The November 12, 2014 decision of the Appellate Division, Second Department, in Bibeau v. Sudick reversed the granting of summary judgment upholding the validity a 2000 prenuptial agreement, remanding the matter for a hearing on that issue.
In September 28, 2000, two days before their wedding, the 70-year old future husband and the 38-year old future wife executed a premarital agreement. It provided that in the event of a divorce, the wife would receive, in lieu of maintenance, support, and equitable distribution, the sum of $25,000 for each year of the marriage. The parties also agreed to waive their interest in the elective share of each other’s estate, and to make no claim to property titled in the other’s name.
According to financial statements attached to the premarital agreement, the future husband had assets of more than $10,000,000, while the future wife had assets of approximately $170,000. The agreement was signed in the office of the husband’s attorney, in the presence of another attorney who was purportedly representing the wife.
At the time of the marriage, the wife, who had a background in marketing works of fine art to corporations, had recently opened an art gallery in California. She closed this business and relocated to Pine Bush, New York, in order to reside with the husband in preparation for their marriage, and assist him in his business endeavors. These included real estate development, as well as breeding thoroughbred horses and managing polo ponies.
In October, 2010, within days of New York’s adoption of no-fault divorce, the husband commenced this action for divorce. There were no children of the marriage.
The husband submitted the premarital agreement as proof that all economic issues had been resolved, entitling him to a judgment of divorce on the grounds of irretrievable breakdown.
The wife cross-moved for summary judgment on her counterclaim to set aside the premarital agreement as void, invalid, and unenforceable. The husband separately cross-moved for summary judgment determining that the premarital agreement was valid and enforceable, and to dismiss the wife’s counterclaim alleging the converse.
In support of her efforts to invalidate the prenuptial agreement, the wife offered proof that she signed the premarital agreement without benefit of counsel, that she was presented with the agreement immediately prior to signing it without discussion or negotiation of its terms, and that she was pressured to sign the agreement by being told that, if she did not, the plaintiff would cancel the impending wedding, scheduled to take place two days later. Specifically, the wife offered proof in the form of the transcript of the deposition testimony of the attorney who purportedly represented her in connection with the negotiation and execution of the premarital agreement. This attorney was unable to produce a retainer or letter of engagement, and had no recollection of the circumstances in which he was hired to represent the wife. Although he produced a note in his file which, in abbreviated form, could be said to refer to a conversation with the wife about several terms of the premarital agreement, the attorney had no independent recollection of meeting with the wife prior to the date of the signing of the premarital agreement. Moreover, he had no recollection as to whether he explained to her the terms of the premarital agreement or her rights pursuant to the laws regarding spousal support, equitable distribution, and the election of a minimum share of a deceased spouse’s estate.
In addition, the wife argued that the financial schedules prepared by the parties demonstrated such a financial disparity between them that the provision in the premarital agreement that she receive a relatively small sum in lieu of her rights to maintenance, equitable distribution, or, if the plaintiff predeceased her, an elective share of the plaintiff’s estate, without a corresponding benefit, was manifestly unfair and unconscionable. The wife further contended that, according to the terms of the premarital agreement, each party was to retain property titled in his or her name, which meant that, although she closed her fine arts marketing business, and assisted in the husband’s real estate development business, she was unduly pressured into agreeing to receive no compensation for her contributions.
In opposition to the wife’s cross motion, and in support of his own separate cross motion, the husband submitted the financial statements prepared by the parties some 10 days prior to the signing of the premarital agreement. He argued that this constituted evidence that the wife knew, or should have known, that she was expected to sign the agreement prior to the wedding, and could not claim surprise or overreaching in connection with the monetary and property distribution provisions of the premarital agreement.
Orange County Surrogate and Acting Supreme Court Justice Robert A. Onofry , below, denied the wife’s cross motion, and granted those branches of the husband’s separate cross motion which were to determine that the agreement was valid and enforceable, dismissing the wife’s counterclaim. The lower court subsequently granted the husband summary judgment on his no-fault cause of action, and entered a judgment of divorce.
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. Such an agreement may be invalidated if the party challenging the agreement demonstrates that it was the product of fraud, duress, or other inequitable conduct.
The Second Department reversed. There was evidence in the record that the wife was not represented by independent counsel in connection with the preparation and execution of the allegedly “take-it-or-leave-it” premarital agreement. In addition, contrary to the husband’s contention, the preprinted financial forms executed by the parties did not demonstrate that they were expecting to enter into a premarital agreement. Rather, the forms recited that they were furnished by a commercial bank in connection with an application for a mortgage. The wife therefore raised triable issues of fact as to whether the premarital agreement was the product of overreaching, such that it would be rendered unenforceable.
Accordingly, the Supreme Court should have denied that branch of the husband’s cross motion which was for summary judgment determining that the premarital agreement was valid and enforceable and dismissing the wife’s counterclaim alleging the converse. Rather, the Second Department remitted the matter to the Supreme Court for a hearing on the validity of the premarital agreement, and for further resolution of any economic issues, if necessary, and the entry an appropriate amended judgment of divorce thereafter.
William S. Friedlander and Betty D. Friedlander, of Friedlander, Friedlander & Arcesi, P.C., of Ithaca, represented the wife. Ronald A. Phillips, of McCormack & Phillips, of Nyack, represented the husband.
For related blog posts, see: It Just Became Tougher To Validate Prenuptial Agreements (October 20, 2014); Is it Open Season on Prenuptial Agreements? (March 25, 2013); Postnuptial Agreement Vacated for Overreaching 16 Years After Entry (December 10, 2012)