Steis v. Steis

Decision Date06 July 2015
Docket NumberNo. S15A0244.,S15A0244.
Citation297 Ga. 483,775 S.E.2d 139
PartiesSTEIS v. STEIS.
CourtGeorgia Supreme Court

Samuel David Almon, Leah Ward Sears, Crystal Leigh Conway, Schiff Hardin, LLP, Atlanta, Nancy F. Lawler, Atlanta, Amy K. Sullivan, Lawler Green Prinz, LLC, Atlanta, for appellant.

Nancy Ingram Jordan, Kathy L. Portnoy, Warner, Bates, McGough, McGinnis & Portnoy, Atlanta, for appellee.

Opinion

NAHMIAS, Justice.

Ronald G. Steis, M.D. (Husband) and Jane Leslie Steis (Wife) married in 2000 and are currently going through a divorce. Husband filed a motion for partial summary judgment seeking a ruling that certain property acquired during the marriage is his separate property under the terms of the parties' prenuptial agreement, and thus is not subject to equitable division. Specifically, Husband claimed as his separate property his salary from employment as an oncologist earned during the marriage and the parties' jointly titled bank accounts, investment accounts, and real property, all of which he asserts were acquired with his salary. The trial court denied Husband's motion, and we granted his application for an interlocutory appeal. We now affirm.

1. Prior to the marriage, both parties worked for Atlanta Cancer Center, P.C. (ACC), Husband as an oncologist and Wife in an administrative capacity. Husband also owned a 9% interest in ACC.1 On September 14, 2000, two days before their wedding, the parties signed a lengthy prenuptial agreement, which the parties agree is valid and enforceable.

The agreement recited that both parties had been married before and already had children; acknowledged a disparity in their relative wealth; and said that they desired to retain all their current and future separate property free from any claim by the other spouse resulting from their upcoming marriage and any subsequent divorce. Paragraph 4(a)(1) of the agreement said, “All Separate Property of each party shall remain the sole and exclusive property of such party and will not be subject to division or distribution upon divorce, legal separation or annulment.” Paragraph 3(b), entitled “Definition of Separate Property,” said that for purposes of the prenuptial agreement, “Separate Property” shall mean as to each party:

(i) all property owned by such party prior to the marriage, however acquired, and brought into the marriage, and any property received by either party at any time by inheritance, beque[st], or gift;
(ii) all property which represents the proceeds (direct or indirect) of any sale, exchange, disposition, transfer, reinvestment or other transmutation of any property described in [this subparagraph];
(iii) all dividends, interest, rents, royalties, earnings, or other income of any kind from any property described in [this subparagraph]; and
(iv) all enhancement and appreciation in the value of any property described in [this subparagraph], including capital gains, regardless of how or when such appreciation accrues or is realized, but specifically excluding contributions to said property made during the marriage from sources other than [Husband's] or [Wife's] Separate Property.

The agreement also recited that Husband and Wife had disclosed to each other “the nature and extent of their various property interests and debts and their respective sources of income, and each has attached hereto a true and correct copy of his or her current, accurate financial statement.” Husband's “Financial Statement,” which was attached to the agreement as Exhibit A, listed a house, two vehicles, several bank and retirement accounts, and “investments,” with a total value of $860,479; an [a]pproximate current yearly income” of $550,000; and a [m]edical practice” of unspecified value.2 Wife's “Financial Statement,” which was attached as Exhibit B, listed a $125,000 townhouse and other assets with a total value of approximately $55,000. In Paragraph 2(a), the agreement explained:

[Wife] acknowledges that the major assets owned by [Husband] or in which [Husband] has a contingent interest, the significant liabilities owed by [him], and the primary sources of [his] income on the date of execution of this Agreement have been fully disclosed to her (as reflected on [his] financial statement, dated as of September 2000, attached hereto as Exhibit “A” and hereby made a part hereof). [Wife] further acknowledges that such assets constitute [Husband's] present Separate Property as hereinafter defined, that she has given thought and consideration to the impact on her of releasing any rights she might hereafter acquire in [his] present or future Separate Property as a result of their marriage, and that she is entering into this Agreement freely and with a full understanding of its provisions. [Wife] further acknowledges she has seen [Husband's] tax return for 1999, bank statements and all other documents she has requested.

After the wedding, Wife left her employment with ACC and worked both in and out of the home, assisting with Husband's medical practice and the management of their assets. The bulk of the parties' income during the marriage consisted of Husband's salary from ACC, which was reflected in his W–2 forms as wages or salary. Husband's salary increased substantially during the marriage and far exceeded the parties' living expenses. The excess sums were deposited into more than a dozen checking, retirement, and brokerage accounts, used to purchase certificates of deposit and annuities, and invested in real estate and vehicles. Most of these assets were jointly titled, and their total value exceeds $5 million.

On October 24, 2012, Wife filed a petition for divorce. Husband filed an answer and counterclaim. Wife later filed a motion to enforce the prenuptial agreement, and Husband responded that he had no objection to that. Following discovery, Husband filed a motion for partial summary judgment on January 21, 2014. Husband claimed that all property created during the marriage was derived from two sources—the assets listed in Exhibit A to the prenuptial agreement and his salary from his medical practice—all of which, he asserted, the agreement classified as his “Separate Property” not subject to equitable division in the event of divorce.

On June 26, 2014, the trial court denied Husband's motion. The court ruled that, upon consideration of the prenuptial agreement as a whole, Husband's personal income from the medical practice, as opposed to any passive income from his 9% ownership interest in the practice, was not his Separate Property but instead was marital property. The court added that even under Husband's interpretation of the agreement, there would be genuine issues of material fact as to how much of his salary was his Separate Property. The court ruled that the jointly titled assets purchased with Husband's salary, which the court had said was marital property, were also marital property. The court also held that even if Husband's salary were not marital property, there would be genuine issues of material fact as to whether some or all of the jointly titled assets were intended as gifts to the marital unit. The court issued Husband a certificate of immediate review, we granted his application for an interlocutory appeal, and he filed a timely notice of appeal.

2. Husband contends that the trial court erred in holding that his personal income from ACC, as opposed to the passive income from his 9% ownership interest in the medical practice, was not his Separate Property under the prenuptial agreement, because the agreement identifies his annual salary as his Separate Property by listing it in Exhibit A and because Paragraph 3(b)'s definition of “Separate Property” includes “all dividends, interest, rents, royalties, earnings, or other income of any kind from any property described in” that subparagraph, including Husband's interest in ACC. We disagree.

When the prenuptial agreement is read as a whole, and in the legal context of prenuptial agreements, it becomes clear that Exhibit A is not an exhaustive list of Husband's Separate Property developed in relation to Paragraph 3(b)(i) of the agreement, which defines each party's “Separate Property” to include “all property owned by such party prior to the marriage.” The agreement first refers to Exhibit A in the recitals, in connection with the parties' disclosure to each other of “the nature and extent of their respective [1] property interests and [2] debts and their respective [3] sources of income.” Paragraph 2(a) then says that Exhibit A reflects [1] the “major assets” owned by Husband or in which he has an interest, [2] his “significant liabilities,” and [3] “the primary sources of [his] income on the date of execution” of the prenuptial agreement. Thus, like the recital, Exhibit A is not limited to “property owned by [Husband] prior to the marriage”—i.e., his assets—because it may include two other categories of financial information—his debts and his income sources. Indeed, Exhibit A does not purport to list all of Husband's premarital assets, only the “major” ones (and only his “significant” liabilities and “primary” sources of income).

Husband focuses on the sentence in Paragraph 2(a) which says that Wife “acknowledges that such assets constitute [Husband's] present Separate Property.” That sentence makes clear that those assets—the “major assets” referred to in the preceding sentence and reflected in Exhibit A—are Husband's Separate Property. But his “income”—a word used separately from the word “assets” in the preceding sentence—is plainly something different than his assets. Likewise, in ordinary English, Husband's “sources of income” would not be congruent with the “property” owned by Husband prior to the marriage, as Separate Property is defined in Paragraph 3(b)(i). To the extent that income exceeds expenses, it may be used to purchase assets, or the money earned may be retained as a liquid asset, but income itself is not in normal parlance an asset or property.

Moreover, Exhibit A is not entitled ...

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