Reed v. Reed

Decision Date08 February 2005
Docket NumberDocket No. 248895.
Citation693 N.W.2d 825,265 Mich. App. 131
PartiesVerladia REED, Plaintiff-Appellee, v. Gregory J. REED, Defendant-Appellant.
CourtCourt of Appeal of Michigan — District of US

Jaffe, Raitt, Heuer & Weiss, P.C. (by Sharon J. LaDuke and Susan S. Lichterman), Detroit, for the plaintiff.

Thomasine Jefferson, Detroit, for the defendant.

Before: MARKEY, P.J., and FITZGERALD and OWENS, JJ.

MARKEY, P.J.

Defendant appeals by right a judgment of divorce entered May 16, 2003, that implemented the trial court's opinion and order following a November 2002 trial. Defendant also appeals the trial court's pretrial order granting partial summary disposition to plaintiff and declaring the parties' May 1975 prenuptial agreement null and void. We conclude that the parties' prenuptial agreement is valid and that the trial court erred by finding that changed circumstances justified not enforcing it. This error affected many of the court's other rulings, including its determination of the marital estate, the equitable division of marital property, the appointment of a receiver, and possibly the trial court's decisions regarding child and spousal support. We therefore reverse in part, affirm in part, and remand this case to the trial court for further proceedings consistent with this opinion.

I. Summary of Facts and Proceedings

Plaintiff and defendant were married on July 5, 1975. On or about May 15, 1975, the parties executed a prenuptial agreement, which provided, among other things, that each party was to have "complete control of his or her separate property" acquired "by either of them in an individual capacity" and that, in the event of a divorce, defendant was to be awarded the residence at 2460 Burns Avenue in the Indian Village area of Detroit. At the time of the agreement, plaintiff had been working for three years as an engineer for Detroit automakers, and defendant was a recent law school graduate employed in an entry-level tax analyst position. The parties' combined net worth at the time of their marriage in 1975 was less than $20,000.

Defendant established his own law practice in 1976, which remains viable today. Plaintiff worked for the Detroit Edison Company off and on for a total of twenty-one years before retiring in 1997. From 1977 to 2000, the parties' respective total incomes were nearly identical: plaintiff earned $1,058,318, and defendant earned $1,063,626. Before retiring from Detroit Edison, plaintiff sued Detroit Edison for discrimination. That lawsuit was settled in 1997. She received a gross cash payment of $773,770 for a total settlement of $1,068,423. According to plaintiff, much of the net cash settlement proceeds, $392,669, was used to pay outstanding debts the parties had accumulated, living expenses, college tuition for their children, and a down payment on a new residence.

Defendant initially practiced law from the family home and later moved into an office at 225 Garfield in Detroit. The Garfield building also housed various other profit and nonprofit entities defendant established. In 1991, the city of Detroit initiated condemnation proceedings against the Garfield property. In March 2001, a consent judgment was entered in the condemnation action, and the city agreed to pay $1.25 million for the property.

Plaintiff filed this divorce action in October 2000. Defendant, relying on the 1975 prenuptial agreement, contended that he was entitled to everything he purchased over the course of the parties' lengthy marriage.

Plaintiff moved for partial summary disposition, asserting that the 1975 prenuptial agreement is unenforceable. Plaintiff claimed that defendant failed to fully disclose his assets to plaintiff before she signed the agreement, that the agreement defendant submitted is not the same agreement she signed, and that because of the change in the parties' circumstances between the time the agreement was signed and the time of the divorce, it would be unfair and unconscionable to enforce the agreement as interpreted by defendant.

Defendant responded that the parties voluntarily entered into the prenuptial agreement, that all assets were fully disclosed when the agreement was signed, and that the circumstances of the parties have not changed to an extent that it would be unfair to enforce the agreement. Defendant claimed that the agreement was necessary because plaintiff did not save money. Moreover, the parties had abided by the terms of the agreement during the marriage. Defendant stated that each party maintained separate accounts, purchased property separately, and that plaintiff executed quitclaim deeds to defendant to extinguish her dower rights in his property. Defendant also claimed that there has been no change in circumstances that would prevent plaintiff from earning adequate income from her investments and business interests or from working as an engineer should she choose to do so.

The trial court held a hearing on plaintiff's motion on August 23, 2002, and, at the conclusion of the hearing, granted plaintiff's motion. On September 23, 2002, the trial court entered its order granting partial summary disposition to plaintiff, declaring the prenuptial agreement "null and void for the reasons stated on the record." At the motion hearing, the trial court had noted that the only provision in the agreement that expressly contemplated divorce related to the property on Burns, suggested the agreement was infirm because it was entered into when agreements contemplating divorce were not yet valid, and ruled the "real reason why I have to strike down this agreement is ... that ... the facts and circumstances have changed since the agreement was executed making its enforcement unfair and unreasonable...."

The trial of this case commenced on November 6, 2002, and concluded on December 3, 2002. The court issued its opinion and order on April 28, 2003, setting forth its findings of fact and conclusions of law. The trial court determined the marital estate to consist of the following property:

(1) A condominium in Harbor Springs, Michigan, valued at $110,595.

(2) Defendant's one-half interest in an office building located at 1201 Bagley, Detroit, valued at $175,000.

(3) Stocks and other investments valued at $21,856.

(4) The net proceeds of the condemnation of the property at 225 Garfield, Detroit, valued at $887,117.

(5) Detroit Edison pension annuities and worker's compensation valued at $172,845.

(6) A SEP and IRAs in the amount of $215,874.

(7) Savings and miscellaneous in the amount of $7,900.

(8) 383.92 acres of land located in Springfield Township, Oakland County, with an estimated value between $2.9 million and $3 million if sold undeveloped and, if sold developed, between $8 million and $10 million.

(9) The marital residence at 2460 Burns, Detroit, valued at $543,449 according to its 2002 state equalized valuation or $450,000 as appraised.

(10) Defendant's law practice with a value estimated at $55,059 because defendant did not provide expert evaluator John Stockdale necessary financial information.

(11) Plaintiff's business, VTR Consulting Inc., valued at $950 by Mr. Stockdale.

(12) Malcolm X papers, valued by the parties at $125,000.

(13) Plaintiff's incurred debt in the amount of $180,000.

The trial court rejected defendant's claims that much of this property should be excluded from the marital estate. Specifically, the trial court rejected defendant's claims that plaintiff had deeded away her interest in the Harbor Springs and Garfield properties, that various profit and nonprofit entities should share in the condemnation proceeds, that a partnership owned 227.54 acres of the Oakland County property and defendant held only a partnership interest, that a corporation in which defendant had no interest owned the remaining 156.38 acres of Oakland County property, and that one of defendant's nonprofit entities actually owned the Malcolm X papers. The trial court found defendant owned the 227.54 acres and owned at least a one-third interest in the other 156.38 acres. The trial court ordered that the marital estate be divided equally and appointed a receiver to sell all the Oakland County property, with fifty-five percent of the net proceeds of defendant's interest to be distributed to plaintiff to equalize the distribution of the marital estate between the parties.

The trial court also rejected plaintiff's request for an award of $400 a week in spousal support, finding that the division of the marital estate would give each party sufficient assets to maintain a high standard of living.

Plaintiff was awarded custody of the parties' one remaining minor child, and the child support previously set was continued.

Finally, the trial court ordered defendant to pay $150,000 of plaintiff's attorney fees because she had "been forced to incur expenses as a result of the other party's unreasonable conduct in the course of the litigation," citing Ianitelli v. Ianitelli, 199 Mich.App. 641, 502 N.W.2d 691 (1993).

II. The Prenuptial Agreement

A. Preservation and Standard of Review

Plaintiff argues that defendant failed to cite authority to support his position on this issue and, therefore, failed to preserve it. See, e.g., Korth v. Korth, 256 Mich.App. 286, 294, 662 N.W.2d 111 (2003). But defendant cites Booth v. Booth, 194 Mich.App. 284, 486 N.W.2d 116 (1992), which in turn relied on Rinvelt v. Rinvelt, 190 Mich.App. 372, 475 N.W.2d 478 (1991), and Brooks v. Brooks, 733 P.2d 1044 (Alaska, 1987). Defendant also cites Kuziemko v. Kuziemko, unpublished opinion per curiam of the Court of Appeals issued December 4, 2001 (Docket No. 212377), 2001 WL 1545706. In rendering its decision voiding the prenuptial agreement, the trial court relied on Rinvelt; Brooks, and Kuziemko. Defendant argues on appeal that the trial court misapplied this case authority. We conclude that defendant has preserved...

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