In The Matter of Paula Geraghty and Kenneth Geraghty

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This is Case 2015 0 4 3 0 in the matter of Paula Garrity and Kenneth Garrity. The record should Reflect the fact that Justice Hicks is disqualified from this

case. Attorney Connor. Thank you, your Honor. May I please the court? My name is Doreen Connor, and I represent Kenneth Garrity. In this appeal, I have reserved two minutes for rebuttal if necessary. Today's appeal involves a question of law and whether the trial court erroneously applied The five choice of law, uh, principles first announced by the car by this court backing Clark v Clark. The first error that the court made was on the very first choice of law factor predictability of results. Can I just ask this question? Let's, let's assume that the court made an error that it should have applied New York law. Do you have any New York case that that supports granting an adult an, an annulment to someone after they've been married for 30 years? I don't have a case with those specific facts close, Even close to 30 years, Your Honor. I don't believe it's the amount of time that they've been married. It's about the fraud in general, uh, that induced the marriage. Probably the closest case would be the Cobra case where the husband failed to mention that he had been a German officer in, in Germany, uh, and the wife had a number of Jewish friends. And when she, how Long was it? How long, how long did this go on? The court did not indicate when they were married because that wasn't critical. What the court focused in on was the material omission, which if it had been disclosed, this woman would have never married. And the same applies here. It was undisputed that if Mr. Garrity had known about his wife's criminal conduct, he would not have married her. He wanted to have a family, and it was never, uh, he was not allowed an opportunity to decide whether her premarital conduct may have been the reason she couldn't have children, because that came to light later. I, just to follow up on Justice Lynn's question. Apparently I get, I think both of you agree that New Hampshire's law on Annulments was relatively generous before it adopted no fault divorce. So when Judge Lin asks you about what New York would do, so let's assume that the court made an error in its choice of law analysis. The court should have applied New York law. We have to look at New York law after it went with no fault divorce. Do we? Not, Your Honor, I don't believe you have to, but even if you do, the court made an error even with regard to that particular issue because there were two changes to New York's no fault law. The court first allowed for no-fault law, or no, no fault grounds in 1966, not 2010. There was then a subsequent, um, enlargement of the no-fault ground. Instead of be saying that the marriage had been broken down for a year, which was the no-fault ground that the New York legislature enacted in 1966. Then in 2010, the legislature shrunk it to a six month steer period. And that's at, uh, Dr. RL New York Section one 70. There's a great case called Palmero at 35 miscellaneous 3D 1211. It's a 2011 case, and it cites the history of the New York no fault law. Um, and so, no, you know, the fact that New York had at one time no ability to grant no-fault law, uh, is not a reason that they have this, uh, liberal annulment law. They've continued to have annulment cases up to this very day. Okay. So, um, in any event, if we agree with you that the court aired in its choice of law analysis, do we not have to remand to the trial court to determine under New York law whether an annulment should be granted? Yes, your Honor. And that's the relief that we seek. We ask this court to vacate the court's choice of law analysis because it is clearly wrong on the three factors that it applied. Predictability of results, advancement of the forum's, governmental interest, and then sound or law, send it back to the trial court to apply New York law and then to determine what impact that would have on the property distribution. And then you're gonna not be looking at New Hampshire statute 4 58 16 A where you presume an equal distribution. It would be up to the court to determine under New York law how to distribute the property. Do you agree that if we conclude New Hampshire law applies, that the court's decision is sustainable? We still challenge, uh, the court's decision. It is obviously much harder under New Hampshire law because New Hampshire annulment law is much more stringent. However, if you look at the Jordan decision, which is the most recent case this court decided with regard to annulment, it's similar facts, in that it was a material omission as opposed to a material misrepresentation. Husband is marrying a 17-year-old devote Roman Catholic. He fails to tell her that he had previously been married. The, the woman who religious beliefs were very important to her said, I just can't live like this. Um, she seeks an annulment, and the court granted it, um, despite the fact that presumably it, it didn't go to the essentials of the marriage, they could continue to have marital relations. It was more her psychological response to this discovery. And the same could be said here with regard to, uh, annulment based upon, is This really analogous? Is this really analogous to the religious situation? Well, it's analogous in that it's a material omission. It's analogous in that Mr. Garry would not have married had he known this. It's analogous in that he wanted to have children, and it's undisputed that Mrs. Garrity could not have children, and she moved out of his bedroom and they had no marital relations for 27 years. Well, lemme just ask you about this importance of having children. That goes to the issue of, uh, her ability to have a child and her abortions, I assume, rather than her drug use or, uh, working as a prostitute. And it, and the trial court specifically found, uh, that the wife's version of events was more credible and that she had disclosed that she had had abortions, right? Yes and no, your Honor. Um, the fact that Mrs. Garrity could not have children because of a, a condition with regard to her uterus is connected to the abortions, which is connected to being a prostitute and, and having to have the abortions. Counsel, don't, don't interrupt. If it's not in the record, don't tell us. Correct, your Honor. I think if you look in the request for findings, you will find that. But, But you would agree that the trial court found that, uh, the wife's version of whether there was a disclosure about the abortions or not was What the court found is that information surfaced much later in trial one month before trial. When those medical records were discovered, the trial court found that Mrs. Garrity testimony that she had disclosed that was indeed credible. Indeed credible, you're right. The court did not find that Mr. Garrity testimony that had not been disclosed was not credible, didn't discuss Mr. Garrity testimony whatsoever. The other issue that the court didn't discuss was the timing of this. The records with regard to pros, prostitution are discovered. She's deposed. She admits that that all happens. The petition to an is filed. We now know what the relevance of that testimony is. We get the records with regard to the abortions. She did not. She now says, oh, I told him about that despite the fact that there's some question about you might not, you would have motive not to, uh, to, to testify that you disclosed it when in fact you didn't. The other thing is, think about this. If somebody discloses that they have four abortions before you get married, might there or not be a follow up discussion about how and why, but there's no, there was no such discussion about that. It sounds like you're making a great argument for a fact finder, but not how do we get behind the, the court, the court's credibility determination. The court didn't allow that testimony to develop and, and, and the court's finding that her testimony is credible has to be followed up with why Mr. Gary's testimony was not. But the court doesn't have to lay that out in a decision. Well, this court in Mount Pla said if there's no reason for no explanation as to how the court came to that conclusion to back up Mm-Hmm. The finding so that this court can deal with it on appeal, then, then it's insufficient. But Mount Pla was, wasn't that the mixed motive, um, employment discrimination case? I don't remember the facts of it. What I remember it, it stands for the principle that when this court doesn't have the narrative, uh, explanation to know the basis for the ruling, that it's insufficient if I'm right about the case, that was a very complicated set of facts leading to complex law, which to me, if I'm right about the case, is quite different from saying I believe the wife. I understand, but how about I believe the wife and I don't believe the husband because of X, Y, and Z or some discussion about the motive of testimony. Yes, your honor. You, you, you disagree? Yes. We accept that. Here's my question. If the husband I is committed to having children, you say in your brief that within six months of the marriage she moved into a separate bedroom and then within, I can't remember exactly. They were married for seven years, and at that point she said, I'm not having sex with you anymore. Why didn't he divorce her sooner? If, if children were the paramount issue in his head, why didn't he file for divorce? By that point in time? He was willing to accept what this marriage was, which was basically two, two par par parties cohabitating. It was Mrs. Garrity that ultimately filed for divorce. Right. But remember, fraud in the inducement, which was the ground for the annulment, talks about the conduct prior to the marriage. Uh, and at that point, what was critical to him was starting a family. Okay, but what is the, what's the chronology? She knew she was a prostitute. She knew she had abor abortions. Did she know while they were dating before they got married that her prior conduct meant she would not be able to have children? Did she know then? Because only if she knew then would she be inducing this marriage based on a, on an omission? I believe her inducement into the marriage was not the, the failure to disclose all of that evidence regardless of whether she knew the results of that conduct. Well, so what if the facts turned out to be that she, she knew she had, she was a prostitute, had abortions, didn't know that it was related to her ability to have children at that point and not discovered for years later with a medical exam. Do you say your client would not have entered the marriage knowing only that she was, had been a prostitute and had had abortions? Yes, your Honor. Not Know neither of them knowing the impact on the ability to have children. Yes. And that's what he testified to in the underlying trial. Can I just ask you a question? Let's, I wanted to sort of follow up one, one other point on this. Let's assume that we, that we believe that the court actually should have granted an annulment that, that you had a proper basis for annulment on the court. Does the case law from New York say that in that circumstance where an annulment is granted, there can be then no division, no sort of equitable division of marital of property that was acquired during the marriage and that kind of thing? No, your Honor, what typically happens is the, the party, uh, who is guilty of the fraud and the inducement or whatever the ground is for in the annulment, gets to keep everything that was titled in their name. And the court has some discretion with regard to, uh, distribution of other assets. But there is no statutory presumption of an equal distribution, which in this case resulted in a distribution of 30 million. Wouldn't The, wouldn't the, you know, it strikes me that, that even, first of all, I would find it, I would find it, I'm gonna be extremely interested if, to see if there's a case that's anywhere close to this in New York, allowing an annulment. But secondly, even if there, even if that were true after 30 years, doesn't that suggest that an equal distribution is pretty much ought to be the starting point, even if after 30 years, even if there was some quote unquote fraud. The New York cases do not suggest that there is an equal distribution. They, they suggest just the opposite. But we didn't get to that point in this proceeding because the court erred as a matter of law when it applied New Hampshire law, we need to go back down to develop that record based on New York, New York law because it seems pretty apparent that the court is leaning towards the fact of thinking that the court's choice of law analysis was flawed, and therefore the proper remedy is a remand to then develop that record under New York law. Thank you. My time, except for my two minutes is up. May I please the court? My name is John Strasberg, and I have the privilege of representing the Appell Poly Garrity in this matter. The decision of the family court should be affirmed in all respects. Um, first I'd like to deal with the choice of law issue that the court had to grapple with in this case. Uh, the first issue, uh, that the court addressed was the predictability of results. And with respect to the predictability of results, the court made a finding that it was reasonable for the parties to expect that the law governing the dissolution of their marriage would be the place where the dissolution had occurred, which is here in New Hampshire. But of course, her argument, uh, attorney Connor's argument was that given the nature, the nature of the request for annulment, that is OMI material omissions at the time the marriage was entered into, she argues exactly the opposite, that it makes more sense to apply New York law because our focus in the, in our analysis is what happened at the time the parties entered into the marriage. Well, I, I guess the focus is, is also what happened years prior to the marriage, because let's not forget that the, you know, the conduct that was complained of in this, it's earlier 11 years prior to the marriage. Um, and, and I don't think that there's a case that really stands for that proposition. When you look at a multitude of cases, which I cite in my brief, uh, when it comes time for the New Hampshire Court to dissolve a marriage amongst New Hampshire litigants, New Hampshire law is routinely applied regardless of where they were married, what the reasons were behind the parties choosing to enter into the marriage. And so I think for uniformity and predictability for New Hampshire residents, uh, when it comes to either petitioning to another marriage or filing a petition for divorce, uh, they should be able to expect that the laws governing the dissolution of marriage in this state are going to be the laws that apply to that particular dissolution. Uh, and I know that, I know that the court's very well aware of the record in this case, but these parties only lived in the state of New York for a very small portion of their marriage. It was three years. They were married in October of 1986. They moved to Boston, Massachusetts in 1990, ultimately moving to New Jersey for quite a few years, then moving to New Hampshire in approximately 2007, and resided consistently in 2007. Although I understand Mr. Garrity claimed a residency in Florida. Um, but he, he also still resided here in New Hampshire, uh, with my client. Um, so they spent an, an inordinate amount more time in New Hampshire as compared to that three year stint, um, following their marriage in 1986. The second pro, uh, the second prong, uh, prong of the choice of law analysis is the reasonable orderliness and good relationship among the states. And the trial court found in this case that although there were connections to both New York and New Hampshire, um, and that goes to your, your point Justice convoy about the underlying failure to disclose would've occurred New York. And if you look at the trial court's decision, judge Forrest considered that, but he also considered what New Hampshire's interest is in maintaining the authority to control dissolutions of marriage. Dissolutions of marriage are conferred entirely by statute other than the very minute areas, uh, for annulment that have been established. Well, This may be nitpicking, but it, I suppose if he granted an annulment, then he isn't dissolving a marriage. He's granting, he's saying, no marriage ex, it's a fiction, but no marriage existed from the beginning. I don't know if that makes a difference. Well, if you look at the way he analyzed it, he, he analyzed, he used the term dissolution, whether he means I'm, I'm, I'm dissolving it based upon a nullity uhhuh or I am dissolving it, um, you know, based upon a, you know, a decree of divorce or otherwise. Um, you know, let's not forget the fact that this petition to Null wasn't filed until 30 days before the final hearing in this divorce, which it was pending, I think near for nearly two years or so before it ultimately went to trial. Um, I think that when it comes to that second prong, the court's analysis is significant. Um, the court, uh, relied, Lemme ask you a question. I know you wanna make your way through the various factors, but your time is short. I take it from attorney Connor's brief, that if she loses on the choice of law argument, she argues that the court shouldn't have done an even split. The husband apparently was willing to give the wife $10 million. Uh, and then she argues, and that's based on, uh, the contributions to the marriage, essentially arguing that the wife, um, didn't do a lot to bring assets into the marriage. And your position on that is what Our position was. It's a long-term marriage. It was a 28 year marriage. The court made specific findings regarding the petitioner's contributions toward the marriage. Uh, I believe Judge Forrest characterized it as somewhat of a, a traditional marriage in that the petitioner cared for the home. Um, and there were several homes which she testified she was responsible for caring for, entertained for his business associates, put on the family parties, was responsible for doing the laundry. The respondent didn't contest that she had hot meals prepared for him every evening. And so, yes, it is true that the evidence supported a finding that she did not contribute to the same degree financially, but that she did contribute to a vast variety, a vast variety of, um, components towards this long-term marriage. And that supported, I'm sorry, your Honor. I'm sorry, I interrupted you. Proceed. Um, and that's supported his finding after he did the analysis under RSA 4 58 16 A, that the rebuttable presumption that in a long-term marriage, an equitable division of marital assets is an equal division, was not rebuttable in this particular case, because there were plenty of contributions towards the marriage. Although one party throughout the history of the marriage was the primary breadwinner, Does it matter that the, um, vast majority of the party's assets came relatively late into the marriage when the stock options were? I I don't think it does, your Honor, and I'll tell you why. So Mr. Garrity testified that the vast majority of his wealth was accrued when he sold his ISO stock options that he had garnered through his employment as a CFO for the INS insurance services organization, I believe was the name of the entity. We referred to it as ISO at trial for short. Um, he testified that he realized approximately a gross amount of about $60 million as a result of the sale of that stock. That sale occurred seven to eight years before the decree of divorce in this case. Well, of course. But the when was the petition filed two years prior to that, right? Correct. Correct. So Relatively speaking, correct. His argument is all that money came fairly late in the marriage. But you have to juxtapose that, your Honor, with the trial court's finding also that this marriage was not irretrievably broken down until after the petition was filed. The court made a finding that the marriage was not broken down until 2013. So you're talking a span of between 2007 and 2013. Um, throughout the course of this case, evidence was presented that Mr. Garrity was making efforts to reconcile with the petitioner. Did that occur before or after discovery disclosed the, uh, prostitution and abortions? My recollection, your Honor, is that though the overt requests were made prior to the discovery of these issues. So after he discovered these issues, he was presumably no longer interested in reconciliation. Well, I, I, I can't pretend to know what, you know, what his inclination was, but my recollection was that, um, after these issues came out in the course of discovery, there wasn't any further requests, uh, not overt requests for reconciliation. I believe there still were requests, you know, will you go out to dinner, et cetera. But, um, ultimately I think it was, uh, prior to the, the disclosures that, that were revealed in the course of discovery. Can I, can I ask you counsel? 'cause I'm just curious on the, on the, uh, on the annulment idea, do the, do government agencies, I mean, for, for example, suppose that there was an, that what was decreed here was an annulment rather than a divorce with the Social Security Administration, for example, would they say, well, wait a minute, you know, the spouse, the, the, the wife here, she was never married to the, the husband. So she doesn't get to, she doesn't get to collect Social security off, off his earnings. I mean, I would be shocked if, if that was the rule of the Social Security Administration, I suspect they would. That the rule is whether, you know, after a certain period of time, whether it's divorce or a, or an annulment, the the spouse is entitled to reli is entitled to collect. I, I, I don't know that for a fact, but it would shock me if it if that was not the law. Well, justice Lynn, I I would agree with you, and I think that's why this issue is of paramount importance because marriage is not a simple contract. Okay? It affects one's legal status for purposes of Social security for purposes of beneficiary designations. We have a whole group of laws that govern marital status. And I, I can't pretend to to know what the Social Security Administration would do in the event, um, of an annulment. Uh, but certainly if they were to find that that means that this was never a valid marriage and they reset the clock on a 28 year marriage, um, that would be a fundamental problem. And I think that's why this court a long time ago in heath, moved away from this material fraud standard. And that's in effect what attorney Connor is asking this court to do. This court first addressed, uh, the material fraud standard in Gato, which is a 1919 decision. It's cited in both of our briefs. And she'd like the court to go back a century and readopt that standard, which was explicitly overruled in Heath. And this court recognized in heath, this is not a simple commercial contract. There is a public policy consideration here, um, dealing with the effect that this has on one's legal status. And the court should encourage a policy that cautions people to enter into marriages with caution. I I need to remind the court that Mr. Garrity, at the time he was married, this wasn't an 18-year-old who got outta high school, who decided to enter into a marriage. He was 36 years old. He had two advanced degrees. He had a MBA from Harvard. He chose never to ask any of these questions. And he admits that he admitted that in his deposition, he admitted it again at trial, that he never asked his future wife about her history. But I Suppose his position would be, I didn't have to ask. She should have told Me. I suppose that's his position, but there was never any affirmative misrepresentation at all, your Honor, and I cite in my papers, there was fault grounds in this case, and he was dating a correspondent, and I'm using the word dating because that's what he testified to. He was dating a woman throughout the period of this marriage from 2010 to 2013. He was paying this individual $400 per day for every day she would spend with him. He admitted that he had sexual contact with her. He admitted he never asked her about her criminal history, her past drug use. There were two other women in the course of discovery that we realized he was paying for time with Be before your time is up, I, I just have a question about the, uh, stock options. And is my understanding correct that while they were exercised in 2008, that they were options that were distributed for compensation purposes over from the early two thousands or, or not, or were they part of a settlement in his lawsuit? I Don't, they were, it, it's a combination of both. So he had accrued stock throughout the course of his employment. He had a lawsuit as the court is aware against the company, um, which was ultimately settled. My understanding, based upon his trial testimony was that as part of that, he was required to sell back all of the ISO stock to iso. So the corporation basically purchased those shares And those shares had been part of his compensation or they were part of a settlement deal. Uh, it may have been a combination of both. I do not believe that we elicited all of those details. Uh, he testified that he accrued stock options through his employment. Um, I, he did not ex I can tell the court he did not explicitly testify that he received additional stock options as compensation for the settlement. I understood his testimony to be that he was required to sell these, these stock options back. So, you know, my reading of it was that he accrued these throughout the course of his employment. I, but there, it really was not explicitly detailed. Um, nonetheless, I think there's evidence in the record that those funds were relied upon during the course of the marriage, which I think was also significant for the trial court. Mr. Garrity testified that he used the proceeds of the ISO stock to pay off a mortgage on the marital home. He further testified that he used those funds to, they Knew, they knew it was gonna come sooner or later 'cause it had VA immense value. It did. It did. Um, and so, and, and it was also relied upon during the course of the marriage, and I understand his argument to be that, well, I, I want it treated as my separate property and it was a result of my earnings. But there's no case that instructs the trial court to, to make a, a separate determination on that issue. And if you look at Judge Forrest's detailed analysis under our property division statute, he made a finding that due to the long-term marriage and due to both parties respective contributions to the marriage, um, that an equal distribution of the marital assets was equitable and followed the statutory presumption. Thank you. Thank you. Do you need your Time, Counsel? I do, your honor. First point deals with the 401k, which I didn't have time to address in my opening remarks. The trial court did something neither party asked them to do, and divided the 401k equally, Mr. Garrity in a motion for reconsideration, then asked whether he could fund that $2 million from some other force, uh, to avoid the net unrealized appreciation tax, which meant he would've been taxed only on the basis of 1 million as opposed to the 4 million. The court refused to grant him that relief, even though if wherever he funds the 2 million, it's irrelevant, she gets 2 million. Your Opponent argues that, that, that this should be done, that this could be done by a quadro and it wouldn't have any tax adverse tax consequence that would, and that would sort of be my general understanding of it. No, your Honor, because, uh, he gets to only tax. He will be taxed on his 2 million at ordinary income as opposed to if he takes one withdrawal at age 70.5 and then only pays on the basis. So there will be tax on him. But beyond that, the court didn't allow a hearing on that and the court didn't allow him to fund it from another source to avoid tax. I also wanna quickly go back to the issue about the number of years in fraud. This court has long recognized that fraud tolls the discovery rule. Whether you find out about the fraud early on or you find out about the fraud 40 years later, uh, that doesn't, uh, excuse the fraud. And therefore, the number of years before the fraud was discovered should not be the critical fact. With regard to the choice of law. I didn't really get into it because it seemed like the court was going with the fact that the court made an error. Predictability of results never make that assumption. All right. Predictability of results. First factor looks at the law, at the outset of the contract, outset of the contract were in New York. It looks at the form, governmental interest. The court talked about protecting offspring, making sure this woman was not a popper on the state. Factors that don't apply in this case. And then third, with regard to sounder choice of law, you look at whether or not the New York law or New Hampshire law is obsolete. The New York legislature has not overruled annulment law. So based on those three factors, the court aired when it applied the choice of law provisions. Thank you. Thank you. Case submitted. The court is in recess. All.