Enforceability of premarital agreements in divorce: When does unfairness become unconscionable injustice?

On Behalf of | Apr 5, 2022 | Property Division

Recently, the Connecticut Supreme Court issued a ruling in Grabe v. Hokin that elaborates on unconscionability as a basis for finding a prenuptial agreement unenforceable between divorce litigants. Connecticut law gives judges the power to decline to enforce a premarital agreement that was unconscionable either when signed or that would cause an unconscionable outcome if enforced in a divorce proceeding.

Whether a prenuptial agreement is unconscionable is a question of law for the court. The litigant alleging unconscionability and unenforceability has the burden of proof. This issue can be the subject of fierce divorce litigation since the answer may determine the distribution of a couple’s significant wealth between them.

Zeroing in on the nature of unconscionability

When is a circumstance, decision, action or contract unconscionable? Concepts may come to mind like outrageous unfairness, shocking harm, extreme injury or oppressive impact.

In a legal context, unconscionable means “without a conscience; unscrupulous; so unfair or unjust that it shocks the conscience.” Wex, Legal Information Institute (LII), Cornell Law School (law.cornell.edu, March 28, 2022). In contracts, unconscionability may trigger unenforceability when terms are “grossly oppressive and unfair …” Unconscionable provisions may not only be based in inequitable bargaining at the original time of negotiation, but also enshrined in “unfair substantive terms” – so-called procedural or substantive unconscionability, respectively.

For more than a century, courts all over the country have cited the U.S. Supreme Court’s decision in Hume v. United States for the basic definition of unconscionability in contracting. The Hume court quoted earlier source material for the famous words that an unconscionable contract is one that “no man in his senses and not under delusion would make on the one hand, and as no honest and fair man would accept on the other …” Hume, 132 U.S. 406 (1889).

Connecticut courts have approved the Hume definition of unconscionability, both in disputes about commercial contracts and in those concerning premarital agreements. Smith v. Mitsubishi Motors Credit of America, Inc., 247 Conn. 342 (1998); Grabe v. Hokin, 341 Conn. 360 (2021).

Connecticut Uniform Premarital Agreement Act

Effective Oct. 1, 1995, Connecticut enacted its version of the Uniform Premarital Agreement Act (UPAA). The statute provides four bases for unenforceability of a premarital agreement, including whether it “was unconscionable when it was executed or when enforcement is sought.” CT Gen. Stat. §46b-36g(a)(2).

The Connecticut UPAA does not specifically define unconscionability, but it requires an extremely high level of unfairness. As in a commercial contract, parties to a prenuptial agreement can create a valid agreement that is one-sided and drastically favors one of the litigants. People can agree to give up marital rights via contract for their own reasons, even when from the outside or with hindsight it may seem unwise. For unfairness to be unconscionable, the court may ask whether its provisions “[surprise] or [shock] the conscience.” Dornemann v. Dornemann, 37 Conn. L. Rptr. 771 (unreported 2004).

The Superior Court in Dornemann explained that Connecticut added to the UPAA its own provision that unconscionability can make a prenuptial agreement unenforceable at the time of enforcement (the UPAA otherwise only provides this at the time of execution). This state-specific variation codified the Connecticut Supreme Court’s decision in McHugh v. McHugh, 181 Conn. 482 (1980).

Dornemann said that McHugh – without a literal use of the word – directed a court considering unconscionability at the time of enforcement to ask if “the circumstances of the parties at the time of the dissolution are 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.” This might arise if the “economic status of parties has changed dramatically” since they executed the agreement or if the divorce is the fault of one party and the innocent litigant waived their rights in the prenuptial agreement.

Dornemann quoted a member of the Family Law Section of the Connecticut Bar Association (CBA) who testified when the UPAA was under legislative consideration that unconscionability “goes beyond just fairness. It is that ‘gut’ reaction of something just being wrong.”

In other words, a bad bargain is not necessarily unconscionable – it must something more oppressive or outrageous. The Dornemann court found the agreement was enforceable. Changes in economic conditions of the couple were not beyond their contemplation when they signed the agreement and neither party was primarily at fault for the marital breakdown.

Connecticut Supreme Court’s latest take on unconscionability at the time of premarital agreement enforcement

This history leads to Grabe v. Hokin, the state Supreme Court’s Nov. 2021 opinion that found a premarital agreement was not unconscionable at the time of divorce despite certain unexpected events during the marriage, except for one provision concerning attorney’s fees.

(Enforcement of that provision would have “financially cripple[d]” the husband. A severability provision in the agreement protected the enforceability of the entire agreement minus the unconscionable legal fee provision. Grabe, 341 Conn. 360 (2021).)

The litigants’ prenuptial agreement provided that upon divorce they would waive any right to one another’s separate property as well as to support. They also agreed that if either one challenged the premarital agreement’s enforceability without success, the challenger would pay the other litigant’s legal fees. The agreement also said that if one term is invalid, the rest may stand and that a “change in circumstances” would not make it unconscionable.

The husband argued that the court should declare the agreement unenforceable because certain events during the marriage were unforeseen and would make enforcement unconscionable. Those events included a house fire, a business interest loss, destruction of a business in a hurricane and the birth of three children, resulting in reduced asset values and income.

The Supreme Court reviewed the state UPAA and its incorporated McHugh standard, explaining that Connecticut courts looking at unconscionability at the time of divorce should first decide if unexpected marital circumstances beyond the party’s initial contemplation had occurred. If so, were they “so far beyond the contemplation of the parties at the time the agreement was made as to make enforcement … work an injustice”? Grabe, 341 Conn. 360, quoting McHugh.

The Supreme Court explained (quoting several cases) that a marriage will of course experience uncontemplated events, but to show unconscionability is a “heavy burden” under McHugh. The challenging litigant must prove unexpected, extreme changes in circumstances such as an “extraordinary change in economic status …” to reach the McHugh standard of injustice.

The court shot down the husband’s claims of unconscionability – that enforcing the agreement would change the children’s standard of living or that his loss in financial worth would impair his relationship with his children. “Extraordinary disparity between the incomes or standards of living of the custodial parent and the children, on the one hand, and the noncustodial parent, on the other hand” does not create unfairness or unconscionability.

The evidence showed that the husband would still have “significant assets” and be able to earn income in the future. The court reasoned that becoming unexpectedly unemployed and refusing to seek employment should not be enough to invalidate a prenuptial agreement.

Experienced divorce counsel can analyze the unique facts and circumstances of a case like this to determine whether adequate basis exists to challenge a premarital agreement or on the other hand, how to defend one.

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