FREDERICKS (JOSEPH A.) VS. FREDERICKS (JOAN C.)

 Annotate this Case
Download PDF
RENDERED: AUGUST 28, 2009; 10:00 A.M. NOT TO BE PUBLISHED Commonwealth of Kentucky Court of Appeals NO. 2008-CA-000131-MR JOSEPH A. FREDERICKS v. APPELLANT APPEAL FROM CARTER CIRCUIT COURT HONORABLE KRISTI HOGG GOSSETT, JUDGE ACTION NO. 07-CI-00008 JOAN C. FREDERICKS, NOW STOREY APPELLEE OPINION AFFIRMING ** ** ** ** ** BEFORE: CAPERTON, THOMPSON AND WINE, JUDGES. CAPERTON, JUDGE: Joseph A. Fredericks appeals the Carter Circuit Court’s property division within its Findings of Fact, Conclusions of Law, and Decree of Dissolution of Marriage. Appellant asserts that the court erred when it failed to enforce the parties’ antenuptial agreement. We disagree. After a thorough review of the parties’ arguments, the record, and the applicable law, we affirm the Carter Circuit Court. Joseph A. Fredericks (“Joe”) and Joan C. Fredericks, now Storey (“Joan”) executed an antenuptial agreement on November 7, 2000, seventeen days before their marriage. The agreement was prepared by Joe’s attorney at Joe’s insistence as Joe had been previously married and divorced several times. Joan, a widow, had been previously married for thirty years. The key provisions1 of the 1 Key provisions of the antenuptial agreement and the accompanying paragraph numbering include: 1. Each party shall retain the title, management and control of the estates and all interest in property now owned by each of them whether real, personal, or mixed, and all increase or addition thereto, entirely free of any claim by the other and shall be entitled to dispose of or encumber said property at any time during the anticipated marriage. 2. A full and complete disclosure of all property owned by the parties both real and personal, tangible and intangible, has been made to each other . . . Each party acknowledges . . . that each have reviewed and understood the nature and extent of the other party’s assets, liabilities and net worth. 3. Each party shall have the absolute and unrestricted right to manage, control, dispose of, or otherwise deal with such separate property that each brings into this marriage, free from any claim that may be made by the other by reason of their marriage, and with the same effect as if no marriage had been consummated between them. .... 5. . . .that upon the termination of the anticipated marriage by divorce, that the rights and responsibilities as set forth herein will be the same as if the marriage was terminated by the death of one of the parties and shall be construed in accordance with the terms of this agreement. 6. . . any existing debts owed by either party at the time of entering into the marriage will be paid by the party who owns said debt out of that party’s funds without contribution by the other party. .... 8. Should the parties purchase a dwelling after the marriage, then same will be purchased together with each party investing an equal amount of money to purchase the home, which shall be placed in the joint names of the parties hereto. Upon the death of one party, while residing in said home, then the survivor shall have the right to reside in said home and enjoy the peaceable and quite [sic] possession of said home for the remainder of their natural life provided, however, that the survivor may sell the home to purchase another residence but whatever equity has been placed in said home by the deceased party will, upon sale, be distributed to that party’s estate. .... 10. The parties agree that any property acquired after the marriage shall be the separate property of the person acquiring that property and making the payment. . . .The parties agree that any property both real and personal acquired, therefore, during this marriage, will not be considered -2- antenuptial agreement set out that the parties had the right to maintain separate property; that each party was responsible for the debt associated with their respective separate property; should the parties purchase a jointly owned home, each party would invest an equal amount into the home; that property acquired after marriage and paid for by one party would be separate property; and that title to the property shall be conclusively presumed to be owned and controlled by the name on the title. The parties disclosed their financial assets and liabilities prior to the execution of the antenuptial agreement. Joan’s assets included monthly income from her employment as a school teacher and from her deceased husband’s pension. Joan also received annual “inheritance” payments. Joan owned her own home in addition to a 1996 van and a 1995 Cadillac. Joan’s only debt was on the 1995 Cadillac. Likewise Joe disclosed his financial assets and liabilities. Because Joe was retired, his primary source of income was from Social Security and as marital property, but will be the separate property of the persons paying for said property. Nothing in this agreement, however, shall prevent the parties from later choosing or electing to hold title to property jointly. If title to property is evidenced by a deed, certificate, bill of sale or other written documentation used in commercial or financial transactions to demonstrate ownership, it shall be conclusively presumed that such property is owned and controlled by the party whose name appears on the documentation. . . . .... 16. Upon termination of this marriage by divorce. . . each party agrees that neither of them will seek any relief inconsistent with the terms of this agreement nor which undermines the agreement’s intended purpose, which is to preserve the separate estates for use as each may deem desirable . . . .Each party agrees that in the event the marriage ends in divorce. . .the property retained and controlled by each and one-half of all jointly held property as provided herein, shall be sufficient. . . . -3- various annuity payments. Joe also owned his own home in addition to a threewheeler and a truck. Joe disclosed that he had credit card debt but did not disclose the amount of the debt. During the marriage the parties sold their respective homes and purchased a new home which was jointly titled. Both parties obtained roughly the same amount in realized gain from the sales of their prior homes. Joan placed her entire realized gain, $75,000, into the new home while Joe placed $60,471 into the new home and deposited the remainder into the parties’ joint accounts. In addition to the jointly titled home, the parties established joint accounts with Joan contributing seventy-two percent of the funds. Joe was tasked with controlling the parties’ assets which included depositing money into the joint accounts and paying all bills. The joint accounts were used by Joe to pay his preexisting credit card debt and to pay off Joan’s Cadillac. Moreover, the joint accounts were used to obtain multiple vehicles, of which some were the result of Joe trading in his premarital vehicles. All of the acquired vehicles were titled solely in Joe’s name at the time of the dissolution of the marriage. The court was presented the aforementioned facts in a three-day hearing. After reviewing the parties’ evidence and the antenuptial agreement, the court concluded that at the time of the signing of the antenuptial agreement there was a free and knowing execution of the agreement, the agreement was not tainted by fraud, there was a full disclosure of assets, and the agreement was free of material omission or misrepresentation. -4- However, the court concluded that the parties did not give effect to their agreement by keeping their premarital estates separate nor by allocating between them property acquired during the marriage in such a way as to give effect to the antenuptial agreement. Thus, the court concluded that the parties completely abandoned the antenuptial agreement by commingling all their assets shortly after marriage. Additionally, the court concluded that even if the parties had not abandoned the agreement, it would be manifestly unfair to enforce the antenuptial agreement, i.e., that the antenuptial agreement was unconscionable at the time enforcement was sought. The basis for the court’s finding that the antenuptial agreement was unconscionable was the language of the antenuptial agreement which would require the court to award, based on title alone, Joe a 50 percent interest in the marital residence and all the vehicles, even though he did not invest an equal amount in the residence, and all the vehicles were clearly purchased with monies from the joint accounts which were primarily funded by Joan. The court reasoned that, based on the language of the agreement, the intent of the parties was to preserve their separate estates. Relying on Edwardson v. Edwardson, 798 S.W.2d 941, 946 (Ky. 1990), the trial court concluded that, despite having found the agreement to be manifestly unfair, that it should nevertheless give effect, as nearly as possible, to the parties’ intent when dividing the property. The court determined that in order to give effect to the agreement, absent the portion that made the antenuptial agreement manifestly unfair, i.e., unconscionable, it would -5- follow the original intent of the parties, which was to preserve their separate estates. The court determined that Joan had properly traced a nonmarital interest in the residence of $84,219.39, $9,800 in the joint savings account, and her Cadillac, and thus awarded her those assets as her separate property. The court determined that Joe had properly traced a nonmarital interest in the residence of $60,471, his annuity plans, and his truck. The court then divided the remaining property according to the respective rates of contribution to the marital estate, i.e., Joe was entitled to 28 percent of the remaining property and Joan was entitled to 72 percent. It is from this division of property in the court’s findings of facts, conclusions of law, and decree of dissolution of marriage entered December 21, 2007, that Joe now appeals. Joe presents one issue on appeal, that the trial court erred by failing to enforce the antenuptial agreement. Joe then addresses this issue in two parts, as the trial court gave two reasons for refusing to enforce the antenuptial agreement. First, Joe disputes the court’s conclusion that the parties had abandoned their agreement. Joe argues that the parties had not abandoned the antenuptial agreement as the agreement clearly envisioned owning joint property. Second, he disagrees with the court’s finding that the antenuptial agreement was manifestly unfair. Joe argues that the court ignored or misapplied the criteria for determining whether to enforce an antenuptial agreement in light of -6- Gentry v. Gentry, 798 S.W.2d 928 (Ky. 1990).2 We now turn to the applicable law on division of property upon dissolution of marriage and antenuptial agreements. At the outset we note that this Court reviews the trial court’s findings under the clearly erroneous standard set forth in Kentucky Rules of Civil Procedure (CR) 52.01, which states: “[f]indings of fact shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the trial court to judge the credibility of the witnesses.” In dividing marital property and debt equitably, a trial court has wide latitude and absent an abuse of discretion we shall not disturb the trial court’s ruling. See Smith v. Smith, 235 S.W.3d 1 (Ky.App. 2006), and Neidlinger v. Neidlinger, 52 S.W.3d 513 (Ky. 2001). Abuse of discretion is that which is arbitrary or capricious, or at least an unreasonable and unfair decision. See Sexton v. Sexton, 125 S.W.3d 258, 272 (Ky. 2004). In a dissolution of marriage proceeding, the courts look to Kentucky Revised Statutes (KRS) 403.190,3 which controls the division of property in such a 2 Joan addresses Joe’s arguments in a more specific manner, as she claims that his arguments do not address the specific relief he is requesting. First, Joan counter-argues that the court did not err in its division of equity in the marital residence. Next, Joan counter-argues that the court did not err by dividing the equity in the vehicles purchased during the marriage. Last, Joan argues that the court did not err in its division of the joint savings account. We decline to address Joan’s arguments at length as Joe’s arguments do not address this specific relief issue. 3 KRS 403.190 states: (1) In a proceeding for dissolution of the marriage or for legal separation, or in a proceeding for disposition of property following dissolution of the marriage by a court which lacked personal jurisdiction over the absent spouse or lacked jurisdiction to dispose of the property, the court shall assign each spouse's property to him. It also shall divide the marital property without regard to marital misconduct in just proportions considering all relevant factors including: (a) Contribution of each spouse to acquisition of the marital property, including contribution of a spouse as homemaker; (b) Value of the property set apart to each spouse; -7- proceeding. KRS 403.190(3) presumes that all property acquired during the marriage is marital property unless it falls under an exception enumerated in KRS 403.190(2). See also Sexton at 266. KRS 403.190(2)(d) excludes “[p]roperty excluded by valid agreement of the parties” from the definition of marital property. (c) Duration of the marriage; and (d) Economic circumstances of each spouse when the division of property is to become effective, including the desirability of awarding the family home or the right to live therein for reasonable periods to the spouse having custody of any children. (2) For the purpose of this chapter, “marital property” means all property acquired by either spouse subsequent to the marriage except: (a) Property acquired by gift, bequest, devise, or descent during the marriage and the income derived therefrom unless there are significant activities of either spouse which contributed to the increase in value of said property and the income earned therefrom; (b) Property acquired in exchange for property acquired before the marriage or in exchange for property acquired by gift, bequest, devise, or descent; (c) Property acquired by a spouse after a decree of legal separation; (d) Property excluded by valid agreement of the parties; and (e) The increase in value of property acquired before the marriage to the extent that such increase did not result from the efforts of the parties during marriage. (3) All property acquired by either spouse after the marriage and before a decree of legal separation is presumed to be marital property, regardless of whether title is held individually or by the spouses in some form of co-ownership such as joint tenancy, tenancy in common, tenancy by the entirety, and community property. The presumption of marital property is overcome by a showing that the property was acquired by a method listed in subsection (2) of this section. (4) If the retirement benefits of one spouse are excepted from classification as marital property, or not considered as an economic circumstance during the division of marital property, then the retirement benefits of the other spouse shall also be excepted, or not considered, as the case may be. However, the level of exception provided to the spouse with the greater retirement benefit shall not exceed the level of exception provided to the other spouse. Retirement benefits, for the purposes of this subsection shall include retirement or disability allowances, accumulated contributions, or any other benefit of a retirement system or plan regulated by the Employees Retirement Income Security Act of 1974, or of a public retirement system administered by an agency of a state or local government, including deferred compensation plans created pursuant to KRS 18A.230 to 18A.275 or defined contribution or money purchase plans qualified under -8- As such, the trial court must determine4 whether the parties had a valid agreement excluding what would normally be characterized as marital property as nonmarital property. In the case sub judice, the party claiming a nonmarital interest had two avenues to pursue before the trial court; one, placing evidence before the trial court that the parties had a valid agreement establishing a nonmarital interest; or, two, barring an effective agreement, the party still could place evidence before the trial court establishing a nonmarital interest through the other enumerated exceptions in KRS 403.190(2). The party claiming that the property acquired during the marriage is nonmarital has the burden of proof and must establish this by clear and convincing evidence. Sexton at 266-267, FN 31. “Clear and convincing proof does not necessarily mean uncontradicted proof. It is sufficient if there is proof of a probative and substantial nature carrying the weight of evidence sufficient to convince ordinarily prudent-minded people.” Rowland v. Holt, 70 S.W.2d 5, 9 (Ky. 1934). This is accomplished with the concept of tracing. Tracing allows the party claiming a nonmarital interest in property to prove its nonmarital character. The “source of funds rule” is often used to achieve tracing when the property before the court includes both marital and nonmarital Section 401(a) of the Internal Revenue Code of 1954, as amended. 4 As stated in Hunter v. Hunter, 127 S.W.3d 656, 659-660 (Ky. App. 2003), “the trial court's division of property involves a three-step process: (1) characterizing each item of property as marital or nonmarital; (2) assigning each party's nonmarital property to that party; and (3) equitably dividing the marital property between the parties.” (Internal citations omitted). -9- components. See Travis v. Travis, 59 S.W.3d 904, 909 (Ky. 2001). “The source of funds rule simply means that the character of the property, i.e., whether it is marital, nonmarital, or both, is determined by the source of the funds used to acquire property.” Travis at 909, FN 10 (internal citations omitted). Moreover, “[i]n the context of tracing nonmarital property, when the original property claimed to be nonmarital is no longer owned, the nonmarital claimant must trace the previously owned property into a presently owned specific asset.” Sexton at 266. 5 The concept of tracing does not require mathematical certainty. Chenault v. Chenault, 799 S.W.2d 575 (Ky. 1990). Instead, the party claiming such an interest may persuade the family court through testimony how the property owned at the time of the dissolution had been acquired. Terwilliger v. Terwilliger, 64 S .W.3d 816 (Ky. 2002). This often requires showing that the nonmarital asset was spent in a traceable manner during the marriage. Kleet v. Kleet, 264 S.W.3d 610 (Ky.App. 2007). We now turn to Joe’s first argument, that the parties had not abandoned the antenuptial agreement, contrary to what the trial court found, as the agreement clearly envisioned owning joint property. In the case sub judice the antenuptial agreement clearly contemplated the ownership of both joint and separate property as evidenced by the repeated 5 Sexton explains the reasoning for tracing as it “arises from KRS 403.190(3)'s presumption that all property acquired after the marriage is marital property unless shown to come within one of KRS 403.190(2)'s exceptions.” Id. at 266. -10- references to separate property, the buying of a joint residence, and the explicit language “[nothing in this agreement... shall prevent the parties from later choosing or electing to hold title to property jointly”]. However, the agreement also provided that all separate assets were to be purchased from separate funds. Based on the parties’ behavior, the court concluded that the parties had abandoned their agreement by commingling their assets after marriage and by purchasing all of their assets from the joint funds. The court was correct that a contract may be abandoned through the subsequent behavior of the parties. Texaco, Inc. v. Debusk, 444 S.W.2d 261 (Ky. 1969). Commingling of assets presents two related issues for the party claiming a nonmarital interest in the property to overcome. First, did the nonmarital property lose its exempt status; and second, has the commingling of assets rendered tracing ineffective? See Bischoff v. Bischoff, 987 S.W.2d 798 (Ky.App. 1998), and Travis at 910. We agree with the trial court that the parties’ failed to effectuate the antenuptial agreement.6 The provisions of the agreement provided that separate assets were to be purchased with non-joint funds and that the house was to be purchased with each party contributing an equal amount. The parties instead chose to commingle their assets in joint accounts and did not invest in equal amounts in 6 See also Gentry, supra, whereby the Kentucky Supreme Court noted “[t]he Gentrys gave effect to their agreement by keeping their premarital property separate and by allocating between them property which would otherwise be subject to division by the court under KRS 403.190.” Id. at 935. -11- the joint residence. By not abiding by their antenuptial agreement the parties were required to instead trace their respective nonmarital interests in the property. At the hearing, the burden to trace fell upon Joe7 because he claimed a nonmarital interest in the property. Joe’s argument that the trial court erred by failing to enforce the antenuptial agreement is essentially one that the agreement entitled him to a equal split of the residence and the joint accounts, and to sole ownership of all the vehicles titled in his name. By so arguing, Joe is claiming that these assets acquired during the marriage are his separate property and they should be presumed nonmarital. See Sexton at 266 and KRS 403.190(3). In lieu of sufficiently tracing his nonmarital interests, Joe instead chose to rely upon the antenuptial agreement’s provision that title to the parties’ property would control its division. As previously discussed, the parties failed to abide by their own agreement. Thus, Joe’s failure to present at the hearing evidence establishing his nonmarital interest in the property sufficiently does not equate to an error by the trial court when it divided the marital property without strictly adhering to the antenuptial agreement. Because the parties failed to adhere to their antenuptial agreement and Joe’s failure to adequately trace his nonmarital interests, we cannot conclude that the trial court abused its discretion. After the court concluded that the parties had not given effect to their antenuptial agreement by commingling their assets, the court found that it would 7 We agree with Joan that she adequately traced a nonmarital interest of $9,800 into the parties’ joint accounts during the course of the hearings. Likewise, the parties adequately traced the nonmarital interests in the joint residence that the court assigned to them. -12- be manifestly unfair to enforce the antenuptial agreement, i.e., it would be unconscionable, given that the assets sought by Joe were purchased from the joint accounts and Joan primarily contributed to said accounts. Thereafter, the court concluded that it should give effect to the intent of the parties as expressed in the antenuptial agreement as nearly as possible. The intent of the agreement was to preserve the separate estates of each party. Thus, the court concluded that it should distribute the property according to said intention. The resulting distribution plan by the court divided the property relative to the parties’ contribution to the total net marital assets, i.e., the court attempted to separate the marital estate as if the parties had kept their respective assets separate.8 This brings us to Joe’s second argument, that the court erred when it reasoned that the antenuptial agreement was manifestly unfair. Joe argues that the court ignored or misapplied the criteria for determining whether to enforce an antenuptial agreement in light of Gentry v. Gentry, 798 S.W.2d 928 (Ky. 1990). We note that the trial court is vested with broad discretion to modify or invalidate an antenuptial agreement. Edwardson at 946. In Gentry, supra, the Kentucky Supreme Court elucidated the criteria for a trial court to employ when deciding whether to enforce an antenuptial agreement: 1) Was the agreement obtained through fraud, duress or mistake, or through misrepresentation or non-disclosure of material facts? (2) Is the agreement unconscionable? 8 Without sufficient tracing by the party claiming a nonmarital interest, the court is certainly not required to go through every deposit into and withdrawal from a joint account, especially when the actions of the parties establish a shared account. As such, the court’s distribution plan in the case sub judice equitably divided the marital assets. -13- (3) Have the facts and circumstances changed since the agreement was executed so as to make its enforcement unfair and unreasonable? Id. at 936 (internal citations omitted). The criteria under Gentry requires the trial court to determine first, whether the parties complied with the full disclosure requirement. Next, the trial court must assess whether the agreement is unconscionable, both at the time of execution and at the time enforcement is sought. See Gentry at 936 and Edwardson at 945. Unconscionable is defined as manifestly unfair and unreasonable.9 Blue v. Blue, 60 S.W.3d 585 (Ky.App. 2001). Upon a finding of unconscionability, the court “may modify the parties' agreement to satisfy the necessary standard, but should otherwise give effect to the agreement as nearly as possible providing the agreement was not procured by fraud or duress.” Edwardson at 945-946. We now turn to whether the court ignored or misapplied the criteria for determining whether to enforce an antenuptial agreement in light of Gentry, supra. Joe asks this Court to conclude that the antenuptial agreement was not unconscionable at the time of its execution and at its desired enforcement. This we cannot do as the circumstances surrounding the parties significantly changed from the time of execution of the agreement until the time enforcement of it was sought. We agree with Joe that at the time of execution the antenuptial agreement was not unconscionable. At the time of the execution each party had 9 We look to the definition of unconscionable in light of separation agreements. See Blue at 589 and KRS 403.180 which controls separation agreements. -14- separate assets and liabilities which were disclosed to the other party. However, we disagree with Joe that the court failed to undertake an analysis of whether enforcement of the agreement would be unconscionable. The court clearly undertook an analysis of the facts and circumstances surrounding the parties at the time enforcement of the agreement was sought and the ramifications of enforcing the agreement. At the time enforcement was sought, the evidence establishes that the assets Joe desired, the vehicles titled solely in his name and one-half of the joint accounts and the residence, were all purchased or funded from the joint accounts to which Joan primarily contributed and from which Joe had not adequately traced his nonmarital interest.10 The distribution of property according to Joe’s desired result would be manifestly unfair. Marriage between two individuals is not a subterfuge to acquire assets. Moreover, Joe wishes to use the antenuptial agreement to obtain assets while failing to abide by the provisions in the agreement whereby the parties were to maintain and pay for their separate assets. Joe cannot arbitrarily pick which provisions of the antenuptial agreement to enforce. Thus, we agree with the trial court that to enforce the antenuptial agreement would be unconscionable. After finding the agreement unconscionable, the court correctly determined that the intent of the parties at the execution of the antenuptial agreement was to maintain separate assets that were paid for by separate funds. 10 We note that some of the vehicles were purchased from the joint accounts after Joe traded in his nonmarital vehicles. -15- The court then distributed the assets according to the intention11 of the parties, thereby giving effect to the antenuptial agreement as nearly as possible.12 See Edwardson at 945-946. We cannot say that the court abused its discretion in such an endeavor nor misapplied or ignored Gentry, supra. Accordingly, we affirm the Carter Circuit Court’s Findings of Fact, Conclusions of Law, and Decree of Dissolution of Marriage as it relates to the division of property between the parties. ALL CONCUR. BRIEF FOR APPELLANT: BRIEF FOR APPELLEE: Reid Allen Glass Grayson, Kentucky MaLenda S. Haynes Grayson, Kentucky 11 It appears that upon the commingling of the assets in a joint account, the parties’ intention clearly shifted to joint assets purchased from joint accounts even if the asset was titled solely in the name of one party. 12 We also note that the trial court undertook a distribution of assets which complied with our jurisprudence absent an antenuptial agreement, i.e., an equitable division of property. See KRS 403.190 and Smith, supra. -16-

Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.