Prenuptial Agreement

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The failure of a prenuptial agreement to specify that earnings during the marriage were separate propertywarranted a breach-of-contract recovery as part of a distribution on divorce when those earnings used to pay sparate liabilities. So held Supreme Court New York County Justice Laura E. Drager in her January 15, 2014 decision in R.B. v. M.I (New York Law Journal published decision).

Once again, the focus of the court’s attention was on the import of a prenuptial provision that limited marital property to that held jointly by the parties.

In Zinter v. Zinter, Saratoga County Supreme Court Justice Thomas D. Nolan, Jr., last month held it was unconscionable for a prenuptial agreement to give the husband  power to control whether earnings and other after-marriage acquired property would be placed into joint or indiviual accounts, and thus marital or separate property (see, my March 17, 2014 blog post).

Here, the Justice Drager held that whether pproperty was owned jointly or individually at the commencement of the divorce action did not end the inquiry, if a breach of contract claim arising during the marriage is viable.Continue Reading Failure in Prenup to Specify Earnings as Separate Property Warrants Recoupment

After surgically excising eight words, Saratoga County Supreme Court Justice Thomas D. Nolan, Jr., in his February 7, 2014 decision in Zinter v. Zinter, upheld the balance of a prenuptial agreement. Those words had given the husband the unconscionable power to control whether earnings and other after-marriage acquired property would be placed into joint or indiviual accounts, and thus marital or separate property.

In this divorce action, the parties were married on December 23, 2005. The wife was then 29 years old, a music teacher with a Master’s degree, and reported a net worth of $71,500.00. The husband was then 35 years old, a college graduate, and an officer and part owner of his family-owned and operated business, with a reported net worth of approximately $2.7 million.

The husband had retained an attorney to prepare a prenuptial agreement. In November 2005, both the prospective husband and prospective wife met with that attorney to review the proposed agreement. At the time, the wife was not represented by counsel. The husband’s attorney provided the wife with the names of three attorneys experienced in matrimonial law. Shortly thereafter, she retained one of them, with whom the wife met three times before the agreement was signed four days before the marriage.Continue Reading Court Strikes Prenup Provision Giving Husband the Power to Determine Whether After-Marriage Acquired Property was Marital or Separate

In its September 18, 2013 decision in Abramson v. Gavares, the Second Department briefly reviewed the interplay between prenuptial agreements and interim awards in divorce actions.

In this case, the parties were married in 2004 and hade one child, born in 2006. This divorce action was commenced in 2009 [before the 2010 laws on counsel fees and temporary maintenance].

On the wife’s motion for various relief pendente lite, Nassau County Supreme Court Justice Margaret C. Reilly had awarded the wife $4,250 per month temporary child support, $1,000 per month in temporary maintenance, and a $15,000 interim counsel fee. The husband was also directed to pay 100% of the costs of the court-appointed forensic evaluator and the attorney for the parties’ child.

On appeal, the husband challenged certain parts of the award on the basis of the prenuptial agreement entered into by the parties. The Second Department upheld the awards of child support and counsel fees, but struck the award of temporary maintenance.Continue Reading Second Department Approves Interim Counsel Fee in Excess of Prenuptial Agreement’s Cap, But Reverses Award of Interim Spousal Maintenance

In its February 20, 2013 decision in Cioffi-Petrakis v. Petrakis, the Second Department affirmed the decision of former Nassau County Supreme Court Justice Anthony J. Falanga which set aside the parties’ prenuptial agreement. Indeed, decisions over the past year indicate that there may be a pendulum swinging towards easing the burden on the party (generally, the wife) attacking such agreements.

For example, in its December 5, 2012 decision in Petracca v. Petracca, the Second Department affirmed the decision of Nassau County Supreme Court Justice Jeffrey S. Brown that set aside a postnuptial agreement due to the husband’s overreaching at the time of signing some 16 years earlier (see the blog post of December 10, 2012: “Postnuptial Agreement Vacated for Overreachong 16 Years After Entry).

In Cioffi-Petrakis, the wife contended that her husband had reneged on his oral promise to tear up their prenuptial agreement once she had children made shortly before the pre-nuptial agreements’s execution (the parties now have two sons and a daughter). That promise was not referenced in the parties’ written agreement entered just four days before the parties’ marriage. Moreover, the parties had disclaimed reliance upon oral statements by either party, a relatively standard provision in the agreement, itself. Nevertheless, the Second Department agreed with Justice Falanga that the evidence supported the wife’s claim that she had been fraudulently induced to accept the deal.

Ironically, three years earlier (72 A.D.3d 868, 898 N.Y.S.2d 861), the Second Department affirmed Justice Falanga’s prior order dismissing the wife’s causes of action which attacked the very same agreement on the grounds of unconscionability. There, the Second Department was satisfied with the record’s demonstration that the wife was represented by independent counsel during the prenuptial agreement negotiations (her counsel signed the agreement as a witness). Moreover, the agreement itself recited that the wife entered into it “freely, voluntarily and with full knowledge of all circumstances having a bearing on this agreement.” At that time, the Second Department opined that the wife was provided with meaningful bargained-for benefits, including a one-third interest in one of the defendant’s businesses. The wife had advanced nothing but conclusory and unsubstantiated assertions insufficient to defeat the husband’s motion for summary judgment dismissing the cause of action to set aside the parties’ prenuptial agreement on the ground of unconscionability.Continue Reading Is it Open Season on Prenuptial Agreements?

On the wife’s motion for temporary relief, Supreme Court, New York County Justice Deborah A. Kaplan in Lennox v. Weberman, awarded the wife tax-free maintenance of $38,000 per month, plus the wife’s unreimbursed medical expenses up to $2,000 per month, interim counsel fees of $50,000, and expert fees of $35,000.

By its February 26, 2013 decision, the First Department modified that order, on the facts, to provide that such pendente lite relief would be treated as an advance on the 50 percent of the parties’ joint funds to which the wife is entitled pursuant to the parties’ prenuptial agreement.

Notwithstanding that the wife had waived any claim to a final award of alimony or maintenance in the parties’ prenuptial agreement, Justice Kaplan was entitled, in her discretion, to award pendente lite relief in the absence of an express agreement to exclude an award of temporary maintenance.

As to the amount of the temporary maintenance award, the appellate court found that Justice Kaplan properly applied the new temporary maintenance formula set forth at Domestic Relations Law § 236(B)(5–a)(c)(2)(a). Specifically, Justice Kaplan had listed all 19 of the enumerated factors, explained how 7 of them supported an upward deviation to $38,000 per month from the $12,500 a month in guideline support, and found that $38,000 per month was not “unjust or inappropriate.”Continue Reading Pendente Lite Award Prospectively Charged as an Advance Against Wife’s Share of Marital Property

contract ripped by angry woman.jpgIn its December 5, 2012 decision in Petracca v. Petracca, the Second Department affirmed the decision of Nassau County Supreme Court Justice Jeffrey S. Brown that set aside a postnuptial agreement due to the husband’s overreaching at the time of signing.

Four months after the parties’ 1995 marriage, they entered into a postnuptial agreement. The agreement provided that the jointly-owned marital residence, which had just been purchased for approximately $3.1 million and which was subsequently renovated at a cost of between $3 million and $5 million, was the husband’s separate property.

The agreement further provided that if the parties divorced, the wife, who had not been employed other than as a homemaker since just before the marriage, would waive her interest in any business in which the husband had an interest, including any appreciation in the value of such interests accruing during the marriage. At the time the agreement was entered into, the husband valued his interests in these business entities at over $10 million. The wife also waived any and all rights she had to the husband’s estate, including her right to an elective share. At the time the agreement was entered into the husband valued his net worth at more than $22 million.

Finally, the agreement provided that if the parties divorced, the wife would waive maintenance, except in the sum of between $24,000 and $36,000 per year, for varying lengths of time, depending on the duration of the marriage.

In 2008, the wife commenced this action for a divorce. In his answer, the husband sought enforcement of the postnuptial agreement. A hearing was held to determined its validity.

The wife testified that her husband had bullied her into signing agreement, shortly after she had suffered a miscarriage, by threatening that they would not have any children and that the marriage would be over if she did not sign. The wife further testified that she signed the agreement within days of receiving it and, although she reviewed some portions of it, she did not understand its terms and did not consult an attorney. At the hearing, the wife also demonstrated that the statement of the husband’s net worth contained in the agreement was inaccurate at the time it was made, and was undervalued by at least $11 million.

For his part, the husband denied any knowledge of his wife’s miscarriage. He had wanted the postnuptial agreement in order to protect his son from a prior marriage. The husband testified that the parties had discussed the issue of entering into a postnuptial agreement prior to the marriage and that they had negotiated the postnuptial agreement over the course of many weeks.

The husband’s attorney drafted the agreement. Although she had not disclosed the name, the husband believed that his wife had consulted with her own attorney.Continue Reading Postnuptial Agreement Vacated for Overreaching 16 Years After Entry