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New York Matrimonial Trial Handbook

The New York Matrimonial Trial Handbook by Joel R. Brandes is available online in the print edition at the Bookbaby Bookstore and other bookstores. It is now available in Kindle ebook editions and epub ebook editions in our website bookstore. It is also available at Amazon Kindle, Barnes & Noble and Goodreads.

The New York Matrimonial Trial Handbook was written for both the attorney who has never tried a matrimonial action and for the experienced litigator. It is a “how to” book for lawyers. This 836 page handbook focuses on the procedural and substantive law, as well as the law of evidence, that an attorney must have at his or her fingertips when trying a matrimonial action. It is intended to be an aid for preparing for a trial and as a reference for the procedure in offering and objecting to evidence during a trial. The handbook deals extensively with the testimonial and documentary evidence necessary to meet the burden of proof. There are thousands of suggested questions for the examination of witnesses at trial to establish each cause of action and requests for ancillary relief, as well as for the cross-examination of difficult witnesses. Table of Contents

Wednesday, December 24, 2008

French Prenuptial Agreement Adopting "Separation of Estates” Regime Constituted Waiver of Equitable Distribution.

Court of Appeals Holds French Prenuptial Agreement Opting out of “Community Property” Scheme in Favor of a “Separation of Estates” Regime Constituted Waiver of Equitable Distribution. Error to Preclude Recovery of Counsel Fees to Oppose Affirmative Defense Predicated on Prenuptial Agreement.


In Van Kipnis v Van Kipnis, --- N.Y.3d ----, 2008 WL 5244630 (N.Y.) the Court of Appeals held that the parties' foreign prenuptial agreement precluded the equitable distribution of certain property under New York law, affirming the courts below. Plaintiff wife and defendant husband were married in France in 1965. At the time of the parties' marriage, the wife was a Canadian citizen from Quebec studying at the Sorbonne and husband was a citizen of the United States, having recently completed college. Prior to the marriage ceremony, wife had a "Contrat de Mariage" drafted under the French Civil Code and arranged for legal counsel to explain the terms of the prenuptial agreement in English to husband. The agreement was executed by the parties on September 30, 1965. Under the provisions of the Contrat de Mariage, the parties opted out of the community property scheme (the governing custom in France) in favor of a separation of estates regime. In relevant part, the agreement provided: "The future spouses declare that they are adopting the marital property system of separation of estates, as established by the French Civil Code. "Consequently, each spouse shall retain ownership and possession of the chattels and real property that he/she may own at this time or may come to own subsequently by any means whatsoever. "They shall not be liable for each other's debts established before or during the marriage or encumbering the inheritances and gifts that they receive. "The wife shall have all the rights and powers over her assets accorded by law to women married under the separate-estates system without any restriction." After the wedding, the parties moved to New York where they resided during their38-year marriage. The Husband was employed in finance while wife worked as a professor at Cooper Union and later as a cultural counselor for the Quebec government. The Wife was also the primary caretaker of the parties' two children, now emancipated. Throughout their marriage, the parties maintained separate accounts and assets, with the exception of the joint ownership of their two homes--a $625,000 house in Massachusetts and a cooperative apartment in Manhattan valued at $1,825,000. In 2002, the wife commenced an action for divorce and ancillary relief. Before trial, Supreme Court granted husband's motion to amend his answer to assert the 1965 prenuptial agreement as a defense to wife's equitable distribution claims. Supreme Court appointed a Special Referee to conduct a hearing on the issues of equitable distribution, maintenance and counsel fees. The Referee determined that the French contract provided for the separate ownership of assets held in the parties' respective names during the course of the marriage. As a result, the husband retained his liquid assets of approximately $7 million and wife kept her assets ranging from $700,000 to $800,000. As to the jointly held properties, which the parties agreed were subject to equitable distribution, the Referee recommended that the wife be awarded the Manhattan apartment, together with $75,000 in reimbursement for repairs, and that the husband be awarded the country home in Massachusetts. The Referee proposed that the wife receive $7,500 per month in maintenance until either husband or wife dies or the wife remarries. The Referee concluded that legal fees expended in connection with wife's challenge to the prenuptial agreement were not compensable under Domestic Relations Law 237. After deducting that portion of wife's claim for counsel fees attributable to contesting the agreement, the Referee awarded wife $92,779.57 in attorneys' fees. Supreme Court confirmed the Referee's report. The Appellate Division affirmed , with one Justice dissenting. The Court of Appeals modified. The Court of Appeals rejected the wife’s contention that all of the parties' property should be subject to equitable distribution under Domestic Relations Law 236(B)(5) because the 1965 agreement, drafted and executed in France, was intended to apply to property ownership during the course of the marriage, but not to the distribution ofproperty in the event of a divorce. In her view, the primary purpose of theagreement was for each spouse to avoid liability for the other's debts. The Court of Appeals noted that it is well settled that duly executed prenuptial agreements are generally valid and enforceable given the "strong public policy favoring individuals ordering and deciding their own interests through contractual arrangements" (Bloomfield v Bloomfield, 97 N.Y.2d 188, 193 [2001]. Prenuptial agreements addressing the ownership, division or distribution of property must be read in conjunction with Domestic Relations Law 236(B), enacted in 1980 as part of New York's Equitable Distribution Law. The statute provides that, unless the parties agree otherwise in a validly executed prenuptial agreement pursuant to section 236(B)(3), upon dissolution of the marriage marital property must be distributed equitably between the parties while separate property shall remain separate. As relevant here, separate property is defined to include "property described as separate property by written agreement of the parties pursuant to subdivision three of this part" . Under the statute, a prenuptial agreement may include a "provision for the ownership, division or distribution of separate and marital property" and is valid and enforceable if it "is in writing, subscribed by the parties, and acknowledged or proven in the manner required to entitle a deed to be recorded" (Domestic Relations Law 236[B][3]. The Domestic Relations Law therefore contemplates two basic types of prenuptial agreement that affect the equitable distribution of property. First, parties may expressly waive or opt out of the statutory scheme governing equitable distribution. Second, parties may specifically designate as separate property assets that would ordinarily be defined as marital property subject to equitable distribution under Domestic Relations Law 236(B)(5). Such property would then remain separate property upon dissolution of the marriage. In either case, the intent of the parties "must be clearly evidenced by the writing" .(Tietjen v. Tietjen, 48 AD3d 789, 791 [2d Dept 2008] ). Here, the parties' written agreement, adopting a "separation of estates" scheme,fell within the second prenuptial agreement category. The agreement specifiedthat separate ownership of assets applies not only to the property that each partyhad acquired at the time of the marriage, but also to property that they "may cometo own subsequently by any means whatsoever." It further assures that "wife shallhave all the rights and powers over her assets accorded by law to women marriedunder the separate-estates system without any restriction." The Court held that contrary to wife's argument, the Domestic Relations Law contains no categorical requirement that a prenuptial agreement must set forth an express waiver of equitable distribution.When read together, Domestic Relations Law s 236(B)(1)(d)(4) and (B)(5)(b)provide that assets designated as separate property by a prenuptial agreement willremain separate after dissolution of the marriage. That was the case here. The Court of Appeals agreed with the courts below that the agreement constituted an unambiguous prenuptial contract that precluded equitable distribution of the parties' separate property, rendering it unnecessary to resort to extrinsic evidence.

The wife also argued that the courts below erred in precluding her recovery of legal fees under Domestic Relations Law 237 for services provided in opposing her husband's affirmative defense predicated on the prenuptial agreement. The Court of Appeals agreed with her. Neither party sought to set aside the prenuptial agreement. Instead, their dispute centered on whether the terms of the contract applied to the ownership of assets upon divorce. In this respect, her request was similar to the fee application inVentimiglia v. Ventimiglia (36 AD3d 899 [2d Dept 2007] ), where attorneys' feeswere awarded to a party who contested her spouse's affirmative defense based on anantenuptial agreement. It held that remittal to Supreme Court for reconsideration wasnecessary because this portion of wife's fee application should not have beenexcluded as a matter of law.

Friday, December 19, 2008

New Attorney Conduct Rules for New York

On December 17, 2008 Chief Judge Judith S. Kaye and the Presiding Justices of the Appellate Division announced a new set of attorney conduct rules for New York, effective April 1, 2009. The Rules of Professional Conduct, which will replace the existing Disciplinary Rules, introduce a number of important ethics changes for New York lawyers and are set forth in a new format and numbering system that are based on the ABA Model Rules.
Highlights of significant ethics changes contained in the new Rules of Professional Conduct are set forth below:
Adoption of ABA Model Rules Format This standardized format, used in 47 other states, is organized according to a lawyer’s role as litigator, counselor, negotiator, etc., and will facilitate a lawyer’s ability to assess specific ethical issues in context. It has generated a national body of ethics law that will ease ethical research and guidance by New York lawyers as well as out-of-state lawyers seeking to research and follow New York’s rules.
Scope of Representation and Allocation of Authority Between Client and Lawyer (Rule 1.2)
Rule 1.2 codifies a lawyer's obligation to abide by a client’s decisions regarding the objectives of representation, including whether to settle a civil matter or to enter a plea, waive a jury trial or testify in a criminal matter.
Fees and Division of Fees (Rule 1.5)
Rule 1.5(b) requires a lawyer to communicate fees and expenses to the client before or within a reasonable time after commencement of representation, thereby extending the current letter of engagement rule (22 NYCRR 1215), without the necessity of a writing, to all matters currently excepted under that rule.
Confidentiality of Information (Rule 1.6) and Conduct Before a Tribunal (Rule 3.3)
Rule 1.6(a)(2) permits disclosure of confidential client information impliedly authorized to advance the client’s best interests when it is reasonable or customary.
Rule 1.6(b) permits a lawyer to reveal or use confidential client information necessary to “prevent reasonably certain death or substantial bodily harm.”
Rule 1.6(b)(4) permits a lawyer to reveal confidential information to the extent necessary to secure legal advice about compliance with ethical rules or other laws.
Rule 3.3 requires a lawyer to correct a false statement of material fact or law previously made to the tribunal by the lawyer or the client and to take necessary remedial measures, including disclosure of confidential client information.
Rule 3.3 requires a lawyer who knows that a person intends to, is or has engaged in criminal or fraudulent conduct related to the proceeding to take reasonable remedial measures, including disclosure of confidential client information.
Current Clients: Specific Conflict of Interest Rules (Rule 1.8) Rule 1.8(c) prohibits a lawyer from soliciting any gift from a client, including a testamentary gift, for the benefit of the lawyer or a person related to the lawyer; or from preparing on a client’s behalf an instrument giving a gift to the lawyer or a person related to the lawyer, unless the lawyer or recipient of the gift is related to the client and a reasonable lawyer would find the transaction fair and reasonable. In a business transaction between lawyer and client, Rule 1.8(a) requires the lawyer to advise the client in writing to seek the advice of independent counsel and to give the client a reasonable opportunity to do so; and the client must give informed written consent that addresses the lawyer’s role in the transaction and whether the lawyer is representing the client in the transaction. Special Conflicts of Interest for Former and Current Government Officers and Employees (Rule 1.11) Rule 1.11 governs the lawyer’s obligations based on conflicts presented when a lawyer moves from government to private employment and vice versa, and provides that such conflicts may be waived by the government entity upon informed consent. Duties to Prospective Clients (Rule 1.18) Rule 1.18 governs a lawyer’s duties to a prospective client when that person and the lawyer ultimately do not form an attorney-client relationship. It applies the same duty of confidentiality owed to former clients. However, a lawyer or law firm may nonetheless oppose a former prospective client if the lawyer’s current client and former prospective client give informed written consent, or the law firm may do so if certain conditions are met, including timely screening of the disqualified lawyer and prompt written notice to the former prospective client. The protections of Rule 1.18 are expressly denied to a prospective client who communicates with a lawyer in order to disqualify the lawyer from handling a materially adverse representation in the same or a substantially related matter. Voluntary Pro Bono Service (Rule 6.1) Though not enforceable through the disciplinary process, Rule 6.1 reaffirms a lawyer’s responsibilities to provide at least 20 hours of pro bono legal services each year to poor persons, and to contribute financially to organizations that provide legal services to poor persons. Other Noteworthy Developments Rule1.3 (Diligence) mandates that a lawyer "shall not neglect" a legal matter and obliges a lawyer to “act with diligence and promptness” in representing a client. Rule 1.4 (Communication) codifies a lawyer’s duty to communicate effectively with the client, including keeping the client reasonably informed about the status of the matter promptly complying with a reasonable request for information. Rule 1.12 applies conflicts rules to arbitrators and mediators, other third-party neutrals and law clerks. Rule 1.14 provides guidance to a lawyer whose client has diminished capacity. It allows the lawyer to take action to protect the client from substantial physical and financial harm, and permits disclosure of confidential client information to the extent reasonably necessary to protect the client’s interests. Rule 2.4 deals with lawyers serving as third-party neutrals, such as arbitrators and mediators, and sets forth their obligations with respect to unrepresented parties. Rule 3.2 prohibits a lawyer from using means that have no substantial purpose other than to delay or prolong a proceeding or cause needless expense. Rule 3.9 requires a lawyer to alert legislators and administrative agencies as to when the lawyer is speaking as a paid advocate rather than a public citizen. Rule 4.3 sets forth a lawyer’s obligations when dealing, on behalf of a client, with a person who is not represented by counsel. Rule 6.4 sets forth a lawyer’s duties when participating in law reform activities that may affect the interests of the lawyer’s clients. Rule 8.2 expands the prohibition against false statements of fact regarding “qualifications” of judges or judicial candidates to include false statements about “conduct or integrity.” The new Rules of Professional Conduct are available at http://www.nycourts.gov/rules/jointappellate/ (Source: http://www.nycourts.gov/press/pr2008_7.shtml) (Last accessed: December 18, 2008)

Saturday, November 01, 2008

Court of Appeals revised 22 NYCRR part 500

On October 16, 2008, the Court of Appeals revised 22 NYCRR part 500 (Court of Appeals Rules of Practice) effective November 5, 2008, or as soon thereafter as section 52 of the Judiciary Law is complied with.

This commentary on the revisions to 22 NYCRR part 500 (Court ofAppeals Rules of Practice) discusses the rule changes that affect civil practice before the Court.

500.1 General Requirements
This rule was amended to clarify the definition of "papers filed" (§ 501[b]), andto separately highlight information that shall be provided for all filings (§§501[d]-[h]). The word “record” was added to § 501[b]).

§ 500.1. General Requirements
(a) All papers shall comply with applicable statutes and rules, particularly thesigning requirement of 22 NYCRR 130-1.1-a.
(b) Papers filed. "Papers filed" means briefs, papers submitted pursuant to sections 500.10 and 500.11 of this Part, motion papers, records and appendices (hereinafter "papers filed").
(c) Method of reproduction. All papers filed may be reproduced by any method that produces a permanent, legible, black image on white paper. Reproduction on both sides of the paper is encouraged.
(d) Designation of original. Where this Part requires the filing of multiple copies of papers, the parties shall identify on its cover the original document filed.
(e) Proof of service. The original affidavit of service shall be affixed to theinside of the back cover of the original of each paper filed.
(f) Disclosure statement. All papers filed by or on behalf of a corporation orother business entity shall contain a disclosure statement listing all itsparents, subsidiaries and affiliates, or state that no such parents, subsidiariesand affiliates exist.
(g) Citation form. Where New York authorities are cited in any submissions, New York Official Law Report citations shall be included, if available.
(h) Inclusion of decisions. Copies of decisions that are not officiallypublished, or are not otherwise readily available, shall be included in thesubmission in which such decisions are cited.
(i) Paper quality, size and binding. Paper shall be opaque, unglazed, white and eleven by eight and one-half inches. Briefs, appendices, records and motionpapers shall be bound on the left side in a manner that keeps all pages securelytogether, without plastic covers or any metal fasteners or similar hard materialthat protrudes or presents a bulky surface or sharp edge.
(j) Computer-generated papers filed. Papers filed prepared on a computer shall be printed in either a serifed, proportionally spaced typeface, such as Times Roman, or a serifed monospaced typeface, such as Courier. Narrow or condensed typefaces and condensed font spacing shall not be used. Except in headings, words shall not be in bold type or type consisting of all capital letters.
(1) Papers filed using a proportionally-spaced typeface. The body of any papersfiled using a proportionally-spaced typeface shall be printed in 14- point type.Footnotes shall be printed in type of no less than 12 points.
(2) Papers filed using a monospaced typeface. The body of any papers filed usinga monospaced typeface shall be printed in 12-point type containing no more than 10and one-half characters per inch. Footnotes shall be printed in type of no lessthan 10 points.
(k) Typewritten papers filed. Typewritten papers filed shall be neatly prepared in legible type no smaller than elite and in a pitch of no more than twelve characters per inch. The original, ribbon typescript of any papers filed shall besigned and filed as the original required by this Part. Carbon copies will not beaccepted.
(l) Margins, line spacing and page numbering of computer-generated and typewritten papers filed. Computer-generated and typewritten papers filed shallhave margins of one inch on all sides of the page. Text shall be double-spaced,but quotations more than two lines long may be indented and single-spaced.Headings and footnotes may be single-spaced. Pages shall be consecutivelynumbered in the center of the bottom margin of each page.
(m) Handwritten papers. Self-represented litigants may serve and filehandwritten papers. Such papers shall be neatly prepared in cursive script orhand printing in black ink. Pages shall be consecutively numbered in the centerof the bottom margin of each page. The filing of handwritten papers is notencouraged. The clerk of the Court may reject illegible papers.
(n) Filing of papers. All papers filed shall be addressed to the clerk ofthe Court at 20 Eagle Street, Albany, New York 12207, not to a Judge or Judges of the Court, and shall be served on each other party in accordance with the requirements of this Part. Submissions shall not be filed by facsimile transmission or electronic mail, except when requested by the clerk of the Court.
(o) Acknowledgment of receipt of papers. A request for an acknowledgment of receipt of papers shall be accompanied by the papers filed and a self-addressed, postage pre-paid postcard or envelope. Parties proceeding as poor persons or requesting poor person relief shall comply with this requirement if acknowledgment of receipt of papers is desired.
(p) Nonconforming papers. The clerk of the Court may reject papers thatdo not conform to the requirements of this Part.

500.2. Companion Filings on Compact Disk, Read-Only Memory (CD-ROM)
Only grammatical changes were made to this section.
§ 500.2. Companion Filings on Compact Disk, Read-Only Memory (CD-ROM)
(a) The Court allows the submission of briefs, records or appendices on compactdisk, read-only memory (CD-ROM) as companions to the requisite number ofprinted briefs, records and appendices filed and served in accordance with thisPart if all parties have consented to the filing of the companion CD-ROM brief andrecord or appendix. The Court, by order on motion of any party or on its ownmotion, may require such filing by a party or amicus.
(b) The companion CD-ROM brief, record or appendix shall comply with the currenttechnical specifications available from the clerk's office.
(c) The companion CD-ROM brief, record or appendix shall be identical in contentand format (including page numbering) to the printed version, except that eachalso shall be word-searchable and shall provide electronic links (hyperlinks) tothe complete text of any authorities cited therein, and to all documents or othermaterial constituting the record on appeal. The disk and container shall belabeled to indicate the title of the case and the documents reproduced on thedisk.
(d) Unless the Court requires a greater number, 10 disks or sets of disks shallbe filed, with (1) proof of service of at least one disk or set on each other party; and (2) a copy of the parties' stipulation permitting, or the Court's order directing, such filing.
(e) Unless the Court requires otherwise, appellant's filing and respondent'sfiling, or a joint filing by appellant and respondent, are due 10 days after thefinal due date for filing appellant's reply brief (see section 500.12[d] of thisPart).
500.3. Fees
Only grammatical changes were made to this section.
§ 500.3. Fees
(a) Upon the filing of record material in a civil appeal pursuant to section500.11, 500.12 or 500.26(a) of this Part, appellant shall provide the clerk of theCourt the fee in the amount specified in CPLR 8022 in the form of an attorney'scheck, certified check, cashier's check or money order payable to "State of NewYork, Court of Appeals" unless:
(1) appellant demonstrates exemption from the fee requirements by statute orother authority;
(2) other payment arrangements have been made with the clerk of the Court;
(3) the appeal is accompanied by a motion requesting poor person relief or amotion requesting relief from payment of the filing fee; or
(4) appellant in the Court of Appeals provides a copy of an order issued by anycourt in the action or proceeding to which the appeal relates granting that partypoor person relief, together with a sworn affidavit that the same financialcircumstances exist at the time of filing in the Court of Appeals as when theorder granting poor person relief was issued.
(b) Upon the filing of each motion or cross motion in a civil case pursuant tosections 500.21 through 500.24 or 500.26(b) of this Part, movant shall provide the clerk of the Court with the fee in the amount specified in CPLR 8022in the form of an attorney's check, certified check, cashier's check or moneyorder payable to "State of New York, Court of Appeals"Appeals" unless:
(1) movant demonstrates exemption from the fee requirements by statute or otherauthority;
(2) other payment arrangements have been made with the clerk of the Court;
(3) the motion or cross motion is accompanied by a motion requesting poor personrelief or a motion requesting relief from payment of the filing fee; or
(4) movant in the Court of Appeals provides a copy of an order issued by anycourt in the action or proceeding to which the motion relates granting that partypoor person relief, together with a sworn affidavit that the same financialcircumstances exist at the time of filing in the Court of Appeals as when theorder granting poor person relief was issued.
(c) Except as provided in subsections (a) or (b) above or where otherwisespecifically required by law or by the Court, no fees shall be charged by theclerk of the Court.
500.5 Sealed Documents and Confidential Material
Subsection (e) was added to address the filing of confidential matter subject toa statutory proscription against publication. The title of the Section was changed to add the words “confidential material”.
§ 500.5. Sealed Documents and Confidential Material
(a) Documents under seal are not available for public viewing.
(b) Any papers sealed by a court below or otherwise required by statute to besealed shall be sealed in the Court of Appeals.
(c) Any party to an appeal or motion may request that papers not sealed below besealed in this Court. Such requests shall be by an original and one copy of amotion pursuant to section 500.21 of this Part, with proof of service of one copyon each other party.
(d) Documents and transcripts ordered sealed by the Court of Appeals or a courtbelow shall be reproduced in separate volumes of the record on appeal. Each suchvolume shall be clearly identified on the cover as containing sealed material.
(e) To the extent possible, papers filed shall not contain confidential material subject to a statutory proscription against publication. Where such material must be included, the cover of the paper filed shall clearly indicate that the documentcontains confidential material.

500.6 Developments Affecting Appeals, Certified Questions, Motions and CriminalLeave Applications
This rule was expanded to require counsel on an appeal to timely inform theclerk's office of any changes in the status of related litigation originallyreflected on appellant's preliminary appeal statement, and of related litigationinitiated after that statement was filed in this Court.

§ 500.6. Developments Affecting Appeals, Certified Questions, Motions and CriminalLeave Applications
Counsel shall timely inform the clerk's office and each other party by letter ofall developments affecting appeals, section 500.27 certified questions, motionsand criminal leave applications pending in this Court, including contemplated andactual settlements, circumstances or facts that could render the matter moot andpertinent developments in applicable case law, statutes and regulations. For appeals, counsel shall also timely inform the clerk's office and each other party by letter of any changes in the status of any related litigation reported on the appellant's preliminary appeal statement or of any related litigation commenced after the filing of appellant's preliminary appeal statement. Such letters shall contain proof of service on each other party.

500.7. Post-Briefing, Post-Submission and Post-Argument Communications
Only Grammatical changes were made to this section
§500.7. Post-Briefing, Post-Submission and Post-Argument Communications
Except for communications providing the information required by section 500.6 ofthis Part or those specifically requested by the Court, post-briefing,post-submission and post-argument written communications to the Court are notfavored, and shall be returned to the sender unless accepted by the clerk of theCourt following a written request with a copy of the proposed submission and proofof service of one copy on each other party.

500.8. Withdrawal of Appeal, Motion or Criminal Leave Application
Only grammatical changes were made to this section
§ 500.8. Withdrawal of Appeal, Motion or Criminal Leave Application
(a) Appeals.
(1) Before argument or submission, an appeal shall be marked withdrawn uponreceipt by the clerk of the Court of a stipulation of withdrawal signed by counselfor all parties <<+to the appeal+>> and by all self-represented litigants and, incriminal appeals, additionally by defendant.
(2) After argument or submission, a request to withdraw an appeal shall besupported by a stipulation of withdrawal signed by counsel for all parties to theappeal and by all self-represented litigants and, in criminal appeals, additionally by defendant. The request shall be submitted to the Court for determination.
(b) Motions.
(1) Before its return date, a motion shall be marked withdrawn upon receipt bythe clerk of the Court of a written notice of withdrawal signed by counsel for themoving party, with proof of service of one copy on each other party.
(2) After the return date, a request to withdraw a motion shall be supported by astipulation of withdrawal signed by counsel for all parties to the motion and byall self-represented litigants. The request shall be submitted to the Court for determination.
(c) Criminal Leave Applications. A request to withdraw an application shall bein writing and, if made on behalf of a defendant, shall also be signed bydefendant. The request shall contain an indication of service of one copy uponall parties and, if the request is made by defendant personally, proof of serviceupon defense counsel, if defendant is represented. The request shall be submittedto the assigned Judge for determination.
500.9. Preliminary Appeal Statement
Only grammatical changes were made to this section.

§ 500.9. Preliminary Appeal Statement
(a) Within 10 days after an appeal is taken by (1) filing a notice of appeal inthe place and manner required by CPLR 5515, (2) entry of an order granting amotion for leave to appeal in a civil case, or (3) issuance of a certificategranting leave to appeal in a criminal case, appellant shall file withthe clerk of the Court an original and one copy of a preliminary appeal statementon the form prescribed by the Court, with the required attachments and proof ofservice of one copy on each other party. No fee is required at the time of filingthe preliminary appeal statement.
(b) Where a party asserts that a statute is unconstitutional, appellant shallgive written notice to the Attorney General before filing the preliminary appealstatement, and a copy of the notification shall be attached to the preliminaryappeal statement. The notification and a copy of the preliminary appeal statementshall be sent to the Solicitor General, Department of Law, The Capitol, Albany,New York 12224.
(c) After review of the preliminary appeal statement, the clerk will notify the parties either that review pursuant to section 500.10 or section 500.11 of this Part shall commence or that the appeal shall proceed in the normal course.

§ 500.10. Examination of Subject Matter Jurisdiction (No changes were made to this section)
500.11 Alternative Procedure for Selected Appeals
Subsections (c) (3) and (d) were changed to reflect the addition of §500.1 (f).
Subsection (e) was added to set forth the Court's longstanding practice onalternative review appeals of not permitting appellants to file a reply brief,except where so authorized by the Court or on the Court's own motion.
Former subsection (e) was changed to (f).
Former subsection (h) was added to require counsel to indicate in its 500.11 letter thestatus of any related litigation.
Former subsections (f) was changed to (g) and former subsection (g) was changed to (i).

§ 500.11. Alternative Procedure for Selected Appeals
(a) On its own motion, the Court may review selected appeals by an alternativeprocedure. Such appeals shall be determined on the intermediate appellate courtrecord or appendix and briefs, the writings in the courts below and additionalletter submissions on the merits. The clerk of the Court shall notify all partiesby letter when an appeal has been selected for review pursuant to this section.Appellant may request such review in its preliminary appeal statement. Respondentmay request such review by letter to the clerk of the Court, with proof of serviceof one copy on each other party, within five days after the appeal is taken.
(b) Appeals may be selected for alternative review on the basis of:
(1) questions of discretion, mixed questions of law and fact or affirmed findingsof fact, which are subject to a limited scope of review;
(2) recent, controlling precedent;
(3) narrow issues of law not of statewide importance;
(4) nonpreserved issues of law;
(5) a party's request for such review; or
(6) other appropriate factors.
(c) Appellant's filing. Within 25 days after the date of the clerk of theCourt's letter initiating the alternative review procedure, appellant shall:
(1) file three copies of the intermediate appellate court record or appendix andthree copies of each brief filed by each party in the intermediate appellatecourt. Original exhibits to be relied upon which are not in the record orappendix at the intermediate appellate court shall be filed or, if they are onfile with the clerk of the trial court, subpoenaed to this Court and the Court soadvised by letter. Such exhibits shall be clearly identified and, whereappropriate, their authenticity shall be certified or stipulated to;
(2) file an original and two copies of a letter stating its arguments in supportof appellant's position on the merits. If appellant objects to review pursuant tothis section, the letter shall also explain that position;
(3) include as part of its submission a disclosure statement pursuant to section 500.1(f) of this Part, if necessary;
(4) file proof of service of one copy of its arguments on each other party; and
(5) remit the fee, if any, required by section 500.3(a) of this Part.
(d) Respondent's filing. Within 20 days after service of appellant's submission,respondent shall file an original and two copies of a letter stating its argumentsin support of its position on the merits. If respondent objects to reviewpursuant to this section, the letter shall also explain that position. Respondentshall include in its submission a disclosure statement pursuant to section 500.1(f) of this Part, if necessary, and file proof of service of one copy of its arguments on each other party.
(e) Appellant's reply. A reply is not permitted unless authorized by the Court upon request of the appellant, which shall accompany the proposed filing, or onthe Court's own motion.
(f) Abandonment of arguments. A party shall be deemed to have abandoned any argument made in the intermediate appellate court briefs not addressed or reserved in the written submission to this Court.
(g) Review of subject matter jurisdiction. An appeal selected for reviewpursuant to this section is subject to dismissal on the Court's own motion, shouldit be determined that the Court is without subject matter jurisdiction.
(h) Related litigation. Where necessary, each letter filing shall indicate thestatus of any related litigation as of the date of the letter's filing.
(I ) Termination of alternative procedure. If the Court terminates its review of the appeal pursuant to this section before disposition, the clerk of the Courtwill notify counsel by letter and set a schedule for full briefing of the appeal.
(j) Amicus curiae relief. The Attorney General of the State of New York may file, no later than the filing date set for respondent's submission, an originaland two copies of an amicus curiae submission without leave of the Court, withproof of service of one copy on each party. Any other proposed amicus curiaeshall request amicus curiae relief pursuant to section 500.23(a)(2) of this Part.
500.13 Content and Form of Briefs in Normal Course Appeal
Subsection (a), governing the contents of briefs on normal course appeals, wasexpanded to require that any disclosure statement required by subsection 500.1(f),and an indication of the status of any related litigation, each be included beforethe table of contents in the party's principal brief. The subsection was furtherexpanded to require appellant to include a statement demonstrating the Court'sjurisdiction over the appeal and the reviewability of issues raised on the appeal.
Subsection (b), treating brief covers, was expanded to state that plastic coversshall not be used.

§ 500.13. Content and Form of Briefs in Normal Course Appeals
(a) Content. All briefs shall conform to the requirements of section 500.1 ofthis Part and contain a table of contents, a table of cases and authorities and,if necessary, a disclosure statement pursuant to section 500.1(f) of this Part. Such disclosure statement shall be included before the table of contents in the party's principal brief. Appellant's brief shall include a statement showing that the Court has jurisdiction to entertain the appeal and to review the questions raised, with citations to the pages of the record or appendix where such questions have been preserved for theCourt's review. Respondent's brief may have a supplementary appendix attached to it. The original of each brief shall be signed and dated, shall have theaffidavit of service affixed to the inside of the back cover and shall beidentified on the front cover as the original. Each brief shall indicate thestatus of any related litigation as of the date the brief is completed. Suchstatement shall be included before the table of contents in each party's brief.
(b) Brief covers. Brief covers shall be white and shall contain the caption ofthe case and name, address, telephone number, and facsimile number of counsel orself-represented litigant and the party on whose behalf the brief is submitted,and the date on which the brief was completed. In the upper right corner, thebrief cover shall indicate whether the party proposes to submit the brief withoutoral argument or, if argument time is requested, the amount of time requested andthe name of the person who will present oral argument (see section 500.18 of thisPart). If a time request does not appear on the brief, generally no more than 10minutes will be assigned. The Court will determine the argument time, if any, tobe assigned to each party. Plastic covers shall not be used.

500.14 Records, Appendices and Exhibits in Normal Course Appeals
Subsection (b)(5) was amended to require, as relevant to the appeal, theinclusion of the jury charge. The subsection was further amended to requireinclusion of any testimony, affidavits, jury charge or exhibits cited in the briefof the party filing the appendix.
Subsection (e) was added to require that a reproduced record or appendix containthe statement required by CPLR 5531. Former subsection (e) was relettered subsection (f)

§ 500.14. Records, Appendices and Exhibits in Normal Course Appeals
(a) Record material. Appellant shall supply the Court with record material inone of the following ways:
(1) Appellant may subpoena the original file to this Court from the clerk of thecourt of original instance or other custodian, and submit original exhibits to berelied upon, and supplement these with an original and 24 copies of an appendixconforming to subdivision (b) below, with proof of service of three copies of theappendix on each other party. If appellant is represented by assigned counsel, orhas established indigency, an oral or written request may be made of the clerk ofthis Court to obtain the original file.
(2) Appellant may file with the clerk of the Court one copy of the reproducedrecord used at the court below. This record shall be supplemented by an originaland 24 copies of an appendix conforming to subdivision (b) below, with proof ofservice of three copies of the appendix on each other party.
(3) Appellant may file with the clerk of the Court an original and 24 copies of anew and full record which shall include the record used at the court below, thenotice of appeal or order granting leave to appeal to this Court, the decision andorder appealed from to this Court, and any other decision and order brought up forreview, with proof of service of three copies of the new record on each otherparty.
(b) Appendix. An appendix shall conform to the requirements of CPLR 5528 and5529, and shall be sufficient by itself to permit the Court to review the issuesraised on appeal without resort to the original file (see subsection [a] [1] ofthis section) or reproduced record used at the court below (see subsection [a][2]of this section). The appendix shall include, as relevant to the appeal, thefollowing:
(1) the notice of appeal or order or certificate granting leave to appeal;
(2) the order, judgment or determination appealed from to this Court;
(3) any order, judgment or determination which is the subject of the orderappealed from, or which is otherwise brought up for review;
(4) any decision or opinion relating to the orders set forth in subsections(b)(2) and (3) above; and
(5) the testimony, affidavits, jury charge and written or photographic exhibitsuseful to the determination of the questions raised on appeal or cited in thebrief of the party filing the appendix .
(c) Respondent's appendix. A respondent's brief may include a supplementaryappendix.
(d) Inadequate appendix. When appellant has filed an inadequate appendix,respondent may move to strike the appendix (see section 500.21 of this Part) ormay submit an original and 24 copies of an appendix containing such additionalparts of the record as respondent deems necessary to consider the questionsinvolved, with proof of service of three copies of the appendix on each otherparty. The Court may direct appellant to supplement the appendix with additionalparts of the record it deems necessary to consider the questions involved.
(e) Description of action or proceeding. The reproduced record and additional papers or the appendix shall contain the statement required by CPLR 5531.
(f) Correctness of the record. The correctness of the reproduced record or the appendix and additional papers shall be authenticated pursuant to CPLR 2105 or stipulated to pursuant to CPLR 5532.

500.15 Extensions of Time
This section was amended by deleting the requirement that requests for extensionsof time for filing papers on appeal be made no earlier than 20 days before thefiling due date set by the clerk's office or otherwise prescribed by the Rules.The change was prompted by the currency of the Court's calendar and the Court'sexperience that the requirement no longer served a useful purpose in managingappeals.

§ 500.15. Extensions of Time
The clerk of the Court is authorized to grant, for good cause shown, a reasonableextension of time for filing papers on an appeal. A request for an extension maybe made by telephone call to the clerk's office. The party requesting an extension shall advise the clerk of the Court of the position of each other party with regard to the request. A party granted an extension shall file a confirmation letter, with proof of service of one copy on each other party, unless the clerk's office has notified allparties in writing of the determination of the request.
500.16 Failure to Proceed or File Papers
Subsection (c) was revised to clarify that a party can seek judicial review ofdismissal and preclusion orders by motion on notice.
§ 500.16. Failure to Proceed or File Papers
(a) Dismissal of appeal. If appellant has not filed and served the papersrequired by section 500.11, 500.12 or 500.26(a) of this Part within the time setby the clerk's office or otherwise prescribed by this Part, the clerk of the Courtshall enter an order dismissing the appeal.
(b) Preclusion. If respondent has not filed and served the papers required bysection 500.11, 500.12 or 500.26(a) of this Part within the time set by theclerk's office or otherwise prescribed by this Part, the clerk of the Court shallenter an order precluding respondent's filing.
(c) Judicial review. A party may seek judicial review of dismissal andpreclusion orders entered pursuant to subsections (a) and (b) above by motion onnotice in accordance with section 500.21 of this Part.
500.17 Calendar
Grammatical changes were made to this section and the requirement of a detailed statement of the reasons for the requested adjournment was added to subsection (d).
§ 500.17. Calendar
(a) Notification of argument time and date. When the calendar has been prepared,the clerk of the Court shall advise counsel by letter of the date and timeassigned for oral argument.
(b) Calendar preferences. A party seeking a preference shall address a letter tothe clerk of the Court, with proof of service of one copy on each other party.The letter shall state why a preference is needed, why an alternativeremedy, such as review pursuant to section 500.11 of this Part or submission without argument, is not appropriate, and opposing counsel's position on the request.
(c) Notification of unavailability. Counsel have a continuing obligation tonotify the clerk's office of days of known or possible unavailability for oralargument during the Court's scheduled Albany sessions.
(d) Adjournments. Requests for adjournment of a calendared appeal are notfavored. A party seeking an adjournment shall address a letter to the clerk ofthe Court, with proof of service of one copy on each other party. The lettershall state in detail why the adjournment is necessary, and why submission on the brief filed or having substitute counsel argue are not viable alternatives, and opposing counsel's position on the request.

§ 500.18. Oral Argument (No changes were made to this section.)
§ 500.19. Remittitur (No changes were made to this section.)
§ 500.20 Criminal Leave Applications. ( Changes to this section are not discussed in this commentary.)
500.21 Motions--General Procedures
Section (f) was changed to reflect the change in section 500.11, with regard to the disclosure statement pursuant to section 500.1(f).
Section (h) was added to clarify the Court's practice of automatically filing andentering orders issued on motions. The section further advises that the Court hasno procedure for filing additional papers, such as proof of service of a copy ofthe order with notice of entry.

§ 500.21. Motions--General Procedures
(a) Return date. Regardless whether the Court is in session, motions shall bereturnable on a Monday or, if Monday is a legal holiday, the first business day ofthe week unless otherwise provided by statute, order to show cause or stipulationso ordered by a Judge of the Court. Motions shall be submitted without oralargument, unless the Court directs otherwise. No adjournments shall be permittedother than in those limited instances provided by statute (CPLR 321[c] and 1022).
(b) Notice and service. Movant shall serve a notice of motion and supportingpapers on sufficient notice to each other party, as set forth in the CPLR andbelow. In computing the notice period, the date of service shall not be included.
(1) When movant's papers are personally served, movant shall give at least eightdays' notice (CPLR 2214[b]).
(2) When movant's papers are served by regular mail, movant shall give at least13 days' notice (CPLR 2103[b][2]).
(3) When movant's papers are served by overnight delivery service, movant shallgive at least nine days' notice (CPLR 2103[b][6]).
(4) When movant's papers are served by facsimile transmission, movant shallcomply with CPLR 2103(b)(5), and give at least eight days' notice.
(c) Filing. Unless otherwise permitted by the Court or clerk of the Court,movant shall file its papers, with proof of service on each other party of therequired number of copies, at Court of Appeals Hall no later than noon on theFriday preceding the return date. On or before the return date of the motion,respondent may file papers in opposition to the motion, with proof of service oneach other party of the required number of copies. Submissions shall not be filedby facsimile transmission or electronic mail, except when requested by the clerkof the Court. The Court's motion practice does not permit the filing of replybriefs and memoranda. A request for permission to file papers after the returndate of the motion is governed by section 500.7 of this Part.
(d) Number of required copies. Except in cases of indigency, where subsection(g) below applies, the number of copies required to be filed is as follows:
(1) Motions for permission to appeal in civil cases. Movant shall file anoriginal and six copies of its papers, with proof of service of two copies on eachother party. Respondent may file an original and six copies of papers inopposition to the motion, with proof of service of two copies on each other party.
(2) Motions for reargument of appeals, reargument of motions for permission toappeal and reargument of decisions on certified questions. Movant shall file anoriginal and six copies of its papers, with proof of service of two copies on eachother party. Respondent may file an original and six copies of papers inopposition to the motion, with proof of service of two copies on each other party.
(3) Other motions. For motions other than those addressed in subsections (d)(1)and (2) above, movant shall file an original and one copy of its papers, withproof of service of one copy on each other party. Respondent may file an originaland one copy of papers in opposition to the motion, with proof of service of onecopy on each other party.
(e) Fee required. Movant shall remit the fee, if any, required by section500.3(b) of this Part with each motion and cross motion filed.
(f) Form of papers. Movant's papers and opposing papers shall comply in formwith section 500.1 of this Part. The papers shall include a disclosure statementpursuant to section 500.1(f) of this Part, if required.
(g) Proof of indigency. Any motion may be made on one set of papers, with proofof service of one copy on each other party, where:
(1) the motion requests poor person relief and contains the information requiredby CPLR 1101(a), or
(2) movant provides a copy of an order, issued by any court in the action orproceeding to which the motion relates, granting that party poor person relief,together with a sworn affidavit that the same financial circumstances exist at thetime of filing in the Court of Appeals as when the order granting poor personrelief was issued.
(h) Orders determining motions. The original of an order of the Court of Appealsissued on a motion decision is filed in the clerk's office automatically by theclerk of the Court and is entered on the date of decision. There is no procedurefor filing additional papers, such as proof of service of a copy of the order with notice of entry upon adverse parties. If necessary, such papers may be filed inthe office where papers submitted to the court of original instance are filed.
500.22
Subdivision (a) was clarified to make it clear that the movant need not file an original and six copies of its papers if permitted to proceed pursuant to section 500.21(g)Subdivision (b) (5) was changed to refer to 500.11 (f) with regard to the disclosure statement.

§ 500.22. Motions for Permission to Appeal in Civil Cases
(a) Filing and notice. Movant shall file an original and six copies of itspapers, unless permitted to proceed pursuant to section 500.21(g), with proof of service of two copies on each other party. The motion shall be noticed for areturn date in compliance with CPLR 5516 and section 500.21(b) of this Part.
(b) Content. Movant's papers shall be a single document, bound on the left, andshall contain in the order here indicated:
(1) A notice of motion (see CPLR 2214).
(2) A statement of the procedural history of the case, including a showing of thetimeliness of the motion.
(i) If no prior motion for leave to appeal to the Court of Appeals was filed atthe Appellate Division, movant's papers to this Court shall demonstrate timelinessby stating the date movant was served (see CPLR 2103[b]) with the order orjudgment sought to be appealed from, with notice of entry.
(ii) If a prior motion for leave to appeal to the Court of Appeals was filed atthe Appellate Division, movant's papers filed in this Court shall demonstrate thatthe timeliness chain is intact by stating:
(a) the date movant was served with the order or judgment sought to be appealedfrom, with notice of entry,
(b) the date movant served the notice of motion addressed to the AppellateDivision upon each other party, and
(c) the date movant was served with the Appellate Division order denying leaveto appeal with notice of entry.
(3) A showing that this Court has jurisdiction of the motion and of the proposedappeal, including that the order or judgment sought to be appealed from is a finaldetermination or comes within the special class of nonfinal orders appealable bypermission of the Court of Appeals (see CPLR 5602[a][2]).
(4) A concise statement of the questions presented for review and why thequestions presented merit review by this Court, such as that the issues are novelor of public importance, present a conflict with prior decisions of this Court, orinvolve a conflict among the departments of the Appellate Division. Movant shallidentify the particular portions of the record where the questions sought to bereviewed are raised and preserved.
(5) A disclosure statement pursuant to section 500.1(f) of this Part, ifrequired.
(6) Copies of the order or judgment sought to be appealed from with notice ofentry, as well as copies of all relevant orders, opinions or memoranda rendered inthe courts below. The papers shall state if no opinion was rendered.
(c) Additional documents. Movant shall file with its papers one copy of therecord below, or appendix if the appendix method was used in the court below, andone copy of the briefs filed below by each of the parties.
(d) Opposing papers. Respondent may file an original and six copies of papers inopposition to the motion, with proof of service of two copies on each other party.The opposing papers shall state concisely respondent's argument for dismissal ordenial of the motion.

500.23 Amicus Curiae Relief (Changes to this section are not discussed in this commentary.)


500.24. Motions for Reargument of Appeals, Motions and Decisions on CertifiedQuestions
Subsection (a) was changed to add 500.21(g). Only grammatical changes were made to the rest of the section.
§500.24. Motions for Reargument of Appeals, Motions and Decisions on CertifiedQuestions
(a) Filing and notice. Movant shall file an original and six copies of itspapers, with proof of service of two copies on each other party. An original andone copy of a motion for reargument of a motion may be served and filed if filingof an original and one copy of papers was allowed on the underlying motionpursuant to section 500.21(d)(3) or (g).
(b) Timeliness. Movant shall serve the notice of motion not later than 30 daysafter the appeal, certified question or motion sought to be reargued has beendecided, unless otherwise permitted by the Court.
(c) Content. The motion shall state briefly the ground upon which reargument issought and the points claimed to have been overlooked or misapprehended by theCourt, with proper reference to the particular portions of the record and to theauthorities relied upon.
(d) New matters. The motion shall not be based on the assertion for the firsttime of new arguments or points of law, except for extraordinary and compellingreasons.
(e) Limitation on motions. The Court shall entertain only one motion per partyfor reargument of a specific appeal, motion or certified question decision.
(f) Opposing papers. Except on those motions described in section 500.21(d)(3),respondent may file an original and six copies of papers in opposition to themotion, with proof of service of two copies on each other party. The opposingpapers shall briefly state respondent's argument for dismissal or denial of themotion.
§ 500.25. Emergency Matters; Orders to Show Cause ( There were no changes to this section.)
§ 500.26. Primary Election Session Procedures (Changes not discussed in this commentary)
§ 500.27. Discretionary Proceedings to Review Certified Questions from FederalCourts and Other Courts of Last Resort (Changes not discussed in this commentary)

Sunday, October 26, 2008

Court of Appeals Holds Rule 202.48 Does Not Apply to Order Granted as Result of Unnecessary Motion Which Results in Order Granting Same Relief Previou

In Farkas v Farkas, — NY3d —, 10/24/2008 N.Y.L.J. 27, (col. 3) the Court of Appeals held that Rule 202.48 cannot deprive a party of a judgment where it has been improperly or unnecessarily invoked in the first place. The 'settle' or 'submit' trigger for the 60-day limitation of Rule 202.48(a) does not purport to govern the flow of the entry process, which is a ministerial recording function that is separate and distinct from the procedure of obtaining the court's signature on a proposed judgment. The trial court’s 1996 decision found that the e husband seriously dissipated marital assets; and that, although the wife was entitled to $100,000 per year in lifetime spousal maintenance, the husband would likely never pay, condemning her to 'the role of sleuth and detective, always in court.' Supreme Court granted the wife the parties' $3.2 million cooperative apartment in Manhattan; all furniture, furnishings, antiques and works of art; all jewelry, collectibles and personal property she owned or had in her possession including stocks, bonds, equities, cash accounts and funds of any description; 50 percent of any interest or shares the husband might own in Alexander's Department Store, the family business; and 100 percent of any remaining IRA, KEOGH or other retirement plan or annuity of which the husband was the owner or beneficiary. The 1996 decision also addressed a debt the parties owed to Chemical Bank. Supreme Court required the husband either to pay all sums due to Chemical Bank and deliver to the wife a satisfaction of the debt and stipulation of discontinuance with prejudice of the foreclosure action; or, alternatively, to pay one-half of the sums due to Chemical Bank and deliver to the wife a stipulation of discontinuance with prejudice of a replevin action that the husband's mother had commenced against the wife. 'In the event that [the husband] fails to comply with one of these alternatives within 45 days,' the Court opined, '[the wife] may enter a money judgment against [the husband] for the total amount due and owing to Chemical Bank'. The Court ended its 1996 decision with the instruction to '[s]ettle judgment.' Supreme Court's subsequent judgment (the 1996 judgment) indicated that the husband had not complied with either alternative for discharging his obligation with respect to the Chemical Bank debt, and included the following decretal paragraph:
'ORDERED, ADJUDGED, and DECREED, [the husband] is directed to pay in full all sums due to Chemical Bank, including interest, penalties, legal fees and other costs and to deliver to [the wife] or her attorneys...evidence of satisfaction of the debt and a stipulation of discontinuance with prejudice of the action brought by Chemical Bank. In lieu thereof, at his option [the husband] may pay one-half of all sums due to Chemical Bank and deliver a discontinuance with prejudice of the action for replevin brought by [the husband's mother] against [the wife]. In the event that [the husband] fails to comply with either option within 30 days from the date hereof, [the wife] shall be entitled to enter a money judgment against [the husband] for the total amount due and owing to Chemical Bank without further order '.
The husband appealed and the Appellate Division affirmed (Farkas v. Farkas, 251 AD2d 4 [1st Dept 1998]).
An amended judgment of divorce entered on April 14, 1999 (the 1999 amended judgment), repeated the 1996 judgment's provision regarding the debt to Chemical Bank. In June 2000, the wife sought an 'Order...[p]ursuant to the Order [sic] of this Court dated July 17, 1996, entering a Final Judgment against [the husband] for the sum of $984,401.17, representing the principal sum due Chemical Bank, with interest and penalties. In a 2000 decision and order, Supreme Court granted the wife's application 'for a money judgment in her favor against [the husband] in the sum of $984,401.17 in respect of the Chemical Bank foreclosure action and restated, in its entirety, the relevant decretal paragraph from the 1999 amended judgment, italicizing the final sentence, presumably for emphasis. At the end of the 2000 decision and order the fifth paragraph provided as follows:
'ORDERED that [the wife's] application...for a money judgment in her favor against [the husband] in the sum of $984,401.17 in respect of the Chemical Bank foreclosure action, in addition to the bank's attorneys' fees, is granted and [the wife] may settle the judgment thereon. Upon [the wife's] suggestion, such judgment shall contain language staying execution thereon pending determination or other disposition of the Chemical Bank foreclosure action' .
In May 2005, 5 ½ years later, the wife served the husband with a notice of settlement and proposed judgment regarding the monies owed Chemical Bank. The proposed judgment stated that the wife and Chemical Bank had settled the foreclosure action for $750,000 in August 2003; the proposed judgment against the husband was in the principal amount of $750,000.
The husband opposed entry, citing 22 NYCRR 202.48 (Rule 202.48). Subdivision (a) states that 'Proposed orders or judgments, with proof of service on all parties where the order is directed to be settled or submitted on notice, must be submitted for signature, unless otherwise directed by the court, within 60 days after the signing and filing of the decision directing that the order be settled or submitted.' Subdivision (b) specifies that failure to submit the order or judgment as directed within the 60-day time frame constitutes an abandonment of the motion or action except upon 'good cause shown'.
Supreme Court thereafter signed a paper captioned 'Order/Judgment,' entered on June 20, 2005 which stated: 'IT IS HEREBY ORDERED, that [the wife's] application...is granted in that a Money Judgment is hereby granted in favor of [the wife]...against [the husband]...in the amount of $750,000.00 with interest from August 6, 2003, and that [the wife] shall have execution therefore.'
The Appellate Division, with two Justices dissenting, reversed the judgment on the law, vacated it, and dismissed the underlying claim as abandoned pursuant to Rule 202.48. It cited Brill v. City of New York (2 NY3d 648 [2004]) and Miceli v. State Farm Mut. Auto. Ins. Co. (3 NY3d 725,726 [2004]). The majority considered itself 'constrained to reverse and vacate' because the wife failed to provide any explanation for her untimely submission of the proposed judgment other than 'law office failure' (Farkas v. Farkas, 40 AD3d 207, 207, 211 [2007]). The majority acknowledged 'that there was arguably good cause for delaying settlement of the judgment until after the Chemical Bank foreclosure action was settled in August 2003,' but concluded that 'the record revealed no justification for the wife's failure to submit a judgment for an additional year and nine months thereafter' .
The Court of Appeals, in an opinion by Judge Read, reversed the Appellate Division's May 2007 order, and upheld its June 1998 order. The Court held that the 1996 judgment and the 1999 amended judgment were not subject to Rule 202.48's 60-day requirement. These judgments carried out the 1996 decision, which directed the parties to ‘settle judgment.' The decretal paragraph specifically addressing the Chemical Bank monies provided that the wife was 'entitled to enter a money judgment against the husband for the total amount due and owing to Chemical Bank without further order'. The Court held that this paragraph set out a 'simple judgment for a sum of money which speaks for itself,' and therefore fell outside the ambit of Rule 202.48 (citing Funk v. Barry, 89 NY2d 364, 367 [1996]). Judge Read pointed out that the Court emphasized in Funk, that the 'settle' or 'submit' trigger for the 60-day limitation of Rule 202.48(a) 'does not purport to govern the flow of the entry process, which is a ministerial recording function that is separate and distinct from the procedure of obtaining the court's signature on a proposed judgment'.
Judge Read noted that Supreme Court added the phrase 'without further order' to the typewritten text of the proposed counter-judgment submitted in 1996 in order to further drive home the point that no further court action was contemplated or required with respect to the monies owed Chemical Bank. Even though the wife was entitled to enter a judgment against the husband for the Chemical Bank monies, without a limitations period, under the plain terms of the 1999 amended judgment and Funk (which held that the Legislature has chosen not to place a time restriction on the completion of entry' ). the wife's attorney moved for an order to show cause allowing the wife to enter a judgment against the husband for the Chemical Bank monies. This unnecessary motion led to the discussion in the 2000 decision and order in which Supreme Court stated, for the third time, that the wife was entitled to the monies owed Chemical Bank without further order, and then unaccountably ordered the wife to 'settle...judgment' for this very relief. Rule 202.48 cannot deprive a party of a judgment where it has been improperly or unnecessarily invoked in the first place.

Thursday, October 23, 2008

First Department Holds That Value of Husbands Subchapter C Corporation Should Be Reduced For Embedded Taxes

First Department Holds in Case Where Marital Estate is $77,680,333.95 That Value of Husbands Subchapter C Corporation Should Be Reduced By $21,778,708 to Reflect the Federal and State Taxes Embedded in Securities it Owned.

In Wechsler v Wechsler, --- N.Y.S.2d ----, 2008 WL 4635832 (N.Y.A.D. 1 Dept.) the issue of first impression was the extent to which the value of a holding company, Wechsler & Co., Inc. (WCI), a Subchapter C corporation, all the shares of which were owned by the husband, should be reduced to reflect the federal and state taxes embedded in the securities it owned. These securities constituted virtually all of its assets, due to the unrealized appreciation of those securities. As of the date the divorce action was commenced, the valuation date, WCI had ceased trading securities for the accounts of customers and bought and sold securities solely for its own account. The Appellate Division, in an opinion by Justice James M. McGuire, modified the judgment appealed from by the husband. It noted that Supreme Court adopted a "baseline" value of $70,848,107 on the date the action was commenced. That baseline value was determined by the neutral expert before any deduction for embedded taxes and then made adjustments to it that differed in various ways from the adjustments made by the neutral expert. The most significant adjustment was on the issue of the extent of the reduction for embedded taxes. Supreme Court rejected the approach of the Fifth Circuit in Matter of Dunn v Commissioner of Internal Revenue (301 F3d 339 [5th Cir2002] ), the approach embraced by the neutral expert. Pursuant to that approach, consistent with the assumption inherent in the net asset valuation methodology, an actual sale of the corporation's assets is assumed to occur on the valuation date. The value of the corporation is reduced on a dollar-for-dollar basis by the full amount of the tax liability that would arise from the sale of the assets by the hypothetical buyer on the valuation date. Both the neutral expert and the husband's expert testified, and the wife's expert did not dispute, that if the securities were sold as of the date of commencement, the effective tax rate would be 41.74% of the baseline value of $70,848,107. Under the valuation methodology adopted in Dunn, the date-of-commencement value of WCI would be reduced by $29,572,000 (41.74% of $70,848,107). Instead, Supreme Court accepted the approach of the wife's expert and reduced the baseline value of WCI by 11% of $70,848,107 ($7,793,292). That percentage approximated what Supreme Court and the wife's expert denominated the "historical" rate of the annual taxes paid by WCI, a rate determined by comparing the average annual taxes paid by WCI to its average annual gross revenue, i.e., its revenue before all applicable deducttions for its various costs of doing business (including the salaries of its employees). The Court indicated that Supreme Court relied in significant part on the decision of the Tax Court in Matter of Jelke v. Commissioner of Internal Revenue (TC Memo 2005-131 [2005] ), a decision that was reversed by a divided panel of the Eleventh Circuit after the appeal was argued (507 F3d 1317 [2007] ). In Jelke, the Eleventh Circuit adopted the approach of the Fifth Circuit in Dunn and concluded that, on the assumption that a sale of the corporation's assets occurs on the valuation date, the value of the corporation's assets should be reduced by the full amount of the embedded taxes that would be payable as a result of the sale. At trial, Supreme Court was asked to choose between the approach of the Fifth Circuit and an approach different from the one advanced by the Commissioner in Jelke. The latter approach, the one Supreme Court adopted, did not attempt to ascertain the period of time over which the assets of a corporation would be sold by a reasonable buyer and discount the taxes that would be due over that period to present value as of the date of commencement. Rather, it adopts a baseline value of the assets as of the commencement date and reduces that value by an "historical" tax rate of the corporation. Both the neutral expert and the husband's expert vehemently disagreed with the"historical" approach espoused by the wife's expert. The Appellate Division pointed out that the wife offered nothing by way of precedent to support her expert's position. The Appellate Division rejected the approach of the wife's expert because it did not accord with common sense, conflicted with the reasoned testimony of both the neutral expert and the husband's expert and was without precedential support. The approach of the wife's expert assumed that the assets will not be sold as of thevaluation date and that WCI would operate in the future as it had in thepast so that each year it both would sell assets to the same extent it annuallyhad sold assets in the past and would be able to offset income generated by thesale of assets with the same deductions for salaries and other expenses that ithad been able to take in prior years. The assumption that WCI would continue to beable to take the same deductions for salaries was at least brought into questionby proceedings in Tax Court that were pending as of the trial. Furthermore, the assumption that WCI would sell assets in the future to the sameextent that it had sold assets in the past was even more questionable. Moreover, by also assuming that the securities owned by WCI will not depreciatein value over time, the approach of the wife's expert required the husband to bearall the risk of a decline in their value. The Appellate Division held that as between the competing methodologies advanced by the parties at trial Supreme Court should have adopted the one accepted by the Fifth Circuit in Dunn. It concluded that Supreme Court overvalued WCI by $21,778,708 (the difference between the $7,793,292 reduction in value based on the "historical" tax rate methodology and the $29,572,000 reduction that would result under the methodology adopted in Dunn ). This amount differed from the "baseline" value of $70,848,107 because of other valuation adjustments made by Supreme Court. The husband did not dispute all of these adjustments and the discrepancy between the two "baseline" values was of no moment.] That amount should be subtracted from the total value of WCI at the time of the commencement of the action found by Supreme Court ($74,387,630), leaving a total value of $52,608,922.
The Court pointed out that shortly after oral argument, the wife moved to dismiss the appeal on the ground that the husband was a fugitive from this jurisdiction and barred from maintaining the appeal under the fugitive disentitlement doctrine. By an order dated November 27, 2007, it granted the wife's motion and dismissed the appeal with leave to the husband to move to reinstate the appeal on the condition that, within a certain time frame, he post an undertaking of approximately $10 million (45 AD3d 470 [2007] ). The husband posted the undertaking and moved to reinstate the appeal.
The Appellate Division affirmed that part of the judgment of Supreme Court which declined to award permanent maintenance in part because the wife would be "vastly wealthy in her own right." The wife did not perfect her cross appeal, so there was no occasion to decide whether a permanent maintenance award would be appropriate in light of the reduction of the distributive award. The Court noted that Supreme Court awarded the wife over $27 million in assets, reflecting approximately 88% of the other marital assets.
On appeal, the husband argued that, consistent with the approach adopted in Dunn, pursuant to which the hypothetical buyer is assumed to liquidate the assets of the corporation upon acquiring it, an additional reduction in value is warranted to account for the non-tax costs of liquidating the corporation that the buyer would incur. The husband's expert computed those costs by assuming that WCI's assets would be liquidated over a six-month period after the valuation date (the date the action was commenced), an assumption that results in higher non-tax liquidation costs than would be incurred if the assets were liquidated on the date of commencement. Although the parties did not discuss the issue, the assumption by the husband's expert of a six-month liquidation period is not consistent with the assumption, for purposes ofdetermining the extent of the reduction for embedded taxes, that the corporation'sassets are liquidated on the valuation date. Supreme Court held that no such reduction in the value of WCI was appropriate. Supreme Court did not make any specific findings on what the non-tax liquidation costs of WCI would be. Determining whether and the extent to which a reduction in value for non-tax liquidation costs is warranted was complicated further by the parties' contentions about those costs. The Court pointed out that there were other complications that the parties did not discuss. The Court concluded that the value of WCI should not be reduced by any non-tax liquidation costs. It had no rational basis in the record for determining what the amount of the non-tax liquidation costs are, assuming it were to hold that the value of WCI should be reduced by some such costs. It also beleived that the amount of any of the costs it might recognize was small relative to the overall value of the marital property and might not exceed the costs of additional briefing and the possible fact-finding proceeding. It added that its resolution of this issue sets no precedent on the question of whether or the extent to which a reduction in value for non-tax liquidation costs is appropriate in other circumstances. The Appellate Division held that Supreme Court erred in concludingthat the husband’s right pursuant to a subscription agreement to purchase additional shares of the common stock of WCI's predecessor entity at a price of $4,900 per share, a right that when exercised entitled him to 12 additional shares of preferred stockfor each share of common stock, was not his separate property. The subscriptionagreement was entered into prior to the marriage and, as amended prior to themarriage, entitled the husband to purchase 10 additional shares of common stockand thereby acquire 120 shares of preferred. Prior to the marriage, the husbandpurchased pursuant to the subscription agreement 2.65 shares of the common stock,thereby also acquiring 31.8 shares of preferred. Supreme Court concluded, and thewife did not contend otherwise, that these shares and fractional sharesconstitute separate property of the husband. The remaining 7.35 shares of commonstock, and the attendant 88.2 shares of preferred, were paid for and acquiredduring the marriage. Because marital property is defined to include "all propertyacquired by either or both spouses during the marriage" (Domestic Relations Law s236[B][1][c] ), Supreme Court concluded that these shares were marital property.The flaw in Supreme Court's reasoning was that it did not recognize that,especially given the broad meaning of the term property in the Domestic RelationsLaw the husband's right to acquire the 7.35 shares of common stock and 88.2 shares of preferred was itself property that he acquired before the marriage. The husband's right to acquire the shares was tantamount to an "in-the-money option" as the purchase price of the shares was far below their fair market value. Thus, he was entitled to acredit in the amount of the value as of the date of the marriage of his right toacquire the additional shares of stock pursuant to the subscription agreement.The value of the 7.35 shares of common stock and the 88.2 shares of preferred, assuming the right was exercised as of the date of marriage, was approximately $232,800. Consistent with the approach of the neutral expert and the husband's expert in valuing the husband's right as of the date of the marriage to acquire the shares pursuant to the subscription agreement, the value of that right was approximately $196,800 ($232,800 minus the approximately $36,000 purchase price of the 7.35 shares of common stock).
The Appellate Division noted that, in part, because of its conclusion that the wife would be "vastly wealthy in her own right" as a result of the equal distribution of themarital assets, Supreme Court denied the wife's request for permanent maintenance.However, Supreme Court awarded conditional, durational maintenance to the wife,with the husband being obligated both to make monthly payments of $46,666 to thewife, a portion of which was deductible by the husband, and to pay variousexpenses, including the mortgage payments and taxes relating to the home awardedto the wife. Pursuant to the terms of the judgment, this maintenance awardcontinues until the wife receives both the specific assets awarded to her and thefirst payment on account of the distributive award. Relying on it decisions in Gad v. Gad (283 A.D.2d 200 [2001] ) and Pickard v. Pickard (33 AD3d 2002 [2006], appeal dismissed 7 NY3d 897 [2006] ), the husband argued that because Supreme Court did not make a permanent maintenance award he was entitled to a credit against the distributive award in the amount of all the temporary maintenance payments he made. The husband contended that he paid a total of $3,000,987 in temporary maintenance.
The Appellate Division held that the husband's reliance on Gad and Pickering was misplaced and that he was not entitled to any credit for the temporary maintenancepayments he made, regardless of the amount of those payments. The meredetermination by Supreme Court not to award permanent maintenance cannot beequated with a finding that the pendente lite maintenance award was excessive.Supreme Court did not make such a finding either expressly or implicitly. The determination not to award permanent maintenance was based in part on the ground that permanent maintenance was unnecessary given the wife's vastly different economic circumstances as a result of the equal distribution of the marital property. Inaddition, Supreme Court also based this determination on the consequences of thedistribution of the overwhelming preponderance of the liquid marital assets to thewife. As a result, a permanent maintenance award would have required the husbandto tap into the income generated by WCI or liquidate securities it owned eventhough he was awarded this asset. Accordingly, Supreme Court cogently observedthat an award of permanent maintenance would entail an element of "double dipping"by the wife into the principal asset awarded to the husband.
The Appellate Division found that the date-of-commencement value of the marital interest in WCI was $47,131,777.95--$52,608,922 minus the sum of the adjusted, after-tax value of the proceeds of the securities sold prior to the commencement date ($155,691.18), the value of the husband's property interest in WCI as of the date of the marriage ($646,271), the value of the husband's subscription right ($196,800), the value of the common and preferred stock he inherited from hisfather ($3,523,904.80) and the amount of the increase in value of the husband'sequity interest at the time of the inheritance stemming from the controllinginterest in the corporation acquired as a result of the inheritance ($954,477.07).
Supreme Court valued at $30,548,556. the other marital assets, including securities (virtually all of which were in the husband's name), cash accounts, a home and an apartment. After considering the statutory factors Supreme Court determined that the parties should share equally in all of the marital assets. Given itsconclusion that the husband should retain his ownership of WCI, Supreme Court wasconstrained to award to the wife approximately 88% of the other marital assets,collectively valued at $27,135,154. The husband was awarded his Colorado residence(valued at $1.95 million) and, to provide him with "some liquid cash assets,"certain securities Supreme Court had valued at $1,463,422. The result of these discrete awards was a deficiency in the wife's share of the assets of $22,770,623 ($49,905,776, one half of the total value of $99,811,533 that Supreme Court assigned to the marital assets, minus $27,135,154, the value of the specific marital assets awarded to the wife). Accordingly, Supreme Court granted a distributive award to the wife in the amount of the deficiency, and directed that the husband pay the award over a period of 15 years, with annual payments of $1,518,042 payable in quarterly installments of $379,510.50. Supreme Court did not grant pre-judgment or post-judgment interest on the distributive award to the wife, but ruled that interest would accrue in the event and to the extent of a default in any of the required payments.
The Appellate Division held that husband's argument that the securities of WCI (and thus WCI itself) and the other securities he owned or controlled should have been valued as of the date of trial was without merit. While some "courts have concluded that 'active' assets should be valued only as of the date of the commencement of the action,while the valuation date for 'passive' assets may be determined more flexibly,"these "formulations" are but "helpful guideposts" and not "immutable rules of law"(McSparron v. McSparron, 87 N.Y.2d 275, 287-288 [1995] ). Thus, althoughsecurities commonly are "passive assets" that are valued at the date of trial asthey may "change in value suddenly based on market fluctuations" (Grunfeld v.Grunfeld, 94 N.Y.2d 696, 707 [2000] ), they may be active assets when, as here,they are actively managed by the titled spouse. The securities owned by WCI andby the husband required his "specialized knowledge in order to be appropriatelyinvested," Supreme Court stressed that: "The parties, by their actions throughout prior proceedings herein, charted a course of litigation that accepted a [date of commencement] valuation of WCI ... When this trial began defendant agreed, by words and deeds, that the court should utilize a [date-of-commencement] valuation. Thus, when, during discovery, [the wife] demanded up to date financial information about WCI, defendant refused to produce such information arguing that it was irrelevant to a [date-of-commencement] valuation." The Appellate Division declined to disturb Supreme Court's allocation of themarital assets other than the marital component of WCI. Accordingly, it held that adistributive award of $11,705,013 ($38,840,167 minus $27,135,154) was necessary toeffectuate the equal division of the marital property. In accordance with thepayment terms fixed by Supreme Court, the $11,705,013 distributive award waspayable over a period of 15 years, with quarterly payments of $195,083.55.
The Appellate Division noted that a problem arose because the written decision and order direct that the husband transfer to the wife all of the securities owned or controlled by the husband (other than those owned by WCI) and listed in the decision and order along with their date-of-commencement market value. The decision expressly noted that by crediting against the distributive award the full value of the securities as of the date of commencement, "the risks of gains and/or losses since the valuation date [were passed] over to [the wife]." Even assuming that there was some ambiguity in the relevant terms of the judgment on this score, the decision controls (Madison III Assoc. Ltd. Partnership v. Brock, 258 A.D.2d 355 [1999] ). With respect to any of the securities the husband sold while he was free to do soafter the wife's motion for an injunction was denied, the husband argued that hewas required to provide the wife with "the proceeds of re-investment less the costsof the sale, taxes and reinvestment." The wife argued that the husband was required to transfer to her the assets acquired with the sale proceeds. The dispute reduces towhether the husband is entitled to a credit against the distributive award in theamount of the costs he incurred, including taxes he paid, in selling and reinvesting the securities sold. The Appellate Division held that it would be inequitable not to grant the husband such a credit given that he was free to sell the securities during the pendency of the action. Accordingly, it directed a hearing to determine which securities the husband sold, what he did with the proceeds, what costs he incurred and the amount of the resulting credit to which he may be entitled. The judgment of Supreme Court was modified by(1) reducing the base line value of WCI by $29,572,000 pursuant to the approach of the neutral expert and the husband's expert, (2) determining that the husband's right pursuant to asubscription agreement to purchase additional shares of stock in WCI's predecessorwas his separate property and reducing the base line value of WCI by the value ofthat right, $196,800, (3) reducing by $211,403.71 the after-tax value of the proceeds of the securities sold prior to the commencement date of the action but not settled until after that date, (4) determining that the marital interest in WCI was $47,131,777.95, (5) determining that the value of the marital estate was $77,680,333.95, (6) directing the husband to pay the wife a distributive award of $11,705,013, payable in quarterly installments of $195,083.55, and (7) determining that the wife's share of the tax liability of WCI was 44.8%, and otherwise affirmed.

Wednesday, October 22, 2008

New York Court of Appeals Rejects Interpretation of the term “Cohabitation” which contemplates “changed economic circumstances"

In Graev v Graev, —NY3d—, --- N.E.2d ----, 2008 WL 4620698 (N.Y.) the parties settlement agreement that was incorporated, but not merged, into a judgment of divorce required Mr. Graev to pay Mrs. Graev spousal support payments of $10,000 per month, subject to adjustment, until the earlier of August 10, 2009 or the occurrence of any of four "termination events"; namely, the wife's remarriage or death, the husband's death, or "[t]he cohabitation of the Wife with an unrelated adult for a period of sixty (60) substantially consecutive days." The agreement did not define "cohabitation."
On September 7, 2004, Mr. Graev advised Mrs. Graev that her cohabitation with MP, an unrelated adult male, had been documented and photographed by professionals retained by his counsel." Invoking the separation agreement's provision for termination in the event of cohabitation, Mr. Graev ceased making spousal support payments as of September 2004. Mrs. Graev moved in Supreme Court to enforce the settlement agreement's maintenance provisions; Mr. Graev cross-moved for summary judgment on the ground that a termination event had occurred. He took the position that Mrs. Graev and MP were cohabiting within the meaning of the settlement agreement because MP had stayed overnight in Mrs. Graev's vacation home in Connecticut for at least 60 substantially consecutive days during the summer of 2004, as borne out by surveillance. He also contended, there was an "obvious serious relationship" between Mrs. Graev and MP, and MP was Mrs. Graev's "lover and life partner," as illustrated by the number of family occasions--weddings, birthdays and the like--they attended as a couple. Mrs. Graev argued that she did not "cohabit" with MP during the summer of 2004 because their relationship had long been platonic, as proven by evidence of MP's sexual incapacity and her diminished sexual desire caused by prescribed medication. In Mrs. Graev's view, use of the word 'cohabitation'--rather than 'living together' or 'residing' ... plainly meant having sexual relations. In response, Mr. Graev insisted that "cohabitation could not possibly require 'sexual relations' " under the law and the plain meaning of the settlement agreement, which was intended to be less stringent than section 248 of the Domestic Relations Law. Supreme Court granted both parties' motions to the extent of ordering a hearing to determine whether Mrs. Graev's relationship with MP constituted "cohabitation" within the meaning of the separation agreement. After the hearing , Supreme Court, credited Mrs. Graev's and MP's testimony that their relationship ceased to be sexual long before the summer of 2004. It concluded that New York cases "find that an essential element of cohabitation is a shared residence with shared household expenses" and that "the couple functioned as an economic unit," features lacking in the bond between Mrs. Graev and MP, which she likened to "an adult dating relationship." On appeal, Mr. Graev repeated his plea that the word "cohabitation" was ambiguous under New York law. Mrs. Graev rejoined that New York courts have construed "cohabitation" as synonymous with "living together," which, in turn, the courts have long held to mean sharing a residence, sharing expenses, and functioning asan economic unit. The Appellate Division affirmed, with two Justices dissenting. According to the majority, New York judicial decisions had consistently interpreted "cohabitation" to mean "more than a romantic relationship or series of nights spent together" and to require "the sharing of finances" or "an economic relationship akin to a shared possessory interest in one home," which could be "proven with evidence that two people keep their personal belongings and receive their mail at the same address". The majority found that Mrs. Graev and MP spent more than 60 substantially consecutive nights together during the summer of 2004, and that "their relationship became romantic in January 2003". These facts were not "decisive" under New York case law, however, because MP owned his own home and there was "absolutely no evidence that the couple shared household expenses or functioned as a single economic unit" . As a result, the majority concluded that Mrs. Graev's relationship with MP did not amount to "cohabitation." The Court of Appeals reversed in a 4-3 opinion by Judge Read. She did not agree that "the term cohabitation has a plain meaning which contemplates changed economic circumstances, and is not ambiguous" absent an explicit provision to the contrary in a separation agreement or stipulation, or, put slightly differently, is necessarily determined by whether a "couple share[s] household expenses or function[s] as a single economic unit". The Court held that the word "cohabitation" is ambiguous as used in this separation agreement: neither the dictionary nor New York case law supplies an authoritative or "plain" meaning. She noted that courts in other states have not ascribed a uniform meaning to the word "cohabitation" as used in separation agreements. Black's Law Dictionary defines "cohabitation" to mean "living together, esp[ecially] as partners in life, usu[ally] with the suggestion of sexual relations" (Black's Law Dictionary 277 [8th ed 2004]. In addition to the definition in Black's Law Dictionary "cohabit" is variously defined as "[t]o live together as husband and wife: often said distinctively of persons not legally married" (Oxford English Dictionary [2d ed 1989] ); "to live together and have a sexual relationship without being married" (The New Oxford American Dictionary [2d ed 2005] ); "to live together as or as if as husband and wife" (Webster's Third New International Dictionary [2002] ); "to live together as husband and wife, usually without legal or religious sanction," or "to live together in an intimate relationship" (Random House Webster's Unabridged Dictionary [2d ed 2001] ); and "to live together as or as if a married couple" (Merriam Webster's Collegiate Dictionary [10th ed 1997] ). The common element in all these definitions is "to live together," particularly in a relationship or manner resembling or suggestive of marriage, and New York courts have used the word "cohabitation" interchangeably with the phrase "living together". Ultimately, however, "living together" as if husband and wife is no less opaque than "cohabitation": both bring to mind a variety of physical, emotional and material factors, and therefore might mean any number of things in a separation agreement, where otherwise unexplained in the text, depending on the parties' intent. For example, the parties here might reasonably have meant "cohabitation" to encompass whether Mrs. Graev engaged in sexual relations with an unrelated adult; whether she and the unrelated adult commingled their finances or--just the opposite--whether she supported the unrelated adult financially; whether she and the unrelated adult shared the same bed; or some combination of these or other factors associated with living together as if husband and wife. The Court found that New York case law does not establish a distinct meaning--"changed economic circumstances"--for "cohabitation.". While more recent Appellate Division decisions may be read to imply, as the Appellate Division held in this case, that there can be no "cohabitation" without changed economic circumstances, the Court of Appeals stated that it had never taken this position and declined to do so now. The Court found that the ambiguity of the word "cohabitation" in this separation agreement was illustrated by the shifting "plain" meanings and positions advanced by the parties over the course of the litigation. The Court of Appeals found that the word "cohabitation" did not have a "plain" meaning in this separation agreement. Without extrinsic evidence as to the parties' intent, there was no way to assess the particular factors inherent in the dictionary meanings or case law discussions of "cohabitation" the parties may have meant to embrace or emphasize. In a footnote the Court responded to the complaint of the dissent that its resolution of this appeal created uncertainty, making it difficult for parties to understand their obligations and responsibilities"; and that "[t]he wiser choice is to articulate a clear rule of law" (dissenting op at 10-11). The Court responded that articulating a "clear rule of law" was hardly fair to those who may have used the word "cohabitation" in an extant separation agreement, intending the meaning ascribed to it by those Appellate Division cases requiring financial interdependence. The wisest rule is for parties in the future to make their intention clear by more careful drafting.

Monday, October 20, 2008

Fourth Department Holds Credit For College Expenses Not Mandatory

In Pistilli v Pistilli, --- N.Y.S.2d ----, 2008 WL 2713989 (N.Y.A.D. 4 Dept.) following the entry of a judgment that, inter alia, granted plaintiff a divorce, plaintiff moved to modify the judgment by "[d]istributing the actual and anticipated college education costs associated with the parties' children," specifically the parties' daughter, between the parties. Defendant cross-moved for an order directing that he pay 60% of the college education expenses of the parties' daughter and reducing his child support obligation accordingly. Defendant appealed from an order requiring him to pay 80% of the daughter's college expenses based on Supreme Court's determination that defendant "shall contribute to college costs 'in accordance with his percentage' " of the parties' combined parental income and denying his cross motion seeking a reduction in his child support obligation. Pursuant to an oral stipulation of the parties that was incorporated but not merged into the judgment of divorce, the parties "agreed to contribute to [their children's college expenses] as they are then financially able." The Appellate Division held that the court erred in failing to consider defendant's maintenance obligation in calculating the percentage of defendant's contribution to the daughter's college expenses. After subtracting from defendant's income the amount of taxable maintenance paid to plaintiff as indicated on the parties' respective 2005 tax returns, which were used by the court in determining the parties' respective incomes, it concluded that defendant's percentage of the combined parental income was 64% rather than 80%, and thus defendant's pro rata share of the daughter's college expenses was reduced from 80% to 64%. It rejected defendant’s contention that the court erred in determining that he was entitled to a credit against his child support obligation only in the amount of his pro rata share of the daughter's college meal plan. It held that a credit against child support for college expenses is not mandatory but depends upon the facts and circumstances in the particular case, taking into account the needs of the custodial parent to maintain a household and provide certain necessaries. Because plaintiff had to maintain a household for the daughter during the daughter's school breaks and weekend visits, it could not be said that defendant was entitled to a credit for the daughter's rooming expenses. Nevertheless, inasmuch as we it reduced defendant's pro rata share of the daughter's college expenses from 80% to 64%, defendant's child support credit based on the college meal plan had to reflect that reduction and it modified the order accordingly.