STIPULATION REDUCING CHILD SUPPORT ARREARS SET ASIDE

MATTER OF MICHELLE B. v. THOMAS Y., 2022 NY Slip Op 50020 - Kings Co. Family Court 2022:

"It is well-settled that the Family Court has continuing jurisdiction over support proceedings and is empowered to determine applications to modify or enforce judgments and orders of support (see Matter of Saratoga County Support Collection Unit v. Hubert, 160 AD3d 1071 [3rd Dept. 2018]). Pursuant to FCA § 453, proceedings under this part "shall be originated by the filing of a petition containing an allegation that the respondent has failed to obey a lawful court order" (Matter of Pudvah v Pudvah, 172 AD3d 1475 [3rd Dept. 2019; see Matter of Messick v Mesick, 71 AD2d 737 [3rd Dept. 1979]). Generally, stipulations of settlement settling those petitions "are favored by the courts and a stipulation made on the record in open court will not be set aside absent a showing that it was the result of fraud, overreaching, mistake or duress" (Matter of Abidi v Antohi, 64 AD3d 772, 773 [2nd Dept. 2009]; see Matter of Blackstock v. Price, 51 AD3d 914 [2nd Dept. 2008]). However, the law is also quite clear that the court shall not reduce or annul child support arrears prior to the making of an application (see Family Court Act § 451[1]; Matter of Dox v Tynon, 90 NY2d 166 [1997]). Failure to file a petition for the vacatur or reduction of arrears renders the Family Court without subject matter jurisdiction to hear the matter (see Matter of Pudvah, 172 AD3d at 1476; Matter of Sheehan v Sheehan, 221 AD2d 897, 898 [3rd Dept. 1995]).

Applying these principles to the case at bar, the Mother's Objections must be granted. The record reflects that the Mother properly initiated an enforcement proceeding alleging that Father had not paid arrears owing on the Support Order amounting to $206,055.44, for the subject Child. Although the Father's obligation to pay current child support ended when the Child was emancipated on November 15, 2013, he remained obligated to pay those arrears and she had every right to seek enforcement for those outstanding arrears from the Father (see Beckmann v Beckmann, 160 AD3d 799, 800 [2nd Dept. 2018]). After several appearances, on August 3, 2020, the Mother consented to vacate the arrears beyond the amount due to Father by NYCERS in exchange for a lump sum payment.

Nevertheless, the Court of Appeals and the Appellate Division have reminded us that "a court has no discretion to reduce or cancel arrears of child support which accrue before an application for a downward modification of the child support obligation" (Beckmann v Beckmann, 160 AD3d at 800, quoting Matter of Gardner v Maddine, 112 AD3d 926, 927 [2nd Dept. 2013]; see Matter of Dox v Tynon, 90 NY2d at 175-176). Of course, an exception to that rule exists where there is an agreement by the parties to vacate accumulated arrears under a proper petition. This Court acknowledges that the parties may enter into a valid agreement to vacate arrears, but, in this case, neither party has filed the jurisdictionally required petition to vacate, adjust arrears or downwardly modify the child support arrears owed by the Father (see e.g. Matter of Essex County Child Support Enforcement Unit v Crammond, 185 AD3d 1190, 1191 [3rd Dept. 2020] [mother's petition to terminate father's child support and forgive arrears permitted court to issue consent order terminating support obligation and vacating arrears]). In the absence of a such a petition, this Court finds that the Magistrate did not have subject matter jurisdiction to accept the parties' Agreement while adjusting the significant arrears owed by the Father.

Even if there was valid petition pending before the Magistrate, this Court concludes that the Agreement fails due to unconscionability and mutual mistake. When the parties entered into the Agreement, it was unclear whether a QDRO could be set up with NYCERS to facilitate the Mother's receipt of the lump sum payment. The Magistrate informed the parties that it was a complicated process thereby advising the Mother to seek legal representation to assist her with the process. This case was adjourned for several court appearances where the Magistrate herself received updates on the progression of the QDRO. It becomes apparent that the parties should have completed the exploration and investigation into the QDRO before an Agreement could be knowingly and voluntarily reached. Moreover, prior to rendering a decision on the Motion, the record reflects that the Magistrate learned the following: that Mother did not qualify for a QDRO because she is not a former spouse; that she would only be entitled to monthly allotments under an Income Execution Order; and that as of April 11, 2019, Father had an outstanding loan in the amount of $55,736.88, which served to reduce his retirement allowance. Given his prior willful violation and his recalcitrant failure to pay accumulated child support arrears, there is a very slim possibility that the Father would pay the NYCERS loan prior to his retirement date.

Moreover, the existence of a mutual mistake may permit vacatur of an Agreement when "the mistake existed at the time the stipulation was entered into and that it was so substantial that the stipulation failed to represent a true meeting of the parties' minds" (Wit Capital, Ltd. v Obigor, 33 AD3d 859 [2nd Dept. 2006]; see Mahon v New York City Health & Hosps. Corp., 303 AD2d 725 [2nd Dept. 2003]). Here, a mutual mistake was made when there was an assumption that upon the execution of that QDRO, the Mother would be entitled to receive $67,674.36 in a lumpsum payment from Father's NYCERS account. Based on this record, the Court finds that the Magistrate should not have allocuted the parties prior to the filing of an appropriate petition and the completion of the investigation into the QDRO. As such, the Magistrate erred when she denied the Mother's motion to vacate the August 3, 2020 Agreement between the parties.

In accordance with the foregoing, the Court grants the Mother's Objections in their entirety and the matter is hereby remanded to Part 29 for the Magistrate to vacate the Agreement placed on the record on August 3, 2020, restore the Violation Petition to the calendar, and reinstate all outstanding arrears by the Father. The parties and counsel shall appear at a date to be scheduled by the Magistrate. This constitutes the decision and order of the Court.

[1] The Mother attached a letter dated April 11, 2019 from NYCERS to Father, which described various options available to Father at retirement. Only Scharon Y. is listed as a beneficiary. The letter also indicates that the Father has an outstanding loan in the amount of $55,736.58, and the loan would reduce Father's maximum retirement allowance by $3,947.63 per year."

A CONTRACT IS A CONTRACT - ANOTHER VIEW

Yesterday, I posted the case CENTI v. McGILLIN, 2019 NY Slip Op 9058 - NY: Court of Appeals December 19, 2019 where the Court of Appeals refused to deny the enforceability of a loan on the ground that it was funded by illegal gambling proceeds. Now contrast that case with Doe v. Doe, NYLJ March 26, 2020, Date filed: 2020-03-16, Court: District Court, Nassau, Judge: Judge Scott Fairgrieve, Case Number: SC-002118-19OB:

 "Plaintiff commenced a small claims case against Defendant for $650 for breach of contract. Defendant brought a counterclaim against Plaintiff for $325 for nonperformance. On November 27, 2019, the court dismissed both the claim and counterclaim for the reasons set forth herein.

Testimony of Parties

The parties orally agreed that Plaintiff would work on Defendant’s daughter’s college applications, for an agreed upon rate of $125 per hour for each hour working with Defendant’s daughter in person. For any hours that Plaintiff was working independently at his residence, the rate was $100 per hour. There was no written agreement. The understanding was that the Plaintiff would provide assistance to work on the Defendant’s daughter’s college essays. Defendant regularly paid Plaintiff for the services he provided. Plaintiff alleges that Defendant was content with the services rendered.

The essays were to be submitted through the Common App, which is an online platform to submit college applications. On September 22 and 23, 2019, Plaintiff independently worked on two essays for Defendant’s daughter’s application to the University of Georgia at his home for a rate of $100 per hour. He sent the essays to the Defendant and her daughter for review. Plaintiff said they were very happy with the product. On September 24, Defendant met with her daughter’s school guidance counselor to discuss the essays. Defendant testified…, “any college advisor is fully aware that you show it to your guidance counselor. The guidance counselor read them and said who wrote these, a 40-year old man?” (Transcript at p10). Defendant called the Plaintiff on the phone to express her concerns that the essays were not written by Defendant’s daughter.

The final bill due to the Defendant was for $650. This was comprised of four hours working independently at a rate of $100 per hour, and two hours of working with Plaintiff’s daughter at a rate of $125 per hour. Plaintiff believed that the Defendant would pay the total $650 that was due but was never paid.

Defendant testified that her understanding of the agreement was that the Plaintiff would only edit the essays. Defendant and her daughter felt pressured to use Plaintiff’s services because they were on a time constraint to get the college applications sent out. The school guidance counselor expressed his concern for having the Plaintiff write the essays because the student must certify that they wrote the essay. Plaintiff admitted that he knew that the Defendant’s daughter had to certify that she wrote the essays.

Decision

The Common App is used as a platform for students to easily apply to colleges. As per the Common App students must certify that their whole work is their own. The Plaintiff’s occupation of writing and editing essays for students puts him on notice of the certification. He knew that students would have to certify that the essays are their own work because he has written essays for students in the past. The Defendant is also on notice because she allowed the Plaintiff to work on her daughter’s essays on his own time. Both parties knew that the Plaintiff was writing the essays on behalf of the daughter with the intention of sending the essays to the schools. Thus, the parties entered into an illegal contract.

When both parties are equally at fault (in pari delicto), the courts tend to leave the parties as is. “The doctrine of in pari delicto, Latin for equality of fault, is grounded on two premises: (1) courts should not lend their good offices to addressing disputes among wrongdoers; and (2) denying relief to a wrongdoer is an effective means of deterring illegality.” (28 N.Y. Prac., Contract Law §7:13).
Both the Plaintiff and Defendant are at fault because they knew the essays were not the work product of the Defendant’s daughter. The Plaintiff worked on the essay on his own time, at his own house, not in the presence of the daughter. The Defendant agreed to allow the Plaintiff to work on the essays at his home. Therefore, they both knew the work was not performed by the Defendant’s daughter.
It is well settled that illegal contracts will not be enforced by the courts. In Carmine v. Murphy, 285 N.Y. 413 (1941), plaintiff allegedly sold and delivered alcoholic beverages to the defendant and demanded that the unpaid balance be paid in full. The plaintiff was not properly licensed to sell or distribute alcoholic beverages in the State of New York. The general rule is that no action can be based upon an illegal contract (Carmine v. Murphy, 285 N.Y. 413 (1941)). The Court held that the contract was illegal and unenforceable.

Additionally, in Parpal Restaurant, Inc. v. Robert Martin Company, 685 N.Y.S.2d 481 (2nd Dept. 1999), plaintiff brought an action seeking a permanent injunction barring a construction project from expanding streets abutting the plaintiff’s subleased premises. The contract was deemed illegal since it was created for the purpose of improper tax avoidance. Thus, the contract was unenforceable.
Furthermore, in Sabia v. Mattituck Inlet Marina and Shipyard, Inc., 805 N.Y.S.2d 346 (1st Dept. 2005), plaintiff sued defendant for breach of contract and fraud. Plaintiff alleged that a boat purchased from defendant was faulty. As per their original agreement, both parties attempted to avoid payment of sales tax on the purchase of the boat. “Since no right of action can arise from an illegal contract, plaintiffs are barred, as a matter of law, from suing on the alleged agreement for the purchase of the boat…” Id. at 347. The court ruled the scheme to be illegal and therefore unenforceable.

Similarly, here the oral contract between the Plaintiff and Defendant is illegal. Both parties knew that the essays must be the sole product of the Defendant’s daughter. The Plaintiff cannot write the essays and have the daughter assert that it is her own work. As per their agreement, the Plaintiff and Defendant attempted to create a scheme in which they would present the Plaintiff’s work as the work of the Defendant’s daughter. The schemes in the previously mentioned cases, were deemed illegal leading the court to rule the contracts were unenforceable. Here, the contract was illegal since it was based on a scheme to defraud the institutions of higher learning, which the daughter was applying to for admission. Thus, the contract is unenforceable.

In Stone v. Freeman, 298 N.Y. 268, 271 (1948), plaintiff brought suit against defendant to recover commissions for the sale of clothing. The plaintiff sold clothing to the defendant. The plaintiff used a broker and the defendant used a purchasing agent. The agreement between the broker and purchasing agent provided that the broker was to pay a portion of his commissions to the purchasing agent. This alleges a conspiracy since it is illegal to pay commissions or bonuses to a purchasing agent because they are on different sides of the contract. Due to this conspiracy, the contract was unlawful, thereby making it unenforceable. “A broker or agent who knowingly participates in a criminal scheme is a principal, and in pari delicto with the one who employs him, so that neither may sue the other.” (Id. at 271). The court held that the case should be dismissed.

Here, Plaintiff and Defendant were involved in an illegal agreement. Plaintiff and Defendant were in pari delicto. The present contract was illegal since both parties knew they were submitting plagiarized work. Plaintiff testified, “They have to certify the whole work is their own.” (Transcript at p14). Defendant testified that when her daughter sent in her application, she was not supposed to have a ghost writer (Transcript at p11). Therefore, they were both at fault and could not be granted a money judgement from the court.

According to The Common App, the college application process prepares students for independence that comes with college. This forces students to take responsibility for their work and be proud of their work product.

Since the agreement between the Plaintiff and Defendant is based on illegal conduct, the court refuses to aid a litigant who petitions relief. The law does not aid either party since they are equally at fault (28 N.Y. Prac., Contract Law §7:13).

Conclusion

The court will not grant a money judgement to the parties since the agreement is based on illegal conduct. Both the claim and counterclaim are dismissed with prejudice."

A CONTRACT IS A CONTRACT

Fruit of the poisonous tree is a legal metaphor in the United States used to describe evidence that is obtained illegally. The logic of the terminology is that if the source of the evidence or evidence itself is tainted, then anything gained from it is tainted as well. But that metaphor may not apply to contract law and in this cases, it appears the Court of Appeals abides by the maxim: "He who comes into equity must come with clean hands."

CENTI v. McGILLIN, 2019 NY Slip Op 9058 - NY: Court of Appeals December 19, 2019:

"The doctrine of waiver does not preclude consideration of defendant's challenge here to the enforceability of the loan on the ground that it was funded by illegal gambling proceeds. Nevertheless, that defense was properly rejected on the merits. Given our strong public policy favoring freedom of contract, agreements are generally enforceable by their terms (159 MP Corp. v Redbridge Bedford, LLC, 33 NY3d 353, 359-361 [2019]). There is an affirmed finding, supported by the record, that the parties entered into a bona fide loan agreement and the facts do not support voiding the agreement on public policy grounds.

Neither the terms of the agreement nor plaintiff's performance — i.e., loaning money to a friend — was intrinsically corrupt or illegal. Although the loan was funded by the parties' illegal gambling operation (for which both were criminally prosecuted), the record does not support a characterization of their conduct as "malum in se, or evil in itself" (Lloyd Capital Corp. v Pat Henchar, Inc., 80 NY2d 124, 128 [1992]) and the source of funds used for a loan is not typically a factor in determining its validity. Defendant argues the agreement should be deemed unenforceable because the courts should not assist a party in profiting from ill-gotten gains. But, here, where both parties were involved in the underlying illegality, neither enforcement nor invalidation of the contract would avoid that result. Indeed, if the loan is not enforced, defendant receives a windfall despite his participation in the criminal acquisition of the funds. We have been reluctant to reward "a defaulting party [who] seeks to raise illegality as a sword for personal gain rather than a shield for the public good'" (id., quoting Charlebois v Weller Assoc., 72 NY2d 587, 595 [1988]; cf. McConnell v Commonwealth Pictures Corp., 7 NY2d 465 [1960]). Although we do not condone plaintiff's illegal bookmaking business, for which he was prosecuted and fined, the circumstances presented here do not warrant a departure from this tenet."

JUDICIAL SCRUTINY OF A DIVORCE AGREEMENT

Entering into a matrimonial agreement, where the parties waive full financial disclosure and the terms of support are unrealistic, is still subject to judicial review.

Mizrahi v Mizrahi, 2019 NY Slip Op 03040, Decided on April 24, 2019, Appellate Division, Second Department:

"The parties were married on August 15, 1996, and have two children together. On January 15, 2015, the parties entered into a separation agreement. In January 2016, the plaintiff commenced this action for a divorce and ancillary relief and interposed causes of action seeking to set aside the separation agreement. The plaintiff thereafter moved to set aside the separation agreement on the ground, inter alia, of unconscionability, and the defendant cross-moved, among other things, to dismiss the causes of action seeking to set aside the separation agreement. The Supreme Court denied the plaintiff's motion, in effect, granted that branch of the defendant's cross motion which was to dismiss the causes of action seeking to set aside the separation agreement, and, sua sponte, determined that the defendant was entitled to an award of attorney's fees pursuant to the terms of the separation agreement and awarded the defendant attorney's fees in the sum of $4,000 for fees expended in opposing the motion. The plaintiff thereafter moved for leave to reargue her prior motion and, in effect, her opposition to that branch of the defendant's cross motion which was to dismiss the causes of action seeking to set aside the separation agreement. The court granted reargument and, upon reargument, adhered to its original determination. The plaintiff appeals.

"Agreements between spouses . . . involve a fiduciary relationship requiring the utmost of good faith. There is a strict surveillance of all transactions between married persons, especially separation agreements. Equity is so zealous in this respect that a separation agreement may be set aside on grounds that would be insufficient to vitiate an ordinary contract" (Christian v Christian, 42 NY2d 63, 72 [citations omitted]).

"Generally, separation agreements which are regular on their face are binding on the parties, unless and until they are put aside" (id. at 71). "Judicial review is to be exercised circumspectly, sparingly and with a persisting view to the encouragement of parties settling their own differences in connection with the negotiation of property settlement provisions. Furthermore, when there has been full disclosure between the parties, not only of all relevant facts but also of their contextual significance, and there has been an absence of inequitable conduct or other infirmity which might vitiate the execution of the agreement, courts should not intrude so as to redesign the bargain arrived at by the parties on the ground that judicial wisdom in retrospect would view one or more of the specific provisions as improvident or one-sided" (id. at 71-72 [emphasis added]).

"A separation agreement or stipulation of settlement which is fair on its face will be enforced according to its terms unless there is proof of fraud, duress, overreaching, or unconscionability" (Linder v Linder, 297 AD2d 710, 711; see Hughes v Hughes, 131 AD3d 1207, 1208; Kabir v Kabir, 85 AD3d 1127, 1127). However, because of the fiduciary relationship existing between spouses, a marital agreement should be closely scrutinized and may be set aside upon a showing that it is unconscionable or the result of fraud or where it is shown to be manifestly unjust because of the other spouse's overreaching (see Jon v Jon, 123 AD3d 979; Potter v Potter, 116 AD3d 1021, 1022). To rescind a separation agreement on the ground of overreaching, a plaintiff must demonstrate both overreaching and unfairness (see Jon v Jon, 123 AD3d at 979; Kerr v Kerr, 8 AD3d 626, 626-627).

"In general, an unconscionable contract has been defined as one which is so grossly unreasonable as to be unenforceable because of an absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other party" (King v Fox, 7 NY3d 181, 191; see Gillman v Chase Manhattan Bank, 73 NY2d 1, 10; Simar Holding Corp. v GSC, 87 AD3d 688, 689). " This definition reveals two major elements which have been labeled by commentators, procedural and substantive unconscionability'" (Simar Holding Corp. v GSC, 87 AD3d at 689, quoting State of New York v Wolowitz, 96 AD2d 47, 67). " The procedural element of unconscionability concerns the contract formation process and the alleged lack of meaningful choice; the substantive element looks to the content of the contract, per se'" (Simar Holding Corp. v GSC, 87 AD3d at 689, quoting State of New York v Wolowitz, 96 AD2d at 67).

A reviewing court examining a challenge to a separation agreement "will view the agreement in its entirety and under the totality of the circumstances" (Jon v Jon, 123 AD3d at 980; see Kabir v Kabir, 85 AD3d at 1127-1128; Reiss v Reiss, 21 AD3d 1073, 1074). Here, without a hearing to determine the totality of the circumstances, including the extent of the parties' incomes [*2]and assets and the circumstances surrounding the execution of the separation agreement, it cannot be determined on this record whether equity should intervene to invalidate the parties' separation agreement (see Kabir v Kabir, 85 AD3d at 1127-1128). The plaintiff raised an inference that the parties' separation agreement was invalid, sufficient to warrant a hearing (see Jon v Jon, 123 AD3d at 980).

It is undisputed that the separation agreement was the product of a mediation conducted by the attorney who prepared the document. The separation agreement reflects that the defendant retained counsel to represent him, while the plaintiff did not do so. While the plaintiff consulted with an attorney regarding the separation agreement, the agreement states, in bold print, that the plaintiff's consulting attorney advised her not to sign the agreement "based upon the fact that there has been no discovery in the matter whatsoever, and [the attorney's] considered opinion that the support provisions in the agreement are not adequate to meet the [plaintiff's] and children's basic needs."

The substantive terms of the agreement reveal that, at the time of execution, the plaintiff earned no income, and the defendant represented his income as $100,000 per year "based upon his ability to earn." The defendant agreed to pay $3,000 per month in child support for the parties' two children, and $500 per month in maintenance. The defendant agreed to provide health insurance for the children and to pay 75% of the children's medical expenses not covered by insurance, with the plaintiff to pay 25% of such expenses. No provision was made for the payment of the children's educational expenses, although the defendant agreed to pay a "possible" outstanding balance due to the children's private high school.

The separation agreement provided that the plaintiff would have exclusive use and occupancy of the marital residence, a rental apartment, and that the defendant would pay, for the period between January 15, 2015, and February 1, 2015, the rent, utilities, and carrying charges in connection with the apartment. From February 1, 2015, the plaintiff was responsible for such expenses. Each party was to retain his or her own personal property, except that the defendant waived any interest in rugs and other items in storage in Israel and agreed to pay the storage charges until October 1, 2015. The defendant agreed to pay the plaintiff a lump sum of $45,000, representing an equitable share in his business, identified as EMS 15A, LLC. The agreement did not identify this business as being claimed by the defendant as his separate property, did not describe the nature of the business, and did not place a value on the business. The agreement recited that the parties had waived their rights to disclosure and to the exchange of statements of net worth. The agreement provided that in the event that the validity of the agreement was unsuccessfully challenged, the challenging party would be responsible for the attorney fees and legal expenses of the defending party.

The Supreme Court denied the plaintiff's motion to set aside the separation agreement and, in effect, granted that branch of the defendant's cross motion which was to dismiss the causes of action challenging the agreement on the ground that the agreement was the product of a mediation, that the plaintiff was afforded the opportunity to consult with counsel, and that the plaintiff elected to sign the agreement, notwithstanding the advice of counsel not to do so. We disagree. These facts, standing alone, do not shield the separation agreement from judicial scrutiny. The validity of the agreement is dependent upon an examination of the totality of the circumstances, including an examination of the terms of the agreement, to see if there is an inference of overreaching (see Christian v Christian, 42 NY2d at 72-73). Moreover, the record discloses no information regarding who retained and paid for the services of the mediator, and how the mediator arrived at the substantive terms of the agreement.

It was undisputed that the monthly rent for the marital residence in Forest Hills, Queens, exceeded $5,200 per month. The amount of combined maintenance and child support, payable by the defendant to the plaintiff, who had no other income, was less than the monthly rent. Thus, the amount of support that the plaintiff was to receive was less than her housing expense, let alone sufficient to cover food, clothing, and other expenses. There is no indication that the plaintiff was expected to, or could, obtain reasonable alternative housing at lesser cost. The plaintiff's [*3]affidavit submitted in support of her motion indicated that she was in the process of being evicted from the marital residence due to missed rental payments. The agreement did not provide for the payment of the children's private school tuition, even though the children had attended a private religious school for several years. The record contains no information as to the plaintiff's ability to obtain employment. While the defendant averred that he was diagnosed with end-stage renal disease in March 2015 and that he was working only on a part-time basis, he did not provide any documentation of his condition and his past or present income.

In his opposition to the plaintiff's motion, the defendant averred that his business, EMS 15A, LLC, owns a condominum apartment in Manhattan, which he estimated had a fair market value of $3,200,000 . He claimed that he had purchased the apartment in 2001, borrowing $150,000 from his watch business to make the down payment. He asserted that the watch business was his separate property, he sold part of his interest in the watch business to his brother in 2006, and he used the proceeds of the sale to repay the mortgage on the apartment. On the other hand, he also claimed that he thereafter had taken out $2,595,000 in mortgages on the property, on which he was in default. He did not, however, describe what use he made of the proceeds of the mortgages.

In addition, the parties' affidavits raised questions as to value of the rugs that the plaintiff was to receive under the separation agreement and the nature and extent of jewelry that the plaintiff retained as her property.

Given that the agreement's support provisions were insufficient to cover the rent for the marital residence and other basic needs of the plaintiff and the children, as well as the lack of financial disclosure regarding the value of the defendant's business, condominium, and actual income, questions of fact existed as to whether the separation agreement was invalid, sufficient to warrant a hearing (see Gardella v Remizov, 144 AD3d 977, 980; Jon v Jon, 123 AD3d at 980; Kabir v Kabir, 85 AD3d 1127). Given the lack of any financial disclosure, the Supreme Court should have exercised its equitable powers and directed disclosure regarding the parties' finances at the time the agreement was executed, to be followed by a hearing to test the validity of the separation agreement (see Gardella v Remizov, 144 AD3d at 980; Kabir v Kabir, 85 AD3d at 1128)."

DOMESTIC VIOLENCE VICTIMS AND LEASE LIABILITY

RIVERWALK ON THE HUDSON, INC. v. Culliton, 2018 NY Slip Op 28350 - NY: City Court 2018:

"Beginning with statutory defenses, RPL 227-c provides a method for victims of domestic violence to terminate a lease. RPL 227-c (1), in pertinent part, provides: "[A] tenant for whose benefit any order of protection has been issued shall be permitted to terminate [her] lease and surrender possession of the leasehold premise and be released from any liability to pay to the lessor rent for the time subsequent to the date of termination of such lease in accordance with subdivision two." RPL 227-c (2) sets forth the required procedural steps to terminate the lease.

Morgan qualifies for the protections afforded by RPL 227-c. However, Morgan, who appeared without a lawyer in either Family Court or this court, never invoked or sought the aid of RPL 227-c at any time. Morgan, the court surmises, was unfamiliar with the statute and sadly, nothing in the law requires a court to explain this important statutory right to victims of domestic abuse. Nevertheless, this court lacks the power to retroactively apply the protections of RPL 227-c for Morgan's benefit; therefore, the statute does not bar Riverwalk's recovery of rent arrears against Morgan.

Morgan may have a common law contract defense that excuses her from liability. The question becomes whether RPL 227-c is the exclusive method for a domestic violence victim to be absolved from rent owed under a lease agreement. To this question, there is no obvious answer. On the one hand, the statute creates a right for a domestic violence victim to break a lease and there would be a thick irony to interpret such a statute to restrict or to eliminate other rights. On the other hand, the statute crafts a balance between victims' and landlords' economic rights and the balance having been set by the Legislature should not be disturbed by a court.

Ultimately, whether RPL 227-c eliminates common law contracts defenses to liability under a lease hinges on whether RPL 227-c "abrogates, or merely derogates, the common law. Abrogation means the entire repeal and annulment of a law; derogation relates to the partial repeal or abolishing of a law, as by a subsequent act which limits its scope or impairs its utility and force" (Fumarelli v. Marsam Dev. Inc., 92 NY2d 298, 306 [1998] [internal quotations and citations omitted, italics in the original]).

The strongest basis to find abrogation is the omission of a subdivision of RPL 227-c indicating that the common law remains intact. Indeed, the Legislature has, in other sections of the RPL, made its intentions not to abrogate other rights explicit. For example, RPL 227-d which protects domestic violence victims from discrimination contains a clause which provides: "Nothing in this section shall be construed as limiting, diminishing, or otherwise affecting any rights under existing law" (RPL 227-d [6]). RPL 227-c has no language or clause that mirrors RPL 227-d (6).

However, finding that a statute abrogates common law rights by the omission of an explicit clause preserving them is not the preferred method of statutory construction. Rather, the "general rule of statutory construction [is] that a clear and specific legislative intent is required to override the common law" (Hechter v. New York Life Ins. Co., 46 NY2d 34, 39 [1978]). Thus, "when the common law gives a remedy, and another remedy is provided by statute, the latter is cumulative, unless made exclusive by the statute" (Katz 737 Corp. v. Cohen, 104 AD3d 144, 159 [1st Dept 2012] [internal quotation marks and citation omitted]; see e.g. Fleury v. Edwards, 14 NY2d 334, 338 [1964] [holding that common law as to admissibility of evidence given by witness who has died was still applicable notwithstanding enactment of rule respecting admissibility of such testimony]). The court holds, therefore, that RPL 227-c neither displaces nor eliminates any common law contract defense that may be available to Morgan.

The common law doctrine of unconscionability seems applicable here. A term of a contract is unconscionable when it is shockingly unjust or unfair or because, procedurally, an unfair term was obtained through unconscionable means, or because of a combination of both factors (People by Abrams v. Two Wheel Corp., 71 NY2d 693, 699 [1988]). The doctrine is designed to prevent oppression (Rzepko v. GIA Gem Trade Lab., Inc., 115 Misc 2d 755, 758 [Sup Ct, New York County, 1982]). An issue of unconscionability is a matter to be decided by a court (Wilson Trading Corp. v. David Ferguson, Ltd., 23 NY2d 398, 403-04 [1968]).

Normally, whether the contract is unconscionable in whole or in part is viewed from the time of its formation (see e.g. RPL 235-c [allowing a court to void or limit "any clause of the lease to have been unconscionable at the time it was made] [emphasis added]). In this case, nothing in the lease agreement is unconscionable on its face. The joint and several liability clause comports with traditional contract principles. It is simply a clause that allocates the risks between the parties and not in an unfair manner. After all, allocation of risk is an essential purpose of a contract (Comprehensive Bldg. Contractors Inc. v. Pollard Excavating Inc., 251 AD2d 951, 952 [3d Dept 1998]). The Cullitons assumed the risk of non-payment jointly—even if "unforeseen circumstances [were to] make performance burdensome" (Kel Kim Corp. v. Central Mkts., 70 NY2d 900, 902 [1987]).
This case is unusual in that the unconscionability inquiry revolves around events that occurred after the execution of the contract. Thus, at least initially, the question is whether a legitimate clause can be rendered impotent because its implementation in a peculiar circumstance produces an unconscionable result. That is, can a court declare a facially valid contract clause invalid as applied to a particular situation. There appears to be no New York authority directly answering this question.^[4] However, courts regularly distinguish between the facial validity and the as applied validity of a law (see e.g. People v. Stuart, 100 NY2d 412, 421 [2003] [discussing the difference between facial validity and as applied validity]). The court will adopt what is routine statutory analysis to the contract issue here (cf. Slamon v. Carrizo LLC, No. 3:16-CV-2187 (Mariani, J.), 2017 WL 3877856, at *4 (M.D. Pa. Sept. 5, 2017) (noting that it is not unusual for courts to sometimes apply rules of statutory construction to aid their interpretations of a contract])
.
The court will, therefore, determine if the joint and several liability clause is unconscionable when applied to the facts in this case. What gave rise to Morgan leaving her apartment was a judicial order which prohibited the Cullitons from living together. The order was necessary to protect Morgan from harm. Morgan, the victim, deemed that living with her mother was safer than the vulnerability of living alone in the apartment. Her choice allowed Robert to keep possession of the apartment— a fact that Riverwalk was aware of by early June. When June's rent went unpaid, Riverwalk did not seek an eviction; when July's rent went unpaid, it did not seek an eviction. Rather, Riverwalk waited all the way until August's rent was due before it made a case returnable in this court.

Riverwalk asks the court to hold Morgan responsible for $3,498 of rent arrears pursuant to the joint and several liability clause of the lease. The court will not do so. A woman who is a victim of domestic violence should not be forced to pay the rent of her abuser. To sustain the contrary proposition, as Riverwalk seeks, would be shockingly unjust and unfair which is the very definition of an unconscionable act (Black's Law Dictionary [10th ed. 2014]). Therefore, the court holds the joint and several liability clause, as applied to the facts in this case, is unconscionable and thus void as to Morgan Culliton.

No monetary judgment will be entered against Respondent Morgan Culliton. The monetary judgment against Robert Culliton is undisturbed. Riverwalk's remedy for rent arrears lies against Robert Culliton alone."

SETTING ASIDE AN UNFAIR SEPARATION AGREEMENT

TUZZOLINO v. TUZZOLINO, 2017 NY Slip Op 8991 - NY: Appellate Div., 4th Dept. 2017:

"We agree with plaintiff that the agreements are unfair and unconscionable and should be set aside. Separation agreements are subject to closer judicial scrutiny than other contracts because of the fiduciary relationship between spouses (see Christian v Christian, 42 NY2d 63, 72 [1977]; Gibson v Gibson, 284 AD2d 908, 909 [4th Dept 2001]). A separation agreement should be set aside as unconscionable where it is "such as no person in his or her senses and not under delusion would make on the one hand, and as no honest and fair person would accept on the other . . ., the inequality being so strong and manifest as to shock the conscience and confound the judgment of any person of common sense" (Christian, 42 NY2d at 71 [internal quotation marks and brackets omitted]; see Dawes v Dawes, 110 AD3d 1450, 1451 [4th Dept 2013]; Skotnicki v Skotnicki, 237 AD2d 974, 975 [4th Dept 1997]). We note that the unconscionability or inequality of a separation agreement may be the result of overreaching by one party to the detriment of another (see Tchorzewski v Tchorzewski, 278 AD2d 869, 870 [4th Dept 2000]).

Here, at the time the parties entered into the agreements, defendant wife was represented by counsel but plaintiff was not, which, while not dispositive, is a significant factor for us to consider (see Gibson, 284 AD2d at 909; Tchorzewski, 278 AD2d at 870; Skotnicki, 237 AD2d at 975). Another factor to consider is that the agreements did not make a full disclosure of the finances of the parties (see Tchorzewski, 278 AD2d at 870-871). In particular, defendant, who had a master's degree in business administration and was a professor at a SUNY college, would receive two pensions upon retirement, neither of which was valued. The separation agreement did not provide for any maintenance for plaintiff despite the gross disparity in incomes and the length of the marriage and, while the modification agreement provided maintenance for plaintiff, it also required plaintiff to transfer his interest in the marital residence to defendant. In opposition to the motion, defendant averred that the parties "wanted an agreement whereby [plaintiff] would keep his income and retirement assets and I would keep mine." As shown by their statements of net worth, which were prepared after the agreements were executed, plaintiff's assets totaled approximately $77,000 whereas defendant's assets, which included the marital residence, totaled approximately $740,000. Based on our consideration of all the factors, we conclude that the agreements here are unconscionable and were the product of overreaching by defendant and thus should be set aside (see Dawes, 110 AD3d at 1451; Gibson, 284 AD2d at 909; Tchorzewski, 278 AD2d at 871). We therefore reverse the judgment in appeal No. 1 insofar as appealed from, grant the motion, vacate the second and third decretal paragraphs, and we remit the matter to Supreme Court to determine the issues of equitable distribution and maintenance."

DOMESTIC VIOLENCE AND MEDIATION

The general school of thought is that domestic violence victims, when seeking divorce, should not attempt mediation as the mediation can be used as a further tool of abuse and control by the abuser. This was illustrated in the recent decision in Massari v. Massari, 2017 NY Slip Op 50412 - NY: Supreme Court 2017.

A reading of the facts indicated that a serious incident of physical violence led to a separation in which the defendant husband insisted that a mediator referred by his attorney be used. The agreements entered into appear fair on its face in that marital assets were split evenly, however, the agreements provided that maintenance would be waived. The court held:

"While marital assets were distributed equitably, Defendant remains in a position to significantly improve his comfortable standard of living. The Court concludes there is a manifest unfairness in enabling Defendant to maintain a comfortable standard of living, while relegating Plaintiff to a poverty level lifestyle. Christian v. Christian, supra. Accordingly, the Court awards maintenance to the Plaintiff in the amount of $1,000.00 per month, commencing on the entry of Judgment herein and continuing until Defendant reaches the age of 66 and he is eligible for full Social Security benefits, at which time Plaintiff will be eligible for her full Social Security benefits based on her contributions, and her marriage to Defendant. Consequently, Defendant shall continue to maintain his life insurance as set forth in Article XIII of the Agreement."

PROMISSORY ESTOPPEL AND THE STATUTE OF FRAUDS

Matter of Hennel 2017 NY Slip Op 05266 Decided on June 29, 2017 Court of Appeals Fahey, J. :

"Petitioners concede that the statute of frauds would generally bar reliance on their oral bargain with decedent. As the Appellate Division acknowledged, wills are ambulatory in nature, and decedent was free to revoke or alter his 2006 will until his death (see Matter of American Comm. for Weizmann Inst. of Science v Dunn, 10 NY3d 82, 92 [2008]). Petitioners do not allege that decedent promised never to revoke or alter his 2006 will. In any event, Estates, Powers and Trusts Law § 13-2.1 (a) (2) requires every agreement or promise to make a "testamentary provision of any kind" to be in writing. General Obligations Law § 5-701 (a) (1) further requires any agreement or promise that "[b]y its terms is not to be performed within one year from the making thereof or the performance of which is not to be completed before the end of a lifetime" to be in writing. The Appellate Division therefore correctly held that "petitioners were obliged to bring this case within an exception to the statute of frauds" (Hennel, 133 AD3d at 1122).

Petitioners attempted to do so by relying on the doctrine of promissory estoppel. Although respondent agrees that the statute of frauds will not apply if petitioners can establish the elements of promissory estoppel and that they would otherwise suffer unconscionable injury, [*5]this Court has not yet expressly recognized this principle. We adopt it now, for several reasons.

The Restatement (Second) of Contracts endorses the principle that a promise inducing reasonable reliance "is enforceable notwithstanding the Statute of Frauds if injustice can be avoided only by enforcement of the promise" (Restatement [Second] of Contracts § 139 [1]; see also 10 Richard A. Lord, Williston on Contracts §§ 27:14-27:15, at 185-206 [4th ed 2011]; 4 Corbin on Contracts § 12:8, at 38-44 [1997]). This Court has previously cited section 139 of the Restatement with approval (see Farash v Sykes Datatronics, 59 NY2d 500, 504-505 [1983]).

This Court has also recognized that the related doctrines of equitable estoppel and part performance may preclude application of the statute of frauds under certain circumstances (see e.g. American Bartenders School v 105 Madison Co., 59 NY2d 716, 718 [1983], affg 91 AD2d 901 [1st Dept 1983]; Anostario v Vicinanzo, 59 NY2d 662, 663-664 [1983]; Woolley v Stewart, 222 NY 347, 350-351 [1918]; cf. Messner Vetere Berger McNamee Schmetterer Euro RSCG v Aegis Group, 93 NY2d 229, 234 n 1 [1999])[FN2]. Furthermore, the Appellate Division departments have unanimously recognized that promissory estoppel may preclude enforcement of the statute of frauds if application of the statute would result in unconscionability (see e.g. Carvel Corp. v Nicolini, 144 AD2d 611, 612-613 [2d Dept 1988]; Bernard v Langan Porsche Audi, 143 AD2d 495, 496 [3d Dept 1988]; American Bartenders School, 91 AD2d at 902; Buddman Distribs. v Labatt Importers, 91 AD2d 838, 839 [4th Dept 1982]; Swerdloff v Mobil Oil Corp., 74 AD2d 258, 261-264 [2d Dept 1980], lv denied 50 NY2d 803, 913 [1980]).

Finally, this equitable doctrine is grounded in sound principles of fairness. As this Court has stated in a different context,

"The Statute of Frauds was designed to guard against the peril of perjury; to prevent the enforcement of unfounded fraudulent claims. But, as Professor Williston observed: 'The Statute of Frauds was not enacted to afford persons a means of evading just obligations; nor was it intended to supply a cloak of immunity to hedging litigants lacking integrity; nor was it adopted to enable defendants to interpose the Statute as a bar to a contract fairly, and admittedly, made'" (Morris Cohon & Co. v Russell, 23 NY2d 569, 574 [1969], quoting 4 Williston on Contracts § 567A, at 19-20 [3d ed 1961]).

In other words, equity "will not permit the statute of frauds to be used as an instrument of fraud" (Wood v Rabe, 96 NY 414, 425 [1884]).

We hold that where the elements of promissory estoppel are established, and the injury to the party who acted in reliance on the oral promise is so great that enforcement of the [*6]statute of frauds would be unconscionable, the promisor should be estopped from reliance on the statute of frauds.[FN3]"

TO MEDIATE WITHOUT SEPARATE COUNSEL

Recently, I had a conversation with an individual who sought a divorce through mediation but did want separate counsel.

This was one of the problems in Massari v. Massari, 2017 NY Slip Op 50412 - NY: Supreme Court 2017 which was decided about 8 days ago. It was a long term marriage of about 40 years. The husband - defendant "consulted an attorney and was referred to a mediator...on the belief that a mediated outcome would be less costly than a divorce trial. Plaintiff assented to the choice of [the mediator], and the parties entered into a mediation agreement with her. [The mediator] provided mediation services between March 2012 and September 2012. In July 2012, after approximately six or eight sessions, the parties executed a Separation Agreement. Then, in September 2012, they executed a Modification Agreement."

However the wife did obtain separate counsel and waived her right to maintenance:

"Prior to the July Agreement, Plaintiff requested maintenance. The mediator advised her that she was entitled to it. Defendant opposed to paying Plaintiff maintenance and to giving her one half of his 401-k. According to Plaintiff, Defendant was willing to do one or the other, but not both. The parties discussed the issue of maintenance, and Plaintiff told the mediator she thought it was "unfair". She claimed she was unaware she was entitled to seek and obtain the advice of counsel, despite the Agreement's express language that states, in part:

"The Parties acknowledge that the terms of this Agreement have been mediated through the efforts of Melissa Goodstein, Esq. The Parties acknowledge that they have each had the opportunity, and have been advised by their mediator on several occasions to obtain independent counsel of their own selection prior to entering into this Agreement. The Parties acknowledge that they have not consulted with nor retained an attorney with respect to this Agreement although they have strongly been advised to do so. They agree that this should in no way affect the legality or enforceability of this Agreement and that they have each chosen not to use an attorney on their own accord."

(Article XV, §3)"

The court set aside the waiver of maintenance:

"Here, the parties' freedom to enter into an enforceable agreement is conditioned on the statutory requirements that such agreement is "subject to the provisions of Section 5-311 of the General Obligations Law, and provided that such terms were fair and reasonable at the time of the making of the agreement and are not unconscionable at the time of entry of final judgment." DRL §236(B)(3). The Court heard the parties' testimony and found the agreement was fair and reasonable at the time of the making. That finding is consistent with the requirements of Christian v. Christian, 42 NY2d 63, 72-73 (1977), where the threshold focus is on the procedural components forming the agreement. See also Levine v. Levine, 56 NY2d 42, 47 (1982). Insofar as DRL §236(B)(3) requires the court to conclude the terms of the agreement "are not unconscionable at the time of entry of final judgment," a separate examination is required — the court must consider changes to a spouse's economic status including the possibility that a spouse may become a public charge. Certainly, a Judgment incorporating an Agreement, which deprives a party of income after a forty-year-marriage, raises the possibility of unconscionability.

As Justice Ecker observed, the severability of the maintenance provision in the Agreement allows for the preservation of the remaining provisions. Consequently, the Court need not disturb the provisions which equally distribute the marital estate. The Court has no intention of re-writing the Agreement. Cappello v. Cappello, 286 AD2d 360 (2d Dept. 2001). It is unnecessary to do so. The Complaint seeks not only to set aside the Agreement but also an award of non-durational spousal maintenance to the Plaintiff. The trial testimony included some evidence of the parties' financial status and current Statements of Net Worth. Plaintiff's Statement of Net Worth reflects a gross income of $11,352.00 per year ($10,526.00 net) from her part-time employment as a receptionist in a hair salon. The interest income on her 401-k funds is unknown. Her claimed expenses are $3,414.00/month, inclusive of a claimed housing expense of $1,500.00/month, without any indication of payments to her daughter. Her limited housing costs are due to her residing in her daughter's basement apartment. Once the Judgment is entered, Plaintiff will have an additional — albeit unknown — expense for health insurance, which will be paid from her distributive award, depleting it rapidly.^[11] The 2016 federal poverty guidelines for a single person household is $11,880.00. In 2017, that figure rises to $12,060.00.^[12] Defendant's income is $76,608.00/year, exclusive of overtime or a second job, but consistent with his income during the marriage, which provided the parties' marital standard of living. His monthly gross income is $6,099.58 (net is $4,019.94). He also has a significant housing cost of $2,024.00 inclusive of mortgage and taxes, arising from his refinance of the marital residence to purchase Plaintiff's interest. His Statement of Net Worth indicates a monthly condominium cost, which may assist the parties' younger daughter, or may be a timeshare expense, but it is not otherwise identified. He can still contribute $1,039.00/month to his 401-k and he budgets $208.00/month for vacations. While marital assets were distributed equitably, Defendant remains in a position to significantly improve his comfortable standard of living. The Court concludes there is a manifest unfairness in enabling Defendant to maintain a comfortable standard of living, while relegating Plaintiff to a poverty level lifestyle. Christian v. Christian, supra. Accordingly, the Court awards maintenance to the Plaintiff in the amount of $1,000.00 per month, commencing on the entry of Judgment herein and continuing until Defendant reaches the age of 66 and he is eligible for full Social Security benefits, at which time Plaintiff will be eligible for her full Social Security benefits based on her contributions, and her marriage to Defendant. Consequently, Defendant shall continue to maintain his life insurance as set forth in Article XIII of the Agreement.

[11] Given Plaintiff's health history, it is unknown if she will be able to obtain insurance, even if she has "access" to it, especially with the proposed radical changes to the Affordable Care Act.
[12] See https://aspe.hhs.gov./poverty guidelines. The Court takes judicial notice of this information."