Five appellate decisions this month have dealt with the propriety of joint custody awards.

On March 20, 2014, the First Department upheld New York County Supreme Court Justice Lori S. Sattler‘s decision to continue the parents’ joint custody arrangement. In Boyce v. Boyce, the appellate court agreed that the mother had failed to make an evidentiary showing sufficient to warrant a hearing on her request to change that arrangement.

For the appellate court, the fact that the parties, who have joint decision-making authority, have different views on education or extracurricular activities did not mean that they could not co-parent. Indeed, the parties had anticipated that they may have these disagreements and provided for a procedure to deal with them in their stipulation of settlement. In the event the procedures failed, as occurred here, the parties reserved their right to resolve such matters in court.

Again supporting joint custody, in Johanys M. v. Eddy A., the First Department on March 11, 2014 reversed the order of Family Court Bronx County Referee Jennifer S. Burtt that had awarded sole custody of a child to the mother.

Referee Burtt had found that the parties had similar abilities to provide for the child financially; that there was no difference in the emotional bonds that they each had established with the child;and that the child had essentially spent an equal amount of time with each party. Nevertheless, the Referee awarded custody to the mother on the grounds that she no longer worked outside the home and thus was “fully available” to care for the child (and a newborn), while the father worked outside the home. The Referee was also concerned about the father’s testimony about the mother because it was “globally negative.”

The First Department, however, found that the it was in the best interests of the child for the parties to have joint legal custody. Although sharing physical custody was no longer feasible because the parties now resided in different boroughs, there was no evidence that the parties’ relationship was characterized by acrimony or mistrust.

Moreover, over the course of the child’s life, the parties had been able to resolve any visitation or custody disputes between themselves. They also appeared to have been in accord with respect to the child’s best interests, despite their failure to communicate directly with each other.

The [father] should not be deprived of a decision-making role in the child’s life because he is unable to care for the child full time. The record shows that he has a strong interest and plays an active role in the child’s life, including aggressively seeking out necessary services to foster the child’s development, and that he arranged for child care while he worked.

Here, although the father’s testimony may have painted an unfairly negative picture of the mother, there was no evidence that he disparaged her in the presence of the child. The record showed that his concern for the child’s welfare was paramount.

Continue Reading Joint Custody: This Month’s Five Appellate Decisions

The Second Department has imposed what may be an impossible burden of proof needed to correct a mathematical miscalculation (the alleged mutual mistake) in a divorce settlement agreement. That is the effect of the March 19, 2014 decision  in Hackett v. Hackett.

After 22 years of marriage, the husband commenced an action for a divorce in 2005. A year later, the parties executed a written settlement agreement, which was incorporated, but not merged into their judgment of divorce.

Under the terms of the settlement agreement, the wife received the marital residence, which the parties estimated to be worth $465,000, and she assumed responsibility for repayment of a first mortgage and a home equity loan with combined outstanding balances of $195,124. The husband retained sole ownership of his restaurant business, which had an appraised value of between $360,000 to $385,000, but which the parties agreed to value, for purposes of their settlement, at only $325,000. The wife also agreed to waive valuation of the husband’s certification as a public accountant, which he acquired during the marriage. “Schedule A” to the divorce settlement agreement listed the dollar values of the assets being allocated to each party. The settlement “purportedly” [the Court’s word] equalized the division of assets by requiring the husband to pay the wife $19,336.

Approximately two years later, the ex-husband commenced this action, seeking to reform the settlement agreement on the ground that an alleged mutual mistake had resulted in the unequal division of the marital assets. He alleged that the settlement agreement contained a “computational error” on Schedule A. As a result the wife’s share of the marital assets was undervalued, resulting in a windfall to her in excess of $100,000. The husband maintained the expressed intent of the agreementcertain was to equally divide the parties’ assets.

Continue Reading “Clear and Beyond Doubt” is Burden of Proof for Correction of Mutual Mistake in Divorce Settlement Agreement

The failure of a prenuptial agreement to specify that earnings during the marriage were separate propertywarranted a breach-of-contract recovery as part of a distribution on divorce when those earnings used to pay sparate liabilities. So held Supreme Court New York County Justice Laura E. Drager in her January 15, 2014 decision in R.B. v. M.I (New York Law Journal published decision).

Once again, the focus of the court’s attention was on the import of a prenuptial provision that limited marital property to that held jointly by the parties.

In Zinter v. Zinter, Saratoga County Supreme Court Justice Thomas D. Nolan, Jr., last month held it was unconscionable for a prenuptial agreement to give the husband  power to control whether earnings and other after-marriage acquired property would be placed into joint or indiviual accounts, and thus marital or separate property (see, my March 17, 2014 blog post).

Here, the Justice Drager held that whether pproperty was owned jointly or individually at the commencement of the divorce action did not end the inquiry, if a breach of contract claim arising during the marriage is viable.

Continue Reading Failure in Prenup to Specify Earnings as Separate Property Warrants Recoupment

After surgically excising eight words, Saratoga County Supreme Court Justice Thomas D. Nolan, Jr., in his February 7, 2014 decision in Zinter v. Zinter, upheld the balance of a prenuptial agreement. Those words had given the husband the unconscionable power to control whether earnings and other after-marriage acquired property would be placed into joint or indiviual accounts, and thus marital or separate property.

In this divorce action, the parties were married on December 23, 2005. The wife was then 29 years old, a music teacher with a Master’s degree, and reported a net worth of $71,500.00. The husband was then 35 years old, a college graduate, and an officer and part owner of his family-owned and operated business, with a reported net worth of approximately $2.7 million.

The husband had retained an attorney to prepare a prenuptial agreement. In November 2005, both the prospective husband and prospective wife met with that attorney to review the proposed agreement. At the time, the wife was not represented by counsel. The husband’s attorney provided the wife with the names of three attorneys experienced in matrimonial law. Shortly thereafter, she retained one of them, with whom the wife met three times before the agreement was signed four days before the marriage.

Continue Reading Court Strikes Prenup Provision Giving Husband the Power to Determine Whether After-Marriage Acquired Property was Marital or Separate

It is certainly not a rare problem. When confronted with fraudulent income tax returns, what is a divorce court to do? Should they be used as swords or shields?

In her January 31, 2014 decision in Morille-Hinds v. Hinds, Supreme Court Queens County Justice Pam Jackman Brown appears to have disregarded the failure to report a husband’s income on the parties’ joint income tax returns when recognizing his claim to a 50% share of marital property. Nevertheless, those returns were honored when fixing the wife’s entitlement to child support.

The parties, both 54, married in 1993. The wife had commenced this divorce action in 2007. The husband had appealed from the 2009 decision of Judicial Hearing Officer Stanley Gartenstein who had awarded him only 15% of the marital property. The J.H.O. had also imputed to the husband an annual income of $80,000 for the purpose of determining his child support obligation. The Second Department reversed, holding that decision was patently unfair to the husband. The case was sent back for a retrial on the issues of equitable distribution and child support.

Continue Reading Fraudulent Tax Returns in Divorce Actions: Sword or Shield?

Not according to Richmond County Civil Court Judge (and Acting Suprme Court Justice) Philip S. Straniere, seemingly running afoul of a contrary body of case law, particularly in the Second Department.

Small Claims Court proceedings may well be the only practical way to redress relatively modest, but often important breaches of divorce settlement agreements as to matters of support and property. Such proceedings are quick, inexpensive, can be pursued without lawyers, and do substantial justice. Eliminating Small Claims Court as a proper forum for such relief would often leave parties without a reasonable remedy.

In his February 19, 2014 decision in Pivarnick v. Pivarnick, Judge Strainiere, held that Small Claims Court was without subject matter jurisdiction to enforce a divorce settlement agreement.

Doing so, he vacated an arbitrator’s $4,000 award to an ex-wife for counsel fees she incurred in connection with her submission to the Supreme Court of a proposed Qualified Domestic Relations Order to implement a division of the ex-husband’s pension and her defense of the ex-husband’s motion to dismiss that proposed QDRO. The ex-wife had cross-moved for sanctions “in the form of ‘attorneys’ fees for his engagement in frivolous conduct.’” Those post-divorce Supreme Court submissions were resolved by a so-ordered stipulation under which the entitlement of the ex-wife to share in the ex-husband’s pension was restated. No reference in the stipulation was made to the wife’s “attorneys’ fee claim” by cross-motion.

Thereafter, the ex-wife sought her counsel fees in Small Claims Court. The arbitrator had awarded the claimant legal fees in the amount of $4,000.00 and dismissed the defendant’s counterclaim for his own counsel fees.

Continue Reading Does Small Claims Court Have Jurisdiction to Resolve Divorce Settlement Agreement Disputes?

Where a divorce settlement agreement contains a SUNY cap on the parents’ obligations to contribute to college expenses, do you subtract financial aid first from the SUNY cap, or first from the total actual costs of the child who chose to attend a private college? Do you include loans in the “financial aid” formula?

In its February 20, 2014 decision in Apjohn v. Lubinski, the Third Department decided to benefit the child.

The parties’ 1994 separation agreement contained a SUNY cap provision limiting the obligations of these parents to contribute to their then 1-year-old son’s college education. Each parent’s obligation would be limited to half of the cost of tuition, room and board at a college or university that is part of the State University of New York.

The agreement further provided that the son must apply to “the said college or university” for all possible grants, scholarships and financial aid before either party would be obliged to pay any college costs. Here, the son applied for and obtained financial aid from the private college where he enrolled in September 2011. the son also received an outside scholarship.

Refusing to make any contribution, the father contended that the agreement required the son to apply to a SUNY institution for financial aid. As the son did not do so (he applied to his private college), the father argued he had no obligation to contribute anything.

The Third Department resolved the ambiguity as to whether the requirement to apply to “the said college or university” for financial aid referred to a SUNY institution or to the college attended by the son, by noting that the agreement did not require the son to attend or apply for admission at a SUNY school. (The father also did not show that it was  possible to apply to a SUNY institution for financial aid without also applying for admission.)

Continue Reading Applying the Ambiguous SUNY-Capped Contribution-to-College Clause

Pets should be recognized as a “special category of property,” according to Albany County Supreme Court Justice Michael C. Lynch in his February 19, 2014 decision in Hennet v. Allan. As a result, he ordered a hearing to determine which member of this broken-up couple would be awarded sole possession of “Duke,” their black Labrador retriever.

The parties, Alisha and William, were involved in a non-marital relationship for over fifteen years, living together for the last four at their Altamont residence. Alisha commenced this replevin action seeking to recover possession of Duke. William had taken Duke from the residence on August 1, 2013, more than four months after he moved out on March 22, 2013.

Duke had been purchased in September, 2009. While there was a dispute as to which party purchased the dog, Duke’s title and registration had been placed in their joint names.

On July 23, 2013, Alisha refinanced the parties’ residence. At that time, William had deeded over his interest and signed an acknowledged release:

I, William Allan, Jr., waive any and all rights and titles to the [Altamont] property . . . along with any and all materials and possessions located therein.

As of today, July 23, 2013, I William Allan, Jr., have removed all personal property from above said property and forever relinquish rights and claims anything left behind. All personal property remaining at above said residence is therefore sole and exclusive property of Alisha Hennet.

The only issue before the Court was a determination of the parties’ respective claims to Duke. Alisha maintained that since William admitted Duke had resided at the residence on July 23, 2013, he lost any claim to Duke under the terms of the release. In opposition, William maintained that he only signed the release as part of the refinancing closing, being expressly advised that “the Release Agreement had nothing to do with my personal property and was required in order to transfer my interest in the real property only.”

Justice Lynch rejected William’s attack on the release. The express terms of the release contradicted William’s suggested limitation of the personal property to which it applied. William’s acknowledged reading of its express terms negated any claim of a plausible reliance on Alisha’s purported misrepresentation.

However, Justice Lynch held that Duke was not covered by the release. Duke was not mere personal property. Although dogs, traditionally, have been defined as “personal property,” the recent trend, however, has been to treat companion dogs as more than just property.

Justice Lynch discussed Justice Cooper’s “thoughtful and careful analysis” recently in Travis v. Murray, the subject of my December 9, 2013 blog post. Justice Cooper had concluded that a strict property analysis should not be used to resolve a dispute between divorcing spouses over possession of their dachshund, instead opting to apply a “best for all concerned” standard, rejecting the application of a “best interests” custody standard as unworkable.

[It is suggested that Justice Cooper probably went further than he had to. As a court has the power to equitably distribute a divorcing couple’s property, and to determine questions of possession, it was not necessary to expand the notion of property to craft relief. Here, as the parties had not been married, they were not entitled to the benefits of the Domestic Relations Law.]

Justice Lynch noted:

Courts are essentially at a crossroads in determining whether a strict property analysis should still govern disputes between dog owners. . . .

Today, we should take the next step in recognizing that pets are more than just “personal property” when it comes to resolving a dispute between owners.

He concluded that the reference to “personal property” in the release did not extend to Duke.

Certainly, the attachment each party professes to have with Duke would only be consistent with recognizing that Duke falls within a “special category of property” that is simply not covered by the release.

In the absence of conclusive documentary proof, the Court ordered that a hearing be held to determine which party should be awarded sole possession of Duke. The Court stated that it would review the circumstances as to how Duke was acquired and cared for, and the actual arrangement between the parties for spending time with Duke after defendant left the parties’ residence.

The significant strain on the parties and the judicial system created by this dispute warranted a final resolution now, without the prospect of ongoing litigation involving compliance with a shared possession arrangement. Since both parties professed a strong relationship with Duke and extensive involvement in his care,  the Court was left with endeavoring to render a fair determination as to which party through his or her conduct has the most genuine right of possession.

Michael D. Assaf, of Assaf & Siegal, PLLC, of Albany, represented Ms. Hennet. F. Matthew Jackson, of O’Connell & Aronowitz, P.C., represented Mr. Allan.

The alleged failure of the mediator and the husband’s counsel to advise the husband that a court need not apply the C.S.S.A. formula to the husband’s entire agreed-upon income of $1,200,000.00 per year income is not a basis to set aside a divorce settlement agreement, or its $29,500.00 per month child support obligation. So held Westchester County Supreme Court Justice Lawrence H. Ecker in his January 16, 2014 opinion in A.B. v. Y.B.

The couple involved separated after 12 years of marriage. Following three years of mediation, the parties entered into an agreement that resolved issues of custody and access to the parties’ three children, maintenance, child support, and equitable distribution. The husband is a 50% equity partner in a brokerage firm. The wife is owner and operator of her own business.

Upholding the agreement, Justice Ecker took pains to quote several of its provisions. One acknowledged that the parties had waived the “compulsory financial disclosure” requirements of the Domestic Relations Law and court rules, and agreed not to exchange Net Worth Statements. Nonetheless, the parties represented to each other that each made a full and complete disclosure of assets, liabilities, income and expenses, and that they relied on the information provided.

The agreement recited the husband’s disclosure, to the best of his knowledge, of his gross personal 2010 income as approximately $156,427.00. The parties agreed to use the 2010 income because their 2011 income was not yet available. The Husband disclosed that in no event was his income from any and all sources more than $156,427.00 in said year.

Nonetheless, for purposes of the agreement, the parties agreed to use an imputed income of$1,200,000 in computing the child support calculation under the Child Support Standards Act.

The parties acknowledged that they reached their agreement with the aid of the mediator, but that the mediator provided no legal representation to either of the parties. Further, although “the mediator may have provided information or opinions concerning the state of the law generally, neither party has relied upon such information or opinions in executing this Agreement.”

The parties further represented that each had ample opportunity to obtain independent legal counsel, and counsel [apparently recommended by the mediator] for each spouse was named.

As to the basic child support obligation, the agreement provided it was agreed that the the husband’s would pay $29,500 per month [$354,000 per year] for 12 years, 5 months, subject to a cost of living increase biennially. The husband was further responsible for 100% of discretionary expenses and add-on expenses, including private school tuition for all three children, private college expenses, camp and summer programs, religion education expenses, Bar and Bat Mitzvah expenses, health insurance and unreimbursed medical expenses.

Continue Reading Claimed Ignorance of C.S.S.A. Treatment of Income Over Cap Not Basis to Set Aside Divorce Settlement Agreement

Sometimes developing divorce case law seems like a bad game of telephone.

Take the February 7, 2014 decision of the Fourth Department in Foti v. Foti. Here, the Court reversed the order of Supreme Court, Monroe County Justice Kenneth R. Fisher which had granted a wife partial summary judgment determining that various real estate entities and management companies were her separate property. She had proven that her interests were received from her father by gift.

Generally, under New York’s Domestic Relations Law §236B, property that is owned by a spouse before the marriage constitutes “separate property,” and is not divided on divorce, except, under some circumstances, to the extent of some portion of appreciation in value of the separate property over the course of the marriage. Inheritances and gifts (from someone other than the other spouse) are also “separate property.” On divorce, the court will divide  the parties’ “marital property,” property acquired during the marriage which is not “separate property.”

In Foti, the Fourth Department held that there was an issue of fact whether the wife commingled her interests in the entities, transforming the nature of those interests to marital property. The possible “commingling” arose from deductions taken on the parties’ joint tax return: “Here, the parties filed a joint federal tax return in which defendant reported her interest in the entities as tax losses, and ‘[a] party to litigation may not take a position contrary to a position taken in an income tax return,’” quoting from the 2009 decision of the Court of Appeals in Mahoney-Buntzman v. Buntzman, 12 N.Y.3d 415, 881 N.Y.S.2d 369.

In Mahoney-Bunztman, the Court of Appeals held that a husband’s decision to declare on his joint income tax return that money he received on the disposition of his interest in a real estate development company was ordinary earned income prevented him from later claiming that that money was merely a transformation of his separate property.

Continue Reading Deducting Separate Property Business Losses on Joint Tax Return May Transform Property to Marital