Cannon v. Cannon

• Decision Date: 12 January 2005
• Docket Number: No. 48,48
• Citation: 865 A.2d 563,384 Md. 537
• Parties: Wendy J. CANNON v. John A. CANNON.
• Court: Maryland Court of Appeals

865 A.2d 563

384 Md. 537

Wendy J. CANNON v. John A. CANNON.

No. 48, September Term, 2004.

Court of Appeals of Maryland.

January 12, 2005.

Lucien T. Winegar, Frederick, for Petitioner.

James S. Maxwell (Brian M. Barke of Maxwell & Barke, L.L.C., on brief), Rockville, for Respondent.

BELL, C.J., RAKER, WILNER, CATHELL, HARRELL, BATTAGLIA and GREENE, JJ.

HARRELL, Judge.

We issued a writ of certiorari in this case to re-examine the proper analysis of challenges to antenuptial agreements in Maryland law and the role, if any, in that analysis of an asserted confidential relationship between the parties to such agreements. As to the latter, we maintain that a confidential relationship exists, as a matter of law, between the parties at the formation of the antenuptial agreement, consistent with Levy v. Sherman, 185 Md. 63, 43 A.2d 25 (1945), Hartz v. Hartz, 248 Md. 47, 234 A.2d 865 (1967), and Frey v. Frey, 298 Md. 552, 471 A.2d 705 (1984).

The present case began in 1992 when Wendy Santilhano (hereinafter referred to as Mrs. Cannon) and John Cannon became engaged to be married. The parties thereafter signed, and had notarized, an antenuptial agreement (the Agreement) prior to the wedding. The Agreement stated that each would retain sole title to any property acquired in their individual capacities prior to the marriage (including Mr. Cannon's home), remain solely liable for any debt individually incurred prior to and during the marriage, and mutually waived alimony and marital property rights. The parties married on 25 June 1994.

In 2001, the parties separated. Mrs. Cannon, and her children from a previous marriage, moved out of Mr. Cannon's home. Mrs. Cannon filed for an absolute divorce in the Circuit Court for Frederick County in July of 2002, alleging, among other things, that the Agreement was invalid and that she was entitled to alimony and an equitable share of the marital property. After a hearing, the Circuit Court concluded, as explained in an oral opinion rendered on 26 March 2003, that the Agreement was invalid. A critical factor in the trial court's reasoning was its finding that the parties expressed an oral intent to enter the antenuptial agreement principally to protect Mr. Cannon's assets and finances from undefined spillover consequences flowing from a bankruptcy proceeding initiated by Mrs. Cannon prior to their marriage. The trial court apparently was of the mind that the existence of a confidential relationship between the parties justified Mrs. Cannon's reliance on this intent in entering the Agreement, but did not serve as a permanent waiver of her asserted marital rights. The Agreement, according to the trial judge, was but a temporary measure to protect Mr. Cannon from her creditors — a threat that allegedly abated no later than 1996. Accordingly, the Circuit Court concluded that the Agreement ceased to be valid and enforceable after that time, even though its terms were silent as to the duration of the Agreement or the perceived oral intent.

Mr. Cannon appealed this interlocutory decision to the Court of Special Appeals.¹ In Cannon v. Cannon, 156 Md.App. 387, 846 A.2d 1127 (2004), the intermediate appellate court reversed the trial court, holding that the alleged oral intent had been weighed too heavily in evaluating the purported unfairness of the antenuptial agreement. Employing factors from Hartz, where we outlined the appropriate analysis for challenges to the validity of antenuptial agreements, the Court of Special Appeals declared the antenuptial agreement valid and remanded the matter for further proceedings. Mrs. Cannon filed a petition for a writ of certiorari with this Court, which we granted. Cannon v. Cannon, 382 Md. 346, 855 A.2d 349 (2004).

Mrs. Cannon raises two issues for our consideration, which we reorder and rephrase as follows:

I. Whether the Court of Special Appeals and the Circuit Court erred in holding that the existence of a confidential relationship between the parties to an antenuptial agreement was a matter of fact to be determined on a case-by-case basis, rather than presumed to exist in every such case as a matter of law.

II. Whether the Court of Special Appeals misapplied the clearly erroneous standard in declaring the Agreement valid under the factors discussed in Hartz and Frey.

We shall affirm the judgment of the Court of Special Appeals, but on different grounds than those employed by that Court. In so doing, we shall restate the Maryland standard for evaluating antenuptial agreements and the role of the confidential relationship that exists between both parties, as a matter of law, to such agreements.

I.

A.

Mrs. Cannon met Mr. Cannon in 1977 at a wedding she attended with her first husband. An intimate romantic relationship between the Cannons commenced in 1986. While waiting for entry of an absolute divorce ending her first marriage (which eventually occurred in October 1990 after a separation agreement was consummated with her first husband), Mrs. Cannon and her two children began living with Mr. Cannon in his town house in July 1990. By November 1992, the Cannons had become engaged. They declared their intent to save money to purchase a larger home and pay for the eventual marriage ceremony. At the time of the engagement, Mrs. Cannon, a high school graduate, earned between $15,000 and $19,000 in annual wages (as a secretary) and received an additional $7,200 in annual child support. Mr. Cannon, possessor of an associate's degree, was earning approximately $40,000 per year as an employee of GE Global Exchange Services.

In September 1993, Mr. Cannon purchased a new home in New Market (the New Market home) with the net proceeds from the sale of his town house and a mortgage. He titled the New Market home solely in his name. Mrs. Cannon and her two children moved into the New Market home and she began paying Mr. Cannon between $500 and $800 per month towards the mortgage debt and general living expenses.

In April 1994 Mr. Cannon broached with Mrs. Cannon the topic of an antenuptial agreement because he was concerned about a prior bankruptcy proceeding initiated by Mrs. Cannon and her first husband. Mr. Cannon professed to be concerned that some of Mrs. Cannon's creditors might pursue his pre-marital assets and any jointly-held assets acquired after they were married.² Mr. Cannon testified that he presented the proposed Agreement³ to Mrs. Cannon on or about 10 May 1994 for her review. She signed and had the Agreement notarized on 27 May 1994. The Agreement included sections that preserved individually titled personal property to each party in accordance with a schedule incorporated by reference (and attached to the Agreement), fixed liability for debts incurred by either party both prior to and during the anticipated marriage, compelled Mrs. Cannon to pay Mr. Cannon $1,000.00 per month for household expenses during the marriage (including mortgage, home maintenance, and utilities), mutually waived alimony if the Cannons divorced, preserved Mr. Cannon's right to the New Market home (which remained titled solely in his name), and allowed Mr. Cannon the right to eject Mrs. Cannon from the New Market home after providing sixty days notice, but allowed her and her children exclusive use of the home during that sixty day period.

Both parties contested before the Circuit Court the amount of discussion between them regarding the Agreement prior to its execution. They also contested the level of knowledge each had about the other's finances at the time of execution of the Agreement. Mrs. Cannon at first maintained that there was no discussion of the Agreement before she signed it, but later conceded that at least Mr. Cannon advised her that she would pay $1,000 per month for household costs (mortgage and utilities). Mrs. Cannon stated, at different times, that she never read the "contents" of the Agreement or only "glanced" at the Agreement or "skimmed over" it after it was presented to her in the New Market home. Mrs. Cannon admitted that, at the time she signed the Agreement, she knew Mr. Cannon worked full time with computers for GE Global Exchange Services, paid partially for the New Market home with proceeds from the sale of his town home, and that he owned a car. She also explained that, despite saving money with Mr. Cannon to help pay for the New Market home and the 1994 wedding, she had no savings and that she had no specific knowledge of the amount of Mr. Cannon's annual income at the time she executed the Agreement.

On redirect examination, Mrs. Cannon stated that she understood specific portions of the Agreement, including the requirement to maintain individual checking, savings, and credit card accounts. She steadfastly maintained, however, that she did not read through the Agreement before signing it in the New Market home immediately after Mr. Cannon presented it to her, despite the fact that the notary that notarized her execution of the Agreement testified that the document was signed by Mrs. Cannon at the New Market Farmers and Mechanics Bank.

Mr. Cannon testified that he discussed his finances and income with Mrs. Cannon, prior to the execution of the Agreement, when he completed the mortgage financing forms to purchase the New Market home. While he admitted that he did not tell her the purchase price of the property nor his exact annual income, he maintained she had actual knowledge of the extent of his real and personal property, his full-time job, and that he had "thousands of dollars" in a retirement account.⁴ He stated that he asked her continuously about the Agreement after she received it on 10 May. He claimed that he advised her to seek an attorney or outside advice before she signed the Agreement, which she declined to do. Mr. Cannon also pointed to Mrs. Cannon's divorce and the separation agreement negotiated with her first husband, both attained with the advice of counsel, as indicators that she was not unaware...