| Quinn v Quinn |
| 2009 NY Slip Op 02510 [61 AD3d 1067] |
| April 2, 2009 |
| Appellate Division, Third Department |
| Marianne Quinn, Appellant-Respondent, v David E. Quinn,Respondent-Appellant. |
—[*1] Law Office of Shawn D. Flaherty, Albany (Shawn D. Flaherty of counsel), forrespondent-appellant.
Peters, J. (1) Cross appeals (a) from an order of the Supreme Court (Lynch, J.), enteredFebruary 6, 2008 in Albany County, which, among other things, awarded plaintiff 30% of thevalue of defendant's medical business, and (b) from a judgment of said court, entered June 20,2008, ordering, among other things, equitable distribution of the parties' marital property, upon adecision of the court, and (2) appeal from an order of said court, entered July 17, 2008 in AlbanyCounty, which granted plaintiff's application for counsel and expert fees.
The parties were married in 1991 and have two children (born in 1993 and 1996). InDecember 2005, plaintiff commenced this divorce action. Prior to trial, the parties agreed thatdefendant would not oppose plaintiff's grounds for divorce and executed stipulations resolvingthe issues of custody and valuation of the marital assets. They also executed a discovery and feestipulation which, in relevant part, permitted plaintiff to use a specific account for certaincounsel and expert fees and empowered Supreme Court to determine whether the used portion ofthe funds would be credited against plaintiff's equitable distribution award or charged todefendant.[*2]
Following a bench trial, Supreme Court issued a decisionand order which, among other things, awarded maintenance to plaintiff in the amount of $10,000per month for 12 years, set defendant's monthly child support obligation at $8,058, anddistributed the marital assets. Overall, the parties' marital assets were distributed equally, withthe exception of defendant's medical business, of which plaintiff was awarded 30% of thestipulated value. This decision and order was incorporated, along with the parties' priorstipulations, into a judgment of divorce. Supreme Court subsequently granted plaintiff'sapplication for counsel and expert fees in an amount that exceeded the funds set aside for thispurpose pursuant to the discovery and fee stipulation. The parties now cross-appeal fromSupreme Court's judgment of divorce,[FN1]and defendant appeals from the order awarding plaintiff counsel and expert fees.
We first address plaintiff's contention that Supreme Court erred in failing to equallydistribute defendant's medical business. Supreme Court is vested with " 'substantial discretion indetermining what distribution of marital property will be equitable under all the circumstances' "(Farrell v Cleary-Farrell, 306 AD2d 597, 599 [2003], quoting Owens v Owens,288 AD2d 782, 783 [2001]), and "there is no requirement that the distribution of each item ofmarital property be on an equal or 50-50 basis" (Arvantides v Arvantides, 64 NY2d1033, 1034 [1985]; see Corbett vCorbett, 6 AD3d 766, 767 [2004]).
Here, Supreme Court examined and set forth the circumstances of the parties and thepertinent statutory factors it considered in deciding to distribute to plaintiff 30% of the value ofdefendant's interest in the medical business (see Domestic Relations Law § 236[B] [5] [d]; Holterman vHolterman, 3 NY3d 1, 8-9 [2004]). In reaching its conclusion, the court fully consideredthe parties' 14-year marriage, the fact that plaintiff agreed to forgo a career in retail when theparties decided to get married and relocate, and her domestic and child-rearing contributions tothe marriage that allowed defendant to build his practice. The court also recognized, however,that, prior to the marriage, defendant not only obtained his medical degree and license, but hewas also an established orthopedic surgeon. Further, although plaintiff indirectly contributed tothe medical business as a parent and homemaker, she made no direct contributions, financial orotherwise, to defendant's business (see Chalif v Chalif, 298 AD2d 348, 349 [2002]; compare Redgrave v Redgrave, 13AD3d 1015, 1017-1018 [2004]; Newton v Newton, 246 AD2d 765, 765-766 [1998],lv denied 91 NY2d 813 [1998]). Given these circumstances, as well as the substantialaward of maintenance that plaintiff will receive (see Domestic Relations Law §236 [B] [5] [d] [6]), we cannot conclude that Supreme Court abused its discretion in awardingplaintiff 30% of the value of defendant's interest in the medical business (see Arvantides vArvantides, 64 NY2d at 1034; Hammack v Hammack, 20 AD3d 700, 705 [2005], lvdismissed 6 NY3d 807 [2006]; Chalif v Chalif, 298 AD2d at 349).[*3]
Next, plaintiff challenges Supreme Court's decision tocharge against her equitable distribution award $70,262 in assets withdrawn from a joint FirstNiagara Bank account. At trial, plaintiff testified that, shortly after defendant's departure fromthe marital residence, she withdrew such funds from the joint account and deposited them into anaccount opened solely in her name. Although she further claimed that the funds were used for"bills," she did not specify what expenses were paid or document that such marital funds were infact used for this purpose. Moreover, defendant introduced into evidence documentationshowing that, at the time this action was commenced, the balance of the personal account openedby plaintiff was $70,262. Having failed to offer any proof that the $70,262 had been utilized formarital expenses, Supreme Court properly charged such amount against plaintiff's distributiveaward.
We do, however, agree that Supreme Court's determination concerning dependencyexemptions for income tax purposes must be modified. In permitting defendant, the noncustodialparent, to declare the tax exemptions, Supreme Court reasoned that defendant is the sole sourceof income for the children and that allowing him to take the full benefit of the tax exemptionswould "maximize the total available income to implement [the court's] decision." Although wedo not quarrel with Supreme Court's reasoning, and recognize that "[w]here a noncustodialparent meets all or a substantial part of a child's financial needs, a court may determine that thenoncustodial parent is entitled to declare the child as a dependent" (Pachomski v Pachomski, 32 AD3d1005, 1007 [2006]; see Guarnier v Guarnier, 155 AD2d 744, 746 [1989]), heredefendant will be unable to take advantage of the benefits of the tax exemptions because hisincome exceeds the threshold set forth in 26 USC § 151 (d) (3). While defendant correctlyreplies that such provision contains a sunset clause causing it to expire in 2010 (see 26USC § 151 [d] [3] [F]), we find no reason to deprive the parties of the opportunity torealize any tax benefit for the 2008 and 2009 taxable years. Accordingly, under thecircumstances of this case, plaintiff may claim the parties' children as dependants for income taxpurposes for the 2008 and 2009 tax years, and for such further time until defendant will nolonger be precluded from the benefit of such dependency tax exemption.
Turning to defendant's cross appeal, he first argues that Supreme Court's award ofmaintenance was excessive in duration and amount. "Maintenance is designed to providetemporary support while one spouse gains skills, education or experience necessary to becomeself-sufficient" (Burtchaell vBurtchaell, 42 AD3d 783, 785 [2007] [citation omitted]). In determining the amountand duration of maintenance, the court must consider the enumerated factors set forth inDomestic Relations Law § 236 (B) (6) (a), as well as the predivorce standard of living ofthe recipient spouse (see Hartog v Hartog, 85 NY2d 36, 50-51 [1995]; Bean v Bean, 53 AD3d 718, 723[2008]).
The parties were married for 14 years and, at the time of trial, defendant was 50 years oldand earning over $1.1 million per year as a partner in a lucrative orthopedic practice. Plaintiffwas 52 years old at the time of trial and, while gainfully employed prior to the marriage,sacrificed a career in retail management in order to undertake the role of a full-time wife andmother. Her prolonged absence from the retail market and lack of a college degree make ithighly unlikely that she will ever be able to achieve reasonable parity with the marital standardof living through her own employment. Further, the parties' lifestyle prior to their divorce waslavish, in that, among other things, they resided in a 5,000-square-foot home, owned a vacationhome on Lake George valued at nearly $1.5 million, possessed expensive automobiles, enjoyedcountry club memberships and traveled extensively. Moreover, plaintiff will now be responsible[*4]for her own health insurance, property taxes, homeowner'sinsurance, and automobile expenses. In light of these facts, the monthly maintenance award of$10,000 was a reasonable exercise of Supreme Court's discretion (see Bean v Bean, 53AD3d at 723; Hendricks vHendricks, 13 AD3d 928, 929 [2004]).
However, inasmuch as " 'this Court's authority is as broad as Supreme Court's in resolvingquestions of maintenance' " (Redgrave v Redgrave, 13 AD3d at 1019, quoting Smithv Smith, 249 AD2d 813, 814 [1998]), we find that the duration of the maintenance awardshould be reduced to eight years. This " 'will better serve the primary goal of maintenance, whichis to encourage rehabilitation and self-sufficiency to the extent possible, while still accountingfor a large discrepancy in earning power between the parties' " (Bean v Bean, 53 AD3dat 724, quoting Semans v Semans, 199 AD2d 790, 792 [1993], lv denied 83NY2d 758 [1994]). Additionally, mindful that the primary purpose of maintenance is toencourage self-sufficiency by the recipient (see Schwalb v Schwalb, 50 AD3d 1206, 1210 [2008]; Semansv Semans, 199 AD2d at 792), we find that the 4% annual increase in the amount ofmaintenance was inappropriate.
Next, we are unpersuaded by defendant's argument that Supreme Court abused its discretionin setting his child support obligation at $8,058 per month. Here, Supreme Court specificallyfound, and the parties acknowledged, that strict application of the statutory figure of 25% to allincome in excess of $80,000—which would yield a monthly child support obligation of$21,642—would be inappropriate (see Domestic Relations Law § 240 [1-b][b] [3]). The court then properly considered the factors listed in Domestic Relations Law §240 (1-b) (f), including the financial resources of the parents, the children's lavish predivorcestandard of living, as well as the cost of the children's numerous after-school activities, includingpiano, skiing, tennis and horseback riding, and determined that a reduced percentage of 8% to allremaining income over $80,000 would be appropriate (see Holterman v Holterman, 3NY3d at 13-15; Matter of Cassano v Cassano, 85 NY2d 649, 655 [1995]). Whiledefendant correctly notes that a distributive award to be paid by one parent to the other is afactor that the trial court may consider in awarding child support (see Holterman vHolterman, 3 NY3d at 14), we cannot conclude that Supreme Court abused its discretion infailing to reduce his child support obligation due to the size of plaintiff's distributive award(see id.). Accordingly, Supreme Court properly exercised its discretion in determiningchild support.
Defendant's challenges to Supreme Court's distribution of the parties' marital assets aresimilarly unavailing. However, the distribution of one particular asset requires furtherdiscussion. In distributing the marital property, the court properly awarded defendant the parties'joint First Niagara Bank account, the value of which was stipulated to be $44,849.07 as of thecommencement of the divorce action. However, while Supreme Court ordered that this accountshall have a value of not less than this amount upon transfer to defendant, it is not disputed thatplaintiff used all such funds during the pendency of this action and that the account was fullydepleted upon being transferred to defendant.[FN2]Because Supreme Court's clear intent was to equally distribute the marital assets, defendant isentitled to the value of the joint First Niagara Bank account as set forth in the court's order anddirected by the judgment of divorce.[*5]
We also agree with defendant that Supreme Court abusedits discretion in awarding plaintiff counsel and expert fees in excess of the amount contained inthe stipulated fund. As previously noted, the parties stipulated that plaintiff could use, for certaincounsel and expert fees, the $60,730.68 contained in an account comprised of the parties' 2005joint income tax refund, and that Supreme Court would subsequently determine how any suchused portion would be allocated between the parties. The court ultimately awarded plaintiff thefull benefit of the $60,730.68, without any credit against her equitable distribution award, as wellas an additional $32,500 for expert fees and $25,000 in counsel fees. Given the $472,500distributive award that plaintiff will be receiving as her share of the value of the medicalbusiness, as well as her monthly award of $10,000 in maintenance, we are of the view thatplaintiff received sufficient liquid funds to enable her to pay that portion of her counsel andexpert fees that exceeded $60,730.68 (see Florio v Florio, 25 AD3d 947, 951 [2006]; Newton vNewton, 246 AD2d at 768; Richards v Richards, 189 AD2d 1025, 1026 [1993]).
Finally, the $2 million life insurance policy that defendant is required to maintain to secureplaintiff's distributive award and his maintenance and child support obligations should be adeclining term policy (see Bean v Bean, 53 AD3d at 725; Matter of Anonymous v Anonymous,31 AD3d 955, 957 [2006]; Somerville v Somerville, 26 AD3d 647, 650 [2006], lvdismissed and denied 7 NY3d 859 [2006]).
Cardona, P.J., Malone Jr., Stein and McCarthy, JJ., concur. Ordered that the appeal and crossappeal from the order entered February 6, 2008 are dismissed, without costs. Ordered that thejudgment entered June 20, 2008 is modified, on the law and the facts, without costs, by (1)reducing the duration of plaintiff's maintenance award to eight years, (2) striking the provisionallowing for a 4% annual increase in maintenance, (3) directing that the life insurance policy tobe maintained by defendant be a declining term policy, (4) directing plaintiff to pay defendant$44,849.07, representing the value of the joint First Niagara Bank account as set forth in theFebruary 6, 2008 order, and (5) granting plaintiff the present right to claim the parties' childrenas exemptions for federal and state income tax purposes, and, as so modified, affirmed. Orderedthat the order entered July 17, 2008 is modified, on the facts, without costs, by reversing somuch thereof as awarded plaintiff expert fees in the amount of $32,500 and counsel fees in theamount of $25,000, and, as so modified, affirmed.
Footnote 1: Although the parties alsocross-appeal from Supreme Court's February 6, 2008 decision and order, entry of the judgmentof divorce requires our dismissal of the cross appeals from that intermediate order (seeMatter of Aho, 39 NY2d 241, 248 [1976]; Smith v Smith, 8 AD3d 728, 729 n [2004]). Nevertheless, theissues raised on the cross appeals from that order are brought up for review on the cross appealsfrom the judgment of divorce (see CPLR 5501 [a] [1]; Finn v Finn, 277 AD2d834, 835 n 2 [2000]).
Footnote 2: Plaintiff's contention thatSupreme Court intentionally charged defendant with the value of this account in an effort to holdhim responsible for plaintiff's pendente lite support is contradicted by the record.