California case summary on enforcement of unconscionable prenuptial agreement in divorce.
In re the Marriage of Kim and Mark S. Zucker
The husband in this Los Angeles County divorce case was the co-founder and co-CEO of a hedge fund. His net worth was about $10 million, and he made about $2 million per year. The wife came from much more humble background, and had a history of psychological troubles, although the husband testified that he was unaware of her struggles.
Prior to their marriage, the parties entered into a premarital agreement, the terms of which were unfavorable to the wife. Under the agreement, she waived her community interest under California law, and agreed to a one-time payment of $10,000 upon moving out of the house, followed by $6000 per month spousal support. She waived inheritance rights. The agreement recited that the wife’s net worth was $242,000, and the husband’s $5.8 million.
Before the marriage, the wife became pregnant two times. The first pregnancy ended in abortion. An abortion was scheduled to end the second pregnancy, but she did not go through with it. According to the wife’s parents, the wife was distraught at this time, although the husband offered testimony that she seemed rational.
They married in 1994, shortly after signing the agreement, which went through several drafts. The wife, however, claimed that she only saw the agreement the day she signed it. The wife was represented by an attorney, who explained in writing that the wife was giving up substantial rights by signing. Ultimately, the attorney advised the wife not to sign.
One of the issues at trial and on appeal was the validity of the agreement. The wife argued that it was not entered into voluntarily.
The trial court found no evidence of duress. In particular, the trial court held that there was no surprise factor. Even though she signed it the day she saw it, she was aware of the agreement, and had a very competent attorney representing her.
Similarly, the trial court held that this was not a case of undue influence, and that the wife was competent to execute it.
Following trial, the wife appealed to the California Court of Appeal, and the first issue she raised was the validity of the agreement. The appeals court noted that under California law, such agreements are proper, and may address both property owned at the time of the agreement and future property.
The California Family Code has been amended over the years, and the validity and enforcement of a premarital agreement depends on the date it was executed. In this case, the 1982 amendments were controlling, since the agreement was executed between 1986 and 2002. Under that version of the statute, the spouse challenging the agreement bears the burden of proving that the agreement was not signed voluntarily.
In this case, the Court of Appeals concluded that there was substantial evidence that the agreement was entered into voluntarily. The court noted that the agreement was signed more than a week before the ceremony, and that it was a small ceremony with only a few guests in attendance. The wife had known all along that the husband wouldn’t marry without an agreement, and she was not taken by surprise.
The wife argued that the unexpected pregnancy meant that the agreement was not voluntary. The appeals court agreed that the trial court might have followed this theory, but that the trial court was in the best position to weigh the testimony.
While it held the agreement valid overall, the trial court did hold that the invalidation of spousal support was unconscionable. The husband appealed this holding of the lower court. The appeals court first held that under the 1986-2002 version of the law, it was proper to consider this issue.
The Court of Appeals took the opportunity to examine a number of precedents on the subject of unconscionability, before turning to the facts of the case before it. It agreed with the lower court that the agreement was unconscionable at the time of enforcement, pointing to the fact that the wife had only a high-school education, was not employed during the marriage, and that the husband had an annual income of over a million dollars. The amount she received under the agreement was only 10% of what she would have received otherwise, and both the trial court and appeals court agreed this was unconscionable.
After examining other issues in the case, the Court of Appeals affirmed most of the lower court’s judgment, but remanded the case for some corrections.
No. B281051 (Cal. Ct. App. Mar. 3, 2022).
See original opinion for exact language. Legal citations omitted.
To learn more, see Prenuptial Agreement: Pros and Cons in Tennessee Divorce Law.