The failure of the now-deceased wife to disclose that she was suffering from terminal cancer at the time the parties entered their divorce settlement agreement was not a basis to set aside that agreement. So held the Appellate Division Second Department in its August 28, 2013 decision in Petrozza v. Franzen.
Richmond County Supreme Court Justice John A. Fusco had granted summary judgment dismissing the complaint in the husband’s plenary action to rescind the agreement brought against the executors of the wife’s estate. The husband had alleged that his wife had fraudulently and actively concealed her illness. That illness resulted in the wife’s death after the execution of the settlement agreement, but before the entry of a final judgment of divorce.
Affirming that dismissal, the Second Department noted that to demonstrate fraud, a plaintiff must show that the defendant “knowingly misrepresented or concealed a material fact for the purpose of inducing [him] to rely upon it, and that [he] justifiably relied upon such misrepresentation or concealment to his . . . detriment.”
The Second Department did acknowledge that a party’s health is material to the equitable distribution of marital assets (Domestic Relations Law §236[B][d]: “the duration of the marriage and the age and health of both parties.”
[Note: subsection (d)(5) would also warrant consideration of “the probable future financial circumstances of each party.” The court rules (22 N.Y.C.R.R. 202.16[h][v]), require each party to file a Statement of Proposed Disposition setting forth the party’s “proposal for equitable distribution, where appropriate, indicating and elaborating upon the statutory factors forming the basis for the proposed distribution.”]
Here, however, the husband had not challenged the manner in which the parties agreed to distribute the marital assets. Rather, he only claimed that he would not have agreed to settle with the wife at all had he known of her condition.
Nonetheless, the Second Department held that the wife’s alleged misrepresentations or omissions concerning her health were not material to the husband’s decision as to whether to enter into any settlement agreement at all with the wife. Thus, the equitable remedy of rescission was not warranted.
As the husband did not dispute the fairness of the division of the marital assets to which the parties agreed, he would not be heard to complain that his decision to fairly settle the matrimonial action, in reliance upon his incorrect notion of the wife’s good health, operated to his detriment. A separation agreement “will not be overturned merely because it was improvident, not the most advantageous to the dissatisfied party, or because a party had a change of heart.”
To hold otherwise, the appellate court stated, would be to recognize, contrary to public policy favoring settlement and fair dealing, that the husband was entitled to a “fair” opportunity to stall in settling the action with the goal of retaining all of the marital assets upon the wife’s death.
Equity is not served by permitting the plaintiff to rescind the separation agreement for lack of this opportunity.
Accordingly, summary judgment dismissing the complaint was proper.
Elliot R. Polland, of Hoffman Polland & Furman, PLLC, of Manhattan, represented the husband. Howard Reiss and Robert Grand, of Reiss Sheppe, LLP, of Manhattan, represented the executors of the wife’s estate.