
Russell was not contractually obligated to insure the declining economic fortunes
of Mr. Russell or his business, Audiologies.
Frustration of Purpose
Mr. Russell argues that the contract should be modified on the basis that its
purpose has been frustrated.
13
The Commonwealth recognizes that the Doctrine of Frustration of Purpose
exists as a defense to the performance of a contract. When people enter into a
contract which is dependent for the possibility of its performance on the continual
availability of a specific thing, and that availability comes to an end by reason of
circumstances beyond the control of the parties, the contract is prima facie
regarded as dissolved." Ragnar Benson, Inc. v. Hempfield Tp. Mun. Authority, 916
A.2d 1183 (Pa. Super. 2007), citing Hart v. Arnold, 8 84 A.2d 3 16, 3 3 5
(Pa.Super.2005).
First, the purpose that is frustrated must have been a principal purpose
of that party in making the contract. It is not enough that he had in mind
some specific object without which he would not have made the contract.
The object must be so completely the basis of the contract that, as both
parties understand, without it the transaction would make little sense.
Second, the frustration must be substantial. It is not enough that the
transaction has become less profitable for the affected party or even that he
will sustain a loss. The frustration must be so severe that it is not fairly to be
regarded as within the risks that he assumed under the contract. Third, the
non-occurrence of the frustrating event must have been a basic assumption
on which the contract was made. This involves essentially the same sorts of
determinations that are involved under the general rule on impracticability.
14
Step Plan Services, Inc. v. Koresko, 12 A.3d 401 (Pa. Super. 2010), quoting
Restatement (Second) of Contracts, § 265
However, one party's wholly subjective expectations are insufficient to
avoid enforcing an otherwise clear agreement based on the frustration of purpose
doctrine. Step Plan Services, Inc. v. Koresko, 12 A.3d at 413, citing American
Bank and Trust Co. of Pennsylvania v. Lied, 487 Pa. 333, 339, 409 A.2d 377, 380
(1979). Settlement agreements are subject to enforcement notwithstanding one
party's failure to anticipate related complications prior to performance. Miller v.
Ginsberg, 874 A.2d 93, 99 (Pa. Super. 2005).
Mr. Russe11's testimony established that events of the past 8 years have
made his decision to agree to the MSA less prudent today than it was in 2007. He
explained his subjective intent was that Mrs. Russel should receive half of the
proceeds from the sale of his business. The plain language of the MSA does not
support this claim. His payment of merely $50,000.00 to Mrs. Russell following
the sale of the business is not consistent with an intent of "1/2 and 1/2." To the
contrary, the evidence clearly demonstrates a pattern of dilatory behavior by Mr.
Russell with regard to contractual obligations to Mrs. Russell. Mr. Russell's
evidence did not establish circumstances so severe as notfairly to be regarded as
within the risks that he assumed under the MSA. The MSA did not condition Mr.
Russell's future obligations on the financial well-being of Audiologies. No escape
15
clause is set forth in the agreement. Mr. Russell owned and operated Audiologies.
The evidence did not establish that Mrs. Russell had superior knowledge of
Audiologies value in 2007 and its future business success. Every financial
agreement, whether commercial or domestic, carries some risk for the parties. Mr.
Russell's present appreciation of that risk is not grounds to justify his breach of the
parties' MSA.
Conclusion
For these reasons, the Court grants the Defendant's Motion for Special
Relief and Enforcement. Furthermore, because the Defendant was required to
litigate in order to enforce the MSA, the Court shall award appropriate counsel
fees.5
s See Paragraph 22 of the MSA.
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