Gavel 2.jpgElevating substance over form, Supreme Court Monroe County Acting Justice Richard A. Dollinger allowed a husband to amend his complaint in a 2009 divorce action to add a no-fault claim under D.R.L. §170(7), effective October 12, 2012.

Justice Dollinger in his April 16, 2012 decision in G.C. v. G.C. (pdf), noted New York’s public policy is to freely grant permission to amend complaints. The wife objected, noting that the Legislature expressly limited no-fault claims to actions commenced after its effective date.

D.R.L. §170(7) permits a divorce to be granted upon the sworn declaration of a party that the marriage has been “irretrievably broken down for a period of six months.” Justice Dollinger stated that the Legislature’s limitation of such a no-fault ground to actions commenced after the October 12, 2010 effective date of the statute, was satisfied by requiring that no such claim could be raised by amended complaint until six months after the effective date.

When the husband moves to amend his complaint to add a cause of action under Section 170(7), he does not violate the language of the statute or the intention of the Legislature, Instead, he seeks to. invoke what the Legislature extended to him: a cause of action that has ripened because more than six months have passed since the date of the amendment and during that time, the husband swears that his marriage has been irretrievably broken.

Continue Reading Judge Allows No-fault Divorce Claim to be Added to Pre-No-fault Case

Prenup.jpg

When your lawyer tells you that you are about to make a really bad deal, you disregard that advice at your peril.

That is one lesson to be learned from a split-decision of the Appellate Division First Department in its April 17, 2012 decision in Barocas v. Barocas. The court affirmed a decision of Supreme Court New York County Justice Ellen Gesmer which for the most part denied a wife’s attack on the prenuptial agreement she signed with her future husband in 1995.

Their marriage two weeks after the agreement was signed is now ending in divorce. Under the parties’ agreement, Deborah Barocas will not receive any maintenance (personal support). (The agreement contained no provision regarding the support for the parties’ two children.) Moreover, under the agreement, Deborah will also not share in any property accumulated by Victor during the marriage. Indeed, the agreement provided that Deborah would forfeit any gifts or jewelry she had been given by Victor before and during the marriage. Over their 15 years of marriage, Victor accumulated some $4,600,000 in assets, while Deborah had only $30,550 in an I.R.A.

Deborah was born in Guyana, the second of seven children. She arrived in the United States in 1981, at the age of twenty-one. She obtained a GED in 1982, and worked menial jobs. In 1989, she worked part-time as a receptionist for Victor’s family business. While working there, the parties began to date. In 1993, she moved into Victor’s Sutton Place apartment. Other than sporadic attempts at small business ventures, Deborah did not work outside the home for the duration of the marriage. She has no further education and no special skills.

Now attacking that agreement, Deborah noted that she has no other assets or sources of income. She alleged that she can no longer work, as she is now 50 years old and that her husband had thwarted her efforts to get a college education and pursue a career during the marriage.

The three-judge majority of this five-judge appellate court upheld Justice Gesmer’s decision to uphold the property division provisions of the prenuptial agreement. With regard to those provisions, Deborah Barocas failed to establish that her execution of the agreement was the result of inequitable conduct on her husband’s part. Rather, the parties fully disclosed their respective assets and net worth.

Moreover, the agreement was reviewed by independent counsel. Indeed, Deborah’s own lawyer admittedly had told her that the agreement was “completely unfair” and advised against signing it. The fact that the husband’s attorney recommended the wife’s attorney, and that the husband paid Deborah’s counsel’s fees, was insufficient to demonstrate duress or overreaching sufficient to base an attack upon the agreement.  Still further, the claim that Deborah believed that there would be no wedding if she did not sign the agreement, that the wedding was only two weeks away and that wedding plans had been made, was an insufficient basis to attack the agreement on the grounds of duress.

Although application of the provisions would result in plaintiff [husband] retaining essentially all the property, courts will not set aside an agreement on the ground of unconscionability where inequitable conduct was lacking and simply because, in retrospect, the agreement proves to be improvident or one-sided . . . . The circumstances surrounding the execution of the agreement disclose no issue of fact as to whether there was overreaching. We therefore adhere to the general rule that “‘[i]f the execution of the agreement . . . be fair, no further inquiry will be made’. . . .

Continue Reading Signing a Prenuptial Agreement Against the Advice of Counsel Bars Subsequent Attack

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

show your work 3.jpgShow your work.

Mistakes happen, and probably a lot more often than any of us matrimonial lawyers would care to admit.

We all make mistakes. I am happy to say that most mistakes are alleviated by collegial adversaries working together to put things right.

However, sometimes the spouse benefiting from the mistake in marital settlement agreement will not acknowledge that a mistake was made.

When that happens, the burdened party must ask the court to reform the agreement to correct the mistake. That party has a heavy burden.

The burden, however, becomes a lot easier to meet if the parties have shown their work.

Consider, the February 21, 2012 decision of Kings County Supreme Court Justice Jeffrey S. Sunshine in Hackett v. Hackett. The parties had entered a marital settlement agreement in January, 2006. The parties’ marital estate was itemized in a schedule annexed to the agreement. The agreement expressly provided that the husband was to pay the wife $19,336.40, “in order to equalize the allocation of marital property so as to arrive in an equal division.”

Included among the parties’ property was their marital residence, a Brooklyn home valued at $465,000.00 against which there were two mortgages totaling $195,124.00. When listing the assets being received by the wife, the marital residence was included at a value equal to its net equity of $264,447.00. Including this amount for net equity, the wife was to receive $557,442.00 in assets. From this the wife was to be take on marital liabilities of $195,124.00. Thus, the wife was receiving assets net of liabilities of $382,318.00.

The problem was that these liabilities were the very same mortgages totaling $195,124.00 which were subtracted from the home’s appraised value to result in the equity value of $264,447.00 stated for the marital residence. The mortgages were double-counted. Moreover, there was another simple math error. Subtracting the $195,124.00 in mortgages from the $465,000.00 appraised value of the marital residence should have resulted in the wife being charged with receiving net equity of $269,876.00, not the $264,447.00 which was stated as the net equity value of the marital residence being received by the wife. Thus, the wife was under-charged $5,429.00, in addition to having benefited from the double-subtraction of the mortgages.

Instead, the wife should have been charged with receiving $562,871.00 in net assets (the originally stated $557,442.00, plus the $5,429.00 math error, without the second deduction for the mortgages already taken into account). The husband was properly charged under the agreement with receiving $400,990.00. Thus, the wife received $161,881.00 more than the husband. In order to equalize the division of assets, the wife would have to pay to the husband one half of this amount, or $80,940.50. Here, the agreement as originally drafted with its mistakes ended up with the husband paying the wife $19,336.00. To correct the error, the wife would have to repay this $19,336.00, and on top of that pay the husband $80,940.50, for a total of $100,276.50.

Justice Sunshine provided the husband relief, reforming the agreement to require the wife to make the requested payment of $100,276.50. To do so, the court rejected the recommendation of the Referee to home the matter was referred to “hear and report.”

Continue Reading Correcting a Mistake in a Divorce Settlement Agreement

“square peg2.jpgThere is a gap in New York’s child support statutes. They do not contemplate a custodial parent paying support to a non-custodial parent.

The Family Court Act does declare that both parents are chargeable with the support of their children. Moreover, the Family Court Act does not make a distinction between the “custodial” and “non–custodial” parents when declaring that parents of a child under the age of 21 years ,“if possessed of sufficient means or able to earn such means, shall be required to pay for child support a fair and reasonable sum as the court may determine.” F.C.A. §413(1)(a). (The Domestic Relations Law contains no such preamble to its section providing for an award of child support within matrimonial actions.)D.R.L. §240(1-b).

However, those same Family Court Act and the Domestic Relations Law provisions provide that awards of child support “shall″ be made “pursuant to the provisions” of those subdivisions. The subdivisions, then, set out the presumptive formula to determine awards of child support. The presumptive formula is to be varied only in the event the court finds, based upon factors specified, that the “non-custodial parent’s pro rata share of the basic child support obligation is unjust or inappropriate.” In all events, the statutes only contemplate support being paid by the non-custodial parent to the custodial parent.

Although the statutes carefully define many of the terms used, “non-custodial parent” is never defined. Thus, in ever-increasing scenarios, the courts have had to decide who is the “non-custodial.”

In Bast v. Rossoff, 91 N.Y.2d 723, 675 N.Y.S.2d 19 (1998), the Court of Appeals recognized that in most instances, the court can determine the custodial parent by identifying which parent has physical custody of the child for a majority of the time. In cases where the child’s time was divided approximately equally between the parents, the more-monied parent has been deemed the non-custodial parent because such a rule maximizes the benefits realized by the child at both homes. Baraby v. Baraby, 250 A.D.2d 201, 681 N.Y.S.2d 826 (3rd Dept. 1998).

Nonetheless, the best interests of a child may require an award of child support from the custodial parent to the non-custodial parent.

Take, for example, New York County Supreme Court Justice Ellen Gesmer’s February 29, 2012 decision in M.R. v. A. D. In that case, the court denied a father’s motion for summary judgment dismissing a mother’s claim for child support. In a painstaking decisionmade earlier in the case, Justice Gesmer (32 Misc.3d 512, 928 N.Y.S.2d 429) awarded the parents “parallel custody” of their 6-year old son with significant learning disabilities. After a through review of the evidence, and as neither parent was sufficiently better than other parent to warrant an award of sole custody, Justice Gesmer gave the father primary custody during school year, and gave the more permissive and disorganized mother primary custody during summer and other school breaks.

Continue Reading Awarding Child Support to the "Non-Custodial" Parent

College Fund 4.jpgA recent decision of the Appellate Division, Third Department, appears to unduly expand the basis upon which a parent may be obligated to contribute to the college education expenses of a child beyond age 21.

Generally, a parent’s obligation to support a child terminates when the child reaches age 21. That general rule, of course, may be varied by the parents themselves by agreement.

Indeed, it is quite common to extend by agreement a parent’s support obligation, beyond the date on which a child turns  21, in a written separation agreement or divorce action stipulation of settlement, whether written or entered in open court. Such agreements often have an “emancipation” clause which defines the circumstances under which a child will be deemed emancipated for the purposes of the parent’s support obligation to a time either before or after child reaches age 21. Again, it is common to delay emancipation until the child turns 22 or thereafter, if the child is enrolled on a full-time basis in an accredited college, university or other post-high school educational program. If properly entered, such agreements are routinely incorporated into divorce judgments or other support orders. They are enforceable in both Supreme and Family Courts.

In its January, 2012 decision in Shapiro v. Shapiro, the Third Department affirmed a divorce judgment which, in part, obligated a father to contribute his pro rata share of college expenses until each child reaches the age of 22.

The court acknowledged that absent an agreement extending the obligation, a parent is not legally obligated to pay college costs for a child that has reached the age of 21. However, the court found that such an agreement could be inferred from statements which did not expressly exclude post-21 expenses from a statement agreeing to contribute to college. The sole basis of the Third Department’s decision was as follows:

Plaintiff acknowledged in his testimony that he had, in fact, agreed to pay part of the children’s college education costs, there was no indication that he intended to limit his payments to the children’s first three years in college, and proof at trial established that funds had been previously set up to assist in such costs. Under these circumstances, it was not error for Supreme Court to direct plaintiff to pay a portion of the children’s college costs until they reach the age of 22.

Continue Reading Court Extends Parent's Obligation to Pay College Expenses Beyond Child's 21st Birthday

As noted in the previous blog, Gazzillo Ralph.jpgagreements which resolve marital rights and obligations are encouraged. They will be enforced absent demonstrable improprieties.

In his January 23, 2011 decision in Capone v. Capone (pdf), Suffolk County Supreme Court Justice Ralph T. Gazzillo granted summary judgment dismissing a wife’s action to rescind and declare null and void a November, 2008 Separation Agreement.

In January, 2010 the husband commenced an action for divorce based on the parties living separate and apart pursuant to that agreement for a period in excess of one year (“grounds” for divorce under Domestic Relations Law §170[6]). The wife responded by bringing her own action in February, 2011 attacking the agreement on the grounds that it was the result of overreaching, coercion, and undue influence. She also alleged that it was manifestly unfair, unjust, inequitable and unconscionable.

The husband moved for summary judgment dismissing the wife’s action. Justice Gazzillo noted that summary judgment is a drastic remedy, only to be granted in the absence of any triable issues of fact. Justice Gazzillo held that the wife failed to demonstrate that the agreement was unfair when made or that there was overreaching in its execution. Quoting the 1977 decision of the Court of Appeals in Christian v.Christian, 42 NY2d 63, 396 NYS2d 817, Justice Gazzillo stated:

Judicial review of separation agreements is to be exercised circumspectly, sparingly and with a persisting view to the encouragement of parties settling their own differences in connection with the negotiation of property settlement provisions.

Here, the parties’ Separation Agreement had been entered with the assistance of Divorce Mediation Professionals (Lenard Marlow, J.D.). The parties only entered their agreement following at least 10 conferences, letters between the parties and the mediator, revisions, a written suggestion by the mediator to the wife that she consult with her own attorney to discuss changes to the agreement, and the valuation of the husband’s pension.

Continue Reading Wife's Attack on 2-Year-Old Mediated Separation Agreement Summarily Dismissed

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 . . .

bruno - Robert A.jpgIn his February 8, 2012 decision in Townes v. Coker, Nassau County Supreme Court Justice Robert A. Bruno joined his benchmate, retired Justice Anthony J. Falanga, and held that true no-fault divorce is now available in New York.

Justice Falanga, in his March 28, 2011 decision in A.C. v. D.R.,  had given full effect to New York’s new no-fault divorce law, when holding there is no defense to such a claim (see April 4, 2011 blog). The irretrievable breakdown grounds effective October, 2011 with the enactment of Domestic Relations Law §170(7) may be established by the subjective sworn declaration of one spouse, alone.

Justice Bruno, granting the wife a divorce upon her motion for summary judgment, agreed:

Therefore, in this court’s view, the Legislature did not intend nor is there a defense to DRL § 170(7). Suggestions that the party wishing to stay married has a constitutional right that is being infringed upon in violation of due process is unavailing. Staying married, against the wishes of the other adult who states under oath that the marriage is irretrievably broken, is not a vested right.

Here, the husband had previously filed his own divorce complaint upon the grounds of constructive abandonment (New York’s tamest fault gound before no-fault was enacted, established by proving, often without opposition, that one spouse had continually refused to engage in sexual relations for at least a year despite the other spouse being ready, willing and able to do so). Although the husband sought to withdraw that claim, Justice Bruno ruled that the claim nevertheless constituted a binding judicial admission from which the husband could not escape. That, too, demonstrated the merit to the wife’s claim:

[I]t is difficult for this Court to imagine a better example of a irretrievable breakdown of the marriage relationship where one spouse continually refuses to have sexual relations with the other spouse for a period of at least one year. Here, the Husband is bound by his own sworn admission contained in his Verified Complaint, thereby eliminating any triable issues of fact for this Court to determine. The fact the Husband … now wants to alter his sworn material representations … to create a defense … will not be tolerated by this Court.

Still further, under the unique circumstances presented to Justice Bruno, summary judgment granting the divorce was proper. Justice Falanga, in A.C. v. D.R., had held that denying summary judgment was necessary to give full import to the second sentence of D.R.L. §170(7), which provides that “no judgment of divorce shall be granted” until the custody and financial issues have been resolved.

In Townes, however, all of the financial rights and obligations of the parties had been determined by a 2007 post-nuptial agreement. The three children of the parties were emancipated. Thus, with it being conclusively established that post-nuptial agreement was valid, enforceable and dispositive as to equitable distribution, support and maintenance, there was no basis to withhold the immediate entry of summary judgment awarding the wife a divorce.