| Petracca v Petracca |
| 2012 NY Slip Op 08294 [101 AD3d 695] |
| December 5, 2012 |
| Appellate Division, Second Department |
| Janine Petracca, Respondent, v Eugene Petracca,Appellant. |
—[*1] Goldman & Greenbaum, P.C., New York, N.Y. (Sheldon M. Greenbaum of counsel), forrespondent.
In an action for a divorce and ancillary relief, the defendant appeals (1) from a decision of theSupreme Court, Nassau County (Brown, J.), dated June 22, 2011, made after a hearing, and (2)from an order of the same court dated December 13, 2011, which, upon the decision, granted theplaintiff's cross motion to set aside the parties' postnuptial agreement.
Ordered that the appeal from the decision is dismissed, as no appeal lies from a decision(see Schicchi v J.A. Green Constr. Corp., 100 AD2d 509 [1984]); and it is further,
Ordered that the order is affirmed; and it is further,
Ordered that the plaintiff is awarded one bill of costs.
The parties were married on December 16, 1995. In March 1996, the parties entered into apostnuptial agreement. The agreement provided that the jointly owned marital residence, whichhad been purchased for approximately $3.1 million after the parties were married, and which wassubsequently renovated at a cost of between $3 million and $5 million, was the defendant'sseparate property.
The agreement further provided that if the parties divorced, the plaintiff, who had not beenemployed other than as a homemaker since October 1995, would waive her interest in anybusiness in which the defendant had an interest, including any appreciation in the value of suchinterests accruing during the marriage. At the time the agreement was entered into, the defendantvalued his interests in these business entities at over $10 million. The plaintiff also waived anyand all rights she had to the defendant's estate, including her right to an elective share. At thetime the agreement was entered into, the defendant valued his net worth at more than $22million.
Finally, the agreement provided that if the parties divorced, the plaintiff would waive anyright to maintenance except as provided in schedule "C" of the agreement, which indicated that[*2]the plaintiff could receive maintenance in the sum of between$24,000 and $36,000 per year, for varying lengths of time, depending on the duration of themarriage. The defendant's obligation to pay the limited maintenance enumerated in the agreementwas contingent upon his receipt of certain visitation with any children that the parties might have,and upon certain residency requirements imposed upon the plaintiff.
In 2008, the plaintiff commenced this action, inter alia, for a divorce on the ground ofconstructive abandonment. In his answer, the defendant, among other things, sought enforcementof the postnuptial agreement. The defendant subsequently moved for a protective order inresponse to the plaintiff's discovery demands, and the plaintiff cross-moved to set aside thepostnuptial agreement.
A hearing was held at which both parties testified. The plaintiff testified that the defendanthad presented the postnuptial agreement to her for signature days after her 42nd birthday, andshortly after she had suffered a miscarriage. She testified that the defendant had "bullied" her intosigning the agreement by threatening that they would not have any children and that the marriagewould be over if she did not consent to the postnuptial agreement. The plaintiff testified that sheand the defendant had agreed to have children prior to the marriage, and that their agreement tohave children had been an important factor in her decision to marry him. She signed theagreement within days of receiving it and, although she reviewed some portions of it, she did notunderstand its terms and did not consult an attorney. The plaintiff also adduced evidencedemonstrating that the statement of the defendant's net worth contained in the agreement wasinaccurate at the time it was made in that it was undervalued by at least $11 million.
When the defendant testified, he denied any knowledge of the plaintiff's miscarriage andstated that he had wanted the postnuptial agreement in order to protect his son from a priormarriage. The defendant testified that the parties had discussed the issue of entering into apostnuptial agreement prior to the marriage and that they had negotiated the postnuptialagreement over the course of many weeks. The defendant testified that his attorney had draftedthe agreement and that he believed that the plaintiff had consulted with her own attorney,although she had not disclosed her attorney's name to him. The defendant explained that themarital residence had been purchased in both parties' names because the plaintiff said she wantedto have her name on it "for perception purposes, for other people," but that she had been willingto sign the agreement converting it into the defendant's separate property shortly after itspurchase.
In a decision made after the hearing, the Supreme Court expressed doubts as to thedefendant's veracity and credited the plaintiff's testimony over conflicting portions of thedefendant's testimony. The court found that the plaintiff had not been represented by counsel andhad been precluded from effectively analyzing the financial impact of the postnuptial agreementdue to the inaccuracies contained in the financial disclosures that had been incorporated into theagreement. The court determined that the terms of the agreement were "wholly unfair" and, afterexamining the totality of the circumstances, concluded that it was unenforceable. In a subsequentorder, made upon the decision, the court granted the plaintiff's cross motion to set aside thepostnuptial agreement.
In general, a postnuptial agreement "which is regular on its face will be recognized andenforced by the courts in much the same manner as an ordinary contract" (Levine vLevine, 56 NY2d 42, 47 [1982]; seeRauso v Rauso, 73 AD3d 888, 889 [2010]; Cioffi-Petrakis v Petrakis, 72 AD3d 868, 869 [2010]; Whitmore v Whitmore, 8 AD3d371, 372 [2004]). However, "[a]greements between spouses, unlike ordinary businesscontracts, involve a fiduciary relationship requiring the utmost of good faith" (Christian vChristian, 42 NY2d 63, 72 [1977]; see Matter of Greiff, 92 NY2d 341, 345 [1998];O'Malley v O'Malley, 41 AD3d449, 451 [2007]; Manes v Manes, 277 AD2d 359, 361 [2000]). Accordingly, "courtshave thrown their cloak of protection" over postnuptial agreements, "and made it their business,when confronted, to see to it that they are arrived at fairly and equitably, in a manner so as to befree from the taint of fraud and duress, and to set aside or refuse to enforce those born of andsubsisting in inequity" (Christian v Christian, 42 NY2d at 72; see Infante v Infante, 76 AD3d1048, 1049 [2010]).[*3]
Because of the fiduciary relationship between spouses,postnuptial agreements "are closely scrutinized by the courts, and such agreements are morereadily set aside in equity under circumstances that would be insufficient to nullify an ordinarycontract" (Levine v Levine, 56 NY2d at 47; see Kabir v Kabir, 85 AD3d 1127, 1127 [2011]; Manes vManes, 277 AD2d at 361; Cardinal v Cardinal, 275 AD2d 756, 757 [2000]). "Towarrant equity's intervention, no actual fraud need be shown, for relief will be granted if the[agreement] is manifestly unfair to a spouse because of the other's overreaching" (Christian vChristian, 42 NY2d at 72-73; see Infante v Infante, 76 AD3d at 1049; O'Malley vO'Malley, 41 AD3d at 451; Frank v Frank, 260 AD2d 344, 345 [1999]; see alsoLevine v Levine, 56 NY2d at 47).
In determining whether a postnuptial agreement is invalid, "courts may look at the terms ofthe agreement to see if there is an inference, or even a negative inference, of overreaching in itsexecution" (Christian v Christian, 42 NY2d at 73; see Terio v Terio, 150 AD2d675, 675-676 [1989]; Stern v Stern, 63 AD2d 700, 700-701 [1978]). A spouse seeking toset aside a postnuptial agreement initially "bears the burden to establish a fact-based,particularized inequality" (Matter of Greiff, 92 NY2d at 346; see Matter of Barabash, 84 AD3d1363, 1364 [2011]; D'Elia vD'Elia, 14 AD3d 477, 478-479 [2005]; accord Brennan-Duffy v Duffy, 22 AD3d 699, 700 [2005]; Chambers v McIntyre, 5 AD3d344, 345 [2004]). Where this initial burden is satisfied, a proponent of a postnuptialagreement "suffers the shift in burden to disprove fraud or overreaching" (Matter ofGreiff, 92 NY2d at 346; see Matter of Barabash, 84 AD3d at 1364; D'Elia vD'Elia, 14 AD3d at 478-479).
Here, the plaintiff demonstrated that the terms of the postnuptial agreement were manifestlyunfair given the nature and magnitude of the rights she waived, particularly the relinquishment ofher property rights in the marital residence and her waiver of all of her inheritance rights, in lightof the vast disparity in the parties' net worth and earnings (see Manes v Manes, 277AD2d at 361; Frank v Frank, 260 AD2d at 345; Terio v Terio, 150 AD2d at675-676; Stern v Stern, 63 AD2d at 700-701; see also O'Malley v O'Malley, 41AD3d at 451; Pisano v Pisano, 71 AD2d 670, 670 [1979]; cf. Levine v Levine, 56NY2d at 47). Furthermore, inasmuch as the terms of the agreement were manifestly unfair to theplaintiff and were unfair when the agreement was executed, they give rise to an inference ofoverreaching (see Christian v Christian, 42 NY2d at 73; Terio v Terio, 150 AD2dat 675-676; Stern v Stern, 63 AD2d at 700-701). This inference of overreaching isbolstered by the evidence submitted by the plaintiff, including her testimony, regarding thecircumstances which led her to give her assent to the postnuptial agreement (see Kabir vKabir, 85 AD3d at 1127; Cardinal v Cardinal, 275 AD2d at 757; Terio vTerio, 150 AD2d at 675-676). The defendant's testimony which tended to show that he didnot engage in overreaching raised an issue of credibility, and we decline to disturb the SupremeCourt's determination with respect thereto (see Northern Westchester Professional ParkAssoc. v Town of Bedford, 60 NY2d 492 [1983]; Reid v Reid, 57 AD3d 960 [2008]).
The defendant's remaining contentions are without merit.
Accordingly, the Supreme Court properly granted the plaintiff's cross motion to set aside theparties' postnuptial agreement. Eng, P.J., Florio, Sgroi and Miller, JJ., concur.