A wife commenced a New York County action to set aside three trusts created by her husband. The wife alleged that the trusts were created in an effort to ensure that the wife would be deprived of her fair and equitable share of assets in the event of a divorce. In fact, the husband had recently commenced a divorce action in Suffolk County.

In its June 20, 2023, decision in Paulson v. Paulson, the Appellate Division, First Department reversed an Order of Supreme Court New York County Justice Louis L. Nock which granted the husband’s motion to close the courtroom for oral argument on the motions to dismiss the complaint.

In the complaint, the wife had alleged that the husband funded the trusts with both spouses’ assets without the knowledge or consent of the wife. She alleged that the husband, worked in total secrecy with a cadre of hand-picked agents and advisors, to create and fund the trusts that held property now worth billions of dollars. Although the trustees had the authority to make distributions to the wife, in the twenty years since their creation, she had received nothing. Moreover, by the express terms of the trusts, upon the spouses’ divorce, the wife would automatically be eliminated as a trust beneficiary.

The wife pleaded that the husband’s actions raised an issue that was not amenable to resolution in a traditional divorce action. She contended that the complex business relationships and assets at play here and the relief sought against third-party trustees together required the commencement of two (2) separate actions: the divorce action and this action addressed exclusively to the secret trusts.

As a procedural matter, the First Department ruled that Justice Nock did not provide the public and the press adequate notice of the husband’s courtroom closure request. However, the Court also reversed on substantive grounds. “Public access to court proceedings is strongly favored, both as a matter of constitutional law . . . and as statutory imperative” Judiciary Law §4 provides:Continue Reading No Closed Courtroom in Action to Invalidate Husband’s Billion-Dollar Trusts