This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2002).
IN COURT OF APPEALS
William Earl Richard, petitioner,
Rita Bernadette Richard,
Ramsey County District Court
File No. F0-03-93
Robert W. Due, Susan A. Daudelin; Katz, Manka, Teplinsky, Due & Sobol, Ltd., 225 South Sixth Street, Suite 4150, Minneapolis, MN 55402 (for appellant)
Daniel W. Fram, Peterson, Fram & Bergman, 50 East Fifth Street, Suite 300, St. Paul, MN 55101 (for respondent)
Considered and decided by Lansing, Presiding Judge; Kalitowski, Judge; and Wright, Judge.
In this marital-dissolution appeal, appellant-wife argues that (1) the parties’ antenuptial agreement is ambiguous; (2) the district court misinterpreted the antenuptial agreement to include a waiver of appellant’s equitable share of the property and to foreclose invasion of respondent-husband’s nonmarital assets to avoid hardship; (3) the evidence is insufficient to support the finding that respondent met his burden to trace presumptively marital property to nonmarital sources; and (4) the agreement, as enforced, is substantively unfair. We affirm.
Appellant Rita Richard and respondent William Richard executed an antenuptial agreement on November 12, 1992, the day before they married. Both parties were represented by counsel and fully disclosed their finances. Respondent brought into the marriage assets totaling $329,264.86, and appellant brought into the marriage $49,193.42 in assets, plus personal property. The agreement directed the manner of property distribution in the event of dissolution.
Throughout the marriage, appellant and respondent segregated most of their assets. The parties kept separate savings and retirement accounts titled in only one party’s name. They had one joint checking account, which they used to purchase groceries and pay utilities. Both parties received comparable fixed retirement income.
In 1998, respondent began acquiring additional income. He inherited $491,241.77, primarily in treasury notes and bills, which he received in several installments. Respondent also received a workers’ compensation settlement of about $27,000. Respondent deposited this income into his preexisting personal accounts.
The parties also owned two parcels of real estate relevant to this appeal—a condominium, sold during the marriage, and a townhouse. Shortly after the parties married, they purchased a condominium in joint tenancy. The property was sold in October 1998 for approximately $72,200. Respondent paid appellant a total of $39,500, in several installments, compensating appellant for her share of the proceeds from the sale. Appellant agreed in writing that she was fully compensated.
Respondent then solely purchased a townhouse in White Bear Lake for $233,900. Appellant did not contribute to the purchase price. Respondent paid the property taxes and maintenance costs on the townhouse. Other costs, including association fees, were paid out of the joint checking account.
In December 2002, respondent commenced a marriage dissolution action. The matter proceeded to trial. The district court found that the antenuptial agreement was clear and unambiguous, met the requirements of procedural and substantive fairness, and was valid and enforceable. After hearing testimony from both parties and receiving documentary evidence, the district court determined that respondent met his burden in tracing any presumptively marital property to nonmarital sources. The district court awarded respondent assets valued at $858,366, which represented all property titled in his name, including the townhouse, some personal property, and his retirement funds. The district court awarded appellant assets valued at $60,450, which represented the property titled in her name, certain personal property, and retirement funds. Appellant moved for amended findings or, in the alternative, for a new trial. The district court denied the motion. This appeal followed.
Appellant argues that the district court erred in finding the antenuptial agreement unambiguous. Appellant contends that, as used in the agreement, the terms “his or her property” and “the property of both parties” are susceptible of more than one interpretation. An antenuptial agreement is a contract. See Minn. Stat. § 519.11 (2002) (setting forth requirements parties must meet to create valid and enforceable antenuptial agreement). Whether a contract is ambiguous is a question of law, which we review de novo. Bank Midwest Minn., Iowa, N.A. v. Lipetzky, 674 N.W.2d 176, 179 (Minn. 2004).
A document is ambiguous if it reasonably can be interpreted to have more than one meaning. Landwehr v. Landwehr, 380 N.W.2d 136, 138 (Minn. App. 1985). Although disagreement over interpretation may be tantamount to finding ambiguity, Erickson v. Erickson, 449 N.W.2d 173, 178 (Minn. 1989), ambiguity cannot be created by reading the agreement too narrowly, Metro Office Parks Co. v. Control Data Corp., 295 Minn. 348, 352, 205 N.W.2d 121, 124 (1973). We read contract terms in the context of the entire contract. Kauffman Stewart, Inc. v. Weinbrenner Shoe Co., Inc., 589 N.W.2d 499, 501-02 (Minn. App. 1999). Moreover, a contract must be interpreted to give meaning to all its provisions. Brookfield Trade Ctr., Inc. v. County of Ramsey, 584 N.W.2d 390, 394 (Minn. 1998).
The phrases appellant contends are ambiguous are set forth in section 2.2.2 of the agreement, which provides:
Each party shall retain his or her property free of any right or claim of the other, except that any assets acquired during the marriage, from the property of both parties, shall be divided between the parties in proportion to the actual monetary consideration provided by each; and any such assets that cannot be so divided shall be sold, and the net proceeds attributable to each party’s contribution shall be distributed to such party.
Section 4.8, which informs the entire agreement, defines “property of a party” as follows:
References to the property of a party mean any interest in property, real or personal, which is acquired by the party.
4.8.1 Before the marriage or after a decree of legal separation;
4.8.2 By gift, devise or inheritance from a third party to one but not both of the parties;
4.8.3 As earnings or income whether before, during or after the marriage; or
4.8.4 In exchange for or as an increase in the value of any such property.
Although section 4.8 does not specifically define “his or her property” or “property of both parties,” section 2.2.2 makes evident that the terms “his” and “her” refer to “each party,” meaning the parties to the marriage. This is consistent with the “property of a party” definition in section 4.8. When reading sections 2.2.2 and 4.8 to give meaning to both provisions, it is clear that the phrases “his or her property” and “property of both parties” are references to “property of a party” as defined in section 4.8. According to section 4.8, “his or her property” is property acquired by the party (1) before marriage; (2) by gift or inheritance; (3) as earnings or income before, during, and after the marriage; or (4) in exchange for or as an increase in value of such property. “Property of both parties” is property acquired jointly using some of “his property” and some of “her property.” When sections 2.2.2 and 4.8 are read together, the agreement’s references to “property” are susceptible to only one reasonable interpretation.
Appellant specifically argues that “his or her property” could be interpreted as “assets that each party owned as of the date of the marriage” rather than as assets owned by either party on the date of dissolution. But interpreting “his or her property” as assets owned at the date of marriage gives meaning only to 4.8.1 (property owned before the marriage), rendering meaningless sections 4.8.2 (gifts or inheritance to only one party), 4.8.3 (earnings of only one party), and 4.8.4 (an increase in value of the property of one party or assets exchanged for that property).
Appellant also asserts that the property references are ambiguous because the agreement does not define them in relation to the statutory terms “nonmarital” and “marital.” Although the agreement does not use the specific statutory terms, the structure of section 4.8 follows Minn. Stat. § 518.54, subd. 5 (2002), which defines nonmarital property. Moreover, the parties need not employ statutory terms when dividing property pursuant to an antenuptial agreement. See McKee-Johnson v. Johnson, 444 N.W.2d 259, 265 (Minn. 1989) (noting that purpose of an antenuptial agreement is to abrogate statutory distinction and create new definitions).
Reading sections 4.8 and 2.2.2 together, it is clear that section 4.8 defines the agreement’s equivalent to nonmarital property and that jointly owned property exists only when both parties contributed to it monetarily. Thus, we conclude that the district court did not err in determining that the antenuptial agreement was unambiguous.
Appellant also challenges the district court’s construction of the antenuptial agreement. Appellant argues that the district court misinterpreted the agreement to (1) include a waiver of her statutory right to an equitable share of the property, and (2) foreclose invasion of respondent’s nonmarital property to avoid hardship. The construction and effect of an unambiguous contract are questions of law, which we review de novo. Turner v. Alpha Phi Sorority House, 276 N.W.2d 63, 66 (Minn. 1979). We determine the meaning of an unambiguous antenuptial agreement by its plainly expressed intent. In re Estate of Aspenson, 470 N.W.2d 692, 696 (Minn. App. 1991).
Appellant first contends that the district court erroneously interpreted the antenuptial agreement to include an express waiver of her statutory right to an equitable share of the property. Because appellant failed to raise this argument at the district court, we need not address this issue. See Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988) (stating that an appellate court generally will not consider matters not argued or considered before the district court).
This argument also is unavailing on the merits. The antenuptial agreement statute clearly states: “An antenuptial contract or settlement made in conformity with [Minn. Stat. § 519.11] may determine what rights each party has in the nonmarital property, . . . upon dissolution, and may bar each other of all rights in the respective estates not so secured to them by the agreement.” Minn. Stat. § 519.11, subd. 1 (2002) (emphasis added). This language has been interpreted to foreclose a party’s statutory right to an elective share of the property so long as the agreement was procedurally fair. See Affiliated Banc Group, Ltd. v. Zehringer, 527 N.W.2d 585, 587-88 (Minn. App. 1995) (finding that “all rights” language in Minn. Stat. § 519.11 establishes that one may waive right to an elective share in the Uniform Probate Code by agreement).
Appellant does not allege that the agreement was unfairly made; she simply argues that the agreement does not express the parties’ intent to abrogate the statutory scheme for dividing property. Thus, we look to the language of the agreement to determine the merit of her argument. See id. at 587 (“The only question is whether the antenuptial agreement contains a waiver of appellant’s right to claim an elective share.”).
Here, the antenuptial agreement clearly includes a waiver of appellant’s right to claim an elective share. The agreement states:
Each party has had an opportunity to consult with legal counsel of his or her choice and has been fully advised of the rights he or she would have under Minnesota law with respect to the property of the other by reason of their marriage if this agreement were not made, including, but not limited to, the following: . . .
1.2.2 The right to seek a court order . . . making a just and equitable division of the property of the parties upon the dissolution of their marriage.
Based on the plain language of the agreement, appellant, with the advice of counsel, executed the agreement knowingly waiving any statutory right to seek an “equitable division of the property of the parties.” The purpose of an antenuptial agreement is to negotiate a property division scheme different from the statutory one. See Hill v. Hill, 356 N.W.2d 49, 55 (Minn. App. 1984), review denied (Minn. Feb. 19, 1985). As long as a particular antenuptial agreement is fairly and equitably made, the agreement will exclude the operation of law with respect to the property rights of each party. Gartner v. Gartner, 246 Minn. 319, 323, 74 N.W.2d 809, 812-13 (1956); see also Desnoyer v. Jordan, 27 Minn. 295, 297, 7 N.W. 140, 141 (1880) (holding that antenuptial agreement permits “the parties in contemplation of marriage to fix those rights by agreement, equitably and fairly made between them, and to exclude the operation of law in respect to fixing such rights”). The district court did not err in interpreting the agreement to include a waiver of the statutory right to obtain an elective share of the property.
Appellant asserts that the district court’s failure to distinguish between property deemed nonmarital pursuant to the antenuptial agreement and property deemed nonmarital on other grounds deprived appellant of her right to seek invasion of respondent’s nonmarital property. A party may seek invasion of the other party’s nonmarital assets if the assets were deemed nonmarital on grounds other than pursuant to an antenuptial agreement. Minn. Stat. § 518.58, subd. 2 (2002).
Contrary to appellant’s assertions, the district court made findings as to how it classified respondent’s nonmarital property. The district court found all of respondent’s nonmarital assets were nonmarital pursuant to section 4.8 of the antenuptial agreement. Because the parties executed this antenuptial agreement to obviate statutory distribution, the district court did not err in interpreting sections 2.2.2 and 4.8 according to their plain language without reference to the statutory definition of nonmarital property.
Appellant challenges the district court’s finding that respondent met his burden in tracing property acquired during the marriage to nonmarital sources. Whether respondent met his burden is a question of fact, which we review for clear error. Doering v. Doering, 385 N.W.2d 387, 391 (Minn. App. 1986). When the evidence consists entirely of conflicting oral testimony, the district court’s findings rarely will be disturbed. Wehner v. Wehner, 374 N.W.2d 569, 572 (Minn. App. 1985).
Property acquired during the marriage is presumed to be marital. Minn. Stat. § 518.54, subd. 5 (2002). A party overcomes this presumption by showing that the property is nonmarital. Id. Nonmarital property includes “property real or personal, acquired by either spouse before, during, or after the existence of their marriage, which . . . is excluded by a valid antenuptial contract.” Id. According to the agreement in this case, excluded or nonmarital property includes pre-marital property, inheritances of one party, earnings and income acquired during the marriage, increases in the value of property owned by a party, and an interest in assets received in exchange for such property.
In order to maintain its nonmarital character, nonmarital property must be kept separate from marital property or, if commingled, be readily traceable. Kottke v. Kottke, 353 N.W.2d 633, 636 (Minn. App. 1984), review denied (Minn. Dec. 20, 1984). A party seeking to trace an asset to a nonmarital source must establish by a preponderance of the evidence that the asset was “acquired in exchange for” nonmarital property. Doering, 385 N.W.2d at 390; see also Nash v. Nash, 388 N.W.2d 777, 781 (Minn. App. 1986) (party met burden by introducing receipts for home improvements two weeks after receiving inheritance), review denied (Minn. Aug. 20, 1986). Oral testimony is sufficient to establish tracing. Danielson v. Danielson, 392 N.W.2d 570, 572 (Minn. App. 1986). A party fails to meet its burden to show tracing, however, if the nonmarital property was extensively commingled and there was little evidence establishing how the nonmarital funds were spent. See, e.g., Crosby v. Crosby, 587 N.W.2d 292, 296-97 (Minn. App. 1998) (finding that appellant did not meet burden when funds were extensively commingled and appellant only showed her funds were “primary source” to acquire assets), review denied (Minn. Feb. 18, 1999); Wopata v. Wopata, 498 N.W.2d 478, 484 (Minn. App. 1993) (because record showed only that funds were commingled without any evidence of tracing, the money was marital).
Respondent acquired the following property during the marriage: (1) $491,241.77 in inheritance income; (2) a $29,000 workers’ compensation award; (3) a condominium, purchased and sold during the marriage; (4) a townhouse; and (5) interest and dividend income from his investments. The district court awarded all of this property, except the already divided condominium proceeds, to respondent. Appellant contends that the district court erred in awarding this property to respondent because respondent failed to trace these assets to nonmarital sources.
The record establishes that the $491,241.77 inheritance respondent received was bequeathed to him solely. The inheritance, thus, was respondent’s property pursuant to section 4.8 of the antenuptial agreement. The $29,000 workers’ compensation award constitutes earnings of a party, and pursuant to section 4.8, also was respondent’s property. The record demonstrates that respondent deposited the proceeds from the inheritance and the workers’ compensation award into his personal accounts, never commingled the proceeds with appellant’s funds, and never placed the proceeds into the parties’ joint account. Because this nonmarital property was never commingled with marital property, it retained its nonmarital character and was properly awarded to respondent.
The parties acquired a condominium as joint tenants shortly after they married. Respondent paid the entire down payment, but both parties paid the mortgage and condominium fees. Respondent eventually paid off the mortgage with inheritance funds. After holding the property for about five years, the parties sold the condominium for approximately $72,200. Respondent testified that he paid appellant $39,500 for her contribution to the property. Respondent also introduced documentary evidence that he paid the $39,500 to appellant in several installments and that appellant acknowledged in writing that she had been fully compensated. Although she could not remember signing the document, appellant recognized her signature on the acknowledgement. She also recalled receiving large sums of money from respondent.
Despite conflicting testimony, the record supports the conclusion that nonmarital funds were commingled in the purchase of the condominium and that both parties properly shared in the proceeds from the sale. Indeed, the parties distributed the proceeds pursuant to a separate contract. But the parties divided the condominium proceeds as they would have under section 2.2.2 of the antenuptial agreement—sharing in an asset’s value when both parties contributed to it monetarily.
In August 1998, shortly after receiving nearly half a million dollars in inheritance, respondent purchased a townhouse. The total purchase price was approximately $236,000, with $212,000 due at closing after deducting the deposit and earnest money. The weight of the evidence supports the district court’s finding that the inheritance was traceable into the townhouse. Respondent testified that he paid the $23,000 deposit with inheritance money from his personal accounts; probate paralegal Linda Fahlin testified that the treasury notes and bills, which respondent received in the will, were liquidated to purchase real estate; respondent then testified that he purchased the townhouse with the liquidated funds by withdrawing the money from a bank account also bequeathed to him in the will; and respondent introduced a bank statement reflecting a $211,000 withdrawal from the bank account one day before closing. Appellant admitted that she did not contribute to the purchase price or to property taxes for the townhouse. The record supports the district court’s finding that a preponderance of the evidence demonstrates that the townhouse was acquired in exchange for respondent’s nonmarital inheritance assets. See Kottke, 353 N.W.2d at 636 (“the trial court lawfully views as non-marital property a portion of the homestead ‘readily traceable’ to an earlier inheritance”). Thus, based on the testimonial and documentary evidence adduced at trial, we conclude it was not clearly erroneous for the district court to find that respondent satisfied his burden in tracing the townhouse to nonmarital assets.
The district court also awarded both parties the contents of accounts in their respective names. Respondent received the funds in two bonus annuities and a money market account. Respondent testified that these assets were funds rolled over from his premarital Dain Bosworth accounts, inheritance funds, and proceeds from his workers’ compensation award—all personal assets. Any interest income derived from the accounts belonged to him by operation of section 4.8 of the antenuptial agreement. Because the record establishes that the parties retained separate accounts during the marriage and did not commingle the accounts with marital property, tracing was not necessary to determine whether the annuities and money market, checking and savings accounts were nonmarital at the time of dissolution. Because the accounts bearing respondent’s name retained their nonmarital character, the district court properly awarded respondent the funds in these accounts.
At trial, appellant introduced expert testimony in an attempt to establish that respondent traced only $255,946 of his assets to nonmarital sources, leaving a marital estate of $696,309 to be divided between the parties. The expert’s testimony was impeached at trial, however, because the expert’s analysis assumed that the antenuptial agreement was invalid. We give great deference to the district court’s factual findings when the record presents conflicting testimony. Wehner, 374 N.W.2d at 572. This is not the rare case in which we will question the district court’s evidentiary weight and credibility determinations and disturb the findings on which these determinations are based. See id.
In light of the evidence adduced at trial, including conflicting oral testimony, we conclude that the district court did not err in finding that, pursuant to the antenuptial agreement, respondent met his burden of tracing assets acquired during the marriage to nonmarital sources.
Appellant also argues that the antenuptial agreement is invalid because, as enforced, it lacks substantive fairness. We review de novo the district court’s interpretation of questions of law in a fairness analysis, while reviewing its factual findings for clear error. In re Estate of Aspenson, 470 N.W.2d at 694.
The substantive fairness of an antenuptial agreement may be attacked at the time of execution or enforcement. McKee-Johnson, 444 N.W.2d at 266. When reviewing an antenuptial agreement for substantive fairness at the time of its enforcement, courts are permitted to relieve parties from contract provisions that have become unconscionably unfair due to circumstances originally not foreseen by the contracting parties. Id. at 267. This analysis is performed on a case-by-case basis, weighing substantive fairness against the freedom to contract. Id. at 267-68. Factors to consider include the parties’ objectives in executing the agreement, their respective economic circumstances, the property they each brought to the marriage, their earning capacities, their ages and health, and the contributions they made to the marriage. Button v. Button, 388 N.W.2d 546, 551 (Wis. 1986) cited in McKee-Johnson, 444 N.W.2d at 267-68. A change in circumstances also is necessary to find substantive unfairness at the time of enforcement; if there has been no drastic change in the parties’ relationship or financial situation, the agreement is substantively fair. See In re Estate of Aspenson, 470 N.W.2d at 696.
Appellant maintains that the antenuptial agreement is substantively unfair as enforced because she sold her home in reliance on the marriage and, upon dissolution, no longer owns real property. This argument is unavailing. The record establishes that appellant sold her home several months before the marriage to move in with respondent. She retained the proceeds from the sale. Appellant executed the antenuptial agreement after she sold her home. It was thus foreseeable at execution that she could be without a house should the marriage dissolve, making a finding of substantive unfairness unwarranted on this ground. See McKee-Johnson, 444 N.W.2d at 267.
Appellant also contends that she did not expect to pay $800 per month toward utilities and association fees, as she often did, when she executed the antenuptial agreement because respondent orally promised he would pay the monthly living expenses. Appellant argues that respondent’s breach of his oral promise was an unforeseen circumstance warranting a finding that the agreement is substantially unfair as enforced.
Rosalind Keppler, respondent’s attorney during the drafting of the antenuptial agreement, testified to a verbal understanding that respondent would cover living expenses. Keppler and respondent proposed this solution at the time of execution to alleviate appellant’s financial concerns. Although each party was represented by counsel, the promise was never put into writing. This circumstance does not render appellant the victim of unforeseen circumstances. Appellant was aware at the agreement’s execution—the time appellant could have contracted to provide economic protection—that paying living expenses could cause her financial hardship. Further, because the promise was never reduced to writing, it was not unforeseeable that respondent would fail to live up to his promise. Without further evidence of an unforeseen change in circumstances, we cannot conclude that the district court abused its discretion in finding the agreement substantively fair. See McKee-Johnson, 444 N.W.2d at 267.
Appellant also argues that the parties’ property awards under the agreement were so disparate that the agreement as enforced is substantively unfair. The district court awarded respondent $858,366 and awarded appellant $60,450. Although these figures are unequal, the amounts are appropriate in light of the parties’ individual financial circumstances and the language of the agreement. The record establishes that the parties brought into the marriage assets of disparate values. At the time of the marriage, respondent’s assets totaled $329,264.86, and appellant’s assets were valued at $49,193.42 plus personal property. These premarital assets were returned to the parties at dissolution. The record demonstrates that the vast majority of respondent’s increase in assets was attributable to inheritance income, a type of nonmarital property specifically foreseen at the agreement’s execution. Respondent inherited nearly $500,000, accounting for the difference in the value of his property before the marriage and upon dissolution. On this record, we conclude that the district court’s distribution is not substantively unfair.
Appellant contends that there is a great disparity between what she would have received under Minnesota law and what appellant received under the agreement, resulting in substantive unfairness. A nearly identical argument was considered and rejected in Pollock-Halvarson v. McGuire. 576 N.W.2d 451, 455 (Minn. App. 1998). The Pollock court concluded that “no case has held that mere disparity between the property division under an antenuptial agreement and that available under probate laws is sufficient to render the agreement substantively unfair.” Id. The Minnesota Supreme Court has reasoned that, when determining whether an antenuptial agreement is substantively fair, the “agreement need not approximate a division suggested by property division statutes . . . in the marital law in order to meet the requirement of substantive fairness.” McKee-Johnson, 444 N.W.2d at 268 n.8.
Based on the record before us, giving deference to the district court’s findings, we hold that the district court did not err in finding that there were no unexpected occurrences between execution and enforcement of the agreement that warrant a determination that enforcement of the antenuptial agreement results in substantive unfairness.
 Appellant specifically asserts in her brief that she is not contesting the antenuptial agreement’s procedural fairness.