Agreements and Stipulations

Generally, a transfer of a judgment debtor’s real property interest is not effective against a creditor whose judgment was recorded prior to the debtor’s transfer (C.P.L.R. §5203). However, that rule will yield to the equitable interests of a former spouse. So held the Appellate Division, First Department, in its August 19, 2021 decision in Tiozzo v. Dangin.

There, the parties’ 2004 Judgment of Divorce incorporated their surviving Stipulation of Settlement. Under the Stipulation, the wife was “entitled to sole ownership and exclusive use and occupancy” of the marital residence. The husband was to “provide a quitclaim deed to [the wife] only if doing so would not jeopardize the existing mortgage.” In the meantime, the husband was solely responsible to continue to pay the mortgage. The Stipulation further provided:

In the event that the Husband is unable, for any reason, to execute and/or record such quitclaim deed, the Husband agrees and covenants that notwithstanding the joint ownership of the Jane Street property, he will not act in any way or manner or through any deed or omission, whether directly or indirectly, to interfere with the Wife’s exclusive use and occupancy of the said property, including the sale of the said property by the Wife should she so choose.

The wife did not demand a quitclaim deed from the husband until 2019, almost 15 years after the divorce. The wife had then decided to sell the residence when the husband went into default of his obligation to make the mortgage payments.

By then, in February 2019, Lenz Capital Group, LLC (Lenz) had entered a two million dollar judgment against the husband upon his confession of judgment.


Continue Reading Ex-Husband’s Judgment Creditor Subordinated to Ex-Wife’s Unrecorded Equitable Realty Interest

Does a four-day delay in notarization by the mediator/notary of a separation agreement  executed by the parties in a Zoom session with the mediator render the agreement invalid? In his June 29, 2021 decision in Ryerson v. Ryerson, Warren County Acting Supreme Court Justice Richard B. Meyer held it did not.

The parties used William J. McCoskery as mediator to assist them in resolving various matters attendant to their divorce. They met once in person with the mediator, during which he advised both parties to consult with an attorney. Based upon his discussions with the parties, the mediator prepared a 15-page separation agreement and emailed it to both parties for their review. The husband claimed not to have read the complete document.

The Governor declared the Covid state of emergency on March 7, 2020. Notarization using audio-video technology was authorized by Executive Order No. 202.7. That Order provides:

Any notarial act that is required under New York State law is authorized to be performed utilizing audio-video technology provided that the following conditions are met:

    • The person seeking the Notary’s services, if not personally known to the Notary, must present valid photo ID to the Notary during the video conference, not merely transmit it prior to or after;
    • The video conference must allow for direct interaction between the person and the Notary (e.g. no pre-recorded videos of the person signing);
    • The person must affirmatively represent that he or she is physically situated in the State of New York;
    • The person must transmit by fax or electronic means a legible copy of the signed document directly to the Notary on the same date it was signed;
    • The Notary may notarize the transmitted copy of the document and transmit the same back to the person; and
    • The Notary may repeat the notarization of the original signed document as of the date of execution provided the Notary receives such original signed document together with the electronically notarized copy within thirty days after the date of execution.


Continue Reading Delayed Notarization by Mediator Does Not Invalidate Separation Agreement Signed Over Zoom

Is a divorce settlement agreement that mandates that the children attend school within a particular school district satisfied by the children being home schooled within that district? Maybe, held the Third Department in its June 17, 2021 decision in Matter of John U. v. Sara U.

The parties were the divorced parents of two children (born in 2010 and 2012). They entered a separation agreement in October 2017, which was modified in September 2019. The agreement provided for joint legal custody and shared physical custody of the children. As is here relevant, it contained a provision that:

[s]o long as the [father] maintains a residence in [a certain school district,] the children shall continue to attend school within [that school district] unless both parties expressly agree in writing to change the schools of the children.

Prior to the 2019-2020 school year, the children had attended a certain public elementary school in that school district. The children had a religious exemption from vaccination. After a June 2019 change in state law eliminated such religious exemptions for students (see Public Health Law § 2164), and after the district’s denial of the mother’s requests for medical exemptions, the unvaccinated children were removed from their school in September 2019 and the mother began home schooling instruction at her home.


Continue Reading Is Home-Schooling “Attending” School?

The parties’ 2013 divorce stipulation of settlement provided that child support for their two children would be adjusted annually. Beginning May 1, 2014:

“the parties shall set by April 30, a payment schedule of the Parent’s total obligation for base child support ‘made pursuant to the formula set forth below and income caps for the fiscal year beginning May 1 and continuing through April 30th of the following year. This schedule shall be based on the actual income’ for the previous calendar year. The Father shall then pay this base child support’ amount to the Mother in monthly installments.” [emphasis added]

For the purpose of computing base child support, the stipulation defined “income” as “the gross earned income solely attributable to a party and as listed on the Form 1040 United States Individual Income Tax Return filed by the parties, less (1) FICA taxes actually paid; (2) Medicare taxes actually paid; less (3) New York City or Yonkers income or earnings taxes actually paid.”

In 2016, the mother received a salary of $86,801 for her work as a veterinarian. She also received $39,631 in “[o]rdinary dividends” and $245,629 in “[r]ental real estate, royalties, partnerships, S corporations, trusts, etc.”  In 2017, the father calculated his base child support obligation using the mother’s adjusted gross income of $369,092. The mother disputed the calculation, contending that the income derived from her ownership interest in the LLCs was not “earned” income and therefore did not fall under the stipulation’s definition of “income.”


Continue Reading Drafting Income Calculations in Divorce Settlement Agreements

Under their 2013 mediated divorce settlement agreement, these ex-spouses agreed to continue to jointly own and operate their distribution business. The agreement reported that their “solid working relationship with a high level of trust in one another’s skills” made “co-ownership a viable solution.” The ex-husband was to receive 30% of the joint business’s profit going forward, and the ex-wife would retain the remaining 70%.

Five years later, the ex-wife commenced this action alleging that after the divorce, the ex-husband began distributing rival products, poached a number of associates from the joint business, ceased recruiting new associates for the joint business, and assisted his new fiancée in establishing her own competing business — all to the detriment of the parties’ joint business. Based on these allegations, the ex-wife claimed that the joint business was no longer viable. She sought, in effect, to terminate the business and obtain such other relief to which she may be entitled.


Continue Reading Continuing a Jointly-Owned Business after a Divorce

A breach by one ex-spouse of a divorce settlement stipulation may or may not excuse a breach by the other. The obligations of the parties may or may not be independent.

In its July, 2019 decision in Lainez v. Orellana, the Appellate Division, Second Department, held that the answer could be found the clear and unambiguous language of the stipulation. The parties could have made the obligations interdependent; they did not. The obligations, then, were not dependent.

In the parties 2011 divorce settlement agreement, the husband agreed to transfer his interest in the marital residence to the wife, and the wife agreed to hold the husband harmless with respect to all mortgage payments and do everything in her power to remove his name from the mortgage.

Following the divorce, the wife continued to live in the marital residence. However, neither party performed his or her obligations under the settlement and the husband had made the post-agreement monthly mortgage payments.


Continue Reading Does One Party’s Breach of a Divorce Settlement Excuse a Breach by the Other?

The separation agreement was the product of mediation; the wife was afforded the opportunity to consult with counsel; and the wife elected to sign the agreement, notwithstanding the advice of counsel not to do so.  “These facts, standing alone, do not shield the separation agreement from judicial scrutiny. The validity of the agreement is dependent upon an examination of the totality of the circumstances, including an examination of the terms of the agreement, to see if there is an inference of overreaching.”

So held the Appellate Division, Second Department in its April 24, 2019 decision in Mizrahi v. Mizrahi. Reversing the decision of Queens County Supreme Court Justice Margaret Parisi-McGowan that upheld the agreement without a hearing, the appellate court also noted the record disclosed no information regarding who retained and paid for the services of the mediator, and how the mediator arrived at the substantive terms of the agreement.

The Second Department noted:

because of the fiduciary relationship existing between spouses, a marital agreement should be closely scrutinized and may be set aside upon a showing that it is unconscionable or the result of fraud or where it is shown to be manifestly unjust because of the other spouse’s overreaching. To rescind a separation agreement on the ground of overreaching, a wife must demonstrate both overreaching and unfairness.

Here, the court held that without a hearing to determine the totality of the circumstances, including the extent of the parties’ incomes and assets and the circumstances surrounding the execution of the separation agreement, it could not be determined on this record whether equity should intervene to invalidate the parties’ separation agreement.


Continue Reading Inference of Mediated Separation Agreement Invalidity Sufficient to Warrant Hearing

In a February, 2019 decision, the Appellate Division, Second Department, foiled the cooperative efforts of previously-divorced parties, by their settlement of post-judgment issues, to avoid an interim fee award to the ex-wife’s counsel to prosecute an appeal.

In Rhodes v. Rhodes, the parties were married in 1993, had three children, and divorced in 2008. In 2013, the ex-husband successfully moved to modify the parties’ custody arrangement and, in a December, 2014 order, was granted residential custody of the children. The ex-wife appealed from that order.

In May 2015, the ex-wife moved for interim appellate attorney’s fees and costs. In an August 25, 2015 order, Former Suffolk County Supreme Court Acting Justice Marlene L. Budd granted that motion, awarding the ex-wife $20,000 in attorney’s fees and costs “for the prosecution of the appeal, with leave to apply for additional sums upon the completion of the appeal.” The ex-husband was directed to pay those attorney’s fees and costs to the ex-wife’s then-attorney, Karyn A. Villar, PLLC (hereinafter Villar), within 20 days of the order.

When payment was not made, on September 23, 2015, Villar moved to hold the ex-husband in civil contempt of the fee order. The ex-husband cross-moved for leave to renew his opposition to the ex-wife’s prior motion for interim appellate attorney’s fees and costs. The ex-husband attached to his cross motion a stipulation of settlement dated September 28, 2015, in which the parties agreed that the ex-wife would waive payment of attorney’s fees and costs owed by the ex-husband pursuant to the August, 2015 order. The ex-wife retained new counsel, and thereafter cross-moved to impose sanctions against Villar, arguing that Villar’s contempt motion was punitive and an abuse of process.

In an order dated March 7, 2016, Suffolk County Supreme Court Justice Carol MacKenzie (1) denied Villar’s motion to hold the ex-husband in civil contempt, (2) vacated the August, 2015 interim fee award and denied a fee, and (3) granted the ex-wife’s cross motion to impose sanctions against Villar, directing Villar to pay the ex-wife’s new attorneys $2,500. Villar appealed.


Continue Reading Divorced Parties Foiled in Efforts to Avoid Counsel Fee Award

The Child Support Standards Act authorizes parents to agree to a child support obligation that deviates from the presumptive formula provided in that statute. However, if they are going to deviate from the formula, the parents must state what the obligation would have been if the formula were to be applied, and the reasons why the parties have agreed to deviate.

In its September 26, 2018 decision in Fasano v. Fasano, the Appellate Division, Second Department, held that if one of those reasons no longer applies, such is a “substantial change in circumstances” warranting a new child support determination.

The parties were married in 1993 and have two children together. In October, 2012, the parties entered into a stipulation of settlement of a prior divorce action after which that action was discontinued.

That stipulation provided that although the husband’s monthly child support obligation using the C.S.S.A. calculation would be $1,994.45 on the first $130,000.00 of combined parental income (then, the “cap”) and $2,575.61 on the total combined parental income, the parties had agreed that the husband’s monthly child support obligation would be $1,500.00. The stipulation also provided that there would be no “add-ons” or “additional health costs” added to these child support payments, even though the C.S.S.A. generally provides that each parent’s share of unreimbursed health care expenses is to be prorated in the same proportion as each parent’s income is to the combined parental income.

The stipulation contained an explanation that the deviation from the C.S.S.A. calculation was necessary “to allow the [husband] to retain the marital residence as a place for the children to be with him when they are together” and had “been agreed by the parties to be in the best interests of the children to provide them continuity and stability in their living and educational environments.”


Continue Reading A Child Support Redetermination Is Warranted If a Stated Reason Parties Deviated From CSSA No Longer Applies