Articles Posted in Prenuptial & Postnuptial agreements

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To the State of New York, a marriage is a civil arrangement between two people to live together, support one another, share property, and possibly raise children. This view of marriage may lack romance, but it effectively addresses the needs of a diverse population. Marriage remains deeply connected to religious faith and practice for many people, and a particular religious tradition may have rules regarding marriage and divorce that differ from state law. This raises the question of how New York courts might address disputes of a religious nature. The short answer is that they do not adjudicate these disputes, except to the extent that participation in a religious procedure is part of a pre- or post-marital agreement, or that one or more elements of a religious procedure violate the law or public policy.

New York expressly defines marriage as a “civil contract” in the Domestic Relations Law (DRL). Both parties to a marriage must be “capable in law of making a contract,” and they must give their consent. The DRL does not prescribe any particular procedure for solemnizing a marriage, so couples are largely free to use whichever religious practice, secular procedure, or completely-made-up ceremony they want. The law mostly does not concern itself with the exact manner in which a couple gets married, as long as they meet the basic requirements.

Divorce in New York is also a civil matter, at least as far as the courts are concerned. The DRL requires parties to resolve issues related to property distribution, support and maintenance, and child custody. A spouse who wants to follow religious procedures during their divorce can get some support from the court, but only if the spouses signed a marital agreement stating that they would use those procedures. The court can enforce the agreement by ordering the other spouse to participate. These procedures often involve arbitration based on religious law, and the civil courts can also confirm—or reject—arbitration awards.

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Certain types of contracts can have a significant impact extending beyond the individual parties who signed the actual document. New York law therefore requires certain procedures to ensure not only that a signature is authentic but also that the signer is acting with some minimal amount of forethought. State law establishes multiple requirements for documents that convey interests in real property, such as deeds. New York’s Domestic Relations Law (DRL) has adopted these requirements for pre- and post-marital agreements. A court in Westchester County considered a challenge to the validity of a premarital agreement this summer. Its ruling in BW v. RF reviews the DRL’s requirements regarding the signatures on a marital agreement and the reasons for those requirements.

Section 236B(3) of the DRL states that marital agreements are “valid and enforceable in a matrimonial action” if they meet two essential requirements. First, the agreement must be in writing. That is the easy part. Second, the agreement must be “acknowledged or proven” in the same manner required for a recorded deed. This is where complications can occur.

Before being recorded, a deed must be “duly acknowledged” by the person signing it. This requires signing the document before a notary public or another authorized official, as well as orally stating that they have signed it. The notary or other official must have “satisfactory evidence” that the person signing the document is the same person described in the document, and they must sign a “certificate of acknowledgment” stating that they have complied with all of the statutory requirements. State law provides a uniform certificate of acknowledgment for this purpose.

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Contract law in the U.S. requires the parties to an agreement to follow certain formalities. This helps ensure that others, including judges and arbitrators, can understand the key elements of the agreement in the event of a dispute. Family law disputes in New York often involve principles of contract law, particularly when the parties to a divorce disagree over a pre- or post-nuptial agreement, also known as a marital agreement. The New York Domestic Relations Law (DRL) requires marital agreements to meet certain criteria in order to be enforceable by a court. A New York appellate court recently reviewed the criteria for a post-nuptial agreement in Ballesteros v. Ballesteros, ultimately finding that the agreement in question did not comply with the DRL’s requirements and was therefore unenforceable.

As a very general rule, a contract does not need to be in writing to be enforceable. Numerous exceptions to this rule exist, including the DRL’s requirements for marital agreements. Section 236(B)(3) of the DRL establishes two basic criteria for an enforceable marital agreement. It must be (1) in writing and (2) “subscribed by the parties, and acknowledged or proven in the manner required to entitle a deed to be recorded.” In plain English, this means that a written marital agreement must follow the same procedures as a deed conveying real property. The parties must sign the document in front of a notary public, and it must bear the notary public’s signature and seal, as well as a “certificate of acknowledgement” in a form prescribed by state law.

The court’s recital of the facts in Ballesteros shows a complicated factual situation surrounding a relatively straightforward legal question:  whether or not the agreement signed by the parties after their marriage, but before the wife filed for divorce, was enforceable. The parties were married in 2008, several days after signing a pre-nuptial agreement “‘opting out’ of New York’s statutory scheme governing maintenance and equitable distribution.” About a year later, the husband said he wanted a divorce and told the wife to move out. He reportedly changed his mind about the divorce shortly afterwards.

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In a New York divorce case, the law of contracts governs many disputes over the enforceability or even the validity of prenuptial, postnuptial, and other agreements between spouses. People often ask a court to rescind an agreement in whole or in part, effectively eliminating some or all of its obligations. A person may also ask a court to reform a contract, modifying its terms to repair a defect or deficiency. The wife in a divorce case in Monroe County, New York recently sought to rescind or reform a prenuptial agreement based on the “mutual mistake” doctrine, which allows a court to invalidate a contract if it finds that neither party made a fully informed decision. The burden of proving a “mutual mistake” is very high, and the court’s ruling in Hosmer v. Hosmer held that the wife did not satisfy it.

One of the fundamental elements of a binding contract is mutual assent. Both parties to a contract must have reached an informed agreement, with full knowledge and understanding of any obligations they are undertaking and any benefits they expect to receive. This is commonly known as a “meeting of the minds.” The doctrine of “mutual mistake” states that a contract is not valid if both parties made an error regarding some key aspect of their agreement.

Rescission or reformation of a contract due to a mutual mistake is an “exceptional remedy,” according to the court in Hosmer. The court quoted a 2012 New York Court of Appeals decision, Simkin v. Blank, which held that the mistake in question “must be so material that it goes to the foundation of the agreement” and that, as a result, the contract “does not represent the meeting of the minds of the parties.”

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Sometimes, albeit rarely, a family law dispute in New York does not center on the dissolution of a marriage but on a disagreement over whether a marriage exists at all. A Manhattan court recently considered a plaintiff’s request for a declaration that his marriage was valid. Alternatively, he asserted several fraud-based claims against the woman he claimed he had married, who denied being his wife. In a ruling earlier this year in Jackson K. v. Parisa G., the court denied the alleged wife’s motion to dismiss, allowing the case to move toward trial.

Some states, not including New York, allow people to get married without a marriage license, commonly known as “common-law marriage.” Under New York’s Domestic Relations Law, a couple must obtain a marriage license from a town or city clerk and provide it to the “clergyman or magistrate” who will perform the marriage ceremony. A marriage without a license is valid, however, if it was “solemnized between persons of full age.” A “clergyman or minister,” as defined by state law, may solemnize a marriage, as may a judge or various other public officials. The marriage ceremony is not required to follow any particular form, as long as the spouses-to-be “solemnly declare” their intention to marry in front of the officiant and witnesses.

The Jackson K. case, as presented by the court, shows numerous features commonly associated with a wedding but fewer features of a marriage. The plaintiff and the defendant “entered into a romantic relationship” in 2006, having known each other since they were children. They moved in together in 2007, and in 2009 the plaintiff asked her parents’ permission to marry her. He purchased a $25,000 engagement ring with the help of the defendant’s mother.

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Divorce typically requires a near-total reorganization of one’s home, family, and personal life. In some cases, it affects the workplace too, such as when spouses are also business partners. A recent court order effectively “broke up” a pair of business owners, who had also once been a romantic couple, after finding that their personal animosity made running the business together impossible. Not all instances of businesses split up by divorce are quite so dramatic. Sometimes ex-spouses are able to continue running a business together, but New York’s business and family laws provide means for divorcing couples to complete the divorce with minimal adverse impact on the business.

In August 2015, a Delaware Court of Chancery judge issued a 106-page order in In re Shawe & Elting LLC, et al., appointing a custodian to effect the sale of a profitable business corporation. The two parties to the case, EE and PS, owned 50 and 49 percent of the stock in the company, respectively, although the court treated them as having equal shares and voting rights. They reportedly started the business in a business school dorm room in 1992. They grew it into a global provider of translation services, with millions in annual revenue.

The two became engaged in 1996, according to the court, but EE broke it off in 1997. Although the business became quite profitable over the years, the court found that the relationship between EE and PS, who essentially owned the company 50/50, had deteriorated to a point of “complete dysfunction,” resulting in “irretrievable deadlocks over significant matters” that threatened “irreparable injury” to the business. It granted EE’s motion to appoint a custodian, as permitted by Delaware law in cases of deadlocks, to sell the corporation.

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New York marital law allows spouses to enter into agreements, before or during the marriage, with regard to issues like characterization of marital property, distribution of marital property upon separation or divorce, maintenance and child support payments, and more. A spouse or ex-spouse may ask a court to rescind all or part of an agreement in some situations, such as fraud or duress at the time of signing, or changed circumstances that would make enforcement of the agreement at the present time unconscionable. Two recent New York court decisions address possible grounds for setting aside an agreement.

In Lombardi v. Lombardi, the New York Appellate Division, Second Department considered a wife’s lawsuit, filed separately from her divorce action, against her husband to rescind a marital agreement. The Supreme Court dismissed the suit on a motion for summary judgment, but the Appellate Division partly reversed this order.

The appellate court found that summary judgment was improper on three claims, beginning with a claim for fraudulent inducement against the husband. It held that the husband’s defense relied on a general merger clause that would not preclude a claim for intentional fraud. It also held that, while the husband argued that the wife was represented by counsel, this alone would not defeat a claim of fraud. Furthermore, it found that the husband’s own submissions raised a “triable issue of fact” as to whether the wife actually was represented at the time.

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A New York appellate court recently considered three appeals brought by the husband/plaintiff while his divorce case, Trbovich v. Trbovich, was still pending in the Supreme Court of Erie County. Each appeal arose from a different order, and the appellate court dealt with each one in separate orders (“Trbovich I,” “Trbovich II,” and “Trbovich III”). The court vacated an order awarding temporary maintenance to the wife because of a pre-nuptial agreement, but it affirmed an order denying summary judgment on the divorce itself. The husband had filed a sworn statement establishing the basis for a “no-fault” divorce, but the court held that state law requires the parties to address additional issues before a divorce may be granted.

The husband initiated the divorce proceeding, and filed a sworn statement that his relationship with the wife had “broken down irretrievably for a period of at least six months,” as required by § 170(7) of the New York Domestic Relations Law. In a preliminary order, the Supreme Court ordered the husband to pay temporary maintenance to the wife in the form of weekly payments for general support and to cover housing expenses.

The husband filed motions seeking summary judgment on the divorce and asking the court to vacate the temporary maintenance award. The court denied these motions, but granted the wife’s motion for over $56,000 in attorney’s fees. It also directed the husband to comply with various discovery requests from the wife.

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A wife’s decision to sign a prenuptial agreement that named Israel as the exclusive jurisdiction for any divorce between her and her husband proved to be the undoing of her effort to secure a divorce in New York. The Appellate Division upheld a lower court’s dismissal of the wife’s divorce petition, concluding that the wife signed the prenuptial agreement, free of fraud or duress, with full knowledge of the nature of Israeli divorce laws. The fact that Israeli courts might be less favorable to her than New York ones did not mean that enforcing the forum clause in the agreement denied the wife her day in court.

Before Olivia Ofer and Ido Sirota married, they signed a prenuptial agreement. One of the terms of this agreement stated that, if a spouse decided to end the marriage, the divorce case would be litigated in the courts of Israel. Some time later, the wife decided to file for divorce, but she did so in New York County, not Israel.

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In legal matters, sometimes the littlest things make the biggest differences. It’s why people speak of “the fine print.” In some cases, it might be the definition of the word “is.” In a recent multi-million-dollar divorce, it was three little letters:  “the.” A prenuptial agreement’s use of the phrase “the marital property,” instead of “marital property,” made all the difference, leading the Appellate Division to reject millions of dollars of separate property credits the husband sought.

The credits related to a prenuptial agreement that Lawrence Babbio Jr. and Sheri Babbio signed before they married. The agreement spelled out certain circumstances under which a spouse could claim a separate property offset credit. Specifically, a spouse was entitled to pursue a credit if the marriage lasted less than 10 years and the spouse seeking the credit could demonstrate that he or she used at least $1 million of separate assets to purchase the piece of marital property.

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