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Today, we are seeing more and more relationships in which spouses have comparative levels of education, earning potential, and professional stature. This is a relatively new development, as such marriages were not at all common in the past. In the first half of the twentieth century, for example, marriages in which the husband and wife had comparable earning power were fairly scarce, as men tended to have greater earning capacity in the majority of cases. As it turns out, marriages in which the spouses have lopsided earning capacity, education, and professional stature have significance in the context in settlement agreement enforcement.
When one spouse has greater earning capacity and sophistication, that spouse is considered the “dominant” spouse with respect to settlement agreements. What this means, essentially, is that the settlement agreement may be subject to greater scrutiny (and different standards) as compared with settlement agreements formed between “equal” spouses. This issue recently showed up in the case of Piedharita v. Piedharita (2019). Let’s take a closer look at this case.
Overview of the Case
The marriage in this case was an example of a lopsided relationship in terms of earning capacity. The wife was the “dominant” spouse, as she had significantly greater earning capability than the husband. When the couple decided to separate, the spouses created a settlement agreement which resolved all the issues deriving from the marriage. The wife used an attorney to assist with the creation of the agreement; the husband was never represented by an attorney.
After the agreement was developed, the wife signed in the presence of her attorney. Subsequently, the wife met the husband at a bank where the husband signed in front of a notary. Then, the wife sought enforcement of the settlement agreement by the court. She argued that the agreement was fully enforceable given the fact that the husband signed under his own volition, and that there was no evidence of fraud or duress. However, the husband attempted to block enforcement of the agreement on the grounds that a special “confidential” relationship existed between he and his wife. The husband argued that the earning potential disparity between he and his wife created a “dominant / dependent” dynamic, and that this dynamic placed a special requirement on any settlement agreement reached by them. The case went to the trial court and a determination was made to overturn the agreement on the basis that the agreement was unfair. The case then went before the appellate division for review.
Outcome & Discussion
The appellate division held that a new trial was needed, because the appellate division concluded that a confidential relationship did exist between the parties, and that the correct standard of review (for “fairness”) wasn’t used during the trial. Because a confidential relationship did exist, the only way to determine the enforceability of the agreement was to apply the correct standard. In some ways, the special confidential relationship created via the dominant / dependent dynamic is similar to the confidential relationship which is always present between spouses. As many laypeople know, spouses have a confidential relationship such that information may be private and non-disclosable in certain contexts. In the case of the confidential relationship created via the dominant / dependent dynamic, this special relationship basically imposes higher standards when it comes to enforcing things such as settlement agreements, because the law knows that the spouses have unequal power.
Contact the Murphy Law Firm for More Information
If you would like more resources on marital settlement agreements, or another related topic, don’t hesitate to connect with one of the family law lawyers at the Murphy Law Firm today by calling 240-219-9311.
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