In the Matter of Richard Calvin and Connie Calvin

THE STATE OF NEW HAMPSHIRE

SUPREME COURT

In Case No. 2014-0816, In the Matter of Richard Calvin
and Connie Calvin, the court on January 11, 2016, issued the
following order:

Having considered the briefs and oral arguments of the parties, the court
concludes that a formal written opinion is unnecessary in this case. We affirm
in part, vacate in part, and remand.

The petitioner, Richard Calvin, appeals the invalidation of his prenuptial
agreement by the Circuit Court (Cooper, M., approved by Gordon, J.) and the
final decree issued by that court (Geiger, M., approved by Leonard, J.) in his
divorce from the respondent, Connie Calvin, now Connie Lorette. He contends
that the trial court erred by: (1) invalidating the parties’ prenuptial agreement
solely on the grounds of timing; (2) inequitably distributing the marital estate
by failing to award him certain pre-marital assets that he did not commit to the
marriage; (3) improperly valuing his dental practice; and (4) identifying a loan
he made to his business as a marital asset subject to distribution.

I

We first address the petitioner’s argument that the trial court erred as a
matter of law by invalidating the parties’ prenuptial agreement on duress
grounds based solely upon the date that the final draft was executed. He
contends that there were “no additional aggravating factors, which when
combined with the timing of the agreement’s execution, created a situation of
undue influence or duress.”

“We will defer to the findings of fact made by the [trial] court unless they
are so plainly erroneous that such findings could not be reasonably made.” In
re Estate of Hollett, 150 N.H. 39, 42 (2003) (quotation omitted). RSA 460:2-a
(2004) permits parties to enter into a written contract “in contemplation of
marriage.” A prenuptial agreement is presumed valid unless the party seeking
the invalidation of the agreement proves that: (1) the agreement was obtained
through fraud, duress or mistake, or through misrepresentation or
nondisclosure of a material fact; (2) the agreement is unconscionable; or (3) the
facts and circumstances have so changed since the agreement was executed as
to make the agreement unenforceable. Id.

“As a practical matter, the claim of undue duress is essentially a claim
that the agreement was not signed voluntarily.” Id. (quotation omitted). To
establish duress, a party must ordinarily show that it “involuntarily accepted
the other party’s terms, that the coercive circumstances were the result of the
other party’s acts, that the other party exerted pressure wrongfully, and that
under the circumstances the party had no alternative but to accept the terms
set out by the other party.” Id. (quotation omitted). “However, the State has a
special interest in the subject matter of prenuptial agreements and courts tend
to scrutinize them more closely than ordinary commercial contracts.” Id.
(quotations and brackets omitted). “Moreover, because such agreements often
involve persons in a confidential relationship, the parties must exercise the
highest degree of good faith, candor and sincerity in all matters bearing on the
terms and execution of the proposed agreement, with fairness being the
ultimate measure.” Id. at 42-43 (quotation omitted).

“Under the heightened scrutiny afforded to prenuptial agreements, the
timing of the agreement is of paramount importance in assessing whether it
was voluntary.” Id. at 43. “Fairness demands that the party presented with
the agreement have an opportunity to seek independent advice and a
reasonable time to reflect on the proposed terms.” Id. (quotation omitted). “To
avoid invalidation on grounds of involuntariness, it has been recommended
that the contract should be presented well in advance of the ceremony, usually
thirty days.” Id. (quotation and brackets omitted). “Some states, in fact,
automatically invalidate any prenuptial agreement signed immediately before a
wedding.” Id.

“[I]n Yannalfo, [147 N.H. 597 (2002)], we rejected a per se invalidation of
agreements signed immediately before the wedding.” Hollett, 150 N.H. at 43.
“Instead, we established that each case must be decided upon the totality of its
own circumstances.” Id. “Citing cases from other jurisdictions, however, we
suggested that additional circumstances coupled with such timing may compel
a finding that a prenuptial agreement was involuntary.” Id. (quotation and
brackets omitted).

Here, the trial court relied upon various factors to conclude that the
prenuptial agreement was the product of duress. First among these was the
timing of the agreement. The petitioner had spoken to his attorney concerning
a prenuptial agreement in the spring of 1999, at which point he was given a
letter that read as follows: “you will then each need to sign this list (of assets)
indicating that each of you is aware of everything the other owns and earns
going into the marriage and have made a fully informed decision to forego an
interest in certain things in consideration of your marriage.” Despite the
conversation with, and letter from, his attorney in 1999 — neither of which the
respondent was made aware of at that time — the petitioner did not inform the
respondent that she would be required to sign a prenuptial agreement until
September 17, 2000, a week before the wedding. The court stressed that the
respondent did not sign the agreement until “a mere five days before the date of
the parties’ wedding.”

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 The petitioner contends that the trial court should have focused upon
the “parties’ course of conduct during the 30-40 days preceding the wedding,”
rather than upon the timing of the document’s execution. Although the court
noted that discussions about the reality of an agreement and exchange of
information “did not commence until the month before the wedding,” it
concluded that “there is no compelling evidence to suggest that serious and
frank discussions regarding material terms of the Agreement ever took place in
an environment outside of the moment of the wedding.” Given that timing is of
paramount importance in assessing the validity of an agreement, see id., it was
proper for the court to place great weight on this factor in its decision.
Further, because the court is tasked with determining whether the respondent
voluntarily entered into or signed the agreement, see id. at 42, it properly
narrowed its focus to “the events surrounding the ultimate execution of the
document.”

The court also focused upon the facts that, at the point at which she was
informed of the agreement, the respondent had already “made arrangements,
spent money, [and] sent out invitations to friends and most of [her] professional
colleagues.” The court further emphasized the petitioner’s testimony that “he
would not have married the Respondent if she had not signed” the agreement.
Finally, although the petitioner consulted with an attorney regarding the
prenuptial agreement well in advance of the wedding, there is no evidence that
the respondent had sufficient time either to seek legal advice or for personal
reflection before signing the agreement a “mere five days” before the wedding.

The petitioner also points out that the court generally noted that the
parties “had a discussion at various times regarding the Petitioner’s desire for
the parties to enter into a prenuptial agreement.” He argues that such
discussions likewise demonstrate that the respondent was not under duress
when she signed the agreement. There is a significant difference, however,
between a willingness to generally discuss a prenuptial agreement at various
points in a relationship and a willingness to sign a specific prenuptial
agreement, without advance notice thereof, days before a wedding. See Lutgert
v. Lutgert, 338 So. 2d 1111, 1116 (Fla. Dist. Ct. App. 1976) (concluding that
husband’s statement that his wife was willing to discuss prenuptial agreements
generally was insufficient to show that she voluntarily signed the specific
prenuptial agreement in question).

Finally, we reject the petitioner’s argument that the respondent ratified
the agreement by not objecting to it and by acknowledging its existence in her
revocable trust agreement. The trial court was not compelled to find that these
circumstances demonstrated a ratification of an otherwise invalid agreement.
See Hollett, 150 N.H. at 45.

We agree with the trial court that prenuptial “[a]greements between
parties are to be negotiated with full disclosure, in good faith, and with

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sufficient time for each of the parties to reflect on the terms of their prospective
agreement and to have the opportunity to conduct meaningful consultation
with competent legal counsel.” As the court stated, the facts in this case do
not show the “type of arm’s length, rational, deliberate negotiations process
that was contemplated by the makers of RSA 490:2-(a).” It thus concluded that
the respondent entered into the prenuptial agreement in “an emotionally
overwrought state, and, under duress,” and invalidated the agreement. Under
the totality of the circumstances, we conclude that the trial court’s finding of
duress was reasonable and therefore affirm its invalidation of the prenuptial
agreement.

II

The petitioner next argues that the trial court’s distribution of the marital
estate was an unsustainable exercise of discretion because it failed to award
him the pre-marital assets that he neither commingled nor committed to the
marital purpose. Specifically, he contends that he should have been awarded
various financial assets, equity in both a home and a condominium, and his
dental practice.

“A trial court has broad discretion in fashioning a final decree of divorce
and in managing the proceedings before it.” In the Matter of Spenard &
Spenard, 167 N.H. 1, 3 (2014) (citations omitted). “We will not overturn a trial
court’s rulings absent an unsustainable exercise of discretion.” Id. “This
means that we review the record only to determine whether it contains an
objective basis to sustain the trial court’s discretionary judgments.” Id.
(quotation and brackets omitted). “If the court’s findings can reasonably be
made on the evidence presented, they will stand.” Id. (quotation omitted).

“The trial court’s statutory obligation is to apportion the property
equitably.” In the Matter of Sarvela & Sarvela, 154 N.H. 426, 431 (2006). “The
court shall presume that an equal division is an equitable distribution of
property, unless . . . [it] decides that an equal division would not be appropriate
or equitable after considering one or more” enumerated factors. RSA 458:16-a,
II (2004). “The court need not consider all of the enumerated factors or give
them equal weight,” and may also “consider any other factor it deems relevant
in equitably distributing the parties’ assets.” Sarvela, 154 N.H. at 431; see RSA
458:16-a, II(o). Further, “[i]n a divorce proceeding, marital property is not to be
divided by some mechanical formula but in a manner deemed ‘just’ based upon
the evidence presented and the equities of the case.” Sarvela, 154 N.H. at 431
(quotation omitted).

“Contrary to the petitioner’s implied assertion, RSA 458:16-a, I (2004)
makes no distinction between property brought to the marriage by the parties
and that acquired during marriage, and does not exclude property given to one
spouse during the course of the marriage.” Sarvela, 154 N.H. at 431.

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“Regardless of the source, all property owned by each spouse at the time of
divorce is to be included in the marital estate.” Id. “While the court has
discretion to consider when and by whom property was acquired in
determining its distribution, the relevant statutory scheme does not classify
property based upon when or by whom it was acquired, but rather assumes
that all property is susceptible to division.” Id. (quotation omitted).

Here, the trial court stated that it would “consider the property that the
parties had acquired prior to the marriage,” but not the unenforceable
prenuptial agreement, when distributing the property. The court determined
that all the property before it, as defined by RSA 458:16-a, I — save the
petitioner’s inheritance — was part of the marital estate, resulting in
$3,093,608 in total assets to be divided.

The court concluded that, because the parties’ marriage was not short
term, it would not put the parties back in the position they were in prior to the
marriage. See In the Matter of Hampers & Hampers, 154 N.H. 275, 286 (2006).
In addition to the length of the marriage, the court considered many of the
factors enumerated in RSA 458:16-a, II, including that: (1) the petitioner “has a
significantly higher income and greater ability to acquire income and assets in
the future”; (2) the petitioner’s high income “should be even higher as he
reduces his debt”; (3) although the respondent “should also be able to work
towards acquiring assets in the future, [it would not be] at the same level” as
the petitioner; (4) “both parties contributed to the growth of the assets and
property owned by either or both parties during the marriage” and both worked
“very hard during the marriage”; (5) “[b]oth parties contributed to the care of
the household and [that] there is no significant disparity relative to their
contributions”; (6) the court would not penalize the respondent “because she
made less money, or because of her decision to pursue her education,” which
the petitioner supported, and which made alimony unnecessary; and (7) while
the petitioner paid more of the household expenses while the respondent was a
student, and helped to pay off her student loans, the respondent “was always
employed and contributing financially to the marriage.”

After considering and weighing the relevant statutory factors, the court
found that a 60%-40% split was “an equitable division.” Thus, the petitioner
was awarded $1,856,165 and the respondent was awarded $1,237,443. Given
that numerous statutory factors support the court’s unequal property
distribution, we reject the petitioner’s argument that the court did not discuss
relevant statutory authority in reaching its decision. See id. (emphasizing that
“marital property is not to be divided by some mechanical formula but in a
manner deemed ‘just’” (quotation omitted) and that “[t]he court need not
consider all of the enumerated factors or give them equal weight”). We further
reject the petitioner’s contention that the court should have discussed New
Hampshire case law in its divorce decree because, in light of the court’s
statutory analysis, such additional discussion was unnecessary. Accordingly,

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we cannot conclude that the court did not equitably divide the marital estate
based upon the evidence presented and the equities of the case.

III

The petitioner argues that the court unsustainably exercised its
discretion by valuing his dental practice at $700,000, which he contends did
not properly consider the debt of the practice. We disagree.

RSA 458:16-a, I, defines the property subject to division in a divorce as
“all tangible and intangible property and assets, real or personal, belonging to
either or both parties, whether title to the property is held in the name of either
or both parties.” We have previously defined the fair market value of property
“as the price at which the property would change hands between a willing
buyer and a willing seller when the former is not under any compulsion to buy
and the latter is not under any compulsion to sell, both parties having
reasonable knowledge of relevant facts.” In the Matter of Watterworth &
Watterworth, 149 N.H. 442, 447 (2003) (quotation omitted). “The valuation of a
professional practice is a question of fact to be determined by the trial court
based upon the particular facts and circumstances.” In the Matter of Cottrell
& El-Sherif, 163 N.H. 747, 749 (2012). “We will not disturb the trial court’s
findings in this regard unless they are unsustainable on the record.” Id.

The court heard testimony from two experts regarding the fair market
value of the dental practice. Anthony Albright, the respondent’s expert, used
the capitalization of earnings method to determine a fair market value for the
practice of $743,000. “This method involves first valuing the tangible assets of
the subject enterprise, then adding a value for goodwill by capitalizing any
earnings in excess of a reasonable return on the tangible assets.” Watterworth,
149 N.H. at 447 (quotation omitted). The approach compares “the average
income of the subject professional to the average income of a salaried
professional with equivalent education, experience, skill, etc.,” and then makes
necessary adjustments to arrive at a fair return on the subject professional’s
invested capital in the practice. Id. (quotation omitted). The excess earnings
are “capitalized and then constitute the value of goodwill.” Id. (quotation
omitted).

In reaching the $743,000 figure, Albright determined an initial “Indicated
Invested Capital Value” for the practice of $1,525,845 under the current capital
structure. He subtracted debt in the form of a bank note (the interest bearing
debt) of $597,462 to arrive at a value of $928,383. He then reduced that value
by $185,677 for lack of marketability to reach a fair market value of the
practice of $742,706, rounded to $743,000.

On the other hand, the petitioner’s expert, Richard Maloney, concluded
that the fair market value of the practice was $188,000. He found that the

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“Valuation of Invested Capital” of the practice was $818,610. He then reduced
that figure by the long-term bank debt of $597,462 for a “Valuation of Equity”
of $221,148. He then further reduced the valuation of equity by $33,172 for
lack of marketability for a fair market value of $187,976, rounded to $188,000.
The court noted that the petitioner’s expert opined that the substantial bank
loan and stockholder loan made by the petitioner “significantly reduced the
value of his dental practice.”

The court reviewed each expert’s opinion and arrived at a fair market
value of $700,000, which it noted was “fairly consistent with Mr. Albright’s
appraisal.” The court stated that this figure was “not an unreasonable amount
considering that on September 19, 2000, over 13 years before the two
appraisals were done, [the petitioner] valued on the asset section of the
prenuptial document that his Practice was worth $550,000.” Cf. Cottrell, 163
N.H. at 749 (in upholding as sustainable the trial court’s valuation of a dental
practice, noting that the court rejected one expert’s 2009 value because it was
less than the dental practice’s purchase price in 1996). The court also
emphasized that the petitioner’s monthly gross income as he reported it in
2000 was significantly less than he has earned since 2008 and that he has
since paid off the loan on his condominium where the practice had been based,
both of which support the $700,000 valuation. Accordingly, subject to any
adjustment that may be necessary as a result of the court’s clarification and/or
reconsideration of the $255,000 shareholder “loan” discussed in section IV of
this order, we find that the court’s valuation of the dental practice was a
sustainable exercise of discretion.

IV

Finally, the petitioner argues that the trial court erred by treating what
he characterizes as a $255,000 shareholder “loan” that he made to his dental
practice as a marital asset subject to the property distribution. He claims that,
because the loan was included in the valuation of the business, it was
improperly counted twice. From our review of the trial court’s order, we are
unable to determine how the court treated these funds. Both of the parties’
experts appear to have considered these funds as a capital contribution to the
dental practice (rather than as a loan), although it is not clear that either
expert’s valuation of the practice was affected by this treatment given the
capitalized earnings method of valuation used by both experts. The trial
court’s order does not reflect that it deducted any portion of these funds in
arriving at its valuation of the practice, but at times in the order it did refer to
the transfer of these funds from the petitioner to the practice as a “loan.” The
trial court’s order focused on the fact that the transfer of these funds to the
practice was made shortly after the respondent discovered that the petitioner
was having an extramarital affair, and intimated that this may not have been
done for legitimate business purposes. However, although lack of a proper
business purpose may provide justification for the court disregarding the

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transfer of these funds to the practice, it would not justify counting these funds
both as part of the value of the dental practice and as a separate asset held by
the petitioner.

Because the record is unclear as to what role, if any, the $255,000 “loan”
played in the court’s valuation of the dental practice, and as to whether the
court “double counted” these funds both as part of its valuation of the dental
practice and as a separate marital asset, we vacate the court’s order to the
extent it addresses the $255,000 “loan” and remand this issue to the trial court
for clarification and/or modification of its ruling consistent with this order.

Affirmed in part; vacated
in part; and remanded.

DALIANIS, C.J., and HICKS, CONBOY, LYNN, and BASSETT, JJ.,
concurred.

Eileen Fox,
Clerk

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