RUGELEY PIERSON DEVAN, III v. SUSAN CLAY CALLAWAY
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February 18, 2005; 10:00 a.m.
NOT TO BE PUBLISHED
Commonwealth Of Kentucky
Court of Appeals
NO. 2004-CA-000198-MR
RUGELEY PIERSON DEVAN, III
APPELLANT
APPEAL FROM FAYETTE CIRCUIT COURT
HONORABLE JO ANN WISE, JUDGE
ACTION NO. 99-CI-03250
v.
SUSAN CLAY CALLAWAY
(FORMERLY DEVAN)
APPELLEE
OPINION
AFFIRMING
** ** ** ** **
BEFORE:
BUCKINGHAM, DYCHE, AND GUIDUGLI, JUDGES.
GUIDUGLI, JUDGE:
Rugeley Pierson DeVan, III, (hereinafter
“Ruge”) appeals from the December 31, 2003, Findings of Fact,
Conclusions of Law and Decree of Dissolution of Marriage entered
by the Fayette Circuit Court.
In the decree, the court
incorporated the antenuptial property agreement dated July 18,
1996.
Ruge argues the enforcement of the antenuptial agreement
was erroneous and as such, that portion of the decree should be
reversed.
We have thoroughly reviewed this matter and the
applicable case law and, finding no error in the court’s
determination, we affirm.
Ruge and Susan Clay Callaway (formerly DeVan)
(hereinafter “Susan”) were married on July 20, 1996.
Each had
been previously married and had children during those marriages.
Susan suggested to Ruge that they should enter into an
antenuptial property agreement (hereinafter “the agreement”) for
the express purpose of protecting Ruge’s children.
Ruge agreed,
and each party consulted an attorney to prepare an agreement.
Following negotiations between the parties, an agreement, dated
July 18, 1996, was entered.
20, 1996.
The parties were married on July
At issue is paragraph 12 of the agreement, which
states:
12. Notwithstanding any contrary
provisions of this agreement,
including, but not limited to, all of
the provisions of paragraph 3 hereof,
the parties expressly agree as follows:
(A) Within thirty (30) days of the
marriage of the parties hereto, Mr. DeVan
shall deed a one-half (1/2) interest, as
tenants in common, to Mrs. Callaway in that
certain real property on Fontaine Road
recently purchased by Mr. DeVan for the
purposes of the parties to live, which onehalf (1/2) interest shall be the sole and
absolute property of Mrs. Callaway with the
exception that Mrs. Callaway recognizes that
a mortgage may be placed on the property up
to eighty percent (80%) of its value. Mrs.
Callaway shall be a party to any such
mortgage transaction.
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(B) In the event either party files
for a divorce or legal separation of the
parties, Mr. DeVan agrees that Mrs. Callaway
may continue to live in the residence being
occupied by the parties (currently the
intended residence on Fontaine Road) and he
will, from his separate property, make any
mortgage payments due on said residence or
its substitute for the life of Mrs.
Callaway. Mrs. Callaway shall further have
the right to select a different residence
from the one on Fontaine Road as long as
same is located in Central Kentucky but same
shall not exceed the value of the Fontaine
Road premises. In the event Mrs. Callaway
selects a different residence, Mr. DeVan
will cooperate in terms of sale of the
current residence and repurchase of another
residence, within the limits specified
herein and in that event Mr. DeVan shall
continue to be a one-half (1/2) owner of the
new residence, but he shall also be required
to make any mortgage payments associated
with the new residence. In addition to the
right of Mrs. Callaway to continue living in
the residence, Mr. DeVan also agrees to pay
Mrs. Callaway One Thousand Dollars
($1,000.00) per month beginning from the
date of filing for legal separation or
divorce. The residence and the payment of
One Thousand Dollars ($1,000.00) per month
to Mrs. Callaway shall be in lieu of all
other claims she may make against Mr. DeVan
for maintenance or other claims that she may
have arising out of the marriage in the
event of divorce or legal separation.
Anything to the contrary in this
subparagraph notwithstanding, it is
expressly understood and agreed that the
aforementioned rights of Mrs. Callaway under
this subparagraph shall terminate upon the
death of Mr. DeVan or upon Mrs. Callaway’s
remarriage or cohabitation with another
male.
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Ruge contends that the agreement is not enforceable
because there was no consideration; it was entered into based
upon fraud, duress, mistake, misrepresentation or nondisclosure; it was unconscionable when entered; and/or it was
unconscionable at the time of dissolution due to changed
circumstances.
Susan argues the circuit court correctly ruled
that the agreement is enforceable, that it was negotiated by the
parties with advice from their respective counsel, and that
there was no change of circumstances at the time enforcement was
sought.
Each party cites to Gentry v. Gentry1 as establishing
the standard for reviewing antenuptial agreements.
In Gentry, the Supreme Court of Kentucky held that
antenuptial agreements are permitted, but enforcement of such
agreements is subject to these limitations:
[T]he trial judge should employ basically
three criteria in determining whether to
enforce such an agreement in a particular
case: (1) Was the agreement obtained
through fraud, duress or mistake, or through
misrepresentation or non-disclosure of
material facts? (2) Is the agreement
unconscionable? (3) Have the facts and
circumstances changed since the agreement
was executed so as to make its enforcement
unfair and unreasonable? Scherer v.
Scherer, [249 Ga. 635] 292 S.E.2d 662
(1982).[2]
1
798 S.W.2d 928 (Ky. 1990).
2
Gentry, 798 S.W.2d at 936.
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In Gentry, as here, the circuit court found the agreement was
executed freely, knowingly and voluntarily.
Both Courts also
rejected all claims of fraud, duress, mistake, misrepresentation
and non-disclosure.
In this case, the circuit court made the
following findings in its March 11, 2002, opinion and order:
The facts of this case are undisputed.
The parties were married on July 20, 1996.
Both parties had previously been married and
each had adult children at the time of their
marriage. On July 18, 1996, the parties
entered into an Antenuptial Agreement at
[Susan’s] suggestion. [Susan] believed that
the agreement would reassure [Ruge’s]
children about the marriage and protect
their interests. At the time the agreement
was executed, each party was represented by
counsel. The agreement provided for the
disposition of all marital and non-marital
property if the marriage was terminated by
either death or dissolution, as well as a
full disclosure of each party’s assets at
the time the agreement was made.
In September of 1999, the parties
separated after experiencing marital
difficulties. [Ruge] moved out of the
marital home and on September 15, 1999
[Susan] filed this dissolution proceeding.
[Susan] now seeks enforcement of the
Antenuptial Agreement.
. . .
In the present case, the antenuptial
agreement was entered into freely,
knowingly, and voluntarily. Each of the
parties read the agreement with the
assistance of counsel and both indicated
that they understood and acquiesced to its
terms. Specifically, clause 18 of the
agreement reflects that “[t]he parties
hereto stipulate that they have read this
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agreement and have had sufficient time to
review same with their respective attorneys
and that they fully understand the terms,
provisions and legal consequences of this
agreement.” Also, there is no evidence to
support [Ruge’s] claims that the agreement
was procured through fraud, duress or
mistake. The Court rejects [Ruge’s]
argument that [Susan’s] infidelity [prior to
the marriage] and failure to cook, travel
and keep house constitute fraud,
misrepresentation and non-disclosure of
material facts because they were not express
conditions precedent to the enforceability
of the agreement. The Court finds that the
parties executed the agreement freely,
knowingly, and voluntarily and there is no
evidence in the record that requires a
contrary conclusion.
Additionally, the agreement was not
unconscionable at the time of execution, and
is not unconscionable at present. All the
terms of the agreement applied equally to
both parties and it was drafted by wellrespected attorneys acting on behalf of each
party. The agreement did not limit or deny
maintenance to either party when executed.
Specifically, in the event of a divorce or
legal separation, [Susan] is to receive
$1,000 per month for [Ruge’s] lifetime or
until [Susan] remarries in lieu of asserting
any other claims against [Ruge] which arise
from the marriage. The evidence also shows
that there was a full and complete
disclosure of [each] party’s financial
status at the time the agreement was
executed. Furthermore, after reviewing the
(sic) each party’s financial situation at
the time of the termination of the marriage,
it is evident to the Court that the facts
and circumstances have not significantly
changed to render the enforcement of the
agreement unconscionable. During the
marriage, [Ruge] earned income from various
investments, and he had received a lump sum
payment as well as yearly payments of
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$100,000 as a result of the sale of his
concrete business in 1995. Conversely,
[Susan] worked limited hours during the
marriage. At the time the divorce
proceedings were initiated, [Ruge] was still
receiving $100,000 a year and his investment
earnings had increased while [Susan] worked
in part-time, casual labor. Therefore, the
Court finds that the facts and circumstances
at the time of dissolution had not so
changed as to make enforcement of the
agreement unconscionable, and the length of
the marriage has no effect on this
conclusion.
[Ruge] argues that the agreement was
not supported by consideration. Clearly,
the mutual promises and obligations of each
party supply consideration for the
agreement.
We have thoroughly reviewed the matter and believe there was no
evidence that compels a contrary finding.
Having determined that the agreement entered herein by
the parties did not violate the Gentry standards, we next
address Ruge’s argument relative to changed circumstances.
As
noted above, the order finding the agreement valid was entered
on March 11, 2002, when the Fayette Circuit Court entered a
summary judgment to that effect.
However, as previously stated,
the decree of dissolution incorporating the agreement was not
entered until December 31, 2003, some 21 months later.
During
that time, Ruge alleges he became disabled and began receiving
$1,700 in monthly disability benefits.
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Ruge cites to Gentry as
well as to Edwardson v. Edwardson3 and Blue v. Blue4 for the
proposition that determination of conscionability and
enforceability of an antenuptial agreement based upon changed
circumstances is viewed at the time the marriage is dissolved.
In Gentry, the Court held, “[i]t is, therefore
appropriate that the court review such agreements at the time of
termination of the marriage, whether by death or by divorce, to
insure that facts and circumstances have not changed since the
agreement was executed to such an extent as to render its
enforcement unconscionable.”5
In Edwardson, rendered the same
day as Gentry, the Court set forth two requirements that must be
met before an antenuptial agreement may be found valid.
First
is the limitation that requires full disclosure and “[t]he
second limitation to be observed is that the agreement must not
be unconscionable at the time enforcement is sought.”6
Finally,
in Blue, this Court stated the following as to when an
antenuptial agreement is reviewed for unconscionability:
Rather, a broader and more appropriate test
of the substantial fairness of a prenuptial
agreement requires a finding that the
circumstances of the parties at the time the
marriage is dissolved are not so beyond the
contemplation of the parties at the time the
3
798 S.W.2d 941 (Ky. 1990).
4
60 S.W.3d 585 (Ky.App. 2001).
5
Gentry, 798 S.W.2d at 936.
6
Edwardson, 798 S.W.2d at 945.
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contract was entered into as to cause its
enforcement to work an injustice.[7]
As we have already pointed out, the petition for
dissolution was first filed on September 15, 1999.
In Ruge’s
response filed October 5, 1999, he stated in paragraph three the
following:
3. In addition to the accumulation of
various marital property and debts which may
be subject to division and distribution by
the Court, as well as an assignment of
certain non-marital property by the Court,
there also exists an Antenuptial Property
Agreement entered into by the parties which
may be applicable to the distribution and
disposition of the parties’ property.
Thereafter, Susan amended her petition for dissolution to
include a statement indicating that “the parties have an
antenuptial agreement which governs the disposition of assets
and liabilities in this case.”
On the same date, October 25,
1999, that the amended petition was filed, Susan also filed a
verified motion to enforce the terms of the parties’ antenuptial
agreement, which incorporated a copy of the agreement.
On
November 5, 1999, Ruge filed his response to the amended
petition in which he again conceded that the “antenuptial
property agreement entered into by the parties is applicable to
the distribution and disposition of the parties’ property and
liabilities in this case.”
7
However, before the court could
Blue, 60 S.W.3d at 590 (footnote to citations omitted).
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address the pending motion to enforce the agreement, Ruge
obtained new counsel and on February 4, 2000, filed an amended
response in which he alleged the agreement to be “unconscionable
and entered into based upon misrepresentations and misstatements
designed to induce [Ruge] to enter into such an agreement.”
As a result of Ruge’s contention that the agreement
was unenforceable, the parties engaged in protracted discovery,
the taking of depositions and the entry of several agreed orders
in an attempt to fully develop this issue.
Finally, on November
15, 2001, Susan moved for summary judgment to enforce the
antenuptial agreement of the parties.
Again, the parties
thoroughly briefed and argued the issue that led to the March
11, 2002, order granting summary judgment to Susan and declaring
the agreement enforceable.
In that order, as previously stated,
the circuit court specifically found “that the facts and
circumstances at the time of dissolution had not so changed as
to make enforcement of the agreement unconscionable, and the
length of the marriage has no effect on this conclusion.”
Based upon this order, Susan filed a motion on April
2, 2002, to set the matter for a final uncontested hearing.
But
as was the norm and not the exception in this case, no hearing
was timely held and instead, the matter went unresolved until
August 6, 2003, (over 16 months later) when Ruge filed a motion
to vacate the March 11, 2002, order relative to the agreement
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being enforceable.
Ruge again argued the agreement was
unconscionable due to changed circumstances that had recently
occurred, specifically, his being declared disabled.
time a different judge had taken over the case.
By this
The new judge
reviewed the record and the agreement presented by the parties
and determined that Ruge’s motion should be treated as a CR
60.02 motion.
The court held that the motion was untimely in
that it was filed more than one year after the original order
had been entered.
However, the court went on to rule that
pursuant to Gentry and Edwardson, antenuptial agreements are to
be reviewed at the time enforcement is sought.
In this case,
the court determined that enforcement was sought at the time the
amended petition for dissolution and motion to enforce were
filed on October 25, 1999.
Subsequently, the parties pursued
the issue and presented the enforceability of the agreement to
the court, which then entered the March 11, 2002, order.
Based
upon this procedural history, the court found that Ruge’s motion
was also barred under the doctrine of claim preclusion and
equitable estoppel.
The court concluded its order by citing
Hicks v. Combs8 and stating, “Now, over a year later, [Ruge]
takes a contrary position and it would be unconscionable to
allow him a ‘second bite of the apple’ at this time.”
8
233 S.W.2d 279 (Ky. 1949).
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Following
the court’s denial of Ruge’s motion to alter, amend or vacate
and entry of the decree of dissolution, this appeal was filed.
We agree with the trial court that the test of
unconscionability as addressed in Gentry, Edwardson, and Blue
takes place at the time enforcement is sought.
In this case, it
occurred when the parties litigated the matter, resulting in the
March 11, 2002, order.
To decide otherwise would foreclose
finality on such an important issue and subject litigants to
continuous, lengthy and expensive litigation.
If we were to
decide this issue as Ruge argues then parties would be
encouraged to delay entry of a final decree and issues of
enforceability of antenuptial agreements, property division,
maintenance, etc., would be subject to relitigation and possible
change.
A review of this case points out several obvious
facts:
(1) Ruge had his opportunity to litigate the issue as to
the enforceability of the agreement; (2) the circuit court
thoroughly addressed his arguments and ruled against him; (3)
both at the time of the filing of the petition and on the date
the decree was entered (some four years later) there had not
been a change of circumstances as to make the agreement
unconscionable (the fact that he is now disabled and receiving
social security disability benefits changes Ruge’s financial
circumstances only slightly); and (4) there was no valid
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argument presented that the agreement was entered into due to
fraud, duress or mistake, or through misrepresentation or nondisclosure of material facts.
The last issue raised by Ruge is that he should not
have to pay the insurance and property tax on the residence
Susan resides in.
The agreement stated that he “will, from his
separate property, make any mortgage payments due on said
residence or its substitute for the life of [Susan].”
This
issue was first brought to the court’s attention in a motion
filed by Ruge on June 20, 2002.
The parties again briefed this
issue and presented the motion to the court.
its order on July 23, 2002.
The court entered
In its order, the court made the
following findings:
The Antenuptial Property Agreement
between the parties obligates [Ruge] to pay
“any mortgage payments due on said
residence.” Agreement ¶ 12(B). The
Agreement does not otherwise define mortgage
payments. Under the terms of the mortgage,
the parties, as the borrowers, are required
to make payments of principal and interest
under the Note, plus funds for Escrow Items
under Section 3 of the mortgage. The Escrow
Items as defined by section 3 essentially
include property taxes and assessments,
premiums for insurance required by Section
5, and any mortgage insurance. Since the
mortgage requires payment of the taxes and
insurance as part of the monthly mortgage
payment, and since [Ruge] is required to
make any mortgage payments due on the
residence, this Court’s view is that he is
required to pay the taxes and insurance in
addition to the principal and interest.
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Besides the references in the mortgage and note mentioned above
in the trial court’s order, the record contains a letter to Ruge
from the mortgage holder dated the same day as the mortgage and
note were entered, which sets forth the following:
A breakdown of your first monthly payment
amount is shown below:
Principal and Interest ...........$ 1,380.71
Taxes and Assessments ............$
129.14
Hazard Insurance Premium .........$
31.84
Mortgage Insurance Premium .......$
.00
Other Escrows ....................$
.00
Buydown Assistance ...............$
.00
Interest Credit ..................$
.00
(if applicable, on first payment only)
Total Monthly Payment ............$ 1,541.69
The record supports the trial court’s finding that payment of
property taxes and insurance was to be included in the mortgage
payment.
Since there is substantial evidence to support the
court’s order, we find no error as to the court’s ruling in this
matter.
For the foregoing reasons, the orders and decree of
dissolution entered by the Fayette Circuit Court are affirmed.
ALL CONCUR.
BRIEF FOR APPELLANT:
BRIEF FOR APPELLEE:
Michael L. Judy
Frankfort, KY
Lisa L. Johnson
Lexington, KY
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