Decisions of Interest

Settlement Agreement Breach Does Not Excuse Performance Of Business Contract

The Appellate Division, First Department, has held that although two agreements executed separately ' a marital separation agreement and a business operating agreement ' may have been related in one party's eyes, they could not be deemed to be one integrated contract. Therefore, said the court, an alleged breach of the separation agreement did not constitute a breach of the operating agreement that would justify a rescission of obligations under the latter. Applehead Pictures LLC v. Perelman, — N.Y.S.2d —-, 2010 WL 4880688 (2d Dept. 12/10/10) (Andrias, J.P., Saxe, Friedman, Nardelli and Acosta, JJ.).

Prior to their marriage in 2000, Ronald Perelman and the actress Ellen Barkin entered into a prenuptial agreement in which they agreed that, in the event of a civil divorce, both parties would fully cooperate with each other in obtaining a Get (Jewish divorce) or other religious divorce or annulment by promptly executing all required paperwork and making personal appearances before a religious tribunal. Perelman agreed to pay all expenses in connection with the obtaining of a Get. Also in the prenuptial agreement were confidentiality provisions in which each agreed not to publicize certain “Prohibited Topics” concerning their relationship.

In 2005, Perelman and Barkin, along with her brother George Barkin, entered into an agreement to form Applehead Pictures, a film production company. Perelman was to infuse $3.4 million into the venture, receiving a 25% share of its profits in return.

A year later, the couple had decided to divorce and entered into a separation agreement and stipulation of settlement. Five days later, their divorce was granted. The separation agreement incorporated and ratified the prenuptial agreement, including its provisions concerning confidentiality and the obtaining of a Get. It also provided that the parties would obtain a Get within three days of Barkin's receipt of a payment of about $10.5 million, as provided for in the prenuptial agreement. The separation agreement also required Barkin to relocate the offices of Applehead Pictures by Feb. 28, 2006. Prior to the divorce the business was housed in the marital home.

On the same day the separation agreement was signed the parties, along with the third partner in the Applehead venture, George Barkin, signed a second agreement concerning Applehead Productions. It changed the percentage of ownership Perelman would have in the company, but said nothing to alter his $3.4 million pledge to fund the company. The amended agreement set out a schedule for Perelman's payments to the company, which were to begin on March 15, 2006. However, Perelman never made this payment or any of the other scheduled payments, prompting Applehead to bring this breach of contract action against Perelman to recover $3.4 million in damages resulting from his alleged breach of the amended operating agreement. Perelman's answer asserted affirmative defenses, including that his obligation to Applehead was “excused by prior breaches” and that there had been a “failure of consideration.” He asked for summary judgment, which Supreme Court, New York County (Debra A. James, J.), denied. The court then sided with Applehead and ordered Perelman to pay the entity $4,367,421.

On appeal, Perelman claimed that Barkin had breached the obligation of confidentiality under the separation agreement, as evidenced by articles published in New York Magazine in 2006 and 2007, which discussed the parties' marriage and relationship, and Perelman's business and personal affairs. He also said Barkin had failed to timely commence proceedings to obtain a Get. He contended that the separation and Applehead agreements were interdependent and that the breach of one excused performance under the other. As evidence of such interdependence, Perelman submitted a letter from Barkin's matrimonial counsel to an attorney who represented Applehead, in which counsel stated, in part, that “[a]s part of that settlement, certain provisions regarding Applehead Pictures, LLC were changed.”

While agreeing that contracts signed contemporaneously are generally treated as one and the same transaction, the appellate court pointed out that this is only the case if the agreements pertain to the same subject matters and are between the same parties. Here, said the court, “The record makes clear that the amended operating agreement and the separation agreement were not intended to be interdependent. The separation agreement, executed, naturally, only by Perelman and Barkin, recited that the parties intended to 'settle their financial and property rights amicably and fulfill their other rights and obligations in conformity with and in addition to the terms of the Prenuptial Agreement.' It made no reference to the original operating agreement or the amendment to the operating agreement, but only required Barkin to cause Applehead to vacate its offices in the marital residence.” The amendment of the Applehead agreement, in contrast, was a contract governed by completely different law (the Delaware Limited Liability Company Act), and was executed not only by Barkin and Perelmen, but also by George Barkin, who was not a party to the separation agreement. Finally, the court found that, even had the agreements been interdependent, there had been no breach of the separation agreement: Barkin had not disclosed any of the prohibited information to the authors of the New York Magazine articles and the settlement agreement did not place the responsibility of commencing the proceedings to obtain a Get on Barkin. She was required only to cooperate with any tribunal that handled the issue, and no evidence was presented to show that she had failed to do so.

Accordingly, Supreme Court's judgment was affirmed.

Outside Parties Open to Tort Liability for Attempts to Part Father and Child

The public interest in preventing parents from being compelled to relinquish their parental rights, without regard to the best interests of the child, takes precedence over the generally absolute privilege attending the disclosure of matters of public interest. Posner v. Lewis, — N.Y.S.2d —-, 2010 WL 4977807 (1st Dept. 12/9/10) (Tom, J.P., Andrias, Nardelli, Renwick and Rom'n, JJ.).

The plaintiff in this tort action was a nontenured teacher in Westchester County whose principal had given him evaluations of “superior” and “outstanding.” In March 2008 his wife, who was a tenured teacher at the same school as her husband, accused him of marital misconduct. Soon thereafter, the wife's father and her father's brother-in-law, an attorney at Proskauer Rose (the defendants), allegedly told the plaintiff to pack up and leave the marital home, although the plaintiff owned the home. One of the defendants then allegedly told the plaintiff's brother that if the plaintiff did not “go quietly” he would “make trouble” and would go to the Board of Education to negatively impact the plaintiff's attempt to obtain tenure.

The divorcing couple had had their first child together on March 24, 2008 ' just one week before the divorce papers were served. On April 3 of that same year, the wife's father allegedly offered to “pay off” the plaintiff to get him to give up his parental rights. This he refused to do. Also in April, the wife signed a retainer agreement with the attorney the plaintiff alleges helped kick him out of his house.

On April 10, 2008, less than two weeks after he was served with divorce papers, the plaintiff's principal told him that the District's Board of Education had approved his tenure, which would be formally acted upon at the June 2, 2008 meeting of the Board.

On April 14, 2008, in a letter to the Office of School Personal Review and Accountability of the New York State Education Department (OSPRA) that allegedly had been initiated, reviewed and approved by the wife's father, the wife's attorney allegedly accused the plaintiff of “Immoral and Fraudulent Misconduct” “requiring disciplinary action … including [ ] the revocation of his teaching license.” The attorney, who had no connection to the school district, stated that the letter was “being submitted solely on my own initiative in my individual and personal capacity as a private citizen,” according to the plaintiff. No mention was made of his attorney/client relationship with the plaintiff's wife. This and similar harassing actions on the part of the defendants prior to the June 2 school board meeting, the plaintiff claims, resulted in his being denied tenure and in his having to resign from his teaching position. According to the complaint, “[a]s a result of Defendants' wrongful and malicious actions, Plaintiff Posner was and continues to be unable to secure another tenure track teaching position in a public school district in Westchester County.” He brought suit against his father-in-law and his wife's attorney under the theories of prima facie tort and tortious interference with prospective contractual relations.

The defendants sought dismissal, claiming any actions taken by them with regard to the plaintiff's tenure bid with the board of education were absolutely privileged, as they were disclosures of matters of public interest. See Brandt v. Winchell, 3 NY2d 628 (1958). They claimed their motives were irrelevant to this inquiry. A divided court disagreed, concluding that such a “rigid and unjustifiably narrow reading of Brandt fails to give weight to the countervailing public interest in deterring the use of coercive means to compel a parent to relinquish his or her parental rights, without consideration of the best interests of the child. Accordingly, the absolute privilege of Brandt should not attach to defendants' communications simply because of defendants' (hollow, in our view) claims of public interest.”

Settlement Agreement Breach Does Not Excuse Performance Of Business Contract

The Appellate Division, First Department, has held that although two agreements executed separately ' a marital separation agreement and a business operating agreement ' may have been related in one party's eyes, they could not be deemed to be one integrated contract. Therefore, said the court, an alleged breach of the separation agreement did not constitute a breach of the operating agreement that would justify a rescission of obligations under the latter. Applehead Pictures LLC v. Perelman, — N.Y.S.2d —-, 2010 WL 4880688 (2d Dept. 12/10/10) (Andrias, J.P., Saxe, Friedman, Nardelli and Acosta, JJ.).

Prior to their marriage in 2000, Ronald Perelman and the actress Ellen Barkin entered into a prenuptial agreement in which they agreed that, in the event of a civil divorce, both parties would fully cooperate with each other in obtaining a Get (Jewish divorce) or other religious divorce or annulment by promptly executing all required paperwork and making personal appearances before a religious tribunal. Perelman agreed to pay all expenses in connection with the obtaining of a Get. Also in the prenuptial agreement were confidentiality provisions in which each agreed not to publicize certain “Prohibited Topics” concerning their relationship.

In 2005, Perelman and Barkin, along with her brother George Barkin, entered into an agreement to form Applehead Pictures, a film production company. Perelman was to infuse $3.4 million into the venture, receiving a 25% share of its profits in return.

A year later, the couple had decided to divorce and entered into a separation agreement and stipulation of settlement. Five days later, their divorce was granted. The separation agreement incorporated and ratified the prenuptial agreement, including its provisions concerning confidentiality and the obtaining of a Get. It also provided that the parties would obtain a Get within three days of Barkin's receipt of a payment of about $10.5 million, as provided for in the prenuptial agreement. The separation agreement also required Barkin to relocate the offices of Applehead Pictures by Feb. 28, 2006. Prior to the divorce the business was housed in the marital home.

On the same day the separation agreement was signed the parties, along with the third partner in the Applehead venture, George Barkin, signed a second agreement concerning Applehead Productions. It changed the percentage of ownership Perelman would have in the company, but said nothing to alter his $3.4 million pledge to fund the company. The amended agreement set out a schedule for Perelman's payments to the company, which were to begin on March 15, 2006. However, Perelman never made this payment or any of the other scheduled payments, prompting Applehead to bring this breach of contract action against Perelman to recover $3.4 million in damages resulting from his alleged breach of the amended operating agreement. Perelman's answer asserted affirmative defenses, including that his obligation to Applehead was “excused by prior breaches” and that there had been a “failure of consideration.” He asked for summary judgment, which Supreme Court, New York County (Debra A. James, J.), denied. The court then sided with Applehead and ordered Perelman to pay the entity $4,367,421.

On appeal, Perelman claimed that Barkin had breached the obligation of confidentiality under the separation agreement, as evidenced by articles published in New York Magazine in 2006 and 2007, which discussed the parties' marriage and relationship, and Perelman's business and personal affairs. He also said Barkin had failed to timely commence proceedings to obtain a Get. He contended that the separation and Applehead agreements were interdependent and that the breach of one excused performance under the other. As evidence of such interdependence, Perelman submitted a letter from Barkin's matrimonial counsel to an attorney who represented Applehead, in which counsel stated, in part, that “[a]s part of that settlement, certain provisions regarding Applehead Pictures, LLC were changed.”

While agreeing that contracts signed contemporaneously are generally treated as one and the same transaction, the appellate court pointed out that this is only the case if the agreements pertain to the same subject matters and are between the same parties. Here, said the court, “The record makes clear that the amended operating agreement and the separation agreement were not intended to be interdependent. The separation agreement, executed, naturally, only by Perelman and Barkin, recited that the parties intended to 'settle their financial and property rights amicably and fulfill their other rights and obligations in conformity with and in addition to the terms of the Prenuptial Agreement.' It made no reference to the original operating agreement or the amendment to the operating agreement, but only required Barkin to cause Applehead to vacate its offices in the marital residence.” The amendment of the Applehead agreement, in contrast, was a contract governed by completely different law (the Delaware Limited Liability Company Act), and was executed not only by Barkin and Perelmen, but also by George Barkin, who was not a party to the separation agreement. Finally, the court found that, even had the agreements been interdependent, there had been no breach of the separation agreement: Barkin had not disclosed any of the prohibited information to the authors of the New York Magazine articles and the settlement agreement did not place the responsibility of commencing the proceedings to obtain a Get on Barkin. She was required only to cooperate with any tribunal that handled the issue, and no evidence was presented to show that she had failed to do so.

Accordingly, Supreme Court's judgment was affirmed.

Outside Parties Open to Tort Liability for Attempts to Part Father and Child

The public interest in preventing parents from being compelled to relinquish their parental rights, without regard to the best interests of the child, takes precedence over the generally absolute privilege attending the disclosure of matters of public interest. Posner v. Lewis, — N.Y.S.2d —-, 2010 WL 4977807 (1st Dept. 12/9/10) (Tom, J.P., Andrias, Nardelli, Renwick and Rom'n, JJ.).

The plaintiff in this tort action was a nontenured teacher in Westchester County whose principal had given him evaluations of “superior” and “outstanding.” In March 2008 his wife, who was a tenured teacher at the same school as her husband, accused him of marital misconduct. Soon thereafter, the wife's father and her father's brother-in-law, an attorney at Proskauer Rose (the defendants), allegedly told the plaintiff to pack up and leave the marital home, although the plaintiff owned the home. One of the defendants then allegedly told the plaintiff's brother that if the plaintiff did not “go quietly” he would “make trouble” and would go to the Board of Education to negatively impact the plaintiff's attempt to obtain tenure.

The divorcing couple had had their first child together on March 24, 2008 ' just one week before the divorce papers were served. On April 3 of that same year, the wife's father allegedly offered to “pay off” the plaintiff to get him to give up his parental rights. This he refused to do. Also in April, the wife signed a retainer agreement with the attorney the plaintiff alleges helped kick him out of his house.

On April 10, 2008, less than two weeks after he was served with divorce papers, the plaintiff's principal told him that the District's Board of Education had approved his tenure, which would be formally acted upon at the June 2, 2008 meeting of the Board.

On April 14, 2008, in a letter to the Office of School Personal Review and Accountability of the New York State Education Department (OSPRA) that allegedly had been initiated, reviewed and approved by the wife's father, the wife's attorney allegedly accused the plaintiff of “Immoral and Fraudulent Misconduct” “requiring disciplinary action … including [ ] the revocation of his teaching license.” The attorney, who had no connection to the school district, stated that the letter was “being submitted solely on my own initiative in my individual and personal capacity as a private citizen,” according to the plaintiff. No mention was made of his attorney/client relationship with the plaintiff's wife. This and similar harassing actions on the part of the defendants prior to the June 2 school board meeting, the plaintiff claims, resulted in his being denied tenure and in his having to resign from his teaching position. According to the complaint, “[a]s a result of Defendants' wrongful and malicious actions, Plaintiff Posner was and continues to be unable to secure another tenure track teaching position in a public school district in Westchester County.” He brought suit against his father-in-law and his wife's attorney under the theories of prima facie tort and tortious interference with prospective contractual relations.

The defendants sought dismissal, claiming any actions taken by them with regard to the plaintiff's tenure bid with the board of education were absolutely privileged, as they were disclosures of matters of public interest. See Brandt v. Winchell , 3 NY2d 628 (1958). They claimed their motives were irrelevant to this inquiry. A divided court disagreed, concluding that such a “rigid and unjustifiably narrow reading of Brandt fails to give weight to the countervailing public interest in deterring the use of coercive means to compel a parent to relinquish his or her parental rights, without consideration of the best interests of the child. Accordingly, the absolute privilege of Brandt should not attach to defendants' communications simply because of defendants' (hollow, in our view) claims of public interest.”