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The Goal of the Interpretation of a Divorce Agreement is to Meet the Parties Mutual Intentions

The husband was a decorated Vietnam combat veteran, who began suffering symptoms of post-traumatic stress disorder (“PTSD”) in 1970, which only fully manifested itself in 2011. Husband and wife married in 1971 and separated in 2001. Both parties were lawyers, although wife worked as a school teacher. They negotiated a Marital Settlement Agreement (“MSA”), which recited that both were in good health and that they entered into the agreement voluntarily, pursuant to which husband agreed to pay $4,000 per month in family support until the younger child reached 18 and the residence was sold, after which it would be modified to an amount mutually agreed upon, “but shall not be reduced to an amount lower than two thousand dollars per month, and is agreed by the parties that spousal support is an ongoing obligation of husband, and will only terminate upon wife’s death or remarriage, or the death of husband.]” In 2012, husband’s divorce lawyer filed a motion to terminate spousal support, alleging he had recently been formally diagnosed with PTSD in December 2011, was currently unable to work more than two or three hours per day, had to borrow $25,000 to keep his practice running and had a $39,000 tax lien, and was going to apply for a service connected disability. Husband’s divorce lawyer argued that neither party contemplated becoming disabled. In a subsequent declaration, he stated he was shutting down his practice and hope to receive $2,940 per month in disability income and a $1,100 per month from Social Security. Wife’s divorce attorney opposed husband’s motion, arguing she could not make ends meet without spousal support. The divorce court held that while it had jurisdiction over the spousal support, it was constrained by the parties’ agreement that spousal support could not be less than $2,000 per month, and denied husband’s divorce lawyer’s motion. The Court of Appeal agreed with wife’s divorce attorney and affirmed, explaining in pertinent part:

As has often been restated: “The fundamental goal of contractual interpretation is to give effect to the mutual intention of the parties. [Citation.] If contractual language is clear and explicit, it governs. [Citation.] On the other hand, “[i]f the terms of a promise are in any respect ambiguous or uncertain, it must be interpreted in the sense in which the promisor believed, at the time of making it, that the promise understood it.” [Citations.][Citation.].

The focus is on ascertaining and implementing the parties’ mutual intent when they entered into the settlement. (Simundza, supra, 121 Cal.App.4th at p. 1518, 18 Cal.Rptr.3d 377. In performing this task, a family law court must construe the divorce judgment as a whole rather than separately considering its individual clauses (Yarus v. Yarus (1960) 178 Cal.App.2d 190, 201, 3 Cal.Rptr. 50), and consider the circumstances when the parties signed the divorce agreement. (In re Marriage of Williams (1972) 29 Cal.App.3d 368, 105 Cal.Rptr. 406.).

In holding husband to his non-modifiable support obligation (notwithstanding his alleged inability to continue paying due to PTSD), the Court of Appeal emphasized that the divorce court must look to the intent of the parties at the time the contract was entered into (as opposed to years later, in hindsight). The court specifically rejected husband’s divorce lawyer’s argument that, given his unforeseeable disability, the MSA was subject to modification of the family law judgment due to frustration of purpose and impossibility, stating:

“To the extent Husband’s divorce lawyer suggests that his disability was not foreseeable and, thus, because of either changed circumstances or impossibility FN5 the divorce agreement is subject to modification, this argument is belied by the facts. According to Howard, he had been suffering with PTSD for 30 years when he agreed to the floor on spousal support. He was approximately 52 years old when he signed the agreement and must have known retirement lay ahead for him. Moreover, both Howard and Lydia were licensed attorneys at the time they signed the MSA. Considering the divorce judgment as a whole and the circumstances of the parties when they signed the MSA, we conclude the parties did not intend that a reduction in Howard’s income, either through disability or retirement, or some combination thereof, would create changed circumstances warranting modification of the divorce agreement. (See Simundzal, supra, 121 Cal.App.4th at 1518, 18 Cal.Rptr. 3d 377; Davis, supra, 120 Cal.App.4th at p. 1018, 16 Cal.Rptr.3d 220; In re Marriage of Iberti, supra, 55 Cal.App.4th at pp. 1439-1440, 64 Cal.Rptr.2d 766.)

FN5. Howard incorrectly cites the Restatement Second of Contracts, section 265, to argue the theory of frustration of purpose. He claims that since it is now impossible for him to comply with the spousal support provisions of the divorce judgment, he is excused from his performance. His lawyer’s argument is misplaced for two reasons. First, none of the cases husband’s divorce lawyer cited ever applied to this theory. Second, his divorce lawyer omitted the following from the passage he quoted: “Contract liability is strict liability. It is an accepted maxim that pacta suet servanda, contracts are meant to be kept. The obligor is therefore liable in damages for breach of contract even if he is without fault and even if circumstances have made the contract more burdensome or less desirable than he had anticipated. ”(Rest.2d Contracts, Ch. 11, Introductory Note, p. 309.)”

In re Marriage of Hibbard (2013) 212 Cal.App.4th 1007