Opinion
10-29-2021
Jennifer D., Plaintiff, v. Maurice D., Defendant.
Coffins & Lusthaus, P.C. By: Maria Coffinas, Esq. Attorney for Plaintiff Walter Anderocci, Esq. Attorney for Defendant Rabin Schumann and Partners LLP By: Bonnie Rabin, Esq. Attorney for Non-Party (Mr. S.M.) 11 Times Square, 10th Floor Wachtel Missry LLP Jeffrey T. Strauss, Esq. Attorneys for Non-Party (Mr. J.D.)
Coffins & Lusthaus, P.C. By: Maria Coffinas, Esq. Attorney for Plaintiff
Walter Anderocci, Esq. Attorney for Defendant
Rabin Schumann and Partners LLP By: Bonnie Rabin, Esq. Attorney for Non-Party (Mr. S.M.) 11 Times Square, 10th Floor
Wachtel Missry LLP Jeffrey T. Strauss, Esq. Attorneys for Non-Party (Mr. J.D.)
Jeffrey S. Sunshine, J.
Procedural History
The parties to this divorce action have been engaged in protracted litigation on the underlying divorce action since plaintiff-wife commenced it on September 14, 2015. The parties have five (5) children of the marriage of which, currently, there are three (3) unemancipated children ages 19, 16 and 13. The parties entered into a Stipulation of Custody and Parenting Time dated September 28, 2018 which was allocuted on the record on September 28, 2018. An Interlocutory Judgment on Custody and Parenting Time was signed by the Court on December 21, 2018. The limited remaining issues before this Court are financial and include final awards of child support, maintenance and counsel fees.
The parties represent that there are no issues of equitable distribution.
Extensive Litigation History
This case has an extensive litigation history which is illustrative of how the parties find themselves in the current litigation quagmire they have created by failure to comply with court ordered discovery schedules and compliance conference orders and their unilateral decision - without Court approval - not to comply with court-ordered depositions. The discovery mayhem presented lays at the feet of these parties.
There have been thirty (30) filed applications in this action: plaintiff having filed fifteen (15) and defendant having filed fourteen (13); two (2) were filed by non-parties seeking to quash subpoenas issued during trial. This Court has issued extensive written decisions dated March 6, 2017; June 14, 2017; November 30, 2017; May 23, 2018; and March 20, 2019: this decision must be read in conjunction with the procedural history thoroughly detailed in those decisions. There has been ancillary litigation in Delaware between plaintiff and the defendant's family.
There has been voluminous document production together with cross-allegations from the commencement of this action that each side had not produced demanded documents. Accompanying those applications, many which were filed while others remained pending and others that requested duplicative relief, the parties annexed multiple bank boxes worth of supporting financial documentation seeking the Court to comb through and analyze the financials. The parties have hired attorneys, fired attorneys only to find themselves return to re-retain the same attorneys they started with.
Plaintiff has been forced to seek Court intervention to obtain pendente lite support, interim counsel fees and to seek enforcement by contempt applications for those obligations, including the payment of court ordered counsel fees so that her prior counsel would release her case file to her current attorney. The Court notes that in that pendente lite decision defendant was ordered to pay plaintiff's then-counsel $100,000 in counsel fees but that he failed to do so and the Court issued a judgment dated May 22, 2017 in that counsel's favor against defendant with statutory interest.
Plaintiff's prior counsel was substituted for her current counsel in July 2017.
Pendente Lite Decision and Order dated March 6, 2017
As fully detailed in this Court's written pendente lite decision dated March 6, 2017, during this litigation, the parties have proffered vastly divergent representations as to the defendant's income: plaintiff maintains he earned in excess of $800,000.00 annually primarily from working for family-owned businesses during the marriage and enjoyed a lavish lifestyle commensurate with that level of income while defendant has maintained that he earned no income and that he has always had to support his family through borrowed funds loaned from his family. Defendant has maintained during this litigation that he travels and works on behalf of his father and brother for family business, without income, in an effort to one day procure employment all while relying on the "generosity" of his father and brother to fund hundreds of dollars of expenses annually. The Court appointed KLG as the court-appointed neutral business evaluators by order dated June 1, 2016, in part based on discovery indicating that defendant sold his interest in a multi-million-dollar company for $1.00 contemporaneously with the marital discord and commencement of this divorce action. Continuously underlying the litigation are allegations of corporate "alter egos" and shell corporations for multi-million dollar businesses with plaintiff alleging that defendant and his family are, in effect, conspiring to avoid scrutiny of their business interests in an effort to obfuscate the defendant's actual income for purposes of calculating his support obligations and defendant's contention that he is unemployed and subsisting on "generosity" of his father and brother. Together with defendant's alleging plaintiff has dissipated and hidden her income and is living based on monies from others.
In plaintiff's application for pendente lite support she requested the Court impute income to him based, inter alia, on his American Express spending which showed more than $800,000 in purchases in 2014 and more then $400,000 in purchases in just the first seven (7) months of 2015.
Failure to Conduct Court-Ordered Depositions
Despite the extensive cross-allegations of financial shenanigans and subterfuge by both parties, the parties inexplicably ignored multiple orders of the Court setting deposition dates.
The so-ordered preliminary conference order dated April 19, 2016 specified that depositions of the parties and any non-parties would take place on June 13, 2016; June 14, 2016; June 22, 2016; June 23, 2016; and July 30, 2016. These deposition dates were selected, on consent, of the parties. The Court did not learn until after trial had commenced that the parties, without the knowledge or consent of the Court, failed to conduct the court-ordered depositions of the parties or any non-parties during the discovery portion of this case.
Trial on Financial Issues
A Note of Issue was filed on December 16, 2019. At this time, there have been twenty-nine (29) dates set aside for trial on the financial issues between the parties. The Court initially adjourned scheduled trial dates, at counsel's request, so that the parties could produce itemized discovery requests conformed to previously produced discovery as an effort for the parties to rectify the discovery quagmire they had created by not complying with discovery procedure; however, that attempt was unproductive. As such, the Court was left with no option but to use additional scheduled trial dates to supervise, document by document, the parties' demands over the course of several trial dates.
The Court notes that, as early as the March 6, 2017 pendente lite decision, this Court found that "there has been a significant delay that have resulted from the inability between both sides to cooperate with one another in exchanging discovery which has resulted in a plethora of dueling and duplicative orders to show cause." The Court further found that "[i]n the case at bar, the Court finds disturbing the significant delay that has resulted from the defendant's non-compliance with plaintiff's discovery requests, which have thereby interfered with the Court's ability to advance this matter to trial and for the neutral appraisal to move forward."
There have already been several hundred proposed exhibits uploaded into the virtual evidence folder for this trial. Due to the parties' non-compliance with the court-ordered depositions of the parties and any non-parties prior to filing the Note of Issue, the Court has been forced, in effect, to supervise a series of "depositions on the witness stand" which has resulted both in an unnecessary drain on judicial resources during a global pandemic and has delayed the final resolution of this litigation. The litigation posturing that is taking place now is directly a result of the parties' failure to comply with court-ordered depositions during the discovery process.
Motions Pending Before the Court
Motion #26: Plaintiff's Contempt Application Against Defendant [KLG fees]
On July 26, 2021, the Court signed plaintiff's order to show cause [NYSCEF #420] seeking an order of contempt against defendant-husband. That application sought the following relief:
(a) Adjudging defendant, Maurice D., to be in civil and criminal contempt of court pursuant to DRL §245 and Jud. Law 75l, 753, 754 and 756 et seq., for his ongoing continuing failure to pay his court-ordered 65% share of the fees and expenses of KLG, and imposing a sentence of imprisonment for the maximum term allowed by law as the appropriate remedy; and
(b) Granting and issuing a FINAL ORDER OF COMMITMENT WITH LEAVE TO PURGE upon this Court's finding that defendant is in civil and/or criminal contempt of court; and
(c) Enforcing the Court's Orders and directives that defendant pay KLG "promptly," "forthwith," and by "June 10, 2021," dated June l, 2016, November 25, 2019 and April 19, 2021; and
(d) Granting plaintiff her attorney fees and costs in an amount not less than $5,000.00 for the prosecution of this contempt and enforcement motion pursuant to DRL §238 and 237(b) and (c); and
(e) Granting plaintiff such other and further relief as the Court deems just and proper together with costs.
Defendant filed opposition [NYSCEF #465-470] dated August 12, 2021 to that application. Plaintiff filed reply [NYSCEF #497-515] dated August 16, 2021. The Court heard oral argument on motion sequence #26 on August 24, 2021 [NYSCEF #522].
The Court issued a written order dated June 1, 2016 appointing KLG as the court-appointed neutral evaluator to "appraise the plaintiff's business and to conduct a forensic evaluation as to plaintiff's and defendant's income and sources of revenue including the sale of business interests, accounting of cash and credit card receipts and product orders and a lifestyle analysis of both parties" [NYSCEF #374]. Pursuant to that order, defendant was ordered to pay 65% of KLG's fees. There were subsequent directions on the record on November 25, 2019 and March 19, 2021 for defendant to pay his share of KLG's invoices. As of the April 19, 2021 virtual court appearance, part of defendant's share of the KLG invoice remained unpaid. On the record during the April 19, 2021 court appearance, the Court ordered defendant to provide KLG with any outstanding responses and payment in full by June 10, 2021 [April 19, 2021 transcript pp. 46-47, NYSCEF #376]. On the record on April 19, 2021, the Court made the following order:
THE COURT: June 10th. That's the date it must be done by. June 10th.
PLAINTIFF'S COUNSEL: Does that include the payment to KLG, Your Honor?
THE COURT: That is correct. That must be done and the response together with the payment, June 10th.
In support of her application, plaintiff annexed communication from KLG dated June 24, 2021 [NYSCEF #383] - 14 days after the June 10, 2021 payment deadline ordered by the Court - that indicates that defendant had not paid his outstanding share of the KLG invoice.
In her affirmation in support dated July 28, 2021, plaintiff's counsel argues that defendant's failure to pay KLG on or before June 10, 2021, as ordered by the Court on the record April 19, 2021 when the parties were present, resulted in the final report being delayed more than two (2) months which, she contends, result in significantly prejudiced her client because she was unable to call KLG on her direct case. Further, she argues, defendant was able to testify, she contends dishonestly, about the nature of credit card charges made during the marriage. She argues that these credit card charges and the parties' lifestyle should be considered in the court's determination. She contends that had defendant's failure to pay pursuant to the Court's order the KLG's report would have been issued in time for her to call KLG to testify as to marital life-style expenses of the parties during her direct case.
This is not the first contempt application against defendant. This Court issued an extensive written pendente lite support order dated March 6, 2017. In that decision, the Court noted that the "parties' lifestyle and expenses during the marriage greatly exceed their numerous and inconsistent representations regarding income" and the Court found that the "[t]he defendant's representations and lack of candor with the Court, and refusal to participate in the discovery process, make it impossible for the Court to determine, with any degree of accuracy, what the husband's true income is" for the purposes of awarding pendente lite support. The Court further noted that, as early as 2017, defendant was refusing to cooperate with the court-appointed neutral forensic appraiser, KLG.
The Court imputed $368,948.40 of income to the defendant for the purposes of calculating pendente lite support which resulted in finding that the defendant-father was required to pay $5,588.13 monthly in interim basic child support and $1,291.33 monthly in interim maintenance. Plaintiff-mother has repeatedly sought court intervention for defendant's non-compliance with his pendente lite support obligations. As a result of one of those applications, this Court found defendant in contempt in a written decision and order dated March 20, 2019 based on his failure to pay court-ordered counsel fees in the sum of $100,000 on behalf of plaintiff [NYSCEF #373].
The Court found in the March 6, 2017 decision that it was appropriate to award child support up to a cap of $275,000. The parties stipulated to calculating interim maintenance pursuant to the maintenance guidelines.
Plaintiff contends that defendant's failure to pay KLG in compliance with this Court's April 19, 2021 order is part of a course of contemptuous conduct by defendant intended to undermine plaintiff's ability to participate on equal footing in this litigation.
In his affidavit in support, defendant-husband avers that on April 21, 2021 he "contacted KLG indicating that after the Passover holiday I would confer with them about their initial report" which was issued on December 21, 2020 [NYSCEF #465]. He continues that thereafter "[i]n the middle of May 2021" - a month later - he arranged to have a meeting with KLG but that by then the "soonest available date" that KLG, himself and his accountant could meet was June 29, 2021. While the Court would not interfere with any party's religious observance, the Court notes that defendant was able to reach out to KLG on April 21, 2021 to let them know he would reach out again later to schedule a meeting but he offers no explanation for why he did not take that opportunity to schedule an appointment time with KLG and instead waited a month to do so. He avers that as of August 2021 he had "only a small balance remaining" of $2,758.08: conceding that he did not comply with the June 10, 2021 deadline ordered by the Court. He avers that KLG completed the report on August 6, 2021 and he subsequently paid the outstanding balance on August 9, 2021. Defendant contends that he cannot be held in contempt because the KLG balance was, eventually, paid and because he informed plaintiff on July 21, 2021 that he had "made [a] deal with KLG" for payment of the remaining balance.
Defendant, in effect, takes the position that he is a "slow payor" but that his unilateral decision to make a financial arrangement with KLG inapposite to the deadline ordered by the Court is not contempt of a Court order. He argues that the total cost of the KLG report exceeds $100,000 and avers that he has paid more than $66,000 so the Court cannot find him in contempt when only several thousand dollars remained unpaid as of the June 10, 2021 date ordered by the Court for full payment. Allegedly in "support" of his claim, defendant attached an agreement dated July 20, 2021 - more than a month after the June 10, 2021 payment date ordered by the Court - that KLG could charge a credit card (it is unclear whether it is defendant's credit card or his father's credit card) $500 bi-weekly until the sum of $3,491.84 was paid in full. This agreement to charge the credit card is signed by defendant and defendant's father. Defendant contends that when the report was ready his father paid the outstanding sum due on August 19, 2021 implying that he was unable financially to pay it.He contends that his unilateral payment plan with KLG superseded the Court's June 10, 2021 court-ordered payment date.
Defendant contends that plaintiff has not been prejudiced because both parties still have an opportunity to cross-examine the KLG report during the trial, which remains ongoing. Defendant's counsel, in his affirmation dated August 12, 2021 notes that KLG was scheduled to testify only after plaintiff's direct, cross and any re-direct was completed [NYSCEF #466]. Defendant's counsel contends that KLG never indicated that the report would not be released until final payment was issued.
Defendant further argued, through counsel, during oral argument that his son's Bar Mitzvah was scheduled for that week and it would be "obnoxious" of the Court to hold him in contempt at such a time.
Motion #27: Plaintiff's Contempt Application Against Non-Party Mr. J.D.
On August 2, 2021, the Court signed plaintiff's order to show cause [NYSCEF #443, 422, 429] seeking contempt against non-party J.D., who is defendant-husband's brother, and for the following relief:
(a) Adjudging J.D., a non-party, to be in civil and criminal contempt of court pursuant to Jud. Law §§751, 753, 754 and 756 et seq., for his willful violation of the Judicial Subpoena Duces Tecum addressed to J.D. and so-ordered by the Court on June 3, 2021, and imposing a sentence of imprisonment for the maximum term allowed by law as the appropriate remedy; and
(b) Granting and issuing a FINAL ORDER OF COMMITMENT WITH LEAVE TO PURGE upon this Court's finding that defendant is in civil and/or criminal contempt of court; and
(c) Enforcing the Court's Order that J.D. produce the information detailed in the rider to the so-ordered Subpoena; and
(d) Granting plaintiff her attorney fees and costs in an amount not less than $5,000.00 for the prosecution of this contempt; and
(e) Granting plaintiff such other and further relief as the Court deems just and proper together with costs.
It is undisputed that plaintiff obtained a so-ordered Judicial Subpoena Duces Tecum dated June 3, 2021 for defendant-husband's brother, Mr. J.D. [herein referred to as Mr. J.D.] to produce documents to her office. It is undisputed that J.D. has not respond to the June 3, 2021 discovery subpoena and that plaintiff's counsel did not provide notice to Mr. J.D. or his attorney prior to obtaining the so-ordered discovery subpoena. In her affirmation [NYSCEF #423], plaintiff's attorney concedes that Mr. J.D.'s attorney, Mr. Jeffrey Strauss, Esq., contested service on his client by correspondence dated June 30, 2021. She argues that personal service must have been effectuated because "Mr. Strauss offered no explanation as to how he and his client had knowledge of the Subpoena" if Mr. J.D. was not personally served.
In her affirmation dated July 28, 2021 [NYSCEF #423], plaintiff's counsel contends that Mr. J.D.'s failure to comply with the discovery subpoena after trial commenced is part of a "blatant and concerted effort by the D. family to ignore and frustrate the lawful procedures, requirements and powers of the New York State Supreme Court as well as an intention to deprive Ms. Jennifer D. of her right to a proper trial." She argues that "without the information set forth in the so-ordered Subpoena by this Court, Ms. Jennifer D. is further prejudiced because she cannot prepare her case in time for the resumption of the trial." Plaintiff's counsel contends, in effect, that the documents must be sought from Mr. J.D. because they were allegedly not provided by defendant. Plaintiff argues that J.D.'s failure to respond to her post-Note of Issue discovery subpoena "has defeated, impaired, impeded and prejudiced Ms. Jennifer D.'s rights and remedies, and her ability to prosecute her case" and that Mr. J.D. should be held in civil contempt pursuant to Judiciary Law 753.
Plaintiff does not address how her failure to seek discovery from Mr. J.D. or to conduct a non-party deposition of him during the discovery schedule set by the Court in the preliminary conference dated April 19, 2016 be reconciled with this argument that this is her only way of obtaining this information when she elected not to seek this discovery prior to filing the Note of Issue.
Plaintiff contends that an award of counsel fees in the sum of $5,000 is appropriate because J.D.'s refusal to comply with the discovery subpoena compelled her to incur unnecessary counsel fees for enforcement.
Motion #30: Non-Party Cross-Motion to Quash Subpoena of Non-Party [Mr. J.D.]
On August 12, 2021, Mr. Strauss, attorney for non-party Mr. J.D., filed a notice of cross-motion [motion sequence #30; NYSCEF #471] and in opposition to motion sequence #27 seeking:
A) Quashing that certain Judicial Subpoena Duces Tecum addressed to J.D., dated June 3, 2021, which was returnable in the office of the plaintiff's counsel on July 13, 2021 (the "6/3/21 Subpoena");
B) Or, in the alternative, limiting the scope of the June 3, 3021 subpoena to a request for the production of documents for a period of three years and eliminating reference to the entities D3Cubed, LLC, Futurevision LLC, Futurevisionsales LLC, 8400 Group LLC, Trading Partners International LLC, Development Properties LLC, ASAP Sales LLC, Claypool Resources, LLC, and Intellectual Solutions, Inc. in the definition of "M. D." in Paragraph 1 of the Rider to the June 3, 2021 Subpoena and by eliminating the reference to payments regarding "any lawsuit Plaintiff [Jennifer D.] has commenced in Delaware against any entity owned or controlled by [the Defendant] or his mother and father" in Paragraph 6 of the Rider to the June 3, 2021 Subpoena;
C) Directing the plaintiff to pay J.D. the sum of $12,000 to defray the expenses of searching for and producing records as authorized by Section 3122(d) of the CPLR; and
D) Granting such other and further relief as may be just and proper in the circumstances.
The Court heard oral argument on motion sequences #27 and #30 on September 9, 2021 [transcript of September 9, 2021 oral argument NYSCEF #526].
In his affirmation, dated September 1, 2021, Mr. Strauss, attorney for non-party Mr. J.D. [herein referred to as Mr. J.D.] argues that the Court should quash the subpoena arguing that it is procedurally defective as it was not obtained in compliance with CPLR 2302(b) and CPLR 3102(d) because no notice was given Mr. J.D. or his attorney that the subpoena was being requested so-ordered by the Court. It is undisputed that Mr. Strauss notified plaintiff's counsel, by correspondence dated June 17, 2021, of the alleged defects pursuant to CPLR 2304 and requested that she withdraw the subpoena and/or to limit the subpoena [NYSCEF #426]. He affirms that plaintiff's counsel replied with a "cryptic June 23, 2021 letter in which she implied that the June 3, 2021 subpoena is somehow impervious to attack and immune from Section 2304 ". He argues that "Plaintiff's counsel may have beat us to the Courthouse while laying in wait after writing her cryptic letter of June 17, 2021, but that does not deprive us of our right to move for relief pursuant to Section 2304, nor are the procedural and substantive information of the June 3, 2021 subpoena insulated from attack and the relief that we seek on this cross-motion." Plaintiff's counsel's correspondence to Mr. Strauss dated June 23, 2021 in response to his objection to the non-party subpoena being issued ex parte merely states:" the Subpoena was so-ordered by Justice Jeffrey S. Sunshine of the Supreme Court, Kings County on June 3, 2021. I suggest you guide yourself accordingly." Her correspondence does not address the substantive procedural objection raised by Mr. Strauss nor does she acknowledge or address the ex parte obtaining of the subpoena in her application or reply. Mr. Strauss also notes that his client takes the position that he was not personally served with the so-ordered subpoena which would therefore also be procedurally defective pursuant to CPLR 2304.
In his affidavit dated August 12, 2021, Mr. J.D. contends that plaintiff-wife moved for contempt against him instead of moving to compel compliance because of her "vindictiveness towards my brother and his family." He alleges that plaintiff-wife, his sister-in-law, has caused four (4) non-party subpoenas to be issued on him and/or his businesses over the past six (6) months in this action and/or in an action pending in Delaware between plaintiff and defendant's family-related businesses. He contends that he believes these subpoenas are "harassment" but that his attorney has responded to each subpoena demand pursuant to CPLR 2304 stating objections: he contends that he has never ignored any subpoena from plaintiff as she claims.
In his affidavit dated August 12, 201, Mr. J.D. avers that he was never served with the subpoena pursuant to CPLR 2304, which requires personal service. In support, he annexed pictures from his door-camera video of the purported service show that the process server a man who works in his home, not himself. The images of the man described in the affidavit of service, including the hair color listed as "black/grey", match the images of the man served in the door-camera images [affidavit of service NYSCEF #368; images of door camera NYSCEF #474]. No one disputed Mr. J.D.'s representation that he has blond hair, not black hair as listed on the affidavit of service and as shown on the person being served on the door camera images annexed in support of his affidavit. Mr. J.D. notes that the skin color described in the affidavit of service does not match his skin color.
It is undisputed that Mr. Strauss notified plaintiff's counsel by correspondence dated June 30, 2021 of the alleged service defect. There is no indication that plaintiff's counsel ever responded to the June 30, 2021 correspondence nor does plaintiff's counsel address the discrepancies between Mr. J.D.'s physical characteristics and the appearance described by the process server in the affidavit of service; rather, plaintiff's counsel argues that "Mr. Strauss offered no explanation as to how he and his client had knowledge of the Subpoena and that it had been so-ordered by this Court if his client was not the person served". Mr. J.D. argues that he "cannot and should not be held in contempt in connection with a subpoena that was not properly served upon me."
In addition to the procedural defects asserted by Mr. Strauss, Mr. J.D. avers that the documents demanded in the discovery subpoena "can readily be produced by the parties themselves" and that, in fact, he has previously provided the information requested by plaintiff in and that, upon information and belief, those documents have previously been offered and accepted into evidence in the ongoing financial trial between the parties (plaintiff's exhibit NYSCEF #101). Mr. J.D. avers that the promissory notes and schedule of funds he advanced to his brother, the defendant-husband herein, which are the crux of the discovery sought by plaintiff herein, were previously produced in this action. In support of that representation, Mr. J.D. annexed an affidavit dated July 28, 2016 and supporting ledger and an updated ledger as of February 21, 2020 detailing transfers of money to defendant and promissory notes associated with each transfer. He argues it is duplicative for plaintiff to now seek the same documents from him. He also contends that the supporting bank statements are already in plaintiff's possession and, upon information and belief, have been entered into evidence in the on-going trial as plaintiff's exhibits 56, 57 and 112. Mr. J.D. argues that any updated bank records as to transfers defendant received from him "could have and should have been sought from the defendant himself and not from me as a non-party."
Mr. J.D. asserts that an award of sanctions would be inappropriate because plaintiff did not first move for an order compelling compliance pursuant to CPLR 2308(b). He requests that the Court not award plaintiff counsel fees on her application to hold him in contempt of a subpoena where the subpoena was obtained "on an ex parte basis, that was not properly served upon me, to which I timely responded as required by Section 2304 of the CPLR, and in connection with which the plaintiff did not first make a motion pursuant to Section 2308(b) and obtain an order compelling compliance."
Plaintiff's counsel filed a reply dated August 19, 2021 [NYSCEF #521] in which she contends that Mr. J.D.'s assertion that he was not properly served is "meritless" inasmuch as there is a lawful court order which he had knowledge of because he responded to, inter alia, seeking that it been withdrawn. She contends that Mr. J.D. "did not have the right to make demands. He was obligated to comply" with the June 3, 2021 subpoena because it was so-ordered by the Court. She does not dispute Mr. Strauss' representation that she did not comply with CPLR 2303(b) and 3102(d) and that she obtained the so-ordered subpoena without notice to Mr. J.D. and/or his attorney. Instead, she contends, in effect, that once the subpoena was so-ordered any procedural defects that may have existed in obtaining it must be disregarded.
Motion #28: Non-Party Motion to Quash Trial Subpoena of Non-Party Mr. S.M.
On July 29, 2021, Ms. Bonnie Rabin, Esq., counsel for non-party Mr. S.M., filed an order to show cause seeking to quash the subpoena and seeking a protective order:
1) Pursuant to CPLR §§2304 and 3103(a) and other relevant provisions of the CPLR and DRL, granting S.M., a non-party witness, an immediate protective order quashing and nullifying in its entirety the improper Amended Judicial Subpoena Duces Tecum and Ad Testificandum served by Mr. J.D.'s counsel, and further directing that Mr. J.D., his attorneys, agents and representatives be precluded from obtaining the improper disclosure sought by the Subpoena, because, inter alia, (i) the Subpoena is patently improper disguised discovery request; (ii) the Subpoena is overbroad and harassing; (iii) upon information and belief, plaintiff has provided Mr. J.D. with responsive documents to the discovery he seeks from S.M.; and (iv) other than what has been previously produced by plaintiff, the Subpoena seeks documents and information which are immaterial and irrelevant to the disputed issues between the parties before this Court; and 2) Pursuant to 22 NYCRR §130-1.1, et seq., awarding S.M. his attorneys fees, costs and disbursements, in an amount not less than $15,000, as a sanction for defendant's retaliatory, vexatious and frivolous litigation tactics; and 3) Granting S.M. such other and further relief as the Court deems just and proper."
In support of the application, Ms. Rabin filed an affirmation dated July 29, 2021. In essence, Ms. Rabin contends that defendant subpoenaed S.M. is retaliatory in nature inasmuch as it was served immediately after plaintiff subpoenaed defendant's brother. She contends that the subpoena is intended to harass and embarrass him as plaintiff's fiancé prior to the parties' divorce and that any post-commencement lifestyle benefits plaintiff derives derivative to her romantic relationship with S.M. is beyond the scope of the divorce litigation discovery between the parties and irrelevant to the financial issues between the parties.
S.M. did not file an affidavit in support of the order to show cause to quash and seeking a protective order.
Ms. Rabin argues that use of the trial subpoena is a procedurally impermissible attempt to seek post-Note of Issue discovery from a non-party, inter alia, 1) no motion to set aside the note of issue; 2) the information has previously been provided directly by plaintiff and, as such, the demands of S.M. are duplicative; 3) the Court has already ruled that if plaintiff cannot show sources of payment for claimed expenses, such claimed expenses will be precluded from testimony and documentary evidence at time of trial; and 4) the remainder of the requested discovery demanded of S.M.'s personal finances is irrelevant to the litigation between the parties. S.M. did not provide an affidavit in support of his application to quash the trial subpoena.
Motion #29: Defendant's Cross-Motion
Defendant's counsel filed a Notice of Cross-Motion dated August 6, 2021 in opposition to S.M.'s motion to quash defendant's subpoena and by which he sought the following affirmative relief:
(A) For an Order denying the motion of the non-party witness S.M. in its entirety;
(B) For an Order directing S.M. to appear and to testify and produce documents on a date certain in compliance with this Court's So-Ordered Subpoena dated June 24, 2021 (Exhibit A);
(C) For an Order pursuant to 22 N.Y.C.R.R. §130-1.1 for sanctions against the non-party witness and his counsel for making material false statements of fact and filing a "frivolous" motion;
(D) And for such other and different relief as to this Court may be just, proper and equitable."
On August 6, 2021, defendant filed an affidavit in support of motion seq. #29 in which he avers that "S.M., his documents and his testimony are crucial for my defense to Plaintiff's claims against me for child support, maintenance, counsel fees and for the appropriate reallocation of the expenses for Court ordered appraisers and evaluators" [NYSCEF #445]. He contends that the lifestyle plaintiff enjoys by way of her romantic relationship with S.M. "may impact upon this Court's decision on so many remaining financial issues yet to be decided in this case." He contends that the discovery sought from S.M. is relevant because there are "so many unanswered questions of financial information deleted by Plaintiff or not available from her but relevant and material for my case."
Defendant contends that he is entitled to S.M.'s personal financial records, in addition to the promissory notes previously produced, because he contends any post-commencement lifestyle benefit(s) plaintiff receives as a result of her relationship with S.M. can and should be imputed to plaintiff as income by the Court in calculating defendant's support obligations, counsel fee awards and allocation of appraisers and experts. Specifically raised is defendant's counsel's contention that income should be imputed to plaintiff including the "benefit" she received from spending time at an alleged $150,000 summer rental in Deal, New Jersey during summer 2021. Defendant avers that plaintiff is paying "plaintiff's rent, counsel fees, litigation expenses, and expenses for our children" and that "[t]hese 'loans' he claims to have made I never requested."
Defendant does not allege that the proffered promissory notes securing these loans are defective, rather, he alleged that the Court should not consider them inasmuch as he, in effect, doubts that S.M. will expect repayment "from his future wife" and, as such, he takes the position that the sums secured by the promissory notes should be imputed as income to plaintiff. He argues that "dining and all forms of entertainment" plaintiff enjoys by proxy of her relationship to S.M. should also be considered income to her. In pursuit of that information, defendant's trial subpoena of S.M. calls for:
Written proof of payment, including but not limited by canceled check, credit card statement, bank debit, paid receipt and/or paid invoice of all paid bills for all expenses paid for or on behalf of JENNIFER D. including, but not limited to: entertainment, travel, living expenses including lease payments, professional fees, rent payments, her portion of Court Ordered payments, car lease, car insurance, utilities, groceries, commutation and any other category of payment made by S.M. or by any person or entity at his direction and authorization for or on behalf of JENNIFER D. Also, including monthly records of any credit card and/or debit card with charges incurred by JENNIFER D. or on her behalf on your accounts or your company credit card accounts, including but not limited to American Express, Visa, MasterCard, or bank debit card. Records of paid receipts and invoices for all gifts and jewelry, including but not limited to an engagement ring for JENNIFER D. with date of purchase. Evidence by documents and testimony of S.M. of all of the above and cash gifts given to JENNIFER D. during the period of time specified and continuing. [emphasis added]"
The Court notes that S.M. did not file an affidavit in support of his application to quash the subpoena nor has he made any representation that the promissory notes comprise the totality of his financial support of plaintiff.
In his affirmation in support dated August 6, 2021, defendant's counsel argues that the promissory notes allegedly securing the moneys advanced by S.M. to the plaintiff "are not business records, not certified, acknowledge or sworn to, are impermissible bolstering if offered by Plaintiff, and not admissible under any theory and must await the testimony of the non-party witness. He contends that "these 'notes' are likely concocted for litigation only" He argues that S.M. is, likely, paying the balance of plaintiff's expenses inasmuch as she was paying more in basic rental expense than the defendant's combined pendente lite maintenance and child support obligation. He contends that she could not afford even the monthly rental on her prior apartment of $7,200 monthly on the support defendant is paying and that since plaintiff has not made an application since 2016 to increase her support from defendant it is a "clear indication Plaintiff has financial resources which must be disclosed and that is why the subject subpoena is so relevant." Defendant does not dispute that plaintiff's relationship with S.M. did not commence until late 2020 nor account for how his argument is reconciled for the four (4) years between 2016 and 2020 during this litigation prior to S.M.'s relationship with plaintiff.
In effect, defendant contends that the documentation provided by plaintiff in response to his March 2, 2021 subpoena of her was not satisfactory and that he should not be entitled to seek that information from S.M..
He affirms that defendant must have the opportunity to "real all of the additional largesse [ emphasis in the original ]" plaintiff receives from S.M.. He contends that it is incredulous for S.M. to claim that he is being "harassed" when he "has chosen to interject himself into this matrimonial action" by becoming engaged to defendant's wife.
On August 10, 2021 at 9:09 a.m., Ms. Rabin filed an eleven (11)-page affirmation, which included additional arguments in opposition to the trial subpoena. Defendant's counsel filed an affirmation approximately two (2) hours later seeking a brief adjournment to file a sur-reply to Ms. Rabin's affirmation in order to address the new legal arguments raised therein. The Court heard extensive argument on the application for an adjournment on August 10, 2021 and granted defendant's counsel's request to submit a limited sur-reply which he filed on August 12, 2021. Ms. Rabin filed a sur-sur reply on August 13, 2021 at 5:00 p.m.. The cross-applications (mot. Seq. #28 and 29) were marked decision reserve as of that time.
Trial Subpoena of Mr. S.M.
Immediately thereafter, defendant filed a trial subpoena duces tecum and ad testificandum pursuant to CPLR 2305(b) for S.M. to appear for testimony on August 17, 2021; however, the Court, in its own hand, noted that the witness should contact the Court as to the date to appear so that the Court could schedule his appearance after plaintiff's direct case and defendant's cross-examination of plaintiff was concluded. It is undisputed that S.M. is plaintiff's fiancé.
Defendant's counsel argues that the only disclosure methodology available under the unique facts and circumstances was a trial subpoena pursuant to CPLR 2305(b) inasmuch as defendant was unaware of plaintiff's relationship with S.M. until September 2020, well after the Note of Issue was filed in December 2019. Here, defendant's counsel argues, there was no pre-Note of Issue opportunity to conduct discovery of S.M. because his existence was not known.
Imputation of Income
A central issue of contention between the parties in this litigation are the parties' cross claims that the other is not being transparent about their income. Plaintiff contends that the lifestyle the parties enjoyed during the marriage, and which defendant allegedly still enjoys, was funded by his work on behalf of family businesses. She contends that defendant's family are engaged in a complex web of income sheltering businesses and that the family, in effect, "pays" expenses on behalf of defendant for his work instead of paying him a direct salary. She argues that these payments should be imputed to defendant as income because, she alleges, these financial benefits were received by defendant during the marriage as substitution for direct income payments to defendant for working for multi-million-dollar businesses owned by his family.
It is undisputed that during the final years of the marriage plaintiff started a clothing boutique; however, she contends now that she does not have this business. Defendant calls for income to be imputed to her based upon her alleged discontinuance of this business (and alleged "donation" of approximately $200,000 in merchandise) after the commencement of the divorce action. The record to date is replete with allegations by both sides as to financial "anomalies": these certainly must be considered by the Court in a final determination after all of the testimony is heard and considered which may have wide ranging implications.
Promissory
It is undisputed that S.M. has provided financial support to plaintiff to pay for certain financial obligations during this litigation: he contends that this support was all by loan secured by promissory notes. At this time, six (6) promissory notes securing more than $100,000 paid by S.M. on behalf of plaintiff have been proffered.
In her affirmation in support of the motion to quash the subpoena, Ms. Rabin details that the promissory notes provided are for:
(i) Records of S.M.'s loan to plaintiff for her payment of rent for the period August through November 2020, including a signed promissory note between Mr. S.M. and plaintiff, as well as a JP Morgan statement showing a wire transfer from Mr. S.M. to plaintiff in the amount of $27,200, dated November 17, 2020; and
(ii) Records of Mr. S.M.'s loan to plaintiff for her payment of her counsel fees owed to Coffinas & Lusthaus P.C. in the present matrimonial action, including signed promissory notes between Mr. S.M. and plaintiff, as well as two JP Morgan statements showing wire transfers from Mr. S.M. to plaintiff's attorneys in the amounts of $40,000, dated January 22, 2021, and $25,000.000, dated March 9, 2021; and
(iii) Records of Mr. S.M.'s three loans to plaintiff for her payment of her counsel fees owed to Delaware counsel, Ted Kittila, Esq., incurred by plaintiff in her Delaware action, including three signed promissory notes between Mr. S.M. and plaintiff, dated November 17, 2020, in the amount of $32,992.73, January 5, 2021 in the amount of $18,893.97, and March 9, 2021 in the amount of $10,445, as well as three JP Morgan statements showing three wire transfers from Mr. S.M. to plaintiff's Delaware attorney, as follows: $32,992.73, dated September 18, 2020, $18,893.97, dated January 5, 2021, and $10,445 dated March 9, 2021
In his affirmation, defendant counsel argues that the need for the financial receipts for any engagement ring is necessary because it will show "the approximate time" when the "financial support from S.M. to Jennifer D. commenced." He also contends that "a substantial symbol in the form of an engagement ring would be enlightening and relevant to the Defendant's 'lifestyle' argument going forward." He argues that while "lifestyle" or "standard of living" are statutory factors the Court must consider in maintenance and child support in this case, he contends, the plaintiff and the parties' children all "enjoy the same lifestyle now that they always enjoyed - evidenced by Plaintiff's failure for the past five years to seek an increase" in the pendente lite support from defendant.
Ms. Rabin, in her affirmation in support of the motion to quash dated July 29, 2021, contends that the non-parties' testimony and financial records related to payment of expenses on plaintiff's behalf have" for the most part, where relevant, been previously produced by plaintiff, and the de minimis remainder of which are largely, if not totally, irrelevant and immaterial to the disputed issues between plaintiff and defendant in this action."
The Court agrees with defendant's counsel that the issue of what, if any, money, goods and services plaintiff receives from relatives and friends is a factor that the Court may consider under DRL 240(1-b)(b)(5)(iv)(d). As such, the issue raised is not, as Ms. Rabin contends, irrelevant to the issues between the parties which include maintenance, child support and counsel fees. The question before the Court is whether a trial subpoena on a non-party for documents related to that issue is the appropriate source prior to establishing the factual predicate. As such, the Court will not quash the subpoena for S.M.'s testimony; however, the Court will limit the inquiry as detailed herein below detailing the parameters, at this time, of the inquiry into S.M.'s financial support, if any, of plaintiff.
Discovery
The Court notes that as early as in the March 6, 2017 decision, the Court questioned "whether it is appropriate to preclude the parties from submitting evidence pertaining to finances based on allegations by both parties of their respective alleged failure to provide discovery and respond to subpoenas." At that time, the Court noted that "only upon consent of the parties, the issue of discovery can be sent to a privately retained referee, something that has been referenced and encouraged by the Court numerous times on the record." The Court further noted that "This case must move forward and it appears the only way this will happen, and for the Court to determine what discovery has been exchanged and what is outstanding, is to conduct a hearing and finalize discovery so the note of issue can be filed and the parties can have their day in court."
THE LAW
Contempt
It is well-settled in the Second Department that a motion for civil contempt is in "the sound discretion of the court, and the movant bears the burden of proving the contempt...." El-Dehdan v. El-Dehdan, 114 A.D.3d 4 (2d Dept. 2013) affirmed 26 N.Y.3d 19 [2015]. "To prevail on a motion to hold another in civil contempt, the moving party must prove by clear and convincing evidence '(1) that a lawful order of the court, clearly expressing an unequivocal mandate, was in effect, (2) that the order was disobeyed and the party disobeying the order had knowledge of its terms, and (3) that the movant was prejudiced by the offending conduct'" (Matter of Fruchthandler v. Fruchthandler, 161 A.D.3d 1151, 1153 (2d Dept. 2018), quoting El-Dehdan v. El-Dehdan, 114 A.D.3d at 16 [internal quotation marks omitted], affd 26 N.Y.3d 19). "'To satisfy the prejudice element, it is sufficient to allege and prove that the contemnor's actions were calculated to or actually did defeat, impair, impede, or prejudice the rights or remedies of a party'" (Matter of Fruchthandler v. Fruchthandler, 161 A.D.3d at 1153, quoting Astrada v. Archer, 71 A.D.3d 803, 806-807 (2d Dept. 2010).
The Court notes that neither defendant nor his attorney allege that there was not a lawful court order directing defendant to pay KLG on or before June 10, 2021 nor do they allege that defendant did not have knowledge of that order. They concede that defendant did not pay KLG until nearly two (2) months after the payment date ordered by the Court. Defendant, in effect, argues that the Court cannot hold him in contempt because he unilaterally worked out a different payment schedule, not on consent of the Court or on consent of the plaintiff, and that he eventually paid KLG.
The Court finds that defendant's unilateral withholding of payment of KLM on or before June 10, 2021 violated a lawful order of the Court (which defendant does not dispute); 2) that defendant withheld payment despite having full knowledge of the order to pay KLG in full on or before June 10, 2021 (again, defendant never disputed this or alleged that he did not have full knowledge of the order); and 3) defendant's failure to comply with the order did defeat, impair, impede, or prejudice the rights or remedies of plaintiff. The Court defers determination of the final issue - defendant's implied defense that he was unable to pay the full fees because he did not have access to financial resources to do so - until after the trial on the financial issues between the parties when the financial circumstances of the parties have been adjudicated after sworn testimony and examination of the evidence in the record. At that time, the Court will be able to determine if defendant had financial resources to pay the outstanding sum due and owing to KLG as of June 10, 2021 and if appropriate issue a second contempt citation against the defendant.
June 3, 2021 Subpoena of Non-Party Mr. J.D..
CPLR 3102(d) provides:
(d) After trial commenced. Except as provided in section 5223, during and after trial, disclosure may be obtained only by order of the trial court on notice [emphasis added].
It is well-established that the Court may quash a discovery subpoena served on a non-party during a trial where there was no compliance with CPLR 3102(d) (see generally Luna Light, Inc. v Just Indus, Inc., 137 A.D.3d 1228, 29 N.Y.S.3d 410 [2 Dept., 2016]). Plaintiff's counsel does not dispute that she did not comply with CPLR 3102(d) inasmuch as she never provided notice to the non-party or his attorney. The June 3, 2021 subpoena is procedurally defective inasmuch as it was obtained ex parte. Motion sequence #30 seeking an order quashing the June 3, 2021 subpoena is granted. As such, motion sequence #27 seeking contempt against non-party J.D. for failure to comply with the (defective) subpoena must be denied.
The Court need not reach the non-parties' other objections to the June 3, 2021 subpoena, to wit: the alleged defective service for failure to personally served; the issue of whether the discovery sought in the subpoena was overbroad; is alleged non-compliance with CPLR 2308(b-1); the alleged non-compliance with 202.7 of the uniform rules requires attorneys to confer in good faith to resolve the issue prior to engaging in motion practice; or the issue of whether an award of reasonable costs incurred for searching for the requested documents and production of same.
The Court categorically does not adopt plaintiff's contention that the "only" way the non-party J.D. could have learned about the subpoena was if he was personally served and that if he knew about the subpoena then personal service as required under CPLR 2302(a) was de facto accomplished.
The Court further notes that the Court previously ruled that any further financial discovery between the parties during the trial was not permitted. The Court will not allow plaintiff to circumvent this ruling or attempt to continue with discovery by way of a defective discovery subpoena after trial has commenced. The parties had a full and fair opportunity to seek any relevant discovery and depositions during the more than four (4) years between the commencement of this action in September 2015 and the filing of the Note of Issue in December 2019. The parties chose to ignore discovery protocols and enforcement during the discovery phase of this litigation. The Court notes that neither party at any time made any application to set aside the Note of Issue. The parties are bound by their discovery. The Court notes that non-party witnesses could be called as witnesses despite discovery being closed.
Jewelry: "Engagement" Ring
The Court rejects defendant's contention that he must ascertain the existence of an engagement ring to establish whether plaintiff is engaged to S.M.: the Court notes, practically, that the existence and/or value of a ring does not establish the validity of an engagement. Many couples in New York State get engaged - and even marry - without any ring at all.
Plaintiff contends that any engagement ring remains S.M.'s property until such time as they may actually marry in the future so, until that time, the existent of an "engagement" ring or jewelry received by her from S.M. is not discoverable by defendant. In support, plaintiff relies on well-established New York case law that holds that where both parties are unmarried and there is no impediment to their marriage an engagement ring remains the donor's property until such time as the donor and recipient marry (see Wilson v Riggs, 243 AD 33 [1 Dept., 1934]; see also Beck v Cohen, 237 AD 729 [1 Dept., 1933]; see generally Gaden v Gaden, 29 N.Y.2d 80, 85 [1971]). In those cases, where neither party is married when the engagement ring (or any other transfer) is given "in contemplation of marriage" the donor may seek to recover the ring pursuant to Civil Law 80-b. In those cases, the Courts have long held that actions are permitted for the recovery of chattel when the sole consideration for its transfer was a contemplated marriage which has not occurred (see generally Gaden v Gaden, 29 N.Y.2d 80, 85 [1971]; see also Rambod v Tazeh, 184 A.D.3d 722, 125 N.Y.S.3d 449 [2 Dept., 2020]).
The Court notes that in Gaden v. Gaden, the property in question were parcels of property which were transferred to a third-party. In Gaden, the Court of Appeals found that these transfers were given in contemplation of marriage. In reaching that holding, the Court of Appeals noted that Civil Law 80-b "[t]here is nothing in the statute itself that requires a transfer directly from the donor to his fiancée, nor does it seem that such a requirement should be imposed. Many gifts, given in contemplation of marriage, are transferred directly from a third party to a donee without the donor's ever gaining possession of them." The case law relating to gifts in contemplation of marriage does not just apply to the tradition of "engagement rings".
The Court rejects S.M.'s application to quash that portion of the trial subpoena requesting information about the value of jewelry provided to plaintiff and grant's defendant's application for production of financial records related to any jewelry S.M. may have given to plaintiff. The trial court herein is bound by the New York State Court of Appeals ruling in Lowe v Quinn where the Court of Appeals ruled that an "engagement ring" does not remain the property of the donor where the recipient of the ring is already married not even where the married individual contemplated divorce because an engagement under such circumstances violates public policy (see Lowe v Quinn, 27 N.Y.2d 397, 318 N.Y.S.2d 467 [1971]; see also see Raji v Nejad, 256 A.D.2d 12 [1 Dept., 1998]). In Lowe, the plaintiff, a married man, sued for return of a diamond "engagement ring" which he gave the defendant upon her promise to wed him when he his pending divorce was finalized. A month after receiving the ring, defendant indicated that she "had 'second thoughts' about the matter and had decided against getting married" [ Lowe v Quinn, 27 N.Y.2d 397, 399 [1971]. The Court of Appeals found that the plaintiff - a married man - was not entitled to return of the ring or its value and found that the Court "should not lend its aid in furthering such a transaction" where the party was married when the "transaction" took place as it violated public policy (id at 401).
The Appellate Division, Second Department held in Lipschutz v. Kiderman that "a party not under any impediment to marry may maintain an action to recover property, such as an engagement ring, given in contemplation of marriage where the contemplated marriage does not come to pass [however], the giving of such property with the knowledge of the existence of an impediment to a lawful marriage will preclude such recovery" (76 A.D.3d 178, 183 [2 Dept., 2010]). In Lipschutz, the plaintiff gave the defendant a six-caret diamond ring, which he purchased for the sum of $100,000 "engagement" ring and, thereafter, the parties "participated in an Orthodox Jewish wedding ceremony as bride and groom" (id. at 179). It was undisputed that "[a]t the time of the religious wedding ceremony, the defendant was still legally married to another man, although she had obtained a" Get" (id.).
Subsequently, plaintiff sought the return of the ring because he alleged that the religious marriage to defendant was void inasmuch as defendant was still married to another man. Defendant opposed plaintiff's application claiming that he knew she was in the process of getting a civil divorce when he gave her the ring and that he had even spoken to her divorce attorney and sat "in the courtroom audience to monitor" her divorce proceeding [ id at 182]. In support of her application, defendant provided an affirmation of her matrimonial attorney as to plaintiff's participation in defendant's matrimonial action. The Appellate Division, Second Department, relying on the Court of Appeals decision in Lowe v. Quinn, ruled that a donor of an "engagement ring" where it is given "with the knowledge of the existence of an impediment to a lawful marriage" precludes recovery of the gift (id at 183).
The Court notes that S.M.'s attorney attends, virtually, the virtual trial in this action, as well.
The Appellate Division, Second Department remanded the issue to the trial court on the "triable issue of fact as to whether the plaintiff knew of an impediment to the proposed marriage at the time he gave the defendant the diamond ring" (id at 188).
Here, there is no allegation or defense raised that S.M. did not know that plaintiff was married when he provided her with any jewelry. As such, any jewelry given by S.M. to plaintiff is not an "engagement" ring under New York case law as it is well-established that to allow an engagement ring prior to divorce would violate public policy. Here, regardless of their religious marriage status, neither party contests the fact that they are still married under New York State law (see Lipschutz, supra; see also Leemon v Wicke, 216 A.D.2d 272, 627 N.Y.S.2d 761 [2 Dept., 1995]).
Under the unique facts and circumstances presented here, the value of any jewelry or other gifts given by S.M. to plaintiff is ripe for defendant's inquiry as it relates, inter alia, to plaintiff's access to financial resources. This Court must, at the conclusion of trial, determine what, if any, award of counsel fees is appropriate herein and, in doing so, the Court must consider the relative financial circumstances of the parties (DRL 237). Additionally, the Court is mindful of the statutory factor of considering lifestyle, including "gifts", in imputing income for the purposes of calculating support [DRL 240(1-b)(b)(5)(iv)(D)].
S.M.'s counsel contends that the Court need not consider any "baubles" S.M. may have given to plaintiff: the Court will be able to ascertain the relevance whether any gifts given by S.M. to plaintiff were mere "baubles" or more substantial gifts whose value may be considered by the Court on the financial issues presented, including counsel fees, where it is well-established that it is within the Court's discretion to consider, inter alia, "the relative financial circumstances of the parties" (see Cravo v Diegel, 163 A.D.3d 920, 83 N.Y.S.3d 91 [2 Dept., 2018]; see also Weiss v Nelson, 196 A.D.3d 722, 152 N.Y.S.3d 143 [2 Dept., 2021]; see also Kaufman v Kaufman, 189 A.D.3d 31, 133 N.Y.S.3d 54 [2 Dept., 2020); DRL 237(a); see also Johnson v Chapin, 12 N.Y.3d 461 [2009]. Certainly, the existence or not of any jewelry give to plaintiff is not dispositive of any issue: what weight the Court may or may not ultimately give to any value of jewelry or other financial value plaintiff may have received is for the trial court to determine after weighing all of the testimony and evidence when considering a final determination as to the relative financial circumstances of the parties.
In making this ruling, the Court does not adopt defendant's argument that the Court should, now, consider reducing defendant's child support obligation for the three (3) unemancipated children based on a potential scenario where plaintiff may, in the future, have different financial obligations is misplaced. Certainly, if plaintiff remarries, it will terminate any maintenance award; however, plaintiff's engagement does not dissipate defendant's obligation to provide support to his children nor is S.M. responsible to support them.
Expenses/Lifestyle: Plaintiff's Burden
Full financial disclosure between the parties is well-established in the case law (see generally Pathak v Shukla, 109 A.D.3d 891, 971 N.Y.S.3d 891 [2 Dept., 2013]). Additionally, DRL 240 and the case law are clear: the Court may, in its discretion, impute income to a party where it is demonstrated that they are receiving recurring money, goods and services from relatives and/or friends (DRL 240(1-b)(b)(5)(iv)(D); see also, Pilkington v. Pilkington, 185 A.D.3d 844, 127 N.Y.S.3d 523 [2 Dept., 2020]). This is, essentially, because the non-party (the friend or family) have assumed expense on behalf of the party.
However, the burden remains on plaintiff to establish her expenses and the source of payments to support those claimed expenses. This Court has, as hereinabove detailed, made rulings on that very issue (see April 19, 2021 transcript). Plaintiff's case must first establish a record that forms a predicate for seeking the document discovery defendant seeks from S.M.. For plaintiff to establish expenses she also has the burden of establishing the source of funds used to meet those expenses. If plaintiff cannot establish her case for lifestyle then the burden does not shift to defendant to provide that lifestyle by way of non-party witnesses.
Certainly, if plaintiff were to claim a certain monthly expense and if a non-party is claimed to be the source of funding that expense then the issue may be ripe. Certainly, if there is testimony of direct assumption of plaintiff's financial obligations is elicited at trial, that may be a predicate for calling for production of underlying documents; however, on April 19, 2021, the Court made certain rulings as to preclusion related to claimed expenses that were not supported by underlying documentation. It is not defendant's burden to prove the expenses alleged by plaintiff: that remains her burden. If she is unable to substantiate her claims, the Court will make a determination as to credibility and whether the record supports considering the claims when making any final awards.
It appears, at this time, that the issues defendant seeks to obtain from the non-party are more properly the subject of his cross-examination of plaintiff: if any expenses are being paid on behalf of plaintiff she is certainly able to answer that question and should be the initial party called to address the issue. Likewise, if plaintiff seeks the Court to consider alleged expenses claimed on her affidavit of net worth she has been notified that she must substantiate them with supporting financial documentation which will show whether and how she pays for the claimed expense. Based upon that cross-examination, if the necessary predicate is established, defendant may seek to renew any application for production from a non-party. For example, if plaintiff claims that an alleged expense is paid by the non-party then financial documentation related to those delineated expenses may be sought. At this time, there has been no predicate established to indicate that plaintiff claims expenses to which she has not demonstrated supporting documentation for payments nor has she asserted that S.M. pays any of those claimed expenses. For example, there is no representation that S.M. pays her streaming entertainment services or leases a car for her exclusive use.
The Court notes that at this time, the issue of the alleged failure of defendant to comply with CPLR 3102(d) - prior notice required to be provided to non-party where discovery is sought post-Note of Issue - is premature. That portion of the subpoena seeking S.M.'s witness testimony is upheld and the need for any document discovery may be renewed if the testimonial predicate is established at trial based on that testimony. The Court will not allow a party to attempt to use a trial subpoena to continue discovery.
Testimony Regarding Promissory
The Court denies S.M.'s application to quash the trial subpoena for his witness testimony. The promissory notes have been offered into evidence by plaintiff and defendant has the right to call S.M. as a witness as to relevant questions surrounding those promissory notes, which defendant has raised in his application. Certainly, that testimony is relevant as to plaintiff's request for an award of counsel fees inasmuch as some of the funds secured by the promissory notes are for payment of counsel fees in this litigation. If, after plaintiff's testimony there is a predicate for renewing the call for specific document production of S.M. related to other expenses the Court may hear that application at the appropriate time.
The Court notes that some of the funds secured by the promissory notes appear to be related to legal fees incurred in a separate legal action.
"Generosity" In Lieu of Salary/Assumption of Financial Obligation vs. Passive Benefits
The Court rejects defendant's attempt to conflate the facts and circumstances presented between the alleged ongoing financial compensation provided by defendant's family businesses during the parties' marriage in lieu of payment for services rendered by defendant (see Ivani v Ivani, ; see Askew v. Askew, 268 A.D.2d 635 [3 Dept., 2000]) with passive lifestyle benefits plaintiff may enjoy by proxy to her relationship with a non-party commenced during the trial where there is no obligation that those passive benefits continue and/or may cease at any time (see Huebscher v. Huebscher, 206 A.D.2d 295 [1 Dept., 1994]). This is an especially relevant distinction in the case at bar where the defendant has been recalcitrantly unreliable to providing consistent and timely financial support to plaintiff (see Isaacs v. Isaacs, 246 A.D.2d 428 [1 Dept., 1998]).
Similarly, the Court notes defendant's unique argument that the Court should impute income to plaintiff based upon promissory notes she incurred, in large part it appears at this stage of the litigation, for payment of counsel fees to litigate this divorce where defendant himself has previously been found in contempt of court for his failure to pay court-ordered counsel fees on behalf of plaintiff. The Court is mindful of plaintiff's contention that but for defendant's recalcitrance in providing his court-ordered pendente lite support in a timely manner she would not be forced to rely on loans from others. The record reveals that plaintiff has repeatedly had to seek judicial intervention to get defendant to provide the basic support payments which are alleged to have consistently been made late.The Court is likewise mindful of plaintiff remaining unemployed and the allegation that she donated hundred's of thousands of dollars of merchandise from her former clothing business during this litigation. The Court is faced with many concerning financial choices by these parties.
There is no allegation here that plaintiff is an employ of S.M. and that she receives lifestyle benefits from him in lieu of income for that employment. Certainly, if the trial record establishes that a non-party has assumed direct payment for a party's financial obligations, such as paying for groceries, utilities, streaming services, rent, where there is no obligation to do so (in lieu of salary, for example) or where there is no obligation to repay said assumption (promissory notes, for example) the payment may be considered by the Court and, in its discretion may be imputed as income for purposes of calculating support. Here, plaintiff has disclosed the source of funds for some of these expenses as received as loans from S.M. secured by promissory notes. This fact differentiates the case at bar from many of the cases cited by defendant's counsel where a party was living "rent free": here, even if the source of funds to pay her rental expenses originated with S.M., due to the promissory notes, the ultimate financial obligation remains plaintiff's. Certainly, defendant's counsel will have the opportunity to question S.M. as to the promissory notes if he believes there is a basis to question the validity of same.
In his affirmation dated August 12, 2021, defendant's counsel contends that S.M. has "placed his financial support to Plaintiff at issue" because of the promissory notes submitted into evidence. The Court does not adopt this view that because a non-party loans money to a party embroiled in a divorce litigation, where that loan is secured by promissory notes that they, de facto, further open their own private financial records to the litigation. He also contends that plaintiff has not denied that she receives financial support from S.M.; however, defendant's counsel has not established that he has explored this line of questioning of plaintiff herself under oath before attempting to question S.M.. Certainly the initial inquiry must be with plaintiff. Additionally, in his affirmation dated August 12, 2021, defendant contends that he "does not want the non-party witness to produce documents in discovery. Defendant seeks S.M.'s testimony and specific documents that evince his support of Plaintiff." This appears inconsistent. Certainly, defendant is entitled to call a non-party as a witness. Depending on the testimony elicited, documents may be called for where appropriate but the Court will limit the inquiry not to infringe on S.M.'s personal finances unrelated to plaintiff.
In his affirmation dated August 12, 2021, defendant's counsel affirms that the record establishes that plaintiff uses S.M.'s credit cards. In Pilkington v. Pilkington, the Appellate Division, Second Department held that it was not an improvident use of discretion for the trial court to impute income to a party for financial contribution received from a fiancée (185 A.D.3d 844 [remanded for calculation as to imputation]). If, after plaintiff's case, the record reveals that she is funding her living expenses from access to her fiancé's financial resources the Court may consider that in any imputation of income analysis (see generally Pilkington v Pilkington, 185 A.D.3d 844, 846 [2 Dept., 2020]. The Court must also consider if this is necessary due to the failure or acts of the other party: if defendant's inconsistent or untimely financial support was a factor in the need for someone else to "bridge" the financial gap created by defendant so that plaintiff could pay living expenses for herself and the parties' children.
As such, the Court hereby grants that portion of Ms. Rabin's application for a protective order to the extent that any document production, at this time, to include only direct payments that he makes to or on behalf of plaintiff for her financial obligations and any financial records of financial obligations he has assumed on her behalf, such as credit card charges, debit card purchases, etc. that she has incurred at his expense where there is no obligation for repayment. At this time, there has been no affirmative representation by S.M. as to whether the promissory notes comprise the totality of the direct financial support he provides to plaintiff because he chose not to provide a supporting affidavit to his application to quash the subpoena. The Court also declines to adopt S.M.'s attempt to brushing aside any obligation he must respond to the trial subpoena to testify asserting in effect that the Court should not concern itself with "baubles, chocolates and flowers" he may provide to plaintiff.
Defendant's counsel may renew the call for additional production of limited documentary evidence, as appropriate, based upon testimony elicited at trial. In reaching this decision, the Court has considered the apparently undisputed representation that plaintiff's relationship with S.M. began post-Note of Issue. As such, some leeway on the issue is appropriate under the unique facts and circumstances.
Sanctions
Ms. Rabin contends that S.M. is entitled to sanctions and counsel fees for having to defend against a subpoena that was made in clear "retaliation" for the subpoena served on defendant's brother. The Court does not find that sanctions are warranted at this time. Sanctions are warranted only when a party or attorney has abused the judicial process or has caused the unnecessary expense of the court's resources to respond to a wholly frivolous motion, one that is completely without merit in law and which cannot be supported by any reasonable argument (see 22 NYCRR 130-1.1; see also Gosset v Firestar, 224 A.D.2d 487, 637 N.Y.S.2d 779 [2 Dept., 1996]). That is not the case here: the Court declines to grant sanctions at this time. The Court also does not find that an award of counsel fees is appropriate at this time inasmuch as the Court does not find that the trial subpoena issued to the non-party witness was frivolous or completely without merit or was undertaken solely to delay, prolong or harass the non-party (see 22 NYCRR 130-1.1; see generally Miller v Miller, 96 A.D.3d 943, 947 N.Y.S.2d 541 [2 Dept., 2012]).
CONCLUSION
Motion sequence #26 is granted to the extent.
Motion sequence #27 is denied.
Motion sequence #28 is granted to the extent.
Motion sequence #29 is granted to the extent.
Motion sequence #30 is granted to the extent.
All relief not granted herein is denied.
This shall constitute the decision and order of the Court.