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Separation and Property Settlement Agreement Prepared by Mediator Was Not Unconscionable- Irizarry v Hayes, 2020 NY Slip Op 50217(U)


In this case the Supreme Court considered whether the terms of a separation agreement prepared by a non-attorney mediator were unconscionable and as a result should be voided.

A separation agreement is a document agreed to by a husband and wife in which they agree to the conditions related to how they are going to live separately, such as property division, spousal maintenance, child custody, and child support.  While a separation agreement is not always a precursor to a divorce, it can be.  In fact, when filing for a divorce in New York, you must state the grounds for the action.  One of the possible grounds is that the couple has been separated pursuant to a separation agreement.  According to Dom. Rel. Law §170 (6), if a couple signed and notarized a separation agreement, are not living together, and have abided by the terms of the agreement, then they would have grounds for divorce.

In this case Irizarry v Hayes, the couple married in 2008 and had one child.  A prenuptial agreement was drafted.  Both parties were aware of its terms and agreed to them, but only the husband signed it.  As a result, the prenuptial agreement was not enforceable.  Several years later the couple experienced problems. After meeting with a mediator, the couple signed a separation agreement in 2016.  In the agreement they acknowledged that they were encouraged to seek the advice of independent counsel, that they had the opportunity to seek independent counsel and financial advisors to review the agreement, and that by signing it they agreed to file an uncontested divorce action. The husband then filed an action for an uncontested divorce, and in her answer the wife consented to the uncontested divorce.  The wife also stated in the answer that she “waives her right to any additional equitable distribution of marital property insomuch as all properties ever jointly owed, shared or enjoyed, have been distributed between the parties voluntarily prior to the commencement of the action by and through their Separation and Property Settlement Agreement.”  The couple received a judgement of divorce.

The husband complied with all of the financial requirements required to do under the agreement, including paying child support. However, two years later the former wife brought an action to set assigned the agreement and judgment of divorce on the ground that the separation agreement was unconscionable.  She argued that the agreement was based on the false premise that the prenuptial agreement was binding, that she was not permitted to have independent counsel review the agreement, and that she was denied financial disclosures. The husband moved for summary judgment.

The Supreme Court first reviewed the issue of whether the circumstances surrounding the signing of the separation agreement was fair to both parties.  The wife contends that the process was fundamentally unfair to her.  However, there is no evidence that that is the case. Both parties agreed to the mediation process and the mediator had an obligation to be fair throughout the process.  The wife did not allege that she ever complained about or questioned the fairness of the process during the mediation, nor was there an allegation that the wife felt the mediator was biased. Furthermore, there was no allegation that the choice of mediator was not a joint choice by the couple.

The wife next argued that separation agreement should be set aside because the property division aspects of it related to pre-marital real estate were based on the unenforceable prenuptial agreement.  The court noted that her interpretation of the law is incorrect.  The language in the separation agreement refers to “pre-marital real estate.” As a matter of law, pre-marital real estate is separate property and would not subject to equitable distribution. Thus, since there is not an enforceable pre-marital agreement, she would not be entitled to pre-marital real estate owned by the husband.

The wife also asserts that the “waiver of spousal support” in the agreement is based on a waiver in the pre-nuptial agreement.  However, while the unsigned prenuptial agreement does contain a mutual waiver of spousal support, the separation agreement does not incorporate such language.  In fact, under the separation agreement the husband paid the wife $20,000 in additional retirement benefits as maintenance considering the disparity in income. In other words, while the husband negotiated a complete waiver in the unsigned prenuptial agreement, he did not do so with the separation agreement.  Thus, the separation agreement did not in fact incorporate the terms of the unsigned prenuptial agreement, but actually acknowledged the husband’s legal obligation to pay maintenance.

Ultimately, the Supreme Court concluded that there is documentary evidence, signed by the wife, that the mediation process was fair and that the resulting agreement was not unconscionable. Further, the wife was informed of her right to counsel on multiple occasions.

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