Thursday, February 28, 2008

Maintenance: Karon Waiver Invalid Without Independent Findings Required in Minn. Stat. 518.552(5)

In an unpublished decision in McDaniel v. McDaniel, MN COURT OF APPEALS 06-2446, the Court of Appeals held that the district court's failure to make the required findings made the parties' Karon Waiver ineffective.
In McDaniel, the parties’ marriage was dissolved on August 21, 2000. The dissolution decree, which was based on a stipulated agreement, awarded the wife spousal maintenance of $600 per week for 20 years and provided that payments would not terminate upon her remarriage. The Karon waiver was included, stating:
It is further stipulated and agreed that except for the aforesaid maintenance, each party waives and is forever barred from receiving any spousal maintenance whatsoever from one another, and this court is divested from having any jurisdiction whatsoever to award temporary or permanent maintenance to either of the parties.
It is further understood and agreed that both parties specifically waive any right to return to court to seek a modification of either the amount or the term of the aforesaid maintenance, based upon a change of circumstances . . . or to seek cost-of-living increases . . .
It is further agreed that the court shall retain jurisdiction solely to enforce husband's obligation to pay maintenance to wife . . . . Wife's waiver of the right to further or additional maintenance is null and void if wife's economic rights and/or responsibilities are adversely affected by husband's discharge of any obligation in a bankruptcy proceeding or non-payment .
Husband then moved for modification of his spousal maintenance obligation in August 2006, claiming that "the terms of the Judgment and Decree were unfair and inequitable" and that he and the wife both had a substantial change in income. Husband also claimed that, when he signed the marital termination agreement, he was suffering from major depression and was not represented by counsel.
The district court denied husband’s motion for modification, concluding that the dissolution court had met the requirements of 518.552 (5) by specifically finding that the marital termination agreement’s waiver provision was fair and equitable and supported by consideration and that full disclosure of financial circumstances occurred between the parties.
The aforementioned statute requires the following specific findings of the district court in order to preclude or limit modification of maintenance:
1. The stipulation is fair and equitable;
2. The stipulation is supported by consideration described in the findings;
3. Full disclosure of each party’s financial circumstances has occurred.
The Court of Appeals relied on the plain language of the statute, which requires the district court itself to specifically make the findings, not to merely recite the parties’ agreed-upon stipulations.
The Court of Appeals found that the District Court merely recited the parties' agreement into the findings, and that this mere repetition of the parties’ language did not fulfill the statutory requirement that the dissolution court specifically find that the agreement was 1.fair and equitable, 2. supported by consideration, and 3. that full disclosure has occurred.
Based on the foregoing the Court of Appeals ruled that the dissolution court’s judgment failed to divest the district court of subject matter jurisdiction over modification of appellant’s spousal maintenance obligations because the dissolution court did not make its own independent findings as required by Minn. Stat. § 518.552(5).

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