Wells v. Wells
Facts
The parties' dissolution judgment incorporated a separation agreement requiring the defendant to pay the plaintiff unallocated support under a three-tier formula based on his income. The agreement defined annual income as total gross income earned from employment plus any distributions deferred for income tax purposes, and capped the plaintiff's share at income up to $600,000 per year. In 2018, the defendant received a $480,000 bonus and paid the plaintiff about $82,000, calculating the second and third tiers using only the bonus rather than his total gross income. The plaintiff claimed the agreement required using the defendant's full gross income for the year, including both salary and bonus, and that he underpaid her by $35,972.
Issue
When a separation agreement provides tiered percentages of the husband's gross income and defines annual income as total gross income earned from employment, do the second and third tiers apply to the husband's total gross income or only to a bonus payment received during the year?
Rule
Separation agreements incorporated into dissolution judgments are construed under ordinary contract principles. If the language is clear and unambiguous, courts must give effect to its terms according to their common meaning and may not rewrite the agreement; where an agreement defines annual income as total gross income earned from employment and provides tiered percentages of that income, the tiers apply to gross income as defined, absent language limiting them to a particular component such as a bonus.
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If the agreement is otherwise clear and unambiguous, how should a court interpret the second and third tiers?