Opinion
Index No. 315368/2015
06-06-2024
H.S., Plaintiff, v. S.C.L., Defendant.
Counsel for Plaintiff: Sonnenfeld & Richman LLP By: Brad E. Serlen, Esq. Counsel for Defendant: Krauss Shaknes Tallentire & Messeri LLP By: Heidi A. Tallentire, Esq.
Unpublished Opinion
Counsel for Plaintiff: Sonnenfeld & Richman LLP By: Brad E. Serlen, Esq.
Counsel for Defendant: Krauss Shaknes Tallentire & Messeri LLP By: Heidi A. Tallentire, Esq.
Ariel D. Chesler, J.
Defendant-Wife (hereinafter: Defendant) moved by Order to Show Cause filed with the county clerk on October 26, 2022 (Motion Sequence No.: 017) for an order directing Plaintiff reimburse the marital estate in the amount of $4,900,000.00; and for an award of interim counsel and expert fees. Thereafter, Plaintiff-Husband (hereinafter: Plaintiff) opposed the motion and cross-moved by Notice of Cross Motion seeking this Court enter an order directing all financial issues raised in the Defendant's Order to Show Cause be resolved through mediation or trial; and for sanctions against the Defendant pursuant to 22 NYCRR § 130-1.13 in the amount of $10,000.00. The Plaintiff and Defendant submitted reply papers on the issues raised.
The parties appeared before this Court twice on this motion sequence. First on February 16, 2023, and then again on May 10, 2023. At the conclusion of the May 10, 2023, compliance conference, the parties were directed to decide, by May 24, 2023, if they would be proceeding to mediation. The parties never availed themselves to further mediation.
Previous to motion sequence 017, the parties had filed similar requests under motion sequence 010. The parties submitted to the Court supplemental filings on the issues briefed under motion sequence 010. Defendant moved on January 15, 2019, for an order adjudging Plaintiff in contempt for his failure to pay $225,000.00 per month in unallocated support; permitting Defendant leave to file additional arrears; directing Plaintiff to reimburse the marital estate for payments made without consent of Defendant from marital accounts; and an award of counsel fees. Plaintiff cross moved on March 4, 2019, seeking this court enter an Order "retroactively modifying" Plaintiff's pendente lite support obligation based upon the fact that both children reside with Plaintiff; and deferring the remaining financial issues to trial.
DISCUSSION
I. Marital Waste
Defendant argues across both motion sequence 010 and 017 that Plaintiff has engaged in multi-million dollars of fraud against the marital estate. To support this allegation, Defendant retained a forensic accounting expert. Defendant submits a spreadsheet allegedly outlining the transactions made by Plaintiff that constitute marital waste that she seeks to have Plaintiff reimburse the marital estate for these sums.
Plaintiff rigorously denies these accusations and accuses Defendant of marital waste. Plaintiff's opposition papers rely heavily upon the incorrect argument that there currently is an effective Order referring this matter to mediation - that is not supported by the papers submitted. To support this argument Plaintiff references this Court's Order dated March 27, 2019, by the Honorable Matthew F. Cooper, JSC (ret.) (NSYCEF Doc. No. 209). However, subsequent to the March 27 Order, Justice Cooper vacated the March 27 Order by Order dated May 17, 2019 (NYSCEF Doc. No. 210). Accordingly, Plaintiff's argument that the issues are not able to be considered because there is a pre-existing court order referring them to mediation is not supported by the law of this case. Indeed, the Court's direction on May 10, 2023, made clear no mediation order was in effect because the parties were left to decide if they were going to mediation - they never notified this Court of their intent to mediate.
Defendant's requests as they relate to any alleged marital waste, specifically the complained of $4,900,000.00, is referred to trial. The marital estate in this matter is complex and far-reaching and will be amply explored at trial wherein both parties can advance arguments related to alleged marital waste.
II. Counsel & Expert Fees
Defendant requests an award of counsel fees in the sum of $500,000.00 and $350,000.00 in expert fees, with leave to apply for additional sums as may become necessary. Defendant, in support of her application, submitted an Updated Statement of Net Worth (NYSCEF Doc. No. 202) (NWS). Notably, within Defendant's NWS the Defendant had a reported adjusted gross income on her 2021 Tax Returns of $1,254,006.00 and $456,004.32 in a joint JP Morgan Chase Checking Account x2814. Defendant likewise reported that she holds $4,329,222.00 in the trust. Relevant to Defendant's financial status is the unopposed fact that the Husband failed to pay Plaintiff her court ordered support for "34 months and is in arrears of $7,650,000.00." While Defendant undoubtably does have access to substantial wealth, it cannot be said that there is an equal playing field between the parties given the truly immense wealth of Plaintiff and the fact that Plaintiff has not complied with the interim support obligations further demonstrates the inequitable financial relationship between the parties.
This Court is aware that the parties' children currently reside with Plaintiff; however, regardless of the scope of the obligation, Plaintiff would still be obligated to pay Defendant maintenance - which he is failing to do. This issue is addressed further below.
Defendant contends that in the two years prior to the divorce action Plaintiff earned $26 million and $55 million dollars annually for the years of 2014 and 2015, respectively. Plaintiff also had income of $26 million on his 2017 tax returns. Moreover, while it is true that Defendant has a license to practice law, she has not worked since 2001 - at the request of Plaintiff. Plaintiff cannot direct Defendant to stop her work to function as a homemaker for his benefit and then complain that he must financially support her thereafter. Plaintiff's 2020 NWS also shows assets of at least $83 million. In sum, there is no doubt that the less monied spouse is Defendant.
DRL § 237(a) provides there, "[t]here shall be a rebuttable presumption that counsel fees shall be awarded to the less monied spouse. In exercising the court's discretion, the court shall seek to assure that each party shall be adequately represented and that where fees and expenses are to be awarded so as to enable adequate representation from the commencement of the proceeding." DRL § 237(b) provides the same language in relation to expenses incurred for expert fees.
The submitted papers and invoices for Defendant reveal she incurred $100,000.00 in a retainer fee for her counsel. She expended that amount fully and incurred an additional $108,866.48 in additional fees. Pl. aff. at 26 (NYSCEF Doc No. 195). Here, the amount of fees incurred, based upon the qualifications of counsel, and the nature of the complexity in this action support an award of fees (See Mitnik v Mitnik, 144 A.D.3d 428 [1st Dept 2016]). Additionally, Plaintiff has failed to rebut the presumption that Defendant is entitled to counsel fees. Such an award is further supported based on Plaintiff's failure to pay his court-ordered support. Accordingly, the branch of Defendant's motion seeking an award of counsel fees is granted to the extent that this Court awards Defendant $208,866.48 in counsel fees, with leave to apply for additional sums at the conclusion of trial or the resolution of this action.
Similarly, Defendant retained an expert to assist in ascertaining the breadth of the financial issues in this matter. Defendant's expert and the exhibits provided demonstrate Defendant paid a $20,000.00 retainer fee for the expert and that Defendant had incurred $291,692.00 in expert fees. Plaintiff likewise failed to rebut the presumption of expert fees under DRL § 237(b). Furthermore, given the nature of the parties' finances it its evident expert examination of the marital estate is essential to resolving this action. See Mitnik, supra. Accordingly, the Wife's motion seeking an award of expert fees is granted to the extent that the Court awards the Wife $291,692.00 in expert fees, with leave to apply for additional sums at the conclusion of trial or resolution of this action.
III. Support Arrears and Retroactive Modification
It is undisputed that since November of 2016 the parties' child Benjamin has resided with Plaintiff. Likewise, since February 2018, the parties' child Christine resided with Plaintiff. Plaintiff argues that his pendente lite obligation which provides for an unallocated support amount of $225,000.00, inclusive of "all child support, add-ons, extras, and spousal support" (Order on Mot. Seq. 001 [Cooper, J.] [ret.] [NYSCEF Doc. No. 136]), should be reduced "retroactively."
The law on the issue is clear that Defendant is not entitled to sums for child support for periods wherein the children did not reside with her (Lacy v. Lacy, 114 A.D.3d 500 [1st Dept 2014]; Rocchio v. Rocchio, 213 A.D.2d 535 [2d Dept 1995]).
Moreover, it is well settled that "any perceived inequities in pendente lite maintenance and child support can best be remedied by a speedy trial, at which the parties' financial circumstances can be fully explored." (Capozzoli v Capozzoli, 187 A.D.3d 834, 835 [2d Dept 2020]) (internal citation omitted); see also, Barra v Barra, 191 A.D.3d 831 [2d Dept 2021]). As has been noted, the parties' marital estate is complex and nuanced. Plaintiff's request for arrears will be better addressed when the parties "financial circumstances can fully be explored" at trial. On the other hand, it is beyond dispute that if this Court were to award Defendant the fully requested arrearage, she would be receiving a substantial sum of funds that are in-fact child support payments for which she is not entitled.
While a "speedy trial" is the general remedy for inequity in a pendente lite order, herein, the inequity cannot wait until trial. Likewise, this case has a 2015 index number and the trial, while approaching, is anything but "speedy." Accordingly, this Court modifies the previous pendente lite support award to reduce Plaintiff's obligation to $50,000.00 per month. Commencing July 1, 2024, and on the first of every month thereafter, Plaintiff shall pay Defendant the sum of $50,000 per month as temporary spousal support.
Notably, the September 2016 pendente lite order directed the payment of $225,000 per month which was meant to cover spousal support, child support, add-ons and extras. However, the children and their add-on expenses have not been covered by Defendant for years. Accordingly, the Court must attempt to determine an appropriate amount for only the spousal support portion of the award.
In this regard, in the Defendant's NWS she indicates monthly expenses of $129,440. However, included in such sum is $42,000 in charitable contributions and $4,000 in gifts to others. These are certainly not necessary expenses. Defendant also includes $8,347 for private air charters even though she indicates the company she uses filed for bankruptcy. The NWS also indicates various expenses are already paid by Plaintiff such as the Puerto Rico property.
Ultimately, the Court believes that the sum of $50,000 in temporary spousal support is an appropriate amount given the incomes and assets of the parties and the relevant circumstances, including the marital lifestyle. Such amount is subject to reallocation and reconsideration at trial.
Further, this Court Orders that Plaintiff reimburse Defendant for arrears incurred using the amount of $50,000.00 as the support owed for each month. Defendant's papers make clear that while Plaintiff did pay Defendant $1.4 million for his arrears in November 2019; there have since been 34 months during which Plaintiff has paid $0.00 in support. Accordingly, this Court awards Defendant $1,700,000.00 as and for support arrears, subject to reallocation after trial. Such sum shall be paid by Plaintiff to Defendant within 30 days of this order.
Accordingly, Plaintiff's request for a downward modification of his pendente lite support award is GRANTED to the extent that his pendente lite support obligation is reduced to $50,000.00 per month which shall be paid directly to Plaintiff commencing on July 1, 2024. Defendant's request for an award of arrears is GRANTED to the extent that Plaintiff is directed, within thirty (30) days of service of this Order with Notice of Entry, to pay to Defendant the sum of $1,700,000.00.
Any additional sums owed to Plaintiff or Defendant with regards to arrears will be resolved at trial.
IV. Defendant's Application to Hold Plaintiff in Contempt
Defendant, under motion sequence 010, requests Plaintiff be adjudged in contempt for his failure to pay on the pendente lite support award. The Court refers this issue to trial.
V. Plaintiff's Cross-Motion for Sanctions
Plaintiff's cross-moves seeking sanctions against Defendant in the amount of $10,000.00. Plaintiff supports this argument by pointing out alleged deficiencies in Defendant's Experts report, as well as challenging the characterization of the transactions made that amount to the $4,900,000.00 at issue. It cannot be said that Defendant's conduct herein was frivolous as conceived under 22 NYCRR 130-1.1(b). The rule provides, For the purposes of this Part, conduct is frivolous if:
(1) It is completely without merit in law and cannot be supported by a reasonable argument for an extension, modification or reversal of existing law;
(2) It is undertaken primarily to delay or prolong the resolution of the litigation, or t harass or maliciously injury another; or
(3) It asserts material factual statements that are false.
Nothing in Plaintiff's papers supports such a finding. Plaintiff wastes both time and legal fees reminding the court of unrelated parenting issues between Defendant and the parties' now-adult children. Simply, there is no issue under this motion sequence where the Defendant's parental capabilities toward her adult children are legally relevant. Accordingly, Plaintiff's cross-motion seeking sanctions is DENIED in its entirety.
In light of the applications made under both this motion sequence and motion sequence 018 which this Court declined to sign, the Court reminds both parties' counsel that sanctions should only be sought where appropriate and the rules make clear, "[f]rivolous conduct shall include the making of a frivolous motion for costs or sanctions under this sanction." 22 NYCRR § 130-1.1.