In this case, after the plaintiff wife and defendant husband were married, they executed a postnuptial agreement, which later had five handwritten addenda. Pursuant to this agreement, there would be no alimony reward, and the wife would receive a cash settlement which, as of the latest addendum, was $75,000. Furthermore, per the agreement, the wife waived her interest in the husband’s car wash business. In the years subsequent to the last revision, the parties had a son and the husband’s business both prospered then deteriorated. In August 2007, the wife filed for dissolution of the marriage, and the husband sought enforcement of the postnuptial agreement.
Trial Court Conclusion
The trial court concluded that the agreement was not fair and equitable, and declined to enforce it, in part because the combined assets of the parties was valued at over $927,000. After re-argument, the trial court again would not enforce the agreement because it did not comply with ordinary contract principles: enforcement would instead work an injustice. The husband appealed, arguing that it was improper for the trial court to apply principles of equity in its decision.
Supreme Court Findings
The Supreme Court had to determine the manner in which courts review and enforce postnuptial agreements. The court characterized such agreements as unique due to the nature of the marital relationship, and as such, treating them merely as business deals would be improper. Instead, a stricter scrutiny must be applied, and the Supreme Court wrote: “a court may enforce a postnuptial agreement, only if it complies with applicable contract principles, and the terms of the agreement are both fair and equitable at the time of execution and not unconscionable at the time of dissolution.”
In this context, fairness and equity are viewed under the totality of the circumstances surrounding execution, and the agreement must be made voluntarily and with full, fair, and reasonable disclosure. Simply put, an agreement will be deemed unconscionable if its enforcement would work an injustice, particularly in the event of unforeseen changes in the marital relationship.
The Supreme Court held that the facts and circumstances of this case supported the trial court’s findings. It determined that the trial court’s ruling that enforcement of the postnuptial agreement would work an injustice “was tantamount to a finding that the agreement was unconscionable at the time the defendant sought to enforce it.” Therefore, the Supreme Court affirmed the judgment.
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