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In Re the Marriage of Nancy and Jeffrey Facter. v. Jeffrey Facter

January 14, 2013

IN RE THE MARRIAGE OF NANCY AND JEFFREY FACTER. NANCY FACTER, RESPONDENT,
v.
JEFFREY FACTER, APPELLANT.



Super. Ct. No. FL-110213) Trial Court: Marin County Superior Court Trial Judge: Hon. Verna A. Adams

The opinion of the court was delivered by: Dondero, J.

CERTIFIED FOR PUBLICATION

(Marin County

In 1994, Jeffrey and Nancy Facter*fn1 executed a premarital agreement providing, among other things, that none of the property acquired during the marriage would be deemed community property. Sixteen years later the parties separated and divorce proceedings were initiated. After contested proceedings, the trial court declared the premarital agreement invalid in its entirety. Jeffrey appeals, contending the trial court erred in nullifying the contract instead of severing any illegal terms and preserving the balance of the agreement. We agree and reverse.

FACTUAL BACKGROUND AND PROCEDURAL HISTORY

I. Background and Pretrial Proceedings

The parties entered into the premarital agreement (the Agreement) on November 7, 1994. The Agreement itself consists of four pages and has three sections entitled "Property Rights," "Child Support," and "Other Provisions." Attached to the Agreement are two exhibits setting forth Jeffrey's separate property (then totaling approximately $3 million), and his earnings of between $475,000 and $700,000 in each of the prior five years. Paragraph No. 1, under the Property Rights section, states that none of the property acquired during the marriage would be community property.*fn2 This section also purports to limit Jeffrey's postmarital financial obligations to Nancy. Paragraph No. 2 of the Agreement sets forth the property she is to receive from Jeffrey in the event of permanent separation or divorce. In it, he promised to give her $100,000, plus an additional $100,000 if the marriage lasted at least 15 years and he was a partner at his law firm for at least seven years.*fn3 She is also to receive: (1) "One half of any sum earned from the sale of the marital residence . . . after the return to [Jeffrey] of the downpayment [sic] that he made . . . and less any expenses, fees and taxes incurred in connection with that sale," (2) all of that home's furnishing, and (3) a Jaguar automobile. The Child Support section seeks to limit his future child support obligations. The parties married the day after they signed the Agreement. The marriage produced a son, who was born in March 1996.

On December 5, 2010, the parties separated.

On February 4, 2011, Jeffrey filed a response to Nancy's petition for dissolution of marriage. In the response, he requested a confirmation of the property rights as set forth in the Agreement.

On April 13, 2011, Nancy filed a motion for temporary support and fees. In a declaration accompanying the motion, she stated Jeffrey had told her he did not believe he had to pay her any spousal support.*fn4 He also said his obligation to pay child support was limited by the terms of the Agreement. She reported that during the entirety of their marriage she never worked outside the home, as Jeffrey's income allowed them "to live a life completely free of any financial stress or worry." She expressed concern that Jeffrey would rely on the Agreement in opposing her motion, and reserved the right to assert the unenforceability of the entire contract. Her attorney also filed a declaration, stating, in part, his view that the enforceability of the Agreement's property provisions were not presently before the court. He affirmed, however, that his client was not waiving her right to challenge the Agreement. He also claimed the Agreement's provisions regarding child support were invalid, and argued that the document did not contain a waiver of spousal support.

Also on April 13, 2011, Jeffrey filed a memorandum of points and authorities in response to Nancy's motion for temporary support and fees. He asserted the Agreement contains a waiver of spousal support that was "contemplated and mutually agreed to." He relied, in part, on language contained in Paragraph No. 6 in the Child Support section, which provides that nothing in his conditional commitment to continue to pay the mortgage, taxes, and insurance on the marital home "shall give rise to any other obligations to pay for the housing of [Nancy], spousal support, or additional sums for child support." (Italics added.) He also relied on a provision in Paragraph No. 3 of the Property Rights section, which states, in part, that the assets enumerated in Paragraph No. 2 (noted above) would "constitute [Nancy's] sole right to property acquired during the marriage and to support . . . ." (Emphasis in memorandum.)

On June 6, 2011, the trial court filed its temporary orders for spousal and child support, attorney fees, and costs. The issue of the validity of the Agreement was ordered bifurcated for early resolution.

On August 4, 2011, Jeffrey filed a "notice of limitation of claims at trial." In this pleading, he conceded the Agreement's provisions relating to child support were unenforceable.*fn5 Backing away from his earlier position, he also indicated that he would not assert the Agreement as a bar to spousal support or to payment of Nancy's attorney fees.*fn6 Finally, he stated he would not rely on a provision in Paragraph No. 2 as grounds for reimbursement of money spent on improvements made to the marital home.*fn7 He warned he would seek sanctions if Nancy were to attempt to litigate the issues he was conceding.

On August 17, 2011, Jeffrey filed his trial brief. He again conceded the Agreement was unenforceable with respect to child support and attorney fees. He also clarified that although he had drafted the Agreement with the intent to provide for a waiver of spousal support, he would not seek to enforce that waiver. His stated intention in making these concessions in his August 4, 2011 pleading was to avoid trial on the validity of the remainder of the Agreement. As that effort had proved unsuccessful, he focused his arguments on Paragraph No. 1, the provision stating that none of the property acquired during the marriage would be deemed community property. He further argued that the severability clause in the Agreement required the property provisions of the contract to be honored, notwithstanding the admittedly invalid provisions concerning child support and attorney fees.

On August 18, 2011, Jeffrey filed a motion in limine in which he claimed the issues of the spousal support waiver, child support, and attorney fees were "irrelevant" because they had been removed "from the case."

The trial on the bifurcated issue of the validity of the Agreement was heard on August 22 and 23, 2011.

II. The Trial

A. Nancy Facter

Nancy testified that she met Jeffrey in 1990. At that time, she had a part-time job at Nordstrom's and Jeffrey was working at a law firm. As their relationship progressed, Jeffrey gave her financial support including buying her a used car and giving her money to take a real estate licensing course. When she stopped working shortly before their marriage, he paid all the living expenses for her and for her two children from a prior marriage. He never asked to be reimbursed for any of these expenses. They decided to purchase a home together in the spring of 1994, prior to their marriage. Both of their names are on the title to the property.*fn8

Jeffrey wanted to have a child but Nancy told him she would not do so outside of marriage. Around the time they purchased their home, he told her he was afraid of marriage because he had worked hard all his life, had earned a lot of money, and wanted all that he had earned prior to marriage to be protected. He asked if she would sign a prenuptial agreement. She said she understood that he needed to protect his prior earnings, but told him she would not enter into a marriage unless the union was a "partnership" without separate finances. He assented and said he would prepare an agreement. When he gave her the draft of the Agreement he told her to take it to a family law attorney who would explain it to her, but advised her that absolutely no changes could be made to the document. He did not discuss any of its provisions with her.

Nancy showed the draft Agreement to an attorney in San Francisco whose name she could not recall, as well as an attorney in San Rafael named Charlotte Huggins. Huggins took a few minutes to review the document and told her the child support section was contrary to California law because any decisions regarding child support would be determined by the court. She advised Nancy that the Agreement did not contain a waiver of spousal support or attorney fees. She also noted that if the marital home was sold in the event of a divorce, Jeffrey would receive a refund of his down payment, as well as any expenses relating to the sale of the house. After that, they would split the profits from the sale. She also told Nancy any earnings or funds that were put into joint accounts would be considered joint funds. Nancy paid Huggins a fee and never saw her again. The entire meeting took less than 30 minutes.

Nancy and Jeffrey signed the Agreement just before their wedding. They never discussed the Agreement's terms.*fn9 She signed it because she believed it protected her interests in that if the marriage failed she would receive spousal support and half of the value of the marital home, and would have a joint interest in the money he had earned during marriage because she understood all his earnings would be held jointly. Had she known Jeffrey would claim all his earnings during marriage were his sole and separate property, she would not have signed the Agreement. She also would not have signed it if she had known he was going to claim it entitled him to reimbursement for the almost $2 million spent on remodeling the marital home.

Nancy testified the parties agreed their marriage would be "very traditional" in that she would be a stay-at-home mom, take care of the house, and support him in his career. Jeffrey told Nancy he made more than enough money to provide for the family and she would never have to worry about money again. During the marriage, he controlled their finances. Whenever she asked him if he was keeping any of his earnings as separate property he would deny doing so. He always said his money was "our money." They also had several joint accounts.

On cross-examination, Nancy admitted she read the entire Agreement before she signed it. With respect to her understanding of Paragraph No. 1, she testified she was advised that any earnings held jointly would be owned jointly. Since the parties had agreed Jeffrey's income would be held jointly during marriage, she understood that she would have a joint interest in all of his earnings. She acknowledged they did not have a written agreement that he would deposit all of his earnings into joint accounts. She testified her attorneys did not tell her the Agreement's integration clause would make any oral promises unenforceable.*fn10 She agreed no undue influence was placed ...


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