$7 Million Penalty for Adultery Is Valid, Court Rules

The Maryland Court of Special Appeals ruled last Wednesday that a wife’s agreement to forgive her husband for adultery and stay in their marriage was adequate consideration for an agreed $7 million penalty if he ever cheated again.

Thomas L. Lloyd and Anna Cristina Niceta were married in 2006 and had two children. Lloyd, a wealth management advisor, and Niceta, an account executive for a catering company, earned between $70,000 to $100,000 and $130,000 to $200,000 a year, respectively. However, the couple enjoyed a standard of living above their income because of Lloyd’s family wealth. In fact, Lloyd received $1 million from his grandmother to buy a home and another $10.7 million after her death in 2014. Sometime thereafter, Niceta discovered that Lloyd was having an affair. The couple initially separated, but Niceta agreed to reconcile after asking Lloyd to re-title his financial accounts in both of their names and sign a postnuptial agreement.

Niceta, represented by two lawyers, proposed an agreement under which Lloyd would pay a lump sum of $5 million if he engaged in inappropriate or immoral behavior, including romantically kissing or hugging, sexting, or engaging in sexual acts with another person. Lloyd, also represented by two attorneys, suggested that they increase the penalty to $7 million as a “showing of his good faith.” He mentioned to his attorneys that Niceta had little knowledge of his financial situation and that he stood to receive a home on Cape Code upon his father’s death. He later revealed during negotiations that his father was in poor health, and he expected to inherit about $12 million from his estate after taxes.

In addition to the $7 million adultery penalty, the final postnuptial agreement provided that upon divorce, Lloyd would give his wife their home, pay off the mortgage, and split the money he had inherited from his grandmother, among other things. 

Lloyd began another affair in October 2018. In response to his wife’s divorce filing, Lloyd argued that the postnuptial agreement was void because there was no consideration, it was unconscionable, and it was the result of undue influence. The appeals court disagreed.

On the issue of consideration, it found that Niceta’s agreement not to file for divorce and work on rebuilding her relationship with her husband was something of value and adequate consideration. It also noted that the agreement was not unconscionable because it did not create an excessive financial disparity between the parties, it would not leave Lloyd in debt for $1.2 million as he had suggested, and it was not against public policy because Lloyd could have chosen to leave the marriage and file for divorce at any time. Finally, it found no evidence of undue influence. The evidence, the court noted, suggested that Lloyd exercised free will both when he negotiated the agreement and when he acted to trigger the penalty.

Hope L. Stafford, Lloyd’s lawyer, told the Maryland Daily Records that they would appeal.

Additional Reading

$7M adultery penalty in postnuptial agreement is valid, appeals court says, ABA Journal (November 2, 2022)

Lloyd v. Niceta, No. 0934 (Md. App. 2022)

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