Among their powers notaries public administer oaths and receive and certify acknowledgments or proof of deeds and other instruments in writing (Executive Law §135). An acknowledgement provides proof of the identity of the purported signatory of a document. It reads (Real Property Law §309-a):
On the ____ day of ____ in the year ____ before me, the undersigned, personally appeared ____, personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument.
Domestic Relations Law §236(B)(3) provides that an agreement made before or during the marriage, shall be valid and enforceable in a matrimonial action if such agreement is in writing, subscribed by the parties, and acknowledged . . . .”
Parties often will resolve their divorce actions through with Separation Agreements or Stipulations of Settlements, the terms of which are incorporated in their Judgment of Divorce. Those agreements and stipulations often survive the entry of the Judgment of Divorce as independently enforceable contracts.
In his June 10, 2015 decision in Defilippi v. Defillipi, Westchester County Supreme Court Justice Paul I. Marx, held that agreements that are entered within pending divorce actions and conclude those actions need not be acknowledged. They must only meet the requirements of C.P.L.R. 2104 and, if not entered in open court, be written, signed and filed with the county clerk.
In Defilippi, the parties were married in 2004 and had three unemancipated children. In May, 2012, the wife filed an action for divorce. The parties and their counsel negotiated a settlement of the action and drafted and executed a written Stipulation of Settlement, dated December 4, 2013, expressly agreeing that their “Agreement is entered into and is to be governed by Section 236, Part B of the Domestic Relations Law of the State of New York.” Both parties initialed each page and signed the last page of the Stipulation of Settlement. In addition, both parties executed a sworn and notarized affidavit attesting that each one had read the Stipulation in its entirety, understood the contents and agreed that it accurately embodied and contained all of the terms of their agreement. Each party attested that they voluntarily entered into the Stipulation of Settlement with the advice of counsel and without duress or coercion or the influence of drugs or alcohol. However, neither the Stipulation of Settlement nor the affidavits contain an acknowledgment that conforms to the requirements of DRL § 236(B)(3).
In March, 2014, the divorce documents, including the executed Stipulation of Settlement, were submitted to Justice Marx for review and signature, with notice to the husband and his counsel. The husband did not object to the divorce documents or proposed judgment, or submit a counter proposed judgment. The husband did not point out any defect in the Stipulation of Settlement, or seek to set it aside. Neither party requested to appear in court to be allocuted (formally acknowledging the agreement) on the terms of the Stipulation of Settlement.
On April 3, 2014, Justice Marx executed the Judgment of Divorce. The husband did not move to vacate or appeal from the Judgment of Divorce.
For more than a year after the Stipulation of Settlement was entered, the husband complied with its terms, including making child support and equitable distribution payments to the wife. However, the husband’s compliance was inconsistent, necessitating the wife to file enforcement petitions in Family Court. The husband filed a petition in Family Court on January 7, 2015, seeking to modify his support obligation based upon his alleged lack of sufficient income. On February 27, 2015, the husband withdrew his petition.
On March 26, 2015, the husband filed the current action against the wife in Supreme Court, seeking to set aside the Stipulation of Settlement on the basis that it failed to meet the D.R.L. §236(B)(3) requirement that it be “acknowledged or proven in the manner required to entitle a deed to be recorded.”
The wife moved to dismiss the action on the ground, arguing that the Stipulation of Settlement was properly executed in accordance with the law prevailing in the Second Department. The wife relied primarily on the 2013 decision of the Appellate Division, Second Department in Rio v. Rio, 110 A.D.3d 1051, 973 N.Y.S.2d 921.
Justice Marx noted that the Second Department has long held that stipulations of settlement in matrimonial actions that are made in open court are governed by C.P.L.R. 2104, rather than D.R.L. §236(B)(3). Justice Marx noted that in Rio, the Second Department extended its holding to apply to a written agreement entered into between the parties to resolve their divorce action, although it was not entered into in open court.
Justice Marx found curious (and somewhat troubling) the court’s statement in Rio that the postnuptial agreement settling the action was “subject to judicial oversight.” Indeed, it appeared from that decision that at the time the agreement was negotiated and entered into between counsel for the parties, there was no involvement by the trial court and no opportunity for judicial oversight. The parties executed the agreement and filed a stipulation to discontinue the divorce action pending at the time of the agreement. There was no Judgment of Divorce and no review by the court of the agreement, nor any allocution by the court as to its terms. Judicial oversight of the agreement only came later in the subsequent divorce action in the form of the “Supreme Court referring to the appellant’s obligations pursuant to the postnuptial agreement in two prior orders.”
Therefore, Justice Marx noted that while the court upheld the validity of the agreement without an acknowledgment or allocution by the court on its terms, it was not entirely clear that the court intended to dispense completely with the requirement of judicial oversight.
Nevertheless, Rio reaffirmed the Second Department’s position that the lack of an acknowledgment consistent with DRL § 236(B)(3) does not void a stipulation of settlement terminating a matrimonial action. As both the First and Second Departments have long held, “section 236 (B) (3) of the Domestic Relations Law applies only to agreements entered into outside the context of a pending judicial proceeding, such as antenuptial agreements. … [T]he statute [does not restrict] the ability of the parties to terminate litigation upon mutually agreeable terms especially where, as here, the court has exercised its oversight and [approved] the stipulation.”
Even if Rio did not intend to dispense completely with judicial oversight of a settlement agreement, the Stipulation of Settlement before Justice Marx in Defilippi case did satisfy the requirement for judicial oversight. Justice Marx, himself, exercised its oversight when reviewing the divorce documents and signing the Judgment of Divorce, which incorporated, but did not merge the Stipulation of Settlement.
Finally, the Court held that the husband could not challenge the Stipulation of Settlement, because he ratified it by receiving the benefit of the wife’s compliance for nearly 1½ years. Under the Stipulation, he maintained ownership of his business. He was also able to keep his share of equitable distribution and pay the wife her share according to a schedule of payments. Moreover, he has had joint custody and access to the parties’ children in accordance with the schedule set out in the agreement, which he sought to maintain even though he desired to set the Stipulation of Settlement aside in all other respects. Justice Marx concluded that through ratification, the husband relinquished the right to challenge that agreement. He remained bound by the provisions in the Stipulation of Settlement.
Additionally, Justice Marx awarded the wife $8,000 (she requested $10,380) in attorney’s fees under the enforcement provision of the Stipulation. However, the Court denied imposing sanctions against the husband for the filing a frivolous action as the application of the rule in Rio was not clear. It could not be fairly said that no “reasonable argument for an extension, modification or reversal of existing law” could be made.
Patricia T. Bisesto, Esq., of White Plains, represented the husband. David M. Rosoff, Esq., of Carton & Rosoff PC, of White Plains, represented the wife.