Court Opinion

ID: 6318197
Source: CourtListenerOpinion
Date Created: 2022-02-28 23:02:16.069624+00
Date Added: 2024-06-11T09:00:47.690498
License: Public Domain

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                                                         Electronically Filed
                                                         Supreme Court
                                                         SCWC-XX-XXXXXXX
                                                         28-FEB-2022
                                                         12:20 PM
                                                         Dkt. 7 OP

            IN THE SUPREME COURT OF THE STATE OF HAWAIʻI

                             ---o0o---
________________________________________________________________

                             JOE CROFFORD,
                    Petitioner/Plaintiff-Appellee,

                                  vs.

                           KRISTI ADACHI,
                  Respondent/Defendant-Appellant.
________________________________________________________________

                            SCWC-XX-XXXXXXX

          CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS
               (CAAP-XX-XXXXXXX; FC-D NO. 13-1-7625)

                           FEBRUARY 28, 2022

   RECKTENWALD, C.J, NAKAYAMA, McKENNA, WILSON, and EDDINS, JJ.

               OPINION OF THE COURT BY RECKTENWALD, C.J.

                          I.   INTRODUCTION

          At issue is whether marital agreements that consider

fault or misconduct when dividing the marital property are

enforceable.    The parties entered into a post-marital agreement

expressing, among other things, that if Joe Crofford (Husband)

engaged in extramarital affairs or physically harmed his wife
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Kristi Adachi (Wife), Wife would receive most of the parties’

joint assets.   Husband contends on certiorari that the agreement

is void because it violates Hawai‘i’s public policy favoring no-

fault divorce and equitable distribution of marital property.

          We have not previously considered whether marital

agreements that account for misconduct or fault when dividing the

marital property are enforceable.        Upon review, we conclude these

agreements are not enforceable.

                          II.    BACKGROUND

          The parties were married in 1999. 1       At the time of their

marriage, Wife owned significant assets, including two homes in

Kailua, Hawai‘i and a medical practice, Hawaiian Island ENT

Specialists, Inc.   Husband did not have significant marital assets

and owed more than $200,000.00 in past child support for two

children from prior marriages.      Together, the parties have one

child, who was twelve years old when they separated.

          Over the course of their marriage, Husband engaged in

several extramarital affairs.      In March 2013, after Wife found

Husband in bed on their yacht with another woman, Wife wanted to

file for divorce.   Husband pleaded with Wife not to leave the

     1    The parties did not execute a premarital agreement.

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marriage and proposed that the parties sign a postnuptial

agreement, which Wife agreed to.

            In or around May 2013, Wife presented Husband with the

first draft of the Marital Agreement, which provided that Husband

would receive $200,000 in the event the parties divorced. 2

Husband rejected the first draft and refused to make any edits to

it.   About two months later, Wife sent Husband a second draft of

the Marital Agreement.      Husband made handwritten edits to the

second draft, but neither party executed the agreement.             Instead,

the parties drafted a Marital Agreement Addendum (Addendum) to

address the issues that Husband lined or struck out in the second

draft.   The Addendum, which was primarily drafted by Husband,

provided as follows:

            I, [Husband] on this date of June 24, 2013 propose this post-
            nuptial agreement.

            I have been married to [Wife] since July 24, 1999. She was
            the love of my life until I did not feel important to her due
            to her career. Instead of being the leader of the family in
            the godly way that I should have been, I acted out because of
            my sinful nature. I have been unfaithful to my wife on
            numerous occasions. . . . I desire to break away from my
            destructive behaviors and truly become the man that our Lord
            Jesus Christ would want me to be.

            . . . .

            I ask my wife for forgiveness for all my sins and will uphold
            my verbal, and now written promise to her regarding agreeing

      2     Specifically, the first draft listed the parties’ two South Street
apartments and their yacht as Wife’s separately owned property. Moreover, the
draft explained that, “[i]n lieu of any payments of maintenance, spousal
support . . . or an interest in [Wife’s] separately owned property in the event
of a divorce, [Wife] shall pay [Husband] the sum of $200,000.00[.]”

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          to leave this marriage with honor and dignity without
          monetary compensation if I a[m] unable [to] change my sinful
          ways. Specifically, have another affair[,] either emotional
          or consummated, or physically harm [Wife].

          In return, I ask of my wife to give me the [l]ove and
          [r]espect I so long for and to truly forgive my sins . . . I
          [also] ask her to spend more time with me[.]

(Emphasis added.)

          Additionally, the Addendum addressed the allocation of

certain property.   It explained:

          The Sunreef 62 foot Catamaran Yacht . . . will remain the
          property [of Husband] and will be put in [Husband’s] trust
          with [Wife] named as the beneficiary in the event of
          [Husband’s] [d]eath and will remain the property of the trust
          in the event of a divorce with exception in the case of
          infidelity and physical harm by [Husband]. At which time the
          [o]wnership of the Yacht Spartan Queen will be transferred to
          [Wife].

          The Penthouse 4501 located at One Waterfront Towers 415 South
          St. will remain in [Wife’s] [t]rust with [Husband] named as
          the [b]eneficiary.

          In the event of divorce with the exception of infidelity or
          physical harm by [Husband], [Husband] will maintain ownership
          of the [yacht], which has been effectively paid in full by
          [Wife]. All monies invested in the yacht up until November
          2012 were contributions directly from money earned through
          [Wife’s] business . . . and will be considered monetary
          compensation for the years invested in this [m]arriage.
          [Husband] will waive any separation of property rights;
          except as described below and alimony.

          . . . .

          We will also both have to agree on all future financial
          decisions to secure our financial future together. I accept
          her proposal to place the proceeds from the sale of apartment
          425 South Street in a [t]rust under both of our names. . . .
          In the event of a divorce, any monies gained or properties
          invested in will be split equally between the two of us; with
          the exception of infidelity and physical harm.

(Emphases added.)

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            Wife executed the Addendum in the presence of a notary

public on June 24, 2013 and Husband executed the Addendum in the

presence of a notary public the following day.            Although Husband

contested whether the Marital Agreement itself was properly

executed, he acknowledged signing the Addendum. 3

            The parties separated in September 2013 after Husband

exhibited aggressive behavior towards Wife.            Husband filed his

Complaint for divorce on October 7, 2013 and Wife filed her Answer

to Complaint for Divorce on November 18, 2013.

A.    Family Court Proceedings

            Following a bench trial, the Family Court of the First

Circuit 4 entered its findings of fact and conclusions of law and

decree granting absolute divorce and awarding child custody.

First, the family court determined that Wife “never coerced or

unduly influenced Husband to sign the Addendum.”            The family court

also concluded that the parties entered into the Marital Agreement

and Addendum voluntarily, and that Husband violated the infidelity

conditions in the Addendum.       However, the family court held that

the Marital Agreement and Addendum were unenforceable because “the

essence of the Marital Agreement [and Addendum] violates the

      3     Both the family court and the ICA concluded that the parties
executed the Addendum, which incorporated by reference the second draft of the
Marital Agreement. Crofford v. Adachi, 148 Hawai‘i 535, 479 P.3d 153, 2020 WL
7775540 at *2, *7 (App. Dec. 30, 2020) (mem. op.).

      4     The Honorable Darryl Y.C. Choy presided.

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statutory policy and principles of no fault divorce and equitable

distribution.”     The family court divided the marital property

based on what it determined would be just and equitable, rather

than as set forth in the parties’ marital agreements. 5           The family

court relied upon a 2015 tax assessment valuation of the parties’

penthouse apartment submitted by Wife, which at $2,454,500, was

almost $600,000 less than the value reached by a private appraiser

that Husband and Wife jointly hired.

B.    Proceedings on Appeal

            The parties cross-appealed to the ICA.          On appeal, Wife

argued that the family court erred in rejecting the Marital

Agreement and Addendum.       Wife argued that “no Hawaii appellate

court has ever held . . . that a marital agreement attaching

contingencies of fault” renders the agreement unenforceable.               Wife

explained that

            both the Hawaii appellate courts and courts in other
            jurisdictions have held that marital agreements in which the
            parties agree to a certain manner in which to divide and
            distribute marital property, effective upon one of the
            parties being unfaithful, are valid and enforceable even if
            the division of property is not otherwise “equitable,” and
            even in light of public policy favoring no-fault divorces.

(Citing Balogh v. Balogh, 134 Hawaiʻi 29, 43-45, 332 P.3d 631,

645-47 (2014); In re Marriage of Tabassum & Younis, 881 N.E.2d

      5     As noted by the ICA, under the Marital Agreement and Addendum,
“[Husband] would at minimum receive the Acura MDX and half of the parties’ gold
and silver.” In its findings of fact, the family court valued the Acura MDX at
$27,000 and the gold and silver at $174,000.

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396, 413 (Ill. App. Ct. 2007); Gilley v. Gilley, 778 S.W.2d 862,

864 (Tenn. Ct. App. 1989)).

          Husband contended that Hawaiʻi’s “no-fault divorce

standards preclude enforcement of the [Addendum],” and allowing

Wife “to ‘revive’ the long deceased, fault-based divorce by

contract would frustrate the legislatively-expressed policy that

the [f]amily [c]ourt should not waste its limited time and

resources attempting to resolve competing claims of marital

misconduct.”   Husband also argued that he signed the agreement

involuntarily and that the agreement was unconscionable.       Finally,

Husband argued that the family court abused its discretion in

valuing the parties’ penthouse apartment at $2,454,500, based on

the property’s 2015 tax assessment value, instead of $3,000,000,

the value reached by a private appraiser that Husband and Wife

agreed to hire.

          In a memorandum opinion, the ICA agreed with Wife, and

concluded that the family court erred with regard to the Marital

Agreement and Addendum’s enforceability.      The ICA explained that

“[a]lthough Hawaiʻi has implemented a no-fault divorce scheme,

there is no law that invalidates a marital agreement because it

provides for distribution of marital property based on the conduct

of the parties.”   Crofford v. Adachi, 148 Hawai‘i 535, 479 P.3d

153, 2020 WL 7775540 at *5 (App. Dec. 30, 2020) (mem. op.)       After
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noting the family court’s finding that both Husband and Wife

signed the Addendum and entered into the Marital Agreement by

referencing it in the signed Addendum, the ICA concluded that the

Marital Agreement and Addendum were valid and enforceable.

          Additionally, the ICA disagreed with Husband that the

Marital Agreement and Addendum were unconscionable because it

awarded almost all joint assets to Wife.        Noting that “the

[Addendum] only contemplated an inequitable division of property

if [Husband] had another affair or physically harmed [Wife],” the

ICA found it “unlikely that the Marital Agreement and Addendum

would have been construed by the parties as demonstrative of

Husband’s commitment to the marriage if it had not contained the

contingencies of fault and the resulting inequitable distribution

of property.”   Id. at *8 (citing Balogh, 134 Hawaiʻi at 43, 332

P.3d at 645).   The ICA concluded:

          Given [Wife’s] contributions to the marriage, all of the
          circumstances at the time the Marital Agreement and Addendum
          were entered into, including the reasons for drafting the
          agreement and the provisions therein, the one-sided
          distribution of property contemplated by the postmarital
          agreement in the event [Husband] had another affair or
          physically harmed [Wife] is not “so outrageously oppressive
          as to be unconscionable in the absence of unfair surprise.”

Id. at *9 (quoting Balogh, 134 Hawai‘i at 42-43, 332 P.3d at 644-

45).

          The ICA additionally held that the agreements were not

procedurally unconscionable, finding no evidence of unfair

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surprise.      The ICA noted that the Husband primarily drafted the

Addendum and “there is no evidence that [Husband] did not have

full knowledge or the chance to obtain full knowledge of [Wife’s]

financial circumstances.”         Id. at *10.

              Finally, the ICA rejected Husband’s other points of

error, including his challenges to “various aspects of the family

court’s valuation of certain real and personal property, debts,

and premarital contributions,” for failing to comply with the

requirements of Hawai‘i Rules of Appellate Procedure (HRAP) Rule

28(b)(4). 6      Id. at *11.    The ICA stated that

              [Husband] fails to specifically address the findings of fact
              and conclusions of law that he lists in his points of error
              in his arguments. We are left to speculate which finding or
              conclusion [Husband] seeks to address in his arguments, which
              we decline to do.

Id. at *11.

              The ICA concluded that Husband failed to argue his

alleged points of error regarding the family court’s findings of

fact and conclusions of law, and deemed them to be waived.

              The ICA vacated the family court’s property division

awards and remanded to the family court to “enter a new property

      6     HRAP Rule 28(b)(4) requires an appellant to state “(i) the alleged
error committed by the court or agency; (ii) where in the record the alleged
error occurred; and (iii) where in the record the alleged error was objected to
or the manner in which the alleged error was brought to the attention of the
court or agency.”

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division award according to the parties’ agreement set forth in

the [] Addendum.”    Id. at *11.

            Husband sought review by this court, raising the

following questions in his application for writ of certiorari: (1)

whether a court may enforce a marital agreement that is contrary

to the no-fault public policy in divorce proceedings; (2) whether

the Marital Agreement and Addendum violated Hawai‘i’s no-fault

public policy, thus making it unenforceable; (3) whether the

agreements are unconscionable because they award Wife

approximately ninety-nine percent of the marital property; (4)

whether the family court erred in rejecting the parties’

stipulation to the value of the parties’ jointly-owned penthouse;

and (5) whether marital agreements between spouses should be

subject to a higher standard pursuant to the rules governing

fiduciary relationships.

                    III.   STANDARDS OF REVIEW

A.   Family Court Decisions

            “[T]he family court possesses wide discretion in making

its decisions and those decisions will not be set aside unless

there is a manifest abuse of discretion.”      Kakinami v. Kakinami,

127 Hawai‘i 126, 136, 276 P.3d 695, 705 (2012) (citations

omitted).

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B.   Findings of Fact and Conclusions of Law

            The family court’s findings of fact are reviewed under the
            clearly erroneous standard. A finding of fact is clearly
            erroneous when (1) the record lacks substantial evidence to
            support the finding, or (2) despite substantial evidence in
            support of the finding, the appellate court is nonetheless
            left with a definite and firm conviction that a mistake has
            been made. Substantial evidence is credible evidence which is
            of sufficient quality and probative value to enable a person
            of reasonable caution to support a conclusion. The family
            court’s conclusions of law are reviewed de novo.

Balogh, 134 Hawai‘i at 38, 332 P.3d at 640 (quoting Kakinami, 127

Hawai‘i at 136, 276 P.3d at 705) (internal quotation marks

omitted).

C.   Construction of a Marital Agreement

            The construction and legal effect to be given a contract is a
            question of law freely reviewable by an appellate court.
            Unconscionability is a question of law this court reviews de
            novo. Whether particular circumstances are sufficient to
            constitute . . . duress is a question of law, although the
            existence of those circumstances is a question of fact.

Id. at 37-38, 332 P.3d at 639-40 (citations, brackets and internal

quotation marks omitted).

                            IV.    DISCUSSION

A.   The Marital Agreement and Addendum are Contrary to Public
     Policy

     1.     Hawai‘i has adopted a no-fault approach to divorce
            proceedings, which extends to the division of marital
            property

            In 1972, the legislature amended Hawai‘i Revised

Statutes (HRS) § 580-41 (2018), the statute governing divorce

proceedings, to eliminate the requirement that a party filing for

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divorce show marital misconduct on the part of their spouse. 7             At

a House Judiciary Committee hearing, Family Court Judge Betty

Vitousek offered the following rationale in favor of no-fault

divorce: “Unnecessary disputes over fault, where one party to the

divorce action must be the accuser and the other the accused, lead

to counter-spouse antagonism which, particularly when the parties

have children, further aggravates their differences.”             H. Stand.

Comm. Rep. No. 1172, in 1972 House Journal, at 637.            As amended,

HRS § 580-41 now mandates that divorce is appropriate “upon the

application of either party” if the court finds:

            (1)   The marriage is irretrievably broken;

            (2) The parties have lived separate and apart under a decree
            of separation from bed and board entered by any court of
            competent jurisdiction, the term of separation has expired,
            and no reconciliation has been effected;

            (3) The parties have lived separate and apart for a period
            of two years or more under a decree of separate maintenance
            entered by any court of competent jurisdiction, and no
            reconciliation has been effected; or

            (4) The parties have lived separate and apart for a continuous
            period of two years or more immediately preceding the application,
            there is no reasonable likelihood that cohabitation will be
            resumed, and the court is satisfied that, in the particular
            circumstances of the case, it would not be harsh and oppressive to
            the defendant or contrary to the public interest to a divorce on
            this ground on the complaint of the plaintiff.

      7     The previous iteration of HRS § 580-41 provided that “[d]ivorces
from the bond of matrimony shall be granted for the causes hereinafter set
forth and no other,” and provided an exhaustive list of reasons related to
fault. 1970 Haw. Sess. Laws Act 116, § 1 at 223.

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HRS § 580-41. 8

            Even before the legislature’s enactment of Hawai‘i’s no-

fault divorce policy, however, this court had already held that a

person’s conduct during the marriage was irrelevant to the

division of marital property.        See Richards v. Richards, 44 Haw.

491, 509, 355 P.2d 188, 198-99 (1960) (“Personal conduct of the

spouses toward each other is material to the establishment of a

ground for divorce.      But it has no bearing on the question as to

which spouse has a better claim to the property sought to be

divided in a divorce proceeding.” (emphasis added)).             And

following Richards, our courts have continued to hold that fault

should not be considered in the division of marital property upon

divorce.    See, e.g., Hatayama v. Hatayama, 9 Haw. App. 1, 11-12,

818 P.2d 277, 282 (1991) (holding that the parties’ relative

contributions during marriage did not authorize a deviation from

an equal division of marital property); Gordon v. Gordon, 135

Hawai‘i 340, 353, 350 P.3d 1008, 1021 (2015) (holding, inter alia,

that husband’s “financial misconduct during the marriage should

not have been considered by the family court when deciding whether

to deviate from an equal division of marital partnership property

in the absence of a finding of extraordinary circumstances”).

      8     HRS § 580-41 has remained unchanged as amended.   See 1972 Haw.
Sess. Laws Act 11, § 1 at 165-66.

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          In Hatayama, the ICA specifically construed Hawai‘i’s

no-fault approach to divorce to include the principle that

parties’ contributions and conduct during marriage are generally

irrelevant to the division of marital assets upon divorce:

          Divorce is not a vehicle by which one spouse is compensated
          for having given more than he or she received during the
          marriage or for having had to suffer during the marriage from
          the other spouse’s inadvertent, negligent, or intentional
          inadequacies, failures, or wrongdoings, financial or
          otherwise. . . . If such evidence was relevant, each spouse
          would be well-advised to prepare from the date of the
          marriage for the possibility of a divorce by meticulously
          keeping score in a daily diary. The trial would be a contest
          of diaries and experts. Allowing it to be such a vehicle
          would be contrary to the public policy in favor of loving,
          trusting, harmonious marriages and no-fault divorces.

Hatayama, 9 Haw. App. at 11-12, 818 P.2d at 282 (emphases added).

          In this way, our courts have recognized that Hawai‘i’s

no-fault divorce policy extends to disputes over how marital

property should be divided.

     2.   The Marital Agreement and Addendum violate Hawai‘i’s no-
          fault divorce policy by requiring that the family court
          make a determination of whether one party engaged in
          misconduct

          As a general rule, postnuptial agreements between

spouses are valid in Hawai‘i.     See HRS § 572-22(c) (Supp. 2019)

(“All contracts made between spouses, whenever made . . . and not

otherwise invalid because of any other law, shall be valid.”);

Balogh, 134 Hawaiʻi at 32, 332 P.3d at 634 (affirming a married

couple’s right to contract).      However, as with any other contract,

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a postnuptial agreement must be made for a lawful purpose and must

not be contrary to public policy.          See, e.g., Yin v. Aguiar, 146

Hawai‘i 254, 270, 463 P.3d 911, 927 (2020) (“When evaluating the

validity of [contract] clauses, we examine whether they violate

public policy.” (cleaned up)).        Public policy “may . . . derive

from numerous sources including constitutional provisions,

statutory provisions, or the common law.”          Id. at 270, 463 P.3d at

927 (emphasis added).

            The ICA here cited Balogh and its general affirmation of

marital contracts to hold that the Marital Agreement and Addendum

were valid and enforceable.       In Balogh, following a period of

marital tension, husband and wife signed two agreements stating

that “if they separated, [wife] would receive seventy-five percent

of the profit from the sale of the property, the contents of their

home . . . , all of their vehicles, and $100,000 from [husband] in

lieu of alimony and court proceedings.”          Balogh, 134 Hawaiʿi at

32, 332 P.3d at 634 (emphasis added). 9        On appeal, we concluded

that the parties’ handwritten agreement was enforceable and the

family court “must enforce all valid and enforceable postmarital

and separation agreements.”       Id. at 40, 332 P.3d at 642 (citing

Epp v. Epp, 80 Hawai‘i 79, 87, 905 P.2d 54, 62 (App. 1995)).

      9     Significantly, the agreement in Balogh was contingent on
separation, not misconduct, and did not necessitate a balancing of the spouses’
interest in contracting against Hawai‘i’s policy of no-fault divorce.

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            Citing Balogh, the ICA in this case held that the

parties’ marital agreement, which was “freely entered into,”

should override the mandate of Hawai‘i’s no-fault divorce scheme

that spousal conduct be disregarded in determining the division of

marital assets.     Crofford, 2020 WL 7775540 at *5.         The ICA

reasoned that

            Although Hawai‘i has implemented a no-fault divorce scheme,
            there is no law that invalidates a marital agreement because
            it provides for the distribution of marital property based on
            the conduct of the parties. Rather, given the explicit
            provisions of HRS § 572-22, and as recognized by the supreme
            court, spouses may contract regarding marital property rights
            in premarital, postmarital, or settlement agreements, and the
            family court must enforce all valid and enforceable
            agreements with regard to marital property division.

Id. at *5 (emphasis added) (citing Balogh, 134 Hawai‘i at 39 n.4,

332 P.3d at 641 n.4).

            Respectfully, we disagree with the ICA’s application of

Balogh to this case.      Unlike the agreement in Balogh, the Marital

Agreement and Addendum here are contingent on the conduct of the

parties, necessitating a determination of whether one party

engaged in misconduct.      Although, in this case, Husband did not

contest that he violated the terms of the agreement, if he did,

the family court would have had to consider the parties’ evidence

of alleged fault in determining whether the agreement was

violated.    Such a result would conflict with the legislature’s

interest in “avoid[ing] abrasive evidence in divorce proceedings,”

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S. Stand. Comm. Rep. No. 415, in 1971 Senate Journal, at 971, and

turn the parties’ divorce trial into the “contest of diaries and

experts” denounced by the ICA in Hatayama.      9 Haw. App. at 11-12,

818 P.2d at 282.

          In conclusion, the ICA erred in holding that the Marital

Agreement and Addendum here are valid and enforceable.       Because

the agreements require the family court to make determinations of

fault, they violate Hawai‘i’s policy of no-fault divorce.       We

therefore hold that the agreements are void and unenforceable.

     3.   Case law from other jurisdictions supports that the
          agreements here are void and unenforceable as a matter
          of public policy

          Although jurisdictions are split on whether postnuptial

agreements that premise property division on a spouse’s infidelity

violate the public policy of no-fault divorce, a number of states

have held that such agreements are void or unenforceable as a

matter of public policy.    For example, in In re Marriage of

Cooper, the parties entered into a reconciliation agreement after

wife learned husband was having an extramarital affair.       769

N.W.2d 582 (Iowa 2009).    The agreement, which was signed and

notarized, provided that husband would “accept full

responsibilities [for his] action” in the event his “indiscretions

le[d] to” a divorce, and required that husband make payments and

provide for certain financial arrangements in the event of

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divorce.   Id. at 584.   Soon thereafter, husband left the marital

home, moved to his own apartment, and admitted he continued his

prior affair even after signing the reconciliation agreement.        Id.

The Iowa Supreme Court concluded that this agreement violated

Iowa’s public policy, stating that “[a] unifying theme of our

historic case law is that contracts which attempt to regulate the

conduct of spouses during the marital relationship are not

enforceable.”   Id. at 586.   In order to avoid “empower[ing]

spouses to seek an end-run around [its] no-fault divorce laws

through private contracts,” id. at 587, and “creat[ing] a

bargaining environment where sexual fidelity or harmonious

relationships are key variables,” id. at 586, the court held that

the agreement in Cooper was void.

           The reasoning of Cooper is instructive here.      Like the

agreement in Cooper, the Marital Agreement and Addendum here have

“as a condition precedent the sexual conduct of the parties within

the marital relationship.”    Id. at 586.   And like Iowa’s no-fault

divorce law, which was “designed to limit acrimonious

proceedings,” id. at 587, Hawai‘i’s divorce statutes were crafted

with the purpose of “avoid[ing] abrasive evidence in divorce

proceedings.”   See Stand. Comm. Rep. No. 415, in 1971 Senate

Journal, at 971.   Despite these similarities, the ICA here

distinguished Cooper by arguing that Iowa courts have broader

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discretion than Hawai‘i courts in accepting or denying a parties’

marital agreement.   Crofford, 2020 WL 7775540 at *6.      The ICA

pointed out that unlike the Iowa Supreme Court, which recognized

that “[t]here is no provision of Iowa statutory law that expressly

authorizes or prohibits enforcement of reconciliation agreements,”

see Cooper, 769 N.W.2d at 585, this court has expressly recognized

a married couple’s right to “contract regarding marital property

rights” under HRS § 572-22.    Crofford, 2020 WL 7775540 at *5

(citing Balogh, 134 Hawai‘i at 39 n.4, 332 P.3d at 641 n.4).

          HRS § 572-22 does not specifically address whether an

agreement that allows marital couples to consider fault in the

separation of their property is unenforceable because it

contravenes Hawai‘i’s no-fault approach to divorce proceedings.

However, HRS § 572-22 does expressly limit the enforceability of

marital contracts to those “not otherwise invalid because of any

other law.”   The ICA therefore erred in holding that HRS § 572-22

authorized the enforcement of the agreements here.       In this case,

the family court would have to determine whether, under the

agreements’ terms and contrary to the purpose of the no-fault

statute, Husband truly “change[d] [his] sinful ways.”       Moreover,

the court would have to evaluate whether Wife’s promises to

forgive him and spend more time with him were fulfilled.       Because

the Marital Agreement and Addendum here require the family court
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to evaluate the parties’ fault, the agreements are contrary to

Hawai‘i’s no-fault divorce policy and must be voided.

           California has also concluded that marital agreements

with infidelity clauses are unenforceable.          In Diosdado v.

Diosdado, 118 Cal. Rptr. 2d 494 (Cal. Ct. App. 2002).            There, a

California appellate court concluded that a provision in a marital

agreement providing payment of liquidated damages to one spouse if

the other was “sexually unfaithful” was unenforceable. 10           Id. at

494.   The facts in Diosdado are similar to those here: After

learning husband was having an affair, the parties entered into a

written marital settlement agreement.         Id. at 494-95.     After

signing the agreement, husband was again unfaithful and the

parties separated.     Id. at 495-96.      The court concluded that

enforcement of the agreement would require that the court

“penalize the party who is at fault for having breached the

obligation of sexual fidelity, and whose breach provided the basis

for terminating the marriage.       This penalty is in direct

      10    The ICA distinguished this case for similar reasons as it did
Cooper. The ICA noted that “there does not appear to be any California statute
similar to HRS § 572-22” and that the California Supreme Court instead relied
on a statute requiring a contract to have a “lawful object.” Crofford, 2020 WL
7775540 at *6. But, as with Cooper, this difference, although significant,
does not answer the question of whether Hawaiʻi public policy renders the
agreement invalid.

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contravention of the public policy underlying no-fault divorce.” 11

Id. at 496.

           Here, the Addendum stated, among other things, that

Husband would leave the marital home “without monetary

compensation” if he was “unable [to] change [his] sinful ways.”

Similar to the liquidated damages provision in Diosdado, enforcing

the Addendum would require that the court “penalize the party who

is at fault for having breached the obligation of sexual fidelity,

and whose breach provided the basis for terminating the marriage.”

Diosdado, 118 Cal. Rptr. 2d at 496.

           Finally, Nevada also rejects marital agreements that

consider fault or marital misconduct in the division of property.

In Parker v. Green, No. 73176, 2018 WL 3211974 (Nev. June 25,

2018), the Nevada Supreme Court addressed a marital agreement

expressing that “[husband] would pay [wife] $2,500 per month,

      11    The California Supreme Court had previously rejected the idea that
married couples have absolute freedom of contract in a case involving the
enforceability of baseball player Barry Bonds’ prenuptial agreement. See In re
Marriage of Bonds, 5 P.3d 815 (Cal. 2000). Significantly, Diosdado quoted the
following passage from Bonds:
            [M]arriage itself is a highly regulated institution of
            undisputed social value, and there are many limitations on
            the ability of persons to contract with respect to it . . .
            that have nothing to do with maximizing the satisfaction of
            the parties or carrying out their intent. . . . These
            limitations demonstrate further that freedom of contract with
            respect to marital arrangements is tempered with statutory
            requirements and case law expressing social policy with
            respect to marriage.
Diosdado, 118 Cal. Rptr. 2d at 497 (quoting In re Marriage of Bonds, 5 P.3d at
829-30) (emphasis added).

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until death or remarriage, if the parties permanently ended their

relationship based on [husband’s] infidelity or dishonesty.”        Id.

at *1.   The court construed the contract as providing the wife

alimony in the event the parties separated, and nonetheless held,

“just as infidelity is not an appropriate consideration for

divorce, it is also an inappropriate consideration when

determining an alimony award.”     Id. at *3 (citing Rodriguez v.

Rodriguez, 13 P.3d 415, 418 (Nev. 2000)).

           Other courts have, however, enforced marital agreements

that account for misconduct when dividing marital property.       In

Laudig v. Laudig, 624 A.2d 651 (Pa. Super. Ct. 1993), husband and

wife entered into a postnuptial agreement after husband learned of

wife’s infidelities.    The agreement provided, among other things,

that if wife engaged in sexual intercourse with anyone other than

husband within a period of fifteen years, wife would “sign all of

her right, title and interest in and to any marital property . . .

to [husband] in consideration for the payment of the sum of Ten

Thousand ($10,000.00) Dollars and the sum of One Thousand

($1,000.00) Dollars each and every year thereafter for the

following fifteen years.”    Id. at 652.   Wife again was unfaithful,

and the husband sought to enforce the postnuptial agreement during

the divorce proceedings.    The Superior Court of Pennsylvania held

that “[o]ne of the recognized purposes of marital agreements is to

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allow the parties to avoid the operation of equitable

distribution,” and “[m]arital agreements allow parties to dispose

of their property rights regardless of the reasons . . . . If such

property rights can be transferred without providing any reason to

support the transfer, there should be no reason why a transfer

would be invalid if it be conditioned on the occurrence of a

specified type of conduct.”    Id. at 655.    The Superior Court of

Pennsylvania thus rejected wife’s argument that the agreement was

unenforceable because it violated Pennsylvania’s public policy.

However, since Pennsylvania allowed married couples to file for

divorce based on fault, id. at 652, the court’s reasoning in

Laudig is less persuasive in a no-fault state such as Hawai‘i.

          Similarly, Tennessee has held that marital agreements

that account for misconduct in the division of property are

enforceable.   In Gilley v. Gilley, the Court of Appeals of

Tennessee concluded that a reconciliation agreement executed after

wife learned husband was having an affair did not violate

Tennessee’s public policy favoring the preservation of marital

relations.   778 S.W.2d 862, 862 (Tenn. Ct. App. 1989).      The

reconciliation agreement “provided that in the event of divorce

husband would convey to wife his interest in a corporation owned

by the parties.”   Id. at 863.    Husband argued that the agreement

was unenforceable because it violated Tennessee’s public policy

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favoring the “preservation of marital relations” and the equitable

division of property.    Id. at 864.    The court disagreed, and

instead concluded that the reconciliation agreement was intended

“to encourage marital fidelity on the part of the husband by

setting forth, prior to reconciliation, the outcome of a divorce

should one occur.”    Id.   However, this case is not persuasive

because the public policy considerations that husband raised

pertained to the “preservation of marital relations,” not a no-

fault approach to divorce proceedings.

            Although the jurisdictions that have considered this

issue are split, those courts that have found such agreements

unenforceable have policies and divorce schemes that resemble our

own.   California and Iowa have both adopted strong policies

favoring a no-fault approach to divorce proceedings.       Moreover, we

have previously adopted California’s approach to the

enforceability of prenuptial agreements.      See L.R.O. v. N.D.O.,

148 Hawai‘i 336, 350, 475 P.3d 1167, 1181 (2020) (citing with

approval In re Marriage of Bonds, 5 P.3d 815 (Cal. 2000)).       And,

although not dispositive, case law from this jurisdiction

generally supports the elimination of fault in the division of

property.    See Richards, 44 Haw. at 509, 355 P.2d at 198-99; Horst

v. Horst, 1 Haw. App. 617, 624, 623 P.2d 1265, 1271-72 (1981).

While those cases did not involve a marital agreement - and

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therefore did not consider a marital couple’s right to contract

under HRS § 572-22 - they nonetheless reinforce Hawai‘i’s strong

policy favoring no-fault divorce proceedings, including when

dividing marital property.    Prior caselaw thus supports that the

Marital Agreement and Addendum are unenforceable, and that the ICA

erred by holding otherwise.

          Since we reject the Marital Agreement and Addendum on

public policy grounds, we decline to opine on whether the

agreements were also substantively or procedurally unconscionable.

B.   Husband’s Additional Challenges on Appeal are Meritless

          After finding that the Marital Agreement and Addendum

were unenforceable, the family court considered the value of the

marital assets when separating the parties’ assets in a just and

equitable manner under HRS § 580-74.     In doing so, the family

court rejected the parties’ private appraisal submitted to the

court valuing the parties’ penthouse property at $3,000,000.

Instead, the family court valued the penthouse at the tax-assessed

value of $2,454,500.    Husband’s contention that the family court

erred in doing so is without merit.

          The family court “possesses wide discretion” when

determining the value of marital assets.      Kakinami, 127 Hawai‘i at

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136, 276 P.3d at 705.      In this case, the family court found that

the parties mutually agreed to hire a private appraiser, that they

did not agree to be bound by the resulting appraisal, 12 and that

they did not include the appraisal in their exhibits or admit it

into evidence.     In light of these findings, which Husband does not

challenge here, 13 the family court acted within its discretion in

relying upon the penthouse’s tax-assessed value of $2,454,500.

            Finally, Husband argues that this court should adopt the

dissent’s reasoning in Balogh, and hold that the “confidential

relationship between spouses should require [postmarital]

contracts to be subjected to a fiduciary standard to protect

spouses against self-dealing and overreaching by the more dominant

spouse.”    134 Hawai‘i at 54, 332 P.3d at 656 (Pollack, J.

dissenting).    Because we hold that the Marital Agreement and

Addendum violate public policy and are therefore unenforceable, we

need not consider whether such a heightened standard is necessary.

      12     Wife had testified at trial that “[t]here’s no agreement or
stipulation they were agreeing to the appraised value.”

      13    The ICA held that Husband failed to argue and therefore waived his
points of error regarding the family court’s findings. On appeal, Husband does
not argue that this was in error.

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                           V.   CONCLUSION

          For the foregoing reasons, the ICA’s February 3, 2021

Judgment on Appeal is vacated.     This case is remanded to the

family court for further proceedings consistent with this opinion.

Michael A. Glenn                        /s/ Mark E. Recktenwald
for petitioner
                                        /s/ Paula A. Nakayama

                                        /s/ Sabrina S. McKenna

                                        /s/ Michael D. Wilson

                                        /s/ Todd W. Eddins

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