It depended on what the definition of “the” was.

In Babbio v. Babbio, the Appellate Division, First Department, on July 17, 2014 defined “the” and otherwise interpreted a prenuptial agreement in ways that cost a husband millions of dollars of separate property credits he sought in his divorce action.

Under the parties’ agreement, marital property, generally, was to be divided equally. However, the agreement also provided:

[i]n the event of an Operative Event, Marital Property [as defined elsewhere in the agreement] shall be distributed equally between [the parties] in accordance with the following provisions, except that if the parties have been married for ten (10) years or less and either party is able to identify One Million ($1,000,000) Dollars or more of Separate Property that was used for the acquisition of the Marital Property, that party shall first receive the amount of his or her contribution of Separate Property prior to the division of the remaining value of such property, if any. [emphasis added]

“Operative Event” was defined, inter alia, as “the delivery by [either party] to the other of written notification … of an intention to terminate the marriage.” Here, the Court held that it was the date of the notification, and not the date of distribution that was determinative. As a result, the husband became entitled to the benefits of this provision.

However, construing the parties’ prenuptial agreement in what the Court viewed as being in accord with the plain meaning of its terms, and interpreting every part of the agreement “with reference to the whole”, the First Department found that the party seeking the credit must have contributed $1 million or more of his or her own separate property directly to the acquisition of the particular item of marital property at issue.

Continue Reading Husband Denied Millions in Separate Property Credits Because of the Definition of "The"

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

House divided.jpgIn its December 13, 2012 decision in Murrary v. Murray, the Appellate Division, Third Department, affirmed the determination to deny a husband an equitable distribution credit for the value of a home which he owned before the marriage and which, after the marriage, he deeded to himself and his wife jointly.

The parties were married in 1986 and have four children. 15 months before the marriage, the husband purchased a residence in Queens County. Tthe parties lived there together for several years after their marriage. In 1991, the husband conveyed the home to himself and his wife jointly. The parties thereafter refinanced the Queens County property and used the proceeds to purchase their ultimate marital residence in Sullivan County, keeping and renting out the Queens County property. In 2003 the parties separated. The husband commenced this divorce action in 2005.

In resolving equitable distrution issues, Sullivan County Supreme Court Justice Robert A. Sackett denied the husband a credit for the premarital value of the Queens County property. On appeal, the Third Department found that that determination was within Justice Sackett’s discretion.

The transfer of that property into joint ownership created a presumption that it was marital property, placing the burden upon the husband to rebut this presumption with clear and convincing proof that the transfer was solely a matter of convenience.

Here, the appellate court noted, the husband’s testimony regarding the Queens County property (characterized by Supreme Court as evasive and questionable) failed to rebut the presumption. The entire Queens County property was thus part of the parties’ marital property and subject to the court’s substantial discretion in fashioning an equitable distribution award.

While the appellate court noted that a credit is often given for the value of former separate property, such a credit is not strictly mandated. The property is no longer separate, but is part of the total marital property. Quoting the 2010 Court of Appeals decision in Fields v. Fields, 15 NY3d 158, it was stated:

There is no single template that directs how courts are to distribute a marital asset that was acquired, in part or in whole, with separate property funds.

Upon review of the record and the entirety of the equitable distribution award, the Third Department was unpersuaded that Justice Sackett abused his discretion.

Continue Reading Husband Gets No Separate Property Credit in Divorce for Pre-marital Home Deeded to Himself and His Wife Jointly