Consent Decree Confuses Collection of Divorce Judgment

hourglassThe Supreme Court of Oklahoma decides a case in which timing affects a party’s right to collect a property division judgment, and interest, in a consent decree.  The case, Dilbeck v. Dilbeck,  had a wild ride through the system.  Three levels of courts decided the case in three different ways.  Ultimately, failure to timely act cost the receiving party part of the judgment she sought.

The time line is crucial to the outcome of the case.

July 25, 2001 – the parties enter into a consent decree of divorce.  Husband is to pay a property division judgment to wife in installments as follows:
$9,000 previously paid in December, 2000;
$6,000 to be paid June 1, 2001;
$23,295.67 to be paid on December 1, 2001;
$23,295.67 to be paid on December 1, 2002; and
$23,295.67 to be paid on December 1, 2003.

The decree provided that the judgment would “not accumulate interest as long as paid in full according to the schedule outlined above. In the event any payment is missed, the entire amount will accumulate interest at the judgment rate.”

Husband did not pay the final payments.

June 13, 2008 – Wife asks the court to grant her judgment, with interest, on the unpaid portion of the judgment.

Husband claims the “entire amount” came due when he failed to make a payment in December 2001.  Under husband’s theory, the 5-year statute of limitations expired by December 2006.  Wife claims the statute of limitations did not start to run until the date of the last payment in December 2003.  Having commenced her action within 5 years of the last installment date, wife claims to be entitled to the full balance due, plus interest.

The trial court agreed with wife.  She received judgment for all unpaid installments and interest on each installment.  Husband appealed.

The Court of Civil Appeals agreed with husband.  It read the decree to treat the missed payment as grounds for  “acceleration,” making the whole judgment due in 2001 when husband first defaulted.  Wife’s 2008 collection effort came too late, according to the intermediate court.

The Supreme Court of Oklahoma focused on the language of the consent decree. The Court interpreted the decree to read that husband’s failure to make a payment resulted in interest being added to the judgment amount.  No interest came due prior to his failure to pay an installment.  There was no “acceleration” of the entire judgment.

The Supreme Court of Oklahoma finally determined wife’s right to pursue the judgment accrued on each payment when it came due.  The statute of limitations began to run on each installment from the date set for payment.  Wife was entitled to judgment and interest on the last installment only.

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