UPDATE - Minnesota Supreme Court Ruling on Kremer v. Kremer

UPDATE – Minnesota Supreme Court Ruling on Kremer v. Kremer

MAJORITY OPINION

The time has finally arrived, and the Minnesota Supreme Court has released their decision in the Kremer case. A case that many divorce attorneys and clients have been patiently waiting for. On Wednesday, May 30, 2018, the Supreme Court ruled in favor of Ms. Kremer by affirming the lower courts finding that antenuptial agreement entered into by the parties was both invalid and unenforceable. The primary debate resolved by this holding lies between McKee-Johnson and Kinney.

STATUTORY ‘SAFE HARBOR’

The majority opinion, written by Justice Lillehaug, cites to Minnesota Statute §519.11, subd 1, which contains a procedural fairness ‘safe harbor’ provision for any and all antenuptial agreements that address nonmarital property. Further, if a provision is not within this safe harbor OR addresses marital property, then the multi-factor test provided by In re Estate of Kinney shall be applied; this analysis is addressed below.

KINNEY ANALYSIS:

In this case the Supreme Court relied on the common law test that was set forth in the case In re Estate of Kinney. This requires the Court to balance four independent factors which are;

“(1) whether there was fair and full disclosure of the parties’ assets; (2) whether the agreement was supported by adequate consideration; (3) whether both parties had knowledge of the material particulars of the agreement and how those provisions impacted the parties’ rights in the absence of the agreement; and (4) whether the agreement was procured by an abuse of fiduciary relations, undue influence, or duress”.

The Supreme Court determined that the first (inadequate consideration) and fourth (duress) factor, listed above, were the most significant to this case. Furthermore, the Court opted to only examine these two factors in depth because of the weight each carried. Even if the other factors in this test were satisfied the antenuptial agreement still did not satisfy this common law test.

MCKEE-JOHNSON ANALYSIS:

The Court use of McKee-Johnson relates primarily to issues arising under the common law standard for substantive fairness. Substantive fairness applies to whether an agreement’s terms are unconscionable or oppressive. In McKee-Johnson the primary issues that were addressed by the Court was “whether the statute voided provisions of antenuptial agreements purporting to distribute marital property”. The previous Court found that §519.11 did not void such provisions.

The current Court now finds that §519.11 reinforces the notion that the legislature would not draft to create more confusion or challenges regarding validity, but to remain “neutral” regarding marital property. Ultimately, the Court overruled McKee-Johnson “to the extent that it determined that the common law and statutory procedural tests were “substantially identical”. They are not”.

DISSENT:

Justice Anderson write the dissenting opinion in this decision for numerous reasons. First, Anderson argues that the Court has ignored the ‘plain language’ of Minn Stat. §519.11, subd 1, which as we know from the previous blog on this topic governs the requirements for antenuptial agreements. Second, he contends that the analysis conduct by the majority regarding McKee-Johnson was done so far too broadly. Finally, Anderson argues that the application of In re Kinney was “neither necessary nor wise”.

The dissent comes to the conclusion that common law should only be used when the antenuptial agreement includes provisions that purport to distribute marital property and “fails to conform” to procedural fairness requirements of Minn. Stat. §519.11, subd 1. Furthermore, Anderson states that “there is little point to an antenuptial agreement that distributes nonmarital property because nonmarital property is subject to distribution only in exceptional cases”.

In regard to the majority opinion’s application of Kinney, Anderson argues that the Court failed to make specific factual findings, as required in Kinney. For example, there is no explicit finding by the District Court of duress. Despite finding that Mr. Kremer, indeed intended to create that affect there is no evidence to suggest that Ms. Kremer’s “will was actually overborne by the circumstances…”.

It is for the above stated reasons that the dissent believes that this case should be remanded to the District Court to make factual findings under the common-law standard.

At Lake Harriet Law Office, we provide strong legal representation for our clients who are going through divorce, and we use a data-focused approach to address the division of assets and debts.  If you are concerned about divorce and the related financial issues, please contact us to schedule a consultation at 612-750-4843.

Randall A. Smith – Managing Attorney             612-750-4843

Jessica Dulz – Student Attorney                          612-223-8925

Addy Scriver – Student Attorney                         612-223-8925