Divorce and Equitable Distribution Where There Are Hidden Assets, Part II
One of the biggest questions in New York divorce actions involves hiding assets. Many times one spouse controls all the money issues and the other spouse is utterly ignorant of the finances. Other times, property “mysteriously” vanishes without a trace. The challenge for the innocent spouse is how to get his/her fair share.
It is very important to remember that New York uses equitable distribution to divide assets, not title. Under New York divorce law, the courts are not concerned with whose name is in the deed to a piece of property or even on a bank account. The courts will look to a true owner.
This is critical when property has been transfered in order to cheat a spouse in a divorce. For example, if the husband owns a house in his own name, but transfers it to his brother around the time or just before the divorce, the court will reach back and provide the wife her share. The court can also adjust the scale and then award the innocent spouse more than 50 percent. In Niland v. Niland, 291 A.D.2d 876, court did just that. Finding a fraudulent transfer of property, the court awarded the wife 60 percent of the asset. Remember, equitable distribution is not “equal.” Therefore, the court can adjust the scales in the interest of fairness.
New York Divorce Law Pre-Nuptial Basics, Part II
This post will bring together a number of concepts visited in other posts, particularly the ones on maintenance and equitable distribution. New York divorce law and the law of property distribution can be a little hairy and not all the pieces of the Domestic Relations law play well with each other. It really is important to try and understand how the pieces of New York divorce and family law work or do not work together. This area on pre-nuptial agreements is a perfect example.
In the equitable distribution posts I have discussed the issue of separate property versus martial property. The purpose of the pre-nup is to ensure that the lines between the two properties do no cross.
As a general rule, property acquired before marriage is separate property and property acquired afterwards is marital property. But, this simple rule rarely remains simple.
For example, a house is acquired before marriage, and the couple lives there for ten years. During the course of the marriage, the house increases in value from $125,000 to $500,000. The increased value could be considered marital property. Or, wife has a stock account before marriage in the amount of $100,000. During the marriage she uses the money to buy a house, and the couple lives there for the next 20 years. An argument can be made that the entire house is marital. Or, wife gets a personal injury settlement, which is separate property. She puts the money into a joint account with the husband. He claims that since she “co-mingled” the money, he is entitled to half of the personal injury settlement. Finally, husband buys a house before the marriage, ten years into the marriage, he sells the house and uses the proceeds to buy another house. The wife now claims the entire house is martial property.
The way to avoid these problems is to get a pre-nuptial agreement. A well-drafted pre-nuptial will reduce if not eliminate headaches and legal expenses. A poorly drafted pre-nuptial could put your lawyer’s daughter through college.
The first step to getting a good pre-nuptial agreement is not to do it yourself. Good legal documents do not come from the internet or by the people who make software packages. Also avoid those places which claim that although they are not attorneys, they can help you with drafting your legal documents.
The next step is to be complete on your assets. I like to get a full list of all the current assets. Then I draft clauses ensuring that not only is the property currently held separate but it will remain separate in the future. I specifically address the issues of increased value, co-mingling and transformation. If these issues are not addressed up front, then you will be opening yourself up for a fight at the divorce.
Finally, consider maintenance. A provision waiving or requiring maintenance can be put into the agreement. But be careful to address not only the current needs of the parties but the future ones as well. An agreement to pay $1,000 a week in 2008 may sound generous, but may be completely inadequate in 2038. The ability to actually pay maintenance must be gauged against future events. I’m sure that many executives at Enron thought their futures were secure.
There are a number of other factors that also need to be considered, but they will vary based upon your particular case. No “one size fits all” pre-nuptial agreement will work. That’s why it needs to be crafted to your particular circumstance. Maybe you don’t have a house, but hold a number of copyrights or patents. May you have an inheritance coming, or have a trust which will mature in a few years. Mature marriages have children from the first marriage to consider. Clauses can be placed in an agreement limited what property can be devised under a will.
For these and other reasons, consider a pre-nuptial agreement, but don’t pull one down from the internet.
National Guardsman Loses Child Custody Due to Deployment
Note: This post pre-dated Albany’s uncharacteristic quick action. After this decision was rendered, there was such a firestorm, that Albany put in a quick fix. It is not perfect, but the fix prevents judges from making permanent changes in custody based during a military deployment. More work needs to be done. But this is a start.
Note Two: The change in the law doesn’t lessen my feelings about the below decision.
Regular readers know I that don’t slam or criticize judges, I merely explain the law. Well that changes with this posting. I am furious at a decision by a panel of appellate judges in Albany who rubber stamped an ill-advised decision to penalize a mother for the crime of being a patriotic American. The case, Diffin v. Diffin involves a mother who got custody of her son as part of a divorce settlement in 2000. On April 2004, the mother got mobilized and went to Iraq.
The father moved for a change in custody, and the mother plead the Servicemembers Civil Relief Act. The Family Court stayed the action, but granted temporary custody to the father until the mother returned from Iraq.
When the mother returned, the Family Court awarded custody to the father. The appellate division, third department affirmed the decision. The reason was that because her military service, she has a less settled life. Therefore, it was in the best interests of the child to change custody to the father.
The Court tried to claim that the military service had no impact on the decision, but then they go on to find that her military service was the primary factor. To put a fig leaf on the decision, they talk about how in the past year the child is in a stable environment and that it would be disruptive to uproot him. But, in the end of the decision the anti-military bias shows through: “although the disruption caused by her deployment was not her fault, this record does not demonstrate that Darrell’s best interests would be enhanced by a order a change (i.e. a return to his mother) in his present physical custody.”
Justices, Cardona, Peters, Spain, Carpinello and Lahtinen, should be ashamed of themselves for this blatantly anti-servicemember decision. Justices Cardona and Spain bear particular responsibility as they are prior military.
There are a large number of single parents in the military and particularly in the Guard and Reserves. The reason we have the Servicemember’s Civil Relief Act (SCRA) and the Servicemembers Employment Re-employment Rights Act (USERA) is to fulfil a public policy of maintaining the Guard and Reserves. Patriotic Americans who go the extra step and serve our country should not be punished by small minded people who are shielded by sacrifices that our military members are making every day.
Here, we have a Guardsman who did not shirk from her duty. She did not make excuses. When the call came, she raised her hand and went into a war zone. The thanks that a grateful nation bestowed upon her was to take her son away from her.
To add insult to injury the knife was wielded by Presiding Justice Cardona, a Viet Nam veteran.
New York Equitable Distribution, The Former Spouses Protection Act and the National Guard
I just settled a strange little divorce in front Judge Kent, in Suffolk County. On it’s face, it was nothing too strange. A forty year marriage, where the only property was a pension and a house. As I explained in other posts, under New York divorce law, a pension is martial property and is divided according the number of years of marriage by number of years in the pension.
The husband in this case had retired as an AGR New York Guardsman. In 1998 when he retired from the National Guard, he took off for Puerto Rico. Eight years later, the wife decided to get a divorce. Under New York divorce law, the military retired pay is marital property, but under Puerto Rican law, it is not. The question facing Judge Kent was: which law to apply.
Under the Former Spouses Protection Act Congress specifically stated that military retired pay is subject to laws of the state where the divorce is ordered. There is one kicker, the military member must either be a resident of the state or consent to the state’s jurisdiction. If he is a resident of Georgia, and the spouse tries to divorce him in Nevada, the court cannot divide his military pay. It can only be divided in Georgia, or if he consents to the Nevada court.
My case was different. The husband was a Guardsman for 20 years. He never left the state of New York and his boss was the TAG. Upon retirement he moved to Puerto Rico. So, does the Former Spouses Protection Act govern? Is it meant to cover a Guardsman who spent his entire military career in New York working for the TAG, and then moves out of state upon retirement? The answer is: I don’t know. At this time, there is no decision by any judge in the United States that I have been able find on this issue. My argument was that the act should not apply. He worked for 20 years for the Governor, not the President. I argued that the Former Spouses Protection Act was not designed to cover a career Guardsman being sued for divorce in the state where served and retired from. Naturally, my opponent argued the other side. Judge Kent was caught in the middle. Fortunately, the judge,who is a gentleman, and famous for cutting to the heart of an issue, managed to get the parties to settle. So, this question is still unanswered.
The lesson here is to be careful. If you are the spouse of guardsman who is retiring and he intends to leave the state, start the divorce now before he establishes residence in another state. If you are the guardsman, after you leave the state, establish residence and then commence the divorce. Here, because the parties let the matter sit for several years, multiple problems occurred. If we had not settled, the husband was facing 10 years of arrears payments to the wife, if we won. If we lost, the wife was potentially facing not getting any money from the pension.
New York Divorce Law Prenuptial Basics.
New York divorce law loves agreements. An agreement means no trial, and the issues are resolved. In fact, so strong does the New York divorce law support agreements, that they are pretty impossible to break.
There are three basic agreements in divorce and family law: (1) the prenuptial ( and it’s close relative the post-nuptial); (2) the separation agreement; and (3) the stipulation settling the divorce.
The prenuptial is a strange creature to be filed under the “hope for the best but plan for the worst” category. Generally, it is used by a person who either is coming into the marriage with assets, or has been burned in a prior divorce, or both.
As readers of these pages know (and by the way, in the space of the month the average visitor comes back 3.7 times) property division is not that straight forward. Sure, the statute (DRL 236 B) states that property acquired before the marriage, such as an inheritance or money from a personal injury settlement are separate property, but creative lawyers have found ways to get the New York courts to chip away at the statute and create a host of exceptions. The two main exceptions are co-mingling and increase in value of the separate property. It is beyond my purpose in this post to explain them. Just take my word for it.
The question is: How do you protect your separate property from becoming marital property? The answer is a well drafted pre or post nuptial agreement. For example, assume you own a house. You want to insure that if there is a divorce the house remains your property. So, you sign a prenuptial which states that the house is separate property. Problem solved? Nope. Remember, where there’s a will there’s a lawyer. Suppose during the marriage, you sold your house and bought a new house. A clever lawyer could (and will) argue that while, yes indeedy, the old house was separate property, this new house is marital. The solution is a clause in the prenuptial which states that all separate property remains separate even if it is sold and new property was bought.
That protects the spouse with the separate property. But, what about the spouse who belatedly realizes that s/he has signed a bad deal? Can the agreement be broken? Remember what I said at the top of the posting? Courts love agreements. Judges use great phrases such as “public policy” and the “smooth administration of justice” and the like. But, what it comes down to, is that New York courts really, really hate to break an agreement absent fraud, duress, and over-reaching. In a future post I’ll address these three grounds to break an agreement. However, in my experience, they are very high standards to meet.
The Appellate Division, First Department, in a recent decision, has demonstrated just how high the standard is. Basically, in 1974 just before marriage the groom presented the wife, in Germany with a prenuptial agreement in German. The court upheld the agreement. I am putting the link here for anyone who wishes to read the full decision. I’m going to quote Judge Saxe’s dissent, because he really sets out why the decision is not fair. Stawski v. Stawski
In December of 1974, an affianced young American woman in the bloom of love, traveling with her German fiancé to his parents’ home in Frankfurt, en route to a skiing vacation in Switzerland, experienced a sudden and unexpected detour to a lawyer’s office in Frankfurt, where she was presented with a prenuptial agreement. Her execution of that document, and its enforceability, form the basis for this appeal.
The Special Referee, who was requested to hear and determine the controversy, held that the agreement is enforceable, and the majority agrees. However, in my view, the confluence of various questionable practices and procedural irregularities surrounding the execution of the agreement makes this the exceptional case in which an antenuptial agreement should be set aside. The evidence establishes that plaintiff’s signature was obtained through a combination of deception and overreaching, causing an unknowing waiver of unexplained rights. Accordingly, I dissent.
Plaintiff wife and defendant husband are children of Holocaust survivors; the parents met in a displaced persons camp outside Frankfurt, Germany after World War II, and ultimately settled there. Plaintiff’s family moved to the United States 3½ years later, and settled in New York City, where plaintiff was born. Defendant’s family remained in Germany. He was educated in England beginning at age 10 and received a law degree from Birmingham University in England. After briefly meeting at a dance in Frankfurt in the 1960s when she was 12 and he was 14, plaintiff and defendant met again in 1971, when she was 19 and an undergraduate at New York University and he was 21 and studying for a Master’s degree in International Law at the same university. They became engaged in the summer of 1974 and married in 1975.
In December 1974, the affianced couple traveled together from New York to Frankfurt, where defendant’s parents lived, in anticipation of a winter ski vacation. Upon their arrival in Germany, defendant told plaintiff that before they left for Switzerland, it was necessary for both of them to attend a meeting with a lawyer. The parties dispute the exact explanation provided to plaintiff as to the need for this meeting; she testified that the reason defendant gave her was the necessity of “signing a piece of paper for bankruptcy.” Plaintiff also testified that she and defendant had no prior discussions regarding the signing of any agreement having to do with their marital or property rights. For his part, defendant testified that he brought up the subject of a premarital agreement with plaintiff in the autumn of 1974 and that she asked him to discuss the matter further with her father, which he testified he did, although both plaintiff and her father disputed this assertion.
The couple went to the office of a law firm in Frankfurt. It is undisputed that the law firm represented defendant’s family in various legal matters. The parties appeared before Dr. Nikolas Hensel, who, aside from being an attorney, was apprentice to a notar. In Germany, a notar is a public official before whom certain types of transactions, including marital agreements, must be executed in order for them to be valid. A notar serves as an independent consultant for the parties to the transaction, and is responsible for exploring and ensuring the parties’ understanding of the transaction and its legal consequences. At the time, Dr. Hensel was not yet officially a notar, but was apprenticed to an older notar, Dr. Rudolph Boergner, for whom he was properly [*5]substituting on the date of execution of the agreement.
After exchanging pleasantries with the parties, Dr. Hensel showed them the agreement, which was written in German. Apparently, neither of the parties had seen either the final document or even a draft of the document before the visit. Dr. Hensel initially read the agreement to the young couple in German. The agreement was not a long one. It stated that the signatories (plaintiff and defendant) planned to get married in 1975 and, as translated into English, that: “We hereby agree that for the time of our marriage we exclude the legal regime of joint ownership of any increase in property. Instead we will adopt the regime of legal separation of property. The notar’s representative informed us on the legal significance of such a decision.” Thirty years later, in a court in New York, it is this language that is relied upon to bar plaintiff from sharing at all in increases in the value of defendant’s separately-owned property during the course of the marriage.
Judge Saxe to goes, in a well reasoned dissent to explain why he would set aside the agreement. The rest of the court was unpersuaded. They cited the oft quoted legal maxims. I’ll provide an except below:
“[T]he decision of the fact-finding court should not be disturbed upon appeal unless it is obvious that the court’s conclusions could not be reached under any fair interpretation of the evidence, especially when the findings of fact rest in large measure on considerations relating to [*2]the credibility of witnesses” (Thoreson v Penthouse Intl., 80 NY2d 490, 495 [1992] [internal quotation marks omitted]). It cannot be said that the Special Referee’s conclusions were not based on a fair interpretation of the evidence, and there is thus no basis for reversal. The agreement is fair, neutral and valid on its face and the issue determined by the Special Referee was therefore solely one of credibility.
Furthermore, the public policy of this State favors ” ‘individuals ordering and deciding their own interests through contractual arrangements’ ” (Van Kipnis v Van Kipnis, 43 AD3d 71, 76-77 [2007], quoting Bloomfield v Bloomfield, 97 NY2d 188, 193 [2001]), and thus, duly executed prenuptial agreements, including agreements executed in a foreign country, are accorded the same presumption of legality as any other contract (see Greschler v Greschler, 51 NY2d 368 [1980]). A party attacking the validity of the agreement has the burden of coming forward with evidence showing fraud, which will not be presumed, and must have as its basis evidence of overreaching—the concealment of facts, misrepresentation or some other form of deception (see Matter of Sunshine, 51 AD2d 326 [1976], affd 40 NY2d 875 [1976]). Plaintiff completely failed to meet that burden.
The numerous circumstances cited by plaintiff as irregularities, including her alleged lack of fluency in the German language, defendant’s superior education, the fact that she was unrepresented by counsel and that the agreement was written by a law firm that had previously done business with defendant’s family, do not establish overreaching on defendant’s part, especially in view of the uncontradicted testimony that the agreement was explained to plaintiff in English. In reaching the opposite conclusion, the dissent adopts a highly skewed version of the facts in the course of portraying plaintiff as a naive individual who was the victim of elaborate “machinations” that were calculated to induce her to sign an agreement she did not understand. However, at the time the agreement was executed, plaintiff had received her B.A. from a prestigious university, New York University (where she took such courses as “International Law,” “Ideas & Action I: Law in Society,” “International Politics” and “U.S. Foreign Policy”) and was pursuing a Master’s degree in political science from that same university.
How far will the courts go to enforce an agreement? In Van Kipnis v. Van Kipnis, the court enforced an agreement, even though the written agreement was contrary to the parties understanding. In 1965 the parties signed a contract in France. “At the time, the wife, a Canadian citizen, was studying at the Sorbonne and the husband, a citizen of the United States, had just finished college. Prior to the marriage ceremony, and at the specific request of the wife, the parties agreed to execute a “Contrat de Mariage” (Contract), which is a form of prenuptial agreement under the French Civil Code. The wife made all the arrangements for the Contract, including securing the presence of a “Notaire,” the French official who presides over the execution of such contracts, and obtaining an American attorney and interpreter to protect the husband’s interests. The expressly stated purpose of the Contract was to opt out of the “community property regime,” which is the custom in France, in favor of a “separation of estates” property regime.”
After 38 years of marriage, the parties started a divorce action. After months of litigation, the husband found the agreement and moved to have it enforced. “At the hearing, the wife testified that the Contract was executed for the sole purpose of opting out of the community property system of France, and instead adopting a complete separation of estates, whereby each party could not be held liable for the other’s debts. She also admitted, however, that the husband executed the Contract at her insistence, that he had no money at the time of the marriage and that she had never moved to set the Contract aside during the marriage.
The husband offered a similar understanding of the Contract in his testimony. Defendant testified: “I didn’t realize it was a prenuptial agreement. I just thought I had a marriage contract, which meant that we decided to protect ourselves from creditors, and we decided to keep our assets in separate names, and I never drew the conclusion that this had relevance in a divorce proceeding.””
The court found that as the agreement was clear on it’s face, the parties understanding was irrelevant and inadmissible.
Two fundamental principles of contract interpretation are that “agreements are construed in accord with the parties’ intent,” and that “[t]he best evidence of what parties to a written agreement intend is what they say in their writing” (Greenfield v Philles Records, 98 NY2d 562, 569 [2002] [internal quotation marks omitted]). “Thus, a written agreement that is complete, clear and unambiguous on its face must be enforced according to the plain meaning of its terms” (id.). “A contract is unambiguous if the language it uses has a definite and precise meaning, unattended by danger of misconception in the purport of the agreement itself, and concerning which there is no reasonable basis for a difference of opinion” (id. [internal quotation marks and brackets omitted]).
Extrinsic evidence of what the parties really intended is generally inadmissible, and will be considered only if the agreement is found to be ambiguous, which is an issue of law for the court (id., citing W.W.W. Assoc. v Giancontieri, 77 NY2d 157, 162 [1990]). However, extrinsic evidence may not be utilized to create an ambiguity that would otherwise not exist, since “before looking to evidence of what was in the parties’ minds, a court must give due weight to what was in their contract” (W.W.W. Assoc. at 162). An omission or mistake in a contract, such as a failure to include a specific contingency, does not itself create an ambiguity (see Reiss v Financial Performance Corp., 97 NY2d 195, 199 [2001]).
But, recently, the Second Appellate Department agreed to set aside a post-nuptial on the grounds that the husband engaged in overreaching. In Barchella v Barchella the court stated that “because of the fiduciary relationship that exists between spouses, postnuptial agreements are closely scrutinized by the courts and are more readily set aside on grounds that would be insufficient to nullify an ordinary contract.”
The lesson is that if you want to protect your property get a prenuptial agreement. If you are on the other side of the table, get a lawyer. A well drafted and fair agreement can save a lot of grief and trouble in the future.
Landmines In Child Support Part 1
A legal landmine is a mistake that I see people repeatedly make. The mistake is made because the person doesn’t realize he is making it, until it is too late. In New York family law and divorce law, there are several such landmines. In this post I will discuss the landmines in Child Support.
The one I see most frequently is failing to follow a court order of child support. At first blush, that may seem odd. How can some violate a support order and not realize it? Well, unfortunately, all to easily because a lot of people do not understand the nature of a court order.
Here’s how it normally plays out: Father is ordered by a court to pay $1000 a month in support. He does so for a while, then, he loses his job, get sicks or something else happens which makes it tough if not impossible for him to make his support payments. He goes to the mother and explains the situation and she agrees to take less, say $500 a month. They shake on the deal, and he now pays $500 a month, thinking all is good. A while later he gets served with papers for violating the court order. Not only must he pay the full $1000 a month, but he owes arrears on the time he was only paying $500. He’s shocked by the injustice: she agreed to the deal. The judge doesn’t see it that way, and the order for arrears is entered.
The problem that he didn’t understand is that a court order is just that: an order of the court. The mother has no authority to reduce the support. She cannot legally agree to lowering the support. Even if she put it in writing, he would still have to pay the full amount. In New York family and divorce law, once a court order is in place the only person who can modify the order is the judge (or family court support magistrate.) So, even if the parties have an agreement, the custodial parent can walk into divorce or family court and demand payment of the arrears and the court will grant it.
The only way to reduce the support payments is to go back to court and request it. In order to get a reduction, the non-custodial parent must demonstrate that there has been an unforeseeable change in circumstances. The court is very wary of guys claiming reduced income or to have lost their jobs. The court frequently sees guys voluntarily reducing or even hiding income to defeat the court order. However, I’ll get into reductions in another post. For now, the lesson is simple: once the court order is in place, obey it until you get another court order.
Divorce and Equitable Distribution Where There Are Hidden Assets (part 1)
A frequent issue in a divorce action is proving a spouse’s assets. For a w-2 employee, this is generally an easy task. Where the issue becomes tricky is where the spouse owns a cash business, such as landscaping, or the restaurant. In that case, there is a question as to how much the spouse really makes, or how much the business is really worth.
I had a case where the husband had a $14,000 a year pension, and claimed that the pension was his sole income. The wife, my client, claimed that he operated an unlicensed garage, and several joker poker machines. The business was unlicensed and all cash; further, he never reported a dime to the IRS. He thought that he was untouchable. However, the divorce court has the power to strip away the lies and determine the real state of affairs. Here, I showed that he spent over $60,000 a year. The judge then found that the husband’s income was $60,000 a year and made the appropriate orders based upon that finding.
This power to look beyond a person’s story and determine the truth of the situation was vividly demonstrated in a recent decision by Justice Arthur Diamond, who is a divorce court judge in Nassau County, in the case of C.H. v. R.H, reported in the Law Journal, November 20, 2007, on page 29.
The husband was a minister of a church in Brooklyn. The church, under New York law, was a religious corporation. As such, it did not belong to the husband, and under New York law, was not part of the martial estate. Additionally, courts are prohibited from judicial involvement with internal church governance.
But, the wife argued, the church is a marital assets because it is actually the husband’s piggy bank. Specifically, she claimed that the husband “provided $50,000 of their marital money to church as start-up capital; the defendant controls all the finances of the church, and makes all financial decisions, defendant refuses to make any financial disclosures to the church’s board of directors and the church administrator, hides his finances from the church elders, determines his own income, refers to the church as ‘my church’ and dismisses anyone who challenges his operation and finance of the church.”
Justice Diamond addressed the New York law governing churches, and the reluctance of the courts to interfere with them. He then discussed the power of a court sitting in divorce to piece the veil of a corporation to determine the true owner as opposed to the title owner. He noted that in the case of Goldberg v. Goldberg, 172 A.D2. 2d 316, which involved a for-profit corporation, the appellate division granted “a distributive award to the plaintiff as her share of the marital property after finding that the defendant had deliberately dissipated and secreted marital funds and assets through conveyance of various trusts and alter ego corporations which served as defendant’s personal pocket book.”
Based upon the statute and case law, Justice Diamond found that there were sufficient questions of fact as to whether the church was indeed a separate and independent religious corporation or merely the alter-ego (i.e. pocket book) of the husband.
This decision shows the power of the divorce court to identify the true ownership of property. After all, at first blush, who would think that a church could be considered marital property? But, if the wife can prove her case, that the husband filtered martial money into the church, and used it to generate income for his personal benefit, then the court can find the church to be a marital asset, subject to equitable distribution. The lesson of this decision is that the court will not be bound by appearances but will determine the true state of affairs based upon the facts.
For example, if the business is in the husband’s father’s name, but the father lives in Florida, has no contact to the business, the husband provided all the capital, runs the business on a daily basis and enjoys the profits from the business, the court could well decide that the husband is the true owner, and the property is subject to division.
Ex Parte Foreign Nation Divorces
Although not as common as they used to be, ex parte foreign divorces are still an issue. By ex parte, we mean the court only had jurisdiction over one party. Back before New York eased, to some degree, its divorce laws, people found it easier to go to Nevada or Mexico to get a divorce. Typically, one party would go and it get. Since the court only had jurisdiction over the person before it, the divorce was ex parte (one party.) The New York courts were very concerned about this type of divorces, since with only one party showing up, there was a good chance that an injustice could be wrought on the absent spouse.
An ex parte foreign divorce where there was no service or appearance by the other party is generally void. In Matter of Levi, NYLJ Volume 215 Number 52 (Nassau County Surrogate 1996), the court recognized the long settled principle that ex parte foreign divorces are void. Surrogate Radigan found that the decedent and his first wife were not domiciled in the Dominican Republic at the time of the divorce. Under the circumstances, the Dominican divorce is void where it is at best an ex parte foreign divorce decree.
The foreign court must obtain jurisdiction over the proponent of the divorce as well as the absent spouse. In cases where a divorce has been obtained without any personal contact with the jurisdiction by either party or by physical submission to the jurisdiction by one, with no personal service of process within the foreign jurisdiction upon, and no appearance or submission by, the other, decision has been against the validity of the foreign decree. Rosenstiel v. Rosenstiel, 16 N.Y.2d 64, 209 N.E.2d 709 (1965). In Maltese, the court found that the sole purpose of the wife’s trip to Mexico was to get a divorce.
it is clear that defendant’s appearance in Mexico was for the sole purpose of participating in the divorce proceeding, not for the purpose of residing there; she remained at all times a resident and domiciliary of New York State. As was said in the Rosenbaum case, supra, ‘Thus under comity as contrasted with full faith and credit our courts have power to deny even prima facie validity to the judgments of foreign countries for policy reasons, despite whatever allegations of jurisdiction may appear on the face of such foreign judgments. * * * The recognition of a foreign county judgment is far less certain, the judgment itself is far more assailable and vulnerable, than sister state judgments and is subject to a test of policy.’Accordingly, plaintiff is entitled to a judgment declaring the Mexican divorce decree null and void,
Similarly, Surrogate Preminger found that a Mexican divorce was void where the decedent was not a domiciliary of Mexico , Matter of Barton, NYLJ Volume 222, Number 13 (N.Y. Surrogate Court 1999).
When a divorce decree is void, either party may attack it. Further, the party who obtained the divorce is not prevented from attacking it’s validity. See Marum v. Marum, 8 A.D.2d 975, 190 N.Y.S.2d 812 (2nd Dept 1959).
The Domestic Relations Law, section 236B(2) specifically grants the court jurisdiction to determine issues of property distribution upon a foreign divorce.
Matrimonial actions. Except as provided in subdivision five of this part, the provisions of this part shall be applicable to actions for an annulment or dissolution of a marriage, for a divorce, for a separation, for a declaration of the nullity of a void marriage, for a declaration of the validity or nullity of a foreign judgment of divorce, for a declaration of the validity or nullity of a marriage, and to proceedings to obtain maintenance or a distribution of marital property following a foreign judgment of divorce, commenced on and after the effective date of this part. Any application which seeks a modification of a judgment, order or decree made in an action commenced prior to the effective date of this part shall be heard and determined in accordance with the provisions of part A of this section.
Emphasis added.
While a divorce granted by a foreign sister is accorded full faith and credit, “[i]t is equally well settled, however, that a valid ex parte foreign divorce terminates only the marital status of the parties. Such a divorce is ‘divisible’ in that it has no effect upon the property held by the parties outside the jurisdiction of the state issuing the judgment.” Peterson v. Goldberg, 180 A.D.2d 260, 585 N.Y.S.2d 439 (2nd Dept 1992). See Vanderbilt v. Vanderbilt, 354 U.S. 416, 77 S.Ct. 1360 (1957) (Ex parte judgments from a foreign sister state resolving issues of support and property are not granted full faith and credit). “An ex parte foreign divorced decree is entitled to recognition to the extent of determining the marital status, though not to the extent of affecting personal rights stemming from the marital relationship such as property and custodial issues…” Matter of Childers, NYLJ Volume 222 Number 112 (New York County Surrogate’s Court, 1999).
The court in Mattwell v. Mattwell, 194 A.D.2d 715, 600 N.Y.S.2d 90 (2nd Dept 1993) explained that the purpose of DRL § 236(B)(2) & (5) was to address the divisible nature of foreign divorces. Accordingly, to provide for the distribution of property not affected by a foreign judgment of divorce, Domestic Relations Law § 236B(2) and (5) provide that a divorced spouse who possesses an interest in marital property within this state may commence an action for equitable distribution of property… The court has the power to convert an action into one for equitable distribution following the entry of a foreign divorce. Peterson v. Goldberg, 180 A.D.2d 260, 585 N.Y.S.2d 439 (2nd Dept 1992).
Therefore, in the case of valid ex parte foreign divorces the court has the power and authority under DRL 236B(2) and (5) to proceed to address and determine the issues of equitable distribution, custody, support and visitation.
Sometimes it’s not that easy to determine if a divorce is ex part. For example, assume that the couple is from the Dominican Republic. Both are legally in the United States, and residents of New York. Both are also still citizens of the Dominican Republic. Assume that one of the spouses goes back to the DR and obtains a legal and valid divorce and the other spouse remained in New York. Was it ex part or not? There would be an argument either way. At present, I’m not aware of any case addressing this issue.
Therefore, let prudence be your guide and avoid any appearance of an ex-parte divorce. If you are looking for a divorce and you live in New York, consult a New York divorce lawyer. If you are looking for a quick solution, you might find that you have severely prejudiced your rights.
Foreign State Divorces and Equitable Distribution
Foreign divorces can be very tricky, and ultimately very dangerous for the unwary. The problem is that under the New York divorce law, all issues between a spouses must be settled in the divorce. Any issue not resolved or raised is waived.
For example, let’s assume that the divorce papers are silent as to the marital home. Nothing is mentioned about how the house will be disposed of, and there is no provision for who will take the house. After the divorce, the parties fight, and now one of the wants to force a sale and get his interest. Under New York law, when co-owners of a piece of property can’t get along, there is a legal proceeding called a partition. If the ex-spouse tries to bring a partition action here, he will be told that he had his chance in the divorce, and now the New York courts are closed to him.
This is a fairly harsh rule, but it is New York divorce law. Any issue of equitable distribution not raised is waived forever. It can never be revisited.
This rule has a serious impact on foreign divorces. By foreign divorces, I mean a divorce from either a sister state or a foreign country.
The issue of a New Jersey divorce was recently examined by Judicial Hearing Officer Stanley Gartenstein in the case of Ottomanelli v. Ottomanelli, decided on September 17, 2007.
The husband, who had established residence in New Jersey, commenced a no-fault divorce there. The court found jurisdiction over both the husband and the wife, although the wife was still a New York resident, living on Long Island.
The court’s divorce decree made no reference either to equitable distribution or maintenance.
The husband, having secured the divorce in his home state, returned to Long Island and commenced an action for equitable distribution. His action was dismissed.
JHO Gartenstein found that the New Jersey divorce was final and could not be amended.
He found that once the court has acquired jurisdiction over both parties, it had the power to decide all issues regarding the marriage and divorce and therefore he was without authority that amend that decision and made a property distribution.
In support of his decision, JHO Gartenstein cited the New York Court of Appeals case of O‘Connell v. Corcoran, 1 NY3rd 179, which involved a Vermont divorce. In that case, the wife appeared before the Vermont court and stated that no application would be made for an equitable distribution award as all the assets were in New York. The Vermont court issued a final judgment of divorce without contest and made no other awards. The wife then started an action in New York for equitable distribution. The Court of Appeals would not allow such an action. It found that the issues were before the Vermont court and the failure of the court to render an award, for whatever reason, ended the matter.
Following the holding of O’Connell, JHO Gartenstein dismissed the husband’s action for equitable distribution, as it should have been raised in New Jersey. The failure to raise the issue waived it.
This rule also applies to divorces from other countries. In DeGanay v. DeGanay 261 AD2d 175, a bilateral divorce in France was also viewed as final.
This rule only applies to bilateral divorces, that is divorces where the court has jurisdiction over both parties. When the court does not have jurisdiction over both parties, it is an ex-parte divorce. In an ex parte divorce, the issue of equitable distribution remains alive. Ex-parte divorces are a large and somewhat complicated area, and I’ll address it in another posting. Just remember for this posting, that if the court has jurisdiction over both parties, it’s a real good idea to address all issues of the divorce. If you leave something for later you’ll find that you’ve waived your rights.