Magsig v. Magsig

• Decision Date: 03 July 2018
• Docket Number: AC 39544
• Citation: 191 A.3d 1053,183 Conn.App. 182
• Parties: Kim MAGSIG v. Michael MAGSIG
• Court: Connecticut Court of Appeals

183 Conn.App. 182

191 A.3d 1053

Kim MAGSIG

v.Michael MAGSIG

AC 39544

Appellate Court of Connecticut.

Argued February 13, 2018

Officially released July 3, 2018

Meredith C. Braxton, Greenwich, for the appellant (plaintiff).

Edward M. Kweskin, Stamford, with whom, on the brief, was Sarah E. Gleason, for the appellee (defendant).

DiPentima, C.J., and Prescott and Bozzuto, Js.

DiPENTIMA, C.J.

The plaintiff, Kim Magsig,¹ appeals from the denial of her postdissolution motion for contempt. On appeal, she claims that the trial court improperly concluded that the defendant, Michael Magsig, had not violated an indemnification obligation contained in the parties' separation agreement. We disagree and, accordingly, affirm the judgment of the trial court.²

The record reveals the following relevant facts and procedural history. On April 16, 2013, the court, Hon. Stanley Novack , judge trial referee, dissolved the marriage of the parties. In accordance with General Statutes § 46b–66, the judgment of dissolution incorporated by reference the parties' separation agreement (agreement). Article 9 of the agreement addressed past and future debts of the parties.

Section 9.2 of the agreement provided: "The [defendant ] shall be solely responsible for the Wells Fargo Bank debt (formerly the home equity line of credit on the parties' foreclosed Greenwich property) as a support obligation and shall indemnify and hold the [plaintiff ] harmless from any loss, injury, debt, charge, legal fees, or liability whatsoever with respect thereto . The [plaintiff] shall secure this indemnification obligation with his Schwab IRA and Korn Ferry 401 (K) and provide the [plaintiff] semiannually with a statement for each account so long as he shall have this indemnification obligation. The [defendant] shall notify the [plaintiff] of any and all material, significant developments or discussions that take place between him and his representatives and Wells Fargo or its representatives. The [defendant] shall promptly notify the [plaintiff] in the event he learns that Wells Fargo is about to commence an action or seek a lien on the [plaintiff's] real property. In the alternative, if the [defendant] is able to remove the [plaintiff's] name as a joint and severally liable obligor on the promissory note to Wells Fargo, which shall be no later than November 16, 2018, the time of the expiration of the statute of limitations on the Wells Fargo liability, all obligations to the [plaintiff] to hold her harmless from liability from Wells Fargo shall terminate." (Emphasis added.)

On January 23, 2014, the plaintiff filed a motion for contempt pursuant to Practice Book § 25–27, alleging that the defendant had violated § 9.2 of the agreement. Specifically, she claimed that the defendant had not made the "required, regular payments to [the Wells Fargo debt] for approximately one year" and had not notified her of "any and all material, significant developments or discussions" regarding this debt; namely, that he intentionally had defaulted on the loan, resulting in an immediate debt of $434,958.

The plaintiff further alleged that the defendant had agreed to indemnify her for both loss and liability and that, under Connecticut law, she became entitled to indemnification as soon as the defendant caused her to be liable to Wells Fargo for the entire balance due. Additionally, she claimed injury in that, as a result of the defendant's actions, (1) her credit score had "dropped precipitously"; and (2) she would not be able to remove him from the mortgage note for a South Carolina property as required by the terms of the agreement. Finally, the plaintiff requested attorney's fees pursuant to § 11.3 of the agreement.³

The defendant filed an objection to the plaintiff's contempt motion, disputing her claims. Specifically, he argued that because Wells Fargo had not commenced a legal action to enforce its right on the debt, his indemnification obligation had not been triggered. He further claimed that the agreement did not require him to make any payments at any particular time to Wells Fargo. The defendant also maintained that he had secured his indemnity obligation as required by the agreement and had not learned of any material, significant developments regarding the debt, nor had he had any discussions with Wells Fargo. Finally, the defendant requested attorney's fees incurred in responding to the plaintiff's motion and on the basis of "litigation misconduct."

On September 4, 2015, the plaintiff filed a reply in further support of her motion. She iterated that, under Connecticut law, she was entitled to prosecute this motion at the time her liability was incurred and was not required to wait for an actual loss. She also claimed that relevant principles of contract interpretation supported her position.

The court, Colin, J. , conducted hearings on May 18, May 19, and May 20, 2016.⁴ An employee of Wells Fargo, the plaintiff and the defendant testified, and, following the presentation of evidence, the court heard argument from counsel. On May 23, 2016, the court issued a memorandum of decision denying the plaintiff's motion for contempt. The court concluded that the plaintiff failed to prove, by clear and convincing evidence, that the defendant wilfully and intentionally had violated § 9.2 of the agreement.

Specifically, the court found that the plaintiff had not produced sufficient evidence that she had suffered any loss, injury, debt, charge, legal fees or liability as to the Wells Fargo debt since the date of the dissolution of the marriage. The court also found that although prior to judgment, the real property that originally secured the Wells Fargo debt had been foreclosed and the debt was in default status, Wells Fargo had not taken any "formal collection actions against the parties."

The court noted that the plaintiff had produced evidence that "due to a derogatory reference on her credit report regarding the Wells Fargo debt, she was unable to secure a rental property for herself and therefore must continue to live in the more expensive South Carolina property .... The court finds that this claim is not a ‘loss’ or ‘injury’ ... with respect [to the Wells Fargo debt] contemplated by the parties' agreement." Put another way, the court determined that this type of impact was "collateral damage" and was not within the scope of the indemnification clause.⁵

The court also examined the language of § 9.2 of the agreement and concluded that the defendant's indemnification obligation was triggered when the plaintiff suffered an actual loss, injury, debt, charge, legal fees, or liability directly related to the Wells Fargo debt; in other words, when Wells Fargo "actually makes a claim against the plaintiff or otherwise takes an affirmative step against the plaintiff to collect the funds due. That has not happened, and it may not happen." The court reached this conclusion by considering the entire language of § 9.2; that is, the requirement that the defendant keep the plaintiff informed of material and significant developments and discussions regarding the debt, his obligation to notify her if he learned that Wells Fargo was about to commence an action or seek a lien on her property and the reference to the 2018 statute of limitations regarding the Well Fargo debt. The court also noted that the parties had agreed that § 9.2 did not require the defendant to pay Wells Fargo on time each month. Simply stated, the court determined that "[t]he agreement does not provide that the plaintiff shall be indemnified for any collateral damages that may be caused directly or indirectly by the nonpayment of the Wells Fargo debt, such as the impact on the plaintiff's credit rating or her ability to rent a dwelling or obtain a car loan ...."

Next, the court concluded that the relevant language of § 9.2 of the agreement was clear and unambiguous. Then, it explained the flaw in the plaintiff's interpretation of the indemnification clause. "Under the plaintiff's theory of the case, once liability attached to her, the defendant's indemnification obligation is triggered and she is entitled to compensation. The plaintiff's liability in connection with this joint [Wells Fargo] debt attached before the date of the dissolution degree, when the parties signed the note and borrowed the money. Thus, under her theory, the defendant's indemnification obligation arguably was triggered immediately upon the dissolution court's approval and entry of the decree. If that is the case, then the other portions of [§] 9.2 would likely be rendered useless. For example, why would the defendant need to secure his obligation with anything if he was already required to fulfill the indemnification obligation and pay off the debt? If the defendant was already required to fulfill the indemnification obligation, then why would he need to notify the plaintiff of any future collection actions taken by the lender? These provisions would be unnecessary under the plaintiff's present argument since the plaintiff would already have been entitled to full and immediate recourse on the indemnification provision on the day of the dissolution court's entry of judgment. The court rejects this interpretation of the agreement because it is inconsistent with the parties' intent .... The plaintiff has failed to prove that, since the date of the dissolution of the marriage, she has suffered ‘any loss, injury, debt, charge, legal fees, or liability ... with respect to [the Wells Fargo Bank debt]’ within the meaning of [§] 9.2 of the parties' agreement. The plaintiff is now attempting to read into the parties' agreement a payment obligation by the defendant that is not contained in the language of the document."

The court further determined that the plaintiff had not incurred a new postdissolution liability and that she was liable for the Wells Fargo debt at the time of the dissolution judgment. Therefore, it concluded "the parties did not intend that this...