Coffey v. Coffey, No. 27721.

• Court: Supreme Court of South Dakota
• Writing for the Court: KERN, Justice.
• Citation: 888 N.W.2d 805
• Parties: Debra R. Tech COFFEY, Plaintiff and Appellee, v. Michael F. COFFEY, Defendant and Appellant.
• Decision Date: 21 December 2016
• Docket Number: No. 27721.

888 N.W.2d 805

Debra R. Tech COFFEY, Plaintiff and Appellee,
v.
Michael F. COFFEY, Defendant and Appellant.

No. 27721.

Supreme Court of South Dakota.

Considered on Briefs on August 29, 2016.
Filed Dec. 21, 2016.

888 N.W.2d 807

Tressa Zahrbock Kool of Lockwood & Zahrbock Kool Law Office, Sioux Falls, South Dakota, Attorneys for plaintiff and appellee.

Michael E. Unke, Salem, South Dakota, Attorney for defendant and appellant.

KERN, Justice.

¶ 1.] Debra R. Tech Coffey sought a divorce from Michael F. Coffey. They entered into a stipulation and agreement (Agreement) to resolve all issues and divide their property and debt. Paragraph 2 of the Agreement awarded the marital home to Michael, divided responsibility for the two mortgages on the home, and declared that should the home be sold, the proceeds from the sale would first be used to pay off any sum remaining on the mortgages.

[¶ 2.] Michael sold the home in April 2015 and used the proceeds of the sale to pay off both mortgages. He requested reimbursement from Debra for the mortgage debt assigned to her. She refused to reimburse him. Michael filed a motion for an order to show cause, asking the circuit court to hold Debra in contempt and enter a judgment against her for the amount he paid on her mortgage plus interest. The circuit court denied his motion. Michael appeals. We affirm.

BACKGROUND

[¶ 3.] Michael and Debra married on February 14, 1987. On February 18, 2010, they entered into the Agreement, which divided their property and debt. Debra's counsel drafted the Agreement. This case concerns the first two sections of Paragraph 2 of the Agreement:

Defendant shall be awarded the marital residence.... The Plaintiff will be responsible for the 1st mortgage at Bank of America and shall have the length of the loan to either pay it off or refinance it. Plaintiff will save and hold harmless the Defendant from any liability on said mortgage. Defendant will be responsible for the second at Service First Credit

[888 N.W.2d 808

Union and shall have the length of the loan to either pay it off or refinance it. Defendant will save and hold harmless the Plaintiff from any liability on said mortgage. Defendant agrees to be responsible for the taxes and insurance on said property.

If Defendant would sell the home prior to the 1st or 2nd mortgage being paid in full, then upon sale of the home these mortgages will be paid in full first out of the proceeds of the home.

On February 23, 2010, the circuit court signed a judgment and decree of divorce, which incorporated the Agreement.

¶ 4.] On April 10, 2015, Michael sold the home and used the proceeds from the sale to extinguish both mortgages. He immediately sought reimbursement from Debra for the $56,040.35 he paid to satisfy the remaining balance on the first mortgage. Debra refused to pay him.

[¶ 5.] On August 17, 2015, Michael filed a motion for an order to show cause, seeking to have Debra held in contempt. He requested judgment against Debra in the amount of $56,040.35 plus prejudgment interest accrued from the date of sale and attorney's fees. In November 2015, with the parties' consent, the court held a hearing on the interpretation of the contract but did not address the contempt portion of the motion because notice was inadequate. The court told the parties if it determined the contract was ambiguous, it would hold a hearing to take evidence of the parties' intent and on the issue of contempt. On December 28, 2015, the court issued a memorandum decision and order denying Michael's motion. The court held: (1) the Agreement was unambiguous, and its plain meaning did not require Debra to reimburse Michael; (2) reimbursement would constitute an improper modification of the property division; and (3) because Debra had no duty to reimburse Michael, she was not in contempt. Michael appeals.

[¶ 6.] We restate Michael's issues as follows:

1. Whether the circuit court erred in its interpretation of the Agreement as unambiguous and not requiring reimbursement.

2. Whether the circuit court erred in holding that an order for reimbursement would constitute an impermissible modification of a final property settlement.

3. Whether the circuit court erred in denying Michael's motion for an order to show cause.

STANDARD OF REVIEW

[¶ 7.] We review a circuit court's findings of fact under the clearly erroneous standard, while conclusions of law are reviewed de novo. Hamilton v. Sommers, 2014 S.D. 76, ¶ 17, 855 N.W.2d 855, 861. Contract interpretation is a question of law reviewed de novo. Lillibridge v. Meade Sch. Dist. # 46–1, 2008 S.D. 17, ¶ 9, 746 N.W.2d 428, 431 (citing Hanson v. Vermillion Sch. Dist. # 13–1, 2007 S.D. 9, ¶ 24, 727 N.W.2d 459, 467 ).

ANALYSIS

1. Whether the circuit court erred in its interpretation of the Agreement as unambiguous and not requiring reimbursement.

[¶ 8.] "Divorce stipulations are governed by the rules of contract; their interpretation is a matter of law for the courts to decide." Hisgen v. Hisgen, 1996 S.D. 122, ¶ 4, 554 N.W.2d 494, 496. "[I]n determining the proper interpretation of a contract the court must seek to ascertain and give effect to the intention of the parties." Id. (quoting Malcolm v. Malcolm, 365 N.W.2d 863, 865 (S.D.1985) ).

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"In order to ascertain the terms and conditions of a contract, we must examine the contract as a whole and give words their ‘plain and ordinary meaning.’ " Gloe v. Union Ins. Co., 2005 S.D. 30, ¶ 29, 694 N.W.2d 252, 260 (quoting Elrod v. Gen. Cas. Co. of Wis., 1997 S.D. 90, ¶ 15, 566 N.W.2d 482, 486 ). Further, we do not "interpret language ‘in a manner that renders a portion of [the contract] meaningless.’ " Tri–City Assocs., L.P. v. Belmont, Inc., 2014 S.D. 23, ¶ 11, 845 N.W.2d 911, 915 (quoting Estate of Fisher v. Fisher, 2002 S.D. 62, ¶ 14, 645 N.W.2d 841, 846 ). "Instead, we interpret the contract to give ‘a reasonable and effective meaning to all [its] terms.’ " Id. (quoting Casey Ranch Ltd. P'ship v. Casey, 2009 S.D. 88, ¶ 11, 773 N.W.2d 816, 821 ).

[¶ 9.] "When the meaning of contractual language is plain and unambiguous, construction is not necessary. If a contract is found to be ambiguous the rules of construction apply." Pesicka v. Pesicka, 2000 S.D. 137, ¶ 6, 618 N.W.2d 725, 726. Ambiguity requires more than mere disagreement:

A contract is not rendered ambiguous simply because the parties do not agree on its proper construction or their intent upon executing the contract. Rather, a contract is ambiguous only when it is capable of more than one meaning when viewed objectively by a reasonably intelligent person who has examined the context of the entire integrated agreement.

Dowling Family P'ship v. Midland Farms, 2015 S.D. 50, ¶ 13, 865 N.W.2d 854, 860 (quoting Pesicka, 2000 S.D. 137, ¶ 10, 618 N.W.2d at 727 ). "This Court has said that ‘[a]mbiguities arising in a contract should be interpreted and construed against the scrivener.’ " Advanced Recycling Sys., LLC v. Se. Props. Ltd. P'ship, 2010 S.D. 70, ¶ 19, 787 N.W.2d 778, 785 (quoting Campion v. Parkview Apartments, 1999 S.D. 10, ¶ 34, 588 N.W.2d 897, 904 ).

¶ 10.] Both parties argue that the Agreement is unambiguous, but they reach markedly different conclusions as to its proper meaning. Debra submits the circuit court did not err in finding the Agreement unambiguous and not requiring reimbursement. Debra argues her obligation was contingent upon Michael retaining ownership of the home. Michael, on the other hand, argues "the Agreement and exhibit 1 are not ambiguous when construed together." But Michael concludes that the plain language of the Agreement obligates Debra to reimburse him for his satisfaction of the first mortgage. In Michael's view, to hold otherwise would be inequitable and result in an ambiguity.

[¶ 11.] The alleged ambiguity arises from a document titled "Spread Sheet Asset—Liability" (Exhibit 1) that was attached to the Agreement. Michael claims Exhibit 1 was incorporated into the Agreement because it is referenced three times in the Agreement. Exhibit 1 is a spread sheet that lists Debra's and Michael's total assets and liabilities from their property settlement. It provides for an equalizing payment by Debra to Michael in the amount of $3,383. This payment is required by Paragraph 30 of the Agreement. Because Exhibit 1 lists the first mortgage as a liability assignable to Debra that was used to equalize the division of property, Michael now submits that Debra must reimburse him for the amount he paid from the sale proceeds to satisfy the first mortgage. Michael argues that if Paragraph 2 is interpreted to extinguish part of Debra's total liabilities, the division of property is unequal. Such a resolution, Michael contends, results in a direct ambiguity within the Agreement as to Debra's net assets: $230,825 under Exhibit 1 or $174,785 (the net assets in Exhibit 1 less the $56,040.35

[888 N.W.2d 810

used to pay off the first mortgage) under the terms of Paragraph 2. To avoid such an ambiguity, Michael advances his view that the Agreement is unambiguous and requires Debra to immediately reimburse him for his payment of the first mortgage. In the alternative, both parties request remand to the circuit court for an evidentiary hearing on the parties' intent should this Court find the Agreement ambiguous.

¶ 12.] We agree with...