In re Karanja-Meek

551 P.3d 127

In the MATTER OF the MARRIAGE OF Nancy KARANJA-MEEK, Appellee,

and

Aaron Marshall MEEK, Appellant.

No. 124,904

Court of Appeals of Kansas.

Oral Argument Held September 20, 2023.

Opinion Filed May 31, 2024.

Appeal from Johnson District Court; K. Christopher Jayaram, judge.

Joseph W. Booth, of Lenexa, for appellant.

Jonathan Sternberg, of Jonathan Sternberg, Attorney, P.C., of Kansas City, Missouri, for appellee.

Before Atcheson, P.J., Isherwood and Hurst, JJ.

Hurst, J.:

Nancy Karanja-Meek and Aaron Marshall Meek were married for about eight years before Nancy filed for divorce. After resolving many issues in their divorce proceeding, Nancy and Aaron went to trial to seeking resolution of the division of their property, including two large personal injury awards with future payments. At the core of this appeal is how the district court categorized and divided those personal injury awards. Aaron claims that the district court erred by identifying Nancy’s personal injury award as her separate property not subject to equitable division in their divorce. Nancy disagrees, arguing that the district court properly identified both of their personal injury awards as separate property not subject to equitable division.

Neither party’s arguments are availing. The district court erroneously characterized both personal injury awards—not just Nancy’s—as separate property. That means the district court should have included both Aaron’s and Nancy’s personal injury awards as marital property under K.S.A. 23-2801 subject to equitable division pursuant to K.S.A. 23-2802. While the district court erroneously classified the personal injury awards as separate property, such misclassification might not affect the district court’s equitable property division. However, because the district court erred in classifying the property subject to division, this case must be remanded for consideration of whether the court’s equitable property division must be adjusted when both personal injury awards are included as marital property under K.S.A. 23-2801(a).

Factual and Procedural Background

Nancy Karanja-Meek and Aaron Marshall Meek were married in November 2009. In February 2013, while still married, Aaron suffered serious, catastrophic injuries in an explosion in Kansas City, Missouri. Later that year, Aaron brought two personal injury claims against several defendants alleging negligence and strict liability. Nancy also brought a claim against the same defendants for loss of consortium.

On July 13, 2015, Aaron and Nancy settled their personal injury claims for a substantial sum through a confidential settlement agreement. Aaron and Nancy were each awarded large lump-sum payments with the remaining amount placed in annuities with monthly and periodic payments for the remainder of their lives with guaranteed payments until 2045.

In December 2017 Nancy filed for divorce. At the time of filing, they had two children and Nancy was pregnant with their third. Among other things, Nancy and Aaron disagreed about how the future annuity payments from their personal injury award settlements should be divided. Nancy and Aaron failed to settle their divorce through mediation, and in January 2021 the district court appointed a special master because the district court believed their property division presented complex issues.

At a pretrial conference in August 2021, the parties agreed that the special master’s report would be submitted to the court for review. The court’s pretrial order documented the parties’ positions related to division of the personal injury award annuities. Nancy argued that at the time of settlement she and Aaron agreed that the annuities were awarded individually and would not be subject to division. Even so, she agreed that the monthly income from the separate annuities to each party should be treated as income for calculating support and maintenance. Aaron disagreed and claimed that Nancy had received a substantial amount for her consortium claim and "that the gross inequity in the settlement payout should be taken into account in this divorce proceeding." Therefore, Aaron claimed the court should order all, or the vast majority, of Nancy’s future annuity payments to him.

The special master distributed their report shortly after the August pretrial conference in which they explained that the analytical approach should be used to divide the property and "wife’s loss of consortium settlement would be compensating her for her loss of companionship, cooperation, aid, affection and sexual relations, as well as compensating her for her pain and suffering, and as such, would be designated as her separate property." The special master’s report explained:

"Black’s Law dictionary defines loss of consortium as ‘[a] loss of the benefits that one spouse is entitled to receive from the other, including companionship, cooperation, aid, affection, and sexual relations. Black’s Law dictionary (8th ed. 2004). This type of claim refers to the pain-and-suffering experienced by a spouse as a result of an injury to that spouse’s partner. Brett indicates that, ‘if the uninjured spouse receives an award for loss of consortium, however, that award it is also compensation for pain-and-suffering, and thus the separate property of the uninjured spouse.’ Brett R. Turner, Equitable Distribution of Property § 6:54 (3rd ed. 2005).

….

"The Court of Appeals’ decisions in Powell, Buetow, and Lash, clearly indicate that in Kansas, when an injured spouse receives a personal injury award, it is marital property, subject to division, utilizing the analytic approach. Such approach requires an examination of each separate component of the settlement recovery, to determine the purpose of each component, to determine if each said component is marital property or separate property." (Emphasis added.)

The special master conceded it had "no way of knowing how the parties and their attorney arrived at how the settlement proceeds were going to be assigned to each party …."

Divorce Trial

Aaron and Nancy resolved child custody and support issues before trial. As part of the trial and settlement efforts both parties prepared documents identifying the marital property. Nancy did not include her annuity as marital property in her worksheet. At trial, Nancy confirmed she and Aaron both received a monthly annuity payment from their personal injury awards in addition to any regular income and that Aaron’s annual income was $67,344 less than her annual income. As such, Nancy agreed to pay a spousal maintenance obligation to Aaron calculated using her annuity income.

Nancy testified that the annuities arose through litigation where Aaron suffered a personal injury and she suffered a continuing loss of consortium. She stated, "I lost the man I loved. I lost Aaron, the Aaron that was there before he got injured." Aaron testified that in the divorce he was "requesting that things be clarified and that monies that were paid out for my life and wellbeing and loss of work be redirected my direction." Aaron was troubled that his wife had been given an approximately equal personal injury award even though he was severely physically injured and she was not. Aaron testified that Nancy "was supposed to be my caretaker and make sure they’re looking out for my best interest." He later testified that at the time of the settlement that he "was still getting over [his] injury and [he] was still highly medicated, and Nancy was making the decisions." Aaron also confirmed that he was alleging he was forced or coerced into the settlement agreement because he felt he did not have control of anything at the time.

Ultimately Aaron’s and Nancy’s personal injury settlements and the conditions for which they received payment are irrelevant to this court’s review.

District Court’s Journal Entry and Decree of Divorce

The district court issued its Journal Entry and Decree of Divorce on January 3, 2022. It granted Aaron spousal maintenance at the parties’ agreed rate and noted that the parties included the annuity payments as " ‘income’ " when arriving at the agreed amount. The court explained that "in a vacuum, the structured payments to each party are likely more properly characterized as a ‘property right’ and not ‘income’ for support or taxation purposes," but still granted Aaron the agreed upon maintenance.

The district court then concluded that it should apply the analytical approach used by Kansas appellate courts to classify the parties’ personal injury awards and associated annuities as either marital or separate property. It then found that the annuities were " ‘separate property’ that should be maintained by and set aside to each litigant respectively."

"The Court notes that the parties previously agreed, years ago, upon a division of the total settlement compensation from their personal-injury litigation, which was done with the advice, input, and oversight of a very capable and skilled trial counsel. At that time, the parties agreed that all proceeds (including the funds that purchased the annuities at issue) were compensation for what are essentially ‘non-economic’ (and thus, non-taxable) losses that each sustained. It would be inherently unfair to now relitigate the nature of such payments and re-cast the resulting annuity as something else, such as an income-stream replacement or any other similar measure of apportionable losses of ‘consortium,’ as Respondent would request."

In a footnote, the district court rejected Aaron’s contention that he was coerced, misled, or fraudulently induced into executing the settlement agreement. The court found Aaron’s testimony "self serving and, at best, a dubious attempt to now relitigate the nature and extent of such settlement proceeds—in contravention of basic legal principles of res judicata and of fundamental interests of finality, justice, and certainty."

Aaron appeals and Nancy requests appellate attorney fees.

Discussion

[1, 2] Aaron appeals the...