Simon v. Smith

• Decision Date: 21 April 2022
• Docket Number: 18-FM-1333
• Citation: 273 A.3d 321
• Parties: Geary SIMON, Appellant, v. Summer SMITH , Appellee.
• Court: D.C. Court of Appeals

273 A.3d 321

Geary SIMON, Appellant,

v.Summer SMITH ^* , Appellee.

No. 18-FM-1333

District of Columbia Court of Appeals.

Argued June 11, 2020

Decided April 21, 2022

Howard B. Soypher, with whom Lisa Fishberg, Bethesda, MD, was on the brief, for appellant.

Eric T. Werlinger, with whom Robert T. Smith, Washington, was on the brief, for appellee.

Before Glickman and Deahl, Associate Judges, and Ruiz, Senior Judge.

Glickman, Associate Judge:

Appellant Geary Simon appeals from the trial court's judgment of absolute divorce between himself and his ex-wife, Summer Smith. He attacks the trial judge's invalidation of two agreements made during the marriage that granted him valuable rights with respect to a residential condominium unit in Arlington, Virginia (hereinafter "the Virginia condo") that Ms. Smith had acquired in her own name before the marriage. Over Mr. Simon's objections, the trial judge held the agreements were unconscionable and ordered him to "cease exercising any control over the property immediately." We affirm.

I. The Divorce Action

Summer Smith and Geary Simon married in 2006. They have two minor children of the marriage. They separated in 2016, and Smith filed for divorce in October 2017. Her complaint portrayed a difficult marriage in which Simon insisted she not work and "exclusively controlled" their finances and resources, including the management of the Virginia condo. The complaint alleged that this control was in part accomplished through a number of "trusts and other financial arrangements" that Simon presented to Smith as "documents she must sign for their family's and/or children's protection, ... often with representations about the effect of the documents that were inconsistent with the language of the documents themselves." The complaint included further allegations that Simon "refused to return to [Smith] her premarital property," identifying specifically the Virginia condo. Smith requested inter alia that the court "[a]ward Plaintiff her sole and separate property" and "[d]etermine which property is marital property, value it and distribute it in a manner that is equitable, just and reasonable, in accordance with D.C. Code § 16-910(b)."

Simon did not object to a determination that the Virginia condo was Smith's sole premarital property, but he claimed his wife had assigned him the rights to manage and receive rents from the property. The two agreements at issue in this appeal (a lease and a transfer of property and management rights) were submitted to the court as exhibits during a pendente lite hearing extending over several days in March and April of 2018. Ms. Smith claimed they were invalid, testifying she did not recall signing them and first learned of their existence after the parties’ separation. During the same hearing, Simon testified that Smith owed him over $170,000 to reimburse him for money he had contributed to the Virginia condo. In its April 2018 order on Smith's request for pendente lite support, the court noted that it "did not receive sufficient evidence at this juncture to rule on the validity" of the agreements and that it would "resolve the issue of ownership and/or control of this condo at trial." In the interim, the pendente lite order suspended operation of the agreements and directed that "starting May 1, 2018, Plaintiff shall receive all rental proceeds generated by her condo in Virginia."

Over a four-day trial held on September 10, 11, and 13, and October 25, 2018, the judge heard testimony from Smith and Simon, and from one of Simon's attorneys, Gary Wright. The judge also reviewed the two agreements themselves, photographs of the Virginia condo, and evidence regarding the expenses Simon claimed he had incurred managing the property (for which he claimed the right to place a lien on the condo in order to be reimbursed). The evidence presented at the pendente lite hearing was incorporated in the trial record. During the trial, Simon orally objected on procedural grounds to the court's determination of the validity of the challenged agreements in the divorce proceeding, particularly in the absence of two trusts that were parties to the agreements.

Following the trial, the judge issued findings of fact, conclusions of law, and a judgment of absolute divorce. The judgment awarded Smith the Virginia condo as her sole and separate property. It declared the two agreements invalid "because they are unconscionable" under the applicable law, and ordered Simon to "cease exercising any control over the [Virginia condo] immediately." We address the judge's rulings on those agreements first, as his findings regarding them inform our disposition of the main procedural issues that Simon presents on appeal.

II. The Validity of the Lease Agreement and the Property Agreement

A. The Evidence at Trial

Smith purchased the Arlington, Virginia condo in December 2003 with funds she received upon the death of her father. Smith testified that during her subsequent marriage, Simon tried to persuade her to transfer ownership of the condo to one of his trusts or to a family trust. She refused to do so, but she did entrust the management of the Virginia condo to him because she thought that Simon, a real estate professional with far more business acumen than she had, was better suited to the task and that his decisions would be in her best interest. In 2009, Smith also agreed to transfer title to the condo to a trust in her name – the Summer Smith Simon Revocable Trust ("SSS Revocable Trust"). Smith is the settlor, beneficiary, and trustee of this Trust.

Simon testified that he established two other trusts in 2009, the "GSS Revocable Trust" and the "GSS Irrevocable Trust." The trust documents were not introduced in evidence, nor were their terms read into the record. According to Simon, he is the settlor of the GSS Revocable Trust and, with his children, one of its beneficiaries.¹ Smith is not a beneficiary. Simon testified that he was the sole trustee of the GSS Revocable Trust until September 2016, when he claims to have resigned and appointed one of his "professional advisors" as the successor trustee. As for the GSS Irrevocable Trust, Simon testified it has two trustees, his brother and cousin.² The trusts are referenced in the agreements the trial court held to be invalid.

The first agreement, dated January 1, 2010, is entitled "Residential Lease Agreement" (hereinafter referred to as the "Lease Agreement"). The Lease Agreement names Smith and her SSS Revocable Trust as lessors of the Virginia condo and the GSS Revocable Trust as lessee. It grants the GSS Revocable Trust a lease on the Virginia condo for a period of ten years, with two five-year extensions of the term available to the Trust at its option, for the fixed rent of $750 per month. Should the Trust "remain in possession" of the property "after the expiration" of the lease, the agreement provides for continuation of the lease month-to-month. The Lease Agreement grants the GSS Revocable Trust "an irrevocable right to assign [the] lease" and states that the Trust may assign the lease "or sublet or grant any concession or license to use the premises" without Smith's consent. The Lease Agreement also includes a purchase option giving the Trust the right to purchase the property at a "fixed and agreed sum" of $290,000 "at any time during the initial [ten-year] term" of the lease (i.e., regardless of the fair market value of the property at the time). (That option was not exercised during the initial term, however, and thus it is undisputed that the Virginia condo remains the premarital property of Smith.) The apparent signatories on the Lease Agreement are Smith, on behalf of both the SSS Revocable Trust and herself individually, and Simon, as trustee on behalf of the GSS Revocable Trust. The Lease Agreement states it is to be "interpreted and enforced pursuant to the laws of The Commonwealth of Virginia."

The second agreement, dated September 2, 2010, is entitled "Agreement Regarding Personal and Real Property" (hereinafter, the "Property Agreement"). The Property Agreement purports to be made "by and between" Geary Simon, the GSS Revocable Trust, and the GSS Irrevocable Trust, and Summer Smith Simon, the SSS Revocable Trust and the SSS Irrevocable Trust. (Smith disclaimed any knowledge of an "irrevocable" trust in her name, and it plays no part in the disputes at issue.) The Property Agreement bears the apparent signatures of Smith and Simon, but solely as individuals. Although the agreement lists the trusts as parties, it is not signed by anyone on behalf of any of the trusts. The Property Agreement states that it "shall be interpreted and enforced pursuant to the Laws of the District of Columbia."

With the sole exception of the Virginia condo, the Property Agreement transfers to the GSS Revocable Trust "all [Smith's] interest in any and all tangible personal property that [she] may own, including but not limited to [her] household furniture, furnishings, collectibles, clothing, linen, china, silverware, books, jewelry and art."³

Although the Property Agreement does not purport to deprive Smith of her ownership of the Virginia condo, it does not leave that property untouched. Instead, the agreement gives Simon, "individually, or through such entity as he determines," the right to manage the Virginia condo on Smith's behalf. It states that "[s]uch management shall include collection of rents or other income generated by the property and payment of all associated expense." After paying Smith "[f]rom the proceeds of income ... a sum equivalent to the monthly mortgage for the property," the "excess sum shall be retain[ed] by [Simon] and used for the expenses." But the agreement further provides that "any deficiency between the income and expense of the property shall constitute a reimbursable expense" to Simon that Smith must repay "on demand, or upon sale or other disposition of the property." The Agreement grants Simon an irrevocable...