Julie M. Fetters v. Jay M. Fetters ( 2015 )

Feb 26 2015, 9:00 am
ATTORNEY FOR APPELLANT ATTORNEY FOR APPELLEE
Chris M. Teagle Dale W. Arnett
Muncie, Indiana Winchester, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Julie M. Fetters, February 26, 2015
Appellant-Petitioner, Court of Appeals Cause No.
68A01-1404-DR-167
v. Appeal from the Randolph Superior
Court
Cause No. 68D01-1111-DR-1230
Jay M. Fetters,
Appellee-Respondent. The Honorable Peter D. Haviza,
Judge
Barnes, Judge.
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Case Summary
[1] Julie Fetters appeals the trial court’s division of property in her divorce from
Jay Fetters, following its decision to enforce a premarital agreement into which
the parties entered. We reverse and remand.
Issue
[2] The restated issue before us is whether the premarital agreement is
unconscionable.
Facts
[3] Julie and Jay began having a sexual relationship in 1994, when Julie was
fourteen years old and Jay was twenty-nine. Jay was a school janitor at the
time, but Julie did not go to his school. In the summer of 1995, when Julie was
fifteen, she became pregnant by Jay, who was then thirty. Police began
investigating Jay for sexual misconduct with a minor. Jay believed he could
avoid prosecution if he married Julie, and Julie agreed to do so.
[4] Before getting married, Jay asked Julie, who had just turned sixteen, to sign a
premarital agreement prepared by his attorney. Among other things, the
agreement provided that each party would retain their own separate property in
the event of divorce. Julie went to Jay’s attorney’s office with her mother,
where Jay’s attorney went over the document with her. Despite not being able
to read very well and not understanding the agreement, Julie agreed to sign it;
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her mother also signed it. Julie did not have an attorney of her own review the
document. Jay was never prosecuted for his relationship with Julie.
[5] Julie dropped out of school when she got married, and she had the couple’s first
child in the spring of 1996. The couple had a second child in 2003. Julie never
obtained her GED and worked in various low-wage jobs during about half the
marriage and exclusively cared for the children during the other half. In 2011,
Julie filed a petition for dissolution of the marriage. She sought to disavow the
premarital agreement and have it declared void by the trial court.
[6] Jay has continued working as janitor, earning approximately $590 per week and
accumulating a PERF pension worth approximately $38,000. Julie works as a
nurses’ aide, earning approximately $9.85 per hour and working fifteen to
thirty-five hours per week, and has no retirement plan. During the marriage,
the couple lived in a home Jay had acquired before marriage and which had a
value at the time of separation of $62,000. Julie, who owned no property at the
time of the marriage, had acquired two vehicles in her name during it worth a
total of $13,900; Jay owned two vehicles and one motorcycle in his own name,
worth a total of $8,500.
[7] The trial court denied Julie’s request to invalidate the premarital agreement.
Thus, in accordance with the agreement, it entered a final dissolution decree
awarding the full value of the marital residence and Jay’s PERF pension to
him, along with his vehicles, while awarding Julie her own vehicles. Julie now
appeals.
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Analysis
[8] The trial court here entered findings and conclusions to accompany its
dissolution decree. However, it does not appear that either party requested
such findings in accordance with Indiana Trial Rule 52(A). “In such a
situation, the specific factual findings control only the issues that they cover,
while a general judgment standard applies to issues upon which there are no
findings.” Stone v. Stone, 991 N.E.2d 992, 998 (Ind. Ct. App. 2013), aff’d on r’hg.
Not every finding needs to be correct, and even if one or more findings are
clearly erroneous, we may affirm the judgment if it is supported by other
findings or is otherwise supported by the record. Id. “We may affirm a general
judgment with sua sponte findings upon any legal theory supported by the
evidence introduced at trial.” Id. Sua sponte findings control as to the issues
upon which the court has found, but do not otherwise affect our general
judgment standard of review, and we may look both to other findings and
beyond the findings to the evidence of record to determine if the result is against
the facts and circumstances before the court. Id.
[9] When reviewing the accuracy of findings entered sua sponte, we first consider
whether the evidence supports them. Id. Next, we consider whether the
findings support the judgment. Id. We will disregard a finding only if it is
clearly erroneous, meaning the record contains no facts to support it either
directly or by inference. Id. We will not reweigh the evidence or judge witness
credibility. Id. at 999. “A judgment also is clearly erroneous if it relies on an
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incorrect legal standard, and we do not defer to a trial court’s legal
conclusions.” Id. at 998-99.
[10] Premarital agreements have long been recognized as valid contracts in Indiana,
“as long as they are entered into freely and without fraud, duress, or
misrepresentation, and are not unconscionable.” Rider v. Rider, 669 N.E.2d
160, 162 (Ind. 1996). Our legislature codified this caselaw approval of
premarital agreements with its adoption in 1995 of a version of the Uniform
Premarital Agreement Act (“the Act”), now found at Indiana Code Chapter 31-
11-3.1 The Act went into effect in Indiana on July 1, 1995, and so it applies to
this case. See id. at 164. In part, the Act states:
(a) A premarital agreement is not enforceable if a party against whom
enforcement is sought proves that:
(1) the party did not execute the agreement voluntarily; or
(2) the agreement was unconscionable when the agreement was
executed.
*****
(c) A court shall decide an issue of unconscionability of a premarital
agreement as a matter of law.
Ind. Code § 31-11-3-8.2 No reported Indiana decision has interpreted the Act
since its adoption. It would appear, however, that we may look to existing
1
For over a century, Indiana courts have referred to premarital agreements as “antenuptial” agreements. See
McNutt v. McNutt, 116 Ind. 545, 19 N.E. 115 (1888); Rider, 669 N.E.2d 160. They have continued to do so
even after the Act’s codification. See Schmidt v. Schmidt, 812 N.E.2d 1074 (Ind. Ct. App. 2004). However, in
the Act, the term “premarital agreement” is used throughout. See Ind. Code § 31-11-3-2. Because the Act is
applicable to this case, will use the term premarital agreement throughout this opinion.
2
Subsection (b) of this statute relates to spousal maintenance, which is not at issue in this case.
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Indiana caselaw on premarital agreements so long as it does not conflict with
the Act. Additionally, we may look for guidance from the official comments to
the Uniform Act, as well as decisions from other jurisdictions that have adopted
it. See Zemco Mfg., Inc. v. Navistar Int’l Transp. Corp., 759 N.E.2d 239, 246 (Ind.
Ct. App. 2001) (looking for guidance from other jurisdictions that adopted
Uniform Trade Secrets Act), trans. denied.
[11] Standard principles regarding contract formation and interpretation apply to
premarital agreements. Schmidt v. Schmidt, 812 N.E.2d 1074, 1080 (Ind. Ct.
App. 2004). Generally, “‘a contract is unconscionable if there was a gross
disparity in bargaining power which led the party with the lesser bargaining
power to sign a contract unwillingly or unaware of its terms and the contract is
one that no sensible person, not under delusion, duress or distress would
accept.’” Rider, 669 N.E.2d at 162 (quoting Justus v. Justus, 581 N.E.2d 1265,
1272 (Ind. Ct. App. 1991), trans. denied). This standard is consistent with the
intent of the drafters of the Uniform Act, which believed unconscionability
“includes protection against one-sidedness, oppression, or unfair surprise . . . .”
Uniform Premarital Agreement Act § 6, cmt. (2001). Also relevant are “the
economic circumstances of the parties resulting from the agreement, and any
other relevant evidence such as the conditions under which the agreement was
made, including the knowledge of the other party.” Id. The lack of assistance
from independent legal counsel may be another factor to consider in deciding
unconscionability. Id.
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[12] We also observe that the Act makes the issue of unconscionability a question of
law. This means that our review of the trial court’s ultimate ruling on
unconscionability is de novo. See Rivera v. Rivera, 243 P.3d 1148, 1154 (N.M.
App. 2010) (applying New Mexico version of the Act). Underlying that legal
determination may be factual determinations regarding the circumstances
surrounding execution of the agreement, which we review for clear error as we
would any other factual determination. See id. (applying New Mexico standard
of “substantial evidence” for factual findings).
[13] Here, the facts are largely undisputed. Indeed, in his brief Jay expressly agrees
with Julie’s statement of the facts in her brief, with one exception. Namely, it is
undisputed here that Jay commenced an illicit sexual relationship with Julie
when she was fourteen years old and he was twice her age. When Julie became
pregnant when she was fifteen, Jay found himself under police investigation for
his conduct. In a successful attempt to evade prosecution, Jay proposed
marriage to Julie, and she accepted. However, he also asked Julie to sign a
premarital agreement disavowing any claim to any of his property, no matter
how long they stayed married. Julie, being just sixteen years old, had no
property of her own at the time and would accumulate very little during the
marriage. She also dropped out of school upon marrying Jay and having their
first child and has not since obtained her GED. Julie did not obtain
independent legal advice regarding the premarital agreement, and she had
difficulty understanding it in part because of her own poor reading skills. The
only matter of dispute between the parties is whether Jay’s attorney read the
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document to Julie as opposed to a legal secretary. We will assume the facts in a
light most favorable to the judgment, specifically that Jay’s attorney personally
went over the document with Julie before she and her mother signed it. That
slight difference in the facts, however, has little impact on our analysis.
[14] We have not discovered any case remotely similar to this one, either in Indiana
or elsewhere. We readily conclude that this premarital agreement is
unconscionable as a matter of law. Although it does not appear Jay is highly
educated, there still was a gross disparity in life experience between him and
Julie. Indeed, Jay apparently violated criminal laws intended to protect minors
by carrying out his illicit sexual relationship with Julie. See I.C. § 35-42-4-9
(1995) (defining crime of sexual misconduct with a minor but providing as
defense that child is married). And, he personally benefitted greatly by
marrying Julie and avoiding prosecution, with no comparable benefit to Julie.
Rather, Julie dropped out of school and did not further her education, while
either caring for the couple’s children or working at low-wage jobs. Also, the
property division portion of the agreement was entirely one-sided in Jay’s favor,
as he was the only party bringing any assets into the marriage.
[15] Furthermore, Indiana law has long held that contracts entered into by a minor
are voidable at the option of the minor while he or she remains a minor, or
within a reasonable time after reaching majority. See Wiley v. Wilson, 77 Ind.
596, 598 (1881); Bowling v. Sperry, 133 Ind. App. 692, 694, 184 N.E.2d 901, 902
(1962). This reflects the law’s view that minors are not always entirely
competent to enter into contracts with adults and are deserving of special
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protection in that regard. Although Julie was permitted to marry Jay at age
sixteen,3 she still was a minor for purposes of contract formation. The current
age of majority in Indiana is eighteen. See I.C. § 1-1-4-5(1). Even if we were to
assume that Julie did not act promptly enough after reaching majority to
disavow the premarital agreement in accordance with the Wiley case,4 we still
believe it is highly relevant to consider that she was a minor when she entered
into the agreement.
[16] Finally, we note Julie’s lack of education, her difficulty reading, her stated lack
of understanding of the premarital agreement, and the fact that she did not
receive independent legal advice. It is true that Jay likewise appears not to be
highly educated and it is possible he also did not understand all of the
agreement’s intricacies. But, it was his attorney who prepared the agreement,
and it is entirely in his favor. We also do not believe that Julie’s mother’s
advice and consent regarding the premarital agreement was an adequate
substitute for professional legal advice.
[17] In sum, after considering all of the circumstances surrounding the premarital
agreement’s execution and its one-sided nature in favor of the dominant party,
3
Julie was permitted to marry at age sixteen in contravention of the general minimum marital age of
eighteen, or sometimes seventeen, because she was pregnant by Jay, was at least fifteen years old, and
received parental consent to marry. See I.C. § 31-7-1-7 (1995).
4
As a practical matter, it is unclear how Julie could have unilaterally disavowed the premarital agreement
while still remaining married to Jay. The agreement could have been withdrawn if both parties agreed to it in
writing, however. See I.C. § 31-11-3-7.
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Jay, we conclude that the agreement was unconscionable at the time of its
execution. Premarital agreements traditionally have been looked upon
favorably in Indiana. See Boetsma v. Boestma, 768 N.E.2d 1016, 1024 (Ind. Ct.
App. 2002). However, we refuse to accept that this agreement is conscionable. 5
[18] Having found the premarital agreement unconscionable, we must also address
the trial court’s alternate conclusion that Julie is “barred by laches and
estoppel” from challenging the agreement because she failed to disavow the
agreement for nearly fourteen years after she turned eighteen. App. p. 50. For
this proposition the trial court cited Estate of Palamora v. Palamora, 513 N.E.2d
1223 (Ind. Ct. App. 1987), and stated that Julie could not “accept[] the benefits
of the marriage” and later attempt to disavow the premarital agreement. Id.
The trial court misapplied the holding of Palamora. In that case, a man dying of
cancer agreed to marry, but only on the condition that his wife-to-be execute a
premarital agreement that would provide her with an income of $1,000 per
month for the rest of her life from a trust to be established by the agreement, but
5
It is unclear under the Act whether we may consider the agreement’s unconscionability at the time of
dissolution, as opposed to the time of execution. There may be a conflict between the Act and caselaw on
this point. Cases have held, “an otherwise valid antenuptial agreement may become voidable as
unconscionable due to circumstances existing at the time of the dissolution.” Pond v. Pond, 700 N.E.2d 1130,
1132 n.3 (Ind. 1998) (citing Rider, 669 N.E.2d at 162–64 (Ind. 1996)). The Act, however, states that courts
should consider whether “the agreement was unconscionable when the agreement was executed.” I.C. § 31-
11-3-8(a)(2). Because we have concluded that the agreement here was unconscionable at the time of
execution, we need not resolve this possible conflict. Regardless, we do note that, although the marital estate
here is not especially large, the agreement has resulted in Jay receiving an overwhelming percentage of what
would have been divisible marital property in the absence of the agreement. After fifteen years of marriage,
Jay has received assets worth approximately $108,500 while Julie has received assets worth approximately
$13,900. Jay also has a steady full-time job with reliable income that he has held for many years and which
includes retirement benefits; Julie’s job is variable in hours, pays considerably less per hour, and does not
provide retirement benefits.
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she would otherwise receive nothing upon the husband’s death. After the
husband died, the wife received and spent several payments from the trust and
then attempted to disavow the premarital agreement. Under these
circumstances, we held the wife could not accept the benefits of the premarital
agreement and later seek to repudiate the agreement. Palamora, 513 N.E.2d at
1228. Thus, in Palamora, it was not the fact that the wife accepted the benefits
of marriage that prevented her from repudiating the premarital agreement; it was
her acceptance of payments from the trust established by that agreement that
prevented her from doing so. Here, Julie did not accept any material benefits
from the premarital agreement; the fact that she did marry and remained
married to Jay did not preclude her from attempting to disavow it.
[19] We also note the following language in the Act: “Any statute of limitations
applicable to an action asserting a claim for relief under a premarital agreement
is tolled during the marriage of the parties to the agreement. However,
equitable defenses limiting the time for enforcement, including laches and
estoppel, are available to either party.” I.C. § 31-11-3-10. In order to establish
laches, a party must prove: “(1) inexcusable delay in asserting a known right;
(2) an implied waiver arising from knowing acquiescence in existing conditions;
and (3) a change in circumstances resulting in prejudice to the adverse party.”
Indiana Real Estate Comm’n v. Ackman, 766 N.E.2d 1269, 1274 (Ind. Ct. App.
2002). The mere passage of time by itself is insufficient to prove laches. Id.
Similarly, estoppel is an equitable doctrine “by which one’s own acts or
conduct prevents the claiming of a right to the detriment of another party who
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was entitled to and did rely on the conduct.” Brown v. Branch, 758 N.E.2d 48,
51-52 (Ind. 2001). We believe it is clear from the statutory language, along with
the caselaw definitions of laches and estoppel, that the mere fact that Julie
stayed married to Jay from approximately fifteen years and did not attempt to
disavow the premarital agreement before she filed for divorce is not a bar to her
disavowal. Rather, there must at least be some evidence or proof of Jay’s
detrimental reliance on Julie’s failure to disavow the agreement, and there is
none in this case. The trial court erred in concluding that Julie’s claim was
barred by laches and/or estoppel.
Conclusion
[20] The trial court erred in concluding that the parties’ premarital agreement is not
unconscionable and that Julie is time-barred from challenging it. We conclude
that the agreement is unconscionable, Julie is not barred from challenging it,
and it therefore is void. We reverse the trial court’s division of property in the
parties’ dissolution and remand for the trial court to divide the marital property
in a manner consistent with the general laws governing such division.
[21] Reversed and remanded.
May, J., and Pyle, J., concur.
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