Not according to Richmond County Civil Court Judge (and Acting Suprme Court Justice) Philip S. Straniere, seemingly running afoul of a contrary body of case law, particularly in the Second Department.

Small Claims Court proceedings may well be the only practical way to redress relatively modest, but often important breaches of divorce settlement agreements as to matters of support and property. Such proceedings are quick, inexpensive, can be pursued without lawyers, and do substantial justice. Eliminating Small Claims Court as a proper forum for such relief would often leave parties without a reasonable remedy.

In his February 19, 2014 decision in Pivarnick v. Pivarnick, Judge Strainiere, held that Small Claims Court was without subject matter jurisdiction to enforce a divorce settlement agreement.

Doing so, he vacated an arbitrator’s $4,000 award to an ex-wife for counsel fees she incurred in connection with her submission to the Supreme Court of a proposed Qualified Domestic Relations Order to implement a division of the ex-husband’s pension and her defense of the ex-husband’s motion to dismiss that proposed QDRO. The ex-wife had cross-moved for sanctions “in the form of ‘attorneys’ fees for his engagement in frivolous conduct.’” Those post-divorce Supreme Court submissions were resolved by a so-ordered stipulation under which the entitlement of the ex-wife to share in the ex-husband’s pension was restated. No reference in the stipulation was made to the wife’s “attorneys’ fee claim” by cross-motion.

Thereafter, the ex-wife sought her counsel fees in Small Claims Court. The arbitrator had awarded the claimant legal fees in the amount of $4,000.00 and dismissed the defendant’s counterclaim for his own counsel fees.

Continue Reading Does Small Claims Court Have Jurisdiction to Resolve Divorce Settlement Agreement Disputes?

The alleged failure of the mediator and the husband’s counsel to advise the husband that a court need not apply the C.S.S.A. formula to the husband’s entire agreed-upon income of $1,200,000.00 per year income is not a basis to set aside a divorce settlement agreement, or its $29,500.00 per month child support obligation. So held Westchester County Supreme Court Justice Lawrence H. Ecker in his January 16, 2014 opinion in A.B. v. Y.B.

The couple involved separated after 12 years of marriage. Following three years of mediation, the parties entered into an agreement that resolved issues of custody and access to the parties’ three children, maintenance, child support, and equitable distribution. The husband is a 50% equity partner in a brokerage firm. The wife is owner and operator of her own business.

Upholding the agreement, Justice Ecker took pains to quote several of its provisions. One acknowledged that the parties had waived the “compulsory financial disclosure” requirements of the Domestic Relations Law and court rules, and agreed not to exchange Net Worth Statements. Nonetheless, the parties represented to each other that each made a full and complete disclosure of assets, liabilities, income and expenses, and that they relied on the information provided.

The agreement recited the husband’s disclosure, to the best of his knowledge, of his gross personal 2010 income as approximately $156,427.00. The parties agreed to use the 2010 income because their 2011 income was not yet available. The Husband disclosed that in no event was his income from any and all sources more than $156,427.00 in said year.

Nonetheless, for purposes of the agreement, the parties agreed to use an imputed income of$1,200,000 in computing the child support calculation under the Child Support Standards Act.

The parties acknowledged that they reached their agreement with the aid of the mediator, but that the mediator provided no legal representation to either of the parties. Further, although “the mediator may have provided information or opinions concerning the state of the law generally, neither party has relied upon such information or opinions in executing this Agreement.”

The parties further represented that each had ample opportunity to obtain independent legal counsel, and counsel [apparently recommended by the mediator] for each spouse was named.

As to the basic child support obligation, the agreement provided it was agreed that the the husband’s would pay $29,500 per month [$354,000 per year] for 12 years, 5 months, subject to a cost of living increase biennially. The husband was further responsible for 100% of discretionary expenses and add-on expenses, including private school tuition for all three children, private college expenses, camp and summer programs, religion education expenses, Bar and Bat Mitzvah expenses, health insurance and unreimbursed medical expenses.

Continue Reading Claimed Ignorance of C.S.S.A. Treatment of Income Over Cap Not Basis to Set Aside Divorce Settlement Agreement

As I wrote about last week, New York attorney Steven Simkin attempted to recover $2.7 million from his wife after he found out the $5.7 million Madoff-invested account he split up in their divorce agreement was worthlesss. In the video interview with Colin O’Keefe of LXBN TV, I discuss the background of the case, why this isn’t an “exceptional situation” and what other divorcing couples can learn from the situation.

House of cards 2.jpgContinuing to demonstrate New York’s public policy enforcing settlement agreements and the finality they bring to bear on divorce litigation, the Court of Appeals on April 3, 2012 held that the post-agreement discovery that the fact that a marital account had been invested with Bernard Madoff and retained by the husband upon the divorce was not a sufficient basis to set aside that agreement when the Madoff scheme later surfaced.

In 2006, former spouses Steven Simkin and Laura Blank entered a divorce settlement agreement under which Ms. Blank, among other terms, waived spousal support and marital property rights in the value of the husband’s law practice. The husband paid his wife $6.25 million.

Three years later, when the now ex-husband learned he was a victim of Bernard Madoff’s massive Ponzi scheme, he commenced an action against his former wife asking that the 2006 agreement be “reformed” to reflect the mutual mistake made by the parties, i.e., the assumption  that there was an account with Madoff worth $5.4 million. Mr. Simkin alleged that the payment made to his ex-wife under the 2006 agreement was intended to accomplish an “approximately equal division of [the couple’s] marital assets.” In reliance upon that mistaken assumption, the ex-husband claimed he paid his wife $2.7 million which should now be returned.

Continue Reading Husband Keeping Madoff Account in Divorce is Not Basis to Change Pre-Collapse Settlement Agreement

Connolly Francesca.jpgThere are may circumstances which courts recognize warrant revisiting a divorce resolution. On the other hand, ongoing litigation is often unfounded and a result of the anger, bitterness, sadness, desire for revenge, etc.

In her February 3, 2012 decision in D.W. v. R.W., Westchester County Supreme Court Justice Francesca E. Connolly imposed $17,500.00 in sanctions and another $42,707.29 in counsel fees against a pro se (self-represented) ex-wife who refused to abide by repeated rulings requiring the ex-wife to discontinue her attacks on a divorce settlement reached over seven years earlier.

Following that settlement, the ex-wife had engaged in extensive post-judgment litigation to vacate the underlying agreement on the grounds that she lacked the mental capacity to understand and agree, and that the agreement was unfair, unconscionable, the product of overreaching, fraud, or some variation thereof. Her numerous attempts to challenge the stipulation were considered and rejected by several lower and appellate courts.

Nevertheless, in October, 2010, the ex-wife commenced another action against 23 defendants, including her ex-husband, her children, her former in-laws, her ex-husband’s former attorneys, and other entities. In an 81-page complaint, she claimed breach of contract and fraud for the failure to disclose various assets during the divorce proceedings. She claimed to have discovered documents showing the fraud by going through her ex-husband’s garbage cans outside his residence.

Continue Reading Sanctions and Fees Totaling $60,000 Imposed Against Ex-Wife; Divorce Litigation Often Keeps Going, and Going, and Going . . .

Rip up contract 3.jpgShlomo Scholar and Shoshana Timinisky married in 2005. They had one child the next year.  The year after that they entered a stipulation of settlement to resolve their divorce action.

Included in that stipulation was the parties agreement that Ms. Timinisky would have sole custody of the parties’ child. However, the parties also agreed that custody rights be limited by an agreement to share decision-making on all issues relating to the child’s education. The parties pre-selected an arbitrator to resolve their failure to agree on such issues.

Such a disagreement arose. However, in a September 9, 2010 order, Queens County Supreme Court Justice Thomas Raffaele denied the father’s motion to enforce the parties’ stipulation. Instead, without a hearing, the mother was granted sole decision-making authority with respect to the child’s education in the event that the parties were unable to agree to a parenting coordinator (traditionally employed to facilitate parent communication and the mediation of disputes).  Justice Raffaele also disqualified “a certain individual from arbitrating issues regarding the education of the child.” Finally, on its own motion, Justice Raffaele enjoined Mr. Scholar from bringing any further motions without the permission of the Supreme Court.

In an August 9, 2011 decision of the Appellate Division, Second Department, in Scholar v. Timinisky, that Order was affirmed. The appellate court ruled that Justice Raffaele properly determined that a change of circumstances required a modification of the parties’ stipulation of settlement to protect the best interests of the child. New York’s best interest standard was to be applied to resolve a dispute regarding parental joint decision-making authority.

Continue Reading Court Avoids Parents' Agreement to Arbitrate Disputes Over Education of Child

square peg1.jpgEntering open-court oral stipulations of settlement to a divorce action is treacherous.  It’s easy to miss something or be imprecise in language.

However, striking the deal while the iron is hot is a necessary part of matrimonial litigation.  Letting the parties walk out of the courthouse without putting the day’s agreement “on the record” may cost the parties their deal.  Emotions, particularly in divorce cases, often cause second (and hundredth) thoughts on settlement provisions.  Giving friends and family one more opportunity for input may likely undermine the day’s efforts.

However, there are reasons that the typical written settlement stipulation consumes scores of pages. The boilerplate and legalese so offensive to the public is the necessary consequence of the thousands of decisions which interpret the words found in or missing from decades of previous settlements or otherwise requiring attention in any final agreement.  Moreover, without reflecting on the written word, it’s easy just to miss things.

Take the recent Second Department decision in Zuchowski v. Zuchowski.  The parties’ oral in-court stipulation announced that “all joint bank accounts have been split to the mutual satisfaction of the parties and here and forward each party shall keep any bank accounts in their respective names . . .”

Continue Reading The Nature of 529 Education Savings Plans Should Not be Disregarded Under the Guise of Divorce Stipulation Interpretation

scissors contract 2.jpgWhat happens when only one provision of an agreement is invalid because it violates some statute or public policy?  The answer may depend on who the court wants to benefit, instead of consistently-applied rules of contract law.

Take, for example the April 5, 2011 decision of the Second Department in Duggan v. Duggan.  In that case, the parties had resolved their divorce by a surviving February 26, 2009 stipulation of settlement. Under that stipulation, the father, who had gross income of $475,000.00, agreed to pay a base monthly child support obligation of $8,000.00.  That amount deviated from the presumptive amount under the Child Support Standards Act (C.S.S.A.) of $11,929.54. The mother had no income.

Apparently, the stipulation also had a provision which called for the reduction in the father’s monthly obligation in the event his income was reduced.

In 2010, the mother brought a Family Court enforcement proceeding when the father ceased making the payments to which he originally agreed. The father raised the stipulation’s modification provision, arguing that his $8,243.00 annual reduction in income to $466,757.00 entitled him to a $76,800.00 annual reduction in child support (to $1,600.00 per month)!

Finding that the father’s interpretation of the stipulation modification provision was “not plausible,” Nassau County Family Court Judge Julianne S. Eisman denied the father’s objections to the Order of Support Magistrate Tejindar S. Kahlon which granted the mother’s arrears petition. Finding that the language of the Stipulation, as interpreted by the father, would violate the C.S.S.A., and was against the best interests of the children, the modification provision was ignored.

On appeal, the Second Department affirmed, holding that the Family Court had the authority to find that a provision in a stipulation of settlement violated the C.S.S.A. The appellate court found that a provision which called for a reduction in child support to 13% of the presumptive C.S.S.A. amount, merely because the father’s income dropped by 1.7% was “against the best interests of the children.”

It is noteworthy that the appellate court did not quote the startling modification provision. Equally noteworthy is that there was no discussion of any interpretation of the modification provision other than the one the Family Court considered implausible.

In order to have obtained the Judgment of Divorce, it would have been necessary to have made the recitation in the stipulation of settlement that the parties had been made aware of the C.S.S.A. and its presumptive formula in their case. D.R.L. §240(1-b)(h).  The parties would have had to have stated the reasons they agreed to deviate from the C.S.S.A guidelines. Specific Findings of Fact would have been made by the Supreme Court upholding those reasons.

It is understandable that the presumed failure of the Supreme Court to review the specific modification provision might not estop the mother from later attacking that provision when it was sought to be applied. Thus, the form language of a divorce judgment that “the parties are directed to comply with every legally enforceable term and provision” of the agreement incorporated into the judgment, does not mean that every provision is, in fact, legally enforceable.

What then is, or should be the impact of rendering unenforceable only one provision of a settlement agreement?

Continue Reading Severability: When Only One Provision of a Divorce Settlement Agreement Is Invalid

Retirement Plan.jpgAfter 36 years of family law practice, I pride myself on having a good idea of what I don’t know.

The good news is that I can reach out for the help needed to make sure the bases are covered when drafting a divorce settlement agreement.  Matrimonial litigation has spawned a host of forensic specialities eager to offer proof on issues and to implement settlements and awards.  They’re also there to assist a settlement.

Consider pensions.  There are plans covered by the Employee Retirement Income Security Act (ERISA), a federal law that sets minimum standards for most voluntarily established pension and health plans in private industry. There are also private plans which are not covered by ERISA, military and other governmental plans, etc.

Generally, pension rights or benefits accumulated during a marriage are to be divided on divorce, whether or not the pension is in “pay status.”  However, unlike dividing a bank account, splitting one spouse’s retirement benefits is not as simple as writing a check.  A Domestic Relations Order (DRO) or a Qualified Domestic Relations Order (QDRO) is necessary to effectively transfer rights to the employee’s spouse.  Such an Order may also be used to divide I.R.A.s, 401(k)s, and other assets without triggering a taxable event.  Without such an Order, the “owner” might be exposed an income tax liability were the plan to be accessed to get the money to pay the spouse.

Pension plans carry benefits beyond the monthly payment after retirement.  There may be health and/or death benefits.  Elections may be allowed which significantly effect available benefits. May a spouse collect before the employee retires?  May a joint survivorship option be pursued? Keeping track of what those benefits may be for any particular plan and how to divide them is a specialty unto itself.

Consider the March 15, 2011 decision of the Second Department in Coulon v. Coulon. In that case, the parties’ settlement provided for the wife to receive a share of the husband’s pension. However, the stipulation was silent with regard to the plan’s death benefits.  The wife was not, by the settlement agreement, entitled to be designated as a surviving spouse under the pre-retirement and post-retirement survivor annuity provisions of the plan.  The court held the wife was not entitled to the any portion of the plan’s death benefits.

A Qualified Domestic Relations Order . . . entered pursuant to a stipulation of settlement ‘can convey only those rights to which the parties stipulated as a basis for the judgment’. . . . Thus, a court cannot issue a QDRO more expansive or ‘encompassing rights not provided in the underlying stipulation.’

When drafting settlement agreements, I often place a call to Bill Burns of Lexington Pension Consultants, Inc. Since I will probably use Lexington after the agreement is signed to draft the Plan and arrange for its approval by the Plan Administrator, on occasion I will call Lexington to make sure that I am made aware of the plan options in advance of drafting the settlement agreement.  I may have Lexington review my proposed agreement provision.  Lexington, itself, markets its service of providing the specific information needed to structure a settlement that addresses all pension/retirement assets, while assuring that the terms of the agreement will conform to the rules of the particular retirement plan.  There certainly are other specialists, but I have worked with Lexington for years; and if it ain’t broke, I won’t fix it.

Making use of the forensic specialists to craft the setllement agreement is cost efficient for the client and better assures that disputes will be avoided in the future.

unhealthy senior couple 2.jpgMarital financial planning is vital for spouses dealing with advanced age and deteriorating health.  Though not arising from an orchestrated plan, the February decision of the Appellate Division, Fourth Department, in Matter of Donald L.L. (Miceli), supports that planning.

After almost 40 years of marriage, the wife in 2005 suffered a stroke that left her with severe brain damage and unable to care for herself.  Her husband was also in poor health and was not capable of caring for his wife. In Guardianship proceedings, the court in 2008 determined that the wife was incapacitated and, by agreement of the husband, appointed someone other than the husband as the Guardian of the person and property of the wife.

At that time, as well, the husband entered a settlement with the Guardian resolving property and spousal support matters.  Their stipulation was “in the nature of an opting[-]out agreement as the same is provided for under the Domestic Relations Law. [They] do not intend to make this a divorce proceeding but would like [the stipulation] to serve as their agreement as to the issues . . . set forth [herein] and to that extent would also like to sign a written adoption of the oral stipulation.”

Five months later, the Guardian commenced this action seeking to enforce the financial settlement agreement. The Guardian also sought to void various allegedly fraudulent transfers by the husband. Justice David Michael Barry upheld the financial settlement agreement.

On appeal, the husband contended that Justice Barry erred when he granted the Guardian relief in the form of equitable distribution without conducting a hearing on the economic issues between him and his wife.

The Fourth Department affirmed. The agreement was enforceable.  No separate equitable distribution relief or hearing was required as there had been, expressly, no action to abrogate the marital status.

Upholding protective and necessary financial arrangements, while preserving lengthy marriages, is increasingly necessary.  Such arrangements, when knowingly entered with independent counsel, are to be promoted.