What Happens if Someone Doesn’t Follow the Separation Agreement?

If a Party does not follow an obligation listed within a Separation Agreement, he or she will be in breach of contract if the Agreement is not integrated into a NC Court Order. Once a party is in breach, the non breaching party may bring a suite for Breach of Contract and seek incidental and consequential damages plus Attorney Fees. In the event that monetary damages are inappropriate, the non breaching party may then seek an Order for Specific Performance where a Court can Order the Performance of an individual to act with the power of contempt, which happens frequently in Charlotte-Mecklenburg County.

In the event that either party breaches a Consent Order, they may be punishable by the contempt powers of the court immediately without filing any additional lawsuits. With this being said, it is extremely important to consult with an experienced family law attorney in Charlotte NC regarding whether your future should be spelled out in a Court Order, a non integrated Separation Agreement, or an Integrated Agreement.

Not every failure to perform is an actionable breach

In North Carolina a breach of a separation agreement must be material to be actionable — one that, in the words of Long v. Long, “substantially defeats the purpose of the agreement or goes to the very heart of the agreement, or can be characterized as a substantial failure to perform.” Lancaster v. Lancaster adds that small lapses and inconsequential breaches are not substantial breaches requiring rescission.

Long itself illustrates the threshold. A husband whose agreement called for child support by direct deposit on the first of the month, and who instead sent payment by another method sometime after the first, had not substantially breached. The question is what the obligation was for, not whether it was performed exactly as written.

These claims are heard in district court whatever the amount at stake

G.S. 7A-244 makes the district court division “the proper division without regard to the amount in controversy, for the trial of civil actions and proceedings for annulment, divorce, equitable distribution of property, alimony, child support, child custody and the enforcement of separation or property settlement agreements between spouses, or recovery for the breach thereof.” A suit to enforce a separation agreement between Charlotte spouses is therefore brought in Mecklenburg County District Court, whether the sum in dispute is a month of support or the equity in a house.

The limitation period depends on whether the agreement was executed under seal

In North Carolina an action for breach of an unincorporated separation agreement is generally governed by the three-year period in G.S. 1-52(1), which covers an action “[u]pon a contract, obligation or liability arising out of a contract, express or implied.” Where the agreement was executed under seal, G.S. 1-47(2) applies a ten-year period to an action “[u]pon a sealed instrument or an instrument of conveyance of an interest in real property, against the principal thereto,” which the Court of Appeals confirmed in Crogan v. Crogan.

The period runs from accrual, and in a contract action the claim generally accrues on breach rather than on discovery. Where the agreement obliges a spouse to make periodic payments, each missed payment is capable of starting its own period, which is one reason arrears are often recoverable for part of a long-running default and not for all of it. Where the agreement has been incorporated, the relevant period is the one applicable to judgments: ten years under G.S. 1-47(1), running from the date of entry.

Specific performance has elements that must be pleaded and proved

Under North Carolina law a party seeking specific performance of a separation agreement must, in addition to proving breach, allege and prove that the remedy at law is inadequate, that the other spouse is able to perform some or all of the obligation, and that the moving party has performed his or her own obligations. Cavenaugh v. Cavenaugh states the requirement and Reeder v. Carter applies it.

A clause in the agreement promising the remedy does not remove the burden. In Reeder the agreement provided that “an order of specific performance enforceable by contempt is an appropriate remedy for a breach by either party,” and the Court of Appeals still required the complaint to allege facts about the defendant’s ability to pay, observing that parties may not contract around an established legal standard.

A money judgment is generally an inadequate remedy where complete recovery would require a multiplicity of actions, which is why specific performance is commonly available to enforce obligations for future periodic payments. A trial court may enter both — a money judgment for the arrears and specific performance of the payments to come — as it did in Lasecki v. Lasecki.

Attorney fee clauses are enforceable in separation agreements although not in contracts generally

The general North Carolina rule is that contractual provisions for attorney fees are invalid without statutory authority. Separation agreements are an exception. In Bromhal v. Stott the Supreme Court read G.S. 52-10.1 to authorize a married couple to include a fee provision, holding that clauses requiring payment of attorney fees on a breach are not inconsistent with the public policy of this State and are legal, valid and binding.

The clause is enforced according to its own words. In Edwards v. Edwards an indemnity provision covering expenses incurred to enforce an obligation supported a fee award in an action for specific performance of alimony provisions. In Hennessey v. Duckworth a clause making the losing party responsible for fees on a breach or in a suit for enforcement did not apply where the later proceeding was not an action on the agreement at all but a custody action under Chapter 50.

Rescission is an alternative to suing on the agreement

A spouse faced with a substantial breach in North Carolina is not confined to enforcing the contract. Wilson v. Wilson recognizes the election to rescind, and Lee v. Lee applies it where the breach was a failure to disclose required by the agreement’s own terms. Rescission puts the parties back to where they stood, which can reopen statutory claims the agreement had settled — alimony, or equitable distribution — if the statutory requirements for those claims are still met.

That last condition is the catch, and the divorce judgment is usually where it bites. Under G.S. 50-11(e) an absolute divorce granted in this State destroys the right to equitable distribution unless the right was asserted before the judgment. The only relief the subsection offers afterwards runs to a defendant who was served by publication and failed to appear in the divorce action, who may bring an action or file a motion in the cause for equitable distribution within six months from the date of the judgment; G.S. 50-11(f) allows the same six months where the divorcing court lacked personal jurisdiction over the absent spouse or lacked jurisdiction to dispose of the property. A spouse who rescinds after a divorce judgment has been entered, with no equitable distribution claim on file and neither exception available, does not recover that route by rescinding.

Contempt is available only where the terms sit in a court order

This is the practical difference between an unincorporated agreement and one incorporated into a judgment. Under Walters v. Walters an incorporated agreement is a court order, enforceable by contempt or execution, and property settlement provisions of an incorporated agreement are enforceable by contempt as well. Under G.S. 5A-21(a) failure to comply is a continuing civil contempt so long as the order remains in force, the purpose of the order may still be served by compliance, the noncompliance is wilful, and the person is able to comply with the order or to take reasonable measures that would enable compliance.

Each element has produced its own case law in North Carolina. Wilfulness means an ability to comply and a deliberate and intentional failure to do so. A trial court must find a present ability to comply before holding a party in civil contempt, which is why a contempt order entered without that finding was reversed in Oakley v. Oakley. And the Court of Appeals has noted in Holden v. Holden that where the terms of an incorporated agreement are ambiguous a finding of contempt will generally not be proper, since it is difficult to refuse wilfully to comply with a term one does not understand.

Child support obligations carry their own machinery. G.S. 50-13.4(f) provides that an order for periodic child support payments “is enforceable by proceedings for civil contempt, and disobedience may be punished by proceedings for criminal contempt,” as provided in Chapter 5A, alongside remedies such as garnishment, attachment and the posting of security.

Incorporation closes the contract remedies and opens the judgment remedies

The exchange runs both ways in North Carolina. Once a separation agreement is incorporated it loses its contractual nature, is superseded by the court’s order, and ceases to exist as an independently enforceable contract. Holden v. Holden holds that on breach the party must use the remedies available for enforcement of a judgment and may not sue for breach of contract, seek contractual specific performance, or bring a declaratory judgment action to have the terms construed.

Fucito v. Francis shows the boundary in operation: the district court had no subject matter jurisdiction over a declaratory judgment action to interpret a distributive award provision in an incorporated agreement, although the same court could construe that provision as part of a contempt proceeding, applying the normal rules for interpreting contracts.

Common questions

Written for North Carolina law and reviewed by David P. Sheehan, attorney, Charlotte. General information, not legal advice — see the disclaimer.

Related questions

• Can I Change the Terms of a Separation Agreement in North Carolina After it is Signed?
• Do I Have to Disclose All My Assets in Negotiating a Separation Agreement?
• Is a Separation Agreement Right for Me?