Carla Ellen Skaates v. Nathan Kayser ( 2020 )

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
revision until final publication in the Michigan Appeals Reports.
STATE OF MICHIGAN
COURT OF APPEALS
CARLA ELLEN SKAATES, FOR PUBLICATION
July 16, 2020
Plaintiff-Appellee, 9:00 a.m.
v No. 346487
Marquette Circuit Court
NATHAN KAYSER, Family Division
LC No. 16-055134-DO
Defendant-Appellant.
Before: MURRAY, C.J., and METER and K. F. KELLY, JJ.
MURRAY, C.J.
Defendant appeals by right a judgment of divorce and an order determining that a
postnuptial agreement was enforceable. We affirm.
I. BACKGROUND1
The parties met and began cohabitating in 2003. Plaintiff is a dentist who operates her own
practice, while defendant has engaged in a number of business ventures and occupied various
positions over his life. Beginning in 2006, after plaintiff purchased her own dental practice,
defendant began working as the practice’s business manager.2
In 2011, plaintiff and defendant began discussing marriage. The parties had lived together
for years, but each had their own separate businesses and assets. Thus, leading up to their 2012
marriage, the parties negotiated the terms of what was to be a prenuptial agreement. Plaintiff and
1
These facts are taken from the evidentiary hearing held on the validity of the postnuptial
agreement.
2
The parties disputed defendant’s role in this position as well as his role in acquiring the practice.
However, there was no dispute that plaintiff utilized an outside company that specialized in the
sale and purchase of dental practices or that plaintiff financed the acquisition entirely with her own
funds.
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defendant e-mailed back and forth, and discussed an agreement for approximately 16 months
before its execution.
Although the agreement was supposed to be a prenuptial agreement, it turned into a
postnuptial agreement because of time constraints. In other words, despite working on it for 16
months and agreeing to the major provisions, the agreement was not signed prior to the marriage.
Plaintiff testified that, after they were married, defendant indicated that he was not going to sign
the agreement, which greatly frustrated her. Nonetheless, after reviewing the document and
obtaining advice from separate legal counsel, the agreement was eventually executed on
September 19, 2012, which was approximately one month after the marriage.
At the outset the parties set forth the purpose of the agreement:
The parties want to define and clarify their respective rights in each other’s
property and in any jointly owned property they now own or might accumulate after
today and to avoid interests that, except as provided by this agreement, they might
otherwise acquire in each other’s property as a consequence of their marriage
relationship.
The parties agreed that plaintiff’s preexisting dental practice would remain plaintiff’s individual
property and, if divorce occurred, that she would be awarded the asset completely. On the other
hand, if plaintiff died before defendant, then he was permitted to sell the practice and retain the
proceeds. Before the marriage plaintiff created a limited liability company (LLC) that owned the
building in which the dental practice operated. Through the agreement, plaintiff transferred to
defendant a 25% ownership interest in this company, and the building was designated a marital
asset. If divorce occurred, the property would be divided according to the parties’ ownership
interest, with plaintiff having the option to buy out defendant’s interest. As with the dental
practice, if either party died before the other, the survivor would have 100% ownership. For his
part, defendant owned before the marriage “3D Heli-Hub, LLC,”3 which under the agreement
would continue to be defendant’s individual property; if divorce occurred, he would solely be
awarded the company. If defendant died before plaintiff, then she could sell the company and
retain the proceeds.
The parties had equal ownership of “Lady Lab-Coats, LLC,”4 and the parties agreed that,
if divorce occurred, the company would be divided equally, with plaintiff having the option to buy
out defendant’s interest. Again, if one party died before the other, then the survivor would have
100% ownership. The agreement also provided that plaintiff would transfer to defendant a 50%
interest in the marital home, and if divorce occurred the parties would divide the property based
on their ownership interests at the time of the divorce, with plaintiff having the option to buy out
3
3D Heli-Hub, LLC was a hobby store that defendant had opened and operated for a number of
years.
4
Lady Lab Coats, LLC was a corporation created to pursue plaintiff’s idea about making a more
“feminine version” of the traditional “white lab coat,” but the venture “never really went too far.”
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defendant’s interest. As with other property, if one party died before the other, then the survivor
would receive 100% ownership.
As to each of their respective bank, investment, and retirement accounts, as well as life
insurance policies, annuities, and other similar assets, the parties agreed that they would remain
separate property and would not be subject to division if divorce occurred. Similarly, the parties
agreed that any inheritances would be separate property, and that defendant would remain a
beneficiary of two of plaintiff’s life insurance policies so long as the parties remained married,
with defendant remaining a beneficiary “at a level equal to or greater than forty percent” as long
as the policies were in effect.
Additionally, the agreement provided that the parties would dissolve their tenancy in
common for the camp property and, in its place, would create a tenancy by the entireties between
them. Each party would have equal ownership, and it would be marital property. If divorce
occurred, defendant would have the option to buy out plaintiff’s interest. 5 All other property not
mentioned in the agreement was to remain separate property with neither party having a claim to
the other’s property.
Importantly, the parties agreed on a “cooling off” provision, a procedure to be used when
contemplating divorce. Specifically, if one party desired to file for divorce, the parties agreed to
wait four months before doing so. In this way, the parties had a “cooling off” period to work out
marital issues. Consistent with that goal, the parties also agreed to attend a minimum of three joint
marital counseling sessions during this period.
In October 2016, plaintiff filed for divorce without waiting four months and before
attending any counseling sessions. Plaintiff subsequently filed a motion to enforce the agreement.
Defendant opposed the motion, and asked the court to void the agreement, arguing: (1) the
agreement went against public policy because it was made in contemplation of a future divorce
and left plaintiff in a more attractive financial position in the event of that divorce; (2) he signed
the agreement under duress, which resulted from uneven bargaining power, financial pressures,
and a threat of divorce; (3) plaintiff materially breached the agreement by failing to follow the
cooling off provision, which prevented her from now seeking to enforce the agreement; and (4)
plaintiff failed to fully disclose her assets, specifically certain gold coins that plaintiff had
possessed and sold. The trial court conducted an evidentiary hearing on the issue of enforceability,
where the parties’ presented their own testimony and offered exhibits into evidence.
The trial court issued a written decision granting plaintiff’s motion. In its opinion, the trial
court noted that the parties had discussed the terms of the agreement for a period of 16 months,
and that each party had been represented by counsel throughout this period, and up to the
5
The agreement also addressed day-to-day financial issues. For example, the parties agreed to
create a joint marital checking account by January 2014, which would be “used for all routine
household expenses.” The parties agreed to contribute “an amount as mutually agreed each year,”
by using their respective financial status to determine their respective contributions. According to
the agreement, the parties intended “to share household expenses that are derived for their mutual
benefit.”
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agreement’s execution. The trial court stated that, although the parties “contemplated” that the
agreement would be a prenuptial agreement, it “evolved into a postnuptial agreement” because the
parties married six weeks before the agreement was executed.
Recognizing that postnuptial agreements were not unenforceable per se and were
acceptable if they “intended to promote harmonious marital relations and keep the marriage
together,” the trial court found that the agreement was the type of postnuptial agreement acceptable
under Michigan law, reasoning in part that
[n]othing in the agreement itself or the record suggests that the parties contemplated
a separation in the near future when they signed the agreement. On the contrary,
the agreement was made in large part to fulfill the desire of the parties to define and
clarify their respective rights in each other’s property and in any jointly held
property that they owned prior to the execution of the Marital Agreement or
thereafter acquired.
The trial court further concluded that the agreement did not leave one of the parties in a far more
favorable position were they to abandon the marriage, but that overall the agreement favored
defendant in light of the short duration of the marriage. In sum, the trial court found that the
agreement was “relatively balanced and does not incentivize divorce.”
With respect to defendant’s duress argument, the trial court found that the parties had
discussed the agreement for 16 months, that the last-minute e-mail on the wedding day included
changes that the parties had previously been discussing, that defendant conceded that he had
understood and voluntarily signed the agreement, and that the parties had each consulted
independent counsel before signing the agreement. As a result, the trial court found that defendant
was not under duress that would void the agreement.
Additionally, the trial court rejected defendant’s material breach argument, finding that,
although plaintiff had “technically violate[d] this provision,” the agreement did not provide any
remedy for a breach, and that plaintiff cured any breach because “after the breach was pointed out
to [her] and she took no further steps to proceed with the divorce proceeding and engaged in 5 or
6 marriage counseling sessions.”6
Defendant filed a motion for reconsideration, which the trial court denied, and after another
hearing, entered a judgment of divorce that was consistent with the agreement.
Before this Court, defendant challenges both the trial court’s decision on the enforceability
of the agreement, and the judgment of divorce as it relates to the invasion of separate assets and
attorney fees.
II. ANALYSIS
6
The trial court did not reference defendant’s arguments on the alleged nondisclosure of the gold
coins.
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A. THE AGREEMENT’S ENFORCEABILITY
1. STANDARDS OF REVIEW
Since postnuptial and other marital agreements are contracts, we are guided by contract
principles in reviewing the agreement. See Hodge v Parks, 303 Mich. App. 552, 558; 844 NW2d
189 (2014); Lentz v Lentz, 271 Mich. App. 465, 471-472 & n 3; 721 NW2d 861 (2006).
Accordingly, we review de novo the trial court’s interpretation of a contract as well as its ruling
on legal questions that affect the contract’s validity. Hodge, 303 Mich. App. at 558. However, we
review for clear error any factual findings made by the trial court. Id.
2. PUBLIC POLICY
Defendant argues that the agreement was unenforceable because it was contrary to public
policy. As defendant notes, the general rule is that “a couple that is maintaining a marital
relationship may not enter into an enforceable contract that anticipates and encourages a future
separation or divorce.” Id. (quotation marks and citation omitted). To allow such agreements
“would encourage separation or divorce, which is not an appropriate public policy.” Id., citing
Randall v Randall, 37 Mich. 563, 571 (1877). One way a postnuptial agreement encourages
separation or divorce is if the terms are “calculated to leave [one party] in a much more favorable
position to abandon the marriage.” Hodge, 303 Mich. App. at 558 (quotation marks and citation
omitted; alteration in original).
Despite this general prohibition against postnuptial agreements, we have recognized that
they “ ‘are not invalid per se,’ because some postnuptial agreements may be intended to promote
harmonious marital relations and keep the marriage together.” Id. at 558-559 (citation omitted).
Such agreements do not implicate the public-policy concerns of Randall. Id. at 559. Accordingly,
if the agreement in question “seeks to promote marriage by keeping a husband and wife together,
Michigan courts may enforce the agreement if it is equitable to do so.” Id.
According to defendant, there are essentially three types of postnuptial agreements that
have been upheld by Michigan courts: where the parties are separated or a divorce action is
pending and the parties either seek to (1) reconcile their marriage or (2) agree to settlement terms
to be entered into a divorce judgment in the near future, or (3) where the married couple is not
separated, but they enter into an agreement to determine property rights upon the death of one of
the spouses. What are not typically upheld in Michigan courts, according to defendant, is a
postnuptial agreement entered into by a married couple that is not separated and which establishes
each respective spouse’s rights in the event of divorce. This latter prohibition, according to
defendant, exists because of the longstanding Michigan public policy against enforcing postnuptial
agreements that promote divorce.
For the most part we have no disagreement with the general legal propositions argued by
defendant. After all, a reconciliation-type agreement was upheld in Hodge, 303 Mich. App. at 560,
while in Lentz, 271 Mich. App. at 467, we upheld a separation-type agreement between spouses
who were no longer living together. And, postnuptial agreements between married parties that
address inheritance issues upon a spouse’s death have been upheld. Rockwell v Rockwell’s Estate,
24 Mich. App. 593, 597-598; 180 NW2d 498 (1970); In re Highgate Estate, 133 Mich. App. 32, 36;
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348 NW2d 31 (1984). But we do disagree with the proposition 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. Indeed,
in Ransford v Yens, 374 Mich. 110; 132 NW2d 150 (1965), an equally divided Supreme Court
upheld a provision similar to that entered into by the parties here. In Ransford, the parties entered
into an agreement three years after their marriage that set forth their respective rights to property.
Id. at 110-111. As in this case, in Ransford the parties had separately accumulated property prior
to the marriage. Id. at 111. The written agreement not only determined their respective rights to
existing property, but it also indicated that if the parties subsequently discontinued living together
as husband and wife, each party would be responsible to support themselves, and neither would be
entitled to any interest in the other spouse’s property. Id. at 112. After entering into the agreement,
the couple continued to live together as husband and wife, but separated eight months before the
husband’s death. Id. at 112-113.
In the ensuing estate matter in probate court, the wife sought a widow’s allowance from
her husband’s estate, a request that was opposed by the estate administrator on the basis of the
postnuptial agreement. Id. at 113. The probate court held that the wife was entitled to the widow’s
allowance because “the agreement, having been made when the parties were not separated and not
contemplating separation, was void as against public policy.” Id. On appeal, the circuit court
reversed, holding that the overall context of the agreement’s language revealed that it was not
made in contemplation of, or in furtherance of, a divorce, but was in part to resolve an existing
dispute and in part to resolve any potential future property disputes. Id. at 113-114.
On appeal to the Supreme Court, the wife argued that the agreement was void under Day v
Chamberlain, 223 Mich. 278; 193 N.W. 824 (1923). Ransford, 374 Mich. at 114. Four justices of
the Court concluded otherwise, holding that the language of the agreement showed that it was in
furtherance of the marriage relation because it set forth their respective rights and obligations
which was important to the parties and their marital harmony:
The parties to the instant agreement expressly stated they were agreeing to
‘continue to live together as husband and wife,’ and there is nothing in the
agreement that shows it was ‘calculated to favor a separation,’ or that it was drawn
to ‘provide for a separation of the parties and a breaking up of the marriage.’
Instead of coming to such a conclusion, it is more logical to state that the parties
now before this Court entered into said agreement with the hopes that the marital
journey they had commenced as rather elderly people would continue on without
discord if they eliminated the only dispute or problem they faced, namely: The
eventual disposition of property owned severally at the time of marriage as well as
that acquired jointly during the marriage. [Id. at 116.]
We agree with the opinion written by Justice KELLY in Ransford, and find that it is the most
applicable case to resolving the validity of the parties’ agreement.7 And, it is an example of a
7
Eight justices sat on the Ransford Court, and an evenly decided decision is not precedent.
Sculthorp v American Motors Corp, 7 Mich. App. 410, 412; 151 NW2d 905 (1967). But that
decision nevertheless contains persuasive reasoning.
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postnuptial agreement upheld by the Supreme Court when it was entered into by a married couple
living together while setting forth their respective rights and obligations as to existing property
and future obligations should a divorce or separation occur. See, also, Rockwell, 24 Mich. App. at
598-599 (recognizing that the Ransford Court affirmed the trial court’s enforcement of the
postnuptial agreement made while the parties were married and which contained some provisions
addressing the possibility of divorce).
Turning back to the parties’ agreement, the parties initially acknowledge their mutual
desire “to define and clarify their respective rights in each other’s property and in any jointly
owned property they now own or might accumulate after today and to avoid interests that, except
as provided by this agreement, they might otherwise acquire in each other’s property as a
consequence of their marriage relationship” (emphasis added). This description is important in
understanding its purpose and the parties’ intent, as the plain language demonstrates that its
purpose was merely to define and clarify the parties’ rights during the course of the marriage and
at the end of the marriage, whether it ends by divorce or death. Nothing in the agreement suggests
that it was created in contemplation of a future separation or divorce. In fact, the agreement
contained terms to help support the marriage. For example, one provision speaks to the creation
of a joint marital checking account, the purpose of which is to fund joint expenses during the
marriage. In this way, the parties could easily pay for joint expenses while still retaining their
separate bank accounts, thereby eliminating a potential acrimonious issue and promoting a
harmonious marriage.
To this same point, the agreement also contained a “cooling off” provision, which required
the parties to wait four months and attend joint marital counseling before filing for divorce. This
provision likewise reflects the parties desire to refrain from making hasty decisions and to take
affirmative steps to preserve the marriage if possible. We therefore reject defendant’s contention
that the agreement was created to encourage, or was made in contemplation of, divorce, rather than
for the harmonious continuation of the marriage.
Postnuptial agreements that make it more financially attractive for a party to divorce are
viewed as encouraging divorce, and have been invalidated on that basis. See Hodge, 303 Mich
App at 558-559; Rockwell, 24 Mich. App. at 597-599. But we reject defendant’s contention that
this agreement’s division made it more attractive for plaintiff to divorce him. In fact, as the trial
court recognized, the evidence is the opposite. Under the agreement, plaintiff transferred a portion
of several significant premarital interests to defendant, including a 25% ownership interest in her
dental practice building; a 50% interest in the marital home (which plaintiff had purchased prior
to the marriage with her own funds); and an immediate 50% interest in the camp property, which
plaintiff had, again, purchased entirely with her own funds. Moreover, defendant’s various bank,
investment, and retirement accounts, as well as his financial items, remained separate property and
under his complete control. The trial court found that the division was equitable, especially in
light of the marriage’s short duration, and, in light of the evidence presented, this determination
was not clearly erroneous.
We also think it important that the parties discussed and negotiated the agreement for 16
months, most of which was prior to the marriage. It was undisputed before the trial court that the
agreement was supposed to be a prenuptial agreement, and that it became a postnuptial one only
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because time constraints prevented earlier finalization.8 Accordingly, we agree with the trial court
that this was not an agreement that contemplated a future divorce; nor was it an agreement that
encouraged divorce. Instead, the agreement reveals that the parties clearly wished to be married
and remain married, and the agreement was meant to help facilitate this.
The language of the agreement, coupled with the trial court’s findings, is what takes this
case out of the Randall line of cases. In Randall and subsequent decisions, the Court ruled that
agreements “calculated to favor a separation which has not yet taken place will not be supported”
by the common law. Randall, 37 Mich. at 571 (emphasis added).9 Here, the trial court did not
clearly err in its findings that the agreement was not “calculated to favor” separation or divorce,
but was meant to do just the opposite, taking this case outside the holding of Randall. Likewise,
the Day Court struck down an agreement because the “husband and wife were living and
cohabitating together at the time [of signing the separation agreement] and continued so to do for
nearly two months thereafter.” Day, 223 Mich. at 281. And, unlike in Wright v Wright, 279 Mich
App 291, 297; 761 NW2d 443 (2008), where we affirmed the trial court’s finding that the terms
of a postnuptial agreement significantly favored one spouse over the other (thus encouraging
separation), here the trial court’s findings supported the opposite conclusion.
Based on the trial court’s findings, though living together, the parties’ agreement was not
in contemplation of them separating or divorcing. As the trial court concluded, because the
postnuptial agreement addressed the disposition of property at death or in case of divorce, and
otherwise allowed the parties to pursue their marriage in a manner most likely to allow it to
flourish, and was not otherwise inequitable in its terms, it was not contrary to public policy.
3. DURESS
Defendant next contends that the trial court erred by determining that he did not sign the
agreement under duress.
“A contract may be deemed unenforceable if it was executed under duress.” Allard v
Allard, 308 Mich. App. 536, 551; 867 NW2d 866 (2014), rev’d in part on other grounds 499 Mich.
932 (2016). To successfully demonstrate duress, a party must show “that they were illegally
compelled or coerced to act by fear of serious injury to their persons, reputations, or fortunes.” Id.
(quotation marks and citations omitted). “[F]inancial ruin alone” does not demonstrate “economic
duress; it must also be established that the person applying the coercion acted unlawfully.” Id.
(quotation marks and citation omitted).
Defendant advanced no allegations or evidence that he was illegally compelled or coerced
to enter the agreement by fear of serious injury to his person, reputation, or fortune. To support
his duress argument, defendant testified that, on the day of the marriage, he was stressed,
distracted, and felt “ambushed” because the latest draft of the agreement was sent to him that day.
8
Evidence showed that defendant in fact requested that the agreement get wrapped up after the
marriage, as it would reduce any associated stress with completing it by that deadline.
9
It is worth pointing out that the Legislature has not spoken on the policy of postnuptial
agreements, and so this issue remains one of common law for the courts.
-8-
This set of circumstances is much less severe than those in Allard, where the defendant was first
presented with the antenuptial agreement 10 days before the wedding, and signed the agreement
on the day of the wedding under pressure that the wedding would be called off and large sums of
money would be lost from canceling the wedding. Allard, 308 Mich. App. at 553. Additionally,
the defendant did not consult with separate counsel. Id. at 540. Here, the agreement was not
executed on the same day as the marriage; it was executed after the marriage and after the
distractions and stresses had passed. Additionally, as the trial court found, there had been months
of negotiation and discussion about the major terms of the agreement, with separate independent
counsel being consulted throughout. And, what defendant signed on the day of the marriage was
not the agreement itself, but merely his agreement to incorporate various corrections and changes
into the final draft. The trial court also found that defendant admitted that he was not forced to
sign the agreement, which is supported by the record.
Finally, although defendant testified that he believed that if he did not sign the final
agreement he would be “homeless, unemployed, uninsured, and without any income,” a fear of
financial ruin cannot, by itself, establish economic duress. Defendant must show that plaintiff
applied this economic coercion unlawfully, Allard, 308 Mich. App. at 551, which he failed to
demonstrate.
4. MATERIAL BREACH
Defendant also challenges the trial court’s ruling that plaintiff did not materially breach the
agreement by failing to follow the cooling off provision before filing for divorce. We conclude
that the trial court correctly analyzed the issue under the facts and terms of the agreement.
Under Michigan law, “one who first breaches a contract cannot maintain an action against
the other contracting party for his subsequent breach or failure to perform.” Michaels v Amway
Corp, 206 Mich. App. 644, 650; 522 NW2d 703 (1994) (quotation marks and citation omitted).
This general rule is qualified, however, by the requirement that the “initial breach is substantial.”
Id. (emphasis added). “One consideration in determining whether a breach is material is whether
the nonbreaching party obtained the benefit which he or she reasonably expected to receive.”
Holtzlander v Brownell, 182 Mich. App. 716, 722; 453 NW2d 295 (1990).
Although plaintiff acknowledged that she did not wait four months or attend joint marital
counseling before filing for divorce, as the trial court recognized, both parties testified that they
did eventually attend counseling together for a period of several months. In fact, plaintiff paid for
the counseling, and plaintiff did not actively pursue the divorce until after counseling concluded
unsuccessfully. And, defendant testified that plaintiff was genuine in attending counseling and
trying to save the marriage. This evidence supported the trial court’s determination that, although
plaintiff did not strictly follow the agreement’s terms, the breach was not substantial because her
actions largely 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. See Holtzlander,
182 Mich. App. at 722.
5. FAILURE TO DISCLOSE ASSETS
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We likewise reject defendant’s argument that the agreement was unenforceable because
plaintiff failed to fully disclose her assets, specifically, a number of gold coins that she received
and later sold. When entering into a marital agreement, the parties have a duty to disclose their
assets to the other party. See In re Benker’s Estate, 416 Mich. 681, 690-691; 331 NW2d 193
(1982). At the evidentiary hearing, plaintiff testified that she showed defendant the gold coins on
the same day that she received them from her mother, and explained to him that the coins were to
be distributed to herself and her siblings. Defendant did not offer any contrary testimony. Thus,
the undisputed evidence was that defendant was aware of the gold coins before entering into the
agreement. See In re Oversmith’s Estate, 340 Mich. 104, 106; 64 NW2d 678 (1954).
B. INVASION OF SEPARATE ASSETS
1. STANDARDS OF REVIEW
We review the trial court’s factual findings on the division of marital property for clear
error. Hodge, 303 Mich. App. at 554. Clear error occurs “when this Court is left with the definite
and firm conviction that a mistake has been made.” Id. at 555 (quotation marks and citation
omitted). “If the trial court’s findings of fact are upheld, the appellate court must decide whether
the dispositive ruling was fair and equitable in light of those facts.” Woodington v Shokoohi, 288
Mich. App. 352, 355; 792 NW2d 63 (2010). Given that the trial court’s “dispositional ruling is an
exercise of discretion . . . , the ruling should be affirmed unless the appellate court is left with the
firm conviction that the division was inequitable.” Sparks v Sparks, 440 Mich. 141, 152; 485
NW2d 893 (1992). Questions of law are reviewed de novo. Cunningham v Cunningham, 289
Mich. App. 195, 200; 795 NW2d 826 (2010).
2. DISCUSSION
On this issue, defendant argues that the trial court was unable to determine if the property
division was equitable without first determining the valuation of various properties. He contends
that this valuation was necessary for the trial court to properly analyze whether an invasion of
plaintiff’s separate property was warranted.
The trial court may utilize its equitable powers under MCL 552.23(1) and MCL 552.401
to award separate property to the parties in order to reach an equitable result. In Allard v Allard
(On Remand), 318 Mich. App. 583, 601; 899 NW2d 420 (2017), we held that, “to the extent that
parties attempt, by contract, to bind the equitable authority granted to a circuit court under MCL
552.23(1) and MCL 552.401, any such agreement is necessarily void as against both statute and
the public policy codified by our Legislature.” More specifically, we stated that “the parties to a
divorce cannot, through antenuptial agreement, compel a court of equity to order a property
settlement that is inequitable.” Id. In other words, parties may not, through a marital agreement,
prohibit the trial court from exercising its equitable powers under these statutes. Id. at 602-603.
We reasoned that under the plain statutory language, “the Legislature intends circuit courts, when
ordering a property division in a divorce matter, to have equitable discretion to invade separate
assets if doing so is necessary to achieve equity.” Id. at 600-601. These two statutes do not give
“parties to a divorce any statutory right to petition for invasion of separate assets—at least none
that is distinct from the parties’ right to petition for divorce in the first instance. Rather, the statutes
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simply empower the circuit court.” Id. at 601. Hence, “parties have no discernible rights to waive
under MCL 552.23(1) and MCL 552.401.” Id.
Defendant misreads and mischaracterizes our Allard decision. He does not possess a
statutory right to invade plaintiff’s separate property; rather, the trial court possesses the authority
to do so if equity demands it. That is why the Allard Court held that parties cannot through a
marital agreement force a trial court to order a property settlement that is not equitable. See Allard,
318 Mich. App. at 601. Our holding presupposed an inequitable agreement; otherwise, there would
be no issue in dividing the property through that agreement’s terms. Here, because the trial court
found that the agreement’s distribution of the property was fair and equitable, it properly ruled that
Allard was inapplicable.
Additionally, the record demonstrates that the trial court already possessed a valuation of
the properties and assets. Although defendant challenged the appraisals for some of the real
property, this was based on his own belief that the appraisals were “wrong.” He submitted no
further documentation or evidence, and failed to demonstrate how these inaccuracies would result
in an inequitable distribution, i.e., that the inaccuracies would result in his receiving an inequitable
amount of property and assets. The trial court did not err.
C. ATTORNEY FEES
Lastly, we reject defendant’s contentions that he was entitled to attorney fees.
1. STANDARDS OF REVIEW
In a divorce action, this Court reviews for an abuse of discretion an award of attorney fees.
Loutts v Loutts, 309 Mich. App. 203, 215-216; 871 NW2d 298 (2015). The trial court’s factual
findings are reviewed for clear error, while issues of law are reviewed de novo. Id. at 216.
2. DISCUSSION
Michigan follows the “ ‘American Rule,’ ” which states that “attorney fees are not
recoverable as an element of costs or damages unless expressly allowed by statute, court rule,
common-law exception, or contract.” Reed v Reed, 265 Mich. App. 131, 164; 693 NW2d 825
(2005). In a divorce action, attorney fees are permitted by statute and court rule. Id. MCR
3.206(D)(1) states that,
A party may, at any time, request that the court order the other party to pay
all or part of the attorney fees and expenses related to the action or a specific
proceeding, including a post-judgment proceeding.
MCR 3.206(D)(2) provides two ways for a party in a divorce action to obtain attorney fees, only
one of which is relevant to this appeal: the party requesting attorney fees “must allege facts
sufficient to show that” he or she “is unable to bear the expense of the action, including the expense
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of engaging in discovery appropriate for the matter, and that the other party is able to pay[.]” MCR
3.206(D)(2)(a).10
MCR 3.206(D)(2)(a) has been interpreted “to require an award of attorney fees in a divorce
action ‘only as necessary to enable a party to prosecute or defend a suit.’ ” Loutts, 309 Mich. App.
at 216 (citations omitted). “[A] party ‘may not be required to invade her assets to satisfy attorney
fees when she is relying on the same assets for her support.’ ” Id. (citations omitted). The trial
court must “give ‘special consideration to the specific financial situations of the parties and the
equities involved.’ ” Id. at 218 (citation omitted).
In his trial brief, defendant argued that, because plaintiff had terminated his employment,
he was “unable to pay the costs associated with this litigation,” and had “accumulated legal debt
in excess of $15,000.” At the final divorce hearing, defendant testified that he had exhausted his
“retirement savings” and his “regular savings,” and had “inadequate income to meet even the most
basics needs.” However, defendant failed to offer any evidence outlining the details of his attorney
fees, such as hourly rate, number of hours worked, and the experience level of his attorney. This
is in contrast to Woodington, in which the plaintiff submitted relevant documentation to support
her request for attorney fees. See Woodington, 288 Mich. App. at 371. Defendant bore the burden
of submitting sufficient facts to justify the award, see id. at 370, and the trial court did not abuse
its discretion by determining that defendant failed to satisfy his burden.
Affirmed.
/s/ Christopher M. Murray
/s/ Patrick M. Meter
/s/ Kirsten Frank Kelly
10
Defendant’s request related entirely to MCR 3.206(D)(2)(a), making (2)(b) inapplicable.
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