In re Marriage of Bonds
24 Cal. 4th 1 (Cal. 2000)
George, C.J.
In this case we consider whether appellant Susann (known as Sun) Bonds
voluntarily entered into a premarital agreement with respondent Barry Bonds. We conclude that the Court of
Appeal erred in determining that because Sun, unlike Barry, was not represented by
independent counsel when she entered into the agreement, the voluntariness of the
agreement must be subjected to strict scrutiny. Instead, we determine that the
circumstance that one of the parties was not represented by independent counsel is only
one of several factors that must be considered in determining whether a premarital
agreement was entered into voluntarily. Further, as we shall explain, we conclude that
substantial evidence supports the determination of the trial court that the agreement in
the present case was entered into voluntarily.
I
Sun and Barry met in Montreal in the summer of 1987 and maintained a
relationship during ensuing months through telephone contacts. In October 1987, at Barry's
invitation, Sun visited him for 10 days at his home in Phoenix, Arizona. In November 1987,
Sun moved to Phoenix to take up residence with Barry and, one week later, the two became
engaged to be married. In January 1988, they decided to marry before the commencement of
professional baseball's spring training. On February 5, 1988, in Phoenix, the parties
entered into a written premarital agreement in which each party waived any interest in the
earnings and acquisitions of the other party during marriage. n1
That same day, they flew to Las Vegas, and were married the following day.
Each of the parties then was 23 years of age. Barry, who had attended
college for three years and who had begun his career in professional baseball in 1985, had
a contract to play for the Pittsburgh Pirates. His annual salary at the time of the
marriage ceremony was approximately $106,000. Sun had
emigrated to Canada from Sweden in 1985, had worked as a waitress and bartender, and had
undertaken some training as a cosmetologist, having expressed an interest in embarking
upon a career as a makeup artist for celebrity clients. Although her native language was
Swedish, she had used both French and English in her employment, education, and personal
relationships when she lived in Canada. She was unemployed at the time she entered into
the premarital agreement.
Barry petitioned for legal separation on
May 27, 1994, in California, the parties then being California residents. Sun
requested custody of the parties' two children, then three and four years of age. In
addition, she sought child and spousal support, attorney fees, and a determination of
property rights. The petition was amended to request dissolution, and the court bifurcated
the trial proceedings, first adjudicating the issue of the validity of the premarital
agreement and then reaching the remaining issues involving application of the agreement to
the property held by the parties and the determination of spousal and child support. Child
support was awarded in the amount of $10,000 per month per child. Spousal support was
awarded in the amount of $10,000 per month, to terminate December 30, 1998. Only the
first issue - the validity of the premarital agreement - is before this court.
Barry testified that he was aware of teammates and other persons who
had undergone bitter marital dissolution proceedings involving the division of property,
and recalled that from the beginning of his relationship with Sun he told her that he
believed his earnings and acquisitions during marriage should be his own. He informed her
he would not marry without a premarital agreement, and she had no objection. He also
recalled that from the beginning of the relationship, Sun agreed that their earnings and
acquisitions should be separate, saying "what's mine is mine, what's yours is
yours." Indeed, she informed him that this was the practice with respect to marital
property in Sweden. She stated that she planned to pursue a career and wished to be
financially independent. Sun knew that Barry did not anticipate that she would shoulder
her living expenses while she was not employed. She was not, in fact, employed during the
marriage. Barry testified that he and Sun had no difficulty communicating.
Although Barry testified that he had previous experience working with
lawyers in the course of baseball contract negotiations and the purchase of real property,
his testimony at trial did not demonstrate an understanding of the legal fine points of
the agreement.
Sun's testimony at trial differed from Barry's in material respects.
She testified that her English language skills in 1987 and 1988 were limited. Out of
pride, she did not disclose to Barry that she often did not understand him. She testified
that she and Barry never discussed money or property during the relationship that preceded
their marriage. She agreed that she had expressed interest in a career as a cosmetologist
and had said she wished to be financially independent. She had very few assets when she
took up residence with Barry, and he paid for all their needs. Their wedding arrangements
were very informal, with no written invitations or caterer, and only Barry's parents and a
couple of friends, including Barry's godfather Willie Mays, were invited to attend. No
marriage license or venue had been arranged in advance of their arrival in Las Vegas.
Several persons testified as to the circumstances surrounding the
signing of the premarital agreement.
Sun testified that on the evening before the premarital agreement was
signed, Barry first informed her that they needed to go the following day to the offices
of his lawyers, Leonard Brown and his associate Sabinus Megwa. She was uncertain, however,
whether Barry made any reference to a premarital agreement. She testified that only at the
parking lot of the law office where the agreement was to be entered into did she learn,
from Barry's financial advisor, Mel Wilcox, that Barry would not marry her unless she
signed a premarital agreement. She was not upset. She was surprised, however, because
Barry never had said that signing the agreement was a precondition to marriage. She did
not question Barry or anyone else on this point. She was under the impression that Barry
wished to retain separate ownership of property he owned before the marriage, and that
this was the sole object of the premarital agreement. She was unaware the agreement would
affect her future and was not concerned about the matter, because she was nervous and
excited about getting married and trusted Barry. Wilcox's statement had little effect on
her, because she had no question but that she and Barry were to be married the following
day.
Sun recalled having to hurry to arrive at the lawyers' office in time
both to accomplish their business there and make the scheduled departure of the airplane
to Las Vegas so that she and Barry could marry the next day. Sun recalled that once they
arrived at the lawyers' office on February 5, 1988, she, her friend Margareta Forsberg,
Barry, and Barry's financial advisor Mel Wilcox were present in a conference room. She did
not recall asking questions or her friend asking questions, nor did she recall that any
changes were made to the agreement. She declared that her English language skills were
limited at the time and she did not understand the agreement, but she did not ask
questions of anyone other than Margareta Forsberg or ask for more time, because she did
not want to miss her flight and she was focussed on the forthcoming marriage ceremony. She
did not believe that Barry understood the agreement either. Forsberg was unable to assist
her. Sun did not recall the lawyers telling her that she should retain her own lawyer,
that they were representing Barry and not her, that the applicable community property law
provided that a spouse has an interest in the earnings and in acquisitions of the other
spouse during marriage, or that she would be waiving this right if she signed the
agreement. The lawyers may have mentioned the possibility of her being represented by her
own lawyer, but she did not believe she needed one. She did not inform anyone at the
meeting that she was concerned about the agreement; the meeting and discussion were not
cut short, and no one forced her to sign the agreement.
Forsberg, a native of Sweden and 51 years of age at the time the
agreement was signed, confirmed that she was present when attorneys Brown and Megwa
explained the agreement, that Wilcox also was present, that no changes to the agreement
were made at Sun's or Forsberg's request, and that she had been unable to answer Sun's
questions or explain to Sun the terminology used in the agreement. She confirmed that
Sun's English was limited, that the lawyers had explained the agreement, and that Sun
never stated that she was considering not signing the agreement, that she did not
understand it, or that she was not signing of her own free will. Sun never said that Barry
threatened her or forced her to sign, that she wanted to consult independent counsel
concerning the agreement, or that she felt pressured. Forsberg understood that Brown and
Megwa were Barry's attorneys, not Sun's. She testified that when the attorneys explained
the agreement, she did not recall any discussion of Sun's community property rights.
Barry and other witnesses offered a different picture of the
circumstances leading to the signing of the premarital agreement, an account found by the
trial court to be more credible in material respects, as reflected in its statement of
decision. Barry and his attorney Brown recalled that approximately two weeks before the
parties signed the formal agreement, they discussed with Sun the drafting of an agreement
to keep earnings and acquisitions separate. Brown testified that he told Sun at this
meeting that he represented Barry and that it might be in her best interest to obtain
independent counsel.
Barry, Brown, and Megwa testified that Wilcox was not present at the
February 5, 1988, meeting, which lasted between one and two hours, and that at the meeting
the attorneys informed Sun of her right to independent counsel. All three recalled that
Sun stated she did not want her own counsel, and Megwa recalled explaining that he and
Brown did not represent her. Additionally, all three recalled that the attorneys read the
agreement to her paragraph by paragraph and explained it as they went through it, also
informing her of a spouse's basic community property rights in earnings and acquisitions
and that Sun would be waiving these rights. Megwa recalled it was clearly explained that
Barry's income and acquisitions during the marriage would remain Barry's separate
property, and he recalled that Sun stated that such arrangements were the practice in
Sweden. Furthermore, Barry and the two attorneys each confirmed that Sun and Forsberg
asked questions during the meeting and were left alone on several occasions to discuss its
terms, that Sun did not exhibit any confusion, and that Sun indicated she understood the
agreement. They also testified that changes were made to the agreement at Sun's behest.
Brown and Megwa experienced no difficulty in communicating with Sun, found her confident
and happy, and had no indication that she was nervous or confused, intimidated, or
pressured. No threat was uttered that unless she signed the agreement, the wedding would
be cancelled, nor did they hear her express any reservations about signing the agreement.
Additionally, legal secretary Illa Washington recalled that Wilcox waited in another room
while the agreement was discussed, that Sun asked questions and that changes were made to
the agreement at her behest, that Sun was informed she could secure independent counsel,
that Sun said she understood the contract and did not want to consult another attorney,
and that she appeared to understand the discussions and to feel comfortable and confident.
The trial court observed that the case turned upon the credibility of
the witnesses. In support of its determination that Sun entered into the agreement
voluntarily, "free from the taint of fraud, coercion and undue influence . . . with
full knowledge of the property involved and her rights therein," the trial court made
the following findings of fact: " Respondent [Sun] knew Petitioner [Barry]
wished to protect his present property and future earnings. Respondent knew . . . that the
Agreement provided that . . . Petitioner's present and future earnings would remain his
separate property. . . . Respondent is an intelligent woman and though English is
not her native language, she was capable of understanding the discussion by Attorney Brown
and Attorney Megwa regarding the terms of the agreement and the effect of the Agreement on
each [party's] rights. [P] . . . . Respondent was not forced to execute the document, nor
did anyone threaten Respondent in any way. Respondent never questioned signing the
Agreement or requested that she not sign the Agreement. Respondent's refusal to sign the
Agreement would have caused little embarrassment to her. The wedding was a small impromptu
affair that could have been easily postponed. [P] Respondent had sufficient knowledge of
the nature, value and extent of the property affected by the Agreement. Petitioner fully
disclosed the nature, approximate value and extent of all of his assets to Petitioner,
both prior to and on the day of the execution of the agreement. [P] Respondent had
sufficient knowledge and understanding of her rights regarding the property affected by
the Agreement, and how the Agreement adversely affected those rights. Respondent had the
opportunity to read the Agreement prior to executing it. Attorneys Brown and Megwa
explained to both parties their rights regarding the property affected by the Agreement,
and how the Agreement adversely affected those rights. Respondent never stated prior to
execution that she did not understand the meaning of the Agreement or the explanations
provided by Petitioner's attorneys. [P] Respondent had sufficient awareness and
understanding of her right to, and need for, independent counsel. Respondent also had an
adequate and reasonable opportunity to obtain independent counsel prior to execution of
the Agreement. Respondent was advised at a meeting with Attorney Brown at least one week
prior to execution of the Agreement that she had the right to have an attorney represent
her and that Attorneys Brown and Megwa represented Petitioner, not Respondent. On at least
two occasions during the February 5, 1988, meeting, Respondent was told that she could
have separate counsel if she chose. Respondent declined. Respondent was capable of
understanding this admonition. The wedding was a small impromptu affair that could have
been easily postponed."
The court also determined that Barry and Sun were not in a confidential
relationship at the time the agreement was executed. The trial court also declared that
pursuant to a pretrial stipulation the burden of proof rested upon Sun, but that even if
the court were to place the burden of proof upon Barry, Barry had demonstrated by clear
and convincing evidence "that the agreement and its execution [were] free from the
taint of fraud, coercion or undue influence" and that Sun "entered the agreement
with full knowledge of the property involved and her rights therein."
The Court of Appeal in a split decision reversed the judgment rendered
by the trial court and directed a retrial on the issue of voluntariness. The
majority opinion stressed that Sun lacked independent counsel, determined that she had not
waived counsel effectively, and concluded that under such circumstances the evidence must
be subjected to strict judicial scrutiny to determine whether the agreement was voluntary.
The majority opinion asserted that Attorneys Brown and Megwa failed to explain that
Sun's interests conflicted with Barry's, failed to urge her to retain separate counsel,
and may have led Sun to believe they actually represented her interests as they explained
the agreement paragraph by paragraph. The majority opinion concluded that the trial court
erred in failing to give proper weight to the circumstance that Sun was not represented by
independent counsel. It asserted with regard to marital settlement agreements in
dissolution actions that "the court should 'carefully scrutinize the agreements' when
the party challenging the agreement did not have the advice of counsel [citation],"
and that the same rule should apply to premarital agreements. It cited various other
circumstances in the present case that, according to the majority, demonstrated a lack of
voluntariness. The majority opinion pointed to Sun's limited English language skills and
lack of "legal or business sophistication," and stated that she "received
no explanation of the legal consequences to her ensuing from signing the contract"
and "was told there would be 'no marriage' if she did not immediately sign the
agreement." It also referred to typographical errors and omissions in the agreement,
the imminence of the wedding and the inconvenience and embarrassment of canceling it,
Sun's asserted lack of understanding that she was waiving her statutory right to a
community property interest in Barry's earnings, and the absence of an attorney acting as
an advocate on her behalf.
The dissenting justice contended that the majority had erred in failing
to apply the appropriate legal standard to determine the voluntariness of the agreement
and in failing to accord appropriate deference to the factual determinations of the trial
court.
We granted Barry's petition for review.
[Editorial Note: Only a small remaining portion of this
opinion addresses the issue of undue influence. You may skip directly to that
portion of the opinion from this link. The balance of
the opinion considers application of California's version of the Uniform Premarital
Agreement Act to the premarital agreement of Sun and Barry Bonds. You may wish to
read the balance of the opinion to satisfy your intellectual curiosity, to learn more
about law governing premarital settlement agreements, or to enhance your understanding of
the interpretation and application of statutes.]
II
We first consider whether the Court of Appeal majority applied the
appropriate legal standard in resolving the question whether the premarital agreement was
entered into voluntarily. We conclude it erred in holding that a premarital agreement in
which one party is not represented by independent counsel should be subjected to strict
scrutiny for voluntariness. Such a holding is inconsistent with Family Code section 1615,
which governs the enforceability of premarital agreements.
A
From the inception of its statehood, California has retained the
community property law that predated its admission to the Union, and consistently has
provided as a general rule that property acquired by spouses during marriage, including
earnings, is community property.
At the same time, applicable statutes recognized the power of parties
contemplating a marriage to reach an agreement containing terms at variance with community
property law. Thus in 1850, the Legislature provided that community property principles
shall govern the rights of the parties "unless there is a marriage contract,
containing stipulations contrary thereto." (Stats. 1850, ch. 103, § 14, p. 255).
There is nothing novel about statutory provisions recognizing the
ability of parties to enter into premarital agreements regarding property, because such
agreements long were common and legally enforceable under English law, and have enjoyed a
lengthy history in this country. In California, a premarital agreement generally has
been considered to be enforceable as a contract, although when there is proof of fraud,
constructive fraud, duress, or undue influence, the contract is not enforceable. The rules
applicable to the interpretation of contracts have been applied generally to premarital
agreements.
At one time, a premarital agreement that was not made in contemplation
that the parties would remain married until death was considered to be against public
policy in California and other jurisdictions, but this court concluded in 1976 that the
validity of a premarital agreement "does not turn on whether the parties contemplated
a lifelong marriage. . . ." ( In re Marriage of Dawley (1976) 17 Cal. 3d
342, 352, 131 Cal. Rptr. 3, 551 P.2d 323.) The latter opinion was in conformity with
the emerging view in other jurisdictions that a premarital agreement concerning the
disposition of property upon the dissolution of a marriage was not against public policy.
(See Posner v. Posner (Fla. 1970) 233 So. 2d 381, 385 [often cited as the seminal
opinion on this issue].)
Persons contemplating marriage began to enter into agreements setting
out property rights in contemplation of marital dissolution - rights that differed from
those that would accrue under applicable statutes - but there was some uncertainty and
considerable lack of uniformity regarding the circumstances under which such agreements
would be enforceable. In order to encourage enforcement of such agreements on a more
certain and uniform basis, while, according to the drafters of the act, retaining some
"flexibility," the Uniform Premarital Agreement Act (hereafter sometimes
referred to as the Uniform Act) was promulgated in 1983.
In 1985, the California Legislature adopted most of the provisions of
the Uniform Act. (Fam. Code § 1600 et seq. (hereafter referred to sometimes as the
California Uniform Act). The only provisions of the Uniform Act omitted by the
California Legislature were those permitting the parties to waive the right to spousal
support and limiting the right to waive spousal support where such a waiver would result
in a spouse's becoming a public charge. . . .
B
The California enactment, like the Uniform Act, sets out the law of
premarital agreements, including such matters as the nature of property subject to such
agreements, the requirement of a writing, and provision for amendments. Section 1615
of the Family Code, like section 6 of the Uniform Act, regulates the enforceability of
such agreements. It provides in pertinent part: "(a) A premarital agreement is not
enforceable if the party against whom enforcement is sought proves either of the
following: [P] (1) That party did not execute the agreement voluntarily. [P] (2) The
agreement was unconscionable when it was executed and, before execution of the agreement,
all of the following applied to that party: [P] (A) That party was not provided a fair and
reasonable disclosure of the property or financial obligations of the other party. [P] (B)
That party did not voluntarily and expressly waive, in writing, any right to disclosure of
the property or financial obligations of the other party beyond the disclosure provided.
[P] (C) That party did not have, or reasonably could not have had, an adequate knowledge
of the property or financial obligations of the other party."
Pursuant to Family Code section 1615, a premarital agreement will be
enforced unless the party resisting enforcement of the agreement can demonstrate either
(1) that he or she did not enter into the contract voluntarily, or (2) that the contract
was unconscionable when entered into and that he or she did not have actual or
constructive knowledge of the assets and obligations of the other party and did not
voluntarily waive knowledge of such assets and obligations. In the present case, the trial
court found no lack of knowledge regarding the nature of the parties' assets, a necessary
predicate to considering the issue of unconscionability, and the Court of Appeal accepted
the trial court's determination on this point. We do not reconsider this factual
determination, and thus the question of unconscionability is not before us. We also do not
review the determination of the Court of Appeal that California law, rather than Arizona
law, governs the enforceability of this agreement, and we express no opinion on this
point. Thus, the only issue we face concerns the trial court's determination that Sun
entered into the agreement voluntarily.
Neither the article of the Family Code in which section 1615 is
located, nor the Uniform Act, defines the term "voluntarily." Certain rules of
construction guide us in our interpretation of this term. "We begin with the
fundamental rule that a court 'should ascertain the intent of the Legislature so as to
effectuate the purpose of the law.' In determining such intent 'the court turns
first to the words themselves for the answer.'" " 'Words used in a statute
. . . should be given the meaning they bear in ordinary use.' " If the language
reasonably may be interpreted in more than one way, we may consult extrinsic aids to
determine the intent of the Legislature.
Courts frequently consult dictionaries to determine the usual meaning
of words. Black's Law Dictionary defines "voluntarily" as "Done by
design . . . . Intentionally and without coercion." (Black's Law Dict. (6th ed. 1990)
p. 1575.) The same source defines "voluntary" as "Proceeding from the free
and unrestrained will of the person. Produced in or by an act of choice. Resulting from
free choice, without compulsion or solicitation. The word, especially in statutes, often
implies knowledge of essential facts." (Ibid.) The Oxford English Dictionary
defines "voluntarily" as "of one's own free will or accord; without
compulsion, constraint, or undue influence by others; freely, willingly." (19 Oxford
English Dict. (2d ed. 1989) p. 753.)
To the extent it is unclear on the face
of the statute what was intended by the Legislature in employing the term
"voluntarily," we consult the history of the statute and consider its general
intent in order to determine the sense in which the Legislature used the term.
The debate that preceded the adoption of the Uniform Act indicated a
basic disagreement between those commissioners at the National Conference of Commissioners
on Uniform State Laws who placed the highest value on certainty in enforcement of
premarital agreements and the vocal minority of commissioners who urged that such
contracts routinely should be evaluated for substantive fairness at the time of
enforcement. Indeed, over sharp and repeated objection from commissioners of the
minority view, eventually it was settled that the party against whom enforcement of a
premarital agreement was sought only could raise the issue of unconscionability, that is,
the substantive unfairness of an agreement, if he or she also could demonstrate lack of
disclosure of assets, lack of waiver of disclosure, and lack of imputed knowledge
of assets. The language adopted was intended to enhance the enforceability of
premarital agreements and to convey the sense that an agreement voluntarily entered into
would be enforced without regard to the apparent unfairness of its terms, as long as the
objecting party knew or should have known of the other party's assets, or voluntarily had
waived disclosure. The commissioners, however, did not supply a definition of the
term "voluntarily," nor was there much discussion of the term.
We find an indication of the commissioners' understanding of the term
in their official comment to the enforcement provision of the Uniform Act, stating that
the conditions to enforcement "are comparable to concepts which are expressed in the
statutory and decisional law of many jurisdictions." In support of this
statement, the comment cites cases from various jurisdictions examining the voluntariness
of premarital agreements. These cases vary in their formal approach to the problem - some
engage in a presumption of undue influence and place the burden of proof on the party
seeking to enforce the agreement (see Lutgert v. Lutgert (Fla.Dist.Ct.App. 1976)
338 So. 2d 1111, 1113-1117), while some place the burden of proof on the person
challenging the agreement. ( In re Kaufmann's Estate (Pa. 1961) 404 Pa. 131, 171
A.2d 48, 50-51.) In the majority of these cases, however, the question is viewed as
one involving such ordinary contract defenses as fraud, undue influence, or duress, along
with some examination of the parties' knowledge of the rights being waived, or at least
knowledge of the intent of the agreement.
These cases demonstrate the commissioners' belief that a number of
factors are relevant to the issue of voluntariness. In considering defenses proffered
against enforcement of a premarital agreement, the court should consider whether the
evidence indicates coercion or lack of knowledge - just as would be suggested by the
dictionary definitions of voluntariness noted above. Specifically, the cases cited in the
comment to the enforcement provision of the Uniform Act direct consideration of the impact
upon the parties of such factors as the coercion that may arise from the proximity of
execution of the agreement to the wedding, or from surprise in the presentation of the
agreement; the presence or absence of independent counsel or of an opportunity to consult
independent counsel; inequality of bargaining power - in some cases indicated by the
relative age and sophistication of the parties; whether there was full disclosure of
assets; and the parties' understanding of the rights being waived under the agreement or
at least their awareness of the intent of the agreement.
The cases cited in the comment to the enforcement provision of the
Uniform Act indicate that the Commission considered that the voluntariness of a premarital
agreement may turn in part upon whether the agreement was entered into knowingly, in the
sense that the parties understood the terms or basic effect of the agreement. A
premarital agreement often contains at least some hallmarks of a waiver, in that it may
bind a person to forgo important rights secured by community property law - rights that in
the absence of an agreement would vest automatically upon marriage. We observe that
the factors relevant to the voluntariness of a waiver generally depend upon the statutory
scheme involved, and most frequently it is required that a waiver be entered into with
knowledge of the effect of the agreement. Similarly, the cases cited in the comment
to the enforcement section (section 6) of the Uniform Act indicate that the parties'
general understanding of the effect of the agreement constitutes a factor for the court to
consider in determining whether the parties entered into the agreement voluntarily.
The commissioners' debate over the problem of unconscionability throws
further light on their view of the voluntariness requirement, which, as noted, did not
receive much explicit discussion. Those taking the minority view noted with concern that
the proposed Uniform Act would enforce agreements that might be declared void as
unconscionable under the Uniform Commercial Code, because the Uniform Act precluded
consideration of the substantive fairness of the agreement unless the party challenging
the agreement also could prove lack of notice of the other party's assets and obligations.
Commissioners who valued substantive fairness over certainty of enforcement urged,
for example, that if a premarital agreement waiving property rights is entered into
between a pregnant teenager - who wishes to ensure the legitimacy of her child - and an
older man, the agreement should be subject to searching scrutiny for unconscionability;
those taking the majority position countered that the requirement that the contract be
entered into voluntarily provided adequate protection to the weaker party. In
addition, it was clear from their discussion that the commissioners anticipated that such
defenses as lack of capacity, fraud, duress, and undue influence would apply in
determining the voluntariness of the agreement.
In sum, it is clear from the cases cited in the comment to the
enforcement section of the Uniform Act, and from the record of the proceedings, of the
National Conference of the Commission on Uniform Acts that the Commission intended that
the party seeking to avoid a premarital agreement may prevail by establishing that the
agreement was involuntary, and that evidence of lack of capacity, duress, fraud, and undue
influence, as demonstrated by a number of factors uniquely probative of coercion in the
premarital context, would be relevant in establishing the involuntariness of the
agreement.
Not only did the commissioners intend that the above factors be
considered in determining whether a premarital agreement was entered into voluntarily, but
the same intention safely may be attributed to the California Legislature, because an
examination of the history of the enactment of Family Code section 1615 in California
indicates that the Legislature adopted the views of the Commission in all respects
relevant to the present discussion.
Decisions interpreting the enforcement provision of the Uniform Act in
other jurisdictions also refer to such factors as inequality of bargaining power, coercion
arising from circumstances peculiar to an imminent wedding, the absence of independent
counsel for one party, and the parties' knowledge of the purpose of the agreement.
The factors we have identified also are in most respects consistent with recent
non-Uniform Act cases in other jurisdictions that examine what often is termed the
procedural fairness of premarital agreements. These factors also are consistent with
the circumstances previously considered in this state, prior to California's adoption of
the Uniform Act, in connection with the issue of the voluntariness of a premarital
agreement. In In re Marriage of Dawley, supra, 17 Cal. 3d 342, for
example, we rejected the wife's claim that a premarital agreement waiving community
property rights had been obtained through undue influence, pointing out that in the
particular case the pressure to marry created by an unplanned pregnancy fell equally on
both the parties, that both parties were educated and employed, and that the party
challenging the agreement did not rely upon the other party's advice, but consulted her
own attorney.
We have considered the range of factors that may be relevant to
establish the involuntariness of a premarital agreement in order to consider whether the
Court of Appeal erred in according such great weight to one factor - the presence or
absence of independent counsel for each party. As we shall explain, we do not believe that
the terms or history of section 1615 of the Family Code support the conclusion of the
Court of Appeal majority that a premarital agreement should be subjected to strict
scrutiny for voluntariness in the absence of independent counsel for the less
sophisticated party or of an assertedly effective and knowing waiver of counsel comparable
to that occurring in the criminal law setting (and potentially also requiring an offer by
the represented party to pay for independent counsel for the other party).
In the official comment to the Uniform Act, the commissioners stated:
"Nothing in [the enforcement section] makes the absence of assistance of independent
legal counsel a condition for the unenforceability of a premarital agreement. However,
lack of that assistance may well be a factor in determining whether the conditions stated
in [the section] may have existed [citation]."
It is clear from the history of the Uniform Act that the commission
rejected the view that independent counsel was essential to the enforceability of
premarital agreements. Although the proposed Uniform Act initially contained a proviso
stating that premarital agreements were presumptively valid unless the party against whom
enforcement was sought was not represented by independent legal counsel or there was not
full disclosure, the commissioners eventually removed any reference to independent
counsel. A commissioner explained the action of the executive committee in removing
the proviso: "We feel that, certainly, that representation would be a factor
in determining whether the party acted voluntarily and knowingly. We do not believe,
however, that legal representation alone would be a desirable basis for enforcement."
(italics added.) An amendment was proposed to restore the omitted provision, but it was
rejected with the comment that "the legislatures of the states ought [not] to be
making the rights of people dependent upon whether or not they have lawyers," and the
observation that such a rule would not reduce litigation but instead would transfer the
litigation to malpractice actions.
Further, in the comment to the enforcement section of the Uniform Act,
the commissioners cited cases that discussed the presence or absence of independent
counsel, or at least a reasonable opportunity to consult independent counsel, as simply a factor
to consider in determining the voluntariness of the agreement. . . . This is
consistent with case law in California before its enactment of the Uniform Act.
As noted, few state courts have interpreted their own versions of the
Uniform Act, but one court that has considered under the act the relationship of
independent counsel to the question of voluntariness is the Supreme Court of North Dakota.
That court, reversing the grant of summary judgment in favor of heirs seeking enforcement
of a premarital agreement in which the parties waived their share in the other party's
estate, determined that issues of fact remained regarding the voluntariness of the wife's
endorsement of the premarital agreement. Specifically, the court noted a factual dispute
as to whether the wife adequately was advised to obtain independent counsel. It observed
that under North Dakota law, the parties were in a confidential relationship and,
observing that the state has an interest in every marriage contract, concluded: "We
agree with the view that lack of adequate legal advice to a prospective spouse to obtain
independent counsel is a significant factual factor in weighing the voluntariness of a
premarital agreement. [P] Indeed, adequate legal representation will often be the best
evidence that a spouse signed a premarital agreement knowledgeably and voluntarily."
(In re Estate of [***46] Lutz, supra,
563 N.W.2d at p. 98.) But even the North Dakota court acknowledged that no state has made
the presence of independent counsel a prerequisite to enforceability. ( Id. at p.
97.) The Rhode Island Supreme Court has determined that independent counsel is not
required for enforcement of premarital agreements under the Uniform Act. ( Penhallow
v. Penhallow, supra, 649 A.2d at p. 1022; see also Marsh v. Marsh, supra,
949 S.W.2d at pp. 740-741 [lack of independent counsel is not dispositive under the
Uniform Act; disadvantaged spouse had been advised to seek separate counsel]; Lebeck
v. Lebeck, supra, 881 P.2d at p. 734 [one factor in favor of enforcement was
review of agreement by independent counsel].)
It seems evident that the commissioners who enacted the Uniform Act
intended that the presence of independent counsel (or a reasonable opportunity to consult
counsel) should be merely one factor among several that a court should consider in
examining a challenge to the voluntariness of a premarital agreement. Moreover, the
overall purpose of the Uniform Act was to enhance the enforceability of
premarital agreements, a goal that would not be furthered if agreements were presumed to
be of doubtful voluntariness unless both parties were represented by independent counsel.
When we also consider the circumstance that in a majority of dissolution cases in
California at least one of the two parties apparently is not represented by counsel, it
seems unlikely that our Legislature intended that the voluntariness of a premarital
agreement should be subjected to strict scrutiny unless each party were represented by
independent counsel or an unrepresented party has entered into a formal knowing waiver of
counsel comparable to that required in the criminal law setting, as the Court of Appeal
holding apparently would require. We also note that in those instances in which the
Legislature has intended that the presence of independent counsel should be a critical
factor in the enforceability of an agreement, it has explicitly so provided. When, for
example, by an agreement entered into either before or during marriage, a person waives
his or her statutory inheritance rights as a surviving spouse, the waiver generally is
enforceable unless the surviving spouse proves that he or she did not obtain a fair
disclosure of the property involved or that "the surviving spouse was not represented
by independent legal counsel at the time of signing of the waiver." (Prob. Code, §
143, subd. (a)(2).) Again, such a requirement does not appear in the California Uniform
Act.
Finally, and perhaps most significantly, the rule created by the Court
of Appeal would have the effect of shifting the burden of proof on the question of
voluntariness to the party seeking enforcement of the premarital agreement, even though
the statute expressly places the burden upon the party challenging the voluntariness of
the agreement. Because the commissioners and our Legislature placed the burden of
proof of involuntariness upon the party challenging a premarital agreement, it
seems obvious that the party seeking enforcement should not be required to prove that the absence
of any factor tending to establish voluntariness did not render the agreement
involuntary - the inevitable result were we to adopt the strict scrutiny standard
suggested by the Court of Appeal.
We conclude that although the ability of the party challenging the
agreement to obtain independent counsel is an important factor in determining whether that
party entered into the agreement voluntarily, the Court of Appeal majority erred in
directing trial courts to subject premarital agreements to strict scrutiny where the less
sophisticated party does not have independent counsel and has not waived counsel according
to exacting waiver requirements.
C
Although we agree with Barry that the lack of independent counsel for
each party cannot alter the burden of proof that, by operation of statute, rests upon the
party challenging the validity of the premarital agreement, we also agree with the Court
of Appeal majority that considerations applicable to commercial contexts do not
necessarily govern the determination whether a premarital agreement was entered into
voluntarily.
Some of the commissioners debating the Uniform Act appeared to equate a
premarital agreement with a commercial contract, and one court has emphasized that both
parties contemplating marriage possess freedom of contract, which should not be
restricted except as it would be in the context of a commercial contract. ( Simeone v.
Simeone (Pa. 1990) 525 Pa. 392, 581 A.2d 162, 165-166 [not interpreting the Uniform
Act].) Even apart from the circumstance that there is no statutory requirement that
commercial contracts be entered into voluntarily as that term is used in Family Code
section 1615, we observe some significant distinctions between the two types of contracts.
A commercial contract most frequently constitutes a private regulatory agreement intended
to ensure the successful outcome of the business between the contracting parties - in
essence, to guide their relationship so that the object of the contract may be achieved.
Normally, the execution of the contract ushers in the applicability of the regulatory
scheme contemplated by the contract, and the endeavor that is the object of the contract.
As for a premarital agreement (or clause of such an agreement) providing solely for the
division of property upon marital dissolution, the parties generally enter into the
agreement anticipating that it never will be invoked, and the agreement, far from
regulating the relationship of the contracting parties and providing the method for
attaining their joint objectives, exists to provide for eventualities that will arise only
if the relationship founders, possibly in the distant future under greatly changed and
unforeseeable circumstances.
Furthermore, marriage itself is a highly regulated institution of
undisputed social value, and there are many limitations on the ability of persons to
contract with respect to it, or to vary its statutory terms, that have nothing to do with
maximizing the satisfaction of the parties or carrying out their intent. Such limitations
are inconsistent with the freedom-of-contract analysis espoused, for example, by the
Pennsylvania Supreme Court. (See Simeone v. Simeone, supra, 581 A.2d at
p. 165.) We refer to rules establishing a duty of mutual financial support during the
marriage (Fam. Code, § 720) and prohibiting agreements in derogation of the duty to
support a child of the marriage (Fam. Code, §§ 1612, subd. (b), 3900-3901; the
unenforceability of a promise to marry (Civ. Code, § 43.5, subd. (d); the circumstance
that a party may abandon the marriage unilaterally under this state's no-fault laws; and
the pervasive state involvement in the dissolution of marital status, the marriage
contract, and the arrangements to be made for the children of the marriage - even without
consideration of the circumstance that marriage normally lacks a predominantly commercial
object. We also observe that a premarital agreement to raise children in a particular
religion is not enforceable. We note, too, that there is authority - as conceded by
the commissioners who considered the Uniform Act - to the effect that a contract to pay a
spouse for personal services such as nursing cannot be enforced, despite the undoubted
economic value of the services. These limitations demonstrate further that freedom
of contract with respect to marital arrangements is tempered with statutory requirements
and case law expressing social policy with respect to marriage.
There also are obvious differences between the remedies that
realistically may be awarded with respect to commercial contracts and premarital
agreements. Although a party seeking rescission of a commercial contract, for example, may
be required to restore the status quo ante by restoring the consideration received, and a
party in breach may be required to pay damages, the status quo ante for spouses cannot be
restored to either party, nor are damages contemplated for breach of the marital contract.
In any event, the suggestion that commercial contracts are strictly enforced without
regard to the fairness or oppressiveness of the terms or the inequality of the
bargaining power of the parties is anachronistic and inaccurate, in that claims such as
duress, unconscionability, and undue influence turn upon the specific context in which the
contract is formed.
We also have explained generally that we believe the reference to
voluntariness in the Uniform Act was intended to convey an element of knowing waiver that
is not a consistent feature of commercial contract enforcement. Further, although the
Uniform Act contemplated that contract defenses should apply, in the sense that an
agreement should be free from fraud (including constructive fraud), duress, or undue
influence, it is clear from the debate of the commissioners who adopted the Uniform Act
and the cases cited in support of the enforcement provision of the Uniform Act that subtle
coercion that would not be considered in challenges to ordinary commercial contracts may
be considered in the context of the premarital agreement. (See, e.g., Lutgert v.
Lutgert, supra, 338 So. 2d at pp. 1113-1116 [agreement presented too close
to the wedding, with passage booked on an expensive cruise].) The obvious distinctions
between premarital agreements and ordinary commercial contracts lead us to conclude that
factual circumstances relating to contract defenses (see Civ. Code, § 1567) that would
not necessarily support the rescission of a commercial contract may suffice to render a
premarital agreement unenforceable. The question of voluntariness must be examined in the
unique context of the marital relationship.
On the other hand, we do not agree with Sun and the Court of Appeal
majority that a premarital agreement should be interpreted and enforced under the
same standards applicable to marital settlement agreements. First, although
persons, once they are married, are in a fiduciary relationship to one another (Fam. Code,
§ 721, subd. (b)), so that whenever the parties enter into an agreement in which one
party gains an advantage, the advantaged party bears the burden of demonstrating that the
agreement was not obtained through undue influence, a different burden applies under the
Uniform Act in the premarital setting. Even when the premarital agreement clearly
advantages one of the parties, the party challenging the agreement bears the burden of
demonstrating that the agreement was not entered into voluntarily. Further, under the
Uniform Act, even when there has been a failure of disclosure, the statute still places
the burden upon the party challenging the agreement to prove that the terms of the
agreement were unconscionable when executed, rather than placing the burden on the
advantaged party to demonstrate that the agreement was not unconscionable. Thus the terms
of the act itself do not support the Court of Appeal's conclusion that the Legislature
intended that premarital agreements should be interpreted in the same manner as agreements
entered into during marriage.
In particular, we believe that both the
Court of Appeal majority and Sun err to the extent they suggest that the Uniform Act or
its California analog established that persons who enter into premarital agreements must
be presumed to be in a confidential relationship, a status that would give rise to the
fiduciary duties between spouses expressly established by section 721 of the Family Code.
California law prior to the enactment of the Uniform Act was to the contrary, and we
discern nothing in the Uniform Act suggesting that its adoption in California was intended
to overrule our earlier decision.
The primary consequences of designating a relationship as fiduciary in
nature are that the parties owe a duty of full disclosure, and that a presumption arises
that a party who owes a fiduciary duty, and who secures a benefit through an agreement,
has done so through undue influence. For example, a transaction in which an attorney
gains an advantage over his or her client "is presumptively invalid, and the attorney
must show not only that it was fair, but that the client was fully informed of all facts
necessary to enable him to deal at arm's length." It long has been the rule that
"when an interspousal transaction advantages one spouse, 'the law, from
considerations of public policy, presumes such transactions to have been induced by undue
influence.' " (In re Marriage of Haines, supra, 33 Cal. App. 4th at
p. 293, quoting Brison v. Brison (1888) 75 Cal. 525, 529, 17 P. 689.)
California law also recognizes a lesser degree of confidential
relationship that may arise, for example, between family members and between
friends. In such cases "mere lack of independent advice is not
sufficient to raise a presumption of undue influence or of constructive fraud, even when
the consideration appears inadequate. But when to these factors is added some other such
as great age, weakness of mind, sickness or other incapacity, the presumption arises, and
the burden is on the other party to show that no oppression took place." (Ibid.,
italics in original; see also Tyler v. Children's Home Society (1994) 29 Cal.
App. 4th 511, 550.) n11
In the Dawley case, we found substantial evidence to support
an implied finding that an agreement between persons contemplating marriage was not the
result of undue influence. We stated: "Parties who are not yet married are not presumed
to share a confidential relationship [citations]; the record demonstrates that Betty did
not rely on the advice and integrity of James in entering into the antenuptial
agreement." (In re Marriage of Dawley, supra, 17 Cal. 3d at p. 355,
italics added; see also La Liberty v. La Liberty, supra, 127 Cal. App.
at p. 673 ["The inferences of fraud and undue influence which require the courts to
carefully examine a contract between a husband and wife, where one has gained an advantage
over the other, do not necessarily apply to prenuptial contracts . . . ."].)
Because the Uniform Act was intended to enhance the enforceability of
premarital agreements, because it expressly places the burden of proof upon the person
challenging the agreement, and finally because the California statute imposing fiduciary
duties in the family law setting applies only to spouses, we do not believe that the
commissioners or our Legislature contemplated that the voluntariness of a premarital
agreement would be examined in light of the strict fiduciary duties imposed on persons
such as lawyers, or imposed expressly by statute upon persons who are married. (See Fam.
Code, § 721.) Nor do we find any indication that the California Legislature
intended to overrule our Dawley decision. Although we certainly agree that
persons contemplating marriage morally owe each other a duty of fair dealing and obviously
are not embarking upon a purely commercial contract, we do not believe that these
circumstances permit us to interpret our statute as imposing a presumption of
undue influence or as requiring the kind of strict scrutiny that is conducted when a
lawyer or other fiduciary engages in selfdealing. On the contrary, it is evident that the
Uniform Act was intended to enhance the enforceability of premarital agreements,
a goal that would be undermined by presuming the existence of a confidential or fiduciary
relationship.
Finally, the reference by the Court of Appeal majority to the state's
interest in an equal division of marital property appears misplaced in the premarital
context, and its claim that the same policy interests apply to premarital agreements is
flawed. We have not been directed to relevant authority establishing that the Legislature
intended that premarital agreements should be examined for fairness or enforceability on
the same basis as marital settlement agreements. Instead, multiple differences in the
statutes regulating each type of agreement suggest that the Legislature contemplated
different standards for each type of agreement. Although community property law expresses
a strong state interest in the equal division of property obtained during a marriage, so
that any agreement in derogation of equal distribution should be subject to searching
scrutiny for fairness, the substantive fairness of a premarital agreement is not open to
examination unless the party objecting to enforcement meets the demands of Family Code
section 1615, subdivision (a)(2). As explained above, with respect to division of
property during marriage and upon dissolution of marriage, the Family Code provides
that the parties stand in a confidential, fiduciary relationship to one another (Fam.
Code, § 721, subd. (b)), but such a proviso does not appear in the California Uniform Act
regulating premarital agreements. Marital settlement agreements must be preceded by
rather elaborate disclosure of assets and liabilities, as well as income and expenses, and
strict rules govern the waiver of disclosure. Such detailed requirements do not
apply to premarital agreements. We are not persuaded that the policy of equal division of
assets at the time of dissolution is intended to apply to premarital agreements. In sum,
the Court of Appeal majority erred in suggesting that the voluntariness of a premarital
agreement should be assessed on the assumption that the parties were in a confidential
relationship and in pursuit of the policy favoring equal division of assets upon
dissolution.
D
The Court of Appeal majority, suggesting that counsel for the party who
proposed the premarital agreement has a duty to provide a warning to the other party if he
or she is unrepresented, stated: "Counsel, at a minimum, must explain to the
unrepresented party (1) that the attorney's responsibility is to pursue and protect only
the interests of his or her client; (2) that spousal interests are probably not identical
and are likely to conflict; (3) that the spouses' interests will change over time and the
attorney will not be concerned with providing for all the changed circumstances that could
possibly impact the unrepresented spouse; and (4) that signing this agreement will
eliminate or modify his or her statutory rights."
Both Sun and Barry contend that counsel for the represented party
cannot effectively or ethically explain to the unrepresented party what rights are being
waived under the agreement. Barry claims that such a warning would be unethical, because
it would be inconsistent with the attorney's duty to serve only his or her own client's
interest. Sun adds that such a rule would be improper because it would violate a rule of
professional conduct prohibiting counsel for one party from giving legal advice to an
opposing party who is unrepresented, in that such advice might cause the unrepresented
party to believe counsel is serving both parties.
We do not believe that the case before us presents an appropriate
occasion to delineate the duties that must guide an attorney in drafting a premarital
agreement. The issue before us is the enforceability of a premarital agreement, not the
extent, if any, of counsel's duty to an unrepresented party to the agreement, or the
imposition of discipline upon an attorney who does not comply with that duty. We do
observe, however, that it is consistent with an attorney's duty to further the interest of
his or her client for the attorney to take steps to ensure that the premarital agreement
will be enforceable. After discussing the matter with his or her client, an attorney may
convey such information to the other party as will assist in having the agreement upheld,
as long as he or she does not violate the duty of loyalty to the client or undertake to
represent both parties without an appropriate waiver of the conflict of interest. We also
observe that, obviously, the best assurance of enforceability is independent
representation for both parties.
III
Finally, we conclude that the trial court's determination that Sun
voluntarily entered into the premarital agreement in the present case is supported by
substantial evidence.
In determining the voluntariness of a premarital agreement, a reviewing
court should accept such factual determinations of the trial court as are supported by
substantial evidence. . . .
The Court of Appeal held the trial court erred in finding the parties'
agreement to be voluntary. The appellate court stressed the absence of counsel for Sun,
and, strictly examining the totality of the circumstances to determine voluntariness,
pointed to Sun's limited English language skills and lack of "legal or business
sophistication," stated that she "received no explanation of the legal
consequences to her ensuing from signing the contract" and "was told there would
be 'no marriage' if she did not immediately sign the agreement." It also referred to
typographical errors and omissions in the agreement, the imminence of the wedding and the
inconvenience and embarrassment of canceling it, and Sun's asserted lack of understanding
that she was waiving her statutory right to a community property interest in Barry's
earnings.
The trial court, however, determined that Sun entered into the
premarital contract voluntarily, without being subject to fraud, coercion, or undue
influence, and with full understanding of the terms and effect of the agreement. It
determined that the parties did not stand in a confidential relationship. The trial
court declared that although, pursuant to a pretrial stipulation, the burden of proof
rested upon Sun, even if the burden were to rest upon Barry, he had demonstrated by clear
and convincing evidence that the agreement had been entered into voluntarily.
The trial court made specific findings of fact regarding the factors we
have identified as relevant to the determination of voluntariness. These findings are
supported by substantial evidence and should have been accepted by the Court of Appeal
majority - as they were by the dissenting justice in the Court of Appeal.
The trial court determined that there had been no coercion. It declared
that Sun had not been subjected to any threats, that she had not been forced to sign the
agreement, and that she never expressed any reluctance to sign the agreement. It found
that the temporal proximity of the wedding to the signing of the agreement was not
coercive, because under the particular circumstances of the case, including the small
number of guests and the informality of the wedding arrangements, little embarrassment
would have followed from postponement of the wedding. It found that the presentation of
the agreement did not come as a surprise to Sun, noting that she was aware of Barry's
desire to "protect his present property and future earnings," and that she had
been aware for at least a week before the parties signed the formal premarital agreement
that one was planned.
These findings are supported by substantial evidence. Several
witnesses, including Sun herself, stated that she was not threatened. The witnesses were
unanimous in observing that Sun expressed no reluctance to sign the agreement, and they
observed in addition that she appeared calm, happy, and confident as she participated in
discussions of the agreement. Attorney Brown testified that Sun had indicated a desire at
their first meeting to enter into the agreement, and that during the discussion preceding
execution of the document, she stated that she understood the agreement. As the trial
court determined, although the wedding between Sun and Barry was planned for the day
following the signing of the agreement, the wedding was impromptu - the parties had not
secured a license or a place to be married, and the few family members and close friends
who were invited could have changed their plans without difficulty. (For example, guests
were not arriving from Sweden.) In view of these circumstances, the evidence supported the
inference, drawn by the trial court, that the coercive force of the normal desire to avoid
social embarrassment or humiliation was diminished or absent. Finally, Barry's testimony
that the parties early in their relationship had discussed their desire to keep separate
their property and earnings, in addition to the testimony of Barry and Brown that they had
met with Sun at least one week before the document was signed to discuss the need for an
agreement, and the evidence establishing that Sun understood and concurred in the
agreement, constituted substantial evidence to support the trial court's conclusion that
Sun was not subjected to the type of coercion that may arise from the surprise and
confusion caused by a last-minute presentation of a new plan to keep earnings and property
separate during marriage. In this connection, certain statements in the opinion rendered
by the Court of Appeal majority - that Sun was subjected to aggressive threats from
financial advisor Mel Wilcox that the temporal proximity of the wedding was coercive under
the circumstances of this case; and that defects in the text of the agreement indicate it
was prepared in a rush, came as a surprise when presented, and was impossible to
understand - are inconsistent with factual determinations made by the trial court that we
have determined are supported by substantial evidence.
With respect to the presence of independent counsel, although Sun
lacked legal counsel, the trial court determined that she had a reasonable opportunity to
obtain counsel. The trial court stated: "Respondent had sufficient awareness and
understanding of her right to, and need for, independent counsel. Respondent also
had an adequate and reasonable opportunity to obtain independent counsel prior to
execution of the Agreement. Respondent was advised at a meeting with Attorney Brown at
least one week prior to execution of the Agreement that she had the right to have an
attorney represent her and that Attorneys Brown and Megwa represented Petitioner, not
Respondent. On at least two occasions during the February 5, 1988, meeting, Respondent was
told that she could have separate counsel if she chose. Respondent declined. Respondent
was capable of understanding this admonition."
These factual findings are supported by substantial evidence. Brown
testified that at the meeting that preceded the February 5, 1988, meeting at which the
premarital agreement was executed, both Sun and Barry indicated they wished to enter into
a premarital agreement, and that Brown informed Sun that he represented Barry and that
therefore it might be in her best interest to have her own attorney. She declined. Brown
testified that at the February 5, 1988, session he explained the basics of community
property law, telling Sun that she would be disavowing the protection of community
property law by agreeing that income and acquisitions during marriage would be separate
property. He informed her of her right to separate counsel, and told both parties that the
agreement did not have to be signed that day. He again informed Sun that he represented
Barry. He testified that Sun stated that it was not necessary for her to have counsel, and
that she said she understood how the contract affected her interests under the community
property law. Attorney Megwa also testified that the attorneys discussed basic community
property law with Sun and told her that she had a right to have her own attorney and that
she did not have to sign the agreement. He testified that the subject of her obtaining her
own counsel came up at least three times during the February 5, 1988, meeting, and that
she stated explicitly that she did not wish to submit the agreement to separate counsel
for review. Megwa testified that he had cautioned Sun that she should not sign the
agreement (which she had reviewed herself and which then had been explained to her clause
by clause) unless it reflected her intentions, and that she said she understood the
agreement.
The Court of Appeal majority rejected the conclusion of the trial court
that Sun understood why she should consult separate counsel. This determination by the
appellate court contradicts the specific finding of the trial court that Sun understood
what was at stake. The trial court's finding is supported by the language of the agreement
itself, including the indication in paragraph 10 that the earnings and accumulations of
each spouse "during marriage" would be separate property, and additional
language stating that "we desire by this instrument to agree as to the treatment of
separate and community property after the marriage . . . ." (Italics added.)
The trial court's finding also was supported by evidence establishing that the attorneys
explained to Sun the rights she would have under community property law. In addition,
Barry testified that ever since the issue first came up at the beginning of the
relationship, Sun had agreed that the parties' earnings and acquisitions should be
separate. Further, the attorneys testified that during the February 5, 1988, meeting, Sun
stated her intent to keep marital property separate. These circumstances establish that
Sun did not forgo separate legal advice out of ignorance. Instead, she declined to invoke
her interests under the community property law because she agreed, for her own reasons,
that Barry's and her earnings and acquisitions after marriage should be separate property.
The Court of Appeal majority surmised that Sun did not have a
reasonable opportunity to consult counsel because a copy of the agreement was not provided
in advance of the February 5, 1988, meeting, and because Sun had insufficient funds to
retain counsel and was not informed that Barry would pay for independent counsel's
services. Again, this determination is contradicted by the conclusion of the trial court
that Sun had "an adequate and reasonable opportunity to obtain independent counsel
prior to execution of the Agreement." The trial court's determination was supported
by evidence that Sun had been told about the agreement and her potential need for counsel
at least a week before the document was executed and that she was told at the February 5,
1988, meeting that she could consult separate counsel and was not required to sign the
contract that day. Additionally, there was evidence supporting the inference that she
declined counsel because she understood and agreed with the terms of the agreement, and
not because she had insufficient funds to employ counsel. We agree with the dissenting
justice in the Court of Appeal that the majority's opinion departed from the appropriate
standard of review in this respect. As noted above, when asked to determine whether a
factual determination is supported by substantial evidence, the reviewing court should
draw all reasonable inferences in favor of the judgment below. The Court of
Appeal, by contrast, recounted evidence from which a number of inferences could be drawn,
and incorrectly chose to draw those inferences least in favor of the judgment
below.
With respect to the question of inequality of bargaining power, the
trial court determined that Sun was intelligent and, evidently not crediting her claim
that limited English made her unable to understand the import of the agreement or the
explanations offered by Barry's counsel, found that she was capable of understanding the
agreement and the explanations proffered by Barry's attorneys. There is ample evidence to
support the trial court's determination regarding Sun's English-language skills, in view
of the circumstances that for two years prior to marriage she had undertaken employment
and education in a trade that required such skills, and before meeting Barry had
maintained close personal relationships with persons speaking only English. In addition,
Barry and his witnesses all testified that Sun appeared to have no language problems at
the time she signed the agreement. Brown and Megwa testified that Sun indicated at
the February 5, 1988, meeting that she understood the agreement, and indeed the contract
contains a paragraph indicating that the parties attest that they "fully
understand[]" the terms of the agreement. The trial court's findings with respect to
the notice and opportunity Sun received to obtain independent counsel at least one week
before the agreement was executed, as well as evidence indicating Sun long had known and
agreed that the marriage would entail separation of earnings and acquisitions, tend to
undercut any inference that coercion arose from unequal bargaining power, including
Barry's somewhat greater sophistication and the involvement of two attorneys and a
financial advisor on Barry's behalf. In addition, although these persons represented
Barry, there is substantial evidence that they did not pressure Sun or even urge her to
sign the agreement. Further, although Barry had three years of college studies as well as
some experience in negotiating contracts, while Sun had only recently passed her high
school equivalency exam (in English) and had little commercial experience, there is
evidence that Barry did not understand the legal fine points of the agreement any more
than Sun did. In addition, the basic purport of the agreement - that the parties would
hold their earnings and accumulations during marriage as separate property, thereby giving
up the protection of marital property law - was a relatively simple concept that did not
require great legal sophistication to comprehend and that was, as the trial court found,
understood by Sun. Finally, we observe that the evidence supports the inference that Sun
was intrepid rather than a person whose will is easily overborne. She emigrated from her
homeland at a young age, found employment and friends in a new country using two languages
other than her native tongue, and in two years moved to yet another country, expressing
the desire to take up a career and declaring to Barry that she "didn't want his
money." These circumstances support the inference that any inequality in bargaining
power - arising primarily from the absence of independent counsel who could have advised
Sun not to sign the agreement or urged Barry to abandon the idea of keeping his earnings
separate - was not coercive.
With respect to full disclosure of the property involved, the trial
court found that Sun was aware of what separate property was held by Barry prior to the
marriage, and as the Court of Appeal noted, she failed to identify any property of which
she later became aware that was not on the list of property referred to by the parties
when they executed the contract. The trial court also determined that Sun was aware of
what was at stake - of what normally would be community property, namely the earnings and
acquisitions of the parties during marriage. Substantial evidence supports this
conclusion, including Sun's statements to Barry before marriage, the terms used in the
contract, and Brown and Megwa's testimony that they painstakingly explained this matter to
Sun.
With respect to the question of knowledge, as already explained it is
evident that the trial court was impressed with the extent of Sun's awareness. The trial
court did not credit her claim that before the premarital agreement was presented to her,
the parties never had discussed keeping their earnings and acquisitions separate during
marriage. Nor did the trial court credit her claim that the subject and content of the
agreement came as a surprise to her, or that she did not understand that absent the
agreement, she would be entitled to share in Barry's earnings and acquisitions during
marriage. The finding that she was sufficiently aware of her statutory rights and how the
agreement "adversely affected these rights" is supported by the testimony of
Barry, Brown, and Megwa that the attorneys explained these matters before Sun signed the
agreement. In addition, as noted, Barry testified that he and Sun agreed long before their
marriage that their earnings and acquisitions would remain separate.
The factors we have identified in assessing the voluntariness of the
agreement entered into between Barry and Sun are not rigidly separate considerations;
rather the presence of one factor may influence the weight to be given evidence considered
primarily under another factor. In this respect, the trial court's finding that Sun had
advance knowledge of the meaning and intent of the agreement and what was at stake for her
is influential, as we have seen, in considering some of the other factors.
In considering evidence that Sun responded to Barry's suggestion that
she secure independent counsel with the observation that she did not need counsel because
she had nothing, the Court of Appeal majority drew the inference least in support
of the judgment - namely, that this statement indicated Sun did not understand that she
did have property interests at stake in the form of the community property rights that
would accrue to her under applicable statutes, in the absence of a premarital agreement.
We believe that this was error on the part of the appellate court, because substantial
evidence supported the trial court's determination to the contrary. It is clear from the
testimony of Brown and Megwa that, even if Sun did not peruse the entire document herself,
they read it to her paragraph by paragraph, thoroughly explaining the matter to her.
Barry's testimony further established that he and Sun had agreed from the beginning of
their relationship that each would forgo any interest in the other's earnings and
acquisitions during marriage.
Family Code section 1615 places on the party seeking to avoid a
premarital agreement the burden of demonstrating that the agreement was involuntary. The
trial court determined that Sun did not carry her burden, and we believe that its factual
findings in support of this conclusion are supported by substantial evidence.
IV
The judgment of the Court of Appeal is reversed to the extent that it
reversed the judgment of the trial court on the issue of the voluntariness of the
premarital agreement. The matter is remanded to the Court of Appeal to determine whether,
consistently with this opinion, its remand to the trial court for reevaluation of the
termination of spousal support remains necessary, and to consider other issues it declared
moot in light of its determination that the agreement was not enforceable: namely, (1)
whether the trial court denied Sun due process by excluding evidence supporting her claim
that Barry should be estopped from enforcing the agreement, and (2) whether the trial
court erred in various respects in interpreting and enforcing the agreement.
We concur: Mosk, J., Kennard, J., Baxter, J., Werdegar, J., Chin, J., Brown, J.
[Editorial notes:
1. In October, 2001, a few days after Barry Bonds set a new major league record for home runs in a single season (73), a California appellate court ruled on some remaining issues in the case. It held that Barry Bonds had classified three homes that he had acquired during his marriage with Sun as community property and, to that extent, had nullified the effect of the premarital agreement. Accordingly, the court ruled that Sun was entitled to half of the proceeds of the sale of the three homes. One of the homes, a six-bedroom home in Atherton, California, was sold in 1996 for $2.5 million. Another home, a 9,900 square foot home in Riverside County, California, was sold for $2.1 million in 1996. A third home in Pennsylvania was sold for approximately $207,000. Barry's lawyer commented that the ruling was likely to be meaningless because the two sides were close to a confidential settlement that would resolve all issues in the dissolution proceeding. San Jose Mercury News, 1B, Oct. 10, 2001.
2. In 2001, in response to the decision, the California Legislature amended section 1615 of the Family Code. The amendment added the following language:
(c) 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 signing 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, 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.
(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.]