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Wednesday, March 21, 2012

Important New Decisions - March 21, 2012

Temporary Maintenance Guidelines Income Cap Raised from $500,000 to $524,000.
The "cap" on each spouses annual income, to be utilized in calculating temporary maintenance orders, has increased from $500,000 to $524,000 effective January 31, 2012 in accordance with Domestic Relations Law § 236 [B][5-a][b][5] . (See Temporary Maintenance Guidelines Worksheet, revised January 31, 2012 at or Temporary Spousal Maintenance Guidelines Calculator, revised January 31, 2012 at  Beginning January 31, 2010 and every two years thereafter, the income cap increases by the product of the average annual percentage changes in the consumer price index for all urban consumers (CPI-U) as published by the united states department of labor bureau of labor statistics for the two year period rounded to the nearest one thousand dollars. The office of court administration is required to determine and publish the income cap. See Domestic Relations Law § 236[B], [5-a][b][5].

Downward Modification of Child Support Based on a Loss of Employment Due to Injury Granted Where Father Demonstrated Injuries Severely Limited His Ability to Resume His Veterinary Practice
In Smith v Smith, --- N.Y.S.2d ----, 2012 WL 88100 (N.Y.A.D. 3 Dept.) pursuant to a 2002 judgment of divorce, defendant (mother) was awarded sole custody of the parties' four children. Pursuant to the Child Support Standards Act (DRL 240[1-b] ), plaintiff (father) was directed to pay $2,887 per month in child support based on his imputed income of $160,000 as the sole proprietor of a veterinary practice. The mother, who had no income, was awarded durational maintenance. In 2007, the father was seriously injured in a motor vehicle accident and, in 2009, he sought a downward modification of his child support payments, alleging that there had been a substantial change in circumstances because, among other things, his injuries severely limited his ability to resume his veterinary practice and to perform veterinary services. After a hearing, Supreme Court granted the motion and recalculated the father's monthly child support payments under the Child Support Standards Act to be $634.96 based on the mother's present income of $49,605 from her work as a part-time dental hygienist and the father's income of $24,877.20 from his limited practice and his Social Security disability benefits.  The mother appealed, contending that, despite the father's injuries and disability, the motion for a downward modification should have been denied because the father could provide support through some other type of veterinary practice. The Appellate Division affirmed. It observed that she did not present any evidence contradicting the father's proof of his limited ability to work or supporting her claim that he could hire other veterinarians to assist in running his practice. While a request for a downward modification of child support based on a loss of employment due to injury or illness may be denied where the parent seeking the modification still has the ability to provide support through some other type of employment Supreme Court credited the father's testimony that he is no longer able to work full time at his own practice, could not  afford to hire another person to assist him in his practice and was not employable at another practice because of his condition. Giving deference to Supreme Court's credibility determinations there was no basis to disturb its determination that the father demonstrated a significant change in circumstances warranting a downward modification of his child support obligation. The Appellate Division rejected the mothers argument that the presumptively correct amount of child support was unjust or inappropriate and that, as a result, the father's personal injury settlement should have been considered in determining his child support obligation The children  received derivative Social Security benefits, and the evidence established that most of the father's settlement had already been used to pay the father's child support arrears, continue his child support payments and otherwise mitigate his financial problems.

Appellate Division Generally Accords Deference to Supreme Court's Determination Regarding Amount and Duration of Maintenance as Long as the Court Considers the Statutory Factors and Provides a Basis for its Conclusion
                 In O’Connor v O’Connor, --- N.Y.S.2d ----, 2012 WL 88226 (N.Y.A.D. 3 Dept.) the parties in this matrimonial action were married in 1986, they had three children (one born in 1990 and twins born in 1992), and plaintiff commenced this action in August 2009 premised upon defendant's abandonment. Following a nonjury trial, Supreme Court, as relevant to this appeal, awarded plaintiff maintenance of $1,000 per month until she was eligible for Social Security retirement benefits in January 2022, subject to earlier termination upon various conditions, including if she remarries or the commencement of her receipt of her share of defendant's pension. In its decision and order, the court also partially granted plaintiff's motion for counsel fees, awarding $7,500 of the over $20,000 in then unpaid counsel fees and disbursements. These awards were included in the April 2011 judgment of divorce. Defendant, challenging the duration of maintenance, appealed from the judgment, which prompted plaintiff to cross-appeal therefrom and to move for an award of appellate counsel fees. Supreme Court, in July 2011, granted plaintiff $900 in counsel fees for making the motion and $9,000 for appellate counsel fees. Defendant appealed from the July 2011 order.
The Appellate Division stated that while its  authority is as broad as Supreme Court's regarding maintenance it generally accords deference to Supreme Court's determination regarding the amount and duration of maintenance" 'as long as the court considers the statutory factors and provides a basis for its conclusion.  Maintenance is appropriate where, among other things, the marriage is of long duration, the recipient spouse has been out of the work force for a number of years, has sacrificed her or his own career development or has made substantial noneconomic contributions to the household or to the career of the payor. The fact that a wife has the ability to be self-supporting by some standard of living does not mean that she is self-supporting in the context of the marital standard of living. Here, Supreme Court discussed each of the statutory factors. This was a long-term marriage of 24 years and plaintiff was 50 years old. Although she had a marketing degree and had a job related to her degree early in the marriage, she passed on a promotion because defendant would not move, and later she gave up her position in order to raise the parties' children. She has not worked in marketing since early 1992. At the time of the divorce, she worked as a school aide and her earnings for 2009 and 2010 were about $14,000 and $18,000, respectively. Supreme Court accepted her testimony that she would need considerable educational updating of an unknown duration and cost before being able to return to a marketing position or another professional field. Defendant's 2010 income was about $78,854, but Supreme Court noted that he did not work available overtime which, in the prior four years, resulted in income levels between approximately $95,000 and $117,000. Defendant's child support obligation for the oldest child ended in August 2011 and the remaining obligation ceases in June 2013. In light of Supreme Court's discussion of the pertinent factors, the length of the marriage, career sacrifice by plaintiff, large discrepancy in current earning power and plaintiff's age, the Appellate Division was unpersuaded that the duration of maintenance determined by Supreme Court should be modified. It rejected defendants argument that it was error to order him to pay counsel fees for the underlying action and the appeal. It is within the discretionary power of Supreme Court to award counsel fees and, in doing so, "a court should review the financial circumstances of both parties together with all the other circumstances of the case, which may include the relative merit of the parties' positions" ( DeCabrera v. Cabrera-Rosete, 70 N.Y.2d 879, 881 [1987]). Supreme Court discussed the financial position of the parties, including defendant's superior earning capacity, and otherwise adequately explained its reasons for awarding counsel fees. Although plaintiff did not pursue her cross appeal, plaintiff's counsel stated in an affirmation that the cross appeal involved a narrow issue that appellate counsel had indicated did not affect her fee. It found  no abuse of discretion by Supreme Court in the award of counsel fees .

 Equitable Distribution and Counsel Fees Denied Where Parties Elected Not to Treat Marriage as an Economic Partnership                                                  
In Medley v Medley, 2011 WL 6975934 (N.Y.Sup.), 2011 N.Y. Slip Op. 52457(U) (Table, Text in WESTLAW), Unreported Disposition, the action was commenced August 2007 for absolute divorce by Plaintiff, Claudette Medley, against Defendant, Maurice Medley. A divorce was granted in favor of Defendant after inquest on the grounds of constructive abandonment. There were no children of the marriage. A trial was held on the ancillary issues of equitable distribution and counsel fees. The parties were married in a civil ceremony on March 5, 1997, after a brief courtship. At the time of the marriage, Plaintiff was in the United States with temporary legal status and Defendant was an American citizen. Prior to the marriage, each party resided in and owned their own home. Plaintiff's home, 141-15 255th Street, Queens, N.Y. ("255 Street property"), was jointly owned with a friend and Defendant was the sole owner of 130-60 221st Street, Queens, N.Y. ("221 Street property"). The parties agree that they lived together at 130-33 221st Street, Queens, N.Y. ( "130-33 Street property"), from March 2005 until July 7, 2007. The parties' living arrangements between March 1997 and 2005 were disputed and was the core issue at trial. Both parties engaged in real estate investments. Plaintiff as a real estate sales agent and owned real estate businesses. Defendant bought and sold investment properties. Except for one joint ownership, all their investments, businesses were conducted separately by each.
            Supreme Court found that Plaintiff migrated to the United States in 1988 under a temporary Visa with a work permit. She was employed in administration at a Hospital. In 1994, Plaintiff purchased the 255 Street property, jointly with a friend. Her friend and co-owner subsequently deceased and the one half share was inherited by her friend's daughter. Upon the death of Plaintiff's friend, the mortgage insurance paid off the mortgage on the 255 Street property. Plaintiff later refinanced the property by herself and solely kept the undisclosed proceeds. It was unclear how Plaintiff, solely, refinanced the joint ownership 255 Street property. The daughter did testify that she was aware the property was refinanced; however, no documents were executed by the daughter nor did she receive any of the undisclosed proceeds. After three months of dating, in early 1997, Plaintiff showed Defendant a letter from Immigration and Naturalization Service ("INS") informing Plaintiff that her Visa status had expired. The parties ensued in a conversation on how to change Plaintiff's status or whether Plaintiff will leave the United States to, what Plaintiff classified as, "her father's farm". After this conversation, the parties immediately planned the wedding. The day before the marriage, at Plaintiff's residence, the parties discussed drafting a pre-nuptial agreement. Plaintiff wrote a handwritten document. The document entitled, Prenuptial Agreement between Maurice Medley and Claudette as of 3/3/97,' states "that neither party would take any legal action to seek the other's assets". The agreement, though not acknowledged, is signed by both parties and dated March 4, 1997. One day later, the parties were married, March 5, 1997.  It was undisputed that the parties resided together from March 2005 until July 2007 at the 130-33 Street property. Plaintiff had one child, not of the marriage, who resided with Plaintiff and one other family member. There was no document placed into evidence to show that the parties filed joint tax returns or commingled their incomes and bank accounts. Although no tax records were placed into evidence, as Plaintiff claimed joint filing, she contradicted her testimony by acknowledging that as of 2003 she filed as head of household. Plaintiff filed as head of household to show diminished income so that her son could receive financial aid and a scholarship from the private school he attended in New Jersey. The tuition for the school was approximately $28,000.00 to $30,000.00 annually. As a result of Plaintiff's tax filing and the financial application she misrepresented to the school, her son obtained the scholarship and she paid $2,400.00 annually as a single parent.
          Plaintiff obtained a Bachelor of Arts degree from York College in 2004. From 1997 through 2005, she earned approximately $30,000.00 annually from Memorial Sloan Kettering. In 2005, her salary increased to $50,000.00. Plaintiff obtained her real estate license in 1997 and began real estate sales. In addition to Plaintiff's earnings from the hospital, she earned additional income ranging through 2010 from as high as $50,000.00 to low as $2,000.00. Consistent with the document signed on March 4, 2005, Plaintiff kept her income separate and apart from Defendant and some of this income was not disclosed prior to the commencement of this case.
          All income received from the properties were kept and used by Defendant towards the mortgages and carrying charges on the properties. Although there was a marriage on paper, the parties communication and financial partnership was non existent. Plaintiff's incomes were either not disclosed or shared. Defendant's income although known was not shared.
          The credible evidence showed that the parties lived their lives in a manner consistent with the written document they signed in March 1997. Each engaged in separate investment ventures, buying and selling investment properties and kept all their incomes separate from each other. Plaintiff did not disclose any of her real estate investment income prior to trial to Defendant although she claimed entitlement to Defendant's. Defendant did not claim any entitlement to Plaintiff's income, investments or license claiming this was the intent of the parties. Throughout the marriage, there was no credible evidence that the parties spent any significant time together but rather maintained a separate business lifestyle. At most the parties had a sparse emotional life but it was impacted by a clear separate financial life. What contribution Plaintiff made to the investment property purchased with Defendant's funds was unproven since the record was devoid of any documents to support Plaintiff's claim except her testimony.
         The Court found that there were several innuendoes of the purpose and true meaning of the parties nuptial. Their arrangement was a sparse emotional life with no financial partnership. For an approximate ten year marriage, the parties lived together for a total of two years and four months just prior to filing of the action. There was evidence that Plaintiff filed deceptive and misrepresented legal school documents and tax returns. Although the Court would not define or marshal what is a "married life". The cliche "you know it when you see it" could be inferred in this case. These parties engaged in a pattern of behavior that was inconsistent of any semblance of a marriage life in its ordinary and reasonable meaning. Plaintiff  failed to present any documentary proof or credible evidence for her claims of entitlement. It was undisputed that during the marriage, Defendant purchased three properties, titled solely in his name. Defendant claimed that Plaintiff failed to meet her burden to establish that she made any contribution to these properties, thus warranting an equitable distribution of the value of these real properties. Defendant made no claim of an equitable distribution of Plaintiff's businesses or license.
      Looking to DRL 236(B)(1)(c), it was clear that all property acquired during a marriage acquired by either spouse, with the exception of property in specifically delineated categories, is considered to be marital property. In this matter, Defendant purchased the Dean Street property, the DeCosta Avenue property, and the 130-33 Street property, during the marriage in 1999, 2001 and 2005, respectively. Pursuant to the statutory presumption, all three properties are deemed to be marital property.    In addition to the real property acquired during the marriage, both parties also acquired retirement benefits throughout the duration of the marriage. The Court found that to the extent the benefits were accrued during the marriage, the retirement benefits were marital property.
      Turning to the unique circumstances of this case, the Court considered the economic partnership, as created by the parties in this marriage. While the living arrangements of the parties from March 1997 through May 2005 was disputed, it was undisputed that from the outset of the marriage the parties agreed not to treat the marriage as an economic partnership. While the document signed on March 4, 1997, was not a pre-nuptial agreement, as it did not satisfy the requirements for a pre-nuptial agreement as required by DRL 236(B)(3), the written signed document evinced the intent of the parties to forego any legal claim each party may have to the other party's assets in the event that the marriage was unsuccessful. While the Plaintiff testified that the agreement only concerned the property owned prior to the marriage, the evidence presented established that the parties maintained separate finances throughout the life of the marriage. Although Plaintiff testified that the parties held one joint account until approximately 2004, she failed to present evidence to establish the existence of that or any joint account. Plaintiff did not contribute to the down payment or mortgage payments nor made any spousal or homemaker contribution on any of the properties purchased by Defendant.  Moreover, while Plaintiff testified that the parties filed joint tax returns during the early years of the marriage, until approximately 2004, she failed to present any joint tax returns for any year during the marriage.
In addition to maintaining separate bank accounts, the parties also conducted their real estate investments and business endeavors separately. The parties' separate real estate dealings evinced an intention to maintain separate financial accounts and investments consistent with the document written and signed on March 4, 1997. Plaintiff's testimony of the parties' intent was inconsistent with the parties' actions. The manner in which the parties conducted their real estate endeavors was inconsistent with the economic partnership theory.
Supreme Court observed that Courts have held in matrimonial proceedings where parties conduct themselves in a manner inconsistent with the economic partnership, the Court may find that equitable distribution of property is not warranted (see  Duspiva v. Duspiva, 181 A.D.2d 810, [2d Dept 1992];  Miller v. Miller, 4 AD3d 718, [3d Dept 2004];  Galvin v. Galvin, 20 AD3d 550, [2d Dept 2005] ). The parties began their marriage with an agreement that neither party would pursue legal action to claim the other party's assets. For the duration of the marriage, the parties lived in a manner consistent with the terms of that the document they wrote and signed. Although the parties resided in the same residence, 130-33 Street property, the Court found that the parties continued to conduct themselves in a manner consistent with the terms of the document signed on March 4, 1997, and conducted themselves in a manner inconsistent with the typical economic partnership and, therefore, equitable distribution of the property was not warranted.
Plaintiff presented evidence and testimony to establish that she purchased furniture for the residence at 130-33 221st Street  in the sum of $11,734.23. Plaintiff further testified that although she left the residence in July 2007 Defendant did not allow her to remove the furniture from the residence. In light of the parties' agreement and conduct consistent with the agreement, the Court finds that the furniture purchased for the 130-33 221st Street residence is property of Plaintiff. However, as the furniture has remained in Defendant's possession since 2007, Defendant had to pay Plaintiff for the cost of the furniture. Defendant was directed to pay Plaintiff $11,734.23 for the furnishings in the residence.
Plaintiff sought counsel fees. According to Plaintiff's testimony, in 2009, she earned approximately $70,000.00 from her employment at the hospital and an additional $20,000.00 from her real estate businesses. Additionally, she testified that for the year 2010, she anticipated earning approximately $70,000.00 from the hospital and has already derived $15,000.00 from her real estate businesses. Plaintiff earned a minimum of $85,000.00 in 2010. Defendant's Amended Statement of Net Worth indicated that Defendant's monthly income was $12,707.44. While Defendant's income was greater than that of Plaintiff, throughout the duration of the marriage, the parties maintained separate finances and Plaintiff was able to meet her financial obligations without the assistance of Defendant. Considering the unique circumstances of this case, Plaintiff's request for counsel fees was denied.

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