In April, the matter of Simkin v. Blank, 19 N.Y.3d 46 (2012), was decided by the Court of Appeals, unleashing polarized reactions throughout the matrimonial law community. The case, much debated as it wended its way through the courts, involved a request by a husband, Steven Simkin, to set aside a settlement agreement post-divorce. The parties’ counsel had negotiated the divorce agreement over a period of two years, each client having received substantial marital assets. A large portion of the assets Simkin received as and for equitable distribution was contained in an account held by Bernard L. Madoff Investment Securities. Thus, two years post-judgment, when the now infamous Madoff Ponzi scheme had collapsed, Simkin found himself with a worthless investment account. In seeking to set aside or reform the divorce settlement, he argued that the initial agreement was based on a mutual mistake of fact, i.e., the existence and value of the Madoff fund.

The Court of Appeals held, inter alia, that the investment fund did, in fact, have value at the time of the divorce. Specifically, the court referred to the fact that Simkin had withdrawn monies from the fund. Indeed, the court determined that the Simkins’ lost millions ultimately amounted to a very bad investment, reasoning that, had the value increased, the wife, Laura Blank, would not have had legal standing to request redistribution of enhanced value. Underlying the court’s reasoning, at least in part, was a public policy of honoring the finality of settled negotiations. Allowing a re-negotiation upon every change of financial circumstances would simply send our legal system into a tailspin.

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