Validity of Marital Settlement Agreements

JurisdictionMaryland

II. VALIDITY OF MARITAL SETTLEMENT AGREEMENTS18

A. Statutory Authority

Family Law §§ 8-101 and 8-102 render obsolete most of the earlier decisions addressing the validity of marital settlement agreements.19

Family Law § 8-101 provides:

(a) Deed or agreement-A husband and wife may make a valid and enforceable deed or agreement that relates to alimony, support, property rights, or personal rights.

(b) Settlement-A husband and wife may make a valid and enforceable settlement of alimony, support, property rights, or personal rights.

Family Law § 8-102 provides:

A deed or agreement between spouses is not a bar to an action for absolute or limited divorce, regardless of whether the deed or agreement was executed: (1) when the parties were living together or apart; or (2) before, after, or while there was a ground for divorce.

An antecedent statute, Md. Ann. Code art. 16, § 28, provided, in part:

Any deed or agreement made between husband and wife respecting support, maintenance, property rights or personal rights or any settlement made in lieu of support, maintenance, property rights or personal rights shall be valid, binding and enforceable to every intent and purpose . . ." (emphasis added).

The language italicized was referred to in Shacter v. Shacter20 as providing such agreements with a "statutory presumptive validity."21

In connection with the statute, the provisions of former Md. Rule 9-210(b) may be noted. The Rule provided:

A deed, agreement or settlement between husband and wife as described in Art. 16, Sec. 28 [now Fam. Law §§ 8-101-8-105] may be received in evidence and made a part of the record in an action for divorce, annulment or alimony and may be incorporated, insofar as the court may deem proper, into the decree.

B. Consideration

1. In general

Like other contracts, a marital settlement agreement must be based upon valid, adequate consideration.22 However, "no formula has been established to guide the Court in its inquiry of the adequacy of consideration."23 Further, even where the agreement containing an alimony waiver has been incorporated into a decree (other than one of absolute divorce), courts have later examined the adequacy of consideration to determine the validity of the waiver.24

2. Agreement to resume marital relations

An agreement entered into by a wife who, with justification, was living separate and apart from her husband, whereby the husband agreed to pay the wife a specified sum of money so long as she would resume marital relations with him, has been held to rest upon valid consideration and is enforceable.25

3. Alimony waivers

a. In general

It is permissible for a party to waive his or her claim to alimony so long as the release is supported by valid consideration.26 Such a waiver may occur in open court under appropriate circumstances27 though, for avoidance of doubt, your authors suggest that best practice is to include a clear and unambiguous waiver provision in a marital settlement agreement.

b. Promise to pay child support

A promise by a husband-father to pay child support to a wife for the benefit of a minor child in her custody has been held not to support the wife's waiver of alimony.28 The husband-father's further commitment to pay medical expenses in connection with a minor child's mental illness also did not preclude an inquiry regarding the validity of the agreement based on inadequate consideration for the waiver.

c. Release of claim against spouse's property rights

Where the other spouse has property rights or a reasonable expectancy of acquiring the same, a spouse's release of any claim against those rights has been found to be a valuable consideration which would support an alimony waiver.29

d. Providing support for third person

Providing support for a third person (here, adult sons) can furnish sufficient consideration to support a marital settlement agreement containing a waiver of alimony.30

C. Representation by Counsel

1. No requirement that both parties be represented

No Maryland authority requires that both signatories to a marital settlement agreement have separate legal counsel; however, it is a factor for consideration.31

2. No consultation at signing

The fact that a spouse is represented by counsel at the time a marital settlement agreement is executed but chooses not to consult the attorney at that time, will not invalidate the same.32

3. Dual representation

a. Frowned upon by courts

The courts have long frowned upon utilization of one attorney by both parties. See Faller v. Faller,33 where it was stated:

Almost invariably, as this case demonstrates, it is unwise for an attorney, even in the best of faith, as was the case here, to undertake to represent both a husband and wife or both parties in any other case.

b. That philosophy continues

In Blum v. Blum34 the Appellate Court of Maryland reiterated the philosophy against dual representation:

This is not the first time the [c]ourt has seen parties apparently relying on the same attorney. This situation has arisen frequently enough to suggest to the members of the [b]ar that no matter how careful they may be to explain their relationship to each of the parties, they are advancing at their own peril. Where there is a potential conflict in interest between the parties, as is true in every domestic dispute, it is inappropriate to attempt to represent them both. This is true even where the parties appear to be in full accord at the time. . . .

Although counsel may have believed that he was merely acting as a "scribe" with regard to the [parties'] separation agreement, . . . the very least counsel should have done was disclose to the parties the possible ramifications of his dual representation and their respective rights. While such dual representation may not necessarily result in the setting aside of the separation agreement, it leaves the door ajar for what occurred here [i.e., the lower court setting aside the agreement but applying the wrong standards, with the appellate court reversing for redetermination of the question of invalidity of the agreement].

In Hale v. Hale, the Appellate Court of Maryland was emphatic in stating, "We feel that when a husband and wife are contemplating a separation agreement, it should be obvious to an attorney that he cannot adequately represent the interests of both parties." [emphasis by the court].35

See also Md. Attorneys' Rules of Professional Conduct, Md. Rule 19-301.7.

4. Authority for court award of counsel fees

The doctrine of necessaries is no longer part of our common law. In order to secure a contribution to counsel fees from the opposing party, absent an agreement authorizing the court to make a fee award, parties must rely on authority bestowed on the courts by general equitable principles, specific statutory authority,36 or a finding of bad faith made pursuant to Maryland Rule 1-341.37 Absent such authority for an award of fees, it is unlikely that courts have the power to award counsel fees in domestic relations cases unless there exists an agreement authorizing such an award.38 As to the effect of an agreement to pay counsel fees, see Head v. Head.39 See also Rauch v. McCall,40 which discusses payment of attorneys' fees pursuant to an agreement and consideration of the reasonableness of fee awards.

5. Attorney as agent

As to the authority of one's attorney to enter into a marital settlement agreement for his or her client, see Litzenberg v. Litzenberg.41 However, for an attorney's acts to bind a party, the attorney must be the agent of the party at the time he/she performs the act in question.42 The fact that certain substantive issues were not resolved in negotiation will not necessarily preclude enforcement of those issues otherwise agreed upon by the parties through their attorneys.43

D. Confidential Relationship Between the Parties

1. Burden to prove fairness in all respects

When a confidential relationship has been shown to exist, . . . the burden is upon the dominant party to establish that the agreement was fair in all respects.44

Although our intermediate appellate court has stated a confidential relationship may exist where parties have entered into negotiations with a view to entering into a marital settlement agreement,45 it further declared it

found no cases in this jurisdiction involving a separation agreement between a husband and wife where the [c]ourt has held that the confidential relationship standing alone was sufficient to set aside the agreement.46

2. No presumption of the existence of a confidential relationship

Unlike many jurisdictions, Maryland does not presume the existence of a confidential relationship in transactions between husband and wife.47

Maryland presumes that a confidential relationship does not exist between spouses.48 On the other hand, Maryland law presumes that a confidential relationship exists as a matter of law between the parties to an antenuptial agreement where marriage is the consideration for the agreement.49

a. Previously, a presumption of dominance

In Maryland, there has been in the past a presumption that a husband is the dominant figure in a marriage.50

b. Presently, no presumption of dominance

However, since the enactment of the equal rights amendment and the decision of Rand v. Rand,51 "the presumption of dominance cannot stand."52

3. Proof necessary to establish the existence of a confidential relationship

In order to establish a confidential relationship, the wife [or husband] must prove that she [or he] justifiably assumed that her husband [or his wife] would only act in a manner consistent with the wife's [or husband's] welfare.53

Moreover:

Among the various factors to be considered in determining whether a confidential relationship exists are the age, mental condition, education, business experience, state of health, and degree of dependence of the spouse in question.54

The existence of a marital relationship in and of itself does not support the finding of a...

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