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Kremer v. Kremer

Supreme Court of Minnesota

May 30, 2018

Michelle Beth Kremer, Respondent,
v.
Robbie Michael Kremer, Appellant.

          Court of Appeals Office of Appellate Courts

          William J. Wetering, Hedeen, Hughes & Wetering, Worthington, Minnesota, for respondent.

          Kay Nord Hunt, Lommen Abdo, P.A., Minneapolis, Minnesota, for appellant.

         SYLLABUS

         1. Minnesota Statutes § 519.11, subd. 1 (2016) offers a procedural fairness "safe harbor" for provisions in antenuptial agreements that address nonmarital property. If a provision is not within the safe harbor, or if the provision addresses marital property, the common-law, multi-factor test for procedural fairness adopted in In re Estate of Kinney, 733 N.W.2d 118 (Minn. 2007), applies.

         2. Applying the Kinney factors, the antenuptial agreement in this case was not procedurally fair because it was not supported by adequate consideration and it was procured by duress.

          OPINION

          LILLEHAUG, JUSTICE.

         Appellant Robbie Michael Kremer appeals from a district court order invalidating an antenuptial agreement he entered into with his then-fiancée, respondent Michelle Beth Kremer.[1] The antenuptial agreement contained provisions concerning the disposition of both marital and nonmarital property upon dissolution or death. The district court held that, under Minn. Stat. § 519.11 (2016), the agreement was procedurally unfair because Michelle did not have an adequate opportunity to consult with an attorney. The court of appeals affirmed-holding that the agreement was procedurally unfair-but applied the common-law test for procedural fairness from In re Estate of Kinney, 733 N.W.2d 118 (Minn. 2007). Robbie petitioned for review, arguing that section 519.11 applied to the agreement and that the statute's procedural conditions were satisfied because both parties engaged in full and fair financial disclosure, and both parties had an opportunity to consult with an attorney. We affirm the court of appeals.

         FACTS

         For almost three years, Robbie and Michelle lived together as a couple on a farm in Fulda, Minnesota. Robbie owned and operated a farming enterprise. Michelle had three children from a previous marriage. Robbie told Michelle that he would require an antenuptial agreement if they ever married. Michelle was ambivalent about such an agreement, and the parties did not discuss or negotiate any terms.

         In August 2000, Robbie and Michelle decided to marry. They scheduled a destination wedding in the Cayman Islands for March 2001.

         As the wedding approached, and without telling Michelle, Robbie contacted an attorney to prepare an antenuptial agreement. Robbie had a minimum of six contacts with the attorney over the course of at least a month. Without Michelle's knowledge, he furnished the attorney with copies of her tax returns.

         On February 26, 2001, at his attorney's office, Robbie signed the antenuptial agreement ("the Agreement"). Later that day, he presented the Agreement to Michelle. Robbie made clear that if Michelle did not sign the Agreement, the wedding was off. The couple was scheduled to leave for the Cayman Islands just three days later. Family members had paid for their lodging and airfare to the destination, and some were already en route.

         After being presented with the Agreement, Michelle attempted unsuccessfully to meet with the attorney who represented her in a previous divorce. On February 28, she met with a different attorney with whom she had no experience. The attorney explained the terms of the Agreement, her rights under the law, and the potential impact of the Agreement upon dissolution of the marriage or Robbie's death. After receiving legal advice, Michelle signed the Agreement. The next day, the couple left for the Cayman Islands to be married.

         The Agreement specified that, upon dissolution, "[e]ach party shall retain his or her Property free of any right or claim of the other." Under the Agreement, "[a]ny assets acquired during the marriage . . . [would be] divided between the parties in proportion to the monetary consideration provided by each." Under the Agreement, both parties surrendered their rights to "alimony or maintenance." The parties certified that they had been advised of their rights and of the nature and probable value of each other's property.

         Robbie and Michelle had one child together, born in 2008. Over the course of the marriage, Michelle contributed to the farming operation, the value of which increased significantly. She did not herself earn much income.

         The marriage did not endure. In 2010, Michelle petitioned for dissolution and moved to set aside the Agreement, arguing that it was unfair. The district court agreed and invalidated the Agreement. The court applied Minnesota Statutes § 519.11, which provides that antenuptial agreements "shall be valid" if the parties satisfy two conditions-"(a) there is a full and fair disclosure of the earnings and property of each party, and (b) the parties have had an opportunity to consult with legal counsel of their own choice." Minn. Stat. § 519.11, subd. 1. The court concluded that the Agreement was procedurally unfair because Michelle did not have an "adequate opportunity to meet with legal counsel of her own choice." The court found that Robbie intentionally "used the wedding deadline to create an atmosphere of pressure" under which Michelle was "pressured/coerced" into signing the Agreement. The court also concluded that the Agreement was substantively unfair at the time it was made and executed, but it did not conclude whether the Agreement was substantively unfair at the time of its enforcement.

         In a published opinion, the court of appeals affirmed the district court's order invalidating the Agreement, but on different grounds. Kremer v. Kremer, 889 N.W.2d 41 (Minn.App. 2017). The court of appeals concluded that, "to the extent that the district court relied on [section 519.11] for evaluating procedural fairness, the district court erred." Id. at 50. The court of appeals determined that agreements that purport to distribute marital property, such as the Agreement between Robbie and Michelle, must be evaluated under the common law, regardless of whether they also address nonmarital property. Id. at 50 n.4. Applying the multifactor common-law test articulated in In re Estate of Kinney, 733 N.W.2d 118, to the findings of the district court, the court of appeals determined that the Agreement was procedurally unfair. Kremer, 889 N.W.2d at 50-52. Because "a lack of procedural fairness is fatal to the validity" of an antenuptial agreement, the court of appeals did not address the issue of substantive fairness. Id. at 51-52.

         One judge on the panel dissented in part, concluding that the statutory framework applied by the district court was the appropriate standard. Id. at 56 (Hooten, J., dissenting in part). But the dissent would have reversed the district court's order invalidating the Agreement on the theory that the statute's procedural conditions were satisfied. Id. at 60.

         We granted Robbie's petition for review to address the validity and enforceability of the Agreement under Minn. Stat. § 519.11 and the common law.[2]

         ANALYSIS

         Antenuptial agreements must be fair, both procedurally and substantively. McKee-Johnson v. Johnson, 444 N.W.2d 259 (Minn. 1989). Two sources of Minnesota law govern the procedural fairness of antenuptial agreements: section 519.11 and the common law. This case requires us to determine which law governs antenuptial agreements that address both marital and nonmarital property. Robbie also asks us to determine that the Agreement was procedurally and substantively fair, and therefore valid and enforceable.

         I.

         In 1979, the Legislature enacted Minn. Stat. § 519.11, captioned "Antenuptial and Postnuptial Contracts." Previously, antenuptial agreements executed in Minnesota were exclusively governed by the common law, which required such agreements to be both procedurally and substantively fair. See Kinney, 733 N.W.2d at 122; McKee-Johnson, 444 N.W.2d at 265). The common-law standard for procedural fairness is whether an agreement was "equitably and fairly made." Kinney, 733 N.W.2d at 122. The common-law standard for substantive fairness is whether an agreement's terms are unconscionable or oppressive. Id.; McKee-Johnson, 444 N.W.2d at 267.

         Section 519.11 modified the common law of procedural fairness for antenuptial agreements executed after August 1, 1979.[3] See Minn. Stat. § 519.11, subd. 6; McKee-Johnson, 444 N.W.2d at 263. Subdivision 1 of the statute states that antenuptial agreements "shall be valid" if the parties satisfy two conditions-"(a) there is a full and fair disclosure of the earnings and property of each party, and (b) the parties have had an opportunity to consult with legal counsel of their own choice." Minn. Stat. § 519.11, subd. 1. The second sentence states that agreements "made in conformity with this section may determine what rights each party has in the nonmarital property." Id. (emphasis added). The third sentence provides: "This section shall not be construed to make invalid or unenforceable any antenuptial agreement or settlement made and executed in conformity with this section because the agreement or settlement covers or includes marital property, if the agreement or settlement would be valid and enforceable without regard to this section." Id.

         We first addressed section 519.11 in our 1989 decision, McKee-Johnson v. Johnson. The primary issue in that case was whether the statute voided provisions of antenuptial agreements purporting to distribute marital property. McKee-Johnson, 444 N.W.2d at 262. In determining that section 519.11 did not void such provisions, we thoroughly reviewed the statute's legislative history, including statements made during committee discussions and floor debates. McKee-Johnson, 444 N.W.2d at 263-64. We concluded that the statute's primary purpose was to codify the procedural fairness requirements for, and make it more difficult to challenge, agreements about nonmarital property. Id. at 264. We highlighted the fact that, during the legislative process, an amendment to address marital property had been added but was later removed. Id. As the bill's original sponsor explained, the statute was "neutral" as to marital property. Id.

         As to provisions in agreements that addressed marital property, we said that "we must look to our common law for guidance." Id. at 265. We equated the common-law standard for procedural fairness with the standard (for nonmarital property) in the statute. Id. (stating that the common-law factors for procedural fairness were "substantially identical" to those in section 519.11, subdivision 1). Specifically, we said that "one standard relative to the procedural fairness requirement is met whenever the proponent has established that the parties have voluntarily contracted only after full financial disclosure, " and "implicit in the procedural fairness analysis is the requirement that each party . . . has unrestrained access to advice from independent counsel." Id. at 265-66.

         We modified the McKee-Johnson common-law standard in our 2007 decision, In re Estate of Kinney. Unlike in McKee-Johnson, the agreement in Kinney was executed before August 1, 1979, and thus was unquestionably subject to the common law. Kinney, 733 N.W.2d at 122. After a comprehensive review of our case law regarding procedural fairness, we articulated a multifactor common-law balancing test different than the factors we applied in McKee-Johnson. Id. at 124; see McKee-Johnson, 444 N.W.2d at 265-66. And we disagreed with McKee-Johnson to the extent that, for procedural fairness, the common-law test required the opportunity to consult with legal counsel. Kinney, 733 N.W.2d at 125 (overruling McKee-Johnson and In re Estate of Serbus, 324 N.W.2d 381 (Minn. 1982), in part).

         Since McKee-Johnson and Kinney, we have not considered the relationship between section 519.11 and the common law as applied to antenuptial agreements that address both marital and nonmarital property and were executed after August 1, 1979. We consider that relationship now.

         A.

         To determine whether the procedural fairness of an agreement addressing both marital and nonmarital property is governed by statute or common law, we begin with the text of section 519.11. Statutory interpretation is a question of law that we review de novo. Caldas v. Affordable Granite & Stone, Inc., 820 N.W.2d 826, 836 (Minn. 2012). The goal of statutory interpretation is to effectuate the intent of the Legislature. Brayton v. Pawlenty, 781 N.W.2d 357, 363 (Minn. 2010). When the intent of the Legislature is clear from the plain language of the statute, further statutory construction is not necessary. Am. Tower, L.P. v. City of Grant, 636 N.W.2d 309, 312 (Minn. 2001); see also Minn. Stat. § 645.16 (2016). A statute should ordinarily be read as a whole to "harmonize all its parts, and, whenever possible, no word, phrase or sentence should be deemed superfluous, void or insignificant." Owens v. Federated Mut. Implement & Hardware Ins. Co., 328 N.W.2d 162, 164 (Minn. 1983).

         We presume that statutes are consistent with the common law, and that the Legislature does not intend to abrogate or modify a common-law rule unless it does so by express wording or necessary implication of the statute. Do v. Am. Family Mut. Ins. Co., 779 N.W.2d 853, 858 (Minn. 2010).

         Section 519.11 reads, in relevant part:

A man and woman of legal age may enter into an antenuptial contract or settlement prior to solemnization of marriage which shall be valid and enforceable if (a) there is a full and fair disclosure of the earnings and property of each party, and (b) the parties have had an opportunity to consult with legal counsel of their own choice. An antenuptial contract or settlement made in conformity with this section may determine what rights each party has in the nonmarital property, defined in section 518.003, subdivision 3b, upon dissolution of marriage, legal separation or after its termination by death and may bar each other of all rights in the respective estates not so secured to them by their agreement. This section shall not be construed to make invalid or unenforceable any antenuptial agreement or settlement made and ...

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