Opinion
3338/2008
02-21-2012
Roland Hackett, Plaintiff, v. Carol Hackett, Defendant.
Corey M. Shapiro, Esq. Attorney for the Plaintiff Sherman S. Sosnow, Esq. Attorney for the Defendant
Corey M. Shapiro, Esq.
Attorney for the Plaintiff
Sherman S. Sosnow, Esq.
Attorney for the Defendant
, J.
The following papers numbered 1 to 12 read herein:
Papers Numbered
Notice of Motion/Order to Show Cause/
Petition/Cross Motion and
Affidavits (Affirmations) Annexed1-2, 4-5
Opposing Affidavits (Affirmations)6,7
Reply Affidavits (Affirmations)8
Affidavit (Affirmation)3, 9-11
Other PapersSpecial Referee's file12
Introduction
Upon the foregoing papers, plaintiff Ronald Hackett moves, pursuant to CPLR 4403, for an order: (1) rejecting that part of Special Referee Charmaine Henderson's Report and Recommendations on Order of Reference After Trial (the Report), dated May 26, 2011 which denies plaintiff's claim for reformation based upon mutual mistake; (2) confirming that part of the Report which denies defendant Carol Hackett's counterclaims not withdrawn at trial; (3) rejecting that part of the Report which grants defendant counsel fees; and (4) granting to plaintiff such other, further and different relief as the court finds just and proper, together with the costs and disbursements of this action.
Defendant also moves, pursuant to CPLR 4403, for an order: (1) confirming that part of the Report which dismisses the complaint with costs, and the counterclaims of defendant; (2) confirming in part the award of counsel fees in the Report, in the sum of $10,000.00 to defendant, and adjusting the amount to cover all of defendant's counsel fees in the sum of $45,084.70 ($6,000.00 to be paid by plaintiff to defendant, and $39,084.70 to be paid by plaintiff to defendant's counsel); (3) awarding defendant reasonable counsel fees for the instant proceedings and prosecution of this application; and (4) granting defendant such other and further relief as the court finds just and proper.
Factual and Procedural Background
The Divorce Action
Plaintiff and defendant were married on November 20, 1982. Plaintiff commenced an action for divorce in the Supreme Court, Kings County, on February 1, 2005. The parties settled the divorce action by entering into a marital settlement agreement (the Agreement) duly executed on January 12, 2006, the same date the parties were set to appear before the court for an inquest. The distribution of the marital estate was set forth in a schedule incorporated by reference and annexed to the Agreement (Schedule A). At the January 12, 2006 hearing before the Honorable Jeffrey S. Sunshine, the court allocuted the parties on the Agreement, under oath; both parties stated, among other things, that they read the Agreement prior to executing same, fully understood its terms, and understood that it was a full and final agreement. The Agreement was incorporated but not merged in the Judgment of Divorce entered by this court on February 9, 2006. The Agreement
Pursuant to "Allocation of Property" paragraph on page 5 of the Agreement, the parties agreed that they "have evaluated their marital property' and/or separate property' and have arrived at an allocation and division thereof which they deem to be fair and equitable distribution considering all the financial, emotional and other facts and circumstances of their marriage." With respect to the marital residence located at 984 East 56th Street in Brooklyn, New York, the Agreement states that there exists on the property a first mortgage held by Washington Mutual, as well as a Washington Mutual home equity line of credit. The appraised value of the residence is listed as $465,000.00, leaving an estimated equity of $264,447.00 in the home. The Agreement further provides that:
"the Husband shall execute any and all documents, papers and forms necessary to
transfer to the Wife all of his right, title and interest in this marital residence within thirty (30) days from the date of the signing of this Agreement. The Husband waives and relinquishes any and all rights to the marital residence. The Wife shall indemnify, save and hold the Husband harmless regarding any and all claims by the Washington Mutual first mortgage account number xxxxxx82 [and Washington Mutual Equity Line Account xxxxxxxx81] or its Assignees or Successors for the aforesaid first mortgage [and equity line] along with any real estate taxes, homeowners insurance liens and utilities associated with this property. The Wife shall have exclusive use and occupancy of the marital residence commencing February 6, 2006 and beginning that date all costs, including mortgage payments, equity line payments, taxes, insurance, utilities, maintenance and upkeep shall be the exclusive responsibility of the Wife."
The account numbers stated herein have been partially redacted for privacy purposes.
The bracketed statements in this excerpt represent handwritten changes made to the face of the Agreement.
Pages 6 and 7 of the Agreement also state, among other things, that plaintiff is the sole owner of the business, Zuni Corporation, located at 598 Ninth Avenue, in New York, New York, which has a stipulated value of $325,000.00. Pages 7 through 9 of the Agreement contain the agreed upon distribution of the remaining marital assets, including: defendant's pension plan, various checking and savings accounts, investments, life insurance policies, IRA accounts and vehicles. Moreover, the Agreement states that the parties jointly own two funeral plots at Woodbridge Memorial Gardens in New Jersey, which they agree to sell to the highest bidder, and then equally divide the proceeds after the costs of the sale.
The "Allocation and Division of Martial Property and Debt" paragraph on page 9 of the Agreement states that:
"[t]he allocation and division of marital property and debt is listed on Schedule A of which is hereby incorporated by reference. See Schedule A. In order to equalize the allocation of marital equity so as to arrive at an equal division, the Husband shall pay to the Wife the sum of approximately $19,336.40 in one lump sum on or before January 31, 2006 by cashier check subject to the sum due to the Husband under the household expenses contribution provision of this Agreement. The parties shall cooperate in any request by either party or third party to execute any necessary documents to effectuate the transfers necessary to implement the above allocations."
In addition, pursuant to the "Joint Income Taxes and 2002/2003 Income Tax Refund" paragraph on page 11 of the Agreement, "[a]ny income tax refunds for the years 2002 and 2003, if received by the Husband during pendency of the divorce action shall be divided equally by the parties."
The "Default" paragraph on pages 13 and 14 of the Agreement also provides that:
"[i]n the event that either party, or his or her estate, shall be adjudged by a court of competent jurisdiction to have defaulted in the performance of the terms or provisions of this agreement, the party so adjudged, or his or her estate, shall be liable for and shall pay to the other party, or the other person having right of enforcement hereunder, reasonable attorneys' fees incurred in enforcing such performance, the amount of such attorneys' fees to be determined by said court without a jury, the parties expressly waiving trial by jury in that respect. . . Neither party, nor his or her estate, shall seek to enforce the terms of this agreement by a judicial proceeding unless he or she shall first have given notice to the other party of his or her intention to hold him or her in default and said default shall have continued for ten (10) days after the date of such notice to cure said default."
Schedule A
Schedule A, which is annexed to the Agreement, provides, in summary, as follows:
ASSETS
ASSET
VALUE
Marital Residence$264,447.00
NYCERS Defined Benefit Plan$196,420.00
City of NY Deferred Compensation Plan$12,184.00
United Methodist Defined Benefit/Comp Plan$4,485.00
Citicorp Savings Account$38,355.00
New York Life Insurance Policy$24,236.00
Citibank IRA Account$17,355.00
TOTAL:$557,442.00
Zuni Corporation$325,000.00
Citibank Checking/Savings Account$301.00
Citibank Checking/Savings Account$12,941.00
Washington Mutual Savings$1,250.00
Citicorp Investment Account$14,832.00
New York Life Insurance Policy$27,825.00
Citibank IRA$18,841.00
TOTAL:$400,990.00
DEBTS
Mortgage Washington Mutual Account$95,124.00*
Equity Line Washington Mutual Account$100,000.00
TOTAL:$195,124.00
* "The Washington Mutual Acct. No xxxxxx82 principal mortgage to be verified and adjusted as of January 31, 2006"
+--------------------------------------------------+ ¦EQUALIZE ¦ ¦ ¦ +-----------------------+-------------+------------¦ ¦Assets ¦$557,442.00 ¦$400,990.00 ¦ +-----------------------+-------------+------------¦ ¦Debts ¦($195,124.00)¦ ¦ +-----------------------+-------------+------------¦ ¦ ¦$382,318.00 ¦$400,990.00 ¦ +-----------------------+-------------+------------¦ ¦Husband's Total ¦$400,990.00 ¦ ¦ +-----------------------+-------------+------------¦ ¦Wife's Total ¦$382,318.00 ¦ ¦ +-----------------------+-------------+------------¦ ¦Subtract ¦$38,672.00 ¦ ¦ +-----------------------+-------------+------------¦ ¦Divide by ½ ¦50.00% ¦ ¦ +-----------------------+-------------+------------¦ ¦Husband Owes to Wife ¦$19,336.00 ¦ ¦ +-----------------------+-------------+------------¦ +-----------------------+-------------+------------¦ ¦ ¦Wife ¦Husband ¦ +-----------------------+-------------+------------¦ ¦Totals ¦$382,318.00 ¦$400,990.00 ¦ +-----------------------+-------------+------------¦ ¦Husband Payment to Wife¦$19,336.00 ¦($19,336.00)¦ +-----------------------+-------------+------------¦ ¦$381,664.00 ¦$381,664.00 ¦ ¦ +--------------------------------------------------+ The Plenary Action
Plaintiff commenced the instant action by filing a Verified Complaint on January 30, 2008, for reformation of the "equalization" sections of the Agreement, on the ground of mutual mistake. Plaintiff alleged that there was a "computational error which resulted in an unequal division of the marital estate notwithstanding an express intention in the Agreement that the distribution be equal." According to plaintiff, a debt in Schedule A of the Agreement was inadvertently "double counted." In the Verified Complaint, plaintiff further alleged that the "net result of this computational mistake was an unequal division of the marital estate to the detriment of plaintiff in the amount of $100,276.50, which amount includes the correct equalization payment due to plaintiff in the amount of $80,940.50[,] and the repayment of plaintiff's incorrect equalization payment to defendant in the amount of $19,336.00." Plaintiff alleged that because of the double counting of a debt in Schedule A, which is apparent on the face of the document, the parties' intent to equally divide the marital estate was not effectuated, and plaintiff did not receive the benefit of his bargain, while defendant received an inequitable windfall.
More specifically, in the Verified Complaint, plaintiff alleged that the marital home was mistakenly listed in the asset section of the Schedule at its net equity value of $264,447.00 (equal to the appraised value of the home, net of the debts on the marital residence, which consisted of a mortgage and a home equity line of credit in the amount of $195,124.00), instead of at its appraised market value of $465,000.00. Plaintiff alleged that the mortgage and home equity loan debts in the amount of $195,124.00 were then listed again, in the debt section. Consequently, plaintiff asserted that the division of assets was not equal. Plaintiff further alleged the Agreement contained an "additional misstatement," in that the net equity value of the home should have been stated as $269,876.00 (equal to the appraised value of the home [$465,000.00], minus the debt [$195,124.00]). As a result, plaintiff alleged that defendant's assets should have been listed at $562,871.00, rather than $557,442.00, a difference of $5,429.00.
Plaintiff further asserted that, if the debt had not been double counted, defendant would have paid to plaintiff the amount of $80,940.50, in order to equalize the marital estate. Plaintiff stated that he arrived at that amount by dividing in half the differences between the assets (minus debt) that the parties were each going to retain ($562,871.00, minus $400,990.00, equals $161,881.00, divided in half, equals $80,940.50). Therefore, plaintiff alleged that he was entitled to receive $100,276.50 (the total of what he already paid to defendant [$19,336.00], plus the amount defendant should have paid him had the mistake not occurred [$80,940.50]).
Defendant joined issue by filing a verified Answer, Affirmative Defenses and Counterclaim dated March 5, 2008. Defendant denied the substantive allegations of the complaint and asserted affirmative defenses, including that plaintiff's action for reformation was barred by: (1) the terms of the parties' Agreement, in which they released each other from all claims except those involving fraud or misrepresentation; (2) res judicata, since the parties reviewed the terms of the Agreement prior to duly executing it, were allocuted fully by the court and a Judgment of Divorce was entered; and (3) laches, in that defendant materially changed her financial position as a result of refinancing the mortgage on the former marital residence, and plaintiff delayed for an extended period of time in bringing this action.
Defendant also asserted counterclaims, wherein she alleged that, pursuant to the Agreement, plaintiff was to pay her the following amounts (which she alleged he did not pay):
"A. Balance for utilities, gas (heat) $1,030.00 and electricity $345.00, total $1,375.00.
B. Balance of one-half of the funeral plot, $2,000.00.
C. Defendant's share of 2004 tax rebate, $2,464.47.
D. Defendant's share of 2002 and 2003 rebates.
E. The known total is $5,839.47 plus 2002-2003 rebate."
Defendant asserted that, pursuant to the "Default" provision of the Agreement, she was entitled to counsel fees "to be determined by the Court by the reason of the plaintiff's failure to pay the amount set forth herein as a counterclaim."
Plaintiff withdrew the above counterclaims at trial, except for her claim to a share of the income tax refunds for the years 2002 and 2003, and her claim for a one-half share of two funeral plots.
Inasmuch as this was a plenary action, the matter was assigned to a general IAS part and, by order dated December 23, 2008, the Honorable Larry D. Martin denied a motion by plaintiff for summary judgment with respect to the complaint, finding, among other things, that a question of fact existed as to whether the monetary distribution in the Agreement expressed the intent of the parties.
Subsequently, defendant moved for an order awarding attorneys' fees, and plaintiff cross-moved for leave to renew and/or reargue his prior motion for summary judgment. By order dated June 5, 2009, Justice Martin denied both the motion and cross motion, finding that the alleged "new evidence" would not have changed the court's prior determination, and also that an award of attorneys' fees pursuant to the terms of the Agreement was premature.
Defendant then moved for an order granting her summary judgment with respect to her counterclaim, and plaintiff cross-moved for an order granting him leave to amend his complaint. By order dated May 13, 2010, Justice Martin denied both the motion and cross motion, finding that issues of fact existed with respect to the counterclaim (payment of the tax refunds and funeral plots), that an award of attorneys' fees was still premature, and that plaintiff's cross motion for leave to amend was procedurally defective and lacked merit.
On March 31, 2010, the Honorable Allen Hurkin-Torres, sitting in the Jury Coordinating Part (JCP-1), issued a short-form order on consent, which stated that the parties waived a jury trial, and that the action was transferred to the non-jury part on July 13, 2010. By short-form order dated September 21, 2011, the Honorable David Schmidt referred the instant matter to the undersigned, inasmuch as the original Agreement arose out of a matrimonial action before this court.
On November 3, 2010, Justice Sunshine referred the following issues as framed by counsel to Special Referee Charmaine Henderson (the Referee) to hear and report with recommendations: "if there was a mistake in calculation of division of property pursuant to agreement and counterclaim for various payments not made by plaintiff to defendant pursuant to agreement, which plaintiff denies. And counsel fees to defendant."
The hearing on the aforementioned issues was held on February 23, 2011. Plaintiff testified in his own behalf and called Zafar Bin Basher (Basher), a certified public accountant, as his witness; two exhibits were admitted into evidence. Defendant also testified in her own behalf; five exhibits were admitted into evidence. After receipt of the transcript, the action was adjourned to May 24, 2011, for issuance of a report with recommendations. The hearing testimony is summarized in further detail below.
On May 26, 2011, the Referee issued her Report with the following final recommendations: "The undersigned recommends to the Court that the plaintiff's plenary action for reformation of the parties' Agreement incorporated but not merged in their judgment of divorce entered on February 9, 2006 be denied after trial. The undersigned recommends that defendant's counterclaims be denied after trial and that the defendant's application for counsel fees and disbursements be granted to the extent that the plaintiff's be directed to pay the defendant's attorney Sherman F. Sosnow, Esq. $10,000.00 for counsel fees." The counterclaims referenced by the Referee were for: (1) reimbursement of the parties' 2002 and 2003 income tax returns; and (2) the payment of defendant's share of the proceeds of sale of two jointly-owned funeral plots.
On July 20, 2011, the parties appeared before this court for oral argument regarding the instant motions.
Hearing Before the Referee On February 23, 2011
Plaintiff's Testimony
At the hearing before the Referee on February 23, 2011, plaintiff testified as follows:
"Q: The question is, before you entered into the agreement, what was [the] intention of how to divide the marital estate with your wife:(February 23, 2011 Hearing Transcript [Transcript], page 16). Plaintiff further testified that he first saw a proposed draft of the marital settlement agreement in December 2005 (Transcript, page 17). According to plaintiff, "When I reviewed it, I reviewed the document thoroughly, and I recognized that one of the assets was incorrectly stated" (Transcript, page 17). According to plaintiff, on page five of the Agreement, the marital residence was listed at its appraised value of $465,000.00 (Transcript, page 18). Plaintiff further testified that:
A: It was intended that the assets would be divided equally."
"[n]ow on schedule A of the marital agreement, all the assets listed there stated at its stated value. However, the appraised value of the house was stated in net of the appraised value. In other words, there was a home equity line of credit and first mortgage that was used to reduce the appraised value. So it was stated net"(Transcript, page 18).
According to plaintiff, the first time he looked at the final Agreement was in the hallway outside of the courtroom prior to the hearing on January 12, 2006 (Transcript, page 19). Plaintiff testified that he was not able to review the entire Agreement prior to being called into the courtroom, because he was experiencing a "deep sense of frustration," and was not able to focus (Transcript, pages 25-26).Plaintiff also stated that when he reviewed the Agreement on January 12, 2006, he requested that it be changed to state that defendant was required to pay the home equity line of credit in addition to the mortgage for the marital residence (Transcript, pages 69-70). According to plaintiff, his counsel made this handwritten change to the Agreement, and both parties initialed the change (Transcript, page 70). Plaintiff stated that this adjustment to the Agreement was made so that it would "become current" (Transcript, page 71).
Furthermore, plaintiff testified that the Agreement did not provide for the equal division of the marital estate because it contained a "computational error," in that the marital residence was listed at its net value, rather than at its appraised value in the Schedule (Transcript, page 31). According to plaintiff, defendant received the benefit of two debt reductions for the mortgage and the home equity line of credit for the marital residence, which reduced her assets in the "equalization" section of the Schedule (Transcript, page 32).
Plaintiff testified that he sent a check to defendant in the sum of $9,951.20, which represented his "equalization payment" under the Agreement ($19,336.00), minus certain "post-commencement marital expenses" (Transcript, page 103). In addition, plaintiff testified that he purchased a four-family dwelling in Brooklyn, New York on or about February 16, 2007 (Transcript, page 93). Plaintiff stated that he obtained two mortgages on the property, one for $516,000.00 and another for $46,500.00 (Transcript, pages 94-95). Plaintiff testified that, approximately six months after he signed the Agreement, when he applied for the first mortgage on the aforementioned dwelling, he was required to contact the credit bureau to prove that he no longer owned the former marital residence (Transcript, page 122). According to plaintiff, "I had to go back and find the documents to show to the credit bureau that I did not have ownership of the premises. While I was going through that, the marital agreement, I found the problem of the marital estate being stated incorrectly on Schedule A" (Transcript, pages 122-123). Plaintiff stated that, around that time, he was notified that there was a delinquency on the payment of the mortgage of the former marital residence (Transcript, page 115).
Plaintiff further testified that he deposited tax refunds from 2002 and 2003 into the parties' joint checking accounts prior to the commencement of the divorce action (Transcript, page 36 and page 125). Additionally, plaintiff testified that he had the deeds for two funeral plots, but that he had not had success in selling them (Transcript, page 37). Plaintiff stated that the original purchase value of the plots was $4,000.00 (Transcript, page 116). According to plaintiff, in order to sell the plots, both plaintiff and defendant must consent and sign off on the sale (Transcript, page 38).
In addition, plaintiff testified that he signed a retainer agreement with his attorney in 2008, and that he has paid his attorney for the divorce (Transcript, page 130). Plaintiff stated that he has not paid his attorney anything since the divorce (Transcript, page 130).
Zafar Bin Basher's Testimony
Plaintiff also called witness Zafar Bin Basher (Basher), a Certified Public Accountant, who testified that there was an "error from the accounting point of view" in Schedule A (Transcript page 46). Basher noted that the assets going to plaintiff and to defendant, pursuant to the Agreement, were listed separately in Schedule A (Transcript, page 47). Bin Basher testified that:
"in the Schedule A in the area which is called equalization of these assets is that the outstanding debts which includes the mortgage and the equity line has subtracted from the wife's side once again. That is where the error appears."(Transcript, pages 47-48). Bin Basher testified that the arithmetic of the figures as they are listed in Schedule A is correct (Transcript, page 65). Defendant's Testimony
Furthermore, at the February 23, 2011 hearing, defendant acknowledged that, at her prior examination before trial on March 31, 2009, she affirmatively answered the following question:
"Q: I asked this question and you gave this answer, it is on page 21, line 23 [of the transcript of defendant's March 31, 2009 EBT], it starts:(Transcript, page 133).
Question: Do you believe that this agreement, or do you believe the intent of this agreement as written was to provide an equal division of marital property and debt?
Answer: Yes'
Is that the question I asked, is that the answer you gave at this deposition?
A. Yes"
In addition, defendant also testified, regarding her prior examination before trial, as follows:
"Q: One last question, Ms. Hackett. If you could turn to page 81 of the deposition transcript, line 23, I asked you this question: Do you think — excuse me, it is line 20 on page 81.(Transcript, page 133). Defendant further testified that when she signed the Agreement on January 12, 2006, she was satisfied with the settlement, and was aware of the "peculiarities" of Schedule A (Transcript, pages 135-136). According to defendant, in her mind, there was no mistake (Transcript, page 136).
Question: Is the debt counted once in the asset section and once in the debt section?
Answer: Looks that way to me.'
Do you remember I asked you that question, you gave that answer at the deposition?
Mr. Sosnow: We are not denying it.
The Court: Isn't that correct?
A: Yes"
"Mr. Sosnow" is defendant's counsel, Sherman S. Sosnow, Esq.
Defendant stated that, after the Agreement was signed, she received a deed with her name as the sole owner of the former marital residence (Transcript, page 136). Defendant testified that she obtained a new mortgage on the property, and she is the sole person responsible for that mortgage (Transcript, page 136). Defendant admitted that she assumed the obligation of the mortgage and the home equity line of credit, but she stated that she was "tricked into the equity loan" (Transcript, page 136). Defendant also testified that she was currently employed as a Tax Auditor with the New York City Department of Finance, and that she earned approximately $59,000.00 per year (Transcript, page 141). Defendant testified that she had a tenant in the former marital residence as well, who paid her rent in the amount of $1,350.00 per month (Transcript, page 141).
Defendant further testified that, over the course of the instant litigation, she paid $6,000.00 to her attorney (Transcript, page 143). Defendant also stated that, according to her billing statements, she owed her attorney an additional $39,085.00 (Transcript, page 143). Defendant testified that she did not have any funds with which to pay the aforementioned fees (Transcript, pages 144-145).
Defendant further stated that she did not believe the Agreement, as written, provided an unequal division of the marital estate (Transcript, page 147). In addition, defendant testified that it was her overall understanding that the marital estate was supposed to be divided equally pursuant to the Agreement (Transcript, page 149).
The Parties' Contentions
Plaintiff's Motion to Confirm in Part and Reject in Part the Referee's Report
Mutual Mistake
In his order to show cause, plaintiff alleges that the Referee erroneously concluded that: (1) plaintiff failed to establish a mutual mistake in the parties' Agreement, and (2) plaintiff's reformation claim should be denied. According to plaintiff, there is clear and convincing evidence of a mutual mistake in the record, including: (1) both plaintiff's and defendant's testimony that the parties intended to equally divide the marital estate; (2) Basher's uncontroverted expert testimony that there is an accounting error in Schedule A, which resulted in an unequal division of the marital estate; and (3) the Agreement itself, which states that all marital assets and debts are to be divided equally and which, other than the referenced accounting error, equally divides all marital assets and debts.
According to plaintiff, the Referee correctly found that the parties intended to equally divide all marital assets and debts, and yet she erroneously failed to find that there was a mutual mistake. Plaintiff notes that he testified on direct examination that the parties intended to equally divide the marital estate, based upon the long-term nature of the marriage. Plaintiff also cites the Referee's findings of fact in the Report that: "[i]n her deposition before trial, the defendant admitted that the intent of the parties was to distribute the assets and debts equally."
In addition to the findings and testimony stated above, plaintiff contends that the parties clearly expressed their intent to divide the marital estate equally in the Agreement itself. Plaintiff cites the following language from page 9 of the Agreement: "In order to equalize the allocation of marital equity so as to arrive at an equal division, the husband shall pay the wife . . ." Plaintiff also notes that, pursuant to the Agreement, the parties agreed to: (1) each take one of the two automobiles that the parties owned; (2) equally share the household expense costs remaining after credits for the rent collected on the marital household; (3) equally split the income tax refunds from 2002 and 2003; and (4) equally split the proceeds of sale from their funeral plots.
Moreover, plaintiff argues that not only does the record establish that the parties intended to equally divide the marital estate, but there is also clear and convincing evidence of the parties' mutual mistake. In that regard, plaintiff notes that he testified that there was an inadvertent double counting of a debt in Schedule A. Plaintiff also notes that he offered uncontroverted testimony from his expert, a certified public accountant, who opined that there was a double counting of a marital debt. Plaintiff contends that defendant offered nothing other than her own conclusory statements and self-serving testimony to refute Basher's expert testimony regarding the existence of a mistake in Schedule A.
According to plaintiff, defendant's statements that the Agreement was satisfactory to her, and that it contained no mistake, are contradicted by both her prior sworn statements, and the express language of the Agreement, both of which express an intent to divide the marital estate equally. Plaintiff contends that defendant's satisfaction with the Agreement is not surprising, given that the error in Schedule A resulted in her receipt of a windfall in the amount of $100,276.50.
Plaintiff further alleges that defendant's current financial circumstances are unknown, and should not preclude reformation of the Agreement to reflect the parties' true intent. According to plaintiff, the Referee found for defendant on the issue of reformation based not upon the evidence before her establishing the mistake, but instead on sympathy for defendant's alleged financial circumstances. Plaintiff contends that the Referee erroneously assumed that defendant would not be able to afford to pay plaintiff the $100,276.00 she owes him. Plaintiff alleges that defendant's financial information was inadequate, because her Statement of Net Worth was incomplete. According to plaintiff, defendant's Statement of Net Worth: (1) contains no income statement and no information about the rent defendant pays; (2) is missing a page in the liabilities section; (3) grossly undervalues defendant's pension by approximately $178,420.00; (4) has no accounting for the mortgage; and (5) is not certified by defendant or her attorney. Plaintiff also notes that he did not submit a Statement of Net Worth. Based upon the aforesaid incomplete financial record, plaintiff argues that the Referee erred in concluding that no injustice would result from the undisputed mathematical error in Schedule A.
Plaintiff also contends that the Referee mistakenly analogized the instant case to those cases where a party claims a mutual mistake is based upon having "undervalued" an asset. In that regard, plaintiff avers that the Referee's reliance on Kojovic v Goldman, (35 AD3d 65 [2006]), and Sweeney v Sweeney, (71 AD3d 989 [2010]), is misplaced, since these cases involve "undervalued" assets and are distinguishable. Plaintiff insists that in the instant case, the parties were aware of the value of the marital assets, and clearly expressed their intent to equally divide such assets in the Agreement, but mistakenly reduced that understanding in Schedule A, by making a mathematical error in the double counting of a debt. According to plaintiff, the instant case does not involve an undervaluation but, rather, a miscalculation.
Moreover, plaintiff alleges that the Agreement, which was reviewed and hastily signed in the hallway of the courthouse, included additions, including Schedule A, that the parties had not previously had an opportunity to review. Plaintiff contends that the parties' initials appear next to some of these changes in the Agreement, but he notes that there are no initials on Schedule A. According to plaintiff, the parties should be afforded greater protection under the circumstances, because they were not given an opportunity to negotiate and review changes made to the Agreement. According to plaintiff, reformation of an agreement due to mutual mistake is required where, as here, a writing does not set forth the actual agreement of the parties. Plaintiff further avers that the rushed setting in which the parties reviewed the final Agreement renders the need for reformation even more compelling here.
In addition to the errors articulated above, plaintiff alleges that the Referee improperly converts plaintiff's claim for mutual mistake into one of unilateral mistake on plaintiff's part. Plaintiff asserts that it was the responsibility of both parties to ascertain the error in Schedule A. Plaintiff maintains that it is inequitable that defendant received a windfall, while plaintiff did not receive the benefit of his bargain. According to plaintiff, the Referee's conclusion that plaintiff received the benefit of his bargain because he was able to remarry quickly invites punitive precedent that the court should take great pause in setting.
Defendants' Counterclaims
Plaintiff also requests that the court confirm that portion of the Report that denies defendant's remaining counterclaims that were not withdrawn at trial. With respect to defendant's counterclaim for the sale of the parties' two funeral plots, plaintiff contends that the Referee correctly found that plaintiff does not have any greater responsibility than defendant for the sale of these funeral plots. Further, plaintiff contends that the Referee correctly denied defendant's counterclaim regarding the reimbursal of income tax refunds for 2002 and 2003, based upon the fact that plaintiff demonstrated his compliance with the terms of the Agreement which provided for equal distribution of the refunds.
Counsel Fees
Finally, plaintiff requests that the court reject the Referee's recommendation regarding counsel fees. Plaintiff notes that the instant action is not a matrimonial action but, rather, a plenary action for reformation of a contract based on mutual mistake. As such, plaintiff argues that DRL §§ 237 and 238, the provisions cited by the Referee in her Report, are not applicable. According to plaintiff, the court's reliance on Fine v Fine, (26 AD3d 406 [2006]), is inapposite, since Fine involved a plenary action to enforce a fraudulently induced separation agreement, not to reform an agreement based upon a mutual mistake. Plaintiff asserts that Stephenson v Stephenson, (116 AD2d 504[1986]), is likewise distinguishable, since the Stephenson case involved non-payment and arrears of maintenance owed by the husband under a separation agreement, where the husband moved to rescind or reform the separation agreement to avoid payment.
Plaintiff also reiterates his position that the Referee did not base her findings on a complete and accurate portrait of the parties' financial circumstances. Moreover, plaintiff contends that the Referee improperly concluded that defendant's counsel complied with the court rules in timely submitting billing statements to defendant, a prerequisite for an award of counsel fees. Plaintiff notes that, pursuant to 22 NYCRR § 1400.3, a client is required to receive invoices at least every sixty days, and failure to comply with this rule precludes an attorney's recovery of a legal fee. According to plaintiff, defendant's counsel's billing statements are sporadic, at best, and cannot be characterized as substantial compliance with the law. Furthermore, plaintiff argues that the Referee ignores the fact that the Agreement controls the award of counsel fees in this action. According to plaintiff, the Agreement does not provide for such fees in actions for mistake. Rather, plaintiff contends that attorneys' fees were contemplated only for non-compliance with the terms of the Agreement. Defendant's Opposition to Plaintiff's Motion
Mutual Mistake
In opposition to plaintiff's motion, defendant contends that there is no evidence of a mutual mistake that would warrant reformation of the Agreement. Defendant notes that she executed the Agreement in court on January 12, 2006, and that she received a check from plaintiff in the sum of $9,336.00 on February 28, 2006. Defendant also notes that the parties each testified in court, on January 12, 2006, that they were satisfied with the Agreement, and that they knew the agreement was final. Defendant further alleges that plaintiff had the benefit of counsel throughout the divorce proceedings, that he holds a degree in public accounting, and that he is a New York Certified Public Accountant who has worked in both the finance industry and the restaurant business. Defendant cites plaintiff's testimony at his examination before trial that he received the proposed agreement three to four weeks before he signed it on January 12, 2006. Defendant also asserts that plaintiff's expert testified that the arithmetic and the figures in Schedule A of the Agreement were correct. Additionally, defendant alleges that she obtained a new mortgage on the marital residence, which incorporated the existing mortgage and home equity loan. According to defendant, after she obtained a new deed making her the sole owner of the marital residence, plaintiff purchased a four-family dwelling on East 96th Street in Brooklyn, New York, and obtained two mortgages, one for $46,500.00 and another for $516,000.00, in order to purchase the dwelling.
Defendant contends that, at most, the circumstances present a unilateral mistake on the part of plaintiff, but not the mutual mistake necessary to rewrite an agreement which is complete on its face. According to defendant, the Simkin v Blank case, (80 AD3d 401 [2011]), which was cited by plaintiff, has been superceded by the Court of Appeals' June 23, 2011 opinion entitled Commodity Futures Trading Commission v Walsh, (17 NY3d 162 [2011]). Defendant alleges that, in the Commodity Futures Trading Commission case, the Court of Appeals stated that to rewrite an agreement would undermine the finality that underlies the equitable distribution process.
Defendant's Counterclaims
Furthermore, defendant agrees that the Referee's dismissal of the counterclaim with the recommendation as to the funeral plots should be confirmed.
Counsel Fees
Moreover, defendant contends that the Referee's recommendation to award defendant attorneys' fees in the amount of $10,000.00 was insufficient. As will be discussed in further detail below, defendant alleges that the amount due now, after trial and the preparation of her motion, is $44,484.70. Defendant contests plaintiff's contention that her Net Worth Statement was not certified, as defendant claims that she signed both the Net Worth Statement and its cover sheet, certifying the contents therein. In addition, defendant alleges that the Referee gave her approval for the "missing page" referred to by plaintiff to be sent to the trial court the day after the trial, with a copy sent to plaintiff's counsel, which was done.
With respect to her current financial circumstances, defendant reiterates her testimony that her gross income as a New York City Tax Auditor is $59,000.00 per year, that she receives $1,350.00 per month in rental income, and that she has no other income. Furthermore, defendant cites her prior testimony that although she received all of the statements and bills from her attorney, and found them to be reasonable, she does not have the necessary funds to pay her attorneys' fees. Defendant's counsel submits copies of the bills for his services, which he claims are up to date. Defendant's counsel notes that he is facing retirement, and thus far has been paid a total of $6,000.00 for representing defendant. Defendant's counsel states that he does not believe he will receive more than a "token payment" from defendant.
Defendant's counsel contends that plaintiff and his lawyer have submitted extremely long and repetitive motions, neglected to file papers on time, and served amended pleadings and notices, all while never appreciating that the instant case has no merit. As a result, defendant argues that plaintiff should bear the cost of the litigation. Defendant states that plaintiff is the owner of a Manhattan bar and restaurant, a four-apartment house, and a cash business. To the contrary, defendant alleges that she is living paycheck to paycheck, with a modest city pension to support herself upon retirement.
Defendant's Motion to Confirm and Adjust in Part the Referee's Report
In her motion, defendant contends that the Referee's Report should be confirmed, dismissing plaintiff's action, and that defendant's counterclaims and upward adjustment of the award of counsel fees, from $10,000.00 to $45,084.70, should be granted.
Defendant requests that the court increase the Referee's prior award of counsel fees in order to cover defendant's costs in defending this action. Defendant's counsel alleges that defendant does not have the funds to pay said counsel fees. Defendant's counsel also contends that defendant should not have to absorb the financial burden for this action, because the action has no merit. Furthermore, defendant's counsel contends that plaintiff and his counsel made several errors which unnecessarily increased defendant's counsel fees in defending the action. Among other things, defendant alleges that plaintiff delayed the litigation by withdrawing a prior order to show cause and an amended complaint, failing to file an RJI stating that this action was related to a matrimonial action, refusing to sign the deposition transcript, moving for summary judgment and renewal of his motion for summary judgment, both of which were denied, and neglecting to file a note of issue on time.
Defendant further argues that plaintiff should bear the cost of the instant litigation because "it seems he is not paying his attorney." Moreover, defendant's counsel alleges that he sent billing statements to defendant on a regular basis, except when there was no activity in the case. Defendant's counsel claims that defendant requested that he send fewer statements, because defendant got upset when she received them, due to her feelings of injustice. Plaintiff's Reply Affirmation in Further Support of Motion
In reply, and in further support of his motion to confirm, plaintiff again argues that the Referee improperly awarded defendant $10,000.00 in counsel fees, and improperly denied plaintiff's mutual mistake claim, based upon her sympathies for defendant, and without the submission of current certified financial information.
Mutual Mistake
Contrary to defendant's contentions, plaintiff insists that there is clear and convincing evidence of a mutual mistake made by the parties herein, in satisfaction of the standard admitted by defendant to be the applicable law (see Maury v Maury, 7 AD2d 585 [2004]), establishing that plaintiff's claim for reformation of the Agreement should be granted. Plaintiff argues that defendant's repeated assertions that the subject mistake was unilateral are unconvincing. Plaintiff also maintains that the intention of the Agreement was that there would be no monied spouse, and that the marital estate was to be divided equally. Plaintiff contends that the parties' current financial circumstances are not relevant to plaintiff's claim that there was a mutual mistake.
Furthermore, plaintiff contends that defendant cites case law that is irrelevant to the instant circumstances. According to plaintiff, Resort Sports Networks, Inc. v PH Ventures III, LLC, (67 AD3d 132 [2009]), is inapposite, because that case deals with unilateral mistake, and it does not involve a separation agreement. Plaintiff asserts that here, unlike in Resort Sports Networks, Inc., both parties intended to divide the marital estate equally, and there is evidence of a mutual mistake in the double counting of a debt in Schedule A. Additionally, plaintiff contends that defendant's reliance on Commodity Futures Trading Commission is misplaced. According to plaintiff, that case involved a dispute as to whether a spouse could keep a marital asset allocated to her in a separation agreement, where it was later discovered that her husband had procured the asset through fraud. Plaintiff asserts that the instant circumstances have nothing to do with fraud. Plaintiff also contends that in Commodity Futures Trading Commission, the court prioritized the winding up of divorcing spouses' economic affairs, because to have held otherwise would have penalized an innocent spouse for her former husband's illegal activity. According to plaintiff, reformation of the Agreement in the instant case is actually consistent with the holding in Commodity Futures Trading Commission, because plaintiff is deprived of the benefit of his bargain through the enforcement of the Agreement as it stands.
Finally, plaintiff asserts that "defendant plays fast and loose with the trial testimony" in representing that plaintiff's expert stated that the arithmetic in Schedule A of the Agreement was correct. To the contrary, plaintiff asserts that his expert testified that the error on Schedule A was due to a double counting of debt, and that the Schedule should be amended to reflect the parties' intent to divide the marital estate equally. Plaintiff notes that, on direct examination, the expert testified that, "there was an error from the accounting point of view."Counsel Fees
Plaintiff contends that defendant's motion for an upward modification of attorneys' fees is improper, since the Referee's first award was also improper. Plaintiff insists that he is not the monied spouse, and that he cannot pay defendant's counsel fees because he is struggling financially. Moreover, plaintiff avers that defendant's request for counsel fees is inappropriate, since she incurred over $50,000.00 in fees, despite the mere one day trial in this matter, as a result of her: (1) failure to timely admit that the intent of the Agreement was to divide the marital estate equally; and (2) inconsistent positions taken in this case and her unwillingness to allow the case to timely proceed to trial. According to plaintiff, the fact that defendant paid her own counsel fees and did not receive maintenance in the divorce action supports the contention that the parties are of equal economic standing. Plaintiff asserts that, because there is no monied spouse, there should be no award of attorneys' fees in this action.
Moreover, plaintiff avers that, since this is not a divorce, separation, or enforcement action, the standard for determining the monied spouse in a divorce action in order to award attorneys' fees should not apply here. If the standard applies, however, plaintiff contends that the court was without sufficient evidence in the record to support a finding of which party was the monied spouse. Plaintiff reiterates that the Referee had before her only an incomplete and uncertified Statement of Net Worth from 2009 for defendant, and no Statement of Net Worth for plaintiff, as none was required in this plenary action for reformation of a contract based upon mutual mistake. Had the court taken proper evidence as to the parties' current financial circumstances, plaintiff alleges that a grim financial situation on his part would have been revealed.
With respect to defendant's counsel's assertion that he is "winding down his career" and that he has not been paid by defendant, plaintiff argues that defendant's counsel's impending retirement cannot justify an award of counsel fees in this matter. In addition, plaintiff's counsel contends that defendant's counsel "should have known better than to apply for an inappropriate and exponential increase in attorneys fees when he could not be bothered to comply with the strict court rules requiring him to submit invoices to his client every 60 days." Plaintiff's counsel reiterates that defendant's counsel's sporadic invoices do not demonstrate substantial compliance with the rules.
Finally, plaintiff argues that because defendant moved for attorneys' fees pre-trial, and her request was denied, the law of the case has been established with respect to that issue. Thus, plaintiff avers that the Referee's recommendation of an award of counsel fees to defendant in the amount of $10,000.00 was inconsistent with the law of the case and, thus, it should be rejected as a matter of law.
Discussion
Standard of Review
As is relevant herein, CPLR 4320 provides that "[a] referee to report shall conduct the trial in the same manner as a court trying an issue without a jury." As is also relevant, CPLR 4403 provides that:
"Upon the motion of any party or on his own initiative, the judge required to decide the issue may confirm or reject, in whole or in part, the verdict of an advisory jury or the report of a referee to report; may make new findings with or without taking additional testimony; and may order a new trial or hearing. The motion shall be made within fifteen days after the verdict or the filing of the report and prior to further trial in the action. Where no issues remain to be tried the court shall render decision directing judgment in the action."
It must also be recognized that a Referee's report is "in no way binding upon Special Term but is merely to inform the conscience of the court'" (Gehr v Board of Education, 304 NY 436, 440 [1952], quoting Bannon v Bannon, 270 NY 484, 493 [1936]). Nonetheless, "it is well settled that a special referee's findings of fact and credibility will generally not be disturbed where substantially supported by the record" (RC 27th Ave. Realty v New York City Housing Auth., 305 AD2d 135, 135 [2003]; accord Matter of Blumenthal, 40 AD3d 318, 318 [2007]; see also Dayan v Yurkowski, 30 AD3d 561, 561 [2006]; Baker v Kohler, 28 AD3d 375, 375-376 [ 2006]). Further, "[t]he determination of a Referee appointed to hear and report is entitled to great weight, particularly where conflicting testimony and matters of credibility are at issue, since the Referee, as the trier of fact, had the opportunity to see and hear the witnesses and to observe them on the stand" (Slater v Links at North Hills, 262 AD2d 299, 299 [1999], citing Frater v Lavine, 229 AD2d 564 [1996]; see also Schwartz v Meisner, 198 AD2d 634, 603 NYS2d 626 [1993]). Credibility
"Evaluating the credibility of the respective witnesses is primarily a matter committed to the sound discretion of the Supreme Court" (Varga v Varga, 288 AD2d 210, 211 [2001], citing Diaco v Diaco, 278 AD2d 358 [2000]; Ferraro v Ferraro, 257 AD2d 596, 598 [1999]). The court's assessment of the credibility of witnesses is entitled to great weight (see generally Wortman v Wortman, 11 AD3d 604, 606 [ 2004]). "In a nonjury trial, evaluating the credibility of the respective witnesses and determining which of the proffered items of evidence are most credible are matters committed to the trial court's sound discretion" (Ivani v Ivani, 303 AD2d 639, 640 [2003], citing L'Esperance v L'Esperance, 243 AD2d 446 [1997]; accord Krutyansky v Krutyansky, 289 AD2d 299, 299-300 [2001]). Mutual Mistake
Initially, the court notes that "[s]tipulations of settlement are favored by the courts and not lightly cast aside. . . Only where there is cause sufficient to invalidate a contract, such as fraud, collusion, [mutual] mistake or accident, will a party be relieved from the consequences of a stipulation made during litigation" (Hallock v State of New York, 64 NY2d 224, 230 [1984] [citations omitted]). "A decision whether to grant or refuse relief by way of reformation rests within the discretion of the court. Granted as equitable relief, reformation is an extraordinary remedy, afforded under only the most limited circumstances, such as where the inaccuracy of the writing is due to a mutual mistake, a fraudulently induced unilateral mistake, or an error in reducing the agreement to writing" (16 NY Jur. 2d, Cancellation of Instruments, § 56; see also Kadish Pharmacy v Blue Cross Blue Shield of Greater NY, 114 AD2d 439 [1985]). "Where there is no mistake about the agreement, and the only mistake alleged is in the reduction of the agreement to writing, such mistake of the scrivener, or of either party, no matter how it occurred, may be corrected" (Born v Schrenkeisen, 110 NY 55, 59 [1888]).
"In a case of mutual mistake, the parties have reached an oral agreement and, unknown to either, the signed writing does not express that agreement" (Chimart Assoc. v Paul, 66 NY2d 570, 573 [1986]; see also 27 Williston, Contracts, [4th ed.], § 70.13). The basis of the doctrine of mutual mistake is that the agreement as expressed, in some material aspect, does not represent the "meeting of the minds" of the parties (see 22 N.Y.Jur. 2d Contracts, § 120). "In the absence of fraud, the mistake shown must be one made by both parties to the agreement so that the intentions of neither are expressed in it... Reformation is not designed for the purpose of remaking the contract agreed upon but, rather, solely for the purpose of stating correctly a mutual mistake shared by both parties to the contract; in other words, it provides an equitable remedy for use when it clearly and convincingly appears that the contract, as written, does not embody the true agreement as mutually intended" (Nash v Kornblum, 186 NY2d 42, 46 [1962] [internal citations and quotation marks omitted]). Stated otherwise, " reformation is not granted for the purpose of alleviating a hard or oppressive bargain, but rather to restate the intended terms of an agreement when the writing that memorializes that agreement is at variance with the intent of both parties" (George Backer Mgt. Corp. v Acme Quilting Co., 46 NY2d 211, 219 [1978]; see also Ross v Food Specialties, 6 NY2d 336, 341 [1959]; 13 Williston, Contracts [3d ed], §§ 1548, 1549).
"Thus, in the context of a reformation action, the court must look to the four corners of the document and any evidence establishing the parties' intention" (Migliore v Manzo, 28 AD3d 620 [2006]). "Because the thrust of a reformation claim is that a writing does not set forth the actual agreement of the parties, generally neither the parol evidence rule nor the Statute of Frauds applies to bar proof, in the form of parol or extrinsic evidence, of the claimed agreement"(Chimart Assoc., 66 NY2d at 573). The Court of Appeals has strongly cautioned, however, that allowing parol and oral evidence "obviously recreates the very danger against which the parol evidence rule and Statute of Frauds were supposed to protect—the danger that a party, having agreed to a written contract that turns out to be disadvantageous, will falsely claim the existence of a different, oral contract" (Chimart Assoc., 66 NY2d at 573). Therefore, there is a " heavy presumption that a deliberately prepared and executed written instrument manifest[s] the true intention of the parties'" and a "correspondingly high order of evidence is required to overcome that presumption" (Chimart Assoc. at 574, quoting George Backer Mgt. Corp. v Acme Quilting Co., 46 NY2d 211, 219 [1978]).
"The proponent of reformation must show in no uncertain terms, not only that mistake or fraud exists, but exactly what was really agreed upon between the parties'" (Chimart Assoc. at 574, quoting George Backer Mgt. Corp., 46 NY2d at 219). In order to reform the agreement, the moving party must show that the mistake was made by both parties, that it occurred at the time the contract was signed, that it involves a basic assumption on which the contract was made, and it must have a material effect on the agreed exchange of performances (see 27 Williston, Contracts [4th ed.], § 70:13; see also True v True, 63 AD3d 1145, 1147 [2009] ["For a party to be entitled to reformation of a contract on the ground of mutual mistake, the mutual mistake must be material, i.e., it must involve a fundamental assumption of the contract"]). "A party need not establish that the parties entered into the contract because of the mutual mistake, only that the material mistake ... vitally affects a fact or facts on the basis of which the parties contracted'" (True v True, 63 AD3d at 1147, quoting Janowitz Bros. Venture v 25—30 120th St. Queens Corp., 75 AD2d 203, 214).
Moreover, "proof of [mutual] mistake must be of the highest order,' [and] must show clearly and beyond doubt that there has been a [mutual] mistake' and ... must show with equal clarity and certainty the exact and precise form and import that the instrument ought to be made to assume, in order that it may express and effectuate what was really intended by the parties'" (Janowitz Bros. Venture, 75 AD2d at 215, quoting 13 Williston, Contracts [3d ed.], § 1548, at 125; see Amend v Hurley, 293 NY 587, 595 [1944])."It is unjust to permit either party to a transaction, where both are laboring under the same mistake, to take advantage of the other when the truth is known" (27 Williston, Contracts [4th ed.], § 70:13). Moreover, a contract may still be reformed when a mutual, material mistake is made, even though one of the parties denies that a mistake was made" (id.).
Turning to the recommendation made by the Referee to deny plaintiff's claim for reformation based upon the absence of a mutual mistake, the court rejects said recommendation. The Referee's findings regarding the lack of a mutual mistake in the Agreement are not adequately supported by the record. Upon an independent review of both the testimony adduced during the hearing, and the documentary evidence submitted, the court finds that there was a mutual mistake in the Agreement warranting the reformation of same. The Referee improperly characterizes the computational mistake as a unilateral one, based upon her finding that plaintiff failed to carefully read the Agreement in order to discover an error that he, as a certified public accountant, should have found. The Referee states in her Report that:
"plaintiff's own actions resulted in a mistake on his part, in that he claims that the Agreement does not mirror what he expected, rather than a mutual mistake. The parties agreed that defendant would pay defendant a certain amount and in fact plaintiff did pay defendant that amount. The defendant expected and understood that she would receive that payment for her share of the equitable distribution of the parties' assets."
To that effect, the court notes that "[a] mutual mistake' is one wherein both or all parties to a bilateral transaction share the same erroneous belief and their acts do not in fact accomplish their mutual intent, while a unilateral mistake' is one in which only one of the parties to a bilateral transaction is in error" (22 NY Jur. Contracts § 119). As discussed in further detail below, the court finds that the mistake here was mutual, in that both parties intended for the Agreement to equally divide the marital assets, and the Agreement did not, in fact, equally divide the marital assets because of a computational error. Neither plaintiff, a certified public accountant, nor defendant, a New York City tax auditor, discovered the computational error in the final Agreement signed at the courthouse. This is not a case where the prior agreement of the parties is uncertain, or where one party suffers from a unilateral misunderstanding regarding the agreement (compare Resort Sports Network, Inc. v PH Ventures III, LLC, 67 AD3d 132 [2009] [where defendants failed to show what the parties really agreed to, "in no uncertain terms," there was, at most, a unilateral mistake, but not a mutual mistake]; compare also 2001 Commerce Street Corp. v Star Enterprise, 14 AD3d 504 [2005] [landlord failed to establish a mutual mistake; at best, landlord's negligence or "conscious ignorance" regarding the contents of the site plan established a unilateral mistake on its part]). Although defendant claims that she was satisfied with the Agreement, and also that there was no mistake, Schedule A does not mirror either of the parties' expectations (as testified to by both parties and as provided for on page 9 the Agreement, "to equalize the allocation of marital equity so as to arrive at an equal division") that the marital assets and liabilities were to be distributed equally.
While one who assents to a writing is generally presumed to know its contents and cannot escape being bound by its terms merely by contending that he did not read it, where the writing does not correctly express the prior agreement, a party's negligence in failing to read the writing does not preclude reformation (see Rest. 2d Contr. § 154; see also Hart v Blabey, 287 NY 257, 262 [1942] [a party relying on the instrument cannot defeat a claim for reformation on the ground of the other party's failure to read or understand the instrument]). "The established law in New York is that the negligence of one party who seeks reformation of an instrument, whether in failing to read the instrument before he signs it, or in failing thereafter to note the error for a long period of time, is not necessarily a bar to a suit for reformation of the instrument'" (Meier v Brooks, 22 AD2d 56, 60 [1964] [where plaintiff saw one mistake in a lease and had it corrected, this did not estop him from seeking reformation of other mistakes], quoting 6 N.Y.Jur., Cancellation and Reformation of Instruments, § 46). As stated in Restatement (Second) of Contracts § 157:
"The mere fact that a mistaken party could have avoided the mistake by the exercise of reasonable care does not preclude either avoidance or reformation. Indeed, since a party can often avoid a mistake by the exercise of such care, the availability of relief would be severely circumscribed if he were to be barred by his negligence. Nevertheless, in extreme cases the mistaken party's fault is a proper ground for denying him relief for a mistake that he otherwise could have avoided. . . a failure to act in good faith and fair dealing during pre-contractual negotiations does not amount to a breach. Nevertheless, the failure bars a mistaken party from relief based on a mistake that otherwise would have not been made. During the negotiation stage each party is held to a degree of responsibility appropriate to the justifiable expectations of the other."
Based upon the foregoing, the court finds that plaintiff's failure to discover the computational error in the final Agreement does not amount to a unilateral failure to act in good faith and in accordance with reasonable standards of fair dealing. Thus, plaintiff should not bear the financial consequences of the parties' mutual mistake (see generally Rest. 2d Contr., When a Party Bears the Risk of a Mistake, § 154).
In her Report, the Referee relies upon Kojovic v Goldman, (35 AD3d 65 [2006], lv denied 8 NY3d 804 [2007]) to suggest that the mistake here was unilateral and not mutual, because it was attributable to plaintiff's own negligence in "failing to pay attention and perform the arithmetic to discover that from his perspective the parties' Agreement did not equalize the allocation of marital equity." The Referee further relies upon Kojovic to state that plaintiff may not challenge the validity of a settlement agreement based upon his claim that defendant "undervalued" assets which were known to him at the time. In Kojovic, the wife commenced an action for reformation, breach of contract, and rescission of a settlement agreement, claiming that the agreement was procured though fraud based upon affirmative misrepresentations made by the husband. The court held, among other things, that a party may not challenge the validity of a settlement agreement based upon a claim that the party undervalued assets which were disclosed by her former spouse and known to her at the time. The court in Kojovic also stated that, since the wife was a finance professional who could have availed herself of valuation and discovery procedures, and yet failed to do so, she was to blame for her failure to inquire further into her husband's assets. The instant case does not involve allegations of fraud, nor the undervaluation of an asset, as in Kojovic, but, rather, it involves a mutual mistake resulting from a miscalculation in the Agreement. As such, the Kojovic case is distinguishable, and it does not operate to demonstrate the absence of a mutual mistake here.
Furthermore, the Referee states that plaintiff "received the considerable benefit of obtaining the judgment of divorce and being able to remarry quickly, particularly given the birth of his son in February 2006." The Referee notes that plaintiff "waited more than a year after discovering the claimed mutual mistake to file his plenary action for reformation, and continued to receive the benefits of the distribution of the property that the parties agreed on when they settled their action in January 2006." The Referee appears to suggest that plaintiff ratified the Agreement, in order to further support her opinion that reformation is not warranted herein. Contrary to the Referee's findings, the court finds that plaintiff's actions in paying the equalization payment and waiting more than a year to commence an action for reformation do not serve as a bar to reformation of the Agreement where, as here, there has been a mutual mistake. The court notes that:
"where [the factors demonstrating a mutual mistake] are met, then the contract is voidable by the adversely affected party, unless that party bears the risk of the mistake. A void contract cannot be ratified; it binds no one and is a nullity. However, an agreement that is merely voidable by one party leaves both parties at liberty to ratify the transaction and insist upon its performance. When either party has the option of avoiding the transaction, as is frequently true with a mutual mistake of fact, ratification by one is impossible. A new(27 Williston on Contracts § 70:13 [4th ed.]).
mutual agreement is essential"
While reaping the benefits of a contract provision for an extended time may constitute ratification of a settlement agreement where it is alleged that the agreement is invalid because of unfairness or overreaching by one party (see generally Osborn v Osborn, 144 AD2d 350 [1988]), or because of the fraud or duress of one party (see generally Nusbaum v Nusbaum, 280 AD315 [1952]), such ratification is not applicable here. Both plaintiff and defendant assumed the existence of a material fact, that the distribution of the marital estate, as written in the Agreement, was equal. Both parties relied upon this assumption and acted accordingly, as evidenced by plaintiff's payment of, and defendant's receipt of, the "equalization" amount stated in the Agreement. However, the parties' assumption that the assets and debts were equally distributed was false, due to a computational error in the Agreement, leaving neither party with the equal distribution intended in the Agreement.
While there is a heavy presumption that the contract between these sophisticated parties represented by counsel manifests their true intent (see Chimart Assoc. v Paul, 66 NY2d 570, 573-574 [1986]), plaintiff submitted sufficient evidence to overcome that presumption and demonstrate that reformation is warranted under the circumstances. Plaintiff established that the Agreement contains a mutual mistake (see e.g. Asset Management & Capital Co., Inc. v Nugent, 85 AD3d 947 [2011] [where amounts credited to parties in stipulation of settlement in partition action were product of mutual mistake, reformation warranted]; see also e.g. True v True, 63 AD3d 1145 [2009] [reformation warranted where parties' use of gross shares in stipulation of settlement in divorce action was a mutual mistake, because it undermined intent to divide the net shares available for division]). Plaintiff presented uncontroverted evidence demonstrating that the parties agreed, "in no uncertain terms," to divide the marital estate equally. Both plaintiff and defendant testified that the intent of the Agreement was to equally divide the marital assets and liabilities. With the exception of the alleged computational error, the Agreement itself also evidences the parties' intent to divide the marital estate equally. To that effect, page 9 of the Agreement states that, "In order to equalize the allocation of marital equity so as to arrive at an equal division, the husband shall pay the wife [the equalization payment] . . ." Additionally, pursuant to the Agreement: (1) each party took one of the two automobiles the parties owned; (2) the parties equally shared the household expense costs remaining after credit for the rent collected on the marital household; and (3) the parties agreed to equally split the income tax refunds from 2002 and 2003 and the proceeds of sale from their funeral plots. The record contains clear and convincing evidence of the parties' mutual intent that the marital estate was to be divided equally in the Agreement.
Plaintiff alleges that Schedule A of the Agreement contains a computational error, wherein the mortgage and home equity line of credit on the marital residence was double counted. At her examination before trial, defendant testified that the intent of the Agreement was to divide the marital estate equally, and that it appeared as if the aforementioned debt had been counted twice in Schedule A. Defendant submitted no evidence to controvert plaintiffs' showing that the parties reached a prior agreement to equally distribute the marital estate. Defendant also failed to demonstrate that the computational error in the final Agreement was the result of a negotiated change. The court notes that the double counting of the debt is evident on the face of the Agreement. There is no affirmative evidence that either plaintiff or defendant discovered the alleged computational error at the time the final Agreement was signed. The materiality of the mistake is evidenced by the fact that a basic shared assumption of the contract (that the marital estate was to be divided equally) was not carried out because of a computational error. As a result of the double counting of the debt on the marital residence in Schedule A, defendant received a greater share of the marital estate, amounting to approximately $100,276.50 more in assets than plaintiff. Under these particular facts, the court finds that the mistake was mutual, that it was unknown at the time the Agreement was signed, and that it involved a fundamental assumption of the parties' Agreement. Because the Agreement as written does not reflect the parties' actual written and testimonial intent to divide the marital estate equally (a mutual mistake that was sufficiently supported by the evidence), reformation is required.
The court notes that the circumstances presented herein are similar to those cases "[w]here there is no mistake about the agreement and the only mistake alleged is in the reduction of the agreement to writing, [and where] such mistake of the scrivener, or of either party, no matter how it occurred, may be corrected" (Nash v Kornblum, 12 NY2d 42 [1962], 46-47 [internal citations and quotation marks omitted]). "In such a case equity will conform the written instrument to the parol agreement which it was intended to embody. . .It need not be shown that the parties did not realize that inaccurate verbiage was used, nor need the language used be ambiguous" (Hart v Blabey, 287 NY 257, 262 [1942]; see also 6 N.Y.Jur., Cancellation and Reformation of Instruments, § 45). In the instant case, there was an error in the written Agreement which was due to a mathematical miscalculation, such that the written Agreement did not correctly embody the parties' true agreement (see e.g. Nash, 12 NY2d 42 [reformation warranted as a result of a mathematical miscalculation of price in agreement]; see also e.g. Montero v Montero, 85 AD3d 986 [2011] [reformation warranted where parties intended to equally divide retirement account, and attorney misstatement in the oral stipulation of equitable distribution resulted in husband owning the entire account]; Baby Togs v Harold Trimming Co., 67 AD2d 868 [1979] [reformation warranted for clear mathematical miscalculation]; Hart v Blabey, 287 NY 257 [1942] [reformation warranted where land description in deed was not the boundary the parties intended]; Jamaica Sav. Bank v Taylor, 73 AD 567 [1902] [reformation warranted where contract for the sale of land mistakenly describes a larger tract of land then intended, even though party did not read over the instrument after it was drawn]). Thus, reformation is required in order for the written Agreement to reflect the undisputed prior agreement of the parties, which was that the marital estate was to be distributed equally.
In Nash, the court stated that: "[t]here is clear and convincing evidence that there was an agreement between the parties as to the area to be fenced before the formal written contract was executed, and then an error was made, albeit by plaintiff, in the reduction of the...expression of the parties into the complete contract...the situation presented as a result of the scrivener's error was closely akin, if not precisely, to a mutual mistake of fact, and as such was sufficient to call for the application and the equitable doctrine of reformation" (Nash, 12 NY2d at 48).
In Hart, the court also noted that its was not necessary to show that the parties did not realize inaccurate verbiage was used in the deed; if the parties believed that the description corresponded with the actual boundaries of land intended to be conveyed and were mistaken, a case for reformation was made out.
In light of the foregoing, the court rejects the Referee's recommendation that plaintiff's reformation claim based upon the parties' mutual mistake should be denied. After an independent review of both the parties' testimony and the evidence submitted at the hearing, the court finds that there was a mutual mistake in the Agreement, that the written Schedule in the Agreement does not reflect the testimonial and written intent of the parties, and that reformation is required to correct the mistake. Plaintiff alleges that the marital residence should have been listed at its appraised value of $465,000.00 in the asset section of Schedule A. Plaintiff also avers that the mortgage and home equity line of credit on the marital residence should have been stated only once, as a debt of $195,124.00. Additionally, plaintiff asserts that the current net equity value of the home should have been $269,876.00 (deducting the debt in the amount of $195,124.00 from the appraised value of $465,000.00). Plaintiff further contends that the assets retained by defendant should have been listed at $562,871.00.
Thus, plaintiff asserts that a correct equalization of the marital estate, if the debt had not been double counted, was that defendant would pay plaintiff $80,940.50. Plaintiff calculated that amount by dividing in half the differences between the assets (minus debt) that the parties were each going to retain ($562,871.00 minus $400,990.00 equals $161,881.00, divided in half equals $80,940.50). Plaintiff alleges that he is entitled to $100,276.50 (the total of what he has already paid to defendant [$19,336.00] plus the amount defendant should have paid him had the mistake not occurred [$80,940.50]). The court finds that plaintiff's proposed calculations and corrections accurately reflect the intent of the parties to divide the marital estate equally. Accordingly, that branch of plaintiff's motion seeking rejection of the Referee's findings regarding reformation of the Agreement is granted, that branch of defendant's motion seeking confirmation of the Referee's findings regarding dismissal of the complaint is denied, and the Agreement is reformed to require defendant to pay to plaintiff the amount of $100,276.50. Defendant shall pay said amount to plaintiff by cashier check, in one lump sum, on or before June 30, 2012. Defendant's Counterclaims
The court accepts the Referee's recommendation that plaintiff's request to dismiss defendant's counterclaims for funeral expenses and for reimbursement of the 2002/2003 tax refunds should be granted. The Referee's findings regarding defendant's counterclaims are adequately supported by the record and sufficiently explained in the Report. The court's independent review of the testimony adduced during the hearing, as well as the documentary evidence submitted by the parties, reveals a sufficient factual predicate to support the Referee's findings. The court further finds that the Referee's opinion with regard to plaintiff's credibility is stated in sufficient detail to be accepted, since the testimony adduced at the hearing supports the conclusion that: (1) plaintiff had previously tried to sell the funeral plots, and he would cooperate in any future effort made by defendant to sell them; and (2) plaintiff complied with the terms of the Agreement regarding the payment of the 2002 and 2003 federal and state income tax returns.
With respect to defendant's counterclaim regarding the sale of the funeral plots, the Agreement requires that "[t]he parties shall place both plots up for sale and sell same to the highest bidder and equally divide the sales proceeds after any costs associated with the sale." The court agrees that plaintiff does not have any greater responsibility than defendant to sell the cemetery plots. Based upon the evidence in the record, defendant does not have any claim for enforcement against plaintiff on this issue. Accordingly, those branches of plaintiff's and defendant's motions seeking confirmation of the findings of the Referee with respect to defendant's counterclaim for the sale of the funeral plots are granted; defendant's counterclaim must be denied for failure of proof.
Turning to defendant's counterclaim that she did not receive her share of income tax refunds for 2002 and 2003, the court agrees that plaintiff satisfactorily demonstrated that he complied with the terms of the Agreement, which provided that "[a]ny income tax refunds for the years 2002 and 2003, if received by the Husband during pendency of the divorce action shall be divided equally by the parties." The Referee sufficiently explained her opinion with regard to plaintiff's credibility that he deposited these sums into the parties' joint bank account when received. The court's independent review of the testimony and documentary evidence found that plaintiff complied with the terms of the Agreement, and that plaintiff does not owe defendant any portion of the 2002 and 2003 federal and state income tax refunds. Accordingly, those branches of plaintiff and defendant's motions which seek confirmation of the findings of the Referee with respect to defendant's counterclaim for payment of the 2002 and 2003 income tax returns are granted; defendant's counterclaim must be denied, since defendant received her share of the income tax refunds in the division of the parties' bank accounts. Attorneys' Fees
Turning to defendant's request for attorneys' fees, the court rejects the Referee's recommendation that defendant be awarded $10,000.00 in attorneys' fees for her enforcement of the Agreement in the plenary action for reformation. The court also denies defendant's further request for an upward adjustment of the award of attorneys' fees to the amount of $45,484.70.
In her Report, the Referee cites defendant's testimony that defendant paid her attorney $6,000.00 for counsel fees and disbursements, and that she had been billed an additional $39,000.00 for his services over the course of the two year litigation. The Referee also notes that, according to invoices for professional services submitted by defendant, defendant's attorney had devoted 175.25 billable hours to the representation of defendant in this plenary action. The Referee states that, as of January 18, 2011, the outstanding legal services bill for defendant's counsel services was $39,084.70. She also states that the retainer agreement executed on January 12, 2008, required payment of a retainer fee of $1,000.00, and it provided for an hourly rate of $250.00 for the services of defendant's attorney.
Furthermore, the Referee notes that, although a plenary action is not considered to be a matrimonial action or proceeding where counsel fees can be awarded under DRL §§ 237 and 238, counsel fees have been awarded for the enforcement of the provisions of the stipulation or agreement incorporated by reference but not merged in the judgment of divorce (see Fine v Fine, 26 AD3d 406 [2006]; Stephenson v Stephenson, 116 AD2d 504 [1986]; Gyory v Schaffer, 80 AD2d 871 [1981]). Moreover, the Referee asserts that:
"[a] determination of counsel fees under DRL § 237 is based upon the discretion of the court and indigence is not a prerequisite to an award (DeCabrera v DeCabrera-Rosete, 70 NY2d 879 [1987]; Levy v Levy, 4 AD3d 398; Krutyansky v Krutyansky, 289 Ad2d 299 [2011]). The DRL requires the court to consider the circumstances of the parties in deciding whether an award of attorneys' fees is proper (DeCabrera v DeCabrera-Rosete, 70 NY2d 879; Linda R. v Richard E., 176 AD2d 312 [1991]). An award of attorneys' fees should be based upon. . . the relative financial circumstances of the parties, the relative merits of their positions, and the tactics of a party in unnecessarily prolonging litigation (cites omitted)' (Schek v Schek, 49 AD3d 625 [2008]; Sevdinoglou v Sevdinoglou, 40 AD3d 959 [2007]).
An additional consideration is whether defendant's counsel has complied with the provisions of 22 NYCRR § 1400 et. seq., particularly the requirements to prepare and send itemized bills every sixty days, to offer a retainer agreement with the required provisions and demonstrate that it was filed and to provide a statement of client's rights and responsibilities in the correct form (see Hovanec v Hovanec, 79 AD3d 922 [2006] . . .). Some limited failure to comply with 22 NYCRR § 1400 et seq has been tolerated if there has been substantial compliance withe the rules (see Flanagan v Flanagan, 267 AD2d 80 [1999] . . .)."
The Referee concludes that, although the retainer agreement and 22 NYCRR § 1400.3 require that a client receive invoices at least every 60 days, the invoices that defendant's attorney submitted for professional services rendered, when coupled with defendant's attorney's compliance with the other provisions of 22 NYCRR § 1400.3, demonstrate a substantial compliance with the Rules. The Referee found that, based upon the nature and extent of the services rendered, the necessity for the services, the merits of the defendant's position, and the results obtained, as well as defendant's attorney's substantial compliance with 22 NYCRR § 1400.3, defendant's attorney should receive an award of counsel fees in the amount of $10,000.00. This amount was for defendant's enforcement of the Agreement in light of plaintiff's action to reform the Agreement because of a claimed mutual mistake.
These invoices are dated January 24, 2009, March 14, 2009, May 23, 2009, October 17, 2009, March 20, 2010, September 16, 2010 and January 18, 2011,
With respect to defendant's request for attorneys' fees in her "Answer, Affirmative Defenses and Counterclaims," the Referee found that, pursuant to the terms of the Agreement, defendant was not entitled to the payment of counsel fees by plaintiff as a contractual right, since plaintiff had not defaulted in the performance of his responsibilities under the Agreement. The Referee notes that, pursuant to the "Default" provision of the Agreement, if a party has been adjudged "to have defaulted in the performance of the terms or provisions of [the] agreement," that party shall pay "reasonable attorneys' fees" incurred in enforcing such performance of [the] agreement." The Referee recommends that, because the counterclaims of defendant have been withdrawn or dismissed, and because plaintiff cannot be said to have defaulted under the terms of the Agreement, counsel fees should not be awarded under the Agreement. According to the Referee, "if the parties wished for a litigant who challenged the validity of the Agreement or any provision of it and did not prevail in the challenge to be responsible for reasonable counsel fees they could have included that language in their Agreement."
Initially, the court accepts the Referee's recommendation that no counsel fees should be awarded under the Agreement, since there is no evidence that plaintiff defaulted under the Agreement. The Referee's recommendation is supported by the weight of the evidence, and the recommendation is also explained in sufficient detail in the Report.
However, as mentioned above, the court rejects the Referee's remaining recommendations regarding the award of attorneys' fees for defendant's enforcement of the Agreement in the reformation action, and the court denies defendant's request for an increased award of attorneys' fees. The cases cited by the Referee in support of an award of attorneys' fees pursuant to DRL §§ 237 (b) and 238 are distinguishable from the instant case. In Fine v Fine, (26 AD3d 406 [2006]), the plaintiff brought a plenary action to set aside an allegedly fraudulently induced separation agreement, and she also sought attorneys' fees pursuant to DRL § 237 (b). The trial court granted that branch of her motion which was for attorneys' fees pursuant to DRL 237 § (b), and the Appellate Division, Second Department subsequently reversed the trial court's award of attorneys' fees, finding that attorneys' fees are not permitted in an action to set aside a stipulation by plenary action. The court in Fine also cited the Stephenson v Stephenson, (116 AD2d 504 [1986]), and Gyory v Schaffer, 80 AD2d 871 [1982]) cases as a point of comparison, to demonstrate that attorneys' fees may be awarded where a party seeks to enforce a separation agreement, but are not awarded where a party seeks to set aside a settlement agreement. As the instant action does not involve the setting aside of a stipulation, but, rather, the reformation of a settlement agreement based upon mutual mistake, the Fine case is distinguishable.
In Stephenson, the plaintiff failed to comply with the maintenance provisions of a settlement agreement, and then commenced an ultimately unsuccessful rescission action to avoid payment of maintenance to the defendant. As a result, defendant was "forced. . .into the position of having to seek arrears of maintenance through a counterclaim" (Stephenson, 116 AD2d at 505-506). The Stephenson court found that defendant was entitled to counsel fees pursuant to DRL §§ 237 (b) and 238, noting that the defendant, "was the party seeking to uphold the agreement and, in that regard, her defense of the rescission action was inextricably entwined with her effort to enforce the maintenance terms of that agreement" (at 506). The court cited Gyory in support of its finding that the "[p]laintiff. . .should not be able to avoid the attorney's fees provisions of the Domestic Relations Law merely by employing the strategem of being the first to bring suit" (Stephenson at 506).
In Gyory, the plaintiff brought an unsuccessful action to reform a clause in the separation agreement which obligated him to pay maintenance in the amount of $125,000.00 to the defendant, in installments, and the defendant counterclaimed for installment payments due under the agreement, and for counsel fees. The Appellate Division, Second Department, affirmed the trial court's award of counsel fees to the defendant, based upon both DRL § 237 (b) and the holding in Friou (discussed below).
The Stephenson court noted that in Friou v Gentes, (11 AD2d 124, 126 [1960]), that court held that " where the defendant takes affirmative action to change the matrimonial judgment. . .or fails to obey the judgment. . . or otherwise flouts the provisions of the judgment. . .he is liable for the legal services made necessary by his action'" (Stephenson at 506, citing Gyory at 126). The Friou case involved an unsuccessful application by the appellant to change the custody provisions of a stipulation.
In Friou, the court held that:
"Legal services rendered for a wife or child are necessaries. The general rule is that, where the court has fixed the amount of alimony to be paid to a wife for her support, the husband's liability therefor is confined to the amount of the award. The wife is not at liberty to disregard the limit of the award and hold the husband to his common-law liability for necessaries furnished, where the husband complies with the judgment. The rule is the same where a judgment has been made fixing a defendant's liability for the support of his child. . .
However, there are several exceptions to the general rule. One, which is inapplicable here, is that, where affirmative action is taken in this State against a defendant to obtain relief not barred by the foreign judgment, he is liable for the services which accomplish that result. The other, which is applicable here, is that, where the defendant takes affirmative action to change the matrimonial judgment, or fails to obey the judgment, or otherwise flouts the provisions of the judgment, he is liable for the legal services made necessary by his action.
Here the respondent is entitled to recover because appellant, long after the entry of the Vermont divorce judgment, brought an affirmative proceeding in this State to vary one of the provisions of the judgment, thus necessitating the employment of respondent to uphold its provisions. In such event, the support provisions of the judgment no longer constitute the limit of appellant's liability for the necessary legal services furnished, either to the former wife or to the children, in the proceeding. Therefore, the fact that respondent rendered his services with full knowledge of the provisions of the Vermont judgment would not bar recovery."(Friou at 126-127 [citations omitted]).
Stephenson, Gyory and Friou each involve successful applications for attorneys' fees brought in response to unsuccessful actions to rescind, reform or modify the support provisions of settlement agreements. Stephenson involves the non-payment and arrears of maintenance owed by the husband under a separation agreement, where the husband moved to rescind or reform the separation agreement to avoid payment of maintenance owed. Likewise, Gyory involves the non-payment of installment maintenance payments owed by the plaintiff under a separation agreement, where the plaintiff moved to reform the separation agreement to avoid payment of maintenance owed.
Here, unlike in the above-cited cases, plaintiff's application for reformation of the Agreement was successful. Moreover, plaintiff's plenary action for reformation was based upon the presence of a mutual mistake in the distribution of the marital estate in the Agreement; plaintiff sought to reform the Agreement to reflect the intent of the parties to equally divide the marital estate. While plaintiff asserted counterclaims for various payments under the Agreement, these counterclaims were either withdrawn or denied. There is no evidence that in seeking reformation of the Agreement, plaintiff was attempting to avoid any support obligation, nor is there evidence that plaintiff defaulted in the payment of any support obligation under the Agreement. Thus, defendant's defense of the reformation action was not "inextricably entwined" with her effort to enforce the terms of the Agreement (see Stephenson at 5-6).
Additionally, even if the aforementioned cases were applicable, the court would not award attorneys' fees to defendant for her enforcement of the Agreement under the circumstances presented herein. The award of a reasonable attorney's fee is a matter within the sound discretion of the trial court (see Domestic Relations Law § 237 [a]; DeCabrera v Cabrera-Rosete, 70 NY2d 879 [1987]). As stated above, "[a]n award of attorneys' fees should be based upon. . . the relative financial circumstances of the parties, the relative merits of their positions, and the tactics of a party in unnecessarily prolonging litigation" (Schek v Schek, 49 AD3d 625 [2008] [citations omitted]; Sevdinoglou v Sevdinoglou, 40 AD3d 959 [2007]).
In that regard, there is no evidence that plaintiff caused any willful or inordinate delay in the prosecution of the instant litigation. Furthermore, while an award of counsel fees is not dependent upon the success on the merits of the proceedings, the merit of the parties' respective positions is nevertheless a factor to be considered by the court. Insofar as the court found that there was a mutual mistake in Schedule A of the Agreement, it cannot be said that plaintiff's action lacks merit. The court notes that, in his own admission, counsel for defendant stated that, "we are not denying [that the debt is counted once in the asset section and once in the debt section]" (Transcript, page 133). By comparison, defendant's counterclaims were either withdrawn or denied for failure of proof, and her instant motion to confirm the dismissal of the reformation action and the award of attorneys' fees has been denied herein. Defendant's attempts to enforce the Agreement lacked merit, especially in light of defendant's testimony that the intent of the Agreement was that the marital estate would be distributed equally. With respect to the financial circumstances of the parties, the court notes that both parties claim to be unable to pay attorneys' fees, and also state that they have not paid any attorneys' fees since the divorce action. In the divorce action, plaintiff and defendant were responsible for their own attorneys' fees and defendant did not receive maintenance. On these facts, there is not a sufficient basis to award attorneys' fees to defendant pursuant to DRL §§ 237 (b) or 238. Accordingly, the court grants plaintiff's motion to reject the Referee's recommendation awarding counsel fees to defendant in the amount of $10,000.00, and denies defendant's motion to confirm the Referee's award of counsel fees. Consistent with the aforementioned analysis, the court also denies defendant's request to increase the Referee's recommended award of attorneys' fees.
Finally, defendant also requests that the court award her attorneys' fees with respect to the instant proceeding, wherein she opposed plaintiff's motion, and also moved to confirm in part and reject in part the Referee's Report. The court granted plaintiff's motion to confirm that portion of the Referee's Report which recommended the denial of defendant's counterclaims for tax return refunds and proceeds of sale of two funeral plots. The Referee correctly found that the tax refunds in question had been distributed and that the defendant does not have any claim for enforcement of the issue. Relating to the sale of the funeral plots: both parties have an equal responsibility under the terms of the Stipulation to attempt to sell the funeral plots and the defendant or the plaintiff may do so. The court denied all other relief requested by defendant in the instant proceeding. Accordingly, there is no basis to award attorneys' fees to defendant regarding the instant proceeding, and her request for same is denied.
Conclusion
In sum, plaintiff's request for an order rejecting that part of the Referee's Report which denies plaintiff's claim for reformation based upon mutual mistake is granted. The Agreement is reformed as articulated herein, and defendant is required to pay to plaintiff the "equalization" amount of $100,276.50, by cashier check, on or before June 30, 2012. Plaintiff's request for an order confirming that part of the Report which denies defendant's counterclaims that were not withdrawn at trial is granted. Plaintiff's request for an order rejecting that part of the Report granting defendant attorneys' fees is granted.
Defendant's request for an order confirming that part of the Report which dismisses the complaint with costs is denied. Defendant's request for an order confirming that part of the Report which dismisses defendant's counterclaims is granted. Defendant's request for an order confirming in part the award of counsel fees in the sum of $10,000.00 is denied, and defendant's request for an order adjusting the award of counsel fees to the increased sum of $45,084.70 is denied. Defendant's request for an order granting her reasonable counsel fees for the instant proceedings and prosecution of this application is denied.
The foregoing constitutes the decision and order of this court.
ENTER:
Hon. Jeffrey S. Sunshine
J. S. C.