Jones v. Culve

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No. 110,334

IN THE COURT OF APPEALS OF THE STATE OF KANSAS

SHARALENE JONES,
Administrator of the Estate of Byron J. Funk, Deceased,
Appellant,

v.

GLENDA CULVER,
Appellee.


SYLLABUS BY THE COURT


1.
To demonstrate a breach of contract claim, a plaintiff must show a contract existed
between the parties; there was sufficient consideration to support the contract; one party
performed or was willing to perform the requirements of the contract; a party breached
the contract; and there were damages to the plaintiff caused by the breach of the contract.

2.
In Kansas, the elements of an unjust enrichment claim are a benefit conferred upon
the defendant by the plaintiff; an appreciation or knowledge of the benefit by the
defendant; and the acceptance or retention by the defendant of the benefit under such
circumstances as to make it inequitable for the defendant to retain the benefit without
payment of its value.

3.
A worker who allows his or her earnings to contribute to a 401(k) plan created by
an employer is a settlor of a trust. Accordingly, to comply with K.S.A. 60-1610(b), a
divorce decree must reflect any changes in a beneficiary.
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Appeal from Sedgwick District Court; JEFFREY SYRIOS, judge. Opinion filed June 6, 2014.
Affirmed.

Donald N. Peterson II and Sean M. McGivern, of Withers, Gough, Pike, Pfaff & Peterson, LLC,
of Wichita, for appellant.

Michael L. Baumberger, of Klenda Austerman LLC, of Wichita, for appellee.

Before MALONE, P.J., HILL and ARNOLD-BURGER, JJ.

HILL, J.: When Byron Funk died intestate 14 years after his divorce from Glenda
Funk (now known as Culver), his former employer paid the proceeds from his retirement
account to Glenda because she was still the named beneficiary of the account.
Contending Glenda had no proper claim to this retirement account because of their
divorce, Byron's estate sued Glenda seeking return of the proceeds on theories of breach
of contract and unjust enrichment. The district court granted summary judgment to
Glenda, and the estate appeals. Because the estate has neither shown us an enforceable
contract nor established all the required elements to prove unjust enrichment, we affirm
the district court.

The factual background is simple.

Byron and Glenda were divorced in Sedgwick County in June 1998. The divorce
decree indicated the court awarded Byron his 401(k) "as his sole and separate property,
free and clear of any right, title, claim or interest" of Glenda. Glenda was awarded her
vehicle, her IRAs, and other items. The divorce decree gave the parties the standard
directions to finish the paper work:

"Each party shall promptly make, execute and deliver to the other party any and
all deeds of conveyance, bills of sale, title of transfer, documents or any other instruments
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which may be necessary or convenient to carry out the terms of this Journal Entry. If
either party fails to comply with the provisions of this paragraph, then this Journal Entry
itself shall substitute as an actual grant, assignment, release and conveyance of the
property and rights in such manner as shall be necessary or convenient to effectuate the
terms hereof."

Byron died intestate on February 6, 2012. The proceeds of his 401(k) were
distributed to Glenda, as she was still the named beneficiary on the account. The
administrator of Byron's estate—his sister, Sharalene K. Jones—sued Glenda in the
district court, alleging her retention of the proceeds constituted (1) unjust enrichment; (2)
a breach of contract with Byron (i.e., under the divorce decree); and (3) a breach of her
fiduciary duty to Byron's Estate.

The court disposed of the breach of contract claim by ruling the Estate had failed
to meet the burden of showing either the divorce decree or a pretrial order made in the
case constituted a contract. The court denied judgment on the unjust enrichment claim
because there was no benefit conferred upon Glenda by the Estate as required by the
theory of unjust enrichment. The court also concluded that it was no more inequitable for
Glenda to collect the proceeds of the 401(k) than it was for Jones or the Estate to do so.

The court added that under K.S.A. 60-1610(b) (now K.S.A. 2013 Supp. 23-
2802[d]), a change in beneficiary must be addressed in a divorce decree or by the actions
of the owner. The court determined this provision applies to trusts and that Byron's
401(k) qualified as a trust. However, the court noted, Byron and Glenda's divorce decree
did not mention a change in beneficiary. The court said it could not grant equitable relief
where the parties failed to comply with K.S.A. 60-1610.




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We review some fundamental points of law.

The district court's grant of summary judgment was based on its interpretation of
the divorce decree and pretrial order. Issues involving the interpretation and legal effect
of written contracts involve questions of law subject to unlimited review by this court.
Shamberg, Johnson & Bergman, Chtd. v. Oliver, 289 Kan. 891, 900, 220 P.3d 333
(2009). The court's decision also rested on its interpretation of caselaw and Kansas
statutes. We exercise unlimited review over these issues. See Redd v. Kansas Truck
Center, 291 Kan. 176, 187-88, 239 P.3d 66 (2010).

To demonstrate a breach of contract claim, a plaintiff must show:
 a contract existed between the parties;
 there was sufficient consideration to support the contract;
 one party performed or was willing to perform the requirements of the
contract;
 a party breached the contract; and
 there were damages to the plaintiff caused by the breach of the contract.

See Commercial Credit Corporation v. Harris, 212 Kan. 310, Syl. ¶ 2, 510 P.2d 1322
(1973); City of Andover v. Southwestern Bell Telephone, 37 Kan. App. 2d 358, 362, 153
P.3d 561 (2007). Jones' claim involved the first of these elements—whether a contract
existed between the parties. And if there was a contract, we do not think it was breached.

The record reveals that the pretrial order, which was made during the divorce
proceedings, listed the parties' proposed divisions of their marital assets. In a section
titled "RESPONDENT'S PROPOSED DIVISION OF VALUES," Glenda listed "Byron's
401k" under "Husband." Other assets, such as "Glenda's IRA," were listed under "Wife."
In a section titled "PETITIONER'S PROPOSED DIVISION OF VALUES," Byron listed
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his 401(k) under "Husband." Thus, there was no conflict between the parties at that
time—Byron's 401(k) should go to Byron.

On appeal, Jones argues the pretrial order constitutes a contract between Byron
and Glenda in which they agreed Byron would keep his 401(k) account. Jones claims that
because Glenda "agreed" in the pretrial order "to make no claim" to Byron's 401(k), she
is "now in breach" of that agreement. We are not so persuaded. This language does not
create a contract.

Here, the pretrial order merely reflects Byron's and Glenda's "proposals" or
"suggestions" as to what should happen with their assets. As the district court pointed out,
Byron and Glenda did not sign the order, and there is no contractual language in the order
indicating the parties' proposals were binding or final or that the parties were purporting
to agree on any particular asset. Instead, Byron and Glenda were simply offering
suggestions as to how the various assets should be divided. The district court would later,
in the divorce decree, make a final determination about the disposition of their marital
property. Nothing about the pretrial order indicates it was a contract between Byron and
Glenda.

Even if we would view the pretrial order as a contract, we see no breach of the
contract. The order only proposed that Byron keep his 401(k) account. And there is no
dispute that Byron did, in fact, keep his 401(k) account post-divorce.

What Byron arranged to have done with the proceeds of the asset upon his death is
an entirely different matter. Byron was free to do whatever he wanted with the asset post-
divorce. And if Byron desired, post-divorce, for Glenda to have the proceeds of the asset
upon his death, Byron was free to make that arrangement. By leaving Glenda as the
named beneficiary on the account, this court can only conclude that Byron must have
intended such a result. Byron's and Glenda's pre-divorce claims over who would keep
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what assets has nothing to do with who Byron might choose to be the ultimate
beneficiary of the asset at his death. In 14 years, he might have changed his mind. Byron
retained the power to do whatever he wanted with the asset.

The court properly denied the unjust enrichment claim.

Jones argues the doctrine of unjust enrichment "allows parties like Jones, as the
administrator of [Byron's] estate, to recover funds which in equity and good conscience
belong to the estate."

In Kansas, the elements of an unjust enrichment claim are: (1) a benefit conferred
upon the defendant by the plaintiff; (2) an appreciation or knowledge of the benefit by the
defendant; and (3) the acceptance or retention by the defendant of the benefit under such
circumstances as to make it inequitable for the defendant to retain the benefit without
payment of its value. Haz-Mat Response, Inc. v. Certified Waste Services Ltd., 259 Kan.
166, 177, 910 P.2d 839 (1996).

We focus on the third element. In our view, the district court correctly determined
the acceptance or retention of the 401(k) benefits by Glenda was not under such
circumstances as to make it inequitable for her to retain the 401(k) proceeds without
payment of their value. See Haz-Mat Response, Inc., 259 Kan. at 177.

Byron retained possession of his 401(k) account post-divorce. What he arranged to
have done with the proceeds of the asset upon his death was up to him. Even if Byron
and Glenda agreed Byron would keep his 401(k) as his sole property, free and clear of
any right, title, claim, or interest Glenda may have had in it, Byron was still free to do
whatever he wanted with it post-divorce. If Byron desired, post-divorce, for Glenda to
have the proceeds of the asset upon his death, Byron was free to make that arrangement.
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By leaving Glenda as the named beneficiary on the account, this court can only conclude
that Byron must have intended such a result.

The Estate argues that Byron was not learned in the law and that he must have
assumed the divorce decree was all that was needed to remove Glenda as the beneficiary.
There is no proof of that in the record. Actions and refraining from acting are evidence a
court can base a judgment on.

In finding it was not inequitable for Glenda to keep the proceeds of the account,
the district court reasoned that K.S.A. 60-1610 requires a change in beneficiary be
addressed in a divorce decree. Namely, K.S.A. 60-1610(b) states a divorce decree shall
divide the real and personal property of the parties, including any retirement and pension
plans, and that the decree

"shall provide for any changes in beneficiary designation on . . . any trust instrument
under which one party is the grantor . . . . Nothing in this section shall relieve the parties
of the obligation to effectuate any change in beneficiary designation by the filing of such
change with the insurer or issuer in accordance with the terms of such policy."

The court determined that Byron's 401(k) qualified as a trust (which Jones
conceded) and pointed out that Byron and Glenda's divorce decree did not refer to
changes in a beneficiary. The court therefore concluded it would not grant equitable relief
where there was a failure to comply with K.S.A. 60-1610.

On appeal, Jones argues K.S.A. 60-1610 is inapplicable because Byron was not
the "grantor" of a trust instrument. Jones says Byron's employer was the grantor instead.
We remain unconvinced.

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Black's Law Dictionary defines "grantor" as "[o]ne who conveys property to
another" and a "[s]ettlor." Black's Law Dictionary 769 (9th ed. 2009). Kansas' Uniform
Trust Code defines a "settlor" as "a person, including a testator, who creates, or
contributes property to, a trust." K.S.A. 2013 Supp. 58a-103(14).The section states: "If
more than one person creates or contributes property to a trust, each person is a settlor of
the portion of the trust property attributable to that person's contribution except to the
extent another person has the power to revoke or withdraw that portion." K.S.A. 2013
Supp. 58a-103(14).

By allowing his earnings to contribute to the 401(k) plan created by his employer,
Byron was a settlor of the trust. Byron contributed part of his property to the trust. Jones
cites authority for the idea that Byron's employer is a grantor, but she fails to demonstrate
that Byron is not a settlor of the trust.

As Byron was a grantor of a trust at the time of divorce, it was necessary that the
divorce decree provide for any changes in a beneficiary designation related to that trust.
Because the divorce decree did not do so, there was a failure to comply with K.S.A. 60-
1610(b). Byron and Glenda were obligated, then, to make any changes to beneficiary
designations as they saw fit. Where Byron failed to make a change to the beneficiary
designation on his 401(k) account, the district court correctly refused to modify this legal
obligation as a matter of equity.

Jones has failed to demonstrate there was a benefit conferred upon Glenda by
Jones and that Glenda's acceptance of the benefit would be inequitable. The district court
did not err in granting summary judgment to Glenda on Jones' unjust enrichment claim.

Affirmed.