Deabreu v Deabreu

[*1] Deabreu v Deabreu 2009 NY Slip Op 51750(U) [24 Misc 3d 1234(A)] Decided on August 13, 2009 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 August 13, 2009
Supreme Court, Nassau County

Brian Deabreu, Plaintiff,

against

Catherine Deabreu, Defendant.



04-203424

Anthony Falanga, J.

This is a post judgment of divorce application by the defendant pro se (hereafter wife) for an order granting her a money judgment for child support arrears in the sum of $484,491.62. The plaintiff pro se (hereafter husband) opposes the application.

The parties, represented by their respective attorneys, placed a stipulation settling their matrimonial action, on the record in open court on July 18, 2006. Said stipulation, incorporated and not merged in the judgment of divorce dated March 26, 2007, provides, in relevant part as follows: both parties waived maintenance; both parties waived counsel fees; the wife would retain 51% and the husband would retain 49% of a business that was no longer profitable or generating significant income; income was imputed to the husband of $125,000.00 a year; income was imputed to the wife of $75,000.00; the husband's child support obligation was established at $2972.00 a month ( $35,664.00 a year) for the parties' four children; as the parties' youngest child was then six years old, the husband was obligated to pay child support for 15 years until said child was 21 years old; the parties agreed that the husband would pay the wife the sum of $35,786.00 a year for 15 years, regardless of the emancipation of the parties' three oldest children during said 15 year period; the parties agreed that the husband would pay the aforesaid child support to the wife by transferring to her $535,000.00 ($35,664.00 a year times 15 years) of his share of the equity in the marital residence; the marital estate, consisting of only two assets, was valued at $1,830,000.00, as follows: husband's unencumbered residence in Uniondale valued at $380,000.00 and the marital residence in Melville, valued at $1,850,000.00 encumbered by a mortgage of $400,000.00 ($380,000.00 plus the equity in the Melville residence of $1,450,000.00 equals $1,830,000.00); each party was to receive 50% of the marital estate, to wit: $915,000.00; the husband retained the Uniondale premises worth $380,000.00 and prepaid his entire 15 year child support obligation by transferring title of the Melville premises to the wife ($380,000.00 plus $535,000.00 equals $915,000.00).

The precise language of the stipulation of settlement reads as follows: "...that [*2]$535,000.00 equity will essentially be deemed up front payment of child support for the next 15 years." The stipulation further provides the reasoning underlying the prepayment of child support by the transfer of the husband's equity in the marital residence to the wife, to wit: " ... the business which had thrown off the moneys to be able to buy these two properties (Uniondale and Melville) is now defunct, so the income stream for both parties at this point in time is negligible, at best. ...Additionally, my client (the husband), who had prostate cancer three years ago, ... has some other medical problems as well. When we combined the fact that we have a sick plaintiff or payor, obligor of child support, possibly, ... and an income stream which is totally gone, what we would like to do is take the moneys that my client (the husband) would generally be receiving as a result of equitable distribution and allocate it for child support."

As best as can be gleaned from the papers submitted by the wife pro se (a HUD settlement statement), it appears that on June 12, 2008, the wife sold the former marital residence for $1,200,000.00 and paid a broker's commission and other charges totaling approximately $66,000.00. Utilizing the principal balance of the mortgage on the premises as of July 18, 2006 in the sum of $400,000.00, the wife would have netted approximately $734,000.00 from the sale, rather than the $1,450,000.00 contemplated by the parties ($1,200,000.00 minus $466,000.00 equals $734,000.00).

The wife pro se contends that the husband owes her child support arrears of $484,491.62 from July 18, 2006 through April 9, 2021. She seeks a money judgment in said amount. The husband pro se opposes the within application on the ground that he prepaid $535,000.00 in child support by signing a deed conveying his interest in the former marital residence to the wife.

While the prepayment of prospective child support by the distribution of the payor's assets to the custodial parent is not common, same is not barred by DRL 240(1-b), and such prepayment has been upheld by the Appellate Division, Second Department (see, Daratany v Daratany, 18 AD3d 496 [ child support arrears and prospective child support satisfied by transfer to former wife of payor's interest in former marital residence]; see also, Krumberg v Krumberg, 44 NY2d 718 [maintenance obligation may be prepaid by transfer to wife of husband's interest in marital residence]; McComish v McComish, 227 AD2d 454 [child support arrears satisfied by transfer to wife of husband's interest in marital residence]). Such proposed prepayment of child support should however, be scrutinized by the Court, in recognition of the fact that the prospective value of the asset being transferred in satisfaction of a prospective child support obligation is not guaranteed.

The issue of the uncertainty of the future value of the assets comprising the marital estate arises most often in the context of one party's efforts to set aside a stipulation of settlement in cases where there has been a substantial post stipulation change in the value of an asset (where hypothetically, one spouse received a residence with an equity of one million dollars and the other spouse received one million dollars of Enron stock shortly before the stock became worthless). The law is clear that both DRL 236B and the public policy in favor of finality require the enforcement of property distribution agreements pursuant to their terms, absent fraud, [*3]regardless of post agreement changes in the values of the assets distributed between the spouses (see, Etzion v Etzion, 62 AD3d 646; Paolino v Paolino, 51 AD3d 886; Cosh v Cosh, 45 AD3d 798). The law views the equitable distribution of marital assets as a snapshot, not a movie. If an agreement distributing marital assets is not subject to vacatur, on the date of its execution, on grounds sufficient to vitiate a contract, it may not be modified or set aside on the ground that future events have rendered the division of assets inequitable.

What if the parties' only asset was one million dollars of Enron stock and only days before the stock crashed, the payor non-custodial parent transferred his or her interest in said stock to the custodial parent, pursuant to a stipulation of settlement, as a prepayment of 15 years of prospective child support in the aggregate amount of $500,000.00? What if the payor non-custodial parent transferred his or her interest in real property to the custodial parent as a prepayment of child support and shortly thereafter, the real estate became worth less than the liens on the property? Should the custodial parent or the non-custodial payor parent bear the risk that the asset transferred in payment of a prospective child support will lose significant value? If the asset in issue significantly increased in value at the time of the sale thereof, should the payor non-custodial parent be permitted to seek a return of the sale proceeds in excess of the aggregate child support obligation?

In the case at bar, the Court need not make such determination, as the proceeds from the sale of the Melville residence received by the wife (approximately $734,000.00), while insufficient to meet the wife's expectations with regard to her share of the value of the marital estate, (she expected her share to be $915,000.00) were nevertheless sufficient to satisfy the husband's aggregate child support obligation of $535,000.00.

Pursuant to the July 18, 2006 stipulation of settlement, the parties divided the marital estate worth $1,830,000.00 equally, with each party to receive $915,000.00. The husband retained only $380,000.00 worth of assets (the Uniondale house) and he took the balance of his $915,000.00 ($915,000.00 minus $380,000.00 equals $535,000.00) and prepaid $535,000.00 to the wife as and for prospective child support by transferring title to her of the Melville house, which on that date, had equity value of $1,450,000.00. Through her receipt of title to the Melville residence on July 18, 2006, the wife received the equity value of the property allocated as follows: $915,000.00 as and for her 50% share of the value of the marital estate and $535,000.00 as and for prepaid child support, for a total of $1,450,000.00. As the result of subsequent events, likely due, in large part, to market factors, upon the June 2008 sale of the Melville premises, the wife received, not the $1,450,000.00 as predicted on July 18, 2006, but only approximately $734,000.00. As the party receiving an asset as part of the distribution of the marital estate, will thereafter enjoy any prospective gain in the value of said asset, or suffer any prospective loss in the value thereof, it is appropriate in the case at bar to allocate the $734,000.00 received by the wife upon the sale of the Melville premises to the contractually agreed upon prepaid child support sum of $535,000.00 and approximately $199,000.00 as her share of the marital estate ($734,000.00 minus $535,000.00 equals $199,000.00). As previously noted, as of the date of the stipulation of settlement, July 18, 2006, the parties agreed that the [*4]marital estate was worth $1,850,000.00 and that each party was entitled to receive $915,000.00. Upon the sale of the Melville premises, the wife received only $199,000.00. Although her agreement, in retrospective, with the fall of the real estate market, now appears improvident and inequitable, the Court cannot modify the parties' July 18, 2006 contractual division of assets so as to make adjustments based upon the post- stipulation reduced value of the Melville premises. While the prepaid child support sum for a prospective 15 year period was specified and fixed pursuant to the parties' stipulation of settlement, the value of the marital assets distributed to each party was determined only as of the date of the stipulation, and the sum the wife would eventually receive upon the sale of the Melville premises, as and for her 50% share of the marital estate, was not guaranteed by the husband, but rather, was subject to various factors such as market fluctuations and the manner in which the premises was maintained.

Accordingly, the wife's within application for a money judgment for child support arrears is denied.

The Court notes that the denial of the instant application does not necessarily leave the wife without any possible remedy as the financial needs of minor children are not viewed by the law as a still frame, determined once and for all time, upon the execution of a stipulation of settlement. The receipt by the wife, upon the sale of the Melville premises in June 2008, of approximately $650,000.00 less than she expected when entering into a stipulation of settlement on July 18, 2006, may constitute an unanticipated and unreasonable change in her financial circumstances (see, Matter of Boden v Boden, 42 NY2d210), and may have left her, as she has alleged in her within application, unable to provide for the financial needs of the parties' four children (see, Matter of Brescia v Fitts, 56 NY2d 132), entitling her to seek an upward modification of child support.

This constitutes the decision and order of the Court.

ENTERDated: August 13, 2009______________________

Mineola, NY

ANTHONY J. FALANGA

J.S.C.