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DIVORCE 10: For an agreement to be unconscionable, there must be both procedural unconscionability and substantive unconscionability.

Plaintiff and defendant were married in 2011, and separated on December 23, 2016. The parties do not have children in common, but defendant has a minor child from a previous marriage. On December 23, 2016, the parties signed a handwritten property settlement agreement, and on December 27, 2016, the parties executed a typed version of the property settlement agreement. Plaintiff filed a complaint for divorce on December 28, 2016, followed by a motion for entry of proofs and judgment on February 9, 2017, after defendant had signed a proposed consent judgment of divorce the previous day, which incorporated the settlement agreement.

Despite having signed the proposed divorce judgment, defendant filed an answer to the divorce complaint on February 28, 2017, and on March 2, 2017, she filed a response to plaintiff’s motion for entry of proofs and judgment, along with a motion to restore her possession of the marital home. Defendant claimed arguments premised on unconscionability.

In order for a court to determine that an agreement was unconscionable, there must be both procedural unconscionability and substantive unconscionability.  Procedural unconscionability arises when the weaker party to a settlement agreement had no realistic alternative but to accept the agreement.  Substantive unconscionability exists where the challenged term is not substantively reasonable.  The challenged term must be more than merely disadvantageous; its inequity must be so extreme as to shock the conscience.

In this case, the court ruled that the settlement agreement was not procedurally unconscionable because, given the circumstances, defendant was not in a situation where she had no realistic alternative to the agreement. And the court additionally ruled that even had the defendant demonstrated procedural unconscionability, defendant’s unconscionability claim would fail because the court is not satisfied that it was presented with sufficient evidence to rule whether substantive unconscionability is present.

First, with regard to procedural unconscionability, defendant had the realistic alternative of litigating the divorce in an attempt to receive an award that included division of the company. And considering the economic circumstances of the parties, defendant would likely have been entitled to an award of attorney fees to assist her in covering the expenses of the action.

There was also significant evidence that defendant did not sign the agreement on December 27, 2016, out of duress, economic or otherwise.  The amicable text messages and communications between defendant and plaintiff covering the period from December 23 to December 27, 2016, the testimony of the notary public, and the evidence showing the child having interactions with plaintiff, absent intervention or concern by defendant, all reflected that defendant was freely and willingly entering into the agreement on December 27, 2016. The trial court did not err in finding that defendant was not coerced into signing the settlement agreement and that she was not acting under duress.

Second, with respect to substantive unconscionability, the trial court was absolutely correct in its determination that it was not presented with adequate evidence to find that the settlement agreement was unconscionable.  The record lacked in evidence concerning the value of the Plaintiff’s company and the extent of its debt.

Defendant di not shown that the settlement agreement shocks the conscience. Reversal is unwarranted.

Were you just served with divorce papers? Do you believe that divorce is the only option left for your marriage?  At the Plymouth and Ann Arbor law firm of Aldrich Legal Services, our attorneys have the skill and experience you need to address all family law issues that may arise during your divorce.

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