2
Derby v. Derby, 378 S.E.2d 74 (Va. Ct. App. 1989)
Facts:
George and Sandra Derby were married for over two decades during which they were blessed
with two children. In 1983, Mrs. Derby (Appellant) sought a divorce, claiming that Mr. Derby
(Respondent) had become cruel to her. About a year later, the Appellant met the Respondent at a
beauty parlor owned by the couple and both parties signed a property settlement agreement
prepared by the Appellant. The agreement included a clause that provided for equal distribution
of marital assets. At the time, both parties had retained an attorney. Later, the Appellant revised
the equal division clause and replaced it with one that provided that the Respondent would
relinquish his share of the property to the wife. The Respondent signed this revised agreement,
albeit without consulting his lawyer.
Procedural History:
The Respondent stated that by signing the revised agreement, he thought his wife would agree to
return to their marital home. The Appellant disagreed, contending that she had not told the
Respondent she would return if he executed the revised agreement. The commissioner of
chancery ruled that the agreement was not unconscionable because there was no evidence of
overarching influence on the Respondent when he signed the revised agreement. The trial judge
found, on the contrary, that the agreement was unconscionable because there was sufficient
evidence of “constructive fraud or duress” when it was executed. The Virginia Court of Appeals
agreed to hear the appeal.
Issue:
Whether the trial court erred in finding that the property settlement agreement was
unconscionable, and therefore, invalid.
Applicable Rule(s) of Law:
“The trial judge ruled that the Derbys' agreement was invalid because it was unconscionable and
it was obtained by constructive fraud or duress… A party may be free of fraud but guilty of
overreaching or oppressive conduct in securing an agreement which is so patently unfair that
courts of equity may refuse to enforce it… But gross disparity in the value exchanged is a
significant factor in determining whether oppressive influences affected the agreement to the
extent that the process was unfair and the terms of the resultant agreement unconscionable.”
Derby v. Derby, 378 S.E.2d 74, 26-28 (Va. Ct. App. 1989).
Holding:
No. The trial court did not err in finding that the property settlement agreement between the
Derbys was unconscionable and, hence, invalid.
The Court’s Order:
Affirmed.
Reasoning:
3
Regarding the first element—actual fraud—there was no actual fraud because “Mrs. Derby did
not misrepresent or conceal the terms or effect of the agreement or do any act sufficient to
constitute fraud.” Derby v. Derby, 378 S.E.2d 74, 28 (Va. Ct. App. 1989). However, the absence
of actual fraud did not necessarily mean that there was no fraud at all. Indeed, the Appellant had
concealed her existing relationship with another man at the time of the agreement’s execution.
This concealment, in the Court’s view, could have misled the Respondent to believe that they
could still reconcile if he relinquished his share of marital property to her. Additionally, the
Appellant’s decision to approach the Respondent at a time (early morning) and place (the parking
lot of the couple’s beauty shop) where he would be without his attorney was evidence of the
Appellant’s “concealment and misrepresentation’’ of her real motives. These considerations,
coupled with the Appellant’s haste to have the Respondent sign the agreement and in light of the
gross disparity in the division of marital property—the Appellant was to receive the entire
property amounting to $423,000 while the Respondent received only an “ephemeral promise” to
occupy one of the property units—was sufficient evidence of the agreement’s unconscionability.
The agreement, thus, is invalid and unenforceable.
New Information:
A finding of unconscionability can still be made even when only constructive, rather than actual,
fraud is present.
Questions, Comments, and Speculations:
1. Why did the Respondent not insist on consulting first his attorney before signing the
revised agreement?
Bibliography
Derby v. Derby, 378 S.E.2d 74 (Va. Ct. App. 1989).
4
Galloway v. Galloway, 622 S.E.2d 267 (Va. Ct. App. 2005)
Facts:
Mr. and Mrs. Galloway were married for nearly two decades. After retiring from her nursing job,
Mrs. Galloway (Appellant) joined her husband Mr. Galloway (Respondent) in running their air
conditioning and refrigeration business. In 2001, the two separated and both executed a property
settlement agreement indicating that the Respondent would receive 94 percent of their marital
property while the Appellant would receive the rest. The Appellant was advised to retain an
attorney to help with executing the agreement, but she refused to do so.
Procedural History:
The commissioner in chancery found the agreement unconscionable because of the gross
disparity in the division of marital assets. The trial court, however, found that Mrs. Galloway was
not under duress when she executed the document and upheld the agreement’s validity. The
Virginia Court of Appeals agreed to review the case.
Issue:
Whether the trial court erred in finding that the property settlement agreement between the
Galloways was not unconscionable.
Applicable Rule(s) of Law:
“If inadequacy of price or inequality in value are the only of unconscionability, the case must be
extreme to justify equitable relief… A person may legally agree to make a partial gift of his or
her property or may legally make a bad bargain… But gross disparity in the value exchanged is a
significant factor in determining whether oppressive influences affected the agreement to the
extent that the process was unfair and the terms of the resultant agreement unconscionable…
Other unfair and inequitable incidents in addition to the inadequacy, however, may more readily
justify relief. When the accompanying incidents are inequitable and show bad faith, such
misrepresentations, as undue advantage, oppression on the part of the one who obtains the
benefit, or ignorance, weakness of mind, sickness, old age, incapacity, pecuniary necessities and
the like, on the part of the other, these circumstances, combined with inadequacy of price, may
easily induce a court to grant relief, defensive or affirmative…” Galloway v. Galloway, 622
S.E.2d 267, 90-91 (Va. Ct. App. 2005).
Holding:
No. The settlement agreement between the Galloways was not unconscionable and, therefore, is
valid and enforceable.
The Court’s Order:
Affirmed.
Reasoning:
5
For a finding of unconscionability to be made, the Court must first determine if there was gross
disparity in the division of marital assets between parties. In the present case, gross disparity
existed because the Respondent received 94 percent of the marital assets while the Appellant
remained with only 6 percent and because the Appellant would not be entitled to spousal support.
To prove unconscionability, however, one must not only show that gross disparity exists. Indeed,
“a person may legally agree to make a partial gift of his or her property or may legally make a
bad bargain.” Galloway v. Galloway, 622 S.E.2d 267, 90 (Va. Ct. App. 2005). In addition to
showing gross disparity, the Appellant needed to show proof of overarching or oppressive
influences that led her to sign the unfair agreement. There is no evidence to suggest that the
Respondent “acted in bad faith, coerced or misled wife.” Galloway v. Galloway, 622 S.E.2d 267,
94 (Va. Ct. App. 2005). Besides, the Appellant had an opportunity to consult her attorney before
she signed the agreement but refused to do so. Thus, the Appellant “did not show
unconscionability by clear and convincing evidence.” Galloway v. Galloway, 622 S.E.2d 267, 95
(Va. Ct. App. 2005).
New Information:
No.
Questions, Comments, and Speculations:
1. Would the outcome be different had the Appellant been advised by her counsel to proceed
with signing the agreement as it was?
Bibliography
Galloway v. Galloway, 622 S.E.2d 267 (Va. Ct. App. 2005).
6
Sims v. Sims, 55 Va. App. 340 (2009)
Facts:
Marvin and Barbara Sims were married for nearly four decades. In 2006, the two separated, and
Mrs. Sims (Appellant) briefly retained counsel. However, since the Appellant could not afford
counsel on her own, she began acting on her own. She initially informed the Respondent that she
preferred they share the marital assets equally. The Respondent instructed his attorney to prepare
a settlement agreement and send it to the Appellant. The Appellant, however, refused to sign it
because it did not mention how the Respondent’s retirement benefits and deferred payment
would be shared. The Appellant later told the Respondent’s attorney that she just wanted a
divorce. The Respondent’s attorney then prepared another settlement agreement in which the
Appellant agreed to waive her entitlement to spousal support and relinquished almost 100
percent of the marital assets to her husband.
Procedural History:
At trial, Mrs. Sims argued that the agreement was unconscionable because it was executed when
she was “totally disabled” due to her health condition. The trial court initially agreed with Mrs.
Sims, but upon reconsideration, found that the agreement was not unconscionable. The Virginia
Court of Appeals granted a review.
Issue:
Did the trial court err by finding that the settlement agreement between the Sims was not
unconscionable?
Applicable Rule(s) of Law:
“In a typical case alleging unconscionability of a marital agreement, the court must consider (1)
whether a gross disparity existed in the division of assets and [(2)] [whether the evidence shows]
overreaching or oppressive influences… [G]ross disparity in the value exchanged is a significant
factor in determining whether oppressive influences affected the agreement to the extent that the
process was unfair and the terms of the resultant agreement unconscionable… We need not
decide whether or under what circumstances gross disparity may be enough because we hold as a
matter of law under the facts of this case that gross disparity in conjunction with pecuniary
necessity on the part of the disadvantaged spouse establishes unconscionability.” Sims v. Sims,
55 Va. App. 340, 349-350 (2009).
Holding:
Yes. The settlement agreement between the Sims was unconscionable and, therefore, invalid and
unenforceable.
The Court’s Order:
Reversed and remanded for further proceedings.
Reasoning:
7
“Gross disparity in conjunction with pecuniary necessity on the part of the disadvantaged
spouse” is sufficient proof of unconscionability. Sims v. Sims, 55 Va. App. 340, 349 (2009). In
the present case, the Respondent entered into a settlement agreement in which his wife
relinquished nearly 100 percent of marital property to him, including all retirement and deferred
payments and the marital residence, while the wife retained only her car, indicating gross
disparity. Additionally, the inequitable distribution left the wife without a practical means to
provide for herself, which is sufficient proof of pecuniary necessity on the wife’s part. Unlike in
Galloway, where the Appellant had a stable job, a $275,000 home she had inherited, and personal
assets, Mrs. Sims would be left with literally nothing if the agreement was enforced, making it
literally impossible to survive on her own. Although the Court did not find evidence of
overarching or oppressive influences on the part of the Respondent, the evidence of gross
disparity and pecuniary necessity supports a conclusion that the settlement agreement was
unconscionable.
New Information:
Evidence of gross disparity and pecuniary necessity is enough to establish unconscionability.
Questions, Comments, and Speculations:
Does the rule, as applied by the court in this case, suggest that a finding of unconscionability can
still be made even where there is no evidence of overarching or oppressive influences?
Bibliography
Sims v. Sims, 55 Va. App. 340 (2009).
8
Chaplain v. Chaplain, 682 S.E. 2d 108 (Va. Ct. App. 2009)
Facts:
Mr. and Mrs. Chaplain were married for eleven years. Shortly after they married, Mr. Chaplain
(Respondent) presented Mrs. Chaplain (Appellant), a Moroccan by nationality, with a premarital
agreement, which provided that in case the two divorced, 1) each party would waive their
interest in the other’s property, 2) neither party would inherit the other’s property, 3) each party
would waive their entitlement to equitable division of matrimonial property, spousal support, and
retirement benefits and insurance compensation, and 4) that Mrs. Chaplain would be entitled to a
sum of $100,000 on condition that she continued to live with Mr. Chaplain until his death. The
Respondent informed the Appellant that the document was a “marriage paper” at which she
signed the agreement.
Procedural History:
Mrs. Chaplain asked the court to determine whether the agreement was unconscionable. The trial
court found that the agreement was prima facie not unconscionable and granted the husband’s
motion to strike. She appealed and the Virginia Court of Appeals granted a review.
Issue:
Did the trial court err in finding that the premarital agreement between the Chaplains was not
unconscionable?
Applicable Rule(s) of Law:
“There is a two-step test that courts must apply in determining whether an agreement is
unconscionable: 1) a gross disparity existed in the division of assets and 2) overreaching or
oppressive influences… [G]ross disparity in the value exchanged is a significant factor in
determining whether oppressive influences affected the agreement to the extent that the process
was unfair and the terms of the resultant agreement unconscionable… In addition to a showing
of gross disparity, [c]ourts must view the apparent inequity in light of other attendant
circumstances to determine whether the agreement is unconscionable and should be declared
invalid… When the accompanying incidents are inequitable and show bad faith, such as
concealments, misrepresentations, undue advantage, oppression on the part of the one who
obtains the benefit, or ignorance, weakness of mind, sickness, old age, incapacity, pecuniary
necessities, and the like, on the part of the other, these circumstances, combined with inadequacy
of price, may easily induce a court to grant relief, defensive or affirmative.” Chaplain v.
Chaplain, 682 S.E. 2d 108, 773-774 (Va. Ct. App. 2009).
Holding:
Yes. The premarital agreement between the Chaplains was unconscionable.
The Court’s Order:
Reversed and remanded for further proceedings.
Reasoning:
9
That under the premarital agreement the husband would retain his entire estate (estimated at $20
million), while the wife would receive nothing except $100,000 if she continued to live with the
husband till his death was a sufficient showing of gross disparity. Throughout her marriage to the
Respondent, the Appellant had no income source, as she had left her job in Morrocco to be with
her husband in the United States
In addition to the gross disparity in the division of marital assets, “other attendant
circumstances… such as… ignorance, weakness of mind, sickness, old age, incapacity, pecuniary
necessities, and the like… may easily induce a court to grant relief, defensive or affirmative.”
Chaplain v. Chaplain, 682 S.E. 2d 108, 774 (Va. Ct. App. 2009). Evidence that the Appellant had
only minimal English language skills at the time of executing the agreement, and as a result was
unable to read the document; the agreement was presented to her in the Respondent’s attorney’s
office, already turned to the signature page; and the husband did not discuss with her what the
agreement entailed or provided her with a copy for review was sufficient proof of unfairness and
inequality. The totality of these circumstances suggests that the premarital agreement was
unconscionable and, thus, invalid.
New Information:
No.
Questions, Comments, and Speculations:
This ruling suggests that any other factors, in addition to gross disparity, can establish
unconscionability. In other words, the primary consideration here is gross disparity. What about
situations where overarching or oppressive influences exist, but no gross disparity is present?
Bibliography
Chaplain v. Chaplain, 682 S.E. 2d 108 (Va. Ct. App. 2009).
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