Derby v. Derby
378 S.E. 2d 74, 8 Va. App. 19, 5 Va. Law Rep. 2059 (1989)
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Rule of Law:
A marital property settlement agreement may be set aside as unconscionable when there is a gross disparity in the division of assets, coupled with inequitable conduct such as overreaching or taking advantage of the other party's emotional weakness.
Facts:
- George and Sandra Derby were married for twenty-two years before Sandra filed for divorce.
- While separated, Sandra concealed her ongoing affair with John Singletary from George.
- On July 9, 1984, Sandra confronted George in a parking lot with a property settlement agreement drafted by her attorney.
- George had not yet conferred with his own attorney about the agreement's contents.
- In the parking lot, Sandra hand-wrote a modification to the agreement, striking a provision for equal division and instead granting her sole ownership of the parties' most valuable real estate.
- George signed the modified agreement on the hood of a car, believing that doing so might lead to a reconciliation with Sandra.
- Later that same day, George executed a deed formally transferring the property to Sandra.
- The agreement resulted in Sandra receiving the vast majority of the couple's accumulated marital property.
Procedural Posture:
- Sandra Derby sued George Derby for divorce in a Virginia trial court.
- George Derby filed a cross-bill seeking a divorce on the ground of adultery.
- The case was referred to a commissioner in chancery, who heard the evidence.
- The commissioner recommended that the divorce be granted to George Derby on the ground of adultery, and that the property settlement agreement be found valid.
- Both parties filed exceptions to the commissioner's report, which were heard by the trial court judge.
- The trial judge granted the divorce on the ground of adultery but rejected the commissioner's recommendation regarding the agreement, ruling it invalid as unconscionable and obtained by constructive fraud or duress.
- Sandra Derby (appellant) appealed the trial court's decision invalidating the agreement to the Court of Appeals of Virginia.
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Issue:
Does a property settlement agreement that results in a gross disparity in the division of assets, and which was signed by one party due to emotional weakness and the other party's overreaching conduct, constitute an unconscionable contract that can be set aside by a court?
Opinions:
Majority - Coleman, J.
Yes, a property settlement agreement is unconscionable and may be set aside when it results in a gross disparity in the division of assets and was secured by one party taking advantage of the other's emotional weakness and desire for reconciliation. While inadequacy of price alone is insufficient to void a contract, a gross disparity in value is a significant factor. When combined with accompanying inequitable incidents—such as concealment, misrepresentation, undue advantage, or oppression—a court of equity may grant relief. Here, the disparity was 'shocking,' as George gave up essentially everything he had accumulated. This was coupled with Sandra's overreaching conduct; she concealed her affair while giving George false hope for reconciliation, 'played upon the weakness of her husband,' and orchestrated the signing at a time and place that took advantage of his emotional state and lack of legal counsel. The combination of the oppressive terms and the unfair process used to obtain them renders the agreement unconscionable and therefore invalid.
Analysis:
This decision clarifies the application of the unconscionability doctrine to marital separation agreements. It establishes that while the confidential relationship between spouses ends upon separation, courts will still closely scrutinize the fairness of the bargaining process. The ruling demonstrates that conduct which may not rise to the level of traditional fraud or duress can still invalidate an agreement if it constitutes overreaching that exploits the unique emotional vulnerabilities present during a marital breakdown. This precedent empowers trial courts to look beyond the face of an agreement and consider whether a combination of grossly inequitable terms and oppressive tactics renders it unenforceable.
