Joan C. Pulkkila v. James M. Pulkkila

2020 WI 34, 941 N.W.2d 239, 391 Wis. 2d 107

• Court: Wisconsin Supreme Court
• Decided: April 14, 2020
• Docket: 2018AP000712-FT
• Status: Published

Opinion

2020 WI 34

SUPREME COURT OF WISCONSIN CASE NO.: 2018AP712-FT

COMPLETE TITLE: Joan C. Pulkkila, Petitioner-Appellant, v. James M. Pulkkila, Respondent, Lynnea Landsee-Pulkkila, Other Party-Respondent-Petitioner.

REVIEW OF DECISION OF THE COURT OF APPEALS Reported at 386 Wis. 2d 352,927 N.W.2d 164 (2019 – unpublished)

OPINION FILED: April 14, 2020 SUBMITTED ON BRIEFS: ORAL ARGUMENT: October 14, 2019

SOURCE OF APPEAL: COURT: Circuit COUNTY: Waukesha JUDGE: Paul Bugenhagen Jr.

JUSTICES: ANN WALSH BRADLEY, J., delivered the majority opinion of the Court, in which ROGGENSACK, C.J., ZIEGLER, and KELLY, JJ.., joined. REBECCA GRASSL BRADLEY, J., filed a dissenting opinion. NOT PARTICIPATING: DALLET and HAGEDORN, JJ.

ATTORNEYS:

For the other party-respondent-petitioner, there were briefs filed by Jeffrey A. Mandell, Eileen M. Kelley, Jared M. Potter, and Stafford Rosenbaum LLP, Madison and Milwaukee. There was an oral argument by Jeffrey A. Mandell.

For the petitioner-appellant, there was a brief filed by Daniel J. O’Brien, Angela C. Foy, and Halling & Cayo, S.C., Milwaukee. There was an oral argument by Daniel J. O’Brien. 2 2020 WI 34 NOTICE This opinion is subject to further editing and modification. The final version will appear in the bound volume of the official reports. No. 2018AP712-FT (L.C. No. 2008FA696)

STATE OF WISCONSIN : IN SUPREME COURT

Joan C. Pulkkila,

Petitioner-Appellant,

v. FILED James M. Pulkkila, APR 14, 2020 Respondent, Sheila T. Reiff Lynnea Landsee-Pulkkila, Clerk of Supreme Court

Other Party-Respondent-Petitioner.

ANN WALSH BRADLEY, J., delivered the majority opinion of the Court, in which ROGGENSACK, C.J., ZIEGLER, and KELLY, JJ., joined. REBECCA GRASSL BRADLEY, J., filed a dissenting opinion.

DALLET and HAGEDORN, JJ., did not participate.

REVIEW of a decision of the Court of Appeals. Reversed and

remanded.

¶1 ANN WALSH BRADLEY, J. The petitioner, Lynnea Landsee-

Pulkkila (Lynnea), seeks review of an unpublished, authored decision of the court of appeals applying a constructive trust to No. 2018AP712-FT

proceeds she collected from a life insurance policy maintained by

her late husband, James Pulkkila (James).1 She asserts that the

court of appeals erred by determining that constructive trust is

an available remedy and by applying that remedy.

¶2 James and Joan Pulkkila (Joan) divorced in 2009. They

arrived at a marital settlement agreement (MSA), which the circuit

court incorporated in its judgment of divorce. The MSA contained

a provision requiring James and Joan to maintain life insurance

with their children as beneficiaries. Joan alleges that James

breached this provision when he made Lynnea, who he married in

2013, the sole beneficiary of (his) life insurance policy, and

argues that a constructive trust should be placed on the proceeds.

¶3 Lynnea contends that a constructive trust cannot be

applied to the life insurance proceeds because the MSA provides

that a lien on James's estate is the exclusive remedy for breach

of the life insurance provision. Further, she asserts that the

court of appeals erred by applying a constructive trust in the

absence of additional proceedings in the circuit court. ¶4 We conclude first that the lien provision of the MSA is

not an exclusive remedy. Second, we conclude that the court of

appeals erred in imposing a constructive trust absent findings of

fact that would support such an imposition. We remand to the

1 Pulkkila v. Pulkkila, No. 2018AP712-FT, unpublished slip op. (Wis. Ct. App. Feb. 27, 2019) (reversing and remanding order of the circuit court for Waukesha County, Paul Bugenhagen, Jr., Judge).

2 No. 2018AP712-FT

circuit court to engage in factfinding and subsequently determine

whether to impose a constructive trust in the first instance.

¶5 Accordingly, we reverse the decision of the court of

appeals and remand to the circuit court for further proceedings

consistent with this opinion.

I

¶6 James and Joan were married in 1996 and divorced in 2009.

At the time of the divorce, they had two minor children.

¶7 As the divorce proceeded, James and Joan negotiated the

MSA. They arrived at an agreement and submitted the MSA to the

circuit court, which incorporated the MSA into its judgment of

divorce.2

¶8 The MSA contains a section entitled, "Life Insurance."

Pursuant to this section, James and Joan agreed as follows:

Both parties shall maintain in full force and pay the premiums on all life insurance presently in existence on their lives or obtain comparable insurance coverage, with the parties' minor children named as sole and irrevocable primary beneficiaries until the youngest minor child reaches the age of majority, or until the child has reached the age of 19 so long as the child is pursuing an accredited course of instruction leading to the acquisition of a high school diploma or its equivalent. During the term of such obligation, each of the parties shall furnish the other with copies of such policies or evidence of there being such insurance in force and proof of beneficiary designation upon request.

The Honorable James R. Kieffer presided at the initial 2

divorce proceedings, while the Honorable Paul Bugenhagen, Jr., presided at the proceedings related to the constructive trust issue now before this court.

3 No. 2018AP712-FT

¶9 Further, the "Life Insurance" section of the MSA sets

forth a remedy in the event either party breaches the provision.

Specifically, it provides:

If either party fails for any reason to maintain any of the insurance required under this article, there shall be a valid and provable lien against his or her estate in favor of the specified beneficiary to the extent of the difference between the insurance required and the actual death benefits received. ¶10 Prior to the divorce, in 2002, James obtained a $250,000 life insurance policy from Banner Life. At the time he obtained

the policy, James named Joan as the primary beneficiary.

¶11 In 2013, James and Lynnea were married, and the following

year James submitted a beneficiary name change request to Banner

Life, asking that Lynnea be made the sole beneficiary of the

policy. James passed away in 2015. At the time of his death,

both of his children were minors.

¶12 Banner Life paid Lynnea the proceeds of the policy.

Subsequently, Joan filed a motion in the divorce action, seeking

three iterations of relief. First, she moved to join Lynnea to

the action as a third party, asserting that "the proceeds from one

of [James's] life insurance policies were paid to Ms. Landsee-

Pulkkila in violation of the [Judgment] of Divorce and complete

relief cannot be accorded unless Ms. Landsee-Pulkkila is joined."

¶13 Second, Joan moved to enforce the judgment of divorce,

seeking "an order requiring Ms. Landsee-Pulkkila to return

proceeds from [James's] life insurance policy that were paid to

her in violation of the Judgment of Divorce in this matter and for such other relief as the Court deems appropriate." Third, Joan

4 No. 2018AP712-FT

moved to establish a constructive trust for her and James's

children's benefit over the life insurance proceeds that were paid

to Lynnea.

¶14 The circuit court held a hearing on the motion and

ultimately denied Joan's motion for a constructive trust,

reasoning that the MSA unambiguously provided that a lien on

James's estate is the exclusive remedy for breach of the life

insurance provision. Because it determined the lien remedy to be

exclusive, it concluded that a constructive trust was not an

available remedy. It explained:

[T]he Court's job isn't to go back and fix the parties' agreement to make it fair now for the children. It's not fair they're not getting as much money. They lost their father. It is a rotten deal for them. However, this Court has to follow the law on it. The contract is not ambiguous to this Court. That is simply a question of law. . . . It is clear to this Court that that was the bargaining, and I'm not going to step outside of their agreement to provide for other remedies. ¶15 Additionally, the circuit court expressly declined to

address several of the issues raised by Joan's motion and Lynnea's

response, reasoning that such issues could be addressed if necessary on remand from an appellate court. It stated, "I believe

that if I am overturned, the Court will give some instructions

that we have to have a hearing as to what to do with this

constructive trust." It further stated that it would not be taking

up the issue of whether the proper parties were before the court,

but again, it may do so on remand if necessary: "The Court may or

may not take up the issue of whether or not we have the proper

5 No. 2018AP712-FT

parties to this, that is the question I'm not reaching today. So

the Court may send that back with directions as well."

¶16 Joan appealed, and the court of appeals reversed and

remanded. Pulkkila v. Pulkkila, No. 2018AP712-FT, unpublished

slip op., ¶1 (Wis. Ct. App. Feb. 27, 2019). First, it rejected

the circuit court's conclusion that the lien remedy in the MSA is

an exclusive remedy. Id., ¶9. Specifically, it determined that

such a remedy was "meaningless" under the facts of this case

because James's estate contained nowhere near enough money to

provide for his children in the manner the life insurance proceeds

would have: "The problem with this argument is that the remedy is

meaningless. Equity might allow for James' wrongdoing if his

estate had $250,000, but it did not. It had $5600. James' new

wife cites no case law, and we have found none, where under these

or similar factual circumstances, a constructive trust is

unavailable if a meaningless remedy exists." Id.

¶17 The court of appeals determined next that "[t]he

equities of this case mandate the creation of a constructive trust in favor of the children so as to accomplish the intent of the

MSA." Id., ¶10. In the court of appeals' view, "[a]ll of the

requirements of a constructive trust have been satisfied: James'

new wife received and retained a benefit, which was unjust to

James' children who were denied their guaranteed means of support,

and the aforementioned unjust enrichment was the result of James'

wrongful conduct in violating the MSA." Id. Accordingly, it

concluded that "[e]quity requires the imposition of a constructive trust." Id. Lynnea petitioned this court for review. 6 No. 2018AP712-FT

II

¶18 We are called upon to review the court of appeals'

decision determining that a constructive trust must be imposed. A

decision to impose a constructive trust is subject to a two-tiered

standard of review. Sulzer v. Diedrich, 2003 WI 90, ¶16, 263

Wis. 2d 496, 664 N.W.2d 641. Legal issues, such as the

interpretation of a marital settlement agreement, are reviewed

independently of the determinations rendered by the circuit court

and court of appeals. Id.; see Topolski v. Topolski, 2011 WI 59,

¶28, 335 Wis. 2d 327, 802 N.W.2d 482.

¶19 However, the ultimate decision of whether to grant the

equitable relief of a constructive trust is reviewed for an

erroneous exercise of discretion. Sulzer, 263 Wis. 2d 496, ¶16;

Pluemer ex rel. Buggs v. Pluemer, 2009 WI App 170, ¶9, 322

Wis. 2d 138, 776 N.W.2d 261. An exercise of discretion is

erroneous if it is based on an error of law or fact. Horizon Bank,

Nat'l Ass'n v. Marshalls Point Retreat LLC, 2018 WI 19, ¶29, 380

Wis. 2d 60, 908 N.W.2d 797. A discretionary determination will be upheld as long as the court "examined the relevant facts, applied

a proper standard of law, and, using a demonstrated rational

process, reached a conclusion that a reasonable judge could reach."

LeMere v. LeMere, 2003 WI 67, ¶13, 262 Wis. 2d 426, 663 N.W.2d 789

(quoting Long v. Long, 196 Wis. 2d 691, 695, 539 N.W.2d 462 (Ct.

App. 1995)).

III

¶20 We initially examine the MSA to determine if a lien on James's estate is the exclusive remedy for a breach of the life 7 No. 2018AP712-FT

insurance provision. Subsequently, we turn to address whether the

court of appeals properly applied a constructive trust to the life

insurance proceeds in Lynnea's possession. Finally, we provide

guidance to the circuit court as it conducts proceedings on remand.

A

¶21 As stated, James and Joan, through the negotiation of

the MSA and the subsequent incorporation of the MSA in the circuit

court's judgment of divorce, agreed that "[b]oth parties shall

maintain in full force and pay the premiums on all life insurance

presently in existence on their lives or obtain comparable

insurance coverage, with the parties' minor children named as the

sole and irrevocable primary beneficiaries . . . ." The MSA

further provides a remedy in the event either party breaches the

provision:

If either party fails for any reason to maintain any of the insurance required under this article, there shall be a valid and provable lien against his or her estate in favor of the specified beneficiary to the extent of the difference between the insurance required and the actual death benefits received. ¶22 Lynnea contends that the remedy provision sets forth a

single and exclusive remedy in the event of either party's breach

of the life insurance requirement in the MSA: a lien against the

estate of the breaching party. In contrast, Joan asserts that the

lien provision is not an exclusive remedy and that as a result

other remedies, including constructive trust, are available.

¶23 We agree with Joan on this point. Although the remedy

provision states that there "shall" be a lien, it does not follow

8 No. 2018AP712-FT

that all other remedies are inapposite. There is no such limiting

language in the MSA.

¶24 This result is compelled regardless of whether we label

the MSA as a judgment of the circuit court or as a contract. If

we call the MSA a judgment, we follow this court's precedent

indicating that "[a] divorce judgment that is clear on its face is

not open to construction." Washington v. Washington, 2000 WI 47,

¶17, 234 Wis. 2d 689, 611 N.W.2d 261. The MSA is clear on its

face——although a lien on James's estate is plainly an available

and mandatory remedy for breach of the life insurance provision,

there is no limiting language that would indicate that it is the

only remedy for such a breach.

¶25 Similarly, if we call the MSA a contract, Lynnea's

argument fares no better. "Although the parties may, in their

contract, specify a remedy for a breach thereof, that specification

does not exclude other legally recognized remedies. A contract

will not be construed as taking away a common-law remedy unless

that result is imperatively required." Local 248 UAW v. Natzke, 36 Wis. 2d 237, 251, 153 N.W.2d 602 (1967); see also Coleman v.

Percy, 86 Wis. 2d 336, 340, 272 N.W.2d 118 (Ct. App. 1978)

(explaining that "a contract will not be construed to take away a

common law remedy unless that result is imperatively required").

¶26 Further, adopting Lynnea's argument would run afoul of

the maxim that we "will not read words into the contract that the

parties opted not to include." Ash Park, LLC v. Alexander &

Bishop, Ltd., 2015 WI 65, ¶66, 363 Wis. 2d 699, 866 N.W.2d 679. As a result, although the MSA is clear that a lien is a remedy, we 9 No. 2018AP712-FT

decline to read in language indicating that a lien is the exclusive

remedy.

¶27 Accordingly, we conclude that the lien provision of the

MSA is not an exclusive remedy.

B

¶28 We turn now to address whether the court of appeals

properly applied a constructive trust to the life insurance

proceeds in Lynnea's possession.

¶29 "A constructive trust is an equitable device used to

prevent unjust enrichment which arises when a party receives a

benefit the retention of which is unjust to another party."

Sulzer, 263 Wis. 2d 496, ¶20 (citing Wilharms v. Wilharms, 93

Wis. 2d 671, 678-79, 287 N.W.2d 779 (1980)). Conceptually, it is

a remedy "used to address situations in which the legal and

beneficial interests in a particular piece of property lie with

different people." Tikalsky v. Friedman, 2019 WI 56, ¶¶18-19, 386

Wis. 2d 757, 928 N.W.2d 502.

¶30 Unjust enrichment by itself is not sufficient to require the imposition of a constructive trust. Sulzer, 263 Wis. 2d 496,

¶20. Indeed, a constructive trust will be imposed only where there

is a demonstration of unjust enrichment accompanied by an

"additional showing" of "actual or constructive fraud, duress,

abuse of confidence, mistake, commission of a wrong, or by any

form of unconscionable conduct" that has caused the one against

whom a trust is imposed to either obtain or hold the legal title

to property which that person ought not in equity and good conscience to enjoy. Tikalsky, 386 Wis. 2d 757, ¶21 (quoting 10 No. 2018AP712-FT

Gorski v. Gorski, 82 Wis. 2d 248, 254-55, 262 N.W.2d 120 (1978)).

In short, both unjust enrichment and the "additional showing" are

required. Id.

¶31 In this case, the circuit court did not reach the issue

of whether to apply a constructive trust because it determined

that constructive trust was not an available remedy. It therefore

found no facts and took no evidence.

¶32 The court of appeals, on the other hand, concluded that

a constructive trust was not only available but that it was

necessary. In the court of appeals' view, "[t]he equities of this

case mandate the creation of a constructive trust in favor of the

children so as to accomplish the intent of the MSA." Pulkkila,

No. 2018AP712-FT, unpublished slip op., ¶10.

¶33 By imposing a constructive trust in the absence of any

factfinding by the circuit court, the court of appeals in this

case jumped the gun. As stated, the imposition of a constructive

trust requires a demonstration of unjust enrichment accompanied by

the "additional showing" set forth in Tikalsky, 386 Wis. 2d 757, ¶21. Without the benefit of factfinding by the circuit court,

such an "additional showing" cannot be demonstrated.

¶34 Whether to impose a constructive trust is a

discretionary determination that must be made through examination

of the relevant facts. See Pluemer, 322 Wis. 2d 138, ¶9

(explaining that the decision as to whether to impose a

constructive trust, as a discretionary determination, will be

sustained on appeal if the circuit court "examined the relevant facts, applied the proper standard of law, and, using a 11 No. 2018AP712-FT

demonstrated rational process, reached a conclusion that a

reasonable judge could reach"). The circuit court here did not

examine the relevant facts because it did not reach the

constructive trust issue, and the court of appeals did not examine

the relevant facts because the circuit court had found none.

¶35 Additionally, case law indicates that "[t]he extent to

which a constructive trust should be imposed upon . . . insurance

proceeds can only be determined after an evidentiary hearing and

a careful and equitable consideration of all relevant factors."

Pluemer, 322 Wis. 2d 138, ¶23 (quoting Prince v. Bryant, 87

Wis. 2d 662, 673, 275 N.W.2d 676 (1979)). Like the "additional

showing" requirement, the "extent" of any constructive trust that

should be imposed cannot be demonstrated in a record vacuum, in

the absence of factual findings. Accordingly, the court of appeals

erroneously exercised its discretion because it determined that a

constructive trust was appropriate in the absence of an evidentiary

hearing and resulting relevant factual findings.

¶36 The circuit court here correctly recognized that factfinding would be necessary in the event of a remand. It

stated, "I believe that if I am overturned, the Court will give

some instructions that we have to have a hearing as to what to do

with this constructive trust." The court of appeals' decision

effectively short-circuits the circuit court's well-reasoned

expectation and opportunity to consider such an issue.

¶37 Accordingly, we conclude that the court of appeals erred

in imposing a constructive trust absent findings of fact that would

12 No. 2018AP712-FT

support such an imposition.3 We remand to the circuit court to

engage in factfinding and subsequently determine whether to impose

a constructive trust in the first instance.

¶38 On remand, the circuit court will necessarily conduct an

evidentiary hearing. See Pluemer, 322 Wis. 2d 138, ¶23. From the

evidence deduced at this hearing, the circuit court will determine

whether a constructive trust should be imposed, and if so, to what

extent.

¶39 Whether to impose a constructive trust presents a fact-

intensive inquiry. See Prince, 87 Wis. 2d at 667-68 (explaining

that "in imposing the doctrine [of constructive trust] each case

must be considered in the factual situation presented" and that

"[e]quitable remedies must, of necessity, place heavy reliance on

the facts of the particular controversy."). In reaching its

determination, the circuit court may take into account "factors

brought to its attention by the parties relating to the equity of

the distribution. It may then make an apportionment of the

proceeds, granting or denying a constructive trust as to all or a part of the property." Wilharms, 93 Wis. 2d at 681. Equitable

3 Lynnea asserts in her briefs that the court of appeals' imposition of a constructive trust absent further proceedings in the circuit court constitutes a violation of due process. We need not address Lynnea's due process argument because we resolve this case based on the common law of constructive trust. "This court has frequently concluded that it need not address a claim of constitutional error if the claim can be resolved on statutory or common law grounds." State v. Dyess, 124 Wis. 2d 525, 533, 370 N.W.2d 222 (1985) (citations omitted).

13 No. 2018AP712-FT

principles favoring each party are appropriate considerations.

See Pluemer, 322 Wis. 2d 138, ¶23.

¶40 The circuit court in this case may also take up

additional issues on remand. It may address those issues it finds

pertinent that it did not reach due to its previous determination

that a lien is the exclusive remedy.4

IV

¶41 In sum, we conclude first that the lien provision of the

MSA is not an exclusive remedy. Second, we conclude that the court

of appeals erred in imposing a constructive trust absent findings

of fact that would support such an imposition. We remand to the

circuit court to engage in factfinding and subsequently determine

whether to impose a constructive trust in the first instance.

¶42 Accordingly, we reverse the decision of the court of

appeals and remand to the circuit court for further proceedings

By the Court.—The decision of the court of appeals is reversed

and the cause is remanded to the circuit court for further proceedings consistent with this opinion.

¶43 REBECCA FRANK DALLET and BRIAN HAGEDORN, JJ., did not

participate.

4As stated, the circuit court also indicated that it would address issues of standing and proper parties on remand: "The Court may or may not take up the issue of whether or not we have the proper parties to this, that is the question I'm not reaching today."

14 No. 2018AP712-FT.rgb

¶44 REBECCA GRASSL BRADLEY, J. (dissenting). For nearly

85 years, marital settlement agreements ("MSAs") have been

regarded as contracts under Wisconsin law, and once approved by

circuit courts and entered as judgments, divorcing parties have

organized their families' lives and financial affairs in reliance

upon their terms. By supplanting the contractual remedy chosen by

James and Joan Pulkkila——and approved by the circuit court judge—

—with an equitable remedy unavailable under black letter contracts

law, the majority calls into question nearly century-old law,

disturbs the long-settled expectations and reliance interests of

thousands of divorced Wisconsin citizens, and leaves their

negotiated marital settlements subject to the whim of judges.

Divorced Wisconsinites beware: from this day forward, a court may

at any time rewrite the terms of your marital settlement agreement

if your former spouse comes to court pleading "unfair."

¶45 There is no dispute that before James died, he violated

the life insurance provision of the MSA by naming his spouse the beneficiary instead of his daughters. In the MSA, he had agreed

to maintain his daughters as beneficiaries until the youngest

reached adulthood, but he failed to do so.1 James' breach triggered

1This case involves the perpetuation of a significant factual error with respect to the older daughter's birthdate. The Judgment of Divorce, Joan's affidavit, and multiple other documents in the record list B.P.'s birthdate as August 18, 1988, which would have made her 27 years old——and not a minor——when her father died. This factual error went uncorrected in the court of appeals and in this court until the court raised it during oral argument. Joan's lawyer failed to correct this factual error until confronted by the court. Appellate courts rely on the record and the facts it contains. Lawyers have a duty "to correct a false statement of material fact or law previously made to the tribunal by the 1 No. 2018AP712-FT.rgb

the remedy specified in the MSA's life insurance provision, for

which James and Joan fought "tooth and nail." This court should

honor the parties' contractual remedy, enforce the MSA, and affirm

the circuit court. Instead, the majority dismisses the MSA's

contractual provisions as non-exclusive and authorizes the circuit

court to consider imposing the extra-contractual and equitable

remedy of a constructive trust.

¶46 I write separately to clarify that: (1) MSAs are

contracts; (2) incorporation of an MSA into a divorce judgment

does not alter its contractual nature; and (3) the remedy provided

by the MSA and approved by the circuit court should be enforced.

Whether the MSA was a contract was never in dispute. All parties

agree the MSA was a contract between James and Joan and that the

circuit court approved its provisions in 2009 by incorporating the

MSA into the divorce judgment. The sole issues presented to this

court were whether the MSA's specified remedy for breach of the

insurance provision was the exclusive remedy, rendering a

constructive trust unavailable and whether the court of appeals violated Lynnea's due process rights by imposing one.

¶47 By implying that an MSA loses its contractual nature

after its incorporation into the circuit court's judgment, the

majority destabilizes black letter divorce law. Treating an MSA

as a judgment subject to equitable modification by a court would

introduce a drastic sea change in the treatment of existing MSAs

to the detriment of parties who reasonably expected finality once

lawyer." SCR 20:3.3. Joan's lawyer should have notified both the court of appeals as well as this court of the error.

2 No. 2018AP712-FT.rgb

their divorce judgments were entered. MSAs are contracts, remain

so post-judgment, and should be enforced according to the terms

for which the parties fought "tooth and nail." I would reverse

the court of appeals decision imposing a constructive trust and

reinstate the order of the circuit court. I respectfully dissent.

¶48 MSAs have been treated as contracts by this court for at

least 83 years:

 Vaccaro v. Vaccaro, 67 Wis. 2d 477, 486, 227 N.W.2d 62 (1975)

(holding that not all stipulations in divorce proceedings are

contracts, but "contractual obligations arise only in

situations where the court expressly refers to and approves

a formal agreement between the parties, and not where, as

here, the court merely adopts and to some extent modifies the

parties' joint recommendations as to alimony, support or

property settlement.").

 May v. May, 2012 WI 35, ¶¶4, 18, 339 Wis. 2d 626, 813

N.W.2d 179 (dealing with child support set forth in an MSA incorporated by the divorce judgment, stating "we are

sensitive to the importance and prevalence of stipulations in

helping families going through difficult and litigious

divorces and curbing disagreements [between] the parties.

The ability to contract is fundamental to our legal system

and may aid parties in settling their divorces more amicably."

(emphasis added) (quoting Frisch v. Henrichs, 2007 WI 102,

¶75, 304 Wis. 2d 1, 736 N.W.2d 85).

3 No. 2018AP712-FT.rgb

 Topolski v. Topolski, 2011 WI 59, ¶¶26-49, 335 Wis. 2d 327,

802 N.W.2d 482 (applying principles of contract

interpretation to an MSA and the standard of review for

written instruments).

 Schmidt v. Schmidt, 40 Wis. 2d 649, 653, 162 N.W.2d 618

(1968) ("Stipulations in divorce actions are in the nature of

a contract." (citing In re Estate of Boyd, 18 Wis. 2d 379,

118 N.W.2d 705 (1963))).

 In re Estate of Boyd, 18 Wis. 2d 379, 381, 118 N.W.2d 705

(1963) ("A stipulation in a divorce action is in the nature

of a contract." (citing Miner v. Miner, 10 Wis. 2d 438, 444,

103 N.W.2d 4 (1960)), abrogated on other grounds by Rohde-

Giovanni v. Baumgart, 2004 WI 27, 269 Wis. 2d 598, 676

N.W.2d 452).

 Miner v. Miner, 10 Wis. 2d at 443-44, ("[T]here may be

situations in which the parties enter into a formal contract

or written agreement outside of court in which they finally

settle all their financial rights and duties toward each other in contemplation of the uncertainties of the

future. . . . When the court merely refers to such an

agreement and approves it without making the provisions

thereof a part of its judgment, the weight of authority is

that such an agreement is not subject to modification by the

court. . . . The arrangement is contractual, not a judicial

determination, and therefore no more subject to change by the

court than the terms of any other private agreement.").

4 No. 2018AP712-FT.rgb

 Frisch v. Henrichs, 2007 WI 102, ¶¶30, 75, 304 Wis. 2d 1, 736

N.W.2d 85 ("This case also requires us to review the 1996

stipulation agreement between the parties. The construction

of a written contract is a question of law that we review de

novo." (citation omitted); "[W]e are sensitive to the

importance and prevalence of stipulations in helping families

going through difficult and litigious divorces and curbing

disagreements among the parties. The ability to contract is

fundamental to our legal system and may aid parties in

settling their divorces more amicably.")

 Wright v. Wright, 92 Wis. 2d 246, 248, 255, 284 N.W.2d 894

(1979) (dealing with a divorce judgment, while stating

"[j]udgments are to be construed in the same manner as other

written instruments." (citing Vaccaro, 67 Wis. 2d at 482)).

 In re Will of Koeffler, 218 Wis. 560, 561, 563-65, 260

N.W. 638 (1935) (referring to an "antenuptial agreement or

marriage settlement" as a "marriage settlement contract").

(emphasis added). ¶49 MSAs have been treated as contracts by the Wisconsin

Court of Appeals in many more cases:

 Pulkkila v. Pulkkila, No. 2018AP712-FT, unpublished slip op.,

¶6 (Wis. Ct. App. Feb. 27, 2019) ("Importantly, the law of

constructive trusts does not require a finding that the

contractual language is ambiguous." (emphasis added)).

 North v. Farris, No. 2015AP1466, unpublished slip op., *2

(Wis. Ct. App. June 23, 2016) ("A marital settlement agreement is a type of contract.").

5 No. 2018AP712-FT.rgb

 Winters v. Winters, 2005 WI App 94, ¶¶15, 17, 21, 281

Wis. 2d 798, 699 N.W.2d 229 ("This issue requires us to

interpret the language of the marital settlement agreement,

which is a contract and subject to de novo review." (citing

Taylor v. Taylor, 2002 WI App 253, ¶7, 258 Wis. 2d 290, 653

N.W.2d 524); applying principles of contract interpretation

to the MSA; holding "the terms of the marital settlement

agreement require . . . ").

 Taylor v. Taylor, 2002 WI App 253, ¶7, 258 Wis. 2d 290, 653

N.W.2d 524 ("This appeal, however, requires us to interpret

the language of a marital settlement agreement, which is 'in

the nature of a contract,' the construction of which is a

question of law we review do novo." (citing Rosplock v.

Rosplock, 217 Wis. 2d 22, 30, 577 N.W.2d 32 (Ct. App. 1998));

applying principles of contract interpretation to the MSA and

concluding its terms are not ambiguous).

 Rosplock v. Rosplock, 217 Wis. 2d 22, 30, 577 N.W.2d 32 (Ct.

App. 1998) (applying contract principles to the parties' written stipulation for maintenance while stating "[a]

stipulation incorporated into a divorce judgment is in the

nature of a contract.").

 Koonce v. Koonce, No. 00-2279-FT, unpublished slip op., ¶¶5-

6 (Wis. Ct. App. Dec. 27, 2000) ("At issue is the

interpretation of a marital settlement agreement. A

nature of a contract." (citation omitted); concluded the MSA was unambiguous).

6 No. 2018AP712-FT.rgb

 Paulson v. Lutze, No. 2015AP230-FT, unpublished slip op., ¶12

(Wis. Ct. App. Oct. 20, 2015) (per curiam) ("Just like the

premarital agreement in Jones, the Paulsons' marital

settlement agreement is a binding contract, in writing, and

as such, it is an affirmative act where the parties are

intentionally relinquishing known rights." (citing Jones v.

Estate of Jones, 2002 WI 61, ¶17, 253 Wis. 2d 158, 646

N.W.2d 280)).

 Winters v. Winters, No. 2007AP909, unpublished slip op., ¶7

(Wis. Ct. App. Aug. 27, 2008) (per curiam) ("Because a marital

settlement agreement is a contract, the interpretation of its

language is subject to de novo review." (citing Winters, 281

Wis. 2d 798, ¶15)).

 Jalovec v. Jalovec, 2007 WI App 206, ¶¶4, 10 305 Wis. 2d 467,

739 N.W.2d 834 (With respect to the interpretation of an MSA,

"[r]esolution of this issue requires us to construe the

of a written contract is a question of law" and holding the MSA violated public policy because it restricted the

availability of child support modification).

 Ondrasek v. Tenneson, 158 Wis. 2d 690, 692-94, 462 N.W.2d 915

(Ct. App. 1990) ("The parties . . . entered into a marital

settlement agreement. . . . The marital settlement agreement

was incorporated into the judgment of divorce. . . . The

construction of a written contract is normally a matter of

law for the court.") (footnotes omitted; citations omitted).

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 Grosshans v. Grosshans, No. 2005AP1770, unpublished slip op.,

¶¶2, 5-6 (Wis. Ct. App. July 6, 2006) (per curiam) (calling

an MSA "a contract," and applying "standard principles of

contract construction" such as looking to the intent of the

parties and holding the contract ambiguous).

 Duhame ex rel. Corrigan v. Duhame, 154 Wis. 2d 258, 264-65,

453 N.W.2d 149 (1989) ("The language at issue here was the

result of a stipulation between the parties to the divorce.

A stipulation is in the nature of a contract and the trial

court must seek a construction which will effectuate what

appears to have been the intention of the parties."

(citations omitted)).

 Pluemer ex rel. Buggs v. Pluemer, 2009 WI App 170, ¶14, 322

Wis. 2d 138, 776 N.W.2d 261 ("A stipulation is in the nature

of a contract and the trial court must seek a construction

which will effectuate what appears to have been the intention

of the parties." (quoting Duhame, 154 Wis. 2d at 264)).

 Kastelic v. Kastelic, 119 Wis. 2d 280, 287, 350 N.W.2d 714 (Ct. App. 1984) ("In divorce actions, stipulations are in the

nature of a contract." (citing Schmidt, 40 Wis. 2d at 653)).

 Yacoub v. Yacoub, No. 2015AP2557, unpublished slip op., ¶18

(Wis. Ct. App. Mar. 14, 2017) (per curiam) ("'The construction

of a written contract presents a question of law which we

review do novo.' If the contractual terms are clear and

unambiguous, as they are [in the MSA] here, we interpret the

contract without considering extrinsic sources." (citations omitted)).

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 Wieland v. Wieland, No. 2010AP3066, unpublished slip op.,

¶10, (Wis. Ct. App. Mar. 28, 2012) (per curiam) (noting "[t]he

record shows that the [marital settlement] agreement was a

comprehensive contract," in response to a claim of estoppel

preventing modification of the judgment).

 Smith v. Smith, No. 00-2123, unpublished slip op., ¶¶5-6, 8

(Wis. Ct. App. Feb. 21, 2001) (referring to an MSA

incorporated into a divorce judgment as a "contract" and

applying contract principles).

 Dickau v. Dickau, 2012 WI App 111, ¶¶14, 20, 344 Wis. 2d 308,

824 N.W.2d 142 ("We apply the rules of contract construction

to a divorce judgment . . . This is true even when the divorce

judgment is based on the parties' stipulation. . . . In

divorce actions, stipulations are in the nature of a

contract." (quoting Waters v. Waters, 2007 WI App 40, ¶6,

300 Wis. 2d 224, 730 N.W.2d 655) (applying contract

principles to the divorce judgment)).

 Wagner v. Estate of Sobczak, 2011 WI App 159, ¶7, 338 Wis. 2d 92, 808 N.W.2d 167 ("[T]he marital settlement

agreement in this case . . . was incorporated into the final

judgment of divorce. A judgment [of divorce] is interpreted

in the same manner as other written documents." (citation

omitted); discussing principles of contract construction for

the divorce judgment incorporating the MSA).

 Reetz v. Reetz, No. 2013AP472, unpublished slip op., ¶7 (Wis.

Ct. App. Oct. 24, 2013) ("[T]he parties dispute whether the circuit court correctly construed subsection (f) of the

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marital settlement agreement, which, as we have stated, was

incorporated into the judgment of divorce. The construction

of a divorce judgment is a legal issue that we review

independently of the circuit court. We apply the rules of

contract construction to a divorce judgment, including where,

as here, 'the divorce judgment is based on the parties'

stipulation.'" (footnotes omitted; internal citations

omitted)).

 Waters v. Waters, 2007 WI App 40, ¶¶2, 6, 300 Wis. 2d 224,

730 N.W.2d 655 (with respect to a "Final Stipulation-Marital

Settlement Agreement," "[w]e apply the rules of contract

construction to a divorce judgment . . . This is true even

when the divorce judgment is based on the parties'

stipulation . . . In divorce actions, stipulations are in

the nature of a contract." (citations omitted)).

 Hutjens v. Hutjens, 2002 WI App 162, ¶¶2-24, 256 Wis. 2d 255,

647 N.W.2d 448 (applying principles of contract construction

to an amended divorce judgment originally based on an MSA).  Henkel v. West, No. 99-0724, unpublished slip op., ¶15 (Wis.

Ct. App. Dec. 30, 1999) ("A marital settlement agreement or

stipulation that is 'incorporated into a divorce judgment is

in the nature of a contract.'" (citing Rosplock, 217

Wis. 2d at 30); "However, unlike with contract law, in a

divorce, a trial court can modify certain terms of the

agreement based on a 'substantial change in circumstances'

despite the original intention of the parties." (citing Wis. Stat. § 767.32(1)(a))).

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 Murray v. Murray, 231 Wis. 2d 71, 80, 604 N.W.2d 912 (Ct.

App. 1999) (citing to an MSA favorably for its language that

"[t]his agreement is a legally binding contract" before

finding no substantial change in circumstances to modify

support).

 Pinter v. Pinter, No. 95-2620-FT, unpublished slip op., *2

(Wis. Ct. App. May 7, 1996) (per curiam) (holding that an MSA

incorporated into a divorce judgment was unambiguous in

requiring the husband to keep the first wife as a beneficiary

on the life insurance policy instead of the second wife; and

"[a] judgment is interpreted in the same manner as other

written documents." (citing Jacobson v. Jacobson, 177

Wis. 2d 539, 546, 502 N.W.2d 869 (Ct. App. 1993)).

 Kaplan v. Kaplan, No. 93-0478-FT, unpublished slip op., *1-2

(Wis. Ct. App. Jan. 5, 1994) (per curiam) (applying contract

principles to the "interpretation of the parties' marital

settlement agreement").

 Jacobson v. Jacobson, 177 Wis. 2d 539, 542, 546-47, 502 N.W.2d 869 (Ct. App. 1993) (addressing a stipulation of the

parties in a divorce proceeding with respect to child support,

insurance, property division, debts, and maintenance,

ultimately incorporated into the judgment, and stating "[a]

court interprets a judgment in the same manner as other

written instruments . . . [w]hether the contract is ambiguous

is a question of law . . . . Only when judgments are

ambiguous is construction permitted[.]" (internal citations omitted)).

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 Wilke v. Wilke, 212 Wis. 2d 271, 272-73, 569 N.W.2d 296 (Ct.

App. 1997) (with respect to a "marital settlement agreement"

approved by circuit court and incorporated into divorce

judgment, which divided marital property: "This appeal

addresses the effect a clause of mutual release contained in

the marital property agreement executed by Scott and Judith

as part of their judgment of divorce has on the restrictive

stock agreement . . . . Insofar as both documents constitute

contracts, their respective construction is a legal question

reviewed independently[.]" (citation omitted)).

¶50 In accordance with Wisconsin cases, MSAs have been

regarded as contracts by secondary sources:

 Jay E. Grenig & Nathan A. Fishbach, Wisconsin Practice Series:

Methods of Practice Form 42-13 (5th ed. 2019) (referring to

MSA as "a legally binding contract.").

 Gregg M. Herman & Kelley J. Shock, Family Law In Wisconsin:

A Forms and Procedures Handbook Vol. 2 (9th ed. 2017)

(distinguishing between an MSA, which is a contract and stipulations between the parties that are just an

"understanding of what the parties desire[.]").

 Kelvin H. Dickinson, Divorce and Life Insurance: Post Mortem

Remedies for Breach of a Duty to Maintain a Policy for a

Designated Beneficiary, 61 Mo. L. Rev. 533, 551-52 (1996)

("Although many divorce agreements are essentially contracts,

and, thus, governed by standard contract principles, divorce

itself is still a matter regulated by statute and administered by courts." (emphasis added; internal footnotes omitted)).

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 Adam W. Lasker, Joint Parenting Agreement Allows Mother to

Remove Children to California, 100 Ill. B.J. 579 (2012) ("A

JPA, like a marital settlement agreement (MSA), is a contract

between the parties and, as such, a court's primary objective

is to give effect to the intent of the parties, which must be

determined only by the language of the agreement, absent an

ambiguity[.]" (emphasis added; quoted source omitted)).

 Timothy Arcaro & Laura Miller Cancilla, The Illusory

Imputation of Income in Marital Settlement Agreements: "The

Future Ain't What it Used to Be," 35 Nova L. Rev. 157, 160,

173 (2010) ("[Florida] [c]ase law is unequivocal that MSAs

are to be interpreted and enforced like other contracts."

(citations omitted); also arguing that this conflicts with a

trial court's obligation to ensure the best interests of the

child and advocating that "principles of pure contract law

cannot apply to the enforcement of an MSA that infringes upon

a child's guaranteed right to support.").

 Lauren M. Ilvento, The Application of Kinney System, Inc. v. Continental Ins. Co. to Modification of Child Custody

Proceedings, 83-May Fla. B.J. 41, 43 (2009) ("In the context

of family law, marital settlement agreements and mediated

agreements are contracts and are to be interpreted pursuant

to the provisions of contract law." (emphasis added;

citations omitted)).

 Sol Lovas, When is a Family Not a Family? Inheritance and

the Taxation of Inheritance Within the Non-Traditional Family, 24 Idaho L. Rev. 353, 366 (1988) ("Separation

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agreements are, of course, subject to the same attacks as all

other contracts, such as fraud, duress, and lack of

consideration. Marital settlement agreements may also be set

aside if they are grossly inequitable or unfair, and they can

be attacked for lack of reasonable and fair disclosure prior

to execution." (internal footnotes omitted).

 Renee A. Rubino, Marital Settlement Agreements – The Key to

Life After Divorce, 279-Dec N.J. Law 46, 46 (2012) ("To be

clear, an MSA is an enforceable contract like any other

contract. Although principles of equity are applied to ensure

the MSA is fair and just, contract principles are utilized to

ascertain the MSA's meaning and the intent of the parties."

 Reid T. Sherard, Family Court Approval of a Marital Settlement

Agreement Over One Party's Objection, 26-Jan S.C. Law. 44

(2015) ("The term 'marital settlement agreement' is a term of

art . . . such agreements are 'viewed as contracts' between

the parties[.]" (quoted source omitted)). ¶51 Dictionaries as well as other sources also describe MSAs

as contracts:

 Marital Settlement Agreement, Black's Law Dictionary

(11th ed. 2019) ("See Divorce Agreement.") Divorce

Agreement, Black's Law Dictionary (11th ed. 2019) ("A

contractual agreement that sets out divorcing spouses' rights

and responsibilities regarding property, alimony, custody,

visitation, and child support. The divorce agreement usu. becomes incorporated by court order as a part of the divorce

decree and thus is enforceable by contempt, among other

remedies. – Also termed agreement incident to divorce;

marital settlement agreement; separation agreement."

(emphasis added)).

 J. Robert J. Steigmann & Lori A. Nicholson, Illinois Evidence

Manual § 12.6 (4th ed. 2019) ("Interpreting a marital

settlement agreement is a matter of contract construction.").

 17 Robert S. Hunter, Illinois Practice Series: Estate

Planning & Administration § 27.5 (4th ed. 2019) ("The

provisions of marital settlement agreements and of

dissolution judgments which incorporate such agreements are

interpreted under the same rules governing the construction

of contracts.").

 41 C.J.S. Husband and Wife § 95 (2020) ("A marital settlement

agreement is a contract, which, when entered into before the

dissolution of the marriage, is binding upon the parties."

(internal footnotes omitted).).

¶52 This substantial body of law confirms the essential nature of MSAs: an agreement negotiated between two parties, with

lawful consideration exchanged, constitutes a binding contract.

See Contract Black's Law Dictionary (11th ed. 2019) (defining

"contract" as "An agreement between two or more parties creating

obligations that are enforceable or otherwise recognizable at law

."). A circuit court's review, approval and

incorporation of the parties' agreement into the divorce judgment

does not change the nature of the agreement. Nor should it mean that a court can alter the terms of the agreement unilaterally,

15 No. 2018AP712-FT.rgb

years after its execution, based merely on its incorporation into

a divorce judgment.

¶53 The question in this case is not whether a divorce

judgment strips an MSA of its contractual nature or even whether

a divorce judgment should be interpreted as "a contract." The

parties never presented or argued that question because that issue

was not in dispute. Under black letter law, an MSA is a contract

and its incorporation into a divorce judgment does not change that.

Nor does incorporation into the divorce judgment mean that one of

the parties can ask a court decades later to replace the legal

remedy the parties chose at the time of the divorce with an

equitable one. Courts do not create contracts, parties do; the

courts' duty is to enforce them. See In re F.T.R., 2013 WI 66,

¶57, 349 Wis. 2d 84, 833 N.W.2d 634 ("The elements of a contract

are offer, acceptance, and consideration." (citations omitted));

Restatement (Second) of Contracts § 1 (1981) ("A contract is a

promise or set of promises . . . ."); 1 Richard A. Lord, Williston

on Contracts § 1:1 (4th ed. 1990) ("[Contract law] is intended to enforce the expectancy interests created by the parties'

promises[.]").

¶54 The Pulkkilas expressly identified and preserved their

MSA as a contract. In the very first paragraph of the MSA, the

parties "agree that the terms and provisions of the agreement may

be incorporated by the court in the pending divorce action between

the parties in the conclusions of law and judgment to be entered

therein; however, this agreement shall independently survive any such judgment[.]" Section XVI of the MSA reiterates the

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independent, contractual nature of the Pulkkilas' agreement:

"this agreement shall survive any subsequent judgment of divorce

and shall have independent legal significance. This agreement is

a legally binding contract[.]" Instead of respecting the parties'

contract and applying the Pulkkilas' chosen remedy, the majority

sets aside the parties' negotiated contractual provisions in favor

of reaching a different result because the lien remedy does not

seem "fair." However, "[a] provision that seems to the court

unjust or unfortunate (creating the so-called casus male inclusus)

must nonetheless be given effect." Antonin Scalia & Bryan Garner,

Reading Law: The Interpretation of Legal Texts 174 (2012). Even

if the Pulkkilas' bargained-for remedy was not exclusive, a

constructive trust is not an available alternative. "It is well

established that . . . 'the mere failure to perform an agreement

or to carry out a promise cannot in itself give rise to

a constructive trust.'" In re Estate of Demos, 50 Wis. 2d 262,

269, 184 N.W.2d 117 (1971) (quoted source omitted).

II A. MSAs are contracts.

¶55 The parties in this case never disputed that MSAs are

contracts under the law. Joan Pulkkila referred to the MSA as a

"contract" in her brief: "Lynnea fails to acknowledge that MSAs,

unlike other contracts . . . " and "[t]hus, the fact that a remedy

or any other provision in an MSA may have been bargained for as

part of a contractual agreement between parties . . . ."

(Emphasis added.) Indeed, Joan admitted to the circuit court that "this is a contractual situation." Similarly, the court of appeals

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based its holding on the MSA being a contract. Pulkkila v.

Pulkkila, No. 2018AP712-FT, unpublished slip op., ¶6 (Wis. Ct.

App. Feb. 27, 2019) ("Importantly, the law of constructive trusts

does not require a finding that the contractual language is

ambiguous." (emphasis added)).

¶56 Although an MSA is subject to approval by the circuit

court in order to prevent contracts violating public policy, once

a court approves the MSA, those concerns disappear. The Pulkkilas'

MSA did not violate public policy, the circuit court approved it,

and the law deemed it a contract. See ¶¶48-52, supra. This court

should have applied the law, respected the parties' bargain, and

honored the contractual remedy the parties chose instead of

offering an extra-contractual remedy grounded in equity and

fairness.2

¶57 Recognizing that In re Estate of Boyd ("A stipulation in

a divorce action is in the nature of a contract.")3 could be read

as inconsistent with Miner ("The [alimony] award was not

contractual, but by adjudication and subject to modification"),4 this court reconciled the two opinions. In Vaccaro v. Vaccaro,

the court held not all stipulations in divorce proceedings are

2 The circuit court appropriately recognized that it is not the circuit court's job "to go back and fix the parties' agreement to make it fair now for the children. It's not fair they're not getting as much money. They lost their father. It is a rotten deal for them. However, this Court has to follow the law on it." 3 In re Boyd's Estate, 18 Wis. 2d 379, 381, 118 N.W.2d 705 (1963). 4 Miner v. Miner, 10 Wis. 2d 438, 442-44, 103 N.W.2d 4 (1960), abrogated on other grounds by Rohde-Giovanni v. Baumgart, 2004 WI 27, 269 Wis. 2d 598, 676 N.W.2d 452.

18 No. 2018AP712-FT.rgb

contracts, but that "contractual obligations arise only in

situations where the court expressly refers to and approves a

formal agreement between the parties, and not where, as [in

Vaccaro], the court merely adopts and to some extent modifies the

parties' joint recommendations as to alimony, support or property

settlement." 67 Wis. 2d 477, 486, 227 N.W.2d 62 (1975) (emphasis

added); see also Kelvin H. Dickinson, Divorce and Life Insurance:

Post Mortem Remedies for Breach of a Duty to Maintain a Policy for

a Designated Beneficiary, 61 Mo. L. Rev. 533, 551-52 (1996)

(conceding that "many divorce agreements are essentially

contracts, and, thus, governed by standard contract principles"

while citing to the quote above from Vacarro (emphasis added)).

¶58 This court's recent opinions discussed the importance of

the right of divorcing parties to contract through MSAs, and

applied contract principles to these agreements. In May v. May,

the court confronted a child support stipulation in the parties'

MSA, which the divorce judgment incorporated. 2012 WI 35, ¶4, 339

Wis. 2d 626, 813 N.W.2d 179. The court stated, "we are sensitive to the importance and prevalence of stipulations in helping

families going through difficult and litigious divorces and

curbing disagreements [between] the parties. The ability to

contract is fundamental to our legal system and may aid parties in

settling their divorces more amicably." Id., ¶18 (emphasis added)

(quoting Frisch v. Henrichs, 2007 WI 102, ¶75, 304 Wis. 2d 1, 736

N.W.2d 85). In this case, the majority fails to honor divorcing

parties' fundamental freedom to contract, depriving them (and

19 No. 2018AP712-FT.rgb

their children) of any finality in their financial and relational

matters.

¶59 In a case preceding May, this court applied contract

principles to "interpret[]" an MSA incorporated into a divorce

judgment. See Topolski v. Topolski, 2011 WI 59, ¶1, 335

Wis. 2d 327, 802 N.W.2d 482. The Topolski court stated it was

putting the parties in the "same position they would have been in"

but for the occurrence of an event, and giving the parties "exactly

what they bargained for in the Marital Settlement Agreement[.]"

Id., ¶7. These are settled pillars of contract law. See Daanen

& Janssen, Inc. v. Cedarapids, Inc., 216 Wis. 2d 395, 404, 573

N.W.2d 842 (1998) ("The law of contracts is designed . . . to

protect the expectancy interests of parties to private bargained-

for agreements. Contract law, therefore, seeks to . . . ensur[e]

that each party receives the benefit of their bargain." (citations

omitted)). The Topolski court, citing to contract cases, adopted

as the standard of review "well-established" "principles that

govern [the] interpretation of written documents[.]" Topolski, 335 Wis. 2d 327, ¶¶28-32 n.10. The court proceeded to analyze the

text of the MSA, giving it "its plain and ordinary meaning" to

ascertain the parties' intent. Id., ¶49.

¶60 I would apply longstanding, controlling authority and

treat the MSA between Joan and James Pulkkila as the contract it

is. The analysis then turns to whether there is any legal basis

to set aside the contract as a whole or its life insurance

provision in particular. There is none.

20 No. 2018AP712-FT.rgb

B. The divorce judgment did not nullify or alter the MSA.

¶61 There are multiple reasons courts nullify or modify

contracts——including rescission, mistake, fraud, duress, etc. See

Williston §§ 18, 68-77. None of these were raised by either party

and none apply in the Pulkkilas' case. At the time the terms of

the Pulkkilas' divorce were finalized, the circuit court approved

and incorporated the MSA into the divorce judgment, without

disapproving or amending the provisions in Section V of the MSA,5

which required the parties to maintain life insurance with their

minor children as beneficiaries and specified the remedy in case

of a breach. Because the life insurance provision was not

nullified or amended by the divorce judgment's incorporation of

the agreement, the divorce judgment did not change the contractual

nature of the MSA. See, e.g., Topolski, 355 Wis. 2d 327, ¶¶28-

49; Dickau, 344 Wis. 2d 308, ¶14 ("We apply the rules of contract

construction to a divorce judgment[.]" (citation omitted)).

C. The remedy provision of the MSA controls.

¶62 "If there is one thing which more than another public policy requires it is that [individuals] of full age and competent

understanding shall have the utmost liberty of contracting, and

that their contracts, when entered into freely and voluntarily,

shall be held sacred, and shall be enforced by courts of justice."

Midwest Neurosciences Assocs., LLC v. Great Lakes Neurosurgical

The circuit court did make several amendments to the MSA 5

following the trial, but these related to payment of utilities, anger management counseling, child support from gross monthly income, payment of debt, pension benefit award, cash value of insurance policies, and a holiday schedule.

21 No. 2018AP712-FT.rgb

Assocs., LLC, 2018 WI 112, ¶39, 384 Wis. 2d 669, 920 N.W.2d 767

(quoting Merten v. Nathan, 108 Wis. 2d 205, 212 n.5, 321 N.W.2d 173

(1982)). Wisconsin law is replete with affirmations of the

parties' freedom to contract, including the freedom to specify

determinate remedies. See, e.g., Ash Park, LLC v. Alexander &

Bishop Ltd., 2010 WI 44, ¶37, 324 Wis. 2d 703, 783 N.W.2d 294

("When a contract specifies remedies available for breach of

contract, the intention of the parties generally governs.").

¶63 Because the MSA is a contract, prevailing principles of

contract interpretation apply. "[W]e interpret the plain language

of a contract 'consistent with what a reasonable person would

understand the words to mean under the circumstances." Marx v.

Morris, 2019 WI 34, ¶63, 386 Wis. 2d 122, 925 N.W.2d 112 (quoting

Maryland Arms Ltd. P'ship v. Connell, 2010 WI 64, ¶22, 326

Wis. 2d 300, 786 N.W.2d 15. "Where the terms of a contract are

clear and unambiguous, we construe the contract according to its

literal terms." Gorton v. Hostak, Henzl & Bichler, S.C., 217

Wis. 2d 493, 506, 577 N.W.2d 617 (1998) (citation omitted). "[U]nambiguous contract language controls contract

interpretation." Kernz v. J.L. French Corp., 2003 WI App 140, ¶9,

266 Wis. 2d 124, 667 N.W.2d 751.

¶64 Section V of the Pulkkila MSA contains the two provisions

material to this appeal:

A. Both parties shall maintain in full force and pay the premiums on all life insurance presently in existence on their lives or obtain comparable insurance coverage, with the parties' minor children names as sole and irrevocable primary beneficiaries until the youngest minor child reaches the age of majority, or until the child has reached the age of 19 . . . 22 No. 2018AP712-FT.rgb

. . . .

D. If either party fails for any reason to maintain any of the insurance required under this article, there shall be a valid and provable lien against his or her estate in favor of the specified beneficiary to the extent of the difference between the insurance required and the actual death benefits received. (Emphasis added.) Section V, article A of the MSA unambiguously

required both Joan and James Pulkkila to maintain life insurance

with the children as beneficiaries, until the children become a

certain age. The parties do not dispute the obligatory requirement

of this provision or suggest an alternate meaning.

¶65 The parties' dispute centers on the remedy for failing

to adhere to the life insurance obligation set forth in section V,

article A. The majority holds the remedy for breach of that

obligation——a lien against the estate——is not the exclusive

remedy. See Majority op. ¶27. The majority cites no language in

the MSA or divorce judgment, nor any amendment to either, changing

the specific remedy the Pulkkilas chose for breach of the life

insurance provision, but instead decides the lack of limiting

language indicates that the specified lien is not the "only remedy for such a breach" and the mandatory "shall" in this provision

does not mean the lien remedy is exclusive. Majority op., ¶¶23-

24. I disagree.

¶66 MSA section V, article D states that the remedy for

breach of the obligation set forth in article A to maintain

insurance with the children as primary beneficiaries "shall be

a . . . lien" against the estate of the party who violates article

A. The remedy applies if a party breaches this obligation "for any reason." The word "shall" in written legal texts generally 23 No. 2018AP712-FT.rgb

imposes a mandatory obligation, rather than a discretionary one.

See Village of Elm Grove v. Brefka, 2013 WI 54, ¶23, 348

Wis. 2d 282, 832 N.W.2d 121 (discussing that we "ordinarily

presume[]" that "shall" is mandatory); Scalia & Garner, Reading

Law 112 ("Mandatory words impose a duty . . . shall is

mandatory."). Reading "shall" as imposing a mandatory remedy

accords with the agreement of the parties to maintain life

insurance policies naming their children as primary beneficiaries.

Nothing in the text of the MSA or the divorce judgment suggests

the Pulkkilas agreed to (or the circuit court ordered) anything

different.

¶67 The only remedy listed in article D specifically, the

MSA as a whole, or the divorce judgment, for breach of the

obligation to maintain life insurance with the minor children as

sole beneficiaries is a "lien against [the violator's] estate in

favor of the specified beneficiary to the extent of the difference

between the insurance required and the actual death benefits

received." Under longstanding Wisconsin law, the express mention of one option in a legal instrument forecloses the availability of

other options. See Goebel v. First Fed. Sav. & Loan Ass'n of

Racine, 83 Wis. 2d 668, 673, 266 N.W.2d 352 (1978); Horizon Bank,

Nat'l Ass'n v. Marshalls Point Retreat LLC, 2018 WI 19, ¶95, 380

Wis. 2d 60, 908 N.W.2d 797 (Rebecca Grassl Bradley, J.,

dissenting) ("Under [the] principle [of expressio unius est

exclusio alterius], a specific mention in a contract of one or

more matters is considered to exclude other matters of the same nature or class not expressly mentioned[.]" (quoting Goebel, 83

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Wis. 2d at 673). Under this canon of construction, the expression

of the lien remedy in article D of the MSA excludes all other

remedies for failing to maintain life insurance with the children

as sole beneficiaries——including a constructive trust.

¶68 The MSA's life insurance provisions are plain and

unambiguous, and therefore govern the disposition in this case.

The lien remedy the parties elected in Section V of the MSA is

both mandatory and exclusive upon either party's failure "for any

reason" to maintain life insurance naming the minor children as

sole beneficiaries. Equitable relief, such as a constructive

trust, is not available. A constructive trust was "created by law

to prevent unjust enrichment[.]" Wilharms v. Wilharms, 93 Wis. 2d

671, 678-79, 287 N.W.2d 779 (1980). However, "[t]he doctrine of

unjust enrichment does not apply where the parties have entered

into a contract." Greenlee v. Rainbow Auction/Realty Co., Inc.,

202 Wis. 2d 653, 671, 553 N.W.2d 257 (Ct. App. 1996) (citation

omitted); In re Demos' Estate, 50 Wis. 2d 262, 269, 184 N.W.2d 117

(1971) ("the mere failure to perform an agreement or to carry out a promise cannot in itself give rise to a constructive trust");

Guaranteed Inv. Co. v. St. Croix Consol. Copper, 156 Wis. 173,

175, 145 N.W. 662 (1914)(holding that a claim in equity "cannot be

sustained" where there is an "adequate remedy at law").

¶69 Finally, the majority does not grapple with its failure

to give effect to the parties' chosen remedy language, depriving

it of any operative effect whatsoever and leaving it mere

surplusage. Specifying a mandatory lien remedy is completely

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pointless if a court is free to impose a different remedy.6 By

rewriting the parties' MSA and allowing a remedy other than the

one the MSA provides, the majority violates the canon against

surplusage. See Ash Park, LLC v. Alexander & Bishop, Ltd., 2015

WI 65, ¶37, 363 Wis. 2d 699, 866 N.W.2d 679; Heritage Mut. Ins.

Co. v. Truck Insurance-Exchange, 184 Wis. 2d 247, 258, 516

N.W.2d 8 (Ct. App. 1994) (recognizing that the surplusage rule

applies when interpreting contracts) ("[T]he general rule of

construction is that an interpretation of an agreement which gives

reasonable meaning to all provisions is preferable to one which

leaves part of the language useless or inexplicable or creates

surplusage."). "If possible . . . every provision is to be given

effect (verba cum effectu sunt accipienda). None should be

ignored. None should needlessly be given an interpretation that

causes it . . . to have no consequence." Scalia & Garner, Reading

Law at 174 (footnote omitted). The majority's treatment of the

life insurance provision needlessly writes the mandatory remedy

chosen by the parties out of the agreement altogether, violating the surplusage canon, which "holds that it is no more the court's

function to revise by subtraction than by addition." Id. The

most frequent circumstance this canon prevents is "an

interpretation that renders [a provision] pointless." Id. at 176.

The canon applies to contracts like MSAs: "This court must be

Dissenting from the court of appeals decision, then-Judge 6

Brian Hagedorn recognized that "the MSA's mandatory lien language does not make much sense if other remedies could be pursued instead of a lien." Pulkkila v. Pulkkila, No. 2018AP712-FT, unpublished slip op., ¶15 (Wis. Ct. App. Feb. 27, 2019) (Hagedorn, J., dissenting).

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guided by the well accepted and basic principle that an

interpretation that gives a reasonable meaning to all parts of the

contract will be preferred to one that leaves portions of the

contract meaningless." Id., (quoting Fortec Constructors v.

United States, 760 F.2d 1288, 1292 (Fed. Cir. 1985)). In

construing contracts, "courts must avoid a construction which

renders portions of a contract meaningless, inexplicable or mere

surplusage." Goebel, 83 Wis. 2d at 680.

¶70 Nothing the majority proffers can justify contravening

the parties' contract. Modifying the parties' chosen remedy also

conflicts with Wisconsin statutory law. Life insurance is an asset

under Wis. Stat. § 767.217(1) and is subject to property division

that is unmodifiable post-judgment, under § 767.59(1c)(b): "A

court may not revise or modify . . . a judgment or order with

respect to final division of property." Because the life insurance

provision addresses a marital property asset, the circuit court is

statutorily prohibited from modifying its remedy clause by

imposing a constructive trust. See also Winkler v. Winkler, 2005 WI App 100, ¶15, 282 Wis. 2d 746, 699 N.W.2d 652 (citing Krieman

v. Goldberg, 214 Wis. 2d 163, 173, 571 N.W.2d 425 (Ct. App. 1997))

("[A] final division of property is fixed for all time and is not

subject to modification."). The life insurance provision is not

modifiable and any "unfair" terms could have and should have been

rejected or amended before the divorce judgment was entered.

¶71 The MSA is a contract and the divorce judgment did nothing to alter its contractual nature. The court approved it at

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the time it entered the judgment of divorce and this court should

enforce it in accordance with its terms. The Pulkkilas elected a

particular legal remedy for James Pulkkila's breach and expressed

it unequivocally in their MSA; this court should apply it. I would

reverse the court of appeals decision and hold the exclusive remedy

is a lien against James' estate, consistent with the unambiguous

words of the parties' MSA. I would reinstate the decision of the

circuit court. Because the majority disregards controlling cases

and statutes in order to confer unprecedented powers on the

judiciary to rewrite marital settlement agreements, thereby

infringing the individual freedom to contract, I respectfully

dissent.

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