In New York, separation are agreements are enforceable, but only if certain conditions are met. One of those conditions is that both parties must make full financial disclosures, including all of their assets. The case of S.M.S. Kabir v. Kabir, 85 A.D.3d 1127 (N.Y. App. Div. 2011) involves a dispute over the validity of a separation agreement between a husband and wife. The wife sought to set aside the agreement, claiming that it was not fairly negotiated and that key financial information had been withheld by the husband.
Background Facts
The parties were married and later entered into a separation agreement on July 11, 2007. The wife later claimed that the agreement was unfair because the husband had allegedly concealed several assets during the negotiation. She stated that she did not discover these concealed assets until 2009, two years after the separation agreement had been signed.
The wife also claimed that when she signed the agreement, she did not have legal representation and was not fluent in English. She was not provided with an interpreter and, as a result, did not fully understand the contents of the agreement. Additionally, the wife alleged that the husband did not disclose all his assets at the time of the agreement, which included real estate and other financial holdings.
The wife filed a motion to set aside the separation agreement and asked for further financial disclosure and a hearing to review whether the agreement was fair. The Supreme Court of Queens County denied her motion.
Question Before the Court
The central question before the Appellate Division, Second Department, was whether the separation agreement between the husband and wife should be set aside based on allegations of fraud, concealment of assets, and the lack of representation for the wife during the agreement’s execution.
Court’s Decision
The Appellate Division, Second Department, reversed the Supreme Court’s ruling. The court concluded that further financial disclosure and a hearing were necessary to determine whether the separation agreement should be set aside. The court’s decision was based on legal principles that allow separation agreements to be invalidated if they are found to be unfair due to fraud, duress, overreaching, or unconscionability.
The court remitted the case to the Supreme Court, Queens County, for further financial disclosure. The hearing would determine whether the separation agreement had been obtained fairly and whether it should be enforced or invalidated based on the circumstances surrounding its execution. The court emphasized that the wife’s allegations, if proven, were sufficient to question the fairness of the agreement.
Discussion
In reaching its decision, the court relied on several legal principles regarding separation agreements. Under New York law, a separation agreement or settlement will generally be enforced as long as it is fair on its face, unless there is evidence of fraud, duress, overreaching, or unconscionability. The courts encourage parties to settle their differences on their own, but they also have a duty to protect parties from unfair agreements, particularly in situations involving a fiduciary relationship, such as between spouses.
In this case, the court considered the wife’s claims that the husband had concealed significant assets and that she did not have legal representation or language assistance when she signed the agreement. The court noted that separation agreements are subject to more scrutiny than other types of contracts due to the fiduciary relationship between the parties. Because of this relationship, courts closely examine whether both parties acted fairly and whether the agreement was equitable.
The court concluded that the wife’s allegations, if proven, would provide sufficient grounds to question the fairness of the agreement. The court found that without further financial disclosure and a hearing, it was impossible to determine whether the separation agreement was valid. The court, therefore, ordered further proceedings to ensure that the agreement was not the result of fraud or concealment.
The court also noted that the wife was not represented by counsel and that she was not fluent in English at the time of signing the agreement. These facts raised additional concerns about whether she fully understood the terms of the agreement and whether the husband had taken advantage of her lack of understanding.
Finally, the court emphasized the importance of financial disclosure in determining whether the separation agreement was fair. The court held that a hearing would allow for a full examination of the parties’ assets and the circumstances under which the agreement was executed.
Conclusion
In cases where one party alleges fraud or concealment, the courts will scrutinize the agreement more closely to ensure that it was negotiated fairly and that both parties had equal access to information. If you are involved in a dispute over a separation agreement or have concerns about the fairness of a settlement, it is important to seek legal advice. An experienced Queens separation agreement lawyer at Stephen Bilkis & Associates can provide guidance on how to protect your rights and ensure that your interests are represented. Contact us today for a free, no obligation consultation.