Joan C. Pulkkila v. James M. Pulkkila ( 2020 )

2020 WI 34SUPREME COURT OF WISCONSIN
CASE NO.: 2018AP712-FT
COMPLETE TITLE: Joan C. Pulkkila,
Petitioner-Appellant,
v.
James M. Pulkkila,
Respondent,
Lynnea Landsee-Pulkkila,
Other Party-Respondent-Petitioner.
REVIEW OF DECISION OF THE COURT OF APPEALS
Reported at 386 Wis. 2d 352,927 N.W.2d 164(2019 – unpublished)
OPINION FILED: April 14, 2020
SUBMITTED ON BRIEFS:
ORAL ARGUMENT: October 14, 2019
SOURCE OF APPEAL:
COURT: Circuit
COUNTY: Waukesha
JUDGE: Paul Bugenhagen Jr.
JUSTICES:
ANN WALSH BRADLEY, J., delivered the majority opinion of the Court,
in which ROGGENSACK, C.J., ZIEGLER, and KELLY, JJ.., joined.
REBECCA GRASSL BRADLEY, J., filed a dissenting opinion.
NOT PARTICIPATING:
DALLET and HAGEDORN, JJ.
ATTORNEYS:
For the other party-respondent-petitioner, there were briefs
filed by Jeffrey A. Mandell, Eileen M. Kelley, Jared M. Potter,
and Stafford Rosenbaum LLP, Madison and Milwaukee. There was an
oral argument by Jeffrey A. Mandell.
For the petitioner-appellant, there was a brief filed by
Daniel J. O’Brien, Angela C. Foy, and Halling & Cayo, S.C.,
Milwaukee. There was an oral argument by Daniel J. O’Brien.
2
2020 WI 34NOTICE
This opinion is subject to further
editing and modification. The final
version will appear in the bound
volume of the official reports.
No. 2018AP712-FT
(L.C. No. 2008FA696)
STATE OF WISCONSIN : IN SUPREME COURT
Joan C. Pulkkila,
Petitioner-Appellant,
v.
FILED
James M. Pulkkila,
APR 14, 2020
Respondent,
Sheila T. Reiff
Lynnea Landsee-Pulkkila, Clerk of Supreme Court
Other Party-Respondent-Petitioner.
ANN WALSH BRADLEY, J., delivered the majority opinion of the Court,
in which ROGGENSACK, C.J., ZIEGLER, and KELLY, JJ., joined. REBECCA
GRASSL BRADLEY, J., filed a dissenting opinion.
DALLET and HAGEDORN, JJ., did not participate.
REVIEW of a decision of the Court of Appeals. Reversed and
remanded.
¶1 ANN WALSH BRADLEY, J. The petitioner, Lynnea Landsee-
Pulkkila (Lynnea), seeks review of an unpublished, authored
decision of the court of appeals applying a constructive trust to
No. 2018AP712-FT
proceeds she collected from a life insurance policy maintained by
her late husband, James Pulkkila (James).1 She asserts that the
court of appeals erred by determining that constructive trust is
an available remedy and by applying that remedy.
¶2 James and Joan Pulkkila (Joan) divorced in 2009. They
arrived at a marital settlement agreement (MSA), which the circuit
court incorporated in its judgment of divorce. The MSA contained
a provision requiring James and Joan to maintain life insurance
with their children as beneficiaries. Joan alleges that James
breached this provision when he made Lynnea, who he married in
2013, the sole beneficiary of (his) life insurance policy, and
argues that a constructive trust should be placed on the proceeds.
¶3 Lynnea contends that a constructive trust cannot be
applied to the life insurance proceeds because the MSA provides
that a lien on James's estate is the exclusive remedy for breach
of the life insurance provision. Further, she asserts that the
court of appeals erred by applying a constructive trust in the
absence of additional proceedings in the circuit court.
¶4 We conclude first that the lien provision of the MSA is
not an exclusive remedy. Second, we conclude that the court of
appeals erred in imposing a constructive trust absent findings of
fact that would support such an imposition. We remand to the
1 Pulkkila v. Pulkkila, No. 2018AP712-FT, unpublished slip
op. (Wis. Ct. App. Feb. 27, 2019) (reversing and remanding order
of the circuit court for Waukesha County, Paul Bugenhagen, Jr.,
Judge).
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No. 2018AP712-FT
circuit court to engage in factfinding and subsequently determine
whether to impose a constructive trust in the first instance.
¶5 Accordingly, we reverse the decision of the court of
appeals and remand to the circuit court for further proceedings
consistent with this opinion.
I
¶6 James and Joan were married in 1996 and divorced in 2009.
At the time of the divorce, they had two minor children.
¶7 As the divorce proceeded, James and Joan negotiated the
MSA. They arrived at an agreement and submitted the MSA to the
circuit court, which incorporated the MSA into its judgment of
divorce.2
¶8 The MSA contains a section entitled, "Life Insurance."
Pursuant to this section, James and Joan agreed as follows:
Both parties shall maintain in full force and pay the
premiums on all life insurance presently in existence on
their lives or obtain comparable insurance coverage,
with the parties' minor children named as sole and
irrevocable primary beneficiaries until the youngest
minor child reaches the age of majority, or until the
child has reached the age of 19 so long as the child is
pursuing an accredited course of instruction leading to
the acquisition of a high school diploma or its
equivalent. During the term of such obligation, each of
the parties shall furnish the other with copies of such
policies or evidence of there being such insurance in
force and proof of beneficiary designation upon request.
The Honorable James R. Kieffer presided at the initial
2
divorce proceedings, while the Honorable Paul Bugenhagen, Jr.,
presided at the proceedings related to the constructive trust issue
now before this court.
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No. 2018AP712-FT
¶9 Further, the "Life Insurance" section of the MSA sets
forth a remedy in the event either party breaches the provision.
Specifically, it provides:
If either party fails for any reason to maintain any of
the insurance required under this article, there shall
be a valid and provable lien against his or her estate
in favor of the specified beneficiary to the extent of
the difference between the insurance required and the
actual death benefits received.
¶10 Prior to the divorce, in 2002, James obtained a $250,000
life insurance policy from Banner Life. At the time he obtained
the policy, James named Joan as the primary beneficiary.
¶11 In 2013, James and Lynnea were married, and the following
year James submitted a beneficiary name change request to Banner
Life, asking that Lynnea be made the sole beneficiary of the
policy. James passed away in 2015. At the time of his death,
both of his children were minors.
¶12 Banner Life paid Lynnea the proceeds of the policy.
Subsequently, Joan filed a motion in the divorce action, seeking
three iterations of relief. First, she moved to join Lynnea to
the action as a third party, asserting that "the proceeds from one
of [James's] life insurance policies were paid to Ms. Landsee-
Pulkkila in violation of the [Judgment] of Divorce and complete
relief cannot be accorded unless Ms. Landsee-Pulkkila is joined."
¶13 Second, Joan moved to enforce the judgment of divorce,
seeking "an order requiring Ms. Landsee-Pulkkila to return
proceeds from [James's] life insurance policy that were paid to
her in violation of the Judgment of Divorce in this matter and for
such other relief as the Court deems appropriate." Third, Joan
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No. 2018AP712-FT
moved to establish a constructive trust for her and James's
children's benefit over the life insurance proceeds that were paid
to Lynnea.
¶14 The circuit court held a hearing on the motion and
ultimately denied Joan's motion for a constructive trust,
reasoning that the MSA unambiguously provided that a lien on
James's estate is the exclusive remedy for breach of the life
insurance provision. Because it determined the lien remedy to be
exclusive, it concluded that a constructive trust was not an
available remedy. It explained:
[T]he Court's job isn't to go back and fix the parties'
agreement to make it fair now for the children. It's
not fair they're not getting as much money. They lost
their father. It is a rotten deal for them. However,
this Court has to follow the law on it. The contract is
not ambiguous to this Court. That is simply a question
of law. . . . It is clear to this Court that that was
the bargaining, and I'm not going to step outside of
their agreement to provide for other remedies.
¶15 Additionally, the circuit court expressly declined to
address several of the issues raised by Joan's motion and Lynnea's
response, reasoning that such issues could be addressed if
necessary on remand from an appellate court. It stated, "I believe
that if I am overturned, the Court will give some instructions
that we have to have a hearing as to what to do with this
constructive trust." It further stated that it would not be taking
up the issue of whether the proper parties were before the court,
but again, it may do so on remand if necessary: "The Court may or
may not take up the issue of whether or not we have the proper
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No. 2018AP712-FT
parties to this, that is the question I'm not reaching today. So
the Court may send that back with directions as well."
¶16 Joan appealed, and the court of appeals reversed and
remanded. Pulkkila v. Pulkkila, No. 2018AP712-FT, unpublished
slip op., ¶1 (Wis. Ct. App. Feb. 27, 2019). First, it rejected
the circuit court's conclusion that the lien remedy in the MSA is
an exclusive remedy. Id., ¶9. Specifically, it determined that
such a remedy was "meaningless" under the facts of this case
because James's estate contained nowhere near enough money to
provide for his children in the manner the life insurance proceeds
would have: "The problem with this argument is that the remedy is
meaningless. Equity might allow for James' wrongdoing if his
estate had $250,000, but it did not. It had $5600. James' new
wife cites no case law, and we have found none, where under these
or similar factual circumstances, a constructive trust is
unavailable if a meaningless remedy exists." Id.
¶17 The court of appeals determined next that "[t]he
equities of this case mandate the creation of a constructive trust
in favor of the children so as to accomplish the intent of the
MSA." Id., ¶10. In the court of appeals' view, "[a]ll of the
requirements of a constructive trust have been satisfied: James'
new wife received and retained a benefit, which was unjust to
James' children who were denied their guaranteed means of support,
and the aforementioned unjust enrichment was the result of James'
wrongful conduct in violating the MSA." Id. Accordingly, it
concluded that "[e]quity requires the imposition of a constructive
trust." Id. Lynnea petitioned this court for review.
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No. 2018AP712-FT
II
¶18 We are called upon to review the court of appeals'
decision determining that a constructive trust must be imposed. A
decision to impose a constructive trust is subject to a two-tiered
standard of review. Sulzer v. Diedrich, 2003 WI 90, ¶16, 263
Wis. 2d 496, 664 N.W.2d 641. Legal issues, such as the
interpretation of a marital settlement agreement, are reviewed
independently of the determinations rendered by the circuit court
and court of appeals. Id.; see Topolski v. Topolski, 2011 WI 59,
¶28, 335 Wis. 2d 327, 802 N.W.2d 482.
¶19 However, the ultimate decision of whether to grant the
equitable relief of a constructive trust is reviewed for an
erroneous exercise of discretion. Sulzer, 263 Wis. 2d 496, ¶16;
Pluemer ex rel. Buggs v. Pluemer, 2009 WI App 170, ¶9, 322
Wis. 2d 138, 776 N.W.2d 261. An exercise of discretion is
erroneous if it is based on an error of law or fact. Horizon Bank,
Nat'l Ass'n v. Marshalls Point Retreat LLC, 2018 WI 19, ¶29, 380
Wis. 2d 60, 908 N.W.2d 797. A discretionary determination will be
upheld as long as the court "examined the relevant facts, applied
a proper standard of law, and, using a demonstrated rational
process, reached a conclusion that a reasonable judge could reach."
LeMere v. LeMere, 2003 WI 67, ¶13, 262 Wis. 2d 426, 663 N.W.2d 789(quoting Long v. Long, 196 Wis. 2d 691, 695, 539 N.W.2d 462 (Ct.
App. 1995)).
III
¶20 We initially examine the MSA to determine if a lien on
James's estate is the exclusive remedy for a breach of the life
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No. 2018AP712-FT
insurance provision. Subsequently, we turn to address whether the
court of appeals properly applied a constructive trust to the life
insurance proceeds in Lynnea's possession. Finally, we provide
guidance to the circuit court as it conducts proceedings on remand.
A
¶21 As stated, James and Joan, through the negotiation of
the MSA and the subsequent incorporation of the MSA in the circuit
court's judgment of divorce, agreed that "[b]oth parties shall
maintain in full force and pay the premiums on all life insurance
presently in existence on their lives or obtain comparable
insurance coverage, with the parties' minor children named as the
sole and irrevocable primary beneficiaries . . . ." The MSA
further provides a remedy in the event either party breaches the
provision:
If either party fails for any reason to maintain any of
the insurance required under this article, there shall
be a valid and provable lien against his or her estate
in favor of the specified beneficiary to the extent of
the difference between the insurance required and the
actual death benefits received.
¶22 Lynnea contends that the remedy provision sets forth a
single and exclusive remedy in the event of either party's breach
of the life insurance requirement in the MSA: a lien against the
estate of the breaching party. In contrast, Joan asserts that the
lien provision is not an exclusive remedy and that as a result
other remedies, including constructive trust, are available.
¶23 We agree with Joan on this point. Although the remedy
provision states that there "shall" be a lien, it does not follow
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No. 2018AP712-FT
that all other remedies are inapposite. There is no such limiting
language in the MSA.
¶24 This result is compelled regardless of whether we label
the MSA as a judgment of the circuit court or as a contract. If
we call the MSA a judgment, we follow this court's precedent
indicating that "[a] divorce judgment that is clear on its face is
not open to construction." Washington v. Washington, 2000 WI 47,
¶17, 234 Wis. 2d 689, 611 N.W.2d 261. The MSA is clear on its
face——although a lien on James's estate is plainly an available
and mandatory remedy for breach of the life insurance provision,
there is no limiting language that would indicate that it is the
only remedy for such a breach.
¶25 Similarly, if we call the MSA a contract, Lynnea's
argument fares no better. "Although the parties may, in their
contract, specify a remedy for a breach thereof, that specification
does not exclude other legally recognized remedies. A contract
will not be construed as taking away a common-law remedy unless
that result is imperatively required." Local 248 UAW v. Natzke,
36 Wis. 2d 237, 251, 153 N.W.2d 602 (1967); see also Coleman v.
Percy, 86 Wis. 2d 336, 340, 272 N.W.2d 118 (Ct. App. 1978)
(explaining that "a contract will not be construed to take away a
common law remedy unless that result is imperatively required").
¶26 Further, adopting Lynnea's argument would run afoul of
the maxim that we "will not read words into the contract that the
parties opted not to include." Ash Park, LLC v. Alexander &
Bishop, Ltd., 2015 WI 65, ¶66, 363 Wis. 2d 699, 866 N.W.2d 679.
As a result, although the MSA is clear that a lien is a remedy, we
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No. 2018AP712-FT
decline to read in language indicating that a lien is the exclusive
remedy.
¶27 Accordingly, we conclude that the lien provision of the
MSA is not an exclusive remedy.
B
¶28 We turn now to address whether the court of appeals
properly applied a constructive trust to the life insurance
proceeds in Lynnea's possession.
¶29 "A constructive trust is an equitable device used to
prevent unjust enrichment which arises when a party receives a
benefit the retention of which is unjust to another party."
Sulzer, 263 Wis. 2d 496, ¶20 (citing Wilharms v. Wilharms, 93
Wis. 2d 671, 678-79, 287 N.W.2d 779 (1980)). Conceptually, it is
a remedy "used to address situations in which the legal and
beneficial interests in a particular piece of property lie with
different people." Tikalsky v. Friedman, 2019 WI 56, ¶¶18-19, 386
Wis. 2d 757, 928 N.W.2d 502.
¶30 Unjust enrichment by itself is not sufficient to require
the imposition of a constructive trust. Sulzer, 263 Wis. 2d 496,
¶20. Indeed, a constructive trust will be imposed only where there
is a demonstration of unjust enrichment accompanied by an
"additional showing" of "actual or constructive fraud, duress,
abuse of confidence, mistake, commission of a wrong, or by any
form of unconscionable conduct" that has caused the one against
whom a trust is imposed to either obtain or hold the legal title
to property which that person ought not in equity and good
conscience to enjoy. Tikalsky, 386 Wis. 2d 757, ¶21 (quoting
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No. 2018AP712-FT
Gorski v. Gorski, 82 Wis. 2d 248, 254-55, 262 N.W.2d 120 (1978)).
In short, both unjust enrichment and the "additional showing" are
required. Id.¶31 In this case, the circuit court did not reach the issue
of whether to apply a constructive trust because it determined
that constructive trust was not an available remedy. It therefore
found no facts and took no evidence.
¶32 The court of appeals, on the other hand, concluded that
a constructive trust was not only available but that it was
necessary. In the court of appeals' view, "[t]he equities of this
case mandate the creation of a constructive trust in favor of the
children so as to accomplish the intent of the MSA." Pulkkila,
No. 2018AP712-FT, unpublished slip op., ¶10.
¶33 By imposing a constructive trust in the absence of any
factfinding by the circuit court, the court of appeals in this
case jumped the gun. As stated, the imposition of a constructive
trust requires a demonstration of unjust enrichment accompanied by
the "additional showing" set forth in Tikalsky, 386 Wis. 2d 757,
¶21. Without the benefit of factfinding by the circuit court,
such an "additional showing" cannot be demonstrated.
¶34 Whether to impose a constructive trust is a
discretionary determination that must be made through examination
of the relevant facts. See Pluemer, 322 Wis. 2d 138, ¶9
(explaining that the decision as to whether to impose a
constructive trust, as a discretionary determination, will be
sustained on appeal if the circuit court "examined the relevant
facts, applied the proper standard of law, and, using a
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No. 2018AP712-FT
demonstrated rational process, reached a conclusion that a
reasonable judge could reach"). The circuit court here did not
examine the relevant facts because it did not reach the
constructive trust issue, and the court of appeals did not examine
the relevant facts because the circuit court had found none.
¶35 Additionally, case law indicates that "[t]he extent to
which a constructive trust should be imposed upon . . . insurance
proceeds can only be determined after an evidentiary hearing and
a careful and equitable consideration of all relevant factors."
Pluemer, 322 Wis. 2d 138, ¶23 (quoting Prince v. Bryant, 87
Wis. 2d 662, 673, 275 N.W.2d 676 (1979)). Like the "additional
showing" requirement, the "extent" of any constructive trust that
should be imposed cannot be demonstrated in a record vacuum, in
the absence of factual findings. Accordingly, the court of appeals
erroneously exercised its discretion because it determined that a
constructive trust was appropriate in the absence of an evidentiary
hearing and resulting relevant factual findings.
¶36 The circuit court here correctly recognized that
factfinding would be necessary in the event of a remand. It
stated, "I believe that if I am overturned, the Court will give
some instructions that we have to have a hearing as to what to do
with this constructive trust." The court of appeals' decision
effectively short-circuits the circuit court's well-reasoned
expectation and opportunity to consider such an issue.
¶37 Accordingly, we conclude that the court of appeals erred
in imposing a constructive trust absent findings of fact that would
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No. 2018AP712-FT
support such an imposition.3 We remand to the circuit court to
engage in factfinding and subsequently determine whether to impose
a constructive trust in the first instance.
¶38 On remand, the circuit court will necessarily conduct an
evidentiary hearing. See Pluemer, 322 Wis. 2d 138, ¶23. From the
evidence deduced at this hearing, the circuit court will determine
whether a constructive trust should be imposed, and if so, to what
extent.
¶39 Whether to impose a constructive trust presents a fact-
intensive inquiry. See Prince, 87 Wis. 2d at 667-68 (explaining
that "in imposing the doctrine [of constructive trust] each case
must be considered in the factual situation presented" and that
"[e]quitable remedies must, of necessity, place heavy reliance on
the facts of the particular controversy."). In reaching its
determination, the circuit court may take into account "factors
brought to its attention by the parties relating to the equity of
the distribution. It may then make an apportionment of the
proceeds, granting or denying a constructive trust as to all or a
part of the property." Wilharms, 93 Wis. 2d at 681. Equitable
3 Lynnea asserts in her briefs that the court of appeals'
imposition of a constructive trust absent further proceedings in
the circuit court constitutes a violation of due process. We need
not address Lynnea's due process argument because we resolve this
case based on the common law of constructive trust. "This court
has frequently concluded that it need not address a claim of
constitutional error if the claim can be resolved on statutory or
common law grounds." State v. Dyess, 124 Wis. 2d 525, 533, 370
N.W.2d 222 (1985) (citations omitted).
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No. 2018AP712-FT
principles favoring each party are appropriate considerations.
See Pluemer, 322 Wis. 2d 138, ¶23.
¶40 The circuit court in this case may also take up
additional issues on remand. It may address those issues it finds
pertinent that it did not reach due to its previous determination
that a lien is the exclusive remedy.4
IV
¶41 In sum, we conclude first that the lien provision of the
MSA is not an exclusive remedy. Second, we conclude that the court
of appeals erred in imposing a constructive trust absent findings
of fact that would support such an imposition. We remand to the
circuit court to engage in factfinding and subsequently determine
whether to impose a constructive trust in the first instance.
¶42 Accordingly, we reverse the decision of the court of
appeals and remand to the circuit court for further proceedings
consistent with this opinion.
By the Court.—The decision of the court of appeals is reversed
and the cause is remanded to the circuit court for further
proceedings consistent with this opinion.
¶43 REBECCA FRANK DALLET and BRIAN HAGEDORN, JJ., did not
participate.
4As stated, the circuit court also indicated that it would
address issues of standing and proper parties on remand: "The
Court may or may not take up the issue of whether or not we have
the proper parties to this, that is the question I'm not reaching
today."
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No. 2018AP712-FT.rgb
¶44 REBECCA GRASSL BRADLEY, J. (dissenting). For nearly
85 years, marital settlement agreements ("MSAs") have been
regarded as contracts under Wisconsin law, and once approved by
circuit courts and entered as judgments, divorcing parties have
organized their families' lives and financial affairs in reliance
upon their terms. By supplanting the contractual remedy chosen by
James and Joan Pulkkila——and approved by the circuit court judge—
—with an equitable remedy unavailable under black letter contracts
law, the majority calls into question nearly century-old law,
disturbs the long-settled expectations and reliance interests of
thousands of divorced Wisconsin citizens, and leaves their
negotiated marital settlements subject to the whim of judges.
Divorced Wisconsinites beware: from this day forward, a court may
at any time rewrite the terms of your marital settlement agreement
if your former spouse comes to court pleading "unfair."
¶45 There is no dispute that before James died, he violated
the life insurance provision of the MSA by naming his spouse the
beneficiary instead of his daughters. In the MSA, he had agreed
to maintain his daughters as beneficiaries until the youngest
reached adulthood, but he failed to do so.1 James' breach triggered
1This case involves the perpetuation of a significant factual
error with respect to the older daughter's birthdate. The Judgment
of Divorce, Joan's affidavit, and multiple other documents in the
record list B.P.'s birthdate as August 18, 1988, which would have
made her 27 years old——and not a minor——when her father died. This
factual error went uncorrected in the court of appeals and in this
court until the court raised it during oral argument. Joan's
lawyer failed to correct this factual error until confronted by
the court. Appellate courts rely on the record and the facts it
contains. Lawyers have a duty "to correct a false statement of
material fact or law previously made to the tribunal by the
1
No. 2018AP712-FT.rgb
the remedy specified in the MSA's life insurance provision, for
which James and Joan fought "tooth and nail." This court should
honor the parties' contractual remedy, enforce the MSA, and affirm
the circuit court. Instead, the majority dismisses the MSA's
contractual provisions as non-exclusive and authorizes the circuit
court to consider imposing the extra-contractual and equitable
remedy of a constructive trust.
¶46 I write separately to clarify that: (1) MSAs are
contracts; (2) incorporation of an MSA into a divorce judgment
does not alter its contractual nature; and (3) the remedy provided
by the MSA and approved by the circuit court should be enforced.
Whether the MSA was a contract was never in dispute. All parties
agree the MSA was a contract between James and Joan and that the
circuit court approved its provisions in 2009 by incorporating the
MSA into the divorce judgment. The sole issues presented to this
court were whether the MSA's specified remedy for breach of the
insurance provision was the exclusive remedy, rendering a
constructive trust unavailable and whether the court of appeals
violated Lynnea's due process rights by imposing one.
¶47 By implying that an MSA loses its contractual nature
after its incorporation into the circuit court's judgment, the
majority destabilizes black letter divorce law. Treating an MSA
as a judgment subject to equitable modification by a court would
introduce a drastic sea change in the treatment of existing MSAs
to the detriment of parties who reasonably expected finality once
lawyer." SCR 20:3.3. Joan's lawyer should have notified both the
court of appeals as well as this court of the error.
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No. 2018AP712-FT.rgb
their divorce judgments were entered. MSAs are contracts, remain
so post-judgment, and should be enforced according to the terms
for which the parties fought "tooth and nail." I would reverse
the court of appeals decision imposing a constructive trust and
reinstate the order of the circuit court. I respectfully dissent.
I
¶48 MSAs have been treated as contracts by this court for at
least 83 years:
 Vaccaro v. Vaccaro, 67 Wis. 2d 477, 486, 227 N.W.2d 62 (1975)
(holding that not all stipulations in divorce proceedings are
contracts, but "contractual obligations arise only in
situations where the court expressly refers to and approves
a formal agreement between the parties, and not where, as
here, the court merely adopts and to some extent modifies the
parties' joint recommendations as to alimony, support or
property settlement.").
 May v. May, 2012 WI 35, ¶¶4, 18, 339 Wis. 2d 626, 813
N.W.2d 179 (dealing with child support set forth in an MSA
incorporated by the divorce judgment, stating "we are
sensitive to the importance and prevalence of stipulations in
helping families going through difficult and litigious
divorces and curbing disagreements [between] the parties.
The ability to contract is fundamental to our legal system
and may aid parties in settling their divorces more amicably."
(emphasis added) (quoting Frisch v. Henrichs, 2007 WI 102,
¶75, 304 Wis. 2d 1, 736 N.W.2d 85).
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 Topolski v. Topolski, 2011 WI 59, ¶¶26-49, 335 Wis. 2d 327,
802 N.W.2d 482 (applying principles of contract
interpretation to an MSA and the standard of review for
written instruments).
 Schmidt v. Schmidt, 40 Wis. 2d 649, 653, 162 N.W.2d 618(1968) ("Stipulations in divorce actions are in the nature of
a contract." (citing In re Estate of Boyd, 18 Wis. 2d 379,
118 N.W.2d 705 (1963))).
 In re Estate of Boyd, 18 Wis. 2d 379, 381, 118 N.W.2d 705(1963) ("A stipulation in a divorce action is in the nature
of a contract." (citing Miner v. Miner, 10 Wis. 2d 438, 444,
103 N.W.2d 4 (1960)), abrogated on other grounds by Rohde-
Giovanni v. Baumgart, 2004 WI 27, 269 Wis. 2d 598, 676
N.W.2d 452).
 Miner v. Miner, 10 Wis. 2d at 443-44, ("[T]here may be
situations in which the parties enter into a formal contract
or written agreement outside of court in which they finally
settle all their financial rights and duties toward each other
in contemplation of the uncertainties of the
future. . . . When the court merely refers to such an
agreement and approves it without making the provisions
thereof a part of its judgment, the weight of authority is
that such an agreement is not subject to modification by the
court. . . . The arrangement is contractual, not a judicial
determination, and therefore no more subject to change by the
court than the terms of any other private agreement.").
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 Frisch v. Henrichs, 2007 WI 102, ¶¶30, 75, 304 Wis. 2d 1, 736
N.W.2d 85 ("This case also requires us to review the 1996
stipulation agreement between the parties. The construction
of a written contract is a question of law that we review de
novo." (citation omitted); "[W]e are sensitive to the
importance and prevalence of stipulations in helping families
going through difficult and litigious divorces and curbing
disagreements among the parties. The ability to contract is
fundamental to our legal system and may aid parties in
settling their divorces more amicably.")
 Wright v. Wright, 92 Wis. 2d 246, 248, 255, 284 N.W.2d 894(1979) (dealing with a divorce judgment, while stating
"[j]udgments are to be construed in the same manner as other
written instruments." (citing Vaccaro, 67 Wis. 2d at 482)).
 In re Will of Koeffler, 218 Wis. 560, 561, 563-65, 260
N.W. 638 (1935) (referring to an "antenuptial agreement or
marriage settlement" as a "marriage settlement contract").
(emphasis added).
¶49 MSAs have been treated as contracts by the Wisconsin
Court of Appeals in many more cases:
 Pulkkila v. Pulkkila, No. 2018AP712-FT, unpublished slip op.,
¶6 (Wis. Ct. App. Feb. 27, 2019) ("Importantly, the law of
constructive trusts does not require a finding that the
contractual language is ambiguous." (emphasis added)).
 North v. Farris, No. 2015AP1466, unpublished slip op., *2
(Wis. Ct. App. June 23, 2016) ("A marital settlement agreement
is a type of contract.").
5
No. 2018AP712-FT.rgb
 Winters v. Winters, 2005 WI App 94, ¶¶15, 17, 21, 281
Wis. 2d 798, 699 N.W.2d 229 ("This issue requires us to
interpret the language of the marital settlement agreement,
which is a contract and subject to de novo review." (citing
Taylor v. Taylor, 2002 WI App 253, ¶7, 258 Wis. 2d 290, 653
N.W.2d 524); applying principles of contract interpretation
to the MSA; holding "the terms of the marital settlement
agreement require . . . ").
 Taylor v. Taylor, 2002 WI App 253, ¶7, 258 Wis. 2d 290, 653
N.W.2d 524 ("This appeal, however, requires us to interpret
the language of a marital settlement agreement, which is 'in
the nature of a contract,' the construction of which is a
question of law we review do novo." (citing Rosplock v.
Rosplock, 217 Wis. 2d 22, 30, 577 N.W.2d 32 (Ct. App. 1998));
applying principles of contract interpretation to the MSA and
concluding its terms are not ambiguous).
 Rosplock v. Rosplock, 217 Wis. 2d 22, 30, 577 N.W.2d 32 (Ct.
App. 1998) (applying contract principles to the parties'
written stipulation for maintenance while stating "[a]
stipulation incorporated into a divorce judgment is in the
nature of a contract.").
 Koonce v. Koonce, No. 00-2279-FT, unpublished slip op., ¶¶5-
6 (Wis. Ct. App. Dec. 27, 2000) ("At issue is the
interpretation of a marital settlement agreement. A
stipulation incorporated into a divorce judgment is in the
nature of a contract." (citation omitted); concluded the MSA
was unambiguous).
6
No. 2018AP712-FT.rgb
 Paulson v. Lutze, No. 2015AP230-FT, unpublished slip op., ¶12
(Wis. Ct. App. Oct. 20, 2015) (per curiam) ("Just like the
premarital agreement in Jones, the Paulsons' marital
settlement agreement is a binding contract, in writing, and
as such, it is an affirmative act where the parties are
intentionally relinquishing known rights." (citing Jones v.
Estate of Jones, 2002 WI 61, ¶17, 253 Wis. 2d 158, 646
N.W.2d 280)).
 Winters v. Winters, No. 2007AP909, unpublished slip op., ¶7
(Wis. Ct. App. Aug. 27, 2008) (per curiam) ("Because a marital
settlement agreement is a contract, the interpretation of its
language is subject to de novo review." (citing Winters, 281
Wis. 2d 798, ¶15)).
 Jalovec v. Jalovec, 2007 WI App 206, ¶¶4, 10 305 Wis. 2d 467,
739 N.W.2d 834 (With respect to the interpretation of an MSA,
"[r]esolution of this issue requires us to construe the
stipulation agreement between the parties. The construction
of a written contract is a question of law" and holding the
MSA violated public policy because it restricted the
availability of child support modification).
 Ondrasek v. Tenneson, 158 Wis. 2d 690, 692-94, 462 N.W.2d 915(Ct. App. 1990) ("The parties . . . entered into a marital
settlement agreement. . . . The marital settlement agreement
was incorporated into the judgment of divorce. . . . The
construction of a written contract is normally a matter of
law for the court.") (footnotes omitted; citations omitted).
7
No. 2018AP712-FT.rgb
 Grosshans v. Grosshans, No. 2005AP1770, unpublished slip op.,
¶¶2, 5-6 (Wis. Ct. App. July 6, 2006) (per curiam) (calling
an MSA "a contract," and applying "standard principles of
contract construction" such as looking to the intent of the
parties and holding the contract ambiguous).
 Duhame ex rel. Corrigan v. Duhame, 154 Wis. 2d 258, 264-65,
453 N.W.2d 149 (1989) ("The language at issue here was the
result of a stipulation between the parties to the divorce.
A stipulation is in the nature of a contract and the trial
court must seek a construction which will effectuate what
appears to have been the intention of the parties."
(citations omitted)).
 Pluemer ex rel. Buggs v. Pluemer, 2009 WI App 170, ¶14, 322
Wis. 2d 138, 776 N.W.2d 261 ("A stipulation is in the nature
of a contract and the trial court must seek a construction
which will effectuate what appears to have been the intention
of the parties." (quoting Duhame, 154 Wis. 2d at 264)).
 Kastelic v. Kastelic, 119 Wis. 2d 280, 287, 350 N.W.2d 714(Ct. App. 1984) ("In divorce actions, stipulations are in the
nature of a contract." (citing Schmidt, 40 Wis. 2d at 653)).
 Yacoub v. Yacoub, No. 2015AP2557, unpublished slip op., ¶18
(Wis. Ct. App. Mar. 14, 2017) (per curiam) ("'The construction
of a written contract presents a question of law which we
review do novo.' If the contractual terms are clear and
unambiguous, as they are [in the MSA] here, we interpret the
contract without considering extrinsic sources." (citations
omitted)).
8
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 Wieland v. Wieland, No. 2010AP3066, unpublished slip op.,
¶10, (Wis. Ct. App. Mar. 28, 2012) (per curiam) (noting "[t]he
record shows that the [marital settlement] agreement was a
comprehensive contract," in response to a claim of estoppel
preventing modification of the judgment).
 Smith v. Smith, No. 00-2123, unpublished slip op., ¶¶5-6, 8
(Wis. Ct. App. Feb. 21, 2001) (referring to an MSA
incorporated into a divorce judgment as a "contract" and
applying contract principles).
 Dickau v. Dickau, 2012 WI App 111, ¶¶14, 20, 344 Wis. 2d 308,
824 N.W.2d 142 ("We apply the rules of contract construction
to a divorce judgment . . . This is true even when the divorce
judgment is based on the parties' stipulation. . . . In
divorce actions, stipulations are in the nature of a
contract." (quoting Waters v. Waters, 2007 WI App 40, ¶6,
300 Wis. 2d 224, 730 N.W.2d 655) (applying contract
principles to the divorce judgment)).
 Wagner v. Estate of Sobczak, 2011 WI App 159, ¶7, 338
Wis. 2d 92, 808 N.W.2d 167 ("[T]he marital settlement
agreement in this case . . . was incorporated into the final
judgment of divorce. A judgment [of divorce] is interpreted
in the same manner as other written documents." (citation
omitted); discussing principles of contract construction for
the divorce judgment incorporating the MSA).
 Reetz v. Reetz, No. 2013AP472, unpublished slip op., ¶7 (Wis.
Ct. App. Oct. 24, 2013) ("[T]he parties dispute whether the
circuit court correctly construed subsection (f) of the
9
No. 2018AP712-FT.rgb
marital settlement agreement, which, as we have stated, was
incorporated into the judgment of divorce. The construction
of a divorce judgment is a legal issue that we review
independently of the circuit court. We apply the rules of
contract construction to a divorce judgment, including where,
as here, 'the divorce judgment is based on the parties'
stipulation.'" (footnotes omitted; internal citations
omitted)).
 Waters v. Waters, 2007 WI App 40, ¶¶2, 6, 300 Wis. 2d 224,
730 N.W.2d 655 (with respect to a "Final Stipulation-Marital
Settlement Agreement," "[w]e apply the rules of contract
construction to a divorce judgment . . . This is true even
when the divorce judgment is based on the parties'
stipulation . . . In divorce actions, stipulations are in
the nature of a contract." (citations omitted)).
 Hutjens v. Hutjens, 2002 WI App 162, ¶¶2-24, 256 Wis. 2d 255,
647 N.W.2d 448 (applying principles of contract construction
to an amended divorce judgment originally based on an MSA).
 Henkel v. West, No. 99-0724, unpublished slip op., ¶15 (Wis.
Ct. App. Dec. 30, 1999) ("A marital settlement agreement or
stipulation that is 'incorporated into a divorce judgment is
in the nature of a contract.'" (citing Rosplock, 217
Wis. 2d at 30); "However, unlike with contract law, in a
divorce, a trial court can modify certain terms of the
agreement based on a 'substantial change in circumstances'
despite the original intention of the parties." (citing Wis.
Stat. § 767.32(1)(a))).
10
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 Murray v. Murray, 231 Wis. 2d 71, 80, 604 N.W.2d 912 (Ct.
App. 1999) (citing to an MSA favorably for its language that
"[t]his agreement is a legally binding contract" before
finding no substantial change in circumstances to modify
support).
 Pinter v. Pinter, No. 95-2620-FT, unpublished slip op., *2
(Wis. Ct. App. May 7, 1996) (per curiam) (holding that an MSA
incorporated into a divorce judgment was unambiguous in
requiring the husband to keep the first wife as a beneficiary
on the life insurance policy instead of the second wife; and
"[a] judgment is interpreted in the same manner as other
written documents." (citing Jacobson v. Jacobson, 177
Wis. 2d 539, 546, 502 N.W.2d 869 (Ct. App. 1993)).
 Kaplan v. Kaplan, No. 93-0478-FT, unpublished slip op., *1-2
(Wis. Ct. App. Jan. 5, 1994) (per curiam) (applying contract
principles to the "interpretation of the parties' marital
settlement agreement").
 Jacobson v. Jacobson, 177 Wis. 2d 539, 542, 546-47, 502
N.W.2d 869 (Ct. App. 1993) (addressing a stipulation of the
parties in a divorce proceeding with respect to child support,
insurance, property division, debts, and maintenance,
ultimately incorporated into the judgment, and stating "[a]
court interprets a judgment in the same manner as other
written instruments . . . [w]hether the contract is ambiguous
is a question of law . . . . Only when judgments are
ambiguous is construction permitted[.]" (internal citations
omitted)).
11
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 Wilke v. Wilke, 212 Wis. 2d 271, 272-73, 569 N.W.2d 296 (Ct.
App. 1997) (with respect to a "marital settlement agreement"
approved by circuit court and incorporated into divorce
judgment, which divided marital property: "This appeal
addresses the effect a clause of mutual release contained in
the marital property agreement executed by Scott and Judith
as part of their judgment of divorce has on the restrictive
stock agreement . . . . Insofar as both documents constitute
contracts, their respective construction is a legal question
reviewed independently[.]" (citation omitted)).
¶50 In accordance with Wisconsin cases, MSAs have been
regarded as contracts by secondary sources:
 Jay E. Grenig & Nathan A. Fishbach, Wisconsin Practice Series:
Methods of Practice Form 42-13 (5th ed. 2019) (referring to
MSA as "a legally binding contract.").
 Gregg M. Herman & Kelley J. Shock, Family Law In Wisconsin:
A Forms and Procedures Handbook Vol. 2 (9th ed. 2017)
(distinguishing between an MSA, which is a contract and
stipulations between the parties that are just an
"understanding of what the parties desire[.]").
 Kelvin H. Dickinson, Divorce and Life Insurance: Post Mortem
Remedies for Breach of a Duty to Maintain a Policy for a
Designated Beneficiary, 61 Mo. L. Rev. 533, 551-52 (1996)
("Although many divorce agreements are essentially contracts,
and, thus, governed by standard contract principles, divorce
itself is still a matter regulated by statute and administered
by courts." (emphasis added; internal footnotes omitted)).
12
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 Adam W. Lasker, Joint Parenting Agreement Allows Mother to
Remove Children to California, 100 Ill. B.J. 579 (2012) ("A
JPA, like a marital settlement agreement (MSA), is a contract
between the parties and, as such, a court's primary objective
is to give effect to the intent of the parties, which must be
determined only by the language of the agreement, absent an
ambiguity[.]" (emphasis added; quoted source omitted)).
 Timothy Arcaro & Laura Miller Cancilla, The Illusory
Imputation of Income in Marital Settlement Agreements: "The
Future Ain't What it Used to Be," 35 Nova L. Rev. 157, 160,
173 (2010) ("[Florida] [c]ase law is unequivocal that MSAs
are to be interpreted and enforced like other contracts."
(citations omitted); also arguing that this conflicts with a
trial court's obligation to ensure the best interests of the
child and advocating that "principles of pure contract law
cannot apply to the enforcement of an MSA that infringes upon
a child's guaranteed right to support.").
 Lauren M. Ilvento, The Application of Kinney System, Inc. v.
Continental Ins. Co. to Modification of Child Custody
Proceedings, 83-May Fla. B.J. 41, 43 (2009) ("In the context
of family law, marital settlement agreements and mediated
agreements are contracts and are to be interpreted pursuant
to the provisions of contract law." (emphasis added;
citations omitted)).
 Sol Lovas, When is a Family Not a Family? Inheritance and
the Taxation of Inheritance Within the Non-Traditional
Family, 24 Idaho L. Rev. 353, 366 (1988) ("Separation
13
No. 2018AP712-FT.rgb
agreements are, of course, subject to the same attacks as all
other contracts, such as fraud, duress, and lack of
consideration. Marital settlement agreements may also be set
aside if they are grossly inequitable or unfair, and they can
be attacked for lack of reasonable and fair disclosure prior
to execution." (internal footnotes omitted).
 Renee A. Rubino, Marital Settlement Agreements – The Key to
Life After Divorce, 279-Dec N.J. Law 46, 46 (2012) ("To be
clear, an MSA is an enforceable contract like any other
contract. Although principles of equity are applied to ensure
the MSA is fair and just, contract principles are utilized to
ascertain the MSA's meaning and the intent of the parties."
(citations omitted)).
 Reid T. Sherard, Family Court Approval of a Marital Settlement
Agreement Over One Party's Objection, 26-Jan S.C. Law. 44
(2015) ("The term 'marital settlement agreement' is a term of
art . . . such agreements are 'viewed as contracts' between
the parties[.]" (quoted source omitted)).
¶51 Dictionaries as well as other sources also describe MSAs
as contracts:
 Marital Settlement Agreement, Black's Law Dictionary
(11th ed. 2019) ("See Divorce Agreement.") Divorce
Agreement, Black's Law Dictionary (11th ed. 2019) ("A
contractual agreement that sets out divorcing spouses' rights
and responsibilities regarding property, alimony, custody,
visitation, and child support. The divorce agreement usu.
becomes incorporated by court order as a part of the divorce
14
No. 2018AP712-FT.rgb
decree and thus is enforceable by contempt, among other
remedies. – Also termed agreement incident to divorce;
marital settlement agreement; separation agreement."
(emphasis added)).
 J. Robert J. Steigmann & Lori A. Nicholson, Illinois Evidence
Manual § 12.6 (4th ed. 2019) ("Interpreting a marital
settlement agreement is a matter of contract construction.").
 17 Robert S. Hunter, Illinois Practice Series: Estate
Planning & Administration § 27.5 (4th ed. 2019) ("The
provisions of marital settlement agreements and of
dissolution judgments which incorporate such agreements are
interpreted under the same rules governing the construction
of contracts.").
 41 C.J.S. Husband and Wife § 95 (2020) ("A marital settlement
agreement is a contract, which, when entered into before the
dissolution of the marriage, is binding upon the parties."
(internal footnotes omitted).).
¶52 This substantial body of law confirms the essential
nature of MSAs: an agreement negotiated between two parties, with
lawful consideration exchanged, constitutes a binding contract.
See Contract Black's Law Dictionary (11th ed. 2019) (defining
"contract" as "An agreement between two or more parties creating
obligations that are enforceable or otherwise recognizable at law
."). A circuit court's review, approval and
incorporation of the parties' agreement into the divorce judgment
does not change the nature of the agreement. Nor should it mean
that a court can alter the terms of the agreement unilaterally,
15
No. 2018AP712-FT.rgb
years after its execution, based merely on its incorporation into
a divorce judgment.
¶53 The question in this case is not whether a divorce
judgment strips an MSA of its contractual nature or even whether
a divorce judgment should be interpreted as "a contract." The
parties never presented or argued that question because that issue
was not in dispute. Under black letter law, an MSA is a contract
and its incorporation into a divorce judgment does not change that.
Nor does incorporation into the divorce judgment mean that one of
the parties can ask a court decades later to replace the legal
remedy the parties chose at the time of the divorce with an
equitable one. Courts do not create contracts, parties do; the
courts' duty is to enforce them. See In re F.T.R., 2013 WI 66,
¶57, 349 Wis. 2d 84, 833 N.W.2d 634 ("The elements of a contract
are offer, acceptance, and consideration." (citations omitted));
Restatement (Second) of Contracts § 1 (1981) ("A contract is a
promise or set of promises . . . ."); 1 Richard A. Lord, Williston
on Contracts § 1:1 (4th ed. 1990) ("[Contract law] is intended to
enforce the expectancy interests created by the parties'
promises[.]").
¶54 The Pulkkilas expressly identified and preserved their
MSA as a contract. In the very first paragraph of the MSA, the
parties "agree that the terms and provisions of the agreement may
be incorporated by the court in the pending divorce action between
the parties in the conclusions of law and judgment to be entered
therein; however, this agreement shall independently survive any
such judgment[.]" Section XVI of the MSA reiterates the
16
No. 2018AP712-FT.rgb
independent, contractual nature of the Pulkkilas' agreement:
"this agreement shall survive any subsequent judgment of divorce
and shall have independent legal significance. This agreement is
a legally binding contract[.]" Instead of respecting the parties'
contract and applying the Pulkkilas' chosen remedy, the majority
sets aside the parties' negotiated contractual provisions in favor
of reaching a different result because the lien remedy does not
seem "fair." However, "[a] provision that seems to the court
unjust or unfortunate (creating the so-called casus male inclusus)
must nonetheless be given effect." Antonin Scalia & Bryan Garner,
Reading Law: The Interpretation of Legal Texts 174 (2012). Even
if the Pulkkilas' bargained-for remedy was not exclusive, a
constructive trust is not an available alternative. "It is well
established that . . . 'the mere failure to perform an agreement
or to carry out a promise cannot in itself give rise to
a constructive trust.'" In re Estate of Demos, 50 Wis. 2d 262,
269, 184 N.W.2d 117 (1971) (quoted source omitted).
II
A. MSAs are contracts.
¶55 The parties in this case never disputed that MSAs are
contracts under the law. Joan Pulkkila referred to the MSA as a
"contract" in her brief: "Lynnea fails to acknowledge that MSAs,
unlike other contracts . . . " and "[t]hus, the fact that a remedy
or any other provision in an MSA may have been bargained for as
part of a contractual agreement between parties . . . ."
(Emphasis added.) Indeed, Joan admitted to the circuit court that
"this is a contractual situation." Similarly, the court of appeals
17
No. 2018AP712-FT.rgb
based its holding on the MSA being a contract. Pulkkila v.
Pulkkila, No. 2018AP712-FT, unpublished slip op., ¶6 (Wis. Ct.
App. Feb. 27, 2019) ("Importantly, the law of constructive trusts
does not require a finding that the contractual language is
ambiguous." (emphasis added)).
¶56 Although an MSA is subject to approval by the circuit
court in order to prevent contracts violating public policy, once
a court approves the MSA, those concerns disappear. The Pulkkilas'
MSA did not violate public policy, the circuit court approved it,
and the law deemed it a contract. See ¶¶48-52, supra. This court
should have applied the law, respected the parties' bargain, and
honored the contractual remedy the parties chose instead of
offering an extra-contractual remedy grounded in equity and
fairness.2
¶57 Recognizing that In re Estate of Boyd ("A stipulation in
a divorce action is in the nature of a contract.")3 could be read
as inconsistent with Miner ("The [alimony] award was not
contractual, but by adjudication and subject to modification"),4
this court reconciled the two opinions. In Vaccaro v. Vaccaro,
the court held not all stipulations in divorce proceedings are
2 The circuit court appropriately recognized that it is not
the circuit court's job "to go back and fix the parties' agreement
to make it fair now for the children. It's not fair they're not
getting as much money. They lost their father. It is a rotten
deal for them. However, this Court has to follow the law on it."
3 In re Boyd's Estate, 18 Wis. 2d 379, 381, 118 N.W.2d 705(1963).
4 Miner v. Miner, 10 Wis. 2d 438, 442-44, 103 N.W.2d 4 (1960),
abrogated on other grounds by Rohde-Giovanni v. Baumgart, 2004 WI
27, 269 Wis. 2d 598, 676 N.W.2d 452.
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contracts, but that "contractual obligations arise only in
situations where the court expressly refers to and approves a
formal agreement between the parties, and not where, as [in
Vaccaro], the court merely adopts and to some extent modifies the
parties' joint recommendations as to alimony, support or property
settlement." 67 Wis. 2d 477, 486, 227 N.W.2d 62 (1975) (emphasis
added); see also Kelvin H. Dickinson, Divorce and Life Insurance:
Post Mortem Remedies for Breach of a Duty to Maintain a Policy for
a Designated Beneficiary, 61 Mo. L. Rev. 533, 551-52 (1996)
(conceding that "many divorce agreements are essentially
contracts, and, thus, governed by standard contract principles"
while citing to the quote above from Vacarro (emphasis added)).
¶58 This court's recent opinions discussed the importance of
the right of divorcing parties to contract through MSAs, and
applied contract principles to these agreements. In May v. May,
the court confronted a child support stipulation in the parties'
MSA, which the divorce judgment incorporated. 2012 WI 35, ¶4, 339
Wis. 2d 626, 813 N.W.2d 179. The court stated, "we are sensitive
to the importance and prevalence of stipulations in helping
families going through difficult and litigious divorces and
curbing disagreements [between] the parties. The ability to
contract is fundamental to our legal system and may aid parties in
settling their divorces more amicably." Id., ¶18 (emphasis added)
(quoting Frisch v. Henrichs, 2007 WI 102, ¶75, 304 Wis. 2d 1, 736
N.W.2d 85). In this case, the majority fails to honor divorcing
parties' fundamental freedom to contract, depriving them (and
19
No. 2018AP712-FT.rgb
their children) of any finality in their financial and relational
matters.
¶59 In a case preceding May, this court applied contract
principles to "interpret[]" an MSA incorporated into a divorce
judgment. See Topolski v. Topolski, 2011 WI 59, ¶1, 335
Wis. 2d 327, 802 N.W.2d 482. The Topolski court stated it was
putting the parties in the "same position they would have been in"
but for the occurrence of an event, and giving the parties "exactly
what they bargained for in the Marital Settlement Agreement[.]"
Id., ¶7. These are settled pillars of contract law. See Daanen
& Janssen, Inc. v. Cedarapids, Inc., 216 Wis. 2d 395, 404, 573
N.W.2d 842 (1998) ("The law of contracts is designed . . . to
protect the expectancy interests of parties to private bargained-
for agreements. Contract law, therefore, seeks to . . . ensur[e]
that each party receives the benefit of their bargain." (citations
omitted)). The Topolski court, citing to contract cases, adopted
as the standard of review "well-established" "principles that
govern [the] interpretation of written documents[.]" Topolski,
335 Wis. 2d 327, ¶¶28-32 n.10. The court proceeded to analyze the
text of the MSA, giving it "its plain and ordinary meaning" to
ascertain the parties' intent. Id., ¶49.
¶60 I would apply longstanding, controlling authority and
treat the MSA between Joan and James Pulkkila as the contract it
is. The analysis then turns to whether there is any legal basis
to set aside the contract as a whole or its life insurance
provision in particular. There is none.
20
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B. The divorce judgment did not nullify or alter the MSA.
¶61 There are multiple reasons courts nullify or modify
contracts——including rescission, mistake, fraud, duress, etc. See
Williston §§ 18, 68-77. None of these were raised by either party
and none apply in the Pulkkilas' case. At the time the terms of
the Pulkkilas' divorce were finalized, the circuit court approved
and incorporated the MSA into the divorce judgment, without
disapproving or amending the provisions in Section V of the MSA,5
which required the parties to maintain life insurance with their
minor children as beneficiaries and specified the remedy in case
of a breach. Because the life insurance provision was not
nullified or amended by the divorce judgment's incorporation of
the agreement, the divorce judgment did not change the contractual
nature of the MSA. See, e.g., Topolski, 355 Wis. 2d 327, ¶¶28-
49; Dickau, 344 Wis. 2d 308, ¶14 ("We apply the rules of contract
construction to a divorce judgment[.]" (citation omitted)).
C. The remedy provision of the MSA controls.
¶62 "If there is one thing which more than another public
policy requires it is that [individuals] of full age and competent
understanding shall have the utmost liberty of contracting, and
that their contracts, when entered into freely and voluntarily,
shall be held sacred, and shall be enforced by courts of justice."
Midwest Neurosciences Assocs., LLC v. Great Lakes Neurosurgical
The circuit court did make several amendments to the MSA
5
following the trial, but these related to payment of utilities,
anger management counseling, child support from gross monthly
income, payment of debt, pension benefit award, cash value of
insurance policies, and a holiday schedule.
21
No. 2018AP712-FT.rgb
Assocs., LLC, 2018 WI 112, ¶39, 384 Wis. 2d 669, 920 N.W.2d 767(quoting Merten v. Nathan, 108 Wis. 2d 205, 212 n.5, 321 N.W.2d 173(1982)). Wisconsin law is replete with affirmations of the
parties' freedom to contract, including the freedom to specify
determinate remedies. See, e.g., Ash Park, LLC v. Alexander &
Bishop Ltd., 2010 WI 44, ¶37, 324 Wis. 2d 703, 783 N.W.2d 294("When a contract specifies remedies available for breach of
contract, the intention of the parties generally governs.").
¶63 Because the MSA is a contract, prevailing principles of
contract interpretation apply. "[W]e interpret the plain language
of a contract 'consistent with what a reasonable person would
understand the words to mean under the circumstances." Marx v.
Morris, 2019 WI 34, ¶63, 386 Wis. 2d 122, 925 N.W.2d 112 (quoting
Maryland Arms Ltd. P'ship v. Connell, 2010 WI 64, ¶22, 326
Wis. 2d 300, 786 N.W.2d 15. "Where the terms of a contract are
clear and unambiguous, we construe the contract according to its
literal terms." Gorton v. Hostak, Henzl & Bichler, S.C., 217
Wis. 2d 493, 506, 577 N.W.2d 617 (1998) (citation omitted).
"[U]nambiguous contract language controls contract
interpretation." Kernz v. J.L. French Corp., 2003 WI App 140, ¶9,
266 Wis. 2d 124, 667 N.W.2d 751.
¶64 Section V of the Pulkkila MSA contains the two provisions
material to this appeal:
A. Both parties shall maintain in full force and
pay the premiums on all life insurance presently in
existence on their lives or obtain comparable insurance
coverage, with the parties' minor children names as sole
and irrevocable primary beneficiaries until the youngest
minor child reaches the age of majority, or until the
child has reached the age of 19 . . .
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. . . .
D. If either party fails for any reason to maintain
any of the insurance required under this article, there
shall be a valid and provable lien against his or her
estate in favor of the specified beneficiary to the
extent of the difference between the insurance required
and the actual death benefits received.
(Emphasis added.) Section V, article A of the MSA unambiguously
required both Joan and James Pulkkila to maintain life insurance
with the children as beneficiaries, until the children become a
certain age. The parties do not dispute the obligatory requirement
of this provision or suggest an alternate meaning.
¶65 The parties' dispute centers on the remedy for failing
to adhere to the life insurance obligation set forth in section V,
article A. The majority holds the remedy for breach of that
obligation——a lien against the estate——is not the exclusive
remedy. See Majority op. ¶27. The majority cites no language in
the MSA or divorce judgment, nor any amendment to either, changing
the specific remedy the Pulkkilas chose for breach of the life
insurance provision, but instead decides the lack of limiting
language indicates that the specified lien is not the "only remedy
for such a breach" and the mandatory "shall" in this provision
does not mean the lien remedy is exclusive. Majority op., ¶¶23-
24. I disagree.
¶66 MSA section V, article D states that the remedy for
breach of the obligation set forth in article A to maintain
insurance with the children as primary beneficiaries "shall be
a . . . lien" against the estate of the party who violates article
A. The remedy applies if a party breaches this obligation "for
any reason." The word "shall" in written legal texts generally
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imposes a mandatory obligation, rather than a discretionary one.
See Village of Elm Grove v. Brefka, 2013 WI 54, ¶23, 348
Wis. 2d 282, 832 N.W.2d 121 (discussing that we "ordinarily
presume[]" that "shall" is mandatory); Scalia & Garner, Reading
Law 112 ("Mandatory words impose a duty . . . shall is
mandatory."). Reading "shall" as imposing a mandatory remedy
accords with the agreement of the parties to maintain life
insurance policies naming their children as primary beneficiaries.
Nothing in the text of the MSA or the divorce judgment suggests
the Pulkkilas agreed to (or the circuit court ordered) anything
different.
¶67 The only remedy listed in article D specifically, the
MSA as a whole, or the divorce judgment, for breach of the
obligation to maintain life insurance with the minor children as
sole beneficiaries is a "lien against [the violator's] estate in
favor of the specified beneficiary to the extent of the difference
between the insurance required and the actual death benefits
received." Under longstanding Wisconsin law, the express mention
of one option in a legal instrument forecloses the availability of
other options. See Goebel v. First Fed. Sav. & Loan Ass'n of
Racine, 83 Wis. 2d 668, 673, 266 N.W.2d 352 (1978); Horizon Bank,
Nat'l Ass'n v. Marshalls Point Retreat LLC, 2018 WI 19, ¶95, 380
Wis. 2d 60, 908 N.W.2d 797 (Rebecca Grassl Bradley, J.,
dissenting) ("Under [the] principle [of expressio unius est
exclusio alterius], a specific mention in a contract of one or
more matters is considered to exclude other matters of the same
nature or class not expressly mentioned[.]" (quoting Goebel, 83
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Wis. 2d at 673). Under this canon of construction, the expression
of the lien remedy in article D of the MSA excludes all other
remedies for failing to maintain life insurance with the children
as sole beneficiaries——including a constructive trust.
¶68 The MSA's life insurance provisions are plain and
unambiguous, and therefore govern the disposition in this case.
The lien remedy the parties elected in Section V of the MSA is
both mandatory and exclusive upon either party's failure "for any
reason" to maintain life insurance naming the minor children as
sole beneficiaries. Equitable relief, such as a constructive
trust, is not available. A constructive trust was "created by law
to prevent unjust enrichment[.]" Wilharms v. Wilharms, 93 Wis. 2d
671, 678-79, 287 N.W.2d 779 (1980). However, "[t]he doctrine of
unjust enrichment does not apply where the parties have entered
into a contract." Greenlee v. Rainbow Auction/Realty Co., Inc.,
202 Wis. 2d 653, 671, 553 N.W.2d 257 (Ct. App. 1996) (citation
omitted); In re Demos' Estate, 50 Wis. 2d 262, 269, 184 N.W.2d 117(1971) ("the mere failure to perform an agreement or to carry out
a promise cannot in itself give rise to a constructive trust");
Guaranteed Inv. Co. v. St. Croix Consol. Copper, 156 Wis. 173,
175, 145 N.W. 662 (1914)(holding that a claim in equity "cannot be
sustained" where there is an "adequate remedy at law").
¶69 Finally, the majority does not grapple with its failure
to give effect to the parties' chosen remedy language, depriving
it of any operative effect whatsoever and leaving it mere
surplusage. Specifying a mandatory lien remedy is completely
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pointless if a court is free to impose a different remedy.6 By
rewriting the parties' MSA and allowing a remedy other than the
one the MSA provides, the majority violates the canon against
surplusage. See Ash Park, LLC v. Alexander & Bishop, Ltd., 2015
WI 65, ¶37, 363 Wis. 2d 699, 866 N.W.2d 679; Heritage Mut. Ins.
Co. v. Truck Insurance-Exchange, 184 Wis. 2d 247, 258, 516
N.W.2d 8 (Ct. App. 1994) (recognizing that the surplusage rule
applies when interpreting contracts) ("[T]he general rule of
construction is that an interpretation of an agreement which gives
reasonable meaning to all provisions is preferable to one which
leaves part of the language useless or inexplicable or creates
surplusage."). "If possible . . . every provision is to be given
effect (verba cum effectu sunt accipienda). None should be
ignored. None should needlessly be given an interpretation that
causes it . . . to have no consequence." Scalia & Garner, Reading
Law at 174 (footnote omitted). The majority's treatment of the
life insurance provision needlessly writes the mandatory remedy
chosen by the parties out of the agreement altogether, violating
the surplusage canon, which "holds that it is no more the court's
function to revise by subtraction than by addition." Id. The
most frequent circumstance this canon prevents is "an
interpretation that renders [a provision] pointless." Id. at 176.
The canon applies to contracts like MSAs: "This court must be
Dissenting from the court of appeals decision, then-Judge
6
Brian Hagedorn recognized that "the MSA's mandatory lien language
does not make much sense if other remedies could be pursued instead
of a lien." Pulkkila v. Pulkkila, No. 2018AP712-FT, unpublished
slip op., ¶15 (Wis. Ct. App. Feb. 27, 2019) (Hagedorn, J.,
dissenting).
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guided by the well accepted and basic principle that an
interpretation that gives a reasonable meaning to all parts of the
contract will be preferred to one that leaves portions of the
contract meaningless." Id., (quoting Fortec Constructors v.
United States, 760 F.2d 1288, 1292 (Fed. Cir. 1985)). In
construing contracts, "courts must avoid a construction which
renders portions of a contract meaningless, inexplicable or mere
surplusage." Goebel, 83 Wis. 2d at 680.
¶70 Nothing the majority proffers can justify contravening
the parties' contract. Modifying the parties' chosen remedy also
conflicts with Wisconsin statutory law. Life insurance is an asset
under Wis. Stat. § 767.217(1) and is subject to property division
that is unmodifiable post-judgment, under § 767.59(1c)(b): "A
court may not revise or modify . . . a judgment or order with
respect to final division of property." Because the life insurance
provision addresses a marital property asset, the circuit court is
statutorily prohibited from modifying its remedy clause by
imposing a constructive trust. See also Winkler v. Winkler, 2005
WI App 100, ¶15, 282 Wis. 2d 746, 699 N.W.2d 652 (citing Krieman
v. Goldberg, 214 Wis. 2d 163, 173, 571 N.W.2d 425 (Ct. App. 1997))
("[A] final division of property is fixed for all time and is not
subject to modification."). The life insurance provision is not
modifiable and any "unfair" terms could have and should have been
rejected or amended before the divorce judgment was entered.
III
¶71 The MSA is a contract and the divorce judgment did
nothing to alter its contractual nature. The court approved it at
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the time it entered the judgment of divorce and this court should
enforce it in accordance with its terms. The Pulkkilas elected a
particular legal remedy for James Pulkkila's breach and expressed
it unequivocally in their MSA; this court should apply it. I would
reverse the court of appeals decision and hold the exclusive remedy
is a lien against James' estate, consistent with the unambiguous
words of the parties' MSA. I would reinstate the decision of the
circuit court. Because the majority disregards controlling cases
and statutes in order to confer unprecedented powers on the
judiciary to rewrite marital settlement agreements, thereby
infringing the individual freedom to contract, I respectfully
dissent.
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