Divorce: New York

Divorce: New York

It Just Became Tougher To Validate Prenuptial Agreements

Posted in Agreements and Stipulations, Temporary (Pendente Lite) Relief

The Second Department seems to have taken another bite out of prenuptial agreements. My March 25, 2013 post asked, Is it Open Season on Prenuptial Agreements? That post discussed the Second Department’s February, 2013 decision in Cioffi-Petrakis v. Petrakis and its December, 2012 decision in Petracca v. Petracca. Both cases affirmed Supreme Court Nassau County decisions setting aside the prenuptial agreements in issue,

Now, in an October 15, 2014 decision in McKenna v. McKenna, the Second Department modified an order of Nassau County Supreme Court Justice Margaret C. Reilly that had granted a husband summary judgment motion declaring the parties’ prenuptial agreement to be valid and enforceable. Justice Reilly had also denied the wife’s motion for an award of pendente lite maintenance and counsel fees.

Holding that summary judgment was not warranted, the appellate court may have increased or changed the burden needed to uphold a prenuptial agreement; changing the role of a contract’s “merger clause.” That clause declares that no factual representations not specifically referenced in the contract may later be used to claim the contract was fraudulently induced. Typically, it is a shield used to protect the agreement from attack.

In McKenna, the Second Department suggests a merger clause may be used as a sword: preventing a court from learning the wife’s actual knowledge of the husband’s finances at the time the prenuptial agreement was entered. As that knowledge could only have come from representations of the husband, the merger clause would bar proof of such representations not referenced by the agreement.

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Ex-Husband May Fire Ex-Wife Despite Intent to Use Employment As Support Device

Posted in Agreements and Stipulations, Maintenance

A couple that used “employment” of the ex-wife by the ex-husband as a device to provide post-remarriage support to the ex-wife was bound to employment rules. The wife could be fired for misconduct. So held the Appellate Division, Fourth Department, in its September 26, 2014 decision in Anderson v. Anderson.

The Separation and Property Settlement Agreement that was incorporated into, but survived the entry of the parties’ divorce decree, provided that if the wife remarried, terminating the husband’s maintenance obligation, the husband would “employ” the remarried wife as a “consultant” for a stated weekly salary. That “employment” was to continue until husband’s child support obligations under the Agreement terminated. Although the Agreement did not require the wife “to work any particular number of hours,” it did require her to “be available at reasonable times and from time to time to consult, as needed by the [husband], with respect to [his] various business interests.”

After her remarriage, however, the wife opened a business in competition with her prior husband. He moved to terminate the consultation fees being paid to his former wife on the ground that she, as his employee, had breached her duty of loyalty.

Niagara County Supreme Court Justice Frank Curso denied the motion, concluding in relevant part that “the employment provision is not a contract for employment, but rather . . . is a support provision which allow[ed] the defendant’s business to make payments to plaintiff instead of the defendant himself.”

The Appellate Division, Fourth Department, reversed. The appellate court concluded that the Agreement provision constituted an employment contract, thereby permitting the husband to terminate the payments upon the wife’s breach of her duty of loyalty to him as her employer.

The separation agreement was required to be “enforced according to the plain meaning of its terms.” The Fourth Department did agree with the wife and Justice Curso that the clear and unambiguous intent of the Agreement was to provide a substitute source of monetary support for the wife after the husband’s maintenance obligation terminated. Nevertheless, the appellate court concluded that:

the reason defendant agreed to employ plaintiff does not change the fact that the Agreement established an employment relationship with corresponding rights and obligations for both parties.

An employee may not compete with his or her employer’s business during the time of his or her employment. Here, when the wife opened a business in direct competition with the husband’s business, the wife breached her duty of loyalty to her employer, thereby permitting the husband to terminate the consultation fees and the employment relationship.

Comment: If, indeed, the “employment” of the ex-wife was simply a device to continue to provide support to the ex-wife despite her remarriage that was tax deductible to the husband (and includable in the income of the wife), the device seems wholly unnecessary. Post-remarriage maintenance (alimony) payments need not lose their tax deductibility if other tests for deductibility under the Internal Revenue Code are met. The obligation must terminate if the ex-wife dies before the end of the stated support period (I.R.C. §71[b][1][D]).

Lawrence J. Vilardo, of Connors & Vilardo, LLP, of Buffalo, represented the husband. Joseph M. Finnerty, of Hiscock & Barclay, LLP, of Buffalo, represented the wife.

Court Authorizes Facebook Service Of Child Support Petition

Posted in Jurisdiction, Statutes

Service by Facebook of a father’s petition to terminate child support was directed by Richmond County Family Court Support Magistrate Gregory L. Gliedman in a September 12, 2014 decision in Matter of Noel B. v. Maria A. (NYLJ link).

The father filed that application to terminate child support based on the alleged emancipation of his son.

The father was unable to effect service of court papers upon the mother by normal means. He submitted an affidavit that the mother was unknown to the current occupant of the the mother’s last known address. The father called and sent text messages to his 22-year old daughter to ask the mother’s location, but that no one answered the call or replied to his texts and voicemail. He also called and sent a text message to his son (the subject child on the instant petition) requesting that information, but again there was no reply of any kind. The father also did a Google search, but was unable to find any location for the mother.

Magistrate Gliedman noted that the Support Collection Unit (“SCU”) to which the father mailed his support checks still had that same last known address on file for the mother, meaning that all correspondence and communication with respect to the funds she was receiving for child support were being  sent to that address. The magistrate further noted that the mother provided that same address to the court when she sent an electronic testimony application to the court in March, 2013 in connection with a prior matter between the parties.

The father told the court that the mother maintains an active social media account with Facebook. The mother’s current spouse maintains her own Facebook account, and has posted photos that have been “liked” by the mother as recently as July, 2014.

Magistrate Gliedman described Facebook as a social networking website that allows its users to interact with friends, relatives, acquaintances and individuals with common interests. Due to its online nature, there are no geographic limitations on Facebook — people with whom an individual interacts with on Facebook can be as close as the house next door or as far away as a continent on the other side of the world.

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Wife Denied Separate Property Credit Against Home Deeded By Her to Herself and Husband

Posted in Equitable Distribution

Six years before the parties’ marriage in June 2000, the wife became the sole owner of real property, which would later become the parties’ marital residence. At the time of marriage, the wife owned the property free and clear of any liens or encumbrances. In 2005, apparently in an effort to consolidate debt, the husband and the wife jointly applied for a mortgage on the property (based upon her limited income, the wife was unable to qualify for a mortgage on her own). To satisfy the requirements of the mortgage lender, the wife executed a deed conveying ownership of the residence from her alone to both her and the husband and the mortgage was issued jointly to the parties that same day.

In December 2011, the wife commenced this action for divorce. The parties resolved all issues except the distribution of the marital residence and the debt attached thereto, which had amounted to approximately $160,000. Following a trial, Supreme Court Justice Gerald William Connolly issued a decision finding, among other things, that the marital residence and its accompanying debt should be equally divided between the parties. No credit for any separate property contribution was given.

The Appellate Division, Third Department, in its July, 2014 decision in Myers v. Myers, affirmed.

The wife acknowledged that the residence had become marital property when she deeded it to herself and her husband. The wife contended that it was error to deny her a separate property origination credit in the amount of $165,000 for the estimated value of the marital residence at the time she did so.

The Third Department held that to the extent that a prior decision of the Third Department in Campfield v. Campfield (95 A.D.3d 1429, 944 N.Y.S.2d 339 [2012], lv. denied 21 N.Y.3d 857, 969 N.Y.S.2d 443 [2013]), may be read to limit a court’s discretion to award a separate property credit to a spouse, like the wife, who transmutes separate property into marital property without changing the nature of the property itself, it should no longer be followed.

The appellate court noted that credits are often given for the value of the former separate property. The decision to award a separate property origination credit in such a situation is a determination left to the sound discretion of the trial court. A court is not precluded as a matter of law from giving a credit when separate property has been transmuted into marital property.

Nonetheless, the appellate court was unpersuaded that the denial of the wife’s request for a separate property origination credit under the specific circumstances herein constituted an abuse of discretion. Justice Connolly had found “the overall picture is of the parties engaging generally in a financial partnership, of which the marital residence, and the loans thereupon, was simply one agreed-upon portion.”

The funds received from the mortgage, as well as the subsequent refinancing and home equity loan, enabled the wife and the husband to consolidate their debts, go on numerous family vacations, make improvements to the marital residence and, generally, live a lifestyle that may have been above their means. Notably, the wife’s individual debt was eliminated by the proceeds of a new, jointly-held debt which, in turn, was primarily paid from the husband’s income for a number of years.

Inasmuch as a separate property origination credit “is not strictly mandated since the property is no longer separate, but is part of the total marital property,” the Third Department could not say that Justice Connolly improperly denied the wife a credit.

Comment: This is not a rare scenario, particularly with second marriages. Rather than leaving such matters to the discretion of a trial judge, dealing with assets brought into marriage is properly the subject of a prenuptial agreement, or a post-nuptial agreement entered at the time the “separate” asset is “transmuted.” At that time the parties would have been independently counseled to consider the effect of using the mortgage proceeds for various purposes and paying the mortgage debt.

Cynthia Feathers, of Glens Falls, represented the wife. Paul W. Van Ryn, of Maxwell & Van Ryn, of Delmar, represented the husband.

Father Given Child Care Right of First Refusal By Appellate Court

Posted in Custody and Visitation

The Second Department has modified an order of Suffolk County Family Court Attorney-Referee Roseann Orlando to direct that when one parent is working, that parent, prior to making babysitting arrangements with a nonparent, shall first afford the other parent the opportunity to care for the subject child during such work period.

In its August 27, 2014 opinion in Matter of Saravia v. Godzieba, the Appellate Division otherwise upheld Referee Orlando’s order that had granted the mother sole custody of the parties’ almost 3-year old son.

The mother and the father had never been married. After the birth of their son in September, 2011, the parties resided together for approximately six months until the mother, with the child, moved out. In June, 2012, the parties cross-petitioned for sole legal and physical custody of the child. After a hearing at which the parties and one other witness testified, Referee Orlando awarded the mother sole legal and physical custody of the child.

The evidence at the hearing established that both parents loved the child, were gainfully employed, maintained their own homes, and could adequately provide for the child’s overall development. However, the Family Court, having the benefit of observing and listening to the witnesses, including the testimony of both parties, found that the mother was better suited to place the child’s interests ahead of her own and to foster the child’s relationship with the other parent. Upholding the custody determination, the Second Department held that here was a sound and substantial basis in the record to support Referee Orlando’s determination that it was in the best interests of the child to award sole custody to the mother, with visitation to the father.

Moreover, the Second Department rejected the father’s contention on appeal that an award of joint custody or equal parenting time would have been in the child’s best interests. The parties were sometimes antagonistic toward each other and demonstrated an inability to cooperate on certain important matters concerning the child.

However, the appellate court did add a child care right of first refusal.

Nonetheless, we find that under the circumstances of this case, where both parties have different work schedules and have expressed a desire to care for the child during the periods when the other parent is working, it would be in the best interests of the child for each parent, prior to arranging for a nonparent to babysit the child during a work period, to first afford the other parent the opportunity to care for the child during that time.

Clifford J. Petroske, P.C., of Bohemia, represented the father. No counsel for the mother was listed in the opinion. Thomas W. McNally, of Huntington, N.Y., served as Attorney for the Child.

Journalist Privilege Precludes Divorce Action Discovery From Author

Posted in Discovery

A party in a divorce action who seeks to compel a journalist to turn over information or documents must meet an extraordinary burden.

So held New York County Supreme Court Justice Donna M. Mills in an August 21, 2014 decision Matter of Hamm (Zuckerman).

Petitioner, Sue Ann Hamm, and her husband, Harold Hamm, are parties to an Oklahoma divorce action. By this application, Ms. Hamm sought to enforce a subpoena issued to New-York based journalist Gregory Zuckerman of the Wall Street Journal, author of the book, The Frackers: The Outrageous Inside Story of the New Billionare Wildcatters, in which Mr. Hamm is featured. Mr. Zuckerman cross-moved to quash the subpoena and for a protective order preventing Ms. Hamm from deposing him and obtaining the materials demanded.

According to Wikipedia, in 2012 Hamm was ranked by Forbes magazine as the 30th richest person in America and 76th richest person in the world, with a net worth estimated at $11 billion, a figure increased to $17 billion in early 2014. In 2012, presidential candidate Mitt Romney named Hamm as his energy advisor, and thereafter Hamm made substantial monetary and advisory contributions to the election effort.

Here, Ms. Hamm sought documents and testimony from Zuckerman about topics in the book, arguing that Mr. Zuckerman had unique insight and knowledge concerning a pivotal issue in the divorce case of whether or not Mr. Hamm’s efforts, skills or expended funds contributed to the value of the marital estate. Ms. Hamm provided the Court with excerpts from the book which indicated that it was based on interviews with numerous witnesses, including her husband, who had personal knowledge of material facts about those contributions.

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Mother Leaving Hasidic Community Denied Custody of Children

Posted in Custody and Visitation

When making a decision in custody matters, the primary concern is the best interests of the child. The courts may consider religion as one of the factors in determining the best interests of a child, but religion alone may not be the determinative factor. New York courts will consider religion in a custody dispute when a child has developed actual religious ties to a specific religion and those needs can be served better by one parent than the other.

So held the Appellate Division, Second Department, in its August 20, 2014 decision in Matter of Gribeluk v. Gribeluk,affirming Family Court Judge Sherri L. Eisenpress’ order awarding custody to the father. The appellate court noted that contrary to the mother’s contentions, Judge Eisenpress did not rely solely on religion and the mother’s decision to leave the Hasidic Jewish community in making the determination to award the father custody of the parties’ children.

Judge Eisenpress had expressly stated that it passed no judgment on either parent’s religious beliefs and practices. Rather it was the children’s need for stability, and the potential impact of uprooting them from the only lifestyle which they had known, that were important factors in making the custody determination.

Judge Eisenpress also found the mother’s repeated allegations of sexual abuse of the children by the father to have been unfounded, which subjected the children to numerous interviews and examinations, casting doubt upon the mother’s fitness to be the custodial parent.

Although the children expressed a preference to reside with the mother, and the attorney for the children advocated awarding custody to the mother, the children’s preference and the recommendation of the attorney for the children were not determinative and did not usurp the judgment of the Family Court.

Considering the totality of the circumstances, there was a sound and substantial basis in the record for the Family Court’s determination that it was in the best interests of the children to award custody to the father.

Ilene Kim Graff , of counsel to Eric Ole Thorsen, of New City, represented the father. Janice Mac Avoy, of Fried, Frank, Harris, Shriver & Jacobson, LLP, of Manhattan, represented the mother. Veronica J. Young, of New City, served as Attorney for the Children.

Husband Denied Millions in Separate Property Credits Because of the Definition of “The”

Posted in Agreements and Stipulations, Equitable Distribution

It depended on what the definition of “the” was.

In Babbio v. Babbio, the Appellate Division, First Department, on July 17, 2014 defined “the” and otherwise interpreted a prenuptial agreement in ways that cost a husband millions of dollars of separate property credits he sought in his divorce action.

Under the parties’ agreement, marital property, generally, was to be divided equally. However, the agreement also provided:

[i]n the event of an Operative Event, Marital Property [as defined elsewhere in the agreement] shall be distributed equally between [the parties] in accordance with the following provisions, except that if the parties have been married for ten (10) years or less and either party is able to identify One Million ($1,000,000) Dollars or more of Separate Property that was used for the acquisition of the Marital Property, that party shall first receive the amount of his or her contribution of Separate Property prior to the division of the remaining value of such property, if any. [emphasis added]

“Operative Event” was defined, inter alia, as “the delivery by [either party] to the other of written notification … of an intention to terminate the marriage.” Here, the Court held that it was the date of the notification, and not the date of distribution that was determinative. As a result, the husband became entitled to the benefits of this provision.

However, construing the parties’ prenuptial agreement in what the Court viewed as being in accord with the plain meaning of its terms, and interpreting every part of the agreement “with reference to the whole”, the First Department found that the party seeking the credit must have contributed $1 million or more of his or her own separate property directly to the acquisition of the particular item of marital property at issue.

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Ex-Wife Living with Parent is Not Cohabitation For Purpose of Terminating Maintenance

Posted in Agreements and Stipulations, Maintenance

The parties were divorced in August, 2012 pursuant to a judgment that incorporated a September, 2008 Memorandum of Understanding. The Memorandum provided for maintenance payments to the wife in a specified sum until, as pertinent here, “[the wife] cohabits with an individual for any period in excess of 75 days within any 6-month period of time.”

In October 2012, the ex-husband moved to cease making these payments based upon the wife’s alleged cohabitation with her mother and stepfather. The wife opposed the motion and cross-moved for sanctions. Albany County Supreme Court Justice Gerald William Connolly denied both motions. The husband appealed, and the Third Department in its July 10, 2014 opinion in Vega v. Papaleo affirmed.

As Justice Connolly noted below, the agreement failed to provide any definition of the term “cohabits.” The ex-husband contended that the provision unambiguously stated the parties’ intention, and that “cohabits” should be read in this context to mean merely that the wife reside with any other person for the requisite time period, with no showing of any sexual, romantic or economic relationship required. However, the Third Department held Justice Connolly properly rejected this argument, finding that the term could not be fairly read to encompass the husband’s broad interpretation.

The Memorandum was an agreement that remained “a separate contract subject to the rules of contract interpretation.” The Third Department’s analysis of disputed terms was based upon the plain meaning of those terms, as well as “’consideration of whatever may be reasonably implied from that literal language,’”

Most notably, the parties entered into this agreement following the decision of the Court of Appeals in Graev v Graev (11 N.Y.3d 262, 869 N.Y.S.2d 866 [2008]), in which the Court carefully reviewed several potential definitions of the term “cohabitation.” The Court held that neither case law nor dictionary usage provided an authoritative or plain meaning. However, while no single factor – such as residing at the same address, functioning as a single economic unit, or involvement in a romantic or sexual relationship – is determinative, the Court of Appeals found that a “common element” in the various dictionary definitions is that they refer to people living together “in a relationship or manner resembling or suggestive of marriage.”

[In the absence of an agreement on this issue Domestic Relations Law §248 would require proof that the ex-wife habitually lived with another man and held herself out as his wife before terminating court-ordered maintenance.]

There is simply no authoritative definition or customary usage of the term that could include residing with a parent. The husband’s assertion that the phrase “with an individual” informs the term “cohabits” in such a manner as to omit a requirement of any showing of an intimate or romantic relationship is wholly contrary to the governing precedent, and is unavailing.

As Justice Connolly correctly found, the husband did not allege that the wife has lived with another individual in any relationship remotely resembling or suggestive of a marital bond, nor did he show that anything in the Memorandum revealed an intention to define cohabitation as a shared address in the absence of such a bond.

David H. Sawyer, Esq., of Albany, represented the ex-husband. Rosemary Nichols, Esq., of Watervliet, represented the ex-wife.

Melting Pot (Part 4 of 4): Although New York Had Jurisdiction, Case Dismissed Because Nicaragua Was Better Forum

Posted in Jurisdiction

In the fourth “international” decision this month, Westchester County Supreme Court Justice Paul I. Marx dismissed a divorce action over which the Court had jurisdiction, deciding, however, that Nicaragua was the better forum. In L.A.B. v. B.M.decided July 9, 2014, the importance of the majority of witnesses and assets being in Nicaragua overcame the wife’s choice of court.

The wife was born and raised in Nicaragua, holding only a Nicaraguan passport. The husband is a U.S. citizen with a U.S. passport. The parties met in Nicaragua and were married in Nicaragua in a civil ceremony in 2003 and a religious ceremony in 2004. After they were married, the parties lived together in the husband’s Manhattan apartment. The parties have two children, the first born in Manhattan; and the younger, born in Nicaragua.

Shortly after the birth of their first son, the wife moved back to Nicaragua. She remained there as a homemaker residing with the parties’ children in one of the parties’ properties in Managua, Nicaragua. The husband is a Risk Manager at Credit Suisse Securities, LLC, residing in a condominium in White Plains, New York.

According to the wife, the husband obtained permission from his employer to work remotely from Nicaragua for several days each month.This allowed The husband to travel each month between New York and Nicaragua, where the wife and the parties’ child (and later children) resided.

The parties owned three properties in Nicaragua. In addition, the husband owned a condominium in Westchester. The parties established a corporation in Nicaragua to purchase two of their Nicaraguan properties and proceeded to build homes on those two properties.

The parties’ marital difficulties began in Fall 2013. In October, the wife notified her husband of her desire to divorce. On December 23, 2013, she wife filed a divorce summons with notice in New York asserting no-fault grounds. On January 13, 2014, the husband filed for divorce in Nicaragua.

The wife moved for an interim award of counsel fees. The husband cross-moved to dismiss the action, arguing that New York was without jurisdiction to hear this divorce action under DRL §§ 230 and 231 and that New York was an improper and inconvenient forum (forum non conveniens).

Justice Marx first held that the court had both personal and subject matter jurisdiction; it had the authority to decide the divorce issues. The residency requirements of D.R.L. §230 had been met. It was undisputed that the parties lived together as husband and wife in Manhattan for approximately three years. The parties further agreed that the wife was not a New York resident.

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