Marriage of Clarke and Akel (2018)

Marriage of Clarke and Akel (2018) exemplifies why it is so important for each party to retain his or her own separate attorney before negotiating, preparing, and signing a prenuptial agreement (called a premarital agreement in the Family Code).  The agreement is considered involuntarily entered into by a party unless certain statutory procedural requirements are met.  (Family Code section 1615(c).)  If it is involuntarily entered into, the prenuptial agreement is wholly unenforceable against the party who did not voluntarily enter into it.  (Family Code section 1615(a)(1).)

Among other statutory requirements to to protect against an involuntary prenuptial agreement, an unrepresented party must be fully informed of the terms and basic effect of the prenuptial agreement and of the rights and obligations he or she is giving up, and he or she must sign a separate declaration stating he or she received this information and indicating who provided the information.  (Family Code section 1615(c)(3).) 

(Note:  Because of the ethical dilemma of advising an opposing unrepresented party of the terms, basic effect, and rights and obligations being waived, I cannot in good conscience represent a party to a prenuptial agreement unless the other party is willing to retain his or her own separate attorney from the inception of negotiations and preparation of the working draft of the prenuptial agreement through the execution (signing) of the final draft.)

Another of the procedural requirements is a contemplative time delay of seven days between the date of delivery of the final draft of the prenuptial agreement to the other party and the date the final draft is signed.  (Family Code section 1615(c)(2).) 

Along with the seven-day contemplative time delay, the premarital agreement must be signed before marriage.  Knowing this, imagine the typical large wedding where your invited guests scheduled time off from work, and air travel and hotel reservations were made well in advance for them, along with the ceremony and reception reservations.  What do you do when you finalize your premarital agreement less seven days before such a wedding?  Do you postpone it while your guests already may be in transit from the east coast?  Are you going to tell them that it has been postponed because of your concern for the validity and enforceability of a prenuptial agreement?  Likely not.

(Note:  This delay is primarily why I ask that you please contact me at least two months prior to the intended date of marriage.)

One remedy (the one Claudia Akel chose, perhaps to avoid postponing the marriage) was to place in the recitals’ portion of the prenuptial agreement the mutually agreed upon (yet false) statement that each party had received the final draft at least seven days before it was signed.

On appeal to the First Appellate District, Division Five, in San Mateo County, Marriage of Clarke and Akel answered two legal questions as to the voluntariness and thus enforceability of the prenuptial agreement that Matthew and Claudia had entered into:

1) Whether Family Code section 1615(c)(2)’s required seven-day delay between the delivery of the final draft of the prenuptial agreement to the other party and the other party’s signature on it can be satisfied by simply inserting boilerplate language into the agreement that indicates the seven-day period had been met when in fact it hadn’t been;  and,

2) Whether Family Code section 1615(c)(3) requirement of an unrepresented party’s written advisement and waiver of certain rights and obligations applies to an unrepresented party who initially prepares and presents a prenuptial agreement to the other party who is represented by an attorney.

FACTS

On February 26, 2008, Matthew downloaded a template prenuptial agreement from Nolo Press, prepared a prenuptial agreement from it and emailed it to Claudia.  Matthew (perhaps due to a lack of funding) then retained an attorney, Clifford Chernick, for Claudia and, on February 29th, emailed a draft prenuptial agreement to Mr. Chernick.

On March 3rd, Matthew emailed a revised draft to Mr. Chernick.

On March 4th, Mr. Chernick met with Claudia and Matthew.  He discussed certain provisions with Matthew and advised him to seek independent counsel.  In turn, Matthew told him he was able to represent himself.

On March 5th, Mr. Chernick revised the agreement into a final draft (which included “significant provisions” that were not part of the initial draft prepared by Matthew) and delivered it to Matthew.

On March 6th, the parties signed the prenuptial agreement, which in its final form was “substantially the same” as the one presented by Mr. Chernick on March 5th and included language to the effect that each party had more than seven days between receiving the final draft and signature.

Matthew also executed a separate written waiver of legal counsel acknowledging that: Mr. Chernick represented only Claudia;  Mr. Chernick had advised Matthew to seek independent counsel; and, Matthew was financially able to obtain independent counsel but elected to waive his right to consult with independent counsel before signing.

The parties separated in 2013 or 2014, and Matthew petitioned for dissolution of their marriage.

Relevant to the divorce were provisions in the premarital agreement that Matthew’s separate property home would become community property if the marriage lasted seven years, that Claudia would own a two-percent interest in the home for every year the parties stayed married if they were divorced before seven years of marriage, that “Claudia and the children [would] have a lifetime tenancy in the house,” and that Matthew would pay all expenses on the house so long as Claudia’s lifetime tenancy continued.

The trial court determined the prenuptial agreement was unenforceable against Matthew under Family Code section 1615(c)(2) because he had not been given at least seven days between presentment of the final draft of the prenuptial agreement and his signature on it.  The trial also determined the agreement was unenforceable under Family Code section 1615(c)(3) because Matthew had not been provided with a written advisement of the rights he was relinquishing under the agreement and did not execute a written waiver of those rights.  Claudia appealed.

APPELLATE ANALYSIS

WAS FAMILY CODE SECTION 1615(c)(2)’S SEVEN-DAY RULE MET?

With a lifetime tenancy for her and the children and more than a 10% interest in the home if the agreement were valid, Claudia argued that Matthew indeed had seven days between delivery of the agreement and his signature by virtue of the following language inserted by her attorney:  “Each of us acknowledges that he/she received this Agreement more than seven days before executing it, and had ample time to review this Agreement with independent legal counsel and other professional advisors before signing it.”

Claudia cited the conclusive legal presumption (meaning it cannot be rebutted by other proof) of Evidence Code section 622, which provides, “The facts recited in a written instrument are conclusively presumed to be true as between the parties thereto, or their successors in interest . . .”

While Claudia’s would seem to be a strong argument at first glance, the appellate court cited earlier appellate opinions with which to differentiate the rationale of Evidence Code section 622 (the doctrine of estoppel by contract), that is:

“’the principle that parties who have expressed their mutual assent are bound by the contents of the instrument they have signed, and may not thereafter claim that its provisions do not express their intentions or understanding.’ (City of Santa Cruz v. Pacific Gas & Electric Co. (2000) 82 Cal.App.4th 1167, 1176–1177.)  ‘The statute does not apply to situations not involving arm’s length negotiations; moreover, it does not apply when the contract itself was invalid.’  (Id.; Bruni v. Didion (2008) 160 Cal.App.4th 1272, 1291.)”

The appellate court opined that because Family Code section 1615(c)(2)’s seven-day rule makes a prenuptial agreement involuntary and thus invalid when an unrepresented party has had fewer than seven days to review the agreement, it is obviously designed to protect parties who enter into a prenuptial agreement without legal representation.  Thus, the policy basis for the statute “would be thwarted if the rule could be satisfied by the inclusion of boilerplate language that did not reflect the true facts.”  

The appellate court added that even if Evidence Code section 622 had applied (i.e., the recitals superseded proof that the parties actually complied with the seven-day rule), the trial court found Matthew involuntarily signed the agreement per Family Code section 1615(c)(3).

To enforce a prenuptial agreement against an unrepresented party, Family Code section 1615(c)(3) requires:

“The party against whom enforcement is sought, if unrepresented by legal counsel, was fully informed of the terms and basic effect of the agreement as well as the rights and obligations he or she was giving up by signing the agreement, and was proficient in the language in which the explanation of the party’s rights was conducted and in which the agreement was written.  The explanation of the rights and obligations relinquished shall be memorialized in writing and delivered to the party prior to signing the agreement.  The unrepresented party shall, on or before the signing of the premarital agreement, execute a document declaring that he or she received the information required by this paragraph and indicating who provided that information.”

Although he signed a separate waiver of his right to legal counsel (as required by Family Code section 1615(c)(1)), Matthew signed no declaration stating he was advised of the terms and basic effect of the prenuptial agreement and of the rights and obligations he was waiving by signing it.  The prenuptial agreement was thus invalid and unenforceable on that basis alone.

BECAUSE MORE THAN SEVEN DAYS HAD ELAPSED BEFORE CLAUDIA SIGNED IT, COULD THE INITIAL DRAFT RECEIVED FROM MATTHEW HAVE BEEN ENFORCED? 

Claudia’s other argument was that the trial court should have invalidated only those provisions that were added by her attorney and enforced the remainder of the prenuptial agreement.  In other words, by using only that portion of the prenuptial agreement Matthew initially drafted and delivered on February 26th, was the seven-day rule satisfied?  This question fell on deaf ears.  Again, there was nothing in writing to show Matthew, as an unrepresented party, had been fully informed of the terms and basic effect of the prenuptial agreement and of the rights and obligations he was giving up because there was no separate document signed by Matthew showing he received that information as required by Family Code section 1615(c)(3).  Because there was a failure to comply with Family Code section 1615(c)(3), Matthew involuntarily signed the prenuptial agreement, and the appellate court could not enforce any part of it.

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