Opinion ID: 2363143
Heading Depth: 1
Heading Rank: 3

Heading: fair and reasonable disclosure [19]

Text: The principles that govern statutory construction are well established. When construing a statute, [o]ur fundamental objective is to ascertain and give effect to the apparent intent of the legislature. . . . In other words, we seek to determine, in a reasoned manner, the meaning of the statutory language as applied to the facts of [the] case, including the question of whether the language actually does apply. . . . In seeking to determine that meaning, General Statutes ง 1-2z directs us first to consider the text of the statute itself and its relationship to other statutes. If, after examining such text and considering such relationship, the meaning of such text is plain and unambiguous and does not yield absurd or unworkable results, extratextual evidence of the meaning of the statute shall not be considered. . . . When a statute is not plain and unambiguous, we also look for interpretive guidance to the legislative history and circumstances surrounding its enactment, to the legislative policy it was designed to implement, and to its relationship to existing legislation and common law principles governing the same general subject matter. . . . (Citation omitted; internal quotation marks omitted.) Cogan v. Chase Manhattan Auto Financial Corp., 276 Conn. 1, 7, 882 A.2d 597 (2005). Prenuptial agreements in Connecticut have been governed since October 1, 1995, by the Connecticut Premarital Agreement Act, General Statutes ง 46b-36a et seq. General Statutes ง 46b-36g (a) provides: A premarital agreement or amendment shall not be enforceable if the party against whom enforcement is sought proves that: (1) Such party did not execute the agreement voluntarily; or (2) [t]he agreement was unconscionable when it was executed or when enforcement is sought; or (3) [b]efore execution of the agreement, such party was not provided a fair and reasonable disclosure of the amount, character and value of property, financial obligations and income of the other party; or (4) [s]uch party was not afforded a reasonable opportunity to consult with independent counsel. Although ง 46b-36g does not expressly define fair and reasonable financial disclosure, a plain reading of the statute indicates that the term was intended to be understood in the context of the phrase that directly follows, namely, the amount, character and value of property, financial obligations and income of the other party. . . . General Statutes ง 46b-36g (a)(3). Accordingly, fair and reasonable disclosure refers to the nature, extent and accuracy of the information to be disclosed, and not to extraneous factors such as the timing of the disclosure. [20] This conclusion is consistent with the case law of other jurisdictions that have adopted similar requirements. See, e.g., Randolph v. Randolph, 937 S.W.2d 815, 821 (Tenn.1996) (full and fair financial disclosure refers to requirement that each party reveal extent and nature of assets, liabilities and income to other party prior to execution of agreement). Notably, there is no requirement in the statute that written disclosures be appended to the agreement. In the absence of further guidance as to what constitutes fair and reasonable disclosure or how such a disclosure should be made, however, it is necessary to look beyond the statute to extratextual sources, beginning with the legislative history. During the committee hearings that preceded legislative debate on the proposed bill, [21] Edith F. McClure, an attorney who represented the family law section of the Connecticut Bar Association and who was a member of the committee that drafted the act, explained that the committee had been influenced by three things; see generally Conn. Joint Standing Committee Hearings, Judiciary, Pt. 7, 1995 Sess., pp. 2237, 2492-93; the first being a 1980 decision of this court, McHugh v. McHugh, 181 Conn. 482, 436 A.2d 8 (1980), in which we addressed whether a prenuptial agreement was enforceable in a dispute involving the disposition of the family residence. Id., at 484-85, 436 A.2d 8; see Conn. Joint Standing Committee Hearings, supra, at p. 2492. McClure noted that, although McHugh was the principal Connecticut decision on prenuptial agreements, it was limited in scope and did not address many other important issues, such as assets . . . and liabilities brought into the marriage. . . . Conn. Joint Standing Committee Hearings, supra, at pp. 2492-93. McClure also explained that the committee had relied on the Uniform Premarital Agreement Act (uniform act) in drafting the statute but had departed from certain of the uniform act's provisions in light of the Connecticut experience. . . . Id., at p. 2493. For example, the proposed bill allow[ed] for an individual to contest an agreement if that individual [was] not provided with fair and reasonable financial disclosure and did not waive that right or have independent knowledge. [22] Id. McClure also revealed that the committee had investigated the statutes and judicial decisions of other jurisdictions and that an article by Professor Judith T. Younger; see generally J. Younger, Perspectives on Antenuptial Agreements, 40 Rutgers L.Rev. 1059 (1988); had been particularly helpful in framing recommendations for changes in the [u]niform [a]ct. Conn. Joint Standing Committee Hearings, supra, at p. 2493. In her article, Younger conducted an extensive review of existing law and concluded that, [i]n every case, disclosure should be enough to give each contracting party a clear idea of the other's property and resources. The best device for proving disclosure is to attach schedules of assets and income to the agreement itself. A mere recital of disclosure in the agreement does not preclude a showing that there was none in fact. J. Younger, supra, 40 Rutgers L.Rev. at 1080. The bill initially required the party against whom enforcement is sought to prove not only that he or she was not provided a fair and reasonable disclosure of the amount, character and value of property, financial obligations and income of the other party, but that he or she [d]id not voluntarily and expressly waive, in writing, any right to disclosure of the property, financial obligations and income of the other party beyond the disclosure provided and [d]id not have, or reasonably could not have had, an adequate knowledge of the property, financial obligations and income of the other party, and of the legal rights which that party would relinquish under the agreement. . . . Substitute House Bill No. 6932, ง 6 (1995 Sess.). An amendment, however, eliminated the second and third requirements. See Substitute House Bill No. 6932, ง 6 (1995 Sess.), as amended by House Amendment Schedule A. The amendment thus made it easier to prove lack of a fair and reasonable financial disclosure and demonstrated the legislature's intent that the disclosure requirement focus on the information to be disclosed rather than on the party to whom disclosure is made. Although the legislative history is helpful in understanding the drafters' general intent, it does not provide a definitive answer to the question of what constitutes fair and reasonable disclosure. It is therefore necessary to review McHugh [23] and the decisions of other jurisdictions that have interpreted analogous provisions. In McHugh, this court articulated the principle that, because the parties to a prenuptial agreement stand in a relationship of mutual confidence, [t]he duty of each party to disclose the amount, character, and value of individually owned property, absent the other's independent knowledge of the same, is an essential prerequisite to a valid antenuptial agreement containing a waiver of property rights. . . . The burden is not on either party to inquire, but on each to inform, for it is only by requiring full disclosure of the amount, character, and value of the parties' respective assets that courts can ensure intelligent waiver of the statutory rights involved. (Citations omitted; internal quotation marks omitted.) McHugh v. McHugh, supra, 181 Conn. at 486-87, 436 A.2d 8. McHugh thus makes three significant points. First, the purpose of disclosure is to ensure that each party has sufficient knowledge of the other party's financial circumstances to understand the nature of the legal rights being waived. [24] See id. In other words, a party cannot know what is being waived unless he or she is privy to all of the relevant facts, in particular, the financial status of the other party. The term fair and reasonable thus refers to the substance of a party's disclosure rather than to its timing. This principle is consistent with the language of ง 46b-36g, as we previously discussed. Second, financial disclosure in Connecticut must be understood as a burden to inform borne solely by the disclosing party. Id. Accordingly, the court's examination of whether proper disclosure has been made must focus on the actions of the disclosing party rather than on the party to whom disclosure is made. See id. Third, full financial disclosure is required in a prenuptial agreement only if the party to whom disclosure is made does not have independent knowledge of the other party's financial circumstances. See id., at 486, 436 A.2d 8. McHugh is the only Connecticut case that has examined, even tangentially, the meaning of fair and reasonable disclosure. [25] We therefore turn to the case law of other jurisdictions that have enacted similar provisions based on the uniform act. See, e.g., Connecticut National Bank v. Giacomi, 233 Conn. 304, 326, 659 A.2d 1166 (1995) (we . . . may find guidance in precedent from other states that have adopted . . . relevant provisions of [a] [u]niform [a]ct); Hill v. Blake, 186 Conn. 404, 408, 441 A.2d 841 (1982) ([when an] act is a uniform law, decisions from other states are valuable for the interpretation of its provisions); see also Jacobs v. Healey Ford-Subaru, Inc., 231 Conn. 707, 719-21, 652 A.2d 496 (1995) (considering interpretations of analogous provisions of article nine of Uniform Commercial Code adopted by other states). Our review of this case law indicates that when a party's independent knowledge is insufficient and the other party must disclose financial information in a prenuptial agreement, the extent of the required disclosure depends on how the court views the relationship. Courts in the majority of jurisdictions regard the parties as involved in a confidential relationship of mutual trust that demands the exercise of the highest degree of good faith, candor and sincerity in all matters bearing on the proposed agreement. See, e.g., In re Marriage of Drag, 326 Ill.App.3d 1051, 1056, 261 Ill.Dec. 184, 762 N.E.2d 1111 (2002); Cannon v. Cannon, 384 Md. 537, 556, 570-71, 865 A.2d 563 (2005); Rosenberg v. Lipnick, 377 Mass. 666, 670, 389 N.E.2d 385 (1979); Wiley v. Iverson, 295 Mont. 511, 517, 985 P.2d 1176 (1999); In re Estate of Hollett, 150 N.H. 39, 42-43, 834 A.2d 348 (2003); Tiryakian v. Tiryakian, 91 N.C.App. 128, 132, 370 S.E.2d 852 (1988); Fletcher v. Fletcher, 68 Ohio St.3d 464, 466, 628 N.E.2d 1343 (1994); Griffin v. Griffin, 94 P.3d 96,99-100 (Okla.Civ.2004); Randolph v. Randolph, supra, 937 S.W.2d at 821; Carpenter v. Carpenter, 19 Va.App. 147, 152, 449 S.E.2d 502 (1994); Pajak v. Pajak, 182 W.Va. 28, 33, 385 S.E.2d 384 (1989). In these jurisdictions, [t]he burden is not on either party to inquire, but on each to inform. . . . Rosenberg v. Lipnick, supra, at 670, 389 N.E.2d 385; accord DeLorean v. DeLorean, 211 N.J.Super. 432, 440, 511 A.2d 1257 (1986); see also Denison v. Dawes, 121 Me. 402, 404, 117 A. 314 (1922); Hartz v. Hartz, 248 Md. 47, 56-57, 234 A.2d 865 (1967); In re Estate of Kaufmann, 404 Pa. 131, 136, 171 A.2d 48 (1961). Jurisdictions that treat the parties as involved in an arm's-length relationship on the theory that parties who are not yet married are not presumed to share a confidential relationship; (internal quotation marks omitted) DeLorean v. DeLorean, supra, 211 N.J.Super. at 441, 511 A.2d 1257, quoting In re Marriage of Dawley, 17 Cal.3d 342, 355, 551 P.2d 323, 131 Cal. Rptr. 3 (1976); impose a duty on each spouse to inquire and investigate the financial condition of the other, and, consequently, the disclosure requirement is less demanding. DeLorean v. DeLorean, supra, at 438, 511 A.2d 1257; [26] see, e.g., In re Marriage of Bonds, 24 Cal.4th 1, 27, 99 Cal.Rptr.2d 252, 5 P.3d 815 (2000); Eckstein v. Eckstein, 129 App.Div.2d 552, 553, 514 N.Y.S.2d 47 (1987). Connecticut regards the parties to a prenuptial agreement as involved in a confidential relationship. See McHugh v. McHugh, supra, 181 Conn. at 486-87, 436 A.2d 8. Accordingly, we must apply the more stringent standard. The overwhelming majority of jurisdictions that apply this standard do not require financial disclosure to be exact or precise. See, e.g., Nanini v. Nanini, 166 Ariz. 287, 290, 802 P.2d 438 (Ct.App. 1990) (applying Illinois law and concluding that exact dollar value of parties' property need not be shown at time of execution of agreement); In re Estate of Lopata, 641 P.2d 952, 955 (Colo.1982) (Fair disclosure is not synonymous with detailed disclosure such as a financial statement of net worth and income. The mere fact that detailed disclosure was not made will not necessarily be sufficient to set aside an otherwise properly executed agreement.); In re Estate of Peterson, 221 Neb. 792, 798, 381 N.W.2d 109 (1986) ([f]air disclosure contemplates that each spouse should be given information, of a general and approximate nature, concerning the net worth of the other [internal quotation marks omitted]); Simeone v. Simeone, 525 Pa. 392, 403, 581 A.2d 162 (1990) (disclosure need not be exact, so long as it is `full and fair'); Sanford v. Sanford, 694 N.W.2d 283, 294-95 (2005) (It is sufficient if the prospective spouse can be said to have had adequate knowledge of the nature and extent of the other party's property. . . . It is not necessary . . . for a spouse to provide a detailed and exact valuation of his or her net worth. . . . It is sufficient for a spouse to provide, within the best of his or her abilities, a list of assets and liabilities with approximate valuations. The listing must be sufficiently precise to give the other spouse a reasonable approximation of the magnitude of the other spouse's net worth. [Citations omitted; emphasis added; internal quotation marks omitted.]); Randolph v. Randolph, supra, 937 S.W.2d at 821 (Although full and fair disclosure need not reveal precisely every asset owned by an individual spouse, at a minimum, full and fair disclosure requires that each contracting party be given a clear idea of the nature, extent, and value of the other party's property and resources. . . . Though not required, a fairly simple and effective method of proving disclosure is to attach a net worth schedule of assets, liabilities, and income to the agreement itself. [Citation omitted.]); Wilson v. Moore, 929 S.W.2d 367, 371 (Tenn.App.1996) ([I]n the absence of fraud or overreaching, the inadvertent failure to disclose an asset or the unintentional undervaluation of an asset will not invalidate a prenuptial agreement as long as the disclosure that was made provides an essentially accurate understanding of the party's financial holdings. The disclosure will be deemed adequate if it imparts an accurate understanding of the nature and extent of a person's property interests.); Pajak v. Pajak, supra, 182 W.Va. at 32, 385 S.E.2d 384 (for a prenuptial agreement to be valid, it is not necessary that both parties execute a detailed, written financial statement such as is required by a bank before making a loan). See generally annot.,  Failure to Disclose Extent of Value of Property Owned As Ground for Avoiding Premarital Contract,  3 A.L.R.5th 394, 413-17, ง 2[a] (1992). We agree with the majority of jurisdictions that a fair and reasonable financial disclosure requires each contracting party to provide the other with a general approximation of their income, assets and liabilities, and that a written schedule appended to the agreement itself, although not absolutely necessary, is the most effective method of satisfying the statutory obligation in most circumstances. In the present case, the defendant's disclosure was more than adequate to ensure that the plaintiff would be able to make an intelligent waiver of her statutory rights. See McHugh v. McHugh, supra, 181 Conn. at 486-87, 436 A.2d 8. Article ten of the agreement provided that the defendant's gross income from all sources for 1997, excluding capital gains, was $2,300,000. In addition, schedule A set forth a list of the defendant's assets and liabilities, most of which were valued individually, for a total net worth of $6,576,000. These assets, as we previously noted, included money market accounts, mutual funds, checking accounts, investments, real and personal property, stocks, various employee and equity participation plans, United States savings bonds, and four frequent flier accounts, all identified by account numbers, where applicable. Moreover, the plaintiff acknowledged in article eleven of the agreement that she had examined the list of assets and liabilities provided in schedule A and clearly understood and consented to all of the agreement's terms. See footnote 9 of this opinion. Significantly, the plaintiff did not allege at any time during the proceedings, nor did the court conclude, that the defendant's disclosure was inaccurate or incomplete. Instead, the court, in effect, validated the defendant's disclosure by relying in part on the statement of net worth provided in schedule A when calculating its financial orders. Thus, the defendant's disclosure would have been adequate even under the standard employed in New Jersey, which requires that a written list of assets and income be appended to the prenuptial agreement. See DeLorean v. DeLorean, supra, 211 N.J.Super. at 438, 511 A.2d 1257 (we can ascertain with complete certainty whether there was a full and complete disclosure only by requiring a written list of assets and income [to] be attached to the [ante]nuptial agreement). We therefore conclude that the defendant's disclosure was fair and reasonable because it provided the plaintiff with an accurate representation, in writing, of his income and financial assets at the time the agreement was executed. The trial court determined that the defendant's disclosure failed to comply with ง 46b-36g because the plaintiff lacked sufficient financial experience to understand the information disclosed. This conclusion is incompatible with McHugh and the statute's legislative history. When the burden is on each party to inform, as established in McHugh, the test for adequate disclosure need not take into account or depend on the capacity of the receiving party to understand or digest the information received. To adopt such a test would place an additional burden on each party to assess the intelligence and financial experience of the other, a subjective determination simply not contemplated in the statute or in the case law of this or other jurisdictions. Accordingly, although the plaintiff's financial inexperience may be relevant in assessing, for example, whether the agreement was substantively fair; see, e.g., Banks v. Evans, 347 Ark. 383, 388-89, 64 S.W.3d 746 (2002); unconscionable; see, e.g., Mallen v. Mallen, 280 Ga. 43, 47, 622 S.E.2d 812 (2005); or voluntary; see, e.g., DeLorean v. DeLorean, supra, 211 N.J.Super. at 436, 511 A.2d 1257; it is not relevant in determining whether the parties made a fair and reasonable disclosure of their respective financial circumstances. The subsequent legislative history of the statute, which included the removal of a provision that would have required the party against whom enforcement is sought to prove that he or she did not have adequate knowledge of the other party's financial status, supports this conclusion. The plaintiff's financial experience, or alleged lack thereof, thus has no bearing on whether the defendant made a fair and reasonable disclosure of his financial circumstances.