Maharaj v Maharaj

[*1] Maharaj v Maharaj 2013 NY Slip Op 51786(U) Decided on October 24, 2013 Supreme Court, Monroe County Dollinger, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 October 24, 2013
Supreme Court, Monroe County

Anne M. Maharaj, Plaintiff,

against

Kumar Maharaj, Defendant.



2006/10875



Sara Stout Ashcraft, Esq.

Attorney for Plaintiff

150 Allens Creek Road

Rochester, New York 14618

Timothy E. Ingersoll, Esq.

Attorney for Defendant

183 East Main Street, Suite 1350

Rochester, New York 14604

Richard A. Dollinger, J.

Can there be such a thing as" too much agreement" between a couple in a long-contested divorce? The answer is "yes" when an oral stipulation and a subsequent written agreement conflict on the issue of maintenance. It is then left to the judge to decide what "agreement" - the stipulation or the signed agreement - should be incorporated, but not merged, into the divorce judgment.

The facts in this case are not disputed. The couple, in July 2012, entered into an oral stipulation before the court and signed an adoption of the oral stipulation. The oral stipulation involved only the issue of maintenance, which has been the source of a fierce dispute between the parties. The stipulation provided that the wife would receive maintenance at the rate of $3,000 per month, plus the cost of health insurance until she turned age 65. At that time the maintenance would be reduced to $2,750 per month, until the wife turned age 67.

Importantly, during the oral stipulation, the court inquired as to whether a "stipulation that would be applied to the terms and the payment of maintenance in this case had been reached." The husband's attorney then described the two-phase maintenance payment arrangement set forth above, and the following colloquy occurred: Husband's Attorney:. . . I just want to make clear that this stipulation wouldreplace the maintenance article in the proposedseparation agreement.

The Court:Correct.

Husband's Attorney:So any agreement we signed would not have an article [*2]for maintenance.

The Court:Correct. Let me just put one other thing, which is not a part of the stipulation, but I want it to be a part of my understanding and the understanding of both parties, and that is what we are going to do is we are going to have this stipulation transcribed. We are going to take that, append it to the agreement as an addendum to the agreement, however you want to do it, and then the agreement will be circulated to both parties, and they will sign the current agreement and they will initial the addendum.

Husband's Attorney:Correct, and the current agreement would have no article with respect to maintenance.

Wife's Attorney:I would ask the Court, we say "will replace the maintenance article." However, there might be clarifying addendums such as references Mr. Ingersoll made to terminating events.

The Court:Right. We are only inserting this stipulation to effect the payment of the maintenance. The other termination events, which I assume are in the separation agreement, will remain. All right?

Husband's Attorney:That's fine Judge.

The Court:We are taking care of the financial issues with respect to maintenance. The legal issues involving termination and the remainder are all set forth in the agreement and shall be binding on the parties when it is signed.

Husband's Attorney:Thank you, Judge.

Wife's Attorney:Thank you, your honor.

The Court:Is that clear?

Husband's Attorney:That's clear, judge.

After this discussion, the husband and wife signed an adoption of oral stipulation and the following colloquy occurred with the husband:

The Court:Do you understand, sir, that by accepting this document [the oral stipulation] into the record of this proceeding today, the terms of this oral stipulation, combined with the terms of the separation agreement, that you are going to sign, that these two documents would be incorporated, but not merged into a judgement of divorce that would forever terminate your marriage [to the wife]? Do you understand that?

The Husband:Yes.

The Court;With that understanding, sir, do you ask me to accept this document into the record today?

The Husband:Yes. [*3]

The Court then asked the wife:

The Court:Do you understand if I accept this document [the oral stipulation] into the agreement today, this document of the oral stipulation we have entered into today when combined with the separation agreement that you will sign, those two documents will become the basis for a judgement of divorce that would forever terminate your marriage [to the husband]? Do you understand that?

The Wife:Yes.

The court then said, in the presence of both parties and their counsel:

The Court:The court understands that the parties will take this transcribed oral stipulation, it will be attached to a settlement agreement that resolves all the other questions relative to this marriage, and that upon the - the agreement will be signed prior to the date of trial, which is scheduled to be July 31st.

At the conclusion of the oral stipulation, counsel for both parties agreed that a written separation agreement would be prepared for signature by both parties.

When the couple could not agree on the remaining terms of the separation agreement, they were directed to return to court and further discussion ensued. The parties eventually signed an agreement, which contained interlineations and other handwritten changes. The signed agreement contained a provision that the wife would receive maintenance until age 65, but it did not include the additional two years of maintenance payments to the wife in the period from age 65 to age 67. The agreement also contained the following paragraph: The Agreement contains the entire understanding of the parties, and there are no promises, terms, conditions, representations, warranties, undertakings, covenants, or understanding by either party to the other, except as expressly set forth in this Agreement.

When the wife submitted a judgment roll for the court, her counsel, consistent with the oral stipulation, included a requirement in the judgment that the husband pay additional maintenance for the two-year period from when the wife turns 65 until she turns 67. The husband objected to these terms from the oral stipulation being included in the final judgment of divorce. He argued that the actual text of the signed separation agreement is inconsistent with the prior oral stipulation, the agreement makes no reference to the stipulation and the agreement contains a "zipper clause" or a "merger clause," which prohibits the court from engrafting the oral stipulation into the agreement. The husband argues that this court lacks the power to incorporate the terms of the oral stipulation into the divorce decree because any claim to set aside the maintenance provisions in the agreement must be brought in a plenary action. Furthermore he argues that the wife may [*4]not set aside the separation agreement unless there was an intentional misrepresentation of material facts or fraud or duress. And he submits a classic contract interpretation theory: that the agreement cannot be construed by this court to include the terms of the oral stipulation unless it is ambiguous. If the full meaning can be found in the text of the agreement, the husband argues that the court cannot venture outside the agreement to consider the stipulation. The written agreement, the husband concludes, is unambiguous: maintenance ceases when the wife turns age 65.

In response, the wife argues that the stipulation (containing the two extra years of maintenance) is enforceable because the wife's signature on the separation agreement - without the two-phase maintenance provision - is a consequence of a mutual mistake. She submits that the settlement agreement should be revised to include the missing language. The husband rebuts, arguing that no mutual mistake occurred or needs to be rectified.

Initially, this court rejects the suggestion proffered by the husband, that the wife must commence a plenary action to challenge the agreement. The husband cites substantial authority from the Appellate Divisions. However, in each instance cited by the husband, the judicial pronouncements involved actions in which the underlying divorce action had been resolved through a judgement of divorce and an incorporated separation agreement, factors not present here. See Kellman v. Kellman, 162 AD2d 958 (4th Dept. 1990) (divorce already completed); Granato v. Granato, 51 AD3d 589 (1st Dept. 2008); (agreement already merged); Dombrowski v. Dombrowski, 239 AD2d 460 (2nd Dept. 1997) (already merged). In contrast, the better authority establishes that when an action has not been terminated (by a judgment or a stipulation of discontinuance), the party seeking to challenge the agreement may do so by motion. Teitelbaum Holdings v Gold, 48 NY2d 51 (1979); Cruciata v. Cruciata, 10 AD3d 349 (2nd Dept. 2004) (where . . . the matrimonial action . . . had not been terminated, a challenge to a stipulation entered into during the course of the litigation may be made by commencing a plenary action or by motion within the matrimonial action); Arguelles v Arguelles, 251 AD2d 611 (2nd Dept. 1998); Einhorn v. Einhorn, 24 Misc 3d 1250 (A) (Sup. Ct. Kings Cty. 2009); Bellofatto v. Bellofatto, 233 N.Y.L.J. 102 (Sup. Ct. Putnam Cty. 2005) (here, given that the matrimonial action has not concluded in any judgment of divorce, defendant properly may attack the validity of the agreement within the context of this action by way of motion). Therefore, the court refuses to dismiss the wife's challenge to the terms of the maintenance provision simply because it is not proffered in a plenary action.

The husband also argues that the "merger clause" or "zipper clause"[FN1] mandates that this court ignore the stipulation because the written agreement, by its express terms, states that there are no promises or understandings by either party, "except as expressly set forth in the agreement." Whether read as a "merger clause" or "a zipper clause," this court is cognizant that these clauses require "full application of the parol evidence rule in order to bar the introduction of extrinsic [*5]evidence to vary or contradict the terms of the writing." Matter of Primex Intl. Corp. v Wal-Mart Stores, 89 NY2d 594, 599 (1997). The merger clause accomplishes this by evincing the parties' intent that the agreement "is to be considered a completely integrated writing." Id. at 600. However, while allowing the merger clause a broad reach, the Court of Appeals has also noted that the trial courts should determine whether there is evidence in the record that the parties intended any bilateral contract (like the oral stipulation agreement in this case) to maintain an existence separate from the underlying written agreement. Jarecki v. Shung Moo Louie, 95 NY2d 665, 669 (2001). In essence, the husband seeks to have this court interpret the "merger" or "zipper" clause to constitute a waiver and release of the husband's obligation under the oral stipulation.

The New York Court of Appeals has directed that when considering a waiver, the proponent must establish the intentional relinquishment of a known right with both knowledge of its existence and an intention to relinquish it. Gould v. Board of Educ., 81 NY2d 446 (1993); Werking v. Amity Estates, Inc., 2 NY2d 43, 52 (1956); Matter of Samuel v. Samuel, 33 AD3d 1010 (2nd Dept. 2006). To enforce the waiver of the wife's rights under the oral stipulation, this court must conclude that the waiver was "clear, unmistakable and without ambiguity." Matter of Civil Serv. Empls. Assn. v Newman, 88 AD2d 685, 686 (3rd Dept. 1982) aff'd 61 NY2d 1001 (1984); see Matter of Board of Coop. Educ. Servs. Sole Supervisory Dist., Onondaga & Madison Counties v New York State Pub. Empl. Relations Bd., 82 AD2d 691 (3rd Dept. 1981) (such waiver must be expressed in such clear and unmistakable terms that it clearly appears from an evaluation of the negotiations that the particular matter in issue was fully discussed and consciously explored). Community Counseling & Mediation Servs. v Chera, 95 AD3d 639 (1st Dept. 2012) (waiver not found unless an unmistakable, unequivocal intention to relinquish its known right). The Court of Appeals defined the concept further: A waiver is an intentional abandonment or relinquishment of a known right or advantage which, but for such waiver, the party would have enjoyed. It is the voluntary act of the party and does not require or depend upon a new contract, new consideration or an estoppel . . . It is essentially a matter of intention. Negligence, oversight or thoughtlessness does not create it. The intention to relinquish the right or advantage must be proved. Occasionally it is proved by the express declaration of the party, or by his undisputed acts or language so inconsistent with his purpose to stand upon his rights as to leave no opportunity for a reasonable inference to the contrary. Then the waiver is established as a matter of law. Alsens Am. Portland Cement Works v Degnon Contr. Co., 222 NY 34, 37 (1917) cited in Jumax Assoc. v. 350 Cabrini Owners Corp., 46 AD3d 407, 410 (1st Dept. 2007).

In this case, there is no suggestion that the wife's rights under the stipulation were "consciously explored" or "fully discussed" at the time of the execution of the agreement. There is no evidence that the wife "intended to relinquish" her contractual right under the stipulation to extended maintenance. There is no evidence that she bargained away her right for extended maintenance for any other benefit. This court cannot conclude that the wife, by signing the agreement, was "consciously waiving a known right." In fact, the very language of the oral stipulation, which the husband had previously agreed to "combine" with the written agreement, militates against a finding that the wife, by signing the agreement, was waiving her right under the stipulation to extended maintenance. This court must not ignore the consequences of the stipulation [*6]which is favored by the courts and may not be lightly cast aside. Matter of Galasso, 35 NY2d 319, 321 (1974); Taormina v. Taormina, 85 AD3d 766 (2nd Dept. 2011) (open-court stipulations [in matrimonial actions] are judicially favored, and will not be set aside absent fraud, overreaching, mistake, duress, or unconscionability) ; Diarassouba v Urban, 71 AD3d 51 (2nd Dept. 2009). Open court stipulations fit comfortably within CPLR 2104. Strict enforcement of the oral stipulation not only serves the interest of efficient dispute resolution, but also is essential to the management of court calendars and integrity of the litigation process. Hallock v. State, 64 NY2d 224 229 (1984). Ignoring the stipulation, under the dictates of the merger/zipper clause would be inconsistent with the parties' intentions and the judicial approbation granted to stipulations. Under these circumstances, this court is not inclined to interpret this catch-all phase in such a manner as to constitute a waiver of the wife's right to have this court consider the terms of the oral stipulation in deciding the terms of any judgment of divorce. See Matter of Professional Staff Congress-City Univ. of NY v. PERB, 21 AD3d 10, 13 (1st Dept. 2005), rev'd other grounds 7 NY3d 458 (2006) (catch-all contract clauses are not sufficient to evidence a clear and unmistakable waiver).

The mere defeat of the defense of waiver by the wife does not automatically require this court to incorporate the terms of the stipulation into the judgement. The written agreement still holds significant sway before the court and a traditional contract interpretation analysis drives the conclusion of this decision. This court acknowledges a heavy presumption that a deliberately prepared and executed written instrument manifests the true intention of the parties, and a correspondingly high order of evidence is required to overcome that presumption. Chimart Assoc. v Paul, 66 NY2d 570, 574 (1986). See also W.W.W. Assocs., Inc., v Giancontieri, 77 NY2d 157, 162 (1990) (when parties set down their agreement in a clear and complete document, their writing should be enforced according to its terms and evidence outside the four corners of the document as to what was really intended, but unstated or misstated, is generally inadmissible to add to or to vary the writing). In this case, the original oral stipulation on maintenance was valid and enforceable. CPLR 2104; Wilson v. Wilson, 35 AD3d 595 (2nd Dept. 2006) (an oral stipulation will be binding if it is spread upon the record in open court). The parties agreed to have the oral stipulation "replace the maintenance article" in the separation agreement. Both parties and their attorneys agreed that the maintenance provisions in oral stipulation would be "combined" with the terms of the separation agreement and both would be "incorporated" into the judgment of divorce.

Therefore, to give full expression to the "combined" agreement contained in the oral stipulation, this court concludes that terms of the oral stipulation and the signed agreement regarding maintenance cannot be read harmoniously. The two provisions are inconsistent. The stipulation extends the maintenance term for two years beyond the term in the signed agreement. The combined agreement - both the oral stipulation and the signed agreement - are contradictory and ambiguous. Swift v Broadway Neon Sign Corp., 2013 NY Slip Op 31618 (U) (Sup. Ct. Suffolk Cty. 2013) (when contradictory terms appear in an agreement, it is, therefore, ambiguous); Carpenter v. Garbade Constr. Corp., 21 Misc 3d 1145 (A) (Sup. Ct. Broome Cty. 2008) (contradictory provisions render the contract ambiguous on its face).

This court cannot ignore that the oral stipulation was the culmination of extensive negotiation and debate. The oral stipulation, when read in its entirety, explains the intentions of the parties at the time of its creation. In this case, the wife is five years older than the husband. The provision for extended maintenance was designed to give the wife additional support until age 67 when, at that [*7]age, she could seek support under the husband's social security, for which he would be eligible at age 62. In the oral stipulation, the husband's attorney explains the rationale behind the two-tier maintenance plan. The wife would be paid maintenance until she turns 65. When she reached that age, the husband will only be 60. At age 65, the wife would be obligated to apply for Medicare, which would fund her health insurance, and under the carefully constructed plan for this couple, the husband would be permitted to reduce his maintenance payments by $250 per month at that point. The $250 reduction in maintenance is the amount that husband estimated he would otherwise have to pay the wife to participate in a health insurance plan after age 65 and until he qualified for social security.

The stipulation gives a Hansel and Gretel-like trail to the entire premise behind the two-tier maintenance plan and the stated intention of the parties. The first tier payment includes a $250 per month payment for the wife's health insurance. The second tier payment, according to the husband's attorney, would "continue for approximately 24 months until he's 62 years of age and qualifies for Social Security." In short, there is extensive evidence in the stipulation to support the two-tier maintenance plan as the intention of the parties. There is no dispute that there was a meeting of the minds on the amount and duration of maintenance at the time of the oral stipulation. The Court of Appeals long ago opined that a party's promise should be ignored as meaningless, "is at best a last resort." Cohen & Sons v Lurie Woolen Co., 232 NY 112, 114 (1921). In contrast, there is no evidence that the maintenance provision in the separation agreement - which does not contain any reference to the second-tier - reflects the intention of the parties or constitutes a meeting of the minds on the amount and duration of maintenance.[FN2] Under these circumstances, the intention of the parties is manifest in the oral stipulation and its provision for extended maintenance until age 67.

Therefore, this court concludes that at the time of the signing of the agreement, the oral stipulation on extended maintenance, which required both documents to be incorporated, but not merged into the final judgment, was binding on the husband and the wife, and those terms should be incorporated into the judgment of divorce.

Submit order on notice.

DATED:October 24, 2013____________________________

Richard A. Dollinger, A.J.S.C. Footnotes

Footnote 1:The term "zipper clause" comes from labor law, where it refers to a provision in a collective bargaining agreement that prohibits further collective bargaining during the term of the agreement, or more generally, that limits the agreement of the parties to the four corners of the contract. Neuman, Jurisdiction and the Rule of Law After the 1996 Immigration Act, 113 Har. L. Rev. 1963, 1984-85 (2000) (footnotes omitted) (citing Local 1309, Nat'l Fed'n of Fed. Employees v. Dep't of the Interior, 526 U.S. 86, 89 (1999); Gannett Rochester Newspapers v. NLRB, 988 F.2d 198, 199 (D.C. Cir. 1993)).

Footnote 2:In reaching this conclusion, the court did not consider the wife's claim that the written agreement was a product of mutual mistake. In view of the court's determination, the court offers no opinion on the merits of that claim.