Phoenix Family Lawyer | Pizza and Prenups

Arizona recognizes prenuptial ("premarital") agreements. But in most divorce cases, one spouse will seek to get out of it. The 2000 case of In Re Marriage of Pownall discusses the circumstances under which one can escape a prenuptial agreement.

In Pownall, the husband and wife lived together for 6 years prior to getting married. Four years prior to the marriage, Mr. Pownall partnered with his step-father to create a business which acquired four "Little Caesars" pizza franchises. The future Ms. Pownall worked in one of the pizza restaurants briefly, before obtaining other employment. More importantly, she knew about them, and (having been the beneficiary of the lifestyle produced by their revenue over the years), she had a good general idea of their value.

As early as four years prior to the wedding, Mr. Pownall mentioned the possibility of a prenuptial agreement, but did not follow through. Four days prior to the wedding, however, he convinced her to accompany him to his lawyer's office to sign a prenuptial agreement. The attorney, at Mr. Pownall's request, had already prepared the agreement. It addressed property division in the event of divorce by purporting to keep as separate property Husband's interests in the pizza businesses, as well as any future business interests he might acquire. The attorney explained that he was only representing Mr. Pownall, that he was not protecting her interests, and that she may want to have another attorney look over the agreement before she signed. Mr. Pownall offered to hire an attorney for her, but she declined. After reading through the agreement with Mr. Pownall attorney, she signed the premarital agreement and the couple married as scheduled. Mr. Pownall filed for dissolution little more than two years later.

Ms. Pownall contested the premarital agreement, alleging under A.R.S. 25-202 that it was unconscionable, and that she didn't have fair and reasonable disclosure of her husband's property, or adequate knowledge of it, prior to signing. The judge agreed, finding that the agreement was invalid due to lack of disclosure of the full value of the business. But the Court of Appeals reversed.

The Court of Appeals began by looking at the comments to the Uniform Premarital Agreement Act, upon which the Arizona statute is based.

"[T]o determine whether an agreement is unconscionable, the court may look to the economic circumstances of the parties resulting from the agreement, and any other relevant evidence such as the conditions under which the agreement was made, including the knowledge of the other party."

The comment also notes that lack of independent legal counsel may be a factor in determining whether an agreement is unconscionable.

The Court also quoted from a contracts case, Maxwell v. Fidelity Fin. Servs., Inc., which also provides guidance in determining what constitutes unconscionability. In Maxwell, the Arizona Supreme Court held that factors indicating procedural or bargaining unconscionability include "[T]hose factors bearing upon ... the real and voluntary meeting of the minds of the contracting party: age, education, intelligence, business acumen and experience, relative bargaining power, who drafted the contract, whether the terms were explained to the weaker party, whether alterations in the printed terms were possible...." Factors "[i]ndicative of substantive unconscionability are contract terms so one-sided as to oppress or unfairly surprise an innocent party," as well as "an overall imbalance in the obligations and rights imposed by the bargain...."

The Court of Appeals emphasized that the wife rejected the opportunity to have her own attorney to help her protect her interests. Since she made that choice, the Court did not think it was right to let her later claim that she was so unprotected as to render the agreement unconscionable. Nor was the Court impressed with the argument that the wife was faced with the choice of either signing the agreement or postponing a wedding that was four days away; the Court did not think that made the agreement involuntary or unconscionable.

On the one hand, this prenuptial agreement came closer to being overturned than it should have been. Had Mr. Pownall disclosed the profit and loss statements from the business, he likely would have saved himself a lot of trouble. Clearly, that is the better practice. And no doubt scheduling the meeting with the attorney four days prior to the wedding was a calculated attempt to pressure the wife into signing without adequate review; a different panel of the Court of Appeals might well see through it. On the other hand, if the wife had gotten the advice of a competent lawyer, she might have been able to negotiate a more favorable agreement. Either way, it shows why you need a hard fighting, straight talking Phoenix Divorce Lawyer on your side.