If Wife Foregoes an Investigation Into the Marital and Separate Property Assets and Accepts a Settlement Agreement, She May Not Later Avoid the Agreement Unless There has Been a Misrepresentation or Concealment of the Facts
Husband and Wife married on March 23, 1974. In June 1997, Wife and Husband each hired divorce lawyers.
By August 1997, the parties considered reconciliation with a post-marital agreement that would resolve present and future financial issues between them. The parties resumed living in together in September 1997 and signed a post-marital agreement in November 1997. In June 2003, Wife’s divorce lawyer filed a petition for divorce, in which she argued that the post-marital agreement was void and unenforceable.
The post-marital agreement included schedules Husband prepared listing and valuing community property assets and assets he claimed were his separate property, terms regarding income derived from various property, division of community assets, and Wife’s waiver of any rights to spousal support.
Wife’ signed the post-marital agreement on November 5, 1997, and Husband signed it on November 21, 1997. The parties initialed each page of the agreement, and Wife’s divorce lawyer signed as well.
The parties lived together for more than four years after signing the post-marital agreement. Wife’s divorce attorney filed for divorce in June 2003 and asserted the agreement was void and unenforceable. The parties agreed to a private judge to determine all disputes arising from the post-marital agreement, as well as child custody, support, and property rights.
Wife’s divorce lawyer sought to compel extensive discovery, which she had foregone when negotiating the post-marital agreement – to determine whether Husband made truthful or fraudulent disclosures. The divorce court declined and limited discovery to the circumstances surrounding the entry into the agreement itself, noting that if it looked as if Wife had been taken advantage of, she would be entitled to further discovery.
Wife’s divorce attorney argued, among other things, that Husband concealed a business interest and assets. On this issue, the divorce court found that Husband offered to make all information available to Wife until she executed the agreement. Husband and Wife met with their respective divorce lawyers all together to discuss the agreement draft. Husband fulfilled his duty to make a true and full disclosure of community and separate property assets, and that Wife knew of the business interest before she signed the agreement. Wife was represented by several divorce lawyers; including three certified family law specialists, a forensic accounting firm, and a private investigative firm. Wife obtained the advantage of financial security that she sought in the agreement. No presumption of undue influence arose by virtue of the parties’ executing the agreement.
The Appellate Court agreed with Husband’s divorce lawyer and ruled that the post-marital agreement did not give Husband an unfair advantage; both parties obtained mutually agreeable advantages. Even if a presumption of undue influence had arisen, substantial evidence supports the finding that Husband and Wife entered into the transaction freely and voluntarily, with full knowledge of the facts, and with a complete understanding of its legal effect. The Court referenced the rule that a spouse who foregoes an investigation and accepts a proposed settlement may not later avoid the agreement unless there has been a misrepresentation or concealment of the facts. Here, Wife and her divorce attorney had full access to all of Husband’s financial and property information throughout negotiations. The Court of Appeal agreed with Husband’s lawyer and held that the agreement was upheld on appeal as valid and enforceable.
In re Marriage of Burkle [Burkle II], (2006) 139 Cal. App. 4th 712