Sogg v. Nevada State Bank

• Citation: 108 Nev. 308,832 P.2d 781
• Decision Date: 13 May 1992
• Docket Number: No. 20724,20724
• Parties: Victoria SOGG, Appellant, v. NEVADA STATE BANK, Executor for the Estate of Paul B. Sogg, Deceased, Respondent.
• Court: Supreme Court of Nevada

Page 781

832 P.2d 781

108 Nev. 308

Victoria SOGG, Appellant, v. NEVADA STATE BANK, Executor for the Estate of Paul B. Sogg, Deceased, Respondent.

No. 20724.

Supreme Court of Nevada.

May 13, 1992.

Beckley, Singleton, DeLanoy, Jemison & List and Daniel F. Polsenberg, Frances-Ann Fine, Las Vegas, for appellant.

Lionel Sawyer & Collins and Mark A. Solomon, Las Vegas, for respondent.

OPINION

PER CURIAM:

Victoria Sogg (Vicky) and Paul Sogg (Paul) met between 1972 and 1974, when both were married to other people. Paul was a successful general contractor, engaged in the business of acquiring and developing real estate. Vicky had been a professional country singer following her graduation from high school. In 1981, she left Las Vegas for Europe, where she was sporadically employed by her brother's company demonstrating wireless telephones to potential customers in various countries. While in Europe, Vicky also participated in DeForest, Inc., a partnership allegedly established to capitalize on differences in monetary exchange rates. Her participation in this partnership required an investment of $265,000, which she raised by securing a second mortgage on her house in Sherman Oaks, California, wrapped with a mortgage on her sister's house. Vicky returned to the United States in 1986, when the bank threatened to foreclose on the houses. She never received a return on her investment and was eventually unable to locate her "partners." She was told that the partnership went bankrupt in January of 1987, although she never received any documents to that effect and never consulted an attorney.

Vicky and Paul began dating in early 1987. Vicky was approximately fifty-five years old at the time, and Paul was approximately eighty-seven. Paul was divorced and Vicky was separated from her husband, Robert Fletcher (Fletcher). In April of 1987, Paul asked Vicky to marry him, and she obtained a divorce from Fletcher, which was paid for by Paul.

Prior to their marriage, Vicky was aware that Paul was a wealthy man. However, Vicky was never specifically informed of Paul's net worth, which was approximately twenty million dollars. Paul testified that prior to their wedding, he was aware that Vicky did not have substantial financial resources, but he believed Vicky was expecting to receive five million dollars from her European business venture.

The day before Paul and Vicky were to be married, Paul took Vicky to the office of his attorney, Mr. Avila (Avila), to sign a premarital agreement. Vicky testified that she was not given a copy of the agreement to read at the time. Avila told Vicky that she should review the agreement with her own attorney, and he took her to see a Mr. Cox (Cox), an attorney whose office was down the hall from Avila's. Avila had already arranged an appointment for Vicky with Cox. Cox met with Vicky alone and began reading parts of the agreement to her. He testified that she immediately had questions concerning certain provisions requiring her to return various items of jewelry that Paul had given her. After approximately twenty to thirty minutes, before Vicky and Cox had finished reviewing the agreement and before Cox had had the opportunity to offer Vicky his advice, Paul entered Cox's office unannounced. Paul testified that Cox and Vicky had been talking for an hour, and he wanted to know what was taking so long. Paul and Vicky began to argue and then left Cox's office, with Vicky in tears. At the time the couple left Cox's office, Paul was aware that Vicky was upset about provisions in the agreement concerning the jewelry he had given her and the payments he had made on her house, as well as the lack of a provision for her living expenses in the event of a divorce.

After the meeting in Cox's office, Paul called off the wedding and he and Vicky stopped talking to each other. Vicky returned the jewelry and the car that Paul had given to her. Several weeks later, the parties reconciled, and a new wedding date was set. Because the parties were in a hurry to get married prior to the date of their prearranged honeymoon, they did not discuss the premarital agreement again until shortly before the wedding. Vicky testified that she and Paul went to Avila's office to sign the agreement the day before their wedding. Avila was not present, but Paul and Vicky both signed the agreement in the presence of Avila's secretary. Vicky testified that she did not read the agreement at that time because Paul had told her that he had not had the opportunity to make any changes. In fact, she testified that she never actually read the document until after the marriage and honeymoon. Rather, Vicky testified that she signed the agreement because Paul promised her that he would amend it when they returned from their honeymoon, to provide for her house in California and to allow her to keep the jewelry, furs, and car he had given her. Although an addendum to the agreement was eventually drafted, it was never signed by the parties.

Sometime after Vicky and Paul signed the premarital agreement and subsequent to the parties' marriage, Avila requested that Cox sign the attorney's certificate stating that he had counseled Vicky with respect to the agreement. Cox refused to sign the certificate after the marriage had taken place because he felt it would be misleading under the circumstances. Furthermore, Cox testified that he had not even seen the complete agreement prior to the parties' marriage, because the copy he had received did not contain any of the financial documents referred to as "attachments" in the agreement. Later, after Paul had initiated the divorce action, a second attorney, Mr. Swanson (Swanson), was also asked to review the agreement on Vicky's behalf. Swanson met once with both Paul and Vicky, but they never had the opportunity to review the entire agreement. Swanson's copy of the agreement was also missing the financial attachments, and he also refused to give his approval to the agreement.

Paul filed for divorce approximately eight months after the parties' marriage. The district court bifurcated the divorce action. During the first phase of the proceedings, the district court upheld the validity of the premarital agreement, finding that it had been voluntarily and knowingly entered into by both parties and that it was not unconscionable as a matter of law. During the second phase of the proceedings, the district court found that the jewelry, furs, and car given to Vicky by Paul were not gifts but were only for her use during the marriage, and that the mortgage payments he made on her house were a loan.

This court may review the validity of a premarital agreement de novo. Buettner v. Buettner, 89 Nev. 39, 45, 505 P.2d 600, 604 (1973). See also NRS 123A.080(3). Because the premarital agreement in the instant case was adopted prior to this state's adoption of the Uniform Premarital Agreements Act (UPAA), this agreement will be found to be enforceable if it either conforms to the requirements of the UPAA or if it conforms to the common law, as interpreted by the courts of Nevada prior to enactment of the UPAA. See NRS 123A.010, Reviser's Note.

We have previously held premarital agreements to be enforceable unless "unconscionable, obtained through fraud misrepresentation, material nondisclosure or duress." Buettner, 89 Nev. at 45, 505 P.2d at 604. Other jurisdictions have held such agreements to similar standards. Because of the presumed fiduciary relationship existing between parties who are engaged to be married, a presumption of fraud has been found where the agreement entered into greatly disfavors one of the parties. Bauer v. Bauer, 1 Or.App. 504, 464 P.2d 710, 711 (1970); Matter of Marriage of Matson, 107 Wash.2d 479, 730 P.2d 668, 671 (1986). This presumption may be overcome by a showing that the party claiming disadvantage was not in fact disadvantaged. Factors to consider include whether the disadvantaged party (1) had ample opportunity to obtain the advice of an independent attorney, (2) was not coerced into making a rash decision by the circumstances under which the agreement was signed, (3) had substantial business experience and business acumen, and (4) was aware of the financial resources of the other party and understood the rights that were being forfeited. See, e.g., Matson, 730 P.2d at 671. Because, in the instant case, the premarital agreement signed by Vicky left her with no resources or means of support in the event of a divorce, and because Vicky probably would have received more under the community property laws of Nevada were it not for the premarital agreement, there is a presumption that the agreement was fraudulent. Therefore, the agreement should not be enforced unless this presumption is overcome by the aforementioned considerations.

The presumption of fraud may be overcome by a finding that the disadvantaged party had the opportunity to consult with an attorney of his or her own choosing....