| Renga v Renga |
| 2011 NY Slip Op 06097 [86 AD3d 632] |
| July 26, 2011 |
| Appellate Division, Second Department |
| Angela Renga, Respondent, v Gregory Renga,Appellant. |
—[*1] Susan Chana Lask, New York, N.Y., for respondent.
In an action for a divorce and ancillary relief, the defendant appeals, as limited by his brief,from so much of an order of the Supreme Court, Nassau County (Falanga, J.), dated December22, 2009, as, upon reargument, adhered to its original determination in an order of the same courtdated September 1, 2009, granting that branch of the plaintiff's motion which was, in effect, for adetermination that the unallocated settlement proceeds of an action to recover damages formedical malpractice received by the parties during their marriage was the parties' separateproperty.
Ordered that the order dated December 22, 2009, is reversed insofar as appealed from, on thelaw, with costs, upon reargument, so much of the order dated September 1, 2009, as granted thatbranch of the plaintiff's motion which was, in effect, for a determination that the unallocatedsettlement proceeds of an action to recover damages for medical malpractice received by theparties during their marriage was the parties' separate property is vacated, that branch of theplaintiff's motion is denied, and the matter is remitted to the Supreme Court, Nassau County, fora determination in accordance herewith, as to whether the subject settlement proceeds are maritalproperty or separate property.
In 1996, during the parties' marriage, the plaintiff, with the defendant suing derivatively,commenced an action to recover damages for medical malpractice. In 2003, the action wassettled, and the parties received an unallocated net settlement in the principal sum of $4.8million, which was made payable to both parties. The parties deposited the net settlementproceeds into a joint investment account and, in April 2007, allegedly for estate planningpurposes, they withdrew a majority of the balance, which they deposited in two relatively equalamounts, into two separate trust accounts, one for the defendant and one for the plaintiff.
In March 2009, the plaintiff commenced the instant action for a divorce and ancillary relief,and in July 2009, she moved, inter alia, for a determination that the net settlement proceeds werethe parties' separate property and for a hearing to determine the allocation between herself andthe defendant of those proceeds. The defendant opposed the motion, arguing that the settlementproceeds had long ago been converted into marital property because the settlement check hadbeen made payable to both parties, the funds had been deposited into a joint investment account,and, in [*2]April 2007, the parties had used a portion of theproceeds to fund, in approximately equal amounts, separate trust accounts for each of them. In anorder dated September 1, 2009, the Supreme Court determined, in effect, and in pertinent part,that the net settlement proceeds were separate property and that the allocation between the partieswould be determined at trial. The Supreme Court further determined that the deposit of theunallocated net settlement proceeds into a joint investment account did not convert those fundsinto marital property, but that the interest earned thereon may be marital property.
The defendant thereafter moved for leave to reargue, contending that the net settlementproceeds had been presumptively transmuted into marital property subject to equitabledistribution, and that the plaintiff could not rebut this presumption. In effect, the defendantsought a determination that, as a matter of law, the settlement proceeds were marital propertysubject to equitable distribution. In the order appealed from the Supreme Court, inter alia,granted leave to reargue, and adhered to its original determination.
Generally, the proceeds from an action to recover damages for personal injuries areconsidered separate property of the spouse receiving the compensation (see DomesticRelations Law § 236 [B] [1] [d] [2]; Crescimanno v Crescimanno, 33 AD3d 649 [2006]). However, thedeposit of separate property into a joint bank account gives rise to a presumption that each partyis entitled to a share of the property (see Banking Law § 675 [b]; Chamberlain v Chamberlain, 24 AD3d589, 593 [2005]; Garner v Garner, 307 AD2d 510, 512 [2003]). This presumptionmay be rebutted with clear and convincing evidence that "the account was titled jointly as amatter of convenience, without the intention of creating a beneficial interest, and that the funds inthe account originated solely in the separate property of the spouse who claims the separateinterest" (Chamberlain v Chamberlain, 24 AD3d at 593; see Crescimanno v Crescimanno, 33AD3d 649 [2006]; Wade vSteinfeld, 15 AD3d 390, 391 [2005]).
Here, contrary to the Supreme Court's determination, the parties' deposit of the unallocatednet settlement proceeds into a joint investment account gave rise to a presumption that theproceeds were transmuted into marital property (see Banking Law § 675 [b];Crescimanno v Crescimanno, 33 AD3d at 650; Chamberlain v Chamberlain, 24AD3d at 593). The record on appeal is insufficient to render a determination as to whether theplaintiff can rebut this presumption. We therefore remit the matter to the Supreme Court, NassauCounty, for determination of this issue upon the trial of this action.
We decline the plaintiff's request for the imposition of sanctions against the defendant inconnection with this appeal (see 22 NYCRR 130-1.1). Dillon, J.P., Belen, Sgroi andMiller, JJ., concur.