Skaates v. Kayser

• Decision Date: 16 July 2020
• Docket Number: No. 346487,346487
• Citation: 333 Mich.App. 61,959 N.W.2d 33
• Parties: Carla Ellen SKAATES, Plaintiff-Appellee, v. Nathan KAYSER, Defendant-Appellant.
• Court: Court of Appeal of Michigan — District of US

333 Mich.App. 61

959 N.W.2d 33

Carla Ellen SKAATES, Plaintiff-Appellee,

v.Nathan KAYSER, Defendant-Appellant.

No. 346487

Court of Appeals of Michigan.

Submitted March 3, 2020, at Grand Rapids

Decided July 16, 2020, at 9:00 a.m.

Laurie S. Longo, Ann Arbor, for Carla E. Skaates.

Scott Bassett for Nathan Kayser.

Before: Murray, C.J., and Meter and K. F. Kelly, JJ.

Murray, C.J. Defendant appeals by right a judgment of divorce and an order determining that a postnuptial agreement was enforceable. We affirm.

I. BACKGROUND¹

The parties met and began cohabiting in 2003. Plaintiff is a dentist who operates her own practice, while defendant has engaged in a number of business ventures and occupied various positions over his life. Beginning in 2006, after plaintiff purchased her own dental practice, defendant began working as the practice's business manager.²

In 2011, plaintiff and defendant began discussing marriage. The parties had lived together for years, but each had their own separate businesses and assets. Thus, leading up to their 2012 marriage, the parties negotiated the terms of what was to be a prenuptial agreement. Plaintiff and defendant e-mailed back and forth, and discussed an agreement for approximately 16 months before its execution.

Although the agreement was supposed to be a prenuptial agreement, it turned into a postnuptial agreement because of time constraints. In other words, despite working on it for 16 months and agreeing to the major provisions, the agreement was not signed prior to the marriage. Plaintiff testified that after they were married, defendant indicated that he was not going to sign the agreement, which greatly frustrated her. Nonetheless, after reviewing the document and obtaining advice from separate legal counsel, the agreement was eventually executed the agreement on September 19, 2012, approximately one month after the wedding.

The parties set forth the purpose of the agreement at its outset:

The parties want to define and clarify their respective rights in each other's property and in any jointly owned property they now own or might accumulate after today and to avoid interests that, except as provided by this agreement, they might otherwise acquire in each other's property as a consequence of their marriage relationship.

The parties agreed that plaintiff's preexisting dental practice would remain plaintiff's individual property and, if divorce occurred, that she would be awarded the asset completely. On the other hand, if plaintiff died before defendant, then he was permitted to sell the practice and retain the proceeds. Before the marriage, plaintiff created a limited-liability company (LLC) that owned the building in which the dental practice operated. Through the agreement, plaintiff transferred to defendant a 25% ownership interest in this company and the building was designated a marital asset. If divorce occurred, the property would be divided according to the parties’ ownership interests, with plaintiff having the option to buy out defendant's interest. As with the dental practice, if either party died before the other, the survivor would have 100% ownership. For his part, defendant owned before the marriage "3D Heli-Hub, LLC,"³ which under the agreement would continue to be defendant's individual property; if divorce occurred, he would solely be awarded the company. If defendant died before plaintiff, then she could sell the company and retain the proceeds.

The parties had equal ownership of "Lady Lab-Coats, LLC,"⁴ and the parties agreed that if divorce occurred, the company would be divided equally, with plaintiff having the option to buy out defendant's interest. Again, if one party died before the other, then the survivor would have 100% ownership. The agreement also provided that plaintiff would transfer to defendant a 50% interest in the marital home and, if divorce occurred, the parties would divide the property based on their ownership interests at the time of the divorce, with plaintiff having the option to buy out defendant's interest. As with the other property referred to in the agreement, if one party died before the other, then the survivor would receive 100% ownership.

As to each of their respective bank, investment, and retirement accounts, as well as life insurance policies, annuities, and other similar assets, the parties agreed that they would remain separate property and would not be subject to division if divorce occurred. Similarly, the parties agreed that any inheritances would be separate property, and that defendant would remain a beneficiary of two of plaintiff's life insurance policies, so long as the parties remained married, "at a level equal to or greater than forty percent" as long as the policies were in effect.

Additionally, the agreement provided that the parties would dissolve their tenancy in common in camp property and, in its place, would create a tenancy by the entireties between them. Each party would have equal ownership, and it would be marital property. If divorce occurred, defendant would have the option to buy out plaintiff's interest.⁵ All other property not mentioned in the agreement was to remain separate property with neither party having a claim to the other's property.

Importantly, the parties agreed on a "cooling off" provision, a procedure to be used when contemplating divorce. Specifically, if one party desired to file for divorce, the parties agreed to wait for four months before doing so. In this way, the parties had a "cooling off" period to work out marital issues. Consistent with that goal, the parties also agreed to attend a minimum of three joint marital counseling

sessions during this period.

In October 2016, plaintiff filed for divorce without waiting for four months and before attending any counseling sessions. Plaintiff subsequently filed a motion to enforce the agreement. Defendant opposed the motion and asked the court to void the agreement, arguing that (1) the agreement went against public policy because it was made in contemplation of a future divorce and left plaintiff in a more attractive financial position in the event of a divorce; (2) he signed the agreement under duress, which resulted from uneven bargaining power, financial pressures, and a threat of divorce; (3) plaintiff materially breached the agreement by failing to follow the cooling-off provision, which prevented her from now seeking to enforce the agreement; and (4) plaintiff failed to fully disclose her assets, specifically certain gold coins that plaintiff had possessed and sold. The trial court conducted an evidentiary hearing on the issue of enforceability, where the parties presented their own testimony and offered exhibits into evidence.

The trial court issued a written decision granting plaintiff's motion. In its opinion, the trial court noted that the parties had discussed the terms of the agreement for a period of 16 months and that each party had been represented by counsel throughout this period, up to the agreement's execution. The trial court stated that although the parties had "contemplated" that the agreement would be a prenuptial agreement, it "evolved into a postnuptial agreement" because the parties married six weeks before the agreement was executed.

Recognizing that postnuptial agreements were not unenforceable per se and were acceptable if they "intended to promote harmonious marital relations and keep the marriage together," the trial court found that the agreement was the type of postnuptial agreement that was acceptable under Michigan law, reasoning in part that

[n]othing in the agreement itself or the record suggests that the parties contemplated a separation in the near future when they signed the agreement. On the contrary, the agreement was made in large part to fulfill the desire of the parties to define and clarify their respective rights in each other's property and in any jointly held property that they owned prior to the execution of the Marital Agreement or thereafter acquired.

The trial court further concluded that the agreement did not leave one of the parties in a far more favorable position were they to abandon the marriage, but that overall the agreement favored defendant in light of the short duration of the marriage. In sum, the trial court found that the agreement was "relatively balanced and does not incentivize divorce."

With respect to defendant's duress argument, the trial court found that the parties had discussed the agreement for 16 months, that the last-minute e-mail on the wedding day included changes that the parties had previously been discussing, that defendant conceded that he had understood and voluntarily signed the agreement, and that the parties had each consulted independent counsel before signing the agreement. As a result, the trial court found that defendant was not under duress that would void the agreement.

Additionally, the trial court rejected defendant's material-breach argument, finding that although plaintiff had "technically violate[d] this provision," the agreement did not provide any remedy for a breach and that plaintiff had cured any breach because "after the breach was pointed out to [her,] ... she took no further steps to proceed with the divorce proceeding and engaged in 5 or 6 marriage counseling sessions."⁶

Defendant filed a motion for reconsideration, which the trial court denied, and after another hearing, the court entered a judgment of divorce that was consistent with the agreement.

Before this Court, defendant challenges both the trial court's decision on the enforceability of the agreement and the judgment of divorce as it relates to the invasion of separate assets and attorney fees.

II. ANALYSIS

A. THE AGREEMENT'S ENFORCEABILITY

1. STANDARDS OF REVIEW

Since postnuptial and other marital agreements are contracts, we are guided by contract principles in reviewing the agreement. See Hodge v. Parks , 303 Mich. App. 552, 558, 844 N.W.2d 189 (2014) ; Lentz v. Lentz , 271...