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Supreme Court Should Not Have Denied Motion to Set Aside a Stipulation of Settlement Without a Hearing, Criteria Explained/Lower Court Properly Considered Issues Raised for the First Time in Plaintiff’s Reply Papers Because Defendant Availed Himself of the Opportunity to Oppose the Contentions at Oral Argument

The Second Department determined Supreme Court should not have denied plaintiff's motion to set aside the stipulation of settlement without a hearing.  The court explained the analytical criteria.  (It is worth noting that the Second Department found that Supreme Court properly considered matters raised for the first time in plaintiff's reply papers because the defendant availed himself of the opportunity to oppose the contentions at oral argument.):

“Marital settlement agreements are judicially favored and are not to be easily set aside” … . However, because of the fiduciary relationship existing between spouses, ” [a] stipulation of settlement should be closely scrutinized and may be set aside upon a showing that it is unconscionable or the result of fraud, or where it is shown to be manifestly unjust because of the other spouse's overreaching'” … .

“To rescind a separation agreement on the ground of overreaching, a plaintiff must demonstrate both overreaching and unfairness” … . ” [N]o actual fraud need be shown, for relief will be granted if the settlement is manifestly unfair to a spouse because of the other's overreaching . . . in its execution'” … . “[C]ourts may examine the terms of the agreement as well as the surrounding circumstances to ascertain whether there has been overreaching” … . However, generally, if the execution of the agreement is fair, no further inquiry will be made … . “[W]hile evidence that one spouse was not represented by counsel is insufficient, standing alone, to find overreaching, it is a significant consideration when determining whether the parties entered into the stipulation freely and fairly” … . “[C]ourts have thrown their cloak of protection [over] separation agreements and made it their business, when confronted, to see to it that they are arrived at fairly and equitably, in a manner so as to be free from the taint of fraud and duress, and to set aside or refuse to enforce those born of and subsisting in inequity” … . Jon v Jon, 2014 NY Slip Op 08961, 2nd Dept 12-24-14

 

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