The calculations required by the C.S.S.A. to be made by an arbitrator in child support determinations provide the “extraordinary circumstances” needed to warrant court-ordered disclosure of documents from a self-employed ex-husband. Such was the ruling of Kings County Supreme Court Justice Jeffrey S. Sunshine in his November 6, 2013 decision in Weisz v. Weisz.
In 2003, the Weisz’s had entered into a stipulation of settlement of their divorce in which they agreed that all controversies, disputes, or interpretation of this agreement, would be arbitrated by a specified rabbi. The 2004 judgment of divorce incorporated by reference that stipulation which survived and did not merge into the judgment.
In 2012, Ms. Weisz brought on an order to show cause seeking a stay of a post-judgment arbitration proceeding and the disqualification of the specified rabbi as the arbitrator. The stay was granted as to custody and visitation issues, but denied as to all financial issues.
The issues to be arbitrated related to an upward modification of child support, child support arrears, unreimbursed medical arrears, child support statutory add-on arrears, tutor expenses and spousal support.
In furtherance of this arbitration, the parties exchanged their 2012 federal tax returns. The ex-husband’s 2012 federal tax return reflected negative income of $-175,423.00. Ms. Weisz contended that production of only the one federal tax return was insufficient; that her ex-husband was self-employed and thus had the ability to under-report, hide and manipulate his true income.
Ms. Weisz argued that additional disclosure was necessary to make an accurate determination under the Child Support Standards Act. Mr. Weisz contended that the issues raised by his former wife should be addressed to the arbitrator. Moreover, he argued that his ex-wife failed to demonstrate the existence of extraordinary circumstances to justify court-ordered discovery in an arbitration (C.P.L.R. 3102[c]). Should issues arise during the course of testimony, the arbitrator can require production of documents which he feels (and in compliance with civil law) are necessary to aid in his determination of the issues before him, being mindful that the decision is potentially subject to judicial scrutiny.
Justice Sunshine noted that in De Sapio v. Kohlmeyer, (35 N.Y.2d 402, 362 N.Y.S.2d 843 ), the Court of Appeals enunciated the standard of discovery in an arbitration proceeding. The availability of disclosure devices is a significant differentiating factor between judicial and arbitral proceedings. It is contemplated that disclosure devices will be sparingly used in arbitration proceedings. Quoting Weinstein-Korn-Miller, N.Y.Civ.Prac., it was noted that if the parties wish the procedures available for their protection in a court of law, they ought not to provide for the arbitration of the dispute. Under the C.P.L.R., arbiters do not have the power to direct the parties to engage in disclosure proceedings. While a court may order disclosure to aid in arbitration’ pursuant to C.P.L.R. 3102(c), it is a measure of the different place occupied by discovery in arbitration that courts will not order disclosure except under extraordinary circumstances.
Justice Sunshine also noted that the Appellate Division, Second Department, more recently held in Progressive Specialty Ins. Co. v. Alexis (90 A.D.3d 933, 934 N.Y.S.2d 719 [2nd Dept. 2011]) that disclosure in aid of arbitration pursuant to CPLR 3102(c) was properly denied where the petitioner failed to demonstrate that “extraordinary circumstances” existed that such that relief was absolutely necessary for the protection of rights.
On the other hand, Justice Sunshine noted that the C.S.S.A. had certain requirements. In his 2008 decision in Berg v. Berg, 20 Misc. 3d 1142(A), 873 N.Y.S.2d 231, he noted that it was well-settled that a child support arbitration award may be vacated on public policy grounds if it fails to comply with the C.S.S.A. and is not in the best interests of the children.
When calculating child support, there is a three-step statutory analysis that must be conducted and articulated. First combined parental income must be determined. Second, so much of the combined parental income up to to $136,000.00 must be multiplied by the applicable statutory child support percentage, with the resulting amount allocated between the parties according to their pro rata share of the combined parental income. Third, combined parental income in excess of the applicable statutory limit of $136,000.00 is to be considered.
Although the statutes do not specifically make the C.S.S.A. requirements applicable to arbitration awards, case law clearly establishes that an award of child support will be vacated if it is not in compliance with the C.S.S.A. In Berg, Justice Sunshine noted that although the arbitrators’ award there considered recited that the arbitrators “took into consideration the guidelines,” their award failed to discuss any factors considered or relied upon, or to articulate any rationale for the determination of the parties’ respective child support obligations. His vacatur of the award in Berg on this basis was ultimately upheld by the Second Department, 85 A.D.3d 952, 927 N.Y.S.2d 83 (2011).
In Weisz, Justice Sunshine held extraordinary circumstances existed to warrant the ordering of discovery. The Court was careful to attempt to limit the impact of its ruling, noting that the result was compelled by the statutory scheme of Domestic Relations Law 240([1-b) and the claim of a self-employed individual who provided a tax return showing an income of $-175,423.00.
It was this second factor that for Justice Sunshine created the extraordinary circumstance, as the underlying statute requires an exact three (3) step calculation and the reason for a deviation was required to be articulated in a written opinion, if applicable.
Accordingly the Court granted Ms. Weisz’s applicating to the extent of requiring the production of all federal, state and city tax returns, including any 1099, W-2 and K-1 for 2010 through 2012; checking and savings account statements for the years 2011 and 2012; copies of all financial statements, including balance sheets and operating statements of any corporation, business, proprietorship, partnership, professional practice, joint venture or syndicate of which the defendant was or is a shareholder, partner, participant, principal or member; and a verified affidavit of net worth in conformity with Domestic Relations Law section 236(B)(4).
Joel N. Yacoob, Esq., of Neuhaus & Yacoob, LLC, of Brooklyn, represented Ms. Weisz. Harvey S. Jacobs, of Brooklyn, represented Mr. Weisz.