Saturday, June 7, 2014

Instant Interest Implied

Richard v. Richard, 2014 VT 58

By Andrew Delaney

When you take a close look at this case, and realize that it’s an appeal over $373.30 in interest, you just have to squint your eyes and scratch your head—or at least I do.

Husband and wife were divorced pursuant to an unappealed final decree. The order required husband to pay wife $11,500 before a certain date. Four days after that date, wife filed a motion for contempt and enforcement. Husband opposed the motion, arguing that he’d initiated the process to get the money to pay wife, it was in the works, and that was all that was required by the order. Plus, he said, a qualified domestic relations order (aka QDRO or “quad-ro”) takes time to complete.
   The trial court ordered a status conference on wife’s motion to determine husband’s compliance with the order, and included “Plaintiff is entitled to legal interest starting February 28, 2013 on the amount due on that date” in its order.

Eventually, wife was paid, albeit a few months after she was supposed to be paid. A little over a week after wife was paid, the trial court issued an order on wife’s motion for contempt and to enforce. The court denied wife’s motion for contempt, noting that there was no evidence of a willful failure to comply with the order. The court treated the motion to enforce as a motion for clarification and added an any-delay-after-the-ordered-date-means-husband-pays-interest line to the final decree. Husband was ordered to pay $373.30 in interest to wife.

Husband moved for reconsideration and stay, arguing that the trial court had no authority to modify the final decree and require payment of interest. The trial court denied the motion, and husband appealed.

The SCOV’s analysis begins thus: “The framing of this case as one involving a court’s power to alter the terms of a property division order after the fact misses the mark.” The SCOV explains that judgments generally get interest and that concept applies in this case.

The SCOV reasons that the trial court’s order wasn’t a modification of the order but rather a redundant statement of the applicable law. The SCOV acknowledges that the trial court’s approach—to add a “clarifying” provision to the final divorce decree—was potentially confusing, but it didn’t change the order in the slightest.

The obligation to pay interest began on the date the full payment was due according to the order and that’s the end of it.

Not a particularly exciting decision, but an important lesson nonetheless: pay the judgment when it’s due.

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