Harbom v. Harbom

DAVIS, Judge. Appellant Soren Harbom was granted a Judgment of Absolute Divorce from appellee Judith Harbom in the Circuit Court for Howard County on June 8,1999. Appellant filed an action for divorce on grounds of adultery in May 1996, and appellee filed a counterclaim for divorce on grounds of constructive desertion in the same month. A consent order was entered on May 12, 1997, under which appellant agreed to pay appellee pendente lite alimony of $2,500 per month and pen-dente lite child support of $1,500 per month.

After the appointment of counsel to represent the parties’ two minor children, the parties entered into a Stipulation and Agreement Regarding Custody, under which they were awarded joint legal custody of both children and appellee was granted primary physical custody. This agreement was incorporated into a Consent Order entered on June 25, 1997. After a hearing on appellant’s Exceptions to the Master’s Written Report and Recommendations, the court awarded appellee $1,600 in retroactive alimony and $800 in retroactive child support in an order entered on June 10,1998. The case proceeded to trial on the merits on September 8, 1998, on appellant’s complaint and appellee’s amended counterclaim.

After the trial court filed its Judgment of Absolute Divorce and appellant filed a Motion to Alter or Amend Judgment on June 11, 1999, the court denied the motion on August 16, 1999, and this appeal ensued. Appellant raises six ⁴³⁸ questions for our review and appellee filed a cross-appeal, raising eight questions. Because some of these questions address the same issues, we list them together, rephrased, and renumbered as follows: I. Did the trial court err in determining that the prenuptial agreement was valid and enforceable?

II

Did the trial court err in classifying certain property as marital or nonmarital?

III

Did the trial court err in ordering appellant to transfer title of a van to appellee?

IV

Did the trial court err in granting appellee indefinite alimony? V. Did the trial court err in calculating child support?

VI

Did the trial court err in making a combined child support and alimony award that constitutes 70.5% of appellant’s net income?

VII

Did the trial court err in refusing to consider whether to grant appellant a dependency deduction?

VIII

Did the trial court err in awarding appellee counsel fees? We answer questions one through six and question eight in the negative and question seven in the affirmative, thereby affirming in part and reversing in part the judgment of the trial court. FACTUAL BACKGROUND The parties were married on June 21, 1986, in Montgomery County, Maryland. Prior to the marriage, on March 31, 1986, the parties entered into an antenuptial agreement under which each party waived “any right or claim ... in the property of [the other party, including] all future growth, interest, ... or changes in assets, traceable to [the other party’s] current ownership of the property.” Appellant also agreed to transfer title to a home known as the Billow Row property to himself and appellee as tenants by the entireties, following the marriage.

Appended to the document was a listing of appellant’s ⁴³⁹ substantial premarital assets, without valuations; whether this appendix was actually shown to appellee is disputed. At the time of the marriage, appellant’s assets included a significant stake in A/S Plastmontage, a Danish plastics company founded by appellant’s father; • a stake in Plastmo Ltd., a Canadian subsidiary of Plastmontage; several loans to Plastmo Ltd. and Plastmo Inc., an American subsidiary of Plastmontage; several investment and deposit accounts; a property in Springfield, Oregon; and the Billow Row property. Most of these assets were traceable to a gift of shares in Plastmontage in 1962 from appellant’s parents to appellant. The gift was subject to the condition that, “[i]n case our son might get married, both the stocks and the dividends from them, or anything that might replace these, will belong to him as (his) separate property.” Appellee had no substantial assets at the time of the marriage.

After the parties married, they resided at the Billow Row home, which was transferred to the parties as tenants by the entireties on March 24, 1988. Two children were born to the marriage — Kirsten Harbom, on October 18, 1987 and Lise Harbom, on September 24, 1990. In March 1989, the parties purchased as tenants by the entireties a new home on Crows Nest, which was purchased in cash, using nonmarital funds of appellant. The Billow Row home was retained as a rental property.

The parties’ marital difficulties began in 1990. There were arguments over the prenuptial agreement, appellee’s lack of financial interest in appellant’s assets, appellee’s relationship with appellant’s family, and appellant’s lack of interest in sexual relations. Appellant alleges that appellee engaged in erratic and sometimes violent behavior; appellee alleges that appellant was verbally abusive and emotionally detached. Appellant refused to attend counseling sessions on the grounds that appellee’s therapist had told her that “no marriage could be whole with a Prenuptial Agreement.” Appellee began an affair in July 1994, that continued until July 1995, when she informed appellant of the affair and of her desire to separate.

The parties agreed to stay together and work on the marriage, ⁴⁴⁰ but the problems continued and appellee met a man in December 1995, with whom she later had another affair. Appellant filed for divorce on May 7,1996. The parties resided at the Crows Nest home until their separation on October 1,1996. In December 1996, the parties executed a deed transferring the Billow Row and Crows Nest properties to appellant as sole owner, in exchange for a payment of $260,000 from appellant to appellee.

Appellee used a substantial portion of this payment to purchase a home on Clarkson Drive, which she owns with her father and where she and the children reside. Appellant is forty-one years of age, holds a high school degree, and has worked for Plastmontage and Plastmo, Inc., during his adult life. Appellee is forty-one years of age and holds an undergraduate teaching degree, with a current certification in special education. At the time of the marriage, she was working as a special education teacher for Calvert County Public Schools.

Additional facts will be provided as they become relevant to our discussion of the issues raised in this appeal. DISCUSSION I Alleging that “[appellant] admitted that neither the assets or their values were disclosed,” appellee contends that “case law holds this failure invalidates the agreement.” We begin with the proposition that, under general contract principles, parties should be free to enter into contracts and such agreements entered into freely, voluntarily, and with knowledge of all relevant facts should not be set aside simply because one of the parties subsequently decides that he or she made a bad deal. College of Notre Dame v. Morabito Consultants, Inc., et al., 132 Md.App. 158, 173-74 , 752 A.2d 265 (2000); Missouri, Kan. & Tex. Ry.

Co. v. Harriman Bros., 227 U.S. 657 , 33 S.Ct. 397 , 57 L.Ed. 690 (1913). Absent fraud, mistake or duress, courts are averse to interfere with the right ⁴⁴¹ to freely contract unless an agreement is unconscionable in its affect or the manner of procurement or one party is manifestly in a superior bargaining position, i.e., a confidential relationship. Even so, that inequality may be cured by the access to legal counsel by the party in the less advantageous bargaining position. As to antenuptial agreements, forty-five years ago, Maryland followed the general rule that “an antenuptial contract which provides for, facilitates or intends to induce a separation or divorce of the parties after marriage is contrary to public policy, and is therefore void.” Cohn v. Cohn, 209 Md. 470, 475 , 121 A.2d 704 (1956).

The rationale was based on the Court’s distinction between agreements that have a natural tendency to induce separations, and those that represent a fair and reasonable compromise, after a separation had occurred or when one is in immediate contemplation. Id. at 476 , 121 A.2d 704 . The Court of Appeals, however, in Frey v. Frey, 298 Md. 552 , 471 A.2d 705 (1984), repudiated the prohibition of antenuptial agreements based on public policy, observing that “the common law is ... subject to modification by judicial decision in light of changing conditions or increased knowledge where this Court finds that it is a vestigue of the past, no longer suitable to the circumstances of our people.” Id. at 562 , 471 A.2d 705 (citing Felder v. Butler, 292 Md. 174 , 438 A.2d 494 (1981)). The Court held that “the policy reasons supporting Cohn [are] no longer suitable today.” As a result of that holding, the Court concluded that there was no longer to be a distinction drawn upon whether an antenuptial agreement is in contemplation of death of one of the spouses or the dissolution of the marriage.

The Court then went on to pronounce that the validity of such agreements must be evaluated upon the factors indicated in Hartz v. Hartz, 248 Md. 47 , 234 A.2d 865 (1967). In Hartz , the Court characterized the nature of the relationship between the parties and the requirement for there to be valid agreement: Levy [v. Sherman, 185 Md. 63 , 43 A.2d 25 (1945) ] and Ortel [v. Gettig, 207 Md. 594 , 116 A.2d 145 (1955) ] establish the law of Maryland to be that there is a confidential ⁴⁴² relationship between a man and a woman who are about to enter into an antenuptial agreement whether or not they are then engaged and whether or not the marriage is to be one of convenience; that this confidential relationship calls for frank, full and truthful disclosure of the worth of the property, real and personal, as to which there is a waiver of rights in whole or in part, so that he or she who waives can know what it is he or she is waiving. If there is adequate knowledge of what that frank, full and truthful disclosure would reveal, this may serve as a substitute though there has been no such disclosure. If there is neither proper disclosure nor actual knowledge and the allowance made to the one who waives is unfairly disproportionate to the worth of the property involved at the time the agreement is made, the burden is cast upon the one who relies on the agreement to prove that it was entered into voluntarily, freely and with full knowledge of its meaning and effect.

The reviewing court is much more apt to find there was voluntary and understanding execution if the one who later asserts invalidity had independent legal advice as to the execution.... The real test in a determination of the validity of an antenuptial agreement is whether there was overreaching, that is, whether in the atmosphere and environment of the confidential relationship there was unfairness or inequity in the result of the agreement or in its procurement. Frank, full and truthful disclosure of what is being relinquished (or in lieu thereof actual knowledge otherwise available or obtained) is the key that turns the lock of the door leading to impregnable validity. (Emphasis added; footnotes omitted.) Citing Lindey, Separation Agreements and Antenuptial Contracts, § 90-44, the Court addressed the test in determining the validity of antenuptial agreements: If there is not adequate disclosure or knowledge (we will assume that the chancellor was not in error in deciding there was not), the validity of the agreement must be tested by other standards — that is, was the benefit to the wife commensurate with that which she relinquished so that the ⁴⁴³ agreement was fair and equitable under the circumstances — and did the subsequent would-be repudiator of the contract enter into the agreement freely and understandingly.

Lindey, Separation Agreements and Ante-nuptial [sic] Contracts, § 90-44, points out that failure to disclose or lack of precise knowledge will not necessarily be fatal to the validity of an antenuptial agreement, saying: “The test of the adequacy of the provision will still remain, and if it is met, the agreement may be enforced. For the basic issue is overreaching, not the absence of disclosure. If the intended wife is not prejudiced by the lack of information, she may not repudiate.” In determining whether or not the one who waives was prejudiced or unfairly or unreasonably treated, either in result or in being induced to enter into the contract to waive, the courts have weighed and assessed various pertinent and relevant factors, including the situation of the parties, their ages, their respective holdings and income, their respective family obligations or ties, the circumstances leading to the execution of the agreement, the actions of husband and wife after the marriage as they tended to show whether the agreement was voluntarily and understandingly made, the needs of him or her who made relinquishment, including whether or not that one, after the death of the other, can live substantially as comfortably as before the marriage. (Citations omitted.) With respect to the requirement for disclosure, citing Lindey, § 90-44, Hartz observes, “While the disclosure should be full, fair and open, it has been said it need not be a drastically sweeping one, and the wife need not know the husband’s [ 1 ] ⁴⁴⁴ exact means, so long as she has a general idea of his property and resources.” Hartz, 248 Md. at 57, n. 4 , 234 A.2d 865 .

From the above, we glean certain general principles. First, if the parties wish to insulate the agreement from subsequent challenge on the basis of overreaching, full, frank, and truthful disclosure serves to make the validity of the agreement “impregnable.” The alternative to full disclosure is proof that the disgruntled party had a “general idea” of the spouse’s property and resources. When there is neither full disclosure or actual knowledge and the allowance to the party who waives is unfairly disproportionate to the worth of the property involved, the party seeking to uphold the agreement simply must shoulder the burden to prove that it was entered into voluntarily, freely, and with full knowledge of its meaning and effect. Concerning the validity of the antenuptial agreement, the trial court stated: [Appellee] claimed that there was no disclosure of assets or that the value of the items in the prenuptual [sic] agreement was not disclosed to her.

Although the agreement does not disclose the value of the assets, the case law indicates this fact alone is not dispositive. Here it appears the [appellee] had her father, who is a lawyer and had knowledge of financial matters, negotiate the arrangement, or the agreement, on her behalf, and an independent lawyer drafted the agreement. It also appears to the [c]ourt from testimony that [appellee] had reasonably good understanding of what she was giving up. She may not have known the dollar amount, but that does not change the fact that she knew that Plastmo was worth a lot of money, and she gave it up.

Did she make a wise agreement from her point of view? No. But it’s a binding one. ⁴⁴⁵ During the course of appellant’s direct examination, the following transpired: Q. Okay. Did there come a time when the agreement had been prepared? A. Yes, there did.

Q. Okay. And what did you do? A. I — I looked at the agreement and it was sent up to my father for his — for him to read. Q. And then how did you know that it was okay with [appellee]?

A. Because I knew my father had forwarded it to [appel-lee’s] father and I know from [appellee] that he encouraged her to sign it. The following exchange occurred when appellant’s father testified: A. Yeah, we had a very nice dinner, and when dinner was finished [appellee’s father] said to me, let us go in here in the other room and speak about economics. Q. And the economics meant in your mind? A. That meant the Prenuptial Agreement.

Q. Prenuptial, okay. So when you met with him what occurred? A. The first thing that happened was that he asked me to tell a little about the family history. So — said where all this money came from, and I told him that (indiscernible) had been in wholesaling and had a wholesaling business, but that we in 1958 started a plastic business called Plastmontage.

That was the beginning of Plast-mo. And then I also told him that we have shares, how many shares (indiscernible) the same amount of all of them, and that was 1962, but we have taken and made it a condition that when they married they should have a Prenuptial Agreement, and that had been made for the two sons already. That was in Danish, of course. But I translated to [appellee’s father] what it said. ⁴⁴⁶ Paragraph 3 of the prenuptial agreement reads, in pertinent part: “This waiver shall attach to all future growth, interest, dividends, profits, additions, accumulated income, or changes in assets, traceable to, arising out of, or in any way or manner derived from HARBOM’s current ownership of the property listed on Exhibit A.” (Emphasis added.) Exhibit A, the schedule of property without valuation referenced in the agreement, includes: 1) All shares of A/S Plastmontage 2) All shares of Plastmo Limited 3) All existing accounts, certificates of deposits, etc. in [appellant’s] name in Maryland National Bank and Pri-vatbanken (Denmark) 4) All individual loans by [appellant] to Plastmo Limited and Plastmo, Inc. 5) All stocks, cash accounts or bonds in Alex Brown’s and Paine Weber’s house accounts in the name of [appellant] 6) The property on Shelley Street in Springfield, Oregon.

In a correspondence, dated January 3, 1986, from appellant’s father to appellee’s father, the former expressed the expectation that appellee’s father would explain the terms of the agreement to his daughter and that any objections to the agreement should be communicated to appellant’s father: Dear Bob, This prenuptural [sic] agreement has been prepared by attorney at law [M]r. E. Alexander Adams, Elicott [sic] City, Maryland. I know, it is important for [appellee], that she will have a joint ownership of their common home, and this agreement will take care of that and should be according to the Maryland law. I hope that you can agree and that you will speak with [appellee] about the agreement, so that she will understand, that it "will have no effect in their daily life. ⁴⁴⁷ I appreciate very much your cooperation in this matter, and if you have any objections, please feel free to contact me.

Ays and I want you to know, that we are very happy with [appellee], and that we feel, that [appellee] and [appellant] will have all possibilities to get a happy and good life together. We send you our regards and best wishes for the new year to yourself and your whole family. Sincerely yours, Despite her acknowledgement that she accompanied appellant to the office of the lawyer who prepared the agreement, appellee testified that she did not remember seeing the schedule of appellant’s assets and she further claimed to have had no memory of any meeting between her father and appellant’s father or that the agreement was ever explained to her before she signed it. From the foregoing, the trial court had before it testimony, as well as correspondence from appellant’s father to appellee’s father, that the antenuptial agreement had been forwarded to appellee’s father who had encouraged appellee to sign it.

The antenuptial agreement, executed by appellee, referenced the schedule of appellant’s assets, which at the very least served to put appellee and her father on notice of the schedule if it was not appended to the agreement. Moreover, the testimony of appellant’s father was that, during a conversation regarding the antenuptial agreement, appellee’s father had said “where [sic] all this money came [sic] from, and I told him that (indiscernible) had been in wholesaling and had a wholesaling business.... ” Appellant’s father also told appellee’s father that, for business reasons, he had insisted on prenuptial agreements when two of his other sons had married. From the testimony regarding the substance of the conversation between the fathers of appellant and appellee in their meeting after dinner and the correspondence concerning the antenuptial agreement sent to appellee’s father, the trial judge could certainly infer that appellee’s ⁴⁴⁸ father had relayed the information received during his conversation to his daughter and had discussed whether she should agree to the terms contained therein. Significantly, appellant’s father underscored the fact that there were business reasons for his insistence that his sons have antenuptial agreements executed before they married and a further inference is that appellee’s father, a Harvard-trained tax attorney, understood that, given the nature of the property as nonmarital, appellee would have no legal claim to the value of appellant’s assets at the time of the marriage even without the antenuptial agreement.

As an attorney negotiating in his daughter’s best interest, therefore, he sought to have their residence at Billow Row conveyed from appellant to appellant and appellee as tenants by the entireties. As noted earlier, appellant is forty-one years of age and a high school graduate who has worked for Plastmontage and Plastmo, Inc. for his entire adult life. Appellee, also forty-one years of age, is a college graduate with a current certification in special education. Although appellant’s assets and income are substantially greater than appellee’s, his holdings are, for the most part, derived from the family business.

Regarding the actions of husband and wife after the marriage as tending to show whether the agreement was voluntarily and understandingly made, all of appellee’s protestations that she was unaware of appellant’s assets and that she did not knowingly and intelligently execute the antenuptial agreement, are contradicted by the circumstances leading to the execution of the agreement. Those circumstances include the fact that appel-lee acknowledged going to the law office of E. Alexander Adams to execute the agreement, the extensive discussions between her father and appellant’s father about the nature and extent of the family business of appellant, the correspondence in which appellant’s father advised appellee’s father to “feel free to contact me” if he had any objections, the fact that, as a result of the negotiations of appellee’s father, appellant’s residence was deeded to husband and wife, jointly, and, notably, appellee’s father was a Harvard-trained tax attorney who ⁴⁴⁹ actively participated in the negotiations and execution of the antenuptial agreement. The trial court, in observing that the agreement “[did] not disclose the value of the assets,” stated that the case law indicates that this fact alone is not dispositive. The court noted that appellee’s father is a lawyer, that he negotiated the agreement on his daughter’s behalf and that appellee “had reasonably good understanding of what she was giving up.” Although the court did not cite to Hartz or the particular “case law” to which she referred, it is well settled that trial judges are presumed to know the law and apply the law correctly to the case before them.

Strauss v. Strauss, 101 Md.App. 490, 511 , 647 A.2d 818 (1994). The lower court, in noting the aforementioned circumstances leading to the execution of the agreement, set forth the substance of the rationale underpinning her conclusion that, notwithstanding that there was no valuation of the assets on the schedule of appellant’s property, “she knew that Plastmo was worth a lot of money, and she gave it up.” We are satisfied that this finding, under the circumstances of the case sub judice, is consistent with the principle espoused in Lindey, Separation Agreements and Antenuptial Contract, § 90-44, that the disclosure need not be a drastically sweeping one and the wife need not know the husband’s exact means so long as she has a general idea of his property and resources. The discussions between appellant’s father and appellee’s father regarding the nature and extent of the Harbom family holdings and the logical conclusion that appel-lee’s father shared that information with her in the course of negotiating the agreement amply support the court’s finding that appellee knew that she was relinquishing any claim to substantial holdings. While the value of the items was not disclosed, the court found that appellee had actual knowledge of every fact regarding appellant’s assets and income that she was interested in or sought to discover.

As we noted earlier, however, even if the court had found that there was neither full disclosure or actual knowl ⁴⁵⁰ edge, the agreement is not necessarily rendered invalid. As Hartz points out, the burden is simply “cast upon the one who relies on the agreement to prove that it was entered into voluntarily, freely and with full knowledge of its meaning and effect.” Indeed, the court’s finding discussed the most cogent factors which would indicate that appellee entered into the agreement voluntarily, freely and with full knowledge of its meaning and effect and that there was no overreaching. We find nothing in Hartz or decisions cited therein which require that the trial judge utter the words “appellant has sustained his burden” in order for the findings of fact to support adequately the conclusion that the agreement was voluntary. As the Court noted in Hartz , “The real test in a determination of the validity of an antenuptial agreement is whether there was overreaching, that is, whether in the atmosphere and environment of the confidential relationship there was unfairness or inequity in the result of the agreement or in its procurement.” Hartz, 248 Md. at 57 , 284 A.2d 865 .

More to the point, as Hartz explains, “For the basic issue is overreaching, not the absence of disclosure. If the intended wife is not prejudiced by the lack of information, she may not repudiate.” 2 Not only was there no evidence of overreaching in the case sub judice, appellee, with benefit of legal counsel, was given every opportunity to object or make a new proposal if the terms of the agreement were not acceptable to her. Consequently, the antenuptial agreement was valid and enforceable. II Appellant contends that the trial court erred in classifying certain property as marital or nonmarital.

He argues that the Individual Retirement Account (IRA) in appellee’s name and ⁴⁵¹ her current residence on Clarkson Drive should have been found to be marital property. Appellee disputes this contention and, for her part, argues that the Billow Row and Crows Nest properties should have been found to be marital property- Maryland Code (1999 RepLVol.), Fam. Law (F.L.) § 8-201(e), defines marital property as follows: (1) “Marital property” means the property, however titled, acquired by 1 or both parties during the marriage. (2) “Marital property” includes any interest in real property held by the parties as tenants by the entirety unless the real property is excluded by valid agreement.

(3) Except as provided in paragraph (2) of this subsection, “marital property” does not include property: (i) acquired before the marriage; (ii) acquired by inheritance or gift from a third party; (iii) excluded by valid agreement; or (iv) directly traceable to any of these sources. With this definition in mind, we shall consider each disputed item in turn. Appellee’s IRA Appellant contends that the trial court erred in classifying the IRA in appellee’s name as nonmarital, arguing that the IRA was a gift from appellant to appellee. Appellee counters that appellant deposited the money into the account with the “intention to give up any future claim” in the funds, noting that appellant normally took care that all property was titled solely to himself.

Appellant states that “[i]t is elementary that a gift between spouses is marital property,”