RENDERED: OCTOBER 2, 2020; 10:00 A.M. TO BE PUBLISHED
OPINION OF SEPTEMBER 25, 2020, WITHDRAWN
Commonwealth of Kentucky Court of Appeals
NO. 2019-CA-1116-MR
MAUREEN O’MEARA HOLLAND APPELLANT
APPEAL FROM JEFFERSON FAMILY COURT v. HONORABLE LAUREN ADAMS OGDEN, JUDGE ACTION NO. 15-CI-502475
JOHN ELKAN HERZFELD, III APPELLEE
OPINION AFFIRMING
** ** ** ** **
BEFORE: CLAYTON, CHIEF JUDGE; TAYLOR AND L. THOMPSON, JUDGES.
CLAYTON, CHIEF JUDGE: Maureen O’Meara Holland (“Holly”) appeals from
two orders of the Jefferson Family Court denying her motion to modify or
terminate her maintenance obligation to her former husband, John Elkan Herzfeld, III (“John”). Upon review of the record and applicable law, we affirm the decision
of the family court.
BACKGROUND
Holly and John were married in 1984. The marriage was dissolved by
a decree entered on April 6, 2016. During the course of the marriage, Holly was
employed as a writer, book editor, and consultant. In 2011, she started teaching
Pilates out of her home. At the time of the divorce, her annual income was
$63,630. John was employed as a full-time teacher until 2012, when he was
diagnosed with congestive heart failure. He worked as a substitute teacher until
2015, when he was diagnosed with Parkinson’s disease and began receiving Social
Security disability benefits. In 2015, he received approximately $30,000 in
disability benefits and $15,216 from part-time employment. His total income that
year was $49,879.
On March 28, 2016, Holly and John entered into a property settlement
agreement (“PSA”) that was subsequently incorporated into the final decree of
dissolution. Under the terms of the PSA, Holly retained a vehicle, bank accounts
with balances totaling $55,000, life insurance policies, and various small business
proprietorships. John retained a vehicle, bank accounts totaling $49,000,
individual retirement accounts, various stocks and mutual funds, personal property,
and art. The PSA equally divided various qualified retirement assets, personal
-2- property, and a Janus account with a total value of $27,456. Holly retained the
marital residence and obtained a mortgage which enabled her to transfer $135,000
to John for his share of the property. John invested this sum. Holly used her share
of the mortgage proceeds to open a Pilates studio.
With respect to the issue of maintenance, the PSA states:
Holly and John acknowledge that each of them are able- bodied persons capable of working and contributing to their own support, or have access to funds for his or her support. John has been determined to be partially disabled and entitled to SSDI and, for some period of time, disability payment from a private disability plan. Additionally, he acknowledges his ability to work (most recently working full time) at least part time and contribute to his support. Nonetheless, Holly acknowledges John meets the statutory requirements for maintenance, and the parties agree as follows: Holly will pay John maintenance in the amount of $800 per month until such time that John is able to draw full Social Security Retirement benefits at age 66½ years of age. The maintenance may be modifiable during the fixed term as provided by KRS 403.250, only in the event of changed circumstances so substantial and continuing as to make the terms of the award unconscionable, which may include (these possibilities are NOT exclusive) significant changes in either party’s income or assets. The term of the maintenance may not be extended and shall terminate in the event of the death of either party, John attaining age 66 and ½, or John’s remarriage.
In 2017, John was able to return to full-time employment as a grant
writer, earning $44,823. His investment income that year was $10,276. By the fall
of 2018, he had resumed full-time teaching with an annualized income of $50,000
-3- and he stopped receiving disability benefits. Holly’s Pilates studio has been
financially successful, and her annual income following the divorce ranged from
$70,000 to $75,000.
On May 1, 2018, Holly filed a motion seeking modification of her
maintenance obligation to John with an accompanying affidavit stating she
believed John’s disability was substantially, if not completely, resolved, and he
was consequently capable of earning sufficient income to meet his reasonable
needs. Both parties attended mediation as prescribed by the PSA but were unable
to reach an agreement.
The family court conducted an evidentiary hearing in January 2019, at
which Holly placed into evidence John’s 2017 tax returns which showed that, in
addition to his salary, he had earned $8,533 in interest and dividend income and
realized $1,743 in capital gains. He reduced his total income that year from
$74,338 to an adjusted gross income of $65,838 by contributing $6,500 to an IRA.
John testified that he lives in a 900-square-foot apartment which is substantially
smaller than the marital residence and has curtailed his lifestyle because of
uncertainty about his future economic circumstances. He also testified about his
health, explaining that he suffers from heart failure, Parkinson’s disease, bipolar
disorder, and hearing loss.
-4- The family court found that although Holly and John had both
experienced a substantial and continuing change in circumstances since entry of
their PSA, their respective incomes remained disparate. It denied Holly’s motion
to modify the maintenance obligations in the PSA because the current maintenance
award was not “manifestly unfair or inequitable.”
On April 8, 2019, Holly timely filed motions requesting the family
court to make additional findings of fact, amend the findings of fact, and alter and
amend its earlier order, arguing that it had failed to consider John’s additional
income from interest, dividends, and capital gains. John timely filed an objection
to these motions on May 1, 2019, pointing out that his current employment at a
higher salary was recent and by no means guaranteed to continue in light of his
ongoing and serious health problems. He also contended that the sale of assets
which generated capital gains in the amount of $1,743 in 2017 could not be
characterized as continuing income.
On June 13, 2019, the family court entered an order amending its
findings of fact to acknowledge that John was likely to meet his monthly living
expenses with his current salary and investment income. It reiterated, however,
that the terms of the PSA awarding him maintenance were not unconscionable and
denied Holly’s motion to modify or terminate her maintenance obligation. This
appeal by Holly followed.
-5- ANALYSIS
a. Standard of Review
Holly and John’s PSA incorporated the statutory standard for
modification of maintenance, which states in pertinent part that “the provisions of
any decree respecting maintenance may be modified only upon a showing of
changed circumstances so substantial and continuing as to make the terms
unconscionable.” Kentucky Revised Statutes (KRS) 403.250(1). “Maintenance
becomes unconscionable if it is manifestly unfair or inequitable. To determine
whether the circumstances have changed, we compare the parties’ current
circumstances to those at the time the court’s separation decree was entered.”
Tudor v.
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RENDERED: OCTOBER 2, 2020; 10:00 A.M. TO BE PUBLISHED
OPINION OF SEPTEMBER 25, 2020, WITHDRAWN
Commonwealth of Kentucky Court of Appeals
NO. 2019-CA-1116-MR
MAUREEN O’MEARA HOLLAND APPELLANT
APPEAL FROM JEFFERSON FAMILY COURT v. HONORABLE LAUREN ADAMS OGDEN, JUDGE ACTION NO. 15-CI-502475
JOHN ELKAN HERZFELD, III APPELLEE
OPINION AFFIRMING
** ** ** ** **
BEFORE: CLAYTON, CHIEF JUDGE; TAYLOR AND L. THOMPSON, JUDGES.
CLAYTON, CHIEF JUDGE: Maureen O’Meara Holland (“Holly”) appeals from
two orders of the Jefferson Family Court denying her motion to modify or
terminate her maintenance obligation to her former husband, John Elkan Herzfeld, III (“John”). Upon review of the record and applicable law, we affirm the decision
of the family court.
BACKGROUND
Holly and John were married in 1984. The marriage was dissolved by
a decree entered on April 6, 2016. During the course of the marriage, Holly was
employed as a writer, book editor, and consultant. In 2011, she started teaching
Pilates out of her home. At the time of the divorce, her annual income was
$63,630. John was employed as a full-time teacher until 2012, when he was
diagnosed with congestive heart failure. He worked as a substitute teacher until
2015, when he was diagnosed with Parkinson’s disease and began receiving Social
Security disability benefits. In 2015, he received approximately $30,000 in
disability benefits and $15,216 from part-time employment. His total income that
year was $49,879.
On March 28, 2016, Holly and John entered into a property settlement
agreement (“PSA”) that was subsequently incorporated into the final decree of
dissolution. Under the terms of the PSA, Holly retained a vehicle, bank accounts
with balances totaling $55,000, life insurance policies, and various small business
proprietorships. John retained a vehicle, bank accounts totaling $49,000,
individual retirement accounts, various stocks and mutual funds, personal property,
and art. The PSA equally divided various qualified retirement assets, personal
-2- property, and a Janus account with a total value of $27,456. Holly retained the
marital residence and obtained a mortgage which enabled her to transfer $135,000
to John for his share of the property. John invested this sum. Holly used her share
of the mortgage proceeds to open a Pilates studio.
With respect to the issue of maintenance, the PSA states:
Holly and John acknowledge that each of them are able- bodied persons capable of working and contributing to their own support, or have access to funds for his or her support. John has been determined to be partially disabled and entitled to SSDI and, for some period of time, disability payment from a private disability plan. Additionally, he acknowledges his ability to work (most recently working full time) at least part time and contribute to his support. Nonetheless, Holly acknowledges John meets the statutory requirements for maintenance, and the parties agree as follows: Holly will pay John maintenance in the amount of $800 per month until such time that John is able to draw full Social Security Retirement benefits at age 66½ years of age. The maintenance may be modifiable during the fixed term as provided by KRS 403.250, only in the event of changed circumstances so substantial and continuing as to make the terms of the award unconscionable, which may include (these possibilities are NOT exclusive) significant changes in either party’s income or assets. The term of the maintenance may not be extended and shall terminate in the event of the death of either party, John attaining age 66 and ½, or John’s remarriage.
In 2017, John was able to return to full-time employment as a grant
writer, earning $44,823. His investment income that year was $10,276. By the fall
of 2018, he had resumed full-time teaching with an annualized income of $50,000
-3- and he stopped receiving disability benefits. Holly’s Pilates studio has been
financially successful, and her annual income following the divorce ranged from
$70,000 to $75,000.
On May 1, 2018, Holly filed a motion seeking modification of her
maintenance obligation to John with an accompanying affidavit stating she
believed John’s disability was substantially, if not completely, resolved, and he
was consequently capable of earning sufficient income to meet his reasonable
needs. Both parties attended mediation as prescribed by the PSA but were unable
to reach an agreement.
The family court conducted an evidentiary hearing in January 2019, at
which Holly placed into evidence John’s 2017 tax returns which showed that, in
addition to his salary, he had earned $8,533 in interest and dividend income and
realized $1,743 in capital gains. He reduced his total income that year from
$74,338 to an adjusted gross income of $65,838 by contributing $6,500 to an IRA.
John testified that he lives in a 900-square-foot apartment which is substantially
smaller than the marital residence and has curtailed his lifestyle because of
uncertainty about his future economic circumstances. He also testified about his
health, explaining that he suffers from heart failure, Parkinson’s disease, bipolar
disorder, and hearing loss.
-4- The family court found that although Holly and John had both
experienced a substantial and continuing change in circumstances since entry of
their PSA, their respective incomes remained disparate. It denied Holly’s motion
to modify the maintenance obligations in the PSA because the current maintenance
award was not “manifestly unfair or inequitable.”
On April 8, 2019, Holly timely filed motions requesting the family
court to make additional findings of fact, amend the findings of fact, and alter and
amend its earlier order, arguing that it had failed to consider John’s additional
income from interest, dividends, and capital gains. John timely filed an objection
to these motions on May 1, 2019, pointing out that his current employment at a
higher salary was recent and by no means guaranteed to continue in light of his
ongoing and serious health problems. He also contended that the sale of assets
which generated capital gains in the amount of $1,743 in 2017 could not be
characterized as continuing income.
On June 13, 2019, the family court entered an order amending its
findings of fact to acknowledge that John was likely to meet his monthly living
expenses with his current salary and investment income. It reiterated, however,
that the terms of the PSA awarding him maintenance were not unconscionable and
denied Holly’s motion to modify or terminate her maintenance obligation. This
appeal by Holly followed.
-5- ANALYSIS
a. Standard of Review
Holly and John’s PSA incorporated the statutory standard for
modification of maintenance, which states in pertinent part that “the provisions of
any decree respecting maintenance may be modified only upon a showing of
changed circumstances so substantial and continuing as to make the terms
unconscionable.” Kentucky Revised Statutes (KRS) 403.250(1). “Maintenance
becomes unconscionable if it is manifestly unfair or inequitable. To determine
whether the circumstances have changed, we compare the parties’ current
circumstances to those at the time the court’s separation decree was entered.”
Tudor v. Tudor, 399 S.W.3d 791, 793 (Ky. App. 2013) (internal quotation marks
and citations omitted).
A family court’s refusal to modify maintenance is reviewed for abuse
of discretion. Id. “The test for abuse of discretion is whether the trial judge’s
decision was arbitrary, unreasonable, unfair, or unsupported by sound legal
principles.” Commonwealth v. English, 993 S.W.2d 941, 945 (Ky. 1999) (citations
omitted). “An appellate court is not authorized to substitute its own judgment for
that of the trial court where the trial court’s decision is supported by substantial
evidence.” Bickel v. Bickel, 95 S.W.3d 925, 928 (Ky. App. 2002) (citation
omitted).
-6- b. Discussion
Holly argues that the family court abused its discretion when it
refused to modify or terminate her maintenance obligation when, according to its
own findings of fact, John was capable of providing for his own reasonable living
expenses through his employment and investment income.
In its order of March 29, 2019, the family court found that both John
and Holly had experienced an increase in their incomes. John had returned to full-
time employment, earning $50,000 per year, or $35,000 more than at the time of
the PSA, and was no longer receiving disability benefits. Holly earns
approximately $75,000 per year from her Pilates business, approximately $12,000
more than she earned at the time of the PSA. The court concluded, however, that
the parties’ incomes remained disparate because John could not meet his
reasonable monthly living expenses of $3,778 without drawing on the substantial
savings he received from the PSA. It also noted that John is sixty-two years of age
and his medical conditions, while currently stable, will ultimately deteriorate. The
family court calculated that the current maintenance payment results in an adjusted
income of $65,400 for Holly and $59,600 for John. It concluded that the current
maintenance award was not unconscionable under KRS 403.250.
In its subsequent order addressing Holly’s motions for additional
findings and/or to alter, amend, or vacate the previous order, the family court
-7- addressed Holly’s contention that John’s investment income was sufficient to meet
the shortfall between his current salary and monthly living expenses. It agreed
John could meet his monthly expenses in this manner but emphasized that the
question was not whether his current circumstances would entitle him to an award
of maintenance. Rather, the question was whether the parties’ agreement for Holly
to pay John maintenance had become unconscionable. The family court concluded
that it had not.
Holly argues that the family court abused its discretion because it
failed to consider the statutory principles governing an initial award of
maintenance. KRS 403.200(1) provides in pertinent part that the court may grant
maintenance to either spouse only if it finds that the spouse seeking maintenance
“(a) Lacks sufficient property, including marital property apportioned to him, to
provide for his reasonable needs; and (b) Is unable to support himself through
appropriate employment[.]” KRS 403.200(1). Holly argues that if this standard
was applied to John’s current financial situation, an award of maintenance would
not be justified because John can provide for his reasonable needs and the disparity
between his and Holly’s assets is modest.
But, in the PSA, Holly agreed to pay maintenance under the financial
facts as they were at that time. She also expressly agreed that any modification of
that maintenance would be governed by KRS 403.250, not by KRS 403.200(1).
-8- Had Holly wished any future modification of maintenance to be governed by the
latter standard, she should have sought to incorporate it into the PSA. The family
court applied the correct standard, as mandated by the PSA, of changed
circumstances and unconscionability under KRS 403.250 in assessing whether a
modification of maintenance was warranted. Holly’s assertion that John would not
currently be entitled to maintenance under KRS 403.200(1) does not render his
continued receipt of maintenance unconscionable.
CONCLUSION
The family court applied the correct legal standard in deciding
whether to terminate or modify maintenance. Its decision is supported by
substantial evidence in the record that the incomes of the parties remain disparate
and that John’s income is contingent upon his progressive medical conditions
remaining stable. For the foregoing reasons, its orders are affirmed.
ALL CONCUR.
BRIEF FOR APPELLANT: BRIEF FOR APPELLEE:
B. Mark Mulloy Christopher Harrell Louisville, Kentucky Louisville, Kentucky
-9-