Opinion
2017/11362
06-07-2018
C.F., Plaintiff, v. D.M.F., Defendant.
Jennifer Fazio, Esq., Rochester, New York, Attorneys for Plaintiff Gregory Mott, Esq., Rochester, New York, Attorney for Defendant
Jennifer Fazio, Esq., Rochester, New York, Attorneys for Plaintiff
Gregory Mott, Esq., Rochester, New York, Attorney for Defendant
Richard A. Dollinger, J.
Separate property in a New York divorce is like a lime dropped into a summer cocktail: it remains "separate" but its output—the squeezed pulp of additional generated income—may provide a sweet or bitter taste—depending on which spouse is sipping the concoction—in the calculation of a maintenance award.
In this matter, during the initial phase of settlement discussions, defendant/husband, by notice of motion, asks the court to declare his Social Security Disability benefits and his Worker's Compensation benefits "separate property" under the Domestic Relations Law. DRL § 236 [B] [1] [d] [1](separate property is that "acquired before marriage or ... by bequest, devise, or descent, or gift from a party other than the spouse"). If the benefits meet that definition, then he argues that this Court, in calculating his income for purposes of a maintenance award, should not consider that additional monthly income in any calculation in this pending divorce case. After all, he notes, if his wife shares in the proceeds via an increase in her maintenance, she is getting through the back door—an award of maintenance enhanced by the income from the separate property—what she could not get through the front door—an equitable share of his separate property. The wife disagrees, claiming that regardless of whether these benefits are separate property, that income, paid to the husband, must be included in the calculation of spousal maintenance to benefit the wife in a long term marriage of over 46 years.
Initially, there is no dispute that the workers compensation and disability payments are the husband's separate property. Domestic Relations Law § 236 (B) (1) (d) (2) provides that "compensation for personal injuries" is separate property not subject to equitable distribution and disability payments constitute compensation for personal injuries. D'Ambra v. D'Ambra , 94 AD3d 1532, 1535 (4th Dept 2012) ; Miceli v. Miceli , 78 AD3d 1023, 1025 (2d Dept 2010) ; Masella v. Masella , 67 AD3d 749, 750 (2d Dept 2009) (the proceeds of the defendant's disability insurance policies are his separate property and the proceeds of the defendant's Social Security disability benefits also are his separate property, and are not subject to equitable distribution). Because these assets are the husband's separate property, this Court cannot equitably distribute the corpus of such funds or allocate a percentage of these funds to the wife. Importantly, the language is these decisions requires further analysis because the appellate divisions in these instances held that the "proceeds" from these special forms of separate property were also separate property. Id. at 1025 ; see also Gann v. Gann , 233 AD2d 188 (1st Dept 1996).The declaration that the "proceeds" are separate property seems to suggest that when the cash payments are received by the recipient spouse, the funds remain his separate property and are not subject to distribution—through any equitable mechanism—to the wife.
But the New York courts have routinely held that mere fact that the source of the income is separate property does not prohibit this Court from considering the annual income from these funds as "income" from which maintenance can be calculated. The concatenation of a series of provisions of the Domestic Relations Law guides the courts in resolving this question. Section 236 (B) (5–a) of the statute provides the formula to calculate the presumptively correct temporary maintenance award amount. ‘Income’ for purposes of the maintenance formula is defined in the Child Support Standards Act which specifies that disability benefits must be included in gross income. DRL § 240 [1–b ] (b) (5) (iii). In Carl v. Carl , 58 AD3d 1036 (3d Dept 2009), the Third Department confirmed:
The principal argument made by the husband on this appeal is that any calculation of maintenance should not include the income that he receives for his disability. We disagree. Among the factors to be considered in determining maintenance is the total amount of each party's income, including that which each receives from separate property that is not otherwise subject to equitable distribution ... Despite the husband's claim to the contrary, the fact that a portion of that income is derived from an asset determined to be separate property not subject to equitable distribution does not render that income immune from consideration in calculating a party's maintenance obligation.
Id at 1037. The New York courts have uniformly reiterated that conclusion. See Tiger v. Tiger , 155 AD3d 1386, 1388–89 (3d Dept 2017) ; Owens v. Owens , 107 AD3d 1171, 1174 (3d Dept 2013) (although "separate property itself is not subject to equitable distribution ..., separate property is taken into account in maintenance determinations..."); Ashley v. Worsell , 66 AD3d 1256 (3d Dept 2009) (the Family Ct Act provides that income received from workers' compensation shall be included in a party's gross income for the purposes of calculating his or her obligation to pay child support); Costanzo v. Costanzo , 778 NYS 2d (4th Dept 2004)(error to exclude workers compensation and social security disability benefits from income in support matter); Dachille v. Dachille , 43 Misc 3d 241 (Sup. Ct., Monroe Cty, 2014) (statute provides that disability benefits, veterans' benefits and pension benefits must be included in gross income). The Second Department has also held that separate property assets may be a source of family support. Cody v. Cody–Evans , 291 AD2d 27 (2nd Dept 2001)
Despite this authority, the husband argues that the disability and workers compensation awards serve two purposes: they represent payment for lost wages or income and also an award for personal injuries. The husband, in discussions with the Court, suggests that only the portion of the benefits that supplements lost wages should be considered income for the maintenance calculation. See Ashley v. Worsell , 66 AD3d 1256 (3d Dept 2009) (husband unsuccessfully argued that only the lost wage portion of a disability payments should be considered income). As a matter of law and fact that analysis, rejected by the Third Department in Ashley v. Worsell , fails here as well. If the Legislature had intended that only the lost wage component of disability or workers compensation benefits would be available to finance maintenance for a spouse, then it would have made that limitation clear in the statute. The statute makes no such distinction: it includes the full amount of those benefits as available income. Factually, the argument also fails because there is no evidence that the insurance funds, from which the benefits originate, divided the annual benefit into a wage supplement and a personal injury award. Without some allocation of the payments from the benefit source, this Court—in the absence of any legislative guidance—declines to even consider such an allocation.
Under these circumstances, the husband's motion for a declaration that the workers compensation payments and disability payments may not be consider income in the calculation of the his wife's maintenance award is denied. The Court declares those payments to be income under the Domestic Relations Law and hence, they are available for the Court's consideration in an award of maintenance to the wife. The resolution of the appropriate amount and duration remains for further analysis as those conclusions are committed to the sound discretion of this Court and each case is to be resolved upon its own unique facts and circumstances." Brody v. Brody , 137 AD3d 830, 831 (2016) ; see Grumet v. Grumet , 37 AD3d 534, 535 (2007).
The summer cocktail is drained: with the table set, trial awaits.