Friday, July 17, 2020
Page 3
Court of Appeal:
Parties’ Intent at Time of Signing MSA Determines Enforceability
By a MetNews Staff Writer
A judge properly found that a marital settlement agreement entered into in 1997, after the wife filed for divorce, was unenforceable when proceedings, dormant for 17 years, were resumed in 2015, because the parties had fully intended to dissolve their marriage when the accord was signed, yet had not observed a mandatory statutory formality, the Court of Appeal for this district has held.
In an unpublished opinion filed Wednesday, Justice Victoria M. Chavez of Div. Two differentiated the present fact situation from the one presented in the 2006 appeal in In re Marriage of Burkle, decided by this district’s Div. Eight.
There, the same formality—exchanging information on assets, as required by Family Code §2100 et seq.—had not been complied with by billionaire Ronald Burkle and his then wife, Janet Burkle, when they entered into a marital settlement agreement (“MSA”) but, Justice Paul Boland (since deceased) wrote, that was not fatal to enforceability. Under that MSA, the wife was limited to a $40 million share of the marital estate.
Boland’s Opinion
Boland wrote that the Family Code provisions “requiring parties to a marital dissolution action to serve preliminary and final verified declarations disclosing all assets and liabilities, do not apply to spouses who negotiate and execute a postmarital agreement while a dissolution proceeding is in abeyance, and the spouses are attempting to reconcile rather than contemplating the imminent dissolution of the marriage.”
The difference between that case and the one before her panel, Chavez said, is that the present appeal is from a judgment founded on an express finding that the parties, Sam Sohrab Shakib and Rebecca Shakib, unequivocally intended to end their marriage when they entered into the MSA. That finding was made by Los Angeles Superior Court Judge Mark A. Juhas, whose judgment was upheld by Chavez’s opinion.
Chavez wrote:
“[T]he trial court did not err by declining to apply general contract principles, including waiver and estoppel, to determine the enforceability of the contract. Once it found that the MSA was executed in contemplation of dissolution, the trial court correctly determined that the MSA was subject to the statutory scheme set forth in section 2100 et seq. Because the parties did not comply with the disclosure requirements, the MSA was not enforceable.”
Wording of MSA
The MSA signed by the Shakibs, she pointed out, reflected no desire, at the time, for a reconciliation. It provided:
“Differences have arisen in the marriage, which the parties have determined to be irreconcilable. As a result, the parties have agreed to live separate and apart, acknowledging their marital relationship cannot be restored or re-established.”
Also, she noted, the husband’s lawyer testified that from what he understood, the agreement was not in the nature of a belated prenuptial agreement but was intended to be an instrument pursuant to which community assets would be divided in connection with a divorce.
The jurist said other factors in the Burkles’s case—that they were living together at the time the MSA was signed and the dissolution of marriage proceeding was in abeyance—were absent when the Shakibs signed their agreement.
Further Argument
The husband argued that the trial court failed to assess the “holistic environment” of the parties’ negotiations at the time the martial settlement agreement was formed. The husband maintained that the court was viewing a “single, isolated frame in this colorful movie” by ignoring the couple’s 17-year reconciliation, during which time they had another child together.
Chavez said “the trial court was not required to put disproportionate emphasis on this factor. The record shows that the court considered the reconciliation, as it was required to do.” She noted that the couple reconciled months after the agreement was signed, adding:
“[I]n spite of the subsequent lengthy reconciliation, substantial evidence supports the court’s conclusion that the balance of factors showed an intent to dissolve the marriage at the time of the MSA.”
Separation Date
The wife maintained that the separation date was in 2015 after an alleged domestic violence incident; that date, the husband contended, was irreconcilable with the finding that the couple intended to separate when the agreement was signed in 1997. Juhas agreed with Rebecca Shakib.
The two determinations were not irreconcilable, Chavez said, explaining:
“The trial court in this matter was required to make factual determinations regarding a complex relationship. The first determination was more narrowly focused on the parties’ acts at the time they negotiated and signed the MSA. The second determination was a broader view of the parties’ subjective feelings and actions over the course of their relationship up to the present time. We decline to second guess the trial court’s determinations, as substantial evidence supported each analysis.”
The case is Marriage of Shakib, B293986.
The attorneys on appeal were J. Nicholas Cuneo and Janina A. Verano of the Law Offices of Cuneo & Hoover and Robin Meadow and Eleanor S. Rut of Greines, Martin, Stein & Richland for Sam Shakib Glenn S. Buzard of Blank Rome and Vanessa Soto Nellis of Lewitt, Hackman, Shapiro, Marshall & Harlan for Rebecca Shakib.
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