Matrimonial practitioners here and in other states are scratching their heads over a recent decision handed down by New York’s Second Department. The case is Cioffi-Petrakis v. Petrakis, 2013 NY Slip Op 1057. Some attorneys view the case as a game-changer in matrimonial law, while others caution us not to read too much into the decision. Either way, we need to be aware of the case and pay attention to what happens next.
The precipitating scenario in Cioffi-Petrakis will surprise no one who practices matrimonial law: The moneyed prospective husband presented his bride-to-be with a prenuptial agreement. In the event of a divorce, the wife would be entitled to “equitable distribution of the marital assets in an amount no greater than the sum of $25,000 per year for each full year the parties had been married” plus other assets, Cioffi-Petrakis, 72 A.D.3d 898 (2d Dept. 2010).
The wife was reluctant to sign the agreement, although she had independent counsel and several weeks to review the agreement prior to the wedding. She finally signed just prior to the wedding. Upon commencement of the divorce, the wife moved to set aside the prenuptial agreement, and trial court granted the defendant’s summary judgment motion to dismiss of the plaintiff’s sixth cause of action asking that the “prenuptial agreement be set aside on the ground of unconscionability,” Id.
The Appellate Court affirmed and the plaintiff’s unconsionability claim was dismissed; however, the plaintiff was able to go forward in the trial court on her other claims, and it is the resulting decision on her other claims that is causing the current flap.
With “unconscionability” gone, the wife’s lawyer went forward by attacking the prenuptial agreement on the basis of fraud, specifically fraud in the inducement. It has long been understood by New York lawyers that unlike arms-length contracts between strangers, agreements “between spouses or prospective spouses may be invalidated if the party challenging the agreement demonstrates that it was the product of fraud, duress or other inequitable conduct,” Cioffi-Petrakis (2013), citing Christian v. Christian, 42 NY2d 63 (CT DATE), et al.
However, until this recent decision by the Second Department it had been also understood that to prevail in setting aside a matrimonial agreement, the fraud or other “inequitable conduct” had to be quite extreme for a court to set aside the agreement. What is perplexing to practitioners is that the decision entered by the appellate court is very brief, leading to speculation as to whether the Second Department has lowered the standards as to what would be viewed as fraudulent conduct.
As far as can be determined from reviewing both the decision itself as well as commentary from various sources, the fraudulent behavior by the defendant that induced the plaintiff to sign the prenuptial agreement was his oral promise that he would tear up the agreement after the parties had a child. (It should be noted that the couple had three children over several years prior to the divorce action, with the prenuptial agreement remaining physically intact.)
The Second Department held that the trial court “found that the plaintiff’s testimony was ‘credible,’ ‘convincing,’ ‘unequivocal’ and consistent with ‘additional corroborative evidence,’ and that any ‘inconsistencies’ in her testimony related to ‘insignificant’ matters. By contrast, the Supreme Court found the defendant’s ‘credibility to be suspect,’ due in part, to his ‘patent evasiveness.’”
There seem to be two camps in the legal analysis of the appellate court’s decision. Either it is viewed as opening the door to overturning matrimonial agreements based on parole evidence consisting of “he said/she said,” or it is accepted as simply another case in which the trial court is given great latitude in judging the demeanor and credibility of witnesses.
Only time — and, likely, the Court of Appeals — will enlighten us as to whether we have a momentous shift in the matrimonial firmament or whether this is just another case of much ado about nothing.
Sara Stout Ashcraft is a partner in Ashcraft, Franklin, Young & Peters LLP. She concentrates her practice in the areas of matrimonial and family law.