Background
After Stacey Morea and Michael Robach divorced, they entered an agreement concerning healthcare costs for their three adult daughters. Under the agreement, Robach would maintain health insurance, the parties would split out-of-pocket expenses equally, and a party who failed to make a timely reimbursement would owe a $100 penalty plus $50 for each week the breach continued. The Kent Circuit Court incorporated the agreement into an October 3, 2022 stipulated order.
After Morea gave notice terminating the annually renewing agreement effective December 31, 2024, Robach sought to hold her in civil contempt for unpaid reimbursements and accumulated penalties. He initially claimed $37,200 in penalties but reduced that demand to $15,950 after acknowledging an accounting mistake. Morea moved to set aside the stipulated order, arguing, among other things, that the agreement was unconscionable and that the late-fee provision was an unenforceable penalty.
The trial court declined to decide unconscionability but set aside the order under Michigan Court Rule 2.612(C)(1)(f). It characterized the late fees as grossly inequitable and violative of usury laws, criticized Robach’s accounting and delay in seeking enforcement, and continued proceedings concerning reimbursements, previously paid penalties, and attorney fees.
The Court’s Holding
The Court of Appeals vacated the order granting Morea relief and remanded. It held that the trial court failed to identify extraordinary circumstances justifying relief under MCR 2.612(C)(1)(f). Robach’s alleged accounting misconduct and delay occurred after entry of the stipulated order and therefore did not show that he obtained the order through improper conduct. The accumulation of large weekly fees also was a foreseeable consequence of the uncapped provision to which the parties agreed, not an unexpected circumstance warranting relief.
The panel further held that setting aside the stipulated order detrimentally affected Robach’s substantial rights because it eliminated his potential claim to late fees and exposed prior payments under the agreement to possible retroactive reversal. It also rejected the trial court’s usury rationale: the contractual late fees were not interest and therefore did not violate Michigan’s usury laws.
The court did not decide whether Morea owed reimbursements or late fees, whether she should be held in contempt, or whether the agreement was unconscionable or contained an unenforceable liquidated-damages provision. Those issues remained open for the trial court to address in the first instance on remand, based on an adequate evidentiary record and proper legal standards.
Key Takeaways
- Relief under MCR 2.612(C)(1)(f) requires extraordinary circumstances, and a foreseeable result of an agreed contractual term generally does not satisfy that standard.
- Post-order enforcement conduct, including alleged delay or inaccurate accounting, does not ordinarily establish that a stipulated order was obtained through improper conduct, though it may support other remedies such as sanctions.
- The remand leaves open whether bargaining pressure made the agreement unconscionable and whether the late-fee clause constitutes an unreasonable and unenforceable penalty.
Why It Matters
The decision underscores that a court cannot undo a stipulated domestic-relations order merely because its agreed terms later produce a harsh or disproportionate result. A court invoking its equitable authority under MCR 2.612(C)(1)(f) must apply the rule’s specific requirements and explain how the record establishes extraordinary circumstances without improperly impairing the opposing party’s substantial rights.
At the same time, the opinion preserves contract-based challenges to stipulated orders. On remand, the trial court may consider evidence concerning the negotiations, including allegations of unequal bargaining power, pressure, and threats, as well as whether the late-fee clause was unreasonable when the agreement was made.