Lay v. Ellis, 115,992

• Decision Date: 23 October 2018
• Docket Number: No. 115,992,115,992
• Citation: 432 P.3d 1035
• Parties: In re: The Marriage of: Carol A. LAY, Petitioner/Appellee, v. Warren H. ELLIS, Jr., Respondent/Appellant.
• Court: Oklahoma Supreme Court

432 P.3d 1035

In re: The Marriage of: Carol A. LAY, Petitioner/Appellee,

v.Warren H. ELLIS, Jr., Respondent/Appellant.

No. 115,992

Supreme Court of Oklahoma.

FILED October 23, 2018

Jan Meadows, Norman, Oklahoma, for Petitioner/Appellee.

Barry K. Roberts, Evan Taylor, Norman, Oklahoma, for Respondent/Appellant.

KAUGER, J.:

¶ 1 This retained cause presents multiple issues, one of which is when it is appropriate to appeal an indirect contempt finding. Under the facts of this cause, the respondent argues that the Court has created the set of circumstances which put him in the position of first having to completely purge the contempt (in this case a three year process) before appealing, thus violating his constitutional right of access to the courts. The remaining issues are whether the trial court: 1) improperly applied res judicata to a previous bankruptcy court proceeding; 2) improperly interpreted a separation agreement; and 3) erred in finding the respondent guilty of contempt. We hold that the respondent was not denied access to the courts, nor did the trial court err in applying res judicata, in its interpretation of the separation agreement or in finding the respondent guilty of contempt.

FACTS AND PROCEDURAL HISTORY

¶ 2 The respondent/appellant, Warren H. Ellis, Jr. (Ellis/husband) and the petitioner/appellee, Carol Lay (wife) were married on January 7, 1978, in Washington, D.C. and had two children born October 8, 1983, and March 8, 1987. On November 25, 1992, the husband and wife entered into a deed of trust note in Madison, Virginia with the wife's aunt and uncle, Carlyn and Francis Lay (the Lays). The note amount was for $77,400.00 with an interest rate of 8% per year. The monthly installments were set at $567.93 and began on December 25, 1992. If paid out at the monthly amount, the final payment would be due November 25, 2022. The purpose of the note was to purchase a parcel of land.

¶ 3 On June 27, 2000, the husband and wife entered into a separation agreement, citing irreconcilable differences. The separation agreement required the husband to pay the wife $500.00 per month spousal support beginning October 1, 2000, and terminating on October 1, 2005. The couple shared joint legal and physical custody of the children with no child support paid by either party. Each parent agreed to take one child each as a deduction on tax returns. The agreement also divided personal property, and set forth requirements for maintaining the children's health insurance.

¶ 4 The agreement also contained a clause devoted to joint indebtedness and provided that each party's obligation to the other pursuant to this clause would not be considered to be dischargeable in bankruptcy.

The pertinent provision of the indebtedness clause provides that:

... a. Husband shall be responsible for the following debts in every respect and shall hold Wife harmless thereon: Personal loan to [sic] Francis and Carlyn Lay in the approximate amount of $20,000.00. On the date that this debt is executed, Husband agrees to pay Wife the sum of Eight Thousand three hundred seventy and 00/100 ($8,370.00). This sum is intended to reimburse Wife for her previous payment of joint debts ...

¶ 5 On April 28, 2005, the County of Maricopa Court of Arizona granted the wife a default divorce. Apparently, on September 26, 2006, the wife filed a contempt action in the Arizona court as well because an order filed January 25, 2007, notes that the parties reached an agreement regarding the September 26, 2006, contempt and jointly ask for entry of a proposed order regarding the separation agreement that the parties entered into before the divorce. The agreed and stipulated order filed February 9, 2007, requires among other things, the husband to: 1) honor the terms of the separation agreement; 2) pay $500.00 a month for five years for spousal maintenance; and 3) reimburse the wife $8,370.00 for reimbursement of the husband's portion of joint debts previously paid by the wife.

¶ 6 The court granted the wife a judgment against the husband for $29,946.91 with 10% annual interest for spousal support until paid in full and a judgment of $11,245.00 with 10% interest for reimbursement to the wife for joint debt until paid in full. Payments towards both judgments were set in the amount of $500.00 a month. In 2008, the wife was awarded attorneys' fees and costs against the husband as well. Also in 2008, the husband filed Chapter 7 Bankruptcy in the United States Bankruptcy Court for the Western District of Virginia.

¶ 7 At issue in the bankruptcy case was the note to the Lays, and whether it would be discharged in bankruptcy. In the bankruptcy court, the husband argued that he only owed $20,000.00 towards the Lays' loan and that he had already paid $21,000.00 towards it, thus already extinguishing his obligations regarding it all together.

¶ 8 The $20,000.00 number came from language in the settlement agreement which specifically refers to a "[p]ersonal loan to Francis and Carlyn Lay in the approximate amount of $20,000.00," even though the note was for the amount of $77,400.00. In the bankruptcy proceeding the wife testified that there was never any discussions of each of them paying a portion of the note, but rather, the husband was to pay the entire note. She testified that "[t]he note was to be totally assumed by" the husband. The wife explained that her attorney indicated that there should be a dollar amount involved to be incorporated into the separation agreement, and that she asked her husband what the amount of the debt was and he said approximately $20,000.00. Apparently, the real amount they owed at that time, after they had made several payments while married, was closer to approximately $50,000.00.

¶ 9 The husband, on the other hand, argued that he only owed $20,000.00 pursuant to the express language of the separation agreement, but that he had already mistakenly paid $21,000.00. Thus, according to the husband he had already complied with the terms of the separation agreement. The bankruptcy court judgment entered on June 23, 2008, merely states that:

It is ORDERED, ADJUDGED and DECREED that the obligation of the Defendant Warren H. Ellis to hold the Plaintiff Carol A. Lay harmless from liability on the debt that she owes Francis and Carlyn Lay by virtue of a note dated on or about November 5, 1992, is non-dischargeable, the order of discharge in the above-styled chapter 7 bankruptcy case notwithstanding.

¶ 10 On April 26, 2012, the wife filed an application for registration of foreign orders in the District Court of Cleveland County. The foreign orders included a copy of her April 28, 2005, default divorce decree entered in the Superior Court in Maricopa County, Arizona, against the husband. She also included a January 25, 2007, Stipulation and Joint Motion for Entry of Order re: Confirmation of Judgments and an attached order filed February 9, 2007, and a July 16, 2008, Judgment for Attorneys' Fees and Costs. On the same day, the wife also filed an application for indirect contempt citation also in the Cleveland County District Court, alleging that the husband owed:

1. A debt in the amount of $30,763.19 plus interest from May 30, 2008, to present at a rate of eight per cent (8%) which was the amount she alleges she paid to the Lay's to extinguish the 1992 note;

2. A judgment for spousal support arrears in the amount of $29,946.91 plus interest at a rate of ten percent (10%) from April 28, 2005, which was to be paid in monthly payments of $500.00 and if the monthly payments were not made, then the entire judgment was immediately due and payable [which equates to $34,179.53 plus accruing interest since April 25, 2012];

3. A judgment in the amount of $4,400.00 for attorney's fees and costs plus interest at the statutory rate. [Apparently, he had paid $1,315.00 but has failed and refused to pay the balance plus interest.]

4. Any additional attorney's fees and costs which the husband should be required to pay for the wife having to pursue what he owed her.

¶ 11 On May 10, 2012, the Cleveland County District Court entered an indirect contempt citation and set an arraignment for June 12, 2012. The husband responded with an objection to the enforcement of the Arizona orders, and he requested a hearing and stay of the collection proceedings. On July 31, 2012, the husband also filed a motion to dismiss and demurrer in response to the application and citation for indirect contempt. On November 30, 2012, the wife filed a supplemental application for indirect contempt citation arguing that in May, June, and July of 2012 the husband received $41,429.00, $14,925.00 and $17,000.00 respectively from his parents' estate and thus had the ability to purge the contempt.

¶ 12 The trial court held a hearing on February 25, 2013, regarding the contempt. The court issued an order in which it determined that the husband owed the wife $26,313.03 as of the date of the hearing, and that his lawyer was to pay $15,499.44 to the wife and her attorney, and that the husband agreed to pay $10,813.59 today, thus purging the contempt as far as the support alimony goes. The trial court also reduced the amount which the wife alleged she had already paid towards the 1992 note of $38,042.44 to a judgment. He delayed sentencing until a purge plan was submitted, but set sentencing on May 2, 2013, and he required submission of the purge plan within 20 days. [For some unexplained reason, the order was not signed until February 11, 2014, and filed that same day.]

¶ 13 On March 25, 2013, the husband filed a his proposed purge plan. Under his plan, he would pay $500.00 a month to purge his contempt. The wife responded on August 2, 2013, with her proposal to the husband's purge plan. She suggested that the order for purge be increased so that he would pay off his debt to her in three years with interest; he provide business and personal records as to the status of his company and the debt it owes to him; and the husband...