| Blay v Blay |
| 2008 NY Slip Op 04260 [51 AD3d 1189] |
| May 8, 2008 |
| Appellate Division, Third Department |
| Jeffrey K. Blay, Appellant, v Tina Blay,Respondent. |
—[*1] Spada Law Firm, Albany (Eugene Spada of counsel), for respondent.
Kane, J. Appeals (1) from a judgment of the Supreme Court (Teresi, J.), entered February 12,2007 in Albany County, ordering, among other things, equitable distribution of the parties'marital property, upon a decision of the court, and (2) from an order of said court, entered April10, 2007, which granted defendant's application for counsel fees.
The parties were married in June 1992 and have three children. In 1978, plaintiff and hisbrother established a partnership which performed landscaping and snow removal services. Thebrothers each held a 50% interest in the partnership. In 1989, plaintiff and his brother purchaseda 16-acre parcel of real estate. Plaintiff renovated the house on the property. This house, whichlater became the marital residence, was further improved during the marriage. Also during themarriage, a karate studio was built on the property, from which the parties taught karate classes.
Shortly after defendant informed plaintiff that she was unhappy with their relationship,plaintiff and his brother dissolved the partnership, formed a corporation in which the brother wasthe sole shareholder, formed a limited partnership and transferred most of the partnership's assetsto the limited partnership, including the land, marital residence and karate studio. Thecorporation was the general partner in the limited partnership with a 1% interest, plaintiff was alimited partner with a 12.75% interest and his brother was a limited partner with an 86.25%[*2]interest. According to plaintiff and his brother, thereorganization was undertaken to protect the partnership's assets and to provide the brother withhis fair share of the partnership's value, as he had allegedly contributed all of the initial capitaland drew only $50 per week from the business while plaintiff drew $350 per week. Plaintiffnever informed defendant of this reorganization, or that he transferred the real property out of hisown name.
In May 2005, plaintiff commenced this divorce action. Following a trial, Supreme Courtrendered judgment granting a divorce to plaintiff, equitably distributing the marital assets,awarding maintenance to defendant and granting plaintiff sole legal custody of the children.Defendant filed an application for counsel fees, which was partially granted. Plaintiff appealsfrom both the judgment and the order awarding counsel fees.
Supreme Court did not err in awarding defendant portions of the real estate originally ownedby plaintiff and his brother. The court found, under the circumstances, that the partnershipdissolution and creation of the new business structure was invalid for purposes of equitabledistribution, concocted as a sham to deprive defendant of her interest in marital assets. The courtfurther found that the mortgage payments on the property, and money to improve the house andbuild the karate studio, came from partnership funds earned during the marriage, not fromplaintiff's brother individually. As plaintiff was a half owner of the partnership, the mortgage wasdeemed paid with marital funds. Additionally, the marital residence was improved during themarriage through the addition of a basement bedroom and laundry room, new flooring andremodeling in the kitchen, installation of a hot tub and erection of an outdoor deck, presumablywith marital funds (see Dashnaw vDashnaw, 11 AD3d 732, 733 [2004]; Cassara v Cassara, 1 AD3d 817, 818-819 [2003]; Carr vCarr, 291 AD2d 672, 676 [2002]). Thus, the court properly awarded defendant half the valueof plaintiff's one-half interest in the property, after deducting the nonmarital percentageattributable to mortgage payments made prior to the marriage.
Similarly, based upon Supreme Court's finding that the corporate reorganization was invalidas to equitable distribution and considering plaintiff's one-half ownership of the business, thecourt did not err in awarding defendant half of plaintiff's interest in the corporation's bankaccounts. We correct a mathematical error and award defendant $24,576.74 as her share of thoseaccounts.
Defendant was entitled to distribution of the value of the GMC Jimmy vehicle that plaintiffpurchased during the marriage. Despite plaintiff's testimony that he purchased the vehicle as agift for defendant's daughter who resided with him, he purchased it with marital funds andmaintained title to it. Although plaintiff testified and provided documentary proof that a 1994Ford Taurus was titled to his brother, partnership documents listed that vehicle as a partnershipasset and plaintiff apparently used the vehicle regularly. Considering the way that plaintiff andhis brother loosely adhered to the corporate form, we find no error in Supreme Court'sdetermination to deem this vehicle marital property in plaintiff's possession.
Supreme Court incorrectly distributed plaintiff's retirement assets. There is no proof thatplaintiff or the partnership contributed to plaintiff's IRA account after the marriage. Any passiveincrease in value to this separate property was also separate property (see DomesticRelations Law § 236 [B] [1] [d] [1], [3]; Price v Price, 69 NY2d 8, 18 [1986]; Shen v Shen, 21 AD3d 1078,1079-1080 [2005]; Lawson v Lawson, 288 AD2d 795, 796 [2001]). The court found thatthe partnership contributed to a Keogh retirement plan during the marriage, making [*3]part of the accrued value in that plan marital property. The courtalso held that the plan was established to benefit both plaintiff and his brother, yet awardeddefendant half of the accrued value as if the entire plan was established to benefit plaintiff alone.Accordingly, we reduce defendant's portion of the Keogh plan to $7,196.72 and award her noportion of plaintiff's IRA account.
The award of $300 weekly maintenance to defendant for seven years was excessive. Theamount and duration of maintenance are generally left to the trial court's discretion as long as thecourt considers the statutory factors and provides a basis for its conclusion (see DomesticRelations Law § 236 [B] [6] [a], [b]; Fosdick v Fosdick, 46 AD3d 1138, 1140 [2007]; Carman v Carman, 22 AD3d 1004,1008 [2005]). Here, the court appropriately exercised its discretion in imputing income toplaintiff as a result of his failure to disclose all of the business's tax documents, which failuremade it impossible to determine whether claimed expenses were legitimate or whether anyadditional business income existed. The court also imputed income to plaintiff based uponmoney he received from family members, free rent for the home and karate studio, the numerouspersonal bills paid by the partnership or corporation and year-end business distributions made tofamily members. While we agree that imputation of income was appropriate, the amount imputedwas incorrect. One-time gifts or alleged loans from family members should not have beencalculated as part of plaintiff's annual income. The court's figures also contained a mathematicalerror and double counted some items. Thus, we reduce the amount of imputed income to$65,000, giving plaintiff a total annual income of $83,200 when including his $350 weekly draw.The parties were married for 13 years at the time of commencement of the action and were ingood health. During the marriage, plaintiff, who has a 10th grade education, worked in the familybusiness. Defendant stayed home with the children during their formative years and did not beginworking outside the home until the children were all in school. At the time of trial, defendant,who is a high school graduate, earned an annual salary of approximately $25,000. She had beenworking at least part time since 1998 and did not present any proof that she intended to pursuetraining to increase her skills, or that she lost out on any particular employment opportunities.The parties never lived an extravagant lifestyle, and both lived modestly after separating. Whileplaintiff's income is considerably higher than defendant's, he is supporting their three childrenand defendant's daughter without receiving any child support.[FN*] Under the circumstances, a maintenance award of $200 per week for two years from the date ofjudgment is appropriate. A retroactive award was required because maintenance shall be awardedfrom the date of application (see Domestic Relations Law § 236 [B] [6] [a]); thataward should also be in the amount of $200 per week.
Supreme Court should not have ordered plaintiff to maintain a $100,000 life insurance policyand at the same time distribute the marital portion of the cash surrender value of that policy. Thecourt was authorized, in its discretion, to direct plaintiff to pay the premiums and keep the lifeinsurance policy in effect for defendant's benefit until his maintenance obligation is satisfied(see Domestic Relations Law § 236 [B] [8] [a]; Holterman v Holterman,307 AD2d 442, 443 [2003], affd 3 NY3d 1 [2004]). The proof supported a determinationthat a portion of the policy, paid for during the marriage by the business that plaintiff half owned,was marital property subject to equitable distribution. By ordering immediate distribution of thecash [*4]surrender value, however, the court was essentiallyrequiring liquidation of that asset at the same time it ordered that the asset be maintained in itspresent form. Based upon our reduction of the length of the maintenance award, plaintiff'scurrent maintenance obligation is substantially satisfied. Accordingly, we remove therequirement that he maintain the life insurance policy for defendant's benefit, but affirm thecourt's direction to distribute the marital portion of the policy's cash surrender value.
Supreme Court did not abuse its discretion in awarding counsel fees to defendant, but wereduce the amount of the fee awarded (see Domestic Relations Law § 237 [a]).Some factors to consider include the extent of legal services provided, the complexity of the caseand the parties' financial circumstances, taking into account any distributive awards (see Howard v Howard, 45 AD3d944, 946 [2007]; Redgrave vRedgrave, 22 AD3d 913, 914 [2005]). Considering the income imputed to plaintiff, he isin a better financial position than defendant, but he is also supporting the children withoutassistance from defendant. Distributive awards to defendant totaled approximately $100,000,many of which plaintiff must pay from nonliquid assets. The counsel fees were partially basedupon additional work required to sort out the confusing financial arrangements created byplaintiff and his family business, plaintiff's failure to advise defendant of the businessrestructuring and the failure to turn over complete financial documents in response to demands(see Yarinsky v Yarinsky, 25 AD3d1042, 1043 [2006]). The court parsed counsel's billing statements, deleting items deemedexcessive, and awarded plaintiff $24,741.50 (see Matter of Buono v Fantacone, 252AD2d 917, 919 [1998]). The complexity of the case due to the confusing financial situation madean award of counsel fees to defendant appropriate but, when considering the parties' financialcircumstances as a whole, we reduce the award to $15,000.
Peters, J.P., Carpinello, Malone Jr. and Stein, JJ., concur. Ordered that the judgment ismodified, on the law and the facts, without costs, by (1) vacating the award to defendant of$1,123.61 for her interest in plaintiff's IRA account, (2) increasing defendant's share of thecorporation's bank accounts to $24,576.74, (3) reducing defendant's interest in plaintiff's Keoghretirement account from $14,393.44 to $7,196.72, (4) awarding defendant maintenance in theamount of $200 per week both retroactive to the commencement of the action and for two yearsfrom the date of judgment, and (5) removing the requirement that plaintiff maintain the lifeinsurance policy for defendant's benefit, and, as so modified, affirmed. Ordered that the order ismodified, on the facts, without costs, by reducing the award of counsel fees to defendant to$15,000, and, as so modified, affirmed.
Footnote *: Plaintiff specifically advised thisCourt that he was not challenging the child support aspect of the judgment on appeal.