Opinion ID: 4282325
Heading Depth: 1
Heading Rank: 6

Heading: Substantive Conscionability

Text: ¶22. In Tanya’s first appeal, this Court held the prenuptial agreement was procedurally conscionable. Sanderson I, 170 So. 3d at 435. So the only question on remand was whether it was substantively conscionable as well. Id. at 436-37. “Substantive unconscionability 5 This opinion does not address Tanya’s Issues 3, 5, 6, and 7. Issue 3—“Whether the trial court erred in not hearing the complaint regarding Hob cutting and selling timber from the marital homestead”—is outside the scope of this Court’s remand in Sanderson I, which did not disturb the chancellor’s classification the of “marital homestead” as Hob’s separate property. And as for Issues 5 through 7, Tanya cites no authority to support her positions. So these issues are waived. Tyler v. Auto. Fin. Co., 113 So. 3d 1236, 1242 (Miss. 2013) (citations omitted). Further, for Issue 5—witness credibility—the law is clear that the chancellor “is in a better position than this Court to judge the veracity of witnesses and credibility of evidence.” Lee v. Lee, 798 So. 2d 1284, 1291 (Miss. 2001). For Issue 6, Tanya does not attack the chancellor’s equitable consideration of the more than $200,000 in courtordered spousal support and court-ordered use of Hob’s home as an error of law. Rather, she merely urges this point as evidence of the second chancellor’s alleged bias against her. And, finally, for Issue 7, the second chancellor specifically stated he was basing his property award on the prior chancellor’s classification, as modified by Sanderson I. And Tanya fails to cite any record evidence contradicting this assertion. 9 occurs when the terms of the agreement are so one-sided that no one in his right mind would agree to its terms.” West v. West, 891 So. 2d 203, 213 (Miss. 2004). See also Smith v. Express Check Advance of Miss., LLC, 153 So. 3d 601, 607 (Miss. 2014) (“An unconscionable contract is one such as no man in his senses and not under a delusion would make on the one hand, and as no honest and fair man would accept on the other.”). So, in contrast to procedural unconscionability, which “deals with the formation of the contract,” substantive unconscionability focuses on the fairness of the agreement’s terms. McLeod v. McLeod, 145 So. 3d 1246, 1249 (Miss. Ct. App. 2014) (citing West, 891 So. 2d at 213). See also Sanderson I, 170 So. 3d at 437 (“Unconscionability looks at the terms of the contract.”). A. Prenuptial Agreement’s Terms ¶23. Here, the chancellor held that the terms of the prenuptial agreement were not so harsh, fundamentally unfair, oppressive, or one-sided as to render the agreement in whole or in part substantively unconscionable. Instead, the agreement “treats both parties the same and contains mutual terms.” We agree. Under the agreement, “each” party “shall separately retain all rights in his or her own property, . . . whether now owned or hereafter acquired,” “each shall have and maintain, regardless of circumstances or change of circumstances, the absolute and unrestricted right to dispose of and maintain use and retain the use and ownership of such separate property,” and “each party waives and releases all rights, statutory or otherwise, in and to the other’s property . . . .” Further, both Tanya and Hob 10 waived all rights to statutory allowances, alimony, intestate distribution, will renunciation, and employment benefits sharing. So the terms of the agreement are not one-sided.6 B. Post-Agreement Results ¶24. Tanya asserts, however, it is not the terms of the agreement that should be the Court’s focus. Rather, this Court must consider the consequences of enforcing the agreement and her resulting financial circumstances. 1. Comparing Agreement Enforcement to Equitable Distribution ¶25. Tanya first argues the chancellor erred by not considering what she would receive if the prenuptial agreement is enforced versus if there was no prenuptial agreement. According to her, this disparity makes the prenuptial agreement unconscionable. The chancellor rejected this results-based analysis. And so do we. ¶26. To support her argument, Tanya cites In re Johnson’s Will, 351 So. 2d 1339 (Miss. 1977). But that case concerned a post-nuptial agreement, not a prenuptial one. So in Johnson’s Will, at the time the wife signed the agreement to not contest her husband’s will, she had statutory inheritance rights. And she gave up these rights when she signed the postnuptial agreement. Id. at 1340. So when considering the fairness of the agreement, this Court found it was necessary to compare what the wife would have received if she had been 6 In fact, the one nonmutual provision actually favored Tanya. If Hob had died during the first year of marriage, Tanya would have received $50,000. And if he had died after a year of marriage, she would have received $100,000. But if Tanya had died during the first year of marriage, Hob would have received only $10,000, and after the first year of marriage, only $20,000. 11 able to renounce the will and take her statutory widow’s share versus if the agreement not to renounce the will was enforced. Id. at 1342. ¶27. Here, by contrast, Tanya was not Hob’s wife when she signed the prenuptial agreement. So at the time of entering the agreement, she had no right to the equitable distribution of the marital estate, because at that time there was no marriage.7 And without the prenuptial agreement, there would be no marriage. So, unlike the widow in Johnson’s Will, this Court cannot compare what Tanya would have received as Hob’s wife if there was no prenuptial agreement. ¶28. Instead of Johnson’s Will, the factually similar case we look to for guidance is McLeod. Just months before Sanderson I’s explicit holding that a prenuptial agreement must be both procedurally and substantively conscionable, the Mississippi Court of Appeals considered both aspects of conscionability when deciding to enforce a prenuptial agreement. McLeod, 145 So. 3d at 1252-53. And the court reversed the chancellor’s holding that the prenuptial agreement was substantively unconscionable. The chancellor had made the same comparison that Tanya asks this Court to make. He concluded the agreement was unconscionable because it did not provide the wife any portion of her husband’s estate in the event of divorce, whereas, “under the laws in Mississippi, without a prenuptial [agreement] 7 Tanya claims that, because she and Hob cohabited prior to marrying, she and Hob were “de facto husband and wife.” But Mississippi has refused to acknowledge commonlaw marriages for more than sixty years. Miss. Code Ann. § 93-1-15 (Rev. 2013). And instead of conveying marital rights, cohabitation is a statutory crime. Miss. Code Ann. § 9729-1 (Rev. 2014). 12 Jeanell would be entitled to an equitable share of the marital estate at the time of divorce.” Id. at 1252. ¶29. The Court of Appeals rejected this comparison, because the fact Jeanell would not be entitled to an equitable distribution was the entire point of the prenuptial agreement. “By signing the agreement, Jeanell acknowledged that she knew that if she and Willie divorced, she relinquished any potential claims to Willie’s property” and “would leave with the few assets she brought into the marriage.” Id. at 1253. In other words, Jeanell got what she bargained for. And “[i]t is not now and never has been the function of this Court to relieve a party to a freely negotiated contract of the burdens of a provision which becomes more onerous than had originally been anticipated.” Id. (quoting Estate of Hensley v. Estate of Hensley, 524 So. 2d 325, 328 (Miss. 1988)). ¶30. As in McLeod, here, equitable distribution upon divorce was never an option for Tanya, because, without the prenuptial agreement contractually dictating property rights upon divorce, Hob and Tanya would not have married. So the chancellor did not err when he rejected Tanya’s comparative analysis. 2. Comparing Tanya’s Separate Property to Hob’s ¶31. Nor did the chancellor err when he rejected Tanya’s other result-based argument, in which she compared her separate property to Hob’s. ¶32. Tanya argues the prenuptial agreement is unconscionably one-sided because it protects Hob’s substantial amount of separate property, while providing her with essentially nothing. According to Tanya, after they married, Hob had promised to take care of her. And he 13 encouraged her to sell her own house and stop working, ensuring she has no separate assets. So because she spent her seventeen-year marriage, in her own words, “100% dependent upon Hob’s largesse,” the prenuptial agreement is substantively unconscionable. ¶33. Claiming Mississippi’s “law regarding prenuptial agreements is so unsettled,” Tanya asserts that “well established precedent from similar jurisdictions is necessary for guidance on this issue.” Tanya argues that a decision from the Missouri Court of Appeals, Potts v. Potts, 303 S.W.3d 177 (Mo. Ct. App. 2010), is most on point and should control. Like the Sandersons, Raymond and Susan Potts signed a prenuptial agreement the day before they married. And like the Sandersons’, the Pottses’ prenuptial agreement provided the parties keep as separate both the property they each brought into the marriage and the property they each separately acquired during the marriage and kept titled as separate. The Missouri court held the agreement was substantively unconscionable, because Raymond Potts had been the only party to come into the marriage “with assets that would generate future assets”—i.e., his business. Id. at 189 (emphasis removed). And the agreement allowed him to keep and protect as his separate property any income generated from his business that would otherwise have become marital by titling and holding the new property in his name. Id. Thus, in the court’s view, “[t]he agreement, by its terms, allowed Raymond to generate a large estate of non-marital property while limiting the distribution to Susan (upon dissolution) exclusively to a formula to be in lieu of maintenance, even after a twenty year marriage in which Susan had devoted her efforts to raising the children and running the household and thereby supporting Raymond’s business.” Id. at 190. 14 ¶34. Zeroing in on the provision in their prenuptial agreement that allowed both Hob and Tanya to retain as separate any after-acquired property, Tanya asserts her agreement with Hob is equally unconscionable, because only Hob generated assets during their marriage. However, though there are factual similarities between this case and Potts, there are also important differences. ¶35. First, integral to the Missouri court’s holding that the prenuptial agreement was unenforceable was the court’s finding of procedural unconscionability—something this Court in Sanderson I specifically held was not present in this case. But the bigger problem with applying Potts is Tanya’s reasoning—that what happened after she entered the prenuptial agreement justifies not enforcing it. When determining unconscionability, circumstances do matter. Sanderson I, 170 So. 3d at 437. But it is the “circumstances existing at the time the contract was made” that the court must consider—not the circumstances at the time of divorce. Id. (emphasis in original). ¶36. What Tanya claims is unfair is that, after she married, she sold her house and stopped acquiring separate property through an income. In other words, she asks this Court to find the prenuptial agreement is unenforceable because the “burdens of a provision” have turned out by her own actions to be “more onerous than [she] had originally anticipated”—something this Court has refused to do. Id. (quoting Mabus, 890 So. 2d at 819). See also Hensley, 524 So. 2d at 328. ¶37. In Sanderson I, this Court specifically directed the chancellor on remand to measure substantive unconscionability “at the time the prenuptial agreement is made[.]” Sanderson I, 15 170 So. 3d at 437. So, as mandated in that opinion, the chancellor on remand measured conscionability at the time the prenuptial agreement was made, focusing on the terms and the circumstances at the time the contract was made, and not the consequences seventeen years later. ¶38. At the time the prenuptial agreement was made, Tanya had a significant asset—a house—and a job. True, her assets and asset-generating ability were much smaller than Hob’s. But since Tanya has asked this Court to look to other jurisdictions for guidance, the Supreme Court of Georgia has held a prenuptial agreement is “not rendered unconscionable just because it ‘perpetuated the already existing disparity between the parties’ estates.’” Mallen v. Mallen, 622 S.E.2d 812, 817 (2005) (quoting Adams v. Adams, 603 S.E.2d 273, 275 (Ga. 2004)). Similarly, the Iowa Supreme Court has recognized “premarital agreements are typically financially one-sided in order to protect the assets of one prospective spouse.” In re Marriage of Shanks, 758 N.W.2d 506, 516 (Iowa 2008). And “[c]ourts must resist the temptation to view disparity between the parties’ financial circumstances as requiring a finding of substantive unconscionability.” Id. Turning to our own precedent, in Mabus v. Mabus, we upheld a prenuptial agreement protecting the separate estates, even though the wife’s estate was smaller. And in doing so, it specifically rejected the claim that the estates were “so disparate that it questions fundamental fairness[.]” Mabus, 890 So. 2d at 821. ¶39. Again, a substantively unconscionable prenuptial agreement is one with “terms . . . so one-sided that no one in his right mind would agree to it[].” West, 891 So. 2d at 213. Here, both Hob and Tanya had been divorced previously and had children from their prior 16 marriages. So it makes sense that each would want to keep their separate property separate both for themselves and their heirs.8 See Farris v. Farris, 202 So. 3d 223, 234 (Miss. Ct. App. 2016) (enforcing prenuptial agreement that, “[i]n substance, . . . simply provided that neither Becky nor Gene—who were both in their sixties, had been married and divorced previously, and had grown children—would ‘make a claim against the other for their separate properties including any additional separate properties acquired, whether by means of purchase, gift, inheritance or other means’”). The agreement they entered, though protecting estates of different sizes, did so with provisions that applied mutually to both parties. See Mabus, 890 So. 2d at 821 (upholding prenuptial agreement that mutually protected separate estates of different sizes); McLeod, 145 So. 3d at 1252-53 (same). Though Tanya claims she did not know the full extent of Hob’s property, she knew through premarital cohabitation that his assets and income-generating ability were larger than hers. See Farris, 202 So. 3d at 233 (holding that, because wife had cohabited with her husband for three years prior to marriage, “[t]here is no question that Becky was aware of Gene’s assets”). And “[b]y signing the agreement, [Tanya] acknowledged that she knew that if she and [Hob] divorced, she relinquished any potential claims to [Hob’s] property” and “would leave with the few assets she brought into the marriage.” McLeod, 145 So. 3d at 1253. ¶40. In the end, the premarital agreement “has done exactly what it was intended to do”—allowed the parties to keep all separate property acquired before or during the 8 We also note that during the marriage, Tanya used solely marital property to support herself and her daughter. Hob agreed to allow Tanya to save the more than $200,000 in child-support payments for her daughter’s college education. 17 marriage. Mabus, 890 So. 2d at 821. Thus, as in Mabus, we will not judicially set it aside for being unconscionable. Instead, we affirm the chancellor’s holding that the prenuptial agreement—in addition to being procedurally conscionable—was substantively conscionable as well.