J.B. v. M.G.

65 Misc.3d 1205 (A)

118 N.Y.S.3d 382 (Table)

J.B., Plaintiff,

v.M.G., Defendant.

***

Supreme Court, New York County, New York.

Decided September 24, 2019

Counsel for Plaintiff: Peter Bronstein and Meredith Strass from Bronstein Van Veen

Counsel for Defendant: Marilyn B. Chinitz and Margaret L. Canby from Blank Rome LLP

Douglas E. Hoffman, J.

Defendant M.G. ("Husband") moves for an order granting him partial summary judgment on this motion for a declaratory judgment stating that (1) the parties "respective rights and claims with respect to any property held by the other, or jointly, are controlled by the parties' Prenuptial Agreement of August 23, 1994" (the "Prenuptial Agreement"), (2) the Prenuptial Agreement is "valid and enforceable and has not been modified by either" the January 8, 2003 Pledge Agreement (the "2003 Pledge Agreement") or the March 17, 2006 Revocation and Release (the "2006 Revocation"), (3) Plaintiff J.B. ("Wife") is "not entitled to any portion of Defendant's separate property business interests, including, but not limited to, the entity [H.H.H.¹ ] under the express terms" of the Prenuptial Agreement; (4) Wife is "not entitled to any portion of Defendant's separate property business interests, including, but not limited to, the entity H.H.H. under the express terms" of the 2006 Revocation; and (5) property held by the parties "shall be distributed solely according to title in accordance with the express terms of the parties' Prenuptial Agreement."

Husband also seeks an order directing that (1) Wife "is barred by the statute of limitations set forth in C.P.L.R. § 213(1) from seeking rescission or reformation" of the 2006 Revocation; (2) Wife is barred from challenging the 2006 Revocation because "she has ratified its terms by accepting the economic benefits of Defendant's belief that he was the sole legal owner of H.H.H. for ten years after the execution" of the 2006 Revocation; and (3) Wife is "equitably estopped from asserting any claims to Defendant's business interests, based upon his reasonable detrimental reliance upon her representations that she was waiving any such interest."

Wife opposes the relief sought by Husband, except she agrees that the 1994 Prenuptial Agreement is valid. She also cross-moves for an order (1) compelling Husband to "comply with all discovery requests, includ[ing] the amended document requests and interrogatories dated March 1, 2018," and (2) directing Husband and his counsel to "engage in good faith efforts to resolve any disputes regarding discovery by meeting and conferring rather than engaging in any further motion practice." Husband opposes Wife's discovery requests, arguing that she is seeking discovery over assets that he would like the court to deem his wholly separate property not subject to equitable distribution.

Ostensibly, the instant motion and cross-motion are the parties' second attempt to either obtain or preclude discovery and equitable distribution of H.H.H. (and its related and/or successor entities). By motion sequence 002, Wife previously moved for an Order directing Husband to comply with extensive discovery requests in connection with her application for equitable distribution. Husband opposed those discovery requests, alleging that they were barred by the parties' Prenuptial Agreement and later agreements, and cross-moved for a protective order and to quash Wife's subpoenae to third parties because they sought discovery over his separate property. The court partially granted Wife's motion, stating, in part that:

At this point in the litigation, [granting Husband's requests] would have the effect of granting summary judgment to Husband as to Wife's equitable distribution claim. A motion for summary judgment ‘shall be granted if, upon all of papers and proof submitted, the cause of action or defense shall be established sufficiently to warrant the court as a matter of law in directing judgment in favor of any party.’ C.P.L.R. § 3212(b). The proponent of summary judgment must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to eliminate any material issues of fact. No such showing was made here by Husband ... Husband here has not shown, as a matter of law and fact, that the 2003 Pledge Agreement cannot be enforced. Therefore, it would be inappropriate at this juncture to deny Wife discovery, because to decide otherwise would have the same effect as granting summary judgment, without, however, the requisite showing. Today's order is not a final determination concerning the validity of the 2003 Pledge Agreement, a final determination that must await trial.

February 9, 2018 mot. 002 Decision and Order at 8, internal citations omitted.

Motion sequence 002 was not, however, a formal motion by Husband for summary judgment seeking declaratory relief finding certain agreements valid (the 1994 Prenuptial Agreement, the 2003 Share Purchase, and 2006 Revocation) while finding other agreements invalid (the 2003 Pledge Agreement). Husband now seeks partial summary judgment in the instant motion sequence 003. Wife's cross-motion sequence 003 is her second motion to compel discovery, after her counsel apparently re-issued their discovery requests after the February 9, 2018 Decision and Order on motion sequence 002, which allowed some discovery and quashed other discovery requests. Wife alleges that Husband has not produced any discovery to date.

Factual Background

The following undisputed facts can be gleaned from the parties' submissions, unless otherwise noted: In 1994, the parties entered into a prenuptial agreement, which complied with D.R.L. § 236(B)(3) acknowledgment requirements for matrimonial agreements. Both parties were represented by counsel. At the time, the parties were living in New York. The agreement was signed in New York, and contains a New York choice of law and New York-only jurisdiction provision. Both parties concede that the Prenuptial Agreement is valid and enforceable.

Pursuant to the 1994 Prenuptial Agreement, each Party's separate property is to remain separate, and any gifts received by Wife are to be treated as her separate property:

The husband acknowledges that the Bride has been and will continue to be the recipient of various gifts of both personal and real property from her mother, her father, and her stepfather, and that all of such gifts, consisting of residences, homes, antiques, paintings or any property whatsoever that was gifted or bequeathed to the Bride, shall remain the sole and separate property of the Bride during the entire course of the marriage and will continue to be her separate property in the event of a divorce. No action on the part of the Bride, permitting the use of the property for the benefit of the husband or for their common enjoyment shall affect the character of the property as being separate property. There shall be no defense raised by the husband that the property has appreciated by his act or contribution, has been co-mingled or in any manner whatsoever, has ceased being anything but the separate property of the Bride. (1994 Prenuptial Agreement, ¶7)

There is a shorter, somewhat mirror version of that paragraph, which states that property acquired by Husband by "bequest, devise, or gift" will remain "exclusive and separate property" of Husband. (1994 Prenuptial Agreement, ¶8). Both parties agree that the Prenuptial Agreement was drafted, at least in large part, for the purpose of protecting Wife's separate interests, especially as a result of gifts and inheritances from her family.

The Prenuptial Agreement also requires that any jointly-owned assets be distributed 50-50 unless a "duly subscribed and acknowledged" writing exists to the contrary. 1994 Prenuptial Agreement, ¶6.

The parties also agreed about certain future writing requirements:

To avoid any future controversy, the Parties agree that no agreement or transaction between them with respect to any financial matters, or with respect to any income, assets, or property, real or personal, shall be binding unless made in writing signed by the Parties hereto. No agreement by either of the Parties to make any will or codicil containing any devise, legacy, or bequest, to the other shall be valid unless in writing signed by the Parties. The Parties further agree, that no contractual obligation shall be created or be binding upon either of the Parties with respect to the other unless made in writing signed by the Parties hereto. No waiver, modification, rescission, or cancellation of this Agreement, or any part thereof, shall be in any way effective unless in writing, signed and acknowledged by both Parties. (1994 Prenuptial Agreement, ¶15).

These writing requirements are the minimum required by the parties, and they do not waive or necessarily satisfy statutory requirements. For example, under New York law, wills and codicils must be co-signed by at least two witnesses subscribing to that writing. E.P.T.L. § 3-2.1.

After the Prenuptial Agreement was signed, the Parties married in 1994. Sometime thereafter, the parties moved to Monaco, where they lived for many years. Two children were born of the marriage, both of whom are now over the age of eighteen. Wife now resides in New York, Husband in Monaco.

In and around 2003, Wife's mother, Ms. V. ("Ms. V."), owned several shipping business entities, apparently directly and indirectly, which she inherited from her husband. There were several entities, the names of several of which began with a version of H.H.H. and that name's related variations, based on country of registration or incorporation. At some point during the marriage, Husband also started working in the shipping business.

In or about 2003, Ms. V. wished to give (or, according to Husband, sell) some part of the shipping business to her daughter and son-in-law. Ms. V. offered to transfer 50% of her indirectly-owned H.H.H. shipping-business shares to Husband and an option to Wife, which Wife could...