E.M. v M.M.Annotate this Case
Decided on June 18, 2015
Supreme Court, Westchester County
The Penichet Firm, P.C.
Attorneys for Plaintiff
140 Grand Street, Suite 401
White Plains, New York 10601
Harold, Salant, Strassfield & Spielberg
Attorneys for Defendant
81 Main Street. Suite 205
White Plains, New York 10601
Lawrence H. Ecker, J.
The following papers numbered 1 through 50 were considered on defendant's motion to dismiss pursuant to CPLR 3211(a)(1) and (7), brought by Order to Show Cause (Seq. #1), and plaintiff's cross-motion (Seq. #2) to set aside the parties Separation Agreement, dated July 9, 2012, and Modification Agreement dated September 8, 2012 and for counsel fees:
Order to Show Cause, Affirmation, Exhibits A - E1 - 7
Notice of Cross-Motion, Affidavit, Affirmation,8 - 22
Memorandum of Law, Exhibits A - K
Defendant's Reply Affirmation, Reply Affidavit, Exhibits A - D23 - 28
Plaintiff's Reply Affidavit, Reply Affirmation, Exhibits A - G29 - 37
Plaintiff's Supplemental Affidavit, Affirmation, Exhibits A-H38 - 47
Defendant's Supplemental Affidavit, Exhibits A - B48 - 50
Upon the foregoing papers, the decision and order of the court is as follows:
In this action for divorce, M. M. ("defendant") moves by Order to Show Cause (Seq. #1) for the following relief (1) dismissing the second, third and fourth causes of action in the complaint (Deft. Ex. A), and (2) for such other relief as may be appropriate. By cross-motion, plaintiff E.M. ("plaintiff") seeks an order (a) setting aside the parties' Separation Agreement dated July 9, 2012 and the Modification Agreement dated September 8, 2012; (b) awarding $25,000 in counsel fees; and (c) such other and further relief.
Defendant initially included his attorney's affirmation only with the Order to Show Cause, without his affidavit. In the affirmation, which includes legal arguments, defendant seeks dismissal of the second, third and fourth causes of action in the complaint.
Plaintiff's first cause of action seeks a divorce based upon the irretrievable breakdown of the marriage for a period of six months or more from the filing of the summons and complaint (Deft.'s Ex. A, ¶ 6). In his answer to the divorce complaint (Deft. Ex. B), defendant admits the truth of the first cause of action (Deft. Ex.1, ¶ 1).
The second cause of action seeks to vacate, rescind or modify the provisions of the parties' written "marital agreements" upon the grounds of fraud, duress and [*2]coercion exercised upon plaintiff by defendant Deft.'s Ex. A, ¶14)
The third cause of action seeks to vacate, rescind or modify the provisions of the parties' written "marital agreements" upon the grounds of breach of fiduciary duty (Deft.'s Ex. A, ¶20).
The fourth cause of action seeks to vacate, rescind or modify the provisions of the parties' written "Marital Agreements" upon the grounds that said agreements were not fair and reasonable when made, and would be unconscionable at the time of entry of the judgment of divorce (Deft.'s Ex. A, ¶ 22, ¶ 25).[FN1]
In opposition to defendant's motion and in support of her cross-motion, plaintiff's affidavit alleges facts that she contends are sufficient to sustain the three contested causes of action, while noting, through her attorney's affirmation, that defendant's motion to dismiss these causes of action must fail because defendant did not include his own affidavit in support of his motion to dismiss. In reply, defendant submitted his personal affidavit wherein he alleges that there is no truth to plaintiff's allegations. In her reply, plaintiff alleges that defendant's allegations are not truthful.
Following receipt of extensive submissions by the parties laying bare their proof, the court issued an Order, dated March 6, 2015, providing notice pursuant to CPLR 3211(c) that it intended to treat defendant's motion to dismiss pursuant to CPLR 3211(a)(1) (documentary evidence) and CPLR 3211(a)(7) (failure to state a cause of action), and plaintiff's cross-motion to set aside the parties' Separation Agreement, dated July 9, 2012, and Modification Agreement, dated September 8, 2012 as motions for summary judgment pursuant to CPLR 3212. Hendrickson v. Philbor Motors, Inc., 102 AD3d 251 [2d Dept 2012]; see also, Patel v. Primary Construction, LLC, 115 AD3d 834 [2d Dept 2014].
Both parties have availed themselves of the opportunity to file further evidentiary materials.In defendant's supplemental affidavit, defendant reviews the retainer agreement that both parties signed with the mediator, M. G., in which they agreed that neither will call the mediator as a witness to testify regarding any aspect of the mediation, nor require production of any of her records or documents. Defendant focuses on the numerous disclosure and waiver provisions in the Separation Agreement executed on July 9, 2012 that plaintiff acknowledged. These provisions stand in marked contrast to her allegations in the instant proceeding (Deft.'s Supp. Aff. ¶ 4-15; Rotbard, Affirm., ¶ 8-11).
In her Supplemental Affidavit, plaintiff reiterates her original claims that she signed the initial Separation Agreement under duress, and that it provided her with "virtually nothing" after a 40-year marriage, including no maintenance (Pltf's Supp. Aff. ¶ 3). She claims to have had no funds to hire an attorney to review the Separation Agreement. The Modification Agreement, dated September 8, 2012 distributed marital assets, but still denied any maintenance. Plaintiff contends defendant "bullied" her into choosing between one-half of his 401K or maintenance, a choice that she again made under duress (Pltf.'s Supp. Aff.
¶ 6). Although modification of the Separation Agreement clearly delivered additional benefits to plaintiff, she now argues that she was defrauded, taken advantage of, and was the victim of overreaching, domestic violence, deceit, and unconscionable conduct by defendant; that she was being treated for cancer; that her sister passed away from cancer; that after a 40-year marriage, during which she had limited employment experience, she would undoubtedly have been awarded maintenance had this matter proceeded in court.
The parties were married on September 7, XXXX, and have two children, now emancipated. Presumably they have been legally separated since the signing of the Separation Agreement on July 9, 2012, although they continued residing in the marital residence thereafter. Plaintiff commenced this action for divorce on March 3, 2014 by filing the summons with notice and verified complaint. As stated, supra, defendant asserted a counterclaim seeking a conversion divorce pursuant to DRL § 170, to which plaintiff has asserted a denial in her reply (Deft. Ex. C). It appears that plaintiff made no complaint relative to the legitimacy of the Separation Agreement or Modification Agreement and accepted the distributive benefits provided under both until the filing of the instant action. Kuznetsov v. Kuznetsova, 127 AD3d 1031 [2d Dept 2015]. In seeking to vacate those agreements, she further alleges that defendant has not fully complied with his obligations, and that he owes her money. However, her remedy would be by enforcement and not by seeking they be set aside.
A material part of plaintiff's difficulty with the Agreements centered around the fact that for a period of time subsequent to their execution, her medical insurance coverage, which was to be maintained by defendant until the parties divorce, had lapsed. Defendant has submitted documentation (Deft. 2nd Ex. A), as admitted by plaintiff in her reply affidavit, that her medical insurance coverage has been reinstated, and is no longer in issue, to the extent that it will be maintained until the divorce. It appears she was aware of this fact when she signed the Separation Agreement (see Deft. Ex. D, Art. IV, ¶ [a]), as well as the fact that she would be responsible for uncovered expenses and co-payments, as of the effective date of the Separation Agreement. Further, after the divorce, plaintiff, at her own expense, may take advantage of the COBRA coverage available to her through defendant's health insurance carrier. Given these circumstances, the issue of the medical insurance coverage is no longer germane to plaintiff's argument, except to the extent the expense of the COBRA coverage will impact her financial circumstances in the future.
It is clear that the parties acknowledged that neither of them was represented by counsel, that they negotiated their Agreements with a mediator, that they entered into the Agreements after waiving the right to further disclosure, and that they signed the agreements knowing that the mediator had urged each of them to seek the advice of independent counsel. See Ex. D, Article XV "Full Disclosure and Voluntary Acceptance", the representations of which were ratified in the Modification Agreement. Hence, as a starting point, the parties entered into the Agreements on equal footing.
That having been established, the court is now presented with plaintiff's allegations, made more than two years after the signing of the Agreements, that her debilitated physical condition, the death of her sister, the harsh treatment she suffered as a result of defendant's threatening and violent actions, and her diminished [*3]resistance resulting from his aggressive conduct, resulted in her signing an improvident agreement. The court finds that these allegations do not sufficiently establish that she was the victim of fraud (second cause of action), or the victim of a breach of a fiduciary relationship (third cause of action), particularly in view of the fact that two months after the initial agreement, the parties renegotiated that agreement, such that plaintiff did significantly better, on her own, through mediation, then she had originally obtained. As demonstrated by her Statement of Net Worth (Pltf. Ex. I), she is far from destitute, insofar as having assets at her disposal.
New York law protects the rights of parties to enter into agreements relating to their marital relations. DRL 236(B)(3) ("An agreement by the parties, made before or during the marriage, shall be valid and enforceable in a matrimonial action..."). Duly executed separation agreements are generally valid and enforceable. Van Kipnis v. Van Kipnis, 11 NY3d 573 . Stipulations of settlement are favored by the courts and not lightly cast aside. Hallock v. State, 64 NY2d 224, 230 .
It is well settled that a separation agreement or stipulation of settlement which is fair on its face will be enforced according to its terms unless there is proof of fraud, duress, overreaching or unconscionability Kabir v. Kabir, 85 AD3d 1127 [2d Dept 2011]; Brennan-Duffy v. Duffy, 22 AD3d 699 [2d Dept 2005], bearing in mind that an agreement is not unconscionable "merely because in retrospect, some of its provisions were improvident or one-sided.' Rauso v. Rauso, 73 AD3d 888 [2d Dept 2010]; Schultz v. Schultz, 58 AD3d 616 [2d Dept 2009], quoting O'Lear v. O'Lear, 235 AD2d 466 [2d Dept 1997]." Furthermore, "a stipulation of settlement in a matrimonial action is a contract subject to principles of contract interpretation....Where the stipulation is clear and unambiguous on its face, the intent of the parties must be gleaned from the four corners of the instrument, and not from extrinsic evidence," Dimond v. Dimond, 105 AD3d 891 [2d Dept 2013], quoting Perry v. Perry, 13 AD3d 508, 509 [2d Dept 2004].
In general, a postnuptial agreement "which is regular on its face will be recognized and enforced by the courts in much the same manner as an ordinary contract." Levine v. Levine, 56 NY2d 42, 47 ; Petracca v. Petracca, 101 AD3d 695 [2d Dept 2012]; Cioffi-Petrakis v. Petrakis, 72 AD3d 868 [2d Dept 2010]. However, "[a]greements between spouses, unlike ordinary business contracts, involve a fiduciary relationship requiring the utmost of good faith," Christian v. Christian, 42 NY2d 63 . When presented with legal challenges to marital agreements, the courts have recognized that there is a "strong public policy favoring individuals ordering and deciding their own interests through contractual arrangements" Bloomfield v. Bloomfield, 97 NY2d 188, 193 , quoting Matter of Greiff, 92 NY2d 341, 344 . "Judicial review is to be exercised circumspectly, sparingly and with a persisting view to the encouragement of parties settling their differences..." Christian v. Christian, supra at 71; Cioffi v. Petrakis, supra. A reviewing court examining a challenge to a postnuptial agreement will view the agreement in its entirety and under the totality of the circumstances. Kabir, supra at 1127-1128.
Notwithstanding the above, DRL § 236 [B] dictates that extra scrutiny be given to maintenance and child support provisions of marital agreements, defined as agreements "made before or during the marriage." Id. While the statute directs that [*4]property distribution provisions are "valid and enforceable" as long as they are "in writing, subscribed by the parties, and acknowledged or proven in the manner required to entitle a deed to be recorded" (Id.), it specifies that maintenance provisions are valid and enforceable "provided that such terms were fair and reasonable at the time of the making of the agreement, and are not unconscionable at the time of entry of final judgment" (Id.). In this respect, the statute dictates a greater degree of scrutiny than ordinary contracts when considering whether they must be enforced. Anonymous v. Anonymous, 123 AD3d 581 [1st Dept 2014].Plaintiff argues, inter alia, the Agreements are unconscionable. As often stated, "an unconscionable bargain is one which no person in his or he 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." McKenna v. McKenna, 121 AD3d 864 [2d Dept 2014]; Morad v. Morad, 27 AD3d 626 [2d Dept 2006]; see also Cioffi-Petrakis v. Petrakis, 72 AD3d 868 [2d Dept 2010]. A mere unequal distribution of assets is insufficient to establish unconscionability. Sabowitz v. Sabowitz, 123 AD3d 794 [2d Dept 2014]; Cosh v. Cosh, 45 AD3d 798 [2d Dept 2007].
Applying these legal principles, and for the following reasons, the court finds that plaintiff has failed to establish a sufficient basis, on the facts or the law, to overturn those provisions of the Separation Agreement and Modification Agreement that address the equitable distribution of the marital property. Thus, summary judgment is granted to defendant as to the second and third causes of action which are hereby dismissed.
Insofar as the fourth cause of action, predicated upon a claim that the Agreements were not fair and reasonable, and therefor would be unconscionable at the time of entry of the final judgment, for the reasons stated, supra, the court declines to sustain this cause of action relative to the provisions that equitably distributed the parties' marital property. However, the court is concerned with the mutual waiver of maintenance agreed to by the parties (Deft. Ex. D, Art. III[b]), wherein plaintiff represents that she is "currently in good health and wholly self-supporting" This may now be questionable, given the factual discrepancies raised by the parties in their submissions. Therefore, the court determines that a hearing must be conducted to ascertain the facts and circumstances leading up to the mutual waiver of maintenance by the parties. This inquiry shall be limited to this issue alone, in that the parties in the Agreements provided that the covenants arrived at were severable and capable of separate enforcement irrespective of any other rights and obligations. In this regard, the Separation Agreement provides, "[E]ach of the respective rights and obligations of the Parties under this Agreement shall be deemed independent, and may be enforced independently of any of the other rights and obligations set forth herein." [Article XXVI(a)]. Thus, in recognition of the public policy enunciated in DRL § 236 [B], the court finds that there are factual issues that need to be heard, limited to the enforcement of the maintenance waiver entered into by plaintiff, and that this task can be accomplished without disturbing the provisions of the Agreements relative to equitable distribution.
In Santini v. Santini, 68 AD3d 745 [2d Dept 2009], in reversing the trial court, the [*5]Court made a finding that the parties' entire separation agreement should not have been set aside as unconscionable since the equitable distribution of the marital property was not manifestly unfair, stating "(A)ny inequity in the property division is not so strong and manifest as to shock the conscience and confound the judgment' of this Court." Id. at 749. After reinstating the equitable distribution provisions of the parties' agreement, the Court then addressed the maintenance provisions thereof, which provided for an escalation in the payer/husband's obligations under circumstances the Court found "that no reasonable and competent person would have consented to."
This court finds that plaintiff has raised sufficient issues of fact, such that a hearing needs to be conducted, where evidence will be taken regarding the facts and circumstances leading up to her agreement to waive maintenance. This inquiry, limited to the maintenance waiver, will perforce need to include testimony and other evidence relative to her mental and physical state at that time, together with the benefits she received pursuant to the Separation Agreement, and the Modification Agreement. The issue to be litigated is whether a competent person, i.e., plaintiff, given the circumstances at the time of the execution of the Agreements, when viewed almost three years later, would have consented to the provision waiving maintenance.
Thus, as to the limited issue of testing the validity of the maintenance waiver provision only, summary judgment as to the fourth cause of action is denied. There being no other or further relief to be afforded to plaintiff at this time, the Order to Show Cause is hereby disposed of to the extent provided, supra.
Plaintiff's moving papers contain numerous assertions that defendant has failed to abide by the Agreements. However, a frontal challenge to the Agreements is unavailing as her remedy lies in enforcement proceedings.
Plaintiff's application for counsel fees in the sum of $25,000 is denied, without prejudice to renewal following the hearing to be conducted relative to the waiver of maintenance. She has thus far not demonstrated a significant disparity in financial circumstances or that she is the non-monied spouse. Carlin v. Carlin, 120 AD3d 734 [2d Dept 2014]; Levitt v. Levitt 108 AD3d 510 [2d Dept 2013]; Prichep v. Prichep, 52 AD3d 61, 63 [2d Dept 2008].
Accordingly, as to plaintiff's cross-motion, it is disposed of as follows:Demand (a), as to the setting aside of the Agreements, is denied, except to the extent that the hearing is to be conducted relative to the waiver of maintenance provision, supra;
Demand (b), the application for counsel fees of $25,000 is denied, without prejudice to renewal, following the waiver of maintenance hearing ordered herein;
Demand (c), for such other and further relief, is denied, as unnecessary.
Based upon the foregoing, it is hereby
ORDERED that a hearing shall be conducted relative to the validity and enforcement of the waiver of maintenance provision of the parties' Separation Agreement, dated July 9, 2012; and it is further
ORDERED that all other items of relief demanded by defendant in the Order to Show Cause to Dismiss (Seq. #1), and by plaintiff in the cross-motion (Seq. #2) are denied; and it is further
ORDERED that the parties and counsel shall appear in court on June 30, 2015 [*6]at 9:30 a.m. to set the date for the Inquest on the first cause of action for divorce [DRL 170(7)] and the hearing to be conducted in this matter.
The foregoing constitutes the Decision and Order of the court.
Dated: White Plains, New York
June 18 , 2015
E N T E R,
HON. LAWRENCE H. ECKER, J.S.C.Footnotes
Footnote 1:The Separation Agreement and Modification Agreement are herein sometimes referred to as "the Agreements."