Opinion
53887/2016
02-13-2018
Mercedes RAPP, Plaintiff, v. John K. RAPP, Defendant.
Bodnar & Milone LLP, By: Benjamin E. Schub, Esq. and Tamara A. Mitchell, Esq., Attorneys for Plaintiff, 140 Grand Street, Suite 401, White Plains, New York 10601 Kramer Kozek LLP, By: Neil E. Kozek, Esq. and Denise O'Connor, Esq., Attorneys for Defendant, 445 Hamilton Avenue, Suite 604, White Plains, NY 10601 Elliot Scheinberg, Esq., Co–Counsel for Defendant, 11 Pepperidge Drive, New City, NY 10956, Court Attorney Referee Carol Swidler
Bodnar & Milone LLP, By: Benjamin E. Schub, Esq. and Tamara A. Mitchell, Esq., Attorneys for Plaintiff, 140 Grand Street, Suite 401, White Plains, New York 10601
Kramer Kozek LLP, By: Neil E. Kozek, Esq. and Denise O'Connor, Esq., Attorneys for Defendant, 445 Hamilton Avenue, Suite 604, White Plains, NY 10601
Elliot Scheinberg, Esq., Co–Counsel for Defendant, 11 Pepperidge Drive, New City, NY 10956, Court Attorney Referee Carol Swidler
Gretchen Walsh, J.
This action for divorce was commenced on March 25, 2016 by the filing of the Summons and Complaint by Plaintiff Mercedes Rapp f/k/a Mercedes Morales ("Plaintiff"). Plaintiff and Defendant John K. Rapp ("Defendant") were married in a religious ceremony on August 16, 1997. There are no children of the marriage although both Plaintiff and Defendant have children from prior marriages.
Defendant filed an Answer and Counterclaims on April 15, 2016. In his Second Counterclaim, Mr. Rapp alleges that the parties (both represented by counsel) entered into an Antenuptial Agreement on 7/3/97 and 7/8/97 which resolves all financial issues between the parties, including all issues of equitable distribution. Plaintiff filed her Reply to Defendant's counterclaims on May 5, 2016 at 9:22 a.m., which was quickly substituted with an Amended Reply on May 5, 2016 at 2:10 p.m. The only difference between the Reply and the Amended Reply (which both deny the material allegations of the Second Counterclaim, including that Plaintiff executed the Antenuptial Agreement) is that the Amended Reply adds four affirmative defenses, which are that the Antenuptial Agreement is unenforceable based upon: (1) unconscionability; (2) fraud; (3) overreaching and undue influence; and (4) that it was not properly witnessed before a notary public or properly acknowledged by a notary public. Two and a half months later, on July 29, 2016, Plaintiff filed a Second Amended Verified Reply. In it, Plaintiff provides more facts to support her affirmative defenses of fraud, overreaching, undue influence, inequitable conduct and unconscionability.
With regard to her claims of fraud contained in her Second and Third Affirmative Defenses, Plaintiff claims that the only document she signed prior to the marriage was a single-page document which Defendant presented to her and did not allow her to read (Def's Ex. G, Second Affirmative Defense at paragraph "NINTH"). According to Plaintiff, Defendant intentionally misrepresented to Plaintiff that the document had no legal effect whatsoever in order to induce Plaintiff to sign it and then to use it to Plaintiff's financial disadvantage. Plaintiff contends that she relied on this misrepresentation by signing it and that Defendant is now trying to use it to her detriment (id. ).
In her Third Affirmative Defense, Plaintiff asserts that Defendant "intentionally and knowingly arranged for the ... purported Antenuptial Agreement to be prepared without advising plaintiff that defendant was doing so, without showing or having said agreement shown to plaintiff and without plaintiff retaining an attorney to represent plaintiff in connection with said agreement. Defendant intentionally and knowingly arranged for said agreement to contain provisions severely detrimental to plaintiff's financial interests, and to have such agreement improperly executed without plaintiff's knowledge" (id. at paragraph "TWELFTH"). Plaintiff claims that "Defendant intentionally and knowingly hid from plaintiff his efforts in connection with the preparation and improper execution of the ... purported Antenuptial Agreement so that plaintiff would marry him without being cognizant of her rights as a future spouse of defendant and any release of her rights by virtue of any antenuptial agreement. Plaintiff, in reliance on defendant's aforesaid deceit and misrepresentations, married defendant without being cognizant of any release of her rights by virtue of any purported antenuptial agreement" (id. at paragraph "THIRTEENTH").
Plaintiff's First Affirmative Defense asserts that the Antenuptial Agreement is unenforceable due to Defendant's overreaching, undue influence and inequitable conduct. In support, Plaintiff sets forth facts concerning the disparity of Plaintiff's education (one year of formal grammar school education) as compared to Defendant's education (engineering degree from NYU and graduate business courses), Defendant's business acumen as compared to Defendant's menial factory job experience, Defendant's net worth of approximately $17 million at the time of the Antenuptial Agreement's execution in 1997 compared to Plaintiff's negligible property holdings, and Plaintiff's lack of knowledge concerning her rights as a future spouse of Defendant as well as her lack of proficiency in the English language (First Affirmative Defense at paragraph "FIFTH"). Plaintiff further alleges facts supporting Plaintiff's financial dependence upon Defendant prior to the execution of the Antenuptial Agreement based on Defendant's paying Plaintiff's rent and his arranging for her and her three children to live in a house owned by a family member at no charge (id. at paragraph "SIXTH"). Plaintiff further alleges that Defendant professed a deep emotional attachment to Plaintiff and he promised Plaintiff that if she were to marry him, he would, for the rest of Plaintiff's life, provide for Plaintiff financially (id. ). According to Plaintiff,
Based on the Addendum to the Antenuptial Agreement, the $17 million was before the deduction of liabilities and taxes. After those deductions, based on the values Defendant provided for the Addendum, in 1997, Defendant's net worth (excluding his properties in Greece) was about $8 million.
To the extent Plaintiff is contending that there was some oral side agreement between the parties, the merger clause in the Antenuptial Agreement prevents Plaintiff from relying on any representations not contained in the agreement (Weinstein v. Weinstein , 36 AD3d 797 [2d Dept 2007] ). In any event, any such oral promise would violate the statute of frauds (Harrington v. Murray , 169 AD2d 580 [1st Dept 1991] ), and it is well settled that a party may not re-characterize a breach of contract as a claim of fraud to circumvent the statute of frauds (Komolov v. Segal, 144 AD3d 487 [1st Dept 2016] ; Nelson Bagel Bakery Co. v. Moshcom Realty Corp. , 289 AD2d 69 [1st Dept 2001] ; Lilling v. Slauenwhite , 145 AD2d 471 [2d Dept 1988] ).
In or about 1992, as proof of the sincerity of his promises to provide for plaintiff financially for the rest of plaintiff's life were she to marry defendant, defendant urged plaintiff to leave her employment and promised that defendant would fully support plaintiff and her children financially in every respect. Defendant thereafter demonstrated to Plaintiff his purported sincerity in his promise to provide financial security for plaintiff for the rest of her life, by paying for plaintiff's rent in the home in which plaintiff then lived with her children and in addition paying for all of plaintiff's and her children's and grandchild's other living expenses, including, e.g., utilities, education, clothing, food, travel, etc. ... In reliance upon [defendant's] promise to provide financial security for plaintiff for the rest of her life, in or about 1992 plaintiff left her employment, thereby plaintiff and her children became fully financially dependent upon defendant. At or about this time defendant twice asked plaintiff to marry him and she refused each time .... Thereafter, as further proof of the purported sincerity of defendant's promises to provide for plaintiff financially for the rest of plaintiff's life were she to marry defendant, defendant continued fully to financially support plaintiff. In or about 1996, in reliance on defendant's aforesaid promises and representations, plaintiff agreed to marry defendant (id. )
Based upon the foregoing conduct, Plaintiff claims that the Antenuptial Agreement is unenforceable due to Defendant's overreaching, undue influence and inequitable conduct (id. ).
As her Fourth Affirmative Defense, Plaintiff alleges that during the course of their marriage, Plaintiff made contributions, both direct and indirect, to Defendant's business, to his family, to his lifestyle and needs, in reliance of Defendant's promises, commitments and misrepresentations (Fourth Affirmative Defense at paragraph "SIXTEENTH"). It is Plaintiff's position that the provisions of the Antenuptial Agreement "with respect to the division of marital property and spousal maintenance are unenforceable due to their manifest unfairness and unconscionability at the date of such purported agreement and at the present, and are grossly inadequate to provide for the reasonable needs, requirements, and necessaries to which plaintiff is entitled in accordance with the parties' station in life and marital standard of living" (id. at paragraph "SEVENTEENTH").
This Court's review of the file reveals that Defendant sought a pre-motion conference with the Court to be granted leave to move for summary judgment for an order dismissing Plaintiff's affirmative defenses and for a declaratory judgment upholding the enforceability of the Antenuptial Agreement. The prior justice assigned to this action, Hon. Linda Jamieson, J.S.C., held the pre-motion conference on September 4, 2016 and denied Defendant the right to make the motion finding that Plaintiff was entitled to discovery on her claim that she never signed the Antenuptial Agreement. Justice Jamieson directed that following the conclusion of discovery on the validity of the Antenuptial Agreement, a hearing would be held. Justice Jamieson also directed that the parties agree on Defendant's payment of counsel fees for Plaintiff.
The Court understands that Defendant has paid approximately $100,000 in attorneys' fees to Plaintiff's counsel to date.
This action was reassigned to this Court in January, 2017. The Court's first encounter with it was the parties' request that the Court so-order a Stipulation, which the Court did on May 26, 2017 (the "Stipulation") (Plf's Ex. 4). Based on terms of the Stipulation, the parties agreed that the maintenance provision of the Antenuptial Agreement was void and that the issues over maintenance and counsel fees would be determined by either (1) agreement of the parties, or (2) the Matrimonial Trial Court. The parties further agreed that because Defendant was agreeing to not raise as a defense his inability to pay any maintenance or counsel fee award, there would be no discovery on Defendant's current financial circumstances. Another provision in the Stipulation provides that in the event the trial court or the Appellate Division, Second Department, were to determine that the Antenuptial Agreement was unenforceable, then discovery would proceed. Plaintiff was afforded the right to obtain discovery regarding: (1) the parties' current living expenses; and (2) Plaintiff's assets, whether held in her name individually or jointly with Defendant.
This Court held the hearing on the enforceability of the Antenuptial Agreement on July 18, 19, 20 and 31, 2017. Plaintiff and Defendant testified and the following witnesses were called to testify: (1) Herbert Steinberg, Esq., Defendant's counsel who drafted the Antenuptial Agreement for Defendant and who notarized and acknowledged Defendant's execution of the Antenuptial Agreement; (2) Martin Kaminsky of Bernstein, Pinchuk and Kaminsky, Defendant's accountant who drafted John Rapp's Statement of Financial Condition and Accountant's Compilation Report as of December 1, 2016 (the "Addendum") that was attached to the Antenuptial Agreement; (3) Hector Marichal, Esq., the attorney who represented Plaintiff with regard to the Antenuptial Agreement and who notarized and acknowledged Plaintiff's execution of the Antenuptial Agreement, although Plaintiff claims to have no recollection of ever meeting with Mr. Marichal or signing the Antenuptial Agreement; and (4) Andrew Sulner, MSFS, JD (Forensic Document Examinations, LLC), Defendant's forensic document examiner hired based on Plaintiff's claims of forgery. In addition, based on Plaintiff's position that she was not proficient in the English language, a Spanish interpreter was provided, although Plaintiff frequently responded in English to the questions posed and often answered the questions prior to the Interpreter having completed her Spanish interpretation of the questions.
See, e.g. , Plf's Ex. 2 at 134 and Tr. at 438–439.
While the Court believes Plaintiff was more fluent in English than she let on to be, that in no way diminishes the fact that she was probably not fluent in English at the time the parties entered into the Antenuptial Agreement in 1997, even though she did speak to Defendant in English and she had taken courses in English in 1985 and 1986 after she emigrated to the United States (Tr. at 140–141; 345–347; 353).
LAW GOVERNING THE ENFORCEABILITY OF PRENUPTIAL AGREEMENTS
Section 236, Part B(3) of the DRL provides for enforcement of prenuptial agreements as follows:
3. Agreement of the parties. 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 or proven in the manner required to entitle a deed to be recorded. Notwithstanding any other provision of law, an acknowledgment of an agreement made before marriage may be executed before any person authorized to solemnize a marriage pursuant to subdivisions one, two and three of section eleven of this chapter. Such an agreement may include, (1) a contract to make a testamentary provision of any kind, or a waiver of any right to elect against the provisions of a will; (2) provision for the ownership, division or distribution of separate and marital property; (3) provision for the amount and duration of maintenance or other terms and conditions of the marriage relationship, subject to the provisions of section 5–311 of the general obligations law, and 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; and (4) provision for the custody, care, education and maintenance of any child of the parties, subject to the provisions of section two hundred forty of this article.
It is well settled that duly executed prenuptial agreements are accorded the same presumption of legality as any other contract ( Matter of Sunshine's Estate , 40 NY2d 875 [1976], affirming 51 AD2d 326 [1st Dept 1976] ). There is a strong public policy favoring individuals ordering and deciding their own interests through contractual arrangements, including by prenuptial agreements ( Bloomfield v. Bloomfield , 97 NY2d 188 [2001] ; Matter of Greiff , 92 NY2d 341 [1998] ; Panossian v. Panossian , 172 AD2d 811 [2d Dept 1991] ; Brassey v. Brassey , 154 AD2d 293 [1st Dept 1989] ). Thus, a prenuptial agreement is presumed to be valid unless the party challenging the agreement meets a very high burden of showing that it was the product of fraud, duress, overreaching or unconscionability ( Christian v. Christian , 42 NY2d 63, 72 [1977] ; Ku v. Huey Min Lee, 151 AD3d 1040 [2d Dept 2017] ; Kashman v. Kashman, 147 AD3d 1034 [2d Dept 2017] ; Abram v. Cheung Sui Mei, 148 AD3d 599 [1st Dept 2017] ; Kabir v. Kabir, 85 AD3d 1127 [2d Dept 2011] ; Weinstein v. Weinstein , 36 AD3d 797 [2d Dept 2007] ; Lombardi v. Lombardi , 235 AD2d 400 [2d Dept 1997] ). "The general rule with respect to prenuptial agreements ‘places no special evidentiary or other burden on the party’ who seeks to sustain the agreement" ( Matter of Barabash, 84 AD3d 1363, 1364 [2d Dept 2011], quoting Matter of Sunshine's Estate , supra, 40 NY2d at 786).
"To maintain a claim of duress, plaintiff must demonstrate that threats allegedly made by defendant ‘deprived [her] of the ability to act in furtherance of [her] own interests’ ... or deprived her of the ability to exercise her own free will .... To accomplish this, plaintiff ‘must demonstrate that threats of an unlawful act compelled his or her performance of any act which he or she had the legal right to abstain from performing’ ... A mere ‘threat to do that which one has the legal right to do does not constitute duress’ " (Lyons v. Lyons , 289 AD2d 902, 904 [3d Dept 2001] ; see also Suchow v. Suchow , ––– NYS3d ––––; 2018 WL 280866 at *1 [3d Dept 2018] [" ‘to prove legal duress, a party must adduce evidence that a wrongful threat precluded the exercise of the party's free will’ "] ).
Overreaching equates with procedural unconscionability. To establish overreaching, the party challenging the prenuptial agreement must proffer evidence showing the concealment of facts, misrepresentation, cunning, cheating, sharp practice or some other form of deception (Gottlieb v. Gottlieb , 138 AD3d 30, 57 [1st Dept 2016] [Saxe, J. dissenting] ). However, the overreaching must be coupled with terms "so manifestly unfair as to warrant equity's intervention," which is the equivalent of substantive unconscionability (id. at 58 ).
An unconscionable bargain has been regarded as one that no person in his or her senses and not under a delusion would make and that no honest and fair person would accept ( Christian, supra , 42 NY2d at 71 ; Ku v. Lee , 151 AD3d 1040 [2d Dept 2017] ; Gardella v. Remizov , 144 AD3d 977 [2d Dept 2016] ). In essence, it is the type of inequality that would shock the conscience and confound the judgment of any person of common sense ( Matter of Hennel , 29 NY3d 487 [2017], citing Christian, supra ). "A mere unequal distribution of assets is insufficient to establish unconscionability" ( Sabowitz v. Sabowitz, 123 AD3d 794, 796 [2d Dept 2014] ; see also Santini v. Robinson , 68 AD3d 745 [2d Dept 2009] ). As the Court of Appeals has stated:
As the Hon. John Colangelo, J.S.C. noted: Nor will ... the allegation of an unequal division of assets be sufficient to nullify the prenuptial agreement, and with good reason: absent a disparity of economic resources as between the parties, a pre-nuptial agreement may never have been contemplated, much less drafted and signed. That is, 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. , 2017 NY Slip Op 1215 [A], 57 Misc 3d 1215[A] at *10 [Sup Ct, Westchester County 2017] ).
Judicial review is to be exercised circumspectly, sparingly and with a persisting view to the encouragement of parties settling their own differences in connection with the negotiation of property settlement provisions. Furthermore, when there has been full disclosure between the parties, not only of all relevant facts but also of their contextual significance, and there has been an absence of inequitable conduct or other infirmity which might vitiate the execution of the agreement, courts should not intrude so as to redesign the bargain arrived at by the parties on the ground that judicial wisdom in retrospect would view one or more of the specific provisions as improvident or one-sided ( Christian, supra, 42 NY2d at 71–72 [emphasis added] ).
"In the absence of such inequitable conduct ... courts should not redesign the bargain reached by the parties merely because in retrospect the provisions might be viewed as improvident or one-sided ... Rather, judicial review should be ‘exercised circumspectly, sparingly and with a persisting view to the encouragement of parties settling their own differences in connection with the negotiation of property settlement provisions’ ... The setting aside of a prenuptial agreement is ‘the exception rather than the rule’ and the burden of establishing fraud, duress or overreaching is on the party seeking to set aside the agreement" ( Gottlieb, supra 138 AD3d at 36–37, quoting Christian, supra 42 NY2d at 71 ; see also Ku,supra , 151 AD3d at 1041 ; Humes v. Humes , 156 AD3d 604 [2d Dept 2017] ). " ‘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, supra , 144 AD3d at 970 [citations omitted]; see also Christian, supra 42 NY2d at 73 ; Abram, supra , 148 AD3d at 600 ; Gottlieb, supra 138 AD3d at 36 ["Because the circumstances surrounding the execution of the agreement raise no issue of fact as to whether there was overreaching, we need not inquire into whether the terms of the agreement are manifestly unfair"] ).
Nevertheless, "due to the existence of a fiduciary relationship between [a prospective husband and wife], [prenuptial agreements] are closely scrutinized by the courts and are more readily set aside under circumstances that would be insufficient to nullify an ordinary contract" ( Paruch v. Paruch , 140 AD2d 418, 420 [2d Dept 1988] ). "Courts have ... ‘thrown their cloak of protection’ over marital agreements ‘to see it that they are arrived at fairly and equitably, in a manner so as to be free from the taint of fraud and duress, and to set aside or refuse to enforce those born of and subsisting in inequity’ " ( C.S. v. L.S., 2013 NY Slip Op 51624[U], 41 Misc 3d 1209[A] at * 3 [Sup Ct, Nassau County 2013], affd 129 AD3d 934 [2d Dept 2015], quoting Petraca v. Petraca , 101 AD2d 695. 696 [2d Dept 2012], quoting Christian, supra , 42 NY2d at 72 ; see also Matter of Greiff, supra 92 NY2d at 347 ). "Although courts carefully scrutinize marital agreements based on the fiduciary relationship of the parties, an agreement is not unconscionable merely because some terms may seem improvident; it must shock the conscience to be set aside" ( Tremont v. Tremont , 35 AD3d 1046, 1048 [3d Dept 2006] ; see also Marin–Brown v. Brown , 79 AD3d 1302 [3d Dept 2010] ).
DISCUSSION
A. The Parties' Agreement to Strike the Maintenance Provision Does not Render the Remainder of the Antenuptial Agreement Unconscionable
Recognizing that the $1,000 a month maintenance provision, which was agreed to back in 1997, is outdated, the parties agreed to stipulate to set aside the maintenance provision and leave it to a further agreement of the parties or the Matrimonial Trial Court to set the proper amount and duration of maintenance. While Plaintiff does not expressly contend that the setting aside of the maintenance provision renders the remainder of the Antenuptial Agreement unconscionable, Plaintiff nevertheless refers to this inadequate maintenance at various points in her Post–Trial Memorandum. Here, the parties' Antenuptial Agreement had a severability clause, which provides that in the event any provision shall be held invalid or unenforceable for any reason, it shall not invalidate, affect or impair the remainder of the agreement (id. at Article IIII, ¶ 6). It is well settled that when a prenuptial agreement contains a severability clause, courts are, based on the "contract's terms, free to adjudge the validity of [a specific provision] without consequential effect on the remainder of the writing" ( Christian , 42 NY2d at 73 ; Clermont v. Clermont , 198 AD2d 631 [3d Dept 1993], lv dismissed 83 NY2d 953 [1994] ). Accordingly, the Court shall not place any import on the fact that the parties have voluntarily stricken the maintenance provision of the Antenuptial Agreement in rendering its determination.
B. Plaintiff Signed the Antenuptial Agreement
As her first line of attack, Plaintiff denies that she signed the Antenuptial Agreement claiming that she does not remember ever signing the Agreement or meeting with her alleged attorney, Hector Marichal, Esq. (Plf's Post–Trial Mem. at 6, 9–10, citing Tr. at 383–384). It is Plaintiff's position that she first saw the Antenuptial Agreement (Def's Ex. A) during this proceeding. According to Plaintiff, she only recalls that Defendant requested that she sign a one-page piece of paper when they were in a hotel room in New Jersey one or two years before their marriage (id. citing Tr. at 385–388). Thus, it is Plaintiff's position it is only if the Court finds that she signed the Antenuptial Agreement that the Court need address her other defenses in which she seeks to set aside the Antenuptial Agreement based on fraud, undue influence, overreaching and unconscionability.
This position differs from Plaintiff's initial position, which was that the Antenuptial Agreement never happened and that her signature was forged
Based on the credible evidence, including the Mr. Marichal's testimony (see infra ) and the report and testimony from Defendant's expert on forensic document examination, Andrew Sulner (see, e.g. , Def's Ex. C; Tr. at 305–306, 344), the Court finds that Plaintiff signed the Antenuptial Agreement on July 3, 1997 in the presence of her counsel Mr. Marichal. Although Plaintiff suggested that the signature was a forgery based on the fact that she did not recollect signing the Antenuptial Agreement, no credible evidence was presented to substantiate her claim that Defendant may have signed her name to the Antenuptial Agreement.
As a result of Plaintiff's claim of forgery, Defendant expended approximately $26,930 hiring Mr. Sulner to verify the authenticity of Plaintiff's signature and the Antenuptial Agreement itself (Tr. at 300).
In this regard, Plaintiff's counsel elicited from Defendant that he signed Plaintiff's name on tax returns (Tr. at 133).
Plaintiff's testimony that she had no recollection of signing the Antenuptial Agreement, meeting with Mr. Marichal, or discussing with Defendant his requirement that the parties enter the Antenuptial Agreement prior to marriage, was incredible (Tr. at 382, 384, 390, 393–394, 517–518). Plaintiff's claim that the parties never discussed the need for a prenuptial is inconsistent with other testimony by Plaintiff, which included that Defendant told her he hid their relationship from his sister Stella and her understanding that prior to their marriage, Stella did not approve of the parties' relationship (Tr. at 379–380). Moreover, at her deposition, Plaintiff testified that she was aware during the period one to two years prior to their marriage that Defendant was in business with his sister Stella and that they owned property together (Plf's Dep. Tr. at 275–277; see also Tr. at 440–441 [Plaintiff testified that she knew that the pharmacy belonged to Defendant and his family] ). Plaintiff's contention that the couple never discussed the need for a prenuptial agreement is also inconsistent with the transcript of the recorded conversation where Plaintiff talked about Defendant telling her that he needed her to sign the document to show his sister (Plf's Ex. 2 at 34). After being reminded that she had made this statement in the recorded conversation of March 20, 2016, Plaintiff admitted that there had been a discussion about a prenuptial agreement before the parties got married (Tr. at 438).
The Court credits Defendant's version of his discussions with Plaintiff over his need to have the Antenuptial Agreement in order to protect his family's jointly-held properties and businesses and to protect the inheritance rights of his daughter and his grandchildren. Defendant credibly testified that in response, Plaintiff stated that the prenuptial agreement would not be a problem (Tr. at 150–152). For the reasons set forth herein, the Court finds Plaintiff's testimony that the parties never had any such discussions not worthy of belief.
Turning to whether Defendant met his burden of showing that the Antenuptial Agreement was properly executed, notarized and acknowledged, as noted above, to be valid and enforceable, a prenuptial agreement must be in writing, subscribed by the parties and "acknowledged or proven in the manner required to entitle a deed to be recorded" ( DRL § 236[B][3] ). "A proper acknowledgment requires both an oral declaration by the signer of the document made before an authorized officer and a written certificate of acknowledgment, attached to the agreement, endorsed by an authorized public officer attesting to the oral declaration" ( Matter of Koegel , ––– NYS 3d ––––, 2018 WL 736117 at * 6 [2d Dept 2018] ). The notary must attach a certificate to the document that substantially complies with RPL § 309–a(1) for the purpose of establishing: (1) that the signor made the oral declaration; and (2) that the notary knew the identity of the signor or secured satisfactory evidence of identity ensuring that the signor was the person described in the document. With regard to the second purpose, a notary may not take an acknowledgment without knowledge or "satisfactory evidence ... that the person making [the acknowledgment] is the person described in and who executed such instrument ( RPL § 303 ).
Here, the acknowledgment provides:
On this 3rd day of July 1997, before me personally came MERCEDES MORALES, to me known and known to me to be the individual described in and who executed the foregoing instrument and she acknowledged to me that she executed same.
The acknowledgment substantially complies with the statutory requirements (Matter of Koegel. supra ). Furthermore, Mr. Marichal's testimony concerning his custom and practice of requiring that the signatory provide photo identification satisfies Defendant's burden (see Galetta v. Galetta, 21 NY3d 186, 197–198 [2013] ["a party can rely on custom and practice evidence to fill in evidentiary gaps ‘where the proof demonstrates a deliberate and repetitive practice by a person in complete control of the circumstances’ .... Custom and practice evidence draws its probative value from the repetition and unvarying uniformity of the procedure involved as it depends on the inference that a person who regularly follows a strict routine in relation to a particular repetitive practice is likely to have followed that same strict routine at a specific date or time relevant to the litigation"] ). Thus, Mr. Marichal's testimony wherein he described a specific protocol that he repeatedly and invariably followed satisfied the requirements for the admissibility of custom and practice testimony under Galetta, supra . During the trial, Mr. Marichal identified his signature on the unnumbered page following numbered page 13 as well as his notary stamp and his acknowledgment of Plaintiff's signature (Tr. at 242). In this regard, Mr. Marichal remembered Plaintiff coming into his office and signing the document (Tr. at 242–243). And while he could not remember the specific details of his meeting with Plaintiff, Mr. Marichal testified that it was his custom and practice when he notarizes a signature that the person signing is in his presence and that he/she provides photo identification and that he never did not ask for photo identification (Tr. at 244–245). He further testified that after Plaintiff signed the Antenuptial Agreement, he notarized and acknowledged Plaintiff's signature (Tr. at 245).
In Galetta, the proponent of a marital agreement sought to cure a defect in the husband's' acknowledgment of the agreement by showing that the notary public had, in fact, confirmed the husband's identity and that the husband was the person described in the agreement. The notary, in an affidavit submitted to the court, did not state that he actually recalled having acknowledged the husband's signature nor that he knew the husband prior to acknowledging the signature. Rather, he averred only that he recognized his own signature, had been employed at a bank at the time, and that it was his "custom and practice" to ask and confirm that the signer was the same person named in the document, and that he was "confident" that he had done so on this occasion.
The same holds true with regard to the acknowledgment of Defendant's execution of the Antenuptial Agreement, which is identical in form/substance to Plaintiff's acknowledgment. Further, Defendant's counsel, Mr. Steinberg, testified that he notarized and acknowledged Mr. Rapp's signature, which was signed it in his presence (Tr. at 111), in accordance with his protocol (Tr. at 112–113).
Based on the foregoing, the Court finds that Defendant has established that the Antenuptial Agreement was properly executed by Plaintiff and Defendant, and that it was properly notarized and acknowledged. Accordingly, the Court shall strike Plaintiff's Fifth Affirmative Defense asserting that the Antenuptial Agreement was not properly notarized and acknowledged. The Court next turns to whether the Agreement should nonetheless be set aside on the grounds that it was procured by fraud, undue influence, overreaching or unconscionability.
C. Plaintiff Failed to Sustain her Burden of Establishing That the Execution of the Antenuptial Agreement was Procured through Fraud, Duress, Overreaching or that it is Unconscionable
To some extent, Plaintiff's version of the execution of the Agreement morphed over time. She originally denied being represented by counsel and that she signed the Agreement. However, at trial, Plaintiff claimed that she did not recall signing it or meeting with Mr. Marichal and that she only recalled signing a one-page document in a hotel room with Defendant. Plaintiff acknowledged the inconsistency of these positions (Tr. at 396–399). By contrast, Plaintiff went to great lengths to try to impugn Defendant's testimony with regard to insignificant matters, with minimal success.
Plaintiff spent a lot of time trying to impeach Defendant with what she viewed were inconsistencies between Defendant's testimony and other witnesses' testimony. The matters involved: (1) Plaintiff getting Defendant to admit that contrary to his earlier testimony that he watched Plaintiff pick Mr. Marichal's name from a directory of attorneys from a distance, he may have assisted Plaintiff in selecting Mr. Marichal from the directory; (2) Plaintiff getting Defendant to admit that he was not entirely accurate at his deposition when he testified that Mr. Kaminsky put in the values found in the Addendum since he came up with the values (guesstimates) and Mr. Kaminsky merely inserted them without verifying their accuracy; (3) Plaintiff's testimony that it was a new Subaru Defendant purchased for her prior to the marriage while Defendant testified that it was used; (4) Plaintiff's testimony that Defendant told her to stop working in 1992 whereas Defendant reluctantly admitted at one point that he may have told her she did not need to work; (5) Defendant's denial that he gave Plaintiff the copies of the Antenuptial Agreement based on his recollection that Mr. Steinberg provided the copies to Mr. Marichal as compared to Mr. Steinberg's testimony that he believed he gave the copies of the Antenuptial Agreement to Defendant to give to Plaintiff; (6) whether the parties spoke exclusively in English when they first met in the mid 1980's or if Defendant spoke broken Spanish to her (it is undisputed that Plaintiff took English courses and spoke in English to Defendant, she just was not fluent); (7) Mr. Steinberg's testimony that he did not believe any changes were proposed to the draft Antenuptial as compared to Defendant and Mr. Marichal's testimony that the believe a change was made with regard to life insurance. In addition, a lot of time was spent trying to show that Defendant entirely supported Plaintiff during the period 1992–1997 whereas Defendant contended he provided some support. The Court has accepted for purposes of this Decision that Defendant completely supported Plaintiff from 1992–1997. However, because Plaintiff provided no evidence that Defendant threatened to discontinue his support of Plaintiff if she refused to enter into the Antenuptial Agreement, and because throughout this period of financial support, Plaintiff was confident enough to twice refuse Defendant's marriage proposals with no financial repercussions, whether or not Defendant told Plaintiff to quit working and whether or not Defendant partially or completely supported Plaintiff, given the other circumstances surrounding the execution of the Antenuptial evidencing the fairness of the process, cannot support Plaintiff's claim of overreaching. Based on the testimony from Plaintiff and Defendant that was consistent, from 1992–1997, Defendant supported Plaintiff in the amount of approximately $1.000 a month (Tr. at 358–359). According to Defendant, this was why the Antenuptial Agreement had a maintenance figure of $1,000 a month.
Plaintiff attempts to shift the burden on Defendant to show that the Agreement was free from fraud, deception or undue influence given that at the time of the Antenuptial's execution, Plaintiff had only one year formal education, she did not speak English, and she was entirely dependent upon Defendant for her financial support given the promises he made to her and his request that she stop working in 1992.
Plaintiff is correct that if the party challenging the enforceability of a prenuptial agreement establishes a "fact-based particularized inequality" (i.e., that the premarital relationship between the parties manifested probable undue and unfair advantage [ Matter of Greiff , supra 92 NY2d at 343 ] ), the burden may be shifted to the party seeking to uphold the prenuptial to disprove fraud or overreaching ( Matter of Fizzinoglia , 118 AD3d 994, 996 [2d Dept 2014], citing Matter of Greiff, supra 92 NY2d at 346 ; Petracca v. Petracca , 101 AD3d 695, 698 [4th Dept 2012] ). However, the cases in which the courts have shifted the burden involve facts evidencing clear cases of overreaching. By contrast, the Appellate Division, Second Department in Matter of Barabash (84 AD3d 1363 [2d Dept 2011] ) held that the fact that the wife did not have independent counsel was insufficient to shift the burden. As set forth herein, the Court finds that the execution of the Antenuptial Agreement was entirely fair. Accordingly, there is no basis to shift the burden to Defendant to disprove fraud or overreaching.
It is Plaintiff's position that Defendant made sure that she was not represented by competent counsel and that no negotiations occurred over the Antenuptial Agreement (Plf's Post–Trial Mem. at 11, citing Tr. at 100, 102, 103). With regard to the competency of Plaintiff's counsel, Plaintiff argues that while Defendant obtained a referral for his counsel (Plf's Mem. at 10, citing Tr. at 22, 38–39, 45, 99), he and Plaintiff chose Plaintiff's attorney through a directory of attorneys and the selection was based on the attorney's location and the attorney's ability to speak Spanish (id. at 3). With regard to Defendant's financial disclosure, Plaintiff asserts that the Addendum (reflecting assets in the amount of $13,116,116 as of December 1, 1996), attached to the Antenuptial Agreement contained a list of assets with values "guesstimated" by Defendant and not verified by Defendant's accountant (Herbert Kaminsky) and the Addendum did not include Defendant's income or the properties he partially owned in Greece (id. at 11 citing Tr. at 70–71, 86–88).
Article X of the Antenuptial Agreement provides
The Husband and Wife have fully disclosed to each other all of their property and assets presently owned by each of them and all of their income derived from these assets and from all other sources. The Husband's financial statement is annexed hereto as Exhibit "A".
As set forth supra , a party challenging a marital agreement on grounds of overreaching or unconscionability bears the very high burden of showing that it is manifestly unfair and that this unfairness was the result of overreaching on the part of the party seeking to uphold the prenuptial agreement ( Christian, supra 42 NY2d at 72–73 ; Bronfman v. Bronfman , 229 AD2d 314 [1st Dept 1996] ). Turning to Plaintiff's last argument first, it is well settled that the failure of a spouse to fully disclose his or her financial condition is insufficient to set aside a prenuptial agreement absent active concealment or misrepresentation sufficient to constitute fraud (Strong, supra ; Panossian v. Panossian , 172 AD2d 811 [2d Dept 1991] ; Eckstein v. Eckstein , 129 AD2d 552 [2d Dept 1987] ). In Anonymous v. Anonymous (123 AD3d 581, 583 [1st Dept 2014] ), the Appellate Division, First Department held that "Defendant's failure to disclose the entirety of his financial interests is ... not a reason to vitiate the contract ... Plaintiff was well acquainted with defendant's assets, and she specifically acknowledged in the agreement the amount she would receive ‘are so significantly less than either [defendant's] assets or annual income that the precise amount of [his] assets and income is irrelevant to her decision to enter into this Agreement and the enforceability of this Agreement’ " ( id. at 583 ). Likewise in Gottlieb, supra , the Appellate Division, First Department found that the fact that wife was not aware of the husband's income at the time she executed the agreement, was not, in and of itself, enough to set aside the agreement especially since the wife lived with the husband and was aware of his luxurious lifestyle ( Gottlieb, 138 AD3d at 36, citing Strong v. Dubin , 48 AD3d 232 [1st Dept 2008], Matter of Finnizoglia , 118 AD3d 994, 996 [2d Dept 2014], affd 26 NY3d 1031 [2015] ). In addition, the Court found that the substantial financial disparity between the parties was fully disclosed at the time the agreement was executed (id., citing Smith v. Walsh–Smith , 66 AD3d 534 [1st Dept 2009], lv denied 14 NY3d 704 [2010] ).
The same holds true in this case. Plaintiff was provided the Addendum at the time she signed the Antenuptial Agreement based upon the credible testimony of: (1) Mr. Marichal (Tr. at 273); and (2) Mr. Sulner (Tr. at 333 [testimony concerning how the imprints from the signatures on the acknowledgment page were found on the first two pages of the Addendum]; see also Def's Exs. C and E). The fact that the Addendum did not reflect (1) Defendant's income (Tr. at 72); or (2) the value of some properties in Greece in which he held a 1/3 or 1/4 interest (Tr. at 70–71); does not provide a basis for this Court's vitiating the Antenuptial Agreement. Here, given the vast disparity of Plaintiff's and Defendant's wealth and Plaintiff's knowledge of Defendant's financial stature in life, even if the values of the Addendum were understated by millions of dollars, Plaintiff was apprised that Defendant held over $17 million in assets (without considering deductions) and no evidence was adduced that she made any further inquiry of Defendant concerning his finances or Defendant fraudulently concealed his assets.
Indeed, Plaintiff testified that she never asked Defendant how much he made in terms of income because she believed that was private.
Furthermore, Plaintiff's reliance on: (1) Defendant's inconsistent testimony concerning whether he or Mr. Kaminsky came up with the values of Defendant's holdings on the Addendum; (2) that the values were "guesstimates" that had not been verified and were understated; is misplaced given the disclaimer by Mr. Kaminsky as well as Plaintiff's acknowledgment contained in the Antenuptial Agreement. Thus, the plain and unambiguous terms of the parties' Antenuptial Agreement provide that "EACH OF THE PARTIES HAS HAD AN OPPORTUNITY TO INQUIRE ABOUT THE INCOME AND ASSETS OF THE OTHER PARTY AND THE HUSBAND HAS PROVIDED THE WIFE WITH A CURRENT STATEMENT LISTING ALL OF HIS ASSETS, (WHERE HE HAS "GUESSTIMATED" THEIR VALUE), BUT NEITHER IS ENTERING INTO THIS AGREEMENT IN RELIANCE OF ANY STATEMENTS OR REPRESENTATIONS BY THE OTHER AS TO HIS OR HER INCOME OR ASSETS" (Antenuptial Agreement, Article XIII at ¶ 2). As Plaintiff testified, she was well aware, prior to the parties' marriage, that Defendant was in business with his sister and that they held real estate together. The value of Defendant's holdings as set forth on the Addendum, prior to subtracting liabilities and taxes, totaled over $17 million. By contrast, it is undisputed that Plaintiff had no assets except for the new or used Subaru. As such, Plaintiff was well aware of her finances as compared to Defendant's vast wealth and whether or not the amount of $17 million was understated by millions of dollars made no difference in the equation. In short, Plaintiff presented no proof that Defendant fraudulently concealed his income from her (indeed Plaintiff admitted she never asked Defendant about his income because she viewed such matters as private) or that he fraudulently concealed the extent of his wealth as reflected in the Addendum.
The accountant's cover page expressly states that the Addendum is a compilation based on information provided by management that had not been audited or reviewed by the accountant—i.e., the values had not been verified by the accountant.
The Court does not agree with Plaintiff's alternative argument that even if she was represented by counsel, the representation was inadequate. In this regard, the Court rejects Plaintiff's contention that her counsel was somehow inadequate because: (1) there was no negotiation over the terms; (2) Defendant assisted Plaintiff in picking the attorney from a directory while Defendant's counsel was chosen based on a referral from Defendant's trusted real estate counsel, and (3) that Mr. Marichal did not sufficiently advise Plaintiff of her rights. Indeed, Plaintiff acknowledged in the Antenuptial Agreement that she was satisfied with her representation of counsel, which rebuts her position that she was inadequately represented ( Kazimierski v. Weiss , 252 AD2d 481 [2d Dept 1988] ) and a person is bound to read what they sign ( Ackerman v. Ackerman , 120 AD3d 1279 [2d Dept 2013] ).
Plaintiff relies heavily on Defendant's admission that he obtained his counsel (Mr. Steinberg) from a referral from his real estate attorney Ira Cooper (Tr. at 22) while Plaintiff's attorney was selected from a directory of attorneys (Plf's Post–Trial Mem. at 15, citing Tr. at 35–36; 38–39). As discussed herein, there is no evidence that Mr. Marichal was inexperienced in the area of matrimonial law and prenuptial agreements. Instead, Mr. Marichal had been graduated from Brooklyn Law School for 16 years at the time of the Antenuptial Agreement and he had more than sufficient experience in the areas of matrimonial law and prenuptial agreements.
Article XI of the Antenuptial Agreement provides
The Wife acknowledges she has sought and obtained legal advice from counsel of her own selection, Hector Atilio Marichal, Esq. of 37–21 75 th St., 2nd Floor, Jackson Heights, NY 11372, and has been fully informed of her legal rights and obligations with respect to this agreement and the subject matter thereof.
It is undisputed that the attorney hired to represent Plaintiff was a native Spanish speaker who was also spoke English and that he had been practicing in the area of matrimonial law for 16 years by 1997. Furthermore, Mr. Marichal credibly testified that by 1997 he had handled somewhere between 60–100 prenuptial agreements (Tr. at 229–233). While Marichal could not recall the specifics surrounding the execution of the Agreement (e.g. , he could not recall if he met with Plaintiff more than once and if there were any changes made to the Agreement [Tr. at 245–246] ), he did recall meeting with Plaintiff based on her distinctive beauty mark (Tr. at 235–236) and he testified as to his custom and practice with regard to prenuptial agreements, which was to explain to his clients the purpose of them, the legal effects of the provisions, and the legal consequences of signing a prenuptial agreement versus not signing a prenuptial agreement (Tr. at 239–240). He further testified that if the client was Spanish speaking, he would primarily speak to them in Spanish (which included translating the provisions of the prenuptial agreement) (Tr. at 241). When questioned about the types of provisions found in this Antenuptial Agreement, Mr. Marichal testified that it was his custom and practice to explain the meaning and effect of such provisions to the client (Tr. at 284–286, 289–290). Given that 20 years had past since the signing of the Antenuptial Agreement in this case, Mr. Marichal testified that he no longer had the file (Tr. at 281) and, therefore, he could not recall: (1) whether he had met with Plaintiff more than once (Tr. at 263–267); (2) whether any changes were proposed although he thinks there was a change made with regard to insurance (Tr. at 245–246, 256, 258–259); (3) whether he advised Plaintiff against signing it (Tr. at 281); and (4) whether he knew Plaintiff's financial circumstances and whether he asked for back up to support the values in the Addendum (e.g., Defendant's bank statements or tax returns) (Tr. at 280–281). With regard to his acknowledgment of Plaintiff's signature, Mr. Marichal testified as to his custom and practice, which was that the client had to produce photo identification and sign the agreement in his presence after which he would notarize their signatures (Tr. 241–245). In addition, Mr. Marichal's testimony that: (1) he was retained by Plaintiff (Tr. at 242); (2) he never knew of met Defendant prior to the trial (Tr. at 248); and (3) he had no business relationship with Mr. Steinberg, Mr. Rapp or Mr. Kaminsky, was left unrefuted (Tr. at 248–249). However, Mr. Marichal did testify that his friend was Defendant's other real estate attorney Charles Levas, Esq., but he was unaware of the connection (Tr. at 288). In sum, there was "[n]o evidence adduced to support ... that the attorney that represented the plaintiff at the signing of the agreement was there only at the connivance of the defendant in order to legitimize the agreement ...." ( Paruch v. Paruch , 140 AD2d 418 at 420–421 ). Further, the fact that Plaintiff may have assisted Defendant is selecting Mr. Marichal and that he paid for Mr. Marichal's services does not, without more, establish overreaching on Plaintiff's part ( Colello v. Colello , 9 AD3d 855, 858 [4th Dept 2014] ; Smith v. Smith–Walsh , 66 AD3d 534, 535 [1st Dept 2009], lv denied 14 NY3d 704 [2010] ; Strong, supra ; Barocas v. Barocas , 94 AD3d 551 [1st Dept 2012], lv dismissed 19 NY3d 993 [2012] ).
Mr. Steinberg testified that he did not believe there were any changes or negotiations (Tr. at 99–100), but he also stated that while he did not recall any negotiation, it was nevertheless possible (Tr. at 109). Defendant testified that he recalled that there was a change with regard to the need for a life insurance policy which was requested by Mr. Marichal (Tr. at 47). Defendant's testimony was corroborated by Mr. Marichal in this regard (Tr. at 245–246).
Plaintiff presented no evidence that would support a finding of overreaching or duress by Defendant ( Garner v. Garner , 46 AD3d 1239 [3d Dept 2007], citing Lounsbury v. Lounsbury , 300 AD2d 812, 815 [3d Dept 2002] ; Lynons v. Lyons , 289 AD2d 902, 904 [3d Dept 2001], lv denied 98 NY2d 601 [2002] ; Colello, supra ). Defendant's actions did not " ‘deprive [Plaintiff] of the ability to act in furtherance of [her] own interests ‘... or the ‘ability to exercise .... free will’ " ( Morand v. Morand , 2 AD3d 913, 914 [1st Dept 2003] ). Further, Plaintiff's financial dependency on Defendant did not cause Plaintiff to be coerced into marrying Defendant and signing the Antenuptial Agreement since during the period Plaintiff was financially dependent on Defendant, she twice rejected his marriage proposals yet Defendant continued to provide her with support in the range of $800 to $1,000 a month.
Based on the evidence presented, Plaintiff was under no compulsion to marry Defendant. Further, the timing of the signing of the agreement reflects that it was not a shotgun signing on the eve of the wedding (i.e., it was signed more than a month before the wedding). Furthermore, neither Defendant nor his attorney was present at the time of Plaintiff's execution, which further demonstrates the fairness of the process. Thus, Plaintiff had time to reflect on the purpose and effect of the Agreement and could have sought other counsel if she was dissatisfied with Mr. Marichal's representation of her. Likewise, her claims of fraud, duress or overreaching are rebutted by her acknowledgment to the contrary in the Antenuptial Agreement ( Cosh v. Cosh , 45 AD3d 798, 800 [2d Dept 2007] ).
ARTICLE XIII, entitled "Legal Effect of the Agreement" provides
1. Both parties acknowledge that this is a fair agreement and is not the result of any fraud, duress, coercion, pressure or undue influence exercised by either party upon the other or by any other person or persons upon either. 2. The parties further acknowledge that the provisions hereof are fair and reasonable, after due consideration of all factors which a Court is obliged to consider pursuant to the provisions of the Domestic Relations Law of the State of New York, Section 236.
Plaintiff failed in presenting proof that: (1) Defendant coerced or tricked Plaintiff into signing the Agreement; or (2) that anyone threatened her in any way to sign the Agreement, or (3) that Defendant was guilty of overreaching in any other way. In Matter of Sunshine v. Sunshine (51 AD2d 326 [1st Dept 1976], affd sub nom Matter of Sunshine's Estate , 40 NY2d 875 [1976] ), the Court found that petitioner's alleged lack of a complete understanding of English, her alleged lack of a higher education, her alleged lack of separate counsel, and the fact that she did not read or receive a copy of the agreement did "not ... lead to the conclusion that she was a victim of fraud or overreaching ...." (Matter of Sunshine , 51 AD3d at 328). Here, while Plaintiff was uneducated and may not have been completely fluent in the English language, she had counsel who was Spanish speaking who explained the provisions to her. Due to the number of years since Mr. Marichal met with Plaintiff, he could not recall the specifics of his representation of her but he described his custom and practice of how he would advise a client with regard to prenuptial agreements. The Court believes Defendant's version, which was that he had advised Plaintiff of the need for a prenuptial agreement because he owned businesses and properties with family members and because he wanted to protect his separate assets for his child and his grandchildren. The Court believes that Mr. Marichal advised Plaintiff of the impact of the Antenuptial Agreement and that Plaintiff chose to sign it believing that Plaintiff would continue to be generous with her and her family members as he had been over the course of their courtship.
Given Plaintiff's lack of formal education and the issue over her complete fluency in the English language, while failure to have legal representation, standing alone, is usually insufficient to provide a basis for invalidating the agreement (Matter of Barbash , 84 AD3d 1363 [2d Dept 2011] ; Fosberg v. Fosberg , 219 A2d 615 [1995] ; Panossian v. Panossian , 172 AD2d 811 [2d Dept 1991] ), if the facts were as Plaintiff contends (i.e., that she was not represented by counsel who translated the agreement to her), the Court would likely have determined that there was overreaching requiring that the Antenuptial Agreement be set aside.
Based on the transcript of the conversation Plaintiff recorded of Defendant on March 20, 2016 (Plf's Ex. 2) as well as the evidence adduced at trial concerning Defendant's paying for Plaintiff's grandchild to go to a private school, his renting a home for her relatives from the Dominican Republic to live, and the admissions made by Plaintiff's daughter as to Defendant's generosity, the Court believes that Plaintiff was correct in her belief that Defendant would be generous with Plaintiff and her family, at least for as long as the couple remained married.
Accordingly, because the circumstances surrounding the execution of the Antenuptial Agreement confirm that Defendant did not engage in fraud, undue influence or overreaching, there is no requirement for further inquiry. Nevertheless, Plaintiff has failed to establish that the terms of the equitable distribution found in the Antenuptial Agreement were so manifestly unfair as to shock the conscience.
There is no question that the Antenuptial Agreement is one-sided. However, because most of Plaintiff's real estate holdings and other business (such as the pharmacy) were acquired prior to marriage, implicit in Plaintiff's theory of unconscionability is that the marital component of these properties would have had significant value. However, at least with regard to the real properties, Plaintiff would have had significant difficulty in showing that any appreciation in the value of Defendant's separate property was due to marital effort, rather than market factors, and that her direct or indirect efforts should be recognized (see, e.g., Lee v. Lee , 48 AD3d 377 [1st Dept 2008] ; Jorsan v. Jorsan, 134 AD2d 486 [2d Dept 1987] [expert witness who testified as to amount of appreciation of building failed to clarify the amount of the appreciation was due to the direct or indirect efforts of the nonowner spouse rather than " ‘to random market fluctuations [independent] of active management ... by either spouse"]; see also McCann v. McCann , 142 Misc 2d 1083 [Sup Ct, Suffolk County 1989] ; Romano v. Romano , 139 AD2d 973 [2d Dept 1987] ). In any event, the Court does not believe that Plaintiff has shown that the bargain struck in the Prenuptial Agreement, which was knowingly made, was so unfair and outrageous that no person in her senses would have agreed to it or that no fair person would have proposed it. Here, Defendant sought to protect his separate property from any claim and Plaintiff agreed to this, perceiving granting him such protection was fair and appropriate. There was no way to know, at the time of the Antenuptial Agreement, how long the marriage would last and, if Plaintiff wished to gain something from Defendant's separate property, she could have negotiated a payment. While the effect of the Antenuptial Agreement (as of the date of signing) theoretically could have left Plaintiff with no equitable distribution, it is similar to facts of Barocas and Colella in terms of the inequities involved. Thus, while the deal struck is one-sided and inequitable in that Defendant will receive the lion's share of the assets, as in Barocas and Colella , because the execution of the Antenuptial was in all respects fair, the Antenuptial Agreement was not so manifestly unfair (at the time of its signing) as to shock the conscience of the Court.
From the trial testimony, only two properties (other than the marital residence) were purchased subsequent to the marriage.
The cases on which Plaintiff relies are distinguishable because there was inequality between the parties calling into question the fairness of the process. For example, in Petracca, supra, at issue was a post-nuptial agreement that was entered into after plaintiff wife had suffered a miscarriage after her 42nd birthday. Plaintiff testified that defendant had bullied her into signing the agreement by threatening that they would not have any children and their marriage would be over if she did not sign it. Plaintiff further testified that she had no lawyer representing her with regard to its execution. According to plaintiff, the parties' agreement to have children was an important factor in her decision to marry defendant. The terms of the agreement were that plaintiff waived her interest in a home that was purchased subsequent to the marriage at a cost of $3.1 million and renovated at a cost of $3–5 million. Plaintiff also (1) waived her interest in any business in which defendant had an interest, including any appreciation of those businesses (valued at over $10 million); (2) waived her right to defendant's estate including her elective share; and (3) agreed to receive maintenance in an amount of $24,000 to $36,000 per year for a term dependent upon the length of the marriage. At the time the parties entered into the agreement, defendant valued his net worth at $22 million, which plaintiff claimed was undervalued by $11 million. In that case, Appellate Division, Second Department noted that the trial court found the plaintiff's testimony concerning the circumstances leading up to the execution of the prenuptial agreement more credible and that plaintiff had met her burden of showing a fact-based particularized inequality, particularly given that the terms of the agreement were manifestly unfair with regard to the magnitude of the rights she waived (i.e., the right in the marital residence that was in both of their names and inheritance rights), which gave rise to an inference of overreaching.
Likewise, C.S. v. L.S., supra is also distinguishable. In C.S. , the husband told his counsel to find counsel for his future wife because she was having difficulty locating her own counsel, but in actuality, the husband had never advised the wife that she should seek independent counsel. Thus, the husband's counsel hired the wife's attorney, who was husband's attorney's office suite-mate. According to the testimony of wife's attorney, he did not recall reviewing any financial information of the husband or wife and he did not ask her any questions concerning her financial situation or background. The attorney further testified that he merely reviewed the terms of the prenuptial with her and advised her it was non-negotiable and she had to either take it or leave it. The attorney also recalled that the wife was crying.
In C.S. , relying on the instruction from the Court of Appeals in Matter of Greiff to gauge the nature of the relationship at the time the parties executed the prenuptial to decide on whom the burden of proof should lie, the court decided to shift the burden to husband to show that the agreement was free from fraud, undue influence or deception. The reasons for the shift were that the wife was totally financially dependent upon the husband and was raising two young children. In addition, she had given up her rental, sold her furniture and she was "financially vulnerable and disadvantaged when Husband informed her at the eleventh hour that she would be driven to his lawyer's office to sign a prenuptial agreement" ( C.S., supra 2013 NY Slip Op 51624[U] at * 5). However, the court noted that simply because the effect of the prenuptial was to leave the wife financially destitute, that was not the end of the inquiry. In this regard, the court acknowledged the case of Barocas, supra , where the First Department held that the agreement was not unconscionable where one spouse of a 15 year marriage retained property worth $4.6 million while the other spouse only got an IRA worth $30,550. In Barocas , the Court stated that "[a]lthough application of the provisions would result in the plaintiff retaining essentially all the property, courts will not set aside an agreement on the ground of unconscionability, where inequitable conduct was lacking and simply because in retrospect, the agreement proves to be improvident or one-sided" ( Barocas, supra 94 AD3d at 551 ).
In C.S. , under the prenuptial agreement, the wife would only receive the gifts given to her during the marriage and the court found that given the magnitude of what wife relinquished in terms of property rights in after-acquired real and personal property and her waiver of inheritance rights and the vast disparity in their net worth and earnings, wife demonstrated that the terms of the agreement were manifestly unfair which gave rise to an inference of overreaching. The trial court further found that the husband failed to meet his burden of disproving overreaching given that he drove his wife to his attorney's office, he gave her an hour to consider it, and she had no right to negotiate it. In C.S. , the trial court nevertheless stated that "[o]ne can predict with confidence that if each spouse retains a lawyer of his or her own choosing, is provided with a proposed agreement with sufficient time to give it due consideration to the serious consequences of the proposed terms, is given fair and adequate disclosure, and is presented with an agreement that does not scream inequity or leave one party practically destitute, it will be upheld" (id. at *6). In affirming the lower court's determination to shift the burden to the husband, the Appellate Division, Second Department, expressly relied on the manifest unfairness and the procedural unconscionability surrounding the signing of the prenuptial. Thus, the Court held "[t]he circumstances surrounding the signing of the agreement support a finding that the unfairness of the agreement was the product of the defendant's overreaching, including that the agreement was presented to the plaintiff two days before the wedding as ‘take-it or leave-it’ when she had already moved in with her children in the marital home" (Smith, supra, 120 AD3d at 935).
Here, Plaintiff was permitted to retain an attorney of her choosing who was well-versed in prenuptial agreements and had 16 years of experience in matrimonial law. Mr. Marichal advised Plaintiff of the consequences of signing the Antenuptial Agreement (i.e., what she would be entitled to under the Antenuptial Agreement as compared to what she could expect to get without it [Tr. at 239–240] ). He read to her the various acknowledgments contained in the Antenuptial Agreement and the legal consequences of these acknowledgments. Plaintiff was provided the Addendum which listed assets for Defendant in an amount exceeding $17 million (whether or not it was understated) and the fact that she did not inquire of Defendant his income is of no consequence. Further, the Antenuptial Agreement was signed over a month before the wedding. And while Plaintiff was financially dependent upon Defendant, she had twice before while she was financially dependent upon Defendant declined his marriage proposals without any repercussion. Plaintiff presented no evidence to show that if she had declined to sign the Antenuptial Agreement, Defendant would cut her off financially. Accordingly, because Plaintiff has failed to demonstrate the type of fact-based particularized inequality present in the cases where the burden was shifted, the high burden remained on Plaintiff to prove fraud, duress, overreaching or unconscionability.
The Court finds the testimony of Defendant and Mr. Marichal with regard to the negotiation of a $100,000 life insurance policy to be credible.
Finally, Plaintiff has failed to sustain her burden of establishing by clear and convincing evidence that Defendant fraudulently induced her into entering into the Antenuptial Agreement. To prove fraud, a party must show by clear and convincing evidence of a misrepresentation or a material omission of fact which was false and known to be false by the other party, made for the purpose of inducing the individual to rely upon it, justifiable reliance on the misrepresentation or material omission, and injury (Whitehall v. Town House Equities, Ltd. , 8 AD3d 367 [2d Dept 2004] ). Here, the Court has not credited Plaintiff's story that she signed a one-page piece of paper in a hotel room one or two years before the parties' wedding based on Defendant's oral representation that he would tear it up after he showed it to his sister (Tr. at 385–386, 388) based on the overwhelming evidence supporting Defendant's version of how the Antenuptial Agreement was executed.
Plaintiff's suggestion that Defendant must have inserted the purported single piece of paper that she had signed in the hotel room into the Antenuptial Agreement was rebutted by Mr. Sulner's convincing opinion that the properties, printing, formalities and staple holes of the 14 pages of paper were consistent such that a single piece of paper could not have been inserted (Def's Ex. C and Tr. at 335–340). Furthermore, Mr. Sulner's opinion concerning the imprint of Plaintiff's signature on the notary/acknowledgment page completely undermined Plaintiff's single page theory.
Further, any claim by Plaintiff that she is not bound based on some oral side agreement between the parties that they had no intent to be bound by the Antenuptial Agreement and that was only executed so that it could be shown to Defendant's sister is rebutted by Plaintiff's express disclaimer that she relied on any promises that were not contained in the Antenuptial Agreement ( Braha v. Braha , 2014 NY Slip Op 51532[U], 45 Misc 3d 1211[A] [Sup Ct, Kings County 2014] ; see also Weinstein v. Weinstein , 36 AD3d 797 [2d Dept 2007] ). Again, Plaintiff's other argument for her claim of fraud, which is that she never signed the Antenuptial Agreement (Tr. at 397–298), is not supported by the evidence.
The merger clause found in Article XIII, paragraph 2, which provides that:
This agreement is entire and complete and embodies all understandings and agreements between the parties and is INTENDED TO SUPERSEDE ANY AND ALL RIGHTS EITHER PARTY MIGHT HAVE TO MAINTENANCE, SPECIAL RELIEF, COUNSEL FEES, EXPERT FEES OR EQUITABLE DISTRIBUTION ... THERE ARE NO REPRESENTATIONS, PROMISES, WARRANTIES, COVENANTS OR UNDERSTANDINGS OTHER THAN THOSE EXPRESSLY SET FORTH IN THIS AGREEMENT.
With regard to what Plaintiff can expect to receive, it is likely that either the parties will come to a reasonable settlement of the amount Plaintiff should be awarded in maintenance or the Matrimonial Court will determine (based on the guidelines and any factors necessitating a deviation from those guidelines) the proper amount and duration of maintenance. Further, the parties will likely agree, or the Matrimonial Trial Court will likely require, that Plaintiff be awarded her separate property totaling approximately $750,000 unencumbered—i.e., that Defendant will be required to refinance the liens on which Plaintiff is named a party so that her bank accounts may become unencumbered and Defendant will be required to indemnify and hold Plaintiff harmless on all such liens until the refinancing is accomplished.
CONCLUSION
For all of the foregoing reasons, the Court finds the Antenuptial Agreement dated July 3 and 8, 1997 valid and enforceable. The parties and their counsel are directed to appear before Court Attorney Referee Carol Swidler on March 8, 2018 at 11:30 a.m. to confirm that all discovery is complete so that a trial readiness order may be issued and a trial date set. Finally, counsel is directed to contact this Court's Senior Part Clerk, Peter McIlmurray (914) 824–5446 to pick up their trial submissions/exhibits and counsels' failure to retrieve their submissions within 30 days of this Decision will result in the submissions/exhibits being discarded.
The foregoing constitutes the Decision of this Court.