October 10, 2024 by Stephen Vincent

Prenuptial Agreements Can Protect Your Spouse from Lawsuits – a look at Elia v Pifer

Prenups can allow couples to opt out of laws, thereby protecting one spouse from being liable for the other’s actions.

Prenuptial and Postnuptial Agreements

Arizona allows parties to sign both and postnuptial agreements. These agreements are primarily known for dictating what will happen to certain property, assets, and debts in a divorce. But they also serve a few other important functions, including declaring how the parties will hold property during the marriage.

Opting Out of Community Property Laws

Many parties choose to keep whatever they acquire during marriage as their and therefore opt out of Arizona’s community property laws altogether.

Spousal Liability in Lawsuits

In so doing, they also opt out of something else that may, at some point, become important – the community being fully liable for the actions of either spouse. A.R.S. § 25-215. For example, let’s say one spouse is sued for a business deal that went south; under Arizona law, the plaintiff must sue both spouses, and both spouses must defend the lawsuit.

By suing both spouses, the plaintiff, if successful, can seek payment of the by reaching all of the community’s assets.

Elia v Pifer

A prenuptial or can protect a spouse from lawsuits. That is what happened in Elia v. Pifer, 194 Ariz. 74 (App. 1978 ).

Background – In this case, the plaintiff sued his former lawyer and her husband. In normal circumstances, when a plaintiff sues a married defendant, the plaintiff must sue both the defendant and their spouse. This is because, under law, both spouses are equally liable for one spouse’s actions.

Protection – But here, the wife and her husband had executed a prenuptial agreement. They had opted out of community property law. Therefore, because of that provision in the , the husband was not liable for the wife’s actions. And, therefore, the court granted summary judgment to husband (in other words, it found that the husband could not be sued). The plaintiff appealed the ruling.

Community Property – The plaintiff first argued that because the couple was married, anything they acquired is presumed to be community property. . at ¶ 45. That’s true, said the —except when they have signed a prenuptial agreement. Id. The law allows parties to opt out of community property law. . But because there is a prenuptial agreement, there is no community, and the husband cannot be held liable for something the wife does.

The plaintiff argued that was not fair to him. He argued that the parties’ prenuptial agreement should only determine how the parties hold property between themselves. It should not affect a third ’s ability to reach both parties and their assets. The Court of Appeals disagreed.

Validity of Prenuptial Agreement – The Court was quite clear—if the plaintiff wanted to sue the defendant’s husband, plaintiff must show the prenuptial agreement is invalid. Under A.R.S. § 25-202(C), there are two ways to invalidate a prenuptial agreement—show that it is either involuntary or . Id. at ¶ 46.

A) Involuntary—the idea that someone was forced to sign a contract—is a high standard that many people claim but rarely prove. Unconscionability is usually the easier thing to prove. A prenuptial agreement is unconscionable when it is too one-sided to be enforceable. Arizona will let the two of you decide how you want to hold or divide your property, but it’s not going to allow one party take extreme advantage over the other.

B) Also, a Court may invalidate a prenuptial agreement if it finds that the way the prenuptial agreement was signed was unfair; for instance, if the parties failed to disclose their assets or one prevented the other party from getting an attorney. A.R.S. § 25-202(C). (As an aside, this is why it is so important, when hiring an attorney to help with a prenuptial agreement, you find one that will ensure all the proper steps are taken).

Court’s Ruling

The reviewed the agreement and determined it was valid and included full and complete . Because the plaintiff did not show the prenuptial agreement was involuntary or , the prenuptial agreement was valid. Because of that, the defendant and her husband owned no community property; therefore, the husband could not be sued by the plaintiff. The prenuptial agreement thus was sufficient for the husband to be spared from being involved in the lawsuit.