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Failure to Follow Through On Property Split May Cost Divorced Couple $14M

Divorce settlements are often meticulously balanced agreements that have been negotiated to within an inch of their life, and when couples do on-the-fly changes to them afterwards, chaos can result. The co-founders of Two Boots Pizzeria, an East Village icon that’s become a small national chain, are facing a dilemma that appears to stem from this sort of informal post-judgment renegotiation.

Independent filmmakers, the two founded Two Boots back in 1987, initially planning to spend six months in the industry, and the neighborhood, to raise money to fund a film project. The couple had already created a Sundance Award-winning independent film, No Picnic.

When their by-the-slice concept took off, they expanded their model to offer even more to the relatively blighted East Village of the late 80s and early 90s – a video rental store, a basement performance space, a 100-seat movie theater, whatever they felt the neighborhood needed. Eventually, Two Boots spread to other neighborhoods, and then other parts of the country. Aside from these business and creative ventures, their marriage also produced three children, but ended in divorce about eight years ago.

According to Phil Hartman, 60, the 2008 divorce agreement that he and his ex-wife Doris Kornish, 59, signed included a provision to sell a townhouse at 113 E. Second Street that the couple had owned and lived in for years. After the divorce, Hartman says that he agreed to let Kornish remain in the residence until their youngest child left for college, which happened in 2012.

He claims that Kornish had promised several times to sell the five-story, 10,000 square foot property, valued at $14M, and that the mortgage is now close to default.

Hartman has sued, asking a Manhattan court to evict his ex-wife and allow him to sell the property before they lose it to foreclosure. For her part, Kornish says the suit is false and defamatory, and that it’s her home and the couple agreed not to sell it.

Obviously, there are at least two sides to every case, and the parties will have to work this one out in court if they can’t reach an agreement between themselves, but it raises a number of interesting questions that apply to many divorces. The most important one may be, how do you handle issues that arise after your case is finished? In this instance, let’s suppose that the divorce agreement did say that the townhouse should be sold, and afterwards, the couple decided that the house should be sold later (such as when the youngest child left for college) or even retained for some reason.

During the recession and the housing market crash, it wasn’t unusual for divorcing couples to agree to hold onto a home until market conditions improved, for instance. It’s unlikely that was a consideration here, where the neighborhood and real estate have appreciated considerably since the home was purchased in 1996, but there may have been other factors influencing the decision.

Did anyone get these new terms in writing? Was any post-judgment modification made to ensure the new terms would be enforceable, or that enforcement wouldn’t be commenced by one party based on the old terms? It seems that neither of these happened, which means that in the current case, Mr. Hartman is facing a he-said, she-said battle against his ex-wife. These are not only difficult to prove, but it can be a tall order to ask a judge to evict a person from their home in any circumstance. When they are ex-spouses without a clear controlling agreement, the odds of victory diminish dramatically.

It also raises the question of what happens when one party fails to live up to the terms of the agreement, many years later. In this case, the couple’s youngest child left for college some four years after the divorce was finalized and the settlement written. Assuming that the settlement did order the townhouse liquidated, and the parties merely pushed the date of that out, or even agreed to that in the settlement, what’s the recourse when the child leaves but the former spouse remains and won’t sell?

While it may feel like overkill, the best answer for all of these questions is to work with experienced lawyers to arrive at a negotiated agreement that can be enforced in court, if need be. This may mean developing new contracts between the parties that specify what events will trigger the sale of an asset, creating a date by which an asset must be on the market, or even creating a deadline for paying out one party’s share of the profits.

It might also mean taking your ex to court for enforcement of a previous order, such as when a couple’s marital home was ordered to be sold but the resident spouse failed to put it on the market.

For the co-founders of Two Boots Pizzeria, these lingering issues may have to be worked out by a judge, but it’s entirely possible that properly negotiated agreements earlier would have made a civil suit on this matter unnecessary. While divorce happens, many couples would rather have as little interaction with lawyers as possible. Working together for the sake of the kids or out of mutual respect is a great idea in theory, but in practice, what protects you, your property, your investments, and ultimately, your family, is getting things in writing.

At Zelenitz, Shapiro & D’Agostino, we know that after a divorce, you’re still raising kids with your ex, and you’re still trying to make the best decisions possible for everyone. We negotiate without antagonizing, and can help you get thorough, enforceable orders and contracts that look out for your interests now and for the long term.

Call us today at 718-725-9601 for a free consultation with an experienced Brooklyn divorce attorney.

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