In the first New York appellate decision to rule on the issue, the Appellate Division, Second Department held in its February 28, 2018 opinion in Spencer v. Spencer, that violations of matrimonial action “Automatic Orders” can be grounds for a finding of civil contempt, but an application for that relief must be made before the entry of the judgment of divorce.
The facts are straightforward. Following the entry of her November, 2015 divorce judgment, the wife discovered that while the divorce action was pending, her husband sold a warehouse in Brooklyn, without the knowledge or consent of the wife or the court. He netted $300,000.00.
Under Court Rule 22 N.Y.C.R.R. §202.16-a, the listed orders are binding upon a plaintiff upon commencement of the matrimonial action and upon a defendant upon service of the summons or summons and complaint (see Domestic Relations Law § 236[B][b]). Automatic Orders seek to preserve the status quo while the action is pending, by prohibiting the transfer or encumbrance of real and personal property and retirement funds, the accumulation of unreasonable debt, and changes in beneficiaries on existing health and life insurance policies.
The wife, then, sought to hold the husband in civil contempt (Judiciary Law §753). After a hearing, Richmond County Supreme Court Justice Catherine M. DiDomenico granted that motion. Justice DiDomenico directed that, unless the defendant purged the contempt by immediately paying $150,000 to the wife, the husband would be incarcerated every weekend for a period of six months. The husband appealed.
The Second Department reversed. The elements needed to be proven by clear and convincing evidence to support a finding of civil contempt are:
- that a lawful order of the court, clearly expressing an unequivocal mandate, was in effect;
- that the party against whom contempt is sought disobeyed the order;
- that the party who disobeyed the order had knowledge of its terms; and
- that the movant was prejudiced by the offending.
The husband argued that the automatic orders do not constitute “unequivocal mandates” of the court, but are merely administrative rules. The Second Department affirmed that part of Justice DiDomenico’s ruling that the automatic orders could form the basis for a finding of contempt. The appellate court found the husband’s argument contrary to the express language of 22 NYCRR 202.16-a, against public policy, and without merit.
Upon a determination that a party has committed civil contempt, the court may impose as a punishment a fine in an amount sufficient to indemnify the aggrieved party for an actual loss, including counsel fees, and/or imprisonment for up to six months or until the fine is paid (see Judiciary Law §§ 773, 774).
However, the Second Department held that where a judgment of divorce has already been entered, the remedy of civil contempt is not available for a violation of the automatic orders.
In the context of a matrimonial action, the Court of Appeals has recognized that a final judgment of divorce settles the parties’ rights pertaining not only to those issues that were actually litigated, but also to those that could have been litigated.
The automatic orders are temporary and exist only “in full force and effect” during the pendency of the action until “terminated, modified or amended by further order of the court or upon written agreement between the parties” (22 NYCRR 202.16-a[b]). Upon entry of a judgment of divorce, the purpose of the automatic orders ends, and, when the life of the automatic orders thus expires, the statutory remedies for their enforcement fall at the same time.
Public policy concerns recognizing the finality of judgments are additional reasons to find that, after a judgment of divorce is entered, a party is not entitled to pursue a motion for contempt of court for a late-discovered violation of the automatic orders even though such violation occurred during the pendency of the divorce action. Preventing vexatious litigation and promoting judicial economy, as well as the goal of avoiding inconsistent rulings where a judgment of divorce might actually conflict with the finding in a hearing on a violation of the automatic orders, also dictate the conclusion that a remedy of civil contempt is not available for a violation of the automatic orders once a judgment of divorce is entered.
However, the Second Department noted that the unavailability after the entry of the judgment of divorce of civil contempt as a remedy to enforce the terms of the automatic orders did not render the wife without available remedies. For example, vacatur of the judgment of divorce based on newly discovered evidence, a civil contempt motion for a violation of the judgment of divorce, a proceeding to enforce the terms of the judgment of divorce or to obtain an order directing the payment of 50% of the value of the property which was awarded to the plaintiff in the judgment of divorce, or amendment of the judgment of divorce are all remedies that the wife could have sought.
Jay S. Baum, of Staten Island, NY, represented the husband. William A. Gogel, of Agulnick & Gogel, LLC, of Great Neck, represented the wife.