New York Court: “Happy Wife, Happy Life” Will Not Shield You From A Wrongful Termination Lawsuit

by:  Peter J. Gallagher (@pjsgallagher) (LinkedIn)

Mr right and mrs always right (pd)I do not have these mugs at home, but I should. Most married men will tell you that the easiest way to avoid trouble at home is to remember that your wife is always right (even on those rare occasions when she is obviously wrong). Sometimes this policy of gratuitous appeasement fails, however, as was the case in a recent decision, Edwards v. Nicolai, from the New York Appellate Division (First Department).

In Edwards, defendants were husband and wife, and co-owners of Wall Street Chiropractic and Wellness. The husband was head chiropractor, while the wife was the chief operating officer. The husband hired defendant as a "yoga and massage therapist," and was her direct supervisor. According to plaintiff, her relationship with the husband was entirely professional and he "regularly praised" her work performance.

A little more than one year after hiring plaintiff, the husband allegedly "informed Plaintiff that his wife might become jealous of Plaintiff, because Plaintiff was too cute." This apparently proved to be a prescient statement. Approximately four months later, at 1:30 in the morning, plaintiff received a text from the wife, stating that plaintiff was not "welcome  any longer" at the office, that plaintiff should "NOT ever step foot in [the office] again," and that plaintiff should "stay the [expletive] away from [the wife's] husband." A few hours later, at around 8:30 am, plaintiff received a text from the husband notifying her that she was "fired and no longer welcome in [the] office," and that if she called or tried to come back, defendants would call the police. 

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For Richer And For (Perhaps Very Shortly) Poorer: Wife Must Testify About Husband’s Allegedly Hidden Assets

by:  Peter J. Gallagher (@pjsgallagher)

For husbands, the lesson from a recent Appellate Division opinion is that you cannot assert the marital privilege in an attempt to keep their wives from being deposed by a judgment creditor about assets that you might be trying to conceal from that judgment creditor. In U.S. Electrical Services, Inc. v. Electrical Solutions Group, Inc., plaintiff obtained a judgment for approximately $165,000 against defendants (a corporation and an individual who was alleged to be the sole shareholder of the corporation). In post-judgment proceedings, plaintiff applied for, and obtained, an order of discovery permitting the deposition of the individual defendant's wife based upon plaintiff's assertion that she had knowledge of certain assets that the individual defendant had failed to disclose.

The individual defendant moved to vacate the order, arguing that any testimony from his wife would be subject to the marital privilege — codified at N.J.SA 2A:84A-22 — and that he did not consent to the disclosure of the information. The trial court denied the motion, holding that the individual defendant's wife could be deposed about her "first-hand knowledge and observations of facts and occurrences." The individual defendant appealed.

The Appellate Division affirmed the trial court's order. It started with the general proposition that privileges must be narrowly construed. With this in mind, it turned to the specific elements of the marital privilege: (1) a communication; (2) made in confidence; (3) between spouses. The Appellate Division further noted that the purpose of the privilege is to "encourage[] free and uninhibited communication between spouses, and, consequently, [to] protect[] the sanctity and tranquility of marriage." But, because the "only effect" of the privilege is to "suppress[] [] relevant evidence," it must be "confined as narrowly as is consistent with the reasonable protection of marital communications."

In U.S. Electrical Services, the individual defendant argued that any "personal and business financial records" that he "brought into the martial home where [his wife] may have seen them [were] necessarily [ ] confidential communication[s] between spouses." The Appellate Division disagreed for a number of reasons.

First, it held that documents that were stored in the marital home and were observed by a spouse do not a "confidential communication" make. The privilege protects communications, not conduct or occurrences. Thus, a wife's observations of what her husband did, including bringing documents into the marital home, are not covered by the privilege. The court did hold, however, that communications about the documents could potentially be protected under the marital privilege "provided the right proofs" (which were not present in the instant case).

Second, the Appellate Division held that the contents of the documents were not automatically privileged "just because both parties have seen them." In this regard, the court held that many business and financial records are generated by, or submitted to, third parties outside of the marital home. As a result, they may not be confidential at all. Moreover, the Appellate Division observed that, even if documents were initially confidential, "placement in the home where another member of the household or a guest could discover them does not guarantee continued confidentiality." At a minimum, a party seeking to assert the privilege would have to demonstrate that the underlying documents remained confidential while in the marital home.

Third, the Appellate Division held that the act of leaving document in the marital home does not encourage communications between spouses or protect marriages, the very purpose behind the privilege. Absent convincing evidence that applying the privilege would protect and further the interests it was designed to advance, the Appellate Division saw no reason to recognize the privilege.

Ultimately, the take home message from U.S. Electrical Services is that simply bringing documents into the marital home, and even sharing them (or making them visible or available to  your spouse) does not bring the existence or content of those documents within the marital privilege. But, both the trial court and Appellate Division left open the possibility that communications about such documents, in the right situation, might be privileged.

How Lady Gaga Keeps Her Poker Face And Avoids The Paparazzi When Looking For An Apartment

by:  Peter J. Gallagher

The New York Times recently reported on the lengths celebrities go to in order to maintain their anonymity when buying property in New York City ("Keep My Boldface Name Out Of It").  Real estate brokers interviewed for the article described signing confidentiality agreements with clients, taking them to view apartments in the dead of night, and employing code words for their clients in order to avoid the ever-prying eyes of professional celebrity watchers.  They also described a tactic that is becoming more popular with celebrities, purchasing property in the name of a trust or limited liability company to hide the identity of the true owner, as in this example of a famous tabloid friend:

[W]hen Jennifer Aniston — whose search for a home in Manhattan was chronicled with the same intensity as every change in her hairstyle and relationship status — reportedly settled on a West Village apartment last month, her name appeared nowhere on the paperwork.

But her dog’s did. As was widely reported, the corgi-terrier mix (who has since died) lent his name to the Norman’s Nest Trust, which purchased several apartments in a building on West 12th Street; Bruce Lagnese, Ms. Aniston’s business manager, signed the documents.

Increasingly, however, celebrities are not alone in seeking to hide their identities.  The article notes that "Wall Street types are more eager than ever to keep their multimillion-dollar real estate deals away from prying eyes," both because of the "public scorn" with which many are held and, more importantly apparently, to protect assets from their spouses in case their marriages "hit the rocks."  

The article does note that not all celebrities hide from the spotlight as they apartment shop.  Courtney Love shared nearly every aspect of her search for the "perfect downtown town house" through correspondence with the editors at Curbed NY and through Twitter.  In case you are wondering, she settled on renting a cozy place on West 10th Street for $28,000 a month.