Opinion
LLIFA176015598
02-27-2018
Robert Crovo v. Darlene Kantor Crovo
UNPUBLISHED OPINION
File Date: February 28, 2018
Judge (with first initial, no space for Sullivan, Dorsey, and Walsh): Dooley, Kari A., J.
MEMORANDUM OF DECISION AFTER TRIAL
Kari A. Dooley, Judge
This dissolution action was filed on June 8, 2017. The case was tried to the court over the course of three days. Having considered all of the evidence the court makes the following factual findings and issues the following orders.
Jurisdictional Findings
The parties were married on October 11, 2015 in Goshen, Connecticut. The plaintiff resided in Connecticut for at least twelve months prior to the commencement of this dissolution action. There are no children which are issue of this marriage. The defendant is not presently expecting a child. Neither the plaintiff nor the defendant received any state or municipal aid during the course of the marriage. The court has jurisdiction over this dissolution action.
Factual Findings and Orders
The Marriage has broken down irretrievably and the court does not ascribe fault to either party.
Prior to the marriage, the parties entered into a premarital agreement which contained provisions regarding, inter alia, distribution of assets or claims which could be made in the event of a divorce or dissolution action. The defendant challenged the enforceability of the premarital agreement. This court found that the premarital agreement is enforceable and not voidable under statute on the grounds alleged. The court’s decision is attached hereto and incorporated by reference.
Under the terms of the premarital agreement, if a dissolution action is commenced on or before October 11, 2018, neither party is entitled to seek or receive alimony. Therefore, no alimony is awarded to either party.
Under the terms of the premarital agreement, joint marital property is to be divided equally in the event of a dissolution of the marriage. The agreement specifically identifies wedding gifts as falling within the parameters of joint marital property. The court does not have before it evidence regarding the number of such gifts or their value. However, the parties acknowledge that the defendant maintains a list of all wedding gifts. On an alternating basis, the parties shall select items from the list of wedding gifts with the defendant making the first selection. The selection of the wedding gifts shall take place within thirty days of this judgment. If any of the items selected by the defendant are presently in the Florida home, the plaintiff, who has exclusive use and access to the Florida home, shall be responsible for and shall bear the cost of delivering any such items to the defendant within thirty days of the selection.
Under the terms of the premarital agreement, property acquired after the marriage becomes the " separate property" of the party who provided the funds for the acquisition. The defendant posits that property procured as a result of a joint agreement, irrespective of who paid for the property, should be considered joint marital property. Her position is not supported by the evidence or the language of the premarital agreement. Therefore, those items identified as " Marital Property" in Defendant’s Exhibit H are awarded to the plaintiff. The weightier evidence established that the plaintiff provided the funds for these acquisitions.
Under the terms of the premarital agreement, property owned at the time of the marriage and gifts received by either party during the marriage shall be the separate property of that party. The court finds that the following items of personal property were either owned by the defendant prior to the marriage or were received by her as gifts during the course of the marriage and she shall retain them as hers: (1) All items listed as " Personal Belongings" on Page 1 of Exhibit H identified as located at the Connecticut home; (2) All items listed as " Personal Belongings" on Page two of Exhibit H identified as located at the Florida home. The defendant’s testimony that these items were hers prior to the marriage or gifts to her during the marriage is credited. If any of these items are located in the Florida home, the plaintiff shall be responsible for and shall bear the cost of delivering these items to the defendant within thirty days of this judgment.
The premarital agreement, at Article II, paragraph 2.6 provides as follows: " It is understood and agreed that the parties will jointly engage in an enterprise (regardless of the structure of such), and have formed a limited liability company known as Riverfront Collections, LLC, (hereinafter RIVERFRONT), in which they are equal (50/50) members, ... Upon the filing of a divorce, [the plaintiff shall own the entire interest in RIVERFRONT and upon Darlene signing all necessary documentation to effectuate the transfer of such interest, [the plaintiff] shall pay [the defendant] Twenty Thousand Dollars ($20,000), and she shall have no further interest in any business or enterprise in which they are engaged."
The plaintiff’s argument that he has fulfilled this obligation is rejected as unsupported by the evidence. The defendant was never presented with any paperwork necessary to effectuate a transfer of her interest in Riverfront. As a result, a condition precedent to the plaintiff’s obligation under the premarital agreement has not yet occurred. Although the plaintiff continued to provide a series of checks to the defendant after the dissolution action was filed, those funds were provided by Riverfront, not the plaintiff. Further, the checks were the same in character and frequency as the checks received as her income stream from Riverfront during the marriage. There was no communication or documentation accompanying the checks identifying them as payments made pursuant to the premarital agreement. The plaintiff’s after the fact characterization or effort to apply these payments by Riverfront to his personal obligation under the premarital agreement does not withstand scrutiny. The plaintiff shall prepare the necessary paperwork to effectuate the transfer of the defendant’s interest contemplated in paragraph 2.6 of the premarital agreement within 30 days. The defendant shall sign the documents when it is presented to her. The plaintiff shall pay to the defendant $20,000 immediately after the defendant has signed the paperwork presented.
The last issue presented at trial relates to Article VIII, paragraph 8.3 of the premarital agreement which provides: " If either party unsuccessfully contests the validity of this agreement, such party shall be liable for all costs associated with the defense of the agreement, including but not limited to reasonable attorneys fees." There is little question that the defendant contested the validity of the agreement and that the court has determined the agreement to be valid and enforceable.
The defendant renews her argument previously raised regarding the defendant’s opportunity to have independent counsel review the agreement, this provision in particular, as this provision was added after the defendant’s counsel sent a draft agreement to the plaintiff’s counsel. The defendant avers that defendant’s counsel never saw this provision and the defendant never had an opportunity to discuss this provision with counsel. The court has already found, as a factual matter, that the defendant could have but did not reach out to her counsel on the day before the wedding to discuss the agreement Indeed, the court has already determined that she had a " reasonable opportunity" to have counsel review the agreement, to include the provision at issue.
The court’s difficulty at this juncture is the scant evidence presented on the issue. The plaintiff testified that he has paid his attorney approximately $76,000 in connection with this dissolution proceeding. The court did not receive any invoices, itemized bills, or any other evidence supporting this testimony. The court was not provided with any information about the billing rates of plaintiff’s counsel or members of his firm and staff.
The court takes judicial notice of the entirety of this file and notes that there are multiple pleadings, short calendar appearances, hearings and the like that appear to be wholly unrelated to the defense of the premarital agreement. While the premarital agreement was raised as a defense to the pendente lite motions, those motions and the hearings thereon did not address or even consider the validity of the premarital agreement. Further, the court reasonably concludes that a portion of the plaintiff’s attorneys fees include time to meet with the client, prepare the complaint and arrange for the complaint to be served. The premarital agreement does not provide an award of attorneys fees for litigating the dissolution action in its entirety. It awards " all costs associated with the defense of the agreement, including but not limited to reasonable attorneys fees." And the dearth of evidence presented makes it difficult to assign any particular portion of the claimed $76,000 to the defense of the premarital agreement.
However, the court notes that the hearing on the premarital agreement lasted two court days. There was a pre-trial hearing on defendant’s motion for expert witness fees which is also reasonably related to the defense of the premarital agreement. The plaintiff’s counsel submitted a post-trial brief to the court related to the validity of the premarital agreement. The court can further reasonably conclude that there was communication between counsel throughout the proceedings, including communications regarding the validity of the premarital agreement. The court awards attorneys fees in favor of the plaintiff in the amount of $10,000. This amount may be offset against the plaintiff’s obligation to pay the defendant $20,000 pursuant to Article II, paragraph 2.6 as ordered above.
The court makes no further distribution of assets as none are permitted under the terms of the premarital agreement.
Finally, the marriage is dissolved on the grounds of irretrievable breakdown and the parties are declared single and unmarried.
The clerk of the court is directed to prepare the judgment file.
So Ordered.
ATTACHMENT TO (MEMORANDUM OF DECISION)
THE COURT: Good morning, marshals. Good morning, everybody.
All right, as indicated previously, I stated that I would issue my decision on the enforceability of the prenuptial agreement first thing this morning. I have received- I had already received Ms. Weaver’s brief on the issue of tortious interference of a business advantage. I also received and have reviewed Mr. Budlong’s submission on the same issue. This is a lengthy decision that I will be ordering the transcript and signing it for purposes of appeal. I appreciate your patience while I read this into the record. I’m not gonna hold anybody in suspense, I will let you know now, I am not voiding the prenuptial agreement.
For the record, the enforceability of premarital agreements entered into after October 1, 1995 is governed by General Statutes 46b-36g. The statute identifies four circumstances under which premarital agreement will not be enforced, three of which are relied upon here by the defendant. They are, in order, that the agreement was not voluntarily entered into; two, that the agreement is unconscionable now and was at the time it was executed; and, three, the defendant did not have adequate opportunity to consult with independent counsel prior to signing the agreement.
The Court heard evidence over the course of two days and arguments by counsel at the conclusion of the evidence. The Court has considered all of the evidence, the arguments of counsel, and the supplemental briefs provided on the limited issue of tortious interference with the business expectancy. The Court has also reviewed and considered not only the statute, but the Appellate cases which address these issues, many but not all of which will be referenced in a moment.
I shall order a transcript of my decision and will sign it as the Court’s Memorandum of Decision for purposes of appeal. The decision will also be incorporated into the Dissolution Judgment of the Court.
First, I will address the issue of whether the defendant had adequate opportunity to review the premarital agreement with counsel. General Statutes Section 46b-36g(a)(4) specifically provides that a party against whom enforcement of the prenuptial agreement is sought must prove that such party was not afforded a reasonable opportunity to consult with independent counsel.
In Friezo v. Friezo, 281 Connecticut 166, 2007, our Supreme Court stated, " The operative terms for the purposes of this analysis are reasonable opportunity and independent counsel. Although this Court- I’m still quoting now- " Although this Court has not yet had occasion to construe Section 46b-36g(a)(4), Appellate Courts that have interpreted identical statutory language invariably have held consistent with the plain statutory wording that a reasonable opportunity to consult with independent counsel means simply that the party against whom enforcement is sought must have had sufficient time before the marriage to consult with an attorney, other than the attorney representing the party’s future spouse," end quote.
The Friezo decision further held that there’s no requirement that a party to a premarital agreement actually seek or obtain the advice of counsel, only that he or she was given a reasonable opportunity to do so.
The Supreme Court relied upon a Maryland case, Cannon v. Cannon, which upheld a prenuptial agreement when the wife had several days to review the agreement and therefore sufficient time to consult with an attorney, but chose not to do so. The Supreme Court also cited with approval a Virginia case Black v. Powers, which held that a party’s failure to seek independent counsel and advice does not negate her opportunity to do so.
Here, not only did the plaintiff (sic) have a reasonable opportunity to consult with legal counsel, she did, in fact, do so. The defendant retained counsel in August of 2015, approximately two months before the wedding. The defendant participated in the negotiation as to the content of the agreement, and although the final version of the agreement presented on the day before the wedding did not contain everything that she had sought in the negotiation, it clearly contained provisions drafted by her lawyer and sent to the plaintiff’s lawyer. Furthermore, the defendant’s lawyer was available to her by telephone on that Saturday, but the defendant did not seek to contact her. The defendant’s testimony that she called and left messages for her attorney is not credited. Attorney Crawford’s testimony was unequivocal and credible that she did not hear from her client at all on the day before the wedding. Under these circumstances, the defendant has failed to prove that she did not have a reasonable opportunity to consult with independent counsel.
The Court next addresses the question of whether the agreement was voluntarily entered into by the defendant or whether it was coerced or the product of duress as she now posits. In the context of separation agreements, which like premarital agreements, are construed in accordance with contract principles, our Supreme Court has held, quote, " To conclude that a stipulated judgment resulted from duress, the finder of fact must determine that the misconduct of one party induced the party seeking to avoid the stipulated judgment to manifest assent thereto, not as an exercise of that party’s freewill, but because that party had no reasonable alternative in light of the circumstances as that party perceived them to be," end quote. That’s Jenks v. Jenks, 232 Conn. 750, a 1995 decision.
Quoting our Appellate Court, quote, " For a party to demonstrate duress, it must prove, one, a wrongful act or threat; two, that left the victim no reasonable alternative; and, three, to which the victim, in fact, acceded; and, four, the resulting transaction was unfair to the victim. The wrongful conduct at issue could take virtually any form, but must induce a fearful state of mind in the other party, which makes it impossible for the party to exercise his own free will," end quote. That’s Noble v. White, 66 Conn.App. 54 (2001).
As noted by the Supreme Court in the Friezo decision, quote, " It is well established that the amount of time available to review a prenuptial agreement is relevant in assessing whether the agreement was voluntary or signed under duress." In support of this- end quote. In support of this proposition, the Court cited 41 Am.Jur.2d 102, Husband and Wife Section 101, which states that, quote, " Courts have recognized that under the heightened scrutiny afforded to prenuptial agreements, the timing of the agreement is of paramount importance in assessing whether it was voluntary." That’s Friezo v. Friezo, at 193 to 194. The decision includes a number of citations to other cases in which a premarital agreement was or was not voidable under circumstances when it was signed in close temporal proximity to the wedding. The Court has reviewed those decisions as well.
And although previous- discussed previously, it is significant in the duress analysis as well that the defendant had independent counsel and ability to reach her to discuss any concerns she had. Again, in Friezo v. Friezo, the Supreme Court cited with approval a West Virginia case in which West Virginia Supreme Court observed, among other things, that, quote, " Advice of independent counsel at the time parties enter into prenuptial agreement, helps demonstrate that there has been no fraud, duress or misrepresentation, and that the agreement was entered into knowledgeably and voluntarily." That case is Pajak v. Pajak, 385 S.E.2d 384.
On these issues the Court makes the following additional factual findings. The plaintiff’s lawyer sent the first draft of the proposed agreement to the defendant’s counsel, Attorney Crawford, on September 24th, 2015. The defendant then went through the agreement with her attorney, developed in talking points and additions which the defendant wanted. Attorney Crawford sent a counterproposal and a request for a four-way sitdown to the plaintiff’s attorney on October 2nd, 2015. The parties and their counsel met at the plaintiff’s attorney’s office on October 8th, 2015. The meeting was very contentious and unpleasant. Eventually plaintiff’s counsel left the meeting to attend to other business. The plaintiff and the defendant continued to discuss the premarital agreement. Attorney Crawford, not comfortable participating in the absence of the plaintiff’s counsel, recalled taking notes of the discussion. She then offered to draft a premarital agreement based upon those notes and the parties’ discussion. On October 9th, 2018, Attorney Crawford sent an amended premarital agreement to plaintiff’s counsel. Although Attorney Crawford had many notes with her when she testified, she was unable to identify which notes were taken on which dates and under what circumstance. As a result, she could not provide, nor testify, as to which notes, if any, were relied upon in drafting the October 9th, 2015 proposal. The body of evidence does not support the conclusion that the parties had agreed to each of the provisions contained in the October 9, 2015 draft. Indeed, to the contrary, the plaintiff advised the defendant that he would have to discuss all issues with his counsel before agreeing to anything.
Comparing the October 9th draft agreement with the agreement ultimately signed by the parties, it is clear that many of the amendments to include very substantive amendments regarding alimony and other provisions, which were drafted by Attorney Crawford, were incorporated into the final agreement. The plaintiff met with his counsel on October 9th, 2015, reviewed the provisions of the premarital agreement, and ultimately signed the agreement that was acceptable to him. Clearly, certain provisions included in Attorney Crawford’s October 9th, 2015 draft, which favored the defendant in the event of a divorce or the plaintiff’s death were not included. By the end of the day on October 9th, 2015, Attorney Crawford was aware that no agreement had been reached, she and the plaintiff’s counsel discussed a possible meeting on Saturday morning, but Attorney Crawford was not available at the time suggested.
The plaintiff took the signed agreement home, he shared it with the defendant on Saturday morning, October 10th, 2015. The wedding was scheduled for the evening of October 11th, 2015. Defendant testified that she was distraught because the agreement the plaintiff had signed was not the agreement she believed she had negotiated with him on Thursday, October 8th, 2015. She testified that she was virtually in tears all day except for those times that she was able to hide her distress from her daughter. She testified that the plaintiff wouldn’t even talk to her about the agreement and at various times threatened to cancel the wedding, and at one point actually did cancel the banquet hall. It is clear to the Court that at the conclusion of these contentious negotiations, the plaintiff had decided those terms to which he was amenable. At that juncture it became the defendant’s decision as to whether she could accept the terms of that agreement.
There is little question that time was running out with which to make the decision if the wedding was to proceed on October 11th, 2015 as scheduled. The plaintiff’s demonstrated willingness to cancel the wedding absent a signed agreement, undoubtedly increased the pressure the defendant perceived. However, the cost of any such cancellation would have been borne by the plaintiff alone. Further, the Court does not fully credit the defendant’s testimony that she was distraught to the point of tears. She accompanied her daughter for their nail appointment; she attended to her final fitting. As previously found, she made no effort to contact her attorney. Perhaps of greatest significance, she was able to negotiate additional revisions to the agreement prior to its execution. In fact, one such change was to Section 2.6, the very provision which the defendant asserts is unconscionable. In addition, her signature was declared her free act and deed before a notary public. The notary’s wife was also present and witnessed the execution of the agreement by the defendant. From this the Court infers that she did not present to the notary or his wife as upset, hesitant, distraught or otherwise demonstratively unhappy with the terms of the agreement. In addition to the notarized signature, the agreement specifically provides at Paragraph 9.4 that the defendant acknowledges that, quote, " she’s entering into this agreement freely, voluntarily, with full knowledge and irrespective of the financial condition of either party and, ellipsis, no one caused her to enter into this agreement through coercion, force, pressure or undue influence." While not dispositive, the agreement itself is further evidence that the agreement was not signed under duress.
By analogy, the Court notes that when a contract is claimed to have been entered into without consideration, declarations within the contract to the contrary are generally sufficient to establish the consideration requirement of a binding contract. See The Milford Bank v. Phoenix Contracting Group, Inc., 143 Conn.App. 519, 2013.
Based upon the law as discussed above and these findings, the Court concludes that the defendant has failed to meet her burden of establishing that she did not voluntarily enter into the premarital agreement.
The Court next turns to the question of whether the premarital agreement was unconscionable at the time it was executed or whether it is unconscionable to enforce it now. To some extent a claim of duress and a claim of unconscionablity overlap in terms of the defendant’s burden. To the extent that the defendant has failed to establish that the agreement was signed under duress, that determination undermines her claim of unconscionability. Section 46b-36g(a)(2) provides in relevant part, quote, " A premarital agreement or amendment shall not be enforceable if the party against whom enforcement is sought proves that: The agreement was unconscionable when it was executed or when enforcement is sought." Beyor v. Beyor, B-e-y-o-r, 158 Conn.App. 752, 2015, cert. denied, 319 Connecticut 933, 2015.
In Schoenborn v. Schoenborn, 144 Connecticut 846, 2013, our Appellate Court stated, and be omitting internal cites, quotations or emphasized text, quote, " An antenuptial agreement is a type of contract and must therefore comply with ordinary principles of contract law. Antenuptial agreements are to be construed according to the principles of construction applicable to contracts generally. Antenuptial agreements relating to the property of the parties, and more specifically to the rights of the parties to that property upon the dissolution of the marriage, are generally enforceable if the circumstances of the parties at the time of the marriage is dissolved are not so beyond the contemplation of the parties at the time the contract was entered into as to cause its enforcement to work injustice. The party seeking to challenge the enforceability of the antenuptial contract bears a heavy burden. This heavy burden comports with the well-settled general principle that courts of law must allow parties to make their own contracts. It is established well beyond the need for citation that parties are free to contract for whatever terms on which they may agree. Whether provident or improvident, an agreement moved on calculated considerations is entitled to the sanction of law," end quote.
In addition, the Beyor Court, citing McKenna v. Delente, 123 Conn.App. 146, 2010 held, quote, " Unconscionable is a word that defies lawyer-like definition. The classic definition of an unconscionable contract is one which no man in his senses, not under delusion, would make, on the one hand, and which no fair and honest man would accept, on the other. The doctrine of unconscionability, as a defense to contract enforcement, generally requires a showing of an absence of meaningful choice on the part of one of the parties together with the contract terms which are unreasonably favorable to the other party. The purpose of the doctrine of unconscionability is to prevent oppression and unfair surprise."
It is in this latter language that the overlap between unconscionability and voluntary execution is readily apparent. By statute the question of unconscionability is a matter of law to be decided by the Court based on all of the facts and circumstances of the case. Our Appellate Courts have confirmed as much in Crews v. Crews, 295 Conn. 153, 2010 and Beyor v. Beyor, a case previously cited.
As noted, a premarital agreement may be voided if the circumstances of the parties at the time of the dissolution, quote, " are so far beyond the contemplation of the parties at the time the agreement was made as to make the enforcement of the agreement work an injustice. For example, where the economic status of parties has changed dramatically between the date of the agreement and the dissolution, literal enforcement of the agreement may work injustice. Absent such unusual circumstances, however, prenuptial agreements freely and fairly entered into will be honored and enforced by the courts as written," end quote, Beyor v. Beyor, at 759 to 760.
Similarly, quoting Bedrick v. Bedrick, 300 Connecticut 691, 2011, a case involving a postnuptial agreement, the Beyor Court stated, " Unfairness or inequality alone does not render a postnuptial agreement unconscionable, spouses may agree on an unequal distribution of assets at dissolution. The mere fact that hindsight may indicate the provisions of the agreement were improvident does not render the agreement unconscionable. Instead, the question of whether enforcement of an agreement would be unconscionable is analogous to determining whether enforcement of an agreement would work an injustice. Marriage, by its very nature, is subject to unforeseeable developments, and no agreement can possibly anticipate all future events. Unforeseen changes in the relationship, such as having a child, loss of employment or moving to another state, may render enforcement of the agreement unconscionable," end quote, and that’s Beyor v. Beyor at 761.
Here, there is no claim that the present circumstances are so far beyond the contemplation of the parties at the time the agreement was executed so as to create an injustice or a finding of unconscionability, nor did any unforeseen circumstances come to pass which impact the enforceability of the agreement. The marriage lasted only 20 months before the dissolution action was commenced. During the marriage there was no significant change to the parties’ relative financial and economic status and resources. The defendant had actually experienced improvement in her health, but everything else was essentially the same as when the parties married.
This case is not unlike the circumstances presented in the Beyor matter, which this Court has relied upon to a great extent. The Beyor Court concluded its unconscionability analysis as follows: " In the circumstances of this case, the defendant was willing to marry the plaintiff, who had substantially greater financial means than she with the full understanding that, pursuant to their agreement, if the marriage did not work out well, she would receive nothing on the dissolution of their marriage. We have been provided with no legal justification for a finding of unconscionability." And that’s Beyor v. Beyor at 765.
The difference in this case relied upon by the defendant is the buyout provision regarding Riverfront Properties, LLC. The evidence established that after May 1, 2015, the plaintiff through his wholly owned entity R. Thomas Crovo, Tax Collector, LLC, which will refer to as RTC, was no longer the tax collector for the City of Torrington. However, RTC still had the right to collect delinquent taxes from the Grand List for the years for which RTC was the tax collector for the City of Torrington. Historically, RTC hired an outside agency to collect outstanding taxes, the agency in turn kept 15 percent of the taxes collected, with RTC receiving the remaining 85 percent. When RTC lost the Town of Torrington contract to be the tax collector, RTC was required to move its business operation out of the Torrington town hall. From 2012 through 2015, at various times, the defendant worked as the office manager and other capacities for RTC. RTC laid off its employees to include the defendant when it moved out of the town hall. Notwithstanding, the defendant continued to assist the plaintiff in the move from town hall.
Prior to the loss of the contract, as well as shortly thereafter, the parties discussed setting up a collection agency to collect the taxes owed to RTC. Eventually, Riverfront Properties, LLC was created with each party identified as 50 percent owner. The evidence established that Riverfront was established for the purpose of providing an income stream to the defendant during the course of the marriage. Riverfront would receive 15 percent of the taxes collected, which would then be shared equally between the parties.
The premarital agreement provides that, quote, " Upon the filing of a divorce, the plaintiff shall have- the agreement uses the parties’ names, I’m inserting the parties’ status. " Upon the filing of a divorce, the plaintiff shall own the entire interest in Riverfront, and upon the defendant signing all necessary documentation to effectuate the transfer of such interest, the plaintiff shall pay the defendant the sum of $20,000, and she shall have no further interest in any business or enterprise in which they are engaged." This provision would untether the parties in their business relation- excuse me, relationship, simultaneous to the commencement of dissolution proceedings. The Court notes that the plaintiff paid, and the defendant accepted, payments totaling $20,000 following the filing of the dissolution action.
The defendant contends that Riverfront had a value of approximately $486,000 at the time of the dissolution action, rendering the $20,000 buyout provision for her 50 percent interest unconscionable. Assuming without finding that the defendant’s valuation of Riverfront is proven, as held in the Beyor decision, even a wholly unequal distribution of assets on its own shall not render a premarital agreement unconscionable. The defendant must show an absence of meaningful choice, as well as contract terms, which are unreasonably favorable to the plaintiff.
For the reasons discussed in connection with defendant’s claim that she did not sign the agreement voluntarily, the Court finds that the defendant has failed to establish the absence of meaningful choice. While the standards are not identical, the evidence presented supports both conclusions. Similarly, the agreement is not unreasonably favorable to the plaintiff. The buyout provision was not contingent upon or impacted by the length of marriage. Whether the marriage lasted 20 months or 20 years, the buyout provision would provide the defendant with $20,000. Again, using, without adopting, the defendant’s valuation theory, with every dollar of delinquent taxes collected, the value of Riverfront decreases. The RTC book of receivables is finite and it diminishes in value as outstanding taxes are collected. As a result, the 15 percent fee payable to Riverfront upon collection of the remaining taxes also decreases. As noted by the defendant’s expert witness, between April and November 2017, a scant seven months, his valuation of Riverfront went from $486,928 in April to $362,064 in November, a 25 percent decline in value. Again, assuming the Court accepts the valuation methodology.
In addition, the plaintiff testified that the passage of time makes the collecting of past due taxes more difficult. And as noted by the defendant’s expert, taxes that are past due by 15 years are no longer collectable, therefore the passage of time in and of itself reduces the value of Riverfront. Thus had the parties’ marriage lasted much longer than it did, the defendant’s receipt of $20,000 would have been proportionately more favorable depending on the remaining amount of receivables, and, in theory, more than her 50 percent interest was worth. For this reason, and in light of all of the circumstances under which the document was executed, the defendant has failed to prove that the agreement was unconscionable at the time it was executed. The evidence simply does not establish that this provision is, quote, " One which no man in his senses, not under delusion, would make on the one hand, and which no fair and honest man would accept on the other," end quote.
Further, as to the present, again, the defendant values her 50 percent interest in Riverfront at $243,000- excuse me, $243,464 as of the date the dissolution action was filed, rendering her twenty- the $20,000 buyout provision unconscionable at this time. The plaintiff counters that the valuation is terribly flawed and that Riverfront has essentially zero value, because RTC is under no obligation to use Riverfront as its tax collecting agency. For this reason, the plaintiff avers and his experts so testify that the value of Riverfront in an arm’s length transaction between a willing seller and willing buyer in the open market is zero.
The defendant’s expert valued Riverfront by identifying the amount of outstanding taxes owed to RTC. He discounted that number to account for some level of non-collectability, he then calculated a present value of that reduced sum and multiplied that present value by 15 percent. He didn’t value the business per se. He gave a present value of receivables based upon the assumption that Riverfront would remain the collection agency for RTC until all outstanding delinquent taxes are paid. This was essentially the present value of the defendant’s income had the marriage remained intact, so that she would have continued to receive 50 percent of the Riverfront income.
As noted by the plaintiff’s expert, to value a business, is to determine what the business could be sold for in an arm’s-length transaction between a willing buyer and a willing seller. There is no pretense that the defendant’s expert performed such an analysis. And the flaw with the defendant’s analysis is that it assumes Riverfront will remain the collecting agency for RTC. There is no dispute that RTC is under no contractual obligation to use Riverfront as its collection agency. The plaintiff alone has the ability to determine whether and to what extent Riverfront or some other agency will be engaged to collecting delinquent taxes for RTC. If he determines not to use Riverfront, the receivables relied upon by the defendant’s expert disappear as a potential revenue stream. The present value of zero is zero. The Court heard no evidence that Riverfront’s business went beyond the RTC collections or that there was value to the business independent of that relationship.
In response, the defendant claims that the premise for the valuation is not flawed, because it would constitute the tort of interference with a business expectancy for RTC to award its collection activity to an agency other than Riverfront. And if Riverfront is therefore entitled to those receivables or more accurately the value of those receivables as damages in a tort action, the defendant’s valuation is correct, and if correct demonstrates the unconscionability of the agreement.
The law on the tort of interference with business or contractual expectancy is well settled and accurately set forth in both parties’ memorandum of law on this issue. The Court does not need to decide whether such a decision by RTC would constitute the tort of tortious interference, because even if it would, the defendant’s argument fails.
The plaintiff’s objection to this argument is in part that under the premarital agreement the defendant loses her 50 percent interest in Riverfront and therefore any interference with the business of Riverfront does not inure to her detriment for purposes of deciding whether the agreement is unconscionable if enforced against her. On this the plaintiff is correct. If there was a tort claim to be brought against RTC for moving its collections to an agency other than Riverfront, that claim would have to be brought by Riverfront in its own name or one of its members in a derivative capacity on behalf of the LLC. See General Statutes 34-243 et seq., the Connecticut Limited Liability Company Act, as well as Padawer v. Yur, 142 Conn.App. 812 (2013).
If the marital agreement is valid, the defendant has no ownership interest which would permit her to advance a claim on behalf of Riverfront. Therefore, the argument that the existence of this right of action defeats the plaintiff’s valuation, an issue which the Court does not decide, presupposes that the premarital agreement is void. In fact, the defendant’s brief on the issue commences with the following statement, " In the instant case the plaintiff and the defendant are equal owners of Riverfront Collections, LLC." This statement is true only if the premarital agreement is void. Thus the defendant seeks to void the premarital agreement as unconscionable because of Riverfront’s present value. However, the present value presupposes a right of action for tortious interference which could only be pursued by the defendant if the agreement is voided and the defendant retains a 50 percent interest in Riverfront. The defendant cannot void an agreement based on a claim of unconscionability using a valuation methodology that necessarily presupposes the agreement is void. Let me be clear, the defendant is free to argue unconscionability based upon the $20,000 buyout provision in light of her 50 percent ownership interest at the time the provision is activated. The Court’s analysis goes only to the defendant’s argument that her expert’s valuation was not flawed in light of the potential for a tort claim by Riverfront against RTC. As noted, any such tort claim could not be pursued by the defendant and would not inure to her benefit.
Moreover, the defendant has failed to establish that Riverfront remains a viable collections agency into 2018, further undermining her expert’s assumptions and the unconscionability argument. The plaintiff offered credible evidence that absent a $50,000 capital contribution to Riverfront, it cannot meet its licensing requirements. Without a license, it cannot be RTC’s collection agency.
Under all of the circumstances, and for all of the foregoing reasons, the defendant has failed to prove that the premarital agreement is unenforceable, and its terms shall be enforced in the dissolution of the marriage proceedings.