On Appeal from Superior Court, Lamoille Unit, Family Division, Dennis R. Pearson, J.
William B. Miller, Jr. and Erin Miller Heins of Langrock Sperry & Wool, LLP, Middlebury, for Plaintiff-Appellant.
Brice C. Simon of Breton & Simon, PLC, Stowe, for Defendant-Appellee.
PRESENT: Reiber, C.J., Dooley, Skoglund, Robinson and Eaton, JJ.
¶ 1. Husband appeals from a final divorce order, arguing that the family division of the superior court: (1) failed to consider the relevant statutory factors before incorporating the parties' pretrial separation agreement into the divorce order; (2) erroneously awarded wife an arrears judgment based on their agreement even though the agreement had not been submitted to the court or incorporated into a temporary order prior to the final divorce hearing; and (3) abused its discretion by awarding wife the bulk of the marital estate in addition to a substantial maintenance award. We reverse and remand.
¶ 2. The relevant facts are not in dispute. The parties married in Alaska in 1992 and moved to Vermont in 1996. They have two children, one of whom had reached the age of majority before the final divorce hearing was held. The younger child, born in March 1997, was a couple of months shy of her eighteenth birthday at the time of the hearing. During most of the marriage, the parties ran what evolved into a flooring business.
¶ 3. The parties separated in February 2012, after which husband lived and worked first in New York and then later in Washington, D.C. Husband filed for divorce in March 2013. Two months later, in May 2013, the parties executed a written agreement that dealt with spousal and child support, as well as business debts. Husband agreed to pay wife $4000 in monthly support for a five-year period after husband had paid off all personal and business debt. The agreement stated that the parties "will be giving a copy of this Divorce agreement to use and make final divorce agreement for divorce court hearing." For six months following the parties' execution of the agreement, husband paid wife $4000 per month, but then reduced his payments to $943 per month, which he continued to pay through the final divorce hearing. Neither party submitted the agreement to the family court until the final divorce hearing, which was held in November 2014. Thus, the agreement was never incorporated into a temporary support order.
¶ 4. By the time of the final hearing, the parties had agreed on parental rights and responsibilities. The primary issue in dispute at the contested hearing was how much maintenance husband would be required to pay wife. Wife asked the family court to enforce the parties' agreement in anticipation of divorce-in particular the provision requiring husband to pay wife $4000 per month in support. At the outset of the hearing, however, her attorney conceded that "even if the Court finds this was an agreement, the Court still has to make an equitable division." Accordingly, the attorney stated that "although we'd like the Court to enforce the agreement, we recognize the need for the Court to hear evidence to make an equitable distribution." For his part, husband did not object to paying maintenance, but stated that he could not afford to pay the amount wife was seeking-the $4000 per month provided for in the parties' agreement.
¶ 5. Following the hearing, the family court: (1) granted the parties a divorce; (2) awarded the marital homestead, which had zero or negative equity, to wife; (3) awarded each party personal property in their possession; (4) required husband to pay off jointly held credit cards; (5) ordered husband to execute any documents necessary to transfer shares in their business to wife; (6) ordered husband to transfer to wife two life insurance policies with a then-current cash value of $23, 539; and (7) awarded wife maintenance in the amount of $4000 per month for a five-year period-from May 2013 until April 2018-per the parties' agreement. The court explicitly stated that it was incorporating the parties' separation agreement into the final order. The court also awarded wife, based on the agreement, an arrears judgment in the amount of $45, 855.
¶ 6. Husband appeals from the final divorce order, arguing that the family court abused its discretion by: (1) incorporating the parties' separation agreement into the final divorce order without considering the relevant statutory factors; (2) awarding wife an arrears judgment based on the agreement even though wife had not submitted the agreement to the court or sought its incorporation into a court order until the final divorce hearing; and (3) awarding wife the bulk of the marital estate in addition to the substantial maintenance award.
¶ 7. The principal issue briefed by the parties is whether the family court erred by incorporating the parties' separation agreement into the final divorce order without examining the relevant statutory factors. Husband contends that the court abused its discretion by adopting the agreement without considering its fairness in light of the statutory factors contained in 15 V.S.A. § 752 for awarding maintenance. According to husband, the family court's express decision not to conduct a statutory analysis resulted in the court failing to consider his inability to pay the maintenance obligation contained in the separation agreement.
¶ 8. In making this argument, husband relies primarily on our decision in Pouech v. Pouech, 2006 VT 40, 180 Vt. 1, 904 A.2d 70. In that case, the wife appealed the family court's refusal to allow her to amend her divorce complaint to seek maintenance. Along with her complaint, the wife had filed a separation agreement that the parties had negotiated in anticipation of divorce. The agreement was silent with respect to maintenance. The family court refused to allow wife to seek maintenance over and above the terms of the agreement, and instead incorporated the agreement into the final order, without any maintenance award. Among other things, the wife argued on appeal to this Court that the family court was obligated to determine whether the parties' agreement was fair and equitable before incorporating it into its final divorce order.
¶ 9. We concluded that under the circumstances of that case-where wife challenged the agreement before the family court held a final divorce hearing or incorporated it into the final divorce order-the court erred by refusing to consider the wife's maintenance request based solely on her failure to establish grounds sufficient to overturn a contract. Id. ¶ 19. We stated that "the court should have given the parties an opportunity to present evidence on the fairness of their stipulation, " after which "the court had the discretion to reject the stipulation on grounds that it was inequitable in light of the relevant statutory factors." Id. We explained that when one or both parties object to a separation agreement before the agreement has been incorporated into a final divorce order, "policy considerations that favor deference to the parties' 'voluntary' agreement are less forceful." Id. ¶ 21. We further explained that while "[p]ublic policy ...