Farrar v. Farrar

• Decision Date: 12 December 2014
• Docket Number: NO. 2013-CA-000180-MR,NO. 2013-CA-000253-MR,2013-CA-000180-MR,2013-CA-000253-MR
• Parties: MELISSA MARGARET FARRAR APPELLANT v. BRADLEY WALTER FARRAR APPELLEE AND BRADLEY WALTER FARRAR CROSS-APPELLANT v. MELISSA MARGARET FARRAR AND MARY JANICE LINTNER CROSS-APPELEES
• Court: Kentucky Court of Appeals

MELISSA MARGARET FARRAR APPELLANT v. BRADLEY WALTER FARRAR APPELLEEANDBRADLEY WALTER FARRAR CROSS-APPELLANT v. MELISSA MARGARET FARRARAND MARY JANICE LINTNER CROSS-APPELEES

NO. 2013-CA-000180-MR

NO. 2013-CA-000253-MR

Commonwealth of Kentucky Court of Appeals

December 12, 2014

TO BE PUBLISHED

APPEAL FROM JEFFERSON CIRCUIT COURT

HONORABLE DONNA DELAHANTY, JUDGE

ACTION NO. 10-CI-502682

CROSS-APPEAL FROM JEFFERSON CIRCUIT COURT

HONORABLE DONNA DELAHANTY, JUDGE

ACTION NO. 10-CI-502682

OPINION

AFFIRMING IN PART, REVERSING IN PART, AND REMANDING

BEFORE: JONES, LAMBERT, STUMBO, JUDGES.

JONES, JUDGE: This appeal and cross-appeal arise out of a marital dissolution proceeding wherein the Jefferson Circuit Court entered an order directing Appellant/Cross-Appellee, Melissa Margaret Farrar (hereinafter referred to as "Melissa") to transfer her interest in the parties' former marital residence (hereinafter referred to as "the residence") to Appellee/Cross-Appellant, Bradley Walter Farrar (hereinafter referred to as "Brad") in exchange for half of the fair market value of the residence less hypothetical closing costs, taxes and realtor fees. Brad also contests the trial court's award of attorney's fees to Melissa based on his alleged failure to timely comply with various other aspects of the dissolution decree and the trial court's denial of his motion for CR¹ 11 sanctions. For the reasons more fully explained below, we affirm in part, reverse in part and remand.

I. FACTUAL AND PROCEDURAL BACKGROUND

Brad and Melissa were married on November 19, 1988, and formally separated on June 1, 2010. Prior to their separation, the parties lived in the residence, which is located in Anchorage, Kentucky. The residence was not encumbered by any mortgages or liens. When the parties separated, Melissa moved out of the residence leaving Brad in sole possession. During the pendency of the parties' marital dissolution action, Melissa moved the trial court to direct that the residence be placed on the market for sale. Melissa also proposed that Brad's brother, realtor Mike Farrar (hereinafter referred to as "Mike") be appointed realtorand that she and Brad each contribute $5,000.00, as Mike suggested, to ready the residence for sale.

Brad objected to Melissa's motion stating to the trial court that he would like to maintain ownership of the residence. He suggested that the trial court allow him to "buy out" Melissa's interest in the residence. The trial court appeared amenable to this course of action and ordered an appraisal of the residence to determine its fair market value.

As directed, the parties had the residence appraised. The appraisal valued the residence at $440,000.00. Sometime thereafter, Brad changed his mind and informed the trial court that he no longer wanted to maintain ownership of the property. The parties then mutually agreed that the residence would be placed on the market for sale.

On March 2, 2011, the parties executed the Settlement Agreement, which codified their agreement concerning the sale of the residence. The relevant portion of the Settlement Agreement provides:

The marital residence will be listed with Mike Farrar. The parties will follow all reasonable recommendations that the realtor may make. [Brad] will be responsible for the maintenance and upkeep of the property until it is sold. Any major improvements necessary for the house will be paid for equally by the parties. Once the home has been sold, they will each receive 50% of the net sale proceeds. Until the house is sold, [Brad] will pay [Melissa] $500.00 per month so long as he resides in the house. These payments will be made to [Melissa] out of [Brad's] share of the proceeds from the sale of the house.

The Settlement Agreement was incorporated into the final dissolution decree entered by the trial court.

As set forth in the Settlement Agreement, Brad continued residing in the residence. The parties agreed to make some repairs and maintenance to the residence before it was listed. To this end, they each contributed $4,829.74 to prepare the residence for sale, which included replacing kitchen countertops, replacing carpet, and painting. The residence was set to be listed on June 1, 2011.

Initially, Brad refused to sign the listing contact unless a clause was inserted into it that forbade the acceptance of any offers under $490,000.00. Melissa moved the trial court to order Brad to sign the listing contract without the minimum sale price clause. The trial court sustained Melissa's motion and directed Brad to sign the listing contract without inclusion of the contested provision.

Mike, acting as realtor, listed the residence for sale at $539,000.00 on or about June 30, 2011. On October 11, 2011, Melissa moved the trial court to allow the parties to reduce their asking price. In support of her motion, Melissa stated that the parties had not received a single offer to purchase the residence since having listed it and that no one had requested a showing in several weeks. Melissa also moved the trial court to appoint a new realtor on the ground that Mike was no longer responding to her inquires and had not been able to generate any offer. Conversely, Brad moved to extend Mike's listing contract, which was set to expire on December 31, 2011, for a two-year term. Following a hearing, the trial court ordered that the residence be co-listed with Mike and a realtor of Melissa'schoosing. The trial court also ordered that the listing price be reduced to $500,000.00.

On July 18, 2012, Melissa moved the trial court to order that the residence be sold at public auction stating that the parties had yet to receive a single offer for the residence. Before the trial court could take up Melissa's motion, a prospective buyer offered to purchase the residence for $447,000.00. When Brad refused to accept the offer, Melissa moved the trial court to order him to accept it.

Brad responded to the motion by offering to purchase Melissa's interest. He offered to do so for $207,243.00, the amount he asserted she would receive if they accepted the third-party buyer's offer.² Melissa replied that she would not agree to sell her interest to Brad for the offered amount.

The trial court held a hearing on the parties' motions. Melissa explained that she had already spent $4,829.74 on improvements for the residence in order to prepare it for sale. Melissa testified at the hearing that she would never have agreed to spend money for improvements to the residence if she knew Brad would continue living there. Melissa also testified that she was a licensed realtor and that the changes to the residence were only "cosmetic" to get the residence to sell and did not actually increase the fair market value of the residence. Second, Melissa objected to Brad buying out her interest in the residence at his calculation,which reduced her interest by half of the closing costs that would not actually be incurred if Brad purchased her interest. Brad testified during the same hearing that he may in the future put the residence back on the market, but had no immediate plans to do so. Brad also testified that he would buy out Melissa's interest in the residence with cash and other assets, not from a sale of the residence.

The trial court ultimately granted Brad's motion. It ordered Brad to pay Melissa $207,200.00, calculated as one half of the $447,000.00 sales price of the residence minus closing costs, "including real estate taxes and realtor commissions but not the home warranty." The trial court then ordered Melissa to execute a quitclaim deed in Brad's favor upon receipt of the $207,200.00.

Thereafter, Melissa filed a motion under CR 59 to alter, amend, or vacate the court's order. In her motion, Melissa argued that the court's order should be amended to reflect the money that she paid to improve the residence and the lack of closing costs actually incurred for a resulting payment of $226,085.00, plus the $4,829.74 for improvements. The court overruled her motion, finding that Melissa had not suffered any manifest injustice due to the execution of the "sale" of the residence to Brad. Brad also moved the trial court to impose sanctions on Melissa, claiming that she filed the CR 59 motion in bad faith. The trial court denied Brad's motion.

This appeal followed.

II. JURISDICTION

A dissolution decree is considered a final judgment. Pursuant to KRS³ 403.250(1): "[t]he provisions [of a decree] as to property disposition may not be revoked or modified, unless the court finds the existence of conditions that justify the reopening of a judgment under the laws of this state."

Melissa asserts that the trial court did not make the required findings necessary under CR 60.02 to support reopening, and therefore, acted outside its authority by modifying the dissolution decree, which incorporated the Settlement Agreement, to permit Brad to purchase her interest in the residence. Apparently recognizing that this issue was not put before the trial court, Melissa couches it in terms of subject-matter jurisdiction, which can be raised at anytime, even for the first time on appeal.

The interplay between our procedural rules and subject-matter jurisdiction has been a source of great confusion. In Commonwealth v. Steadman, 411 S.W.3d 717 (Ky. 2013), the Kentucky Supreme Court went to great lengths to clarify the important distinction between case-specific jurisdiction, which is waived if not timely asserted, and subject-matter jurisdiction, which can never be waived. Steadman concerned a trial court's restitution order, which was entered more than ten days after final judgment. Steadman did not raise the "jurisdictional" issue before the trial court. On appeal, the Kentucky Supreme Court determined that because the circuit court has jurisdiction over felony criminal matters, it did not act outside its general subject-matter jurisdiction, butonly outside its case-specific jurisdiction. Since Steadman did not raise the alleged error before the...