Court of Appeal:
In Light of Advantage to Her, Presiding Justice Gilbert Says, Presumption Is Raised of Invalidity
By a MetNews Staff Writer
A wife who held a college degree and had once worked as a paralegal exercised undue influence over her husband, who had attended some college courses but had not attained a degree, when she handed him a form which terminated their prenuptial agreement, even though, when he started to sign it, she cautioned him to read it first, Div. Six of the Court of Appeal for this district has held.
The opinion says there is a presumption of undue influence where one spouse, in a transaction, gains a financial advantage over the other spouse; that revocation of the premarital agreement (“PMA”) rendered it “highly likely” that the wife would benefit upon a division of property, so that the presumption applied; and that she failed to rebut the presumption by a preponderance of the evidence.
Under the 2006 premarital agreement, Aaron Steed and Erin Cromwell, his future bride, agreed that neither would obtain a community property interest in what was separate property before marriage. Cromwell had little separate property; Steed, in 1997, at the age of 17, had co-founded with his brother a successful moving company called Meathead.
After the 2008 marriage, wife Erin Steed became controller of the company, and its profits rose. She desired to gain a financial interest in Meathead.
On April 23, 2012, she handed her husband a form she had downloaded from a law firm website terminating the PMA.
He signed it; San Luis Obispo Superior Court Commissioner Erin M. Childs on Sept. 3, 2019, invalidated it.
The Court of Appeal on Oct. 22, 2019, granted a motion to permit an appeal from an interlocutory order in a family law matter. On Monday, it affirmed Childs’s order.
“If one spouse secures an advantage from a transaction with the other spouse, a presumption that the advantaged spouse exercised undue influence arises,” Presiding Justice Arthur Gilbert wrote, in an unpublished opinion, filed Monday.
He said substantial evidence supports Childs’s finding that Erin Steed would gain an advantage through a revocation of the PMA, and in light of the presumption that was thus created, her ruling must be upheld.
Effect of Presumption
Gilbert went on to say:
“Wife’s argument that there was no substantial evidence of undue influence misses the point. Undue influence is presumed. There need not be any evidence of actual undue influence for Husband to prevail.”
“In any event, there is substantial evidence when viewed in a light most favorable to the order from which the trial court could reasonably conclude there was actual undue influence. Wife is a college graduate with legal training. Husband is a high school graduate with no legal training. Wife complained that she was only an employee and had no share in Meathead. She had access to a ‘bench’ of attorneys; yet she selected to prepare the PMA termination agreement herself, thus depriving Husband of the benefit of legal counsel. She handed the agreement to Husband at work without warning. Although she told him to read it, she did not advise him to seek legal counsel before signing. The entire transaction lasted only 10 to 15 minutes. The agreement was entirely one-sided. She gave up nothing to obtain a share in a successful business.”
The case is Steed v. Steed, B300907.
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