| Armstrong v Armstrong |
| 2010 NY Slip Op 03502 [72 AD3d 1409] |
| April 29, 2010 |
| Appellate Division, Third Department |
| Nancy J. Armstrong, Appellant-Respondent, v Harold M.Armstrong, Respondent-Appellant. |
—[*1] Assaf & Mackenzie, P.L.L.C., Troy (Michael D. Assaf of counsel), for respondent-appellant. Francisco Berry, Law Guardian, Ithaca.
Lahtinen, J. (1) Appeal from an order of the Supreme Court (Connolly, J.), enteredDecember 29, 2008 in Albany County, which, among other things, denied plaintiff's motion topreclude defendant's testimony, and (2) cross appeals from a judgment of said court, enteredJanuary 12, 2009 in Albany County, among other things, granting plaintiff a divorce andordering equitable distribution of the parties' marital property, upon a decision of the court.
The parties were married in November 1995 and have one child (born in 1996). Plaintiffcommenced this action for divorce in March 2006 alleging, among other things, cruel andinhuman treatment. Following extensive discovery, a lengthy nonjury trial was held. During thetrial, plaintiff objected and sought preclusion of certain evidence allegedly not produced indiscovery and, at the close of trial, plaintiff moved for, among other things, discovery sanctionsand counsel fees. Supreme Court denied those aspects of the motion in a decision and order[*2]entered in December 2008 and plaintiff appealed.[FN1]Supreme Court rendered a detailed written decision addressing the trial issues, and that decisionwas incorporated into the judgment of divorce entered in January 2009. In its decision, SupremeCourt, among other things, granted plaintiff a divorce on the ground of cruel and inhumantreatment, awarded the parties joint legal custody of the child and granted plaintiff primaryphysical custody with liberal parenting time for defendant, directed defendant to pay $681.83 permonth in child support, calculated the marital estate at $1,141,683.34 and awarded plaintiff 70%thereof, and declined to award plaintiff maintenance. Both parties appeal from the judgment.
We consider first plaintiff's argument that Supreme Court should have precluded defendantfrom introducing various proof at trial regarding his separate property as a sanction for failing tofully respond to her discovery demands. The trial court has broad discretion with respect todiscovery (see Cerasaro v Cerasaro,9 AD3d 663, 664 [2004]), including the appropriate penalty and, in such regard, "theremedy of preclusion is reserved for those instances where the offending party's lack ofcooperation with disclosure was willful, deliberate, and contumacious" (Kumar v Kumar, 63 AD3d 1246,1248 [2009] [internal quotation marks and citations omitted]; see Ndulo v Ndulo, 66 AD3d 1263, 1267 [2009]). Supreme Courtnoted that plaintiff had been directed at a conference three months before trial not to delay untilthe trial to seek resolution of any discovery issues, and yet she made no motion to precludebefore trial. More importantly, Supreme Court found that plaintiff was not unduly prejudicedsince she had access before the trial to the relevant information and the court concluded thatdefendant's conduct was not willful. These determinations are supported by the record. We areunpersuaded that Supreme Court abused its discretion with regard to the discovery issue.
Defendant contends that plaintiff failed to prove that she was entitled to a divorce basedupon his cruel and inhuman treatment. "To prevail on that ground, 'the party seeking the divorcemust establish that the other party's conduct so threatened his or her physical or mentalwell-being that it would be unsafe or improper to continue to cohabit with the offending party' "(Redgrave v Redgrave, 304 AD2d 1062, 1063 [2003], quoting Shortis v Shortis,274 AD2d 880, 880-881 [2000]). "Supreme Court, as the trier of fact, is vested with broaddiscretion in determining whether a spouse's conduct rises to the level of cruel and inhumantreatment, and its assessment of witness credibility is entitled to deference" (Xiaokang Xu v Xiaoling Shirley He,24 AD3d 862, 863 [2005] [citations omitted], lv denied 6 NY3d 710 [2006]; see Freas v Freas, 33 AD3d 1069,1070 [2006]; Myers v Myers, 255 AD2d 711, 712 [1998]).
The marriage had been marked by ongoing contentiousness and both parties had commenceddivorce actions earlier in the marriage. Plaintiff's proof at trial, which Supreme Court foundcredible on this issue, set forth defendant's controlling nature and ongoing abusive behavior. Thisincluded repeated verbal abuse in which he referred to her by the most vile derogative names. Hecalled her by such names in front of her teenage daughter, who had been born during plaintiff'sprior marriage that ended when her then-husband died. Defendant accused plaintiff within thehearing range of her teenage daughter of sleeping around while her then-[*3]husband (the teenage daughter's father) was in the hospital dying.He also stated within hearing range of the teenage daughter that plaintiff had sexual relationswith her own father. He crudely insulted plaintiff's smell, her hair and other aspects of herphysical appearance. As set forth in detail by Supreme Court, defendant, who pleaded guilty in2005 to federal tax-related criminal conduct and served a prison sentence, indicated at varioustimes to plaintiff that he was going to incriminate her despite her lack of involvement in hiscrimes. Defendant further referred to plaintiff as someone he had picked out of the "slums ofAlbany" and he accused her of infidelity when, in fact, his own infidelity was acknowledged attrial. Considering cumulatively this proof, as well as the many other incidents of abusivebehavior by defendant detailed in the voluminous record, we find that Supreme Court actedwithin its discretion in concluding that plaintiff should be granted a divorce on the ground ofcruel and inhuman treatment.
Turning to the issue of custody of the parties' child, the overriding concern is the bestinterests of the child and a host of well known factors are relevant in making that determination(see Matter of Holle v Holle, 55AD3d 991, 991-992 [2008]; Matterof Gast v Gast, 50 AD3d 1189, 1189 [2008]). Supreme Court weighed and discussedthe pertinent factors, it fully explained the reasons for its custody determination, and it conducteda Lincoln hearing with the child. The child's Law Guardian favors maintaining custodyas crafted by Supreme Court. There is a sound and substantial basis in the record for the custodydetermination and we discern no persuasive reason to disturb it (see generally Matter ofRobinson v Davis, 58 AD3d 1041, 1042 [2009]; Matter of Anson v Anson, 20 AD3d 603, 604 [2005], lvdenied 5 NY3d 711 [2005]).
Next, we consider issues raised regarding defendant's child support obligation. Thethree-step analysis of a child support award involves: first, ascertaining combined parentalincome; second, multiplying that amount (up to $80,000) by the applicable statutory percentage(17% for one child) and allocating the result between the parties based on each parent's share oftotal income; and, third, determining additional support if combined income exceeds $80,000 byconsidering the pertinent statutory factors (see Holterman v Holterman, 3 NY3d 1, 10-11 [2004]; Matterof Cassano v Cassano, 85 NY2d 649, 653 [1995]). Plaintiff and the Law Guardian correctlypoint out that Supreme Court made a mathematical error in the third step of this analysis.Defendant's annual income was determined as $84,191.97 and plaintiff's as $45,170.10, for atotal of $129,362.07. Defendant's proportionate share was 65%, resulting in a monthly obligationon the first $80,000 of $736.67. As for the income that exceeded $80,000, the court consideredvarious relevant statutory factors and then assessed child support on 50% of the $49,362.07excess, which resulted in an additional monthly payment of $227.27 (i.e., $49,362.07 x .50 x .17x .65 ÷ 12). However, instead of adding this amount to $736.67, the court accidentallyadded it to a different number arriving at a total of $681.83 when, in fact, the correct total is$963.94. The judgment must be modified accordingly.[FN2][*4]
Plaintiff also argues that Supreme Court erred in notimputing to defendant his potential earning capacity in his newly-established business as aconsultant. "[C]ourts have considerable discretion in fashioning a child support award; whenassessing a parent's income from which to determine his or her child support obligation, a courtshould consider factors such as the parent's gross (total) income as . . . reported inthe most recent federal income tax return, as well as additional income from sources other thanemployment and a parent's past income" (Matter of Yarinsky v Yarinsky, 36 AD3d 1135, 1137 [2007][internal quotation marks and citations omitted]). Further, a court is "not bound by a parent'saccount of his or her own finances, and may impute income based upon a prior employmentexperience, as well as such parent's future earning capacity in light of that party's educationalbackground, and underreported business activity or payment of personal expenses from businessaccounts" (Matter of Rubley vLongworth, 35 AD3d 1129, 1130 [2006] [internal quotation marks and citationsomitted], lv denied 8 NY3d 811 [2007]; see Moffre v Moffre, 29 AD3d 1149, 1150 [2006]).
Determining defendant's income was a problematic task. During the 1990s, he worked forAlbany Molecular Research where he became the chief financial officer earning about $200,000per year. He had been asked to leave that company in 1998 and received at the time of histermination nearly $10 million for stock and options of the company that he had purchased.While he thereafter received passive income from some investments, he placed a significantamount of the buyout money in high risk investments that failed to materialize. He pleadedguilty to a federal crime in 2005 and received a 27-month jail sentence, during which he earnedlittle income other than from his investments. His reputation and, concomitantly, his earningcapacity were diminished by his criminal record, and Supreme Court was unpersuaded that therewas sufficient proof to conclude that the prospects were particularly positive for significantearnings from his new consulting business. The court opted to use his most recent net worthstatement rather than the 2006 income tax return (which had lower income because of hisincarceration) since it found that the net worth statement more accurately reflected his actualincome (see Matter of Kellogg v Kellogg, 300 AD2d 996, 996 [2002] [income earnedduring a tax year not completed at the commencement of trial may, under some circumstances,be weighed by the court]). Using that document, Supreme Court based its income for defendantof $84,191.97 upon his work earnings of $20,529 plus investment income. While the incomenumbers were susceptible to more than one conclusion, Supreme Court's determination issupported by a sound and substantial basis in the record and does not stray beyond itsconsiderable discretion (see Bean vBean, 53 AD3d 718, 722 [2008]; Matter of Kelly v Bovee, 9 AD3d 641, 642 [2004]).
The parties dispute the equitable distribution award. A primary issue at trial involved theclassification (separate or marital property) of the stock and stock options that had resulted indefendant (and a trust he had established) receiving a gross amount of close to $10 million aspart of his severance agreement with Albany Molecular Research. Of the over 500,000 sharesand options owned by defendant (353,068 individually and another 150,000 owned by the trust),Supreme Court determined that 14,137 shares, with a value of $178,678, were marital property.The court found that the remainder of the shares had been acquired before the marriage and wereseparate property. However, in light of defendant's significant role in contributing to the successof the company during the pertinent years, the court further determined that 10% of the [*5]appreciation in value of the company flowed from defendant'sdirect efforts and, hence, constituted marital property. The importance of defendant to thecompany's success was confirmed by various proof, including testimony of the company's chiefexecutive officer. The court calculated the appreciation of these stocks and treated 10% of suchappreciation as marital property, which computed to $565,579.29. We are satisfied that SupremeCourt's determination was appropriate (see generally Hartog v Hartog, 85 NY2d 36, 46[1995]).
The $178,678 from marital property shares was added to the $565,579.29 and a deduction ofabout one third the value was made for taxes paid on these assets by defendant, resulting in atotal of $496,196.34. Supreme Court then added the net value of the parties' various other maritalproperties, including, among other things, the residence, a lake home, vehicles and sundry bankaccounts. This resulted in a total marital estate of $1,141,683.34. After weighing the germanefactors (see Domestic Relations Law § 236 [B] [5] [d]), and particularly notingdefendant's wasteful dissipation of assets during the marriage, Supreme Court awarded plaintiff70% of the marital estate. This resulted in an award to plaintiff of nearly $800,000.
Plaintiff asserts that during the marriage, defendant commingled property from the stockswith marital property and, thus, all stock assets should have been treated as marital property. Weare unpersuaded. Preliminarily, we note that "while the method of equitable distribution ofmarital property is properly a matter within the trial court's discretion, the initial determination ofwhether a particular asset is marital or separate property is a question of law" (DeJesus vDeJesus, 90 NY2d 643, 647 [1997]). Commingling separate property with marital propertyfunds can result in separate property becoming marital property (see Schwalb v Schwalb, 50 AD3d1206, 1209 [2008]; Judson v Judson, 255 AD2d 656, 657 [1998]). However,commingling only a part of separate property does not necessarily result in other separateproperty that has not been commingled being transmuted to marital property (see Chernoff v Chernoff, 31 AD3d900, 903 [2006]).
When defendant received funds under his severance agreement with Albany MolecularResearch, some of those funds were marital property (e.g., salary, bonus, payout for the 14,137marital shares) and other funds were separate property. The payments from Albany MolecularResearch were not, of course, broken down into such categories. Thus, although upon initialdeposit of these payments into various bank accounts there was some commingling, therenevertheless was ample evidence presented at trial for Supreme Court to conclude that defendantmaintained the separate nature of the property and the vast majority of the funds were placed inseparate (rather than joint) accounts. The remaining arguments about the classification of theparties' property have been considered and found unavailing. Moreover, the court did not abuseits discretion in the method it used to equitably distribute the parties' marital property.
Plaintiff argues that she should have been awarded maintenance. We cannot agree. The trialcourt has discretion in addressing this issue so long as the pertinent statutoryfactors—including the marital standard of living—are considered (see Carman v Carman, 22 AD3d1004, 1008 [2005]; see also Bean vBean, 53 AD3d 718, 723 [2008]). "It is settled that the purpose of maintenance is 'toprovide temporary support while the recipient develops the skills and experience necessary tobecome self-sufficient' " (Wheeler vWheeler, 12 AD3d 982, 983 [2004], quoting Garvey v Garvey, 223 AD2d 968,970 [1996]). Plaintiff has had steady employment as a hairstylist since before the marriage, shealso became a real estate appraiser during the marriage and she owns unencumbered rentalproperty. As part of the equitable distribution of the parties' [*6]property she was awarded the marital residence. Supreme Courtnoted plaintiff's "ability to support herself, her relative good health, the shorter duration of theparties' marriage, the support for the parties' child, and the equitable award." The decision not toaward maintenance was within the ambit of the court's discretion under the facts of this case.
Plaintiff contends that she should have been awarded counsel fees. Pursuant to DomesticRelations Law § 237 (a), counsel fees may be awarded to a spouse in a divorce action "toenable that spouse to carry on or defend the action or proceeding as, in the court's discretion,justice requires, having regard to the circumstances of the case and of the respective parties." Indetermining whether to award counsel fees, the court may consider such factors as the relativefinancial circumstances of the parties, the complexity of the case and the extent of legal servicesrendered, " 'together with all the other circumstances of the case, which may include the relativemerit of the parties' positions' " (Johnson v Chapin, 12 NY3d 461, 467 [2009], quotingDeCabrera v Cabrera-Rosete, 70 NY2d 879, 881 [1987]; see Blay v Blay, 51 AD3d 1189,1193 [2008]).
We do not take issue with Supreme Court's sentiment that, although the proceedings wereprotracted, the underlying issues were not sufficiently complex to justify much of the billing ofplaintiff's counsel; particularly charging over $100,000 for preparing posttrial submissions.However, we disagree with the court's finding that the equitable distribution award placed theparties in a relatively comparable financial position, as the record establishes that defendantretained substantial assets that were not subject to equitable distribution. In addition to thedisparity between the parties' respective financial resources, there is evidence that defendant mayhave engaged in some conduct that obstructed the discovery process, causing delay andprolonging the trial (see Johnson v Chapin, 12 NY3d at 467; Nelson v Nelson,290 AD2d 826, 828 [2002]). In our view, the totality of the circumstances warrant an award ofpartial counsel fees to plaintiff (seegenerally Freas v Freas, 33 AD3d 1069, 1071 [2006]; Nelson v Nelson, 290AD2d at 828 [2002]). Accordingly, we remit the matter to Supreme Court to conduct a hearingand make an appropriate award (see Redgrave v Redgrave, 304 AD2d 1062, 1066-1067[2003]).
The remaining issues have been considered and found unavailing.
Peters, J.P., Spain, Stein and Garry, JJ., concur. Ordered that the appeal from the order isdismissed, without costs. Ordered that the judgment is modified, on the facts, without costs, byincreasing defendant's child support obligation to $963.94 per month; matter remitted to theSupreme Court to conduct a hearing and make an appropriate award of counsel fees; and, as somodified, affirmed.
Footnote 1: Although the subsequent entryof the judgment of divorce requires dismissal of the appeal from this intermediate order, theissues asserted on the appeal from the order will be considered on the appeal from the finaljudgment (see CPLR 5501 [a] [1]; Quinn v Quinn, 61 AD3d 1067, 1069 n 1 [2009]).
Footnote 2: While the child supportobligation is retroactive to the date of commencement (see Burns v Burns, 84 NY2d 369,377 [1994]), this record contains ample evidence that defendant made monthly payments beforethe commencement of the action through the trial that exceeded his obligations under the ChildSupport Standards Act (see Domestic Relations Law § 240 [1-b]) and,accordingly, no further payment is owed for that period of time (cf. Baraby v Baraby,250 AD2d 201, 205 [1998]; Scheinkman, New York Law of Domestic Relations § 16:54[11 West's NY Prac Series 2009]). Any payment after the date of judgment for an amount lessthan $963.94 per month is subject to retroactive adjustment.