Justus v. Justus, 49A02-9008-CV-455

• Decision Date: 27 November 1991
• Docket Number: No. 49A02-9008-CV-455,49A02-9008-CV-455
• Citation: 581 N.E.2d 1265
• Parties: Patricia Ann JUSTUS Appellant-Petitioner, v. Walter J. JUSTUS Appellee-Respondent. 1
• Court: Indiana Appellate Court

Page 1265

581 N.E.2d 1265

Patricia Ann JUSTUS Appellant-Petitioner, v. Walter J. JUSTUS Appellee-Respondent.

No. 49A02-9008-CV-455. ¹

Court of Appeals of Indiana,

Fifth District.

Nov. 27, 1991.

Rehearing Denied Jan. 29, 1992.

Robert E. Saint, Coons & Saint, Charles F. Miller, Jr., Stewart, Due, Miller & Pugh, Indianapolis, for appellant-petitioner.

Wilson S. Stober, Andrew Z. Soshnick, Baker & Daniels, Indianapolis, for appellee-respondent.

SHARPNACK, Judge.

The principal issue in this case concerns the impact of a discharge in bankruptcy on the enforceability of an antenuptial agreement between a husband and wife who remain married after the filing of the bankruptcy petition by the husband. The case comes to us on an appeal by Patricia Ann Justus ("Wife") from a dissolution decree which she seeks to have reversed to require enforcement of an antenuptial agreement and an award of rehabilitative maintenance. Walter J. Justus ("Husband") cross-appeals and we consider the following issues raised by the appeals and restated by us:

I. Whether the trial court erred in finding that Wife's claim under the antenuptial agreement was not discharged by Husband's bankruptcy which he filed during the marriage.

II. Whether the trial court erred by finding that the antenuptial agreement was unenforceable due to circumstances existing at the time of dissolution which made it unconscionable.

III. Whether Wife should be estopped from seeking to enforce the antenuptial agreement due to her acceptance of benefits inconsistent with other provisions of the antenuptial agreement and her request for rehabilitative maintenance.

IV. Whether the trial court erred by failing to make special findings of fact concerning Wife's request for an award of rehabilitative maintenance where Wife had filed a request for special findings.

The facts most favorable to the decision of the trial court are as follows. The parties executed an antenuptial agreement shortly before they were wed on March 17, 1984. That agreement, in relevant part, provided that in the event of divorce, each party would keep all property and interests which that party brought into the marriage as well as all such property and interests acquired during the marriage in that party's separate name. In addition, the agreement provided for:

iv. Alimony payments arising out of the marital relationship as follows (for purposes of this subparagraph, the date that any legal proceeding for the divorce or dissolution is filed shall be deemed the last day of the marriage);

* * * * * *

b. If the last day of the marriage as herein defined occurs after thirty-six (36) months of marriage but prior to seventy-two (72) months of marriage, Prospective Husband shall pay to Prospective Wife alimony in the sum of Five Hundred Thousand Dollars ($500,000) payable as follows:

(Record, 35). The payments were to be made in the amount of $100,000 dollars within 30 days of the decree of dissolution, and a $100,000 payment on each of the following four anniversaries of the dissolution. Id. The agreement also obligated Husband to pay Wife $500 per week during the pendency of dissolution litigation, "in lieu of any and all other payments," as well as to allow Wife to occupy the marital abode for a period not exceeding 120 days At the time of the marriage, Husband was a successful businessman with a net worth of $31,432,000. During the marriage, Husband suffered financial reversals which ultimately resulted in his filing a petition for bankruptcy. Husband did not schedule Wife as a creditor in his bankruptcy proceedings, and, when Wife questioned him as to whether she needed to file a claim based upon the antenuptial agreement, he told her that the antenuptial agreement would not be affected by his bankruptcy. On January 8, 1990, Husband received a discharge under chapter 7 of the Bankruptcy Code.

following the last day of the marriage. (Record, 36.)

On March 15, 1989, Wife filed the present petition for dissolution, "an equitable distribution of the property and debts of the parties," and attorney fees. Wife asked the court to enforce the antenuptial agreement as well as to provide her with rehabilitative maintenance. At the time of the hearing in December, 1989, Husband's net worth was $301,075, representing a decline of approximately $83,000 over the previous eight months. Husband had an annual salary of approximately $50,000. Husband is also the lifetime income beneficiary of a discretionary spendthrift trust which had provided him with substantial income in the past, but from which he had not received a disbursement since 1987. The trust properties had been refinanced and the trust had made significant expenditures in property rehabilitation. In addition, the trust was contesting a $7,000,000 lawsuit with the IRS. Husband also testified that he was defending lawsuits by four creditors who were objecting to the discharge of debts, and that if such lawsuits were decided unfavorably to Husband, he could be liable to those creditors for $10,000,000.

Wife was employed with Merrill Lynch at the time of the hearing. She was paid solely on a commission basis, and, as of the time of the hearing, she had not received any income from that job.

On April 20, 1990, the trial court entered its decree of dissolution accompanied by its findings of fact and conclusions of law. The court found that, contrary to Husband's assertions, the antenuptial agreement had not been discharged in Husband's bankruptcy proceedings for the following reasons:

The evidence shows that Petitioner was never listed as a creditor in the bankruptcy. Respondent argues that listing the Petitioner as a creditor would have created instability in the marriage, and in any event Petitioner had actual knowledge of the bankruptcy and was free to file a claim against the estate. By not filing a claim when she had actual knowledge of the bankruptcy, Respondent contends that the debt was discharged pursuant to Sec. 523(a)(3) of the Bankruptcy Code.

Two problems exist with this argument. First, the evidence differs as to whether the Respondent told the Petitioner that the bankruptcy would render the antenuptial agreement invalid. Petitioner indicates that the Respondent said the antenuptial agreement would not be effected [sic] by the bankruptcy because she was not listed as a creditor, and the Respondent testified that he told the Petitioner that the bankruptcy would render the antenuptial agreement invalid. The Court tends to believe the Petitioner's testimony because if the Respondent's testimony was true no greater instability to the marriage could occur simply by listing the Petitioner as a creditor; Respondent had already said the bankruptcy was invalidating the agreement. If the Respondent had misled the Petitioner by indicating that the bankruptcy would not effect the agreement, then the Petitioner was not actually "put on notice" that she had to file a claim.

Secondly, if listing the Petitioner as a creditor would create instability in the marriage, then surely filing a claim against the estate would have the same effect. If public policy relieves Respondent of the need to list his Wife as a creditor, then public policy relieves the Petitioner of having to file a claim against his estate.

(Record, 5-6). However, the court also stated that,

[E]ven though the Court believes that Respondent's bankruptcy did not discharge Petitioner's right to payment pursuant to the antenuptial agreement, the drastic change which occurred regarding the Petitioner's [sic] financial condition now renders the agreement unenforceable, for to do so would be unconscionable. If the Court were to enforce the agreement, the Court would be awarding literally all of the marital assets to the Petitioner after a five year marriage which produced no children. This the Court cannot in good faith do.

(Record, 6).

The court divided the marital estate pursuant to Ind.Code Sec. 31-1-11.5-11. The court found the net worth of the marital estate to be $506,155.17. It awarded Wife $335,080 out of the estate (approximately 66% of the estate).

Initially, we note that Wife requested special findings pursuant to Trial Rule 52(A). In such a case, the trial court is required to make complete special findings. Dahnke v. Dahnke (1989) Ind.App., 535 N.E.2d 172, 175. Special findings are complete if they are "sufficient to disclose a valid basis under the issues for the legal result reached in the judgment." In re Marriage of Miles (1977), 173 Ind.App. 5, 8, 362 N.E.2d 171, 174. We afford special findings a two-tier standard of review. First, we determine if the evidence supports the findings, and second, we determine if the findings support the judgment. If we conclude that the findings support the judgment and are not clearly erroneous, we will affirm the judgment. A judgment is clearly erroneous when a review of the record leaves us with a definite and firm conviction that a mistake has been made. Dekalb County Eastern Community School District v. Dekalb County Eastern Education Association (1987), Ind.App., 513 N.E.2d 189.

ISSUE I

We first take up the issues related to whether or not the antenuptial agreement is enforceable. Husband claims that the antenuptial agreement is unenforceable because it was a debt discharged in his bankruptcy. Husband contends that the antenuptial agreement was a "debt" within the definition of that word in the Bankruptcy Code. According to Husband, Wife insists that the antenuptial agreement gives her a $500,000 "right to payment." Section 101(4) of the Code defines that "right to payment" as a "claim." Under that section the term "claim" is defined as

[A] right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured....

11 U.S.C.A. Sec. 101(4) (1988). Husband quotes the official comments to section 101 to the effect that Congress intended the concept of "claim" to be...