Friday, April 3, 2009

Post-Nuptial Agreements - Something Big Out of Connecticut

Indiana favors using agreements in a divorce which are a bit different from a post-nuptial (also called an antenuptial agreement). We have one case (WordPerfect format) that explains the difference between a post-nuptial agreement and a divorce settlement agreement. Which makes Connecticut Law Tribune's Legal Swordplay In Divorce Court a bit interesting:

"The key to his hoped-for quickie divorce is an unusual 2005 post-nuptial agreement that set the terms for any split between David and Marie Douglas-David, a Swedish countess and former Wall Street stock analyst. The document was not totally pessimistic; it mentioned the possibility of the couple having children. But if things did go sour, the agreement said, Marie would simply take some $43 million in UTC stock and other property instead of duking it out in court.

In New York, David said, he would merely have had to produce the document and that would have been the end to all this. Bang. On the barrelhead. Next case.

But in Connecticut, things have turned out to be not-so-simple. While the public has fixated on the couple’s lavish spending habits, Douglas-David’s demands for a much bigger share of her estranged husband’s fortune, and accusations of extra-marital affairs, the legal community has been drawn in by some of the subtle strategies of the case, which is scheduled to resume in July."

The Pond case has this to say about post-nuptial agreements:
...Although this Court has never directly addressed the question, the Court of Appeals has done so. In Flansburg, the parties attempted reconciliation after the wife filed a petition for dissolution. 581 N.E.2d 430. The parties then signed a post-nuptial agreement, and she dismissed the petition. The marriage continued for three more years, and she again filed a petition for dissolution. Finding the “reconciliation” agreement to be something of a hybrid between an antenuptial agreement and a dissolution settlement agreement, the Court of Appeals noted:
While the property settlement labeled a “Post Nuptial Agreement” was negotiated by the parties well into their marriage, it primarily concerned the distribution of property interests acquired prior to the marriage. Just as marriage is, in and of itself, valued and respected by the law as adequate consideration to support an antenuptial agreement, the extension of a marriage that would have otherwise been dissolved but for the execution of an agreement to reconcile has been deemed adequate consideration.
Id. at 433-34 (citations omitted) (emphasis added). The Court of Appeals upheld the trial court’s findings of fact regarding consideration, including its finding that the dissolution action was dismissed after the signing of the agreement, and concluded that there was “no reason to treat [a] reconciliation agreement any differently than an antenuptial agreement.” Id. at 434.

Back to Connecticut, and what appears to be an interesting argument:
In court papers, Dranginis had urged the judge to protect David’s “substantive right to the benefit of his bargain and, as New York law requires, enforce the Wife’s waiver” of her right to a divorce trial and equitable distribution in a Connecticut court.


Still, Beslow, a one time marathon runner with daily training in divorce litigation, exasperated Dranginis with endless objections to her questions, many of which were upheld. But David’s team made its main point: the countess is a fully-competent woman who signed a fair deal, aided by some of New York and Connecticut’s top matrimonial lawyers. The couple have no children together, whose rights might be affected. If any marital agreement deserved enforcement, Dranginis contended, this is the one.


Beslow is trying to make a case that the post-nup, under the circumstances it was signed, was inherently coercive and has to be voided. Beslow said David gave his wife the option of signing the agreement or facing a divorce, at a time when Douglas-David wanted the marriage to survive and wanted to have children.
This argument appears not so different from arguments used to set aside a prenuptial agreement: unequal bargaining power.

The Connecticut article does discuss a Connecticut case that bears on this argument:

Lawyers on both sides agree that Connecticut has no case law for guidance about post-nuptial agreements. The case law in New York is thin, Beslow said in an interview. He said he’s only found one case nationwide, a 1999 New Jersey Appellate Division decision, Pacelli v. Pacelli, that’s on point. It’s not legal authority, just a legal concept.


In the New Jersey case, Francesca Pacelli, against her lawyer’s advice, signed a post-nuptial agreement in 1986 when her developer husband’s net worth was increasing toward $14 million. The trial court found the agreement valid, and not signed under coercive conditions. The appellate court reversed, explaining that a mid-marriage agreement is distinctly different from a pre-nup or a settlement signed once both parties are resigned to a divorce.

Pond lacks the coercive argument but ends (after a long discussion of the facts about the forming of the agreement) with this:
We find that the parties’ agreement is not a reconciliation agreement and should not be treated as an antenuptial agreement as in Flansburg. To the contrary, the agreement clearly falls within the ambit of section 10 of the Dissolution of Marriage Act. This agreement was formed between the parties to a marriage, and its substance was directed at the amicable settlement of “disputes that have arisen or may arise . . . attendant upon the dissolution of their marriage.” Ind. Code § 31-1-11.5-10. The agreement was signed after the husband had commenced proceedings pursuant to the Act. The trial court did not err in construing the parties’ agreement in accordance with the Act.

Coercion could be a good argument under the right set of facts for an Indiana antenuptual agreement.

I strongly urge anyone contemplating this kind of agreement to get a lawyer. I think the greatest weakness of the Connecticut case (as reported) is that both parties hired what sounds like the best legal counsel possible.

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