Lloyd v. Niceta ( 2022 )

Thomas L. Lloyd v. Anna Cristina Niceta, No. 934, September Term, 2021. Opinion by
Sharer, J. Frederick, J.
MARRIAGE AND POST-NUPTIAL AGREEMENTS – CONSIDERATION
Post-nuptial agreements are valid contracts in Maryland. A post-nuptial agreement
contains adequate consideration when the parties enter into the agreement as a means to
continue the marriage and forego a suit for divorce after adultery.
MARRIAGE AND POST-NUPTIAL AGREEMENTS – UNCONSCIONABLE
Post-nuptial agreement was not substantively unconscionable where the redistribution of
the parties’ assets did not “shock the conscience” of the court even though it created a
somewhat imbalanced distribution of assets.
MARRIAGE AND POST-NUPTIAL AGREEMENTS – “LUMP SUM” PENALTY
PROVISION FOR ADULTERY NOT AGAINST PUBLIC POLICY
Seven million dollar penalty provision in post-nuptial agreement that was triggered if
husband engaged in adultery was not against public policy in the absence of fraud,
mistake, duress, or undue influence.
MARRIAGE AND POST-NUPTIAL AGREEMENTS – “LUMP SUM” PENALTY
PROVISION FOR ADULTERY NOT UNCONSCIONABLE
Seven million dollar penalty provision in post-nuptial agreement that was triggered if
husband engaged in adultery was not unconscionable given the parties’ assets and that
husband controlled whether the provision was triggered.
Circuit Court for Montgomery County
Case No. 165376FL
REPORTED
IN THE COURT OF SPECIAL APPEALS
OF MARYLAND
No. 934
September Term, 2021
______________________________________
THOMAS L. LLOYD
v.
ANNA CRISTINA NICETA
______________________________________
Graeff,
Nazarian,
Sharer, J. Frederick
(Senior Judge, Specially Assigned),
JJ.
______________________________________
Opinion by Sharer, J.
______________________________________
Filed: October 26, 2022
Pursuant to Maryland Uniform Electronic Legal
Materials Act
(§§ 10-1601 et seq. of the State Government Article) this document is authentic.
2022-10-26 12:06-04:00
Suzanne C. Johnson, Clerk
On October 23, 2019, Anna Niceta filed a complaint for divorce in the Circuit Court
for Montgomery County, from Thomas Lloyd, her husband of 13 years. Mr. Lloyd filed a
cross-complaint. The court divided the issues presented into three areas: the validity of the
parties’ post-nuptial agreement; custody of their two children; and the divorce. After
separate trials, the court ruled that the post-nuptial agreement was valid, in part; the parties
consented to a custody order; and the court granted Ms. Niceta a divorce on the grounds of
adultery.
The primary issue of this appeal is the validity of the post-nuptial agreement. Mr.
Lloyd raises the following questions for our review, which we have slightly rephrased:
I. Did the circuit court err in enforcing the post-nuptial agreement
because it: A) lacked consideration; B) was unconscionable; or C) was
procured by undue influence and/or unfair because the parties were in
a confidential relationship?
II. Did the circuit court err in upholding the “lump sum” section of the
post-nuptial agreement because it was: A) a penalty and contrary to
public policy; B) exceeded Mr. Lloyd’s ability to pay; or C)
unconscionable?
In her cross-appeal, Ms. Niceta raises the following questions, which we have
slightly rephrased:
I. Did the circuit court err when it failed to determine Mr. Lloyd’s
income before ruling that Mr. Lloyd owed no additional duty of child
support beyond what he was already paying under the terms of the
post-nuptial agreement?
II. Did the circuit court err when it determined that a provision of Mr.
Lloyd’s trust account that barred the trustee from distributing trust
assets to discharge legal obligations prevented the court from ordering
Mr. Lloyd to pay child support that he could only pay by using the
assets of the trust?
For the reasons that follow, we shall affirm the circuit court’s judgments as to the issues
raised by appellant. As to the issues raised by appellee in her cross-appeal, we shall remand
for further proceedings.
BACKGROUND FACTS
In 2006, Mr. Lloyd and Ms. Niceta, college graduates, married at the ages of 29 and
35, respectively. They had two children: a daughter born in 2008 and a son born in 2010.
During much of their marriage, Mr. Lloyd, who held a financial planning certificate from
Georgetown University, worked as an advisor in wealth management. His annual income
varied from a low of $70,000 to a high of $100,000. Ms. Niceta was employed as an
account executive for a catering company and earned a commission that ranged between
$130,000 to $200,000 per year.
The parties established a standard of living above their earned income because of
Mr. Lloyd’s inherited money. His grandmother, Rachel “Bunny” Mellon, was a well-
known socialite and philanthropist, who in 2010, gave Mr. Lloyd one million dollars to
purchase a house for his family in Arlington, Virginia. Mrs. Mellon died in March 2014,
and Mr. Lloyd received a substantial inheritance in two installments. The first installment
occurred upon her death and totaled about $5.3 million. The second installment was
received in May 2016, when Mr. Lloyd turned 40, and totaled about $5.4 million.
On June 2, 2014, a few months after Mr. Lloyd’s grandmother died, Ms. Niceta
discovered that Mr. Lloyd was having an affair. She was “devastated,” and the parties
separated. After several months, the parties began the process of reconciling, although Ms.
2
Niceta was still unsure whether she wanted to continue the marriage. In the fall of 2014,
Ms. Niceta asked Mr. Lloyd to re-title his existing financial accounts, then titled in his
name only, as tenants by the entirety accounts. He complied with her request. After the
new year, Ms. Niceta advised Mr. Lloyd that for her to feel secure in a future together, they
should enter into a post-nuptial agreement (the “Agreement”). Ms. Niceta retained two
attorneys who began drafting the Agreement. Mr. Lloyd likewise retained two attorneys,
both members of the Virginia bar, Ms. Deborah Cochran, who specialized in estate
planning, and Ms. Julie Day, who specialized in family law. At that time, the parties were
residents of Virginia.
During Mr. Lloyd’s conversations with Ms. Day, he told her that his highest priority
was “[m]aintaining an intact family unit for his children and regaining the trust of his wife
after their marital difficulties.” He expressed his desire to have the Agreement done as
soon as possible and that he was willing to agree to any terms. He told her that Ms. Niceta
had said that reconciliation was only possible if they signed an Agreement. He also told
her that “he knows all of the finances and [Ms. Niceta] knows little.” In sharing his
financial situation, Mr. Lloyd gave his attorneys copies of his father’s trust documents that
provided that he would receive, among other things, a home on Cape Cod upon his father’s
death.
A draft Agreement circulated by Ms. Niceta’s attorneys contained a “lump sum”
clause that stated that if Mr. Lloyd engaged in inappropriate sexual behavior he would pay
to Ms. Niceta $5 million. Mr. Lloyd advised Ms. Day that he wanted to increase the “lump
sum” clause from $5 million to $7 million, as a “showing of his good faith” toward his
3
wife.1 Ms. Day explained: “He wanted more money put on it because that would make it
that much more clear that he really wouldn’t engage in those behaviors again[.] … That’s
why he wanted the money to be higher.”
The parties and their attorneys met together on two occasions to negotiate the terms
of the Agreement. Before the first meeting, Ms. Day had an hour-long telephone
conversation with Mr. Lloyd in which she shared her edits and concerns regarding the draft
the parties were working from, and he provided comments.
The first meeting of the parties and their attorneys occurred on June 16, 2015, and
lasted more than four hours, during which they reviewed the first draft of the agreement,
line by line. After the meeting, Ms. Day sent Mr. Lloyd a revised draft. In advance of their
second meeting, he provided comments to her on the revised draft. The second meeting
occurred a month after the first, during which the parties and their attorneys reviewed the
revised draft line by line. That meeting lasted more than six hours. Mr. Lloyd provided
information at that meeting that, among other things, his father’s estate was valued at about
$50 million and that he expected to receive, after taxes, about $12 million. At that time,
his father was 78, was attended to by an aide, and was in very poor health. At trial, Mr.
Lloyd admitted that both of his attorneys advised him against signing the Agreement, and
in particular, they opposed the increase in the lump sum payment from $5 million to $7
million.
1
At trial, Mr. Lloyd testified that Ms. Niceta had suggested increasing the lump sum
payment from $5 million to $7 million but had wanted him to present it to his attorney as
his idea. Ms. Niceta denied this.
4
By August 2015, Ms. Niceta and Mr. Lloyd had bought a new home in Chevy Chase,
Maryland and began living together again as a family, had enrolled the children in a new
school, were vacationing and spending time together, and were continuing the effort of
reconciliation and finalizing the post-nuptial agreement.2 To this end, Mr. Lloyd had sold
his car that he had used with his paramour; followed through with his earlier plans to get a
vasectomy; and took steps to convert to Catholicism, which was Ms. Niceta’s faith. The
parties continued meeting with various marriage counselors.
On September 18, 2015, the parties executed a 25-page “Marital Agreement”, which
resolved certain issues in the event of a separation and divorce. The Agreement began by
naming the parties and their two children. The Agreement then states:
WHEREAS, the parties do not contemplate a suit for divorce at this
time, but instead remain desirous of continuing the marriage. However, by
this Agreement the parties do resolve certain rights regarding equitable
distribution as more fully set forth herein;
WHEREAS, Husband committed adultery with [his paramour], which
was discovered by Wife on June 2, 2014. The parties acknowledge that
Husband’s adultery is in complete contravention of their marriage, and that
Wife is working on forgiving the Husband for such adultery. As more fully
set forth below, Husband affirms that he shall not have any further contact,
including but not limited to: in-person meetings, emails, text messages,
letters, and telephone calls, with [his paramour] in the future; he shall not
initiate or engage in any Inappropriate and/or Immoral Conduct as defined in
Paragraph 10(A)(3) herein with [his paramour] or any other party outside of
the marriage of the parties similar to the relationship he engaged in with [his
paramour]; and he shall not engage in intentional viewing of pornographic
or sexually explicit pictures and videos for so long as the parties remain
married;
2
Between June 2014 and September 2015, Mr. Lloyd took his daughter on a father-
daughter trip to New Orleans and took both children to New York. During the summer of
2015, they also traveled as a family to Jamaica and Cape Cod.
5
WHEREAS, whether or not the parties reconcile, each party wants to
enter into this Agreement. The parties desire to settle by agreement certain
of their rights, interests, and obligations between them and to resolve claims
or demands each might have against the other now and in the future as to
those provisions set forth below, and each party is entering this Agreement
voluntarily and by his or her own free will and choice.
WHEREAS, the parties contemplate that this Agreement will be
offered in a court of competent jurisdiction in which their rights and
obligations may be decided at a later time as a partial property settlement
agreement, in the place of any court determined resolution of the matters that
are expressly set forth in this Agreement.
(Emphasis added.) The Agreement, which has a severability clause, contained the
following terms, which we summarize:
1. In the event of divorce, the parties waive any claim to any right of
equitable distribution as to any property addressed in the Agreement;
2. If the parties divorce, Husband will convey the “marital residence” to
wife; pay off the mortgage within 60 days of a divorce order; and pay the
taxes, insurance, and repairs over $2,000 on the residence until their son
turns 22 years of age;
3. The first installment of husband’s inheritance from his grandmother shall
remain titled as tenants by the entirety during their marriage and shall be
split evenly between the parties in the event of a divorce. Husband’s
expected second inheritance installment from his grandmother shall be
placed in an account titled tenants by the entirety and in the event of
divorce the property shall be evenly split between the parties;
4. Liquid assets from any other inheritance husband receives during their
marriage shall be placed in an account titled in the names of both parties
as tenants by the entirety and in the event of divorce, the parties shall split
those assets evenly. Non-liquid assets that husband inherits during the
marriage shall remain in husband’s sole name during the marriage and
shall remain his sole property upon divorce;
5. If the parties divorce, husband may spend any subsequent inheritance at
his discretion, except on any subsequent girlfriend, wife, or child;
6. The proceeds of the sale of a particular brooch husband inherited from
his grandmother, which occurred on April 21, 2015 for $850,000, shall
6
be transferred into the children’s educational accounts titled in both
parties’ names as tenants by the entirety. In the event of divorce, the
accounts shall become the wife’s “sole and separate property[,]” but she
agrees to be bound by the terms on those accounts that the monies shall
only be used for the benefit of their children’s general welfare;
7. Husband shall maintain and continue to pay wife’s long-term health care
policy in the yearly amount of $13,739, although husband may petition
to terminate payment if he is unable to meet those obligations;
8. Husband shall maintain and continue to pay for as long as each party is
living the following life insurance policies: three on husband’s life with
wife as sole beneficiary; two on wife’s life for the sole benefit of the
children; and one on each child’s life with each parent as equal
beneficiaries.
Additionally, and of particular importance to this case, was paragraph 10, which provided:
10. LUMP SUM MONETARY AWARD.
A. This provision shall only be effective only in the limited situation
that any one of the following conditions are satisfied:
(i) If Husband is found by a preponderance of the
evidence to have committed adultery, buggery or sodomy with
any person;
(ii) If Wife proves by a preponderance of the evidence
that Husband initiated any contact, including, but not limited
to, in-person meetings, emails, text messages, correspondences
and telephone calls, with [his paramour]. However, Husband
shall be held harmless for the following, and the same shall
neither be deemed to be contact initiated by Husband nor make
this provision effective:
a. Husband responding to any contact initiated
by [his paramour] provided that his response directs [his
paramour] to stop contacting him, his family, his
colleagues, or any of his business interests.
(iii) If Husband is found by a preponderance of the
evidence to have engaged in any Inappropriate and/or Immoral
Conduct of the following with any other person, including, but
not limited to: inappropriate emails; sexting; sending
7
pornographic pictures of himself to the other person; receiving
pornographic pictures of the other person; romantically
kissing, hugging, fondling, or embracing another person;
keeping secret email, cell phone or credit card accounts; or
engaging in sexual acts with another person even if it does not
lead to intercourse.
B. If Wife proves by a preponderance of the evidence that Husband
has engaged in any of the conduct as set forth above in subparagraph 10.A,
Husband shall make a tax-free transfer to Wife of SEVEN MILLION AND
00/100 DOLLARS ($7,000,000.00) within ninety (90) days of such findings.
If the parties remain married, said transfer shall be a permanent gift between
husband and wife; if the parties divorce, this transfer shall constitute a lump
sum monetary award not subject to taxation under the terms of the Internal
Revenue Code. The transfer shall be made from Husband’s 50% share of the
Column B Assets.
The parties signed the Agreement and initialed each page.
Mr. Lloyd’s father died in March 2017.3 In October 2018, Mr. Lloyd commenced
a second affair that Ms. Niceta discovered in April 2019. The parties separated, and Ms.
Niceta subsequently filed for an absolute divorce on the grounds of adultery, asking that
the Agreement be incorporated into the divorce judgment. Mr. Lloyd filed a
countercomplaint seeking rescission of the Agreement.
3
Mr. Lloyd’s father’s assets were distributed pursuant to a trust. Under the terms
of that trust, certain real property located in Osterville, Massachusetts was distributed to
the “Descendant’s Separate Trust” for the benefit of Mr. Lloyd. After monetary gifts to
various persons, the remainder of Mr. Lloyd’s father’s trust was to be divided per stirpes
between Mr. Lloyd and his brother to their respective Descendant’s Separate Trusts. The
parties have given various values for those assets. At trial, Ms. Niceta’s counsel stated that
the value was about $26.8 million. As stated in the body of the opinion, when the parties
were negotiating the Agreement, Mr. Lloyd told Ms. Day that he expected to inherit about
$12 million from his father. It is unclear whether this amount included the value of the
house in Osterville.
8
As explained above, the evidentiary issues were separated. A three-day trial was
held in November 2020 on the validity of the Agreement. Ms. Niceta, Ms. Day, and Mr.
Lloyd testified, among others. The court delivered oral findings in January 2021, striking
those provisions restricting husband’s ability to spend his money on a future girlfriend,
wife, or child but otherwise finding the Agreement valid and enforceable. The court heard
the merits of the grounds for divorce in March 2021.4 In October 2021, the court entered
a judgment of absolute divorce that incorporated the Agreement, except for the provisions
that had been deemed invalid. Mr. Lloyd filed this timely appeal and Ms. Niceta has cross-
appealed. We shall provide additional facts where necessary.
DISCUSSION
Standard of Review
We review an action tried without a jury on both the law and the evidence. Md.
Rule 8-131(c). We will not set aside a trial court’s judgment on the evidence “unless
clearly erroneous,” giving “due regard to the opportunity of the trial court to judge the
credibility of the witnesses.” Id. We view the evidence in the light most favorable to the
party who prevailed at trial, and we resolve all evidentiary conflicts in their favor. Brault
Graham, LLC v. Law Offs. of Peter G. Angelos, P.C., 211 Md. App. 638, 660 (2013). In
contrast, we review whether “the [trial] court’s conclusions are legally correct under a de
4
The parties had agreed to a custody/parenting plan with Ms. Niceta to have primary
physical custody, the parties to have joint legal custody, and Mr. Lloyd to have access as
agreed to in the parenting plan. The parties do not appeal the Consent Custody Order.
9
novo standard of review.” Nouri v. Dadgar, 245 Md. App. 324, 343 (2020) (quotation
marks and citations omitted).
I.
Mr. Lloyd first argues that, contrary to the circuit court’s ruling, the Agreement was
void because it: 1) lacked consideration; 2) was unconscionable; or 3) was procured by
undue influence. Ms. Niceta argues that the Agreement contained adequate consideration;
was not unconscionable; nor was it procured by undue influence. We shall address each
argument in turn.
There is little law in Maryland and in our sister jurisdictions regarding the validity
of post-nuptial agreements, particularly in comparison to ante-nuptial agreements.
However, the Court of Appeals has recently, and broadly, stated, that post-nuptial
agreements, which “look a lot like pre[-]nuptial agreements[,]” are contracts between a
married couple “‘that sets forth the rights, duties and responsibilities of the parties during
and upon termination of the marriage through death or divorce.’” McGeehan v. McGeehan,
455 Md. 268, 297 (2017) (quoting Cynthia Callahan & Thomas C. Ries, Fader’s Maryland
Family Law § 14-15 (6th ed. 2016)).
In McGeehan, the Court of Appeals was asked to decide whether certain real
property came within the purview of an oral post-nuptial agreement the parties entered into
during a time of crisis in their marriage. The Court stated that in both pre-nuptial and post-
nuptial agreements the couples are “‘trying to assure that their financial situation is certain
and predictable[,]’” but in post-nuptial agreements the couples often “‘attempt to use
financial rewards and penalties to create incentives during a marriage that constrain the
10
behavior of both spouses.’” Id. at 297-98 (quoting Sean Williams, Postnuptial Agreements,
2007 Wis. L. Rev. 827, 835 (2007)). Such agreements are “‘generally held to be binding
when they are shown to be fair and regular and not unconscionable or the product of fraud,
duress, mistake or undue influence; and certainly when they have been fully executed they
will be given effect.’” Id. at 298 (quoting 5 Richard A. Lord, Williston on Contracts § 11:7
(4th ed. 2009)). With this in mind, we shall turn to the parties’ specific arguments.
A. Did the Agreement lack consideration?
In its oral opinion, the trial court observed:
In this case, Mr. Lloyd argues there was no consideration given by
Ms. Niceta. Mr. Lloyd argues that the terms of the agreement
overwhelmingly favor Ms. Niceta. On this point, he is correct but what the
evidence established is that Mr. Lloyd committed adultery which he admitted
on June 2, 2014. This established grounds for divorce which means Ms.
Niceta elected not to pursue and instead agreed to work on reconciling the
marriage. As the third whereas clause in the agreement states, quote the
parties do not contemplate a suit for divorce at this time but instead remain
desirous of continuing in the marriage. The evidence shows that she did.
She contacted a priest with whom she had confidence to help them deal with
the emotional pain she was enduring. Mr. Lloyd also interacted with the
priest and with plaintiff’s therapist. They began to spend more time together
and they traveled together. They resumed living together and purchased the
Chevy Chase house together. I recognize that these acts occurred before the
signing of the agreement but I think that’s what happens in a family situation.
Ms. Niceta agreed to continue to work on the marriage and to continue to
work towards a reconciliation. This was her promise.
If she had not, I believe the defendant would have had [a] cause of
action or breach and would have been able to seek appropriate remedies from
the court. I also note that the agreement states and I quote for and in
consideration of the mutual promises contained in this agreement and other
good and valuable consideration, the receipt of and sufficiency of which is
hereby acknowledged. So I do not find that the plaintiff’s promise to work
towards a reconciliation to be [illusory] and I find that there was
consideration.
11
Before this Court, Mr. Lloyd argues that the Agreement is not valid because it is not
supported by consideration as it contains “no meaningful act, forbearance, or promise made
by Wife[.]” He argues that the language in the Agreement that she is working on “forgiving
the Husband for such adultery” is merely an illusory promise and too indefinite to be
enforceable. He argues that the court erred in finding adequate consideration in her
decision to reconcile the marriage upon discovering his adultery because “past acts cannot
form the requisite consideration.” Lastly, he argues that her waiver of equitable
distribution of property under the Agreement in the event of divorce did not constitute
adequate consideration because the distribution of property under the Agreement was to
her benefit. Ms. Niceta responds that releasing her right to sue for divorce after the
discovery of the affair was valid consideration for the Agreement. Additionally, her
promise to work on forgiving her husband of his adultery was also valid consideration and
not an illusory promise.
“It is basic contract law that courts generally will not inquire as to the adequacy of
consideration.” Vogelhut v. Kandel, 308 Md. 183, 190 (1986). The Court of Appeals has
said that:
It is not the province of the Courts to interfere with the natural right of parties
to contract, and to exercise their own will and judgment upon the subject;
and they will have the power to estimate the value of the consideration and
the benefits to be derived from their contracts, where there is no
incompetency to contract, no fraud or surprise, and no rule of law is violated.
Id. at 191 (quotation marks and citation omitted). See also Shriver v. Druid Realty Co. of
Baltimore City, 149 Md. 385, 391 (1926) (“Parties contracting must determine for
themselves the value and benefit of the consideration[.] . . . While there must be some
12
consideration . . . it is sufficient if it be slight, or may be valuable to the party promising.”).
Moreover, “a recital of facts which may constitute consideration in an unsealed written
agreement, is prima facie evidence of those facts[,]” although the “parol evidence rule does
not prevent a rebuttal of the truth of that statement by extrinsic evidence.” Reece v. Reece,
239 Md. 649, 658 (1965).
The Agreement provides that “the parties do not contemplate a suit for divorce at
this time, but instead remain desirous of continuing the marriage” and “that Wife is
working on forgiving the Husband for such adultery.” We believe these statements met
the consideration requirement to constitute an enforceable contract.
It is well-settled that the forbearance of bringing a legal action is a form of
consideration. See Shimp v. Shimp, 287 Md. 372, 384 (1980) (“[T]he parties may agree on
the surrender or acquisition of any legal rights as consideration[.]” (quotation marks and
citation omitted)). Therefore, Ms. Niceta’s decision not to file for divorce and to remain
in the marriage following discovery of her husband’s adultery, and work on reconciling the
marriage, is adequate consideration for the Agreement. Cf. Hall v. Hall, 27 N.E.3d 281,
285-86 (Ind. Ct. App. 2015) (“[T]he extension of a marriage that would have otherwise
been dissolved but for the execution of an agreement to reconcile” is adequate
consideration to support a reconciliation agreement. (quotation marks and citation
omitted)); In re Marriage of Tabassum & Younis, 881 N.E.2d 396, 407-409 (Ill. App. Ct.
2007) (physical separation not necessary for a finding of consideration in executing a post-
nuptial agreement where the parties were undisputedly having marital difficulties when
they signed the agreement); Zagari v. Zagari, 746 N.Y.S.2d 235, 238 (N.Y. Sup. Ct. 2002)
13
(desire to continue marriage was sufficient consideration for a post-nuptial agreement); and
Gilley v. Gilley, 778 S.W.2d 862, 864 (Tenn. Ct. App. 1989) (where wife agreed not to
prosecute a divorce action against her unfaithful husband in exchange for an agreement
setting forth property distribution if the parties later divorced, wife supplied consideration,
and court upheld agreement).
We recognize that other jurisdictions are inclined to not find adequate consideration
where the parties enter into a post-nuptial agreement when they are not having marital
difficulties. In Bratton v. Bratton, 136 S.W.3d 595, 603 (Tenn. 2004), the Tennessee
Supreme Court refused to enforce a post-nuptial agreement, holding that the wife did not
give adequate consideration for the agreement even though she stated in the agreement that
she promised to remain in the marriage. The court stated that “[c]onsideration exists when
a party does something that he or she is under no legal obligation to do or refrains from
doing something which he or she has a legal right to do.” Id. at 602. The court recognized
that because each spouse has a legal right to bring an action for divorce, when one spouse
promises not to bring such an action, that spouse is presumably “refrain[ing] from doing
something which he or she has a legal right to do.” Id. Nonetheless, the court held that
Ms. Bratton’s promise to remain in the marriage was not a “meaningful act” because the
spouses were not having “marital difficulties” at the time they signed the post-nuptial
agreement. Id. at 603-04. See also Whitmore v. Whitmore, 8 A.D.3d 371, 372 (N.Y. App.
Div. 2004) (mere continuation of marriage was not adequate consideration for post-nuptial
agreement in which wife released claims on husband’s property). See also 7 Richard A.
Lord, Williston on Contracts § 16:20 (4th ed. 2010) (“[I]f there is no justification for
14
divorce or separation, an agreement to continue or resume marital relations certainly lacks
consideration[.]”). Contrast with Uniform Premarital and Marital Agreements Act
(providing that a post-nuptial agreement is enforceable without consideration).
We need not decide whether the desire to remain in a marriage without marital
difficulties is by itself sufficient consideration to uphold a post-nuptial agreement because
that is not the situation before us. Following discovery of husband’s infidelity, Ms. Niceta
promised not to file suit, to stay in the marriage, and work on forgiving her husband. We
agree with Mr. Lloyd that generally “past consideration is insufficient to support a present
promise” but her promise to not file for divorce, to stay in the marriage, and to work on
forgiving her husband is not a past promise but a continuing promise. Reece, 239 Md. at
659. Moreover, the promises were not illusory under the circumstances because there was
no allegation of bad faith regarding her promises. Therefore, under the circumstances
presented, we hold that Ms. Niceta’s promises were adequate consideration to constitute
an enforceable contract.
B. Was the Agreement unconscionable?
The trial court opined extensively on the question of unconscionability, both
procedural and substantive, in its review of applicable Maryland law, the burden of proof,
and, relative to this matter, the valuation of assets that Mr. Lloyd agreed to convey to Ms.
Niceta, including the $7 million “penalty,” and concluded that, with the exception of
restriction of certain future conduct, the Agreement was not void as unconscionable.
Mr. Lloyd argues that the Agreement is unenforceable because it was
unconscionable for two reasons: (1) it produced a gross disparity in the financial
15
circumstances of the parties and (2) placed financial obligations on him that were
impossible to perform. Ms. Niceta responds that the Agreement was not unconscionable
as it neither produced a gross financial disparity between the parties nor was impossible
for him to perform.
A contract is void if it is unconscionable, a term that encompasses both procedural
and substantive unconscionability. Freedman v. Comcast Corp., 190 Md. App. 179, 207-
08 (2010). Both aspects – procedural and substantive – “must exist for a court to decline
to enforce” a contract.5 Rankin v. Brinton Woods of Frankford, LLC, 241 Md. App. 604,
621-22 (2019) (citing Doyle v. Fin. Am., LLC, 173 Md. App. 370, 383 (2007)). Procedural
unconscionability can be found when one party lacks meaningful choice in the formation
of the contract; substantive unconscionability is found when the terms are “so one-sided as
5
We note that, relying on Li v. Lee, 210 Md. App. 73, 98-99 (2013), aff’d, 437 Md.
47 (2014), both the circuit court and Mr. Lloyd’s trial attorney seem to have been under
the impression that only one aspect of unconscionability must be present for a contract to
be found unconscionable. In Li, we acknowledged that both aspects of unconscionability
must be present to invalidate a contract. See id. at 112. Maryland law is clear that both
aspects of unconscionability must exist before a court will set aside a contract. See Walther
v. Sovereign Bank, 386 Md. 412, 426 (2005); Rankin, 241 Md. App. at 621-22; Stewart v.
Stewart, 214 Md. App. 458, 478 (2013); and Doyle, 173 Md. App. at 383.
Because the circuit court ruled that the Agreement was not substantively
unconscionable, Mr. Lloyd focuses his appeal on substantive unconscionability but hedges
his bets by arguing in a footnote in his appellate brief that “the evidence presented at trial
is more than sufficient for this Court to conclude that the Agreement is both substantively
and procedurally unconscionable.” Because we ultimately agree with the circuit court that
the Agreement was not substantively unconscionable, and because Maryland law requires
the presence of both aspects of unconscionability to find a contract unconscionable, we
need not decide whether the Agreement was also procedurally unconscionable.
16
to shock the conscience of the court.” Li, 210 Md. App. at 112 (quotation marks and
citation omitted). We have explained further:
Procedural unconscionability “concerns the process of making a
contract and includes such devices as the use of fine print and convoluted or
unclear language, as well as deficiencies in the contract formation process,
such as deception or a refusal to bargain over contract terms.” Stewart v.
Stewart, 214 Md. App. 458, 477 (2013) (internal quotations and citation
omitted).
Substantive unconscionability, on the other hand, “refers to
contractual terms that are unreasonably or grossly favorable to the more
powerful party and includes terms that attempt to alter in an impermissible
manner fundamental duties otherwise imposed by the law[.]” Stewart, 214
Md. App. at 477-78 (internal quotations and citation omitted). They are
“provisions that seek to negate the reasonable expectations of the nondrafting
party, and terms unreasonably and unexpectedly harsh . . . having nothing to
do with . . . central aspects of the transaction.” Id. at 478.
Rankin, 241 Md. App. at 622. “The burden of establishing the presence of both is on the
party challenging the … agreement.” Stewart, 214 Md. App. at 478. Unconscionability is
determined as of “the time the contract was entered.” Id. (quotation marks and citation
omitted). See also Martin v. Farber, 68 Md. App. 137, 144 (“[T]he fairness of an
agreement is to be determined as of the time it was made, not on the basis of conditions
occurring subsequently.”), cert. denied, 308 Md. 237 (1986).
Mr. Lloyd argues on appeal that the circuit court’s ruling was in error because the
court erroneously failed to attribute certain assets listed in the Agreement to Ms. Niceta.
Specifically, he asserts that the circuit court should have counted among Ms. Niceta’s
assets the Arlington house; ½ of the first installment of his grandmother’s inheritance; the
brooch proceeds; and the $7 million lump sum payment. According to Mr. Lloyd, if those
items were viewed as Ms. Niceta’s assets, the Agreement produced a “shocking” financial
17
disparity and was therefore void. Under his calculations, at the time the Agreement was
signed he would have been roughly $1.2 million in debt and Ms. Niceta would have assets
of roughly $15 million. We find no error in the circuit court’s decision not to attribute
those assets to Ms. Niceta under the Agreement. Further, because we review the concept
of “shocked conscience” under an abuse of discretion standard, we find no reason to
conclude that the trial court abused its discretion in its conclusion that its conscience was
not shocked by the somewhat imbalanced distribution of assets under the Agreement. We
explain.
Arlington Property. The Agreement provides that upon divorce, Ms. Niceta shall
receive the “Marital Residence” and then states that their marital residence is their home
in Arlington, Virginia. However, the evidence elicited at trial showed that several weeks
before signing the Agreement, the parties purchased a property (for $2.25 million) in Chevy
Chase, Maryland, with the intent that it was to become their marital home; that at the time
they signed the Agreement, the parties were temporarily living in Washington, D.C. while
the Chevy Chase house was being renovated; and that the parties sold the Arlington
property ten months after signing the Agreement. Given the facts presented, the circuit
court found that when the Agreement was signed, the parties intended the Chevy Chase
property to be their marital residence. Therefore, the circuit court ruled that the Chevy
Chase property was covered by the Agreement but not the Arlington property. As a result,
the circuit court ruled that the value of the Chevy Chase property became part of Ms.
Niceta’s assets under the Agreement.
18
Mr. Lloyd does not challenge the circuit court’s findings of fact that the parties
intended the Chevy Chase house to be their marital residence. Instead, he seemingly argues
that the Arlington property should be distributed to Ms. Niceta, in addition to the Chevy
Chase property. We agree with the circuit court that when the “Marital Residence”
provision of the Agreement is read as a whole, it was the clear intention of the parties that
Ms. Niceta would receive only “the marital residence” and there is nothing to suggest that
the parties intended for Ms. Niceta to receive more than one house in the event of divorce.
Accordingly, we find no error by the circuit court in ruling that the Chevy Chase residence
was covered by the Agreement and the Arlington residence was not.
First Installment of Inheritance. Mr. Lloyd argues that the trial court erred in not
including half of the first installment of his inheritance from his grandmother as an asset
of Ms. Niceta. He argues that in determining whether an unconscionable outcome results
in upholding the Agreement, we must consider the parties’ respective financial positions
overall, which includes assets not affected by the Agreement. We disagree.
In determining whether the Agreement was substantively unconscionable, we look
to the terms of the agreement and the assets each party is to receive under the Agreement.
See Hale v. Hale, 74 Md. App. 555, 561 (1988) (an unconscionability analysis requires
assessment of the assets passing to the parties under a separation agreement).6 At the time
6
It is argued by Ms. Niceta, citing Hale, supra, that we consider only those assets
divided pursuant to the Agreement. In contrast, Mr. Lloyd argues that the court ought to
have considered the parties’ overall financial position before and after the effective date of
the Agreement. We conclude that the parties, in negotiating the terms of the Agreement,
and in executing the Agreement, clearly took into account their respective financial
positions.
19
the Agreement was executed, the first installment of the inheritance had already been
distributed to Mr. Lloyd and deposited into the parties’ tenants by the entirety account.
Therefore, the circuit court correctly decided to not include the value of this asset as a
transfer to Ms. Niceta under the Agreement because the transfer had been completed prior
to the execution of the Agreement.
Brooch Proceeds. Mr. Lloyd argues that the circuit court erred in not including the
brooch proceeds as an asset of Ms. Niceta under the terms of the Agreement because the
asset “operates solely to benefit Wife.” We find no error. Although the proceeds of the
brooch sale were to be retitled from accounts held as tenants by the entirety into accounts
held solely in her name, under the Agreement the terms of the accounts never changed, i.e.,
the proceeds of the accounts could only be used for their children’s benefit. We agree with
the circuit court that given the terms of the accounts, this asset was properly not included
as part of Ms. Niceta’s assets under the Agreement.
$7 million lump sum. Lastly, Mr. Lloyd argues that the circuit court erred in not
including the $7 million lump sum payment (should he commit adultery or otherwise
violate his commitments under the Agreement) as an asset of Ms. Niceta. He does not
dispute that payment of the lump sum was “not a given” at the time the Agreement was
signed, but he suggests that because other conduct could trigger the payment (e.g., sexting),
the lump sum payment should have been viewed as an asset of Ms. Niceta in the circuit
court’s unconscionability analysis. Mr. Lloyd offers no rationale for this argument and we
see none. We agree with the trial court that this amount should not be included as an asset
of Ms. Niceta’s at the time the Agreement was signed because the acts prohibited in the
20
lump sum provision were prospective in nature. Unconscionability is not determined on
future facts but events that exist “at the time a contract is formed.” Li, 210 Md. App. at
101.
In sum, the circuit court found that at the time the Agreement was executed, in the
event of divorce Ms. Niceta was to receive the value of their Chevy Chase house, $2.25
million, and ½ of the second installment inheritance, $2.7 million, for a total of $4.95
million. Mr. Lloyd was to receive ½ of the second installment inheritance, $2.7 million,
and be responsible for $56,540 annually, based on expenses related to the Chevy Chase
property, Ms. Niceta’s long term care policy, and five life insurance policies. When the
Agreement was signed, Mr. Lloyd earned about $100,000 a year. The court also noted that
at the time the parties signed the Agreement, he retained his ½ share of the first installment
from his grandmother’s inheritance, worth approximately $2.6 million. Under the
circumstances, the court found that Mr. Lloyd would not be penniless as he claimed, nor
did the distribution shock the court’s conscience.7,8 As we have noted, we find no abuse
of discretion in the court’s finding.
7
Under the terms of the Agreement, any non-liquid assets Mr. Lloyd inherited
during the marriage were to be titled solely in Mr. Lloyd’s name and to remain titled in his
name alone in the event of divorce. The court did not attribute this “asset” (basically Mr.
Lloyd’s future inheritance from his father) to Mr. Lloyd in its unconscionability analysis
of the Agreement, presumably because it was unknown and prospective in nature, but the
court did include Mr. Lloyd’s future inheritance in its unconscionability analysis of the
lump sum provision.
8
The question naturally arises: when an appealing party asserts that the evidence
below ought to have shocked the conscience of the trial court, must the appellate court be
bound by the trial court’s conscience (or lack thereof) or may we substitute our collective
(continued…)
21
Mr. Lloyd also argues that the Agreement was substantively unconscionable
because the terms placed obligations on him that would have been impossible for him to
perform at the time it was signed. Because his obligations under the Agreement totaled
$56,540 annually, and he earned approximately $100,000 a year at the time the Agreement
was executed, he argues that his total obligations under the Agreement would have caused
him to “be in debt as the result of the division of assets under the Agreement,” and he
“would be incapable of supporting himself[.]” We agree with the circuit court. We fail to
see how he would have had insufficient income and assets to meet his annual $56,540
obligation to Ms. Niceta when he had $2.7 million in assets under the Agreement and
earned $100,000 per year at the time the Agreement was executed. Therefore, this
argument is without merit.
C. Was the Agreement procured by undue influence and/or unfair because
the parties were in a confidential relationship?
Mr. Lloyd argues that the circuit court erred in not rescinding the Agreement
because 1) it was procured by undue influence, and/or 2) was unfair because the parties
consciences for that of the trial court? More concisely, whose conscience must be shocked,
or not shocked?
Whether the context is substantive due process rights, damages award, or contract
law, case law states that it is the “court’s” conscience that must be shocked. E.g., Lombardi
v. Whitman, 485 F.3d 73, 85 (2d Cir. 2007) (the burden of a shock the conscience analysis
falls on the one who must make such a decision). Does this mean our conscience must be
shocked on appeal? We have not found a Maryland case that provides the answer. But,
because we review for abuse of discretion, we must determine whether the circuit court
abused its discretion in having a shocked conscience. Which, one could conclude, we must
consider our conscience as well. Interestingly, Justice Scalia in his dissent in Herrera v.
Collins, 506 U.S. 390, 428 (1993) questioned the “usefulness of ‘conscience shocking’ as
a legal test[.]”
22
were in a confidential relationship at the time the Agreement was made. Mr. Lloyd argues
that Ms. Niceta’s domination of him resulted in undue influence and, because they were in
a confidential relationship, the burden was on her to prove that the Agreement was fair in
all respects. Lastly, he argues that the circuit court failed to make any factual findings
regarding the presence or absence of either undue influence or a confidential relationship,
even though the issue was fully litigated. Ms. Niceta responds that the circuit court did
make specific findings of fact rejecting his argument that the Agreement was procured by
undue influence or that the parties were in a confidential relationship when the Agreement
was executed.
As a prerequisite to a finding of whether a contract was a product of undue influence
(or duress), it must first be determined whether a confidential relationship existed between
the parties. That is so because the burden of proof shifts depending on whether the parties
were in a confidential relationship. Blum v. Blum, 59 Md. App. 584, 595 (1984). The party
alleging undue influence (or duress) bears the burden of proof, unless the parties were in a
confidential relationship; if so, the opposing party bears the burden of proof. Cannon v.
Cannon, 384 Md. 537, 554-55 (2005).
In Cannon, the Court held that when reviewing the validity of a premarital
agreement, “a confidential relationship is presumed to exist as a matter of law,” but that
presumption “may be rebutted . . . by the party seeking enforcement of the agreement. If
the party seeking enforcement can prove that a negotiation took place between the parties—
an actual give and take occurrence, then a court properly may treat the contested agreement
as a contract between equals.” Id. at 572. See also Harbom v. Harbom, 134 Md. App. 430,
23
441 (2000) (The inequality present in a confidential relationship “may be cured by the
access to legal counsel by the party in the less advantageous bargaining position.”). In
Hale, we reviewed the validity of a separation agreement between a married couple and
stated:
“[T]he question of whether a confidential relationship exists between
husband and wife [is] a question of fact. Among the various factors to be
considered in determining whether a confidential relationship exists are the
age, mental condition, education, business experience, state of health, and
degree of dependence of the spouse in question.” Bell v. Bell, 38 Md. App.
10, 14 (1977), cert. denied, 282 Md. 729 (1978). The trial court found that
Mr. Hale was the dominant party in a confidential relationship with his wife.
In reviewing [a trial court’s decision regarding the existence of such a
relationship], “we must first assume the truth of all the evidence and of all
the favorable inferences fairly deducible therefrom tending to support the
factual conclusions reached by the [trial judge].” McClellan v. McClellan,
52 Md. App. 525, 530 (1982), cert. denied, 295 Md. 283 (1983) (citations
omitted).
Hale, 74 Md. App. at 564.
In Hale, we affirmed a trial court’s legal determination that the parties were in a
confidential relationship at the time they signed a separation agreement. There, Ms. Hale
had one year of community college education and limited business experience, and prior
to their separation, Ms. Hale “never even had her own bank account.” Id. at 564-65. In
addition, the trial court found that Ms. Hale “was not well physically at the time the
agreement was promulgated” and was under great emotional stress when she learned of her
husband’s infidelity, and after their separation, she had difficulty eating and sleeping and
developed an ulcer. Id. at 565. The trial court also concluded that Ms. Hale did not
understand the separation agreement. Id. Against this factual backdrop, we agreed with
the trial court that Ms. Hale, who had the burden of establishing a confidential relationship,
24
reasonably believed that Mr. Hale was acting in her best interests, and therefore, we held
that a confidential relationship existed. Id. at 567.
At first glance Cannon (which neither party cited when discussing whether the
parties were in a confidential relationship when they signed the Agreement) and Hale
(which Ms. Niceta did cite) seem to have contrary holdings. Nonetheless, we think Cannon
and Hale may be read congruently. Cannon occurred in the context of a premarital
agreement while Hale occurred in the context of a separation agreement.9 It is reasonable
to assume that the parties to a premarital agreement are less likely to know of each other’s
financial resources and assets to the extent that a married couple might when negotiating a
post-nuptial agreement. Hence, we apply the Hale standard to the circumstance now before
us.
Although Maryland courts “have not created a bright-line test to detect the existence
of undue influence,” Anderson v. Meadowcroft, 339 Md. 218, 229 (1995), the Restatement
(Second) of Contracts provides: “Undue influence is unfair persuasion of a party who is
under the domination of the person exercising the persuasion or who by virtue of the
relation between them is justified in assuming that that person will not act in a manner
inconsistent with [her] welfare.” Restatement (Second) of Contracts, § 177 (1981).
Additionally, Williston on Contracts describes “undue influence” as follows:
If a party in whom another reposes confidence misuses that
confidence to gain an advantage while the other has been made to feel that
the party in question will not act against its welfare, the transaction is the
9
Indeed, in Cannon, Judge Harrell recalled that, in Levy v. Sherman, 185 Md. 63,
73-74 (1945), a confidential relationship existed as a matter of law between parties in
contemplation of an antenuptial agreement where marriage was its consideration.
25
result of undue influence. The influence must be such that the victim acts in
a way contrary to its own best interest and thus in a fashion in which it would
not have operated but for the undue influence. Undue influence is equivalent
to that which constrains the will or destroys the free agency of the person and
substitutes in its place the will of another. The characteristics which play a
role in establishing undue influence include pressure “of whatever sort which
overpowers the will[.]” The pressure is applied “by a dominant subject to a
servient object.” The will of the servient person is actually the will of the
dominant party.
28 Richard A. Lord, Williston on Contracts § 71:51 (4th ed. 2020) (footnotes omitted).
In his counterclaim, Mr. Lloyd argued that the Agreement was invalid because it
was procured by duress and undue influence, and the parties were in a confidential
relationship, which resulted in an unfair Agreement.10 During closing argument, Mr.
10
Duress, like undue influence, includes lack of free will as a central component.
“In order to establish duress, there must be a wrongful act which deprives an individual of
the exercise of his free will.” Eckstein v. Eckstein, 38 Md. App. 506, 512 (1978). Quoting
from Central Bank v. Copeland, 18 Md. 305, 317-18 (1862), we stated the rule as follows
in Eckstein:
“The element of obligation upon which a contract may be enforced
springs primarily from the unrestrained mutual assent of the contracting
parties, and where the assent of one to a contract is constrained and
involuntary, he will not be held obligated or bound by it. A contract, the
execution of which is induced by fraud, is void, and a stronger character
cannot reasonably be assigned to one, the execution of which is obtained by
duress. Artifice and force differ only as modes of obtaining the assent of a
contracting party, and a contract to which one assents through imposition or
overpowering intimidation, will be declared void, on an appeal to either a
court of law or equity to enforce it. The question, whether one executes a
contract or deed with a mind and will sufficiently free to make the act
binding, is often difficult to determine, but for that purpose a court of equity,
unrestrained by the more technical rules which govern courts of law in that
respect, will consider all the circumstances from which rational inferences
may be drawn, and will refuse its aid against one who, although apparently
acting voluntarily, yet, in fact, appears to have executed a contract, with a
(continued…)
26
Lloyd’s counsel argued these concepts together, focusing on the alleged coercive control
Ms. Niceta exercised over Mr. Lloyd.
The circuit court addressed Mr. Lloyd’s confidential relationship and duress/undue
influence claim, specifically stating in its ruling that it declined to accept the testimony and
opinion of Dr. Robin Deutsch, Mr. Lloyd’s expert in clinical and forensic psychology with
a focus on intimate partner domestic violence and on families of separation and divorce.
Dr. Deutsch hypothetically opined that it would be irrational for one to enter into an
agreement like the one entered into by Mr. Lloyd, unless one was under the influence of a
coercive, controlling partner. The court declined to accept Dr. Deutsch’s opinion because
it was based only on information provided by Mr. Lloyd and she had not spoken to or
interviewed either of the parties. Additionally, although the circuit court found that Ms.
Niceta had said “ugly” and “unfortunate” things in the emails and conversations with
family and friends regarding her discovery of the first affair, the court did “not believe [that
Ms. Niceta] kept [Mr. Lloyd] from his family or berated him to the point that he was
coercively controlled into signing the [A]greement.” The circuit court also found that Mr.
Lloyd’s act of engaging with his counsel in successfully negotiating changes to the
Agreement “shows that he is an individual who was still exercising his free will.”
Under the circumstances, the circuit court clearly did not find a confidential
relationship between the parties when the Agreement was executed. Mr. Lloyd needed to
mind so subdued by harshness, cruelty, extreme distress, or apprehensions
short of legal duress, as to overpower and control the will.”
Eckstein, 38 Md. App. at 512-13.
27
show that his age, mental condition, education, business experience, state of health, and
degree of dependence on Ms. Niceta resulted in his belief that he needed to rely upon her
to act in his best interest.11 Based on the facts presented and the court’s findings, this he
failed to do. Because the parties were not in a confidential relationship when they executed
the Agreement, Mr. Lloyd bore the burden of proving that the Agreement was procured by
duress/undue influence. See Blum, 59 Md. App. at 595. Again, we perceive no error by
the circuit court in finding the facts insufficient to meet the requirements for a finding of
duress/undue influence. To the contrary, the court’s factual findings were that Mr. Lloyd
did exercise free will in the negotiation of the Agreement, and Ms. Niceta’s coercive
behaviors were insufficient to show undue influence/duress. We find no error.
II.
Mr. Lloyd next argues that the “lump sum” clause of the Agreement was void as
contrary to public policy and unconscionable. We shall again address each argument in
turn.
A. Was the lump sum provision against public policy?
Mr. Lloyd argues that we should rescind the lump sum provision of the Agreement
because it is against public policy for two reasons: 1) it is an illegal, punitive, liquidated
damages provision, and 2) it is disproportionate to any damages that might have resulted
from a breach. Ms. Niceta disagrees that the lump sum provision constitutes liquidated
11
Application of the Cannon standard would not lead us to a different conclusion.
The testimony elicited at trial showed ample evidence of extensive and thorough
negotiations between adult, educated, sophisticated, business-oriented parties, who were
represented by skilled and experienced counsel throughout.
28
damages because it was not intended to compensate her for damages she would sustain for
breach of the Agreement. She concedes that the provision is a penalty but argues that
Maryland does not ban penalties in marital contracts that are intended to discourage certain
behaviors, like the one alleged here, that may damage the marital relationship.
“Liquidated damages” are defined as a “specific sum of money . . . expressly
stipulated by the parties to a . . . contract as the amount of damages to be recovered by
either party for a breach of the agreement by the other.” Traylor v. Grafton, 273 Md. 649,
661 (1975) (quotation marks and citation omitted). Such a provision will be held to violate
public policy and found not enforceable:
“when it is intended to punish, or has the effect of punishing, a party for
breaching the contract, or when there is a large disparity between the amount
payable under the provision and the actual damages likely to be caused by a
breach, so that it in effect seeks to coerce performance of the underlying
agreement by penalizing non-performance and making a breach prohibitively
and unreasonably costly.”
Barrie Sch. v. Patch, 401 Md. 497, 510 (2007) (quoting 24 Richard A. Lord, Williston on
Contracts § 65:1, at 216-23 (4th ed. 2002)).
The circuit court found McGeehan, 455 Md. 268, pertinent and persuasive to its
reasoning regarding penalties in post-nuptial agreements, which are different in kind to
classic contractual agreements. In McGeehan, the issue before the Court of Appeals was
the validity of a post-nuptial agreement regarding various parcels of real property. The
Court stated:
“[S]imilar to an antenuptial agreement” is a postnuptial agreement
that is “a contract—in this instance between a married couple—that sets forth
the rights, duties and responsibilities of the parties during and upon
29
termination of the marriage through death or divorce.” Cynthia Callahan &
Thomas C. Ries, Fader’s Maryland Family Law § 14-15. As such:
Postnuptial agreements often look a lot like prenuptial
agreements. In both contexts, couples are trying to assure that
their financial situation is certain and predictable. . . .
Alternatively, many postnuptial agreements attempt to use
financial rewards and penalties to create incentives during a
marriage that constrain the behavior of both spouses.
Sean Williams, Postnuptial Agreements, 2007 Wis. L. Rev. 827, 835 (2007).
Williston has observed that “property settlements or other postnuptial
agreements, whether in contemplation of divorce or otherwise, are generally
held to be binding when they are shown to be fair and regular and not
unconscionable or the product of fraud, duress, mistake or undue influence;
and certainly when they have been fully executed they will be given effect.”
[5 Richard A. Lord,] Williston on Contracts § 11:7 (4th ed. [2009)].
McGeehan, 455 Md. at 297-98.
Mr. Lloyd argues that the circuit court erred in relying on McGeehan to uphold the
lump sum penalty because there should be no exception to the prohibition against penalties
in contracts. We are not persuaded. As the Court of Appeals clearly stated in McGeehan,
post-nuptial agreements designed to discourage certain behavior are not void as a matter
of public policy. The general public policy prohibition against penalties that coerce
behavior in contracts does not apply with the same rigidity in the context of post-nuptial
agreements. That is so as here, where public policy generally frowns on adultery, and post-
nuptial agreements by their very nature may be viewed as penalizing because they may
alter the financial agreement between the parties.
Mr. Lloyd also argues that the Agreement is against public policy because it was
“‘grossly excessive and out of all proportion to the damages that might reasonably have
been expected to result from such breach of the contract[.]’” (Quoting Traylor, 273 Md.
30at 662.) He argues that the language of the contract, which is so broad that it would “sweep
up a substantial amount of innocent conduct” (i.e., receiving a pornographic picture from
another person); would impose a “massive financial penalty” that would leave him with
“no assets” if he breached the provision; and would require him to stay married even if he
was the victim of physical abuse because he could not have a secret credit card to consult
a lawyer, was untenable and against public policy. The simple answer to this argument is
that the Agreement in no way required Mr. Lloyd to stay married to Ms. Niceta. He could
have ended the marriage at any time he chose by remaining separated for 12 months and
filing for divorce.
B. Was the lump sum provision unconscionable?
Mr. Lloyd argues that we should find the lump sum provision unenforceable because
it is unconscionable. He argues that it was unconscionable because he could not pay the
$7 million at the time the Agreement was entered into and because the provision created
an environment of fear and coercion in the marriage. These claims address the substantive
aspect of unconscionability.
The circuit court found that the lump sum provision was qualitatively different from
the other assets transferred under the Agreement because Mr. Lloyd alone controlled
whether it would come to pass. The court found that at the time of the Agreement, Mr.
Lloyd retained about $5.4 million under the terms of the Agreement, adding in half of the
first installment from his grandmother. The court questioned whether it was
“unconscionable [for Mr. Lloyd] to agree to risk all of your net worth, plus another 1.5
million, that you would not commit adultery in the future?” Additionally, the court noted
31
that Mr. Lloyd expected to receive $12 million from his father. Under these circumstances,
the court found that the “decision to agree to the $7 million penalty may have been
improvident, but I do not believe it rises to the level of unconscionability.” The court found
that Mr. Lloyd “took on the risk that he would not receive the inheritance from his father’s
estate, and the risk that he would not commit adultery in the future.” We agree with the
circuit court’s assessment. Because Mr. Lloyd alone controlled whether this provision was
triggered, based on his assessment of his finances, we agree that this provision was not
unconscionable.
He argues that the lump sum provision created an environment of fear and coercion
in the marriage that was unconscionable. While such a provision might create fear, it could
as well create stability and peace in a marriage because the consequences of various actions
in a marriage are explicitly spelled out. Mr. Lloyd alone was the trigger of the penalty, and
the circuit court found that he had acted with free will in the negotiation of the Agreement
and thereafter. We agree with the trial court that the lump sum provision is not
unconscionable.
Ms. Niceta’s Cross-claims
Ms. Niceta argues that the circuit court erred when it declined to order Mr. Lloyd to
pay child support without first determining his actual income. She also argues that the
circuit court erred when it failed to determine whether a trust provision prohibiting
distributions to discharge Mr. Lloyd’s legal obligations precluded the court from awarding
child support that he practically could only pay from distributions to him from his deceased
father’s trust.
32
In its child support analysis, the circuit court ruled that the children benefitted
financially from the financial distribution under the Agreement, particularly the provision
giving the Chevy Chase home to Ms. Niceta and requiring Mr. Lloyd to pay for its upkeep,
property taxes, and insurance until their youngest son reaches the age of 22. The court
noted that Mr. Lloyd was also paying for the children’s health insurance. The court stated
that if the parties decide that the children will attend private school or should the children
have “any extraordinary medical expense[s,]” those expenses shall be divided equally.
As the court, in rendering its oral opinion, began to address Ms. Niceta’s child
support argument, i.e., that the court determine an amount of child support that could be
applied against the spendthrift trust to which Mr. Lloyd is the beneficiary, the court was
interrupted and never returned to this issue. The court did opine: “[G]iven all of those
findings I’m making with regard to the financial benefits that the defendant is providing
for the children, that it would not be appropriate to award any additional child support.”
Likewise, the court did not consider and adhere to the child support guidelines in
reaching its conclusion, as the statute requires. See Md. Code Ann., Family Law, § 12-
202(a)(1) (stating that “in any proceeding to establish or modify child support … the court
shall use the child support guidelines set forth in this subtitle”). Because child support was
not fully briefed, argued, or decided by the trial court, we shall remand the child support
issues raised in Ms. Niceta’s cross-appeal to the circuit court for further appropriate
hearing. Cf. Ley v. Forman, 144 Md. App. 658, 665-70 (2002) (remanding to the trial court
to make specific findings of fact regarding parents’ income as required by the child support
33
guidelines); Tannehill v. Tannehill, 88 Md. App. 4, 15 (1991) (remanding to the trial court
where it departed from child support guidelines but failed to make requisite findings).
JUDGMENT OF THE CIRCUIT
COURT FOR MONTGOMERY
COUNTY AS TO ISSUES RAISED
BY APPELLANT AFFIRMED.
MATTERS RELATING TO CHILD
SUPPORT IN APPELLEE’S
CROSS-APPEAL ARE REMANDED
TO THE CIRCUIT FOR FURTHER
PROCEEDINGS.
COSTS TO BE PAID 2/3 BY
APPELLANT AND 1/3 BY
APPELLEE/CROSS-APPELLANT.
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