Opinion
B281051 (Cons. w B284981)
03-03-2022
IN RE the MARRIAGE OF Kim and Mark S. ZUCKER. Kim Zucker, Appellant, v. Mark S. Zucker, Respondent.
Law Offices of Robert M. Cohen, James L. Keane, Los Angeles, Yvonne T. Simon and Robert M. Cohen, Beverly Hills, for Appellant. Kibre & Horwitz, Joseph Kibre, Beverly Hills; Greines, Martin, Stein & Richland and Marc J. Poster, Los Angeles, for Respondent.
Certified for Partial Publication.
Pursuant to California Rules of Court, rules 976(b) and 976.1, this opinion is certified for publication with the exception of parts PHASE I (VALIDITY OF THE PMA) page 3 through page 19, and PHASE II SUPPORT ISSUES, page 37 through page 72.
Law Offices of Robert M. Cohen, James L. Keane, Los Angeles, Yvonne T. Simon and Robert M. Cohen, Beverly Hills, for Appellant.
Kibre & Horwitz, Joseph Kibre, Beverly Hills; Greines, Martin, Stein & Richland and Marc J. Poster, Los Angeles, for Respondent.
WILLHITE, Acting P. J. In this contested marital dissolution proceeding, the trial court held a bifurcated, two-phase trial which considered (1) the validity of Kim and Mark Zucker's 1994 premarital agreement (PMA) limiting community property rights and spousal support (phase 1), and (2) determining the awards of child support, spousal support, and attorney fees (phase 2). The case was intensively litigated; the two phases of the trial consumed 57 days. Both Mark and Kim appeal and cross-appeal. They raise a myriad of issues challenging many aspects of the trial court's rulings.
The two separate appeals (each with cross-appeals) were consolidated March 16, 2018 under case No. B281051. We refer to Mark and Kim by first names for ease of reference, and no disrespect is intended.
In Kim's appeal, Kim challenges aspects of the trial court's rulings upholding the community property provisions of the PMA and the court's awards of spousal and child support. In Mark's appeal, Mark challenges the trial court's finding that the provision in the PMA limiting spousal support was unconscionable at the time of enforcement. In their respective cross-appeals, Mark and Kim each challenge aspects of the trial court's attorney fee award.
We reject all challenges to the trial court's rulings, except: (1) we correct an arithmetical error in the trial court's attorney fee award, and modify the order to direct Mark to pay Kim $870,000; and, (2) vacate the trial court's ruling on Kim's request for order of March 14, 2014 seeking to modify the temporary spousal support order, and remand for the trial court to determine the amount of pendente lite spousal support from the date of Kim's request. In all other respects, we affirm.
In the published portion of this opinion, we hold that in considering whether a spousal support agreement executed between 1986 and 2002 is enforceable, the court is not limited to a determination under Family Code section 1615, subdivision (a)(2) whether the agreement was unconscionable when executed. Rather, the court retains the power under Family Code section 1612, subdivision (a)(7) to shape public policy regarding premarital spousal support agreements to the extent not inconsistent with Legislative declarations of such policy, and to declare that a premarital spousal support agreement is unenforceable as against public policy solely because it is unconscionable at the time of enforcement.
See footnote *, ante .
III. MARK'S APPEAL IN PHASE I
Mark contends that the trial court erred by invaliding the spousal support provision of the PMA, which was entered in 1994, as unconscionable based on circumstances existing at the time of enforcement. He raises an issue on which California law is unsettled, an uncertainty created by the timing and intent of an amendment to the Family Code effective 2002 (the addition of subd. (c) to § 1612 ), and the decisions in In re Marriage of Pendleton & Fireman (2000) 24 Cal.4th 39, 99 Cal.Rptr.2d 278, 5 P.3d 839 ( Pendleton ), In re Marriage of Howell (2011) 195 Cal.App.4th 1062, 126 Cal.Rptr.3d 539 ( Howell ), and In re Marriage of Facter (2013) 212 Cal.App.4th 967, 152 Cal.Rptr.3d 79 ( Facter ). Indeed, as noted by a leading treatise, the state of the law is "unclear if a trial court is required to consider whether a spousal support limitation or waiver in a premarital agreement executed between 1986 [the effective date of California's adoption of the Uniform Premarital Agreement Act (UPAA)] and 2002 is unconscionable at the time of enforcement, the time of execution, or both." (Hogoboom, et. al. Cal. Practice Guide: Family Law (Rutter Group 2021), p. 9-78, § 9:177.4; see also In re Marriage of Miotke (2019) 35 Cal.App.5th 849, 860–861, 248 Cal.Rptr.3d 1 ( Miotke ) [noting uncertainty in the law].)
Attempting to provide some clarity, we hold, for reasons explained below, that in considering whether a spousal support agreement executed between 1986 and 2002 is enforceable, the court is not limited to a determination under section 1615, subdivision (a)(2) whether the agreement was unconscionable when executed. Rather, the court retains the power under section 1612, subdivision (a)(7) (identified in Pendleton, supra, 24 Cal.4th at pp. 48–49, 99 Cal.Rptr.2d 278, 5 P.3d 839 ) to shape public policy regarding premarital spousal support agreements to the extent not inconsistent with Legislative declarations of such policy, and to declare (as suggested though left open in Pendleton , id. at pp. 53–54, 99 Cal.Rptr.2d 278, 5 P.3d 839 ) that a premarital spousal support agreement is unenforceable as against public policy solely because it is unconscionable at the time of enforcement.
A. Provisions of the PMA Relating to Spousal Support
Article 13 of the PMA governed spousal support. In Article 13, the parties affirmed that their counsel believed contemporaneous and existing California public policy did not permit premarital agreements limiting spousal support. Nonetheless, "the parties intend and desire to have this Agreement resolve their respective rights and obligations to the fullest extent permissible regarding the support of [Kim] in the event the marriage of the parties terminates by reason of a permanent separation, dissolution or divorce."
Further, the parties agreed that if California law did not recognize limitations on spousal support, Article 13 would be of no force or effect. However, "the parties further agree that if prenuptial agreements regarding spousal support of the nature set forth herein become enforceable under California law, either by reason of a statutory change or by reason of a judicial determination, ... then the provisions of this Article 13 shall fully apply."
With respect to spousal support, Kim and Mark mutually relinquished "to the full extent permitted by law any and all right, entitlement or award of spousal support." The PMA set forth that Mark agreed to pay Kim temporary and permanent spousal support according to a schedule, based on the number of years of their marriage. If the marriage was less than two years, Mark would pay no spousal support, but payments thereafter would increase as the marriage lengthened, up to $6,000 a month after 11 years. These payments would be adjusted to reflect changes in the CPI. Finally, the parties agreed that "no court shall have or retain any power or jurisdiction to extend, increase, decrease or otherwise modify the payments of Spousal Support provided in this Article 13 or to require that Mark pay any other amounts as Spousal Support or alimony, regardless of changed circumstances or changes in the law existing at any time." The spousal support provisions were agreed to be severable from the rest of the PMA.
At trial, Kim argued Mark's spousal support obligation of $6,000 per month with a one-time payout of $10,000 was unconscionable at the time of enforcement and therefore unenforceable. Relying on Facter, supra, 212 Cal.App.4th 967, 152 Cal.Rptr.3d 79, Kim's brief highlighted the disparities in the parties’ income. Mark had a $32 million net worth, $4 to $5 million yearly income (with a monthly net of between $376,000 to $682,453) while Kim had stayed at home and raised the parties’ children during the marriage and had no current employment.
B. Trial Court Ruling
On January 30, 2014, the court issued its statement of tentative decision. The court recognized that section 1612, subdivision (c) regarding spousal support provisions did not retroactively apply to the spousal support provision of the PMA. However, relying on Pendleton, supra, 24 Cal.4th 39, 99 Cal.Rptr.2d 278, 5 P.3d 839 and Facter, supra , 212 Cal.App.4th 967, 152 Cal.Rptr.3d 79, the court concluded that it had the authority to determine whether the PMA was unconscionable at the time of enforcement.
The statement of decision was supplemented on March 11, 2014, and April 21, 2014, to respond to the parties’ comments, but did not change the court's ruling on unconscionability.
That section provides: "(c) Any provision in a premarital agreement regarding spousal support, including, but not limited to, a waiver of it, is not enforceable if the party against whom enforcement of the spousal support provision is sought was not represented by independent counsel at the time the agreement containing the provision was signed, or if the provision regarding spousal support is unconscionable at the time of enforcement. An otherwise unenforceable provision in a premarital agreement regarding spousal support may not become enforceable solely because the party against whom enforcement is sought was represented by independent counsel." (§ 1612, subd. (c), italics added.)
Examining the circumstances present in Facter (in which the Court of Appeal found a premarital waiver of spousal support unconscionable at the time of enforcement), the trial court concluded that "[t]he facts of this case are ... even more extreme for Kim." In Facter, the wife had a high-school education and was unemployed throughout the 16-year marriage, while the husband had an annual income of $1 million and a net worth of $10 million. Here, Kim's forensic accountant had opined that Kim would need $86,000 per month to meet the marital lifestyle based on an income-available approach, while an expenditure approach would yield $37,000 per month. The trial court adopted the expenditure approach because there was no community property per the PMA. Kim, like the wife in Facter, was unemployed, similarly educated, and spent the marriage raising the couple's six children. The trial court found the amount Kim would receive under the PMA—"merely 10% of the probable order without the agreement"—was unconscionable.
C. Discussion
Mark contends that the trial court did not have the authority to find the spousal support provision of the PMA unenforceable as being unconscionable at the time of enforcement. We disagree. Our explanation of our decision requires an examination of the state of the law when the parties entered the PMA and subsequent developments.
1. The Uniform Premarital Agreement Act
Effective 1986, the Legislature adopted the Uniform Premarital Agreement Act (UPAA), now Family Code section 1600 et seq. In 1994, when the parties in the present case entered the PMA, section 1612, subdivision (a) provided, as it does now, that "[p]arties to a premarital agreement may contract with respect to all of the following." (Stats. 1992, ch. 162, § 10.) It listed various specific topics and concluded with "(a)(7) Any other matter, including their personal rights and obligations, not in violation of public policy or a statute imposing a criminal penalty." (Ibid., italics added.)
The UPAA was originally enacted as part of the Civil Code, but in 1994 was reenacted as part of the Family Code.
In its entirety section 1612 provided at the time of the PMA: "(a) Parties to a premarital agreement may contract with respect to all of the following: [¶] (1) The rights and obligations of each of the parties in any of the property of either or both of them whenever and wherever acquired or located. [¶] (2) The right to buy, sell, use, transfer, exchange, abandon, lease, consume, expend, assign, create a security interest in, mortgage, encumber, dispose of, or otherwise manage and control property. [¶] (3) The disposition of property upon separation, marital dissolution, death, or the occurrence or nonoccurrence of any other event. [¶] (4) The making of a will, trust, or other arrangement to carry out the provisions of the agreement. [¶] (5) The ownership rights in and disposition of the death benefit from a life insurance policy. [¶] (6) The choice of law governing the construction of the agreement. [¶] (7) Any other matter, including their personal rights and obligations, not in violation of public policy or a statute imposing a criminal penalty. [¶] (b) The right of a child to support may not be adversely affected by a premarital agreement." (Stats. 1992, ch. 162, § 10, p. 464, operative Jan. 1, 1994.)
With respect to the unenforceability of premarital agreements on the ground of unconscionability, section 1615, subdivision (a) provided in relevant part that "[a] premarital agreement is not enforceable if the party against whom enforcement is sought proves either of the following: [¶] ... [¶] (2) The agreement was unconscionable when it was executed and, before execution of the agreement, all of [certain listed conditions] .. applied to that party." (Stats. 1992, ch. 162, § 10, italics added.)
2. Pendleton, supra, 24 Cal.4th 39
When the UPAA was enacted, California common law disfavored premarital agreements generally (including agreements waiving or limiting spousal support) as being in violation of public policy, namely, as encouraging divorce. (See Dawley, supra, 17 Cal.3d at p. 352, 131 Cal.Rptr. 3, 551 P.2d 323 ["an antenuptial agreement violates the state policy favoring marriage only insofar as its terms encourage or promote dissolution"].) In 2000, in Pendleton, supra, 24 Cal.4th 39, 99 Cal.Rptr.2d 278, 5 P.3d 839, the California Supreme Court was "asked to decide whether a premarital agreement in which the parties to be married waive the right to spousal support in case of dissolution is enforceable." ( Id. at p. 41, 99 Cal.Rptr.2d 278, 5 P.3d 839.) As noted, section 1612, subdivision (a)(7) then (as now) permitted parties to enter premarital agreements limiting their marital rights if "not in violation of public policy." Observing that "[i]t is not necessary to decide in this case whether all such agreements are enforceable regardless of the circumstances of the parties at the time enforcement is sought," the court "conclude[d] that no policy of this state makes an agreement like that entered into by the parties to this action per se unenforceable." ( Ibid. ) The court's holding rested on two primary lines of analysis: (1) an examination of public policy as defined by the courts regarding premarital spousal support waivers, and (2) whether the UPAA deprived the court of the power to shape that policy after its enactment.
As to the first line of inquiry, the court charted the evolution of its prior decisions regarding the unenforceability of premarital agreements and concluded that when "the California version of the Uniform Act was adopted [in 1985, effective 1986], this court had held that agreements waiving the right to spousal support were unenforceable as being against public policy if the waiver would promote or encourage dissolution." ( Pendleton, supra , 24 Cal.4th at p. 46, 99 Cal.Rptr.2d 278, 5 P.3d 839.) Examining changes in "[b]oth public attitude and contemporary official policy," the court further concluded that "changes in the law governing the spousal relation warrant[ed] reexamination of the assumptions and policy underlying the refusal to enforce waivers of spousal support." ( Id. at pp. 48, 52, 99 Cal.Rptr.2d 278, 5 P.3d 839.)
However, before undertaking that reexamination, the court had to consider whether the UPAA had deprived it of the power to reexamine that policy. In adopting the Uniform Act, the Legislature deleted a Uniform provision (subdivision (a)(4) of section 3) which would have expressly permitted the parties to modify or eliminate spousal support, and the sparse legislative history (two subcommittee reports) was ambiguous as to the purpose of the omission. Further, one of the reports erroneously described existing case law as prohibiting premarital waivers of spousal support, and indicated that the omission of the Uniform provision in the enacted legislation would keep that prohibition in place. (See Pendleton, supra , 24 Cal.4th at p. 44, 99 Cal.Rptr.2d 278, 5 P.3d 839 [discussion of legislative history].) Thus, the court considered two possibilities for the omission: "[t]he Legislature may have intended to deny couples the right to enter into any premarital agreement regarding spousal support by adopting what the committee report erroneously described as the existing case law under which premarital waivers would be per se unenforceable. Alternatively, the Legislature may have concluded that policy governing spousal support agreements, having been established by the court in the past, should continue to evolve in the court." ( Id. at p. 47, 99 Cal.Rptr.2d 278, 5 P.3d 839.)
The court resolved this question by preserving the prerogative of the courts to shape public policy regarding the enforceability of premarital agreements on spousal support. The court reasoned: "The most reasonable understanding of the Legislature's purpose when it omitted subdivision (a)(4) is that it was satisfied with the evolution of the common law governing premarital waivers of spousal support and intended to permit that evolution to continue..... We agree with the Court of Appeal, therefore, that the court is free to reexamine the assumptions that underlie the common law rule that premarital spousal support waivers promote dissolution and for that reason contravene public policy." ( Pendleton , supra, 24 Cal.4th at pp. 48–49, 99 Cal.Rptr.2d 278, 5 P.3d 839.)
Having determined that the UPAA did not deprive it of the power to shape public policy regarding premarital spousal support waivers, and having concluded that reexamination of that policy was warranted, the court reached its ultimate holding: "We agree with the Court of Appeal, therefore, that, when entered into voluntarily by parties who are aware of the effect of the agreement, a premarital waiver of spousal support does not offend contemporary public policy. Such agreements are, therefore, permitted under section 1612, subdivision (a)(7), which authorizes the parties to contract in a premarital agreement regarding ‘[a]ny other matter, including their personal rights and obligations, not in violation of public policy or a statute imposing a criminal penalty.’ [¶] We need not decide here whether circumstances existing at the time enforcement of a waiver of spousal support is sought might make enforcement unjust. It is enough to conclude here that no public policy is violated by permitting enforcement of a waiver of spousal support executed by intelligent, well-educated persons, each of whom appears to be self-sufficient in property and earning ability, and both of whom have the advice of counsel regarding their rights and obligations as marital partners at the time they execute the waiver. Such a waiver does not violate public policy and is not per se unenforceable as the trial court believed." ( Pendleton , supra, 24 Cal.4th at pp. 53–54, 99 Cal.Rptr.2d 278, 5 P.3d 839, fn. omitted.)
In a footnote to its statement that it "need not decide whether circumstances existing at the time enforcement of a waiver of spousal support is sought might make enforcement unjust," the court noted: "The Legislature may, of course, limit the right to enter into premarital waivers of spousal support and/or specify the circumstances in which enforcement should be denied." ( Pendleton, supra , 24 Cal. 4th at p. 53, 99 Cal.Rptr.2d 278, 5 P.3d 839.)
For our analysis here, three points of the court's decision in Pendleton stand out: (1) the preservation of the court's authority under section 1612, subdivision (a)(7) to determine the contours of public policy regarding the enforceability of spousal support agreements; (2) the suggestion that changed "circumstances existing at the time enforcement of a waiver of spousal support is sought might make enforcement unjust"; and (3) the observation that the Legislature could "specify the circumstances in which enforcement should be denied." ( Pendleton, supra , 24 Cal.4th at p. 53, fn. 12, 99 Cal.Rptr.2d 278, 5 P.3d 839.)
3. The Enactment of Senate Bill No. 78 (2001–2002 Reg. Sess. )
Effective 2002, in response to Pendleton , the Legislature (after incorporating various amendments to the original bill) passed Senate Bill No. 78 (2001–2002 Reg. Sess.); "SB 78"), which amended section 1612, as well as section 1615. As enacted, SB 78 created a new subdivision (c) of section 1612, which remains the same today. It specifically applies to premarital spousal support agreements, as follows: "(c) Any provision in a premarital agreement regarding spousal support, including, but not limited to, a waiver of it, is not enforceable if the party against whom enforcement of the spousal support provision is sought was not represented by independent counsel at the time the agreement containing the provision was signed, or if the provision regarding spousal support is unconscionable at the time of enforcement . An otherwise unenforceable provision in a premarital agreement regarding spousal support may not become enforceable solely because the party against whom enforcement is sought was represented by independent counsel." (Stats. 2001, ch. 286, § 1 (SB 78), italics added.)
SB 78 did not change section 1612, subdivision (a)(7), under which premarital parties may contract with respect to "[a]ny other matter, including their personal rights and obligations, not in violation of public policy." As noted, in Pendleton the Supreme Court had invoked this provision in preserving the court's authority to define public policy regarding premarital spousal support agreements. In tandem with adding subdivision (c) to section 1612, SB 78 also made amendments to section 1615, the provision that governs the unenforceability of premarital agreements generally. With respect to the unenforceability of a premarital agreement under section 1615, subdivision (a)(2) because it was "unconscionable when it was executed," the amendment made only one change not pertinent to our discussion. (Stats. 2001, ch. 286, § 2.)
The Legislature added that the party against whom enforcement was sought must have been provided a "fair, reasonable, and full disclosure" of the other party's property or financial duties, whereas the prior version simply required a "fair disclosure." (Stats. 2001, ch. 286, § 2, italics added.)
4. Howell, supra, 195 Cal.App.4th 1062
In Howell, supra, 195 Cal.App.4th 1062, 126 Cal.Rptr.3d 539, the Court of Appeal considered whether section 1612, subdivision (c) is retroactive. In Howell , the trial court invalidated a 1999 premarital spousal support waiver by retroactively applying the provision of subdivision (c) of section 1612 making such an agreement unenforceable "if the party against whom enforcement of the spousal support provision is sought was not represented by independent counsel at the time the agreement containing the provision was signed." On appeal, the court held that the trial court had erred in retroactively applying section 1612, subdivision (c).
The court concluded that SB 78 changed existing law in response to Pendleton by "limit[ing] the right of parties to enter into premarital waivers (e.g., the independent counsel requirement) and specif[ying] the circumstances in which enforcement could be denied (e.g., the spousal support waiver is unconscionable at the time of enforcement)." ( Howell, supra , 195 Cal.App.4th at p. 1072, 126 Cal.Rptr.3d 539.) Noting that the legislation contained no express retroactivity provision, the court referred to the rule that " ‘in the absence of an express retroactivity provision, a statute will not be applied retroactively unless it is very clear from extrinsic sources that the Legislature ... must have intended a retroactive application.’ [Citations.]" ( Id . at p. 1074, 126 Cal.Rptr.3d 539.)
Examining the legislative history, the court determined that the Legislature did not intend the 2002 amendment to apply retroactively. After charting the proposed amendments to SB 78 made in May 2001 (adding to proposed section 1612, subdivision (c) an independent counsel requirement) and June 2001 (adding unconscionability at the time of enforcement as a ground for nonenforcement), the court looked to a Senate Judiciary Committee analysis of the original version of the bill (prior to the May and June 2001 amendments) to discern the Legislature's intent in passing the final bill. ( Howell, supra , 195 Cal.App.4th at pp. 1074–1076, 126 Cal.Rptr.3d 539.) The Senate Judiciary report "noted that those opposed to the bill were concerned ‘over the possible retroactivity of a prohibition on spousal support waivers ....’ (Sen. Com. on Judiciary, Analysis of Sen. Bill No. 78 (2001–2002 Reg. Sess.) as introduced Jan. 11, 2001, p. 10.) The Senate Judiciary Committee report went on to note that Senate Bill No. 78 ‘contains no provision for retroactive application,’ and cited the general rule that ‘laws operate prospectively unless retroactive application is provided for specifically, or unless the new legislation clarifies existing law.’ ( Id . at p. 11 [99 Cal.Rptr.2d 252, 5 P.3d 815].)" ( Id . at p. 1075, 126 Cal.Rptr.3d 539.) Based on this comment, and in the absence of any provision for retroactive application, the court concluded that "the legislative history of Senate Bill No. 78 supports the conclusion that the Legislature did not intend subdivision (c) of section 1612 to apply retroactively." ( Howell, supra , 195 Cal.App.4th at p. 1075, 126 Cal.Rptr.3d 539.)
Because section 1612, subdivision (c) did not apply retroactively, the court set aside the trial court's invalidation of the spousal support agreement based on the absence of independent counsel. The court then analyzed the remainder of the trial court's decision and concluded substantial evidence supported the trial court's findings that the agreement was nether involuntarily entered nor unconscionable when executed. ( Howell, supra , 195 Cal.App.4th at pp. 1078–1080, 126 Cal.Rptr.3d 539.) In a footnote, the court noted: "After the 2002 amendment to section 1612, a spousal support provision in a premarital agreement—including the waiver of such support—is deemed unenforceable if the provision ‘is unconscionable at the time of enforcement .’ ( § 1612, subd. (c), italics added.) However, under former section 1615, subdivision (a)(2), which we apply here, unconscionability is determined at the time the premarital agreement ‘was executed .’ " ( Id . at p. 1080, fn. 12, 126 Cal.Rptr.3d 539, italics added.)
5. Facter, supra, 212 Cal.App.4th 967
In Facter, supra, 212 Cal.App.4th 967, 152 Cal.Rptr.3d 79, the court agreed with Howell that section 1612, subdivision (c) is not retroactive. But it appeared to disagree (on grounds not entirely clear) with Howell's assertion (195 Cal.App.4th at p. 1081, fn. 12, 126 Cal.Rptr.3d 539 ) that when examining a pre-2002 premarital spousal support agreement for unconscionability, a court is limited to an examination under section 1615, subdivision (a)(2) of the circumstances existing when the agreement was executed.
In Facter , the trial court applied section 1612, subdivision (c) retroactively to invalidate a 1994 spousal support waiver as being unconscionable at the time of enforcement. ( Facter, supra , 212 Cal.App.4th at p. 981, and fn. 19, 152 Cal.Rptr.3d 79.) On appeal, relying on Howell, the court held that the trial court erred in applying section 1612, subdivision (c) retroactively. The court observed, however, that "the Supreme Court in Pendleton did not set a precise standard for when a spousal waiver is deemed unconscionable." ( Facter , supra , 212 Cal.App.4th at p. 982, 152 Cal.Rptr.3d 79.) In an accompanying footnote, the court noted that "[f]ormer section 1615 (pertaining to unenforceable premarital agreements) applies to premarital agreements as a whole and does not specifically reference spousal support waivers. Accordingly, we rely primarily on case law in evaluating whether the waiver in the Agreement is unconscionable. (See Pendleton, supra , 24 Cal.4th 39, 48–49 [99 Cal.Rptr.2d 278, 5 P.3d 839] [‘The most reasonable understanding of the Legislature's purpose when it omitted [the UPAA's spousal support language from section 1612 ’s list of permissible objects of a premarital agreement] is that it was satisfied with the evolution of the common law governing premarital waivers of spousal support and intended to permit that evolution to continue.’].)" ( Facter , supra, 212 Cal.App.4th at p. 982, fn. 21, 152 Cal.Rptr.3d 79.)
Distinguishing the circumstances at the time of execution of the agreement in the case before it with those in Pendleton and Howell, the court appeared to hold (without expressly so stating) that the agreement was unconscionable at the time it was executed. ( Ibid . ) But the court went further: "The Supreme Court in Pendleton also suggested that circumstances existing at the time of the enforcement of a spousal support waiver ‘might make enforcement unjust.’ [Citation.]" ( Facter, supra , 212 Cal.App.4th at p. 983, 152 Cal.Rptr.3d 79.) The court then analyzed the circumstances of the parties at the time of enforcement and concluded: "Given that Jeffrey's [husband's] self-reported separate property is now in excess of $10 million and his earnings $1 million per year, whereas Nancy [wife] amassed no separate property during the marriage and has no income at all, we have little difficulty in concluding that the Agreement's spousal support waiver is presently unconscionable." ( Facter, supra , 212 Cal.App.4th at p. 984, 152 Cal.Rptr.3d 79.)
6. Unconscionability at the Time of Enforcement
Like Facter, we agree with Howell to the extent it held that section 1612, subdivision (c), in and of itself, is not retroactive. But we do not agree with the implicit conclusion of Howell that the non-retroactivity of section 1612, subdivision (c) means that, under section 1612, subdivision (a)(2), a court considering the unconscionability of premarital spousal support agreements entered between 1986 and 2002 is limited solely to the circumstances existing at the time of execution. To the contrary, as apparently recognized in Facter (though the details are not fleshed out) we conclude that the Legislature did not intend to eradicate the authority of the court, recognized in Pendleton, to shape public policy regarding spousal support agreements for the protection of the parties. Thus, we hold that in considering whether a premarital spousal support agreement entered between 1986 and 2002 is enforceable, the court is not limited to the section 1615, subdivision (a)(2) determination whether the agreement was unconscionable when executed. Rather, the court retains the power under section 1612, subdivision (a)(7) (identified in Pendleton, supra, 24 Cal.4th at pp. 48–49, 99 Cal.Rptr.2d 278, 5 P.3d 839 ) to shape public policy regarding premarital spousal support agreements to the extent not inconsistent with Legislative declarations of such policy, and to declare (as suggested in Pendleton, id. at pp. 53–54, 99 Cal.Rptr.2d 278, 5 P.3d 839 ) that a premarital spousal support agreement is unenforceable as against public policy solely because it is unconscionable at the time of enforcement. We reach this conclusion for three reasons.
First, as we have noted, in Pendleton , the California Supreme Court held that the adoption of the UPAA did not deprive the court of the power to shape the extent to which a premarital spousal support waiver may be unenforceable as against public policy under section 1612, subdivision (a)(7). The court also left open the possibility that such agreements are unenforceable based on circumstances existing at the time of enforcement. And it did so even though section 1615, subdivision (a)(2) expressly provided that premarital agreements were unenforceable if unconscionable at the time of execution, not the time of enforcement. Thus, if the reference to unenforceability at the time of execution in section 1615, subdivision (a) controlled, there would have been no need for the Pendleton court to mention the possibility that a court might find a premarital spousal support agreement unenforceable as unjust at the time of enforcement.
Second, Howell's determination of non-retroactivity relied in large part on its interpretation of a comment in a report of the Senate Judiciary Committee describing SB 78 as introduced. Omitted in the court's summary of the comment is language important for the issue that faces us here: whether, by not making SB 78 retroactive, the Legislature intended to vitiate the court's power, to the extent not inconsistent with Legislative declarations, to shape public policy regarding the enforceability of premarital spousal support agreements.
The entire comment referred to in Howell states, with the language omitted by Howell in italics: "Opponents of the bill further express concern over the possible retroactivity of a prohibition on spousal support waivers, particularly as some premarital agreements waiving spousal support may have been executed in reliance on the original Pendleton decision by the Court of Appeal in 1998 (upheld by the Supreme Court in 2000 ). [¶] This bill contains no provision for retroactive application. As a general rule, laws operate prospectively unless retroactive application is provided for specifically, or unless the new legislation clarifies existing law." (Sen. Bill Analysis, SB 78 (2001-2002 Reg. Sess.) pp. 10–11, italics added.)
Thus, the specific concern of the opponents of the bill was the possible retroactivity of "a prohibition on spousal support waivers," particularly as to the expectations of parties who entered premarital agreements waiving spousal support in reliance on the original Court of Appeal decision in Pendleton (for ease of reference, Pendleton 1 ). Of course, as adopted, section 1612, subdivision (c) did not contain the per se prohibition. More importantly, the opinion in Pendleton 1 endorsed the power of the court to declare premarital spousal support agreements unconscionable at the time of enforcement.
In Pendleton 1 , the Court of Appeal noted that under section 1615, a premarital agreement was unenforceable if it "was unconscionable when executed" and the trial court made the findings listed in that section. (See former 62 Cal.App.4th 751, 759, fn. 9, 72 Cal.Rptr.2d 840, depublished by grant of review.) The opinion suggested a need for changes in the conditions of enforcement under section 1615, and further stated that until then "the courts will have to decide enforcement issues in conformance with the rules that are expressed in Family Code section 1615 and the policies underlying both the Uniform Act and the California Act." (See former 62 Cal.App.4th at p. 759, fn. 9, 72 Cal.Rptr.2d 840.)
Amplifying on the role of the courts, the opinion referred to a then-current version of a secondary treatise which "not[ed] the absence of any reported California case involving an unconscionability claim vis-à-vis a premarital agreement and quoting the standard under the Uniform Act, to the effect that, ‘in determining whether a premarital agreement is unconscionable, courts "may look to the economic circumstances of the parties resulting from the agreement, and any other relevant evidence.’ " " (Former 62 Cal.App.4th at p. 759, fn. 9, 72 Cal.Rptr.2d 840.)
On the same point the opinion also cited Lewis v. Lewis (1988) 69 Haw. 497, 748 P.2d 1362. In that case, the Hawaii Supreme Court held that a premarital spousal support agreement must be evaluated for unconscionability not only at the time of execution, but also, as a matter of public policy, at the time of enforcement. (See former 62 Cal.App.4th at p. 759, fn. 9, 72 Cal.Rptr.2d 840 ; see also Lewis v. Lewis (1988) 69 Haw. 497, 503, 748 P.2d 1362 ["To enforce a spousal support provision of a premarital agreement because it was reasonable at the time of execution of the agreement can result in unforeseen economic hardship to a spouse that may shock the conscience of the court due to relevant changes in the circumstances of the marriage by the time of divorce. Public policy mandates against the enforcement of unconscionable support payments"].) Although the holding of Lewis is not specifically mentioned in Pendleton 1 , the import of the citation to Lewis is clear.
In short, Pendleton 1 contemplated courts evaluating unconscionability as a matter of public policy at the time of enforcement. Agreements entered by parties in reliance on Pendleton 1 would have taken that fact into account. Therefore, to the extent the opponents to SB 78 expressed concern regarding invalidation of premarital spousal support agreements entered into by parties who relied on Pendleton 1 , and to the extent the Legislature responded to that concern by not making section 1612, subdivision (c) retroactive, the Legislature certainly did not intend to preclude a court from declaring, as a matter of public policy under section 1612, subdivision (a)(7), that a premarital spousal support agreement was unenforceable as being unconscionable at the time of enforcement.
Indeed, the Legislature added section 1612, subdivision (c) in response to Pendleton to provide greater legislative protections to parties against whom a premarital spousal support agreement is sought to be enforced. Nothing in the statute or Legislative history suggests that the Legislature meant to eradicate the court's independent power, recognized in Pendleton, to define public policy, especially as it might relate to invalidation of a premarital spousal support agreement based on circumstances existing at the time of enforcement.
Finally, it is true that, as a general matter, courts examine the unconscionability of contracts as of the time of execution. (See Civ. Code, § 1670.5, subd. (a).) But as illustrated by case law evaluating the substantive unconscionability of arbitration agreements in cases brought under FEHA (the California Fair Employment and Housing Act; Gov. Code, § 12900 et seq. ), in some circumstances it is appropriate to examine the unconscionability of contract provisions as of the time of enforcement. Although the parties to an employment arbitration agreement may agree to something less than the full panoply of discovery available in California's discovery statutes ( Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 105–106, 99 Cal.Rptr.2d 745, 6 P.3d 669 ), courts have recognized that such agreements must " ‘ensure minimum standards of fairness’ so employees can vindicate their public rights. [Citation.]" ( Fitz v. NCR Corp. (2004) 118 Cal.App.4th 702, 716, 13 Cal.Rptr.3d 88.) Whether such minimum standards of fairness exist is examined at the time of enforcement of the agreement, not execution of the agreement, and is analyzed based on the specific discovery needs of the plaintiff's case. "In striking the appropriate balance between the desired simplicity of limited discovery and an employee's statutory rights, courts assess the amount of default discovery permitted under the arbitration agreement, the standard for obtaining additional discovery, and whether the plaintiffs have demonstrated that the discovery limitations will prevent them from adequately arbitrating their statutory claims. [Citation.]" ( Davis v. Kozak (2020) 53 Cal.App.5th 897, 910–911, 267 Cal.Rptr.3d 927, italics added.)
Section 1670.5, subdivision (a) provides that: "If the court as a matter of law finds the contract or any clause of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result."
As illustrated by the cases involving employment arbitration agreements, when important statutory rights are at stake, courts are not always constrained to examine unconscionability at the time of execution of an agreement. We acknowledge that the analogy to premarital spousal support agreements is not perfect. But California recognizes the centrality in dissolution proceedings of the trial court's broad statutory discretion to fashion an appropriate award of spousal support (or no award at all) based on the parties’ present abilities to provide for their own needs and the standard of living established during the marriage. (§§ 4320, 4330, subd. (a); see Pendleton, supra, 24 Cal.4th at p. 52, 99 Cal.Rptr.2d 278, 5 P.3d 839.) In light of the importance of the right to spousal support in appropriate cases, we see no reason why, as a matter of public policy, a premarital agreement entered between 1986 and 2002 waiving or limiting the right to spousal support ought not be examined by a court for unconscionability at the time of enforcement. (See Melissa , supra, 212 Cal.App.4th at pp. 610–611, 151 Cal.Rptr.3d 608 ["The rules and underlying public policy regarding support waivers has swung like a pendulum from the one extreme of complete prohibition, to the other extreme of being condoned but highly regulated with technical requirements and safeguards. While we no longer believe prenuptial agreements containing spousal support waivers encourage dissolution or will harm society, we are also well aware of the need for safeguards to ensure fairness and voluntariness"]).
Thus, despite the non-retroactivity of section 1612, subdivision (c), we hold that the court retains the power under section 1612, subdivision (a)(7) (identified in Pendleton ) to shape public policy regarding premarital spousal support agreements to the extent not inconsistent with Legislative declarations of such policy, and to declare (as suggested in Pendleton ) that a premarital spousal support agreement is unenforceable as against public policy solely because it is unconscionable at the time of enforcement. In the instant case, therefore, the trial court did not err in considering whether the spousal support provision of the PMA was unconscionable at the time of enforcement.
We further conclude that the trial court properly found the spousal support provision in the PMA unconscionable at the time of enforcement.
In Facter, in concluding that the spousal support provision was unconscionable at the time of enforcement, the court observed that the wife had a high-school education and was unemployed throughout the 16-year marriage, while the husband had an annual income of $1 million and a net worth of $10 million. Here, Kim's forensic accountant had opined that Kim would need $86,000 per month to meet the marital lifestyle based on an income-available approach, while an expenditure approach would yield $37,000 per month. Kim, like the wife in Facter, was unemployed, similarly educated, and spent the marriage raising the couple's six children. The trial court found the amount Kim would receive under the PMA—"merely 10% of the probable order without the agreement"—was unconscionable.
We find no flaw in the trial court's reasoning. Many years had elapsed since the time of execution, and Kim had foregone employment outside of the home, while at the same time Mark continued to amass a large separate property fortune from his business. As a result, $6,000 a month in spousal support under the agreement compared to Mark's monthly earnings of upwards of approximately $250,000 was oppressive. Further, we note as well that Kim had already waived any community property interest in Mark's income. We therefore affirm the trial court's invalidation of the spousal support provision of the PMA.
Mark filed a letter brief citing the recently decided case of Miotke, supra, 35 Cal.App.5th 849, 248 Cal.Rptr.3d 1 on the issue of the time of evaluation of unconscionability. He does nothing other than draw this court's attention to the case. For good reason—Miotke concluded the issue had been waived by the wife's failure to raise it in the trial court. (Id. at p. 861, 248 Cal.Rptr.3d 1.)
See footnote *, ante .
DISPOSITION
The judgment of the superior court is reversed with respect to the spousal support award, and remanded for a determination of pendente lite spousal support from the date of Kim's OSC. In all other respects, the judgment is affirmed. The parties are to bear their own costs on appeal.
We concur:
COLLINS, J. CURREY, J.