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### IN THE SUPREME COURT OF THE STATE OF HAWAI # I ---o0o---
SANDRA C.J. BALOGH, Respondent/Plaintiff-Appellant,

vs. DONALD RAYMOND BALOGH, Petitioner/Defendant-Appellee.

SCWC-11-0001074
CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS (CAAP-11-0001074; FC-D NO. 10-1-0149)

AUGUST 7, 2014 RECKTENWALD, C.J., NAKAYAMA, MCKENNA, JJ., AND CIRCUIT JUDGE CHAN, IN PLACE OF ACOBA, J., RECUSED, WITH POLLACK, J., CONCURRING AND DISSENTING SEPARATELY OPINION OF THE COURT BY RECKTENWALD, C.J. We consider whether various documents signed by a husband and wife should control the division and distribution of their marital partnership property upon divorce. Donald Raymond Balogh (Ray) and Sandra C.J. Balogh (Sandra) married in New 1

Becau se bo th pa rties in t his c ase s hare the s ame s urnam e, we refe r 1 to th em bythei r fir st na mes, i.e., Ray and S andra
. 

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### Jersey in 1981. After moving to Oahu in 2003, the couple began constructing a home on a vacant lot they had purchased (Kahalakua property or the property). The parties held title to the property as tenants by the entirety.

On October 6, 2008, following a period of tension between Ray and Sandra, they each signed a handwritten document stating that if they separated, Sandra would receive seventy-five percent of the profit from the sale of the property, the contents of their home (excluding Ray’s tools and clothes), and all of their vehicles. A few weeks later, on October 24, 2008, the parties signed a typewritten Memorandum of Understanding (MOU) stating that upon separation or divorce, Sandra would receive seventy-five percent of the proceeds from the sale of the property, the contents of their home (excluding Ray’s tools and building equipment), all of their vehicles, and $100,000 from Ray in lieu of alimony and court proceedings.

After a period of continued tension between Ray and Sandra, Ray agreed to move out of the couple’s home on August 15, 2009. On September 1, 2009, Ray signed a quitclaim deed transferring his entire interest in the property to Sandra for ten dollars and “other valuable consideration.”

In January 2010, Sandra filed a complaint for divorce in the Family Court of the First Circuit. Notwithstanding the quitclaim deed and two agreements, the family court awarded Ray and Sandra each a one-half interest in the property, which it
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### valued at $1.6 million at the time of divorce. The family court 2 

### concluded that it would be unconscionable to enforce the quitclaim deed and that all three agreements were unenforceable because Ray acted under duress and coercion when he signed them.

Sandra appealed, and the Intermediate Court of Appeals vacated in part the family court’s divorce decree and its findings of fact and conclusions of law, and remanded for further proceedings. The ICA concluded that both the quitclaim deed and MOU were enforceable. The ICA explained that the quitclaim deed was not unconscionable and that Ray executed both the deed and the MOU voluntarily. The ICA also concluded that the deed superseded the MOU only to the extent it modified the disposition of the Kahalakua property, and therefore remanded to the family court to determine whether Ray owed Sandra an additional $100,000 pursuant to the MOU.

In his application, Ray presents two questions: (1) whether the ICA erred in vacating the family court’s decision that the postmarital agreements and the quitclaim deed were unenforceable because they were unconscionable; and (2) whether the ICA erred in vacating the family court’s decision that the postmarital agreements and quitclaim deed were unenforceable because they were entered into involuntarily.

As a threshold matter, we hold that the quitclaim deed

The H onora ble P aul T . Mur akami pres ided. 2 

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### does not constitute a separation agreement that alters the parties’ rights to an equitable division of their marital partnership property, such that Sandra should receive the entire value of the Kahalakua property. The ICA therefore erred in concluding that the quitclaim deed was an enforceable separation agreement. Because the quitclaim deed did not affect the disposition of the couple’s marital partnership property upon divorce, we must also consider whether the MOU is enforceable. We hold that the MOU is enforceable because it is not unconscionable and was entered into voluntarily. Because we conclude that the MOU is enforceable, we do not consider the October 6, 2008 handwritten agreement. The ICA’s judgment is therefore vacated, the family court’s divorce decree and findings of fact and conclusions of law are vacated in part, and we remand this case to the family court for further proceedings consistent with this opinion. I. Background

The following factual background is taken from the record on appeal and the family court’s findings of fact and conclusions of law. 3

On ap peal, Sand ra ch allen ged o nly t wo ofthe famil y cou rt’s 3 factu al fi nding s. S pecif icall y, Sa ndra chall engedfind ing o f fac t 48 to th e exten t it state d tha t “Sa ndra told Ray h e sho uld l eave, ” andfind ing o f fac t 53, w hich state d the foll owing : “Af ter d iscus sions withSand ra, R ay th ought the Q uitcl aim d eed w ould prote ct th e hom e fro m pot entia l law suits , but titl e wouldbe t ransf erredbackto j oint owner ship when thing [s] r eturn ed to (cont inued ...) 

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### A. Factual background

Ray and Sandra married in 1981 in New Jersey. At the time of the marriage, Sandra owned two properties in Monmouth County, New Jersey. Sandra sold the first property in 1982 for $89,000. The second property was a vacant lot which Sandra had purchased for $28,750 (Wall Township property). At the time of the marriage, Ray owned one property which he sold shortly thereafter for $40,000. According to Ray, after he and Sandra married, they built a home on the Wall Township property.

Ray and Sandra are both well educated. Ray has a bachelor of science and a master’s degree in electrical engineering. Sandra has a bachelor of science in biological science and a master’s degree in education and student personal services. While living in New Jersey, Ray worked as a contractor for various companies. Before retiring in 2002, Sandra worked as a high school guidance counselor for more than twenty-five years.

While Ray and Sandra were living in New Jersey, they regularly vacationed in Hawai # i. In 2002, Ray and Sandra purchased the Kahalakua property, which was a vacant lot on O # ahu on Kahalakua Street, for $280,000. Ray and Sandra took out a home-equity loan on the Wall Township property to pay for the

(...c ontin ued) 3 norma l.” All o f the fami ly co urt’s rema iningfind ings of fa ct ar e bin ding on this court . Se e Bre mer v . Wee ks, 1 04 Ha wai # i 43, 63, 85 P. 3d 15 0, 17 0 (20 04) (“[F] indin gs offact that are not c halle nged on ap peal are b indin g on the appel late court .” (q uotat ion m arks, elli psis, and citat ion o mitte d)). 

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### Kahalakua property. Ray and Sandra held title to the Kahalakua property as tenants by the entirety.

In 2003, Ray and Sandra decided to move to Hawai # i so that Sandra could care for her elderly parents. The couple sold the Wall Township property for $545,000.

Soon after arriving in Hawai # i, Ray and Sandra hired a contractor to build a home on the Kahalakua property for $595,000. The couple used the proceeds from the sale of the Wall Township property, as well as approximately $350,000 Ray had inherited and money from their joint savings, to help pay for the Kahalakua property and the construction of the home on the property. Construction on the property began in 2004 and the home was supposed to be completed within two years. There were problems with the construction process from the start. The builder showed up only sporadically and eventually walked off the project without completing the work. In 2006, the builder placed a mechanic’s lien on the property, even though there was a list of approximately 150 incomplete items.

The homeowner’s association then sought to assess Ray and Sandra a penalty totaling $350,000 because the house had not been completed within the prescribed two-year period. The couple sued the homeowner’s association, and the parties agreed on a reduced penalty of $5,000 with an additional two-year period to complete construction of the home.
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### In order to complete the home, Ray and Sandra paid a total of $60,000 to six additional subcontractors, but the home was still not completed. About six months after the original builder had walked off the job, Ray and Sandra were able to move into the house.

During this time, Sandra was working as a part-time secretary, and Ray was working for Northrop Grumman. Sandra coordinated the work of most of the subcontractors, and Ray worked on the house when he was home from work. For example, Ray finished the kitchen.

Tension arose between Ray and Sandra after Ray began going outside their home without clothes on. Ray’s behavior resulted in complaints from neighbors and a visit to the couple’s home by the police. Sandra also suspected that Ray was having an affair because he had lost weight, was working out, and was well tanned. Sandra also observed Ray giving other women what she described as “lecherous looks.”

Ray stopped working in July 2008, after his contract with Northrop Grumman had expired and he was unable to find additional work. At the time of his retirement, Ray was earning between $115,000 and $120,000 per year. Following his retirement, Ray continued to work on the house.

After months of arguing and still questioning Ray’s fidelity, Sandra told Ray that if he was serious about being committed to the marriage, that they should “write something up.”
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### On October 6, 2008, Ray wrote an agreement, as dictated by Sandra, that provided the following:

If Sa ndy a nd Ra y Bal ogh a re to sepa rate from each otherthei r ass ets a re to be d ivide d as such:
I Don ald R aymon d Bal ogh a gree that my wi fe Sa ndra C. Balog h wil l rec eive: 1. 3⁄4 or 75 % of the p rofit s of the s ale o f [] Kahal akua St. 2. Th e ent ire c onten ts ofthe house excl udingRay’ s tools and cloth es 3. Al l veh icles at t ime o f sep arati on 

### [.] Both Ray and Sandra signed the agreement. Sandra was not thinking about divorce when she asked Ray to sign this agreement; instead, Sandra thought that Ray was committing to saving their marriage. Ray acknowledged that he had agreed to the terms of the agreement, and Sandra testified that she did not threaten Ray to get him to sign the agreement. According to Ray, he was not in his right mind when he signed the agreement, but nevertheless signed the agreement to show his good faith and commitment to save the marriage. Ray thought that if he did not sign the agreement, his and Sandra’s relationship would further degrade and he would be thrown out of the house.

Sandra, however, remained suspicious of Ray’s fidelity. Just over two weeks after they had signed the first agreement, Ray and Sandra executed the MOU in front of a notary. The MOU provided the following:

This Agree ment betwe en Do nald Balog h andSand ra Ba logh will be impleme nted if th ey ar e to separ ate a nd/or divor ce fr om ea ch ot her.



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Theirasse ts wi ll be divi ded a s fol lows: 1. In rega rds t o the cont ents of th e hou se at [] Kahal akua St., Honol ulu, HI [] : Don ald B alogh(Ray ) will recei ve hi s too ls an d bui ldingequi pment . San dra Balog h (Sa ndy) will recei ve th e ent ire c onten ts ofthe house , fur nitur e, ap plian ces, elect ronic s (tele visio ns, e tc.) 2. In rega rds t o veh icles : San dy wi ll re ceive the vehic les. 3. In rega rds t o the proc eeds of th e hou se, d ue to a sale: San dy wi ll re ceive 75% of th e sal e pro ceeds and Ray w ill r eceiv e 25% of t he pr oceed s. 4. In rega rds t o compensa tion: Rayagre es to pay $100, 000.0 0 to Sandyin l ieu o f Ali mony and c ourt proce eding s. 

### Again, both Ray and Sandra signed the agreement. Sandra testified that the MOU was intended as an inducement for Ray to work on the marriage because if Ray was “going to sign something like that, which gives [Sandra] quite a bit, then [Ray] must [have been] serious about working on the marriage.” Sandra testified that she added the additional term requiring Ray to pay her $100,000 to obtain further commitment from Ray to their marriage and to “see how serious he was.” Ray acknowledged that he agreed to the terms of the MOU, and Sandra testified that she did not threaten Ray before he signed the MOU. Because Ray signed the MOU, Sandra thought that Ray would tell her the truth and stop his inappropriate behavior. Ray signed the MOU in a “desperate attempt to hold the marriage together.”

In November 2008, an attorney representing the homeowner’s association mailed a letter to Ray and Sandra. The letter stated that a number of individuals had complained about

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### Ray’s behavior. In January 2009, a second letter was mailed to Ray and Sandra. This letter detailed another incident involving Ray and demanded that Ray cease and desist. Ray hid both of these letters from Sandra. Ray’s behavior, however, did not stop. In June 2009, Ray and Sandra were walking on the Makapu # u Trail when police stopped Ray to question him about exposing his buttocks. The following month, Ray and Sandra were at Ala Moana shopping center when security officers again stopped the couple to question Ray about exposing his buttocks. Ray was issued a trespass warning, banning him from the shopping center for one year. Following both incidents, Ray told Sandra that he had not exposed himself.

Ray sent a written request to Ala Moana, asking that the one-year ban be lifted, but on August 10, 2009, that request was denied. Upon receiving the letter denying Ray’s request, Sandra wanted to contact a lawyer because she believed Ray that he had done nothing wrong. Ray then admitted to exposing his buttocks at Ala Moana. Sandra was shocked. Ray agreed to move out of the couple’s home the following day.

Ray testified that by that point, the marriage had “melted down,” the anxiety and friction were constant, and there was “just so much tension in the house,” that he “decided that it’d be best that [he] leave.” Before Ray left, Sandra asked him to call their relatives to tell them what was happening. While
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### Ray was speaking to his sister on the telephone, Sandra heard Ray mention the possibility of divorce and she got upset. Sandra then told Ray, “I need security, Ray, I need security, I need you to sign the house over to me.” Ray agreed to do so, and Sandra said that she would make the necessary arrangements. Ray moved out of the couple’s home on August 15, 2009.

On September 1, 2009, Ray and Sandra met to execute a quitclaim deed, in which Ray granted his interest in the Kahalakua property to Sandra in exchange for ten dollars and “other valuable consideration.” According to Ray, he thought the deed was only a “temporary agreement,” that would protect the home from potential lawsuits, and that title would eventually be transferred back to joint ownership. Ray testified that he signed the deed in an effort to save the marriage and that he signed the document “in a panic.”

On September 24, 2009, Ray and Sandra met with Dr. Renee Robinson for marriage counseling. Dr. Robinson referred Ray to a specialist on obsessive-compulsive behavior. Ray saw the specialist three times, who recommended ways for Ray to deal with his behavior.
B. Family court proceedings

Ray and Sandra attempted to execute an uncontested divorce, which failed because Ray refused to sign the divorce documents. On January 14, 2010, Sandra filed a Complaint for Divorce. Following a trial, the family court rendered an oral
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### decision. As relevant here, the family court stated the following:

The C ourt consi deredwhat it t hough t to be th e

appro priat e mot ivati ons a nd re asoni ngs o f the part ies. What was c lear to th e Cou rt is that at t he ti me th e docum ents were done, bothwere focu sed – - bot h hus band and w ife w ere f ocuse d on I thi nk, i n the ir ow n wor ds, savin g the marr iage. Tha t was the prima ry mo tivat ion for t he do cumen ts. At so me po int t hose actio ns -- what may h ave b een i ntent beca me ac tions . A quitc laim was s igned . Bu t it is un clearas t o wha t the motiv ation s of both parti es we re, a nd th at’s why, again , youfolk s wen t to trial . Ba sed o n the rele vant case law, the C ourt finds that this woul d be an inequ itabl e pro visio n to hold both parti es to . Court ’s go ing t o rul e as follo ws: With regar d to the m arita l pro perty , whi ch is the K ahala home , the Cour t is goingto b asica lly a ward Mr. B alogha on e hal f int erest . Th at on e hal f inter est m ay be sati sfiedeith er byway of a sale of the p roper ty, i n whi ch ca se th e net proc eeds are c ut in ha lf, o r Mrs . Bal ogh m ay bu y out Mr. Balog h. The C ourt’ s goi ng to set the b uy-ou t pri ce -- I’m s orry, the value of t he pr opert y at 1.6 b ased on the r eleva nt te stimo ny. Again , the Cour t com es to that numbe r bas ed on what was prese nted in co urt. I know there ’s co nflic ting testi mony, but that’ s the price the Court ’s go ing t o -- or th e –- the v alue the Court will set. Aga in, i f it comes to a n act ual s ale, it ma y be more, it m ay be less . Fo r pur poses of a buy-o ut, t he Co urt w ill s et it at 1 .6. So ba sical ly it’s 800,0 00, i f it’ s a b uy-ou t. 

### On December 2, 2011, the family court issued the divorce decree. The decree provided the following:

a. Th e Cou rt fi nds t hat i t is inequ itabl e to enfor ce the a greem ents enter ed in to bythe parti es on Octo ber 6, 20 08, O ctobe r 24, 2008 , andSept ember1, 2 009, as to th e rea l pro pertyloca ted a t [] Kahal akua Stree t, Honol ulu, Hawai i (ma rital resi dence ). b. Th e gro ss va lue o f sai d pro pertyis $ 1,600 ,000. 00.
c. Sa id pr opert y sha ll be soldin a comm ercia lly reaso nable mann er. From the p rocee ds ofthe sale, the realt or co mmiss ions, escr ow fe es, a nd co sts o f sal e shall be p aid. Ther eafte r, th e net proc eeds shall be divid ed eq uallybetw een t he pa rties
. d. Ei ther partymay buy-o ut th e oth er pa rty.



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e. Th e for egoin g pro visio ns sh all b e enf orcedupon the expir ation of 9 0 day s fro m the effe ctive date of t his Decre e. f. Th e par ties [are] to c ooper ate o n res olvin g the mecha nics lien. 

### On February 15, 2012, the family court issued its findings of fact and conclusions of law. As relevant here, the family court made the following conclusions of law:

K. To enfo rce t he pa rties ’ agr eemen t or the Q uitcl aim Deed is to awar d San dra w ith a mari tal a sset worth $1,60 0,000 . In doin g so, Sand ra wo uld b e rec eivin g more than 85% o f the mari tal e state . L. In addi tion, Ray contr ibute d $35 0,000 of h is inher itanc e and$40, 000 o f his prem arita l ass et[s] to the m arita l par tners hip, for w hich he is not recei ving a cre dit. Sand ra co ntrib uted $89,0 00 ofher prema rital asse t[s] to th e mar ital partn ershi p for whichshe is no t rec eivin g a c redit
. M. IfRay recei ved c redit for his $ 390,0 00 ca pital contr ibuti on, R ay’s share of t he re tirem ent/s ecuri ties accou nts w ould just be su ffici ent t o rep ay hi m his capit al co ntrib ution . He woul d in essen ce re ceive 0% of th e mar ital estat e if Sandr a is award ed th e Kah ala Kua p roper ty. N. Af ter t hirtyyear s of marri age, the C ourt concl udes it wo uld b e unc onsci onabl e to awardSand ra th e Kah ala Kua p roper ty byenfo rcingthe Quitc laim Deed. Kur oda v. Ku roda, 87 H aw. 4 19, 9 58 P. 2d 54 1 (Ha w. Ap p. 19 98); and L ewis v. Le wis, 69 Ha w. 49 7, 74 8 P.2 d 136 2 (19 88).
O. Fu rther , aft er co nside ring theirtest imony , the Court find s tha t the part ies w ere m otiva ted t o sav e the m arria ge wh en th ey si gned the v ariou s agr eemen ts. When Ray s ignedthe Quitc laim Deed, Ray was p rotec ting theirmari tal h ome f rom p otent ial l awsui ts an d hadno inten t of perma nentl y tra nsfer ring his i ntere st to Sandr a. N eithe r par ty in tende d the ir ma rriag e to resul t in a div orce and t o div ide t heir marit al es tate accor dingl y. P. Th e Cou rt fi nds R ay wa s suf ferin g fro m ext reme distr ess a s a r esult of t he on goingcons truct ion o f theirKaha la Ku a res idenc e, th e con tract or’s walk- off and l awsui t in 2006, the penal ties asses sed b y the [home owner ’s as socia tion] and parti es’ l awsui t aga inst [the homeo wner’ s ass ociat ion], his high secur ity clear ance job w hich also requi red t wenty -four hour/ seven days on c all o ne we ek a month , the conti nuingissu es wi th th e sub contr actor s, an d his uncon troll able obses sive behav ior t hat e scala ted f rom


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his b ackya rd nu dity to pu blic displ ay, h is sh ame a nd embar rassm ent, his f ear o f bei ng di scove red, and t he const ant a rgume nt wi th Sa ndra about his inapp ropri ate behav ior. At t he sa me ti me, S andra susp ectedhim of infid elitywhic h fur ther exace rbate d the mari tal relat ionsh ip an d esc alate d the tens ion a nd th e frict ion i n the ir ho me. Ray w as th us un der d uress and c oerci on wh en he sign ed th e agr eemen ts. Prell v. Silve rstei n, 11 4 Haw . 286 , 162 P.3d2 (H aw. App. 2007)
. Q. Th erefo re, t he Co urt c onclu des t hat t he pa rties ’ agree ments on O ctobe r 6, 2008, Octo ber 2 4,200 8, an d Septe mber 1, 20 09, a re no t enf orcea ble.
R. Ac cordi ngly, eachpart y sha ll be awar ded fifty -perc ent ( 50%) inter est i n the ir Ka hala Kua prope rty. The parti es ma y sel l sai d pro pertyand divid e the net sales proc eeds equal ly orSand ra ma y buyou t Ray ’s in teres t forthe amoun t of Eight Hund red Thous and a nd No /l00 Dolla rs ($ 800,0 00.00 ). S aid provi sion shall take plac e wit hin 9 0 day s of the effec tive date of th e Div orce Decre e. 

### C. ICA proceedings and proceedings in this court

On December 20, 2011, Sandra timely filed a notice of appeal. In her amended opening brief — and as relevant here — Sandra argued that the agreements and the quitclaim deed were not unconscionable, Ray was not under duress when he signed each agreement and the deed, and in signing the three documents, Ray did not intend to protect the Kahalakua property from the claims of third parties. Sandra argued, therefore, that the agreements and the deed were enforceable.

The ICA agreed with Sandra that the family court erred with regard to the agreements’ enforceability. The ICA first concluded that the quitclaim deed was not unconscionable. The ICA noted that “nothing in the record indicates unfair surprise,” and that “this is not an exceptional case where the agreement was so one-sided that it is unconscionable even without a showing of
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### unfair surprise.” The ICA explained that “[t]he fact that [Ray’s] (perhaps shortsighted) decision to quitclaim his interest to [Sandra] ultimately turned out to be a bad one from his perspective is irrelevant and does not warrant invalidating the quitclaim deed.”

The ICA further concluded that Ray “freely and voluntarily entered into the agreements.” Specifically, the ICA noted that both Ray and Sandra were well educated, and that “there is nothing in the record showing that [Sandra] used threats or any other improper methods of persuasion.” The ICA also rejected Ray’s argument that he never intended to convey his interest in the Kahalakua property. The ICA explained that Ray’s statements regarding intent “were inadmissible for purposes of contradicting the deed’s clear language, under which he granted his interest in the [Kahalakua property] to [Sandra] as tenant in severalty.” The ICA further explained that because the deed was unambiguous, extrinsic evidence of the facts and circumstances surrounding the execution of the deed was not “competent to contradict, defeat, modify or otherwise vary the meaning or legal effect of the deed.” (Internal quotation marks and citation omitted). The ICA concluded, therefore, that the “Family Court erred in failing to classify the [Kahalakua property] as [Sandra’s] separate property pursuant to the plain language of the deed.”

In a concurring opinion, Judge Foley stated that
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### unconscionability encompasses two basic principles: onesidedness and unfair surprise, and indicated that both must be present in order for the doctrine to apply. Specifically, Judge Foley noted that, even assuming the quitclaim deed was one-sided, “nothing in the record indicates unfair surprise.”

The ICA entered its judgment on appeal on October 3, 2013, and, on December 2, 2013, Ray timely filed an application for writ of certiorari. In his application for writ of certiorari, Ray presents two questions:

1. Wheth er th e ICAerre d in vacat ing t he Fa mily Court ’s de cisio n tha t pos tmari tal a greem ents were unenf orcea ble b ecaus e the y wer e uncon scion able. 2. Wheth er th e ICAerre d in vacat ing t he Fa mily Court ’s de cisio n tha t pos tmari tal a greem ents were unenf orcea ble b ecaus e the y wer e invol untar y.



### II. Standards of Review
A. Construction of contract

“[T]he construction and legal effect to be given a contract is a question of law freely reviewable by an appellate court.” Brown v. KFC Nat’l Mgmt. Co., 82 Hawai # i 226, 239, 921 P.2d 146, 159 (1996). Unconscionability is a question of law this court reviews de novo. See, e.g., HRS § 490:2-302(1) (2008). “Whether particular circumstances are sufficient to constitute . . . duress is a question of law, although the existence of those circumstances is a question of fact.” Gruver v. Midas Int’l Corp., 925 F.2d 280, 282 (9th Cir. 1991) (citing

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### Oregon law on economic duress).
B. Findings of Fact and Conclusions of Law

The family court’s findings of fact are reviewed under the clearly erroneous standard. Kakinami v. Kakinami, 127 Hawai # i 126, 136, 276 P.3d 695, 706 (2012) (citation omitted). 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.” Id. “‘Substantial evidence’ is credible evidence which is of sufficient quality and probative value to enable a person of reasonable caution to support a conclusion.” Id.

The family court’s conclusions of law are reviewed de novo. Id. III. Discussion

At the outset, we must decide whether the quitclaim deed in fact constituted a separation agreement that altered the parties’ rights to an equitable division of the couple’s marital partnership property, such that Sandra must receive the entire value of the Kahalakua property pursuant to the deed. For the reasons set forth below, the answer to this threshold question is no. Accordingly, the ICA erred in concluding that the quitclaim deed was an enforceable separation agreement.

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### Because the quitclaim deed did not affect the disposition of the parties’ property upon divorce, we must also decide whether the MOU is enforceable. For the reasons set forth below, the MOU is enforceable because it is not unconscionable and Ray entered into the agreement voluntarily. Because we conclude that the MOU is enforceable, we do not consider the enforceability of the October 6, 2008 handwritten agreement.
A. The quitclaim deed was not an agreement to alter the division of Ray and Sandra’s marital partnership property
“In Hawai # i, there is no fixed rule for determining the amount of property to be awarded each spouse in a divorce action other than as set forth HRS § 580–47.” Kakinami, 127 Hawai # i at 136-37, 276 P.3d at 706-06 (brackets and internal quotation marks omitted) (quoting Tougas v. Tougas, 76 Hawai # i 19, 26, 868 P.2d 437, 444 (1994)). Pursuant to HRS § 580-47(a), the family court has broad discretion to divide the estate of divorcing parties in a “just and equitable” manner. HRS § 580-47(a) (Supp. 2011); see also Kakinami, 127 Hawai # i at 137, 276 P.3d at 706. This court has adopted the “partnership model of marriage” to guide the family court in its exercise of this discretion. Kakinami, 127 Hawai # i at 137, 276 P.3d at 706 (citing Gussin v. Gussin, 73 Haw. 470, 486, 836 P.2d 484, 492 (1992)). Pursuant to the partnership model, “the family court can utilize the following five categories of net market values (NMVs) as guidance in divorce cases”:

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Categ ory 1 . The [NMV ], pl us orminu s, ofall prope rty separ atelyowne d by one s pouse on t he da te ofmarr iage (DOM) but exclu ding the NMV at tribu table to p roper ty that is su bsequ entlylega lly g iftedby t he ow ner t o the o ther spous e, to bothspou ses, or to a th ird party . Categ ory 2 . The incr ease in th e NMVof a ll pr opert y whose NMV on th e DOMis i nclud ed in cate gory 1 and that the o wner separ atelyowns cont inuou sly f rom t he DOM t o the DOCO EPOT [date of t he co nclus ion o f the evide ntiar y par t of the t rial. ] Categ ory 3 . The date -of-a cquis ition NMV, plus or minus , of prope rty s epara tely acqui red b y gif t or inher itanc e dur ing t he ma rriag e but excl udingthe NMV attri butab le to prop erty that is su bsequ entlylega lly gifte d by the o wner to th e oth er sp ouse, to b oth spous es, o r to a thi rd pa rty. Categ ory 4 . The incr ease in th e NMVof a ll pr opert y whose NMV on th e dat e of acqui sitio n dur ing t he marri age i s inc ludedin c atego ry 3 and t hat t he ow ner separ atelyowns cont inuou sly f rom t he da te of acqui sitio n to the D OCOEP OT. Categ ory 5 . The diff erenc e bet ween the NMVs, plus or minus , of all p roper ty ow ned b y one or b oth o f the spous es on the DOCOE POT m inus the NMVs, plus or mi nus, inclu dable in c atego ries 1, 2, 3, a nd 4. 

### Id. at 137-38, 276 P.3d at 706-07 (brackets in original).

These NMVs generally determine the division of marital partnership property upon divorce. However, spouses may expressly contract for a different division of marital partnership property, and the family court must enforce all valid and enforceable agreements with regard to marital property division. See HRS § 572-22 (2006) (“All contracts made between

4

Spous es ma y con tract rega rdingmari tal p roper ty ri ghts in 4 prema rital , pos tmari tal, or se ttlem ent a greem ents. Pre marit al orpren uptia l agree ments are enter ed in to be fore marri age. See, e.g. , Pre ll v. Silv erste in, 114 H awai # i 286 , 287 -88, 162 P .3d 2 , 3-4 (App . 200 7). Postm arita l or postn uptia l agr eemen ts ar e ent ered into aftermarr iage. See , e.g ., Ch en v. Hoefl inger , 127 Hawa i # i 346 , 352 , 279 P.3d11, 17 (App. 2 012). Set tleme nt agree ments are enter ed in to af ter s epara tion or in anti cipat ion o f imm ediat e separ ation . Se e, e. g., B ienve nue v . Bie nvenu e, 10 2 Haw ai # i 59, 61, 72 P. 3d 531, 533 ( App. 2003)
. 

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### spouses . . . not otherwise invalid because of any other law, shall be valid.”); Epp v. Epp, 80 Hawai # i 79, 87, 905 P.2d 54, 62 (App. 1995). In addition, spouses may exclude certain assets from the marital partnership entirely, thereby segregating those assets as marital separate property. Marital separate property includes:

a. A ll pr opert y tha t was excl uded from the m arita l

partn ershi p by an ag reeme nt in conf ormit y wit h the Hawai # i Uni form Prema rital Agre ement Act (HUPAA), H RS chapt er 57 2D (S upp. 1992) ; b. Al l pro pertythat was exclu ded f rom t he ma rital partn ershi p by a val id co ntrac t; an d c. Al l pro pertythat (1) was a cquir ed bythe spous e-own er du ring the m arria ge bygift or inher itanc e, (2 ) was expr esslyclas sifie d by the donee /heir -spou se-ow ner a s his or h er se parat e prope rty, and ( 3) af ter a cquis ition , was main taine d by itsel f and /or s ource s oth er th an on e or both of th e spous es an d fun ded b y sou rces otherthan mari tal partn ershi p inc ome o r pro perty . 

### Kakinami, 127 Hawai # i at 138-39, 276 P.3d at 707-08 (brackets and ellipsis omitted) (emphasis added).

In the instant case, the quitclaim deed does not constitute either an express agreement to deviate from the partnership model of marital property division, or a valid contract converting the Kahalakua property into marital separate property. Although the deed stated that Ray “remise[d],

5 

### release[d] and forever quitclaim[ed]” his interest in the property to Sandra, nothing on the face of the deed indicates

The o ther two m eans of co nvert ing m arita l par tners hip p roper ty 5 into marit al se parat e pro perty— an agre ement purs uant to th e HUP AA orthe speci al tr eatme nt ofa gi ft orinhe ritan ce — are n ot implica ted i n the inst ant case. 

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### that it was intended to alter Ray’s right to an equitable division of the property upon divorce, or to convert the property to marital separate property. Thus, although the language of the deed effectuated a change in who held title to the property, it was not, standing alone, sufficient to remove the property from the marital partnership. See Reithbrock v. Lange, 128 Hawai # i 1, 16 n.9, 282 P.3d 543, 558 n.9 (2012) (noting that awarding property solely on the basis of which spouse holds title would conflict with the partnership model of property division).

Accordingly, this court must look to the circumstances surrounding the quitclaim deed to determine whether it was intended to alter the disposition of the Kahalakua property. 6 

### According to Ray, he signed the deed to protect the property from lawsuits, and he and Sandra intended to eventually “restore the title to joint ownership.” However, according to Sandra, Ray signed the quitclaim deed because she told him, “I need security.” Sandra further testified that, pursuant to the deed, she “gave up” the $100,000 due to her under the MOU in exchange for receiving the entire Kahalakua property.

The family court credited Ray’s explanation for the

Thus, the ICA e rred in co nclud ing t hat “ [Ray’ s] st ateme nts 6 regar ding inten t wer e ina dmiss ible for p urpos es ofcont radic ting the d eed’s clearlang uage. ” Al thoug h the deedwas unamb iguou s wit h res pect to th e trans fer o f tit le, i t was ambi guous withresp ect t o whe ther it wa s int endedto alterthe divis ion o f the prop erty upon the p artie s’ di vorce . Ac cordi ngly, the I CA wa s inc orrec t in stati ng th at “[ t]he Famil y Cou rt er red i n fai ling to class ify t he Pr opert y as [Sand ra’s] sepa rate prope rty p ursua nt to the plain langu age o f the deed .” 

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### quitclaim deed, finding that, “[a]fter discussions with Sandra, Ray thought the Quitclaim deed would protect the home from potential lawsuits, but title would be transferred back to joint ownership when things returned to normal.” Although Sandra challenged this finding on appeal, it is supported by substantial evidence in the form of Ray’s testimony. In re Doe, 95 Hawai # i 183, 190, 20 P.3d 616, 623 (2001) (“[I]t is well-settled that an appellate court will not pass upon issues dependent upon the credibility of witnesses and the weight of the evidence; this is the province of the trier of fact.” (internal quotation marks and brackets omitted)). Accordingly, the family court’s finding is not clearly erroneous, and it is therefore binding on this court.

Based on the family court’s finding, the parties did not intend the quitclaim deed to alter the disposition of their marital partnership property upon their divorce. Accordingly, the quitclaim deed did not bar the family court from equitably dividing the Kahalakua property. Thus, this court need not determine whether the quitclaim deed was unconscionable or agreed to under duress. 7

In ge neral , a d eed i s not a co ntrac t. S ee, e .g., Brown v. B rown, 7 501 S o. 2d24, 26 n. 1 (Fl a. Di st. C t. Ap p. 19 86) ( “As d istin guish ed fr om coven ants of wa rrant y, et cete ra, w hich are o ften in a deed but w hich are n ot essen tial to it s cha racte r, a deed is no t a c ontra ct. A dee d doe s som ethin g (conv eys l and) as di sting uishe d fro m pro misin g to do so methi ng.”)
. Never thele ss, t o the exte nt th e par ties here treat the quitc laim deed as a contr act, it is well sett led t hat “ there must be a meet ing o f the mind s on all essen tial eleme nts o r ter ms in orde r to creat e a b indin g con tract .” M oss v . Am. I nt’l Adjus tment Co., 86 H awai # i 59, 63, 947 P .2d 3 71, 3 75 (1 997) (inte rnal quota tions mark s andcita tion omitt ed). Beca use R ay th ought that the d eed w ould prote ct th e pro pertyfromlaws uits and t hat t itle would (cont inued ...) 

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### We next must determine whether either of the parties’ other two agreements are enforceable. In her appeal to the ICA, Sandra described the October 6, 2008 agreement, the MOU, and the quitclaim deed as a “series of agreements for their divorce,” and maintained that each of the agreements was enforceable. However, Sandra also argued that, even if the family court’s findings and conclusions regarding the quitclaim deed are affirmed, the October 6, 2008 agreement and subsequent MOU should nonetheless be enforced. Consistent with this view, Sandra continues to argue in this court that all three agreements are enforceable. Accordingly, we next consider whether the MOU is enforceable.
B. In general, a postmarital agreement is unconscionable if it is impermissibly one-sided and is the result of unfair surprise As stated, the family court must enforce all valid and enforceable postmarital and separation agreements. See Epp, 80 Hawai # i at 87, 905 P.2d at 62. A postmarital or separation agreement is enforceable if the agreement is “not unconscionable and has been voluntarily entered into by the parties with the knowledge of the financial situation of the [other] spouse.” See Lewis v. Lewis, 69 Haw. 497, 501, 748 P.2d 1362, 1366 (1988); see also Chen v. Hoeflinger, 127 Hawai # i 346, 356-57, 279 P.3d 11,

(...c ontin ued) 7 event uallybe r estor ed to join t own ershi p, an d San dra t hough t tha t Raysign ed the d eed i n ord er to prov ide h er wi th “s ecuri ty,” there plai nly w as no meet ing of th e min ds wi th re spect to t he ef fect of th e dee d. 

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### 21-22 (App. 2012). Ray argues that the ICA applied the wrong 8 

### legal standard for determining unconscionability. For the reasons set forth below, Ray’s argument is without merit.

Unconscionability encompasses two principles: onesidedness and unfair surprise. Lewis, 69 Haw. at 502, 748 P.2d 1366. One-sidedness (i.e., substantive unconscionability) means that the agreement “leaves a post-divorce economic situation that is unjustly disproportionate.” Id. Unfair surprise (i.e., procedural unconscionability) means that “one party did not have full and adequate knowledge of the other party’s financial condition when the [marital] agreement was executed.” Id. A contract that is merely “inequitable” is not unenforceable. Id. 9 

### at 500, 748 P.2d at 1366. The unconscionability of an agreement regarding the division of property is evaluated at the time the

Some juris dicti ons h ave c onclu ded t hat p ostma rital agre ement s are 8 subje ct to grea ter s cruti ny th an pr emari tal a greem ents becau se ofthe natur e of th e mar ital relat ionsh ip. See, e.g., Bedr ick v . Bed rick, 17 A .3d 1 7, 27 (Conn . 201 1) (“ This leads us t o con clude that post nupti al ag reeme nts r equir e stric ter s cruti ny th an pr enupt ial a greem ents. ”). The d issen t ado pts s uch a view, argu ing t hat “ trans actio ns be tween spou ses s houldbe s ubjec t to the gener al ru les g overn ing f iduci ary r elati onshi ps,” and t hat “ an ag reeme nt th at [is] not i n acc ordan ce wi th fi ducia ry st andar ds sh ould be pr esump tivel y invol untar y andunen force able. ” Di ssent at 2 8-29. Nei ther the f amilycour t nor t he IC A con clude d tha t a h eight ened stand ard s houldbe a pplie d in evalu atingpost marit al ag reeme nts, and n eithe r par ty ha s arg ued t hat t his court shou ld ap ply s uch a stan dard. We there fore do no t con siderwhet her postm arita l agr eemen ts sh ould be su bject to g reate r scr utinythan prem arita l agree ments .

Altho ugh t he fa mily court stat ed in the divor ce de cree that it

9 wouldbe “ inequ itabl e to enfor ce th e agr eemen ts en teredinto by t he pa rties ,” the f amilycour t’s f indin gs offact and concl usion s of law i ndica te th at th e famil y cou rt co nclud ed th at “i t wou ld be unco nscio nable to a ward Sandr a the Kahal a Kua prop erty by en forci ng th e Qui tclai m Dee d,” n ot me rely “ineq uitab le.” The famil y cou rt th erefo re ap pliedthe corre ct le gal s tanda rd in de termi ning wheth er th e dee d was unco nscio nable
. 

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### agreement was executed. See id. at 507, 748 P.2d at 1369.

Generally, “[a] determination of unconscionability . . . requires a showing that the contract was both procedurally and substantively unconscionable when made,” but there may be “exceptional cases where a provision of the contract is so outrageous as to warrant holding it unenforceable on the ground of substantive unconscionability alone.” Gillman v. Chase Manhattan Bank, N.A., 534 N.E.2d 824, 828-29 (N.Y. 1988); see also Adler v. Fred Lind Manor, 103 P.3d 773, 782 (Wash. 2004) (en banc) (“individual contractual provisions may be so one-sided and harsh as to render them substantively unconscionable despite the fact that the circumstances surrounding the parties’ agreement to the contract do not support a finding of procedural unconscionability”); Maxwell v. Fidelity Fin. Servs., Inc., 907 P.2d 51, 59 (Ariz. 1995) (concluding under state statute that “a claim of unconscionability can be established with a showing of substantive unconscionability alone”). Although some courts have concluded that “[t]o be unenforceable, a contract must be both procedurally and substantively unconscionable,” see, e.g., Marin Storage & Trucking, Inc. v. Benco Contracting and Eng’g, Inc., 107 Cal. App. 4th 1042, 1052 (Cal. Ct. App. 2001), most authorities have recognized that, in at least some cases, substantive unconscionability, without more, can render an agreement unenforceable, see Restatement (Second) of Contracts § 208 cmt. c (1981) (“Theoretically it is possible for a contract
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### to be oppressive taken as a whole, even though there is no weakness in the bargaining process and no single term which is in itself unconscionable.”); 7 Joseph M. Perillo, Corbin on Contracts § 29.1 at 377 (revised ed. 2002) (“Some cases hold that the defense of unconscionability cannot be invoked unless the contract or clause is both procedurally and substantively unconscionable, but there is no basis in the text of [Uniform Commercial Code §2-302] for such a conclusion.” (footnotes omitted)). Indeed, the courts of this state have recognized that, under certain circumstances, an impermissibly one-sided agreement may be unconscionable even if there is no unfair surprise. For example, in Kuroda v. Kuroda, 87 Hawai # i 419, 428 (App. 1998), the court held that a postnuptial agreement was unconscionable where it awarded the wife all personal and real property held in common, implicitly allowed the wife to keep her personal property including her accounts, required the husband to pay the wife one half of his net income from every source until either spouse passed away, and required the husband to pay all attorney’s fees and costs associated with the separation and divorce. The Kuroda court reached this conclusion without considering whether there was unfair surprise. Thus, although under Hawai # i law “two basic principles are encompassed within the concept of unconscionability, one-sidedness and unfair surprise,” Lewis, 69 Hawai # i at 502, 748 P.2d at 1366, in certain
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### circumstances, one-sidedness alone can render an agreement unconscionable, see Kuroda, 87 Hawai # i at 428, 958 P.2d at 550.

Here, the ICA applied the correct legal standard in its memorandum opinion. Specifically, the majority stated that “there need not be both one-sidedness and unfair surprise in reaching a determination that a marital agreement is unconscionable.” The ICA concluded, however, that the quitclaim deed was not “so outrageously oppressive as to be unconscionable in the absence of unfair surprise.”

Ray nevertheless argues that instead of applying the well settled law, “the ICA held that a marital agreement is only enforceable if there is both one-sidedness and unfair surprise.” Ray’s description of the ICA’s analysis does not accurately characterize the approach taken by that court. The ICA did not hold that one-sidedness, without more, would never be enough to find an agreement unconscionable. Instead, the ICA concluded that the deed was not so “one-sided that it is unconscionable even without a showing of unfair surprise.” Thus, the ICA plainly applied the correct legal standard in considering the validity of the deed.

Ray also appears to argue that this legal standard is overly narrow. According to Ray, “a marital agreement is unenforceable if it is one-sided,” and unconscionability in the context of marital agreements does not require a showing of unfair surprise. Put another way, Ray appears to argue that a
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### marital agreement need not be exceptionally one-sided in order to be unconscionable. Ray further argues that requiring a showing of unfair surprise is absurd in the context of postmarital agreements because spouses “are in an obvious[ly] better position to be knowledgeable about their spouse’s financial condition.”

Ray’s arguments are without merit. First, Ray does not cite to any cases invalidating a postmarital agreement solely on the basis of that agreement being somewhat one-sided. 1 0 

### Furthermore, parties may have legitimate reasons for entering into a somewhat one-sided postmarital agreement, and may do so knowingly and voluntarily. Permitting the family court to invalidate such agreements without requiring a showing of extraordinary one-sidedness would frustrate the purpose of HRS § 572-22, which permits spouses to enter into enforceable contracts with each other.

Accordingly, the ICA applied the correct legal standard in evaluating unconscionability.

Ray c ited two c ases invol ving uncon scion abili ty in divo rce 10 actio ns. The f irst, In r e Mar riage of T homas , 199 S.W. 3d 84 7, 86 0 (Mo . App . 2006) , doe s not supp ort R ay’s argum ent b ecaus e the cour t the re no ted t hat parti es ar e bou nd to the provi sions of a pre- nupti al ag reeme nt “o nly i f the agree ment was c onsci onabl e andfair ly ma de,” i.e., bothsubs tanti vely and proce dural ly co nscio nable . Id . at 852 ( empha sis a dded) . Ad ditio nally , the court emph asize d a s imila r sta ndardof o ne-si dedne ss as that arti culat ed by the I CA: “An a greem ent i s unc onsci onabl e whe n the ineq ualit y is so st rong, gross , andmani fest that it mu st be impo ssibl e to state it t o one withcomm on sense with out p roduc ing a n exc lamat ion a t the ineq ualit y of it.” Id. (inte rnal quota tion marks and citat ion o mitte d). Simil arly, in t he se cond case, In r e Mar riage of M anzo, 659 P.2d 669, 671 ( Colo. 1983 ), th e cou rt consi deredbothwhet her t he ag reeme nt wa s pro curedthro ugh “ overr eachi ng, fraud , con cealm ent o f ass ets, or sh arp d ealin g,” a nd wh etherit w as subst antiv ely “ fair, just and reaso nable .” I d. at 675. 

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### C. The MOU is not unconscionable

Ray argues that the marital agreements were one-sided and therefore unconscionable. In her response to this court, 1 1 

### Sandra agrees that it would be one-sided to award the Kahalakua property to her in its entirety pursuant to the deed. Sandra argues, however, that the MOU is not “unjustly disproportionate” because Ray would receive 25% of the proceeds of the sale of the property, in addition to any cash accounts and retirement benefits awarded by the family court. (Citing Chen, 127 Hawai # i at 357, 279 P.3d at 22).

Although the family court did not address whether the MOU is unconscionable, this court may nonetheless reach the issue because unconscionability is a question of law, reviewable de novo. See, e.g., HRS § 490:2-302(1). For the reasons set forth below, the MOU is not unconscionable with respect to the division of the Kahalakua property, nor is it unconscionable to the extent it required Ray to pay Sandra $100,000 in lieu of alimony. The 1 2 

### MOU is therefore an enforceable marital agreement with regard to these clauses.

Again, the terms of the MOU were as follows:

Nothi ng in the recor d sug gests that Ray was s urpri sed b y the term s 11 of th e MOU , andRay did n ot ar gue o therw ise i n his answ eringbrie f or appli catio n. T he on ly is sue, there fore, is w hethe r the MOU was s o imper missi bly o ne-si ded t hat i t is uncon scion able.

Altho ugh t he MO U als o add resse d Ray ’s to ols a nd bu ildin g 12 equip ment, the conte nts o f the hous e, an d the coup le’s vehic les, the dispo sitio n of those item s is not b eing dispu ted b y the part ies. 

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This Agree ment betwe en Do nald Balog h andSand ra Ba logh will be impleme nted if th ey ar e to separ ate a nd/or divor ce fr om ea ch ot her. Theirasse ts wi ll be divi ded a s fol lows:

. . . . 3. In rega rds t o the proc eeds of th e hou se, d ue to a sale: Sand y wil l rec eive 75% o f the sale proc eeds and Ray w ill r eceiv e 25% of t he pr oceed s. 4. In rega rds t o compensa tion: Ray agree s to pay $100, 000.0 0 to Sandyin l ieu o f Ali mony and c ourt proce eding s. 

### Even if the allocation of the entire Kahalakua property to Sandra pursuant to the quitclaim deed could be characterized as so one-sided as to have been unconscionable, the 75%/25% split set forth in the MOU and the requirement that Ray pay $100,000 in lieu of alimony are not. First, in addition to his share of the Kahalakua property, Ray was entitled to an equitable share of the couple’s other major assets, which totaled $760,000. Second, 1 3 

### although Ray will receive a lesser share of the proceeds under the MOU than he would under the family court’s 50%/50% division of the property, such imbalance was the express purpose of the MOU. As the family court found, “Sandra believed Ray would tell her the truth and stop his inappropriate behavior by signing the MOU. Ray signed it in his desperate attempt to hold the marriage together.” It is unlikely that the MOU would have been construed as demonstrative of Ray’s commitment to the marriage had it

The r ecorddoes not indic ate t he ex act v alues of R ay’s and 13 Sandr a’s r espec tive share s of theirothe r ass ets. Base d on the f amilycour t’s calcu latio ns, h oweve r, it appe ars t hat R ay an d San dra e ach r eceiv ed ab out h alf of th e oth er as sets. 

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### provided for the same division of property Ray was likely to receive in the family court under an equitable division upon divorce. Moreover, as noted above, “unless the agreement rises to the level of unconscionability, a merely ‘inequitable’ contract is not unenforceable under contract law.” Lewis, 69 Haw. at 500, 748 P.2d at 1365-66. Accordingly, the 75%/25% division of the Kahalakua property and the $100,000 payment set forth in the MOU are not unconscionable.
D. The MOU was entered into voluntarily

Ray also argues that the ICA erred in vacating the family court’s decision because he did not enter into each of the marital agreements voluntarily. For the reasons set forth below, Ray executed the MOU voluntarily. 1 4



### “Involuntariness is shown by evidence of ‘duress, coercion, undue influence, or any other circumstance indicating lack of free will or voluntariness.’” Chen, 127 Hawai # i at 357, 279 P.3d at 22 (quoting Prell, 114 Hawai # i at 298, 162 P.3d at 14). Here, the family court concluded that Ray was “under duress and coercion when he signed the agreements” because of the ongoing construction of the Kahalakua home, the contractor walking off and the resulting mechanic’s lien, the penalties assessed by the homeowner’s association and the resulting

For t he re asons stat ed ab ove, this court neednot addre ss wh ether 14 the q uitcl aim d eed w as vo lunta rily execu ted. More over, beca use w e con clude that the M OU is enfo rceab le, w e do not c onsid er th e vol untar iness of t he Octob er 6, 2008 agre ement . 

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### litigation, the demands of Ray’s job, the continuing issues with subcontractors, and Ray’s uncontrollable obsessive behavior. The family court’s factual findings, however, are not sufficient to support a conclusion that Ray signed the agreements under either duress or coercion. 1 5



### Duress is defined as “a threat of harm made to compel a person to do something against his or her will or judgment; [especially], a wrongful threat made by one person to compel a manifestation of seeming assent by another person to a transaction without real volition.” Black’s Law Dictionary 614 (10th ed. 2014). It is well established that an agreement is voidable due to duress when “a party’s manifestation of assent is induced by an improper threat by the other party that leaves the victim no reasonable alternative.” Standard Fin. Co., Ltd. v. Ellis, 3 Haw. App. 614, 621, 657 P.2d 1056, 1061 (1983) (quotation marks and citation omitted); see also Restatement (Second) of Contracts § 175(1) (“If a party’s manifestation of assent is induced by an improper threat by the other party that leaves the victim no reasonable alternative, the contract is voidable by the victim.”). 1 6

It ap pears that the famil y cou rt us ed th e ter ms du ress and 15 coerc ion i nterc hange ably, i.e. , the re is noth ing i n the Find ings of Fa ct an d Concl usion s of Law t o ind icate that the court view ed th em as lega lly d istin ct terms . We addr ess e ach d octri ne se parat ely.

Secti on 17 5(2) of th e Res tatem ent c oncer ns imprope r thr eats made 16 by a thirdpart y to induc e the reci pient to e nter into a con tract . Ho wever , Ray d oes n ot co ntend , andthe recor d doe s not sugg est, that any t hird party threa tenedRay to en ter i nto t he ag reeme nts. 

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### A threat of divorce does not constitute an improper threat since the party making it has the legal right to seek a divorce. See Kam Chin Chun Ming v. Kam Hee Ho, 45 Haw. 521, 558, 371 P.2d 379, 402 (1962) (it is not duress for a party to “threaten to do what they had a legal right to do”); see also Rubenstein v. Sela, 672 P.2d 492, 494 (Ariz. Ct. App. 1983) (concluding that husband’s threat to leave the marriage did not constitute duress because he had a right to leave the marriage); Autin v. Autin, 617 So.2d 229, 233 (La. Ct. App. 1993) (holding that “a threat of doing a lawful act or a threat of exercising a right does not constitute duress”).

However, a threat of exposure of publicly embarrassing information can be the basis of a claim of duress. See Restatement (Second) of Contracts § 176(2) (“A threat is improper if the resulting exchange is not on fair terms, and . . . the threatened act would harm the recipient and would not significantly benefit the party making the threat”); id. cmt. f (“A typical example is a threat to make public embarrassing information concerning the recipient unless he makes a proposed contract.”).

The record here does not support a finding that Ray’s assent to the MOU was induced by an improper threat by Sandra and that he had no reasonable alternative to signing that agreement. There was conflicting testimony regarding whether Sandra had threatened Ray in order to get him to sign any of the documents.
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### Sandra repeatedly testified that she did not threaten Ray in connection with the two agreements and the deed. Ray testified at one point that Sandra had told him that if he did not sign, she would tell family members about his behavior and that she would “go public” with that information. 1 7



### In its findings of fact and conclusions of law, however, the trial court did not find that Sandra had threatened Ray. Rather, it simply identified a number of factors that contributed to Ray’s “extreme distress,” ranging from problems with the construction to “his uncontrollable obsessive behavior that escalated from his backyard nudity to public display, his shame and embarrassment, his fear of being discovered, and the constant argument with Sandra about his inappropriate behavior.” Moreover, Ray failed to establish that he had no reasonable alternative to signing the MOU. Ray could have declined to sign the MOU but still attempted to resolve his issues with Sandra in

At an otherpoin t Rayappe ared to de ny th at Sa ndra had t hreat ened 17 him. Howe ver, this testi mony was s ubjec t to an ob jecti on th at wa s sus taine d by th e cou rt: Q. So was it –- was there a -– thre at ofdivo rce

or ex posur e to other s-- A. No . Q. –o r -- MR. H IOKI: Obje ction , lea ding, YourHono r. THE C OURT: Gett ing t here. Sus taine d. Rephr ase t he qu estio n. (Emph asis added ).

Sandr a arg ues t hat b ecaus e the answ er wa s not stri cken from the recor d, it is i n evi dence . Ev en as sumin g arg uendo that Ray’ s res ponse can be consi dered , the fact rema ins t hat t here was c onfli ctingtest imonyon t his issue , andthe famil y cou rt implici tly r esolv ed th ose c onfli cts i n San dra’s favorwhen it d eclin ed to findthat she had t hreat ened Ray. 

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### an effort to save the marriage. In sum, because the family court did not make a finding that Sandra had improperly threatened Ray, and since Ray had a reasonable alternative to signing the MOU, the record does not support the family court’s conclusion that Ray signed that agreement under duress.

The record also does not support a conclusion that the MOU was the result of coercion. Coercion is defined as “[c]ompulsion of a free agent by physical, moral, or economic force or threat of physical force.” Black’s Law Dictionary 315 (10th ed. 2014). “Coercion sufficient to avoid a contract need not . . . consist of physical force or threats of it. Social or economic pressure illegally or immorally applied may be sufficient.” Billouris v. Billouris, 852 N.E.2d 687, 693 (Mass. App. Ct. 2006). For all the reasons set forth above, the record does not support a conclusion that Sandra employed physical, moral, or economic force to obtain Ray’s assent.

Although the family court found Ray was under stress due to a variety of factors, those factors do not establish either duress or coercion. Moreover, Ray cannot rely on those factors to establish that he lacked mental capacity when he signed the agreements, since he had specifically agreed prior to trial that he was “not claiming lack of mental capacity as to any issue herein.” Ray therefore executed the MOU voluntarily.

In sum, the record does not support the family court’s conclusion that Ray’s assent to the MOU was the product of duress
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### and coercion. The dissent does not dispute that analysis, but rather suggests that the family court did not intend to rely specifically on those doctrines, as opposed to other potential grounds for finding that Ray’s assent was involuntary. See Dissent at 10-24. Respectfully, the family court’s Conclusion of Law P quite specifically refers to “duress and coercion” as the basis for invalidating the agreement, and the court’s accompanying citation to the Prell case implies that its reliance on those two doctrines was intentional.

In any event, we respectfully disagree with the dissent’s contention that Ray did not enter into the MOU voluntarily because his “mental state was extremely vulnerable”, he was unduly influenced, and “other circumstances” demonstrate involuntariness. Dissent at 15, 22-24, 17-22. First, to the extent the dissent suggests that Ray’s “mental state” deprived him of the capacity to contract, Ray explicitly agreed prior to trial that he was not claiming a lack of mental capacity.

Second, the record does not establish that Ray was unduly influenced. Undue influence is “[t]he improper use of power or trust in a way that deprives a person of free will and substitute’s another’s objective.” Black’s Law Dictionary 1760 (10th ed. 2014); Cvitanovich-Dubie v. Dubie, 125 Hawai # i 128, 160, 254 P.3d 439, 471 (2011). As a threshold matter, the family court did not find that Sandra exerted undue influence over Ray, and Ray does not argue otherwise in this court. Moreover, the
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### record does not support a conclusion that Sandra either attempted to impose or actually imposed improper influence on Ray.

Finally, there are no “other circumstances” indicating a lack of free will on Ray’s part. The dissent asserts that Ray was motivated by saving the marriage and that Ray believed he had no other choice but to sign the agreements. Dissent at 21. The facts of this case, however, do not support a conclusion that Ray executed the MOU involuntarily. As noted above, Ray was well educated, with a bachelor’s and master’s degree in electrical engineering, and he held a high-level security clearance. There is no suggestion in the record that Ray was unaware of what he was doing, nor do the facts otherwise support a conclusion that the MOU was the result of a lack of free will. In fact, Ray expressly testified that he agreed to all of the terms of the MOU. While Ray was under stress from a number of sources, that stress is not sufficient to establish that the MOU was not entered into voluntarily.

The dissent also asserts that the MOU is voidable for a lack of consideration. Dissent at 29. The family court, however, made no findings or conclusions relating to the adequacy of consideration, and Ray has made no argument in this regard to this court. Thus we do not consider the issue.

We therefore vacate the family court’s conclusions of law N, P (in part), Q, and R. We vacate conclusion of law N because the family court treated the quitclaim deed as a
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### separation agreement. We vacate conclusion of law P to the extent the family court concluded that Ray signed the agreements under duress and coercion. We vacate conclusion of law Q because the family court concluded that the parties’ agreements were unenforceable. Finally, we vacate conclusion of law R because it awarded Ray and Sandra each a fifty-percent interest in the Kahalakua property. IV. Conclusion

For the foregoing reasons, the ICA’s judgment is vacated, the family court’s divorce decree is vacated, and the family court’s findings of fact and conclusions of law are affirmed in part and vacated in part. The case is remanded to the family court for further proceedings consistent with this opinion. Rebecca A. Copeland for petitioner Stephen T. Hioki for respondent /s/ Mark E. Recktenwald /s/ Paula A. Nakayama /s/ Sabrina S. McKenna /s/ Derrick H.M. Chan

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