Opinion
09-06-2016
S.E., Plaintiff, v. M.E., Defendant.
Recitation, as required by CPLR § 2219(a), of the papers considered in the review of this motion.
| Papers | Numbered |
|---|---|
| Notice of Motion/Order to Show Cause/ Cross Motion and Affidavits (Affirmations) Annexed | 1, 2 |
| Plaintiff's Affirmation in Opposition to Cross Motion and in Reply to Motion | 3 |
| Defendant's Reply Affirmation | 4 |
| Transcript of Proceedings dated October 2, 2014, | 5 |
| Report and Recommendation After Trial on Equitable Distribution of Special Referee Sweeting dated 07/09/2014, | 6 |
| Post–Trial Memoranda | 7, 8 |
| Transcripts of Trial held before Referee Sweeting dated 2/7/13, 4/25/13, 7/1/2013, 9/4/2013, 11/20/2013, 11/27/2013, 1/30/2014, | 9–15 |
| Plaintiff's Exhibits 1–7, 10, 12a–19, | 16 |
| Defendant's Exhibits A–Q, S1–Y, | 17 |
Plaintiff–Wife (hereinafter "Plaintiff") moves by notice of motion (Motion Sequence No.6) to confirm in all respects the Report and Recommendation ("Report") after Trial on Equitable Distribution of Special Referee Machelle J. Sweeting ("Referee" or "Referee Sweeting") dated June 9, 2014. Plaintiff also seeks, pursuant to DRL 237(a), an award of counsel fees from Defendant–Husband (hereinafter "Defendant").
Defendant opposes Plaintiff's motion to confirm the Referee's Report and her motion for counsel fees. Defendant moves by cross motion (Mot.Seq.# 7) to reject: 1) the portion of the Special Referee's Report that allegedly fails to credit Defendant's transferring Con Edison stock to his children prior to being served process in the instant action and 2) the portion of the Special Referee's Report that recommends Plaintiff receive 50% of both Defendant's Con Edison stock and retirement benefits (Defendant's Defined Benefits and Contributions Plans at Con Edison and Defendant's Defined Benefits Plan at MABSTOA), acquired during the marriage.
PROCEDURAL AND FACTUAL HISTORY
The parties were married on January XX, 1992 in a civil ceremony in Manhattan, N.Y. (2/7/13 Tr. at 28). Plaintiff is approximately 54 years old and her highest level of education is high school, with two years of beauty school in Ukraine. Defendant is approximately 63 years old and his highest level of education is high school. Plaintiff commenced the instant action for divorce on the ground of cruel and inhuman treatment on August 4, 2009. The preliminary conference (PC) was held on March 10, 2010. The PC stipulation and order indicates that there were no children of the marriage, and that both parties waived maintenance. The issues of grounds, equitable distribution and counsel fees for Plaintiff were marked unresolved. The Defendant filed a demand for a jury trial on grounds, and in an order dated August 2, 2011, the matter was administratively transferred to the Honorable Debra Silber for trial. On August 4, 2011 the jury returned a verdict for Plaintiff. The judgment was stayed and the matter transferred back to this court to resolve all remaining ancillary issues.
The matter was then referred by this court to Referee Sweeting, to hear and report on the issue of equitable distribution in an order of reference dated December 6, 2012. The hearing before Referee Sweeting was held on February 7, 2013; April 25, 2013; July 1, 2013; September 4, 2013; November 18, 2013; November 20, 2013; November 27, 2013; and January 30, 2013. Referee Sweeting issued her report and recommendation on July 9, 2014.
The Referee's Report
Referee Sweeting, having had the opportunity to observe the testimony of both parties and to assess the credibility of the parties as well as the documentary evidence submitted, made the following final recommendations:
1. that the assets subject to equitable distribution be divided equally between the parties;
2. the marital residence be sold and proceeds from the sale divided equally between the parties, as agreed upon by the parties;
3. that Plaintiff receive a fifty percent share of the 3,640.58 shares of Con Edison Stock that Defendant owned at the time of commencement of action, equal to 1,820.29 shares valued at $71,901.45 at the time of commencement;
4. that Plaintiff receive a fifty percent share ($76,538.60) of the defendant's Defined Benefit Plan at Con Edison (valued at $153,077.21); a fifty percent share ($62,652.97) of the defendant's Defined Contribution Plan at Con Edison (valued at $125,304.94); and a fifty percent share ($83,469.91) of the defendant's Defined Benefit Plan at MABSTOA (valued at $166,939.83);
5. the withdrawals from the parties' joint Citibank account constitute marital waste which must be credited back to the marital estate, with each party receiving a 50% equitable share of $17,648.91 of the account balance;
6. the withdrawals totaling $4,527.81 from the accounts in the Plaintiff's name be credited back to the marital estate and equally divided with each party to receive $2,263.90; and
7. any claims not raised in the report and recommendation shall be considered denied.
CONFIRMING OR REJECTING THE REFEREE'S REPORT
Plaintiff's Contentions
Plaintiff contends that Referee Sweeting's June 9, 2014 report must be confirmed in its entirety. Plaintiff argues that Referee Sweeting had an opportunity to hear all relevant testimony and evidence and was able to draw reasonable factual and legal conclusions in accordance with the record and relevant law.
Defendant's Contentions
Defendant requests that the Court deny Plaintiff's motion to confirm the Referee's report. Rather, Defendant requests that the court reject certain parts of the Referee's report, and otherwise confirm the remainder of the report. Defendant specifically asks that the court reject the recommendation of the Special Referee to divide Defendant's Con Edison stock and retirement benefits equally between the parties. Instead, Defendant proposes the court allocate 35% of Defendant's Con Edison stock and retirement benefits to Plaintiff, in accordance with the formula set forth in Majauskas v.. Majauskas, 94 A.D.2d 494 (4th Dept 1983). Defendant argues that the distribution of assets should reflect the proportion of the parties' economic contributions to the marriage.
Defendant also asks the court to reject the portion of the Special Referee's report that found that Defendant's transfer of 3,031 shares of Con Edison stock to his children was made in anticipation of a matrimonial action and designed to protect the stock from equitable distribution. Defendant instead argues that the transfer of stock was made to equalize the value of gifts made by the parties to Plaintiff's daughter, Adrianna, during the marriage. According to Defendant, the parties gave Adrianna $50,000 towards the purchase of a condo and $5,000 as a gift for a nursery. Defendant claims that at some point during the marriage, Plaintiff agreed that Defendant's children should receive comparable amounts. Defendant further alleges that approximately two weeks prior to being served with the summons and complaint, he arranged for the stock to be transferred so that each of his children would receive approximately $57,000. Defendant argues that the Special Referee erred in finding that Defendant transferred the stock on August 18, 2009, and maintains that he was unaware of the matrimonial action at the time that he arranged for the stock transfer.
Plaintiff's Opposition to Cross Motion
Plaintiff contends that Defendant's cross-motion to reject the Special Referee's Report is untimely and should be dismissed, according to the requirements of CPLR 4403. Addressing the substantive points of Defendant's cross-motion, Plaintiff argues that the parties had a long-term economic partnership, and Defendant's arguments with respect to the parties' unequal economic contributions to the marriage do not properly credit Plaintiff's considerable non-economic contributions to their marriage. Plaintiff claims that her efforts as a wife to Defendant and stepmother to his children from a prior marriage allowed Defendant to work two jobs and provide financially for his family. Plaintiff further contends that the findings of the Special Referee should be entitled to great deference by the court under applicable case law.
On the issue of Defendant's transfer of the Con Edison, Plaintiff argues that Defendant's claim that the 3,031 shares of Con Edison stock were transferred without anticipation of the matrimonial action is both incredible and belied by the record.
Defendant's Reply
Defendant contends that the filing of the cross motion was timely under the provisions of 22 NYCRR 202.44. Alternatively, Defendant argues that failure to move within the statutory fifteen-day period is not a dispositive omission and the Court may still choose to confirm or deny the Special Referee's report.
Defendant also argues that, in accordance with the holding of Mahoney–Buntzman v. Buntzman, 12 NY3d 415 (2009), Referee Sweeting erred in relying on Plaintiff's testimony regarding her cash earnings during the marriage, which were not reported on the parties' tax returns, to support awarding Plaintiff an equal share of Defendant's assets
Regarding the stock transfer, Defendant maintains that he could not have transferred the stock in contemplation of divorce because he requested the stock transfer on August 6–12 days before he was served with the summons for this action. Defendant also argues that the Special Referee ignored his testimony regarding the parties' agreement to equalize gifts made to Plaintiff's daughter. Defendant rejects the Referee's determination that Defendant failed to establish the parties' agreement, and that the parties should have called Defendant's son or Plaintiff's daughter to provide corroborating testimony. Defendant claims that Plaintiff's daughter was not privy to the conversation, and there was no reason to call Defendant's son as a witness when he believes Plaintiff herself acknowledged the agreement.
DISCUSSION
CPLR 4403 provides "[u]pon the motion of any party or on his own initiative, the judge required to decide the issue may confirm or reject, in whole or in part, the verdict of an advisory jury or the report of a referee to report; may make new findings with or without taking additional testimony; and may order a new trial or hearing." While the Referee's report is entitled to some deference, the court is not bound by the Referee's findings or recommendations (Jan S. v. Leonard S., 26 Misc.3d 243, 249 [Sup Ct, New York County 2009] ; RBC Capital Markets Corp. v. Bittner, 24 Misc.3d 728 [Sup Ct, New York County 2009] ). The Referee's report, however, "should be confirmed whenever the findings are substantially supported by the record, and the Referee has clearly defined the issues and resolved matters of credibility" (Stone v. Stone, 229 A.D.2d 388, 388 [2d Dept 2005] ; see also Shen v. Shen, 21 AD3d 1078 [2d Dept 2005] ; Namer v. 152–54 W 15th St. Realty Corp., 108 A.D.2d 705 [1st Dept 1985] [a court reviewing the findings and recommendations of a Special Referee will generally "look with favor upon a Referee's report in as much as the Referee, as a trier of fact, is considered to be in the best position to determine the issues presented"] ).
In the instant case, the Referee had the opportunity to observe the parties, their testimony, and exhibits, and was able to make certain findings on the credibility of the parties and the facts of the case. Both parties were represented by counsel, who conducted exhaustive direct examination, cross examination, redirect, recross; re-redirect and re-recross, presented documentary evidence, and stipulated certain facts as appropriate.
Upon review of the record in this case, this court confirms the Referee's report, except as discussed below.
Division of Retirement Assets
In making a decision on equitable distribution of marital assets, the court must consider, inter alia, "the income and property of each party at the time of marriage, and at the commencement of the action," "the duration of the marriage and the age and health of both parties," "the loss of inheritance and pension rights upon dissolution of the marriage as of the date of dissolution," "any award of maintenance under subdivision six of this part," the "direct or indirect contribution made to the acquisition of such marital property by the party not having title, including ... contributions and services as a spouse, parent, wage earner and homemaker, and to the career or career potential of the other party," "the probable future financial circumstance of each party," "the wasteful dissipation of assets by either spouse," and "any transfer or encumbrance made in contemplation of a matrimonial action without fair consideration" (Domestic Relations Law § 236 [B][5][d][1], [2], [4], [6], [7], [9], [12], [13] ). "Although equitable distribution is not necessarily equal distribution, where ... both spouses equally contribute to a marriage that is of long duration, a division of marital assets should be made as equal as possible" (Miller v. Miller, 128 A.D.2d 844 [2d Dept 1987] [citations omitted]; see also Schwartz v. Schwartz, 67 AD3d 989 [2d Dept 2009] ).
When the parties married they had little or no assets between them (11/20/2013 Tr. at 6). Thus, the assets in issue at the time of commencement, i.e., the marital residence, Defendant's retirement assets, Defendant's stock, and the parties bank accounts, were acquired during the marriage and are presumptively marital (Domestic Relations Law § 236[B][1][c] ). Defendant does not dispute that the parties' assets are marital property, but, rather, disagrees with Referee Sweeting's assessment as to their distribution. While Defendant is correct in arguing that equitable distribution does not require equal distribution, which was noted by the Referee in her report and recommendation, the testimony and evidence presented at trial, in conjunction with consideration of the statutory factors, warrant equal distribution of the marital assets.
Defendant argues that Referee Sweeting erroneously relied on Plaintiff's testimony regarding her earnings according to the precedent set forth in Mahoney–Buntzmann v. Buntzman (12 NY3d 415 [2009] ). In Mahoney–Buntzman, the Court of Appeals held that "[a] party to litigation may not take a position contrary to a position taken in an income tax return" and "[w]e cannot, as a matter of policy, permit parties to assert positions in legal proceedings that are contrary to declarations made under the penalty of perjury on income tax returns" (12 NY3d at 422 ). In making this argument, Defendant characterizes the Referee's determination as solely relying on Plaintiff's self-serving testimony regarding her earnings. However, on this record, it is clear that Referee Sweeting did not rely solely on Plaintiff's testimony of her cash earnings during the marriage. On plaintiff's counsel and defense counsel's direct examinations of Defendant, Defendant acknowledged that throughout the marriage, Plaintiff worked as a cleaning lady and nanny, that she earned approximately $5–6 per hour, and that she brought home cash and gave it to Defendant, which he would deposit in a bank account (9/4/2013 Tr. at 45, 46; 11/20/2013 Tr. at 7; 11/27/2013 Tr. at 38–39, 45). Further, Defendant's counsel, on cross examination of Defendant, elicited testimony regarding Plaintiff's cash earnings throughout the marriage (9/4/2013 Tr. at 63). Although the documentary evidence indicates that Plaintiff's earnings were not reported on the parties' tax returns during the marriage, the Plaintiff's testimony, as corroborated by Defendant, indicates that Plaintiff made economic contributions in addition to her considerable non-economic contributions to support this family during the marriage, as further discussed below.
Additionally, Referee Sweeting noted, and this court acknowledges, that Defendant seemingly seeks to simultaneously reject any testimony regarding Plaintiff's earnings pursuant to Mahoney–Buntzman, but also utilize those earnings to arrive at a calculation of Plaintiff's pro rata share of his retirement assets. If the court were to follow Defendant's logic and disregard Plaintiff's income, then there would not be a 65/35 split of the marital assets based on their economic contributions during the marriage. Instead, Defendant would be awarded 100% of the retirement assets and stocks. It would be inequitable to allow Defendant to use Plaintiff's earnings as a sword in one instance, and then hide behind the shield of Mahoney–Buntzman in another, particularly where, as here, Defendant's own testimony corroborates Plaintiff's testimony regarding her employment and earnings during the marriage.
Defendant argues that the retirement and stock assets should be divided 35/65 based on the parties' economic contributions during the marriage, with Plaintiff being awarded 35% of the retirement assets and stocks. The cases cited by Defendant in support of this argument are unpersuasive and distinguishable from the case at bar. First, some of the cases cited by Defendant involve the division of business entities or interests, or real property (see, e.g., Arvantides v. Arvantidies, 64 N.Y.2d 1033 [1985] [dental practice]; Gordon v. Gordon, 113 AD3d 654 [2d Dept 2014] [realty company]; Benabu v. Rienzo, 104 AD3d 714 [2d Dept 2013] [realty company]; Faello v. Faello, 43 AD3d 1102 [2nd Dept 2007] [plaintiff-husband awarded 85% of net proceeds of Florida residence because of significant separate property contribution to purchase and furnishing of home]; Diaco v. Diaco, 278 A.D.2d 358 [2d Dept 2000] [2/3–1/3 division of the marital residence for reflect defendant's contribution to the asset]; McAlpine v. McAlpine, 176 A.D.2d 285 [2d Dept 1991] [defendant-husband awarded 75% of marital residence where he contributed 25% of purchase price from separate property and was primarily responsible for its maintenance] ). Retirement assets are akin to deferred compensation and are therefore more similar to wages than to business interests, professional licenses and real property (Dolan v. Dolan, 78 N.Y.2d 463 [1991] ). Just as Defendant's wages were utilized for the parties' mutual benefit prior to their separation (see 2/7/2013 Tr. at 73), the pension benefits accrued during the marriage should similarly be equally divided after due consideration of the statutory factors and the record before this court.
Second, in many of the cases cited by Defendant, the non-titled spouse received an award of maintenance, which was then factored into the trial court's analysis on equitable distribution. Here, both parties waived maintenance in the preliminary conference stipulation and order, and that was explicitly considered by Referee Sweeting in arriving at a recommendation for equitable distribution.
Third, Kobylack v. Koblyack, 111 A.D.2d 221 (2d Dept 1985), is distinguishable because there, the court equitably divided the marital assets 72/28 finding that (1) both parties worked fulltime in a childless marriage for 10 years and contributed to the acquisition and maintenance of their assets in that proportion; (2) there were no other economic or noneconomic contributions made by the non-titled wife in the record to warrant a greater percentage of husband's Thrift Fund; and (3) both parties had pensions available through their respective employment. Here, Plaintiff worked part time as a housekeeper and babysitter, spending the rest of her time catering to the needs of Defendant, her daughter and Defendant's children from a prior marriage and does not have any retirement assets to rely on post-divorce.
Fourth, although the Second Department mentions in Annis v. Annis, 189 A.D.2d 846 (2d Dept 1993), that the wife was receiving a one-third share of the pension, that the only issue on appeal was the date of valuation, which the court decided without any analysis about the appropriateness of the division.
Finally, there was no evidence presented at trial that Plaintiff has any retirement assets of her own to rely upon for her support. There have been no allegations of complacency on Defendant's part in making an economic contribution during the parties' marriage or in the acquisition and maintenance of the marital property, as the court found in Mavra v. Mavra, 131 A.D.2d 447 (2d Dept 1987).
Defendant testified that if he had one pension, he would be willing to split it equally with his wife. Instead, he would like the pensions divided 65/35, with the 65 going to him because he has two pensions, and "[n]ow she going to receive, even 65/35 she going to receive 70 percent, 35 percent from each pension" (11/27/2013 Tr. at 33:5–6). To the extent, Defendant believes that Plaintiff would be receiving a greater than 50% share of the two pensions, the court respectfully corrects Defendant's arithmetic—if Plaintiff were to receive 35% of each pension, she would be receiving 35%, not 70%, of the sum of the two pensions.
Even assuming this court were to disregard any testimony regarding Plaintiff's earnings, the record supports a finding that Plaintiff's noneconomic contributions during the marriage warrant equal distribution of the marital assets. Although Defendant worked two, sometimes three, jobs during the marriage and was the primary breadwinner, Referee Sweeting found that Plaintiff credibly testified that she cared for the parties' children from prior marriages as well as Defendant himself when he became ill. According to Plaintiff, Defendant's children would live with them for months at time and that she would care for them as she did her own daughter (see 2/7/2013 Tr. at 31–33, 36–40; 46, 52, 63–64, 70–71; 4/25/2013 Tr. at 39, 46–47). Plaintiff performed housework and prepared Defendant's lunches and the family's dinner each night (2/7/2013 Tr. at 37–38, 40, 43–44). Plaintiff testified that Defendant did not help with the daily housework, but when he returned home from work, he would check on the children and talk on the phone (id at 42, 52). She also stated that Defendant was chiefly responsible for financial matters (7/1/2013 Tr. at 57). During the marriage, Defendant was diagnosed with Hepatitis C and Plaintiff acted as his nurse: she accompanied Defendant to his doctor appointments and injected his medication every week for approximately six months (2/7/2013 Tr. at 66; see also 9/4/13 Tr. at 45). Additionally, the Referee found that Plaintiff credibly testified regarding her efforts, at times alongside her husband, in renovating and maintaining their home (2/7/2013 at 41–42, 59–61; 4/25/2013 Tr. at 35–39; see also 9/4/2013 Tr. at 45 [Defendant testifies that Plaintiff helped him with construction of their home] ). When Defendant started working a second job, Plaintiff's responsibilities at home increased (2/7/2013 Tr. at 57–58). Plaintiff testified that Defendant would not allow her to enroll in school or classes to improve her English or learn any skills to increase her earning capacity (id at 44–45).
Defendant fails to establish that the Referee's conclusions were not substantially founded in the record based on her determinations of the issues and credibility. Referee Sweeting fully considered the statutory factors applicable to the instant case, and set them forth in her report and recommendation. Referee Sweeting credited Plaintiff's testimony regarding her non-economic contributions during the marriage, and Defendant's general denial is not sufficient to contradict Plaintiff's testimony in this regard. Referee Sweeting ultimately found that, based on the credible evidence presented at trial regarding Plaintiff's contributions during the marriage, Plaintiff is entitled to an equal share of the marital assets. The fact that Defendant worked two full time jobs throughout the marriage does not presumptively entitle him to a greater share of the marital assets (see Funaro v. Funaro, 34 NYS3d 757 [3d Dept 2016] ). The court declines to discount Plaintiff's considerable and unremunerated efforts as a wife and step-mother to Defendant's children during a seventeen-year marriage, especially at the expense of amassing any financial assets of her own and for the further benefit of Defendant. This court finds that, upon Plaintiff's noneconomic contributions during this long term marriage, together with the fact that she waived maintenance, the Referee's distribution of the marital assets is well supported by the record, and should not be disturbed.
Based on the foregoing, it is clear that the parties had a true economic partnership throughout their marriage, and the parties' assets subject to equitable distribution shall be equally divided in accordance with the Referee's findings. However, the court amends Referee Sweeting's calculation and method of distribution of the retirement assets as follows: Plaintiff shall receive 50% of the marital portion of defendant's Defined Benefit Pension Plan at Con Edison; and 50% of the marital portion of defendant's Defined Benefit Pension Plan at MABSTOA pursuant to the formula set forth in Majauskas v. Majauskas, supra. Plaintiff shall submit a Qualified Domestic Relations Order ("QDRO") within 45 days of the entry of a Judgment of Divorce in this matter. The cost of preparing the QDRO shall be shared equally between the parties.
Con Edison Stock and Other Assets
With respect to the Con Edison stock, Referee Sweeting found, after consideration of the evidence and the credibility of the parties, that Defendant transferred the stock to his son in contemplation of matrimonial action, and that such transfer was wasteful dissipation of a marital asset. Defendant claims that he arranged for the transfer of stock prior to being served with the summons and notice, however, Referee Sweeting found, and the record supports, that Defendant had notice of this action prior to being served with any papers.
Plaintiff testified that on or about July 24, 2009, Defendant told her that he wanted to divorce her because he could not change her (4/25/2013 Tr. at 24, 31). Plaintiff testified that she called Defendant on or about July 26, 2009 to inform him that she had left him and that she would file for divorce (4/25/2013 Tr. at 9; see also 11/20/2013 Tr. at 15 [Defendant testified Plaintiff called to say she was leaving him] ). She also testified that she told him that she had withdrawn money from their joint bank account (4/25/2013 Tr. at 9). On August 10, 2009, Defendant hired a private investigator to follow Plaintiff (see 4/25/2013 Tr. at 12, 26; 9/4/2013 Tr. at 32). Defendant received a letter dated August 11, 2009 from Plaintiff's counsel attaching an affidavit of defendant in an action for divorce (11/20/2013 Tr. at 31). Defendant met with an attorney and signed a retainer agreement on August 11, 2009 (Plaintiff's Exhibit 15). On August 12, 2009, Defendant called and placed a book transfer request for 3,031 shares of his Con Edison stock (Plaintiff's Exhibit 14). The transfer of shares was completed on August 18, 2009. Defendant was served with this divorce action on August 18, 2009 (9/4/2013 Tr. at 25). Although Defendant testified that he first requested the transfer on August 6, 2006, Referee Sweeting did not find that testimony credible. The documentary evidence and testimony indicate that Defendant made the request on August 12, 2009 and the transaction was posted to the account on August 18, 2009 (compare 11/27/2013 Tr. at 29 and Plaintiff's Exhibit 14; see Report at 15–16). The timing of this transfer, together with the other events that occurred between Plaintiff filing this action and Defendant being served with the summons and notice, support Referee Sweeting's conclusion that Defendant's transfer of Con Edison stock was done in contemplation of divorce (see Gallagher v. Gallagher, 93 AD3d 1311 [4th Dept 2012] [purchase of property titled in son's name was part of defendant-husband's scheme to divest wife of her interest in farm]; DeGroat v. DeGroat, 84 AD3d 1012 [2d Dept 2011] [defendant-husband ordered to pay plaintiff-wife 50% of the money he withdrew from joint bank account immediately prior to or after commencement] ).
To the extent Defendant claims that he ordered the stock transfer prior to being served with the automatic orders, then that would only refute the allegation that he transferred the stock in violation of the automatic orders. That, however, is not the only issue. Plaintiff also claims that Defendant transferred the stock in contemplation of a matrimonial action. Therefore, so long as the record supports that Defendant was aware of the divorce action, by service of the summons, complaint and/or automatic orders, or by some other means, Referee Sweeting was correct in concluding that the stock was transferred in contemplation of this action.
Additionally, Defendant claims that the transfer was made pursuant to an agreement of the parties during the marriage to equalize gifts made to the children. Domestic Relations Law § 236(B)(3) provides: "[a]n 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 or proven in the manner required to entitle a deed to be recorded." Further, the Court of Appeals has held:
where the payments are made before either party is anticipating the end of the marriage, and there is no fraud or concealment, courts should not look back and try to compensate for the fact that the net effect of the payments may, in some cases, have resulted in the reduction of marital assets ... Courts should not second-guess the economic decisions made during the course of a marriage, but rather should equitably distribute the assets and obligations remaining once the relationship is at an end," (Mahoney–Buntzman, 12 NY3d at 421 ; see also Kessler v. Kessler, 118 AD3d 946 [2d Dept 2014] ).
The parties testified that in or early 2006, the parties gave Adrianna $50,000 towards the purchase of a condo, $5,000 as a wedding gift, and $5,000 as a gift for a nursery (4/25/13 Tr. at 82–83; 9/4/2013 Tr. at 52–53; 11/20/2013 Tr. at 52–53, 56). Defendant claims that he and Plaintiff agreed and promised to give gifts of an equivalent amount to each of Defendant's two children (11/20/2013 Tr. at 54). Although Plaintiff admitted that certain monies were paid for her daughter's support out of the parties' joint account and that the parties had discussed whether Defendant's children would receive a comparable amount, Plaintiff did not testify that there was any agreement to do so, and, in fact, testified that she never authorized Defendant to transfer any money or assets to any members of his family (see 4/25/2013 Tr. at 25, 84). When Plaintiff's counsel asked Defendant whether Plaintiff had consented to any transfer of stock, he replied that she had not (9/4/2013 Tr. at 9).
To the extent Defendant seeks to have this court recognize an agreement during the marriage, Defendant failed to produce any independent evidence of a written agreement between the parties to equalize the gifts, and both parties testified that Plaintiff did not consent to the transfer of stock. To the extent Defendant now seeks to justify the post-commencement transfer of stock to equalize gifts made during the marriage, the Court declines to look back three to four years prior to commencement of this divorce action to make any finding regarding how the parties chose to spend their money. Referee Sweeting found that Defendant's "equalizing gifts" claim was not credible or otherwise supported by the record, and this court confirms the Referee's findings in that regard.
However, the court rejects the method of distribution of the stock and restates same as follows: Plaintiff is awarded 1,820.29 shares of Defendant's Con Edison stock or $71,901.45 to reflect the value of 1,820.29 shares of Defendant's Con Edison stock as measured at the commencement of the action.
Bank Accounts
After review of the record, the court rejects the method of distribution of the parties' bank accounts and restates same as follows: the $17,648.91 Plaintiff withdrew from the joint Citibank account shall be deemed her marital share of those funds and Defendant shall have 100% of the remaining funds as his equitable share of the bank account.
Of the $4,527.81 that Plaintiff withdrew from bank accounts in her name, Defendant is entitled to 50% (i.e., $2,263.90) and Defendant shall have a set off of this from the sum of $71,901.45 from the stock proceeds.
In all other respects the Referee's Report and findings are adopted by the Court.
COUNSEL FEES
Plaintiff's Contentions
Plaintiff requests that the court award Plaintiff all counsel fees incurred by her in this matrimonial action pursuant to Domestic Relations Law § 237(a). Plaintiff contends that Defendant has been extremely litigious, with particular reference to his demand for a jury trial on grounds, and his refusal to negotiate a reasonable settlement despite the limited assets subject to equitable distribution. Plaintiff claims that Defendant has imposed unnecessary litigation costs on Plaintiff throughout the action, and posits that Defendant will likely continue to increase the fees incurred by Plaintiff by demanding a hearing on the award of counsel fees. Plaintiff further contends that Defendant, as the monied spouse, should bear the burden of counsel fees.
In support of Plaintiff's counsel fees application, Plaintiff's counsel has attached a redacted copy of invoices from June 2010 through June 2014; Plaintiff's statement of net worth dated November 26, 2012; a retainer agreement dated July 30, 2009; and Plaintiff's 2009–2011 tax returns (see Plaintiff's Exhibits D–F). Plaintiff's counsel avers that his office received an initial retainer of $5,000 from Plaintiff, $56,110.61 in payments from Plaintiff and $5,000 from Defendant. As of June 12, 2014, Plaintiff had an outstanding balance of $14,955.65.
Defendant's Opposition
Defendant asks the Court to deny, with prejudice, Plaintiff's motion for counsel fees, as this, Plaintiff's third motion, is "permeated with errors" (Defendant's Affirmation at 1). Defendant contends that Plaintiff's counsel has failed to comply with 22 NYCRR 202.16(k)(2) by failing to attach Plaintiff's current statement of net worth, and instead attaching a November 2012 net worth statement, which is not reflective of Plaintiff's current financial circumstances. Defendant also contends that Plaintiff's counsel, as the moving attorney, was required to attach an affidavit to the moving papers detailing the attorney's compensation and expenses pursuant to 22 NYCRR 202.16(k)(3), although admitting that some of the information could be found in the invoices and documents attached in support of Plaintiff's motion. Further, although the motion seeks an award of counsel fees to the Plaintiff, Defendant notes that there is no affidavit of the Plaintiff' attached to the moving papers demonstrating her inability to pay her counsel fees.
Defendant also contends that Plaintiff caused Defendant to incur unnecessary legal fees by initially filing this action in New York County, when both parties resided in Kings County, and in refusing to consent to change venue until after being served with Defendant's motion for same.
Finally, Defendant contends that Plaintiff's distributive award, as reported by the Special Referee, when combined with Plaintiff's income will prove more than sufficient to pay any counsel fees incurred.
Plaintiff's Reply
Plaintiff argues that the motion papers for Plaintiff's motion for counsel fees are not defective and are in full compliance with the requirements of Domestic Relations Law § 237(b) and 22 NYCRR 202 .16(k)(2–3). Plaintiff claims that the statement of net worth dated November 26, 2012 is updated for the purposes of this motion because the trial of this matter commenced in February 2013. Furthermore, Plaintiff contends that the alleged defects in Plaintiff's motion papers would not require the Court to deny the application, emphasizing the court's discretion in awarding or denying counsel fee applications. Plaintiff also contends that Defendant's opposition papers fail to include Defendant's Statement of Net Worth and thus are defective under the requirements of 22 NYCRR 202.16(k)(4)
Additionally, Defendant needlessly increased litigation costs by first contesting the issue of grounds, refusing to timely provide complete discovery and forcing a seven-day equitable distribution trial. In contrast the only delay caused by Plaintiff was the six days' notice between Defendant's letter request to change venue and filing a motion for the same relief. Defendant's dilatory conduct throughout the trial warrants an award of counsel fees to Plaintiff.
DISCUSSION
Pursuant to Domestic Relations Law § 237(a), the court may, in its discretion, award counsel fees in order to allow a party "to carry on or defend the action as, in the court's discretion, justice requires, having regard to the circumstances of the case and of the respective parties." According to the Court of Appeals, the purpose of these provisions is to ensure that the outcome of a matrimonial case is not instructed by the relative wealth of the litigants. (O'Shea v. O'Shea, 93 N.Y.2d 187 (1999). The final allocation of counsel fees must be based on testimonial or other trial evidence, unless the parties stipulate otherwise (see Sadofsky v. Sadofsky, 78 A.D.2d 520 [2d Dept 1980] ). In exercising its discretion to award such fees, "a court may consider all of the circumstances of a given case, including the financial circumstances of both parties, the relative merit of the parties' positions, the existence of any dilatory or obstructionist conduct, and the time effort and skill required of counsel" ‘ (See Ashmore v. Ashmore, 92 AD3d 817, 818 [2d Dept 2012] ; Carr–Harris v. Carr–Harris, 98 AD3d 548, 551 [2d Dept 2012] ; Nicodemus v. Nicodemus, 98 A.D.2d 605 [2d Dept 2012]; Chaudry v. Chaudry, 95 A.D.2d 1058 [2d Dept 2012]; Decker v. Decker, 91 AD3d 1291 [4th Dept 2012] ).
This motion is Plaintiff's third application for counsel fees. Plaintiff' withdrew the first application upon Defendant's agreement to pay Plaintiff's counsel $5,000 in counsel fees (see Plaintiff's Exhibit B). The second was denied as defective without prejudice (see Plaintiff's Exhibit C).
In the instant matter the evidence presented demonstrates, and the Special Referee found, that Plaintiff is the significantly less-monied spouse, creating the rebuttable presumption, under Domestic Relations Law § 237(a), that Plaintiff will receive counsel fees. As the parties have not stipulated to the Court's determination of the issue of final counsel fees on their papers, and given the history of these parties a hearing is required. The parties shall be referred to a Special Referee to hear and report or determine the issue of counsel fees.
CONCLUSION
Accordingly, it is hereby ORDERED that Plaintiff's motion to confirm the report of the Special Referee is granted to the extent that the Court adopts the findings of the Special Referee; and it is further
ORDERED that Defendant's motion to reject the report of the Special Referee is granted to the limited extent that the method of distribution of the marital assets is modified as provided herein; and it is further
ORDERED that Plaintiff's motion for counsel fees is granted to the extent that the matter shall be referred to a Special Referee to hear and report unless the parties agree otherwise; and it is further
ORDERED that the parties shall appear in Part 5T, Room 924 on Wednesday, September 21, 2016 at 2:00 p.m. for a status/settlement conference, or, if necessary, an order of reference.
Any issues raised and not specifically addressed are denied.
This constitutes the decision and order of the court.