ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Thursday, December 24, 2009

Madoff Mutual Mistake Case Decided in Favor of Ex-Wife

Grinch We had previously mentioned (here and here) a lawsuit (by a Paul Weiss partner) to unravel a divorce settlement that included a payout to his wife for the right to keep the $5.4 million (or so they thought) Madoff account.  As part of the settlement husband paid wife $2.7 million in cash, and he sued wife to modify the settlement agreement based on mutual mistake as to the value of the "account." 

Earlier this week, Supreme Court, New York County (Evans, J), dismissed the complaint in its entirety.  The court explained

According to the Amended Complaint and despite the absence of any such statement in the written contract, the parties intended to divide the value of the parties' assets equally as of September 1, 2004.  The Amended Complaint further states that this intention was thwarted by the parties' mistaken belief that on the September 1, 2004 valuation date, plaintiff's investment with the Madoff firm was worth $5.4 million.  The amended Complaint alleges that the Madoff firm in fact never engaged in any stock trades and as of the parties' valuation date, held no assets.  The Amended Complaint concludes from this that plaintiff's account was "a fiction."

The complaint does not contend, however, that the account had no value, only that, under the circumstances it was "non-existent".  In urging that the Amended Complaint fails to state a viable cause of action, defendnat contends without contradiction that on September 1, 2004, and later, on June 27, 2006 when the parties entered into their agreement, and in fact, for the several years thereafter that plaintiff maintained this investment, it could have been redeemed for cash, presumably significantly in excess of its 2004 value.

A claim of mistake must be set forth with particularity, and the circumstances must be stated in detail. CPLR ยง3016{b}.  Here, the claim of mistake is opaque, stating simply that the account at issue did not exist.  There is no assertion, however, that at the time of the agreement the account could not be redeemed for value.  In fact, plaintiff allegedly liquidated an undisclosed portion of his investment at the time of the agreement in June of 2006 to fund the payment of defendant's equitable entitlement. [Amended Complaint, para. 55].  An investor's ability to redeem an account for value, was the assumption on which the parties relied in dividing their property and in doing so they made no mistake.

* * * Viewed in their most favorable light, the Amended Complaint fails to articulate facts which if true would establish a viable cause of action that the settlement agreement pursuant to which the parties divided all of their assets and were divorced, was the product of a mutual mistake.

Simkin v. Blank (Sup. Ct., NY County Dec. 22, 2009).

[Meredith R. Miller]

December 24, 2009 in Recent Cases | Permalink | Comments (0) | TrackBack (0)

Wednesday, December 23, 2009

Now in Print


R. Bruce Allensworth et al., That's Unconscionable: An Update Regarding the Enforceability of Arbitration Provisions in Form Contracts, 42 UCC L.J. 73 (2009).

Hilary Delany, Is There a Future for Proprietary Estoppel as We Know It?, 31 Dublin U. L.J. 440 (2009).

D. Andrew Gaona, Comment, Privity No More: Implied Warranty Rights of Subsequent Purchasers of Commercial Property in Arizona, 41 Ariz. St. L.J. 877 (2009).

Kevin F. Hallock, Job Loss and the Fraying of the Implicit Employment Contract, 23 J. Econ. Persp. 69 (2009).

Edward J. Imwinkelried, The Implied Obligation of Good Faith in Contract Law: Is it Time to Write its Obituary?, 42 Tex. Tech L. Rev. 1 (2009).

Hugh V. McLachlan & J. Kim Swales, Commercial Surrogate Motherhood and the Alleged Commodification of Children: A Defense of Legally Enforceable Contracts, 72 Law & Contemp. Probs. 91 (2009).

David McLauchlan, Commonsense Principles of [Contract] Interpretation and Rectification, 126 Law Q. Rev. 8 (2010).

Susanne Ohlendorf, Expectation Damages, Divisible Contracts, and Bilateral Investment, 99 Am. Econ. Rev. 1608 (2009).

Kate Tokeley, Introducing a Prohibition on Unfair Contractual Terms into New Zealand Law: Justifications and Suggestions for Reform, 23 N.Z. U.L. Rev. 419 (2009).

[Keith A. Rowley]

December 23, 2009 in Recent Scholarship | Permalink | TrackBack (0)

Monday, December 21, 2009

Always Depend on the Kindness of Colleagues

When I first started teaching contracts, I relied heavily on the advice of my more-experience colleague, who is now our Associate Dean, Mark Adams.  I adopted the same casebook as Mark was using, adapted his syllabus to suit my purposes, and vamped on his exam questions to create my own exam.  

When Alan White came on board, I thought I would serve the same role for Alan as Mark provided for me, but I think I have benefitted from his arrival at least as much as I have benefitted him.  I was thinking of changing casebooks in any case, just to force myself to get a new perspective on the material, and Alan and I adopted the same one.  We struggled together through the material, taught ourselves the new cases and worked to accommodate the perspectives of the casebook authors to our own teaching styles.  As readers of the blog familiar with Alan's stint as a guest blogger know, Alan has pushed to introduce more problems and drafting exercises into first-year teaching as part of a Carnegie-inspired recognition of the need for an integrated approach to law school teaching, including writing across the curriculum.  Alan and I have worked together on this project, but he has clearly taken the lead, while I have borrowed some of his exercises and reaped the rewards of his experimentation.  My students are the real beneficiaries of Alan's innovations.

All of this is my way of saying, "Alan, thanks for the memories."  As Alan will not be teaching contracts next semester, his first stint as a guest blogger in this space has come to an end.  We hope to bring him back next year.  In the meantime, those of you addicted to exposure to Alan's mind should visit the Consumer Law & Policy Blog, to which Alan is a regular contributor.

Ave atque vale, Alan!

[Jeremy Telman]

December 21, 2009 in About this Blog, Teaching | Permalink | Comments (0) | TrackBack (0)