Sharon Blanchard v. Ronald Blanchard , 148 A.3d 277 ( 2016 )

MAINE SUPREME JUDICIAL COURT Reporter of Decisions
Decision: 2016 ME 140 Docket: Cum-15-504
Argued: May 3, 2016
Decided: September 6, 2016
Panel: SAUFLEY, C.J., and ALEXANDER, MEAD, GORMAN, JABAR, HJELM, and HUMPHREY, JJ.
SHARON BLANCHARD
v.
RONALD BLANCHARD
SAUFLEY, C.J.
[¶1] Sharon Blanchard appeals from a judgment of the District Court
(Portland, Moskowitz, J.) finding that a valid premarital agreement had been
executed by the parties before their marriage and entering a judgment of
divorce. We affirm the judgment.
I. BACKGROUND
[¶2] On June 22, 1986, four days after executing a premarital
agreement, Sharon and Ronald Blanchard were married. The parties had two
children, both of whom are now adults. Twenty-six years after the marriage,
in December 2012, Sharon filed for divorce. Ronald responded, asserting that
the parties had entered into a valid premarital agreement that governed the
equitable distribution of property and the award of spousal support. Highly
2
contentious proceedings continued for over two and a half years before a final
hearing was held. During this time, prejudgment orders requiring Ronald to
pay interim spousal support were entered. Ronald paid some of the ordered
interim spousal support but did not fully comply with the orders.
[¶3] On August 24, 2015, the court held a bifurcated trial on (1) the
validity of the premarital agreement and (2) the divorce complaint. After trial,
the court found the following facts, which are supported by competent
evidence in the record. Prior to their marriage in 1986, Sharon and Ronald
requested that an attorney draft a premarital agreement in exchange for
consideration. That attorney had previously represented Ronald in other
contexts, and he made it clear to Sharon that he was representing Ronald only.
At the time, Sharon and Ronald had been living together for about four years
and were expecting a child.
[¶4] The attorney provided a financial disclosure form to each of the
parties and requested that they provide full and complete information about
their financial circumstances. The parties provided completed forms to the
attorney, and the attorney began drafting a premarital agreement. The parties
were then furnished with a copy of the proposed agreement.
3
[¶5] Approximately six weeks after a draft of the agreement was
provided to the parties, before the final agreement was executed, the attorney
asked Sharon if she had consulted with independent counsel regarding the
terms of the proposed agreement. She stated that she had done so. She also
confirmed that the final agreement contained certain revisions to the original
draft that she had specifically requested.
[¶6] During the first part of the trial regarding the validity of the
premarital agreement, the parties testified that at the time they signed the
premarital agreement, Ronald’s net worth was substantially larger than
Sharon’s, but Sharon was self-sufficient and supported herself. The court
entered in evidence the premarital agreement signed by the parties.
[¶7] That agreement, executed on June 18, 1986, was written before the
enactment of the Uniform Premarital Agreement Act, 19-A M.R.S. §§ 601-611
(2015), and it does not have the clarity of more recently drafted instruments.
It states that Ronald desires to make provision for Sharon “in release of and in
full satisfaction of all rights” which Sharon might have “by reason of the
marriage, in the property which Ronald F. Blanchard now has or may
hereafter acquire.” It further states that Sharon desires to accept the
provision “in lieu of all rights which she would otherwise acquire, by reason of
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the marriage, in the property . . . of Ronald F. Blanchard.” In the event of
divorce after a marriage lasting more than five years, the premarital
agreement provides the following.1 Ronald will repay Sharon “the principal
amount of $2,100 plus 12% interest thereon computed from May 1, 1984,”
which represents money that Sharon loaned to Ronald. In addition,
temporary spousal support “shall be paid” to Sharon. Furnishings are to be
divided equally and each party is to keep his/her personal effects. Sharon has
the right to select any automobile owned by the parties, but if it is subject to
debt, Sharon alone will be responsible for the debt.
[¶8] The agreement also states,
Sharon Elaine Turgeon acknowledges that the present
approximate net worth of Ronald F. Blanchard has been fully
disclosed to her and she understands that such net worth is in
excess of $750,000, that she has given consideration to this fact
and others, and that she has had the advice of independent
accounting counsel and independent legal counsel, and that
having had such independent counsel, she chooses to enter into
this Agreement freely and with full understanding of its
provisions.
Attached to the agreement as appendices are complete lists of Sharon’s and
Ronald’s assets held at the time of the agreement.
1 An additional provision, not applicable here, addressed the parties’ rights in the event that the
marriage did not last for five years.
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[¶9] The court found that, when she executed the agreement, Sharon
had a “full understanding of the parties’ respective financial circumstances,”
had consulted with independent counsel, and had “more than a fair
opportunity to fully understand and consider any marital rights she would
gain” in Ronald’s assets and how the agreement would modify those rights.
Thus, the court gave full force and effect to the premarital agreement, and
proceeded to try the other issues raised by the parties.
[¶10] Regarding the spousal support and equitable distribution of
property, Sharon sought repayment of a promissory note that Ronald had
signed promising to pay back money that Sharon had loaned him in 2010.
Sharon also sought payment of a spousal support arrearage, and Ronald
admitted that he had not yet paid Sharon approximately $20,000 of
court-ordered interim support.
[¶11] The court noted that the premarital agreement had not been
amended to include the 2010 loan that the parties testified to, and concluded
that the loan would therefore not be enforced through the present action. The
court concluded that Ronald was required to pay Sharon $2,100 in satisfaction
of the loan mentioned in the agreement plus 12% annual interest2 and that
2 We reject Sharon’s argument that the court should have determined the amount due on the
$2,100 loan using compound interest instead of noncompounding interest when the agreement was
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the agreement permitted Ronald to credit any temporary spousal support
already paid toward that obligation.3 Thus, the court concluded that Ronald
had fulfilled all of his obligations under the agreement, and it granted the
parties a divorce in a judgment in which the terms did not require either party
to pay support or further cash distribution to the other.4 The judgment did
not explicitly address the spousal support arrearage that Ronald had not paid
to Sharon. Sharon appeals to us. See 14 M.R.S. § 1901(1) (2015); M.R.
App. P. 2.
II. DISCUSSION
A. The Premarital Agreement
[¶12] Sharon argues that the court erred in failing to find that the
premarital agreement is invalid and unconscionable. We review the court’s
factual findings for clear error. In re Heather G., 2002 ME 151, ¶ 12, 805 A.2d
silent as to the type of interest to be used. See Premier Capital, Inc. v. Doucette, 2002 ME 83, ¶ 17,
797 A.2d 32 (“As a general rule, compound interest cannot be recovered where the parties do not
expressly promise to pay it.” (quotation marks omitted)).
3 Sharon argues that pursuant to the agreement, only support paid within ten days of service of
process of the complaint, rather than all interim support paid by Ronald, should have been credited
toward Ronald’s ultimate obligation, and thus Ronald had not fulfilled his obligations under the
agreement. Because Sharon did not present that argument to the trial court, it has not been
preserved, and we do not address the argument further. See Morey v. Stratton, 2000 ME 147, ¶ 9,
756 A.2d 496.
4
The judgment did order Ronald to pay Sharon outstanding attorney fees that had been
previously awarded in connection with a motion for contempt.
7
249. We review “the legal determination of the [premarital] agreement’s
validity and enforceability de novo.” Hoag v. Dick, 2002 ME 92, ¶ 7, 799 A.2d
391. We review de novo whether, based on the facts found by the trial court,
an agreement is unconscionable. See Bedrick v. Bedrick, 17 A.3d 17, 29 (Conn.
2011); cf. Estate of Martin, 2008 ME 7, ¶ 18, 938 A.2d 812 (de novo standard
of review pursuant to the now existing Uniform Premarital Agreement Act,
19-A M.R.S. §§ 601-611).
[¶13] The Uniform Premarital Agreement Act, 19-A M.R.S. §§ 601-611,
was first passed in 1987, a year after the parties signed the agreement at issue
here; thus, we analyze the validity of the agreement under common law
principles as they existed in 1986. See Hoag, 2002 ME 92, ¶¶ 9-10, 799 A.2d
391. For a premarital agreement to be valid, “there shall be no fraud or
imposition practiced,” “full and complete disclosure shall be made,” and
adequate provisions shall be made for each spouse. Rolfe v. Rolfe, 125 Me. 82,
83, 130 A. 877 (1925). The burden of proof begins with the party seeking to
invalidate the agreement. See id. When the party seeking to invalidate the
agreement establishes that the agreement’s provisions for [one] spouse are
“clearly disproportionate to the [other spouse’s] wealth,” a presumption of
fraud arises. Wilson v. Wilson, 157 Me. 119, 131, 170 A.2d 679 (1961). Once a
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presumption of fraud is established, the burden of proof shifts to the party
seeking to enforce the agreement to rebut the presumption of fraud by
proving “fairness, notice, understanding and adequacy.” Rolfe, 125 Me. at 83,
130 A. 877; see also Estate of Martin, 2008 ME 7, ¶¶ 10-11, 938 A.2d 812 (discussing the pre-UPAA “common law presumption of fraud”).
[¶14] The court concluded that the agreement’s provisions for Sharon
were clearly disproportionate to Ronald’s wealth. Ronald does not dispute
this conclusion. Therefore, a rebuttable presumption of fraud arose, and the
burden of proof shifted to Ronald to rebut that presumption. The court then
went on to conclude that Ronald had successfully rebutted this presumption
of fraud.
[¶15] Sharon argues that the court failed to make the necessary
findings to allow it to conclude that the presumption of fraud had been
rebutted. In its judgment, the court did not explicitly find that the agreement
was “fair” or “adequate.” Because no motion for additional findings was filed,
we assume the court found facts to support these implied findings. See
Coppola v. Coppola, 2007 ME 147, ¶ 25, 938 A.2d 786 (“[I]n the absence of a
motion for further findings, we must assume that there was competent
9
evidence in the record, which the court considered, to support the . . .
judgment.”); M.R. Civ. P. 52(b).
[¶16] The court found that after living together for four years, the
parties requested that an attorney draft a premarital agreement. Both parties
fully disclosed their debts and assets to each other. A copy of the agreement
was available to the parties at least six weeks before the agreement was
executed. During this time, Sharon asked that specific changes to the
agreement be made. Before signing the agreement, Sharon stated that she had
met with independent counsel. These findings are supported by competent
evidence in the record and support the required determination that Sharon
had notice of and understood the agreement.
[¶17] In addition, the parties presented testimony and evidence to
support the finding that at the time the agreement was signed, Sharon was
employed and was earning a sufficient income to support herself. Ronald had
been married and divorced previously. He did not want to marry again and
agreed to do so only upon reaching the agreement at issue. The agreement
provided for Sharon in a limited fashion. Upon divorce after more than five
years of marriage, the agreement provided Sharon with repayment of a debt
with 12% interest, unspecified temporary spousal support, all of her own
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“personal effects” (including substantial amounts of jewelry), and a vehicle.
These facts support the implied findings that the agreement was fair and
adequate. Thus, the court did not err in concluding that the premarital
agreement was valid.
[¶18] Even when a premarital agreement is otherwise valid, however, a
premarital agreement, “under all of the circumstances existing in a particular
case, may be so unconscionable that [we] will not aid in its enforcement even
if the prospective [spouse] had full knowledge of the property affairs of the
other party.” Wilson, 157 Me. at 132, 170 A.2d 679. The party seeking to
invalidate the contract on the ground of unconscionability—in this case,
Sharon—bears the burden of timely raising the issue in the trial court
proceedings and demonstrating that the contract in question is
unconscionable. E.H. Ashley & Co. v. Wells Fargo Alarm Servs., 907 F.2d 1274,
1278 (1st Cir. 1990). When the party with the burden of proof appeals from a
judgment, “the appellant must show that the evidence compels a contrary
finding.” Young v. Lagasse, 2016 ME 96, ¶ 8, --- A.3d ---.
[¶19] Unconscionability can be considered through two lenses:
procedural and substantive. See Barrett v. McDonald Invs., Inc., 2005 ME 43,
¶¶ 32-33, 870 A.2d 146 (Alexander, J., concurring) (discussing the
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unconscionability of adhesion contracts requiring arbitration of disputes).
Procedural unconscionability is analyzed based on the circumstances that
existed at the time the contract was adopted, Jay Cashman, Inc. v. Portland Pipe
Line Corp., 559 F. Supp. 2d 85, 108 (D. Me. 2008), and generally refers to the
exploitation of unequal bargaining power between the parties, see Am. Airlines
v. Wolens, 513 U.S. 219, 249 (1995) (“[P]rocedural unconscionability is
broadly conceived to encompass not only the employment of sharp practices
and the use of fine print and convoluted language, but a lack of understanding
and an inequality of bargaining power.” (quotation marks omitted)); Barrett,
2005 ME 43, ¶ 32, 870 A.2d 146 (Alexander, J., concurring) (“[T]he defense of
unconscionability may be asserted to a contract of adhesion ‘exacted by the
overreaching of a party.’”). “Substantive unconscionability or unfairness
focuses on the terms of the agreement and whether those terms are so
one-sided as to shock the conscience.” Barrett, 2005 ME 43, ¶ 36, 870 A.2d
146 (Alexander, J., concurring) (quotation marks omitted); see Bither v.
Packard, 115 Me. 306, 314, 98 A. 929 (1916).
[¶20] Here, the evidence presented to the court did not compel findings
contrary to those reached by the court regarding unconscionability.
Concerning the circumstances of the adoption of the agreement, the parties
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testified that at the time the agreement was signed, both parties were
independent and self-sufficient. Both parties wished to enter into the
premarital agreement. As the court found, after Ronald’s attorney drafted the
agreement, Sharon had six weeks to review the agreement before it was
executed. During that time, Sharon insisted that it be amended in certain
specific and substantive ways. Sharon confirmed that the changes she
requested had been incorporated in the agreement and stated that she had
consulted with independent counsel before signing the agreement. With
respect to the issue of substantive unconscionability, the final terms of the
agreement were not so one-sided as to shock the conscience. Based on the
evidence presented, the court was not compelled to make contrary factual
findings. The facts that the court found support the conclusion that the
agreement was not unconscionable.
B. 2010 Loan
[¶21] Sharon argues that the court should have ordered Ronald to
repay a 2010 business loan even though that loan was not included in the
premarital agreement because the divorce statute requires the court to set
apart each spouse’s property and divide the marital property. See 19-A M.R.S.
§ 953 (2015).
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[¶22] “[P]eople may execute enforceable premarital agreements that
apply in the event of a divorce.” Hoag, 2002 ME 92, ¶ 15, 799 A.2d 391. Here,
the premarital agreement unambiguously states that it was executed in full
release of any and all marital rights; thus, all statutory rights were released.
The premarital agreement itself and the subsequently enacted UPAA allow
individuals to amend a premarital agreement at any time. See 19-A M.R.S.
§ 607. Ronald and Sharon did not amend the premarital agreement. Under
the facts of this case, the court did not err or abuse its discretion in declining
to enforce the 2010 loan as part of the divorce proceeding. Sharon can pursue
civil remedies if she seeks repayment of the loan.
C. Unpaid Interim Support
[¶23] Sharon now argues that the court also erred in declining to award
Sharon the unpaid spousal support that Ronald identified during his own
testimony. She asks us to remand the matter to the trial court for
reconsideration of the spousal support arrearage.
[¶24] The court’s judgment did not mention the spousal support still
due. It is unclear from the judgment whether the absence of an order
requiring payment of that spousal support was intentional or represents an
oversight by the court. Sharon, however, did not file a motion for further
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findings of fact that would have allowed the court to clarify or correct the
judgment. See M.R. Civ. P. 52(b). The court had before it many facts from
which it could have concluded that Sharon had received substantial personal
property from Ronald during the marriage and substantial spousal support
over many months following the filing of the complaint. We therefore assume
that the court found the facts to justify a retroactive modification of Ronald’s
temporary spousal support obligations. See Coppola, 2007 ME 147, ¶ 25, 938
A.2d 786; cf. Nadeau v. Nadeau, 2008 ME 147, ¶¶ 56-57, 957 A.2d 108. On this
record, we cannot conclude that the modification was an abuse of discretion.
Thus, we do not disturb the court’s judgment as written.
The entry is:
Judgment affirmed.
On the briefs and at oral argument:
John P. Simpson, Esq., Simpson Law Offices, Cumberland
Foreside, for appellant Sharon Blanchard
Robert A. Levine, Esq., Portland, for appellee Ronald
Blanchard
Portland District Court docket number FM-2012-1333
FOR CLERK REFERENCE ONLY