Grabe v. Hokin, 341 Conn. 360 (2021) (prenuptial agreement & unconscionability; severability)
Officially released November 17, 2021.
In Short: (1) Uncontemplated events do not necessarily establish unconscionability for purposes of enforcing a prenuptial agreement. (2) A non-custodial parent has no right to receive child support to maintain the same or similar standard of living on behalf of the children and it is improper to disguise child support as alimony.
The issue before the Supreme Court in this case was: whether the trial court correctly determined that enforcement of the prenuptial agreement was not unconscionable at the time of the dissolution of marriage. The case was transferred directly to the Supreme Court per C.G.S. § 51-199(c).
The parties executed a prenuptial agreement shortly before their marriage in 2010, pursuant to which each party waived any claim to the other’s separate property, as defined in the agreement, and waived any form of support from the other, including alimony. The prenuptial agreement provided that a party who unsuccessfully challenged enforceability of the agreement would pay the counsel fees of the other party. The prenuptial agreement contained a severability provision and stated that no change in circumstances shall render it unconscionable.
At the time the prenuptial agreement was executed Wife’s annual income was $1.3m and her net worth was $12m. Husband’s estate had fair market value of $5m and he disclosed income of $97k over the prior six months. Husband’s primary source of income was director’s fees and guaranteed payments from certain family owned entities, with no other income from employment.
The trial court found that both parties enjoyed frequently partying all night prior to the marriage, but Wife changed her behavior upon the first pregnancy and Husband did not. The trial court found that Husband drank to excess and neglected his family. In 2014, the house in Norwalk in which the family resided, owned by Husband, burned down and the parties leased another residence. Wife built a new residence and ultimately moved into it with the parties’ three young daughters.
In 2016 Wife filed for dissolution and sought enforcement of the prenuptial agreement. Husband filed a cross complaint in which he claimed that the prenuptial agreement was unenforceable because it was unconscionable at the time of the dissolution per C.G.S. § 46b-36g(a)(2).
During the pendency of the divorce in 2017, a yacht club in which Husband had an interest was destroyed while underinsured. The entity that paid Husband’s director’s fees and guaranteed payments suffered a downturn and ceased making such payments to Husband.
The trial court found that Husband’s assets had decreased from $5.1m to $2.1m, and $1.8m of these assets were owned by a trust, which was illiquid. Husband had liabilities of $1.3m, more than $1m of which was owed to Husband’s father and to the entity which had paid him fees. Husband had no significant income.
Husband argued to the trial court that the birth of the three children, destruction of his house by fire, destruction of the yacht club and failure of the fee-paying entity were not contemplated, and that enforcement of the prenuptial agreement would be unconscionable in light of those events. Wife argued that these events were not beyond contemplation, the circumstances were not unconscionable, and failure to enforce it would force her to bear the burden of Husband’s neglectful and unproductive behavior.
The trial court found that at time of trial Wife was forty-one and in good health, had net weekly income of $34k and the fair market value of her assets was $27.4m. Husband was forty-four years old and in good health, possessed a bachelor’s degree, had no significant income and possessed assets with fair market value of $2.1m. Husband was primarily at fault for the breakdown of the marriage. The trial court found that the events cited by Husband were not contemplated, but nevertheless would not render enforcement of the prenuptial agreement unconscionable. However, the court found that Wife was capable of paying the $1.5m in counsel fees she had incurred, whereas ordering Husband to pay that amount would financially cripple him.
Thus, the trial court determined that, with the exception of the attorney’s fees provision, enforcement of the prenuptial agreement was not unconscionable, and enforced the agreement with the exception of the attorney’s fees provision.
The trial court incorporated the final parenting plan of the parties into the judgment, pursuant to which the children were to reside primarily with Wife but spend time with Husband in a regular visitation schedule. The parties stipulated that Husband would pay $57.00/week child support pursuant to the guidelines.
Husband appealed, arguing that the trial court incorrectly determined that the occurrence of unforeseen events found by the trial court did not render the prenuptial agreement unconscionable at time of dissolution.
The Appellate Court set forth the standard of review, that factual findings will not be disturbed unless clearly erroneous but that unconscionability in light of those facts is a question of law subject to plenary review. The Appellate Court recognized that the Premarital Agreement Act, C.G.S. § 46b-36g, was intended to codify the standards of McHugh v. McHugh. Unfairness or inequality alone does not render a prenuptial agreement unconscionable, nor does improvidence in hindsight.
The Appellate Court assumed “without deciding” that the trial court correctly found that the parties did not contemplate all the major events cited by Husband, but noted that establishing that uncontemplated events occurred does not establish unconscionability. The court must instead determine whether the circumstances were “so far beyond the contemplation of the parties at the time the agreement was made as to make enforcement of the agreement work an injustice.”
Husband contended that the trial court improperly failed to recognize that enforcement of the agreement would affect the standard of living enjoyed by the children. The Appellate Court noted that Wife was supporting the children at the same standard of living they enjoyed prior to the dissolution. The fact that a child is spending a limited amount of time with a noncustodial parent with a somewhat lower standard of living does not mean the child’s standard of living is reduced. Husband was not entitled to a child support award as the non-custodial parent, and the legislature did not envision that the custodian would be required to pay child support to a person who does not have custody. Substantial disparity in income could result in the non-custodial parent paying less support, but could not result in support flowing to the non-custodial parent. The Appellate Court further noted that it is improper to disguise a child support award as alimony, and thus Husband had no claim to seek alimony in order to support his children.
Husband sought to analogize this case to Bedrick v. Bedrick in his argument that the prenuptial agreement was unconscionable. The Appellate Court distinguished the facts of this case from Bedrick. The parties here anticipated having children and Husband did not contribute any financial support to Wife. The health, ages and length of marriage were all different, as well as the assets. There was no evidence that Husband could not earn an income. Husband gave up no opportunities as a result of his marriage or the birth of his children. Husband “did not make the plaintiff or the children even a remote priority in his life.”
The Appellate Court found no error with the trial court’s decision to act on the severability clause and invalidate only the attorney’s fees award. It was not inconsistent to find that the $1.5m sum of attorney’s fees could financially cripple Husband while not finding the underlying prenuptial agreement unconscionable.
The Judgment was affirmed.