| Mula v Mula |
| 2015 NY Slip Op 06757 [131 AD3d 1296] |
| September 10, 2015 |
| Appellate Division, Third Department |
[*1](September 10, 2015)
| Paul J. Mula, Appellant-Respondent, v Jo-Anne Mula,Respondent-Appellant. |
Blatchly & Simonson, PC, New Paltz (Bruce D. Blatchly of counsel), forappellant-respondent.
Larkin, Ingrassia & Brown, LLP, Newburgh (Azra J. Khan of counsel), forrespondent-appellant.
Clark, J. Cross appeal from a judgment of the Supreme Court (McGinty, J.), enteredFebruary 12, 2014 in Ulster County, ordering, among other things, equitable distributionof the parties' marital property, upon a decision of the court.
Plaintiff (hereinafter the husband) and defendant (hereinafter the wife) were marriedin November 1968. The husband is a certified public accountant (hereinafter CPA),earning his license in 1981, and the sole proprietor of an accounting practice that he hasowned since 1997. During the course of the marriage, the wife was primarily involvedwith the upkeep of the parties' home and raising their three children, the first of whichwas born in 1973,[FN1] while the husband was the primarywage earner. Over the ensuing 42 years, the parties acquired a number of assetsincluding, in addition to the marital residence, a home on Doris Lane in Lake Katrine,Ulster County, a home on Newkirk Avenue in the City of Kingston, Ulster County, anapartment in Tudor City, New York City, and two condominiums in St. Croix.
[*2] In January 2011, the husband commenced thisdivorce action asserting an irretrievable breakdown of the parties' marriage. The wifejoined issue with a counterclaim alleging abandonment, cruel and inhuman treatment andirretrievable breakdown of the marriage, to which the husband replied. Subsequently, theparties agreed that they would each withdraw their answers to thecomplaint/counterclaim and would obtain a mutual divorce upon the ground of anirretrievable breakdown. A trial on the remaining issues ensued in May 2012, followingwhich Supreme Court, among other things, granted a divorce, ordered equitabledistribution of the parties' various assets and liabilities, awarded the wife durationalspousal support and declined to award either party counsel fees. The husband appealsand the wife cross-appeals.
Initially, the findings of fact and conclusions of law, incorporated by reference intothe judgment of divorce, read as follows: "the [wife] consents to the [husband] retaininghis CPA practice and enhanced earning capacity, in exchange for [the marital residenceand another parcel]." In accordance with this, the husband was awarded $255,000,representing the full value of the CPA practice, and $39,000, representing the full valueof his enhanced earnings. Thus, per the plain language of the order, the husband wasawarded 100% of both of these assets. However, on appeal, both of the parties agree thatthe manner in which Supreme Court allocated marital assets resulted in the wifeeffectively being awarded 50% of the value of the husband's professional practice andlicense,[FN2] adistributive award that the husband contends was in error.
When distributing marital property, the trial court has "broad discretion" and isaccorded "substantial flexibility in fashioning an appropriate decree based on what itviews to be fair and equitable under the circumstances" (Mahoney-Buntzman vBuntzman, 12 NY3d 415, 420 [2009]; see Vertucci v Vertucci, 103 AD3d 999, 1001 [2013]). Therecord here demonstrates that this was a long-term marriage of over 40 years and that thewife provided support for the husband during much of his education. Among otherthings, she undertook primary responsibility for the home and raised their three childrenwhile the husband pursued his career. Moreover, the wife otherwise contributed to thehusband's establishment of his professional practice. Under such circumstances, we areunpersuaded that Supreme Court's award regarding these assets was an abuse ofdiscretion (see Litman v Litman, 280 AD2d 520, 522 [2001], lv denied 97NY2d 613 [2002]; White v White, 204 AD2d 825, 827 [1994], lvdismissed 84 NY2d 977 [1994]).
The husband also contends that Supreme Court erred in calculating maintenance byfailing to reduce the available income to reflect the distributive award of his professionalpractice and license. At issue is the rule against double counting, which provides that,"[o]nce a court converts a specific stream of income into an asset, that income may nolonger be calculated into the maintenance formula and payout" (Grunfeld vGrunfeld, 94 NY2d 696, 705 [2000]). The husband's solely owned accounting firmis a service business for purposes of this rule (see Keane v Keane, 8 NY3d 115, 122 [2006]). Withoutfurther elaboration, Supreme Court utilized an annual income of $100,000 to calculatethe maintenance award to be paid to the wife. By comparison, the fair market value of thehusband's business was calculated using his reported annual income from 2007 through2010, ranging from about $98,000 to $109,000. As such, it is evident that the court didnot make the necessary adjustment to account for the distributive award of the business.Insofar as the license is concerned, however, the record shows that the expert [*3]who prepared the joint valuation allocated compensation asbetween profits and payments for services rendered to avoid double counting and noadjustment is necessary. Given that the record is sufficiently developed, and in theinterest of judicial economy, we will make the adjustment necessary to account for thedistribution of the business (seeSmith v Smith, 8 AD3d 728, 731 [2004]). Factoring in the aforementionedadjustment and considering the equitable distribution award as modified herein, weconclude that $50,000 should be utilized as the income available for maintenancepurposes and reduce the maintenance award to $1,000 a month. However, inasmuch asSupreme Court properly cited several relevant statutory factors and gave a reasonedanalysis, it did not abuse its discretion in awarding durational maintenance (seeDomestic Relations Law § 236 [B] [6] [a] [1]-[20]; Curley v Curley, 125 AD3d1227, 1228 [2015]; Aleccav Alecca, 111 AD3d 1127, 1129-1130 [2013]; Roberto v Roberto, 90 AD3d1373, 1376 [2011]).
Next, "while the method of equitable distribution of marital property is properly amatter within the trial court's discretion, the initial determination of whether a particularasset is marital or separate property is a question of law" (DeJesus v DeJesus, 90NY2d 643, 647 [1997]; accordWhitaker v Case, 122 AD3d 1015, 1016 [2014]). Although the record before ussupports Supreme Court's determination that the wife's investmentaccounts—inherited from her father upon his death and never transferred into ajoint account—remain her separate property (see Domestic Relations Law§ 236 [B] [1] [d] [1]; Whitaker v Case, 122 AD3d at 1016-1017),we do find error in the court's classification of certain real property assets. Specifically,we agree with the wife that Supreme Court erred in determining that the Tudor Cityapartment and one of the St. Croix condominiums were marital property and not herseparate property. The Doris Lane home, however, was properly classified as maritalproperty.
"[P]roperty acquired during the marriage is presumed to be marital property, and theparty seeking to establish that a particular item is indeed separate property bears theburden of proof in this regard" (Seidman v Seidman, 226 AD2d 1011, 1012[1996]). Because the properties currently being discussed were all acquired during themarriage, they are presumed to be marital in nature, and our inquiry relates solely towhether the wife met her shifted burden of demonstrating that such properties wereseparately owned by her (seeCease v Cease, 72 AD3d 1450, 1451 [2010]). To this end, "evidence thatproperty obtained during a marriage was a gift to only one spouse, if unrebutted, cansatisfy the donee's burden to prove that it is separate property" (Keil v Keil, 85 AD3d1233, 1236 [2011]; see Saiav Saia, 91 AD3d 1110, 1110 [2012]). However, evidence that property has beenconveyed to only one spouse is not necessarily dispositive as to whether the subjectproperty is marital or separate (see Cease v Cease, 72 AD3d at 1451).
Addressing the home on Doris Lane first, the wife testified that, in 1978, herfather—who jointly owned the property with her brother—allowed theparties to live in the home in exchange for a small monthly fee that, apparently, was usedto pay the associated property taxes. The wife's father thereafter conveyed the propertysolely to her in 1997 and, consequently, only her name was on the deed.[FN3] The husband, on theother hand, testified that the $250 fee that the parties paid to the wife's father each monthwas in an effort to purchase the property—an effort that was successful afterapproximately 10 years—and that all taxes and utilities were paid from maritalincome. The husband further explained that the home was deeded solely to the wifebecause, by that point in time, he had become the sole owner of the accounting firm andsuch [*4]conveyance operated to reduce personal riskshould he be sued in his professional capacity. According due deference to SupremeCourt's determination, which credited the husband's testimony and found that theeconomic and noneconomic contributions by him weighed in favor of deeming thisparcel a marital asset, we find that the wife was unable to meet her shifted burden torebut the marital property presumption. Thus, the Doris Lane home was properlycharacterized as marital property.[FN4] However, in light of the discussion setforth above, we nonetheless find no error in Supreme Court's determination to award100% of the agreed-upon value of the Doris Lane property to the wife.
Next, with respect to the ownership of the Tudor City apartment, it was purchased inJuly 1997 with the acquisition of certain stock in the wife's name, paid for entirely withfunds from one of her investment accounts. Because property acquired in exchange forseparate property, even when acquired during the marriage, is indeed separate property(see Owens v Owens, 107AD3d 1171, 1172-1173 [2013]; Chernoff v Chernoff, 31 AD3d 900, 902-903 [2006]), wefind that the wife sufficiently met her burden of overcoming the marital propertypresumption, and the Tudor City apartment should have been declared her separateproperty. Supreme Court erred in finding otherwise. Likewise, documentary andtestimonial evidence make it clear that one of the St. Croix condominiums, unit J-10specifically, was purchased solely using the wife's separate property as collateral for aloan and is deeded only to her. Therefore, this asset also constitutes the wife's separateproperty.[FN5]Accordingly, the Tudor City apartment and unit J-10 need not be sold as previouslydirected by Supreme Court.
Keeping in mind that there is no requirement that each item of marital property bedistributed equally and the trial court has discretion in fashioning a division of property(see Bellizzi v Bellizzi, 107AD3d 1361, 1362 [2013]), the parties should retain their IRA accounts, even despitethe wife's somewhat larger account (see Musacchio v Musacchio, 107 AD3d 1326, 1330[2013]). While it is true that Supreme Court incorrectly stated the value of the wife'saccount—deeming its value to be $23,000 instead of $56,365.91—we findthis error to be harmless.
Finally, in light of the pertinent statutory factors, we discern no reason to disturbSupreme Court's determination to deny the wife's request for counsel fees (see e.g. Soles v Soles, 41AD3d 904, 908 [2007]). The parties' remaining contentions have been consideredand have been found to be without merit.
[*5] Lahtinen, J.P., Lynch and Devine, JJ., concur. Ordered that the judgment ismodified, on the law, without costs, by reversing so much thereof as (1) awardeddefendant maintenance in the amount of $1,500 per month, (2) deemed the Tudor Cityapartment and the St. Croix condominium, unit J-10, to be marital property, and (3)ordered said properties to be sold; defendant is awarded maintenance in the amount of$1,000 per month and the Tudor City apartment and said St. Croix condominium areclassified as defendant's separate property; and, as so modified, affirmed.
Footnote 1:Child support andcustody are not at issue.
Footnote 2:In distributing themarital property, Supreme Court awarded the wife assets that are comparable in value tothe combined value of the husband's enhanced earnings and professional practice.
Footnote 3:The parties residedtogether in the Doris Lane home until approximately 2000.
Footnote 4:It should be noted,however, that, because the Doris Lane home is marital property, it was unnecessary forthe husband to provide evidence of an appreciation in the value of the home due to hisefforts before becoming entitled to an equitable share in its value (see generally Ceravolo vDeSantis, 125 AD3d 113, 116 [2015]).
Footnote 5:The same cannot be saidfor unit N-3, which was purchased with the use of marital property as collateral. Thus,that parcel was properly deemed marital property.