Opinion
Index No. 303704/2016
07-16-2024
V.A., Plaintiff, v. E.M., Defendant.
Counsel for Plaintiff The Law Firm of Liou & Maisonet, PLLC By: Dimitri Maisonet, Esq. Counsel for Defendant Treuhaft & Zakarin, LLP By: Miriam Zakarin, Esq.
Unpublished Opinion
Counsel for Plaintiff The Law Firm of Liou & Maisonet, PLLC By: Dimitri Maisonet, Esq.
Counsel for Defendant Treuhaft & Zakarin, LLP By: Miriam Zakarin, Esq.
Ariel D. Chesler, J.
The following e-filed documents, listed by NYSCEF document number (Motion 004) 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, 117, 118, 119, 120, 121, 122, 123, 124, 125, 126, 127, 128, 129, 130, 131, 132, 133, 134, 135, 136, 137, 138, 139, 140, 141, 142, 143, 144, 145, 146, 147, 148, 149, 150, 151, 152, 153, 154, 155, 156, 157, 158, 159, 160, 161, 162, 163, 164, 165, 166, 167, 168, 169, 170, 171, 172, 173, 174, 175, 176, 177, 178, 179, 180, 181, 182, 183, 184, 185, 186, 187, 188, 189, 190, 191, 192, 193, 194, 195, 196, 197, 198, 199, 200, 201, 202, 203, 204, 205, 206, 207, 208, 209, 210, 211, 212, 213, 214, 215, 216, 217, 218, 219, 220, 221 were read on this motion to/for CONFIRM/DISAPPROVE AWARD/REPORT.
Upon the foregoing documents, it is
Background
In this motion, Plaintiff moves to confirm in part, modify in part, and reject in part, and Defendant cross-moves to deny Plaintiff's OSC in its entirety, confirm in part and modify in part, the Report and Recommendation of Special Referee Jeremy R. Feinberg dated July 6, 2023, which was entered in the Office of the New York County Clerk on July 6, 2023. The Referee's Report follows a financial hearing, specifically on child support and equitable distribution related to the parties' divorce.
Thankfully, a comprehensive history of this litigation can be found in the Referee's Report. (Ref. Report at 4-7). The history is set forth as follows:
Plaintiff and Defendant were married on April 5, 2008. The parties have one child, M.M. born in 2008. The action was commenced on April 4, 2016, by summons with notice. Defendant answered on July 21, 2016, and following an RJI, the parties had a preliminary conference with Justice Cooper. In the Preliminary Conference Order dated November 30, 2016, the parties resolved the issue of grounds, relying on irretrievable breakdown pursuant to DRL 170(7).
Throughout the pendency of this matter, the parties entered into a series of stipulations regarding custody, parenting time and temporary support. First, in a so ordered stipulation dated February 8, 2017 (the "Temporary Support Stipulation"), they agreed on temporary child support ($2,000 from Defendant to Plaintiff), and that the parties would split M.M.'s add-on expenses equally (December 2022 Stipulation ¶ 2). Next the parties entered into a so-ordered Custody and Parenting Agreement, dated May 3, 2017 (the "First Custody Stipulation") granting joint custody of M.M., with Plaintiff to have primary residential custody and Defendant to have parenting time every other weekend and weekly midweek parenting time if his work schedule allowed (December 2022 Stipulation ¶ 3).
Justice Cooper so-ordered another stipulation on May 3, 2017, appointing Lexington Pension Consultants ("LPC") to provide a valuation of the parties' respective pension and other retirement accounts (the "Pension Stipulation"). Pursuant to the Pension Stipulation, on September 18, 2017, LPC issued a report valuing the marital portion of Plaintiff's pension at $251,803.39. On March 22, 2018, LPC issued a second report valuing the marital portion of Defendant's pension at $158,464.55 (December 2022 Stipulation ¶¶ 4, 6-7). Later, on December 22, 2020, LPC valued the marital portion of Defendant's savings plan to be $254,293.24 and on the next day, LPC valued the marital portion of Plaintiff's savings plan as $200,155.29 (December 2022 Stipulation ¶¶ 13-14).
Justice Cooper issued an Order dated August 25, 2017 (the "August 2017 Order"), appointing K.M. of Valuation Services, Inc. "to provide a valuation of marital property in this divorce action, specifically, certain restricted stock units and restricted stock options held by one or both of the parties, and any other marital property jointly requested by the parties' respective attorneys" (emphasis in original) (December 2022 Stipulation ¶ 5). Pursuant to the August 2017 Order, K.M. issued a valuation report on April 10, 2018 (the "Valuation Report"), setting the fair value of certain [REDACTED COMPANY P] holdings of Plaintiff at $197,079 (inclusive of a premarital option acquired February 28, 2008, valued at $5,215; and the fair value of Defendant's holdings as $48,907.00 (December 2022 Stipulation ¶ 9).
Justice Cooper next issued the October 2018 Order referring the defined financial issues of child support and equitable distribution to the Special Referee Part for a Referee to hear and report (December 2022 Stipulation ¶ 10). Because there were open applications regarding modification of custody before Justice Cooper, the reference waited for those matters to be resolved. First, on April 19, 2019, the Court so-ordered an Interim Stipulation (the "April 2019 Stipulation") further expanding Defendant's parenting time with M.M. to include alternate weekends from Friday after school through Monday morning drop-off at school; and, following the completion of the 2018/2019 school year, there would be a further expansion to alternating weeks from Wednesday to Wednesday, so long as summer scheduled activities and vacation plans were respected and carried out (December 2022 Stipulation ¶ 11). This was later modified by the Court in the February 2020 Order changing the Wednesday-Wednesday alternating week arrangement to a Friday-Friday arrangement (December 2022 Stipulation ¶ 12).
This reference, based on the October 2018 Order, then followed. Once the initial hearing was complete, the parties entered into the May 21 Stipulation resolving various trial facts and values, and contemporaneously with filing their post-hearing submissions, they stipulated to convert this matter from paper filings to NYSCEF (December 2022 Stipulation ¶¶ 15-17).
While this matter was sub judice, Defendant filed an OSC (MS 003) seeking to find Plaintiff in contempt as to the May 21 Stipulation. Because of Justice Cooper's retirement, the matter was delayed until this Court set a briefing schedule, resulting in a fully submitted application on February 24, 2022 (December 2022 Stipulation ¶¶ 21-24). The Court then issued the May 2022 Order, referring the OSC (MS003) and a parallel issue of how the parties should be claiming M.M. on their tax returns to me (December 2022 Stipulation ¶ 26). The Re-Opened Hearing followed.
Plaintiff now moves by OSC (MS004) to disaffirm portions of the Report and Recommendation, including the recommendation that Plaintiff must pay Defendant $2,603.13 per month in child support. In the alternative, Plaintiff seeks that neither party should pay the other basic child support. Plaintiff also seeks a disaffirmation of the Referee's recommendation that Plaintiff pay the Defendant a reimbursement amount of $2,675.00 for her 50% share of M.M.'s add-on expenses. Plaintiff also seeks to modify the Referee's recommendation that reimbursement of child support add-ons should be made within 30 days. Plaintiffs seeks that it should be reduced to 15 days. Plaintiff also seeks to modify the Referee's recommendation that the Parties should be clear and specific about each add-on expense to also include a mechanism for agreed-upon-out-of-network health expenses for M.M. Finally, Plaintiff seeks to reject the Referees Recommendation that Plaintiff should pay the Defendant $1,774.50 representing half the amount of the Parties' 2016 joint tax refund.
Defendant cross moves to deny Plaintiff's OSC (MS004) in its entirety. Additionally, Defendant disaffirms the portion of the Referee's recommendation that Defendant is not entitled to a credit for appreciation of the marital residence and instead seeks a credit in the amount of $31,813.00. Defendant also seeks a disaffirmation of the Referee's recommendation that Defendant pay the Plaintiff $975.00 as a credit for M.M's lunch program for the 2018-2019 school program. Defendant seeks to modify the Referee's recommendation that Plaintiff pay Defendant child support going forward to the extent that the payments should be made retroactive to February 18, 2021, the date of the February Agreement or in the alternative January 26, 2021, the date of Defendant's submission of his Statement of Proposed Disposition. Finally, Defendant seeks disaffirmation of the Report to the extent it denied him an award of counsel fees.
Discussion
Initially, it is important to note that the Court is not ignorant to the fact that the Special Referee was unable credit either Parties testimony in full. Likewise, the Court is not ignorant to the Defendants retaliatory filing as is evident in the language of his papers. By way of example, Defendant's Affidavit in Support of Cross Motion reads "Although I am not completely satisfied with the Report and recommendation of the Special Referee dated July 6, 2023, by Special Referee Feinberg, I would have accepted it in its entirety had it not been for Plaintiff's filings of her Order to Show Cause. Since a response is now warranted, I will make the terms of the Special Referee Report that I am unsatisfied with known." The Court does not condone retaliatory filings as it is a complete waste and disregard of Judicial time and resources.
The very apparent hostility and combativeness that is persistent between the Parties, specifically over the course of a 7 plus years long case, is deeply concerning. These concerns lead the Court to affirm the Referee in his recommendation to view the testimony from both sides warily and with a skeptical eye. (Herman v. Gill, 61 A.D.3d 433 [1st Dept 2009] [holding role of referee includes resolving matters of credibility and affirming determinations as to same]) (Ref. Report at 33).
The Court shall confirm a report by a Special Referee when the report is supported by the record (Bubul v. Port Parties, Ltd. 83 A.D.3d 517 [1st Dept 2011]). The Referee's responsibility is to determine what the issues are and "resolve any conflicting testimony and matters of credibility" (Rezzadeh v. Lucas, 253 A.D.2d 698, 698 [1st Dept 1998]). The Court will defer greatly to the findings of the referee as long as the referee's report is supported by the record (Freedman v. Freedman, 211 A.D.2d 580, 580 [1st Dept 1995]). Further, stipulations in a matrimonial action are enforceable and are subject to the principles of contract law and interpretation (see Meccio v Meccio, 76N.Y.2d 822 [1990]; Rainbow v Swisher, 72 N.Y.2d 106 [1988]).
Under the Civil Practice Law and Rules, CPLR §4403, a judge may confirm or reject, in whole or in part, the referee's report in a motion to confirm. This Court has reviewed the Referee's Report and Recommendation and now affirms the Report with a few exceptions which are modified as discussed more below.
Child Support
Plaintiff moves to modify the Report to direct that neither party should pay the other basic child support given there is equal parenting time and the Parties have comparable incomes. The Defendant moves to modify the Report to direct that the Plaintiff should pay the recommended amount of child support and additionally pay retroactive support to the date of either February 18, 2020, where he asked for support in his answer and counterclaim or, January 26, 2021, where he asked for support in his Statement of Proposed Disposition.
The Referee recommends that Plaintiff pay Defendant basic child support in the amount of $2,603.13 based on the Parties 2020 financial information, using $267,509.82 for the Plaintiff's adjusted income after statutory deductions and $242,424.46 for Defendant's adjusted income after statutory deductions. (Ref. Report at 44-48). After having reviewed the relevant statutory factors, the Referee recommends using an adjusted income cap of $350,000 based on M.M.'s actual needs and lifestyle. Although the Referee used a cap of $350,000 because the Parties have an equal access schedule and nearly equal salaries, the Court believes an adjusted cap of $250,000 is more appropriate and equitable. The presumptive amount of basic child support obtained by calculating the statutory percentage for 1 child (17%) of the combined parental adjusted income cap of $250,000 results in child support of $42,500.00 per year. The Plaintiff's pro rata share of that sum is $22,295.37 or $1,857.95 per month.
Neither Plaintiff nor Defendant dispute that the incomes used and the calculations reached for child support purposes by the Referee are accurate. The Plaintiff argues that the Referee erred in not continuing the required child support analysis as to whether it was fair and appropriate for either party to pay to each other basic child support.
It is well established that the CSSA applies to cases of shared custody. (Matter of Holmes v. Holmes, 184 A.D.2d 185, 187 [3rd Dept 1992]). The CSSA sets forth "a precisely articulated, three-step method" for determining the basic child support obligation. (Matter of Cassano v. Cassano, 85 N.Y.2d 649, 652 [1995]). "After completing this three-step statutory formula, under the CSSA the trial court must then order the noncustodial parent to pay a pro rata share of the basic child support obligation, unless it finds that amount to be "unjust or inappropriate" based on a consideration of the "paragraph (f)" factors DRL 240 1-b(f)". (Bast v. Rossoff, 91 N.Y.2d 727 [1998]). Those factors include the financial resources of the parents and M.M., the standard of living M.M. would have had if the marriage had not ended, nonmonetary contributions of the parents toward M.M., extraordinary expenses incurred in exercising visitation and any other factors the court determines are relevant.
Plaintiff cites the matter Bast v. Rossoff arguing that the Referee in this matter erred by not reviewing the factors set forth in DRL 240 1-b(f) before awarding child support in a shared custody case. (Id.). Defendant argues that Plaintiff is seeking the use of the proportional offset method, which has been explicitly rejected by the Court of Appeals. (Baraby v. Baraby, 250 A.D.2d 201, 203 [3rd Dept 1998]).
The Court of Appeals in Bast v. Rossoff ruled that the Trial Court erred because they did not use the three-step statutory formula before awarding child support in a shared custody case. (Bast, 91 N.Y.2d at 732). Here, unlike in Bast v. Rossoff, the Referee correctly used the three-step statutory formula to determine M.M.'s support amount. It is only after that statutory calculation, if the Court chooses to deviate from that amount because it is deemed unjust or inappropriate that they must explain why through the factors set forth in DRL 240 1-b(f). However, it is not required that the factors must be used in every case of shared custody. Here, the Referee did not err, because upon using the three-factor calculation he believed the amount calculated was just and fair.
In the event the Court did resort to reviewing the factors set forth in DRL 240 1-b(f), the Court would still find in favor of confirming the Referee's recommendation. Some factors to be considered in DRL 240 1-b(f), include, 1. the financial resources of the custodial and non-custodial parent, and those of the child; 2. the physical and emotional health of the child and his/her special needs and aptitudes; 3. the standard of living the child would have enjoyed had the marriage or household not been dissolved; 4. the tax consequences to the parties; 5. the non-monetary contributions that the parents will make toward the care and well-being of the child; 6. the educational needs of either parent; 7. a determination that the gross income of one parent is substantially less than the other parent's gross income.
This Court has made the 3-factor calculation utilizing a slightly lower income cap of $250,000 and concludes that the amount is just and fair. Upon considering the facts of this case none of these factors mentioned above rise to the level of concern that would warrant further adjustment of M.M.'s support award. The Plaintiff fails to convincingly argue why the award would be "unjust and inappropriate," only turning to the argument that custody is shared and the parties' incomes are comparable. Both of which were considered by the Referee and now again by this Court. The Court now Orders that Plaintiff pay the amount of $1,857.95 in monthly child support payments to the Defendant.
As to Defendant's request to modify the Report to include retroactive child support, the Referee recommends that there should be no retroactive award of child support to the Defendant. Plaintiff moves to deny Defendant's request for retroactive child support. Given the complexity and length of this matter the Referee does recommend that said amounts should be set off against Add-On Expenses. The Court defers the Referee's finding that Defendant is not entitled to a retroactive child support award.
Add- On Expenses and Reimbursements
The Parties agreed to split the cost of Add-on Expenses 50-50 pursuant to their Temporary Support Stipulation. Plaintiff asserts that Defendant has been delinquent in reimbursing her the sum of $6,427.03 towards his share of add on expenses. Defendant also seeks reimbursement specifically for monies spent on M.M. for hospital testing at Mt. Sinai hospital, an ice-skating program and a deposit towards a Greek Camp. The Referee recommends that given the adequate and documented proof of payment provided, Defendant should receive fifty percent of his outlays of $300 for the camp deposit, $50 for the ice-skating program, and $5,000 for the Mt. Sinai testing. The Referee states that Plaintiff did not provide sufficient evidence to establish proof of payment of the requested reimbursement amount. Additionally, the Referee acknowledges that the Defendant will not receive any retroactive reimbursement for child support he has been paying under the Temporary Support Stipulation, and is entitled to off-set add-on expenses instead. (McGovern v. McGovern, 148 A.D.3d 900, 902 [2nd Dept 2017]). The Referee recommends Plaintiff should be denied the reimbursement she is requesting. The Court defers to the Referee's finding that the Plaintiff must reimburse Defendant $2,675 for add-on expenses and that Plaintiff's request for reimbursement is denied.
The Referee recommends that the existing split of 50/50 as to add-on expenses including but not limited to educational expenses (up to a cap of $15,000 per year for each party); camp and other summer activities (up to a cap of $7,000 per year for each party); and, other extra-curricular activities including gymnastics and tennis (up to a cap of $5,000 per year for each party) and the mechanism for providing proof of payment with reimbursement to follow within 30 days should remain in place. The Plaintiff seeks to modify this recommendation in that reimbursement of child support add-ons should be made within 15 days after proof of payment. The Defendant seeks to keep the recommendation of 30 days. It is common practice to allow 30 days upon proof of payment, to reimburse the other Party for any add-on expenses incurred. The Court defers to the Referee's finding that the add-on expenses shall be split 50/50 by the Parties, including placing the caps mentioned above on different types of expenses and that reimbursement of add-on expenses shall be made within 30 days after proof of payment is provided.
The Referee further recommends that the Parties should be clear and specific about each item that needs to be reimbursed, rather than put them together on a long list. The Plaintiff moves to modify this recommendation to include a mechanism for any agreed upon out of network medical expenses for M.M. The Plaintiff suggests that each party be responsible for 50% of all agreed upon out of network health expenses as they come due, and both parties shall cooperate in seeking reimbursement. The Defendant argues that Plaintiff should be responsible for the full payment of the invoice for any agreed upon out of network expenses, and once provided with proof of payment, he would be mandated to make payment within 30 days. Again, it is common practice and far more practical to have one party pay an invoice and later be reimbursed, upon providing proof of payment. It does not matter what type of expense it is, specifically carving out a different payment and reimbursement mechanism just for agreed upon out of network expenses seems unnecessarily complicated. The Court defers to the Referee's finding that the Parties should be clear and specific about each item that needs to be reimbursed and the Court additionally modifies this recommendation to include that for any agreed upon out of network expenses, the invoice should be paid by the Party scheduling the appointment or procedure for the Child, and upon proof of payment reimbursement for that cost shall paid within 30 days. Any reimbursements received from the insurance company shall be considered an offset for the other Party.
Health Insurance Premiums
The Referee recommends that the Plaintiff should remain responsible for providing M.M.'s healthcare coverage, that both parties continue to split the costs of healthcare coverage 50/50 and the Defendant shall have 30 days from delivery of proof of payment to reimburse his 50% share. Neither Party objects to this recommendation. The Court defers to the Referee's finding that M.M. is to remain on the Plaintiff's insurance, the Parties split the cost of healthcare coverage 50/50 and the Defendant have 30 days to reimburse the Plaintiff his 50% share upon receipt of proof of payment.
In the Report, the Referee states that there is undisputed testimony that Defendant did not pay his share of the 2020 healthcare coverage. Defendant only wanted proof payment from the Plaintiff given that Plaintiff have several changes of employer in 2019-2020. The Referee recommends that Plaintiff provide a single list of just the health insurance expenses she incurred in 2020, together with proof of payment as to those amounts and the Defendant shall have 30 days upon receipt to pay his 50% share of reimbursement of the past amounts.
Subsequent to the Report and Recommendation, Plaintiff sought relief through this Order to Show Cause (MS 004) in the form of reimbursement for the 2020 healthcare expenses across three different employers. Plaintiff states that M.M. was covered under [REDACTED COMPANY P]'s sponsored health plan from January 1, 2020 through May 31, 2020. Stating she paid a total of $1,760.00 in premiums to cover M.M. during that time period, and proof of payment is provided in Plaintiff's W-2 statement under Box 12c DD, which is defined in the W-2 statement as "Cost of employer-sponsored health coverage" (Pl. Ex. 5). Defendant argues that Plaintiff's current filings still do not constitute proper proof of payment of the Healthcare Coverage though [REDACTED COMPANY P]. Specifically, Defendant argues that Plaintiff was not even employed by [REDACTED COMPANY P] in 2020. In her reply, Plaintiff did not address or clarify any of Defendants concerns and instead reiterated what was already written in her moving papers.
In reviewing the documents submitted by Plaintiff, the 1095-C and [REDACTED COMPANY P] benefits letter provided do show the Defendant and M.M. were both enrolled in coverage with [REDACTED COMPANY P] January 2020 to May 2020. While the Court notes Defendant's concern that Plaintiff was not employed by [REDACTED COMPANY P] at that time, the Court is aware that the Plaintiff did receive a severance package from [REDACTED COMPANY P] and there could be a possibility that the Plaintiff received healthcare coverage as a part of that. However, no such arguments were presented to the Court. Plaintiff also does not provide proof of the breakdown of healthcare coverage for just M.M.'s costs. Plaintiff states the proof of payment is shown through the deductions made on her W2 statement under Box 12c DD. However, the number reflected in Box 12c DD is $7,760.65. While the Court would accept this as a proof of payment as healthcare coverage is routinely deducted from employees' paychecks, the Plaintiff does not explain or provide evidence of how she calculated $1,7600.00 of that amount to be attributable to M.M.'s coverage. All that is provided to the Court is a notice with costs for both herself and M.M., with hand drawn markings seemingly noting how much was for M.M. The Court cannot consider these handwritten markings as proof of how much the Plaintiff paid specifically for just M.M.'s coverage. The Court finds that while the Plaintiff did provide adequate proof of payment of healthcare coverage for M.M., and although we cannot determine the breakdown of the cost for just M.M.'s coverage, the Court would Order a third of the total health care costs be split by the Parties. Here, the Court accepts the lower number offered by the Plaintiff and Orders the Defendant to pay 50% of $1,760.00 or $880.00 as and for M.M.'s healthcare coverage from January 2020 to May 2020 within 30 days.
Plaintiff states M.M. was covered under [REDACTED COMPANY S]'s sponsored health plan from June 1, 2020 until October 2020, stating she paid a total of $1,122.50 in premiums to cover M.M., with proof of payment contained in plaintiff's W-2 statement under Box 12c DD, and her pay stub ending October 31, 2020 (Pl. Ex. 6). Defendant argues that there is still no proof of payment for coverage under [REDACTED COMPANY S]'s provided. Plaintiff fails to put forth any additional information in her reply.
In reviewing the documents submitted by Plaintiff, the 1095-C shows the Defendant and M.M. were both enrolled in coverage with [REDACTED COMPANY S] from June 2020 to October 2020. However, Plaintiff does not provide proof of the breakdown of healthcare coverage for just M.M.'s costs. Plaintiff states the proof of payment is shown through the deductions made on her W2 statement under Box 12c DD. However, the number reflected in Box 12c DD is $5495.45. While the Court would accept this as a proof of payment as healthcare coverage is routinely deducted from employees' paychecks the Plaintiff does not explain or provide evidence of how she calculated $1,122.50 of that amount to be attributable to M.M.'s coverage. The Plaintiff also provides her October 31, 2020, paystub which does reflect deductions for healthcare coverage, but again it is unclear what portion of those deductions are for M.M.'s coverage. The Court finds that while the Plaintiff did provide adequate proof of payment of healthcare coverage for M.M., and although we cannot determine the breakdown of the cost for just M.M.'s coverage, the Court would Order a third of the total health care costs be split by the Parties. Here, the Court accepts the lower number offered by the Plaintiff and Orders the Defendant to pay 50% of $1,122.50 or $561.25 as and for M.M.'s healthcare coverage from June 2020 to October 2020 within 30 days.
Finally, the Plaintiff states M.M. was covered under [REDACTED COMPANY M]'s sponsored health plan from November 1, 2020 through December 31, 2020, where Plaintiff paid a total of $155.40 in premiums to cover M.M. with proof of payment contained in plaintiff's pay stub ending December 31, 2020 (Pl. Ex. 7). Defendant does not dispute this and in fact consents that he would owe $77.70 to the Plaintiff for coverage. The Court finds, on consent, that Defendant must reimburse the Plaintiff a total of $77.70 as and for M.M.'s healthcare coverage from November 2020 through December 2020 within 30 days.
2016 Joint Tax Refund
The Defendant sought half of the tax refund the parties received in 2016 in the amount of $1,774.50. Defendant argued that the Plaintiff received the full refund and despite repeated requests never paid him his half. The Referee recommends that Plaintiff should provide Defendant with a check for $1,774.50, half of the amount of the 2016 tax refunds. Plaintiff contended in her testimony that she applied half of the refunds against Defendant monthly expenses and credited it to him. The Referee notes that Plaintiff should have been able to present a particular document to the Court evidencing such credit.
However, in her Order to Show Cause (MS 004) Plaintiff provided the Court additional evidence in the form of a check made by Defendant to Plaintiff which contained handwritten deductions (Pl. Ex. 8). The annotations reflect three hand written numbers in the amount of: $1775 clearly labeled "tax ref," $112.50 that was unlabeled, and $23.13 that was illegibly labeled. These amounts total $1,910.63. In the memo line of the check, labeled "for," the Defendant seemingly deducted the total of the three handwritten amounts from what was owed to Plaintiff, writing "1961.74 -1910.63 = 51.11" The Defendant failed to oppose or even address this new evidence in his cross motion and opposition papers. As permitted expressly by CPLR 4403, the Court finds the handwritten markings of a check to be credible evidence, particularly since Defendant does not dispute this. The Court therefore modifies the Referee's finding that Plaintiff should provide the Defendant with a check for $1,774.50 for his half of the 2016 joint tax refunds, and concludes that this obligation has been satisfied.
Appreciation of Marital Residence
Defendant sought $31,813 as a credit for his contribution to the appreciation of the marital residence. The Defendant presented a compilation of mortgage statements that did not reflect whether he was personally responsible for any of those payments. The Referee states that the best available evidence in support of his claim were handwritten notations in the parties' list of monthly expenses, which were often made on post-it notes. Additionally, the Referee notes, that it is unclear how Defendant derives the $31,812.90 figure he claims as appreciation, as it was not listed in any documentation presented to the Court.
The Referee also notes that according to Plaintiff's unrefuted testimony the Defendant declined multiple opportunities to pay for improvements to the residence or put his name on the mortgage. The Referee recommends that Defendant did not meet his burden of demonstrating that the appreciation of the marital residence was due to his payments toward the carrying costs or the principal of the mortgage.
Defendant now moves via cross motion to modify the Report to direct that Defendant is entitled to equitable distribution in the amount of $31,813. Plaintiff moves to deny Defendants request and confirm the Referee's recommendation. Defendant argues that the evidence of payments toward the marital property that was presented should not be taken lightly. Defendant also highlights that there was clear testimony from the Defendant that he contributed to the mortgage, carrying costs and to the marriage. While testimony is important this Court will not rely solely on testimony that the Referee already stated he has difficulty crediting. The Court confirms the Referee's finding that Defendant did not meet his burden to establish that he contributed to the appreciation of the marital residence and is not entitled to a credit of any amount.
Educational Expenses and School Lunch
The parties currently have proceeds held in escrow after challenging the Department of Education's failure to provide schooling sufficient to meet M.M.'s needs for the 2018-2019 school year. While Plaintiff claims there is a total of $57,550.00 held in escrow and Defendant claims there is a total of $89,325.00 held in escrow, there is no dispute that whatever amount is remaining in escrow shall be divided equally (50/50) between the Parties. The sole issue regarding this sum of money is a cost of $975.00 that arose from M.M.'s lunch program that year.
Defendant sought that Plaintiff should be responsible for the cost of M.M.'s 2018-2019 lunch program in the amount of $975.00. Defendant argues that because the cost was not included in what the school reimbursed the parties for that it should be considered a food under the basic child support. Defendant believes that at the time, because he was paying child support, that payment should have been used towards M.M.'s food expenses including this one. Plaintiff argues that Defendant should pay the associated amount because he also recommended the lunch plan for M.M. Additionally, The Court agrees with the Referee when he stated how very troubling it is that the parties continue to fight over such a small amount of money, while holding up a much larger sum of money from being disbursed. The Referee recommends that according to the Plaintiff's testimony and clear evidence of her payment of the program that Plaintiff shall receive a credit of $975.00 and the remaining escrow monies shall be split 50/50. The Court believes that the Referee's determination is substantiated by the record and should therefore be affirmed.
Retirement Assets and Counsel Fees
The parties May 21 Stipulation set out the equalization of the parties' retirement asserts. There is no dispute that Plaintiff was to transfer $71,478.50 to the Defendant to complete the equalization of the remaining assets. However, the Parties dispute how the transfer of the assets were to be effectuated and what relief they are each entitled to. Plaintiff claims she already exercised certain stock options and because of the transaction costs only needs to transfer $20,755.42 to the Defendant. Defendant claims that Plaintiff breached the May 2021 Stipulation by both failing to comply with her obligations within 90 days and exercising the stock options prematurely, and is therefore seeking a transfer of $71,478.50 and an award of counsel fees. Defendant later, at the Re-Opened Hearing, moves for an additional award of shares of [REDACTED COMPANY V] and [REDACTED COMPANY P] and an increase in value of the securities since the date of the transfer (Def. Sup. SPD at 2). The Referee recommends that Plaintiff's reasoning to failure to comply with the terms of the May 21 Stipulation within 90 days be rejected. Plaintiff did not provide credible testimony as to why she could not timely comply with the May 21 Stipulation. The Court defers to the Referee's finding that Plaintiff reasoning for failure to comply with her obligations be rejected. The Referee further recommends that Plaintiff's assertions that she had several phone calls with financial professionals, and impliedly had difficulty navigating a way to make good on her obligations, does not excuse her compliance with the May 21 Stipulation. The Court finds the Referee's determination is substantiated by the record and should therefore be affirmed.
In an attempt to resolve the issue of the remaining assets and remedy the Defendant from the Plaintiffs violation of the May 21, Stipulation, the Referee recommends, in simplest fashion that Plaintiff make a cash payment directly to Defendant in the amount of $71,478.50 within 30 days of entry of the Judgment. The Court agrees with the Referee that exercising either Parties request would result in unnecessarily substantial transaction costs and tax obligations. The Court defers to the Referees finding that both parties approaches to equalization be rejected and that Plaintiff be solely responsible for the cost penalty she incurred from prematurely exercising certain stock options, and shall pay $71,478.50 to the Defendant within 30 days of the Judgment.
In connection to the equalization of assets the Referee has recommended that Defendant should not be entitled to a separate award of counsel fees for Plaintiff's non-compliance with the May 21, Stipulation. While the Referee does acknowledge the Plaintiff was in violation of the May 21 Stipulation, the Defendant failed to put forth routine evidence in the record such as a retainer agreement or attorney affirmation detailing and identifying the services that were rendered. (Cervone v Cervone, 74 A.D.3d 1268 [2nd Dept 2010]). Additionally, the Referee states that in conjunction with the recommendation and now directive of this Court that the Defendant receive a cash payout with the elimination of splitting transaction fees, it is more equitable to deny his counsel fee request.
Subsequent to the Report and Recommendation, Defendant has moved to disaffirm the portion of the report that recommends he is responsible for his own counsel fees. However, the Defendant provides no legal argument as to why the recommendation should be modified given the lack of documentation presented to the Court at the time of trial. The Court agrees that Defendant is responsible for 100% of his Counsel fees. The Court confirms the Referee's reasoned judgment as a matter of equity, as to the Defendant being responsible for his own counsel fees.
Tax Treatment of M.M.
The Parties dispute who may add M.M. as a tax deduction for the year 2021 and the following years. Defendant claimed M.M. on his taxes in 2020. In 2021, Plaintiff's taxes were unexpectedly rejected because the Defendant claimed M.M. on his taxes again in 2021 before Plaintiff filed. While there was no explicit agreement in place Plaintiff did not expect Defendant to claim M.M. on his taxes two years in a row. The Referee recommends that Plaintiff should be entitled to take the deduction for M.M. in each of the two years 2022 and 2023, to make up for Defendant's inappropriate use of the deduction in 2021. Because of his wrongful action, Defendant, however, should additionally be required to pay any additional tax advisory fees Plaintiff incurred from having her original 2021 tax returns rejected, together with any penalties, interest, and costs imposed by the IRS for her defective filing. The Court defers to the Referee and affirms this recommendation.
The Referee also recommends that starting in 2024, the parties should alternate years for taking the tax deduction starting in 2022. Meaning, that Defendant should be taking the deduction for even-numbered years (including 2024) and Plaintiff should thereafter take odd years, starting in 2025. The Court defers to the Referee and affirms this recommendation.
The Referee further recommends that at the time of any motion to confirm, reject, or modify this report, Plaintiff should submit an affidavit detailing all the relevant amounts described above, with appropriate backup. Subsequent to the filing of the Report and Recommendation the Plaintiff submitted her affidavit regarding the same. Plaintiff contends through an affidavit of her accountant, K.L., that subsequent filing of an amended income tax return without claiming M.M. as a dependent will increase her federal taxes by $3,637.00, decrease her New York State taxes by $356.00, and increase her New Jersey State taxes by $1,961.00, giving a net increase of her my payment of income taxes totaling $5,242.00. (Pl. Ex. 10). She states she also incurred an additional tax advisory fee of $275.00 for K.L. to assist her with the issue of having her initial 2021 income tax returns rejected. Ultimately stating the cost incurred from having her original 2021 tax returns rejected totaled $5,517.00. The Defendant does not oppose this application in his response papers.
Upon review of Plaintiff's amended 2021 tax documents, which are notably blurry and difficult to read amended tax documents, the Court finds the tax documents reflect that Plaintiff owes $3,637.00 in federal tax but does not provide proof of payment. (Pl. Ex. 9). The Court also notes the Plaintiff uploaded a Form 1040-V Payment Voucher indicating that she owes $3,637.00 to the IRS, however, again, this is not a receipt or proof of payment. Plaintiff provides proof of the $275.00 charged by K.L. and proof of said payment through Venmo. As for the other costs requested, the Plaintiff does not specify where these numbers come from, nor can the Court identify where these numbers originate from in Plaintiff's uploaded paperwork. Plaintiff provides an email from K.L., indicating the change in her taxes based on the refiling, however, this is not adequate proof of costs that exist nor is it any proof of payment of these costs. The Court finds that only the charge and proof of payment of the $275.00 was appropriately documented and Defendant is directed to pay the amount of $275.00 directly to the Plaintiff within 30 days of the Judgement. Within 30 days of this Order Plaintiff shall submit to Defendant proof of payment of the other tax expenses and upon such proof he shall reimburse her that amount.
All Other Points of Relief
CPLR 4403 provides:
Upon 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. The motion shall be made within fifteen days after the verdict or the filing of the report and prior to further trial in the action. Where no issues remain to be tried the court shall render its decision directing judgment in the action.
All other matters of this Report and Recommendation that have not yet been addressed in this Decision and Order are not disputed by the Parties. Neither party has addressed any of the remaining topics in their OSC or cross motion. Accordingly, pursuant to this Court's authority under CPRL 4403, the Court adopts and confirms in whole the remainder of the Referee Report and Recommendation of Special Referee Feinberg.
Conclusion
As discussed above, the Court now confirms the Report which is well founded and supported by the record, with the exception of the basic child support amount, the modification of implementing a mechanism for reimbursements for mutually agreed upon non add on expenses, the reimbursement for M.M.'s healthcare coverage in 2021, the 2016 tax refund, and the costs related to refiling Plaintiff's 2021 taxes, the Report and Recommendation is otherwise confirmed.
Accordingly, it is hereby
ORDERED, that the Report is affirmed to the extent indicated and modified to the extent indicated in this Decision; and it is further
ORDERED, that Defendant pay Plaintiff a combined total of $1,793.95 in reimbursements for healthcare add -on expenses and tax penalty expenses; and it is further
ORDERED, that Plaintiff pay Defendant a combined total of $74,153.00 in reimbursement for add on expenses, and equalization of the assets; and it is further
ORDERED, the Plaintiff shall pay to the Defendant the sum of $1,857.95, as and for child support, commencing on the 1st of every month, retroactive to the date of the Referees Report, July 6, 2023; and it is further
ORDERED, the Parties shall split M.M.'s add on expenses 50% to be paid by the Plaintiff and 50% to be paid by the Defendant; and it is further
ORDERED, the Plaintiff is entitled to a credit in the amount of $975.00 from the educational escrowed money, and the remainder of the money shall be evenly divided between the Parties; and it is further
ORDERED, that any relief not granted in this Order or in the Referee's Report is denied.
This constitutes the Decision and Order of the Court.