Rose v. Rose.

• Decision Date: 22 June 2010
• Docket Number: Docket No. 286568.
• Citation: 795 N.W.2d 611,289 Mich.App. 45
• Parties: ROSEv.ROSE.
• Court: Court of Appeal of Michigan — District of US

289 Mich.App. 45

795 N.W.2d 611

ROSE

v.ROSE.

Docket No. 286568.

Court of Appeals of Michigan.

Submitted Jan. 5, 2010, at Grand Rapids.Decided June 22, 2010, at 9:15 a.m.

Speaker Law Firm, PLLC (by Liisa R. Speaker, Kalamazoo), for plaintiff.Wheeler Upham, P.C. (by Nicholas S. Ayoub), Grand Rapids, for defendant.Before: STEPHENS, P.J., and GLEICHER and M.J. KELLY, JJ.GLEICHER, J.

In this postdivorce dispute over nonmodifiable spousal-support language in a divorce judgment, plaintiff, Rebecca Ann Rose, appeals by leave granted a circuit court order relieving defendant, Wesley Allen Rose, Sr., from the judgment and reducing his spousal-support obligation. We reverse and remand for further proceedings.

I. UNDERLYING FACTS AND PROCEEDINGS

The parties, who wed in 1983, entered into a consent divorce judgment in 2006. During the 22 years of the parties' marriage, they acquired substantial wealth. The couple's most valuable marital asset consisted of stock that defendant owned in Die Tron, Inc., a tool and die company in which defendant partially acquired an interest in 1992. In 2000, defendant purchased the entirety of Die Tron's stock and became the company's sole owner. When the parties divorced, they valued defendant's interest in Die Tron at $6 million.

Defendant wished to avoid liquidating or selling Die Tron in the course of the parties' divorce, in part because he hoped that David Rose, his son from a prior marriage, would eventually buy the business. Instead of converting defendant's Die Tron holdings into cash, the parties agreed that defendant would pay plaintiff spousal support in the amount of $230,000 a year and that plaintiff would forgo any interest in Die Tron. The parties further agreed that plaintiff's spousal support would be nonmodifiable. The divorce judgment, which the parties negotiated with the assistance of counsel, includes the following relevant details concerning modification:

B. The spousal support provided for herein shall be paid directly to or for the benefit of plaintiff by defendant and not through the Office of the Friend of the Court. The parties intend that the spousal support provided for herein shall be all of the spousal support that plaintiff shall receive from defendant. Spousal support payments shall automatically terminate upon plaintiff's death or upon defendant's death.

* * *

D. It is the intention and understanding of the parties that the spousal support obligations of the defendant be non-modifiable regarding duration and amount, except:

(1) If plaintiff has died, resulting in early termination as provided herein;

(2) If defendant has died, since the parties have provided for the continuation of plaintiff's spousal support through the assignment by defendant to plaintiff of his New England Life Insurance Company Variable Universal Life Policy ..., a significant part of the life insurance proceeds of which are intended to secure to plaintiff adequate spousal support in the event of defendant's death.

This is the agreement of the parties, and it is the intention of the parties that regardless of any change in circumstances or in the lifestyles of plaintiff or defendant, this spousal support provision is to be non-modifiable.

After entry of the divorce judgment, defendant ceded responsibility for Die Tron's day-to-day operations to David Rose. In January 2008, defendant learned that David Rose had committed financial improprieties that severely compromised Die Tron's ability to remain solvent. Defendant shared this information with plaintiff, who agreed to temporarily modify the spousal-support payment schedule while defendant attempted to rescue Die Tron. Defendant's efforts proved unsuccessful, and Die Tron ceased operation in March 2008. In April 2008, plaintiff moved to enforce the divorce judgment's spousal-support provision. Defendant countered with a motion to modify his support obligation and for relief from the spousal-support portion of the divorce judgment under MCR 2.612.

The circuit court denied defendant's motion to modify the judgment, finding that the spousal-support term “is non-modifiable and not subject to judicial review.” After conducting an evidentiary hearing, the circuit court granted defendant's motion for relief from judgment and reduced his spousal-support obligation to $900 a month. This Court granted plaintiff's application for leave to appeal.

II. ANALYSIS

Plaintiff contends that because the parties clearly and unambiguously agreed to forgo their statutory right to petition for modification of spousal support, the circuit court abused its discretion by partially relieving defendant of his spousal-support obligation. A divorce judgment entered by agreement of the parties represents a contract. Holmes v. Holmes, 281 Mich.App. 575, 587, 760 N.W.2d 300 (2008). The “interpretation of a contract is a question of law reviewed de novo on appeal....” Reed v. Reed, 265 Mich.App. 131, 141, 693 N.W.2d 825 (2005). Likewise, “[t]he proper interpretation and application of a court rule is a question of law, which we review de novo.” Henry v. Dow Chem. Co., 484 Mich. 483, 495, 772 N.W.2d 301 (2009). We review for an abuse of discretion a circuit court's ultimate decision to grant or deny relief from a judgment. Yee v. Shiawassee Co. Bd. of Comm'rs, 251 Mich.App. 379, 404, 651 N.W.2d 756 (2002).

In Staple v. Staple, 241 Mich.App. 562, 574, 616 N.W.2d 219 (2000), a special conflict panel of this Court considered whether parties to a divorce judgment may voluntarily relinquish their statutory right to seek modification of a spousal-support agreement “and instead stipulate that their agreement regarding alimony is final, binding, and nonmodifiable[.]” The Court in Staple answered this question affirmatively, holding that if divorcing parties negotiate a settlement in which they clearly and unambiguously forgo their statutory right to petition for modification of spousal support, courts must enforce their agreement. Id. at 564, 581, 616 N.W.2d 219. In this case, the parties agree that the holding in Staple supplies the appropriate analytical starting point.

Staple recognized that for some divorcing parties, “the general rule of finality is not always suitable.... In many situations, judgments of divorce must anticipate that circumstances will change for both the spouses who require support and the spouses who must provide that support.” Id. at 565, 616 N.W.2d 219. In the face of changed circumstances, “flexibility in the form of modifiable arrangements may be more important than finality....” Id. Recognizing the need for flexibility in this realm, our Legislature enacted MCL 552.28, which grants circuit courts the authority to modify the spousal-support award contained in a divorce judgment.¹

This Court explained in Staple, 241 Mich.App. at 574–575, 616 N.W.2d 219, that the plain language of MCL 552.28 does not preclude a party from waiving his or her right to seek modification of a spousal-support award and that Michigan courts often enforce agreements to waive statutory rights. The Court observed that, “[m]ore importantly,” longstanding caselaw holds that when both parties waive their rights to seek spousal support altogether, “neither party has the right to petition the court” to modify that agreement by adding a provision for spousal support when none previously existed. Id. at 575, 616 N.W.2d 219. In light of these legal principles, we concluded in Staple that “the statutory right to seek modification of alimony may be waived by the parties where they specifically forgo their statutory right to petition the court for modification and agree that the alimony provision is final, binding, and nonmodifiable.” Id. at 578, 616 N.W.2d 219.

After announcing this holding, the Court in Staple approvingly acknowledged the following “five public policy reasons why courts should enforce duly executed nonmodifiable alimony arrangements”:

(1) Nonmodifiable agreements enable parties to structure package settlements, in which alimony, asset divisions, attorney fees, postsecondary tuition for children, and related matters are all coordinated in a single, mutually acceptable agreement; (2) finality of divorce provisions allows predictability for parties planning their postdivorce lives; (3) finality fosters judicial economy; (4) finality and predictability lower the cost of divorce for both parties; (5) enforcing agreed-upon provisions for alimony will encourage increased compliance with agreements by parties who know that their agreements can and will be enforced by the court.

[ Id. at 579, 616 N.W.2d 219.]

The Court further emphasized that its decision “also advance[d] the public policy of requiring individuals to honor their agreements.” Id. at 579–580, 616 N.W.2d 219.

The circuit court determined that the instant judgment's nonmodifiable spousal-support language fully complied with the requirements this Court identified in Staple. The circuit court then considered whether, despite the parties' covenant not to seek any modification of spousal support, defendant had established a ground for relief from the judgment under MCR 2.612(C). MCR 2.612(C)(1) authorizes a court to relieve a party from a final judgment on the following grounds:

(a) Mistake, inadvertence, surprise, or excusable neglect.

(b) Newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under MCR 2.611(B).

(c) Fraud (intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party.

(d) The judgment is void.

(e) The judgment has been satisfied, released, or discharged; a prior judgment on which it is based has been reversed or otherwise vacated; or it is no longer equitable that the judgment should have prospective application.

(f) Any other reason justifying relief from the operation of the judgment.

A motion for relief from judgment under subrules (a), (b), or (c) must be made within one year after the...