Opinion
No. 203114/08.
2010-06-24
Hannelore FUERST, Plaintiff, v. Wolfgang FUERST, Defendant.
Carway & Flipse, Esqs., Mineola, Attorney for Plaintiff. Seligman & Seligman, Esqs., Kingston, Attorney for Defendant.
Carway & Flipse, Esqs., Mineola, Attorney for Plaintiff. Seligman & Seligman, Esqs., Kingston, Attorney for Defendant.
ROBERT A. BRUNO, J.
Plaintiff seeks an order: (a) restraining and enjoining the Defendant from taking any further action to advance the divorce proceedings which he has initiated in the courts of the Nation of Germany, or, in the alternative, Ordering the defendant to take all measures needed to withdraw the divorce action which he commenced in the Courts of the Nation of Germany on or about December 15, 2009; (b) in the event the Court is not inclined to order the injunctive relief set forth in (a) above and the temporary relief provisions set forth below, an order directing Allison Korbage, Esq., to release the proceeds of the marital residence which are held in escrow in the amount of approximately $277,000.00 to the plaintiff and an order directing Merrill Lynch to release to plaintiff the entire account with an approximate balance of $237,000.00 being held by Merrill Lynch under account number X to the plaintiff, pursuant to the terms of the parties' oral stipulation on the record dated November 19, 2009; (c) or, in the alternative, to the relief sought in (b) above, directing Merrill Lynch to continue to hold the proceeds of Merrill Lynch account number X pursuant to the prior stays issued in these proceedings, pending other and further order of the Court; (d) directing the defendant to notify the Court of the Nation of Germany, and the Judge presiding over the proceedings which he initiated, in writing, that this action is currently pending before this Court; and (e) directing the defendant to request an adjournment of the Jurisdictional hearing before the German Court on April 28, 2010 until August, 2010 or until such time as this Court makes a determination of the motions currently pending before it. The defendant opposes the motion.
This action was commenced on November 24, 2008 and by stipulation, it was agreed that the plaintiff would receive pendente lite maintenance in the sum of $2,000.00 per month. The matter was scheduled for trial on November 16, 2009 and, afer an inquest on grounds on that date, the court granted a judgment of divorce but held the entry of judgment in abeyance pending resolution of the ancillary issues.
The trial continued and on November 19, 2009, the parties entered into an open court stipulation on the record. The court allocuted both parties on the record. Despite the fact that the husband's attorney indicated that she had advised him against entering into the stipulation, on being asked by the court whether it was “safe to say that you're doing it of your own free will?”, the husband answered, “yes, of course” (Transcript 11/19/09, 15–19). At another point the husband was asked by the court “And you're choosing to go forward at this point without your attorney's blessing, so to say. You understand that, right?” The husband replied “Perfectly” (Transcript 11/19/09, p. 4).
Although it was understood and agreed that a stipulation of discontinuance would be filed on the following day, this was never done, neither was a written separation agreement signed, as the parties had stipulated on the record that they would do. The reasons proffered as to why the Settlement Agreement was never executed ranged from logistical problems regarding the delivery and execution of documents to counsel for plaintiff being hospitalized for a heart condition.
On December 15, 2009, less than one month after the open court stipulation, the husband filed a divorce action in Germany. The husband took the position that, since there was a computer entry by the clerk of the court marking the case as “disposed”, the court no longer had jurisdiction over him. This court notes, initially, that the marking by the clerk that the case was “disposed” was a ministerial act which does not bind this court or divest this court of jurisdiction. An action is terminated in one of three ways, by entry of a judgment determining the action, by an order dismissing the action or by a discontinuance under CPLR § 3217(a) or (b). Since neither of these methods occurred in this case, the matter is not terminated, and this Court retains jurisdiction over this matter. “Generally, the presumption is that an action is not automatically terminated merely because a settlement has been reached, and this presumption may be overcome only by an express, unconditional stipulation of discontinuance.” ( see, Duman Realty LLC v. Stareshefsky, Sup.Ct. N.Y. Co., Scarpulla, J., decided 4/30/10; see, also, White House Manor, Ltd. v. Benjamin, 11 NY3d 393, 401 (2008); Teitelbaum Holdings, Ltd., v. Gold, 45 N.Y.2d 51, 54–55 (1979)).
More important, however, is the issue as to whether the stipulation on the record was a binding agreement permitting this court to compel compliance on the part of the husband. CPLR § 2104 provides that “[a]n agreement between parties or their attorneys, other than one made between counsel in open court, is not binding upon a party unless it is in writing subscribed by him or his attorney or reduced to the form of an order and entered” (emphasis added). Courts have enforced agreements made under what has become known as the “open court exception” to the writing requirement ( see, In re Dolgin Eldert Corp., 31 N.Y.2d (1972) because “strict enforcement not only serves the interest of efficient dispute resolution but also is essential to the management of court calendars and the integrity of the litigation process” (Hallock v. State of New York, 64 N.Y.2d 224, 230 [1984] ).
In Sood v. Sood, the court observed that “[i]t is well established that stipulations of settlement placed upon the record to settle a matrimonial action are not lightly cast aside and are enforceable absent showing of fraud, duress or mistake” (19 Misc.2d 971, 972, Sup.Ct., N.Y. Co., 2008, [Richter, J.,] citing, among other cases, Balkin v. Balkin, 43 AD3d 967 [2nd Dept.2007]; Weissman v. Weissman, 43 AD3d 448 [2nd Dept.2007] ). There is, however, some doubt as to whether open court stipulations in matrimonial cases are enforceable, as Richter, J., opined.
Domestic Relations Law, § 236(B)(3) provides that “[a]n agreement by the parties, made before or during the marriage, shall be valid and enforceable in a matrimonial action if such agreement is in writing, subscribed by the parties, and acknowledged or proven in the manner required to entitled a deed to be recorded.” Unlike CPLR § 2104, DRL § 236(B)(3) does not carve out an open court exception. This issue has split the Departments with the First and Second Departments holding such agreements valid (see, Storette v. Storette, 11 AD3d 365 [1st Dept.2004]; Rubenfeld v. Rubernfeld, 279 A.D.2d 153 [1st Dept.2001]; Balkin v. Balkin, and Weissman v. Weissman, supra ) while the Third and Fourth Departments have held to the contrary ( see, Lischynsky v. Linschynsky, 95 A.D.2d 111 [3rd Dept.1983], Giambattista v. Giambattista, 89 A.D.2d 1057 [4th Dept.1982], and Hanford v. Hanford, 91 A.D.2d 829 [4th Dept.1982] ).
In Matisoff v. Dobi, 90 N.Y.2d 127 (1997), the Court of Appeals held invalid a matrimonial agreement which had been acknowledged before a notary but the form of acknowledgment utilized was not the more recent one enacted and required RPL § 309–a, effective September 1,1999. The Court rejected the contention that the agreement could be saved by the sworn admissions of the parties at trial that they had duly executed the document. Hence there appears to be a rule, in the Court of Appeals and the Third and Fourth Departments, that strict compliance with the formalities laid down by the legislature in Domestic Relations Law, § 236(B)(3) is a condition precedent to the enforcement of matrimonial agreements. However, “ Matisoff made no mention of the interplay between CPLR 2104, which authorizes in-court stipulations, and DRL § 236, Part B, subdivision 3, requiring marital agreements to be written, signed and acknowledged” (McKinneys Consolidated Laws of New York, Domestic Relations Law, § 236, Part B, subdivision 3, C236B:18, at 369 [former Professor, now Justice Alan Sheinkman] ).
It is axiomatic that this court is bound by Second Department authority (cf, Mohen v. Stepanov, 59 AD3d 502, 504 [2nd Dept.2009], citing Mountain View Coach Lines v. Storms, 102 A.D.2d 663, 664 [2nd Dept.1984] ) and must hold, in the appropriate case, that an oral stipulation spread on the record is valid and enforceable. However, there are some issues which justify the conclusion that the open court stipulation in this case should not be enforced.
In Castellano v. Castellano, 66 AD3d 942 (2nd Dept. 10/27/09, citing Zafran v. Zafran, 28 AD3d 752, 753 [2nd Dept.2006]; Korngold v. Korngold, 26 AD3d 358 [2nd Dept.2006]; Leahy v. Leahy, 9 AD3d 351, 352 [2nd Dept.2004]; and Harrington v. Harrington, 103 A.D.2d 356, 359 [2nd Dept.1984] ), the Appellate Division stated that such oral agreements were enforceable “if spread upon the record and found to be fair and reasonable by the court ” (emphasis added). The highlighted language emanates from Domestic Relations Law, § 236(B)(3) which permits marital agreements “provided that such terms were fair and reasonable at the time of making of the agreement and are not unconscionable at the time of entry of final judgment.”
The prior proceedings in this case, took place before a different Judge who did not pass on any substantive part of the instant stipulation. The statute, DRL § 236(B)(3), however, requires a finding that the terms of the agreement be fair and reasonable. It is clear that the prior court did not determine whether the agreement was fair or not, presumably because it was to be reduced to writing in more detail.
There are some other concerns which this Court has with the stipulation. It is notable that the husband's counsel, Ms. Seligman, advised him against entering the stipulation because she felt that he would have to go into debt to satisfy the $610,000.00 payment to the wife “and I think it's unwise for him to do so” (Transcript 11/19/09, p. 3). The wife's counsel, Ms. Hausch, had observed that “the husband will indicate to us how he wishes to provide the 610 thousand dollars, because, from our perspective it doesn't make any difference how he gets it, where he gets it, what assets are transferred or anything else” (Transcript, p. 8).
Moreover, the agreement was entered into while all of the husband's bank accounts were frozen. Immediately after the statement by the wife's counsel, and the court's admonition to the husband to “[t]alk to your attorney for a second”, the husband blurted out: “I'm sorry, Your Honor. At the moment all my funds are still confiscated by the court. I have no access to any money. When will this money finally be given back to me?” Ms. Hausch, confirming the accuracy of the husband's assertions, retorted: “The minute that the action is withdrawn, which will be at the end of these proceedings, all of these stays fall and before the close of business, we will advise all of the banks that there are no longer any restrictions on those accounts.” The husband said “Thank you very much” and, in an outburst while addressing his attorney said “What do you mean it doesn't matter. God damn it. I have to have my money” (Transcript, pp. 8–9). The court then cautioned both parties against such outbursts and confirmed with Ms. Hausch that “today, the funds will be made available” (Transcript, p. 10).
Immediately after this, the following exchange occurred:
MS. SELIGMAN:Your Honor, I note that there was a missing 25 thousand dollars that Mr. Fuerst had loaned to her. He certainly should get credit for it.
MS. HAUSCH:Your Honor, in the calculations of the pluses and minuses and whatever, 610 thousand dollars is what Mr. Fuerst is going to pay. There were claims on both sides. They've all been resolved. That's what he has agreed to.
MR. FUERST:That claim was not resolved because I loaned Hannelore and she agreed that I loaned the 25 thousand dollars. She claimed she paid it back. She never paid it back.
MS. HAUSCH:We sat here, Mr. Fuerst, and we came to an agreement, I thought. If we haven't we haven't.
MR. FUERST:Okay. Forget the 25 thousand. Take it. Please don't. It's okay. It's okay. Your Honor, it's okay.
THE COURT:Stop for a second. Listen, I said before I don't know the details of your agreement other than what was just put on the record. I don't know and I can't pass on the fairness of the agreement. We just really started your trial. I just started hearing testimony. I heard lots of numbers. I've taken copious notes on everything I've heard, but I don't know about the fairness of anything that you're entering into right now. So your attorney sitting next to you is suggesting to you that you shouldn't be doing this.
MR. FUERST:I'm fully aware of it and I'm fully conscious of what I'm doing. I'm a grownup man, after all. So let her do it.
(Transcript, pp. 11–12).
While the transcript and the Second Department authorities suggest that the husband made a voluntary and knowing entry in the open court settlement, this Court finds that there is enough on the record which may impugn the fairness and reasonableness of the agreement. It is noted that this was all happening at the end of November 2009 and both parties were planning to travel to Germany for the holidays, while the husband, whose accounts were frozen, insisted that “I want my money back. I need my money back” (Transcript, p. 13). In addition to the foregoing, the time to perform the stipulation was not firmly established, rendering the stipulation difficult to enforce.
Unfortunately, this Court can only rely upon the record it has before it, as it was not present during the initial trial, open court stipulation or allocution made in open court, as this matter was recently re-assigned to this Court on or about April 22, 2010 when plaintiff moved by Emergency Order to Show Cause for a temporary restraining order, inter alia, enjoining the defendant from proceeding with a matrimonial action in the Nation of Germany, and as such, this Court did not have the benefit of observing the litigants and evaluating their credibility and demeanor. All stipulations and agreements made between the parties in the progress of an action in the Supreme Court, and affecting proceedings in it, and all orders entered thereon, are within the control of the court, and may be set aside in the discretion of the court whenever the parties can be restored to the same condition in which they would have been if no agreement had been made. The power of a trial court to exercise supervisory control over all phases of pending actions and proceedings has long been recognized (e.g. Barry v. Mutual Life Ins. Co., 53 N.Y. 536, 539 (1873). Incident to this general authority, a court possesses discretionary power to relieve parties from the consequences of a stipulation effected during litigation (e .g. Matter of Frutiger, 29 N.Y.2d 143, 149–150 [1971];Yonkers Fur Dressing Co. v. Royal Ins. Co., 247 N.Y. 435, 445 [1928] ). Therefore based upon the totality of the circumstances of this record, this Court finds that the fair and reasonable thing to do is to direct that this matter be put back on the trial/conference calendar, and that the purported open court stipulation should be set aside. Accordingly, the parties and their counsel are directed to appear before this Court on August 4, 2010, at 9:30 A.M., unless prior to that date, this Court receives from the parties either (1) a fully executed stipulation of discontinuance within the language of CPLR 3217; or (2) a copy of a settlement agreement in writing, signed by both parties and acknowledged in the same manner as would entitled a deed to be recorded.
In addition to the foregoing, the temporary restraining order issued by this Court on April 22, 2010, enjoining the defendant from taking any further action to advance the divorce proceedings which he commenced in the Courts of the Nation of Germany is continued and a preliminary injunction is hereby issued enjoining the defendant from taking any further action to advance the divorce proceedings which he commenced in the Nation of Germany.
All matters not decided herein are DENIED.
This constitutes the decision and order of this Court.