Opinion
Index No. 50169/2019
03-12-2024
T.H., Plaintiff v. I.H., Defendant
Plaintiff: Howard M. File, Esq. Defendant: Maryam Jahedi-Perez, Esq.
Unpublished Opinion
Plaintiff:
Howard M. File, Esq.
Defendant:
Maryam Jahedi-Perez, Esq.
Paul Marrone, Jr., J.
I. PROCEDURAL HISTORY
On February 28, 2019, T.H. (hereinafter "Wife"), the plaintiff, commenced the instant action for divorce against I.H. (hereinafter "Husband"), the defendant, by filing a summons and verified complaint. The summons and complaint, along with notices pertaining to automatic orders (Domestic Relations Law § 236 [B] [2], hereinafter "the automatic orders"), health insurance coverage (id. § 255), and spousal maintenance guidelines (id. § 236 [B] [6]), were served upon Husband personally at *** XXX XXXXXXX Lane, Staten Island, New York (hereinafter, "the marital residence") on March 11, 2019. Husband filed an answer to Wife's complaint on June 10, 2019.
The parties were married in a religious ceremony in Pakistan on December 23, 1988. There are two children of the marriage, both emancipated as of the commencement of this action, who are identified herein as "SH", born on XXXXXXX **, 1991, and "AH", born on XXXXXXXX **, 1998 (hereinafter "the children", collectively). Wife was born on XXXXXXX **, 1970, and was 51 years old at the time of trial. Husband was born on XXXXXXX **, 1965, and was 57 years old at the time of trial. The Honorable Barbara I. Panepinto issued a preliminary conference order on July 7, 2019, wherein the parties agreed that Wife would be granted a divorce on the grounds that the marriage has broken down irretrievably for a period of at least six months prior to the commencement of the action (id. § 170 [7]).
The issues of equitable distribution, spousal maintenance, and counsel fees were tried before this Court over the course of eight days between June 6, 2022 and July 29, 2022. Wife was represented by Howard M. File, Esq. throughout the entirety of this action. On March 14, 2019, Husband retained Thomas J. DeVito, Esq. On May 19, 2020, Husband changed his counsel to Maryam Jahedi-Perez, Esq., who represented him through the balance of the case.
Pursuant to the preliminary conference order, fully executed by the parties and counsel on July 9, 2019, the real property in the marital estate and Husband's medical practice were appraised, with 100% of the costs paid by Husband, subject to reallocation after trial. The appraisal reports for the two marital properties were completed on August 12, 2019 and August 19, 2019, respectively. The appraisal report for Husband's business was completed on February 10, 2021. Moreover, in the pendente lite section of the preliminary conference order, the Court directed Husband to pay Wife $300.00 per week in cash, pay all household bills and credit cards, and otherwise maintain the status quo.
Justice Panepinto presided over this matter from commencement until her retirement on December 31, 2021, and all six motions filed during the pendency of this litigation were adjudicated by her. Motion #1 was filed by Wife on January 21, 2020, to which Husband filed a cross-motion, Motion #2, on February 14, 2020. Before deciding the motions, the Court issued an interim order on February 7, 2020, which precluded Husband from further using the home equity line of credit (hereinafter "the HELOC") on the parties' investment property at *** Steuben Street, Staten Island, New York (hereinafter "the Steuben Property"), set a briefing schedule for Motions #1 and #2, and directed the parties to list the Steuben Property for sale, on consent, with all proceeds to be held in escrow by Wife's counsel.
In a decision on Motions #1 and #2, rendered on August 27, 2020 (hereinafter "the August 2020 Order"), the Court directed Husband to maintain all status quo payments for the two marital properties, pursuant to the preliminary conference order; continue paying all premiums for life insurance policies in effect as of commencement, and maintain Wife as sole beneficiary thereof; pay Wife's attorney $20,000.00 in interim counsel fees; continue paying all premiums for Wife's and AH's substitute health insurance coverage; and reimburse Wife $23,067.00 for payment of AH's tuition for the Spring 2020 semester. The Court also ordered a recovery to the marital estate in the amount of $249,000.00 and "$80,000.00-$90,000.00" , separately, to be realized from the net sale proceeds from the Steuben Property. The branches of Motion #2 seeking a trial on the parties' prenuptial agreement, a stay of further discovery until a decision pursuant to that trial was rendered, and the implementation of the prenuptial agreement, were withdrawn on consent. Finally, the branches of Motions #1 and #2 seeking to modify the temporary spousal maintenance and status quo obligations created within in the preliminary conference order were denied, as was the branch of Motion #2 requesting that Wife be held responsible for marital bills.
The exact amount of the outstanding balance on the HELOC was unknown when the motion was decided by the presiding judge at the time.
Wife filed Motion #3 on May 4, 2021, and the Court rendered its decision on June 8, 2021 (hereinafter "the June 2021 Order"). In its decision, the Court directed Wife's counsel to release from his trust account $20,000.00 for counsel fees and $23,067.00 for tuition reimbursement, upon Husband's non-payment of those amounts directly to Wife pursuant to the August 2020 Order. Furthermore, the Court made clear that these two distributions would be taken solely from Husband's 50% share of the net sale proceeds from the Steuben Property. Wife's other branches of relief seeking additional distributions were held in abeyance.
Wife then filed Motions #4, #5, and #6, which sought findings of contempt against certain non-parties for their failure to appear for depositions pursuant to a judicial subpoena. Motions #5 and #6 were later withdrawn. Ultimately, Motion #4 was resolved by the non-party appearing for the deposition.
The matter was assigned to this Part in January 2022. On February 2, 2022, this Court issued a pre-trial order, and on February 10, 2022, Wife filed a note of issue for a trial without a jury.
At trial, Wife testified on her own behalf and called the following witnesses: (1) Husband; (2) her father, MR; and (3) Steven Crowe, Esq., an attorney who represented Husband in a separate action. Wife's counsel read into the record deposition testimony of the following: (1) Husband; (2) Husband's girlfriend post-commencement, identified herein as "TA"; and Husband's brother, ANH. Furthermore, Wife submitted numerous documents into evidence (plaintiff's exhibits 1-52). Husband also testified on his own behalf and called the following witnesses: (1) Wife; (2) his brother, KH; and (3) his sister, SS. Husband's counsel read into the record deposition testimony of the following: (1) Wife; (2) TA; and (3) ANH. Furthermore, Husband submitted numerous documents into evidence (defendant's exhibits A-R* ). Counsel for Wife and Husband submitted their respective post-trial summations on January 30, 2023.
Plaintiff's Exhibits 16, 17, 21, 26, 35, 39, 40, 43, and 51 were marked for identification only and not placed into evidence.
Defendant's Exhibit F was marked for identification only and not placed into evidence.
An inquest was held on June 8, 2022, the third day of trial, whereupon Wife was granted a Judgment of Divorce on the ground that the marriage had broken down irretrievably pursuant to Domestic Relations Law § 170 (7). The judgment was held in abeyance until the remaining issues in this divorce were adjudicated, as required by statute.
II. BACKGROUND
The parties were married in a religious ceremony, or a nikah, in Karachi, Pakistan on December 23, 1988. After the parties' marriage, Husband, a citizen of the United States and 23 years old at the time, returned to Washington, DC to resume his final year at Howard University College of Medicine. Wife, then 18 years old, remained in her native Pakistan for several months until Husband legally registered the parties' marriage in the United States, and completed the official processes required to allow her and her family to immigrate. Wife immigrated to the United States in February 1989 and joined Husband in Washington, DC.
Upon Husband's completion of medical school, the parties moved in with Wife's parents, who lived in Brooklyn but later moved to Staten Island. The parties resided with Wife's parents from 1989 to 1995, without paying rent. In 1989, Husband commenced his three-year residency for medical training at SUNY Downstate, working approximately 80-120 hours per week, and earning approximately $45,000.00 in annual income. During that time, Wife attained a certificate of high school equivalency by passing the general educational development test (GED), and enrolled in Kingsborough Community College, full-time, in 1990. When the parties' daughter, SH, was born on February 14, 1991, Wife transitioned to being a part-time student and attended evening classes. Eventually, Wife transferred to CUNY College of Staten Island as a part-time student and earned a bachelor's degree in 1996.
In 1992, after completing his residency program with a specialty in family medicine, Husband simultaneously worked 20 hours per week for three employers: HIP Health Insurance's Brooklyn practice, Wyckoff Heights Medical Center, and Long Island College Hospital. At the time, Husband was the sole income-earner in the family. While the parties lived with Wife's parents rent-free, Husband was able, with his father's financial assistance, to save enough of his wages to pay off his medical school loans, pay the tuition for Wife's post-secondary education, and purchase a home. During this period, between 1991 and 1995, Wife cared for the parties' daughter during the day and attended college classes in the evening. Wife's parents assisted with the childcare responsibilities.
In 1995, the parties purchased the Steuben Property, a one-family home in Staten Island, for approximately $200,000.00. The parties saved enough of Husband's income to purchase their first home in cash, without a mortgage. On February 18, 1998, the parties' son, AH, was born, and Wife enrolled in Seton Hall Law School on a part-time basis later that year. Wife's tuition was partially covered by scholarships (20%-40%) and the balance was paid by Husband (60%-80%). The parties did not take any student loans to pay for Wife's law school education. It is important to note that the parties dispute the day-to-day household arrangement while Wife attended law school at night. Specifically, the parties do not agree on Husband's level of involvement in childcare, or the number of hours per week he worked during this period between 1998 and 2002.
In or around the year 2000, Husband joined University Physicians Group (hereinafter "UPG") in Staten Island, where he was assigned to work in nursing homes and private practices. According to Husband, UPG helped him both secure a position with Northwell Health, which turned into a full-time position as an attending physician sometime between 2001 and 2007, and to open his own outpatient family medicine practice in 2000. Husband opened the medical practice with two physician partners and, in 2007, the practice was formally incorporated as MXXXXXX OXXXXX, PC (hereinafter "MO PC"). In 2010, he bought out both partners for a total $110,000.00 and maintained a 100% interest in the business thereafter. Throughout the lifespan of the medical practice, Husband earned the bulk of his reported annual income from his full-time position at Northwell Health's XXXXX XXXXXX XXXXX XXXXXXX Center (hereinafter "the Northwell Clinic"), an outpatient methadone clinic which was located next door to MO PC.
Wife was admitted to the New York State Bar in 2003. Upon admission, Wife began volunteering at the Law Offices of RXXXXXX GXXXXXXXXXX (hereinafter "the law office"). At some point, one to three years later, Wife became an independent contractor at the law office and was paid for her work via a 1099. She initially worked three to four hours per week but, at the time of trial, was working 25 hours per week. According to Wife, her work at the law office was limited to a niche specialty: H-1B visas. Throughout her legal career, up to the time of trial, Wife was never a W-2 employee and never worked full-time. Although the parties dispute timelines and degree, Wife was primarily responsible for caring for the children and maintaining the household during the marriage.
In late 2012, the parties purchased the marital residence for $1.15 million. The marital residence is a single-family home spanning approximately 4,700 square feet, and the parties paid for the property in full, without a mortgage. Almost one year after the purchase, in August 2013, and upon the completion of extensive renovations to the newly acquired property, the parties and their children moved into the marital residence. The parties maintained the Steuben Property as a rental property. In addition to acquiring the marital residence, the parties purchased four luxury vehicles, vacationed regularly to destinations like Hawaii, the Caribbean, and Florida, paid tuition at private universities, and made generous annual charitable contributions. It is undisputed that Husband's wages and business income were the predominate funding sources for the parties' standard of living. Moreover, Husband's earnings were enough to pay significant expenditures in full via lump-sum transactions, without a need to obtain financing.
Although the sequence of events is not clear, Husband left the marital residence in or around November 2015 upon Wife's discovery that he was having an extramarital affair with an alleged paramour, identified herein as "VS". Around this time, Wife presented Husband with an agreement that proposed, inter alia, a disposition of marital assets in light of the parties' physical separation. However, Husband refused to execute it. Shortly after leaving the marital residence, Husband moved into the Steuben Property, which was previously being rented to a tenant, where VS cohabitated with him rent-free. In 2016, the parties separated their finances by depositing their respective earnings into newly created separate bank accounts, rather than the joint account they used throughout the marriage. Moreover, at Wife's request, Husband issued two checks to Wife from that joint account, in the amounts of $84,000.00 and $33,000.00, respectively, as part of this effort.
The parties were physically separated and maintained separate finances for approximately three years before Wife commenced the instant action for divorce on February 28, 2019. During that time, however, Wife maintained access to two of the parties' joint credit cards. Wife regularly utilized these credit cards during the parties' physical separation, and the monthly payments due for charges incurred by Wife were paid exclusively by Husband. In addition, Husband paid for expenses related to the upkeep of the marital residence, college tuition, and the preservation of the standard of living that the parties enjoyed prior to their physical separation. Simultaneously, for those three years, Husband was paying his personal expenses as he lived apart from Wife and with VS, including those associated with the upkeep of the Steuben Property.
In early 2019, Husband returned to the marital residence and expressed an interest in reconciling with Wife, but further efforts toward reconciliation never materialized. Based on the parties' respective testimony at trial, it is unclear what led to Husband's return, precisely how long that return lasted, and why a potential reconciliation was abandoned. In fact, the summons and complaint for this action were served upon Husband, personally, at the marital residence on March 11, 2019. It is clear, however, that each party was open to reconciliation at various points throughout their physical separation.
Husband moved out of the Steuben Property sometime in late 2019 or early 2020, and eventually moved into an investment property owned by Husband's sister, SS, at ** Francesca Lane, Staten Island, New York (hereinafter "the Francesca Property"). At the time, he was in a relationship with TA. Husband lived in the Francesca Property rent-free until he moved out at the end of 2021 when, according to his testimony, he moved into another home owned by SS. The Steuben Property was not rented out between the time Husband moved out in late 2019 or early 2020, and the sale of the property on April 22, 2021.
Since Wife commenced this action for divorce in February 2019, there have been significant changes regarding Husband's employment, medical practice, and finances. On August 27, 2019, Husband signed an employment renewal contract and compensation schedule with Northwell Health at an annual salary of $198,590.00. Shortly thereafter, Northwell Health suspended Husband without pay pending an investigation of whether he inappropriately prescribed marijuana. In a letter dated September 30, 2019, Northwell Health informed Husband that the investigation uncovered no violative actions and, therefore, he was to be fully reinstated. A month later, Husband received a letter from Northwell Health informing him that he was suspended without pay again, as of October 24, 2019, pending investigation of allegations of inappropriate and unprofessional conduct. A letter from Northwell Health, dated December 12, 2019, informed Husband that his employment was terminated as of December 2, 2019, and his health benefits, which also covered Wife and AH, would be terminated by the end of the calendar year. Four months after his termination, Husband received a letter from the New York State Justice Center for the Protection of People with Special Needs informing him that the allegations of obstruction that resulted in his termination were deemed unfounded. Nevertheless, he was not reinstated by Northwell Health.
In 2019, Northwell Health closed the clinic where Husband worked. Husband testified that the Northwell Clinic was a significant source of referrals to MO PC, located next door and, consequently, the closure of the Northwell Clinic had a significant negative impact on MO PC. Furthermore, MO PC was operating out of an office leased by Northwell Health. In October 2019, around the time of Husband's second suspension from his employment at Northwell Health, he received a notice that Northwell Health would be terminating MO PC's month-to-month tenancy, effective November 30, 2019. In December 2019, Northwell Health commenced a holdover eviction proceeding in New York City Civil Court, Kings County and, in May 2020, Husband closed MO PC.
After closing MO PC, Husband gained employment with an entity identified as "XXX Medical, Inc.", which paid him an annual gross salary of $41,638.00 in 2021 but offered no benefits. Approximately one month before trial, Husband started a new job at an entity identified as "AMT". During trial, pursuant to this Court's direction, Husband produced paystubs from AMT, which showed that he earned gross income of $2,000.00, bi-weekly, but without any benefits. It was also uncovered at trial that Husband created a new eponymous entity in January 2020, several months before closing MO PC, identified as IXXXXXXX HXXXXXX MD, PLLC ("IH MD"). Husband did not disclose IH MD in his pre-trial net worth statement. Though non-operational at the time, IH MD was listed as an active business entity at an address within a short distance from Husband's shuttered medical practice, MO PC.
At the start of trial in June 2022, Wife was earning a gross annual salary of approximately $36,000.00 from the law office, and was residing in the marital residence with AH, who was 24 years old. Also in June 2022, AH completed a postgraduate program, attained his master's degree, and secured a paid, part-time internship. The parties' daughter, SH, has lived independently outside the marital residence since 2015 or 2016. Shortly after the conclusion of trial, Husband ceased paying court-ordered spousal maintenance to Wife, which had amounted to $300.00 per week. Moreover, except for the first month's payment, he never maintained Wife's health insurance coverage pursuant to the August 2020 Order.
III. EQUITABLE DISTRIBUTION
Equitable distribution is based on the premise that a marriage is, among other things, an economic partnership to which both parties contribute as spouse, parent, wage earner, or homemaker (see Fields v Fields, 15 N.Y.3d 158 [2010]; see also O'Brien v O'Brien, 66 N.Y.2d 576, 585 [1985]). In an action for divorce, the Court is charged with, among other things, dividing marital assets in an equitable manner (Domestic Relations Law § 236 [B]). "Consistent with this purpose, and implicit in the statutory scheme as a whole, is the view that upon dissolution of the marriage there should be a winding up of the parties' economic affairs and a severance of their economic ties by an equitable distribution of the marital assets" (O'Brien, 66 N.Y.2d at 585).
Domestic Relations Law § 236 defines "marital property" as "all property acquired by either or both spouses during the marriage and before the execution of a separation agreement or the commencement of a matrimonial action, regardless of the form in which title is held" (Domestic Relations Law § 236 [B] [1] [c]), and the definition of marital property includes a "wide range" of tangible and intangible interests (DeJesus v DeJesus, 90 N.Y.2d 643, 665 [1997]). Moreover, the term "marital property" is to be construed broadly, while the concept of "separate property", an exception to marital property, is to be construed narrowly (Price v Price, 69 N.Y.2d 8 [1986]). The equitable distribution law "recognizes that spouses have an equitable claim to things of value arising out of the marital relationship and classifies them as subject to distribution by focusing on the marital status of the parties at the time of acquisition" (O'Brien, 66 N.Y.2d at 585). The evidence presented at trial supports the presumption that every asset acquired by the parties, both individually and jointly, during their 30-year marriage is marital property regardless of title (Domestic Relations Law § 236 [B] [1] [c]; see DeLuca v DeLuca, 97 N.Y.2d 139, 144 [2001]).
Separate property is defined as "property acquired before marriage or property acquired by bequest, devise, or descent, or gift from a party other than the spouse" (Domestic Relations Law § 236 [B] [1] [d]). Separate property also includes property acquired in exchange for or the increase in value of separate property, except to the extent that such appreciation is due in part to the contributions or efforts of the other spouse (id. § 236 [B] [1][d] [3]). Under the law of equitable distribution, there is a presumption that all property acquired by either spouse during the marriage is marital property (id. § 236 [B] [1] [c]). The burden rests with the titled spouse to rebut the presumption of marital property (DeJesus, 90 N.Y.2d at 652). The parties have each asserted a separate property claim, which will be discussed herein, in relation to the marital residence and Wife's separate bank account, respectively.
To properly distribute a marital asset, the Court must first determine the value of the property subject to distribution (Capasso v Capasso, 119 A.D.2d 268 [1st Dept 1986]). The Domestic Relations Law, however, does not specify the date that is to be used as the touchstone for measuring the value of the marital property (McSparron v McSparron, 87 N.Y.2d 275, 287 [1995]). Thus, trial courts have been vested with the authority to determine the appropriate date for measuring the value of marital property upon consideration of all relevant facts and circumstances (id.; Domestic Relations Law 236 § [B] [4] [b]).
Equitable distribution of marital property does not necessarily mean equal distribution (see Santamaria v Santamaria, 177 A.D.3d 802, 804 [2d Dept 2019]). The equitable distribution of marital assets must be based on the circumstances of the particular case, and the trial court is to consider a number of statutory factors (Domestic Relations Law § 236 [B] [5][d] [6]; see Holterman v Holterman, 3 N.Y.3d 1, 8 [2004]; see also Price v Price, 69 N.Y.2d at 11). "Those factors include: the income and property of each party at the time of marriage and at the time of commencement of the divorce action; the duration of the marriage; the age and health of the parties; the loss of inheritance and pension rights; any award of maintenance; any equitable claim to, interest in, or direct or indirect contribution made to the acquisition of marital property by the party not having title; and any other factor which the court shall expressly find to be just and proper" (Taylor v Taylor, 140 A.D.3d 944, 945-946 [2d Dept 2016]; Domestic Relations Law § 236 [B] [5] [d]). "While equitable distribution does not necessarily mean equal distribution, when both spouses have made significant contributions to a marriage of long duration, the division of marital property should be as equal as possible" (Kamm v Kamm, 182 A.D.3d 590, 591 [2d Dept 2020], quoting Eschemuller v Eschemuller, 167 A.D.3d 983, 985 [2d Dept 2018]).The Court has reviewed all of the enumerated statutory factors in order to effectuate the equitable distribution of the parties' marital estate. Although the statute suggests that a trial court consider all of the factors in making its determination, it does not impose a requirement to engage in a point-by-point analysis of each and every one of them (see Morille-Hinds v Hinds, 87 A.D.3d 526, 527 [2d Dept 2011]). Therefore, the Court has included for discussion only those factors that specifically apply to the facts of this proceeding and omitted those it afforded minimal, if any, weight. Specifically, the Court has considered the following factors: (a) the income and property of each party at the time of marriage, and at the time of commencement; (b) the duration of the marriage and the age and health of both parties; (c) the loss of health insurance benefits upon dissolution of the marriage; (d) the award of maintenance to Wife herein; (e) direct or indirect contributions to the development during the marriage of the enhanced earning capacity of the other spouse; (f) the liquid or non-liquid character of all marital property; (g) the probable future financial circumstances of each party; and (h) the wasteful dissipation of assets by either spouse.
A. Income and Property
When the parties were married on December 23, 1988, Husband was a medical student, and Wife lacked a high school diploma or its equivalent. Husband started earning income in 1989, at approximately $45,000.00 annually, as a medical resident at SUNY Downstate. When Wife enrolled in Kingsborough Community College in 1990, she received tuition assistance based on the parties' low income. Moreover, the parties resided with Wife's parents, rent-free, from 1989 through 1995. Neither party testified at trial that they owned separate property at the time of marriage.
At commencement of this action on February 28, 2019, Wife, a licensed attorney, reported $29,500.00 in gross annual earnings (plaintiff's exhibit 2) and Husband, a licensed physician, reported $224,464.00 in combined gross annual earnings (plaintiff's exhibit 24) from his medical practice and full-time position at Northwell Health. The parties' adjusted gross income, at commencement, was reported as $421,786.00 (plaintiff's exhibits 19, 24), which included a one-time credit of at least $127,738.00 that Husband received toward future coverage from his medical malpractice liability carrier (tr at 590).
As of commencement of this action, Husband was clearly the monied spouse. Wife's testimony, that she never earned more than $38,000 in gross income annually (tr at 29), is substantiated by documents in the trial record. Notwithstanding that Husband reported a significantly lower income at the time of trial, this factor weighs in favor of Wife for equitable distribution purposes.
According to the trial record, at the time of trial, Wife never earned more than $36,000.00 annually.
B. Duration, Health, and Age
The parties were married approximately 30 years prior to the commencement of this action. Although they were physically separated for over three years before commencement, no separation agreement was executed. At the time of trial, Wife was 51 years old and Husband was 57 years old. Husband is in good health and did not claim to suffer from any health conditions that would impact his earning capacity or the distribution of marital assets.
On the sixth day of trial, Wife testified that she suffered from keratoconus, a degenerative condition affecting her right eye, since the late 1990s (tr at 928). She testified that, due to keratoconus, she could barely see out of her right eye and is unable to read or review paperwork for extended periods of time which, in turn, impacts her ability to work (tr at 928). Wife did not testify or provide any documentation, however, that her eye condition has any impact on her earning capacity. She did not complain of any other health issue.
Given the long duration of the parties' marriage, the Court finds that this factor weighs in favor of an equal distribution of the marital assets.
C. Health Insurance
Husband's employer-based health insurance was terminated shortly after being fired from his full-time position at Northwell Health in December 2019 (defendant's exhibit J). Wife and AH, both covered under Husband's policy, lost their health insurance as well. Throughout most of their 30-year marriage, Wife relied on Husband for health insurance and did not have access to employer-based plans, as she was an independent contractor. Moreover, Husband did not comply with the Court's August 2020 Order which directed him to maintain Wife's substitute health insurance coverage during the pendency of the action.
At the time of trial, Wife was paying approximately $457.00 per month for health insurance coverage through New York State Fidelis Care, which she purchased through the New York State Marketplace (plaintiff's exhibit 3). In her post-trial summation, Wife provided a notice from her insurer stating that her premiums would increase to $558.34 per month as of January 1, 2023. Husband, on the other hand, qualified for free health insurance based on his reported income. The Court finds, however, that Husband had no barriers to securing employment which offered employer-based coverage, while Wife, in her early 50s, would need to obtain her first full-time job as a W-2 employee. Therefore, this factor weighs in Wife's favor for equitable distribution purposes.
D. Maintenance
In the preliminary conference order, the Court directed Husband to pay Wife $300.00 per week in cash, maintain status quo payments, and pay all household bills and credit cards (plaintiff's exhibit 5). Although Husband's payments of this interim support were irregular, he was current with this obligation (tr at 298). It is difficult to ascertain from the trial record the total amount Husband paid in household bills, credit cards, and other expenses, or to what extent he maintained those payments throughout more than three years of litigation.
The Court has awarded Wife post-divorce spousal maintenance in the amount of $4,475.00 per month, or $53,700.00 per year. Based on the parties' 30-year marriage, the Court fixed the duration of the award to 14 years. The post-divorce maintenance awarded to Wife, herein, has been considered by the Court in its equitable distribution of the parties' marital assets.
E. Contributions Towards Earning Capacity
Husband had a significant and direct impact on Wife attaining a law degree and her admission to the New York State Bar. Husband's income was used to pay all of Wife's undergraduate tuition after the parties no longer qualified for income-based tuition assistance. When Wife enrolled in Seton Hall Law School, Husband paid, from his income, the 60%-80% of Wife's tuition not covered by scholarship or grants (tr at 24). The Court also considered that, despite becoming a licensed attorney in 2003, Wife never worked full-time during the marriage, never earned more than $36,000.00 annually, and worked exclusively as an independent contractor for a sole proprietor (tr at 25).
When the parties were married in December 1988, Husband was in his final year of medical school. Upon graduation, he commenced a three-year residency at SUNY Downstate where he worked approximately 80-120 hours per week (tr at 253, 472). SH was born at the approximate halfway point of his residency. It is uncontested that Wife, who was attending community college part-time, was primarily responsible for caring for SH at the time (tr at 21). The parties also lived rent-free with Wife's parents until 1995 (tr at 20).
Wife testified at trial that she was always the primary caretaker for the parties' two children and maintained the household when the parties' lived independently in their own home (tr at 23). Husband disputed that claim and testified that, when AH was born in 1998, he left two of his three jobs to help care for children. According to Husband, he worked only 20 hours per week so that Wife could attend law school (tr at 471-472). He testified that, during that time, he cared for the children and maintained the household with help from his parents, Wife, and Wife's parents (id.).
The Court finds Husband's claim to be exaggerated, at best. Wife commenced law school, part-time, in 1998, the same year that AH was born. In or around 2000, Husband joined UPG in Staten Island where he was assigned to work in nursing homes and private practices (tr at 478). That same year, he opened his own medical practice, which he formally incorporated seven years later (tr at 479, lines 23-25; at 480, lines 1-3). Shortly thereafter, he started working full-time at Northwell Health. Husband testified at trial that, between his position at Northwell Health and his practice, he worked approximately 80 hours per week (tr at 728).
Therefore, if Husband did in fact reduce his work hours in 1998 to care for the children and household, it was for a relatively short period of time. One to two years later, he was working at UPG and opening a new medical practice. In the meantime, Wife cared for the parties' young children, maintained the home, and attended law school in the evening. The Court credits Wife's trial testimony that she handled the lion's share of caretaking and household duties during the marriage.
The parties' respective direct and indirect contributions to each other's earning capacities weigh in favor of an equal distribution of the marital assets.
F. Liquidity
The parties have several significant liquid assets to be distributed: proceeds from the sale of the Steuben Property, Wife's joint bank account with her father, and several life insurance policies with cash surrender values. At the time of trial, the marital residence, Husband's retirement accounts, MO PC, and the parties' motor vehicles were non-liquid. The Court will, however, direct the parties to sell the marital residence, with a buyout option granted to Wife, which will substantially increase the pool of liquid assets in the marital estate. Accordingly, this factor weighs equally in favor of both parties.
G. Future Financial Circumstances
Based on the trial record, Husband has a demonstrably greater earning capacity than Wife. Husband is a licensed physician in good standing and, as he testified at trial, there is no barrier which prevents him from working at a hospital or operating his own medical practice as he has for most of the marriage (tr at 784-785). Accordingly, although he currently earns less than a quarter of the annual salary that he reported at commencement, Husband does not claim any barrier or limitation to his earning capacity (tr at 711-712, 784-785). Furthermore, Husband has not adequately explained why his current salary is a fraction of what he has historically earned.
Wife is an attorney in good standing and is licensed to practice in New York State. Since being admitted in 2003, she has worked exclusively as an independent contractor, part-time, for a sole practitioner with an office in Staten Island. According to her trial testimony, Wife's work at the law office was limited to a niche immigration law subpractice: the H-1B visa program (tr at 179, 194, 199-202). Husband testified at trial that he believed Wife was offered to be a partner at the law firm, and has handled real estate closings in addition to her immigration work, but provided no evidence to substantiate that claim (tr at 475-476). Moreover, Husband introduced no expert testimony or evidence to establish Wife's earning capacity given her experience to date. Thus, the Court relied on Wife's reported earnings at the time of trial and in years prior and finds that she is currently earning at or around her established earning potential.
This factor weighs in Wife's favor for equitable distribution purposes.
H. Wasteful Dissipation and Encumbrances
In the context of a matrimonial action, wasteful dissipation is generally understood as any conduct by a party to prevent the Court from fairly and equitably distributing the marital estate (Sykes v Sykes, 35 Misc.3d 591 [Sup Ct, NY County 2012]) citing Blickstein v Blickstein, 99 A.D.2d 287, 293 [2d Dept 1984]). "What is and what is not a 'wasteful dissipation' will have to be defined judicially" (19 Carmody-Wait 2d § 118:50). "It will be important to separate true waste from mere difference over spending priorities between people who no longer agree" (id., citing Alan D. Scheinkman, Practice Commentary, McKinney's Cons Laws of NY, Domestic Relations Law, § 236B:36 [2012]). "The party alleging that his or her spouse has engaged in wasteful dissipation of marital assets bears the burden of proving such waste by a preponderance of the evidence" (Epstein v Messner, 73 A.D.3d 843, 846 [2d Dept 2010]; see Raynor v Raynor, 68 A.D.3d 835, 838 [2d Dept 2009]).
In her post-trial summation and at trial, Wife raised numerous instances of alleged wasteful dissipation of assets by Husband. The wasteful dissipation perpetrated by Husband, she argued, entitles her to distributive awards, credits, and/or an unequal distribution of the marital estate in her favor. To support her claim, Wife cited a litany of cases where the court determined that a party's economic fault entitled the other to a distribution of marital assets greater than 50%, or granted a credit for the value of a depleted or wasted asset (plaintiff's summation at 20-24). Economic fault in those cases consisted of the dissipation or secreting of assets, or other conduct which unfairly prevented the court from making an equitable distribution of marital property, and was a consequential factor considered by the trial court (see Michaelessi v Michaelessi, 59 A.D.3d 688, 874 [2d Dept 2009]; see also Kurley v Kurley, 131 A.D.3d 1124 [2d Dept 2015]; see also Maharam v Maharam, 245 A.D.2d 94 [2d Dept 1997]; see also Davis v Davis, 175 A.D.2d 45 [1st Dept. 1991]).
The Court carefully considered the alleged instances of wasteful dissipation claimed by the parties in determining the equitable distribution of the marital estate and makes the following findings:
1. Pre-Commencement
A plurality of Wife's allegations that Husband dissipated marital assets are related to his extramarital affairs. It was established at trial, and uncontroverted, that Husband had two extramarital affairs: one pre-commencement and the other post-commencement. Wife characterized these affairs as marriages, and Husband's paramours as his wives. To support her claim, she explained that a nikah ceremony was conducted to authorize these relationships as permissible under Muslim law and tradition. Moreover, Wife testified that Husband referred to his paramours as "wives" and supported them financially in accordance with that belief (tr at 36, 56). That financial support, she claimed, was provided by Husband from marital assets.
Despite Wife's characterization, the Court does distinguish between Husband's extramarital affair with VS before the commencement of this action and his relationship with TA after Wife commenced this action.
Husband denied that he married his paramours or considered them to be his wives. According to Husband, these ceremonies were "unofficial nikahs" that are necessary under Muslim law and tradition to commence dating or any romantic relationship, generally, and are not officiated by an imam or legally recognized (tr at 457-459, 606-608, 618). Husband acknowledged, however, that although he had the affairs while "separated" from Wife, there was no formal separation agreement between the parties (tr at 604-605). With respect to financial support, Husband denied that he dissipated marital assets and contended that he was simply covering his living expenses while physically separated from Wife. In response to questions at trial about specific credit card purchases, Husband insisted that he was reimbursed by his paramour VS for her charges on the credit card (tr at 625-630). He failed, however, to offer any evidence to substantiate such an arrangement.
A significant amount of time at trial was spent on Husband's pre-commencement expenditures during the more than three-year period when the parties were physically separated. Husband was questioned about numerous credit card transactions and expenses between the time he left the marital residence in late-2015, and the commencement of this action in February 2019. Wife claimed that, during this period while parties were living separately, Husband was using marital assets to travel with his paramour, purchase luxury gifts and services for her, and cover the many charges she made on his credit card. Although Wife may not have been aware of specific expenditures, her trial testimony revealed that she knew, even in the early days of the parties' physical separation, that Husband was spending money on his paramour (tr at 57-58, 234, 248-259). Nonetheless, Wife did not file for divorce until more than three years later (tr at 216, 221).
Under these circumstances, the Court would need to review and evaluate scores of financial transactions over multiple years during the parties' marriage. Neither Husband nor Wife cited a barrier, real or perceived, which prevented them from commencing an action for divorce during their three-year physical separation. In fact, Wife's testimony at trial indicated that she was hopeful for an eventual reconciliation with Husband (tr at 271, 280). Furthermore, Wife did not claim that, during their three-year physical separation, Husband's paramour-related expenditures were made in contemplation of divorce.
Therefore, the Court has followed the general rule that, where payments are made before either party is anticipating a divorce, and there is no evidence presented of fraud or concealment, courts should not look back and try to compensate a party for any reduction in the value of the marital estate that may have resulted from such payments (Mahoney-Buntzman v Buntzman, 12 N.Y.3d 415 [2009]). "The parties' choice of how to spend funds during the course of the marriage should ordinarily be respected" (id. at 421). "Courts should not second-guess the economic decisions made during the course of a marriage, but rather should equitably distribute the assets and obligations remaining once the relationship is at an end" (id.). There is no established exception to this general principle for financial decisions made by parties during their marriage, but while living apart.
However, in its consideration of Wife's allegations that Husband dissipated marital assets during the parties' physical separation, the Court did examine whether the following expenditures cited were so excessive that they amounted to wasteful dissipation (id. at 421-422; Domestic Relations Law § 236 [B] [5][d] [11]).
i. Husband's Forgoing of Rent
In this case, as aforementioned, Husband left the marital residence in November 2015 upon Wife's discovery that he was having an extramarital affair with VS. At trial, Wife testified that, when Husband expressed his intention to live with VS in the Steuben Property, she vehemently expressed her objection (tr at 56, 929-931). Further, Wife claimed that she asked Husband to agree, in writing, that he would not move into the Steuben Property with VS, which Husband refused to sign (tr at 217-221). In late 2015 or early 2016, Husband moved into the Steuben Property, which was previously being rented to a tenant, and VS joined him rent-free (tr at 349,619-622). According to Wife, she eventually discovered that Husband was living at the Steuben Property with VS but did not confront him about it because the parties were not on speaking terms at the time (tr at 929-930).
For approximately two years prior to Husband's move to the Steuben Property, the property was rented for $2,500.00 per month (tr at 620-625). Husband testified at trial that there were three tenants during that period, and he was responsible for collecting the rent (tr at 622). The Steuben Property did not generate any rental income from the date that Husband moved in with VS until it was sold on April 22, 2021 (tr at 624-625). Wife is seeking a credit of $100,000.00, which she claims represents her 50% marital share of lost rental income over a six-year period, at a rate of $2,500.00 per month. Husband's occupancy of the property with his paramour, she claimed, amounted to a dissipation of marital assets in the form of forgone rent.The parties were married for most of the six-year period for which Wife now seeks a credit for lost rent. It is clear from Wife's testimony that, during that time, she was aware Husband was living with VS at the Steuben Property (tr at 929-930). Moreover, Husband openly communicated his intention to do so in advance (tr at 216). Therefore, the Court will not look back to second-guess why Wife failed to file for divorce or take any other action, for at least three years, to address the loss of potential rental income from the Steuben Property during the parties' marriage. Moreover, it is notable that Wife made no claim that the loss of a rental income stream during these three years caused any financial strain or had an impact on the parties' standard of living.
Husband further claimed that all three tenants failed to either pay rent on time or at all. As a result, Husband testified, the parties made very little money from the property when it was rented.
Husband moved out of the property in late-2019/early-2020.
As for the post-commencement period, Husband lived in the Steuben Property without VS for approximately one year, and the property was vacant for approximately one year thereafter until it was sold (tr at 622-623). Wife did not substantiate, neither in her trial testimony or post-trial summation, her claim for a post-commencement loss-of-rent credit. Wife did not meet the burden of proof to establish that Husband dissipated marital assets when he resided in a mortgage-free marital property for a year, post-commencement, and paid all property-related expenses during that time. Furthermore, Wife failed to meet the burden of proof to establish that Husband dissipated marital assets simply because the Steuben Property did not generate rental income when it was vacant during this litigation until it was sold in April 2021. Therefore, the Court will not grant any credit to Wife for her loss-of-rent claim.
VS moved out of the Steuben Property at some point in 2018.
Husband had no access to Wife's income during this period. He was making payments, from his income, to maintain both the Steuben Property and the marital residence.
As a general matter, parties in an action for divorce should be allowed to reside in properties they own rather than forced to pay rent to a third party which would result in a net-loss of available income to the parties. Furthermore, a ruling that one spouse, or the other, should have to reimburse the marital estate for lost rent when they occupy a marital property would have an unintended chilling effect on parties physically separating during the pendency of a matrimonial proceeding which is generally preferable to parties residing together during a time of significant strife.
ii. Husband's Credit Card Expenditures for VS
The trial transcript is replete with Wife's counsel questioning Husband, line-by-line, about specific charges on his credit card account ending in "*517" (hereinafter "the credit card"). It was undisputed at trial that Wife never had access to that credit card. According to Husband's testimony, VS used the credit card and an unidentified friend of hers managed the account (tr at 356, 629-630). Wife pointed to over $10,000.00 in charges, which included hotel bookings and airfare for trips Husband took with VS to Atlanta, Chicago, Baltimore, and Saudi Arabia. Wife also identified over $5,000.00 in veterinarian charges that she claims were for VS's dog, along with numerous charges for beauty spa services and lingerie (plaintiff's summation at 25). Wife seeks a minimum credit of $5,000.00 for Husband's use of marital assets to pay VS's charges on this credit card.
Husband had no access to Wife's income during this period. He was making payments, from his income, to maintain both the Steuben Property and the marital residence.
Husband admitted that VS used his credit card but claimed that she would reimburse him for all of her charges. He did not, however, submit any evidence to substantiate that claim. Husband further claimed, without any evidence, that the veterinarian charges were probably, at least in part, for his cats (tr at 986-987). As for the travel, he admitted the possibility that VS accompanied him to medical conferences which he testified he would use as personal vacations post-conference (tr at 1009-1012). Husband also equivocated in his responses about whether he traveled with VS to Saudi Arabia at his expense (tr at 641-642). The Court does not credit Husband's testimony on this issue.
Husband's payments of these charges, however, were made during the marriage. At several points during the trial, Wife testified that she worried that Husband would squander away all of their money on his paramour. In fact, that concern was so serious that she presented Husband with a separation agreement in an effort to protect marital assets, which Husband refused to sign (tr at 221, 231). Thereafter, she separated her finances by redirecting her wages from the joint account she shared with Husband into a newly created account she opened with her father, MR, at another bank. Despite knowing that Husband was spending money on VS throughout the parties' three-year separation, Wife did not file for divorce or take any action to protect marital assets beyond segregating her own wages.
2016-2018.
Although the Court did not scrutinize the financial activities of the parties during their marriage, and before a divorce was anticipated, it did consider whether Husband's credit card payments were so excessive that they amounted to wasteful dissipation. During the parties' physical separation, when Husband made these credit card payments, he was earning over $200,000.00 dollars annually in combined income from his full-time job at Northwell Health and his medical practice, MO PC. He was paying the expenses for both the marital residence and the Steuben property, Wife's credit card charges, and AH's college tuition. When the parties were physically separated pre-commencement, Husband did not take on debt or encumber any marital asset. Based on the trial record, Husband was able to afford his own lifestyle and maintain the standard of living enjoyed by Wife and AH.
SH moved out of the marital residence around that time and lived independently thereafter.
Therefore, Husband's payments "of over $10,000.00" for VS's charges on his credit card are not excessive in relation to his income, standard of living, and the financial support he provided to Wife during that three-year period (see Kohl v Kohl, 24 A.D.3d 219 [1st Dept 2005]; see also Sykes, 35 Misc.3d 591). The evidence regarding Husband's credit card expenditures during the parties' physical separation are consistent with the fact that he was openly living a separate life with a paramour, rather than pursuing a nefarious scheme to improperly dispose of marital assets. Moreover, there was no showing at trial that either party contemplated divorce during the relevant period. Accordingly, Wife's request for a $5,000.00 credit for Husband's credit card payments during their marriage will be denied.
iii. Husband's Concealment of Motor Vehicle and Insurance Payout
Wife alleged that Husband purchased a new 2017 Jeep ("the Jeep") for, or on behalf of, VS while the parties were physically separated during their marriage. Husband, both at his deposition and trial, denied ever owning the Jeep. To refute Husband's claim, Wife presented an abstract from the New York State Department of Motor Vehicles which indicated that VS took title of the vehicle on July 31, 2017, when the odometer reading was at 26 miles, and title was transferred to Husband on September 10, 2019 (tr at 759, 760; plaintiff's exhibit 42). In contradiction of his earlier trial testimony and his deposition, Husband admitted that he took title to the Jeep, but only to help VS dispose of it (tr at 757-760). According to Husband, VS "crashed the vehicle on the Belt Parkway," which resulted in its total loss. He further testified that VS was in a detox facility after this accident and transferred title to him solely to facilitate the disposal of the vehicle (tr at 759-760). In response to questions about insurance proceeds, Husband averred that any policy for the Jeep would be solely in VS's name and denied receiving any insurance proceeds (tr at 760-762, 829-830).
In her post-trial summation, Wife claimed that once Husband acquired title to the Jeep in 2019, it became a marital asset which entitles her to a share of any insurance payout, along with the Jeep's salvage value. There is nothing in the trial record, however, to support that claim. Husband took title to the Jeep post-commencement, which triggers the rebuttable presumption that the vehicle is separate property (Domestic Relations Law § 236 [B] [1] [c]; plaintiff's exhibit 42). Wife did not submit evidence that Husband acquired the Jeep post-commencement using marital funds, or to substantiate her claim that he purchased the vehicle for, or on behalf of, VS during the marriage. Similarly, Wife did not submit any evidence that Husband received insurance proceeds or other payments for the Jeep. Therefore, she failed to meet her burden of proof to establish that Husband dissipated marital assets in this instance.
Wife did not introduce any evidence that Husband paid for, with marital funds or otherwise, the post-commencement acquisition of the Jeep.
Wife did introduce evidence of a questionable $2,500.00 transaction at a Chrysler dealership the same year the Jeep was acquired by VS, which Husband testified was to repair/install a navigation system (tr at 1005). Although the Court did not find Husband's testimony credible, evidence of that transaction does not establish that Husband purchased the Jeep during the marriage.
iv. Husband's Charitable Contributions in 2018 and 2019
In her post-trial summation, Wife also alleged that Husband dissipated marital assets by making charitable contributions in excess of $29,000.00, in both 2018 and 2019, when Husband claimed that his medical practice was losing money (plaintiff's summation at 25). The Court does not find that these charitable contributions amounted to a dissipation of marital assets.
The parties testified at trial that they, as Muslims, adhered to zakat, a religious obligation to contribute a minimum of 2.5% of their total income and savings to charity every year (tr at 138-139). The parties made charitable contributions which exceeded the minimum 2.5% throughout their marriage, including the period when they lived separately, pre-commencement. As evidenced by their joint tax returns, the parties reported $20,468.00 and $18,932.00 in charitable contributions in 2016 and 2017, respectively (plaintiff's exhibits 18, 24; tr at 721). In 2018, the parties filed a joint tax return reporting $29,147.00 in charitable contributions (plaintiff's exhibit 19). Despite the increase in the amount of contributions from the previous year, the Court will not second-guess the parties' financial decision to donate to charity in 2018, or at any other point during their marriage, especially when the parties filed their taxes jointly and likely received a tax benefit for those contributions.
Wife commenced this matrimonial action in February 2019. The parties, for the first time since they were married in 1988, filed separate tax returns in 2019. That year, Husband reported $29,623.00 in total charitable contributions (plaintiff's exhibit 20). Wife's allegation that Husband's charitable contributions in 2019 amounted to dissipation of marital assets is based on both Husband's claim that his medical practice lost money that year, and his failure to comply with various court-ordered payments. The amount of Husband's contribution, however, is consistent with what the parties reported the previous year. Moreover, between 2016 and 2018, the parties reported $68,547.00 in total charitable contributions (tr at 721; plaintiff's exhibit 24). Given that Husband's earnings represented most of the parties' total income during those years, his reported contributions in 2019, even filing separately, were not aberrations. Furthermore, Husband's claimed financial difficulties that year, and non-compliance with court-ordered payments, does not deem it more likely that Husband intended to deplete marital assets by making charitable contributions at a historically consistent amount.
According to documentary evidence submitted at trial, Husband's financial setbacks occurred during the last quarter of 2019, when he was first suspended from his job at Northwell Health. There was no evidence presented with respect to the timing of Husband's charitable contributions in relation to those setbacks.
Therefore, Wife has not met her burden of proof to establish that Husband's reported charitable contributions, in either 2018 or 2019, amounted to dissipation of marital assets.As a matter of public policy, the Court is reluctant to probe the religious practices of the parties. Furthermore, the Court is careful not to set a precedent that would discourage parties in a matrimonial action from continuing to make their regular, established charitable contributions during the pendency of litigation.
2. Post-Commencement
At trial, Wife also alleged Husband dissipated marital assets during the litigation. As with the allegations of pre-commencement dissipation, Wife bore the burden of proving that Husband engaged in such waste by a preponderance of the evidence (see Epstein, 73 A.D.3d at 846; see Raynor, 68 A.D.3d at 838).
In considering these allegations, the Court examined whether the following alleged conduct by Husband unfairly prevented the equitable distribution of marital property (see Blickstein, 99 A.D.2d at 293).
i. Husband's Gifts and Travel Expenses for TA
The Court previously considered claims that Husband depleted marital assets on pre-commencement expenses related to VS. According to the trial testimony, Husband's relationship with VS ended at some point before Wife commenced this divorce action. In May 2019, after the commencement of this instant action, he met TA and commemorated the start of their new romantic relationship with an "unofficial nikah" in the following month. Husband and TA moved in together in late 2019, first in Queens for three months, and then in the Francesca Property owned by Husband's sister, SS, in Staten Island. According to Husband, he and TA did not pay any rent during the approximate two years that they lived at the Francesca Property (tr at 654).Wife claimed that Husband dissipated marital assets on expenditures related to TA which included the purchase of a "diamond" ring, "gold" bangles, and travel-related expenses. During trial, Wife's counsel read select portions of TA's deposition wherein TA testified that Husband gifted her said ring and bangles. However, when questioned about the items at trial, Husband claimed that the ring did not have diamonds, and the bangles were not gold (tr at 638-640). According to Husband, these gifts were mere "token" items and cost no more than "a hundred dollars' worth" (tr at 640). The Court does not credit Husband's testimony. Wife's counsel also questioned Husband about credit card charges related to travel expenses. Husband admitted to covering TA's expenses when they attended a wedding in Texas, and that they traveled to upstate New York for a weekend (tr at 657-658). Whether Husband considered TA his wife in accordance with the Muslim religion, as Wife testified at trial and Husband denied, was not relevant. The Court's analysis focused simply on Husband's financial conduct in relation to marital assets.
Husband testified that he may have paid rent for one month from a line of credit (tr at 654).
There was insufficient evidence in the trial record, however, to quantify Husband's expenditures. Wife's counsel questioned Husband about a $5,000.00 purchase at a jewelry store (tr at 994). Husband's testimony, that the charge was for "decorative items and chandeliers" that he purchased for himself, was not at all credible (tr at 994-995). Nevertheless, the transaction occurred pre-commencement on August 9, 2015, and several years before Husband allegedly began his relationship with TA. Therefore, this purchase could not have been for a diamond ring intended for TA as Wife claims. There was also no evidence presented to quantify Husband's alleged purchase of gold bangles for TA.
"In the absence of a separation agreement, the commencement date of a matrimonial action demarcates the termination point for the further accrual of marital property" (Campbell v Campbell, 149 A.D.3d 560 [1st Dept 2017] citing Anglin v Anglin, 80 N.Y.2d 553 [1992]). Therefore, a party's income earned post-commencement, unless it is compensation for past services rendered during the marriage, is their separate property (see DeLuca v DeLuca, 97 N.Y.2d 139 [2001]). In order for Wife to establish her assertion of wasteful dissipation, she would have to identify a pre-commencement asset, to which she would have a claim, that Husband liquidated or otherwise used to fund the purchases at issue. Moreover, post-commencement debt is also separate property (see Prince v Prince, 247 A.D.2d 457 [2d Dept 1998]). So, to the extent Husband bought his girlfriend gifts post-commencement using credit cards, those debts are his alone and do not form the basis of a marital waste claim.
Husband's expenditures related to TA are consistent with him living a separate life with a girlfriend, post-commencement, rather than an effort to impede the fair distribution of the marital estate or deprive Wife of her equitable share of marital assets. Moreover, Wife did not identify any marital asset that Husband improperly used to purchase items for TA post-commencement. Therefore, Wife failed to meet her burden of proof to establish the wasteful dissipation of marital assets in this instance.
ii. Husband's Closure of MO PC
During the litigation, the Court appointed a neutral forensic evaluator to appraise Husband's medical practice, MO PC. At trial, the Court admitted into evidence the evaluator's report which found that MO PC had a total value of $530,000.00 as of this action's commencement date (plaintiff's exhibit 7). Interestingly, by the time the report was produced on February 10, 2021, the medical practice was no longer in business. Citing numerous factors outside of his control, Husband testified that he closed MO PC in May 2020. Wife claimed that Husband dissipated the practice to prevent her from receiving her equitable marital share in distribution. Specifically, Wife alleged that Husband made no effort to sell his practice or patient list and had no reason, other than to impede equitable distribution, to close the practice.
The closure of MO PC was acknowledged in the report.
Upon careful consideration of Wife's claims and a comprehensive review of the trial record, the Court does not find that Husband dissipated MO PC. As a general matter, the Court finds that Husband was a less than credible witness. Nevertheless, Husband's testimony that he was forced to close MO PC through no fault of his own is supported by the trial record and is thus credible.
The circumstances around the closure of MO PC are discussed in greater detail in the asset-by-asset distribution section herein, but do not amount to a wasteful dissipation of marital assets.
iii. Husband's Buyout of MO PC
At trial, Husband testified that, in 2010, he became the sole owner of MO PC by buying out his two partners for a total of $110,000.00 (tr at 482-483). However, Section 8.1 of Husband's first net worth statement, dated June 7, 2019, stated, "partners left in 2010, final buyout to partners in [January] of 2019 of $340,000" (plaintiff's exhibit 4). Husband's testimony at trial conflicted with this net worth statement in two significant ways: timing and buyout amount. At trial, Husband testified that the buyout of his partners was completed in 2010 for $110,000.00, not in January 2019 for $340,000.00.
When confronted with this inconsistency at trial, Husband blamed Wife's counsel for mischaracterizing his net worth statement and explained that the buyout included a payment to his brother for another business. However, Husband did not clarify why he used a lump sum figure in the section specific to MO PC, to include buyout payments that were for different businesses, made to different individuals, almost 10 years apart. Moreover, Husband did not clarify how any payment to his brother was relevant to MO PC, given that Husband testified that his brother was never a partner, shareholder, officer, or employee of the practice (tr at 440-441, 668). Therefore, the Court does not credit Husband's explanation of what he meant to report in his 2019 net worth statement (tr at 666-667). In fact, his testimony revealed an intent to mislead the Court about a transaction completed shortly after this action commenced. That transaction will be discussed in greater detail below.
It is important to note that a transfer of assets by a party in contemplation of the matrimonial action, without fair consideration, is also an enumerated factor which must be considered in making an award of equitable distribution (Domestic Relations Law § 236 [B] [5][d] [13]). Like the wasteful dissipation of marital assets, such transfers unfairly prevent a court from making an equitable distribution of marital property. An intentional misstatement by Husband in his sworn net worth statement, however, is not in and of itself a dissipation of marital assets or a transfer in contemplation of divorce.
iv. Husband's Transfers from Checking Account
The trial record reflects that Husband opened a checking account ending in "*900" at New York Community Bank (hereinafter "the NYCB account"), in June 2017 when the parties were physically separated (tr at 678, plaintiff's exhibit 27). In January 2019, just 18 months later, the account reflected a balance of approximately $247,500.00 (id.). On January 29, 2019, Husband wrote a check from that account, in the amount of $240,000.00, to MO PC (id., tr at 679-680). On February 28, 2019, Wife filed for divorce, and, on March 11, 2019, Husband was personally served. On March 12, 2019, $234,000.00 was debited from the MO PC account pursuant to a check from Husband to his brother, ANH, dated February 15, 2019, with the word "loan" on the memo line (defendant's exhibit L, plaintiff's exhibit 13).
According to Husband, this $234,000.00 payment was not part of a final buyout of MO PC as he indicated in his 2019 net worth statement, nor was it a loan as indicated on the memo line of the check, but rather money owed to his brother for services performed more than a decade prior to the commencement of this action (tr at 574, defendant's exhibit L). ANH, an optometrist by trade, purportedly managed Husband's prior optometry business in 2004 and/or 2006 but was not compensated (id.). Husband reasoned that, 11 to 13 years later, he was finally paying his brother the wages he was owed. Husband further argued that the check for $234,000.00 was dated before commencement, and before he had any inclination that Wife was planning to file for divorce.
The Court was not persuaded by Husband's explanation that, despite the financial success he achieved between 2004 and 2019, evidenced by major purchases made in cash and ownership of two homes mortgage-free, it was only until weeks before the commencement of this divorce action that he finally had the funds to compensate his brother in a lump sum payment of $234,000.00. Moreover, Husband did not produce any documentary evidence to substantiate his claim that he owed his brother for past services, nor did ANH receive a W-2 or 1099 statement for the belated compensation. The Court also took notice that, although Husband dated the check pre-commencement, it cleared almost a month later and, perhaps coincidentally, on the day after Husband was served with the summons and complaint for this action (tr at 572-574, 681-682).Wife further claimed that Husband transferred an additional $6,000.00 by check to his sister, SS. According to Husband, this payment represented his share owed for the care of his mother, who suffered from dementia (tr at 567). Despite Wife's assertion that, like Husband's transfer to ANH, this $6,000.00 check was negotiated post-commencement, the trial record reflects otherwise. In fact, Husband's check to SS cleared on September 25, 2018, several months prior to commencement (plaintiff's exhibit 13). Nevertheless, Husband failed to provide any accounting or explanation for what happened to the remaining $6,000.00, of the total $240,000.00, that Husband transferred from the NYCB account to the MO PC account.
Wife also flagged a withdrawal executed by Husband on April 24, 2019, in the amount of $9,156.00 from the MO PC account, which brought the account balance to zero (plaintiff's exhibit 15). Husband testified that this money was not deposited into a personal account or transferred to a relative, but rather used to pay a contractor for repairs at the MO PC office (tr at 575). There was no evidence in the trial record, such as an invoice, to substantiate Husband's claim, and the Court does not credit his testimony. And although the Court acknowledges that funds used for business operating expenses would not be distinct marital assets subject to equitable distribution, Husband provided questionable explanations for his financial activity in the months proximate to, both before and after, commencement of this action. In the context of that financial activity, the Court finds it more likely that Husband cleared the remaining funds in the MO PC account to avoid equitable distribution, rather than to cover business operating expenses.
Therefore, the Court finds, by a preponderance of the evidence, that Wife has met her burden of proof that Husband dissipated $249,000.00 in marital funds. The timing of the transfers, and Husband's dubious, unsupported explanations for them, suggested that he engaged in deliberate financial conduct to prevent the equitable distribution of marital assets (see Blickstein, 99 A.D.2d 287; see also DeGroat v DeGroat, 84 A.D.3d 1012 [2d Dept 2011]; see also Buchsbaum v Buchsbaum, 292 A.D.2d 553 [2d Dept 2002]). Although Husband argued that these transactions should be scrutinized individually, the Court finds that they were all part of Husband's effort, in the early stages of this litigation, to use the MO PC account to conceal and deplete marital assets. At trial, Husband provided no explanation for why he transferred $240,000.00 from his personal checking account to the MO PC account, or how it was related, if at all, to his return to the marital residence around that time. Furthermore, Husband testified at trial that he believed his earnings, specifically those received after the parties physically separated, were not marital funds (tr at 625-626). However, the Court considered any assets acquired during the parties' marriage, and before the execution of a separation agreement or the commencement of this action, as a marital asset, regardless of the form in which title was held (Domestic Relations Law § 236 [B] [1] [c]; see Fields, 15 N.Y.3d at 158).
The parties testified that Husband returned to the marital residence in early-2019, pre-commencement, and that the parties were considering the possibility of reconciliation at that time.
Moreover, in the August 2020 Order, the judge originally assigned to this case found that Husband's transfers were made in violation of the automatic orders and directed that $249,000.00 from his marital share of the proceeds from the sale of the Steuben Property be returned to the marital estate. In effect, the presiding judge at the time created a new marital asset for the trial court to distribute.
This Court will credit $124,500.00 to Wife for Husband's dissipation of marital assets, which will be taken against the $249,000.00 returned to the marital estate.
v. Husband's Use of Marital Funds for Pendente Lite Obligations
In her post-trial summation, Wife argued that Husband improperly used marital funds to pay pendente lite obligations.
In his first net worth statement, dated June 7, 2019, Husband listed five bank accounts which totaled $53,315.17 (plaintiff's exhibit 4). In his pre-trial net worth statement, dated March 5, 2022, Husband indicated that three of those bank accounts had a zero balance, and failed to list his checking account at Chase ending in "*601" (plaintiff's exhibit N). According to Husband's pre-trial net worth statement, the only account that existed at commencement and was still funded at the time of trial was an account at Chase ending in "*665" (id.). When questioned about what happened to the $51,004.66 in the other four accounts listed at commencement, Husband stated that he used those funds to make court-ordered status quo payments, which included Wife's temporary maintenance, AH's tuition, and expenses related to the marital residence. Husband did not claim that any of the accounts, all of which were opened during the marriage, were separate property (tr at 747-749).
This was identified by Husband as a joint account at commencement, and as a separate account in his name only several months before trial.
Based on Husband's testimony at trial, and the net worth statements admitted into evidence, the Court finds that Husband improperly paid pendente lite obligations with marital assets (see Azizo v Azizo, 51 A.D.3d 438 [1st Dept 2008]; see also Elkaim v Elkaim, 176 A.D.2d 116 [1st Dept 1991]). Therefore, Wife will receive a credit in the amount of $25,502.33 for her share of the marital funds depleted by Husband, which will be applied against, and thereby reduce, Husband's distributive award for his marital share of Wife's accounts at New York Community Bank. Husband's account at Chase ending in "*665", which was funded at the time of trial, will be distributed separately herein.
Representing 50% of the total depleted funds: $51,004.66.
vi. Wife's Transfers and Withdrawals from Checking Account
Husband alleged that Wife transferred $10,000.00 in marital funds to her brother, without fair consideration, in contemplation of filing this divorce action. The copy of a check written from Wife to her brother in the amount of $10,000.00 was admitted into evidence (defendant's exhibit E). The check was dated February 12, 2019, which was approximately two weeks before Wife filed for divorce, and "legal fees" was written on its memo line (id.). When questioned about this payment, Wife credibly testified that her brother needed money to pursue litigation related to his children (tr at 241). Husband's counsel also asked about two checks totaling $15,000.00, which Wife explained were for her counsel fees in connection with this divorce action (tr at 242). At commencement, Wife's checking account reflected a balance of over $160,000.00 (defendant's exhibit E).
The Court does not find that these transfers amounted to dissipation of marital assets. Husband failed to submit sufficient evidence to establish that Wife intended to deprive him of his share of marital assets. Moreover, Wife's payment for her legal fees does not constitute dissipation. Even during the pendency of a divorce action, reasonable legal fees are an exception to the prohibition on using marital assets after commencement pursuant to the automatic orders (see Domestic Relations Law § 236 [B] [2])
Most importantly, because these transfers were executed after commencement, they will not impact the equitable distribution of Wife's checking account (defendant's exhibit E).Having considered the statutory factors, the Court will distribute the marital estate equally between the parties, subject to exceptions specified herein. In making its determination, the Court finds that the parties made equivalent pecuniary and non-pecuniary contributions to this 30-year marriage and, therefore, determines the assets should be distributed as equally as possible (see Davis v O'Brien, 79 A.D.3d 695 [2d Dept 2010]; see Parkoff v Parkoff, 195 A.D.3d 936 [2d Dept 2021]; see Kamm, 182 A.D.3d at 591, quoting Eschemuller, 167 A.D.3d at 985).
I. Asset-by-Asset Distribution
1. Net Proceeds from the Steuben Property Sale
The parties did not dispute that the Steuben Property, purchased during the marriage, was marital property. On February 7, 2020, the Court, on consent of the parties, ordered the sale of the Steuben Property with all proceeds to be held in escrow by Wife's counsel. On April 22, 2021, the parties sold the property for $710,000.00 and realized net proceeds in the amount of $575,090.37 (plaintiff's exhibits 11,12). In addition to taxes and various fees, satisfaction of the outstanding HELOC balance, in the amount of $82,841.84, was paid from the gross sale proceeds (id.).
The interim directives issued during the pendency of this litigation impacted the final distribution of the sale proceeds from the Steuben Property held in escrow. In the June 2021 Order, the Court directed Wife's counsel to draw $20,000.00 from his escrow account for interim counsel fees, and transfer $23,067.00 from his escrow account to Wife for reimbursement of her payment of AH's Spring 2020 tuition bill (plaintiff's exhibit 12). Pursuant to the June 2021 Order, these distributions were taken solely from Husband's 50% share of the net proceeds from the sale of the Steuben Property (id.).
In the August 2020 Order, the judge presiding at the time ordered that the marital estate was entitled to recover, from Husband's share of the net sale proceeds, $249,000.00 for dissipating marital assets, and $80,000.00-$90,000.00 outstanding on the HELOC (plaintiff's exhibit 10). Given that the outstanding HELOC balance of $82,841.84 was satisfied from gross proceeds upon the sale of the Steuben Property, the Court will credit $41,420.92 to Wife from Husband's share of the net sale proceeds (plaintiff's exhibit 11). For the sake of consistency with the Court's prior orders, $249,000.00 will be distributed herein as a distinct marital asset.At trial, Husband's counsel read portions of Wife's deposition transcript into the record. There was a particular portion that pertained to AH's Spring 2020 tuition bill. As aforementioned, the Court ordered Husband to pay $23,067.00 to Wife, from his share of the Steuben Property's net sale proceeds, as reimbursement for her payment of that bill. During her deposition, Wife was asked about a credit she received from AH's school in the amount of $3,476.00 on April 10, 2020, which reduced her total tuition payment for the Spring 2020 semester by same (tr at 903-905). Wife explained that she requested the reimbursement of $23,067.00 based on the bill she received but failed to account for the subsequently awarded credit (id.). Wife then conceded that Husband's reimbursement for that should not have included the $3,476.00 credit (id.). To effectuate an equitable distribution of this marital asset and correct Wife's oversight, the Court applied a credit to Husband, against Wife's share of the net sale proceeds in escrow, in the amount of $3,476.00.
In its calculations, the Court initially divided the net proceeds from the sale of the Steuben Property evenly, which entitled each party to $287,545.18. After accounting for the adjustments discussed above, the Court calculated Wife's share in the sum of $368,557.10. Husband's share reflects a shortfall of $42,466.74, which will be covered by his share of the funds directed be returned to the marital estate. The distribution of the Steuben Property's net sale proceeds will be discussed in greater detail below.
$287,545.18 + $20,000.00 + $23,067.00 - $3,476.00 + $41,420.92 = $368,557.10.
$287,545.18 - $20,000.00 - $23,067.00 + $3,476.00 - $41,420.92 - $249,000.00 = ($42,466.74).
2. $249,000.00 as Established by the August 2020 Order
This asset was created pursuant to the August 2020 Order, which directed $249,000.00, sourced exclusively from Husband's share of the Steuben Property's net sale proceeds, to be returned to the marital estate (plaintiff's exhibit 10). This amount represents marital funds that Husband removed from his personal and business bank accounts in violation of the automatic orders, which thereby deprived Wife of her equitable share of those funds. The presiding judge at the time referred the distribution of the $249,000.00 to the trial court.
As detailed herein, in its consideration of Wife's claim that Husband dissipated marital funds, the Court awarded Wife a credit in the amount of $124,500.00. The credit will be applied to this asset and will restore Wife's 50% share of marital funds that were depleted by Husband. The remaining 50%, in the amount of $124,500.00, will be distributed to Husband.
Although the August 2020 Order effectively created a new asset, the funds to create that asset came from the same aforementioned escrow account that holds the Steuben Property's net sale proceeds. Therefore, with a credit of $124,500.00 awarded to Wife, her share of the Steuben Property's net sale proceeds totals $493,057.10. Given that $20,000.00 and $23,067.00 were previously released from the escrow account pursuant to the June 2021 Order, Wife is due $449,990.10 from the remaining funds held in the escrow account. With the return of $124,500.00 to his share of the net sale proceeds, Husband is due $82,033.27 from the remaining funds held in the escrow account. These respective shares will be adjusted herein to reduce the number of transactions required between the parties to effectuate the equitable distribution of the marital estate.
3. The Marital Residence
The parties purchased the marital residence in 2012, without a mortgage, for $1,115,000.00. The property is held in an irrevocable trust in both parties' names (tr at 62). The parties moved into the property in August 2013 after the completion of extensive renovations. The marital residence is a detached, single-family home with nearly 5,000 square feet of gross living area, on a lot measuring approximately 39,500 square feet (plaintiff's exhibit 8). It has four bedrooms, 2.75 bathrooms, and a two-car garage (id.). According to an appraisal report prepared by the court-appointed neutral expert, which was admitted into evidence at trial without objection, the market value of the marital residence was $1,455,000.00 as of August 12, 2019 (id.). There was no other value of the marital residence introduced or established, by either party, between the date of commencement and time of trial for the Court to consider.
There is no information in the trial record about the type of trust wherein the marital residence is held, its terms, or its beneficiaries. Neither party, however, warned of any issue that may arise if the Court ordered a sale of the property. In fact, in his summation, Husband seeks a Court-ordered sale of the marital residence, with the net proceeds distributed equally between the parties.
At the time of trial, Wife resided in the marital residence with AH. In her post-trial summation, Wife proposed a distributive arrangement by which Husband would offset his share of the marital residence against Wife's share of other marital assets combined with any credits the Court awarded to her for Husband's alleged wasteful dissipation. According to Wife, such a distribution would allow her to remain in her home with the parties' son and avoid the taxes and fees the parties would have to pay if they sold the property. Husband, on the other hand, proposed that the marital residence be sold, with the net proceeds distributed evenly between the parties after accounting for his separate property claim.
The Court has considered Wife's position as to the distribution of this asset. However, the absence of a recent valuation of the property rendered such an approach impracticable and inequitable. Generally, because it is considered a passive asset, a marital residence should be valued as of the date of trial (see Newman v Newman, 35 A.D.3d 418, 419 [2d Dept 2006]; see also Donovan v Szlepcsik, 52 A.D.3d 563 [2d Dept 2008]; see also Moody v Moody, 172 A.D.2d 730, 731 [2d Dept 1991]). The purpose of using a trial-date valuation is to avoid the inequity to one spouse which could result from either appreciation or depreciation in the value of the residence between the date of commencement of the action and at the time of trial (Wegman v Wegman, 123 A.D.2d 220, 232 [2d Dept 1986]). Here, the only appraisal of the marital residence in the trial record was conducted nearly three years before trial. Expert testimony is not necessary to state the obvious fact that the value of real property in New York City can change significantly in the course of three years.
Although a trial court has authority to determine the valuation dates for marital assets, it must consider all of the relevant facts and circumstances to ensure the dates selected are fair and appropriate (see D'Angelo v D'Angelo, 14 A.D.3d 476 [2d Dept 2005]; see also McSparron, 87 N.Y.2d at 287; Domestic Relations Law § 236 [B] [4] [b]). Without an up-to-date valuation of the marital residence to use as its basis, the Court cannot effectuate an equitable distribution of the property by exchanging or offsetting the parties' respective shares of marital assets. The risk of significantly overvaluing or, more likely, undervaluing the marital residence would undermine the Court's effort to distribute the marital estate equally between the parties.
With several exceptions as discussed herein.
Contrary to Wife's post-trial argument, the Court is not constrained to rely on the obsolete value of the marital residence at the time of commencement. The trial court is vested with broad discretion in making an equitable distribution of marital property (see Morille-Hinds, 87 A.D.3d 526; see also Michaelessi, 59 A.D.3d 688, 874). Moreover, the parties' two children have reached the age of majority, so there is no compelling need for Wife to occupy the marital residence as the custodial parent (see Gorman v Gorman, 165 A.D.3d 1067 [2d Dept 2018]).Therefore, the Court will direct that the marital residence be listed for sale with each party entitled to a 50% share of the net sale proceeds. However, Husband's post-divorce spousal maintenance arrears will be paid to Wife exclusively from his 50% share of the net sale proceeds, upon closing of title.
To effectuate the sale, Wife is to provide a written list of at least three proposed real estate brokers to Husband within seven days after service of the Judgment of Divorce. Further, Husband shall select one of the three brokers proposed by Wife, in writing, within 14 days after service of the Judgment of Divorce. If Husband does not select a proposed real estate broker within that time, Wife shall select one from the list she provided. The listing price of the marital residence shall be set by the chosen broker based upon comparable sales, and the real estate broker shall be paid their customary rate of commission-but not to exceed 6%. Each party shall cooperate, in a timely manner, with the sale of the marital residence. The parties will be directed to accept any bona fide purchase offer equal to, or exceeding, 95% of the listing price. The parties will be permitted to modify this paragraph, in writing, upon mutual consent.
Wife testified that the parties are the only trustees of the irrevocable trust wherein the marital residence is held. However, there were no trust documents admitted into evidence at trial, nor any testimony about the details of the trust. Furthermore, there was no indication by either party that any third party had an interest in the trust or the marital residence. Therefore, the Court hereby directs each party to expeditiously take all necessary steps in their individual capacities, and/or as trustees, to execute any and all deeds and documents required to effectuate the sale of the marital residence.
In his post-trial submission, Husband claimed that he is entitled to a separate property credit, in the amount of $150,000.00, for non-marital gifts and inheritance proceeds that he contributed toward the purchase of the marital residence. Husband testified at trial that he received a total of $150,000.00 from his father, partly as a gift and partly as an inheritance (tr at 609). Husband's brother, KH, and his sister, SS, both testified in corroboration of this claim. According to their testimony, shortly after being diagnosed with terminal cancer in 2006, their father gifted $100,000.00 to each of his four children (tr at 609, 797, 799-800). Husband claimed that, upon his father's death in 2009, he and his siblings each inherited an additional $50,000.00 (tr at 797, 800, 815). At trial, KH and SS both testified that they witnessed Husband receiving the physical checks for $100,000.00 in 2006, and $50,000.00 in 2009 (tr at 801-803, 811-812).Property acquired by either or both spouses during the marriage, like the marital residence in this case, is presumed to be marital property (Domestic Relations Law § 236 B] [1] [c]; see Fields, 15 N.Y.3d 158). The party seeking to overcome that presumption bears the burden of proving that the disputed property is separate (id.; see also D'Angelo, 14 A.D.3d 476). The statute expressly identifies property acquired by gift or inheritance as separate property (Domestic Relations Law § 236 [B] [1] [d]). Further, a party is generally entitled to a credit for a contribution of separate property toward the acquisition of a marital asset, but the Court has discretion in awarding such a credit (see Fields, 15 N.Y.3d 158).
Here, Husband provided no documentary evidence to support his claim that he received a $100,000.00 gift or $50,000.00 inheritance during the marriage. Moreover, there is no evidence or testimony in the trial record to indicate where, if received, those funds were deposited, or to suggest the funds were used toward the purchase of the marital residence. Although Husband assuredly testified that he used the $150,000.00 received from his father toward the purchase of the marital residence, he had no recollection of what he did with the funds upon receipt (tr at 715). Husband's siblings testified only that they witnessed Husband receiving and holding the respective checks. Neither KH nor SS could testify about what Husband ultimately did with those checks, or how he used the funds (tr at 801-802, 814).
Husband did not provide bank records, personal financial records, gift tax filings, or any other tax documents to substantiate his separate property claim.
In response to a question from Wife's counsel, Husband expressed doubt about depositing the funds into a joint account with Wife but could not provide any evidentiary support for the notion that he deposited the money into an account in his name only.
When questioned on the fifth day of trial about whether there was any documentation showing that he received a gift or inheritance from his father, Husband replied "it's forthcoming" (tr at 714). On the seventh day of trial, Husband was pointedly asked whether he had any documentation showing that he received $150,000.00, deposited it into any account of his, or used those funds to purchase the marital residence. Husband replied in the negative (tr at 892). The lack of evidence to support Husband's claim is especially troublesome given his testimony that he received the gift of $100,000.00 from his father in 2006, and the inheritance of $50,000.00 in 2009. The marital residence was purchased in 2012, six and three years later, respectively. In that time, the inherited funds could have been transmuted, co-mingled with marital funds, or exhausted. There is certainly no basis for the Court to conclude that the only possible source of funds to acquire the marital residence, purchased by the parties for $1,115,000.00 and without a mortgage, was the $150,000.00 Husband received from his father several years prior (see Heine v Heine, 176 A.D.2d 77 [1st Dept 1992]).
The Court finds that Husband failed to establish that the gift and inheritance he claimed to receive, in the total sum of $150,000.00, were used toward the purchase of the marital residence (see Novick v Novick, 214 A.D.3d 995 [2d Dept 2023]; see also Cravo v Diegel, 163 A.D.3d 920 [2d Dept 2018]). As a general matter, Husband failed to sustain his burden of tracing the alleged separate property from its acquisition to the date the parties purchased the marital residence (see Cravo, 163 A.D.3d 920 ; see also Culen v Culen, 157 A.D.3d 926 [2d Dept 2018]). Furthermore, Husband failed to prove that any gift or inheritance he received during the marriage, several years before the parties purchased the marital residence, retained its character as separate property (see Klauer v Abeliovich, 149 A.D.3d 617 [1st Dept 2017]). It is certainly not for this Court to engage in the precise financial tracing and review of the parties' debits and credits during the marriage in order to make such a determination (see Mahoney-Buntzman, 12 N.Y.3d 415).
Therefore, the Court has no basis upon which to award Husband a separate property credit in its equitable distribution of the marital residence.
4. Wife's Bank Accounts
The Court considered two bank accounts in Wife's name for equitable distribution purposes: Wife's checking account at New York Community Bank ending in "*524" (hereinafter "the *524 Account") and Wife's Certificate of Deposit (CD) account at New York Community Bank ending in "*938" (hereinafter "the *938 Account"). It is important to note that both Wife and her father, MR, are named as holders on each of these accounts (defendant's exhibits A, B). Wife testified that only $84,000.00 of the funds in these accounts are marital and claimed that the money she received from her mother's life insurance proceeds, in the amount of $33,000.00, is separate property. Husband seeks an equal division of the funds but provided different scenarios regarding distribution. On one hand, in his post-trial summation, Husband identified all the funds in the *524 Account and the *938 Account, as of the date of commencement, as marital property (defendant's summation at 12). In the "Conclusion" section of same, however, Husband specifically called for $84,000.00, $33,000.00, and $3,000.00, or a total of $120,000.00, to be returned to the marital estate for equitable distribution (defendant's summation at 27).
In his pre-trial statement of proposed deposition, Husband also claimed that the total funds in Wife's bank accounts were all marital as of the date of commencement.
The $3,000.00 represents funds that Wife paid by check to her father, and that were deposited into her bank accounts in February 2018, one year prior to commencement. To the extent those funds were in the bank accounts at commencement, they will be subject to equitable distribution as formulated herein. Otherwise, the Court will not look back to precisely trace whether and how these funds were expended during the marriage (see Mahoney-Buntzman, 12 N.Y.3d 415).
In her pre-trial net worth statement, Wife disclosed a checking account, in her name, ending in "*013", which was opened post-commencement. At trial, Wife testified that the account was opened to deposit Husband's payments for AH's tuition (tr at 73). Despite Wife's disclosure of this account, it was not mentioned in any of Husband's pre-trial or post-trial documents. Therefore, the Court did not consider the account for equitable distribution purposes.
Wife opened the *524 Account jointly with her father in 2016. According to her testimony at trial, Wife created this account to prevent Husband from "squandering" her earnings on VS (tr at 231, 233). On September 16, 2016, Wife deposited a check in the amount of $84,000.00 from an account held jointly with Husband into the *524 Account (defendant's exhibits B, C). The check was written by Wife, but both parties understood the $84,000.00 to represent the sum of Wife's wages in their joint account, less taxes paid for same (tr at 227-232, 609-610). Approximately one month later, on October 25, 2016, Wife deposited a check in the amount of $33,000.00 from the account held jointly with Husband into the *524 Account (defendant's exhibits B, C). Husband wrote this check to Wife upon her request to recoup her mother's life insurance proceeds that she deposited into the jointly held account (tr at 609-610). Since September 2016, Wife deposited her earnings exclusively into the *524 Account (tr at 222).
On September 16, 2016, the same day that she deposited $84,000.00 into her *524 Account, Wife opened the *938 Account jointly with her father (defendant's exhibit A). She funded the *938 Account with $50,000.00 withdrawn from the *524 Account (defendant's exhibit B, tr at 225-227). According to the trial record, there were no other transfers out of or into the *938 Account as of the time of trial (defendant's exhibit A). In contrast, Wife regularly used the *524 Account to deposit funds and pay various expenses after the date of commencement. Additionally, Wife testified that her father, MR, deposited his social security benefits and annuity payments into the *524 Account. Wife estimated that her father deposited approximately $40,000.00 of his income into that account (tr at 64). However, she did not submit any documentary evidence to substantiate that he deposited any of his own funds. Moreover, Wife failed to provide an explanation or rationale for opening the *524 Account or the *938 Account jointly with her father, rather than in her name alone.
Wife opened the *524 Account and the *938 Account during the marriage, but while the parties were living separately. As aforementioned, the parties did not enter into a separation agreement. Therefore, Wife's earnings during the parties' physical separation, like Husband's earnings during that time, are marital property (Domestic Relations Law § 236 [B] [1] [c]). By extension, the funds that were in the *524 Account and the *938 Account, on the date this divorce action was commenced, are presumptively marital. As Wife failed to provide an accounting or tracing for any funds that were purportedly deposited by her father, there is no basis for the Court to exclude any funds in the *524 Account or the *938 Account from the marital estate. The Court was careful not to establish a harmful precedent that would allow parties in a divorce action to avoid the equitable distribution of marital funds by strategically depositing them into joint accounts with third parties.
The valuation of marital assets for equitable distribution purposes, guided by expert testimony, is properly within the fact-finding authority of the trial court (Haran v Haran, 282 A.D.2d 572 [2d Dept 2001]; Burns v Burns, 84 N.Y.2d 369 [1994]). While the valuation date for an asset should be between the date of commencement of the action and the date of trial, the Court may set different valuation dates for different assets (Domestic Relations Law § 236 [B] [4] [b]; see Wegman, 123 A.D.2d at 232). Generally, courts value "active" assets, such as a bank account, as of the commencement date, while "passive" assets, such as securities, which could change in value suddenly based on market fluctuations, are valued as close to the date of trial as possible (see Grunfeld v Grunfeld, 94 N.Y.2d 696 [2000]; see also Lorne v Lorne, 217 A.D.3d 412 [1st Dept 2023] [internal quotation marks omitted]). Rather than apply helpful guideposts as if they were rigid rules, however, the trial court must consider all of the relevant facts and circumstances to ensure the valuation dates it selects are fair and appropriate (see Grunfeld, 94 N.Y.2d 696; see also McSparron, 87 N.Y.2d at 287).
Here, Wife credibly testified that the *524 Account served as her primary checking account since it was opened (tr at 65). Since 2016, she has been depositing her wages into the account, using it to pay credit card bills, and generally withdrawing funds to meet basic living expenses (id., defendant's exhibit B). Therefore, the Court will value the *524 Account, as of the date commencement, at $161,774.74 (defendant's exhibit E; see Pickard v Pickard, 33 A.D.3d 202 [1st Dept 2006]; see also Rywak v Rywak, 100 A.D.2d 542 [2d Dept 1984]). In contrast, the *938 Account is clearly a passive asset. According to bank records admitted into evidence, there were only two transactions between September 2016 and September 2020: an initial deposit of $50,000.00 on September 16, 2016, and a deposit of $3,500.00 on April 17, 2018. Since commencement, the account balance has increased solely due to interest earned. Therefore, the Court will value the *938 Account as close to the date of trial as possible, which is at $54,724.03 (defendant's exhibit A, see Grunfeld, 94 N.Y.2d 696).
According to the bank statements submitted for Wife's NYCB Checking Account ending in "*524", the balance in the account was $161,774.74 as of February 21, 2019. There was no activity in the account that affected its balance between the date of commencement and March 1, 2019. Therefore, the Court utilized the $161,774.74 balance figure as the commencement date value. Wife credibly testified, and her testimony is supported by documentary evidence, that the $300 she withdrew on February 21, 2019 (pre-commencement) was for counsel fees to litigate this instant action which cannot be characterized here as a dissipation of marital assets.
This amount reflects the balance in Wife's CD Account as of September 30, 2020. Even though this was eight months before trial, the interest paid to the account during this period (since March 2020) was de minimis (less than $1.00 per month, on average).
Husband is entitled to distributive awards of $80,887.37 and $27,362.02, which represent his 50% shares of marital funds in the *524 Account and the *938 Account, respectively. In total, Husband is entitled to a distributive award of $108,249.39 for his share of marital funds in these accounts. However, to limit the transactions between the parties, the Court will offset Husband's distributive award against health insurance arrears owed to Wife, a credit awarded to Wife herein for Husband's depletion of marital funds to pay pendente lite obligations, and a distributive award payable to Wife for her share of Husband's checking account at Chase ending in "*665".The Court has considered Wife's claim that $33,000.00 in the *524 Account and the *938 Account is her separate property. Here, Wife bears the burden of proving that the disputed funds are separate (see Fields, 15 N.Y.3d 158; see also D'Angelo, 14 A.D.3d 476). To do so, her father, MR, testified at trial that he gave Wife a check for $33,000.00 on October 30, 2013 (tr at 527-528; plaintiff's exhibit 37). According to MR, he received $100,329.00 in life insurance proceeds upon the death of Wife's mother in 2013 (tr at 531 plaintiff's exhibit 34) and, in order to distribute those funds as the sole beneficiary on the policy, he received a "total control account" checkbook (plaintiff's exhibit 36; tr at 528). MR credibly testified that, with that checkbook, he wrote a check to Wife in the amount of $33,000.00, gave $67,000.00 to Wife's brother, and donated $329.59 to charity (tr at 525). Wife deposited the check from her mother's life insurance proceeds into the joint Chase account she shared with Husband in or around 2013 (tr at 233, 526, 541; plaintiff's exhibit 37).
Given that Wife was not a beneficiary of her mother's life insurance policy, the funds that she received from her father were a gift rather than an inheritance. Nevertheless, a gift from a party other than a spouse is separate property (Domestic Relations Law § 236 [B] [1] [d]). Separate property, however, can be transmuted into marital property when actions of the titled spouse demonstrate an intent to transform the character of the property from separate to marital (Spera v Spera, 71 A.D.3d 661 [2d Dept 2010]; Imhof v Imhof, 259 A.D.2d 666 [2d Dept 1999]). Here, Wife's gift from her father became presumptively marital property when she deposited the funds into a joint account that she shared with Husband (Sinnott v Sinnott, 194 A.D.3d 868, [2d Dept 2021]; Belilos v Rivera, 164 A.D.3d 1411 [2d Dept 2018]; Brown v Brown, 147 A.D.3d 896 [2d Dept 2017].
The burden then shifted to Wife to establish, by clear and convincing evidence, that she deposited the separate funds into the parties' joint account only as a matter of convenience, without the intent to create a beneficial interest (see Sinnott, 194 A.D.3d 868; see also Yuliano v Yuliano, 175 A.D.3d 1354 [2d Dept 2019]). Although Wife implied that she deposited the $33,000.00 into the parties' joint account because it was the only account she had at the time, she did not explain why she failed to separate the funds thereafter or could not open a separate account in her name alone (cf. Signorile v Signorile, 102 A.D.3d 949 [2d Dept 2013] [affirmed the trial court's determination that the defendant overcame the presumption because he removed the funds from the parties' joint account a few days later and placed them into an account in his name only]). In fact, Wife failed to take any action to separate the $33,000.00 until she discovered that Husband was having an extramarital affair. Wife's request for the funds to prevent Husband from squandering them on his paramour, however, does not establish that she did not intend to create a beneficial interest when she deposited her $33,000.00 gift into the parties' joint account three years prior.
As aforementioned, MR gave Wife the check for $33,000.00 on or about October 30, 2013 (plaintiff's exhibit 37). Husband, upon Wife's request, wrote her a check from the parties' joint account for $33,000.00 on October 22, 2016 (defendant's exhibit C; tr at 609-610). Wife then deposited the check into the *524 Account on October 25, 2016 (defendant's exhibits B, C). At trial, Wife's counsel suggested that Wife thereby "returned" the $33,000.00 gift from her father to herself and re-established its character as separate property (tr at 525-527). To assess that claim, the Court would have to pore over the many debits and credits of the parties' joint bank account over the course of three years during their marriage, which is clearly impracticable (see Mahoney-Buntzman, 12 N.Y.3d 415). Thus, Wife failed to establish that the $33,000.00 she deposited into the *524 Account originated from the funds, in the same amount, that she received from her father three years earlier. Furthermore, the Court does not find that Husband, by merely giving Wife a check for $33,000.00 from the parties joint account upon her request, acknowledged or admitted to the separate property character of those funds (cf. Belilos, 164 A.D.3d 1411 [the presumption of marital property was overcome because the defendant admitted, at trial, that he intended to return plaintiff's inheritance to her when the litigation settled]).Wife failed to overcome the presumption that the funds in the *524 Account and the *938 Account on the date of commencement are marital property subject to equitable distribution.
5. Husband's Bank Account
According to the trial record, Husband has one bank account with funds subject to equitable distribution: a checking account at Chase ending in "*665" (defendant's exhibit N). This was a joint account opened during the marriage. It was listed in Husband's pre-trial net worth statement, however, as an account in his name alone (id.). The balance in this account increased between the date of commencement and the time of trial. Therefore, the Court will value this account as of the date of commencement at $2,310.51 (see Wegman, 123 A.D.2d at 232).
From this account, Wife is entitled to a distributive award in the amount of $1,155.26 which represents 50% of the account balance at commencement.
6. MO PC
Husband opened MO PC in 2000, and it was formally incorporated in or around 2007. After buying out his two partners in 2010, Husband became the sole owner of the practice with unfettered decision-making authority. It is undisputed that Husband's ownership interest in MO PC is a marital asset.
According to the trial record, although MO PC was a private practice owned entirely by Husband, it was intertwined with and dependent on its relationship with Northwell Health. Husband was employed full-time at the Northwell Clinic, and MO PC was located next door (plaintiff's exhibit 7). As an employee of the Northwell Clinic, Husband was involved in the treatment of patients for opiate addiction (tr at 479-481). Those patients were then referred to MO PC, where he would provide primary care services outside of his full-time working hours (id.). Furthermore, MO PC operated under a month-to-month tenancy pursuant to a sublease agreement with Northwell Health (tr at 489; defendant's exhibit G).
Husband testified at trial that virtually all of MO PC's patients were referrals from the Northwell Clinic (tr at 481). In response to questioning, he maintained that he never independently advertised MO PC's services, nor were there any other referral sources for the practice other than the Northwell Clinic (id.). Husband denied Wife's claim that MO PC also offered pain management services which generated significant cash income for the business. Although he admitted that pain management may have been part of his practice early on, Husband testified that, as a primary care physician, he was prohibited from offering those services after 2012 (tr at 676). Wife did not submit any documentary evidence to substantiate her claim that MO PC offered treatment for pain management or treated any patients other than those referred by the Northwell Clinic.
In 2019, the Court ordered an appraisal of MO PC's fair market value as of the date of commencement (hereinafter "the business appraisal report") (plaintiff's exhibit 6). Likely due to the disruption caused by the COVID-19 pandemic, the appraisal report was not produced until February 10, 2021 (plaintiff's exhibit 7). In May 2020, however, Husband closed MO PC (tr at 488). The business appraisal report estimated that MO PC's fair market value, as of February 26, 2019, was $530,000.00 (plaintiff's exhibit 7). Despite acknowledging that Husband closed the practice, the business appraisal report considered only the facts and circumstances as of the court-ordered valuation date in its appraisal analysis (id.). Notably, when referring to the estimated value of MO PC, the business appraisal report stated, "our opinion would most likely be different if another valuation date was used" (id. at 5).
Upon review of the trial record, there was no request for the Court to consider an alternative valuation date. At trial, Husband's counsel requested the Court's permission to call an expert witness and admit into evidence a competing appraisal report for the medical practice. Wife's counsel objected to the application citing, inter alia, Husband's failure to disclose the expert witness and related information pursuant to CPLR § 3101 (d). Upon consideration of the circumstances, namely the potential prejudicial impact on Wife, the Court denied the request.
In his post-trial summation, Husband argued that there is no medical practice to distribute and, therefore, Wife is not entitled to a distributive award. Husband testified at trial that he was forced to close MO PC due to several adverse developments outside of his control. In 2019, the Northwell Clinic, which was the sole referral source for MO PC, was closed, resulting in a loss of $101,955.00 (tr at 488-491, 565; defendant's exhibit N). Shortly thereafter, Northwell Health terminated MO PC's month-to-month tenancy and commenced a legal action to evict the practice from its offices (tr at 488-491; defendant's exhibit G). Also around that time, Northwell Health terminated Husband from his full-time position (defendant's exhibit J). Although Husband was cleared of any wrongdoing in connection with two separate investigations, his termination was made permanent (defendant's exhibits I, K). Husband testified that, under those circumstances, he was unable to sell MO PC or its list of 300 patients but, instead, was forced to close the practice (tr at 564-566).
Wife now seeks an award of 35% to 50% of the value of MO PC, as assessed by the business appraisal report, for her indirect contributions to the growth of the practice during the marriage. Wife credibly testified that she was the primary caretaker of the parties' children, and maintained the household, while Husband was building the practice and working full-time at Northwell Health (tr at 21-26, 926-927). In her post-trial summation, she accused Husband of closing MO PC voluntarily, and needlessly abandoning the office space to prevent the equitable distribution of the practice. To support her allegation, Wife revealed at trial that Husband created IH MD before closing MO PC, which he did not disclose in his pre-trial net worth statement (tr at 694-695). According to Wife, Husband converted MO PC to IH MD and was surreptitiously operating the practice as of the date of trial (plaintiff's summation at 32-33).
Generally, Courts value "active" assets, like a professional practice, as of the date of commencement to prevent the unjust enrichment of the non-titled spouse if that practice increases in value due to the active management of the titled spouse during the litigation (see Greenwald v Greenwald, 164 A.D.2d 706, 716 [1st Dept 1991], citing Wegman, 123 A.D.3d 220). In this case, however, the value of MO PC essentially evaporated prior to trial. Under similar circumstances, where a business loses value during the pendency of the litigation due to adverse economic forces outside of a party's control, courts have used a trial-date valuation for the business (see Giallo-Uvino v Uvino, 165 A.D.3d 894 [2d Dept 2018]; see also Schacter v Schachter, 151 A.D.3d 422 [1st Dept 2017]; see also Sagarin v Sagarin, 251 A.D.2d 396 [2d Dept 1998]). Conversely, in the interest of equity, courts have used commencement-date valuations where they found evidence that a party's fault or wasteful dissipation caused the decline in the value of a marital asset during the litigation (see Siegel v Siegel, 132 A.D.2d 247 [2d Dept 1987]; see also Sagarin, 251 A.D.2d 396). The trial court is therefore empowered to deviate from the "active/passive guideposts" to ensure the valuation date it selects is fair and appropriate (see Grunfeld, 94 N.Y.2d 696; see also McSparron, 87 N.Y.2d at 287).
The Court finds that Husband was generally not credible. There were numerous instances at trial, while being cross-examined by Wife's counsel, where Husband was intentionally evasive, feigned forgetfulness, and blatantly contradicted prior testimony and sworn statements (tr at 637-639, 655-656, 681-687, 709, 758-759, 845-860, 994-995). Nevertheless, his testimony about the circumstances which, he averred, forced him to close MO PC is supported by documentary evidence in the trial record. Northwell Health was the linchpin of MO PC's business model. In late-2019, Northwell Health closed the Northwell Clinic, terminated Husband's employment, and commenced a legal proceeding to evict MO PC. The documents in evidence clearly indicate that Northwell Health was no longer interested in participating in the business model that supported MO PC's viability (defendant's exhibits G, I, K). Wife's allegations that Husband could have continued operating the practice without Northwell Health's involvement are unrealistic and influenced by hindsight bias. In her post-trial summation, Wife claimed that, although Northwell Health initiated a holdover proceeding in Kings County, MO PC was protected from eviction by emergency executive orders enacted by the Governor of New York during the COVID-19 pandemic (plaintiff's summation at 10). The attorney who represented MO PC at the time, however, Steven Crowe, Esq., testified at trial that he advised Husband to vacate the office space (tr at 1033-1041). In consideration of the documentary evidence and corroborative testimony offered in support of Husband's claims, the Court credits Husband's testimony in regard to his medical practice and its closing.
The business appraisal report detailed the factors and variables that were incorporated in the methodology used to estimate the value of MO PC as of the commencement date. It considered MO PC's unique business model, including its dependence on the Northwell Clinic next door for patient referrals. Based on MO PC's business model, the business appraisal report incorporated the rapid growth of the methadone treatment industry as a positive factor in the determination of its value (plaintiff's exhibit 7, at 13). The value that the business appraisal report proposed for MO PC was, therefore, tailored to the unique characteristics of the practice.There is no evidence in the trial record to substantiate Wife's claim that MO PC "never actually closed but was simply moved down the block to a new location at *** Coney Island Avenue under the new entity name of [IH] MD, PLLC" (plaintiff's summation at 32-33). Even if the Court accepted Wife's claims that IH MD used the same telephone number as MO PC and was located blocks away, she did not prove that the new practice employed the same operational framework wherefrom MO PC derived a significant portion of its value. In fact, it is highly improbable that IH MD is serving patients undergoing methadone treatment who are referred by a clinic located next door. Rather, it is more likely that Husband created a new practice, with a different business model, that could operate independent of Northwell Health. Furthermore, there is no evidence in the trial record to support Wife's accusation that Husband is treating former patients of MO PC, or otherwise using any other assets from the former practice.
Husband's expertise as a physician and experience as a sole proprietor are intangible assets that could be "transferred" to a new practice or leveraged to enhance his future earning capacity. The Court discusses Husband's earning capacity in greater detail in its consideration of spousal maintenance.
After considering the totality of the facts and circumstances, the Court finds that it would be inappropriate, unjust, and inequitable to grant Wife a distributive award based on the valuation of MO PC as of the date of commencement, as stated in the business appraisal report (see Naimollah v De Ugarte, 18 A.D.3d 268 [1st Dept 2005]; see also Sagarin, 251 A.D.2d 396; see also Schacter, 151 A.D.3d 422). If the Court were to grant such an award, Wife would receive a payment for some portion of the $530,000.00 in appraised value as of commencement while Husband, the titled spouse, would retain a closed practice of no value. The Court credits Husband's testimony, supported by documentary evidence, that MO PC lost its value during this litigation due to adverse forces outside of his control. As the party seeking an interest in MO PC, Wife had the burden of establishing its value (see Repetti v Repetti, 147 A.D.3d 1094 [2d Dept 2017]; see also Iwahara v Iwahara, 226 A.D.2d 346 [2d Dept 1996]). The Court finds, however, that Wife failed to present sufficient proof to rebut Husband's contention that MO PC had no value at the time of trial (see Antoian v Antoian, 215 A.D.2d 421 [2d Dept 1995]).
Wife also alleged that Husband's use of the MO PC business account to pay for personal expenses, like tuition and life insurance premiums, were evidence of economic fault that led to the failure of the medical practice. However, even Wife points out that Husband routinely paid personal expenses from his business account during the marriage, and several years before MO PC was closed. Moreover, with this line of argument, Wife is claiming on one hand that Husband's economic fault led to the failure of the practice and, on the other hand, that Husband is surreptitiously operating MO PC under the cover of a new entity.
Therefore, the Court has no basis upon which to grant Wife a distributive award for a share of MO PC.
7. Retirement Accounts
According to the trial record, the following three retirement accounts are in the marital estate and subject to equitable distribution:
• Husband's MML Investors Services simplified employee pension ("SEP") individual retirement account ("IRA") ending in "*54" (hereinafter "the SEP IRA"), with a balance totaling $64,922.88at the date commencement, and a balance totaling $104,902.54 at the time of trial (plaintiff's exhibit 24; defendant's exhibit N)
• Husband's Northwell 403 (b) plan, managed by TransAmerica, ending in "*542" (hereinafter "the Northwell 403(b)"), with a balance totaling $136,716.30at the date commencement, and a balance totaling $241,675.00 at the time of trial (plaintiff's exhibit 24, defendant's exhibit N)
• Husband's Fidelity Rollover IRA account ending in "*419" (hereinafter "the Fidelity IRA"), with a balance totaling $290,942.12 at the date commencement, and a balance totaling $486,793.71 at the time of trial (defendant's exhibit N)
The Court utilized the commencement value of the SEP IRA as indicated in the ending balance of the account statement in Plaintiff's Exhibit 24, rather than the value indicated in Husband's pre-trial net worth statement, which was the pre-commencement, opening balance of the account.
The Court utilized the commencement value of the Northwell 403(b) as indicated in the ending balance of the plan statement in Plaintiff's Exhibit 24, rather than the value indicated in Husband's pre-trial net worth statement, which was the pre-commencement, opening balance of the plan.
Husband seeks the division of the retirement accounts at their values as of the date of commencement and in accordance with Majauskas v Majauskas (61 N.Y.2d 481 [1984]). Conversely, Wife is requesting that the Court utilize the values of the retirement accounts at the time of trial and offset Wife's total share of those accounts against Husband's share of the equity in the marital residence. In this case, there is no dispute that the retirement accounts, all acquired during the marriage, are entirely marital property. Husband did not make separate property claims for any portion of the retirement assets in his name. Therefore, the Majauskas formula is inapplicable here. As aforementioned, the Court will be directing the parties to list the marital residence for sale, rather than swapping credits or offsetting distributive awards as proposed by Wife.
At trial, Husband testified that the only contributions made to his retirement accounts since the commencement date of this action were deductions from his wages and employer contributions, which continued until he was terminated from Northwell Health in December 2019. According to Husband's paystubs from Northwell Health, a portion of his wages were automatically allocated to the Northwell 403 (b). There is no evidence in the trial record showing that Husband made any contributions to his SEP IRA or Fidelity IRA during this litigation, or that he made any contributions to his Northwell 403 (b) account between January 2020 and the time of trial. According to the Court's calculations, the total value of the retirement assets increased by $340,789.95 between the date of commencement and the time of trial.
Commencement Date Values: $64,922.88 + $136,716.30 + $290,942.12 = $492,581.30; Trial Date Values: $104,902.54 + $241,675.00 + $486,793.71 = $833,371.25; Total increase in value from commencement to trial: $833,371.25 - $492,581.30 = $340,789.95.
Given that there is no evidence in the trial record to indicate that the substantial appreciation of the retirement accounts during the litigation is attributable to Husband's efforts or active management, the Court will utilize the respective values of those accounts at the time of trial for equitable distribution purposes (see Grunfeld, 94 N.Y.2d 696; see also Sinnott, 194 A.D.3d 868; see also Michaelessi, 59 A.D.3d 688). Otherwise, Husband would unjustly receive a windfall for the passive, market-driven appreciation of the retirement accounts (see Wegman, 123 A.D.2d at 232). It is important to note that nothing in the trial record indicates that there were any withdrawals from, or outstanding loans against, the retirement accounts during the litigation. Wife is therefore entitled to $416,685.63, which represents 50% of Husband's retirement accounts as valued at the time of trial. Specifically, Wife is entitled to $52,451.27 from Husband's SEP IRA, $120,837.50 from Husband's Northwell 403 (b), and $243,396.86 from Husband's Fidelity IRA. In consideration of tax consequences and potential fees, the Court hereby directs Wife to open an IRA, or similar account, in her name, so that a "rollover" of the funds in kind from each of Husband's three retirement accounts can be facilitated. If there are insufficient funds in any of Husband's retirement accounts, Husband shall be responsible for paying a distributive award to make up the shortfall.
Wife's share: $833,371.25 x.50 = 416,685.63.
If any of Husband's retirement plan managers/custodians require a qualified domestic relations order (hereinafter "QDRO"), or similar order, to effectuate a rollover of account funds to Wife, Husband and Wife shall each pay 50% of the costs to a mutually agreed upon pension consultant or attorney to prepare the QDRO(s). If the parties cannot agree within 30 days after either is notified that a QDRO will be required, Wife shall select the pension consultant or attorney to prepare the necessary QDRO(s).
8. Life Insurance Policies
There are several life insurance policies in the marital estate that are subject to equitable distribution (see Miller v Miller, 150 A.D.2d 652 [2d Dept 1989]), and Husband has proposed an equal division of the savings components thereof (defendant's summation at 18). Conversely, Wife asked the Court to direct Husband to maintain the policies for the duration of his maintenance obligation, as security in event of his death. The basis for this proposed disposition is her belief that she and Husband each own three MetLife policies, of which two are for the benefit of the parties' children (plaintiff's summation at 34). Wife's accounting of the marital life insurance policies in effect as of the commencement date of this action, however, is not supported by the trial record.
At trial, Wife introduced MetLife policy statements, from several years prior to the commencement of this action, which indicated that the parties had as many as 10 life insurance policies during the marriage. Wife proffered no evidence, however, to establish that any life insurance policies existed, or had any value, as of the date this divorce action was commenced (see Domestic Relations Law § 236 [B] [4] [b]). In his pre-trial net worth statement, as admitted into evidence, Husband indicated the following MetLife policies in effect as of commencement, and their purported values:
Four of the ten policies were term policies with no cash surrender values.
• Husband as the Insured:
MetLife Policy ending in "*673PR"
• whole life policy
• Face Value: $500,000.00
• Cash Surrender Value at Commencement: $79,325.43
• Cash Surrender Value at Start of Trial: $90,899.41
• Wife as the Insured:
MetLife policy ending in "*618PR
• "whole life policy
• Face Value: $500,000.00
• Cash Surrender Value at Commencement: $54,533.97
• Cash Surrender Value at Start of Trial: $63,174.76
MetLife policy ending in "*027PR"
• whole life policyFace Value: $500,000.00
• Cash Surrender Value at Commencement: $39,553.97
• Cash Surrender Value at Start of Trial: $47,651.29
• Parties' Children as the Insureds:
MetLife policy ending in "*730A"
• whole life policyFace Value: $250,000.00
• Cash Surrender Value at Commencement: $39,500.97
• Cash Surrender Value at Start of Trial: $48,530.68
MetLife policy ending in "*307A"
• whole life policyFace Value: $250,000.00
• Cash Surrender Value at Commencement: $8,500.97
• Cash Surrender Value at Start of Trial: $11,231.70
Although Husband's net worth statement indicated that he is the insured on this policy, a MetLife statement in evidence showed that, in fact, Wife is the insured. The Court has determined that the documentary evidence was more reliable than Husband's representation in his net worth statement.
The parties did not dispute that the cash surrender values of these policies, established during the marriage, are marital property. Furthermore, according to the evidence in the trial record, the premiums for all the policies were paid solely by Husband and typically with marital funds.
According to bank statements admitted into evidence, Husband occasionally paid life insurance premiums from his MO PC business account during the marriage. Husband admitted to making such payments from the MO PC account, but testified that he always reimbursed the medical practice.
Upon consideration of the relevant facts and circumstances in this particular case, the Court finds that the respective values of the life insurance policies at the time of trial are fair and appropriate for equitable distribution purposes (see Grunfeld, 94 N.Y.2d 696; see also D'Angelo, 14 A.D.3d 476; see also Giallo-Uvino, 165 A.D.3d 894). The Court, in its August 2020 Order, directed Husband to "maintain and pay all premiums for all existing policies of life insurance from the date of commencement and continue to name [Wife] as sole beneficiary of said policies." Husband did not comply with the Court's directive. In his pre-trial net worth statement, among several added "explanations," Husband disclosed that he did not pay the premiums for the life insurance policies from January 2020 through the start of trial in June 2022 (defendant's exhibit N). According to his explanation, the policies remained in effect despite his non-payment because the premiums were paid from their respective equity (id.).
The pre-commencement statements that Wife provided for the corresponding policies indicate that the premiums for each were annualized. Therefore, the only year during the litigation that Husband paid the premiums was 2019.
Husband's pre-trial net worth statement indicates that the cash surrender value of each of the marital life insurance policies increased between the date of commencement and time of trial (id.). During that time, with the exception of 2019, Husband did not pay the policy premiums (id.). There is no evidence in the trial record to indicate that any portion of the increase in the cash surrender values during the litigation are attributable to Husband's efforts or active management (see Lieberman-Massoni v Massoni, 215 A.D.3d 656 [2d Dept 2023]; see also Sinnott, 194 A.D.3d 868). Furthermore, Husband did not claim that his efforts or active management were responsible for the increase in the cash surrender values of the policies as of commencement. Therefore, the Court finds that the life insurance policies here are passive assets and should be distributed based on their respective cash surrender values at the time of trial (id.).As set forth below, Husband will be directed herein to pay Wife $4,475.00 per month in post-divorce spousal maintenance, for a duration of 14 years. To secure his maintenance obligation, in the total amount of $751,800.00, Husband will be required to maintain life insurance policies, with sufficient coverage, until the end of that maintenance obligation.
Accordingly, the Court hereby directs Husband to maintain his MetLife policy ending in "*673PR", with Wife as the sole beneficiary, until the end of his maintenance obligation. Wife is entitled to a distributive award of 50% of the cash surrender value, at the start of trial, of the MetLife policy ending in "*673PR", in the amount of $45,449.71, which will be credited against Husband's share of the remaining four policies. Therefore, Husband will be entitled to retain the entire cash surrender value of the MetLife policy ending in "*673PR", upon the expiration or termination of his maintenance obligation.
$90,899.41 x.50 = $45,449.71.
The parties are hereby directed to surrender the remaining four MetLife life insurance policies ending in "*618PR", "*027PR", "*730A", and "*307A". The cash surrender values of the policies shall be divided equally between the parties. Therefore, Husband is entitled to 50% of the cash surrender values, at the start of trial, of Wife's policies ending in "*618PR" and "*027PR", in the amount of $55,413.03, less Wife's credit for her share of Husband's policy ending in "*673PR", which results in $9,963.32. Furthermore, the parties are each entitled to $29,881.19, which represents 50% of the cash surrender values, at the start of trial, of the policies ending in "*730A" and "*307A". To reduce the amount of transactions between the parties, Wife shall, upon surrender of the policies ending in "*618PR" and "*027PR", retain the entirety of the cash surrender values. Upon the surrender of the policies ending in "*730A" and "*307A", Husband is hereby directed to pay $19,917.87 to Wife for her share of those policies, less the outstanding amount payable to Husband for his share of the cash surrender values of the policies ending in "*618PR" and "*027PR". To the extent Husband controls or manages the policies ending in "*618PR" and "*027PR", he is hereby directed to effectuate the distribution of those policies as prescribed herein.
"*618PR": $63,174.76 x.50 = $31,587.38; $47,651.29 x.50 = $23,825.65; $31,587.38 + 23,825.65 = $55,413.03.
$55,413.03 - $45,449.71 = $9,963.32.
"*730A": $48,530.68 x.50 = $24,265.34; "*307A": $11,231.70 x.50 = $5,615.85; $24,265.34 + $5,615.85 = $29,881.19.
$29,881.19 - $9,963.32 = $19,917.87.
In total, Husband is entitled to $39,844.51 and Wife is entitled to $130,743.93 from the equitable distribution of the life insurance policies in the marital estate. The Court will direct Husband to maintain his policy ending in "*673PR" until the end of his maintenance obligation, at which time he will be entitled to retain its total cash surrender value.
$9,963.32 + $29,881.19 = $39,844.51.
$45,449.71 +$55,413.03 + $29,881.19 = $130,743.93.
The disparity in the distribution of the cash surrender values of the marital life insurance policies is due to Wife's credit for her 50% share of Husband's policy ending in "*673PR", which he will be directed by this Court to maintain until the end of his maintenance obligation. It is important to note that, once Husband's maintenance obligation ends, he will be entitled to retain the entirety of its cash surrender value, which should be a relatively substantial sum by that time.
9. Motor Vehicles
As of the date of commencement, the parties owned four vehicles with Husband as the sole title owner, including a 2015 Lexus in Husband's possession, a 2014 Mercedes in Wife's possession, a 2010 BMW used by the SH, and a 2004 Lexus used by AH (plaintiff's exhibit 4; defendant's exhibit N). There was no dispute that the motor vehicles, all acquired during the marriage, were marital property. At the time of trial, Husband indicated that he no longer owned the 2015 Lexus, and was in possession of a leased 2019 Toyota (Defendant's exhibit N). He further indicated that SH traded in the 2010 BMW for another car that she now owns (id.), while the 2014 Mercedes is still used exclusively by Wife, and the 2004 Lexus is still used exclusively by AH (plaintiff's exhibit 2; tr at 68).
Wife proposed that each party, and their children, retain the vehicle which they have exclusively used during this multi-year litigation (plaintiff's summation at 34). Husband did not testify about the disposition of the parties' motor vehicles at trial, nor did he offer a position on that issue in his post-trial summation. In his statement of proposed disposition, Husband only referred to two of the four vehicles, and provided no information about what happened to the 2015 Lexus, a marital asset in his possession during the litigation. Furthermore, there is no documentary evidence in the trial record to substantiate the fair market value of the vehicles, either at the time of commencement or the time of trial. Even if the Court were to accept the values provided by Husband in his net worth statements, the difference in value between the parties' respective 50% shares of the 2015 Lexus and 2014 Mercedes are negligible, especially considering Husband's lack of disclosure as to how he disposed of the 2015 Lexus (plaintiff's exhibit 4; defendant's exhibit N).
Therefore, in the interest of equity, the Court finds that each party shall retain use of the vehicle he or she currently possesses. Accordingly, Husband is hereby directed to transfer title to the 2014 Mercedes to Wife. In consideration of Wife's proposal that the children each retain the vehicles that they exclusively use, and Husband's silence on the issue, the distribution of those vehicles will not be directed herein.
10. Household Furnishings and Jewelry
Wife seeks to retain household furnishings which she values at $10,000.00 as of the commencement date (plaintiff's summation at 35; plaintiff's exhibits 2, 3). Husband made no claim to any household furnishings, nor did he state any position with respect to Wife's claim. In fact, as Wife pointed out in her post-trial summation, there was no testimony about any household furnishings, or their value, by either party. Moreover, household furnishings were not identified with any specificity at trial and, consequently, the Court cannot determine a value for equitable distribution. It is the burden of the party seeking the equitable distribution of an asset to establish its existence and value (see Osman v Osman, 142 A.D.3d 978 [2d Dept 2016]; see also Nacos v Nacos, 168 A.D.3d 413 [1st Dept 2019]; see also Barnhart v Barnhart, 148 A.D.3d 1264 [3d Dept. 2017]). A failure to do so precludes the Court from distributing same (see Novick, 214 A.D.3d 995; see also Keil v Keil, 85 A.D.3d 1233 [3d Dept 2001]).
In his pre-trial net worth statement, Husband identified Wife's jewelry as an asset with a valuation of $10,000.00 as of the commencement date (Defendant's exhibit N). There was no mention of Wife's jewelry at trial by either party. Furthermore, Husband did not identify or specify Wife's jewelry in his proposed disposition or post-trial summation. Consequently, the Court is unable to distribute the property (see id.; see also Phillips v Haralick, 70 A.D.3d 663 [2d Dept 2010]).
Each party shall be entitled to retain the personal property currently in his or her possession.
IV. SPOUSAL MAINTENANCE
Wife seeks an award for post-divorce spousal maintenance in the amount of $4,475.00 per month, which amounts to $53,700.00 per year, until the earlier of her eligibility for full Social Security retirement benefits or 15 years. To support the proposed award, Wife argues that the Court should impute income to Husband, in the amount of $215,782.00, based on his earnings as reported in 2019, which was the year this action was commenced. Although she accused Husband of grossly underreporting his income during the marriage and this litigation, Wife nevertheless agreed, in her post-trial summation, to the presumptive maintenance award calculated in accordance with the statute. In addition to post-divorce maintenance, Wife petitions this Court to direct Husband to pay her health insurance premiums until the earlier of the cessation of his maintenance obligation, her eligibility for Medicare, or her obtention of employer-based coverage. Husband, on the other hand, argues that Wife failed to establish sufficient proof as to her genuine need for spousal support. Accordingly, he is asking this Court to deny Wife's request for an award of post-divorce maintenance.
This action was commenced on February 28, 2019. Therefore, the Court will calculate and award maintenance pursuant to Domestic Relations Law § 236 (B) (6), which was in effect as of January 23, 2016 (as amended by L 2015, ch 269, § 4). The maintenance guidelines statute, as revised, established a mathematical formula to determine the presumptive amount of maintenance to be awarded to the less-monied spouse (id. § 236 [B] [6] [c]). The Court may, however, deviate from the presumptive guidelines award if it finds the resultant amount unjust or inappropriate (id. § 236 [B] [6] [e]; see Novick, 214 A.D.3d 995; see also Mahoney v Mahoney, 197 A.D.3d 638 [2d Dept 2021]). If the Court adjusts the guidelines amount, it shall consider any one or more of the factors (Domestic Relations Law § 236 [B] [6] [e] [1] [a]-[o]) and set forth the reasons for the deviation based on its consideration (id. § 236 [B] [6] [e] [2]; Mahoney, 197 A.D.3d 638). It is important to note that Husband, to support his claim that Wife is not entitled to spousal maintenance, points to cases decided long before statutory revisions established a formula for a presumptive post-divorce maintenance award (defendant's summation at 19).
A. Amount
To calculate the guidelines amount of post-divorce maintenance, the Court must first determine the parties' respective incomes. The applicable definition of income is set forth in the Child Support Standards Act (hereinafter "the CSSA") (Domestic Relations Law § 236 [B] [6] [b] [3], § 240 [1-b] [b] [5]). According to the CSSA, courts should refer to the parties' respective gross incomes as they "should have been or should be reported in the most recent federal income tax return" as a starting point (id.). However, the Court "is not bound by party's account of his or her own finances, and where a party's account is not believable, the court is justified in finding a true or potential income higher than that claimed" (see Rohrs v Rohrs, 297 A.D.2d 317 [2d Dept 2002], quoting Thomas v DeFalco, 270 A.D.2d 277 [2d Dept 2000]). Accordingly, the Court may impute income to a party based on past earnings, demonstrated future earning capacity, educational background, and money received from friends or family (see Duffy v Duffy, 84 A.D.3d 1151 [2d Dept 2011], citing Wesche v Wesche, 77 A.D.3d 921 [2d Dept 2010]; see also Tuchman v Tuchman, 201 A.D.3d 986 [2d Dept 2022]).
According to Wife's 2021 tax return and 1099 form, she earned $36,000.00 in gross non- employee compensation from the law office that year (plaintiff's exhibit 3). Similarly, she earned $36,000.00 in 2020 from the same source. At trial, Wife, who was 51 years old at the time, testified that she has worked exclusively at the law office, first as a volunteer and thereafter as an independent contractor, since her admission to the New York State Bar in 2003. The Court credits Wife's testimony, which was supported by documentary evidence, that she never worked full-time or made more than $36,000.00 per year in her career as a licensed attorney. Husband accused Wife of deliberately suppressing her income. However, he failed to present any evidence, expert or otherwise, to establish that Wife could earn a higher income, nor did he provide any basis for the Court to impute a particular income figure to Wife. Although Wife is a licensed attorney, during the parties' 30-year marriage she was the primary homemaker and caretaker of their two children, while Husband was the primary wage earner (see Weiss v Nelson, 196 A.D.3d 722 [2d Dept 2021]; see also Zehner v Zehner, 186 A.D.3d 784 [2d Dept 2020]). Based on the trial record, including Wife's credible testimony, there was no evidence of past earnings or demonstrated future earning potential to justify imputing income to Wife (id.). Therefore, the Court will utilize Wife's reported 2021 gross income of $36,000.00 to calculate post-divorce guidelines maintenance.
Wife did not establish any permissible statutory deductions from a party's CSSA income (Domestic Relations Law § 240 [1-b] [b] [5] [vii]), including Federal Insurance Contributions Act (FICA) withholdings or New York City income taxes which were actually paid. According to her testimony at trial, Wife still owed taxes for income she earned in 2021. Moreover, Wife did not include any statutory deductions in the Maintenance Guidelines Worksheet appended to her post-trial summation.
Husband reported $41,637.89 in gross income in 2021, earned exclusively from his employment with XXX Medical, Inc. (defendant's exhibit N). He reported $49,671.00 in gross income in 2020, earned from a combination of XXX Medical, Inc., Northwell Health, and MO PC. On the sixth day of trial, Husband disclosed, seemingly for the first time, that he left XXX Medical, Inc. for a new role with AMT approximately one to two months before the time of trial. Pursuant to the Court's directive, at the next trial date, Husband produced paystubs showing that he earned $2,000.00 in gross wages on a bi-weekly basis from AMT, or $52,000.00 if extrapolated annually (plaintiff's exhibit 44). As aforementioned, Husband also created a new entity, IH MD, in January 2020 which he claimed, as of trial, was never operational. In her post-trial summation, Wife accused Husband of suppressing and/or concealing his income and argued that the Court should impute $215,782.00 in gross income to Husband based on his earnings as reported in 2019.
In 2019, shortly after renewing his employment agreement with Northwell Health at an annual base salary of $198,590.00, Husband was suspended without pay due to an allegation that he improperly prescribed marijuana (defendant's exhibits H, I). In September of that year, he was cleared of those charges and reinstated. A month later, Husband was again suspended without pay pending an investigation into allegations of inappropriate and unprofessional conduct (defendant's exhibit J). At trial, Husband testified that Northwell Health wrongfully accused him of forging patients' signatures amid his assistance to a group of patients with a letter-writing campaign. Northwell Health terminated Husband's employment on December 2, 2019, and his medical benefits soon thereafter (defendant's exhibit J). According to Husband's testimony, he was terminated for his unknowing violation of an internal hospital policy when he attempted to prove that he did not forge patients' signatures. Several months after his termination, in March 2020, Husband was informed by a New York State government agency that the allegations against him were found unsubstantiated. At trial, Husband credibly testified that he was absolved of all disciplinary actions initiated by Northwell Health and was in good standing as a practicing physician.
Husband's 2019 tax return and W-2 statements indicated that he earned $215,782.00 in total gross wages from Northwell Health and MO PC (plaintiff's exhibit 20). The parties' 2018 joint tax return, and Husband's 2018 W-2 statements, indicate that Husband earned $224,464.00 in gross wages from Northwell Health and MO PC (plaintiff's exhibit 19). In his net worth statement filed on June 7, 2019, Husband indicated that his monthly expenses at that time totaled $45,995.81 which, extrapolated annually, would be $551,949.72, more than double Husband's reported gross annual earnings (plaintiff's exhibit 4). Moreover, in that same net worth statement, Husband indicated that his only liabilities were outstanding credit card bills totaling $9,013.37 (id.). When questioned about this incongruence at trial, Husband explained that the monthly expenses he listed in his net worth statement were a snapshot of the financial circumstances at the time which he was able to maintain by utilizing his savings (tr at 671-672). The Court does not credit Husband's unsupported explanations and finds that he likely inflated the expenses listed in his net worth statement to either frustrate or influence the Court's calculation of his temporary maintenance obligation.
This calculation does not include one-time income events that the parties reported in their joint tax return for that year, such as a medical malpractice insurance credit in the amount of $127,738.00 (plaintiff's exhibit 19; tr at 590-591).
Based on the evidence in the trial record, the incomes reported by the parties in their joint returns from 2016-2018 were significantly less than the income that would be required to afford $551,949.72 in annual expenses.
Husband's testimony about his employment situation at the time of trial severely undermined his credibility. On one hand, he testified that he borrowed over $250,000.00 from SS, and over $100,000.00 from his girlfriend TA, in a three-year period during this litigation just to make ends meet (tr at 660-662, 839). According to Husband, he has lacked the means to pay rent to SS since at least early 2020, nor could he afford to pay the utility bills (tr at 809-820). On the other hand, he could offer no explanation for why he, a physician in good standing with 30 years of experience, has settled for a job that pays him a fraction of what he earned annually pre-commencement. In fact, when asked by Wife's counsel if he made any efforts to secure a higher paying position, Husband replied, "Why would I do that?" (tr at 711-712). Furthermore, when asked if he intends to operationalize his newly created entity, IH MD, Husband replied, "I haven't decided yet" (tr at 709). Husband's responses were evasive, vague, and contradicted his portrayal of his financial circumstances at the time of trial.
The Court finds that Husband's testimony regarding his position with AMT is not credible. In response to a question about how he found the job, Husband stated, "I just came across it," and then added that a colleague at XXX Medical, Inc. had "mentioned it" (tr at 780). He further testified that, because he has only worked for AMT for a month or two, he does not know where they are located, how they function, or the name of even a single individual within the organization. Moreover, he could not recall whether they provided medical malpractice insurance on his behalf while he treated patients at their direction. Husband testified that "AMT corporate people" send him to outpatient clinics or hospitals to treat patients (tr at 774-775). According to his testimony, after treating a patient, Husband could simply leave the outpatient facility without reporting to anyone. The most concrete information provided to the Court regarding AMT was the address indicated on Husband's paystub: *** Coney Island Avenue, Brooklyn, New York (plaintiff's exhibit 44). The Court notes that the address of MO PC was *** Coney Island Avenue, and Wife claims that AMT lists the same phone number as used by MO PC.
The Court finds Husband's account of his income and employment at the time of trial inconceivable. Husband testified that he is in good health and is not limited, in any way, to own and operate a medical practice or work as a medical practitioner, yet he has not demonstrated any good faith effort to maximize his full earning capacity. Although the Court determined that Wife failed to substantiate her claim that Husband voluntarily closed MO PC and transformed it into AMT or IH MD to avoid equitable distribution, it does find that Husband is intentionally impeding the Court's calculation of an appropriate and accurate post-divorce maintenance obligation. According to the financial documents in the trial record, and the testimony of both parties about their pre-divorce standard of living as detailed herein, Husband's income exceeded $200,000.00 for numerous years before the commencement of this action.
Therefore, the Court will impute income to Husband based on his past earnings, earning potential as an experienced physician and business owner, and status as a licensed medical doctor in good standing. In her post-trial summation, Wife proposed that the Court use Husband's reported 2019 income for imputation purposes. However, due to Husband's unpaid suspensions and subsequent termination from Northwell Health in late-2019, his reported income for that year does not accurately reflect his earning potential. To counter the effect of these unique employment events and arrive at a grounded imputation, the Court will instead use Husband's base annual salary of $198,590.00 pursuant to the employment agreement with Northwell Health, which he accepted on August 27, 2019, and add it to his 2019 earnings from MO PC in the amount of $52,000.00 (defendant's exhibit H; plaintiff's exhibit 20). To determine Husband's post-divorce maintenance obligation, the Court will impute an annual income of $250,590.00 to Husband.
It is important to note that both parties sought to impute income to the other. The difference, to this finder of fact, is that Husband had an established income history which he can restore while Wife has no such employment or salary history to support a basis for imputation.The maintenance guidelines statute requires different calculations based upon whether the payor of maintenance is also the payor of child support. If, as in this case, child support will not be paid for the children of the marriage because they are emancipated, the Court will calculate the difference between 30% of the payor's income (Domestic Relations Law § 236 [B] [6] [c], [d]), up to and including the statutory cap of $203,000.00 (id. § 236 [B] [6] [b] [4]; see Notice of Guideline Maintenance, as published by the New York State Office of Court Administration on March 1, 2022), and 20% of the payee's income (Domestic Relations Law § 236 [B] [6] [c] [2], [d]). The Court then calculates the difference between 40% of the parties' combined income under the CSSA, using the payor's income up to and including the cap of $203,000.00, and the payee's income (id.). The presumptive award of maintenance is the lower result of the two calculations. Here, the Court calculated the amount of Wife's presumptive post-divorce maintenance award in the following manner:
On March 1, 2024, shortly before this decision was issued, the statutory cap for spousal maintenance increased to $228,000.00 (see Notice of Guideline Maintenance, as published by the New York State Office of Court Administration on March 1, 2024). In the interest of equity, the Court here applied the previous statutory cap of $203,000.00 which controlled at the time of trial and post-trial submissions.
Calculation 1:
30% of $203,000.00 = $60,900.00
20% of $36,000.00 = $7,200.00
Result 1: $60,900.00 - $7,200.00 = $53,700.00
Calculation 2:
Combined CSSA income (using the payor's income up to and including the cap):
$203,000.00 + $36,000.00 = $239,000.00
40% of $239,000.00 = $95,600.00
Result 2: $95,600.00 - $36,000.00 = $59,600.00
Lower Result: $53,700.00
Therefore, the presumptive amount of guidelines maintenance is $53,700.00 per year or $4,475.00 per month. Given that Husband's income, as imputed, exceeded the statutory cap, and that Husband argued that Wife is not entitled to post-divorce maintenance, the Court considered the factors in the Domestic Relations Law to determine whether a deviation from the presumptive amount is warranted (§ 236 [B] [6] [e] [1] [a]-[o]). In its consideration of, among the other factors, the age and health of the parties; the parties' present and future earning capacity including Wife's limited participation in the workforce during the marriage, despite her admission to the New York State Bar; the parties three-year physical separation, pre-commencement; the availability and cost of medical insurance for the parties since Husband lost his employer-based coverage; the standard of living established and sustained by the parties during the marriage; Wife's reduced or lost earning capacity due to her role as primary caretaker of the parties' children and household; the equitable distribution of marital property; and Wife's contributions as a spouse, parent, and homemaker to Husband's medical career, the Court finds the presumptive amount of post-divorce maintenance is just and appropriate. Although Wife expressed her willingness to accept a maintenance award calculated up to the statutory cap of $203,000.00, the Court nevertheless relied on its own consideration of the aforementioned factors to reach the conclusion that additional maintenance over the cap would be unnecessary and inappropriate.
In awarding the presumptive amount of post-divorce maintenance under the statute, there is no need for a detailed discussion of the factors. The Court will, however, explain the rationale for its determination that the presumptive amount is appropriate in this case. A critical factor was the parties' standard of living. The parties purchased the marital residence, mortgage-free, for $1,150,000.00 in 2012, completed extensive renovations to the property, and had the financial resources to do so without a need to sell the Steuben Property, where they lived at the time of purchase. The parties purchased luxury vehicles without loans, regularly vacationed to destinations like Hawaii, the Caribbean, and Florida, paid tuition for the private post-secondary institutions their children attended with minimal student loans, and made generous annual charitable contributions. These parties clearly lived a prosperous, upper middle-class lifestyle. According to the trial record, Husband's income was the preponderate source of funds for the parties throughout their 30-year marriage and supported their standard of living.
The primary purpose of post-divorce spousal maintenance is to allow the less-monied spouse an opportunity to achieve economic independence (see Marino v Marino, 183 A.D.3d 813 [2d Dept 2020], citing Papakonstantis v Papakonstantis, 163 A.D.3d 839, 841 [2d Dept 2018]). In this case, Wife was wholly dependent on Husband's income during the parties' 30-year marriage. Even during the approximate three-year period when the parties were physically separated, Husband provided for all of Wife's financial needs, including the payment of major expenses related to the marital residence, AH's tuition, and credit card charges incurred by Wife. Although Wife has been a licensed attorney since 2003, she has never worked full-time or earned more than $36,000.00 in a year (see Novick, 214 A.D.3d 995). During this litigation, Husband inconsistently paid his temporary support obligation which, at $300.00 per week, was significantly less than the presumptive post-divorce amount. Wife credibly testified that, as a result, she was forced to use her income and deplete her savings. Considering the totality of the circumstances, the Court rejected Husband's argument that Wife's maintenance award should be $0.
At the time of trial, Wife was 51 years old and a practicing attorney for 19 years. In those 19 years, Wife worked exclusively as an independent contractor for a sole proprietor. At trial, Wife testified that she has experienced difficulty in finding a higher-paying job because she faces discrimination for wearing a hijab, suffers from keratoconus, has limited opportunities due to restrictive federal immigration policies, and has worked exclusively within a niche area of immigration law throughout her legal career. Of these alleged impediments, the Court finds her limited work history and narrow experience within a subspecialty of immigration law most convincing. Given that she practiced only part-time for the same sole practitioner within a narrow subspeciality for 19 years, Wife's opportunity to earn a higher income is likely limited. Moreover, Wife credibly testified that she never dealt directly with clients, but rather completed tasks assigned to her by the sole proprietor. Husband did not submit any evidence to establish Wife's marketability, nor did he provide the Court with any indication of how much Wife could earn given her experience and skill set.
Save for the first one or two years that Wife volunteered without pay.
Notwithstanding Wife's limited work history and experience, there are viable pathways for her to potentially increase her earnings over time. Given that the parties' children are both adults, Wife is no longer restricted to part-time employment. Although Wife credibly testified that she suffered from a medical condition, she did not go as far as to suggest that the condition prevented her from working on a full-time basis. Furthermore, there was no evidence that this condition impacted her ability to work or limited her employment options in any way. An eventual transition to full-time work, even at an entry-level salary, would certainly increase Wife's current income and future earning capacity. The Court acknowledged that it is unreasonable to expect Wife, in her early fifties and with limited work experience, to launch a legal career lucrative enough to maintain her pre-divorce standard of living. However, the combination of incremental increases to income over time, post-divorce maintenance, and equitable distribution, would allow Wife the opportunity to achieve economic independence by the time she reaches retirement age.
As a result of the Court's equitable distribution of the marital estate, Wife will receive a considerable amount of assets. As detailed below, she will receive $388,524.40 of the net sale proceeds from the Steuben Property, a rollover of half of Husband's retirement assets totaling $416,685.63, and $130,743.93 upon the surrender of four marital life insurance policies. Most importantly, Wife stands to receive a significant distribution of liquid assets from the sale of the marital residence. Unlike Husband, however, Wife has a limited capacity to accumulate retirement assets post-divorce. Additionally, as discussed herein, at least half of the funds in her bank accounts are subject to equitable distribution. Wife's funds were further depleted due to Husband's inconsistent payments of temporary spousal support and non-compliance with other court-ordered obligations. Therefore, although Wife is receiving a considerable equitable distribution award, there is a significant risk that it will be insufficient to maintain her pre-divorce standard of living and finance a secure retirement.
In contrast, Husband admitted at trial that there were no limitations to his earning capacity as a physician. The Court finds that Husband, who is in good health, good professional standing, and was 57 years old at the time of trial, could rapidly restore his income to pre-divorce levels. Moreover, the parties' children are adults and there was no testimony that they require his financial support. Husband has created a new entity, IH MD, which he could operationalize at any time. In addition to a new medical practice, Husband could also secure a full-time position at a hospital or outpatient provider which would offer a steady base salary, employer-based health insurance, and retirement benefits. Given his extensive professional experience and specialty in family medicine, Husband has direct pathways to continued financial prosperity after the divorce. Even if the Court credited his claim that he borrowed hundreds of thousands of dollars from SS and TA during the litigation, the proceeds from the sale of the marital residence will be more than sufficient to satisfy those purported debts.
At trial, Husband did testify that AH, 24 years old at the time, was covered under his government-provided health insurance plan.
After consideration of the factors and unique circumstances in this case, the Court finds that the presumptive amount of post-divorce maintenance is sufficient to allow Wife an opportunity to achieve economic independence.
B. Duration
For a 30-year marriage, as in this case, the statutory range for a post-divorce maintenance award is between 35% and 50% of the length of the marriage, or between 10.5 years and 15 years (Domestic Relations Law § 236 [B] [6] [f] [1]). In addition to the advisory schedule, the Court considered the factors set forth in the Domestic Relations Law, including but not limited to the age and health of the parties; the parties' present and future earning capacity, including Wife's limited participation in the workforce during the marriage; the parties' three-year physical separation, pre-commencement; the availability and cost of medical insurance for the parties since Husband lost his employer-based coverage; the standard of living established and sustained by the parties during the marriage; Wife's reduced or lost earning capacity due to her role as primary caretaker of the parties' children and household; the equitable distribution of marital property; and Wife's contributions as a spouse, parent, and homemaker to Husband's medical career (id. § 236 [B] [6] [e] [1]).
As aforementioned, the primary purpose of post-divorce spousal maintenance is to allow the less-monied spouse an opportunity to achieve economic independence (Marino, 183 A.D.3d 813, citing Papakonstantis, 163 A.D.3d at 841). Accordingly, post-divorce maintenance should be awarded for the duration that would afford the less-monied spouse sufficient time to become self-supporting (see Mahoney, 197 A.D.3d 638; see also D'Iorio v D'Iorio, 135 A.D.3d 693 [2d Dept 2016]; see also Pandis v Lapis, 176 A.D.3d 837 [2d Dept 2019]). Given Wife's limited income history, work experience, and earning capacity, the Court finds that she is unlikely to become self-supporting until she reaches retirement age. At that point, Wife's equitable distribution award could finance her retirement, along with her Social Security benefits and any accumulated savings. Therefore, the Court will award Wife post-divorce maintenance for 14 years, or 168 total payments. Husband's maintenance obligation will commence on March 15, 2024, and terminate upon the earlier of Wife's remarriage or cohabitation (Domestic Relations Law § 248), the death of either party, Wife's eligibility for full Social Security retirement benefits, or the expiration of the 14-year duration.
As of the date of this decision, the "full retirement age" under Social Security is 67 years old.
According to the trial record, Wife has been financially dependent on Husband during their 30-year marriage, including the three-year period, pre-commencement, when they were physically separated. Although Husband significantly financed Wife's education, it is clear that her primary role during the marriage was as a homemaker and caretaker of the parties' children. She attended college and law school on a part-time basis while Husband advanced his medical career and opened his practice. After graduating from law school, Wife worked part-time while the children were in school, and maintained her primary role caring for them and maintaining the home. In fact, she never worked full-time in her legal career, even when the children became independent and attended post-secondary institutions. Although Husband and Wife offer conflicting testimony as to why Wife never pursued a full-time position with a higher salary, the record supports the Court's conclusion that the parties were either satisfied with their respective roles in the marriage or satisfied enough to maintain the status quo in that regard.
As Husband achieved professional success during the marriage, his income increased enough to support a relatively high standard of living. The Court finds that Wife, as the homemaker and primary caretaker of the parties' children, significantly contributed to Husband's medical career. Furthermore, Wife sacrificed her own earning capacity and career advancement. As a result, Wife faces an uncertain and relatively long pathway to economic independence upon completion of this divorce. Husband, on the other hand, can quickly restore his income to pre-divorce levels. The Court must also note that Wife indirectly contributed to the growth of MO PC which, as discussed herein, was closed due to adverse events outside of Husband's control and, therefore, cannot be distributed. However, Husband can and likely will, given the creation of IH MD, leverage his management expertise and utilize intangible assets from MO PC to maximize his post-divorce earning capacity.
Although Husband claimed that Wife is intentionally suppressing her income, he failed to provide any evidence to establish or even approximate her earning capacity. As aforementioned, Wife has worked, on a part-time basis, for the same sole proprietor for her entire 19-year legal career. The Court credits Wife's testimony that, throughout her career, she worked within a narrow subspecialty and lacks experience in any other area of law. Given her limited work history, it is unclear how Wife would fare in the labor market and how much she could realistically be expected to earn. Consequently, the Court finds that Wife, 51 years old at the time of trial, will require a substantial period of time to become self-supporting.
When factoring age, health, and education, the Court finds that the parties are similarly situated. There is, however, a significant disparity between the parties' respective income histories and future earning capacities. Essentially, Wife would need to build her career from the ground up after this divorce. Moreover, during this litigation, Wife was forced to deplete a portion of her earnings and savings due to Husband's non-compliance with court-ordered obligations. Although Husband has paid temporary support, albeit inconsistently, up to at least the end of August 2022, he has failed to meet his obligation to pay Wife's health insurance premiums since making the first payment in September 2020. Although Wife's equitable distribution award will provide her with considerable liquid assets, the Court finds that it will be insufficient.Accordingly, the Court finds that durational maintenance for 14 years, in compliance with the statutory guidance, should provide Wife with enough time to become self-supporting. The Court considered awarding non-durational maintenance, but ultimately concludes that it would be inappropriate and unnecessary in this case. Although Wife may qualify for full Social Security retirement benefits several months before the completion of the 14-year maintenance duration, which would terminate Husband's obligation, it is also possible that the eligibility age for those benefits will increase over time. Given that Husband was 57 years old at the time of trial, the Court finds that a durational award, with a clear end-date for the maintenance obligation, is just and proper. Furthermore, pursuant to a short form order that will accompany this decision, Husband will no longer be responsible for any pendente lite maintenance or payments as ordered by the Court before trial.
C. Retroactivity
A party's maintenance obligation commences on, and is retroactive to, the date an application for maintenance was first made (Domestic Relations Law § 236 [B] [6] [a]; Sinnott, 194 A.D.3d 868; see Schack v Schack, 128 A.D.3d 941 [2d Dept 2015]). In this case, Husband's maintenance obligation will be retroactive to February 28, 2019, which was the date that Wife made her first application for maintenance in the summons and complaint (plaintiff's exhibit 1). The party paying post-divorce maintenance is entitled to a credit against the retroactive award, for temporary maintenance paid pursuant to a pendente lite order (Domestic Relations Law § 236 [B] [6] [a]; see DiLascio v DiLascio, 170 A.D.3d 804 [2d Dept 2019]; see also D'Iorio, 135 A.D.3d 693). Moreover, the payor is entitled to a credit for payments made to third parties on behalf of the payee during the litigation (id.; Yunis v Yunis, 94 N.Y.2d 787 [1999]).
Accordingly, the retroactive arrears for Wife's post-divorce maintenance award will be calculated from February 28, 2019 until February 29, 2024, or 60 months. As Husband will be directed to pay post-divorce maintenance in the amount of $4,475.00 per month, the retroactive maintenance arrears will total $268,500.00.
Within the preliminary conference order issued on July 9, 2019, Husband was directed to pay temporary maintenance to Wife in the amount of $300.00 per week (plaintiff's exhibit 5) and, as of trial, Husband was current with this obligation. In her post-trial summation, Wife indicated that Husband paid his temporary maintenance obligation through the end of August 2022, but made no payments thereafter. On July 6, 2023, Wife's counsel filed a letter informing the Court that Husband did not make any court-ordered payments to Wife, including temporary maintenance, since August 2022. Husband did not submit a response to that letter. Accordingly, Husband is entitled to a credit in the amount of temporary maintenance paid to Wife in the 162 full weeks, each Monday to Sunday, between July 9, 2019 and August 31, 2022. Thus, Husband is entitled to a credit against the retroactive maintenance arrears in the amount of $48,600.00. Therefore, Wife's total retroactive post-divorce maintenance award is $219,900.00. As aforementioned, this award will be paid to Wife directly from Husband's share of the net sale proceeds from the marital residence, upon closing of title.
$300 x 162 = $48,600.
$268,500.00 - $48,600.00 = $219,900.00.
The preliminary conference order further directed Husband to maintain the status quo (plaintiff's exhibit 5). At trial, Husband testified that, pursuant to this directive, he paid to maintain the Steuben Property before it was sold, as well as the marital residence. Husband generally referred to making other payments consistent with maintaining the status quo. However, Husband did not enumerate, nor did he submit any documentary evidence sufficient to support, the total amount of "status quo" payments he made during this litigation. Therefore, the Court had no basis to consider any credits to Husband for those court-ordered payments.
D. Medical Insurance
In addition to post-divorce maintenance, Wife is seeking a directive, pursuant to the Court's authority under the Domestic Relations Law, that Husband pay her health insurance premiums until the earlier of Wife's eligibility for Medicare, obtention of health insurance through her employer, or the end of Husband's post-divorce maintenance obligation (§ 236 [B] [8] [a]). In her post-trial summation, Wife argued that she is entitled to such special relief because Husband has historically provided for her health insurance coverage during the parties' marriage, and due to her inability to secure employer-based coverage as an independent contractor.
According to the trial record, Husband maintained health insurance for the parties and their children throughout the marriage until December 31, 2019, when his employer-based coverage was terminated by Northwell Health along with his employment. The Court, in its August 2020 Order, directed Husband to maintain Wife's substitute health insurance coverage during the pendency of the action (plaintiff's exhibit 10). However, Husband did not comply with the Court's order and only paid Wife's premium for September 2020 (plaintiff's exhibit 12, at D).
Wife has paid for her health insurance coverage, a basic Fidelis Care plan purchased through the New York State Marketplace, since October 2020 (plaintiff's exhibit 3). Therefore, Husband owes arrears for failing to pay Wife's premiums during that period. At the time the Court issued its August 2020 Order, the monthly premiums for Wife's health insurance coverage were $437.42 (id.). As of December 1, 2020, the premiums for the plan increased to $457.38 per month (id.). Since January 1, 2023, the monthly premiums further increased to $558.34 per month (plaintiff's summation at 59). The Court calculated Husband's health insurance premium arrears by combining two unpaid months (October 1, 2020 to November 30, 2020) at $437.42 per month, 25 months (December 1, 2020 to December 31, 2022) at $457.38 per month, and 14 months (January 1, 2023 to February 29, 2024) at $558.34 per month. Accordingly, Husband's arrears for non-payment of Wife's health insurance premiums during the pendency of this litigation amounts to $20,126.10. These arrears will be applied against, and thereby reduce, Husband's distributive award for his marital share of Wife's checking and CD accounts.
The Court calculated Husband's health insurance premium arrears from the first month that he failed to comply with the August 2020 Order, until the month before the commencement of Husband's post-divorce maintenance obligation as ordered herein.
2 x 437.42 = $874.84; 25 x $457.38 = $11,434.50; 14 x $558.34 = $7,816.76; $874.84 + $11,434.50 + $7,816.76 = $20,126.10.
The Court declines, however, to direct Husband to pay Wife's prospective health insurance premiums. After reviewing the unique facts and circumstances of this case, the Court concludes that such an award would be unnecessary and inappropriate. In contrast with numerous cases where special relief pursuant to the Domestic Relations Law was deemed appropriate (§ 236 [B] [8] [a]), the payee spouse here is in good health and not suffering from any conditions that prevent her from becoming self-supporting (see Greco v Greco, 161 A.D.3d 952 [2d Dept 2018]; see also Simon v Simon, 55 A.D.3d 477 [1st Dept 2008]; see also Feldman v Feldman, 194 A.D.2d 207 [2d Dept 1993]). Although Wife testified at trial that she suffered from keratoconus, she did not claim that the condition prevented her from working on a full-time basis, nor did she establish that it was a barrier to her achieving economic independence (tr at 928). For instance, Wife testified that she could operate a motor vehicle without any restriction or issue.
As the Court has determined herein, Wife's earning capacity is significantly hampered by her limited work history and legal experience. Nevertheless, as a licensed attorney with academic credentials, Wife has viable pathways to full-time employment through which she could secure employer-based health insurance. Although Wife will require post-divorce maintenance until she becomes self-supporting, the Court finds that she is capable of obtaining her own health insurance coverage using her income and substantial maintenance award herein (see Wasserman v Wasserman, 66 A.D.3d 880 [2d Dept 2009]). Furthermore, the considerable liquid assets that Wife will receive from the equitable distribution of the marital estate will provide her with a safety net (id.).
E. Life Insurance
Husband is hereby directed to maintain the existing MetLife policy ending in "*673PR", and obtain an additional policy, with Wife as the sole beneficiary on both policies, until the termination of his post-divorce maintenance obligation (Domestic Relations Law § 236 [B] [8] [a]; Sinnott, 194 A.D.3d 868; Gillman v Gillman, 139 A.D.3d 667 [2d Dept 2016]). According to the trial record, the face value of Husband's MetLife policy is $500,000.00, and the death benefit at commencement was $536,044.26 which, alone, is insufficient to secure his total post-divorce maintenance obligation of $751,800.00, should he decease prior to its termination (plaintiff's exhibit 24, see Hartog v Hartog, 85 N.Y.2d 36 [1995]; see also DiLascio 170 A.D.3d 804). Therefore, the Court will direct Husband to obtain an additional life insurance policy, with Wife as the sole beneficiary and with a minimum aggregate death benefit of $250,000.00.
Wife's annual maintenance award is $53,700.00 ($4,475.00 x 12 months). Therefore, Husband's total obligation is $751,800.00 ($53,700.00 x 14 years).
The Court will permit Husband to periodically reduce the total coverage amount of his policies as his total maintenance obligation decreases. However, he shall ensure that the total death benefit is never, at any point, less than his total outstanding post-divorce maintenance obligation. Furthermore, Husband will provide copies of both life insurance policies to Wife by July 1, 2024, and furnish proof to her, annually, that the policy premiums have been fully paid until the end of his maintenance obligation.
V. COUNSEL FEES
In her post-trial summation, Wife requests that the Court order Husband to pay the entire sum of legal fees she incurred during this litigation, less a credit for Husband's interim payments to date or, alternatively, for Husband to pay the current balance of Wife's legal bills. Wife duly executed a retainer with Howard M. File, Esq., PC on February 20, 2019. According to the affirmation submitted with Wife's summation, her attorney provided 254.45 hours of legal services in this action, from the date of commencement through trial, at an hourly rate of $400.00 which totals, with disbursements, $108,746.15 (plaintiff's summation at 47). During this litigation, Husband was directed to pay $20,000.00 for Wife's pendente lite counsel fees. Wife has paid $32,325.15 to her attorney, including the initial retainer in the amount of $15,000.00. According to the regular monthly billing invoices provided by Wife's counsel, supplemented by itemized transaction records, Wife's outstanding balance for attorney's fees and disbursements is $56,421.00.
According to the affirmation submitted to the Court by Wife's counsel, Wife incurred $101,780.00 in total legal fees, and $6,966.15 for disbursements made on her behalf.
The Domestic Relations Law vests the trial court with discretion to award attorney's fees in an action for divorce (§ 237 [a]; see Sufia v Khalique, 189 A.D.3d 1499 [2d Dept 2020], citing Morrissey v Morrissey, 259 A.D.2d 472 [2d Dept 1999]). The purpose for this discretionary authority is to empower the Court to redress any economic disparity between the litigating parties, and to ensure that the non-monied spouse will be able to litigate the matrimonial action on equal footing with the monied spouse (see O'Shea v O'Shea, 93 N.Y.2d 187 [1999]; see also Brockner v Brockner, 174 A.D.3d 567 [2d Dept 2019]; see also Prichep v Prichep, 52 A.D.3d 61 [2d Dept 2008]). In fact, the statute provides that "[t]here shall be a rebuttable presumption that counsel fees shall be awarded to the less monied spouse" (Domestic Relations Law § 237 [a]). Furthermore, in exercising its discretionary authority, the Court must consider the financial circumstances of the parties and the circumstances of the case as a whole, including the relative merits of the parties' positions and whether either party has delayed the proceedings or engaged in unnecessary litigation (see Marchese v Marchese, 185 A.D.3d 571, 576 [2d Dept 2020] [internal quotation marks omitted]; see also Piccininni v Piccininni, 176 A.D.3d 880 [2d Dept 2019]).
Here, Wife is the less-monied spouse and there is a significant disparity in the parties' respective incomes and earning capacities. During the parties' 30-year marriage, Husband has continuously been the primary wage earner, and Wife was dependent on his income. Although Wife has been a licensed attorney since 2003, she was a homemaker and the primary caretaker of the parties' two children for most of the marriage. Husband has not disputed Wife's assertion that she never worked on a full-time basis and never earned more than $36,000.00, annually, in her professional career.
Husband, on the other hand, was a successful physician who worked for a hospital system and operated his own medical practice before the commencement of this action. In the years immediately preceding this litigation, Husband earned more than $200,000.00, annually. During the marriage, Husband's income afforded the parties an upper-middle-class standard of living without the need to incur debt. After the commencement of this divorce action, however, Husband was terminated from his position with Northwell Health and closed his medical practice due to adverse events outside of his control. Nevertheless, as Husband testified at trial, he is able to practice medicine and work as a physician without restriction. As discussed herein, the Court did not believe Husband's account of his current income and, consequently, imputed to him an annual income of $250,590.00, which is consistent with his pre-commencement earnings.Pursuant to this decision, Wife will receive $4,475.00 per month in post-divorce maintenance. Additionally, Wife will receive $388,524.40 of the net sale proceeds from the Steuben Property, a rollover of half of Husband's retirement assets totaling $416,685.63, and $130,743.93 upon the surrender of four marital life insurance policies. Wife will also receive a significant distribution of liquid assets from the sale of the marital residence. Nevertheless, the Court finds that Wife is the less-monied spouse and, while mitigated to an extent by the aforementioned awards, the disparity in the parties' respective financial circumstances persists.Given her work history, income and age, Wife has a limited capacity to accumulate retirement assets post-divorce. Although the Court finds that Wife is able to work full-time and increase her post-divorce income, she will nevertheless require spousal maintenance for 14 years in order to become self-supporting by the time she reaches retirement age. Furthermore, Wife was forced to deplete her earnings and savings during the litigation due to Husband's inconsistent payments of temporary spousal support and non-compliance with other court-ordered obligations. Consequently, Wife will be reliant on finite resources, post-divorce maintenance and the equitable distribution awards, to support herself after the divorce has been granted and, perhaps most importantly, into her retirement (see Kugler v Kugler, 174 A.D.3d 878 [2d Dept 2019], citing Prichep, 52 A.D.3d 61).
This includes securing and maintaining housing after the sale of the marital residence.
In contrast, Husband is likely to rapidly restore his income to a pre-commencement level. As a result, he will be able to accumulate assets to secure his retirement and resume his pre-commencement standard of living. Moreover, Husband will receive a considerable amount of liquid assets upon the sale of the marital residence, which will be sufficient to satisfy his purported debts to friends and family. Even before the marital residence is sold, Husband will receive approximately $143,000.00 in liquid assets from his share of the net sale proceeds from the Steuben Property, Wife's bank accounts, and cash from the four marital life insurance policies to be surrendered. Therefore, the Court finds that Husband failed to rebut the statutory presumption that Wife, as the less-monied spouse, is entitled to counsel fees.
The Court did not find any evidence of dilatory tactics or frivolous conduct by either party. Since the date of commencement through trial, Wife was represented by the same attorney, and Husband substituted counsel once early in the litigation. During three years of litigation, there were only six motions filed, three of which related to depositions of non-parties. The Court will note, however, that Wife's first three motions were filed, at least in part, due to Husband's non-compliance with court orders, including non-payment of temporary maintenance, AH's tuition, and interim counsel fees.
Finally, Wife's attorney submitted an affirmation of services to the Court, which was supported by a retainer agreement, monthly billing statements, and an itemized list of the legal services provided to Wife during the litigation, as of the filing of the post-trial summation. The Court reviewed the affirmation and supporting documents and finds that Wife was charged reasonable legal fees commensurate with services rendered and the complexity of the instant action (see Gove v Gove, 183 A.D.3d 581 [2d Dept 2020], citing DiBlasi v DiBlasi, 48 A.D.3d 403 [2d Dept 2008]).
After considering the equities and circumstances of the case, including the disparity in the parties' income, the Court will award counsel fees to Wife in the amount of $40,000.00, which represents approximately 70% of Wife's outstanding legal bill (see Lieberman-Massoni, 215 A.D.3d 663; see also Marino, 183 A.D.3d 813; see also Nadasi v Nadel-Nadasi, 153 A.D.3d 1346 [2d Dept 2017]; see also Brantly v Brantly, 89 A.D.3d 881 [2d Dept 2011]). This award will be deducted exclusively from Husband's share of the net proceeds from the sale of the Steuben Property and made payable directly to Wife's counsel.
VI. CONCLUSION
As set forth by the Court in this decision after trial, Wife is hereby granted a Judgement of Divorce on the ground of irretrievable breakdown of the marital relationship six months prior to the commencement of this action (Domestic Relations Law § 170 [7]).
The Court has made the following equitable distribution awards herein:
Wife is entitled to
• a share of the remaining net proceeds from the sale of the Steuben Property, in the amount of $449,990.10,from the total $532,023.37 held in an escrow account by Wife's counsel (which includes the application of a credit in the amount of $124,500.00 for her share of marital funds dissipated by Husband), less credits and offsets applied to reduce the number of transactions as indicated herein;
• a 50% share of the net proceeds from the sale of the marital residence;
• a distributive award totaling $1,155.26 for her 50% share of Husband's Chase checking account ending in "*665";a rollover representing 50% of Husband's SEP IRA in the amount of $52,451.27, Northwell 403(b) in the amount of $120,837.50, and Fidelity IRA in the amount of $243,396.86, which totals $416,685.63;
• 50% of the cash proceeds, or a total of $29,881.19, from the surrender of the MetLife life insurance policies ending in "*730A" and "*307A", which insure the parties' children;
• a credit for 50% of Husband's MetLife life insurance policy ending in "*673PR", which Husband will be directed to maintain until the end of his post-divorce maintenance obligation, in the amount of $45,449.71;
• a credit in the amount of $25,502.33 for her 50% share of marital funds improperly used by Husband to pay pendente lite obligations during this litigation; and
• exclusive use and possession of the 2014 Mercedes.
$493,057.10 - $20,000 - $23,067 = 449,990.10 to reflect deductions previously effectuated pursuant to court order.
Husband is entitled to
• a share of the remaining net proceeds from the sale of the Steuben Property, in the amount of $82,033.27, from the total $532,023.37 held in an escrow account by Wife's counsel, with credits and offsets applied to reduce the number of transactions as indicated herein;
• a 50% share of the net proceeds from the sale of the marital residence, less retroactive post-divorce maintenance arrears as indicated herein;
• distributive awards for 50% of the marital funds in Wife's NYCB Checking Account ending in "*524", in the amount of $80,887.37, and NYCB CD Account ending in "*938", in the amount of $27,362.02, which totals $108,249.39;
• 50% of the cash proceeds, or a total of $29,881.19, from the surrender of the MetLife life insurance policies ending in "*730A" and "*307A"; and
• 50% of the cash surrender values of the MetLife life insurance policies ending in "*618PR" and "*027PR", upon their surrender, less Wife's credit for 50% of Husband's MetLife life insurance policy ending in "*673PR", which totals $9,963.32.
The parties will list the marital residence for sale within sixty (60) days after service of the signed Judgment of Divorce, as directed herein. Husband's total retroactive post-divorce maintenance arrears, in the amount of $219,900.00, will be paid to Wife exclusively from Husband's share of the net sale proceeds from the marital residence, upon closing of title.Husband is entitled to a distributive award for his 50% share of Wife's checking and CD accounts in the sum of $108,249.39. To limit the transactions necessary between the parties, the Court will reduce Husband's distributive award by the pendente lite health insurance arrears owed to Wife in the amount of $20,126.10, a credit in the amount of $25,502.33 awarded to Wife for Husband's depletion of marital funds to pay pendente lite obligations, and a distributive award payable to Wife for her share of Husband's Chase checking account ending in "*665", in the amount of $1,155.26. As a result, Husband's net award is reduced to $61,465.70. To further simplify the exchange of funds, Husband's net distributive award will be paid from Wife's share of the net sale proceeds from the Steuben Property. Consequently, Wife's share of the remaining funds held in escrow totals $388,524.40, and Husband's share totals $143,498.97.
$108,249.39 - $20,126.10 - $25,502.33 - $1,155.26 = $61,465.70.
$449,990.10 - $61,465.70 = $388,524.40.
$82,033.27 + $61,465.70 = 143,498.97.
Furthermore, Wife's application for an award of counsel fees is granted in the amount of $40,000.00. This award shall be paid exclusively from Husband's share of the remaining net sale proceeds from the Steuben Property.
Therefore, Wife's counsel is hereby directed to release from escrow $388,524.40 to Wife, $103,498.97 to Husband, and $40,000.00 payable to his law practice, Howard M. File, Esq., PC within thirty (30) days after service of the signed Judgment of Divorce.
Wife is entitled to 50% of Husband's SEP IRA in the amount of $52,451.27, Northwell 403(b) in the amount of $120,837.50, and Fidelity IRA in the amount of $243,396.86, which totals $416,685.63. In consideration of tax consequences and potential fees, the Court hereby directs Wife to open an IRA in her name to facilitate a rollover of the funds, in kind, from each of Husband's three retirement accounts. If there are insufficient funds in any of Husband's retirement accounts, Husband shall be responsible for paying a distributive award to make up the shortfall.
Wife's application for post-divorce maintenance is hereby granted in the amount of $4,475.00 per month, or $53,700.00 annually, for a period of fourteen (14) years from the first payment, and applied retroactively to February 28, 2019 net of credits for pendente lite maintenance paid. Husband's first payment of post-divorce maintenance pursuant to this decision shall be due on March 15, 2024. As of that date, Husband will no longer be obligated to make any pendente lite payments. Furthermore, Husband shall maintain the existing MetLife life insurance policy ending in "*673PR" and obtain an additional policy with a minimum death benefit of $250,000.00 which he will be permitted to periodically reduce commensurate with the decrease of his total maintenance obligation. Husband shall ensure however, that the combined death benefit of his two life insurance policies is never, at any point, less than his total outstanding post-divorce maintenance obligation. Furthermore, at the end of or upon the termination of his post-divorce maintenance obligation to Wife, Husband will no longer be required to maintain any life insurance policies pursuant to this order.
Husband is entitled to distributive awards for 50% of the cash surrender values of Wife's two policies, ending in "*618PR" and "*027PR", in the amount of $55,413.03, less Wife's credit for her 50% share of the cash surrender value of Husband's policy ending in "*673PR", which results in $9,963.32 payable to Husband. The parties are each entitled to $29,881.19, which represents 50% of the cash surrender values of the policies for their children, ending in "*730A" and "*307A". To reduce the amount of transactions necessary between the parties, Wife shall, upon surrender of the two policies in her name, retain the entirety of the cash surrender values. Upon the surrender of the policies for the children, Husband shall pay $19,917.87 to Wife for her share of the cash surrender values of the children's policies, less the outstanding amount payable to Husband for his share of the cash surrender values of Wife's policies. The parties are hereby directed to surrender the four (4) MetLife life insurance policies indicated herein within thirty (30) days after service of the signed Judgment of Divorce. To the extent Husband controls or manages the two life insurance policies in Wife's name, he shall effectuate the distribution of those policies as directed herein.
$29,881.19 - $9,963.32 = $19,917.68.
Wife is hereby directed to serve and file a Judgment of Divorce in accordance with the terms of this Decision, together with Findings of Fact and Conclusions of Law. The Judgment of Divorce, with its supporting documentation, is to be filed within thirty (30) days of the issuance of this Decision. A separate short form order shall be issued in conjunction with this Decision to immediately effectuate post-divorce maintenance awarded herein before the Judgment of Divorce is signed.
This constitutes the Decision of the Court after trial. In the event that an application was made during or before trial, and not specifically addressed herein, or any motion was filed and not specifically decided, that application or motion is hereby denied.