MCC Business Law Week 5 Whats Love Got to Do with It Case Study

What’s Love Got to Do With It??

Review the case below entitled Estate of Hollett.  There are two versions of the Court’s opinion.  The second one might be easier to read but either one will give you the information you need. Answer the following questions and provide responses to what other students say.

What type of contract is the Court discussing?

Does this contract have to be in writing?  Why?  If so, under which section of the Statute of Frauds?

Was the signature of Erin a voluntary act?  How does the textbook define the concept of voluntary or involuntary?

What does duress mean?  What facts in the case would support an argument of duress?  What facts would argue against duress?

What does undue influence mean?  What facts would support an argument of undue influence?  What facts would argue against undue influence?

What do you think about the contract?  Should it be set aside or should it be enforced?

Link to Case:

In re Estate of Hollett, 150 NH 39 – NH: Supreme Court 2003 – Google Scholar

150 N.H. 39
In re Hollett
834 A.2d 348
IN RE ESTATE OF JOHN ALBERT HOLLETT
THE SUPREME COURT OF NEW HAMPSHIRE
Merrimack
County
Probate
No.
Argued:
July
10,
Opinion Issued: September 26, 2003
Court
2002-346
2003
Wyskiel, Boc & Tillinghast, P.A., of Dover (William E.
Boc and Michael J. Bolduc on the brief, and Mr. Boc
orally), for the petitioner.
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McLane, Graf, Raulerson & Middleton, P.A., of
Manchester (Ralph F. Holmes on the brief and orally), for
the respondents.
DUGGAN, J.
The petitioner, Erin Hollett, appeals an order by the
Merrimack County Probate Court (Patten, J.) declaring
the prenuptial agreement made between Erin and the
decedent, John Hollett, to be valid. Erin argues that the
agreement should be set aside because of duress, undue
influence, insufficient financial disclosure, and lack of
effective independent counsel. The respondents, Kathryn
Hollett, the decedent’s first wife, and their five children,
argue that the agreement is valid and the probate court’s
order should be affirmed. We reverse and remand.
The following facts were found by the trial court or
are evident from the record. John and Erin married on
August 18, 1990. Their courtship had begun in 1984,
when John was fifty-two and Erin was twenty-two. John
was a successful real estate investor and developer who
regularly bought and sold property in New Hampshire
and Florida. He had considerable experience with
attorneys and accountants because of his business
dealings. Erin had dropped out of high school in the
eleventh grade, and had no work or business experience
aside from several low level jobs. Throughout their
relationship and marriage, Erin had almost no
involvement in or understanding of John’s business.
John had previously been married to Kathryn C.
Hollett, with whom he had five children. Under the terms
of their divorce, John owed Kathryn a substantial
property settlement, and still owed her millions of dollars
at the time of his death. Erin was unaware of this property
settlement.
In 1988, the same year that John and Erin became
engaged, Erin found a newspaper article about prenuptial
agreements that John had left on the kitchen counter.
When Erin confronted John with the article, he explained
that his first wife had given it to him, and stated that he
would not get married without a prenuptial agreement.
This statement provoked a “heated and unpleasant”
discussion during which Erin said she would not sign
such an agreement, particularly because John’s first wife
had insisted upon it. John said nothing to Erin about a
prenuptial agreement again until several days before the
August 18, 1990 wedding.
In May 1990, apparently in anticipation of the
impending marriage, John sent a statement of his net
worth to his attorneys in the law firm of McLane, Graf,
Raulerson, and Middleton. After meeting with John on
July 18, 1990, his lawyers drafted a prenuptial agreement
that was sent to him on July 26. Erin testified that she did
not learn about the agreement until the evening of August
16, less than forty-eight hours before the wedding. Under
the original draft, Erin was to renounce any claim to
alimony or a
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property settlement in the event of a divorce, and would
receive only $25,000 and an automobile.
Several days before the wedding, John’s lawyers
contacted Brian Shaughnessy, a recent law school
graduate, and requested that he counsel Erin regarding
the prenuptial agreement. The lawyers told Shaughnessy
that John would pay his fee. Shaughnessy first called Erin
on August 16 to obtain her consent to act as counsel and
to set up a meeting at the McLane law firm office the
next day. Shaughnessy had never before negotiated a
prenuptial agreement, but prior to the meeting he studied
the law of prenuptial agreements and reviewed the draft
agreement.
Erin, accompanied by her mother, met with
Shaughnessy in person for the first and only time at the
McLane law firm on August 17, the day before the
wedding. At that time, all of the plans and arrangements
for the elaborate wedding, at which over 200 guests were
expected, had already been made and paid for; Erin’s
mother and father had already flown in from Thailand.
During the meeting and subsequent negotiations with
John’s attorneys, Shaughnessy noted that Erin was under
considerable emotional distress, sobbing throughout the
three or four hours he was with her and at times so
distressed that he was unable to speak with her. Erin
testified that she remembered almost nothing about the
conference. Shaughnessy, however, testified that he
carefully reviewed John’s financial disclosure and draft of
the agreement with Erin, explained their legal
significance, and asked her what she sought to obtain
from the agreement. He testified that he advised her that
the settlement offer in the draft was inadequate, and
reminded her that the wedding could be put off if
necessary.
Shaughnessy also testified that he believed the
financial disclosure provided by John, which had not
been audited or reviewed by any other party, was
inadequate. Shaughnessy, however, had no time to
independently verify any of John’s finances. In any case,
he believed that any failure to disclose was John’s
problem, as it could lead to the invalidation of the
agreement.
At the end of the negotiations, the prenuptial
agreement was considerably more favorable to Erin,
allowing her to obtain as much as one-sixth of John’s
estate in the event of a divorce or John’s death. John’s
lawyers prepared a final version of the agreement, which
John and Erin signed on the morning of August 18, the
day of their wedding.
The parties remained married until John’s death on
April 30, 2001. John was survived by Erin, his first wife,
and his children from his first marriage. Erin
subsequently petitioned the probate court to invalidate the
prenuptial agreement, while John’s first wife and children
argued in favor of
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upholding it. After four days of hearings, the probate
court concluded that the prenuptial agreement was valid
and enforceable.
On appeal, Erin argues that the prenuptial agreement
was invalid for three reasons: (1) the agreement was not
voluntary because it was the product of duress and undue
influence; (2) John’s financial disclosures were
inadequate; and (3) she did not have independent counsel.
We need only address the issue of duress. We will defer
to the findings of fact made by the probate court unless
“they are so plainly erroneous that such findings could
not be reasonably made.” RSA 567-A:4 (1997); In re
Jesse F., 143 N.H. 192, 193-94 (1998). Although whether
duress exists in a particular case is normally a question of
fact, it becomes a question of law when only one valid
inference can be drawn from the undisputed facts. See
Faske v. Gershman, 215 N.Y.S.2d 144, 148-49 (Sup. Ct.
1961); 25 Am. Jur. 2d Duress and Undue Influence § 29,
at 542-43 (1996). We review questions of law de novo.
See Duffy v. City of Dover, 149 N.H. 178, 181 (2003).
RSA 460:2-a (1997) permits a man and a woman to
enter into a written contract “in contemplation of
marriage.” A prenuptial agreement is presumed valid
unless the party seeking the invalidation of the agreement
proves that: (1) the agreement was obtained through
fraud, duress or mistake, or through misrepresentation or
nondisclosure of a material fact; (2) the agreement is
unconscionable; or (3) the facts and circumstances have
so changed since the agreement was executed as to make
the agreement unenforceable. See In the Matter of
Yannalfo and Yannalfo, 147 N.H. 597, 599 (2002).
“As a practical matter, the claim of undue duress is
essentially a claim that the agreement was not signed
voluntarily.” 3 C. Douglas, New Hampshire Practice,
Family Law § 1.05, at 12 (2002). To establish duress, a
party must ordinarily “show that it involuntarily accepted
the other party’s terms, that the coercive circumstances
were the result of the other party’s acts, that the other
party exerted pressure wrongfully, and that under the
circumstances the party had no alternative but to accept
the terms set out by the other party.” Yannalfo, 147 N.H.
at 599. However, “the State has a special interest in the
subject matter” of prenuptial agreements and “courts tend
to scrutinize [them] more closely than ordinary
commercial
contracts.”
MacFarlane
v.
Rich
(MacFarlane), 132 N.H. 608, 613 (1989). Moreover,
because such agreements often involve persons in a
confidential relationship, “the parties must exercise the
highest degree of good faith, candor and sincerity in all
matters bearing on the terms and execution of the
proposed agreement, with fairness being
43
the ultimate measure.” Lutgert v. Lutgert,
, 1115 (Fla. Dist. Ct. App. 1976), cert. denied,
(Fla. 1979); see also In re Marriage of Matson,
, 818 (Wash. Ct. App. 1985), aff’d
(Wash. 1986).
Under the heightened scrutiny afforded to prenuptial
agreements, the timing of the agreement is of paramount
importance in assessing whether it was voluntary. See 2
A. Lindey & L. Parley, Lindey and Parley on Separation
Agreements and Antenuptial Contracts § 110.65[2] (2d
ed. 2003). Fairness demands that the party presented with
the agreement have “an opportunity to seek independent
advice and a reasonable time to reflect on the proposed
terms.” Lutgert, 338 So. 2d at 1116. To avoid invalidation
on grounds of involuntariness, it has been recommended
that “[t]he contract should be presented well in advance
of the ceremony, usually thirty days.” 3 C. Douglas, New
Hampshire Practice, Family Law § 1.05, at 13. Some
States, in fact, automatically invalidate any prenuptial
agreement signed immediately before a wedding. See,
e.g., Minn. Stat. § 519.11 (2002) (agreement “must be
entered into and executed prior to the day of
solemnization of marriage”).
In arguing for the validity of the Holletts’ agreement,
the respondents rely upon In the Matter of Yannalfo and
Yannalfo, 147 N.H. 597 (2002). In that case, the husband
and wife, each of whom was employed by the United
States Postal Service, signed a prenuptial agreement a
“day or so” before their wedding. Yannalfo, 147 N.H. at
598. The agreement was limited to a house that the
husband and wife had purchased one month before the
wedding, for which the husband had contributed $70,000
as a down payment, and the wife had provided $5,000 for
closing costs. Id. The agreement stated that the first
$70,000 of equity in the house was the property of the
husband, and that in the event of a divorce, the house
would be sold and $70,000 would be paid to the husband.
Id. The agreement did not concern any property other
than the $70,000 contribution. Id.
In upholding the agreement in Yannalfo, we rejected a
per se invalidation of agreements signed immediately
before the wedding. Id. at 599. Instead, we established
that each case must be decided upon the totality of its
own circumstances. Id. at 599- 600. Citing cases from
other jurisdictions, however, we suggested that
“additional circumstances coupled with [such] timing”
may compel a finding that a prenuptial agreement was
involuntary. Id.
Several important circumstances distinguish the
present case from Yannalfo. First, the agreement in
Yannalfo did not involve the entire estates of the parties.
Rather, it only concerned money used in a
44
transaction that both parties had participated in one
month before the wedding. Id. at 598. The agreement in
this case, by contrast, involves the post-marriage
disbursement of an estate that totaled over six million
dollars at the time of the agreement, and the
relinquishment of marital rights such as alimony. Such a
complicated and important agreement will require more
time for negotiation and reflection than the agreement in
Yannalfo.
Second, unlike the parties in Yannalfo, Erin’s
bargaining position was vastly inferior to that of her
husband. John was much older than Erin, and he had
already been married. According to their financial
disclosures, John had approximately six million dollars in
assets, while Erin owned approximately five thousand
dollars worth of personal property at the time of the
agreement. Erin’s work experience during the relationship
was limited to stints as a bartender and a grocery store
cashier. She had little understanding of and no real
involvement in John’s business ventures. According to
Erin, in fact, John had encouraged Erin to stop working
after they began their relationship. If Erin refused to sign
the agreement, she thus not only stood to face the
embarrassment of canceling a two hundred guest
wedding, but also stood to lose her means of support.
Prenuptial agreements that result from such a vast
disparity in bargaining power must meet a high standard
of procedural fairness. Cf. Yannalfo 147 N.H. at 600;
Lutgert, 338 So. 2d at 1115.
Finally, John’s conduct before the wedding raises
serious questions regarding his good faith in dealing with
Erin. John had contemplated a prenuptial agreement at
least two years before the wedding, as evidenced by his
argument with Erin in 1988. Despite Erin’s opposition to
the idea, however, he did not discuss the agreement with
her again. Moreover, although John’s lawyers had drafted
a prenuptial agreement almost a month before the
wedding, John did not obtain counsel for his wife or even
inform her of the agreement until several days before the
ceremony. In other words, despite having every
opportunity to negotiate the agreement well before the
wedding, John elected to conduct his affairs so that Erin
had no time to choose her own counsel, and very little
time to negotiate and reflect upon the agreement.
In upholding the agreement, the trial court cited as a
factor in its reasoning Erin’s failure to “repudiate or
rescind” the agreement during her ten years of marriage
to John. Public policy, however, limits the consideration
of such evidence. As one court has stated: The law frowns
upon litigation between husband and wife. Where their
relations are friendly and affectionate, it takes account of
the fact that she would be loath to institute legal
proceedings
45
against him. . . . [A]ny other policy would be apt to beget
disagreements and contentions in the family fatal to
domestic peace. In re Flannery’s Estate,
, 304 (Pa. 1934). The Flannery court thus declined to
permit a laches defense in a case where the wife
challenged a prenuptial agreement after her husband’s
death. Id. The same logic precludes us from considering
the wife’s delay in challenging the agreement as
substantive evidence of the agreement’s voluntariness or
ratification. To hold otherwise would be to penalize Erin
for choosing not to disrupt her marriage, which the trial
court characterized as “close,” “loving” and “traditional,”
with a lawsuit against her husband.
Finally, the trial court focused upon the assistance
Erin received from Brian Shaughnessy before the
execution of the agreement. The respondents, in fact,
suggest that the presence of counsel should be dispositive
of the issue of voluntariness. We note that the trial court
itself found that the time constraints limited the quality of
Shaughnessy’s representation: for example, he was unable
to verify the accuracy of John’s disclosures. Even
assuming, however, that Shaughnessy provided Erin with
effective independent counsel, and that the financial
representations upon which he relied were accurate, we
cannot agree that his counsel by itself was sufficient to
validate this agreement.
Independent counsel is useless without the ability and
the time to make effective use of such counsel. As one
commentator has stated: [M]ore recent and enlightened
cases have held that the dependent party must be given
sufficient time to obtain the advice of independent
counsel. . . . The contract should be presented well in
advance of the ceremony, usually thirty days, to allow the
bride or groom a reasonable opportunity to consult with
independent counsel. 3 C. Douglas, New Hampshire
Practice, Family Law § 1.05, at 13 (emphasis added).
In this case, it would be unreasonable to conclude that
Erin had “sufficient time” or a “reasonable opportunity”
to make use of Brian Shaughnessy’s advice. Given the
complexity of John’s finances and the agreement, and the
disparity in the parties’ bargaining power, Erin needed
more than one day to negotiate and reflect upon his draft
proposal. Without such time, we conclude as a matter of
law that her signing of the agreement was involuntary
under the heightened standard applied to
46
prenuptial agreements. See Matson, 705 P.2d at 820-21;
Lutgert, 338 So. 2d at 1115-17.
Reversed and remanded.
NADEAU and DALIANIS, JJ., concurred.
NH
N.H.