In Lloyd v. Niceta, __Md.App. ___ (2022), the Maryland Court of Special Appeals addressed the issue as to whether a monetary penalty for adultery in a post-nuptial agreement was enforceable. The parties’ post-nuptial agreement provided that the husband would pay $7 million to his wife if he committed adultery. The husband argued that this provision was not enforceable. Both the trial court and the appellate court rejected husband’s contention.
The husband contended that the amount of the $7 million penalty was unconscionable and should not be enforced, because it would render him penniless. However, the court found that the husband had ample assets to pay $7 million penalty, especially when he was a grandson and an heir to wealthy socialite and philantropist Rachel “Bunny” Mellon.
The husband next claimed that the $7 million was an unenforceable penalty. The court disagreed, noting that it was acceptable for post-nuptial agreements to contain rewards and penalties to create incentives during a marriage to constrain the behavior of spouses.
The husband’s final contention was that the post-nuptial agreement should be rescinded on the grounds that it was the product of undue influence or duress. Undue influence exists when one party believes that the other party will not act against the welfare of the first party, but then misuses this misplaced confidence to gain an advantage.
The perquisite to finding whether a contract was the product of undue influence is whether a confidential relationship existed between the parties. The presumed existence of a confidential relationship between spouses may be cured by access to legal counsel by the party in the less advantageous bargaining position. There was not a confidential relationship between the parties, because they had negotiated the post-nuptial agreement with the assistance of their attorneys. In fact, the husband at trial admitted that his two attorneys had advised him against signing the post-nuptial agreement. (Presumably, the husband waived his attorney-client privilege in an effort to show that he rejected the sound advice of his attorneys, because he was purportedly under the influence of a coercive, controlling spouse). Nor was the post-nuptial agreement a product of duress, because the husband had exercised free will in negotiating the terms of the post-nuptial agreement.
Practice pointer: Don’t promise the earth and moon to your spouse in a post-nuptial agreement and then expect the court to declare the agreement to be unenforceable.