Flipping a Chef’s Prenup

According to this article, as part of her pending divorce action with chef Bobby Flay, actress Jennifer March, intends to challenge the prenuptial agreement which could otherwise limit what either March or Flay would be entitled to receive incident to a divorce or the death of a party.  Through a prenuptial agreement, parties decide what will happen in the event of the death of one of the parties or in the event of their separation or divorce.  The purpose of a prenuptial agreement is to address these issues in a way that differs from what the law would otherwise provide.  In a divorce context, the parties can decide to include or exclude certain assets from division; they can also decide who gets what either by asset or by percentages; they can decide whether or not someone is going to receive alimony or other financial support.  Basically, as long as the terms of the agreement are not contrary to public policy, the parties can agree to anything that they want.  For example, as reported in that article, it appears that Flay and March agreed in their prenup that he would be obligated to pay her $5,000 per month. It is also possible that they could have agreed that there would be no payment of alimony or support in the event of their separation or divorce.

The aspect of this article which I wanted to home in on was the statement, “March is challenging the prenup on the grounds that Flay allegedly cheated on her with three women, including actress January Jones.” This, of course, raises the question, in what situations can a prenuptial agreement be challenged or set aside. If March’s challenge is successful, then the entirety of the agreement is thrown out and the law where this divorce action is taking place controls. Obviously, March believes that she would receive more from Flay as part of the divorce if the prenuptial agreement were set aside. Otherwise, she would not bother.

Under Pennsylvania law, a prenuptial agreement can only be set aside in very limited circumstances – only in two situations, actually.  If someone wants to challenge a prenuptial agreement in Pennsylvania, that person must convince a court by clear and convincing evidence that

  1. the person challenging the agreement did not execute it voluntarily  OR
  2. before the agreement was signed,
    1. the person challenging the agreement was not provided with “a fair and reasonable disclosure of the property or financial obligations of the other party”;
    2. the person challenging the agreement did not voluntarily and expressly waive, in writing, the right to such financial disclosure; and
    3. the person challenging the agreement did not have adequate knowledge of the property or financial obligations of the other party.

In other words. under PA law, If March was not able to show that she did not sign the prenuptial agreement voluntarily, she would need to prove that she did not know the extent of Flay’s assets, she was never provide the information about his assets, and she did not, in writing, give up the right to know about his assets. If she were to only say, as her pen glided across the signature line of the agreement, “I am so in love, I trust him and I don’t need to know about his assets.”, that would not be enough under PA law. Such a waiver was not in writing.

Note that there is nothing in the law in PA which allows for a prenuptial agreement to be set aside because it is a bad deal.  A party can agree to give up all rights that would arise as part of a divorce, primarily the division of assets and alimony, if that party so chooses.  There is also no requirement that both parties have attorneys.

Based on the quote above, it appears that March is conditioning her challenge of the prenuptial agreement on alleged adultery. However, as the article mentions, there is no known “infidelity clause” in the March-Flay prenuptial agreement. When such a lifestyle clause is in an agreement, it becomes a required condition for some other aspect of the agreement. For example, “If Flay commits adultery, March will receive $10,000 per month in alimony; if March commits adultery, Flay will have no obligation to pay alimony.”  This language actually sets forth 2 lifestyle clauses – each taking into consideration what happens if either party commits adultery.  States may vary as to whether such provisions would be enforceable.

Based on the limited information presented in this article, it does not seem likely that, if this were a Pennsylvania case, March would be able to set aside the prenuptial agreement. There is no indication in the article regarding the failure to provide financial disclosure. Without that failure, this prenuptial would be as solid as one of Flay’s cast iron skillets.

Khloe’s Divorce to be Dismissed?

It is old news that Khloe Kardashian filed for divorce from her husband Lamar Odom back in 2013. According to this article, however, there is a possibility that her divorce action could be dismissed by the Court in Los Angeles. It would appear from this article, that under California law, a party has an affirmative duty to keep a divorce action moving; otherwise, the case could be dismissed. It would appear that she started her action in December 2013 and, if nothing else is filed by the end of April, her case will be dismissed. It is not clear from the article what either Khloe or Lamar will have to file to preclude the dismissal of her divorce action.

So, what would have happened if Khloe had filed her divorce action in Pennsylvania.  In many counties in Pennsylvania, the divorce action is driven by the parties, not by the court system. If either party files the appropriate document, the case moves through the system. If neither party files anything to move a case forward, the case sits dormant if not for months, then for years.   In 2003, a Rule of Civil Procedure was implemented by the Supreme Court of Pennsylvania authorized a trial court to terminate any case “in which there has been no activity of record for two years or more by serving a notice of proposed dismissal of court case.” Pa.R.C.P. 230.2.  Not long after this rule was implemented, county courts were sending our many notices and/or publishing notices regarding which cases would be terminated if there was no activity.  To avoid having one’s case dismissed, a simple “Statement of Intent to Proceed” would be filed with the Court within 30 days of the Notice being sent. If the Statement were filed, the case could sit inactive for another two years before another notice could be sent.  The filing of the Statement of Intent to Proceed was like re-setting the shot clock.

On April 23, 2014, however, the PA Supreme Court issued an order suspending this rule. According to the text of the order that was issued, Rule 230.2 was going to be under “review and revision.” Almost 1 year later, this rule is still suspended.   However, this did not preclude the courts from dismissing inactive cases.  The April 2014 Order from the PA Supreme Court specifically provided that the Court could still proceed under Rule of Judicial Administration (Pa.R.J.A.) 1901.

This administrative rule provides that the county trial courts have the discretion to develop a local rule which provides for the termination to inactive cases.  At least 30 days notice still has to be given before the termination. Instead of their being a universal procedure throughout PA, it was left up to the county.

So where would this leave Khloe if she filed in PA? It would depend upon the county where she filed. If she wants to get a divorce, she or Lamar should move the case forward to its conclusion.

Truly Special Service

In most divorce cases, a party is served with the divorce complaint by mail or through personal service.  As reported in this article, a NY judge allowed a person to be served with notice of a divorce action via Facebook.  Anyone having difficulty serving a divorce complaint on the other side should not start posting things on Facebook and assuming they have good service.

Service is the way in which a person is given notice that a law suit has been initiated.  Some form of notice is required in every type of law suit. This makes sense because a person should know if someone is suing him or her, why the suit is being brought, and what the remedy is that the person is seeking.  Usually, delivering to the defendant a copy of the complaint or other paperwork which initiates the lawsuit provides all of this information.

Under Pennsylvania law, a party starting a divorce action (the plaintiff) can serve the other party (the defendant) by mail. However there are some strict requirements.  Original service, which would include service of an initial divorce complaint, can be completed by mail if it sent by certified mail, for the recipient’s signature only.  If the certified mail is accepted, i.e. signed for by the defendant, there is good service.  The Plaintiff has to sign an Affidavit affirming that the signature on the green card is that of the defendant. If the green card is signed by any other person even if that person lives with the defendant, it is not good service and other means have to be taken to properly serve the defendant.

If the certified mail is unclaimed, which happens in many situations, it is also not good service.  If the certified mail is refused, if the same documents were sent to that same address by regular mail, and if the regular mail does not get sent back because there is no one living at that address with name of the defendant, then there is good service. The presumption is that the intended recipient of the mail is the person who refused to sign for the certified mail. It is important to keep in mind that refused certified mail, which means the intended recipient affirmatively refused to accept the mail., i.e. told the mail carrier that he or she is not going to sign for the certified mail, is only good service if regular mail sent to that same address does not get returned. In more than 25 years of practice, I think I have had certified mail refused twice. Someone simply not being home to sign for the certified mail or not going to the post office to sign for the certified mail does not make it “refused”; rather it is just “unclaimed.”

So what is the average person in Pennsylvania to do if the certified mail is unclaimed. The person has to look into having the documents personally served by any adult who is not the Plaintiff. A process server or private investigator can be hired to do this. Actually, under the Pennsylvania Rules of Civil Procedure, any adult who is not the Plaintiff can do this.

If personal service is not successful, as in the article referenced above, the Plaintiff has to file a Petition for Special Service. That special service can be to have a notice published in the local newspaper of general circulation, i.e the major newspapers in that area, or service at the address of a relative who is likely to have contact with the defendant, or service at the defendant’s place of employment.  The person asking for permission to specially serve the defendant can be creative in offering suggestions to the Court. Those suggestions need to be likely to get the defendant’s attention; there needs to be some likelihood that the defendant will see the paperwork or receive notice that the divorce action has started.

In Philadelphia, before one files a petition for special service, there are numerous steps that must be taken. The person seeking special service needs to have confirmed the defendant’s address with the US Post Office, which is a simple form. The plaintiff needs to check with local Board of Elections to see where the Defendant is registered to vote. The Plaintiff has to check with the Pa Department of Transportation to find out the address associated with the Defendant’s driver’s license.  There is a list of steps that the Plaintiff must take before filing the Petition for Special Relief.  It would appear from the facts set forth in that article that NY has similar requirements.

When all the required steps have been exhausted and the defendant still can not be served, then a person can file for special service.  In this particular case, the plaintiff was fortunate to know that the defendant has a Facebook account which he checks on some regular basis. Otherwise, the plaintiff may have had to resort to other, more expensive options.

The novel solution in this New York case is not going to apply to every other divorce case. However, it does provide an additional option where all other options have been exhausted.

Looking at Divorce with Big Eyes

January 12, 2015 Leave a comment

Although I have not yet seen the movie Big Eyes, I am familiar with the premise of the movie. This movie tells the story of the relationship between Margaret Keane and her second husband, Walter Keane. Ms. Keane is known for her paintings (usually of children) with very large eyes. This “based on a true story” film, shows the rise in popularity of the paintings, how Walter took credit for the paintings, and how Margaret eventually brought a law suit to reclaim her own artwork.

The purpose of this blog is not to provide a review of the movie, but rather to look at certain facts in this story through the lens of current Pennsylvania Family Law. So, let’s posit that we have a couple. One of the spouses is a prolific painter. The other is not. (Let’s avoid the whole aspect of one person taking credit for the paintings of the other). Let’s also assume, the parties are divorcing, which is what the Keanes actually did. How could these paintings be treated?

There are several ways that this situation could be considered.  First, the paintings could be considered as personal property, like any other piece of art owned by either of the parties. If the artwork came into the possession or control of either or both parties at any point between the date of the parties’ marriage and the date of their final separation, there would be a presumption that the artwork was marital property subject to equitable distribution.  It would not matter which of the spouses painted the picture; the time when the painting came into existence would determine whether or not the painting was marital property.

Whether either party created the painting would go to the value of the asset. So, if one spouse were an established painter, that piece of artwork may have a greater value than the art created by the unknown artist.  If one spouse were the actual painter (Margaret) and the other spouse was taking credit for the paintings (Walter), then if it was eventually disclosed that Margaret was the actual painter, it could have an impact on the value of the paintings.  Further, under this analysis, the marital estate would only include those paintings owned by the parties that were not yet sold. Walter would have no claim to the future paintings.

It is also possible, that this painting enterprise can be viewed as a business. It would depend upon how the parties operated it. If there was also posters, postcards, refrigerator magnets, t-shirts, etc. using designs from the paintings, being sold by the parties or being sold on their behalf, the parties probably established some type of corporation to protect their personal assets.  There might have been a corporation, LLC, a partnership or some other business entity established to pitch these wares.  In such a case, the unsold paintings could be considered inventory owned by the business. The business itself would also have a value with or without the inventory.

However, under Pennsylvania law, personal goodwill is not an asset subject to equitable distribution. Personal goodwill is the additional value that a company has due to the efforts of a specific person. Without that person’s involvement, does the value of the business change? For example, suppose someone always goes to the same person to get his or her hair cut. If that barber/hairdresser changes locations, does that person go to the new location? If the answer is yes, then there is some personal goodwill connected to that barber/hairdresser. If that same person goes to a particular location for a haircut because of the price or where it is located, then personal goodwill is not a factor.  In the present situation, the question then becomes what would this business be worth without the painter in the picture. Could the business be sold without the painter creating the underlying artwork? It may still have a value is it were possible to license out the mass production of the posters, cards, etc. based on the paintings.

In addition, one of the factors that the Court considers when dividing the marital estate is the ability of each of the parties to acquire assets in the future. The ability of the painter-spouse to continue creating artwork that sells would be a factor that the Court would have to consider when dividing the marital estate. Until what age can someone continue to paint? For how long would there still be a market for the artwork and the other merchandise?

The purpose of this posting is not to answer all of these questions. There are so many other facts and factors that would go into answering these questions.  Rather, I wanted to offer something to consider when watching the movie or reading about the legal drama that took place between the Keanes.

 

A New Day is Dawning

October 28, 2014 Leave a comment

I remember back when I was first starting to practice law. At that time, there were three possible locations for a family law matter in Philadelphia: some matters were in City Hall, some were at 1801 Vine Street, and other matters were at 1600 Walnut Street. At some point in the 1990’s, Family Court was to be consolidated into a single building: 34 South 11th Street. This location was just to be for Domestic Relations Matters. Juvenile and Dependency proceedings and Adoption proceedings were to remain at 1801 Vine Street. Since that move, the needs of Family Court in Philadelphia have expanded – or at least there was a recognition that it would be better for people to use different entrances to different aspects of Family Court instead of walking through the maze of hallways that connected 34 South 11th Street (main court building), 42 South 11th Street (custody and divorce masters), 27 South 12th Street (support masters and some judicial chambers), and 1133 Chestnut Street (court filings). All of these addresses have been used by Family Court in Philadelphia for different proceedings.

All that is changing in the next few weeks. The new Family Court building, which is going to be named after Justice Ronald Castille, will be open for business on November 17, 2014. The new building is located at 1501 Arch Street. It is a single multi-level building which will house ALL of Family Court – Domestic Relations and Dependency. Family Court will be closed from November 7th through November 14th as the courthouse files and other things are physically moved and the new courthouse is set up.

Things may be hectic for parties who have been scheduled for hearings in the old buildings as they will be getting notices of the new location (if not a new date) for their court appearances.

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Maybe I am just being picky….

There is a new reality-TV show on Bravo called “Untying the Knot” In this show, matrimonial attorney Vikki Ziegler, Esquire, who practices law in  New York and New Jersey at the firm of Ziegler and Zemsky LLC, works with clients on the resolution of the economic issues related to the dissolution of their marriage.  From what little I watched from the only two episodes that have aired, the show does not deal with the litigation of divorce matters such as the division of marital property and alimony. Rather, the program promotes Ms. Ziegler as a mediator.  This is where I have a slight issue with the program, so far.

When I was trained as a mediator, I was taught that the mediator helps facilitate communication between the parties and helps the parties come to a resolution on the issues. In the most recent episode that I watched, Ms. Ziegler ascertained the issues, i.e. which items of personal property still need to be divided. Okay – so far so good. She then obtained independent valuation of those assets. Not something that mediators usually do. If the parties come to an understanding as to what an item is worth, then that is usually the value that is used. I can understand a mediator asking the parties to get appraisals if there is a dispute as to the value. But, for the purpose of making the show more entertaining, I can accept this aspect of the show.

Toward the end of the 30 minute program, however, Ms. Ziegler announced her decision as to which assets each person would receive. WHOA! That is not what a mediator does. The mediator does not decide who gets what assets. The mediator does not even offer an opinion as to who should get what.  An arbitrator can decide issues for the parties.  An arbitrator could decide who gets what assets, but not a mediator. Mediation is a process than enables the parties to decide the resolution of their issues. A simple explanation of what mediation is can be found here.

I don’t begrudge Ms. Ziegler how she operates her practice and the services she offers her clients. I am concerned, however, that people will get the wrong impression about the role of a mediator. Parties who enter into mediation thinking they have to convince the mediator that they are right will be missing the point of mediation. If parties do not fully understand what mediation can and cannot do, perhaps they should not be mediating.

If a reality TV show is going to be promoting someone as a mediator, then the person should be mediating not making decisions for the parties. There are other reality shows where one person makes a decision for the parties: Judge Judy, The People’s Court, et al. The reality of what a mediator does should not be obscured to make more entertaining television.

Coming up on the end of another year

November 22, 2013 3 comments

As I write this post, Thanksgiving Day is less than a week away. Christmas and New Years Day will be upon us sooner than we would like. For many this is the time of the year when people get together with their families (family of birth, or family by choice) to enjoy the holidays.

For married couples who are separated, this can be a difficult time of year. When there are children involved, there can be squabbles about where the children should be for the holiday. Parents can’t afford to get what they want for their children because they do not have enough money. Children are often caught in the middle as they want to spend time with both parents. The better thing for parents to do is work out as many of these issues in advance and outside of the hearing of the children. Better to work out the pick up/drop off time and place for Thanksgiving a few days before the holiday as opposed to resolving it on Thanksgiving Day.

For divorcing parties who have no children or for whom there are no problems regarding custody, the end of the year can have an important impact for tax purposes. For federal income tax purposes, a person’s filing status is determined by that person’s marital status as of December 31st. If a divorce decree is not entered before 12/31, then the parties can either file jointly or “married filing separate.” For some individuals, they want to rush that divorce decree to make sure it is entered before the end of the year. For others, they prefer to delay the entry of the divorce decree until after December 31st. If you are not sure which way is better for you, you should consult your attorney and/or an accountant.

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