In the Matter of Rudder and Rudder

• Jurisdiction: Oregon
• Parties: In the Matter of the MARRIAGE OF Samuel Arthur RUDDER, aka Samuel A. Rudder, Petitioner-Appellant Cross-Respondent, and Hollie Ann RUDDER, Respondent-Respondent Cross-Appellant.
• Citation: 217 P.3d 183,230 Or. App. 437
• Docket Number: A135992.,06DM0549.
• Court: Oregon Court of Appeals
• Decision Date: 26 August 2009

217 P.3d 183

230 Or. App. 437

In the Matter of the MARRIAGE OF Samuel Arthur RUDDER, aka Samuel A. Rudder, Petitioner-Appellant Cross-Respondent, and Hollie Ann RUDDER, Respondent-Respondent Cross-Appellant.

06DM0549.

A135992.

Court of Appeals of Oregon.

Argued and Submitted on December 11, 2008.

Decided August 26, 2009.

George W. Kelly, Eugene, argued the cause and filed the briefs for appellant-cross-respondent.

Malcolm J. Corrigall, Coos Bay, argued the cause and filed the briefs for respondent-cross-appellant. With him on the briefs was Corrigall & McClintock, LLP.

Before HASELTON, Presiding Judge, and ARMSTRONG, Judge, and ROSENBLUM, Judge.

ARMSTRONG, J.

Husband appeals a judgment of dissolution, contending that the trial court erred in failing to enforce the parties' premarital agreement relating to property and spousal support. Alternatively, he asserts that, even if the agreement was unenforceable, the court erred in treating as marital assets property acquired after the parties began cohabitating but before they were married. Wife cross-appeals, arguing that the court erred in awarding her maintenance spousal support of $1,000 per month for 60 months rather than indefinite support in a greater amount. We conclude that the trial court did not err in concluding that the premarital agreement is unenforceable. Next, although we agree with husband that the court erred in treating property acquired during the parties' cohabitation as marital assets subject to the presumption of equal contribution, we conclude that a just and proper division of the parties' property entitles wife to an equal division of those assets in any event. Accordingly, we affirm on appeal. On cross-appeal, we modify the judgment to award wife maintenance spousal support in the amount of $1,500 per month for 60 months and $1,000 per month indefinitely thereafter.

We begin with a brief overview of the facts and the proceeding below, adding a more detailed discussion as necessary in the context of each assignment of error. We review the facts de novo, deferring to the trial court's express and implied credibility findings. Olson and Olson, 218 Or.App. 1, 3, 178 P.3d 272 (2008); ORS 19.415(3) (2007).¹

Husband and wife began cohabitating in 1986² and were married on August 12, 1989. Both had been married previously; wife has one child from her previous marriage, and husband has two children from his previous marriage. They have no joint children. In 2006, husband petitioned for dissolution of the marriage. At the time of the dissolution judgment, husband was 55 years old and wife was 49.

Husband, who is generally in good health, is a journeyman electrician and has worked for Bay Area Hospital since 1991. At the time of the dissolution, he was earning approximately $5,648 per month. Wife, after dropping out of high school, became a licensed cosmetologist. She purchased a two-chair beauty salon in 1984; she sold the business in 1994, but took it back and ran it again until January 2001, when she sold it for the final time. Wife continued to work part time in the salon after it was sold until approximately 2004. She suffers from debilitating migraines and, at the time of the dissolution, she reported zero income.

Before they were married, the parties entered into a premarital agreement, under which they each purported to waive any present or future interest in the separate real and personal property of the other and any claim to spousal support. The trial court ruled that the premarital agreement was unenforceable under ORS 108.725, see 230 Or. App. at 445, 217 P.3d at 188, and divided the parties' property and awarded spousal support without regard to its terms. The court also concluded that property and any appreciation in property acquired during the period of the parties' cohabitation—from 1986 to 1989—was to be considered a marital asset, subject to the presumption of equal contribution under ORS 107.105(1)(f).

Applying that principle, the court then made the following rulings with respect to the property division: (1) The parties' residence (the Garden Lane property), which was acquired in 1988, and an adjacent vacant lot acquired in 1989 were marital assets to which the presumption of equal contribution had not been rebutted; therefore, the value of those properties was subject to an equal division. The parties disagreed as to the residence's value—wife contended that the fair market value was $242,460, while husband argued that it was $180,000. The parties agreed that the fair market value of the vacant lot was $34,907. The court ordered that both properties be sold and the net proceeds divided equally. (2) Real property that husband acquired in his earlier divorce (the Michigan Street property) was not a marital asset; however, the appreciation on that property from the time the parties began cohabitating in 1986 until they separated in April 2006 ($154,338) was a marital asset, again subject to an even division. (3) Real property deeded to wife by her mother in 1996 for division among wife's siblings upon the mother's death (the North Bend property) was not marital property and not considered in the property division at all. (4) The portions of husband's Cascade Pension Trust Fund (Cascade Fund), National Electrical Benefit Fund (NEBF), and International Brotherhood of Electrical Workers Defined Benefit Plan (IBEW) that were earned between 1986 and April 2006 were marital assets to be divided equally, as was the appreciation on those accounts that accrued during the parties' cohabitation and marriage. The marital asset portions of those accounts were to be divided by a qualified domestic relations order (QDRO). (5) The balance of the parties' assets was divided roughly evenly, and wife was awarded an equalizing judgment of $72,903.25, representing "half of the difference between the value of the marital assets awarded to husband and the value of the marital assets awarded to wife." The court also awarded wife temporary spousal support of $1,000 per month for 60 months.

On appeal, husband contends that the court erred in failing to enforce the prenuptial agreement, under which "each party keeps the property in his or her own name, and there can be no spousal support." Failing that, husband argues that the court erred in determining that 1986—the date of cohabitation—rather than 1989—the date of the marriage—was the relevant date for determining whether an asset was a marital asset for the purpose of dividing the parties' property. Wife cross-appeals, contending that the court erred in failing to award her indefinite spousal support.

I. HUSBAND'S FIRST ASSIGNMENT OF ERROR: THE PREMARITAL AGREEMENT

The validity of the premarital agreement was the primary issue at trial. As noted, the parties began living together in 1986. Both parties were somewhat reluctant to remarry; however, in July 1989, they decided they would get married the following month in Las Vegas. The parties executed a premarital agreement on August 10, 1989, the day before they were scheduled to fly to Las Vegas for their wedding on August 12.

The agreement specifies, in part:

"1. Each party does hereby release and waive all common-law and statutory rights of every kind and nature now existing or which hereafter may exist, which may be created in the separate property of the other party, which either party, as husband or wife, may have or could have arising during the marriage of the parties, as a result of their marriage or during the prior period of cohabitation between them, or upon the termination of the marriage of the parties prior to death."

As relevant here, the parties also purported to waive any claim for spousal support and "any and all rights or claims existing now or hereafter, with reference to their extended period of cohabitation prior to their intended marriage, * * * including, but not limited to, any claim for real property, personal property, personal services or otherwise[.]" Exhibit A of the agreement listed the major assets of the parties; the agreement states that the listing "is not intended by them to be complete, only to set forth[,] in writing, the parties' respective assets which both agree have significant value" and that, "by reason of their extended period of cohabitation," "they are each fully aware of these listed assets as well as all other assets and obligations of them each." The Garden Lane property and vacant lot, the Michigan Street property, the Cascade Fund, the NEBF, and a certificate of deposit were listed as husband's assets. Wife's assets were her beauty salon business, including the business's bank accounts, and a savings account that she held in the name of herself and her minor son. No values were listed for either party's assets.

Husband and wife presented conflicting testimony about the circumstances surrounding the preparation and execution of the premarital agreement. According to husband, the idea of being married and the idea of a premarital agreement came up at the same time, about a month before they were married. He testified that he had contacted Hedges, the attorney who had handled his earlier divorce, to draft the agreement, and that, two weeks before the wedding, a draft of that agreement had been made available to wife. According to husband, wife never indicated that she needed more time to consult with an attorney about it, and she had a "very clear picture" of his business affairs and assets. Wife, on the other hand, testified that she had seen the agreement for the first time the day that she had signed it; that she had asked husband, when he announced that he was going to have Hedges prepare the agreement, to "make sure that Nick Nylander [wife's attorney] is there"; that Nylander had not been present when she arrived at Hedges' office to sign the agreement the day before they were to leave for their wedding; and that, when she asked husband where Nylander was and expressed doubts...