In our CFL course, you learned a lot about how to look for assets and divide them fairly in property settlement agreements (PSAs). One or both parties usually talk to a lawyer before they proceed. But, as in the recent case of Hope-Harnish v. Harnish, that doesn’t always happen.
The Court of Special Appeals in Maryland considered the case, which involved invalidating the couple’s PSA because it gave most of the assets to the husband, and the wife signed it without consulting a lawyer.
The couple separated in early January 2015 after six years of marriage. Days later, Glen Harnish presented his wife with a marital settlement agreement his lawyer had drafted.
The agreement claimed to give him their house, two rental properties, two cars, two motorcycles, and all retirement accounts. It also required Jacqueline Hope-Harnish to waive any claims for rehabilitative or permanent alimony. In exchange, the property settlement agreement offered her a one-time payment of $7,000. Ms. Hope-Harnish signed the PSA without seeing an attorney.
During the trial court proceedings, Glen filed a complaint for absolute divorce, while Jacqueline filed an answer and a counter-complaint, also seeking absolute divorce. She also encouraged discovery in the form of interrogatories and document requests to determine the value of the marital assets. Those assets concerned the value of all property more than $1,000, regardless of how it was titled, debts, real property rental income, tax return data, Glen’s income, and information about his annual leave.
Glen didn’t answer the discovery request, and instead filed a motion for a protective order under Maryland Rule 2-403. He argued that the PSA resolved all financial issues between the couple, and as a result, the discovery requests exceeded their proper scope. In her reply, Ms. Hope-Harnish filed an opposition to Glen’s motion for a protective order and a motion to set aside the settlement agreement because she believed it wasn’t valid.
The circuit court granted Glen’s protective order and denied Jacqueline’s motion for reconsideration and to invalidate the PSA. Months later, the circuit courted granted the couple a divorce, and Jacqueline appealed to void the PSA.
Court of Special Appeals Verdict
The appeals court argued that “this case boils down to whether the trial court erred in precluding Hope-Harnish from obtaining discovery.” It added that Jacqueline also appealed on the grounds that the trial court erred in placing the burden of proof on her to void the PSA and in its decision that she had consented to the agreement after she signed it. “We decline to reach either of these issues.”
The court noted that the main issue in Ms. Hope-Harnish’s argument for invalidating the PSA was that it was “substantively unconscionable.” In Maryland, an agreement can be either “substantively unconscionable” or “procedurally unconscionable.” Procedural unconscionability involves the processes through which the contract was created. Substantive unconscionability means a “one-sided” or unfair contract is unreasonable and therefore, unenforceable. But to void it, the law must find it unreasonable.
In this case, that involved finding the exact value of the assets assigned to Glen and those assigned to Jacqueline through discovery.
Glen’s refusal to provide his asset data prevented the trial court from getting enough information to decide whether it could enforce the PSA.
The appeals court ruled that “This is further evidence that the information Hope-Harnish sought to discover was relevant under Maryland Rule 2-402(a).” As a result, it held that the circuit court abused its discretion in denying Jacqueline’s discovery requests.
It dissolved the protective order and instructed the trial court, after an appropriate amount of time for discovery, to hold a new hearing to determine whether it should invalidate the PSA. It further went on to state that the trial court erred and it returned the case with instructions for further proceedings.
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Mdcourts.gov. (2019). [online] Available at: https://mdcourts.gov/sites/default/files/unreported-opinions/1236s17.pdf [Accessed 29 Aug. 2019].