J-S39032-16
NON-PRECEDENTIAL DECISION – SEE SUPERIOR COURT I.O.P 65.37
JEWEL L. WOODS, : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
Appellee :
:
v. :
:
JAMES A. WOODS, :
:
Appellant : No. 2098 MDA 2015
Appeal from the Order Entered November 5, 2015
in the Court of Common Pleas of York County
Civil Division at No(s): 2011-FC-640-15
BEFORE: STABILE, PLATT,* and STRASSBURGER,* JJ.
MEMORANDUM BY STRASSBURGER, J.: FILED JULY 26, 2016
James A. Woods (Husband) appeals from the order entered November
5, 2015 denying his petition for enforcement of the parties’ marital
settlement agreement. Specifically, Husband seeks enforcement of a
provision regarding the marital residence. We vacate the trial court’s order
and remand for proceedings consistent with this memorandum.
Husband and Appellee Jewel Woods (Wife) were married on January
16, 1993, and separated in October 2010. On April 13, 2011, Wife filed a
complaint for divorce and a petition for special relief, requesting that
Husband transfer all of his interest in the marital residence to Wife. Soon
thereafter, the parties entered into a partial marital settlement agreement
(partial settlement agreement) which provided, in relevant part, the
following:
*Retired Senior Judge assigned to the Superior Court.
J-S39032-16
The parties acknowledge that at the time of separation
they were the owners of real property located at 1265 Cranberry
Lane West, York, Windsor Township, York County, Pennsylvania
which served as the marital residence. The parties further
acknowledge that Wife has been residing in the marital residence
since separation.
The parties hereby agree that the marital residence is
subject to a first mortgage with Chase Home Mortgage, having
an approximate balance of $304,000.00 and a second mortgage
with Chase Home Mortgage having an approximate balance of
$75,000.00. The parties agree that the fair market value of the
property is less than the amount owed to Chase Home Mortgage
on the first and second mortgages and that there is no equity for
distribution between them. The parties further acknowledge that
Husband was primarily responsible for making the mortgage
payments while the parties were together and that both
mortgages were delinquent at the time of separation with the
last payment having been made on March 10, 2010.
The parties acknowledge that Wife would like to retain the
marital residence and is seeking a mortgage modification
through Chase Home Mortgage.
Husband hereby agrees to transfer to Wife all of his right,
title and interest in and to the marital residence. In furtherance
of this covenant, Husband shall, contemporaneously with the
execution of this agreement, duly execute and acknowledge a
Deed transferring all his right, title and interest in and to the
said property to Wife, with the understanding that the Deed shall
be held in escrow by Wife’s attorney until Wife’s mortgage
modification has been approved. Wife shall assume full
responsibility for the costs associated with the preparation and
recording of the Deed for the transfer of the marital residence by
Husband to Wife.
The parties acknowledge that Wife shall assume sole
responsibility for payment of the first and second mortgages,
real estate taxes, premiums for liability and fire insurance
coverage, sewer, water, utilities, refuse collection, maintenance,
repairs and assessments at the residence.
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Wife agrees to indemnify and hold Husband harmless of
and from any such liabilities, obligations, claims or demands as a
result thereof since the date of execution of this Agreement.
Wife agrees that she will attempt to either refinance the existing
mortgages with Chase Home Mortgage so as to remove
Husband’s name from liability and/or gain approval for a
mortgage modification on said property within ninety (90) days
of the execution of this Agreement.
In the event that Wife is unable to refinance and/or
assume the first and second mortgages to remove Husband’s
name from the same within ninety (90) days, then in such
event, the parties agree, that at Husband’s request, the property
shall be placed for sale with a responsible Real Estate Agent,
chosen by the parties. The parties will cooperate with the Real
Estate Agent’s suggestions with regard to the listing price,
reduction of price and acceptance of offers, as well as the
appearance of the home. Further, both parties will cooperate
with the Short Sale[1] process and will provide any and all
documentation requested by the first and second mortgage
companies so that the property may be approved as a Short
Sale.
Partial Settlement Agreement, 4/25/2011, at 3-4.
At the November 4, 2015 special relief hearing which preceded this
appeal, Wife testified that following the parties’ 2011 partial settlement
agreement she sought, but was unable to secure refinancing from the bank.
Wife contends the bank was unwilling to refinance the mortgage because
Husband failed to pay the mortgage for ten months, which she claims she
was unaware of when she entered into the partial settlement agreement.
1
A short sale is “the sale of a real property for less than the mortgage loan
balance.” Ronald D. Jung, Short Sale Assistance in Colorado and Under
Mars, Colo. Law., January 2012, at 69.
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N.T., 11/4/2015, at 5. She was, however, approved for a loan modification
lowering her monthly obligation, and she began paying the mortgage. Id. at
15.
Husband testified at the hearing that in April 2013 he sent Wife a
letter, through counsel, electing to enforce the provision within the partial
settlement agreement which allowed him to request the property be sold.
Id. at 34-35. The issue was eventually referred to a Divorce Master and the
parties reached an agreement on May 21, 2015 (second settlement
agreement). The second settlement agreement, as detailed by their
respective attorneys on the record specified, in part, the following:
[Husband’s Attorney]: At this point the agreement -- we are
going to dictate an agreement on the record. It will be
incorporated, but not merged into the decree. Both parties --
the standard provisions with regard to both parties have the
right to live separate and apart would be contained in the
agreement and the actual property [sic]. The parties together
own a home located at 1265 Cranberry Lane West, York, in York
County, Pennsylvania 17402. There is currently a mortgage on
the property with a principle [sic] balance of approximately
$375,000.00 through Chase Bank. There is a possibility that
Chase Bank may have acted inappropriately in regard to the first
and second mortgages. In that the second mortgage should
ha[ve] been forgiven rather than added to the first loan. This
would reduce the total loan amount. Nonetheless, neither party
would make [any more] payments toward this debt from this
day forward. There is an interim property settlement agreement
in which wife indicated she would hold husband harmless with
regard to the payments on this property. That agreement would
remain in effect. If [W]ife chooses to bring any action against
Chase Bank, she would be entitled to any proceeds from that
action.
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[Wife’s Attorney]: And [H]usband waives any claim to those
proceeds.
[Husband’s Attorney]: Husband would waive any claim.
However, such an action would not slow down the short sale or
other provisions related to getting rid of this property.
Specifically, the parties will use Wade Elfner to start the process
for a short sale of the properties. Wade indicates that he uses a
professional company in Harrisburg that specializes in short
sales. Both parties will cooperate in providing any documents
requested by the short sale company or the real estate agent
within ten days of such a request. If at any point Mr. Elfner does
not want to proceed or feels it is not going to be fruitful to
proceed with the short sale, then the parties will attempt a deed
in lieu of foreclosure. If the bank does not want to cooperate
with regard to a deed in lieu of foreclosure, then the parties will
proceed to a foreclosure. Wife may remain in the property
during the time that the property is listed for short sale and/or
any foreclosure proceedings are occurring.
N.T., 5/21/2015, at 3-5.
Wife initially complied with the second settlement agreement,
foregoing payment of the mortgage for one month. However, she testified
that after her credit score “plummeted seventy points in one month” she
began making payments again, contrary to the terms of the second
settlement agreement. N.T., 11/4/2015, at 9-10. Wife cites her mistaken
belief that a short sale would not hurt her credit “because the judge told
[her] to do it.” Id. at 16-17. Wife contends that she would not have been
able to find a place to rent or get another loan if she continued to miss
mortgage payments. Id. at 9-10.
Husband filed a petition for enforcement of both settlement
agreements on August 20, 2015. Specifically, Husband sought to enforce
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the provision within the second settlement agreement that Wife cease
paying the mortgage on the marital property.2 Following the conclusion of
testimony at the special relief hearing, the trial court denied Husband’s
petition on the record. This timely filed appeal followed.3
Husband sets forth a number of issues on appeal. However, as an
initial matter we consider his contention that the trial court erred by not
enforcing the marital settlement agreement. See Appellant’s Brief at 4.4
In considering this issue, we bear in mind that marital settlement
agreements are governed by the law of contracts. Stamerro v. Stamerro,
889 A.2d 1251, 1258 (Pa. Super. 2005).
Because contract interpretation is a question of law,
this Court is not bound by the trial court’s
interpretation. Our standard of review over
2
At the April 2015 special relief hearing, Wade Elfner, a real estate broker,
explained why Wife must cease paying the mortgage in order to attempt to
enter into a short sale. See N.T., 11/4/2015, at 27 (“[T]he mortgage
company will give no credence if a loan is current. They’re not [going to]
voluntarily forgive money to a seller just because they don’t want to pay
anymore. … If they’re [going to] take a short sale on price, they want the
homeowner to have consequences and that would be credit
[consequences].”)
3
On July 23, 2015 the trial court entered a divorce decree.
4
Husband complied with the trial court’s directive to file a concise statement
of errors complained of on appeal pursuant to Pa.R.A.P. 1925. The trial
judge, however, did not file an opinion and instead submitted a notice to this
Court stating that due to his “pending retirement and attendant time
constraints as well as a lack of transcript presently, a formal 1925 opinion
will not be filed in this appeal.” See Notice to the Superior Court Re: 1925
Opinion, 12/30/2015. The transcript in this case was filed on December 16,
2015.
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questions of law is de novo and to the extent
necessary, the scope of our review is plenary as the
appellate court may review the entire record in
making its decision. However, we are bound by the
trial court’s credibility determinations.
Kraisinger v. Kraisinger, 928 A.2d 333, 339 (Pa. Super. 2007) (quoting
Stamerro, 889 A.2d at 1257-58).
The standard of enforceability of a marital settlement agreement is
well settled: “[a]bsent fraud, misrepresentation, or duress, spouses should
be bound by the terms of their agreements.” Crispo v. Crispo, 909 A.2d
308, 313 (Pa. Super. 2006) (quoting McMahon v. McMahon, 612 A.2d
1360, 1363 (Pa. Super. 1992)) (citations omitted). “We are not permitted
to review the reasonableness of a marital settlement agreement to
determine its validity.” Paroly v. Paroly, 876 A.2d 1061, 1065 (Pa. Super.
2005) (citing Simeone v. Simeone, 581 A.2d 162 (Pa. 1990)). A trial court
has “neither the power nor the authority to modify or vary the decree unless
there is conclusive proof of fraud or mistake.” Bianchi v. Bianchi, 859 A.2d
511, 515 (Pa. Super. 2004).
Following testimony by the parties and real estate broker, Wade
Elfner, the trial court denied Husband’s request to enforce the settlement
agreement. In doing so the trial court stated:
So, here’s my dilemma. [Husband’s] premise is faulty on
saving [his] credit, but nevertheless the agreement itself
provides for certain things. [W]ife now argues, as we hear from
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[Wife’s Attorney], it’s impossible[5] to do what the agreement
says. Well, not really. [Wife] can stop making the payments,
wait the default period, attempt to do a short sale, which is what
the import of the agreement is, and then whatever happens
happens.
Well, here’s my take on that. That’s a circumstance that I
view as an unnecessary problem for both parties because now
you end up with a foreclosure on your credit as well as the
default in payments. Is this the case where I am called upon to
save both parties from themselves? I get it. You want
something done. You want action. Wife wants an opportunity to
straighten this out.
What is the import of enforcing the agreement? My
[6]
conclusion is there’s no benefit to [H]usband , so why would I
do that simply to penalize [W]ife, who has been making
payments? And there also is the troubling issue of [Husband]
waiting for two years to come forward.
5
At the special relief hearing, Wife testified that she did not adhere to the
settlement agreement, in particular, the part in which she agreed not to
make any future payments on the mortgage because her credit score
plummeted, which she was unaware would occur if she stopped paying the
mortgage. Wife stated she feared having bad credit because she was caring
for children and testified that when she went to look for other financing or a
place to rent “people laughed at [her].” N.T., 11/4/2015, at 10-11. Wife’s
attorney summarized Wife’s position by stating: “your honor, this isn’t a
case where my client doesn’t want to not [sic] be agreeable or not comply.
It’s a case where she’s not able to comply. She lives in a house with a
number of children that she’s obligated for. She does not want herself and
the children to be homeless. She’s not able to obtain another place for her
to live.” Id. at 51. In her brief to this Court, Wife argues that her mistaken
understanding as to the effect not paying her mortgage would have on her
credit was material, and enough to warrant the trial court not to enforce the
contract. Wife’s Brief at 7-8.
6
Husband disagrees with the trial court’s finding that the agreement would
not benefit him. To the contrary, Husband contends that “he cannot buy a
house and has trouble even buying a car because he is still listed as the
primary borrower on the mortgages for the marital residence. [Husband]
testified that, aside from bad credit, the amount of debt is creating a debt-
to-income ratio that requires him to pay a higher interest rate.” Husband’s
Brief at 11 (citations to the record removed).
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N.T., 11/4/2015, at 51-56.
Based on the foregoing, it is evident the trial court did not apply the
applicable standard a court must use when deciding whether a contract is
enforceable. The trial court’s reasoning was based neither on a finding of
ambiguity within the agreement nor on any purported fraud,
misrepresentation or duress. In deciding not to enforce the agreement, the
trial court essentially substituted its personal opinion that the agreement did
not benefit the parties, in lieu of determining whether the agreement was
valid under the law, and therefore the provision mandating Wife to cease
payment of the mortgage was enforceable.
Because we find the trial court abused its discretion, we vacate the
court’s order and remand for a new hearing to determine whether the
parties’ May 21, 2015 settlement agreement, which incorporated the partial
settlement agreement,7 should be enforced in accordance with the above-
stated case law. At that time, the trial court is also directed to address
Husband’s request for relief and issues regarding attorney’s fees and Wife’s
contempt.
Order vacated. Case remanded for proceedings consistent with this
memorandum. Jurisdiction relinquished.
7
The second settlement agreement stated that the partial settlement
agreement “should remain in full force and effect and be incorporated into
this agreement to the extent it is not inconsistent with it.” N.T., 5/21/2015,
at 11.
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Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 7/26/2016
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