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New York courts throw out prenup signed under allure of false promise

The media has had a field day with the story of divorcing spouses Elizabeth Cioffi-Petrakis and her multimillionaire husband real estate mogul Peter Petrakis. A New York appeals court agreed with a Long Island judge who had found that the couple’s prenuptial agreement, which was very financially disadvantageous for the wife, should be invalidated because the husband induced the wife to sign it by verbal promises that were never kept.

A landmark case

The public response to the Petrakis case has been resounding shock that the court would throw out an antenuptial agreement – something rarely done in New York. New York public policy supports the legal ability of future spouses to enter into a binding contract that can set out carefully negotiated terms by which important issues will be handled in case of divorce, separation or death.

Property division

Maybe the most common issue dealt with by premarital agreements is the distribution of property brought into the marriage by either party or of assets accumulated individually or jointly during the union. For example, one spouse might want a pre-existing family business to stay with his or her family of origin, or a spouse entering into a second or subsequent marriage may want property accumulated during a prior marriage to go to the children from that marriage rather than to the new spouse and possibly to his or her family.

Cioffi-Petrakis v. Petrakis

In the Petrakis case, according to media reports, the multimillionaire husband unsuccessfully had tried to get his future wife to sign an agreement that if they divorced, any property they acquired during the marriage would be his and she would get $25,000 for each year they were married. After her father had spent many thousands of dollars on the wedding and only a few days before the ceremony, the husband-to-be reportedly told her that if she signed it, he would tear it up after they had children, a promise that was never kept.

So Cioffi-Petrakis successfully challenged the agreement based on her husband’s fraudulent inducement to get her to sign it.

Court scrutiny

The appeals court said that when reviewing contracts between potential (or current) spouses, courts should scrutinize them closer than they would with other types of contracts because of the special nature of the marital relationship. A New York court may invalidate a prenuptial agreement if the spouse “challenging the agreement demonstrates that it was the product of fraud, duress, or other inequitable conduct.”

The reviewing court stated further that the trial judge was reasonable when he found that the wife’s testimony had been solidly credible and corroborated by other evidence, and that the husband’s had been evasive and suspicious. Based on the “particular facts” of the case, the appeals court agreed with the lower court that the wife had adequately proven “grounds to set aside the prenuptial agreement.”

Legal advice crucially important

It will remain to be seen whether the Petrakis case was just serious enough to meet the difficult hurdle of proving fraud in the prenuptial agreement context or whether the startling case could signal a new era of closer scrutiny of such contracts.

In the meantime, anyone in New York contemplating a prenup before marriage or facing divorce with a premarital agreement already in place should speak with an experienced and knowledgeable New York family law attorney who follows the complex path of the relevant law and groundbreaking cases like Petrakis.