Opinion
300534/18
06-06-2019
M.G., Plaintiff, v. N.HD., Defendant.
Wendy Parmet, Esq., Linda Zhou, Esq., Parmet and Zhou, LLC, and Gary I. Cohen, Esq., counsel pro haec vice, for Plaintiff. Harriet Newman Cohen, Esq., Cohen Rabin Stine Schumann, LLP for Defendant.
Wendy Parmet, Esq., Linda Zhou, Esq., Parmet and Zhou, LLC, and Gary I. Cohen, Esq., counsel pro haec vice, for Plaintiff.
Harriet Newman Cohen, Esq., Cohen Rabin Stine Schumann, LLP for Defendant.
Laura E. Drager, J.
In this divorce action, the Plaintiff ("Husband") seeks summary judgment finding the prenuptial agreement executed by the parties on September 14, 2007 (the "Prenuptial Agreement") is enforceable. The Defendant ("Wife") opposes his application.
The Husband's application is made as a cross-motion to the Wife's motion to dismiss this action. The Wife's motion was withdrawn by her counsel in open court on April 30, 2018. The Husband withdrew, with prejudice, that portion of his cross-motion for sanctions against the Wife and her counsel based on allegedly frivolous conduct. (Zhou Aff. 11/9/18, p.1).
UNDISPUTED FACTS
The parties lived together for an unspecified period before they married. In May 2006, more than a year prior to their marriage, they purchased an apartment in Manhattan titled in their joint names (the "Marital Apartment").
The parties were in their late fifties when they married. They have no children together. Each party held significant assets at that time. This was the Wife's second and the Husband's first marriage. The Wife, now age 70, has adult sons from her prior marriage. The Husband, also now age 70, is a stockbroker. The Wife is an art expert. When the parties married she was a curator with a museum. The Wife has been unemployed since 2009 when she was fired by the museum. She brought an age discrimination lawsuit against the museum and received an unspecified payment in settlement of that case.
The Prenuptial Agreement contains, inter alia, an expansive definition of separate property, a waiver of spousal maintenance and a waiver of counsel fees in the event of a divorce. The definition of separate property is expanded to include increases in value of a party's separate property that occurs during the marriage. In addition, separate property cannot be transmuted into marital property. (Ex. 1, pp. 3-6, Husband's Cross Motion). Marital property is restricted to property gifted or acquired in the parties' joint names and is to be deemed owned by the parties as tenants by the entirety. (Id. p.8).
Four months prior to entering into the Prenuptial Agreement, the parties entered into a letter agreement dated May 28, 2006 (the "Letter Agreement"). The Letter Agreement provides that if any of the Wife's three sons engage in disruptive or abusive behavior toward either of the parties while visiting in any of their residences, that son could be excluded from the residence. (Ex. 1, Husband's Cross Motion). Further, one of the sons was prohibited from entering any of the parties' residences without the prior, express permission of the Husband. In the Prenuptial Agreement, the parties modified the terms of the Letter Agreement to allow the excluded son into the parties' residences if the Wife was incapacitated or could not otherwise see the son. The Letter Agreement was otherwise incorporated into and annexed to the Prenuptial Agreement. (Ex. 1, page 11, Husband's Cross Motion).
In an exhibit to the Prenuptial Agreement, the Wife listed assets worth approximately $1,991,750 and the Husband listed assets worth $1,253,970. (Ex. 1, Husband's Cross Motion).
The Wife's assets in September 2007 consisted of: art, jewelry and antiques valued at $140,000; $453,750 equity in the Manhattan apartment jointly owned with the Husband; $870,000 in retirement accounts; and various investment accounts worth approximately $528,000.
The Husband's assets in September 2007 consisted of: $453,750 equity in the Manhattan apartment jointly owned with the Wife; $283,000 in a brokerage account; an IRA worth $22,000; $7,220 in checking and savings accounts; $288,000 equity in a house in Millbrook, New York; and $200,000 in art, jewelry, gold, and precious stones.
The Prenuptial Agreement was signed one day before the parties married on September 15, 2007. The Husband commenced this divorce action on January 22, 2018.
The Wife commenced an action for divorce in Connecticut on January 26, 2018. That action was dismissed by the Connecticut court on the basis of forum non conveniens in a Decision dated April 18, 2018.
Discussion
The Husband seeks summary judgment to find the Prenuptial Agreement enforceable. The Wife argues the agreement is invalid and unenforceable due to the Husband's overreaching and duress committed against her both before and after the Prenuptial Agreement was signed. The Wife also asserts that the waiver of maintenance is unconscionable at present. The Wife further claims that the waiver of counsel fees is unenforceable given the present disparity between the parties' finances.
Summary Judgment
The proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issues of fact. Winegrad v. New York Univ. Med. Ctr. , 64 NY2d 851 (1985). On a motion for summary judgment, "the facts must be viewed in the light most favorable to the non-moving party." Vega v. Restani Constr. Corp., 18 NY3d 499, 503 (2012). Summary judgment must be denied if there are any issues of material fact that require trial.
Validity of Prenuptial Agreement
The Husband makes a prima facie showing that the Prenuptial Agreement is valid. There is no dispute that it is signed and properly acknowledged by each party. DRL 236B (3). It recites that each party was represented by independent counsel of his and her own choosing and received "advice pertaining to the negotiation, preparation and execution" of the agreement. It further recites: "each party has carefully considered and weighed all the facts, conditions and circumstances likely to influence his or her judgment herein, and consequently each party is entering into this Agreement freely, voluntarily and with full knowledge and understanding of all the provisions contained herein. " (Emphasis added, Ex. 1, Husband's Cross Motion).
The terms of the Prenuptial Agreement are neither unfair nor unreasonable. Each party is entitled to retain his or her separate property and any increase in value of property acquired from the sale or transfer of the separate property. At the time the Prenuptial Agreement was signed, the Wife held separate property valued at more than twice the value of the Husband's separate property. (Ex. 1, Husband's Cross Motion). The parties waived maintenance based on their respective financial circumstances.
"It is well settled that duly executed prenuptial agreements are generally valid and enforceable given the ‘strong public policy favoring individuals ordering and deciding their own interests through contractual arrangements interests through contractual arrangements.’ Bloomfield v. Bloomfield, 97 NY2d 188 (2001). "Thus, a prenuptial 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.’ " ( Anonymous v. Anonymous, 123 AD3d 581,582 [1st Dep't 2014] ). Gottlieb v. Gottlieb , 138 AD3d 30, 36 (1st Dep't 2016). "The burden of proving evidence of fraud, duress or overreaching is on the party asserting the invalidity of the agreement ( Matter of Greiff, 92 NY2d 341, 344 (1998) ; Cohen v. Cohen , 93 AD3d 506 (1st Dep't 2012).
A party challenging a prenuptial agreement on the ground of overreaching:
must show overreaching in the execution, such as the concealment of facts, misrepresentation, cunning, cheating, sharp practice, or some other form of deception. (see Stawski v. Stawski, 43 AD3d 776, 777 [1st Dep't 2007] ; Matter of Baruch, 205 Misc. 1122, 1124 [Sur. Ct. Suffolk County 1954], aff'd 286 A.D. 869 [1st Dep't 1955] ). In addition, the challenging party must show that the overreaching resulted in terms so manifestly unfair as to warrant equity's intervention. (see Levine v. Levine, 56 NY2d 42, 47[1982] [to set aside agreement, both overreaching and manifest unfairness must be demonstrated]; Christian, 42 NY2d at 72 ; Barocas v. Barocas , 94 AD3d 551 [1st Dep't 2012], appeal dismissed 19 NY3d 993 [2012] ; Bronfman v. Bronfman, 229 AD2d 314, 315 [1st Dep't 1996] [challenger of agreement bears "very high burden" of showing that it is manifestly unfair and that such unfairness was the result of overreaching] ).
Gottlieb v. Gottlieb, 138 AD3d 30, 37 (1st Dep't 2016).
The burden is on the Wife to produce evidence of material issues of fact which require a trial. See, Zuckerman v. City of New York, 49 NY2d 557, 562 (1980). See also, Johnson v. Phillips , 261 AD2d 269 (1st Dept 1999).
The Wife claims that the relationship between the parties prior to execution of the Prenuptial Agreement was characterized by a pattern of coercive control by the Husband. She claims that the Husband's professions of love and extravagant compliments were "offset and then overwhelmed by appalling verbal and emotional abuse and obsessive and controlling behavior," including 25 to 30 telephone calls to her at work per day, attempts to alienate her from her sons, demands that she wait on him at home like a servant and intimidation with his tone of voice. The Wife points to the Letter Agreement potentially excluding her sons from the marital residences as evidence of the Husband's coercion and overreaching. She further asserts that her independence was "greatly compromised" prior to the marriage due to the fact that she sold her separate property house in Connecticut to use the proceeds to purchase the Marital Apartment which she claims was purchased at the Husband's insistence. The Wife claims that the Husband insisted that she contribute equally to the purchase price although he was the higher wage earner and possessed greater wealth. As a result, the Wife claims she became "emotionally subservient" to the Husband. She also contends that the Husband's relentless negotiating style, repeating his demands to her and to her counsel while refusing to "be transparent about his finances" "ultimately wore her down" until she signed the Prenuptial Agreement, sobbing and robbed of her free will, the day before the wedding. (Ex. E, Cohen Aff. 10/17/18, Wife's Verified Answer).
The Wife was represented by highly experienced matrimonial attorneys of her own choosing during the negotiations leading to the signing of the Prenuptial Agreement. Negotiations occurred over several months and several drafts of the agreement were passed between counsel over two weeks before the agreement was finalized. The Wife submits no evidence from her then-counsel to support her claims about the Husband's relentless negotiating style, lack of financial transparency, or the Wife's emotional distress prior to and at the time the agreement was signed. There is no evidence that the Wife's attorneys told her not to sign the agreement. Her attorneys, who still practice, have direct knowledge of the negotiations and were in the best position to observe her demeanor and state of mind during the negotiation process and when she signed the agreement. Two witnesses other than the Wife's attorneys were present when the agreement was signed. The Wife submits no evidence from those individuals to support her claim that she was sobbing as she signed it.
Although the Husband's attorneys prepared the first draft, the evidence reveals that the Wife's attorneys made significant changes in subsequent drafts. The Husband's counsel transmitted a first draft of the agreement to the Wife's counsel on August 23, 2007. (Ex. D, Zhou Aff. 11/9/18). The Wife's counsel sent a "final draft" to Husband's counsel on September 12, 2007. (Ex. C, Zhou Aff. 11/9/18). Some of the clauses the Wife claims are now abhorrent to her, such as the inclusion of the Letter Agreement and waiver of maintenance, were in the drafts her attorneys prepared. The Wife claims that the Husband insisted on changes the day the parties signed the Prenuptial Agreement. However, a review of the final draft prepared by her attorneys and the signed Prenuptial Agreement, reveal only minor modifications. The evidence also reveals that each party substantially revealed his or her financial assets. Moreover, the Wife had the previous opportunity to learn of the Husband's finances when they purchased the Marital Apartment together and undertook a mortgage.
The Prenuptial Agreement is accompanied by a certification by the Wife's attorney that:
The undersigned hereby certifies that he is an attorney at law duly licensed and admitted to practice in the State of New York; that he has been employed and compensated by Nancy Hall-Duncan, one of the parties to the foregoing Agreement, and he has advised and consulted with her in connection with her property rights and has fully explained to her the legal effect of the foregoing Agreement and the effect which it has upon her rights otherwise obtaining; that Nancy Hall-Duncan, after being fully advised by the undersigned that she understood the legal effect of the foregoing Agreement and she executed the same freely and voluntarily.
(Ex. 1, Husband's Cross Motion.)
The Wife argues that the Husband's abusive behavior caused her to sign the Prenuptial Agreement under duress. She points to the Letter Agreement as indicative of his controlling behaviors. However, the Letter Agreement was modified to her advantage to permit the excluded son to enter the residence if the Wife was incapacitated or otherwise unable to see the son or that he could see her in any separate property residence she purchased after the date of the marriage. (Ex. 1, pp. 11-12, Husband's Cross Motion). Her own attorneys' drafts of the Prenuptial Agreement included the Letter Agreement. She presents no evidence that she raised an objection to the Letter Agreement during the negotiations.
The Wife also claims that the Husband "forced" her to sell her Connecticut home to buy the Manhattan Apartment. That event, however, occurred more than a year before the parties married. The Wife provides no evidence of his coercive behavior with respect to the purchase of the Manhattan Apartment. The fact that the Wife was expected to contribute 50% of the cost to maintain the Marital Apartment of which she was a 50% owner is not indicative of coercion. Notably, as set forth in her Net Worth Statement, her separate property assets were not depleted by her contribution to the cost of maintaining the Marital Apartment. (Ex. E, Wife's Reply Aff.). The value of the Marital Apartment has increased. Thus, the Wife will benefit financially when the Marital Apartment is sold.
The Wife complains that the Husband's excessive number of calls to her at work further indicate his abusive behavior. Accepting the Wife's statement that these calls occurred, she does not say what the Husband said during those calls or if the calls occurred before or after the Prenuptial Agreement was signed. She provides no evidence that these calls led to her loss of job.
The Wife argues that she was forced to sign the Prenuptial Agreement the day before the wedding. Carter v. Fairchild-Carter, 159 AD3d 1315 (3d Dep't 2018) (wife given prenuptial agreement outside the County Clerk's office on the day before the wedding and was given no time to read the document or review it with her counsel). That decision is inapposite because here the Prenuptial Agreement was negotiated over a period of months and the Wife had advice of counsel.
The Wife gives no support for her claim that there was a lack of financial transparency. The only financial information the Husband did not disclose prior to execution of the Prenuptial Agreement were the specific contents of his safe deposit box located in California. The agreement provides that the contents of any safe deposit boxes outside the tri-state area could be inspected by the Wife within ten weeks after the marriage. (Ex. 1, p. 15, Husband's Cross Motion). The Husband's list of assets indicated his estimation that the value of the contents of that safe deposit box was approximately $100,000. The Wife does not indicate whether she ever inspected that safe deposit box. In any event, failure to disclose the entirety of a party's financial interests is not a reason to invalidate the agreement. See, Anonymous v. Anonymous, 123 AD3d 581, 583 (1st Dep't 2014).
The Wife submits a forensic psychological evaluation, dated September 30, 2018 by a psychiatrist she retained after the Husband filed the instant motion (the "2018 Evaluation"). The evaluator is an expert on domestic violence. The evaluator concludes that the Wife suffered from Battered Women Syndrome and that the Wife was coerced into signing the Prenuptial Agreement in 2007. (Ex. A, Cohen Aff. 10/1/18). That opinion is based on two interviews with the Wife in 2018 after the Husband filed this motion, an interview with one of the Wife's sons, a telephone conversation with a therapist who treated the Wife sporadically, and review of documents provided to her by the Wife (including the pleadings and motion papers in this matter).
The court finds the opinion expressed in the 2018 Evaluation insufficient to raise a triable issue of fact regarding the Husband's alleged coercive behavior in 2007, eleven years earlier. The evaluation is not based on contemporaneous observation of the Wife's emotional and mental condition in 2007. The evaluation barely discusses the events surrounding the negotiations. The evaluator spoke to none of the non-party participants involved in the negotiations of the Prenuptial Agreement. Other than the Wife, the only "fact" witness the evaluator spoke to was the Wife's son who apparently had no involvement in the negotiations or the signing of the Prenuptial Agreement. The son described an incident of the Husband's abusive behavior, but it appears that this event occurred years before the agreement was signed. (Ex. A, pp 13-14, Cohen Aff. 10/1/18). In a "brief" phone conversation the evaluator spoke to a therapist who treated the Wife at some undesignated time "years ago" and periodically only after this divorce action began. The treating therapist concluded that the Wife suffered from "a PTSD syndrome (unspecified)." The diagnosis was based on the Wife's description of an abusive marriage with the Husband, but the treating therapist also noted that the Wife had apparently described her first marriage as abusive. The treating therapist offered no insight into the negotiations surrounding the Prenuptial Agreement. The treating therapist's vague assessment is insufficient to raise a triable issue. As further evidence of abuse, the evaluator relies on the Wife's statement that the Husband denied her medical treatment, yet there was no discussion of how the Husband prevented her from getting necessary treatment. The court concludes that the 2018 Evaluation fails to raise facts warranting a hearing.
Of paramount importance is the fact that the Prenuptial Agreement expressly states that it was entered into freely and voluntarily and that each party was informed of and understood the terms of the agreement. The Wife does not deny that she signed the agreement. She does not claim to have misunderstood the meaning of any terms in the agreement or that she did not understand the legal effect of the agreement as explained by her counsel. Nor does she disavow the certification made by her counsel attesting that she signed the Prenuptial Agreement freely and voluntarily.
It is noted that not only is the Wife highly educated, but was knowledgeable of the divorce process at the time she entered into the Prenuptial Agreement as a result of the dissolution of her prior marriage.
The court finds that the Wife has not met her burden of establishing grounds to set aside the Prenuptial Agreement, or facts to warrant a hearing. See, Anonymous v. Anonymous , 123 AD3d, 581, 583 (1st Dep't 2014) (no overreaching where wife claimed that she was pressured into signing the agreement was contradicted by facts that the agreement was negotiated over a period of about four weeks; the wife was represented by competent and experienced matrimonial counsel; the agreement went through several drafts; changes requested by the Wife were incorporated in the final document; and the agreement expressly disclaims reliance on representations not set forth in the agreement). The Wife's allegations viewed in the light most favorable to the Wife do not establish overreaching or duress.
Enforcement of Maintenance Waiver
The Wife claims that enforcement of the waiver of maintenance would be unconscionable on entry of the Judgment of Divorce based on the great disparity in the parties' present respective incomes and assets. The Wife states her present annual income is $25,251, comprised of $24,520 in Social Security benefits, $2,571 from investments and $160 from an annuity. (Wife's Net Worth Statement, Ex. E, Cohen Aff., 10/1/18). The Husband reported income of $414,210 on his 2017 income tax return. (Ex. F, Wife's Reply Aff.).
The Wife does not submit her 2017 tax return.
DRL 236(B)(3) permits the parties to a marital agreement to make provision for the amount and duration of maintenance so long as "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." DRL 236(B)(3).
"An agreement will be viewed as unconscionable only ‘if the inequality is so strong and manifest as to shock the conscience and confound the judgment of any person of common sense’ ( McCaughey v. McCaughey, 205 AD2d 330, 331 (1st Dep't 1994). Gottlieb v. Gottlieb, 138 AD3d 30, 47 (1st Dep't 2016).The Wife argues that at the time the parties entered into the Prenuptial Agreement she was employed. The loss of her employment during the marriage, her inability to obtain a new job and the Husband's abusive conduct during the marriage which contributed to her inability to obtain new employment after her job with the museum was terminated would make enforcement of the maintenance provision in the Prenuptial Agreement unconscionable at this time. Maddaloni v. Maddaloni , 142 AD3d 646 (2d Dep't 2016).
The Wife's reliance on out-of-state cases is irrelevant since it appears those states rely on different standards to set aside maintenance provisions in prenuptial agreements. Blige v. Blige, 283 Ga. 65 (2008) ; Scherer v. Scherer , 249 Ga. 635 (1982) ; Matter of Nizhnikov v. Nizhnikov , 168 N.H. 525 (2016) ; Hardee v. Hardee , 355 S.C. 382, rehearing denied 2003 S.C. LEXIS 221 (2003); McHugh v. McHugh, 181 Conn. 482 (1980).
The Husband counters that the Wife has sufficient assets and income with which to support herself and that financial disparity is not a basis for finding unconscionability. Moreover, the Maddaloni case, the only New York case relied on by the Wife, presents an entirely different factual scenario.
According to the Wife, she has spent down a considerable amount of her assets to pay for this litigation and her remaining assets are not enough to support her going forward. The Wife claims to have approximately $1.5 million in her retirement accounts plus $210,000 in other bank accounts. In addition, it is anticipated that she will receive between $600,000 and $700,000 from her 50% share of the marital apartment. She claims over $500,000 in debt, primarily owed to her attorneys and for other litigation costs in connection with this divorce. (Wife's Reply Aff., pp 6-7).
Attorney billing statements were not included in the papers, nor any explanation for the high costs incurred.
--------
Viewing the parties' allegations in the light most favorable to the Wife, the court finds there are triable issues of fact regarding whether the maintenance waiver in the Prenuptial Agreement is unconscionable at present. Accordingly, the court orders a hearing as to whether enforcement of the waiver of maintenance provision of the Prenuptial Agreement would be unconscionable at this time.
Waiver of Counsel Fees
The Wife claims the waiver of counsel fees in the Prenuptial Agreement is unenforceable due to the great disparity between the parties' income and assets. Kessler v. Kessler, 33 AD3d 42 (2d Dep't 2006) ; Anonymous v. Anonymous, 123 AD3d 581 (1st Dep't. 2014). There was no disparity in assets or income at the time the Prenuptial Agreement was entered. There may be a disparity in the assets and income of the parties at present, although it is not as great as existed in Kessler or Anonymous. As was observed in Kessler , the determination of whether a provision in an agreement to waive attorney fees is unenforceable must be made on a case-by-case basis after consideration of the competing interests between upholding a provision of the parties' agreement and DRL 237 (a). Since the court finds it appropriate to refer to trial whether enforcing the waiver of maintenance provision of the Prenuptial Agreement would be unconscionable at this time, it is appropriate to refer the issue of whether attorney fees are warranted solely with respect to the cost of the hearing now being ordered. This is a fact issue that must be decided at a hearing. Thus, the court will not order interim attorney fee relief. Since the court has otherwise upheld the enforceability of the Prenuptial Agreement but for the waiver of maintenance provision at the present time, each party shall be responsible for any attorney fees or costs he or she has otherwise incurred.
Accordingly, it is hereby
ORDERED , that the court grants summary judgment finding the parties' Prenuptial Agreement is enforceable, except as ordered herein; and it is further
ORDERED , that the issue of whether enforcement of the waiver of maintenance in the Prenuptial Agreement is unconscionable at this time shall be referred to trial; and it is further
ORDERED , that the issue of whether the Wife is entitled to attorney fees for the cost of proceeding to trial on the issue of whether the enforcement of the waiver of maintenance provision in the Prenuptial Agreement is unconscionable at this time shall be referred to trial; and it is further
ORDERED, that the waiver of attorney fee provision of the Prenuptial Agreement is otherwise enforceable and each party is solely responsible for his or her attorney fees and costs incurred except as set forth in the immediate prior order provision; and it is further
ORDERED , that any relief not granted is denied.
This opinion is the Decision and Order of the court.