In Lloyd v. Niceta, No. 0934/21 (October 26, 2022), the husband argued that the circuit court erred in enforcing the parties' post-nuptial agreement because it lacked consideration, was unconscionable, was procured by undue influence, and/or was unfair because the parties were in a confidential relationship.
The Maryland Court of Special Appeals explained that post-nuptial agreements are generally binding where they are not unconscionable or the product of fraud, duress, mistake, or undue influence.
The Court explained that it was well-settled that the forbearance of bringing a legal action is a form of consideration. Accordingly, the wife’s decision not to divorce the husband, to remain in the marriage, and to work on forgiving the husband following the discovery of her husband’s adultery was adequate consideration for the post-nuptial agreement.
The Court found that based on the parties’ assets, the agreement did not shock the conscience and was not unconscionable.
Additionally, the Court found that the agreement was not procured by undue influence. The party alleging undue influence bears the burden of proof unless the parties were in a confidential relationship. The Court found that the presumption of a confidential relationship that applies to premarital agreements did not apply to post-nuptial agreements. Instead, the Court followed Hale v. Hale, 74 Md. App. 555, 539 A.2d 247, (Md. Ct. Spec. App. April 6, 1988) (“Hale”) to determine whether a confidential relationship existed between the parties. In Hale, the Maryland Court of Special Appeals stated that whether a confidential relationship exists between spouses is a question of fact. Among the various factors to be considered are age, mental condition, education, business experience, state of health, and degree of dependence of the spouse in question.
In this case, the circuit court declined to accept the husband’s expert’s testimony and found that the fact that the husband engaged counsel in successfully negotiating changes to the agreement showed that he was exercising his free will. Thus, the circuit court did not find that a confidential relationship existed between the parties. Therefore, it was the husband’s burden to prove the agreement was procured by undue influence, which he failed to do.
The Court rejected the husband’s argument that the agreement’s $7 million lump sum provision was against public policy. Maryland permits post-nuptial agreements designed to discourage certain behavior. Furthermore, the agreement in no way required the husband to stay married to the wife.
Based on the fact that the husband controlled whether the lump sum provision was triggered and the husband’s assets, including his expected inheritance, the Court found that the provision was not unconscionable. Additionally, the Court countered the husband’s argument that the provision created an environment of fear and coercion and noted that it could just as well have created stability because the consequences of various actions in the marriage were explicitly spelled out.
The Court affirmed the circuit court’s judgment as to the issues raised by the husband. The Court remanded the case for matters related to child support that the wife raised in the cross-appeal.