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Grounds For Invalidating A Separation Agreement

[A] Introduction

In order that a separation agreement between a husband and wife may be upheld as valid and enforceable, it must have been entered into freely, fairly, and voluntarily, and be free from coercion, duress, or undue influence. A separation agreement that is a product of coercion, duress, or undue influence can be set aside. Duress, coercion, and undue influence are discussed below.

[B] Duress–Defined

Duress is defined as that degree of constraint or danger, either actually inflicted or threatened and impending, which is sufficient in severity or in apprehension to overcome the mind and will of a person of ordinary firmness. The requirements of common-law “duress” have been enlarged to include any wrongful acts that compel a person, such as a grantor of a deed, to manifest apparent assent to a transaction without volition or cause such fear as to preclude him from exercising free will and judgment in entering into a transaction.

It may be manifested by threats or by the exhibition of force which apparently cannot be resisted.

The Restatement of Contracts § 492 has defined duress as “(a) any wrongful act of one person that compels a manifestation of apparent assent by another to a transaction without his volition, or (b) any wrongful threat of one person by words or other conduct that induces another to enter into a transaction under the influence of such fear as precludes him from exercising free will and judgment, if the threat was intended or should reasonably have been expected to operate as an inducement.”

Duress that will provide grounds for avoiding such an agreement is a condition of mind produced by improper, external pressure or influence that practically destroys the free agency of a party and causes him or her to make a contract not of his or her own volition. Duress may take the form of unlawfully inducing one to make a contract or to perform some other act against his own free will. Therefore, “[t]o set aside an agreement on the ground that it was the product of . . . duress, the party making the claim must make a convincing showing that the agreement was coerced by means of a wrongful threat such that the exercise of free will was precluded.”

[C] –Proof

Two factors must be proven to establish “duress” to set aside a prenuptial agreement:

(a) that the act sought to be set aside was effected involuntarily and thus not as an exercise of free choice or will and

(b) that this condition of mind was caused by some improper and coercive conduct of the opposite side.

Threats of violence can be held to constitute duress in order to set aside a separation agreement. Repeated harassment by a spouse seeking the other spouse to sign a separation agreement has been found by the courts to constitute duress.

A threat to institute criminal prosecution can amount to duress where there is no question as to guilt. Moreover, for purposes of duress, a plaintiff must demonstrate that threats of an unlawful act compelled his or her performance of an act which he or she had the legal right to abstain from performing; a mere threat to do that which one has the legal right to do does not constitute duress.

However, where the pleadings do not establish that plaintiff’s threats of prosecution on the alleged assault charge were “made with the corrupt intent to coerce a transaction grossly unfair to [defendant] and not related to the subject of such proceedings,” the court may not find duress based on the threat of criminal prosecution. Moreover, where the party fails to sign the agreement until two months after the threat was made, a court will not find that a separation agreement was made under duress.

Threats of personal embarrassment that do not rise above annoyance and vexation do not constitute duress.

In Casto v. Casto, the court determined that a separation agreement was properly invalidated by the trial court based on the determination that the husband’s conduct caused the wife to involuntarily enter into the agreement. In this case, the husband had refused to give the wife a financial statement regarding his assets, and had threatened to blow up the house and throw Clorox all over her clothes if she did not find an attorney who would let her sign the proposed separation. The husband, in a dissolution proceeding, petitioned for review of the trial court’s determination to set aside a property settlement agreement. The Florida Supreme Court held that competency of counsel is not a ground to vacate postnuptial agreements.

COMMENT: If the complaint alleges facts sufficient to raise an issue of fact as to whether “duress” occurred at the time the separation agreement was signed, the trial court must conduct an evidentiary hearing to determine if duress had, in fact, occurred during the time the separation was signed.

[D] Coercion–Defined

Coercion has been defined as “the imposition, oppression, undue influence, or . . . the taking of undue advantage of the stress of another, whereby that person is deprived of the exercise of her free will.” Additionally, it has been defined as “compelling by force or arms or threat.”Alternatively, “[t]o force to act or think in a given manner; to compel by pressure or threat 2. to dominate, restrain, or control forcibly 3. To actualize by force.” The person asserting coercion bears the burden of proving it by clear and convincing evidence.

[E] –Distinguished from Duress

“Coercion” is often treated as a synonym of “duress.” In some decisions, however, a technical distinction has been made, and “coercion” has been used to indicate one of the elements of duress, namely, the pressure applied to the victim, consisting of the wrongful conduct, act, or threat involved.

For example, in Gribbin v. Gribbin, 499 So. 2d 858 (Fla. Dist. Ct. App. 4th Dist. 1986), the Florida Appeals Court examined the difference between duress and coercion, stating that duress usually connotes some degree of force or threat of force, but duress has also been found when the conduct of one person induces another to enter into a contract against his own volition or judgment, generally out of fear, but also in some cases because of extreme persuasion or pressure of circumstances.

OBSERVATION: The essential characteristic of coercion which emerges from these definitions is that force, threat of force, strong persuasion or domination by another, necessitous circumstances, or some combination of those, has overcome the mind or volition of the defendant so that he acted other than he ordinarily would have acted in the absence of those influences.

[F] –Proof

There is no formula for determining whether the actions and behavior of one spouse in the circumstances surrounding the execution of a separation agreement will be held to constitute duress. Earlier authorities applied an objective test and held that duress existed where the pressure would have been sufficient to overcome the will of a person of ordinary firmness. In the modern view, duress may be found where the wrongful conduct in fact overcomes the mind and will of the person in question. Thus, each case is considered separately on its own facts, and the result depends on the condition and circumstances of the person to whom the pressure is applied.

Threatening or coercive statements made by one spouse may generally be introduced by the testimony of the other spouse or third parties who were present at the time. As such testimony is offered solely to prove the fact that threats were made, it is not objectionable as hearsay. The conversations, acts, and declarations of the spouses prior to, during, and after the execution of a separation agreement generally form the bulk of the evidence offered to prove the exercise of duress by one spouse on the other. The state of mind of the victim of duress at the time of execution of the separation agreement is at the heart of the inquiry, and generally any facts and circumstances, and inferences properly drawn therefrom, which tend to show such state of mind will be admitted into evidence.

Anxiety inherent in making a choice between the settlement of a case rather than accepting uncertainty of trial does not, by itself, constitute “coercion.” A threat of exposure is insufficient to show coercion when it is proven that the party about whom the threat of exposure is directed is generally open about the subject matter with others.

However, a threat to blackmail a spouse to sign a separation agreement is sufficient to set aside the agreement. In one unusual case, the New York Supreme Court Appellate Division held that a separation agreement that waived any and all rights to equitable distribution, thereby relinquishing any share in the husband’s substantial assets, and the wife’s receipt of a meager amount of maintenance was conditioned upon her being employed and simultaneously taking at least six college-level credits was void ab initio on the grounds of coercion. In this case, the husband, an attorney, and his spouse entered into a separation agreement. The husband sought a divorce and the wife sought to have the separation agreement set aside. The trial court set aside the agreement and the husband appealed.

The New York Appellate Division stated that the agreement is “patently unconscionable.” Specifically, the court stated that the defendant’s wife, who had been married to the plaintiff for 22 years at the time she signed the agreement, waived any and all rights that she might have with respect to equitable distribution, thereby relinquishing any share in the husband’s assets, which are conservatively estimated as exceeding $2 million. Moreover, the wife’s receipt of maintenance was conditioned on her being employed and simultaneously taking at least six college-level credits, and further limited the plaintiff’s obligations by providing that, even if those stringent requirements were met, he would only have to pay the difference between the defendant’s other income and the sum of $15,000 per year. Additionally, the provision requiring the wife to transfer her share of the jointly held marital home to the husband and granting the husband “an irrevocable Power of Attorney,” empowering him to sign the defendant’s name to any “documents, checks, deeds, leases, [and] instruments . . . required to effectuate the intent expressed . . . herein . . . that theWife shall return to the Husband any assets held by her and shall be entitled to retain only those [personal] items set forth [in the agreement].” After the agreement was signed, the husband induced the wife to cosign a loan agreement for a mortgage in the amount of $85,000, on a second house purchased by him. He thereafter kept for himself the entire proceeds of this transaction.

Moreover, the court noted that the husband’s testimony indicates a fatal lack of disclosure concerning his financial affairs. Moreover, the record is replete with evidence of the defendant’s diminished capacity due to her periods of dependence upon valium and alcohol. Consequently, the Appellate Division stated that the agreement is so manifestly unfair, and the apparent product of coercion and overreaching on the part of the husband, that it was properly set aside and concluded that the separation agreement was void ab initio, and that it may not serve as the predicate for a conversion divorce. Consequently, the Appellate Division affirmed the order of the trial court.

[G] Undue Influence–Defined

Undue influence has been defined as the exercise of sufficient control over the person, the validity of whose act is brought into question, to destroy that person’s free agency and constrain him or her to do something he or she would not have done if that control had not been exercised.47 Undue influence has been defined as “any improper or wrongful constraint, machination, or urgency of persuasion whereby the will of a person is overpowered and he is induced to do or forebear an act which he would not do or would do if left to act freely.” To be “undue” the influence must be such as to deprive the party of his free agency by substituting for his will that of another.

It has also been described as a form of influence that would destroy the free agency of the mind and cause people to act against their will. Some states have defined undue influence as any improper urgency of persuasion whereby the will of a person is overpowered and he is induced to do an act which he would not do if left to act freely.

Some courts have defined undue influence as “manifest irresistible coercion” that deprives a person of volition to dispose of property as he desired. Undue influence is the “fraudulent influence over the mind and will of another to the extent that the professed action is not freely done but is in truth the act of the one who procures the result.”

COMMENT: To invoke undue influence as a means of voiding an executed document, an individual must establish that he or she had no free will when they signed the document in question.51 In determining whether undue influence has been exerted, courts will closely scrutinize confidential relationships or facts which show that defendant created the relationship of dominance over the plaintiff; however, not all influence can be said to be undue since a party is not prohibited from exercising proper influence to obtain a benefit to himself. Ordinarily, a presumption of undue influence arises where a fiduciary relationship is shown to exist.

[H] –Distinguished from Duress

Undue influence has been described as a species of duress. Undue influence is somewhat difficult to distinguish from duress and is no more precisely defined by the courts. Some courts have stated that duress and undue influence are “related wrongs” and, “to some degree, overlap.” They are, however, not synonymous. Proof of facts sufficient to show one does not necessarily constitute proof of either of the other two.

Fraud rests upon deception by misrepresentation or concealment. Duress is the result of coercion. It may exist even though the victim is fully aware of all facts material to his or her decision. Undue influence may exist where there is no misrepresentation or concealment of a fact and the pressure applied to procure the victim’s ostensible consent to the transaction falls short of duress.”

The end result of each form of pressure is the same, that is, to overcome the free will of another person. However, in duress, the immediate effect of the wrongful act employed is to create fear in the victim. In contrast, the foremost element of undue influence is the reliance of the victim on the persuader, usually stemming from a certain relationship or position of dependence, such as guardian ward, trustee-beneficiary, or husband-wife.

One court has stated that equity raises a presumption against the validity of a transaction by which the superior obtains a possible benefit at the expense of the inferior, and casts upon him the burden of showing affirmatively his compliance with all equitable requisites and that the presumption is triggered by the marital relationship which is seen as a confidential one involving trust concepts.

Thus, the burden is on the dominant party to the marriage to establish that a separation agreement is fair and equitable and was entered into knowingly, without fraud, force, or coercion.

[I] –Proof

As stated earlier, the elements of undue influence: “(1) a susceptible party; (2) another’s opportunity to influence the susceptible party; (3) the actual or attempted imposition of improper influence; and (4) a result showing the effect of the improper influence.”

To set aside a transfer on the grounds of undue influence, the undue influence must be present at the time the transfer is made. Relevant factors in determining if the victim was subject to undue influence and whether that person’s will was actually overcome include “the age, physical and mental condition of the victim, whether the victim had independent advice, whether the transaction was fair, whether there was independent consideration for the transaction, the relationship with the victim and alleged perpetrator, the value of the item transferred compared with the total wealth of the victim, whether the perpetrator actively sought the transfer and whether the victim was in distress or in an emergency situation.”

OBSERVATION: Among the many factors that may be considered when a claim of undue influence is raised are the age and mental condition of the victim, whether the victim had the benefit of independent or disinterested advice concerning the transaction in question, the adequacy of consideration for any contract entered into, and the nature of the relationship between the parties.

In Terio v. Terio, the New York Appeals Department held that a separation agreement was a product of undue influence and set it aside. The plaintiff, the wife, commenced an action for divorce against the defendant in June of 1986. During the pendency of the divorce action, the parties entered into a separation agreement prepared by the defendant’s attorney. The plaintiff thereafter sought to set aside the financial provisions of the agreement on the grounds that they treat her unfairly and are the product of the defendant’s overreaching and undue influence. The New York Supreme Court, after an evidentiary hearing, set aside the financial provisions of the separation agreement, holding that the agreement did not equitably divide the marital property, or make adequate provisions for maintenance, and was unreasonable in light of the length of the marriage. The husband appealed.

On appeal, the New York Appellate Division held that the separation agreement was a product of undue influence, and therefore affirmed the Supreme Court’s ruling. In making this determination, the Appellate Division held that the separation agreements which are regular on their face are binding on the parties, unless and until they are set aside. Furthermore, where there has been full disclosure between the parties and there has been no inequitable conduct, courts should not intrude to redesign a bargain arrived at by the parties. In order to warrant equity’s intervention, the court stated, a plaintiff need not show actual fraud but must establish that the agreement is unfair owing to the defendant’s overreaching.

In applying the law to the facts, the court maintained that the evidence in the record demonstrates that the plaintiff suffered from mental depression for several years, requiring professional counseling, and that she was distraught as a result of her marital difficulties. She does not deny examining the agreement but claims that she ignored the advice of her counsel when she signed it. The court found it significant that the parties were married for over 35 years. The plaintiff indicated that she had “always listened to her husband . . . he was always the boss.” The plaintiff claimed that the defendant continuously pressured, badgered, and verbally harassed her until she finally acquiesced in his demands that she sign the agreement.

Further, the terms of the agreement gave rise to an inference of overreaching since they were manifestly unfair to the plaintiff and were unfair when the agreement was executed. Thus, the Appellate Division concluded that the separation agreement was procured through undue influence and therefore should be set aside thus affirming the order of the Supreme Court.

[J] Effect of Duress, Coercion, or Undue Influence on Separation Agreement

To be valid, binding, and enforceable, a separation agreement, like any other contract, must be entered into voluntarily.

Where it can be proven that one spouse resorted to the exercise of duress in order to force the other spouse to execute a separation agreement, the agreement is voidable at the election of the victim.

Duress, coercion, and undue influence may also render a transaction absolutely void or void ab initio,but some courts hold a separation agreement based on duress, coercion, and undue influence as merely voidable.

By Adam Hunt

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