The separation agreement was the product of mediation; the wife was afforded the opportunity to consult with counsel; and the wife elected to sign the agreement, notwithstanding the advice of counsel not to do so.  “These facts, standing alone, do not shield the separation agreement from judicial scrutiny. The validity of the agreement is dependent upon an examination of the totality of the circumstances, including an examination of the terms of the agreement, to see if there is an inference of overreaching.”

So held the Appellate Division, Second Department in its April 24, 2019 decision in Mizrahi v. Mizrahi. Reversing the decision of Queens County Supreme Court Justice Margaret Parisi-McGowan that upheld the agreement without a hearing, the appellate court also noted the record disclosed no information regarding who retained and paid for the services of the mediator, and how the mediator arrived at the substantive terms of the agreement.

The Second Department noted:

because of the fiduciary relationship existing between spouses, a marital agreement 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 unjust because of the other spouse’s overreaching. To rescind a separation agreement on the ground of overreaching, a wife must demonstrate both overreaching and unfairness.

Here, the court held that without a hearing to determine the totality of the circumstances, including the extent of the parties’ incomes and assets and the circumstances surrounding the execution of the separation agreement, it could not be determined on this record whether equity should intervene to invalidate the parties’ separation agreement.Continue Reading Inference of Mediated Separation Agreement Invalidity Sufficient to Warrant Hearing

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

The Second Department seems to have taken another bite out of prenuptial agreements. My March 25, 2013 post asked, Is it Open Season on Prenuptial Agreements? That post discussed the Second Department’s February, 2013 decision in Cioffi-Petrakis v. Petrakis and its December, 2012 decision in Petracca v. Petracca. Both cases affirmed Supreme Court Nassau County decisions setting aside the prenuptial agreements in issue,

Now, in an October 15, 2014 decision in McKenna v. McKenna, the Second Department modified an order of Nassau County Supreme Court Justice Margaret C. Reilly that had granted a husband summary judgment motion declaring the parties’ prenuptial agreement to be valid and enforceable. Justice Reilly had also denied the wife’s motion for an award of pendente lite maintenance and counsel fees.

Holding that summary judgment was not warranted, the appellate court may have increased or changed the burden needed to uphold a prenuptial agreement; changing the role of a contract’s “merger clause.” That clause declares that no factual representations not specifically referenced in the contract may later be used to claim the contract was fraudulently induced. Typically, it is a shield used to protect the agreement from attack.

In McKenna, the Second Department suggests a merger clause may be used as a sword: preventing a court from learning the wife’s actual knowledge of the husband’s finances at the time the prenuptial agreement was entered. As that knowledge could only have come from representations of the husband, the merger clause would bar proof of such representations not referenced by the agreement.Continue Reading It Just Became Tougher To Validate Prenuptial Agreements

The calculations required by the C.S.S.A. to be made by an arbitrator in child support determinations provide the “extraordinary circumstances” needed  to warrant court-ordered disclosure of documents from a self-employed ex-husband. Such was the ruling of Kings County Supreme Court Justice Jeffrey S. Sunshine in his November 6, 2013 decision in Weisz v. Weisz.

In 2003, the Weisz’s had entered into a stipulation of settlement of their divorce in which they agreed that all controversies, disputes, or interpretation of this agreement, would be arbitrated by a specified rabbi. The 2004 judgment of divorce incorporated by reference that stipulation which survived and did not merge into the judgment.

In 2012, Ms. Weisz brought on an order to show cause seeking a stay of a post-judgment arbitration proceeding and the disqualification of the specified rabbi as the arbitrator. The stay was granted as to custody and visitation issues, but denied as to all financial issues.

The issues to be arbitrated related to an upward modification of child support, child support arrears, unreimbursed medical arrears, child support statutory add-on arrears, tutor expenses and spousal support.Continue Reading Court Orders Disclosure to Aid in Arbitration of Child Support Issues

Man stealing data from a laptop iStock_000013972877XSmall.jpgIn her June 25, 2010 Shreiber (PDF) decision, Brooklyn Supreme Court Justice Delores Thomas denied a wife’s second motion for the wholesale inspection of her husband’s (previously-secured) computer hard disk drive. A prior motion had been denied as premature and because the activities of the appraiser court-appointed to evaluate the husband’s solo law practice might