In re Traster

Citation301 Kan. 88,339 P.3d 778
Decision Date19 December 2014
Docket Number106,092.
PartiesIn the Matter of the MARRIAGE OF David M. TRASTER, Appellee, and Debra C. Traster, Appellant.
CourtUnited States State Supreme Court of Kansas

Stephen P. Weir, of Stephen P. Weir, P.A., of Topeka, argued the cause and was on the briefs for appellant.

Gary L. Ayers, of Foulston Siefkin LLP, of Wichita, argued the cause, and Kristy L. Simpson, of the same firm, was with him on the briefs for appellee.

Opinion

The opinion of the court was delivered by BILES, J.:

This appeal challenges the district court's property division in a divorce case. Our focus is on a document entitled “Post–Nupt[i]al Agreement Dissolution of the Marriage,” which the attorney-husband drafted during the marriage, reserving most of the assets for the wife. Husband now claims the agreement is void because of the lopsided property division, even though the agreement explicitly states it is “fair, just and reasonable, and comports with all legal requirements so as to be fully enforceable under the laws of the State of Kansas.”

The district court agreed with the husband, voided the agreement, and allocated the couple's assets based on the court's own determination of what was just and reasonableunder K.S.A. 60–1610(b)(1) (division of property when no agreement controls). The Court of Appeals reversed and restored the terms favoring the wife.

The panel reasoned that Kansas should recognize two types of postnuptial agreements: (1) separation agreements governed by K.S.A. 60–1610(b)(3) ; and (2) all others, which would be governed by a common-law rule adopted by the panel based on whether the spouses intended to remain married when entering into the agreement. The panel found the agreement at issue in this case was entered before the parties intended to divorce, so K.S.A. 60–1610(b)(3) was not applicable. In re Marriage of Traster, 48 Kan.App.2d 356, 365–67, 291 P.3d 494 (2012). We granted review and now affirm in part and reverse in part the rulings by both lower courts.

We hold the couple's agreement is controlled by K.S.A. 60–1610(b)(3), which requires a separation agreement to be incorporated into the divorce decree if the court finds it is “valid, just and equitable.” We hold further that the district court erred when it invalidated the agreement based on the public policy grounds that the disproportionate property division encouraged divorce. That common-law analysis was abrogated when the legislature adopted K.S.A. 60–1610(b)(3)'s “just and equitable” requirement. We remand the case to the district court for a more detailed review into whether the agreement is just and equitable under K.S.A. 60–1610(b)(3), given the considerations detailed in the agreement, the particular circumstances of the case, and this opinion.

Factual and Procedural Background

David and Debra Traster married in 1976. They have no children. David has been practicing law since 1981. Debra graduated from law school but never took the Kansas bar exam. She has had limited employment throughout the marriage and claims she is incapable of gainful employment due to a brain injury and the resulting impact on her mental health. The district court found Debra capable of sitting for the Kansas bar exam but incapable of being “employed as an attorney in the manner as most attorneys.”

During their marriage, the parties entered into two agreements concerning the division of their assets upon divorce. David drafted both agreements. The first was in the 1980's and was not admitted at trial. The parties agree its provisions were identical or nearly identical to the second agreement that was admitted into evidence and which presents the central questions in this appeal. By its terms, the second agreement became effective upon David's December 2004 signature. Its terms are important to our analysis, so they must be set out in detail.

The Trasters' 2004 Agreement

The 2004 agreement acknowledges David was the scrivener and that Debra relied on his legal expertise and advice because she lacks “David's practical experience with drafting and enforcing agreements.” It further acknowledges the couple's assets “have been accumulated largely because of loans, gifts and payments from Debra's parents.” It expressly states it is “fair, just and reasonable, and comports with all legal requirements so as to be fully enforceable under the laws of the State of Kansas.” It further states that neither Debra nor David have “current plans” to divorce, but it notes “ the marriage has not always been idyllic and that significant problems and differences have arisen ... from time to time.”

The agreement calls for the following unequal division of assets, as well as providing the rationale for that division:

“6. Distribution of Assets. It is acknowledged and agreed that all or nearly all of the accumulated Assets of the Parties have been contributed directly or indirectly to the marriage by ... Debra's parents. As an example, and without limitation, Debra's parents have given educational support and vehicles at prices substantially below market value or as outright gifts. The Assets contributed by David's career and employment have been used by the Parties for maintenance of their lifestyle. For this reason, and because Debra will have no Social Security Benefits and, because of her age will have limited ability to obtain gainful employment in the event of a voluntary dissolution of the marriage by either party, and in the absence of any other agreement between the Parties executed with the same formality as this Agreement and which is in compliance with Paragraph
9. H, below, the Assets of the Parties should be and are to be divided and distributed between them as follows:
“A. To David: His personal belongings and effects, including his clothing, tools and guns, (Debra may elect to retain one of the Parties handguns of her choice.) and gifts and inheritances, if any, from David's family. As of the date of this agreement, there have been no such gifts or inheritances.
“B. To Debra: All other Assets, both real personal and mixed which are owned by the Parties at the time any proceeding for dissolution of the marriage are instituted by either Party, including but not limited to, the Parties' home, vehicles, personal property, accounts, funds, stocks, bonds, investments, buildings, contracts, leases, and any other Assets owned by the Parties. This grant shall apply to all Assets, whether or not enumerated herein and to all Assets regardless of when they are or were acquired by the Parties, including after acquired property.”

The agreement also contains a severability provision, stating that if “one or more provisions of this Agreement shall be held invalid or unenforceable such invalidity or unenforceability shall not affect the remaining provisions....”

Finally, the agreement prohibits either party from seeking any court order contrary to its terms and enforces that prohibition by stating that each party “agrees to indemnify the other for any loss, cost or expense (including attorney fees and expenses) incurred because a Party seeks to obtain judicial modification of this Agreement.”

The same day David signed the 2004 agreement the parties also executed a notarized document entitled “Post–Nupt[i]al Agreement Contract for Will,” which similarly divided the couple's property, except that assets reserved to David included his individual retirement accounts, his law firm's 401(k) account, and all automobiles owned by David and Debra. It likewise acknowledged Debra's parents' financial contributions and the couple's desire for those contributions to remain with her family and similarly stated that its agreed-upon property distribution was “fair, just and reasonable, and comports with all legal requirements.”

The District Court Proceedings

David petitioned for divorce in June 2007 based on incompatibility. This triggered K.S.A. 23–201, which gives each spouse a common interest in the marital property until the district court finalizes the property division under K.S.A. 60–1610. In his petition, David did not refer to or provide the court with the couple's 2004 agreement.

In June 2010, Debra filed a motion for partial summary judgment seeking a ruling that the 2004 agreement was valid and enforceable and controlled disposition of the real and personal property in the divorce. David opposed this motion, setting the stage for the parties' dispute.

The threshold issue was whether the agreement should be characterized as a separation agreement under K.S.A. 60–1610(b)(3), requiring a judicial determination that it met the statutory standard of being “valid, just, and equitable.” After a hearing, the district court held the agreement was a separation agreement under K.S.A. 60–1610(b)(3). The court set the matter for trial to determine if the contract was valid, just, and equitable based upon a full review of the parties' assets.

The trial occurred in October 2010. At its conclusion, the district court held the agreement was invalid or void as against public policy because the court found the unequal property division promoted divorce by giving David a substantial incentive to end the marriage as soon as possible so he could accumulate his own assets. And on that same basis, the district court found the agreement to be “unreasonable and inequitable,” later characterizing it as “not fair and equitable.” In so ruling, the district court noted David would receive only 1.13 percent of the marital assets under the agreement, while Debra would receive 98.87 percent.

The district court then made its own “just and reasonable” property division as required by K.S.A. 60–1610(b)(1), the statute governing property division when the parties have no agreement. The court awarded Debra spousal maintenance for 120 months and ordered David to maintain life insurance naming Debra as the beneficiary in an amount equal to the spousal maintenance owed. It declined to award Debra attorney fees.

The Court of Appeals Ruling

Debra appealed to the Court of...

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