Keller-Goldman v. Goldman , 149 A.D.3d 422 ( 2017 )

Judgment of divorce, Supreme Court, New York County (Matthew F. Cooper, J.), entered October 15, 2015, to the extent appealed from, adhering to the court’s interpretation that there was a cap on the “room and board” credit provision of the parties’ Stipulation of Settlement and Agreement in its August 19, 2015 order, affirmed, without costs. Appeal from order, same court and Justice, entered August 19, 2015, which granted plaintiff’s motion to the extent of interpreting the parties’ agreement as providing a cap on defendant’s credit against his child support obligations, dismissed, without costs, as subsumed in the appeal from the judgment.

The parties entered into a Stipulation of Settlement and Agreement (the agreement) that resolved all issues surrounding their separation. Although they had four unemancipated children, the agreement only provided for support for the three children for whom plaintiff mother was the custodial parent. Defendant father retained custody of the fourth child, but agreed to receive no support for him from the mother. Had the parties not negotiated the issue of child support, the mother stood to collect $5,000 per month in child support payments, pursuant to the Child Support Standards Act, a fact acknowledged by the agreement. Instead, she agreed to monthly child support payments of $2,500.

Paragraph 10.3 of the agreement provided for a graduated reduction in the father’s child support payments upon the emancipation of the three children, to wit: upon the first emancipation his monthly payment would be reduced to $2,150 per month; and upon the second emancipation the payment would be reduced to $1,462 per month. Attendance at college, the agreement’s definition of which included a “gap year” at a yeshiva or seminary in Israel, was not considered an emancipation event. However, the agreement did provide, in paragraph 10.4, immediately following the support reduction schedule: “During the period in which a Child is attending a college and residing away from the residences of the parties and [the father] is contributing towards the room and board expenses of that Child, [the father] shall be entitled to a credit against his child support obligations in an amount equal to the amount [the father] is paying for that Child’s room and board. The credit shall be allocated in equal monthly installments against [the father’s] child support payments.”

At the time the agreement was negotiated and executed, the eldest of the three children in the mother’s custody was attending a 10-month seminary program in Israel. The father, who was responsible under the agreement for the entire tuition and for room and board, paid approximately $12,000 for the latter expense. Relying on the language from paragraph 10.4 of the agreement, quoted above, the father, prior to a judgment of divorce having been entered, informed the mother that he was due a credit towards his total monthly child support obligation of $2,500, in the amount of approximately $1,200. The mother then moved by order to show cause for a declaration that the pending judgment include language making clear that any credit due the father would be capped in accordance with the graduated emancipation reduction provided for in the immediately preceding paragraph 10.3 of the agreement. In other words, she interpreted that formula as defining the amount of child support due the particular child in question as $350 ($2,500 minus $2,150, the amount to be paid after emancipation of that child), and sought to limit the father’s credit to that amount. She noted that under the father’s construction of the agreement, he could, in theory, completely deprive one or two of her children of support if he paid enough in room and board for the other child or children that the credit would wipe out the obligation.

The father opposed the motion and cross-moved for, inter alia, an order awarding him expenses, costs and fees incurred in responding to the mother’s motion. The father stressed that the court was required to enforce the plain language of the agreement, which, again, with respect to the child studying in Israel, granted him “a credit against his child support obligations in an amount equal to the amount [he] is paying for that Child’s room and board.” Since that amount was $1,200 a month, the father reasoned, he was entitled to a credit in that amount.

In oral argument on the motions, the court opined that, as a matter of public policy, the agreement could not be enforced as written. It expressed deep concern with the possibility that one or two of the children could be deprived of any child support because the father was paying room and board for their sibling or siblings in an amount that exceeded the amount owed the mother. The court stressed the fact that the father was already enjoying a reduction in the presumptive support amount provided by the Child Support Standards Act. The court ultimately entered a judgment of divorce that clarified that the provision allowing the father a credit against his child support obligations is capped at the amount identical to the decrease in monthly child support when such child becomes emancipated.

A stipulation of settlement which, like the one at issue here, is incorporated but not merged into a judgment of divorce, is a contract subject to the ordinary principles of contract construction and interpretation (see Matter of Meccico v Meccico, 76 NY2d 822, 823-824 [1990]; Rainbow v Swisher, 72 NY2d 106 [1988]; Kosnac v Kosnac, 60 AD3d 636 [2d Dept 2009]). These rules provide that “a written agreement that is complete, clear and unambiguous on its face must be enforced according to the plain meaning of its terms . . . [and] courts may not by construction add or excise terms, nor distort the meaning of those used and thereby make a new contract for the parties under the guise of interpreting the writing” (Beinstein v Navani, 131 AD3d 401, 405 [1st Dept 2015] [citations and internal quotation marks omitted]). In the specific realm of settlement agreements defining a parent’s child support obligations, there is a presumption that the agreement reflects what the parties believed to be a fair and equitable division of the financial burden to be assumed in rearing the child (see Matter of Trester v Trester, 92 AD3d 949, 950 [2d Dept 2012]). However, this Court has articulated a very important caveat to that principle: “[T]he parties cannot contract away the duty of child support. Despite the fact that a separation agreement is entitled to the solemnity and obligation of a contract, when children’s rights are involved the contract yields to the welfare of the children. The duty of a parent to support his or her child shall not be eliminated or diminished by the terms of a separation agreement, nor can it be abrogated by contract” (Matter of Thomas B. v Lydia D., 69 AD3d 24, 30 [1st Dept 2009] [internal quotation marks and citations omitted]).

The agreement here violates this rule. The credit sought by the father takes away that portion of child support intended for the welfare of the other two children. Taken to its logical end, the agreement threatens to completely deprive the other children of any support whatsoever, if monthly room and board costs for one child were to exceed $2,500. The dissent does not question the principle this Court enunciated in Thomas B., which makes all but irrevelant the dissent’s adherence to traditional canons of contractual interpretation. Neither Matter of Brandt v Peirce (132 AD3d 665 [2d Dept 2015]) nor Schulman v Miller (134 AD3d 616 [1st Dept 2015], appeal dismissed 27 NY3d 947 [2016]), both discussed by the dissent, deals with a situation where a child was threatened with a potential loss of support. Similarly, Meshel v Meshel (146 AD3d 595 [1st Dept 2017]) did not involve a result that conflicted with public policy.

Thomas B. is also instructive insofar as it demonstrates that it is appropriate for courts, in ensuring the fairness of child support provisions in divorce agreements, to look beyond the plain language chosen by the parties. In that case, the parties had stipulated that the father’s obligation to support the child would terminate when the child turned 21 or was otherwise emancipated, defining “emancipation,” unambiguously, as “engaging in fulltime employment” (69 AD3d at 25). The father sought to end his support payments when the child, in fulfilling a condition of a substance abuse recovery program, obtained a 35-hours-per-week job at a music store. The mother objected, and this Court agreed, relying on case law holding that, as a matter of public policy, a child cannot be considered emancipated, regardless of how clearly and unambiguously the parties defined that term in an agreement, unless he or she is “economically independent,” a finding that could be not be made based on the facts in Thomas B. (id. at 30).

As in Thomas B., there is precedent to help us interpret the agreement here in a manner that is consistent with public policy. In Lee v Lee (18 AD3d 508 [2d Dept 2005]), in considering whether the father might have to at some future point have to pay the children’s college expenses, the court stated: “[I]t is not the defendant’s overall child support obligation, which in this case encompasses his duty to support four children, that might properly be reduced on account of his payment of ‘college expenses’ on behalf of one or more of those children; rather, the ‘college expenses’ paid on behalf of one particular child, or on behalf of some particular children, could properly serve as a credit only with respect to so much of the defendant’s overall child support obligation as it relates to such particular child or children” (18 AD3d at 512; see Matter of Levy v Levy, 52 AD3d 717, 718-719 [2d Dept 2008]). It is ir-revelant that Lee did not involve a negotiated settlement agreement. It is, however, in accordance with Thomas B., completely appropriate to look to Lee as authority that establishes public policy concerning child support provisions like the one at issue here, and to interpret the provision in a manner consistent with that public policy.

We recognize that Domestic Relations Law § 240 (1-b) (h) permits parties to deviate by agreement from the basic child support obligation. However, that section also provides that the court shall retain discretion with respect to child support. That discretion unquestionably extends to invalidating those provisions in agreements that violate public policy, as the court did here. Further, we do not believe that enforcing a specific and narrow public policy, will, as the dissent fears, “create confusion, uncertainty, and even chaos.”

Another reason why we agree with the wife’s interpretation of the agreement is because, while it is important for a court to adhere to the plain language of an agreement in interpreting it, it is also true that “a contract should not be interpreted to produce a result that is absurd, commercially unreasonable or contrary to the reasonable expectations of the parties” (Greenwich Capital Fin. Prods., Inc. v Negrin, 74 AD3d 413, 415 [1st Dept 2010] [internal quotation marks omitted]). The reasonable expectation of the parties when they executed the agreement, based on its plain language, was that the father would support each child individually until that child was emancipated. This can be deduced from the fact that paragraph 10.3 of the agreement reduced the total support amount after the emancipation of the first, and then the second, child. Insofar as the credit provision is the one that immediately follows, it was reasonable for the mother to interpret that provision as making clear that attendance at college or a gap year program is effectively a “temporary emancipation,” where no support payment is necessary for the child because the child is not a financial burden on the mother. At the same time, the credit provision prevents the mother from realizing a windfall by collecting child support for a child who, temporarily, is not a household expense. Reading the agreement this way, the two provisions can be understood as being in harmony with each other, which is a goal when construing any contract (see Gessin Elec. Contrs., Inc. v 95 Wall Assoc., LLC, 74 AD3d 516, 518 [1st Dept 2010]). We are unaware of any rule of construction limiting the ability to harmonize two or more separate contraction clauses to instances where they explicitly cross-reference each other. Indeed, to interpret the credit provision as negating the child support promised for each child in the preceding provision would be an untenable construction, and the absurd result we are admonished against producing.

Concur — Sweeny, J.R, Mazzarelli and Webber, JJ.