The Few and Varying Published Decisions on the Presumption of Undue Influence

• Jurisdiction: California,United States
• Author: Elsa-Marie Medeiros
• Publication year: 2020
• Citation: Vol. 42 No. 3

The Few and Varying Published Decisions on the Presumption of Undue Influence

Elsa-Marie Medeiros

Elsa-Marie Medeiros has been a member of the Bar since 2019. She is an associate at Harris and Fraser, a family law firm in San Mateo County. She received her Juris Doctorate and certificate in Child Advocacy from UC Hastings College of the Law. She also served as an editor for the Hastings Law Journal. She graduated summa cum laude from the University of San Francisco with a Bachelor of Arts in Politics and earned a certificate in Human Rights from Stanford University. She is a Court-Appointed Special Advocate in San Francisco County and speaks fluent Portuguese.

The presumption of undue influence is a unique aspect of Family Code section 721(b) because it is not explicitly stated. It must be inferred. Generally, the presumption arises when one spouse obtains an advantage over the other spouse in an interspousal transaction. If the advantaged spouse fails to demonstrate to the court that the non-advantaged spouse was not unduly influenced in the transaction, the transaction is void and unenforceable.

Since Family Code section 721(b) came into effect twenty-six years ago on January 1, 1994, only eleven published cases comprehensively analyze the presumption of undue influence.¹ One case, Marriage of Deluca, is currently not citable because it is scheduled for a rehearing.² The shortage of published cases provides little guidance to advise clients and renders unpredictable court decisions. This is unsettling and deserves careful review.

Advantaged Spouse

The presumption arises if a spouse obtained an advantaged over the other. A spouse is "advantaged" if he or she received a favorable opportunity or position, or profits from the transaction.³ The analysis is usually straightforward in cases involving agreements that change the character of property. The advantaged spouse is the one who acquires property that he or she did not have title to previously at the expense of the other spouse who receives nothing in return.⁴

However, there are other cases, particularly those involving post-marital agreements or promissory notes, in which the analysis is less forthright. For instance, in Marriage of Burkle, the Second District Court of Appeal found the spouses' post-marital agreement to be mutually advantageous because each spouse received a benefit — wife acquired financial security and husband obtained financial freedom to make investments.⁵ Essentially, where there is a "mutual advantage," the presumption of undue influence will not rise.

Further, in Marriage of Lange, the Second District Court of Appeal did not find a "mutual advantage."⁶ Rather, it found that husband's $250,000 promissory note executed for wife's separate property contributions to their jointly owned home provided her with a financial advantage.⁷ She became a secured creditor additionally entitled to ten percent interest on husband's obligation.⁸

Rebutting the Presumption

If the presumption arises, the advantaged spouse must rebut it. He or she must show the court by a "preponderance of the evidence" that the interspousal transaction was (1) "freely and voluntarily made," (2) "with full knowledge of all the facts," and (3) "with a complete understanding of the effect of the transfer."⁹

Freely and Voluntarily Made

Interestingly, to determine whether the transaction was "freely and voluntarily made," courts have considered the objective and subjective states of mind of the non-advantaged spouse at the time of the transaction. Courts have examined the context of the transaction by looking for evidence of coercion or fraud. In addition, they have looked at the mental characteristics of the non-advantaged spouse, such as his or her capacity to enter the transaction.

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Evidence of physical, emotional, and or financial coercion will not rebut the presumption. For instance, in Marriage of Balcof, the Fourth District Court of Appeal did not find the transaction to be freely and voluntarily made because wife physically struck husband and screamed at him for forty-five minutes immediately preceding the transaction.¹⁰ She threatened him with divorce and the obstruction of his relationship with their children if he did not prepare the transaction.¹¹ The Fourth District Court of Appeal reached the same conclusion in Marriage of Haines because husband coerced wife economically. He would not agree to cosign a car loan for her unless she quitclaimed her interest in the jointly owned house.¹²

Further, evidence of a cognitive impairment suffered by the non-advantaged spouse at the time of the transaction will not rebut the presumption. For instance, in Marriage of Delaney, husband had a learning disability that severely limited his reading comprehension.¹³ Throughout the marriage, he relied on wife to handle all legal and financial marital matters because of his disability.¹⁴ Per wife's instruction, he executed a grant deed conveying his property to wife as joint tenants to obtain a loan to finance a remodeling project.¹⁵ He did not question her and did not realize he was giving half of his property to wife to obtain the loan.¹⁶ Therefore, the First District Court of Appeal held the transaction was not voluntary.¹⁷

Analyzing this element is fact intensive. The slightest change in the facts can change the outcome completely. For instance, the Second District...