Chapter 39 COUNSEL FEES
Jurisdiction | New York |
Chapter Thirty-Nine
Counsel Fees
I. Counsel Fees As Creatures of the Legislature; Strict Construction; Counsel Fee Awards Are Unavailable In Actions to Rescind Agreements
In this state, and indeed, in the rest of the country, the longstanding American rule precludes the prevailing party from recouping legal fees from the losing party except where authorized by statute, agreement or court rule.6195 New York public policy disfavors any award of attorney fees (and experts' fees) to the prevailing party in a litigation.6196 Under the general rule, attorney fees are incidents of litigation, and a prevailing party may not collect them from the loser unless an award is authorized by agreement between the parties, statute or court rule.6197 The rule is based upon the high priority accorded free access to the courts and a desire to avoid placing barriers in the way of those looking for judicial redress of wrongs. The preferred remedy for deterring malicious or vexatious litigation has been the use of separate, plenary actions after the challenged proceedings have concluded.6198
The counsel fee in matrimonial proceedings is a creature of statute and unknown to the common law.6199 At common law the courts of this state had no jurisdiction over matrimonial matters.6200 As creatures of the Legislature, divorce and ancillary relief are determined by statute and thus require strict compliance;6201 counsel fees may thus only be awarded in matrimonial actions as defined in Domestic Relations Law § 237 (DRL):6202
In any action or proceeding brought (1) to annul a marriage or to declare the nullity of a void marriage, or (2) for a separation, or (3) for a divorce, or (4) to declare the validity or nullity of a judgment of divorce rendered against a spouse who was the defendant in any action outside the State of New York and did not appear therein where such spouse asserts the nullity of such foreign judgment, or (5) to enjoin the prosecution in any other jurisdiction of an action for a divorce, the court may direct.
A. Counsel Fees May Not Be Awarded to Rescind an Agreement
Although a voidable agreement may be set aside under principles of equity in an action in which such relief is sought in a cause of action or by way of affirmative defense,6203 since an action for rescission of an agreement is not a matrimonial action under DRL § 237,6204 attorney fees are not available.In addition to DRL § 237, DRL § 238, "expenses in enforcement and modification proceedings," identifies other actions and proceedings for which counsel fees are available:6205 § 238 references DRL § 243 ("security for payments by defendant in action for divorce, separation or annulment; sequestration"6206); § 244 ("enforcement by execution of judgment or order in action for divorce, separation or annulment"6207); § 245 ("enforcement by contempt proceedings of judgment or order in action for divorce, separation or annulment"6208); and § 246 ("persons financially unable to comply with orders or judgments directing the payment of alimony"6209); none of which statutes references enforcement of an agreement. Nevertheless, an argument can be raised in favor of the theory that fees for enforcement of an agreement are statutorily justified.
B. Counsel Fee Awards to Enforce or Oppose a Prenuptial Agreement
Although decisional authority statewide has been unanimous that counsel fees may not be awarded to a party who seeks to rescind an agreement, case law has, without explanation, illogically evolved to authorize counsel fees to a plaintiff to oppose an agreement where the agreement is first raised by the defendant as an affirmative defense or in a counterclaim, the plaintiff not having mentioned it in the complaint.6210
There is no case explicating the difference between seeking rescission of and opposing an agreement asserted in an affirmative defense or in a counterclaim because their practical effect is the same, to wit, the invalidation of either the entire agreement. While an incomplete complaint that does not acknowledge the existence of an agreement is, for all intents and purposes, deceitful,6211 case law, nevertheless, rewards that plaintiff with eligibility for a counsel fee award.6212
1. First Department, Karg v. Kern (2015): Fees Awarded to Oppose Affirmative Defense of an Existing Prenuptial Agreement and to Enforce Agreements
In 2015, the First Department, in Karg v. Kern,6213 citing Van Kipnis v. Van Kipnis,6214 upheld an award of counsel fees arising from litigation over the parties' prenuptial agreement because "plaintiff was not precluded from recovering legal fees under DRL § 237 for services provided in opposing defendant's affirmative defense predicated on the prenuptial agreement." As discussed above, no branch of either DRL § 237 or DRL § 238 authorizes counsel fee awards to oppose an agreement.
2. First Department, Stephenson v. Stephenson (1986): Upheld a Counsel Fee Award to Enforce an Agreement
In 1986, in Stephenson v. Stephenson,6215 the plaintiff-former husband commenced an action to rescind and reform a separation agreement subsequently incorporated into a judgment of divorce. The defendant-former-wife counterclaimed for maintenance arrears under the judgment of divorce. The Supreme Court granted the wife's motion for summary judgment dismissing the husband's action, and granted her counterclaims for arrears and counsel fees.
The Appellate Division correctly noted that "pursuant to the Domestic Relations Law, the court may, in its discretion, award attorney fees for the prosecution or defense of an action to annul or modify an order or judgment for alimony (DRL § 237[b]) or for the prosecution or defense of an action to compel the payment of money required to be paid by a judgment or order entered in a divorce action (DRL § 238)"—Stephenson did not need to venture further. Nevertheless, the court added: that "defendant endeavored to defend the validity of the separation agreement, as incorporated into the judgment of divorce, and to enforce its terms." The court reasoned that "instead of complying with the maintenance provisions of the agreement, the plaintiff instituted an ultimately unsuccessful rescission action, forcing his ex-wife into the position of having to seek arrears through a counterclaim." However, under DRL § 237(b), relief to the wife was statutorily available independent of the husband's action to reform and rescind the agreement because her claim was specifically grounded on the husband's noncompliance with the judgment, not the agreement.
Stephenson further held: "[the ex-wife] was the one seeking to uphold the agreement and, in that regard, her defense of the rescission action was inextricably entwined with her effort to enforce the maintenance terms of that agreement. As such, she is entitled to receive counsel fees under Domestic Relations Law 237(b) and 238." The former-wife fought two discrete battles: the battle to uphold the judgment which incorporated the agreement, for which statutory counsel fees are available, and the action to rescind the agreement.6216
In Trento v. Trento,6217 the Fourth Department, citing Stephenson, rejected another stratagem to deny the other spouse attorney's fees: the husband characterized his complaint for a downward modification of support as one for declaratory relief.
3. Second Department, Rosenthal v. Rosenthal (2017): Party who Defended an Agreement Denied Counsel Fees
In Rosenthal v. Rosenthal,6218 the Supreme Court, following a hearing, denied the defendant's motion to set aside the parties' stipulation of settlement. Thereafter, the plaintiff, who defended the agreement, submitted an application for an award of counsel fees. The Second Department reversed the fee award because, under the general rule, the prevailing party in litigation may not collect his or her counsel fees unless supported by statute, court rule, or written agreement of the parties. The ruling inherently held that defense of an agreement is statutorily ineligible for an award of attorney's fees.
4. Second Department, Hof v. Hof (2015): No Counsel Fees to Enforce or Rescind an Agreement
In 2015, in Hof v. Hof,6219 a fact bare decision, the Second Department held: "Domestic Relations Law § 237 does not provide for an award of counsel fees in actions to enforce or rescind prenuptial agreements." Hof cites Schapiro v. Schapiro,6220 which cites Lamborn v. Lamborn,6221 each of which denied attorney fees.6222 However, Hof did not cite Van Kipnis v. Van Kipnis,6223 a Court of Appeals decision, which had affirmed the Second Department, in Ventimiglia v. Venimiglia6224 (discussed below), that counsel fees may be awarded to oppose an affirmative defense of an existing prenuptial agreement. Otherwise stated, Hof tacitly declined to follow Van Kipnis and Ventimiglia. Furthermore, Hof also conflicts with a prior ruling from the same court decided only one year earlier.6225
5. Second Department, Hackett v. Hackett (2014): Awarded Counsel Fees to Enforce an Agreement
In Hackett v. Hackett,6226 decided only one year before Hof, the Second Department, citing DRL § 238, reached a different conclusion. Therein the plaintiff had commenced an action to reform the parties' settlement agreement on the ground that a mutual mistake resulted in the unequal division of the marital assets. The Supreme Court reformed the agreement. The defendant also requested an award of counsel fees in connection with her defense of the terms of the settlement agreement and her counterclaims for enforcement of certain of its provisions. The Second Department held that the defendant should have been awarded "a counsel fee since she incurred counsel fees in seeking to uphold and enforce the valid settlement agreement."
Hackett cited Montero v. Montero6227 and Stephenson v. Stephenson6228 (the First Department, above). In Montero, the parties had orally placed a stipulation of settlement on the record concerning, inter alia, the distribution...
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