356 S.W.3d 235 (Mo. Ct. App. 2011)
Husband and Wife were married on August 9, 1978.1 The parties had discussed and eventually signed a prenuptial agreement on August 8, 1978.2 On January 25, 2008, after thirty years of marriage, the parties separated.3 The trial court dissolved their marriage on May 21, 2010.4 In its Judgment of dissolution, the trial court found the prenuptial agreement to be valid and enforceable.5 The trial court determined and divided the parties' separate and marital property with a balance of 60% of the marital property to Wife and 40% to Husband.6
The dissolution proceeding mainly involved the division of assets, as the parties' three children are emancipated.7 At the time of the marriage, Wife owned a 3% interest in Sieben, which was valued at that time as worth approximately $136,000.8 In June of 1999, and in January of 2000, Wife received two liquidating distributions totaling approximately $5.2 million.9 Wife's expert appraised the value of her CCC stock at $2,346,700.10 Husband's expert appraised it at $8,000,000.11 Wife deposited the Sieben distributions into three accounts in her name.12
Wife appealed from the trial court's May 21, 2010 Judgment dissolving her marriage to Husband and its two Amended Judgments entered September 20, 2010 on Wife's and Husband's Motions to Amend Judgment, respectively.13 Husband cross-appeals from the original judgment and from the trial court's denial of his motion to amend one of the September 20, 2010 Amended Judgments to include an order of interest on his award of marital property.14 The appeals were heard by the Missouri Court of Appeals, Eastern District, Division Three.15
Whether the prenuptial agreement was valid and enforceable?16
In Missouri, to be valid and enforceable a prenuptial agreement must be entered into freely, fairly, knowingly, understandingly, and in good faith with full disclosure.17 This involves a subjective evaluation of fairness surrounding execution.18 Courts consider factors such as access to independent counsel, time to revise the agreement, bargaining positions in age, sophistication, education, employment, and experience, and full disclosure of assets.19 Fairness is determined as of the date of the agreement.20
Yes. The parties entered the agreement on August 8, 1978, the day before their wedding after thirty years of marriage until separation in 2008, with Husband as a 26-year-old third-year medical student and Wife as a 26-year-old nurse who had similar professional vocations and education levels.21 Husband had four days to review after the August 4 meeting, access to independent counsel though he declined due to cost and chose not to seek less expensive options or borrow funds because he loved Wife and wanted to marry her, and both parties disclosed assets with Husband listing a net worth of approximately $180,000 to $200,000 while Wife's book values were used without legal authority showing this rendered the agreement unfair.22 The trial court found the agreement conscionable and fairly made with no unconscionability, as the bargaining positions were relatively equal and Husband understood the straightforward terms.23
The prenuptial agreement was valid and enforceable.24
Whether the trial court erred by failing to enforce paragraphs 4, 5(a), and 5(c) of the prenuptial agreement?25
A court may not selectively enforce part and reject part of a prenuptial agreement.26 Such agreements are conscionable or not in their entirety when made.27 A prenuptial agreement can be held sufficiently comprehensive in scope and detail to avoid being held totally unenforceable while rejecting a party's interpretation of some provisions.28 Courts apply ordinary contract principles that determine the intention of the parties.29 The general rule is that income generated during the marriage including from separate property is marital property.30 The agreement may specifically exclude it under the exception in Section 452.330.2(4).31
No. Paragraphs 4, 5(a), and 5(c) provide that each party shall keep sole ownership of all property now or hereafter acquired by him or her in any manner whatsoever and that each shall keep sole ownership of property acquired before or during marriage.32 The trial court found the language too vague and indefinite to exclude specific income such as earnings, interest, and dividends generated by Wife's separate property from its presumptive marital status under Section 452.330.33 The paragraphs are silent as to income, earnings, dividends or interest unlike the specific language in Sprock v. Sprock that included proceeds, rents, increase, profits, interest, and dividends.34 The trial court correctly determined the agreement evoked an intent to keep family businesses in the family rather than redefine income acquired during marriage as separate property.35
The trial court did not err by failing to enforce paragraphs 4, 5(a), and 5(c) to exclude income from Wife's separate property.36
Whether the liquidating distributions Wife received from Sieben, Inc. constituted her separate property?37
The classification of property as marital or non-marital is a question of law reviewed de novo.38 Property acquired in exchange for property acquired prior to marriage remains separate under Section 452.330.2(2).39 The source of funds rule provides that property is marital to the extent the source of funds used to acquire it is marital.40 Liquidating distributions received in exchange for and cancellation of separate stock upon corporate dissolution retain the character of the stock.41 They are distinguishable from cash dividends paid from retained earnings of an ongoing corporation.42
Yes. At the time of the marriage Wife owned a 3% interest in Sieben valued at approximately $136,000 as her separate property.43 In June 1999 and January 2000 she received two liquidating distributions totaling approximately $5.2 million in exchange for and cancellation of her stock.44 This occurred after Sieben's dissolution and liquidation where 97% of assets were retained earnings never severed as dividends.45
Wife deposited these into her separate accounts. The parties classified them as capital gains not dividends for tax purposes.46 The distributions were not income earned by her separate stock but liquidated capital distributions received in exchange for her separate property interest.47 This makes them Wife's separate property at distribution.48
The liquidating distributions Wife received from Sieben, Inc. constituted her separate property.49
Whether the trial court abused its discretion by accepting Husband's $8,000,000 valuation of Wife's CCC stock?50
The trial court is entitled to believe or disbelieve the testimony of the parties or their experts regarding valuation.51 It defers to the trial court's determination of witness credibility and resolution of conflicts in evidence concerning value.52 The decision is reviewed only for an abuse of discretion.53
No. Wife's expert appraised the CCC stock at $2,346,700.54 This appraisal was based on a 1999 estate tax valuation using a 42.5% discount for lack of marketability and minority interest.55 The trial court found this valuation of marginal value due to its lack of proximity to trial and the inappropriateness of the discount for determining market value since Wife would sell her interest to a family member.56 Husband's expert appraised it at $8,000,000 using a net operating income analysis appropriate for a commercial real estate company with a conservative 10% capitalization rate.57
He also testified as to the inappropriateness of the discount Wife's accountant used.58 The trial court accepted this as the only contemporaneous valuation presented at trial.59
The trial court did not abuse its discretion by accepting Husband's $8,000,000 valuation of Wife's CCC stock.60
Whether the accounts in Wife's name or revocable trust were transmuted into marital property by commingling?61
The classification of property as marital or non-marital is reviewed de novo.62 Separate property may be transmuted into marital property by commingling where the length of marriage, number of accounts, and level of activity render tracing futile.63 The trial court must reconsider tracing when separate funds are involved.64
No. Wife deposited the Sieben distributions into three accounts in her name.65 Her expert testified extensively tracing those funds from their deposit to the time of trial.66 The trial court summarily dismissed the tracing as futile because it had classified the funds as marital.67 This requires remand for redetermination in light of the funds being separate property from the outset.68
The remaining accounts were hopelessly commingled due to the length of the marriage, number of accounts, and level of activity.69 Wife's expert presented no convincing evidence to dispute this for dividends, income, and earnings from separate property that were not traced.70
The accounts in Wife's name or revocable trust were transmuted into marital property by commingling except for the three accounts holding the Sieben distributions, which require redetermination on remand.71
Whether the trial court erred by refusing to order Husband to pay Wife's attorney's fees?72
In awarding attorney's fees the court considers any relevant factors including the spouses' financial resources and any unreasonable conduct of a spouse during the dissolution proceeding that may have increased the other spouse's fees.73 The trial court is an expert on the issue and may independently determine appropriate fees.74 Reversal occurs only upon a showing that the decision was against the logic of the circumstances and so arbitrary and unreasonable as to shock one's sense of justice.75
No. Both parties asked the trial court to order the other to pay fees.76 The court found the case extraordinarily contentious at every turn without labeling one party the greater source of motions and arguments.77 It recognized the substantial but not unreasonable fees given the magnitude of assets and issues.78 It concluded both had adequate resources to pay their own.79 Neither party demonstrated an abuse of discretion by showing the allocation was against the logic of the circumstances.80
The trial court did not err by refusing to order Husband to pay Wife's attorney's fees.81
Whether the values assigned to Wife's accounts were reasonably proximate to the date of the amended judgment?82
The trial court may amend the judgment to update values of property and accounts to be reasonably proximate to the date of the dissolution judgment.83 No error occurs where the court uses updated balances submitted by the parties as of a date close to the amended judgment.84 The court must correctly account for changes without double-counting or improper credits.85
No. The trial court entered an Amended Judgment on September 20, 2010 granting the request to update values.86 The parties submitted updated balances of securities and investment accounts as of approximately April 30, 2010 which were used in the 60% to Wife and 40% to Husband division.87 The court properly handled the Bank of America Certificate of Deposit and Husband's 10428 Limited Partnership account by removing a double-counted Sauer Dazey account rather than crediting a cash-out.88 There was no error in failing to subtract the December 29, 2009 value from Wife's statement.89
The values assigned to Wife's accounts were reasonably proximate to the date of the amended judgment.90
Whether the trial court erred by denying Husband's motion to include an award of interest on his marital property?91
Section 408.040 provides that in all nontort actions interest shall be allowed on all money due upon any judgment or order of any court from the date judgment is entered until satisfaction.92 A dissolution judgment bears interest under the statute without needing explicit specification unless the award is contingent on a future event such as sale of property as in Randall, Boxx & Masri, P.C. v. Norman.93
No. The judgment clearly adjudged the division and allocation of separate and marital property from the marital estate.94 There was no contingency on a future event like sale of equity.95 Husband moved to include an express award of interest.96 The trial court declined to do so as unnecessary because Section 408.040 provides for it.97 Randall is irrelevant because it involved an award not entitled until sale of the marital home with no interest language before that event.98
The trial court did not err by denying Husband's motion to include an award of interest on his marital property.99
Whether the trial court abused its discretion by denying Husband's request for attorney's fees?100
In awarding attorney's fees the court considers any relevant factors including the spouses' financial resources and any unreasonable conduct of a spouse during the dissolution proceeding that may have increased the other spouse's fees. The trial court is an expert on the issue and may independently determine appropriate fees. Reversal occurs only upon a showing that the decision was against the logic of the circumstances and so arbitrary and unreasonable as to shock one's sense of justice.
No. Wife had twice Husband's income and more than 250 times more separate property.101 The court found the case extraordinarily contentious at every turn without labeling one party the greater source of motions and arguments. It recognized the substantial but not unreasonable fees given the magnitude of assets and issues. It concluded both had adequate resources to pay their own. Husband failed to demonstrate an abuse of discretion by showing the allocation was against the logic of the circumstances.102
The trial court did not abuse its discretion by denying Husband's request for attorney's fees.103