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D. J., Plaintiff, v. C. R., Defendant.
The following papers read on this motion:
Notice of Motion, Affidavit, Affirmation, and Exhibits (Mot. Seq. 07) x
Notice of Cross Motion, Affidavit, Affirmation, and Exhibits (Mot. Seq. 08) x
Affirmation in Opposition, Affidavit and Exhibits x
Affirmation in Reply and Exhibits x
Upon the foregoing papers, the Plaintiff moves by Notice of Motion (Mot. Seq. 07) seeking an Order:
A. Rejecting the Domestic Relations Order submitted by the Defendant to effectuate distribution of the Plaintiff's Retirement Annuity with prejudice;
B. Sanctioning the Defendant's counsel for her repeated failed attempts to set aside the parties’ Stipulation of Settlement after the parties’ divorce action was settled, the parties were allocuted on the record, and the Findings of Fact and Conclusions of Law and Judgment of Divorce were signed by this Court;
C. Awarding the Plaintiff counsel fees in the amount of $5,000.00; and
D. For such other and further relief as this Court deems just and proper.
The Defendant cross moves by Notice of Cross Motion (Mot. Seq. 08) seeking an Order:
A. Modifying the parties’ Stipulation of Settlement dated January 25, 2019 by declaring that the word “pension” refers to all retirement accounts owned by the parties, or, in the alternative, declaring that the word “pension” refers to the parties’ four retirement accounts which were evaluated and exchanged during the divorce proceedings;
B. Awarding the Defendant reasonable attorney's fees and the costs for bringing this motion; and
C. Granting such other and further relief as this Court may deem just and proper.
The Plaintiff and the Defendant (the “parties”) were married on June 4, 2002. There are no children born of the marriage. During the marriage the parties accrued the following four retirement assets: (1) the Plaintiff's Voluntary Retirement Savings Plan c/o XXXXX (the “Plaintiff's Annuity”); (2) the Plaintiff's pension plan with XXXXX (the “Plaintiff's Pension”); (3) the Defendant's Union Annuity Trust Fund (the “Defendant's Annuity”); and (4) the Defendant's Union Pension (the “Defendant's Pension”). The Plaintiff commenced an action for divorce on XXX, XX, 2015.
Pursuant to a So-Ordered Stipulation to Refer Case dated October 2, 2018 (Lorintz, J.), the trial of this matter was referred to the Supervising Judge of the Matrimonial Parts, Nassau County, New York, for referral to a Judicial Hearing Officer or Court Attorney Referee. The trial of this matrimonial matter commenced before Referee Marie McCormack in XXXXX, 2018. On February 26, 2019, the parties entered into an oral stipulation resolving all ancillary issues, the terms of which were spread on the record (the “Stipulation”). Therein, the parties agreed that their “pension shall be split equally pursuant to the Majauskas formula and each party will be responsible for 50 percent of the costs.” They further agreed that each party “shall be [the] sole owner of all bank accounts currently in their name, be it personal or business.” The parties further agreed, inter alia, that the Plaintiff would purchase the Defendant's ownership interest in the marital residence for $250,000.00. During their allocution, Referee McCormack asked each party to affirm their understanding that the Stipulation was a “full and final settlement of this matter resolving all issues in this matrimonial action.” Both parties affirmed, and the court held that they entered into the Stipulation “freely and voluntarily.”
In or about July 2019, the Plaintiff's counsel filed on notice to the Defendant's counsel, a Proposed Findings of Fact and Conclusions of Law and Proposed Judgment of Divorce, together with other papers necessary to effectuate the parties’ divorce. The “Fifteenth” Paragraph of said Proposed Findings of Fact stated, “the wife's pension and Defendant's pension shall both be split in accordance with the Majauskas formula and each party shall be responsible for half the cost.” The fifth ordered paragraph in the Proposed Judgment of Divorce further stated that “the Party's pensions shall be split equally pursuant to the Majauskas formula and each party shall be responsible for 50% of the costs.”
On or about August 16, 2019, the Defendant filed an Order to Show Cause (Mot Seq. 05) seeking, inter alia, an Order restoring this matter to the Court's Calendar “so that all assets that have not been equitably distributed can be equitably distributed”, holding the Plaintiff in contempt for violating the automatic orders, sanctioning the Plaintiff and her counsel, and awarding the Defendant counsel fees. This Court declined to sign Motion Seq. 05 on August 16, 2019. On or about August 27, 2019, the Defendant's counsel filed on notice to the Plaintiff's counsel, a Counter Proposed Judgment of Divorce, together with other papers necessary to effectuate the parties’ divorce. The third ordered paragraph of the Counter Proposed Judgment provided for the distribution of both parties’ annuities and pensions.
The parties were divorced by a Judgment of Divorce dated August 30, 2019 (McCormack, Referee). Referee McCormack signed the Judgement of Divorce submitted by the Plaintiff's counsel. The “phrase “Pursuant to Stipulation” was inserted at the beginning of the Fifteenth Ordered Paragraph. On or about July 21, 2021, the Defendant's counsel filed a Proposed Qualified Domestic Relations Order to distribute the Plaintiff's Annuity (the “QDRO”). The Plaintiff's counsel filed two Affirmations objecting to the QDRO before filing the instant Notice of Motion (Mot. Seq, 07) on December 24, 2021. The Defendant cross moved by Notice of Cross-Motion (Mot. Seq. 08) on January 21, 2022. The Plaintiff filed responsive papers on or about February 23, 2022, and the Defendant filed a Reply on March 20, 2022. Motion Seqs. 07 and 08 were fully submitted on May 9, 2022.
The merit of both parties’ applications hinge on whether the parties’ retirement annuities must be distributed pursuant to the Stipulation and, if the answer is no, whether the Stipulation must be modified or vacated for not explicitly addressing the same.
“Open court stipulations of settlement are judicially favored and should not lightly be set aside.” Hannigan v Hannigan, 50 AD3d 957 (2d Dept 2008). Parties are free to enter into agreements “that not only bind them, but which the courts are bound to enforce.” Etzion v Etzion, 84 AD3d 1015 (2nd Dept. 2011) (quoting Greve v Aetna Live-Stock Ins. Co., 30 NYS 668, 670 ). An oral stipulation of settlement spread on the record is “binding and strictly enforceable and shall not be disturbed absent a showing of one of the traditional grounds for vacatur, e.g., fraud, duress, mistake or overreaching.” M.P. v L.P., 2006 NY Misc. LEXIS 4017 (Sup Ct, Queens County Mar. 10, 2006) (citing Harrington v Harrington, 103 AD2d 356 [2d Dept 1984]); see also CPLR § 2104. Such stipulations are contracts which are subject to the principles of contract law. Petrovovich v Obradovic, 40 AD3d 1063 (2d Dept 2007); Simmons v Simmons, 305 AD2d 661 (2d Dept 2003).
Where an agreement is clear and unambiguous on its face, the parties’ intent must be construed within the four corners of the agreement and not from extrinsic evidence.” Khorshad v Khorshad, 121 AD3d 857 (2nd Dept. 2014). “Courts should construe stipulations made in open court in accordance with the purpose of the agreement and the parties’ intent by examining the entire record as a whole. Hannigan v Hannigan, 50 AD3d 957 (2d Dept 2008). “However, a court should not, under the guise of interpretation, make a new contract for the parties.” Sklerov v Sklerov, 231 AD2d 622 (2d Dept 1996). A court cannot enforce a contract unless it can determine what the parties have agreed to. 166 Mamaroneck Ave. Corp. v. 151 East Post Rd. Corp., 78 NY2d 88 (1991). If an agreement is not reasonably certain in its terms, there can be no legally enforceable contract. Id. citing Joseph Martin, Jr., supra.
Here, the Plaintiff argues that the QDRO submitted to the court by the Defendant's counsel should be rejected, as the parties waived distribution of their annuities, and agreed that only their pensions would be divided. She claims their agreement is evidenced by the clear language in the Stipulation, wherein they explicitly stated that their pensions would be distributed by a QDRO pursuant to the Majauskas formula, and by the absence of a similar clause in reference to their annuities. The Defendant claims that the parties negotiated and agreed to distribute all their retirement assets and, in entering into the Stipulation, he believed the term “pension” included all four of their accounts. He further claims that the Plaintiff and her attorney shared his understanding. The Defendant argues that the parties never contemplated waiving their interest in each other's retirement assets, as evidenced by the absence of an explicit waiver in the Stipulation. The Defendant's counsel further argues that “[i]t is well settled law in New York that waivers are legally insufficient to enforce a waiver upon a retirement account, in the context of a divorce stipulation, and New York routinely requires waivers of non-defined benefit plans such as 401k, to be specific, and the plan must be identified.” In support of this purported legal principle, the Defendant cites to three cases: Eredics v Chase Manhattan Bank, N.A., 100 NY2d 106 (2003); Smith v Pathmark Stores, Inc., 57 AD3d 759 (2d Dept 2008); and Matter of Christie, 152 AD3d 765 (2d Dept 2017).
In Eredics v Chase Manhattan Bank, N.A., supra, the court held that a separation agreement did not constitute a waiver of an ex-spouse's beneficiary interest in Totten Trust accounts owned by her deceased ex-husband. The court reasoned that the language cited by the movant was not sufficiently explicit to constitute a waiver pursuant to EPTL § 7-1.9, the Totten Trusts were not specifically referenced in the agreement, and the parties agreed that accounts not specifically mentioned in the agreement were already “distributed equitably and to the mutual satisfaction of the parties, prior to the execution of this agreement.” Similarly, in Smith v Pathmark Stores, Inc., supra, the court held that a former spouse had not waived his beneficiary interest in his decedent-wife's 401k, as the stipulation executed by the parties did not specifically reference the account, and the general release language contained therein did not constitute a valid waiver.
Both cases are clearly distinguishable from the instant matter, as they were actions in surrogate's court wherein surviving ex-spouses, who were still listed as beneficiaries of their deceased ex-spouse's retirement accounts, sought to collect a beneficiary interest. The relevant issue in both cases was whether agreements executed by the parties constituted valid waivers of their beneficiary interests. Though the Defendant argues otherwise, neither court held that the same specificity was required to waive distribution of a retirement asset in the context of a divorce proceeding.
The Defendant further cites to Matter of Christie, supra, wherein the court held that a stipulation of settlement that was incorporated into a judgment of divorce, wherein one party agreed to accept $60,000.00 in exchange for her interest in the other party's “retirement/pension and/or bank accounts”, constituted a valid waiver of the surviving ex-spouse's beneficiary interest in the decedent's pension plan. Even if the facts of this case were analogous to those of the instant matter, which they are clearly not, the court's ruling would still belie, or at least qualify, the legal principle argued by the Defendant.
The parties, and this Court, need not attempt to glean precedential wisdom from cases with dissimilar facts, as there are several published decisions which directly address the issues herein. Indeed, the facts in Hannigan v. Hannigan, 50 AD3d 957 (2d Dept 2008) and W.T, v. E.T., 28 N.Y.S.3d 651 (Sup. Ct. Cayuga Cty. 2016) are strikingly similar to the instant matter.
In Hannigan, the parties resolved their matrimonial action by an oral stipulation of settlement in open court. While spreading the terms of the parties’ agreement on the record, the parties’ counsel failed to address the Defendant's 401-k or pension plan. However, the parties’ Judgment of Divorce included a decretal paragraph distributing both retirement assets. On appeal, the Second Department, Appellate Division vacated the Judgment and held that the Plaintiff was not entitled to distribution of the Defendant's retirement assets. The court reasoned, in part, that both parties were represented by counsel, the terms of the stipulation were clear and unambiguous, and, therefore, the absence of a provision distributing retirement assets evinced the parties’ intent not to distribute them. The court held that such intent was confirmed by the Plaintiff's counsel's representation that there was nothing left to place on the record and by the subsequent voir dire of the parties.
In W.T. v. E.T., supra, in spreading the terms of the parties’ oral stipulation of settlement on the record, the wife's attorney stated that the husband had “a pension, a true pension with his primary employer” and that he would provide information necessary for the wife to obtain a QDRO. No agreement regarding the husband's second pension was placed on the record. The parties agreed that their oral stipulation resolved all contested issues and would be incorporated into a divorce judgment. Eighteen months after the Judgment of Divorce was entered, the wife's attorney indicated her intent to file a QDRO to distribute the second pension. The court held that since both parties and their attorneys knew the husband had two pensions for at least six months before the case was settled, their failure to mention the second pension while spreading the terms of their agreement on the record precluded distribution thereof. Similarly, in Dykstra v Dykstra, 211 AD2d 745 (2d Dept 1995) the court declined to reopen a stipulation of settlement based upon one parties’ claim that distribution of an annuity was inadvertently omitted.
Here, as in W.T. v. E.T., supra and Hannigan, supra, both parties were represented by counsel, all retirement assets were disclosed and valued well before the settlement was entered into, and the parties were allocuted on the record. Crucially, both parties affirmed that the Stipulation was a “full and final settlement of this matter resolving all issues in this matrimonial action.” While the Defendant argues that there was a mutual mistake of fact as to the definition of the term “pension”, he offers nothing more than conclusory allegations to support his claim that the Plaintiff shared his understanding. See, for e.g., McClorey v McClorey, 153 AD3d 1252 (2d Dept 2017) (denying a motion to vacate a stipulation for the movant's failure to support allegations of mutual mistake with “record evidence”). Even if the Defendant and his attorney believed the word “pension” meant something other than its colloquial definition, such error was at best a unilateral mistake. To obtain reformation based on a unilateral mistake, a movant must show that the mistake was induced by the other party's fraudulent representation. See Kadish Pharm., Inc. v Blue Cross & Blue Shield, Inc., 114 AD2d 439 (2d Dept 1985). Here, the Defendant failed to establish that his and his attorney's misunderstanding of the term “pension” was induced by the Plaintiff's fraudulent conduct.
“In the context of a matrimonial action, the Court of Appeals has recognized that a final judgment of divorce settles the parties’ rights pertaining not only to those issues that were actually litigated, but also to those that could have been litigated.” Spencer v Spencer, 159 AD3d 174 (2d Dept 2018) (citing Nicodemus v. Nicodemus, 124 AD3d 849, 851, 3 NYS3d 64 ). Here, the parties agreed that the Stipulation was a “full and final settlement” and resolved all issues. The terms of their agreement were clear and unambiguous, both parties were represented by counsel, and, during their allocutions, the parties indicated that they were satisfied with their representation. The Defendant has failed to prove the existence of fraud, duress, unconscionability, or mutual mistake, and has failed to establish that any unilateral mistake was induced by the Plaintiff's fraudulent representations. Considering all the facts and circumstances discussed herein, the Defendant's conclusory allegations are insufficient to overcome this State's strong public policy of ensuring finality in divorce proceedings.
Accordingly, all branches of the Defendant's application (Mot. Seq. 08) are DENIED. The branch of the Plaintiff's application (Mot. Seq. 07) seeking an Order rejecting the QDRO filed by the Defendant seeking to distribute her Annuity is GRANTED; and it is hereby
ORDERED, that the Proposed Domestic Relations Order submitted by the Defendant to effectuate distribution of the Plaintiff's Annuity is dismissed with prejudice.
The Plaintiff seeks an Order directing the Defendant to pay her $5,000.00 as and for the counsel fees she incurred during the instant motion practice. She further seeks an Order sanctioning the Defendant's counsel pursuant to 22 NYCRR 130-1.1. The Plaintiff, and her counsel, claim that the Defendant previously sought the same relief requested herein in post-settlement discussions with Referee McCormack, a previously filed Order to Show Cause, and a proposed QDRO which was obtained ex parte and filed without notice of settlement. She argues that, though they were unsuccessful in all prior attempts and knew, or should have known, that this motion would not succeed, the Defendant and her counsel chose to file Motion Seq. 08, and ought to pay the legal fees she incurred as a result. In opposition to the Plaintiff's prayer for counsel fees and sanctions, the Defendant appears to rest on the merits of his application (Mot. Seq. 08).
Conduct during litigation is frivolous and subject to sanctions and/or counsel fee awards when it is completely without merit in law or fact and cannot be supported by a reasonable argument for the extension, modification, or reversal of existing law; it is undertaken primarily to delay or prolong the resolution of the litigation, or to harass or maliciously injure another, or it asserts material factual statements that are false Wecker v. D'Ambrosio, 6 AD3d 452 (2nd Dep't 2004) citing 22 NYCRR 130-1.1. At the very least, the movant must have a good faith basis to assert their claim. Id. citing Kamruddin v. Desmond, 293 AD2d 714 (2nd Dep't 2002).
Here, the Defendant offers nothing more than conclusory allegations in support of his claim of mutual mistake, and he fails to establish that his claimed unilateral mistake was induced by the Plaintiff's fraudulent conduct. Furthermore, the Defendant's counsel persistently and incorrectly argues that parties cannot waive equitable distribution of retirement assets unless the waiver is in writing and explicitly identifies each asset being waived. Though not entirely clear, it seems that the Defendant's counsel is misapplying the rules governing waivers of survivor benefits, pursuant to ERISA. See, for e.g., Edmonds v Edmonds, 184 Misc 2d 928 (Sup Ct, Onondaga County 2000). Thus, this Court agrees that the Defendant's application was without merit in law or fact and, therefore, the Plaintiff is entitled to a counsel fee award. On the other hand, the Plaintiff failed to establish, to this Court's satisfaction, that the Defendant and his counsel were operating in bad faith, and, though an explicit waiver was not required with respect to the parties’ retirement assets, given the length and nature of the parties’ matrimonial litigation and that less-valuable assets were specifically addressed in the Stipulation, failing to specifically address the parties’ annuities was imprudent and, therefore, both parties are partially responsible for the instant motion practice.
Accordingly, the branch of the Plaintiff's application seeking sanctions is DENIED. The branch of her application seeking an Order directing the Defendant to pay counsel fees pursuant to 22 NYCRR 130.1 is GRANTED to the extent that it is hereby
ORDERED, that the Defendant shall pay to the Plaintiff $2,500.00 within thirty (30) days of the service of this Decision and Order with notice of entry; and it is further
ORDERED, that if the Defendant fails to pay the counsel fees awarded herein within the time directed above, the Plaintiff is awarded a money judgment in said amount, with a credit for any partial payment made by the Defendant. Upon such non-compliance, the Plaintiff may file an affidavit of non-compliance with the Nassau County Clerk, along with a copy of this Decision and Order, and may then enter judgment without further proceedings.
Any relief sought herein and not specifically ruled upon is denied.
This constitutes the Decision and Order of this Court.
Joseph H. Lorintz, J.
Response sent, thank you
Docket No: Index No.: XXXXX/XX
Decided: May 24, 2022
Court: Supreme Court, Nassau County, New York.
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