FIFTH DIVISION
MCFADDEN, C. J.,
MCMILLIAN, P. J., and SENIOR APPELLATE JUDGE PHIPPS
NOTICE: Motions for reconsideration must be
physically received in our clerk’s office within ten
days of the date of decision to be deemed timely filed.
http://www.gaappeals.us/rules
September 6, 2019
In the Court of Appeals of Georgia
A19A0858. BERRY v. BERRY.
MCMILLIAN, Presiding Judge.
We granted the application for discretionary appeal filed by Kelly Randall
Berry (the “Wife”) of the trial court’s order directing her to pay one-half of the
amount due at closing on the sale of the former marital residence. Because we find
that the trial court’s order improperly modified the terms of the parties’ divorce
decree, we reverse and remand the case to the trial court for further consideration.
In 2008, the trial court granted a final judgment and decree of divorce, which
incorporated a settlement agreement signed by both parties, to the Wife and Darren
Heath Berry (the “Husband”). As for the marital residence, the settlement agreement
provided that the Wife could remain in the residence for a specified time and that the
Husband would be responsible for paying the mortgage. The agreement further
provided that the Husband had the right to refinance the loan if interest rates dropped
to a point that it would be “fiscally responsible to refinance the existing mortgage[.]”
However, any refinancing “must be completed in such a manner as to fully protect
[the] Wife’s equity position in the Marital Residence” and “in no event shall [the]
Wife be required to go on the mortgage with [the] Husband as a borrower, co-signer,
guarantor, or in any other capacity.”
Once the Wife vacated the marital residence, the settlement agreement
provided the parties three options: (1) the Husband could buy the Wife’s interest in
the marital residence for $25,000; (2) the Wife could buy the Husband’s interest in
the marital residence for an agreed upon price; or (3) if neither party exercised these
options, the marital residence would be sold, with the Wife receiving the first $25,000
of the net sales proceeds and assuming the risk that the marital residence would not
net $25,000. Under the third option, the settlement agreement provided that the
marital residence would be listed for sale with a real estate broker or agent and that
the list price would be mutually agreed upon by the parties or absent agreement,
would be determined by a licensed real estate appraiser.
Sometime in or around 2014, the Husband apparently failed to meet some of
the monthly mortgage payments, and in June 2014, he opted to refinance the loan
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through a loan modification agreement. By this time, the Wife had vacated the marital
residence, and neither the Husband nor the Wife chose to exercise the option to buy
the other’s interest in the property. Therefore, the parties were required under the
settlement agreement to sell the residence.
However, by 2014, the value of the marital residence was below the
outstanding mortgage balance, resulting in negative equity. To avoid paying this
mortgage shortfall at closing, the Husband proposed in a series of correspondence
that the Wife transfer the marital residence to him or to the couple’s son, who would
then assume the mortgage. The Husband eventually offered the Wife up to $3,600 to
agree to his proposal. The Wife rejected these evolving proposals and countered with
a proposal that she assume the mortgage on the marital residence and that the
Husband pay her $25,000, arguing that the Husband’s missed mortgage payments and
refinancing increased the mortgage amount, which she contended was a violation of
the parties’ settlement agreement. Over time, the Wife reduced the monetary demand
on her proposal down to $8,000.
During the course of these negotiations, the Husband filed a motion asserting
the Wife should be held in contempt for declining his proposed solution to the
negative equity issue. In response, the Wife filed a counterclaim arguing the Husband
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should be held in contempt for increasing the principal amount of the mortgage
contrary to the terms of the settlement agreement and that he should be solely
responsible for the mortgage deficiency.
After an initial hearing, the trial court entered an interim order directing that
the marital residence be sold. After a second hearing on the cross-motions to consider
the issue of the mortgage deficiency, the trial court entered a second interim order,
finding that the Wife had not acted equitably in refusing to agree with the Husband’s
proposal that she transfer the marital residence to their son in exchange for the
Husband’s monetary offer. As a result, the trial court declined to find the Husband in
contempt and further declined “to reallocate any portion of the deficiency in the
principal balance owed on the existing mortgage between the parties.” Instead, the
trial court ordered the parties to appear at the hearing with the funds required to
complete the closing, which the trial court estimated to be approximately $12,000
each.
The marital residence was subsequently sold to the son for the appraised value
of $75,000, which was more than $17,000 below the remaining mortgage balance,
and the parties, as sellers, were required to pay a total of $24,851.51 at closing, which
included the mortgage payoff and closing costs. The Husband and Wife each paid one
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half of this amount. In its final order, the trial court refused to reallocate these
amounts between the parties and found that they were each responsible for their own
attorney fees. This appeal followed.
1. On appeal, the Wife contends the trial court’s order erroneously modified the
parties’ divorce decree by ordering the Wife to pay one half of the mortgage
deficiency because their settlement agreement provides that the Husband was
responsible for the mortgage debt. We agree.
“[W]hile the trial court has broad discretion to determine whether a divorce
decree has been violated and has authority to interpret and clarify the decree, it does
not have the power in a contempt proceeding to modify the terms of the decree.”
(Citation and punctuation omitted.) Greenwood v. Greenwood, 289 Ga. 163, 164 (709
SE2d 803) (2011). “The test to determine whether an order is clarified or modified
is whether the clarification is reasonable or whether it is so contrary to the apparent
intention of the original order as to amount to a modification.” (Citation and
punctuation omitted.) Pollard v. Pollard, 297 Ga. 21, 23 (771 SE2d 875) (2015). “It
is the function of the court to construe the contract as written and not to make a new
contract for the parties.” (Citation and punctuation omitted.) Friday v. Friday, 294
Ga. 687, 693 (4) (755 SE2d 707) (2014).
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The parties’ settlement agreement provides that the Wife was entitled to live
in the marital residence after the divorce until August 2015 at the latest, and after she
moved out of the residence, she was financially responsible for any damages to the
property beyond normal wear and tear. However, nothing in the agreement provided
that the Wife was ever to be responsible for any mortgage indebtedness. To the
contrary, the settlement agreement provided that the Husband would pay the full
monthly mortgage amount while she resided in the residence. The settlement
agreement also entitled the Husband to refinance the mortgage so long as he fully
protected the Wife’s equity interest, and if he chose to refinance the Wife was not to
be made a party to that new mortgage. In July 2014, the Husband made the decision
to refinance the debt on the marital residence and signed a new mortgage solely in his
own name; therefore, as the settlement agreement provided, the Wife was under no
legal obligation to repay that loan.
Additionally, the settlement agreement specifically addressed the risk the Wife
was to bear with regard to any sales transaction, providing that she bore the risk that
the sale would not net $25,000 and that the Husband had no obligation to pay her that
amount if it did not. However, nothing in the agreement stated that she also shared
in the risk that the sale would not result in sufficient proceeds to cover the mortgage
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that the Husband took out in his own name. Although the settlement agreement
defined the net proceeds of the sale as the amount remaining after the “costs of the
sale of the Marital Residence which the sellers agreed to pay as part of the transaction
as well as the balance owed on any mortgage that is in effect” were deducted from the
gross proceeds, nothing in the agreement requires the Wife to pay any portion of the
mortgage balance. Rather, the Husband, individually, agreed to repay the refinanced
mortgage on the marital residence, and thus he alone bore the risk that the subsequent
sale of the property would not cover the remaining balance. We find, therefore, that
the portion of the trial court’s order requiring the Wife to assume liability under the
Husband’s mortgage was an improper modification of the divorce decree.
We note, however, that the settlement agreement does not address the payment
of any closing costs associated with the sale of the property, other than the cost of an
appraiser, which the parties were to share equally. Therefore, the payment of closing
costs was not governed by the final divorce decree, and to the extent that the trial
court’s order directed the parties to split such costs, it did not violate the divorce
decree.
Based on the foregoing, we reverse and remand the case to the trial court for
further proceedings consistent with this opinion.
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2. The Wife also argues that the trial court impermissibly modified the
settlement agreement by permitting the Husband to erode the Wife’s equity position
in the residence by failing to pay mortgage payments and by increasing the principal
balance through the refinancing. Although the Wife argues in her appellate brief that
the Husband’s actions increased the principal balance from to $90,563.41 to
$93,391.46, a difference of less than $3,000, the mortgage shortfall in this case
exceeded $17,000. Therefore, any addition to the mortgage balance did not affect the
Wife’s ability to recover equity upon the sale of the property. Moreover, as we have
found that the Wife has no obligation to repay the mortgage balance on the marital
residence, any violation of the settlement agreement did not result in damages to the
Wife. Accordingly, we need not address the issue on appeal.
Judgment reversed, and case remanded. McFadden, C. J., and Senior
Appellate Judge Herbert E. Phipps concur.
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