HSC Adopts California's Test to Determine if Prenuptial Agreement Voluntarily Entered

 

L.O. v. N.O. (HSC November 5, 2020)

Background. Back in 2013, LO, the husband, was introduced online through a relative to NO, the wife, who had been living in Vietnam. LO was 45; NO was 22. NO’s aunt, who introduced them, paid for LO to fly to Vietnam and meet NO. Four months later, LO goes back to Vietnam and proposes to marry her. She accepted and came to the United States in 2014 on a K-1 fiancee visa, which allowed her 90 days to marry.

 

A month after arriving to the United States, the parties entered into a premarital agreement. The agreement released the parties in the event of a divorce of alimony and support obligations. It also provided that each spouse’s property upon entry into the marriage would be treated as separate property. It also stated that “it is the intention of the husband in the event that he sells his current residence . . . that any equity shall be used to finance another shared property with the wife and said equity will be considered shared and joint property.” They were married the same day they signed the agreement by an officiant LO hired on Craigslist.

 

They had a child together born in Honolulu in 2015. After that, the marriage soured. The police came to the home several times and both alleged physical abuse against each other. LO filed for divorce when NO took the child to visit relatives in Texas. He also filed for a restraining order. When NO came back from the mainland, she was served with the restraining order and LO took custody of the child. In the divorce proceedings, the family court appointed Dr. Reneau Kennedy as a custody evaluator to investigate the family and recommend custody for the child.

 

Dr. Kennedy concluded LO has “a better sense of what the child needs and is focused on the child’s best interest.” She recommended an 80/20 split favoring LO. At trial, LO testified about the prenuptial agreement. Getting one was his idea and he told NO that “all men in the west” get them. He testified that NO’s English was good enough to understand the document. He presented it to her and she had it for at least two weeks before she signed it. He also testified that he modified part of it after discussing it with NO. He claimed to have encouraged NO to go to a lawyer offered to pay her $300 to hire one to review the agreement. He confirmed that the agreement was signed at around 9:00 a.m. in front of a notary and they were married at around 4:30 p.m. that same day.

LO’s testimony conflicted with evidence from other witnesses that NO’s English was not very good at the start of the marriage. NO also testified that her English at the time of the marriage and execution of the agreement was bad. NO disputed LO’s testimony that he gave her time to review the document and volunteered to hire a lawyer for her. She testified that she was afraid of being sent back to Vietnam and that 15-30 minutes after signing the agreement, they were married.

 

The family court—with the Hon. Kevin Morikone presiding—concluded that the prenuptial agreement was valid and voluntarily entered by both parties. The family court, therefore, enforced it and withheld alimony. The ICA affirmed.

 

Enforcing Prenuptial Agreements. Prenuptial agreements are enforceable unless (1) the execution of the agreement was involuntary; or (2) the agreement was unconscionable. HRS § 572D-6(a). The statute also deems an agreement unenforceable when “before execution of the agreement,” the party against whom the enforcement is sought:

 

(A)    Was not provided a fair and reasonable disclosure of the property or financial obligations of the other party;

(B)    Did not voluntarily and expressly waive, in writing, any right to disclosure of the property or financial obligations of the other party beyond the disclosure provided; and

(C)    Did not have, or reasonably could not have had, an adequate knowledge of the property or financial obligations of the other party.

 

Id. The HSC addressed the first two exceptions—voluntariness and unconscionability.

 

Determining a Voluntary Agreement Based on Factors from California. Although the HSC has never addressed voluntariness in the context of a prenuptial agreement, the ICA has stated that “[i]nvoluntariness is shown by evidence of duress, coercion, undue influence, or any other circumstances indicating lack of free will or voluntariness.” Chen v. Hoelinger, 127 Hawai'i 346, 357, 279 P./3d 11, 22 (App. 2012). That was the standard used to apply a post-marital agreement in Balogh v. Balogh, 134 Hawai'i 29, 49, 332 P.3d 631, 651 (2014). The HSC used this case to afford better guidance for family courts in determining when a prenuptial agreement was voluntarily or involuntarily executed.

 

The HSC relied on case from California. In In re: Bonds, 5 P.3d 815 (Cal. 2000), Barry Bonds, yes, the baseball player, and his wife, a Swedish citizen, signed a prenuptial agreement the day before getting married. Id. at 818. The California Supreme Court relied on factors to determine if the former Mrs. Bonds entered into the agreement voluntarily:

 

[T]he court should consider whether the evidence indicates coercion or lack of knowledge . . . . Specifically, . . . consideration of the impact upon the parties of such factors as the coercion that may arise from the proximity of execution of the agreement to the wedding, or from surprise in the presentation of the agreement; the presence or absence of independent counsel or of an opportunity to consult independent counsel; inequality of bargaining power—in some cases indicated by the relative age and sophistication of the parties; whether there was full disclosure of assets; and the parties’ understanding of the rights being waived under the agreement or at least their awareness of the intent of the agreement.

 

Id. at 824-825. The HSC noted that other jurisdictions have adopted the Bonds factors. See Mamot v. Mamot, 813 N.W.2d 440 (Neb. 2012); In re Marriage of Rudder, 217 P.3d 183, 191 (Or. Ct. App. 2009). Hawai'i is among those states that have adopted the Uniform Premarital Agreement Act and the Bonds factors derived from the same statute were persuasive for the HSC.

 

The HSC applied the Bonds factors to this case and affirmed the family court. Although the agreement was executed the same day as the wedding, the family court found that the marriage on the same day was NO’s decision and NO had a copy of the agreement for a few weeks. Moreover, the family court’s findings that LO’s modification of the agreement in response to NO’s concerns about it were supported by the record and there was no evidence that LO failed to disclose all of his assets. According to the HSC, four out of the five Bonds factors weigh in favor of LO. As for the fifth—opportunity to consult with independent counsel—the family court did not enter a finding on this issue, but the family court did find LO credible and LO did testify that he offered NO the chance to consult with a lawyer. That was enough for the HSC to affirm the conclusion that NO entered into the agreement voluntarily.

 

The Agreement is not Unconscionable. Unconscionable agreements are not enforceable even though the parties agreed to it voluntarily.

 

Unconscionability encompasses two principles: one-sidedness and unfair surprise. One-sidedness (i.e., substantive unconscionability) means that the agreement leaves a post-divorce economic situation that is unjustly disproportionate. Unfair surprise (i.e., procedural unconscionability) means that one party did not have full and adequate knowledge of the other party’s financial condition when the marital agreement was executed.

 

Balogh v. Balogh, 134 Hawai'i at 41, 332 P.3d at 643. On top of that HRS § 572D-6(a)(2) requires a party to prove both substantive and procedural unconscionability to avoid enforcement of the agreement. The HSC held that the agreement was not unconscionable. According to the HSC, the agreement was not “unjustly disproportionate.” The agreement stated that assets or liabilities acquired during the marriage would be joint property and released both parties from alimony. These terms do not arise to substantive unconscionability. As for procedural unconscionability, the family court found LO credible and his version of events included a chance to consult with an attorney about the agreement. The second form of unconscionability was not met.

 

Other Issues. The HSC also held that the family court did not err in considering the custody evaluator’s report. See HRS § 571-46(4). The evaluator’s opinion is treated as expert opinion evidence. See Fisher v. Fisher, 111 Hawai'i 41, 50-51, 137 P.3d 355, 364-365 (2006). The HSC also held that the family court did not err in its failure to find an abuse of the restraining order process to gain leverage in the custody dispute. See HRS § 571-46(b)(16). LO’s actions in removing the child at the airport did not arise to clear and convincing proof of a willful misuse of the TRO process. Id.