J.R. v E.M.

[*1] J.R. v E.M. 2014 NY Slip Op 51094(U) Decided on July 21, 2014 Supreme Court, New York County Gesmer, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 July 21, 2014
Supreme Court, New York County

J.R., Plaintiff,

against

E.M., Defendant.



301738/2013



Plaintiff's counsel:

Mark Holtzer, Esq.

Snitow, Kanfer & Holtzer, LLP

New York, New York

Defendant's counsel:

Robert S. Michaels, Esq.

Dobrish Michaels Gross, LLP

New York, New York
Ellen Gesmer, J.

In this divorce action, plaintiff J.R. (Wife) moves for an order setting aside the "Matrimonial Property Agreement" signed by the Wife and defendant E.M. (Husband) on March 3, 2004 before the Spanish Consul at the Spanish Consulate located in New York City (the Agreement). The Husband opposes the motion, and cross-moves for an order: (1) declaring that the Agreement is valid, binding and enforceable; (2) granting him summary judgment on his claim that all property titled in his sole name is his separate property, pursuant to the Agreement; (3) granting him summary judgment on his claim that all property titled in the Wife's sole name is her separate property under the Agreement; (4) granting him summary judgment on his claim that all property titled in the parties' joint names shall be distributed 50% to each party, pursuant to the Agreement; (5) granting him summary judgment on his claim that all debts incurred during the marriage for the benefit of both parties shall be distributed 50% to each party, pursuant to the Agreement; and (6) setting the matter down for a hearing on the distribution of [*2]any remaining property. The Wife opposes the cross-motion.

FACTS

The Husband is a Spanish citizen. The Wife is a Peruvian citizen. It is undisputed that both parties are native Spanish speakers and are well educated and accomplished professionals, both currently employed by the United Nations (UN).

It is undisputed that, before they married, the parties had several discussions about the possibility of entering into a matrimonial agreement, beginning as early as 2001 and continuing until after their engagement. The Wife claims that, in each of these discussions, the Husband told her that the intent of such an agreement would be to ensure that, in the event of divorce, she would not receive any part of any real property that had been transferred to the Husband by his parents. She further states that she did not object to this idea. The Husband denies this, and claims that, in any event, he never had any interest in properties transferred to him by his parents.

The Husband states that, prior to the parties' marriage, he owned am apartment in New York City, and had two bank accounts and a UN pension.

The parties were married on March 2, 2004 in New York City. The following day, on March 3, 2004, the parties went to the Spanish Consulate in New York City. The Wife claims that the Agreement had been drafted before the parties went to the Consulate, but that she first saw it at the Consulate on March 3, 2004. In contrast, the Husband claims that a Spanish "Notaire," who was also a Consul at the Spanish Consulate,[FN1] met with the parties upon their arrival at the Consulate and explained to them the various economic regimes that they could elect to govern their marriage by executing a matrimonial agreement, as well as the formalities required for a matrimonial agreement. The Husband further claims that the parties orally confirmed to the Consul/Notaire that they wished to execute a matrimonial agreement so as to elect the "property separation" regime to govern their marriage. The Husband claims that the Consul/Notaire said that it would take a few hours to draft the agreement, so the parties returned a few hours later and each reviewed the Agreement which the Consul/Notaire had drafted.[FN2] The Husband claims that the Consul/Notaire then read the Agreement aloud to them, that each party [*3]confirmed that the terms were correct and acceptable, and that each then executed it. Neither party was represented by counsel in the drafting or execution of the Agreement.[FN3]

At page one, the Agreement states, "In the City and State of New York, United States of America . Before me, Maria Luisa Huidobro Martin-Laborda, Consul of Spain, acting as a Notary Public, certifies .I identify the appearing parties by their documentation that is listed above and shown.[FN4] Acting on their own behalf and ensuring that they, in my view, [sic] the legal competency to execute this matrimonial property agreement ."

The Agreement provides that the parties

appear for the purpose of agreement on a separate property system, in accordance with the provisions of articles 1.315, 1.325 and 1.327 of the Civil Code, herein verified, by executing the matrimonial property agreement and accordingly, the marital property system, which hereinafter shall be governed by the following agreements.

FIRST. The marriage shall be governed by the absolute separation of property and as a result each spouse shall have the ownership, administration, enjoyment and free disposal of property, whether movable or immovable, which belonged to him at the time of marrying and of any which he may acquire subsequently pursuant to any title.

Each spouse shall be responsible for the debts contracted on their own behalf, following this execution.

SECOND. Each spouse shall retain the income or proceeds of their assets, being able to invest it in the manner that is desired.

THIRD. Separate property of each spouse is recognized as property that appears in the Public Registry, in addition to deeds or other authentic documents, notwithstanding proof of the property title by all means of proof admissible by law. .

FIFTH. If at the dissolution of the marriage there is property whose origin or exclusive ownership cannot be proved, it shall be divided by half between both spouses .

At the bottom of page three of the Agreement, it states, "As was stated and certified before me. And on reading this agreement in its entirety on their own, the appearing parties approve and [*4]sign the same before me. In witness thereof, and having issued the legal notices and disclaimers, I the Consul, hereby certify ." Thereafter, each party's signature appears. Below that, it states, "Before me, Consul," followed by the signature of M. L. Huidobro. Following that, there is a seal that states: "General Consulate of Spain, New York."

The parties' marriage was registered with the "Registro Civil del Consulado General de Espana en Nueva York" on March 5, 2004 by Ms. Huidobro as Civil Registrar and Consul.[FN5] The registration states the parties' respective nationalities, acknowledges the place and date of their marriage the day before, lists their "residence" address, and lists the "Marital Property System" as "absolute separation of property, according to [the Agreement]."

It is undisputed that the apartment which the Husband owned in his sole name prior to the marriage was transferred into the parties' joint names during the marriage, and that the parties have joint bank accounts. It is also undisputed that each party now has real property titled in his and her separate name, and that each has bank accounts in his and her separate name.

The parties have two minor children. According to the documentation attached to the Husband's motion papers, he registered each of their births with the Spanish Consulate. The parties resolved custody and access by a so-ordered agreement dated April 4, 2014.

ANALYSIS

Choice of Law

The Wife argues that New York law governs the validity of the Agreement.[FN6] The Husband argues that Spanish law applies to determine the validity of the Agreement, claiming that its reference to "articles 1.315, 1.325 and 1.327 of the Civil Code," constitutes a choice of [*5]law provision, and that the Agreement's execution was proper under Spanish law.[FN7]

The Agreement's reference to "articles 1.315, 1.325 and 1.327 of the Civil Code"[FN8] does not constitute a choice of law as to all aspects of the Agreement. Indeed, the fact that the parties disagree about what law governs indicates that the Agreement is ambiguous as to choice of law (compare Lederman v Lederman, 203 AD2d 182 [1st Dept 1994] [counterclaim that alleged prenuptial agreement failed to comply with New York law was properly dismissed where parties agreed the law of the District of Columbia controlled], cited by the Husband).

As the Court of Appeals has noted, the traditional rule was that the law of the place where a contract was made should be applied where there is any ambiguity about choice of law (see, e.g., Auten v Auten, 308 NY 155, 160 [1954]), but this rigid rule was impractical, and "failed to accord any significance to the policies underlying the conflicting laws" (Matter of Allstate Ins. Co., 81 NY2d 219, 225 [1993][citations omitted]). Accordingly, modern courts have adopted a "center of gravity" or "grouping of contacts" choice of law theory in contract cases (Id.).[FN9] This theory is based on the Restatement Second of Conflict of Laws, which provides that, where there is no effective choice of law in a contract, the law of the state with "the most significant relationship to the transaction and the parties" governs (Restatement Second of Conflicts of Laws, §188). Even where reference is made to a specific law in the contract as to substantive law, issues of contractual formalities and validity will be governed by the law of the state with the most significant relationship to the parties and the subject matter, if the state referenced in the contract "has no substantial relationship to the parties or the [*6]transaction and there is no other reasonable basis for the parties' choice, or application of the law of the chosen state would be contrary to a fundamental policy of a state which has a materially greater interest than the chosen state in the determination of the particular issue and which, under the rule of §188, would be the state of the applicable law in the absence of an effective choice of law by the parties" (Restatement Second of Conflict of Laws, §187; see also Welsbach Elec. Corp. v MasTec N. Am., Inc., 7 NY3d 624 [2006]; Cooney v Osgood Mach., 81 NY2d 66 [1993]; Lupien v Lupien, 68 AD3d 1807 [4th Dept 2009][enforcing choice of Massachusetts law provision in prenuptial agreement where parties signed the agreement in Massachusetts and resided there when they signed it]). To determine which law governs under the grouping of contacts theory of conflict of laws, the court must look to the following factors: Athe place of contracting, negotiation and performance; the location of the subject matter of the contract; and the domicile of the contracting parties@ (Matter of Allstate Ins. Co., supra, at 227).

Here, the parties were married in New York, and the Agreement was drafted, negotiated and executed in New York. Since well before the parties signed the Agreement to the present, they have resided in New York, and their children have always lived in New York. The parties= assets all appear to be located in New York, including four apartments. Accordingly, the court finds that New York law applies to determine the validity and enforceability of the Agreement.

Formality Requirements

The Wife argues that the Agreement is invalid because matrimonial agreements must be "acknowledged or proven in the manner required to entitle a deed to be recorded" (DRL §236[B][3]; Matisoff v Dobi, 90 NY2d 127 [1997]). Specifically, the Wife points out that the Spanish Consul/Notaire is not a person authorized to take an acknowledgement in New York State under Section 298 of the Real Property Law (see also CPLR §2309). The Husband argues that the Agreement "substantially complies with New York law" (Defendant's Memorandum of Law at 9), in that: (1) the acknowledgment in the Agreement contains all of the elements required under Section 309-a of the Real Property Law ("Uniform forms of certificates of acknowledgment or proof within this state"); and/or (2) it complies with the requirements under Section 301(a) of the Real Property Law (which governs acknowledgment or proof made in a foreign country of conveyance of real property located in New York); and/or it complies with the requirements under Spanish law for a deed to be recorded in Spain. The court agrees with the Wife.

First, the Agreement does not comply with the requirements of New York law applicable to acknowledgements made in New York of conveyances of real property situated in New York, since a consular officer is not one of the enumerated persons authorized to take such acknowledgements (RPL §298; see also Matisoff v Dobi, supra, at 132-133).

Second, the court rejects the Husband's claim that the Spanish consular office in New York constitutes Spanish territory, and therefore the Agreement is valid because it was acknowledged in compliance with Real Property Law Section 301(a), which applies where a deed is executed in a foreign country. The Spanish consular offices is located in New York, not [*7]in a foreign country. The Agreement itself, drafted by the Spanish Consul, states at page one that it was made and executed "[i]n the City and State of New York, United States of America ." This is consistent with the 1963 Vienna Convention on Consular Relations (Convention), cited by the Husband, which does not provide that a sending state's consular office situated within the borders of a receiving state is the sovereign territory of the sending state.[FN10] The Convention states, at Article Four, Paragraph One, that "[a] consular post may be established in the territory of the receiving State only with that State's consent." Article Five, Paragraph (g) of the Convention provides that one consular function shall be to safeguard the interests of nationals of the sending state in the territory of the receiving state "in accordance with the laws and regulations of the receiving State." Indeed, as the Wife's attorney points out, many of the Convention's provisions consist of permissions granted by signatory receiving states to signatory sending states, which would be unnecessary if consular offices constituted 'foreign soil.' These include permission to the sending state to fly the flag of its own nation (Convention Article 29) and exemption from real estate taxation by the receiving state (Convention Article 32). Accordingly, the provisions of New York's Real Property Law which apply to acknowledgments made in foreign countries of conveyances of real property situated in New York (RPL §301 et seq), cited by the Husband, do not apply to the Agreement.

The Husband's citations to Cohen v Cohen (93 AD3d 506 [1st Dept 2012]), Van Kipnis v Van Kipnis (43 AD3d 71 [1st Dept 2007], affd as modified, 11 NY3d 573 [2008]), Stawski v Stawski (43 AD3d 776 [1st Dept 2007]), De Ganay v De Ganay (261 AD2d 175 [1st Dept 1999]), and Stein-Sapir v Stein-Sapir (52 AD2d 115 [1st Dept 1976]) are inapposite, since each of those cases involved matrimonial agreements executed in foreign countries. His citations to Smith v Walsh-Smith (66 AD3d 534 [1st Dept 2009]), Weinstein v Weinstein (36 AD3d 797 [2d Dept 2007]), Garguillo v Garguillo (122 AD2d 105 [2d Dept 1986]), Gross v Rowley (147 App. Div. 529 [2d Dept 1911]), and Smith v Boyd (56 Sickels 472 [1886]) are also inapposite, because each of those cases addressed the form of the acknowledgment, and none involved any allegation that a person not authorized to take the acknowledgement in New York under RPL §298 had done so.

Since the Court of Appeals has held that the requirement of strict compliance with the formalities called for by the Domestic Relations Law to create a binding matrimonial agreement is an "essential" "bright line rule" (Matisoff v Dobi, supra, at 132, 135), the court is constrained to find that the Agreement is unenforceable because it fails to comply with DRL §236(B), in that its acknowledgment was not taken by a person authorized to acknowledge the execution of a deed in New York. This result is ironic and unfortunate. In explaining the reason for its "bright line rule, the Court of Appeals stated:

Acknowledgment, moreover, serves a valid purpose apart from prevention of fraud. Marital agreements within section 236(B)(3) encompass important personal rights and family interests. As we explained with regard to the similar prerequisites for proper execution of a deed of land: [*8]'When [the grantor] came to part with his freehold, to transfer his inheritance, the law bade him deliberate. It put in his path formalities to check haste and foster reflection and care. It required him not only to sign, but to seal, and then to acknowledge or procure an attestation, and finally to deliver. Every step of the way he is warned by the requirements of the law not to act hastily, or part with his freehold without deliberation' (Chamberlain v Spargur, 86 NY at 607, supra). Here, too, the formality of acknowledgment underscores the weighty personal choices to relinquish significant property or inheritance rights, or to resolve important issues concerning child custody, education and care.

(Matisoff, supra at 136). In fact, the formalistic requirement of the form of the acknowledgment is not accompanied by any process that ensures that the parties are making an informed choice about these important matters. In contrast, the requirements of Spanish law, painstakingly followed in this case, ensure that the parties are given a thorough explanation of the alternatives available to them, and the legal implications of the choice they are making. Nonetheless, the court is constrained by Matisoff to invalidate the Agreement.

Since the Agreement is unenforceable for this reason, the court need not reach the Wife's claims that she was not given disclosure of financial information prior to signing the Agreement and/or that she lacked legal representation in connection with the Agreement, or the Husband's claims that the Wife ratified, or is equitably estopped from challenging, the Agreement. Accordingly, the Wife's motion for an order adjudging the Agreement to be unenforceable under New York law is granted, and the Husband's cross-motion for summary judgment is denied in its entirety.

In accordance with this decision, it is

ORDERED AND ADJUDGED that the "Matrimonial Property Agreement" signed by the Wife and Husband on March 3, 2004 before the Spanish Consul at the Spanish Consulate located in New York City (the Agreement) is invalid and unenforceable under New York law; and it is further

ORDERED that all relief requested but not granted above is denied.

This constitutes the decision and order of the court.

Dated: July 21, 2014ENTER

________________________

Hon. Ellen Gesmer, JSC

Footnotes

Footnote 1: The Husband attaches to his cross-motion an affirmation of Maria Del Rosario Garcia Mariscal, an experienced Spanish family attorney, who sets out the relevant requirements of Spanish law. The Wife does not dispute the accuracy of Ms. Mariscal's explanation. Ms. Mariscal explains that Spanish law provides that one of a Spanish notaire's "specific functions is to draft the marriage contract and oversee the marriage contract's proper execution and registry in the Spanish Civil Registry . Spanish consuls are vested with the same power as a notaire" (Mariscal Affm. at par. 33-34 [citations omitted]).

Footnote 2: The Agreement is in Spanish. Both parties submitted a certified translation in English, which is quoted in this decision and order.

Footnote 3: As explained in Ms. Mariscal's affirmation, and not disputed by the Wife, the sequence of events at the Consulate, as described by the Husband, is consistent with what is required under Spanish law when a Spanish notaire oversees the drafting and execution of a marriage contract.

Footnote 4: The documentation listed is the Wife's Peruvian passport and the Husband's registration in the Spanish National Registry of "this General Consulate."

Footnote 5: The Husband claims that the parties signed a document in connection with the registration of their marriage by the Spanish Consul, but neither party submits any document with a signature line for the parties. The registration document appears to have been signed by the Consul alone. Although, as is the common practice in Spain, neither party was given a signed copy of the Agreement, the copies of that document attached to their motion papers contain lines for their signatures identified by their typewritten names. There are no similar lines on the registration document.

Footnote 6: The Wife also argued in her moving papers that she had not signed the Agreement, since her signature did not appear on the copy in her possession when she made the motion. However, as explained above, the typical procedure under Spanish law is that the original signed document remains in the possession of the registering governmental body, and the parties are given unsigned copies. The Husband has since obtained a copy of the original signed Agreement, and the Wife has withdrawn her claim that she did not sign it.

Footnote 7: There is no real dispute that the Agreement's execution was proper under Spanish law.

Footnote 8: The Agreement never refers to "the Civil Code" as being that of Spain or any other jurisdiction. In any event, the sections of the Spanish Civil Code to which the Husband claims the Agreement refers are as follows (unlike the citations in the Agreement, neither the English translation of the Spanish Civil Code sections attached to the Husband's motion papers, nor the references to Spanish Civil Code sections in his expert's affidavit, contain punctuation): Article 1315: "The property regime of the marriage shall be as stipulated by the spouses in marriage articles, without other limitations than as provided in this Code." Article 1325: "In marriage articles the executors may stipulate, amend or replace the property regime of their marriage or any other provisions as a result thereof." Article 1327: "Marriage articles must be set forth in a public need [sic] to be valid."

Footnote 9: It is possible that courts' approach to choice of law issues in torts cases is more appropriate to matrimonial matters, which, like tort actions, implicate important public policy issues. Tort choice of law jurisprudence focuses even more stringently on the public policy of the state with the greatest interest in the matter; in the classic example, the state where a car accident occurs generally has the strongest public policy interest in governing accidents within its borders, even where the relevant automobile insurance contract may make reference to another state's law. However, since, as discussed above, the same result is reached in this case by applying a "grouping of contacts" analysis, the court need not address this issue here.

Footnote 10: In the terminology of the Convention, the "sending state" is the foreign state having consular offices in another country, and the "receiving state" is the host country.