Nicholas v. Nicholas

• Citation: 277 Kan. 171,83 P.3d 214
• Decision Date: 30 January 2004
• Docket Number: No. 88,765.,88,765.
• Parties: ARTHUR E. NICHOLAS, Executor of the Estate of Sheryl A. Nicholas, Deceased, Appellant, v. RUBY E. NICHOLAS, Appellee, and SHERYL A. NICHOLAS, v. RUBY E. NICHOLAS.
• Court: United States State Supreme Court of Kansas

277 Kan. 171

83 P.3d 214

ARTHUR E. NICHOLAS, Executor of the Estate of Sheryl A. Nicholas, Deceased, Appellant, v. RUBY E. NICHOLAS, Appellee, and SHERYL A. NICHOLAS, v. RUBY E. NICHOLAS.

No. 88,765.

Supreme Court of Kansas.

Opinion filed January 30, 2004.

J. Eugene Balloun, of Shook, Hardy & Bacon, L.L.P., of Overland Park, argued the cause, and Celia K. Garrett, Kirsten Ehlen, and Brenda R. Mesker, of the same firm, and John R. Toland, of Toland & Thompson, L.L.C., of Iola, were with him on the briefs for appellant.

Ted E. Knopp, of Ted E. Knopp, Chtd., of Wichita, argued the cause, and Charles H. Apt, III, of Apt & Apt, L.L.P., of Iola, was with him on the briefs for appellee.

The opinion was delivered by

LUCKERT, J.

Ruby Nicholas filed for divorce from Sheryl Nicholas and obtained an ex parte temporary restraining order prohibiting either party from disposing of assets. Knowing he was terminally ill, Sheryl created a new will, changed the beneficiary on his life insurance policy, made pay on death (POD) and transfer on death (TOD) designations on several accounts, and attempted to unilaterally sever joint tenancies. He also sued Ruby for invasion of privacy and trespass, alleging that she broke into his home and removed documents and financial records. Sheryl died 2 days before the divorce trial date.

Sheryl's executor filed suit against Ruby and, in an amended answer, she asserted claims against those named as beneficiaries on the accounts and insurance. The district court granted summary judgment in favor of Ruby, ruling that Sheryl's actions had violated the temporary restraining order and that titles to the accounts should remain as they existed at the time the restraining order was issued. The district court also ruled that the invasion of privacy action did not survive. On appeal, a majority of the Court of Appeals panel affirmed. This court granted the executor's petition for review.

The parties have not contested the Court of Appeals' rendition of the facts, which was largely based upon stipulations of the parties. As the Court of Appeals recited, on May 9, 2000, after more than 25 years of marriage and approximately 2 years of living separately, Ruby Nicholas filed for divorce from Sheryl Nicholas. Ruby obtained an ex parte temporary restraining order prohibiting either party from disposing of any asset of the parties "except in the normal course of business." Knowing that he was terminally ill, on July 18, 2000, Sheryl executed a will devising all of his property in equal shares to his children from a previous marriage, Arthur E. Nicholas and Susan A. Johnson, and naming Arthur as executor of his estate. During July 2000, Sheryl also executed a transfer on death (TOD) form designating Arthur and Susan as beneficiaries of his Van Kampen funds, a TOD form naming Arthur and Susan as beneficiaries of an Edward Jones account, and a pay on death (POD) form naming Arthur as beneficiary of a checking account at the Iola Bank and Trust Company (Iola Bank). In August 2000, Sheryl changed the primary beneficiary of his Ameritas life insurance policy from Ruby to Arthur.

Sheryl then filed a cross-petition for divorce and a motion for an emergency divorce. He later filed a motion to sever the joint tenancy property he owned with Ruby. Finally, he sued Ruby for invasion of privacy and trespass, alleging that Ruby broke into his home and removed documents and financial records. Sheryl demanded the return of the documents and sued for damages in excess of $50,000.

The district court denied Sheryl's motion for an emergency divorce but granted his motions to file a cross-petition for divorce and to modify the restraining order. At the hearing, Sheryl's counsel reserved argument on the motion to sever the joint tenancies. Trial was set for October 3, 2000.

Meanwhile, the parties attempted to negotiate a settlement agreement. On September 27, 2000, Sheryl executed a property settlement and separation agreement which he believed was consistent with the terms of a previous offer made by Ruby. On September 29, 2000, Sheryl executed a revocable trust funded with all of his personal property and certain real property, with Arthur and Susan as equal beneficiaries.

Sheryl died on October 1, 2000, 2 days before the divorce trial date. Sheryl's will was admitted to probate on December 11, 2000, after Ruby withdrew her objections. Arthur, as executor of Sheryl's estate, filed suit against Ruby seeking delivery of one-half of the joint tenancy property and alleging that she had breached the settlement agreement by refusing to release that property. In her answer, Ruby acknowledged the existence of Sheryl's new will; however, she argued that most of the marital property was held in joint tenancy with right of survivorship and denied that Sheryl's actions succeeded in terminating their joint tenancies. Ruby also responded that she had neither approved nor executed the settlement agreement.

On April 13, 2001, Ruby filed an application to amend her answer and join Arthur and Susan as additional parties to the action. Ruby's amended answer stated a counterclaim and cross-claim against Arthur as executor and against Arthur and Susan as individuals. Ruby alleged that Sheryl's attempts to sever joint tenancy interests and his changing or naming beneficiaries on accounts and his life insurance policy violated the restraining order and were fraudulent under K.S.A. 33-201 et seq., the Kansas Uniform Fraudulent Transfer Act. Ruby asked the district court to impose a constructive trust on those funds transferred by Sheryl "outside the normal course of business" to Arthur and Susan in violation of the restraining order.

Arthur opposed Ruby's motion, responding that the district court did not have personal jurisdiction over Susan or himself, as individuals. He argued that the district court did not have subject matter jurisdiction over the Van Kampen funds, the Edward Jones account, or the Ameritas life insurance policy because the funds were situated and paid from locations outside of Kansas to parties residing outside of Kansas. The Iola Bank checking account was in the possession of the special administrator and had not been disbursed. Further, Arthur maintained that Ruby claimed these four accounts in ongoing probate proceedings. There is no indication in the record that a hearing was held to address Ruby's motion.

Both parties filed motions for summary judgment on their respective claims. Ruby argued that Sheryl's actions did not sever the joint tenancies; Sheryl violated the restraining order when he made POD and TOD designations for the Van Kampen funds, the Iola Bank checking account, and the Edward Jones account; Sheryl further violated the restraining order by changing the beneficiary of his Ameritas life insurance policy; the proposed settlement agreement did not bind the parties because Ruby did not sign or execute it and, without her signature, the agreement violated the homestead laws of Kansas and the statute of frauds; and Sheryl's invasion of privacy claim did not survive his death.

Arthur's motion for summary judgment argued that the restraining order did not prohibit severance of the parties' joint tenancies; Sheryl acted properly in changing or designating beneficiaries on his life insurance policy and the various accounts at issue; the settlement agreement signed and executed by Sheryl was binding on the parties; and Sheryl's invasion of privacy claim survived his death. On February 15, 2002, the parties signed a stipulation as to the joint or several ownership of Ruby and Sheryl's personal and real property as of the date of Sheryl's death. The stipulation indicates that the Edward Jones account and Iola Bank account were titled solely in Sheryl's name and that Sheryl was the policy holder on his Ameritas life insurance policy. The parties continue to dispute whether the Van Kampen funds were the sole property of Sheryl or were held jointly with Ruby.

In its March 14, 2002, order, the district court granted summary judgment in favor of Ruby, ruling: (1) Titles to the accounts should remain as they existed when the court issued the restraining order on May 9, 2000; (2) the settlement agreement did not bind the parties because it had not been agreed to by Ruby or approved by the court prior to Sheryl's death, which abated the divorce proceeding; and (3) Sheryl's invasion of privacy claim did not survive his death. Arthur timely appealed.

The Court of Appeals described the remaining procedural history of the case as follows:

"After deciding issues dispositive of Arthur's suit and Sheryl's invasion of privacy claim, the district court issued an order consolidating those two cases.

"Arthur filed a temporary restraining order on April 1, 2002. The district court issued its order on July 1, 2002, initially dissolving all prior restraints on the property. However, the order indicated that Ruby was restrained from `gifting or spending one-half of the joint tenants' personal property.' Ruby was allowed to make estate plans and testamentary dispositions. Arthur was instructed to post a supersedeas bond in the amount of $152,674 to cover 125 percent of the value of the Ameritas life insurance policy and the Van Kampen fund which were at the disposal of Arthur or Susan.

"On July 15, 2002, Arthur filed a motion with this court to modify the July 1, 2002, stay of enforcement of the judgment entered by the district court. This court instructed the district court to hold a hearing for the limited purpose of determining: (1) whether an accounting of assets should be ordered; (2) whether property should be redistributed to restore the parties' interests; and (3) which measures, if any, should be taken to protect those interests during the pendency of the appeal. A hearing was held on August 29, 2002. The parties were unable to agree on a journal entry and the case was reset for a hearing on November 6, 2002.

"On

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