Laesch v. Laesch – Indiana Court Affirms Sanctions for Failure to Pay Per Divorce Agreement

The Indiana Court of Appeals has affirmed a lower court decision in Laesch v. Laesch, finding a husband must:

• Pay interest on his monthly payments to his wife, because he did not pay each in a lump sum;
• Be held in contempt for failure to obtain a life insurance policy naming his ex-spouse as the sole irrevocable beneficiary;
• Pay for her attorney fees in taking the matter to court. 

The outcome has proven costly for the husband, and it illustrates the importance of ensuring you fully understand your obligations under each provision of the original Indiana divorce agreement. Failure to abide by any part of it could prove an expensive mistake. 

According to court records, Husband appealed the trial court’s order requiring him to pay interest on the unpaid balance of the settlement judgment he owed to his former wife, finding him in contempt for failure to obtain life insurance, and requiring him to pay his wife’s attorney’s fees for this contempt. Husband argued that he should only have to pay interest on the monthly payments if he failed to make them – not simply because he didn’t pay each in a lump sum. He further argued that the trial court failed to allow him due process by not informing him of the factual basis for the contempt allegation before the hearing, and also that there was not enough evidence he intentionally disobeyed the dissolution decree. He also insisted the court had wrongly denied him the opportunity to purge his contempt before it imposed the sanction.

The court rejected each of his arguments.

First, it looked at the judgment in which the husband was ordered to pay $272,000 to his wife, which he could do either in a lump sum or in 84 monthly installments of $3,238. The decree didn’t specifically indicate that Husband would have to pay interest if he chose the latter option, but it did say Wife was entitled to legal interest on any unpaid balance of the judgment. Husband argued this meant he only was required to pay interest if he didn’t keep up with those monthly payments. Wife argued this was unfair, as it would essentially mean her husband had an interest-free loan.

The court looked at the plain language of the agreement and sided with the wife, noting that “any unpaid balance” would include whatever he didn’t pay right away upfront.

Next, on the issue of contempt, the court analyzed the requirement of the husband to obtain a life insurance policy that named his ex-wife. The dissolution of their marriage occurred in October 2013. At that time, the husband was ordered to obtain a life insurance policy. However, the wife filed a motion in September 2015, arguing he still had not done this. Husband argued he should not be held in contempt for this because he had been trying to secure a life insurance policy, but had encountered great difficulty in the interim. He’d suffered several blood clots in the years leading up to the divorce. Following the third clot, which he suffered in August 2013, he was diagnosed with Deep Vein Thrombosis (DVT). When he tried to obtain life insurance, he spoke to a financial adviser in March 2014 who explained that this would be difficult, and that it would probably be at least two years before he was able to do so. Husband explained that he waited one year, until in July 2015, at which point the financial adviser indicated he could try again. He applied for one policy for $500,000, but was told it would cost $23,000 a year due to his medical condition. Because the rate was so high, he applied to another company, and that application was still pending at the time of this suit.

Husband argued that he’d still kept his ex-wife on the life insurance policy he’d held before, worth about $41,000, and he’d also named her the beneficiary of his net estate in his will – which he asserted was more than what he owed her.

However, the trial court ruled this was not sufficient to meet the terms of the agreement, and the appellate court affirmed both the finding of contempt and the requirement that Husband pay his ex-wife’s attorney fees.

Here again, communication with an experienced divorce lawyer at the outset of this agreement may have helped to avoid these financial headaches.

Indiana Family Law Attorney Burton A. Padove handles divorce and child custody matters throughout northern Indiana, including Gary and Hammond.

Additional Resources:

Laesch v. Laesch, Aug. 24, 2016, Indiana Court of Appeals

More Blog Entries:

Wallerstedt v. Wallerstedt – Relocation in Indiana Child Custody Case, July 25, 2016, Indiana Divorce Lawyer Blog