Marriage of Monslow, Matter of, 72721

• Decision Date: 08 March 1996
• Docket Number: No. 72721,72721
• Citation: 259 Kan. 412,912 P.2d 735
• Parties: In the Matter of the MARRIAGE OF Linda MONSLOW, Appellee, and H. Vincent Monslow, Appellant.
• Court: Kansas Supreme Court

Page 735

912 P.2d 735

259 Kan. 412

In the Matter of the MARRIAGE OF Linda MONSLOW, Appellee and H. Vincent Monslow, Appellant.

No. 72721.

Supreme Court of Kansas.

March 8, 1996.

Syllabus by the Court

1. The use of an automatic escalator clause in awarding maintenance is permissible under K.S.A. 60-1610(b)(2).

2. An interest in a patent is marital property subject to division under K.S.A. 60-1610(b)(1).

3. In a divorce action, the record on appeal is examined, and it is held: The district court did not commit error in (1) awarding maintenance and (2) dividing the marital property.

Review of the judgment of the Court of Appeals. Appeal from Johnson District Court; Larry McClain, Judge. Judgment of the Court of Appeals affirming the district court is affirmed. Judgment of the district court is affirmed.

Gregory M. Dennis, Overland Park, argued the cause, and J. Charles Droege, Overland Park, was on the briefs for appellant.

David J. Waxse, of Shook, Hardy & Bacon, P.C., Overland Park, argued the cause, and Brett D. Leopold, of the same firm, was with him on the briefs for appellee.

ALLEGRUCCI, Justice:

This is an appeal from the judgment of the district court in a divorce action. Linda and Vincent Monslow were divorced in 1992. Vincent appeals from the district court's order regarding maintenance, property division, child visitation, and numerous other matters. The Court of Appeals affirmed. In re Marriage of Monslow, 21 Kan.App.2d 386, 900 P.2d 249 (1995). Vincent's petition for review was granted on the questions of a maintenance escalator clause and division of patent proceeds.

The facts, for the most part, are set out in the opinion of the Court of Appeals and are not disputed:

At the time of the divorce, Vincent's former law firm had undergone dissolution, and he had begun practice with the Blackwood Langworthy firm. For this reason, "the trial court recognized the growth potential of Vincent's income." 21 Kan.App.2d at 389, 900 P.2d 249. Based on his earning a $60,000 contingency fee shortly before dissolution of his former firm, the trial court also recognized the potential for temporary, significant increases in his income. For the 11 months preceding trial, his average monthly income was $4,227.

Linda's average monthly income was $2,000. In the year before the divorce, she earned an average of $3,000 per month from the same employer.

The trial court's journal entry states the following with regard to the award of maintenance:

"Respondent shall pay petitioner maintenance of $450/month for a term of 48 months, commencing January 1, 1993. In addition, if respondent's adjusted gross income rises above the $4,227/month average which he experienced for such gross earned income during the first eleven months of 1992, then respondent shall pay petitioner, as and for additional maintenance, 20% of any such increases during the above-described 48-month period. Such additional maintenance, if any, shall be payable quarterly."

The Court of Appeals found that the award was supported by the evidence and concluded that the district court had not abused its discretion in awarding the basic maintenance figure. 21 Kan.App.2d at 387, 900 P.2d 249.

With regard to the escalator clause for additional maintenance, the Court of Appeals concluded that such a clause was permitted by K.S.A. 60-1610(b)(2) as long as the use was reasonable. Finding that the district court's approach was "not an unreasonable approach," the Court of Appeals concluded that the district court had not abused its discretion. 21 Kan.App.2d at 389, 900 P.2d 249. The maintenance escalator clause is the subject of the first question on this review.

The other question centers on the trial court's division of patents held by Vincent. He owns a partnership interest in two patents for a cable television service which would transmit viewer-chosen programs at viewer-requested times. The business plan refers to the concept as "Pic-A-Flick" or "Video On Demand."

Upon examination by Linda's attorney, Vincent gave the following testimony:

"Q. ... And you agree the patent is incapable of an accurate evaluation at the current time?

"A. ... That's a loaded question. I mean I think it has tremendous potential and maybe someone could tell you what that potential is. I haven't wasted my money to go out and find that out.

"Q. My question was: In your opinion does [the patent] currently have any value that you can put a number on?

"A. Not that I can put a number on, but it has value I would say.

"Q. And, therefore, if you can't put a number on it, it has got to be divided in kind; right?

"A. What do you mean by 'kind'?

"Q. Your wife is going to get a percentage of it and you are going to get a percentage of it?

"A. That would be fine with me." (Emphasis added.)

Vincent's affidavit characterized the patents as expectancies without ascertainable value and suggested that they be set aside to Vincent, or, if not, that a small percentage of gross proceeds or 50 percent of the first $3 million be awarded to Linda. Included in his evidence, however, was a plan for developing the patents which forecast a net profit of more than $48 million by the fifth year of market. The district court "awarded the patents to Vincent subject to a lien of 40 percent of the income from the patents, which the trial court vested in Linda. Linda's share of any income from the patents is to be calculated only after deducting necessary expenses." 21 Kan.App.2d at 390, 900 P.2d 249.

We first consider the propriety of including an escalator clause in the maintenance order. The first task for this court is interpretation of K.S.A. 60-1610(b)(2). This is a question of law for which the court's review is unlimited. Todd v. Kelly, 251 Kan. 512, 515, 837 P.2d 381 (1992). If acting in conformity with the statute, the district court has wide discretion in adjusting the financial obligations of theparties in a divorce action. Exercise of that discretion will not be disturbed on appeal unless clear abuse of discretion is shown. In re Marriage of Brown, 247 Kan. 152, 165, 795 P.2d 375 (1990).

An award of maintenance is governed by K.S.A. 60-1610(b)(2), which states in pertinent part:

"The decree may award to either party an allowance for future support denominated as maintenance, in an amount the court finds to be fair, just and equitable under all of the circumstances. The decree may make the future payments modifiable or terminable under circumstances prescribed in the decree. The court may make a modification of maintenance retroactive to a date at least one month after the date that the motion to modify was filed with the court. In any event, the court may not award maintenance for a period of time in excess of 121 months.... Maintenance may be in a lump sum, in periodic payments, on a percentage of earnings or on any other basis. At any time, on a hearing with reasonable notice to the party affected, the court may modify the amounts or other conditions for the payment of any portion of the maintenance originally awarded that has not already become due, but no modification shall be made without the consent of the party liable for the maintenance, if it has the effect of increasing or accelerating the liability for the unpaid maintenance beyond what was prescribed in the original decree. Every order requiring payment of maintenance under this section shall require that the maintenance be paid through the clerk of the district court or the court trustee except for good cause shown."

In the Court of Appeals, Vincent argued that the escalator clause, which increases the maintenance amount if his income exceeds the $4,227 monthly average, is not based, as it should be, on Linda's need. He further contended that the effect of the escalator clause was "automatic modification of a maintenance award without the necessary notice and an opportunity for a hearing." 21 Kan.App.2d at 388, 900 P.2d 249.

The Court of Appeals disagreed. It focused on this sentence from the statute: " 'Maintenance may be in a lump sum, in periodic payments, on a percentage of earnings or on any other basis.' " 21 Kan.App.2d at 389, 900 P.2d 249. The Court of Appeals stated:

"The term 'any other basis' offers broad support to any reasonable formula employed by a trial court in awarding maintenance. It would appear to permit the use of any formula deemed reasonable under the circumstances. Accordingly, we hold that the Kansas statute does permit the reasonable use of an escalator clause in ordering maintenance." (Emphasis added.) 21 Kan.App.2d at 389, 900 P.2d 249.

The 20 percent of increased income escalator clause formulated by the trial court was considered by the Court of Appeals to be a reasonable way of taking into account the potential for growth and for temporary, significant increases in Vincent's income. Thus, the Court of Appeals affirmed that portion of the decree. 21 Kan.App.2d at 389, 900 P.2d 249.

It is not precisely accurate to say, as the Court of Appeals does, that the statute permits reasonable use of an escalator clause in ordering maintenance. If the statute permits use of an escalator clause, it would be correct to say that an appellate court review involves the inquiry whether use of the clause is reasonable in the circumstances. Although the end result may be the same, the initial inquiry is whether the statute permits the use of an escalator clause in a maintenance award, not whether the statute permits the use of a reasonable escalator clause. It also may be noted that, for Vincent, the end result may be the same because his position is that the statute does not permit use of an escalator clause, but, even if it does, the particular one used in this case is unacceptable, i.e., unreasonable.

Vincent argues in his supplemental brief that the Court of Appeals' construction of the statute is unreasonable in that it fails to harmonize various provisions of the statute. In...