Calulator on 100s 6 red.jpgIn the first appellate decision to apply the October 12, 2010 temporary maintenance amendment to the Domestic Relations Law, it was held that the recipient’s share of marital residence carrying charges is within the temporary maintenance award, itself. It was improper to have the payor spouse pay carrying costs directly in exhange for a credit against income before calculating maintenance.

In the February 7, 2012 decision in Khaira v. Khaira, the Appellate Division, First Department, considered the breadth of D.R.L. §236B(5-a). No longer was the temporary (pendente lite) maintenance award used simply to “tide over the more needy party,” but rather to provide “consistency and predictability in calculating temporary spousal maintenance awards.” The amendment “creates a substantial presumptive entitlement.”

The First Department modified the April 1, 2011 order of New York County Supreme Court Justice Deborah A. Kaplan.  In the case before it, Justice Kaplan had “properly followed the initial procedures” to determine that the presumptive temporary maintenance award would be $138,000.00 per year ($11,500.00 per month), at least based on the husband’s first $500,000.00 of income. Justice Kaplan, then, analyzed the reasonable needs of the wife and children after taking into account husband’s payment of the mortgage and health insurance and expenses. Justice Kaplan, then, awarded the wife $13,870.00 in monthly unallocated spousal and child support payments, in addition to requiring the husband to pay the $5,317.00 monthly mortgage payments and the family’s $855.00 monthly health care premiums and medical expenses. The award and expenses totaled $20,041.00 per month. Justice Kaplan, however, did not discuss the factors required by the amendment to be considered when making an award in excess of the formula applied to the first $500,000.00 of a spouse’s income.

Before remanding the issue to Justice Kaplan for redetermination, the First Department focused on the “suggestion” inherent in her decision “that the formula was intended to cover the support needs of the non-monied spouse, such as food and clothing, but not the cost of the mortgage payments for her residence.” However, because any specific reference to the carrying charges for the marital residence was absent from the temporary maintenance formula amendment, the First Department considered:

[It was] reasonable and logical to view the formula adopted by the new maintenance provision as covering all the spouse’s basic living expenses, including housing costs as well as the cost of food and clothing and other usual expenses.

The First Department noted that prior to the amendment, it was common to award support both in cash payments to the spouse as well as to third-parties. That practice was “not only eminently reasonable, but also the most expedient way of covering payment of the necessities, and protecting the home as a marital asset.” The “new approach” changes that, instead awarding “the amount that will cover all the payee’s presumptive reasonable expenses.”

The First Department did not rule out the possibility of a direct mortgage payment, but, as required by the statute, only after the analysis of income in excess of the $500,000.00 cap was made.

The impact of this decision is clear.  However, it also reveals the lack of logic in the remaining support calculations required by the various support provisions.

The December 2, 2011 decision of Monroe County Supreme Court Justice Kenneth R. Fisher in Martin v. Buckley, discussed the “double shelter allowance” inherent in past temporary child support awards. The court noted that the usual method to avoid the double-award when deciding temporary child was to deduct any amount for carrying charges which the payor was required to pay directly to third parties from that spouse’s income; then the Child Support Standards Act (C.S.S.A.) formula would be applied to the payor’s remaining to compute the temporary child support award.

Justice Fisher presumed the new temporary maintenance statute also involve the double-counting of marital residence carrying charges. To avoid this, Justice Fisher first deducted the annual $25,984.08 cost for marital residence mortgage, real estate taxes, utilities, and homeowners insurance (i.e., the “carrying cost credit”) from the husband’s $73,478.00 annual income (net of payroll taxes). The resulting temporary maintenance award under the formula was $12,361.18 ($1,030.10 per month). The husband would be left with $35,132.74 after paying carrying costs and temporary maintenance.

Justice Fisher, then, applied the C.S.S.A. formula to this net amount and directed the husband to pay $5,965.48 per year ($497.12 per month) in temporary child support.

Then, Justice Fisher did his reality check. Justice Fisher declared that the Court was entitled to consider the size of the total award in relation to the total resources available as a permissible qualitative factor to determine whether the presumptive formulas were inappropriate. He projected the husband’s state and federal income taxes at another $7,295.00 per year. This resulted in a total annual “expense burden” on the husband of $51,605.74 (for carrying costs, maintenance, child support and taxes), leaving the husband with $21,872.26 for his personal living expenses.

With this analysis, the Court determined that it should reduce the temporary maintenance award to $8,000.00 annually ($666.67 per month). Then, after reducing the maintenance award, Justice Fisher adjusted the temporary child support (because temporary maintenance is subtracted to arrive at C.S.S.A. income) to be $6,714.23 ($559.52 per month).

Justice Fisher criticized the “senselessness of a statutory presumption expressed wholly in formulaic fashion balanced against (again, statutory) deviation factors requiring a wholly qualitative assessment and determination of the parties’ respective circumstances.”

[T]he statutory percentages chosen by the legislature for the presumptive award formula bears no relationship to any conceivable notion of reasonableness, appropriateness, let alone justice, in a case involving respective income levels such as this.

Justice Fisher concluded:

This case illustrates the very real need to scrap the entire temporary maintenance scheme enacted last year. In the absence of a repeal, the statute should be amended to require the court to deduct the temporary maintenance award from the payor’s gross income before making the CSSA calculation . . . ; to permit such deduction in temporary maintenance cases only without ordering pretrial a specific adjustment [upon cessation of maintenance]; . . . and [to] readjust the presumptive percentages in making the temporary award along a sliding scale of incomes to ameliorate the devastating financial effects imposed by the presumptive awarded income level such as this one so that judges can quickly make awards without the intensive effort required to deviate in the pre-discovery phase of the case.

Obviously, results under the First Department’s decision in Khaira would be different. Applying the temporary maintenance formula to the incomes of the parties (without deducting the “carrying cost credit”) in Martin v. Buckley would result in a temporary maintenance award of $20,156.40 annually ($1,679.70 per month), leaving the husband with $53,321.60.

After this calculation, however, the decision of the First Department in Khaira fails to address the remaining substantial inconsistency. Under Khaira, one does not subtract carrying costs from income when determining the temporary maintenance award. However, prior caselaw holds that the credit is applied when determining temporary child support. Cohen v. Cohen, 286 A.D.2d 698, 730 N.Y.S.2d 343 (2 Dept. 2001);  Krantz v. Krantz, 175 A.D.2d 863, 573 N.Y.S.2d 736 (2 Dept. 1991).

With Martin v. Buckley, the parents apparently live in separate households. In addition to his own carrying costs, Should Mr. Martin be required to pay half, or some other percentage (perhaps pro rata based upon the parent’s incomes) of the carrying costs of Ms. Buckley’s home attributable to their child’s shelter. If so, does Mr. Buckley’s portion (as well as the temporary maintenance award) get deducted from his income before applying the C.S.S.A. Percentage.

There, Mr. Buckley’s income net of maintenance (but without the carrying cost credit), would have been $53,321.60. This is 84.97% of the combined parental income of $62,756.60 (without adding the maintenance award to Ms. Buckley’s income). Applying the 17% rate for 1 child would result in a temporary child support award of $9,064.67 annually ($755.39 per month).

Should Mr. Buckley pay his pro rata share of the child’s carrying costs, 84.97% of one half of the $25,984.08 in total carrying costs, or $11,039.34?

But then that share would have to be deducted from his income before computing the child support award. The father’s income would be reduced to $42,282.26. . . . But then the combined parental income would be reduced, now only $51,717.26. . . . But then the father’s share of combined parental income would be 81.76%. . . . But then the pro rata share of carrying would change, as would the credit, as would the net income, and so on, and so on.

The remedy is to provide a workable, logical series of calculations. Following Khaira, no more credits. The temporary maintenance amendment brings us from the era of needs-based awards the age of the redistribution of income.

First, apply the maintenance formula to the monied spouse’s income net of payroll taxes. Then, apply the C.S.S.A. formula to the parents’ incomes as “redistributed.” Include the temporary maintenance award in the non-monied spouse’s income when determining pro rata shares.

Divide the carrying costs by the number of people in the residence. The monied spouse, if a resident, pays his or her share. However, the support recipient pays not only his or her own share, but the shares of the children. Carrying costs are included within a base child support; they are not an add-on.

Once this is done, do a reality check. See how much each parent has left for his or her own needs and those of the children. If that is inappropriate, adjust.