Opinion
350109/98.
Decided September 29, 2006.
PROCEDURAL HISTORY
By underlying order to show cause dated May 25, 2004 (Motion Seq. No. 3), transferred to Part 26 on January 10, 2005, defendant former husband seeks, inter alia, an order to vacate and terminate, and/or downwardly modify, his obligation to pay spousal maintenance under the parties' open court Property Settlement Agreement ("Agreement") which, by reference to their written Schedule of Settlement, was incorporated, but not merged, into the Dual Final Judgment of Divorce filed in the Superior Court of New Jersey on October 15, 1991 ("Judgment of Divorce"). As relevant hereto, the Agreement originally obligated defendant to, inter alia, pay lifetime maintenance to plaintiff former wife in the sum of $60,000 per year, at the rate of $5,000 per month.
Plaintiff files a cross-motion seeking various forms of relief, some of which was previously granted by the transferring court, including the appointment of a neutral mental health forensic who evaluated defendant's claimed disability and submitted a report on March 28, 2005, and a neutral business appraiser who, after experiencing months of delay in obtaining necessary discovery, submitted a report on April 4, 2006, assessing defendant's business interests in, and income and benefits derived from, K.G. of New York, Inc. ("K.G., Inc.").
Following the parties' failed attempts at settlement, plaintiff filed the instant application (Motion Seq. No. 4) on July 17, 2006, seeking dismissal of defendant's motion on the ground of failure to state a cause of action (CPLR 3211[a][7]) or, alternatively, summary judgment (CPLR 3212[a]), and attorney and expert fees. Defendant filed in opposition and cross-moved for financial discovery from plaintiff, and for dismissal of plaintiff's motion as procedurally defective or, alternatively, on the merits.
BACKGROUND
On May 5, 1998, plaintiff brought an enforcement action (Motion Seq. No. 1), seeking maintenance arrears. Noting that there was "little dispute" that defendant owed plaintiff maintenance arrears in excess of $200,000 at that time, Justice Eileen Bransten referred the issues of the exact sum and whether interest should be awarded pursuant to DRL § 244 to a Special Referee (Bransten, J., Decision and Order dated 5/27/98, p. 2). Prior to the hearing before the Special Referee, the parties reached a settlement and executed a "Post-Divorce Modification Agreement of Certain Terms to the [Judgment of Divorce]" ("Modification Agreement") on September 16, 1998. Pursuant to the Modification Agreement, plaintiff agreed to a reduction of her lifetime maintenance from $60,000 to $45,000 per year, payable at the rate of $865 per week and subject to certain penalty clauses against defendant for any violations during the first three years.
Within days of the expiration of the three-year period, defendant ceased making maintenance payments. On March 5, 2002, plaintiff brought a second enforcement action. That matter was resolved with defendant's payment of accrued maintenance arrears in the sum of $26,835.38 on or about April 25, 2002, and the decision of Justice Marjory D. Fields dated May 13, 2002. Justice Fields rejected defendant's argument that plaintiff was not entitled to attorney's fees because his payment had rendered the arrears issue moot, and awarded plaintiff $10,000 in counsel fees. In addition, Justice Fields directed defendant to post a surety bond in the amount of $45,000 to guarantee payment of spousal support, citing defendant's need of "prodding to pay his maintenance obligations," and the "pattern of bad faith he has established in his dealings with plaintiff" (Fields, J., Decision and Order dated 5/13/02, p. 2).
DISCUSSION
In bringing the underlying motion to vacate and terminate, and/or downwardly modify, his spousal support obligation based upon changed circumstances, defendant argues that he is no longer able to work due to a disability. Plaintiff counters that defendant's loss of earned income does not warrant a termination or downward modification of spousal maintenance, given that he has substantial assets and continues to receive benefits from K.G., Inc., his previously owned and operated business.
Defendant's impairment has been described by the court-appointed expert, Wilfred van Gorp, PhD, ABPP, and his colleagues, Daphna Roth, Ph.D. and Reuben Robbins, MA, as "acquired neuropsychological (cognitive) impairment," a condition that affects such skills and functioning as organization and planning, abstract thinking, and memory (Neuropsychological Evaluation, 3/28/05, p. 6). This condition has rendered him eligible for disability benefits under two private insurance policies. Defendant also receives Social Security benefits.
Defendant's ownership interests in K.G., Inc. were transferred piecemeal to the parties' son, Laurence K., on or about December 31, 1997, December 31, 2001, and January 1, 2002. The court-appointed business appraiser found that between 2002 and 2004 defendant received payments in excess of $498,000 from K.G., Inc. In addition, the business appraiser found that defendant receives approximately $6,000 per year in automobile insurance and nearly $10,000 per year in medical insurance. Finally, the appraiser found that K.G., Inc. owes defendant approximately $892,000 as of December 31, 2004, and that the business "has more than sufficient cash and investments to pay [defendant]." (Report of Lazar Lipton Valuation Services, LLC, by Joan A. Lipton, CPA/ABV, Ph.D. and Zafar Bin Basher, CPA/ABV, MBA, 4/4/06, pp. 6-10).
As a threshold matter, the court will address each side's procedural arguments regarding a summary determination of defendant's motion to terminate and/or downwardly modify plaintiff's maintenance. Plaintiff seeks summary relief in the form of dismissal for failure to state a cause of action (CPLR 3211[a][7]) or, alternatively, summary judgment (CPLR 3212[a]). Defendant argues that these procedural mechanisms of accelerated relief are inapplicable to motions and that there exist issues of fact precluding summary judgment.
With respect to plaintiff's motion to dismiss, the court notes that CPLR 3211(a)(7), which addresses the legal sufficiency, not the merit, of claims, is inapplicable to the merit-based arguments raised ( see, e.g., Fischbach Moore, Inc. v. E.W. Howell Co., Inc., 240 AD2d 157, 157 [1st Dept 1997] [on a motion to dismiss for failure to state a cause of action, court should "make no effort to evaluate the ultimate merits of the case"]). Such a motion calls for an examination of the four corners of the complaint in order to discern whether the factual allegations contained therein manifest a legally cognizable cause of action ( see Gershon v. Goldberg, 30 AD3d 372, 373 [2nd Dept 2006], 2006 NY Slip Op. 04385 [ quoting Guggenheimer v. Ginzburg, 43 NY2d 268, 275 (1977)]). In the instant matter, defendant's assertion of inability to pay based upon an acquired impairment and resulting loss of income, standing alone, survives this initial inquiry. Plaintiff's motion to dismiss based upon legal insufficiency is therefore denied.
With respect to plaintiff's motion for summary judgment, determined upon review of each side's submissions, it is axiomatic that the matter may be decided summarily, i.e., without a hearing or trial, if there exist no material issues of fact ( see, e.g., Zuckerman v. City of New York, 49 NY2d 557, 562). While the case at bar presents issues of fact, including whether defendant's transfer of K.G., Inc. to the parties' son was necessitated by his disability or undertaken to divest himself of assets, there is no genuine factual dispute with respect to the two dispositive, material matters: plaintiff does not challenge the findings of the court-appointed forensic with respect to defendant's neuropsychological impairment ( see fn.1, p. 3, supra); and defendant does not contest the findings of the court-appointed business appraiser establishing his recent receipt of $498,000 and annual automobile and medical insurance benefits of $16,000 from K.G., Inc., or that, as of December 31, 2004, the business owed him $892,000 on an interest-free loan ( see fn.2, p. 4, supra).
Thus, the sole issue before this court is one of law, namely, whether the undisputed fact of defendant's disability, taken in tandem with the undisputed income and benefits he has received since his transfer of K.G., Inc., and that entity's substantial debt to him, constitute changed circumstances necessitating termination and/or downward modification of defendant's spousal maintenance obligation.
In arguing this legal issue, both sides acknowledge that the terms of the Modification Agreement require the application of New Jersey law through that document's incorporation of a new Article providing that, "[s]o long as one of the parties remains a resident of New York State, the courts of this state may exercise continuing jurisdiction over any proceedings, employing New Jersey law, to enforce or modify any of the terms of this MODIFICATION AGREEMENT and of any decree incorporating the terms of this agreement" (Art. [X], Clause [1]). The parties differ, however, as to whether defendant has demonstrated a change of circumstances warranting termination or downward modification of his spousal maintenance. Citing the apparent seminal support modification case from New Jersey's highest appellate court, Lepis v. Lepis, 83 NJ 139 (Sup.Ct. 1980), defendant argues that his impairment results in his inability to work, and thus establishes changed circumstances mandating relief under New Jersey law. Also relying upon Lepis, supra, plaintiff argues that defendant's application should be summarily denied because he has failed to make a prima facie showing of changed circumstances that have substantially impaired his ability to meet his spousal maintenance obligations.
Both sides also cite Innes v. Innes, 117 NJ 496 (Sup.Ct. 1990), in which the Court, in deciding a support modification application that raised the issue of "double dipping," reaffirmed the general principles it enunciated in Lepis.
In Lepis, supra, the New Jersey Supreme Court held that settlement agreements "should receive continued enforcement . . . so long as they remain fair and equitable" ( Lepis, supra, at 149). That court also enumerated various forms of changed circumstances that have been recognized in the context of support modifications, including a decrease in the supporting spouse's income ( Id. at 151). This court finds no support in Lepis, however, for defendant's position that the fact of diminished income is in and of itself dispositive on his entitlement to downward modification. Indeed, the Lepis court observed that "[a]t times courts have found it necessary to assess the supporting spouse's ability to pay without regard to current earnings to determine fair and equitable support" ( Id. at 155, fn.8). Lepis went on to make clear that the party seeking relief there the payee spouse, here the payor bears the initial burden of establishing, prima facie, that the changed circumstances relied upon have substantially impaired the movant's financial ability to abide by the existing terms of support ( see id. at 158). This burden has not been met here.
Consistent with the laws of New York, an application for spousal modification will not survive summary dismissal if there exist no genuine issues of material fact ( see Shaw v. Shaw, 138 NJ Super. 436, 440 [AD 1976] ["(W)here, as here, the affidavits do not show the existence of a genuine issue of material fact, the trial judge . . . may decide the motion without a plenary hearing"]; see, also, Stirber v. Stirber, 139 AD2d 727 [2nd Dept 1988] [application for downward modification of spousal support denied without a hearing where movant presented no issue of fact requiring resolution at a hearing]). In making a determination as to whether there are genuine issues of material fact, the court "should rely on the supporting documents and affidavits of the parties" ( Lepis, supra, at 159).
Nor may defendant seek the financial discovery he demands from plaintiff in the absence of a prima facie showing ( Lepis, supra, at 157 ["A prima facie showing of changed circumstances must be made before a court will order discovery of an ex-spouse's financial status."]).
In applying these standards, the court has reviewed the parties' submissions and considered the arguments of counsel, and concludes that there exist no genuine material issues of fact. Briefly put, despite his impairment and claimed inability to work, defendant fails to make a prima facie showing that this change in circumstances is sufficient to warrant modification, given the substantial unearned income and benefits he has received since the change, and the substantial sums due and owing to him from K.G., Inc. In such circumstances, the settlement agreement remains fair and equitable and must receive continued enforcement ( Lepis, supra, at 148-49).
Nor will defendant's projections of future financial inability serve to accord him the relief he seeks now. As noted in Lepis, supra, at 151, "[c]ourts have consistently rejected requests for modification based on circumstances which are . . . expected but have not yet occurred" [citations omitted].
For these reasons, plaintiff's application for summary judgment pursuant to CPLR 3212(a) with respect to Motion Sequence No. 3 is granted, and defendant's cross-motion seeking dismissal of plaintiff's motion is denied.
Plaintiff further moves for attorney's fees and costs totaling $45,896.52 incurred in connection with this matter. In light of all of the circumstances presented, and the court's determination that defendant's application must be summarily denied, plaintiff's application for attorney's fees in this third post-judgment litigation relating to her spousal support, is granted. Upon review of counsel's affirmation and submitted invoices setting forth services provided and rates charged therefor, the court concludes that the sum of $41,201.52 constitutes fair and reasonable attorney's fees.
With respect to plaintiff's application for expert fees, the court has determined that, in light of the history of post-judgment litigation as well as current circumstances, plaintiff is entitled to reimbursement in the sum of $4,747.14, representing her share of the neutral business appraisal costs. However, plaintiff's application for expert fees sought in connection with the neutral forensic evaluation that ultimately confirmed defendant's neuropsychological impairment is denied.
Accordingly, it is hereby
ORDERED, that plaintiff's application seeking dismissal of defendant's motion (Motion Sequence No. 3) for failure to state a cause of action (CPLR 3211[a][7]), is denied; and it is further
ORDERED, that plaintiff's application for summary judgment dismissing defendant's motion (Motion Sequence No. 3) pursuant to CPLR 3212(a), is granted; and it is further
ORDERED, that defendant is directed to pay plaintiff counsel fees of $41,201.52 within sixty days of the date of this decision; and it is further
ORDERED, that if defendant fails to pay the sum of $41,201.52 to plaintiff within sixty days of the date of this decision, the Clerk of the County shall enter a judgment in favor of plaintiff, Susan K., and against defendant, Myron K., in the sum of $41,201.52, together with statutory interest from the date of this decision; and it is further
ORDERED, that plaintiff's application for reimbursement of her share of the neutral business appraisal costs is granted, and defendant is directed to pay plaintiff $4,747.14 within thirty days of the date of this decision; and it is further
ORDERED, that if defendant fails to pay the sum of $4,747.14 to plaintiff within thirty days of the date of this decision, the Clerk of the County shall enter a judgment in favor of plaintiff, Susan K., and against defendant, Myron K., in the sum of $4,747.14, together with statutory interest from the date of this decision; and it is further
ORDERED, that plaintiff's application for expert fees sought in connection with the neutral mental health evaluation is denied; and it is further
ORDERED, that defendant's cross-motion for financial discovery from plaintiff is denied.
This constitutes the Order and Decision of the Court; any matters not decided herein are hereby denied.