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Saturday, June 28, 2008

Court of Appeals Decides Valuation Date Issue

In Mesholam v Mesholam, 6/27/2008 NYLJ 30, (col. 1) the Court of Appeals, in an Opinion by Judge Pigott, held that the commencement of a prior, discontinued divorce action may not serve as the valuation date for marital property for purposes of equitable distribution in a later divorce action. Courts must use the commencement date of the later, successful action as the earliest valuation date for marital property. However, the circumstances surrounding the commencement of the earlier action can and should be considered as a factor by the trial court, among other relevant factors, as it attempts to calibrate the ultimate equitable distribution of marital economic partnership property acquired after the start of such an action by either spouse. The parties were married in 1969. The wife commenced an action for divorce in 1994. The husband answered, but did not counterclaim for divorce. Five years later the Supreme Court granted the wife's motion to discontinue the action. Almost immediately, the husband commenced this action for divorce. After finding that the husband was entitled to a divorce Supreme Court held that the husband's pension must be valued as of the commencement date of the present action, rather than the commencement date of the wife's 1994 action, relying on Domestic Relations Law §236(B)(4)(b). Supreme Court determined that the marital property, including the marital portion of the pension, should be divided equally between the parties. The Appellate Division held Supreme Court improvidently exercised its discretion in valuing the pension as of the commencement date of the present action. It concluded that the 'appropriate valuation date was the commencement date of the 1994 action' because there was 'no evidence that the parties reconciled and continued to receive the benefits of the marital relationship after the prior action was commenced' (25 AD3d 670, 671 [2006]). The Court of Appeals modified the order of the Appellate Division and remitted the matter to Supreme Court for further proceedings. It pointed out that Domestic Relations Law 236(B)(1)(c) defines marital property as all property acquired 'during the marriage and before the execution of a separation agreement or the commencement of a matrimonial action.' Thus, in the absence of a separation agreement, the commencement date of a matrimonial action demarcates 'the termination point for the further accrual of marital property ' (citing Anglin v. Anglin, 80 NY2d 553, 556 [1992]). The Court held that the valuation date must be between 'the date of commencement of the action and the date of trial ' (Domestic Relations Law 236 [B][4][b]). In determining whether the commencement of a particular 'matrimonial action' terminates the accrual of marital property, it looked to 'the overall legislative intent of the Domestic Relations Law and the particular application of the equitable distribution regime. In Anglin, the Court held that the commencement of a separation action does not cut off the accrual of marital property because such an action does not, ipso facto, terminate the marital economic partnership. Rather, the economic partnership should be considered dissolved when a matrimonial action is commenced which seeks divorce, or the dissolution, annulment or declaration of the nullity of a marriage, i.e., an action in which equitable distribution is available. It observed that this rule provides internal consistency and compatibility and objective verification, as opposed to uneven, ephemeral, personal interpretations as to when economic marital partnerships end. For similar reasons, it concluded that the value of marital property generally should not be determined by the commencement of an action for divorce that does not ultimately culminate in divorce. Equitable distribution is available 'in an action wherein all or part of the relief granted is divorce. Where there is no divorce, there can be no equitable distribution. Consequently, permitting the commencement date of the prior, unsuccessful divorce action to govern the valuation date of marital property for the purposes of a later, successful action in which equitable distribution is available would be inconsistent with the statutory scheme. The Court found that, as Supreme Court concluded, the pension benefits were marital property to the extent that they were earned prior to the commencement of the present divorce action. As a result, the marital portion of the pension could not be valued at any time earlier than the commencement date.

11th Circuit Defines "Retention" in Hague Cases

In Pielage v McConnell, --- F.3d ----, 2008 WL 399431 (11th Cir., 2008) Plaintiff Mariette Pielage, a native of the Netherlands, was involved in a child custody battle with James Vincent McConnell, III, a native of this country. That battle was being fought in the Circuit Court of Baldwin County, Alabama, and in the course of it the state court issued a ne exeat order, which forbid Pielage from removing the child from its jurisdiction pending its decision. Pielage filed a complaint in federal district court claiming that the state court's order constituted a "wrongful retention" under the Hague Convention. The district court dismissed her complaint and Pielage appealed. The Eleventh Circuit affirmed. In her complaint, Pielage alleged that all of her time in the United States was just visits, and that the Netherlands was both her and Josha's "habitual residence." Any thoughts she had about returning to the Netherlands while the custody battle was ongoing were interrupted on September 6, 2006, when the Baldwin County Circuit Court granted McConnell's ex parte motion for a ne exeat order. That order prohibited Pielage from removing Josha from the state court's jurisdiction until the custody dispute was resolved. Thirteen weeks after the ne exeat order was issued, Pielage filed a complaint in the United States District Court for the Southern District of Alabama, claiming that the order constituted an "unlawful retention" that deprived her of her custody rights, in violation of the Hague Convention and requested multiple forms of relief, including an order from the district court directing that Josha be returned to his "habitual residence of the Netherlands. McConnell responded with a Federal Rule of Civil Procedure 12(b)(6) motion to dismiss, arguing that the state court's ne exeat order did not constitute an "unlawful retention" within the meaning of ICARA. Ruling on the motion, the district court assumed that the Netherlands was Josha's habitual residence. Even with that assumption, the district court agreed with McConnell that the state court ne exeat order did not constitute a wrongful removal or retention under ICARA, because Josha had been in Pielage's physical custody since his birth, and she still had physical custody of him after the order was entered. The district court dismissed Pielage's complaint for failure to state a claim.Pielage contended on Appeal that the ne exeat order constituted a wrongful retention of Josha under the Hague Convention because it amounts to an interference with her custodial right to return the child to his habitual residence in the Netherlands. The obvious initial issue was whether there had been a "retention" at all under the Hague Convention. Neither the Hague Convention nor ICARA actually defines the term "retention." Pielage pointed to Article V of the Hague Convention, which defines a parent's "rights of custody" over a child as including "the right to determine the child's place of residence." Using that definition, Pielage contended that the state court ne exeat order was interfering with one of her rights of custody by preventing her from removing Josha from the state court's jurisdiction to take him to her desired place of residence, the Netherlands. According to her, that is all she needed to show to state a valid claim under the Hague Convention. The Eleventh Circuit was not persuaded to define "retention" to include every breach of a parent's rights of custody. Doing that would render the treaty's definition of "wrongful" superfluous. The treaty provides that a retention is wrongful only where "it is in breach of rights of custody attributed to a person, an institution or any other body." That necessarily means that there are some retentions that are not wrongful. Under Pielage's construction, however, none would be. Any breach of the rights of custody would be a retention and it would be wrongful. There would be no retention unless there were a wrongful one. It noted that according to one dictionary, the primary definition of the term "retain" is "to keep possession of." This meaning of the term "retention" was supported by the Perez-Vera Report, which states that the Hague Convention was meant to remedy situations where a "child is taken out of the family and social environment in which [he] has developed." This indicates that the term "retention" is meant to cover the circumstances where a child has been prevented from returning to his usual family and social environment. The court held that because the order did not disrupt or otherwise alter the "family and social environment in which [he] has developed," it was not the type of "retention" that the Hague Convention was intended to remedy. Although the preamble to the Hague Convention does state that one of its purposes is the return of the child to its state of habitual residence, the substantive provisions of the treaty are silent on where the child is to be returned. This silence, according to the Perez-Vera Report, was intentional and must be "understood as allowing the authorities of the State of refuge to return the child directly to the applicant, regardless of the latter's present place of residence." In cases such as this one, where the child remains in the physical care of the petitioner, it is impossible "to return the child directly to the applicant.". That is so because there has been no "retention" within the meaning of the Convention. There having been no retention, there can have been no "wrongful retention." Because the state court's ne exeat order did not constitute a "retention" within the meaning of the Hague Convention the district court did not err in granting McConnell's motion to dismiss.