In Re Marriage of Bernard

155 P.3d 171
CourtCourt of Appeals of Washington
DecidedApril 9, 2007
Docket57296-2-I
StatusPublished
Cited by8 cases

This text of 155 P.3d 171 (In Re Marriage of Bernard) is published on Counsel Stack Legal Research, covering Court of Appeals of Washington primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re Marriage of Bernard, 155 P.3d 171 (Wash. Ct. App. 2007).

Opinion

155 P.3d 171 (2007)

In re the MARRIAGE OF Gloria BERNARD, Respondent, and
J. Thomas Bernard, Appellant.

No. 57296-2-I.

Court of Appeals of Washington, Division 1.

April 9, 2007.

*172 Camden Michael Hall, Camden Hall, PLLC, Seattle, WA, for Appellant.

Cynthia B. Whitaker, Melissa Mager, Law Offices of Cynthia B. Whitaker, Jerry Richard Kimball, Catherine Wright Smith, Edwards Sieh Smith & Goodfriend PS, Seattle, WA, for Respondent.

BAKER, J.

¶ 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 had been married before, and both had adult children. The parties had an imbalance of assets: Tom's net worth at the time was approximately $25 million, Gloria's was $38,000.

¶ 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."[1] No action was taken to *173 draft an agreement until May 24, 2000, less than six weeks before the July 8 wedding date. His attorney, Richard Keefe, faxed Tom a checklist of items to be included in a prenuptial agreement. Tom lost the list and Keefe had to resend it on June 8. Tom asked Gloria to prepare his lengthy financial statement, so he could attach it to the agreement. She did so, and also completed her own financial statement. During this same period, Tom was urging Gloria to retain her own attorney. Gloria made efforts to do so, but could not find an attorney she was comfortable hiring. She also believed that she needed to have a draft agreement first.

¶ 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 major concerns with the agreement; these were not the only problems he noted, but time was short. He also acknowledged that refusing to sign was probably not practical. Gehring did not tell Gloria that they could have waited until later to negotiate a more equitable agreement. Keefe and Tom quickly drafted a "side letter" in which both parties agreed to amend the prenuptial agreement with respect to the five issues raised in Gehring's advice letter.

¶ 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."[2] The prenuptial agreement as amended still severely restricted Gloria's community property rights.

¶ 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 agreement substantively unfair as a matter of law and denied Tom's motion to compel arbitration. The first part of a bifurcated trial examined the procedural fairness of the agreement as amended. The judge decided that the adoption of the amendment was procedurally fair. However, because the side letter did not allow for renegotiation of the entire agreement, the amendment did not cure the procedural defects in the original agreement, so the agreements taken together were procedurally unfair. Nothing more was said specifically about Tom's request for arbitration. But it appears that all concerned assumed that if the agreement as a whole was unenforceable, then the arbitration clause was also ineffective. Tom appealed the verdict.

*174 II.

¶ 9 The trial court's refusal to order arbitration is essentially denial of a motion to compel arbitration, which is reviewed de novo.[3] Evaluation of the substantive and procedural fairness of a prenuptial agreement involves mixed questions of legal policy and fact. It is treated as a question of law, to be viewed in light of the undisputed findings and the findings supported by substantial evidence.[4]

III.

¶ 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.[5]Pinkis held that an arbitration clause contained within a larger agreement must be evaluated independently before the court deals with substantive issues concerning the contract.[6] Judicial review of the matter is limited to whether the arbitration clause, viewed separately, is subject to traditional contract defenses such as fraud or unconscionability.[7] The court may deny arbitration and proceed with other issues only if it concludes that the arbitration clause was improperly transacted.[8]

¶ 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[9] test. If the issue were properly before us, we would need to determine whether the Foran test, as opposed to traditional contract defenses, applies to an arbitration clause when that clause is seated within a prenuptial agreement.

¶ 12 But because the parties do not raise this issue, it is inappropriate for us to decide it.[10] Although RAP 2.5(a) allows us to affirm on any sufficiently developed ground, the Pinkis

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Bluebook (online)
155 P.3d 171, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-marriage-of-bernard-washctapp-2007.