Lloyd v. Niceta
| Docket Number | 33-2022 |
| Decision Date | 30 August 2023 |
| Parties | THOMAS L. LLOYD v. ANNA CRISTINA NICETA |
| Court | Maryland Court of Appeals |
IN THE SUPREME COURT OF MARYLAND [*]
Argued: June 1, 2023 Circuit Court for Montgomery County Case No.: 165376FL
OPINION
A foundation of many marriages is the vow that spouses will, for better or for worse, remain faithful to one another. We hold that Maryland law allows spouses to allocate marital assets in a postnuptial agreement based on whether a spouse engaged in adultery, thereby causing the breakdown of the marriage.
On October 23, 2019, Anna Cristina Niceta ("Respondent") filed a Complaint for Absolute Divorce in the Circuit Court for Montgomery County against Thomas L. Lloyd ("Petitioner") on the grounds of adultery. Respondent requested that the circuit court incorporate the parties' postnuptial agreement ("Agreement") into the divorce decree, which included a $7 million lump sum provision that would trigger if Petitioner engaged in adultery and related acts. Petitioner filed a countercomplaint, seeking, in relevant part, to rescind the Agreement based on public policy and unconscionability. The circuit court determined that the lump sum provision was an enforceable penalty. On October 8, 2021, the circuit court issued a Judgment of Absolute Divorce, which incorporated, but did not merge, the Agreement. Both parties timely appealed to the Appellate Court of Maryland.[1]Lloyd v. Niceta, 255 Md.App. 663, 671, 284 A.3d 808, 813 (2022). The Appellate Court affirmed the circuit court's decision and remanded for further proceedings on issues not before this Court. Id., 284 A.3d at 813. Petitioner timely sought review in this Court.
We conclude that the answer to both questions is "yes" and affirm the Appellate Court of Maryland. We explain below.
Petitioner and Respondent were married on March 25, 2006 in the District of Columbia. Both parties have college degrees. Respondent was employed as an event planner and served as the White House Social Secretary between February 2017 and January 2021, earning between $130,000 and $200,000 per year. Petitioner was a wealth manager who earned between $70,000 and $122,000 per year. Petitioner has a wealthy family, including his paternal grandmother, Rachel Mellon, who left him a substantial inheritance after she passed away in March 2014.[3]
On June 2, 2014, Respondent discovered that Petitioner was involved in an extramarital affair. The parties separated. Although Respondent was "uncertain if she wanted to remain in the marriage[,]" the parties worked toward "build[ing] trust" and ascertaining the reason for Petitioner's infidelity. The parties consulted a priest and a therapist beginning in the late summer. Upon Respondent's request, Petitioner: (1) provided her with the passwords to his financial and email accounts; (2) transferred a portion of his inheritance into an account held with Respondent as tenants by the entirety; (3) converted to Catholicism; (4) sold the car he had used with his affair partner; and (5) underwent a vasectomy. During the autumn of 2014, Respondent introduced the idea of a postnuptial agreement to Petitioner. Thereafter, the parties each retained two attorneys to prepare the Agreement. Petitioner retained Deborah Cochran, Esq., an estate law attorney, and Julie Day, Esq., a family law attorney. Respondent retained Alison Noll, Esq., an estate law attorney, and Ann Luu, Esq., a family law attorney.
In April 2015, Respondent forwarded a draft of the Agreement to Petitioner. The Agreement contained, in relevant part, a lump sum clause that would require Petitioner to pay Respondent a sum of $5 million if he engaged in adultery and related acts. On June 16, 2015 and July 16, 2015, the parties and their attorneys reviewed the draft "line by line[]" during extensive meetings. Petitioner proposed a $2 million increase to the lump sum provision to demonstrate "his good faith toward" Respondent and because he anticipated that he would inherit approximately $12 million from his father's estate. Respondent agreed to the change, and the parties signed the finalized Agreement on September 18, 2015. The lump sum provision provides, in relevant part:
The Agreement included a chart listing Column A Assets, which were assets in accounts that only Petitioner owned, and Column B Assets, which were assets in accounts owned jointly by the parties. Under the Agreement, Petitioner agreed to transfer certain assets that had been Column A Assets to become Column B Assets, converting them from Petitioner's sole property into marital property. Column B Assets included "separate funds" that Petitioner received from: (1) both installments of his inheritance from Ms. Mellon; and (2) "all [other] liquid assets [that Petitioner] inherit[ed] during the marriage[.]" Per the Agreement, Petitioner would deposit those liquid assets into a specified account or, if that account no longer existed, "into another brokerage account titled in the names of both parties as tenants by the entirety with the common law rights of survivorship." Once deposited, the funds, "including all investments or reinvestments of, subsequent accounts, increases in value and income and proceeds from such assets[,]" would be "treated as marital property . . . for as long as the parties [were] married." Pursuant to the distribution scheme under Paragraphs 4(C) and 5(A)(i) of the Agreement, the parties would "equally divide" the Column B assets upon divorce.[4] After the parties entered into the Agreement, Petitioner engaged in another extramarital affair in October 2018. The parties separated on April 14, 2019, after Petitioner advised Respondent that he no longer wished to remain married to her.
On October 23, 2019, Respondent filed a Complaint for Absolute Divorce in the Circuit Court for Montgomery County on the grounds of adultery. She requested that the circuit court incorporate the Agreement into the divorce decree and enforce, among other things, the lump sum provision. Petitioner filed an Answer and Counterclaim, arguing that the Agreement was void because it was unconscionable and against public policy. Petitioner also asserted that the lump sum provision constituted an unenforceable penalty because it was an excessive liquidated damages clause.
The circuit court held several merits hearings between November 23, 2020 and December 9, 2020, where witnesses testified regarding the lump sum provision. Respondent testified that she "did not calculate" the initial $5 million provision. She further testified that the Agreement memorialized Petitioner's promise to remain faithful and that its terms "put [Petitioner's] money where [his] mouth [was]." Respondent asserted that she accepted the $2 million increase to the provision because Petitioner had proposed it.[5] Anthony Joseph Delvecchio Petitioner's friend, described the lump sum provision as "a bad boy clause[.]" In an email to Petitioner, Ms. Day also described the lump sum clause as "the bad boy clause." Ms. Day testified that she had advised Petitioner against agreeing to the lump sum provision. In Ms. Day's view, the lump sum provision "was intended to . . . be prohibitive so that [Petitioner] would not engage in those behaviors again, because he would know there was $5 million out there." Ms. Day further testified that Petitioner wished to increase the provision to $7 million to "make it that much more clear that he really wouldn't engage in those behaviors again," and "as a showing of good faith[.]" Ms. Day referred to the lump sum provision as a "penalty" during negotiations "because that's what it looked like to [her] at that point." She asserted, however, that the term "penalty" ...
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