Opinion
03-202917.
Decided September 2, 2005.
Procedural History
The underlying matrimonial action was commenced by the filing of a summons and complaint on September 29, 2003. Therein, plaintiff/husband sought, inter alia, a divorce on enumerated grounds and enforcement of a prenuptial agreement executed by the parties on April 13, 1990. Defendant served a verified answer, same which contained, inter alia, counterclaims seeking to set aside the parties' prenuptial agreement on the grounds of fraud, duress, unconscionability and lack of independent counsel.
On or about April 6, 2004, defendant moved via notice of motion to set aside the prenuptial agreement executed by the parties on April 13, 1990. Plaintiff, naturally, opposed same. The motions were full submitted on June 29, 2004 and thereafter, pursuant to the Order of the undersigned Justice, a hearing was scheduled to afford the Court the opportunity to observe witnesses and access their credibility and review all evidence presented.
A hearing commenced on December 2, 2004 and continued on subsequent adjourned dates ultimately concluding on February 28, 2005. Both plaintiff and defendant testified on their own behalf. The following witnesses were called: Jean M. Kestel, Esq., the attorney whom prepared the prenuptial agreement which was the subject of the hearing and Cynthia Barker, defendant's sister. (No credence was given to the testimony of Cynthia Barker as same was irrelevant to the issues which were the subject matter of the hearing).
The Court has had a full opportunity to consider the evidence presented with respect to the issues in this proceeding, including the testimony offered and the exhibits received. The Court has further had an opportunity to observe the demeanor of the witnesses called to testify and has made determinations on issues of credibility with respect to these witnesses. The Court now makes the following findings of fact and conclusions of law.
Findings of Fact
The plaintiff/husband and defendant/wife were married on April 13, 1990. There is one minor child of the marriage. The plaintiff/husband, Dr. Joseph Werther, a pediatrician, and defendant/wife, Kristina Werther, first met in or about 1985. They became romantically involved and began dating in or about 1989 while plaintiff was still married to his then current wife, Irene Werther, whom he was engaged in a divorce proceeding with. The defendant had been divorced four times prior to meeting the plaintiff and apparently sympathized with his current marital situation and thus blossomed their romance. The parties relationship grew and they planned to get married shortly after plaintiff's divorce from his first wife was resolved and Judgment of Divorce issued. Plaintiff's divorce from his first wife was ultimately resolved via stipulation of settlement executed on December 21, 1989 at the office of his attorney, Jean M. Kestel.
Plaintiff, who presented as a very credible witness, felt his divorce settlement with his first wife provided her with a tremendous amount of money inclusive of maintenance, child support and equitable distribution of his medical license. Plaintiff had discussed theses issues and his attendant concerns with the defendant in contemplation of their future plans. As such, in contemplation of his future marriage to the defendant, plaintiff asked his attorney, Jean M. Kestel, to prepare the prenuptial agreement at issue. Plaintiff made this request to Ms.Kestel while at her office on December 21, 1989 subsequent to executing his stipulation of settlement with his first wife.
Soon thereafter, Jean M. Kestel, Esq., whose testimony was given credence by the Court, prepared the requested prenuptial agreement and scheduled a meeting with the plaintiff and defendant to discuss the agreement she had prepared. The meeting was scheduled for December 29, 1989 and was attended by the plaintiff and defendant. At that meeting, Ms. Kestel provided the plaintiff and defendant with copies of the prenuptial agreement she prepared in response to plaintiff's request and discussed the merits of the agreement, including plaintiff's assets, with the parties. Additionally, Ms. Kestel explained to defendant that she represented the interests of her client, the plaintiff, and as such the defendant should seek independent counsel of her own choosing to review the prenuptial agreement prepared by Ms. Kestel. Defendant did not present as a credible witness, and no credence was given to her testimony that she never met with Ms. Kestel to discuss the prenuptial agreement at issue and that she was presented with the prenuptial agreement at issue for the first time on the morning of the parties' wedding day on April 13, 1990.
The prenuptial agreement provides, in relevant part, the following:
1.Plaintiff will execute a deed transferring his residence, owned by him separately before the marriage, to the defendant individually, and that same shall thereafter be deemed marital property. Plaintiff will be entitled to a $65,000.00 reimbursement he paid on the purchase price in addition to his equitable share of the premises;
2.Plaintiff will retain sole and exclusive ownership of his medical license, medical practice, medical building, corporate holdings and defendant waives any and all claims to same;
3.Plaintiff waives any child support payments to defendant;
4.Plaintiff and defendant shall each retain sole and exclusive ownership of their respective personal and separate property they had prior to the marriage;
5.All property acquired after the date of the marriage, other than appreciation in separate assets, shall be divided equally among the parties;
6.The parties opted out of any rights and privileges under DRL § 236.
Shortly after the parties met with Ms. Kestel on December 29, 1989, the parties scheduled their wedding for April 13, 1990. The plaintiff reinforced to defendant, Ms. Kestel's strong suggestion that she seek independent counsel to review the prenuptial agreement that Ms. Kestel had prepared, reviewed with them and provided them copies of. Defendant acknowledged to plaintiff she would do so. On at least six occasions since December 29, 1989 until the date of the wedding, the plaintiff raised the issue regarding execution of the prenuptial agreement with the defendant. On each occasion, the defendant responded that she intended to sign the prenuptial agreement and simply had not done so yet due to time constraints caused by the planning and preparation of the parties' upcoming wedding.
On April 13, 1990, the parties' wedding day, the plaintiff and defendant had not executed the prenuptial agreement. As such, in the forenoon of that day, the parties went to the EAB bank branch near their residences and executed the prenuptial agreement at issue before a Notary Public, thus completing the formalities associated with the preparation and execution of said agreement. Thereafter, the parties were married at Rockville Centre Village Hall, by Mayor Eugene Murray. A reception followed several hours later.
On July 24, 1990, pursuant to the terms of the prenuptial agreement, plaintiff executed a deed transferring his residence, owned by him separately before the marriage, to the defendant individually.
Conclusions of Law
Statute of Limitations
The Court initially notes that defendant's action to set aside the prenuptial agreement is not time-barred. Indeed, an action to set aside a prenuptial agreement arises upon the signing of the document and if such an action is not commenced within six years of the execution of the agreement, the agreement is, pursuant to CPLR § 213(1), barred by the statute of limitations. However, in the instant matter, plaintiff's is seeking enforcement of the prenuptial agreement in order to avoid equitable distribution and defendant, via counterclaim, is defensively seeking nullification of the same agreement. In such a procedural context, the challenge to the agreement arose out of and is directly related to plaintiff's claim that the agreement precludes or limits equitable distribution of his assets. Thus, while an independent action by defendant to set-aside the prenuptial agreement would be time-barred, that same claim asserted defensively which arises from the same transaction asserted in the complaint is not time-barred. ( Bloomfield v. Bloomfield, 97 NY2d 188).
Formalities of the Agreement
There is no question that the prenuptial agreement was properly executed with the appropriate formalities dictated by DRL § 236, Part B(3), to wit: 1. it is in writing; 2; subscribed by the parties and 3. acknowledged or proven in a manner required to record a deed. (DRL § 236, Part B(3); Goldfarb v. Goldfarb, 231 AD2d 491 [2nd Dept. 1996]).
Plaintiff made much of the fact that, in compliance with the agreement, he executed a deed transferring his residence (owned by him separately before the marriage) to the defendant individually and that same was the "bargained for consideration" of the prenuptial agreement. Briefly, the Court notes that consideration is not an element required by DRL § 236, Part B(3). A properly executed agreement and a valid marriage vitiates the need for consideration. ( See, Colello v. Colello, 9 AD3d 855 [4th Dept. 2004]).
The Prenuptial Agreement
A duly executed prenuptial agreement is given the same presumption of legality as any other contract, commercial or otherwise, and is not, regardless of the fairness and reasonableness of the agreement, burdened by a presumption of fraud arising from the subsequent confidential relationship of the parties. ( Eckstein v. Eckstein, 129 AD2d 552 [2nd Dept., 1987]; Panossian v. Panossian, 172 AD2d 811 [2nd Dept. 1991] (Prenuptial agreement given presumption of legality. Fraud is not presumed.)). Moreover, a party seeking to set-aside a prenuptial agreement bears a very high burden of showing that is manifestly unfair and that this unfairness was the result of overreaching on the part of the other party to the agreement. ( Bronfman v. Bronfman, 229 AD2d 314 [1st Dept. 1996]).
A. Duress and Fraud/Overreaching
Defendant initially claims the prenuptial agreement is invalid due to duress and overreaching/fraud by the plaintiff. Defendant asserted that the duress occasioned upon her by the plaintiff consisted of his failure to present her with the agreement until the morning of their wedding (at which time plaintiff is alleged to have provided defendant with the ultimatum to either sign the agreement or forego his hand in marriage). Defendant further asserted that plaintiff's overreaching and fraud consisted of his failure to disclose the value of his assets at the time the agreement was executed.
As noted previously, the Court gives no credence to defendant's first assertion. The Court is convinced by the credible testimony of both the plaintiff and plaintiff's counsel, Jean M. Kestel, that defendant was provided with copies of the prenuptial agreement by plaintiff's counsel in December 1989 at which time Ms. Kestel discussed the merits of the agreement, including plaintiff's assets, with the defendant and explained to the defendant that she represented the interests of her client, the plaintiff, and as such the defendant should seek independent counsel of her own choosing to review the prenuptial agreement prepared by Ms. Kestel.
With respect to defendant's assertion that the agreement was procured by the plaintiff's fraud and overreaching as result of his asserted failure to make full and fair disclosure of his assets, the Court notes that failure to disclose alone is not fraud or overreaching. ( Panossian v. Panossian, 172 AD2d 811 [2d. Dept. 1991]). Nevertheless, the agreement contains no representation by the plaintiff that he had made a disclosure of his assets. Rather, the agreement contains only reciprocal acknowledgments by each of the parties that they were acquainted with the others investments and resources of the other. Moreover, the agreement provided that there were no representations made by the parties other than those expressly set forth therein. Thus, since there was no confidential relationship between the parties at the time they entered into the agreement, and full disclosure was not required as part of the agreement, a failure to disclose would not constitute fraud or overreaching. ( Panossian v. Panossian, 172 AD2d 811 [2d. Dept. 1991]; see, County of Westchester v. Becket Assoc., 102 AD2d 34; Matter of Davis, 20 NY2d 70). In any event, the record reveals that the defendant was aware of plaintiff's financial assets or reasonably should have had independent knowledge of same, and there is no indication that plaintiff had at any time attempted to conceal or misrepresent the nature and extent of his assets.
The defendant did not demonstrate by a preponderance of the evidence that the premarital relationship between her and plaintiff manifested probable undue and unfair advantage. ( Matter of Greiff, 92 NY2d 341). The record does not support defendant's claim that she was not advised of the effect of the prenuptial agreement, failed to comprehend it or entered into it unwillingly. The Court additionally notes that defendant had been divorced four times prior and her testimony with respect to her lack of any familiarity with the concepts of equitable distribution of marital assets, separate and marital property and prenuptial agreements was contrived and incredulous. Furthermore, the passage of time since the execution of the agreement ( thirteen years) militates against setting aside the agreement on the ground of duress and overreaching. A party seeking to set-aside an agreement on such grounds must promptly take such action as is necessary to disavow the agreement, or be held to ratify it, ( Dwyer v. Dwyer, 190 Misc 2d 319). The law is well settled that a party seeking to repudiate a contract procured by duress and overreaching must act promptly lest he be deemed to have elected to affirm it. ( Bethlehem Steel Corp. V. Solow, 62 AD2d 611). Such a belated attempt, as defendant in the instant matter is making, to nullify the prenuptial agreement which was properly executed with the appropriate formalities and acted upon by the defendant (defendant twice refinanced and ultimately sold the residence the defendant deeded to her as part of the within agreement), is insufficient. A party who executes a contract under alleged duress or over overreaching and then acquiesces in the agreement for any considerable length of time is barred from suddenly raising issues of overreaching or duress. ( Sheindlin v. Sheindlin, 88 AD2d 930 [2nd Dept. 1982]).
B. Unconscionability
Defendant asserted the prenuptial agreement is unconscionable on its face with respect to both the property distribution and maintenance/child support provisions. DRL § 236 governs the allocation of marital assets and debts insofar as equitable distribution is concerned. Nowhere in the portions of the statute concerning distribution of marital assets do phrases such as "unconscionable" and "fair and reasonable" appear. The fair and reasonable and unconscionability test in DRL § 236(B)(3) applies only to maintenance provisions in pre/post-nuptial agreements and not to property settlement. ( Grubman v. Grubman, 191 AD2d 194 [1st Dept. 1993]) (emphasis added). Thus, a party, in order to succeed on a claim for rescission, must demonstrate manifest unfairness to one party because of the other's overreaching or that its terms are unconscionable or there existed fraud or collusion. ( Tchorzewski v. Tchorzewski, 278 AD2d 869 [4th Dept. 2000]). As noted above, overreaching, fraud and duress have not been demonstrated. Accordingly, unconscionability must be established.
To establish unconscionability, the defendant has a heavy burden to establish that the agreement was one that no person in his or her senses and not under delusion would make and one that no honest and fair person would accept. In essence, it is the type of inequality that would shock the conscience of a person of common sense. ( Christian v. Christian, 396 AD2d 817).
The court is not convinced that the prenuptial agreement is unconscionable with respect the property distribution provisions. It has never been claimed that marital property was secreted, and it has already been determined that plaintiff did not defraud or misrepresent the value of his assets. Plaintiff's claim of unconscionability rests on the fact that, thirteen years after executing the agreement, plaintiff's assets addressed in same are, at present time, significantly more valuable than defendant's.
However, the maintenance provisions of the agreement are not deemed fair and reasonable. General Obligations Law § 5-311 provides that the parties to an agreement may relieve one another from the ability of support provided neither party is likely to become a public charge. While the Court acknowledges that defendant's waiver of maintenance would likely not result in her becoming a public charge, the waiver is not fair and reasonable in view of the current and prospective financial circumstances of the parties, same which are disparate. Accordingly, that portion of the agreement waiving maintenance is set-aside.
At the time the agreement at issue was executed, there were no issue of the marriage. Despite that fact, paragraph three of the agreement waives plaintiff's child support obligation to defendant in an apparent contemplation of marital issue and a custodial award to the defendant in the event of a divorce. While there is a strong public policy favoring individuals ordering and deciding their own interests through contractual arrangements, including prenuptial agreements, child support trumps such an interest. In the context of child support, the Court must act as parens patriae, and retains jurisdiction to act in the child's best interests. Without question, a provision in an agreement eliminating a party's child support obligation is void as against public policy. ( see, Sievers v. Estelle, 211 AD2d 175). Accordingly, that portion of the agreement waiving child support obligation is set-aside.
C. Lack of Independent Counsel
Lastly, defendant asserted that the prenuptial agreement should be set-aside because she was not represented by independent counsel. While lack of independent counsel is a factor to be considered in determining whether the agreement should be set-aside, it is not, without some extrinsic evidence of unconscionability, duress or fraud, sufficient in and of itself to overturn the agreement. ( Forsberg v. Forsberg, 219 AD2d 615; Panossian v. Panossian, 172 AD2d 811 [2d. Dept. 1991]). This is especially true where one of the parties to the agreement makes a conscious decision not to retain an attorney despite being advised to do so. ( Groper v. Groper, 132 AD2d 492 [1st Dept. 1987]). As previously noted, there was no competent evidence of duress, fraud or unconscionability. Furthermore, the credible testimony of the attorney who prepared the subject agreement established that the parties were provided with copies of the prenuptial agreement, that the attorney discussed the merits of the agreement, including plaintiff's assets, with the parties and explained to defendant that she represented the interests of her client, the plaintiff, and as such the defendant should seek independent counsel of her own choosing to review the prenuptial agreement. The record is devoid of any evidence of coercion or undue influence exercised on the part of the attorney or the plaintiff.
D. Conclusion
The record does not establish that the subject prenuptial agreement was procured through fraud or duress. Nor was it demonstrated that the agreement is unconscionable. The defendant established nothing more than her own dereliction in failing to fully acquaint herself with the provisions of the agreement and to obtain the benefit of independent counsel. Although this dereliction may have caused her to be ignorant of the precise terms of the agreement, absent fraud, duress, unconscionability or other misconduct, the defendant is bound by her signature. ( Pommer v. Trustco Bank, 183 AD2d 976 [3rd Dept. 1992]. Accordingly, defendant's application to set-aside the prenuptial subject agreement is denied. The agreement is upheld except as to the provisions set-aside herein.
This constitutes the decision of the Court.