Panel Reinstates Cause of Action Based on Alleged Oral Contract

, New York Law Journal

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Justice Austin

A split appellate court has recognized the validity of a breach of contract claim filed by a partner in a longtime unmarried lesbian relationship who claimed she had quit her job to care for the couple's children in exchange for a share of the couple's assets and the working partner's retirement benefits.

A 3-1 panel of the Appellate Division, Second Department, reinstated the claim of Laura Dee.

"There is no reason, on this record, at this early stage of the litigation to conclude, as the Supreme Court did, that the oral agreement between the parties cannot serve as the basis for a breach of contract cause of action," Justice Leonard Austin (See Profile) said in Dee v. Rakower, 2011-02738, joined by Justices Ruth Balkin (See Profile) and Jeffrey Cohen (See Profile).

The court agreed to resolve the appeal though the parties settled, apparently accepting the position of Dee's pro bono attorney, Michele Kahn of Kahn & Goldberg, that the case involved important issues for both gay and heterosexual couples.

Kahn noted in a letter to the court that there were "tens of thousands of unmarried, mostly gay, couples in the State." Although those couples can now marry, she said "questions will remain" about the application of equitable distribution laws to "specific and identifiable promises and agreements" prior to their marriages.

Kahn also argued that, according to the Census Bureau,"an increasing number of couples are rejecting the institution of marriage."

"The manner in which this couple conducted their lives—relying and acting upon each others' specific promises, without formal writings, is the way that most unmarried couples live their lives," she wrote. "Inevitably, many of these couples will break up, and inevitably many of these couples will be involved in litigation over property and assets that were acquired during the relationship," Kahn wrote.

The Second Department majority reversed a lower court that had thrown out the breach of contract claim. But Justice Mark Dillon (See Profile) argued that the claim should have been rejected.

"The 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," he wrote. "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."

He emphasized that none of his partial dissent reflected views on the state's marriage equality law. He said he was "sensitive to the complications occasioned by various forms of familial relationships" but had to abide by the rules established that govern the distribution of assets through marriage or enforceable contracts.

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