Opinion
42587/03.
Decided January 10, 2005.
In the instant application plaintiff moves for pendente lite child support equivalent to that which the defendant was voluntarily paying for a 4½ year period as well as pendente lite maintenance also consistent with an amount of monies that had been paid voluntarily during a 4½ year period. Plaintiff further moves for an order of visitation and a restraint on defendant from making any derogatory remarks together with interim accounting and counsel fees. The defendant herein opposes the motion. The parties, by separate order and stipulation, have resolved those issues relating to visitation.
This matter poses vexing questions to this Court which clearly place the Court in a position of having to deal with circumstances which had the attorneys and the parties followed the prescribed rules set forth at 22 NYCRR 202.16 et seq relating to matrimonial matters, the dispute between the parties could have been approaching trial or at the very least discovery could be nearing conclusion. Instead, the Court is placed in a position of deciding issues pendente lite at a time that the parties find themselves in a period of alleged financial crisis without discovery or neutral appraisal reports being available.
This matter was commenced by service of a summons and complaint which was filed on October 28, 2003. An affidavit of service was filed in the Office of the County Clerk on October 31, 2003. Nearly 7½ months later, plaintiff filed a request for judicial intervention (on July 9, 2004, a corrected RJI was filed) and a preliminary conference was held on August 16, 2004, at which time numerous interim orders were entered into including the appointment of the real estate appraisers to conduct eight appraisals (seven buildings and two apartments) and a neutral business evaluator. It was nearly two months later that the defendant complied with that order which required the payment of a fee to a forensic accountant for the business evaluation of a host of business interests owned by the defendant. It appears that defendant did comply expeditiously with the requisite real estate appraisals.
While the parties have every right to delay for years the filing of a summons post separation and the Court has absolutely no interest in requiring parties to file for divorce or separation until they are ready to do so, the Court does have an interest that once the parties file for divorce or separation that the matter is expeditiously resolved. In the matter at hand, plaintiff waited 7½ months before the filing of the request for judicial intervention notwithstanding the provisions of 22 NYCRR 202.16 that require within 45 days of the purchase of an index number that a request for judicial intervention must be served which triggers the scheduling of a preliminary conference within 45 days. Complicating the delay in this matter is the fact that the defendant, although having been ordered on August 16, 2004, to pay for the services of a forensic accountant, waited nearly 2 months to make those payments under the guise that he was not able to afford the payments to be made. Thus, the Court is now faced with an application pendente lite to maintain status quo payments of 4½ years wherein the defendant claims he no longer has the monies to make such payments and the plaintiff avers that a standard of living has been established pre and post separation requiring defendant to continue making said payments.
If the parties file a statement of no necessity, a 120 day period can elapse between the purchase of an index number and the filing of the request for judicial intervention.
The Court finds particularly problematic the fact that the defendant now claims, in the midst of litigation, that his businesses, all consisting of real estate ventures, many of which are located in the Park Slope section of Brooklyn, are not providing him with enough income to pay the support at the level which he has been voluntarily paying for 4½ years. He now claims that he has of late been sleeping in this office and had to sell an income producing apartment for which the plaintiff was receiving $1,300.00 a month rent in order to meet with his own economic needs. At oral argument, defendant revealed that it was his intention to move into a smaller apartment in one of the units which he owns.
Plaintiff was a art history major and defendant is a developer of real estate. They have been married since September 1981. There are two twins of the marriage, age 10. Plaintiff alleges that the parties agreed that the defendant would give the plaintiff $3,184.00 per month as and for voluntary support and $1,300.00 per month income from a rented studio condominium in a building that he owed. (This apartment was recently sold by defendant.) Additionally, defendant agreed to pay for tutoring, home repairs, extracurricular activities, car payments, medical bills and therapists, totaling $5,000.00 per month in addition to the payment of $4,484.00 ($3,184.00 + $1,300.00). Plaintiff avers that for two months prior to the making of the instant application the defendant has reduced the amount of money he has been giving her in half, paying $1,840.00 and no longer giving her the $1,300.00 from the rental income of the studio apartment.
Plaintiff expressed her concern in that one of the children suffered from Aspergers Syndrome which she describes as a syndrome related to autism and that their son receives treatment for numerous related ailments that he suffers. Plaintiff expresses concern that the defendant has threatened to cancel health insurance for her and the infant issues.
Plaintiff questions the defendant's credibility as to his sudden inability to make payments in that he recently borrowed $6,000,000.00 from one bank and $5,000,000.00 from another as well as assumed personal liability for $9,965,675.00 on another investment. She states "what banks and conglomerates loan a man over $20,000,000.00 if they didn't strongly believe he was worth it". Plaintiff avers that the last financial statement that she has for the defendant indicated that his net worth was $5,419,103.00 as of December 31, 2000. Plaintiff further states that the defendant is currently developing and selling two buildings in Park Slope, Brooklyn, with a total of 68 condominium units together with retail space and conservatively estimates each apartment will be sold at $300,000.00 which would be equivalent to $20,400,000.00 for the condominium sales for these apartments alone.
Plaintiff claims that the status quo should be maintained which was the voluntary payments made during the parties' period of separation of 4½ years. Plaintiff alleges that she is unable to seek employment at the present time as she is the sole care giver of the two children with special needs and that she spends a great deal of time dealing with one of the children's condition which is "a pathological mental condition characterized by a deficit in language and ability to normally interact with others". Plaintiff plans on teaching early childhood special education and does plan on returning to school part time so she can continue to work with this child. She has a PhD in art history and will be seeking a Masters Degree in education and certification.
Plaintiff also avers that she suffers from a lack of cartilage in her knees due to a debilitating arthritic condition and attaches medical documentation relating to both her son and herself to her moving papers.
Lastly, plaintiff moves for an order of accountant fees together with a request for legal fees. Counsel for the defendant was retained on October 8, 2003, and was paid an initial retainer of $7,500.00 at an hourly rate of $325.00 per hour. As of the date of the motion he is owed $75.00, the initial retainer having been exhausted. In the affirmation in support of said application, counsel states that he has had to analyze between 30 and 40 pounds of financial documents produced by the defendant concerning his many real estate holdings and management companies. Additionally, because of the complex nature of the defendant's real estate management and construction projects including interlocking loans from different financial institutions, he has spent over 40 hours attempting to reconstruct the defendant's various overlapping financial interests. At oral argument defendant's counsel conceded that defendant's financial transactions were complex and would require extensive review. Plaintiff's counsel posits that there will be the need to conduct financial depositions and engage the services of an accountant notwithstanding that the Court has appointed a forensic accountant. This he states will be necessary in order to analyze tax returns, general ledgers, cash receipts, loan agreements, construction cost records and monthly financial statements. Counsel requests legal fees in the amount of $10,000.00 with the right to renew for an additional amount of monies if necessary.
Defendant opposes said application pendente lite and claims that by the payment of maintenance, mortgage, property, health insurance, etc. and by direct payment of cash or indirect payment for condominium maintenance, he is paying the sum of $7,792.00 per month based upon his net income of $7,684.00 per month. He counters that the plaintiff has liquid cash assets in the amount of $190,500.00 and that he has no investments at all. He further claims that he has monthly personal expenses totaling $4,666.00 with income of only $7,684.00 and the short fall is made up by personal borrowing.
Defendant alleges that the plaintiff is able to pay for all of her own interim accountants and attorneys fees and urges that this Court withhold any award or allocation of fees to a party's own expert until conclusion of the litigation.
The defendant disputes the plaintiff's employment history and claims ". . . she had become another eternal graduate student and, comfortable in her lifestyle, spent over 15 years completing her PhD. Throughout these years she failed and refused to pursue the academic career she original (sic) envisioned with such enthusiasm for herself." The defendant further goes on to state "I urged her to work, to find something she wanted to do, but apparently her life had become all too comfortable for her to do anything." The defendant states in a footnote to his affidavit that he believes that a trial or settlement of this action will most likely require that the triplex penthouse apartment in which plaintiff lives must be sold. Defendant claims that during the course of the marriage his wife required "full time help, cleaning ladies, weekend babysitters and, at times, a cook". He claims that "the children are in school all day as they have for years that she still requires a nanny and she continues to avoid work".
Defendant describes himself as being far more generous in providing for his wife than the financial circumstances and that he "has recently been informed I have provided far more in total support than the statutes and courts would require. The result is that I placed my wife's interest and the children interest ahead of my own."
Defendant describes that his sources of income are from developing a number of properties since 1986 in Kings County. The defendant claims that at this juncture he is paying $2,004.00 per week to his wife in cash, $1,612.00 per month maintenance for the wife and children, $3,129.00 in condo mortgage payment for the wife and children, $142.00 in homeowners insurance, $625.00 which represents one half of the health insurance premium and $280.00 for the children's toys. Defendant admits that he no longer receives rental income from the tenant in the building because he was required to give up his own apartment in Manhattan which costs him $3,450.00 because of his growing financial crunch and that he presently lives in his Worth Street office where he has lived for the past three months. Defendant claims that the "tiny studio apartment" owned by the parties which was vacated on November 1, 2004, with maintenance cost of $242.00 per month is where he presently intends on residing.
Defendant avers that his total business income per month is $30,500.00 including property rental income and property management fees and that his total business expenses are $21,115.00 per month with a net income after tax of $6,851.00. Defendant posits that his monthly business income of $6,851.00 together with a monthly gift from his family of $833.00 total $7,684.00 and that he is paying $7,792.00 for support and maintenance to his wife and child. He claims that with $4,666.00 in personal expenses to live and that he therefore has a monthly shortfall of $4,774.00. Defendant further claims that as a result of a settlement relating to a condominium development he has an interest in he will eventually have to pay an estimated $150,000.00 for certain repairs which were needed to said property. He will also personally owe and eventually will be required to pay $157,900.00 for architectural services growing out of this real estate development. Defendant claims that a condominium development which he is developing in Park Place, Brooklyn has been taken over by "the financial people, and with escalating costs there is not only the potential that the developer will receive no profit distribution when all the units are sold, but I could suffer a substantial personal liability". Defendant states that he recently closed on a bank loan in the amount of $235,000.00 from which over $156,000.00 was paid to the IRS for unpaid income taxes for 2001. He attaches selected certain pages of his tax returns referred to them as the "critical pages" showing his adjusted income having been on a steady decline. He also attaches "critical pages" of the plaintiff's tax returns. The defendant avers that the loans which he has put together for the projects which he is working on are secured by the real estate and are paid back out of the project during or at completion and that the loans do not prove that he is worth "millions".
DISCUSSION
The standard for an order of pendente lite support is an "accommodation between the reasonable needs of the moving spouse and the financial ability of the other spouse, with due regard for the pre-separation standard of living ( see Pezza v. Pezza, 300 AD2d 555, 752 N.Y.S.2d 550 [2nd Dept. 2002] citing Kesten v. Kesten, 234 AD2d 427, 650 N.Y.S.2d 807 [2nd Dept. 1996).
In setting an award of child support and maintenance "a court is not bound by a party's account of his or her own finances . . ." ( see Parise v. Parise, ___ AD3d ___, [2nd Dept. 2004], citing Rohrs v. Rohrs, 297 AD2d 317, 746 N.Y.S.2d 305 [2nd Dept. 2002]; Peri v. Peri, 2 AD3d 425, 767 N.Y.S.2d 846 [2nd Dept. 2003]; Gleicher v. Gleicher, 303 AD2d 549, 756 N.Y.S.2d 624 [2nd Dept. 2003]). The Court is mindful that in Pezza, supra, the Appellate Division Second Department held "In determining the amount of child support and maintenance to be awarded, the trial court was free to find that the husband's actual income was greater than he had reported in documents submitted to the court ( see Sebag v. Sebag, 256 AD2d 401)."
While the ultimate award of child support and maintenance can only be made after an evidentiary hearing, at this juncture the Court finds the defendant's position questionable. He readily admits to establishing a pre-separation and even post-separation standard of living and criticizes the wife's reaping the benefits of that standard. He then comes before the Court after months of delaying court intervention by not filing a request for judicial intervention post summons and basically says I gave her too much, and I do not have enough monies to meet my reasonable needs. This Court does not believe that an award pendente lite will prevent defendant from meeting his own financial obligations. His representations to the contrary are refuted by his established lifestyle ( see Aliano v. Aliano, 285 AD2d 522, 727 N.Y.S.2d 656 [2nd Dept. 2001]; Zeitlin v. Zeitlin, 209 AD2d 613, 619 N.Y.S.2d 658 [2nd Dept. 1994]).
In determining pendente lite support, even if this Court finds the defendant's income is low at the time that the application is made, the Court can determine the award by earning capacity, not actual earnings ( see Pezza, supra, citing Borra v. Borra, 218 AD2d 780, 631 N.Y.S.2d 76 [2nd Dept. 1995]).
In the case at bar, the defendant has failed to comply in a timely manner with the one evaluation which could shed light on his true income and that is the business evaluation. The court rule allowing for the appointment of a neutral evaluator pursuant to 22 NYCRR 202.18 was designed to allow for evaluations that hopefully reduce the battle of the experts which were previously commonplace in matrimonial litigation. Instead of each party incurring the cost of their own expert, the Court is authorized to appoint a neutral expert, hopefully reducing the ultimate costs of the litigation. Here, the Court, after reviewing with counsel names of various experts, chose Joan Lipton on consent of both counsel pursuant to 22 NYCRR 202.18. While the report of the expert is admitted so long as it is under oath [ see 22 NYCRR 202.16(g)(2)] each party has the right to call the neutral expert for purposes of cross examination, the Court is not bound to follow the expert's report and, in fact, must make an independent determination ( see Johnson v. Johnson, 303 AD2d 641, 757 N.Y.S.2d 87 [2nd Dept. 2003]).
The defendant has been delaying the payment of the expert's fee, claiming he cannot afford same and has thus blocked for approximately two additional months any neutral assessment of his business interests which could shed light on his financial position.
This defendant's income, past and present, cannot support the lifestyle or expenses stated. While the Court recognizes that the millions of dollars in loans he has received are related to property located in a desirable real estate market and secured by same, the accounting of his finances are clearly incomplete. If, as reported, his earning capacity and financial status are so precarious, why would he spend so many years spending freely while losing money. His attacks on the plaintiff's acceptance of the lifestyle he created are telling. His animosity is great in the midst of this divorce and rejects that which he provided as being the status quo. He expects this Court to also sanction that animosity and it will not.
The reduction of voluntary support, coupled with defendant's disdain for plaintiff's lifestyle, the voluntary elimination of the apartment rental income as a source of funds for plaintiff and defendant's reliance on "assistance from family members" while obtaining huge sums of monies to finance developments, lead this Court to fix support on the parties' prior lifestyle (both pre and post separation) which has resulted in a sudden economic crisis for the defendant once plaintiff instituted the action. To expect that at this juncture ( pendente lite) the defendant to suddenly earn more monies is unrealistic.
Defendant is incorrect in his assumption that plaintiff should exhaust her liquid assets for support before the Court orders pendente lite support ( see Weintraub v. Weintraub, 99 AD2d 405, 470 N.Y.S.2d 7 (1st Dept., 1984); Hyman v. Hyman, 56 AD2d 337, 392 N.Y.S.2d 455 [1st Dept. 1977]). This is especially important where it appears that defendant's future earning capacity is greater than plaintiff's.
An award pendente lite is not required to be pursuant to the Child Support Standards Act [DRL 236 B(7); see Kyriazis v. Kyriazis, 260 AD2d 447, 687 N.Y.S.2d 723 (2nd Dept. 1999); George v. George, 192 AD2d 693, 597 N.Y.S.2d 129 (2nd Dept. 1993)] and until a clear picture of the defendant's income and/or earning capacity is ascertained, would not be appropriate. The Court, though, cannot double dip by ordering support without taking into account any allowance for shelter provided ( see Krantz v. Krantz, 175 AD2d 865, 573 N.Y.S.2d 738 [2nd Dept. 1991]).
The Court pendente lite directs the defendant, retroactive to the date of application ( see Khalily v. Khalily, 99 AD2d 482, 470 N.Y.S.2d 424 [2nd Dept. 1984]; Dooley v. Dooley, 128 AD2d 669, 513 N.Y.S.2d 167 [2nd Dept. 1987]), to continue to pay $2,129.00 monthly mortgage on the triplex apartment (the amount of mortgage payments were corrected on the record during oral argument), $1,216.00 monthly in condominium charges, $146.00 monthly in homeowners insurance, together with child support of $2,000.00 per month and maintenance in the sum of $800.00 per month pendente lite. All retroactive payments are to be made at a rate of $500.00 per month with credit for sums paid.
The maintenance shall be deductible to the payor and income to the plaintiff to the extent permitted by law pendente lite. An award of pendente lite maintenance is intended to "tide over the more needy party, not to determine the correct ultimate distribution" ( see Yecies v. Yecies, 108 AD2d 813, 814, 485 N.Y.S.2d 128 [2nd Dept., 1985]; Isham v. Isham, 123 AD2d 742, 507 N.Y.S.2d 215 [2nd Dept. 1986]). The defendant shall continue to provide health insurance for plaintiff and the infant children and he shall pay 80% of the costs of tutors (total cost $200.00 per month) and extracurricular activities ($180.00 per month total costs), and the balance to be paid for by the plaintiff from her income. (The plaintiff's affidavit of net worth reveals annual income of $44,165.00). The parties shall utilize plan physicians wherever possible. Given the special needs of one of the children, any costs for therapy, if said therapy has been medically prescribed by the child's physician, shall be paid 80% by defendant and 20% by plaintiff pendente lite. All unreimbursed medical expenses shall be paid 80% by the defendant and 20% by the plaintiff.
Plaintiff's application for counsel fees pendente lite is granted. In rejecting the defendant's position that an award of counsel fees pendente lite should be deferred to the trial court, this Court is mindful of the recent decision of the New York Court of Appeals related thereto ( see Frankel v. Frankel, 2 NY3d 601, 781 N.Y.S.2d 59). The plaintiff should not have to invade her limited savings for the payment of counsel fees ( see Hyman v. Hyman, 56 AD2d 337, 392 N.Y.S.2d 455 ([1st Dept. 1977]). Certainly, an award herein is necessary to prevent the monied spouse from wearing down the non-monied spouse ( see Charpié v. Charpié, 271 AD2d 169, 710 N.Y.S.2d 363 [1st Dept. 2000]).
Plaintiff's counsel has been paid $7,500.00, the defendant's counsel at oral argument reveals he has been paid $300.00. The Court does not accept the notion that because defendant's counsel did not ask for or receive a larger retainer, plaintiff's counsel must work under those same conditions. Here, defendant admits his business dealings are complex and inter-related. At oral argument, in response to the Court's inquiry, defendant's counsel revealed defendant's accountant's services alone cost him $20,000.00 to $25,000.00 per year.
There is clearly a disparity in income, and the hours plaintiff's counsel has already devoted to the matters, coupled with anticipated expenditures warrant an award of counsel fees ( see DeCabrera v. Cabrera-Rosete, 70 NY2d 879, 524 N.Y.S.2d 176). Given counsel's hourly rate and experience, the Court directs payment pendente lite of $10,000.00 in counsel fees. Upon failure to make payment within 30 days of today's date, plaintiff's counsel may enter judgment on five days notice for said amount plus costs and statutory interest.
The request for accountant's fees are denied as premature at this juncture with the right to renew after the report of the neutral appraiser.
This shall constitute the decision and order of the Court.