Opinion
XXXXXX-2013
03-26-2019
M. LANGER, Plaintiff, v. T. LANGER, Defendant.
Attorney for the plaintiff is Weisman Law Group, P.C. (516) 256-7737 Attorney for the defendant is The Pickney Law Firm (516) 565-5555
Attorney for the plaintiff is Weisman Law Group, P.C. (516) 256-7737
Attorney for the defendant is The Pickney Law Firm (516) 565-5555
Edmund M. Dane, J.
The following papers were read on these motions:
Defendant's Order to Show Cause, Affidavit, Affirmation, Exhibits 1
Plaintiff's Notice of Cross Motion, Affidavit, Affirmation, Exhibits 2
Defendant's Affirmation, Affidavit in Opposition and Reply, Exhibits 3
Plaintiff's Affidavit, Affirmation in Reply, Exhibit 4
PRELIMINARY STATEMENT
Defendant moves by Order to Show Cause dated November 30, 2018, for an Order (1) granting Defendant the right to serve discovery demands and/or interrogatories and compel disclosure from Plaintiff of all marital and separate property income, assets, and liabilities pursuant to CPLR Article 31 and DRL § 236[B] maintained during the five years prior to the execution of the parties' Stipulation of Settlement dated November 8, 2013, as well as compel disclosure from Plaintiff of any income, appreciation, sales proceeds, property acquisitions/transfers, or the like, originating from or otherwise generated by any marital or separate property income, assets, or liabilities identified during the period of five years prior to execution of the parties' Stipulation Settlement dated November 8, 2013; and (2) granting Defendant the right to serve discovery demands and/or interrogatories and compel disclosure from Plaintiff of all marital and separate property income, assets, and liabilities pursuant to CPLR Article 31 and DRL § 236[B] for the time period subsequent to execution of the parties' Stipulation of Settlement dated November 8, 2013.
At the time Defendant brought the instant application, the Court extended the time previously set for Defendant to challenge the parties' Stipulation of Settlement to a date to be set upon this Decision.
Plaintiff cross-moves for an Order (1) pursuant to CPLR § 3211, dismissing Defendant's Order to Show Cause; (2) pursuant to CPLR § 3212, granting summary judgment in favor of Plaintiff, entitling him to a judgment of divorce, incorporating but not merging the Stipulation of Settlement dated November 8, 2013; (3) finding the Defendant in default for her failure to appear in this action and/or otherwise respond to the Complaint personally served upon her; (4) setting this matter down for an inquest and granting Plaintiff a judgment of divorce, incorporating but not merging the Stipulation of Settlement; (5) granting Plaintiff counsel fees pursuant to the Domestic Relations Law and Stipulation of Settlement; (6) pursuant to 22 NYRCRR Sec. 130-1.1, granting Plaintiff costs for actual expenses reasonably incurred and reasonable counsel fees resulting from Defendant's frivolous conduct in filing the Order to Show Cause dated November 30, 2018; (7) pursuant to 22 NYCRR Sec. 130-1.1, imposing sanctions upon Defendant for her frivolous conduct in filing the Order to Show Cause dated November 30, 2018; (8) precluding Defendant from commencing plenary proceedings to vacate the Stipulation of Settlement and deeming her submitted affidavit the complaint; and (9) deeming the Defendant's Order to Show Cause a motion to set aside the Stipulation of Settlement executed by the parties and precluding Defendant from bringing any further motion to set aside the Stipulation of Settlement executed by the parties.
BACKGROUND
The parties were married on December 22, 1996. There are three children of the marriage: X1, born 1998, X2, born 1999, and X3, born, 2000. Plaintiff filed a Summons with Notice for divorce on June 12, 2013. Thereafter, the parties, who were both represented by seasoned matrimonial counsel, executed a Stipulation of Settlement dated November 8, 2013 (hereinafter "Stipulation"), resolving issues of custody and all financial issues of the marriage. Defendant asserts that no discovery was exchanged between the parties in connection thereto.
In or about July 20, 2017, Plaintiff filed a Verified Complaint, Request for Judicial Intervention and a Request for a Preliminary Conference in this action. Plaintiff seeks a Judgment of Divorce, incorporating but not merging the terms of the Stipulation. A Preliminary Conference was held on July 3, 2018, at which time Defendant preserved her right to challenge the Stipulation.
Defendant's Contentions
Defendant states that during the marriage she was a stay-at-home mother, uninvolved in the family's finances. She asserts that Plaintiff was responsible for the payment of all expenses, including carrying the marital residence and the cost of Yeshiva. She estimates that the family's expenses were between $ 500,000 and $ 600,000 per year. Defendant claims that during the limited negotiations had in connection with the Stipulation, Plaintiff advised her that he had "hidden" assets and that she would not be able to locate anything in his name. She claims that Plaintff further threatened that he would seek to pay her support on his reported income of only $ 30,000 and that he would contest custody if the matter went forward to litigation. Defendant states that Plaintiff's father, an extremely wealthy man, guaranteed that he would take care of her financial needs and that same constitutes duress.
Defendant claims to have recently learned that Plaintiff grossly misrepresented his assets and income at the time of the Stipulation. She states that he is the President and Founder of a company worth $ 40,000,000, that he was Vice President and/or employed by another company operated by his father with hundreds of millions of dollars of real estate in its portfolio, that he was a member of an LLC worth over $ 4,000,000, and that he has additional businesses and interests. She further asserts that although she either signed joint income tax returns with Plaintiff or provided authorization to file, she never reviewed the tax returns. Defendant attaches various tax documents which reference the Plaintiff's interest in various businesses Defendant claims to have been unaware of at the time the Stipulation was signed. Defendant argues that having now reviewed the joint bank account statements, it is evident that the deposits exceed the income Plaintiff reported on his tax returns. Defendant further identifies and questions hundreds of thousands of dollars in transfers to or from Plaintiff's checking account within weeks of the execution of the Stipulation.
The Stipulation states that the Plaintiff's income is $ 312,000 "for child support purposes."
Defendant argues that she has established a legitimate factual predicate to set aside the parties' Stipulation and therefore discovery should be permitted. She argues that the Court cannot determine whether the Stipulation is unconscionable or the maintenance provisions fair and reasonable absent the discovery she seeks. She argues that she is entitled to compel financial disclosure from the Plaintiff without first having to successfully vacate the parties' Stipulation.
Plaintiff's Contentions
The Plaintiff argues that the Stipulation was the product of substantial negotiations between the attorneys for the parties and discussions with mediators. He argues that the fact that Defendant insisted that Plaintiff's father secure the equitable distribution payments demonstrates her understanding of Plaintiff's financial circumstances and her participation in the negotiations. Plaintiff points to the fact that the Defendant did not contest the validity of the Stipulation until five years after its execution, and only after accepting in excess of $ 3,200,000 in equitable distribution and continued support payments. He further notes that rather than contest the validity, she sought to enforce the Stipulation on numerous occasions following the execution. He argues that Defendant should be estopped from challenging the Stipulation because she has ratified it.
Plaintiff further asserts that Defendant's claim that she felt "threatened" by potential legal action Plaintiff had the right to commence does not constitute duress. Plaintiff cites to the fact that Defendant signed a full allocution following the Stipulation, setting forth her understanding of the settlement and that it was entered into upon her own free will. He further argues that the maintenance provision providing for a duration of more than 50% of the marriage at $ 150,000 per year cannot be unconscionable as it is in excess of what Defendant would be entitled to under the current maintenance guidelines. He asserts that the Stipulation's reference to his income of $ 312,000 was solely "for child support purposes," and the fact that his tax returns reflect a lesser sum does not render them false. Plaintiff argues that because his bank accounts and tax returns were in joint names, Defendant had full access and opportunity to review them prior to signing the Stipulation. Plaintiff asserts that the Defendant had greater income and assets than she disclosed at the time of the Stipulation and, despite her claim that she was a homemaker, she worked during the marriage and owned a business. He asserts that she was fully involved in the family finances and had full access to the financial records. Plaintiff seeks sanctions for having to defend against Defendant's application.
DISCUSSION
As a general rule, financial disclosure is inappropriate until an existing agreement is set aside (see, Wandell v. Wandell, 140 AD2d 434 [2nd Dept., 1988] ; Potvin v. Potvin, 92 AD2d 562 [2nd Dept., 1983] ). The only exception to this rule is if the moving party first establishes a "legitimate factual predicate" for setting aside the agreement. ( Fakiris v. Fakiris , 177 AD2d 540 [2nd Dept., 1991] ). The facts must demonstrate that the underlying circumstances establish a basis to modify the agreement ( Oberstein v. Oberstein , 93 AD2d 374 [1st Dept., 1983] ).
Although Defendant's application is not one to set aside the Stipulation, the Court must nonetheless consider the grounds to set aside an agreement to determine whether the Defendant is entitled to the discovery she now seeks. The Court does not find Defendant has met her burden in this instance.
New York has a long-standing "strong public policy favoring individuals ordering and deciding their own interests through contractual arrangements" ( Matter of Greiff, 92 NY2d 341 [1998] ). A duly executed agreement is presumed to be valid and controlling unless and until the party challenging it meets his or her very high burden to set it aside (see Bloomfield v. Bloomfield, 97 NY2d 188 [2001] ). "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." ( Wilson v. Neppell , 253 AD2d 493 [2nd Dept., 1998] ). It is against this backdrop that the Court must determine whether Defendant has set forth a "legitimate factual predicate" to set aside the agreement.
The Defendant has not sufficiently demonstrated the existence of duress or overreaching. The parties do not dispute that both mediators and independent matrimonial counsel were involved in negotiating the settlement. Although Defendant claims that she settled because Plaintiff "threatened" to litigate this case and "threatened" to ask the Court to calculate his support obligation on a sum far less than what he was offering at settlement, same does not establish duress. A threat to do something that one has the legal right to do does not constitute fraud or duress ( Cacchioli v. Hoberman , 31 NY2d 287 [1972] ; Lyons v. Lyons , 289 AD2d .902 [3rd Dept., 2001]; Gerstein v. 532 Broad Hollow Road Co. , 75 AD2d 292 [2nd Dept., 1980] ). In fact, it is common practice for a litigant to make a settlement offer which is far more favorable than the position he or she takes during the litigation. Furthermore, the Stipulation contains express acknowledgments that it was not the product of any duress, coercion, or undue influence.
Defendant argues that because Plaintiff did not fully disclose his financial interests at the time of the Stipulation she should now be entitled to discovery. A party's failure to disclose the entirety of his financial interests is not a reason to vitiate a contract (see: Strong v. Dubin, 48 AD3d 232 [1st Dept.2008] ; Smith v. Walsh—Smith, 66 AD3d 534 [1st Dept.2009], lv. denied 14 NY3d 704, 2010 WL 606404 [2010] ); Anonymous v. Anonymous , 123 AD3d 581, [1st Dept., 2014] ). A failure to disclose does not, standing alone, constitute fraud or overreaching sufficient to vitiate an agreement (see, Matter of Davis, 20 NY2d 70 [1967] ; Hoffman v. Hoffman, 100 AD2d 704 [3rd Dept., 1984] ; Panossian v. Panossian , 172 AD2d 811 [2nd Dept., 1991] ).
While there is precedent to allow discovery prior to the setting aside of an agreement with respect to a party's financial circumstances as they existed at the time of the Stipulation (see, e.g. : Piccano v. Piccano , 134 AD2d 418 [2nd Dept., 1987] ; Berkman v. Berkman , 287 AD2d 426 [2nd Dept., 2001] ), the Defendant in this case knowingly waived her right to same.
Whether Defendant knew the full extent of Plaintiff's financial condition or not, she unequivocally acknowledged her right to and waiver of financial discovery. The Stipulation states as follows:
1. The parties acknowledge that each has received independent legal advice from the counsel of his or her own selection in connection with the negotiations and execution of this Stipulation. The Husband has been represented by Schlissel Ostrow Karabatos, PLLC, 200 Garden City Plaza, Suite 301, Garden City, New York 11530, and the Wife has been represented by Jeffrey S. Schecter & Associates, PC 595 Stewart Avenue, Suite 500, Garden City, New York 11530.
2. The parties acknowledge that each has had a full and complete right to obtain discovery respecting any and all financial information of the other, they have been advised by their respective attorneys of their rights to disclosure and to compel inspection of the other's books and records, business and personal, and to their right to have accountants, appraisers and/or evaluators further investigate, appraise, and evaluate the other's business and property; and each have availed themselves of such right to the extent desired. Each party has instructed his or her attorney not to take any further steps themselves or through others in connection with discovery, inspection, appraisal or evaluation of the other's business or property. Each party is satisfied that this Stipulation is fair and equitable. (emphasis added)
3. The parties acknowledge that they are entering into this Stipulation freely and voluntarily , that they have ascertained and weight, to their complete satisfaction, all of the facts and circumstances likely to influence their judgment, that they have sought and obtained legal advice independently of each other, and that they have been duly apprised of their respective legal rights and each has had the provisions hereof fully explained to them and specifically of their rights under the existing laws of the State of New York as effective on and after July 19, 1980, concerning marital property, separate property and other financial matters; that all of the provisions hereof, as well as all questions pertaining thereto, have been fully and satisfactorily explained to them, and that they have given due consideration to such provision and questions that they clearly understand and assent to all the provision hereof, that they are making this Stipulation freely and voluntarily, and that this Stipulation constitutes a fair and adequate settlement. (emphasis added)
In addition to agreeing upon the above terms, Defendant signed an allocution affidavit annexed to the Stipulation wherein she acknowledged that she read the Stipulation, that it completely and accurately expresses her understanding of the settlement, that it expresses the entire settlement, that her execution was voluntary and of her free will, that neither the settlement nor her signing was occasioned or brought about by the use of any duress, coercion, undue influence, and that she thoroughly consulted with counsel. Further, the Court cannot ignore Defendant's claim that Plaintiff told her that he had "hidden assets" at the time of negotiations and with that knowledge she nonetheless signed the Stipulation and waived her right to further discovery.
Defendant next argues that discovery is required so that the Court can determine whether the maintenance provisions are fair and whether the Stipulation is unconscionable. The Court acknowledges that a challenge to the support provisions of an agreement as unfair or unreasonable may require an examination of the parties' finances, although a legitimate factual predicate must still be established ( Piccano v. Piccano , 134 AD2d 418 [2nd Dept., 1987] ; Klein v. Klein , 246 AD2d 195 [1st Dept., 1998] ).
Pursuant to the support terms of the Stipulation, the Plaintiff is to pay Defendant the sum of $ 7,540 per month in child support for three unemancipated children and $ 12,500 per month in maintenance for a period of nine years, unless sooner terminated by her remarriage, cohabitation, or death of the parties. It is well established that the purpose of maintenance is to give the recipient spouse economic independence and a sufficient period to become self-supporting (see : Sheila C. V. Donald C. , 5 AD3d 123 [1st Dept., 2004; Bains v. Bains , 308 AD2d 557 [2nd Dept., 2003] ; Anonymous v. Anonymous , 137 AD3d 583 [1st Dept., 2016] ; Cohen v. Cohen , 120 AD3d 1060 [1st Dept., 2014] ). Absent any sworn statement of net worth from the Defendant or evidence of Defendant's income, assets, or employment to allow the Court to consider whether Defendant has attained economic independence, the Court cannot find the maintenance provision to be unfair or unreasonable.
As to Defendant's claims of unconscionability, an unconscionable agreement is one "such that 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" ( Christian v. Christian , 42 NY2d at 71 ). On its face, the support award negotiated by counsel of $ 20,040 per month, or $ 240,480 per year, in addition to in excess of $ 3,200,000.00 in equitable distribution, does not appear to be unconscionable.
While Defendant may have been entitled to more and may have received more had the matter proceeded to trial, in the absence of inequitable conduct, courts should not intrude to redesign the bargain arrived at by the parties even if it is one-sided (see : Christian v. Christain , 42 NY2d 63 [1977] ).
It has long been held that broad financial disclosure should be denied unless and until an existing agreement between the parties which controls their respective support obligations and the distribution of property is set aside (see, Weinstock v. Weinstock, 122 AD2d 790 [2nd Dept., 1986] ; McLean v. Balkoski, 125 AD2d 234 [1st Dept., 1986] ; Wandell v. Wandell , 140 AD2d 434 [2nd Dept., 1988] ). This Court will not deviate from longstanding precedent under the facts of this case. Accordingly, the Defendant's application is DENIED , unless and until the Stipulation is set aside.
Because the Defendant preserved her right to make a separate application to set aside the Stipulation, it is
ORDERED , that the time for Defendant to challenge the parties' Stipulation of Settlement dated November 8, 2013, shall be extended to April 29, 2019 .
Although Plaintiff asks that the Defendant be held in default for failing to file an Answer, the Preliminary Conference Order does not set forth a definitive date for her to do so. Rather, the date by which Defendant is to serve a Verified Answer is "subject to application motion." The Preliminary Conference Order is replete with references to Defendant's intention to challenge the Stipulation and the unresolved issues as to financial discovery. Because Defendant has preserved her right to make this application and has participated in this action, it would be inequitable to find her default. Accordingly, Plaintiff's request at branches (2), (3), (4), (8) and (9) are DENIED . However, it is
ORDERED , that Defendant shall serve Plaintiff with a Verified Answer on or before April 29, 2019 .
Plaintiff seeks an award of counsel fees. Pursuant to both Domestic Relations Law § 237 and § 238, "there shall be a rebuttable presumption that counsel fees shall be awarded to the less monied spouse. In exercising the court's discretion, the court shall seek to assure that each party shall be adequately represented and that where fees are to be awarded, they shall be awarded on a timely basis, pendente lite , so as to enable adequate representation from the commencement of the proceeding." Neither party has provided the Court with a sworn statement of net worth and therefore the Court cannot assess either parties' current financial circumstances. Accordingly, Plaintiff's request at branch (5) is DENIED , without prejudice.
Finally, because the Court does not find that the Defendant's application to be frivolous, Plaintiff's request for sanctions at branches (6) and (7) are DENIED .
All other requested relief, not specifically addressed herein, is hereby DENIED.
This constitutes the Decision and Order of this Court.