Fox Family Lawyers
Cynthia Moseley Fox
Attorney at Law
7751 Carondelet Avenue,
Suite 700
Clayton, Missouri 63105
(St. Louis)

Court of Appeals Says Interest Not Due on Deferred Buy-Out of Home Equity

A decision recently issued by the Missouri Court of Appeals highlights the importance of paying attention to the details and nuances of one’s divorce judgment.

Unfortunately, for Chris Pugh, he had to learn this lesson the hard way. In 1999, Chris and his wife, Lonna, divorced. Their decree gave Lonna the marital home while assigning Chris $28,407 as his equity in the home, which was to be paid to him by Lonna upon the occurrence of any one of 4 events, including when Lonna sold their marital home.

Several years later, probably sometime in 2006 and 2007 (the court record does not identify the timing), Lonna and her new husband, Ed, sold the house and Chris was ready to receive his payout. Naturally, Chris believed he was also entitled to interest on the debt long deferred. By his reckoning, the appropriate amount due, given the period of time elapsed since the dissolution and the amount of equity owed, would be $14,185. Surprisingly, perhaps, Lonna and Ed found no fault with Chris’s calculations.

Oh, dear reader, don’t be ensnared by the possibility of an amicable conclusion! Didn’t I warn you of a schooling painfully received? Read on.

The Normans (Lonna’s new last name) had no quibble with Chris’s math. Instead, they claimed that no interest was owed because their obligation to pay began not when the equity amount was awarded in 1999 when the divorce was finalized, but upon the occurrence of the “triggering” event, the sale of the home.

Chris Pugh and the Normans took their differences back to court, each asking for a summary judgment supporting their point of view. Chris must have been confident that he had the stronger case. After all, Missouri Statute Section 408.040 states, in part, that “interest shall be allowed all money due upon any judgment or order of any court from the day of rendering the same until satisfaction be made by payment, accord or sale of property”.

The trial court agreed, awarding Chris the $14,185 in interest.

Now it was time for the Normans to object and for Chris (and his attorney) to be reminded about the importance of attention to detail. Lonna and Ed took their argument to the Missouri Court of Appeals, which found their reasoning compelling.

In a unanimous decision, the Appellant court reversed. It wrote that the original divorce contained “no language granting interest to Pugh on the (equity) amount before the occurrence of that event (the sale of the home).” The court also pointed out Chris Pugh did not file an appeal of his 1999 dissolution, contesting this omission.

In essence, the Court said that the equity interest valued at $28,407 that Chris received in 1999 was not the same as a monetary award of the same amount. Had the original divorce court converted that equity into a monetary award that was immediately due upon the dissolution, but then allowed Lonna to defer payment until the house were sold, interest would have accrued automatically.

Not only does this case affirm the importance of paying attention, it likely also calls to mind the colorful monition of many a former boss about how “assumption is the mother of screw-up”. Lessons Chris is not likely to soon forget.