A Question of Nullities, Relative and Absolute

By Henry S. Rauschenberger, Articles Editor for the Louisiana Law Review

Introduction

Louisiana Civil Code article 2329 provides the legal framework for spouses who wish to, by matrimonial agreement before or during their marriage, modify or terminate their matrimonial regime.[1] Spouses may freely enter into such agreements before their marriage with very few restrictions as to content[2] or form.[3] During the marriage, however, spouses who wish to modify or terminate their matrimonial regime must not only follow the form requirement common to all matrimonial regimes,[4] they must also seek approval of the agreement by a court via joint petition.[5] But what if they did not get approval? What if they were not aware of the need for judicial approval? What if they filed a separate petition? It has remained an open question for family law practitioners and scholars as to what effect a failure to get judicial approval would have on a matrimonial agreement . . . until now.

 

The Case

In Radcliffe 10, L.L.C. v. Burger, the Louisiana Supreme Court, for the first time, weighed in on the validity of matrimonial agreements that are not judicially approved and provided a definitive, somewhat troubling, answer.[6] The story of Radcliffe begins at the end of another legal story, one in which Radcliffe 10, L.L.C. (“Radcliffe”) received a judgment against Ronald Burger that exceeded $3.4 million dollars.[7] After the judgment was rendered, but before it was signed by the court, Ronald and his wife Lynda entered into a matrimonial agreement that terminated their community property regime and partitioned their community property between them.[8] The Burgers sought and received judicial approval of their agreement—again before the signing of Radcliffe’s judgment—but the petition filed was not joint, naming Lynda as a defendant rather than as a joint petitioner.[9] Radcliffe, taking note of this irregularity, sought to have the matrimonial agreement declared an absolute nullity, and the trial court ruled as such.[10] Hearing the case on appeal, the Louisiana First Circuit Court of Appeal split evenly, five to five, on the issue of whether the failure to file a joint petition rendered the matrimonial agreement an absolute nullity—which can be raised by any party at any time, including in this instance the judgment creditor, Radcliffe—or a relative nullity—which can only be raised by the party whom the nullity protects.[11] Being split evenly, no executable majority judgment could be issued, and the trial court decision was left standing.[12] Writs were subsequently sought and granted.[13]

 

The Decision

To determine whether the procedural defect at the heart of the case rendered the matrimonial regime between Ronald and Lynda an absolute or a relative nullity, the Louisiana Supreme Court looked to prior case law and the writings of prominent Louisiana legal scholars.[14] If the object of the requirement of judicial approval in article 2329 was a “rule of public order,” intended to protect a large class of persons, then the violation of it would render the agreement an absolute nullity; if it was “a rule intended for the protection of private parties,” the violation of it would only render the agreement a relative nullity.[15] After considering all of the aforementioned sources, the Louisiana Supreme Court determined that the requirement for judicial approval found in article 2329 was intended to protect the “less worldly” spouse in a marriage from entering into disadvantageous matrimonial agreements he or she did not fully understand.[16] Therefore, the Court held that the failure of the Burgers to get proper judicial approval rendered the agreement only a relative nullity and, as such, this nullity could only be raised by the parties it protected—the Burgers themselves.[17] Without being an absolute nullity, Radcliffe as a non-protected party had no right to raise the issue.[18] The Louisiana Supreme Court reversed the trial court judgment and dismissed Radcliffe’s action with prejudice.[19]

 

The Dissents

Both Justice Guidry and Justice Clark dissented.[20] Although the justices dissented separately, both dissents focused on the same two points: (1) that article 2329 is clear and unambiguous in its requirement of a joint petition and (2) that although article 2329 primarily protects the spouses, it does afford protections to other persons, such as creditors, heirs, and legatees, and should thus be considered a rule of public order.[21] Both justices would have affirmed the trial court’s holding that the agreement between the Burgers was an absolute nullity.

 

So What? What’s the Big Deal?

The Louisiana Supreme Court’s determination that failure to properly seek and obtain judicial approval of a matrimonial agreement under article 2329 only renders such an agreement a relative nullity is troubling. A close look at the facts of Radcliffe reveals why. Ronald Burger had a significant judgment rendered against him and before that judgment could be signed, he and his wife Lynda terminated their matrimonial regime and partitioned their marital property. While the timing of the Burger’s matrimonial agreement may have been—but likely was not—coincidental, it effectively prevented Ronald’s judgment creditor, the party whom Ronald had been adjudged to have harmed, from going after any of the formerly marital property that had been partitioned to Lynda or any of Lynda’s future earnings to satisfy the lawful judgment that had been rendered in their favor. The Louisiana Supreme Court’s ruling has essentially opened the door for any married person to avoid judgments against him or her in the same manner. As the Supreme Court has determined that the requirement of judicial approval is only for the protection of the spouses, why should two spouses, against one of whom a judgement has been rendered, not simply terminate their matrimonial regime?

This decision opens the door for married couples to manipulate their matrimonial regimes to avoid their responsibilities to creditors. The law should not condone and permit creative manipulation of the law to avoid one’s responsibilities, and it should certainly not condone the manipulation of the marital regime for patrimonial gain or protection. This decision, together with the law underlying it, should be revisited and this open door to wanton manipulation shut and locked.

[1] La. Civ. Code art. 2325 (2017) (“A matrimonial regime is a system of principles and rules governing the ownership and management of the property of married persons as between themselves and towards third persons.”).

[2] Id. art. 2330.

[3] Id. art 2331 (“A matrimonial agreement may be executed by the spouses before or during marriage. It shall be made by authentic act or by an act under private signature duly acknowledged by the spouses.”).

[4] Id.

[5] Id. art. 2329.

[6] No. 2016–C–0768, 2017 WL 362085 (La. Jan. 25, 2017).

[7] Id. at *1.

[8] Id. Although the record does not mention it, one would guess that Mrs. Burger received the bulk—if not all—of the martial property.

[9] Id.

[10] Id.

[11] Radcliffe 10, L.L.C. v. Burger, 191 So. 3d 79, 84 (La. Ct. App. 2016).

[12] Id.

[13] Radcliffe 10, L.L.C. v. Burger, 204 So. 3d 998 (La. 2016).

[14] Radcliffe 10, L.L.C. v. Burger, 2017 WL 362085 at *4–5.

[15] Id. at *6.

[16] Id. at *4.

[17] Id. at *6.

[18] Id. The Supreme Court did note that the creditor had a separate action under Louisiana Civil Code article 2376 through which he could challenge any allegedly fraudulent transfers made pursuant to the agreement. Id. at *5–6.

[19] Id. at *6.

[20] Id. at *7.

[21] Id. at *7–9.

[22] Id.

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