Opinion
800247-2020
01-27-2021
D.K., Plaintiff, v. E.K., Defendant.
Attorney for Plaintiff: Laraib Butt Friedman & Friedman, PLLC 516-222-1030. Attorney for Defendant: Neil Cahn PLLC 516-741-0001.
Attorney for Plaintiff: Laraib Butt Friedman & Friedman, PLLC 516-222-1030.
Attorney for Defendant: Neil Cahn PLLC 516-741-0001.
Edmund M. Dane, J.
PRELIMINARY STATEMENT
Plaintiff moves by Order to Show Cause dated November 16, 2020, seeking an Order pursuant to CPLR § 3212, granting the Plaintiff summary judgment and thereby dismissing the Defendant's Counterclaims seeking to set aside the parties' Prenuptial Agreement and Addendum dated May 28, 2008, for failure to state a material or triable issue of fact. Defendant opposes the motion.
BACKGROUND
On May 28, 2008, the parties entered into a Prenuptial Agreement and Addendum (collectively "Agreement"), at which time they were both represented by counsel. The parties were married shortly thereafter on June 15, 2008. There are two children of the marriage: X, born xx xx, xxxx, and X, born xx xx, xxxx. Plaintiff commenced this instant action for divorce on May 27, 2020. Defendant filed a Verified Answer and Counterclaim on June 23, 2020, seeking to set aside the Agreement.
The parties were each deposed regarding the claims set forth in Defendant's Counterclaim, as was the attorney who represented Defendant in connection with the Agreement, Steven G. Shakhnevich, Esq. ("Steven"). Plaintiff maintains that there exist no triable issues of fact which would require setting aside the Agreement.
The attorney who represented Plaintiff in connection with the Agreement defaulted in failing to appear for his deposition.
Plaintiff cites to Defendant's testimony wherein she acknowledged having been advised to seek her own independent counsel in connection with the execution of the Agreement and that she chose Steven, a friend/acquaintance of the parties from high school. Plaintiff argues that although Defendant states in her complaint that Plaintiff "told" her to use Steven, she testified that she had no objection to using Steven, that she was not forced to use him, and that she never expressed that she wanted different representation. Defendant testified that she initiated contact with Steven by telephone and asked him to represent her. Plaintiff refers to Defendant's testimony that there was no behavior on the part of Plaintiff that constituted overreaching in connection with the execution of the Agreement. Plaintiff further argues that while Defendant complains in her Counterclaim that Steven had little matrimonial law experience, she testified at her deposition that she had done no research when choosing counsel, did not seek a consultation with another lawyer, and did not ask Steven about his professional background or experience. Plaintiff credits Steven's testimony that he was qualified to represent Defendant, that he was aware of the equitable distribution and spousal support laws, that he was working under the tutelage of experienced matrimonial lawyer, and that he explained to Defendant her rights in the event of a divorce and how it differed from the terms of the Agreement. Plaintiff further points to the Addendum which awarded Defendant additional rights including maintenance in the amount of $36,000.00 or $6,000 per month for six months, allows her to enjoy an increase in any separate property asset (excluding the business) to the extent of her contributions, and requires Plaintiff provide her with health and dental insurance for a period of six months after a termination event.
Plaintiff further argues that Defendant was aware of her rights as she testified she knew she was waiving interest in the residence where the parties were residing, as well as the business, and that she declined her right to an appraisal. He points to her testimony wherein she stated she knew Plaintiff wanted a written agreement months prior to the wedding to "secure" what he had worked for. Plaintiff states that his net worth and income was disclosed and set forth in the Agreement, as was Defendant's. Plaintiff argues that Defendant admitted at her deposition to knowingly signing the Agreement, even if "one-sided," by testifying that even though she believed the Agreement was not fair and felt it was "unconscionable," she voluntarily chose to execute it anyway, without saying anything. Plaintiff maintains that the strong public policy in New York of allowing individuals to decide their own interests must be acknowledged and that Defendant has not met the very high burden to set aside the Agreement. He argues that Defendant is well educated, that the Agreement was entered into freely and voluntarily, and that Defendant understood its terms. He further argues that to prove overreaching in the execution, there must be concealment of facts, misrepresentation, cunning, cheating, sharp practice, or some other form of deception, none of which is present here. Plaintiff asserts that even where an agreement is one-sided, same is not a basis to overturn the agreement.
In opposition, Defendant suggests impropriety regarding the circumstances of her attorney's representation. Defendant states that Plaintiff chose a matrimonial attorney to represent him but recommended Steven, an attorney he knew did not primarily practice matrimonial law, to represent the Defendant. Defendant asserts that Steven received a draft of the Agreement from Plaintiff's attorney and could not recall whether he read the Agreement prior to meeting with the Defendant at his office for the first time. Defendant testified that during that first meeting Steven sat across from her while she read the Agreement and asked him questions. Defendant claims that Steven never told her that the Agreement meant there would be "no economic partnership" or what her rights would have otherwise been. Defendant cites to Steven's testimony wherein he stated he knew the Agreement was one-sided and therefore the addendum was meant to "give her something." The Defendant testified that she and Steven had two telephone calls after that first meeting, lasting 30 to 50 minutes each. Defendant could not recall anything that was discussed during those calls except that they set up a date and time to meet to sign the Agreement. Defendant further claims that the Agreement was unfair. Defendant cites to her testimony stating she understood "in very general terms that whatever [D.] had acquired before our marriage would belong to [D.]. And everything else that would be after the marriage it would depend on certain issues." She asserts that as a result of Plaintiff's claims of his separate property contribution to "joint assets," she may be precluded from receiving anything from those assets, other than $200,000 she accumulated in bank accounts during the marriage. Defendant states that she also received $36,000 in total maintenance but Plaintiff will leave the marriage with "perhaps $10,000,000 to $20,000,000" is assets. Defendant argues that the credibility issues cannot be resolved in the instant motion for summary judgment and that the terms of the Agreement are manifestly unfair. In sum, she argues that the Court should assume that Plaintiff recommended Steven because he was not a matrimonial attorney and that the Agreement and Addendum are manifestly unfair.
Defendant does not submit any affidavit in opposition. Rather, only an attorney affirmation is offered.
In reply, Plaintiff argues that Defendant's opposition is improper as she offers only an affirmation from counsel without personal knowledge of the facts. He further argues that Defendant's claims with respect to the assets and what Plaintiff might leave the marriage with must be disregarded as there have been no appraisals or valuations. Plaintiff maintains there is no triable issue of fact as Defendant mis-characterizes the sworn deposition testimony. Plaintiff notes the testimony establishes that Steven was a high school friend/acquaintance of both parties and that Defendant called him directly to seek out his services. He cites to the fact that the Agreement discloses the parties' net worth, annual income and assets, and that Defendant refused the option to have his business and residence appraised. Plaintiff further cites to Steven's testimony that Defendant was advised of her rights and that they did discuss the issue of support, which is how the Addendum came to be. Plaintiff argues that Defendant's claim that she was not adequately represented and that the terms of the Agreement are either unconscionable or overreaching must be rejected due to her admission that she chose Steven to represent her, she discussed the Agreement with him, and he answered all of her questions. Furthermore, he notes that Defendant has not alleged any concealment of facts, misrepresentation or any form of deception, thereby failing to establish overreaching.
DISCUSSION
The strong public policy in favor of allowing parties to decide their own interests through premarital contracts is well established, as is the presumption of validity of a duly executed prenuptial agreement. ( Bloomfield v. Bloomfield , 97 N.Y.2d 188, 738 N.Y.S.2d 650, 764 N.E.2d 950 [2001] ).
"A duly executed antenuptial agreement is given the same presumption of legality as any other contract, and is not burdened by a presumption of fraud because the parties subsequently enter into a confidential relationship (see, Eckstein v. Eckstein , 129 A.D.2d 552, 553, 514 N.Y.S.2d 47 ; see also, Matter of Phillips, 293 N.Y. 483, 490–491, 58 N.E.2d 504 ; Matter of Sunshine, 51 A.D.2d 326, 327, 381 N.Y.S.2d 260, affd 40 N.Y.2d 875, 389 N.Y.S.2d 344, 357 N.E.2d 999 )." Panossian v. Panossian , 172 A.D.2d 811, 569 N.Y.S.2d 182 [2nd Dept., 1991].
Although the Court must view the evidence in a light most favorable to the Defendant on Plaintiff's motion for summary judgment, it is the Defendant who must meet a very high burden to set aside the Agreement ( Anonymous v. Anonymous , 123 A.D.3d 581, 582, 999 N.Y.S.2d 386 [1st Dept., 2014] ). Setting aside a prenuptial agreement is "the exception rather than the rule," ( id. at 582, 999 N.Y.S.2d 386 ).
Nonetheless, a prenuptial agreement may be set aside where it is the product of fraud, duress, or overreaching resulting in manifest unfairness ( Christian v. Christian , 42 N.Y.2d 63, 396 N.Y.S.2d 817, 365 N.E.2d 849[1977] ). The crux of Defendant's argument is that the Agreement should be set aside both because there was overreaching in the selection of her counsel and/or counsel inadequately represented her, and also because the terms of the Agreement are either unconscionable or overreaching. Defendant's Representation
Although Defendant's pleadings suggest that Steven was a friend and classmate of the Plaintiff, the sworn testimony at her deposition establishes that Steven was a classmate of both parties, and enjoyed a friendly relationship with both parties. Defendant testified that while Plaintiff suggested she use Steven, a mutual acquaintance, she responded "Okay, that's fine. I'll use him." She testified that she did not object, that nobody stopped her from reaching out to other potential lawyers, and that she willingly and voluntarily called Steven to ask if he would represent her. When asked if she felt comfortable having Steven represent her, she responded "I was okay with having him represent me." She proceeded to meet with Steven in person, one-on-one, to review the proposed Agreement, had two additional telephone calls with him after that meeting, and met with him a final time to sign the Agreement and the Addendum. The mere fact that Plaintiff had a relationship with Steven does not suggest any wrongdoing or malfeasance (See: e.g. Levine v. Levine , 56 N.Y.2d 42, 451 N.Y.S.2d 26, 436 N.E.2d 476 [1982] [no overreaching where attorney, who was an acquaintance of both the Husband and the Wife, represented both parties at the Husband's request where Wife was told she could consult with another attorney]; Strong v. Dubin , 48 A.D.3d 232, 851 N.Y.S.2d 428[1st Dept., 2008] [fact that Plaintiff's counsel recommended an attorney for Defendant and that attorney had worked in Plaintiff's counsel office does not evince undue influence); Barocas v. Barocas , 94 A.D.3d 551, 942 N.Y.S.2d 491 [1st Dept., 2012] ; Smith v. Walsh-Smith , 66 A.D.3d 534, 887 N.Y.S.2d 565 [1st Dept., 2009] [no overreaching where Husband recommended counsel and paid the legal fees].
Defendant claims that Steven lacked sufficient matrimonial experience to represent her but she never questioned him about his professional experience. Steven testified that he was, in fact, familiar with matrimonial law and both qualified and competent to represent Defendant in connection with the Agreement. The Defendant testified that as she read the Agreement she asked Steven several questions, all of which were answered. She further testified that he clarified terms for her when she requested.
The Defendant testified that she was not forced to use Steven as her attorney. At the time of the execution of the Agreement, Defendant was well educated, having completed nearly seven years of higher education, only one month shy of becoming a licensed pharmacist. The Defendant chose to retain Steven, contacted him, reviewed the Agreement with him, and had all of her questions answered by him. There is no claim that he gave her false information. She did not have to use Steven but chose him to represent her. To ask the Court to set aside an agreement reached by the parties because in hindsight one party wished they used more seasoned counsel would have longstanding and unintended repercussions. A party's entitlement to be represented by counsel of his or her own choosing is a valued right ( Olmoz v. Town of Fishkill , 258 A.D.2d 447, 684 N.Y.S.2d 611 [2nd Dept., 1999] ; Campolongo v. Campolongo , 2 A.D.3d 476, 768 N.Y.S.2d 498 [2nd Dept., 2003] ). It would be patently improper for the Court to override a party's knowing and voluntary selection of counsel and consider invalidating an agreement based upon its own subjective belief of what credentials counsel should have. Requiring counsel have certain qualifications or experience, beyond being a member in good standing of the New York State Bar, is beyond the purview of the Court. Furthermore, the Agreement, which is initiated on each page, states in Section 11, titled "Legal Representation":
The parties each acknowledge that they have retained and have been represented by separate and independent counsel of their own choosing in connection with the negotiation of this Agreement. Each has been separately and independently advised regarding this Agreement including the rights waived or otherwise released herein.
The Court does not find that Defendant has not raised any triable issue of fact with respect to her request to set aside the Agreement based upon her representation.
Overreaching / Unconscionable
In determining whether an Agreement is invalid, courts may look at the terms of the agreement to see if there is an inference of overreaching in its execution. If the execution of the agreement was fair, no further inquiry will be made. ( Christian v. Christian , 42 N.Y.2d 63, 73, 396 N.Y.S.2d 817, 365 N.E.2d 849 [1977] ). The Defendant does not allege that the Plaintiff engaged in any overreaching in the execution of the Agreement. As she testified at her deposition:
Q. What behavior did D. engage in are you saying that constituted overreaching?
A. Behavior-wise, I wasn't speaking of behavior.
Q. So, there's no behavior on D.'s part that you're saying constitutes overreaching?
A. No.
Rather, she argues that the terms of the Agreement are unconscionable. Although the Agreement appears to be one-sided, or even "unfair," the Court finds that Defendant voluntarily and knowingly agreed to enter into such an Agreement. In fact, she testified to being fully aware that the Agreement was "unfair" or even "unconscionable" when she voluntarily signed it:
Q. So, did you feel when you signed it that it was unconscionable?
A. I felt that it was unconscionable. It wasn't fair.
Q. You felt that when you signed it?
A. Yes.
Q. And did you say anything?
A. No.
Q. Well, why didn't you say anything?
A. Because I know D., and I knew me saying
anything would not make a difference.
Q. So, why did you get married if you though it was unconscionable?
A. I didn't marry D. for his money.
Q. So, you married him feeling the Agreement was unconscionable, but you signed it voluntarily. Is that what your testimony is?
A. Correct.
Q. And you had an option to choose not to get married. Is that correct?
A. Correct.
Under these circumstances, it cannot be said that there was any undue influence or overreaching ( See: Strong v. Dubin , 48 A.D.3d 232, 851 N.Y.S.2d 428 [1st Dept., 2008] [no undue influence where Defendant was told agreement appeared one-sided and purportedly responded "It's okay. I just want to get married."]; Gottlieb v. Gottlieb , 138 A.D.3d 30, 25 N.Y.S.3d 90 [1st Dept., 2016] [willingness to enter into an agreement known to be one-sided cannot establish overreaching or procedural unconscionability]; Panossian v. Panossian , 172 A.D.2d 811, 569 N.Y.S.2d 182 [2nd Dept., 1991] [agreement enforced where Wife stated she willingly signed the Agreement in consideration of Defendant's wishes and acknowledged she was aware of the portent of the Agreement]).
"Although courts carefully scrutinize marital agreements based on the fidicuary relationship of the parties, an agreement is not unconscionable merely because some terms may seem improvident, it must shock the conscience to be set aside" ( Tremont v. Tremont , 35 A.D.3d 1046, 827 N.Y.S.2d 309 [3rd Dept., 2006] ). While the agreement is one-sided, the Court cannot say that it "shocks the conscience." It identifies the Plaintiff's business and the parties' residence as his separate property (as well as any subsequent residence purchased if the apartment was sold and a substitute residence purchased). The Defendant testified to her understanding of this and that any future business would also be "his." The Agreement further states that all property titled in an individual's name, whether acquired before or after the marriage, remains the separate property of the title holding spouse, including any growth or increase of that asset, and classifies property held in joint names as marital, with limitations depending on financial contributions made by the parties. The Addendum requires the payment of maintenance to the Defendant in the total sum of $36,0000, requires Plaintiff to provide six months of health insurance and dental insurance, and allows her to make claim to assets to which she make financial contributions.
Although the ultimate distribution of assets under the Agreement is entirely unknown to the Court, as is the value of the assets, it is undisputed that the Defendant, who entered the marriage with a net worth of between $4,000 and $25,000 will leave with a minimum of $200,000 and $36,000 in maintenance payments . They further acknowledge that at the time of the Agreement the Defendant had no income, whereas she is now self supporting, earning $75,000 per year working three days a week, with the ability to earn more. At the time of the Agreement, as was disclosed directly therein, Plaintiff's net worth was as high as $4,000,000 and his annual income was approximately $500,000.00, far in excess of Defendant's.
The parties have not yet discussed the issue of custody of the minor children with the Court but it is evident, based upon the income available to the parties, that all of the children's financial needs will be met and their standard of living maintained.
It is apparent that the Plaintiff will leave the marriage as he entered it, in a far superior financial condition than the Defendant. While a one-sided agreement resulting in substantial disparities of wealth may be unfair, it is not unconscionable if the facts are disclosed at the time the parties enter into the agreement ( Gottlieb v. Gottlieb , 138 A.D.3d 30, 25 N.Y.S.3d 90 [1st Dept., 2016] ). Here, Defendant's testimony established that she was aware of the facts and aware of what she was agreeing to.
It was no secret that the Plaintiff never intended for his marriage to Defendant to be an "economic partnership" and that he had no intention of sharing his wealth or ongoing success with her. Defendant testified that this was made abundantly clear to her, even while the parties were still dating:
Q. Did he mention without using the word "Prenup" that he would want a written agreement prior to marriage in case of a divorce?
A. I don't remember if he said written agreement or not. But he did make it known that he works very hard and he does not want anyone else to benefit from that.
Q. Including a wife?
A. Correct. A woman in his life.
Q. And he said that throughout the period you were dating?
A. Correct.
The very purpose of a prenuptial agreement is to agree to something other than what the law would otherwise provide in the absence of an agreement. Defendant was aware that the purpose of the Agreement was to shield Plaintiff's assets and income from her so that she, as his wife, would not "benefit." Defendant nonetheless chose to voluntarily enter into the Agreement and chose to marry the Plaintiff.
This Court may not "redesign the bargain" reached by the parties. In fact even in the context of prenuptial agreements, "judicial review should be "exercised circumspectly, sparingly and with a persisting view to the encouragement of parties settling their own differences in connection with the negotiation of property settlement provisions’ " Gottlieb , 138 A.D.3d at 36-37, 25 N.Y.S.3d 90, quoting Christian , supra 42 N.Y.2d at 71, 396 N.Y.S.2d 817, 365 N.E.2d 849.
For all of these reasons, Plaintiff's application is GRANTED, and it is
ORDERED, that Defendant's Counterclaims seeking to set aside the parties' Prenuptial Agreement and Addendum dated May 28, 2008 are hereby dismissed.
This constitutes the decision and order of this Court.