E.R. v. W.S.

DECISION/ORDER  In this action for divorce, plaintiff E.R. moves for an order: (1) pursuant to CPLR §3001, granting him a declaratory judgment declaring that the parties’ Domestic Partner Property Agreement (“the Agreement”) dated June 17, 2015 is unenforceable, on the ground that it lacks consideration; or, in the alternative,(2) declaring that the Agreement is enforceable only for the period from June 17, 2005, when the Agreement was signed, until September 22, 2012, when the parties married; and(3) awarding pendente lite counsel fees.Defendant W.S. opposes the motion and cross-moves for an order:(1) granting partial summary judgment as to all relief and issues addressed in the Agreement; and(2) declaring that the Agreement is valid and binding upon the parties.BackgroundThe parties met in 2003. At the time, plaintiff was working as a professional singer and defendant was a medical resident. According to plaintiff, the parties began living together in plaintiff’s New York City rental apartment sometime in 2005, and subsequently jointly purchased a house located at (address redacted), Woodstock, New York 12498 (“the Woodstock house”). Defendant claims that the parties did not begin to formally cohabitate until defendant joined a medical practice in Kingston, New York and they moved into the Woodstock house.On June 17, 2005, shortly after the purchase of the Woodstock house, the parties entered into the Agreement, which provides, in relevant part, as follows:3. Acknowledgment of Domestic Partnership:The parties hereby agree and acknowledge that they are domestic partners in a committed relationship and that neither Party is engaged in another domestic partnership. The parties agree that this contract sets forth their rights and obligations toward each other with regard to certain property in the event the Parties should separate and terminate their relationship as domestic partners.4. Ownership of (address redacted), Woodstock, New York 12498:The Parties agree and acknowledge that real property located at (address redacted), Woodstock, New York 12498 is the joint property of both E.R. and W.S.The parties agree and acknowledge that any mortgage obligation with regard to any such property, although issued in the name of W.S., shall in fact be the joint responsibility of the Parties and that the Parties acknowledge they contribute equally to payments on said mortgage.The parties further agree that they should equally share all expenses incurred with regard to said property including, but not limited to, maintenance, insurance; utilities and household expenses.* * *8. Property Jointly Owned by the Parties:In the event the Parties should separate in the future and terminate their relationship as domestic partners, all jointly owned property shall be divided equally between the Parties, and/or sold with all net proceeds divided equally between the Parties.9. Property by Gift or Inheritance:Should either Party receive real or personal property by gift or inheritance, the property shall be the separate property of the person receiving the gift or the inheritance and cannot be transferred to the other except by writing.10. No Claims for Support:In the event the Parties terminate the domestic partnership, neither Party shall have any claim for support or for any other money or property from the other, except as otherwise provided herein.Plaintiff claims that defendant took the initiative to identify and hire an attorney, but defendant claims that plaintiff initiated the contact with the attorney.Plaintiff claims that he reviewed a draft of the Agreement for the first time just prior to executing the document. Plaintiff further claims that the attorney failed to counsel him as to any rights or obligations, or any waivers he may have been making as a result of entering into the Agreement.¹The Agreement did not explicitly state how the rights of the parties would be affected in the event that the freedom to marry was extended in New York to same-sex couples and the parties married.²Although the parties acknowledged in the Agreement that they were “domestic partners in a committed relationship,” there is no dispute that the parties never exercised their legal option under New York City Code_3-241 of formally registering as “domestic partners” with the Clerk of the City of New York,³ or any other jurisdiction.⁴DiscussionConsiderationIt is well settled that “[a]ll contracts must be supported by consideration, consisting of a benefit to the promisor or a detriment to the promisee (citations omitted).” Beitner v. Becker, 34 AD3d 406, 407 (2nd Dep’t 2006).In the instant case, plaintiff argues that he received no bargained for benefit to the extent that he should be considered the promisor of the Agreement, and that he suffered no detriment to the extent that he should be considered the promisee of the Agreement.Specifically, plaintiff argues that: (i) he was merely retaining rights he already had to the property, since title to the Woodstock house was already in joint names; (ii) he received no benefit from agreeing to be jointly responsible for sharing the cost of the monthly mortgage on the Woodstock house since the mortgage was in defendant’s sole name; and (iii) the agreement for the sharing of expenses associated with plaintiff’s then rental apartment at 525 Manhattan Avenue constituted past consideration, since the residence was already shared between the parties.⁵In opposition, defendant argues that the Agreement was supported by adequate consideration, since the Agreement contains promises from both parties to: (i) divide future expenses equally (paragraphs 4 and 7); (ii) convert all personal property and furnishings located in the Woodstock house into joint property (paragraph 5); (iii) divide all jointly owned property in the future (paragraph 8); and (iv) undertake any future disputes through mediation and binding arbitration.Thus, defendant contends that the Agreement constitutes an enforceable contract between the parties.Under the traditional principles of contract law, the parties to a contract are free to make their bargain, even if the consideration exchanged is grossly unequal or of dubious value (citations omitted). Absent fraud or unconscionability, the adequacy of consideration is not a proper subject for judicial scrutiny (citation omitted).Apfel v. Prudential-Bache Securities, Inc., 81 NY2d 470, 474 (1993). See also, City of New York v. Shellbank Restaurant Corp., 169 AD3d 581 (1st Dep’t 2019).Based on the papers submitted and the oral argument held on the record on July 3, 2018, this Court finds that defendant has sufficiently shown that each side received something of value as a result of entering into the Agreement.Accordingly, that portion of plaintiff’s motion seeking an order declaring the Agreement unenforceable for lack of consideration is denied.Effect of the marriage on enforceability of the AgreementPlaintiff alternatively argues that even were this Court to determine that the Agreement was supported by valid consideration, the Agreement — which outlines the parties’ mutual property rights and obligations should they “separate and terminate their relationship as domestic partners” (paragraph 3) — became null and void on September 22, 2012, when the parties married and thereby terminated their domestic partnership. See O’Reilly-Morshead v. O’Reilly-Morshead, 50 Misc3d 402 (Sup Ct., Monroe Co. 2015), in which the court declined to recognize property rights under the parties’ recognized civil union in Vermont, finding that the civil union was dissolved under New York law when the parties later married in Canada; and New York City Code §3-242(b), which provides that a registered domestic partnership shall “terminate whenever one of the parties to the partnership marries.”However, the parties did not “separate,” as contemplated by the Agreement, until after the marriage.⁶ Accordingly, that portion of the motion seeking a declaration that the Agreement is unenforceable after September 22, 2012 is denied.Prenuptial agreementIt is well settled that duly executed prenuptial agreements are generally valid and enforceable given the “strong public policy favoring individuals ordering and deciding their own interests through contractual arrangements” (citation omitted). As with all contracts, prenuptial agreements are construed in accord with the parties’ intent, which is generally gleaned from what is expressed in their writing. Consequently, “a written agreement that is complete, clear and unambiguous on its face must be enforced according to the plain meaning of its terms” (citation omitted). Extrinsic evidence of the parties’ intent may not be considered unless a court first finds that the agreement is ambiguous.Van Kipnis v. Van Kipnis, 11 NY3d 573, 577 (2008); DRL §236(B)(3).⁷Prenuptial agreements addressing the ownership, division or distribution of property must be read in conjunction with the equitable distribution provisions of Domestic Relations Law §236(B). See, Van Kipnis v. Van Kipnis, supra at 577; Stong v. Dubin, 75 AD3d 66, 68 (1st Dep’t 2010).“The Domestic Relations Law…contemplates two basic types of prenuptial agreement[s] that affect the equitable distribution of property. First, parties may expressly waive or opt out of the statutory scheme governing equitable jurisdiction (citations omitted). Second, parties may specifically designate as separate property assets that would ordinarily be defined as marital property subject to equitable distribution under Domestic Relations Law §236(B)(5). Such property would then remain separate property upon dissolution of the marriage.” Van Kipnis v. Van Kipnis, supra at 578.Plaintiff argues that the subject Agreement is unenforceable as a prenuptial agreement because: (i) there was no statutory scheme governing the distribution of any assets owned or acquired by the parties since there was no equitable distribution law applicable to them (as they were prohibited from marrying in New York in 2005); (ii) the parties never intended to override the rules of equitable distribution;⁸ and (iii) enforcement of the Agreement would produce an inequitable result.⁹Plaintiff contends that the parties’ intent can be understood from paragraph 3 of the Agreement itself (i.e., to set “forth their rights and obligations toward each other with regard to certain property in the event the Parties should separate and terminate their relationship as domestic partners”), as well as from extrinsic evidence.Specifically, plaintiff has submitted an affidavit in which he claims that theydid not intend the Property Agreement to be, nor could it be, as I understand it, a prenuptial agreement. W. and I did not have the right to marry and I was unaware of any rights or obligations which could (and ultimately would) become available to me in marriage. Conversely, I also did not know what rights I could and could not waive in connection with a marriage and what the impact of any such waiver(s) would be. W. and I discussed that the Property Agreement was only meant to define our rights with regard to certain property in the event W. and broke up and ceased being domestic partners, most importantly, the Woodstock Residence. When I signed the Property Agreement, I had no idea that one day W. and I could gain the right to marry and that such marriage would bestow upon each of us certain rights. I had no knowledge or understanding of any rights to marital property, separate property or spousal support nor any knowledge that I could waive any such “rights.”Although defendant contends that he and plaintiff entered into the Agreement in furtherance of their “mutual desire to ensure that marriage-like rights were available to [them] upon cohabitation” and “to ensure that rights afforded to heterosexual couples would be conferred to us,” defendant agrees with plaintiff’s position that the Agreement does not constitute a prenuptial agreement, as defined in Domestic Relations Law §236.However, defendant argues that the Agreement remains a valid and binding contract between the parties, since the Agreement “did not specify that it would become null if the law changed to permit same-sex marriage.” Estate of Wilson v. Wilson, 211 Cal. App.4th 1284, 1297 (1st District [Div. 2] 2013).The instant case, however, is distinguishable from the facts presented in Estate of Wilson v. Wilson, supra, in which the parties specifically acknowledged in their agreement that they wished the terms of the agreement to govern regardless of any changes in the law.Defendant argues that the subject Agreement contains language from which the Court can infer that the parties intended for the Agreement to govern in the event they gained the right to marry in New York and entered into a marriage in the future.Specifically, defendant argues that there would have been no reason to include the provision in paragraph 9 that any real or personal property received by gift or inheritance would remain that person’s separate property if the parties never intended for the Agreement to govern their property rights during or after a potential marriage.Likewise, defendant argues that the inclusion of language in paragraph 10 of the Agreement regarding the waiver of distribution of property, or support (i.e., maintenance or alimony) demonstrates that the parties contemplated a potential marriage and intended the Agreement to govern the distribution of their property.Plaintiff, on the other hand, argues that the waiver (without independent counsel) of equitable distribution, spousal support and estate rights (which were non-existent at the time) does not demonstrate that the parties intended for the Agreement to govern regardless of any future changes in state and federal law affecting their relationship.At the very least, it appears that the inclusion of the above-quoted language creates an ambiguity in the Agreement as to whether the parties intended for the Agreement to survive in the event that they subsequently married.Accordingly, this Court finds that there are triable issues of fact in the case at bar as to: (i) whether the parties intended for the subject Agreement to govern in the event that they gained and exercised the right to marry in the future and thereafter separated and terminated their relationship; and (ii) whether the parties knowingly waived their right to seek maintenance and equitable distribution.Defendant’s cross-motion for partial summary judgment and a declaration that the Agreement is binding is, therefore, denied as premature.Pendente Lite counsel feesIt is well settled that[i]n a matrimonial action, an award of attorney’s fees or an expert fee is a matter committed to the sound discretion of the trial court (citation omitted). An award of attorney’s and expert fees pursuant to Domestic Relations Law §237(a) will generally be warranted where there is a significant disparity in the financial circumstances of the parties (citations omitted). An award of attorney’s fees pursuant to Domestic Relations Law §237(a) ensures that the nonmonied spouse will be able to litigate the action and do so on equal footing with the nonmonied spouse (citations omitted). In determining whether to award fees, the court should review the financial circumstances of both parties, together with all of the other circumstances of the case, which may include the relative merit of the parties’ positions (citations omitted).Vitale v. Vitale, 112 AD3d 614, 615 (2nd Dep’t 2013).Defendant argues that this Court should deny that portion of plaintiff’s motion seeking an award of counsel fees, based on defendant’s claims, inter alia, that plaintiff was already provided by defendant with $25,000 on or about April 15, 2018 to contribute to his own fees and support, plaintiff receives and retains all of the proceeds of rental properties in California, and defendant has continued to pay the mortgage and loans on the property in which plaintiff resides (as well as the expenses associated with a New York City property).However, there is no dispute that there is a great disparity in the parties’ incomes.¹⁰Accordingly, after reviewing the financial circumstances of both parties, together with all of the other circumstances of the case, this branch of plaintiff’s motion is granted, in the discretion of the Court, to the extent of directing defendant to forward payment of interim counsel and expert fees in the amount of $30,000 directly to plaintiff’s counsel, Pryor Cashman LLP, within 60 days of service of a copy of this order with notice of entry, subject to reallocation at trial.Both parties and their counsel shall appear for a scheduling conference in IA Part 24 on June 14, 2019 at 9:30 a.m.This constitutes the decision and order of this Court.Dated: May 14, 2019