In re Eichstadt

983 N.W.2d 572

In the MATTER OF the ESTATE OF Paul A. EICHSTADT

#29569

Supreme Court of South Dakota.

ARGUED FEBRUARY 16, 2022

OPINION FILED December 21, 2022

ELIZABETH HERTZ of Davenport, Evans, Hurwitz & Smith, LLP, Sioux Falls, South Dakota, Attorneys for appellant Estate.

JEFF BURNS of Churchill, Manolis, Freeman, Kludt & Burns, LLP, Huron, South Dakota, Attorneys for appellee Kathryn Eichstadt.

DEVANEY, Justice

[¶1.] This appeal concerns whether a surviving wife voluntarily entered into a premarital agreement that waived any right she had to the property of her deceased husband and whether that premarital agreement is unconscionable. After a one-day court trial, the circuit court found that the wife did not voluntarily sign the premarital agreement and determined that the agreement is unconscionable. The Estate appeals. We affirm in part and reverse in part.

Factual and Procedural Background

[¶2.] Paul Eichstadt, born in 1928, married Vanieda Schrimer in 1952. The couple had two children and owned and operated a farm and ranch near Wolsey, South Dakota. In 1987, Bret Bergeson accepted a job with Paul to work on the farm, and Bret, Bret's wife Kathryn, and their two children moved onto a farmstead owned by the Eichstadts. In 1988, Bret quit his position and left the farm. Kathryn and her children remained there, and she began helping Paul with the farm operation. She also performed limited bookkeeping services for Paul.

[¶3.] In 1989, while Kathryn was still living at the farm, Paul and Kathryn began an extramarital affair. In May 2001, Kathryn moved from the farm to Huron, where she obtained an apartment and a job. Kathryn's testimony implies that the affair ended at that time, but the record does not indicate why. However, Kathryn testified that after Vanieda, who was still married to Paul, passed away in July 2001, Paul started calling her and asking her to come to the farm because he was lonely and wanted her to clean his house and wash clothes. Soon thereafter, they began discussing marriage. In 2002, she agreed to marry Paul, although they did not set a wedding date. Kathryn testified that she moved back to the farm in 2003 to live with Paul; however, she kept her job in Huron.

[¶4.] The events leading up to Kathryn's signing of the agreement at issue in this appeal began on the morning of July 17, 2003, when Paul asked Kathryn to go for a drive. Although Kathryn did not know where he planned to take her or the purpose of the outing, she testified that this type of request from him was not uncommon. Paul drove them to see his attorney, Carl Haberstick, in Huron. Once they arrived at Haberstick's office, Paul asked Kathryn to come inside with him, but he did not tell her why. According to Kathryn, it was not until they were inside the office that she learned Paul had hired Haberstick to draft a premarital agreement (Agreement). She further testified that although she and Paul had discussed marriage, they had never talked about having a premarital agreement and the meeting in Haberstick's office was the first time she saw the Agreement.

[¶5.] According to Haberstick, prior to the July 17 meeting, he had mailed two copies of the Agreement to Paul's residence for Kathryn and Paul to review. He testified that Paul had informed him, prior to coming to his office on July 17, that Kathryn did not intend to hire her own lawyer to review the Agreement. At the beginning of the meeting, Haberstick handed Kathryn a letter that stated:

In talking with Paul today, he informs me that you do not wish to have an attorney review the Prenuptial Agreement before you sign it. Although I recommend you consult an attorney prior to signing, you may sign it without consultation.

You must understand that I have drafted this Agreement at the request of Paul. He is my client and I cannot represent you in this matter. As such, I cannot give you any advice concerning the Agreement.

Haberstick testified that he "tried to make it clear that [he] represent[s] Paul, not her" and that he "cannot give her any advice or really answer any questions about the consequences of her signing it or not signing it." Kathryn signed the letter as acknowledgement of its receipt.

[¶6.] The Agreement provides in relevant part:

4) Property Ownership. All property and assets owned or acquired by either of the parties in his or her individual name or with a third party, whether before or after the marriage contemplated by this Agreement, ... shall remain the separate property of the respective parties, except as otherwise provided in this Agreement.

...

5) Joint Property. If the parties acquire any property jointly during the marriage, the property shall be held by them as provided in the instrument conveying or evidencing title to the property.

...

7) Disposition of Property Upon Death.

a) Each party acknowledges that if the other dies, whether testate or intestate during the marriage, the share of the deceased party's estate to which the surviving party would be entitled to by law or to which a right could be asserted, except for this Agreement, could or might be greater than the share under this Agreement. b) The estate of the deceased party may be disposed of by Will or Codicil thereto or Trust to such devisees or beneficiaries as the deceased party may determine in his or her sole discretion; or, in the absence of a Will, the estate of a deceased party shall descend to the heirs of that party as if the marriage had not taken place. In either event, each party waives, and the deceased party's estate shall be free of, any claim or demand of inheritance, dower, curtesy, elective share, family allowance or any other claim given to a surviving spouse by law, irrespective of the marriage or any laws to the contrary. If either of the parties has an existing will at the time of the marriage, that Will shall remain in effect, regardless of the marriage, until revoked by that party. Further, neither party intends by this Agreement to limit or restrict the right to give or receive a testamentary gift to the other by Will without invalidating this paragraph and may thereafter change or eliminate the gift by a Codicil or a subsequent Will without in any way affecting the continued effectiveness of this Agreement.

...

11) Homestead. Each party releases any claim, demand, right or interest that may be acquired because of the marriage in any real property of the other party under the homestead provisions of the South Dakota Constitution or any South Dakota statute concerning the descent of the property as homestead.

...

14) Voluntariness; Independent Counsel. Both parties acknowledge that they have entered into this Agreement freely and voluntarily. Kathryn further acknowledges that she has had sufficient opportunity to consult with an attorney but has chosen not to do so. Nonetheless, Kathryn is confident she understands what her rights and obligations would be in the absence of this Agreement.

(Emphasis added.)

[¶7.] When questioned during trial about the language in section 14 of the Agreement, Haberstick explained that he added it to the Agreement shortly before Paul came to his office with Kathryn to sign it based on what he had learned from Paul. When asked if he recalled asking Kathryn whether she read the Agreement prior to coming to his office, Haberstick responded that he assumed she had read it because the Agreement states she did not want to have an attorney review it. He then added, "I didn't ask her have you specifically read this and understand it. But in the prenuptial agreement it says she understands it and she's read it." Haberstick acknowledged that he has no recollection of seeing her read the Agreement, and he agreed that "the vast majority of individuals" would not understand terms such as dower, curtesy, and elective share.

[¶8.] When asked at trial about the estimate he gave in his deposition that the meeting in his office lasted approximately 10 to 15 minutes, Haberstick testified that it could have been "a little more, a little less" and commented that he was "just guessing." During this timeframe, Haberstick obtained information from Kathryn to complete her financial disclosure, and in addition to handing Kathryn the Agreement, Haberstick gave her a copy of Paul's financial disclosure to review. He did not explain the documents to her, but he did not limit the amount of time she could take to review them.

[¶9.] Kathryn testified that during the meeting, Paul was pacing and she was crying. Haberstick did not recall Kathryn crying, but he conceded that he did not have any independent recollection of the events in question. He also testified that he could have been outside of the meeting room at some point because it is his practice to exit the room while the couple discusses the document and return to ask if there are any questions. However, when asked during cross-examination about Paul and Kathryn's demeanor, he explained that it is his practice to have persons who appear upset prior to signing come back another day rather than sign while upset, and had this occurred during the meeting with Paul and Kathryn, he would have told Kathryn to talk to a lawyer.

[¶10.] Kathryn agreed that while they were at Haberstick's office, Paul offered to pay for a lawyer to look over the Agreement for her, but she declined. However, she explained that she declined because she trusted Paul and believed she did not need an attorney because Paul "always said he would take care of me."

[¶11.] Ultimately, after skimming through the Agreement and Paul's disclosure, Kathryn signed the Agreement. Approximately a week later, on July 24, 2003, Paul and Kathryn were married in a private ceremony at her daughter's home in Wolsey. Kathryn testified that she did not know until that morning that their wedding would occur that day. She claimed that Paul said it was "too windy to hay" and then said, "Let's go get hitched."

[¶12.] In June 2016, for reasons not disclosed in the record, Kathryn and...