Divorce and
Separation, Alimony. Contract,
Antenuptial agreement. Husband
and Wife, Antenuptial agreement.
COMPLAINT for divorce filed in the
Barnstable Division of the Probate
and Family Court Department on May
31, 2001.
The case was heard by Robert E.
Terry, J.
After review by the Appeals Court,
the Supreme Judicial Court granted
leave to obtain further appellate
review.
Jacob M. Atwood (Mark T.
Smith & Erin Moran Shapiro
with him) for Craig B. Austin.
Dana Alan Curhan (Brad P.
Bennion with him) for Donna M.
Austin.
IRELAND, J.
As part of the parties' judgment of
divorce nisi, a Probate and Family
Court judge held an antenuptial agreement
(agreement) was invalid only insofar
as it precluded the wife from receiving
alimony. The husband appealed from
the judgments, including the judge's
award of alimony to the wife, and
the Appeals Court affirmed. Austin
v. Austin, 62 Mass.App.Ct. 719
(2004). We granted the husband's application
for further appellate review, limited
to the enforceability of the agreement.
Because we conclude that the agreement
was valid at the time it was executed
and fair and reasonable at the time
of divorce, we vacate so much of the
judgment that awards alimony payments
to the wife.
Facts and procedural background.
The parties met in 1984 and lived
together from 1986 until 1988. They
were married in May, 1989. Two days
prior to the marriage, on May 11,
1989, the couple executed the agreement.
The judge found that the husband made
the marriage conditional on the signing
of the agreement and that the wife
"was not thrilled" about
signing. Both parties sought the advice
of legal counsel, but it was the draft
prepared by the wife's counsel that
the parties executed. Separate lists
of each of the parties' assets were
attached to the agreement as exhibits.
The husband's assets were worth approximately
$1 million, including interests in
various family businesses. The wife's
assets totaled approximately $35,000,
most of which consisted of furs and
jewelry. See Austin v. Austin,
supra at 720 (listing the parties'
assets).
The agreement allowed the separate
property listed on the parties' exhibits
to the agreement to be retained separately.
In addition, "[t]he separate
property of each party ..., including
[the] increase in value of property
acquired in exchange therefor, shall
remain the sole and separate property
of the party in whose name it is titled."
All other property was to be deemed
marital property and subject to "division
under the laws of the jurisdiction
which ultimately terminates ... the
marriage." The agreement provided,
in relevant part, that any appreciation
on the last marital home at the time
of separation would be deemed a marital
asset, subject to division. A key
provision was that, if the marital
residence was owned solely by the
husband at the time of separation,
although the wife would have to vacate
the home, [FN1] the husband was required
to assist the wife in relocating and
to give the wife "support based
upon such considerations as the length
of the marriage, their present employment,
whether any children were born to
the marriage and such other factors
as are cognizable under domestic relations
and property laws of the jurisdiction
in which the parties last resided."
[FN2] Both parties waived alimony
from the other. [FN3]
Over the course of their twelve-year
marriage, the couple had one child,
born in 1991. By agreement, the wife
stayed home as a full-time mother,
helping out occasionally at the family's
restaurant, which opened in 1999,
and other businesses. In addition,
in 1995, the couple bought a house
in East Sandwich, which was the marital
home at the time the wife filed for
divorce in 2001. During the marriage,
the family enjoyed "an upper
class lifestyle."
In a bifurcated trial, the judge first
considered evidence whether the agreement
was valid. The judge found that the
parties made informed, voluntary decisions
to sign the agreement, that they represented
their net worth to the best of their
abilities, and that the wife was "under
neither duress [n]or coercion when
she signed the agreement." [FN4]
He also found that the wife was fully
advised of her rights when she executed
the agreement and that the wife, having
been divorced previously, was fully
aware of her rights to alimony, support,
property division, and child support.
The judge found that, as it related
to the division of property, the agreement
was fair and reasonable at the time
of execution. However, although he
further found that the wife's "waiver
of alimony at that time was a knowing,
voluntary and intelligent waiver,"
the judge concluded that the waiver
of alimony was unfair and unreasonable
at the time the agreement was executed.
After a trial on the merits of the
divorce, the judge divided the marital
assets. Relevant to our discussion
is the fact that the wife was awarded,
among other things, the marital home,
valued at $1,275,000, [FN5] $525,000
in cash, and her Lexus automobile
(subject to a loan balance of $24,575).
The judge also awarded the wife $500
per week in child support and $1,000
per week in alimony. The husband's
appeal from the alimony provision
is the sole issue before this court.
[FN6]
Discussion.
Antenuptial agreements that waive
alimony are not "per se against
public policy and may be specifically
enforced." Osborne v. Osborne,
384 Mass. 591, 598 (1981). However,
to be enforceable, the agreement must
be valid at the time of execution
and must also be fair and reasonable
at the time of divorce. DeMatteo
v. DeMatteo, 436 Mass. 18, 26
(2002). In order to be valid at the
time of execution, the judge must
determine whether "(1) [the agreement]
contains a fair and reasonable provision
as measured at the time of its execution
for the party contesting the agreement;
(2) the contesting party was fully
informed of the other party's worth
prior to the agreement's execution,
or had, or should have had, independent
knowledge of the other party's worth;
and (3) a waiver by the contesting
party is set forth." Id.,
quoting Rosenberg v. Lipnick,
377 Mass. 666, 672 (1979). In determining
whether an agreement was fair and
reasonable at the time of execution,
"reference may appropriately
be made to such factors as the parties'
respective worth, ... ages, ... intelligence,
literacy, business acumen, and prior
family ties or commitments."
Rosenberg v. Lipnick, supra
at 672. An agreement, even a one-sided
agreement that leaves the contesting
party with "considerably fewer
assets" and imposes a "far
different lifestyle after divorce"
than she had during the marriage,
is fair and reasonable unless "the
contesting party is essentially stripped
of substantially all marital interests."
DeMatteo v. DeMatteo, supra
at 31.
Where an agreement is valid at the
time of execution, a judge must take
a second look at its provisions at
the time of divorce. Id. at
34-35. At that time, the agreement
will be enforced "unless,
due to circumstances occurring during
the course of the marriage, enforcement
... would leave the contesting spouse
'without sufficient property, maintenance,
or appropriate employment to support'
herself." Id. at 37, quoting
1 H.H. Clark, Jr., Domestic Relations
in the United States § 1.9 (2d ed.1987).
We turn first to the validity of the
agreement at the time it was executed.
In concluding that the agreement was
not fair and reasonable as to alimony
for the wife at the time of its execution,
the judge stated: "Although at
the time it may have been reasonable
to for[ ]go alimony because she was
employed and was young and healthy,
... it was not fair and reasonable
at the time of execution for [the
wife] to for[ ]go all possible alimony
and support given the great disparity
of earning potential of the parties."
The wife was employed at a department
store in Boston, and the husband had
various business interests. The judge
noted that the wife entered the marriage
intending to build a life with the
husband and "rightfully believed
that what they built together would
belong to both of them," but
that the husband made "it his
mission ... to prevent the creation
of joint marital assets." [FN7]
Although it is important to our analysis,
the judge did not address the provision
of the agreement that created support
for the wife based on, among other
things, length of marriage and employment,
in the event a jointly owned marital
home did not exist at the time a divorce
complaint was filed.
The judge's findings do not permit
the conclusion that the wife was "essentially
stripped of substantially all marital
interests," which is the standard
required to declare an agreement invalid
at its execution. [FN8] DeMatteo
v. DeMatteo, supra at 31. Disparity
of income that has the potential to
leave one spouse in an essentially
different lifestyle is not a valid
basis for determining that the agreement
was invalid at its execution. Id.
Moreover, "[w]here there is no
evidence that either party engaged
in fraud, failed to disclose assets
fully and fairly, or in some other
way took unfair advantage of the confidential
and emotional relationship of the
other when the agreement was executed,
an agreement will be valid unless
its terms essentially vitiate the
very status of marriage." Id.
Here there is no evidence of the husband's
taking unfair advantage of the wife
at the time the agreement was executed.
The wife's attorney drafted the agreement,
after he had advised her not to sign
an agreement prepared by the husband's
attorney. Furthermore, as discussed,
the judge found that the wife was
fully aware of her rights and knowledgeable
about alimony, property division,
and child support. The agreement provided
that the wife's separate premarital
property would remain hers and not
be incorporated into marital assets.
Cf. Rice v. Rice, 372 Mass.
398, 400 (1977) (judge has "discretion
to assign to one spouse property of
the other spouse whenever and however
acquired"). The agreement permitted
the wife a joint interest in marital
assets and provided that "any
appreciation on the marital home or
such home as the parties reside as
their last marital home at the time
of separation, whether due to market
forces or capital investment,"
be divided as a marital asset, even
if the husband held sole title to
the property. Most importantly, the
agreement entitled the wife to relocation
and "support" from the husband
if there were no jointly owned marital
home at the time of a divorce, "based
upon such considerations ... as are
cognizable under domestic relations
and property laws" of the relevant
jurisdiction. In short, the agreement
provided for either funds from a capital
asset or access to support, utilizing
standard factors such as those now
codified in Massachusetts in G.L.
c. 208, § 34. When they were married,
the couple resided in the husband's
condominium unit. Therefore, it was
reasonably foreseeable that a home
owned by the husband would exist in
the event of a divorce. There is nothing
in this record that would allow us
to conclude that the agreement vitiated
the status of marriage by stripping
the wife of "substantially all
marital interests." DeMatteo
v. DeMatteo, supra at 31. Accordingly,
the agreement was valid at the time
it was executed. Had the wife been
dissatisfied with the terms of the
agreement, she could have refused
marriage. See id. at 34.
Our conclusion that the agreement
is valid requires us "to consider
whether there is any reason not to
enforce it." Id. We begin
by noting that, although he was not
required to do so after he found the
agreement to be invalid at the time
of execution, the judge also found
that the agreement concerning alimony
was invalid at the time of divorce.
He stated that the wife had spent
ten of the twelve years of marriage
as a homemaker, completely dependent
on the husband, and given her lack
of education, [FN9] was "not
in a position to secure income which
would maintain the lifestyle that
she achieved [for her and her daughter]
during the marriage."
In the DeMatteo
case, the court held that the so-called
"second look" at the agreement
"is to ensure that the agreement
has the same vitality at the time
of the divorce that the parties intended
at the time of its execution."
Id. at 37. The agreement must
be enforced unless circumstances such
as the mental or physical deterioration
of the contesting party, or erosion
of promised support by inflation,
would lead the court to conclude that
the agreement was not conscionable
and that its "enforcement ...
would leave the contesting spouse
'without sufficient property, maintenance,
or appropriate employment to support
herself.' " Id., quoting
1 H.H. Clark, Jr., Domestic Relations
in the United States § 1.9 (2d ed.1987).
In the DeMatteo
case, the court rejected as insufficient
the factors the judge had relied on
to determine that an antenuptial agreement
with "less than modest"
financial provisions for the wife
was invalid: lifestyle during the
marriage, vast disparity in the parties'
ability to acquire assets, and the
fact that it was a ten year marriage
that produced two children. Id.
at 38. The court stated that "the
wife was fully apprised of the husband's
holdings before she agreed to these
'less than modest' arrangements."
Id. In fact, the court recognized
that one spouse's share of the marital
assets may be "disproportionately
small." [FN10] Id. at
37.
Here, there has been no physical or
mental deterioration of the wife.
She was self-supporting during a period
of separation prior to their marriage.
The wife has the marital home worth
$1,275,000 and was awarded $525,000
in cash. She was allowed to keep many
of the contents of the marital home,
including jewelry acquired since the
marriage worth $74,000. Given the
assets she has been awarded, we cannot
say that the agreement leaves the
wife without sufficient property and
maintenance.
Conclusion.
For the reasons set forth above, we
conclude that the agreement is enforceable
and vacate the judge's order to award
the wife alimony.
So ordered.
GREANEY, J. (dissenting, with whom
Spina, J., joins).
The court today denies a woman, in
her fifties, with a high school education,
low potential earning capacity, and
a child to raise, her right to receive
alimony. The linchpin of the court's
decision, which pertains to the first
standard stated in Rosenberg v.
Lipnick, 377 Mass. 666, 672 (1979),
for determining the validity of an
antenuptial agreement, is the following
statement:
"The
judge's findings do not permit the
conclusion that the wife was 'essentially
stripped of substantially all marital
interests,' [ [FN1]] which is the
standard required to declare an agreement
invalid at its execution. DeMatteo
v. DeMatteo, [436 Mass. 18, 31
(2002) ]."
Ante at ----. The court erroneously
applies this standard.
As noted, the critical time frame
is the time of execution of
the agreement. DeMatteo v. DeMatteo,
supra at 30. Significantly, at
that time, the wife did not simply
agree to take less than what she might
have received under G.L. c. 208, §
34. Instead, she relinquished her
right to both alimony and any claim
on the husband's assets, essentially
giving up substantially all marital
interests. Contrast DeMatteo v.
DeMatteo, supra at 22, 34 (explaining
that, although it gave wife less than
she would have received under G.L.
c. 208, § 34, antenuptial agreement
did not strip wife of her marital
rights because it provided her, at
the time of its execution, with a
mortgage-free house, an automobile,
medical insurance, and lifetime alimony).
While the agreement did not impair
the wife's right to seek her share
of the marital assets in the event
of divorce, there were no marital
assets at the time she executed the
agreement. The wife, in substance,
was given nothing under the agreement.
The agreement contemplated only potential
marital assets that might be acquired
after marriage. Further, although
the agreement contemplated the possibility
of a future marital residence, it
had a provision relating to circumstances
where the parties lived together "in
a residence owned by only one of them,"
and, as noted by the Appeals Court,
"there is ... nothing in the
agreement requiring [the husband]
to provide a home for [the wife]"
(emphasis added). Austin v. Austin,
62 Mass.App.Ct. 719, 720 n. 2 (2004).
Contrary to the court's statement,
if no jointly owned marital home existed
at the time of the divorce, the agreement
required the husband only to "assist"
the wife "in her relocation and
support," with absolutely no
monetary obligation specified or required.
Thus, at the relevant time, namely,
when the agreement was executed, the
wife essentially gave up all her marital
rights.
The parties did subsequently acquire
assets during the marriage, and the
wife ultimately received a share of
the assets. Consideration of that
fact, however, is appropriate if it
becomes necessary to take a "second
look" at the agreement, a step
required only after it has been determined
(at the time of the first look) that
an agreement is valid. DeMatteo
v. DeMatteo, supra at 34. There
is no need to reach that consideration
in these circumstances. The Appeals
Court, in a well-crafted opinion,
saw the flaw in the husband's arguments
and voided the agreement in first-stage
examination for the reasons I have
described. See Austin v. Austin,
supra at 727 ("In so doing
[namely, concluding that this agreement
should not be enforced], we do not
consider the circumstances at the
time of the divorce, including whether
either party has accumulated additional
assets since the agreement was made.
That inquiry occurs during the 'second
look' stage, when a court deciding
whether and to what extent to enforce
a valid term of the agreement must
assess if it is 'conscionable' to
do so. DeMatteo v. DeMatteo,
436 Mass. at 38"). Thus, the
court has analytically transposed
the proper order that governs examination
of the validity of antenuptial agreements.
In so doing, it has implicitly overruled
portions of the DeMatteo decision
that hew closely to the traditional
two-stage analysis, holding, without
expressly saying so, that an agreement,
perhaps proper at the second look,
is valid for all purposes, even if
it is nugatory at the time of execution.
For these reasons, I respectfully
dissent.
|