‘Unconscionable’: Last-minute prenup unenforceable

A prenuptial agreement signed the day before a couple’s wedding was unenforceable because the groom failed to disclose $10 million in assets, the Court of Appeals of Virginia has ruled.

The groom argued that the lack of disclosure didn’t matter, because the bride should have realized his worth due to her work at his property management business.

A trial court found the agreement was unconscionable and refused to enforce it. The Court of Appeals affirmed.

“[T]he Agreement, if enforced, would entail a ‘gross disparity’ in the division of assets,” Judge Richard Y. AtLee Jr. explained. “As the circuit court held, ‘nothing in [the Agreement] provided for [wife].’”

Further, the fact that the wife signed the agreement “does not amount to a waiver of the right to receive financial disclosure.”

Senior Judge James W. Haley Jr. and Judge Doris Henderson Causey joined in the opinion in Remillard v. Remillard (VLW 022-7-372).

Last-minute prenup

Terri Lee Remillard left her job, sold her home and relocated from Arkansas to marry Randy Lee Remillard in 2014 based on his promise that he would take care of her. Randy owned several businesses and Terri began working for his rental property management company.

The day before their wedding, Randy handed Terri a prenuptial agreement and told her to sign it or the wedding was off. Without time to consult an attorney, Terri signed it.

A footnote in the opinion said the key reason Randy agreed to get married — and the importance of the wedding happening on Dec. 30, 2014 — was because his accountant concluded Randy would have substantial tax savings if they were married and filed jointly rather than separately.

Under the agreement, the parties would keep all individually titled property regardless of when it was acquired or the time and effort invested by either party in maintaining, managing, or improving it.

Neither party could modify the agreement, and each waived their rights to the others’ assets in the event of death or divorce.

And while the agreement said the parties had fully and completely disclosed their premarital property to each other, the attached asset exhibits were titled but left blank.

Terri went from managing eight rental properties to 57 by the time she stopped in 2018. She never acquired any ownership stake in any of Randy’s companies.

Terri filed for divorce in 2019 on the grounds of “constructive desertion and/or cruelty” and asked the court to set aside the agreement as unenforceable because it was unconscionable. She testified about learning that Randy’s assets exceeded $10 million while applying for a home equity loan in 2015.

Based on Randy’s admission that he never told Terri about his assets before the marriage, the circuit court refused to enforce the agreement and awarded Terri assets, support and attorneys’ fees.

Randy appealed.

‘Gross disparity’

Under Virginia Code § 20-151(A), a prenuptial agreement is unenforceable if it was unconscionable when it was executed.

AtLee said there’s a two-step process for determining whether an agreement is unconscionable: is there a gross disparity in the division of assets and were overreaching or oppressive influences at play.

There was a “gross disparity” in the agreement, he found.

“It made no allowances for, and in fact expressly prohibited [Terri] from receiving any benefit from, the increased value of husband’s assets attributable to her efforts working for husband’s business,” AtLee wrote. “She could not, under the Agreement, receive any portion of assets earned or purchased with income from those businesses, as it permitted husband to title everything in his name ‘free from any claim that may be made by the other by reason of their marriage and with the same effect as if no marriage had been solemnized between them.’”

AtLee said there were “overreaching or oppressive influences” at play when Terri signed the agreement.

“Husband waited until the last moment — the afternoon before their wedding day — to present wife with the Agreement, making the wedding contingent upon her signing it and providing no time for her to consult an attorney,” he noted. “In addition, this all took place after wife, going on husband’s assurances that he would take care of her, sold her home and left her career in Arkansas and had become dependent on husband and his businesses for her livelihood.”

Given this, the appellate judge said the circuit court made no error in finding the agreement unconscionable.

No disclosure

AtLee said there was “no ‘fair and reasonable disclosure’ of assets” before Terri and Randy signed the agreement.

“Although the Agreement sets forth that there was ‘full and complete’ financial disclosure between husband and wife and that each party prepared a written summary of their assets, the totality of the Agreement facially contradicts those assertions,” he wrote. “The purported disclosures referenced, Exhibits A and B, listed no assets for either party — they were blank save for the titles indicating that they were the exhibits listing the ‘assets of [husband]’ and ‘assets of [wife].’”

Randy admitted not disclosing his assets to Terri but claimed she should have been able to “make inferences based on her work for his property management business.”

AtLee disagreed.

“Wife’s general awareness of some of husband’s assets does not amount to ‘fair and reasonable disclosure’ … much less the ‘full and complete’ financial disclosure the Agreement sets forth,” he wrote.

Finally, the appeals court concluded that Terri hadn’t waived her right to disclosure of Randy’s property or financial obligations.

“The mere fact that she signed this document, despite its obvious omissions, does not amount to a waiver of the right to receive financial disclosure,” AtLee wrote.

Further appeal

Rick Collins, a partner of Collins & Hyman in Williamsburg, represents the husband.

“We actually got a really good trial result, but our position was that if the prenup was valid then the wife wouldn’t have been entitled to even the small amount that she got, and so that was the purpose of the appeal,” he explained.

He has appealed the case to the Virginia Supreme Court.

“I certainly take the Court of Appeals point on the disclosure issue,” he told Virginia Lawyers Weekly. “However, I hope the Supreme Court focuses more on whether the wife showed that the prenup was unconscionable at the time that it was signed, as required by statute.”

Collins pointed out that the “$10 million figure came from an asset list found one year into the marriage and it doesn’t say precisely what the husband had at the time of the marriage.”

Additionally, Collins intends to reinforce that Terri had knowledge of his client’s assets at the time they were married because “she was working for one of his companies and managing rental properties.”