In the August 23, 2023 opinion in Moore v. Smith, 441 S.C. 261, 892 S.E.2d 552 (Ct.App. 2023), the Court of Appeals reversed the family court’s refusal to require Husband to hold Wife harmless on a note encumbering the marital home despite affirming the family court’s finding that Husband was not in contempt on that issue. It further ordered Husband to pay Wife’s attorney’s fees despite his not being in contempt.
In Moore, the parties entered a temporary order that read, in part:
Both parties shall be restrained from alienating, disposing of or borrowing money, or from injuring, damaging, destroying, trading, or otherwise liquidating or decreasing in value any assets of the parties’ except as in the ordinary course of business and with the exception of the marital residence as outlined below.
They subsequently reached a final settlement agreement that was adopted as the final order of the court. In its relevant part that agreement read:
Both parties shall be restrained from alienating, disposing of or borrowing money, or from injuring, damaging, destroying, trading, or otherwise liquidating or decreasing in value any assets of the parties’ except as in the ordinary course of business and with the exception of the marital residence as outlined below. Both parties shall be restrained from alienating, disposing of or borrowing money, or from injuring, damaging, destroying, trading, or otherwise liquidating or decreasing in value any assets of the parties’ except as in the ordinary course of business and with the exception of the marital residence as outlined below.
Further, Wife was “entitled to all net equity from the [marital residence], following payment of the mortgage balance, pro-rata taxes, and agreed upon repair costs.”
At the time Wife sold the marital residence, she was required to pay off a commercial promissory note related to Husband’s business (the 2018 Note) in the amount of $21,813.49. In her contempt petition, Wife alleged Husband violated the Temporary Order by obtaining that note and securing it with a mortgage on the marital residence and Husband’s business. She further alleged Husband violated the Final Order by failing to disclose this debt on his financial declaration. Wife asked the family court to hold Husband in contempt and order him to immediately pay her $21,813.49 to reimburse her for and indemnify her from the debt. In addition, she sought an award of attorney’s fees and costs incurred in bringing the contempt action. Wife filed an affidavit of attorney’s fees evidencing the charges incurred for time spent in preparing for the prosecution of Wife’s rule to show cause for contempt and defending Husband’s Rule 60(b), SCRCP motion totaled $9,590.55.
At trial, Wife gave contradictory testimony regarding her awareness of the 2018 note, and prior notes that has been paid off by the 2018 note, and whether she had received these notes in discovery. At trial, she attempted to introduce a payoff letter showing she paid $21,813.49 at the time of the sale of the marital residence representing the outstanding balance on the 2018 note. The family court sustained Husband’s objection to the admission of this letter.
During Husband’s testimony, he acknowledges he failed to disclose the 2018 note in discovery or on his financial declaration. Over Wife’s objection, he used the payoff letter to refresh his recollection. He testified Wife knew about the promissory notes taken out on the marital residence and stated that the loans were intended to repair and make improvements to the marital residence. He denied investing the loan proceeds into his business.
In its order on Wife’s rule to show cause, the family court held it could not hold Husband in contempt of the Temporary Order after the Final Order had issued. The family court further held Husband was not in contempt of the Final Order when no evidence supported a finding Husband violated the provision holding him responsible for the debt associated with the marital residence he retained under the terms of the final settlement agreement. It found that if Wife was attempting to allege Husband violated the warranty provision of the Final Order relating to the disclosure of indebtedness, Wife could
request, by proper motion, [that] the [family] court enforce the portion of the [final settlement] agreement requiring one party to be responsible for any non-disclosed debt under Paragraph 12, or [Wife] may seek to set aside the [final settlement agreement] for failure to disclose the indebtedness, but those remedies [were] not properly before the court in a contempt proceeding.
The family court further found Husband had neither failed to do something he was ordered to do nor done something he was ordered not to do.
Wife filed a Rule 59(e), SCRCP motion to alter or amend, arguing evidence supported a finding that Husband violated the Temporary Order and the Final Order and that the family court erred in excluding the payoff letter from evidence. Wife also moved under Rule 60(b), SCRCP, for relief from the Final Order, in accordance with the family court’s instructions. The family court denied Wife’s motions, finding Wife misunderstood its ruling concerning the Rule 60(b) motion. It determined Wife’s argument that Husband committed fraud upon the parties or the court in obtaining the Final Order was not proper during the contempt hearing and should have been made by filing a Rule 60(b) motion to set aside the Final Order. The family court stated Wife could file a Rule 60(b) motion to set aside the final settlement agreement or a motion to enforce the warranty provision in paragraph 12 of the final settlement agreement if she so chose. Wife appealed.
The Court of Appeals agreed that Wife was not required to file a Rule 60 motion to address the 2018 note issue. Such a motion, if successful, would have reopened the parties’ settlement agreement. Wife was merely seeking to enforce that agreement. Filing a contempt petition was the proper method to address Wife’s issue.
The Court of Appeals further held Wife failed to demonstrate by clear and convincing evidence Husband willfully and intentionally refused to pay her the amount of the loan or indemnify her from any liability, including the payment of attorney’s fees and costs prior to the filing of the contempt action. However, it held Wife demonstrated Husband failed to meet his obligation under the Final Order to hold harmless and indemnify Wife for the outstanding balance on the 2018 Note, which was disclosed at the closing of the sale of the marital residence.
Despite not finding Husband in contempt, it found
Wife’s rule to show cause gave the family court the ability to enforce the terms of the Final Order and provide Wife’s requested relief. See Rule 14(a), SCRFC, note (“The rule to show cause provided [in Rule 14(a), SCRFC,] is for contempt of court arising from failure to comply with the Court’s orders, decrees or judgments and for enforcement thereof.” (emphasis added))….
Accordingly, we find Wife’s rule to show cause gave the family court leave to enforce the unambiguous payment and indemnification terms of the Final Order by ordering Husband to pay Wife $21,813.49 to indemnify her for the outstanding balance of the 2018 Note and $9,590.55 in attorney’s fees and costs incurred in bringing her contempt action.
The Court of Appeals refused to address the issue of whether the temporary order remained enforceable once the final order issued, as its determination of the prior issue was dispositive. It found the exclusion of the payoff letter to be moot because the family court accepted Wife’s testimony on the balance.
Moore is noteworthy in that the Court of Appeals explicitly reversed the family court’s refusal to enforce the parties’ settlement agreement despite affirming the family court’s finding that Husband was not in contempt. It’s also noteworthy that the Court of Appeals explicitly awarded Wife all her requested fees despite not finding Husband in contempt. One often pursues enforcement through contempt proceedings and is able to prove violation without necessarily proving willfulness. Moore establishes that Rule 14, SCFRC, authorizes the family court to enforce an order and award fees even if willfulness is not established.
Moore further notes, but does not answer, the issue of whether a temporary order remains enforceable after the final order issues. I have seen this issue recur but never seen a definitive answer. My own belief is that a final order extinguished any obligations under prior temporary orders but, to date, there is no case law either supporting or refuting that belief.
Without commenting on the court’s ruling, I think it is wise to include language in all marital settlement agreements that upon approval of the agreement, all prior orders are moot and unenforceable. At least this clears up the question about the enforceability of prior orders since there is no case law on the topic.