Estate of Theodore R. Mortner & a. v. Lindsay Thompson

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THE SUPREME COURT OF NEW HAMPSHIRE
___________________________
Strafford
No. 2016-0584
ESTATE OF THEODORE R. MORTNER & a.
v.
LINDSAY THOMPSON
Argued: May 16, 2017
Opinion Issued: March 7, 2018
Bianco Professional Association, of Concord (Jason B. Dennis on the
brief and orally), for the plaintiffs.
Coughlin, Rainboth, Murphy & Lown, P.A., of Portsmouth (Timothy C.
Coughlin on the memorandum of law and orally), for the defendant.
HICKS, J. This appeal arises in the wake of our decision in In the Matter
of Mortner & Mortner, 168 N.H. 424, 429 (2015), in which we held that the
death of Theodore Mortner (Husband) prior to issuance of a divorce decree
abated the divorce action instituted by his then-wife, defendant Lindsay
Thompson (Wife). We declined on preservation grounds in that case to address
whether a property settlement agreement entered into by Husband and Wife
during the divorce action’s pendency survived the action’s abatement as an
independently enforceable contract. See Mortner, 168 N.H. at 429-30.
Following our decision, the plaintiffs, Husband’s estate (the “Estate”) and his
daughter, Judith Mortner (“Judith”), filed this action against Wife, alleging
breach of the property settlement agreement and unjust enrichment. The
Estate and Judith now appeal an order of the Superior Court (Howard, J.)
dismissing both claims. We affirm.
I
The pertinent factual and procedural background is set forth in our
opinion in Mortner and need not be recapitulated here. See id. at 426-27.
Subsequent to our decision in that case, the Estate and Judith instituted this
action claiming that Wife remained contractually bound to the “Memorandum
of Understanding” — a settlement agreement reached by Husband and Wife
during the divorce action’s pendency concerning division of the marital assets
and debts. We shall refer to this agreement as the “property settlement
agreement” for purposes of this appeal. The Estate and Judith also asserted
an alternative claim against Wife for unjust enrichment, alleging that, as a
result of Husband’s death, Wife “wrongly secured” or unjustly retained certain
assets that she had agreed to part with under the property settlement
agreement.
Wife subsequently moved to dismiss the contract claim, arguing that the
property settlement agreement’s enforceability was contingent upon the
issuance of a divorce decree and, because one never issued, the agreement was
unenforceable. At a hearing held on her motion, Wife also orally moved to
dismiss the unjust enrichment claim, contending that the Estate and Judith
had alleged insufficient facts to establish that she had received anything of
value from Husband or Judith, or that it would be unconscionable for Wife to
retain the disputed assets. The Estate and Judith objected.
Following the hearing, the trial court issued an order agreeing with Wife
on both fronts. With regard to the contract claim, the trial court found that the
plain language of the property settlement agreement, read in light of the
agreement’s purpose and the context in which it was negotiated, demonstrated
that a divorce decree was an “implied condition precedent” to its contractual
enforceability. As to the unjust enrichment claim, the trial court concluded
that the facts set forth in the Estate’s and Judith’s complaint were insufficient
to allege that Wife engaged in any wrongdoing, or that her retention of the
disputed assets rose to “the requisite level of indecency necessary to establish
unconscionability.” The Estate and Judith filed a motion for reconsideration
and partial clarification, which was denied. This appeal followed.
II
The Estate and Judith first challenge the trial court’s dismissal of their
contract claim against Wife, contending that the property settlement agreement
does not contain any of the signal words generally recognized to create
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conditions precedent in a contractual agreement. See Holden Eng’g and
Surveying v. Pembroke Rd. Realty Trust, 137 N.H. 393, 396 (1993). Thus,
according to the Estate and Judith, the trial court should have concluded that
Husband and Wife intended the agreement to be an enforceable contract upon
execution, not upon issuance of a divorce decree.
An essential premise of the Estate’s and Judith’s claim, however, is that
in this State, as in some other jurisdictions, a property settlement agreement
between parties in a divorce proceeding constitutes an independently
enforceable contract. See generally Annotation, Separation Agreements:
Enforceability of Provision Affecting Property Rights upon Death of One Party
Prior to Final Judgment of Divorce, 67 A.L.R.4th 237 (1989). This premise is
incorrect. It has long been common practice in New Hampshire for parties in a
divorce proceeding to reach a stipulated agreement, like Husband’s and Wife’s
property settlement agreement, regarding matters arising out of dissolution of
the marital relationship. See, e.g., Miller v. Miller, 133 N.H. 587, 590 (1990);
Narins v. Narins, 116 N.H. 200, 202 (1976); Pindar v. Pindar, 109 N.H. 76, 76
(1968). And we have long held that such agreements are binding upon the
parties. See Bossi v. Bossi, 131 N.H. 262, 265 (1988); Leighton v. Leighton,
122 N.H. 721, 723 (1982). Yet, it must be recognized that, although parties in
a divorce proceeding are free to negotiate and bind themselves to such an
agreement, the agreement itself is not self-executing in this State, but rather
becomes enforceable only through the action of the court. Compare Bossi, 131
N.H. at 265 (explaining that a master in a divorce proceeding has the discretion
“to accept or reject a settlement agreement based on its terms”) with Estate of
Ladd v. Estate of Ladd, 640 A.2d 29, 32 (Vt. 1994) (“[A] pretrial agreement
[between spouses] to distribute property is a contract, which the court can set
aside only for grounds sufficient to set aside a contract.” (quotation omitted)),
overruled by Pouech v. Pouech, 904 A.2d 70, 77 (Vt. 2006), and Surabian v.
Surabian, 285 N.E.2d 909, 911 (Mass. 1972) (“Because the separation
agreement [between husband and wife] exists independently of the divorce
decree, the [wife] could seek to have the support provision enforced in a
contract action.”).
“Notwithstanding any law to the contrary,” the family division has
exclusive jurisdiction over divorce matters. RSA 490-D:2 (Supp. 2017); see
Maldini v. Maldini, 168 N.H. 191, 195 (2015). Because “the need to render
equitable orders is inherent in the resolution of divorce matters,” In the Matter
of Muller & Muller, 164 N.H. 512, 518 (2013), the legislature has afforded the
family division the powers of a court of equity in exercising this jurisdiction, see
RSA 490-D:3 (2010). The family division’s equitable powers in a divorce
proceeding include the full authority to divide the parties’ marital property,
Maldini, 168 N.H. at 195, in a manner it deems “‘just’ based upon the evidence
presented and the equities of the case,” In the Matter of Kempton & Kempton,
167 N.H. 785, 799 (2015); see RSA 458:16-a, II (2004) (creating presumption
that an equal division of marital property is “equitable”). We afford the family
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division broad discretion in determining matters of property distribution in
fashioning the final divorce decree. Kempton, 167 N.H. at 799.
The parties cannot deprive the family division of this authority — or of its
authority to determine the disposition of other matters involved in a divorce
proceeding — by purporting to settle the matter on their own terms. Compare
Poland v. Twomey, 156 N.H. 412, 414-15 (2007) (“Generally, parties are free to
settle a case on any terms they desire and that are allowed by law.”) with
Campanello v. Mason, 571 P.2d 449, 453 (Okla. 1977) (holding that a property
settlement agreement between divorcing spouses “is not a settlement as that
term is generally used, for such agreements are not binding unless approved
and incorporated into the trial court’s decree”). It has long been true in this
State that agreements between parties in a divorce proceeding, although
binding upon them, are not binding upon the trial court, see Bossi, 131 N.H. at
265; Mortner, 168 N.H. at 429; Miller, 133 N.H. at 590; Narins, 116 N.H. at
202; Madsen v. Madsen, 109 N.H. 457, 459 (1969); see also In re Marriage of
Rettke, 696 N.W.2d 846, 850 (Minn. Ct. App. 2005) (recognizing, in a divorce
proceeding, “a [trial] court has a duty to protect the interests of both parties
and all the citizens of the state to ensure that the stipulation is fair and
reasonable to all” (quotation omitted)).
Nor may the parties defeat the power expressly conferred on the family
division by the legislature with regard to property division by reaching their
own private agreement and enforcing it through a contract action in superior
court. Maldini, 168 N.H. at 196 (holding that superior court lacked jurisdiction
over a “side agreement” reached by spouses during divorce proceedings
because it concerned marital property, “over which the family division has
exclusive jurisdiction”); see In the Matter of Sculley & Sculley, 153 N.H. 178,
181 (2006) (“Where exclusive jurisdiction is expressly conferred upon a court,
no other tribunal may exercise such jurisdiction.” (quotation omitted)).
Nevertheless, as alluded to above, the parties are entitled to enter into a
stipulated agreement, like the one in this case, setting forth a recommended
property settlement and submit it to the family division for its consideration.
But that is all such an agreement amounts to in this state — a
recommendation. Cf. Bliwas v. Bliwas, 178 N.W.2d 35, 37 (Wis. 1970); 27C
C.J.S. Divorce § 985, at 67 (2016); see also Norris and Norris, 727 P.2d 115,
116 (Or. 1986) (“A property settlement agreement is offered by the parties as a
suggested shorthand for the trial court’s obligation to achieve a distribution of
property between the parties that is just and equitable in the circumstances.”).
After consideration, the family division is free to entirely reject the provisions
set forth in the parties’ recommendation. Mortner, 168 N.H. at 429. If the
family division instead approves the recommended provisions in whole or in
part and incorporates them into a final divorce decree, those provisions become
enforceable. See Miller, 133 N.H. at 590. “But it is the court’s action, and not
the action of the parties which makes the provisions [enforceable].”
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Campanello, 571 P.2d at 453; see also Bailey v. Mann, 895 N.E.2d 1215, 1217
(Ind. 2008) (“Settlement agreements become binding contracts when
incorporated into the dissolution decree and are interpreted according to the
general rules for contract construction.”).
The instant property settlement agreement requests that the family
division approve what Husband and Wife believed to embody a “fair and
reasonable” property division between them. Such an agreement “amounting
to no more than an understanding of what the parties desire and recommend
to the court does not rise to the dignity of a contract,” Vaccaro v. Vaccaro, 227
N.W.2d 62, 66 (Wis. 1975) (quotation omitted), let alone one enforceable in a
superior court action, Maldini, 168 N.H. at 196. Because the property
settlement agreement between Husband and Wife was not a contract, the
Estate’s and Judith’s contract claim thereunder necessarily fails. Accordingly,
we conclude that the trial court did not err in dismissing this claim. See
Suojanen v. Tardif, 121 N.H. 1036, 1039 (1981) (a wrong reason given by a trial
court does not invalidate a correct ruling).
III
The Estate and Judith next challenge the trial court’s conclusion that the
factual allegations in the complaint fail to state a claim for unjust enrichment.
In reviewing a trial court’s grant of a motion to dismiss, our task is to
determine whether the allegations in the complaint are reasonably susceptible
of a construction that would permit recovery. See Coan v. N.H. Dep’t of Env’t
Servs., 161 N.H. 1, 4 (2010). We assume all facts pleaded in the complaint to
be true and construe all reasonable inferences drawn from those facts in the
plaintiff’s favor. See id. We need not, however, assume the truth of statements
in the pleadings that are merely conclusions of law. Lamb v. Shaker Reg’l Sch.
Dist., 168 N.H. 47, 49 (2015). We engage in a threshold inquiry that tests the
facts in the complaint against the applicable law, and if the allegations
constitute a basis for legal relief, we must hold that it was improper to grant
the motion to dismiss. See Coan, 161 N.H. at 4-5.
“The doctrine of unjust enrichment is that one shall not be allowed to
profit or enrich himself at the expense of another contrary to equity.” Pella
Windows and Doors v. Faraci, 133 N.H. 585, 586 (1990) (quotation omitted).
To state a claim, a plaintiff must sufficiently allege that the defendant was
enriched at the plaintiff’s expense through either: (1) wrongful acts; or (2)
“passive acceptance of a benefit that would be unconscionable to retain.”
Kowalski v. Cedars of Portsmouth Condo. Assoc., 146 N.H. 130, 133 (2001).
In the complaint, the Estate and Judith allege that, as a result of
Husband’s death during the divorce proceedings, Wife “wrongly secured” or
unjustly retained certain assets she had agreed to give Husband under the
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property settlement agreement — namely, a $250,000 payment, and a 45
percent share of her individual interest in a limited partnership agreement. We
note that the Estate and Judith have clarified in this appeal that they are
pursuing this claim solely under the theory that Wife passively accepted a
benefit that would be unconscionable to retain.
Where, as in the present case, no enforceable contract exists between the
parties, “a trial court may require an individual to make restitution for unjust
enrichment if he has received a benefit that would be unconscionable to
retain.” Pella Windows and Doors, Inc., 133 N.H. at 586 (quotation and
brackets omitted). A defendant’s retention of a benefit is “unconscionable”
when it “affronts the sense of justice, decency, or reasonableness” or is
“[s]hockingly unjust or unfair.” Black’s Law Dictionary 1757 (10th ed. 2014)
(defining unconscionable). Thus, the question for us becomes whether
pleading that, as a result of one spouse’s death during divorce proceedings, the
surviving spouse retained assets he or she had agreed to part with under a
property settlement agreement sufficiently alleges a shockingly unjust or unfair
outcome, or one affronting the sense of justice. We conclude it does not.
As Wife asserts, the complaint fails to allege a benefit Husband or Judith
conferred upon her that it would be unconscionable for her to retain. We
decline to construe, as the Estate and Judith seem to invite us to, Husband’s
death as providing Wife with such a benefit, regardless of whether it had the
legal effect she was ultimately seeking in the divorce — i.e., termination of the
parties’ marriage. Rather, the complaint merely alleges that, as result of
Husband’s death, Wife retained the entirety of her individual interest in a
limited partnership agreement and what appears to be a sum of her own
money. We agree with the trial court that these factual allegations fall short of
the unconscionable outcome required to maintain an action for unjust
enrichment.
Accordingly, the trial court’s dismissal of the Estate’s and Judith’s
unjust enrichment claim is also affirmed.
Affirmed.
DALIANIS, C.J., and LYNN and BASSETT, JJ., concurred.
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