Opinion
No. 2011–08834.
2012-07-23
G.R.P., Plaintiff, v. L.B.P., Defendant.
Gregg M. Tirone, Esq., Rochester, for Plaintiff. Michael T. Hagelberg, Esq., Rochester, for Defendant.
Gregg M. Tirone, Esq., Rochester, for Plaintiff. Michael T. Hagelberg, Esq., Rochester, for Defendant.
RICHARD A. DOLLINGER, J.
When a couple leads a lavish lifestyle, albeit almost exclusively at the sufferance of the husband's parents, complex questions arise when a divorce ensues and the husband and wife go their separate ways. The circumstances in this case, not unique in New York, challenge the court to determine what income and assets, financed almost exclusively by a parent, are imputable to the son for purposes of supporting his now estranged wife and his children. Regarding child support, Domestic Relations Law § 240(1–b)(f) requires this court to consider the following: the financial resources of both parents, the needs of the child, the standard of living the child would have enjoyed had the marriage not been dissolved, non-monetary contribution that the parents will make to the care and well-being of the child, and any other factor which the court determines to be relevant to the case. The family's lifestyle is also factor in deciding temporary maintenance. DRL § 236(5–a)(c)(2)(iii) (standard of living of the parties's during the marriage); Baron v. Baron, 71 AD3d 807 (2nd Dept.2010); McAuliffe v. McAuliffe, 70 AD3d 1129 (3rd Dept.2010); PP v. KOP, 926 N.Y.S.2d 346 (Sup.Ct. Nassau Cty.2011) (pre-separation standard can be a factor in determining the amount of maintenance).
Married for twenty years, the couple have three children. During their marriage, it is undisputed that the parities lived a substantial lifestyle. They lived in a home valued in excess of $300,000, belonged to a country club and health clubs, vacationed annually in resort communities including skiing in Colorado and winters in Florida. It is undisputed that this way of life has persisted throughout most of the couple's marriage. However, the lifestyle always exceeded the couple's earned income. The husband holds two undergraduate degrees; the wife has one. The husband had been employed as a photographer in a business owned by his father, but the business stalled and was closed in the last 18 months. In his statement of net worth before this court, the husband identifies $8,470 in annual income as of July 2011. The wife, in her statement of net worth submitted in the same period, lists $25,000 in income from employment at Paychex. The husband has never earned significant sums. His social security report indicates that his annual earnings in the last decade have never exceeded $39,000. On the average, his yearly income from 2000–2009 was approximately $35,000. If he paid his income and payroll taxes for those years, his net income would have been less than $30,000.
The degree to which the couple's lifestyle was subsidized by outside sources is dramatically revealed by an undisputed analysis of the family expenses. The husband in his statement of net worth, lists monthly expenses of $7,901 or $94,812 annually and asserts that he is “primarily responsible for expenses of our family.” The wife, estimates the family expenses at $8,988 monthly or more than $107,000 annually. The costs reveal that the couple were able to buy a $30,000 automobile for the husband in 2007, but importantly, does not include any expenses for the college education of the oldest child, who attends Marquette University, a cost which must further increase the family's monthly expenses.
Neither party explained, in their presentation to the Court, how the child's college education is financed. What is apparent, in a review of the respective net worth statements, is that neither parent is paying anything for college as they have no unclaimed income to support college payments. There is no evidence of 529 college accounts or other deferred income accounts to support the college expenses.
The husband lists as separate property a margin account in the amount of $143,252, which is based on an annual gift from his mother. The husband's only other significant asset is another gift in the form of an Individual Retirement Account valued at $32,378. Thus, according to his statement of net worth, the husband, after 20 years, has accumulated no individual assets except those bequeathed to him by his parents. The only conclusion is that he has never saved any of his own money, and that his parents have heavily subsidized his lifestyle. His assertion that his parents “helped us from time to time” seems to be understated. The wife's statement of net worth is further evidence of the same. She has only $1,000 in a savings account, an estimated $10,000 in the cash surrender value of a life insurance policy, and $1,900 in credit card debt. In short, the wife has not accumulated any assets during the marriage, a fact that suggests that she too has relied on the husband's family—or some other source of outside income—for the support to pay family expenses.
The parental subsidy in this case extends to the marital residence as the home is owned by the husband jointly with his father. (According to the husband's statement of net worth, his father also is a joint owner of the entire contents of the house.) The house is valued in excess of $325,000, and there are three separate mortgages. The first mortgage was given for $50,000 in 2003 and is held jointly by the father and the husband. According to the statement of net worth, the periodic payment is $590.36 monthly, but the balance on the mortgage, totaled in July 2011, is more than $86,000, a fact that evidences that the couple are not paying on this mortgage. The second mortgage is a demand note for $100,000, given in 1997 for which there have been no payments, and no accumulated interest because the value of the current debt equals the value of the original loan. The third mortgage is from a bank and was placed in 1997. The husband and his wife are jointly liable on all three mortgages. It is apparent that the only mortgage actually being paid is the bank mortgage. The “family mortgages” have not been paid for almost a decade. The conclusion here is compelling: the husband and wife never generated enough income to pay their mortgages, yet they lived in a fully furnished, expensive, suburban home.
The husband does not list his interest in this mortgage as an asset on his statement of net worth, even though the debt is jointly payable to him.
The husband asserts that “he anticipates repaying my father for the monies he has loaned since I have been unemployed.” Based on the financial materials before the court, this hope is unfounded and quixotic. The husband has no income, has not worked for two years, and has $96,000 in annual family expenses. The prospect that he might ever pay back his parents for the mortgages, the borrowings for the last two years, and the annual costs for his family, seems highly remote at any foreseeable time in the future. In his statement of net worth, the husband shows that his total assets are limited to the IRA, valued at just in excess of $32,000, which he characterizes as a gift from his parents. In what this court regards as an intriguing omission, the husband confesses that his liabilities are “unknown.” The couple's 2010 income tax return reveals that outside of unemployment insurance benefits, the couple had less than $17,000 in income and of that, more than $10,000 was a result of dividend income.
In short, from the documents before this court, the husband needs more than $95,000 in net income in order to meet his expenses, but exclusive of unemployment insurance benefits, he has less than $10,000 in income. Either the husband has borrowed huge sums from third parties to maintain his lifestyle during the last two years or his parents have financed his entire financial life. There is no evidence that the former has occurred-the husband's statement of net worth shows no credit card balances, no notes payable, and no other debts. There is no evidence of accumulated debt, which might lead to the conclusion that the husband borrowed sums in previous years to finance his family expenses. The husband avers that during the marriage, the family has “trouble meeting our expenses,” but the absence of any consumer debt or any debt—other than the mortgages owed to his parents—belies this statement. The conclusion is inescapable: the husband's parents have routinely gifted or transferred large sums of money to the husband to pay for his family living expenses and, apparently, they have done so for years.
This conclusion is re-enforced by several other facts. The wife has not, in the recent past, provided significant earned income to the family and has not been a source to offset the family's substantial expenses. She asserts that she recently returned to the work force. Even when she worked full time on certain occasions during the marriage, there is no evidence that she made significant financial contributions to the family's expenses. Second, the wife acknowledges that her parents have also supported the family with gifts in the past, albeit at a much lower annual rate than the husband's parents, and that these gifts, mostly in the form of new cars, have provided close to $10,000 annually to the family. Third, the husband has not made full financial disclosure, a factor which weighs in favor of imputing significant income. (He did not provide his 2010 or his 2011 income tax returns in this application.) Fourth, there is no evidence of the husband's efforts to find employment: no job search results, no copy of his resume, and no lists of interviews. His only acknowledgment of an obligation to seek employment to support his family is the meek statement that he has tried to find employment as a self-employed photographer. In considering his obligation to support his family, this court declines to give any significant credence to the husband's employment efforts. Again, the only reasonable conclusion is that the husband's parents have financed most of, if not all, the family's expenses for at least two years, if not significantly longer.
In reaching this conclusion, the court is also struck by the husband's failure to quantify the “loans” or “gifts” given to him by his parents during the last two years. He states that: “I have not always relied upon gifts and regular payments from my parents,” and further states that “since I have been unemployed, my father has loaned me money to pay the expenses of our household.” At no point does he admit the amount of annual gifts—he never states exactly how much he received from his parents. In this case, when the amount of parental support is critically important to this court's evaluation of the respective financial conditions of the family, the husband's failure to admit exactly how much support he has received is especially troubling and raises questions regarding his candor before the court.
In considering the legal aspects of this matter, there are two guiding principles. First, this court has broad discretion to impute income to both parents in fashioning a child support award. Genender v. Genender, 51 AD3d 669, 670 (2nd Dept.2008); Irene v. Irene, 41 AD3d 1179, 1180 (4th Dept.2007). A parent's child support obligation is calculated not on the parent's current financial condition, but instead by the parent's ability to provide support. Zwick v. Kulhan, 226 A.D.2d 734, (2nd Dept.1996); Collins v. Collins, 241 A.D.2d 725, 727 (3rd Dept.1997). This court is not bound by either parent's own account of his or her finances, but may impute income based on a parent's prior employment experience as well as a parent's future earning potential in light of that party's educational background. Moffre v. Moffre, 29 AD3d 1149, 1150 (3rd Dept.2006). The same general principle applies to a maintenance calculation which may be premised on the party's past income or demonstrated earning capacity. P.C. v. K.K, 30 Misc.3d 1211(A)(Sup. Ct. Kings Cty 2011). In making a child support and maintenance determination, this court may also consider whether the party has engaged in a good faith effort to find suitable employment, given his or her education and opportunities. Genender v. Genender, 51 AD3d 669, 670 (2nd Dept .2008).
The second principle is equally compelling. New York law gives this court “considerable discretion to impute income to a parent where the parent receives money, goods, or services from a relative or friend.” DRL § 240(1–b)(b)(5)(iv)(D); FCA § (1)(b)(5)(iv)(D). A plethora of opinions applying the Domestic Relations Law provides a solid foundation to impute income to the husband based on the financial contributions from his parents (whether described by the husband as “gifts” or “loans”). Cooper v. Cooper, 52 AD3d 429, 430 (1st Dept.2008) (the Special Referee properly imputed income to party because there was evidence that plaintiff received assistance from his affluent father); Matter of Todd R.W. v. Gail A.W., 38 AD3d 1181, 1182 (4th Dept.2007) (the Support Magistrate properly imputed income to petitioner where his parents provided him with substantial gifts); Ambrose v. Felice, 45 AD3d 581, 583 (2nd Dept.2007) (the Family Court's failure to impute income to mother where she testified that her father covered significant expenses was an improvident exercise of discretion); Abellard v. Aime, 18 AD3d 653, 653 (2nd Dept.2005) (the court properly considered the financial assistance petitioner received from his father in calculating his child support obligation by imputing the loans that he received from his father as income); Miller v. Miller, 18 AD3d 629, 631 (2nd Dept.2005) (the court should have considered the help that plaintiff received from her mother when calculating her child support obligation); Baffi v. Baffi, 24 AD3d 578 (2nd Dept.2005) (the court properly imputed income to the husband based on his prior earnings history and the value of the rent-free home provided for him by a relative); Collins v. Collins, 241 A.D.2d 725, 727–28 (3rd. Dept.1997) (the Family Court properly imputed income to respondent where he received monthly spending money from his father and lived with his parents); P.C. v.. K.K, 30 Misc.3d 1211(A)(Sup. Ct. Kings Cty 2011) (a court may properly impute income to a party based on the value of a rent-free home provided for him or her by a relative). Given this landscape of judicial authority, this court must impute income to the husband based on his employment history and his parental support; and there is an equally compelling command to impute income to the wife based on her income and family support.
The husband's decade long history of income, as reflected in his social security report, justifies imputing $35,000 in annual income to him. In addition to his earnings history, the husband has two college degrees, has operated a business, and worked as stock broker. Given his employment record, his obvious skills and talents, the imputed income of $35,000 is well within his capability.
Furthermore, the husband's income has been supplemented by substantial contributions, either loans or gifts, from his parents for the last two years, if not for the better part of the last decade. The unpaid demand note from the husband's mother, and the non-payment of the mortgage granted by his father (and jointly held by the husband), are evidence of a substantial annual subsidy through loan deferral and/or loan forgiveness. The critical analysis involves the family expenses: the husband acknowledges family expenses in excess of $90,000 annually, while the wife estimates them at over $100,000 annually. During the last two years, the husband has been unemployed, and yet there is no evidence that he has incurred new debts, a fact that indicates his parents have covered his and his family's living expenses. Based on the history of the families's earnings and the continual influx of financial assistance to the husband through his parents, the husband is determined to have annual financial assistance from his parents in an amount of $75,000. To pay his expenses in excess of $90,000, the husband, after paying taxes on his earned income, must have relied on his parents for annual support of at least $75,000. This court, having found a multi-year pattern of parental subsidy for the husband, imputes the amount of that contribution to the husband for the purposes of evaluating his income and resources available for purposes of support of his wife and children. While the husband may characterize these payments as gifts, they are amounts on which his lifestyle has depended for years. There is no evidence that he has cut back his lifestyle in the last years after he became unemployed. The evidence clearly indicates that these payments are necessary to maintain the husband and his family and they function as subsidies to a dependent rather than gifts.
The court also notes that there are no affidavits from either of the husband's parents containing any information regarding the annual payments of their son and his family.
In arriving at this conclusion, this court notes that the husband does have a substantial asset in his own name, which exists apart from the support of his father: he lists $143,252 in a Morgan Stanley brokerage account, which he details as an annual gift from his mother. He also owns in his own name a Morgan Stanley Chase IRA with a value of $32,378. In this court's judgment, these assets are available to pay the husband's support obligations. As the Third Department noted:.
It is not necessary for the court to be able to impute income from an asset in order to consider it as a resource, all resources may be considered, in whatever manner the court deems reasonable and that in a given set of circumstances, the court may determine that it is appropriate to require a parent to reinvest or liquidate certain assets to provide for his or her children.
Matter of Webb v. Rugg, 917 A.D.2d 777, 779 (3rd Dept.1993). These accounts can be used by the husband to satisfy his child support obligations. Ogborn v. Hilts, 262 A.D.2d 857 (3rd Dept.1999). The New York courts have clearly held that a court, considering a child support obligation, can invade otherwise separate property assets for purposes of paying child support and maintenance. The Second Department has repeatedly held that an inheritance, considered separate property, may be a source for family support, even though not subject to equitable distribution. See Cody v. Cody–Evans, 291 A.D.2d 27 (2nd Dept.2001) (inheritance may be invaded to pay for support): Ashley v. Worsell, 66 AD3d 1256 (3rd Dept.2009) (personal injury may be invaded to pay support).
The husband has requested that the court impute income to his wife. Until recently, she was working for $25,000 annually with Paychex. There is no evidence that she could attain a higher paying job in the immediate future. There is no evidence of her historical wage earnings, and based on this minimal proof, the court declines to impute any income to her beyond the $25,000. For purposes of this application, the wife has $25,000 in imputed income. The husband also argues that the wife has received gifts from her family. There is evidence that she has received gifts from her parents, including a $10,000 value in a whole life insurance policy. There is also evidence that the wife's parents provided the couple with automobiles, but neither of the current family cars are listed as gifts. The husband alleges that the wife, after leaving the marital home, secured family assistance to purchase a home and pay legal fees. These gifts or loans are clearly post-commencement separate property, and are evidence of nothing more than emergency family assistance. Under these circumstances, in determining the available resources used by this couple to pay marital expenses during the marriage, the court declines to impute any periodic gifts to the wife as income for paying family expenses.
Based on these determinations, the court finds that the husband has total resources available in the amount of $110,000; $75,000 from annual subsidies from his parents and the $35,000 as imputed income. This court will reduce that amount by the amount of payroll taxes that would be paid on $35,000 to $33,023. The total income for purposes of maintenance and child support is $103,023. The maintenance to be paid to the wife under the temporary maintenance guidelines is $25,906 annually or $2,158.91 monthly. The child support, calculated after subtracting the maintenance from the father's income, is totaled to $22,363 annually or $860 bi-weekly. The pro rata contributions to add-ons expenses (health insurance, extracurriculars) are calculated using a 75% contribution for the husband and 25% contribution for the wife. All payments should be retroactive to the date of the initial application, with credits for any interim payments by the husband.
In reaching this conclusion, the court acknowledges that the husband does not have the income to support these payments. However, as indicated above, he does have assets to pay these expenses during the pendency of the divorce. It is clear that, when his expenses have mounted, his parents have paid those expenses. In the absence of a job that will generate enough income, this court acknowledges that the husband may have to turn to his parents for the resources to pay these obligations. As the undisputed proof in this case clearly indicates, the parents have always provided that support when this couple lived together. This court cannot permit the husband to now shut off his family support, if the impact is to reduce his statutory obligations to his wife and avoid his child support obligations.
The award of counsel fees in a matrimonial action is within the discretion of the trial court. Cerami v. Cerami, 845 N.Y.S.2d 67, 68 (2nd Dept.2007). The recent amendments to the Domestic Relations Law make fee awards mandatory to the less-monied spouse. DRL § 237(a). In this case, such an award is easily justified as the husband is the monied spouse. The wife is awarded temporary fees in the amount of $7,500.00 with reservation of her right to renew a claim for further fees in the future.
The wife's motion for temporary relief is granted consistent with this opinion and she should submit an order forthwith.
This decision should be submitted as an order on notice to all parties.