Family Law Case Review: Divorce with Curious Provision for Amendments

Case: Steven M. Kelly v. Rebecca J. Kelly
by Mike Kohlhaas, Bingham Greenebaum Doll

HELD: The parties’ amendments to their divorce decree and final settlement agreement, which amendments were not submitted to the Court for approval, were nevertheless enforceable.

HELD: There is no statutory requirement that all property settlement agreement amendments must be approved by the Court to be enforceable. “[A] property settlement agreement may be amended without approval of the dissolution court so long as the terms of the agreement do not require such approval.”

FACTS AND PROCEDURAL HISTORY:
Husband and Wife divorced in 1995. Their original property settlement agreement required Husband to pay Wife a total of $5,000,000 over a period of years. Importantly, the agreement also provided that it could be amended only by a “writing, signed by each of the parties and approved by a court of competent jurisdiction.” However, the agreement also contained a curious other provision that “the parties agree to a flexible payment schedule with only written unilateral agreement.”

In 1997, the parties entered into a written amendment that provided for a new schedule of payments, and that the total due would be $5,600,000.

In 1999, another amendment followed, pursuant to which Husband agreed to advance Wife $1,200,000, which would be credited against the money due from Husband to Wife. Neither the 1997 nor 1999 amendments were submitted to the Court for approval.

A 2003 amendment was entered into, pursuant to which Wife was able to borrow funds from Husband, and either repay them or have them credited against Husband’s property settlement obligation.

At the end of 2007, Husband stopped making regular property settlement payments to Wife, taking the position that she had borrowed advances totaling of $1,414,200, which was offset by the balance outstanding on Husband’s payments due to Wife.

In 2008, the parties entered into an agreement that recited that Wife had “exhausted her ability to borrow” against the property settlement, “actually exceeding it by $22,634.93,” but that Husband agreed to loan Wife $30,000 to be secured by other collateral.

In 2013, Wife filed a contempt against Husband, arguing that he should be required to make all payments due under the original 1997 Decree, and without regard to the subsequent amendments.

After a hearing, the trial court concluded that the amendments did not modify the original Decree since they were not approved by the Court, though they were separate contracts that Husband could proceed upon for civil collection. Husband appealed.

The Court of Appeals interpreted the agreement as permitting binding modifications to the payment schedule without approval of the Court. While the use of “with only written unilateral agreement” may have been linguistically clumsy, its interpretation was that “unilateral agreement” meant an agreement of the parties without the trial court approving it. Thus, the matter was reversed and remanded with instructions to the trial court to consider the amendments made to the original property settlement agreement.

To view the text of this opinion in its entirety, click here: Steven M. Kelly v. Rebecca J. Kelly

 

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James A. Reed and Michael R. Kohlhaas of Bingham Greenebaum Doll represent clients in a wide spectrum of relationship transition and wealth planning matters, including premarital agreements, estate planning, cohabitation, separation, divorce (especially involving high net worth individuals and/or complex asset issues), custody, parenting arrangements, adoption, and domestic partnerships. Bingham Greenebaum Doll, a multidisciplinary law firm serving regional, national, and international clients, is the fourth-largest law firm in Indiana. The firm’s main practices include corporate, property, litigation, labor, government law, and personal services law. Visit the firm’s website at www.bgdlegal.com.

ICLEF • Indiana Continuing Legal Education Forum, Indianapolis, IN

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