Marriage of Howell (May 24, 2011) 195 Cal.App.4th 1062
The Fourth District out of San Diego County recently published an opinion upholding a spousal support waiver contained in a premarital agreement that was executed before 2002, when California adopted the Uniform Premarital Agreement Act (UPAA) and amended Family Code section 1612.
Section 1612 invalidates any provision in a premarital agreement regarding spousal support, including, but not limited to, a waiver of such support if (i) the party against whom enforcement of the spousal support provision is sought was not represented by independent counsel at the time the agreement containing the provision was signed or (ii) that provision is unconscionable at the time of enforcement.
Michael and Pamela Howell began dating in 1997 and married in mid-May, 1998. They separated in March, 2008. Prior to marriage they executed a prenuptial agreement that included, among other things, a provision that they each waived any right to seek spousal support from the other in the event of divorce. At trial there was a dispute concerning the circumstances surrounding the timing and execution of the agreement, with Michael claiming he contacted his lawyer to draft the prenup a year before the wedding, and that he gave her a copy to review in December, 1998. He testified that he told Pamela to take her time in reading it, and to consult a lawyer. He said that Pamela reported she'd discussed it with family members and friends and that she concluded there was no need to have it independently reviewed because Michael had "nothing" to protect. It was signed on January 30, 1999.
Pamela's story was that Michael waited until the wedding day was fixed and paid for by Pamela and her family before raising the issue of a prenup. She said they argued about it, and Michael threatened to call of the wedding and so cause her great embarrassment and expense if she refused to sign. She claimed she had the agreement for only about three days before she signed and didn't understand what rights she was waiving. Nor did she have the money to hire a lawyer and advise her, since she'd spent it all on the wedding and Michael never offered to pay for to consult with an attorney.
The agreement recited that Michael had been previously married twice and had a daughter; Pamela was never married and had no children. Michael worked for the U.S. Postal Service earning $38,000/year and Pamela worked at a mortgage company and made $24,000 annually. Paragraph 5 stated that the agreement had been drafted by Michael's attorney, who represented Michael only, and it urged Pamela to seek independent counsel but that she has declined to do so with full knowledge of the interests she was waiving. In another portion the language stated both parties were of sound mind and not acting under duress. Both parties fully disclosed their assets, liabilities, and income.
The spousal waiver stated: "The parties mutually waive any right to receive future spousal support, maintenance or alimony from the other in the event of a Dissolution of Marriage or Legal Separation."
The trial court found that the waiver did not comply with the 2002 amendments to Family Code section 1612, even though it was executed four years before their enactment, and that Pamela had lacked independent counsel. Nonetheless, however, the court went on to make a number of findings for the record including:
- that Pamela entered the agreement voluntarily
- Pamela was capable of understanding the admonition to obtain her own attorney
- she had sufficient time to do so
- at a minimum she could have inquired into the cost of retaining counsel but didn't
- the premarital agreement was twelve pages long, not particularly complex, involved a small estate, made full disclosure, and basically sought to maintain the parties' separate property interests
- she was fluent in English
- she was employed in the field of bookkeeping, which involves the keeping of finances
- under either parties' version, she had at least 14 days prior to the wedding to consider the agreement
- there was no evidence of duress - it was presented to her at least four months prior to the wedding; indeed, she'd provided her own financial information some five months earlier
- given that Michael had been twice divorced, it was reasonable that he would have raised the request for a prenup much earlier than admitted by Pamela, which was way before the parties began to plan for a wedding
- she had mental capacity and there was no evidence of trick or deception
- there was no evidence the agreement was unconscionable when signed
Nonetheless, because the Court believed that FC section 1612 had to be applied retroactively it declined to enforce the waiver and ordered Michael to pay spousal support of $1,015 per month as temporary support, and then $1,659/month until further of court. It ordered Michael to contribute $10,000 to Pamela's attorney fees per Family Code section 2030. Michael appealed the support ruling but not the attorney fees' order.
Justice Benke of the the Fourth District reversed the trial court's determination that FC § 1612 could be applied retroactively. The Court decided that the California legislature must have intended otherwise because (a) there was no express retroactivity provision contained in the statute itself, (b) there was nothing in the legislative history to suggest the legislature so intended; and (c) the addition of the requirement of independent counsel added in 2002 constituted a material change in prior law and to apply it retroactively would upset the expectations of parties to a contract based upon the state of the prior law by imposing a new duty (to obtain counsel) that hadn't existed earlier.
Ironically, it wasn't until 2000 that the California Supreme Court first declared that a waiver of spousal support did not per se violate public policy (IRMO Pendleton and Fireman, 24 Cal.4th 39). Up to that point it was an open question in California whether premarital agreements could ever be enforced as to support waivers.
The Howell trial court had been careful to lay the groundwork in its factual findings to support a knowing and intelligent waiver by Pamela, but for the reach of the 2002 amendments to FC section 1612. Without retro application, there was sufficient evidence in the record to enforce the waiver. Pamela's lack of independent counsel in a pre-2002 prenup was just one of several factors that a court needs to consider in answering whether a support waiver is enforceable in a pre-UPAA agreement.
The appellate court ruled:
"In light of the trial court's findings, which are supported by ample evidence in the record, and based on the law as it existed at the time the parties executed their premarital agreement, we conclude on this record that Pamela, despite not having independent counsel at the time she executed that agreement, knowingly and voluntarily waived her right to spousal support in that agreement."
This prenup was executed in January, 1999, at a time when most family law attorneys anticipated that premarital waivers of spousal support would one day be upheld as enforceable, but had no idea when and under what conditions. Prenuptial agreements used to be viewed with great suspicion by the Courts under the assumption that they were 'promotive of divorce.' The law has radically shifted since then, as has the legislative and public sentiment. Many people - and evidently Michael in this case - who have prior marriages and children won't get married without one. In that sense they may actually serve to promote marriage.
I find one of the most interesting facts of this case to be the evident simplicity of this particularly premarital agreement. Rarely have I seen a prenup agreement that is only twelve pages long. We lawyers tend to make them quite complicated, partly out of fear of committing malpractice in this area of the law; we may want to reconsider this strategy. The Howell decision, which would have had a different outcome if the agreement had been executed after the enactment of the 2002 amendments to FC § 1612, expresses a major new judicial attitude that support waivers in premarital agreements are to be enforced when they are not unconscionable at the time they are signed, or under current 1612 at the time a party seeks to enforce them. It may serve people to reduce them to their bare essence rather than elongating them. An agreement that is 50 pages long may seem incomprehensible to most nonlawyers.
By the way, prenups that don't mention spousal support will be much more easily enforced. While it is possible for a court to strike only the spousal support language in agreements that contain them, it is also possible the entire agreement could be stricken if the waiver is rejected depending upon how interrelated various provisions are.
For those contemplating drafting or signing a prenup it remains very difficult to predict whether they will be enforced under the circumstances of a contemporary divorce or legal separation. Section 1612(c) reads:
"(c) Any provision in a premarital agreement regarding spousal support, including, but not limited to, a waiver of it, is not enforceable if the party against whom enforcement of the spousal support provision is sought was not represented by independent counsel at the time the agreement containing the provision was signed, or if the provision regarding spousal support is unconscionable at the time of enforcement. An otherwise unenforceable provision in a premarital agreement regarding spousal support may not become enforceable solely because the party against whom enforcement is sought was represented by independent counsel." [Emphasis added].
We await further appellate rulings to determine what the bounds of "unconscionab[ility] at the time of enforcement" are. This is where drafting these agreements is especially tricky, and requires great skill. Don't believe that support waivers will always be enforced, particularly where they are blanket waivers (as opposed to limiting spousal support rights by duration, amount, or future circumstances at time of enforcement).
In the meantime, as to this decision, it appears that Pamela's side threw all the standard objections at the trial court that one would expect where there is a challenge to a prenup (wedding already planned, embarrassment and cost, duress, lack of understanding, no independent review and Michael didn't offer to pay for her to get one), and they didn't stick. She has to repay all the alimony she received, plus Michael's costs on appeal.
T.W. Arnold, C.F.L.S.