528 S.W.3d 353
Ky. Ct. App.2017Background
- Terry and Brianna Callihan divorced after signing a Settlement Agreement (incorporated into the divorce decree) allocating debts: each party responsible for debts in their name or business; Terry agreed to indemnify Brianna for debts/obligations concerning his business (C&H Heating & Air Conditioning).
- Terry (co‑owner/manager of C&H) obtained a PNC Bank loan in 2002; loan documents named C&H as borrower, Terry and partner signed as principals/managers, and spouses (including Brianna) signed as guarantors.
- Terry later discharged personal liability in bankruptcy; the business partner resolved his liability by settlement; PNC sued Brianna (as guarantor) in 2016 to collect remaining debt.
- Brianna filed a Verified Motion for Contempt asking the family court to compel Terry to indemnify and reimburse her for any amounts paid to PNC and for attorney’s fees, based on the Settlement Agreement.
- The family court found the loan to be business debt of C&H (not Brianna’s individual debt), relied on Terry’s financial statement listing the loan as a C&H liability, and ordered Terry to indemnify/reimburse Brianna and awarded $1,500 in attorney’s fees.
- Terry appealed, arguing Brianna should be personally responsible for her guaranty; the appellate court affirmed.
Issues
| Issue | Plaintiff's Argument (Brianna) | Defendant's Argument (Terry) | Held |
|---|---|---|---|
| Whether Terry must indemnify Brianna for PNC claim | Settlement requires Terry to indemnify Brianna for his business debts; he should pay | Brianna signed as guarantor and agreed to be responsible for debts in her name; she should bear guaranty liability | Court held Terry must indemnify — loan was business debt of C&H and Settlement obligated Terry to cover it |
| Characterization of the PNC loan (business vs. personal) | Loan is business debt of C&H; C&H named on loan and liability listed on Terry’s financial statement | Loan included personal/family charges; Brianna’s guaranty makes her liable | Court found substantial evidence loan was a C&H business debt; personal charges were not persuasive |
| Whether family court’s factual findings were clearly erroneous | N/A (movant) | Terry contended findings were wrong | Appellate review: findings supported by substantial evidence and not clearly erroneous; trial court credibility findings upheld |
| Award of attorney’s fees to Brianna | Fees sought as costs of defending and enforcing indemnity | Terry questioned reasonableness; did not brief fees issue on appeal | Appellate court affirmed fee award (trial court discretion; appellant did not brief the issue) |
Key Cases Cited
- Owens‑Corning Fiberglas Corp. v. Golightly, 976 S.W.2d 409 (Ky. 1998) (substantial‑evidence standard for factual findings)
- Janakakis‑Kostun v. Janakakis, 6 S.W.3d 843 (Ky. App. 1999) (definition of substantiality of evidence)
- Neidlinger v. Neidlinger, 52 S.W.3d 513 (Ky. 2001) (trial court discretion in attorney’s fees awards)
- Commonwealth v. English, 993 S.W.2d 941 (Ky. 1999) (abuse‑of‑discretion standard)
- Bailey v. Bailey, 231 S.W.3d 793 (Ky. App. 2007) (family court credibility and fact‑finding deference)
- Coffman v. Rankin, 260 S.W.3d 767 (Ky. 2008) (appellate review limited to clear error/abuse of discretion)
- Milby v. Mears, 580 S.W.2d 724 (Ky. App. 1979) (appellate consequence of failing to brief an issue)