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In its April 10th decision in Angello v. Angello, the Third Department upheld the trial determination that a wife’s refusal to approve a mid-action sale of the husband’s insolvent business constituted a wasteful dissipation of the largest marital asset. Such warranted saddling the wife with half of the business’s debts. It also, in part, justified a downward deviation from the maintenance guidelines but did not warrant an award of counsel fees to the financially-superior husband.

The parties were married in 1989 and had one adult child. The husband commenced this divorce action in 2016, and the trial began in 2019. The marital property at issue included a local, organic grocery distribution business primarily operated by the husband, which had incurred significant debt and had ceased operations by the time of trial. Marital property also included a warehouse associated with the business, as well as the marital residence. At the conclusion of the trial, the parties each moved for an award of counsel fees.

Columbia County Supreme Court Justice Margaret Walsh found that the wife had wastefully dissipated marital assets by refusing to agree to the 2018 sale of the business to one of the marital business’ competitors in exchange for the buyer assuming responsibility for $900,000 in business debt. The trial court valued the business as of the date of trial and directed that the wife be responsible for half of its $995,000 in debt. Justice Walsh also directed that the warehouse be sold and that the sales proceeds net of liens be applied against the remaining business debt. Justice Walsh also directed that the marital residence be sold with the net proceeds equally divided between the parties.

The presumptive amount of maintenance to which the wife was entitled was $914 a month, but Justice Walsh determined that a downward deviation was warranted, directing the husband to pay $305 a month for five years.Continue Reading Wife’s Refusal to Consent to Mid-Action Sale of Husband’s Business is Wastefull Dissipation

In its July 25, 2018 decision in Cravo v. Diegel, the Appellate Division, Second Department, affirmed a counsel fee award to a wife, the monied spouse in this divorce action. Supreme Court Kings County Justice Esther M. Morganstern had awarded the wife 55% of her total counsel fees. Upholding the award, the Second Department noted:

In its determination of a counsel fee application, the trial court must consider the relative financial circumstances of the parties, the relative merit of their positions, and the tactics of a party in unnecessarily prolonging the litigation. Although the defendant correctly contends that he is the less monied spouse, the Supreme Court’s award to the plaintiff of 55% of her total counsel fees, upon its determination that the defendant’s obstructionist conduct unnecessarily prolonged the pretrial motion practice and the trial, was not an improvident exercise of discretion.

The Second Department cited Meara v. Meara, 104 A.D.3D 916, 960 N.Y.S.2d 911 (2013) in which the financial circumstances of the parties was not discussed, and Quinn v. Quinn, 73 A.D.3d 887, 899 N.Y.S.2d 859 (2010), in which the parties were described as being on equal footing.

However, a counsel fee award to the monied spouse is contrary the rule in the First Department as announced in Silverman v. Silverman, 304 A.D.2d 41, 47-49, 756 N.Y.S.2d 14, 19-21 (1st Dept. 2003). Below, Supreme Court New York County Justice Marilyn Diamond had awarded the husband $50,000 in attorney’s fees, out of a total of over $ 200,000 incurred, based upon the dilatory conduct of the wife and her then counsel. Eliminating the award, the First Department held:

This award of attorney’s fees was not proper under Domestic Relations Law §237, because awarding attorney’s fees to the monied spouse does not comport with the purpose and policies of that section of the Domestic Relations Law.

Continue Reading Awarding Counsel Fees to the Monied Spouse: Conflict in the Departments