Hussemann v. Hussemann

• Decision Date: 23 May 2014
• Docket Number: No. 13–1082.,13–1082.
• Parties: Velma J. HUSSEMANN, By Her Next Friend and Attorney–In–Fact Marcella D. RITTER, Appellant, v. Herbert J. HUSSEMANN Jr. and Robert J. Hussemann, as Trustees of the Herbert J. Hussemann Inter Vivos Trust Agreement, dated June 3, 1991, Appellees.
• Court: Iowa Supreme Court

847 N.W.2d 219

Velma J. HUSSEMANN, By Her Next Friend and Attorney–In–Fact Marcella D. RITTER, Appellant,
v.
Herbert J. HUSSEMANN Jr. and Robert J. Hussemann, as Trustees of the Herbert J. Hussemann Inter Vivos Trust Agreement, dated June 3, 1991, Appellees.

No. 13–1082.

Supreme Court of Iowa.

May 23, 2014.

[847 N.W.2d 220]

Daniel L. Seufferlein of Ackley, Kopecky & Kingery, LLP, Cedar Rapids, for appellant.

Mark E. Mossman and Amy L. Van Wechel of Mossman & Mossman, LLP, Vinton, for appellees.

MANSFIELD, Justice.

This conflict-of-laws case requires us to determine whose state law governs the enforceability of mutual clauses in a postnuptial agreement that waived each spouse's elective share. Two Florida residents were married in Florida in 1991. A few months later, they signed a postnuptial agreement in Florida. The agreement expressly provided that Florida law would apply. The married couple subsequently moved to Iowa in 2005. In 2012, one of the spouses died, and the other spouse sought to claim an elective share under Iowa law, notwithstanding the waiver of the share in the postnuptial agreement. The district court denied relief based on Florida law. Applying the principles of the Restatement (Second) of Conflict of Laws, we give effect to the choice-of-law provision in the agreement and hold that Florida law applies. Accordingly, we affirm the judgment of the district court.

I. Facts and Procedural Background.

Herbert J. Hussemann Sr. and Velma J. Hussemann were married on February 7, 1991, in Florida at a time when both were Florida residents. Herbert and Velma had been married previously and had children from their prior marriages. Marcella Ritter is Velma's daughter from her first marriage, and Herbert Hussemann Jr. (Herbie) and Robert Hussemann are Herbert's children from his first marriage.

Shortly after their February 1991 marriage, when they were still Florida residents,

[847 N.W.2d 221]

the couple entered into a postnuptial agreement. The agreement was signed by the parties on June 3, 1991, in Citrus County, Florida. The agreement contained a separate “Statement of Assets and Liabilities” for each spouse, and it was witnessed and notarized. The agreement provided that each spouse's premarital assets would remain his or her own property, that property acquired after marriage would become and remain the property of the party in whose name title was taken, and that the parties waived rights to spousal support or equitable division of property in the event of dissolution of marriage. The agreement further contained a provision detailing the “Disposition of Property Upon Death.” Subsection B of that provision stated:

Wife hereby waives and releases all rights in and claims against the estate of Husband on his death, including elective share, dower, family allowance, inheritance, or any spousal support or other claims or rights given by law or otherwise. Neither Wife nor Husband intend that this Agreement limit or restrict the right of Husband to make any bequest, devise or gift to Wife by Will or otherwise. Husband may elect to make a bequest, devise or gift to Wife by his Will, without invalidating this Agreement, and may thereafter change or eliminate such bequest, devise or gift by a codicil or trust amendment, or by another Will, or otherwise, without in any way affecting the continued effectiveness of this Agreement.¹

The agreement also disclosed that Herbert had been represented by independent counsel in the negotiation of the agreement and that Velma had not been represented by counsel. A choice-of-law provision stated, “All questions relating to the validity and construction of this Agreement shall be determined in accordance with the laws of the State of Florida.”

On the same day the postnuptial agreement was signed, Herbert also created an inter vivos trust (the Trust) into which he placed his assets. The Trust made no provision for Velma, and all residual assets were left to Herbie and Robert. Herbert was named as the settlor and trustee, and Herbie and Robert were named as successor trustees. The Trust was not only formed in Florida, but (like the postnuptial agreement) provided that it was governed by Florida law.

Herbert and Velma continued to live in Florida for another fourteen years. In 2005, the couple moved to Belle Plaine, Iowa. They remained there until Herbert's death on September 17, 2012. Herbert died intestate.²

Following Herbert's death, on September 20, Velma (through her next friend and attorney-in-fact, Marcella Ritter) filed a petition claiming her spousal elective share of the Trust under Iowa Code section 633.238.³SeeIowa Code § 633.238 (2011) (describing elective share of surviving

[847 N.W.2d 222]

spouse). The trustees answered the petition and asserted Velma had waived her rights to a spousal share under the postnuptial agreement, and the waiver was valid and enforceable under the laws of Florida, which had been selected as the controlling law in the agreement.

On February 27, 2013, the trustees filed a motion for judgment on the pleadings. Velma resisted the motion, filed her own motion for judgment on the pleadings, and argued the entire postnuptial agreement was void as violating Iowa's public policy against postnuptial agreements.

The district court issued its order on June 11. In it, the court concluded “the undisputed choice of law provision in the agreement has effectively taken the matter out of the purview of Iowa law and subsequently Iowa's public policy.” The court added:

Furthermore, accepting Plaintiff's argument declaring the entire agreement void would lead to an unfavorable consequence. Parties who[ ] intentionally enter into such agreements in states allowing them could simply circumvent the agreement later by bringing a claim in Iowa.

As a result, the court granted the trustees' motion for judgment on the pleadings.

Velma appealed; we retained the appeal.

II. Standard of Review.

“We review a grant of judgment on the pleadings for corrections of errors at law.” Roush v. Mahaska State Bank, 605 N.W.2d 6, 8 (Iowa 2000). The court should grant a party's motion for judgment on the pleadings only if the uncontroverted facts stated in the pleadings, taken alone, entitle the party to judgment. Meinders v. Dunkerton Cmty. Sch. Dist., 645 N.W.2d 632, 633 (Iowa 2002).⁴

III. Analysis.

The parties do not dispute any of the facts in this case. Rather, this case turns on a legal issue—the enforceability of Velma's waiver of her spousal elective share contained in a postnuptial agreement she signed in June 1991. Neither party disputes the enforceability of the agreement under Florida law. SeeFla. Stat. § 732.301 (1991) (providing that an elective share may be “waived by ... the spouse by prenuptial or postnuptial agreement”). Rather, Velma argues the agreement cannot be enforced in Iowa because that would violate this state's established public policy against postnuptial agreements waiving a spouse's elective share.

Because suit was brought in Iowa, we apply our own choice-of-law rules. See Cameron v. Hardisty, 407 N.W.2d 595, 596 (Iowa 1987) (noting that when a diversity case is filed in federal court in Iowa, the court must apply Iowa choice-of-law rules). Where an agreement contains a choice-of-law provision, Iowa follows Restatement (Second) of Conflict of Laws section 187. See Pa. Life Ins. Co. v. Simoni, 641 N.W.2d 807, 813 (Iowa 2002) (applying Restatement (Second) section 187 to a contractual choice-of-law provision); Cole v. State Auto. & Cas. Underwriters, 296 N.W.2d 779, 781 (Iowa 1980) (citing Restatement (Second) section 187 and noting that “with certain restrictions not applicable here, contracting parties can themselves determine the law which is to control”); Joseph L. Wilmotte & Co. v. Rosenman Bros., 258 N.W.2d 317, 328 (Iowa 1977) (stating that “

[847 N.W.2d 223]

Restatement Second, Conflicts of Law, section 187, permits the parties to agree on the law to be applied to the contract in most cases so long as it does not override the public policy of a state having a materially greater interest in the transaction”).

Restatement (Second) of Conflict of Laws section 187 provides in relevant part:

(2) The law of the state chosen by the parties to govern their contractual rights and duties will be applied, even if the particular issue is one which the parties could not have resolved by an explicit provision in their agreement directed to that issue, unless either

(a) the chosen state has no substantial relationship to the parties or the transaction and there is no other reasonable basis for the parties' choice, or

(b) application of the law of the chosen state would be contrary to a fundamental policy of a state which has a materially greater interest than the chosen state in the determination of the particular issue and which, under the rule of § 188, would be the state of the applicable law in the absence of an effective choice of law by the parties.

Restatement (Second) of Conflict of Laws § 187(2), at 561 (1971). Florida law clearly does not lack a “substantial relationship to the parties or the transaction.” See id.§ 187(2)(a), at 561. So the only question is whether application of Florida law would be

contrary to a fundamental policy of [Iowa] which has a materially greater interest than [Florida] in the determination of the particular issue and which, under the rule of § 188, would be the state of the applicable law in the absence of an effective choice of law by the parties.

Id.§ 187(2)(b), at 561. The comment to this provision suggests that a sliding scale applies. The greater the relationship of the contract to the state whose law has been chosen, the more fundamental the policy must be of the forum state:

No detailed statement can be made of the situations where a “fundamental” policy of the state of the otherwise applicable law will be found to exist. An important consideration is the extent to which the significant contacts are grouped in...