Daniela Di Francesco v. Conor McEnroy
Attorneys and Parties
Brief Summary
Family law—enforceability of marital separation agreements and the scope of a confession of judgment (COJ) used as security for support obligations.
The trial court dismissed plaintiff’s claims for rescission, to set aside the settlement, and for breach of fiduciary duty/accounting, but allowed the cause of action seeking entry of judgment on defendant’s confession of judgment to proceed.
The Appellate Division reversed the portion of the order that allowed the COJ claim to proceed and dismissed that claim as well.
The COJ secured defendant’s obligations for a distributive award and monthly maintenance pending establishment of a trust. The distributive award was fully paid and maintenance payments were ongoing; the agreements limited plaintiff’s remedy upon default to unpaid maintenance and contained no language deeming failure to establish the trust a default or authorizing acceleration of the entire COJ.
Background
The parties executed a 2018 separation agreement providing for a distributive award and ongoing maintenance, and contemplated defendant establishing and funding a trust for plaintiff’s benefit. Defendant executed a confession of judgment (COJ) as security for those obligations pending the trust’s creation. Plaintiff accepted substantial benefits, including six years of maintenance and a distributive award exceeding one million dollars paid in May 2020. Plaintiff later sued seeking rescission/avoidance of the agreement and entry of judgment on the COJ, asserting defendant failed to establish the trust within five years.
Lower Court Decision
Supreme Court, New York County (Lyle E. Frank, J.) granted defendant’s motion to dismiss the rescission, set-aside, breach of fiduciary duty, and accounting causes of action, but denied dismissal of the COJ cause of action.
Appellate Division Reversal
The Appellate Division modified to dismiss the COJ claim and otherwise affirmed. It held plaintiff ratified and is estopped from challenging the separation agreement by accepting its benefits over several years. As to the COJ, the court found no default or contractual basis for acceleration: the distributive award had been paid, maintenance was current, and the agreements did not make failure to establish the trust a default or permit recovery of the full COJ amount absent a maintenance default, in which case only unpaid maintenance would be recoverable.
Legal Significance
Acceptance of substantial benefits under a marital settlement constitutes ratification and estoppel against later challenges to the agreement’s validity. A confession of judgment securing support-related obligations cannot be used to accelerate or collect the entire secured amount absent explicit contractual default and acceleration terms; absent a payment default, the remedy is limited to amounts actually unpaid.
Parties who accept benefits under a separation agreement cannot later rescind it, and a confession of judgment given as security for marital obligations cannot be accelerated without clear contractual language or an actual payment default.