Same-sex couple breach of oral contract case allowed to proceed

November 19, 2013 By Charisma L. Miller, Esq. Brooklyn Daily Eagle

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The Brooklyn appellate court has upheld the oral agreement entered into by former partners in a same-sex relationship to share assets in exchange for one party leaving her job to be a full-time mother.

Brooklyn couple Laura Dee and Dena Rakower were in a long-term relationship that resulted in the creation of two children, with each being the biological parent of one and adopting the other. Having began their relationship prior to legalization of same-sex marriage in New York State, Dee asserted that she and Rakower entered into an oral “joint venture/partnership” agreement whereby Dee would quit her full-time job to take care of the couple’s children.

In exchange for the decrease in income, the agreement, it is alleged, was that Dee would be “entitled to one half of the [Rakower’s] retirement contributions and earnings for the period that the [Dee] did not work at a job that provided her with a retirement plan.” When the couple parted ways in 2007, Dee attempted to enforce the oral agreement and demanded her share of Rakower’s retirement contributions and earnings.

With the facts presented, three of the four Appellate Division, 2nd Department justices found the “existence of a contract.” One foundation of a viable contract is consideration, something of value given or forborne in exchange for a promise.

In this case, the consideration is the “forbearance of the [Dee’s] career, the inability to continue to save toward her retirement during that forbearance, and her maintenance of the household in return for a share in the [Rakower’]s retirement benefits and other assets earned during the period of forbearance,” Justice Leonard Austin wrote in the opinion of the court.

Justice Mark Dillon disagreed with his colleagues, writing in his partial dissent that Dee’s “complaint is devoid of any allegation as to whether and how their assets and pension benefits would be divided in the event the parties were to no longer be together.

“To read such a provision into the parties’ agreement, where none is expressed in the complaint, would result in the invention of implied contractual provisions which, as noted, is prohibited by our law for agreements between unmarried persons living together,” Dillon continued.

The issues involved in the Dee/Rakower case is one that courts will have to wade through even though same sex-couples have achieved the right to marry, noted Dee’s attorney, Michele Kahn. For married couples, the principles of equitable distribution govern the split of assets absent a pre-nuptial agreement.

Many same-sex couples, a number of whom entered into relationships before the passage of marriage equality laws, established “specific and identifiable promises and agreements” about how assets are to be distributed, Kahn said in a letter to the court. With marriage comes the possibility of divorce, and many “questions will remain,” Kahn stated, as same-sex couples go through break-ups and divorces.

David Rubinstein of Weiss & Hiller represented Rakower on appeal, and Roberta Kaplan of Paul, Weiss, Rifkind, Wharton & Garrison assisted Khan in the appeal.