Brooks v. Minn, 15592

• Decision Date: 25 September 1992
• Docket Number: No. 15592,15592
• Citation: 73 Haw. 566,836 P.2d 1081
• Parties: Pauline Anne BROOKS, Plaintiff-Appellee, v. Philip Nathan MINN, Defendant-Appellant.
• Court: Hawaii Supreme Court

Page 1081

836 P.2d 1081

73 Haw. 566

Pauline Anne BROOKS, Plaintiff-Appellee, v. Philip Nathan MINN, Defendant-Appellant.

No. 15592.

Supreme Court of Hawai'i.

Sept. 25, 1992.

Syllabus by the Court

1. Where a promissory note is incorporated into a property settlement agreement (PSA), which is itself merged into a final divorce decree (i.e., a judgment), and the PSA expressly provides that unless the family court approves it the PSA will have no further force or effect, the promissory note cannot be legally enforced as a separate contract, but only as part of the judgment.

2. Where, as part of a final divorce decree, the family court orders installment (i.e., deferred) property settlement payments, which are neither child-support payments nor alimony, and the payments are not subject to post-decree modification by the family court or an appellate court, collection of any deferred payment arrearage can be enforced in both family and civil court.

3. Where a promissory note is only enforceable as part of a final divorce decree, the applicable statute of limitations is Hawaii Revised Statutes (HRS) § 657-5 (1985), which allows a ten-year period for the enforcement of domestic judgments and decrees.

4. Where the trial court renders a decision based on incorrect reasoning, the appellate court must affirm the judgment if it is correct on any other legal ground.

Andrew V. Beaman (Trudy M. Burns, with him on the brief, Chun, Kerr, Dodd & Kaneshige), Honolulu, for plaintiff-appellee Pauline A. Brooks.

Lloyd Y. Asato, Honolulu, for defendant-appellant Philip Nathan Minn.

WAKATSUKI, Acting C.J. ^* , MOON and LEVINSON, JJ., BURNS, Intermediate Court of Appeals Chief Judge, in place of KLEIN, J., recused and WATANABE, Intermediate Court of Appeals Associate Judge, in place of LUM, C.J., recused.

LEVINSON, Justice.

The defendant-appellant Philip Nathan Minn (Minn) appeals the August 20, 1991 Findings of Fact, Conclusions of Law, and Judgment entered in favor of the plaintiff-appellee Pauline Anne Brooks (Brooks) on her breach of contract claim against Minn for failure to make divorce property settlement payments, pursuant to a promissory note (the Note). While we disagree with the circuit court's grounds for ruling in favor of Brooks, we conclude for other reasons that the circuit court correctly entered judgment in her favor. Therefore, we affirm in part, vacate in part, and remand the matter to the circuit court for further proceedings consistent with this opinion.

I.

Minn and Brooks were married on December 27, 1970. There were no children by the marriage. Subsequently, on December 22, 1980, they executed a property settlement agreement (PSA) entitled "Agreement Incident to and in Contemplation of Divorce." The PSA recited that the "wish and desire" of the parties was "to effect a final and complete settlement of [the parties'] respective property rights, interest, claims and obligations arising out of their marital relationship" and that the PSA would only have "force or effect" if approved by "such court ... of competent jurisdiction as shall hereafter hear any petition seeking the dissolution of [their] marriage...." Regarding the division of marital property, the PSA provided, inter alia, that "[Minn], shall pay to [Brooks] in settlement of [Brooks'] marital claims the sum of Sixty Thousand and No/100 Dollars ($60,000.00) in accordance with the terms of a promissory note [the Note] attached hereto as Exhibit A." ¹

The PSA was approved by the family court and incorporated into a final divorce decree entered on February 9, 1981. ² Minn's obligation to make installment payments to Brooks, pursuant to the terms of the Note, commenced upon entry of the decree. Minn failed to make any installment payments to Brooks, and on September 28, 1989, Brooks filed a complaint in circuit court against Minn, seeking collection of the amounts due her under the PSA. ³ On June 12, 1990, Brooks moved for summary judgment on her complaint, and by order entered October 5, 1990, the circuit court partially denied the motion. ⁴ On November 27, 1990, Brooks filed an amended complaint in which she deleted Count I of the original complaint and added a claim for breach of contract pursuant to the Note executed by Minn on January 1, 1981. In substance, the new count set forth a claim for relief in contract based on the Note independent of the PSA.

On August 20, 1991, following a bench trial conducted on May 17, 1991, the trial court, applying the six-year limitations period contained in Hawaii Revised Statutes (HRS) § 657-1(1) (1985), issued findings of fact (FOFs) and conclusions of law (COLs) upon which it based its judgment that Brooks "is entitled to recover on the unpaid principal balance [of the Note] as of October 1, 1983 ... to the date paid, together with interest at the rate set forth in the promissory note of twelve percent (12%) per year," plus costs and attorney's fees. Minn timely appealed the judgment.

II.

On appeal, Minn challenges COL No. 1, which states:

[T]he Court concludes it has jurisdiction over the parties and the subject matter of this action. This is a civil action for default on the payment of amounts due under the terms of a promissory note and is within the jurisdiction of the Court pursuant to Haw.Rev.Stat. § 603-21.5. The Family Court decree and agreement did not require defendant to execute the promissory note. The decree and agreement required that defendant pay the plaintiff $60,000 in accordance with the terms of the promissory note. By executing the promissory note separate and apart from the agreement, defendant entered into a contract with plaintiff, which contract this court has jurisdiction to enforce.

Minn contends that COL No. 1 is defective because the family court's incorporation of the PSA into the divorce decree merged the PSA into the divorce decree and, therefore, the Note, which was itself incorporated into the PSA by reference, is not enforceable as a contract, but only as part of the divorce decree. Minn further argues that: (1) the family court, pursuant to HRS §§ 571-14 (1985 & Supp.1991) and 580-1 (1985), has exclusive jurisdiction over all divorce proceedings; ⁵ (2) HRS § 571-8.5(a)(3) and (6) (1985) provide that the family court can "[m]ake and issue all orders and writs necessary or appropriate in aid of their original jurisdiction" and can "[e]nforce decrees and judgments ...;" and (3) therefore the family court had exclusive jurisdiction to enforce collection on the Note, and the circuit court lacked subject matter jurisdiction to do so.

We agree with Minn that the incorporation of the PSA into the divorce decree merged the PSA into the final divorce decree; therefore, the Note no longer has any independent existence and is not enforceable as a contract, but only as an element of the family court's final judgment. In Jendrusch v. Jendrusch, 1 Haw.App. 605, 609, 623 P.2d 893, 896 (1981), the Intermediate Court of Appeals (ICA) stated on analogous facts:

In our view, the first issue we must decide is whether the PSA merged into the decree. We must decide whether we are dealing with a contract or a judgment. On this issue we apply the rule stated in 24 AM JUR 2d Divorce and Separation § 908 (1966).

Where the language of the agreement shows an intent to make it part of the decree, and the agreement is actually incorporated into the decree, the provisions of the agreement are superseded by and merged into the decree.... [Footnote omitted.]

* * * * * *

[T]he PSA lost its independent existence and merged into the decree. Thus we are not concerned with interpreting a contract; we are concerned with interpreting a judgment.

See also Wellman v. Wellman, 7 Haw.App. 266, 270-71, 752 P.2d 1079, 1082 (1988); Joaquin v. Joaquin, 5 Haw.App. 435, 438, 698 P.2d 298, 301 (1985). The Note was incorporated into the PSA by reference and was executed by the parties "in settlement of [Brooks'] marital claims," i.e., as part of the property settlement approved by the family court. Furthermore, because the PSA expressly provided that, unless it was approved by the family court, it would "have no further force or effect," the divorce decree gave the Note its legal "life." Accordingly, the Note cannot be enforced as a separate contract, but only as a judgment.

While it is correct that the Note was incorporated, via the PSA, into the divorce degree, we disagree with Minn's contention that only the family court had jurisdiction to enforce the Note as a decree-judgment. In Contra Costa County ex rel. Tuazon v. Caro, 8 Haw.App. 341, 352-53, 802 P.2d 1212, 1217-18, aff'd, 72 Haw. 1, 802 P.2d 1202 (1990), decided four months before Brooks filed her amended complaint, the ICA stated:

A court-ordered child support payment becomes an enforceable decree when the payment becomes due. A due but unpaid court-ordered child support payment (decree arrearage) is enforceable in family court.... Where the family court authorizes payment of a decree arrearage on a deferred payment basis and payment is not made, the deferred payment arrearage then becomes a decree-judgment debt enforceable in both family and civil court. Where the family court declines to authorize payment of a decree arrearage on a deferred payment basis, the arrearage then becomes a decree-judgment debt enforceable in both family court and civil court.

The decree-judgment creditor may take a decree-judgment to civil court and have the civil court enforce it in the same manner as the civil court enforces judgments entered by civil courts.

(Emphasis added.) (Citation omitted.)

While the Caro rule was framed in the context of enforcing court-ordered child support payments, we see no meaningful distinction between such payments and court-ordered property settlement payments. If anything, the family court has a more substantial interest in enforcing child support payments because of the family court's "inherent authority to protect...