Opinion
xxxxx
03-03-2021
P.M., Plaintiff, v. M.M., Defendant.
Counsel for Plaintiff: Michael L. Fried, Samantha M. Cooper, Berkman Bottger Newman & Schein LLP Counsel for Defendant: Kevin M. McDonough, Perri W. Blitz, Mantel McDonough Riso, LLP, New York, NY
Counsel for Plaintiff: Michael L. Fried, Samantha M. Cooper, Berkman Bottger Newman & Schein LLP
Counsel for Defendant: Kevin M. McDonough, Perri W. Blitz, Mantel McDonough Riso, LLP, New York, NY
Douglas E. Hoffman, J. In this action for divorce and ancillary relief, Plaintiff Wife P.M. ("Plaintiff" or "Wife"), moves, by order to show cause, ... [redacted by court for publication]:
a. Setting aside and vacating the parties’[...] 2003 Prenuptial Agreement (hereinafter "PNA") in its entirety and declaring the entire PNA null and void; and
b. In the alternative, setting aside, vacating and declaring as null and void that provision of the PNA pertaining to a waiver of spousal maintenance; and
c. Setting aside, vacating and declaring as null and void that portion of the PNA pertaining to a "cap" of Defendant's income up to $100,000 in determining his basic child support obligation; and
d. Declaring the "2005 Modification of Prenuptial Agreement" void ab initio; and
e. Directing Defendant to remit payment directly to Plaintiff's counsel, BERKMAN BOTTGER NEWMAN & SCHEIN, LLP in the sum of $100,000 for the reasonable counsel fees, expenses and costs incurred by Plaintiff by having to seek to set aside,
vacate and declaring null and void that portion of the PNA pertaining to a waiver of spousal maintenance as well as the "cap" of Defendant's income up to $100,000 in determining his basic child support obligation.
[NYSCEF doc. 9].
Defendant opposes and cross-moves on seq. 002, for an order "(a) pursuant to CPLR § 3212, granting Defendant partial summary judgment sustaining the parties’ [PNA] and finding that said agreement is valid and enforceable." [NYSCEF doc. 25].
Background
The parties are married and continue to reside in separate parts of their multi-story marital residence. Wife filed for divorce in early 2020. [...].
The Prenuptial Agreement
On September 30, 2003, prior to the marriage, the parties entered into the PNA. The PNA included provisions regarding separate property, estate waivers, maintenance waivers, and waivers of attorney's fees, as defined therein. At the time, the parties were expecting their first child, and there are also child support, custody, parenting time, and international relocation provisions in the PNA.
Specifically, article 1, entitled "Separate Property of Each Party" provides [a list of real, personal, vested, contingent, etc] property that shall remain separate property of each party, during the marriage, in the event of divorce, or upon the death of either party: [including]
... [Defendant] specifically reserves the right to transfer any and all of his separate property to a family limited partnership or an asset protection trust, or any other tax-saving vehicle that he determines to be appropriate.
...
[NYSCEF doc. 12, PNA at 1-3].
Article 2 entitled "Joint or Marital Property" provides that "[i]t is the present intention of the parties not to acquire any joint or marital property during the marriage, except as otherwise provided for in [the PNA]" (id. at 3). [...]
With respect to the marital residence, the PNA states that at the time the parties entered into the agreement, Defendant owned a condominium located at [...], New York, New York, which was purchased with his own funds. The provision further states that the condominium [and any replacement residence] "shall remain the separate property of [Defendant] notwithstanding the marriage of the parties and notwithstanding any contributions [Plaintiff] may make [...]" (id. at 3-5 [emphasis added]). [Parties also waived any interest in pensions, and the other's estate, except wife may receive, if husband predeceases her, the equitable distribution she could have received under the PNA from husband's estate].
Article 7, entitled "Children" provides that "[i]t is the intention of the parties to have one or more children during the marriage. It is the intention of the parties to have their first child, if possible, during the first year of their marriage" (id. at 7). At the time of the PNA, Plaintiff had approximately $24,000 in debt, which Defendant agreed to pay in four annual payments of $6,000 (id. ). [As of the date of the execution of the PNA, Defendant acknowledges that his net worth was $30,972,400 (Plaintiff exhibit A).]
[ ]
Article 13, entitled "Legal Representation," provides:
"The parties each acknowledge that they have retained and have been represented by separate and independent counsel of their own choosing in connection with the negotiation of this Agreement. Each has been separately and independently advised regarding this Agreement including the rights waived or otherwise released herein. [...]"
(id. at 14 [emphasis added]).
[PNA also included a merger clause and a paragraph attesting that it is fair, just, and voluntary agreement]. [...] (id. at 15-16).
Plaintiff's Contentions
Plaintiff was born in [another country] [...]. In February 2000, she relocated to New York for work, where she was employed as a foreign exchange sales representative with [...] Bank. When Plaintiff came to New York, she received a two-year work visa. She met Defendant in December 2000 and they started dating. By February 2002, Plaintiff's work visa had expired and she returned to [her home country].
According to Plaintiff, after her return to [her home country], Defendant called her asking her to return to live with him in New York. He promised to take care of her financially. Since she no longer had a work visa, she could only return to the United States for a limited 90-day period by means of a tourist visa. In or about March 2002, she returned to New York and lived with Defendant. Thereafter, in or about May 2002, the parties returned to [...]. Plaintiff quit her job, and the two traveled between New York and Europe for much of the remainder of 2002. In November 2002, the parties became engaged and then traveled to [...] to celebrate Christmas with Plaintiff's family. Between January 2003 and April 2003, Plaintiff traveled between [...] and New York City on a tourist visa. The parties began to plan for their wedding and according to Plaintiff, agreed to get married sometime in early September 2003. Plaintiff sent out informal "save the dates" for a September 2003 wedding, so that her friends and family would have time to make travel and hotel arrangements. During the month of July 2003, the parties traveled to Europe to vacation in the French Riviera and Italy. By mid-July, the parties realized they were not prepared to finalize wedding plans for September and Plaintiff notified family and friends that the wedding was postponed. Thereafter, on July 26, 2003, while still vacationing in France, Plaintiff learned that she was pregnant. The parties returned to New York City the next day.
The PNA & Representation by Counsel
According to Plaintiff, two days after learning that Plaintiff was pregnant (in July 2003), Defendant contacted his attorney about terms of a prenuptial agreement. However, it was not until the end of August/beginning of September 2003, that Defendant presented Plaintiff with a draft of the PNA. She was four months pregnant with their first child at that time. Upon receipt of the PNA, and after speaking with her parents, Plaintiff contacted [Attorney 1], who was recommended by [...] an attorney her parents had researched to help her. Plaintiff contacted [Attorney 1] on September 2, 2003 to obtain his opinion and advice regarding the terms of the PNA. Plaintiff claims that on his own volition, Defendant sent the agreement directly to [Attorney 1] in anticipation of her consultation. When she then met with [Attorney 1] (possibly later that same day), he advised her that he read the proposed PNA and in his opinion, it was "horrible" and she should not sign it. [Attorney 1] worked with her on the matter between September 2, 2003 and September 18, 2003. However, throughout that time, Defendant "incessantly and relentlessly, hectored [her] during this time, to sign the agreement ... ‘as is’ without making any changes or edits" (P.M. aff, ¶ 13).
Though Defendant previously agreed to pay for her representation, he allegedly became very upset and directed her to question [Attorney 1] about the charges. Defendant refused to pay [Attorney 1] claiming [Attorney 1] was "too fancy" and that she did not need a "Madison Avenue Lawyer" (id. at ¶ 14). Defendant then selected another attorney, [Attorney 2], for Plaintiff. Plaintiff avers that she had nothing to do with the selection of [Attorney 2], with whom she had only met on one occasion prior to signing the PNA. Plaintiff was not advised of the financial consequences of the PNA. Rather, the focus of discussions concerned those provisions detailing custody of the parties’ unborn children and Plaintiff's ability to retain residential custody of them, including a potential relocation with them back to [wife's home country] in the event of a divorce. Following that meeting, Plaintiff had no further contact with [Attorney 2] until September 30, 2003.
Plaintiff further states that on September 30, 2003, when she appeared in [Attorney 2]’s office in Brooklyn, she was pregnant, unemployed, bereft of any assets of her own, residing in the United States on a ninety (90) day tourist visa that was expiring shortly, and living approximately [thousands of] miles away from her friends and family. According to Plaintiff, she felt that if she did not sign the PNA she would not be married and would be forced to return to her family's home in [...] unemployed, and forced to raise their child as a single mother. She also considered that she would be depriving an innocent child of the right to have his or her father living in close proximity and participating regularly in his or her life. She believed that she had absolutely no alternative but to sign the PNA on September 30, 2003. She signed the PNA, and the parties married one month later. Following the parties’ marriage on November 1, 2003, Plaintiff became a stay-at-home wife and mother for approximately 15 years. Throughout the marriage, the parties lived an extravagant lifestyle with lavish vacations, a house in the Hamptons and the children attending private school. Defendant is a self-employed [...] who specializes in [...].
Defendant's Contentions
Defendant counters that Plaintiff's allegations concerning the PNA are demonstrably false. He claims that Plaintiff was made aware shortly after they met that he would not marry without a prenuptial agreement: "I was engaged once before, and that engagement broke down, in part, because of my insistence on a prenuptial agreement. Plaintiff knew that, and she knew from shortly after we met in 2000, that I would not marry without a prenuptial agreement."
He further asserts that the parties negotiated the PNA over a nine-month period from January 2003, as evidenced by several drafts of the PNA, pointing to Defendant exhibits B — D. It is not entirely clear from the wording of Mr. M.’s affidavit whether the redline drafts he attaches were prepared by [Attorney 1], although that is the suggestion: "[Attorney 1] sent my lawyer multiple markups to the agreement, and obtained many financial benefits for Plaintiff. See Exhibits ‘B’ to ‘D’ for the drafts of the Agreement proposing material changes on behalf of Plaintiff (which were included in the final Agreement) indicating ‘P.M. has been represented by [Attorney 1] as legal counsel’)." (Def. aff. at ¶ 43).
The court notes, however, that none of these allegedly January — September 2003 drafts provide dates as to when they were negotiated or exchanged, and Plaintiff's first prenuptial attorney, [Attorney 1], states, as part of Plaintiff's papers on this motion: "I have reviewed exhibits ‘A’ through ‘E’ attached to Mr. M.’s Notice of Cross Motion. To the best of my recollection, I did not prepare nor did I receive these drafts from [Mr. M.’s then counsel,] [Attorney G]. In 2003, I did not use ‘trackchanges’ or ‘redlines’ to electronically edit agreements. As previously stated, to the best of my recollection, I prepared handwritten changes on a draft provided to me, and I did not provide a marked-up draft to [Attorney G]." ([Attorney 1] nonparty affirmation, ¶ 10).
Additionally, Husband claims that Wife was not pressured to sign the PNA (i.e., because she became pregnant, which they found out about in July), but rather, she had received a draft of the PNA in January 2003, four months before the parties had been trying for a baby and before the wedding had been planned (7/2/20 Defendant aff, ¶¶ 51-53). Defendant states "I provided Plaintiff a draft copy of the Agreement in January 2003 ... 1 had been engaged before, and my attorney, [Attorney G], had prepared a prenuptial agreement which I was still in possession of. That was the draft agreement that I provided Plaintiff with in January 2003." The court notes that the redline attached as Defendant's Ex. B (NYSCEF doc. 29), as "Redline PNA Drafts (1 v 2)" includes only these parties’ names, and does not appear to include a former fiancée, so, is presumably not a redline against that "prior" prenuptial agreement. The first paragraph of that redline states "August 2003" (a date that is not redlined or changed). Defendant claims that in 2019, "[o]nce Plaintiff ‘maxed out’ what she could earn under our Agreement, she decided that she no longer wanted to be married to me, and wanted a divorce ... Now, after all these years of marriage (and as Plaintiffs legal entitlements have ‘capped out’), she has decided to divorce me, and demands that the entire Agreement which we negotiated and signed, be jettisoned out the window ..."
Defendant argues that under the terms of the PNA, Plaintiff secured for herself more than $1.5 million in capital, ownership of a home in her native [country], health insurance and the retirement of her student debt. Defendant claims that Plaintiff comes from a monied, educated background and had the knowledge and background to know what the PNA provided and nevertheless agreed to it.
According to the PNA, each of Plaintiff and Defendant have a 50% ownership of the house in [Wife's home country].
With respect to the child support provisions of the PNA, and the provision providing for a cap of income of $100,000 set forth in the PNA (at the time of the signing on the PNA, the guideline Child Support Standards Cap was $80,000), Defendant concedes that "the Court will ultimately set the appropriate level of support of the children, regardless of what our Agreement provides, as the Court must make an award in their best interest" (Defendant aff dated July 7, 2020 at 4, n.4). Defendant does not address the custody and international relocation provisions of the PNA, or state whether those could be enforceable.
Defendant claims that Plaintiff found and hired her own attorneys and that he had no involvement in the selection of either, and points to the PNA, which specifically states that each party acknowledges "that they have retained and been represented by separate and independent counsel of their own choosing in connection with the negotiation of [the PNA]" (PNA at 14). He further asserts that her claim that she had never been to Brooklyn is false as the two had dined together in Brooklyn many times over the course of their "courtship." He alleges that Plaintiff had an apparent falling out with [Attorney 1], having nothing to do with Defendant, and that she then hired [Attorney 2].
Defendant alleges that Plaintiff had a draft of the PNA since January 2003. He claims that she obtained counsel of her choosing in July 2003, and that her attorney [without stating whether it was [Attorney 1] or [Attorney 2]] negotiated among other things a distributive award that was 50% larger than the original draft contemplated, i.e., from $100,000 per year for 10 years to $100,000 per year for 15 years. He claims that the provision that tied the distributive award to minimal levels of his income and net worth were eliminated at Plaintiff's request. In addition, Defendant agreed to a provision made for Plaintiff in his "Last Will and Testament," that in the event he predeceased Plaintiff, she would also receive all of the benefits to which she would have been entitled under the PNA in the event of a divorce. Defendant contends that these revisions demonstrate that Plaintiff was actively involved in the negotiation of the PNA and that the PNA is substantively fair and confers many valuable financial benefits upon Plaintiff.
In addition, Defendant claims that Plaintiff's counsel also requested, and Defendant agreed to: (a) accelerate the distributive award payments from five installments to three; (b) include an inflation adjustment of the distributive award being impacted for each year that the marriage exceeded 15 years; and (c) remove the changed financial circumstances provision that could have allowed Defendant to reduce the distributive award if his income or net worth declined (Defendant exhibit G). The court notes that this alleged September 30, 2003 letter is not on letterhead and bears no signature.
Defendant claims that the parties did not secure a wedding venue until after the PNA was executed and points the court to "copies of checks for our wedding venue dated October 2, 2003 at exhibit ‘H’ " (Defendant aff, ¶ 12 at 8). The only document provided, however, appears to be an invoice titled "Private Party Bill;" there is no name on the document to show the name of the venue or the event, and the court did not find a copy of checks to show when these alleged payments were actually made or to whom.
Defendant also claims that the parties "ratified" the 2003 PNA in 2005, when he made two installments towards Plaintiff's student loan debt (as agreed to in the PNA), and again in 2006, when the parties agreed Defendant would have an additional nine months beyond the three years agreed to in the PNA in order to acquire property in [wife's home country] (see Defendant exhibits I and J). Both the 2005 and 2006 documents state that "Both parties hereby confirm the validity of the entire [PNA]" (id. ). Copies of the 2005 and 2006 documents, however, lack either party's acknowledgment; the 2006 document does not appear to be signed by Defendant (id.). See, e.g., Jorge R v. Janett S, 68 Misc. 3d 1205(A), 2020 WL 4332852 [Sup. Ct., N.Y. County 2020] ["lack of a proper acknowledgment is fatal to the Agreement's validity"] (citing DRL § 236(B)(3), Matisoff v. Dobi , 90 N.Y.2d 127, 659 N.Y.S.2d 209, 681 N.E.2d 376 [1997]. Accordingly, neither the 2005 nor 2006 "ratifications" can be treated as duly acknowledged postnuptial matrimonial agreements.
Defendant claims that it was always his desire for Plaintiff to work and denies Plaintiff's claims to the contrary, pointing to the PNA, which states "It is the expectation of the parties that, after the marriage, both of the parties shall continue working" and that Plaintiff "is well educated and capable of returning to work and becoming gainfully employed, and both parties wish her to do so" (PNA, article 12). Defendant claims that for 17 years, he begged Plaintiff to get a job, [...]. In late 2018, Plaintiff secured employment. In January 2020, Plaintiff apparently told Defendant and the children that she planned to move out of the marital residence and commenced the instant action.
Defendant asserts that with respect to the pressures of being pregnant and the "what ifs" surrounding her not signing the PNA, Plaintiff had sufficient alternatives so that the PNA was purely voluntary: (1) if she did not sign the PNA and they did not marry, Plaintiff could have returned to her parents’ home in [her home country], where they have a separate two-bedroom apartment with its own entrance and private living room; (2) if Plaintiff had a child born in the United States, there would be no visa issue, because she "easily" could have obtained a "green card" and could have been able to reside in New York "indefinitely" even absent a marriage to Defendant; and (3) there was absolutely no risk to the safety of their unborn child if she took a flight back from New York to [wife's home country] in September or October 2003. Defendant notes that Plaintiff traveled by plane much later into her pregnancy in November and December 2003, including for their honeymoon. Defendant does not, however, cite to any specific relevant immigration law or code that would support his proposition that a parent who overstayed a 90-day tourist visa and had an American-born baby could "easily" obtain long-term "green card" status.
Defendant claims that at no time during the 16 years of their marriage did Plaintiff complain of any unconscionability or duress concerning the PNA. He also claims that his finances are grossly misrepresented by Plaintiff. Defendant claims that his income in 2017 was $1.8 million and that in 2018 he earned approximately $1.3 million. Then, in 2019, his adjusted gross income, excluding Plaintiff's income, was approximately $750,000, and that his income has declined over the last several years. Further, he states that given the effect that the COVID-19 pandemic has had on the [...] sector, it is likely his income in 2020 will be significantly lower than in 2019. At the time the parties entered into the PNA, his net worth was approximately $31 million. Today, he claims that his net worth is approximately $30.2 million, though he does not attach documents or exhibits to support this 2020 valuation. Defendant argues that the bulk of his assets were owned by him prior to his marriage, which includes his New York City-based interests in property A, B [...], and C, the initial marital residence, [which ...] was sold and he acquired the residence at D [...], the value of which he believes to be $9.5 million before taxes and other costs, not $18 million as Plaintiff claims. [...]
Discussion
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’ " ( Nomura Asset Capital Corp. v. Cadwalader, Wickersham & Taft LLP , 26 N.Y.3d 40, 49, 19 N.Y.S.3d 488, 41 N.E.3d 353 [2015], quoting Alvarez v. Prospect Hosp. , 68 N.Y.2d 320, 324, 508 N.Y.S.2d 923, 501 N.E.2d 572 [1986] ). "If the moving party produces the requisite evidence, the burden then shifts to the nonmoving party to establish the existence of material issues of fact which require a trial of the action" ( Nomura Asset Capital Corp. , 26 N.Y.3d at 49, 19 N.Y.S.3d 488, 41 N.E.3d 353 [internal quotation marks and citation omitted]; Zuckerman v. City of New York , 49 N.Y.2d 557, 562, 427 N.Y.S.2d 595, 404 N.E.2d 718 [1980] ). The court views the evidence in the light most favorable to the nonmoving party and gives the nonmoving party the benefit of all reasonable inferences that can be drawn from the evidence (see Vega v. Restani Constr. Co rp., 18 N.Y.3d 499, 942 N.Y.S.2d 13, 965 N.E.2d 240 [2012] ; Negri v. Stop & Shop, Inc. , 65 N.Y.2d 625, 626, 491 N.Y.S.2d 151, 480 N.E.2d 740 [1985] ; Sosa v. 46th St. Dev. LLC , 101 A.D.3d 490, 492, 955 N.Y.S.2d 589 [1st Dept. 2012] ). When there is any doubt as to the existence of triable issues, summary judgment should not be granted ( McCummings v. New York City Tr. Auth. , 81 N.Y.2d 923, 597 N.Y.S.2d 653, 613 N.E.2d 559 [1993] ; Rotuba Extruders, Inc. v. Ceppos , 46 N.Y.2d 223, 231, 413 N.Y.S.2d 141, 385 N.E.2d 1068 [1978] ). The Prenuptial Agreement
"A strong public policy exists in favor of parties deciding their own interests through premarital contracts, and a duly executed prenuptial agreement is given the same presumption of legality as any other contract" ( Gottlieb v. Gottlieb , 138 A.D.3d 30, 36, 25 N.Y.S.3d 90 [1st Dept. 2016] ). While DRL § 236B governs the division of assets upon divorce and defines marital and separate property for purposes of such a division, individuals may agree to opt out of this statutory framework (DRL § 236B [3] ["An agreement by the parties, made before or during the marriage, shall be valid and enforceable in a matrimonial action if such agreement is in writing, subscribed by the parties, and acknowledged .... Such an agreement may include ... provision for the amount and duration of maintenance ... provided that such terms were fair and reasonable at the time of the making of the agreement and are not unconscionable at the time of entry of final judgment"]). "[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’ " ( Gottlieb , 138 A.D.3d at 36, 25 N.Y.S.3d 90, quoting Anonymous v. Anonymous , 123 A.D.3d 581, 582, 999 N.Y.S.2d 386 [1st Dept. 2014] ).
"[A]n agreement between prospective spouses may be invalidated if the party challenging the agreement demonstrates that it was the product of fraud, duress, or other inequitable conduct" ( Anonymous v. Anonymous , 123 A.D.3d at 582, 999 N.Y.S.2d 386 ). Here, the parties present factually contradictory versions surrounding the execution of the PNA, and Plaintiff alleges that there are questions regarding the agreement's fairness, conscionability, or overreaching.
Allegations of Unfairness, Overreaching, or Unconscionability of the PNA
Plaintiff alleges that the PNA was signed without truly independent counsel of her choosing. Defendant claims that Plaintiff secured her own counsel, first [Attorney 1], then [Attorney 2]. Plaintiff instead alleges that Defendant thought it a mere formality as he expected Plaintiff to sign the agreement as drafted by him and his counsel (see email dated 9/2/03 from Defendant to both [Attorney 1] and [Attorney G] re: M. and [...] pre-nup agreement ["Please forward the Final Execution Copy of the above referenced agreement to P.M.'s council at the above e-mail for execution and have him send the executed agreement back to your office for signature"]). [Attorney 1] affirms that to the best of his recollection, he "had not seen nor reviewed a draft of a PNA between these parties before this date" ([Attorney 1] affirmation, ¶ 4), which contradicts Defendant's version of the facts. When Plaintiff's counsel objected to language in the agreement, Plaintiff alleges that Defendant refused to pay her counsel's fee. [Attorney 1] advised Plaintiff not to sign the agreement as written, and that the draft agreement "forced [Plaintiff] to waive substantial rights" ([Attorney 1] affirmation, ¶¶ 4, 6). Plaintiff emailed [Attorney 1] stating that she "decided that I want to sign the agreement as it is.... I will not be able to make any changes to it" (id. , ¶ 7 [emphasis added]; exhibit M.7). [Attorney 1] then again advised Plaintiff that the PNA did not protect her interests and since she decided to sign the agreement as is, that he must resign as counsel (id. ).
Plaintiff claims that thereafter, Defendant contested [Attorney 1]’s invoices, and instead selected [Attorney 2], an attorney who maintained an office in Brooklyn, New York, for Plaintiff to use for the execution of the PNA. Defendant denies this and states that Plaintiff found both of her attorneys herself, and discharged [Attorney 1] on her own accord and for her own reasons. There is nothing in the current record to prove or sustain either party's position. Plaintiff claims that she met with [Attorney 2] on one occasion prior to signing the PNA, and had a discussion focused on the provisions detailing custody of the parties’ unborn children and her ability to retain residential custody of them, including a potential relocation with them back to [her home country] in the event of divorce (Plaintiff affidavit dated, ¶ 16). After signing the PNA on September 30, 3003, Plaintiff had no further contact with [Attorney 2].
Notably, the PNA includes a provision that purports to allow Plaintiff to move back to [her home country] with any future children, with Defendant having visitation with any such children in the summer and holidays (seemingly regardless of their age or other circumstances). According to redlines attached by Defendant on this motion, there were several changes to this section [from the original that would have required Husband's written consent for a relocation, to a right for Wife to relocate, except the children would reside with Husband during summers and holidays, plus weekends upon "reasonable" notice]. In a later draft, Husband's parenting schedule with the children (should Wife choose to remain in New York) was set at "alternate weekend and one overnight visit"] [...]. This apparently last draft changes the name of Wife's counsel from [Attorney 1] to [Attorney 2]. (id. ). The draft PNA provided by [Attorney 1] from his files, however, includes only the "first" version of the above, "In the event of the termination of the marriage, the parties shall have joint custody of any minor children of the parties. Any decision of P.M. to relocate outside of the United States must be agreed upon in writing by M.M., having due regard for the best interests of the child(ren) of the parties at the time" [NYSCEF doc. 50]. [Attorney 1] also affirms, as part of Wife's papers on this motion, that he does not recall seeing the other drafts, has no record of the other drafts in his file, nor are any other drafts reflected in his invoices (also attached), and that he did not use track changes in 2003. [id. ].
Regardless of when or how the final custody and relocation provision was agreed to, as with child-support provisions discussed supra , custody of unborn children cannot be predetermined in a prenuptial agreement, as opposed to a later "best interest" analysis at the relevant time. For example, in 1954, the Court of Appeals upheld a trial court decision modifying a religious-upbringing and school-choice provision in an antenuptial agreement, where the modification was "for [the child's] best interests and welfare." Martin v. Martin , 308 N.Y. 136, 138—39, 123 N.E.2d 812 [1954]. This court could not find any cases upholding a pre-birth prenuptial custody agreement. See also Sara Ashton McK. v. Samuel Bode M. , 111 A.D.3d 474, 475, 974 N.Y.S.2d 434 (1st Dept. 2013) (finding only a post-birth custody petition to be "valid," and holding that the "father's paternity petition, filed in California [three months before the child's birth], did not initiate a proper custody proceeding, because the child had not yet been born") (citing UCCJEA, which prevents courts from exercising subject matter jurisdiction over custody proceedings filed prior to the birth of a child, and Matter of Wilner v. Prowda , 158 Misc.2d 579, 601 N.Y.S.2d 518 [Sup. Ct., N.Y. County 1993], denying married putative father's request to determine custody of the parties’ unborn child or to restrain his then-pregnant wife from leaving New York City). Even agreements to arbitrate custody have been held void as against public policy, which dictates judicial review in the best interest of the child. Glauber v. Glauber , 192 A.D.2d 94, 97—98, 600 N.Y.S.2d 740 [2d Dept. 1993]. Likewise, agreements made by parents after a child's birth are subject to "best interest" review by the courts in their role as parens patriae :
It is already well established by both statute and case law that contracts entered into by the parents with regard to the fate of their children are not binding on the courts. Domestic Relations Law § 70 and § 240 impose the responsibility upon the courts to make custody and visitation orders based upon the best interests of the child. Notwithstanding that custody agreements between parents are, in the usual case, to be given priority (see, Nehra v. Uhlar , 43 N.Y.2d 242, 251, 401 N.Y.S.2d 168, 372 N.E.2d 4 [1977] ), the responsibility of the courts always supersedes whatever bargain has been struck. The court must always
make its own independent review and findings, and may award custody to one parent in the face of an agreement granting custody to the other if the best interests of the child requires it (see, Eschbach v. Eschbach , 56 N.Y.2d 167, 451 N.Y.S.2d 658, 436 N.E.2d 1260 [1982] ; Friederwitzer v. Friederwitzer , 55 N.Y.2d 89, 447 N.Y.S.2d 893, 432 N.E.2d 765 [1982] ). The best interests standard will be applied to modifications as well as to the original custody determinations at all stages of judicial proceedings (see, Friederwitzer v. Friederwitzer, supra ). A court cannot be bound by an agreement as to custody and visitation, or either custody or visitation, and simultaneously act as parens patriae on behalf of the child (see, Finlay v. Finlay , 240 N.Y. 429, 433—434, 148 N.E. 624 [1925] ).
Glauber v. Glauber , 192 A.D.2d at 97—98, 600 N.Y.S.2d 740 [2d Dept. 1993].
Here, the PNA does not, however, seem to state that the parents were made aware that these custody and relocation provisions were either void, unenforceable, or at most, aspirational and subject to "best interest" review by the courts at the relevant time. It is perplexing why Wife's counsel at the time would have advocated for detailed changes to these custody and relocation provisions knowing that if challenged, these provisions would likely be of no weight, and custody and relocation would be evaluated at that relevant time in the children's "best interest," regardless of the PNA. If Plaintiff were making major financial concessions in order to secure (or so she thought) future physical custody of her then-unborn child or future children, or an ability to relocate to her home country with them, inclusion of such illusory provisions raises significant concerns.
Parties here acknowledge, as the First Department stated in the 2014 Anonymous v. Anonymous case, that there is a heavy burden on the spouse challenging a prenuptial agreement, and it is the exception, rather than the rule, that a prenuptial agreement can be overturned: "The burden of producing evidence of such fraud, duress or overreaching is on the party asserting the invalidity of the agreement" Anonymous v. Anonymous, supra, 123 A.D.3d at 582, 999 N.Y.S.2d 386 (citing Matter of Greiff , 92 N.Y.2d at 344, 680 N.Y.S.2d 894, 703 N.E.2d 752 ; Cohen v. Cohen , 93 A.D.3d 506, 940 NYS2d 250 [1st Dept. 2012] ). Although it is possible to shift this burden to demonstrate fraud or overreaching, such burden shifting is usually possible only after a showing that it is "certain" that the "stronger party" had a "probable" unfair advantage, and then, the burden may be shifted for that "stronger" party to affirmatively demonstrate that there was no fraud or undue influence:
Whenever the relations between the contracting parties appear to be of such a character as to render it certain that either on the one side from superior knowledge of the matter derived from a fiduciary relation, or from an overmastering influence, or on the other from weakness, dependence, or trust justifiably reposed, unfair advantage in a transaction is rendered probable, it is incumbent upon the stronger party to show affirmatively that no deception was practiced, no undue influence was used, and that all was fair, open, voluntary and well understood.
Greiff , 92 N.Y.2d at 345, 680 N.Y.S.2d 894, 703 N.E.2d 752.
Although the Greiff court did not set out specific factors to show this "certainty," courts have analyzed the following non-exclusive factors, as summarized in Estate of Buzen :
-detrimental reliance on the part of the poorer spouse ( citing Greiff)
relative financial positions of the parties ( citing Greiff)
the formality of the execution ceremony itself ( citing Greiff; citing Christian)
full disclosure of assets as a prerequisite to a knowing waiver ( citing Matter of Van Zandt, 117 A.D.2d 810, 499 N.Y.S.2d 432 (2d Dept. 1986) )
the physical or mental condition of the objecting spouse at the time of execution ( citing Gordon v. Bialystaker [Bialystoker] Ctr. & Bikur Cholim, Inc ., 45 N.Y.2d 692, 695—96 , 385 N.E.2d 285 (1978) )
superior knowledge/ability and overmastering
influence on the part of the proponent of the agreement ( citing Gordon v. Bialystaker [Bialystoker])
the presence of separate, independent counsel for each party ( citing Greiff)
the circumstances in which the agreement was proposed and whether it is fair and reasonable on its face ( citing In re Phillips’ Estate, 293 N.Y. 483, 58 N.E.2d 504 (1944) )
provision for the poorer spouse in the will [or otherwise] (citing Sunshine's Estate, 40 N.Y.2d 875, 876 , 357 N.E.2d 999 (1976) )
Estate of Buzen, 1999 NYLJ LEXIS 913, NYLJ, Apr. 2, 1999, at 35, col 1 [Sur. Ct. Nassau Co. 1999] [[ quoted by A.A. v. B.B., 61 Misc. 3d 1223(A), 2018 WL 6253441 [N.Y. Sup. Ct., N.Y. County 2018] [ affirmed sub nom. DiPietro v. Vatsky, 177 A.D.3d 401, 114 N.Y.S.3d 350 [1st Dept. 2019] ]; quoted by Estate of Rappaport, 184 Misc. 2d 660, 662, 709 N.Y.S.2d 921, 922 [Sur. Ct. Nassau Co. 2000] , In re Kazuba, 9 Misc. 3d 1116[A], 2005 WL 2467045 [Surr. Ct. Nassau Co. 2005] , In re Estate of Menahem, 16 Misc. 3d 1125[A], 847 N.Y.S.2d 903, 2007 WL 2350237 [Sur. Ct. Kings Co. 2007] , aff'd sub nom In re Menahem, 63 A.D.3d 839, 880 N.Y.S.2d 500 [2d Dept. 2009] ].
Here, both parties recognize Defendant's absolute right in 2003 not to marry absent a prenuptial agreement, and acknowledge that any threats not to go forward with the wedding are not considered legally improper "threats" sufficient to invalidate a prenuptial agreement in and of themselves, and are instead an exercise of his legal right not to marry ("a threat to a pregnant woman to cancel the wedding if she refused to sign the agreement provided no basis to set the agreement aside ... Likewise ... we declined to invalidate a prenuptial agreement where the wife believed that there would be no wedding if she did not sign the agreement; [courts] cannot set aside the agreement here merely because the husband's repeated refusal to marry his then-pregnant fiancée without a prenuptial agreement might be viewed by some as callous." Gottlieb v. Gottlieb , 138 A.D.3d 30, 40—41, 25 N.Y.S.3d 90 [1st Dept.], leave to appeal dismissed , 27 N.Y.3d 1125, 36 N.Y.S.3d 880, 57 N.E.3d 73 [2016]. Wife, however, raises a novel issue of whether her lack of legal immigration status absent marriage, combined with her pregnancy, created an additional factor: she alleges that she could not remain in the United States with her child unless she was married to Husband, which marriage was only possible if she signed the PNA. See, e.g., Smith v. Smith , 129 A.D.3d 934, 934, 11 N.Y.S.3d 655 [2d Dept. 2015] [court, finding question of fact concerning the circumstances surrounding the signing of the agreement, considered that the wife had already moved into the marital home when presented with the prenuptial agreement]). While Defendant claims that Plaintiff would be able to "easily" obtain her "green card" if the child were born in the United States, he does not cite any law to support his reading of immigration law, either in 2003 or currently. Although not necessarily the exclusive method for legal status, for a parent to obtain resident alien ("green card") status through a United States citizen child (including a child who obtains citizenship by birth in the United States), that child must be at least twenty-one-years old to sponsor their parent ( 8 USC § 1151 [b]). If Plaintiff had remained in the United States after the birth of the child, beyond the visa's expiration, she alleges that she would have been remaining in the United States unlawfully. Plaintiff states that her only recourse, absent the marriage, would have been to return to [her home country], separating the parties’ child from Defendant. The parties did not address the additional possibility of Plaintiff, unmarried and without legal status, returning to [her home country] without the child, and the child staying with Defendant (which "option," presumably would not be a viable or attractive alternative for Plaintiff when deciding whether the PNA was a fair agreement to enter into).
Additionally, there are numerous other material contested facts before the court, which may create the Greiff burden-shift. For example, here are factual disagreements regarding whether Wife had the benefit of independent counsel, including analysis of the timing of the drafts, availability of the drafts, negotiation of the drafts, and advice and information regarding the multiple unenforceable provisions in the agreement (regarding child support, custody, visitation, and relocation to Wife's home country).
"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, although 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 A.D.3d 977, 979, 42 N.Y.S.3d 225 [2d Dept. 2016] (citations omitted); see also Lombardi v. Lombardi , 127 A.D.3d 1038, 1040, 7 N.Y.S.3d 447 [2d Dept. 2015] ; McKenna v. McKenna , 121 A.D.3d 864, 866, 994 N.Y.S.2d 381 [2d Dept. 2014] ; see also Sasha T v. Barry T , 66 Misc. 3d 1206(A), 2020 WL 92051 [N.Y. Sup. Ct., N.Y. County 2020] ; J.B. v. M.G. , 65 Misc. 3d 1205(A), 2019 WL 4665716 [N.Y. Sup. Ct., N.Y. County 2019] ; A.A. v. B.B. , 61 Misc. 3d 1223(A), 2018 WL 6253441 [affirmed sub nom. DiPietro v. Vatsky , 177 A.D.3d 401, 114 N.Y.S.3d 350 ].
Based on the foregoing, the court finds that Plaintiff has raised triable issues of fact with regard to the circumstances surrounding the negotiation and execution of the agreement, including, without limitation, whether it was a product of overreaching.
The parties’ respective financial assets vastly differed at the time the parties entered into the PNA. Plaintiff, though educated and having had a position with a [...] bank previously, was not employed at the time, and had over $20,000 in student loan debt. Defendant, on the other hand, had a net worth of over $30 million dollars. While Plaintiff claims that the husband failed to fully disclose his financial situation, such a failure on its own is insufficient to vitiate a prenuptial agreement ( DiPietro v. Vatsky , 177 A.D.3d 401, 401, 114 N.Y.S.3d 350 [1st Dept. 2019] [alleged failure to disclose finances under the circumstances does not provide a ground to set aside the prenuptial agreement]; Cohen v. Cohen , 93 A.D.3d 506, 940 N.Y.S.2d 250 [1st Dept. 2012] ). The question becomes, then, whether the disparity of income and separate assets between the parties, Plaintiff's waiver of maintenance, and very limited equitable distribution under the circumstances was either not "fair and reasonable at the time of the making of the agreement" or is "unconscionable at the time of entry of final judgment." Sasha T. v. Barry T. , 66 Misc. 3d 1206(A), 2020 WL 92051 (quoting Anonymous v. Anonymous , 123 A.D.3d at 582, 999 N.Y.S.2d 386 ); see also Lorenc v. Lorenc , 178 A.D.3d 623, 624, 117 N.Y.S.3d 14 [1st Dept. 2019]. Certainly, "the motivating factor behind any such agreement is generally preservation of the wealthier party's separate assets rather than the chimera of creating a future harmonious division of equal resources" ( S.G. v. N.G. , 57 Misc. 3d 1215[A], 2017 WL 4969956 [Sup. Ct., Westchester County 2017], citing Cioffi-Petrakis v. Petrakis , 72 A.D.3d 868, 869, 898 N.Y.S.2d 861 [2d Dept. 2010] ). In Barocas v. Barocas, 94 A.D.3d 551, 552, 942 N.Y.S.2d 491 (1st Dept. 2012), the First Department held that "[a]lthough Defendant's waiver of spousal support was not unfair or unreasonable at the time she signed the [prenuptial] agreement, given her knowing and voluntary execution thereof with benefit of counsel, factual issues exist as to whether waiver would be unconscionable as applied to the present circumstances" (citing DRL § 236 [B] [3] [3] ; Anonymous v. Anonymous , 123 A.D.3d at 584, 999 N.Y.S.2d 386 ["an agreement concerning the amount and duration of spousal maintenance must be fair and reasonable at the time it is made, and not unconscionable at the time of entry of final judgment in the divorce action"] [internal quotation marks and citation omitted]. In 2019, according to the parties’ tax return, Plaintiff earned approximately $81,874 and Defendant earned $782,587, although Plaintiff posits that Defendant's income greatly exceeds this amount. Given the parties’ clearly disparate incomes, in light of all other circumstances noted herein, Plaintiff has raised a question of fact as to whether such a waiver is unconscionable in the present circumstances, including, without limitation, that the parties now have three children for whom Plaintiff will need to provide a residence during her parenting time, not to mention any continued "extras" the children have customarily enjoyed, such as gifts, clothes, dinners out, and vacations (although some of these expenses may be covered by child support, no such amount has been set, or could be currently set, as the parties continue to live together and there are no allegations that the children's needs are not being met. See, e.g., Warshaw v. Warshaw , 66 Misc. 3d 1206(A), 120 N.Y.S.3d 585 [Sup. Ct., N.Y. County 2020] [" Warshaw II "]; see also Barocas , 94 A.D.3d at 552, 942 N.Y.S.2d 491 ; M.G. v. N.HD. , 64 Misc. 3d 1206[A], 2019 WL 2588400.
As to equitable distribution, the parties provided for an expansive view of "separate property" in the PNA. Specifically, separate property is defined in the PNA as not only any real or personal property acquired prior to the marriage, which includes the marital residence, but excludes the residence in [wife's home country], which shall be considered joint property with each party having a 50% interest (PNA, article 5). It is also defined as: 1) all property acquired by a party at any time by gift, except that all gifts given to the parties jointly "shall be the joint or marital property of the parties" (PNA at article 3); 2) salary, wages and other compensation for personal services; 3) retirement and pension benefits; 4) proceeds of insurance policies received from any sources; 5) the increase in value of such property regardless of whether the increase is due in whole or in part to the contributions or efforts of the other party; 6) proceeds of the sale of such property, among others (PNA at 1-2). Further, under the PNA, Defendant "reserves the right to transfer any and all of his separate property to a family partnership or an asset protection trust, or any other tax-saving vehicle that he determines to be appropriate" (id. at 2).
By entering into the PNA, Plaintiff waived her right to any interest in the marital home and any other properties acquired during the marriage, no matter what other typically marital assets may have been used to improve that property, such as employment income during the marriage, any gifts Defendant received during the marriage, and any pension plans as defined above that Defendant had prior to the marriage, as well as after the marriage. In addition, Plaintiff waived her right to any spousal support to which she would otherwise have been entitled. However, in exchange, under the terms of the PNA, if the marriage is terminated, Plaintiff is entitled to $100,000 for each full and complete year, and a prorated amount for any portion thereof, that the marriage has continued, measured from the date of marriage to and including 15 years, as equitable distribution for a maximum of $1.5 million with inflation adjusted at an assumed rate of three percent annually (PNA at 8).
Defendant claims that his assets have remained steady from the time he entered into the PNA to present with a net worth of approximately $30 million. Plaintiff counters that Defendant actually has additional assets that he has transferred into various trusts, which together, reflect his net worth is in excess of $120 million; however, there are not sufficient underlying documents presented to the court at this time to corroborate this assertion. Under the PNA, Plaintiff would be entitled to $1.5 million plus interest, $100,000 for each year of marriage up to 15 years, as equitable distribution. She is also currently earning approximately $81,000 per year and though under these circumstances she is not at risk of being a "public charge," it appears that her income coupled with the amount she would receive under the PNA would not be enough to sustain her housing costs, providing for her and her three children during her parenting time, at least not on any level remotely close to what she and the children have enjoyed during the intact marriage. Further, while $1.5 million is a large sum of money, if as Plaintiff asserts, Defendant is worth $122 million, then this figure represents approximately 1.2% of his total net worth. Even if the court relied on Defendant's claim that his net worth is approximately $30 million, $1.5 million represents 5% of his net worth. Plaintiff raises factual questions about Defendant's asserted stagnant net worth over the course of sixteen years, citing his ability to transfer assets into various trusts and other holdings. Plaintiff thus raises a triable question of whether, depending on what the parties’ actual current financial circumstances are, the PNA's provisions for Plaintiff so "shock the conscience" as to invalidate the PNA (cf. Mack v. Mack , 169 A.D.3d 1214, 94 N.Y.S.3d 683 [3d Dept. 2019] [finding trial court did not abuse its discretion in deciding to award the wife 50% of marital assets, given the 15-year duration of the marriage and the wife's contributions to the household as homemaker and in caring for the parties’ children]; M.M. v. D.M. , 159 A.D.3d 562, 73 N.Y.S.3d 156 [1st Dept. 2018] ; Nadasi v. Nadel-Nadasi , 153 A.D.3d 1346, 60 N.Y.S.3d 488 [2d Dept. 2017] [finding 25% of the husband's interest in a commodities brokerage firm equitable, given the wife's contributions to the business as a homemaker and primary caregiver of the parties’ three children over the parties’ 20-year marriage, resulting in her forgoing her own career]; Berk v. Berk , 5 A.D.3d 165, 166, 773 N.Y.S.2d 53 [1st Dept. 2004] [wife entitled to 50% of the marital assets, noting the parties were married for almost fifteen years, and the wife gave up her career as a stockbroker to raise the parties’ twin children]); Barocas , 94 A.D.3d 551, 942 N.Y.S.2d 491. While "[a] mere unequal division of assets is insufficient to establish unconscionability" ( Sabowitz v. Sabowitz , 123 A.D.3d 794, 796, 999 N.Y.S.2d 80 [2d Dept. 2014] ), "[a]n agreement that might not have been unconscionable when entered into may become unconscionable at the time a final judgment would be entered" ( Taha v. Elzemity , 157 A.D.3d 744, 745-746, 68 N.Y.S.3d 493 [2d Dept. 2018] ).
In M.G. v. N. HD., 64 Misc. 3d 1206[A], 2019 WL 2588400 (Sup. Ct., N.Y. County 2019), the court found that there were "triable issues of fact regarding whether the maintenance waiver in the Prenuptial Agreement is unconscionable at present," and ordered a hearing as to whether enforcement of said provision would be unconscionable given the present circumstances. There, as here, the prenuptial agreement contained "an expansive definition of separate property, a waiver of spousal maintenance" ( id. at *1 ). Specifically, "[t]he definition of separate property [wa]s expanded to include increases in value of a party's separate property that occurs during the marriage" ( id. ). At the time the parties entered into the prenuptial agreement, the wife had assets worth approximately $1,991,750, and was employed as a museum curator ( id. ). The husband was a stockbroker, and listed his assets as $1,253,970 ( id. ). Subsequent to the execution of the prenuptial agreement, the wife was terminated from her employment and could not secure other employment ( id. ). The wife claimed that, at the time a judgment would be entered her annual income was $25,251, whereas the husband's reported income was $414,210; and that although she had $1.5 million in her retirement accounts and anticipated to receive approximately $650,000 for her 50% share of the marital residence, she owed over $500,000 primarily for litigation costs in connection with the divorce ( id. at *6 ; cf. A.A. v. B.B. , 61 Misc. 3d 1223[A], 2018 WL 6253441, [finding prenuptial agreement was not unconscionable because there was no allegation that the Defendant would "be left with only minimal assets"]), affirmed sub nom. DiPietro v. Vatsky , 177 A.D.3d at 402, 114 N.Y.S.3d 350.
Plaintiff argues that even if the maintenance provision is not found to be unconscionable, equity compels an award in her favor. The First Department has stated that in determining the enforceability of provisions in prenuptial agreements "there comes a point when the imbalance is so extreme that it is appropriate for equity to intervene" ( Gottlieb v. Gottlieb , 138 A.D.3d at 44, 25 N.Y.S.3d 90). For example, in Cron v. Cron, 8 A.D.3d 186, 187, 780 N.Y.S.2d 121 (1st Dept. 2004), the First Department held that, although the maintenance waiver was not unconscionable, the court had to look to what was equitable and increased the non-monied spouse's housing allowance as specified in the parties’ marital agreement from $200,000 to $2,000,000 (see also Smith v. Smith , 129 A.D.3d 934, 935, 11 N.Y.S.3d 655 [2d Dept. 2015] [the Plaintiff established her prima facie case to judgment by demonstrating that "the terms of the prenuptial agreement were manifestly unfair given the nature and magnitude of the rights she waived and in light of the vast disparity in the parties’ net worth"]).
Here, the court finds that there are questions of fact as to whether the terms of the PNA are manifestly unfair given that Plaintiff will receive no housing costs, no maintenance, and an amount of equitable distribution representing at most 5% of Defendant's net worth despite 16 years of marriage, three children, and Plaintiff's alleged stay-at-home parent role during 15 of those years.
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