Court: premarital agreements that don’t comply with rules are void

In Knapp v. Ginsberg, 2021 DJDAR 8067 (Aug. 5, 2021), in the context of an action for legal malpractice, the 2nd District Court of Appeal reminded family law practitioners that the requirements for a valid premarital agreement are strictly construed and enforced. The essential facts are that Knapp and her deceased husband, Tinker, signed a premarital agreement that was negotiated over a period of several weeks prior to their marriage by Knapp's lawyer and Tinker's business manager who approved the agreement on behalf of their respective clients.

In Knapp's complaint for malpractice against Ginsberg, she alleged that Tinker was not represented by an attorney in the negotiation of the agreement, and never signed a separate waiver of independent counsel required by Family Code Section 1615, which rendered the premarital agreement unenforceable.

Among other defenses, Ginsberg asserted that the premarital agreement stated "each party has been represented by and has relied exclusively on independent counsel of his or her own choosing and paid with his or her own funds in the negotiation of this Agreement." Ginsberg also contended that Section 1615 was inapplicable because neither party ever took the position that the premarital agreement was unenforceable (in litigation with Tinker's heirs). Finally, Ginsberg argued that Tinker had ratified the terms of the premarital agreement on multiple occasions, which cured the purported lack of consent to the agreement.

On appeal of the order granting Ginsberg's motion for summary judgment, Knapp argued that whether Tinker was represented by counsel was disputed and that without a separate waiver of independent counsel the agreement was void, and therefore incapable of ratification as a matter of law.

The appellate court concluded that the evidence did not establish that Tinker was represented by counsel; accordingly, there was a triable issue of material fact. More importantly, the court held that "premarital agreements that do not comply with section 1615 are void, not voidable, and therefore cannot be ratified as a matter of law."

The version of Section 1615 in effect at the time Knapp and Tinker executed the premarital agreement provided in pertinent part that a premarital agreement "is not enforceable if the party against whom enforcement is sought proves ... that that party did not execute the agreement voluntarily."

Former Section 1615(a) provided as follows:

For the purposes of subdivision (a), it shall be deemed that a premarital agreement was not executed voluntarily unless the court finds in writing or on the record all of the following:

(1) The party against whom enforcement is sought was represented by independent legal counsel at the time of the signing of the agreement or after being advised to seek independent legal counsel, expressly waived, in a separate writing, representation by independent legal counsel.

(2) The party against whom enforcement is sought had not less than seven calendar days between the time that party was first presented with the agreement and advised to seek independent legal counsel and the time the agreement was signed.

(3) 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 .... 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 her or she received the information required by this paragraph and indicating who provided that information.

(4) The agreement and the writings executed pursuant to paragraphs (1) and (3) were not executed under duress, fraud, or undue influence, and the parties did not lack capacity to enter into the agreement.

(5) Any other factors the court deems relevant.

To begin with, the court held that statements in the premarital agreement that each party was represented by counsel do not conclusively establish that Tinker was represented.

In Marriage of Clarke and Akel, 19 Cal. App. 5th 914 (2018), Clarke prepared an initial draft of a premarital agreement, subsequently retained an attorney to represent Akel in the negotiations, and later signed an edited version of the premarital agreement he had prepared. Clarke also signed a separate written waiver of counsel. The appellate court held that the agreement was unenforceable under former Section 1615(c)(2) because Clarke did not receive the final version of the agreement at least seven days before its execution.

Akel relied on Evidence Code Section 622, which provides that "the facts recited in a written instrument are conclusively presumed to be true as between the parties thereto." The court held that Section 622 "does not apply to situations not involving arm's length negotiations" and concluded that Section 1615(c)(2) was "obviously designed to protect parties who enter into a premarital agreement without legal representation, and this policy would be thwarted if the rule could be satisfied by the inclusion of boilerplate language that did not reflect the true facts."

Along the same lines, a recitation that the parties were both represented was insufficient to satisfy the requirement of the statute if the "true facts" were otherwise.

The Knapp court noted that Section 1615 plainly states that a premarital agreement is not enforceable if the party against whom enforcement is sought did not execute the agreement voluntarily.

In construing the legislative history, the court compared the language of Section 1612(c) to the "virtually identical" language of Section 1615(c)(1), and concluded that the similarity compelled the conclusion that failure to comply with the requirements of Section 1615 rendered the premarital agreement void.

In response to Marriage of Cadwell-Faso & Faso, 191 Cal. App. 4th 945 (2011), holding that Section 1615(c)(2) did not apply to parties who were represented, the Legislature amended Section 1615 to provide that a premarital agreement will be deemed to have been involuntarily executed unless the court makes all of the five designated findings. As the court stated in Clarke: "The question of voluntariness must be examined in the unique context of the marital relationship and that relationship ... is governed by the specific requirements of section 1615 rather than general contract principles such as those embodied in Civil Code section 1588 or Evidence Code section 622."

In emphasizing the rationale for strict interpretation and enforcement of statutes enacted to implement a public policy such as Section 1615, the court observed that such statutes could not be contravened by the parties' private agreement or subsequent conduct such as the putative ratification that Ginsberg had alleged.

The lessons of Knapp for family law practitioners who prepare premarital agreements are clear:

The agreement will be deemed void unless each party is in fact represented by independent legal counsel.

If not, an unrepresented party must be advised to seek independent legal counsel and expressly waive representation in writing.

The parties must wait seven calendar days between the time agreement is in final form and the time the agreement is signed even if both parties are represented by counsel.

An unrepresented party must be fully informed of the terms and basic effect of the agreement, as well as the rights and obligations he or she is giving up by signing the agreement, and that explanation must be memorialized in writing and delivered to the unrepresented party prior to signing the agreement.

Finally, an unrepresented party must execute a document acknowledging that he or she received the required information and identifying the person who provided that information prior to signing the agreement.

In short, if a party to a premarital agreement is not represented by counsel, the waiver, the explanation and the acknowledgment must all be in writing. The only way to avoid compliance with these detailed and specific requirements is to insist, as the vast majority of family law practitioners do, that both parties to a premarital agreement must be represented by counsel in its negotiation and preparation. 