Opinion
01-06-2020
SASHA T., Plaintiff, v. BARRY T., Defendant.
Counsel for Plaintiff: Alton L. Abramowitz, Esq., Alexis L. Cirel, Esq., Schwartz Sladkus Reich Greenberg Atlas LLP Counsel for Defendant: Robert S. Cohen, Esq., Joseph De Simone, Cohen Clair Lans Greifer Thorpe & Rottenstreich LLP Counsel for the Children: Lauren M Friend, Esq.
Counsel for Plaintiff: Alton L. Abramowitz, Esq., Alexis L. Cirel, Esq., Schwartz Sladkus Reich Greenberg Atlas LLP
Counsel for Defendant: Robert S. Cohen, Esq., Joseph De Simone, Cohen Clair Lans Greifer Thorpe & Rottenstreich LLP
Counsel for the Children: Lauren M Friend, Esq.
Douglas E. Hoffman, J.
The following e-filed documents, listed by NYSCEF document number (Motion 002) 64, 65, 66, 67, 68, 69, 70, 71, 72, 73, 74, 75, 76, 77, 78, 79, 80, 87, 88, 89, 90, 91, 92, 93, 94, 95, 96, 97, 98, 99, 100, 101, 102, 103, 104, 105, 106, 107, 108, 109, 110, 111, 112, 113, 114, 115, 116, 123, 124, 125, 126, 127, 128, 129, 130, 132, 133 were read on this motion to/for PENDENTE LITE.
In this action for divorce and ancillary relief, plaintiff wife Sasha T. moves by order to show cause for an order: (1) Declaring the spousal maintenance provisions of the parties' 2008 prenuptial agreement to be unconscionable and unenforceable, and declaring the entire agreement null and void due to the lack of a severability provision in that agreement; and (2) granting the following relief: (i) directing defendant husband Barry T. to pay combined pendente lite spousal maintenance and child support in the amount of $30,000 per month, from which plaintiff will pay all of her own personal expenses, including vacations with the parties' children in common; (ii) requiring defendant to continue paying 100% of the children's add-on expenses, including summer camp, private school tuition, and unreimbursed medical expenses; (iii) directing defendant to continue paying all expenses related to the marital residence, including, but not limited to, all insurance, maintenance, taxes, utilities, and customary property care; (iv) mandating defendant to immediately pay the entire amount of the family's summer rental home in Southampton as he has historically done; (v) commanding defendant to maintain and continue to pay 100% of all premiums for all policies of insurance, including, but not limited to, life insurance, auto insurance, and medical insurance; (vi) granting plaintiff an interim counsel fee award in the amount of $250,000, subject to reallocation upon the trial of this matter; and (vii) appointing a neutral forensic accountant to perform a lifestyle analysis and to evaluate whether and to what extent defendant converted separate property to marital property, and ordering defendant to pay 100% of the costs thereof.
Plaintiff opposes and cross-moves for an order, inter alia , (1) directing plaintiff to cooperate with allowing the children's nanny to provide child care services at defendant's residence during his parental access periods on Tuesdays and Wednesdays of each week; and (2) mandating that defendant be provided with additional parental access with the children during the weekend immediately prior to the commencement of the rental period for the parties' summer vacation residence.
After parties and counsel appeared on the motion, the court issued an interim order regarding parenting time and financial support while this motion is pending, with no prejudice to either side [NYSCEF doc. 133, May 21, 2019 Corrected Order], and Wife's requests for prenuptial and pendente lite relief were submitted. Husband's requests were granted to the extent that the "husband shall have the services of the nanny to a reasonable extent during his Tuesday and Wednesday parenting time," and the interim parenting time was modified in October 2019 [NYSCEF doc. 144, October 18, 2019 Order].
For the reasons set forth below, the open branches of the motion are granted in part, and denied in part.
Background
The parties were married on September * * *, 2008. There are two children of the marriage, * * *, born * * *, 2010, and * * *, born * * *, 2011. Plaintiff is 45 years old. Defendant is 50 years old. Before the marriage, plaintiff was employed, earning approximately $60,000 per annum. Defendant is an approximately half-owner of [redacted by the court as "ABC"] and related entities (together, "[ABC]"), a [redacted] firm, which was started ten years prior to the marriage. At the time of the marriage and currently, husband was and still is a co-owner of [ABC].
The Prenuptial Agreement
Prior to the parties' marriage, the parties entered into a prenuptial agreement executed on August 26, 2008 (NYSCEF doc. 67, the "Prenuptial Agreement"). The agreement was signed and duly acknowledged as required under Domestic Relations Law (DRL) § 236(B)(3), and there are no allegations that it does not comply with those requirements. The parties, who were both represented by counsel during negotiation of the Prenuptial Agreement, agreed, among other things, to the following provisions:
"1. [Wife] agrees (a) that [Husband] shall keep and retain sole ownership, control and enjoyment of all property including, real, personal and mixed and wheresoever situated, which he now owns or may hereafter acquire up to the date of the marriage including any appreciation thereon (including, but not limited to, the assets set forth in Schedule A hereof), and (b) that all such property shall be deemed the separate property of [defendant].... [plaintiff] agrees that [defendant] shall hold all such property free from any claim, lien or right, inchoate or otherwise, on the part of [plaintiff] and that he may dispose of any part or all of such property (including, but not limited to, the process of any such disposition) at any times and in the manner he may see fit....
"3. [Wife] expressly acknowledges that [Husband] is a co-owner of [ABC] Partners Incorporated; [ABC] Partners L.P. and [ABC], Inc. ( [he]ereinafter collectively referred to as "[ABC]"), as set forth in the Schedule A hereof, and agrees that all appreciation thereon is and shall remain the separate property of [defendant] (all dividends and other profits earned from [ABC] shall be deemed [defendant's] separate property as hereinafter defined). Further, [plaintiff] expressly acknowledges that [defendant] may, in the future purchase additional shares in [ABC] and [plaintiff] agrees that if such additional shares are purchased with [defendant's] separate property, all appreciation thereon and all dividends and other profits earned from [ABC] is and shall remain the separate property of [defendant]. Notwithstanding the foregoing, earned income, including any deferred compensation and/or retirement contributions received by either party following their marriage shall not be deemed separate property regardless of its source, it being the intention of the parties that all such earnings shall be deemed marital property subject to the vesting schedule as se[t] forth in paragraph 11 (b) below, except that the process of the sale of any separate property (including but not limited to shares of stock or and/or stock options) shall be deemed the separate property of the party who owned said property before the sale.
"4. [Plaintiff] hereby acknowledges that although the parties may permanently or from time to time reside in defendant's dwelling located at [redacted] [marital residence ...], the [marital residence] shall remain the separate property of [defendant] .... The payment by either or both parties of any real property taxes, insurance premiums, operating expenses or any other expense in connection with the [marital residence], regardless of whether the source of such payments is [either party's] separate property, marital property or a combination thereof, shall not effect the character of the marital residence, which shall ... remain the separate property of [defendant]. [Plaintiff] hereby renounces, disclaims and releases, and covenants to renounce, disclaim and release any and all claims to, interest in or share of the [marital residence] and any appreciation thereon ...
"7. Any appreciation in the value of separate property (including property described under paragraphs 1 through 6 hereof) whether caused by the efforts of a party to this Agreement or a third party, or by inflation, or by any other stimulus, shall remain separate property ...
"10. ‘Marital property’ shall be defined as all property or income not expressly designated as separate property under this Agreement, and that which is acquired or earned by the parties during the course of the marriage prior to the occurrence of an Operative Event, including, but not limited to, earnings the payment of which are deferred for a later date, the appreciation or increase in value, if any, of the investment of such earnings, property acquired in exchange for such earnings, and for the proceeds thereof, and the income from the investment of and proceeds of such earning property, regardless of the form in which title is held.
"11. ... (b) Except as expressly provided to the contrary below, all marital property shall be divided between the parties as follows: ... (ii) in the event a Termination Event occurs after the parties tenth (10th) anniversary and a child of the marriage has been born [plaintiff] will receive as and for equitable distribution fifty (50%) percent of the parties' marital assets or $200,000 whichever is greater with [defendant] receiving the remainder of said marital assets.... (f) In the event that the parties are residing, at the time of an occurrence of an operative event in a premises that is then owned by one party as his or her separate property and a child of the marriage has been born and resides in said residence with [the parties] the other parties agree to vacate said residence within One Hundred and Twenty (120) days after the execution of a Separation Agreement, or the service of a Judgement of Divorce with Notice of Entry on either party.
"12. [Defendant] represents that he is currently employed and is capable of supporting himself and that his current net worth is approximately Twenty Two Million Five Hundred Eight Five [sic] ($22,585,958) Dollars excluding contingent interests in trusts and various life insurance policies of another Eighteen Million ($18,000,000) Dollars as set forth in Schedule A. [Plaintiff] represents that she is currently employed and is capable of supporting herself and that her current net worth is approximately Sixty Three Thousand ($63,000) Dollars as set forth in Schedule B. Each party acknowledges that the other has made full disclosure of his or her respective assets, liabilities and general financial status as evidenced by the disclosure statements annexed hereto.
"13. ‘Termination of the Marriage’ shall be defined ... as the sooner of: (a) the parties' separation ... for sixty (60) consecutive days, with or without cause, and with or without legal separation, divorce, dissolution of the marriage or other decree terminating the marriage, (b) notification of one party by the other by certified mail of his or her intention to dissolve the marriage, (c) the commencement of an action for dissolution of the marriage ....
"15. In the event of the Termination of the Marriage, the parties shall use their best efforts to resolve all issues of temporary or permanent alimony, maintenance or support, child support and the equitable distribution of marital property and, failing agreement, either party may apply to a court of competent jurisdiction, for a determination.... In all instances where temporary or permanent alimony, maintenance or support for [plaintiff] is to be determined, the parties agree that neither they nor a court shall consider for purposes of determining or awarding alimony, maintenance or support, or legal, expert or related fees any of the income, interest, dividends, distributions or other earnings that Barry derives from his separate property.
"16. Except as otherwise provided in the previous paragraph, no provision is made herein for alimony, separate maintenance or support for either party in the event of a Termination of the Marriage.... In the event of a Termination of Marriage, [defendant] will not be obligated to pay [plaintiff] temporary or pendente lite alimony, spousal support or spousal maintenance of a length of time that will exceed one year of support for every year the parties are married .... In the event [defendant] is to pay [plaintiff] support the monthly payment, if any will be calculated by agreement of the parties or a decision of a Court of competent jurisdiction....
"19. The parties acknowledge that they are entering into this Agreement freely and voluntarily; that they have ascertained and weighed all of the facts and circumstances; that [defendant] and [plaintiff] freely sought legal advice and that they have been duly apprised of their respective legal rights; that they clearly understand and agree to all the provisions herein; and that the parties believe that the terms are fair and reasonable to both and not unconscionable....
"24. If either party commences an action or proceeding to modify, alter, rescind, declare null and void, or set aside this Agreement in whole or in part, or to obtain distribution of property in the event of the Termination of the Marriage or to obtain temporary or permanent spousal support, maintenance, or alimony other than as provided in this Agreement and is unsuccessful by virtue of a Court Order, then in such event, the party commencing such an action shall pay for all of the party's attorneys', accountants' expert and professional fees and costs incurred in connection with such action or proceeding."
Net Worth Statements
According to plaintiff wife's Statement of Net Worth dated January 23, 2019 [NYSCEF doc. 58], her listed monthly expenses total $49,366.70, which include, but are not limited to: $7,855 for housing, $4,300 for the mortgage on the marital residence; $625 in utilities, which includes $305 for the land-line telephone, cable, and internet at the marital residence and $320 for her cell phone; $4,250 for food; $2,098 for clothing, which includes $1,000 for plaintiff and $900 for the parties' children; $2,227 in unreimbursed medical expenses; $1,000 for household maintenance; $2,504.70 for automotive expenses on a 2017 Mercedes Benz, including $350 in gas and oil, $50 in repairs, $50 in car wash expenses, $163 for parking and tolls and $600 for garage parking; $9,767 for the children's education and extracurricular expenses; $8,986 for recreation expenses, including, but not limited to, $6,943 for vacation, $176 for movies; $2,041 in miscellaneous expenses, which includes, but is not limited to, $600 in beauty parlor/spa expenses, $700 in toiletries, $16 for books and magazines, $175 in gifts, $150 for religious contributions, $400 in commuting expenses; as well as $3,830 in big box stores and miscellaneous cash expenses.
Plaintiff claims to have a personal checking account with a value of $45,593, a joint checking account in the amount of $5,057 and a personal savings account in the amount of $68.45, as well as a joint savings account for the benefit of the parties' children in the amount of $6,186.45. She also has a premarital Vanguard IRA with a value of $117,060, and a premarital Vanguard pension account with a value of $24,881. Plaintiff claims that as of the date of the net worth statement, she owed her counsel $94,803.82, and has no other debts.
According to defendant husband's net worth statement dated March 12, 2019 [NYSCEF doc. 83], his listed monthly expenses total $57,741, which include, but are not limited to: $17,296 for housing, $6,475 for rent at his current residence, and $4,385 for the mortgage at the marital residence, as well as $2,851 in real estate taxes, $265 in homeowner's insurance and $3,238 in maintenance charges at the marital residence; $1,123 in utilities for both residences; $3,800 for food, including $1,500 for groceries, $2,300 for dining out; $550 in clothing for defendant and the parties' children; $8,944 for various insurances, including $4,037 for life insurance, $3,889 for medical and dental insurance (which is paid through defendant's business), and $137 for disability insurance; $2,215 for unreimbursed medical expenses; $200 in household maintenance; $2,000 for child care of the parties' two children; $2,069 for the 2017 Mercedes Benz (which is paid through defendant's business); $9,710 for the parties' children's education, including school tuition and extracurricular activities; and $1,844 in miscellaneous expenses, which include, but are not limited to, $292 in beauty and drug supplies, $90 for barber expenses, and $833 in charitable contributions.
The husband claims to have four checking accounts with values of $11,182, $85,430 and $26,223, and two savings accounts in the amount of $35 and $92. Defendant also has a number of retirement accounts — a 401K with [ABC] with a value of $1,446,121, a cash balance plan with a $300,000 value and a traditional Roth IRA with Morgan Stanley with a value of $11,970. He is also a 50% owner of [ABC], the value of which business is presently undetermined. Defendant also has a number of investment accounts totaling $4,817,529. Defendant claims that he has $736,926 worth of debt and liabilities, which includes a $379,934 outstanding mortgage on the marital residence, $201,495 in legal fees as of January 31, 2019, and $75,000 for an under-funded pension plan with [ABC].
The fourth checking account, purportedly a premarital account, was closed on November 28, 2018, and had a balance of $45,594 as of the date of commencement of this action.
Plaintiff commenced the instant divorce action on October 29, 2018. Wife asserts that the spousal maintenance provisions of the Prenuptial Agreement are unconscionable and unenforceable. She claims that even were the court to find that the maintenance provisions are not unconscionable, equity compels an award of relief in plaintiff's favor. Plaintiff seeks an award of $30,000 per month in combined temporary maintenance and child support so that she and the parties' children may continue to maintain their present standard of living during the pendency of the action. Plaintiff also seeks an award of counsel fees and expert fees pursuant to DRL § 237, as the Prenuptial Agreement does not explicitly bar such an award.
In opposing such relief, Husband contends that there is no legal or factual basis to set aside the parties' fully negotiated and valid Prenuptial Agreement; that even were the court to strike the maintenance provision, the balance of the Prenuptial Agreement should be upheld. Further, defendant claims that there is no basis for plaintiff's request for pendente lite spousal maintenance, as her request greatly exceeds that which she and the children need, and applying statutory maintenance guidelines would satisfy plaintiff's reasonable expenses. Defendant also claims that plaintiff's request for counsel fees is exorbitant, and that any interim legal fee award should be issued as an advance against her ultimate share of equitable distribution.
Discussion
Prenuptial Agreement
"A strong public policy exists in favor of parties deciding their own interests through premarital contracts, and a duly executed prenuptial agreement is given the same presumption of legality as any other contract" ( Gottlieb v. Gottlieb , 138 AD3d 30, 36 [1st Dept 2016] ). While DRL § 236B governs the division of assets upon divorce and defines marital and separate property for purposes of such a division, individuals may agree to opt out of this statutory framework (DRL § 236B [3] ["An agreement by the parties, made before or during the marriage, shall be valid and enforceable in a matrimonial action if such agreement is in writing, subscribed by the parties, and acknowledged .... Such an agreement may include ... provision for the amount and duration of maintenance ... provided that such terms were fair and reasonable at the time of the making of the agreement and are not unconscionable at the time of entry of final judgment"] ). "[A] prenuptial agreement ‘is presumed to be valid and controlling unless and until the party challenging it meets his or her very high burden to set it aside’ " ( Gottlieb , 138 AD3d at 36, quoting Anonymous v. Anonymous , 123 AD3d 581, 582 [1st Dept 2014] ); see also Lorenc v. Lorenc , 2019 NY Slip Op 09378, 2019 WL 7173737 [1st Dept Dec. 26, 2019] [upholding prenuptial agreement where plaintiff "failed to establish that the parties' prenuptial agreement was the product of fraud, duress, or other inequitable conduct and should therefore be set aside"] [citing Anonymous , 123 AD3d at 582 ]. Plaintiff claims that the maintenance provision is effectively a maintenance waiver, which is unenforceable because it was unfair at the time the Prenuptial Agreement was made and is unconscionable as applied to the present circumstances. The maintenance provision, noted above, excludes "any of the income, interest dividends, distributions or other earnings that [defendant] derives from his separate property" (Prenuptial Agreement, ¶ 15). Schedule A of the Prenuptial Agreement defines "Separate Property" as including the marital residence, defendant's investment accounts and his 50% share of [ABC], the executive recruiting firm defendant owns with his partner. Plaintiff asserts that defendant's earnings from [ABC] and the alleged substantial dividends he receives in connection with his investment accounts are and always have been the only sources of defendant's income during the marriage.
Defendant counters that both parties were aptly represented by experienced matrimonial attorneys of their respective choosing when negotiating the terms of the Prenuptial Agreement. Full financial disclosures were made by both parties, and there is no allegation that plaintiff did not understand the terms of the Prenuptial Agreement either during the negotiations or at the time that she executed the document. Defendant points to a letter from plaintiff's counsel at the execution of the Prenuptial Agreement, [A.R., Esq.], to the husband's then-lawyer, [J.R., Esq.], concerning her objection to the spousal maintenance provision (see NYSCEF doc. 112, Ex. V, Letter from A.R. dated July 9, 2008). Specifically, Ms. A.R. advised, among other things, that plaintiff "will not agree that [defendant's] separate property is not to be a consideration in a determination of maintenance, support, legal fees, expert fees, or any other related expenses arising from a matrimonial matter." [Id. ] In his response, Defendant's counsel Mr. J.F. addressed many of the objections raised in the July 9, 2008 letter; however, he did not agree to remove the clause pertaining to the exclusion of separate property-related income from maintenance considerations. [NYSCEF doc. 113, Ex. W, Letter from J.F. dated August 4, 2008]. On August 11, 2008, Ms. A.R. requested clarification as to whether defendant intended to remove the separate property related income exclusion language [see NYSCEF doc. 114, Ex. X, Letter from A.R. dated August 11, 2008]. Mr. J.F. replied on August 13, 2008 stating, among other things, "[w]e cannot agree to remove the requested language from the Agreement as that would violate the spirit of the agreement — that being that Separate Property of the parties staying separate in the event of a divorce" [see NYSCEF doc. 115, Ex. Y, Letter from J.F. dated August 13, 2008]. Defendant's counsel asserts that the issue was discussed, analyzed and addressed by both lawyers during the negotiations. Therefore, defendant argues, it cannot be said that plaintiff was unaware of or did not comprehend the terms. She understood enough to object, and despite her objections, she considered, ultimately consented to and executed the Prenuptial Agreement notwithstanding the now-contested maintenance provision.
"[A]n agreement between prospective spouses may be invalidated if the party challenging the agreement demonstrates that it was the product of fraud, duress, or other inequitable conduct" ( Anonymous v. Anonymous , 123 AD3d 581, 582 [1st Dept 2014] ). Here, plaintiff does not contend that there was any fraud or duress with respect to spousal maintenance, but rather that it is unconscionable ( id. at 583 ["an agreement concerning the amount and duration of spousal maintenance must be fair and reasonable at the time it is made" (citation omitted) ] ). An unconscionable bargain has been regarded as one that no person in his or her senses and not under a delusion would make and that no honest and fair person would accept ( Ku v. Huey Min Lee , 151 AD3d 1040 [2d Dept 2017] ; see also Gardella v. Remizov , 144 AD3d 977 [2d Dept 2016] ). "A mere unequal division of assets is insufficient to establish unconscionability" ( Sabowitz v. Sabowitz , 123 AD3d 794, 796 [2d Dept 2014] ). On the other hand, an "agreement that might not have been unconscionable when entered into may become unconscionable at the time a final judgment would be entered" ( Taha v. Elzemity , 157 AD3d 744, 745-746 [2d Dept 2018] ).
The Prenuptial Agreement here does not contain an actual waiver of maintenance, but rather, provides certain parameters for maintenance consideration. The first question, then, becomes whether the Prenuptial Agreement, as currently applied, results in either a waiver of maintenance or a de minimis amount of maintenance. The second question would be whether such a waiver or de minimis level of maintenance would be unconscionable in this case.
In reviewing prenuptial agreements, courts are guided by the standard rules of contractual interpretation. Anonymous v. Anonymous , 137 AD3d 583, 587 [1st Dept 2016]. A "written agreement that is complete, clear and unambiguous on its face must be enforced according to the plain meaning of its terms." Beinstein v. Navani , 131 AD3d 401, 405, [1st Dept 2015]. Similarly, "courts may not by construction add or excise terms, nor distort the meaning of those used and thereby make a new contract for the parties under the guise of interpreting the writing." Id. Where an "agreement is clear and unambiguous on its face, the intent of the parties must be gleaned from the four corners of the instrument, and not from extrinsic" evidence. Clark v. Clark , 33 AD3d 836, 837-38 [2d Dept 2006], abrogated on other grounds by Graev v. Graev , 11 NY3d 262 [2008]. Existence of an ambiguity is "determined by looking within the four corners of the document, not to outside sources." Kass v. Kass , 91 NY2d 554, 566-67 [1998]. Whether a writing is ambiguous is a matter of law for the court, and the proper inquiry is "whether the agreement on its face is reasonably susceptible of more than one interpretation" Abadi v. Abadi , 177 AD3d 689 [2d Dept 2019] (citations omitted).
Courts should interpret contracts to give meaning to all material provisions of the contract, and may not read some provisions in such a way as to make other provisions meaningless. "Further, a contract should be read as a whole, and every part will be interpreted with reference to the whole; and if possible it will be so interpreted as to give effect to its general purpose." Beal Sav. Bank v. Sommer , 8 NY3d 318, 324-25 [2007) (citations omitted). "[C]onflicting contract provisions should be harmonized, if reasonably possible, so as not to leave any provision without force and effect." Natixis Real Estate Capital Tr. 2007-HE2 v. Natixis Real Estate Holdings, LLC , 149 AD3d 127 [1st Dept 2017].
The entire contract must be read as a whole, and in "deciding whether an agreement is ambiguous[,] courts should examine the entire contract and consider the relation of the parties and the circumstances under which it was executed. Particular words should be considered, not as if isolated from the context, but in the light of the obligation as a whole and the intention of the parties as manifested thereby. Form should not prevail over substance and a sensible meaning of words should be sought. Where the document makes clear the parties' over-all intention, courts examining isolated provisions should then choose that construction which will carry out the plain purpose and object of the agreement]." Kass , 91 NY2d at 567.
Although extrinsic evidence cannot create an ambiguity in an agreement, if there is an ambiguity, then, courts may look at such extrinsic evidence to resolve the ambiguity. Kass , 91 NY2d at 568 (emphasis in the original). Of course, even when reviewing extrinsic evidence to resolve an ambiguity in a contract, courts should review the ambiguous provision not just in isolation, but also in the context of the contract as a whole. Id.
Here, the parties' Prenuptial Agreement does not define a number of material terms. It refers to "income" in several places, including in discussion of the parties' separate property, marital property, calculation of equitable distribution, and maintenance. In some of those discussions of income, the agreement refers to "earned income," and in other places, to income "earned from" or "derived from" Husband's [ABC] business. For example, Husband's separate property includes his business [ABC] (defined term), as well as "all appreciation," "all dividends and other profits earned from [ABC]" (emphasis added):
[Plaintiff] expressly acknowledges that [defendant] is a co-owner of [ABC] Partners Incorporated; [ABC] Partners L.P. and [ABC], Inc. ( [h]ereinafter collectively referred to as "[ABC]"), as set forth in the Schedule A hereof, and agrees that all appreciation thereon is and shall remain the separate property of [defendant] (all dividends and other profits earned from [ABC] shall be deemed [defendant's] separate property as hereinafter defined).
[Prenuptial Agreement ¶3].
Husband's separate property also includes the same terms ["all appreciation," "all dividends and other profits earned from [ABC]"] (emphasis added) for any additional [ABC] shares that Husband might purchase with his separate property during the marriage:
Further, [plaintiff] expressly acknowledges that [defendant] may, in the future purchase additional shares in [ABC] and [plaintiff] agrees that if such additional shares are purchased with [defendant's] separate property, all appreciation thereon and all dividends and other profits earned from [ABC] is and shall remain the separate property of [defendant].
The next sentence of the agreement, however, specifically carves out "earned income" from the above paragraph:
Notwithstanding the foregoing, earned income, including any deferred compensation and/or retirement contributions received by either party following their marriage shall not be deemed separate property regardless of its source, it being the intention of the parties that all such earnings shall be deemed marital property subject to the vesting schedule as se[t] forth in paragraph 11 (b) below , except that the process of the sale of any separate property (including but not limited to shares of stock or and/or stock options) shall be deemed the separate property of the party who owned said property before the sale.
The term "earned income" is not defined, but does include "deferred compensation and retirement contributions received" and is also referred to as "all such earnings," which is also not a defined term. It is also notable that although Husband's business [ABC] is specifically mentioned throughout the agreement, in the above paragraph, "earned income" is not considered separate property "regardless of its source," i.e. , would appear to include earned income even from [ABC].
The "vesting schedule as se[t] forth in paragraph 11 (b) below" refers to the equitable distribution "vesting" that wife would be entitled to, at an increasing percentage, depending on whether the parties had children before a defined triggering event, as well as how many years have passed from the start of the marriage until a triggering event.
The court notes that the cited 11(b) equitable distribution schedule includes years 0-10 if the parties have no children and years 10 and above if they have or do not have children, but is silent about years 0-10 if the parties do have children, which is presumably an oversight or in error; because the instant action was filed after ten years of marriage, and the parties do have children, this "missing" permutation of duration and children is not relevant here, but is another instance of potential ambiguity in the agreement.
The agreement also discusses the treatment of "derived from" income, and excludes any income "derived from" husband's separate property from consideration for purposes of calculating maintenance or counsel fees:
In all instances where temporary or permanent alimony, maintenance or support for [Wife] is to be determined, the parties agree that neither they nor a court shall consider for purposes of determining or awarding alimony, maintenance or support, or legal, expert or related fees any of the income, interest, dividends, distributions or other earnings that [Husband] derives from his separate property. [Prenuptial Agreement ¶15].
The agreement does not state which types of income are to be used for calculating maintenance, and merely excludes the "derived from" income from calculation of maintenance, without stating what is included. The same section continues to state that there is no predetermined calculation of the amount (or predetermined duration, other than an outside cap in certain circumstances) and does not contain an explicit waiver of maintenance:
Except as otherwise provided in the previous paragraph, no provision is made here in for alimony, separate maintenance or support for either party in the event of a Termination of the Marriage. All such issues are reserved for determination when and if they should become relevant and each party reserves any and all rights which he or she may acquire by reason of the marriage with respect to alimony, separate maintenance or support or equitable distribution of marital property. In the event of the Termination of Marriage, [Husband] will not be obligated to pay [Wife] temporary or pendente lite alimony, spousal support or spousal maintenance of a length of time that will exceed one year of support for every year the parties are married, unless [Wife] is Disabled (which disability prevents her from working in any capacity) or the parties have been married for at least twenty-five (25) years then the Court will be allowed to Order maintenance of a duration that they see fit. In the event [Husband] is to pay [Wife] support the monthly payment, if any, will be calculated by agreement of the parties or a decision of a Court of competent jurisdiction. [Prenuptial Agreement, ¶16]
The agreement excludes income "earned from" [ABC] from its definition of marital property, includes "earned income" in the definition of "marital property," and also excludes only "derived from" income from maintenance calculations. For each provision to have an independent meaning, therefore, "earned income" needs to be distinguished from "derived from" and "earned from" income: maintenance provision excludes "any of the income, interest dividends, distributions or other earnings that [husband] derives from his separate property" [Prenuptial Agreement, ¶ 15]. For one type of income (earned) to be included in the "marital property" provision, and another type of income (derived from) to be excluded, it is necessary to understand the two types of income as different and separate, in part because under the rules of contractual interpretation discussed supra , the two provisions must have independent meanings. And whatever meanings are determined for "earned income" and "derived from" or "earned from" income, would have to remain consistent throughout the agreement, including for the purposes of excluding "derived from" income from the calculation of maintenance or counsel fees.
There is, however, an ambiguity in what is actually included in each category, at least to some degree: certain "income" is specifically included in discussion of either of the two categories: "deferred compensation and retirement contributions" are listed examples of "earned income," whereas "appreciation," "dividends and other profits" are listed examples of "derived from" income. But the agreement does not attempt to define either category, and does not explicitly state whether non-deferred compensation is included in either. The terms "earned from" and "derived from" appear to be used similarly, and use similar examples, but as they are not fully defined terms, this too, is not necessarily clear.
The parties' submissions do not necessarily concede either the existence of an ambiguity or how to resolve it (although by citing and discussing extrinsic evidence, both sides concede the possibility of an ambiguity). Wife's motion seems to treat the various income terms similarly and at least suggests that any income earned or derived from [ABC] might be excluded from the maintenance provision, which would all but lead to, in essence, a maintenance waiver. In her reply, wife suggests that earned income (even if "earned" by working at [ABC] ) should be included in both marital-property and maintenance calculations. In his papers, husband states "It should be noted that maintenance provision which the wife now seeks to invalidate is not a complete waiver of spousal support, but rather merely a definition of the husband's income which is to be utilized for such purposes in the event of divorce." [NYSCEF doc. 90, H. Affir. at 6, n.8]. Although this footnote concedes that there is some defined category (or categories) of income for calculating maintenance, it does not set out either the definition or the amounts of income that would fit in that "definition."
These terms ("earned income," "earned from" and "derived from" income) have some independent definitions, including in Black's Law Dictionary of "earned income": "Money derived from one's own labor or active participation; earnings from services." Black's Law Dictionary (11th ed. 2019). None of the multiple sub-definitions of "income" in Black's Law Dictionary, however, discuss "earned from" and "derived from" income, although there are various definitions of accrued, accumulated, active, business, deferred, disposable, dividend, ordinary, passive, passive investment, personal, or private income, among other sub-categories of income.
Further, existence of a definition outside of the agreement does not, however, mean that this is the definition meant for this agreement, especially if there are multiple possible or overlapping definitions outside of the agreement. For example, the term "cohabitation" addressed by the Court of Appeals in Graev was so "variously defined" outside of the parties' agreement (which agreement did not itself define the term), that the Court ruled the term ambiguous under the circumstances:
We do not agree that "the term cohabitation has a plain meaning which contemplates changed economic circumstances, and is not ambiguous" absent an explicit provision to the contrary in a separation agreement or stipulation, or, put slightly differently, is necessarily determined by whether a "couple share [s] household expenses or function[s] as a single economic unit". Rather, the word "cohabitation" is ambiguous as used in this settlement agreement: neither the dictionary nor New York case law supplies an authoritative or "plain" meaning. Similarly, courts in other states have not ascribed a uniform meaning to the word "cohabitation" as used in separation agreements.
In addition to the definition in Black's Law Dictionary, already set out [as ‘living together, especially as partners in life, usually with the suggestion of sexual relations’], "cohabit" is variously defined as "[t]o live together as husband and wife: often said distinctively of persons not legally married" (3 Oxford English Dictionary 448 [2d ed. 1989] ); "live together and have a sexual relationship without being married" (The New Oxford American Dictionary 330 [2d ed. 2005] ); "to live together as or as if as husband and wife" (Webster's Third New International Dictionary 440 [2002 ed] ); "to live together as husband and wife, usually without legal or religious sanction," or "to live together in an intimate relationship" (Random House Webster's Unabridged Dictionary 400 [2d ed. 2001] ); and "to live together as or as if a married couple" (Merriam Webster's Collegiate Dictionary [10th ed. 1997] ). The common element in all these definitions is "to live together," particularly in a relationship or manner resembling or suggestive of marriage, and New York courts have, in fact, used the word "cohabitation" interchangeably with the phrase "living together". Ultimately, however, "living together" as if husband and wife is no less opaque than "cohabitation": both bring to mind a variety of physical, emotional and material factors, and therefore might mean any number of things in a separation agreement, where otherwise unexplained in the text, depending on the parties' intent. For example, the parties here might reasonably have meant " cohabitation" to encompass whether Mrs. Graev engaged in sexual relations with an unrelated adult; whether she and the unrelated adult commingled their finances or—just the opposite—whether she supported the unrelated adult financially; whether she and the unrelated adult shared the same bed; or some combination of these or other factors associated with living together as if husband and wife.
Graev v. Graev , 11 NY3d 262, 270—72 (2008) (citations omitted) (reversing, and finding that "cohabitation" was ambiguous as used in the parties' agreement).
In addition to Black's Law Dictionary definition of "earned income," the term is also defined by the Internal Revenue Service, although no information was submitted that these parties meant to constrain themselves to that definition, either. C.f. , Mihale v. New York State Dep't of Envtl. Conservation , 15 Misc 3d 1138(A) [Sup. Ct., Monroe Cty. 2007] (in an Article 78 proceeding, upholding New York State Department of Environmental Conservation's interpretation of "earned income" differently from IRS's definition, in order to determine whether 50% of more of a fisherman's prior years' earned income was from fishing, for purposes of allocating "striped bass" fishing tags). Further, there are several provisions of the Internal Revenue Service that define "earned income," including, without limitation 26 USCA § 32 (defining "earned income" for Earned Income Tax Credit; cross-referenced in 26 USCA § 129, Dependent Care Assistance Programs, although with certain additional exclusions); 26 USCA § 911 (defining "foreign earned income" for Citizens or residents of United States living abroad; cross-referenced in 26 USCA § 1 as "earned income" for Certain unearned income of children taxed as if parent's income, although with certain additions and exclusions; also cross-referenced in 26 USCA § 66 as "earned income" for Treatment of community income where spouses live apart); 26 USCA § 401 ("earned income" defined for Qualified pension, profit-sharing, and stock bonus plans; cross-referenced in 26 USCA § 404, regarding self-employed individuals' ineligibility for deduction for contributions of an employer to an employees' trust or annuity plan and compensation under a deferred-payment plan). There is no evidence in the agreement that these parties intended to refer to the IRS definition, or to any specific subsection's definition.
Recently, the Appellate Division, Second Department reversed summary judgment and remanded a child-support modification case for a hearing on the parties' intent of the meaning of "gross earned income" in their stipulation, including whether it was intended to exclude LLC distribution income: "the term ‘gross earned income,’ in the context of the parties' stipulation, is ambiguous; ... instead of deferring to the CSSA's definition of ‘income,’ the Support Magistrate should have held a hearing to determine the parties' intent in including the word ‘earned’." Abramson v. Hasson , 177 AD3d 869 [2d Dept. 2019].
In this case, the Prenuptial Agreement's use of "earned income," "earned from" and "derived from" income creates ambiguities, especially when it comes to categorizing the various moneys received by Husband from [ABC] (and its related entities), of which he is one of two main owners, and where he works on a full-time basis. The parties clearly intended certain portions of Husband's [ABC] moneys to be treated as separate (for example, by stating that appreciation and dividends are his separate property), and certain [ABC] moneys as marital (for example, by stating that deferred compensation and retirement contributions would be marital). It is not, however, clear from the four corners of the agreement how the parties intended to treat other moneys received by Husband from [ABC] and its related companies.
If, as here, there is an ambiguity, courts may look at extrinsic evidence to attempt to resolve the ambiguity. Kass , 91 NY2d at 568. Husband's counsel submits 2008 letters between the two sides' counsel, sent during the negotiations of the agreement [NYSCEF docs. 112-16]. In a letter from plaintiff's counsel at the execution of the Prenuptial Agreement, regarding the treatment of earned income, Ms. A.R. wrote to defendant's then-counsel: "[Plaintiff] agrees that [ABC] Partners is separate property and but for the earned income therefrom, shall always be separate property. However, she does not agree that if [defendant] purchases additional shares of [ABC] with marital property then the appreciation is to be considered separate. Should your client choose to purchase these shares with marital funds [then] the appreciation should be marital in nature and subject to equitable distribution pursuant to the schedule in the agreement. Similarly on page 2[ ]¶3 you include a sentence that the income from additional shares of [ABC] purchased with separate money should be separate. While we agree that the appreciation is separate, we do not agree that earned income is separate. If the concept is that earned income from [ABC] be considered marital, and this would apply to all additional shares purchased during the marriage regardless of whether separate or marital property is used." (see NYSCEF doc. 112, Ex. V, Letter from A.R. dated July 9, 2008). In his response, Defendant's counsel Mr. J.F. answered "Agreed" to this request. [NYSCEF doc. 113, Ex. W, Letter from J.F. dated August 4, 2008]. In at least the second negotiation letter, Ms. A.R. requested clarification as to whether defendant also intended to remove the separate property related exclusion language from the maintenance provision, stating that "It was not clear from your letter whether you agreed to remove the language that ‘[defendant's] separate property is not to be a consideration in a determination of maintenance, support, legal fees, expert fees, or any other related expense arising from a matrimonial matter’. Please advise that you do in fact intend to remove this language." [NYSCEF doc. 114, Ex. X, Letter from A.R. dated August 11, 2008]. Mr. J.F. replied on August 13, 2008 stating, among other things, "We cannot agree to remove the requested language from the Agreement as that would violate the spirit of the agreement - that being the separate property of the parties staying separate in the event of a divorce. If [defendant] does not earn enough money at the time [of] the [parties'] divorce to make support payments to your client he should not be forced to invade his separate property to do so." [NYSCEF doc. 115, Ex. Y, Letter from J.F. dated August 13, 2008]. At that time, husband apparently also forwarded a draft redline with proposed changes, which included him adding "dividends and other profits" but deleting "income therefrom" for [ABC] moneys that would not be considered for maintenance. This correspondence, in and of itself, however, does not necessarily resolve the ambiguity of how to treat all [ABC] moneys, although it strongly suggests the parties' intent to treat "earned income" very differently from any "derived from" income. It may be, after a hearing, that income earned due to Husband's work (even at [ABC] ) was marital property, and any such received moneys (or imputed income based on past such income) would be used for purposes of determining maintenance, whereas any passive accumulation would be separate property and not relevant for maintenance determination. At this point, there is not sufficient information to determine which categories of moneys are which, especially considering that [ABC] is a closely held corporation, and it is at least possible that husband's "earned" wage income may be received as dividends or reinvested in the company as accruing capital (or, of course, vice-versa).
Accordingly, the ambiguity cannot be resolved without a hearing, the scope of which will be delineated as follows: admissible evidence to demonstrate, if possible, the parties' intent at the time of the negotiation and execution of the Prenuptial Agreement of the definitions of the various income terms in the agreement ("earned income," "earned from" and "derived from" income) for maintenance purposes; including, if known, the intention for categorizing the various moneys planned to be received by husband from [ABC] businesses for maintenance purposes.
It may be, of course, that the intended reading of the ambiguous terms could result in, in effect, a maintenance waiver. Whether such a waiver would be unconscionable in this case would be a separate question. In Barocas v. Barocas , 94 AD3d 551, 552 [1st Dept 2012], the First Department held that "[a]lthough defendant's waiver of spousal support was not unfair or unreasonable at the time she signed the [prenuptial] agreement, given her knowing and voluntary execution thereof with benefit of counsel, factual issues exist as to whether waiver would be unconscionable as applied to the present circumstances" (citing DRL § 236 [B] [3] [3] ).
Similarly, in M.G. v. N. HD. 64 Misc 3d 1206[A], *7 [Sup Ct, NY County 2019], the court held that there were "triable issues of fact regarding whether the maintenance waiver in the Prenuptial Agreement is unconscionable at present," and ordered a hearing as to whether enforcement of said provision would be unconscionable given the present circumstances. There, the prenuptial agreement contained "an expansive definition of separate property, [and] a waiver of spousal maintenance" (id. at *1). Specifically, "[t]he definition of separate property [was] expanded to include increases in value of a party's separate property that occurs during the marriage" and separate property could not "be transmuted into marital property" (id. ). At the time the parties entered into the prenuptial agreement, the wife had assets worth approximately $1,991,750, and was employed as a museum curator (id. ). The husband was a stock broker and listed his assets as $1,253,970 (id. ). Subsequent to the execution of the prenuptial agreement, the wife was terminated from her employment and could not secure other employment (id. ). The wife claimed that, at the time a judgment would be entered, her annual income would be $25,251, whereas the husband's reported income was $414,210; and that although she had $1.5 million in her retirement accounts and anticipated receiving approximately $650,000 for her 50% share of the marital residence, she owed over $500,000 primarily for litigation costs in connection with the divorce, and the unconscionability question was referred to a hearing (id. at *6; cf. A.A. v. B.B. , 61 Misc 3d 1223[A] [Sup Ct, NY County 2018] [finding prenuptial agreement was not unconscionable because, in part, there was no allegation that the defendant would "be left with only minimal assets"], aff'd sub nom DiPietro v. Vatsky , 177 AD3d 401 [1st Dept 2019].
In this case, at all times during the marriage, plaintiff was unemployed, and she has no income or means of support other than that provided by defendant. Pursuant to the terms of the Prenuptial Agreement, she has relinquished any equitable distribution claims to husband's widely-defined "separate property," and has only $150,000 in premarital retirement savings. Defendant claims that under the Prenuptial Agreement, wife is entitled to 50% of the marital assets. Defendant calculates wife's share to $724,216, asserting that a maintenance waiver when coupled with receipt of such a sum cannot be deemed unconscionable, presumably as a matter of law. The court, however, cannot on the basis of the parties' submissions alone resolve this issue of fact. Therefore, the court will order a tripartite hearing: First, the court will hear competent evidence to determine the meaning of income terms for maintenance purposes as discussed infra ; second, based upon utilization of those terms in context of the overall prenuptial agreement, the court will determine whether or not the result would be that maintenance is either waived or found to be de minimis ; third, the court would then determine whether this maintenance waiver or calculation is unconscionable under the present circumstances.
Alternatively, plaintiff argues that even if the court finds that the maintenance provision is not unconscionable, equity nevertheless compels an award in her favor. The Appellate Division, First Department has stated that in determining the enforceability of provisions in prenuptial agreements "there comes a point when the imbalance is so extreme that it is appropriate for equity to intervene." Gottlieb , 138 AD3d at 44. For example, in Cron v. Cron , 8 AD3d 186, 187 [1st Dept 2004] ), the Appellate Division, First Department found that although the maintenance waiver was not unconscionable, the court had to look to what was equitable, and increased the non-monied spouse's housing allowance as specified in the parties' marital agreement from $200,000 to $2,000,000. Accordingly, if the court and the parties proceed to the third stage of the hearing (concerning whether or not the maintenance waiver or amount of maintenance calculated pursuant to the Prenuptial Agreement is unconscionable), the scope of that stage of the hearing will also address the equity of the maintenance waiver at that time. The court notes, however, that "equity's intervention" to reform a prenuptial agreement would not be appropriate if the agreement's terms were merely "improvident," but instead, would require a showing of "manifest" unfairness. DiPietro v. Vatsky , 177 AD3d 401 (upholding trial court's grant of summary judgment enforcing a prenuptial agreement); see also Lorenc , 2019 NY Slip Op 09378, 2019 WL 7173737.
The maintenance provisions, if found to be unenforceable, would be severable from the remainder of the Prenuptial Agreement, which would remain enforceable. "[W]hether the provisions of a contract are severable depends largely upon the intent of the parties as reflected in the language they employ and the particular circumstantial milieu in which the agreement came into being" Matter of Wilson , 50 NY2d 59, 65 [1980] ; Scotti v. Tough Mudder Inc. , 63 Misc 3d 843, 857 [Sup Ct, Kings County 2019] ). The court finds that many of the provisions are discrete in nature, and turns specifically to paragraph 24 of the Prenuptial Agreement, which states, in relevant part: "If any party commences an action or proceeding to modify, alter, rescind, declare null and void, or set aside this Agreement in whole or in part ," thereby implying that challenged clause or set of clauses could be severable. Accordingly, the court finds that even if it is determined that the maintenance provisions are unenforceable, the remainder of the agreement would remain viable.
Temporary Maintenance
Plaintiff next asserts that the Prenuptial Agreement contains no express waiver of temporary maintenance, but rather provides for it. Specifically, paragraph 16 of the Prenuptial Agreement provides: "In the event of a Termination of Marriage, [defendant] will not be obligated to pay [plaintiff] temporary or pendente lite alimony, spousal support or spousal maintenance of a length of time that will exceed one year of support for every year the parties are married ...."
It is well settled that a "prenuptial agreement waiving any right to maintenance does not bar temporary relief prior to the dissolution of the marriage." Tregellas v. Tregellas , 169 AD2d 553, 553 [1st Dept 1991] ; Davis v. Davis , 144 AD3d 623, 624 [2d Dept 2016] ["parties' prenuptial agreement did not expressly preclude an award of pendente lite maintenance, nor did (the wife) waive such an award under the terms of the agreement, and thus, the agreement does not preclude an award of interim relief"]; Vinik v. Lee , 96 AD3d 522 [1st Dept 2012] ; Solomon v. Solomon , 224 AD2d 331, 331 [1st Dept 1996] ); c.f. , Anonymous v. Anonymous , 137 AD3d 583, 585 [1st Dept 2016] ["a waiver of temporary maintenance will be enforced as long as the parties' intent to do so is ‘clearly evidenced by the writing’ "]. Here, the Prenuptial Agreement does not bar temporary relief (see Prenuptial Agreement ¶ 16). As provided by the parties, to the extent defendant must pay plaintiff pendente lite support, the payment amount "will be calculated by agreement of the parties or a decision of a Court of competent jurisdiction" (id. ).
Plaintiff seeks a combined maintenance and child support award of $30,000 per month, assuming that she remains in the marital residence. Both sides agree that the marital apartment carrying costs are approximately $11,500 per month ($4,385 mortgage, $2,851 real estate taxes, $265 homeowner's insurance, $3,238 condominium charges, plus utilities, see NYSCEF doc. 95, Husband's Statement of Net Worth). Husband has been paying this approximately $11,500 monthly amount, and wife requests that he continue to pay this $11,500, in addition to her $30,000 monthly support request, for a total "in effect" request of $41,500 per month. Wife does not submit a calculation worksheet, relying instead on her net worth statement, which lists monthly expenses in the amount of $49,266.70.
Defendant does not dispute that plaintiff is entitled to pendente lite spousal maintenance or child support, but counters that the amount plaintiff is seeking is exorbitant, and not a reflection of the amount she or the children need. Further, he argues that plaintiff's expenses are not nearly as high as she sets forth in her statement of net worth, and therefore, the court should discredit those sums. Miller v. Miller , 24 AD3d 521, 522 [2d Dept 2005] [holding that the payor husband was entitled to a reduction of his temporary maintenance and child support payments where "certain of the wife's claimed expenses were either inflated or undocumented"]; Hearst v. Hearst , 29 AD3d 395, 395 [1st Dept 2006] [the "court properly found that some of the wife's expenditures were undocumented and/or inflated and accordingly exercised its discretion appropriately in awarding plaintiff less than she requested"]. Defendant seeks to have the court issue an award that follows the calculations set forth under DRL § 236 [B] [5-a], applying the statutory cap up to $184,000, which he claims will cover plaintiff's reasonable expenses. Khaira v. Khaira , 93 AD3d 194, 200 [1st Dept 2012] [the "new approach of calculating spousal support payments to the nonmonied spouse by means of a formula is intended to arrive at the amount that will cover all the payee's presumptive reasonable expenses"] [emphasis added].
While defendant contends that income should be imputed to plaintiff, based on her prior work experience and earnings, the court is not inclined to impute income to plaintiff at this time, as she has been out of the workforce for over ten years, while the parties were married and while caring for the parties' children. Warshaw v. Warshaw , 173 AD3d 582, 583, 105 N.Y.S.3d 405 [1st Dept 2019].
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The court must first make a determination as to temporary maintenance before determining the child support amount, as monies awarded for temporary maintenance must be subtracted from the payor's income to determine the amount of child support ( DRL § 240 [1-b] [b] [5] [iii] [1] ). At the outset, the court must calculate the guideline amount by applying the statutory formula to the payor's income up to the statutory cap of $184,000 ( DRL § 236 [B] [5-a] [b] [5], [6] ). Where, as here, the payor earns in excess of the statutory cap, the court must, after calculating the amount pursuant to the statutory formula, determine whether an additional amount of maintenance should be awarded after considering the enumerated factors specified in the statute ( DRL § 236 [B] [5-a] [d], [h] [1] ). These factors, include, but are not limited to: the age and health of the parties; the present or future earning capacity of the parties, including a history of limited participation in the workforce; the need of one party to incur education or training expenses; the care of children provided during the marriage that inhibits a party's earning capacity; the standard of living of the parties established during the marriage; and the reduced or lost earning capacity of the payee as a result of having forgone or delayed education, training, employment or career opportunities during the marriage. Id. ; see also Goncalves v. Goncalves , 105 AD3d 901, 902 [2d Dept 2013].
Applying the statutory formula, the guideline amount of temporary maintenance based upon defendant's capped income of $184,000 is $36,800 annually or $3,066 per month. Plaintiff seeks an upward deviation of that amount asserting that the court should consider plaintiff's prolonged absence from the workforce, deferral of professional achievement, allegedly at defendant's insistence, financial control exerted by defendant over plaintiff throughout the marriage, limited premarital assets held by plaintiff, the lavish lifestyle the parties had during the marriage, and the alleged minimal assets plaintiff is to receive under the Prenuptial Agreement (see Tregellas , 169 AD2d at 553 [despite prenuptial agreement waiving maintenance, the defendant found to be entitled to temporary maintenance "at the standard to which she has become accustomed during the course of the marriage"] ).
Defendant counters that plaintiff is a young, 45-year-old, educated woman with prior work experience, and that she should be working to supplement her income while the parties' children are in school or in the care of a nanny. He further claims that he has been providing adequate support, in that he has been paying all of plaintiff's housing costs, see Francis v. Francis , 111 AD3d 454 [1st Dept 2013] [holding that court should consider direct payment of housing costs when considering temporary maintenance award]; see also Warshaw , 173 AD3d 582 [upholding grant of temporary maintenance allegedly higher than requested, in part because the court "also required [recipient] to pay, from that sum, 50% of the costs of the parties' rent (at the time of the award, the parties continued to live together), utilities and household help, and 100% of her own personal expenses."].
If considering income above the statutory cap for maintenance purposes, the court turns to an analysis of DRL § 236(B)(5-a)(h)(1) factors, without being limited to the formula above the cap: in "considering income above the statutory cap there is a very important and fundamental difference between calculating basic child support under the Child Support Standards Act and the Court making an award of maintenance using the maintenance guideline statute as amended October 2015. When calculating an award of pendente lite maintenance on income above the statutory cap DRL § 236 (B) (5-a) provides that the formula is only applied to the first [$184,000]. If the Court finds it appropriate to consider income over the [$184,000] the Court must consider the factors set forth in DRL § 236(B)(5-a)(h)(1) ; however, the maintenance guideline statute formula is not applied when calculating an award on income above the [$184,000] cap." Al E. v. Joann E. , 55 Misc 3d 1212(A), 2017 NY Slip Op 50543[U], *19 [Sup Ct, Kings County, May 1, 2017]. See also Warshaw , 173 AD3d 582 ["We reject defendant's contention that the court misapplied DRL § 236(B)(5—a)(d). The court articulated the factors set forth in subsection (h)(1) upon which it relied in setting its [maintenance] award [above the cap]."] [citing Al E. v. Joann E. , 55 Misc 3d 1212(A) ]. After considering the relevant DRL § 236(B)(5-a)(h)(1) statutory factors here, the court finds that the statutory guideline amount of temporary maintenance is unjust and inappropriate in this case. Defendant owns his business and acknowledges income in excess of $1 million annually. Plaintiff, on the other hand, has been out of the work force for over ten years and has served as the primary caretaker for the parties' children, a role that appears to have inhibited her earning capacity. Moreover, the parties enjoyed a high standard of living during the marriage. The children attend private schools, the family enjoys lavish vacations and use of a summer home in the Hamptons, employed household help, and spent their money freely. There is no dispute that the monthly carrying costs on the marital home is approximately $11,500 (see plaintiff's net worth statement dated January 23, 2019 and defendant's net worth statement dated March 12, 2019).
The court notes that during this litigation, husband has continued to pay the monthly carrying costs of the marital residence, which have been occupied by wife (and children when they are with her), although the apartment may eventually revert to husband. The carrying costs have been approximately $11,500 per month. At this time, wife has not requested funds to move out of the marital residence, or for the pendente lite support to account for a new residence for her (and the children when they are with her). The court notes that "the overriding purpose of a maintenance award is to give the [recipient] spouse economic independence." Cohen v. Cohen , 120 AD3d 1060, 1065 [1st Dept 2014]. The "formula adopted by the ... maintenance provision [usually covers] all the spouse's basic living expenses, including housing costs as well as the costs of food and clothing and other usual expenses." Khaira v. Khaira , 93 AD3d 194, 200 [1st Dept 2012] ; c.f. , Al E. v. Joann E. , 55 Misc 3d 1212(A) ["the facts presented here are distinguishable from the circumstances contemplated as a ‘double-dip’ by the Court in [Khaira ]. As such, the Court directs that parties continue the status quo by using the rental income generated by the investment properties to pay the carrying charges on the marital residence [without subtracting mortgage payments from maintenance]."]. If the parties were still living together, husband's payment of all or most of the household expenses could serve to reduce a potential award from guideline maintenance. See Khaira , 93 AD3d 194 ; see also Francis v. Francis , 111 AD3d 454 [1st Dept 2013] ; C.G. v. F.G. , 53 Misc 3d 229, 238 [Sup. Ct., Rich. County 2016]. The question would become, however, how much to credit the payor for household expenses, and whether such a credit could eliminate any maintenance award. There are several Appellate Division, First Department cases where the court either subtracted half of the household expenses that were being fully paid by the payor spouse from the presumptive maintenance amount, or remanded for such a calculation by the trial court, as well as for an articulation of "any other factors" the court "may consider in deviating from the presumptive award." See Galvin v. Galvin , 154 AD3d 1141, 1143 [1st Dept 2017] ; Francis v. Francis , 111 AD3d 454, 455 [1st Dept 2013]. In Galvin , even after a deduction of half the household expenses, the recipient spouse was still entitled to $8,154 per month. In Francis , the amounts were not stated, but the appellate court allowed for the calculation on remand, as well as an articulation of "any other factors" the court "may consider in deviating from the presumptive award," adding that "award of maintenance should be made effective as of the date of application," presumably, at least allowing for the possibility of a monetary award. Francis , 111 AD3d at 455. Here, marital apartment carrying costs are approximately $11,500 per month, although at least some of those funds benefit husband as the presumed future owner and occupant of that apartment. Currently, husband is not living in the apartment, and wife is. A 100% allocation of all apartment expenses to her, however, would be unjust because such an allocation could potentially result in no maintenance award, while still leaving husband with very substantial discretionary funds. Any effectively "zero" net maintenance award (if she were to pay all of the apartment's costs) would leave wife without ability to cover her expenses, and leaving her with no funds for her food, clothing, transportation or other usual expenses. Further, if wife were to pay the mortgage and real estate costs on an apartment that may end up being husband's separate property, those payments could be a windfall to husband. On the other hand, wife cannot receive the full maintenance award and compel husband to solely pay all the carrying charges on the marital apartment she lives in: awards of support herein are intended to be all inclusive. See Khaira , 93 AD3d at 199 ; see also Francis v. Francis , supra; Woodford v. Woodford , 100 AD3d 875 [2d Dept 2012]. If the parties were living together in the apartment, a pro-rata sharing of the costs may be appropriate, especially here, where the husband acknowledges income over $1 million per year. Husband is not, however, living in the apartment, so pro-rata sharing (which would have wife pay a relatively small percentage) is not appropriate. Accordingly, upon the actual receipt of the maintenance payments awarded herein, wife is hereby directed to pay 100% portion of the utilities, homeowner's insurance, and building co-op or condo carrying charges associated with the marital residence while she resides there, within 10 days of receiving the bills, pendente lite . The court does not have information about the original use of the mortgage funds from the marital apartment, for example, whether the funds were taken out to support the children, or whether this was a pre-marital origination cost of husband's allegedly separate property. At this time, it appears that the mortgage and real estate payments are necessary to preserve what may ultimately be husband's separate property, and under these circumstances, including husband's admitted annual income of $1 million, it is appropriate for husband to continue to pay the mortgage and real estate taxes to preserve what is likely to be his separate asset. See, e.g. , Al E. v. Joann E. , 55 Misc 3d 1212(A), discussed supra . Wife shall pay the other separate housing costs for the marital apartment while she resides there, as detailed above. Husband is hereby ordered to cooperate by providing utility, homeowner's insurance, and building co-op or condo carrying charges bills to wife (in this case, due to a Temporary Order of Protection, bills shall be provided through counsel, and preferably by email, so that there is a timed record). In accordance with this ruling, husband may not subtract wife's share of bills relating to the marital residence from maintenance (or as a deduction therefrom). C.G. v. F.G. , 53 Misc 3d at 237—38. Nothing in this ruling compels the wife to remain in the marital residence. Accordingly, the husband's "maintenance payments cannot be bound to that property and must be paid to wife directly." Id. ; see also Warshaw , 173 AD3d 582.
If applying the statutory cap of $184,000, the maintenance calculations would result in annual maintenance of $36,800, or $3,067 monthly. As discussed above, pursuant to DRL § 236(B)(5-a)(h)(1) factors discussed above, a deviation above the cap is appropriate in this case, and a monthly maintenance of $7,500 is hereby awarded as more commensurate with the parties' lifestyle and needs. The court notes that although it does not follow the statutory formula when deviating above the maintenance cap [see Warshaw , 173 AD3d 582 ; Al E. v. Joann E. , 55 Misc 3d 1212(A) ], parenthetically, if the court were to utilize the formula, $7,500 monthly maintenance corresponds with an income cap of $450,000.
Accordingly, the court orders that the just and appropriate amount defendant shall pay plaintiff in monthly temporary maintenance is $7,500 ($90,000 annually), which includes the housing costs discussed above. Husband's first payment shall be made on or before January 10, 2020 for the month of January, and continuing by the first of each month thereafter, pending further court order. This award is retroactive to the date of the initial application, and arrears, if any, shall be paid at a rate of $8,000 per month.
Temporary Child Support
The court next turns to the calculation of child support for the parties' two children. In awarding temporary child support, the court may, but is not required to, consider the guidelines contained in the Child Support Standards Act (CSSA). [ Readick v. Readick , 80 AD3d 512 [1st Dept 2011] ; DRL § 240 [1-b] [c]. Additionally, the court may consider the factors that permit a deviation from the standard calculation, as provided under DRL § 240 [1-b]. Anonymous v. Anonymous , 63 AD3d 493 [1st Dept 2009]. The court will calculate the amount of the basic child support obligation by applying the statutory formula to the parties' combined income up to the statutory cap of $148,000 ( DRL § 240 [1-b] [b] & [c] ), multiplied by 25%, which is the statutory percentage for two children. Under this formula, the basic child support obligation is $37,000 annually or $3,083.33 per month:
Payor's pro rata monthly basic child support $2,806 $8,531 $18,958 The court must consider the amount of child support to be awarded, on the income that exceeds the statutory cap, if any, under the factors set forth in DRL § 240 [1-b] [f]. Given the parties' high standard of living that the children would have enjoyed had the marriage continued, coupled with defendant's financial resources and plaintiff's lack of income other than support, the court finds it appropriate to apply the statutory formula to the parties combined income up to $450,000 ( Kosovsky v. Zahl , 272 AD2d 59 [1st Dept 2000] ; DRL § 240 [1-b] [f] ), which amounts to $112,500 annually. Given the amount of temporary maintenance awarded, defendant's pro rata share of the parental income is 91% and plaintiff's pro rata share is 9%. Therefore, defendant's pro rata share of the basic child support obligation is $102,375 per year or $8,531 per month. See Blake v. Blake , 164 AD3d 1111, 1112 [1st Dept 2018] [trial "court acted within its discretion in departing from Child Support Standards Act guidelines for purposes of calculating defendant's pendente lite child support obligations and in considering the parties' resources and the family's pre-commencement standard of living"].
Further, at this time, defendant shall pay 91% and plaintiff shall pay 9% of the statutory and the parties' current and customary add-on expenses, including but not limited to child care (even if not work-related, in keeping with the parties' standard of living, and as a customary, but not statutory add-on), health insurance costs, the children's tuition, agreed-upon extracurriculars, and unreimbursed medical expenses. Hughes v. Hughes , 79 AD3d 473, 476 [1st Dept 2010] ["[a]dd-on expenses such as child care and unreimbursed medical expenses are to be prorated in the same proportion as each parent's income is to the combined parental income"].
Each party shall reimburse the other party for his or her share of those costs within 15 days upon receipt from the other party of proof of payment. These awards are retroactive to the date of the filing of this application. Retroactive child support payments, if any, shall be made at a rate of $5,000 per month.
Interim Counsel Fees
Pursuant to DRL § 237(a), which was amended as of October 12, 2010, the Court in an action for divorce:
... may direct the person or persons maintaining the action, to pay counsel fees and fees and expenses of experts directly to the attorney of the other spouse to enable the other party to carry on or defend the action or proceeding as, in the court's discretion, justice requires, having regard to the circumstances of the case and of the respective parties. There shall be rebuttable presumption that counsel fees shall be awarded to the less monied spouse. In exercising the court's discretion, the court shall seek to assure that each party shall be adequately represented and that where fees and expenses are to be awarded, they shall be awarded on a timely basis, pendente lite, so as to enable adequate representation from the commencement of the proceeding.
An award of interim counsel fees is within the sound discretion of the trial court, DeCabrera v. Cabrera-Rosete , 70 NY2d 879, 881 [1987], and the issue is controlled by the equities and circumstances of the individual case. Johnson v. Chapin , 12 NY3d 461, 467 [2009].The purpose of section 237(a) is to "redress the economic disparity between the monied spouse and the non-monied spouse." O'Shea v. O'Shea , 93 NY2d 187, 190 [1999]. In determining whether to award interim attorney's fees, the court should review the financial circumstances of both parties, as well as all the other circumstances of the case, which may include the relative merit of the parties' positions. DeCabrera v. Cabrera-Rosete, supra . See also Yao v. Kao-Yao , 147 AD3d 624 [1st Dept 2017]. " ‘An appropriate award of attorney's fees should take into account the parties' ability to pay, the nature and extent of the services rendered, the complexity of the issues involved, and the reasonableness of the fees under all of the circumstances.’ " DiBlasi v. DiBlasi , 48 AD3d 403, 405 [2d Dept.], lv. app. denied , 10 NY3d 716 [2008], quoting Grumet v. Grumet , 37 AD3d 534, 536 [2d Dept 2007] [citations omitted]. The court may also consider whether either party has engaged in litigation causing delay or unnecessary legal proceedings. Prichep v. Prichep , 52 AD3d 61, 64 [2d Dept 2008].
As stated by the court in Prichep , the interim award of fees ensures that the nonmonied spouse will be able to litigate the action, and do so on an equal footing with the monied spouse. Id. at 65. Such an award "is appropriate ‘to prevent the more affluent spouse from wearing down or financially punishing the opposition by recalcitrance, or by prolonging the litigation.’ " Gober v. Gober , 282 AD2d 392, 393 [1st Dept 2001], quoting O'Shea , 93 NY2d at 193. See also Brookelyn M. v. Christopher M. , 161 AD3d 662 [1st Dept 2018] ; Chesner v. Chesner , 95 AD3d 1252 [2d Dept 2012] ; Shurka v. Shurka , 68 AD3d 488, 489 [1st Dept 2009] ; Charpié v. Charpié , 271 AD2d 169 [1st Dept 2000] ; S.B. v. G.B. , 33 Misc 3d 1212(A) [Sup. Ct., NY County 2011]. Such interim awards focus upon redressing economic disparity between the parties and ensuring that superior resources do not unbalance the scales of justice. Frankel v. Frankel , 2 NY3d 601, 607 [2004], quoting O'Shea , 93 NY2d at 190. Unlike a final award of attorney's fees, when awarding interim counsel fees, the court need not conduct a detailed inquiry or evidentiary hearing. Prichep , 52 AD3d at 65.
Plaintiff seeks $250,000 in interim fees, claiming that as of the date of the reply on this motion, plaintiff's counsel is owed $204,935 (see invoices filed as NYSCEF doc. 98, 128, plaintiff's exhibits L, P). Plaintiff asserts that much of the litigation costs have been incurred due to defendant's controlling behavior throughout this litigation, including, but not limited to, responding to frivolous "emergency" custody motions and having to address multiple violations of current orders of protection. She contends that she should not have to use her limited resources, $150,00 in premarital retirement funds, depleting her assets in order to pay her legal expenses (see Mitnik v. Mitnik , 144 AD3d 428 [1st Dept 2016] [counsel fees awarded to the wife where the husband was in a superior financial position]; Charpi , 271 AD2d at 171-172 [holding that the less monied spouse should not be required to utilize the finite resources available to him or her where the other spouse has substantial resources and income from which to pay legal expenses] ).
Defendant counters that it is plaintiff who is resorting to unnecessary litigation, and that in order to level the playing field both parties must be financially responsible when supervising their lawyers and making decisions about what is or is not worth fighting about. Antizzo v. Cannizzaro , 43 Misc 3d 1204[A], *3 [Sup Ct, Westchester County 2014] ["ultimately, it is a litigant's responsibility to be aware of and recognize when the fees are growing beyond what the case merits or a level that they can reasonably afford"]. Husband does not dispute any specific entry in the wife's attorneys' bills.
Reasonable short-term prospective counsel fees are appropriate under all of the circumstances discussed above. Soiefer v. Soiefer , 17 AD3d 268, 269 [1st Dept 2005] [in consolidated matrimonial action, upholding award of attorneys' fees, including an "appropriate advance on those and other anticipated fees"]; Feinstein v. Merdinger , 305 AD2d 115 [1st Dept 2003] [upholding fees in a post-judgment custody case, stating that "Attorneys' fees ... can be awarded for prospective work"]; Avedon v. Avedon , 270 AD2d 65, 66 [1st Dept] [reversing denial of prospective counsel fees] lv. dismissed , 95 NY2d 902 [2000]. Prospective counsel fees are not a "blank check," however, and should be limited to fees either "actually incurred or reasonably anticipated to be incurred." Messinger v. Messinger , 24 AD3d 631, 632 [2d Dept 2005].
Inasmuch as it appears that plaintiff lacks sufficient funds of her own to compensate counsel without depleting her assets, wife is entitled to attorney's fees already spent, in the total amount of $204,935, plus an additional $45,000 to be held in escrow by wife's counsel towards invoices to be presented to all counsel for fees reasonably projected to have been expended either while this motion was pending or for fees to be incurred in the near future. These fees are to be paid by defendant directly to plaintiff's attorney in the following installments: $100,000 by January 15, 2020, $50,000 by February 15, 2020, $50,000 by March 15, 2020, and $49,935 by April 15, 2020. Charpi , 271 AD2d 169. This award is made subject to meaningful reallocation at trial or settlement, and without prejudice to further applications for additional sums, as necessary at time of trial or sooner. Ritter v. Ritter , 135 AD2d 421 [1st Dept 1987] ; Jorgensen v. Jorgensen , 86 AD2d 861 [2d Dept 1982].
The parties are reminded that the best remedy for any claimed inequities in a pendente lite award is a speedy trial, Warshaw , 173 AD3d at 584, "where the facts may be examined in greater detail and a more accurate appraisal of the parties' situation may be obtained," Kaplan v. Kaplan , 192 AD2d 343 [1st Dept 1993].
Conclusion
Accordingly, it is
ADJUDGED and DECLARED that the parties' prenuptial agreement is enforceable, except as ordered herein; and it is further
ORDERED that the issue of whether enforcement of the waiver of maintenance in the prenuptial agreement is unconscionable at this time shall be referred to a tripartite hearing: First, the court will hear competent evidence to determine the meaning of income terms for maintenance purposes as discussed supra; second, based upon utilization of those terms in context of the overall prenuptial agreement, the court will determine whether or not the result would be that maintenance is either waived or found to be de minimis; third, the court would then determine whether this maintenance waiver or calculation is unconscionable under the present circumstances, or manifestly unfair; and it is further
ORDERED that defendant shall pay the sum of $7,500 per month for temporary spousal maintenance; Husband's first payment shall be made on or before January 15, 2020 for the month of January, and continuing by the first of each month thereafter, pending further court order. This award is retroactive to the date of the initial application, and any arrears, if any, shall be paid at a rate of $8,000 per month, and continuing until all arrears are paid in full; and it is further
ORDERED that, upon the actual receipt of the maintenance payments awarded herein, plaintiff shall pay 100% of utilities, homeowner's insurance, and building co-op or condo carrying charges (if any) associated with the marital residence while she resides there, within 10 days of receiving the bills, pendente lite; husband is hereby ordered to cooperate by providing utility, homeowner's insurance, and building co-op or condo carrying charges bills to wife (through counsel, and preferably by email, so that there is a timed record); husband may not subtract wife's share of bills relating to the marital residence from support (or as a deduction therefrom); husband shall continue to pay the mortgage and real estate taxes on the marital apartment to preserve what is likely to be his separate asset; and it is further
ORDERED that defendant shall pay the sum of $8,531 per month to plaintiff in temporary basic child support. The first payment shall be made on or before January 10, 2020 for the month of January, and continuing by the first of each month thereafter, pending further court order. This award is retroactive to the date of plaintiff's application. Arrears shall be paid at the rate of $5,000 per month, and continuing until all arrears are paid in full; and it is further
ORDERED that defendant's pro rata share of 91% and plaintiff's pro rata share of 9% shall be applied for all of the children's add-on expenses, including, but not limited to, tuition, extracurricular activities, childcare costs, and health insurance costs; and it is further
ORDERED that each party shall reimburse the other party for his or her share of those costs within 15 days upon receipt from the other party of proof of payment to a third party; and it is further
ORDERED that the awards for add-on expenses are retroactive to the date of filing of wife's application; and it is further
ORDERED that defendant shall pay $204,935 in attorneys' fees directly to plaintiff's counsel, Alton L. Abramowitz, Esq., Schwartz Sladkus Reich Greenberg Atlas LLP, located at 444 Madison Avenue, New York, NY 10022, plus an additional $45,000 to be held in escrow by wife's counsel towards invoices to be presented to all counsel for fees reasonably projected to have been expended either while this motion was pending or for fees to be incurred in the near future. These fees are to be paid by defendant directly to plaintiff's attorney in the following installments: $100,000 by January 15, 2020, $50,000 by February 15, 2020, $50,000 by March 15, 2020, and $49,935 by April 15, 2020; and it is further
ORDERED that any relief not granted is denied.