Divorce: New York

Divorce: New York

Claimed Ignorance of C.S.S.A. Treatment of Income Over Cap Not Basis to Set Aside Divorce Settlement Agreement

Posted in Agreements and Stipulations, Attorney and Client, Child Support (C.S.S.A.), Settlement

The alleged failure of the mediator and the husband’s counsel to advise the husband that a court need not apply the C.S.S.A. formula to the husband’s entire agreed-upon income of $1,200,000.00 per year income is not a basis to set aside a divorce settlement agreement, or its $29,500.00 per month child support obligation. So held Westchester County Supreme Court Justice Lawrence H. Ecker in his January 16, 2014 opinion in A.B. v. Y.B.

The couple involved separated after 12 years of marriage. Following three years of mediation, the parties entered into an agreement that resolved issues of custody and access to the parties’ three children, maintenance, child support, and equitable distribution. The husband is a 50% equity partner in a brokerage firm. The wife is owner and operator of her own business.

Upholding the agreement, Justice Ecker took pains to quote several of its provisions. One acknowledged that the parties had waived the “compulsory financial disclosure” requirements of the Domestic Relations Law and court rules, and agreed not to exchange Net Worth Statements. Nonetheless, the parties represented to each other that each made a full and complete disclosure of assets, liabilities, income and expenses, and that they relied on the information provided.

The agreement recited the husband’s disclosure, to the best of his knowledge, of his gross personal 2010 income as approximately $156,427.00. The parties agreed to use the 2010 income because their 2011 income was not yet available. The Husband disclosed that in no event was his income from any and all sources more than $156,427.00 in said year.

Nonetheless, for purposes of the agreement, the parties agreed to use an imputed income of$1,200,000 in computing the child support calculation under the Child Support Standards Act.

The parties acknowledged that they reached their agreement with the aid of the mediator, but that the mediator provided no legal representation to either of the parties. Further, although “the mediator may have provided information or opinions concerning the state of the law generally, neither party has relied upon such information or opinions in executing this Agreement.”

The parties further represented that each had ample opportunity to obtain independent legal counsel, and counsel [apparently recommended by the mediator] for each spouse was named.

As to the basic child support obligation, the agreement provided it was agreed that the the husband’s would pay $29,500 per month [$354,000 per year] for 12 years, 5 months, subject to a cost of living increase biennially. The husband was further responsible for 100% of discretionary expenses and add-on expenses, including private school tuition for all three children, private college expenses, camp and summer programs, religion education expenses, Bar and Bat Mitzvah expenses, health insurance and unreimbursed medical expenses.

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Deducting Separate Property Business Losses on Joint Tax Return May Transform Property to Marital

Posted in Equitable Distribution

Sometimes developing divorce case law seems like a bad game of telephone.

Take the February 7, 2014 decision of the Fourth Department in Foti v. FotiHere, the Court reversed the order of Supreme Court, Monroe County Justice Kenneth R. Fisher which had granted a wife partial summary judgment determining that various real estate entities and management companies were her separate property. She had proven that her interests were received from her father by gift.

Generally, under New York’s Domestic Relations Law §236B, property that is owned by a spouse before the marriage constitutes “separate property,” and is not divided on divorce, except, under some circumstances, to the extent of some portion of appreciation in value of the separate property over the course of the marriage. Inheritances and gifts (from someone other than the other spouse) are also “separate property.” On divorce, the court will divide  the parties’ “marital property,” property acquired during the marriage which is not “separate property.”

In Foti, the Fourth Department held that there was an issue of fact whether the wife commingled her interests in the entities, transforming the nature of those interests to marital property. The possible “commingling” arose from deductions taken on the parties’ joint tax return: “Here, the parties filed a joint federal tax return in which defendant reported her interest in the entities as tax losses, and ‘[a] party to litigation may not take a position contrary to a position taken in an income tax return,’” quoting from the 2009 decision of the Court of Appeals in Mahoney-Buntzman v. Buntzman, 12 N.Y.3d 415, 881 N.Y.S.2d 369.

In Mahoney-Bunztman, the Court of Appeals held that a husband’s decision to declare on his joint income tax return that money he received on the disposition of his interest in a real estate development company was ordinary earned income prevented him from later claiming that that money was merely a transformation of his separate property.

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C.S.S.A. Recitiation Requirements Relaxed for In-Court Child Support Sipulation

Posted in Child Support (C.S.S.A.)

The required C.S.S.A. recitation in an oral open-court stipulation by which the parties explain why they have agreed to a child support obligation varying from the presumptive C.S.S.A. formula may not have to be as “precise” as that required in a written stipulation. Such appears to be the holding of the Appellate Division, Second Department, in its January 22, 2014 decision in Rockitter v. Rockitter.

On August 9, 2010, the parties had entered two stipulations to settle their divorce action. A written stipulation covered the parties’ joint custody of their two daughters. The second stipulation was oral, made on the record in open court and concerned child support and equitable distribution. Both stipulations were subsequently incorporated, but not merged, into the parties’ judgment of divorce.

Approximately 18 months later, the ex-wife commenced this action seeking to vacate the child support provisions of the oral support stipulation and the judgment of divorce. The ex-wife alleged that the support stipulation failed to comply the Child Support Standards Act because the parties did not make the required recitation of the reasons they chose to deviate from C.S.S.A. guidelines. Nassau County Supreme Court Justice Norman Janowitz granted the ex-husband’s motion to dismiss the complaint. The Second Department affirmed.

The C.S.S.A. requires that any agreement varying its presumptive child support formula contain specific recitals:

  • (1) that the parties have been made aware of the C.S.S.A.;
  • (2) that they are aware that the guidelines would result in the calculation of the presumptively correct amount of support;
  • (3) that in the event the agreement deviates from the guidelines, it must recite the presumptively correct amount of support that would have been fixed pursuant thereto; and
  • (4) the reason for the deviation.

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Relocation of Mother with Children Requires Showing of Economic or Emotional Enhancement

Posted in Custody and Visitation

A mother’s application to relocate with her children to Arizona was properly dismissed where she failed to establish that the relocation would enhance the children’s lives economically or emotionally. In its January 29, 2004 decision in Christy v. Christy, the Second Department affirmed the order of Suffolk County Family Court Attorney Referee Roseann Orlando that had granted the father’s motion to dismiss the mother’s petition at the conclusion of the mother’s presentation of evidence.

The appellate court noted the general rule that on such a motion to dismiss a petition (as opposed to a ruling after both sides have presented all their evidence), the facts must be viewed in the light most favorable to the petitioner, accepting her proof as true and affording her every favorable inference that reasonably can be drawn therefrom.

Here, the mother failed to establish, prima facie, that her proposal to relocate to Arizona with the subject children was in their best interest. The mother failed to prove that the move would enhance the children’s lives economically. The mother was currently living in the home of her second husband together with six children, three from each of their prior marriages. The mother, an unemployed educator, testified that she had received a job offer in Arizona, contingent on her obtaining reciprocal certification. She, however, did not testify about what salary she expected to earn. Further, the mother’s second husband, who had a secure job in New York, annually, did not have a job waiting for him in Arizona.

Without proof of the second husband’s potential job prospects in Arizona, or proof of the mother’s earning potential as a teacher in Arizona, any contention that the children would enjoy a higher quality of life there is speculative.

The mother also provided no evidence that the lives of the subject children would be enhanced emotionally by the move.

There was no testimony regarding how the children felt about the proposed move, in terms of how they believed it would affect their relationship with their father or any of their friends. In fact, there was no evidence as to whether the subject children even desired to move.

Moreover, if relocation of the subject children across the country were permitted, the frequency of contacts between them and the father would be significantly reduced. He currently visited with the children three weekends a month.

The mother failed to show that the relationship between the subject children and the father could be preserved through suitable visitation arrangements, particularly given her financial circumstances.

Katherine M. Saciolo, of Bryan L. Salamone & Associates, P.C., of Melville, represented the mother.
Alan K. Hirschhorn, of Golden Hirschhorn LLP, of Garden City, represented the father. Beth A. Rosenthal, of North Babylon, N.Y., was Attorney for the Children.

Voluntary Payments Clause Precludes Reduction of Arrears

Posted in Agreements and Stipulations

The “Voluntary Payments” clause of the parties’ divorce stipulation of settlement prevented an ex-husband from using his non-required payments as an offset against his unpaid obligations. So held the First Department in its January 28, 2014 decision in Trepel v. Trepel. Doing so, the appeallate court affirmed the order of New York County Supreme Court Justice Lori S. Sattler that had awarded the ex-wife $38,994 in arrears for unpaid cost-of-living increases in child support and distributive award interest, plus $2,500 in counsel fees.

The ”Voluntary Payments” clause provided that “[a]ny payments made by either party to the other . . . shall not alter that party’s legal obligations hereunder (except to the extent it discharges or satisfies such obligations), nor create any precedent for the future.”

The First Department held that this clause clearly and unambiguously expressed the intent of the parties. Since the payments to the ex-wife that the ex-husband was not obligated to make, however generous, did not satisfy any of his obligations under the stipulation, he remained liable for the unpaid COLA increases and distributive award interest required by the stipulation.

A July 12, 2013 decision of Justice Sattler in this matter held that the fact that the father set his daughter up with her own apartment when not away at college could not be used by the father as a basis to discontinue making child support payments to the mother. That decision in Trepel v. Trepel, was the subject of my July 24, 2013 blog post. It is not stated whether the payments for the apartment were the voluntary payments made by the ex-husband which could not be used to offset other obligations.

Peter Bienstock, of Hennessey & Bienstock, LLP, of Manhattan, represented the ex-husband. Michael W. Appelbaum, of Grant & Appelbaum, P.C., of Manhattan, represented the ex-wife.


Ambiguous Agreements to Pay for Children’s College Expenses

Posted in Agreements and Stipulations, Child Support (C.S.S.A.), Enforcement of Support and Orders

What is a “mandatory” college expense to be shared by the parents?

In its January 15, 2014 decision in Shaughnessy v. Cox, the Second Department upheld the order of Nassau County Family Court Judge Robin M. Kent (which in turn upheld the determination of Support Magistrate Neil Miller) directing the father to pay 50% of the college expenses of the parties’ children regardless of their emancipation. The parties’ stipulation of settlement of their divorce action so provided. Moreover, the father’s obligation included the repayment of expenses which were paid from the proceeds of student loans.

However, Magistrate Miller had required the father to pay those expenses “upon the mother’s presentation of proper documentation directly to him . . . .” This, the Second Department held was error. Rather, the documentation should be provided by the mother first to the Family Court. The Court would determine whether the expenses were mandatory and, therefore, payable by the father pursuant to the parties’ agreement.

Setting up a situation in which parties are required to go, in the first instance, to a court to determine whether a college expense is “mandatory,” seems like extra work is being created. Here, it is not explained why the mother did not present proper documentation of expenses prior to Magistrate Miller making his ruling. Alternatively, the appellate court could have set up a procedure by which only if the father disputed the mandatory nature of expenses claimed by the mother would further Family Court proceedings be necessary.

Once again, the controversy results from the failure of an agreement to properly set forth the categories of college expenses to be shared. Apparently this agreement only specified “mandatory” expenses.

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Imputing Income When Determining Child Support

Posted in Child Support (C.S.S.A.)

Three Second Department decisions within eight days this month reveal the discretion of the trial court when income is not apparent (no pun intended) on a determination of a parent’s basic child support obligation.

In Fein v. Fein, the Appellate Division, Second Department, affirmed the determination of Westchester County Supreme Court Justice Bruce E. Tolbert to impute $125,000.00 as the annual income of the father, and $65,000.00 as the annual income of the mother, but then to cap the non-custodial husband’s support obligation on his share (65.79%) of the $130,000.00 Child Support Standards Act (C.S.S.A.) cap in effect when the 2011 order was made. The court awarded $450.00 per week in child support and also awarded the wife $346.15 per week ($18,000.00 per year) for 3 years as maintenance.

In Fein, the parties had three children (29%). The husband had worked as a trader in the financial industry before losing his job in late 2009. The mother stayed at home with the children. The Second Department stated that it was proper for Justice Tolbert to have imputed to the husband an annual income of $125,000.00 for the purpose of calculating child support, given the plaintiff’s current employment situation, his future earning capacity, and the evidence presented relating to additional streams of income.

[The actual calculation, though, is not discussed. If the combined parental income was imputed to be $190,000.00, the husband's share would be 65.79% of the total. For the three children, using the formula, the father's base obligation would be 65.79% of 29% of $130,000.00, or $24,802.83 per year ($476.98 per week). Alternatively, and deducting the $18,000.00 annual maintenance from the $130,000.00 cap, would leave $112,000.00 in parental income. The father's support obligation based on this sum would be $410.31 per week ($21,336.11 per year). Perhaps the difference was based on attributed FICA and Medicare taxes, or other adjustments.]

More difficult to explain is the January 15, 2014 decision in Best v. Hinds. There the Second Department affirmed the order of Kings County Family Court Alan Beckoff (who, in turn, denied the father’s objections to the order of Support Magistrate John M. Fasone) that granted a father’s downward modification of his child support obligation, but only to $738.00 per month. When doing so, the Family Court imputed an annual income to the father in the sum of $35,000.00.

$738.00 per month for the one child to benefit from this order, would gross up to $52,094.12 per year as the income upon which to apply the C.S.S.A. formula ($738.00 x 12 ÷ 17%). The failure to limit the child support award to the formula application to his imputed income of $35,000.00 per year is more noteworthy, as the father also had custody of three other children. Although the Second Department held that Support Magistrate Fasone’s failure to consider this fact was not properly preserved for appellate review, the appellate court did state that such was not an improvident exercise of discretion. In determining whether the full amount of support under the standard guideline would be unjust or inappropriate, a court may consider the needs of the children of the noncustodial parent who are not the subject of the support proceeding and for whom the noncustodial parent is providing support.

However, the court may only take this factor into consideration where the resources available to support such children are less than the resources available to support the children who are the subject of the proceeding.

Such a finding was not supported by the evidence.

[The May 31, 2012 blog post reported on the Second Department's decision in Bershadskaya v. Nemirovsky, which reversed a determination of Magistrate Fasone because he did not impute income to a father received in fringe benefits.]

Finally, in the January 8, 2014 decision in Speranza v. Speranza, the Second Department upheld the order of Dutchess County Family Court Judge Denise M. Watson  (who, in turn, denied the father’s objections to the order of Support Magistrate Rachelle Kaufman) that had based a support award on income of the father imputed to be the income represented by the father some five years earlier.

The earlier representation of the father’s annual income of $61,467.00 formed the basis of a November 30, 2007 Family Court support order had been issued on the consent of the parties. In a December, 2010 stipulation of settlement that was incorporated, but not merged into the parents’ 2011 judgment of divorce, the parties agreed that the father’s obligation to pay child support would be suspended for 15 months, after which his child support obligation would resume and be calculated pursuant to the C.S.S.A.

When the mother petitioned the Family Court to so redetermine the father’s support obligation, the father failed to make any financial disclosure. To resolve the matter the Magistrate used the 2007 income figure. That was upheld by the Family Court Judge and, here, the Second Department.

Where a respondent in a support proceeding fails, without good cause, to comply with the compulsory financial disclosure . . . , ‘the court on its own motion or on application shall grant the relief demanded in the petition or shall order that, for purposes of the support proceeding, the respondent shall be precluded from offering evidence as to respondent’s financial ability to pay support’ . . . .

Under the circumstances it was a  provident exercise of discretion to direct that the father pay child support based upon an annual income of $61,467.00.

We don’t know whether the father benefited from this or not. What is clear is that when basing support on imputed income, the trial court has a large degree of flexibility and discretion, both in determining the amount of income imputed and then in how to apply the C.S.S.A.

In FeinEvan Wiederkehr of DelBello Donnellan Weingarten Wise & Wiederkehr, LLP, of White
Plains, represented the mother. Bryce R. Levine  of Jeffrey S. Schecter & Associates, P.C., of Garden City, represented the father.

In Best, Alan S. Cabelly of Cabelly & Calderon,of Jamaica, represented the father.

Counsel Fees Awarded Against Husband Living in “Parallel Universe”

Posted in Counsel Fees

The husband’s willingness to lie was only exceeded by his arrogance, which apparently permits him to believe that the court might possibly buy the bridge he is selling. The world in which Mr. Medina lives, is at best in a parallel universe.

So noted Justice Charles D. Wood, Supervising Judge of the Matrimonial Part of the Westchester County Supreme Court, in his December 17, 2013 decision in Medina v. Medina, when awarding the wife $53,000 of the $63,000 in counsel fees she incurred in this divorce action.

The parties were married in 2001. They had one child, now five years old. Both parties were 38 years old. The wife attained the equivalent of a bachelor’s degree in Poland. During the marriage, she earned her real estate license. For the last two years, she had worked selling real estate directly for a developer. After having worked in a sales position for another developer for six years, the wife gave birth in 2008 to the parties’ son, and only worked half the year. She also stayed home with the child in 2009. In 2011, she earned $87,000, and in 2010, $58,936.

Prior to the marriage, the husband held licenses to sell insurance, securities, and a Series 7 certification. The day before the January, 2011 commencement of this divorce action, the husband was laid off as an investment advisor with the firm for whom he had been working since 2006. In 2011, the husband worked for a securities firm, and earned $87,911.47. He now works for another securities firm, where his income is based solely on commissions.

A six-day trial was conducted on the issues of parental access, equitable distribution, allocation of marital debt and tax arrears, child support and maintenance (and arrears of both). Following a decision on these issues, a hearing was held on the wife’s application for counsel fees.

The wife had incurred counsel fees of over $63,000,based upon her counsel’s fee at $400 per hour. Of that sum, the wife had already paid $25,000.

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Court Clarifies Civil Contempt and the Fifth Amendment Privilege

Posted in Enforcement of Support and Orders, Equitable Distribution

The Second Department used its December 18th decision in El-Dehdan v. El-Dehdan to clarify the parties’ relative burdens of proof on an application for contempt where the Fifth Amendment privilege against self-incrimination has been invoked. The court also harmonized inconsistencies in case law as to the elements of civil contempt. The court held that there was no element of willfulness which needed to be shown to establish civil contempt, and that an adverse inference could be drawn from the invocation of the privilege against self-incrimination.

It is not necessary that the disobedience be deliberate or willful; rather, the mere act of disobedience, regardless of its motive, is sufficient if such disobedience defeats, impairs, impedes, or prejudices the rights or remedies of a party.

In this matrimonial action, Kings County Supreme Court Justice Eric I. Prus had held the husband in contempt of court for disobeying a court order dated January 29, 2010, which required him to deposit with the wife’s attorney the proceeds of a certain 2009 real estate transaction. Justice Prus imposed a civil sanction which allowed him to purge the contempt to avoid incarceration.

The husband appealed, contending that the wife failed to satisfy her burden of proof and that the Supreme Court improperly drew an adverse inference against him for invoking his privilege against self-incrimination during the contempt hearing.

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Parent May Assert Malpractice Claim Against Attorney for the Child as Defense to Fee Application

Posted in Custody and Visitation

Following a custody/visitation dispute, a parent may assert a malpractice claim as a defense to the application for the payment of fees of the Attorney for the Children. However, in its December 5, 2013 opinion in Venecia V. v August V., the Appellate Division, First Department, held that no malpractice had been committed, and no hearing was required to reach that conclusion.

The parties were the divorced parents of three children, now ages 17, 14 and 11. In their divorce action, the trial court had directed that mother would have primary residential custody in the marital apartment in Manhattan. When the mother moved  for an order allowing her to relocate with the children to Demarest, New Jersey, approximately 12 miles outside Manhattan, the father responded by moving for a change of custody. Jo Ann Douglas was then appointed Attorney for the Children.

Among the decisions below, New York County Supreme Court Justice Matthew F. Cooper allowed the relocation. The father’s visitation schedule was modified to account for the children’s schedule, including various extracurricular activities that required them to be in New Jersey.

Opposing the fee application of the Attorney for the Child (“AFC”), the father claimed that attorney had committed malpractice. He claimed that the children’s attorney ignored her professional duty by advocating the position advanced by two out of the three children (that they wanted to relocate with their mother), when the children lacked the “capacity for knowing, voluntary and considered judgment.” The father also claimed that the AFC violated the rules governing professional conduct in matrimonial matters by ignoring “abundant evidence that her clients’ judgment was not voluntary and in fact was manipulated by their mother.” The father charged that the AFC ignored the forensic expert’s observations and conclusions that the mother controlled and manipulated the children, and purposely alienated the children from him. He further argued that the AFC failed to consider post-relocation events, engaged in improper ex parte communications with the court, and assisted the mother in reducing his visitation.

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