Opinion
15/05371
05-13-2019
Donna M. Jones, Plaintiff, v. Elwyn O. Jones, Jr., Defendant.
Maurice J. Verrillo, Esq. Attorney for Plaintiff Rochester, New York Timothy E. Ingersoll, Esq. Attorney for Defendant Rochester, New York
Maurice J. Verrillo, Esq. Attorney for Plaintiff Rochester, New York Timothy E. Ingersoll, Esq. Attorney for Defendant Rochester, New York Richard A. Dollinger, J.
In this matter, a heretofore unanswered question challenges the Court: can a Court award fees to collect a marital debt if the fees to chase an elusive and uncooperative spouse exceed the amount in the original controversy?
In the matter before the Court, a former wife chased her husband through a veritable labyrinth of procedural hoops in order to recover sums — large and small — owed to her as a result of the couple's stipulated settlement agreement. Her counsel expended significant sums in the chase and now, at the end of the long march, she seeks counsel fees in an amount in excess of the original amounts owed under the agreement.
This couple were divorced in 2016, after a stipulation of settlement was entered in January, 2016. The stipulation required the husband to refinance the marital residence, forward a proposed quit claim deed, arbitrate any personal property disputes, remit cash to the wife as her share of the husband's life insurance and undertake other obligations. At first, the husband balked because, he claimed that he was awaiting a judgment of divorce, even though the stipulation was not contingent on the signing of the judgment. Almost instantaneously, other disputes arose. In March, 2016, less than three months after the settlement, the wife moved by order to show cause to enforce the stipulation. The agreement required a series of actions by the husband within 30 days of the agreement. The husband had agreed to forward a pre-qualification letter for refinancing the marital home: none was timely provided. The agreement required the husband to forward a proposed quit claim deed: none was provided. The settlement required arbitration of any disputes over personal property within 30 days: the husband refused to participate. The husband agreed to pay $11,977.51 from his life insurance: it was not timely paid. The husband even refused to pay his half of the transcript cost. In the order to show cause, the wife also complained that the husband had failed to disclose certain marital accounts, mishandled 529 accounts for their children's education and misrepresented issues relating to a separate property claim held by the husband on the marital residence.
The trial court issued its decision on the wife's order to show cause in September, 2016 and the husband was not present. The Court held:
(1) the husband was in contempt for failing to arbitrate the personal property issues;The Court ordered the husband to immediately list the property for sale, issued a $26,642.62 judgment in favor of the wife for other sums owed under the agreement and granted the wife attorneys fees. The Court declined to re-open the judgment of divorce to account for certain undisclosed assets and refused to consider the wife's application to deny the husband a separate property credit on the marital home because of an alleged misrepresentation of the origin of the separate property interest. The Court summoned the husband to be sentenced for his contempt and for the payment of fines. The husband appeared at the October date and the Court, in an oral order, vacated the contempt finding because of the husband's appearance. The trial judge was encountering health issues and, for some reason, no order was signed vacating the contempt finding. In the absence of superseding order, the contempt finding remains. In addition, the Court, shortly after the issuance of the contempt order, appointed a private attorney as counsel for the husband.
(2) the husband was in contempt for failing to remit the life insurance proceeds to the wife; and,
(3)the husband was in contempt for failing to list the marital home after he failed to refinance the property and pay his wife $49,865.
In a second order to show case, new disputes arose. The wife moved in April 2017 to enforce the requirements that the husband sign documents to enable her to claim the daughter as a tax exemption, modify the child support to allow payments directly to the child, enforce the requirement for reimbursement of medical expenses, process the distribution of retirement accounts and and punish the husband for failing to disclose bank accounts during the divorce. The application featured a lengthy attorney's affidavit and a similar lengthy affidavit from the wife. The husband, in response, asked for a hearing on the contempt issues raised in the second order to show cause and for a hearing on any additional penalties for failure to comply with the trial Court's September, 2016 order. There is no evidence that the 2017 order to show cause was resolved through an order of the Court. The hearing before the trial court never occurred, as the trial judge encountered health difficulties and eventually, the matter was referred to this Court in mid-2018.
In the meantime, the wife brought a third order to show cause in February, 2018. The wife sought payment of an arbitration award in the amount of $1,197.00, an award of her share of retirement accounts as of the date of commencement and a finding of contempt for failure to promptly resolve a dispute over tax exemptions. In addition, at that time, the husband retained counsel — the same attorney who had been earlier appointed in this matter. In June, 2018, this Court requested an update from counsel on the status of the newly-transferred case. By letter, the wife's attorney recited the history of the two prior motions and claimed that the disputes raised in the April, 2017 order to show cause remained unresolved. Significantly, the husband was still — two and half years after the settlement agreement — refusing to release the house sale proceeds. The attorney repeated the claims raised in the second order to show and claimed those issues were still before the Court, as no hearing had occurred. This Court, after conferences with counsel, scheduled a hearing for March, 2019 and, even at that time, the husband's counsel was holding, under client instructions, $5,000 which was the final payment to the wife for the proceeds from the sale of the house. In response to the scheduling, the husband's counsel moved to withdraw as counsel, alleging that the husband was uncooperative in the hearing preparation process. At the scheduled hearing date, the entire matter and outstanding disputes were finally resolved.
In reviewing the record of this extended proceeding, this Court can only conclude that the husband stalled and delayed the resolution of this matter at almost every single step. He failed to timely remit the wife's share of the house proceeds, even though the wife had prematurely tendered a quitclaim deed for her interest. The payment was made more than two years late. The husband stalled a simple property arbitration and had refused to pay the balance due. He stalled the transfer of retirement accounts, refused to negotiate on matters related to the children and, in short, took every possible step to thwart the wife's enforcement of the stipulation. As a consequence of the husband's recalcitrance, the wife to spend significant sums to completely enforce the promises that he made more than three years ago.
Under Section 237 of the Domestic Relations Law, this can award fees which, in its discretion, are reasonable for the services rendered. NY DRL §237(a). This Court agrees with the husband's counsel that the finding of wilfulness, which underlined the September, 2016 contempt finding by the prior trial Court, was vacated when the husband appeared for a hearing in October, 2016. While the prior trial court vacated the finding of contempt — and the wilfulness finding that accompanied it — this Court can still consider the husband's longstanding refusal to comply with the stipulation in determining an appropriate fee under Section 237. Numerous courts have held:
[It] is well settled that, in determining the proper amount of attorneys' fees and costs, the court "should consider the time spent, the difficulties involved in the matters in which the services were rendered, the nature of the services, the amount involved, the professional standing of the counsel, and the results obtained."Matter of HSBC Bank N.A., 150 AD3d 1661 (4th Dept 2017). But, equally important, this Court can consider other aspects of the litigant's behavior in awarding fees. See Prichep v. Prichep, 52 AD3d 61, 858 N.Y.S.2d 667 (2nd Dept. 2008) (the court may also consider whether either party has engaged in conduct or taken positions resulting in a delay of the proceedings or unnecessary litigation); Levy v. Levy, 4 AD3d 398, 771 N.Y.S.2d 386 (2nd Dept. 2004) (court may consider the "relative merits" of the parties' claims); Morrissey v. Morrissey, 259 AD2d 472, 686 N.Y.S.2d 71 (2nd Dept. 1999) (court must consider "relative merits" of the parties positions in assessing fees and may consider "stonewalling" conduct that results in unnecessary litigation); see also G.C. v. K.C., 39 Misc 3d 1207[A], 969 N.Y.S.2d 803, 2013 NY Slip Op 50516[U] [Sup. Ct. Westchester Cty. 2013] (stonewalling includes spending "an inordinate amount of time on this case due to the defendant's unreasonable and obstructionist conduct" and the court can consider, as evidence of stonewalling, a requesting of a hearing for no purpose other than delay). Therefore, the husband's post-judgment recalcitrance can be factor in any fee award.
In the fee affidavit before the Court, the wife's chief counsel states his hourly rate is $245 per hour. The Court finds that this rate is certainly within the range of usual and customary rates for similar matrimonial practitioners in this region. The associate's attorney rate ($195/hr.) and the paralegal rates are similarly reasonable and consistent with rates charged for these services in matrimonial matters before this Court. The wife's chief counsel is an experienced matrimonial practitioner who appears frequently before this Court. This Court regards him as an expert in matrimonial law. He has more than 30 years of experience and operates a small two-person law firm which is common occurrence among matrimonial practitioners in this region. He has furnished a copy of his retainer agreement and the Court finds that it is reasonable and fair.
In addition, this Court has reviewed the legal bills submitted by the wife's counsel. The hours logged for the various services are eminently reasonable and fair. This Court notes that the three orders to show cause to hold the husband in contempt are detailed and exacting, tracing the wife's compliance with the Court orders and the husband's lack of attention to the various court-ordered obligations. The initial order to show cause in March 2016 contains a 13-page attorneys affidavit and a five-page client affidavit and a series of financial and other exhibits. The 2017 order to show cause evinces much of the same laborious work and preparation and is an inch thick. The 2018 order to show cause also contains a lengthy attorneys affidavit and detailed client affidavit. The attorney's affidavit for fees is also nine pages long.
In reviewing the attorney's fee affidavit, this Court notes that it would be easy to argue that a portion of the $66,558.80 legal fees sought by the wife relate to financial claims under the separation stipulation — other than the proceeds from the sale of the house — were not substantial. The roll-over of the retirement accounts did not involve substantial sums: the amount totaled less than $10,000. The award in the arbitration was less than $1500. These sums — standing alone — might not justify a substantial fee award. But, the seemingly small amounts transferred to the wife are a two-edged sword. The husband claims that meager sums do not justify the wife's persistence or the wife's incurring fees to chase him. That logic backfires on this husband: the small sums sought by the wife would make compliance with the stipulation by the husband easily attained and hardly justify his defiance. The husband, with a minor amount of cooperation, could have substantially sliced this fee demand. His after-the-fact complaint that the fees are excessive are reminiscent of the complaint of the child who kills his parents and bemoans his status as an orphan. In addition, this Court is cognizant that a failure to award the wife the full amount of her requested fees will result in diminishing, if not extinguishing, her claims for the roll-over of the retirement accounts, her arbitration award and a significant portion of the equitable distribution of her house. If the wife fails to receive a significant — if not complete — award of fees, the wife's efforts to obtain the benefits of her bargain in the settlement agreement will be significantly reduced.
In that regard, the lack of cooperation with the house proceeds resolution is graphic evidence of the husband's obstinate refusal to comply with the settlement agreement. Despite the wording of the stipulation, the husband did not pay the wife any share of the house proceeds until July, 2018 — two and half years after the agreement. Even at that time, he declined to turn over $5,000, claiming he held what can only be described as a fictitious claim against the house proceeds. He eventually paid the remaining $5,000 in March, 2019, almost three years after it was due under the stipulation.
Based on all these factors, this Court concludes that the wife entitled to $50,000 in legal fees and all filing or other fees incurred in the various orders to show cause for her counsel's efforts to enforce the terms of their settlement agreement. The sum is substantial but so was the husband's obstructionist conduct during the post-judgment period. The wife deserved compliance with their agreement and even a minor effort on the husband's part would have prevented the expenditure of the significant sums to obtain compliance. Denying the wife these fees would deny her the benefit of her bargain and reward the husband's failure to abide by his bargain. The husband makes a belated argument before the Court that the delay in payment of the house proceeds resulted from the wife's failure to promptly sign a quitclaim deed. This Court, more than three years after the stipulation was entered, declines to credit that claim and notes that the husband filed the deed and still waited more than two years after the stipulation for payment of any portion of the house proceeds and waited a year after the wife delivered the required deed to her husband's counsel to pay her most — but not all — of the proceeds.
This Court has also considered other factors. The couple have similar incomes. The legal fees were necessary: the Court can easily conclude that this husband would never have paid these obligations without the wife's counsel's persistence. The case is not complex but as noted earlier, it could have been resolved earlier with any reasonable compliance by the husband. Finally, this Court concludes that the fees, while substantial even to the point of exceeding the value of the wife's original claims, were reasonable because the evidence suggests the husband would never have voluntarily paid these sums without the pressure applied by the wife's counsel's conscientious persecution of her claims.
This Court also notes that the wife requests this Court to award interest at the state-approved rate of nine per cent on the claims related to the breach of settlement agreement. The wife suggests the husband's failure to timely deliver the house proceeds would result in more than $10,000 in interest. The delay in transferring retirement accounts, delay on payment of the arbitration award and a delay in filing appropriate tax returns totals more than $3,000 in additional interest. The Court declines to award those amounts at this time and, without commenting on whether interest is appropriate in this matter, the Court will require additional motion practice before awarding interest on these breach of contract claims.
In addition, this Court notes that the prior trial court, in an order dated January 10, 2017, appointed an attorney to represent the husband under Section 722-d of the County Law and the trial Court held that the husband would reimburse the County of Monroe for any sums that the County would pay to his counsel. The husband's attorney informed the Court that he anticipated billing the Counyt of Monroe $3,356.25 for his services in this matter. In the event that the County pays that sum to the husband's attorney, the husband is ordered to repay that amount to the County of Monroe. This Court will approve the attorney's voucher upon submission and issue a further order granting judgment against the husband for the amounts advanced by the County of Monroe to the husband's attorney. This Court also notes that the husband's attorney, in seeking to protect the husband's interests, expended numerous hours that would have generated fees in excess of $12,000 if charged at his standard hourly rate. Rather than the $75 per hour rate charged by appointed counsel. This husband, who has income sufficient to pay retained counsel rates, should have been liable to his assigned attorney for that higher amount and perhaps paying fees at that rate would have prompted him to fulfill his obligations to his wife sooner rather than later.
The wife's motion for fees in granted to the extent of $50,000 in legal fees plus all of the costs and disbursements incurred by the wife's counsel during this ordeal to obtain compliance with the settlement agreement.
SUBMIT ORDER ON NOTICE. 22 NYCRR 202.48 Dated: May 13, 2019 ____________________________________ Richard A. Dollinger, A.J.S.C.