Recent Blog Posts in January 2012

In Re Marriage of Hill and Dittmer (1/18/12), B226017

Parties' Circumstancs

How the Court Ruled

"The contention that the Agreement is tainted by fraudulent and inadequate disclosures is refuted by evidence that Hill, both in the Agreement itself and in her conduct during the three-month period of negotiation, waived this claim. The Agreement states in part: 'Each party waives the provisions of California Probate Code Section 143 and California Family Code Section 1615 relating to financial disclosures. . . . The absence of disclosures shall not create any legal right in favor of either party, nor any legal remedy by either party against the other including, but not limited to, challenging the validity or enforceability of this Agreement. Based upon each party's knowledge of the other's income and assets and their access to same, and in consideration of the prospective marriage, each party acknowledges that this Agreement is fair and equitable at the time of its execution. The foregoing waivers of disclosure are voluntary and express and shall be deemed conclusive for the purposes of Section 1615 (a)(2)(8) of the California Family Code and for all other purposes.'

The circumstances surrounding the execution of the premarital Agreement provide substantial evidence that Hill entered into the Agreement voluntarily. She had the advice of two attorneys specializing in family law and estate planning during the nine months the Agreement was being discussed and negotiated. Hill's lawyer drafted the Agreement and revised drafts of the Agreement in consultation with Dittmer and his attorney. These facts, coupled with Hill's professional background and evident skills are strong evidence that she entered into the Agreement voluntarily.

There is no evidence that Hill took any steps to obtain financial disclosures from Dittmer during the negotiation period, although she was invited to do so by Dittmer's attorney. Dittmer's attorney sent a memorandum to Rainey in this regard as follows: 'Article IV (perhaps in Section 4.4) should acknowledge that the financial information provided by Tom includes his Trust and that 'Tom has provided Sandy's legal counsel and representatives with full and complete access to the books and records of Tom and his Trust, with the opportunity to consult with him, and any of his accountants, agents and representatives as to the nature, value and cash flow from any of his assets and the nature and extent of his liabilities.' This provision was contained, in substance, in the Agreement.

Hill's additional argument, that she did not see the final draft of the Agreement until the date of the wedding and that the agreement she signed was incomplete, is not persuasive. As the trial court found, the record shows that the provisions upon which Hill bases her claims of invalidity had been in prior drafts of the Agreement. Hill's assertions that she was too busy with wedding preparations to read or understand the Agreement ring hollow in light of her education and her extensive business experience. In this regard, the trial court said: 'The Court further finds that the prenuptial agreement signed by [Hill] was full and complete and contained page 14. Even if the version that [Hill] signed was missing that page, the Court finds that the failure to include it was a clerical error by [Hill's] attorney and not a surprise to [Hill] and was included in prior drafts of the prenuptial agreement provided to [Hill]. It was a provision that had been agreed to by the parties prior to the execution of the agreement.' Moreover, any failure on her part in this regard is not a sufficient basis for invalidating a contract. (See, e.g., Wal-Noon Corp. v. Hill (1975) 45 Cal.App.3d 605, 615 ['[f]ailure to make reasonable inquiry to ascertain or effort to understand the meaning and content of the contract . . . constitutes neglect of a legal duty such as will preclude recovery for unilateral mistake of fact'].)

The trial court found as a fact that Hill had adequate opportunity to review the various drafts of the agreement and that she was aware of and understood its contents. Substantial evidence supports this finding. Furthermore, even if it were true that she was unaware of portions of the final Agreement, her failure to take reasonable steps to become aware of the contents of the Agreement, particularly given her business background, her awareness of earlier drafts, and her access to counsel, precludes a finding of that she entered into the Agreement involuntarily. (See, e.g., Bauer v. Jackson (1971) 15 Cal.App.3d 358, 370 ['[o]rdinarily, when a person with capacity of reading and understanding an instrument signs it, he may not, in the absence of fraud, imposition, or excusable neglect, avoid its terms on the ground he failed to read it before signing it'].)"

Hill also contended that the changes to Family Code section 1615 that became effective a year later, in 2002, should be retroactively applied to the question of the agreement's validity and that if they were a different result would have occurred. Specifically, current section 1615(c)(2) creates a presumption that a prenup is not executed voluntarily unless the court makes a finding that the party against whom enforcement is sought had at least seven calendar days between the date he or she was "first presented" with the agreement and advised to seek independent counsel, and the time he or she signed the agreement.

Hence, the amended provisions that are no effective presumes a premarital agreement is unenforceable when the party who is challenging it did not receive it at least seven days before it was signed - Hill argued that the final version was only given her the day of the wedding. The decision ignores the question whether the "final, final" draft needs to be presented more than seven days before, because the Court (and an earlier decision) have found that the 2002 revisions to the Uniform Premarital Agreement Act are not to be applied retroactively to agreements entered into prior to January 1, 2002.

The language that Dittmer's attorney requested will likely become the standard for future agreements like this one, and will create a method of by which actual disclosure of assets and debts in the prenup can be avoided - which, the standard of professional care now suggests based on this decision should become the rule and not the exception. Why now ever give a detailed financial disclosure, whether by way of exhibits or statements made in the agreement itself, when that can be waived? Giving detailed facts in an agreement would appear to be unwise, since the party who is attacking enforceability then has something specific to challenge. A 'multitude of sins' can be shielded if the opportunity to investigate is extended, but not undertaken.

It bears repeating that the provisions attached in the Appendix, including a form of spousal support waiver, are a very good starting point for drafting the language for your own agreements.

Marital Privileges Not To Testify Against Spouse or Domestic Partner

Sometimes married persons who are in litigation with third parties (i.e., former spouses and co-parents) are asked to reveal communications in deposition, through written discovery, or at trial between them that are protected from disclosure. It may help you to know when to assert an objection to such inquiries, and how to avoid answering such questions altogether.

California recognizes both a "testimonial privilege" and a privilege protecting "confidential marital communications". These privileges are codified in Evidence Code section 970, Evidence Code section 971 and Evidence Code section 980. They are distinct privileges, and the one that most often applies to family law are sections 970 and 980, where one's current spouse is embroiled, for instance, in litigation with a former spouse (or in paternity cases, the other parent). These privileges apply equally to registered domestic partners pursuant to the general application of Family Code section 297.5. Limitations on the marital privilege are generally found at Evidence Code section 972. 

These privileges serve two important public policy goals: 1) to preserve and promote marital harmony and 2) to encourage and preserve confidences between husband and wife. Essentially, the assumption is that society has more to lose from the disruption of the marital relationship that might be caused by encouraging spouses to testify against one another, or to disclose secrets, than it has to gain by learning what was said. This makes sense - however, unrepresented parties often lack an understanding about their rights and privileges, which can be waived if not properly asserted. Hence today's Blog.

The testimonial and confidential marital communication privileges require the existence of a valid marriage or domestic partnership. Keep in mind that they do not apply between you and the spouse or domestic partner whom you are litigating against - these privileges cease to exist as between parties to a dissolution or related family law proceeding. In addition, where no valid marriage existed (i.e., a marriage that was void at its inception (bigamous, incestuous, lack of proper solemnization and the like)), the privileges never arise. In contrast, where a marriage is voidable (minority, fraud, physical incapacity) the privilege exists unless and until a final judgment of annulment has issued.

Testimonial Privilege

• The privilege applies only during existence of valid marriage or domestic partnership
• A married person has a privilege not to testify against his or her spouse in any proceeding. Evidence Code § 970.
• A married person, whose spouse is a party to a proceeding has a privilege not to be called as a witness by an adverse party without the witness spouse's prior express consent. Evidence Code § 971.
• Both testimonial privileges belong to the witness spouse.
• The 970 privilege permits a spouse to refuse to answer questions requiring testimony about the other spouse, whether or not they are a party to a proceeding.
• The 971 privilege only permits a spouse to refuse to answer (or be called) in proceedings where the other spouse is a party.
• The 970 privilege belongs only to the spouse who has been called as a witness - in such cases (i.e., where the other spouse is not a party) the other spouse has no standing to prevent their spouse from voluntarily testifying.
• The 971 privilege belongs to both spouses. Thus, even if spouse B is willing to answer questions about spouse A in pending proceedings involving spouse A, spouse A can assert the privilege to bar the testimony that otherwise might have been obtained.
• Once the marriage is terminated by Final Judgment (for instance, even a "status termination" on bifurcated proceedings where other issues remain reserved and therefore open - like property division or custody), the privilege evaporates (but see the confidential marital communications privilege below).
• The privileges do not apply to proceedings brought by one spouse against the other.
• They do not apply to certain types of hearing, including competency or commitment/conservatorship proceedings (since alleged mental or physical condition may be in issue).
• These privileges do not apply to juvenile court proceedings. [EC section 972(d)].
• Trial courts are not required to inform spouses of their rights not to testify - being uninformed and then giving testimony that could have been avoided does not operate to permit the testimony to be stricken.
• There are critical exceptions to the privilege that apply in family court proceedings [EC section 972(g)]. These include:
  • A married person cannot claim the testimonial privilege to refuse to answer questions about issues relating to income, expenses, assets, debt and employment of either spouse.
  • An action brought against the spouse by a former spouse to establish, modify or enforce a child, family or spousal support obligation arising from the marriage to the former spouse.
  • An action brought against a spouse by the other parent to establish, modify or enforce a child support obligation for a child of a nonmarital relationship between the parties.
  • In proceedings brought by a guardian of a child against a spouse relating to a child support obligation.
• Note that the testimonial privilege in the exceptions above (disclosure of income and assets, etc.) remains intact if other information is sought beyond the scope of these finance related exceptions, as to the requested disclosure of such other information.
• There are two exceptions in which a spouse may be deemed to have waived their marital privilege to refuse to testify or be called as a witness:
  • Unless erroneously compelled to do so, a married person who testifies in a proceeding to which his or her spouse is a party, or who testifies against the spouse in any such proceeding, waives their section 970 and 971 privileges in those proceedings for all purposes. 'Erroneously compelled' means under circumstances indicating "irresistible force", for instance where a judge orders the spouse to answer the question.
  • A married person cannot assert these privileges in a civil proceeding which they themselves have brought, or are defending, for the "immediate benefit" of his or her spouse, or both jointly. In such cases the privileges are effectively waived. [Evidence Code § 973(b)]. A common example would include an action for personal injury damages against a third party.

Confidential Marital Communications' Privilege

Absent a waiver or an exception, a married person, whether or not they are a party to proceedings, has a privilege to refuse to disclose confidential communications between the married person or their spouse made while they were married or domestic partners. Evidence Code section 980. 

Here are some general points to understand as to the limitations of this privilege:

• There must be a valid marriage or RDP at the time of the communication.
• This privilege survives the dissolution of the marriage itself.
• Each spouse or former spouse holds and can assert the privilege.
• Only "confidential communications" are exempted from disclosure. A "communication" means a written or oral statement or act intended to convey a message.
• As to the existence of assets and debts, it doesn't prevent disclosure of the fact of the existence of same - it only protects communications about those subjects.
• The communication must have been made in a setting that reasonably implies a confidence. There is a presumption that communications between spouses were made in confidence, but that presumption can be overcome upon a proper showing.
• If a third person was present, then there may not be a presumption that the communication was intended to be "confidential" or the presumption may be rebutted.
• The privilege will not exist where the party asserting it is abusing the "mantle of confidentiality", for instance where it is part of an assault by one spouse upon the other.
• It cannot be asserted where its application would serve to enable or aid a crime or fraud that is being attempted (although the privileges under EC sections 970 and 971 may apply).
• It does not apply to proceedings against the spouses themselves, and there are other limited exceptions (juvenile court proceedings, for instance).

Thurman Arnold, CFLS

Q.    If I contest date of separation, what evidence do courts look at?

A.    The question for trial courts is: Does one or both spouses objectively and subjectively act and appear as though they intend a separation? It only takes one of the two, because either can legitimately harbor and intention to separate and finally terminate the relationship - consent to dissolution is not required in California.

Objective evidence of separation includes very prominently whether the spouses continue to live under the same roof. Spouses that do not maintain separate residences do not appear to be living separately, even where they are occupying different rooms within the same address. It becomes quite problematic for courts to determine what is going on inside the dwelling, and if they are still maintaining intimate relations, and family courts desire to avoid the "liar's contests" that so often accompany the stories of couples whose interests have diverged.  

The fact of filing a dissolution, itself, has been found by appellate courts to be insufficient to prove physical separation as in a case where the husband filed, but went off on a international speaking tour for two years and then returned, who discovered in the court's view the marriage had continued all along.

In another case, the husband moved out to live with his girlfriend, but brought his laundry home to the wife each week to do every week. This was not a physical separation.

A separation to be effective needs to reflect a final breakup in the marriage. Ambivalent, on and off again, spouses are difficult to evaluate but the court is always going to error on the side of finding the parties have not separated if the evidence is inconclusive. This is because the policy of the law is to promote marriage, and court's are reluctant to second guess parties who fail to act with exquisite clarity. Reconciliation is a related topic, and where it is found to exist downstream (so called 'serial relationships' of get mad and make up) it will wipe out an otherwise valid physical separation.  

Today, in this economy, the notion that parties must be living in two households in order to show convincing evidence of an intent to separate may be unrealistic and unfair. Many couples are forced by financial constraints to live at the same address, unfortunately loathing most or every moment of it. This is a new development in the law of physical separation in California, and may lead to some new appellate court decisions which liberalize the existing standards, and most notably the holding of the case of Marriage of Norviel.  Norviel is a middle level appellate decision which is not binding on California Trial Courts, but may be followed by them as the judges feel is appropriate. That decision essentially requires that the parties, if they want to be considered separated, must: 

• Clearly communicate the intent to separate to the other mate and everyone else you both know
• Move out physically or physically partition the house (nail the doors between rooms shut!) 
• Divide financial accounts, including joint checking and credit accounts (cancel joint cards) 
• Decline marital counseling 
• Cancel prepaid vacations and do not take trips together 
• Don't take your laundry "home" 
• Don't date your spouse and don't be intimate 
• Tell anybody who asks the marriage is toast and you are filing for divorce 
• File for dissolution 
• Still expect to lose the issue if you don't move the divorce forward, earlier rather than later

Fortunately, there are other cases which trial courts can follow which are not nearly so draconian if circumstances are different but nonetheless convincingly demonstrate a final and complete break in the marital relationship.

By the way, when date of separation has important consequences - which may happen when characterization of property as community or separate is required - consider bifurcating that issue so that it can be tried and decided early on.

The take away from all of this is: You cannot have your cake and eat it too!  Beware, and be clear or assume the risk.