| Whitaker v Case |
| 2014 NY Slip Op 07707 [122 AD3d 1015] |
| November 13, 2014 |
| Appellate Division, Third Department |
[*1]
| Brian K. Whitaker, Appellant-Respondent, v Carol L.Case, Respondent-Appellant. |
Lowell R. Siegel, Altamont, for appellant-respondent.
Cynthia Feathers, Glens Falls, for respondent-appellant.
Alexandra Verrigni, Rexford, attorney for the children
Lynch, J. Cross appeals from a judgment of the Supreme Court (Powers, J.), enteredSeptember 17, 2013 in Schenectady County, ordering, among other things, equitabledistribution of the parties' marital property, upon a decision of the court.
The parties were married in September 1994 and have a daughter (born in 1995) anda son (born in 1998). Shortly after defendant (hereinafter the wife) left the maritalresidence in April 2008, plaintiff (hereinafter the husband) commenced this divorceaction. In the ensuing litigation, Supreme Court initially awarded the parties joint legalcustody of the children, with the husband maintaining primary physical custody. Thecourt also ordered the children and the wife to engage in therapeutic counseling,directing both parties to cooperate in the process. Following an extended bench trial thatcommenced in August 2010 and concluded in April 2011, Supreme Court issued anorder in September 2012 which, as pertinent here, granted the parties a divorce on mutualgrounds of cruel and inhuman treatment, classified and ordered the equitable distributionof the parties' marital property, granted the husband sole legal and physical custody of thechildren without any award of visitation to the wife, retroactively suspended the wife'sobligation to pay child support, directed that certain child support payments be returnedto the wife, and directed the husband to pay the wife limited costs. A judgment ofdivorce was entered [*2]in September 2013 and bothparties have appealed.[FN1]
The wife maintains that Supreme Court erred in awarding the husband two bankaccounts he opened jointly, one with his daughter and the other with his son, both in theprincipal sum of $100,000. "[W]hile the method of equitable distribution of maritalproperty is properly a matter within the trial court's discretion, the initial determination ofwhether a particular asset is marital or separate property is a question of law"(DeJesus v DeJesus, 90 NY2d 643, 647 [1997]; see Owens v Owens, 107AD3d 1171, 1173 [2013]; Armstrong v Armstrong, 72 AD3d 1409, 1415 [2010]).Supreme Court determined that the husband funded each account, at least in part, with$187,000 in funds received and/or inherited from his aunt. The bank records, however,do not sustain the court's findings as to the daughter's account. The parties' joint SEFCUchecking account statements show that $100,000 was withdrawn on December 21, 2005by transfer number 1930. Notably, the husband acknowledged this account was used asthe parties' primary checking account. That same day, $100,000 was deposited into acertificate of deposit in the name of the husband and his daughter by transfer number1930. This match verifies that marital funds were utilized to fund the jointfather/daughter account. Accordingly, we find that the wife's distributive share should beincreased by $50,000.[FN2]
As for the joint account that the husband opened with his son, the SEFCU statementsshow that, on December 21, 2005, the husband withdrew $100,000 from an accounttitled in his name "as settlor" by transfer number 1550. That same day, by transfernumber 1550, $100,000 was placed in a certificate of deposit in the husband's name,jointly with his son. This match identifies the settlor account as the source of funds forthe joint account. Separate property includes funds received by gift or inheritance(see Domestic Relations Law § 236 [B] [1] [d] [1]). The husbandtestified that he funded the settlor account entirely with cash received and inherited fromhis aunt, which he initially stored in a security box at home. Notably, the wife does notdispute the fact that the husband placed funds received from his aunt in a security box,but maintains that since she had a key, the funds were transformed into marital property.This contention is not convincing. On the record presented, we decline to disturbSupreme Court's classification of this joint account as the husband's separateproperty.[FN3] Therecord also supports Supreme Court's classification of various savings bonds as thehusband's separate property, purchased with funds received from his aunt.
[*3] Next, the wife contends that Supreme Court erred inclassifying as marital property a $100,000 payment that she received in 2003 aftersettling an employment discrimination claim. Compensation received for personalinjuries constitutes separate property for purposes of equitable distribution (seeDomestic Relations Law § 236 [B] [1] [d] [2]). By its terms, the settlementagreement resolved the wife's claim of employment discrimination without an admissionof liability, specified that no damages were being paid for any prior or future wage lossclaim and provided for the payment of her counsel fees. All things being equal, this fundwould constitute the wife's separate property. The record shows, however, that afterinitially depositing the proceeds into an individual account on July 30, 2003, the wifecreated a joint account with the husband on August 18, 2003. Thereafter, the husbandwithdrew the accrued interest on the account. Although the wife testified that thehusband threatened to harm her unless she added his name to the account, Supreme Courtdiscredited this explanation and found that she transmuted the funds into marital propertythrough the joint account. We defer to the court's credibility assessment. The transfer ofseparate property, as here, into a joint bank account raises a presumption that the fundsare marital (see Schwalb vSchwalb, 50 AD3d 1206, 1209 [2008]; Judson v Judson, 255 AD2d 656,657 [1998]).
The analysis, however, must proceed further given the separate property source andthe use of this account. With limited exception, the principal in the account remainedintact until 2008 when, with Supreme Court's approval, the wife utilized the $100,000balance to construct a home on a 6.4-acre lot on Pryne Road in the Town of Glen,Montgomery County. Up to that point, the husband routinely withdrew the accruedinterest to maintain the $100,000 balance. As an exception, the SEFCU accountstatements support the wife's contention that the Pryne Road lot was purchased in 2004with $13,000 in funds taken from the account. An adjacent lot was also purchased, whichremains vacant. The wife explained that she utilized her workers' compensation disabilitypayments, which arose out of a 1996 automobile accident, to replenish the balance backto $100,000. On this record, it is evident that the account was funded entirely with thewife's separate property.
Since the two lots were purchased during the marriage, they are presumed to bemarital property (see Domestic Relations Law § 236 [B] [1] [c]; Halse v Halse, 93 AD3d1003, 1005 n 1 [2012]). Supreme Court did not abuse its discretion in rejecting theparties' respective claims that separate property was utilized to purchase the vacant lot.We find that the court properly treated the entire property as marital property, but erred innot recognizing a credit in the wife's favor. Notwithstanding the fact that the settlementfunds were placed in a joint account, those funds were not commingled with othermarital assets. To the extent that principal withdrawals were made, the wife replenishedthe principal balance with her own separate property. Given this content, we find that thewife should have received a $100,000 credit for the purchase of the Pryne Road lot andthe construction of the home (see Chernoff v Chernoff, 31 AD3d 900, 903 [2006]; Milnarik v Milnarik, 23 AD3d960, 962-963 [2005]; Zanger v Zanger, 1 AD3d 865 [2003]; Judson vJudson, 255 AD2d at 657; compare Campfield v Campfield, 95 AD3d 1429, 1430[2012]). Since Supreme Court awarded the husband $69,000 based on a cumulativevalue of $138,000 for the land and residence, we reduce the award to him to $19,000.While we recognize that the wife also secured a $20,000 loan from SEFCU and another$8,000 from relatives to complete the construction, Supreme Court duly noted that thesewere postcommencement loans that the court did not authorize.
For his part, the husband challenges Supreme Court's calculation of the award to thewife of an equitable share of the parties' property located at Rynex Corners Road in [*4]Pattersonville, Schenectady County. The parties stipulatedthat this was marital property, valued at $186,000. According the wife a $25,000 separateproperty credit, the court awarded the property to the husband, with a correspondingdistributive award of $118,000 to the wife. Essentially, the husband maintains that thecourt erred in calculating the wife's share by not subtracting the credit from the totalvalue before dividing the remainder in half. We agree, for the credit should be appliedagainst the value of the marital asset acquired with the separate property funds (seeJudson v Judson, 255 AD2d at 657). Utilizing this formula, we reduce the wife'sdistributive award to $105,500.
The husband also maintains that Supreme Court erred in awarding the wife a 50%equitable share of the Altamont Avenue property located in the City of Schenectady,Schenectady County. Since the husband acquired the property in 2003, it initiallyqualified as his separate property (see Domestic Relations Law§ 236 [B] [1] [d] [1]; Keil v Keil, 85 AD3d 1233, 1235 [2011]). He did so,however, through a $45,000 mortgage and a $10,000 loan from his parents. The wifetestified that she was added to the mortgage "as soon as [she] moved in," which was priorto the marriage. Supreme Court credited her testimony that both the mortgage and theparents' loan were paid off with marital funds, as well as funds that the wife receivedfrom a workers' compensation claim, and rejected the husband's contention that themortgage was satisfied with funds from his aunt. In deference to the court's credibilitydetermination, we discern no abuse of discretion in its classification of this property as amarital asset (see Fields vFields, 15 NY3d 158, 162-163 [2010]; Lurie v Lurie, 94 AD3d 1376, 1378 [2012]).
Given the absence of proof, Supreme Court aptly declined to award either party aninterest in the other's pension interest. That being said, the court duly awarded thehusband a Majauskas share of the wife's federal Thrift Savings Plan.
We turn next to Supreme Court's directive retroactively suspending the wife's childsupport obligation and refunding certain child support made, challenged by both thehusband and the attorney for the children.[FN4] A noncustodial parent's duty to supporthis or her children until the age of 21 (see Family Ct Act § 413 [1][a]) may be suspended where he or she establishes that the custodial parent "wrongfullyinterfered with or withheld visitation" (Matter of Luke v Luke, 90 AD3d 1179, 1182 [2011];see Domestic Relations Law § 241; Usack v Usack, 17 AD3d736, 737-738 [2005]). Here, Supreme Court's decision describes a household rifewith animosity and overtones of domestic violence. Indeed, the protracted hostilitybetween the parties led the court to grant a mutual divorce pursuant to DomesticRelations Law § 170 (1) because "both [were] batterers and BOTH [were]victims." After one particularly abusive event, the wife left the household and the courtordered her and the children to engage in therapeutic visitation, with the husband'sassistance. Regrettably, these sessions failed and were discontinued in March 2010, andthe children refused further contact with the wife. In our view, while the record showsthat the wife's behavior was not above reproach, it also supports the court's finding thatthe husband behaved badly in both his demeanor and his efforts to promote therapeuticcounseling. Notably, for example, the initial therapeutic counselor asserted that heundermined the therapeutic process, and the court-appointed psychologist went evenfurther, describing the husband as a "parent alienator" who "brainwashed" the childrenagainst the wife. Accordingly, we find a reasoned [*5]basis in this record for Supreme Court's determination tosuspend the wife's child support obligations pending the husband's demonstration of agood faith effort to assist in the therapeutic process undoubtedly needed to reunite thewife with the children. Further, there is no indication that this remedy presented any riskto the children becoming public charges (see Usack v Usack, 17 AD3d at740).
Upon its finding of interference, Supreme Court was authorized to suspend childsupport payments (see Domestic Relations Law § 241; Alan D.Sheinkman, Practice Commentaries, McKinney's Cons Laws of NY, Book 14, DomesticRelations Law § 241 at 22-23). Here, during the pendency of herapplication to suspend her child support obligation, the wife paid child support directlyto the husband from November 2009 through April 22, 2011. Thereafter, pursuant to anorder entered May 5, 2011, the wife paid child support to the support collection unit tobe held pending resolution of her interference claim. Under the circumstances presented,we perceive no abuse of discretion in the court's determination to permit the wife's childsupport payments to be held in escrow during the pendency of the issue (see Matter of Lew v Sobel, 91AD3d 648, 648 [2012]). Similarly, we find that, under the circumstances, the courtproperly suspended her child support obligation retroactively, but only to the date theescrow fund was established (compare Matter of Luke v Luke, 90 AD3d at 1182;Matter of Alexander v Alexander, 129 AD2d 882, 884 [1987]) and directed thereturn of the escrowed monies to her. In contrast, we find that Supreme Court improperlyadjusted the distributive award payable to the wife to reimburse her for the child supportpayments that she actually made to the husband for the benefit of the children during thependency of her application. In our view, this adjustment violated the "strong publicpolicy against restitution or recoupment of support overpayments" (Johnson v Chapin, 12 NY3d461, 466 [2009] [internal quotation marks and citation omitted]; see Katz v Katz, 55 AD3d680, 683 [2008]). We see no reason to depart from that policy in this case.
Finally, given the respective financial circumstances of the parties and the dynamicsof this case, Supreme Court did not abuse its discretion in declining the wife's request forcounsel fees, while awarding her costs incurred as a result of the husband's misconduct(see DeCabrera v Cabrera-Rosete, 70 NY2d 879, 881 [1987]). Not to beoverlooked is that the court duly sanctioned the husband for his obstructivebehavior.
McCarthy and Egan Jr., JJ., concur.
Stein, J.P. (concurring). While we agree with the result reached by the majority, weare compelled to voice our concerns regarding the practical effect of, and policyconsiderations surrounding, the retroactive suspension of a noncustodial parent'sobligation to pay child support. According to the longstanding jurisprudence of thisCourt, in certain circumstances, such as here, in which a custodial parent interferes withthe parental rights of the noncustodial parent, a court may suspend the noncustodialparent's child support obligation retroactive to the date an application for suchsuspension was made (seeMatter of Luke v Luke, 90 AD3d 1179, 1182 [2011]; Matter of Alexander vAlexander, 129 AD2d 882, 884 [1987]; but see Alan D. Scheinkman,Practice Commentaries, McKinney's Cons Laws of NY, Book 14, Domestic RelationsLaw § 241 at 23). While we interpret the relevant statutes as prohibiting thechild support payor from unilaterally discontinuing his or her payments during thependency of a suspension application in the absence [*6]of a court order permitting such action, we are concernedthat our previous decisions—and, to a certain extent, the majority decisionhere—which apply a suspension of child support retroactively, could actuallypromote such self-help. We, therefore, write separately to advocate for clarificationand/or a modification of our precedent on this issue.
In our view, as the following examples illustrate, retroactivity of child supportsuspensions cannot be effectuated as a practical matter. Where a child supportpayor—who makes an application to suspend payments due to the custodialparent's interference with the payor's parental relationship—continues to complywith his or her child support obligation payments while the application is pending, publicpolicy prevents recoupment of the payments made in the event the court ultimately makesa finding of parental interference warranting a suspension. A similar result occurs wherethe payor does not make payments during the pendency of a suspension application, inthat the statute prohibits the court from canceling the accrued arrears upon a subsequentfinding of interference (see Domestic Relations Law § 241; Alan D.Scheinkman, Practice Commentaries, McKinney's Cons Laws of NY, Book 14, DomesticRelations Law § 241 at 23; Matter of Rivera v Echavarria, 48 AD3d 578, 578 [2008];Ledgin v Ledgin, 36 AD3d669, 670 [2007]; Doyle v Doyle, 198 AD2d 256, 257 [1993]; but seeMatter of Alexander v Alexander, 129 AD2d at 883-884). However, in the lattersituation, the noncustodial parent is temporarily relieved of his or her financialobligation, while the custodial parent is deprived of support for the children without thebenefit of a judicial determination that there is at least some arguable merit to thesuspension application and a consideration of the financial consequences to the parentsand the children. In either event, it seems that retroactivity is but a legal concept withoutany practical application.
Considering the foregoing, we are of the view that a retroactive suspension of childsupport payments is appropriate only where, as here, the child support payor has, withcourt authorization, either paid child support into an escrow account or has obtained atemporary court order suspending payments during the pendency of the suspensionapplication. In our opinion, requiring that child support payments be made in escrow ispreferable, as it ensures that the noncustodial parent fulfills his or her child supportobligations if the case is ultimately decided in favor of the custodial parent, while alsomaking certain that the financial support is readily available for court-directedwithdrawals, if necessary, for the custodial parent to meet the needs of the children(see Alan D. Scheinkman, Practice Commentaries, McKinney's Cons Laws ofNY, Book 14, Domestic Relations Law § 241 at 23). If, on the other hand,the noncustodial parent prevails, a subsequent suspension of child support can truly beretroactive and allow for the return of monies paid into the escrow account withoutviolating the public policy against recoupment and without encouraging the accrual ofarrears.
Clark, J., concurs. Ordered that the judgment is modified, on the law, without costs,by reversing so much thereof as (1) classified the joint account of plaintiff and hisdaughter as separate property, (2) failed to award defendant a separate property creditagainst the acquisition of the cumulative Pryne Road property, (3) miscalculated theseparate property credit due defendant for the Rynex Road property, and (4) ordered therefund of child support overpayments; award defendant half of the value of said jointaccount naming plaintiff and the daughter ($50,000), award defendant a $100,000 creditfor the purchase of the Pryne Road property, resulting in a reduction of plaintiff's [*7]distributive share for this asset from $69,000 to $19,000,reduce defendant's distributive share in the Rynex Road property to $105,500, and awardplaintiff a refund of $25,447.85 in child support for the period of November 2009through April 22, 2011; and, as so modified, affirmed.
Footnote 1:Although the husbandonly appealed from the September 2012 order, rather than the judgment entered inSeptember 2013, since the order is not materially different from the judgment, we deemthe appeal to have been taken from the judgment (see CPLR 5520 [c]; Bukowski v Clarkson Univ.,86 AD3d 736, 737 n [2011], affd 19 NY3d 353 [2012]).
Footnote 2:On November 21, 2008,the $100,000 was transferred into a different joint account in the name of the husbandand the daughter from which a check in the amount of $25,000 was paid to the husband'sformer attorney and an additional $5,000 was withdrawn.
Footnote 3:This account was closedon October 5, 2009 with a check in the amount of $100,025.25 issued to the husband.
Footnote 4:Subsequent to the filingof this appeal, the suspension of the wife's child support payments was lifted by orderentered April 24, 2014.