Justice Catherine M. DiDomenico

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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][2][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.Continue Reading Contempt Available for Violators of “Automatic Orders”

If the IRS determines that as between spouses only one is liable for a tax debt, should that finding be binding on a divorce court determination as to whether the marital tax debt should be allocated to only one spouse?

Married couples who choose to file a joint tax return are jointly and severally liable for the tax and any additions to tax, interest, or penalties that arise from the joint return, even if they later divorce. Joint and several liability means that each taxpayer is legally responsible for the entire liability. Thus, both spouses on a married filing jointly return are generally held responsible for all the tax due even if one spouse earned all the income or claimed improper deductions or credits. This is also true even if a divorce decree states that a former spouse will be responsible for any amounts due on previously filed joint returns.

In some cases, however, a spouse can get relief from being jointly and severally liable. Such “Innocent Spouse Relief” relieves a spouse from additional tax owed if based upon the other spouse’s failure to report income, improper reporting of income, or the claiming of improper deductions or credits.

In order to qualify for Innocent Spouse Relief:

  • The understatement of tax (deficiency) must be solely attributable to the other spouse’s erroneous item (omitted income, or incorrectly reported deductions, credits, or property basis);
  • The innocent spouse must establish that at the time the joint return was signed the spouse didn’t know, and had no reason to know, that there was an understatement of tax; and
  • taking into account all the facts and circumstances, it would be unfair to hold the innocent spouse liable for the understatement of tax.

Justice Catherine M. DiDomenico, in her August 29, 2017 Richmond County (Staten Island) Supreme Court opinion in S.M. v. M.R. (the subject of last week’s blog post on the effect of an attorney retainer agreement cap), appeared to hold that a Tax Court innocent spouse finding should, conclusively, result in the equitable distribution of the entire tax debt to the other spouse.Continue Reading IRS Innocent Spouse Relief’s Impact on Equitable Distribution in Divorce

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