Court Opinion

ID: 5135867
Source: CourtListenerOpinion
Date Created: 2021-12-17 15:06:15.664422+00
Date Added: 2024-06-11T08:23:51.922624
License: Public Domain

RENDERED: DECEMBER 10, 2021; 10:00 A.M.
                      TO BE PUBLISHED

            Commonwealth of Kentucky
                    Court of Appeals

                      NO. 2020-CA-1624-MR

LYNDSEY M. KING, CHELSEY
N. KING, BAILEY M. KING,
ANDREW R. KING, AND
ASHLEY D. KING (ADULT CHILDREN
OF RANDALL KING, M.D.)                            APPELLANTS

             APPEAL FROM DAVIESS CIRCUIT COURT
v.          HONORABLE JAY A. WETHINGTON, JUDGE
                    ACTION NO. 17-CI-00375

KARLA EVELYN
GARDNER KING                                           APPELLEE

AND                   NO. 2020-CA-1627-MR

A.K.K. (MINOR CHILD OF DR.
RANDALL KING, M.D.)                                   APPELLANT

             APPEAL FROM DAVIESS CIRCUIT COURT
v.          HONORABLE JAY A. WETHINGTON, JUDGE
                    ACTION NO. 17-CI-00375
KARLA EVEYLN
GARDNER KING                                                           APPELLEE

                                    OPINION
                                   AFFIRMING

                                   ** ** ** ** **

BEFORE: CLAYTON, CHIEF JUDGE; COMBS AND L. THOMPSON,
JUDGES.

CLAYTON, CHIEF JUDGE: This appeal is taken from a Daviess Circuit Court

order and declaratory judgment. The trial court found that a prenuptial agreement

between Karla Evelyn Gardner King (“Karla”) and her late husband, Randall E.

King, M.D. (“Randall”), is void and invalid for lack of full disclosure of the extent

and value of the parties’ assets prior to the execution of the agreement. The

appellants, who are the children of Randall King (“the Kings”), argue that the trial

court departed from clear precedent in making this determination and improperly

admitted and relied upon hearsay of Randall. In addition, they seek to modify the

standard for invalidating such an agreement on the grounds of nondisclosure by

requiring an additional finding of deception, fraud, or material omission. For the

following reasons, we affirm.

             Karla and Randall met in July 2012. Both had been married before.

Karla, who holds a master’s degree in nursing from Vanderbilt University, was

living in Tennessee and working as a registered nurse in aesthetics. Randall was a

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physician specializing in obstetrics and gynecology in Owensboro. Karla moved

to Randall’s home in Owensboro in October 2012 and they were married a short

time later on Thanksgiving, November 22, 2012. According to Karla, they planned

for Randall to continue his successful medical practice after their marriage and also

to act as a consultant to her cosmetic surgery and procedure clinic.

             Randall’s previous marriage had ended in a contentious manner and

Karla testified that Randall first mentioned the topic of a prenuptial agreement to

her as something that his family wanted. Randall and Karla then had a lunch

meeting with attorney Gary Abshier to discuss the subject. Karla testified she

indicated at the meeting she was willing to sign a prenuptial agreement if it was

fair to both of them.

             On November 14, 2012, shortly before their wedding, Randall and

Karla met with Randall’s attorney, J.D. Meyer, to prepare for a custody and

support hearing involving Randall’s youngest child. At the close of the meeting,

Randall raised the subject of a prenuptial agreement for the first time with Meyer.

Meyer testified that Karla discussed the general terms she would agree to and gave

Meyer the contact information for her attorney. Meyer testified he made it clear he

could not represent both Randall and Karla in the matter, which was why he took

down Karla’s attorney information.

                                         -3-
             On November 19, 2012, Meyer met first with Randall and then with

Randall and Karla. According to Meyer, the meeting with Randall lasted

approximately 45 minutes to one hour; the meeting at which Karla was present was

very brief. No specific terms were discussed with Karla and Meyer reiterated that

he wanted to ensure she knew he did not represent her. He did not speak to her

again after the November 19 meeting.

             On the same day, Meyer sent Randall a first draft of the agreement.

His accompanying email stated: “We definitely need the financial disclosures in

order to complete the agreement.” Meyer also expressed concern about Karla’s

attitude to the agreement: “It has apparently upset her vastly and I can understand

that. But, her comment that she did not want to read it and will just sign anything

causes me concern from a legal standpoint. I am fearful she will try to question the

enforceability of the agreement in the future.” Meyer warned that Karla might try

to argue that she was forced to sign the agreement and stressed that her attorney

should review the agreement, stating: “Her counsel’s signature will provide some

legitimacy to the agreement and its enforceability and prevent the argument that

the terms are unfair.”

             He emailed a second draft to Randall on November 21, 2012. This

version, which the parties signed the next day, included provisions Karla wanted.

In the event of a separation, Randall was required to remain as a collaborating

                                         -4-
physician in her clinic for one year. He was also required to pay her the equivalent

of her salary for the previous year and double that amount if he were unfaithful. In

the event of his death, the agreement provided that Karla would receive $200,000

and her listed separate property.

             The agreement also contained a provision stating that the parties each

acknowledged they had made a full disclosure of the nature, extent, and value of

each party’s separate estate and financial condition as of the date of the agreement.

It stated that the parties acknowledged they had each been afforded a full and

adequate opportunity to verify and to seek and receive independent advice

concerning all representations made by the other party and that copies of each

party’s financial statement had been attached to the agreement as Exhibits “A” and

“B” and were incorporated into the agreement by reference. It further stated:

“Neither party represents that his or her respective balance sheet is a precise

identification of his or her assets and liabilities, but such does constitute a

reasonable approximation of such assets and liabilities. Each party represents to

the other that he or she has fully disclosed to the other his or her financial situation

by representations contained in the balance sheet, subject only to the qualification

that the balance sheets were prepared informally and without reference to specific

documentation.”

                                           -5-
             Randall never replied to Meyer about the agreement nor did he send

him the financial disclosures. Karla did not provide Meyer with any financial

disclosures and her attorney never reviewed the agreement. Their balance

statements were never attached to the agreement.

             Meyer testified that if he had been consulted, he would have added a

provision to the agreement that Karla had waived the opportunity to get her own

attorney to review the agreement and a provision stating that Meyer did not

represent her. He also testified that if they had signed it in his office, he would

have added something to the agreement about the absence of financial disclosures

from the parties.

             On the day of the wedding, which took place at Randall’s home,

Randall came into the bedroom where Karla was getting ready for the ceremony

and gave her the agreement to sign. He had already signed it. According to Karla,

he told her she needed to sign the agreement so they could get married, and that the

agreement “did not mean anything.” Karla’s mother, Nancy Gardner, who was

also in the bedroom, testified that when Randall came into the room, Karla was in

the bathroom finishing up her makeup and hair. Gardner testified: “He called her

in there and told her she needed to sign that, and she said, what is it, and he said,

it’s the prenuptial agreement. And she said, well, Randy, I haven’t read it, and he

said I haven’t either, but you need to sign it, and then he left the room.” According

                                          -6-
to Gardner, this conversation occurred about ten minutes before the wedding

ceremony. According to Karla, it was her understanding that the prenuptial

agreement addressed what would happen if she and Randall divorced but she did

not know the agreement contained any provisions regarding what would happen if

one of them died.

             Randall died intestate on October 9, 2016. Karla filed a declaratory

judgment action claiming the prenuptial agreement was invalid and unenforceable

because it was the product of duress, unconscionability, and overreaching. As

additional grounds for invalidating the agreement, she claimed she had not been

made aware of the nature, extent, and value of Randall’s estate before signing the

agreement.

             A bench trial was conducted on September 28-30, 2020. Relying on a

balance sheet Randall submitted to a bank in early 2013 when he was applying for

a loan, the trial court found his net worth at the time of the marriage to Karla to be

over $5.2 million. Karla testified about the extent of her knowledge of Randall’s

estate prior to their marriage. She knew he was a physician with a busy medical

practice and that he also worked at a plasma center. She knew he or one of his

companies owned his home, his medical office building, and a strip mall which

housed numerous stores. She also knew he owned all-terrain vehicles, a Ford F-

150, a Cadillac Escalade, and a Lexus. She was not aware of the specific value of

                                          -7-
any of these assets, or that Randall had a 401(k) plan, three bank accounts

containing over $127,000, and a life insurance policy with a $4 million death

benefit.

             The trial court found that although Karla had failed to prove her

claims of duress, unconscionability, and overreaching, neither of the parties had

done what they specifically attested to in the agreement: they had not attached

their financial statements, they had not made full disclosures of the extent and

values of their estate, and had not attached any definitions of separate property.

On the day of their marriage, they told each other they had not read the agreement,

even though they attested that they had. The trial court concluded that neither

party “manifested faith in the integrity of the agreement or their stated promises to

each other” and neither party “manifested the intention to respect the agreement.”

For these reasons, it declared the agreement to be void.

             This appeal by Randall’s children followed. Independence Bank of

Kentucky, the administrator of Randall’s estate, was a defendant in the case below

but did not join in the appeal.

             In reviewing the trial court’s decision, the trial court’s findings 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.” Kentucky

Rules of Civil Procedure (“CR”) 52.01. A factual finding is not clearly erroneous

                                          -8-
if it is supported by substantial evidence, which is defined as evidence which has

“sufficient probative value to induce conviction in the mind of a reasonable

person.” Gosney v. Glenn, 163 S.W.3d 894, 898 (Ky. App. 2005). The trial

court’s conclusions of law, however, are reviewed de novo. Id.

             “As a general rule, antenuptial agreements, if supported by valid

consideration, are valid and enforceable and favored in the law.” Luck v. Luck,

711 S.W.2d 860, 862 (Ky. App. 1986). “The first limitation upon parties to an

antenuptial agreement is the requirement of full disclosure.” Edwardson v.

Edwardson, 798 S.W.2d 941, 945 (Ky. 1990). In assessing the validity of an

agreement, the court must ask: “[W]as there a full and complete disclosure of the

property owned by each party at the time the contract was entered into?” Luck,

711 S.W.2d at 862. “The law is clear that the burden of proof regarding the

question of full disclosure of assets at the time of the agreement rests on the party

relying on the agreement.” Lawson v. Loid, 896 S.W.2d 1, 2 (Ky. 1995), as

modified on denial of reh’g (May 11, 1995) (citations omitted).

             The Kings argue that the trial court’s finding that the parties failed to

make full disclosure of the extent and value of their estates was not supported by

substantial evidence and departed from clear precedent. They rely upon Lawson v.

Loid, supra, and an unpublished opinion of this Court, Copley v. Copley, No. 2009-

                                          -9-
CA-001102-MR, 2010 WL 3447703 (Ky. App. Sep. 3, 2010), to support their

argument that the facts of this case compelled a different conclusion.

             In Lawson, the prenuptial agreement at issue provided for the wife to

receive $1,000 as settlement of any claims for dower or maintenance. 896 S.W.2d

at 2. Both the husband and wife had been married before and the husband had four

children from his previous marriage. Id. at 1-2. The wife was educated and had

been employed as a bookkeeper at the husband’s Buick dealership before their

marriage. Id. at 3. The agreement was executed on the day of their wedding, in

1952. Id. at 2. Thirty-seven years later, when the husband passed away, his estate

was worth between $2.5 and 4 million. Id. The trial court found that the wife was

aware of the husband’s financial condition at the time of the marriage because of

her employment as a bookkeeper at his dealership. Id. at 3. It held that the

prenuptial agreement was valid, finding “that the estate of the wife had failed to

present any competent or relevant testimony proving that the husband had not

made a full disclosure concerning his financial condition at the time of the

marriage and execution of the agreement.” Id. at 2. The Court of Appeals

reversed on the grounds that the trial court had applied the wrong burden of proof

on the question of full disclosure. Id. at 1. The Kentucky Supreme Court reversed

the Court of Appeals, holding that the burden of proof rested on the party relying

on the agreement and that the trial court’s findings were supported by substantial

                                        -10-
evidence, stating that “[a] review of the evidence clearly shows that the wife was

aware of the husband’s assets prior to the execution of the agreement.” Id. at 3.

The Supreme Court cited as significant evidence the fact that the wife was an

educated woman who had been previously married and divorced, had worked as a

bookkeeper at her husband’s business, and that the parties had kept separate bank

accounts throughout the entire marriage. Id.

             In Copley, the Court of Appeals affirmed the trial court’s ruling that a

prenuptial agreement was valid and enforceable. Copley, 2010 WL 3447703, at

*1. As in this case, the schedules which were intended to detail the couple’s

respective assets were not attached to the agreement. The trial court nonetheless

concluded that the wife had knowledge of approximately one-half of the husband’s

net worth at the time she signed the agreement and that he had not misrepresented

the extent and nature of his assets to induce her to sign the agreement. Id. at *2.

Specifically, the trial court found that at the time of the marriage, the wife knew

the husband owned a business, a post office building, a retail store, a car wash, a

motor home, his main residence, a smaller residence, and his vehicles. Id. She

also knew he was on the board of a bank. Id. The Court of Appeals affirmed on

the grounds that her substantial knowledge of the nature and extent of the

husband’s assets was sufficient to satisfy the disclosure requirement. Id.

                                         -11-
             The Kings argue that the facts of their case sufficiently resemble those

of Lawson and Copley to mandate a finding of adequate disclosure of Randall’s

assets. They point to the following similarities amongst the cases: Karla is well-

educated; both she and Randall had previously been married; Karla had assisted

her former husband, a veterinarian, to build his office and their home; Karla was

aware that Randall owned various parcels of real estate; Karla and Randall

maintained separate checking accounts during their marriage; and their prenuptial

agreement was executed shortly before the marriage. As to the failure to attach the

financial disclosures to the agreement, they note there was no attached schedule of

assets mentioned in the Lawson prenuptial agreement either, whereas the Kings’

agreement expressly stated that the parties had knowledge of the extent and nature

of each other’s assets and liabilities. The Kings also emphasize that, like the wife

in Copley, Karla received a substantial amount of assets upon Randall’s death. In

Copley, the husband’s estate contained assets of $2.9 million; the wife received a

$200,000 home, two vehicles, $4,000 in rental income, and $20,000 in cash.

Copley, 2010 WL 3447703, at *2. Randall’s estate contained assets of $5.2

million; Karla received $200,000 under the prenuptial agreement and she received

the marital home, which sold for $599,000, through joint tenancy. The Kings

claim that the very same evidence that induced the Copley and Lawson Courts to

find full disclosure was ignored by the trial court here.

                                         -12-
             Lawson and Copley do not stand for the proposition that factual

similarities mandate a particular legal result. The facts set forth in Lawson and

Copley are not intended as a rigid checklist to govern future cases. Our standard of

review requires us to exercise deference towards the findings of the trial court and

to review every agreement on a case-by-case basis. Lane v. Lane, 202 S.W.3d 577,

579 (Ky. 2006). Our standard remains whether the trial court’s findings were

supported by substantial evidence. As earlier noted, Lawson clearly holds that the

party seeking to uphold the agreement bears the burden of proving full disclosure

of assets at the time the agreement was executed. Lawson, 896 S.W.2d at 2. The

trial court found as credible Karla’s testimony that she was unaware of the

character and full extent of Randall’s financial holdings, comprising the real

property, the bank and retirement accounts, and the $4 million life insurance

policy. It is undisputed that neither Randall nor Karla provided the financial

disclosures specified by the agreement and there is substantial evidence in the form

of their own statements and the statements of Randall’s attorney to support the trial

court’s conclusion that neither party took the agreement seriously.

             Next, the Kings argue that the trial court abused its discretion and

committed reversible error by admitting and relying upon hearsay testimony from

Randall. The appellees made a motion in limine to exclude the statements Randall

made to Karla in the bedroom immediately prior to the wedding, in which he told

                                        -13-
her to sign the agreement or they would not get married, that it didn’t mean

anything, and that his family wanted him to do it. The trial court ruled that the

statements were admissible as a declaration against interest, and it relied on the

statements in its final ruling as evidence that Randall had actually not read the

agreement and that he signed it to satisfy his family’s wishes. The court also wrote

that “[n]either party, on the day they presented the agreement to each other,

manifested faith in the integrity of the agreement or their stated promises to each

other.”

             “Hearsay is inadmissible unless it is excepted under the Kentucky

Rules of Evidence [(“KRE”)]. The rules contain an exception for statements made

against the declarant’s interest under KRE 804(b)(3). The exception applies where

the declarant is unavailable to testify at trial[.]” Fisher v. Commonwealth, 620

S.W.3d 1, 11 (Ky. 2021) (footnote omitted). A statement against interest is

defined as follows:

             A statement which was at the time of its making so far
             contrary to the declarant’s pecuniary or proprietary
             interest, or so far tended to subject the declarant to civil
             or criminal liability, or to render invalid a claim by the
             declarant against another, that a reasonable person in the
             declarant’s position would not have made the statement
             unless believing it to be true. A statement tending to
             expose the declarant to criminal liability is not admissible
             unless corroborating circumstances clearly indicate the
             trustworthiness of the statement.

KRE 804(b)(3).

                                         -14-
             At the time Randall made the statements to Karla, they were against

his pecuniary interest because they could be used to invalidate the prenuptial

agreement which, in the event of a divorce, would have operated in his favor.

Thus, his statements were admissible under KRE 804(b)(3).

             Finally, the Kings argue that a prenuptial agreement should not be

invalidated for inadequate disclosure unless there is also evidence of deception,

fraud, or material omission. We do not have the authority to add additional

requirements to the legal standard established by our state’s highest Court:

             The abstract declaration of the law that an antenuptial
             contract must have been fairly entered into usually
             consists in requiring that it be shown that the agreement
             substituting contractual rights for statutory rights was
             equitable and just, made freely and with a knowledge of
             the prospective wife or husband of the nature and extent
             of the other’s estate and of her or his property rights
             which would otherwise be acquired by reason of the
             marriage.

Truitt v. Truitt’s Adm’r, 290 Ky. 632, 636, 162 S.W.2d 31, 33-34 (1942); see also

Edwardson, supra.

             “[A]s an intermediate appellate court, this Court is bound by

established precedents of the Kentucky Supreme Court. SCR [Kentucky Supreme

Court Rules] 1.030(8)(a). The Court of Appeals cannot overrule the established

precedent set by the Supreme Court or its predecessor Court.” Smith v. Vilvarajah,

57 S.W.3d 839, 841 (Ky. App. 2000).

                                        -15-
             For the foregoing reasons, the order and judgment of the Daviess

Circuit Court is affirmed.

             ALL CONCUR.

JOINT BRIEF FOR APPELLANTS:             BRIEF FOR APPELLEE:

Travis L. Holtrey                       R. Michael Sullivan
Tyler H. Johnson                        L. Christopher Hunt
Jennifer L. Hendricks                   Owensboro, Kentucky
Owensboro, Kentucky

                                       -16-