In a lengthy, thoughtful August 29, 2017 opinion in S.M. v. M.R., Richmond County (Staten Island) Supreme Court Justice Catherine M. DiDomenico resolved the financial issues incident to the parties’ divorce. Among the issues were those that arose from parties’ family and financial ties to Egypt, the absence of proof on various financial matters, and the wife’s 1999 medical degree in Egypt, all but abandoned since moving to the United States in 2002 resulting in her current need for rehabilitative maintenance.

The final issue tackled by the Court was the wife’s request for an award of counsel fees in the sum of $43,000 for her attorney’s handling of the entirety of this divorce proceeding. The wife based her claim upon the fact that she was the non-monied spouse in this action (D.R.L. §237[a]). In support of her claim, the wife submitted a copy of her attorneys’ retainer agreement, together with legal billing.

The husband objected to any award on the basis of the language of that retainer agreement: the wife and her attorney had agreed to “cap” counsel fees at the sum of $10,000.

You agree to pay Your Attorney for legal services at the rate of $250.00 per billable hour and $750.00 per each half-day appearance in Court by Steven Scavuzzo Esq. The foregoing rates are valid for services rendered in calendar years 2013 and 2014. In the event that such rates are modified you will be advised and requested to execute an amendment reflecting the new rates. Legal fees in this matter shall be capped at $10,000, not including costs, disbursements, post-judgment enforcement and any appeal You wish to pursue.”

The husband argued that this cap should inure to his benefit; that as the wife can never be charged more than $10,000 for the divorce proceeding, as a matter of law he cannot be responsible for any more than that amount. The wife’s attorney should be prohibited from seeking an award of counsel fees by the clear language of his own retainer agreement

Continue Reading Husband Benefits From Wife’s Retainer Agreement Cap On Counsel Fees

 

JengaIt is common in agreements, and often the case in judicial decisions, for the parent paying periodic child support to receive a credit against those payments for college room and board expenses paid by that parent. May parties agree that the credit exceed the amount allocated by the parties to the support of the particular child attending college? No, (probably) said the Appellate Division, First Department, in its April 6, 2017 decision in Keller-Goldman v. Goldman.

The parties entered into a Stipulation of Settlement and Agreement that resolved all issues surrounding their separation. As may be relevant to the court’s determination, although the parties had four unemancipated children, the agreement only provided for support for the three children for whom the wife was deemed the custodial parent (the parties were to share equal time with these three). The husband retained custody of the fourth child, but agreed to receive no support for him from the mother. The opinion noted that had the parties not negotiated the issue of child support, the mother stood to collect $5,000 per month in child support payments, pursuant to the Child Support Standards Act, a fact acknowledged by the agreement. Instead, she agreed to monthly child support payments of $2,500.

Paragraph 10.3 of the parties’ agreement provided for a graduated reduction in the father’s child support payments upon the emancipation of each of the three children. Upon the first emancipation his monthly payment would be reduced by $350 to $2,150 per month; and upon the second emancipation the payment would be reduced to $1,462 per month.

The agreement provide for a room and board credit at paragraph 10.4, immediately following the support reduction schedule:

During the period in which a Child is attending a college and residing away from the residences of the parties and [the father] is contributing towards the room and board expenses of that Child, [the father] shall be entitled to a credit against his child support obligations in an amount equal to the amount [the father] is paying for that Child’s room and board. The credit shall be allocated in equal monthly installments against [the father’s] child support payments.

Continue Reading Uncapped Room and Board Credit Violates Public Policy

A court gavel on 100 bills - legal concept

In its December 30, 2016 decision in Peddycoart v. MacKay, the Second Department reduced a father’s obligation to pay child support from $542 to $378 per week by holding that the Family Court should not have imposed the support obligation on the parents’ income in excess of the C.S.S.A. “statutory cap” (then $141,000).

The parties, who were never married, had one daughter together, born in 2009. The father signed an acknowledgment of paternity less than nine days after the child was born. The parties did not have an order of child support for approximately six years. In 2015, the mother filed a petition against the father seeking an award of child support. After a hearing, Support Magistrate Barbara Lynaugh determined that the mother had income of $36,112 and that the father had income of $166,096, for combined parental income of $202,208, exceeding the cap by $61,208.

Continue Reading Imposing Child Support on Income Over Cap Not Warranted

Calculator formulaOn June 24, 2015, the New York State Senate passed Bill A7645-2015 relating to the duration and amount of temporary and post-divorce spousal maintenance. The bill passed the State Assembly on June 15th. It awaits approval by Governor Cuomo.

The law’s formulas apply to actions commenced on or after the 120th day after they become law (except for the temporary maintenance formulas which apply to actions commenced on or after the 30th day after they become law). The new law may not be used as a basis to change existing orders and agreements.

The law will undoubtedly be the subject of numerous articles and legal seminars. Years of decisions will be forthcoming that particularly focus on matters of discretion, just as they followed the enactment of the Child Support Standards Act in 1989.

Before getting to the new formulas, the law eliminates a major thorn in side of the matrimonial bench and bar: When equitably distributing the assets of the parties, the court is no longer to consider as a marital asset the value of a spouse’s enhanced earning capacity arising from a license, degree, celebrity goodwill, or career enhancement (however, it may be condidered when making other distributive awards).

As to maintenance, the following highlights may be noted, many of which are contained in the Sponsor’s Memo:

Continue Reading Legislature Passes Spousal Maintenance (Alimony) Formula

Education savingsA parent who pays all or some portion of a child’s college room and board expenses is often entitled to a credit against that parent’s base child support obligation. The Appellate Division, Second Department, in its May 6, 2015 decision in Sawin v. Sawin, appears to hold that such credits may only be taken only against the base child support obligation for the child attending college and then only for the months that the child is away at school.

In Sawin, the parties were married in 1988 and had three children.  During the marriage, the husband worked as a firefighter, and in 2011, he earned approximately $122,500. The wife stopped working full-time after the birth of the parties’ second child in 1994. In 2004, she began working part-time as a real estate agent, earning approximately $15,000 in 2010 and $23,000 in 2011.

In December 2010, the wife commenced this matrimonial action seeking, among other things, child support, maintenance, and equitable distribution. At the time of trial in February 2012, the parties’ oldest child was in college and resided on campus during the school year.

The Second Department noted that among other rulings Putnam County Supreme Court former Justice Francis A. Nicolai properly directed the husband to pay a proportionate share of the children’s college expenses as part of the child support award. However, the appellate court noted that the husband was entitled to a credit for at least some portion of the college room and board expenses he paid.

The child support award should have included a provision either directing that, when a child is living away from home while attending college, the [husband’s] monthly child support obligation shall be reduced, or awarding the [husband] a credit against his child support obligation for any amounts that he contributes toward college room and board expenses for that child during those months.

Accordingly, the Second Department remitted the issue for a determination of the husband’s child support obligation “for any time periods that one or more of the parties’ children are living away from home at college.”

Comment: The rule, although logical, may be both difficult to apply and inequitable. For example, what happens in December and January when a child is home half the time for intersession or the winter recess. Do we start having to count the days?

No. The entirety of the room and board expense gets spread over the total number of days the child is away at school. One way or the other, a potential credit should be available for the entire expense.

The bigger problem is capping the credit at the total base child support obligation attributable to the child attending college. Take this family with three children. The child support formula would use 29% of parental income to determine that base obligation. After one of the children is emancipated, 25% is the formula percentage.

Does that mean that only 4% of parental income is being used to support the eldest child? No. 29% is being used to support all three children. The credit should be available against one third of the base obligation.

Of course, not every penny of the support for the child in college is earmarked for room and board at school. The overhead expenses of the home must still be paid. There are also expenses for clothing, vacations, etc.

All that being said, the time and cost of proving the equities in a case would outweigh the credit. A rule is necessary.

Yesterday’s blog post discuss the maintenance and basic child support awards. Tomorrow’s post will discuss giving credits to the wife for debts she incurred after the divorce action was commenced.

Jason A. Advocate, of Advocate & Lichtenstein, LLP (John H. Hersh, former counsel on the brief), of Manhattan, represented the husband. Sarah R. Scigliano, of Stephen M. Santoro, Sr., P.C., of Carmel, represented the wife.

Calulator on 100s 6 redThe Third Department gave us insight into its analysis of child support awards in two recent decisions in which it increased those awards.

What to do when the parents’ combined income exceeds the Child Support Standards Act (C.S.S.A.) cap, now $141,000, appears to be, at the trial level, often county-, if not judge-dependent. Use by the lower courts around the state upon these decisions will vary, perhaps greatly.

In Petersen v. Petersen, decided February 26, 2015, the Third Department increased the divorce-action award of Albany Supreme Court Justice Eugene P. Devine (now, himself, sitting on the Third Department).

The parties had one child, born in 1999. After the parties separated and lived apart for several years, the husband commenced this divorce action based on the parties’ separation agreement. After finding that the child support provision of the separation agreement did not comply with the Child Support Standards Act, a trial was held to address, among other things, child support.

Justice Devine granted the divorce, incorporated the parties’ separation agreement except for the weekly child support provision, and ordered the husband to pay child support in the amount of $414 per week, declining to order child support on any income above the C.S.S.A. statutory cap, then $136,000 (and now $141,000). The wife appealed.

Continue Reading Increasing Child Support On Appeal: Awards On Income Over The Cap

Two published decisions last week ruled on the whether to award child support upon combined parental income in excess of the base child support amount. In the first, the Second Department in Beroza v. Hendler, found it was an improvident exercise of discretion for the trial court to have capped the parties’ combined parental income at $255,000.00. On appeal, the Second Department increased the cap to $400,000.00 and awarded the mother the father’s pro rata portion of that capped amount.

In the second case, A.C. v. J.O. (to be the subject of Wednesday’s blog post), Acting Kings County Supreme Court Justice Debra Silber, determined that although the parents had net combined parental income of $423,100.00, the father’s child support obligation would be limited to his pro rata share of the $136,000.00 cap.

In Beroza, the father had commenced this divorce action in 2001 after 11 years of marriage. At that time the oldest of the parties’ three children was 4½ years old and their twins were 18 months old. The parties were both educated professionals. The father was a veterinarian with a private practice devoted to horses and a related horse-boarding business and the mother was a partner in a group anesthesiology practice. Both parties worked throughout the marriage. the family enjoyed an affluent lifestyle in Laurel Hollow.

Underlying the parties’ 2008 divorce judgment, Nassau County Supreme Court Justice Ira Warshawsky imputed gross annual income to the father of $259,100.00. The father’s base annual child support obligation was fixed at as 29% of $200,000.00, or $4,833.33 monthly.

On the husband’s appeal from the 2008 judgment, the Second Department agreed with amount of the father’s imputed annual gross income, but remitted the matter to the Supreme Court because it had failed to properly set forth the parties’ pro rata shares of child support. Additionally, the lower court failed to adequately explain its application of the “precisely articulated, three-step method for determining child support’” pursuant to the Child Support Standards Act (Beroza v Hendler, 71 AD3d 615, 617, 896 N.Y.S.2d 144 [2010]).

On remittitur, Justice Warshawsky re-determined the parties’ respective annual net C.S.S.A. incomes to be $248,721.00 for the father and $487,693.00 for the mother, for net combined parental income of $736,414.00. However, for the purpose of determining the plaintiff’s child support obligation, the court capped combined parental income at $255,000.00.

Justice Warshawsky found that $255,000.00 adequately reflected a support level that met the needs and continuation of the children’s lifestyle, as dictated by the past spending practices of the parties. Justice Warshawsky applied the 29% statutory percentage to combined parental income capped at $255,000.00 ($73,950.00 total support obligation), and the calculated that the husband’s 33.7% pro rata support obligation at $24,921.00, annually, or $2,076.75, monthly.

The Second Department modified. Although he had articulated his analysis pursuant to the three-step method for determining child support embodied in the C.S.S.A. guidelines, Justice Warshawsky, the appellate court held, improvidently exercised his discretion in capping the parties’ combined parental income at $255,000.00.

Continue Reading $400,000 Combined Parental Income Cap Imposed by Second Department when Determining Father’s Child Support Obligation

In a May 8, 2013 decision in Mejia v. Mejia, the Appellate Division, Second Department, modified a divorce judgment’s provisions concerning the cap on combined parental income, the disposition of the marital residence, college expenses for three children ages 14, 10 and 6, and judgment inconsistencies with the underlying decision and judgment  formalities.

After the parties separated, they each petitioned the Family Court for custody of the children. The parties consented that they share joint legal custody, and that the father have primary physical custody.

After a non-jury trial on certain financial issues, the Family Court considered the first $200,000 of combined parental income in determining child support, based upon, among other things, “the economic reality of life in Rockland County,” and a determination that the gross income of the mother was substantially less than that of the father. The mother’s pro rata share of the basic child support obligation was 37% of 29% of the first $200,00 of combined parent income was fixed at $1,789 per month in the 2011 Family Court order.

The marital residence, titled in the parties’ joint names, was awarded to the father and the children, based upon the father’s claim that there was no equity in the house. The court further concluded in its decision that the father should maintain health insurance for the children, and that the mother should pay 37% of the college expenses of the children.

The Second Department lowered to $150,000 the applied cap on combined parental income, “considering the substantial difference between the parties’ income, the fact that the [mother] has less income than the [father], and the amount of parenting time awarded to the [mother].” Calculated on that basis, the mother’s pro rata share of the child support obligation was $1,341 per month.

Continue Reading The Second Department Rules on Child Support Parental Income Cap, Transfer of the Marital Residence, and Judgment Formalities