Devney v. Devney

295 Neb. 15

886 N.W.2d 61

Clarence W. Devney, appellee,

v.Elizabeth A. Devney, appellant.

No. S-15-937.

Supreme Court of Nebraska.

Filed October 21, 2016.

Michael B. Lustgarten, of Lustgarten & Roberts, P.C., L.L.O., Omaha, for appellant.

Frederick D. Stehlik and Zachary W. Lutz–Priefert, of Gross & Welch, P.C., L.L.O., Omaha, for appellee.

Heavican, C.J., Wright, Miller–Lerman, Cassel, Stacy, Kelch, and Funke, JJ.

Funke, J.

NATURE OF CASE

This matter commenced as a petition for dissolution of marriage between Clarence W. Devney and Elizabeth A. Devney. The district court dissolved the marriage between the parties and divided the parties' assets and debts. In doing so, the district court found that a postnuptial property agreement entered into by the parties was valid and enforceable and that the division of the marital estate was fair and reasonable. Elizabeth appeals from both of these findings.

The main issue presented is whether a property agreement in a postnuptial agreement that was not attendant upon the spouses' separation or divorce is valid in Nebraska.

We conclude that such property agreements remain void in Nebraska. Accordingly, the district court erred in enforcing the property agreement provision of the parties' postnuptial agreement. For the reasons set forth herein, we reverse in part, and vacate in part, the judgment of the trial court and remand the cause with direction.

BACKGROUND

Clarence and Elizabeth were married in August 1998. No children were born of their marriage, but each party had children from previous marriages, all of whom have reached the age of majority. Clarence commenced a marital dissolution proceeding in April 2014. After a trial, the court issued its decree in September 2015.

At trial, Clarence sought to enforce the parties' postnuptial agreement. Clarence and Elizabeth executed the postnuptial agreement in January 1999, 5 months after their marriage. The parties had discussed a prenuptial agreement with Clarence's attorney to protect the interests of their children from previous marriages but failed to execute one before the marriage. Instead, the parties included a clause in the postnuptial agreement stating that the agreement was effective as of August 1998 and enforceable as if it were a prenuptial agreement.

The parties created the postnuptial agreement to address “the disposition of their respective assets upon the death of either party or in the event that the parties should terminate their marriage.” In the event of Clarence's death, Elizabeth waived her statutory rights in his estate, such as homestead allowances, exempt property, family allowances, and the right of election of her statutory share of Clarence's augmented estate; but she was entitled to receive the marital residence and the residuary of Clarence's estate, excluding specific legacies in his will. In the event of Elizabeth's death, Clarence waived his statutory rights in her estate as well, but was entitled to receive the residuary of her estate, excluding specific legacies in her will.

If the marriage were dissolved, each party waived and relinquished all interest in the other spouse's premarital property, identified in exhibits A and B of the postnuptial agreement. Elizabeth was entitled to 50 percent of the assets acquired by the parties after the marriage. Exhibits A and B were purported to be lists of the parties' premarital assets and debts and the values of the same.

Clarence's attorney, Ronald L. Eggers, drafted the postnuptial agreement and represented him through the execution. Elizabeth was not represented by an attorney. Eggers testified that he would have clearly explained the agreement's “Representation by Counsel” section to Elizabeth, informing her that he did not represent her and that she was free to obtain her own counsel.

Clarence purchased the marital residence 7 years before the parties married, for $130,000. Prior to the marriage, few improvements were made to the marital residence, and the residence had an assessed tax value of just over $103,000. Elizabeth moved into the marital residence after the parties married. During the marriage, the parties made substantial improvements throughout the residence. At trial, Clarence estimated the home to be worth about $310,000; Elizabeth had the home appraised at $330,000. When the parties married, the debt against the marital residence was $90,000; it had been reduced to $18,000 by the time of trial.

Exhibit A of the postnuptial agreement listed the premarital value of the marital residence as $250,000. Clarence signed a deed transferring the marital residence into both parties' names after the postnuptial agreement was executed, under the belief it was required by the agreement. The language of the agreement stated, “The transfer of title of any asset by Clarence to [the parties] shall not affect the terms and provisions of this Agreement, notwithstanding the creation of a joint tenancy or other relationship by such transfer.”

The parties' trial testimony is in contradiction on four factual circumstances regarding the execution of the postnuptial agreement. Eggers also testified about the circumstances surrounding the execution of the postnuptial agreement, but he lacked a strong recollection of the events and testified mostly from the exhibits he provided.

First, Clarence stated the parties decided that $250,000 was a fair assessment of the marital residence's value at the time of their marriage, after taking the county assessment into consideration. However, Elizabeth denied being involved in any of the valuations in exhibit A or B. Eggers stated he would not have prepared exhibit B, the valuation of Elizabeth's separate property, without consulting Elizabeth.

Second, Clarence testified that Eggers went over the postnuptial agreement “word for word” with Elizabeth the day it was signed, but Eggers could confirm only that he discussed the agreement with Elizabeth in May 1998 for “8/10ths of an hour.” He could not confirm that he explained it to her in January 1999 or that she ever saw the final postnuptial agreement. Elizabeth stated that she was presented with only the signature page and never saw the contents of the postnuptial agreement or the exhibits, but that she signed the agreement pursuant to Clarence's demand.

Third, Clarence stated that the parties signed the postnuptial agreement in Eggers' office, but Elizabeth testified that she signed it at her kitchen table without the presence of a notary public. Eggers believed that he did not travel out of his office for the signing because he billed only 0.3 hours on that date and that he would have billed more time if travel had been involved. Eggers identified the notary public as a deceased former secretary at his law firm. Eggers stated that he would have never asked a secretary to notarize a document unless she had seen the document and witnessed its execution.

Fourth, Clarence testified that the parties also executed wills, essentially mirroring the terms of the postnuptial agreement, on the same day the parties signed the agreement. Elizabeth confirmed her signature on her will, but she stated that she would not have consented to its terms and could not recall ever having read it or recall the circumstances behind her signing it. Eggers testified that he represented Elizabeth in executing her will and that he would not have prepared it without Elizabeth's direction on the contents. Elizabeth's will does not contain a valuation of the marital residence or any of the other items present in the exhibits.

The trial court determined that the postnuptial agreement should be enforced as written. Accordingly, the court concluded that $250,000, the agreed-upon premarital value of the marital residence, should be set off from the marital estate for Clarence. Additionally, the court found that the marital residence increased in value by $80,000 during the marriage, and the court equally divided the increase because it had resulted from the parties' joint efforts and expenditures on the property after the postnuptial agreement was signed. The district court then ordered the division of other assets and ordered Clarence to pay Elizabeth an equalization payment of $116,747 within 90 days from the date of the decree.

ASSIGNMENTS OF ERROR

Elizabeth assigns that the district court erred as follows:

(1) in not finding the postnuptial agreement void and unenforceable;

(2) in determining that the value of the marital residence was $250,000 at the time of the marriage; and

(3) in finding that Clarence was entitled to a setoff, as a nonmarital asset, of the first $250,000 in equity in the marital residence.

STANDARD OF REVIEW

To the extent an appeal calls for statutory interpretation or presents questions of law, an appellate court must reach an independent conclusion irrespective of the determination made by the court below.¹

In actions for dissolution of marriage, an appellate court reviews the case de novo on the record to determine whether there has been an abuse of discretion by the trial judge.² This standard of review applies to the trial court's determinations regarding division of property.³ A judicial abuse of discretion exists if the reasons or rulings of a trial judge are clearly untenable, unfairly depriving a litigant of a substantial right and denying just results in matters submitted for disposition.⁴

ANALYSIS

PROPERTY AGREEMENTS IN POSTNUPTIAL AGREEMENTS ARE VOID

Elizabeth contends that postnuptial property agreements are neither permitted by statute nor Nebraska's public policy. Historically, this court has held that postnuptial property agreements were invalid because of a common-law prohibition and on the grounds of public policy.⁵

In contrast, we have long accepted postnuptial separation agreements to divide the parties' property. In 1921, this court described a separation agreement as one

where husband and wife find it impossible to dwell together in harmony, because of the misconduct of

...