Oberstein v. Oberstein

Sullivan, J. (dissenting).

In April, 1982 the husband, alleging that the parties had, pursuant to a separation agreement, lived separate and apart for more than a year, brought this action for a conversion divorce to terminate a 14-year marriage which had produced one child, a daughter now eight years of age. The wife interposed two “affirmative defense[s] and counterclaim[s]”. The first seeks rescission of the separation agreement on the ground that, distraught and without the benefit of counsel and advice, she signed an inherently unfair and inequitable agreement which had been drafted by an attorney chosen by her husband. The second seeks modification of the separation agreement based on the parties’ mutual mistake in failing to made adequate provision for the child and to provide for equitable distribution of the marital property in accordance with the law then in effect. The separation agreement was executed on October 21,1980, three months after the effective date of the Equitable Distribution Law (Domestic Relations Law, § 236, part B). The wife also asks for an increase in child support from the $300 per month provided in the separation agreement, and maintenance for herself. The separation agreement had made no provision for maintenance payments to the wife, who earns in excess of $30,000 per annum as a speech pathologist.

Simultaneously with the service of her answer, the wife served the husband with a notice of oral examination as to his “financial state”. The denial of the husband’s motion to vacate that notice in its entirety is the subject of this appeal. As reflected by her affidavit opposing the motion, the wife alleges overreaching on the part of her husband, a Merrill Lynch sales manager, who, by concealing his financial affairs, denied her access to information essential to fair and proper provision for her and her daughter.

We all agree that the Equitable Distribution Law (Domestic Relations Law, § 236, part B), applicable to matrimonial actions commenced after July 19, 1980, saps the vitality of the rule barring financial disclosure in a matrimonial action unless and until the support provisions of an existing separation agreement are set aside (see Shiffman v Shiffman, 57 AD2d 519; Gleeson v Gleeson, 69 AD2d 964, mot for lv to app dsmd 47 NY2d 709). We part company, however, with the majority when it concludes that this is not the appropriate case for such disclosure.

That a piece of legislation as enlightened as the Equitable Distribution Law contemplates a greater liberality with respect to pretrial financial disclosure in matrimonial actions would appear to be beyond dispute. The new law recognizes marriage as “an economic partnership”, the dissolution of which causes severe economic repercussions on spouses and children. (See Governor’s Memorandum of Approval, McKinney’s Session of Laws of NY, 1980, p 1863.) Consistent with that approach, section 236 (part B, subd 5, par c) provides for the equitable distribution of marital property. Moreover, the maintenance provision of any separation agreement executed after July 19, 1980 must be on terms “fair and reasonable at the time of the making of the agreement and * * * not unconscionable at the time of entry of final judgment” (Domestic Relations Law, § 236, part B, subd 3). No longer does the efficacy of a maintenance provision in a separation agreement turn solely on whether the agreement was unconscionable when made or the result of fraud, undue influence, duress or overreaching. (See, e.g., Christian v Christian, 42 NY2d 63; Gorman v Gorman, 87 AD2d 674.) Now the fairness and reasonableness of the separation agreement with respect to maintenance are, when challenged, critical issues at the outset of any matrimonial action and, although thitherto insulated from disclosure unless and until the separation agreement was set aside, appropriate subjects for relevant inquiry. While it is true that, probably due to clerical error (see Scheinkman, Practice Commentary, McKinney’s Cons Laws of NY, Book 14, Domestic Relations Law, C236B:5, pp 119-120), the fair and reasonable and not unconscionable standard appears only in the paragraph of section 236 (part B, subd 3) which deals with maintenance, and not in the property division and child support clauses of the same subdivision, the latter provisions are, in any event, subject to the traditional challenges of fraud, concealment and overreaching.

In our view the wife who, through her counterclaims, has squarely placed in issue the fairness, reasonableness and impartiality of the support and maintenance terms of the separation agreement, is entitled to the financial disclosure she seeks. We are not suggesting that the new law commands broad financial disclosure even before the separation agreement is set aside in every case where an assertion of unfairness and overreaching is made, but, here, the wife has shown enough to warrant the relief sought. She has alleged that, emotionally distraught, without independent legal representation, and the victim of her husband’s concealment, she could not make an informed decision regarding the settlement of the financial affairs of a theretofore intact 13-year marriage, and that the agreement failed to provide adequate maintenance for her and support for the child. Unless she is allowed to develop, by pretrial disclosure of the husband’s finances, the allegation of concealment, an issue to which he does not address himself, she will be unable to make her case.

While we can appreciate the public policy considerations underlying the majority’s concern that some degree of finality should be accorded separation agreements, those considerations are valid only if the parties have entered the agreement with full knowledge of all the facts. The wife alleges concealment and overreaching. The husband’s only response is to rely on the sanctity of the agreement as a bar to any financial disclosure. Milts v Milts (87 AD2d 779), decided by this court and cited by the majority involves an October 14, 1976 separation agreement to which the “fair and reasonable [when made] and * * * not unconscionable at the time of entry of final judgment” standard does not apply. (See Domestic Relations Law, § 236, part B, subd 3.)

The husband also contends that, in any event, the wife’s notice' of examination exceeds the permissible scope of inquiry since, at least as to Federal and State income tax returns, it calls for the production of financial records for the years 1976 through 1981, inclusive. In arguing that section 236 (part B, subd 4) of the Domestic Relations Law limits disclosure “to a three year period or the length of the marriage, whichever is shorter,” the husband distorts the statute which applies the three-year limitation to only the “net worth” statement. In Ponard v Ponard (52 AD2d 564), decided under former section 250, the predecessor to section 236 (part B, subd 4), this court determined that a wife could inquire into a husband’s finances for the four years that they were living separate and apart and during which she was unaware of his financial status. (See, also, Garrel v Garrel, 59 AD2d 885; but see Epstein v Epstein, 21 AD2d 799, in which financial disclosure was limited to a two-year period preceding commencement of the action.) We agree, however, that the wife is not entitled to the 1981 returns since they are irrelevant to her claim that she was deceived as to the true state of her husband’s financial affairs at the time the separation agreement was executed on October 21,1980. (See Potvin v Potvin, 92 AD2d 562.) For the same reason the scope of the deposition should not extend beyond 1980. Since, however, the Equitable Distribution Law recognizes marriage as an economic partnership, the tax returns of a party for the last five years of a marriage of over 13 years’ duration would appear to be relevant.

The demand for the other enumerated documents is apparently limited to the current year, which would be 1980, the year the parties separated. Nor is the demand unnecessarily burdensome in its enumeration of the documents sought. CPLR 3101 (subd [a]) requires “full disclosure of all evidence material and necessary in the prosecution or defense of an action”. The husband fails to show how the production of income tax returns and statements of brokerage or investment accounts, pension profit sharing or stock option plans and evidence of value of any proprietary interest in real or personal property would be so burdensome or oppressive as to warrant the court’s intervention.

Accordingly, the order of Special Term denying the motion for a protective order should be modified only to the extent of limiting the scope of the deposition to the financial condition of the husband at the time of the execution of the separation agreement and limiting production of income tax returns to the years 1976 through 1980, and the production of the other enumerated documents to the year 1980 and, except as thus modified, affirmed.

Kupferman, J. P., and Lynch, J., concur with Kassal, J.; Sandler and Sullivan, JJ., dissent in an opinion by Sullivan, J.

Order, Supreme Court, New York County, entered on September 16, 1982, modified, on the law, without costs and without disbursements, the motion for a protective order granted only to the extent of deleting from the notice any direction to produce documents concerning plaintiff’s finances and limiting the deposition of plaintiff to preclude any examination as to his finances, without prejudice to such other further proceedings as the parties may deem advisable upon a proper and sufficient factual showing to evidence a ground to modify or vacate the support provisions of the separation agreement, and otherwise affirmed. The examination shall be held on a date and time mutually agreed upon by the parties.