Braun v. Braun

306 Neb. 890

947 N.W.2d 694

Jennifer J. BRAUN, appellee,

v.Corey L. BRAUN, appellant.

No. S-19-880.

Supreme Court of Nebraska.

Filed August 21, 2020

Sterling T. Huff, P.C., L.L.O, for appellant.

Jennifer J. Braun, pro se.

On brief, Andrew W. Snyder, of Chaloupka, Holyoke, Snyder, Chaloupka & Longoria, P.C., L.L.O., Scottsbluff, for appellee.

Heavican, C.J., Miller-Lerman, Cassel, Stacy, Funke, Papik, and Freudenberg, JJ.

Stacy, J. Corey L. Braun appeals from an order finding him in willful contempt of court for failing to hold his ex-wife, Jennifer J. Braun, harmless from joint mortgage debt on the marital home Corey was awarded in the decree. As a sanction, the court imposed a delayed jail sentence and a purge plan that allowed Corey to purge himself of contempt by either refinancing the mortgage in his own name by a date certain or selling the property. Finding no error, we affirm.

I. BACKGROUND

Corey and Jennifer were married in 2005. A child was born to the marriage in 2007, and in 2012, Jennifer filed for divorce. In the dissolution proceeding, the parties generally agreed on the equitable division of their assets and debts; a trial was held on all remaining issues.

1. DIVORCE DECREE

In February 2013, the court entered a decree dissolving the marriage. As relevant to the issues on appeal, the parties’ marital home in Gordon, Nebraska, was valued at $112,000. The home was awarded to Corey by agreement of the parties, subject to the existing mortgage debt. The decree generally ordered each party to be responsible for the debts associated with the property they were awarded and to hold the other harmless from such debt. As relevant to the issues on appeal, the decree provided: "Debts: [Corey] agrees to hold [Jennifer] harmless from any debt associated with the property he has been awarded, including payment of attorneys fees should any contempt action arise from his failure to hold her harmless of these debts."

2. CONTEMPT PROCEEDINGS

On January 11, 2019, Jennifer filed what she captioned a "Complaint to Modify and for Contempt." This pleading alleged that Corey had willfully failed to hold her harmless from the mortgage debt on the home, and it asked that he be held in contempt of court. The pleading also sought to hold Corey in contempt of court for failing to pay court-ordered childcare expenses, and it requested a modification of Corey's child support obligation due to a material change in circumstances.

The court set trial on all matters for May 1, 2019. Both parties appeared with counsel and offered evidence. We summarize only that evidence pertaining to the hold harmless provision, as no error has been assigned to the trial court's rulings on child support or childcare expenses.

(a) Jennifer's Testimony

Jennifer testified that after the decree was entered, she signed a quitclaim deed on the home, but her name was still on the mortgage note. Jennifer admitted she had not been required to make any mortgage payments on the home since the decree was entered, but she testified that Corey had failed to remain current on the mortgage and that his failure was adversely affecting her finances. She explained that she had received late notices and foreclosure notices from the mortgage company and that her credit report showed she was delinquent on the home mortgage.

Jennifer testified her credit score had historically been around 780 or 800, and in the summer of 2018 she had an application for a credit card rejected, which had not happened before. She checked her credit score and learned it had fallen to 620 or 640, despite the fact she was current on the only debts she had. She also testified she was unable to qualify for a loan to purchase a home because of her current credit score.

Jennifer testified she had repeatedly asked Corey to refinance the mortgage in his own name, but he told her he was not able to qualify for refinancing due to his previous bankruptcies and his low credit score. According to Jennifer, the mortgage company had not yet foreclosed on the home, but Corey had been "dancing around foreclosure." Jennifer testified the mortgage company had "set up multiple payment plans with him, he makes a couple payments, and then he stops making payments, and then he calls in and they make new payment arrangements, he'll make a couple payments, and then he fails. It's a cycle."

Jennifer believed the only way to protect her finances from Corey's chronic failure to keep the mortgage debt current was to get her name off the mortgage altogether. She asked that Corey be ordered to refinance the home in his name only and that if he was not able to refinance, he be ordered to sell the home.

(b) Corey's Testimony

Corey testified the balance on the mortgage note was close to $70,000, and he agreed that Jennifer remained obligated on that note. He testified that about a year earlier, he attempted to refinance the mortgage on the home but was unable to get a loan because of his credit score. He had not attempted to refinance recently, because his credit score had not improved.

Corey estimated the current value of the home was around $120,000 to $150,000, and he agreed he would be able to sell the home for more than is owed on the mortgage. Corey admitted that since 2018, he had been behind on the mortgage payments, but stated that a few months before trial he had arranged a new payment plan and was current on payments under that new plan. He testified the mortgage was still in arrears by about $4,900.

Corey did not want to sell the home, but he did not think it was possible for him to refinance the mortgage debt immediately. He testified he had obtained a good-paying job and expected to be able to keep making payments under the new payment plan, and he was hopeful that he could refinance the home "sooner [rather] than later."

Corey admitted the decree required him to hold Jennifer harmless from any debt associated with the home. And he generally understood the hold harmless provision meant that no harm should come to Jennifer as a result of the debts he was ordered to pay, including harm related to a reduction in her credit rating. But Corey generally testified that he did not think his delinquency on the mortgage had harmed Jennifer.

3. TRIAL COURT'S ORDER

On May 16, 2019, the trial court entered an order ruling on all pending matters. As relevant to the contempt issues on appeal, the court expressly found that Corey had consistently failed to keep the mortgage current and that his conduct had resulted in financial damage to Jennifer in the form of damage to her credit.

The court described the "more difficult" question as whether Corey's conduct amounted to a violation of the hold harmless provision in the decree. The court framed the question as whether financial harm or injury, such as damage to one's credit, is the type of harm that falls within the scope of a standard hold harmless provision in a divorce decree where one party has been ordered to assume responsibility for a joint debt. The court noted it had located no reported decisions in Nebraska addressing the issue, but that other jurisdictions have held that a hold harmless provision includes protection from financial injury such as damage to credit. The court discussed two cases in particular: Long v. McAllister-Long¹ and Eaton v. Grau .²

In Long , the wife sought to hold her former husband in contempt of court for violating a provision in the decree requiring him "to hold [the wife] harmless" from the joint mortgage debt and other joint debts.³ The wife alleged the husband's failure to make timely payments had a harmful effect on her credit rating. The Tennessee appellate court considered the plain language and broad purpose of the hold harmless provision, and concluded it was intended to operate as both indemnity against liability and indemnity against loss. It therefore concluded the hold harmless provision "required [the husband] to pay these debts in a timely manner in order to prevent [the wife] from being harmed," and it reasoned "risking adverse effects on her credit rating" was a type of harm that was to be prevented.⁴

In Eaton , the parties’ stipulated divorce decree awarded the marital home to the husband and made him solely responsible for paying the joint mortgage debt.⁵ The decree included a hold harmless provision which ordered the husband to " ‘indemnify and hold the Wife harmless from any and all further obligations from ownership of the property,’ " but it did not require the husband to refinance in his own name.⁶ The wife later moved to modify the decree to require the husband to either refinance the mortgage or sell the home, alleging he had failed to keep the mortgage current and foreclosure proceedings had damaged her credit rating. The trial court denied her modification request, reasoning that although a hold harmless provision could be broad enough to protect against damage to credit scores, the language of the provision selected by the parties was narrow and only encompassed protection from " ‘further obligations.’ "⁷ On appeal, the New Jersey appellate court affirmed, reasoning that even if it assumed the hold harmless provision protected against financial harm to the wife's credit rating, she had failed to prove she sustained such injury and thus had not shown exceptional circumstances as would entitle her to modification of the decree.

In the instant case, the trial court found the plain language of the hold harmless provision in the decree was not materially different from that considered in Long , and it concluded:

Corey's obligation [under the hold harmless provision] plainly extends beyond making mortgage payments so that Jennifer does not become obligated to make payments herself; it also requires Corey to fulfill the parties’ joint obligations under the mortgage so as to prevent other fiscal injury that might foreseeably befall Jennifer, such as the kind of damage to her credit that could result from payments that are chronically

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