Where the results of a 2007 prenuptial agreement waiver of maintenance would be a risk that a mother of three children would become a public charge, the agreement would be set aside for being unconscionable at the time of divorce. So held the Appellate Division, Second Department, in its January 10, 2018 decision in Taha v. Elzemity.

The parties were married in 2007, and had three children. Shortly before their marriage, they entered into a prenuptial agreement. The agreement provided, inter alia, that each party waived the right to the other’s separate property in the event of separation or divorce; each party would keep separate bank accounts; and the husband’s maintenance obligation would be limited to a lump sum payment of $20,000.

In 2008, the parties moved into the marital residence, which was purchased with funds from the husband’s bank account, and the deed and mortgage were placed solely in his name.

The husband had been practicing medicine since 1987 and earned approximately $300,000 annually. The wife, who had been employed part-time as a sales person when the parties met, did not work outside the home during the marriage, but dedicated herself to the care of the household and the parties’ children, one with special needs.

In October 2013, the husband commenced this divorce action. The wife moved to set aside the prenuptial agreement, among other grounds, because it was unconscionable. The husband cross-moved for summary judgment determining that the prenuptial agreement was valid and enforceable. After a hearing, Supreme Court, Richmond County Justice Catherine M. DiDomenico found that the prenuptial agreement was not unconscionable. The wife appealed.

The Second Department reversed. It noted that:

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.

Further, the Court stated, “an agreement is unconscionable if it is one which no person in his or her senses and not under delusion would make on the one hand, and no honest and fair person would accept on the other, the inequality being so strong and manifest as to shock the conscience and confound the judgment of any person of common sense.” Moreover:

An agreement that might not have been unconscionable when entered into may become unconscionable at the time a final judgment would be entered.

Here, the appellate court held that the wife met her burden of proof as to unconscionability. Contrary to the lower court’s determination, the wife established that the prenuptial agreement was, at the time this action was before the court, unconscionable.

Enforcement of the agreement would result in the risk of the wife’s becoming a public charge. The wife, who was unemployed, largely without assets, and the primary caregiver for the parties’ young children, would, under the prenuptial agreement, receive only $20,000, in full satisfaction of all claims, even though the husband earns approximately $300,000 annually as a physician. Accordingly, the wife’s motion to set aside the prenuptial agreement should have been granted.

Catherine S. Bridge, of Staten Island, represented the wife. Arnold E. DiJoseph, P.C., of Manhattan, of counsel to Kuharski, Levitz & Giovinazzo, represented the husband.

The second of four decisions this month with an international flavor was also decided by New York County Supreme Court Justice Ellen Gesmer.

In M v. M, 2014 N.Y.Misc. Lexis 3201, decided July 3, 2014, Justice Gesmer again voided a marital agreement, this time applying the laws of Spain and the Dominican Republic.

On June 27, 2001, one year and five months before their marriage, the parties signed an Agreement in Madrid, Spain, that purported to govern the disposition of property in the event of marriage and divorce. As with the Agreement in J.R. (see yesterday’s blog post), it provided that the parties would marry in a system of absolute separation of property.

At the time of the Agreement, the wife, born in the Dominican Republic, had Italian citizenship and was a domiciliary of Spain. The Husband is a citizen of Spain.

The parties were married in the Dominican Republic on December 12, 2002. Their marriage certificate, and the certification issued by the Office of Vital Statistics from the local government district, so listed the husband as a Spanish citizen, domiciled in Spain, and the wife as an Italian citizen, domiciled in Spain.

The wife commenced this divorce action in New York in 2012. Seeking now to invalidate the Agreement, the wife alleged that she never read the Agreement before signing it, that no one else read it to her, and that no formalities, particularly an oral recitation of the Agreement, were conducted when it was signed. She claimed that the husband brought her to the office of his attorney, and asked her to sign an accounting document drafted by his attorney to help him protect assets from business dealings. She claimed she never saw the document before the evening she signed it, and never saw or discussed it with the husband again until he raised it after commencement of this action. The husband disputed the wife’s claimed lack of awareness of the contents and significance of the Agreement.

Continue Reading Melting Pot (Part 2 of 4): Prenuptial Agreement Voided Applying the Laws of Spain and the Dominican Republic

After surgically excising eight words, Saratoga County Supreme Court Justice Thomas D. Nolan, Jr., in his February 7, 2014 decision in Zinter v. Zinter, upheld the balance of a prenuptial agreement. Those words had given the husband the unconscionable power to control whether earnings and other after-marriage acquired property would be placed into joint or indiviual accounts, and thus marital or separate property.

In this divorce action, the parties were married on December 23, 2005. The wife was then 29 years old, a music teacher with a Master’s degree, and reported a net worth of $71,500.00. The husband was then 35 years old, a college graduate, and an officer and part owner of his family-owned and operated business, with a reported net worth of approximately $2.7 million.

The husband had retained an attorney to prepare a prenuptial agreement. In November 2005, both the prospective husband and prospective wife met with that attorney to review the proposed agreement. At the time, the wife was not represented by counsel. The husband’s attorney provided the wife with the names of three attorneys experienced in matrimonial law. Shortly thereafter, she retained one of them, with whom the wife met three times before the agreement was signed four days before the marriage.

Continue Reading Court Strikes Prenup Provision Giving Husband the Power to Determine Whether After-Marriage Acquired Property was Marital or Separate

The alleged failure of the mediator and the husband’s counsel to advise the husband that a court need not apply the C.S.S.A. formula to the husband’s entire agreed-upon income of $1,200,000.00 per year income is not a basis to set aside a divorce settlement agreement, or its $29,500.00 per month child support obligation. So held Westchester County Supreme Court Justice Lawrence H. Ecker in his January 16, 2014 opinion in A.B. v. Y.B.

The couple involved separated after 12 years of marriage. Following three years of mediation, the parties entered into an agreement that resolved issues of custody and access to the parties’ three children, maintenance, child support, and equitable distribution. The husband is a 50% equity partner in a brokerage firm. The wife is owner and operator of her own business.

Upholding the agreement, Justice Ecker took pains to quote several of its provisions. One acknowledged that the parties had waived the “compulsory financial disclosure” requirements of the Domestic Relations Law and court rules, and agreed not to exchange Net Worth Statements. Nonetheless, the parties represented to each other that each made a full and complete disclosure of assets, liabilities, income and expenses, and that they relied on the information provided.

The agreement recited the husband’s disclosure, to the best of his knowledge, of his gross personal 2010 income as approximately $156,427.00. The parties agreed to use the 2010 income because their 2011 income was not yet available. The Husband disclosed that in no event was his income from any and all sources more than $156,427.00 in said year.

Nonetheless, for purposes of the agreement, the parties agreed to use an imputed income of$1,200,000 in computing the child support calculation under the Child Support Standards Act.

The parties acknowledged that they reached their agreement with the aid of the mediator, but that the mediator provided no legal representation to either of the parties. Further, although “the mediator may have provided information or opinions concerning the state of the law generally, neither party has relied upon such information or opinions in executing this Agreement.”

The parties further represented that each had ample opportunity to obtain independent legal counsel, and counsel [apparently recommended by the mediator] for each spouse was named.

As to the basic child support obligation, the agreement provided it was agreed that the the husband’s would pay $29,500 per month [$354,000 per year] for 12 years, 5 months, subject to a cost of living increase biennially. The husband was further responsible for 100% of discretionary expenses and add-on expenses, including private school tuition for all three children, private college expenses, camp and summer programs, religion education expenses, Bar and Bat Mitzvah expenses, health insurance and unreimbursed medical expenses.

Continue Reading Claimed Ignorance of C.S.S.A. Treatment of Income Over Cap Not Basis to Set Aside Divorce Settlement Agreement

In its February 20, 2013 decision in Cioffi-Petrakis v. Petrakis, the Second Department affirmed the decision of former Nassau County Supreme Court Justice Anthony J. Falanga which set aside the parties’ prenuptial agreement. Indeed, decisions over the past year indicate that there may be a pendulum swinging towards easing the burden on the party (generally, the wife) attacking such agreements.

For example, in its December 5, 2012 decision in Petracca v. Petracca, the Second Department affirmed the decision of Nassau County Supreme Court Justice Jeffrey S. Brown that set aside a postnuptial agreement due to the husband’s overreaching at the time of signing some 16 years earlier (see the blog post of December 10, 2012: “Postnuptial Agreement Vacated for Overreachong 16 Years After Entry).

In Cioffi-Petrakis, the wife contended that her husband had reneged on his oral promise to tear up their prenuptial agreement once she had children made shortly before the pre-nuptial agreements’s execution (the parties now have two sons and a daughter). That promise was not referenced in the parties’ written agreement entered just four days before the parties’ marriage. Moreover, the parties had disclaimed reliance upon oral statements by either party, a relatively standard provision in the agreement, itself. Nevertheless, the Second Department agreed with Justice Falanga that the evidence supported the wife’s claim that she had been fraudulently induced to accept the deal.

Ironically, three years earlier (72 A.D.3d 868, 898 N.Y.S.2d 861), the Second Department affirmed Justice Falanga’s prior order dismissing the wife’s causes of action which attacked the very same agreement on the grounds of unconscionability. There, the Second Department was satisfied with the record’s demonstration that the wife was represented by independent counsel during the prenuptial agreement negotiations (her counsel signed the agreement as a witness). Moreover, the agreement itself recited that the wife entered into it “freely, voluntarily and with full knowledge of all circumstances having a bearing on this agreement.” At that time, the Second Department opined that the wife was provided with meaningful bargained-for benefits, including a one-third interest in one of the defendant’s businesses. The wife had advanced nothing but conclusory and unsubstantiated assertions insufficient to defeat the husband’s motion for summary judgment dismissing the cause of action to set aside the parties’ prenuptial agreement on the ground of unconscionability.

Continue Reading Is it Open Season on Prenuptial Agreements?

contract ripped by angry woman.jpgIn its December 5, 2012 decision in Petracca v. Petracca, the Second Department affirmed the decision of Nassau County Supreme Court Justice Jeffrey S. Brown that set aside a postnuptial agreement due to the husband’s overreaching at the time of signing.

Four months after the parties’ 1995 marriage, they entered into a postnuptial agreement. The agreement provided that the jointly-owned marital residence, which had just been purchased for approximately $3.1 million and which was subsequently renovated at a cost of between $3 million and $5 million, was the husband’s separate property.

The agreement further provided that if the parties divorced, the wife, who had not been employed other than as a homemaker since just before the marriage, would waive her interest in any business in which the husband had an interest, including any appreciation in the value of such interests accruing during the marriage. At the time the agreement was entered into, the husband valued his interests in these business entities at over $10 million. The wife also waived any and all rights she had to the husband’s estate, including her right to an elective share. At the time the agreement was entered into the husband valued his net worth at more than $22 million.

Finally, the agreement provided that if the parties divorced, the wife would waive maintenance, except in the sum of between $24,000 and $36,000 per year, for varying lengths of time, depending on the duration of the marriage.

In 2008, the wife commenced this action for a divorce. In his answer, the husband sought enforcement of the postnuptial agreement. A hearing was held to determined its validity.

The wife testified that her husband had bullied her into signing agreement, shortly after she had suffered a miscarriage, by threatening that they would not have any children and that the marriage would be over if she did not sign. The wife further testified that she signed the agreement within days of receiving it and, although she reviewed some portions of it, she did not understand its terms and did not consult an attorney. At the hearing, the wife also demonstrated that the statement of the husband’s net worth contained in the agreement was inaccurate at the time it was made, and was undervalued by at least $11 million.

For his part, the husband denied any knowledge of his wife’s miscarriage. He had wanted the postnuptial agreement in order to protect his son from a prior marriage. The husband testified that the parties had discussed the issue of entering into a postnuptial agreement prior to the marriage and that they had negotiated the postnuptial agreement over the course of many weeks.

The husband’s attorney drafted the agreement. Although she had not disclosed the name, the husband believed that his wife had consulted with her own attorney.

Continue Reading Postnuptial Agreement Vacated for Overreaching 16 Years After Entry