Marriage of Larson, Matter of, 70968

• Citation: 257 Kan. 456,894 P.2d 809
• Decision Date: 21 April 1995
• Docket Number: No. 70968,70968
• Parties: In the Matter of the MARRIAGE OF Craig W. LARSON, Appellant, and Marla J. Larson, Appellee.
• Court: United States State Supreme Court of Kansas

Page 809

894 P.2d 809

257 Kan. 456

In the Matter of the MARRIAGE OF Craig W. LARSON, Appellant,

and

Marla J. Larson, Appellee.

No. 70968.

Supreme Court of Kansas.

April 21, 1995.

Syllabus by the Court

1. A motion to modify under K.S.A. 60-260(b)(1), (2), and (3) must be filed within a reasonable time and not more than one year after the judgment, order, or proceeding sought to be modified was entered.

2. A motion under K.S.A. 60-260(b)(1), (2), and (3) may be rejected as untimely if not filed within a "reasonable time" although the one-year period referred to in the statute had not expired when the motion was filed.

3. What constitutes a "reasonable time" within which to file a motion under K.S.A. 60-260(b) is a question left to the discretion of the trial court. The determination depends upon the facts of each case, considering the interest in finality, the reasons for the delay, the ability of a litigant to learn earlier of the grounds relied upon, and any prejudice to the parties.

4. As the delay in filing a motion to modify judgment pursuant to K.S.A. 60-260(b)(1), (2), and (3) approaches one year, the burden on the movant to show that the delay was reasonable increases.

5. Given the proper factual setting, even though the parties to a divorce did not provide for modification in a separation agreement and did not subsequently consent to a modification, relief may be granted under a K.S.A. 60-260(b)(1), (2), (3) motion to modify where the separation agreement was procured by fraud, or material facts affecting whether the agreement is just and equitable were not known to the parties and the court at the time the agreement was incorporated into the divorce decree.

Charles A. Peckham, of Browne, Creighton & Peckham, of Atwood, argued the cause and was on the briefs, for appellant.

Allen Shelton, of Clark, Shelton & Pratt, P.A., of Oberlin, argued the cause and was on the brief, for appellee.

SIX, Justice:

This is a first impression case requiring us to construe K.S.A. 60-260(b). The specific question is whether a motion to modify a divorce decree was untimely because the motion was not filed within a "reasonable time," although it was filed within one year of the decree. The parties' written property settlement agreement was incorporated into the decree. The trial court denied the motion to modify. In a 2-1 decision, the Court of Appeals affirmed. 19 Kan.App.2d 986, 880 P.2d 1279 (1994). We granted the ex-husband's petition for review. We agree with the Court of Appeals' interpretation of K.S.A. 60-260(b). A motion to modify under K.S.A. 60-260(b)(1), (2), and (3) must be filed within a reasonable time and not more than one year after the judgment, order, or proceeding sought to be modified was entered. We find no abuse of discretion and affirm.

Facts

Craig and Marla Larson were divorced on January 9, 1992. The divorce decree incorporated their "Property Settlement Agreement" (Agreement), which determined rights of maintenance (alimony), child support, and custody of their four children, in addition to dividing their property. Under the agreement, Craig agreed to pay Marla $1,900 per month until June 2006 for maintenance, child support, and property settlement, besides periodic lump sum payments. (The total of all payments would be about $370,000 over 15 years.)

Under the Agreement, Craig retained the one-half ownership interest in a cattle feedlot, Yuma Performance Feeders, Inc. (YPF), that he and Marla had owned jointly. Craig's parents owned the other half.

The record does not provide a clear picture of Craig's financial position at the time the Agreement was reached. Craig himself seemed to lack a firm understanding of his own net worth, mainly because of the uncertain financial status of YPF.

Craig was represented by the same attorney when he signed the Agreement in January 1992 and when he filed the motion to modify one year later. By the time the hearing on the modification motion was held in November 1993, Craig had changed to his current counsel, who also represented his parents.

At the hearing on the motion to modify, Craig testified that he signed the Agreement with Marla in January 1992 based on his belief that the feedlot was making a "good profit." Craig introduced into evidence two different profit and loss statements for YPF showing figures through November 1991. One showed that YPF netted $9,499.98 in November and $5,540.17 in October. The other purports to show YPF's monthly profit and loss totals for 1991, excluding December. When read together, the exhibits suggest that YPF's monthly profits exceeded $8,000, on average, and that YPF was on track in 1991 for yearly profits of about $100,000. Craig said he relied on these profit numbers in deciding to sign the January 1992 Agreement.

Shortly after Craig and Marla reached their Agreement, an accountant reviewing YPF's books found that the feedlot's financial condition was considerably different. Lance Bohall, CPA, informed Craig and his parents in a March 9, 1992, letter that he had discovered $254,625.96 in unrecorded accounts payable. Bohall cited "poor controls and/or bad judgment coupled with unusual deals made by the manager," as the reasons for the unrecorded expenses. On March 21, 1992, Bohall completed his report on YPF's finances for the year ending December 31, 1991. The 1991 year-end report showed a net loss of $187,965. By comparison, a year-end report for 1990 showed YPF with a net profit of $55,999.

Thus, by March 1992, Craig had specific information showing that YPF was in trouble and that his anticipated income from YPF profits would not be even close to what he had projected. Furthermore, YPF was heavily in debt, and its revised financial picture made obtaining credit difficult as existing creditors tightened the reins. Craig's parents had to inject $200,000 cash into the business to satisfy creditors and prevent foreclosure. By May 1992, according to Craig's testimony, the manager blamed for much of the trouble was gone; Craig was managing the feedlot himself; he had laid off some help; and he was working 18-hour days trying to keep the business running.

Meanwhile, Craig had fallen behind in his payments to Marla almost immediately after the Agreement was filed. Within a year, Craig was $17,000 in arrears. Craig's only source of income was a $2,000 per month salary from YPF. The record shows that Marla's attorney filed motions in February, March, and December of 1992 to show cause why Craig should not be punished for contempt. A hearing was held on the motions on January 4, 1993, and the trial court ordered Craig to pay at least $900 of his $2,000 per month salary to Marla to avoid being found in contempt.

Craig filed his motion to modify the divorce decree under K.S.A. 60-260(b) on January 8, 1993.

The trial court, after hearing all the evidence, including testimony from Craig, his accountant, Craig's mother, Marla, and a bank executive, denied modification of the property settlement and maintenance provisions in the Agreement. It granted modification of child support.

The trial court reasoned: (1) YPF was under the exclusive control of Craig and his parents during 1991 when the heavy losses incurred at the hands of manager, (2) the motion was not made within a reasonable time in that Craig knew of YPF's substantial losses in March 1992 and waited nine months to file a motion for modification, and (3) "there is no way to put the parties back into a position where they were on January 9th of 1992, and the condition has deteriorated further since that date."

The Court of Appeals' Opinion

The Court of Appeals recognized the first impression issue of whether the "reasonable time" requirement in K.S.A. 60-260(b) is separate and distinct from the one-year limitation for filing such motions with respect to statutory grounds (1), (2), and (3). Siding with many federal courts and commentators interpreting Rule 60(b) of the Federal Rules of Civil Procedure, which is identical to K.S.A. 60-260(b), the Court of Appeals held that "as to motions filed under 60-260(b)(1), (2), and (3), the one-year period represents an extreme limit and the motion may be rejected as untimely if not made within a 'reasonable time' even though it was filed within one year of the date the decree sought to be modified was entered or taken." 19 Kan.App.2d at 992, 880 P.2d 1279.

The Court of Appeals then considered whether the trial court abused its discretion in concluding that the motion to modify was not filed within a "reasonable time." The court found that "strong arguments can be made for both parties," but upheld the trial court's decision. 19 Kan.App.2d at 998, 880 P.2d 1279.

The majority emphasized that: (1) Craig carried the burden of showing abuse of discretion; (2) Craig had not proffered a valid justification for delaying his motion for nine months after learning of the feedlot's true problems in March 1992; (3) either party would be prejudiced "rather equally" by an adverse ruling on the motion for modification; (4) Craig's predicament was largely one of his own making because he signed the January 1992 Agreement despite knowledge of possible problems in the feedlot's finances; and (5) restoring the status quo as of January 1992 is impossible at this point. 19 Kan.App.2d at 996-98, 880 P.2d 1279.

The Court of Appeals majority emphasized that deference must be given to the trial court in this kind of determination. The majority conceded that "strong arguments can be made for both parties," and said that under such circumstances, the "superior position of the trial court" takes on even greater meaning. It lamented that it could "gaze only at a cold, printed record, which does not give us the undefinable 'feel' which a trial court has in resolving matters of this nature." 19 Kan.App.2d at 998, 880 P.2d 1279.

Interpretation of K.S.A. 60-260(b)

Craig first seeks review of the Court of Appeals' interpretation of the...