Agreements and Stipulations

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

Here’s a reminder. Look over the “boilerplate” counsel-fees-on-default provision of your settlement agreements; and re-read them when resolving enforcement proceedings.

Take a lesson from the July 25, 2018 decision of the Appellate Division, Second Department, in Posner v. Posner. There, The parties’ 2010 judgment of divorce incorporated, but did not merge, their stipulation of settlement. That stipulation provided that where one of the parties commences litigation to enforce it, and that litigation does not “result in a judgment or order in favor of the party” who commenced the litigation, that party shall reimburse the other party for any and all expenses, including attorney’s fees.

In 2011, the husband commenced litigation in the Family Court to enforce certain stipulation provisions. Thereafter, the wife filed a contempt motion under a separate docket number. After eight days of trial over nine months, the parties agreed to withdraw their respective petitions with prejudice. The parties nevertheless “reserve[d] all other rights provided for” in the 2010 stipulation of settlement.

In January 2014, the wife filed a motion in the Supreme Court seeking an award of attorney’s fees pursuant to the parties’ 2010 stipulation of settlement for the 2011 Family Court litigation. Westchester County Supreme Court Justice Francis A. Nicolai granted the wife’s motion to the extent of finding that the wife was entitled to an award of attorney’s fees and set the matter down for a hearing as to the appropriate amount. In a judgment entered September 27, 2016, after a hearing, Justice Janet C. Malone awarded the wife a judgment for attorney’s fees in the sum of $224,287. The husband appealed.

Continue Reading Counsel Fees Per Divorce Settlement For Withdrawn Enforcement Proceedings

If divorcing parties will file their income tax returns jointly, how do you allocate each party’s fair share of taxes? How do you draft an unambiguous provision that spells that out?

Such were among the questions raised by the July 18, 2018 decision of the Appellate Division, Second Department, in Cohen v. Cohen.

There, in October 2013, the parties entered into a settlement stipulation which was incorporated into their 2014 judgment of divorce. Article XIII, paragraph “1,” of the stipulation addressed the parties’ respective liability for their jointly-filed 2013 tax returns: any taxes due were to be “paid by the parties in proportion to their respective income.”

In January 2015, the husband moved to enforce the stipulation by seeking a determination of the wife’s proportionate liability for the parties’ jointly filed 2013 taxes and to direct the wife to pay that sum. In the order appealed from, Supreme Court Nassau County Justice Stacy D. Bennett granted the husband’s motion and determined that the wife was responsible for 11.3% of the parties’ tax liability for 2013, giving the parties credit for any payments already made.

On appeal, the Second Department held that the relevant provision was ambiguous as to how to calculate the parties’ respective income. The appellate court noted that whether an agreement is ambiguous is a question of law for the courts. Moreover, the Second Department held that the parties’ submissions to Justice Bennett were insufficient to resolve the ambiguity.

Continue Reading Drafting an Income Tax Allocation Provision for Returns Filed During the Divorce

What is the effect of a divorce settlement stipulation provision, incorporated in the judgment of divorce, that calls for a specified reduction in child support upon the emancipation of one of the children of the parties?

The fact pattern is almost routine. For example, say the parties have three children, 14, 17 and 19. Their divorce settlement tracks the C.S.S.A. Upon the first emancipation (presumably when the 19-year old turns 21, or, perhaps graduates college according to the definition of emancipation in the agreement), the stipulation provides that the child support obligation will go from $2,900 per month to $2,500 per month (tracking the reduction in the formula obligation from 29% for three children to 25% for two children). Assume the full stipulation is incorporated by reference into the parties’ divorce judgment.

Continuing the example, assume that upon the first emancipation, the child support payor in fact reduces his/her payment from $2900 to $2500, but does not have that reduction established by a new court order. A year later, the support recipient goes into court to seek 12 months of $400/per/month arrears. What happens?

Consider last month’s decision of the Appellate Division, Second Department, in Beckmann v. Bedckmann. There, the parties’ 2012 divorce judgment incorporated, but did not merge with, their 2011 stipulation of settlement. The parties had agreed that the husband would pay $700 semi-monthly in basic child support for their two children. In April 2013, the parties’ daughter became emancipated under the terms of the stipulation, and shortly thereafter, the husband reduced his child support payments from $700 to $476 semi-monthly [I am going to dangerously assume that an agreement that defined emancipation would also provide what was to happen on emancipation].

Continue Reading Divorce Settlements that Provide for Reductions in Child Support upon Emancipation

In its February 7, 2018 decision in Matter of Koegel, the Appellate Division, Second Department, held that defects in the acknowledgment forms in a 30-year old prenuptial agreement, i.e., the failure of the notary to recite that he knew the signatory, could be cured following the death of one of the parties.

Irene and John Koegel were married in August, 1984. Mr. Koegel had been widowed twice before marrying Irene. Mrs. Koegel had been widowed in July 1983. The Koegels were married for more than 29 years at the time of Mr. Koegel’s death in 2014. A month before their marriage, the Koegels had executed a prenuptial agreement.

Among other provisions the agreement provided that the parties ‘would not make a claim as a surviving spouse on any part of the estate of the other. Further, they irrevocably waived and relinquished ‘all right[s] to . . . any elective or statutory share granted under the laws of any jurisdiction.’ Both the decedent and Irene desired that their marriage ‘shall not in any way change their pre-existing legal right, or that of their respective children and heirs, in the property belonging to each of them at the time of said marriage or thereafter acquired.’

Continue Reading Defective Acknowledgment in Prenuptial Agreement Cured After 30 years

Where the results of a 2007 prenuptial agreement waiver of maintenance would be a risk that a mother of three children would become a public charge, the agreement would be set aside for being unconscionable at the time of divorce. So held the Appellate Division, Second Department, in its January 10, 2018 decision in Taha v. Elzemity.

The parties were married in 2007, and had three children. Shortly before their marriage, they entered into a prenuptial agreement. The agreement provided, inter alia, that each party waived the right to the other’s separate property in the event of separation or divorce; each party would keep separate bank accounts; and the husband’s maintenance obligation would be limited to a lump sum payment of $20,000.

In 2008, the parties moved into the marital residence, which was purchased with funds from the husband’s bank account, and the deed and mortgage were placed solely in his name.

The husband had been practicing medicine since 1987 and earned approximately $300,000 annually. The wife, who had been employed part-time as a sales person when the parties met, did not work outside the home during the marriage, but dedicated herself to the care of the household and the parties’ children, one with special needs.

In October 2013, the husband commenced this divorce action. The wife moved to set aside the prenuptial agreement, among other grounds, because it was unconscionable. The husband cross-moved for summary judgment determining that the prenuptial agreement was valid and enforceable. After a hearing, Supreme Court, Richmond County Justice Catherine M. DiDomenico found that the prenuptial agreement was not unconscionable. The wife appealed.

The Second Department reversed. It noted that:

An agreement between spouses or prospective spouses 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 unfair to one spouse because of overreaching on the part of the other spouse.

Further, the Court stated, “an agreement is unconscionable if it is one which no person in his or her senses and not under delusion would make on the one hand, and no honest and fair person would accept on the other, the inequality being so strong and manifest as to shock the conscience and confound the judgment of any person of common sense.” Moreover:

An agreement that might not have been unconscionable when entered into may become unconscionable at the time a final judgment would be entered.

Here, the appellate court held that the wife met her burden of proof as to unconscionability. Contrary to the lower court’s determination, the wife established that the prenuptial agreement was, at the time this action was before the court, unconscionable.

Enforcement of the agreement would result in the risk of the wife’s becoming a public charge. The wife, who was unemployed, largely without assets, and the primary caregiver for the parties’ young children, would, under the prenuptial agreement, receive only $20,000, in full satisfaction of all claims, even though the husband earns approximately $300,000 annually as a physician. Accordingly, the wife’s motion to set aside the prenuptial agreement should have been granted.

Catherine S. Bridge, of Staten Island, represented the wife. Arnold E. DiJoseph, P.C., of Manhattan, of counsel to Kuharski, Levitz & Giovinazzo, represented the husband.

When negotiating a divorce settlement agreement, the parties should agree on whether or not all child support-related rights and obligations must be redetermined in the event the periodic basic child support obligation is modified.

Take the recent Appellate Division, Second Department, decision in Walsh v. Walsh. There the parties’ settlement agreement was incorporated, but not merged into their 2014 judgment of divorce. Under that agreement, the father was to pay $500 per month in child support.

After the parties divorced, the father began collecting Social Security benefits in addition to his salary, which caused his income to increase by more than 15%. In their agreement, the parties did not opt out of allowing the court to modify the support order, without requiring a party to allege or demonstrate a substantial change in circumstances, where either party’s gross income changed by 15% or more since the order was entered or modified. The mother petitioned for an upward modification of the father’s child support obligation.

Family Court Suffolk County Support Magistrate Kathryn L. Coward granted the upward modification on the basis of the father’s increased income. Calculating the father’s child support obligation under the Child Support Standards Act, the Magistrate awarded the mother $2,074 per month in child support.

The father objected to the Support Magistrate’s order. Family Court Judge Matthew G. Hughes denied the father’s objections. The father appealed. The Second Department affirmed.

Continue Reading Are The Various Types of Child Support Benefits Interrelated?

It is common for the parents of young children when entering a divorce settlement agreement to defer until the children approach college age the determination of the parents’ obligations to contribute. The language chosen to express that deferral may be significant.

The recent decision of the Appellate Division, Second Department, in Conroy v. Hacker, lets us know the agreement language is significant. But we are left asking what would have happened without it.

In Conroy, the parties were married in 1991 and were the parents of two children. Their 1999 divorce judgment incorporated, but did not merge, a 1998 separation agreement. As relevant here, the separation agreement stated:

The parties are not making any specific provisions for the payment of college expenses which may be incurred on behalf of the infant children because of the tender age of said children as of the date of this Agreement. The parties do, however, acknowledge an obligation on each of their parts to contribute to the children’s future college expenses in accordance with their financial abilities at that time.

Continue Reading Enforcing the Divorce Settlement Agreement To Defer Fixing College Obligations

Keep a secret

The failure of a spouse to disclose a material change in facts that occurred during settlement negotiations may result in an invalidation of the related settlement provisions.

So held the he Appellate Division, Third Department in its May 11, 2017 decision in Flikweert v. Berger, invalidating one paragraph of a divorce settlement separation agreement and remanding the matter to address the appropriate equitable distribution of the funds in issue.

The parties were married in 1997 and had one child. In June 2014, the wife commenced this action for a divorce. After extensive negotiations, the parties executed a separation agreement on September 15, 2015 that addressed issues including equitable distribution, child support, custody and spousal maintenance.

Paragraph 21 of the separation agreement concerned the wife’s ownership interest in her employer, a privately held company. The wife began employment with the company in February 2012. In August 2013, the wife was awarded unvested equity incentive units by the employer. By September 2015, half of the units were vested.

Continue Reading Keeping Secrets During Divorce Action Partially Invalidates Settlement

In its November 23, 2016 decision in Gardella v. Remizov, the Second Department upheld an improperly-executed 2002 postnuptial agreement on the basis of ratification, and a 2006 postnuptial agreement alleged to be unconscionable, but sent the matter back to the trial court for financial disclosure and an inquiry to consider the parties’ 2010 separation agreement.

The parties to this matrimonial action were married in 2000. In October 2002, the parties entered into a postnuptial agreement which provided, among other things, that the marital residence and the wife’s private medical practice were the wife’s separate property. In 2006, the parties entered into a second postnuptial agreement which provided that four parcels of real property in Florida acquired by the parties during the marriage had been purchased with the wife’s separate property, and further addressed the distribution of those four parcels in the event of a divorce.

In 2010, the parties entered into a separation agreement, which addressed, inter alia, issues of maintenance and equitable distribution of the parties’ respective assets. At the time, the wife, a neurologist, was earning approximately $600,000 per year, and the husband, a wine salesman, was earning approximately $40,000. The separation agreement provided, among other things, that the husband would have no interest in any of the assets acquired during the parties’ marriage, including six parcels of real property, the wife’s partnership interest in a neurological practice, and the wife’s bank and brokerage accounts. The husband also waived his right to spousal maintenance. The husband was not represented by counsel when he executed the separation agreement.

Continue Reading Upholding Marital Agreements: 2+ out of 3