Opinion
Supreme Court No. S-12778.
November 12, 2008.
Appeal from the Superior Court of the State of Alaska, Third Judicial District, Anchorage, Jack W. Smith, Judge, Superior Court No. 3AN-06-4378 CI.
Andrew Josephson, Law Offices of Dan Allan, Anchorage, for Appellant. Bruce A. Bookman, Bookman Helm, LLP, Anchorage, for Appellee.
Before: Fabe, Chief Justice, Matthews, Eastaugh, Carpeneti, and Winfree, Justices.
NOTICE
Memorandum decisions of this court do not create legal precedent. See Alaska Appellate Rule 214(d). Accordingly, this memorandum decision may not be cited for any proposition of law or as an example of the proper resolution of any issue.
MEMORANDUM OPINION AND JUDGMENT
Entered pursuant to Appellate Rule 214.
I. INTRODUCTION
Allen Ah You appeals from an order enforcing a domestic agreement he and his then-wife, Joan Ah You, signed in attempting a reconciliation. The domestic agreement allocates two of the couple's three houses to Joan. Allen argues, among other things, that the agreement is unenforceable because he signed it under duress and because Joan did not attempt to reconcile in good faith. Because our review of the record does not leave us with a definite and firm conviction that the superior court abused its discretion by granting Joan's motion to enforce the agreement, we affirm.
II. FACTS AND PROCEEDINGS
Allen Ah You and Joan Ah You married in March 2001 and separated in December 2005. In January 2006 Allen filed a complaint for divorce. Allen and Joan then attempted to reconcile. The parties saw a marriage counselor and hired a mediator to help resolve financial issues.
The use of the counselor and mediator seemed to help the relationship temporarily. Allen and Joan resumed sexual relations and vacationed together in Oregon. Joan also invited Allen to move back into the family home, although Allen ultimately declined Joan's invitation because he "thought it would be premature." In March 2006 Allen and Joan asked their respective attorneys to suspend work on the divorce. It appears that Allen also chose to end his attorney-client relationship by asking his attorney to return his retainer deposit.
In April 2006 Joan told her attorney to draft an agreement that would help the couple resolve their financial issues. Joan argues that she "wanted a binding reassurance that Allen was not just interested in her for her money." Joan's attorney then drafted a document entitled "Domestic Agreement" that divided Allen and Joan's ownership of three houses:
The "domestic agreement" prepared by Joan's attorney is more accurately characterized as a reconciliation agreement. See In re Marriage of Ellinwood, 651 P.2d 190, 192 (Or.App. 1982) (discussing reconciliation agreement drafted by wife's attorney that states "wife is willing to dismiss her suit for dissolution and to reconcile the marriage and in good faith attempt to continue the marriage relationship" in exchange for property).
In contemplation and consideration of the dismissal of the divorce action and the good faith efforts of both to reconcile, as well as the mutual promises contained in this Agreement, the parties agree that it is to their mutual advantage to fix and determine the rights and claims of each of them in their existing separate property, their future earnings and their respective interests as to property and earnings acquired during their relationship.
. . . .
3. Recognition of Separate Property. The parties each recognize and agree that the following real properties shall henceforth be the separate property (and debts) of each as shown (values are only estimates):
Sydney Park House, value $630,000, Loan $321,500 goes to Joan.
Kenai Property, value $300,000, no loan, goes to Joan. Kona, Hawaii Property, value $355,000, loan $104,000 goes to Allen.
The domestic agreement also stated that Allen was not represented by counsel and that "Allen has decided, freely and voluntarily, that he does not need to consult with an attorney concerning this Agreement." Allen and Joan signed the domestic agreement in April 2006. Allen later testified that he signed the domestic agreement without showing it to a lawyer because he thought he "would just go ahead and sign it and just get that over with and just move on to getting our marriage back together."
Allen's adult son from a previous marriage had acted as Joan's financial advisor during Allen and Joan's marriage. Allen testified that Joan had threatened to report his son to the Securities and Exchange Commission (SEC). Allen discussed Joan's threats with his attorney, who sent Joan a letter in January 2006 stating "Allen has told me twice that you have threatened his son (through him) with an SEC investigation if Allen does not acquiesce to your terms in the divorce litigation." There was some dispute about when Joan made her alleged threats relative to when Allen signed the domestic agreement on April 23, 2006.
The reconciliation attempt ended a few weeks after the domestic agreement was signed. The length of the reconciliation period is disputed. Allen testified it began in January 2006 and lasted "through April, and into mid-May." Joan swore in an affidavit that the reconciliation period ended near the end of June 2006.
In May 2006 the parties' attorneys prepared but did not file a joint stipulation for dismissal of Allen's divorce complaint.
In September 2006, after the reconciliation attempt ended, Allen and Joan signed a second document, titled "Petition for Dissolution." This document is partially handwritten and appears to be a draft petition for dissolution. Among other things, it discusses vehicle ownership, real property ownership, and financial information. Allen and Joan signed or initialed the petition for dissolution in numerous places. Allen did not sign the pages of the petition for dissolution that allocated two of the three houses to Joan. Allen testified that he did not consult an attorney before he signed the petition for dissolution. It is unclear whether Allen was represented by counsel when he signed the petition for dissolution.
The petition for dissolution is also titled "working copy civil rule 90.1."
In October 2006 Allen revived the divorce action by requesting a status hearing.
In March 2007 Joan filed a motion to enforce the domestic agreement and the petition for dissolution, and attached the latter document as an exhibit. This was the first time either party had submitted this document to the court. Allen, through counsel, opposed the motion. The parties supported their arguments with their affidavits and deposition testimony. The affidavits and deposition testimony disagreed about various aspects of the relationship, the formation of the agreement and the petition, the reconciliation attempt, and the claims of duress and bad faith. Allen asked that Joan's enforcement motion be denied on various grounds, but did not argue that an evidentiary hearing was needed to resolve any of the issues pertinent to the motion, including the duress and good faith issues. The superior court granted Joan's enforcement motion by order of April 27, 2007.
In June 2007 the superior court held a settlement conference. Allen, Joan, and their respective attorneys participated. Because the superior court had granted Joan's motion to enforce the two agreements, the settlement conference focused on dividing the personal property. After the settlement conference the court granted a decree of divorce and incorporated the domestic agreement and petition for dissolution into the decree.
Allen appeals.
III. DISCUSSION
A. Standard of Review
We review questions regarding the superior court's response to a motion to enforce a settlement under the abuse of discretion standard. We will hold that an abuse of discretion has occurred only when, after a review of the entire record, we are left with a definite and firm conviction that the superior court has erred in its ruling. We apply our independent judgment to questions of law, including questions of contract interpretation. Allen's brief, in discussing the standard of review, refers us to Brooks Range Exploration Co. v. Gordon, and quotes this passage:
Ford v. Ford, 68 P.3d 1258, 1263 (Alaska 2003) (citing Dickerson v. Williams, 956 P.2d 458, 462 (Alaska 1998)); see also Brooks Range Exploration Co. v. Gordon, 46 P.3d 942, 944 (Alaska 2002) ("We review a ruling on a motion to enforce a settlement agreement for abuse of discretion.").
Liimatta v. Vest, 45 P.3d 310, 313 (Alaska 2002).
Williams v. Crawford, 982 P.2d 250, 253 (Alaska 1999).
Brooks Range Exploration Co. v. Gordon, 46 P.3d 942, 944-45 (Alaska 2002) (footnotes omitted).
We review a ruling on a motion to enforce a settlement agreement for abuse of discretion. The superior court may not summarily enforce a settlement agreement without conducting an evidentiary hearing, unless there are no genuine issues of material fact regarding the existence or terms of the agreement. We review de novo the question whether there are genuine issues of fact material to a motion to enforce a settlement agreement.
This quotation would support a contention that it was error to decide the enforcement motion without conducting an evidentiary hearing because there were genuine issues of material fact. But Allen never makes that argument in his opening or reply briefs on appeal. Nor did he raise that contention in the superior court before the court granted the motion to enforce or before it later entered the decree of divorce incorporating the order enforcing the parties' agreement.
B. Allen's Appellate Arguments
Allen raises numerous arguments to support his contention that the superior court abused its discretion when it granted Joan's motion to enforce the domestic agreement. His arguments in essence raise the contract defenses of failure to act in good faith, duress, absence of arm's-length bargaining, and lack of consideration. Allen's arguments are nearly identical to those he raised in the superior court. The superior court rejected, at least implicitly, each of Allen's arguments when it granted Joan's motion to enforce the domestic agreement. The order rejecting Allen's arguments states:
Upon the motion of Defendant, Joan Ah You, for an order enforcing the April 23, 2006 Domestic Agreement and the Petition for Dissolution signed by the parties in September 2006, and after considering the evidentiary materials and opposition submitted, and finding Defendant's arguments persuasive
IT IS HEREBY ORDERED,
That Defendant's motion is granted, and the parties' Domestic Agreement of April 23, 2006, and the parties' Petition for Dissolution of September 2006, are deemed binding upon the parties.
This order does not explicitly rule on each of Allen's arguments, but any one of Allen's arguments, if successful, would have called for a different result.
Allen does not contend that the superior court failed to make necessary findings or that the court's findings are insufficient for review. Nor does Allen argue that the superior court erroneously failed to hold an evidentiary hearing or trial on the enforcement motion or that genuine issues of material fact had to be resolved by trial before the court could decide whether to grant Joan's enforcement motion. Allen only argues that the superior court reached the wrong conclusion when it granted Joan's enforcement motion. He asks that we hold that the agreements were not enforceable, that we reverse the enforcement order, and that we remand for a divorce trial on the property division issue.
Allen argues that the petition for dissolution the parties drafted in September 2006 is unenforceable because "AS 25.24.220(a) requires that the petition actually be filed . . . and that a hearing be scheduled." Because we hold that the April 2006 domestic agreement is enforceable, it is unnecessary for us to determine whether the September 2006 petition for dissolution is an enforceable agreement. See Atcherian v. State, Dep't of Revenue, Child Support Enforcement Div., 14 P.3d 970, 974 n. 8 (Alaska 2000) ("We may affirm a superior court's decision on any legal ground that appears in the record.") (citing, among other cases, N. Lights Motel, Inc. v. Sweaney, 563 P.2d 256, 257 (Alaska 1977)).
Although we have held that prenuptial agreements are presumptively valid, in Gabaig v. Gabaig, applying California law, we held that postnuptial agreements in which one spouse gains advantage over another are inherently suspect, such that the "advantaged spouse has the burden of proving the transaction was fair, just and reasonable." The superior court did not abuse its discretion when it granted Joan's enforcement motion because the evidence was sufficient to satisfy even the more exacting scrutiny of Gabaig. We therefore do not need to decide whether postnuptial agreements are similarly suspect under Alaska law.
Brooks v. Brooks, 733 P.2d 1044, 1050-51 (Alaska 1987) ("[P]renuptial agreements legally procured and ostensibly fair in result are valid and can be enforced.").
Gabaig v. Gabaig, 717 P.2d 835, 841 (Alaska 1986).
Id. at 841.
1. Good faith
Allen contends that the domestic agreement is unenforceable because Joan did not attempt to reconcile in good faith and because the duration of the reconciliation period was too short. The superior court apparently rejected these arguments.
The issue of good faith will often raise genuine factual disputes that must be tried. We review a trial court's finding of good faith for clear error. We will conclude that there was clear error only if after a thorough review of the record, we come to a definite and firm conviction that a mistake has been made. We have held that "[i]n every contract . . . there is an implied covenant of good faith and fair dealing that neither party will do anything which will injure the right of the other party to receive the benefits of the agreement." Here there was no express finding on the issue of Joan's good faith, but the court implicitly rejected Allen's argument on the issue. Because Allen did not and does not argue that there were genuine fact issues concerning Joan's good faith, we review the record for clear error.
See Casey v. Semco Energy, Inc., 92 P.3d 379, 382 (Alaska 2004).
Id.
McConnell v. State, Dep't of Health Soc. Servs., 991 P.2d 178, 184 (Alaska 1999) (quoting Guin v. Ha, 591 P.2d 1281, 1291 (Alaska 1979) (footnote omitted)); see Pitka v. Interior Reg'l Hous. Auth., 54 P.3d 785, 789 (Alaska 2007).
The parties participated in counseling, vacationed together in Oregon, resumed sexual relations, and lived together for at least a short time. Joan invited Allen to move in with her, but Allen declined Joan's invitation because he "thought it would be premature." The record does not leave us with a definite and firm conviction that the superior court erred when it rejected Allen's argument that Joan did not attempt to reconcile in good faith.
Allen also argues that Joan did not exercise good faith because she stopped trying to reconcile a few weeks after he signed the domestic agreement. We have held that "[i]f the parties resume the marital relationship by unequivocal acts, it is said that the parties have reconciled, even if the reconciliation fails after a short time." Whether the marital relationship has been resumed by "unequivocal acts" presents a factual question that we normally review for clear error. The superior court made no factual finding about the adequacy of the reconciliation attempt.
Glasen v. Glasen, 13 P.3d 719, 724 n. 13 (Alaska 2000) (citing HOMER H. CLARK, JR., THE LAW OF DOMESTIC RELATIONS IN THE UNITED STATES § 19.7, at 437-38 (1998) and 24 AM. JUR. 2D Divorce Separation § 34, at 253-54 (1998)).
See id. at 724.
Although the record reflects other factual disputes, it undisputedly establishes that the parties traveled together, resumed sexual relations, and attended counseling together. And Allen's brief admits on appeal that when he signed the domestic agreement he had reconciled with Joan: "[i]ndeed, the parties, ostensibly, meant to dismiss the divorce case because they were then and there (April 23, 2006) reconciled." (Footnote omitted.) We are therefore not left with a definite and firm conviction that the superior court erred when it implicitly rejected Allen's contentions that Joan did not really try to reconcile and that the reconciliation period was too short to be a good faith effort.
2. Duress
Allen argues that he signed the domestic agreement under duress caused by Joan's threats to file an SEC complaint against his son. Allen asserts that "Joan threatened to file an SEC complaint against [his] son" and that Joan "intended to `ruin' and `screw' [his son]." Allen's son swore in an affidavit that Joan did not file a claim against him and implied that Joan did not threaten him directly. Allen asserts that Joan's threats to file an SEC complaint began in the fall of 2005 and continued throughout their reconciliation attempts. By granting Joan's motion to enforce, the superior court implicitly rejected Allen's assertion that he signed the domestic agreement under duress.
We have held that "[s]ettlement agreements that divide property in a divorce case are generally treated under general contract law theories and can be held invalid if there is fraud, duress, or undue influence." We have explained that duress generally requires a threat that arouses such a fear as to preclude a party from exercising free will and judgment or that "[the duress] must be such as would induce assent on the part of a brave person or a person of ordinary firmness."
Allen v. Vaughn, 161 P.3d 1209, 1214 (Alaska 2007) (citing 1 BRETT R. TURNER, EQUITABLE DISTRIBUTION OF PROPERTY § 3:14 (3d ed. 2005)).
Crane v. Crane, 986 P.2d 881, 887 (Alaska 1999) (citing 25 AM. JUR. 2D Duress and Undue Influence § 1 (1996)); see also Mullins v. Oates, 179 P.3d 930, 937 (Alaska 2008) (settlement agreements must meet minimal contract requirements and must be entered into voluntarily and knowingly; they cannot be product of coercion, duress, or misrepresentation).
The evidence leaves us unconvinced that the superior court erred by rejecting Allen's duress defense. Allen sought legal advice concerning the SEC threats, discussed the threats with his son's lawyer and executive manager, and was told by his son's former employer that his son would prevail in a lawsuit. Allen also testified that although Joan's threat to file an SEC complaint against his son was "always hanging out there," the threat was only "a part of the equation" that led to his decision to sign the domestic agreement. It is also significant that Allen, who conceded he was no longer under duress after reconciliation foundered no later than June 2006, nonetheless entered into the September 2006 petition for dissolution that proposed dividing the real property on terms similar to the disputed terms in the domestic agreement. His entry into the petition for dissolution renders his duress claim untenable.
The April 2007 order granting the motion to enforce held that the petition for dissolution was enforceable, and the June 2007 findings and conclusions held that it was "fair." Allen challenges those determinations, in part because he did not sign every page of the petition for dissolution. Our conclusion that the superior court did not err in granting the motion to enforce the domestic agreement makes it unnecessary to decide whether it was error to grant the motion to enforce the petition for dissolution. But assuming that the petition was a draft document that was not enforceable, Allen's conceptual approval of the draft is nonetheless irreconcilable with his contention that he previously entered into the domestic agreement because his free will was overborne by Joan's SEC threats.
3. Arm's-length bargaining
Allen contends that the agreement is unenforceable because Joan did not bargain at "arm's length"; he cites Gabaig in support. Applying California law, we held in that case that "when one spouse gains an advantage over the other, the transaction is presumed to be the result of undue influence and without sufficient consideration, thus the advantaged spouse has the burden of proving the transaction was fair, just and reasonable." Because the husband in Gabaig "actively discouraged Wife from consulting with an attorney and repeatedly threatened divorce," we upheld a superior court decision that declined to enforce a postnuptial agreement. Gabaig is distinguishable. Although Allen had been represented by a lawyer, he chose not to ask the lawyer to review the domestic agreement, even though Joan encouraged Allen to seek legal advice before he signed the domestic agreement. Furthermore, she did not threaten divorce when the parties were considering whether to sign the domestic agreement. Instead, during the reconciliation period she asked her own attorney to "suspend work on the divorce, because it looked like [she and Allen] would reconcile." Allen's arm's-length argument is therefore unpersuasive.
Gabaig, 717 P.2d at 835.
Id. at 841.
Id.
4. Consideration
Allen contends that the domestic agreement is unenforceable because it lacked consideration. The superior court implicitly rejected this argument. We review issues of contract formation de novo.
Williams v. Crawford, 982 P.2d 250, 253 (Alaska 1999).
We have held that "[t]o constitute consideration, a performance or a return promise must be bargained for. . . . A performance or return promise is bargained for if it is sought by the promisor in exchange for his promise and is given by the promisee in exchange for that promise." Here Joan promised to attempt to reconcile, to recognize ownership of separate property, and to not pursue a divorce. These promises were sufficient consideration to support the domestic agreement. 5. Allen's remaining arguments
Reust v. Alaska Petroleum Contractors, Inc., 127 P.3d 807, 811 n. 4 (Alaska 2005) (quoting RESTATEMENT (SECOND) OF CONTRACTS § 71 (1981)).
See In re Marriage of Ellinwood, 651 P.2d 190, 192 (Or. 1982) (holding "[a]n agreement promoting reconciliation is favored by the law and is not illegal" and "[s]ufficient consideration for the promise of one spouse to will an estate exists in the forbearance of the other spouse to pursue a dissolution suit").
Allen argues that the domestic agreement is unenforceable because it has "internally inconsistent or unclear elements" and because it is unconscionable. The superior court held that the domestic agreement was fair and enforceable. We review these determinations de novo.
Williams, 982 P.2d at 253.
We have held that "[t]he terms of a contract are reasonably certain if they provide a basis for determining the existence of a breach and for giving an appropriate remedy." The domestic agreement provides a basis for determining whether a breach occurred. As Joan's attorney correctly argues,
Stenehjem v. Kyn Jin Cho, 631 P.2d 482, 485 (Alaska 1981) (citing RESTATEMENT (SECOND) OF CONTRACTS § 32(2) (Tent. Drafts 1-7, 1973)); see also Dunlap v. Dunlap, 131 P.3d 471, 476 (Alaska 2006) (discussing uncertain contract terms).
[I]f Joan had made no effort to reconcile, had refused sexual relations, had refused to live with Allen, had refused to attend counseling, and had refused to agree to a dismissal, a court could conclude that she had not made a good faith effort to reconcile and, therefore, breached the contract.
The appropriate remedy for a contract breach by Joan would have been to refuse to enforce the domestic agreement. Because the domestic agreement contains "a basis for determining the existence of a breach and for giving an appropriate remedy," Allen's "unclear elements" argument is unpersuasive.
See Stenehjem, 631 P.2d at 485.
Allen next contends that the domestic agreement is unconscionable because it awards Joan more than seventy-three percent of the marital estate. Joan responds that Allen's valuation of the marital estate is erroneous and estimates that Allen received about thirty-one percent of the marital estate. The superior court concluded that the domestic agreement was enforceable and fair. We review a trial court's distribution of assets for abuse of discretion. We will only reverse a property distribution if it is clearly unjust. We here apply the same standard in deciding whether the parties' domestic agreement results in a distribution that is so unconscionably disparate that it was error to grant Joan's motion to enforce it.
Fortson v. Fortson, 131 P.3d 451, 456 (Alaska 2006) (citing Martin v. Martin, 52 P.3d 724, 726 (Alaska 2002)).
Id.
The superior court was not obliged to accept either Allen's or Joan's valuation of the marital estate. We do not need to determine the exact value of the marital estate. We assume, for purposes of discussion, that Allen's valuation is correct and that Joan received about seventy-three percent of the marital estate. Nonetheless, the circumstances demonstrate that the agreed-upon distribution is not unconscionable. Allen and Joan do not have children, their marriage was relatively short, Allen earned about $30,000 per year more than Joan, and Joan contributed a significant amount of premarital money to the purchase of the houses. The record therefore does not convince us that the superior court abused its discretion when it held that the agreement was enforceable and granted Joan's enforcement motion, and when it later held that the agreement was "fair."
See Berg v. Berg, 983 P.2d 1244, 1246 (Alaska 1999) (placing monetary value on marital assets is second step superior court must take in property division).
IV. CONCLUSION
For these reasons, we AFFIRM the order enforcing the domestic agreement and the decree incorporating that agreement.