Hawxhurst v. Hawxhurst

• Decision Date: 29 December 1998
• Citation: 723 A.2d 58,318 N.J.Super. 72
• Parties: Stephen B. HAWXHURST, Plaintiff-Appellant, v. Pamela HAWXHURST, Defendant-Respondent.
• Court: New Jersey Superior Court

723 A.2d 58

318 N.J.Super. 72

Stephen B. HAWXHURST, Plaintiff-Appellant, v. Pamela HAWXHURST, Defendant-Respondent.

Superior Court of New Jersey, Appellate Division.

Submitted September 14, 1998.

Decided December 29, 1998.

Alan J. Cornblatt, Brick Town, for plaintiff-appellant (Jay J. Turnbach, on the brief).

George G. Whitmore, Red Bank, for defendant-respondent. Before Judges PETRELLA, D'ANNUNZIO and CUFF.

The opinion of the court was delivered by CUFF, J.A.D.

In this dissolution matter, we must determine whether the pre-nuptial agreement executed by the parties is valid and enforceable and, if so, whether the husband's Individual Retirement Account (IRA), created by a rollover of his pension, is an asset subject to the agreement. A subsidiary issue is whether the furnishings of the parties' two homes were properly valued and appropriately distributed.

I

Plaintiff Stephen B. Hawxhurst and defendant Pamela Hawxhurst were married on May 11, 1991. It was the second marriage for both. Mr. Hawxhurst's first wife died in August 1990. He has two adult children from that marriage. Ms. Hawxhurst's first marriage ended in divorce. She, too, has two adult children from her prior marriage.

Prior to their marriage, Mr. Hawxhurst initiated discussions with Ms. Hawxhurst about a pre-nuptial agreement. He wanted to protect a portion of his assets for his children. Both parties met with an attorney. At the end of the hour-long meeting, they instructed the attorney to draft an agreement. Approximately two weeks later, the couple met with the attorney again and reviewed the initial draft. In early May, Mr. Hawxhurst picked up a copy of the agreement. Ms. Hawxhurst met with another attorney to review the agreement. No changes were requested by Ms. Hawxhurst's attorney; however, the parties made minor changes to the document on their own prior to execution. Appended to the agreement are schedules of each party's assets and liabilities. Mr. Hawxhurst's pension is listed, but not valued, on his schedule.

The agreement provides that Ms. Hawxhurst would participate in a greater portion of Mr. Hawxhurst's assets as the marriage endured. In the fifth year of the marriage and thereafter, Ms. Hawxhurst would receive fifty percent of Mr. Hawxhurst's net worth, subject to certain excluded premarital assets, if the parties separated or a divorce action had been filed. However, if Mr. Hawxhurst died at any time after the marriage, Ms. Hawxhurst was entitled to receive fifty percent of his gross estate as calculated for federal estate tax purposes. The relevant provisions are as follows:

In the event of an annulment, a separation (whether by operation of law or by mutual agreement) or a pending or final divorce between the parties within the first four (4) years after the marriage, then in such event each party agrees that there shall be a property settlement or division of solely-owned property between them as follows, with the effective date being the date either party files legal papers ... or actually vacates the marital residence, whichever occurs first:

a) [Defendant] shall be entitled to receive from [plaintiff] ten per cent (10%) of his net worth if the effective date is during the first year; twenty per cent (20%) during the second year; thirty (30%) during the third year; forty per cent (40%) during the fourth year; and fifty per cent (50%) thereafter, not to include anything gifted to her by him before death or separation or divorce, and not subject to offset for any property voluntarily gifted prior to the effective date.

* * *

c) Each party shall keep and retain sole ownership, enjoyment, control and power of disposal of all property of every kind and nature whatsoever now owned (as set forth in Schedules A and B annexed hereto) or hereafter acquired from any source whatsoever by that party, and all increments or increases of value to that property, free and clear of any interest, rights, or claims of the other party, including rights under N.J.S.A. 2A:34-23, the laws of community property, equitable distribution, or similar statutory or case law in any jurisdiction, except as otherwise provided for herein.

* * *

8.3 In the event of [plaintiff's] death any time after the marriage, [defendant] shall be entitled to receive fifty per cent (50%) of the deceased's Gross Estate as calculated for Federal Estate Taxes, not subject to offset for any property voluntarily gifted prior to the date of death.

"Net worth" is not defined in the agreement; however, each schedule annexed to the agreement calculates each party's net worth as the difference between each party's listed and valued assets and liabilities.

On February 23, 1996, Mr. Hawxhurst filed a complaint for divorce on the grounds of extreme cruelty. Because he contested the validity of the May 1991 pre-nuptial agreement, an order was entered bifurcating the trial of the matter. On October 2, 1996, trial commenced on the issue of the validity of the pre-nuptial agreement.

According to Ms. Hawxhurst, the couple discussed the pre-nuptial agreement extensively prior to their marriage. Both were content with the terms of the agreement. Ms. Hawxhurst testified that she believed that Mr. Hawxhurst wanted to make sure that his children would receive fifty percent of his assets. She, in turn, wanted protection in the event Mr. Hawxhurst should die.

At trial, Mr. Hawxhurst testified that the agreement was his idea. He viewed the agreement as a way to protect his children's interest in half his assets. However, he was not aware at the time he signed the agreement that Ms. Hawxhurst would be entitled to fifty percent of his entire estate if they divorced. He believed that she would be entitled to half of only certain unspecified assets. Mr. Hawxhurst also stated that he was not entirely satisfied with the agreement when he signed it, but signed it because "it was a quick type marriage" and he "was in duress from the death of [his] first wife." On cross-examination, he virtually admitted that the agreement was an error in judgment.

On November 21, 1996, the trial judge rendered his decision. He found that the pre-nuptial agreement was valid and enforceable. He noted that the agreement was Mr. Hawxhurst's idea and was drafted by his attorney after at least two consultations. The trial judge found that the parties fully disclosed their assets and liabilities; he further found no fraud or duress. He concluded his findings of fact as follows:

I find that plaintiff's testimony in Court as to his understanding of the agreement is not credible but colored by his current desire to make a better deal for himself now that the marriage has fallen apart.

I find that he got what he bargained for in the Spring of 1991 and cannot now complain, five years later, that he is dissatisfied with his deal.

On appeal, Mr. Hawxhurst argues that the court erred in finding that he voluntarily entered the agreement. He further contends that the trial judge should have found the agreement was designed to effect only a portion of his assets, the agreement was unconscionable, and he did not have appropriate independent legal counsel.

N.J.S.A. 37:2-38 governs the enforceability of a premarital agreement. It provides:

A premarital agreement shall not be enforceable if the party seeking to set aside the agreement proves, by clear and convincing evidence, that:

a. The party executed the agreement involuntarily; or

b. The agreement was unconscionable at the time enforcement was sought; or

c. That party, before execution of the agreement:

(1) Was not provided full and fair disclosure of the earnings, property and financial obligations of the other party;

(2) Did not voluntarily and expressly waive, in writing, any right to disclosure of the property or financial obligations of the other party beyond the disclosure provided;

(3) Did not have, or reasonably could not have had, an adequate knowledge of the property or financial obligations of the other party; or

(4) Did not consult with independent legal counsel and did not voluntarily and expressly waive, in writing, the opportunity to consult with independent legal counsel d. The issue of unconscionability of a premarital agreement shall be determined by the court as a matter of law.

By its terms, Mr. Hawxhurst bore the burden to prove the unenforceability of the agreement by clear and convincing evidence.

Pre-nuptial agreements establishing post-divorce obligations and rights should be held valid and enforceable. Marschall v. Marschall, 195 N.J.Super. 16, 27, 477 A.2d 833 (Ch.Div.1984). These contracts should be encouraged by the courts "at least `to the extent that the parties have developed comprehensive and particularized agreements responsive to their peculiar circumstances.'" D'Onofrio v. D'Onofrio, 200 N.J.Super. 361, 366, 491 A.2d 752 (App.Div.1985) (quoting Petersen v. Petersen, 85 N.J. 638, 645-46, 428 A.2d 1301 (1981)).

A finding of fraud, duress or overreaching will bar the enforcement of a pre-nuptial agreement. D'Onofrio, supra, 200 N.J.Super. at 367, 491 A.2d 752. However, simply because a spouse receives a disproportionate amount of assets does not necessarily render an agreement voidable because it is for the parties themselves to decide what is fair and equitable. DeLorean v. DeLorean, 211 N.J.Super. 432, 437, 511 A.2d 1257 (Ch.Div.1986). The DeLorean court stated:

So long as a spouse had sufficient opportunity to reflect on her actions, was competent, informed, and had access to legal advice and that of any relevant experts, a court should not, except in the most unusual case, interject its own opinion of what is fair and equitable and reject the wishes of the parties.

[Ibid.]

In DeLorean, the court upheld the validity of a pre-nuptial agreement even though the wife received a very small portion of the husband's substantial assets. Id. at 435, 511 A.2d 1257.

Furthermore, findings of fact should not be disturbed unless this...