Kudrov v Kudrov

[*1] Kudrov v Kudrov 2005 NY Slip Op 50257(U) Decided on February 23, 2005 Supreme Court, Kings County Krauss, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on February 23, 2005
Supreme Court, Kings County

Simon Kudrov, Plaintiff,

against

Lyudmila Kudrov, Defendant.



2240/97

Sarah L Krauss, J.

The defendant, Lyudmila Kudrov, has moved by order to show cause for an order to enforce certain provisions of a postnuptial agreement, dated Decemebr 21, 1996. The plaintiff opposes the motion and argues that the agreement is unenforceable and void because it was not properly acknowledged. For the reasons that follow, the defendant's motion is denied and the agreement is deemed invalid and unenforceable.

[*2]Background

The parties were married on August 26, 1992. On December 21, 1996 the parties entered into a written agreement which provided for the equitable distribution of their marital property. On January 21, 1997 the plaintiff commenced an action for divorce which was uncontested and resulted in a Judgment of Divorce dated July 8, 1997. The agreement was incorporated, but did not merge into the Judgment of Divorce.[FN1] The defendant now moves, by order to show cause, to specifically enforce the provision of the agreement which stipulates that the parties shall be joint owners of two taxi cab corporations with the net profits to be divided equally between the parties.[FN2] The defendant claims that the plaintiff has failed to share any profits from the operation of the two taxi cab corporations and has prevented her from obtaining any information regarding the operation of the businesses.[FN3]

Although it appears that the parties have complied with all other aspects of the agreement to date, the plaintiff opposes the defendant's request for relief and seeks to deem the agreement unenforceable and invalid as it was not acknowledged or proven in a manner required to entitle a deed to be recorded. See, Domestic Relations Law (DRL) § 236 (B) (3). The agreement itself was subscribed by the parties in the State of Florida. The certificate of acknowledgment, however, reveals that the acknowledgment was made before a New York notary.

Legal Discussion [*3]

DRL § 236 (B) (3) provides that: "[a]n agreement by the parties, made before or during the marriage, shall be valid and enforceable in a matrimonial action if such agreement is in writing, subscribed by the parties, and acknowledged or proven in the manner required to entitle a deed to be recorded."

In Matisoff v. Dobi, 90 NY2d 127 (1997), the Court of Appeals reversed a decision of the Appellate Division, First Department and held that a postnuptial agreement which had been signed, but not acknowledged, was not specifically enforceable in a matrimonial action because it failed to comply with the terms of DRL § 236 (B) (3). In reaching its holding, the Court ultimately rejected the analysis of the Appellate Division which had concluded that, where various equitable factors are present, the failure to comply with the statutory requirement of acknowledgment should not constitute an absolute bar to enforcing a nuptial agreement.[FN4] The Court of Appeals, instead, specifically opted for a "bright-line rule" that would require acknowledgment in every case involving marital agreements, and noted that such a rule would be easy to apply and would place couples and their legal advisors on notice of the prerequisites to a valid nuptial agreement. Matisoff at 135.

Since the agreement at issue is a marital agreement pursuant to DRL § 236 (B) (3), the agreement itself must be acknowledged in the manner required to entitle a deed to be recorded.[FN5] Thus, there must be an oral acknowledgment before an authorized officer, and a written certificate of acknowledgment must be attached to the agreement. See, Matisoff at 137; Filkins v. Filkins, 303 AD2d 934 (4th Dept., 2003); Real Property Law (RPL) §§ 291, 298, 299, 306.

It is undisputed that the acknowledgment in this case was made in the State of Florida before a New York notary public. Pursuant to RPL § 299, acknowledgments of the conveyance of real property situated in New York state can be made in another state only by certain officers, which include either a notary qualified in the State of Florida, or a commissioner of deeds appointed pursuant to the laws of New York State to take acknowledgments outside of the state. No evidence has been presented to this court that the New York notary who received and certified the acknowledgment in this case was, at the time, either qualified as a notary public in the State of Florida, or qualified in New York State as a commissioner of deeds entitled to take [*4]out of state acknowledgments. Moreover, pursuant to Executive Law § 135, a notary public qualified in New York State is only empowered to receive and certify acknowledgments within and throughout New York State.

Accordingly, because the marital agreement in question was never properly acknowledged, it is invalid and unenforceable. See, Matisoff, supra.

The defendant essentially makes two arguments in support of upholding and enforcing the marital agreement. The first, is that the agreement has been acknowledged and ratified by the parties throughout the eight years it has been in effect. While this is a very compelling argument, the Court of Appeals in Matisoff , as already discussed, has rejected the consideration of such equitable factors. Nothing other than strict compliance with the acknowledgment rules of DRL § 236 (B) (3) will uphold the validity of a marital agreement.[FN6]

The defendant further asserts that the agreement in question is a binding stipulation and is entitled to be enforced pursuant to Civil Practice Law and Rules (CPLR) § 2104. CPLR § 2104 states as follows: An agreement between parties and their attorneys relating to any matter in action, other than one made between counsel in open court, is not binding upon a party unless it is in a writing subscribed by him or his attorney or reduced to the form of an order and entered.

While it is true that both the First and Second Departments have held that an agreement which settles a matrimonial action is exempt from the statutory formalities of DRL § 236 (B) (3) and will be upheld as valid and enforceable if it complies with CPLR § 2104[FN7], the agreement in question was effectuated prior to commencement of the action and not in settlement of an existing action. The agreement, therefore, does not qualify as a settlement agreement subject to CPLR § 2104 and is, therefore, not exempt from the requirements of DRL § 236 (B) (3).[FN8]

In light of the foregoing, the defendant's motion to enforce the postnuptial agreement dated December 21, 1996 is denied and the agreement is deemed invalid and unenforceable.

This constitutes the decision and order of the court.

Date:February 23, 2005

Enter: _________________________

Sarah L Krauss, J.C.C.

Footnotes

Footnote 1:Although the Judgment of Divorce refers to the Agreement as a Stipulation of Settlement, because the Agreement preceded the matrimonial action, it is technically a marital agreement pursuant to DRL § 236 (B) (3).

Footnote 2:Article IX, paragraph C of the agreement specifically states: "In consideration of the Wife's investment of her money towards the purchase of the ownership of five (5) medallions in two (2) corporations, namely Lou Lou Transit, Inc. (3 cabs) and Tomcat Transit, Inc. (2 cabs), the parties agree that the ownership of the said corporations shall be jointly owned by both of them and that the Husband shall continue to manage the said medallions and the taxis to which they are attached and shall pay all business expenses, including management fee (sic), relating to such taxis from any income generated by them. Any profits resulting from said medallions and taxis or the corporations to which those taxis belong shall be divided between the parties."

Footnote 3:The order to show cause was originally argued before the Honorable Betsy Barros on January 20, 2005. On that date an order was entered directing the plaintiff to provide for the inspection and copying of all the books and records of the two subject taxi cab corporations within 30 days. A compliance conference was scheduled for March 30, 2005.

Footnote 4: In Matisoff, the Appellate Division had reversed a determination by the trial court which had ruled that the postnuptial agreement was unenforceable despite admissions by the parties, during their divorce trial 13 years later, that the signatures on the agreement were genuine. The Appellate Division opted for a more flexible approach given that there was no evidence of fraud, duress or misunderstanding and that the terms of the postnuptial agreement had been acknowledged and ratified in the daily activities and the property relations of the parties throughout the marriage. However, as already discussed, this flexible approach was rejected by the Court of Appeals for a "bright-line rule".

Footnote 5:Moreover, the agreement itself provided that it should be construed under the laws of the State of New York.

Footnote 6: Although the Matisoff decision precludes consideration of equitable factors in determining the validity of a marital agreement, such factors will nevertheless be relevant should this court need to determine the equitable distribution of the two taxi cab corporations at issue. See, Matisoff at 136.

Footnote 7:Rubenfeld v. Rubenfeld, 279 AD2d 153 (1st Dept., 2001); Nordgren v. Nordgren, 264 AD2d 828 (2nd Dept., 1999).

Footnote 8:Whether the validity of a stipulation of settlement in a matrimonial action is controlled by CPLR § 2104 or DRL § 236 (B) (3) is a subject which has divided the Appellate Divisions. The Third and Fourth Departments, unlike the First and Second, have determined that any nuptial agreement, including one which settles a matrimonial action, is subject to the statutory formalities of DRL § 236 (B) (3). The Court of Appeals has not yet settled this issue.