In re Marriage of Lozada
| Docket Number | 124,235 |
| Decision Date | 21 July 2023 |
| Parties | In the Matter of the Marriage of Peggy Lozada, Appellee, and Leonardo Lozada, Appellant. |
| Court | Kansas Court of Appeals |
NOT DESIGNATED FOR PUBLICATION
Appeal from Johnson District Court; ROBERT J. WONNELL, judge. Opinion filed Affirmed.
Joseph W. Booth, of Lenexa, for appellant.
Christopher T. Wilson, of Beam-Ward, Kruse, Wilson & Fletes, LLC, of Overland Park, for appellee.
Before CLINE, P.J., ISHERWOOD, J., and PATRICK D. MCANANY, S.J.
Peggy Lozada filed for divorce from her husband, Leonardo, to terminate their roughly seven-year union. The matter went to trial in 2019 but the district court failed to issue a final order. In the interim, the parties placed a purported settlement agreement on the record. Not long after, Peggy moved to set the agreement aside upon learning about new information related to the couple's assets that undercut the ability to have a true meeting of the minds in arriving at their agreement. Following a hearing, the court granted Peggy's motion and declared the agreement non-binding. Several months later the court conducted a second trial to litigate the divorce. Leonardo moved for a new trial following the court's issuance of its final order, but his request was denied.
Leonardo now brings the matter to us to resolve whether the district court improperly set the parties' agreement aside and erred in declining to tax treat a particular retirement account. Following a thorough review of the issues raised and the underlying record, we are convinced the alleged agreement was invalid and therefore properly set aside. Not only was a condition precedent to the contract's formation not completed, but many assets were also absent from the agreement. Accordingly, it cannot be said there was a meeting of the minds regarding the settlement's material terms. We further find the court's refusal to tax treat a particular IRA was appropriate given that Leonardo withdrew several hundred thousand dollars from that account during the pendency of the divorce in violation of the district court's temporary orders. Accordingly, the court properly reduced Leonardo's assets based on marital asset dissipation under K.S.A. 2022 Supp. 23-2802(c). Finding no error, the decisions of the district court are affirmed.
In June 2018, Peggy Lozada petitioned seeking a divorce from her husband, Leonardo. The following day, the district court filed temporary orders that, among other things, prohibited the parties from using their assets unless the use complied with a court order or accompanied written consent from both parties and was reasonably necessary for day-to-day expenses or the payment of attorney fees and other litigation related expenses.
The first trial spanned two days in April 2019. Peggy and Leonardo both testified and presented evidence on their own behalf. Peggy testified she was seeking sole custody of the couple's four children, as well as child support and maintenance. She also desired a fair and equitable division of the marital property including their marital home and its two mortgages, numerous joint and individual bank accounts, three vehicles, multiple retirement accounts, various credit card debts, and an assortment of other items. According to Peggy, she and Leonardo met with a mediator before trial and reached an agreement as to how the property would be disbursed. Some of these assets, including several bank accounts, were destined to be split 50/50, while they agreed to a 68/32 division of several other assets. For example, the couple recently sold a second property for $500,000 and the proceeds were split according to the 68/32 agreement.
As far as an appropriate sum for maintenance, Peggy explained that her current monthly expenses totaled approximately $25,000 and included rent, food, childcare, fuel, medication, and an assortment of other expenditures. She informed the court she was a nurse anesthetist and an attorney licensed in Missouri but was not currently employed. While she had participated in several interviews, she had yet to locate a position that would accommodate her childcare obligations.
Leonardo testified and explained that he grew up in Caracas, Venezuela, graduated medical school, and then came to the United States to complete his residency and two fellowships. After his fellowships he eventually moved to Columbus, Ohio to work as the Chief Medical Officer for the Ohio Health Riverside Methodist Hospital. During that phase of his life, he married and divorced, and the court imposed $11,250 non-modifiable monthly maintenance payments through 2025. He met Peggy while living in Ohio and the couple eventually relocated to Kansas City when he accepted a position at St. Luke's hospital. He left that role in 2018.
Leonardo addressed Peggy's maintenance request and explained he was already obligated to pay her $6,000 per month under the court's temporary orders, on top of the considerable sum he was still required to pay his first wife. He claimed to be living in a deficit and was forced to rely on his savings and severance package payout, as well as proceeds from the sale of their second home to satisfy all his financial obligations. Thus, he did not have the funds available for maintenance, and further, did not believe it was necessary given that Peggy was capable of earning over $100,000 per year. This assertion was drawn from Peggy's testimony that she made close to that amount annually when she first met Leonardo. Finally, Leonardo rejected Peggy's claim that they agreed to a 68/32 division of certain property and instead suggested the division hinged on an agreement regarding parenting time.
The court took the matter under advisement and ultimately issued a journal entry reinforcing the requirements from its pretrial order. Several motions and filings followed, including Leonardo's motion to consider a new tax bill that surfaced. He believed the burden of that debt should be borne by both parties equally.
The parties filed a joint spreadsheet outlining their assets and debts, which indicated the marital home was valued at around $1.9 million, until the mortgages were subtracted, which then reduced the anticipated yield upon its sale to $27,500. Peggy also moved to amend the court's journal entry on the grounds it erroneously conveyed the required maintenance was around $4,000 rather than $6,000. The court granted her motion and also stated it would address the new tax bill issue raised by Leonardo in its final order.
Peggy later filed another motion seeking enforcement of Leonardo's obligation to pay the mortgage on the marital home, child support, and maintenance. The motion also contained a request for the court to direct Leonardo to complete repairs and upkeep on the marital home, reimburse her for costs based on lapsed health insurance coverage, and include medical debt among his assets and debts calculation. Not long after, Peggy's attorney withdrew and filed a lien of around $70,000 for services rendered.
The court filed a journal entry indicating that, according to counsel, each of the issues set forth in Peggy's motion were resolved except for the health insurance matter, which the parties were actively working through to reach a decision. The court also rejected Leonardo's contention that his Cleveland Clinic Foundation Cash Balance Plan was not marital property, as the court ruled at trial, but was actually premarital property awarded to Husband's previous wife as part of their divorce. The court explained that if the parties could not come to an agreement on the matter Leonardo could file a motion for new evidence. Finally, the court observed that the parties agreed to short sell the marital home and participate in mediation with Judge Kevin Moriarty.
At the close of 2019, Leonardo submitted a series of filings to update the court as to the sale of the marital home and his new position in Ohio where he relocated to be closer to the children's new home with Peggy in Tennessee. Those filings included updated versions of his domestic relations affidavit and distribution of assets worksheet. He opted to accompany the motions with a brief to flesh out some of the issues including asset modifications, property division, and the lack of success achieved through mediation. Peggy filed an affidavit addressing each of the points Leonardo touched on.
Three months later the court conducted a hearing to address the remaining issues and opened by stating that the parties had apparently reached a settlement with respect to the outstanding issues. Peggy's attorney outlined the details of what they characterized as a global settlement agreement which included a provision that Leonardo's Roth IRA would be set over to Peggy and his other IRA through Fidelity would first be used to pay off the shortfall from the sale of the marital residence and the remainder of the asset would be forwarded to Peggy. The parties also agreed Peggy would receive an equalization payment along with two payments of $3,895 each for maintenance and child support and that Leonardo would also pay a percentage of his bonuses going forward as child support. Finally, the settlement agreement included a provision noting that "whatever personal property is in each party's possession will remain there as well as any individual debt that was not joint marital debt presented at trial [will] be assumed by either party in an individual capacity."
Peggy and Leonardo acknowledged that counsel's recitation accurately communicated their agreed upon terms. The court then explained:
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