Pohl v. Pohl

• Decision Date: 09 September 2014
• Docket Number: No. 32S04–1404–DR–245.,32S04–1404–DR–245.
• Citation: 15 N.E.3d 1006
• Parties: Barbara J. POHL, Appellant (Respondent), v. Michael G. POHL, Appellee (Petitioner).
• Court: Indiana Supreme Court

15 N.E.3d 1006

Barbara J. POHL, Appellant (Respondent)

v.Michael G. POHL, Appellee (Petitioner).

No. 32S04–1404–DR–245.

Supreme Court of Indiana.

Sept. 9, 2014.

Deborah M. Agard, Daniel W. Kiehl, Law Office of Deborah M. Agard, Indianapolis, IN, Attorneys for Appellant.

Robert C. Rothkopf, Thomas L. Landwerlen, Landwerlen & Rothkopf, L.L.P., Indianapolis, IN, Attorneys for Appellee.

Opinion

RUSH

, Chief Justice.

Nearly twenty years ago, our decision in Voigt v. Voigt reserved the question of whether a court may modify a maintenance obligation that originates in a settlement agreement, but rests on grounds such as incapacity that would have permitted an identical award even in the absence of an agreement. 670 N.E.2d 1271, 1280 n. 13 (Ind.1996)

. That question poses a choice between a rock and a hard place: As Voigt recognized, permitting modification may unjustly upend a delicate balance the parties struck in negotiations with the expectation of finality. Id. at 1278

& n. 11. Yet prohibiting it may cause undue hardship to a party who faces unforeseen circumstances.

We conclude that prohibiting modification will cause harsh results somewhat less frequently than the alternative, making it the better of those two unsatisfactory choices. We therefore hold that any maintenance provision in a settlement agreement, regardless of its grounds, is modifiable only if the agreement so provides. But this agreement does so provide—echoing the language of the incapacity maintenance statute by making the agreed maintenance amount subject to “further order of the court” in the alternative to “agreement of the parties.” We therefore reverse the trial court and remand with instructions to apply the incapacity maintenance statute's “substantial and continuing change in circumstances” standard to the evidence presented at the modification hearing.

Facts and Procedural History

Barbara and Michael Pohl were married in 1991, and their one child, M.P., was born in 1995. For most of their marriage, Barbara was the breadwinner—Michael suffered a back injury in 1996, and the resulting Social Security Disability (SSDI) payments are still his sole individual income.

When the Pohls divorced in March 2009, they entered into a “Custody, Support, and Property Settlement Agreement” (“Agreement”) that was approved and incorporated into their dissolution decree. But in what the parties call an oversight on their part, this original agreement did not provide for spousal maintenance.

The Pohls then filed an Addendum to the Agreement in May 2009, calling for Barbara to pay Michael monthly maintenance of $4,000 beginning in June 2013:

[T]he parties herein stipulate and agree that the Wife shall pay to the Husband the sum of Four Thousand Dollars ($4,000.00) per month as post-dissolution spousal maintenance, commencing the 5th day of June, 2013, and continuing on the 5th day of each successive month thereafter until further order of the court or agreement of the parties.

Michael's attorney drafted the Addendum, while Barbara chose not to retain counsel, despite her six-figure income. Barbara said she agreed to this delayed maintenance because she wanted to be “fair” given the disparity in their incomes and because she wanted to “keep the peace for our son's benefit.” But she admits the June 2013 date was mistakenly tied to M.P.'s high school graduation rather than his emancipation date in December 2014.

In October 2012, months before the first maintenance payment came due, Barbara filed a petition to modify this maintenance obligation from $4,000 to $1,000 monthly, among other requests not relevant here. In support, she cited Michael's changed circumstances. His yearly income from SSDI payments increased from around $5,000 in 2009 to at least $22,000 in 2012. Michael and M.P. had also moved into a home with Michael's fiancée—and while Michael paid for the majority of monthly household expenses and for the fiancee's car payments, his fiancee earned well over $100,000 per year and paid the mortgage. But after earning a pharmacy degree in 2010, Barbara had likewise increased her yearly income: from $127,000 when the divorce was finalized in 2009 to about $182,000 in 2012 (and nearly $230,000 the year before).

In March 2013, the trial court held a hearing on the modification (and several other post-dissolution matters not challenged on appeal). The trial court denied Barbara's request to modify her spousal maintenance obligation. It concluded that the agreement was not intended to be modifiable and thus could be modified only by showing fraud, duress, or mistake, and that Barbara had not made that showing.

Barbara appealed, arguing that the Addendum called for incapacity maintenance, which was modifiable because the court could have ordered it even in the absence of an agreement. See Voigt, 670 N.E.2d at 1280 n. 13

(“reserv[ing] the question whether a court may modify a maintenance obligation that originated in a settlement agreement but that rested on a ground—incapacity, care-giving, or rehabilitation—on which the court could have ordered the same maintenance in the absence of agreement”). The Court of Appeals affirmed the trial court. Pohl v. Pohl, 999 N.E.2d 442 (Ind.Ct.App.2013).

We granted transfer to squarely answer Voigt 's reserved question, and we conclude that even when a maintenance award could have been made in the absence of an agreement, principles of contract finality preclude modification unless the agreement is modifiable by its own terms. But here, the parties' agreement is modifiable because they expressly made it subject to “further order of the court,” echoing similar language in the incapacity maintenance statute. We therefore reverse the trial court and remand to consider whether the parties' evidence established a substantial and continuing change in circumstances making the agreed maintenance award unreasonable—rather than the “fraud, duress, or mistake” standard the trial court erroneously required Barbara to meet.

Standard of Review

Both questions here—determining the nature of the parties' agreed spousal maintenance obligation, and whether their agreement is modifiable without both parties' consent—are matters of contract interpretation. Accordingly, they present questions of law we review de novo. Bailey v. Mann, 895 N.E.2d 1215, 1217 (Ind.2008)

. “Unless the terms of the agreement are ambiguous, they will be given their plain and ordinary meaning.” Id. But as with other contracts, if there is an ambiguity, we may consider extrinsic (parol) evidence to resolve it, with the aim of carrying out the parties' likely intent. Johnson v. Johnson, 920 N.E.2d 253, 256 (Ind.2010).

Discussion

I. To Preserve Freedom of Contract, Settlement Agreements Are Generally Non–Modifiable Without the Parties' Consent, Absent Fraud or Other Defects in the Contract Process.

We first considered courts' authority to modify agreed maintenance awards in Voigt. There, we held that “a court has no statutory authority to grant a contested petition to modify a maintenance obligation that arises under a previously approved settlement agreement if the court alone could not initially have imposed an identical obligation had the parties never voluntarily agreed to it.” 670 N.E.2d at 1280

. Our holding was based in part on the Legislature having restricted courts' discretion to impose maintenance “to three, quite limited options”—incapacity (the recipient spouse's means of self-support are materially affected by incapacity), caregiver (the recipient spouse must forego employment to care for an incapacitated child), and rehabilitative (the recipient spouse needs a limited period of support to pursue education or training to improve employability). Id. at 1276–77. We were concerned that agreeing to maintenance in other, non-statutory circumstances should not “effectively grant to the court—under the guise of modifying a proffered agreement—a general power to set whatever amount of maintenance the court may deem just and proper” beyond the court's statutory authority. Id. at 1278

.

Voigt also recognized that judicial modification of agreed maintenance raises serious concerns about freedom of contract and the parties' expectations. Indiana encourages such settlement agreements to “promote the amicable settlements of dissolution-related disputes,” on the expectation that “freedom of contract will ... produce mutually acceptable accords, to which parties will voluntarily adhere.” Id. at 1277–78

. Yet we recognized that “the actual purpose lying behind any particular provision of a settlement agreement may remain forever hidden from the trial judge,” and “[i]ndeed, it may be quite idiosyncratic.” Id. at 1278. Accordingly, “a court's bearing down on a maintenance provision could produce a rupture in the delicate consent holding together another part of the agreement” and upend “a tenuous armistice between the parties.” Id. at 1278 & n. 11. That policy concern factored heavily into our conclusion that an agreement for non-statutory forms of maintenance may be modified only with both parties' consent. Id. at 1280.

Nevertheless, Voigt expressly “reserve[d] the question whether a court may modify a maintenance obligation that originated in a settlement agreement but that rested on a ground—incapacity, caregiving, or rehabilitation—on which the court could have ordered the same maintenance in the absence of agreement.” Id. at 1280

n. 13. Those circumstances present a closer call because they do not implicate the concern about overstepping statutory authority, but “the freedom of contract considerations ... will be present in such cases and point against modification.” See

id. at 1280 (Sullivan, J., concurring). We have had opportunities to address that reserved question, but never found it presented squarely enough to warrant resolving the issue. See

Haville v. Haville, 825 N.E.2d 375, 378 (Ind.2005) (finding the Voigt question not squarely presented because parties agreed to non-modifiable...