Post-Nuptial Agreements and the $7 Million Affair

In a recent Maryland appellate case, a husband was ordered to make a lump sum payment of $7 Million to his ex-wife for engaging in adultery, which led to the dissolution of the marriage. Here we provide some information about the case, and when couples might consider a postnuptial agreement (a “post-nup”).

What Is a “Post-nup”?

A post-nup is an agreement between spouses reached after the spouses are married. Contrast this with a “prenuptial agreement” or “pre-nup”, which is an agreement between parties before their marriage.

What Can a “Post-Nup” Do?

Post-nups may include agreements in contemplation of a possible divorce, such as alimony or support payments, or the division of marital property. They may also be used to address changing financial circumstances during a happy marriage. For example, post-nups are frequently used where spouses contribute separate resources, such as a recent inheritance, to the acquisition of an asset and each spouse wants to confirm ongoing ownership interests at the time of the first spouse’s death, or in the unlikely event of divorce.

How About the $7 Million Affair?

The Maryland Court of Special Appeals summarized the basic facts of the case as follows:

According to the appeals court, the basic facts of the case are as follows:

• Husband and wife were married in 2006.
• Although the husband made a good income, the husband and wife were able to live well beyond their means because of the husband’s access to substantial family wealth.
• In 2014, the wife discovered her husband was having an affair. The parties tried to reconcile but the wife was unsure as to whether she wanted to continue in the marriage.
• In 2015, the wife told her husband that she would consider staying in their marriage, but only on certain terms.
• Husband and wife each retained separate counsel to represent their interests in the negotiation of a post-nup.
• The husband’s priority was regaining his wife’s trust and maintaining an intact family unit.
• The wife’s attorneys drafted a post-nup stating if her husband engaged in inappropriate sexual behavior, he would pay the wife a lump sum of $5 Million.
• Over the advice of his attorneys, the husband actually increased the penalty provision that his wife’s attorneys had originally proposed, agreeing that if he engaged in inappropriate sexual behavior, he would pay his wife a lump sum of $7 Million.
• The husband and wife signed the post-nup in September 2015.
• In April 2019, the wife discovered that her husband had been having an affair since October 2018 and filed for divorce on the grounds of adultery, seeking, among other relief, to enforce the post-nup.
• The husband filed a counter-complaint asking the court to rescind the post-nup.
• The trial court held a three-day trial and, among other relief, enforced the post-nup.
• The husband filed an appeal.

What Were the Husband’s Arguments?

The husband made four claims. First, he argued that the post-nup lacked “consideration”, meaning that his wife had not given up anything of value in exchange for the $7 Million promise. Second, he argued that the $7 Million penalty provision was void under a doctrine of “unconscionability”. Third, he argued that the post-nup was procured by undue influence upon him. Fourth, he argued that the lump sum penalty provision should be void as a matter of public policy.

Was the Husband Successful on Appeal?

No. The appeals court first ruled that the wife had given “consideration” in exchange for the post-nup. Namely, she agreed to stay married to this man despite his past indiscretions. Next, the appeals court found that the $7 Million penalty provision for adultery was not unconscionable, finding the trial court fully considered the extent of the husband’s wealth and appropriately considered that there would not be a gross imbalance of wealth between husband and wife if the post-nup was enforced. Third, the court dispensed with the husband’s claim that the post-nup was the product of undue influence or duress. The court observed that the husband was represented by skilled counsel in negotiating the post-nup and voluntarily opted to act contrary to their advice. Finally, the court concluded that post-nups designed to discourage this type of behavior are not void as a matter of public policy. In short: he made his bed, and now he must lie in it.

What Next?

The husband may apply to Maryland’s highest court, the Maryland Court of Appeal, to see if they will  agree to hear a further appeal.

What About My Post-Nup?

Maryland law regarding the enforceability of prenuptial agreements versus postnuptial agreements varies greatly.  Bulman Dunie attorneys frequently assist clients with the negotiation and drafting of both types of agreements. If you would like to discuss a pre-nup or a post-nup, please contact Meg Rosan at mrosan@bulmandunie.com or (301) 656-1177