In re O'Malley
| Decision Date | 20 May 2022 |
| Docket Number | 123,910 |
| Citation | 509 P.3d 598 (Table) |
| Parties | In the MATTER OF the MARRIAGE OF Jalyn O'MALLEY, Appellee, and Joseph O'Malley, Appellant. |
| Court | Kansas Court of Appeals |
T. Bradley Manson and Austin Meagher-Manson, of Manson Karbank McClaflin, of Overland Park, for appellant.
Frederick R. Smith, of Pittsburg, for appellee.
Before Powell, P.J., Green, J., and Richard B. Walker, S.J.
Joseph O'Malley appeals the trial court's divorce decree. Joseph and Jalyn O'Malley signed a premarital agreement in 1999. The trial court ruled that Jalyn did not voluntarily execute the premarital agreement. The trial court also ruled that the agreement was unconscionable and unenforceable and proceeded to a bench trial. Joseph argues that the trial court's division of marital property after the trial was incorrect because it was based on incorrectly excluding evidence of the premarital agreement. Because the trial court correctly made a division of property in this matter, we affirm.
Joseph has farmed continuously since he was 18 years old. With guidance from his father, Joseph bought his first piece of farmland, which he calls his "Homestead." Shortly after that, Joseph met Jalyn and in less than a year, Jalyn moved into the Homestead. Joseph was 19 and Jalyn was 24 or 25 when she moved in sometime in 1990 or 1991. Jalyn and Joseph signed a prenuptial agreement (Agreement) on September 21, 1999, and they married on September 24, 1999. At trial, Jalyn testified that during the eight years leading up to the marriage, she felt like she was a regular participant in the farming operation. She knew that Joseph owned the Homestead. During the marriage, they had two children. After their second child was born, Jalyn quit her full-time job to stay at home with their children.
In re Marriage of O'Malley , No. 120,053, 2019 WL 5849811, at *1 (Kan. App. 2019) (unpublished opinion).
The Agreement stated that each party has had "an opportunity to counsel with his or her attorney" relative to the matters set forth and agreed upon in the Agreement and have been fully advised of the facts and circumstances.
The Agreement further stated that Jalyn's estate, as described in Exhibit A, shall remain her separate property, subject entirely to her individual control; and Joseph shall not acquire by reason of said marriage to himself, his heirs, assigns, or creditors, any interest in her property or estate, or right to control thereof nor any interest in the gross income, increase, rents, profits, or dividends arising therefrom. And Jalyn had the right at any time to dispose of any part or all of her separate property or estate by deed, will, or otherwise. The same terms applied to Joseph and his separate property described in Exhibit B, including any interest in his said property or estate, or right to control thereof nor any interest in the gross income, increase, rents, profits, or dividends arising therefrom.
Under the Agreement, neither party had a right to spousal support in the event of divorce. The Agreement did not specify how any subsequently acquired property was to be treated. 2019 WL 5849811, at *1.
In 2017, Jalyn petitioned for divorce. In March 2018, Jalyn moved the trial court to determine the scope and enforceability of the Agreement. She argued that it was unenforceable because she did not receive advice from independent counsel before signing and because the Agreement did not fully disclose Joseph's debts as required by K.S.A. 2017 Supp. 23-2407(a)(1)-(2).
The parties presented evidence to the trial court at an evidentiary hearing in July 2018 about the circumstances leading to the Agreement. Joseph testified that they talked about a premarital agreement years before the wedding. He intended on keeping his farming operation for himself so that he could keep growing it. Joseph testified that he had always told Jalyn that he would require a prenup before they would get married.
Joseph testified that his attorney, Larry Prauser, drafted the Agreement. Joseph testified that he and Jalyn met with Prauser several months before the marriage to discuss the terms they wanted in the Agreement. Prauser asked them to submit a list of assets which they intended to keep in the event of divorce. Jalyn handwrote her list of assets, which Prauser typed and attached to the Agreement. Jalyn saw Joseph's list and knew that it showed real property worth about $150,000, as well as cash savings, stored grain, and equipment. Jalyn also testified that there was nothing about Joseph's list that she did not understand. Jalyn testified that she did not consult with an attorney, but she "skimmed over" the Agreement before signing it and understood its terms.
Joseph testified that in the eight or nine years before the marriage, Jalyn lived on the farm where he had sheds, farm equipment, crops, and cattle. Joseph stated that Jalyn "had to be aware" of the farming operation because she helped move cattle and equipment and she knew what the crops were.
But Jalyn testified that she was not involved in any decision making, Joseph did not consult with her, and she did not know specifics about crops and debts. Jalyn testified that they did not commingle their incomes before marriage. But she did see the list of assets attached to the Agreement, including the cash savings, stored grain, and various items of equipment and their value. She also testified that when their second child was born, Joseph told her to quit her job because "he didn't want his children [to be] raised by a baby-sitter."
After the evidentiary hearing, the trial court's order held that the parties had capacity, that the contract was in writing and signed by the parties, and the contract was not against public policy. But the trial court found that Jalyn did not receive the advice of independent counsel and had no understanding of the legal significance of the document she was signing.
Further, the trial court ruled that the parties had abandoned the Agreement in 2003 in favor of an oral postmarital agreement in which Jalyn would stop working to be a stay-at-home mother. The trial court held that the oral postmarital agreement effectively nullified the Agreement. The trial court held that all assets and liabilities acquired after 2002 other than through gift or inheritance would be considered marital property, and assets traded and replaced would be considered co-mingled marital assets to be divided using a fair, just, and equitable rule. But ultimately, the trial court failed to definitively conclude whether Jalyn executed the Agreement voluntarily. After Joseph's interlocutory appeal from the order, this court reversed and remanded. O'Malley , 2019 WL 5849811, at *1.
This court held that the oral postmarital agreement could not render the premarital agreement unenforceable. After marriage, a premarital agreement can be revoked only by the execution of another written agreement signed by the parties. K.S.A. 2020 Supp. 23-2406. This court directed the trial court to determine the validity of the Agreement on remand. 2019 WL 5849811, at *5.
The trial court issued a Memorandum and Order on Remand without hearing additional evidence. The trial court held that Jalyn did not voluntarily execute the Agreement, the Agreement was unconscionable when executed, and the Agreement did not adequately disclose Joseph's financial obligations.
Joseph moved the trial court to certify the order for interlocutory appeal. The trial court denied Joseph's motion as untimely and proceeded to trial. The trial ran for three days in January 2021.
Joseph testified that he maintains two checking accounts, one at CBW Bank and another at the Exchange State Bank. Joseph deposited virtually all income into his CBW account, which he has maintained since he was 14 years old. When Joseph's business produced and sold grain, the proceeds went into the CBW account. Use of the account at Exchange State Bank was very limited. Joseph used the Homestead that he bought in 1990 as collateral to buy the next piece of property. Joseph paid off debts on subsequent parcels of land through proceeds from the farming operation.
Joseph deposited all revenue from the farming operation into his two accounts, primarily the CBW account. Joseph testified that Jalyn never had access to any of his bank accounts and could not write checks from those accounts. Joseph paid all his bills through his two accounts, including his personal credit card bills.
Joseph testified that he is the sole owner of the farming business, has no partners, and considers all land and equipment to be one farming operation. When buying land in the early years of his business, Joseph used his parents as cosigners on deeds to secure mortgages from Farm Credit Services. All loans which his parents cosigned have been paid off and Joseph now owns the property clear of any interest from his parents.
Jalyn testified that before the marriage she worked full time and also helped on the farm. Before the marriage, Jalyn's full-time job was physical labor at a door manufacturing company. Jalyn testified that she was a regular participant in the farming operation in the years of living together before marriage, helping Joseph with farm labor. But she agreed that Joseph ran the farm. She stated the...
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