Oral Modifications of Separation Agreements

Separation agreements in matrimonial actions often contain provisions prohibiting oral modification or waiver of their terms. These provisions usually contain language to the effect that 'no modifications, waiver or termination of any of the terms of this stipulation shall be valid unless in writing and executed with the same formality as this agreement.' Despite such language, are there any possible scenarios under which the terms of such an agreement can be modified or waived without a written agreement? The answer may surprise you.

Exceptions to 'No Oral Modification' Provisions

Consider the following fact pattern: The parties in a divorce action enter into a stipulation of settlement, which is incorporated, but not merged, into the judgment of divorce. The stipulation of settlement (the stipulation) provides that the husband is required to pay maintenance to the wife until she remarries or resides with an unrelated male for 30 consecutive days. The stipulation additionally contains a clause providing that no modification, waiver or termination of any of the stipulation's terms shall be valid unless in writing. One year later, upon discovering that his ex-wife was cohabiting with another male for several months, the husband confronts the wife, leading to an oral agreement between the parties that the husband's maintenance obligation will be terminated immediately in exchange for a small lump sum payment to the wife, which is promptly made by the husband. No written agreement is executed, nor is there any modification of the judgment of divorce. Years later, the wife commences an enforcement proceeding against the husband for all maintenance arrears to date.

At first blush, it seems as though the husband has no defense. The general rule, as codified in General Obligations Law ' 15-301, is that a contractual clause requiring a written modification of a contract is enforceable and should be accorded great deference. See Healy v. Williams, 30 A.D.3d 466, 818 NYS2d 121 (2^nd Dept. 2006). Similarly, New York case law has upheld the use of contractual clauses requiring written waivers of contractual provisions. See Reinhardt v. Reinhardt, 204 AD2d 1028 (4^th Dept. 1994); Fox v. Ridinger, 234 AD2d 131 (1^st Dept. 1996). Parties are free to include such provisions in their agreements to protect themselves from spurious claims of modification/waiver by the other party to the contract. However, the respective rules regarding the enforceability of 'no oral modification' and 'no oral waiver' provisions each have a significant exception.

The exception to the enforceability of 'no oral modification' clauses was set forth by Chief Justice Breitel in Rose v. Spa Realty Associates, 42 NY2d 338 (1977):

W]hen the oral agreement to modify has in fact been acted upon to completion, the same need to protect the integrity of the written agreement from false claims of modification does not arise ' Thus, section 15-301 nullifies only 'executory' oral modification. Once executed, the oral modification may be proved '

Where there is partial performance of the oral modification sought to be enforced ' the court may consider not only past oral exchanges, but also the conduct of the parties. But only if the partial performance be unequivocally referable to the oral modification is the requirement of a writing under section 15-301 avoided '

Analytically distinct from the doctrine of partial performance, there is the principle of equitable estoppel. Once a party to a written agreement has induced another's significant and substantial reliance upon an oral modification, the first party may be estopped from invoking the statute to bar proof of that oral modification ' conduct relied upon to establish estoppel must not otherwise be compatible with the agreement as written [citations omitted.

Thus, where an oral modification to an agreement is either fully or partly-performed, a party may prove and enforce the oral modification based on the doctrines of partial performance and equitable estoppel, which serve to override any proscription against oral modification contained in the original agreement.

Does the exception to the enforceability of 'no oral modification' clauses as articulated in Rose v. Spa Realty Associates apply to matrimonial agreements? New York courts have consistently held that it does. In Savino v. Savino,146 AD.2d 766 (2^nd Dept. 1989), the parties' separation agreement contained a provision prohibiting oral modification. Under the separation agreement, the husband was required to maintain a $100,000 escrow account as security for the wife's maintenance payments. The wife moved, in the matrimonial action, to enforce the security provision contained in the separation agreement. The husband commenced a plenary action (which was consolidated with the wife's application) seeking reformation of the separation agreement based on an alleged oral agreement with the wife. The husband claimed that under the oral agreement, he advanced a loan to the wife's father, took back a mortgage, and substituted the mortgage he granted to the father as his security for the wife's maintenance payments. The Second Department, citing Rose, held that the husband's allegations of an oral modification which had already been executed, if proven, would constitute a defense to the wife's application.

Similarly, in Weissman v. Weissman, 173 AD2d 609 (2^nd Dept. 1991), the parties' separation agreement, which mandated a sale of the marital residence, contained a 'no oral modification' clause. The wife commenced a partition action in accordance with the terms of the separation agreement and moved for summary judgment. The Second Department held: 'Questions of fact remain to be resolved with respect to the respondent's allegations of an oral modification which, if proven, would constitute a defense to the action. Although the separation agreement did contain a clause prohibiting oral modification, the record demonstrates that there is a triable issue concerning whether an oral agreement exists which was performed or partially performed by the respondent.'

Child Support Agreements: A Special Case?

What about the enforceability of oral modifications to the child support provisions of a separation agreement? In Scally v. Scally, 151 AD2d 869 (3^rd Dept. 1989, the father claimed that he and the children's mother entered into an oral modification of their separation agreement with respect to custody and child support. The Third Department held the record revealed a triable issue of fact regarding the existence of executed oral modifications of the separation agreement whereby defendant would have custody of the parties' children and support payments to plaintiff would cease. Although the agreement did contain a clause prohibiting oral modification, case law has recognized that this fact does not preclude proof of an executed oral modification.

However, the alleged oral modification in Scally occurred prior to the adoption of the Child Support Standards Act (CSSA), which mandates that specific language and calculations be contained in all child support agreements, particularly those opting out of the CSSA guidelines. This author views as problematic any attempt to claim an oral modification of child support which opts out of the CSSA guidelines, since such oral modifications do not contain the necessary statutory language.

Yet there is a relatively recent Second Department case that upheld the enforcement of such an oral modification agreement with respect to child support. In Healy v. Williams, 30 AD3d 466 (2^nd Dept. 2006), the parties' stipulation of settlement required the husband to pay child support and provided the wife with exclusive use and occupancy of the marital residence until the occurrence of a triggering event. The stipulation also included a proscription against oral modification of its terms. According to the husband, the parties later orally agreed to suspend and reduce the husband's child support obligation in consideration for his agreement to defer his right to terminate the wife's occupancy of the marital residence. The husband later sold his interest in the marital residence to the wife for less than fair market value, which he claimed was in consideration for the wife's agreement to forgive the suspended child support balance due and to permanently fix his child support obligation at the lower amount. For five years, the husband wrote checks to the wife for the lower amount of support, which for the last two years contained a notation 'child support balance: 0.' The wife later brought an action for a money judgment based on an alleged breach of the original stipulation of settlement. The Healy court found that the oral modification was enforceable since it 'had actually been performed in a manner which was unequivocally referable to that oral modification.' The court did not address why such an oral modification of child support would be enforceable when there was no evidence that such agreement was in conformance with the CSSA, or that there had been a valid opting-out agreement.

The Exception to 'No Oral Waiver' Provisions

Even where a party cannot prove an oral modification of a written agreement, the other party may be found to have waived his or her right to enforce the written agreement, despite the fact that the original agreement contains a 'no oral waiver' provision. The distinction between a modification and a waiver is that while a modification agreement is binding according to its terms and may only be withdrawn by agreement, an oral waiver 'requires no more than the voluntary and intentional abandonment of a known right.' Nassau Trust Co. v. Montrose Concrete Products Corp., 56 NY2d 175 (1982). A waiver cannot be expunged or recalled to the extent it is has been executed, but to the extent it is executory, it can be recalled. Id.

In Nassau Trust Co. v. Montrose Concrete Products Corp., 56 NY2d 175 (1982), the Court of Appeals held that a contractual provision prohibiting oral waivers may itself be waived, which essentially means that you do not want to be the attorney trying to enforce such a 'no oral waiver' clause. This exception to the enforceability of 'no oral waiver' clauses has been applied in the matrimonial area as well. In O'Connor v. Curcio, 281 AD2d 100 (2^nd Dept. 2001), the parties executed a stipulation of settlement in their divorce action that contained a 'no oral waiver' provision. Under the terms of the agreement, the mother, as the custodial parent, received child support from the father. The parties subsequently executed a signed (unacknowledged) agreement providing that the only child of the marriage would reside with the father, who would assume all financial responsibility for the child, but that if the child returned to live with the mother, the father's child support obligation would be reinstated. The child returned to live with the mother after several years, and the mother commenced a proceeding to collect arrears from the father for the time the child was with him. The Second Department held that the mother expressly waived future child support payments by agreement; thus, the court stated, it did not have to reach the issue of whether the written agreement was a valid modification agreement, given that it was unacknowledged, and given that it may not have constituted a valid opting-out agreement under the CSSA. (Question: Is there a statutory requirement for a post-judgment modification agreement to be acknowledged, given that DRL 236(B)(3) refers only to agreements made before or during the marriage? This author does not believe so, but would not care to test the waters in a court of law.)

The 'oral waiver' defense is quite potent since it does not require evidence of a modification of the original agreement, only a waiver of its terms. Nor does it implicate the formalities of the CSSA according to the O'Connor case.

Conclusion

Despite the fact that most separation agreements prohibit a modification or waiver of their terms unless such modification or waiver is in writing, the case law provides exceptions where an oral agreement has been performed in a manner uniquely referable to its terms, or where there is a clear waiver of the 'no oral waiver' provision. Thus, in defending against the enforceability of an original agreement, the matrimonial practitioner should always consider whether there is sufficient evidence to establish an oral modification or waiver, particularly where the evidence in support of such modification or waiver is compelling.

Benjamin E. Schub, a member of this newsletter's Board of Editors, is a member of the law firm of Berman, Bavero, Frucco & Gouz, P.C., located in White Plains.

Separation agreements in matrimonial actions often contain provisions prohibiting oral modification or waiver of their terms. These provisions usually contain language to the effect that 'no modifications, waiver or termination of any of the terms of this stipulation shall be valid unless in writing and executed with the same formality as this agreement.' Despite such language, are there any possible scenarios under which the terms of such an agreement can be modified or waived without a written agreement? The answer may surprise you.

Exceptions to 'No Oral Modification' Provisions

Consider the following fact pattern: The parties in a divorce action enter into a stipulation of settlement, which is incorporated, but not merged, into the judgment of divorce. The stipulation of settlement (the stipulation) provides that the husband is required to pay maintenance to the wife until she remarries or resides with an unrelated male for 30 consecutive days. The stipulation additionally contains a clause providing that no modification, waiver or termination of any of the stipulation's terms shall be valid unless in writing. One year later, upon discovering that his ex-wife was cohabiting with another male for several months, the husband confronts the wife, leading to an oral agreement between the parties that the husband's maintenance obligation will be terminated immediately in exchange for a small lump sum payment to the wife, which is promptly made by the husband. No written agreement is executed, nor is there any modification of the judgment of divorce. Years later, the wife commences an enforcement proceeding against the husband for all maintenance arrears to date.

At first blush, it seems as though the husband has no defense. The general rule, as codified in General Obligations Law ' 15-301, is that a contractual clause requiring a written modification of a contract is enforceable and should be accorded great deference. See Healy v. Williams, 30 A.D.3d 466, 818 NYS2d 121 (2 nd Dept. 2006). Similarly, New York case law has upheld the use of contractual clauses requiring written waivers of contractual provisions. See Reinhardt v. Reinhardt , 204 AD2d 1028 (4 th Dept. 1994); Fox v. Ridinger , 234 AD2d 131 (1 st Dept. 1996). Parties are free to include such provisions in their agreements to protect themselves from spurious claims of modification/waiver by the other party to the contract. However, the respective rules regarding the enforceability of 'no oral modification' and 'no oral waiver' provisions each have a significant exception.

The exception to the enforceability of 'no oral modification' clauses was set forth by Chief Justice Breitel in Rose v. Spa Realty Associates , 42 NY2d 338 (1977):

W]hen the oral agreement to modify has in fact been acted upon to completion, the same need to protect the integrity of the written agreement from false claims of modification does not arise ' Thus, section 15-301 nullifies only 'executory' oral modification. Once executed, the oral modification may be proved '

Where there is partial performance of the oral modification sought to be enforced ' the court may consider not only past oral exchanges, but also the conduct of the parties. But only if the partial performance be unequivocally referable to the oral modification is the requirement of a writing under section 15-301 avoided '

Analytically distinct from the doctrine of partial performance, there is the principle of equitable estoppel. Once a party to a written agreement has induced another's significant and substantial reliance upon an oral modification, the first party may be estopped from invoking the statute to bar proof of that oral modification ' conduct relied upon to establish estoppel must not otherwise be compatible with the agreement as written [citations omitted.

Thus, where an oral modification to an agreement is either fully or partly-performed, a party may prove and enforce the oral modification based on the doctrines of partial performance and equitable estoppel, which serve to override any proscription against oral modification contained in the original agreement.

Does the exception to the enforceability of 'no oral modification' clauses as articulated in Rose v. Spa Realty Associates apply to matrimonial agreements? New York courts have consistently held that it does. In Savino v. Savino,146 AD.2d 766 (2^nd Dept. 1989), the parties' separation agreement contained a provision prohibiting oral modification. Under the separation agreement, the husband was required to maintain a $100,000 escrow account as security for the wife's maintenance payments. The wife moved, in the matrimonial action, to enforce the security provision contained in the separation agreement. The husband commenced a plenary action (which was consolidated with the wife's application) seeking reformation of the separation agreement based on an alleged oral agreement with the wife. The husband claimed that under the oral agreement, he advanced a loan to the wife's father, took back a mortgage, and substituted the mortgage he granted to the father as his security for the wife's maintenance payments. The Second Department, citing Rose, held that the husband's allegations of an oral modification which had already been executed, if proven, would constitute a defense to the wife's application.

Similarly, in Weissman v. Weissman , 173 AD2d 609 (2 nd Dept. 1991), the parties' separation agreement, which mandated a sale of the marital residence, contained a 'no oral modification' clause. The wife commenced a partition action in accordance with the terms of the separation agreement and moved for summary judgment. The Second Department held: 'Questions of fact remain to be resolved with respect to the respondent's allegations of an oral modification which, if proven, would constitute a defense to the action. Although the separation agreement did contain a clause prohibiting oral modification, the record demonstrates that there is a triable issue concerning whether an oral agreement exists which was performed or partially performed by the respondent.'

Child Support Agreements: A Special Case?

What about the enforceability of oral modifications to the child support provisions of a separation agreement? In Scally v. Scally , 151 AD2d 869 (3 rd Dept. 1989, the father claimed that he and the children's mother entered into an oral modification of their separation agreement with respect to custody and child support. The Third Department held the record revealed a triable issue of fact regarding the existence of executed oral modifications of the separation agreement whereby defendant would have custody of the parties' children and support payments to plaintiff would cease. Although the agreement did contain a clause prohibiting oral modification, case law has recognized that this fact does not preclude proof of an executed oral modification.

However, the alleged oral modification in Scally occurred prior to the adoption of the Child Support Standards Act (CSSA), which mandates that specific language and calculations be contained in all child support agreements, particularly those opting out of the CSSA guidelines. This author views as problematic any attempt to claim an oral modification of child support which opts out of the CSSA guidelines, since such oral modifications do not contain the necessary statutory language.

Yet there is a relatively recent Second Department case that upheld the enforcement of such an oral modification agreement with respect to child support. In Healy v. Williams , 30 AD3d 466 (2 nd Dept. 2006), the parties' stipulation of settlement required the husband to pay child support and provided the wife with exclusive use and occupancy of the marital residence until the occurrence of a triggering event. The stipulation also included a proscription against oral modification of its terms. According to the husband, the parties later orally agreed to suspend and reduce the husband's child support obligation in consideration for his agreement to defer his right to terminate the wife's occupancy of the marital residence. The husband later sold his interest in the marital residence to the wife for less than fair market value, which he claimed was in consideration for the wife's agreement to forgive the suspended child support balance due and to permanently fix his child support obligation at the lower amount. For five years, the husband wrote checks to the wife for the lower amount of support, which for the last two years contained a notation 'child support balance: 0.' The wife later brought an action for a money judgment based on an alleged breach of the original stipulation of settlement. The Healy court found that the oral modification was enforceable since it 'had actually been performed in a manner which was unequivocally referable to that oral modification.' The court did not address why such an oral modification of child support would be enforceable when there was no evidence that such agreement was in conformance with the CSSA, or that there had been a valid opting-out agreement.

The Exception to 'No Oral Waiver' Provisions

Even where a party cannot prove an oral modification of a written agreement, the other party may be found to have waived his or her right to enforce the written agreement, despite the fact that the original agreement contains a 'no oral waiver' provision. The distinction between a modification and a waiver is that while a modification agreement is binding according to its terms and may only be withdrawn by agreement, an oral waiver 'requires no more than the voluntary and intentional abandonment of a known right.' Nassau Trust Co. v. Montrose Concrete Products Corp., 56 NY2d 175 (1982). A waiver cannot be expunged or recalled to the extent it is has been executed, but to the extent it is executory, it can be recalled. Id.

In Nassau Trust Co. v. Montrose Concrete Products Corp., 56 NY2d 175 (1982), the Court of Appeals held that a contractual provision prohibiting oral waivers may itself be waived, which essentially means that you do not want to be the attorney trying to enforce such a 'no oral waiver' clause. This exception to the enforceability of 'no oral waiver' clauses has been applied in the matrimonial area as well. In O'Connor v. Curcio, 281 AD2d 100 (2 nd Dept. 2001), the parties executed a stipulation of settlement in their divorce action that contained a 'no oral waiver' provision. Under the terms of the agreement, the mother, as the custodial parent, received child support from the father. The parties subsequently executed a signed (unacknowledged) agreement providing that the only child of the marriage would reside with the father, who would assume all financial responsibility for the child, but that if the child returned to live with the mother, the father's child support obligation would be reinstated. The child returned to live with the mother after several years, and the mother commenced a proceeding to collect arrears from the father for the time the child was with him. The Second Department held that the mother expressly waived future child support payments by agreement; thus, the court stated, it did not have to reach the issue of whether the written agreement was a valid modification agreement, given that it was unacknowledged, and given that it may not have constituted a valid opting-out agreement under the CSSA. (Question: Is there a statutory requirement for a post-judgment modification agreement to be acknowledged, given that DRL 236(B)(3) refers only to agreements made before or during the marriage? This author does not believe so, but would not care to test the waters in a court of law.)

The 'oral waiver' defense is quite potent since it does not require evidence of a modification of the original agreement, only a waiver of its terms. Nor does it implicate the formalities of the CSSA according to the O'Connor case.

Conclusion

Despite the fact that most separation agreements prohibit a modification or waiver of their terms unless such modification or waiver is in writing, the case law provides exceptions where an oral agreement has been performed in a manner uniquely referable to its terms, or where there is a clear waiver of the 'no oral waiver' provision. Thus, in defending against the enforceability of an original agreement, the matrimonial practitioner should always consider whether there is sufficient evidence to establish an oral modification or waiver, particularly where the evidence in support of such modification or waiver is compelling.

Benjamin E. Schub, a member of this newsletter's Board of Editors, is a member of the law firm of Berman, Bavero, Frucco & Gouz, P.C., located in White Plains.