Allard v. Allard
308 Mich. App. 536
Mich. Ct. App.2014Background
- Parties signed an antenuptial agreement two days before their 1993 wedding; plaintiff’s father conditioned inheritance on execution of prenup. Plaintiff disclosed ~$400,000 net worth.
- Agreement broadly reserved pre-marital assets and provided that property acquired in a party’s individual name during marriage would remain that party’s separate property; it waived typical statutory property-division and alimony rights.
- During the marriage plaintiff formed multiple single-member LLCs and acquired real estate and other assets in the LLCs’ names; parties had minimal joint accounts and defendant stopped working in 1999.
- Plaintiff filed for divorce in 2010 and moved for partial summary disposition seeking enforcement of the antenuptial agreement; trial court enforced the prenup, awarded the LLCs and most assets to plaintiff, and denied spousal support.
- On appeal the wife (defendant) argued the agreement was void for duress, unconscionability, and changed circumstances (including alleged abuse); she also argued statutory exceptions (MCL 552.23 and 552.401) permitted invasion of plaintiff’s separate estate and that income and LLC-held assets should be marital property.
- Court of Appeals: upheld enforceability of the antenuptial agreement generally, but reversed the trial court’s conclusion that all assets acquired during the marriage were separate because (1) assets held by LLCs are not automatically the plaintiff’s "individual capacity" property under the prenup and (2) income (distinct from "property" in the agreement) earned during marriage is marital and may have funded LLC acquisitions. Case remanded for findings about marital income, commingling, and potential veil-piercing/attribution.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Enforceability of antenuptial agreement | Prenup is valid, unambiguous, and bars claims for support and property division | Agreement void for duress, unconscionable, and changed circumstances (abuse) | Agreement enforceable: no unlawful duress, not unconscionable, abuse did not establish relevant unforeseen change |
| Whether MCL 552.23 / 552.401 require invasion of separate estate despite prenup | Prenup controls and prevents statutory invasion | Statutes permit invasion for need or contribution regardless of prenup | Statutes do not override a valid prenup; MCL 557.28 preserves premarital contracts; trial court correctly rejected automatic statutory invasion |
| Characterization of assets titled to single-member LLCs formed during marriage | LLC-held assets are plaintiff’s separate property under prenup ("acquired in his individual capacity or name") | LLC assets should be marital / subject to inquiry because LLCs are separate entities and may have been funded with marital income | LLCs are separate entities; assets titled to LLCs are not automatically plaintiff’s "individual capacity" property under prenup; trial court erred in treating all LLC assets as separate |
| Treatment of income earned during marriage and effect on asset division | Prenup treats post-marriage property as separate when titled in individual name; trial court awarded plaintiff most assets | Income is not listed as "property" in paragraph treating separate property; income is referenced elsewhere and should be marital subject to division and may have funded LLC purchases | Income earned during marriage is marital (distinct from separate “property” in prenup); remand required to determine marital income amount, whether marital funds purchased LLC assets, commingling, and any veil-piercing or equitable relief |
Key Cases Cited
- Dressel v. Ameribank, 468 Mich. 557 (interpreting summary disposition standard) (summary disposition reviewed de novo)
- Reed v. Reed, 265 Mich. App. 131 (valid prenups enforceable; court enforces clear, unambiguous prenuptial terms)
- Woodington v. Shokoohi, 288 Mich. App. 352 (changed circumstances test for prenup enforcement; courts should enforce valid prenuptial agreements)
- Moon v. Michigan Reproductive & IVF Center, P.C., 294 Mich. App. 582 (trial court may not make credibility findings at summary-disposition stage)
- Berger v. Berger, 277 Mich. App. 700 (factors in property division and spousal support considerations)
- Sparks v. Sparks, 440 Mich. 141 (equitable-distribution factors for divorce)
- Florence Cement Co. v. Vettraino, 292 Mich. App. 461 (corporate veil-piercing principles apply to LLCs)