velma-j-hussemann-by-her-next-friend-and-attorney-in-fact-marcella-d ( 2014 )

IN THE SUPREME COURT OF IOWA
No. 13–1082
Filed May 23, 2014
VELMA J. HUSSEMANN, By Her Next Friend and Attorney-In-Fact
MARCELLA D. RITTER,
Appellant,
vs.
HERBERT J. HUSSEMANN JR. and ROBERT J. HUSSEMANN,
as Trustees of the HERBERT J. HUSSEMANN INTER VIVOS TRUST
AGREEMENT, dated June 3, 1991,
Appellees.
Appeal from the Iowa District Court for Benton County, Patrick R.
Grady, Judge.
A surviving spouse appeals the district court’s order granting
judgment on the pleadings to the trustees of the decedent’s estate and
denying her claim of a spousal elective share. AFFIRMED.
Daniel L. Seufferlein of Ackley, Kopecky & Kingery, LLP, Cedar
Rapids, for appellant.
Mark E. Mossman and Amy L. Van Wechel of Mossman &
Mossman, LLP, Vinton, for appellees.
2
MANSFIELD, Justice.
This conflict-of-laws case requires us to determine whose state law
governs the enforceability of mutual clauses in a postnuptial agreement
that waived each spouse’s elective share. Two Florida residents were
married in Florida in 1991. A few months later, they signed a
postnuptial agreement in Florida. The agreement expressly provided that
Florida law would apply. The married couple subsequently moved to
Iowa in 2005. In 2012, one of the spouses died, and the other spouse
sought to claim an elective share under Iowa law, notwithstanding the
waiver of the share in the postnuptial agreement. The district court
denied relief based on Florida law. Applying the principles of the
Restatement (Second) of Conflict of Laws, we give effect to the choice-of-
law provision in the agreement and hold that Florida law applies.
Accordingly, we affirm the judgment of the district court.
I. Facts and Procedural Background.
Herbert J. Hussemann Sr. and Velma J. Hussemann were married
on February 7, 1991, in Florida at a time when both were Florida
residents. Herbert and Velma had been married previously and had
children from their prior marriages. Marcella Ritter is Velma’s daughter
from her first marriage, and Herbert Hussemann Jr. (Herbie) and Robert
Hussemann are Herbert’s children from his first marriage.
Shortly after their February 1991 marriage, when they were still
Florida residents, the couple entered into a postnuptial agreement. The
agreement was signed by the parties on June 3, 1991, in Citrus County,
Florida. The agreement contained a separate “Statement of Assets and
Liabilities” for each spouse, and it was witnessed and notarized. The
agreement provided that each spouse’s premarital assets would remain
his or her own property, that property acquired after marriage would
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become and remain the property of the party in whose name title was
taken, and that the parties waived rights to spousal support or equitable
division of property in the event of dissolution of marriage. The
agreement further contained a provision detailing the “Disposition of
Property Upon Death.” Subsection B of that provision stated:
Wife hereby waives and releases all rights in and
claims against the estate of Husband on his death, including
elective share, dower, family allowance, inheritance, or any
spousal support or other claims or rights given by law or
otherwise. Neither Wife nor Husband intend that this
Agreement limit or restrict the right of Husband to make any
bequest, devise or gift to Wife by Will or otherwise. Husband
may elect to make a bequest, devise or gift to Wife by his
Will, without invalidating this Agreement, and may thereafter
change or eliminate such bequest, devise or gift by a codicil
or trust amendment, or by another Will, or otherwise,
without in any way affecting the continued effectiveness of
this Agreement. 1
The agreement also disclosed that Herbert had been represented
by independent counsel in the negotiation of the agreement and that
Velma had not been represented by counsel. A choice-of-law provision
stated, “All questions relating to the validity and construction of this
Agreement shall be determined in accordance with the laws of the State
of Florida.”
On the same day the postnuptial agreement was signed, Herbert
also created an inter vivos trust (the Trust) into which he placed his
assets. The Trust made no provision for Velma, and all residual assets
were left to Herbie and Robert. Herbert was named as the settlor and
trustee, and Herbie and Robert were named as successor trustees. The
1Subsection A contained a mirror provision in which Herbert waived and
released the same rights and claims upon Velma’s death.
4
Trust was not only formed in Florida, but (like the postnuptial
agreement) provided that it was governed by Florida law.
Herbert and Velma continued to live in Florida for another fourteen
years. In 2005, the couple moved to Belle Plaine, Iowa. They remained
there until Herbert’s death on September 17, 2012. Herbert died
intestate. 2
Following Herbert’s death, on September 20, Velma (through her
next friend and attorney-in-fact, Marcella Ritter) filed a petition claiming
her spousal elective share of the Trust under Iowa Code section
633.238. 3 See Iowa Code § 633.238 (2011) (describing elective share of
surviving spouse). The trustees answered the petition and asserted
Velma had waived her rights to a spousal share under the postnuptial
agreement, and the waiver was valid and enforceable under the laws of
Florida, which had been selected as the controlling law in the agreement.
On February 27, 2013, the trustees filed a motion for judgment on
the pleadings. Velma resisted the motion, filed her own motion for
judgment on the pleadings, and argued the entire postnuptial agreement
was void as violating Iowa’s public policy against postnuptial agreements.
The district court issued its order on June 11. In it, the court
concluded “the undisputed choice of law provision in the agreement has
2Velma indicated in her petition that Herbert died intestate. In its response, the
Trust alleged a will existed and was created on the same date as the postnuptial
agreement and the trust agreement. However, no will was produced as a part of the
record, and the district court indicated in its order that “Herbert J. Hussemann died
intestate as a resident of Benton County on September 17, 2012.” For the purposes of
this appeal, we will assume Herbert died intestate.
3The petition also sought a temporary injunction prohibiting Herbie and Robert
from dissipating the Trust assets and from removing Herbert’s remains from the state.
These issues were later resolved by the parties and are not part of this appeal.
5
effectively taken the matter out of the purview of Iowa law and
subsequently Iowa’s public policy.” The court added:
Furthermore, accepting Plaintiff’s argument declaring the
entire agreement void would lead to an unfavorable
consequence. Parties who[] intentionally enter into such
agreements in states allowing them could simply circumvent
the agreement later by bringing a claim in Iowa.
As a result, the court granted the trustees’ motion for judgment on the
pleadings.
Velma appealed; we retained the appeal.
II. Standard of Review.
“We review a grant of judgment on the pleadings for corrections of
errors at law.” Roush v. Mahaska State Bank, 605 N.W.2d 6, 8 (Iowa
2000). The court should grant a party’s motion for judgment on the
pleadings only if the uncontroverted facts stated in the pleadings, taken
alone, entitle the party to judgment. Meinders v. Dunkerton Cmty. Sch.
Dist., 645 N.W.2d 632, 633 (Iowa 2002). 4
III. Analysis.
The parties do not dispute any of the facts in this case. Rather,
this case turns on a legal issue—the enforceability of Velma’s waiver of
her spousal elective share contained in a postnuptial agreement she
signed in June 1991. Neither party disputes the enforceability of the
agreement under Florida law. See Fla. Stat. § 732.301 (1991) (providing
that an elective share may be “waived by . . . the spouse by prenuptial or
postnuptial agreement”). Rather, Velma argues the agreement cannot be
enforced in Iowa because that would violate this state’s established
4Arguably, the parties have gone beyond the pleadings. Herbie and Robert
attached a copy of the postnuptial agreement to their motion. However, neither party
disputes the terms of the agreement or the circumstances of its execution for purposes
of appeal.
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public policy against postnuptial agreements waiving a spouse’s elective
share.
Because suit was brought in Iowa, we apply our own choice-of-law
rules. See Cameron v. Hardisty, 407 N.W.2d 595, 596 (Iowa 1987)
(noting that when a diversity case is filed in federal court in Iowa, the
court must apply Iowa choice-of-law rules). Where an agreement
contains a choice-of-law provision, Iowa follows Restatement (Second) of
Conflict of Laws section 187. See Pa. Life Ins. Co. v. Simoni, 641 N.W.2d
807, 813 (Iowa 2002) (applying Restatement (Second) section 187 to a
contractual choice-of-law provision); Cole v. State Auto. & Cas.
Underwriters, 296 N.W.2d 779, 781 (Iowa 1980) (citing Restatement
(Second) section 187 and noting that “with certain restrictions not
applicable here, contracting parties can themselves determine the law
which is to control”); Joseph L. Wilmotte & Co. v. Rosenman Bros., 258
N.W.2d 317, 328 (Iowa 1977) (stating that “Restatement Second,
Conflicts of Law, section 187, permits the parties to agree on the law to
be applied to the contract in most cases so long as it does not override
the public policy of a state having a materially greater interest in the
transaction”).
Restatement (Second) of Conflict of Laws section 187 provides in
relevant part:
(2) The law of the state chosen by the parties to govern
their contractual rights and duties will be applied, even if the
particular issue is one which the parties could not have
resolved by an explicit provision in their agreement directed
to that issue, unless either
(a) 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
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(b) 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,
under the rule of § 188, would be the state of the
applicable law in the absence of an effective choice of
law by the parties.
Restatement (Second) of Conflict of Laws § 187(2), at 561 (1971). Florida
law clearly does not lack a “substantial relationship to the parties or the
transaction.” See id. § 187(2)(a), at 561. So the only question is whether
application of Florida law would be
contrary to a fundamental policy of [Iowa] which has a
materially greater interest than [Florida] in the determination
of the particular issue and which, under the rule of § 188,
would be the state of the applicable law in the absence of an
effective choice of law by the parties.
Id. § 187(2)(b), at 561. The comment to this provision suggests that a
sliding scale applies. The greater the relationship of the contract to the
state whose law has been chosen, the more fundamental the policy must
be of the forum state:
No detailed statement can be made of the situations
where a “fundamental” policy of the state of the otherwise
applicable law will be found to exist. An important
consideration is the extent to which the significant contacts
are grouped in this state. For the forum will be more
inclined to defer to the policy of a state which is closely
related to the contract and the parties than to the policy of a
state where few contacts are grouped but which, because of
the wide dispersion of contacts among several states, would
be the state of the applicable law if effect were to be denied
the choice-of-law provision. Another important
consideration is the extent to which the significant contacts
are grouped in the state of the chosen law. The more closely
this state is related to the contract and to the parties, the
more likely it is that the choice-of-law provision will be given
effect. The more closely the state of the chosen law is related
to the contract and the parties, the more fundamental must
be the policy of the state of the otherwise applicable law to
justify denying effect to the choice-of-law provision.
Id. § 187 cmt. g, at 568.
8
Another official comment elaborates on the “rationale” for section
187:
e. Rationale. Prime objectives of contract law are to
protect the justified expectations of the parties and to make
it possible for them to foretell with accuracy what will be
their rights and liabilities under the contract. These
objectives may best be attained in multistate transactions by
letting the parties choose the law to govern the validity of the
contract and the rights created thereby. In this way,
certainty and predictability of result are most likely to be
secured. Giving parties this power of choice is also
consistent with the fact that, in contrast to other areas of the
law, persons are free within broad limits to determine the
nature of their contractual obligations.
....
It may . . . be objected that, if given this power of
choice, the parties will be enabled to escape prohibitions
prevailing in the state which would otherwise be the state of
the applicable law. Nevertheless, the demands of certainty,
predictability and convenience dictate that, subject to some
limitations, the parties should have power to choose the
applicable law.
Id. § 187 cmt. e, at 565.
As we have already noted, when the Hussemanns executed their
agreement in 1991, and continuing to the present, Florida has
recognized the validity of postnuptial agreements waiving the spouse’s
elective share. See Sean Hannon Williams, Postnuptial Agreements, 2007
Wis. L. Rev. 827, 881 (2007) (cataloguing the position of states on
postnuptial agreements). By contrast, over a century ago, we held that
“a contract between husband and wife, with reference to her interest in
his estate, is of no validity whatever.” In re Kennedy’s Estate, 154 Iowa
460, 468, 135 N.W. 53, 56 (1912). Although our legislature has
authorized antenuptial agreements, it has made no such allowance for
postnuptial agreements. See Iowa Code § 596.5(1) (providing that parties
to a premarital agreement may contract with respect to various matters,
9
including the disposition of property upon death); see also In re Marriage
of Shanks, 758 N.W.2d 506, 517, 519 (Iowa 2008) (reversing a district
court order refusing to enforce a premarital agreement that included a
waiver of the spouse’s elective share).
Furthermore, Iowa Code section 597.2 provides,
When property is owned by the husband or wife, the
other has no interest therein which can be the subject of
contract between them, nor such interest as will make the
same liable for the contracts or liabilities of the one not the
owner of the property, except as provided in this chapter.
Iowa Code § 597.2. We have previously indicated that section is to be
“narrowly interpreted . . . not to limit all transactions between husband
and wife, but to shield one spouse’s dower interest from exploitation by
the other.” In re Estate of Wulf, 471 N.W.2d 850, 853 (Iowa 1991); see
also Young v. Young-Wishard, 227 Iowa 431, 436, 288 N.W. 420, 423
(1939) (“The above section [now Iowa Code section 597.2] does not
prohibit all transactions between husband and wife with references to
their separate property, but only those that relate directly to their
respective rights of dower.”). Thus, there appears to be a real difference
in how the parties’ postnuptial agreement waiving elective shares would
be treated under Florida law and under Iowa law. 5 We need to decide
whose law applies.
As noted above, the Second Restatement directs us first to whether
Iowa law would apply in the absence of “an effective choice of law by the
parties.” See Restatement (Second) of Conflict of Laws § 187(2)(b), at
561. Under section 188 of the Restatement (Second) of Conflict of Laws,
5We do not address whether section 633.238(1)(d), which eliminates the spouse’s
elective share in certain trust property where the surviving spouse has made an
“express written relinquishment,” could apply to the facts of the case, because it has
not been argued here or below. See Iowa Code § 633.238(1)(d).
10
the test to determine whether a state’s law would apply in the absence of
the choice-of-law provision is the “most significant relationship” test. Id.
§ 188(1), at 575. Section 188(2) indicates courts should consider the
following factors when determining which state has the most significant
relationship to the contract:
(a) the place of contracting,
(b) the place of negotiation of the contract,
(c) the place of performance,
(d) the location of the subject matter of the contract,
and
(e) the domicil, residence, nationality, place of
incorporation and place of business of the parties.
These contacts are to be evaluated according to their
relative importance with respect to the particular issue.
Id. § 188(2), at 575.
Here it is undisputed the contract was negotiated and executed in
Florida. At that time, the couple lived in Florida and most of Herbert’s
property affected by the postnuptial agreement consisted of intangibles
(e.g., bonds, certificates of deposit, and a mutual fund). 6 It was
contemplated that the contract would be performed in Florida; indeed
any performance occurred in Florida for the ensuing fourteen years, until
the couple moved to Iowa in 2005. 7 Under Restatement (Second) of
Conflict of Laws section 188, it seems that “place of performance”
primarily refers to where performance is to occur at the time of
6Velma’s primary assets consisted of a mortgage receivable and life insurance.
The record does not indicate what Herbert’s assets were at the time of his death.
7Forexample, the agreement covered how property acquired during the marriage
would be treated. We presume the parties would have performed this part of their
agreement during the fourteen years they lived in Florida.
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contracting, i.e., in this case Florida. See id. § 188 cmt. e, at 580
(indicating that “the place of performance can bear little weight in the
choice of the applicable law when . . . at the time of contracting it is
either uncertain or unknown”); see also One Beacon Am. Ins. Co. v.
Huntsman Polymers Corp., 276 P.3d 1156, 1168 (Utah Ct. App. 2012)
(favoring the intended place of performance at the time of contracting
where there was “a discrepancy between the intended place of
performance at the time of contracting and the actual place of
performance”).
We do not need to decide, however, whether Florida law would
apply to the present dispute if there were no choice-of-law provision in
the postnuptial agreement. See, e.g., Rivers v. Rivers, 21 S.W.3d 117,
120–22 (Mo. Ct. App. 2000) (finding that Missouri law applies to a
premarital agreement that the parties entered into in Louisiana, even
though the parties lived in Louisiana for twelve years before moving to
Missouri); cf. Black v. Powers, 628 S.E.2d 546, 549–50, 554–56 (Va. Ct.
App. 2006) (applying Virgin Islands law to a prenuptial agreement
executed by two Virginia residents just prior to their wedding ceremony
in the Virgin Islands, although noting that “neither party argues that the
law of the Virgin Islands, as it pertains to prenuptial agreements, is
contrary to Virginia’s established public policies”).
For present purposes, we need only conclude that Iowa does not
have a “materially greater interest” than Florida in the present dispute
under the balancing approach adopted by the Second Restatement. See
Restatement (Second) of Conflict of Laws § 187(2)(b) & cmt. g, at 561,
568. The parties entered into a contract that was valid under Florida law
at a time when virtually all their ties were to Florida, and they had no
connection to Iowa. The contract was signed shortly after the parties
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married in Florida and reflected the financial terms that were to govern
that marriage for its entire duration. In fact the agreement states, “The
parties do not intend that . . . any other event or events or change of
conditions shall in any way [a]ffect or change the terms of this Agreement
. . . .” The postnuptial agreement was thus an integral component of the
parties’ overall marriage arrangement. 8 Florida has a significant interest
in assuring that a Florida marriage, including any accompanying
agreements, is recognized and carried out in a manner consistent with
its own law.
Moreover, one of the two parties to this dispute is a Trust formed
in Florida under Florida law. Not only does Velma seek to invalidate the
postnuptial agreement in part, but her claim would also deny that Trust
its full effect. If she prevails, the Trust will lose assets that were
transferred to it in Florida. Florida has an interest in preserving and
protecting trusts formed under its legal umbrella.
Again, we have presumed here that Iowa does not enforce
postnuptial agreements that waive a spouse’s elective share. But on a
spectrum of public policies, this is not at the upper end. It is not a crime
to enter into such an agreement. There are no civil penalties. One
cannot be sued for entering into such an agreement. At most, our courts
would simply decline to enforce these agreements. Furthermore, if the
agreement had been signed shortly before rather than shortly after the
parties’ marriage, it would have been enforceable. See Iowa Code
§ 596.5. 9 Even after the parties were married, under Iowa law, they
8In an apparent scrivener’s error, the agreement at one point incorporates
premarital verbiage, stating that it “shall become effective only in the event that the
contemplated marriage between the parties is hereafter solemnized.”
9Some have questioned the logic of a legal distinction between prenuptial and
postnuptial agreements. See Sean Hannon Williams, Postnuptial Agreements, 2007
13
could have achieved the outcome of preserving their respective assets for
their chosen heirs rather than for each other simply by using a different
device—i.e., payable on death accounts. See In re Estate of Myers, 825
N.W.2d 1, 6–9 (Iowa 2012).
Additionally, we consider the Second Restatement’s underlying
goal of preserving justified expectations. See Restatement (Second) of
Conflict of Laws § 188 cmt. c, at 578 (emphasizing the protection of
“justified expectations”); see also In re Marriage of Whelchel, 476 N.W.2d
104, 109 (Iowa Ct. App. 1991) (citing Restatement (Second) section 6 in a
conflict of laws case relating to the ownership of property acquired
during marriage); Restatement (Second) of Conflict of Laws § 6(2), at 10
(identifying “the protection of justified expectations” as a factor relevant
to the choice of law). In our mobile society, we doubt that parties who
enter into a valid contract in their home state and live under that
contract for fourteen years would expect that contract to be nullified
simply because they move to another state. Most people do not consult
with an Iowa probate attorney before deciding whether to move into Iowa.
For all these reasons, we believe section 187 dictates the application of
Florida law in the present case.
The Connecticut Supreme Court’s decision in Elgar v. Elgar is
instructive. See 679 A.2d 937 (Conn. 1996). In that case, a woman from
New York and a man from Connecticut married. Id. at 939–40. Two
days before the wedding, the woman—who was unrepresented—signed a
prenuptial agreement prepared by the man’s New York lawyer. Id. The
agreement was executed at the lawyer’s New York office and had a
___________________________________
Wis. L. Rev. at 879 (“[I[f prenuptial agreements are embraced by a legal system—as they
are in the United States—then there is no good reason to reject postnuptial
agreements.”).
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choice-of-law provision selecting New York law as the governing law. Id.
at 940. When the man died two years later and his estate was admitted
to probate in Connecticut, the woman challenged the prenuptial
agreement, urging that Connecticut law should apply and that the
agreement was invalid under Connecticut law. Id. at 939, 941. Applying
section 187(2)(b) of the Second Restatement, the Connecticut Supreme
Court rejected this position:
In light of the referee’s findings, the trial court
determined that Connecticut did not have a materially
greater interest than New York, so as to trigger an inquiry
into the relative policy interests. We agree. Although there
were significant contacts with Connecticut, including the
facts that the marriage took place in Connecticut, that the
decedent was a Connecticut resident, and that his estate is
in probate in Connecticut, these contacts are not “materially
greater” than the contacts with New York. In view of the
numerous contacts, as set forth earlier in this opinion,
between the parties, the agreement and the state of New
York, we conclude that Connecticut does not have a
materially greater interest in the enforceability of the
agreement than New York. Accordingly, we conclude that
the trial court properly upheld the parties’ choice of New
York law.
Id. at 944. Here too, we believe the quantity and quality of Florida
contacts result in a situation where Iowa does not have a materially
greater interest in the property allocation than Florida.
Likewise, in In re Estate of Nicole-Santos, a Florida appellate court
generally applied Puerto Rico law to the validity of a prenuptial
agreement executed by a couple when they resided in Puerto Rico, even
though they were living in Florida at the time of the husband’s death.
See 648 So. 2d 277, 278–81 (Fla. Dist. Ct. App. 1995). The agreement
provided that Puerto Rico law would govern. Id. at 279 n.3. Among
other things, the court observed, “[J]ust because the law differs between
Florida and another jurisdiction does not in itself bar application of
15
foreign law.” Id. at 281. The only exception to this ruling related to the
parties’ home, because the court noted that under the Florida
constitution, “[p]rotection of homestead from alienation cannot be waived
by contract or otherwise.” Id. at 282. The court added, “A citizen’s right
to homestead protection under our constitution is considered a
paramount rule of public policy that would justify our departure from the
otherwise applicable rule of comity.” Id.; see also In re Estate of Levine,
700 P.2d 883, 887 (Ariz. Ct. App. 1985) (applying Florida law as
designated in the premarital agreement rather than Arizona law to claims
by children of the decedent seeking to be declared third-party
beneficiaries of the agreement); DeLorean v. DeLorean, 511 A.2d 1257,
1261–62 (N.J. Super. Ct. Ch. Div. 1986) (applying California law to
uphold a premarital agreement that was executed in California and
provided for the application of California law, even though the agreement
would have been unenforceable under New Jersey law); Lupien v. Lupien,
891 N.Y.S.2d 785, 785–86 (App. Div. 2009) (rejecting an argument that a
premarital agreement was not enforceable under New York law after
noting it “was signed by the parties in Massachusetts at a time when
both parties resided there” and contained a Massachusetts choice-of-law
clause); Friedman v. Roman, 885 N.Y.S.2d 740, 741 (App. Div. 2009)
(honoring New Jersey choice-of-law provision in marital agreement).
IV. Conclusion.
For the above stated reasons, we uphold the district court’s
determination that Florida law applies to the validity of a postnuptial
marital agreement that was executed in Florida by Florida residents and
that provided Florida law would govern. We therefore affirm the
judgment of the district court.
AFFIRMED.