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Sanderson v. Sanderson

Supreme Court of Mississippi

June 7, 2018


          DATE OF JUDGMENT: 10/19/2016







         ¶1. This is the second time Tanya Dale Wright Sanderson and Hobson L. "Hob" Sanderson's divorce has ended up before this Court.

         ¶2. In Sanderson v. Sanderson, 170 So.3d 430 (Miss. 2014) (Sanderson I), this Court agreed with the chancellor that Tanya and Hob's prenuptial agreement was procedurally conscionable. But we disagreed that potential substantive unconscionability was not a consideration. We reversed and remanded for the chancellor to weigh Tanya's claim that the prenuptial agreement was substantively unconscionable. Tanya had also claimed the chancellor erroneously classified as Hob's separate property several assets that had been commingled with marital property. We agreed with Tanya regarding one asset-the couple's joint bank account. And we reversed the chancellor's finding that the joint bank-account funds were not commingled.

         ¶3. On remand, a different chancellor found the prenuptial agreement was substantively conscionable and thus enforceable. After a detailed Ferguson[1] analysis, the chancellor then awarded Tanya $537.42-the balance of the joint bank account at the time of Tanya and Hob's final separation. Tanya appeals. She first argues the chancellor failed to recognize the prenuptial agreement was unconscionable because the results of enforcement are unfair. Alternatively, she argues the chancellor erred by not expanding the scope of commingled marital assets to include Hob's home and investment accounts.

         ¶4. Upon review, we discern no reversible error. The chancellor's holding the prenuptial agreement was enforceable and his determination the commingled marital assets only encompassed the balance of the joint account are consistent with both Sanderson I and the terms of the prenuptial agreement. Therefore, we affirm.

         Background Facts and Procedural History

         I. Marriage and Divorce

         ¶5. Tanya and Hob were cohabiting when they decided to marry in 1994. At the time, Hob was sixty-two and owned a construction business and a home. Tanya was twenty-eight, worked as a deputy chancery clerk, and owned a home. Both had been married previously. Hob had children from his first marriage who were grown and not living with him, and Tanya had a young daughter with her ex-husband.

         ¶6. The day before they married, at Hob's insistence, the two entered into a prenuptial agreement. The agreement eliminated all rights to spousal support and entitled each party to keep all separate property acquired not only before but also during the marriage, if traceable. According to Tanya, after she married, she sold her home and quit her job. Tanya raised her daughter in Hob's home, and both she and her daughter lived off Hob's income from his business, saving all child-support payments for her daughter's college education.

         ¶7. After seventeen years of marriage, Tanya was granted a divorce. The chancellor enforced the prenuptial agreement, granting each party his or her separate property. Relevant to this appeal, the chancellor found six investment accounts in Hob's name remained his separate, nonmarital property and two investment accounts were Tanya's separate property. While the couple had a joint bank account, the chancellor found the funds deposited in this account were completely traceable to Hob's separate assets, so the joint account was merely a "clearinghouse" to facilitate the transfer of funds. The chancellor also found Hob had exclusive title, possession, and control of the house and 320 acres in Aberdeen, Mississippi, where he and Tanya had lived during their marriage. In total, Hob left the marriage with more than $3.5 million in separate property, and Tanya left with approximately $425, 000 in separate property.

         II. First Appeal

         ¶8. Tanya appealed. She challenged both the chancellor's determination the prenuptial agreement was enforceable and his application of the agreement to find certain assets, otherwise subject to equitable distribution, remained Hob's separate property.

         A. Conscionability

         ¶9. Tanya argued the chancellor erred in finding the prenuptial agreement procedurally conscionable, as well as refusing to consider whether the agreement was substantively conscionable. This Court affirmed the chancellor's finding the agreement was procedurally conscionable. Sanderson I, 170 So.3d at 435. But we clarified that, because "a prenuptial agreement is a contract like any other contract, " it is "subject to the same rules of construction and application"-including the consideration whether the agreement is substantively conscionable. Id. at 436 (citations omitted). Substantive conscionability "looks at the terms of the contract" and "the circumstances existing at the time the contract was made." Id. at 437 (emphasis in original). We held "that substantive unconscionability feasibly could be measured at the time the prenuptial agreement is made, " thus "ensur[ing] that the Court does not 'relieve a party to a freely negotiated contract of the burdens of a provision which becomes more onerous than had originally been anticipated.'" Id. (quoting Mabus v. Mabus, 890 So.2d 806, 819 (Miss. 2003)). And we reversed and remanded this case for the chancellor to do so. Id.

         B. Asset Classification

         ¶10. Tanya's other points of error focused on property-its classification and distribution. She argued commingling had converted Hob's separate property into marital assets subject to distribution.[2] Specifically, she claimed all of Hob's investment accounts were marital property subject to distribution. And the joint account was not a "clearinghouse" but instead the funds deposited into the account were for familial use. She also asserted the chancellor erred when he did not classify the marital home, surrounding acreage, and contents of the marital home as marital property subject to equitable distribution.

         ¶11. Our opinion in Sanderson I only addressed Tanya's commingling claim concerning the joint account. We reversed the chancellor's finding that the account merely served as a "clearinghouse." Id. at 437. Instead, we found "the money deposited in the joint account became a marital asset subject to equitable division because of its family use." Id. (citing A&L, Inc. v. Grantham, 747 So.2d 832, 838 (Miss. 1999)). Because Tanya had contributed in "disburs[ing] the funds for familial purposes, " under Mississippi's law concerning marital property, "her contributions and the familial use to which the money in the joint account was put changed the legal nature of the money in the account from separate property subject to tracing to marital property." Id. at 438.

         ¶12. We concluded that "Tanya and Hob[] could have drafted the prenuptial agreement to address funds for familial use, but they did not." Id. (internal citations omitted). So we "reverse[d] the chancellor's finding that the joint bank account funds were not commingled." Id.

         ¶13. "After due consideration of the other issues raised, " we "discern[ed] no other errors." Id.

         III. Remand

         A. Conscionability

         ¶14. Due to the passing of the original chancellor, another chancellor was assigned this case on remand. He first tackled the "main remanded issue"-whether the prenuptial agreement was substantively conscionable. He rejected Tanya's assertions that the true test of fairness was to compare what she would have received had there been no prenuptial agreement to what she would receive if the agreement is enforced. He also rejected Tanya's request to apply caselaw from other jurisdictions and reach the same result. Instead, he considered the agreement's terms and the circumstances at the time the agreement was formed. See Sanderson I, 170 So.3d at 438. And he concluded the terms were mutual and the circumstances were not so unfair and one-sided to make the agreement unconscionable.

         B. Equitable Distribution

         ¶15. By separate order, the chancellor then addressed the more "limited" issue of the commingled joint bank account. On remand, Tanya had argued that Hob's investment accounts and home fell into the scope of marital assets to be distributed, based on commingling. But the chancellor found Tanya's "extensive and all-encompassing commingling and familial use claims" were incompatible with the enforceable terms of the prenuptial agreement. While this Court had held funds "kept" in the joint account were marital, the funds Tanya claims were also marital were not kept in the joint account for family use. Instead they were separated out and thus regained the status of separate property under the prenuptial agreement. See Johnson v. Johnson, 650 So.2d 1281, 1286 (Miss. 1994) (holding timber-sale proceeds, generated by wife's separate estate, though commingled in the family account, "reacquired" their nonmarital status when the funds were transferred back to the wife).

         ¶16. Moreover, in the first appeal, Tanya had challenged the original chancellor's classification of these specific assets, based on the exact same commingling arguments. And this Court affirmed the chancellor's classification except for the joint account. So based on the language of Sanderson I and the prenuptial agreement, the chancellor concluded his authority on remand was limited to distributing the balance of the joint account, which was $537.42 at the time of final separation.

         ¶17. The chancellor then went through a detailed Ferguson analysis. See Ferguson v. Ferguson, 639 So.2d 921, 928 (Miss. 1994). He noted, had all the money deposited into the joint account been "kept" there, he would have to consider how much money went to Tanya and her daughter-almost $95, 000. Another equitable consideration would be the more than $200, 000 in court-ordered temporary support Tanya received during the divorce proceedings that she otherwise was not entitled to under the prenuptial agreement. In total, there was ...

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