In Flanagan v. duMont, 2016 VT 115 (Nov. 4, 2016), the Vermont Supreme Court reversed and remanded the case so that the family court could address wife’s claims under two hold-harmless provisions in their divorce decree.
Issue: Wife had been awarded the house in the divorce with a requirement to refinance or sell, but before she could, the IRS and State of Vermont placed several liens on the house, which were recorded in husband’s name only. Husband did not clear the tax liens, causing a prospective sale to fall though, the loss of wife’s rental income, and wife’s inability to pay the mortgage. Wife filed a motion to enforce the final decree of divorce, specifically the two hold-harmless provisions and requested damages. The trial court held that it did not have the authority to adjudicate their respective liabilities with respect to the taxes. Wife appealed.
Holding: The Court held that, while the trial court did not have authority to adjudicate the parties responsibilities to the IRS, it could adjudicate their respective responsibilities to each other under the divorce decree, and such an order was one potential step towards resolving the matter. It held that husband’s inability to pay the liens did not prevent the trial court from issuing the order about the obligation. The Court then analyzed the language of the two hold-harmless provisions and held that husband breached one of them with respect to some (but not all) of the liens. It remanded the matter for further evidence regarding one of the liens and for consideration of the damages to be awarded.