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Peace v. Peace

Court of Appeals of Arkansas, Division IV

September 14, 2016

JOHN MICHAEL PEACE APPELLANT
v.
CHRISTINA PEACE (NOW MALIN) APPELLEE

         APPEAL FROM THE PULASKI COUNTY CIRCUIT COURT, SEVENTEENTH DIVISION [NO. 60-DR-13-3300] HONORABLE MACKIE M. PIERCE, JUDGE

          Kamps & Stotts, PLLC, by: David W. Kamps, for appellant.

          Gill Ragon Owen, P.A., by: Sharon Elizabeth Echols and Christopher L. Travis, for appellee.

          KENNETH S. HIXSON, Judge

         Appellant John Michael Peace and appellee Christina Peace (now Malin) were divorced on October 9, 2013. The parties' property settlement agreement was incorporated into the divorce decree, and Paragraph 15 of the agreement provided in relevant part:

The parties have not filed a tax return for tax years 2011 and 2012. The Wife agrees to file a joint return with the Husband for these years[.] . . . If the Husband has not submitted a joint tax return for the Wife's approval by November 1, 2013, the Wife may file a separate tax return for 2011 and 2012. . . . The Husband accepts full responsibility for any tax liability, including penalties and interest, associated with the 2011 and 2012 tax returns, and indemnifies and holds the Wife harmless from same. (emphasis added).

         On July 30, 2015, Christina filed a motion for contempt and relief against John. In her motion, Christina alleged that she was unable to file her separate 2012 and 2013 tax returns until the outstanding 2011 tax debt was paid, and that John had advised her that he had most of the money necessary to pay the taxes but was short $22, 000. According to Christina's complaint, she loaned John $22, 000 to apply to the 2011 tax debt, and after receiving a letter from the IRS reporting an additional tax deficiency of $5186.55, she loaned John an additional $2500 to apply to the tax debt. Attached to Christina's motion was a copy of a $22, 000 canceled check she had written to John on November 11, 2013, which contained the notation "2011 taxes, " and a copy of a $2500 canceled check she had written to John on February 20, 2014, also containing the notation "2011 taxes." Christina asserted in her motion that she had made multiple requests for John to reimburse her these funds but that he had refused. Christina alleged that John's conduct constituted willful contempt of the court's order and that he should be required to appear and show cause for his failure to abide by the terms of the decree.

         On September 2, 2015, John filed a motion to dismiss Christina's motion. In John's motion, he argued that the trial court lacked subject-matter jurisdiction to enforce the property settlement agreement through contempt proceedings because Christina's claim failed to allege that he violated any part of the agreement, and instead that her claim was a separate action for breach of an oral contract that had to be resolved in a separate civil suit. John also argued, because there was no written contract for the repayment of the alleged loan, that Christina's claim was barred by the statute of frauds.

         On September 4, 2015, Christina filed an amended motion for contempt. In her amended motion, Christina alleged that John did not accept full responsibility for the tax liability associated with the 2011 tax return, and that he had failed to indemnify and hold her harmless for the 2011 tax liability as agreed to by the parties and ordered by the trial court.

         A hearing on Christina's motion for contempt and John's motion to dismiss was held on September 9, 2015. At the hearing, Christina testified that she loaned $22, 000 to John in November 2013 and loaned him an additional $2500 in February 2014 so he could pay the outstanding debt on their 2011 taxes, which he agreed to pay in their property settlement agreement. Christina asserted that she loaned this money to John because she could not file her 2012 or 2013 taxes until the 2011 tax debt was satisfied. Christina stated that, about a year and a half later, she asked John to pay her back, but he refused. In John's testimony, he acknowledged receiving a total of $24, 500 from Christina, which he used to satisfy the parties' 2011 tax debt. However, John maintained that there was no loan agreement and rather that Christina simply gave him the money and told him he did not have to pay her back. Both parties agreed that there was nothing in writing evidencing any loan agreement between the parties.

         On October 1, 2015, the trial court entered an order awarding a judgment of $24, 500 to Christina against John, and the trial court made the following findings:

1. The Court has jurisdiction over the parties and subject matter. Venue is proper.
2. [John's] Motion to Dismiss is denied.
3. The parties entered into a Property Settlement Agreement which is incorporated into their Divorce Decree. The Decree was entered on October 9, 2013.
4. Pursuant to Paragraph 15 of the parties' Property Settlement Agreement, [John] agreed to accept full responsibility for any tax liability, including the penalties and interest associated with the 2011 and 2012 tax returns ...

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