ATTORNEY FOR APPELLANT ATTORNEY FOR APPELLEE
Donald E.C. Leicht Katherine J. Noel
Kokomo, Indiana Kokomo, Indiana
______________________________________________________________________________
In the
Indiana Supreme Court FILED
Oct 29 2008, 8:30 am
_________________________________
No. 34S04-0805-CV-304 CLERK
of the supreme court,
court of appeals and
tax court
STEPHANIE BAILEY,
Appellant (Petitioner below),
v.
LEWIS MANN,
Appellee (Respondent below).
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Appeal from the Howard Superior Court, No. 34D02-0703-DR-295
The Honorable Stephen Jessup, Special Judge
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On Petition to Transfer from the Indiana Court of Appeals, No. 34A04-0709-CV-506
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October 29, 2008
Boehm, Justice.
The parties entered into a property settlement agreement awarding a jointly leased auto-
mobile to the wife. There was no express requirement in the agreement that the wife remove the
husband’s name from the lease. We hold that the law does not imply such a requirement in the
absence of an express provision addressing it.
Facts and Procedural History
On May 16, 2007, the Howard Superior Court entered a Summary Dissolution Decree
dissolving the marriage of Stephanie Bailey and Lewis Mann. The parties’ Property Settlement
Agreement, incorporated by the Summary Dissolution Decree, awarded the wife a leased Pontiac
G-6. The lease is not in the record. The parties agree that the husband and wife were jointly ob-
ligated for lease payments. The provisions of the Property Settlement Agreement relevant to this
case are:
Property Awarded to [Wife]. Except as herein specifically provided otherwise,
[Wife] shall take as her separate assets all property, both real and personal, tangi-
ble and intangible, that she owned prior to marriage, including but not limited to
the residence . . . (subject to the mortgage thereon), the Pontiac G-6 (subject to the
lease thereon), together with all personal property in her possession and accounts
with financial institutions existing in her name alone. In addition to the joint debt
(lease) on the Pontiac G-6, [Wife] shall pay all debts in her name only.
....
Indemnity And Implementation. Each of the parties agrees to: (A) assume and
pay as due any indebtedness (1) which he or she incurred prior to the date of fil-
ing, but which was not assigned above and/or (2) which he or she incurred after
the date of filing, (B) indemnify and save harmless the other as to those obliga-
tions assumed hereunder, and (C) promptly execute such documents as may be
reasonably required to give full force and effect to the terms and spirit of this
Agreement.
After the dissolution, the wife made the required monthly lease payments. However, the
husband continued to receive monthly statements from the lender. The husband filed a Verified
Motion to Show Cause, alleging that the wife’s failure to remove his name from the lease vio-
lated the Dissolution Decree. He also requested attorney fees. The wife responded that the mo-
tion was “frivolous, baseless, or groundless,” and requested attorney fees.
After a hearing, the trial court ordered the wife to remove the husband’s name from the
lease. The trial court explained
[The wife] is not in contempt of Court because the language is susceptible of two
interpretations. I also find that this was not brought facetiously by the [husband].
The way I interpret it is that this is something she should do even though it
doesn’t say that accurately so I’m showing not in contempt, motions for attor-
ney’s fees denied, each of you pay your own lawyer’s fees.
The trial court stayed its order requiring the wife to remove the husband’s name from the lease
pending her appeal.
The Court of Appeals affirmed the trial court in an unpublished memorandum decision.
Bailey v. Mann, No. 34A04-0709-CV-506, slip op. at 2 (Ind. Ct. App. Feb. 20, 2008). The Court
of Appeals agreed with the trial court’s conclusion that the Property Settlement Agreement was
ambiguous, and held that the trial court correctly ordered the wife to remove the husband’s name
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from the lease to effectuate the “spirit” of the Property Settlement Agreement. Id. at 4–5. Judge
Kirsch dissented, observing the difficulty and expense of removing a party from a joint debt. Id.
at 6–7. Judge Kirsch would have reversed the trial court because there was no indication that the
wife expected to refinance the lease, and although the husband “was free to negotiate a provision
in the settlement agreement that Wife would remove his name from any joint obligation,” he had
not done that. Id. at 7. We granted transfer.
Interpretation of the Property Settlement Agreement
When dissolving a marriage, the parties are free to craft an agreement providing for the
maintenance of either party, the custody and support of the parties’ children, and the disposition
of property. Ind. Code § 31-15-2-17 (2004). Settlement agreements become binding contracts
when incorporated into the dissolution decree and are interpreted according to the general rules
for contract construction. Shorter v. Shorter, 851 N.E.2d 378, 382–83 (Ind. Ct. App. 2006) (cit-
ing Myers v. Myers, 560 N.E.2d 39, 42 (Ind. 1990); White v. White, 819 N.E.2d 68, 70 (Ind. Ct.
App. 2004)). Unless the terms of the agreement are ambiguous, they will be given their plain
and ordinary meaning. Shorter, 851 N.E.2d at 383. Interpretation of a settlement agreement, as
with any other contract, presents a question of law and is reviewed de novo. Id. (citing S.C.
Nestel, Inc. v. Future Constr., Inc., 836 N.E.2d 445, 449 (Ind. Ct. App. 2005)).
Here, neither party suggests that the Property Settlement Agreement is ambiguous. Ra-
ther, the parties dispute what is required to “give full force and effect to the terms and spirit of
this Agreement.” The husband argues that the provision that the wife “shall take as her separate
assets” requires the wife to remove the husband’s name from the lease, and that the parties would
not have “intended to bootstrap themselves together after the dissolution was finalized.” The
wife responds that the language “Pontiac G-6 (subject to the lease thereon)” and “joint debt”
made clear that she was assuming the obligation under the existing lease in both names, rather
than promising to refinance in her name alone. She contends that she is giving full force and ef-
fect to the terms and spirit of the Agreement by making the monthly payments.
We agree with the wife and Judge Kirsch. The Property Settlement Agreement requires
the wife to make payments on the lease, but does not require her to refinance or remove the hus-
band’s name from the lease. The husband is correct that the agreement provides the wife with
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“separate” assets. However, the term “separate” is used generally to describe all assets, and the
phrases “subject to the lease thereon” and “joint debt” specifically modify the Pontiac G-6. As
Judge Kirsch pointed out, the husband was free to negotiate a provision explicitly requiring the
wife to remove his name from the lease. In fact, property settlement agreements frequently
cover refinancing and removal of one party’s name from a joint debt. E.g., Phillips v. Delks, 880
N.E.2d 713, 715 (Ind. Ct. App. 2008) (“Husband shall have three (3) years . . . to either refinance
or sell the properties and remove Wife’s name from the indebtedness.”); White, 819 N.E.2d at 69
(requiring husband to subordinate his judgment lien “so as to facilitate Wife’s efforts to refinance
the marital residence for an amount not to exceed Fifty-Five Thousand and 00/100”); Dawson v.
Dawson, 800 N.E.2d 1000, 1004 (Ind. Ct. App. 2003) (requiring husband to “refinance or other-
wise satisfy the second mortgage”).
For several reasons, notably the desire to avoid refinancing costs, one or both of the par-
ties may have agreed to leave both names on the lease or omitted to address the issue. We there-
fore do not find a requirement to remove the husband’s name to be an inevitable inference from
an award of the vehicle to the wife. In the event the wife fails to make payments, the trial court
may find her in contempt and award the husband monetary damages for injury to his credit, as
well as for any inconvenience and frustration he may have suffered. Phillips, 880 N.E.2d at 720
(citing City of Gary v. Major, 822 N.E.2d 165, 172 (Ind. 2005)).
We summarily affirm the decision of the Court of Appeals on the issue of the wife’s at-
torney fees. Ind. Appellate Rule 58(A)(2).
Conclusion
We reverse the part of the trial court’s order requiring the wife to remove the husband’s
name from the Pontiac G-6 lease and affirm the part denying the wife’s motion for attorney fees.
Shepard, C.J., and Dickson, Sullivan, and Rucker, JJ., concur.
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