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In re The Marriage of Hansen

Court of Appeals of Iowa

October 10, 2018

IN RE THE MARRIAGE OF MAX F. HANSEN AND KARIN L. HANSEN Upon the Petition of MAX F. HANSEN, Petitioner-Appellant/Cross-Appellee, And Concerning KARIN L. HANSEN, Respondent-Appellee/Cross-Appellant.

          Appeal from the Iowa District Court for Scott County, Mark R. Lawson, Judge.

         Max Hansen appeals, and Karin Hansen cross-appeals from the district court's decree dissolving their marriage.

          Richard A. Davidson of Lane & Waterman LLP, Davenport, for appellant.

          M. Leanne Tyler of Tyler & Associates, PC, Bettendorf, for appellee.

          Heard by Danilson, C.J., and Mullins and McDonald, JJ.


         Max Hansen appeals, and Karin Hansen cross-appeals from the district court's decree dissolving their marriage. Max asserts the district court's award of spousal support is inequitable. Max also challenges the court's order he pay a portion of Karin's trial-attorney fees. Karin contends the district court should have ordered a greater spousal-support award. Karin also argues the district court improperly determined the parties' most recent postnuptial agreement controlled the division of assets and contends the premarital agreement controlled the property division. Finally she argues the court erred in not awarding her a share of the equity in Max's Davenport residence. Karin requests attorney fees on appeal. We conclude there is no reason to disturb the district court's property distribution, and the district court properly awarded Karin trial-attorney fees. However, we also conclude the district court's spousal support award was inequitable and modify the spousal-support award. We deny Karin's request for appellate-attorney fees.

         I. Background Facts & Proceedings.

         Max and Karin were married on July 3, 2009, when Max was fifty-eight years old and Karin was fifty-six. The petition in this action was filed in June 2016. Karin filed a petition for dissolution in Arizona the same month, but the Arizona action was later dismissed. The trial was held in May 2017.

         At the time of the dissolution trial, Max was sixty-six years old. During the parties' marriage, Max worked as president and chief executive officer of JMF Companies (JMF). Max owned thirty-four percent of the company. Max also co-founded and served as the managing member of Dayco Industries (Dayco). Max solely owned Black Bear L.L.C., a holding company for Max's share of commercial real estate leased to JMF and Dayco. In 2016, Max sold his interest in Dayco and JMF and invested the proceeds. At the time of trial, Max was retired and received income from his investments. Max's net worth was determined to be approximately $15.7 million.

         Before entering the marriage at age fifty-six, Karin had a net worth of about $33, 000. At the time of the dissolution trial, Karin was sixty-four years old and had established residency in Arizona. Karin worked for JMF for approximately four and a half years of the marriage and for one year she worked for Max's brother's business. Karin began as an administrative assistant, but after earning sufficient certifications, she was elevated to human resources (HR) director at JMF. Karin earned a salary of $65, 000 as HR director. Her prior work experience included working as a travel agent, working for a dentist, being a stay-at-home mother, and working for a plumbing and heating company.

         Karin moved to Arizona in late 2015. When JMF was sold in 2016, Max gave Karin a gift of one million dollars. The purpose of this gift, according to Max, was to make Karin more financially secure because she would no longer receive a salary from her job at JMF. Karin testified at trial she was forced into retirement due to the sale of the company. Max purchased health and dental insurance for Karin, effective until she turned sixty-five. He also bought a Mercedes automobile for Karin that she subsequently traded in for a Volkswagen-receiving about $20, 000 from the trade. At the time of trial, Karin was working as an administrative assistant for a financial broker. She worked twelve hours per week, earning twelve dollars an hour. Karin also had income from a small pension arising from her first marriage and social-security benefits.

         Max and Karin executed a premarital agreement in June 2009, just prior to their marriage. During the marriage-in 2011 and 2013-Max and Karin executed two postnuptial agreements. The parties disagree which agreement controls in this appeal.

         On appeal, Karin requests a share of the equity in a home owned by Max prior to the marriage. Before Karin moved to permanently live in Arizona the parties lived in the home together in Davenport. Prior to the parties' marriage, Max executed a deed naming them as joint tenants of the Davenport residence. Max explained at trial his intention was to ensure Karin would be able to stay in the home in the event of his death. Karin had no knowledge of this change in title until after these dissolution proceedings were initiated.

         In its findings of fact, conclusions of law, and decree of dissolution filed May 30, 2017, the court determined the 2013 postnuptial agreement controlled, Karin was not entitled to one-half interest in the Davenport home, Max had satisfied his obligations under the 2013 agreement, and Karin was not entitled to any additional property. The court awarded Karin spousal support in the amount of $4000 per month commencing June 1, 2017, until June 1, 2025, when the amount of support would be reduced to $2000 per month until Karin's death or remarriage, whichever occurs first. The district court also noted Max had previously been ordered to pay $10, 000 in temporary attorney fees, and ordered Max to pay an additional $20, 000 towards Karin's trial-attorney fees. Max now appeals and Karin cross-appeals.

         II. Standard of Review.

         Because dissolution proceedings are in equity, our review is de novo. In re Marriage of Thatcher, 864 N.W.2d 533, 537 (Iowa 2015). "Accordingly, we examine the entire record and adjudicate anew the issue of property distribution. We give weight to the findings of the district court, particularly concerning the credibility of witnesses; however, those findings are not binding upon us." In re Marriage of McDermott, 827 N.W.2d 671, 676 (Iowa 2013). In fixing spousal support, the district court has considerable latitude, and we disturb the award only "if it fails to do equity between the parties." In re Marriage of Schenkelberg, 824 N.W.2d 481, 486 (Iowa 2012).

         III. Property Distribution.

         On Karin's cross-appeal, she seeks one-half of the equity in the Davenport residence, which she estimates to be approximately $100, 000. Karin also seeks to enforce the premarital agreement and requests an additional $100, 000 pursuant to its terms.[1] However, we cannot consider an award of one-half of the equity of the home or any cash settlement in isolation, but rather must consider the entire property distribution to determine if it is equitable to award Karin additional monies. Intertwined in our review of the property distribution is the existence of the premarital agreement and the two postnuptial agreements executed by the parties. This in turn requires a determination of the validity of the agreements.

         Max argues the 2011 and 2013 agreements acted to amend the 2009 premarital agreement. Karin asserts the postnuptial agreements were not amendments to the premarital agreement, but rather entirely new agreements entered into by the parties. Karin further contends postnuptial agreements are not permitted under Iowa law, and she therefore seeks to enforce the 2009 premarital agreement as to the property and homestead distribution provisions.

         A. Premarital Agreement.

         As a general rule, premarital agreements are favored and should be construed liberally to carry out the intention of the parties. In re Marriage of Christensen, 543 N.W.2d 915, 918 (Iowa Ct. App. 1995). "The purpose of such contracts is to fix the interests of the respective parties in the property of the other." See In re Marriage of Pillard, 448 N.W.2d 714, 715 (Iowa Ct. App. 1989). Iowa Code chapter 596 applies to premarital agreements executed on or after January 1, 1992. Iowa Code § 596.12 (2016).

         Neither party contests the original validity of the premarital agreement executed between the parties on June 2, 2009. However, both parties agree the waiver and relinquishment of spousal support is contrary to Iowa law. See id. § 596.5(2) ("The right of a spouse or child to support shall not be adversely affected by a premarital agreement."). If we were bound by the remaining terms of the premarital agreement without consideration of any other facts, Karin would be entitled to a sum of $100, 000.[2]

         A premarital agreement may be revoked after marriage and without consideration. See id. § 596.7(1) ("After marriage, a premarital agreement may be revoked . . . [b]y a written agreement signed by both spouses. The revocation is enforceable without consideration."). After the parties were married the parties entered into a written "postnuptial agreement" on October 28, 2011, followed by another postnuptial agreement executed by the parties on May 8, 2013. The 2011 postnuptial agreement provides in part, "NOW THEREFORE, for good and adequate consideration, including the mutual covenants herein expressed, the parties hereby REVOKE the Premarital Agreement entered into on June 2, 2009." We also observe that both the 2011 and 2013 postnuptial agreements have identical severability clauses, which provide:

Should any article, section, or clause of this Agreement be declared illegal or unenforceable by a court of competent jurisdiction or by legislative decree, then that article, section, or clause shall be deleted from this Agreement to the extent that it violates the law. The remaining articles, sections, and clauses shall remain in full force and effect.

         Thus, even if we conclude the 2011 and 2013 postnuptial agreements are otherwise unenforceable, the provision revoking the premarital agreement appears to be valid as it is in writing, was consented to by both parties, and required no consideration.

         We next address Max's contention the postnuptial agreements only amended the premarital agreement, as well as the effect and enforceability of the postnuptial agreements.

         B. Postnuptial Agreements.

         Iowa Code chapter 596 governing premarital agreements does not expressly address postnuptial agreements. Most recently, in Hussemann ex rel. Ritter v. Husseman, 847 N.W.2d 219, 224 (Iowa 2014), our supreme court addressed postnuptial agreements and Iowa Code chapter 596, stating, "Although our legislature has authorized antenuptial agreements, it has made no such allowance for postnuptial agreements."

         Prior to Hussemann, our supreme court addressed the enforceability of agreements entered into by spouses following the marriage:

There is no provision of Iowa statutory law that expressly authorizes or prohibits enforcement of reconciliation agreements between spouses. While Iowa Code section 598.21(1)(k) states that any mutual agreement made by the parties may be considered by the court, this provision does not provide for enforcement of reconciliation agreements specifically, but only that mutual agreements may be considered, among other factors, in making property divisions.

In re Marriage of Cooper, 769 N.W.2d 582, 585 (Iowa 2009). Because our legislature has not authorized postnuptial agreements to control or bind the award of property or spousal support in a dissolution action, we consider postnuptial agreements as only one of many factors in dividing property in dissolution proceedings and in fixing spousal support. See id.; see also Iowa Code §§ 598.21(k), 598.21A(1)(i). Accordingly, in applying the factors set forth in Iowa Code section 598.21(5), the district court may consider the terms of a postnuptial agreement, ignore its terms as inequitable, or adopt its terms in full or in part.

         Here, Max contends the 2011 postnuptial agreement serves to amend the premarital agreement, and the 2013 postnuptial agreement amends the 2011 agreement. Thus, Max argues the premarital agreement remains binding as amended. Max relies upon language from a "whereas" provision in the 2011 agreement, which provides in part:

[T]he parties wish to amend and determine the rights of each in his or her separate income and property, the rights and interests of each in income and property to be acquired during the marriage, and the rights of the parties in the event the parties separate or the marriage terminates.

         Max also cites to O'Dell v. O'Dell, 26 N.W.2d 401, 412 (Iowa 1947), [3] for support for his argument that a premarital agreement may be amended by a postnuptial agreement. We are not persuaded.

         First, we observe the O'Dell decision preceded the existence of Iowa Code chapter 596, and the chapter was intended to unify the law with respect to premarital agreements. See Iowa Code § 596.2. Our Iowa Code chapter 596, the Iowa Uniform Premarital Agreement Act (IUPAA), was "modeled after the Uniform Premarital Agreement Act (UPAA), which was drafted by the National Conference of Commissioners on Uniform State Laws in 1983." In re Marriage of Shanks, 758 N.W.2d 506, 511-512 (Iowa 2008). In Shanks, our supreme court also explained, "[i]n the absence of instructive Iowa legislative history, we look to the comments and statements of purpose contained in the Uniform Act to guide our interpretation of the comparable provisions of the IUPAA." Id. The court has also observed, "[o]ur comparison of features of the IUPAA and the UPAA reveals the IUPAA's tendency toward providing more protection to vulnerable parties." [4] In re Marriage of Erpelding, ___ N.W.2d ___, ___, 2018 WL 3322921, at *7 (Iowa 2018).

         We find persuasive our prior observation:

[T]he Iowa Uniform Premarital Agreement Act refers only to revocation of premarital agreements, not amendments thereto. Iowa Code § 596.7 ("After marriage, a premarital agreement may be revoked only as follows: . . ."). This provision differs from the corresponding provision of the Uniform Premarital Agreement Act, section 5, which provides: "After marriage, a premarital agreement may be amended or revoked only by a written agreement signed by the parties. The amended agreement or the revocation is enforceable without consideration."

In re Marriage of Frary, No. 14-1398, 2016 WL 146221, at *2 n.2 (Iowa Ct. App. Jan. 13, 2016). Clearly, the legislature chose to omit the right to amend a premarital agreement after marriage, and "we do not search for meaning beyond the statute's express terms." Erpelding, 2018 WL 3322921, at *3. Thus, we conclude the O'Dell decision is limited to premarital agreements existing before the effective date of Iowa Code chapter 596. See Iowa Code § 596.12 ("This chapter takes effect on January 1, 1992, and applies to any premarital agreement executed on or after that date. This chapter does not affect the validity under Iowa law of any premarital agreements entered into prior to January1, 1992."). We conclude a premarital agreement executed after January 1, 1992, may not be amended after marriage, although it may be revoked, abandoned, or the rights thereunder waived. See Iowa Code § 596.7; see also In re Marriage of Christensen, 543 N.W.2d 915, 918 (Iowa Ct. App. 1995) (holding premarital agreements can be abandoned like any contract).

         Moreover, we are unable to harmonize the use of the term "amend" in the prefatory language of the 2011 agreement with the subsequent specification that the parties "revoke the premarital agreement." As best we can determine, the parties were trying to amend their rights to property interests and spousal support by revoking the premarital agreement. We reach this determination because the 2011 agreement appears to set forth a methodology for the distribution of all of the parties' joint and separate property, as well as any rights to spousal support, rather than amend only specific provisions of the original comprehensive terms.[5]

         We also find significant the language in the 2013 agreement stating in part, "Whereas the parties entered into a Premarital Agreement on June 2, 2001 [sic], and a Post-Nuptial Agreement on October 28, 2011, which purported to revoke the Pre-marital Agreement." Thus, in the 2013 agreement, the parties acknowledge their 2011 agreement revoked the premarital agreement. The agreement to revoke was in writing, consented to by both parties, and required no consideration. See Iowa Code § 596.7(1). The fact that the revocation provision was incorporated in a postnuptial agreement that was unenforceable as an amendment to the premarital agreement and was not binding on the district court is inconsequential because the agreement included a severability clause quoted above. Accordingly, we conclude the premarital agreement was revoked by the 2011 agreement as recognized in the 2013 agreement.

         Our analysis of the 2011 and 2013 agreements does not end there however, because if the postnuptial agreements are void contracts, they may not even serve as a factor in the distribution of property or fixing spousal support. See Cooper, 769 N.W.2d at 585-87. In Cooper, a reconciliation agreement with a condition precedent that required certain conduct of the parties in their marital relationship was determined to be contrary to our no-fault divorce law, and was void. Id. The court concluded, a void contract "should be given no weight in the dissolution proceedings," nothwithstanding Iowa Code sections 598.21(5)(k) and (m).[6] Id. at 587. The 2013 agreement recited there was a pending dissolution action in Scott County, Iowa, the agreement was to facilitate a reconciliation, and "amend and restate" the 2011 agreement, noting:

[T]he parties acknowledge that the post-nuptial agreement executed on October 28, 2011 between the parties has caused significant acrimony, discord, and marital conflict between the parties during the course of their marriage and they agree that to avoid a dissolution of their marriage at this time as a result of such discord, they mutually desire to amend and restate said post-nuptial as set forth herein.

         However, neither agreement imposes any conditions upon either party in their interpersonal relationship, and thus, is not in conflict with our public policy of no-fault dissolution or the principles announced in Cooper. Thus, we conclude the agreements do not include an improper condition precedent and are not void.

         Postnuptial agreements that affect or waive a spouse's elective share are also unenforceable. Hussemann ex rel. Ritter v. Hussemann, 847 N.W.2d 219, 224, 226 (Iowa 2014) (stating "over a century ago, we held that 'a contract between husband and wife, with reference to her interest in his estate, is of no validity whatever'" and "we have presumed here that Iowa does not enforce postnuptial agreements that waive a spouse's elective share" (citation omitted)). However, here, neither party's elective share is at issue, and as noted, both postnuptial agreements include severability clauses. Accordingly, they are not void contracts.

         The next question is whether both agreements should be considered as a factor or just the last expression of the parties' intent. Similar to the 2011 agreement, the 2013 agreement appears to provide a comprehensive distribution of all of the parties' joint and separate property. Because the 2013 agreement provides that the parties intend to "amend and restate" their agreement, we agree the parties intended the 2013 agreement to control. See Bank of the West v. Michael R. Myers Revocable Trust, No. 09-0359, 2009 WL 2960404, at *4 (Iowa Ct. App. Sept. 2, 2009) (acknowledging the "well-settled principle that 'where either party has orally agreed to abandon or rescind . . . a contract, and this is acquiesced in, he may not thereafter maintain an action for its enforcement'') (quoting Henderson v. Beatty, 99 N.W. 716, 718 (Iowa 1904)). In light of the parties' intent, we will consider the 2013 agreement as one of the factors to consider in determining an equitable property distribution and spousal-support award, but which is not binding on the ultimate distribution of property or the spousal-support award.

         C. Davenport Home.

         Max contends the district court's determination that Karin was not entitled to half of the equity in the Davenport home was correct. Karin asserts this determination was in error. Max owned the home prior to the marriage; thus, the home is premarital property, but it will not be set aside to Max on that fact alone. See In re Marriage of Fennelly, 737 N.W.2d 97, 102 (Iowa 2010) ("The district court 'may not separate [a premarital] asset from the divisible estate and automatically award it to the spouse that owned the property prior to the marriage.'" (quoting In re Marriage of Sullins, 715 N.W.2d 242, 247 (Iowa 2006)); see also In re Marriage of Hansen, 886 N.W.2d 868, 872 (Iowa Ct. App. 2016) (noting property brought into the marriage by a party is merely a factor among many to be considered, which "may justify full credit, but does not require it" (citation omitted)).

         Karin notes Max executed a deed in 2007 naming Max and Karin as joint tenants of the Davenport home. Karin argues the deed constituted a gift from Max to Karin of a one-half ownership interests in the home. Max explained at trial:

Q. So, again, in your own understanding what was the reason there you added [Karin] as a joint tenant on the title to [the Davenport] house?

A. Well, just as I indicated before. It was in case I died she would not have to move immediately out of the house because of concerns that my children [did] not approve of her living in a house that I owned.

Q. Was it your intent that she was going to be a half owner of your house?

A. No. And that was made clear . . . at the time that did not mean a conveyance of my ownership of the house.

Q. Was it more like an estate planning arrangement?

A. That's exactly what it was.

         We agree with the district court's determination that Karin is not entitled to an interest in the Davenport home. We have previously stated, "Joint ownership of an asset originally owned by one party in a marriage cannot be demonstrated by merely affixing the other party's name to that asset." In re Marriage of Bishop, No. 02-1074, 2003 WL 1524449, at *2 (Iowa Ct. App. Mar. 26, 2003) (citing In re Marriage of Hoffman, 493 N.W.2d 84, 89 (Iowa Ct. App. 1992)). Thus, in making a division of property in dissolution proceedings, we do not look simply to whether the title to the asset is in a particular party's name. Even if we did, Karin has not identified any appreciation in this asset during the marriage.

         Additionally, Karin's testimony that she was not aware of the execution of the deed until the current dissolution proceedings belies her assertion that the deed constituted a gift from Max to Karin of a one-half ownership interest in the Davenport home. On the contrary, Max stated the execution of the deed was purely for estate-planning purposes. See Bishop, 2003 WL 1524449, at *2 (holding where the transfer of property was made "simply for estate planning purposes" it "should not have been divided").

         Although not binding on our determination, we observe the 2013 postnuptial agreement provides, "[E]ach party's separate property shall at all times retain its character as separate property, regardless of whether such property is owned, held, or titled in joint tenancy, tenancy by the entirety, or any other form of joint ownership." The parties also agreed, "[E]ach of the parties now own and may hereafter acquire income and property in his or her own rights, and each desire that their ongoing marriage shall not, in any way, change or affect certain individual rights to and in their respective separate property as set forth herein." As he did on the 2009 and 2011 agreements, Max listed the Davenport home as his separate property with respect to the 2013 agreement. Equity does not demand Karin be entitled to an interest in the property or a portion of its equity in light of Max's payments to her in excess of $1, 000, 000 during the marriage, and all other factors set forth in section 598.21(5).[7]

         D. Lump Sum Payment.

         Karin's only other claim of error with respect to the property distribution is the court's failure to award her an additional $100, 000 pursuant to the terms of the premarital agreement. Karin asserts, because the 2013 postnuptial agreement was unenforceable to amend the premarital agreement, the $150, 000 paid by Max pursuant to the agreement constituted a gift. Max contends his ...

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