By Kelly Caplan
BridgeTower Media Newswires
What was supposed to be a prenup ended up as a postnuptial agreement.
And even though postnuptial agreements aren’t enforceable per se, the Marquette County Circuit Court nonetheless said this one was OK under Michigan law — and an appeals court panel agreed in a published opinion.
In Skaates v. Kayser (MiLW 07-102889) the parties had lived together for several years before they talked about getting married. They also worked together.
Carla Skaates had purchased a dental practice entirely with her own assets; Nathan Kayser began working as the business manager.
Leading up to their marriage, they discussed and negotiated the terms for what was supposed to be a prenuptial agreement. These discussions and negotiations via email went on — for about 16 months.
The agreement was executed in September 2012, a little more than a month after their marriage.
In essence, the agreement said that, in the event of divorce, Skaates’ dental practice was hers alone and Nathan’s business, 3D Heli-Hub LLC, was solely his. Meanwhile, Lady Lab-Coats LLC, would be divided equally, with Skaates having the option to buy out Kayser’s interest.
Other assets would remain separate property and would not be subject to division if divorce occurred.
But perhaps most importantly, Skaates and Kayser agreed on a “cooling off” provision to be used when contemplating divorce.
In other words, if one party wanted to file for divorce, both parties agreed to wait four months before doing so. They also agreed to participate in at least three joint marital counseling sessions during the cooling off.
Fast forward to 2016: Skaates filed for divorce — with no cooling off period and no joint counseling — and filed a motion to enforce the agreement.
Kayser asked the trial court to void the agreement, saying it went against public policy because it left Skaates better off financially. He also claimed he signed under duress and that Skaates materially breached the agreement.
But the Marquette County Circuit Court granted Skaates’ motion to enforce the agreement in a written decision — and the appellate panel agreed, rejecting each of the Kayser’s arguments.
The trial court said the parties had hashed out the terms of the agreement for more than a year; and for the entire process and up to its execution, each had been represented by counsel.
Also, this postnuptial agreement did not incentivize divorce; in fact, the overall agreement favored Kayser given the marriage’s brief duration, the trial court said.
And while Skaates had “technically violate[d]” the provision, the trial court said she cured any breach by attending several joint counseling sessions and taking no further steps to move forward with the divorce proceedings.
The Michigan Court of Appeals panel — Judges Christopher M. Murray, Patrick M. Meter and Kirsten Frank Kelly — said it didn’t disagree with Kayser’s general arguments.
It did, however, disagree “that all postnuptial agreements made by happily married couples living together (i.e., not separated or otherwise contemplating divorce) that address property rights in the event of divorce are invalid as a matter of law.”
In fact, the plain language of the parties’ agreement highlighted its purpose to name and spell out each party’s rights during and at the end of the marriage, either by death or divorce.
Citing Ransford v Yens, 374 Mich 110 (1965), the panel said “an equally divided Supreme Court upheld a provision similar to the one entered into by the parties here.”
As for Kayser’s claim that the agreement made it more attractive for Skaates to divorce him, the panel said the evidence showed the opposite, just as the trial court recognized.
Kayser’s fear of financial ruin alone can’t establish economic distress, the panel added, and he failed to show that Skaates applied this economic coercion unlawfully.
Finally, the parties attended joint counseling for several months; Skaates paid for the sessions and didn’t actively pursue the divorce until after counseling proved unsuccessful.
And Kayser testified that Skaates’ efforts were genuine in trying to save the marriage.
The panel said this evidence supported the trial court’s ruling that, although the agreement’s terms weren’t followed strictly, Skaates’ actions cured the breach.
“We similarly agree that any breach was not substantial given that defendant received the benefit that he could reasonably be expected to receive: a period of time in which the parties could attempt to reconcile their marriage and avoid divorce.”
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