Thailand Law Journal 2012 Fall Issue 1 Volume 15

2. Disparities Within the Second Restatement Approach

Much like the application of the First Restatement, courts do not uniformly apply the Second Restatement. One specific area that suffers continual inconsistency is the courts’ treatment of a couple’s choice of law provision. Some courts only apply a couple’s chosen law to issues of construction and will refuse to apply the couple’s designated law to the validity or enforcement of the prenuptial agreement.³⁰ Whereas other courts have found that the parties’ choice of law will apply to the entire agreement.³¹ In Proctor v Mavis³², an Oregon court construed a choice of law provision narrowly. The couple designated that the prenuptial agreement would be construed according to the laws of California. Nevertheless, the court found that California law would only apply to issues of construction and Oregon substantive law would apply elsewhere.  In contrast, the court in Elgar v Elgar³³ held that a marital parties’ choice of law provision would be upheld and apply to all issues (validity, construction, and enforcement).  The court explained that not applying the choice of law provision to the issues of validity would render a choice of law provision meaningless. Other courts do not distinguish among questions of validity, enforcement, or construction and merely apply the choice of law provision.³⁴

Courts which apply the Second Restatement approach do not uniformly weigh the aforementioned seven policy goals. For example in Mehtar v Mehtar³⁵, the Connecticut court held that the parties’ expectations were paramount and could not be outweighed by the interests of Connecticut.  The court reasoned that the purpose of a prenuptial agreement contract is to uphold the intention of the parties; therefore the parties’ intention should be the overriding concern of the courts. However, a number of other Second Restatement jurisdictions give higher weight to the forum state’s interests.³⁶ In California, parties can designate the law they want applied to the agreement’s construction issues, however, the law of California will govern the validity of the prenuptial agreement.³⁷ The relative weight the California courts give a couple’s intended law illustrates the relative weight Californian courts give to the Restatement’s policy goals. It appears that California gives more weight to the “relevant policies of the forum” than the public policy goal of “protection of justified expectations”.³⁸ Contracting spouses that include a choice of law provision expect to be bound by the agreement accordingly; however, California courts consider the interests of the state of California to override the expectations of the marital parties. This is in direct contrast to the situation in Connecticut courts. In Connecticut, the courts apply the parties’ chosen law to all issues of validity, construction, and enforcement without the significant analysis into the “relevant policies of the forum”.³⁹ Although, both the California and Connecticut state courts apply the Second Restatement approach, they weigh the public policy concerns differently and reach different conclusions. The inconsistent treatment of the Second Restatement’s seven public policy goals leads to contradictory treatment of the agreement’s choice of law provisions and prenuptial agreements as a whole.

III. The U.P.A.A.: silence is not golden

The Uniform Premarital Agreement Act (U.P.A.A.) was promulgated in 1983.⁴⁰ The stated purpose of the U.P.A.A. is to provide a uniform and predictable set of guidelines for U.S. courts reviewing prenuptial agreements.⁴¹ The drafters of the U.P.A.A. recognized the issues associated with the U.S. courts’ inconsistent treatment of prenuptial agreements (cite Prefatory note of the U.P.A.A.).⁴² They feared that an increased ease of geographical mobility would exacerbate problems unless the states adopted a uniform approach to prenuptial agreements.⁴³ The U.P.A.A. provides specific and consistent procedural and substantive requirements for the execution and review of prenuptial agreements. It therefore appears at first blush that the U.P.A.A. should have been a panacea to the issues that face interstate and international prenuptial agreements. However, there are a number of reasons that the U.P.A.A. failed to rectify the inconsistency among U.S. courts. First, the Act has been enacted by only 26 state legislatures.⁴⁴ The drafters had recommended that all states adopt the provisions.⁴⁵ With little more than half of the states having enacted the guidelines of the U.P.A.A., the differences among U.S. state courts have continued. Secondly, many of the state legislatures which adopted the U.P.A.A. modified the provisions of the model act to reflect each state’s idiosyncratic public policy concerns. For example, the Utah legislature added an additional provision which allows a Utah court to apply the laws of the jurisdiction in which either party is domiciled in the interest of “fairness” regardless of whether the couple had a choice of law provision.⁴⁶ This diverges greatly from the U.P.A.A. which gives the marital parties the right to designate the choice of law (for issues of construction at least) regardless of fairness concerns.⁴⁷ Utah’s unique provision provides considerable discretion to the reviewing court relative to the U.P.A.A. Modifications such as these have continued the inconsistent treatment of prenuptial agreements in the United States.

Furthermore, the U.P.A.A. was silent on the two major sources of inconsistency that form the main subjects of the article: conflicts of law and choice of laws. The U.P.A.A. does not provide guidance on conflicts of law. This is significant to courts following both the First Restatement and Second Restatement approaches. Under both Restatement approaches, the court may determine that the laws of a jurisdiction besides the forum state (lex loci or significant interest, respectively) must be applied to the prenuptial agreement.⁴⁸ Should the court apply the foreign state’s or nation’s laws? To what extent should the laws of the foreign jurisdiction be applied to the issues of validity, construction, or enforcement of the agreement? These questions are not addressed by the U.P.A.A. In fact, unlike many U.S. states, the U.P.A.A. does not distinguish among the three levels of contract review: validity, enforcement and construction.⁴⁹ This has resulted in widespread heterogeneity among U.P.A.A. states because each state has had to develop its own individualized statutory law or common law in order to address these conflicts of law issues. The U.P.A.A. did not clarify the conflict of law issues for prenuptial agreements and this has resulted in continued discordance among U.S. states.

The U.P.A.A. does not address the choice of law issues for prenuptial agreements. Specifically, the U.P.A.A. does not specify how a court should treat a prenuptial agreement’s choice of law provision. According to the plain language of the U.P.A.A., marital parties can designate which law they want “governing the construction of the agreement”.⁵⁰ However, the U.P.A.A. does not specify whether this phrase acts to exclude the parties’ right to designate which jurisdiction’s laws they want applied to the validity and enforcement issues of the prenuptial agreement.⁵¹ Therefore, states which have adopted the U.P.A.A. have interpreted the U.P.A.A. provision in a variety of ways. In the In re Bonds Marriage decision⁵², the California Supreme Court interpreted the provision as acting to exclude the marital parties’ ability choose the governing law for matters of validity and enforcement. In the case, the prenuptial agreement designated that Nevada state law would apply to the couple’s prenuptial agreement. In the Bonds’ case, the court applied the parties’ chosen law (Nevada) for the issues of construction, but applied the laws of California to the agreement’s validity and enforcement issues. The California Supreme Courts’ interpretation of the U.P.A.A. provision was outcome determinative.  The couple’s prenuptial agreement was valid according to California state law, but it would have been invalid under the couple’s designated law (Nevada). As seen in the Bond’s case, the ambiguity of the U.P.A.A.’s approach to choice of law provisions can significantly impact the interpretation or validity of a couple’s prenuptial agreement. The U.P.A.A. did not solve the inconsistent approaches to choice of law provisions among U.S. state courts.