Opinion
Index No. I2012001795
12-21-2021
J.F., Plaintiff, v. D.F., Defendant.
Richard G. Curtis, Esq., Attorney for Plaintiff, Rochester, New York Seema Ali Rizzo, Esq., Attorney for Defendant, Rochester, New York Lisa B. Morris, Esq., Attorney for Children, Rochester, New York
Richard G. Curtis, Esq., Attorney for Plaintiff, Rochester, New York
Seema Ali Rizzo, Esq., Attorney for Defendant, Rochester, New York
Lisa B. Morris, Esq., Attorney for Children, Rochester, New York
Richard A. Dollinger, J.
Child support is for children but only adults—usually with significant incomes and equally significant grievances—fight over it, even if their children, living in contentment and abundance, could apparently care less.
In this matter, a mother, eight years after her divorce, moved to increase the father's share of child support because his income had jumped nearly 50 per cent since the divorce. In response, the father cross-moved to readjust the child support, claiming his wife is underemployed as an attorney, gets financial help from others, including family trusts and her new husband and should, therefore, be contributing more to the child support and add-on costs under the Child Supports Standards Act (CSSA) formula.
But, curiously, the entire fracas—which consumed a year of motions, oral arguments, two opinions from this Court and finally a three-day hearing—surrounds an embarrassingly small adjustment to child support, regardless of which parent triumphs, leaving a more decisive question for the Court—which parent gets to have this referee raise their hand and declare them the winner of this "no-holds-barred-but-very-expensive" cage match and award them attorneys fees.
See J.F. v. D.F. , 2021 NY Misc. LEXIS 5473 (Sup. Ct. Monroe Cty 2021)(dismissing an order of protection application); J.F. v. D.F. , 2021 NY Misc. LEXIS 6142 (Sup. Ct. Monroe Cty 2021)(ordering vaccination of the couple's daughter).
1. Background and Procedural Status
Before running through the procedural morass extant here and dissecting the "almost-head-of-a-pin" legal arguments in this matter, several salient facts dominate this Court's perspective. First, as the Court's earlier more than 100-page decision analyzed, the couple's joint custody and shared residence — the week-on/week-off visitation — has persisted for years. See J.F. v. D.F. , 112 N.Y.S.3d 438 (Sup. Ct. Monroe Cty 2018). Thus, consistent with this Court's judicial leanings as evidenced in its writing throughout the last decade, a deviation in child support may be appropriate, meaning that the raw numbers produced by a strict reading of the CSSA could be modified by this Court for either parent based on a bevy of circumstances. One of the prime circumstances in play in this matter is that this couple in their separation and property settlement agreement, dated October 10, 2013 ("the Agreement") agreed to a deviation when they adjusted their incomes to divide up the child support obligations. Having agreed to a deviation back then, it seems that a further deviation — whether comparable or not — is part of the judicial calculus in this matter.
Where the court finds that the non-custodial parent's pro rata share of the basic child support obligation is unjust or inappropriate, the court shall order the non-custodial parent to pay such amount of child support as the court finds just and appropriate, and the court shall set forth, in a written order, the factors it considered; the amount of each party's pro rata share of the basic child support obligation; and the reasons that the court did not order the basic child support obligation" (Domestic Relations Law § 240[1-b][g] ).
A second fact drives another dimension to this contest: the Court has customarily used the statutory cap for child support payments unless there is evidence that the children's lifestyle or living conditions require additional transfers of funds from one parent to the other. Ford v. Ford , 2021 NY App. Div. LEXIS 7013 (2d Dept 2021)(the Child Support Standards Act [CSSA] sets forth a formula for calculating child support by applying a designated statutory percentage, based upon the number of children to be supported, to combined parental income up to the statutory cap that is in effect at the time of judgment). In that regard, when this couple divorced, their combined incomes exceeded the statutory cap for child support — it was $330,000 in stipulated annual income when the judgment was signed. Thus, the child support was proportionateley distributed between the parents based on their respective portions of the family's combined income but the total under the terms of the agreement was capped by the then "basic support" of $136,000. Now, the couple's combined actual income in excess of $400,000 substantially exceeds the new statutory cap — $154,000 annually — by an even greater margin.
https://www.childsupport.ny.gov/child_support_standards.html
These facts drive a certain conclusion — as they say - without further adieu: regardless of what this Court concludes the total child support paid or apportioned between the parents for three children should be, it will not exceed 29 percent of the cap — $154,000 — or $44,660. Under the terms of their agreement, the mother's income was stipulated — by imputation — to be $110,000 annually and the husband's income was $220,000, which meant the wife paid 33 per cent of the child support — $11,043 of the total support — and the husband paid 67 per cent or approximately $28,397 in annual support.
These preliminary facts color this Court's evaluation of this entire matter. There is no evidence that the needs of the children have not been adequately met by the father's payment of his share of the support or that the three children have lost any opportunities based on their shared time with their mother and father. Neither parent has argued for child support payments over their shares required by the cap. Therefore, there is no reason to exceed the cap and this Court intends to apply the $154,000 income cap to any conclusion. In addition, once the application of the cap is conceded, then the only issue is to what extent the current parental incomes — with additional income imputed to the mother as the father advocates or a straight tax return income as the mother argues drives the father's contribution — change the percentage contributions of both parents to the current cap-directed support of $44,600. While the parents have seemingly approached this hearing and other disputes with an apparent WWE style vigor, the bottom line is that even if one party were to win "all the marbles," the overall impact on their respective finances would be minuscule — less than $2,500 per year one way or the other for parents with combined current incomes in excess of $400,000 — and there would be no impact on their daughters lives or activities. The seeming insignificance of any final result has this Court shaking its head but, nonetheless, this Court must consider all dimensions of this stormy tempest-in-a-gilded teapot.
This squabble began quietly enough: the father moved to require the mother to comply with travel restrictions and COVID quarantine protocols more than a year ago. The mother crossed moved for an order of protection and a modification of child support. Three months later, the father moved again to have his three children engaged in mental health counseling. The mother cross moved to dismiss that application. Eventually, this Court dismissed the mother's application for an order of protection. J.F. v. D.F. , 2021 NY Misc. LEXIS 5473 (Sup. Ct. Monroe Cty 2021). The Court then held a hearing on the remaining issues: the upward modification of child support, the imputation of income to the mother for a child support calculation and the ubiquitous request, by both sides, for the staggering amount of legal fees incurred by both sides in this elongated legal fight. In the meantime, the parents, despite their shared custody and equal visitation rights, could not agree on whether the 11-year-old daughter should be vaccinated, necessitating this Court's intervention in ordering administration of the COVID vaccine. J.F. v. D.F. , 2021 NY Misc. LEXIS 6142 (Sup. Ct. Monroe Cty 2021).
The couple's agreement provides little guidance to this Court in resolving the child support question. The agreement incorporated the usual terms for modification under Domestic Relations Law § 236B(7)(d): a substantial change in circumstances, passage of three years since the last adjustment, or if either parties’ income changed by 15 percent since the last adjustment. Agreement, Art VII, § 8. There is no dispute that under this language, the mother is entitled to "seek" modification, as the statute permits.
2. Imputation of Income to the Mother from Alternate Employment
At the heart of this dispute over child support is whether this Court should impute income to the mother. The facts of the mother's current income are not disputed. The mother is an attorney. After marrying the father, she moved to Monroe County as her husband had an academic appointment at a local institution. At the time of the divorce in 2013, the mother worked as a senior counsel at a large local firm. Two years later, she was released and sought employment, eventually landing as a remote brief/writer for a San Francisco, California based law firm. The law firm considers her to be a full-time employee, as she met the firm's billable hours requirement for her by logging more than 1500 hours in 2020. Her income in 2020 was $106,787, which included a bonus and, her adjusted gross income from employment was $96,617. The mother received some minor distributions from family trusts that constitute income, raising her 2020 income for child support purposes to $99,760. At the time of the 2013 separation agreement, the mother's salary for child support purposes was $95,120 and hence, her 2020 net income was less than five percent higher than it was in 2013.
The mother argues that the Agreement bars the father's claims to recalculate the mother's income because of a broad release clause. However, the clause only bars claims "up to the date of the Agreement" and this Court declines to apply it to bar the husband's claims in this litigation.
The mother had 1530.2 billable hours and 384.30 non-billable hours or a total of 1,914 hours or an average of 37 hours per week. There was no evidence of what constitutes a "non-billable hour" for this law firm but the firm obviously required the mother to log those hours for some law-related accounting purpose. Given that fact, this Court can easily conclude that the mother's employer has some justified business reason for requiring the mother to log those hours as part of her employment, even thought the hours may not have generated firm revenue. For those reasons, when this Court considers the mother's "work effort," this Court will use as reference the 1914 hours reported to her employer as part of her "work" during 2020.
In contrast, the father's income has grown significantly. In 2013, his income was approximately $248,421 for child support purposes, although the stipulated income in the agreement was only $220,000 annually. His 2020 income, adjusted for child support purposes, was $306,091. His income has jumped more than 20 per cent, a sufficient increase to trigger a recalculation under both the statute and the agreement. The child support formula, applied to the couple's actual 2020 incomes, divided under the CSSA cap, reveals that the father has 75.4 per cent of the total income and mother has 24.6 per cent, which, when applied to the 29 per cent of income for the three children as the statute requires, suggests that father would pay $2806 per month in support.
The father pays the health insurance costs for the children and he deducts the mother's share of those expenses from his payment to the mother and that issue is not disputed and will continue.
However, the raw numbers, both in 2013 and currently, do not tell the entire story. In the 2013 agreement, the couple reached an unusual compromise: the mother agreed to have additional income imputed to her and she also agreed to discount the father's income in calculating child support. The parties agreed that the mother's support obligation would be calculated using an imputed income of $110,00 and the father's obligations would be calculated using $220,000, which translates into the mother sharing a third of the child support cost and the father paying two-thirds. There is no dispute of the justification for the imputation of income to the mother and the discount to the father: the shared visitation time, the expenses encountered by each parent during time with the children and the children's standard of living would be maintained by the compromise. There is also no dispute that the justification for the original deviation remains: the same circumstances exist now as they did then.
In essence, at this stage, the father seeks to deflect the mother's request for an upward modification of child support by asserting two equitable defenses: the mother should have income imputed to her which would have the impact of raising her contribution to the cost of child support and decrease his and further, regardless of whether the Court imputes any income to the mother, the Court should continue to impute some income to the mother and discount the father's income because the circumstances which originally justified such an arrangement still exist. Initially, in seeking to impute income, the father claims that the mother is underemployed, making much less than she could otherwise earn. The father argues that the mother never previously engaged in a diligent job search and, if she had there were abundant jobs, at higher pay, for which she would be eminently qualified and, if she engaged in a diligent search now, she would qualify for a better higher position.
In an interesting sidelight, the couple's agreement provided that "each [parent] may for his or her benefit engage in any employment as he or she may chose ..." Agreement Art.1 (1). Neither party raised any issue regarding the impact of that provision on the imputation of income in this case.
On the first point, the mother testified that she did engage in a serious effort to obtain employment with a higher remuneration in 2015, when she lost her employment with a local firm. The evidence establishes that she did search for employment but, in doing so, the mother was also involved in the increasingly busy lives of her children, then 13, 11 and 5. In addition, it is undisputed that the mother, in searching for employment, would have to find it close to home. The children were well-established in a local suburban community, active in their schools and the prospect that the mother would move for employment was never seriously considered. In this Court's view, the father failed to prove by the preponderance of the evidence that the mother failed to make a diligent job search in 2015 and thus, her acceptance of her current employment as a remote brief writer does not justify any imputation of income to her in the period from 2015 through the time the father brought his cross-motion to impute income to the mother for child support purposes.
Therefore, the only issue before this Court is whether this Court should impute in 2020 from the mother's failure to now search for additional, higher paid employment. In that regard, both parents introduced experts to testify about the mother's current earning capacity. The father's expert argued that if the mother conducted a reasonably diligent job search now, there were abundant jobs for someone with her skills in numerous locations and that her skills and lengthy experience could justify a salary in excess of $250,000 annually. As the mother's counsel notes, in making that forecast, the father's expert relied on a report from what the mother's counsel claims is a newly established "institute" which lacked scientific credibility. The mother's expert, a former legal recruiter in the Rochester area, testified that it was unlikely that any attorney, who had spent a decade as a remote brief writer, would find even a comparable position at a similar income anywhere in any nearby region.
Layered over the duel between these experts is the statutory language governing any imputation of income. Domestic Relations Law § 240[1-b][b][5][iv] & [v] provides that this Court may attribute or impute income from, such "former resources or income," but only "if the court determines that a parent has reduced resources or income in order to reduce or avoid the parent's obligation for child support." In reviewing this statute, the Court notes that while it gives the Court an ability to "impute income," there is nothing specific in the statute that authorizes this Court to impute income to this mother based on her "earning potential," as the father seeks. The statute includes, as potential sources of income imputation, perks from employment, fringe benefits, non-income producing assets and assistance from friends and relatives. The statute does permit a broad imputation of that type of "then available" income but, as the Legislature said, only if based on a parent's "former resources" and then only if there is evidence that a parent reduced their resources to avoid their child support obligations. The statute's grant of authority to trial courts to impute income is designed to preclude a spouse from incurring "SIRS" — sudden income reduction syndrome — during the pendency of a child support proceeding. The rationale is obvious to any matrimonial practitioner: a parent can not suddenly become poorer in an effort to deny their children the support that the Legislature has found to be justified for families and children.
Here, there is no evidence that the mother here had "former resources or income" that exceed her current income during the time since the divorce. The mother's income has remained relatively constant. Furthermore, there is no evidence that the mother reduced her resources — what she already had or earned — in an effort to avoid her child support obligations. Her income has been consistent: there has been none of the pre-filing income swoons — SIRS — that have permitted imputation of income elsewhere. This Court also notes that in fashioning this general imputation language, the Legislature included the word "former" as an adjective to "resources or income." The Legislature did not insert the word "potential" or "possible" before the words "resources or income." Read in this light, the broad power to impute income is reserved for those circumstances in which a parent is hiding income or resources — or suddenly divesting themselves of income and resources and does not explicitly suggest a broad power to impute income based solely on income potential, even though other courts have suggested otherwise. See Aslam v Younas, 198 AD3d 747, 748-49 (2d Dept 2021) ("In assessing [a parent's ability to pay], the support magistrate is afforded considerable discretion in determining whether to impute income to a parent based upon ... demonstrated future potential earnings"); Matter of Sacchetti v Sacchetti , 192 AD3d 810 (2d Dept 2021) ; Dougherty v Dougherty , 131 AD3d 916 (2d Dept 2015).
In this analysis, the "former resources" can include the trust distributions but those resources are discussed elsewhere in this opinion.
If subsection (v) of the statute does not explicitly support the father's claims, then the father must resort to the "but not limited to" language of subsection (iv) as he seeks to impute income to his former spouse. Domestic Relations Law § 240[1-b][b][5][iv]. While the language suggests a broad reading of the power to impute income, a reading of the various identified sources for imputation suggest a more narrow reading of the options. In each of the subsections of subdivision (iv), the Legislature directed courts to investigate income sources currently available to the spouse: non-income producing assets, perks, fringe benefits and assistance from relatives. All of these sources are items that a spouse had, at one time or had reasonable access to during the pertinent time. In short, all of these provisions relate to resources "then available" to a spouse. This portion of the CSSA makes no reference to any future potential assets, such as inheritances, lottery winnings or better paying jobs.
In view of the myriad precedents involving imputation of income, this Court notes that this matter does not involve any allegations that the wife's income, as reflected on her income tax return, is not credible or suspect. See Matter of Deshotel v Mandile , 151 AD3d 1811 (4th Dept 2017) (a court may properly impute income in calculating a support obligation where it finds that a party's account of his or her finances is not credible or is suspect). Imputation is also not based here on the mother's employment history, as the only evidence before this Court establishes that her income has been relatively constant — and less than $120,000 annually — for the last half decade. Dougherty v Dougherty , supra. Instead, this matter involves purely whether the mother is capable of increased earnings, based upon prevailing market conditions and prevailing salaries paid to individuals with the mother's credentials in his or her chosen field. See Matter of Bouie v Joseph , 91 AD3d 641 (2d Dept 2012). In many of the cases justifying imputation in those instances, there was either evidence of prior employment at a higher salary or an admission of a capability to earn more than their reported income. Brown v. Brown , 239 AD2d 535 (2d Dept 1997). In other instances, where a parent worked only part-time hours, a court may impute the hourly rate for full-time work to establish the child support obligation. Matter of LoCasto v Chiofolo , 89 AD3d 847 (2d Dept 2011). Access to other income or employment at prior higher paying jobs can be factors. Juhasz v Juhasz , 59 AD3d 1023, 1025 (4th Dept 2009) (access to investment income); Matter of Hurd v Hurd , 303 AD2d 928 (4th Dept 2003) (evidence established that he had worked at higher paying jobs and income was averaged for child support). In Perry v. Pica , 22 AD3d 903 (3d Dept 2005), the Court imputed $30,000 in income to a spouse as the testimony at the hearing revealed that petitioner grossed $ 16,000 and $ 21,473 in the two prior years, and because the petitioner had been working in her chosen profession for more than 30 years and was free to select her own work hours, the imputation was supported in the record. See also R.S. v B.L. , 46 Misc 3d 1218(A) (Sup. Ct. New York Cty 2015), aff'd 151 ADNo.d 608,610 (1st Dept 2017)(gainful employment in the past, but lack of a "serious effort" to become gainfully re-employed justified imputed income in excess of $200,000 annually). Contra Alessi v. Alessi , 289 Ad2d 782 (3d Dept 2001) (court credited husband's claim that he was unsuccessful in obtaining employment with other school districts and declined to impute income). As most of these precedents indicate, there was an established history of employment prior to the child support calculation that drove the courts to impute income to the lesser-employed spouse. Here, the prior work history argues against any imputation: the mother's income has been constant for almost a decade. There is no evidence that she had ever made more than $120,000 in the recent past.
In R.S. v. B.L ., the mother had a far more extensive work history than the mother here. The mother in R.S. v. B.L. was an acknowledged arbitrator, appointed by a large union, and had extensive legal contacts, was a member of bar associations and other professional organizations and attended continuing legal education programs in her discipline. Her tax return showed thousands of dollars of business-related expenses. In this matter, there is no evidence of such extensive business-related activities by the mother. In addition, unlike the facts here, in R.S. v. B.L. the mother discontinued employment and stopped all her business activities in the year the divorce was commenced. R.S. v B.L. , 46 Misc 3d 1218(A) at 20-21.
This Court also rejects the notion that the mother is only working part time and has an ability to work more hours and earn a higher salary for her current employer. First, there is no evidence that if the mother worked more hours in her current position that she would earn more income. There is insufficient evidence to conclude that any bonus, which she might earn, is connected to working additional hours. Second, as noted above, the mother logged 1910 hours for her law firm in 2020, which included billable and unbillable time. If the Court assumes that a workweek is 35 hours, then the annual work time in 1820 hours. If we assume a 40-hour workweek, then the annual work time is 2080 hours. Under these facts, the mother was logging hours — billable and unbillable — beyond the allotted time in a 35 hour work week and more than 90 per cent of the work hours available under the 40 hour work week. Under either scenario, the mother cannot be characterized as a part-time worker.
Finally this Court notes that even if this Court imputes additional income to the mother, there is no net benefit to these children. The father suggests, eight years after his divorce, that his former spouse, who already earns six figure and as much as she had ever earned before, needs to work at some other employer and earn more money. In making this argument, the father does not suggest that she needs to earn more money for the benefit of the couple's three children. As noted above, the child support cap, implemented by prior court order, suggests that even if the mother earned more money, the children would not benefit because the total amount of child support would remain the same. Instead, the husband argues that the wife should work more because his percentage of child support would apparently decline.
Based on all the evidence, the Court concludes that the mother is working to her income potential. There is no direct evidence of an available specific job for which the mother would be qualified that would pay her in excess of what she currently earns. Neither expert could point to any job posting — now available — that the mother could attain while staying as a remote worker. While the father's expert said there were postings for jobs in other locations that might pay more, this Court is struck by the fact that she could not identify a single job opening at a comparable salary which matches the mother's skill set in this region. For these reasons, the father's claim to impute income to the mother because of a potential for higher paying employment elsewhere is not justified by a preponderance of the evidence before this Court.
3. Imputation of Income from Distributions from a Family Trust
As a second argument, the father contends that trust distributions, paid from a family trust to the mother, should be considered a form of income for child support purposes. It is undisputed that the mother received a series of distributions from family trusts in the period from 2019 through 2020. In one instance, the mother received a principal distribution of approximately $124,000, which she used to pay off her mortgage. The elimination of the monthly mortgage payment, the father alleges makes the mother able to live in a rent-free residence and he argues that because it frees the mother from that monthly cost, the monthly amount of the eliminated payment should be considered annual income for child support purposes. This Court cannot find any authority for the proposition that using a separate property asset to pay off a mortgage, eight years after a divorce, constitutes income to the beneficiary in the amount of retired monthly mortgage payment. It is undisputed that the mother did not disclose the trust payout as income on her income tax returns and no one suggests she was required to do so. In addition, as a practical matter, the mother was simply using one asset — the trust funds — to create an equivalent value in another asset — her home. She extinguished a liability with an asset: her net worth did not change even if the annual debt service cost declined. Prudently reducing monthly debt — as the mother did here — does not create additional monthly income for child support purposes. The father's counsel, in a submission, also argues that a "third party fund" paid off the mortgage. In this Court's view, that description is somewhat misleading: while the trust that held the funds is a "third-party," the money held by the trust was beneficially owned by the mother. The proof establishes that the mother had access to the funds, took the tax-free distribution and used that asset to remove a liability on another asset. Therefore, this Court declines to consider the $124,000 principal distribution as constituting income for child support purposes and further declines to impute the now relieved monthly mortgage payment as a form of additional monthly income to the mother for the same purpose.
The husband's counsel cites this Court's decision in G.R.P. v L.B.P. , 36 Misc 3d 1217(A)(Sup. Ct. Monroe Cty 2012) in support of the "good faith" obligation to find employment. The Court's prior decision is easily distinguished on the facts. In that matter, the husband was supported almost entirely by his parents, had only minuscule income and even then, the Court only imputed $35,000 in income to him.
The husband's counsel cites Baffi v. Baffi , 24 AD3d 578 (2d Dept 2005) as suggesting that this Court can impute income if a party lives "rent-free" in a home provided by another. The mother here does not live "rent-free," like the parent in Baffi v. Baffi . She owns the home. Her assets have paid for it and her equity is tied up in it. No third party is financing the cost of the home.
The father also argues that the mother's receipt of principal distributions of $40,000 in 2020 and $55,000 in 2021 from the same trust should be imputed as income. Importantly, the father concedes that these distributions are not taxable income under state or federal taxing laws and there is no claim that these distributions were not justified under the pertinent trust documents. In reviewing these distributions, this Court notes that the New York courts have held that a party's interest in a trust may be considered in making child support determinations. Domestic Relations Law § 240 [1-b] [b] [5] [iv], [e] ; Alvares-Correa v Alvares-Correa , 285 AD2d 123, 126-127 (1st Dept 2001). In addition, a portion of the Domestic Relations Law directs this Court to consider "non-recurring payments from extraordinary sources not otherwise considered income ... including inheritances" as income for child support. Domestic Relations Law § 240 (1-b) (e)(4). The same statutory provision permits this Court to "allocate a proportion of the same to child support ... which shall be paid in a manner determined by the Court." Id. However, New York's courts have often applied the "inheritance as income" principle in this portion of the DRL as a basis for awarding "additional support." See e.g., Krup v. Fehr , 24 Misc 3d 1219(A)(Sup. Ct. Kings Cty 2009) ; Bryant v. Bryant , 235 AD2d 116 (3d Dept 1997) (the trial court could consider the impact of a lump sum inheritance when making an award of "additional child support"). In seeking to allocate some portion of these trust distributions to the mother, the father's counsel cites this Court to Vural v. Vural , 130 AD3d 1459 (4th Dept 2015). In that matter, the Fourth Department compared the "respective financial resources" of the parents "including [father's] inheritance" and awarded child support to the mother, even though the parents’ incomes were roughly comparable and a shared custody arrangement existed. The Fourth Department noted that utilizing CSSA to calculate the "basic obligation" — which would have no child support paid by the recipient of the inheritance — "would be unjust or inappropriate," and awarded what can only be characterized as "additional" support beyond what CSSA required. In Vural v. Vural , the Fourth Department cited Matter of Cody v Evans-Cody , 291 AD2d 27, 30-31 (2d Dept 2001), in which the Second Department held that if a court determined a child support award, based on CSSA, was "unjust or inappropriate" then the Court must consider "all of the parties financial resources." Id. at 30. In that matter, the proof established that the couple's modest family income was supplemented by the parent's inheritance, as the available funds were used to pay the mortgage and taxes during the marriage. The Second Department concluded that relying solely on the recipient's income was "unjust and inappropriate" and the appeals court concluded that the trial court erred in failing to "award additional support." A finding that earned-income-based child support was "inappropriate or unjust" and that "additional" support was also required in Matter of Gilbert v. Walker , 39 Ad3d 1112 (3d Dept 2007) (lump sum personal injury settlement used in support calculation); see also Matter of Geraghty v. Munitz , 193 AD3d 729 (2d Dept 2021) (personal injury settlement justified finding of additional support).
This Court concludes that the trust funds here are the legal equivalent of an "inheritance" under the statute, as the trusts were in the name of the mother's family.
In Bryant v. Bryant , the child support award was $115 per week or less than $6,000 annually. The Second Department, in a footnote, commented that any "award of additional support ... must take into consideration a number of relevant factors including, inter alia, the parties respective standards of living and the actual needs of the children." Id. at 122, n.5. The Court analyzed the award in Bryant v. Bryant under Family Court Act § 413 (10(e) but this provision mirrors Domestic Relations Law § 240 (1-b) (e)(4) and suggests this Court should apply the same criteria to any award of "additional" child support here.
In considering whether "additional support" is justified after a finding that a CSSA calculation, based solely on income was "unjust or inappropriate," other courts have noted an adjustment is warranted if there is a sharp contrast between the available resources and an income-based child support calculation. In Matter of Geraghty v. Munitz , the contested support order under CSSA was originally $5 per month. In Matter of Gilbert v. Walker , the contested CSSA support order, based on income, was $54.24 per week for a disabled child when the personal injury settlement award to the father was in excess of $500,000 and the mother had devoted her life to the son and the father had abandoned the son.
The possible imputation of income from the trusts, in some ways, also raises more questions than it answers. In Matter of Cody v Evans-Cody , 291 AD2d 27, 30-31 (2d Dept 2001), the Court noted other states may include the entire amount of the distribution as income in the year it is received and still others hold that only the interest from the distribution should be considered income. Id. at 30. In Matter of Walker v. Gilbert , 39 AD3d 1112 (3d Dept 2007), the Third Department held that a "reasonable rate of return" on the one-time lump-sum funds could be imputed as income to the recipient and described this imputation as "the preferred approach." Id. at 1114. If the two lump sum distributions in 2020 and 2021 were added to the wife's income, as the husband suggests, her income in 2020-2021 would spike up by $95,000 but the next year the income would retreat to the "earned income" status. In short, the wife's income for child support would yo-yo back and forth depending on the amount of distributions, a result which would only guarantee future tinkering or litigation by both parents on the child support calculation. If the Court elected to impute a "rate of return" to the $95,000 distribution, the Court notes that it would have to presume the "rate" and at even six percent, the total imputed income would be less than $6,000 in 2021. The question of whether to impute a similar "rate of return" in future years would be challenging, especially because there is no evidence in this record to support such a continuing imputation. In that respect, the New York approach — leave the inheritance as a factor for the Court to equitably consider in imputing income for the year of receipt and future years — seems the most equitable and practical approach.
The imputation of an additional $6,000 in "rate of return" income to the mother as a result of the distributions in this matter would have a imperceptible impact on the percentage of either parent's child support obligation.
In short, under these precedents, this Court would need to find that the support calculated by CSSA, using the cap, was "unjust and inappropriate" and then, if that conclusion was justified, then whether "additional support" is required. In this matter, there is no evidence — or even an allegation — that the current amount of child support, allocated between the parents under the CSSA formula is "unjust or inappropriate." In fact, the proof here demonstrates otherwise. There is no evidence of any lost opportunities for the couple's children, no indication that any basic or even more optional opportunities have been foregone by the children because of a lack of resources from either parent. There is also no proof that "additional support" is required for the children to attend to any special needs or unique gifts of the children. In addition, neither parent in the trial described any serious financial impact on their lifestyles from their respective obligations to support the children under the current CSSA calculations.
Even under a strict application of the principles in Vural v. Vural , no adjustment of child support would be justified. In its holding in Vural v. Vural , the Fourth Department considered, as a factor in evaluating whether additional support was justified, "the parties’ respective financial resources." In considering the mother's access to trust funds as a factor in allocating "additional support," it seems equitable to evaluate both parents access to resources before charging any trust fund resources to the mother with the consequence that the father's share of child support would be diminished. In this case, the available income resources lean in favor of the father, whose current actual income exceeds his former spouses income by a factor of almost three to one. A cursory analysis of each parent's sworn net worth statements suggests that both parents have access to ample assets. Both parents live in expensive homes in the same suburban town. The mother's net worth statement lists a house, bought in 2013 for $400,000, as her primary residence. She has more than $1 million in retirement accounts, $35,000 in jewelry and minimum debts, almost exclusively for legal fees. The father has a similar nest egg in addition to $317,492 in income in 2020, according to his statement of net worth. He purchased a $675,000 home in 2006 and it still carries a $350,000 mortgage and he lists its value as only $550,000, which, even in his estimation, reveals a net equity of $200,000. He also has more than $1.5 million in retirement assets and almost $50,000 in an investment account. Totaled, the mother has assets in hand of approximately $1.5 million without considering her access to the trust assets. The father has access to approximately $1.75 million in associated assets. Even if this Court considered the total amount of trust fund distributions to the mother — the $124,000 to pay off the mortgage, the $95,000 distributed in 2019 and 2020 and the remaining estimated $124,000 to which she may someday have access — the mother's net worth is roughly comparable to the father's despite the fact that her annual real cash income is only a third of his income. Viewed from this perspective, each of the parents has access to ample additional assets for their benefit and the benefit of their children. Given the broad equity that inheres in the Domestic Relations Law, it would be inappropriate and unjust to allocate the trust fund distributions to the mother as additional resources to her when the parents each have access to ample assets to finance their lifestyles and the lives of their children and there is no justification for additional support to benefit the children.
This Court will not consider the impact of the recent hot real estate market on either parent's valuation of their primary residence, except to note that the stated net equity in both cases seems to be somewhat understated.
4. Imputing Income from Payments from the Mother's Spouse
The father also contends that the mother has received funds from her current spouse and that these sums should be added to her income for child support purposes. The proven payments were: $10,000 to pay her attorneys fees, a $17,000 loan, a $17,000 contribution to jointly buy a car and associated bank transfers for other expenses. This Court can clearly consider these funds as supplements to the mother's income but the method of attributing them and the impact on her support obligations is, as judges sometimes concede, tricky. First, the Court declines to impute as income the payment of legal fees. As the latter course of this opinion indicates, the fees generated on both sides in this matter have been out-of-sight. However, the one-time payment of a debt does nothing to improve the mother's lifestyle or impact the lives of the children. The purchase of the car is subject to the same analysis: the proof establishes that the current husband paid for half the car and is the titled owner of half of the car. In essence, the current husband did not transfer any funds to the mother: he got what he paid for. The Court declines to impute any portion of that purchase to the mother's income. The current spouse also gave the mother a loan of $17,000 to pay her bills. This "loan," used to pay the mother's bills, looks like a direct subsidy of the mother's lifestyle and, under numerous precedents, can be considered a form of income, although whether, as a one-time payment, it should be included, in toto, in any year's income requires a more delicate balancing from the Court. However, because it has an appearance as a "one-time" payment, this Court will not impute the entire a $17,000 to the mother for purposes of establishing her 2020 income. But, the Court will consider a major portion of the bank transfers made in 2020 and 2021 as income to the mother because they cover two years in roughly comparable amounts. When all of these transfers, the loan and other spousal contributions are considered, this Court elects to impute $10,000 in income to the mother for 2020 from her current spouse's support.
The father agues that this Court should impute more than $18,000 per year in income to the mother as a result of her husband's transfers in 20202 and 2021. However, there is no evidence that these transfers will occur annually. In addition, if the transfers occurred one year and were considered imputed income and did not occur the following years, the child support obligations between the parents would end up fluctuating — based on their percentages according to the cap — annually and would only drive more challenges and potential litigation for this couple.
5. Calculation of Child Support After Imputation of Income
The fact that this Court imputes $10,000 in income to the mother in 2021 as a result of support from her current husband has little discernable impact on the final child support calculation for these parents. In 2013, mother's agreed to stipulate to a higher income of $110,000 because, at that stage, she acknowledged that she could earn more income and her share of the child support should be defined by at least that then attainable income. While her income has not attained a higher number in the intervening years, she has retained that imputed income — $110,000 — for child support purposes for more than seven years and paid her share of the support accordingly. Now, when this Court imputed $10,000 in spousal support to the wife's 2020 income, her actual income for child support purposes is $99,000 and her imputed income with her husband's support added is approximately $110,000 — the same amount she agreed to as her "attainable" income in 2013. The converse is not equitable when considering the father's contribution to child support. The discount accorded the father was designed for the same reason as the mother: the shared time with the children and other factors. But, while the mother's net income includes "imputed" dollars, the father's income is real income. In that regard, the percentage of discount, granted to the father in the 2013 agreement, was approximately11.5 per cent. If the same discount exists, the father's net income for purposes of child support currently would be $271,074. The father's percentage of net parental income — using his actual income minus the agreed discount from 2013 — today is 71.3 percent. The mother's percentage, using imputed dollars that are almost identical to the agreed imputed 2013 income, is 28.7 per cent. The factors that drove the original discount for the father and the imputation for the mother — the best interests of the children and a shared concept of support — remain unscathed, despite the fury of apparent parental resentment and the flurry of legal petitions and cross-petitions that characterize this case. In this Court's view, after this trial and all of its dimensions, both sides are sent to their respective "neutral corners" and left with virtually no change in the underlying support payments. When both incomes as dictated by this decision are plugged into the CSSA and its cap, the father's monthly child support should be $2647 per month.
In its original opinion, this Court erred in the mathematical calculation of the father's child support. CPLR 5019(a) permits this Court to correct that minor mistake. Sokoloff v Schor , 176 AD3d 120 (32d Dept 2019). Based on this opinion, the father's percentage times the $44,660 cap (29% of $154,000) yields $2,647 as his contribution to child support. This amount will be adjusted to cover the costs of the daughter's health coverages as the agreement requires.
6. Attorneys Fees
Both parties request attorneys fees for this seemingly interminable legal contest: the father's requested COVID compliance for his children, the mother's application for an adjustment of child support, the father's request for mental health counseling for the children, the mother's cross-motions to dismiss, the mother's request for an order of protection, the father's application to dismiss that application and then the extended hearing with experts to boot. The costs are extraordinary. The Court's discretion is broad: it must consider the "financial circumstances" of the couple, the case "as a whole," including the relative merit's of each parties stance and whether either party delayed the litigation. Assad v. Assad , 2021 NY App. Div. LEXIS 7051, 2021 WL 5913153 (2d Dept 2021); Messinger v. Messinger , 2020 NYLJ LEXIS 595 (Sup. Ct. Monroe Cty 2020). In considering attorneys fees, the mother points to her status as a lesser moneyed spouse under Section 238(a) of the Domestic Relations Law and she claims that she is presumed to be awarded fees. DRL § 238(a). The father points out that he was "forced to file" applications to obtain COVID compliance and mental health counseling and then later when the mother sought an order of protection, he was "forced to file" a motion to dismiss that application. The contest went on and on to a three-day trial.
This Court declines to conclude that the mother is the lesser-moneyed spouse. The mother clearly has less annual income but the mother has access to assets that are nearly as significant as the father: trust funds, retirement accounts, a mortgage-free residence and current child support. In this Court's view, the mother does not have a strong claim to "lesser-moneyed spouse" status and hence, the Court declines to presume an award of fees to the mother. Conversely, the father, while arguing that he was "forced to file" applications, eventually consented to dismissal of his applications because both issues — COVID compliance and the need for mental health counseling for the children — were mooted by the mother's compliance with the father's request. In this Court's view, the father may be entitled to fees for these applications, even though they were eventually dismissed by agreement. The Court, in an exercise of discretion, would also consider an award of fees for the application to dismiss the order of protection because the Court concluded that the father's constitutional rights insulated him from an order of protection.
In her summation to the Court, the mother argues that she should not have to exhaust her finite resources to pay her legal fees when the father can more easily absorb the costs because of his higher annual income. See Marchese v. Marchese , 185 AD3d 571 (2d Dept 2020). However, there is no evidence that the mother's having to pay her own attorneys fees will "exhaust" her resources or substantially change her current lifestyle or that of her children. In addition, the mother brought the application to increase child support and, as this opinion indicates, the change in support is minuscule.
But in balancing any equities, the Court cannot turn its back on the mother's concession — before the trial and all of its preparation — that she would withdraw the request for increase in support if the father withdrew his pending claims for imputation of income and fees. In that regard, as this opinion indicates, this Court concluded, after all was said and done that there should be little change in the support calculation. The father is not a prevailing party in reality, even though this Court imputed income to the mother because the total earned and imputed income — remains virtually the same as those agreed to by both parents in 2013. That said, this Court declines to find that either party's claim regarding the imputation of income was meritless. The mother's claim that she was employed full-time and lacked an ability to generate a higher income was challenged by an expert and even though the expert was not credited by the Court at the end of the trial, this Court would never describe the father's claim as meritless. The claims with respect to the trust were likewise grounded in precedent and some established facts, even though the Court, as with the employability claim, declined to adopt its logic. Those claims cannot be described as meritless. The Court did accept — albeit in a reduced amount — the father's claims that the wife should have spousal support imputed to her.
Against the backdrop of these equities, the mother also argues that this Court's prior determination in Clements v. Clements , 43 Misc 3d 1211(a), 990 N.Y.S.2d 437 (Sup. Ct. Monroe Cty 2014) justifies an award of fees because this Court, in that instance, awarded fees when one party rejected an offer for settlement and then arrived for trial — after significant preparation costs — and accepted the same offer on the day of trial. Those facts do not exist here: while the mother made an offer to settle and withdraw her claims, there were disputed facts that justified the father's refusal to settle on those terms, even though the Court found that those facts did not ultimately sustain the father's claims. This Court declines to apply Clements v. Clements to the facts of this case.
But — and it is a "big but" — despite the competing equities that might justify fees to either side, the couple's agreement nullifies an award of fees to either parent. Under Article XVIII of their agreement, the couple agreed that if either of them defaulted in the performance of any obligation under the agreement and "such default continued for 15 days after written notice of the default was sent to the other party" and in such subsequent action it was "judicially determined that the spouse has failed to perform such obligation," then attorneys fees would be paid by the non-compliant spouse to the other. There is no proof before this Court that either parent gave the other the 15 days notice required to trigger a right to attorneys fees for a default under the agreement. There is also no judicial determination that either party failed to perform any obligation under the agreement: the only judicial determination in this opinion is the child support should be slightly adjusted based on the mother's higher imputed income and the father's actual income. In this Court's view, this couple conditioned any award of attorneys fees on compliance with an easy routine to avoid further litigation and excessive legal costs: they would give each written notice of any "default" by the other before commencing litigation. The point of this provision has eluded both parents: in 2013, they agreed that before commencing litigation, they would give each other a reasonable chance to negotiate and settle any disputes. Instead, over the last year, they have invested in contentious legal proceedings at great cost and now, they ask this Court to ignore their agreement. The Court elects not to ignore the agreement and instead enforce it. There is no evidence that either parent complied with this notice provision and hence, neither party is awarded fees. To hold otherwise would deny either parent the benefit of their bargain in their separation agreement.
This opinion resolves all outstanding issues in this matter. The attorneys should submit an order consistent with this opinion at their earliest convenience.