This author is not much for the world of Hollywood although this law firm does have an office there. But in reviewing the general news of the day, the screen divulged that the divorce involving Halle Berry and Olivier Martinez is now on hold, nine months after that party started.

This is a new phenomenon affecting the ordinary world as well. We have several cases where the parties have either found a reason to stop the presses of divorce filings or just take a pause to refresh.

In olden times, like the 20th century, a break in the action was very rare.  Once a split occurred both parties tended to pound away until the case was either litigated or settled.  There was no “Finland” or Christmas 1914 when soldiers from the Allies and Axis gathered to sing “Silent Night”.  But today, people are doing a better job of taking stock in the havoc that divorce can wreak and sometimes they realize that things were not as bad as they seemed or that the man or woman who may have enticed a separation was not “the best” or even “better.”

The problem with a break is a financial one. For people securing divorce, trust levels are low and the job of the lawyer is to identify the assets that existed at or about the time of separation and make certain they don’t disappear.  That can be hard enough to do when the couple are unhappily split but when they re-unite only to divide once again, it is the task of the lawyer and the forensic accountant to make certain that during the Summer of Love or reconciliation no one stole or dissipated the assets to be divided.  In many instances as well, reconciliation prompts decisions to buy a new home or to take the dream vacation that the couple always wanted.  If the marriage survives, the couple can typically absorb that financial wave.  But if things don’t work out, the financial burdens are now greater and, as we all know, houses can’t be split down the middle.

So if you decide to take a break either from exhaustion or out of renewed affection, just be certain to keep it real and maintain very careful records of your assets and expenses.

One other note. There certainly was plenty of news during the Johnny Depp/Amber Heard controversy that erupted this spring with allegations of physical violence.  What made this matter all the more interesting is the fact that for both participants there was a lot at stake.  Here were two people with enormously lucrative star power whose agents no doubt grimaced when the abuse case was filed.  The risk was that either or both would be found to be violent or dishonest in their statements as to what occurred.  The public tends to be tolerant of what celebrities do but no one ever got a lucrative role for unsocial behavior.  Although there was a dust up at the end about “how” Depp paid the settlement, the end was otherwise peaceable and the brand names remain bankable.  Even real world clients need to realize that while there is undeniable power in getting out the whole truth that truth can come with very drastic consequence.

Eric Solotoff, a partner in our Roseland, New Jersey office and editor of our New Jersey Family Law Blog recently posted a blog entry on bad faith negotiating and its detrimental effect on settling cases. Eric’s point is well taken: there are times in family law cases when people lose sight of their goals and try to land a (proverbial) shot on the other person. Empty demands, veiled threats, and open hostility become the rules of the game rather than honest discussions on finding a resolution and that rarely leads to a satisfying outcome for either side or their counsel.

Following up on Mark Ashton’s “celebrity” themed blog entry on the Los Angeles Dodgers’ ownership, another high profile individual is having a residual effect on divorces: Bernie Madoff.

Mr. Madoff’s crimes are well-documented and high profile. His arrest has given rise to a media niche on scan artists, including Montgomery County’s own “Madoff”, Robert L. Krikorian, who was recently convicted of a Ponzi scheme and sentenced to three to seven years in jail for bilking investors out of (a paltry) $870,500.00 over about four years. If you rip off your investors you are labeled a “Madoff.”

But in being duped, should people get the chance to redo the a Marital Settlement Agreement negotiated and executed years before the fraud was discovered? That is the question being asked in New York where a well-heeled couple split their assets in 2006, including a large investment account with Madoff. Wife pulled her money from the investment, while Husband kept his in. You probably can guess what happens next: Husband’s money gets lost in the Madoff scandal while Wife continues to live well in her Upper East Side apartment.

 

The question before the New York bar is whether Husband can sue to have the Marital Settlement Agreement reopened and the funds Wife retained redistributed to account for his Madoff loses. Sides are being taken in this dispute and many practitioners view a favorable outcome to Husband as having wide reaching implications to contract law and beyond; it calls into question whether a deal is ever really “done.”

 

The crux of Husband’s case rests on the argument that the parties’ Agreement (contract) is nullified by “mutual mistake;” they were both mistaken by the existence of an account with Madoff. It appears that Husband is arguing in that they were both mistaken their belief that they had an account containing millions of dollars with Madoff. – the Madoff fraud proves they, in fact, had no “account” with Madoff. So, even if they had moved $1 million dollars over to Madoff, they really weren’t investing it. Madoff stole just stole it…except for the $6.6 million cash payment Husband swung over to Wife from the account.

 

This case basically sets up the possibility that events subsequent to an agreement could allow for a total reexamination of the deal. Interestingly, we had (have) a national crisis over real estate values (many would argue millions of frauds were committed), yet I am not aware of any parties successfully trying to re-litigate a deal in which they kept the marital residence and off-set its equity value with cash assets. No one is successfully re-litigating their stock holdings that tanked. In my experience, a client and her husband split their stock account when they separated; my client moved her money into cash, while Husband – allegedly a financial guru – keep his in stocks. Two years later, my client has retained most of her money in cash, while husband has lost all of his money to his lifestyle and stock market.  Husband unsuccessfully argued that Wife should bear some of the liability because the assets were marital in nature, but the court held that he was responsible for his portion of the money.

 

In New York, Husband’s case looks, in many respects, as a brazen attempt to capitalize on a highly publicized crime for which neither party had any knowledge or control over. The only control they had was how they decided to invest their individual pieces of the marital estate after the divorce. Wife chose to pull her money out; Husband opted to keep his in. Wife mitigated her risk; Husband appeared to have raised the stakes.

 

After a trial court dismissal, the New York appellate court reached a 3-to-2 decision in favor of Husband’s right to sue to revise the deal based on “mutual mistake.” Whether he will successfully revise the deal remains to be seen.

 

Eric Solotoff, a partner in our Roseland, New Jersey office, recently posted a piece on our New Jersey Family Law Blog about his experience with a mediator who sought to apply “settlement anxiety” on the parties to help force a settlement in the case.


Eric explores the ethical and practical application of “settlement anxiety” in settling cases and it is an interesting topic for practitioners and litigants, alike.