Cannon v. Cannon

• Decision Date: 15 April 2004
• Docket Number: No. 295,295
• Citation: 846 A.2d 1127,156 Md. App. 387
• Parties: John A. CANNON v. Wendy J. CANNON.
• Court: Court of Special Appeals of Maryland

846 A.2d 1127

156 Md. App. 387

John A. CANNON v. Wendy J. CANNON.

No. 295, Sept. Term, 2003.

Court of Special Appeals of Maryland.

April 15, 2004.

James S. Maxwell (Brian M. Barke, Maxwell & Co., LLC on the brief), Rockville, for appellant.

Lucien T. Winegar of Frederick, for appellee.

Argued before DAVIS, DEBORAH S. EYLER, and BARBERA, JJ. DAVIS, Judge.

On July 3, 2002, appellee Wendy J. Cannon filed a Complaint for Absolute Divorce in the Circuit Court for Frederick County. After filing an Answer to the Complaint on July 22, 2002, appellant John A. Cannon requested a hearing to determine the validity of a Pre-Nuptial Agreement executed by the parties prior to their marriage. At the hearing, appellant filed a notice of appeal prematurely on April 25, 2003. On September 15, 2003, the court issued an order directing appellant to pay alimony pendente lite. Appellant noted an appeal from that order on October 2, 2003.¹

Appellant presents three questions² for our review, which we consolidate and rephrase as follows:

Did the trial court err in its determination that the Pre-Nuptial Agreement executed by the parties was not valid or enforceable?

We answer appellant's question in the affirmative and, accordingly, reverse the judgment of the circuit court.

FACTUAL BACKGROUND

Appellant and appellee were married on June 25, 1994; there were no children born of the marriage. The parties separated on May 3, 2001. Prior to the marriage between the parties, appellee had been previously married on April 10, 1976. Two children were born of that union, which ended in a divorce on October 4, 1990. As part of the divorce decree, a Separation Agreement, which was incorporated but not merged into the decree, provided that appellee would have custody of the two minor children and would receive child support payments from her former husband in the amount of $300 per month.

Appellant and appellee met in 1977 and maintained a friendship for several years. Their relationship became more intimate in December 1986, at a time when appellee was still married to her former husband. In July 1990, appellant and appellee commenced cohabiting with each other. Appellee and her children, then eight and twelve years old, moved into appellant's townhouse. In the latter part of 1992, the parties became engaged to marry and agreed to set the marriage date for some time in 1994. In 1993, appellant, appellee, and her children moved into a single-family home located on Samuels Road in New Market, Frederick County (Samuels Road Home). The house was purchased by appellant with proceeds from the sale of his townhouse and titled solely in appellant's name.

In 1994, appellant was employed by GE Global Exchange Services and had earned approximately $40,000 per year in the previous two years. Appellee was employed by Images Hair Design, Inc., where she had worked since 1986, as an assistant secretary earning a yearly income between $15,000 and $19,000. In April 1994, appellant approached appellee about the possibility of executing a pre-nuptial agreement because of his concern about the bankruptcy proceedings commenced against appellee and her former husband. Specifically, appellant stated that creditors in the bankruptcy proceeding would attempt to go after his assets once he and appellee were married.

On May 27, 1994, approximately one month before their wedding, appellant and appellee executed a Pre-Nuptial Agreement (Agreement). Pursuant to the Agreement, the parties agreed that each party would retain sole title to any property acquired prior to and during the marriage and any debts incurred prior to and during the marriage would remain the debt of the party who had incurred the debt. Additionally, the parties made a series of acknowledgements³ and thereafter waived certain rights including those relating to alimony payments, a monetary award, and retirement benefits.

The parties were married on June 25, 1994. By late 1998, their relationship had started to deteriorate. As noted, they separated in 2001. Appellee and her children moved out of the Samuels Road house. On July 3, 2002, appellee filed a Complaint for Absolute Divorce,⁴ which alleged, inter alia, that the Agreement was no longer valid and, as a result, she was entitled to her share in the marital estate and monetary support from appellant. Subsequent to his timely answer, appellant requested a hearing on the validity of the Agreement. On March 26, 2003, a hearing was conducted after which the trial court rendered its oral opinion, in which it made its factual findings regarding the validity of the Agreement. It began with an analysis of evidence pertaining to the existence of a confidential relationship:

And I'll start with confidentiality of the relationship, and I will tell you right away it doesn't cause me to focus on the burden of proof. These parties lived together for a period of time. About, about four years. They moved in together in 1990. I don't [sic] whether it was the beginning or the later part of the year. But they got married in the middle of `94. June 25th. So they lived together and that in itself doesn't establish a confidential relationship but it seems to me that it's clear that even before the marriage and before this agreement came on the scene, [appellee] was giving $500 to $800—that's not contested—to [appellant] every month and he was paying the bills. The intent then became that under this agreement she would give him a thousand [dollars] a month. He would pay all of the bills. I think the agreement provides, specifies what he's going to pay although he testified that he paid, ah, I believe it was something toward her car and some other items. So to that extent I believe that [appellee] accepted the guidance, I'll put it, of [appellant] in terms of surrendering to him some of her financial independence, if not all of it, and relying on him to make financial decisions and, and take care of the two of them, and that continued into the marriage. That doesn't matter because it was after the agreement was signed, but I think that supports, a piece of evidence that supports the conclusion that that's what was going on before the marriage. So there was an element of confidentiality. She trusted. He managed the funds. Interestingly enough, her testimony was, and I think not contradicted, she made between 15 to 18 or $19,000 a year, a, a month. I'm sorry. Fifteen to 18 or $19,000 a year. Now that ends up somewhere in the neighborhood of $1,500 a month or less. Yet she was gonna [sic] pay him a thousand [dollars] a month toward these household expenses. Now I, I understand that while the children were minors she was to receive $300 per child per month so she had more than just her salary at least during part of this time. But at some point they pass that age. She didn't get child support. Going back to the day of the signing, however, from her salary she was paying him about two-thirds under this agreement. Going to pay him about two-thirds of her income, gross income, for him to pay the bills and take care of things. She accepted that he was going to own the house that he purchased. That doesn't establish confidentiality, but it seems to me that that at least suggests some reliance on [appellant].

Addressing the intended purpose of the Agreement, the court opined:

What persuades me to conc, [sic] to reach the final answer in this case is this. It is absolutely certain as far as I'm concerned both from the testimony of [appellee], from the answer to interrogatory of [appellant] and from his own testimony, that they talked about this, the purpose of this agreement, the impetus—let me say that. The impetus for this agreement was concern, ..., but it led [appellant] to be very concerned that he might somehow have to defend himself or his assets from some claim of creditor of [appellee] and he wanted to avoid that. So he asked that she enter this agreement. And Ms Cannon said by all means. She didn't want him to be in that position and she was willing to enter that agreement. She said something about it being, her bankruptcy being cleared up in February of `96. I don't know. But here's what strikes me and what causes me to reach the conclusion. When asked on cross [-]examination, [appellant] again confirmed—I shouldn't say again—[appellant] confirmed that the primary purpose of the contract was to prevent him from any claims of her creditors coming out of the bankruptcy. He said he didn't know

when the bankruptcy was filed. He didn't know when that threat would end. But because of the various disputes they had, he didn't see any reason to go along with any termination to that agreement. I believe that it was understood that the agreement was to be in place for that protection. Once that protection went, it was not to be in effect, and I think that is a finding that's consistent with the law that I recited at the beginning of, of my remarks.

The fact that there was a confidential relationship I don't believe in itself is dispositive. But I believe that it, I should take that into account with the fact that there was a confidential relationship to the extent that [appellee] was justified or I'd say should, ah, maybe it's not justified is the right word. But [appellee] understandably believed that the purpose was to get through this bankruptcy issue and then the matter would be at an end. I think she believed that in May of 1994. She trusted [appellant] as I commented before and so she signed what then would seem to be a, what then was I believe an agreement that was not fair and equitable.

Regarding whether there was disclosure or actual knowledge of appellant's property and resources, the court found:

What really counts, I think, is did the parties know what they were doing, and it's not just a matter of saying well, gee, if you were slightly mislead [sic] or slightly misunderstood I should say, it's over. The point is we treat these people as adults. They

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