Important New Decisions - April 16, 2012

Court of Appeals Rejects Husbands Argument That Intention to Equally Divide Marital Estate Was Frustrated Because Both Parties Operated under "Mistake" or Misconception as to Existence of a Legitimate Madoff Investment Account
In Simkin v Blank, --- N.E.2d ----, 2012 WL 1080295 (N.Y.) Plaintiff Steven Simkin (husband) and defendant Laura Blank (wife) married in 1973 and had two children. The Husband was a partner at a New York law firm and the wife, also an attorney, was employed by a university. After almost 30 years of marriage, the parties separated in 2002 and stipulated in 2004 that the cut-off date for determining the value of marital assets would be September 1, 2004. The parties, represented by counsel, spent two years negotiating a detailed 22-page settlement agreement, executed in June 2006. In August 2006, the settlement agreement was incorporated, but not merged, into the parties' final judgment of divorce. The settlement agreement set forth a comprehensive division of marital property. The Husband agreed to pay the wife $6,250,000 "[a]s and for an equitable distribution of property ... and in satisfaction of the Wife's support and marital property rights."In addition, wife retained title to a Manhattan apartment (subject to a $370,000 mortgage), an automobile, her retirement accounts and any "bank, brokerage and similar financial accounts in her name."Upon receipt of her distributive payment, the wife agreed to convey her interest in the Scarsdale marital residence to husband. The Husband received title to three automobiles and kept his retirement accounts, less $368,000 to equalize the value of the parties' retirement accounts. He also retained "bank, brokerage and similar financial accounts" that were in his name, two of which were specifically referenced-his capital account as a partner at the law firm and a Citibank account. The agreement also contained a number of mutual releases between the parties. Each party waived any interest in the other's law license and released or discharged any debts or further claims against the other. Although the agreement acknowledged that the property division was "fair and reasonable," it did not state that the parties intended an equal distribution or other designated percentage division of the marital estate. The only provision that explicitly contemplated an equal division was the reference to equalizing the values of the parties' retirement accounts. The parties further acknowledged that the settlement constituted: "an agreement between them with respect to any and all funds, assets or properties, both real and personal, including property in which either of them may have an equitable or beneficial interest wherever situated, now owned by the parties or either of them, or standing in their respective names or which may hereafter be acquired by either of them, and all other rights and obligations arising out of the marital relationship."

At the time the parties entered into the settlement, one of husband's unspecified brokerage accounts was maintained by Bernard L. Madoff Investment Securities (the Madoff account). According to husband, the parties believed the account was valued at $5.4 million as of September 1, 2004, the valuation date for marital assets. The Husband withdrew funds from this account to pay a portion of his distributive payment owed wife in 2006, and continued to invest in the account subsequent to the divorce. In December 2008, Bernard Madoff's colossal Ponzi scheme was publicly exposed and Madoff later pleaded guilty to federal securities fraud and related offenses. As a result of the disclosure of Madoff's fraud, in February 2009, about 2 ½ years after the divorce was finalized, the husband commenced an action against wife alleging two causes of action: (1) reformation of the settlement agreement predicated on a mutual mistake and (2) unjust enrichment. The amended complaint asserted that the settlement agreement was intended to accomplish an "approximately equal division of [the couple's] marital assets," including a 50-50 division of the Madoff account. To that end, the amended complaint stated that $2,700,000 of wife's $6,250,000 distributive payment represented her "share" of the Madoff account. The Husband alleged that the parties' intention to equally divide the marital estate was frustrated because both parties operated under the "mistake" or misconception as to the existence of a legitimate investment account with Madoff which, in fact, was revealed to be part of a fraudulent Ponzi scheme. The amended complaint admitted, however, that funds were previously " 'withdrawn' from the 'Account' " by husband and applied to his obligation to pay wife.

In his claim for reformation, the husband requested that the court "determine the couple's true assets with respect to the Madoff account" and alter the settlement terms to reflect an equal division of the actual value of the Madoff account. The second cause of action sought restitution from wife "in an amount to be determined at trial" based on her unjust enrichment arising from husband's payment of what the parties mistakenly believed to be wife's share of the Madoff account. Supreme Court granted the Wife’s motion to dismiss the amended complaint. The Appellate Division, with two Justices dissenting, reversed and reinstated the action ( 80 AD3d 401 [1st Dept 2011] ).

The Court of Appeals observed that on a motion to dismiss under CPLR 3211, the pleading is to be given a liberal construction, the allegations contained within it are assumed to be true and the plaintiff is to be afforded every favorable inference. At the same time, however, "allegations consisting of bare legal conclusions as well as factual claims flatly contradicted by documentary evidence are not entitled to any such consideration" . Moreover, a claim predicated on mutual mistake must be pleaded with the requisite particularity necessitated under CPLR 3016(b). The Court, in an opinion by Judge Graffeo, noted that marital settlement agreements are judicially favored and are not to be easily set aside. Nevertheless, in the proper case, an agreement may be subject to rescission or reformation based on a mutual mistake by the parties. Similarly, a release of claims may be avoided due to mutual mistake. The mutual mistake must exist at the time the contract is entered into and must be substantial". Put differently, the mistake must be "so material that ... it goes to the foundation of the agreement". Court-ordered relief is therefore reserved only for "exceptional situations". The premise underlying the doctrine of mutual mistake is that "the agreement as expressed, in some material respect, does not represent the meeting of the minds of the parties". After reviewing Appellate mutual mistake cases in the context of marital settlement agreements the Court was of the view that the amended complaint failed to adequately state a cause of action based on mutual mistake. As an initial matter, the husband's claim that the alleged mutual mistake undermined the foundation of the settlement agreement, a precondition to relief under the Court’s precedents, was belied by the terms of the agreement itself. The Court pointed out that in True v. True (63 AD3d 1145 [2d Dept 2009] ), the settlement agreement provided that the husband's stock awards from his employer would be "divided 50-50 in kind" and recited that 3,655 shares were available for division between the parties. After the wife redeemed her half of the shares, the husband learned that only 150 shares remained and brought an action to reform the agreement, arguing that the parties mistakenly specified the gross number of shares (3,655) rather than the net number that was actually available for distribution. The Second Department agreed and reformed the agreement to effectuate the parties' intent to divide the shares equally, holding that the husband had established "that the parties' use of 3,655 gross shares was a mutual mistake because it undermined their intent to divide the net shares available for division, 50-50 in kind" (id. at 1148). Unlike the settlement agreement in True that expressly incorporated a "50-50" division of a stated number of stock shares, the settlement agreement here, on its face, did not mention the Madoff account, much less evince an intent to divide the account in equal or other proportionate shares. To the contrary, the agreement provided that the $6,250,000 payment to wife was "in satisfaction of [her] support and marital property rights," along with her release of various claims and inheritance rights. Despite the fact that the agreement permitted husband to retain title to his "bank, brokerage and similar financial accounts" and enumerated two such accounts, his alleged $5.4 million Madoff investment account was neither identified nor valued. Given the extensive and carefully negotiated nature of the settlement agreement, the Court did not believe that this presented one of those "exceptional situations") warranting reformation or rescission of a divorce settlement after all marital assets have been distributed.

Even putting the language of the agreement aside, the core allegation underpinning the husband's mutual mistake claim, that the Madoff account was "nonexistent" when the parties executed their settlement agreement in June 2006, did not amount to a "material" mistake of fact as required by case law. The amended complaint contained an admission that husband was able to withdraw funds from the account in 2006 to partially pay his distributive payment to wife. Given that the mutual mistake must have existed at the time the agreement was executed in 2006 the fact the husband could no longer withdraw funds years later was not determinative. This situation, however sympathetic, was more akin to a marital asset that unexpectedly loses value after dissolution of a marriage; the asset had value at the time of the settlement but the purported value did not remain consistent. The Court found this case analogous to the Appellate Division precedents denying a spouse's attempt to reopen a settlement agreement based on post-divorce changes in asset valuation. The Court held that the husband's unjust enrichment claim likewise failed to state a cause of action. It is well settled that, where the parties executed a valid and enforceable written contract governing a particular subject matter, recovery on a theory of unjust enrichment for events arising out of that subject matter is ordinarily precluded. Accordingly, the order of the Appellate Division was reversed, the order of Supreme Court reinstated, and the certified question answered in the negative.


QDRO Based on a Stipulation Can Convey Only Those Rights to Which the Parties Stipulated as a Basis for the Judgment
In Gursky v Gursky, --- N.Y.S.2d ----, 2012 WL 1033543 (N.Y.A.D. 3 Dept.) after plaintiff commenced an action for divorce, the parties entered into a partial written stipulation in which they agreed upon the total present value of the marital portion of the defined benefits component of plaintiff's pension. They did not reach any agreement as to the division of this asset. Instead, they specifically reserved their rights with respect to its equitable distribution. When they appeared for trial, they entered into an oral stipulation in which they agreed that the pension "will be divided pursuant to the Majauskas [f]ormula" (Majauskas v. Majauskas, 61 N.Y.2d 481 [1984] ). The stipulation was incorporated but not merged into the judgment of divorce, and defendant then moved for an order directing entry of his proposed qualified domestic relations order. Plaintiff objected, arguing that the proposed order exceeded the terms of the parties' stipulation because it created a separate pension interest for defendant by providing that he could elect to receive payment from the pension plan when plaintiff reached the plan's early retirement age of 55, regardless of whether she had yet retired. Supreme Court rejected plaintiff's objections and granted the motion. The Appellate Division reversed and denied the motion. It observed that a qualified domestic relations order based on a stipulation "can convey only those rights to which the parties stipulated as a basis for the judgment" ( McCoy v. Feinman, 99 N.Y.2d 295, 304 [2002]). Where the language of the stipulation is unambiguous, the intent of the parties must be ascertained from within its four corners and the Court will not add language that the parties did not include. Here, there was no ambiguity. The parties agreed to divide the pension by applying the Majauskas formula. To interpret that agreement, Supreme Court was required to look to Majauskas, where the formula entitled the nonemployee spouse to receive a proportionate share of one half of each pension check received by the employee spouse, with the denominator of the fraction based on the length of the employee spouse's employment prior to his or her retirement. By invoking the Majauskas formula, without more, the parties stipulated that distribution of the pension would take effect upon plaintiff's retirement, as in Majauskas, resulting in a shared payment. Thus, Supreme Court's distribution of a separate pension interest to defendant prior to plaintiff's retirement improperly expanded the terms of the parties' stipulation.

Wife Did Not Waive Right to Challenge Husband's Claims Regarding Income Because She Signed Joint Tax Returns That Listed His Annual Income.
In Harrington v Harrington, --- N.Y.S.2d ----, 2012 WL 1033451 (N.Y.A.D. 3 Dept.) Plaintiff (husband) and defendant (wife) were married in 1991 and had two children (born in 1989 and 1991). The husband was a self-employed contractor who operated his own construction business while the wife, who was permanently disabled, devoted herself to the care of the parties' children and was not otherwise employed. The husband commenced this action for a divorce in December 2008. After a trial, Supreme Court granted the wife's counterclaim for divorce, distributed certain marital assets, and directed the husband to pay maintenance for 15 years and approximately $10,000 towards the wife's counsel fees. The Appellate Division affirmed. It rejected the husbands challenge to Supreme Court's decision to impute an additional $30,000 to the income he claimed to earn each year. The Appellate Division held that Supreme Court is not bound by representations made by a party in a matrimonial action regarding his or her annual income and may increase that figure where the record establishes, as it did here, that a party routinely paid "personal expenses from business accounts" and had access to other income to offset such expenses. In support of his claim regarding his annual income, the husband submitted tax returns for a four-year period beginning in 2005 in which he claimed annual adjusted gross income between $13,802 and $33,689. Supreme Court found, and the record established, that despite the husband's claims regarding his limited income, he paid, in addition to other expenses, $559 per month in child support and $2,000 each month to his girlfriend to live at her residence and for bookkeeping services she provided his contracting business. Also, the husband admitted using the business checking account for personal expenses and paying for numerous vacations he had taken with his girlfriend, plus $950 a month in rent for a residence in which he did not reside. This evidence provided ample support for Supreme Court's determination that additional income should be imputed to the husband to reflect an annual income of $60,000 per year. Supreme Court was not bound by a determination previously rendered by Family Court in a child support proceeding that his annual income was $30,000. Here, evidence was presented that the husband's claims in this regard were not accurate or credible, and provided a rational basis for Supreme Court's decision placing his annual income at $60,000. In addition, the wife did not waive her right to challenge the husband's claims regarding his annual income simply because she had previously signed joint tax returns that listed his annual income as $30,000.

Supreme Court conducted a hearing at which the wife's counsel testified to the legal services she provided during the course of these proceedings. Given the wife's need for these legal services, and the parties' respective financial conditions, the Appellate Division held that court did not abuse its discretion by directing the husband to contribute $9,816 to the payment of the legal expenses that the wife incurred in these proceedings. While the wife's counsel did not, as required, bill the wife every 60 days for her services, she did provide her with a copy of a retainer agreement, as well as a statement of client's rights and responsibilities pursuant to 22 NYCRR 1400.3. Counsel's failure to bill the wife for these services every 60 days was not a ground upon which the husband can rely to avoid paying a share of her legal expenses. The court noted that the action was commenced prior to the amendment to Domestic Relations Law 237(a) (see L 2010, ch 329, s 1 ).


Error in Failing to Afford Father Opportunity to Make Closing Statement Does Not Require Reversal Where Court Familiar with the Facts of Case and Parties' Arguments
In Matter of Bond v Bond, --- N.Y.S.2d ----, 2012 WL 1033469 (N.Y.A.D. 3 Dept.) Petitioner (father) and respondent (mother) were the parents of six children. The three youngest children, two daughters (born in 1994 and 1995) and a son (born in 2001), were the subject of the proceeding on appeal. In November 2004, the parties stipulated to a custody arrangement by which the mother had sole legal and primary physical custody of the three children, with extended alternate weekend visitation with the father. This agreement was later incorporated into a custody order in January 2005 and the judgment of divorce in March 2007. In April 2010, the father filed a petition for modification seeking joint legal and primary physical custody of the younger daughter and joint legal and shared physical custody of the son. Following trial, Family Court dismissed the petition on the ground that the father had failed to establish a sufficient change in circumstances. The Appellate Division affirmed. It observed that the father's petition alleged that the two younger children wished to spend more time with him, that the mother was verbally and physically abusive, and that the mother disappointed the younger daughter by failing to bring her to an out-of-state award ceremony. As the allegations of abuse were unsubstantiated and the children's preferences standing alone did not establish a sufficient change in circumstances, there was a sound and substantial basis in the record supporting Family Court's determination. The Appellate Division observed that the trial testimony and decision referenced events occurring prior to the existing custody order. As the father argued, relying upon those prior events would be improper in assessing whether there had been a change in circumstances. However, it did not find that the Courts analysis relied upon these extraneous references. It rejected that the father's contention that Family Court's error in failing to afford him the opportunity to make a closing statement required reversal (see CPLR 4016[a] ). At the conclusion of the fact-finding hearing, the father's counsel stated that he wished to make a short closing statement only if the mother did so, and the court indicated that arrangements would be made following the Lincoln hearing. The mother subsequently submitted a written closing statement; the father neither responded to this submission nor requested a further appearance, and more than four weeks passed before the decision was rendered. Considering these circumstances, and that the court was fully familiar with the facts of the case as well as the parties' arguments, no reversible error occurred (See Matter of Saggese v. Steinmetz, 83 A.D.3d 1144, 1145 [2011; Lohmiller v. Lohmiller, 140 A.D.2d 497, 498 [1988] ).

On Motion to Dismiss Family Offense Petition Pursuant to CPLR 3211(a) (7) Court Should Wade Through Allegations and Dismiss Only Those Which Do Not Sufficiently Allege Conduct That Constitutes a Family Offense
In Matter of Pamela N v Neil N, --- N.Y.S.2d ----, 2012 WL 1033487 (N.Y.A.D. 3 Dept.), Petitioner (mother) and respondent (father) were married in 2003 and had twins in 2005. The father was awarded custody by order of August 20, 2010. In December 2010, the mother filed two family offense petitions against the father, and filed a third such petition in February 2011, as well as a modification of custody petition. Family Court granted the father's motions to dismiss the two December 2010 family offense petitions, and also dismissed the custody petition given that a divorce action was then pending in Supreme Court. The court also dismissed the February 2011 family offense petition, on the father's motion, for failure to state a cause of action (CPLR 3211[a][7] ), without a hearing. The Appellate Division observed that presented with a motion to dismiss pursuant to CPLR 3211(a)(7), which is proper here in that family offense proceedings under Family Ct Act article 8 are civil in nature a court may freely consider affidavits submitted by the petitioner to remedy any defects in the petition, and the criterion is whether the proponent of the pleading has a cause of action, not whether he or she has stated one. ( Guggenheimer v. Ginzburg, 43 N.Y.2d at 275). A family offense proceeding is originated by filing a petition alleging that the respondent committed one of the enumerated offenses against, among others, a spouse, former spouse or child. In her pro se February 2011 petition, the mother checked all boxes on the petition form listing those enumerated offenses. Her attached affidavit and handwritten answers contained many conclusory, irrelevant, ambiguous and insufficiently specific allegations, including claims against individuals who were not "members of the same family or household". However, liberally construing the petition and giving it the benefit of every favorable inference (Leon v. Martinez, 84 N.Y.2d at 87-88), the Court found that while it was inartfully drafted, it adequately alleged, at the very least, that the father had stalked and harassed her. For example, the mother alleged in her affidavit that on November 23, 2008, the father came to her house while she had the children and threatened and harassed her, making excuses for his presence; he then called her three times that evening and continued to make excuses for coming to her house, leading her to file a domestic incident report with police the next day. These allegations described the type of conduct required to originate a family offense proceeding (Family Ct Act 821[1] ) in that they adequately allege, so as to survive a motion to dismiss for failure to state a cause of action (CPLR 3211 [a][7] ), that the father, acting with the requisite intent that is inferable from the alleged circumstances, engaged in a course of conduct which alarmed or seriously annoyed the mother, which served no legitimate purpose, thereby committing the offense of harassment in the second degree (Penal Law 240.26 [3]) Additionally, the allegations, if credited, were sufficient to allege that respondent committed the offense of stalking in the fourth degree (Penal Law 120.45[1], [2] ). The Appellate Division agreed with the mother and attorney for the children that Family Court should not have dismissed the petition in its entirety but, rather, should have waded through the myriad allegations and dismissed with specificity only those which did not sufficiently allege conduct that constituted harassment, stalking or any other act listed in Family Ct Act 821(1). The order granting respondent's motion to dismiss the February 18, 2011 petition was reversed, the motion denied and matter remitted to the Family Court for further proceedings not inconsistent with the Court's decision.

Family Court Lacks Subject Matter Jurisdiction to Enforce Purported Modification Agreement Not Incorporated into Judgment
In Hirsch v Schwartz, --- N.Y.S.2d ----, 2012 WL 1033520 (N.Y.A.D. 3 Dept.) Petitioner (mother) and respondent ( father) were divorced in 2009 and had two children from the marriage (born in 2001 and 2003). The parties' 2007 separation agreement, which required the father to pay 96% of all child-care expenses, was incorporated but not merged into their 2009 judgment of divorce. Shortly thereafter, the mother sent the father a letter offer which proposed a reduction of the father's child-care expenses from 96% to 75%. Although the father did not sign and return the letter offer he made at least two full reimbursement payments and several partial payments in the months that followed. The mother subsequently commenced this proceeding seeking to enforce the child support provisions of the judgment of divorce. In response, the father argued that the mother's letter offer served to modify his support obligations and that the terms of this subsequent agreement should be enforced. Following a trial, a Support Magistrate found that the letter offer constituted a valid modification of the parties' separation agreement that reduced the father's child-care expenses to 75%, and ordered arrears in the amount of $2,625.25. Upon the mother's written objections, Family Court concluded that the Support Magistrate lacked the authority to enforce the terms of the purported modification agreement and, therefore, the provisions in the judgment of divorce concerning the father's child-care obligations controlled. The Appellate Division affirmed. It observed that Family Court, as a court of limited jurisdiction, may only enforce or modify child support provisions contained in a valid court order or judgment ( Family Ct Act 422, 461[b][I]; 466; Matter of Johna M.S. v. Russell E.S., 10 NY3d 364, 366 [2008]; Matter of Brescia v. Fitts, 56 N.Y.2d 132, 139 [1982]; Kleila v. Kleila, 50 N.Y.2d 277, 282 [1980] ). Thus, even assuming that the mother's letter offer constituted a valid modification of the parties' separation agreement, Family Court did not have subject matter jurisdiction to enforce the amended agreement which stands as an independent contract between the parties .

Important New Decisions - April 4, 2012

Court of Appeals Rejects Husbands Argument That Intention to Equally Divide  Marital Estate Was Frustrated Because Both Parties Operated under "Mistake" or Misconception as to Existence of a Legitimate Madoff Investment Account                                                     


                                                      
In Simkin v Blank, --- N.E.2d ----, 2012 WL 1080295 (N.Y.) Plaintiff Steven Simkin (husband) and defendant Laura Blank (wife) married in 1973 and had two children. The Husband was a partner at a New York law firm and the wife, also an attorney, was employed by a university. After almost 30 years of marriage, the parties separated in 2002 and stipulated in 2004 that the cut-off date for determining the value of marital assets would be September 1, 2004. The parties, represented by counsel, spent two years negotiating a detailed 22-page settlement agreement, executed in June 2006. In August 2006, the settlement agreement was incorporated, but not merged, into the parties' final judgment of divorce.  The settlement agreement set forth a comprehensive division of marital property. The Husband agreed to pay the wife $6,250,000 "[a]s and for an equitable distribution of property ... and in satisfaction of the Wife's support and marital property rights."In addition, wife retained title to a Manhattan apartment (subject to a $370,000 mortgage), an automobile, her retirement accounts and any
"bank, brokerage and similar financial accounts in her name."Upon receipt of her
distributive payment, the wife agreed to convey her interest in the Scarsdale marital
residence to husband. The Husband received title to three automobiles and kept his
retirement accounts, less $368,000 to equalize the value of the parties' retirement accounts. He also retained "bank, brokerage and similar financial accounts" that were in his name, two of which were specifically referenced-his capital account as a partner at the law firm and a Citibank account. The agreement also contained a number of mutual releases between the parties. Each party waived any interest in the other's law license and released or discharged any debts or further claims against the other. Although the agreement acknowledged that the property division was "fair and reasonable," it did not state that the parties intended an equal distribution or other designated percentage division of the marital estate. The only provision that explicitly contemplated an equal division was the reference to equalizing the values of the parties' retirement accounts. The parties further acknowledged that the settlement constituted:  "an agreement between them with respect to any and all funds, assets or  properties, both real and personal, including property in which either of them  may have an equitable or beneficial interest wherever situated, now owned by the  parties or either of them, or standing in their respective names or which may  hereafter be acquired by either of them, and all other rights and obligations  arising out of the marital relationship."
 At the time the parties entered into the settlement, one of husband's unspecified brokerage accounts was maintained by Bernard L. Madoff Investment Securities (the Madoff account). According to husband, the parties believed the account was valued at $5.4 million as of September 1, 2004, the valuation date for marital assets. The Husband withdrew funds from this account to pay a portion of his distributive payment owed wife in 2006, and continued to invest in the account subsequent to the divorce. In December 2008, Bernard Madoff's colossal Ponzi scheme was publicly exposed and Madoff later pleaded guilty to federal securities
fraud and related offenses.  As a result of the disclosure of Madoff's fraud, in February 2009, about 2 ½ years after the divorce was finalized, the husband commenced an action against wife alleging two causes of action: (1) reformation of the settlement agreement predicated on a mutual mistake and (2) unjust enrichment. The amended complaint asserted that the settlement agreement was intended to accomplish an "approximately equal division of [the couple's] marital assets," including a 50-50 division of the Madoff account. To that end, the amended complaint stated that $2,700,000 of wife's $6,250,000 distributive payment represented her "share" of the Madoff account. The Husband alleged that the parties' intention to equally divide the marital estate was frustrated because both parties operated under the "mistake" or
misconception as to the existence of a legitimate investment account with Madoff
which, in fact, was revealed to be part of a fraudulent Ponzi scheme. The amended
complaint admitted, however, that funds were previously " 'withdrawn' from the 'Account' " by husband and applied to his obligation to pay wife.  In his claim for reformation, the husband requested that the court "determine the couple's true assets with respect to the Madoff account" and alter the settlement terms to reflect an equal division of the actual value of the Madoff account. The second cause of action sought restitution from wife "in an amount to be determined at trial" based on her unjust enrichment arising from husband's payment of what
the parties mistakenly believed to be wife's share of the Madoff account. Supreme Court granted the Wife’s motion to dismiss the amended complaint. The Appellate Division, with two Justices dissenting, reversed and reinstated the action ( 80 AD3d 401 [1st Dept 2011] ).
The Court of Appeals observed that on a motion to dismiss under CPLR 3211, the pleading is to be given a liberal construction, the allegations contained within it are assumed to be true and the plaintiff is to be afforded every favorable inference. At the same time, however, "allegations consisting of bare legal conclusions as well as factual claims flatly contradicted by documentary evidence are not entitled to any such consideration" . Moreover, a claim predicated on mutual mistake must be pleaded with the requisite particularity necessitated under CPLR 3016(b). The Court, in an opinion by Judge Graffeo, noted that marital settlement agreements are judicially favored and are not to be easily set aside. Nevertheless, in the proper case, an agreement may be subject to rescission or reformation based on a mutual mistake by the parties. Similarly, a release of claims may be avoided due to mutual mistake. The mutual mistake must exist at the time the contract is entered into and must be substantial". Put differently, the mistake must be "so material that ... it goes to the foundation of the agreement". Court-ordered relief is therefore reserved only for "exceptional situations". The premise underlying the doctrine of mutual mistake is that "the agreement as expressed, in some material respect, does not represent the meeting of the minds of the parties". After reviewing Appellate mutual mistake cases in the context of marital settlement agreements the Court was of the view that the amended complaint failed to adequately state a cause of action based on mutual mistake. As an initial matter, the husband's claim that the alleged mutual mistake undermined the foundation of the settlement agreement, a precondition to relief under the Court’s  precedents, was belied by the terms of the agreement itself. The Court pointed out that in True v. True (63 AD3d 1145 [2d Dept 2009] ), the settlement agreement provided that the husband's stock awards from his employer would be "divided 50-50 in kind" and recited that 3,655 shares were available for division between the parties. After the wife redeemed her half of the shares, the husband learned that only 150 shares remained and brought an action to reform the agreement, arguing that the parties mistakenly specified the gross number of shares (3,655) rather than the net number that was actually available for distribution. The Second Department agreed and reformed the agreement to effectuate the parties' intent to divide the shares equally, holding that the husband had established "that the parties' use of 3,655 gross shares was a mutual mistake because it undermined their intent to divide the net shares available for division, 50-50 in kind" (id. at 1148). Unlike the settlement agreement in True that expressly incorporated a "50-50" division of a stated number of stock shares, the settlement agreement here, on its face, did not mention the Madoff account, much less evince an intent to divide the account in equal or other proportionate shares. To the contrary, the agreement provided that the $6,250,000 payment to wife was "in satisfaction of [her] support and marital property rights," along with her release of various claims and inheritance rights. Despite the fact that the agreement permitted husband to retain title to his "bank, brokerage and similar financial accounts" and enumerated two such accounts, his alleged $5.4 million Madoff investment account was neither identified nor
valued. Given the extensive and carefully negotiated nature of the settlement
agreement, the Court did not believe that this presented one of those "exceptional
situations") warranting reformation or rescission of a divorce settlement after all
marital assets have been distributed.
    Even putting the language of the agreement aside, the core allegation underpinning the husband's mutual mistake claim, that the Madoff account was "nonexistent" when the parties executed their settlement agreement in June 2006,  did  not amount to a "material" mistake of fact as required by case law. The amended complaint contained an admission that husband was able to withdraw funds from the account in 2006 to partially pay his distributive payment to wife. Given that the mutual mistake must have existed at the time the agreement was executed in 2006 the fact the husband could no longer withdraw funds years later was not determinative.   This situation, however sympathetic, was more akin to a marital asset that unexpectedly loses value after dissolution of a marriage; the asset had value at the time of the settlement but the purported value did not remain consistent. The Court found this case analogous to the Appellate Division precedents denying a spouse's attempt to reopen a settlement agreement based on post-divorce changes in asset valuation.
The Court held that the husband's unjust enrichment claim likewise failed to state a cause of action. It is well settled that, where the parties executed a valid and enforceable written contract governing a particular subject matter, recovery on a theory of unjust enrichment for events arising out of that subject matter is ordinarily precluded.
 Accordingly, the order of the Appellate Division was reversed, the order of Supreme Court reinstated, and the certified question answered in the negative.


QDRO Based on a Stipulation Can Convey Only Those Rights to Which the Parties Stipulated as a Basis for the Judgment 
                                                      
In Gursky v Gursky, --- N.Y.S.2d ----, 2012 WL 1033543 (N.Y.A.D. 3 Dept.) after plaintiff commenced an action for divorce, the parties entered into a partial written stipulation in which they agreed upon the total present value of the marital portion of the defined benefits component of plaintiff's pension. They did not reach any agreement as to the division of this asset. Instead, they specifically reserved their rights with respect to
its equitable distribution. When they appeared for trial, they entered into an oral stipulation in which they agreed that the pension "will be divided pursuant to the Majauskas [f]ormula" (Majauskas v. Majauskas, 61 N.Y.2d 481 [1984] ). The stipulation was incorporated but not merged into the judgment of divorce, and defendant then moved for an order directing entry of his proposed qualified domestic relations order. Plaintiff objected, arguing that the proposed order exceeded the terms of the parties' stipulation because it created a separate pension interest for defendant by providing that he could elect to receive payment from the pension plan when plaintiff reached the plan's early retirement age of 55, regardless of whether she had yet retired. Supreme Court rejected plaintiff's objections and granted the motion. The Appellate Division reversed and denied the motion.  It observed that a qualified domestic relations order based on a stipulation "can convey only those rights to which the parties stipulated as a basis for the judgment" ( McCoy v. Feinman, 99 N.Y.2d 295, 304 [2002]). Where the language of the stipulation is unambiguous, the intent of the parties must be ascertained from within its four corners and the Court will not add language that the parties did not include. Here, there was no ambiguity. The parties agreed to divide the pension by applying the Majauskas formula. To interpret that agreement, Supreme Court was required to look to Majauskas, where the formula entitled the nonemployee spouse to receive a proportionate share of one half of each pension check received by the employee spouse, with the denominator of the fraction based on the length of the employee spouse's employment prior to his or her retirement. By invoking the  Majauskas formula, without more, the parties stipulated that distribution of the pension would take effect upon plaintiff's retirement, as in Majauskas, resulting in a shared payment. Thus, Supreme Court's distribution of a separate pension interest to defendant prior to plaintiff's retirement improperly expanded the terms of the parties' stipulation.




Wife Did Not Waive Right to Challenge Husband's Claims Regarding Income Because She  Signed Joint Tax Returns That Listed His Annual Income.


In Harrington v Harrington, --- N.Y.S.2d ----, 2012 WL 1033451 (N.Y.A.D. 3 Dept.)
Plaintiff (husband) and defendant (wife) were married in 1991 and had two children (born in 1989 and 1991). The husband was a self-employed contractor who operated his own construction business while the wife, who was permanently disabled, devoted herself to the care of the parties' children and was not otherwise employed. The husband commenced this action for a divorce in December 2008. After a trial, Supreme Court granted the wife's counterclaim for divorce, distributed certain marital assets, and
directed the husband to pay maintenance for 15 years and approximately $10,000
towards the wife's counsel fees. The Appellate Division affirmed. It rejected the husbands challenge to Supreme Court's decision to impute an additional $30,000 to the income he claimed to earn each year. The Appellate Division held that Supreme Court is not bound by representations made by a party in a matrimonial action regarding his or her annual income and may increase that figure where the record establishes, as it did here, that a party routinely paid "personal expenses from business accounts" and had access to other income to offset such expenses. In support of his claim regarding his annual income, the husband submitted tax returns for a four-year period beginning in 2005 in which he claimed annual adjusted gross income between $13,802 and $33,689. Supreme Court found, and the record established, that despite the husband's claims regarding his limited income, he paid, in addition to other expenses, $559 per month in child support and $2,000 each month to his girlfriend to live at her residence and for bookkeeping services she provided his contracting business. Also, the husband admitted using the business checking account for personal expenses and paying for numerous vacations he had taken with his girlfriend, plus $950 a month in rent for a residence in which he did not reside. This evidence provided ample support for Supreme Court's determination that additional income should be imputed to the husband to reflect an annual income of $60,000 per year. Supreme Court was  not bound by a determination previously rendered by Family Court in a child support proceeding that his annual income was $30,000. Here, evidence was presented that the husband's claims in this regard were not accurate or credible, and provided a rational basis for Supreme Court's decision placing his annual income at $60,000. In addition, the wife did not waive her right to challenge the husband's claims regarding his annual income simply because she had previously signed joint tax returns that listed his annual income as $30,000.
Supreme Court conducted a hearing at which the wife's counsel testified to the legal services she provided during the course of these proceedings. Given the wife's need for these legal services, and the parties' respective financial conditions, the Appellate Division held that court did not abuse its discretion by directing the husband to contribute $9,816 to the payment of the legal expenses that the wife incurred in these proceedings. While the wife's counsel did not, as required, bill the wife every 60 days for her services, she did provide her with a copy of a retainer agreement, as well as a statement of client's rights and responsibilities pursuant to 22 NYCRR 1400.3. Counsel's failure to bill the wife for these services every 60 days was not a ground upon which the husband can rely to avoid paying a share of her legal expenses. The court noted that the action was commenced prior to the amendment to  Domestic Relations Law  237(a) (see L 2010, ch 329, s 1 ).




Error in Failing to Afford Father Opportunity to Make  Closing Statement Does Not Require Reversal Where Court Familiar with the Facts of Case and Parties' Arguments


In Matter of Bond v Bond, --- N.Y.S.2d ----, 2012 WL 1033469 (N.Y.A.D. 3 Dept.)    Petitioner (father) and respondent (mother) were the parents of six children. The three youngest children, two daughters (born in 1994 and 1995) and a son (born in 2001), were the subject of the proceeding on appeal. In November 2004, the parties stipulated to a custody arrangement by which the mother had sole legal and primary physical custody of the three children, with extended alternate weekend visitation with the father. This agreement was later incorporated into a custody order in January 2005 and the judgment of divorce in March 2007. In April 2010, the father filed a petition for modification seeking joint legal and primary physical custody of the younger daughter and joint legal and shared physical custody of the son. Following trial, Family Court dismissed the petition on the ground that the father had failed to establish a sufficient change in circumstances. The Appellate Division affirmed.  It observed that the father's petition alleged that the two younger children wished to spend more time with him, that the mother was verbally and physically abusive, and that the mother disappointed the younger daughter by failing to bring her to an out-of-state award ceremony.
As the allegations of abuse were unsubstantiated and the children's preferences standing alone did not establish a sufficient change in circumstances, there was a sound and substantial basis in the record supporting Family Court's determination. The Appellate Division observed that the trial testimony and decision referenced events occurring prior to the existing custody order. As the father argued, relying upon those prior events would be improper in assessing whether there had been a change in circumstances. However, it did not find that the Courts analysis relied upon these extraneous references. It rejected that the father's contention that Family Court's error in failing to afford him the opportunity to make a closing statement required
reversal (see CPLR 4016[a] ). At the conclusion of the fact-finding hearing, the
father's counsel stated that he wished to make a short closing statement only if
the mother did so, and the court indicated that arrangements would be made
following the Lincoln hearing. The mother subsequently submitted a written closing
statement; the father neither responded to this submission nor requested a further
appearance, and more than four weeks passed before the decision was rendered.
Considering these circumstances, and that the court was fully familiar with the
facts of the case as well as the parties' arguments, no reversible error occurred
(See Matter of Saggese v. Steinmetz, 83 A.D.3d 1144, 1145 [2011; Lohmiller v. Lohmiller, 140 A.D.2d 497, 498 [1988] ).






On Motion to Dismiss Family Offense Petition Pursuant to CPLR 3211(a) (7) Court Should Wade Through Allegations and Dismiss Only Those Which Do Not Sufficiently Allege Conduct That Constitutes a Family Offense 
                                                      
In Matter of Pamela N v Neil N, --- N.Y.S.2d ----, 2012 WL 1033487 (N.Y.A.D. 3 Dept.),   Petitioner (mother) and respondent (father) were married in 2003 and had twins in 2005. The father was awarded custody by order of August 20, 2010. In December 2010, the mother filed two family offense petitions against the father, and filed a third such petition in February 2011, as well as a modification of custody petition. Family Court granted the father's motions to dismiss the two December 2010 family offense petitions, and also dismissed the custody petition given that a divorce action was then pending in Supreme Court. The court also dismissed the February 2011 family offense petition, on the father's motion, for failure to state a cause of action (CPLR 3211[a][7]
), without a hearing. The Appellate Division observed that presented with a motion to dismiss pursuant to CPLR 3211(a)(7), which is proper here in that family offense proceedings under Family Ct Act article 8 are civil in nature a court may freely consider affidavits submitted by the petitioner to remedy any defects in the petition, and the criterion is whether the proponent of the pleading has a cause of action, not
whether he or she has stated one. ( Guggenheimer v. Ginzburg, 43 N.Y.2d at 275). A family offense proceeding is originated by filing a petition alleging that  the respondent committed one of the enumerated offenses against, among others, a spouse, former spouse or child. In her pro se February 2011 petition, the mother checked all boxes on the petition form listing those enumerated offenses. Her attached affidavit and handwritten answers contained many conclusory, irrelevant, ambiguous and insufficiently specific allegations, including claims against individuals who were not "members of the same family or household". However, liberally construing the petition and giving it the benefit of every favorable inference (Leon v. Martinez, 84
N.Y.2d at 87-88), the Court found that while it was inartfully drafted, it adequately
alleged, at the very least, that the father had stalked and harassed her.   For example, the mother alleged in her affidavit that on November 23, 2008, the father came to her house while she had the children and threatened and harassed her, making excuses for his presence; he then called her three times that evening and continued to make excuses for coming to her house, leading her to file a domestic incident report with police the next day. These allegations described the type of conduct required to originate a family offense proceeding (Family Ct Act  821[1] ) in that they adequately allege, so as to survive a motion to dismiss for failure to state a cause of action (CPLR 3211 [a][7] ), that the father, acting with the requisite intent that is inferable from the alleged circumstances, engaged in a course of conduct which alarmed or
seriously annoyed the mother, which served no legitimate purpose, thereby
committing the offense of harassment in the second degree (Penal Law  240.26
[3]) Additionally, the allegations, if credited, were sufficient to allege that respondent committed the offense of stalking in the fourth degree (Penal Law  120.45[1], [2] ).
The Appellate Division agreed with  the mother and attorney for the children that Family Court should not have dismissed the petition in its entirety but, rather, should have waded through the myriad allegations and dismissed with specificity only those
which did not sufficiently allege conduct that constituted harassment, stalking or
any other act listed in Family Ct Act  821(1). The order granting respondent's motion to
dismiss the February 18, 2011 petition was reversed, the motion denied and matter remitted to the Family Court for further proceedings not inconsistent with the Court's decision.




Family Court Lacks Subject Matter Jurisdiction to Enforce Purported Modification Agreement Not Incorporated into Judgment


In Hirsch v Schwartz, --- N.Y.S.2d ----, 2012 WL 1033520 (N.Y.A.D. 3 Dept.)    Petitioner (mother) and respondent ( father) were divorced in 2009 and had two children from the marriage (born in 2001 and 2003). The parties' 2007 separation agreement, which required the father to pay 96% of all child-care expenses, was incorporated but not merged into their 2009 judgment of divorce. Shortly thereafter, the mother sent the
father a letter offer which proposed a reduction of the father's child-care
expenses from 96% to 75%. Although the father did not sign and return the letter
offer he made at least two full reimbursement payments and several partial
payments in the months that followed.   The mother subsequently commenced this proceeding seeking to enforce the child support provisions of the judgment of divorce. In response, the father argued that the mother's letter offer served to modify his support obligations and that the terms of this subsequent agreement should be enforced. Following a trial, a Support Magistrate found that the letter offer constituted a valid modification of the parties' separation agreement that reduced the father's child-care expenses to 75%, and ordered arrears in the amount of $2,625.25. Upon the mother's written objections, Family Court concluded that the Support Magistrate lacked the
authority to enforce the terms of the purported modification agreement and,
therefore, the provisions in the judgment of divorce concerning the father's
child-care obligations controlled. The Appellate Division affirmed. It observed that Family Court, as a court of limited jurisdiction, may only enforce or modify child support provisions contained in a valid court order or judgment ( Family Ct Act  422, 461[b][I];  466;  Matter of Johna M.S. v. Russell E.S., 10 NY3d 364, 366 [2008]; Matter of Brescia v. Fitts, 56 N.Y.2d 132, 139 [1982]; Kleila v. Kleila, 50 N.Y.2d 277, 282 [1980] ). Thus, even assuming that the mother's letter offer constituted a valid modification of the parties' separation agreement, Family Court did  not have subject matter jurisdiction to enforce the amended agreement which stands as an independent contract between the parties .

New Child Support Standards Chart released April 1, 2012 


According to the Child Support Standards Chart, [LDSS 4515 (4/12)] released April 1, 2012, prepared by New York State Office of Temporary and Disability Assistance, Division of Child Support Enforcement, the 2012 poverty income guideline amount for a single person as reported by the United States Department of Health and Human Services is $11,170 and the 2012 self-support reserve is $15,080. 


The combined parental income amount is $136,000. It will be adjusted every two years (effective January 31st for applicable years) based on the average annual percent changes to the federal Department of Labor’s Consumer Price Index for Urban Consumers. The adjusted combined parental income amount will be announced and available at January 31st until such time as this revised form is released. st for applicable years) based on the average annual percent changes to the federal Department of Labor’s Consumer Price Index for Urban Consumers. The adjusted combined parental income amount will be announced and available at www.childsupport.ny.gov until the revised Child Support Standards Chart is released.


The Child Support Standards Chart is released each year on or before April 1. The income tables are used to determine the annual child support obligation amount pursuant to the provisions of Chapter 567 of the Laws of 1989.  The chart may be downloaded from https://newyorkchildsupport.com/dcse/pdfs/cssa_2012.pdf.


Res Judicata Bars Court from Considering Fathers Biological Parental Status Which Holds He Has No Standing to Seek Visitation with Child


In Matter of Weaver v Durfy--- N.Y.S.2d ----, 2012 WL 895497 (N.Y.A.D. 4 Dept.) Family Court  dismissed the Petitioners prior petition seeking to establish paternity of the child. The court found that respondents were married when the child was born and at the time of the hearing on the paternity petition and that, based upon petitioner's admissions, he had acted as a friendly neighbor to the child, although he had regular and significant contact with the child with respondents' consent. The court therefore determined that it was not in the best interests of the child to disrupt her legitimate paternal relationship with respondent father.  After he perfected his appeal from the prior order dismissing the paternity petition, petitioner discontinued that appeal based on his agreement with respondents that respondent mother and the child would participate in DNA testing, which revealed a probability of 99 .99% that petitioner was the child's biological father, and that respondents would permit petitioner to visit with the child. The child subsequently began to receive Social Security benefits as petitioner's biological child. Thereafter, respondents refused to permit petitioner to visit with the child, and he filed a petition seeking, inter alia, visitation based upon the DNA test results. Family Court determined that the petition was barred by res judicata and dismissed the petition. The Appellate Division affirmed. It observed that the resolution of the proceeding presented a coalescence of the various societal interests promoted by the doctrine of res judicata, particularly the need for finality, stability and consistency in family status determinations. Thus, the court properly determined that it was prohibited by the doctrine of res judicata from considering petitioner's biological parental status as a basis for determining his standing to seek visitation with the child and as petitioner has no legal standing to seek visitation with the child, the court properly dismissed the petition.


Where Agreement Required Decedent to Name Children as the "Joint Irrevocable Designated Beneficiaries" He Was Without Authority to Name Any Other Person as a Partial or Sole Beneficiary 


In Johnson v New York State and Local Retirement System, --- N.Y.S.2d ----, 2012 WL 895707 (N.Y.A.D. 4 Dept.) Plaintiff Wendy Johnson and Dan Johnson (decedent) were divorced in 1998. During the divorce action, they executed a matrimonial settlement agreement, pursuant to which they were required to name their children, plaintiffs Dane Johnson and Danika  Johnson, as "joint irrevocable designated beneficiaries" of, inter alia, the death benefits provided by their retirement plans. That agreement was subsequently incorporated but not merged into the judgment of divorce. In March 1998, shortly before executing the matrimonial settlement agreement, decedent had named his then girlfriend, defendant Kimberly Leone-Johnson, as a one-third beneficiary of his New York State Retirement Plan death benefit and each of his children as a one-third beneficiary. Leone was not removed as a beneficiary after the judgment of divorce was entered in May 1998 and, moreover, in June 1998 decedent purportedly designated Leone as the sole beneficiary of his retirement plan death benefit.   In July 2000 decedent and Leone executed a prenuptial agreement and were married. Pursuant to that agreement, decedent and Leone expressly waived all rights and claims to each other's pensions and retirement plans. In June 2006, decedent and Leone executed a separation agreement, which contained clauses that, inter alia, reaffirmed the pension and retirement plan waivers contained in the prenuptial agreement and mutually released and waived all rights that decedent and Leone had to each other's estate. Decedent and Leone allegedly reconciled without divorcing just prior to decedent's death in October 2008. No beneficiary changes were made to decedent's retirement plan death benefit after Leone was allegedly named the sole beneficiary in 1998. After decedent died, however, defendant New York State and Local Retirement System (System) notified Leone that decedent's designation naming her as the sole beneficiary was invalid and that the System intended to disburse the death benefit to Leone and the children in accordance with decedent's March 1998 designation.    Plaintiffs commenced an action seeking to designate the children as the joint irrevocable beneficiaries of decedent's retirement plan death benefit in compliance with the matrimonial settlement agreement and to remove Leone as a beneficiary thereof. They moved for summary judgment and Supreme Court determined that Leone and the children were each entitled to one-third of decedent's retirement plan death benefit. The Appellate Division held that Leone was not entitled to any part of decedent's retirement plan death benefit.    The matrimonial settlement agreement clearly required decedent to name the children as the "joint irrevocable designated beneficiaries" of his retirement plan death benefit. As a result of that agreement, decedent was without authority to name any other person as a partial or sole beneficiary of such death benefit. Moreover, any right to that benefit that Leone would have acquired by virtue of being married to decedent was waived by the prenuptial and separation agreements. The court erred in determining that Leone's waiver of her interest in the retirement plan death benefit was not "explicit, voluntary and made in good faith" ( Silber v. Silber, 99 N.Y.2d 395, 404,cert denied 540 U.S. 817). The contention of Leone that decedent's obligation to name the children as beneficiaries of his retirement plan death benefit was solely to provide security for his child support obligation was contrary to a fair interpretation of the matrimonial settlement agreement. It  rejected Leone's further contention that her separation agreement with decedent became void when they allegedly reconciled prior to his death. By its terms, the separation agreement could only be canceled in writing.


Improper for Court to Take Judicial Notice of Factual Material in Filed Net Worth Statement.


In Halse v Halse, --- N.Y.S.2d ----, 2012 WL 850604 (N.Y.A.D. 3 Dept.)  Plaintiff commenced an action for divorce in September 2008 and, thereafter, a pendente lite order was entered which, among other things, directed the parties to submit to drug testing and prohibited the parties from selling or transferring any assets. In June 2010, plaintiff moved to have defendant held in contempt, alleging that she had sold various marital assets and was using drugs and alcohol. After a nonjury trial, Supreme Court issued a judgment of divorce, ordered the equitable distribution of marital assets, awarded maintenance to defendant and ordered plaintiff to pay child support for the parties' two children. In a separate order, the court adjudged defendant to be in contempt of the pendente lite order, but imposed no punishment.
The Appellate Division held that substantial deference is accorded to the trial court's determination regarding equitable distribution so long as the requisite statutory factors were considered. In this case, it was apparent that  Supreme Court considered all of the relevant factors before equitably distributing the parties' marital assets; of particular note was the long duration of the marriage and the parties widely disparate future financial circumstances. Moreover, contrary to plaintiff's contention, the record reflected that Supreme Court adequately addressed defendant's dissipation of marital assets. Notably, the court awarded plaintiff adjustments to compensate him for the value of various items of marital property that had been improperly sold by defendant, including $12,500 representing half of the value of a backhoe.  As for the marital residence, it was not persuaded by plaintiff's contention that he should have been awarded an adjustment based upon defendant's alleged dissipation of that asset. While the evidence did indicate that defendant had not maintained the residence in optimal condition, there was also evidence that the real estate market was overburdened with properties in the residence's price range and that market conditions, in general, had declined. As such, there was no definitive proof that the approximately $200,000 decline in the market value of the house was due solely to defendant's actions. Further, although plaintiff opined that the residence needed between $45,000 and $62,000 in repairs to become marketable, he submitted no proof to support these figures. In awarding defendant maintenance, Supreme Court considered the statutory factors and determined that a maintenance award to defendant in the amount of $3,000 per month for two years and then $2,500 per month for three years was appropriate. Although defendant did not offer a statement of net worth at trial, the record contained sufficient evidence regarding both parties' assets and liabilities to permit it to conclude that the durational maintenance award was a provident exercise of the court's discretion The Appellate Division pointed out in a footnote that although defendant filed a statement of net worth with Supreme Court in 2008, it was not proper for the court to take judicial notice of the factual material contained therein (citing Matter of Grange v. Grange, 78 A.D.3d 1253, 1255 [2010] ).


Failure to Disclose Financial Information and Lack of Counsel Insufficient to Set Aside Prenuptial Agreement 
                                                   
In Cohen v Cohen, --- N.Y.S.2d ----, 2012 WL 851206 (N.Y.A.D. 1 Dept.) the Appellate Division held that plaintiff's alleged threat to cancel the wedding if defendant refused to sign the agreement did not constitute duress ( Colello v. Colello, 9 A.D.3d 855, 858 [2004]). Nor did the absence of legal representation establish overreaching or require an automatic nullification of the prenuptial agreement, especially as the evidence showed that the agreement was prepared by an independent public official unaligned with either party. Plaintiff's alleged failure to fully disclose his financial situation was also insufficient to vitiate the prenuptial agreement ( Strong v. Dubin, 48 A.D.3d 232, 233 [2008] ). There was no evidence that plaintiff concealed or misrepresented any financial information or the terms of the agreement. To the extent the prenuptial agreement, to be enforceable in New York, must contain an acknowledgment sufficient to entitle a real property deed to be recorded, this requirement was  satisfied by plaintiff's filing, at the direction of the court, of a certificate of conformity attesting to the credentials of the French official who drafted the agreement, and certifying that his proof of acknowledgment of the agreement conformed to the laws of France (Real Property Law 301-a).


Where Supreme Court Refers Issue to Family Court, it  Has  Jurisdiction to Determine Issue of Child Support During  Divorce Action.


In  Francois v Francois, --- N.Y.S.2d ----, 2012 WL 833185 (N.Y.A.D. 2 Dept.) the Appellate Division held that the Family Court had subject matter jurisdiction to hear and determine the issue of child support during the pendency of the divorce action. When an action for divorce is pending, the Family Court may exercise its jurisdiction only in certain situations, such as where the Supreme Court refers an application for support to it ... or where the Supreme Court has not acted concerning support and the spouse is likely to need public assistance" ( FCA 464). Here the Supreme Court referred all issues of child support to the Family Court for a hearing and determination .Accordingly, the Family Court properly exercised its jurisdiction over the child support proceeding.




Spouse generally obligated to pay 50% share of income tax liability if spouse benefits from use of funds or delay in paying tax liability.  Imputation of income may be based upon testimony of expert. Provision for Future Modification Improper.


In Lago v Adrion,--- N.Y.S.2d ----, 2012 WL 833203 (N.Y.A.D. 2 Dept.), the parties were married on September 10, 1995, and had one child, born October 28, 1996. The plaintiff wife commenced the  action by filing a summons and complaint on September 19, 2006, after 11 years of marriage. The parties agreed on joint custody of the child and the primary physical residence of the child with the plaintiff, and consented to a divorce on the ground of constructive abandonment. In March 2010 the parties proceeded to a nonjury trial on certain financial issues.   At the conclusion of the trial, the Supreme Court found that the defendant was a tax attorney with a current income of $475,000 per year, that the plaintiff was not working, and that the plaintiff had a masters' degree in architecture from Harvard University and performed some doctoral work at the Massachusetts Institute of Technology. Based upon her educational qualifications and experience, and expert testimony, the Supreme Court imputed income of $80,000 per year to the plaintiff. The Supreme Court determined that the defendant was obligated to pay $2,041 per month in basic child support based on the plaintiff's imputed income of $80,000 per year, and a finding that the child support percentage should only be applied to the first $150,000 of the defendant's annual income. The supplemental findings of fact stated that "[t]o the extent that this court may have deviated from the guideline standards," it did so for the reasons that the child was "thriving" on the pendente lite child support of $2,041 per month, and the parties' standard of living during the marriage was that of a "middle-class" family. The judgment appealed from further provided that "should the Defendant lose his law license by suspension, revocation, or otherwise, and be unable to sustain his current level of income, such event shall constitute a sufficient change of circumstances warranting application for downward modification" of child support.    With respect to the equitable distribution of property, the Supreme Court concluded that the parties incurred Federal tax liability of $430,476 for 2005 and 2006 up until September 19, 2006, and New York State tax liability of $38,000 for that same period, which constituted a marital debt which should be divided equally between the parties. This tax liability included interest and penalties. The Supreme Court held that the plaintiff's one-half share of that tax liability was $234,238.
The Appellate Division held that Supreme Court properly imputed $80,000 in annual income to the plaintiff based upon her education and experience, and the testimony of the defendant's expert. "In determining a child support obligation, a court need not rely on a party's own account of his or her finances", but may, in the exercise of its considerable discretion, impute income to a party based upon his or her employment history, future earning capacity, and educational background , and what he or she is capable of earning, based upon prevailing market conditions and prevailing salaries paid to individuals with the party's credentials in his or her chosen field . Further, imputation of income may be based upon the testimony of an expert regarding a party's ability to earn an income. Here, the Supreme Court's imputation of income was supported by unrefuted expert testimony and testimony regarding the plaintiff's education and experience.
The Court observed that effective January 31, 2010, the Child Support Standards Act provides that the applicable child support percentage should be applied to the first $130,000 of combined parental income (DRL 240[1-b] [c][2];  SSL111-i[2][b]). Where the parents' income exceeds the income cap, as in this case, the amount of child support in excess of the income cap is determined based upon a consideration of factors set forth in DRL 240 (1-b)(f) "and/or the child support percentage" (DRL 240 [1-b][c][3]). The factors set forth in Domestic Relations Law s 240(1-b)(f) include, in  pertinent part, the financial resources of both parents, the needs of the child, the standard of living the child would have enjoyed had the marriage not been dissolved, nonmonetary contribution that the parents will make to the care and well-being of the child, and any other factor which the court determines to be relevant to the case. Here, the evidence at the trial supported the Supreme Court's conclusion that, during the marriage, the child enjoyed a "middle-class" lifestyle, and her needs were met by the pendente lite child support award of $2,041 per month. The application of the child support percentage to the first $150,000 of the defendant's annual income, and the amount of child support awarded was supported by the record.
  The Appellate Division held that the provision of the judgment of divorce which stated that, "should the Defendant lose his law license by suspension, revocation, or otherwise, and be unable to sustain his current level of income, such event shall constitute a sufficient change of circumstances warranting application for downward modification" of child support, was improper. ( Matter of Knights v. Knights, 71 N.Y.2d 865). This provision of the judgment was deleted.
The Appellate Division observed that the income tax liability of the parties was subject to equitable distribution, but equitable distribution does not necessarily mean equal distribution. A spouse is generally obligated to pay his or her 50% share of income tax liability during the marriage if the spouse benefits from use of the funds or the delay in paying the tax liability.  However, if one spouse makes the financial decisions regarding the income tax return, and earned virtually 100% of the parties' income during the period, the court, in its discretion, may direct that spouse to pay the entire tax liability. The defendant acknowledged that he handled all tax matters for the parties during the marriage, and attributed his inability to pay his taxes from his current income to the fact that his expenses were too high, in part because he had to maintain a rented home for his family while the parties' house in Pawling was being renovated. The evidence adduced at trial indicated that it was his decision to move the parties' full-time residence to the house in Pawling, despite the fact that the house was in "bad shape."  Under the circumstances of this case, it could not  be said that the plaintiff derived a benefit from the defendant's failure to pay the taxes . The Appellate Division held that Supreme Court, in its discretion, should have directed the defendant to pay the entire tax liability.  


Supreme Court Agree’s with Justice Falanga - Holds Plaintiff's Self-serving Declaration about State of Mind Is All Required for Divorce on “Irretrievable Breakdown” Ground, Disagreeing with Schiffer v. Schiffer and  Strack v. Strack.


In Vahey v Vahey, --- N.Y.S.2d ----, 2012 WL 832350 (N.Y.Sup.) Supreme Court granted the defendant’s motion to dismiss the action pursuant to CPLR 3211(a)(7) to the extent that the first and second causes of action, alleging cruel and inhuman treatment and constructive abandonment, respectively, were dismissed.
Supreme Court observed that  CPLR 3016(c) requires that in an action for divorce, "the nature and  circumstances of a party's alleged misconduct, if any, and the time and place of  each act complained of, if any, shall be specified in the complaint ..." In this case, the plaintiff has sought a divorce on three grounds: cruel and inhuman treatment, and an irretrievable breakdown in the  marital relationship. 
The Court agreed with the defendant that a claim of cruel and inhuman treatment was not made out, as it did not specify the time and place of the misconduct, and, in addition, did  not allege conduct that rises to the required level. All that was alleged was that the wife called the husband vile names and used obscene language, told the plaintiff husband that she didn't want to be married to him any more, and that he was not a good husband. This was patently insufficient and this claim was dismissed. 
The plaintiff alleged in his verified complaint that "The relationship between Plaintiff and Defendant has broken down irretrievable [sic] for a period of at least six months."The Supreme Court disagreed with the defendant that CPLR 3016(c) and the cases that cite that statute mandate factual allegations supporting this claim.  CPLR 3016(c) refers to the necessity of pleading allegations of "misconduct." Domestic  Relations Law  170(7) permits a party to seek a divorce upon a sworn statement by that party that the marital relationship between husband and wife has broken down irretrievably for a period of at least six months. This has been pled. This section does not require the plaintiff to allege that the other party was responsible for the breakdown or had misbehaved in any way. The very essence of the law is to dispense with the necessity of proving misconduct by the other spouse. CPLR 3016(c) speaks only of pleading acts of misconduct, and misconduct does not have to be alleged under Domestic Relations Law 170(7). Therefore, it is  more accurate to say that CPLR 3016(c) continues to apply where marital fault is alleged, but does not apply when the plaintiff alleges a breakdown in the relationship, as there is no need to cast blame on the other party. Given the clear language of the statute regarding the need to prove "misconduct," the lack of an amendment to CPLR 3016 indicated that the Legislature was not requiring a party asserting the new "no-fault" ground to plead and prove facts in support of the irretrievable breakdown. If its intention were otherwise, such an amendment to the divorce action pleading requirements would be needed. Rather, all that is required is the sworn statement of the irretrievable breakdown, a statement that finds no counterpart in any of the "fault" grounds. Accordingly, the motion to dismiss was denied as to the claim made under Domestic Relations Law 170 (7).  The Court noted that as the Legislature in adopting section 170(7) has not required the pleading of objective facts of the breakdown, but has required instead no more than a sworn statement of a breakdown by the plaintiff, it did not appear that a plaintiff can be put to his or her proof on the subject. Under this ground the plaintiff's sworn belief about the state of the relationship must be deemed sufficient, for if not the party seeking the divorce on this basis could be put through the same type of litigation regarding the martial relationship that this legislative addition was clearly designed to avoid. The Court agreed with the analysis set forth by Justice Falanga that the section 170(7) ground is inherently subjective in nature, and "a plaintiff's self-serving declaration about his or her state of mind is all that is required for the dissolution of a marriage on the ground that it is irretrievably broken." D.R.C. v. A.C., 32 Misc.3d 293 (Sup Ct Nassau County 2011). The Court disagreed with the views expressed in  Schiffer v. Schiffer, 33 Misc.3d 795 (Sup Ct Dutchess County, 2011) and  Strack v. Strack, 31 Misc.3d 258 (Sup Ct Essex County 2011).
 The Court denied that cross motion  for a sharing of family expenses pro rata based upon the parties' income at the commencement of the action. There was no demonstration that the reasonable needs of the movant or of the parties' children were not being met, as all continued to reside together in the marital residence, and it was apparent that the bills were being paid. The basis of the request for this relief was that plaintiff believed it unfair that the defendant, who retired from the New York City Police Department after the action was commenced, now asserted that she no longer had her full salary and thus had less to contribute to household expenses. Plaintiff, in effect, wanted the Court to "balance the scales" by imputing income to the defendant and to direct specific percentages based on such imputed income. This is not the purpose of a pendente lite award.  Here, there was no proven need for support on the part of the moving party, especially in view of the fact that even before the defendant's retirement the plaintiff's income exceeded hers.