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Keywords

contractlawsuitsettlementplaintiffappealpleadivorceunjust enrichment
contractsettlementplaintiffdefendantattorneyprecedentplea

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Simkin v. Blank, 19 N.Y.3d 46, 968 N.E.2d 459, 945 N.Y.S.2d 222, 2012 N.Y. Slip Op. 02413

Facts

Steven Simkin and Laura Blank were married in 1973 and divorced in 2006 after nearly 30 years of marriage. They negotiated a detailed marital settlement agreement that included a comprehensive division of assets, with Simkin agreeing to pay Blank $6,250,000. The agreement did not mention a Madoff investment account, which Simkin later claimed was valued at $5.4 million at the time of their divorce. After the Ponzi scheme was revealed in 2008, Simkin filed a lawsuit against Blank, alleging mutual mistake and unjust enrichment regarding the settlement agreement.

Plaintiff Steven Simkin (husband) and defendant Laura Blank (wife) married in 1973 and have two children. Husband is a partner at a New York law firm and wife, also an attorney, is employed by a university. After almost 30 years of marriage, the parties separated in 2002 and stipulated in 2004 that the cut-off date for determining the value of marital assets would be September 1, 2004. The parties, represented by counsel, spent two years negotiating a detailed 22–page settlement agreement, executed in June 2006.

Issue

Whether the plaintiff has presented facts sufficient to support the reformation or setting aside of the parties' marital settlement agreement based on a claim of mutual mistake pertaining to an investment account.

Whether the plaintiff has presented facts sufficient to support the reformation or setting aside of the parties' marital settlement agreement based on a claim of mutual mistake pertaining to an investment account.

Rule

Marital settlement agreements are judicially favored and are not to be easily set aside; a claim predicated on mutual mistake must be pleaded with particularity and must exist at the time the contract is entered into, being substantial enough to undermine the foundation of the agreement.

Marital settlement agreements are judicially favored and are not to be easily set aside; a claim predicated on mutual mistake must be pleaded with particularity and must exist at the time the contract is entered into, being substantial enough to undermine the foundation of the agreement.

Analysis

The court found that Simkin's claim of mutual mistake did not meet the necessary legal standards. The settlement agreement did not mention the Madoff account, and the court determined that the alleged mistake regarding the account's existence was not material to the agreement. The court emphasized that the agreement was carefully negotiated and that the parties had a clear understanding of their assets at the time of the divorce, undermining Simkin's claim.

Applying these legal principles, we are of the view that the amended complaint fails to adequately state a cause of action based on mutual mistake. As an initial matter, husband's claim that the alleged mutual mistake undermined the foundation of the settlement agreement, a precondition to relief under our precedents, is belied by the terms of the agreement itself.

Conclusion

The Court of Appeals reversed the Appellate Division's decision, reinstating the Supreme Court's order of dismissal, concluding that Simkin failed to state a cause of action for reformation based on mutual mistake.

Accordingly, the order of the Appellate Division should be reversed, with costs, the order of Supreme Court reinstated, and the certified question answered in the negative.

Who won?

Laura Blank prevailed in the case because the court found that Simkin did not adequately demonstrate a mutual mistake that would justify reformation of the marital settlement agreement.

Wife argues that the Appellate Division erred in reinstating the amended complaint because the allegations, even if true, fail to appropriately establish the existence of a mutual mistake at the time the parties entered into their settlement agreement.

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