Marsh v. Marsh

• Decision Date: 27 March 1997
• Docket Number: No. 14-95-01471-CV,14-95-01471-CV
• Citation: 949 S.W.2d 734
• Parties: William T. MARSH, Appellant, v. Juanita Jacobs MARSH, Appellee. (14th Dist.)
• Court: Texas Court of Appeals

Page 734

949 S.W.2d 734

William T. MARSH, Appellant, v. Juanita Jacobs MARSH, Appellee.

No. 14-95-01471-CV.

Court of Appeals of Texas,

Houston (14th Dist.).

March 27, 1997.

Rehearing Overruled July 10, 1997.

Richard A. Tindall, Deborah Heaton McElvaney, Houston, for appellant.

Ray Epps, Houston, for appellee.

Before MURPHY, C.J., and ANDERSON and O'NEILL, JJ.

OPINION

ANDERSON, Justice.

In this appeal, we must determine whether the parties' premarital agreement is unconscionable as a matter of law. The trial court found that it was not, enforced the agreement, and ordered that appellant, William T. Marsh ("Bill"), is indebted to appellee, Juanita Jacobs Marsh ("Juanita") in the amount of $867,778, plus pre- and post-judgment interest and attorney's fees. In seventeen points of error Bill argues that the agreement is unenforceable because it is unconscionable, the trial court incorrectly calculated pre-judgment interest and erroneously excluded evidence. ¹ We affirm.

Bill and Juanita were married on March 19, 1991. At the time of the marriage, Bill was 78 and Juanita was 58. Both had been married previously. Juanita was reluctant to agree to marry because of the financial losses she incurred from the long illness and decline of her deceased husband. She agreed to marry Bill on the condition that he would provide for her financially.

On the morning before their evening marriage, Bill and Juanita executed an "Agreement in Consideration of Marriage" ("the premarital agreement"), a Trust Agreement, and a Release. The documents were prepared by Juanita's attorney, Robert Jarrard, and Bill was not represented by counsel. According to the premarital agreement, as consideration for Juanita's agreement to marry him, Bill agreed to pay to Juanita, as her separate property, one-half of his assets, which included several accounts in his name at Legg Mason Wood Walker, Inc. ("Legg Mason"). The assets were to be transferred to the Juanita Jacobs Trust ("the Trust") within thirty days of the marriage. The Trust Agreement provides that Juanita is the trustee and sole beneficiary of the corpus of the Trust. Bill and Juanita are equal income beneficiaries of the Trust, as long as both are living. The Trust terminates at Bill's death and the corpus is to be distributed to Juanita. The Release recites that Bill was "strongly requested to obtain counsel," but he elected not to do so. The Release further states that each party fully understood the terms of the premarital agreement, each entered it freely and with informed consent, and it was not procured by fraud, duress or overreaching.

After their marriage, Bill paid approximately $189,000 into the Trust, but thereafter refused to make further payments. Juanita filed suit to enforce the agreement. ² Bill answered, claiming the agreement is unconscionable, he did not receive adequate disclosure of Juanita's assets, he had no way to acquire adequate knowledge of the property or financial obligations of Juanita, and did not waive this right. Alternatively, he claimed the agreement was achieved through fraud, duress, or overreaching, or that his performance was excused because of a failure of a predicate to his performance. He also counterclaimed, seeking return of the funds paid to the Trust. The trial court entered temporary orders which required Bill to maintain a minimum balance of $1,200,000 in his Legg Mason account through final hearing. The case was tried to the court, which ruled in favor of Juanita and incorporated its ruling in a written judgment dated August 15, 1995. The trial court entered a Supersedeas Order requiring Legg Mason to hold $1,282,249 in escrow to secure the judgment. On September 14, 1995, Bill filed a motion for new trial, which was overruled by operation of law. The trial court filed findings of fact and conclusions of law. ³

I. Enforceability

Effective September 1, 1987, Texas adopted the Uniform Premarital Agreement Act, which is codified in Chapter 5 of the Texas Family Code. Section 5.46 of the Family Code, which governs the enforcement of premarital agreements, provides as follows:

(a) A premarital agreement is not enforceable if the party against whom enforcement is sought proves that:

(1) that party did not execute the agreement voluntarily; or

(2) the agreement was unconscionable when it was executed and, before execution of the agreement, that party:

(A) was not provided a fair and reasonable disclosure of the property or financial obligations of the other party;

(B) 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; and

(C) did not have, or reasonably could not have had, an adequate knowledge of the property or financial obligations of the other party.

(b) An issue of unconscionability of a premarital agreement shall be decided by the court as a matter of law.

(c) The remedies and defenses in this section are the exclusive remedies or defenses, including common law remedies or defenses.

TEX.FAM.CODE ANN. § 5.46 (Vernon 1993 & Supp.1997). Juanita agrees that subsection (c), which was added by 1993 amendment, applies only to an agreement executed on or after September 1, 1993. An agreement executed before that date is governed by the law in effect at the time the agreement was executed. Act effective September 1, 1993, 73rd Leg., R.S., ch. 136, § 3, 1993 Tex.Gen.Laws 283. Therefore, Juanita concedes the premarital agreement is subject to common law defenses, in addition to those provided in section 5.46.

Bill has not raised the issue of voluntariness on appeal. Instead, he contends the agreement is unconscionable as a matter of law. In his points of error one, two, five, six and seven, Bill attacks the trial court's findings and conclusions which impliedly determined the agreement was not unconscionable. Specifically, the trial court determined in conclusion of law no. 2 that the premarital agreement is a valid and enforceable agreement pursuant to the Texas Family Code.

A. Standard of Review

We review the trial court's findings of fact by the same standards we use to review a jury's findings. Zieben v. Platt, 786 S.W.2d 797, 799 (Tex.App.--Houston [14th Dist.] 1990, no writ). It was Bill's burden to establish that the premarital agreement was unenforceable. TEX.FAM.CODE ANN. § 5.46(a) (Vernon 1993). When an appellant attacks the legal sufficiency of an adverse finding on an issue on which he had the burden of proof, he must demonstrate on appeal that the evidence conclusively established all vital facts in support of the issue. Sterner v. Marathon Oil Co., 767 S.W.2d 686, 690 (Tex.1989). When reviewing a "matter of law" point, we apply a two-prong test: (1) we examine the record for any evidence that supports the finding, ignoring all evidence to the contrary; (2) if there is no evidence to support the finding, we then examine the entire record to determine if the contrary proposition is established as a matter of law. Id. If the contrary proposition is established conclusively, we sustain the point. Meyerland Community Improvement Ass'n v. Temple, 700 S.W.2d 263, 267 (Tex.App.--Houston [1st Dist.] 1985, writ ref'd n.r.e.).

When reviewing a challenge to the factual sufficiency of the evidence, we must examine all of the evidence in the record, both supporting and contrary to the judgment. Plas-Tex, Inc. v. U.S. Steel Corp., 772 S.W.2d 442, 445 (Tex.1989). After considering and weighing all the evidence, we will sustain the challenge only if the finding is so contrary to the overwhelming weight and preponderance of the evidence as to be clearly wrong and manifestly unjust. Cain v. Bain, 709 S.W.2d 175, 176 (Tex.1986).

Our standard of review of the trial court's legal conclusions is to determine their correctness. Zieben, 786 S.W.2d at 801-02. Conclusions of law are always reviewable on appeal. Middleton v. Kawasaki Steel Corp., 687 S.W.2d 42, 44 (Tex.App.--Houston [14th Dist.] ), writ ref'd n.r.e. per curiam, 699 S.W.2d 199 (Tex.1985). The issue of unconscionability is a question of law for the court. TEX.FAM.CODE ANN. § 5.46(b) (Vernon 1993). We review questions of law de novo, without deference to the lower court's conclusions. State v. Heal, 917 S.W.2d 6, 9 (Tex.1996); Hull & Co., Inc. v. Chandler, 889 S.W.2d 513, 517 (Tex.App.--Houston [14th Dist.] 1994, writ denied). As an appellate court, we have a duty to independently evaluate the trial court's findings on matters of law. Daniel v. Daniel, 779 S.W.2d 110, 114 (Tex.App.--Houston [1st Dist.] 1989, no writ). We will uphold conclusions of law on appeal if the judgment can be sustained on any legal theory supported by the evidence. Kotis v. Nowlin Jewelry, Inc., 844 S.W.2d 920, 922 (Tex.App.--Houston [14th Dist.] 1992, no writ).

B. Unconscionability

The legislature and people of Texas have made a public policy determination that premarital agreements should be enforced. Beck v. Beck, 814 S.W.2d 745, 749 (Tex.1991). Therefore, premarital agreements are presumptively enforceable. Grossman v. Grossman, 799 S.W.2d 511, 513 (Tex.App.--Corpus Christi 1990, no writ). According to the statute, Bill, as the party opposing enforcement, bore the burden of proof to rebut the presumption of validity and establish the premarital agreement is not enforceable. Id.; TEX.FAM.CODE ANN. § 5.46(a) (Vernon 1993).

However, neither the legislature nor Texas courts have defined "unconscionable" in the context of marital or premarital property agreements. Instead, Texas courts have addressed the issue of unconscionability on a case-by-case basis, looking to the entire atmosphere in which the agreement was made. Pearce v. Pearce, 824 S.W.2d 195, 199 (Tex.App.--El Paso 1991, writ denied). ⁴ In the absence of clear guidance as to the definition of "unconscionability" in marital property cases, courts have turned to the commercial context. For example, the following general...