important New Decisions - February 12, 2012

Threat to Cancel Wedding Is Not Duress.

In Ramunno v Ramunno, --- N.Y.S.2d ----, 2012 WL 266464 (N.Y.A.D. 4 Dept.) Plaintiff commenced a action seeking a determination that the parties' Antenuptial Agreement was null and void on the grounds of , inter alia, duress. The Appellate Division held that Supreme Court property determined that defendant's threat to cancel the wedding unless plaintiff signed the agreement did not amount to duress (citing Colello v. Colello, 9 AD3d 855). The Appellate Division held that court erred, however, in sua sponte determining that plaintiff could not, prior to the marriage, waive her right to equitable distribution of defendant's pension (citing Strong v. Dubin, 75 AD3d 66, 72-73) or her right to maintenance (DRL 236[B][3][3] ), and modified the order accordingly.

Husband's Motion to Modify Divorce Judgment to Conform to Agreement Not Barred by the Doctrine of Laches, Although He Waited Eight Years to Make the Motion

In Markell v Markell--- N.Y.S.2d ----, 2012 WL 234084 (N.Y.A.D. 2 Dept.) in a stipulation of settlement dated May 14, 2002, the plaintiff former wife and the defendant former husband agreed, inter alia, that the defendant would pay child support on the fifteenth day of each month, and that unreimbursed health care expenses for their children would be divided equally after the plaintiff paid the initial sum of $500 per child. The Supreme Court issued Findings of Fact and Conclusions of Law dated December 10, 2002, which reflected this agreement. However, the judgment of divorce, which was entered on December 10, 2002, provided that the defendant was to pay child support on the first day of each month and two thirds of the children's unreimbursed health care expenses after the plaintiff paid the initial $500 per child. On or about December 10, 2010, the defendant moved to modify the judgment of divorce to "accurately reflect the provisions of the December 10, 2002 Findings of Fact and Conclusions of Law and [the] parties' May 14, 2002 Stipulation of Settlement." The Supreme Court denied the motion and, upon reargument, adhered to its original determination. The Supreme Court determined that the husband's motion to modify the judgment was barred by the doctrine of laches, in that he waited eight years to make the motion.
The Appellate Division modified the order made upon reargument. It observed that the doctrine of laches is an equitable doctrine which bars the enforcement of a right where there has been an unreasonable and inexcusable delay that results in prejudice to a party. The mere lapse of time without a showing of prejudice will not sustain a defense of laches. In addition, there must be a change in circumstances making it inequitable to grant the relief sought. Notably, prejudice may be established by a showing of injury, change of position, loss of evidence, or some other disadvantage resulting from the delay ( Skrodelis v. Norbergs, 272 A.D.2d at 316-317). In support of his motion, the defendant demonstrated that the subject provisions of the judgment were the result of a clerical error, as the parties had been adhering to the terms of the stipulation of settlement for approximately eight years, and that the plaintiff had only recently informed him at a Family Court proceeding that the judgment contained terms different from those in the stipulation of settlement and Findings of Fact and Conclusions of Law. In opposition, the plaintiff conceded that the parties had been complying with their stipulation of settlement since it was executed in May 2002. Since the parties had been operating under the terms of the stipulation of settlement for approximately eight years prior to the husband's motion, the plaintiff failed to demonstrate a change in circumstances that would render inequitable the relief sought by the defendant. Further, the plaintiff failed to show that she would be prejudiced by a modification of the judgment to accurately reflect the provisions contained in the stipulation of settlement and Findings of Fact and Conclusions of Law .

Court Should Not Rely on New Statutory Formula in Domestic Relations Law 236(b)(5-a) in Actions Commenced Prior to its Effective Date
In Truglia v Truglia, --- N.Y.S.2d ----, 2012 WL 233765 (N.Y.A.D. 2 Dept.) the Appellate Division held that in determining an award of pendente lite maintenance, a court should not rely on the new statutory formula in Domestic Relations Law 236(B)(5-a) in actions, such as this one, commenced prior to its effective date (see Ingersoll v. Ingersoll, 86 AD3d 684, 685). Here, however, the Supreme Court's award, while erroneously arrived at using the new statutory formula, was upheld in accordance with the prior standard under former Domestic Relations Law 236(B)(6)(a). The award of pendente lite maintenance reflected " 'an accommodation between the reasonable needs of the moving spouse and the financial ability of the other spouse... with due regard for the preseparation standard of living.

Plaintiff Made Direct Contributions to the Business Established by Husband Prior to Parties Marriage by Serving as Company Bookkeeper for Approximately Seven Years
In Scher v Scher,--- N.Y.S.2d ----, 2012 WL 233930 (N.Y.A.D. 2 Dept.) the Appellate Division held that contrary to the determination of the Supreme Court, the plaintiff was entitled to share in the appreciated value of Home Companion Services of New York, Inc., which the defendant incorporated approximately three years prior to the marriage. Separate property includes "property acquired before [the] marriage" (Domestic Relations Law 236[B] [1][d][1] ), such as the business interest in Home Companion Services in this case, as well as "the increase in value of [such] separate property, except to the extent that such appreciation is due in part to the contributions or efforts of the other spouse" (Domestic Relations Law 236[B][1][d][3] ). In order for appreciation in the value of separate property to be deemed marital property subject to equitable distribution, the nontitled spouse must demonstrate the manner in which his or her contributions resulted in the increase in value and the amount of the increase which was attributable to his or her efforts. Here, the Supreme Court improvidently exercised its discretion in finding that the plaintiff made no direct or indirect contributions to the appreciation of Home Companion Services which resulted in the increase in the value of the company. The evidence established that the plaintiff made direct contributions to the business by serving as the company bookkeeper for approximately seven years. The evidence further established that the defendant's active participation in expanding the business was aided and facilitated by the plaintiff's indirect contributions as homemaker and occasional caretaker of one of his children from a prior marriage. Moreover, the defendant failed to establish that the plaintiff committed "wasteful dissipation" of marital assets in her role as bookkeeper. The Appellate Divison held that in light of the plaintiff's direct and indirect contributions, the Supreme Court should have awarded her 20% of the appreciated value of Home Companion Services. As the parties stipulated that the appreciated value over the course of 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 to an equitable share of the appreciated value of the marital residence over the course of the marriage, notwithstanding that the residence was the separate property of the defendant until March 2005, when the property was transferred to the plaintiff and defendant as tenants by the entirety. The increase in the value of separate property remains separate property except to the extent that such appreciation is due in part to the contributions or efforts of the other spouse at which point the increase in value becomes marital property, in accordance with the rule that the definition of marital property is to be broadly construed, given the principle that a marriage is an economic partnership. The parties stipulated to a neutral appraisal which found that the marital residence had increased in value by $40,000 due to "active appreciation" in the form of physical improvements, and $300,000 due to "passive appreciation" in the form of "market forces, without regard to any improvements, except normal maintenance." Since the record established that the $340,000 in appreciation was attributable to the efforts of both parties, the plaintiff was entitled to share equitably in that increased value. Applying the plaintiff's 50% distributive share to the $340,000 in appreciation, she was entitled to an award of $170,000 for the appreciated value in the martial residence from the date of marriage. In light of the plaintiff's contributions, the Supreme Court should have awarded the parties equal shares in the increase in the value of the marital residence.
The Appellate Division found that Supreme Court erred in finding that the interest in Green Fields East Holding, LLC , which was held in the defendant's name, was the separate property of the defendant. Domestic Relations Law 236 defines "marital property" as "all property acquired by either or both spouses during the marriage and before the execution of a separation agreement or the commencement of a matrimonial action, regardless of the form in which title is held". Likewise, expenses incurred prior to the commencement of an action for a divorce are marital debt to be equally shared by the parties upon an offer of proof that they represent marital expenses. Where a party has paid the other party's share of what proves to be marital debt, reimbursement is required. As the interest in Green Fields was acquired during the marriage and before the commencement of the instant action, it was marital property. Likewise, a loan in the approximate amount of $239,000 which was taken out simultaneously, was marital debt. Since the defendant established that he paid the plaintiff's share of the marital debt by satisfying the loan, reimbursement was required. Taking the market value of the interest in Green Fields ($350,000), and applying the plaintiff's 50% distributive share thereto, she was entitled to an award of $55,500 after reimbursing the defendant the sum of $119,500 for satisfying her portion of the marital debt.
The Appellate Division held that Supreme Court erred in awarding the defendant a separate property credit in the amount of $32,719.59. Where separate property has been commingled with marital property, there is a presumption that the commingled funds constitute marital property. However, a party may overcome this presumption by presenting sufficient evidence that the source of the funds was separate property. Defendant failed to present sufficient evidence to establish that the source of the funds in the disputed profit-sharing plan account was separate property.
Considering the plaintiff's distributive award with respect to the marital residence and Home Companion Services and Green Fields, and in light of the plaintiff's direct and indirect contributions, an award of 10% of the value of the parties financial accounts, except a 529 college savings plan account, was equitable. It declined to disturb the provision of the judgment which directed that the defendant was to receive all the proceeds of the 529 college savings plan account.
In light of the distribution of the marital property and the plaintiff's own testimony regarding her expenses and earning capacity, the Appellate Division declined to disturb the Supreme Court's determination that the plaintiff was not entitled to future maintenance payments and declined to disturb the Supreme Court's determination that the plaintiff was not entitled to an award of an attorney's fee. In light of the substantial distributive award in favor of the plaintiff, she was capable of paying for her own attorney.