Gottlieb v. Such

293 A.D.2d 267, 740 N.Y.S.2d 44, 2002 N.Y. App. Div. LEXIS 3452
CourtAppellate Division of the Supreme Court of the State of New York
DecidedApril 4, 2002
StatusPublished
Cited by14 cases

This text of 293 A.D.2d 267 (Gottlieb v. Such) is published on Counsel Stack Legal Research, covering Appellate Division of the Supreme Court of the State of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Gottlieb v. Such, 293 A.D.2d 267, 740 N.Y.S.2d 44, 2002 N.Y. App. Div. LEXIS 3452 (N.Y. Ct. App. 2002).

Opinion

Judgment, Supreme Court, New York County (Jacqueline Silbermann, J.), entered April 20, 2001, which, upon a prior order, same court and Justice, entered on or about February 8, 2001, granting defendant ex-wife’s motion pursuant to CPLR 3211 (a) (7) and denying plaintiff ex-husband’s cross motion pursuant to CPLR 3212 for summary judgment on the issue of liability, dismissed the complaint, affirmed, without costs.

Defendant ex-wife commenced an action to rescind the parties’ separation agreement on the ground that it had been induced by fraud. Plaintiff ex-husband contends that, by doing so, she violated the terms of the agreement and is liable to him for legal fees incurred in defending the action.

While barring an actitin by either party for its breach, the separation agreement contains no prohibition against the commencement of an action seeking its rescission upon the ground of fraud in the inducement. Nor does the agreement purport to [268]*268exculpate the parties from the consequences of fraudulent misrepresentation. Had such a provision been included in the separation agreement, it would not be enforceable (see, Lago v Krollage, 78 NY2d 95, 100; Ash v New York Univ. Dental Ctr., 164 AD2d 366).

Defendant’s commencement of the fraud action is not a default under the terms of the agreement, and the provision entitling the prevailing party to an award of “counsel fees in event of default” is not implicated. As the dissenter points out, invalidation of the entire agreement would entitle defendant wife to an award of equitable distribution. However, such a result could not be considered tantamount to a breach of her promise “never to seek through proceedings or otherwise a distributive award” because voiding the agreement would thereby void the promise.

In any event, counsel fees are only recoverable “in the event of default” where the prevailing party has been “required to seek judicial relief for [an] alleged breach of this agreement” for costs “made necessary by the [other] party’s default.” In view of the public policy obliging the respective parties to bear the cost of counsel (Matter of A.G. Ship Maintenance Corp. v Lezak, 69 NY2d 1, 5), a provision for recovery of fees that are “incidents of litigation” (id.) should be construed strictly (see, Kips Bay Towers Assoc. v Yuceoglu, 134 AD2d 164, 165-166, lv denied 71 NY2d 806). Had the parties intended the disputed provision to permit reimbursement in the case of a challenge to the validity of the agreement, as opposed to a “default” in its performance, it would have been simple enough to have stated as much. Concur—Tom, J.P., Andrias and Rubin, JJ.

Saxe, J., dissents in a memorandum as follows: In view of the prevalence of excessive post-divorce litigation, it has become increasingly important to find ways to discourage baseless post-judgment proceedings and offer instead protection against the enormous financial burden they entail. One way to accomplish that is by including a broad attorney’s fee provision in the parties’ final agreement, entitling the prevailing party to recover the costs of such unnecessary litigation. This appeal requires us to consider the extent to which an attorney’s fee provision included in the parties’ Separation Agreement provides such protection.

The parties were married in March 1983. During their marriage, the husband was a partner in0 the firm of Cadwalader, Wickersham & Taft, and the wife worked as a corporate attorney. They have one daughter, born in 1987.

The underlying divorce litigation was commenced in January [269]*2691991. Both parties were represented by highly experienced matrimonial counsel. Ultimately, in October 1992, the parties entered into a 51-page Separation Agreement. In addition to providing for child custody and support, the Separation Agreement recited the substantial personal property owned by the parties, including bank and security accounts and retirement plans, as well as numerous pieces of real property, in Long Island, Manhattan, San Francisco, Colorado, and elsewhere. Article II of the Separation Agreement made provision for the division of the property between them.

At the end of article II there was included a provision containing mutual waivers, by which each party agreed: “Except as provided to the contrary in this Agreement, the [Husband or Wife] waives any right which he [or she] may at any time have to a distributive award or an award of equitable distribution with respect to any property acquired by the [other] either before or during the marriage, and agrees never to seek through court proceedings or otherwise a distributive award or an award of equitable distribution with respect to any property acquired by the [other] either before or during the marriage.”

The parties also included an attorney’s fees provision: “In the event that either party is required to seek judicial relief for any alleged breach of this Agreement, the party prevailing in such action shall be entitled to receive from the losing party his or her attorney’s fees.”

Almost six years after entering into the Separation Agreement, defendant ex-wife commenced an action to set aside the Separation Agreement and for an award of equitable distribution. This Court ultimately dismissed the action (see, Such v Gottlieb, 273 AD2d 72, lv denied 95 NY2d 770).

On the strength of the provision in their Separation Agreement governing the entitlement to attorney’s fees, plaintiff ex-husband claims the right to recoup from defendant ex-wife the fees he paid his attorney to defend against defendant’s unsuccessful action to set aside their Separation Agreement and obtain, instead, an award of equitable distribution from the court.

The motion court’s rejection of plaintiff’s claim for attorney’s fees was premised upon a misunderstanding of plaintiff’s argument. The court reasoned that the ex-wife could not have breached the parties’ Separation Agreement, because in the waiver provision she did not clearly and unequivocally waive the right to challenge the validity of the Separation Agreement on grounds of subsequently discovered fraud. However, con[270]*270trary to the motion court’s analysis, the breach of contract upon which plaintiff predicates his claim for attorney’s fees is not simply the act of his ex-wife in commencing an action to set aside the Separation Agreement on grounds of fraud; plaintiff does not suggest that the waiver provision precludes her from seeking to set aside the Separation Agreement where such relief is warranted. Rather, the breach of the Separation Agreement he claims under arose when defendant lost her lawsuit to set aside the Separation Agreement. Put another way, she committed an act of breach by attempting to avoid the obligations of the Separation Agreement without support in law or fact. This distinction is critical.

The validity of this point is illustrated by considering the following: if, in the absence of any application to set aside the Separation Agreement, defendant ex-wife brought an action seeking a further distribution of assets, such action would unquestionably constitute a violation of the contract provision promising not to seek a distributive award. Indeed, a court proceeding seeking a distributive award is exactly what she promised not to bring.

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Cite This Page — Counsel Stack

Bluebook (online)
293 A.D.2d 267, 740 N.Y.S.2d 44, 2002 N.Y. App. Div. LEXIS 3452, Counsel Stack Legal Research, https://law.counselstack.com/opinion/gottlieb-v-such-nyappdiv-2002.