Title: Gamache v. Smurro

State: vermont

Issuer: Vermont Supreme Court

Document:

Gamache v. Smurro (2004-342); 180 Vt. 104; 904 A.2d 1184

2004-342

[Filed 14-Jul-2006]


       NOTICE:  This opinion is subject to motions for reargument under
  V.R.A.P. 40 as well as formal revision before publication in the Vermont
  Reports.  Readers are requested to notify the Reporter of Decisions,
  Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
  any errors in order that corrections may be made before this opinion goes
  to press.


                                 2006 VT 67

                                No. 2004-342


  Lili Gamache                                   Supreme Court

                                                 On Appeal from
       v.                                        Franklin Family Court


  James Smurro                                   November Term, 2005


  Jane E. Dimotis, J.

  John J. Bergeron and David D. Aman of Bergeron Paradis & Fitzpatrick, LLP,
    Burlington, for  Plaintiff-Appellee.

  Brian K. Valentine of Downs Rachlin Martin PLLC, Burlington, for
   Defendant-Appellant.


  PRESENT:  Reiber, C.J., Dooley, Johnson, Skoglund and Burgess, JJ.

       ¶  1.  DOOLEY, J.   Husband, James Smurro, appeals from a family
  court divorce order that distributed a portion of the equity in a property
  located in California to wife Lili Gamache.  Husband claims that the
  California property is not marital property because wife signed a
  prenuptial agreement prior to their California marriage that waived her
  right to any equity in the property.  We find that the prenuptial agreement
  was modified and superseded by husband and wife's subsequent purchase of
  the entire property, which deeded a 100% undivided interest to both
  parties.  Further, we hold that the family court's distribution of the
  property was equitable and not an abuse of its discretion.  We affirm.
   
       ¶  2.  The parties were married in 1981 and lived together in
  California until July of 1992.  They have one daughter who was born
  in 1990.  In 1992, when their daughter was two years old, the parties separated
  amicably, and wife and daughter moved back to Vermont.  Husband stayed in
  California and eventually moved to Massachusetts.  He frequently saw both
  daughter and wife during the eleven years of separation.  Wife currently
  has a bachelor's degree in Fine Arts, which she obtained before marriage,
  and husband has a bachelor's degree, as well as master's degrees in both
  Science and Engineering and Business Administration, all earned from
  Harvard University before the marriage.  Husband has at times held
  high-level, well-paying positions, but is currently unemployed and seeking
  employment.  Between 1998 and 2003, he earned over $600,000.  


       ¶  3.  Following the separation, wife moved back to St. Albans.  She
  acquired a home, a forty-percent interest in a downtown building, and a
  Subway franchise, the income of which supports her and her daughter.  The
  money to make these purchases apparently came as a gift from her father. 
  Between 1998 and 2003, wife made about $141,000, but at times her monthly
  income has equaled that of husband.  

       ¶  4.  The main issue in this case involves the effect of a prenuptial
  agreement, so we recite the facts related to that agreement in some detail. 
  Prior to the parties' 1981 marriage, husband owned an approximately
  ten-percent interest in a house and surrounding property located in San
  Clemente, California.  The remaining interests were owned by his parents,
  Nicholas and Mary Rose Smurro, his sister, and his two brothers. 
  Apparently, the house was used as a home by husband's father and mother. 
  Prior to their marriage, wife signed a "prenuptial agreement" regarding
  this property, which reads: 

      I Lili Gamache am the spouse-to-be of James Paul Smurro.

      I understand that as of this date, James Paul Smurro has a 10%
    ownership interest in 509 Via Florida, San Clemente and is
    responsible for a proportionate 10% share of all mortgage
    payments, taxes, and insurance on said property, currently
    amounting to $265.00 a month.

      I further understand that James Paul Smurro may buy additional
    shares of said property from his parents or siblings or may
    receive additional shares of said property from his parents or
    siblings as gifts or by will, and that such additional shares,
    however acquired, will require James Paul Smurro to pay the
    percentage of all mortgage payments, taxes, and insurance on said
    property which equals the percentage of ownership that he then
    has.

      . . . .

      I further understand that payments that James Paul Smurro makes to
    said property during our marriage may consist (in all or in part)
    of community property which, under California law, would otherwise
    consist of my one-half share of the same.  I hereby specifically
    renounce any and all rights to any interest in 509 Via Florida,
    including any interest that otherwise would be my one-half share
    of community  property with James Paul Smurro.

      . . . . 

      I freely and willingly sign this Pre-Nuptial Agreement for each
    and all of the following reasons:

      (1)  My love and affection for James Paul Smurro who is to be my
    lawful wedded spouse.

      (2)  My understanding that the purchase of 509 Via Florida (an
    event that occurred before my engagement to James Paul Smurro) was
    contingent upon Nicholas A. Smurro, Sr., Mary Rose Smurro,
    Rosemarie Elizabeth Smurro, James Paul Smurro, Thomas Edward
    Smurro, Nicholas A. Smurro, Jr., and each of them mutually
    agreeing that said property, until completely sold, was to be
    owned only by the above-recited six individuals; that each of the
    four children, including James Paul Smurro, agreed to continue
    payments on said property, whether in a single or marital state;
    that all four children, including James Paul Smurro, agreed that
    upon the contemplation of marriage, that he would secure a
    pre-nuptial agreement from his spouse-to-be which agreement would
    renounce any community property interest, or otherwise, in said
    property; that unless such a pre-nuptial agreement were obtained,
    then James Paul Smurro would forfeit his share of said property at
    fair market value less a prescribed penalty payment.

      (3) That family cooperation and harmony are important to me and my
    renunciation of any and all interest in 509 Via Florida is more
    likely to foster such cooperation and harmony as I join the Smurro
    family as the spouse of James Paul Smurro without the burden of
    financial entanglements.

      WHEREFORE, I LILI GAMACHE HEREBY RENOUNCE, FREELY AND WILLINGLY,
    NOW AND FOREVER, ANY AND ALL INTERESTS THAT I MIGHT OTHERWISE HAVE
    IN THE PROPERTY LOCATED AT 509 VIA FLORIDA, SAN CLEMENTE,
    CALIFORNIA.

  As the agreement reflects, California is a community property state, as
  discussed infra.  At the time of the agreement, the Smurro family did not
  contemplate that they would sell the property to husband and wife.  Husband
  did not sign the agreement.  After wife signed the agreement, the parties
  married.
   
       ¶  5.  Subsequently, in November of 1983, the parties purchased a
  100% interest in the San Clemente property as an investment property. 
  Husband's parents did not like the house and wanted to move to another
  property.  The parties needed a tax shelter for some of their income. 
  Although the evidence does not disclose the source of the purchase money,
  no party disputes it was purchased for valuable consideration. (FN1)  The
  purchase was reflected in a deed to "JAMES PAUL SMURRO  and LILI GAMACHE
  SMURRO, husband and wife as community property as to an undivided 100%
  interest."  The deed was signed by each of the owners of the property,
  including husband.  It states that husband had previously "acquired title
  as a single man," apparently to indicate that, prior to this grant, it was
  not then held by him as community property with wife.  Although the parties
  never lived in the property, wife contributed $40,000 from her earnings to
  support the property from 1983 until 1992.  After the separation, husband
  assumed responsibility for the property and spent over $150,000 on
  management and upkeep.  The parties had an understanding that his
  assumption of responsibility was in lieu of child support for the parties'
  child and maintenance for wife.

       ¶  6.  The prenuptial agreement was introduced late in the trial
  without disclosure in discovery.  Wife testified that she had not seen the
  document in twenty years and that husband had never claimed it affected the
  title to the San Clemente property.  Husband argued that the prenuptial
  agreement was enforceable and meant that wife had no interest in the San
  Clemente property.  Wife argued that the prenuptial agreement was invalid,
  and that, in any event, it did not have the effect of making the San
  Clemente house separate property of husband.  The family court accepted
  wife's arguments.  On the interpretation issue, the court found:

      The Court further concludes that even if this agreement was valid
    when made, it does not bear on the distribution of real estate
    held jointly by the parties as husband and wife.

      . . . .

      The Pre-Nuptial Agreement before the Court is not a comprehensive
    agreement between the parties regarding the disposition of assets
    in the event of divorce.  It relates only to a property interest
    Defendant at one time held as a joint tenant.  Despite the
    language at the end of the Pre-Nuptial Agreement that Plaintiff
    was forever renouncing any interest in the California property,
    other provisions indicate the Agreement was intended to ensure
    that the interest Defendant had as a joint tenant with other
    members of the Smurro family would remain as separate property. 
    The Agreement does not contemplate what actually occurred, that
    Plaintiff and Defendant would buy the entire property together as
    husband and wife.  The Agreement does not address how the parties
    intended to divide the California property if held jointly as
    husband and wife, and the Court will not construe it to bear on
    this issue.

  On appeal, as husband's first ground for reversal, he disputes each of the
  family court's reasons for refusing to give effect to the prenuptial
  agreement and hold that the San Clemente house was husband's separate
  property.

       ¶  7.  We agree with a variation of the court's decision on
  interpretation of the prenuptial agreement and do not reach the question of
  whether the agreement is valid.  In reaching our result, we agree with the
  family court that California law governs the validity and interpretation of
  the prenuptial agreement made in California. (FN2)  See Stalb v. Stalb, 168
  Vt. 235, 241,