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In re Marriage of Hutchins

Supreme Court of Montana

November 20, 2018

IN RE THE MARRIAGE OF: MICHELE R. HUTCHINS, Petitioner and Appellant,
v.
MICHAEL J. HUTCHINS, Respondent and Appellee.

          Submitted on Briefs: August 22, 2018

          APPEAL FROM: District Court of the Fourth Judicial District, In and For the County of Missoula, Cause No. DR 15-96 Honorable Leslie Halligan, Presiding Judge

          For Appellant: Richard A. Reep, Reep, Bell, Laird & Jasper, P.C., Missoula, Montana

          For Appellee: Evonne Smith Wells, Wells & McKittrick, P.C., Missoula, Montana

          OPINION

          LAURIE McKINNON, JUDGE

         ¶1 Michele Hutchins (Michele) appeals from orders of the Fourth Judicial District Court, Missoula County, dissolving her marriage to Michael Hutchins (Michael). We affirm and restate the issues on appeal as:

1. Is the parties' premarital agreement enforceable?
2. Did the District Court equitably apportion the marital estate?
3. Did the District Court abuse its discretion by valuing some of the parties' assets at the time of separation?

         FACTUAL AND PROCEDURAL BACKGROUND

         ¶2 Michael graduated from medical school in 1985 and later that year met Michele. Michael and Michele lived in Nevada and dated on-and-off for a few years. Michael worked as a physician for the State of Nevada and Michele worked as a graphic designer. The couple eventually moved in together. In 1990, Michael proposed to Michele and she accepted. During the parties' engagement, Michele left her job to undertake homemaker duties and oversee construction of the couple's new home.

         ¶3 On August 9, 1991, the parties executed a document entitled "Pre-Nuptial Agreement" (Premarital Agreement). Michael and Michele married on August 16, 1991, one week after they executed the Premarital Agreement. The couple lived in Las Vegas, where Michael worked as a physician and Michele as a homemaker. Michele earned her bachelor's degree in fine arts, became a certified Pilates instructor, and took photography classes.

         ¶4 In 2006, the parties moved to Montana. At that time, Michael retired from his position with the State of Nevada and began receiving monthly retirement distributions from his Nevada Public Employees Retirement System (Nevada PERS) account. Michael and Michele purchased land outside of Missoula, Michele oversaw construction of a new home, and Michael obtained new employment as a physician. Throughout their marriage, Michael worked as a physician earning substantial income, which allowed the parties to accumulate significant assets and enjoy an above-average standard of living. Michele worked as a homemaker and briefly as a Pilates instructor.

         ¶5 In April 2014, Michele announced she wanted a separation and eventually moved out of the marital home. In January 2015, Michele filed a petition for dissolution of marriage. As the dissolution proceeding progressed, Michele sought a declaratory ruling that the Premarital Agreement was unenforceable. The District Court denied Michele's request, ultimately concluding the agreement was enforceable. The case proceeded to a bench trial in January 2017, at which both parties presented evidence and proposed apportionments of the marital estate. The District Court issued its findings, conclusions, and order of dissolution in August 2017. Michele appeals the District Court's orders regarding the Premarital Agreement and the division of marital assets. Additional facts are supplied throughout the opinion as needed.

         STANDARD OF REVIEW

         ¶6 The determination of which state's law to apply in a particular situation is a question of law that we review de novo. Masters Group Int'l, Inc. v. Comerica Bank, 2015 MT 192, ¶ 33, 380 Mont. 1, 352 P.3d 1101. Nevada courts review the validity of a premarital agreement de novo. Gonzales-Alpizar v. Griffith, 317 P.3d 820, 827 (Nev. 2014).

         ¶7 Section 40-4-202, MCA, governs the distribution of a marital estate. A district court has broad discretion to apportion the marital estate in a manner equitable to each party under the circumstances. In re Marriage of Spawn, 2011 MT 284, ¶ 9, 362 Mont. 457, 269 P.3d 887. In making its findings and conclusions, the district court must consider the factors listed in § 40-4-202, MCA. In re Marriage of Hollamon, 2018 MT 37, ¶ 8, 390 Mont. 320, 413 P.3d 460. We review a district court's division of marital property to determine whether the court's findings of fact are clearly erroneous and whether its conclusions of law are correct. Deschamps v. Deschamps, 2009 MT 431, ¶ 11, 354 Mont. 94, 223 P.3d 324. A finding is clearly erroneous if it is not supported by substantial credible evidence, if the court misapprehended the effect of the evidence, or if a review of the record leaves us with the definite and firm conviction that the court committed a mistake. In re Marriage of Edwards, 2015 MT 9, ¶ 9, 378 Mont. 45, 340 P.3d 1237. A district court's apportionment of the marital estate will stand unless there was a clear abuse of discretion as manifested by a substantially inequitable division of the marital assets resulting in substantial injustice. Richards v. Trusler, 2015 MT 314, ¶ 11, 381 Mont. 357, 360 P.3d 1126. We examine each case individually, with an eye to its unique circumstances. Spawn, ¶ 9.

         ¶8 A district court's valuation of a marital estate is a discretionary ruling that we review for an abuse of discretion. In re Marriage of Thorner, 2008 MT 270, ¶ 21, 345 Mont. 194, 190 P.3d 1063. The test for an abuse of discretion is whether the district court acted arbitrarily without employment of conscientious judgment or exceeded the bounds of reason resulting in substantial injustice. Thorner, ¶ 21.

         DISCUSSION

         ¶9 1. Is the parties' premarital agreement enforceable?

         ¶10 Michele asked the District Court to declare the Premarital Agreement unenforceable, while Michael sought to enforce the agreement. The District Court considered the parties' briefs, held a hearing at which both Michele and Michael testified, and ultimately enforced the Premarital Agreement. The Premarital Agreement contained a choice-of-law provision, so we must first determine which state's law governs.

         A. Choice of Law

         ¶11 The Premarital Agreement's choice-of-law provision provided, "This agreement shall be interpreted and enforced in accordance with the laws of the State of Nevada in effect at the time of its execution." The District Court quoted the choice-of-law provision and concluded the Premarital Agreement "should be construed according to Nevada law, as provided in the document." However, the court further concluded Montana law also applied to the agreement's enforceability because the dissolution and division of assets was occurring in Montana. The court proceeded to apply Montana's statutes and case law to its analysis of the Premarital Agreement's enforceability.

         ¶12 Pursuant to the Uniform Premarital Agreement Act (UPAA), which both Montana and Nevada have adopted, parties to a premarital agreement may contract with respect to the "choice of law governing the construction of the agreement." Section 40-2-605(1)(g), MCA; Nev. Rev. Stat. § 123A.050(1)(g). As a general rule, Montana courts enforce choice-of-law provisions and apply the law of the state the parties chose. Tenas v. Progressive Preferred Ins. Co., 2008 MT 393, ¶ 32, 347 Mont. 133, 197 P.3d 990 (citing Restatement (Second) of Conflict of Laws § 187(2)). A court will not apply a choice-of-law provision if either (1) "the chosen state has no substantial relationship to the parties or the transaction and there is no other reasonable basis for the parties' choice" or (2) "application of the law of the chosen state would be contrary to a fundamental policy of a state which has a materially greater interest than the chosen state in the determination of the particular issue and which . . . would be the state of the applicable law in the absence of an effective choice of law by the parties." Tenas, ¶ 32 (quoting Restatement (Second) of Conflict of Laws § 187(2)).

         ¶13 We determine the District Court erred by analyzing the Premarital Agreement under Montana law. Neither exception to the general rule that Montana courts enforce choice-of-law provisions applies in this case. We accordingly apply the Premarital Agreement's choice-of-law provision and conclude Nevada law controls our interpretation of the Premarital Agreement's enforceability. We note, however, that the choice-of-law provision relates only to the parties' Premarital Agreement. It does not relate to the dissolution proceeding as a whole; Montana law governs the remainder of the proceeding, including the equitable division of the marital estate. See Procter v. Mavis, 125 P.3d 801, 803 (Ore. Ct. App. 2005) (concluding, under the UPAA, a premarital agreement's choice-of-law provision applied only to the agreement's enforceability, not to the division of assets). While the District Court erred in applying Montana law, the factual findings upon which it based its decision permit us to apply Nevada law to determine whether the Premarital Agreement is enforceable.

         B. Enforceability of the Premarital Agreement under Nevada Law

         ¶14 Michael and Michele executed the Premarital Agreement on August 9, 1991, and married one week later on August 16, 1991. The agreement stated that the parties "agreed to retain a single attorney to draft this agreement and to advise them of their respective rights and obligations under law and the ways and manner in which this agreement might alter such rights and obligations." The agreement further provided that each party "understands that said counsel does not represent either of them individually." The agreement listed each party's separate property. Michael's list included sixteen investment accounts, an undeveloped parcel of real property, an antique vehicle, and personal items. Michele's list only included personal items; she did not own any investments or real estate. The agreement also provided that each party waived spousal maintenance claims in the event of divorce.

         ¶15 Michele and Michael recalled different versions of the events surrounding the compilation and execution of the Premarital Agreement, but the District Court resolved the factual dispute in favor of Michele's memory. Michele recalled that, on August 9, 1991, one week before their wedding date, Michael took her to a law office in Las Vegas where the couple met with attorneys she had never encountered before. The attorneys presented the fully prepared Premarital Agreement and read the agreement to the parties. Michele stated she was surprised, embarrassed, and sad about the agreement, but she signed it anyway because the wedding was set to occur the following week. The District Court found "Michele provided credible testimony that she and Michael went to an attorney's office [one week][1] before the date which had been scheduled for their wedding; that she had not had an opportunity to review the agreement prior to going to this attorney's office; that she had no part in drawing up the agreement; and that she did not consult with her own attorney prior to the date that she signed the agreement." Based on those facts, the District Court, applying Montana law, enforced the Premarital Agreement. While we affirm its conclusion, we instead apply Nevada law to the court's factual findings.

         ¶16 Nevada's UPAA governs any premarital agreement executed after October 1, 1989. 1989 Nev. Stat., ch. 472, § 22, at 1009; Kantor v. Kantor, 8 P.3d 825, 829 (Nev. 2000). Michael and Michele executed the Premarital Agreement in 1991, and, accordingly, the UPAA governs the Premarital Agreement. See Fick v. Fick, 851 P.2d 445, 449 (Nev. 1993).[2] Under the UPAA, a premarital agreement is enforceable without consideration if it is in writing and signed by both parties. Fick, 851 P.2d at 449 (citing Nev. Rev. Stat. § 123A.040). A premarital agreement may, among other things, eliminate spousal maintenance in the event of a divorce. Nev. Rev. Stat. § 123A.050(1)(d). The burden of proving the unenforceability of a premarital agreement is on the party challenging the agreement. Kantor, 8 P.3d at 830 (citing Nev. Rev. Stat. § 123A.080). "A premarital agreement is not enforceable if the party against whom enforcement is sought proves that":

(a) That party did not execute the agreement voluntarily;
(b) The agreement was unconscionable when it was executed; or
(c) Before execution of the agreement, that party:
(1) Was not provided a fair and reasonable disclosure of the property or financial obligations of the other party;
(2) Did not voluntarily and expressly waive, in writing, any right to disclosure of the property or financial obligations of the other party beyond the disclosure provided; and
(3) Did not have, or reasonably could not have had, an adequate knowledge of the property or financial ...

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