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.

Continue Reading Counsel Fees Awarded Against Husband Living in “Parallel Universe”

Mid-trial in a “high-end” matrimonial, it was held that the “monied” husband would not be required to continue to pay his wife’s continuing fees. Rather, in his October 10, 2013 decision in Sykes v. Sykes, Manhattan Supreme Court Justice Matthew F. Cooper held that such fees would be paid from $2 million in marital assets; each side to use half of the sum to pay his or her own outstanding and prospective counsel and expert fees, subject to reallocation after trial.

From the divorce action’s commencement in December, 2010, until February, 2013, just before the trial, Mr. Sykes had paid close to $1 million in counsel fees for himself and, voluntarily, for his wife. Then, in March 2013, the wife’s attorneys billed the husband $238,196 for their services rendered that month. He paid that bill in full. In April 2013, during which the first eight days of trial took place, the wife’s attorneys billed the husband $355,329 for their services. In addition, the husband was billed $74,853 for the wife’s experts’ services. Mr. Sykes, then decided he could no longer foot the litigation costs for both sides. He declined to pay the April 2013 bills or any subsequent bills incurred by the wife for her attorneys’ or experts’ services absent further order of the court.

Instead, Mr. Sykes, moved for an order authorizing him to release $2 million from marital funds and evenly share that amount with his wife so that each party could pay his or her own interim litigation expenses. He argued that not only had his income and personal funds significantly declined over the last two years, but that permitting the wife to proceed without “skin in the game” (a phrase attributed to Warren Buffett), enabled her to push forward with the litigation without any concern for its cost or any eye towards settlement.

Ms. Sykes opposed the release of the money for the payment of counsel and expert fees. She maintained that she had “skin in the game” by virtue of having to travel from France to make periodic court appearances; she was every bit as motivated as the husband to reach a fair resolution of the case. Moreover, Ms. Sykes argued that because she had no income other than the husband’s $75,000 monthly interim maintenance and child support support payments, she must be considered the nonmonied spouse. Thus, she was entitled under statutory and case law to have her husband pay her interim legal fees. Moreover, she claimed the law was clear: interim counsel fees must come from her husband’s income and separate funds rather than marital funds so as not to deplete her assets.

Continue Reading Wife Given “Skin In The Game” By Having To Pay Her Own Interim Counsel Fees Using Marital Assets

In its September 18, 2013 decision in Abramson v. Gavares, the Second Department briefly reviewed the interplay between prenuptial agreements and interim awards in divorce actions.

In this case, the parties were married in 2004 and hade one child, born in 2006. This divorce action was commenced in 2009 [before the 2010 laws on counsel fees and temporary maintenance].

On the wife’s motion for various relief pendente lite, Nassau County Supreme Court Justice Margaret C. Reilly had awarded the wife $4,250 per month temporary child support, $1,000 per month in temporary maintenance, and a $15,000 interim counsel fee. The husband was also directed to pay 100% of the costs of the court-appointed forensic evaluator and the attorney for the parties’ child.

On appeal, the husband challenged certain parts of the award on the basis of the prenuptial agreement entered into by the parties. The Second Department upheld the awards of child support and counsel fees, but struck the award of temporary maintenance.

Continue Reading Second Department Approves Interim Counsel Fee in Excess of Prenuptial Agreement’s Cap, But Reverses Award of Interim Spousal Maintenance

What does a court do with a wife who claims not to have discovered that she was a million-dollar winner of a May 19, 2011 lottery drawing until only days before the ticket would have expired a year later, and 11 months after she was awarded temporary support and counsel fees in her pending divorce action?

Almost a year ago, the media covered the claim of Lolymary Questel, a Queens pre-school teacher, that she discovered her million-dollar lottery ticket in her purse only days before the one-year deadline to produce the ticket to the Lottery Commission would have expired. “I was cleaning out an old bag and found some Lottery tickets,” explained Questel to the Lottery Commission. “I checked the drawing results on the Lottery’s website and realized one of the tickets was a million dollar winner.” Questel, a regular Mega Millions player, spent $1 on a set of Quick Pick numbers for the twice weekly drawing.

Seven months before the drawing, Ms. Questel’s husband had commenced his divorce action on October 28, 2010 (just weeks after New York’s no-fault law went into effect).

On June 22, 2011, 5 weeks after the lottery drawing, Queens County Supreme Court Justice Pam B. Jackman-Brown awarded Ms. Questel temporary maintenance of $127.39 per week and $4,500.00 in interim counsel fees. In April, 2011, less than a month before the drawing, Mr. and Ms. Questel had entered a Stipulation under which Mr. Questel agreed to pay C.S.S.A.-formula interim child support and his then  77% pro rata share of educational, extracurricular, summer camp and unreimbursed health expenses.

Continue Reading Wife Wins Million-Dollar Lottery While Divorce Action Is Pending

In his February 26, 2013 decision in J.K.C. v T.W.C., Monroe County Supreme Court Justice Richard A. Dollinger held that an attorney could not have a charging lien under Section 475 of the Judiciary Law against the IRA received by his former client (the wife) as her marital share of the husband’s IRA. IRAs, generally, are exempt from creditor’s claims pursuant to CPLR §5205(c)(2).
The attorney had represented the wife in a divorce action. In the retainer agreement, the attorney noted that if fees were due and owing at the time of his discharge, the attorney had the right to seek a charging lien which the agreement described as “a lien upon the property that was awarded to you as a result of equitable distribution in the final order or judgment in the case.” The client also signed a “statement of client’s rights and responsibilities” which stated that a court could give the attorney a charging lien which “entitled your attorney to payment for services already rendered at the end of the case out of the proceeds of the final order or judgment.”

Justice Dollinger recognized several facts as pertinent to his analysis:

  • There was no evidence that the wife ever contested her attorney’s charges until after the judgment of divorce;
  • There was no allegation before the court that the wife ever agreed to pay the attorney’s fees specifically from the IRA account;
  • There was no evidence that the wife possesses any other assets, distributed under the divorce judgment, available to satisfy the charging lien; and
  • There was no allegation that the client, in the divorce judgment, engaged in any collusive or other improper behavior to thwart the attorney’s recovery of his fees.

Holding that a charging lien could not be asserted against an IRA, Justice Dolinger also considered:

  • The federal tax consequences on any withdrawal;
  • The penalty imposed when an unqualified withdrawals is made;
  • The actual ownership of the trust funds by the trustee;
  • The “anti-alienation” provisions of ERISA;
  • The wife’s never having “available cash proceeds” during the trustee-to-trustee transfer of the funds from the husband’s IRA to her own;
  • The broad language protecting IRA roll-overs from the reach of creditors in CPLR §5205;
  • The lack of express direction in Section 475 in the Judiciary Law to permit a charging lien against retirement funds; and
  • The lack of any provisions relating to a charging lien for attorneys fees under New York’s Domestic Relations Law.

Continue Reading Collecting Counsel Fees in Divorce Actions: Charging Lien Against IRA Denied

In his January 7, 2013 decision in Gluck v. Gluck, Nassau County Supreme Court Justice Daniel R. Palmieri, determined that the wife pay 80% of the counsel fees incurred by the husband, as such reflected the wife’s pro rata share of the parties’ total income.

Following a 13-day trial, the parties agreed that the Court would consider the legal fee applications of  both parties on submitted papers. The defendant-husband (the less-monied spouse) sought $125,000.00 in counsel fees under Domestic Relations Law §237 for services rendered by the two law firms that had represented him consecutively in this action.

Justice Palmieri noted that earlier, and after the Court issued its Decision and Order on the issues of custody and parental access, the parties had entered into a stipulation regarding child support and certain holidays. Certain child care expenses were apportioned 80% to the wife and 20% to the husband. The Court adopted those proportions as appropriately based on the incomes of the parties (approximately $360,000.00 and $90,000.00, respectively).

In opposition to the husband’s application, the wife contended that the husband’s obstructionist tactics and unreasonable demands unnecessarily prolonged and delayed the action, going to trial and unreasonably refusing to settle. This, the wife claimed, unnecessarily added to her own counsel fees which were in excess of $200,000.00.

Neither party claimed that the bills of opposing counsel were excessive or not reflective of work performed.

Mary Ann Aiello, Esq., the husband’s latter attorney, conducted the trial and negotiated stipulations in March 2012 regarding the sale of the marital residence and in August 2012 on the issues of equitable distribution and maintenance. After the trial of the remaining issues, the parties settled the issue of child support and certain holiday visitation.

Continue Reading Divorce Counsel Fee Awards: Beware Formulaic Approaches

Prenuptial Agreement.jpgThe premarital agreement of the parties limited their rights to obtain spousal support upon divorce. It also contained a waiver of their rights to counsel fees.

Nevertheless, recently-retired New York County Supreme Court Justice Saralee Evans awarded the wife $6,000 per month in unallocated pendente lite support (an award not specifying how much of it was spousal maintenance and how much was child support). Justice Evans also made two separate awards of interim counsel fees to the wife, each in the sum of $25,000.

In its June 12, 2012 decision in Vinik v. Lee, the Appellate Division, First Department, affirmed.

While the parties’ premarital agreement limits their rights to obtain spousal support and waives their rights to counsel fees, it does not bar temporary relief, including temporary maintenance [and] interim counsel fees.

The appellate court specifically noted that the parties’ agreements did not address custody and child support. Therefore, the waiver of counsel fees did not apply to counsel fees related to litigating child custody and support issues.

Moreover, the First Department noted that Justice Evans made her counsel fee awards based on a proper consideration of the financial circumstances of both parties together with all the other circumstances of the case. Justice Evans also properly considered the fees necessitated by the husband’s litigation tactics and to ensure that the litigation would not be “shaped . . . by the power of the bankroll” (quoting the Court of Appeals decision in O’Shea v. O’Shea, 93 N.Y.2d 187 [1999]).

The appellate court noted that under Illinois law, which governed the parties’ agreement, the result would be the same. In that state, a ban on a counsel fee award in a premarital agreement is not enforceable as to child-related issues. That would violate public policy. Moreover, Illinois law also permits an interim counsel fee award where the parties have waived counsel fees in an agreement.

The wife was represented by Nina S. Epstein of Goldweber Epstein LLP; the husband was represented by Kevin M. McDonough of Stein Riso Mantel, LLP; both of New York City.

NYPD shield.jpgWithin weeks after entering a temporary support stipulation, the husband in a Kings County divorce action, resigned from his employment as a police officer with the New York City Police Department (NYPD). He moved to Georgia and entered the police academy as an entry-level officer at $38,000.00 per year, a more than 50% reduction of his $89,000.00 NYPD annual income.

In his May 30, 2012 decision in Darby v. Darby, Supreme Court Justice Jeffrey S. Sunshine determined whether to impute income to the husband when deciding the wife’s request for additional pendente lite counsel fees.

The parties were married on May 5, 2000. The parties have 4 children under 11 years of age.

At the preliminary conference on September 12, 2011, the parties stipulated that the husband would pay pendente lite legal fees to the wife’s attorney of $5,000.00. On November 16, 2011, the parties entered into another stipulation under which the husband agreed to pay the wife temporary support of $1615.40 bi-weekly.

With his subsequent NYPD resignation and move to Georgia, the husband began to default in his obligations immediately. The wife moved to hold the husband in contempt for failure to pay the stipulated amount of support, also requesting security, a money judgment, and an additional $20,000.00 in interim counsel fees.

The husband did not dispute that he unilaterally reduced his annual income by almost $50,000.00 when he voluntarily resigned from his employment with NYPD and moved to Georgia to enter the Dekalb County police academy as an entry-level officer;. He contended that his move was motivated by a decision to change career paths and not by a desire to reduce his income available for child support or to avoid paying maintenance.

Dekalb PD.jpgNevertheless, the husband argued that he should not be responsible for the pendente lite support obligation to which he agreed because he now earned only $1,417.38 bi-weekly. This was less than his $1,765.40 bi-weekly support obligation under the parties’ so-ordered stipulation.

The husband told the Court that he intended, in the future, to seek a second job in order to meet his pendente lite support obligations. However, he advised, he could not find a second job until his Georgia police academy training and a one-year probationary period was completed.

After presenting the current state of the law on pendente lite counsel fees, Justice Sunshine found the husband’s arguments “wholly unpersuasive.” The husband’s current financial situation was a direct result of his willful premeditated and purposeful decision, after commencing this divorce action, to leave his employment and relocate and begin a new career earning less than half of what he earned in New York.

This Court will not allow the husband to control this litigation or attempt to financially restrain the wife’s ability to participate meaningfully in this litigation by his self-serving claim that he is unable to pay, particularly under the facts and circumstances presented here.

Justice Sunshine noted that the husband’s actions forced the wife to incur additional counsel fees to enforce the parties’ stipulation. Additionally, the Court noted that the husband used tactics to delay the litigation: he repeatedly failed to appear at scheduled court appearances claiming that he was unavailable to appear because of his police academy attendance in Georgia.

Litigants are free to chart their own course in many aspects of a matrimonial proceeding; however, the Court will not permit the husband to utilize the financial consequences of his decision to start a divorce action, to change career paths and to relocate to control the wife’s ability to seek judicial relief.

Regardless of the recent reduction in income, the husband continued to be the monied spouse. The wife was not employed outside of the home. She was a full-time care-giver and mother to the parties’ four young children.

Justice Sunshine rejected the husband’s argument that he could commence a divorce proceeding, negotiate and agree to a pendente lite support obligation and then leave his wife and four young children behind in order to take an entry-level job in another state.

The husband’s purposeful and foreseeable reduction in income should not be a basis for him to refuse to contribute to the non-monied spouse’s counsel fees. . . . The husband shall not be permitted to control this litigation by controlling the purse-strings.

The Court found that the wife had demonstrated that she incurred counsel fees in proportion to the sum she requested. Justice Sunshine granted the wife an additional interim award of legal fees in the sum of $7,500.00.

The husband was represented by Yvonne E. Gardener; the wife was represented by Angela Scarlato, both of Brooklyn.

show your work 3.jpgShow your work.

Mistakes happen, and probably a lot more often than any of us matrimonial lawyers would care to admit.

We all make mistakes. I am happy to say that most mistakes are alleviated by collegial adversaries working together to put things right.

However, sometimes the spouse benefiting from the mistake in marital settlement agreement will not acknowledge that a mistake was made.

When that happens, the burdened party must ask the court to reform the agreement to correct the mistake. That party has a heavy burden.

The burden, however, becomes a lot easier to meet if the parties have shown their work.

Consider, the February 21, 2012 decision of Kings County Supreme Court Justice Jeffrey S. Sunshine in Hackett v. Hackett. The parties had entered a marital settlement agreement in January, 2006. The parties’ marital estate was itemized in a schedule annexed to the agreement. The agreement expressly provided that the husband was to pay the wife $19,336.40, “in order to equalize the allocation of marital property so as to arrive in an equal division.”

Included among the parties’ property was their marital residence, a Brooklyn home valued at $465,000.00 against which there were two mortgages totaling $195,124.00. When listing the assets being received by the wife, the marital residence was included at a value equal to its net equity of $264,447.00. Including this amount for net equity, the wife was to receive $557,442.00 in assets. From this the wife was to be take on marital liabilities of $195,124.00. Thus, the wife was receiving assets net of liabilities of $382,318.00.

The problem was that these liabilities were the very same mortgages totaling $195,124.00 which were subtracted from the home’s appraised value to result in the equity value of $264,447.00 stated for the marital residence. The mortgages were double-counted. Moreover, there was another simple math error. Subtracting the $195,124.00 in mortgages from the $465,000.00 appraised value of the marital residence should have resulted in the wife being charged with receiving net equity of $269,876.00, not the $264,447.00 which was stated as the net equity value of the marital residence being received by the wife. Thus, the wife was under-charged $5,429.00, in addition to having benefited from the double-subtraction of the mortgages.

Instead, the wife should have been charged with receiving $562,871.00 in net assets (the originally stated $557,442.00, plus the $5,429.00 math error, without the second deduction for the mortgages already taken into account). The husband was properly charged under the agreement with receiving $400,990.00. Thus, the wife received $161,881.00 more than the husband. In order to equalize the division of assets, the wife would have to pay to the husband one half of this amount, or $80,940.50. Here, the agreement as originally drafted with its mistakes ended up with the husband paying the wife $19,336.00. To correct the error, the wife would have to repay this $19,336.00, and on top of that pay the husband $80,940.50, for a total of $100,276.50.

Justice Sunshine provided the husband relief, reforming the agreement to require the wife to make the requested payment of $100,276.50. To do so, the court rejected the recommendation of the Referee to home the matter was referred to “hear and report.”

Continue Reading Correcting a Mistake in a Divorce Settlement Agreement

Connolly Francesca.jpgThere are may circumstances which courts recognize warrant revisiting a divorce resolution. On the other hand, ongoing litigation is often unfounded and a result of the anger, bitterness, sadness, desire for revenge, etc.

In her February 3, 2012 decision in D.W. v. R.W., Westchester County Supreme Court Justice Francesca E. Connolly imposed $17,500.00 in sanctions and another $42,707.29 in counsel fees against a pro se (self-represented) ex-wife who refused to abide by repeated rulings requiring the ex-wife to discontinue her attacks on a divorce settlement reached over seven years earlier.

Following that settlement, the ex-wife had engaged in extensive post-judgment litigation to vacate the underlying agreement on the grounds that she lacked the mental capacity to understand and agree, and that the agreement was unfair, unconscionable, the product of overreaching, fraud, or some variation thereof. Her numerous attempts to challenge the stipulation were considered and rejected by several lower and appellate courts.

Nevertheless, in October, 2010, the ex-wife commenced another action against 23 defendants, including her ex-husband, her children, her former in-laws, her ex-husband’s former attorneys, and other entities. In an 81-page complaint, she claimed breach of contract and fraud for the failure to disclose various assets during the divorce proceedings. She claimed to have discovered documents showing the fraud by going through her ex-husband’s garbage cans outside his residence.

Continue Reading Sanctions and Fees Totaling $60,000 Imposed Against Ex-Wife; Divorce Litigation Often Keeps Going, and Going, and Going . . .