Opinion
Index No. 2022-50729
07-06-2022
M.W., Plaintiff, v. R.W., Defendant.
Counsel for Plaintiff HOSKINS LLP By: Sharon T. Hoskins Esq. Counsel for Defendant Cohen Goldstein, LLP By: Glenn S. Goldstein
Unpublished Opinion
Counsel for Plaintiff HOSKINS LLP By: Sharon T. Hoskins Esq.
Counsel for Defendant Cohen Goldstein, LLP By: Glenn S. Goldstein
ARIEL D. CHESLER, J.S.C.
The following e-filed documents, listed by NYSCEF document number (Motion 012) 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47, 48, 49, 50, 51, 52, 53, 54, 55, 56, 57, 58, 59, 60, 61, 62, 63, 64, 65, 66, 67, 68, 74 were read on this motion to/for POST JUDGMENT OTHER.
Upon the foregoing documents, it is
BACKGROUND
This matter was commenced in 2014. During the proceedings, Defendant relocated from Manhattan to a former marital property in North Carolina. In April 2017, after the Court granted Plaintiff a divorce, Defendant chose to represent himself for the remainder of the trial and his counsel withdrew from representation. Trial on financial issues was scheduled to begin August 8, 2017. Defendant's repeated requests for an adjournment were denied.
On July 24, 2017, the Court directed Defendant to submit an affidavit from his treating physician to support his claim that his medical condition prevented him from proceeding to trial. No affidavit was provided in advance of the trial. On August 4, 2017, however, Defendant submitted a note from a physician's assistant at a healthcare center in North Carolina stating that he had preexisting medical conditions, including seizures, and that he had been advised to avoid stressors that could trigger seizures, such as travel, pending testing, and further evaluation.
When Defendant failed to appear for trial on August 8, 2017, the Court determined him to be in default and held an inquest. After the inquest, a judgment of divorce was entered on or around October 13, 2017.
Defendant then moved to vacate the judgment. On or around December 23, 2020, the Court denied the motion. The Court explained that at the time of the trial/inquest, Defendant had been told he must appear numerous times but failed to do so. The Court noted that Defendant was not purporting to have an excusable default but rather claimed that the Judgment was rife with errors.
The Court further explained that the vacatur motion had been pending for two years because the parties had entered into a series of stipulations and had been trying to resolve the post-judgment concerns. Despite these efforts, they were unsuccessful. Critically, although the parties had agreed to the sale of the North Carolina residence ("Blowing Rock"), Defendant obstructed the sale and refused to comply with the stipulations, and Plaintiff had to make various motions which the Court then had to decide.
Ultimately, the Court determined that Defendant failed to set forth any basis to vacate the Judgment of Divorce. The Court explained that the trial was scheduled well in advance after three years of litigation which had mostly been prolonged by Defendant. The Court added that the medical evidence Defendant submitted on the eve of trial to support his claim of impairment was inadequate and unconvincing, and Defendant chose to intentionally absent himself from the proceedings. He also failed to oppose the proposed Judgment.
The Court also remarked that at the trial it heard Plaintiff's credible testimony and substantial documentation on all matters, was able to render a comprehensive post-trial decision, and found that the Judgment was not rife with errors.
In any event, the Court noted that, in an August 10, 2020 order, it had directed the sale of Blowing Rock and that certain of the proceeds be held in escrow to potentially satisfy some of Defendant's post-judgment claims. Thus, although the Court found no basis to vacate the judgment, it specifically noted that Defendant could address his claims in post-judgment motion practice, which it had already permitted.
On appeal, the First Department affirmed the denial of the motion to vacate (see Wilson v. Wilson, 201 A.D.3d 581 [1st Dept 2022]). The Court found that "Supreme Court providently rejected Defendant's excuse for failing to appear at trial because of his seizure condition and health issues." The Court found that while Defendant's health condition existed from at least June 2016, Defendant was able to participate in the proceedings from June 2016 to August 2017 and that there were no changes in his condition that would render him unable to attend trial in August 2017. The Court found no basis to disturb Supreme Court's determination that, based on its prior observations of Defendant, Defendant was using his preexisting medical condition to prolong the proceedings.
PRESENT MOTIONS
Before this Court are a post-judgment Order to Show Cause and cross-motion asking this Court to determine various credits, for an award of statutory interest and counsel fees, and for various ancillary relief. These motions had been held in abeyance pending the decision from the First Department.
The parties now agree that many of the issues raised in the motions are resolved or moot. The resolved issues include the receipt of the Blowing Rock closing documents, storage fees, and the issue of Defendant's pension plan distributions. In addition, the parties agree that the Judgment of Divorce incorrectly orders that Defendant pay Plaintiff a sum total of $664,729.91 plus a separate award of $110,000 in counsel fees. They agree that the sum total of $664,729.91 includes the $110,000 which the Court separately awarded Plaintiff in counsel fees. Relatedly, the parties also agree that the Court's August 2020 order incorrectly stated that the sum total owed was $674,729.91. Further, following the sale of the Blowing Rock property, the parties agree that Plaintiff received $674,729.91 and was thus overpaid by $10,000.
DEFENDANT'S CLAIMS
Defendant seeks credits in the approximate amount of $549,480.99. Plaintiff agrees that Defendant is entitled to certain credits as follows: 1) The $10,000 overpayment to Plaintiff noted above; 2) The remaining proceeds from the sale of the Blowing Rock home in the amount of $146,051.99 held in escrow; 3) $51,132 representing Plaintiff's 50% share of back taxes paid by Defendant for tax years 2012-14.
Defendant also seeks a credit for interest and penalties accrued when he failed to timely pay taxes for 2012-14. However, there is no basis for such a credit. Defendant should be solely responsible for the payment of any interest and penalties charged as a result of his failure to file and pay taxes. Nor is Defendant entitled to a credit for retirement funds he invaded to pay these taxes. Notably, he chose to invade those retirement funds without permission of the Court, and without demonstrating he could not have used other assets to pay the tax liability. Nor is Defendant entitled to a recalculation of the tax rate to be used on his Morgan Stanley accounts and stock units. Defendant chose not to participate in the trial and the trial court used a tax rate of 25% based on the various factors and the information provided and available at the time of trial, which was a fair and reasonable estimate.
There is also no basis to credit Defendant for tax liability related to loan forgiveness. Defendant's claim in this regard is based on his 2016 tax returns, which are dated October 11, 2017, two months after the trial of this matter. These documents were not provided and not available for consideration as evidence at trial and, therefore, cannot be used as the basis of any argument in support of or against decisions made at trial. Further, Defendant provides no other documentation to support his claim.
Defendant also seeks various credits relating to the Blowing Rock property. Specifically, he wants credit of $50,000 related to the sale of the property for a reduced price, credits for monies he paid to repair and improve the home and for carrying charges, wants to utilize the capital loss on the home, and wants this Court to "equalize" the equity both parties should have received from their homes.
In order to effectuate the equitable distribution of the marital property, Defendant was ordered to pay a distributive award to Plaintiff in the amount of $664,729.91 (inclusive of a $110,000 award of legal fees) within 30 days of the entry of the judgment, which meant payment was due by November 13, 2017.
Although Defendant had been awarded the Blowing Rock property and numerous other valuable assets, as well as substantial separate property assets, Defendant failed to make even a partial payment to Plaintiff of her distributive award. Instead, Defendant filed the motion to vacate the judgment. On May 16, 2018, the parties entered into a So-Ordered Stipulation whereby they agreed that the Blowing Rock property was to be sold and the sale proceeds were to be used to pay Plaintiff her past due distributive award.
On June 27, 2018, the parties entered into another So-Ordered Stipulation that set forth specific requirements concerning the marketing and sale of the Blowing Rock property. Paragraph 9 specifically provided that, should Defendant fail to comply with the Stipulation or obstruct or delay the sale, he would be excluded from the home. Despite the very clear requirements of the June 27, 2018 Stipulation, Defendant continued to obstruct and delay the sale of the property and was ultimately removed from the home.
Although the June 27, 2018 stipulation required that Plaintiff "act in good faith to accept a reasonable offer for the property but in no event an amount more than 5% less than the then listing price," several price reductions were required over a few year period and Plaintiff ultimately accepted the highest offer of $900,000 which was 10% less than the listing price. Given the Defendant's obstruction and dilatory tactics throughout the litigation, it would not be equitable to credit Defendant anything as if the home had been sold for 95% of the listing price. There is also no basis to consider only the New York residence and the Blowing Rock residence and then equalize the values as Defendant requests. The Judgment of Divorce, which Defendant failed to comply with, considered all the parties' assets and awarded them in equitable distribution. In any event, it would be improper to compare the current market value of the Blowing Rock property to the six-year-old appraised value of the New York property to equalize the value of the distribution between the parties.
Nor is Defendant entitled to a credit for repairs or improvements, as he agreed to and was required to pay the same pursuant to the June 27, 2018 stipulation. Similarly, no credit is appropriate for the property taxes and homeowners' insurance that he paid while he resided in the Blowing Rock property.
Defendant also seeks to recalculate spousal support. However, his remedy would have been a timely appeal from the Judgment of Divorce, which he failed to pursue. Instead, Defendant moved to vacate the Judgment and then appealed the denial of that motion. In any event, there was nothing improper or erroneous in that the Court accepted Plaintiff's suggestion that in order to determine the post-divorce maintenance, the Court apply the same formula it used to arrive at the award of temporary spousal maintenance.
Overall, the Court notes that most of Defendant's claims should have and could have been raised at trial but cannot be raised at this juncture. To the extent there are any further claims by Defendant that were not resolved or addressed herein, they are denied.
PLAINTIFF'S CLAIMS
Plaintiff seeks payment of $35,000 owed for past due spousal support. Specifically, it is undisputed that Defendant paid his ordered spousal support of $14,250 per month up until July 2019. However, from July 2019 through February 2020, when he was supposed to pay a reduced amount of $5,000 per month in support, he failed to make any payments.
Defendant claims that at some point the parties entered into an alternative arrangement whereby he would cover certain expenses such as car insurance and EZ pass charges instead of paying the ordered support. He therefore contends he had overpaid support and thus should not be liable for the $35,000 now. However, he provides no stipulation or court order amending the support in this manner. In any event, Plaintiff denies there was any such agreement. Defendant cannot unilaterally determine that certain expenses he voluntarily paid are somehow credited against his unpaid spousal support from July 2019 through February 2020. Accordingly, Defendant must pay Plaintiff the $35,000 in support arrears.
Plaintiff also asks for statutory interest on the entire judgment amount of $664,729.91, which was not satisfied until the sale of the Blowing Rock home in March 2021. The Judgment of Divorce ordered that the amount be paid within 30 days of entry of the Judgment, which was November 13, 2017. The statutory interest of 9% per annum applied to the 1,214 days that the judgment was not paid results in a total interest of $198,986.74 owed.
Plaintiff notes that instead of paying the judgment or making even partial payment in good faith, Defendant engaged in further litigation, including motion and appellate practice. She notes that if not for Court intervention forcing the sale of the Blowing Rock home, she could still be waiting to receive her distributive award. She also contends that Defendant failed to sufficiently show an inability to pay, and in fact has various assets and interests he could have utilized but refused to do so. Overall, she complains that Defendant's conduct throughout the proceedings, both pre and post Judgment, were intended to delay her payment. In fact, Defendant's conduct resulted in such a delay, as well as increased costs and counsel fees.
Defendant opposes the award of any interest mainly because of the error in the Judgment relating to whether the counsel fee award was included in the total sum he was directed to pay and asks this Court to deny any award of interest in its discretion. However, he asserts that to the extent interest is awarded, it should only be $162,258.50, which would be the amount owed if the counsel fee award were separated and interest was charged only on the distributive award.
The Judgment directed that the entire sum of $664,729.91 be paid within 30 days. However, it is undisputed that the correct amount of the distributive award was $554,729.91. In this Court's view, it is appropriate to use the lower amount of interest Defendant argues the Court should award. The statutory nine percent rate is "presumptively fair and reasonable" (see Rodriguez v New York City Hous. Auth., 91 N.Y.2d 76, 81 [1997]). CPLR 5003 mandates that interest accrues on any money judgment or judgment from the date it is entered and until it is paid. CPLR 5004 further mandates that such interest be at the rate of 9% per annum.
Accordingly, Defendant must pay to Plaintiff the statutory interest owed on the distributive award amount, or $162,258.50.
Plaintiff also seeks an award of counsel fees in the amount of $99,720, which are the amount of fees accrued between 2018 and August 2021. In support of this request, Plaintiff provides her attorney's retainer and invoices, and counsel has provided her qualifications in her affirmation. Plaintiff states that she has incurred these fees simply to obtain what was already awarded to her in the Judgment of Divorce. The Court notes that additional fees have certainly accrued since that time.
Defendant opposes an award of counsel fees, claiming he is "homeless" and that in contrast Plaintiff has significant assets. He therefore claims he cannot be deemed the monied spouse. He also claims that Plaintiff took advantage of him in preparing the proposed Judgment of Divorce in an effort to obtain an additional $110,000.
Pursuant to DRL 237, in any application to enforce or modify a judgment or order for, inter alia, a distributive award, the Court may direct one party to pay the other in the court's discretion, as justice requires, having regard to the circumstances of the case and of the respective parties. There is also a rebuttable presumption that counsel fees shall be awarded to the less monied spouse.
Here, there can be no dispute that Defendant is the monied spouse. He has previously been found to be the monied spouse and ordered to pay Plaintiff's counsel fees, and has previously had to pay spousal support. Indeed, during the parties' marriage, Defendant was the sole breadwinner for the family and Plaintiff had not worked outside of the home for approximately thirty years. Moreover, his claims of poverty are belied by the marital assets that were divided in the Judgment of Divorce, Defendant's past earnings history, his forthcoming pension, and his interest in a trust.
Critically, Defendant has repeatedly taken actions to intentionally prolong this matter. His obstructionist behavior throughout this litigation has caused Plaintiff to incur additional and significant legal fees in her efforts to enforce the Judgment of Divorce so that she would receive what she was awarded and entitled to receive. All of the fees incurred were caused by Defendant's decision not to participate in the trial and the post-judgment litigation that occurred thereafter, including due to Defendant's failure to comply with post-judgment stipulations intended to move the parties to resolution.
Based on the foregoing history and circumstances, the Court directs that Defendant pay Plaintiff's counsel fees in the amount of $99,720.
CONCLUSION
The parties agree that there is currently $146,051.99 being held in escrow from the proceeds of the sale of the Blowing Rock home. Based on the foregoing, Defendant is entitled to those proceeds, to the $10,000 overpayment to Plaintiff, and to $51,132 as and for Plaintiff's share of tax liability. In sum, he is owed $207,183.99. However, Plaintiff is entitled to $162,258.50 in statutory interest on the distributive award judgment, $35,000 in support arrears, and $99,720 as an award of counsel fees. In sum, she is owed $296,978.50.
Accordingly, following a calculation of credit offsets, Plaintiff is owed $89,794.51.
Therefore, it is
ORDERED that the Defendant's motion is granted in part and the Plaintiff's cross-motion is granted in part; and it is further
ORDERED that $89,794.51 shall be released from escrow and paid to Plaintiff, and it is further
ORDERED that the remainder of proceeds in escrow, $56,257.48, shall be released and paid to Defendant.
This constitutes the decision and order of this Court.