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HomeMy WebLinkAbout98-4340 CIVILPATTY ANN EARHART, Plaintiff V. SAMUEL A. EARHART, Defendant : IN THE COURT OF COMMON PLEAS OF : CUMBERLAND COUNTY, PENNSYLVANIA : NO. 98-4340 CIVIL TERM :CIVIL ACTION -LAW :IN DIVORCE IN RE: VALIDITY OF ANTE-NUPTIAL AGREEMENT ORDER OF COURT AND NOW, June 27, 2001, after careful consideration of all issues raised, Plaintiff's request to invalidate the Ante-Nuptial Agreement of the parties dated August 4,1995, is denied. By the Court, George E. Hoffer, P.J. Lori K. Serratelli, Esquire SERRATELLI, SCHIFFMAN, BROWN & CALHOON, P.C 2080 Linglestown Road Suite 201 Harrisburg, PA 17110 Attorney for Plaintiff Charles Rector, Esquire 1104 Fernwood Avenue, Suite 203 Camp Hill, PA 17011-6912 For the Defendant PATTY ANN EARHART, Plaintiff V. SAMUEL A. EARHART, Defendant : IN THE COURT OF COMMON PLEAS OF : CUMBERLAND COUNTY, PENNSYLVANIA : NO. 98-4340 CIVIL TERM :CIVIL ACTION -LAW :IN DIVORCE IN RE: VALIDITY OF ANTE-NUPTIAL AGREEMENT Before HOFFER, P.J.: OPINION In this opinion, the Court addresses plaintiff's judgment on the validity of an ante-nuptial agreement. this petition are as follows: Patty Earhart, plaintiff, defendant, married on July 29, 1995, in Perry County, petition for declaratory The events giving rise to and Samuel A. Earhart, Pennsylvania. Although Pastor Herbert Coe performed the marriage on July 29, 1995, he entered August 5, 1995, as the date of their marriage on the wedding certificate. Both parties then signed an Ante-Nuptial Agreement, dated August 4, 1995. In signing the Agreement, plaintiff waived her right to receive any form of spousal support or alimony from defendant in the event that either party should move to terminate the marriage.1 Plaintiff moved to terminate the marriage, by filing a Complaint in Divorce, on July 28, 1998, at which time she made claims for the divorce, as well as alimony, alimony pendente lite, counsel fees and costs, and equitable 2 distribution. On July 30, 1998, plaintiff filed a Complaint for spousal support, the Agreement notwithstanding. Plaintiff now claims that the entire Agreement is invalid and unenforceable due to lack of full and fair disclosure, duress, and lack of consideration. DISCUSSION At issue in this case is a determination of the validity of a prenuptial agreement executed between Mr. and Mrs. Earhart. In evaluating a prenuptial agreement, the Pennsylvania Supreme Court has held that a prenuptial agreement is a contract and the terms of such should be evaluated under the same criteria as are applicable to other types of contracts. Simeone v. Simeone, 525 Pa. 392,400, 581 A.2d 162, 165 (1990). Prenuptial agreements are presumed valid and binding. Re Estate of Geyer, 516 Pa. 492, 501, 533 A.2d 423, 427 (1987). Absent fraud, misrepresentation, or duress, spouses should be bound by terms of their agreements. Simeone at 400, 581 A.2d at 165. The reasonableness of such agreements and the general knowledge of the parties are not subject to judicial review. Id. In the case sub judice, plaintiff asserts the Agreement is invalid and unenforceable for the following reasons: lack of consideration, duress, and a lack of full and fair disclose at the time the Agreement was signed. 1 Plaintiff's Exhibit B at 8. 3 Consideration An agreement is a valid and binding contract only if the parties have manifested an intent to be bound by the terms of the agreement, the terms are sufficiently definite, and there was consideration. Estate of Craig Hall, 731 A.2d 617 (Pa. Super. 1999). The marriage of the parties is consideration for the prenuptial agreement. Bamhart v. Bamhart, 376 Pa. 44, 53, 101 A.2d 904, 908 (1954). In this case, however, there is a discrepancy regarding when the parties were officially married. Both plaintiff and defendant agree that their wedding ceremony took place on July 29, 1995, but their marriage certificate was dated August 5, 1995. Therefore, in this case, the marriage itself can not act as consideration, as the parties were already married prior to the signing of the Agreement. Even though the parties executed the Agreement after they were married, the agreement cannot be considered void for lack of consideration because the same principles of law apply to both ante-nuptial and post-nuptial agreements. Adams v. Adams, 414 Pa. Super 634, 637, 607 A.2d 1116, 1118 (1992), citing Nitkiewicz v Nitkiewicz, 369 Pa. Super 504, 535 A.2d 664, (1988). Therefore, the Agreement will be upheld if the consideration provided for in the Agreement is independent of the date upon which the marriage occurred. Paragraph one of the Agreement recites consideration for the agreement, wherein each of the parties knowingly waive certain rights that each of them might 4 otherwise have with regard to the property of the other.2 Paragraph four of the Agreement recites the consideration that neither party to the Agreement shall be responsible for any debts incurred by the other party prior to the date of marriage, stating that any such debt shall remain the sole and separate obligation of the party who incurred the debt.3 Paragraph seven of the Agreement provides that all property acquired by the parties, either individually or jointly, after their marriage and through the date of final separation, except that property which was previously excluded as separate property, shall be divided equally between the parties.4 This existence of mutual promises within the Agreement, wherein each party waives certain rights, acts as valid and independent consideration for the Agreement. Therefore, plaintiff's claim that the Agreement is invalid and unenforceable due to a lack of consideration fails. Duress Plaintiff asserts that she did not knowingly and voluntarily enter into the Ante-Nuptial Agreement; rather she signed the Agreement under duress. Duress is that degree of restraint or danger, either actually inflicted or threatened and impending, which is sufficient in severity or apprehension to overcome the mind of a person of ordinary fairness. Hamilton v. Hamilton, 404 Pa. Super 533, 536, 591 A.2d 720, 721 (1991), citing Carrier v. William Penn Broadcasting Co., 426 Pa. 427, 233 A.2d 519 (1967). 2 Plaintiff's Exhibit B at 3 (Ante-Nuptial Agreement ¶ 1). 3 Plaintiff's Exhibit B at 5 (Ante-Nuptial Agreement ¶ 4). 4 Plaintiff's Exhibit B at 7 (Ante-Nuptial Agreement ¶7 (B)). 5 Formation of a valid contract requires mutual assent of contracting parties. Degenhardt v. Dillon Co., 543 Pa. 146, 669 A.2d 946, 949 (1996). When one party coerces the assent of the other party by duress, mutual assent does not exist. Id. To prove that a party entered into the agreement under duress, one must show such duress by clear and convincing evidence. Cooper v. Oakes, 427 Pa. Super 430, 438,629 A.2d 944, 948 (1993). Plaintiff claims that despite her persistent efforts expressing to defendant that she thought the Agreement was unfair, she was pressured into signing the Agreement. She claims that defendant pressured her to sign the Agreement during the negotiations on August 4, 1995, in the presence of defendant's attorney. The court has held that in the absence of actual bodily harm, normally there can be no duress when the contracting party is free to consult with counsel. Hamilton at 536, 591 A.2d at 721. In the present case, there is no indication whatsoever of actual bodily harm and there is also no indication that plaintiff was not free to consult with counsel. Plaintiff admits that she began looking for counsel prior to the August 4, 1995, meeting, but did not have the assistance of counsel at the time the agreement was signed. Plaintiff had the ability to bring counsel with her to the meeting, but failed to do so on her own account. Where a party has been free to consult with counsel before signing an agreement, the courts have generally rejected duress as a defense to an agreement. Hamilton at 536, 591 A.2d at 722, citing Bata v. Central-Penn Nat. Bank of Philadelphia, 423 Pa. 373, 224 A.2d 174 (1966). 6 Plaintiff did not indicate a lack of understanding of the agreement. Further, because the marriage had already occurred when plaintiff signed the Agreement, there was no implied threat that the marriage would be called off if she refused to sign the Agreement. These facts demonstrate that plaintiff was not at a disadvantage and that her husband was not exercising control over her actions in order to coerce her into executing the Agreement. Therefore, plaintiff has not proved by clear and convincing evidence that she signed the Agreement under duress; thus, her duress claim fails. Full and Fair Disclosure Plaintiff claims, at the time the Agreement was executed, there was not full and fair disclosure of the financial position of both parties. One of the criteria for a valid ante-nuptial agreement is full and fair disclosure of the financial positions of both parties. Simeone, at 396, 581 A.2d at 163. Full and fair disclosure is necessary because parties to these agreements do not quite deal at arm's length, but rather, at the time the contract is entered into, they stand in a relation of mutual confidence and trust that calls for disclosure of their financial resources. Cooper at 435, 629 A.2d at 947. Without such a disclosure, a party may assert material misrepresentation in inducement for entering the agreement. Id. An exact disclosure is not required so long as the disclosure is full and fair. Id. If the language of the agreement provides that full disclosure has been made, the court deems this as a presumption, which may be rebutted through the assertion of fraud or misrepresentation, proven by clear and convincing evidence. Id. 7 Plaintiff claims that defendant failed to disclose substantial assets of substantial value to plaintiff at the time the Agreement was executed. The Agreement contained a schedule of Defendant's assets which are as follows: Business Property/Earhart's Floor and Wall Tile, The Business/Earhart's Floor and Wall Tile, Property located at 9 Dickinson Avenue, Camp Hill, Cabin located in Perry County, and any and all rights or income or royalties from the song "Jingle Bell Rock". Based upon defendant's deposition, the total valuation of the assets listed in Schedule A were approximately worth $458,000.00 prior to the execution of the Agreement.5 The defendant merely failed to disclose in Schedule A the existence of an IRA valued at less than $24,000.00, a property in the Bahamas valued at less than $4,000.00, and two checking accounts that did not have more than $3,000.00 each. At the time of the Agreement's execution, the aggregate amount the defendant failed to disclose in Schedule A was less than 8% of the total valuation of defendant's assets. Pennsylvania law requires that full and fair disclosure of the financial positions of the parties need not be an exact accounting, but there must be a sufficient disclosure of assets to allow the other party to make an intelligent decision concerning the rights, which will be given up under the terms. Nitkiewicz v. Nitkiewicz, 369 Pa. Super 504, 511,535 A.2d 664, 667 (1988), citing Kaufmann's Estate, 404 Pa. 131, 171 A.2d 48 (1961). It is the decision of this Court that defendant's failure to disclose less than 8% of his total assets is a 5 These values are based upon defendant's deposition and have not been contested by plaintiff. 8 sufficient disclosure to allow plaintiff to make an intelligent decision regarding the waiver of rights. Plaintiff claims that because she failed to include a listing of her own assets in the Agreement, that the Agreement did not adhere to the full and fair disclosure requirement of ante-nuptial agreements. Plaintiff's failure to provide a listing of her own assets in the Agreement does not invalidate the Agreement, when it is obvious that plaintiff was fully aware of her own financial position at the time the Agreement was executed. An ante-nuptial agreement is presumed valid if it contains a statement that the parties have fully and fairly disclosed their assets and the full extent of their marital rights. Cooper at 436, 629 A.2d at 947. A statement such as this is prima facie evidence of full and fair disclosure. Id. The Agreement at issue includes a provision which provides that both parties agree that they have made a full and complete disclosure of their assets and income to the other, wherein each acknowledges that they have clearly and completely disclosed to the other their assets and their liabilities? Given this provision and consistent with Simeone, a presumption of full and fair disclosure exists which must be rebutted by clear and convincing evidence. Plaintiff attempts to rebut this presumption by arguing that the schedule of assets attached to the Agreement contained no valuations of the assets. Consistent with the Simeone and Adams line of cases, disclosure must include both the general financial pictures of the parties involved, and evidence that 9 the parties are aware of the statutory rights which they are relinquishing. None of these cases requires that the agreement include a schedule of assets or list of marital rights. Cooper at 438, 629 A.2d at 948. Because the plaintiff is the proponent of avoiding the agreement, and bears the burden of proving this asserted fraud or misrepresentation by clear and convincing evidence and has failed to do so, her claim that full and fair disclosure was not adequately made fails. 6 Plaintiff's Exhibit B at 4 (Ante-Nuptial Agreement ¶ 2). 10