Texas Divorce Attorney Blog
A Texas postnuptial agreement is not enforceable if the party proves that it was not signed voluntarily or that it was unconscionable and they were not given a fair and reasonable disclosure of the other party’s property or financial obligations, did not voluntarily and expressly waive disclosure in writing, and did not have or reasonably could not have had adequate knowledge of the other party’s property or obligations. Tex. Fam. Code § 4.105. A former husband recently challenged a finding the parties’ postnuptial agreement in a high net worth divorce was unenforceable.
The parties married in 1991 and the wife petitioned for divorce in 2019. She voluntarily non-suited that case and the parties signed a postnuptial agreement. The wife filed for divorce again in 2022. She argued the agreement was unconscionable and she had entered into it involuntarily.
According to the appeals court, the evidence showed the husband was not represented by an attorney at the time. The wife emailed him links to websites about postnuptial agreements. The husband testified they drafted an agreement that day. The wife denied being involved with drafting the agreement. The husband testified she told him her attorney would review it and he agreed to reimburse her for the fees. She contacted her attorney at some point and signed the non-suit order. The court granted the non-suit the same day the wife’s attorney filed it. The following day, the parties signed the agreement in front of a notary, but the wife’s attorney was not present.
The agreement provided the wife would get accounts solely in her name, clothes and jewelry gifted to her, a Mercedes, and monthly payments of $1,500 until she could receive Social Security benefits. The husband was to receive both houses and all of the other accounts and assets. He was also to have primary custody of the parties’ disabled child.
The agreement did not identify values for any accounts. However, statements going back to 2023 showed the total value of the accounts allotted to the wife was $156,741, while those allotted to the husband were worth more than $8.7 million as of 2023. The marital home was worth more than $1.1 million.
The wife said she did not know the values of the accounts when she executed the agreement, but the husband said the statements were kept in a binder that she could access.
The wife testified the husband did not give her time to review the agreement. She said she had not reviewed the information on the linked websites. She testified she discussed increasing the spousal support from $1,000 to $1,500. She did not receive a copy before she signed it, but the husband read it to her and she saw it on his computer.
The wife testified she had not signed the agreement voluntarily. She said the husband forbade her from talking to her attorney about it. She testified he threatened to have her citizenship revoked. She testified he kept her up all night the night before they were to sign the agreement.
The trial court found the agreement was unenforceable, stating the wife had not signed it voluntarily and it was unconscionable. The court found she had not signed a waiver of the right of disclosure and there had not been a disclosure of the parties’ property and financial obligations.
The husband appealed.
Voluntariness
He argued there was insufficient evidence supporting the court’s findings the wife had not signed the agreement voluntarily.
Texas law generally recognizes the freedom of contract. Voluntariness is determined based on the totality of the circumstances. Fraud and duress may show an agreement was not signed voluntarily.
The wife knew the agreement was being drafted and gave the husband information about how to draft it. She negotiated spousal support. She saw it and the husband read it to her. She was represented by an attorney, while the husband was not. She contacted her lawyer. She picked a location to sign the agreement and arrived separately from the husband. She initialed the provisions of the agreement and signed it. It stated she was signing “under no compulsion and with sound mind.”
The wife argued the husband’s threats constituted fraudulent inducement, duress or overreach. Duress, however, is only a defense to a contract if the party threatened to do something they did not have a legal right to do. The appeals court noted the husband had a right to report suspected immigration violations. The appeals court also determined there was no evidence the threats overwhelmed the wife’s free will. She also had an attorney and could have inquired about the credibility of the threats. The appeals court concluded there was no evidence the threats constituted duress.
The wife alleged the husband “forbade” her from consulting her attorney. She admitted, however, she had contacted her attorney after the agreement was drafted. The appeals court determined her contact with the attorney showed her free will was not destroyed by his threats. The appeals court found there was not sufficient evidence to support the wife’s claim of duress or coercion.
Courts consider a party’s knowledge about the meaning and effect of the agreement in determining voluntariness. The appeals court determined the evidence conclusively established that she participated by negotiating spousal support. The appeals court also determined emailing the links about postnuptial agreements showed she was at least somewhat aware of the importance of the document and participated in creating it. The appeals court concluded there was insufficient evidence the wife had no knowledge of the agreement’s meaning and effect.
The wife also argued she had insufficient time to review the agreement or consult with her attorney. The appeals court concluded, however, that she had enough information to address it with her lawyer. She also had contact with her attorney. The appeals court determined she did not present any evidence to support a conclusion she did not have sufficient time to talk to her attorney about the agreement.
The wife argued she signed the agreement involuntarily because the husband failed to make a disclosure of his accounts’ values, thereby breaching his fiduciary duty to her. She argued this failure constituted a material misrepresentation of his financial condition and fraudulently induced her to enter the agreement involuntarily.
There are duties of good faith and fair dealing between spouses, but this general fiduciary duty is not enough to raise an issue of fact on whether a marital property agreement was involuntarily executed. The appeals court concluded that, even if the did breach a fiduciary duty, that breach was not sufficient to support a finding the wife involuntarily signed the agreement under the totality of circumstances.
Unconscionability
In addition to arguing the same points related to the voluntariness analysis, the husband also argued the wife had not shown the agreement was unconscionable because there was no evidence it disproportionately advantaged him. He argued the only evidence of the value was from financial statements from 2023. There was no evidence of the value of the accounts in 2019 when they signed the agreement, so the court did not have evidence upon which to base a determination the agreement was unconscionable. Furthermore, a determination of whether the agreement was unfairly disproportionate could not be made. The appeals court also noted the husband had disclosed the relevant accounts and the wife could discover the values.
Courts consider a number of factors to determine if an agreement for marital property is unconscionable. The parties had been married more than 20 years. There was no evidence the husband had higher education or superior bargaining power. The wife had her own income and attorney. The husband was not represented when the agreement was signed. The appeals court noted the wife could have refused to sign if she had concerns about the agreement. The appeals court found there was no evidence of unconscionability around the execution of the agreement.
The appeals court concluded the evidence was legally insufficient to support a determination the agreement was unconscionable. The appeals court reversed the judgment and declared the agreement enforceable.
Call a Dallas Divorce Lawyer
In this case, the appeals court upheld an agreement that resulted in the husband receiving assets apparently worth more than $9 million while the wife received accounts worth less than $200,000, along with a vehicle, jewelry, and clothing. If your marriage is ending, an experienced Texas high net worth divorce attorney advise you on your rights with regard to any pre-marital or postnuptial agreement and help you protect your assets. Schedule a consultation with McClure Law Group at 214.692.8200.