Strong v. Dubin

• Decision Date: 13 May 2010
• Citation: 2010 N.Y. Slip Op. 04121,901 N.Y.S.2d 214,75 A.D.3d 66
• Parties: Leslie Elliot STRONG, Plaintiff–Appellant,v.Madeline DUBIN, Defendant–Respondent.
• Court: New York Supreme Court — Appellate Division

75 A.D.3d 66

901 N.Y.S.2d 214

2010 N.Y. Slip Op. 04121

Leslie Elliot STRONG, Plaintiff–Appellant,

v.Madeline DUBIN, Defendant–Respondent.

Supreme Court, Appellate Division, First Department, New York.

May 13, 2010.

Lee A. Rubenstein, New York, and Blank Rome, LLP, New York (Leonard G. Florescue of counsel), for appellant.Law Offices of Denise Mortner Kranz & Associates, New York (Steven K. Meier and Denise Mortner Kranz of counsel), for respondent.RICHARD T. ANDRIAS, J.P., JOHN W. SWEENY, JR., EUGENE NARDELLI, JAMES M. CATTERSON, LELAND G. DeGRASSE, JJ.ANDRIAS, J.P.

The primary issue before us is whether the parties' prenuptial agreement contains an enforceable waiver of defendant wife's interest in the marital portion of plaintiff husband's retirement assets. In analyzing this issue, we consider principles of contract interpretation in the context of prenuptial agreements and revisit our determination in Richards v. Richards, 232 A.D.2d 303, 303, 648 N.Y.S.2d 589 [1996], where we found that under the Employee Retirement Income Security Act “only a spouse can waive spousal rights to employee plan benefits, that a fiancee is not a spouse, and that such rights, therefore, cannot be effectively waived in a prenuptial agreement.”

After entering into a prenuptial agreement, the parties were married on April 6, 1992. In 2005, plaintiff commenced this matrimonial action and defendant moved to have the prenuptial agreement set aside. The trial court confirmed a Special Referee's report that found the agreement to be valid and enforceable and denied defendant's motion. Defendant appealed and we affirmed (48 A.D.3d 232, 233, 851 N.Y.S.2d 428 [2008] ), finding, among other things, that “[d]efendant admitted that she read the agreement before signing it, and while she did not understand the ‘legalese’ (i.e., statutory references), she did understand that the parties' properties would remain separate.” We also found that there was no attempt by plaintiff to conceal or misrepresent the nature or extent of his assets, with which defendant was personally acquainted.

While the prior appeal was pending, defendant moved for a declaratory judgment, or alternatively, discovery and a hearing, on her entitlement to certain assets, including plaintiff's retirement assets and the marital apartment. The motion court, relying on Richards v. Richards, 232 A.D.2d 303, 648 N.Y.S.2d 589 [1996], supra, found that there was no enforceable waiver of defendant's interest in the retirement assets and granted defendant's motion to the extent of ordering discovery and, if necessary, a hearing to determine (a) the value of the marital-property portion of plaintiff's retirement funds, to be divided among the parties by the percentages laid out in the prenuptial agreement; and (b) whether marital assets were used to purchase the apartment, rendering it marital property. We now modify, finding, for the reasons set forth below, that contrary to the motion court's holding, the prenuptial agreement contained a valid waiver of defendant's interest in the marital portion of plaintiff's retirement assets.

Prenuptial agreements addressing the ownership, division or distribution of property must be read in conjunction with Domestic Relations Law § 236(B), which provides that, unless the parties agree otherwise in a validly executed prenuptial agreement pursuant to section 236(B)(3), upon dissolution of the marriage, marital property must be distributed equitably between the parties, while separate property shall remain separate ( see Domestic Relations Law § 236[B][5][a]-[c] ). 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 ( see Van Kipnis v. Van Kipnis, 11 N.Y.3d 573, 577, 872 N.Y.S.2d 426, 900 N.E.2d 977 [2008] ). “[T]he intent to override the rules of equitable distribution-whether by express waiver, or by specifically designating as separate property assets that would otherwise be considered marital property under New York law-must be clearly evidenced by the writing” ( Tietjen v. Tietjen, 48 A.D.3d 789, 791, 853 N.Y.S.2d 118 [2008] ).

Still, when interpreting a prenuptial agreement “the court should arrive at a construction that will give fair meaning to all of the language employed by the parties to reach a practical interpretation of the expressions of the parties so that their reasonable expectations will be realized” ( Matter of Schiano v. Hirsch, 22 A.D.3d 502, 502, 803 N.Y.S.2d 643 [2005]; see also Kass v. Kass, 91 N.Y.2d 554, 566, 673 N.Y.S.2d 350, 696 N.E.2d 174 [1998]; Noach v. Noach, 53 A.D.3d 602, 861 N.Y.S.2d 946 [2008] ). “Particular words should be considered, not as if isolated from the context, but in the light of the obligation as a whole and the intention of the parties as manifested thereby” ( Kass v. Kass, 91 N.Y.2d at 566, 673 N.Y.S.2d 350, 696 N.E.2d 174 [internal quotation marks and citations omitted] ). “A contract should not be interpreted in such a way as would leave one of its provisions substantially without force or effect” ( Matter of John E. Andrus Mem. Home v. DeBuono, 260 A.D.2d 635, 636, 688 N.Y.S.2d 687 [1999], lv. denied 93 N.Y.2d 813, 697 N.Y.S.2d 561, 719 N.E.2d 922 [1999] ).

Here, the parties' prenuptial agreement, read as a whole and giving effect to all provisions, expresses an intent to opt out of the statutory scheme governing equitable distribution, which encompasses plaintiff's retirement funds ( see Vendome v. Vendome, 41 A.D.3d 837, 840 N.Y.S.2d 801 [2007]; Moor–Jankowski v. Moor–Jankowski, 222 A.D.2d 422, 634 N.Y.S.2d 728 [1995] ). The recitals to the prenuptial agreement provide that “[t]he parties desire, in advance of their marriage, to settle their financial, property, and all other rights, privileges, obligations and matters with respect to each other arising out of the marital relationship and otherwise, as more particularly hereinafter provided” (emphasis added). Article I of the prenuptial agreement provides:

“The parties, having considered their respective financial circumstances and the factors set forth for the equitable distribution of property in Section 236, Part B, Subdivision 5 of the Domestic Relations Law of the State of New York, hereby agree, pursuant to Subdivision 3 of the said statute, as follows with respect to the division of all marital and separate property either now in existence or which is hereafter acquired (emphasis added).”

Article 1, paragraph 1 of the prenuptial agreement provides that “it is the intention [of the parties] ... that the property owned by each of them shall remain completely and wholly vested in each such person in whose ownership it presently exists.” Article I, paragraphs 2 and 3 sets forth the parties' rights with respect to an apartment owned by plaintiff which was to serve as the marital residence. Article I, paragraph 4 sets forth the parties' rights with respect to furniture, silver and crystal which each party owned. Article I, paragraph 5 provides:

“Notwithstanding the foregoing Paragraphs 1 through 4, inclusive, in the event that [the parties] maintain joint banking or savings accounts or joint investment accounts then, such accounts shall be deemed marital property. Any assets purchased by [the parties] from utilized proceeds of any such joint account shall, similarly, be deemed marital property. [The parties] agree that marital property shall, in the event of a termination of the marriage be divided seventy (70%) percent to [plaintiff] and thirty (30%) to [defendant]. If any property is not owned jointly but, becomes marital property by reason of this paragraph, then in such event, either [plaintiff or defendant], as the case may be, shall have the right to assert a claim under the spouses ‘right of election’ ...”

While Article I is not artfully drawn, it expressly references Domestic Relations Law § 236(B)(3), which provides that a prenuptial agreement may include, among other things a “provision for the ownership, division or distribution of separate and marital property,” and reflects an intent to opt out of equitable distribution “with respect to the division of all marital and separate property either now in existence or which is hereafter acquired ” (emphasis added), which encompasses the retirement funds at issue. To hold otherwise would render the reference to property that is “hereafter acquired” meaningless, leaving that provision without force or effect.

Indeed, the only assets specifically designated to be “marital property” are the prospective joint banking, savings or investment accounts or assets purchased from the proceeds of those joint accounts set forth in Article I, paragraph 5. The retirement assets in question were not held in joint names or funded with money from an account in the joint names of the parties and are not marital property within the meaning thereof.

This interpretation is consistent with Article IV, paragraph 8, which, read as a whole, resolves any ambiguity in Article I and confirms the parties' intent to waive equitable distribution rights ( see Kass v. Kass, 91 N.Y.2d at 566–567, 673 N.Y.S.2d 350, 696 N.E.2d 174; MacAllister v. MacAllister, 275 A.D.2d 1015, 1016, 713 N.Y.S.2d 596 [2000] ). Paragraph 8 provides:

“Except as otherwise expressly provided herein, each party hereby releases ... the other, of and from all causes of action, claims, rights, or demands, whatsoever, in law or in equity ( including, but not limited to claims for equitable distribution, distributive award or claims against the separate property of the other spouse ) which either of the parties hereto ever had, or now has, against the other, except (a) nothing herein contained shall be deemed to prevent either party from enforcing the terms of this Agreement or from asserting such claims as are reserved by this Agreement to each party against the estate of the other; provided, however, that...