EARL H. ALLARD, JR., Plaintiff-Appellee, v. CHRISTINE A. ALLARD, Defendant-Appellant.
No. 308194
STATE OF MICHIGAN COURT OF APPEALS
January 31, 2017
FOR PUBLICATION 9:05 a.m. Wayne Circuit Court Family Division LC No. 10-110358-DM
ON REMAND
Before: M.J. KELLY, P.J., and WILDER and FORT HOOD, JJ.
WILDER, J.
I. FACTUAL BACKGROUND
The pertinent facts on remand remain nearly identical to those set forth in our prior opinion:
The parties signed an antenuptial agreement on September 9, 1993, two days before their wedding on September 11, 1993. This case primarily deals with the validity and enforcement of that antenuptial agreement.
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The pertinent sections of the signed antenuptial agreement provide as follows:
4. Each party shall during his or her lifetime keep and retain sole ownership, control, and enjoyment of all real, personal, intangible, or mixed property now owned, free and clear of any claim by the other party. However, provided that nothing herein contained shall be construed to prohibit the parties from at any time creating interests in real estate as tenants by the entireties or in personal property as joint tenants with rights of survivorship and to the extent that said interest is created, it shall, in the event of divorce, be divided equally between the parties. At the death of the first of the parties hereto, any property held by the parties as such tenants by the entireties or joint tenants with rights of survivorship shall pass to the surviving party.
5. In the event that the marriage . . . terminate[s] as a result of divorce, then, in full satisfaction, settlement, and discharge of any and all rights or claims of alimony, support, property division, or other rights or claims of any kind, nature, or description incident to marriage and divorce (including any right to payment of legal fees incident to a divorce), under the present or future statutes and laws of common law of the state of Michigan or any other jurisdiction (all of which are hereby waived and released), the parties agree that all property acquired after the marriage between the parties shall be divided between the parties with each party receiving 50 percent of the said property. However, notwithstanding the above, the following property acquired after the marriage will remain the sole and separate property of the party acquiring the property and/or named on the property:
a. As provided in paragraphs Two and Three of this antenuptial agreement, any increase in the value of any property, rents, profits, or dividends arising from property previously owned by either party shall remain the sole and separate property of that party.
b. Any property acquired in either party‘s individual capacity or name during the marriage, including any
contributions to retirement plans (including but not limited to IRAs, 401(k) plans, SEP IRAs, IRA rollovers, and pension plans), shall remain the sole and separate property of the party named on the account or the party who acquired the property in his or her individual capacity or name.
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8. Each party shall, without compensation, join as grantor in any and all conveyances of property made by the other party or by his or her heirs, devises, or personal representatives, thereby relinquishing all claim to the property so conveyed, including without limitation any dower or homestead rights, and each party shall further, upon the other‘s request, take any and all steps and execute, acknowledge, and deliver to the other party any and all further instruments necessary or expedient to effectuate the purpose and intent of this agreement.
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10. Each party acknowledges that the other party has advised him or her of the other party‘s means, resources, income, and the nature and extent of the other party‘s properties and holdings (including, but not limited to, the financial information set forth in exhibit A attached hereto and incorporated herein by reference) and that there is a likelihood for substantial appreciation of those assets subsequent to the marriage of the parties.
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The parties were married on September 11, 1993. During the course of the marriage, the parties held a joint checking account with Private Bank, which was closed in November 2010. There were no other jointly held accounts. Defendant worked at two different advertising agencies during the first several years of the marriage. At the end of her employment, she earned approximately $30,000 per year. In 1999, after she became pregnant with the couple‘s second child, defendant stopped working and did not seek further employment.
Plaintiff received numerous cash gifts from his parents during the marriage, often totaling $20,000 per year. Plaintiff also testified to having received loans from his father during the course of the marriage, and claims that he used those funds to acquire some of the real estate he purchased during the marriage. Plaintiff also formed six limited liability companies (LLCs) during the marriage and served as the sole member of these companies.
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Testimony during trial established that plaintiff used at least some of the LLCs as a vehicle to purchase and convey numerous real estate holdings. In addition, the marital home, which plaintiff owned before the marriage, was conveyed to one of the LLCs. Plaintiff asserted in the trial court that defendant never incurred any liability as the result of the obligations arising from these multiple transactions, and that, as required by the antenuptial agreement, defendant signed warranty deeds when properties were sold to release any dower rights she might have acquired.
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After more than 16 years of marriage, plaintiff filed for divorce on July 28, 2010. On July 13, 2011, plaintiff filed a second motion for partial summary disposition regarding the antenuptial agreement. Plaintiff argued that the antenuptial agreement governed and was dispositive of all issues except for custody, parenting time, and child support. Plaintiff attached as evidentiary support for his motion: the September 9
The trial court granted plaintiff‘s motion. First, the trial court determined that defendant could not establish that the contract was signed under duress because there was no evidence of any illegal action. Next, the trial court determined that the agreement was not unconscionable because its terms did not shock the conscience of the court. Last, the trial court found that there was no change of circumstances that would make enforcement of the contract unfair and unreasonable. In particular, the trial court noted that the length of a marriage and the growth of assets are not unforeseeable and therefore cannot qualify as a change of circumstances. Further, the trial court questioned the validity of defendant‘s claim of abuse because, as far as the trial court was concerned, it was raised at the “eleventh hour,” but regardless, noted that the allegation on its face would not “rise to the level of rendering th[e] contract unenforceable . . . .” Finally, the trial court found defendant‘s argument—that plaintiff‘s lack of intent to create a marital partnership was unforeseeable—unpersuasive, noting that the clear language of the agreement allowed for each spouse to maintain separate assets.
Subsequently at trial, defendant argued that aside from the plain language of the antenuptial agreement as interpreted by the trial court, she should be able to “invade” plaintiff‘s personal assets based on a partnership theory. The trial court ultimately rejected this argument. The trial court also concluded “that the equitable distribution factors contemplated by
Further, the trial court declined defendant‘s invitation to invade plaintiff‘s personal assets under
The record is clear that all the assets of worth were titled in either plaintiff‘s name, one of plaintiff‘s LLCs’ names, or defendant‘s name. Given that evidence, the trial court concluded that there was little marital property to distribute. Consequently, pursuant to the antenuptial agreement, the trial court awarded plaintiff the six LLC entities, the stock he owned, and “all bank accounts presently titled in his name alone or titled in
Because the antenuptial agreement prohibited the award of any spousal support, the trial court did not award any.
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With regard to child support, the trial court used the Michigan Child Support Formula to calculate the base child support to be $3,041 a month for both children. However, the trial court also determined that application of the formula would be both unjust and inappropriate and, therefore, not in the children‘s best interests. Consequently, the trial court increased the base monthly child support award by $1,000. [Allard v Allard, 308 Mich App 536, 539-547; 867 NW2d 866 (2014) (Allard I), aff‘d in part, vacated in part, rev‘d in part 499 Mich 932 (2016) (footnotes omitted; second and third alterations added, other alterations in original).]
II. STANDARDS OF REVIEW AND PRINCIPLES OF STATUTORY CONSTRUCTION
Under
“The primary goal when interpreting a statute is to discern the intent of the Legislature by focusing on the most reliable evidence of that intent, the language of the statute itself.” Fairley v Dep‘t of Corrections, 497 Mich 290, 296-297; 871 NW2d 129 (2015). If the legislative intent can be gleaned from the statutory language, further construction is neither necessary nor permissible. Id. at 297.
III. ANALYSIS
Before turning to the substantive merits of the issue before us, we thank amici curiae, the Business Law and Family Law sections of the Michigan Bar Association, for the briefs they have submitted in this matter. Given the ambit of the remand order in this case, the Business Law Section has decided to offer no argument regarding the issues now before us. The Family Law Section, however, offers an argument we feel compelled to address.
The Family Law Section posits that, by including the term “property” in
There are few legal terms that carry a denotation more conceptually dense than that associated with the term “property.” Property encompasses, “[c]ollectively, the rights in a valued resource such as land, chattel, or an intangible“—these collective rights are often analogized to a “bundle of sticks“—and also includes “[a]ny external thing over which the rights of possession, use, and enjoyment are exercised[.]” Black‘s Law Dictionary (10th ed). Property can be real or personal, tangible or intangible, and—in the instant context—can be considered marital or separate. The so-called “bundle” of property rights can include many diverse forms of property “interests.” Such interests are so varied, and their machinations so complex, that the subject is necessarily relegated to hornbooks and treatises. See, e.g., Edwards, Estates in Land and Future Interests (4th ed).
of
We must, therefore, reject the interpretation of
We turn now to the true heart of the matter. The waiver question before us is one made difficult by a seeming intersection of two bedrock principles of Michigan jurisprudence: first, that the fundamental right to contract must be protected by allowing parties to contract freely and by enforcing contractual agreements;2 second, that courts sitting in equity must be free to afford whatever relief is necessary to see done that which, in good conscience, ought to be done.3 It is well-settled that
[a] court possesses inherent authority to enforce its own directives. A divorce case is equitable in nature, and a court
of equity molds its relief according to the character of the case; once a court of equity acquires jurisdiction, it will do what is necessary to accord complete equity and to conclude the controversy. [Loutts v Loutts, 298 Mich App 21, 35; 826 NW2d 152 (2012), quoting Draggoo v Draggoo, 223 Mich App 415, 428; 566 NW2d 642 (1997), quoting Wiand v Wiand, 178 Mich App 137, 144; 443 NW2d 464 (1989), quoting Schaeffer v Schaeffer, 106 Mich App 452, 457; 308 NW2d 226 (1981) (footnotes omitted).]
“Because divorce is not a natural or common-law right, however, a court presiding over divorce matters does not wield general equity powers but is limited to those powers specifically granted by statute.” Kasper v Metropolitan Life Ins Co, 412 Mich 232, 262; 313 NW2d 904 (1981).
The circuit court of this state may include in any decree of divorce or of separate maintenance entered in the circuit court appropriate provisions awarding to a party all or a portion of the property, either real or personal, owned by his or her spouse, as appears to the court to be equitable under all the circumstances of the case, if it appears from the evidence in the case that the party contributed to the acquisition, improvement, or accumulation of the property. The decree, upon becoming final, shall have the same force and effect as a quitclaim deed of the
real estate, if any, or a bill of sale of the personal property, if any, given by the party‘s spouse to the party.
In essence, the above language is a codification of the concept of the equitable trust, also known as the “constructive” trust. Such trusts recognize “the broad doctrine that equity regards and treats as done what in good conscience ought to be done.” Haack v Burmeister, 289 Mich 418, 425; 286 NW 666 (1939) (quotation marks and citations omitted). In other words, if a “party contributed to the acquisition, improvement, or accumulation of [] property,” and therefore should have an interest in that property, equity will make it so.
Similarly,
Upon entry of a judgment of divorce or separate maintenance, if the estate and effects awarded to either party are insufficient for the suitable support and maintenance of either party and any children of the marriage who are committed to the care and custody of either party, the court may also award to either party the part of the real and personal estate of either party and spousal support out of the real and personal estate, to be paid to either party in gross or otherwise as the court considers just and reasonable, after considering the ability of either party to pay and the character and situation of the parties, and all the other circumstances of the case.
Through the above statutes, it is evident that our Legislature has endeavored to codify the axiom that, in divorce actions, “a division of property must be equitable . . . in [] light of the particular facts.” See Mitchell v Mitchell, 333 Mich 441, 446; 53 NW2d 325 (1952).
Notwithstanding, plaintiff contends that parties can, by way of an antenuptial agreement, divest a circuit court of its statutory authority to effectuate an equitable settlement by “invading” separate assets under
In its remand order, our Supreme Court provided some guidance, directing our attention to two cases: Staple v Staple, 241 Mich App 562; 616 NW2d 219 (2000), and Omne Fin, Inc v Shacks, Inc, 460 Mich 305; 596 NW2d 591 (1999) (Omne). With regard to the latter case, the Supreme Court‘s remand order did not specify whether we should consider Justice Kelly‘s lead opinion, Justice Corrigan‘s concurrence, or both opinions. In any event, we find all three of the
referenced opinions instructive here.4 In particular, consideration of the relationship between Staple and the Omne opinions requires careful examination of two oft-repeated principles; first, that “[w]aiver is the voluntary and intentional relinquishment of a known right,” see Varran v Granneman, 312 Mich App 591, 623; 880 NW2d 242 (2015) (emphasis added), and second, that “the freedom to contract does not permit contracting parties to impose obligations upon and waive the rights of third parties in the absence of legally cognizable authority to do so,” Woodman ex rel Woodman v Kera LLC, 486 Mich 228, 243; 785 NW2d 1 (2010).
At issue in Staple was “the question of when an agreed-upon alimony provision in a divorce judgment entered pursuant to a settlement is subject to future modification, and when it is final and nonmodifiable.” Staple, 241 Mich App at 564. The Staple conflict panel summarized its holding as follows:
[W]e adopt a[n] . . . approach that allows the parties to a divorce settlement to clearly express their intent to forgo their statutory right to petition for modification of an agreed-upon alimony provision, and to clearly express their intent that the alimony provision is final, binding, and thus nonmodifiable. Of course,
MCL 552.28 creates a statutory right in either party to seek modification of alimony. However, like many other statutory and constitutional rights, parties may waive their rights underMCL 552.28 . If the parties to a divorce agree to waive the right to petition for modification of alimony, and agree that the alimony provision is binding and nonmodifiable, and this agreement is contained in the judgment of divorce, their agreement will constitute a binding waiver of rights underMCL 552.28 . [Id. at 568 (emphasis added).]
Thus, Staple dealt with the straightforward question of whether parties can, by contract, knowingly and willingly waive their own statutory rights.
Contrastingly, in Omne, our Supreme Court grappled with “the question whether parties may contractually agree to venue” before any cause of action arises. Omne, 460 Mich at 311 (opinion of KELLY, J.). Noting that parties can duly waive any objection to venue so long as
regardless of whether the defendant had contractually agreed to the venue.” Omne, 460 Mich 318-319 (opinion of CORRIGAN, J.). Hence, Omne involved not only the straightforward question involved in Staple—i.e., whether parties can agree to waive their own statutory rights—but also whether such an agreement can be enforced when it openly defies the Legislature‘s statutorily expressed intent.
In light of the contrast between Staple and Omne, the issue before us crystallizes into a rational paradigm; it changes from a seeming conflict between equity and the freedom to contract to a simple matter of statutory interpretation. In concert,
Our conclusion in this regard is buttressed by the fact that
Here, the trial court deviated from the Michigan Child Support Formula (MCSF), finding that it was in the best interests of the minor children to award defendant an extra $1,000 per month in base child support. But the trial court did so only after concluding that the parties’ antenuptial agreement precluded it from invading plaintiff‘s separate assets under
IV. CONCLUSION
In sum, we conclude that the parties could not, and ergo did not, waive the trial court‘s equitable discretion under
portions of Allard I, and (3) our Supreme Court‘s decision in Allard II.6 We do not
/s/ Kurtis T. Wilder
/s/ Michael J. Kelly
/s/ Karen M. Fort Hood
