Equitable Distribution

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Blending science, culture, compassion and philosophy with legal precedent, Justice Matthew F. Cooper, in his November 29, 2013 opinion in Travis v. Murray, agreed to hold a one-day, winner-take-all hearing to determine the fate of a divorcing couple’s dog, Joey, a two and a half year-old miniature dachshund.

Shannon Louise Travis and Trisha Bridget Murray were married on October 12, 2012. Before their marriage, they resided in the same Upper Manhattan apartment that they continued to occupy after the marriage. On February 6, 2011, while the parties were living together, but before they married, Ms. Travis bought Joey from a pet store. At the time of Joey’ purchase, he was a ten week-old puppy.

On June 11, 2013, defendant moved out of the marital apartment while plaintiff was away from New York on a business trip. Defendant took some furniture and personal possessions with her. She also took Joey. According to plaintiff, defendant first refused to tell her where Joey was, but then later claimed that she had lost him while walking in Central Park.

Ms. Travis filed this Supreme Court, New York County action for divorce on July 11, 2013. Two months later she made this motion requesting that Ms. Murray be directed to immediately account for Joey’s whereabouts since the date he was removed from the marital apartment, that he be returned to Ms. Travis’s “care and custody,” and that she be granted an “order of sole residential custody of her dog.” Once the motion was made, Ms. Murray revealed that Joey was never lost in Central Park, but instead was living with her mother in Freeport, Maine.

Philosophically, Justice Cooper noted:

People who love their dogs almost always love them forever. But with divorce rates at record highs, the same cannot always be said for those who marry. All too often, onetime happy spouses end up as decidedly unhappy litigants in divorce proceedings. And when those litigants own a dog, matrimonial judges are called upon more and more to decide what happens to the pet that each of the parties still loves and each of them still wants.

Continue Reading Hearing Ordered to Determine Custody of Dog in Divorce Action

An ex-wife’s failure to obtain a Domestic Relations Order during her ex-husband’s lifetime did not bar relief after his death. The divorce settlement agreement provision that granted her the right to receive the ex-husband’s retirement plan death benefits could be enforced after his death more than seven years after the divorce judgment was entered.

Suchwas the holding of New York County Supreme Court Justice Debra A. James, in the August, 2013 decision in Paschall v. New York City Employees Retirement System.

After 20 years of marriage, Diana and Randy Paschall were divorced. Their 2004 divorce judgment incorporated the terms of their surviving 2003 Settlement Agreement.

By the time of his death in 2011, Mr. Paschall  had married again to Jewel Paschall. Jewel was issued letters of administration for Randy’s estate. She also exercised her personal right of election to take her elective share of her late husband’s estate pursuant to New York Estates, Powers & Trust Law 5-1.1-A.

During his  marriage to Diana, Mr. Paschall accrued benefits under the New York City Employees’ Retirement System (NYCERS). Diana and Randy’s divorce Settlement Agreement provided that in the event of Randy’s death before Diana, Diana would be entitled to Randy’s survivor annuity. The Agreement required Randy to designate Diana as his death benefit beneficiary.

Randy never designated Diana as his death benefit beneficiary. No Domestic Relations Order was ever entered by which Diana’s entitlement was ordered, nor was NYCERS otherwise notified of Diana’s entitlement before Randy’s death. Indeed, in 2009, Randy had designated his children as beneficiaries of his death benefit.

Here, Diana had sued Jewell and NYCERS, itself, seeking to enforce the Settlement Agreement insofar as it gave her rights to receive Randy’s retirement system death benefit.Continue Reading Ex-Wife's Failure to Obtain DRO Before Ex-Husband's Death Not a Bar to Recovery of Retirement Plan Death Benefits

The failure of the now-deceased wife to disclose that she was suffering from terminal cancer at the time the parties entered their divorce settlement agreement was not a basis to set aside that agreement. So held the Appellate Division Second Department in its August 28, 2013 decision in Petrozza v. Franzen.

Richmond County Supreme Court Justice John A. Fusco had granted summary judgment dismissing the complaint in the husband’s plenary action to rescind the agreement brought against the executors of the wife’s estate. The husband had alleged that his wife had fraudulently and actively concealed her illness. That illness resulted in the wife’s death after the execution of the settlement agreement, but before the entry of a final judgment of divorce.

Affirming that dismissal, the Second Department noted that to demonstrate fraud, a plaintiff must show that the defendant “knowingly misrepresented or concealed a material fact for the purpose of inducing [him] to rely upon it, and that [he] justifiably relied upon such misrepresentation or concealment to his . . . detriment.”Continue Reading Concealing Terminal Cancer Not Basis to Invalidate Divorce Settlement

The August 21, 2013 decision of the Appellate Division, Second Department in Patete v. Rodriguez may have expanded the credits available to the non-titled spouse when marital funds are expended on a separate-property asset.

When New York adopted its Equitable Distribution Law in 1980, courts were now longer bound by which spouse held title to an asset generated during the marriage. Upon divorce, the non-titled spouse could be awarded an equitable share.

Not all property of parties getting divorced, however, is “marital property” subject to Equitable Distribution. The law recognizes as “separate property,” assets owned by one of the spouses either before the marriage, or acquired through inheritance, or by gift from someone other than the other spouse, etc. The appreciation in the value of separate property is also separate property, subject to a claim that such appreciation is due to the contributions or efforts of the non-titled spouse.

Determining what is or should be marital and separate property, and each spouse’s equitable share of marital property is not always clear. Indeed, the rules and guidelines are not free from doubt.

Take last week’s decision in Patete, for example. This divorce was the second time around for these parties. They married for the first time in 1978. Incident to their first divorce in 1981, the wife conveyed her interest in the 68th Street, Maspeth, Queens marital residence to the husband.

The parties married again in 1985. At that time the husband still owned the 68th Street home. Again it was used as the marital residence. As the home was the husband’s property before the second marriage, it was deemed his separate property when the second marriage here ended in divorce.

In 1987, two years into the second marriage, however, the husband sold the 68th Street property. $125,000 of the proceeds were used to purchase the parties’ jointly-owned new marital residence on 64th Street in Maspeth.

The appellate court acknowledged that the 68th Street property remained the husband’s separate property until its sale in 1987. Thus, the $125,000 in sales proceeds used to purchase the jointly-owned 68th Street home was also his separate property. The husband was entitled to a separate property credit for his use of separate funds to purchase the 68th Street home.

However, between the date of the second marriage and the sale of the 68th Street home, marital funds were used to pay the mortgage on the husband’s separate-property 68th Street home. As a result, the Second Department held:

The [wife] should receive a credit for one-half of the marital funds used to the pay this mortgage on the plaintiff’s separate property.

The Court reported that the total amount of marital funds used for this purpose was $7,338.94.The Court did not state that this was the amount by which the principal amount due on the mortgage was reduced, just that such was the amount used to pay the mortgage.Continue Reading Credits on Divorce for Using Marital Funds for Separate Property Assets

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

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 a January 15, 2013 decision in Alvarado v. Alvarado, Richmond County Supreme Court Justice Catherine M. DiDomenico, held that the husband’s veteran’s and Social Security disability benefits are separate property for purposes of equitable distribution. Moreover, the veteran’s disability benefits could not be considered on a maintenance award. The Social Security benefits could.

As discussed in the comment, below (far more detailed than may be appropriate for this blog), veteran’s disability payments should be able to be considered when making maintenance awards in divorce actions.

In Alvarado, as a result of his military service in the United States Marine Corps prior to the marriage, the husband was now receiving monthly veteran’s disability benefits. The husband successfully argued to Justice DiDomenico that the veteran’s benefits were not to be considered. The Uniformed Services Former Spouse’s Protection Act (USFSPA) declared them to be separate property. 10 U.S.C. § 1408. The Court rejected the wife’s argument that veteran’s disability payments should be considered for purposes of maintenance.

Congress enacted USFSPA in direct response to the 1981 U.S. Supreme Court decision in McCarty v. McCarty, 453 U.S. 210, which had held that federal law as it then existed completely pre-empted the application of state divorce property law to military retirement pay. USFSPA authorized state courts to treat disposable retired pay as marital property. However, Federal disability benefits remained excluded, and any military retirement pay waived in order for the retiree to receive veterans’ disability benefits also remained excluded. Mansell v. Mansell, 490 U.S. 581 (1989).

Justice DiDomenico noted that while the Second Department had yet to address the issue, the Third and Fourth Departments had held that state courts are prohibited from distributing veteran’s disability benefits in an action for divorce. The Court cited Hoskins v. Skojec, 265 AD2d 706 (3d Dept. 1999), leave to appeal denied,  94 NY2d 758 (2000), and Newman v. Newman, 248 AD2d 990 (4th Dept. 1998). Similarly, Justice DiDomenico ruled, Social Security Disability Benefits are separate property and are not subject to equitable distribution. DRL § 236 (B) (1) (d) (2); Miceli v. Miceli, 78 AD3d 1023 (2d Dept. 2010).

However, as Justice DiDomenico held, Social Security Disability Benefits are to be considered by the Court when determining a payor spouse’s ability to pay maintenance, citing Cerabona v. Cerabona, 302 AD2d 346 (2d Dept. 2003). and Carl v. Carl, 58 AD3d 1036 (3d Dept. 2009).  Justice DiDomenico also noted that in Carl, it was stated that while disability benefits obtained from other sources may be considered for purposes of maintenance, veteran’s disability payments are precluded from consideration.Continue Reading Considering Veteran's and Social Security Disability Payments in Divorce

In order to prevent the foreclosure of the marital residence, a court in a divorce action, and prior to judgment, may order the spouses to cooperate with a refinance application. Moreover, if the property is not successfully refinanced, the court, before divorce judgment, may compel a spouse to satisfy (at least) one half of the current mortgage in default.

Such was the holding of the Appellate Division, First Department, in its January 3, 2013 decision in Nederlander v. Nederlander. That decision unanimously affirmed the Order of New York County Supreme Court Justice Deborah A. Kaplan.

In this case, the bank was planning to foreclose on the marital residence. Until the wife made her motion, below, the husband had failed to submit a requested application and financial information to the bank. This was months after such was requested by the bank, and months after the wife submitted her information and application to the bank. The appellate court would not speculate whether the husband’s actions, which in effect contributed to the foreclosure, were by design or neglect.

The First Department based the authority to grant the wife her requested relief on Domestic Relations Law §234. That section empowers the court to determine questions of title to property and to “make such direction, between the parties, concerning the possession of property, as in the court’s discretion justice requires having regard to the circumstances of the case and of the respective parties.”Continue Reading Husband in Divorce Action Ordered to Refinance Home, or Pay Off Half of Mortgage Balance

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

Rocket launch child.jpgIn its November 14, 2012 decision in Shah v. Shah, the Appellate Division, Second Department, held that Suffolk County Supreme Court Justice Mark D. Cohen did not improperly “double count” the income generated by the husband’s business when he awarded the wife four years of maintenance.

That business was started by the husband and a partner during the marriage, and was purportedly transferred by the husband for no consideration to his partner shortly before commencement of the divorce action. Justice Cohen awarded the wife 30% of the value of the husband’s interest in the business and additionally awarded the wife $4,000 per month for four years.

Among the issues presented on the appeal was whether the income generated by the business should have been considered when making that maintenance award.

Put differently, the question is (or should be) if the income generated by assets has already been “divided,” should that income again be “divided” through a maintenance award.

That issue became focused when the Court of Appeals in Grunfeld v. Grunfeld (94 N.Y.2d 696 [2000]) recognized the inequity of double-counting income, at least when awarding maintenance after the asset value of a license or degree has been divided. In 1985, in O’Brien v. O’Brien (66 N.Y.2d 576), the Court of Appeals had determined that New York would be unique and recognize the enhanced earnings attributable to attaining a license or degree as property to be divided upon a divorce. Earnings enhanced during the marriage through some achievement are an intangible asset capable of being divided.Continue Reading Income Generated by Tangible Assets Divided in Divorce Is Considered on Maintenance Award