| Scher v Scher |
| 2012 NY Slip Op 00502 [91 AD3d 842] |
| Jnury 24, 2012 |
| Appellate Division, Second Department |
| Allison Scher, Appellant, v Edward Scher,Respondent. |
—[*1] Shlimbaum and Shlimbaum, Islip, N.Y. (C. Donald Shlimbaum of counsel), forrespondent.
In an action for a divorce and ancillary relief, the plaintiff appeals, as limited by her brief,from so much of a judgment of the Supreme Court, Suffolk County (Garguilo, J.), entered March4, 2010, as, upon a corrected decision of the same court dated January 26, 2010, made after anonjury trial, directed the defendant to pay her the sum of only $10,000, "representing adistributive award for improvements made to the marital residence," directed her to vacate themarital residence within 30 days of service of the corrected decision, in effect, awarded thedefendant the appreciated value of Home Companion Services of New York, Inc., from the dateof the marriage as separate property, awarded the defendant Green Fields East Holding, LLC, asseparate property, awarded the defendant the funds in a certain 529 college savings plan account,awarded the defendant a separate property credit in the sum of $32,719.59 for the value of theJanney Montgomery Scott profit-sharing plan account, awarded her only 10% of the value of allthe financial accounts, except the 529 college savings plan account, and declined to award herfuture maintenance or an attorney's fee.
Ordered that the appeal from so much of the judgment as directed the plaintiff to vacate themarital residence within 30 days of service of the corrected decision is dismissed as academic,without costs or disbursements; and it is further,
Ordered that the judgment is modified, on the law, on the facts, and the exercise ofdiscretion, (1) by deleting the provision thereof directing the defendant to pay the plaintiff thesum of $10,000, "representing a distributive award for improvements made to the maritalresidence," and substituting therefor a provision directing the defendant to pay the plaintiff thesum of $170,000, representing a distributive award for the appreciated value of the maritalresidence from the date of the marriage, (2) by deleting the provision thereof, in effect, awardingthe defendant the appreciated value of Home Companion Services of New York, Inc., as separateproperty and substituting therefor a provision directing the defendant to pay the plaintiff$229,200, representing her distributive share of the appreciated value of Home CompanionServices of New York, Inc., from the date of the marriage, (3) by deleting the provision thereofawarding the defendant Green Fields East Holding, [*2]LLC, asseparate property, and substituting therefor a provision directing the defendant to pay the plaintiff$55,500, representing her distributive share of the value of Green Fields East Holding, LLC, and(4) by deleting the provision thereof awarding the defendant a separate property credit in the sumof $32,719.59 for the value of the Janney Montgomery Scott profit sharing plan account; as somodified, the judgment is affirmed insofar as reviewed, without costs or disbursements.
Contrary to the determination of the Supreme Court, the plaintiff was entitled to share in theappreciated value of Home Companion Services of New York, Inc. (hereinafter HomeCompanion Services), which the defendant incorporated approximately three years prior to themarriage. Separate property includes "property acquired before [the] marriage" (DomesticRelations Law § 236 [B] [1] [d] [1]), such as the business interest in Home CompanionServices in this case, as well as "the increase in value of [such] separate property, except to theextent that such appreciation is due in part to the contributions or efforts of the other spouse"(Domestic Relations Law § 236 [B] [1] [d] [3]). "[I]n order for appreciation in the value ofseparate property to be deemed marital property subject to equitable distribution, the nontitledspouse must demonstrate the manner in which his [or her] contributions resulted in the increasein value and the amount of the increase which was attributable to his [or her] efforts" (Embury v Embury, 49 AD3d 802,804 [2008] [citations and internal quotation marks omitted]; see Michelini v Michelini, 47 AD3d 902, 903 [2008]; Burgio vBurgio, 278 AD2d 767, 769 [2000]; Chan v Chan, 267 AD2d 413, 414 [1999];Elmaleh v Elmaleh, 184 AD2d 544, 545 [1992]). Here, the Supreme Court improvidentlyexercised its discretion in finding that the plaintiff made no direct or indirect contributions to theappreciation of Home Companion Services which resulted in the increase in the value of thecompany. The evidence established that the plaintiff made direct contributions to the business byserving as the company bookkeeper for approximately seven years (see Baron v Baron, 71 AD3d 807,809 [2010]; Hamroff v Hamroff, 35AD3d 365, 366 [2006]; Ventimiglia v Ventimiglia, 307 AD2d 993, 994 [2003]). Theevidence further established that the defendant's active participation in expanding the businesswas aided and facilitated by the plaintiff's indirect contributions as homemaker and occasionalcaretaker of one of his children from a prior marriage (see Hartog v Hartog, 85 NY2d 36,46 [1995]; Price v Price, 69 NY2d 8, 17-18 [1986]; Zaretsky v Zaretsky, 66 AD3d 885, 888 [2009]; Chalif vChalif, 298 AD2d 348, 349 [2002]). Moreover, the defendant failed to establish that theplaintiff committed "wasteful dissipation" of marital assets in her role as bookkeeper (Gravesv Graves, 307 AD2d 1022, 1023 [2003] [internal quotation marks omitted]; see Epstein v Messner, 73 AD3d843, 846 [2010]; O'Sullivan v O'Sullivan, 247 AD2d 597 [1998]; Strang vStrang, 222 AD2d 975, 978 [1995]). In light of the plaintiff's direct and indirectcontributions, the Supreme Court should have awarded her 20% of the appreciated value ofHome Companion Services. As the parties stipulated that the appreciated value over the courseof the marriage amounted to $1,146,000, the plaintiff was entitled to an award of $229,200.
Furthermore, contrary to the determination of the Supreme Court, the plaintiff was entitled toan equitable share of the appreciated value of the marital residence over the course of themarriage, notwithstanding that the residence was the separate property of the defendant untilMarch 2005, when the property was transferred to the plaintiff and defendant as tenants by theentirety. The increase in the value of separate property remains separate property "except to theextent that such appreciation is due in part to the contributions or efforts of the other spouse"(Domestic Relations Law § 236 [B] [1] [d] [3]; see Price v Price, 69 NY2d 8[1986]), at which point the increase in value becomes marital property, in accordance with therule that the definition of marital property is to be broadly construed, given the principle that amarriage is an economic partnership (see Mesholam v Mesholam, 11 NY3d 24, 28 [2008]; Price vPrice, 69 NY2d at 14-15). The parties stipulated to a neutral appraisal which found that themarital residence had increased in value by $40,000 due to "active appreciation" in the form ofphysical improvements, and $300,000 due to "passive appreciation" in the form of "marketforces, without regard to any improvements, except normal maintenance." Since the recordestablished that the $340,000 in appreciation was attributable to the efforts of both parties, theplaintiff was entitled to share equitably in that increased value (see Mongelli v Mongelli, 68 AD3d1070, 1072 [2009]; Kost vKost, 63 AD3d 798, 799 [2009]; Kilkenny v Kilkenny, 54 AD3d 816, 818-819 [2008]; Cincottav Cincotta, 221 AD2d 306, 307 [1995]). Thus, applying the plaintiff's 50% distributive shareto the $340,000 in appreciation, she is entitled to an award of $170,000 for the appreciated valuein the marital residence from the date of marriage. In light of the plaintiff's contributions, theSupreme Court should have awarded the parties equal shares in the increase in the value of themarital [*3]residence. However, the plaintiff's contention that theSupreme Court improperly directed her to vacate the marital residence within 30 days has beenrendered academic by the passage of time.
The Supreme Court erred in finding that the interest in Green Fields East Holding, LLC(hereinafter Green Fields), which was held in the defendant's name, was the separate property ofthe defendant. Domestic Relations Law § 236 defines "marital property" as "all propertyacquired by either or both spouses during the marriage and before the execution of aseparation agreement or the commencement of a matrimonial action, regardless of the form inwhich title is held" (Domestic Relations Law § 236 [B] [1] [c] [emphasis supplied]; see Fields v Fields, 15 NY3d 158,161-162 [2010]). Likewise, "[e]xpenses incurred prior to the commencement of an action for adivorce are marital debt to be equally shared by the parties upon an offer of proof that theyrepresent marital expenses" (Epstein v Messner, 73 AD3d at 845). "Where a party haspaid the other party's share of what proves to be marital debt, reimbursement is required"(id.; see Bogdan v Bogdan, 260 AD2d 521, 522 [1999]). As the interest in GreenFields was acquired during the marriage and before the commencement of the instant action, itwas marital property (see Domestic Relations Law § 236 [B] [1] [c]). Likewise, aloan in the approximate amount of $239,000 which was taken out simultaneously, was maritaldebt. Since the defendant established that he paid the plaintiff's share of the marital debt bysatisfying the loan, reimbursement is required (see Epstein v Messner, 73 AD3d at 845;see Bogdan v Bogdan, 260 AD2d at 522). Taking the market value of the interest inGreen Fields ($350,000), and applying the plaintiff's 50% distributive share thereto, she isentitled to an award of $55,500 after reimbursing the defendant the sum of $119,500 forsatisfying her portion of the marital debt.
The Supreme Court erred in awarding the defendant a separate property credit in the amountof $32,719.59. Where separate property has been commingled with marital property, there is apresumption that the commingled funds constitute marital property (see Massimi v Massimi, 35 AD3d400, 402 [2006]; Wade vSteinfeld, 15 AD3d 390, 391 [2005]; Lynch v King, 284 AD2d 309, 310 [2001];Judson v Judson, 255 AD2d 656, 657 [1998]). However, a party may overcome thispresumption "by presenting sufficient evidence that the source of the funds was separateproperty" (Phillips v Haralick, 70AD3d 663, 665 [2010]; see Masellav Masella, 67 AD3d 749, 750 [2009]; Bennett v Bennett, 13 AD3d 1080, 1082 [2004]). Here, thedefendant failed to present sufficient evidence to establish that the source of the funds in thedisputed profit-sharing plan account was separate property (see Massimi v Massimi, 35AD3d at 402; Lynch v King, 284 AD2d at 310; Diaco v Diaco, 278 AD2d 358,359 [2000]).
We decline to disturb the Supreme Court's determination that the plaintiff was entitled to anaward of 10% of the value of the various financial accounts delineated in the judgment ofdivorce, except a certain 529 college savings plan account. " 'A trial court is vested with broaddiscretion in making an equitable distribution of marital property, and unless it can be shown thatthe court improvidently exercised that discretion, its determination should not be disturbed' " (Aloi v Simoni, 82 AD3d 683, 685[2011] [internal quotation marks omitted], quoting Schwartz v Schwartz, 67 AD3d 989, 990 [2009]; see Saleh v Saleh, 40 AD3d 617,617-618 [2007]; Oster v Goldberg, 226 AD2d 515 [1996]). "Moreover, where thedetermination as to equitable distribution has been made after a nonjury trial, the trial court'sassessment of the credibility of witnesses is afforded great weight on appeal" (Aloi vSimoni, 82 AD3d at 685; see Schwartz v Schwartz, 67 AD3d at 990; Ivani vIvani, 303 AD2d 639, 640 [2003]). "While the distribution of marital property must beequitable, there is no requirement that the assets be split evenly" (Giokas v Giokas, 73 AD3d 688,689 [2010]; see Arvantides v Arvantides, 64 NY2d 1033, 1034 [1985]). Considering theplaintiff's distributive award with respect to the marital residence and Home Companion Servicesand Green Fields, and in light of the plaintiff's direct and indirect contributions, an award of 10%of the value of the financial accounts, except the 529 college savings plan account, is equitable.Moreover, the plaintiff's contention that the Supreme Court failed to consider the marital fundswhich were contributed to the 529 college savings account plan when it excluded that accountfrom the distributive award is speculative and without merit. Accordingly, we decline to disturbthe provision of the judgment which directed that the defendant was to receive all the proceeds ofthe 529 college savings plan account.
Furthermore, "the amount and duration of maintenance is a matter committed to the sounddiscretion of the trial court and every case must be determined on its unique facts" (Mazzone[*4]v Mazzone, 290 AD2d 495, 496 [2002]; see Mora v Mora, 39 AD3d 829,830 [2007]; Buchsbaum v Buchsbaum, 292 AD2d 553, 553-554 [2002]; Ferraro vFerraro, 257 AD2d 596, 597 [1999]). "The court may order maintenance in such amount asjustice requires, considering, inter alia, the standard of living of the parties during the marriage,the income and property of the parties, the distribution of marital property, the duration of themarriage, the health of the parties, the present and future earning capacity of both parties, theability of the party seeking maintenance to become self-supporting, and the reduced or lostlifetime earning capacity of the party seeking maintenance" (Kret v Kret, 222 AD2d 412,412 [1995], citing Domestic Relations Law § 236 [B] [6] [a]; see Meccariello v Meccariello, 46AD3d 640, 641-642 [2007]). While there was a substantial disparity in the parties' respectiveincomes, "financial disparity is only one factor to consider" in determining a maintenance award(Bernholc v Bornstein, 72 AD3d625, 629 [2010]). Moreover, "[a]n award of maintenance is not determined by actualearnings, but rather by earning capacity" (Arrigo v Arrigo, 38 AD3d 807, 808 [2007]). In light of thedistribution of the marital property and the plaintiff's own testimony regarding her expenses andearning capacity, we decline to disturb the Supreme Court's determination that the plaintiff wasnot entitled to future maintenance payments (cf. Kret v Kret, 222 AD2d at 412-413).
Finally, we decline to disturb the Supreme Court's determination that the plaintiff was notentitled to an award of an attorney's fee. In light of the substantial distributive award in favor ofthe plaintiff, she is capable of paying for her own attorney (see Celauro v Celauro, 295AD2d 388, 389 [2002]; cf. Levy vLevy, 4 AD3d 398, 398-399 [2004]). Rivera, J.P., Skelos, Sgroi and Miller, JJ., concur.