Thompson finds Rule 60(b)(5), SCRCP, does not give family court subject matter jurisdiction to modify equitable distribution

Posted Wednesday, August 7th, 2019 by Gregory Forman
Filed under Equitable Distribution/Property Division, Of Interest to Family Court Litigants, Of Interest to Family Law Attorneys, South Carolina Appellate Decisions, South Carolina Specific

The August 7, 2019 Court of Appeals opinion in Thompson v. Thompson, 428 S.C. 142, 833 S.E.2d 274 (Ct. App. 2019), holds that Rule 60(b)(5), SCRCP, does not give that family court subject matter jurisdiction to modify an equitable distribution order.

The Thompsons’ divorce decree approved a separation agreement providing “[a]s soon as she is able, Wife shall assume or re-finance all loans on [the Home] in her own name. . . . Wife must place [the Home] on the market for sale on or before June 1, 2025.” The Final Order also provided Husband and Wife would each be responsible for their own debts, indemnify each other against liability for those debts, and pay all accounts and obligations in a timely manner so as to not harm the other party’s credit. The Final Order made Husband responsible for all debts associated with Palmetto Tree and indemnified Wife from Palmetto Tree’s debts. Finally, the Final Order provided:

It is the intent of the parties that the provisions of [the Final Order] shall govern all rights and obligations of the parties as well as all rights of modification; and, further, that the terms and conditions of [the Final Order] . . . shall not be modifiable by the parties or any court without the written consent of Husband and Wife . . . . Neither the Family Courts of the State of South Carolina nor any other court shall have jurisdiction to modify, supplement, terminate, or amend [the Final Order] or the rights and responsibilities of the parties hereunder.

Subsequent to the divorce, Wife allowed Husband to take possession of the marital home. The parties then had a falling out, with a dispute as to who was to pay the mortgage. The house went into foreclosure and both parties allowed liens to attach to the home. Wife eventually got the house out of foreclosure but was unable to refinance it to get the mortgage out of Husband’s name. Husband filed a rule to show cause due to Wife’s failure to pay the mortgage and failure to get the home mortgage out of his name. He also sought relief, pursuant to Rule 60(b)(5), SCRCP, to order that Wife place the home for sale immediately.

At trial, the family court declined to hold Wife in contempt. However it found the parties’ agreement regarding the marital home was no longer equitable and ordered Wife to immediately list the home for sale. It also granted Husband attorney’s fees and denied Wife her request for fees. After the family court denied her motion for reconsideration, Wife appealed.

The Court of Appeals reversed the family court’s grant of Rule 60(b)(5) relief. Citing S.C. Code § 20-3-620(C), the court based the decision on a finding that the family court lacked subject matter jurisdiction to modify a final order of equitable distribution. The court noted that Rule 60(b)(5) was already in effect when it decided Hayes v. Hayes, 312 S.C. 141, 439 S.E.2d 305 (Ct. App. 1993) and that Hayes held that “[a] family court order can be modified only when jurisdiction was specifically reserved in the decree or if allowed by statute.” It interpreted Hayes’ holding as meaning that “[d]espite the existence of Rule 60(b)(5), this court indicated ‘[t]here is no statutory authority for modifying an order of equitable distribution.’”

Notwithstanding this holding that Rule 60(b)(5) cannot be used to modify an equitable distribution order, the opinion then discusses circumstances in which the appellate courts have allowed a Rule 60 motion to modify a final order of equitable distribution–specifically when there are clerical errors to be corrected or exceptional circumstances to warrant modification of the property agreement. The Court of Appeals noted that no clerical errors were alleged in Thompson and distinguished the few cases in which the appellate courts have found “exceptional circumstances” before determining that those circumstances did not exist in this case.

Because the Court of Appeals reversed the granting of Rule 60(b)(5) relief, it also reversed the award of attorney’s fees to Husband and remanded the matter of attorney’s fees for reconsideration by the family court.

I was Wife’s attorney both at the family court matter and on appeal (although not for the divorce). As the opinion notes, Wife did not specifically contest the family court’s subject matter jurisdiction to modify the Final Order. I am unclear how much the determination that the family court lacked subject matter jurisdiction rested upon the language in the parties’ agreement that purports to divest the family court of jurisdiction to modify their agreement. I am further unclear how much the Court of Appeals’ reversal is based upon a finding of a lack of subject matter jurisdiction, as opposed to a finding that no “exceptional circumstances” existed.

There is certainly a reading of Thompson that having language in separation agreements divesting the family court of jurisdiction to modify the agreement might be binding on matters of equitable distribution (and potentially alimony). This boilerplate language might be more powerful than I would have believed prior to this opinion.

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