Thacker v. Hale

• Decision Date: 05 September 2002
• Docket Number: No. 0532,0532
• Citation: 806 A.2d 751,146 Md. App. 203
• Parties: Sheila F. THACKER f/k/a Sheila Thacker Hale v. Edwin F. HALE, Sr.
• Court: Court of Special Appeals of Maryland

806 A.2d 751

146 Md. App. 203

Sheila F. THACKER f/k/a Sheila Thacker Hale v. Edwin F. HALE, Sr.

No. 0532, September Term, 2001.

Court of Special Appeals of Maryland.

September 5, 2002.

Shale D. Stiller (Evelyn W. Pasquier and Piper, Marbury, Rudnick & Wolfe LLP on the brief), Baltimore, for appellant.

Bambi Glenn, Bel Air (Michael S. Libowitz, Margaret L. Argent and Thomas & Libowitz, P.A. on the brief), Baltimore, for appellee.

Argued before SONNER, ADKINS and WILLIAM W. WENNER (Retired, Specially Assigned), JJ. ADKINS, Judge.

The issue before us is whether a court has revisory power under Md. Rule 2-535(b) to strike a clause allowing a wife to accelerate the balance due on an installment monetary award in the event that the husband misses an installment. The Circuit Court for Baltimore County concluded that Maryland law does not authorize such acceleration, and that the acceleration provision in the 1989 divorce judgment of Sheila F. Thacker, appellant, and Edwin F. Hale, Sr., appellee, was either an "irregularity" subject to revision under Md. Rule 2-535(b), or an unenforceable "nullity."

Thacker challenges the circuit court's order striking the acceleration clause from the judgment, presenting two questions for our review:

I. Did the trial court err in striking the acceleration clause from the judgment on the ground that it was either an "irregularity" or "mistake" within the meaning of Md. Rule 2-535(b), or an unenforceable "nullity"?

II. Did the circuit court err in holding that the acceleration clause in the parties' 1989 divorce judgment was an unenforceable penalty that altered the amount and method of payment of the monetary award in that judgment?

We shall not resolve the second issue, because we conclude that, even if the acceleration clause was an impermissible penalty, the circuit court did not have revisory power to strike it twelve years after the divorce judgment became enrolled.

FACTS AND LEGAL PROCEEDINGS

On November 17, 1988, the Circuit Court for Baltimore County entered a final judgment dissolving the marriage of Thacker and Hale. The judgment included a $3,932,752 monetary award to Thacker. In paragraph 11(c), the court directed Hale to pay Thacker $3,000,000 of this award

in annual installments of $200,000.00 per year during the first ten years immediately following the date of this Judgment and $100,000.00 per year for the next succeeding ten years, with the first such payment to be made on December 31, 1989 and subsequent payments thereafter to be made on the last day of each and every succeeding year until the $3,000,000.00 balance is paid in full[.]

Under paragraph 11(d), Thacker had the right to accelerate the balance due on the monetary award if Hale failed to make any of the scheduled payments.

In the event of [Hale's] default in making any of the above payments when due on account of this monetary award, at [Thacker's] election, the entire balance outstanding on account of the aforesaid monetary award shall become immediately due and payable by [Hale] to [Thacker][.]

We shall refer to this as the "acceleration clause."

Hale immediately moved to alter or amend the judgment, but his motion did not contest the acceleration clause. The court partially granted that motion, and reduced, inter alia, the total amount of the monetary award. It then revised the terms of Hale's payment obligation as follows:

[P]aragraph (11) of the aforesaid Judgment dated November 17, 1988 is amended to reduce the monetary award granted in favor of [Thacker] to be paid by [Hale] to the sum of $3,657,752.00, said sum to be payable as provided in paragraph (11) of the aforesaid Judgment dated November 17, 1988, with the exception of sub-paragraph (c), which... is hereby deleted and substituted in lieu thereof is the following new subparagraph (c), namely:

"(c) The $2,725,000.00 balance of the monetary award shall be paid by [Hale] to [Thacker] in annual installments of $136,250.00 per year during the 20 years immediately following the date of this Amendment to Judgment, with the first such payment to be made on December 31, 1989, and subsequent payments thereafter to be made on the last day of each and every next succeeding year until the $2,725,000.00 balance is paid in full[.]"

The court explicitly "ratified and confirmed" all other provisions of the November 17 judgment, including the acceleration clause in paragraph 11(d). The court entered the amended judgment on December 16, 1988.

Thacker then moved to alter or amend the December 16 judgment. She specifically asked the court to enhance her option to accelerate the balance due on the monetary award in the event that Hale's "assets do become liquidated." In doing so, she noted that "[t]he Amendment to Judgment made no provision for accelerated payment except in the event of [Hale's] default in making any [installment] payments [on the monetary award] when due." Hale filed a written opposition to Thacker's motion, arguing that the December 16 amendment "only changed the figures in the payment schedule, not the basic design or character of that schedule, which as ordered by this Court has never called for accelerated payments except in the event of default." The court denied Thacker's motion, explaining that "through the provisions of paragraph (11) of the Judgment and Amendment to Judgment ... specifically including subparagraph (d) of paragraph (11), .... the current provisions of the Judgment ... and other available protections of law are sufficient to insure the payment of the monetary award herein made...."

Neither Thacker nor Hale appealed the judgment, which became enrolled thirty days later. We shall refer to this enrolled judgment as the "1989 divorce judgment."

Nearly twelve years later, on November 27, 2000, Thacker filed a motion to accelerate the entire unpaid balance of the monetary award, which she alleged was $1,271,666.45. She asserted that Hale had never made any of the annual payments by the December 31 deadline established in the judgment. Instead, she claimed, Hale made partial payments spread out as late as the May following the December 31 payment date. She set out the exact dates and amounts of Hale's payments on the monetary award. "As to the $136,250 installment that was due on December 31, 1999, Mr. Hale has made two partial payments to date of $45,416.67 each, but has failed and refused to pay the balance[,]" leaving "$45,416.66 in arrears as of the date of [the] [m]otion."

Thacker admitted that she "originally acquiesced in the delayed partial payment procedure early in 1991 in the face of a threat by Mr. Hale that he would declare bankruptcy if she insisted on immediate payment in full of the December 31, 1990 installment." In subsequent years, she continued to acquiesce to such partial payments "as long as [they] were being made within three or four months of their due date." But by November 2000, Thacker alleged, Hale had not yet fully paid the annual installment that was due and payable on December 31, 1999. He purportedly withheld payment "in an apparent attempt to coerce Ms. Thacker into entering into a cash settlement of all of Mr. Hale's payment obligations, including both the alimony award and the monetary award[.]" Thacker found Hale's settlement proposals "unacceptable," and proceeded to "exercise[ ] her election under Paragraph 11(d) ... to declare the entire balance outstanding on account of the monetary award immediately due and payable[.]" She asked the court to reduce the remaining balance of the monetary award to judgment.

On January 26, 2001, Hale filed an opposition to Thacker's motion to accelerate. For the first time, he argued that "the Maryland Marital Property Act ... does not permit this [c]ourt to `accelerate' payment on the unpaid balance of a marital award where a court has provided for payment of the award over a period of time and where the balance is not yet due and owing." Citing McClayton v. McClayton, 68 Md.App. 615, 515 A.2d 231 (1986), he contended that the court's authority was limited to entering a judgment for any installment payments that were due and owing. Because "[f]uture installments on a monetary award are not `due and owing,' "the trial court had "exceed[ed] its statutory authority" by including the acceleration clause in the judgment. He maintained that "[s]uch an action" was, "`if not a total nullity, at least an `irregularity' within the meaning of Rule 2-535(b).'" See id. at 621, 515 A.2d 231.

Hale eventually made all the installment payments due through December 31, 2000.¹ On February 28, 2001, he filed a motion to revise the 1989 divorce judgment, by deleting the acceleration clause.

The circuit court agreed with Hale that the acceleration clause was an unenforceable penalty. In a written opinion, it concluded that Thacker's exercise of the acceleration clause "would retroactively alter both the method and amount of payment of the structured monetary award." Noting that "the present value of the $1,090,000 to be paid to her is considerably less than that sum," the court found it "patently inequitable to provide her with such a reward in view of the insubstantial nature of [Hale's] past failures to adhere strictly to the specified due dates of payments." Accordingly, the court granted Hale's motion to revise the judgment by striking paragraph 11(d).

Because ... the acceleration clause is not a device permitted by the Family Law Article, it ought not to have been included in the Judgment of Divorce. Accordingly, the [c]ourt also finds it to be an irregularity and thus subject to attack by [Hale] under Rule 2-535, albeit more than 30 days after entry of the Judgment.... Even if this [c]ourt's interpretation of Rule 2-535 is deemed erroneous, the acceleration clause is essentially a nullity....

Thacker now appeals this ruling.

DISCUSSION

Maryland Code (1984, 1999 Repl.Vol.), section 8-205 of the Family Law Article ("FL") governs the entry of a...