Opinion
16/5954
10-10-2017
Daniel J. Fichter, Plaintiff, v. Karla A. Fichter, Defendant.
Marilee Sercu, Esq. Attorney for Plaintiff Rochester, New York Richard Curtis, Esq. Attorney for Defendant Rochester, New York Lisa Siragusa, Esq. Attorney for the Child(ren) Rochester, New York
Marilee Sercu, Esq. Attorney for Plaintiff Rochester, New York Richard Curtis, Esq. Attorney for Defendant Rochester, New York Lisa Siragusa, Esq. Attorney for the Child(ren) Rochester, New York Richard A. Dollinger, J.
Eve of wedding prenuptial agreements always arouse judicial suspicion: on the eve of saying "I do" to an oral agreement to be husband and wife, the parties sign a document saying, in essence, if the oral agreement unravels, "we won't" seek or be able to obtain remedies to protect marital bonds, support spouses, and equitably divide marital property under the Domestic Relations Law.
Judges in New York frequently face these competing nuptial agreements — struck nearly simultaneously — in deciding whether couples can, through written agreements, restructure the financial rules that otherwise govern their marriage's dissolution. This case is no exception.
In this matter, the husband commenced an action for divorce, the wife answered, counterclaiming for the same relief, and both sides now move for summary judgment. The husband seeks summary judgment on his second cause of action to invalidate a pre-nuptial agreement, signed the night before his wedding. The wife, in response, seeks partial summary judgment to dismiss the husband's claim and cross-moves for a judgment declaring the agreement to be binding. Faced with a motion for summary judgment to dismiss the second cause of action, the court must view all allegations of the husband regarding the circumstances of the execution of the agreement as credible and he is entitled to every favorable inference from his sworn statements. Ruggiero v DePalo, 2017 NY Slip Op 06308 (2d Dept 2017).
In that regard at this stage of this litigation, the parties have different burdens of proof. The husband, seeking summary judgment to submarine the agreement, has the burden to demonstrate why it is unenforceable as a matter of law. Lombardi v Lombardi, 235 AD2d 400 (2nd Dept. 1997) (party challenging the validity of the prenuptial agreement, failed to sustain her burden of proof that the agreement was the product of fraud, overreaching, or other misconduct); see also Cioffi-Petrakis v Petrakis, 103 AD3d 766 (2nd Dept. 2013). The wife, seeking to enforce the agreement, bears the burden to establish that the document is properly executed in accordance with the requirements of the Domestic Relations Law and the Real Property Law and if she does so, then the burden shifts to the husband to provide evidentiary proof sufficient to justify a trial.Zuckerman v. City of New York, 49 NY2d 557, 599 (1980)
The facts are somewhat simple and, for the most part, undisputed. The day before their wedding, the wife and husband signed the agreement. The husband acknowledges that his wife told him "two or three weeks" before the wedding that she would require a pre-nuptial agreement, and that he consulted with an attorney friend about an agreement. He states that he never saw the subject agreement until it was presented to him on the night of the rehearsal dinner. The agreement recites that "each of the parties had been fully and separately advised of his or her legal rights and obligations by independent counsel of his or her own selection." The agreement, according to the husband, was a "cut and pause" version of an agreement used by the wife's sister and there were no financials attached to the agreement. The agreement states that the husband and wife had each attached a list of assets and liabilities to the agreement, but there is no evidence that any such list was attached when either party signed the document. The husband claims he was told that he had to sign the agreement or the wedding was off. There is no statement that the husband read or reviewed the document before he signed it. The husband does not contest that the signature on the agreement is his signature. In the agreement, the husband waived any claim to the wife's separate property and both spouses waived maintenance. The agreement also included a provision requiring the husband to be paid $150,000 if a divorce ensued.
The husband provided a letter affirmation from an attorney. The letter simply confirms that the attorney gave the husband a form pre-nuptial agreement, but there is no evidence that the husband reviewed or questioned this attorney regarding the document.
There is no suggestion by the husband that he ever asked for financials from his future wife before the wedding.
The husband also presented an affidavit from his sister who says she saw the pre-nuptial agreement before it was signed and that her brother told her he had to sign it. She never said that he objected to signing it, never said that the husband discussed the agreement with others present at the time and she did not witness the signing. She also contradicts part of her brother's affidavit because she claims he told her that he had "just learned" about the agreement on the night it was executed, when the husband admits he was told about the need for such an agreement weeks before and had obtained a draft agreement from an attorney.
The husband avers that the document attached to the moving papers is not the original agreement. However, the wife says that the original is in her possession and that document attached to the moving papers is a full and accurate copy. The husband cannot point to any portion of the agreement before the court which is omitted from or added to the original.
To invalidate a pre-nuptial agreement, the husband in this case must provide evidence that the agreement was the result of fraud or duress, or overreaching, and the agreement, taken in its entirety, involves a transaction that is unconscionable to the aggrieved party. Christian v Christian, 42 NY2d 63, 72-73 (1977). The inequality in the terms of the agreement must be so strong and manifest as to shock the conscience and confound the judgment of any person of common sense Matter of Hennel, 29 NY3d 487 (2017) (citing Christian v. Christian). As the Appellate Division, Second Department recently intoned:
An agreement is unconscionable if it is one which no person in his or her 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'" In addition, "[a]lthough courts may examine the terms of the agreement as well as the surrounding circumstances to ascertain whether there has been overreaching, the general rule is that if the execution of the agreement is fair, no further inquiry will be made."Gardella v Remizov, 144 AD3d 977, 979 (2nd Dept. 2016) (citations omitted); Abram v. Cheung Sui Mei, 148 AD3d 599 (1st Dept. 2017). Given these judicial precedents, the unconscionability standard is a tough hurdle to overcome. In essence, the pre-nuptial agreement must be so unfair and one-sided as to be the product of outrageous fraud or undue influence on one side and an all-but-delusional choice on the other.
The alleged facts in this matter fail to meet that test. The husband claims he did not see the pre-nuptial agreement until the night before the wedding. Last-second pre-nuptial agreements, often foisted on a spouse-to-be on the eve of the wedding, and which eliminate some of the most basic rights stemming from the institution of marriage, are nevertheless, routinely enforced. Robbins v Robbins, 39 Misc 3d 1216 (A) (Sup. Ct. New York Cty. 2013). The claim that the wife threatened to cancel the wedding if he failed to sign the agreement is insufficient to establish duress. Hof v Hof, 131 AD3d 579 (2nd Dept. 2015); Weinstein v. Weinstein, 36 AD3d 797 (2nd Dept. 2007). The husband claims he did not review the agreement with counsel beforehand or even read it, but those facts are also insufficient to establish duress. Stein-Sapir v. Stein-Sapir, 52 AD2d 115 (1st Dept. 1976) (a litigant did not read or understand a pre-nuptial agreement written in Spanish and had no explanation of his failure to do so and the court concluded his conduct evidenced a degree of carelessness or negligence not to be expected of a sophisticated person). There is no dispute that the husband, who is previously divorced, has experience with attorneys, runs a business, holds a master's degree, and is employed by a local school district understood what a pre-nuptial agreement meant. He never states that he was unaware of the intention of the agreement or its contents. This court can easily infer, in the absence of those allegations, that the husband knew why he was being asked to sign the agreement, and that he knew that claims for maintenance or for the distribution of certain marital property would be restricted. The husband does not fit the profile of someone easily bamboozled. He could have asked for an attorney to review the document the next day or asked for a delay in signing it - he did neither. There is even an admission that he had previously consulted with an attorney who prepared a draft agreement for him to review.
Finally, the husband claims he was not given financial disclosure from his future wife when he signed the agreement. That fact, standing alone, does not equate with duress or a fraud. Gottlieb v Gottlieb, 138 AD3d 30 (1st Dept. 2016); Strong v. Dubin, 48 AD3d 232 (1st Dept. 2008) (failure to disclose financial matters, by itself, is not sufficient to vitiate a prenuptial agreement). Notably, there is no claim by the husband that the wife concealed or misrepresented her income or assets. Cohen v Cohen, 93 AD3d 506 (1st Dept. 2012). It is also undisputed that the husband had been living with his future wife for months before the wedding, and he knew that his future wife was involved in negotiations over a valuable family business. In similar circumstances, courts have frowned on after-the-fact claims that a spouse, who signs a pre-nuptial agreement, was unaware of the financial disparity between the parties. Gottlieb v Gottlieb, 138 AD3d 3, 38 (1st Dept. 2016) (agreement enforced despite claim of lack of financial disclosure because the wife lived with the husband and was aware of the luxurious lifestyle his income and assets afforded, even if the precise amount of the income was unknown to her); Matter of Fizzinoglia, 118 AD3d 994, 996 (2nd Dept. 2014), affd 26 NY3d 1031 (2015) (record indicates that the petitioner-wife was personally acquainted with the nature of the decedent-husband's assets before signing the agreement, and there was no indication that the decedent had at any time attempted to conceal or misrepresent the nature or extent of his assets). While the husband in this matter may not have known his future wife's net worth down to the penny, he cannot, with a straight face, suggest he was unaware of her substantial family wealth or the substantial disparity between her assets and his. Even when this court compounds all of these allegations — no financial disclosure, no attorney review, failure to read the agreement, its last-minute presentation, the threat to cancel the wedding — and considers them in toto, they fail to amount to over-reaching or undue influence.
The husband's claims also fail because the agreement is not unfair on its face. The wife's business interests and her family assets and income - including the eventual marital residence - were, as a matter of law, her separate property at the time of the marriage. Van Kipnis v. Van Kipnis, 11 NY3d 573, 578 (2008) (parties may specifically designate as separate property assets that would ordinarily be defined as marital property subject to equitable distribution); DRL § 236 [B] [5] [a]-[c]. The bargain contained in this agreement is not unconscionable or unfair. The husband must have known, given his prior divorce, that any maintenance paid after a divorce would be paid by his wife, the more moneyed spouse. The amount of any maintenance and the term would, at the time of the execution of the agreement, have been mere speculation, as the maintenance payments would depend on a host of equitable factors set forth in the Domestic Relations Law. DRL § 236 [B] [6] [a]; Galanopoulos v Galanopoulos, 152 AD3d 745 (2nd Dept. 2017) (standard of living of the parties during the marriage, the income and property of the parties, the distribution of marital property, the duration of the marriage, the health of the parties, the present and future earning capacity of both parties, the ability of the party seeking maintenance to become self-supporting, and the reduced or lost lifetime earning capacity of the party seeking maintenance); Macaluso v Macaluso, 145 AD3d 1295 (3rd Dept. 2016). The husband, in the simplest terms at the start of his marriage, traded that possible future maintenance for a guaranteed $150,000 payment if a divorce ensued, regardless of which party sought the divorce, and regardless of the claims made in the divorce action. Having traded a possible future benefit (an unknown award of some maintenance for an unknown period of time) for a guaranteed benefit of $150,000, the husband cannot, realistically, ask this court to declare his choice unfair or inequitable. Based on these conclusions and even viewing the husband's evidence most favorably to him, there is insufficient evidence of fraud or duress to void this agreement and the agreement is not unconscionable on its face.
In a somewhat quixotic appeal, the husband suggests that "the Domestic Relations Law does not allow one party to be rich and the other party a pauper." To some extent, the husband is right - the statute provides numerous protections for spouses in the state's longstanding respect for marriages and families. But, New York has always let husband and wives fashion their own "intra-spousal" agreements, governing their marriage in which they may waive statutory rights and obligations. New York has a "strong public policy favoring individuals ordering and deciding their own interests through contractual arrangements" Matter of Greiff, 92 NY2d 341, 344 (1998) The New York courts are reluctant to substitute their judgment for how spouses, through their consent, organize their affairs. In short, spouses, acting jointly through an agreement signed prior to the wedding, can decree that someone who enters a marriage "rich" can protect their wealth from statutory claims made by the "pauper" spouse. New York courts - this court included - are, rightly, loath to interfere with that connubial choice.
The court must now pivot to determine whether the wife is entitled to summary judgment declaring that the agreement is enforceable under the strict rules governing the execution of agreements that waive a spouse's rights under the Domestic Relations Law. To be valid and enforceable, a prenuptial agreement must be in writing, subscribed by the parties and "acknowledged or proven in the manner required to entitle a deed to be recorded." DRL § 236 (B) (3); RPL § 291. The party signing the document must orally acknowledge to the notary that he/she signed same. RPL § 292; Galetta v Galetta, 21 NY3d 186, 192 (2013). A notary may not take an acknowledgment "without knowledge or satisfactory evidence that the person making the acknowledgment is the person who is described in and executed the document." RPL § 303. The acknowledgment requirement imposed by DRL § 236 (B) (3) "is onerous and, in some respects, more exacting than the burden imposed when a deed is signed." Matisoff v Dobi, 90 NY2d 127, 134-35 (1997) (holding that RPL exceptions on unacknowledged grants are not incorporated into § 236 [B] [3]).
The acknowledgment fulfills two important purposes: (1) it "serves to prove the identity of the person whose name appears on an instrument and to authenticate the signature of such person," Id. at 191-92; quoting Matisoff v. Dobi, 90 NY2d 127, 133 (1997), and (2) "it imposes on the signor a measure of deliberation in the act of executing the document." Galetta v. Galetta, 21 NY3d at 192.
Determining what constitutes "satisfactory evidence" is not specified by statute, but the New York courts have long held that it must satisfy the conscience of the notary. Schum v Burchard, 211 AD2d126 (2nd Dept. 1924). A mere introduction by a third person to a notary is not sufficient evidence if the third person is not well known to the notary. People v Schooley, 35 NYS 429 (Gen Term 1895), aff'd, 149 NY 99 (1896). However, if the third person is well known to the notary and "apparently well acquainted with the acknowledger, and there is nothing in the circumstances to create any suspicion as to the identity of the latter," the notary may rely upon the introduction without further proof. 1 NY Jur. 2d Acknowledgments § 13; Bidwell v Sullivan, 17 AD 629 (1st Dept. 1897). If this test is met, then the Real Property Law requires a notary to execute and endorse or attach a certificate to the document for the purpose of establishing: (1) that the signor made the oral declaration required under Real Property Law § 292, and (2) that the notary knew the identity of the signor "or secured satisfactory evidence of identity ensuring that the signor was the person described in the document." RPL § 306; Galetta v. Galetta, 21 NY3d at 192. Importantly, the party seeking to nullify an otherwise valid-on-its-face notarized document bears the burden of proof to invalidate the notarized acknowledgment. An acknowledgment that deviates not only in form, but also in substance is defective. Galetta v. Galetta, 21 NY3d at 194.
To render a conveyance recordable under the Real Property Law, the certificate of acknowledgment must substantially conform with the following:
On the ...... day of ...... in the year ... before me, the undersigned, personally appeared ......, personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument. (Signature and office of individual taking acknowledgment.)RPL § 309-a (1). To meet this test, an acknowledgment must meet the following requirements:
(1) confirm that the signor personally appeared;A certificate of acknowledgment does not have to be identical in form to the above acknowledgment and is sufficient so long as it is in substantial compliance with the statute. Weinstein v. Weinstein, 36 AD3d 797, 798 (2nd Dept. 2007).
(2) confirm that the signor was personally known to the acknowledger or proved to the acknowledger on the basis of satisfactory evidence to be the individual whose name is subscribed to the instrument;
(3) confirm that the signor acknowledged that he/she executed the document in his/her capacity; and,
(4) confirm that by his/her signature on the instrument, the signor executed the instrument.
The prenuptial agreement in this case contains the following acknowledgment:
Personally appeared before me the above-named husband, personally known to me to be
the person who executed the above instrument, and he acknowledged the same to be his free act and deed.This acknowledgment:
(1) confirms that the husband personally appeared;Therefore, it appears that, the acknowledgment substantially complies with the substantive requirements under the statute.
(2) confirms that the husband was personally known to the acknowledger to be the individual whose name appeared on the document;
(3) confirms that the signor acknowledged that he/she executed the document.
The affidavit of the notary public states that "the husband was introduced to me by the wife both husband and wife signed the Pre-Nuptial Agreement in my presence and duly acknowledged to me that they did so." The notary, in his subsequent affidavit, goes on to aver that "there is no doubt in my mind that signed and acknowledged and Pre-Nuptial Agreement inasmuch as he was the same individual who was the groom at the wedding reception of wife and husband the following evening, August 11, 2007, which I attended." Based on notary's sworn statement, he relied solely on the introduction of husband by wife and obtained no further proof or evidence of Husband's identity. The notary admits that he confirmed the identity only in attending the wedding on the following day at which time Husband appeared as the bride-groom. The notary's affidavit further avers that he has been employed as controller of the wife's family business since 1998 and had met wife "on numerous occasions" prior to execution of the agreement. Because the notary was well acquainted with wife and wife was well acquainted with husband, and there was nothing in the circumstances to create suspicion as to husband's identity, it was not improper for the notary to rely on the wife's introduction of her future husband without further proof.
The acknowledgment annexed to the pre-nuptial agreement meets the statutory requirements. The notary knew the woman signing the agreement and the same woman told the notary who the other party signing the agreement was - she introduced him to the notary as her future husband. There is no evidence that the man introduced to the notary ever contested the wife's description of him as her future groom. The notary could rely on his first-hand knowledge of the wife and further rely on the wife's introduction of the man who signed the agreement as her future husband. The notary, upon signing the acknowledgment, knew that the man signing it was the future husband and attested that signing it was his free act. Thereafter, the notary, who attends the wedding, confirmed that the signer of the document was the same man who said "I do" during the wedding ceremony. For these reasons, the acknowledgment is valid on its face.
In surveying the record in this case to determine whether the husband can rebut the wife's entitlement to judgment declaring the agreement valid and binding, the husband provides no evidence to cast suspicion on the notary's acknowledgment. There is no evidence that the husband, at the time of the signing of the agreement, voiced any objection to its contents or demurred in its execution. He never denied that a notary was present at the time of the agreement's execution. In his responsive affidavit, the husband, despite the clear opportunity to contest the notary's factual recitation - and the wife's version of the execution of the agreement - never suggests that he made any contrary comments to anyone at the time of the execution of the agreement. He never denies that the signature on the agreement is his. He never rebuts the notary's sworn statement that he was introduced as the groom by his future wife. He never suggests that the notary was unaware of who he was, when he signed the document. In short, while he contests what happened before the execution of the agreement, he never challenges that notary's rendition of what transpired at the time of the execution of the agreement (when the notary signed the acknowledgment). For these reasons, the husband's evidence does not rebut the wife's evidence prima facie case that this document meets the requirements of the Real Property Law and the wife's request for a judgment declaring it to be valid and binding on both parties is granted.
The final question for this court is an award of attorneys fees demanded by the wife and her counsel. The agreement provides that if either party "contests" the agreement, "she will be responsible for all attorneys fees and costs" in connection with "same." This action by the husband to void the agreement is a "contest" within that language. More troubling is the use of the word "she" as the party responsible for the fees. Read literally, the wife alone would be responsible for the fees, regardless of whether she or her husband contested the agreement. But, restricting the award of fees to the wife, regardless of whether the husband "contested" the agreement, makes no sense.The first few words in that provision include the words "either party." These words evince that the clear intention of the provision was to put the risk of fees on the party "contesting" the agreement. If the contest were successful and the agreement invalidated, then the attorneys fees provision would be unenforceable. But if the "contest" failed, then the party who caused the expenditure of legal fees by the proponent would be liable for those fees. Read in its entirety, this provision is a "both ways" clause that binds anyone who challenges the agreement and this court will not read the word "she" as pertaining solely to the wife. The undisputed intention of the sentence is to inhibit either party from contesting the agreement. As the party seeking to invalidate the agreement, the husband would be liable for fees under this clause.
However, while the agreement makes him liable for fees related to the "contest" of the pre-nuptial agreement, the Domestic Relations Law Section 237 (a) contains a provision for a presumption for legal fees to be awarded for the less-monied spouse in the divorce action. While not resolved at this stage in the proceeding, there is a reasonable basis to conclude that the husband is the less monied spouse in this case. In this court's view, an award of fees to the wife for the contest of the agreement may be offset by an award for fees to the husband under Section 237 (a). Furthermore, the question of whether any award for the husband's fees can include sums expended by his counsel in challenging the agreement should also be left for another day. For these reasons, an award of fees to the wife under the agreement is denied, without prejudice, pending the resolution of the divorce action.
SUBMIT ORDER ON NOTICE 22 NYCRR 202.48. Dated: October 10, 2017 Richard A. Dollinger, A.J.S.C.