Enforcement of Marital Settlement Agreement

The Pennsylvania Superior Court recently decided a case challenging a Post-Nuptial Marital Settlement Agreement (MSA), demonstrating the wisdom of involving competent counsel in preparing and executing agreements, either before or after marriage, in resolving equitable distribution, support or other economic issues.

The case before the Superior Court was Lugg v. Lugg, 2013 Pa. Super. 67, decided April 1, 2013.  In Lugg, Mrs. Lugg appealed from an order of the Court of Common Pleas enforcing the written post-nuptial MSA.  Mrs. Lugg asserted the Agreement should not be binding due to a lack of disclosure by her husband; duress; and because the terms of the Agreement were unconscionable.

First, the Court reviewed general law and determined that the same standard applied to both pre-nuptial (that is agreements entered into before marriage) and post-nuptial (agreements entered into after the date of marriage).  In either case, the agreement is a contract and is to be evaluated under the law of contracts.  Absent fraud, misrepresentation or duress, the parties should be held to the terms of the agreement.

Mrs. Lugg first contented that the Agreement should not be enforced due to lack of full financial disclosure.  She also asserts that she could not waive her right to full economic disclosure without the disclosure, because without the knowledge provided by the disclosure she would not know what she was waiving.

Pennsylvania law specifically allows waiver of economic disclosure so long as the waiver is knowing and in writing, 23 Pa.C.S. § 3106.  The Superior Court, quoting the Supreme Court in Stoner v. Stoner, 819 A.2d 529 (Pa. 2003) rejecting the paternalistic approach of requiring the husband to explain wife’s rights, but rather accepting that each spouse has the intelligence and ability to protect him or herself, with the statutory requirement that a disclosure waiver be in writing.

The Superior Court did not adopt Mrs. Lugg’s position that a waiver of economic disclosure, even if in writing, cannot be binding because the party doe not know what the effect is.  Waiver, if in writing, is specifically permitted.

Similarly, the Superior Court rejected the claim that, absent fraud, misrepresentation or duress, it should delve into the “fairness” of the Agreement.

Because a waiver of economic disclosure specifically advises wife that a disclosure has not occurred, her husband did not misrepresent his economic condition, he just failed to disclose with his spouse’s explicit knowledge.

Finally, Mrs. Lugg asserts that the MSA should not be enforced because she signed under duress.  Mrs. Lugg states the duress consisted of daily pressure from her husband and, on the day of execution, a one and one half hour period of continued pressure and negotiation.

Duress is a degree of restraint or danger, actual or threatened, sufficient in severity to overcome the mind of a person of ordinary firmness and, absent of actual harm, there cannot be duress where the contracting party is free to consult with his or her attorney.

Based on this, the Superior Court rejected Mrs. Lugg’s final assertion and affirmed the enforceability of the MSA as found by the Court of Common Pleas.

Properly drafted post-nuptial and pre-nuptial agreements are enforceable.  It is vital to be sure that such agreements are properly drafted and signed, such as including a written waiver of disclosure as mandated by statute noted in the above discussed case.