Opinion
Index No. I2019001315
06-06-2021
N.O., Plaintiff v. T.F.O., III, Defendant
Maureen A. Pineau, Esq., Attorney for Plaintiff, Rochester, New York 14610. HEISMAN NUNES & HULL, LLP, Lewis J. Heisman, Esq., Attorney for the Defendant, Rochester, New York 14614.
Maureen A. Pineau, Esq., Attorney for Plaintiff, Rochester, New York 14610.
HEISMAN NUNES & HULL, LLP, Lewis J. Heisman, Esq., Attorney for the Defendant, Rochester, New York 14614.
Richard A. Dollinger, J.
The Plaintiff wife commenced an action for a judgment of divorce against the Defendant husband on the grounds of an irretrievable breakdown of the marriage. The grounds were established by a declaration of irretrievable break down of the marriage by the wife without objection. DRL § 170(7). A trial was held, virtually, in this matrimonial action on September 30, 2010, and March 2 and 3, 2021. The parties do not have any minor children in common. The Plaintiff was represented by Maureen P. Pineau, Esq., throughout the action and the Defendant was represented by Lewis J. Heisman, Esq., throughout the proceeding.
In this case, neither spouse has significant assets. The wife's income is barely $26,000 annually — apart from child support paid by the fathers of her children. The husband's income, as a result of a disability, barely exceeds $27,000. The couple have few other assets, except for the marital residence. Before analyzing the equitable distribution, this Court must resolve two threshold issues.
1. FAILURE TO DEMAND EQUITABLE DISTRIBUTION
Initially, the wife argues that the husband should be denied any equitable distribution because, in the answer filed with the Court in July 2019, the husband through his counsel, submitted an answer which did not specifically request equitable distribution. The answer filed by the husband demanded a judgment of divorce and "such other and further relief as to the Court may seem just and proper." This convention — requesting "other and further" relief — invokes the Court's broad equitable powers in resolving any disputes over the extent of the relief requested. Because this matter was a matrimonial matter, it seems eminently reasonable that "the other and further relief" requested would include all financial and other issues that arise in a divorce action, including equitable distribution and support. Schiller v. Weinstein , 45 Misc. 591 (Sup. Ct App. Term 1904) (nature of the relief asked in a decree must be such as could bring it within the meaning of "other and further relief,").
Furthermore, this omission seems exactly the type that CPLR 2001 is designed to ameliorate as there is no evidence of any prejudice to the wife, who has known about the husband's claims for equitable distribution throughout the pretrial phases of this matter. She can hardly suggest that the husband's claims, interposed and argued at trial, were a surprise or, as the wife's counsel suggests, the wife "was left to guess what the defendant was seeking." Therefore, the Court rejects the claim that the failure to specifically request equitable distribution — particularly when he did request "such other and further relief" — somehow constitutes a waiver of the husband's claim for equitable of marital property.
2. MARRIAGE AS AN ECONOMIC PARTNERSHIP
During this trial, the wife repeatedly argued that this couple was not a true "economic partnership." It is undisputed that the couple each maintained separate finances, paid specific expenses, and, according to the wife, reluctantly, at first, filed joint tax returns and later filed separate tax returns. In essence, the wife argues that she never intended to merge any of her assets into any form of "marital partnership" to which the husband could lay any claim pursuant to equitable distribution.
This Court acknowledges that New York courts have frequently referred to marriage as an "economic partnership." See Fields v Fields , 15 NY3d 158 (2010) (in recognizing marriage as an economic partnership, Domestic Relations Law § 236 mandates that the equitable distribution of marital assets be based on the circumstances of the particular case and directs the courts to consider a number of statutory factors). But, the mere fact that a couple keeps separate finances and segregates marital income in accounts in their separate names does not create "economic independence" that defeats a claim for equitable distribution of the property acquired by either spouse during a marriage. First, the Domestic Relations Law defines marital property as property acquired during the marriage. Fields v Fields , 15 NY3d at 162.
Second, in making this argument, the wife seeks to have this Court consider, as a factor in equitable distribution, an apparent oral understanding in this case that this couple created by keeping separate accounts or filing separate income taxes or paying designated expenses. In essence, the wife seeks to create an enforceable agreement by conduct that at worst supersedes, and at best should somehow influence the equitable distribution rights created by the legislature for married couples in the Domestic Relations Law. In contrast, the "law ... favors the inclusion of property within the marital estate." LeRoy v. LeRoy , 274 AD2d 362 (1st Dept 2000). In short, under the strong presumption that property acquired by either party during the marriage is subject to equitable distribution, the conduct described by the wife in this matter — keeping separate accounts and filing separate tax returns — provides no basis for altering the conclusion that the assets acquired during the marriage are marital property. See DeJesus v. DeJesus , 90 NY2d 643, 652 (1997) ; see also Saasto v. Saasto, 211 AD2d 708, 709 (2d Dept 1995).
In enshrining equitable distribution as New York law in 1980 and in its amendments since that date, the Legislature could easily have included as a factor in determining equitable distribution whether a couple has, through a course of conduct, carved separate property out of income or assets acquired during the marriage. The Legislature has made provision for a non-titled spouse to acquire an equitable interest in certain marital property for "services as a spouse, parent, wage earner or homemaker." DRL Section 236B(5)(d)(7). But, the Legislature has never authorized one spouse, by conduct, to defeat the other spouse's claim that assets acquired during the marriage are subject to equitable distribution. With reverence for that legislative limitation, this Court declines to describe this marriage or any other as simply or solely an "economic partnership" in which the spouses are treated like corporate shareholders and their equity is determined solely by their economic contribution. K. v B. , 13 AD3d 12, 17 (1st Dept 2004). "The distribution of marital assets depends not only on the financial contribution of the parties ‘but also on a wide range of non-remunerated services to the joint enterprise, such as homemaking, raising children and providing the emotional and moral support necessary to sustain the other spouse in coping with the vicissitudes of life outside the home’ " K. v B., 13 AD3d at 17.; see Repetti v Repetti , 147 AD3d 1094, 1098 (2d Dept. 2017). Marriages, from the legislative perspective, are more than economics and, in most cases, at least at their commencement, are deep social and emotional unions that involve "partners." Those social, emotional and intensely personal bonds defy easy description but, they are real parts of every marriage and they deserve to be recognized as factors in peeling apart the economics of a marriage. In this matter, for example, this couple remained married for some time even though, as the wife now alleges, the husband was allegedly frequently intoxicated, failed to help out in household chores and contributed little or no financial assistance to the household. The husband responds vociferously, alleging that he paid household expenses and assisted in chores and oversaw his wife's children from another marriage. In addition, the wife argues that the husband lied to her during the marriage about whether he had had a mortgage on the home in which he resided prior to the marriage, whether he worked during the marriage, whether he owned a truck and made other misstatement. The wife argues that these alleged lies, told during the marriage, should form the basis for this Court refusing to credit the husband on any aspect of his marriage, his contributions to the family or the marital residence. This Court declines to follow that path: marriages can be plagued by misstatement, outright lies, falsehoods and indiscretions. This Court will not rewind the film of this marriage: the couple were married, stayed married and each endured the other's foibles until the wife commenced the action for divorce. The suggestion made by the wife — that the husband's pre-divorce conduct should influence equitable distribution or that lies told during the marriage should influence equitable distribution — seems to be an attempt to steer the Court back to a time when "fault" — of some sort — was required as a grounds for dissolving a marriage or a factor in resolving distribution of property.
The Court notes that the Legislature did authorize courts to consider certain conduct — domestic violence — as a factor in equitable distribution. DRL § 236B(5)(d)(14). The conduct alleged here falls far short of constituting domestic violence.
Under all these circumstances, this Court will not go back and allow either spouse to recast their marriage in some form of "just friends with separate accounts and property during the marriage." If this couple wanted such an arrangement, they could have easily negotiated and signed a written agreement defining their relative shares of their economic property acquired during the marriage. Having failed to put any such written agreement in place, this court will not allow one spouse to somehow diminish the requirements of the Equitable Distribution Law buy claiming, after six years of marriage, that they never intended to equitably share their marital assets or that one spouse, by their personal behavior, has forfeited their right to marital property.
3. SUPPORT
This couple have no children. There was no cognizable claim for maintenance by either party and this Court declines to consider any maintenance as the parties have roughly comparable incomes, the husband is disabled and most of the wife's income is derived from child support paid by the fathers of her children. The Court, having considered the factors under the maintenance guidelines, declines to award any maintenance.
4. THE MARITAL RESIDENCE
The largest asset of the couple was the marital residence. The couple resided in a home purchased after the date of marriage but it was placed solely in the wife's name. The wife contributed $93,511.94 as the down payment, a contribution that the husband acknowledges is the wife's separate property. At the time of the commencement of this action, the balance of the mortgage was $45,138. The evidence establishes that the mortgage was paid down as a result of marital income.
Throughout the trial, the wife argued that the husband made no financial contributions to the maintenance of the residence. She proved that a substantial portion of her marital income was derived from child support paid by a prior husband and a father of one of the children for whom she was the primary residential parent. While these funds may be the wife's separate property at the time of their receipt, nonetheless, if used to reduce the mortgage balance on the marital residence, they constitute a pay down of the mortgage that gives the husband a marital share in the mortgage reduction.
The husband could not identify any specific payments made by him toward the mortgage. But the husband established that he paid certain expenses and gave the wife checks totaling in excess of $29,000 over the term of the marriage and during the period from 2014 - 2019, when the parties separated. The checks were payable to his wife. While the husband was unable, at trial, to track the wife's use of these funds, the payments are evidence that the husband viewed his marriage as an economic partnership, as the funds were used by the wife for expenses during the marriage.
The husband also testified that he gave the wife cash payments during this time but without receipts, the Court declines to consider these payments in any respect. The Court reaches the same conclusion regarding the husband's claims that he paid property taxes, insurance costs, entertainment expenses and used his credit card to pay family expenses and those of the wife's children. These alleged payments for day-to-day marital expenses — without receipts — give him no further interest in the marital residence or any other marital asset.
In addition to these periodic checks, payable to the wife, the husband produced evidence of two different types of expenditures made during the period from December 2013 through 2014, the year after the property was acquired. It is undisputed that the funds were advanced from his separate property and were a gift of funds from a property owned by his parents. The first form of expenditure, based on the receipts introduced into evidence, proved the husband paid for more than $18,000 in household improvements for the marital residence including funds for a new driveway, a sliding door, carpet and upgraded kitchen cabinets. These contributions to the residence clearly give the husband some claim to the marital asset, as they were his separate property contributions to the improvement of the home. While this Court cannot determine the exact value of these improvements on the date of commencement or the increased value as result, this Court would be remiss to ignore the fact that these improvements, even if made years earlier, did not contribute to some increased value to the home on the date of commencement.
During this proceeding, the wife's counsel contested whether the proceeds from the husband were his money or his family's money. The fact of where the funds originated does not matter to this Court: the funds were the husband's separate property, regardless of their origin.
The second form of expenditures in 2013-2014, documented in the receipts introduced by the husband, are not related to any fixtures or capital improvements that would enhance the value of the real property. The records indicate the husband spent more than $16,000 on what are clearly household-related operating items and which he described as "various purchases for the home." However, these expenditures were not directly related to any increase in value of the marital property and should be properly characterized as operating costs. As a result, this Court declines to consider these remaining expenses as impacting, in any extent, the value of the marital residence. During the trial, the wife's counsel argued that many of the expenses detailed by the husband contained the name of his father or were delivered to addresses other than the marital residence. This Court however accepts the husband's version of events in that he made purchases that were utilized or incorporated into the marital residence.
The husband argues that these contributions are evidence that he contributed to the mortgage pay down and hence, acquired a marital share in the net equity of the property. Importantly, whether these payments were credited against the mortgage is not relevant to any issue before this Court because any portion of the mortgage pay down, by either spouse using funds acquired during the marriage, after the date of marriage and before the date of commencement is considered a contribution of marital funds to the debt reduction and both spouses acquire an equitable share in any pay down of the mortgage during that time Even if, as the wife argues, the source of mortgage payment were her separate funds from child support payments, those funds were commingled into an asset in which the husband had a marital interest and hence, the mortgage reduction creates a marital equity to which the husband has a claim.
As indicated earlier, the marital residence was purchased solely in the wife's name. The wife signed the purchase contract just before the marriage and she closed the transaction after the marriage. The husband produced a real estate appraiser who testified that the property has been improved during the first year of the wife's ownership; i.e., from December 2013 through December, 20124. The husband argued that his contributions during the first year of the marriage improved and increased the value of the home. The husband produced a real estate appraiser who testified that the improved household increased in value by $25,000 as a result of a series of improvements in 2014 which, the husband argued, were financed by his separate property contributions. This Court, while respecting the opinion of the appraiser, nonetheless declines to credit this testimony as it was highly speculative, made without any detailed considerations of the exact improvements and was retrospective, in that the valuation was calculated more than half a decade after the alleged improvements were made. However, as indicated in the later portions of this opinion, this Court, while refusing to allocate a specific dollar contribution of the husband's separate property financed improvements, concedes that these improvements did give the husband a recognizable marital interest in the net equity in the property.
While the couple argued over the impact of these dates — signing the purchase offer before marriage and closing the transaction after it — this Court declines to let those facts dictate the distribution of the marital shares in the property as the later course of this opinion directs.
Finally, the husband testified that after the home was damaged by fire during the marriage, he assisted the wife in the insurance settlement for the fire. He described a series of activities, after the fire, in assisting the wife in settling the insurance claims. These activities were never associated with any dollar value but, realistically, the husband's efforts, while contested to some extent by the wife, did provide assistance in recovering the economic value of the home. Under any reasonable view of the principle of equity, the husband, in taking these steps, gained some equitable interest for these activities during the marriage.
Based on all these facts, this Court is not inclined to give the husband a direct dollar-for-dollar credit for either the periodic payments made during the marriage (approximately $29,000), fixture-type improvements made by him (in excess of $18,000), the so-called "purchases for the home" (which exceed $16,000), the alleged $25,000 increase in fair market value for expenditures made between 2013-2014 or his efforts, after the fire, to restore the property and recover the insurance proceeds. But, this Court would ignore the reality of this family-living situation if the husband was denied any credit for these payments for the benefit of the family living in the marital residence. In short, from the husband's perspective, the husband has a potential "recognizable" cash investment of more than $60,000 in expenses — $29,000 in checks payable to his wife, $18,000 in fixture-related improvements early on and $16,000 in miscellaneous expenses related to the marital residence. However, the reality of this couple's financial existence justifies a conclusion that while the husband made contributions, nonetheless, the majority of the household finances during the marriage were derived from the child support and gifts given to the wife.
This Court also wrestles with the claims made by the husband that he acquired some interest in the residence as a consequence of his providing assistance to his wife in upbringing of her children, his handling chores and provided some coverage for food, household supplies and repairs to both the home and items of personal property. With no valuation — expert or otherwise — associated with these family and household support activities, this Court declines to consider them in analyzing the equitable distribution in this matter.
Finally, the Court concludes that the credible evidence establishes the fair market value of the property on the date of commencement was $325,000. The actual net fair market value needs to reflect the potential sale costs, which the Court pegs at eight per cent for a realtor's fee and other costs. The result is a net equity of $299,000. The Court finds that the wife had a $95,511.94 separate property claim to the proceeds from the marital residence. Subtracting the date of commencement mortgage balance ($45,138) and the separate property claim ($95,511.9) leaves $160,035 as the net equity. Based on all the proven facts and circumstances, this Court concludes that under equitable distribution, the husband should be awarded 20 per cent of the remaining fair market value and as a consequence the husband receives $32,000 of that amount.
5. PERSONAL PROPERTY
During the time that the couple resided together, the husband maintained certain personal property that he had owned prior to the marriage. While the property was stored in the marital residence, nonetheless the property never lost its separate property status. His go-cart and e-bike are his separate property and should be returned to him in their current condition. The bedroom set and his mattress, acquired after the marriage, are marital property subject to distribution but, as part of the distribution in this matter, these items should be returned to the husband. All these items should be returned within 30 days of the entry of the judgment of divorce. The remainder of the personal property in the residence is awarded to the wife.
A fire occurred in October, 2017, extensively damaging the house and associated personal property. The husband and wife worked together — the extent of that cooperation was the subject of differing testimony at trial — to resolve the fire insurance claims. The insurance covered replacement of most items in the house but the proceeds also included a number of separate property items owned by the husband. The replacement value of those separate property items, according to the trial proof, was $6,046.89. The husband's testimony that these items were covered by the fire insurance and that the payment to the wife included payment for these items is credited. The husband gets a credit for $6,046.89 off the wife's share of the proceeds from the sale of the marital residence.
6. INCOME TAXES
The husband suggests that the parties filed separate income tax returns in 2018 and he claims that his wife received a refund from both the state and federal taxing authorities and he was required to remit additional payments to each. This Court declines to make any adjustment in the tax returns as the couple were married when they filed separately in 2018 and the Court will not adjust any sums for either party as a consequence of that marital choice prior to commencement. They could have filed jointly: they chose to file separately and each took their own chances on the consequences of that choice.
7. CASH ACCOUNTS
The statements of net worth reveal small cash accounts held by each party in their own names. In the absence of any testimony requesting division of those accounts and because the parties were separated for some time prior to the commencement, each party may keep those accounts in their own names.
8. RETIREMENT AND INSURANCE
While neither party discussed these items during the trial, the husband has $5262.90 in the cash value of a life insurance policy. There is no evidence to show whether this accumulated value is marital or separate and the Court applies the presumption that it is marital and it should be evenly divided between the parties.
The wife has a 401(k) account managed by Paychex. There is no evidence that this qualifies as "separate property." The marital share of that account as of the date of commencement, according to the wife's statement of net worth, was $9,909. The husband shall receive a one-half share of that amount, plus or minus gains or losses since the date of commencement and the husband's counsel shall prepare all documents necessary to transfer such funds to the husband at the husband's expense.
The wife has two other retirement accounts — a Vanguard Traditional IRA and a Vanguard Roth IRA — which are her separate property and will remain such. The husband has no retirement assets.
9. DEBTS
The husband's statement of net worth shows no debts other than his vehicle and that vehicle remains his property and he is solely liable for any debt associated therewith. He has no other debts to distribute. The wife has what she describes in her statement of net worth as a household debt: there is no evidence that this debt was used for any purpose other than martial expenses and because it was accrued during the marriage, it is presumed to be marital. However, the undisputed evidence establishes that the husband left the marital residence for some time before the commencement of the action. Therefore, this Court equitably distributes only 25 per cent that debt to the husband or $937 as a credit to the wife.
All other property held by either spouse in their own name remains their separate property and shall not be further divided.
10. CONCLUSION
The Plaintiff is granted a divorce from the Defendant based upon Domestic Relations Law § 170(7). There is no support to either party and the equitable distribution of the marital assets is set forth in this decision. All other applications and/or pleadings and motions not specifically granted or denied, are denied.