| Schwalb v Schwalb |
| 2008 NY Slip Op 02927 [50 AD3d 1206] |
| April 3, 2008 |
| Appellate Division, Third Department |
| David Schwalb, Respondent, v Eustacia Schwalb,Appellant. |
—[*1] Kalter, Kaplan, Zeiger & Forman, Woodbourne (Terry S. Forman of counsel), forrespondent.
Stein, J. Appeal from a judgment of the Supreme Court (LaBuda, J.), entered August 21,2006 in Sullivan County, ordering, among other things, equitable distribution of the parties'marital property, upon a decision of the court.
The parties were married in 1992. During their 12-year marriage, the parties did not havechildren. Plaintiff was licensed to practice medicine in 1990 and certified to practice internalmedicine in 1991. Defendant obtained a Master's degree in fine arts in 1991. After living togetherin New York City, the parties purchased a home in Sullivan County in 1991 because plaintiff wasraised there and wished to return. Plaintiff was already employed by Liberty Medical Group, amedical practice owned by his father and Donald Roth.
From 1992 to 1995, defendant worked in New York City three days a week and from theparties' Sullivan County home two days a week. In 1995, defendant left her position in New YorkCity so that she could pursue her fine arts career and so that she and plaintiff could start a family.From 1995 on, defendant worked intermittently as an independent contractor, charging $50 perhour for her services. In 2005, defendant earned a degree in landscape design and started her ownlandscaping business.
Plaintiff became an employee of Mary Imogene Bassett Hospital in 1995, when LibertyMedical Group was sold to that entity. In 2001, plaintiff and Roth purchased the practice from[*2]the hospital and immediately resold it to Catskill RegionalMedical Center. Plaintiff's portion of the proceeds of sale were placed in the parties' joint A.G.Edwards & Sons, Inc. account. Shortly thereafter, plaintiff and Roth formed Addenbrooke, LLC,with equal ownership, for the purpose of purchasing the building in which they were practicing.Addenbrooke purchased the building in August 2001 for $125,000 using a bridge loan.Addenbrooke then took out a $450,000 mortgage in order to pay off the bridge loan and makerepairs to the building. When interest rates declined, Addenbrooke refinanced the property with a$500,000 mortgage, which was used, in part, to pay off the $450,000 mortgage. After completionof the repairs, $260,000 remained from the mortgage proceeds; plaintiff deposited his half($130,000) in the parties' joint A.G. Edwards account, which was valued at approximately$179,000[FN1]at the time of trial.
Plaintiff commenced this action for divorce in September 2004. At or about that time, eachparty removed $20,000 from the A.G. Edwards account, apparently in order to provide funds forthe payment of counsel fees, among other things. By agreement, plaintiff paid maintenance todefendant in the amount of $3,250 per month from October 2004 through March 2005. He alsopaid the tuition for defendant's studies in landscape design and the rent on the New York Cityapartment, which the parties had maintained. From April 2005 through July 2006, plaintiff paidmaintenance to defendant in the reduced amount of $2,250 per month.
After a trial in January 2006, Supreme Court rendered a judgment of divorce which, amongother things, awarded defendant exclusive use and occupancy of the New York City apartmentand terminated plaintiff's obligation to pay maintenance. Supreme Court also awarded ownershipof all of the parties' jointly owned real property to plaintiff and awarded defendant a distributiveaward of $224,250 for her half of the value of that property, in addition to approximately$95,000, representing one half of the value of certain deferred compensation accounts. Defendantwas awarded only 10% of the value of plaintiff's interest in Addenbrooke and nothing for thevalue of the A.G. Edwards account. Defendant now appeals.
Supreme Court did not abuse its discretion with regard to the distribution of the value ofAddenbrooke. Equitable distribution does not necessarily require an equal division of maritalproperty (see Arnone v Arnone, 36AD3d 1170, 1172 [2007]). The testimony demonstrated that defendant had little to do withthe acquisition, maintenance or increase in value of the property owned by Addenbrooke.Moreover, Supreme Court properly valued Addenbrooke as of the date of commencement of thematrimonial action based on its classification as an active asset, rather than a passive one (seeGrunfeld v Grunfeld, 94 NY2d 696, 707 [2000]; Homkey-Hawkins v Hawkins, 42 AD3d 725, 726-727 [2007]).Similarly, while there is no proof in the record of any specific benefit to plaintiff in his retainingownership of the Livingston Manor property, whereas there was some evidence of a possibleeconomic benefit to defendant if she were to retain ownership, Supreme Court's distribution ofsuch property was not a clear abuse of discretion and, therefore, it will not be disturbed (see Spilman-Conklin v Conklin, 11AD3d 798, 802 [2004]).
However, we agree with defendant's contention that Supreme Court erred in its failure todistribute any of the A.G. Edwards account to her. "It is well settled that the transfer of separateproperty into a joint account raises a presumption that the funds are marital property"(Homkey-Hawkins v Hawkins, 42 AD3d at 727 [citations omitted]; see BankingLaw § 675 [b]). Here, plaintiff "failed to overcome this presumption by demonstrating. . . that the joint account was established for convenience only"(Homkey-Hawkins v Hawkins, 42 AD3d at 727; see Kay v Kay, 302 AD2d 711,713 [2003]). To the contrary, plaintiff testified that marital expenses were paid from the jointaccount and that both parties deposited their earnings into the account. Thus, the commingling ofthe $40,000, representing the proceeds from the sale of plaintiff's premarital stock, into the jointA.G. Edwards account transmuted those funds into marital property (see Chernoff v Chernoff, 31 AD3d900, 903 [2006]; Judson v Judson, 255 AD2d 656, 657 [1998]). Insofar as the fundsin the A.G. Edwards account represent proceeds from the purchase and sale of the medicalpractice, those funds are clearly marital. Therefore, it was not necessary for defendant tospecifically demonstrate her involvement in those transactions in order to support an entitlementto equitable distribution of the account in which those proceeds were deposited.
To the extent that plaintiff argues that the parties' marital property should be divided roughlyin proportion to their earnings throughout the marriage, we disagree (see Arvantides vArvantides, 64 NY2d 1033, 1034 [1985]). Here, the limited record indicates that, whileplaintiff may not have been completely happy with defendant's employment decisions, heacquiesced in those decisions. Furthermore, defendant has established proof of her noneconomiccontributions to the acquisition of marital property, generally. Overall, we find no basis for asubstantial deviation from an equal division of the A.G. Edwards account (see O'Brien vO'Brien, 66 NY2d 576, 587-588 [1985]). Thus, defendant is entitled to a distribution in theamount of $89,500 therefor.[FN2]
The determination of whether to award maintenance rests in the sound discretion of the trialcourt (see Arnone v Arnone, 36 AD3d at 1173; Holmes v Holmes, 25 AD3d 931, 932-933 [2006]). However, theremust be some evidence in the record from which a proper evaluation of employability can beassessed (see Halaby v Halaby, 289 AD2d 657, 660 [2001]; Semans v Semans,199 AD2d 790, 790-791 [1993], lv denied 83 NY2d 758 [1994]). Here, Supreme Court'sreliance on plaintiff's vocational expert was improper, as the expert's report contained criticalflaws, such as an assumption that defendant had experience in graphic design, rather thanaccurately reflecting her experience in graphic art. In addition, the report proposed work inmanagement positions in the New York metropolitan area requiring numerous years ofexperience which defendant does not have. Defendant already obtained further education, forwhich plaintiff has paid, to improve her financial prospects. She elected to start her own businesswhich, once developed, she anticipates will allow her to become self-supporting. Meanwhile,plaintiff continues to earn a substantial salary.
Based upon the duration of the marriage, the age and health of both parties, the income andproperty of the respective parties, the present and future earning capacity of both parties,defendant's ability to become self-supporting, the training she has already received and theduration of maintenance already paid during the pendency of the matrimonial action and thecontributions made by defendant to plaintiff's career or career potential, we find that plaintiffshould pay maintenance to defendant in the amount of $2,000 per month for a period of twoyears. Such an award "will better serve the primary goal of maintenance, which is to encourage[*3]rehabilitation and self-sufficiency to the extent possible,while still accounting for a large discrepancy in earning power between the parties" (Semansv Semans, 199 AD2d at 792).
Likewise, we find that Supreme Court's failure to award any counsel fees to defendant was anabuse of discretion (see DeCabrera v Cabrera-Rosete, 70 NY2d 879, 881 [1987];Madori v Madori, 201 AD2d 859, 860 [1994]). There was no evidence presented that theservices rendered were unnecessary or unreasonable. To the contrary, those services includednegotiation for temporary maintenance, financial discovery and preparation for trial, among otherthings, and no time was charged for travel from New York City. Considering the parties'respective financial circumstances, including the award of maintenance made herein, as well asthe distribution of marital property, we find that an award of $15,000 to be paid by plaintiff todefendant's counsel is appropriate (see O'Brien v O'Brien, 66 NY2d at 590).
Peters, J.P., Carpinello, Kane and Kavanagh, JJ., concur. Ordered that the judgment ismodified, on the law and the facts, without costs, by reversing so much thereof as denieddefendant (1) equitable distribution of the A.G. Edwards & Sons, Inc. account, (2) counsel feesand (3) maintenance; award defendant $89,500 as her equitable share of the A.G. Edwardsaccount, direct plaintiff to pay $15,000 for defendant's counsel fees and award defendantmaintenance in the amount of $2,000 per month for two years or until her remarriage orcohabitation or the death of either party, whichever occurs first; and, as so modified, affirmed.
Footnote 1: It is not clear from the recordhow that value was determined. However, it does not appear that either party is in disagreementtherewith.
Footnote 2: We note that such award willresult in defendant receiving approximately 40% of the combined value of all of the parties'marital property, a result which we find to be equitable under the circumstances.