Bigamy.jpgDistinguishing the 2009 Court of Appeals decision in Mahoney–Buntzman v. Buntzman, the Second Department, in its October 24, 2012 decision in Levenstein v. Levenstein, has held that if marital funds are used to pay pre-marital support arrears, the non-obligated spouse may be awarded a credit towards equitable distribution.

In 1995, before the current marriage, Mr. Levenstein was convicted in the United States District Court for the Eastern District of Virginia, for the failure to pay child support (see 18 USC § 228). Incident to the criminal conviction, he was directed to pay arrears of $132,718.49 to his first wife by July 13, 1995. Mr. Levenstein failed to fully satisfy that obligation by that deadline.

Thereafter, the husband remarried twice. The second remarriage took place four years after the criminal conviction, but before the husband secured a divorce from his second wife. During the purported third marriage, the husband paid the remainder of his criminal restitution obligation, and made additional child support payments to his first wife that became due during the purported marriage.

In 2006, the third wife sought an annulment for bigamy. In 2008, grounds were established and a trial was held to determine the apportionment of the putative marital debt. In a decision dated February 25, 2009, now-retired Rockland County Supreme Court Justice Alfred J. Weiner awarded the wife a credit of 50% of the marital funds used to satisfy premarital maintenance and child support obligations that the defendant had paid to his first wife, including the amounts due under the criminal judgment. A judgment of annulment was entered in April, 2009.

One month later, in May, 2009, the Court of Appeals held in Mahoney–Buntzman v. Buntzman (12 N.Y.3d 415) that a spouse is not entitled to a credit for marital funds paid to a former spouse or a child pursuant to an order of maintenance or child support.

Based on Mahoney–Buntzman, Mr. Levenstein moved for a reconsideration of the decision which had granted the 50% credit. Justice Weiner granted the husband’s motion and denied the credit. The putative marital debt was reapportioned accordingly.

On appeal, the Second Department reinstated the credit. The appellate court noted that in Mahoney–Buntzman, the wife had sought credit for maintenance payments made to the husband’s former spouse that had become due and were paid during the marriage. In holding that such payments were not subject to recoupment by the wife, the Court of Appeals reasoned that maintenance obligations to a former spouse and to children pursuant to a support order “are obligations that do not enure solely to the benefit of one spouse.” Nevertheless, the Court of Appeals cautioned:

This is not to say that every expenditure of marital funds during the course of the marriage may not be considered in an equitable distribution calculation. … There may be circumstances where equity requires a credit to one spouse for marital property used to pay off the separate debt of one spouse or add to the value of one spouse’s separate property.”

The Second Department noted that the payments now being considered were significantly different than those at issue in Mahoney–Buntzman. Here, however, the wife sought credit for amounts that were due and attributable to periods of time that elapsed long before the beginning of the purported marriage. Indeed, the husband’s failure to make those payments resulted in the entry of the criminal judgment, which itself was entered long before the commencement of the purported marriage.

Under the circumstances of this action for an annulment, which is based on the defendant’s bigamy, it would be inequitable for the plaintiff to be required to bear any part of the financial burden brought about by the defendant’s criminal conduct . . . . Consequently, the plaintiff was entitled to a credit of 50% of the payments made during the purported marriage toward satisfaction of the criminal judgment.

Certainly, the fact pattern here presents a far more egregious case for awarding the wife a credit. However, what is the rule, if there is one? May marital funds used to pay pre-marital obligations result in a credit only to the extent those obligations were in arrears as of the date of the marriage.

Three recent decisions are not so limiting. In Iarocci v Iarocci, the Second Department on September 19, 2012, held that it was a proper exercise of discretion to give the wife a full $12,000 credit for repaying, during the marriage, the husband’s pre-marital separate debt owed by him to his sister.

In July, 2012, the Third Department in Biagiotti v Biagiotti, held that the wife was entitled to a credit equal to one half of the payments from marital funds which reduced the husband’s refinanced mortgage used to pay off the pre-marital mortgage indebtedness on the marital residence (his separate property).

In February, 2012, in Nidositko v Nidositko, the Second Department held that where marital funds are used to pay the separate liabilities of one of the parties, the other party may be entitled to a credit. Here, these again included payments from marital funds on the husband’s refinanced mortgage used to pay off the pre-marital mortgage indebtedness on his separate-property marital residence, as well as other separate liabilities.

In Mahoney-Buntzman itself, the Court of Appeals declared that the wife was not entitled to any credit because marital funds were used to pay a student loan debt incurred by husband during the marriage for him to obtain a doctoral degree, even though that degree did not enhance his earnings. On the other hand, the Court of Appeals appeared to let stand a credit to the wife which the Second Department recognized for marital payments used to satisfy a pre-marital boat loan.

Thus, if there is any rule, perhaps it is that a credit will be given if marital funds are used to pay a pre-marital debt, fixed in amount before the marriage, as opposed to a pre-marital obligation which does not become due until after the wedding.

Such appears to be a distinction without a difference. The Mahoney–Buntzman rationale (i.e.,that no credit will be given if the pre-marital obligation being satisfied inures to the benefit of both spouses) applies just as well to payments made with marital funds towards a pre-marital mortgage on the marital residence. Both parties receive a benefit during the marriage from living in the residence. Giving a credit for payments upon a pre-marital mortgage, but not for current child support payments would not appear to be a warranted result.

In Levenstein, the wife was represented by Mark P. Legere, Esq. (Matthew Keller, Esq., of counsel).