Opinion
Index No. 303340/2015
11-08-2024
W.P.W., Petitioner, v. E.M.R., Defendant.
Counsel for Weitman Nicky Rooz Law firm of Withersworldwide Counsel for Reid Yosef Rothstein Law firm of Elman Freiberg PLLC
Unpublished Opinion
Counsel for Weitman Nicky Rooz Law firm of Withersworldwide
Counsel for Reid Yosef Rothstein Law firm of Elman Freiberg PLLC
HON. TA-TANISHA JAMES, J.S.C.
Recitation, as required by CPLR 2219 (a), of the papers considered in the review of this: Order to Show Cause and Cross-Motion to Enforce Judgment of Divorce
Papers Numbered
Order to Show Cause and Exhibits Attached 1
Affidavit of E. M. R 2
Notice of Cross Motion and Exhibits Attached 3
Affirmation of Yosef Rothstein and Exhibits Attached 4
Reply Memorandum of Law in Support of Order to Show Cause 5
Reply Affidavit in Further Support of Cross-Motion and Exhibits Attached 6
In this post-judgment matrimonial action, Defendant E.R. ("Defendant") moves for: (1) An order directing Plaintiff W.W. ("Plaintiff") to fully comply with his financial obligations pursuant to the Judgment of Divorce by immediately paying all amounts due and owing to Defendant; (2) A money judgment against Plaintiff in the sum of $611,711.12 plus interest and expenses; (3) An order directing Plaintiff to transfer $28,166.00 in retirement account assets, as well as an award of interest for the alleged delayed; and (4) An award of legal fees incurred in bringing this motion. Plaintiff opposes and cross-moves for: (1) An order enforcing the terms of the parties' Judgment of Divorce and directing Defendant to comply with her obligations under the Judgment of Divorce, specifically that Defendant immediately turn over any and all insurance proceeds received by her in connection with personal property items award to Plaintiff which Defendant alleges were missing or no longer in her possession, and that Defendant follow the Decision after Trial dated September 20, 2021, as to the protocol to submit to the Court the issue of the cash award to be paid to Defendant in lieu of distribution of Sotheby's shares; (2) An award granting Plaintiff counsel fees in connection with this motion practice; and (3) Sanctions against Defendant if the Court does not award counsel fees.
Plaintiff commenced this action by filing a Summons and Complaint on March 13, 2015, in Supreme Court in the County of New York, pursuant to DRL 170(7), the irretrievable breakdown of the relationship for a period of at least six months. There are no children of the marriage. Plaintiff and Defendant were married on July 23, 2005, and both parties had prior marriages. The parties were unable to settle the matter and the Court (Drager, J.) issued an Order of Reference referring the financial issues to a Special Referee to hear and report with recommendations on the issues of equitable distribution, counsel and expert fees. The matter was assigned to Special Referee Steven E. Liebman and the financial trial commenced on March 16, 2017, and continued over nearly 30 dates in 2017 and 2018 before concluding on May 8, 2018. The matter was deemed fully submitted in September 2018 after the parties submitted their post-trial submissions. Although the parties stipulated and consented to Special Referee Liebman hearing and determining the financial issues, he retired prior to issuing a decision on the referred issues. Thus, the matter was transferred to Judge Kelly O'Neill-Levy following the retirement of Judge Drager, and the parties and their counsel stipulated to Judge O'Neill-Levy accessing and reviewing any and all relevant pleadings and material in the court file regarding this action, including, but not limited to, the transcripts from the trial conducted before Special Referee Liebman, in order to render a final decision in the matter. Subsequently, Judge O'Neill-Levy issued a comprehensive, 41-page Decision After Trial (the "Decision") on September 20, 2021. The Judgment of Divorce (the "Judgment") was signed on February 9, 2022, by Judge O'Neill-Levy and entered by the County Clerk on March 2, 2022. A complete recitation of the history between the parties and the Court's findings and determinations as to equitable distribution, counsel and expert fees, and ancillary matters, is contained in the Decision.
For the reasons discussed below, the Court grants in part and denies in part the requested relief.
Money Judgment Against Plaintiff
Defendant seeks a money judgment for money she believes she is owed on the Cash Distributive Award, the value of the Sotheby's stock, and Plaintiff's share of the cost of transporting certain property from Dallas, TX to New York, plus interest.
The Cash Distributive Award
Defendant asserts that she still is still owed money from Plaintiff to fully satisfy the Cash Distributive Award as directed in the Decision. Per Defendant, pursuant to the Decision, she was to receive $718,518.50 as a Cash Distributive Award following the transfer of the title for the parties' UN Plaza Apartment to Plaintiff's sole name. The Cash Distributive Award was to be reduced by one half of the transfer fee for the transfer of the title upon Plaintiff providing proof of the costs. Defendant maintains that she only received $655,591.79, $62,926.71 less than the amount directed in the Decision and Judgment, and that Plaintiff did not provide any proof of the costs related to the title transfer.
In his Affidavit in Opposition to Defendant's Motion and in Support of his Cross-Motion, Plaintiff maintains he made timely payments and appropriately reduced the amount paid to Defendant for the transfer fees, as well as a charging lien from Defendant's prior counsel. Plaintiff asserts he and his counsel immediately took steps to effectuate the various transfers and payments directed by the Court by sending a letter a month after entry of the Judgment to Defendant's counsel, at the time Ingrid Gherman, Esq., in April 2022. After Ms. Gherman failed to respond, another letter was sent in July 2022. Plaintiff indicates that Ms. Gherman finally responded in August 2022, but maintains her correspondence failed to address critical issues, including the notice of charging lien filed by Defendant's prior counsel, Martin Friedlander, Esq., and a resolution to the distribution of the Sotheby's shares.
As the payment of the Cash Distributive Award was ordered to take place upon the transfer of the title of the UN Plaza Apartment jointly from the parties' to Plaintiff's sole name, upon the closing of the title transfer on August 25, 2022, Plaintiff maintains that his counsel provided proof of the transfer costs to Defendant's counsel, still Ms. Gherman, and the amount of $655,591.79 was transferred to Defendant. Plaintiff withheld $6,028.93, representing the transfer costs as he was entitled to pursuant to the Judgment, and $54,864.08, representing the amount of the charging lien owed to Mr. Friedlander. Plaintiff attaches as exhibits to his motion the letters sent by his counsel to Ms. Gherman that reference the charging lien and indicate that Plaintiff would satisfy it unless he was notified the lien had otherwise been paid. Plaintiff maintains that up until the time he transferred the Cash Distributive Award, his counsel reached out to Defendant's counsel regarding the charging lien on four separate occasions between August 18 and September 1, 2022, and Ms. Gherman did not object or otherwise respond to Plaintiff's assertion that he would satisfy the charging lien and deduct the amount from the Cash Distributive Award.
Regarding the charging lien, Defendant claims that Plaintiff satisfying the charging lien was improper, and as such Plaintiff must pay her the amount paid for the charging lien directly. Defendant asserts Plaintiff had no right to unilaterally satisfy the lien, and maintains that even if he did, a charging lien can only be enforced when the attorney's representation terminates upon consent and there has been no misconduct. Plaintiff contends he had no knowledge Defendant fired Mr. Friedlander for cause.
Judiciary Law § 475 affords attorneys a statutory right to a charging lien which attaches automatically to a judgment. Courts have previously recognized the right of a discharged attorney to enforce the statutory charging lien . Klein v Eubank, 87 N.Y.2d 459, 462 (1996). When an attorney's representation terminates upon mutual consent, and there has been no misconduct, no discharge for just cause, and no unjustified abandonment by the attorney, the attorney maintains his or her right to enforce the statutory lien. Nassour v Lutheran Med. Ctr., 78 A.D.3d 671, 671-672 (2nd Dept 2010), quoting Lansky v Easow, 304 A.D.2d 533, 534 (2nd Dept 2003). In a matrimonial action, a charging lien will be available to the extent an award of equitable distribution reflects the creation of a new fund by an attorney greater than the value of the interest already held by the client. Moody v Sorokina, 50 A.D.3d 1522, 1523 (4th Dept 2008). The Court of Appeals has found that Judiciary Law § 475 impliedly provides that the attorney's lien extends to the proceeds of an award such that a party who has notice of the lien, actual or constructive, is liable to the attorney for his lien in an equitable action to enforce it when he would be unable to collect from his client . Fischer-Hansen v Brooklyn Hgts. R.R. Co., 173 N.Y.492, 501 (1903).
In this case, Mr. Friedlander had a statutory charging lien against the judgment, a charging lien was specified in his retainer agreement, and he filed notice of the charging lien with the County Clerk on January 20, 2017. Additionally, Mr. Friedlander served notice of the lien on both Plaintiff's counsel and Ms. Gherman, Defendant's counsel at the time. While Defendant now contends that she terminated Mr. Friedlander for cause because he allegedly engaged in improper billing practice, she did not move to have Mr. Friedlander removed as her counsel or otherwise seek a finding from the Court that his representation ended for cause, nor did she dispute the lien when notice was served upon her counsel and with the County Clerk. Notably, Ms. Gherman did not object to the lien being satisfied or indicate Defendant's belief the lien had been forfeited when she was notified by Plaintiff's counsel on multiple occasions that he would pay the charging lien and deduct the amount from the Cash Distributive Award paid to Defendant. Based upon the holding in Fischer-Hansen and other applicable case law, it is not inconceivable that Plaintiff paid the lien directly to Mr. Friedlander. Plaintiff had no notice that the lien was improper or contested by Defendant, and Ms. Gherman was notified on at least six different occasions of the lien. As Plaintiff was on notice of the lien, he could have been liable for it had he distributed the entirety of the cash award to Defendant and she failed to satisfy the lien or obtain a ruling the lien was forfeited due to Mr. Friedlander's termination for cause.
There was no court finding of misconduct by Defendant's past counsel.
Defendant reveals in her Reply Affidavit that during this time period Ms. Gherman was very ill due to cancer and not working. However, Plaintiff and his counsel had no knowledge of that at the time and Ms. Gherman remained Defendant's counsel of record until a Consent to Change Attorneys was executed on March 23, 2023.
While the better course of action would have been for Plaintiff to hold the amount of the charging lien in escrow, considering Plaintiff's potential liability and unawareness that Defendant contested the lien; Defendant and her counsel's non-responsiveness to Plaintiff's multiple inquiries regarding satisfaction of the lien; and the absence of a finding the lien was forfeited, the Court will not fault Plaintiff for paying the lien and reducing the amount distributed to Defendant, thus Plaintiff does not owe Defendant an additional $54,864.08. As to Defendant's assertion that the attorney-client relationship between her and Mr. Friedlander ended due to unjust cause, misconduct, or unjustified abandonment and he is not entitled to enforce the charging lien, that is a question of fact, requiring further proceedings to determine the enforceability of the lien. Defendant's recourse is to bring an action against Mr. Friedlander, to the extent such an action is permissible at this juncture, to attempt to recoup some or all of the $54,864.08 paid to satisfy Mr. Friedlander's charging lien.
Outside of the amount of the charging lien, Defendant also alleges Plaintiff owes additional sums for the Cash Distributive Award. Namely, Defendant claims that Plaintiff withheld $2,033.70 without explanation and an additional $8,104.47 for expenses he did not actually incur. Plaintiff does not dispute the failure to transfer the $2,033.70, but maintains the failure was inadvertent and he will transfer the amount to Defendant, subject to the amount he alleges he is owed from the insurance proceeds. Plaintiff further maintains that the $8,104.47 was withheld, upon the advice of his real estate attorney, for any taxes that could become due following the transfer of the UN Plaza Apartment transfer. Plaintiff does not dispute that Defendant is entitled to an additional $4,052.23, representing her one-half share, upon confirmation that no taxes are owed.
Upon review of the parties' Affidavits and exhibits attached to their papers, the Court finds Plaintiff offered sufficient proof as to the amount withheld for the transfer costs, and credits Plaintiff's position as to the further amounts that were not transferred to Defendant for the Cash Distributive Award, thus the Court finds that Plaintiff owes Defendant an additional $6,085.93 to fully satisfy the Cash Distributive Award.
The final component of the money judgment sought by Defendant is costs incurred in transporting Plaintiff's property from Texas to New York. Defendant claims the total cost for shipping was $1,800.00 and seeks $900.00, plus interest dating back to August 19, 2022, the date the property was delivered to Plaintiff. Plaintiff opposes this amount and asserts that he previously offered to pay $500.00 instead of $900.00, as he claims that Defendant incurred additional unnecessary expenses by having the items shipped from Texas to her home in Staten Island and then to Plaintiff's apartment in Manhattan; Defendant did not coordinate the delivery with him such that he could obtain approval from his building and make arrangements for the delivery; and Defendant unilaterally hired the moving company, which did not properly pack his items causing some of them to arrive damaged. Plaintiff further asserts that he attempted to pay $500.00 to Defendant by mailing her a check, but it was returned to him as Defendant no longer resided at the address where the check was sent, and Defendant failed to respond to his communications to obtain a valid address.
The Court is not persuaded by Plaintiff's arguments. The Judgment directs Defendant to make arrangements to transport the items to Plaintiff and does not direct the parties work together or otherwise agree on which moving company to use. To the extent that any damage occurred to the items, that is an issue properly addressed directly with the moving company. The Judgment directs the parties to share in the cost of the transportation and Defendant provided proper proof of the expenses incurred to transport. Accordingly, the Court finds Plaintiff liable to Defendant for $900.00.
Sotheby's Stock
The Decision awards Defendant 35% of the marital Sotheby's shares, which constituted 6,650 of the 19,000 shares owned on the date of commencement (the "Sotheby's Shares Distributive Award"). The Judgment indicates that all of the Sotheby's shares were sold or liquidated as a result, inter alia, of Sotheby's being acquired and taken private in 2019. As such, the Judgment directs the parties attempt to reach an agreement as to an appropriate cash award to be paid to Defendant in lieu of the distribution of the shares. The Judgment further directs that if the parties are unable to reach an agreement within 30 days of entry of the Judgment of Divorce, the issue shall be submitted to the Court for determination.
In her motion, Defendant asserts the cash value of her share of the Sotheby's shares is $394,278.50 to satisfy her share of Sotheby's stock awarded to her as marital property under the Decision. Defendant further asserts that she is entitled to "prejudgment and post judgment interest from the date of sale of the shares in 2018." (Defendant Aff. ¶ 6). As such, Defendant claims that the total award she should receive for the Sotheby's shares is $565,773.44.
Defendant derived this figure based upon the value of the stock being $59.29 per share at the time of sale. Defendant maintains the parties agree to this valuation.
In opposition, Plaintiff asserts that since the parties were unable to reach an agreement as to the cash value of the Sotheby's shares, despite, as he submits, multiple attempts by his counsel, and the issue had not been submitted to the Court for determination until filing of the instant motion, there is no payment due to Defendant at this time, and certainly no interest due. Regarding the value of the Sotheby's Shares Distributive Award, it is Plaintiff's position that Defendant should receive $340,593.90. Plaintiff calculated that sum based upon the sale of 8,500 Sotheby's shares in June 2018 at the price of $59.29 per share. The remaining 12,163 shares, some of which were marital and some of which were post-commencement separate property, were sold in October 2019 when Sotheby's went private and were liquidated at a price of $57.00 per share. Plaintiff agrees with Defendant's position that the shares should be valued at the $59.29 per share price, as all of the shares that were sold in 2018 were marital property, however, Plaintiff maintains that the cost basis per share was $35.41, resulting in $23.88 in capital gains per share, or $158,802.00 for Defendant's 6,650 shares. As such, Plaintiff maintains that the net cash proceeds from the sale of Defendant's 6,650 shares is $340,593.90, after deduction of the capital gains taxes Plaintiff paid.
The Judgment provides that Plaintiff shall make the cash payment for the Sotheby's Shares Distributive Award within ten (10) days of either an agreement reached by and between the parties concerning the appropriate cash amount, or a decision by the Court.
Defendant argues she should receive the entire cash value of the shares awarded to her without taxes removed, as she contends there is no ascertainable proof that Plaintiff paid the taxes on the shares, plus 9% interest. Plaintiff argues Defendant should not be entitled to the cash value of the stock without factoring in the taxes he paid when the stock was sold, as the sum sought by Defendant is not actually equivalent to the net cash she would have received for the shares upon liquidating them. In response to Defendant's claim that Plaintiff has not submitted reliable proof of his payment of taxes on the shares, Plaintiff contends that doing so would constitute post-judgment discovery.
After considering the arguments set forth by both parties, the Court finds in favor of Plaintiff's argument as to the value of the Sotheby's Shares Distributive Award that should be paid to Defendant. The Court notes that the parties' positions are the same as far as the per share value of the shares. The difference lies in whether Defendant should be responsible for the tax liability of her shares. The Court finds that she should. Had Sotheby's not been privately acquired, forcing liquidation of the remaining shares, and Defendant had actually received the shares as her own property, at whatever time Defendant decided to sell or liquidate her shares she would have had to pay any taxes as a result of the sale. Thus, it stands to reason that since the shares attributed to her sole possession through the Decision and Judgment were sold, she is liable for the tax liability related to her shares. The Court notes that Defendant's argument that she should not "suffer the consequences" for the capital gains taxes paid from the sale of the shares, as Plaintiff was not authorized to sell the shares and there were other options for the shares that would have been "more tax efficient" is without merit and academic in light of the fact that Sotheby's was acquired a year later and all of the shares would have been liquidated, even if Plaintiff had not previously liquidated some of the shares. See Kaufman v Kaufman, 189 A.D.3d 31, 65-66 (1st Dept 2020) ("the plaintiff should have to shoulder the tax burden only in the same percentage as she shares in the distribution of the asset. Since the plaintiff's share of the illiquid marital assets is 25%, she should be required to absorb 25% of the defendant's tax burden with respect to such assets. Thus, the plaintiff shall be directed to reimburse the defendant for 25% of any taxes he paid or pays as the result of liquidating assets in order to satisfy his equitable distribution obligation"). However, the Court does concur with Defendant's assertion that the proof of taxes paid by Defendant, copies of checks he wrote to the IRS, is insufficient, in as much as that is not dispositive that the taxes Plaintiff remitted to the IRS were in connection with the Sotheby's shares and not for any other tax liability Plaintiff may have had. Therefore, the Court will require Plaintiff to submit proof, preferably from the IRS directly and on notice to Defendant's counsel, that demonstrates the amount of taxes incurred and paid on the liquidation of the Sotheby's shares sold in 2018.
Accordingly, the cash value of Defendant's Sotheby's shares will be $394,278.50, minus the taxes incurred when the shares were liquidated.
Retirement Assets
Defendant claims that Plaintiff failed to timely transfer retirement assets in the amount of $28,166.00, without explanation, and seeks the immediate transfer of that amount, plus interest in the amount of $3,097.49. Regarding the retirement assets, Plaintiff asserts that his counsel reached out to Defendant's counsel on numerous occasions about transfer of the assets. Originally, Defendant designated that the retirement funds be transferred from Plaintiff's Fidelity Account to her Morgan Stanley Account, however Fidelity did not permit such transfers and would only transfer from one Fidelity Account to another or would allow a party to transfer from their Fidelity Account to the account of another institution in their name. In other words, the assets would have to transferred to Defendant's Fidelity Account, and if she did not have one, she would have to open one and then she would be able to transfer the funds elsewhere. Once Plaintiff became aware of this, his counsel provided this information, along with the required forms, to Ms. Gherman by email on August 23, 2022. Plaintiff maintains that Ms. Gherman did not respond until October 2022, and when she did respond, she continued to indicate that the retirement assets be transferred directly to Defendant's Morgan Stanley Account. Plaintiff indicates a final letter on the issue was sent to Ms. Gherman in December 2022, and no response was received prior to the instant motion being filed in March 2023.
Plaintiff and his counsel were not on notice that Defendant was no longer represented by Ms. Gherman until the instant motion was filed. Plaintiff's counsel emailed Defendant's new counsel on April 24, 2023, to resolve the remaining issues in the Judgment of Divorce, including transfer of the retirement funds. Subsequently, on April 25, 2023, Defendant executed the forms required by Fidelity, and Defendant's counsel emailed the completed forms to Plaintiff's counsel on April 28, 2023. Plaintiff initiated the transfer with Fidelity on May 1, 2023 and the transfer was complete on or about May 9, 2023. Thus, Plaintiff contends that as soon as he was able to obtain Defendant's cooperation, upon Defendant retaining her current counsel in March 2023, he immediately transferred the assets.
Defendant for her part does not dispute in her Reply that the retirement assets have now been transferred to her. Accordingly, the only issue that remains regarding the retirement assets is what, if any, interest Defendant is entitled to. On that point, Defendant maintains that notwithstanding the fact that she was required to open her own Fidelity account in order to have the funds transferred, Plaintiff's counsel did not reach out to Ms. Gherman until April 2022, two months after the Judgment was signed and a month after it was entered, and Plaintiff did not find out until August 2022, more than six months after the Judgment was signed, that Defendant was required to have a Fidelity Account. Thus, Defendant maintains that Plaintiff did cause delay necessitating the payment of interest in the amount of $3,097.49.
Insurance Proceeds
Plaintiff was awarded certain personal property in the Decision that was in the possession of Defendant. Subsequently, Defendant asserted that she could not locate certain items. Thus, Defendant was directed to submit an insurance claim for the missing items and the Judgment provides that any proceeds from the insurance claim are to be turned over to Plaintiff. Defendant received $21,585.05 from the insurance company, however at the time of the Cross-Motion, Defendant had not turned over the proceeds. Defendant does not dispute this amount is due to Plaintiff and as of the filing of Plaintiff's Reply Affidavit, Defendant has not yet remitted the amount. Accordingly, Defendant owes this sum to Plaintiff.
Interest on the Amounts Remaining under the Judgment
Defendant argues that interest is owed under each amount still owed under the Judgment, at a 9% per annum rate. Additionally, Defendant asserts that since Plaintiff failed to timely transfer the retirement assets of $28,166.00, the delay in transfer should result in her receiving interest on the award in the amount of $3,097.49. Defendant relies on CPLR §§ 5003 and 5004 which provide that "[e]very money judgment shall bear interest" at a rare of 9% per annum, as well as CPLR § 5002 which provides that interest should be awarded at the statutory rate from the date the "decision was made to the date of entry of final judgment." Defendant also cites to Klein v Klein, 296 A.D.2d 533, 535 (2nd Dept 2002), where the court determined the wife was entitled to a money judgment for the value of stock purchased during the marriage, and that interest should accrue on the money judgment at a rate of 9% per annum.
Plaintiff contends there is no factual basis to the demand for interest since Plaintiff does not actually owe most of the payments Defendant is demanding and any delays in the payments were due to Defendant's failure to respond or cooperate when necessary. Defendant relies on Lipsky v Lipsky, 276 A.D.2d 753, 752 (2000) in support of her claim that she is entitled to interest. However, Plaintiff distinguishes Lipsky due to the Lipsky court's finding that the husband's failure to comply with obligations led to the wife's delay in receiving a payment on the husband's medical license, whereas here Plaintiff contends he has been fully compliant and made repeated efforts notwithstanding the lack of cooperation and response from Defendant and her counsel. Plaintiff asserts that he was unable to effectuate a transfer of the retirement assets without Defendant's cooperation and reached out to counsel four times to effectuate the transfer. Plaintiff further asserts that once Defendant finally cooperated, the funds were immediately transferred.
Pursuant to the CPLR, post-judgment interest on the funds at issue is required. Under CPLR § 5002, "Interest shall be recovered upon the total sum awarded, including interest to verdict, report or decision, in any action, from the date the verdict was rendered or the report or decision was made to the date of entry of final judgment. The amount of interest shall be computed by the clerk of the court and included in the judgment." Pursuant to CPLR § 5003, "Every money judgment shall bear interest from the date of its entry. Every order directing the payment of money which has been docketed as a judgment shall bear interest from the date of such docketing." The rate is set at 9% by CPLR § 5004: "Interest shall be at the rate of nine per centum per annum, except where otherwise provided by statute." Thus, to the extent that certain disputed cash distributions have not yet been tendered, interest continues to accrue until tender.
Although in certain actions, interest is calculated as accruing from date of commencement of the action, for equitable distribution in matrimonial cases (such as the "cash distributions" at issue here), interest accrues from decision or entry, until payment:
Supreme Court providently exercised its discretion in denying interest on the defendant's distributive award from the date of commencement of this action to the date of decision (see, CPLR 5001; Schanback v Schanback, 159 A.D.2d 498). However... defendant is entitled to interest on her distributive award from the date of the decision concerning the same until the entry of the judgment of divorce, and from the entry of that judgment until payment (see, CPLR 5002, 5003, 5004; Purpura v Purpura, 261 A.D.2d 595 [2nd Dept 2005]; Liebling v Liebling, 146 A.D.2d 673 [2nd Dept 1998]).Gold v. Gold, 276 A.D.2d 587, 589-90 (2nd Dept 2002).
The Appellate Division, First Department has held that post-decision interest on awarded "money" equitable distribution in matrimonial cases is "mandatory" pursuant to CPLR 5002:
[The] trial court properly exercised its discretion in declining to award interest predating the Special Referee's report and recommendation dated February 3, 2011 on the enhanced earning capacity award. Postreport interest on this distributive award is mandatory pursuant to CPLR 5002 and, thus, should have been awarded.Theophilova v Dentchev, 111 A.D.3d 463, 463-64 (1st Dept 2013).
Similarly, the Appellate Division, Second Department has held that trial courts "should" order interest on unpaid [money] judgments in matrimonial cases:
Ordered that the [trial court matrimonial] order is modified, on the law, by deleting the provision thereof denying that branch of the motion which was to recover interest on the unpaid equitable distribution award and substituting therefor a provision granting interest at the statutory rate of 9% per annum on the unpaid equitable distribution award from December 10, 1997, to August 15, 1998, the date the payment was made; as so modified, the order is affirmed insofar as appealed from, with costs to the defendant.
The judgment of divorce, entered October 2, 1997, inter alia, directed the plaintiff former husband to pay to the defendant former wife an award of equitable distribution in the amount of $300,000 on or before December 10, 1997. The defendant did not engage in inequitable or dilatory conduct which would preclude her entitlement to interest earned on the unpaid judgment (internal citations omitted). Accordingly, the Supreme Court should have permitted the defendant to recover interest on the unpaid judgment at the statutory rate of 9% per annum (see, CPLR 5004).Greenberg v Greenberg, 269 A.D.2d 354, 354-55 (2nd Dept 2000).
Here, Defendant claims that Plaintiff owes her interest on the cash distributive award, retirement assets, moving fees, and the Sotheby's shares. Plaintiff claims no significant monies are owed of the Cash Distributive Award; that Defendant's delay in cooperation is what resulted in the delay in transferring the retirement assets; that he disputed the amount of the moving expenses and attempted to pay a lesser amount; and that there is no basis in Defendant receiving interest on the Sotheby's shares since the exact amount owed was left undecided in the Judgment.
Plaintiff acknowledges he failed to transfer just over $2,000.00, plus the just over $4,000.00 owed to Defendant for the anticipated taxes on the title transfer that were withheld.
Cases prior to 1991 addressed various delays by one or the other side as relevant to whether statutory interest accrues. In 1991, however, the Court of Appeals in Love v. State, 78 N.Y.2d 540, 541 (1991), held that interest is due even if the judgment payor is not at "fault" for the delays. The question was whether "the claimant in [the] bifurcated personal injury action against the State was properly awarded prejudgment interest from the date of the decision establishing liability, rather than the date of the decision fixing damages, even though the State was not responsible for the extended delay in the assessment of damages." The Court held that "interest was correctly calculated from the date of the liability adjudication" regardless of fault for any delays. The Court stated that "intent of the statute authorizing prejudgment interest is to indemnify the plaintiffs for the nonpayment of what is due to them." Id. at 543.
The Court of Appeals in Love v State explicitly rejected the proposition that responsibility for delay should be assessed when determining whether to award statutory interest:
[Statutory] interest is not a penalty. Rather, it is simply the cost of having the use of another person's money for a specified period. It is intended to indemnify successful plaintiffs for the nonpayment of what is due to them, and is not meant to punish defendants for delaying the final resolution of the litigation. It accordingly follows that responsibility for the delay should not be the controlling factor in deciding whether interest is to be computed from the date of the liability verdict or, instead, from the date of the verdict on damages.Id. at 544 (citations omitted).
Relatedly, the Court of Appeals thus held that interest starts to accrue from the moment of liability, even if exact calculation of damages is delayed, not as a penalty for either side, but as "compensation" to the payee for the payor's continued "use" of the payee's funds:
... what is dispositive on this point [of when interest starts to accrue] is when the plaintiff's right to be compensated for the damages he or she sustained becomes fixed in law. In a bifurcated trial, the plaintiff's right to be made whole becomes fixed when the verdict holding the defendant liable is rendered. At that point, the defendant's obligation to pay the plaintiff is established, and the only remaining question is the precise amount that is due. The fact that damages are not yet liquidated is of no moment. As we explained in Gunnarson v State of New York (70 N.Y.2d 923, 924 [1987]), plaintiffs are entitled "to be compensated with interest for the delay in payment of the principal award certainly due them [even though]... the amount remain[s] uncertain." And, there is no logical objection to permitting the plaintiff to recover interest "retroactive[ly]" (id., at 924), after damages are computed... It is worthy of note that the defendant, who has actually had the use of the money, has presumably used the money to its benefit and, consequently, has realized some profit, tangible or otherwise, from having it in hand during the pendency of the litigation. There is thus nothing unfair about requiring the defendant to pay over this "profit" in the form of interest to the plaintiff, the party who was entitled to the funds from the date the defendant's liability was fixed. Indeed, inasmuch as the defendant was not entitled to the use of the money from the moment that liability was established, a rule that would permit the defendant to retain the cost of using the money (i.e., interest) would provide the defendant with a windfall. Such a result is unacceptable irrespective of which party causes the delay. Regardless of who is responsible, the fact remains that the plaintiff has been deprived of the use of money to which he or she was entitled from the moment that liability was determined. That is a loss for which the plaintiff should be compensated.Id. at 544-545 (emphasis added).
Here, interest on certain cash distributions issued to Defendant, after trial, began to accrue upon the later of (i) the entry of the Judgment or (ii) post-Judgment issuance of such distributions to Plaintiff, and would of course stop accruing once payment is tendered. The interest on the remainder of the Cash Distributive Award and moving fees began to accrue once Judgment was entered Therefore, Defendant owes Plaintiff interest at a rate of 9% per annum on the following sums: the remaining Cash Distributive Award of $6,085.93 constituting the funds withheld without explanation and Defendant's one-half share of the possible taxes Plaintiff withheld for the apartment title transfer, and $900.00 constituting Plaintiff's one-half share of the moving expenses since Plaintiff did not comply with the directive set forth in the Judgment.
While the Court does not find that Plaintiff maliciously withheld the additional $6,085.93 and finds that amount de minimis considering the amount Defendant did receive ($665,591.79), in as much as those amounts were due and owing under the Judgment and not paid, an award of interest on the sum of $6,085.93 is appropriate.
The Court notes that there is a post-1991 case where statutory interest was not due because of the payee's delay actions: ERHAL Holding Corp. v Rusin, 252 A.D.2d 473 (2nd Dept 1998]). The delay in that matter, however, included plaintiff "interfer[ing]with the defendants' attempts to satisfy the judgment on two occasions" Id. at 474. ERHAL is not contrary to Love v State in that the judgment payor actually attempted to tender the judgment on two occasions and was thwarted by defendant. Delays short of rejecting offered tender have been held not to toll interest. See, e.g., Gibbs v State Farm Fire & Cas. Co., 169 A.D.3d 1483, 1484-85 (4th Dept 2019) (holding that interest was still due even though payee delayed a 'new trial on damages' when she 'caused former counsel to withdraw for just cause') (citing Love v State).
Regarding the transfer of retirement assets, Plaintiff was unable to effectuate a transfer of the retirement assets without Defendant's cooperation and reached out to Defendant's counsel on four separate occasions to advise that Defendant was required to open a Fidelity account for the transfer to occur. Once Defendant signed the requisite forms and opened an account, Plaintiff transferred the funds the next business day. Although Defendant's dilatory actions are partly to blame for the delay in transfer, it does not rise to the level of the two attempted tenders in ERHAL, thus, the Court will not toll the statutory 9% interest on the retirement account assets. Likewise, Plaintiff is entitled to interest on the insurance proceeds that Defendant has yet to turn over to Plaintiff.
Regarding interest on the Sotheby's shares, although an exact amount due to Defendant was not set forth in the Judgment, the Judgment does create an obligation for Plaintiff to pay Defendant something for the cash value of the stock. When the parties were unable to reach an agreement as to the value, Plaintiff could have submitted the issue to the Court for determination as directed by Judge O'Neil-Levy in the Judgment. Instead, the issue remained unresolved by both parties until Defendant filed the instant motion. It is important to note that the Judgment does not establish an obligation of one party over the other to bring the issue of the cash value of the Sotheby's stock back before the Court. In as much as statutory interest is not a penalty for either side, but "compensation" to the payee for the payor's continued "use" of the payee's funds, the Court finds that Defendant is owed interest for the Sotheby's shares at the 9% statutory rate. Further, as the Court has found that Defendant is liable for the tax consequences incurred in liquidating the shares, but that Plaintiff has not produced sufficient proof as to what those taxes were, interest will continue to accrue until the Court determines the appropriate amount of taxes to be deducted and the adjudicated cash value of the Sotheby's shares is tendered to Defendant.
Counsel Fees
Defendant seeks an award of counsel fees for filing the instant motion, arguing that she should not have been compelled to bring this motion to enforce the Judgment. Plaintiff opposes an award of fees to Defendant and argues he should be entitled to counsel fees for having to respond to Defendant's unnecessary motion and address the litany of demonstrably false statements throughout Defendant's papers. In opposing Plaintiff's Cross-Motion and request for his counsel fees to be paid, Defendant argues that the Judgment orders that each of the parties is responsible for the payment of their own respective counsel. Despite this, Defendant maintains that Plaintiff's conduct warrants an award of her counsel fees, as Plaintiff "withheld payments based upon hypothetical (but not incurred) taxes and raced to satisfy a charging lien that was improper." (Defendant's Reply Memorandum of Law at 15). Plaintiff maintains that he was forced to bring a cross-motion to enforce Defendant paying him the insurance proceeds in connection to his personal items and resolve the Sotheby's shares cash payment.
The Court is not persuaded by either party's arguments regarding the other party paying their counsel fees and upholds the prior determination in the Decision and Judgment that each party is responsible for their own counsel fees. Given that the parties could not reach a resolution on the cash value of the Sotheby's shares, further motion practice on that issue was required and is not the fault of either party. As to the remaining portions of the motions, the Court does not find that Defendant included the other relief related to the Cash Distributive Award without a good faith basis. There were sums of money that Plaintiff did not pay, and while perhaps counsel could have resolved some of the issues without motion practice, such as the retirement funds, the Court does not find either party's conduct to be of a nature warranting the payment of the other's counsel fees or sanctions. Consequently, Defendant and Plaintiff's requests for counsel fees is denied.
Upon the foregoing, it is hereby, ORDERED, that Plaintiff shall pay Defendant $6,085.93 for the Cash Distributive Award and $900.00 in moving fees, with 9% statutory interest from the date of the Judgment until the date of tender within 30 days of the date of this Order; and it is further
ORDERED, that Plaintiff shall pay 9% statutory interest on the $28,166.00 in retirement assets from the date of the Judgment through May 9, 2023; and it is further
ORDERED, that Defendant shall pay to Plaintiff $21,585.05 for the insurance proceeds, with 9% statutory interest from the date of Judgment until the date of tender, within 30 days of the date of this Order; and it is further
ORDERED, that Plaintiff shall provide further proof of the taxes paid on the liquidation of the Sotheby's shares within 30 days by submitting a letter and attached proof to the Court, on notice to Defendant's counsel, and if Plaintiff is unable to obtain the proof, but has made the request for same, he shall notify the Court and seek additional time for the submission; and it is further
ORDERED, that both parties' request for counsel fees is denied.
All requests for relief not discussed herein are denied.
This constitutes the Decision and Order of the Court.