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Derby v. Derby, 378 S.E.2d 74 (Ct. App. 1989)
Parties:
Sandra Derby (Appellant)
George Derby (Appellee)
Facts:
Sandra Derby (Appellant) filed for divorce alleging cruelty in marriage. George Derby
(Appellee) countersued alleging adultery by Sandra Derby. George Derby was deceived into
signing an amended separation agreement giving Sandra the sole owner of most of the parties'
marital property. George signed the agreement without his counsel and under the belief that
Sandra would return home to reconcile, in which this was not true of her intention. She denied
that she ever stated that to him. During the trial, a private investigator testified that Sandra was
observed on multiple occasions sharing overnight visits with another man, as well as the two of
them confirming their romantic involvement through public displays of affection.
Procedural History:
In 1983 in the Circuit Court of Norfolk, Sandra Derby sought a dissolution of marriage on the
grounds of cruelty. In response, George Derby sued in 1985 claiming that she had committed
adultery. The Circuit Court ordered the divorce and declared the separation agreement
unenforceable as an agreement that had been made under circumstances where it was
unconscionable. Sandra appealed in the Court of Appeals of Virginia against the ruling made by
the circuit court.
Issues:
Was the separation agreement unenforceable because it was unconscionable and was obtained by
constructive fraud or duress?
Applicable Rule(s) of Law:
Unconscionability is “the level of unfairness and unreasonableness of a contract or deal that
leads a court to change or void it.” U.C.C. § 2-206 states, “An agreement otherwise legal shall
not be found invalid except ‘with clear and convincing evidence’ that the agreement was
unconscionable, and ‘a constructive fraud or duress result in the making of the agreement.
Holdings:
The court determined that while the separation agreement was formally valid, it was
unconscionable due to the unequal distribution of property.
Court’s Order:
The Court of Appeals upheld the judgment of the Circuit Court because the testimony that was
presented was not refuted, along with the other circumstantial evidence of Sandra Derby's
adultery led to George Derby being granted a divorce. Furthermore, it established that the
property settlement agreement was unconscionable and induced by fraud, thus nullifying the
agreement.
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Reasoning:
Sandra Derby engaged in constructive fraud by presenting the agreement after hours to George
Derby before he had the opportunity to review it with his attorney. Sandra Derby was deceitful in
negotiating the separation agreement, as Sandra suggested that she would come back to the
family home if the agreement were signed. Sandra's message was a misrepresentation, and
Sandra had taken advantage of her husband, George Derby, who prior to this was at an
emotionally vulnerable and weak stage in his life, because Sandra was lying about her act(s) of
adultery, giving the impression that she wanted to return when in fact she did not; therefore, this
was fraud. George’s emotional state was established during trial by expert Psychiatrists whose
testimonies proved Sandra’s actions were unconscionable. Under the amended deal, Sandra
Derby would have received 100 percent of the marital property, valued at $260,000 as
apartments or $423,000 if it were to be turned into condominiums, and George Derby would
have waived any claim to spousal support.
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Galloway v. Galloway, 622 S.E.2d 267 (Va. Ct. App. 2005)
Parties:
Ruth Galloway (Appellant)
David Galloway (Appellee)
Facts:
Before entering divorce, Diana and David Galloway executed a notarized property settlement
agreement under which Diana Galloway received their vehicle with a value of $11,000.00, and
David Galloway received any of the interest in the marital residence and the business valued at
$200,000.00. The agreement stated that the parties waived spousal support as well as a portion of
the pension accounts. David Galloway brought the agreement to Diana, and she declined to
obtain an attorney, as he insisted. The following day David and Diana went to the bank where the
agreement was notarized and endorsed between the two. During the proceedings, Diana
attempted to contest the terms of the agreement, claiming to have read the agreement, agreed to
sign it and voluntarily went to the notary. She also testified that David Galloway told her that he
would take her to court if she did not sign the agreement. Gross disparity also played a role in
which it was found that the property agreement was unconscionable. David filed objections to
this ruling, and the decision was overturned in David’s favor.
Procedural History:
Before signing both parties examined the terms of the agreement before voluntarily signing. The
parties renounced spousal support and pension interests, and David Galloway retained all rights
to marital residence and business. A second reason the commissioner found the agreement to be
unconscionable was the gross disparity between the two parties. The conclusion did not find the
agreement to be unconscionable because these and other factors of unconscionability were not
met in the case, from a trial court perspective.
Issues:
Can the agreement be found unconscionable based on the gross disparity of the distribution of
marital assets?
Applicable Rule(s) of Law:
Under the Rule of Law of Unconscionability, applicable in the state, severely oppressive and
unjust agreements may be set aside, but this can only be established by clear and convincing
proof of the agreement's unconscionability, or of constructive fraud or duress in its procurement.
There was no evidence (such as bad faith, concealments, misrepresentations, undue advantage, or
oppression) as Diana indicated.
Holdings:
The court concurred with the trial court's ruling that the property settlement agreement was not
unconscionable, because while Diana Galloway established that the value of the division of
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marital assets was grossly disparate, she made no showing of overreaching or oppressive conduct
by David Galloway.
Court’s Order:
Rule of Court affirmed the trial court was correct in finding this agreement to be valid.
Reasoning:
The validity of the agreement is the result of testifying of Diana Galloway that she voluntarily
signed the agreement giving up interest in the marital residence and the business and no evidence
of overreaching or other oppressive conduct had been established by David Galloway and thus
the validity of the agreement was upheld. It follows from this case that gross disparity alone does
not make for unconscionability, but gross disparity together with "bad faith, as for concealments,
misrepresentations, undue advantage, [or] oppression on the part of the one who obtains the
benefit.
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Sims v. Sims, 55 Va. App. 340 (2009)
Parties:
Barbara Sims (Appellate)
Marvin Sims (Appealle)
Facts:
Mr. Sims and Mrs. Sims married in 1968 and separated in 2006. Mrs. Sims asked for fifty
percent of all classifiable marital property. At the time of the divorce, Mr. Sims did not want to
sell the property and agreed to pay wife $2,000.00 per month until such time as wife had
received half of everything they owned. With this implication, Mr. Sims attorney offered up a
property settlement agreement to Mrs. Sims. Mrs. Sims would not agree to this settlement,
because there was no provision for the division of husband’s retirement and deferred
compensation. In 2007, Mrs. Sims stated she wanted the divorce to be finalized quickly and did
not want half of the marital property. Mr. Sim's lawyer drafted a property settlement agreement
in which the pair both waived their rights to any order for spousal support and equitable
distribution. Mrs. Sims signed this document but received nothing other than the 1999 pickup
truck. Mr. Sims received the martial home ($200,000), a deferred profit-sharing account
($128,000) and retirement ($2,400 per month). Mr. Sims then counterclaims that agreement is
unconscionable, and Mrs. Sims responds by filing a motion to reconsidering contending that she
is 100% disabled and had been diagnosed with a series of physical and mental illnesses in which
the side effects from the medications she was taking caused her to not be competent enough to
comprehend what she was signing and any other legal implications regarding Mr. Sims receiving
nearly 100% of the marital property.
Procedural History:
The significant disparity in the couple's division of the marital property leads to a trial court
determining that the agreement is unconscionable. Mrs. Sims moved for reconsideration and the
trial court ruled the agreement valid and not unconscionable. The Virginia Court of Appeals
remanded for proceedings consistent with the opinion that agreement was unconscionable and
reversed.
Issues:
Was the agreement unconscionable based solely on the gross disparity in the division of marital
assets?
Applicable Rule(s) of Law:
According to section 2-302 of the UCC, “if the court as a matter of law finds the contract or any
clause of the contract to have been unconscionable at the time it was made the court may refuse
the contract”. For a marriage agreement to be deemed unconscionable, there must be evidence
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that the division of marital assets was grossly inequitable. Marital contracts involve some mutual
vulnerability that is prone to overreaching and oppressive forces between the parties.
Holding:
The evidence established an unequal division of marital property and the pecuniary necessities.
Due to the unconscionability of the agreement, the court reversed and remanded for further
proceedings.
Court’s Order:
In the divorce matter, the wife requested the judge to refuse to enforce the agreement as
unconscionable. The wife was "permanently disabled" and on state food stamps by the time Mr.
Sims went to court to divorce her. Trial court invalidated the property settlement agreement as
unconscionable due to gross disparity in division of marital property. Wife moves for
reconsideration of husband's motion. Initially, trial court finds the agreement should be set aside.
Trial court reverses itself, now finding the agreement consequently should be allowed
considering wife's proof being only of "a gross disparity in the value" of the division of assets,
instead of proof that husband's conduct was "overreaching and oppressive". The case was then
remitted for appeal to the Virginia Court of Appeals. The appeals court also recognized that a
trial court must find two elements to invalidate a property settlement agreement as
unconscionable in Virginia. These factors result in a huge imbalance in asset separation and
indication of overreaching or the presence of an unfair factor. On that point, the court
acknowledged that “marital contracts differ from ordinary commercial contracts because the
husband-wife relationship is uniquely prone to overreaching, and because the state has an interest
in preventing a spouse from becoming a public charge.
Reasoning:
Although the evidence before the court did not establish the husband had acted in an oppressive
or overreaching manner, the court held that “where there is an obvious imbalance in the division
of property to the point of demonstrating a hardship of a pecuniary nature on one side, it
demonstrates both elements of the unconscionability test. As a result, the contract was
determined to be as unjust and not enforceable.
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Chaplain v. Chaplain, 682 S.E. 2d 108 (Va. Ct. App. 2009)
Parties:
Rabha Chaplain
Billy W. Chaplain
Facts:
Mrs. Chaplain was visiting the United States from Morocco when she met and married Mr.
Chaplain in 1997. Before getting married, they prepared a premarital agreement, relinquishing
rights to each other's property and equitable distribution, spousal support, retirement, and
inheritance. Mr. Chaplain testified that Mrs. Chaplain suggested that her family's resources were
comparable to or more significant than his own. At the time of signing, Mr. Chaplain’s net worth
was approximately twenty million dollars, which was not disclosed because the premarital
agreement failed to provide a disclosure of assets for each party. During trial, Mrs. Chaplain,
speaking through an interpreter, later argued that she did not understand the agreement because
of she was not fluent in English and could not adequately comprehend the terms of the contract.
It was discovered that Mrs. Chaplain was a well-educated woman who would have been
employable had she attempted to secure employment. It was also discovered that she was more
fluent in English than she wanted the courts to believe and was capable of being self-sufficient.
Procedural History:
Mrs. Chaplain appealed the trial court’s decision to contest the finding that the agreement was
free from unconscionability due to the absence of disclosure and the absence of lack of
comprehension. The court reviewed the evidence and concluded that the premarital agreement
had been valid.
Issues:
Is the premarital agreement between husband and wife unconscionable, or is it a valid and
enforceable contract?
Applicable Rule(s) of Law:
Any unconscionability in a premarital agreement is a legal issue for the court to determine. A
marriage agreement will be considered unconscionable if the division of marital assets is grossly
out of proportion. It also must be established by clear and convincing evidence that the party
gaining a benefit exercised undue influence or overreaching or oppressive influence. There was
not any evidence proven during court that either of these conditions applied. Mr. Chaplain did
not disclose his wealth, which does not, per se, establish bad faith, over-reaching by himself or
oppressive influences. Similarly, the evidence did not demonstrate a significant difference
between the parties with respect to their assets. The trial court found that the evidence showed
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that Mrs. Chaplain had the intellectual ability to understand the terms of the premarital
agreement, and that Mrs. Chaplain had not established a lack of ability to support herself because
she was educated and skilled enough to gain employment.
Holding:
The court granted husband’s motion to strike wife’s evidence. Husband claimed that his net
worth was not subject to equitable distribution, and under the terms of the premarital agreement
that wife signed voluntarily, he would retain his entire net worth upon separation.
Court’s Order:
The evidence supported the trial court's finding that wife executed the premarital agreement
knowingly, intelligently, and voluntarily. Accordingly, they reversed and remanded the case to
the trial court for further proceedings.
Reasoning:
Since neither party made a financial disclosure when the premarital agreement was signed, the
court's evidence did not reflect that husband had made a direct showing of oppressive or
overreaching conduct. The evidence did not show that a disproportionate division of assets
created a gross disparity that the courts that typically honor premarital contracts (even if they are
not in a signed agreement).The wife stated that she did not fluent in English at the time of
signing the agreement hence she did not understand it well, however there was no proof that the
wife had limitations (whether it be intellectually or physically) at this time. Also, husband
testified that wife said if he sought to divorce her that she would try to pretend that she cannot
understand English so that the prenuptial would be ineffective. As such, the premarital agreement
is valid and enforceable, because wife executed the premarital agreement having full
appreciation of her legal rights and the consequences of signing the agreement, and she did so
knowingly and voluntarily.
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