Breach and Enforcement of Separation Agreements in North Carolina
What is a separation agreement?
A separation agreement is a contract between a husband and wife that states the terms under which they will live apart. In North Carolina, if the agreement deals with property issues the full legal name of such a document is a “Separation Agreement and Property Settlement.” You can see a sample here.
The agreement can govern issues such as spousal and child support, child custody, and the division of the couple’s property.
A separation agreement can resolve all of the legal issues that would otherwise be decided by a judge. The only thing a separation agreement can’t do is grant the actual divorce.
In most other states, a judge must at least approve a separation agreement at the time the divorce is granted. Not so in North Carolina. With the exceptions noted below in the discussion of defenses, the parties are free to arrange things as they see fit.
Does a separation agreement need to be notarized?
Yes. To be valid in North Carolina, a separation agreement must be notarized.
Why should a couple negotiate a separation agreement, rather than leave things to the judge?
Negotiating a separation agreement has many advantages over adversarial litigation, in which lawyers argue over the issues in court and a judge makes the final decision.
In almost all cases, negotiating an agreement is faster, cheaper, more private, and less stressful than litigation, and the results are usually better for both parties. That’s why the great majority of married couples in North Carolina come to an agreement without the need for a judge’s intervention.
One reason that results are better is that couples understand their own needs (and those of their children) better than any judge can. Another reason is that, while courts often impose “one size fits all” solutions that have worked before, couples can be more creative and flexible about working things out.
Do you need to have an attorney negotiate and draft your separation agreement?
It’s not required to have an attorney involved in negotiating or drafting a separation agreement, but it’s a very good idea. And it’s an especially good idea when your spouse has an attorney involved.
Click here to learn more about why you should have the help of an experienced family law attorney when you’re creating a separation agreement.
Do you need to have a separation agreement in order to be legally separated?
No. Separation occurs on the day that a husband and wife move into separate homes with the intent to live apart permanently.
A separation agreement can be negotiated either before or during the period of separation.
How soon after separation can couples get divorced?
A divorce can be granted after a year and a day following the date a couple separates.
How is a separation agreement related to a divorce decree?
A separation agreement can later become part of a divorce decree, or it can stay completely separate. Both parties must agree to bring the separation agreement to the court; if they don’t, then it remains only a contract.
As noted above, in North Carolina there’s no requirement for a judge to approve a separation agreement. However, if the parties submit the agreement to the court, then the concept of merger applies.
In this context, merger means that the agreement becomes part of the court order. That means that the agreement is no longer treated like (and enforced like) a contract. Instead, the terms are enforced like a court order.
There can also be a partial merger, where the agreement is like a contact in some ways and like a court order in other ways.
Unless the separation agreement says otherwise, the actual granting of the divorce won’t have any effect on the separation agreement. The agreement will still apply after the parties are no longer legally married.
What happens if a party violates a separation agreement?
If a party violates the separation agreement, then the other party can seek to enforce it, by bringing a lawsuit.
How this happens is discussed in detail below.
How are separation agreements enforced?
How a separation agreement is enforced depends on whether the agreement is “just” a contract or whether it’s become part of a court order.
A separation agreement that isn’t part of a court order is just a contract, like any other contract. The parties can enforce it in the same ways that other contracts are enforced.
For example, a party (the plaintiff) can sue for breach of contract and seek money damages. The court can enforce an award of money damages by imposing a levy on the property of the other party (the defendant). The court can even order the defendant’s property sold to pay the damages.
If one party breaches, the plaintiff can also sue for “specific performance” – a court order for the defendant to do what the separation agreement requires (such as make support payments). Specific performance can be ordered even before trial, to preserve the status quo (i.e., keep things the way they are).
If one party sues to enforce the separation agreement, the court may order the parties to attend settlement conferences or engage in settlement negotiations. If a party refuses to attend such settlement meetings, the court can impose monetary sanctions (fines) on that party.
If the separation agreement bars support and alimony and the party relieved of alimony payments commits a material breach of the agreement, the plaintiff can “rescind” the separation agreement and seek support or alimony.
What damages can a party recover when suing for breach of a separation agreement?
In awarding damages, the court’s goal is to put the plaintiff in the same position she or he would have been in if the defendant hadn’t breached the contract.
If the breach involves failure to make periodic payments (for example, child or spousal support payments), the plaintiff can get a judgment for all of the overdue payments, plus interest running from the date each payment was due.
More types of damages are discussed below.
Can a party recover for emotional damages?
In most cases, a party can’t recover for emotional damages or mental anguish caused by a breach of contract.
The North Carolina Supreme Court has held that a plaintiff must prove three things in order to recover damages to compensate for mental suffering due to breach of contract:
- The contract was not concerned with trade and commerce
- The contract was not primarily for pecuniary (financial) benefit
- The contract related to issues of dignity and emotions, so that there would be a great probability of mental anguish in the case of breach
Most separation agreements don’t satisfy the second and third elements.
However, damages for emotional injury might be available when a defendant has breached a non-molestation clause in a separation agreement, for example.
A non-molestation clause is a provision in which the parties agree to leave each other alone and to not interfere with each other’s lives.
What kinds of actions violate a non-molestation clause depend on how the clause is written. Some examples of violations are:
- Making repeated and unwanted phone calls or sending numerous texts, emails, or letters – especially if these are of a harassing nature
- Seeking to have the other party arrested without good cause
- Filing and withdrawing multiple civil suits against the other party
- Complaining to the other party’s boss and work colleagues about the other party and the terms of the separation
- Intercepting the other party’s mail
- Engaging for months in “a campaign of slander, vilification and personal abuse”
Are punitive damages available for breach of a separation agreement?
In rare cases, a party can recover punitive damages for breach of a separation agreement.
For example, if one party breaches a separation agreement in a way that’s intended to make the other party suffer the effects of tax liens and foreclosures, that conduct could be considered “intentional infliction of emotional distress.”
Although punitive damages are not generally available for breach of contract, intentional infliction of emotional distress is a tort, and punitive damages are available in tort cases.
Punitive damages do more than just compensate one party for losses. Punitive damages are intended to punish the defendant and discourage the defendant (and others) from doing the bad acts that led to the imposition of punitive damages. Thus, punitive damages can be more than the actual damages suffered by the plaintiff.
What is “specific performance”?
A court can also enforce a separation agreement by issuing a decree of specific performance. This decree orders the defendant to comply with the terms of the separation agreement.
This remedy is only available to enforce a separation agreement that has not become part of a court decree.
Normally, a court may not hold a defendant in contempt (and send him or her to jail) for breaching a separation agreement. However, failure to comply with an order of specific performance can lead to a defendant being held in contempt of court and sent to jail until he or she complies with the order.
Even if a separation agreement says that the parties may enforce it by bringing an action for specific performance, the moving party is still required to show that:
- The moving party’s remedy at law (that is, for damages) is inadequate
- The other party can perform (but chooses not to)
- The moving party has performed his or her own obligations under the separation agreement
In a 2013 case, a motion for specific performance was denied because the plaintiff failed to show that the defendant had the ability to pay. In that case, the defendant had recently declared bankruptcy.
How is a separation agreement enforced if it becomes part of a court decree?
If a separation agreement has become part of a court decree, as discussed above, the parties can’t enforce it like a normal contract. Instead, the usual process is for one party to bring a motion to hold the other party in contempt for failing to abide by the decree.
The court can even hold a party in contempt (and potentially send him or her to jail) even to enforce provisions in an agreement that the court would not have the power to order on its own.
For example, a court normally has no power to order a party to support a child past the age of majority (18) or to pay for a child’s college education. However, if the parties have agreed in a separation agreed that one party will pay for college, and that agreement has become part of a decree, and the obligated party fails to pay for college, the agreement can be enforced with a contempt order.
What is “rescission”?
As an alternative to enforcing a separation agreement when the other party has breached it, under some circumstances a party can rescind a separation agreement — and start over from scratch.
This means that the law will treat the agreement as if it had never been signed. The party that rescinds can then seek a court order for spousal support, alimony, and property distribution just as she or he could if there had never been a separation agreement.
The parties can also agree in the separation agreement that breach will lead to rescission of only part of the separation agreement (the part that was breached) rather than the entire agreement. This avoids “throwing out the baby with the bathwater” when there’s a problem with only one part of the agreement.
It’s a good idea to file a claim with the court for equitable distribution of property and alimony at the same time you seek rescission and before the divorce is final. That’s because if the court grants rescission of the separation agreement after the divorce was final, and there was no such pending claim, under North Carolina law divorce normally destroys the right of a spouse to seek equitable distribution of property or alimony.
The statutory rights to support, equitable distribution, and alimony may survive in only limited circumstances, based on the obligated party’s wrongful conduct.
If the court grants rescission after the parties have performed at least some of their obligations under the separation agreement, then they will be required to make restitution to each other of — i.e., pay back — the benefits they each received under the agreement. The goal is to put each party in the same position as before the agreement was signed. If this isn’t possible, then it’s up to the court to come up with a fair solution.
Will a separation agreement that waives child support be enforced?
No. No separation agreement can prevent the state from acting in the best interests of a child.
Thus, the courts will refuse to enforce clauses in separation agreements in which one parent is relieved of the obligation to provide child support, or the other parent agrees not to seek child support.
Even an agreement in which one parent agrees to accept a lump sum of money to cover future child support will not be enforced if the child turns out to have greater needs.
The parents may agree about the amount of child support, and if the court agrees that the amount is in the best interest of the child, the law will enforce that agreement – even if the amount is more than the court would have ordered.
However, a support agreement must be reasonably definite to be enforceable. In a case where a father agreed to pay for his children’s post-high school expenses, “limited to those expenses reasonably incurred in the obtaining of an undergraduate degree or the completion of a course in a specific vocation,” the North Carolina courts held that the lack of a specific amount or percentage of total costs made the agreement unenforceable.
Can a separation agreement be enforced even if one party dies?
The death of a party to a separation does not automatically end that party’s (or that party’s estate’s) obligations under the agreement.
For example, a parent can bind his or her estate to support a child after the parent’s death, including after the child reaches the age of majority (18).
If the agreement doesn’t expressly state what will happen in the event of a party’s death, then the courts will look to the intent of the parties.
Will a North Carolina court enforce a separation agreement from another state? Will another state enforce my North Carolina separation agreement?
Generally, yes. Courts in all states are required to enforce contracts entered into in all other states as long as those contracts are valid.
Unless the parties agree otherwise, the law of the state where the parties signed the agreement will govern its validity and interpretation.
Is it possible to recover attorneys’ fees if a separation agreement is breached?
Yes, but only if the agreement includes an attorneys’ fees provision.
As with other contracts, a court may not award attorneys’ fees unless they’re specifically provided for in an agreement.
The parties may agree that the losing party will pay the attorneys’ fees of the prevailing party, no matter who sued to enforce the separation agreement.
In the case of an agreement that has become part of a court decree, if a party seeks to enforce it by bringing a motion for contempt, attorneys’ fees are in some cases available according to statute.
How can a party defend against a claim that the separation agreement has been breached?
If one party claims that a separation agreement has been breached, the other party can argue that:
- He or she did not breach the agreement
- That the agreement isn’t actually valid and shouldn’t be enforced
A separation agreement that hasn’t become part of a court decree is like any other contract. Thus, defenses available for a claimed breach of a separation agreement are the same as for breach of any other type of contract.
Defenses come in two basic types: procedural and substantive.
A procedural defense is a claim that a contract isn’t valid because some technical legal requirement wasn’t met.
Examples of procedural defenses are:
- Mental incapacity
- Constructive fraud
- Undue influence
- Lack of disclosure
Since separation agreement must be signed before a notary, another procedural defense is that the parties failed to comply with this formality.
If a party successfully raises one of these procedural defenses, then the separation agreement may be subject to rescission.
A substantive defense is a claim that an agreement should not be enforced because it is fundamentally unfair or unconscionable.
Some of the most common defenses are discussed in more detail below.
What is the defense of “mental incapacity”?
The mental incapacity of one of the parties makes the separation agreement voidable at the option of the incapacitated party. That is, the incapacitated party (or his or her representative, such as a guardian) can ask the court for an order that the party is not legally bound by the contract.
A party does not have to be legally insane to be deemed incapacitated. The test for voiding a separation agreement on the grounds of incapacity is whether at the time of signing the agreement the party had the ability to understand the nature and consequences of the act of signing.
A person is not considered incapacitated simply because he or she has poor judgment and acts against his or her own best interests.
What is the defense of “infancy”?
An infant is a person under the age of majority in North Carolina (18).
In North Carolina, it is legal for infants to marry.
A minor between the ages of 16 and 18 may marry only with the written consent of a parent will full or joint legal custody, or with the consent of another person, agency, or institution with legal custody.
A minor between the ages of 14 and 16 may marry if the girl is pregnant, or has already given birth, and intends to marry the father of the child. Such marriages must be authorized by a district court.
A district court may also authorize a marriage of a minor between 14 and 16 if the judge determines that the minor is capable of assuming the responsibilities of marriage and that the marriage is in the minor’s best interest.
It is unlawful in the state for any person under the age of 14 to marry.
Just as infants can marry, they can also get divorced.
A separation agreement involving an infant is voidable by (that is, can be set aside by) that person within a reasonable time after he or she comes of legal age (18).
North Carolina law makes married persons under the age of 18 competent to enter agreements about certain kinds of property. They may waive or release any rights in property of the other spouse.
However, infants are not deemed competent to enter into contracts for other types of property or for support.
What are the defenses of “fraud” and “constructive fraud”?
To support a defense of fraud, the complaining party must prove five elements:
- That the other party made a false representation or concealed a material fact
- That this representation or concealment was reasonably calculated to deceive
- That this representation or concealment was made with the intent to deceive
- That the complaining party was in fact deceived
- That the complaining party suffered damages
A defense of constructive fraud requires only proof that there was a confidential relationship between the parties and one party took advantage of his or her position of trust.
A marriage is considered a “confidential relationship.” However, a party may argue that by the time the parties are signing a separation agreement that confidential relationship no longer exists – by then the parties are adversaries and less likely to trust each other.
Failing to disclose assets that would constitute marital property (and be subject to division between the spouses) is one example of how a party might take advantage of a position of trust.
What is the defense of “mistake”?
A party can rescind a separation agreement if both parties were mistaken about a material fact at the time they signed the agreement.
Usually the mistake concerns the contents or legal effects of the separation agreement or related documents. For example, the written agreement may not accurately reflect what the parties actually agreed.
What is the defense of “duress”?
A party may prevent the enforcement of a separation agreement by proving that it was signed under duress.
In North Carolina, duress exists “where one by the unlawful act of another is induced to make a contract or perform or forego some act under circumstances which deprive him of the exercise of free will.”
The complaining party must show that the other party (or a person acting on the other party’s behalf) made a threat, and that this threat overcame the free will of the complaining party.
The threat does not have to be criminal in nature, like the threat of physical harm to the spouse or others (such as the couple’s children). A threat can include a threat to seek custody of the couple’s children or to withhold visitation rights, if these threats are made in bad faith – such as only to gain an advantage in the negotiation.
Whether a threat is deemed sufficient to overcome the complaining party’s free will depends on factors such as the age and physical, mental, emotional, financial, and medical condition of the complaining spouse.
It will be very difficult for a party to make a claim of duress if he or she negotiated with the other party only via a lawyer, and if the complaining party’s lawyer drafted the agreement.
What is the defense of “undue influence”?
Undue influence is closely related to duress. It is defined as the unfair persuasion of a party who:
- Is under the domination of the person doing the persuading
- Is in a relationship with the persuader such that he or she assumes the persuader will not act against his or her welfare
Unlike with duress, there is no requirement of an actual threat.
The complaining party must prove that he or she was susceptible to undue influence. Some of the factors relevant to showing susceptibility are:
- The age of the alleged victim
- The victim’s physical and mental condition
- Whether the victim had independent advice (for example, from a lawyer)
- The value of the property transferred in relationship to the victim’s overall wealth
- Whether the victim was in economic distress or in an emergency situation
Agreements negotiated in haste are considered especially vulnerable to undue influence.
What is the defense of “lack of disclosure”?
In most contracts, the parties have no obligation to disclose all the relevant facts. For example, one party at a garage sale may believe that a painting is a valuable original and the other may believe it is a worthless reproduction. One party may not fraudulently mislead the other, but there is no obligation for the parties to disclose their unstated beliefs.
However, there is a duty of disclosure when the parties are in a “confidential relationship.” Then, the parties reasonably rely on each other to disclose material facts.
A marriage is considered a confidential relationship, but by the time the parties are negotiating a separation agreement that relationship is breaking down.
There is no clear line that marks where a confidential relationship has ended, but it has certainly ended by the point where the parties have separated, see each other as adversaries, and are negotiating through their lawyers.
What makes a separation agreement unfair or “unconscionable”?
The law imposes a general requirement that contracts be fair, but it’s not always clear what this means.
One commentator has suggested that unfairness and unconscionability mean that the separation agreement “provides an amount of alimony or property for a spouse which appears to be very much larger or very much smaller than a court would consider appropriate.”
North Carolina courts have defined procedural unconscionability as “bargaining naughtiness,” “unfair surprise,” or “lack of meaningful choice,” but these terms aren’t especially helpful.
State courts have defined substantive unconscionability as referring to separation agreements with “harsh, oppressive… one-sided terms,” or terms that are “unreasonably favorable” to one party.
A bad bargain or a lopsided bargain (for example, a 62/38 property split), however, is neither inherently unfair nor unconscionable. As one North Carolina court put it, “The inequality of the bargain [must be] so manifest as to shock the judgment of a person of common sense, and where the terms are so oppressive that no reasonable person would make them on the one hand, and no honest and fair person would accept them on the other.”
What defenses are available for an agreement-based decree?
All of the defenses above apply to separation agreements that are only contracts. When a separation agreement is incorporated into a court decree, the parties lose their contract defenses. Different procedures apply when a party is challenging the enforcement of an agreement that has become part of a court decree.
A party that objects to the decree can seek to have it set aside if the process by which it was issued was defective. For example, a party may argue that he or she didn’t actually consent to the decree.
Or, a party may argue that the decree was obtained due to fraud or was the product of mutual mistake.