Opinion
2013-51625
07-01-2013
N.S., Plaintiff, v. A.S., Defendant
Plaintiff's Attorney Douglas Rothkopf, Esq. Defendant's Attorney Jaclene Agazarian, Esq.
Unpublished Opinion
Plaintiff's Attorney
Douglas Rothkopf, Esq.
Defendant's Attorney
Jaclene Agazarian, Esq.
LEONARD D. STEINMAN, J.S.C.
In this action, this court is called upon to decide whether a parties' contractual right to an agreed-upon amount of child support is affected by a court-ordered downward modification of such support. Because New York law is clear that an agreement that is incorporated but not merged into a divorce judgment survives the judgment and remains enforceable, plaintiff is entitled to summary judgment on her contract claim for unpaid child support under the terms of the parties' Stipulation of Settlement. Plaintiff prevails notwithstanding a court-ordered downward modification of such support.
BACKGROUND
On January 30, 2003, plaintiff, N.S., and her former husband, defendant A.S., entered into a Stipulation of Settlement resolving all issues stemming from their divorce proceedings. Among the issues resolved were custody and child support for their son, N., who was then two and a half years old. It was agreed that plaintiff would receive child support from defendant in the amount of $34,000 per year ($2,833.33 per month) for 48 months and thereafter the sum of $39,146 per year ($3,262.16 per month). The increased amount coincided with the cessation of the durational maintenance plaintiff was to receive. The parties agreed to these child support provisions notwithstanding that, as set forth in the agreement, the Child Support Standards Act provided that plaintiff presumptively would be entitled to the sum of $3,437 per month (if the CSSA formula was applied to the parties' total combined income, which was $288,584 after applicable deductions). The agreement reflects that the parties reported on their 2001 income tax return that defendant's 2001 income was $312,121.
The agreement also provided for four years of maintenance to be paid to plaintiff at $3,833.33 per month. If defendant's income were to dip below $250,000 the parties agreed that they would attempt to renegotiate the maintenance amount. The agreement also provides that if unable to come to an agreement, defendant could seek a downward modification of his maintenance obligation from the court. The agreement does not provide to defendant a concomitant right to seek a downward modification of his child support obligations in the event of a reduction in his income.
The parties agreed that the agreement would be incorporated but not merged into the parties' judgment of divorce and they did so in three distinct paragraphs of the agreement:
Article 21, B provides that the agreement "shall not be invalidated or otherwise affected" by any judgment of divorce and that the "obligations and covenants of [the] Agreement shall survive any decree or judgment of separation or divorce." That section further provides that the agreement "may be enforced independently" of a divorce judgment.
Article 21, C provides that the agreement would be incorporated into a divorce judgment and, as a result, its terms would be enforceable in the same manner as a judgment, including the remedies of contempt, sequestration and deduction of wages.
Article 21, D confirmed again that the agreement would not merge into the judgment of divorce but shall "survive any such judgment and shall remain in full force and effect as if no judgment had been procured."
The agreement further reflects that the parties understood that there were legal consequences to simply incorporating but not merging the agreement into the judgment of divorce. For example, in the paragraph that permits defendant to seek a downward modification of his maintenance obligations in the event his income is reduced, the parties expressly agreed to modify the statutory legal standard to be applied. The parties agreed that the standard to be applied would be that for a modification of a judgment where an agreement had merged into the judgment ("substantial change of circumstances"), "rather than the standard for modification of a prior judgment incorporating the terms of a separation agreement" ("extreme hardship").See Stipulation of Settlement, Article 9, E.
A judgment of divorce was entered on August 14, 2003. That judgment provided:
"[T]he Stipulation of Settlement entered into between the parties on the 30th day of January, 2003, a copy of which is attached and incorporated in this judgment by reference...shall survive and shall not be merged into this judgment and the parties are hereby directed to comply with every legally enforceable term and provision of such Stipulation of Settlement...."
In April 2004, defendant became unemployed and subsequently took a position at the reduced salary of $150,000. In March 2006, defendant moved for a downward modification of his child support and maintenance obligations (by that time, defendant's maintenance obligations had expired, but plaintiff claimed that there were arrears owed to her based upon the payment amounts set forth in the agreement). Over plaintiff's opposition, this court (Justice Randy Sue Marber) granted defendant's application pursuant to a July 18, 2008 order. That order erased outstanding maintenance arrears owed to plaintiff after January 2005. This court also reduced defendant's child support obligations to $2,296 per month and retroactively (to the date of the application) granted a reduction of such support to $1,969 per month through the end of the durational maintenance period.
On August 29, 2012, plaintiff instituted this action alleging a breach of the parties' Stipulation of Settlement. Plaintiff bases her suit on defendant's failure from March 1, 2006 through the filing of the complaint to pay the child support amounts set forth in that agreement (presumably defendant paid the modified amounts set forth in the July 18, 2008 order). Plaintiff seeks to recover $59,293, representing allegedly owed child support obligations. Defendant has moved for summary judgment seeking dismissal of plaintiff's claims and plaintiff has cross-moved for summary judgment in her favor.
Plaintiff also alleges that defendant owes her $611.68 representing defendant's share of the cost of extra-curricular activities and summer camp for Nicholas. The court renders no decision with respect to this claim as it is not the subject of the pending motions.
DISCUSSION
For over 70 years it has been the law of this State that a modification of a divorce judgment or decree providing that a party is to pay "a sum less than he agreed to pay does not relieve [such party] of any contractual obligation." Goldman v. Goldman, 282 NY 296, 305 (1940). Instead, "such agreements, lawful when made, will be enforced like other agreements unless impeached or challenged for some cause recognized by law." Id. at 300.
This principle of law has been repeated in cases too numerous to cite and too clearly to refute. See e.g., Merl v. Merl, 67 N.Y.2d 359, 362 (1986) ("the case law distinguishes between modification of a separation agreement and that of a divorce decree. A separation agreement that is incorporated but not merged with a divorce decree is an independent contract binding on all the parties...."); Handa v. Handa, 103 A.D.2d 794, 797 (2d Dept. 1984) ("The law is well settled that [w]hen parts of a separation agreement are incorporated into but not merged within a divorce decree, the separation agreement continues in effect as a separate and independent contractual arrangement between the parties'") quoting Kleila v. Kleila, 50 N.Y.2d 277, 283 (1980); Kreuger v. Kreuger, 86 Misc.2d. 857, 861 (Sup. Ct. Kings Co. 1976) ("The law of New York has always been... that so long as the support agreement stands unimpeached, the court cannot alter or modify its provisions"). See also Cohen v. Seletsky, 142 A.D.2d 111, 118 (1988) ("Previous decisions have held that stipulations of settlement, which have been incorporated into, but not merged with, the judgment of divorce, share the contractual characteristics of surviving separation agreements").
Thus, where an agreement has not been merged into the judgment and the supporting spouse's financial condition has worsened, a court may modify the judgment downward but such modification would still leave the supported spouse with a right to maintain a cause of action for breach of contract. Schenkman, Alan D., Practice Commentaries, McKinney's C236B:45 at 316 (2010). See also Rainbow v. Swisher, 72 N.Y.2d 106, 109 (1988)("If not merged, [an] agreement may survive as a basis for suit, independent of other available procedures for enforcing the decree"). This right has been recognized and enforced in such cases as Makarchuk v. Makarchuk, 91 A.D.3d 1313 (4th Dept. 2012); Cefola v. Cefola, 231 A.D.2d 600 (2d Dept 1996) ; Voss v. Voss, 132 A.D.2d 545 (2d Dept. 1987); Handa, supra; Jewett v. Jewett, 79 Misc.2d 76 (County Co. Broome Co. 1974) ; and Holahan v. Holahan, 191 Misc. 47 (Sup. Ct. Monroe Co. 1947).
It is undoubtedly true that courts have the power to modify their divorce decrees and judgments upon the required showing as done previously in this action. In Boden v. Boden, 42 N.Y.2d. 210 (1977), the Court of Appeals held that where there is an unforseen change in circumstances and a concomitant showing of need the courts may increase the amount of child support to be paid, notwithstanding the existence of a valid, binding agreement between the parties. In Brescia v. Fitts, 56 N.Y.2d 132 (1982), the Court clarified that the rule enunciated in Boden was applicable in those instances where a child's needs were being met but a parent was asserting his/her own interest's in having the other contribute more. Where it is the child's right to receive adequate support that is being asserted, only a sufficient change in circumstances must be shown, notwithstanding the existence of an agreement between the parties. Id. In the latter case, the court's power stems from its interest in ensuring that the needs of the child are being met and such needs take precedence over the terms of an agreement. See Gravlin v. Ruppert, 98 N.Y.2d 1, 5 (2002). In the former, the basis of the court's authority, while not expressed, stems from its inherent power to annul, modify or vary its divorce decrees, as originally set forth by the Court in Goldman ( whilerecognizing- as explained above - that such modifications do not impact a party's contractual obligations). The court's power to modify its awards has often been applied to both increase and decrease contractually-obligated support obligations.
Unfortunately, when courts consider applications to modify support awards they sometimes do so in imprecise language. For example, in Boden itself, the court stated that the courts have the "power to modify the provisions pertaining to child support in a separation agreement." Boden at 212. See also Nuesi v. Gago, 103 A.D.3d 897 (2d Dept. 2013) (Terms of a stipulation of settlement act as a binding contractual obligation but a court has the power to modify "such terms"). This court's July 18, 2008 order modifying the award in the parties' divorce action similarly made reference to the court's power to "modify the child support provisions of a separation agreement incorporated in, but not merged with, a judgment of divorce...." Of course, it is the judgment of divorce that can be modified, not the terms of the agreement itself. The court in this action purported to do nothing more than this, as evidenced by the paragraph modifying the child support obligation. ("ORDERED, that the Judgment of Divorce is modified to provide....")
Therefore, defendant's argument that he is entitled to judgment dismissing plaintiff's complaint on the grounds of res judicata or collateral estoppel is without merit. Although this court found that defendant was entitled to a reduction of his child support obligations under the parties' divorce judgment, it did not - and for the reasons discussed above, could not - find that he was relieved from his contractual obligations.
Defendant may nonetheless try to establish that the parties intended that a modification of the judgment would effectuate a similar amendment of their agreement (see, e.g., Kliella v. Kliella, 50 N.Y.2d 277 (1980) (parties may voluntarily agree that any modification of a decree would serve as a modification of their agreement)) or that the agreement can fairly be interpreted to relieve him of his obligations thereunder in the face of a change in the decree (see, e.g., Trolf v. Trolf, 143 Misc.2d 26 (Dist. Ct. Nassau Co. 1989) (separation agreement interpreted to relieve spouse of obligation to pay child support following court's modification of custody agreement).Defendant has made such an effort: he argues that Article 8, paragraph 16 of the agreement should be read to incorporate any court-ordered modifications of his support obligations. That paragraph conditions the entire agreement's effectiveness upon the court's approval of the child support provisions. Defendant argues that the court's modification of the child support provisions was tantamount to a subsequent "disapproval" of them and therefore plaintiff cannot rely upon such provisions in this action. But defendant makes too much of paragraph 16 and its plain meaning doesn't support his interpretation. See Brooke Group Ltd. v. JCH Syndicate, 488, 87 N.Y.2d 530, 534 (1996)(the words and phrases used by the parties to an agreement must be given their plain meaning). It is undisputed that the court did approve of the child support provisions in August of 2003 when it entered the divorce judgment and that the agreement did go into effect. Defendant's attempt to stretch Article 8, paragraph 16 of the agreement into a continuing condition subsequent which can trigger the termination of his agreed-upon support obligations contorts the clear meaning of that provision. Accepting defendant's argument would require the court to find that the entire agreement - which has been in effect for nearly 10 years and presumably fully complied with except as alleged - no longer has any effect.
The court does not agree with defendant's assertion that the First Cause of Action is time-barred or that plaintiff is otherwise estopped from bringing this action. The statute of limitations for breach of contract is six years, measured from the date of the breach. CPLR § 213(2); Kassner & Co., Inc. v. City of New York, 46 N.Y.2d 544 (1979). Plaintiff's First Cause of Action seeks child support owed from March 1, 2006 through July 31, 2008. Since this action was commenced on August 29, 2012, on first blush it would appear that any payments owed for the period prior to August 29, 2006 would be time-barred. But defendant initially made the pre-August 2006 child support payments in full. Defendant did not breach the agreement until he unequivocally demanded the return of a portion of those payments in a letter from his counsel on July 21, 2008, following this Court's downward modification.
Nor can plaintiff's acceptance of the reduced court-ordered child support amounts be deemed a waiver of her right to sue for the balance owed under the parties' agreement. See Holahan v. Holahan, 191 Misc.2d 47 (Sup. Ct. Monroe Co. 1947) (mere acceptance of payments under the order of modification does not spell out an abandonment of rights under a contract; doctrine of estoppel has no application), aff'd 274 A.D. 846 (4th Dept. 1948), aff'd 298 N.Y 798 (1949). Plaintiff's return to defendant following the court's downward modification order of a portion of the child support payments previously paid presents a closer question as to whether she can now seek to recover those amounts. But defendant provides no evidence of plaintiff's intent to enter into an accord and satisfaction or to waive her rights. Therefore, no such waiver may be found. See Gilbert Frank Corp. v. Federal Ins. Co., 70 N.Y.2d 966, 968 (1988) (waiver is an intentional relinquishment of a known right). Furthermore, the parties' agreement in Article 22 requires a writing, signed and acknowledged by the parties, before the agreement may be deemed modified, discharged, revoked or terminated.
The court is cognizant of the apparent harshness of the rule that dictates judgment in plaintiff's favor, as have various courts and the legislature before it. When the legislature passed the current equitable distribution statute in 1980, it changed the common law rule concerning court-ordered modifications of maintenance obligations that are the subject of a contractual commitment. DRL § 236(9)(b) was amended to provide that a modification (up or down) of a judgment or order pertaining to maintenance shall supercede the terms of an agreement for such period of time and under such circumstances as the court directs. But that provision relates only to modifications of maintenance and not child support provisions.
The constitutionality of the statute has been called into question and at least one court has held that the statute unconstitutionally impairs parties' rights to enter into private contracts. Iffland v. Iffland, 155 Misc.2d 661 (Sup. Ct., Monroe Co. 1992).
Courts have provided relief to a party sued for breach of contract where such party successfully obtained an increase in the child support obligations of the other. See Priolo v. Priolo, 211 A.D.2d 627 (2d Dept. 1995); Pecora v. Cerillo, 207 A.D.2d 215 (2d Dept. 1995). Such suits are barred by New York's public policy to ensure adequate support for a child.
That leaves only the present situation: a successful court-ordered downward modification of a child support obligation followed by a breach of contract action. Some courts have sought to alleviate the sting of taking with one hand what it has given with the other by impeding the supported spouse's ability to collect more than the modified support amount. They have done so by further modifying support awards downward to the extent the supported spouse is successful in collecting additional sums through contractual remedies. Mackey v. Mackey, 58 A.D.2d 806 (2d Dept. 1977); Matter of Jacqueline S. v. Matter of Gerald C., 70 Misc.2d 19 (Fam. Ct., Richmond Co. 1972). At least one court has declined to "undertake such machinations" and instead has gone so far as to hold that it has the power to reduce both a party's support obligation under a judgment and a contract. Kuczminski v. Kuczminski, 128 Misc.2d 55 (Sup. Ct. Onondoga Co. 1985).
This court declines to so hold here in the face of the precedent cited above. Whether plaintiff's success in collecting additional child support justifies a further reduction of defendant's support obligations under the judgment must await another day. In the meantime, plaintiff's remedies to enforce the award to which she is entitled in this action are restricted to those of an ordinary judgment in contract.
The result today is the consequence of the negotiated bargain struck by the parties: to incorporate but not merge their agreement into the judgment of divorce. The parties could have provided that a modification of the judgment would be deemed a modification of the agreement. They did not. In retrospect, these contractual choices may appear unwise and improvident on the part of defendant. But in no respect can the parties' bargain be deemed unconscionable or even inequitable. This court, therefore, must enforce the agreement before it.
Defendant's motion for summary judgment is denied in all respects and plaintiff's cross-motion is granted. Any relief requested not specifically addressed herein is denied.
This constitutes the DECISION and ORDER of this Court.