More on PreNups Invalidated for Unconscionability

Diana Skaggs commented in response to my last post about the Michigan Court of Appeals unpublished decision in Trudeau-Chene v Chene, Docket No. 260734 (10/26/2006) in her excellent Kentucky family law blog, Divorce Law Journal.

Thanks, Diana, for providing commentary and a link to a recent Kentucky Supreme Court decision where the high court reversed the Kentucky court of appeals' decision that upheld the prenuptial agreement. As in the Trudeau-Chene case, the overriding consideration was the court's look at the specific facts and circumstances involved. To my surprise, the facts in the Kentucky case, Lane v Lane, were far more similar to Reed v Reed, the Michigan court of appeals case upholding a prenup against a claim of unconscionability, which the Trudeau-Chene court distinguished.

In Michigan, a prenuptial agreement may be voided (1) when obtained through fraud, duress, mistake, or misrepresentation or nondisclosure of material fact, (2) if it was unconscionable when executed, or (3) when the facts and circumstances are so changed since the agreement was executed that its enforcement would be unfair and unreasonable.

The trial court in Reed found that the length of the parties' marriage and each party's acquisition of substantial assets during the marriage were unforeseeable changed circumstances rendering it unfair and unreasonable to enforce the parties' prenuptial agreement. But the court of appeals held that the trial court erred in not enforcing the parties' contract, stating that the trial court was charged with enforcing the parties' agreement, not construing their clearly stated contract. The argument in Reed turned on the question of "foreseeability." According to the Reed panel:

"Having agreed to [be captains of their own destiny during the marriage], it was clearly foreseeable at the time the agreement was entered that the parties would
acquire separate assets over the course of the marriage. Further, that the parties' separate assets could grow at disparate rates and that one party's assets might grow significantly more than the other party's would have been readily apparent. In sum, the fact that the parties' assets grew significantly over many years can hardly be considered an unforeseeable changed circumstance that justifies voiding the parties prenuptial agreement. Similarly, the benefit accruing to one party from the disparate growth of his assets is simply not a changed circumstance rendering the agreement unfair and unreasonable to enforce."

At this point, Diana, all I can say is "Lucky Mrs. Lane!" You can read Diana's blog here. The case is interesting, as well, with one dissenter who would have been comfortable on the Reed panel.

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Comments

[James D Livesay]

In my Virginia divorce practice, I've learned that Virginia courts almost never seem to strike down a prenuptial agreement because of fraud or unconscionability. I don't believe our courts would use "change of circumstances" as a ground for striking down a prenup, either.