Another cautionary tale for attorneys contemplating premarital agreements

Recognizing the perils premarital agreements pose to drafters of such agreements, family law attorneys justifiably hesitate in considering whether to prepare them. For example, determining the validity of such agreements may depend upon what a future Judge views as unconscionable years after the drafting of the agreement.

The 2nd District Court of Appeal's decision in Knapp v. Ginsberg, 2021 DJDAR 8076 (Aug. 5, 2021), should give family law attorneys pause when considering whether to prepare premarital agreements. In this instance, it was attorney Ginsberg, a certified family law expert, who learned the hard lesson.

As so often occurs in these big family law cases, Knapp involves well-known people. On one side was Grant Tinker, the television producer and former spouse of Mary Tyler Moore. On the other side was Brooke Knapp, who he married in 2004. Brooke was an aviator, entrepreneur and realtor.

Prior to marrying Brooke, Grant and Brooke executed a premarital agreement. Brooke was represented by legal counsel. Grant was not represented, although the agreement stated that both parties were represented.

The parties' agreement stated that the couple would jointly own the marital home and that if Grant predeceased Brooke, Brooke would receive Grant's one-half interest "in the residence free and clear of any encumbrance, lien, assessment, or other debt." The agreement also stated that if Grant died while an encumbrance remained on the marital home, "Brooke shall have a lien against Grant's estate in an amount sufficient to promptly pay the full amount of such lien or encumbrance so as to ensure that Brooke receives the property free and clear of any such liens or encumbrances."

After marriage, Grant executed several amended versions of his trust. In the earlier trust amendments, Grant acknowledged the existence of the premarital agreement. These trust amendments also contained provisions for carrying out the premarital agreement's terms. Grant was represented by legal counsel when these amendments were prepared.

In his Sixth Amended Trust, Grant revoked a Residence Trust created concurrently with his Fifth Amended Trust. This Sixth Amended Trust did not mention the premarital agreement, although it provided for payment of $450,000 of family home related expenses. Grant died in 2016. At the time of his death, the mortgage on the family residence was approximately $3.9 million. Brooke later sold the property for $10.2 million.

In 2017, Grant's children filed a probate petition to set aside the Sixth Amended Trust, alleging that Brooke exerted undue influence over Grant. Brooke, in turn, filed a $4 million creditor's claim against Grant's estate after Grant's son refused to reimburse Brooke for her payment of the marital home mortgage.

During their litigation, the parties learned that the premarital agreement might be invalid because Grant did not execute a signed waiver of legal representation per Family Code Section 1615(c)(1) (presumption that premarital agreement was not executed voluntarily if unrepresented party did not sign a waiver of legal representation).

After learning about this issue, Brooke contacted attorney Ginsberg, who had continued to provide representation relating to the marital home to Brooke throughout the years. In 2018, Brooke and Ginsberg entered into a tolling agreement pursuant to which Ginsberg denied any wrongdoing in the drafting and execution of the premarital agreement but he agreed to toll the running of the statute of limitations until April 30, 2019.

Grant's children and Brooke settled their claims against each other in 2018.

In 2019, Brooke filed a malpractice action against Ginsberg, alleging that the premarital agreement she hired him to prepare was void because Grant was not represented by counsel and did not sign a separate waiver of counsel per Family Code. Section 1615(c)(1).

Ginsberg filed a motion for summary judgment, alleging that Brooke could not prove causation of her malpractice claim because Grant later ratified the terms of the premarital agreement through his numerous trust amendments, each of which "cured his purported lack of consent." Ginsberg also argued that he presented evidence to establish that Grant was represented by counsel during the execution of the premarital agreement.

After the trial court granted Ginsberg's motion for summary judgment, basing its decision on the fact that Grant had repeatedly acknowledged the existence and terms of the premarital agreement and he had failed to rescind it.

The Court of Appeal reversed. The justices were unpersuaded that boilerplate language in the premarital agreement stating that Grant was represented by legal counsel conclusively established that Grant was represented by counsel. The justices also rejected the argument by Ginsberg that Grant "never told Knapp that he was not advised by an attorney prior to signing the Agreement." Instead, the justices held that whether Grant was represented by counsel was a triable issue of material fact.

The justices also rejected Ginsberg's claim that a premarital agreement that was not voluntarily executed due to failure to comply with statutory requirements, could be later ratified. Relying on the plain language of Family Code Section 1615, its legislative history, and relevant case law, the justices determined that it cannot later be ratified. Section 1615 reads in pertinent part "that a premarital agreement 'is not enforceable if the party against whom enforcement is sought proves ... That party did not execute the agreement." The justices agreed with Knapp's argument that to construe "not enforceable" to mean voidable instead of void would "render the separate waiver portion of the statute superfluous."

Finally, the justices rejected Ginsberg's argument that Brooke's malpractice claim against him was barred by the statute of limitations. The justices indicated that Code of Civil Procedure Section 340.6 contains a tolling provision in which that statute of limitations does not begin to run until after the plaintiff sustains an actual injury. Here, the justices found that Brooke sustained her injury in December 2017, when Grant's children refused to honor the lien.

Knapp highlights the perils of venturing into the premarital agreement arena. Courts do not appear to like these agreements and will therefore carefully and scrupulously review them. It also reminds us of a lesson that should be apparent: carefully review the statutes and law applicable to your situation -- in this case, the Uniform Premarital Agreement rules -- prior to taking a case.