## Facts

- Daniel N. Kohn (decedent) and Barbara Lutz, also known as Barbara Kohn (surviving spouse), executed a prenuptial agreement dated November 10, 2006.
- The prenuptial agreement provided that, upon Kohn’s death, Lutz would receive a payment of $3,500,000, reduced by (1) the amounts of four mortgages and (2) the amount of “any accounts that pass to [Lutz] by operation of law,” including certain joint accounts identified in the agreement.
- After Kohn died, Joel M. Hockett, as executor of Kohn’s estate, commenced a Surrogate’s Court proceeding (including a petition to recover property for the estate) in Suffolk County.
- A dispute arose over how to apply the prenuptial agreement’s reduction clause to the joint accounts that were titled in both spouses’ names and were payable to the survivor by right of survivorship.
- The executor contended that the $3,500,000 payment should be reduced by the full value of the identified joint accounts because, upon Kohn’s death, Lutz became entitled to the entire balances of those accounts.
- Lutz contended that she owned a one-half interest in the joint accounts when they were opened, so only Kohn’s one-half interest “passed” to her at death; under her view, only one-half of the account values should reduce the $3,500,000 payment.
- On cross-motions for summary judgment, the Surrogate’s Court granted summary judgment to Lutz on her counterclaim seeking a decree construing the agreement in her favor and denied the executor’s request for the contrary declaration.
- On renewal, the executor submitted additional proof, including prior testimony from Lutz’s former attorney concerning the negotiation or drafting of the prenuptial agreement and the parties’ intended operation of the offset.
- The Surrogate’s Court nevertheless left its prior determination in place, and the executor appealed (as limited by his brief). Lutz cross-appealed from another portion of the renewal order.

## Issues

1. Whether the prenuptial agreement’s phrase reducing the $3,500,000 payment by “any accounts that pass to [Lutz] by operation of law” was ambiguous as applied to the identified joint accounts.
2. If ambiguous, whether extrinsic evidence— including testimony from Lutz’s former attorney—was admissible to determine the parties’ intent regarding how the joint accounts would offset the $3,500,000 payment.
3. Whether, on renewal and the expanded record, summary judgment should have been granted to Lutz (reducing the payment by only one-half of the joint accounts) or to the executor (reducing the payment by the full value of the joint accounts).

## Decision

- The Appellate Division, Second Department reversed the relevant portions of the Surrogate’s Court’s renewal order.
- The court held that the reduction clause was ambiguous because it was reasonably susceptible to two competing readings: (a) the full balances of the joint accounts “pass” to the survivor at death by operation of law, or (b) only the decedent’s one-half share “passes” because the survivor already owned a one-half interest during the decedent’s life.
- Because the clause was ambiguous, the court held that extrinsic evidence was admissible to determine the parties’ intent, and the expanded proof submitted on renewal could be considered.
- On the renewed record, the court concluded that the executor established the intended construction: the $3,500,000 payment was to be reduced by the four mortgages and the full value of the joint accounts identified in the prenuptial agreement.
- The court denied Lutz’s motion for summary judgment on her counterclaim.
- The court granted the executor’s cross-motion for summary judgment dismissing the counterclaim and remitted the matter to the Surrogate’s Court to enter a decree declaring that Lutz was entitled to $3,500,000 reduced by the amount of the four mortgages and the full value of the funds in the identified joint accounts.
- The court dismissed Lutz’s cross-appeal as academic.

## Legal Principles

- Prenuptial agreements are construed under ordinary contract-interpretation rules.
- Contract language is ambiguous when it is reasonably susceptible to more than one meaning when read in context.
- When a contract provision is ambiguous, courts may consider extrinsic evidence of the parties’ intent; the parol evidence rule does not bar such proof offered to resolve the ambiguity.
- Summary judgment is appropriate only where the movant shows entitlement to judgment as a matter of law; ambiguity may require fact-finding unless the extrinsic evidence resolves intent without a triable issue.
- On a motion to renew, newly submitted facts and proof may be considered; if the renewed record establishes the proper construction as a matter of law, the court may grant summary judgment and direct entry of a declaratory decree.

## Conclusion

In *In re Kohn*, the Second Department held that a prenuptial agreement’s offset for “any accounts that pass” to the surviving spouse by operation of law was ambiguous as applied to specified joint accounts, but that extrinsic evidence submitted on renewal (including prior testimony from the spouse’s former attorney) established the parties’ intent to reduce the $3,500,000 death payment by the four mortgages and the full value of the identified joint accounts; the court therefore denied the spouse’s summary-judgment motion, granted summary judgment to the executor dismissing her counterclaim, and remitted for entry of a decree consistent with that construction.


In re Kohn, 144 A.D.3d 684, 40 N.Y.S.3d 487 (2016)