“Dot the i’s and Cross the t’s”: Louisiana Supreme Court Voids Prenuptial Agreement for Signature Defect

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Posted in: Family Law

The typical fight about prenuptial agreements revolves around fairness. Such agreements are often one-sided, sometimes dramatically so, but the law has evolved more and more to ignore fairness. Courts, instead, police procedural formality as a means of policing voluntariness. The Louisiana Supreme Court continued this trend with its recent decision in Acurio v. Acurio, in which a prenuptial agreement had been signed with certain elements of formality—a notary and one witness—but not the right elements under the relevant statute. The agreement was thus thrown out, and the couple’s property rights were governed by the standard community property rules rather than the rules they had designed for themselves. While this was an appropriate interpretation of the relevant code provisions, it provides a cautionary tale for those trying to fix their marital rights and obligations in advance.

Premarital Agreements in General

The desire to predetermine one’s obligations upon divorce or death of the other spouse is not new, but the legal ability to do so is. Only in the last few decades have courts warmed to the idea of an enforceable premarital agreement. A standard premarital agreement will dictate the financial terms of marital dissolution and, usually, the financial consequences of the first spouse’s death. The earlier reluctance to enforce such agreements arose in part from the law’s view of marriage as a status that came with uniform, state-assigned rights and obligations. In this view, states regulate all aspects of marriage. States dictate who can marry and how; what obligations and rights married couples must live by; and when and pursuant to what terms a marriage can be dissolved. A prenuptial agreement flies in the face of this view of marriage, as it reflects an effort by a married couple to individualize their marriage and set special terms of exit. Courts reasoned that it was the right of the state rather than the couple to determine whether alimony should be awarded and for how long, and whether and how the couple’s property should be redistributed. Courts were also hesitant to enforce agreements that overtly contemplate divorce; indeed, they might even encourage it, at least for the party whose financial interests were protected better under the agreement. These agreements also seemed to plan for divorce, which, before no-fault, was not something couples were entitled to count on. Finally, courts also worried that two people on the brink of marriage—and presumably in love—could not negotiate fairly with one another. Surely one would get the better of the other, financially speaking.

In recent decades, couples have earned greater control over their marriages, and this includes more freedom to set the terms of dissolution. Beginning in the 1960s and 1970s, couples began using premarital agreements in greater numbers and attempted to regulate not only the inheritance consequences of the first spouse’s death, but also the financial consequences of divorce. The 1970s saw a significant change in the law of premarital agreements, in step with social and legal developments that all reinforced the state’s loosening grip on marriage.

Today, states vary in their approach to enforcing premarital agreements, but they all agree that couples are entitled to enter an enforceable agreement that will dictate, at a minimum, the economic consequences of marital dissolution. The question is only what requirements a state might impose on such agreements and whether parties to them are entitled to any special protections which these agreements are made.

The Shift from Fairness to Voluntariness as the Touchstone of Enforceability

The shift towards enforceability has meant that courts are less likely to review agreements for basic fairness. A key catalyst in this shift was the promulgation of the Uniform Premarital Agreement Act (UPAA) in 1983. Under the UPAA, which more than half the states adopted, premarital agreements were deemed presumptively enforceable, flipping the longstanding default. A party seeking to avoid enforcement had the burden to prove that (1) the agreement was executed involuntarily; or (2) the agreement was unconscionable when executed and signed without fair and reasonable disclosure of the other party’s financial circumstances. In other words, unfairness, even gross unfairness, was insufficient to void an agreement unless it was coupled with the failure to disclose the other party’s financial situation. Even in states that did not adopt the UPAA, this act changed the norm with respect to premarital agreements. They were now enforceable unless proven otherwise, and the key to avoiding enforcement was in proving that something went wrong in the process of negotiating and signing the agreement.

Neither the UPAA, nor the Uniform Premarital and Marital Agreement Act that superseded it in 2012, imposes any special requirements of formality on premarital agreements. But some states, including New York and Louisiana, have rules particular to these agreements, designed to ensure that they are voluntarily entered into by both parties. These states are strict about the formalities, but, if satisfied, courts tend to hold couples to their bargains.

Special Formalities: Pay Attention or Lose the Protection of the Prenuptial Agreement

Most states require that prenuptial agreements be in writing, but otherwise impose no requirements about the level of formality of the agreement. An agreement that was written in crayon on a napkin could be enforced as long as the requirements regarding voluntariness and disclosure are met. New York, unlike most states, requires that agreements be notarized or acknowledged, the same standard it imposes for real property deeds. Although it is not unusual to require notarization for significant documents, premarital agreements just don’t happen to be among the usual class for which it is required.

Gary Galetta learned the hard way that New York is a stickler for formalities (a statement that is true in other legal contexts as well). He and his soon-to-be-wife, Michelle, had signed a prenuptial agreement about a week before the wedding, which provided that their property would remain separate in the event of divorce and that neither party would seek alimony from the other. In a 2013 ruling, the state’s highest court ruled that the agreement was unenforceable because while the agreement was in writing and signed—both requirements under the statute—the signatures had not been “acknowledged” properly. On the signature page, spaces had been left blank for the parties’ signatures and dates that would be filled in by hand. There was also a typed certificate of acknowledgement followed by a space for the notary to sign—one for each party. But for some reason, while the certificate of acknowledgement preceding Michelle’s signature contained the usual boilerplate language, the certificate preceding Gary’s signature omitted a key phrase confirming that the notary public confirmed the signer’s identity before acknowledging the signature.

There was no claim of fraud or duress in the Galetta case, nor any that the signatures were not authentic. But Michelle brought suit to set aside the prenuptial agreement on grounds of a defective acknowledgment. On appeal, the state’s highest court sided with her. The acknowledgment requirement was designed to authenticate the signature and to impose on the signer “a measure of deliberation in the act of executing the document.” Even though the defect might have seemed minor, the agreement simply did not satisfy the statutory formalities and could not be enforced.

Acurio v. Acurio: Louisiana Follows in New York’s Footsteps

Danielle Dickerson and Michael Acurio married once in 1998 and divorced in 2000. Two years later, they married (each other) again, but this time they signed a prenuptial agreement first. They signed the agreement before both a notary and a witness, but Louisiana requires very particular types of formality, and this was not enough.

The relevant provision requires that both prenuptial and postnuptial agreements must be “made by authentic act or by an act under private signature duly acknowledged by the spouses.” And a separate provision requires that a postnuptial agreement—similar in purpose to a prenuptial agreement but entered into after the marriage has been solemnized—can only be entered “upon a joint petition and a finding by the court that this serves their best interests and that they understand the governing principles and rules.”

Postnuptial agreements were unenforceable in most states for longer than prenuptial agreements, but most states have grown more accepting of them. Moreover, several states have enacted statutes specifically granting spouses the right to enter into postnuptial agreements. These court rulings and statutes vary in terms of the formality required of postnuptial agreements and their permissible scope, as well as with respect to other restrictions. By and large, however, states have begun to recognize that spouses need not lose the right to enter into a binding contract just because they are married to one another. But many of these rulings also recognize that marital agreements might necessitate a special type of scrutiny—certainly, more scrutiny than an ordinary commercial contract would merit, but maybe even more scrutiny than premarital or separation agreements would merit.

Louisiana takes this special-scrutiny to the next level by requiring pre-approval from a court before a postnuptial agreement can be given effect. Although the Acurio case does not involve a postnuptial agreement, this provision ended up being relevant to the validity of their prenuptial agreement. The parties sought their second divorce in 2009, and Danielle filed a motion to avoid enforcement of the prenuptial agreement. Her argument, which the Louisiana Supreme Court ultimately accepted, is that the agreement did not satisfy the statutory formalities. It was not authenticated—a concept peculiar to the civil law of Louisiana—but neither was it executed “under private signature duly acknowledged by the spouses.” The parties did not acknowledge that the document contained their signatures in the manner required by law until a deposition during their divorce proceedings in 2009—not before the marriage. The question for the Louisiana Supreme Court, then, was whether the acknowledgement before witnesses had to occur before the marriage, or only at some point prior to enforcement.

The court concluded, as Danielle had argued, that the acknowledgment required for prenuptial agreements was temporal—like the signature itself, it had to occur before the marriage was solemnized. This interpretation made sense given that the Louisiana legislature had singled out postnuptial agreements for a separate set of formalities—judicial approval after a determination that the agreement was in the parties’ best interests. The court in Acurio concluded that the legislature must have intended the formalities for prenuptial agreements to be satisfied prior to marriage. And those formalities were not satisfied by the Acurios. In the court’s view, the legislature clearly “intended to make it onerous to waive one’s community property rights, at least to the extent that certain procedural hurdles were put in place to ensure the parties consider the consequences of entering into a matrimonial agreement that is not favored by public policy.”

Conclusion

Like the Galettas in New York, the Acurios were thrown back into the standard property-sharing regime when their prenuptial agreement was set aside. The reasoning in both cases is entirely consistent with this modern shift toward enforcement of prenuptial agreements, even though in these particular cases the agreements were not enforced, because they focus on the voluntariness of the agreements—using valid formalities as a proxy for the parties’ intent—rather than the substantive fairness of the agreement. Indeed, in Acurio v. Acurio, the court never even mentions the nature of the agreement the couple entered. One can assume that Danielle would have fared worse than her husband since she is the one who moved to set the agreement aside, but the court reveals nothing about their financial circumstances or the terms of the agreement. Thus, engaged couples need to take heed: Dot your i’s and cross your t’s or the consequences may be very different from what you imagine.