Opinion
302489/2017
01-02-2020
Linda WARSHAW, Plaintiff, v. Steven WARSHAW, Defendant.
Counsel for Plaintiff: Law Office of Yonatan Levoritz, New York (Yonatan Levoritz of counsel) Counsel for Defendant: Warshaw Burstein, LLP, New York (Sophie Jacobi—Parisi of counsel)
Counsel for Plaintiff: Law Office of Yonatan Levoritz, New York (Yonatan Levoritz of counsel)
Counsel for Defendant: Warshaw Burstein, LLP, New York (Sophie Jacobi—Parisi of counsel)
Douglas E. Hoffman, J.
Plaintiff Linda Warshaw (the Wife) moves by order to show cause for an order pursuant to New York Domestic Relations Law (DRL) §§ 236 (B) and 240, directing defendant Steven Warshaw (the Husband) to pay monthly pendente lite maintenance in the sum of $7,778.38 and to pay the monthly pendente lite child support in the sum of $7,218.34 for the parties' three minor children, together with 80% of all Child Support Standards Act (CSSA) add-ons, in accordance with the guidelines calculation based on the income calculated by this court in its decision and order dated August 22, 2018. In the alternative, pursuant to DRL §§ 236 (B) and 240, the Wife is seeking an order directing the Husband to pay monthly pendente lite maintenance in the sum of $11,871.03 and to pay monthly pendente lite child support in the sum of $10,927.97 for the children, together with 80% of all CSSA add-ons, based upon a recalculation of the Husband's income premised upon newly discovered evidence. As another alternative, pursuant to DRL §§ 236 (B) and 240, the Wife is seeking an order making a needs or lifestyle-based maintenance and child support award, as the Husband's true income cannot be ascertained. The Wife also moves, pursuant to DRL § 237, for an order directing the Husband to pay her $250,000 as and for counsel fees for this action and $12,587.07 in appellate counsel fees. The Wife further requests an order directing the Husband to pay $25,000 to retain Heidi Muckler ("Muckler"), a forensic expert. Lastly, pursuant to CPLR § 3025, the Wife is seeking leave to file an amended complaint to include additional causes of action that accrued or of which she became aware during the pendency of the divorce action.
The Husband cross-moves for downward modification of his temporary maintenance obligation and opposes the remainder of the Wife's requested relief. In the event that the Wife is granted leave to amend the complaint, he is requesting to further depose the Wife.
BACKGROUND AND FACTUAL ALLEGATIONS
The parties married on September 4, 2006 and have three children: [REDACTED]. The Wife filed for divorce on March 16, 2017.
The Husband is the "Chief Executive Officer and President of a business, the Warshaw Group, which designs and provides software to institutional clients." The Husband's aff. in opp., ¶ 7. Mr. Warshaw states that he founded a technology firm in 1996 with a partner. After buying out the partner in 1999, the Husband began to operate the Warshaw Group in its current form. On January 2, 2006, prior to the marriage, the Husband entered into a shareholder's agreement delineating that the Husband would own 70% of the company and the other 30% would be owned by the Husband's brothers ("Brothers"), [REDACTED] Warshaw and [REDACTED] Warshaw.
In 2005, the Husband bought an investment property in Woodside, Queens, and was the sole owner of Woodside 48, LLC, the entity owning the property. Pursuant to an amended operating agreement, also executed on January 2, 2006, the Brothers were provided with 15 and 30 percent ownership interests, respectively, with the Husband receiving a 55 percent ownership interest.
Ms. Warshaw did not work during the marriage and has no independent income. She stated, "[o]nce we were married, My Husband and [I agreed] that I would stay home and tend to the needs of our three (3) Children, including overseeing their performance in school and daily routines." The Wife's aff. in supp., ¶ 11. During the marriage, the Wife did obtain a Master's Degree in Public Administration.
The August 22, 2018 Order and Appeal
In May 2018, the Wife moved for an order, in pertinent part, directing the Husband to pay pendente lite spousal support in the amount of $4,375 per month and many other expenses, as well as $20,000 to her attorneys in interim counsel fees. At that time, the parties were living together.
On August 22, 2018, this court ordered the Husband to pay $11,668 per month to the Wife as temporary maintenance and directed the Husband to continue to pay 100% of the children's unreimbursed non-elective medical, pharmaceutical, optical, dental and mental health services. The Husband was also ordered to maintain health insurance for the Wife and the children. The Husband reported that he had been paying the total monthly cost of $2,200 for the nanny and housekeeper. The Wife was ordered to reimburse the Husband for 50% of the cost of the rent, utilities, nanny and housekeeper bills from her maintenance payments, while she lived in the marital residence.
The decision set forth the details of how the court arrived at the temporary maintenance award. In relevant part, the court imputed $0 income to the Wife (payee). Regarding the Husband's income, in brief, the court listed the Husband's reported income on his W-2's for the years 2012-2017 and noted that the income throughout the years varied. For example, the gross pay in 2014 and 2015 was $804,522 and $785,498, while the gross pay for 2016 and 2017 was $277,374 and $277,093.
The court stated that it was not provided with an updated statement of net worth for purposes of determining the Husband's income. It found that the "lack of current updated financials complicates the court's analysis and certainty about the Husband's current income, expenses, or resources, especially given that the Husband has a history of varying annual income" See Wife's Exh. 1, par. 3. For example, the June 19, 2017 statement of net worth listed his expenses as $340,728, which included the Wife's and children's expenses, although the fees paid to both parties' attorneys were not included in the figure. Further, as the Husband "is the 75% owner of his business, the Warshaw Group ... [he] may (or may not) have at least some control over how much money to take out of his business each year as personal income." Id.
At the time of the financial submissions, the Husband did not place a value on the Warshaw Group or on Woodside 48, LLC, although the building located at 48th Street was purchased for $750,000. The Husband also stated that he received supplemental income from Woodside 48, LLC, of which he has a 55% interest, and from other investments. The Husband listed other assets and discretionary expenses such as boating and tennis membership. The statement of net worth indicated that his voluntary pre-tax 401(k) contributions were actually greater in the years during which his income was less.
The court first calculated the temporary maintenance payment based on the Husband's capped income of $184,000. It declined to award maintenance based on that amount, and discussed the reasons why the income should be adjusted to a higher amount. It then arrived at the amount of $466,703 as income for determining the amount of maintenance as this was the average of the submitted income from 2012 through 2017, minus FICA and NYC local tax.
After subtracting FICA and NYC local tax, the 2015 income was $752,328. The income for 2016 was $256,568 and the income for 2017 was $255,453.
The court noted that the Wife reported no independent income and listed assets valued at a total of $6,100. The Wife also stated that she incurred $13,000 in debt to her family members. The court held that, "[a]t this time, there is not sufficient basis to impute income to the Wife, who, the parties agreed, has not worked in many years and has stayed home with the children, the youngest of whom is currently two years old." Id. at 9.
The Wife's request for an award of interim counsel fees in the amount of $20,000 was denied, as the Wife's attorney "failed to attach his current retainer or any itemized bills" and only provided some documentation in reply papers. Id. at 14.
The Husband's Appeal of the August 22, 2018 order
The Husband appealed the portion of the August 22, 2018 order that awarded the Wife pendente lite spousal maintenance in the amount of $11,668 per month. The Appellate Division, First Department affirmed this court's determination. It held, in relevant part, that the Husband's arguments are "largely academic," because, after deducting the Wife's rent and other payments, the Wife's net monthly award is $4,307 per month. Warshaw v. Warshaw , 173 AD3d 582, 583 (1st Dept 2019). This amount is less than she originally sought and "also less than the $4,600 per month that she, to whom the court appropriately imputed zero income, and who is not receiving child support, would receive upon application of the statutory guideline formula to defendant's income capped at $184,000." Id. at 582-583.
The Appellate Division held that "[d]efendant correctly argues that the court should not have relied upon an income average." Id. at 583. Nevertheless, the Appellate Division found the Husband's arguments to be unavailing. It held that this court "appropriately looked beyond defendant's most recent tax return to consider his earnings history." Id. The Appellate Division also found that it was reasonable to consider the "possibility that defendant, whose income declined precipitously after plaintiff commenced this action, might wield some control over the timing and amount of his compensation." Id. The Appellate Division also noted "the ambiguities surrounding defendant's actual financial situation ...." Id. at 584. It "reject[ed] defendant's contention that the court misapplied [DRL] § 236 (B) (5-a) (d)" and concluded that the trial court "articulated the factors set forth in subsection (h) (1) upon which it relied in setting its award." Id. at 583.
Further, the Appellate Division held that it was proper to "decline to impute income to plaintiff." Id. at 583. Although the Wife obtained a Master's Degree in 2008, she has not worked in many years. The Husband failed to offer any proof of income earned by the Wife prior to leaving the work force to have children.
DISCUSSION
Pendente Lite Maintenance
Pursuant to the court's August 22, 2018 order, the Wife has been receiving a monthly amount of $11,668.00. Given the extent of discovery in this action, as well as the proximity to a full financial trial, the court would normally have considered denying the motion and cross-motion, subject to the plenary trial; however, given the material change of circumstances, as the Wife and children have moved out of the marital residence, significantly changing the constellation of expenses, and requiring a pendente lite award of child support to the nonmonied spouse, who is deemed the custodial parent for child support purposes [ Al E. v. Joann E. , 55 Misc 3d 1212(A) [NY Sup. Ct., Kings County 2017] [citing Bast v. Rossoff , 91 NY2d 723, 732 [1998] ], the court will address further the merits of the motion and cross-motion. The parties no longer reside in the marital residence and the Wife is now paying 100% of the rent, utilities and other charges associated with her rental apartment. As a result, she is requesting to change the amount of spousal support she receives and is also requesting to receive child support. Ms. Warshaw provides three alternate ways to compute the spousal and child support. The Wife provides several of the same theories initially provided to the court in May 2018, for why she believes that the Husband's income is higher than reported and why it also exceeds the amount the court initially imputed to the Husband in the August 22, 2018 order. For example, she states that his reported expenses from 2017 were $340,728.00, with a reported income of $255,453.00. In addition, his reported income failed to include the attorneys' fees paid, among other expenses.
As the court discussed in the August 22, 2018 order, the Husband owns 55% of 48 Woodside LLC, while the Brothers own the remainder. The Wife states that the Husband's income is higher than $466,703, as the court had previously not included this 55% interest in 48 Woodside LLC, or the other investment income in its calculations. Plaintiff asserts that a full 100% supplemental income from 48 Woodside LLC should be imputed to the Husband because he paid for 100% of the costs, expenses, and renovations of the building. She continues that any depreciation, tax credits, and other expenses should be added back to the Husband's income.
"In January 2006 ... My Husband changed the entire structure of his business and inexplicably entered into a Shareholder Agreement diluting his ownership interest in the Warshaw Group and purporting to transfer 30% of his 100% ownership interest to his two Brothers for no legitimate business purpose." The Wife's aff. in supp., ¶ 9. The Wife alleges that the Husband receives more income from the Warshaw Group than he reports, as he is the controlling shareholder and "may have control over how much of the business' income is claimed as his income ...." Id. , ¶ 3 (F). She adds that at least 70% of $1,292,881 should be imputed as income to the Husband, as this is the purported retained earnings. According to the Wife, the Husband has created sham business dealings with the Brothers to make it appear that he receives less money than he actually does, "which is precisely why his spending exponentially exceeds his purported income." Id. ¶ 3 (L).
The Wife alleges, among other things, "[m]y Husband claims tens of thousands in business expenses for travel, yet all his clients are in New York." Id. , ¶ 24. Further, the Husband's income "suspiciously" decreased in two years leading up to the divorce, despite the fact that the company "still maintained the same major city contracts ...." Id. , ¶ 25.
The Wife claims that she is "under constant financial duress and persistently worried about being able to meet [her] monthly obligations ...." The Wife's aff. in opp., ¶ 14. Ms. Warshaw contends that her husband continues to mislead the court regarding his true income and earning capacity. The Wife also alleges that the Husband refuses to pay for the children's unreimbursed medical expenses. She states the following, in pertinent part:
"[M]y Husband still manages to afford to pay for a nanny during his own parenting time, travel constantly with and without our Children, and continues to live the same lavish lifestyle to which he is accustomed, which our Children get to live only half of the time while they are under his care. While I have been forced to forego all luxuries, including but not limited to, the use of nanny, spa treatments, massages, self-care, and even therapy."
Id. , ¶¶ 19-20.
The Wife reports that the monthly expenses for her and the three children amount to $17,150. She continues that her "only source of income is the $11,668.00 per month" and that this does "not even begin to cover the basic monthly living expenses for me and our three (3) children." The Wife's aff. in supp., ¶ 30. According to the Wife, while she receives $140,016 annually in maintenance, after taxes, she is left with $90,158 in net income. Some of the reported monthly expenses include the following: Total housing and utilities = $3,824, food = $1,636, unreimbursed medical = $685, clothing = $500, babysitter/other child care = $1,440, nursery school = $2,000, summer camp = $1,400, extracurricular school activities = $766 and income taxes = $2,842. The Wife's Exh. 7. In the liabilities section, the Wife reports an outstanding medical loan in the amount of $10,000 and approximately $16,000 in loans owed to family members. In addition to the monthly expenses of $17,150, the Wife also incurs expenses for the parenting coordinator, and child support add-ons, such as extra-curricular activities "which the Children would like to attend and should attend based upon the parties' pre-commencement standard of living." Aff. of Yonatan Levoritz (Levoritz), ¶ 48.
The parties retained a parenting coordinator, with the Husband paying 75% and the Wife paying 25% of any joint consultations.
According to the Wife, the court should continue to impute zero income to her for purposes of calculating support obligations. She claims that it has been "impossible for [her] to find adequate employment," because the Husband refuses to help "pay for a nanny or afterschool child care programs" during her parenting time. The Wife's aff. in opp., ¶ 16. Further, it is "preposterous[ ]" for the Husband to impute income to the Wife, as the court has "repeatedly" ruled against it. Id.
Although the Wife believes that the Husband's income is higher than $466,703, which is what the court initially computed, she is requesting that the court compute spousal and child support obligations based upon this figure. In the alternative, she is requesting that the court recalculate the Husband's income as $706,550. Lastly, the Wife states that, as another alternative, the court can issue a needs-based award to the Wife in the amount of $17,150 a month, based on her expenses.
The Wife apparently ascertained this number by adding up the Husband's reported 2017 expenses and including some unreported payments to attorneys and other estimated tax impacting sums. The Wife's aff. in supp., ¶ 39.
Using the amount of $466,703 as the Husband's income and $0 for the Wife's income, the Wife calculates the spousal payment to be $93,340.60 annually, or $7,778.38 monthly. The annual child support payment, using the same income and the formula for three children, is calculated to be $86,620.08 annually, or $7,218.34 monthly, along with an 80% pro rata share of the CSSA add-on expenses. See Wife's Exh. 9.
The Husband does not oppose the branch of the Wife's motion seeking a reduction in the amount of temporary maintenance from $11,668 per month to $7,778.38 per month. The Husband maintains that a modification is necessary, as the parties no longer live together and are living in separate rental apartments. In the alternative, the Husband argues that his cross motion for a downward modification of temporary support should be granted. According to the Husband, his income is less than that which the court previously imputed in its August 22, 2018 decision. The Husband submits an updated statement of net worth, indicating that his adjusted gross income for 2017 was $350,512. After subtracting Social Security, Medicare and New York City taxes, the income for purposes of calculating temporary maintenance should be $328,873. The Husband attached a 2018 W-2 wage statement, indicating that he received approximately $250,000 in wages from the Warshaw Group in 2018. However, his "total distributions in 2018 from Warshaw Group, if any, will not be determined until my corporate taxes are prepared." The Husband's aff. in opp., ¶ 8. According to the Husband, the court "should use no more than the income reflected on my most recently filed tax return" or, in actuality, use $310,000, as this was his "take home pay" "given that some of [his] distributions were retained by Warshaw Group." Id. , ¶ 17.
According to the Husband, "substantial changes to our lifestyles warrant a reduction in temporary support." For example, the Husband alleges that he has "drastically reduced [his] discretionary expenses," as he "no longer pay[s] expenses related to docking a boat in the Hamptons. [His] mother now pays all these expenses ...." Id. , ¶ 23. The Husband lists his monthly expenses as $14,733, which includes $3,701 for housing, $1,650 for food, $2,233 for insurance, $810 for unreimbursed medical, $1,950 for childcare/housekeeping, $246 for extracurriculars and $1,789 for recreational activities, which include $666.67 for summer camp. The Husband maintains that he has paid all of the children's add-on expenses, including unreimbursed medical costs, childcare, camp and extracurricular activities. Attached to the updated statement of net worth is the list of legal and other fees paid in connection with the divorce action, totaling $228,820.42. See the Husband's Exh. 3.
It appears, however, that Husband pays for childcare costs and extracurriculars that are incurred only during his parenting time.
The Husband reports the following assets: $817,011.23 in a retirement account in the Husband's name (as of March 31, 2017, the date of commencement of the divorce action, this had a value of $655,229.90), checking accounts totaling $52,768 in his name (one of which had a value of $129,782 as of March 31, 2017) and Vanguard accounts in the children's names. The following investment accounts are listed and held in the Husband's name: Etrade now valued at $7,496, valued at $111,905 on March 31, 2017, JP Morgan account valued at $0, valued at $96,102.00 on March 31, 2017, another JP Morgan account currently valued at $0, valued at $208,921.16 as of April 18, 2017. Other assets include a boat, a life insurance policy paid for by Warshaw Group, and his businesses, with the value of his business interests to be determined. The amount of liabilities is listed as $127,628, with the majority comprised of legal fees due in the amount of $114,340.18 and some credit card debt.
The Husband argues that the court should not rely on the Wife's "false and misleading claims about [his] income and ownership in Warshaw Group," as a basis for imputing income to the Husband. The Husband's aff. in opp., ¶ 15. The Husband claims that, although the Wife and her retained expert allege that $1,292,881 in retained earnings should be imputed to the Husband, retained earnings "is not a basis to impute additional income to me; it is not money that can be taken out of the business." Id. , ¶ 13. Further, the Wife only speculates, without any proof, that the Warshaw Group's reduction in revenue is the result of pre-divorce planning. The Husband maintains that he has paid, and will continue to pay, the cost of more than $2,000 per month for the family's health insurance coverage. The Husband states that he has "been forced to spend down marital brokerage and bank accounts to pay litigation expenses." Id. , ¶ 16.
According to the Husband, the Wife has drastically inflated her monthly expenses. For example, the Husband claims that the Wife did not pay many of the listed expenses on her updated statement of net worth. For instance, although the Wife reported thousands of dollars in expenses for nursery, childcare and summer camp, these costs are inaccurate. The Husband claims that the monthly cost of camp was $665, not $1,400, and that the Wife did not contribute to any of these costs. He states, "[a]fter subtracting the phony expenses set forth above (totaling $5706), [the Wife's] total expenses equal $11,450 per month ($17,156 - $5,706)." Id. , ¶ 26.
Further, according to the Husband, even after receiving the $11,668 per month in maintenance, the Wife still had excess money. He claims that she was able to obtain cosmetic procedures and open savings accounts for the children, funded by the excess temporary maintenance payments. In his reply, the Husband states that, "[a]fter subtracting the expenses that [the Wife] now admits she does not actually pay for the children, her total monthly expenses total $8,828 ($17,156 less $8,328). The Husband's reply aff., ¶ 6.
The Husband believes that modification is also necessary to the Wife's imputed income. While the court initially imputed $0 income to the Wife, the Husband argues that $60,000 of income should now be imputed to the Wife. The Husband claims that, in 2006, the Wife earned $64,000 while working only nine months. In further support of his contentions, the Husband submits an affidavit from Lynn Mizzy Jonas ("Jonas"), a vocational expert, who the Husband retained to conduct a vocational evaluation of the Wife. After interviewing the Wife and considering "her age, education and work experience, as well as her additional language and IT skills," Jonas found that the Wife is "capable of obtaining paid employment in the $60,000 range to start," and that the Wife "could work in the public or private sectors as a Research Assistant, Grant Writer or Marketing Associate." Cross motion, Jonas aff, ¶ 8.
A compliance conference order dated June 4, 2019 directed the Wife to provide the Husband with documents related to her employment search. See the Husband's Exh. 35. According to the Husband, as the Wife has not produced any documents, the court should infer that the Wife has made no efforts to obtain employment.
The record indicates that, during the preliminary conference held on May 16, 2017, the parties stipulated that the court would appoint a neutral expert to appraise the Husband's business interest. Following various motion practice, on July 27, 2018, this court appointed Klein Liebman & Gresen, LLC ("KLG") to appraise the Husband's business interest and determine his income and cash flows as of the date of the marriage to the date of the commencement of the divorce action. Pursuant to the order, the Husband was responsible to pay 100% of the cost of the neutral appraiser, subject to meaningful reallocation at trial.
On July 15, 2019, KLG issued a preliminary draft report, for discussion purposes. The draft report, to be submitted to the court, states that, pursuant to the court's order dated July 27, 2018, KLG was appointed as a neutral appraiser to determine the Husband's interest in the Warshaw Group and his income and cash flow as of the date of the marriage and the date of the commencement of the divorce action. See the Wife's Exh. 27. KLG stated that it interviewed both the Wife and the Husband and that it reviewed business and personal tax returns, bank statements and statements of net worth, among other documents. It considered various approaches, but utilized the capitalization of earnings method to value the company. As of the date of the marriage, the fair market value of the Husband's 70% interest in the Warshaw Group was $1,356,000. As of the date of the commencement of this action, his interest was $1,236,000. The report concluded by setting forth the Husband's "normalized pre-tax income (cash flow before adjustment for reasonable compensation and before income taxes)" for various years. According to KLG, in 2015, the Husband's normalized income was $980,000. In 2016 it was $447,000, and, for 2017, it was $463,000.
As noted, the Husband does not oppose the Wife's request to reduce her maintenance to $7,778.38 per month. However, in the alternative, he cross-moves for a downward modification of her support payments to reduce this monthly amount to $7,221. Using $328,873 ($350,512 reported from his 2017 W-2, minus taxes), and adding an additional $60,000 imputed income to the Wife, the Husband proposes an alternative monthly temporary maintenance award of $7,221 ( [$328,873 X .3] —[$60,000 X .2]/12).
As this action was commenced after October 25, 2015, the new maintenance guidelines for temporary maintenance apply. DRL § 236 (B) (5-a). Pursuant to DRL § 236 (B) (5-a) (c), after the statutory formula is applied to the parties' income, using a cap of $184,000 of the payor's income, the calculated amount is considered the presumptive award of temporary maintenance, which shall be ordered, unless the court finds that the presumptive award would be unjust or inappropriate based upon the factors prescribed in DRL § 236 (B) (5-a) (h) (1). If the court determines that the presumptive temporary maintenance award is unjust or inappropriate, thereby warranting a deviation, the statute requires that the order adjusting the presumptive award must include the amount of the unadjusted presumptive award of temporary maintenance, the factors the court considered, and the reasons the court adjusted the presumptive award. See DRL § 236 (B) (5-a) (h) (2).
Pursuant to the court's decision and order dated August 22, 2018, the Wife has been receiving a monthly amount of $11,668.00. Out of this amount, she was required to pay 50% of the rent, utilities and childcare costs actually paid by husband while she remained in the marital residence. As noted, infra , the parties no longer reside together in the marital residence and the Wife is now responsible for paying 100% of the rent and utilities for her apartment.
In proposing the instant award of $7,778.38, it appears that the Wife took 20% of $466,703 ($93,340.60) and divided by 12; however, the court must first determine the presumptive maintenance award, which, based on the capped income of $184,000 would be $36,800 annually, or $3,066.66 monthly.
For example, as set forth in Al E. v. Joann E. , 55 Misc 3d 1212(A), 2017 NY Slip Op 50543[U], *19 [Sup Ct, Kings County, May 1, 2017]:
"The Court notes that 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." 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 $300,000 annually for 2017 and 2018. The court notes, however, that Husband's income in prior years was significantly greater, and his expenses remained high throughout this litigation (including multiple gym memberships, a boat, spas, and increased pension contributions, as stated in this court's 2018 pendente lite decision). Husband has apparently reduced certain expenses since the 2018 pendente lite motion and decision, most notably, the boat expense, nevertheless, he has been able to maintain a lifestyle similar to prior years', when his income was over $400,000 and over $700,000, according to both the tax returns and the KLG report.
In relevant part, income for support purposes is determined by the "gross (total) income as should have been or should be reported in the most recent federal income tax return." DRL § 240 (1-b) (b) (5) (i). Social security, local income taxes and other specified enumerated deductions may then be credited. Id. Effective January 26, 2016, the CSSA was amended to reflect that a payor spouse is entitled to deduct prospective maintenance payments from his income for purposes of calculating child support. DRL § 240 (1-b) (b) (5) (vii) (C). These maintenance payments are also added to the payee's income prior to the calculation of child support. DRL § 240 (1-b) (b) (5) (iii).
Pursuant to DRL § 240 (1-b) (b) (5), for child support purposes under the CSSA, " ‘[i]ncome’ shall mean, but shall not be limited to, the sum of the amounts determined by the application of clauses (i), (ii), (iii), (iv), (v) and (vi) of this subparagraph reduced by the amount determined by the application of clause (vii) of this subparagraph." DRL § 236 uses the CSSA definition of income for the purpose of calculating temporary maintenance.
Income also includes, to the extent not already included in gross amount, "the amount of income or compensation voluntarily deferred and income received, if any," from, among other sources, pension and retirement benefits. DRL § 240 (1-b) (b) (5) (iii). At the discretion of the court, income may be imputed from other sources, including, but not limited to, fringe benefits received as compensation for employment. DRL § 240 (1-b) (b) (5) (v) permits "an amount imputed as income based upon the parent's former resources or income, if the court determines that a parent has reduced resources or income in order to reduce or avoid the parent's obligation for child support."
In response to the Wife's initial application for maintenance in May 2018, the Husband had argued that his income should be based on $255,453, the amount on his then-most recent tax return after deducting taxes. However, the court declined to do so, based the award of temporary support on the Husband's income of $466,703 and provided its rationale. Although the Appellate Division held that it would be error to base Husband's income on a multi-year average, it affirmed the court's order and concluded, in relevant part, that this court "appropriately looked beyond defendant's most recent tax return to consider his earnings history." Warshaw v. Warshaw , 173 AD3d at 583.
In support of his contentions that his income is lower than the $466,703 that the court used in the 2018 Decision, the Husband now submits an updated W-2 indicating gross income of $350,612 in 2017. This includes $253,093 in W-2 wages and $95,549 reported on the K-1 from the Warshaw Group. He also submits a W-2 from 2018 with reported wages of $250,000, without an updated K-1, as this was apparently still outstanding when the motion was submitted to the court.
However, the court finds that the various discrepancies and "ambiguities surrounding [the Husband's] actual financial situation" are not resolved by the recent submissions, ( Warshaw , 173 AD3d at 584 ), and must await a full trial. Accordingly, as set forth below, after considering the updated submissions by the parties, the court, in its discretion, will not deviate from the initially imputed amount of income for the Husband, $466,703 per annum.
Several factors militate towards imputing a higher income than what the Husband reported on his most recent tax return. For example, as initially noted by the court, as the Husband is majority owner and officer of a business that he co-owns with his Brothers, he may have some control over the timing and amount of his compensation. Further, despite allegedly earning less since the filing of the divorce action, the Husband's voluntary pre-tax 401 (k) contributions increased. The court also considered the most recent submissions indicating that, as of the date of the divorce action, a retirement account in the Husband's name had a value of $655,229.90. This account is now listed as valuing $817,011.23. See e.g. Lennox v. Weberman , 109 AD3d 703, 704 (1st Dept 2013) (When imputing income, it was proper for the court to take "into account plaintiff's income from his investments, voluntarily deferred compensation, and substantial distributions ...").
Similar to the 2018 submissions, the Husband still lists the same discretionary expenses such as "activities for yourself," gym, and a life insurance policy as being paid for by the Warshaw Group. "Where, as here, a party pays for personal expenses through a business account, the court has the authority to impute income." Johnson v. Johnson , 172 AD3d 1654, 1656 (3d Dept 2019). Further, the Husband testified that his mobile phone is paid for by the business and that when he recently sold the car, the Warshaw Group received the proceeds of the sale. [See Wife's Exh. 28, Husband's Dep. Transcr. at 132, 196].
As originally noted, the Husband's income was represented as drastically lower in 2016 and 2017 than it was for 2014 and 2015. This action was filed in 2016. The draft report from the KLG, the neutral appraiser, found the Husband's normalized income to be $463,000 for 2017 (as opposed to the $350,612 the Husband requests for this court to use as his 2017 income in this motion). KLG also found the Husband's 2015 income to be $980,000 (as opposed to the $785,498 originally reported to the court). A court may also "impute income to a party where the record demonstrates that a party's income tax return does not reflect the party's actual income." Wallach v. Wallach , 37 AD3d 707, 708 (2d Dept 2007). Moreover, it is well settled that, "[a] court need not rely upon the party's own account of his or her finances, but may impute income based upon the party's past income or demonstrated earning potential." Lennox v. Weberman , 109 AD3d at 703-704.
The Husband states that he has been forced to spend down marital brokerage and bank accounts to pay the costs associated with this action. He lists the total amount of fees paid in connection with this litigation as $228,820.42, of which $60,000 was for the Wife's attorneys' fees. The amount of liabilities is listed as $127,628, with the majority comprised of legal fees due in the amount of $114,340.18 and some credit card debt. As indicated above, Husband's updated statement of net worth lists several checking and investment accounts that were recently depleted by an amount far in excess of this $228,820.42. For example, one account, which was valued at $208,921.16 on April 1, 2017, is currently valued at $0. At this time, it is unclear from the submissions how the remainder of the funds were spent. See e.g. Bauman v. Bauman , 132 AD3d 791, 793 (2d Dept 2015) ("Supreme Court providently exercised its discretion in imputing income .... based upon all the circumstances, including evidence which tended to show that he earned more than he claimed"); see also Samimi v. Samimi , 134 AD3d 1010, 1011-12 (2d Dept 2015) ("A parent's child support obligation is not necessarily determined by his or her current financial condition, but rather by his or her ability to provide support .... Here, the Supreme Court was permitted to impute income to the defendant ... since his account of his finances was not credible") (internal quotation marks and citation omitted).
While the court initially imputed $0 income to the Wife, the Husband now seeks to have $60,000 in income imputed to her for support purposes. After the initial August 22, 2018 order, the Husband retained a vocational expert to assess the Wife's ability to obtain employment. The expert concluded that the Wife had the potential to find a job earning a starting salary of $60,000. The Husband also indicated that the last time the Wife was employed, in 2006, she earned $64,000 while working only nine months. Further, according to the Husband, the Wife has not taken any steps to try to secure employment. Wife replies that it has been "impossible for [her] to find adequate employment," because the Husband refuses to help "pay for a nanny or afterschool child care programs" during her parenting time. The Wife's aff. in opp., ¶ 16.
At this time, the court declines to impute income to the Wife. The parties agreed that she would remain a homemaker for the duration of the marriage, she has not worked in over ten years, the youngest child is still only three years old and the Wife has recently transitioned to her own apartment. She 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 court notes that the parties enjoyed a high standard of living during the marriage: the children attend private camp, various extracurricular activities, the family enjoys lavish vacations, with the Husband owning and paying for a boat (although apparently Husband stopped paying for the boat after this court's prior decision), employed household help, and spent their money freely on spas and multiple gym memberships.
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 $7,778.38 is hereby awarded as more commensurate with the parties' lifestyle and needs. The court notes that Husband does not oppose this amount as requested by the Wife. The court further 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, $7,778.38 monthly maintenance corresponds with an income cap of $466,703. "The main purpose of a maintenance award is to give the nonmonied spouse economic independence." Giokas v. Giokas , 73 AD3d 688, 689 (2d Dept 2010). The court notes that "an aggrieved party's remedy for any perceived inequities in a pendente lite award is a speedy trial, and no exception is warranted here." Torres v. Torres , 171 AD3d 613, 614 (1st Dept 2019).
Accordingly, the court orders that the just and appropriate amount defendant shall pay plaintiff in monthly temporary maintenance is $7,778.38 ($93,340.56 annually). 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 filing of this motion, and arrears, if any, shall be paid at a rate of $5,000 per month.
Pendente Lite Child Support
The Husband argues that the Wife's application for temporary child support should be denied. He states that he has equal parenting time under the custody agreement and that, including her maintenance payments and potential income of $60,000, she is not entitled to any child support. He claims that, after accounting for her maintenance payments (previously $140,016, although, after this order, $93,340.56 annually) plus her imputed income of $60,000, he calculated the Wife's income at approximately $200,000 for child support purposes. His income, on the other hand, is represented as $328,873 minus his [prior] maintenance obligation of $140,016, or $188,857. The combined parental income, as calculated by the Husband, totals $388,873, with his pro rata share totaling 48% and the Wife's pro rata share totaling 51%. In his reply, the Husband claims that his income to be used for calculating child support should actually be further reduced to $166,456, which is $328,873, minus what he characterizes as "phantom income" and corresponding taxes. The husband contends that, as the Wife has a greater income by his calculations, and the parties have equal parenting time, she is not entitled to child support. He also alleges that the Wife has not demonstrated how the children's needs are not being met in the absence of receiving temporary child support. The Husband also alleged that the Wife had excess money after receiving her then-in-effect $11,668 maintenance support payments to pay for savings accounts in the children's names, cosmetic procedures, and legal fees. In the alternative, if the court did elect to award temporary child support, using the combined parental income of $148,000 and his calculated 48% pro rata share, the Husband states that the Wife should be awarded no more than $1,743 per month. Given the approximately equal pro rata share, the Husband requests that the court "direct that the parties be equally responsible for the children's add-on expenses, including reasonable child care expenses, unreimbursed expenses, and extracurricular activities." Aff. of Husband's counsel Sophie Jacobi Parisi, ¶ 30.
As discussed supra , the court imputes an income of $466,703 to the Husband and $0 to the Wife, before maintenance. After adjusting for $93,340 annual maintenance award, Husband's income for child support purposes is $373,363, and the Wife's income for child support purposes is the post-maintenance $93,340, for a combined total of $466,703. Husband's pro rata share is 80% ($373,363/$466,703) and Wife's pro rata share is 20% ($93,340/$466,703).
When determining an award for temporary child support, the court may, but is not required, to "apply the CSSA [Child Support Standards Act] standards and guidelines." Rubin v. Della Salla , 78 AD3d 504, 505 (1st Dept 2010). "The first step requires the computation of combined parental income." Holterman v. Holterman, 3 NY3d 1, 10, (2004) (internal quotation marks and citation omitted). Next, after taking deductions allowable by the CSSA, the court multiplies the combined parental income, up to the current statutory cap of $148,000 "y a designated percentage based on the number of children to be supported, and then allocates that amount between the parents, applying each parent's respective portion of the total income to reach the amount of each parent's support obligation." Id. at 11. If the combined parental income exceeds the statutory cap, "the court shall determine the amount of child support for the amount of the combined parental income in excess of such dollar amount through consideration of the factors set forth in paragraph (f) of [ Domestic Relations Law § 240 (1-b) ] and/or the child support percentage." Id. (internal quotation marks and citation omitted).
"Where neither parent has the child for a majority of the time, the parent with the higher income, who bears the greater share of the child support obligation, should be deemed the noncustodial parent for the purposes of child support." Matter of Conway v. Gartmond, 144 AD3d 795, 796 (2d Dept 2016) (citing Bast v. Rossoff , 91 NY2d at 732 ). Here, although the parties have roughly equal parenting time, the Husband is considered the noncustodial parent for child support purposes. The court rejects the Husband's arguments that it should impute $60,000 in income to the Wife and, therefore, his contention that, after accounting for past maintenance previously payable to the Wife, or imputing a lower income to Husband, the court should consider the Wife to have higher income for child support purposes.
To arrive at the presumptive amount of child support herein, the first step is to calculate the total amount of parental income. In applying the CSSA guidelines, the Wife's net annual income for purposes of calculating child support is $93,340.56, which is her zero imputed income plus this court's pendente lite maintenance award ($7,778.38 X 12=$93,340.56). The Husband's net annual income is $373,362.44 ($466,703 — $93,340.56). The combined parental income for purposes of DRL § 240 (1-b) (c) is $466,703 (373,362.44 + $93,340.56). The Wife's pro rata share of the combined amount is 20%. The Husband's pro rata share of the combined amount is 80%. The presumptive amount of child support is then obtained by calculating 29% (the statutory percentage for three children) of the combined parental income up to the current statutory cap of $148,000, resulting in annual support of $42,920, of which the Husband's share would be $34,336.00 annually, or $2,861.33 monthly.
As the combined parental income exceeds the $148,000 cap, the court must consider whether to award any additional child support based on income in excess of the cap. The court has discretion to apply the statutory factors set forth in DRL § 240 (1-b) (f) and/or statutory percentages. DRL § 240 (1-b) (c) (3). Some of the factors include the standard of living the children would have enjoyed had the marriage not been dissolved, when one parent's gross income is substantially less than the other's, and any other factors the court finds relevant.
"Pendente lite awards are designed to insure that a needy spouse is provided with funds for his or her support and reasonable needs and those of the children in his or her custody" Shapiro v. Shapiro , 163 AD2d 294, 296 (2d Dept 2010). The Wife is requesting that the court apply the CSSA calculation to $466,703 and that she receive $7,218.34 per month in child support. However, she has not demonstrated how the children's needs will not be met absent receiving this full amount. Some of the documented monthly expenses have been paid by the Husband, such as the $1,400 monthly cost allotted for summer camp. Moreover, certain monthly costs requested by Wife ($4,125) associated with unreimbursed medical, childcare and education, are "add-on expenses expressly addressed in the CSSA" and, as set forth below, will be shared pursuant to the pro rata statutory formula. Michael J.D. v. Carolina E.P ., 138 AD3d 151, 153 (1st Dept 2016). On the other hand, the relatively small amount of money allegedly saved by the Wife ($11,668 - $11,450) to contribute to the children's savings accounts, along with the documented monthly expenses, does not indicate that she receives more than she needs.
"The add-on expenses expressly addressed in the CSSA are: (1) child care expenses when a custodial parent is working, looking for work and/or engaged in an educational or training program that will lead to employment (Domestic Relations Law § 240 [1-b] [c] [4], [6] ); (2) health insurance and unreimbursed medical expenses (Domestic Relations Law § 240 [1-b] [c] [5] ); and (3) educational expenses (Domestic Relations Law § 240 [1-b] [c] [7] )." Michael J.D. v. Carolina E.P ., 138 AD3d at 153 (Family Ct Act citations omitted).
The record indicates that the children live in Manhattan, attend summer camp, participate in extracurricular activities and have childcare providers while they are at the Husband's residence. Further, the Husband recently testified that he has a membership at Westhampton Boat and Tennis Club and that he took the kids to Florida around winter break. In light of the standard of living the children would have enjoyed had the marriage not been dissolved, in its discretion, the court applies the CSSA calculation to the combined parental income of $300,000. In applying the CSSA formula, the Wife is awarded $5,800 monthly pendente lite child support at this time.
$300,000 X .29 = $87,000 X .80 (pro rata share) = $69,600/12= $5,800.00
The Wife does not specifically address her expectation regarding expenses for summer camp or extracurriculars, which are not a mandatory add-on, and can only be ordered to be paid on a pro rata basis (absent the parties' agreement) after an analysis under DRL § 240 [1-b] [f] Klauer v. Abeliovich , 149 AD3d 617, 620 (1st Dept 2017). The Husband concedes these extracurricular activities as the parties' customary add-on expense, but claims that he should be responsible for only 49% of his pro rata share.
As discussed supra, the parties pro rata shares of income are 20% plaintiff and 80% defendant, and accordingly, defendant shall pay 80% and plaintiff shall pay 20% 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), the children's agreed-upon camp and 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"].
At this time, with the exception of health insurance, the court sees no basis to deviate from the calculated pro rata formula. The Husband states that he will continue to pay for the Wife's and children's medical insurance premiums during the pendency of this action. It appears that Husband's business pays this insurance expense, so the actual cost to the Husband may not be easily ascertainable. To the extent that there is any additional cost to Husband to maintain Wife on his health insurance (i.e. , the difference, if any, between (i) cost of insuring Husband and the children, and (ii) cost of insuring Husband, Wife, and the children), and adjusted for the difference between the cost to the business and what the Husband's share of that business cost is, Wife is to reimburse Husband for that additional cost, within 10 days of presentment of invoices and schedules. Accordingly, the Husband shall continue to maintain health insurance premiums for the Wife and the children.
Health insurance is an add-on expense. However, at this time, as the Husband voluntarily states that he will continue to pay for the Wife and children's health insurance premiums during the pendency of this action, the court will not apply the pro-rata share. Compare Bauman v. Bauman , 132 AD3d 791, 793 (2d Dept 2015) ("While the court properly directed that the defendant maintain health insurance for the benefit of the children, it should have directed that the plaintiff's 20% pro rata share of such costs be deducted from the defendant's basic support obligation").
Counsel Fees
Pursuant to DRL § 237 (a), the Wife is seeking the amount of $250,000 in counsel fees for this action and an amount of $12,587.07 for the cost of defending against the Husband's appeal of the August 22, 2018 order. According to the Wife, the Husband engaged in dilatory conduct by not providing the court with a complete financial record and by filing an appeal of the August 22, 2018 decision. She states that, "as a result of My Husband's fraudulent and dilatory tactics and the Court's inability to ascertain My Husband's true income ... I am forced to bring the instant application seeking Support and Fees for this complex and protracted litigation to create some parity ..." The Wife's aff. in supp., ¶ 4.
The Wife retained her current counsel on February 27, 2019. Counsel worked on the appeal of the August 22, 2018 order and continues to represent the Wife in connection with the divorce proceedings. The Wife paid a retainer fee of $10,000, which is attached to Wife's filed Statement of Net Worth, part of this motion.
The Wife's counsel states that, due to the nature of the discovery issues involved and the parties' respective incomes, among other things, an award of $250,000 in interim counsel fees is proper and also necessary for the Wife to continue to prosecute this matter. He states, "[w]ithout an expert and staff to go over the tens of thousands of documents, trial will be almost impossible in terms of being able to prove income, assets, the ownership of assets under the law, and ... [we] now have to amend the complaint to include new causes of action ...." Wife's counsel Levoritz aff., ¶ 64.
According to counsel, although it is impossible to predict the actual cost of attorneys' fees, given the complex issues involved, fees "shall in all likelihood be in excess" of the $250,000 that is being requested. Id. , ¶ 87. Counsel set forth his qualifications, the qualifications of the other staff working on the case, and the respective hourly rates. The Wife's counsel attaches detailed invoices for $101,413.67 in this action, and for $12,587 on appeal (Exs. 18, 20, 29); see Holloway v. Holloway , 307 AD2d 405, 407 [3d Dept 2003].
In the July 22, 2019 updated statement of net worth, the Husband reports paying $98,412 for his own attorneys' fees, $35,062 to the forensic psychologist, $26,458 to KLG, $60,000 to the Wife's former counsel, and $1,600 to his vocational expert. Another professional listed as "Counsel Press" was paid $7,288.42. The Husband's Exh. 3, updated statement of net worth at 28. The Husband also reports an outstanding debt of $114,340.18 to his attorneys and $500 to the vocational expert.
The Husband argues that the Wife's "fifth request" for counsel fees should be denied. He states that he has paid $60,000 towards the Wife's legal fees in connection with the divorce action. According to the Husband, it is the Wife who has been engaging in dilatory and meritless conduct. For example, the Husband notes that this is Wife's third counsel. The Husband states that he "should not be financially responsible for [current counsel's] document review when discovery has been ongoing for two years and [the Wife's] first and second lawyers presumably already reviewed the relevant documents in this matter. Furthermore, although current counsel has only billed $67,000 on the matter thus far, counsel claims, without any explanation, that fees will exceed over $250,000." The Husband's aff. in opp., ¶ 32. The Husband alleges that the Wife engaged in excessive motion practice, including filing the instant motion to amend the complaint. He argues that the Wife should "bear some responsibility" for the litigation costs, including the duplicative services required from changing counsel. As a result, if the court does award counsel fees, "any award should be deemed as an advance of [the Wife's] share in equitable distribution." Id. , ¶ 34. Regarding appellate fees, the Husband alleges that he did not engage in frivolous conduct by appealing the August 22, 2018 order and that he should not be financially penalized for exercising his right to appeal.
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.
In support of the motion for counsel fees, the Wife includes invoices pertaining to the work involved in the appeal. Accordingly, the court, in its discretion, awards the Wife appellate counsel fees of $2,587.07, which are included in the total interim award amount listed below. This is not penalty for the Husband filing the appeal; rather, it is an award that seeks to level the playing field for the Wife who was compelled to defend against the appeal. The Husband's updated statement of net worth sets forth that he has paid his own counsel $98,412 and that he still owes counsel fees in the amount of $114,340.
As of August 7, 2019, the Wife has accrued $101,413.67 in counsel fees to her current counsel, in addition to the $12,587 appellate fees. Her counsel has provided detailed billing documents and time records for the work already billed for. The Husband does not dispute any specific time entries.
The Wife should not have to use her limited resources, 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]; Charpié , 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] ).
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 $101,413, plus $12,587 for the defense of the appeal, 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 four equal installments: $39,750 by January 15, 2020, $39,750 by February 15, 2020, $39,750 by March 15, 2020, and $39,750 by April 15, 2020. Charpié , 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].
Expert Fees
The Wife is also requesting an order directing the Husband to pay $25,000 to retain Heidi Muckler as a forensic expert. She states that there is "the need for a Forensic Accountant to decipher My Husband's true income ...." The Wife's aff. in supp., ¶ 4. The Wife is "requesting the funds to retain a Forensic Accountant to go through and decipher all of the records that have been obtained ...." Id. , ¶ 43.
As previously mentioned, according to the Wife, the Husband has been engaging in "sham business dealings and efforts to deceive the Court in terms of his true income and extent of marital assets ...." Id. , ¶ 28. As a result, the Wife believes that an expert must be retained to analyze the Warshaw Group's retained earnings, the depreciation values, the differences between the audited financial statements and tax returns, among other issues. Counsel states that the "Forensic Accountant for the Husband is only seeking to value the business and has not looked into any of [these] side issues." Levoritz aff., ¶ 65.
After performing a cursory review, Muckler found numerous discrepancies between the business tax returns and the audited financial statements, but does not have the "reconciling work papers to explain the differences between the two documents." The Wife's Exh. 3; Muckler aff. at par. 4. Muckler continues that, "[i]n order for [her] to prepare a valuation of the [Husband's] business and determine his income and cash flow, [she] require[s] a retainer of $25,000." Id. at 6.
In opposition, the Husband argues that the request to pay expert fees should be denied. The Husband explains that the parties already agreed to appoint KLG, a neutral expert, to assess the value of the Warshaw Group. According to the Husband, if the value of the Warshaw Group did not appreciate during the marriage, the Wife will not be entitled to any portion of the business in equitable distribution. The Husband submits the Warshaw Group's audited financial statements from 2014 through 2016 indicating that it "has been Warshaw Group's practice to mark depreciation on a straight-line basis." The Husband's aff in opposition, ¶ 38. The Husband claims that income based on depreciation expenses should not be imputed to him. Muckler "claims that income should be imputed to me based on depreciation expenses without considering whether depreciation was taken on a straight-line basis..... I have been advised that it is appropriate to impute income for depreciation only when it is in excess of a straight-line method." Id., ¶ 39. As the Wife is "[u]nhappy with this result," she is now attempting to retain a "hired gun," to get a more favorable result. Id. , ¶ 40. The Husband contends that, as a matter of equity, he should not be required to pay for another expert to repeat the work that has already been done. He states that, "in discovery and as part of KLG's valuation, I produced more than 6,000 pages of documents related to my financial circumstances and businesses." The Husband's aff. in opp., ¶ 15.
The Wife's affidavit in opposition to the Husband's cross motion cites the "new Forensic Report prepared by the Court appointed Forensic Account ..." The Wife's aff. in opp., ¶ 27. The Wife argues that the report supports the conclusion that the Husband "seeks to mislead this Court regarding his income ...." Id. The Wife, therefore, requests expert fees to retain Muckler, who has pointed out "additional discrepancies." Id. , ¶ 29.
The Husband does not agree with the amount of income KLG attributed to him. He states, "income listed on the KLG draft report is not the same thing as income as defined under the CSSA." The Husband's reply aff., ¶ 15. Further, Husband states that as the KLG report is just a draft, it should not be considered as admissible evidence. Nonetheless, the Husband then cites to the KLG report. He states the following:
"KLG's report confirmed its initial opinion that Warshaw Group — which I started before the marriage — declined in value during my marriage to [the Wife]. See preliminary Draft Report at 5, Plf. Ex. 27. Because Warshaw Group is my separate property and depreciated during the marriage, I have been advised that [the Wife] is not entitled to an equitable award from my business."
Id., ¶ 17.
"The award of expert witness fees in a matrimonial action is left to the sound discretion of the trial court, ... (and) should be made upon a detailed showing of the services to be rendered and the estimated time involved" ( Greco v. Greco , 161 AD3d 950, 952 (2d Dept. 2018) (internal quotation marks and citations omitted); Avello v. Avello , 72 AD3d 850, 852 (2d Dept. 2010) ).
In support of the Wife's request for expert fees, Muckler states her qualifications in an affidavit, and also states that her firm would provide the following consulting services to Wife's attorneys: Muckler would "evaluate and perform forensic accounting and valuation services of the holdings of [the Husband]." Muckler aff., par. 1. The Wife's Counsel states that the "Forensic Accountant for the Husband is only seeking to value the business and has not looked into any of this side issues." Levoritz aff., ¶ 65. Wife's counsel and Muckler state a basis for the possible necessity of Wife's expert, as discussed above, including to review the KLG report, to help prepare counsel for trial, and to look into business and income valuation issues allegedly not explored by KLG. Accordingly, forensic fees in the amount of $25,000 are granted, 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 in the near future. This award is without prejudice to future applications. This and any pendente lite fees' award will be subject to meaningful reallocation at settlement or after a trial.
Leave to Amend
The Wife is seeking leave to amend the complaint to include [REDACTED], the Husband's two Brothers, and include the additional causes of action that accrued or of which she became aware during the pendency of the divorce action. The Wife believes that the Husband purposefully diluted his ownership interest in both the Warshaw Group and 48 Woodside LLC as a way to evade spousal and child support. These "attempts to reduce Plaintiff-Wife's equitable share of the Marital Estate in anticipation of a divorce began before the parties were even married." Levoritz aff., ¶ 99.
The Wife believes that he created a "fictional partnership," and claims, for example, that "there are no cancelled checks or any proof whatsoever of any payments received by Defendant-Husband for the dilution of his ownership interest in neither the Warshaw Group nor Woodside LLC." The Wife's aff., ¶ 10. For another example, although the Husband allegedly only owns 55% of the investment property, he was the only one who recently paid for the renovation costs. The Wife claims that she "first learned of the frauds perpetrated by My Husband and his Brothers while my new attorney was working on the case, which has only been since February 27, 2019." Id., ¶ 49.
The initial complaint contained one cause of action, seeking a divorce due to an irretrievable breakdown in relationship for at least six months ( DRL § 170(7) ). The proposed amended complaint (PAC) includes causes of action grounded in breach of fiduciary duty and aiding and abetting such duty, fraudulent conveyance of marital funds and aiding and abetting such conveyance, unjust enrichment, common law fraud and aiding and abetting such fraud, and fraud pursuant to debtor and creditor law.
In the second and third causes of action, the PAC alleges that a fiduciary duty existed between the Husband and the Wife, by virtue of their engagement and subsequent marriage, and that the Husband breached his duty to the Wife by diluting and manipulating his income in an effort to reduce his support obligations. In the third cause of action, Jay Warshaw and Michael Warshaw are alleged to have aided and abetted this breach of fiduciary duty.
The fourth and fifth causes of action, fraudulent conveyance of marital funds, allege that the Brothers conspired with the Husband to facilitate the fraudulent conveyances as a way to deprive the Wife and the children of the value of both the Warshaw Group and 48 Woodside, LLC. Unjust enrichment, the sixth cause of action, states that the Wife contributed to the business by taking care of the marital home and the children and that the Husband and his Brothers have been unjustly enriched by these contributions.
The numerical headings for the causes of action in the PAC appear to have errors. For instance, there are two "fifth" causes of action.
In the seventh and eighth causes of action, alleging fraud, the PAC indicates that the Husband "promised [the Wife] that he would financially support her and the parties' three (3) Children, if Plaintiff agreed to give up her career to take care of the marital home and the parties' three (3) Children." The Wife's Exh. 15, PAC, ¶ 67. However, "[u]nbeknownst to [the Wife], in January 2006, the Husband, with the assistance of his Brothers, perpetrated the fraudulent scheme." Id. , ¶ 68. The Husband is alleged to have conspired to deprive her and the children of income. The PAC alleges that the Husband "should be found liable for Fraud, as a result of which, Plaintiff has been left with wholly insufficient funds to pay for the basic needs of herself and the parties' three (3) Children, has been deprived of her equitable share of the marital estate, and has been forced to incur astronomical fees in connection with litigating this matter and deciphering [the Husband's] true income." Id. , ¶ 76. The Wife contends that the Brothers should be found liable for aiding and abetting such fraud, as they knew of the Husband's fraudulent intent to frustrate the Wife's rights as a potential creditor, and aided and assisted this scheme.
In the ninth and tenth causes of action, fraud pursuant to debtor and creditor law, the Wife alleges that the Husband and the Brothers should be found liable for fraudulent conveyance of marital property. The PAC sets forth that the Wife is a creditor in this action and the Husband is a debtor. The Husband is "hiding his income and assets through his Brothers," and she "will not have an opportunity to receive her rightful support and equitable share of the property once the divorce is resolved." Id. , ¶ 94. By giving away his financial assets, which are potentially subject to spousal and child support, the Husband is "running the risk of becoming insolvent, thereby defrauding [the Wife]." Id. , ¶ 96. The Brothers allegedly conspired to deprive the Wife and the children of these assets and should be found liable for fraudulent conveyance of marital property pursuant to Article Ten of the New York Debtor and Creditor Law (DCL).
In the last proposed cause of action, constructive trust, the Wife repeats the same allegations as the other causes of action and requests that a constructive trust be imposed in her favor. The PAC requests punitive damages.
In his opposition papers, the Husband argues that all of the proposed claims are time barred and he provides the alleged applicable statute of limitations for each claim. In the alternative, the Husband explains how every proposed cause of action fails to state a cause of action. The Husband also argues that the Wife's request should be denied because he has been prejudiced due to the delay in seeking the amendment. He states, "The factual allegations that form the basis of [the Wife's] amendment occurred more than thirteen years ago..... I cannot locate banking records germane to [the Wife's] allegations, as J.P. Morgan Chase only keeps records for seven years ...." The Husband's aff., ¶ 50.
In reply, plaintiff does not address either the statute of limitations issue regarding her request to amend the complaint or the merits of the individual causes of action. She states that in the Husband's most recent deposition testimony, taken June 21, 2019, he admitted that the Brothers have no active roles in the company. She continues that the Brothers "indisputably aided and abetted my Husband's fraudulent scheme to reduce the marital share of his vast wealth...." The Wife's aff., ¶ 31. Therefore, the Wife asserts, she should be allowed to amend the complaint to include causes of action in constructive trust, fraudulent conveyance, constructive fraud and actual fraud.
In general, "[l]eave to amend the pleadings shall be freely given absent prejudice or surprise resulting directly from the delay." Murray v. City of New York , 51 AD3d 502, 503 (1st Dept 2008) (internal quotation marks and citations omitted). However, "leave should be denied where the proposed claim is palpably insufficient." Pasalic v. O'Sullivan , 294 AD2d 103, 104 (1st Dept 2002).
The Wife requests to amend the complaint to include [the Brothers] as defendants and include ten additional causes of action. For the reasons discussed below, the amended complaint is palpably insufficient, and the Wife's request to amend is denied in its entirety.
The PAC's requested relief of punitive damages is not viable and is also denied.
The Wife did not address the relevant statute of limitations for each of the proposed claims, and did not attempt to set forth the elements of each proposed cause of action. In response to the Husband's papers, the Wife argues that she should be allowed to amend the complaint to include causes of action in constructive trust, fraudulent conveyance, constructive fraud and actual fraud. As the Wife seemingly abandons the claims for breach of fiduciary duty and unjust enrichment by failing to address these claims, she is denied leave to amend to include these claims. See e.g. Cassell v. City of New York , 159 AD3d 603, 603 (1st Dept 2018) "Plaintiff's claim of municipal liability under 42 USC § 1983 is abandoned because, in the motion court, he did not oppose the City's argument that the complaint had failed to state a section 1983 claim").
Even if the Wife had addressed the merits of these claims, they both would be barred by the applicable statute of limitations.
The remaining causes of action are based on the Wife's allegations that, prior to the marriage, the Husband entered into two business arrangements with the Brothers so that he could evade spousal and child support. It is undisputed that the stockholder and operating agreements which restructured Warshaw Group and 48 Woodside, LLC were entered into on January 2, 2006, approximately 13 years ago. At that time, the parties were not married and they did not have children. "A motion to amend a complaint or other pleading to add a cause of action or theory of recovery that is time barred under the applicable statute of limitations is patently devoid of merit." Schwartz v. Walter , 171 AD3d 969, 970 (2d Dept 2019) (internal quotation marks and citations omitted). Accordingly, as set forth below, except for the causes of action grounded in fraud, the remaining causes of action are barred by the statute of limitations. With respect to the fraud-related causes of action, "a cause of action based upon constructive fraud pursuant to Debtor and Creditor Law § 273 must be commenced within six years after the date that the fraud occurred, irrespective of the date of discovery." Felshman v. Yamali , 106 AD3d 948, 849-950 (2d Dept 2013). In addition, "[a]n action to impose a constructive trust is governed by the six-year statute of limitations provided by CPLR 213 (1), which commences to run upon occurrence of the wrongful act giving rise to a duty of restitution, and not from the time when the facts constituting the fraud are discovered." Kaufman v. Cohen, 307 AD2d 113, 127 (1st Dept 2003). As the date of the alleged fraud is January 2, 2006, the causes of action grounded in constructive fraud and constructive trust are time barred as outside the statute of limitations.
"A cause of action sounding in fraud must be commenced within 6 years from the date of the fraudulent act or 2 years from the date the party discovered the fraud or could, with due diligence, have discovered it." Id. at 22 (internal quotation marks and citations omitted). As discussed, it is undisputed that the alleged fraudulent acts occurred in 2006. "The plaintiff bears the burden of establishing that [she] could not have, with reasonable diligence, discovered the fraud earlier than two years before commencing the original action." Sabbatini v. Galati , 43 AD3d 1136, 1140 (2d Dept 2007). The Wife claims, without any explanation, that she only became aware of these acts when she retained her current counsel, on February 27, 2019. However, this is not substantiated by the record. The statement of net worth dated June 20, 2017 submitted by the Husband, relied upon in both the initial order to show cause and the PAC, specifically delineates the Husband's ownership interests in both the Warshaw Group and 48 Woodside, LLC. In this statement, the Husband also indicated that he loaned his brother $100,000 to buy shares at the Warshaw Group. Moreover, the court's August 22, 2018 order expressly noted the Husband's 55% ownership in 48 Woodside, LLC.
"To state a cause of action for fraud, a plaintiff must allege a representation of material fact, the falsity of the representation, knowledge by the party making the representation that it was false when made, justifiable reliance by the plaintiff and resulting injury." Kaufman v. Cohen , 307 AD2d at 119. In addition, pursuant to the pleading requirements set forth in CPLR 3016 (b), "[w]here a cause of action or defense is based upon misrepresentation, fraud, mistake, wilful default, breach of trust or undue influence, the circumstances constituting the wrong shall be stated in detail."
Even if the Wife only recently discovered that, for instance, the Brothers allegedly did not pay for their shares during the 2006 restructuring, the proposed remaining claims for common law fraud and aiding and abetting such fraud are "palpably insufficient" as they fail to satisfy the pleading requirements alleging fraud. See e.g. A.L. Eastmond & Sons, Inc. v. Keevily, Spero-Whitelaw, Inc., 07 AD3d 503, 503 (1st Dept 2013) (Among other reasons, as plaintiff "failed to plead the elements of its proposed fraud counts with the particularity required by CPLR 3016 (b)," the court denied plaintiff's motion to amend its complaint to assert fraud claims and add a defendant).
The PAC claims that the Husband fraudulently intended to dilute his ownerships interests as a way to evade spousal and child support. However, this is speculative, as, at the time of the transactions, the Husband was not married and did not yet have any children. See, e.g., Giant Group, Ltd. v. Arthur Andersen LLP , 2 AD3d 189, 190 (1st Dept 2003) ("plaintiff's allegations of scienter are not pleaded with the requisite particularity, but are conclusory, failing to set forth facts from which scienter may be inferred").
The PAC states that the Brothers had knowledge of the Husband's fraudulent intent, "since [they] were personally present at the time of the fraudulent conveyances and execution of the fraudulent Operating and Shareholders Agreements." PAC, ¶ 86. However, the speculative allegation that the Brothers had knowledge of the fraudulent scheme because they were physically present when the agreements were executed, is insufficient to support a claim for aiding and abetting fraud. See, e.g., 125 Assoc. v. Cralin Trading Assoc., L.P., 196 AD2d 630, 631 (2d Dept 1993) (internal quotation marks and citation omitted) ("Where liability for fraud is to be extended beyond the principals actors, to those who, although not participants in the fraudulent scheme, are said to have aided and encouraged its commission, it is especially important that the command of CPLR 3016 (b) be adhered to").
Further, in the proposed fraud claim, the Wife claims to have relied on the Husband's promise to financially support her and the three children. The Wife has not indicated how, at the time the promise was made in 2006, the Husband did not intend to honor this promise. See Mance v. Mance , 128 AD2d 448, 449 (1st Dept 1987) (internal quotation marks and citation omitted) ("A complaint based upon a statement of future intention must allege facts to show that the defendant, at the time the promissory representation was made, never intended to honor or act on his statement. Here, no facts are alleged to show that the defendant father never intended to honor the alleged statement").
Without referencing the actual sections, the PAC alleges various fraudulent conveyances in violation of he DCL. An actual finding of intent is required to set aside a conveyance as fraudulent under DCL § 276 Here, however, the Wife asserts no more than conclusory allegations that, prior to being married and having children, the Husband intended to give away financial assets to evade support obligations and that the Brothers conspired with the Husband to do so. See e.g. Menaker v. Alstaedter , 134 AD2d 412, 413 (2d Dept 1987) (internal citations omitted) ("However, paragraph 22 of the complaint alleges a violation of Debtor and Creditor Law § 276 which, insofar as it alleges an actual intent to defraud was properly dismissed for failure to comply with CPLR 3016 (b)"). As the allegations of scienter are not pleaded with the requisite particularity, the proposed claims for fraudulent conveyance and aiding and abetting such conveyance are also palpably insufficient.
Wife's PAC would allege that the pre-marriage transfers were the equivalent of a gift to Brothers, apparently for the purpose of shielding part of Mr. Warshaw's business from equitable distribution or support obligations to Wife if they were to get married and subsequently divorce. Wife does not cite law to support to proposition that Mr. Warshaw was barred from transferring his separate property prior to marriage. If during the marriage, any marital funds (for example, Husband's income) went to support the entire Warshaw Group or Woodside LLC business, and not just the shares owned by Husband, with no contribution by the Brothers, Wife could attempt to show wasteful dissipation of marital property. Sotnik v. Zavilyansky , 101 AD3d 1102, 1104, 956 N.Y.S.2d 514, 517—18 (2d Dept 2012) (where husband spent marital funds on his separate business, crediting wife with half of those "wasteful dissipation of marital property expenditures); Kushman v. Kushman , 297 AD2d 333, 334, 746 N.Y.S.2d 319, 321 (2d Dept. 2002) (upholding a finding of marital waste where husband liquidated pension accounts, and used the money business expenses, instead of marital).
Additionally, wasteful dissipation of even separate assets may be a factor for consideration when determining maintenance and equitable distribution, similar to the way in which the very presence of separate assets may be considered when determining maintenance or equitable distribution ( Alvares-Correa v. Alvares-Correa , 285 AD2d 123, 126—28, 726 N.Y.S.2d 668 (1st Dept. 2001) ("party's interest in [separate] trusts can be taken into account when making maintenance and child support awards ... given [his] vast trust resources, it would be inappropriate to limit child support to the statutory percentage"). In other words, if a spouse has millions of dollars of separate assets, although those assets could not be distributed in the divorce, they could be considered, for example, in determining the appropriate level of support. Had that spouse, then, wastefully dissipated those millions of dollars of separate assets, it could then be equitable for a court to impute at least some of those funds to him in determining the appropriate level of support:
Considering that "[e]conomic fault, which [includes] conduct [that] unfairly prevents the court from making an equitable distribution of marital property, has generally been considered relevant to the distribution" ( Blickstein v. Blickstein , 99 AD2d 287, 293, 472 N.Y.S.2d 110 [1984], appeal dismissed 62 NY2d 802 [1984] ; see Brzuszkiewicz v. Brzuszkiewicz , 28 AD3d at 861, 813 N.Y.S.2d 793 ; Griffin v. Griffin, 115 AD2d 587, 588, 496 N.Y.S.2d 249 [1985] ; see also Maharam v. Maharam , 245 AD2d 94, 94—95, 666 N.Y.S.2d 129 [1997] ), and that the catchall factors provide "substantial flexibility [to] fashion[ ] an appropriate decree based on what i[s] ... fair and equitable under the circumstances" ( Mahoney—Buntzman v. Buntzman , 12 NY3d 415, 420, 881 N.Y.S.2d 369, 909 N.E.2d 62 [2009] ), we conclude that, in compelling circumstances, a spouse's wasteful dissipation of his or her separate assets, may "just[ly] and proper[ly]" be considered relevant to equitable distribution and maintenance ( Domestic Relations Law § 236[B][5][d] [former (13) ]; [B] [6] [a] [former (11) ]; see Alan D. Scheinkman, Practice Commentaries, McKinney's Cons. Laws of NY, Book 14, Domestic Relations Law C236B:36 at 300; see also Mulverhill v. Mulverhill , 268 AD2d 948, 949, 702 N.Y.S.2d 457 [2000] ; Rheinheimer v. Rheinheimer , 235 AD2d 742, 743, 652 N.Y.S.2d 410 [1997] Owens v. Owens , 107 AD3d 1171, 1175, 967 N.Y.S.2d 465, 469—70 (3d Dept 2013) (modifying judgement to increase wife's maintenance and equitable distribution where husband wastefully dissipated almost $4.5 million of separate property).
Wasteful dissipation, however, is not a cause of action, but rather a factor that may be considered for support or equitable distribution ancillary to the DLR § 170(7) cause of action already filed by Wife in her original complaint. Wasteful dissipation, if any occurred here, does not need to be pleaded as a separate cause of action to pursue it at trial. Further, newly proposed causes of action may be allowed, after appropriate pleading, which relate back to an existing cause of action. Bloomfield v. Bloomfield , 97 NY2d 188, 192—93 (2001).
"A motion for leave to amend a pleading is committed to the sound discretion of the trial court." Oil Heat Inst. Of Long Is. Ins. Trust v. RMTS Assocs., LLC, 4 AD3d 290, 293 (1st Dept 2004). Accordingly, for the reasons set forth above, the Wife's request to amend the complaint is denied in its entirety.
CONCLUSION
Accordingly, it is
ORDERED that the Husband shall pay to the Wife the sum of $7,778.38 per month as temporary maintenance; 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 filing of this motion, and arrears, if any, shall be paid at a rate of $5,000 per month; all payments shall be made directly into the Wife's bank account; and it is further
ORDERED that the Husband shall pay to the Wife $5,800 per month as interim basic child support; 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 filing of this motion, and arrears, if any, shall be paid at a rate of $2,000 per month;
ORDERED that the Husband may take a credit for actual sums paid to Wife under the prior maintenance order if incurred after the filing of this motion, and prior to the date of this decision, for which he has canceled checks or other similar proof of payment; and it is further
ORDERED that defendant's pro rata share of 80% and plaintiff's pro rata share of 20% shall be applied for the children's add-on expenses, including, but not limited to, extracurricular activities, childcare costs, and unreimbursed medical 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 the Husband shall continue to maintain health insurance for the Wife and the parties' children; and it is further
ORDERED that the Husband shall pay directly to the Wife's attorney the following fees: $101,413, plus $12,587 for the defense of the appeal, 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 four equal installments: $39,750 by January 15, 2020, $39,750 by February 15, 2020, $39,750 by March 15, 2020, and $39,750 by April 15, 2020, all subject to meaningful reallocation at trial, and without prejudice to further applications for additional sums, as necessary, at the time of trial or sooner; and it is further
ORDERED that the Wife's request for $25,000 to retain an expert, is granted; and it is further
ORDERED that the Wife's request for leave to file an amended complaint is denied without prejudice, and it is further;
ORDERED that the Husband's cross-motion, to the extent that it seeks to lower the maintenance amount awarded herein, is denied without prejudice; and it is further
ORDERED that this action is restored to the Part 44 calendar for January 24, 2020 at 12 noon, time certain, for conference to ensure that discovery is completed and for settlement purposes; and it is further
ORDERED, that any relief not granted is denied.
This constitutes the Decision and Order of the Court.