Opinion
Nos. A05-693, A05-955.
Filed April 11, 2006.
Appeal from the District Court, Hennepin County, File No. DC282382.
Kathleen M. Picotte Newman, Joani C. Moberg, Larkin Hoffman Daly Lindgren, Ltd., (for appellant Charlene Jundt)
Peter H. Watson, Peter H. Watson Associates, P.A., and
Leland S. Watson, (for respondent Marcus Jundt)
Considered and decided by Willis, Presiding Judge; Kalitowski, Judge; and Stoneburner, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2004).
UNPUBLISHED OPINION
Appellant challenges the district court's order enforcing a choice-of-law provision in the parties' antenuptial agreement and the subsequent amended dissolution decree, arguing that (1) Minnesota law should apply; (2) the antenuptial agreement is invalid; (3) the district court abused its discretion in the amount and duration of maintenance awarded; (4) the district court abused its discretion by failing to provide her a right of first refusal to care for the children during respondent's parenting time; and (5) the district court abused its discretion in the award of conduct-based attorney fees. Respondent challenges the district court's post-decree order concerning division of personal property. Because the district court did not err in its choice-of-law determination; did not err in concluding that the antenuptial agreement is valid; and did not abuse its discretion with regard to maintenance, parenting time, or attorney fees; we affirm in part. Because the district court should have applied the antenuptial agreement to distribution of personal property, we reverse in part and remand.
FACTS
Appellant Charlene Karen Jundt (wife) and respondent Marcus Edward Jundt (husband) met in Illinois in October 1987 and began dating in approximately December 1987. Wife graduated from Northwestern University in the spring of 1988 with a major in chemical engineering and a minor in biomedical engineering and almost immediately moved to Carson, California to work for Shell Oil Company as a process-control engineer. Several months later, husband also moved to California approximately 55 miles from where wife was living, and the couple continued their relationship. They were engaged in January 1991 and set the wedding date for August 1991 in Minnesota, where husband's family resides. In the spring of 1991, wife moved into husband's home and became employed as a process-control engineer with Profimatics, an engineering-consulting firm. The parties planned to later move to Minnesota where husband would work in the family business.
Upon consolidating the two appeals in this matter, this court ordered that Charlene Jundt would proceed as appellant for briefing and oral argument.
Husband's parents were the principal owners of Jundt Associates, Inc., a successful investment-advisory firm that managed significant assets of investors. Husband explained that his parents insisted that each of their children enter into a valid premarital agreement before marriage so that the family's money would not "walk away" in the event of a marriage dissolution. Husband's attorney provided wife with the names of several attorneys, and wife consulted one of these attorneys regarding the antenuptial agreement. Wife's attorney fees were paid by husband's family. Wife's attorney explained to wife that under the antenuptial agreement proposed by husband's attorney, California law would apply to the enforcement of the agreement. Wife made several suggested modifications to the proposal regarding distribution amounts and inflation adjustments. The parties executed the antenuptial agreement on July 11, 1991, in California and married on August 3, 1991, in Minnesota. The parties lived in California until May 1992, when they moved to Minnesota.
Husband joined the family firm and became its president. He eventually purchased the business. The parties lived a very affluent lifestyle. Husband's income was significant until 2002 when, according to husband, the business began to experience financial difficulties. Wife was a homemaker and cared for the parties' children. She was also extensively active in charities, in which she held leadership positions.
Husband began dissolution proceedings in January 2003. Wife, who fractured her back while sledding with the children in February 2003, challenged the validity of the antenuptial agreement, and the district court bifurcated the case to determine the validity of the agreement before addressing the remaining issues. The parties submitted the choice-of-law issue to the district court on written arguments. On November 7, 2003, the district court issued a memorandum decision upholding the choice-of-law provision in the agreement and concluding that the validity of the agreement would be determined under California law. On February 18, 2004, the district court issued an order determining that the antenuptial agreement was valid under California law. After a multi-day trial, the district court issued findings of fact, conclusions of law, order for judgment, and judgment, which was subsequently amended twice. The second amended judgment, among other provisions, awarded wife $1,979,534 to purchase a home and cash in the amount of $1,319,689 under the antenuptial agreement; sole physical custody of the children subject to husband's parenting time and the right of first refusal to care for the children under certain circumstances; $12,000 per month in spousal maintenance, decreasing annually until 2011 and then remaining constant until 2014 at which time, unless wife has moved to extend maintenance, the court's jurisdiction over maintenance terminates; and $15,000 in conduct-based attorney fees. Husband was awarded all interest in Jundt Associates, Inc. and $40,000 in attorney fees under the antenuptial agreement. In addition, the parties were ordered to appraise and divide their valuable wine collection, and personal property was divided by the "two-list" method under which one party prepares two lists of personal property and the other party is allowed first choice of the lists.
Husband appeals the method of personal-property division, arguing that the antenuptial agreement should control division of the parties' separate property which should not have been included on the lists. Wife appeals the choice-of-law determination, the determination that the antenuptial agreement is valid, the district court's refusal to grant her a right of first refusal to care for the children during husband's parenting time, the maintenance provision, and the attorney-fee awards. The appeals were consolidated.
DECISION
I. Choice of law
Choice-of-law questions are questions of law and are reviewed de novo. Schumacher v. Schumacher, 676 N.W.2d 685, 690 (Minn.App. 2004). "An antenuptial agreement is a type of contract recognized and favored at common law." Pollock-Halvarson v. McGuire, 576 N.W.2d 451, 455 (Minn.App. 1998) (citing Hill v. Hill, 356 N.W.2d 49, 53 (Minn.App. 1984)), review denied (Minn. May 28, 1998). "Minnesota traditionally enforces parties' contractual choice of law provisions." Hagstrom v. Am. Circuit Breaker Corp., 518 N.W.2d 46, 48 (Minn.App. 1994), review denied (Minn. Aug. 24, 1994). "Minnesota courts have consistently expressed a commitment to the rule `that the parties, acting in good faith and without an intent to evade the law, may agree that the law of either state shall govern.'" Id. (quoting Combined Ins. Co. of Am. v. Bode, 247 Minn. 458, 464, 77 N.W.2d 533, 536 (1956). The application of another state's law is constitutionally permissible when the forum state has a "significant aggregation of contacts, creating state interests, such that choice of its law is neither arbitrary nor fundamentally unfair." Allstate Ins. v. Hague, 449 U.S. 302, 312-13, 101 S. Ct. 633, 640 (1981) (upholding choice of North Carolina law even though the choice would require enforcement of a contractual provision that conflicted with a specific Minnesota statute and concluding that policy interest in statute did not override Minnesota's longstanding policy of enforcing contractual choice-of-law provisions). Here, as the district court correctly found, because the parties both lived in California when they discussed and entered into the antenuptial agreement and continued to live in California for a time after they were married, the parties have sufficient contact with California to make application of California law constitutionally permissible.
Wife argues that "closer scrutiny" of the choice-of-law provision is required in family-law cases "to ensure that Minnesota does not abdicate to other states its constitutional powers to establish important social policies" and cites McKee-Johnson v. Johnson, 444 N.W.2d 259, 267 (Minn. 1989), as support for that proposition. But McKee-Johnson did not involve a choice-of-law provision, and we find no authority in that case for the assertion that closer scrutiny of choice-of-law provisions must be applied to an antenuptial agreement.
Wife also asserts that husband acted in bad faith with the intent to evade Minnesota law by proposing that California law govern the antenuptial agreement. We agree with the district court's conclusion that there is no evidence in this case of an intent to evade the law. Wife was aware that the parties intended to move to Minnesota sometime after the marriage and acknowledged in her deposition that her California lawyer was aware of the Minnesota law that applied to antenuptial agreements and discussed with her that the intent of the agreement was to have California law apply. As the district court noted, the evidence shows an intent to make a conscious, well-informed choice of law rather than to evade the law.
Wife also asserts that because husband's family paid for her lawyer, she was not adequately represented, but again the evidence does not support this assertion. Wife chose an attorney from names presented to her by husband's attorney, but makes no claim that her choice was limited to these names. Wife was a college graduate with a responsible engineering position at the time she entered into the agreement, and she actively participated with her attorney in negotiating better terms for herself in the agreement. We conclude that the district court did not err in concluding that there is no evidence of bad faith or intent to evade the law sufficient to set aside Minnesota's deference to contractual choice-of-law provisions.
Because the choice-of-law provision is valid, we decline to enter into the choice-of-law analysis that would be required absent a choice-of-law provision, despite the fact that the district court conducted such an analysis and the parties have devoted a substantial portion of their briefs to such analysis. Suffice it to say that if we were to conduct such an analysis, we would agree with the district court that consideration of the factors does not overcome Minnesota's tradition of enforcing a valid choice-of-law provision.
II. Validity of antenuptial agreement
Although wife's primary argument is that the antenuptial agreement is invalid under Minnesota law, portions of her choice-of-law argument assert that the antenuptial agreement is invalid under California law as well because husband did not accurately disclose his assets. We disagree because wife's argument is actually that husband did not disclose "the true extent of the [Jundt] family wealth" and only disclosed that he
Husband argues that the agreement is valid even if Minnesota law is applied, but we decline to reach that issue because the district court correctly applied California law.
may receive by gift or inheritance from his parents, directly or indirectly and outright or in trust, substantial additional assets (including common stock of Jundt Associates, Inc.), possibly with total value in excess of millions of dollars. This possibility is an expectancy only, and has no ascertainable value at this time.
Wife has provided no authority for, and we find no merit in, her assertion that husband's family's net worth or details of their wealth were required to be disclosed in the context of the antenuptial agreement.
Additionally, under California law, the antenuptial agreement is enforceable unless wife proves that (1) she was not provided a fair, reasonable, and full disclosure of husband's property; (2) she did not voluntarily and expressly waive, in writing, any right to disclosure of the property beyond the disclosure provided; and (3) she did not have, or reasonably could not have had, an adequate knowledge of husband's property. See Cal. Fam. Code § 1615(a)(2) (2004). In the antenuptial agreement, wife "expressly and voluntarily waives any right to disclosure of [husband's] property and financial obligations beyond the disclosure provided." Therefore, even if wife's argument that further disclosure was required, she voluntarily waived such disclosure.
Wife also argued, without citing any controlling authority, that the provision for attorney fees to the prevailing party in any dispute over the agreement is unenforceable as "[o]ppressive and coercive." The district court relied on Sherman v. Sherman, 162 Cal. App. 3d 1132, 1140 (Ct.App. 1984), for the proposition that attorney-fee provisions in antenuptial agreements are to be upheld under California law. The district court provided a lengthy and thoughtful analysis of the validity of the agreement under California law, and aside from assertions already discussed above, wife has not challenged that analysis. The district court did not err in concluding that the antenuptial agreement is valid under California law.
III. Maintenance
The decree awards wife maintenance in the amount of $12,000 beginning in 2004, to be reduced by $400 in each succeeding year though 2011, then to remain constant until 2014, at which time it shall terminate unless a motion to extend maintenance is made before that date. Wife argues that whether she will be able to earn a sufficient salary in the future to support herself is speculative and cites Morrison v. Morrison, 20 Cal. 3d 437, 453 (1978), for the proposition that the court must not engage in speculation concerning retention of jurisdiction over maintenance and should not "burn its bridges" by failing to retain jurisdiction.
The district court explained the basis of the maintenance award, including wife's education and work experience. The district court relied on the testimony of wife's doctor that injuries such as she sustained in the sledding accident typically heal within one year, wife's testimony that she will seek employment, and wife's statements to a vocational analyst that she might be interested in a career in scientific research or post-secondary teaching. And through what is known in California as a " Richmond order," the district court has retained jurisdiction over maintenance until October 14, 2014. See Richmond v. Richmond, 164 Cal. Rptr. 381 (Ct.App. 1980). A Richmond order is "an order providing the supported spouse with notice support will terminate on a specified date unless prior to this date the supported spouse shows good cause to extend it." Schmir v. Schmir, 35 Cal. Rptr. 3d 716, 725 (Ct.App. 2005). California courts have approved such retention of jurisdiction to a definite date in the future as appropriately meeting the concerns expressed in Morrison that a trial court not "burn its bridges" with regard to jurisdiction over maintenance. See, e.g., Prietsch v. Calhoun, 235 Cal. Rptr. 587, 597 (Ct.App. 1987).
Wife also argues that the district court abused its discretion in setting the amount of maintenance, citing Cal. Fam. Code § 4330, which provides that maintenance should be based on the standard of living established during the marriage, taking into consideration several factors listed in section 4320. Wife complains that the district court unilaterally reduced her claimed reasonable monthly expenses of $16,949 by nearly $5,000.
The district court set out its analysis of the maintenance decision in detail, finding that wife submitted a "Quicken" analysis for the parties' highest-spending year with adjustments by wife. The district court agreed with wife that the parties had an affluent lifestyle during the marriage, but found that wife's budget was not representative of the marital standard of living. The district court noted that wife was able to pay for her $1,250,000 home and has no mortgage payment. The district court found that wife's budget contained unexplained, inflated, and unreasonable expenses, and the court made reductions to some of those expenses such as the wine budget (noting the substantial amount of valuable fine wine she was awarded in the decree), car expenses (noting that she had no car payments), and her "pocket money." The district court made six pages of findings on the factors listed in Cal. Fam. Code § 4320, demonstrating that its exercise of discretion was not arbitrary, capricious, or patently absurd. See In re Geoffrey G., 159 Cal. Rptr. 460, 465 (Ct. App. 1979) (stating that "[w]here a trial court has discretionary power to decide an issue, a reviewing court will not disturb that decision unless the trial court has exceeded the limits of legal discretion by making an arbitrary, capricious, or patently absurd determination").
IV. Denial of right of first refusal to care for children during husband's parenting time
Wife argues that the district court abused its discretion by granting husband a right of first refusal during her parenting time with the children without a corresponding right for wife because it is in the children's best interests to be with their mother rather than a third-party caregiver. Wife cites no authority for her assertion that the district court's decision represents an abuse of discretion, and we find no merit in her argument.
V. Attorney fees award
Wife argues that the district court abused its discretion in awarding her only $15,000 in conduct-based attorney fees and requests this court to award her $100,000 in conduct-based fees. An award of attorney fees "rests almost entirely within the discretion of the trial court and will not be disturbed absent a clear abuse of discretion." Crosby v. Crosby, 587 N.W.2d 292, 298 (Minn.App. 1998) (quotation omitted), review denied (Minn. Feb. 18, 1999). The district court made specific findings explaining its conclusion that wife was "at least as culpable as Husband (if not more) in imposing a significant burden on the Court and the Court's staff" and prolonging the litigation, but that "[h]aving considered all the facts and circumstances . . ., while neither party is without fault, the scales tip in Wife's favor on this issue." The district court was in the best position to evaluate the effect of each parties' conduct on the litigation, and we cannot conclude that the award represents an abuse of discretion.
VI. Husband's challenge to property division
After having upheld the validity of the antenuptial agreement, the district court inexplicably failed to apply the terms of the agreement to the division of personal property. When the district court proposed to dispose of personal property by auction or a "two-list method," husband stated he did not object to the two-list method "[a]s long as the Court can rule on the issue of separate property." We conclude that husband thereby conditioned acceptance of the two-list method on the district court excluding separate property from that method of division, and the district court clearly erred by ordering separate property to be included on the lists. The antenuptial agreement defines what property shall remain the separate property of each party and should have been applied. We reverse the division of personal property and remand for a division of the parties' separate property under the terms of the antenuptial agreement. On remand, the district court shall also determine whether the four paintings husband asserts belong to the business are his separate property under the provision awarding him the business assets.