In the below decision from Suffolk County Supreme Court Justice Gargiulo denies equal distribution in a case where the wife contributed nothing to the economic partnership, neither through her work or her by contributing her own money. In this case the Judge found that the wife had been siphoning off company funds throughout the marriage. The Judge also denied counsel fees on the theory that it was plainly obvious that the wife was not entitled to the requested relief and as such the Judge would not grant counsel fees merely to allow the wife to play with "house money" in trying to receive a larger degree of equitable distribution. This warning is fair warning to those who put nothing into an economic partnership, but intend to take half of everything with them when they leave.
S v. S, 29475-2007
Decided: January 26, 2010
Justice Garguilo
This is an action for Absolute Divorce commenced by the plaintiff, A.S., against the defendant, E.S. The Court took testimony as to grounds and makes its findings hereinafter allowing divorce on the basis of constructive abandonment (DRL §170(2)). Thereafter, the trial was held before this Court ending on November 6, 2009.
The court has had a full opportunity to consider the evidence presented with respect to the issues in this proceeding including all the testimony offered and all exhibits received. Furthermore, the Court observed the demeanor of the witnesses and has made determinations concerning the credibility of these witnesses. The Court makes the following Findings of Fact and Conclusions of Law:
FINDINGS OF FACT:
A. GROUNDS:
1. The parties were married on August 7, 1999 within the State of New York.
2. The Action for Divorce was commenced on or about October 10, 2007.
3. The plaintiff-wife, at the time of trial, was 47 years old. The defendant-husband, at the time of trial, was 57 years old. The health of the parties is not in issue.
4. There are no children of the marriage. Both were previously divorced and do have children of their prior marriages. In 2002, the plaintiff had commenced an action for divorce which was discontinued.
5. At the time of the commencement of this action, both plaintiff and defendant were residents of the State of New York and both had prior thereto continuously resided in the State of New York for a period in excess of two years. Neither the plaintiff nor the defendant are in the military service of the United States, and there is no judgment or decree of divorce, separation or annulment granted with respect to this marriage by this Court or any other court of competent jurisdiction and no other actions are pending at the present time.
6. Both parties agree to take, prior to the entry of a filed Judgment, all steps solely within their power to remove any barrier to the other's remarriage following divorce. The Court finds it has jurisdiction of the parties and the subject matter.
7. The Court finds that the defendant knowingly, intelligently and voluntarily constructively abandoned the plaintiff with respect to the grounds alleged by the plaintiff in her Verified Complaint. The Court finds credible the testimony of the plaintiff that since on or about March, 2006, and continuing, the defendant, without just cause or provocation, willfully refused to co-habit with the plaintiff as man and wife and to have normal sexual relations with the plaintiff, despite plaintiff's repeated requests of the defendant to resume normal sexual relations. Both plaintiff and defendant are physically capable of engaging in same and neither party suffers from any physical or mental disability which would preclude marital relations. The Court finds that said refusal has been continuous, unjustified and unprovoked. Consequently, the plaintiff proved, and the Court finds as fact, those allegations as set forth in paragraphs Eighth, Ninth and Tenth of her Verified Complaint dated April 20, 2009. Oral applications to conform the pleadings to the proofs were granted. The defendant has neither admitted and/or denied the allegations.
B. DISPOSITION OF PROPERTY:
8. Marital property is defined in Domestic Relations Law §236B(1)(c) as "All property acquired by either or both spouses during the marriage." The issues both prosecuted and defended by the parties, in large measure, concern the identity of the property (marital vs. separate) and the relative share of each party.
The following are the properties at issue:
a) 3 Frances Lane, Port Jefferson, New York (the marital residence).
b) Home Companion Services of New York, Inc.
1
c) Home Companion Services of Florida, Inc.
d) Access Home Care, Inc.
e) Arcadia Management, Inc.
f) Green Fields East Holding, LLC.
g) Janney Montgomery Scott accounts:
i. XXXX-0213
ii. XXXX-0116 (529 Plan)
iii. XXXX-0170 (Roth IRA)
iv. XXXX-0045
v. XXXX-2840 (profit sharing)
vi. Arcadia Management (401K)
h) HSBC Accounts:
923XXXXXX
923XXXXXX
253XXXXXX
I) ING Account:
73322014
j) Time Shares:
I. Manhattan Club
ii. Bahamas
k) Vehicles:
I. 2003 Nissan
ii. 2009 Nissan X-terra
iii. Mercedes-Benz (leased)
DISCUSSION
The plaintiff seeks a 50 percent share of the marital portion of all the business interests in accordance with the stipulated values determined by the neutral appraiser. As to the marital residence, the plaintiff seeks a 50 percent share of its value in accordance with the stipulated value determined by the neutral appraiser and exclusive occupancy of said residence until such time as the home is sold. Additionally, plaintiff seeks a 50 percent share of all retirement accounts and all the other enumerated funds. Green Fields East Holding, LLC controls defendant's share of realty located in Aquebogue, New York. The plaintiff is seeking a 50 percent share "of the equity in the property located in Aquebogue, in accordance with the stipulated value determined by the neutral appraiser." The plaintiff seeks title to the Bahamas time share as well as a distributive award and/or credit in the sum of $11,500 representing the balance of her claimed 50 percent share in the two marital time share units. Lastly, the plaintiff seeks exclusive title and possession of the 2003 Nissan vehicle.
The defendant does not suggest any percentage as concerns the distributive award aspects of the case. However, the defendant, in his post-trial memorandum, suggests "plaintiff herein was clearly not a contributing member of an economic partnership with defendant." In stark contrast, the plaintiff, in her post-trial memorandum, characterizes her contributions in phrases such as "the expansive nature of her ongoing contributions is clear;" "her direct and daily involvement in the business...vast indirect contributions;" "Allison's (plaintiff) significant direct and indirect contributions to the success and viability of the businesses;" and, "significant and unquestioned contributions to her husband and the businesses."
The Domestic Relations Law contemplates an equitable division of assets based upon the parties' respective contributions to the marriage (see, Domestic Relations Law §236(B)(5)(d)(6)). The distribution of the assets depends not only on the financial contributions of the parties, "but also on a wide range of non-remunerated services to the joint enterprise, such as homemaking, raising children and providing the emotional and moral support necessary to sustain the other spouse in coping with the vicissitudes of life outside the home," (Price v. Price, 69 NY2d 8, 14 [1986]).
The Court has considered the marital history and will enumerate the factors considered in arriving at an equitable distribution of marital property (DRL §236(B)(5)(d)). At the time of the marriage, the defendant was (and currently remains) the driving, tireless source of the success of the business interests. He came to the marriage as a responsible entrepreneur earning a handsome living. The plaintiff came into the marriage with poor credit. This is borne out as the trial testimony indicated that the marital home, purchased days before the wedding, was purchased solely with defendant's money. The plaintiff could not participate in the purchase as she had bad credit. The record is quite clear that the plaintiff offered virtually nothing to enhance the growth of the business interests and/or the accumulation of additional assets.
The marriage, as noted earlier, was the second marriage of both parties. This marriage is of relatively short duration as the wedding occurred on August 7, 1999 and the action commenced in October of 2007.
There being no children of the marriage, the issue of a "custodial parents [need] to occupy or own the marital residence and to use or own its household effects," is not a consideration.
Neither party offered evidence reflecting DRL §236(B) (5) (d)(4), (7), (9), (10) or (12). Nonetheless, the Court does note that liquidity issues (DRL §236(B)(5)(d)(7) pose no compelling considerations.
Pursuant to DRL §236(B)(5)(d)(13), the Court may consider "any other factor which the court shall expressly find to be just and proper." Given the credible testimony of the non-party witnesses, it is an affront to the sensibilities of the finder of fact to suggest the plaintiff to be or have been anything but a consumer, user and abuser of her status as the boss's wife. To claim the plaintiff to be an element in any way responsible for the defendant's success in business and/or investments is equally an affront. The plaintiff has not demonstrated to any degree the contribution of non-remunerated services to the joint enterprises.
During the course of this short, rocky relationship, nothing tied the plaintiff to the marital home. There is no rearing of children, maintaining the marital abode and/or active participation in fostering the growth of defendant's enterprises. At the time the plaintiff took employment with her husband's companies, she abused her stature as the boss's wife. She came and went as she pleased and neglected accounts, costing the business dearly. She engaged in self-dealing by secretly siphoning money.
On the home front, she allowed her sons from a prior marriage to run amok, damage, soil and show no respect for the defendant's proprietary rights. In short, to suggest any kind of symbiosis between the plaintiff and defendant is sheer fiction. The plaintiff's presence, as suggested by the record, was parasitic.
It is elementary that equitable distribution does not necessarily mean equal distribution, Rizutto v. Rizutto, 250 AD2d 892 (1998). Equitable distribution presents issues of fact which the Court must resolve,Teabout v. Teabout, 269 AD2d 719 (2000). In partitioning property, the Court should consider the separate contributions of each party to the acquisition and improvement of the property, Quattrone v. Quattrone, 210 AD2d 306 (1996). The Court must also consider the parties' respective contributions to the family economic enterprise, Johnson v. Johnson, 49 AD2d 348 (2008).
THE MARITAL RESIDENCE
The marital residence at 3 Frances Lane, Port Jefferson, New York was purchased by the defendant prior to the marriage (August 5, 1999). The purchase price was $425,000. The sum of $145,000 came directly from proceeds of a sale of defendant's condominium. The home, upon closing, was encumbered with a $280,000 mortgage solely in defendant's name. The plaintiff did not contribute money to the acquisition of the home.
During March of 2005, the defendant conveyed his interest in the marital home to himself and the plaintiff as tenants by the entirety. There was no consideration for the transfer.
The neutral appraiser, Given Associates, valued the residence at the time of the transfer at $900,000. Shortly before commencement of this trial, the neutral appraiser determined the value of the premises to be $765,000. The marital residence declined in value by $135,000 from conveyance to trial. The sum of $40,000 paid for improvements is reflective of improvements made wholly with funds supplied by the defendant. Those funds came from his income earned post marriage. The record is further clear that all funds to carry the home were derived from defendant's self employment.
The plaintiff seeks 50 percent distribution of the net value after crediting defendant with the sum he actually spent to take possession of the house ($145,000) citing Coffey v. Coffey, 119AD2d 620 (2nd Dept.1986). The Court deciding Coffey in remanding the matter to determine the increase in value from the date the transferring spouse acquired the separate property to the date of transfer to his spouse clearly found the pre-transfer appreciation to be relevant. Why so? The Court noted:
At the outset, it is important to note that there is no requirement that distribution of each item of marital property be on an equal basis (see, Arvantides v. Arvantides, 64 NY2d 1033, 1034; Parsons v. Parsons, supra.; Ackley v. Ackley, supra.; Rodgers v. Rodgers, 98 AD2d 386, 390-391, appeal dismissed 62 NY2d 646). Rather, property acquired during the marriage should be distributed "in a manner which reflects the individual needs and circumstances of the parties" (mem of Governor Carey, 1980 McKinney's Session Laws of NY, at 1863). To this end, courts possess the flexibility required to mold a decree appropriate to a given situation, with fairness being the ultimate goal (see, Rodgers v. Rodgers, supra., at p 391).
The court went on to further comment:
In accordance with these principles, in the case at bar, the husband should receive a credit for the contribution of his separate property toward the creation of the marital assets (see, Parsons v. Parsons, 101 AD2d 1017; Duffy v. Duffy, 94 AD2d 711; Domestic Relations Law §236(B)(5)(d)(10)).
The Coffey court noted that the record was "devoid of evidence of the value of the marital residence at the time of the 1973 conveyance." The 1973 conveyance was the one that created marital property as the husband deeded the property to himself and his wife as tenants by the entirety.
The matter before this Court suffers no lack of evidence similar to Coffey. As noted earlier, the property was acquired, pre-marriage, separately. It was valued at $425,000. At the time of the conveyance to plaintiff, it was valued at $900,000. At or near the time of trial, it was valued at $765,000. As a finding, the Court concludes that the value of the marital residence declined $135,000 during its tenure as marital property. Worthy of note is the fact that the defendant-husband paid virtually all carrying charges on the home from his earned income.
The logic of the Coffey court in holding that the grantor spouse should "receive a credit for the contribution of his separate property toward the creation of the marital assets" and thereafter remanding the matter to take "evidence of the value of the marital residence at the time of the conveyance" compels this Court to find the defendant-husband's contribution of his separate property is $900,000. As the asset depreciated, the plaintiff is ORDERED to execute a quit claim deed (without any payment from the defendant) transferring her interest in the marital premises to the defendant-husband, fee simple absolute.
In deciding this case, the Court referenced Granade-Bastuck v. Bastuck, 249 AD2d 444, 671 NYS2d 512(App. Div. 2d Dept., 1998). A prime consideration of that court in sustaining a 50 percent award of the husband's non-business properties was that the wife made non-economic contributions to the marriage which allowed the couple to "amass a substantial marital estate." No such contributions were made by the plaintiff herein.
The marital home herein was improved by construction projects. Those improvements are incorporated into the appraisal of the home and the funds were derived wholly from defendant-husband's post-marriage income. The defendant-husband is directed to pay to plaintiff the sum of $10,000 representing a distributive award concerning the improvements. Both the quit claim deed and payment of funds shall occur within thirty (30) days of service of a copy of the decision and order with notice of entry. The plaintiff is ORDERED to vacate the premises no later than thirty (30) days after service of a copy of the decision and order with notice of entry.
BUSINESS INTERESTS
The plaintiff seeks a 50 percent share (distributive award) of the marital value of her husband's business interests. Plaintiff claims such an award:
"[i]s appropriate, given the magnitude of her contributions, and the manner in which her labor, services and indirect contributions helped grow the business into the successful enterprise it is today."
The record supports an extremely different scenario. Testimony of Susan Farrar (an employee of the defendant) was credible. She has been an employee of the defendant for approximately twenty (20) years. The witness testified that the labor, marketing and networking skills of the defendant transformed his chiropractic practice into a thriving home companion business. The plaintiff, herself, acknowledged Home Companion Services of New York was conceived through defendant's insight. Testimony of S F and D K, another employee, demonstrated that the plaintiff engaged in affirmative bad acts in drawing checks payable to cash and deleting same from the operating account register to avoid detection. Plaintiff's assertion that same was done with the consent of the defendant is patently incredulous. Why would the defendant, the boss, encourage his wife to write checks to cash and delete same from the register? Perhaps to give his auditors something else to do?
Financial Appraisal Services, Ltd., the neutral, court-ordered forensic accountant, found an appreciation of $1,146,000.00 of Home Companion Services of New York during the marriage. The company was founded three (3) years before the marriage. The plaintiff's contributions to the growth of that entity is undetectable. It is the decision of the Court that plaintiff's distributive award of the business entities is zero dollars. As noted earlier, the plaintiff's cavalier approach to work attendance, misfeasance, malfeasance and disruptive nature substantiate the finding herein consistent with Granade-Bastuck v. Bastuck (249 AD2d 444) in correlating a distributive award to the party's non-economic contributions to the marriage which allowed the couple to "amass a substantial marital estate."
The Court's determination concerning business interests applies to those entities noted herein at B, (b), (c), (d), (e) and (f).
INVESTMENT PORTFOLIOS
Several investment portfolios and bank accounts were the subject of the distribution claims. The testimony remains uncontroverted that all monies represented by the accounts came from income generated by the husband. However, a good deal of said income was earned during the marriage. That income used to fund the investment vehicles is marital property.
The plaintiff seeks a 50 percent distributive award of all the funds. The defendant concedes a distribution "consistent with the respective financial contributions of the parties."
Clearly the plaintiff made no financial contributions to these accounts. However, it is clear that monies represented in the accounts are a marital asset as that term is defined. The Court awards the plaintiff as follows:
J M S accounts:
1. XXXX-0213-10 percent of the value at the date of commencement of this action.
2. XXXX-0116 (529 Plan)-0 percent
3. XXXX-0170 (Roth IRA)-10 percent of the value at the date of the commencement of this action.
4. XXXX-0045-10 percent of the value at the date of commencement of this action.
5. XXXX-2840 (profit sharing)-10 percent of the value at the date of commencement of this action after crediting the defendant $32,719.59. The Court has carved out that sum as the defendant's separate property, the sum of $32,719.59 being defendant's monies in the Janney accounts pre-marriage and therefore separate property.
6. Arcadia Management (401K)-10 percent of the value at date of commencement of this action.
The accounts with HSBC and ING are marital property. The plaintiff shall receive as her distributive award 10 percent of the value of each account at the date of commencement.
In awarding the plaintiff a portion of the accounts, the court has given weight to her testimony concerning some domestic responsibilities assumed during the marriage. The plaintiff testified working with decorators involving drapery, the living room, painting, carpeting and bedding (pillows). Additionally, the plaintiff offered testimony concerning her work in cleaning the home as well as serving breakfast and dinners. The Court, in seeking equity, despite all else, chose to credit plaintiff for her services.
The two time shares will be sold. The proceeds shall be divided 10 percent to the plaintiff, 90 percent to the defendant. In lieu of sale, either party may buy the other's interest at a gross valuation of $30,000 (Manhattan Club) and $7,000 (Bahamas). More particularly, the defendant may buy out the plaintiff by tendering 10 percent of the gross values as set forth hereinabove.
The plaintiff is awarded the 2003 Nissan motor vehicle. All other vehicles are awarded to the defendant.
425 OLD TOWN ROAD PROPERTY
The real estate and building housing the defendant's business (425 Old Town Road, Port Jefferson Station, New York) was acquired by the defendant some ten (10) years before the marriage. It is separate property. The plaintiff offered no testimony concerning value, appreciation or the like. The property shall remain the defendant's separate property.
MAINTENANCE
The plaintiff is seeking an award of maintenance in the sum of $3,000 per week for a period of five (5) years. The defendant has been paying the plaintiff $500 per week in pendente lite spousal support, retroactive to October 16, 2007. The duration of this marriage is approximately eight (8) years.
Plaintiff cites Fuchs v. Fuchs, 276 AD2d 868, 714 NYS2d 381 in support of her claim. The marriage of Mr. and Mrs. Fuchs endured for thirty (30) years. They reared four (4) children. That court restated the accepted proposition that:
It is well settled that determination of whether one of the parties in a matrimonial action is entitled to maintenance and, if so, the amount to be awarded falls within the broad discretionary powers of Supreme Court (see, Domestic Relations Law §236[B][6][a]; Cohen v. Cohen, 154 AD2d 808, 809; Donnelly v. Donnelly, 144 AD2d 797, 798, appeal dismissed 73 NY2d 992).
The marriage before this Court is of a short duration. The plaintiff's contributions were at best de-minimus. Her acts of misfeasance and malfeasance have been addressed. She came into the marriage with "bad credit" and no testimony reflects any separate property except perhaps a child support entitlement from a prior marriage. She is currently under-employed and as noted hereinabove has received pendent lite spousal support for almost three (3) years. During that three (3) year period, the record is clear that the plaintiff has taken few steps to attain some form of self-sufficiency.
In lieu of any future maintenance, the defendant is directed to pay 50 percent of plaintiff's credit obligations, not to exceed $27,950. Said sum representing 50 percent of plaintiff's credit obligations on the date of commencement. In consideration of said payment, the defendant shall be discharged from any alleged arrears for unpaid medical bills limited to $1,000.
COUNSEL FEES
The plaintiff seeks a separate counsel fee award of $47,467.02. To date, defendant has paid $16,000 toward plaintiff's counsel fees.
In support of her application for counsel fees, plaintiff correctly points out:
Domestic Relations Law Section 237 expressly authorizes the award of legal fees. To discourage the use of litigation as a form of economic harassment, courts must grant reasonable and substantive awards of counsel fees that will reflect the current value of legal services, and the nature of the services that must be rendered.
The matter at bar presents itself as one where the plaintiff's demands for an equal distribution of all marital properties is preposterous. It is preposterous given the facts which were known to the parties going into trial. The defendant is successful. His properties are very valuable. Is the award of counsel fees in the best interest of all when it becomes apparent that a party's mind set is to proceed to trial and play with the "house's money"? In this case, the "house's money" is embodied in the prospect that win, lose or draw, we can count on Mr. S to pay his wife's cover charge.
The Court denies the plaintiff's fee application
It is, therefore, the ORDER of this Court that within thirty (30) days after service of a copy of this Order with Notice of Entry that:
1. The plaintiff will deliver a quit claim deed to the marital premises to the defendant and vacate the premises.
2. That the defendant will pay the plaintiff the sum of $10,000 representing marital property (money) paid for improvements of the marital home.
3. That all the business interests shall become the separate property of the defendant.
4. That the defendant shall tender the appropriate sums of money from the various retirement investment and bank accounts consistent with this decision.
5. That the defendant shall tender all documents necessary to transfer the 2003 Nissan vehicle to the plaintiff.
6. That the defendant shall tender the sums of money to the plaintiff to resolve the credit card obligations consistent with this decision.
Furthermore, the parties are directed to submit, on notice, proposed Judgments consistent with the Court's determination on or before MARCH 5, 2010.
The foregoing constitutes the ORDER of this Court.
1. Items (b) through (e) are collectively referred to as the "Business Interests."
It is important to hire a lawyer who stays up to date on the latest developments in the law. For further information about The Law Offices of Brian D. Perskin please
click here.