John G. v Lois G.

[*1] John G. v Lois G. 2006 NY Slip Op 50292(U) [11 Misc 3d 1060(A)] Decided on March 6, 2006 Supreme Court, Nassau County Falanga, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on March 6, 2006
Supreme Court, Nassau County

John G., Plaintiff,

against

Lois G., Defendant.



00-20XX74

Anthony J. Falanga, J.

This is a post settlement application by the plaintiff for an order "1) terminating maintenance; 2) terminating the order for health insurance; 3) staying the income execution during the pendency of the action; and 4) requiring the devisees/beneficiaries of the former marital residence to remove the plaintiff's name from the mortgage obligation."

The parties were married on May 15, 1976 in the State of New York in a religious ceremony. There are three children of the marriage, to wit: N, age 27; M, age 23; and B, who turned 21 on April 28, 2005.

The plaintiff commenced the above captioned action for divorce on October 20, 2000. His cause of action seeking a judgment of divorce was denied after trial by decision and order dated October 10, 2001. All issues ancillary to the action for divorce were set down for trial on February 4, 2002.

On that date, the parties appeared with their respective attorneys and counsel placed a stipulation on the record in open court. Counsel stated on the record that the stipulation constituted a "separation agreement." Counsel further stated on the record that the parties intended to discontinue the action, and requested that the Court "so-order" the transcript of the stipulation.

Said stipulation, "so-ordered" by the Court on February 19, 2002, provides, in relevant part, as follows: 1) the defendant shall have custody of M, then 19 and B, then 17; 2) the plaintiff's child support obligation pursuant to CSSA guidelines would be $603.88 biweekly based on the plaintiff's annual adjusted gross income of $62,798.00, but the parties intended to deviate from guidelines so that the plaintiff's child support obligation would be $500.00 biweekly; 3) the plaintiff shall pay to the defendant $900.00 biweekly for a period of seven years, allocated as $500.00 child support and $400.00 maintenance; 4) upon the emancipation of B, the [*2]payment of $900.00 biweekly shall continue unabated; however, at such time the entire $900.00 will be deemed maintenance; 5) the $900.00 biweekly amount being paid by the plaintiff to the defendant shall continue without modification by either party for seven years; 6) maintenance paid by the plaintiff to the defendant shall be considered deductible by the plaintiff and taxable income to the defendant; 7) the plaintiff shall provide health insurance for the children until emancipation and for the defendant for not less than seven years; 8) within 90 days the defendant shall furnish an itemization of claimed arrears; the plaintiff shall have 60 days to raise objections thereto; and 9) the defendant's attorney shall undertake to amend an existing income deduction order to reduce the biweekly amount to $900.00 plus $41.00 on arrears; the $41.00 biweekly shall continue until such time as arrears are paid in full even should the time exceed the duration of maintenance and support.

Said stipulation also provides in relevant part as follows:

The parties are both titled owners on a piece of real property located at NP Street, North Massapequa, New York. The parties acknowledge that they are two of three people on the deed to that property. The parties acknowledge that there are a total of three mortgages, those mortgages being held by Chase Bank, Fleet Mortgage and Beneficial Finance. ...The husband (plaintiff) shall forthwith take any and all steps necessary to convey to the wife (defendant) any interest which he may have with respect to that property located at NP Street, North Massapequa, New York. The wife will henceforth be the sole owner of all marital interest in that real property; it being acknowledged that her mother is the third titled owner on the property; and will further cooperate in any transfer documents which may be required in order to convey the husband's interest. The wife shall hold the husband harmless with respect to the three mortgages against the property, and all other expenses associated with that property, including, but not limited to, taxes, insurance, utilities, repairs and maintenance.

... The parties acknowledge that as a New York City corrections officer, the husband has a pension with the New York City retirement system. Additionally, the husband has a 414-H deferred compensation or annuity plan. ... The parties hereby agree that they may submit to the Supreme Court of Nassau County, ..., a QDRO wherein the wife shall be provided with her one half interest in both the pension and 414-H plan. ... The cost of preparation of the QDRO shall be borne by the husband whose counsel has represented that he will undertake to prepare the QDROs... Such orders to be submitted not more than 90 days from the date of this agreement.

...In the event of a breach of this agreement by either party, then the aggrieved party shall be entitled to collect reasonable counsel fees and costs incurred in bringing on any enforcement proceeding to facilitate the terms of the stipulation.

On or about February 25, 2002, the defendant's attorney served the plaintiff's employer with an income execution pursuant to CPLR 5241. Said execution is contradictory in that in one place it directs the employer to deduct $900.00 plus an additional $41.00 biweekly for arrears and in another sentence provides for the deduction of the total sum of $900.00 biweekly, [*3]from which sum $41.00 was directed to be applied toward arrears of $10,000.00. Said execution superceded a prior execution (erroneously referred to in the stipulation of February 4, 2002 as an income deduction order), dated September 11, 2001, in the amount of $3757.00 a month plus $90.00 a month toward arrears of $18,785.00.

On September 13, 2004, the defendant brought a post settlement application for an order compelling the husband to comply with the terms of a so-ordered stipulation placed on the record in open court on February 4, 2002. She alleged that the plaintiff had failed to execute a deed to the marital residence or prepare and submit QDROs necessary to effectuate the stipulation dated February 4, 2002.

In opposing the defendant's application, the plaintiff conceded that he had not conveyed his interest in the marital residence to the defendant or prepared and submitted the necessary QDROs, but he contended that the Court lacked jurisdiction to enforce the agreement placed on the record on February 4, 2002 and that the defendant was relegated to seek enforcement by means of a plenary action. He contended that as the parties had agreed to discontinue the action, the stipulation which was so-ordered on February 19, 2002 remained viable only as a contract enforceable by means of a plenary suit, and not as an order of a court amenable to post disposition enforcement proceedings commenced by motion practice. He further contended that he was not obligated to convey title to the former marital residence to the defendant until such time as she refinanced the premises and relieved him of liability under the three mortgages on the premises.

In opposing the defendant's motion, the plaintiff correctly recited two general rules of law. The first rule of law provides that a plenary action is required to enforce a stipulation in an action that has been terminated ( Teitelbaum Holdings, Ltd. v Gold, 48 NY2d 51). The second provides that "(w)hen an action is discontinued, it is as if it had never been; everything in the action is annulled and all prior orders in the case are nullified "(Newar v Newar, 245 AD2d 353) (but see, Fotiadis v Fotiadis, 18 AD3d 699, holding payee entitled to money judgment for pendente lite arrears accrued prior to discontinuance). If parties intend to settle an action on terms that are enforceable by means of post judgment motion practice, including contempt, rather than limiting the method of relief to a plenary action on a contract, they should not file a stipulation of discontinuance, but should file a judgment incorporating, and not merging, the terms of their stipulation, even in cases in which the marital status is not terminated.

In the case at bar, the action was never terminated by the actual filing of either a stipulation of discontinuance or a judgment incorporating the terms of the stipulation. The law is well settled that " (a)n action is not automatically terminated by agreement unless there has been a showing that the parties have executed an express, unconditional stipulation of discontinuance'" (Pegalis v Gibson, 237 AD2d 420 quoting Teitelbaum Holdings, Ltd. v Gold, supra).

Here, as of the date the defendant served her aforementioned enforcement motion, [*4]the parties had not filed a stipulation of discontinuance in the action. Accordingly, pursuant to an order dated September 15, 2004, the Court decided her application on the merits, as follows, denoted in bold print:

The law is well settled that a settlement agreement entered into by the parties does not terminate an action but, rather, absent the actual entry of a stipulation of discontinuance or judgment in accordance with the terms of the settlement, the Court retains supervisory power over the action and may lend aid to the party who has moved for enforcement of the settlement (Teitelbaum Holdings, Ltd. v Gold, 48 NY2d 51; see also, Patel v Orma, 190 AD2d 782). As the husband has not demonstrated that a stipulation of discontinuance was filed, this Court has the authority to restore the above captioned action to its calendar and enforce the terms of the agreement in issue.

The husband states that his attorney is in the process of preparing the QDROs or orders relating to his pension and 414-H plan. His contention that he is not required to transfer his interest in the marital residence to the wife until such time as she relieves him of liability for the three mortgages on the premises is devoid of merit as the stipulation does not impose such obligation on the wife.

Accordingly, the motion is granted to the following extent:

The action is calendared for a conference on October 27, 2004 at 2:00p.m. The parties and counsel shall be present at the conference. The husband's attorney shall present the following documents at the conference: a deed transferring the husband's interest in the marital residence to the wife, and orders necessary to transfer to the wife her share of the marital portions of the husband's pension and 414-H plan. Appearance at the conference will be waived upon the receipt by chambers, on or before October 27, 2004, of a FAX to (516) 571-0029 on counsel's letterhead stating that the deed has been executed and delivered and the necessary orders relating to the husband's pension and 414-H have been submitted to the Matrimonial Part Judgment Clerk's office.

The wife is awarded counsel fees in the sum of $750.00 for costs incurred incident to bringing the instant enforcement motion. Said sum shall be paid by the husband directly to the wife on or before October 27, 2004. In the event the wife and her attorney are required to appear at the conference on October 27, 2004, the Court will entertain an application for an additional award of counsel fees.

On September 24, 2004, the parties executed a deed to the former marital residence transferring title solely to the defendant. On July 25, 2005, the defendant transferred title to the parties' son, N.

The defendant passed away on August 7, 2005. Subsequent to her death, the plaintiff notified his employer to terminate the income execution dated February 25, 2002. His employer advised it could not do so without a court order. It appears that thereafter, the plaintiff retained [*5]present counsel who contacted Arnold Koenig, Esq., counsel for N, then the proposed administrator of the Estate of Lois G, seeking a consent stipulation terminating the income execution. The Estate has taken the position that the provision of the February 4, 2002 stipulation providing that the payment of $900.00 biweekly shall continue for a period of seven years without modification evinces the parties' unequivocal intent that such payments continue subsequent to Lois G's demise. The Estate points out that the parties were aware that the defendant was ill at the time of the stipulation and asserts that although labeled as maintenance to afford the plaintiff a tax benefit, said payments were in fact part and parcel of a property settlement. The Estate further points out that the income execution should continue until arrears are liquidated.

The plaintiff brought the instant order to show cause on December 9, 2005 and pursuant to the order of the Court, effectuated service on the proposed administrator of the Estate of Lois G, N, and counsel for the proposed administrator, Koenig & Samberg, Esqs. Although no documentation has been provided, Mr. Koenig has represented that N was, in fact, appointed administrator on December 8, 2005 by the Nassau County Surrogate.

The Court has determined herein above, that the above captioned action, not previously terminated by the filing of a stipulation of discontinuance or judgment, is a pending matrimonial action, subject to post settlement enforcement by motion practice. There are, however, other jurisdictional issues which must be addressed.

Although the issue has not been raised by counsel for either party herein, before addressing the merits of the instant application, the Court must determine the extent, if any of its jurisdiction to adjudicate the matters at issue subsequent to the demise of Lois G.

First, the Court notes that neither the plaintiff nor the Estate has moved for a substitution pursuant to CPLR 1021. As such substitution is mandatory upon the death of a party, the Court sua sponte orders that N as administrator of the Estate of Lois G shall be substituted as the defendant in the above captioned action in the place of Lois G, deceased; and the caption of the action shall hereafter be amended to reflect such substitution (CPLR 1015; see, Paul v Ascher, 106 AD2d 619).

Next, the Court must determine whether the above captioned action abated upon the death of Lois G. Generally, an action seeking a judgment terminating a marriage and granting ancillary relief abates upon the death of a party prior to the granting of a divorce (see, Forgione v Forgione, 237 AD2d 438; Hoff v Dugan, 266 AD 790). The law is clear, however, that where the Court has rendered a written or oral decision granting a divorce, the formal execution and entry of a judgment is a ministerial act which a court is empowered to perform subsequent to the death of a matrimonial litigant (see, Cornell v Cornell, 7 NY2d 164). Further, where a divorce was granted prior to the death of a party to a divorce action, the Supreme Court retains jurisdiction to adjudicate financial issues ancillary to the termination of the marriage, subsequent to the demise of one or both of the parties (see, Estate of Agliata, 222 AD2d 1025; Peterson v [*6]Goldberg, 180 AD2d 260).

The instant action appears to be a case of first impression wherein a Court is being asked, after the death of a litigant, to enforce a so-ordered stipulation that resolved financial issues ancillary to the denial, after trial, of a judgment of divorce, wherein the terms of the stipulation of settlement were never incorporated into a judgment and the parties never filed a stipulation of discontinuance.

This Court did not grant a divorce prior to the death of Lois G, but the status of the marriage between the plaintiff and Lois G was adjudicated by the decision and order dated October 10, 2001 denying the plaintiff's claim seeking a divorce, and ancillary issues were thereafter resolved by stipulation. This Court holds as a matter of first impression that the death of a matrimonial litigant subsequent to the adjudication of marital status, whether it be the granting or denial of an action for divorce, does not abate the action to the extent that there are ancillary property issues before the Court. Although the Court lacks jurisdiction, in a case where a claim for divorce has been denied, to equitably distribute the marital estate (see, Garver v Garver, 253 AD2d 512), it retains jurisdiction, subsequent to the death of a litigant to determine, for example, title claims pursuant to DRL 234, as well as certain property rights accrued prior to the death, for example, for pendente lite arrears, a claim for necessaries, or entitlement to interim counsel fees, child support and maintenance retroactive to the demand therefore (see, Grosso v Grosso, 24 AD3d 506; Jacob v Jacob, 8 AD3d 725; Garver v Garver, supra; King v King, 230 AD2d 775).

As the instant application involves only the enforcement of property rights pursuant to a so-ordered stipulation of settlement in a pending matrimonial action, and does not address marital status, which was determined by order dated October 10, 2001 prior to the demise of Lois G, the action did not abate upon her death. Further, the administrator of the deceased's Estate was personally served with the instant application and has appeared in the action, and the Court has directed the requisite substitution.

Based upon all of the foregoing, the motion is decided as follows:

The substituted defendant has consented to the termination of the plaintiff's obligation to provide health insurance for Lois G, deceased. Accordingly, the so-ordered stipulation is modified so as to relieve the plaintiff of such obligation as of the date of her death, August 7, 2005.

The plaintiff's application for an order requiring the devisees/beneficiaries of the Estate of Lois G to remove him as an obligor on the three mortgages encumbering the former marital residence is denied as such relief was previously denied by order dated September 15, 2004.

The plaintiff seeks an order terminating his obligation to pay the sum of $900.00 [*7]biweekly to Lois G, deceased. He contends that said payments are maintenance which terminated as a matter of law upon his wife's demise on August 7, 2005. The Estate of Lois G contends that the so-ordered stipulation of settlement prohibits the Court from modifying the plaintiff's obligation to pay the sum of $900.00 biweekly for seven years and that said obligation survives the death of Lois G.

Pursuant to DRL 236B(1)(a), a court award of maintenance, by definition, terminates upon the death of either party. Parties, may however, by contract, provide that the obligation to pay maintenance continues after the death of the payor (Matter of Riconda, 90 NY2d 733; Cohen v Cronin, 39 NY2d 42). There appear to be no reported cases relating to the enforcement of a contractual obligation to pay maintenance to the estate of a spouse or former spouse after the death of the payee, however, there is no rational that would preclude parties from entering into such an agreement. An agreement that unequivocally provided for the continuation of payments, denominated as maintenance, after the demise of the payee, would be enforceable by a court. Where the purported obligation to pay maintenance after the death of the payee, however, is not explicit, a court must determine the intent of the parties from the four corners of the agreement, and upon finding intent ambiguous, must direct a hearing on the issue (see, Matter of Riconda, supra).

Here, the Estate argues that the provision prohibiting the modification of the plaintiff's obligation to pay maintenance to defendant for seven years is an explicit agreement to continue said payments after her death. Said contention lacks merit. While such intent could be inferred from the prohibition against modification, the stipulation does not explicitly require payment after the death of Lois G. Further, the stipulation is unequivocal with regard to the tax implications of the payments in issue in that same are tax deductible to the plaintiff and taxable income to the defendant.

This is significant by virtue of the 1984 Tax Reform Act, as amended in 1986, 26 USCA 71(b) (1) (D), which provides that in order for payments to be tax deductible to the payor and taxable income to the payee, there must be no obligation on the part of the payor to continue said payments after the death of the payee (see, Temp. Regs., 26 CFR 1.71-1T, Q-10, A-10).

Payments made pursuant to a matrimonial stipulation cannot be both tax deductible by the payor and survive the death of the payee. In view of the unequivocal agreement by the parties in the February 4, 2002 stipulation providing that maintenance payments were deductible by the plaintiff and taxable income to Lois G, the Court cannot sustain the Estate's contention that said stipulation provides for maintenance to continue after the demise of Lois G, nor can the Court, after examining the four corners of the agreement, determine that there is an ambiguity necessitating a hearing on the issue of intent. The Court notes that if, in fact, the parties intended that the payments in issue were to be tax deductible to the plaintiff and were to continue beyond the death of Lois G, the stipulation may be the result of a mutual mistake of fact, and therefore subject to redress by plenary action. [*8]

Based upon the foregoing, the Court grants the plaintiff's application for an order terminating his obligation to pay biweekly maintenance subsequent to August 7, 2005. The income execution served by Lois G's attorney on February 25, 2002, established arrears in the sum of $10,000.00. It appears that the income execution has continued to date at the rate of $1800.00 a month and that arrears have been liquidated. Accordingly, the income execution is vacated as of March 16, 2006. The vacatur is effective ten days from the date of this order to afford the Estate the opportunity to set aside the vacatur upon proof that arrears have not been liquidated.

This constitutes the decision and order of the Court. Counsel are directed to submit a judgment or a stipulation of discontinuance within 60 days of the date of this order.

E N T E R:

______________________________

Anthony J. Falanga, Justice

Supreme Court, Nassau County

Dated: March 6, 2006

Mineola, NY