Chris Carney v. Heather Carney (n.K.A. Foster)

• Court: Court of Appeals of Kentucky
• Decided: September 17, 2020
• Docket: 2019 CA 001134
• Status: Unknown

Opinion

RENDERED: SEPTEMBER 18, 2020; 10:00 A.M. NOT TO BE PUBLISHED

Commonwealth of Kentucky Court of Appeals

NO. 2019-CA-001134-ME

CHRIS CARNEY APPELLANT

APPEAL FROM MCCRACKEN CIRCUIT COURT v. HONORABLE DEANNA WISE HENSCHEL, JUDGE ACTION NO. 11-CI-01059

HEATHER CARNEY (N/K/A FOSTER) APPELLEE

OPINION AFFIRMING

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BEFORE: ACREE, KRAMER, AND TAYLOR, JUDGES.

ACREE, JUDGE: Chris Carney appeals the McCracken Circuit Court’s June 24,

2019 order granting Heather Carney’s motion for contempt, ordering Chris to

indemnify her from a debt incurred during the marriage, and sanctioning him by

denying his access to an Edward Jones account until Heather is indemnified.

Finding no error, we affirm. BACKGROUND

The parties divorced on July 5, 2012. However, the circuit court

bifurcated the decree. All issues were eventually resolved in a supplemental

decree issued on November 15, 2012. In that decree, Chris retained his business,

Carneeds, Inc., including the real estate the business occupied. He was ordered to

use his best efforts to release Heather from liens on the business loans, but the

circuit court recognized it may not be possible to release Heather from notes she

signed because the business was then losing money and the parties’ residence was

in foreclosure. (Trial Record (T.R.) at 238.) Regardless, Chris was to use his best

efforts to accomplish these measures.

Soon thereafter, the parties filed a joint motion to supplement the

decree regarding their agreement about the marital residence. The relevant portion

reads as follows:

Chris Carney further agrees that as to debts on the former marital residence he will indemnify and hold Heather Carney harmless thereon. Chris Carney agrees to use his best efforts to refinance the house so as to release Heather Carney from any liability. Heather Carney acknowledges that as the house is in foreclosure, Chris Carney may not be able to immediately refinance, but that he shall use his best efforts to refinance the house long term, so as to remove Heather Carney from any remaining liability on the note and mortgage.

(T.R. at 247.)

-2- In 2019, seven years after the divorce was finalized, Heather received

a notice concerning a Small Business Administration (SBA) loan Chris had taken

for his business for which Heather was a co-signer. A balance of some $251,000

was due. Chris then filed for bankruptcy protection, but that only addressed

Chris’s liability and not Heather’s liability. Heather filed a motion for rule, and a

hearing was held on June 12, 2019.

The circuit court concluded that Chris attempted to refinance in 2014

but was unable to do so and, since that time, had failed to make any efforts to

refinance or keep the loan current. Yet, Chris purchased a Corvette, boats, and

other luxury items within the previous year. Ultimately, the circuit court found

Chris did not use reasonable efforts to refinance this debt and held him in

contempt. The circuit court ordered Chris to indemnify and hold Heather harmless

on any claims made against her regarding the SBA loan and to pay Heather’s

attorney fees for filing the motion. To facilitate Chris’s compliance, the circuit

court’s order prohibited Chris from cashing out or transferring any funds in his

Edward Jones financial account, until further orders of the court, except to the

extent those funds could be used in satisfying Chris’s obligation to indemnify

Heather. This appeal followed.

-3- STANDARD OF REVIEW

Trial courts have broad authority to enforce orders, including the

conducting of contempt proceedings when necessary. Commonwealth, Cabinet for

Health and Family Services v. Ivy, 353 S.W.3d 324, 332 (Ky. 2011). The standard

for reviewing a trial court’s use of its contempt powers is abuse of discretion, and

the clear-error standard is applied to findings of fact. Id. Factual findings “shall

not be set aside unless clearly erroneous[.]” CR1 52.01. “Findings of fact are not

clearly erroneous if supported by substantial evidence.” Janakakis-Kostun v.

Janakakis, 6 S.W.3d 843, 852 (Ky. App. 1999) (citation omitted).

ANALYSIS

Chris argues the circuit court abused its discretion in finding him in

contempt and issuing sanctions because he was unable to refinance his loan. We

disagree.

KRS2 403.180(5) provides: “Terms of the agreement set forth in the

decree are enforceable by all remedies available for enforcement of a judgment,

including contempt, and are enforceable as contract terms.” There is an implied

covenant of good faith and fair dealing in every contract, “and contracts impose on

the parties thereto a duty to do everything necessary to carry them out.” Farmers

1 Kentucky Rules of Civil Procedure. 2 Kentucky Revised Statutes.

-4- Bank and Trust Co. of Georgetown, Kentucky v. Willmott Hardwoods, Inc., 171

S.W.3d 4, 11 (Ky. 2005) (citation omitted).

When a contract does not fix a time for performance of the contract or of any act or duty of the parties to it, there is no fixed rule to determine what constitutes a reasonable period. Rather, what is a reasonable time is to be determined by the facts and circumstances of each case. Ultimately, a court must make a subjective determination of what constitutes a reasonable period.

Liggett Group, Inc. v. Commonwealth, 232 S.W.3d 559, 563 (Ky. App. 2007)

(citations omitted). Along those lines, in Crowder v. Rearden, this Court said:

A trial court has inherent power to punish individuals for contempt, Newsome v. Commonwealth, 35 S.W.3d 836, 839 (Ky. App. 2001), and nearly unfettered discretion in issuing contempt citations. Smith v. City of Loyall, 702 S.W.2d 838, 839 (Ky. App. 1986). We will reverse a finding of contempt only if the trial court abused its discretion in imposing the sentence. Meyers v. Petrie, 233 S.W.3d 212, 215 (Ky. App. 2007).

296 S.W.3d 445, 450 (Ky. App. 2009).

Chris seems to argue that refinancing the loan is an impossible task

because of his financial situation. He contends his financial situation has actually

worsened over the years, yet admitted he purchased luxury items because “it was

something I wanted.” (Video Record (V.R.) 06/12/2019; 02:25:00.) Chris has not

attempted to refinance the loan in seven years and failed to make any payments

during that time. Regardless, the circuit court chose to have him, at the very least,

indemnify Heather from the SBA loan as was agreed in the supplemental decree in

-5- 2012. We reiterate that the implied covenant of good faith and fair dealing in

every contract imposes a duty to do everything necessary to carry it out. Farmers

Bank and Trust, 171 S.W.3d at 11. We find no error.

We also conclude it was not an abuse of discretion for the circuit court

to prohibit Chris from cashing out or transferring funds from his Edward Jones

account until further orders. The circuit court stated the money can be used to

protect Heather on any indebtedness. “The purpose of civil contempt is to coerce

rather than punish. Ultimately, then, the defining characteristic of civil contempt is

the fact that contemnors ‘carry the keys of their prison in their own pockets.’”

Blakeman v. Schneider, 864 S.W.2d 903, 906 (Ky. 1993). The primary purpose

was not to punish, but rather to urge his obedience to and respect for an order of

the court. Hardin v. Summitt, 627 S.W.2d 580, 581-82 (Ky. 1982).

The sanction was merely a tool to compel compliance. If Chris

chooses to refinance or indemnify Heather in another way, then the circuit court

would revisit the order.

CONCLUSION

Finding no error, we affirm the McCracken Circuit Court’s June 24,

2019 order.

ALL CONCUR.

-6- BRIEF FOR APPELLANT: BRIEF FOR APPELLEE:

Heather L. Jones Alisha Kay Bobo Paducah, Kentucky Paducah, Kentucky

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