*** FOR PUBLICATION IN WEST’S HAWAI‘I REPORTS AND PACIFIC REPORTER ***
Electronically Filed Supreme Court SCWC-XX-XXXXXXX 28-FEB-2022 12:20 PM Dkt. 7 OP
IN THE SUPREME COURT OF THE STATE OF HAWAIʻI
---o0o--- ________________________________________________________________
JOE CROFFORD, Petitioner/Plaintiff-Appellee,
vs.
KRISTI ADACHI, Respondent/Defendant-Appellant. ________________________________________________________________
SCWC-XX-XXXXXXX
CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS (CAAP-XX-XXXXXXX; FC-D NO. 13-1-7625)
FEBRUARY 28, 2022
RECKTENWALD, C.J, NAKAYAMA, McKENNA, WILSON, and EDDINS, JJ.
OPINION OF THE COURT BY RECKTENWALD, C.J.
I. INTRODUCTION
At issue is whether marital agreements that consider
fault or misconduct when dividing the marital property are
enforceable. The parties entered into a post-marital agreement
expressing, among other things, that if Joe Crofford (Husband)
engaged in extramarital affairs or physically harmed his wife *** FOR PUBLICATION IN WEST’S HAWAI‘I REPORTS AND PACIFIC REPORTER ***
Kristi Adachi (Wife), Wife would receive most of the parties’
joint assets. Husband contends on certiorari that the agreement
is void because it violates Hawai‘i’s public policy favoring no-
fault divorce and equitable distribution of marital property.
We have not previously considered whether marital
agreements that account for misconduct or fault when dividing the
marital property are enforceable. Upon review, we conclude these
agreements are not enforceable.
II. BACKGROUND
The parties were married in 1999. 1 At the time of their
marriage, Wife owned significant assets, including two homes in
Kailua, Hawai‘i and a medical practice, Hawaiian Island ENT
Specialists, Inc. Husband did not have significant marital assets
and owed more than $200,000.00 in past child support for two
children from prior marriages. Together, the parties have one
child, who was twelve years old when they separated.
Over the course of their marriage, Husband engaged in
several extramarital affairs. In March 2013, after Wife found
Husband in bed on their yacht with another woman, Wife wanted to
file for divorce. Husband pleaded with Wife not to leave the
1 The parties did not execute a premarital agreement.
2 *** FOR PUBLICATION IN WEST’S HAWAI‘I REPORTS AND PACIFIC REPORTER ***
marriage and proposed that the parties sign a postnuptial
agreement, which Wife agreed to.
In or around May 2013, Wife presented Husband with the
first draft of the Marital Agreement, which provided that Husband
would receive $200,000 in the event the parties divorced. 2
Husband rejected the first draft and refused to make any edits to
it. About two months later, Wife sent Husband a second draft of
the Marital Agreement. Husband made handwritten edits to the
second draft, but neither party executed the agreement. Instead,
the parties drafted a Marital Agreement Addendum (Addendum) to
address the issues that Husband lined or struck out in the second
draft. The Addendum, which was primarily drafted by Husband,
provided as follows:
I, [Husband] on this date of June 24, 2013 propose this post- nuptial agreement.
I have been married to [Wife] since July 24, 1999. She was the love of my life until I did not feel important to her due to her career. Instead of being the leader of the family in the godly way that I should have been, I acted out because of my sinful nature. I have been unfaithful to my wife on numerous occasions. . . . I desire to break away from my destructive behaviors and truly become the man that our Lord Jesus Christ would want me to be.
. . . .
I ask my wife for forgiveness for all my sins and will uphold my verbal, and now written promise to her regarding agreeing
2 Specifically, the first draft listed the parties’ two South Street apartments and their yacht as Wife’s separately owned property. Moreover, the draft explained that, “[i]n lieu of any payments of maintenance, spousal support . . . or an interest in [Wife’s] separately owned property in the event of a divorce, [Wife] shall pay [Husband] the sum of $200,000.00[.]”
3 *** FOR PUBLICATION IN WEST’S HAWAI‘I REPORTS AND PACIFIC REPORTER ***
to leave this marriage with honor and dignity without monetary compensation if I a[m] unable [to] change my sinful ways. Specifically, have another affair[,] either emotional or consummated, or physically harm [Wife].
In return, I ask of my wife to give me the [l]ove and [r]espect I so long for and to truly forgive my sins . . . I [also] ask her to spend more time with me[.]
(Emphasis added.)
Additionally, the Addendum addressed the allocation of
certain property. It explained:
The Sunreef 62 foot Catamaran Yacht . . . will remain the property [of Husband] and will be put in [Husband’s] trust with [Wife] named as the beneficiary in the event of [Husband’s] [d]eath and will remain the property of the trust in the event of a divorce with exception in the case of infidelity and physical harm by [Husband]. At which time the [o]wnership of the Yacht Spartan Queen will be transferred to [Wife].
The Penthouse 4501 located at One Waterfront Towers 415 South St. will remain in [Wife’s] [t]rust with [Husband] named as the [b]eneficiary.
In the event of divorce with the exception of infidelity or physical harm by [Husband], [Husband] will maintain ownership of the [yacht], which has been effectively paid in full by [Wife]. All monies invested in the yacht up until November 2012 were contributions directly from money earned through [Wife’s] business . . . and will be considered monetary compensation for the years invested in this [m]arriage. [Husband] will waive any separation of property rights; except as described below and alimony.
We will also both have to agree on all future financial decisions to secure our financial future together. I accept her proposal to place the proceeds from the sale of apartment 425 South Street in a [t]rust under both of our names. . . . In the event of a divorce, any monies gained or properties invested in will be split equally between the two of us; with the exception of infidelity and physical harm.
(Emphases added.)
4 *** FOR PUBLICATION IN WEST’S HAWAI‘I REPORTS AND PACIFIC REPORTER ***
Wife executed the Addendum in the presence of a notary
public on June 24, 2013 and Husband executed the Addendum in the
presence of a notary public the following day. Although Husband
contested whether the Marital Agreement itself was properly
executed, he acknowledged signing the Addendum. 3
The parties separated in September 2013 after Husband
exhibited aggressive behavior towards Wife. Husband filed his
Complaint for divorce on October 7, 2013 and Wife filed her Answer
to Complaint for Divorce on November 18, 2013.
A. Family Court Proceedings
Following a bench trial, the Family Court of the First
Circuit 4 entered its findings of fact and conclusions of law and
decree granting absolute divorce and awarding child custody.
First, the family court determined that Wife “never coerced or
unduly influenced Husband to sign the Addendum.” The family court
also concluded that the parties entered into the Marital Agreement
and Addendum voluntarily, and that Husband violated the infidelity
conditions in the Addendum. However, the family court held that
the Marital Agreement and Addendum were unenforceable because “the
essence of the Marital Agreement [and Addendum] violates the
3 Both the family court and the ICA concluded that the parties executed the Addendum, which incorporated by reference the second draft of the Marital Agreement. Crofford v. Adachi, 148 Hawai‘i 535, 479 P.3d 153, 2020 WL 7775540 at *2, *7 (App. Dec. 30, 2020) (mem. op.).
4 The Honorable Darryl Y.C. Choy presided.
5 *** FOR PUBLICATION IN WEST’S HAWAI‘I REPORTS AND PACIFIC REPORTER ***
statutory policy and principles of no fault divorce and equitable
distribution.” The family court divided the marital property
based on what it determined would be just and equitable, rather
than as set forth in the parties’ marital agreements. 5 The family
court relied upon a 2015 tax assessment valuation of the parties’
penthouse apartment submitted by Wife, which at $2,454,500, was
almost $600,000 less than the value reached by a private appraiser
that Husband and Wife jointly hired.
B. Proceedings on Appeal
The parties cross-appealed to the ICA. On appeal, Wife
argued that the family court erred in rejecting the Marital
Agreement and Addendum. Wife argued that “no Hawaii appellate
court has ever held . . . that a marital agreement attaching
contingencies of fault” renders the agreement unenforceable. Wife
explained that
both the Hawaii appellate courts and courts in other jurisdictions have held that marital agreements in which the parties agree to a certain manner in which to divide and distribute marital property, effective upon one of the parties being unfaithful, are valid and enforceable even if the division of property is not otherwise “equitable,” and even in light of public policy favoring no-fault divorces.
(Citing Balogh v. Balogh, 134 Hawaiʻi 29, 43-45, 332 P.3d 631,
645-47 (2014); In re Marriage of Tabassum & Younis, 881 N.E.2d
5 As noted by the ICA, under the Marital Agreement and Addendum, “[Husband] would at minimum receive the Acura MDX and half of the parties’ gold and silver.” In its findings of fact, the family court valued the Acura MDX at $27,000 and the gold and silver at $174,000.
6 *** FOR PUBLICATION IN WEST’S HAWAI‘I REPORTS AND PACIFIC REPORTER ***
396, 413 (Ill. App. Ct. 2007); Gilley v. Gilley, 778 S.W.2d 862,
864 (Tenn. Ct. App. 1989)).
Husband contended that Hawaiʻi’s “no-fault divorce
standards preclude enforcement of the [Addendum],” and allowing
Wife “to ‘revive’ the long deceased, fault-based divorce by
contract would frustrate the legislatively-expressed policy that
the [f]amily [c]ourt should not waste its limited time and
resources attempting to resolve competing claims of marital
misconduct.” Husband also argued that he signed the agreement
involuntarily and that the agreement was unconscionable. Finally,
Husband argued that the family court abused its discretion in
valuing the parties’ penthouse apartment at $2,454,500, based on
the property’s 2015 tax assessment value, instead of $3,000,000,
the value reached by a private appraiser that Husband and Wife
agreed to hire.
In a memorandum opinion, the ICA agreed with Wife, and
concluded that the family court erred with regard to the Marital
Agreement and Addendum’s enforceability. The ICA explained that
“[a]lthough Hawaiʻi has implemented a no-fault divorce scheme,
there is no law that invalidates a marital agreement because it
provides for distribution of marital property based on the conduct
of the parties.” Crofford v. Adachi, 148 Hawai‘i 535, 479 P.3d
153, 2020 WL 7775540 at *5 (App. Dec. 30, 2020) (mem. op.) After 7 *** FOR PUBLICATION IN WEST’S HAWAI‘I REPORTS AND PACIFIC REPORTER ***
noting the family court’s finding that both Husband and Wife
signed the Addendum and entered into the Marital Agreement by
referencing it in the signed Addendum, the ICA concluded that the
Marital Agreement and Addendum were valid and enforceable.
Additionally, the ICA disagreed with Husband that the
Marital Agreement and Addendum were unconscionable because it
awarded almost all joint assets to Wife. Noting that “the
[Addendum] only contemplated an inequitable division of property
if [Husband] had another affair or physically harmed [Wife],” the
ICA found it “unlikely that the Marital Agreement and Addendum
would have been construed by the parties as demonstrative of
Husband’s commitment to the marriage if it had not contained the
contingencies of fault and the resulting inequitable distribution
of property.” Id. at *8 (citing Balogh, 134 Hawaiʻi at 43, 332
P.3d at 645). The ICA concluded:
Given [Wife’s] contributions to the marriage, all of the circumstances at the time the Marital Agreement and Addendum were entered into, including the reasons for drafting the agreement and the provisions therein, the one-sided distribution of property contemplated by the postmarital agreement in the event [Husband] had another affair or physically harmed [Wife] is not “so outrageously oppressive as to be unconscionable in the absence of unfair surprise.”
Id. at *9 (quoting Balogh, 134 Hawai‘i at 42-43, 332 P.3d at 644-
45).
The ICA additionally held that the agreements were not
procedurally unconscionable, finding no evidence of unfair
8 *** FOR PUBLICATION IN WEST’S HAWAI‘I REPORTS AND PACIFIC REPORTER ***
surprise. The ICA noted that the Husband primarily drafted the
Addendum and “there is no evidence that [Husband] did not have
full knowledge or the chance to obtain full knowledge of [Wife’s]
financial circumstances.” Id. at *10.
Finally, the ICA rejected Husband’s other points of
error, including his challenges to “various aspects of the family
court’s valuation of certain real and personal property, debts,
and premarital contributions,” for failing to comply with the
requirements of Hawai‘i Rules of Appellate Procedure (HRAP) Rule
28(b)(4). 6 Id. at *11. The ICA stated that
[Husband] fails to specifically address the findings of fact and conclusions of law that he lists in his points of error in his arguments. We are left to speculate which finding or conclusion [Husband] seeks to address in his arguments, which we decline to do.
Id. at *11.
The ICA concluded that Husband failed to argue his
alleged points of error regarding the family court’s findings of
fact and conclusions of law, and deemed them to be waived.
The ICA vacated the family court’s property division
awards and remanded to the family court to “enter a new property
6 HRAP Rule 28(b)(4) requires an appellant to state “(i) the alleged error committed by the court or agency; (ii) where in the record the alleged error occurred; and (iii) where in the record the alleged error was objected to or the manner in which the alleged error was brought to the attention of the court or agency.”
9 *** FOR PUBLICATION IN WEST’S HAWAI‘I REPORTS AND PACIFIC REPORTER ***
division award according to the parties’ agreement set forth in
the [] Addendum.” Id. at *11.
Husband sought review by this court, raising the
following questions in his application for writ of certiorari: (1)
whether a court may enforce a marital agreement that is contrary
to the no-fault public policy in divorce proceedings; (2) whether
the Marital Agreement and Addendum violated Hawai‘i’s no-fault
public policy, thus making it unenforceable; (3) whether the
agreements are unconscionable because they award Wife
approximately ninety-nine percent of the marital property; (4)
whether the family court erred in rejecting the parties’
stipulation to the value of the parties’ jointly-owned penthouse;
and (5) whether marital agreements between spouses should be
subject to a higher standard pursuant to the rules governing
fiduciary relationships.
III. STANDARDS OF REVIEW
A. Family Court Decisions
“[T]he family court possesses wide discretion in making
its decisions and those decisions will not be set aside unless
there is a manifest abuse of discretion.” Kakinami v. Kakinami,
127 Hawai‘i 126, 136, 276 P.3d 695, 705 (2012) (citations
omitted).
10 *** FOR PUBLICATION IN WEST’S HAWAI‘I REPORTS AND PACIFIC REPORTER ***
B. Findings of Fact and Conclusions of Law
The family court’s findings of fact are reviewed under the clearly erroneous standard. A finding of fact is clearly erroneous when (1) the record lacks substantial evidence to support the finding, or (2) despite substantial evidence in support of the finding, the appellate court is nonetheless left with a definite and firm conviction that a mistake has been made. Substantial evidence is credible evidence which is of sufficient quality and probative value to enable a person of reasonable caution to support a conclusion. The family court’s conclusions of law are reviewed de novo.
Balogh, 134 Hawai‘i at 38, 332 P.3d at 640 (quoting Kakinami, 127
Hawai‘i at 136, 276 P.3d at 705) (internal quotation marks
C. Construction of a Marital Agreement
The construction and legal effect to be given a contract is a question of law freely reviewable by an appellate court. Unconscionability is a question of law this court reviews de novo. Whether particular circumstances are sufficient to constitute . . . duress is a question of law, although the existence of those circumstances is a question of fact.
Id. at 37-38, 332 P.3d at 639-40 (citations, brackets and internal
quotation marks omitted).
IV. DISCUSSION
A. The Marital Agreement and Addendum are Contrary to Public Policy
1. Hawai‘i has adopted a no-fault approach to divorce proceedings, which extends to the division of marital property
In 1972, the legislature amended Hawai‘i Revised
Statutes (HRS) § 580-41 (2018), the statute governing divorce
proceedings, to eliminate the requirement that a party filing for
11 *** FOR PUBLICATION IN WEST’S HAWAI‘I REPORTS AND PACIFIC REPORTER ***
divorce show marital misconduct on the part of their spouse. 7 At
a House Judiciary Committee hearing, Family Court Judge Betty
Vitousek offered the following rationale in favor of no-fault
divorce: “Unnecessary disputes over fault, where one party to the
divorce action must be the accuser and the other the accused, lead
to counter-spouse antagonism which, particularly when the parties
have children, further aggravates their differences.” H. Stand.
Comm. Rep. No. 1172, in 1972 House Journal, at 637. As amended,
HRS § 580-41 now mandates that divorce is appropriate “upon the
application of either party” if the court finds:
(1) The marriage is irretrievably broken;
(2) The parties have lived separate and apart under a decree of separation from bed and board entered by any court of competent jurisdiction, the term of separation has expired, and no reconciliation has been effected;
(3) The parties have lived separate and apart for a period of two years or more under a decree of separate maintenance entered by any court of competent jurisdiction, and no reconciliation has been effected; or
(4) The parties have lived separate and apart for a continuous period of two years or more immediately preceding the application, there is no reasonable likelihood that cohabitation will be resumed, and the court is satisfied that, in the particular circumstances of the case, it would not be harsh and oppressive to the defendant or contrary to the public interest to a divorce on this ground on the complaint of the plaintiff.
7 The previous iteration of HRS § 580-41 provided that “[d]ivorces from the bond of matrimony shall be granted for the causes hereinafter set forth and no other,” and provided an exhaustive list of reasons related to fault. 1970 Haw. Sess. Laws Act 116, § 1 at 223.
12 *** FOR PUBLICATION IN WEST’S HAWAI‘I REPORTS AND PACIFIC REPORTER ***
HRS § 580-41. 8
Even before the legislature’s enactment of Hawai‘i’s no-
fault divorce policy, however, this court had already held that a
person’s conduct during the marriage was irrelevant to the
division of marital property. See Richards v. Richards, 44 Haw.
491, 509, 355 P.2d 188, 198-99 (1960) (“Personal conduct of the
spouses toward each other is material to the establishment of a
ground for divorce. But it has no bearing on the question as to
which spouse has a better claim to the property sought to be
divided in a divorce proceeding.” (emphasis added)). And
following Richards, our courts have continued to hold that fault
should not be considered in the division of marital property upon
divorce. See, e.g., Hatayama v. Hatayama, 9 Haw. App. 1, 11-12,
818 P.2d 277, 282 (1991) (holding that the parties’ relative
contributions during marriage did not authorize a deviation from
an equal division of marital property); Gordon v. Gordon, 135
Hawai‘i 340, 353, 350 P.3d 1008, 1021 (2015) (holding, inter alia,
that husband’s “financial misconduct during the marriage should
not have been considered by the family court when deciding whether
to deviate from an equal division of marital partnership property
in the absence of a finding of extraordinary circumstances”).
8 HRS § 580-41 has remained unchanged as amended. See 1972 Haw. Sess. Laws Act 11, § 1 at 165-66.
13 *** FOR PUBLICATION IN WEST’S HAWAI‘I REPORTS AND PACIFIC REPORTER ***
In Hatayama, the ICA specifically construed Hawai‘i’s
no-fault approach to divorce to include the principle that
parties’ contributions and conduct during marriage are generally
irrelevant to the division of marital assets upon divorce:
Divorce is not a vehicle by which one spouse is compensated for having given more than he or she received during the marriage or for having had to suffer during the marriage from the other spouse’s inadvertent, negligent, or intentional inadequacies, failures, or wrongdoings, financial or otherwise. . . . If such evidence was relevant, each spouse would be well-advised to prepare from the date of the marriage for the possibility of a divorce by meticulously keeping score in a daily diary. The trial would be a contest of diaries and experts. Allowing it to be such a vehicle would be contrary to the public policy in favor of loving, trusting, harmonious marriages and no-fault divorces.
Hatayama, 9 Haw. App. at 11-12, 818 P.2d at 282 (emphases added).
In this way, our courts have recognized that Hawai‘i’s
no-fault divorce policy extends to disputes over how marital
property should be divided.
2. The Marital Agreement and Addendum violate Hawai‘i’s no- fault divorce policy by requiring that the family court make a determination of whether one party engaged in misconduct
As a general rule, postnuptial agreements between
spouses are valid in Hawai‘i. See HRS § 572-22(c) (Supp. 2019)
(“All contracts made between spouses, whenever made . . . and not
otherwise invalid because of any other law, shall be valid.”);
Balogh, 134 Hawaiʻi at 32, 332 P.3d at 634 (affirming a married
couple’s right to contract). However, as with any other contract,
14 *** FOR PUBLICATION IN WEST’S HAWAI‘I REPORTS AND PACIFIC REPORTER ***
a postnuptial agreement must be made for a lawful purpose and must
not be contrary to public policy. See, e.g., Yin v. Aguiar, 146
Hawai‘i 254, 270, 463 P.3d 911, 927 (2020) (“When evaluating the
validity of [contract] clauses, we examine whether they violate
public policy.” (cleaned up)). Public policy “may . . . derive
from numerous sources including constitutional provisions,
statutory provisions, or the common law.” Id. at 270, 463 P.3d at
927 (emphasis added).
The ICA here cited Balogh and its general affirmation of
marital contracts to hold that the Marital Agreement and Addendum
were valid and enforceable. In Balogh, following a period of
marital tension, husband and wife signed two agreements stating
that “if they separated, [wife] would receive seventy-five percent
of the profit from the sale of the property, the contents of their
home . . . , all of their vehicles, and $100,000 from [husband] in
lieu of alimony and court proceedings.” Balogh, 134 Hawaiʿi at
32, 332 P.3d at 634 (emphasis added). 9 On appeal, we concluded
that the parties’ handwritten agreement was enforceable and the
family court “must enforce all valid and enforceable postmarital
and separation agreements.” Id. at 40, 332 P.3d at 642 (citing
Epp v. Epp, 80 Hawai‘i 79, 87, 905 P.2d 54, 62 (App. 1995)).
9 Significantly, the agreement in Balogh was contingent on separation, not misconduct, and did not necessitate a balancing of the spouses’ interest in contracting against Hawai‘i’s policy of no-fault divorce.
15 *** FOR PUBLICATION IN WEST’S HAWAI‘I REPORTS AND PACIFIC REPORTER ***
Citing Balogh, the ICA in this case held that the
parties’ marital agreement, which was “freely entered into,”
should override the mandate of Hawai‘i’s no-fault divorce scheme
that spousal conduct be disregarded in determining the division of
marital assets. Crofford, 2020 WL 7775540 at *5. The ICA
reasoned that
Although Hawai‘i has implemented a no-fault divorce scheme, there is no law that invalidates a marital agreement because it provides for the distribution of marital property based on the conduct of the parties. Rather, given the explicit provisions of HRS § 572-22, and as recognized by the supreme court, spouses may contract regarding marital property rights in premarital, postmarital, or settlement agreements, and the family court must enforce all valid and enforceable agreements with regard to marital property division.
Id. at *5 (emphasis added) (citing Balogh, 134 Hawai‘i at 39 n.4,
332 P.3d at 641 n.4).
Respectfully, we disagree with the ICA’s application of
Balogh to this case. Unlike the agreement in Balogh, the Marital
Agreement and Addendum here are contingent on the conduct of the
parties, necessitating a determination of whether one party
engaged in misconduct. Although, in this case, Husband did not
contest that he violated the terms of the agreement, if he did,
the family court would have had to consider the parties’ evidence
of alleged fault in determining whether the agreement was
violated. Such a result would conflict with the legislature’s
interest in “avoid[ing] abrasive evidence in divorce proceedings,”
16 *** FOR PUBLICATION IN WEST’S HAWAI‘I REPORTS AND PACIFIC REPORTER ***
S. Stand. Comm. Rep. No. 415, in 1971 Senate Journal, at 971, and
turn the parties’ divorce trial into the “contest of diaries and
experts” denounced by the ICA in Hatayama. 9 Haw. App. at 11-12,
818 P.2d at 282.
In conclusion, the ICA erred in holding that the Marital
Agreement and Addendum here are valid and enforceable. Because
the agreements require the family court to make determinations of
fault, they violate Hawai‘i’s policy of no-fault divorce. We
therefore hold that the agreements are void and unenforceable.
3. Case law from other jurisdictions supports that the agreements here are void and unenforceable as a matter of public policy
Although jurisdictions are split on whether postnuptial
agreements that premise property division on a spouse’s infidelity
violate the public policy of no-fault divorce, a number of states
have held that such agreements are void or unenforceable as a
matter of public policy. For example, in In re Marriage of
Cooper, the parties entered into a reconciliation agreement after
wife learned husband was having an extramarital affair. 769
N.W.2d 582 (Iowa 2009). The agreement, which was signed and
notarized, provided that husband would “accept full
responsibilities [for his] action” in the event his “indiscretions
le[d] to” a divorce, and required that husband make payments and
provide for certain financial arrangements in the event of
17 *** FOR PUBLICATION IN WEST’S HAWAI‘I REPORTS AND PACIFIC REPORTER ***
divorce. Id. at 584. Soon thereafter, husband left the marital
home, moved to his own apartment, and admitted he continued his
prior affair even after signing the reconciliation agreement. Id.
The Iowa Supreme Court concluded that this agreement violated
Iowa’s public policy, stating that “[a] unifying theme of our
historic case law is that contracts which attempt to regulate the
conduct of spouses during the marital relationship are not
enforceable.” Id. at 586. In order to avoid “empower[ing]
spouses to seek an end-run around [its] no-fault divorce laws
through private contracts,” id. at 587, and “creat[ing] a
bargaining environment where sexual fidelity or harmonious
relationships are key variables,” id. at 586, the court held that
the agreement in Cooper was void.
The reasoning of Cooper is instructive here. Like the
agreement in Cooper, the Marital Agreement and Addendum here have
“as a condition precedent the sexual conduct of the parties within
the marital relationship.” Id. at 586. And like Iowa’s no-fault
divorce law, which was “designed to limit acrimonious
proceedings,” id. at 587, Hawai‘i’s divorce statutes were crafted
with the purpose of “avoid[ing] abrasive evidence in divorce
proceedings.” See Stand. Comm. Rep. No. 415, in 1971 Senate
Journal, at 971. Despite these similarities, the ICA here
distinguished Cooper by arguing that Iowa courts have broader
18 *** FOR PUBLICATION IN WEST’S HAWAI‘I REPORTS AND PACIFIC REPORTER ***
discretion than Hawai‘i courts in accepting or denying a parties’
marital agreement. Crofford, 2020 WL 7775540 at *6. The ICA
pointed out that unlike the Iowa Supreme Court, which recognized
that “[t]here is no provision of Iowa statutory law that expressly
authorizes or prohibits enforcement of reconciliation agreements,”
see Cooper, 769 N.W.2d at 585, this court has expressly recognized
a married couple’s right to “contract regarding marital property
rights” under HRS § 572-22. Crofford, 2020 WL 7775540 at *5
(citing Balogh, 134 Hawai‘i at 39 n.4, 332 P.3d at 641 n.4).
HRS § 572-22 does not specifically address whether an
agreement that allows marital couples to consider fault in the
separation of their property is unenforceable because it
contravenes Hawai‘i’s no-fault approach to divorce proceedings.
However, HRS § 572-22 does expressly limit the enforceability of
marital contracts to those “not otherwise invalid because of any
other law.” The ICA therefore erred in holding that HRS § 572-22
authorized the enforcement of the agreements here. In this case,
the family court would have to determine whether, under the
agreements’ terms and contrary to the purpose of the no-fault
statute, Husband truly “change[d] [his] sinful ways.” Moreover,
the court would have to evaluate whether Wife’s promises to
forgive him and spend more time with him were fulfilled. Because
the Marital Agreement and Addendum here require the family court 19 *** FOR PUBLICATION IN WEST’S HAWAI‘I REPORTS AND PACIFIC REPORTER ***
to evaluate the parties’ fault, the agreements are contrary to
Hawai‘i’s no-fault divorce policy and must be voided.
California has also concluded that marital agreements
with infidelity clauses are unenforceable. In Diosdado v.
Diosdado, 118 Cal. Rptr. 2d 494 (Cal. Ct. App. 2002). There, a
California appellate court concluded that a provision in a marital
agreement providing payment of liquidated damages to one spouse if
the other was “sexually unfaithful” was unenforceable. 10 Id. at
494. The facts in Diosdado are similar to those here: After
learning husband was having an affair, the parties entered into a
written marital settlement agreement. Id. at 494-95. After
signing the agreement, husband was again unfaithful and the
parties separated. Id. at 495-96. The court concluded that
enforcement of the agreement would require that the court
“penalize the party who is at fault for having breached the
obligation of sexual fidelity, and whose breach provided the basis
for terminating the marriage. This penalty is in direct
10 The ICA distinguished this case for similar reasons as it did Cooper. The ICA noted that “there does not appear to be any California statute similar to HRS § 572-22” and that the California Supreme Court instead relied on a statute requiring a contract to have a “lawful object.” Crofford, 2020 WL 7775540 at *6. But, as with Cooper, this difference, although significant, does not answer the question of whether Hawaiʻi public policy renders the agreement invalid.
20 *** FOR PUBLICATION IN WEST’S HAWAI‘I REPORTS AND PACIFIC REPORTER ***
contravention of the public policy underlying no-fault divorce.” 11
Id. at 496.
Here, the Addendum stated, among other things, that
Husband would leave the marital home “without monetary
compensation” if he was “unable [to] change [his] sinful ways.”
Similar to the liquidated damages provision in Diosdado, enforcing
the Addendum would require that the court “penalize the party who
is at fault for having breached the obligation of sexual fidelity,
and whose breach provided the basis for terminating the marriage.”
Diosdado, 118 Cal. Rptr. 2d at 496.
Finally, Nevada also rejects marital agreements that
consider fault or marital misconduct in the division of property.
In Parker v. Green, No. 73176, 2018 WL 3211974 (Nev. June 25,
2018), the Nevada Supreme Court addressed a marital agreement
expressing that “[husband] would pay [wife] $2,500 per month,
11 The California Supreme Court had previously rejected the idea that married couples have absolute freedom of contract in a case involving the enforceability of baseball player Barry Bonds’ prenuptial agreement. See In re Marriage of Bonds, 5 P.3d 815 (Cal. 2000). Significantly, Diosdado quoted the following passage from Bonds: [M]arriage itself is a highly regulated institution of undisputed social value, and there are many limitations on the ability of persons to contract with respect to it . . . that have nothing to do with maximizing the satisfaction of the parties or carrying out their intent. . . . These limitations demonstrate further that freedom of contract with respect to marital arrangements is tempered with statutory requirements and case law expressing social policy with respect to marriage. Diosdado, 118 Cal. Rptr. 2d at 497 (quoting In re Marriage of Bonds, 5 P.3d at 829-30) (emphasis added).
21 *** FOR PUBLICATION IN WEST’S HAWAI‘I REPORTS AND PACIFIC REPORTER ***
until death or remarriage, if the parties permanently ended their
relationship based on [husband’s] infidelity or dishonesty.” Id.
at *1. The court construed the contract as providing the wife
alimony in the event the parties separated, and nonetheless held,
“just as infidelity is not an appropriate consideration for
divorce, it is also an inappropriate consideration when
determining an alimony award.” Id. at *3 (citing Rodriguez v.
Rodriguez, 13 P.3d 415, 418 (Nev. 2000)).
Other courts have, however, enforced marital agreements
that account for misconduct when dividing marital property. In
Laudig v. Laudig, 624 A.2d 651 (Pa. Super. Ct. 1993), husband and
wife entered into a postnuptial agreement after husband learned of
wife’s infidelities. The agreement provided, among other things,
that if wife engaged in sexual intercourse with anyone other than
husband within a period of fifteen years, wife would “sign all of
her right, title and interest in and to any marital property . . .
to [husband] in consideration for the payment of the sum of Ten
Thousand ($10,000.00) Dollars and the sum of One Thousand
($1,000.00) Dollars each and every year thereafter for the
following fifteen years.” Id. at 652. Wife again was unfaithful,
and the husband sought to enforce the postnuptial agreement during
the divorce proceedings. The Superior Court of Pennsylvania held
that “[o]ne of the recognized purposes of marital agreements is to
22 *** FOR PUBLICATION IN WEST’S HAWAI‘I REPORTS AND PACIFIC REPORTER ***
allow the parties to avoid the operation of equitable
distribution,” and “[m]arital agreements allow parties to dispose
of their property rights regardless of the reasons . . . . If such
property rights can be transferred without providing any reason to
support the transfer, there should be no reason why a transfer
would be invalid if it be conditioned on the occurrence of a
specified type of conduct.” Id. at 655. The Superior Court of
Pennsylvania thus rejected wife’s argument that the agreement was
unenforceable because it violated Pennsylvania’s public policy.
However, since Pennsylvania allowed married couples to file for
divorce based on fault, id. at 652, the court’s reasoning in
Laudig is less persuasive in a no-fault state such as Hawai‘i.
Similarly, Tennessee has held that marital agreements
that account for misconduct in the division of property are
enforceable. In Gilley v. Gilley, the Court of Appeals of
Tennessee concluded that a reconciliation agreement executed after
wife learned husband was having an affair did not violate
Tennessee’s public policy favoring the preservation of marital
relations. 778 S.W.2d 862, 862 (Tenn. Ct. App. 1989). The
reconciliation agreement “provided that in the event of divorce
husband would convey to wife his interest in a corporation owned
by the parties.” Id. at 863. Husband argued that the agreement
was unenforceable because it violated Tennessee’s public policy
23 *** FOR PUBLICATION IN WEST’S HAWAI‘I REPORTS AND PACIFIC REPORTER ***
favoring the “preservation of marital relations” and the equitable
division of property. Id. at 864. The court disagreed, and
instead concluded that the reconciliation agreement was intended
“to encourage marital fidelity on the part of the husband by
setting forth, prior to reconciliation, the outcome of a divorce
should one occur.” Id. However, this case is not persuasive
because the public policy considerations that husband raised
pertained to the “preservation of marital relations,” not a no-
fault approach to divorce proceedings.
Although the jurisdictions that have considered this
issue are split, those courts that have found such agreements
unenforceable have policies and divorce schemes that resemble our
own. California and Iowa have both adopted strong policies
favoring a no-fault approach to divorce proceedings. Moreover, we
have previously adopted California’s approach to the
enforceability of prenuptial agreements. See L.R.O. v. N.D.O.,
148 Hawai‘i 336, 350, 475 P.3d 1167, 1181 (2020) (citing with
approval In re Marriage of Bonds, 5 P.3d 815 (Cal. 2000)). And,
although not dispositive, case law from this jurisdiction
generally supports the elimination of fault in the division of
property. See Richards, 44 Haw. at 509, 355 P.2d at 198-99; Horst
v. Horst, 1 Haw. App. 617, 624, 623 P.2d 1265, 1271-72 (1981).
While those cases did not involve a marital agreement - and
24 *** FOR PUBLICATION IN WEST’S HAWAI‘I REPORTS AND PACIFIC REPORTER ***
therefore did not consider a marital couple’s right to contract
under HRS § 572-22 - they nonetheless reinforce Hawai‘i’s strong
policy favoring no-fault divorce proceedings, including when
dividing marital property. Prior caselaw thus supports that the
Marital Agreement and Addendum are unenforceable, and that the ICA
erred by holding otherwise.
Since we reject the Marital Agreement and Addendum on
public policy grounds, we decline to opine on whether the
agreements were also substantively or procedurally unconscionable.
B. Husband’s Additional Challenges on Appeal are Meritless
After finding that the Marital Agreement and Addendum
were unenforceable, the family court considered the value of the
marital assets when separating the parties’ assets in a just and
equitable manner under HRS § 580-74. In doing so, the family
court rejected the parties’ private appraisal submitted to the
court valuing the parties’ penthouse property at $3,000,000.
Instead, the family court valued the penthouse at the tax-assessed
value of $2,454,500. Husband’s contention that the family court
erred in doing so is without merit.
The family court “possesses wide discretion” when
determining the value of marital assets. Kakinami, 127 Hawai‘i at
25 *** FOR PUBLICATION IN WEST’S HAWAI‘I REPORTS AND PACIFIC REPORTER ***
136, 276 P.3d at 705. In this case, the family court found that
the parties mutually agreed to hire a private appraiser, that they
did not agree to be bound by the resulting appraisal, 12 and that
they did not include the appraisal in their exhibits or admit it
into evidence. In light of these findings, which Husband does not
challenge here, 13 the family court acted within its discretion in
relying upon the penthouse’s tax-assessed value of $2,454,500.
Finally, Husband argues that this court should adopt the
dissent’s reasoning in Balogh, and hold that the “confidential
relationship between spouses should require [postmarital]
contracts to be subjected to a fiduciary standard to protect
spouses against self-dealing and overreaching by the more dominant
spouse.” 134 Hawai‘i at 54, 332 P.3d at 656 (Pollack, J.
dissenting). Because we hold that the Marital Agreement and
Addendum violate public policy and are therefore unenforceable, we
need not consider whether such a heightened standard is necessary.
12 Wife had testified at trial that “[t]here’s no agreement or stipulation they were agreeing to the appraised value.”
13 The ICA held that Husband failed to argue and therefore waived his points of error regarding the family court’s findings. On appeal, Husband does not argue that this was in error.
26 *** FOR PUBLICATION IN WEST’S HAWAI‘I REPORTS AND PACIFIC REPORTER ***
V. CONCLUSION
For the foregoing reasons, the ICA’s February 3, 2021
Judgment on Appeal is vacated. This case is remanded to the
family court for further proceedings consistent with this opinion.
Michael A. Glenn /s/ Mark E. Recktenwald for petitioner /s/ Paula A. Nakayama
/s/ Sabrina S. McKenna
/s/ Michael D. Wilson
/s/ Todd W. Eddins