| McAuliffe v McAuliffe |
| 2010 NY Slip Op 01029 [70 AD3d 1129] |
| February 11, 2010 |
| Appellate Division, Third Department |
| Daniel E. McAuliffe, Respondent, v Maria D. McAuliffe,Appellant. |
—[*1] Maynard, O'Connor, Smith & Catalinotto, L.L.P., Albany (Lia B. Mitchell of counsel), forrespondent. Suzanne L. Latimer, Law Guardian, Latham.
Garry, J. Appeals (1) from a judgment of the Supreme Court (Hall, J.), entered December 27,2006 in Saratoga County, ordering, among other things, equitable distribution of the parties'marital property, upon a decision of the court, (2) from an order of said court, entered July 13,2007 in Saratoga County, which, among other things, partially granted plaintiff's motion formodification and enforcement of the judgment of divorce and directed the parties to executebargain and sale deeds to certain real property, and (3) from an order of said court, enteredJanuary 29, 2008 in Saratoga County, which, on the court's own motion, directed the parties toexecute said deeds.
Plaintiff (hereinafter the husband) and defendant (hereinafter the wife) were married in 1976.They have two sons (born in 1985 and 1993) and a daughter (born in 1988). The husband has anengineering degree and has been regularly employed since early in the marriage. The wife holdsan undergraduate degree and worked in administrative and sales positions before leavingfull-time work to care for the children in approximately 1992. Thereafter, she worked part timeas a self-employed consultant and trainer. Both parties acquired their degrees during themarriage.[*2]
In January 2005, the husband commenced this action fordivorce. The wife answered and counterclaimed for divorce and, among other things, soughtmaintenance and child support. After a lengthy trial, a judgment of divorce was entered in whichSupreme Court awarded the parties joint custody of the minor children, and the husband wasdirected to pay $200 weekly in maintenance until 2016 and $570 weekly in child support. Theequitable distribution award, among other things, directed the sale of the parties' realestate—consisting of the marital residence, two rental duplexes, and a vacantlot—and the equal division of the net proceeds after payment of certain debts andexpenses.
Due to the parties' failure to divide the marital estate as directed, further litigation ensued,and an order was entered in July 2007 directing the husband to deed his interest in the maritalresidence and vacant lot to the wife, and directing her to deed her interest in the rental propertiesto him. A subsequent order in January 2008 set a new deadline for compliance. The wife nowappeals from the child support, maintenance, and equitable distribution awards as set forth in theDecember 2007 judgment of divorce and both postjudgment orders.
We agree with the wife's contention that the record does not support the earning capacity thatSupreme Court attributed to her in determining certain portions of the support and equitabledistribution awards. In imputing income, a trial court may base its determination on "pastemployment experience, future earning capacity, and/or the payment of personal expenses frombusiness accounts" (Bean v Bean,53 AD3d 718, 722 [2008]). The court imputed income of $120,000 annually to the husbandand $50,000 annually to the wife. While the record of the husband's 20-year history ofsubstantial earnings in computer sales and services supports the court's conclusion as to hiscontinuing earning capacity,[FN1] it does not provide similar "sound and substantial support" (id. at 722) for the amount ofincome imputed to the wife.
At the time of trial, the wife was not employed outside the home. However, Supreme Courtrejected her claim that she was completely incapable of gainful employment and imputed incometo her based upon her employment history, salary potential, and its assessment of hercapabilities. Notably, there is no support in the record for the court's findings that the wife hadsubstantial income in at least two jobs after leaving full-time employment and that she earnedmore than $100,000 in 2002 from an "annual contract" with New York State. The record revealsinstead that the wife began working in sales and account management positions in about 1980,with earnings that increased from $18,831 in 1981 to $51,300 in 1990 and reached a high pointof $91,939 in 1991. Thereafter, she left her employment to care for her children. She testifiedthat in the subsequent years she sought facilitation and consulting contracts through her owncompany, but this effort was, for the most part, unsuccessful. Her Social Security and tax recordssupport this testimony, showing that she had no earnings in any year after 1993 except 1995,when she earned $2,344, and 2004, when she earned approximately $28,000.[FN2][*3]
In analyzing her salary potential, Supreme Court reliedon an expert opinion that the wife could earn $60,000 annually, set forth in a report by anevaluator appointed by the court to assess both spouses' enhanced earning capacities resultingfrom their degrees. However, that amount was not determined by the evaluator himself; instead,it was derived from a separate report prepared by Sheldon Grand of Forensic RehabilitationServices. Grand did not testify, and his report is not in the record. The court-appointedevaluator's report merely quoted Grand's conclusion without setting forth any part of the factualfoundation or calculations upon which it was based. "To be properly admitted, expert opinionevidence must generally be based upon facts either found in the record, personally known to thewitness, derived from a 'professionally reliable' source or from a witness subject tocross-examination" (Brown v County of Albany, 271 AD2d 819, 820 [2000] [citationomitted], lv denied 95 NY2d 767 [2000]; see Hambsch v New York City Tr.Auth., 63 NY2d 723, 725-726 [1984]; accord O'Brien v Mbugua, 49 AD3d 937, 938 [2008]). It cannot bedetermined from this record whether Grand's opinion meets these requirements, precludingreliance on his assessment of the wife's salary potential (see Semans v Semans, 199AD2d 790, 790-791 [1993], lv denied 83 NY2d 758 [1994]; Matter of Aetna Cas. &Sur. Co. v Barile, 86 AD2d 362, 364 [1982]).
When the amount of income imputed to a party has been improperly determined, we mayimpute the appropriate amount based on evidence in the record (see Blay v Blay, 51 AD3d 1189,1192 [2008]). Here, we agree with Supreme Court's assessment that the wife is capable ofgainful employment. However, as the court noted, it may reasonably be anticipated that she willrequire some time to reenter the job market and her income will continue to be lower than thehusband's. Although the wife achieved significant earnings before 1993, her lack of meaningfulearnings thereafter and the absence of any reliable evidence that she will be able to return toemployment comparable to her prior work, or of the earning capacity of persons with similareducational and employment backgrounds, make it speculative to impute anything more than aminimal income to her (see Matter ofBianchi v Breakell, 23 AD3d 947, 949 [2005]; Alessi v Alessi, 289 AD2d 782,783-784 [2001]). Given her age and health, we find that the record does not support imputedincome in excess of the applicable minimum wage (see Moffre v Moffre, 29 AD3d 1149, 1151-1152 [2006];Matter of Bukovinsky v Bukovinsky, 299 AD2d 786, 787 [2002], lv dismissed100 NY2d 534 [2003]), and we remit the matter for the determination of this amount and forrecalculation of the husband's resulting child support obligation (see Moffre v Moffre, 29AD3d at 1152; Milnarik v Milnarik,23 AD3d 960, 963-964 [2005]). In this regard, we agree with the court that, given thedisparity in the parties' incomes and the decrease in the children's standard of living caused bythe dissolution of their parents' marriage, it is appropriate to subject all of the parties' combinedincome over $80,000 to the statutory percentage (see Domestic Relations Law §240 [1-b] [c] [3]; Matter of Cassano v Cassano, 85 NY2d 649, 653-655 [1995]; Pulver v Pulver, 40 AD3d 1315,1318 [2007]). The resulting award should be retroactive to the date of the wife's first applicationfor child support, reduced by payments made (see Domestic Relations Law § 236[B] [7] [a]; Carlson-Subik v Subik, 257 AD2d 859, 861 [1999]).
The wife further challenges Supreme Court's determinations with regard to payment of thechildren's college expenses and health insurance costs. The court's previous determination [*4]not to require the husband to pay a share of the college costs wasbased almost entirely on its conclusion that the wife had improperly excluded him from collegedecision-making. The appropriateness of such an award should have been determined byevaluating whether special circumstances exist, based on the parents' educational backgrounds,the children's academic abilities, and the husband's ability to pay (see Brough v Brough,285 AD2d 913, 917 [2001]), and, if no such circumstances exist, as a matter of discretion basedon all the circumstances, the children's best interests, and the requirements of justice (seeDomestic Relations Law § 240 [1-b] [c] [7]; Brough v Brough, 285 AD2d at 917).However, based on all the circumstances, and particularly in view of the parties' extensive debtand obligations and their limited available resources, we decline to disturb the court'sdetermination that the husband should not be required to pay a share of the children's collegeexpenses. The court further directed the wife to pay a pro rata share of the children's healthinsurance. In view of the disparity in the parties' incomes, and as insurance is available throughthe husband's employment, we find that he should bear the full cost of the children's healthinsurance (see Domestic Relations Law § 240 [1] [c]; Recuppio vRecuppio, 246 AD2d 342, 344 [1998]).
Next, the wife challenges both the amount and duration of the maintenance award. Initially,we disagree with her claim that Supreme Court gave inadequate consideration to the parties'predivorce standard of living (see generally White v White, 204 AD2d 825, 828 [1994],lv dismissed 84 NY2d 977 [1994]). Although the court did not explicitly discuss theparties' standard of living in its maintenance analysis, the decision as a whole reflects the court'ssharp awareness that the parties' financial distress at the time of trial would prevent both spousesand their children from returning to their former lifestyle in the near future, and the maintenanceaward was clearly crafted with this reality in mind.
Nonetheless, we find that the maintenance award must be reassessed. "[T]he purpose ofmaintenance is to provide financial support for the recipient spouse while he or she gains theskills and employment necessary to become self-sufficient" (Dowd v Dowd, 58 AD3d1057, 1058 [2009]). Although due deference must be accorded to Supreme Court's credibilitydeterminations with regard to the wife's claimed economic needs and her assertion that she wasincapable of gainful employment (seegenerally Evans v Evans, 55 AD3d 1079, 1081 [2008]; Nichols v Nichols, 19 AD3d 775,777 [2005]), its analysis of the wife's earning capacity and of her credibility was affected by thesame misunderstandings of her recent employment history set forth above relative to theimputation of income. Because of these errors, the award must be modified (see Evans vEvans, 55 AD3d at 1082-1083). Our authority in determining issues of maintenance is asbroad as that of Supreme Court (seeRedgrave v Redgrave, 13 AD3d 1015, 1019 [2004]). In view of our adjustment in thewife's imputed income and our consideration of the statutory factors (see DomesticRelations Law § 236 [B] [6] [a] [1]-[11])—in particular the duration of themarriage, the age and health of the parties, and the likelihood, as noted by the court, that thedisparity between their incomes will persist—we find that the amount of the maintenanceaward must be increased to $20,000 annually, to continue until 2016 as established by SupremeCourt. "Such an award 'will better serve the primary goal of maintenance, which is to encouragerehabilitation and self-sufficiency to the extent possible, while still accounting for a largediscrepancy in earning power between the parties' " (Schwalb v Schwalb, 50 AD3d 1206, 1210 [2008], quotingSemans v Semans, 199 AD2d 790, 792 [1993], lv denied 83 NY2d 758 [1994]).An appropriate adjustment should further be made in the value of the life insurance policy thatthe husband was directed to obtain to secure this obligation. As with child support, themaintenance award should be retroactive to the date of the wife's first application, with credit forpayments made (see Domestic Relations [*5]Law §236 [B] [6] [a]; White v White, 204 AD2d at 828-829).
The wife further objects to various aspects of the equitable distribution award. With respectto the parties' real property, the wife argues that the postjudgment orders should have conveyedall of the real estate to her to enable her to use the income from the rental properties to financeher ownership of the mortgage-encumbered marital residence. However, the postjudgment orderspresent a more fundamental problem, in that they purport to modify the judgment's equitabledistribution award based on changes in circumstances that took place after the judgment wasentered. While the law permits modification of child support and maintenance awards(see Domestic Relations Law § 236 [B] [9] [b]), there is no comparable provisionallowing modification of equitable distribution awards. Thus, " 'a distributive award pursuant to[Domestic Relations Law] section 236 (B) (5) (e), once made, is not subject to change' "(Welsh v Lawler, 282 AD2d 977, 979 [2001], quoting O'Brien v O'Brien, 66NY2d 576, 591 [1985, Meyer, J., concurring]; see Farsace v Farsace, 97 AD2d 951, 952[1983]). "Indeed, permitting the modification of the equitable distribution provisions of ajudgment of divorce 'would effectively undermine the finality of [matrimonial] judgments' "(Welsh v Lawler, 282 AD2d at 979, quoting Siegel v Siegel, 132 AD2d 247, 254[1987], lv dismissed 71 NY2d 1021 [1988], lv denied 74 NY2d 602 [1989]).
Here, Supreme Court's stated objective in modifying the real property distribution was tolimit the diminution of the marital estate caused by the parties' ongoing refusal to comply withthe original distribution.[FN3] Although the goal was laudable, the court lacked the power to accomplish it by modifying theoriginal distribution. Accordingly, both postjudgment orders must be set aside. Supreme Court'soriginal direction with regard to the real estate will not be disturbed, since it was soundly basedon full consideration of the statutory factors (see Domestic Relations Law § 236[B] [5] [d]) and well within the court's "substantial discretion" (Farrell v Cleary-Farrell,306 AD2d 597, 599 [2003]).
Next, the wife challenges Supreme Court's distribution of the parties' enhanced earningcapacities resulting from the degrees they acquired during the marriage. The court accepted theopinion of the court-appointed evaluator that the value of the wife's undergraduate degrees was$149,000, and awarded 15% of that amount to the husband. As to the husband, however, thecourt disagreed with the evaluator's determination that his degree was worth $496,000, andinstead determined that its value was zero.[FN4] The wife challenges both determinations.
We find, first, that Supreme Court erred in awarding a percentage of the value of the wife'sdegrees to the husband. To be entitled to a share of these assets, the husband was required toshow not only that the degrees had enhanced the wife's earning capacity, but also that "[he], in ameaningful and substantial way, contributed to [her] efforts in obtaining [them]" (Evans vEvans, 55 AD3d at 1080). The court made no finding that the husband had made such a[*6]contribution and, indeed, such a finding would not have beensupported by the record. The wife's uncontradicted testimony was that she obtained both of herdegrees through night and weekend courses while working full time for employers thatreimbursed all of her expenses for tuition and books. There was no evidence that anyunreimbursed marital funds were expended or that the husband made any efforts to assist thewife in obtaining either degree that went beyond "overall contributions to the marriage" (Carman v Carman, 22 AD3d1004, 1007 [2005]). Thus, the husband did not meet his burden to establish that the degreesresulted from anything other than the wife's "own ability, tenacity, perseverance and hard work"(Evans v Evans, 55 AD3d at 1081), and he was not entitled to share in their value.Further, the record does not support the court's determinations that the degrees had enhanced thewife's earnings or, if they had, of the value of the enhancement. For example, there was norecord support for the finding that the degrees had continued to augment her income after 1993.Further, the valuation placed on the degrees was based on Grand's assessment of the wife's salarypotential, which, as previously noted, is unavailable for review (see Semans v Semans,199 AD2d at 791).
On the other hand, Supreme Court's determination that the husband's engineering degree didnot enhance his earning capacity was supported by the record, including the husband's testimonyand documentation from his employer, and was not an abuse of its discretion (see Evans vEvans, 55 AD3d at 1080; Halaby v Halaby, 289 AD2d 657, 660 [2001];McAlpine v McAlpine, 176 AD2d 285, 286-287 [1991]). While the court-appointedevaluator reached a different conclusion, "it was for [the court] to evaluate this testimony, assignto it whatever weight the court believed it deserved and arrive at determinations that weresupported by the credible evidence introduced at trial" (Evans v Evans, 55 AD3d at1080).
We have examined the wife's remaining contentions and find them to be without merit.
Mercure, J.P., Kavanagh, Stein and McCarthy, JJ., concur. Ordered that the judgment ismodified, on the law and the facts, without costs, by reversing so much thereof as awarded 15%of the value of defendant's enhanced earning capacity to plaintiff, directed defendant to pay a prorata share of the cost of the children's health insurance premiums, and awarded child supportbased on an imputed income to defendant of $50,000 annually; plaintiff is directed to paymaintenance in the amount of $20,000 annually, retroactive to the date of defendant's firstapplication therefor, and to pay the full cost of the children's health insurance; matter remitted tothe Supreme Court for further proceedings not inconsistent with this Court's decision; and, as somodified, affirmed. Ordered that the order entered July 13, 2007 is modified, on the law, withoutcosts, by reversing so much thereof as partially granted plaintiff's motion; motion denied in itsentirety; and, as so modified, affirmed. Ordered that the order entered January 29, 2008 isreversed, on the law, without costs.
Footnote 1: The amount of incomeattributed to the husband was lower than his actual earnings in the years immediately precedingthe divorce based on his testimony—which Supreme Court found credible—that theloss of a significant contract in 2005 had caused a decline in his earnings that was expected tocontinue.
Footnote 2: The wife testified that the 2004earnings came from a four-month period during which she taught boating safety under a NewYork State certificate that was revoked by state officials in August 2004 because of her allegedfailure to comply with certification requirements.
Footnote 3: For example, foreclosureproceedings were pending against the marital residence.
Footnote 4: The evaluator noted that thehusband took the position that his degree had no value because he would have attained the sameposition without it.