June 15, 2011

Divorce Do-Over

Posted in Divorce tagged at 11:26 pm by demetriagraves

Wouldn’t it be nice to get a divorce do-over if you’re not happy with the outcome. Like when you paint a room, and then decide later that you just can’t stand the color and need to repaint. Or when you have your hair done but the final result doesn’t really meet your expectations. So you visit another hair stylist and hope for a better result. But, as you might expect, in divorce, it’s not so easy to “try again.” In divorce, no one usually gets a do-over. Of course, some people have a hard time accepting the kind of finality that comes along with a signed settlement.
An interesting case that raises the question of a divorce do-over is the divorce between Steven Simkin and Laura Blank. This case seemed to be more or less standard-fare when it was settled back in 2006 – despite the fact that he is a partner at one of the country’s most prominent and powerful law firms and the division of property involved millions of dollars of assets. Like most non-celebrity divorces, it’s likely that this one would have stayed out of the limelight, except for one thing: Steven Simkin is now requesting a do-over.
After the divorce, Simkin continued to keep a sizeable amount of money invested with Bernard Madoff. By contrast, Blank was no longer interested in keeping any of her money with Madoff, and she opted instead to receive her divorce settlement proceeds in cash (some $6.6 million).
Although Simkin continued to invest with Madoff after the divorce was finalized, now that the Ponzi scheme has been exposed, he’s arguing that he is the victim of fraud. Reportedly, Simkin’s assets have diminished considerably and as a result, he has filed court papers to revise the terms of his divorce settlement.
The cornerstone of Simkin’s suit is a legal term called “mutual mistake”, by which an error of both parties to a contract leads to the identical misconception concerning a past or existing fact. But, is this contract law principle enough to cancel the terms of a divorce settlement? Divorces are settled every day based on an estimation of asset value. Every day, asset evaluations are completed.  Terms are set. Compromises are made. Divisions are agreed to. Divorces are finalized.
Of course, in certain cases spousal support and child support can be modified(either up or down) when due to a substantial change in financial circumstances. However, changing a property settlement agreement and the division of assets was thought to be impossible. However, this case seems to be changing that view. At first, a trial judge dismissed Simkin’s suit. However, that decision was reversed by a New York Appellate Court that ruled 3-2 in favor of Simkin.
So the case is back in the courts again and many now see it as a landmark test for contract law. If the Simkin-Blank settlement can be re-opened, why can’t others? Every divorce settlement involves the evaluation of current assets, and there’s an implicit understanding that the value of certain assets may change over time. Can settlements be revised whenever one party suffers a loss? What happens when one party benefits from a significant gain?
Stay tuned. This case has intrigued family law attorneys and other divorce professionals for months, and it looks as though the debate is going to continue for some time.
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