Kramer v. Kramer, 20050222.

• Court: United States State Supreme Court of North Dakota
• Citation: 711 N.W.2d 164,2006 ND 64
• Docket Number: No. 20050222.,20050222.
• Parties: Cheryl Rae KRAMER, Plaintiff and Appellee v. Kenneth Leroy KRAMER, Defendant and Appellant.
• Decision Date: 29 March 2006

711 N.W.2d 164 2006 ND 64 Cheryl Rae KRAMER, Plaintiff and Appellee
v.
Kenneth Leroy KRAMER, Defendant and Appellant. No. 20050222. Supreme Court of North Dakota. March 29, 2006.

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Samuel S. Johnson, Johnson Law Office, Ltd., Wahpeton, N.D., for plaintiff and appellee.

Tracey R. Lindberg, Tracey R. Lindberg Law Firm, Breckenridge, MN, for defendant and appellant.

SANDSTROM, Justice.

[¶ 1] Kenneth Kramer appeals from a divorce judgment that incorporated a property settlement agreement between Cheryl Kramer and him. He argues the district court erred in failing to review the settlement agreement for unconscionability, erred in enforcing the agreement, and erred in issuing a protective order. We affirm.

I

[¶ 2] In May 2002, Cheryl Kramer and Kenneth Kramer signed a "legal separation agreement/property settlement agreement" that provided:

9. SUBSEQUENT DIVORCE. Nothing herein contained shall be deemed to prevent either of the parties from maintaining a suit for absolute dissolution of marriage against the other in any jurisdiction based upon any past or future conduct of the other nor bar the other from defending any such suit. The husband and wife agree that the husband was served with a Summons and Complaint seeking a divorce, and the wife agrees to not prosecute said Complaint until providing notice in writing to the husband that she does intend to dissolve the marriage, giving him at least twenty (20) days notice before proceeding on the same, said notice to be provided to the husband by certified mail, return receipt requested, or by personal service, if necessary.

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Both parties further agree that, in the event the wife shall seek a divorce, after proper notice has been given, that this Legal Separation Agreement shall act as a Property Settlement Agreement and may be submitted to the Court as such. At the time this Agreement is entered into, both the husband and wife contemplate that a divorce may subsequently be granted. In the event that such divorce is granted, they hereby stipulate and agree that the applicable Court shall distribute property, apportion bills and obligations and specifically the Court shall carry out all terms of this entire Agreement.

Both parties agree that the property of the parties shall be divided by the parties such that the wife receives the property listed in Exhibit I, and the husband receives the property listed in Exhibit II. The parties further agree to the special terms and conditions listed in Exhibit III. The parties agree that the debts, bills and other obligations of the parties shall be divided as listed in Exhibit IV.

[¶ 3] In October 2004, Cheryl Kramer provided Kenneth Kramer with notice of her intent to seek a divorce and again served an action for divorce upon him. Kenneth Kramer asked the district court to not approve the property settlement agreement, claiming it was unconscionable and he signed it under undue influence when he was not represented by counsel. He also sought discovery from Cheryl Kramer. Cheryl Kramer asked the court to approve the settlement agreement and moved for a protective order. After an evidentiary hearing, the court decided Kenneth Kramer knew and understood the terms of the agreement before signing it and voluntarily consented to the agreement. The court decided the agreement was a fair and reasonable disposition of the parties' property and incorporated the agreement into a divorce judgment. The court also granted Cheryl Kramer's motion for a protective order.

[¶ 4] The district court had jurisdiction under N.D. Const. art. VI, § 8, and N.D.C.C. § 27-05-06. Kenneth Kramer's appeal is timely under N.D.R.App.P. 4(a). This Court has jurisdiction under N.D. Const. art. VI, §§ 2 and 6, and N.D.C.C. § 28-27-01.

II

[¶ 5] Kenneth Kramer argues the district court failed to review the property settlement agreement for unconscionability. He claims neither the court's memorandum decision, nor its findings of fact indicate the court reviewed the agreement for unconscionability. He asserts the court's statement the agreement was a fair and reasonable disposition of the property was not sufficient to demonstrate the court reviewed the agreement for unconscionability. He claims the agreement should be analyzed for unconscionability, because (1) it provided for an unequal distribution of the parties' assets; (2) it was signed in contemplation of potential reconciliation without following the procedural safeguards set forth in Peterson v. Peterson, 313 N.W.2d 743 (N.D.1981); and (3) it failed to divide or account for assets accumulated by Cheryl Kramer after it was signed.

A

[¶ 6] When a divorce is granted, a district court "shall make an equitable distribution of the property and debts of the parties." N.D.C.C. § 14-05-24. In making an equitable distribution of the parties' property, however, this Court has encouraged district courts to recognize valid settlement agreements between divorcing parties. Weber v. Weber, 1999 ND 11,

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¶ 9, 589 N.W.2d 358; Clooten v. Clooten, 520 N.W.2d 843, 846 (N.D.1994); Peterson, 313 N.W.2d at 745. Public policy favors the "'prompt and peaceful resolution of [marital] disputes.'" Clooten, at 846 (quoting Wolfe v. Wolfe, 391 N.W.2d 617, 619 (N.D.1986)). "[T]o the extent that competent parties have voluntarily stipulated to a particular disposition of their marital property, a court ordinarily should not decree a distribution of property that is inconsistent with the parties' contract." Wolfe, at 619.

[¶ 7] District courts, however, should not blindly accept property settlement agreements. Weber v. Weber, 548 N.W.2d 781, 783 (N.D.1996). A district court's duty to make an equitable distribution of marital property under N.D.C.C. § 14-05-24 includes the authority to decide whether a settlement agreement was executed as a result of mistake, duress, menace, fraud, or undue influence under N.D.C.C. § 9-09-02(1). Weber, 548 N.W.2d at 783. A district court also may set aside a settlement agreement that is unconscionable. Crawford v. Crawford, 524 N.W.2d 833, 835-36 (N.D.1994). This Court has said "[u]nconscionability is a doctrine by which courts may deny enforcement of a contract `because of procedural abuses arising out of the contract formation, or because of substantive abuses relating to the terms of the contract.'" Weber, 1999 ND 11, ¶ 11, 589 N.W.2d 358 (quoting Black's Law Dictionary 1524 (6th ed.1990)). In Weber, we said an unconscionable agreement is an "agreement no rational, undeluded person would make, and no honest and fair person would accept." Weber, 1999 ND 11, ¶ 15, 589 N.W.2d 358. See also Crawford, 524 N.W.2d at 836 (vacating judgment based on stipulation that was "blatantly one-sided" and "rankly unfair").

[¶ 8] Our decisions thus require district courts to review settlement agreements to determine whether the agreement was entered freely and knowingly, without fraud, duress, menace or undue influence, and whether the agreement was unconscionable. Weber, 548 N.W.2d at 783. Here, although the district court did not specifically...