| Mairs v Mairs |
| 2009 NY Slip Op 02881 [61 AD3d 1204] |
| April 16, 2009 |
| Appellate Division, Third Department |
| Michael A. Mairs, Respondent, v Camille Mairs,Appellant. |
—[*1] Donnellan & Knussman, P.L.L.C., Ballston Spa (Nicholas E. Tishler, Niskayuna, ofcounsel), for respondent.
Kavanagh, J. Appeal from a judgment of the Supreme Court (Hall, J.), entered January 3,2008 in Saratoga County, ordering, among other things, equitable distribution of the parties'marital property, upon a decision of the court.
The parties were married in 1981 and have seven children. Plaintiff (hereinafter the husband)is an ophthalmologist with his own private practice while defendant (hereinafter the wife) is atenured math professor employed at the Community College of Philadelphia. In 2002, thehusband commenced this action for divorce and, prior to trial, the parties reached a partialstipulation resolving some, but not all, of the issues that divided them. Among those that remainwere the degree to which the wife should share in the husband's medical practice and medicallicense, the amount and duration of maintenance, the value of each party's educational degree, aswell as the husband's medical license, and the amount to be paid by the parties for the support oftheir children. The wife also sought payment by the husband of the fees charged by her counseland the expert witness, as well as an order extending the husband's obligation to share in thepayment of the children's numerous extracurricular activities. After a three-day trial, SupremeCourt issued a judgment that, among other things, granted the husband a divorce and orderedhim [*2]to pay the wife 15% of the value of his medical licenseand medical practice.[FN1]It also directed the husband to pay $400 per week in maintenance to the wife for seven years,child support in the amount of $1,260 per week, $18,000 of the wife's counsel's fees, 50% of theexpert witness fees, and a portion of the college expenses incurred by the parties' eldest child.Finally, it required the husband, as a guarantee against his obligations under the judgment, tomaintain a $200,000 life insurance policy with the wife listed as the primary beneficiary. Thewife now appeals.
The wife takes issue with almost every aspect of Supreme Court's decision and, in particular,claims that in its judgment the court failed to fully take into account the sacrifices andcontributions she made during the parties' 20-year marriage that, in her view, served to providethe husband with an opportunity to obtain his medical license and develop a thriving medicalpractice. The husband, while acknowledging that his medical license and practice are, to adegree, marital assets, claims that each was acquired as the direct result of his individual effortsand that his wife had little to do with his having obtained them.
In deciding the extent to which a spouse should share in the value of a marital asset, amongthe factors to be considered are the length of time the parties were married, their respective ageand health, the ability of each to earn an income now and in the future, any direct or indirectcontributions made by the nontitled spouse in the effort to obtain the asset, the asset's value andthe degree to which it appreciated during the marriage and any tax consequences that will occurupon the assets distribution (see Domestic Relations Law § 236 [B] [5] [d]; Smith v Smith, 8 AD3d 728, 729[2004]). Initially, we note that such decisions are generally left to the exercise of the trial court'ssound discretion and will not, as a general rule, be disturbed if, as rendered, they properlyaccount for all of the relevant statutory factors. However, we have the authority to conduct abroad review of any such award (seeCarman v Carman, 22 AD3d 1004, 1006 [2005]; Roffey v Roffey, 217 AD2d864, 866 [1995]).
On the facts presented, we are of the view that the wife is entitled to more than 15% of thevalue of the husband's license to practice medicine and his medical practice. We reach thisconclusion by noting that, in particular, during this long-term marriage, the husband not onlysuccessfully completed his undergraduate studies and attended medical school, he also earnedhis medical degree and completed both his internship and residency, after which he was able toestablish a successful medical practice. While the husband pursued his medical career, the wifenot only gave birth to the parties' seven children, but cared for them, managed the household andearned a salary that, for a time, was the principal source of the family's income. She relocated thefamily from Utah to Philadelphia and later to New York for the express purpose of allowing thehusband to pursue his medical studies and obtain his medical license. When the husband enteredprivate practice, the wife, in addition to her maternal obligations, continued towork—commuting on a regular basis to Philadelphia—and managed the practice,assuming the [*3]responsibility for the preparation of all invoicesand the payment of all bills.[FN2]Given these circumstances, we find that the wife's contributions to her husband's medical careerwere both meaningful and significant and, as such, she is entitled to 25% of the value of hismedical license, as well as his medical practice (see Carman v Carman, 22 AD3d at1006; Brough v Brough, 285 AD2d 913, 914 [2001]).
While Supreme Court placed a value on the husband's educational degrees at $1,493,000, itadopted the opinion of the expert retained by the parties that the practice had a value of $12,000and that the wife's distributive share amounted to $1,800. The expert, while acknowledging thatthe practice annually had gross revenues in excess of $500,000, initially placed its value at$93,000, after allowing for a full discount on the total amount alleged by the husband to be owedon a loan made to the practice by a local hospital. The expert then reduced that amount toaccount for the tax implications that would occur if the practice were sold. While we acceptSupreme Court's determination that the tax impact generated by the sale of the practice wasfairly considered in this valuation, we do not agree that the full amount of theloan—$190,830—should be included in determining the practice's fair marketvalue. In that regard, we note that in the 12 years that this debt has been in existence, not onepayment has been made against its principal and the promissory notes evidencing the existenceof this legal obligation only amount to $104,000.[FN3]As a result, we find that while it was appropriate to consider this loan as a liability to be countedagainst the value of the practice, the amount used to discount its value should be that representedby the face value of the promissory notes—$104,000 (see Charland v Charland,267 AD2d 698, 700-701 [1999]). Given that the expert has acknowledged reducing his estimateof the practice's value by the full amount claimed to be owed on this loan, the value of thepractice for distributive purposes should be increased by $86,830 to $98,830, with the wifereceiving a 25% distributive share.[FN4]
We find no abuse of discretion in Supreme Court's imposition of a 4.2% interest rateimposed on the amount the husband owes the wife for her share of the marital assets. "[T]hemanner in which a distributive award is to be paid is discretionary" (Smith v Smith, 17 AD3d 959, 960[2005]) and the imposition of interest on an outstanding debt as a result of equitable distributionis equally within a court's discretion (see Dewitt v Sheiness, 42 AD3d 776, 778 [2007]; Hamroff v Hamroff, 35 AD3d365, 366 [2006]).[FN5]
As for maintenance, Supreme Court directed that the husband pay the wife $400 per [*4]week for seven years, or $20,800 annually. The determination of anappropriate maintenance award requires a "delicate balanc[e] of each party's needs and means"(Matter of Shreffler v Shreffler, 283 AD2d 679, 680 [2001]; see Brzuszkiewicz v Brzuszkiewicz,28 AD3d 860, 862 [2006]) and consideration of the relevant statutory factors (seeDomestic Relations Law § 236 [B] [6] [a]). These factors include "the parties' employmenthistory, respective educational background and vocational skills, present and future earningcapacity, age and health, each party's ability to become self-supporting, the duration of themarriage, and the present state of their finances" (Carl v Carl, 58 AD3d 1036, 1038[2009]; see Bean v Bean, 53 AD3d718, 721-722 [2008]), as well as their predivorce standard of living (see Hartog vHartog, 85 NY2d 36, 50-51 [1995]). In that regard, the husband earns, on average, $300,000per year, is in good health and enjoys a significant earning potential for the foreseeable future. Incomparison, the wife suffers from chronic asthma, has an annual salary that, in the past, rarelyexceeded $50,000 and is not likely to earn significantly more income in the future.[FN6]Given the length of the marriage, the wife's age and the fact that a substantial portion of thedistributive award for her share of the marital assets is deferred, we conclude that the husband'smaintenance obligation should be increased to $500 per week for seven years.[FN7]
While we do not agree with the wife's claim that Supreme Court should have imputed certainincome to the husband in its calculation of child support, we do note that certain errors werecommitted in the final calculation of that figure that require an adjustment in each party'sobligation to pay child support. Specifically, in determining each party's annual gross income,the court neglected to add any income that had been deferred by the parties (seeDomestic Relations Law § 240 [1-b] [b] [5] [iii]) or deduct all the payments made by themfor FICA and Medicare taxes (see Domestic Relations Law § 240 [1-b] [b] [5][vii] [C], [H]). Furthermore, there is no indication that Supreme Court, prior to making thiscomputation, deducted the amount that the husband is paying in maintenance from the total ofhis gross income (see Domestic Relations Law § 240 [1-b] [b] [5] [vii] [C]; Sullivan v Sullivan, 46 AD3d1195, 1197 [2007]; Burtchaell vBurtchaell, 42 AD3d 783, 785 [2007]; Milnarik v Milnarik, 23 AD3d 960, 961 [2005]). Theseadjustments, when properly entered into the calculation, will result in a significant reduction inthe husband's obligation to pay child support.
The wife also takes issue with the percentages employed by Supreme Court against theparties' combined income in determining the amount to be paid for child support. While itincluded all of the parties' income in this calculation, Supreme Court used 35% as the percentageto be applied against the first $80,000 of combined income, but reduced the percentage to 25%[*5]for any income over $80,000.[FN8]Supreme Court found that applying the statutory percentage to all of the parties' income,including that in excess of $80,000, would result in an "unjust or inappropriate" award(Domestic Relations Law § 240 [1-b] [f]; see Hammack v Hammack, 20 AD3d 700, 701-702 [2005], lvdismissed 6 NY3d 807 [2006]). Since the husband's child support obligation will besubstantially reduced once his maintenance payments are deducted from his gross income and, asa result of Supreme Court's decision, he is no longer required to contribute to the payment of thechildren's extracurricular activities—a financial burden borne entirely by thewife—there is no justification from deviating from the statutory percentage. In our view,therefore, the 35% figure should be applied against the entire combined parental income used tocalculate child support (see Matter of Cassano v Cassano, 85 NY2d 649, 654 [1995]; Moffre v Moffre, 29 AD3d 1149,1150 [2006]; Golub v Ganz, 22AD3d 919, 924 [2005]; Hammack v Hammack, 20 AD3d at 701).[FN9]
As for Supreme Court's determination that the husband should receive a $250 weekly creditagainst his child support obligations "for overpayments of child support, extracurricularactivities and college expenses," we note, as conceded by the husband, that there can be no suchoffset and that this part of the order must be vacated (see Matter of Taddonio v Wasserman-Taddonio, 51 AD3d 935,936 [2008]; Baraby v Baraby, 250 AD2d 201, 205 [1998]). In addition, because thehusband will be required to pay additional maintenance, as well as a significant sum for thewife's distributive share of the marital assets, we refuse to revisit Supreme Court's decision thatthe husband is no longer required to contribute towards the payment of the children'sextracurricular activities or that he pay any more of the expert witness fees or the wife's counselfees (see Domestic Relations Law § 237 [a]; Laura WW. v Peter WW., 50 AD3d 1292, [*6]1292-1293 [2008]; Bellinger v Bellinger, 46 AD3d 1200, 1203 [2007]; Freas v Freas, 33 AD3d 1069,1071 [2006]; Redgrave v Redgrave,22 AD3d 913, 914 [2005]; Miller vMiller, 4 AD3d 718 [2004]; Farrell v Cleary-Farrell, 306 AD2d 597, 600[2003]).
We are of a different view as to Supreme Court's decision regarding the payment of thechildren's college expenses. In that regard, the court only required the husband to pay half of aloan taken by the wife to defray expenses incurred by their oldest daughter for her first two yearsin college. This finding, which also served to absolve the husband from any responsibility forany college expenses incurred by any of the remaining six children, appears to be at odds withthe court's own observation of the "high value [the parties] place upon learning and knowledge,"and the "ambitions and hopes" they have for their children. Given that the evidence presented attrial focused almost exclusively on the oldest child, we find that Supreme Court did notadequately account for the needs of the other children or give appropriate consideration toexpectations that appear to have existed within the family unit as to their pursuit of a highereducation (see Domestic Relations Law § 240 [1-b] [c] [7]; Evans v Evans, 55 AD3d 1079,1083 [2008]; Matter of Naylor vGalster, 48 AD3d 951, 953 [2008]; Brough v Brough, 285 AD2d at 917). Assuch, its decree that the husband has no financial responsibility for the payment of collegeexpenses incurred on behalf of the remaining children, per the wife's request, must be stricken(see Domestic Relations Law § 240 [1-b] [c] [2]).
Finally, Domestic Relations Law § 236 (B) (8) (a) provides that a court "may alsoorder a party to purchase, maintain or assign a policy of accident insurance or insurance on thelife of either spouse, and to designate in the case of life insurance, either spouse or children ofthe marriage, or in the case of accident insurance, the insured spouse as irrevocable beneficiariesduring a period of time fixed by the court." Here, Supreme Court, other than acknowledging thatthe insurance was to secure the husband's obligation to pay maintenance and the wife'sdistributive share of the marital assets, failed to set forth any rationale for establishing the facevalue of the policy at $200,000. Given that the obligations it was intended to secure easilyexceed $200,000, such a policy would not serve its intended purpose. Therefore, while SupremeCourt has broad discretion in fashioning such an obligation, its order should be modified to theextent that the husband is required to obtain a declining term life insurance policy with an initialface value of $500,000 (see Bean v Bean, 53 AD3d at 725; Blay v Blay, 51 AD3d 1189, 1192[2008]; see also Matter of Anonymousv Anonymous, 31 AD3d 955, 957 [2006]).
Mercure, J.P., Lahtinen and Malone Jr., JJ., concur. Ordered that the judgment is modified,on the law and the facts, without costs, by (1) increasing the value of plaintiff's medical practiceto $98,830, (2) ordering plaintiff to pay 25% for defendant's share of the enhanced earnings fromplaintiff's medical license and medical practice, (3) ordering plaintiff to obtain a declining termlife insurance policy with an initial face value of $500,000, (4) increasing plaintiff's maintenanceobligation to $500 per week until 2012, (5) vacating the provision for a $250 weekly creditagainst plaintiff's child support obligation, (6) striking the provision that plaintiff is notresponsible for the college expenses of the parties' five younger children, and (7) ordering childsupport in the amount of $1,364 per week, and, as so modified, affirmed.
Footnote 1: Supreme Court found that thevalue of the marital portion of the wife's Master's degree was $56,000 while the marital portionof the husband's Bachelor's degree and medical license had a total value of $1,493,000. The courtthen determined that each party was entitled to 15% of the value of these assets, resulting in a netaward to the wife of $215,550.
Footnote 2: The wife left for Philadelphiaafter dinner on Sunday evening and returned home to New York on Tuesday afternoon.
Footnote 3: The first promissory note isdated January 19, 1996 and the last was signed on October 15, 1997.
Footnote 4: The resulting increase of thewife's share of the husband's medical practice and medical license shall be paid in equal monthlyinstallments until May 2014.
Footnote 5: We note, however, thatSupreme Court failed to explain its deviation from the statutory 9% interest rate imposed byCPLR 5004. This decision should not be read as an approval of such an omission.
Footnote 6: The records introduced at trialindicate that the husband earned $304,984, $384,955 and $256,687 for tax years 2001, 2002,2003, respectively. The wife, for these same years, earned $48,247, $50,217 and $49,811,respectively.
Footnote 7: As part of their pretrialstipulation, the parties agreed that the wife would retain the marital home while the husbandwould receive a parcel of developed property that was a marital asset. Nothing in the stipulationestablishes the values of these properties or what equity, if any, the parties have in each.Accordingly, this Court cannot appropriately factor the value of these assets in any maintenancecalculation.
Footnote 8: The husband's pro rata share ofchild support was 83% and the wife's pro rata share was 17%.
Footnote 9: The correct gross income for thehusband is $243,444. After adding his voluntary payments deferred ($2,251) and deducting hisentire FICA and Medicare taxes paid ($17,662) and his newly established maintenanceobligation ($26,000), his adjusted gross income for purposes of child support is $202,033. Thecorrect gross income for the wife is $49,854. After adding her deferred income ($2,656) anddeducting her FICA and Medicare taxes ($4,014), her adjusted gross income is $48,496. Theparties' combined parental income is $250,529. The husband's pro rata share of this income is81% and the wife's pro rata share is 19%. The parties' combined child support obligation of thecombined adjusted parental income is $87,685 (35% of $250,529) and the husband's pro ratashare of this combined obligation is $71,025 annually, or $1,365 per week. This obligationshould be adjusted to take into account that period of time that the husband had custody of onechild and the wife did not pay child support. Further, this amount of child support shall beadjusted upon the termination of the maintenance obligation to the wife (see DomesticRelations Law § 240 [1-b] [b] [5] [vii] [C]; Navin v Navin, 22 AD3d 474, 475 [2005]; Thoma v Thoma, 21 AD3d 1080,1082 [2005]; Smith v Smith, 1AD3d 870, 873 [2003]).