Gardella v. Remizov
42 N.Y.S.3d 225, 144 A.D.3d 977, 2016 NY Slip Op 7924 (2016)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
A separation agreement, though judicially favored, may be set aside if there is a triable issue of fact as to whether it is unconscionable or the product of fraud, particularly where there is a vast income disparity, a waiver of all marital property and maintenance by the unrepresented, financially dependent spouse, and evidence of asset concealment by the monied spouse.
Facts:
- The parties married in 2000.
- In 2010, the parties entered into a separation agreement.
- At the time of the agreement, the plaintiff, a neurologist, earned approximately $600,000 per year, while the defendant, a wine salesman, earned approximately $40,000 per year.
- The defendant was not represented by counsel when he executed the agreement.
- The agreement stipulated that the defendant waived all rights to any marital property, including six parcels of real estate and the plaintiff's interest in her medical practice, and also waived his right to spousal maintenance.
- The defendant had a documented medical condition that inhibited his future earning capacity.
- In the months leading up to the execution of the agreement, the plaintiff sold nearly $1 million in securities, the value of which was not accounted for in the agreement's list of her assets.
Procedural Posture:
- The plaintiff commenced an action for divorce in the Supreme Court, Nassau County, a state trial court, seeking to incorporate the 2010 separation agreement.
- In his answer, the defendant asserted counterclaims to set aside the separation agreement as unconscionable and the product of fraud and duress.
- The plaintiff moved for summary judgment to dismiss the defendant's counterclaims.
- The defendant cross-moved for summary judgment on his counterclaims.
- The Supreme Court granted the plaintiff's motion for summary judgment, dismissing the counterclaims challenging the agreement.
- The defendant moved for leave to reargue, which the court granted, but it ultimately adhered to its original decision.
- A final judgment of divorce was entered, implementing the terms of the separation agreement.
- The defendant appealed the judgment to the Supreme Court, Appellate Division, an intermediate appellate court.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does a separation agreement that requires an unrepresented, financially disadvantaged spouse to waive all rights to marital property and maintenance, given a vast disparity in the parties' incomes and evidence of potential asset concealment, create a triable issue of fact as to its validity on grounds of unconscionability and fraud, thereby making summary judgment inappropriate?
Opinions:
Majority - Per Curiam (Leventhal, J.P., Miller, LaSalle and Brathwaite Nelson, JJ.)
Yes. A separation agreement under these circumstances creates a triable issue of fact as to its validity, precluding summary judgment. While marital settlement agreements are judicially favored, they are more closely scrutinized than ordinary contracts due to the fiduciary relationship between spouses and may be set aside for unconscionability or fraud. An agreement is unconscionable if it is one 'which no person in his or her senses and not under delusion would make on the one hand, and no honest and fair person would accept on the other.' Here, the defendant raised sufficient facts to create an inference of unconscionability, including the vast disparity in income, the defendant's waiver of all marital property and maintenance, his lack of any significant assets, and a medical condition limiting his future earning capacity. Furthermore, evidence that the plaintiff sold nearly $1 million in securities prior to the agreement without accounting for the funds raises a triable issue of fact as to fraudulent concealment. Therefore, the lower court erred by granting summary judgment and should have instead ordered financial disclosure and a hearing to test the validity of the separation agreement.
Analysis:
This decision reaffirms the judiciary's role in scrutinizing marital agreements for fairness, preventing a financially dominant spouse from imposing an inequitable settlement on a disadvantaged party. It establishes that a combination of factors—significant income disparity, lack of legal representation, a complete waiver of rights, and evidence of incomplete financial disclosure—is sufficient to defeat a motion for summary judgment and force a hearing on the merits. The ruling underscores that boilerplate recitals in an agreement about voluntariness and financial awareness will not shield an agreement from judicial review when the substantive terms and surrounding circumstances suggest unconscionability or overreaching. This precedent strengthens the position of financially weaker spouses seeking to challenge oppressive separation agreements.
Unlock the full brief for Gardella v. Remizov