In re the Marriage of Bernard
In re the Marriage of Bernard
Opinion of the Court
¶1 This is an appeal from the first half of a bifurcated dissolution trial. Husband Tom Bernard appeals the trial court’s verdict that the prenuptial agreement and subsequent amendment are unenforceable.
I
¶2 Tom Bernard hired Gloria Whitehead in 1994. Gloria worked for Tom’s real estate development and management firm. In April 1999, they were engaged to be married. Both
¶3 When he proposed, Tom mentioned a prenuptial agreement. Gloria consented to sign an agreement, but Tom did not contact his attorney of 25 years right away because, “we weren’t about to get married, you didn’t need to negotiate a prenup’ unless the wedding is coming up.”
¶4 On June 20, 18 days before the wedding, Gloria received the first draft of the agreement, containing a number of blanks. With draft agreement in hand, Gloria stepped up her search for an attorney. During the same period, however, she was also preparing Tom’s financial statement, moving out of her home and into Tom’s, preparing for her daughter’s graduation and trip to Mexico, finalizing the wedding plans, and working at Bernard Development Company. After many inquiries, Gloria was referred to attorney Marshall Gehring by a co-worker.
¶5 Gehring first received a draft copy of the agreement from Keefe on July 5, three days before the wedding. Keefe’s cover letter to Gehring cautioned that Tom had not yet seen that version of the agreement. Gehring reviewed the document, and on the day before the wedding he wrote a letter to Gloria and advised her not to sign it. He cited five
¶6 Gloria signed both the prenuptial agreement and the side letter within 24 hours of the wedding. The side letter incorporated Gehring’s suggestions, but Gloria signed it without first consulting Gehring. She said she signed the agreement because she felt she had no alternative. To refuse would mean canceling the wedding, she said, because the agreement was a test of her love and loyalty. She did not feel that the agreement was fair. Tom conceded that the first agreement needed to be amended.
¶7 In August 2001, an amendment was executed, based on the terms contained in the side letter. Although both parties were involved in the drafting process, Gloria believed that no terms of the agreement were open for discussion other than those mentioned in Gehring’s letter. The amendment was a separate document, not a redraft of the original agreement. The side letter stated that if the parties failed to reach agreement on the amendment, the original agreement remained in full force and effect. Gloria signed the amendment because Gehring told her that having signed the prenuptial, she was stuck with it but at least the amendment was a “little bit better.”
¶[8 Gloria filed for divorce in early 2005. Tom demanded arbitration based on the original agreement’s arbitration clause. Gloria moved for summary judgment to have the entire prenuptial agreement, including the arbitration clause, declared unenforceable. The trial court declared the
II
¶9 The trial court’s refusal to order arbitration is essentially denial of a motion to compel arbitration, which is reviewed de novo.* *
Ill
f 10 Instead of trying the validity of the agreement as a whole, the trial court should have first determined whether the arbitration clause, viewed independently, was substantively or procedurally unconscionable. This rule comes from Pinkis v. Network Cinema Corp.
¶11 However, this case requires more than a rote application,of the Pinkis rule. No court has yet determined the effect of Pinkis in the context of a prenuptial agreement. We apply a different standard of enforceability to prenuptial agreements, the Foran
¶12 But because the parties do not raise this issue, it is inappropriate for us to decide it.
¶13 We therefore turn to the briefed issue: whether the entire agreement as amended was substantively and procedurally fair. The agreements must be evaluated under
¶14 Tom does not seriously dispute that the July 7, 2000 prenuptial agreement, standing alone, was both substantively and procedurally defective.
Substantive Fairness
¶15 The trial court correctly determined that the agreement as amended is not substantively fair and reasonable. It fails the first prong of the Foran test.
Procedural Fairness
¶16 The trial court erred when it concluded that adoption of the amendment was procedurally fair. Both the original agreement and the amendment failed the second prong of Foran. Neither document was drafted with the benefit of independent counsel, the bargaining positions of the parties were grossly imbalanced, and at no time did Gloria have full knowledge of her legal rights.
Independent Counsel
¶17 Although Gehring was “independent” in the sense that he was not hired by Tom, he did not fulfill the primary duty of independent counsel, “assisting the subservient party to negotiate an economically fair contract.”
Full Knowledge of Rights
f 18 Gloria also never had full knowledge of her rights, because Gehring did not advise her accurately. He did not explain community property or how the agreement altered Gloria’s rights under the law. Gehring’s assessment that the prenuptial agreement was substantively fair in the short term was flawed. Gehring said that any appeal from binding arbitration would be a trial de novo, apparently in the erroneous belief that the mandatory arbitration rules would apply to a private agreement to arbitrate. He also told Gloria that even if she agreed to arbitrate, she could avoid binding arbitration by applying to a court for relief.
¶19 Gehring told Gloria that after enough time had passed, the agreement would become irrelevant and could be ignored by a court. He testified that despite concerns with minor difficulties, Gloria was happy with the amendment. Gloria’s trial counsel suggested that it is “hard to be knowingly happy with something that you don’t understand.”
Relative Bargaining Positions
¶20 The parties’ bargaining positions were grossly imbalanced. Gloria believed that she had no bargaining power regarding the amendment. If Gloria refused to sign the amendment, she stood to lose her husband, her job of seven years, and her home. She had not arranged for financial aid for her children’s education because Tom had promised to assist them. Gloria had deposited half her annual salary into a community property account, half of
¶21 In addition, the amendment was nothing more than a codification of the provisions of the side letter, which Gloria signed the day of the wedding. It was not a renegotiation of the entire agreement. Gehring and Gloria both testified that the amendment could address only those items listed in the side letter. In fact, the final amendment adopted the side letter almost entirely. Any procedural analysis of the amendment must take the circumstances of the side letter into account. Procedurally, the side letter was adopted in the same manner as the original agreement: finalized and signed within 24 hours of the wedding.
¶22 The trial court erred in concluding that the amendment passed the second prong of the Foran test. The judge relied too much on the fact that Gloria was represented, however inadequately, by counsel, and the fact that the amendment was not rushed. The other important criteria discussed above — the duty of independent counsel, bargaining positions of the parties, and full knowledge of legal rights — are missing from the analysis.
¶23 The agreement and amendment were procedurally unfair under Foran. Also, the amendment was based almost completely on the side letter, which was as rushed and procedurally flawed as the prenuptial agreement itself. The trial court erred when it concluded that the amendment was procedurally sound.
¶24 Tom contends that the trial court erred in refusing to uphold the amendment based on its conclusion that the amendment was procedurally fair. But a trial court’s decision may be sustained on any theory within the
Attorney Fees
¶25 The trial court, under Stringfellow v. Stringfellow,
¶26 Affirmed.
Agid and Ellington, JJ., concur.
Reconsideration denied May 15, 2007.
Report of Proceedings (RP) (Sept. 8, 2005) at 29.
RP (Sept. 7, 2005) at 60.
Kruger Clinic Orthopaedics, LLC v. Regence BlueShield, 157 Wn.2d 290, 298, 138 P.3d. 936 (2006). Denial of Tom’s motion to stay pending arbitration was essentially denial of a motion to compel. The trial court somewhat erroneously characterized Tom’s motion as a motion for summary judgment. Either way, the standard of review is de novo.
In re Marriage of Foran, 67 Wn. App. 242, 251, 834 P.2d 1081 (1992).
9 Wn. App. 337, 345, 512 P.2d 751 (1973).
Pinkis, 9 Wn. App. at 345. Although the arbitration agreement in Pinkis fell under the federal arbitration laws, the same rule applies when Washington’s arbitration laws are at issue. See Keen v. IFG Leasing Co., 28 Wn. App. 167, 622 P.2d 861 (1980).
Pinkis, 9 Wn. App. at 345.
Pinkis, 9 Wn. App. at 345-46.
In re Marriage of Foran, 67 Wn. App. 242, 834 P.2d 1081 (1992).
RAP 2.5(a).
RAP 2.5(c)(1); State v. Barberio, 121 Wn.2d 48, 49-51, 846 P.2d 519 (1993).
Foran, 67 Wn. App. at 249.
Foran, 67 Wn. App. at 249.
Tom accuses Gloria of dragging her feet in obtaining an attorney. But Tbm, who requested the prenuptial in the first place, also dragged his feet by waiting until May to draft an agreement. He makes no argument and cites no support for the proposition that Gloria’s action or inaction excuses any other procedural unfairness.
In fact, it closely mirrors the unfair agreement at issue in Foran. Foran, 67 Wn. App. at 250.
Form, 67 Wn. App. at 250-51.
In re Marriage of Matson, 107 Wn.2d 479, 484, 730 P.2d 668 (1986).
Foran, 67 Wn. App. at 254 (emphasis omitted).
Tom claims that Gehring’s file contains proposed edits to the agreement that belie his sworn testimony. But the test here is whether substantial evidence supports Gloria’s position. Foran, 67 Wn. App. at 251.
Clerk’s Papers at 687.
Clerk’s Papers at 688.
A conclusion of law erroneously labeled as a finding of fact is nevertheless reviewed as a conclusion of law. City of Tacoma v. William Rogers Co., 148 Wn.2d 169, 192, 60 P.3d 79 (2002).
Foran, 67 Wn. App. at 248.
53 Wn.2d 359, 361, 333 P.2d 936 (1959) (trial court has authority to award “suit money on the appeal”), subsequent proceedings at 56 Wn.2d 957, 350 P.2d 1003 (1960).
State v. Dennison, 115 Wn.2d 609, 629, 801 P.2d 193 (1990).
Reference
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- In the Matter of the Marriage of Gloria Bernard, and Thomas Bernard
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