| Jayaram v Jayaram |
| 2009 NY Slip Op 04197 [62 AD3d 951] |
| May 26, 2009 |
| Appellate Division, Second Department |
| Kristin Jayaram, Respondent-Appellant, v MohanJayaram, Appellant-Respondent. |
—[*1] Berman Bavero Frucco & Gouz P.C., White Plains, N.Y. (Ronald J. Bavero and HowardLeitner of counsel), for respondent-appellant.
In an action for a divorce and ancillary relief, the defendant former husband appeals, aslimited by his notice of appeal and brief, from stated portions of a judgment of the SupremeCourt, Westchester County (Giacomo, J.), entered July 17, 2007, which, after a nonjury trial,inter alia, awarded the plaintiff former wife the sum of $1,053,500 as her 35% share of hisenhanced earning capacity, prejudgment interest on her distributive award in the sum of$432,954.85, child support in the sum of $1,654 per week, and counsel fees in the sum of$125,000, and failed to provide that the insurance policy which he is required to provide andmaintain to secure his obligations to pay the plaintiff's distributive award and child support maybe a declining term policy that would permit him to reduce the amount of coverage by theamount of the distributive award and child support actually paid, and the plaintiff cross-appeals,as limited by her brief, from so much of the same judgment as applied a coverture fraction toreduce the valuation of her share of the defendant's enhanced earning capacity.
Ordered that the judgment is modified, on the law and in the exercise of discretion, (1) bydeleting the provision thereof awarding the plaintiff the sum of $1,053,500 as her 35% share ofthe defendant's enhanced earning capacity, and substituting therefor a provision awarding theplaintiff the sum of $514,500 as her 35% share of the defendant's enhanced earning capacity, (2)by deleting the provision thereof awarding the plaintiff prejudgment interest in the sum of$432,954.85, and (3) by adding thereto a provision that the insurance policy which the defendantis required to provide and maintain to secure his obligations to pay the plaintiff's distributiveaward and child support may be a declining term policy that would permit him to reduce theamount of coverage by the amount of the distributive award and child support actually paid; asso modified, the judgment is affirmed insofar as appealed and cross-appealed from, without costsor disbursements.
The parties were married on April 20, 1992, and have two children. Prior to the marriage, thehusband earned a Masters in Science degree from the Georgia Institute of Technology, and aPh.D. in mechanical and aerospace engineering from Princeton University. At the time of theirmarriage, both the husband and wife were employed by IBM. At the beginning of 1995 thehusband entered a Columbia University program to earn a Masters in Business Administration(hereinafter MBA), and he subsequently earned that degree in 1996. The husband then embarkedon a career in finance, obtaining a position as an investment banker at a brokerage firm withearnings that far exceeded his earnings at IBM. After obtaining his position at the brokeragefirm, the husband also obtained certain licenses issued by the [*2]National Association of Securities Dealers (hereinafter NASD).
On appeal, the husband contends that the Supreme Court erred in concluding that his MBAdegree and NASD licenses provided him with an enhanced earning capacity subject to equitabledistribution. We disagree. "An academic degree may constitute a marital asset subject toequitable distribution, even though the degree may not necessarily confer the legal right toengage in a particular profession" (Judge v Judge, 48 AD3d 424, 425 [2008]; see McGowan vMcGowan, 142 AD2d 355, 357 [1988]). Here, while the husband presented some evidencethat an MBA degree was not an actual prerequisite to his employment at the brokerage firm,there was also ample evidence, including expert testimony, to support the court's finding that theattainment of this degree made the husband a more attractive candidate for a position ininvestment banking. It is also clear from the record that the knowledge of financial products,including options and derivatives, which the husband acquired during his MBA studies, assistedin his advancement at the firm. Accordingly, the court properly concluded that the MBA degree,as well as the NASD licenses which the husband obtained during the course of his employment,enhanced his earning capacity.
The court also properly determined that the wife was entitled to a 35% share of the husband'senhanced earning capacity. Although the wife did not make direct financial contributions to thehusband's attainment of his MBA degree and NASD licenses, she made substantial indirectcontributions by supporting the husband's educational endeavors, working full-time andcontributing her earnings to the family, being the primary caretaker of the couple's children,cooking family meals, and participating in housekeeping responsibilities (see Holterman v Holterman, 3 NY3d1 [2004]; McSparron v McSparron, 87 NY2d 275 [1995]; Chamberlain v Chamberlain, 24 AD3d589, 594 [2005]).
However, the court should not have relied solely upon the wife's expert in valuing thehusband's enhanced earnings capacity at $4,300,000. The methodology employed by the wife'sexpert essentially consisted of deducting the husband's baseline earnings from his toplineearnings, and projecting this differential over his expected work life. However, under thecircumstances of this case, this methodology resulted in overstating the husband's enhancedearning capacity, because it failed to adequately account for the fact that the MBA degree wasonly one factor in the husband's employment and advancement at the brokerage firm. Moreover,the wife's expert employed only a risk free 3% discount rate in projecting the likelihood that thehusband would achieve his projected earnings. The court attempted to arrive at a more accuratevaluation of the husband's enhanced earnings by applying a 30% coverture fraction to accountfor the husband's premarital educational achievements. However, in view of the strong evidencethat the mathematical skills which the husband honed prior to the marriage during hisengineering studies made him a highly desirable employee at the brokerage firm, application ofthe coverture fraction was insufficient to arrive at an equitable determination of the wife's shareof enhanced earnings. Accordingly, we adopt the $2,100,000 enhanced earning capacityvaluation recommended by the court-appointed neutral accountant, which considers both thehusband's base salary and bonuses in determining his topline salary, and reflects a moreconservative 7% discount rate. Applying a 30% coverture fraction to $2,100,000, we find thatthe wife's 35% share of the husband's enhanced earning capacity is $514,500.
Further, the court should not have awarded the wife prejudgment interest on her distributiveaward. The distributive award was largely comprised of the wife's interest in the husband'senhanced earning capacity, which was not fixed until after trial. Thus, this was not a tangibleasset which the wife was deprived the use of during the pendency of the litigation. The balanceof the distributive award was comprised of the parties' bank and investment accounts, which theparties stipulated to divide equally. There is no evidence that the husband engaged in anymisconduct regarding these accounts, or deprived the wife of their use (see Schwartz v Schwartz, 54 AD3d400, 402 [2008]). Moreover, the accounts increased in value during the pendency of theaction.
We discern no basis to disturb the court's determination of the parties' child supportobligations, which was made after a careful consideration of the relevant statutory factors(see Matter of Cassano v Cassano, 85 NY2d 649 [1995]; Spreitzer v Spreitzer, 40 AD3d840, 842 [2007]). Furthermore, the court properly directed that child support be awardedretroactively to the date upon which the application for support was first made (seeDomestic Relations Law § 236 [B] [7] [a]; Miklos v Miklos, 9 AD3d 397, 399 [2004]).[*3]
However, we agree with the husband's contention that thelife insurance policy he was required to obtain and maintain in order to secure his obligationsmay be a declining term policy that would permit him to reduce the amount of coverage by theamount of the distributive award and support actually paid (see Matter of Moran v Grillo, 44 AD3d 859, 861 [2007]; Matter of Anonymous v Anonymous,31 AD3d 955, 957 [2006]).
The court's counsel fee award to the wife was not an improvident exercise of discretion(see DeCabrera v Cabrera-Rosete, 70 NY2d 879 [1987]).
The husband's remaining contention is based on matter dehors the record and is improperlyraised for the first time on appeal. Skelos, J.P., Fisher, Miller and Eng, JJ., concur.