Lawrence B. Trachtenberg

It depended on what the definition of “the” was.

In Babbio v. Babbio, the Appellate Division, First Department, on July 17, 2014 defined “the” and otherwise interpreted a prenuptial agreement in ways that cost a husband millions of dollars of separate property credits he sought in his divorce action.

Under the parties’ agreement, marital property, generally, was to be divided equally. However, the agreement also provided:

[i]n the event of an Operative Event, Marital Property [as defined elsewhere in the agreement] shall be distributed equally between [the parties] in accordance with the following provisions, except that if the parties have been married for ten (10) years or less and either party is able to identify One Million ($1,000,000) Dollars or more of Separate Property that was used for the acquisition of the Marital Property, that party shall first receive the amount of his or her contribution of Separate Property prior to the division of the remaining value of such property, if any. [emphasis added]

“Operative Event” was defined, inter alia, as “the delivery by [either party] to the other of written notification … of an intention to terminate the marriage.” Here, the Court held that it was the date of the notification, and not the date of distribution that was determinative. As a result, the husband became entitled to the benefits of this provision.

However, construing the parties’ prenuptial agreement in what the Court viewed as being in accord with the plain meaning of its terms, and interpreting every part of the agreement “with reference to the whole”, the First Department found that the party seeking the credit must have contributed $1 million or more of his or her own separate property directly to the acquisition of the particular item of marital property at issue.

Continue Reading Husband Denied Millions in Separate Property Credits Because of the Definition of "The"