Lerner v Lerner
Annotate this CaseDecided on December 8, 2016
Supreme Court, New York County
Stephanie Lerner, Plaintiff,
against
Mark Lerner, Defendant.
301039/08
Stephanie Lerner, Plaintiff Pro Se; Alan S. Botter, Esq. for Defendant.
Laura E. Drager, J.
In Motion Sequence 47, the Plaintiff ("Wife"), who is now self-represented[FN1] , moves to reject the October 28, 2015 Amended Report ("Report") issued by Special Referee Lancelot Hewitt ("Referee") and requests a new trial on the issue of equitable distribution. The Wife also seeks recusal of the Referee.
In Motion Sequence 48, the Husband moves to confirm the Report and to dismiss this action. The motions are consolidated for decision.[FN2]
The parties were married on December 1, 1991. They have three children: a son born in December 1991; a daughter born in January 1993 and a son born in August 1996. The Wife worked as a writer, producer and host of radio and television interview programs and business conferences. She claims to have assisted the Husband in his business too. The Husband was the [*2]principal director of a business that assisted companies based primarily in Asia in finding potential business partners in the United States. The parties separated in January 2008 and the Wife commenced this divorce action on January 29, 2008. During the pendency of this action, the Husband filed a petition for personal bankruptcy in Connecticut on September 5, 2010 (where he owned a house). The Wife brought an adversary proceeding in the bankruptcy action in which she was represented by counsel. The Husband was discharged in the bankruptcy action on August 3, 2011.
The Referee Hearing — Procedural History
The issues of equitable distribution, maintenance, child support, the Husband's contempt for failing to pay pendente lite support, and counsel fees were referred for hearing by order dated April 2, 2013. In the same order, the court deemed discovery closed. The matter was assigned to the Referee on September 12, 2013, but adjourned to October 28, 2013, at the Wife's request so that she could retain counsel. On October 11, 2013, the Wife filed a motion to stay the hearing before the Referee on the grounds that the Husband's personal bankruptcy action in Connecticut had not been fully resolved and that, therefore, the trial on the issue of equitable distribution must be stayed. (Motion Sequence 34).On October 25, 2013, this court denied that application finding that the Husband had already been discharged in the bankruptcy proceeding but that what remained was the Wife's adversary proceeding.[FN3] The court concluded that any remaining issues in the bankruptcy proceeding did not prohibit proceeding with the financial trial in the divorce action, but that the Judgment of Divorce would not be entered until proof was provided that any stay arising from the adversary proceeding had been lifted (Order, October 25, 2013).
The hearing before the Referee commenced on October 28, 2013.[FN4] Testimony was taken and documents were received in evidence. In the meantime, the Wife appealed the court's denial of her stay application, raising as an issue for the first time that she had filed for bankruptcy in the Southern District of New York, resulting in an automatic stay of aspects of the divorce proceeding. A Judge of the Appellate Division denied the Wife's request for a stay without prejudice to renewal or reargument on the application for a stay to this court based on the new information of her own bankruptcy proceeding (Feinman Order, October 29, 2013). After reviewing the bankruptcy action papers submitted by the Wife establishing that she had commenced a bankruptcy action, this court granted the Wife's application to renew and reargue. The court then ordered that the trial of the issues of whether the Husband was in contempt for failure to pay past pendente lite support, past due attorneys' fees and future support would continue but that the trial on the issue of equitable distribution was stayed until resolution of the Wife's bankruptcy proceeding or the lifting of the automatic stay in that proceeding. (Order, November 22, 2013).[FN5] On December 23, 2013, to prioritize the Wife's application for contempt, the court ordered that the hearing on all other issues but contempt was stayed (Order, December [*3]23, 2013).
The contempt hearing proceeded resulting in the Referee's report and recommendation dated March 2, 2015 that the Husband be found in contempt. After reviewing that report, this court sua sponte issued a decision and order finding that the Husband owed support arrears in the amount of $608,700 plus interest, authorizing the Wife to cause a money judgment to be entered against the Husband and issuing a warrant for his arrest. (Decision and Order of Civil Contempt and Arrest, June 25, 2015).
The court again referred the remaining issues of equitable distribution, maintenance, child support and counsel fees for a hearing. (Transcript, February 27, 2015). Discovery was again deemed closed. (Transcript and Order, February 27, 2015). The parties were directed to appear for a continued hearing before the Referee on the remaining financial issues on May 4, 5, 6 and 7, 2015.
As set forth in the Report, neither of the parties appeared before the Referee on May 4, 5, 6 or 7, 2015, as directed. Thereafter, by Order of this court, dated June 11, 2015, the parties were directed to appear before the Referee for the continued hearing on July 13, 14, 15 and 16, 2015. The parties were informed that failure to appear would result in dismissal of the action.
On June 19, 2015, the Wife informed the court, via email, that she could not appear on the dates specified. The court informed the parties that the matter could be adjourned to July 7, 9; September 9, 10, 28 or 30, 2015, and directed the parties to select three of those dates. The Wife responded that she was available only the last week of July, 2015 and the entire month of August (times that were not included in the dates offered by the Referee). Defendant indicated that he was available on September 10, 28 and 29, 2015. Consequently, the hearing was adjourned to September 10, 28 and 29, 2015.
The Wife appeared before the Referee on September 10, 2015. The Husband did not appear at that time but his counsel appeared on his behalf. The Wife informed the Referee that she was not prepared to go forward with the hearing at that time and requested an adjournment to September 28, 2015. The adjournment was granted over objection of Husband's counsel. In an email sent to the Referee on September 25, 2015 but not received by him until September 28, 2015, the Wife informed the court that she could not appear for the hearing on September 28 (the date she had requested) or September 29, 2015 due to her observance of the Jewish Holiday of Sukkot. The Husband's counsel appeared before the Referee on September 28, 2015, but neither Plaintiff nor Defendant appeared at that time. The parties were directed to appear for the continued hearing on October 21, 2015.[FN6] Neither party appeared on that date, although the Husband's counsel was present.
The Referee's Report — Findings
The Referee issued the Report in which he recommended that due to the Plaintiff's failure to appear for the hearing as scheduled she was in default and that the case should be dismissed. He made no findings of fact or conclusions of law or recommendations regarding the financial issues.
A report of a Special Referee should be confirmed whenever the findings are supported by the record and the Special Referee has clearly defined the issues and resolved matters of credibility. (Nager v Panadis, 238 AD2d 135, 135-36, 655 NYS2d 946 [1st Dept 1997].) "However, the court is not bound by the referee's recommendation or his or her determination." (RBC Capital Markets Corp. v Bittner, 24 Misc 3d 728, 732 [Sup Ct, New York County 2009], citing Garrick-Aug Assoc. Store Leasing v Shefa Land Corp., 270 AD2d 68, 69, 704 NYS2d 62 [1st Dept 2000]). The court may "make new findings with or without taking additional testimony; and may order a new trial or hearing . . . Where no issues remain to be tried the court shall render decision directing judgment in the action." CPLR 4403.
The Husband asks this court to confirm the Referee's recommendation that the case be dismissed due to the Wife's default.
The court has reviewed the transcripts of the hearing before the Referee and the exhibits entered in evidence after the court's initial reference order. On October 28, 2013, the Wife presented testimony and evidence concerning marital assets, the Husband's income, the pendente lite support orders and the Husband's failure to make required payments of pendente lite support. Subsequently, after the court issued its order temporarily limiting the hearing to the issue of contempt (Order, December 23, 2013), additional testimony was taken and exhibits entered into evidence on December 23, 2013, March 10, 11 and 12, 2014 and June 20, 2014. Testimony was given by the Wife, the Husband and Amy Klein, the Husband's sister. While the focus of the hearing from December 23, 2013 was the Husband's contempt, the evidence necessarily addressed the Husband's income and the status of marital assets, including the marital business entities, and disposition of the marital property.
From all of the proceedings before the same Referee who heard the testimony offered on the financial issues and the contempt proceeding, the court rejects his recommendation that the case be dismissed on the grounds of the Wife's default. The court is satisfied that the record provides sufficient evidence from which the financial issues of this action can be decided. Six days of trial were conducted and well over 60 exhibits were received in evidence in this case that dates back to 2008. The Husband's application to confirm the Referee's recommendation that the case be dismissed is premised solely on the failure of the Wife to proceed. He does not argue that because of her default he was precluded from introducing evidence. Thus, his motion to dismiss is denied.
The Wife seeks to reopen the hearing but to exclude the Husband's counsel from representing him under "the Fugitive Disentitlement Doctrine." That doctrine "permits a court to dismiss an appeal . . . 'if the party seeking relief is a fugitive'. . . . The doctrine applies in civil cases provided there is a nexus between an appellant's fugitive status and the appellate proceedings. (citations omitted)." Wechsler v. Wechsler, 45 AD3d 470, 472 (1st Dept 2007).The trial before the Referee that is the subject of these motions was not an appeal of the contempt findings; rather, the trial concerned unrelated issues. The Husband's status as a fugitive relates to his failure to purge the order of civil contempt and not to the issues presently before the court. Thus, there is no nexus between the Husband's status as a fugitive and the remaining issues in this case. Moreover, even if the doctrine were to be found applicable in this trial, the Husband offered no additional evidence after the Contempt Order was issued. Although present before the Referee after the issuance of the Contempt Order, the Husband's attorney made no arguments that affected the presentation of evidence by the Wife. The only argument the [*4]Husband's attorney has raised was in this motion seeking to confirm the Referee's recommendation that this action be dismissed. That relief was denied. As a result, the Fugitive Disentitlement Doctrine is not applicable. [FN7]
The Wife also requests that the Referee be recused. Although she does not specifically so state, presumably she seeks to have the trial reopened before a different referee. Her application is denied. The Wife argues that Referee Hewitt displayed bias against her. The record does not support that conclusion. The Wife complains that the Referee did not provide her with sufficient time to review documents received in court by subpoena. By her own admission, this court provided her copies of some documents received by subpoena. The Referee then provided her some additional time allowing her to review the documents in his own hearing room. Accepting her claim that the Referee did not allow her sufficient time on one particular day to review the remaining documents, she does not contend that she requested to return to continue her review on a different day, nor did she seek further assistance of this court to provide her more time to review the documents. When it became evident that some financial records that had been obtained by subpoena were missing, the Referee granted the Wife time to reissue subpoenas for the documents. The Wife chose not to avail herself of that opportunity, even though the documents came from major financial institutions and could have been replicated.[FN8] Notwithstanding the fact that the he had no obligation to do so, the Referee showed the Wife great tolerance by repeatedly adjourning the hearing to try to accommodate her schedule. She failed to offer any reasonable explanation for her repeated failure to proceed with the hearing. She complains that the Referee failed to properly notify her of the last adjournment she requested. In fact, the Referee sent a letter confirming the new date to the Wife's home. It is evident that the Wife had previously received mail from the Referee at that address (see, June 28, 2013 letter from Wife to Referee Hewitt). The fact that this court had agreed to communicate with the Wife by email does not mean the Referee could not communicate with her via the post office. Moreover, since the Wife had requested the adjournment of her action, nothing prevented her from contacting the court to learn the new date. The court is satisfied that there is no evidence that the Referee displayed bias against the Wife and her application to recuse him is denied.
The Wife's application to reopen the hearing is denied. This divorce action was commenced in 2008 and the parties have lived separate and apart since then. As a result of protracted litigation and delays caused by each party, eight years have passed without a final resolution. During the pendency of this action, two of the parties' children became emancipated (the youngest child will turn 21 in August 2017). The Husband was discharged in bankruptcy. [*5]Forty-eight motions have been filed in this action. It is time for these parties to be divorced. They have had ample time to conduct discovery in this action, as well as discovery obtained during the Husband's bankruptcy proceeding. New York Courts have a strong public policy favoring resolution of disputes on the merits. See, Kaufman v. Bauer, 36 AD3d 481 (1st Dept. 2007) (dismissal unwarranted where action had merit and there was no evidence of an intent to abandon the action). The court is satisfied that it has sufficient evidence to determine the remaining financial issues based on the proof submitted by the parties during the course of the hearing before the Special Referee and the instant motions. To the extent that either party may have additional evidence they would like to have offered, they each chose to forego that opportunity. From the evidence adduced over the six days of hearings and in these motions the court can make new findings without taking additional testimony. See, CPLR 4403. [FN9]
EQUITABLE DISTRIBUTION
The Domestic Relations law requires that before deciding the appropriate distribution of assets the court must first determine what constitutes marital and separate property, as well as the value of the marital property as of the appropriate valuation date. DRL §§236B(1)(c); (1)(d); (4)(b); (5).
MARITAL PROPERTY
The Marital Apartments at 200 East End Ave, Apartments 12 A/P and E, New York, NY
The parties purchased two apartments during the marriage on East End Avenue in Manhattan: Apartment 12A/P where the family lived and Apartment E, an adjacent studio apartment (the "Marital Apartments"). These apartments were martial property. Neither party presented a sale contract or closing statement at trial. It appears that the Marital Apartments were sold for $2,300,000. (Court Ex.V). That is the value of this asset.
Connecticut House
Each party acknowledged that the Husband owned a house in Salisbury, Connecticut from before the marriage (the "Connecticut House").[FN10] The property was purchased for approximately $72,000. (DX H). The Husband surrendered the property in his bankruptcy action. The Connecticut House was sold in October 2012 in a mortgage foreclosure short sale for about $350,000. (DX GG, p.14; TR 3/10/14 P. 96; TR 3/12/14 p. 58). [FN11] There is no evidence that the Husband received any money from this sale.
The Morgen Evan Business Interests
Various corporate entities that are part of the Husband's business are identified in the parties' respective net worth statements and in the Husband's Bankruptcy Petition. (DX H, I; PX 22-3/10/14 p. 33-34; TR 3/10/14 pp. 65-75).
According to the Wife, Morgan Evan & Company ("Morgen Evan & Co.") initially was incorporated by the parties in the name Morgen Evan & Associates, Inc. with each party owning a 50% interest in the company. (TR 3/10/14 pp. 65-66). The Wife claimed she still owned a 50% interest in Morgen Evan & Co. in her 2008 Net Worth Statement. At trial, the Wife offered no testimony or documents to support that claim. [FN12] The Husband's 2008 net worth statement lists his ownership of a 75% interest in Morgen Evan & Co., but indicates that the business is insolvent. (DX H, Rider 1). The Husband's Bankruptcy Petition indicates that he held a 100% stock ownership interest in Morgen Evan & Co., but identified three non-party individuals who had equity participation in the company in an undisclosed percentage. (PX 22 -3/10/14, pp. 10, 33-34). The Husband's 2013 updated net worth statement states that Morgan Evan & Co. is in the process of dissolution. (DX GG, p. 10). He testified at trial that it had not yet been dissolved. The court finds that Morgen Evan & Co. is marital property.
The Wife's 2008 Net Worth Statement indicates that she holds a 50% interest in Morgen Evan International Inc. ("Morgen Evan International"), value "TBD." (DX I, pp. 14-15). The Husband's 2008 net worth statement lists a 55% interest in Morgen Evan International, with an "undetermined" value. (DX H, Rider 1). The Husband's Bankruptcy Petition indicates that he had a 100% ownership interest in Morgen Evan International and identified two non-party individuals who had equity participation in the company in an undisclosed percentage. (PX 22 -3/10/14, pp. 10, 33-34).[FN13] The Husband's 2013 updated net worth statement indicates that Morgan Evan International is in the process of dissolution. (DX GG, p. 10). The Husband testified that this company is a shell with no operating business other than to hold overseas companies, Morgen Evan Japan and Morgen Evan Redrock. (TR 3/12/14 p. 25). The court finds that Morgen Evan International is marital property.
The Wife's 2008 Net Worth Statement indicates that she has a 50% interest in Morgen Evan Japan, value "TBD." (DX I, p. 15). The Husband does not list Morgen Evan Japan in either one of his net worth statements. The Husband's Bankruptcy Petition indicates that Morgen Evan International is a holding company for Morgen Evan Japan. (PX 22-3/10/14 p. 33). The Husband testified that Morgen Evan Japan was dissolved in about 2011, but provided no documentation to support his testimony. (TR 3/12/14 p. 25). The court finds that Morgen Evan Japan was a subsidiary of Morgen Even International and existed during the marriage. It is marital property.
The Wife's 2008 net worth statement indicates that she has a 50% interest in Morgen, Evan Redrock, value "TBD." (DX I, p. 15). The Husband's 2008 net worth statement indicates ownership of a 50% interest in Morgen Evan Redrock "through Morgen Evan International." (DX H, Rider 1). The Husband's Bankruptcy Petition indicates that Morgen Evan International is [*6]a holding company for Morgen Evan Redrock. (PX 22-3/10/14 p. 33). That business is not listed in the Husband's 2013 updated net worth statement. (DX GG). The Husband testified that Morgen Evan Redrock was dissolved and an agreement terminating the Morgen Evan Redrock joint venture in April 2009 was entered into evidence. (DX BB). The court finds that Morgen Evan Redrock was a subsidiary of Morgen Evan International and existed during the marriage. It is marital property, although there is some evidence that it no longer exists.
At trial, the Wife offered evidence of another entity called Morgen Evan & Company K. K. which was founded in 1994, as a subsidiary of Morgen Evan & Co. (PX 31).[FN14] Neither party listed this entity on their respective net worth statements. Since it was created during the marriage and there is no evidence of its dissolution, it is marital property.
The Husband's 2013 Net Worth Statement lists Morgen Evan Advisory Services as a business created post-commencement, in 2011, in which the Husband holds a 90% interest. (DX GG, p. 10). The Husband testified that he created Morgen Evan Advisory Services because a tax lien had been placed on the bank account of Morgen Evan and Co. and that by creating this new entity he could continue to conduct his business. He further testified, however, that his clients at Morgen Evan Advisory Services are different than his clients at Morgen Evan & Co. (TR 3/12/14 pp. 26, 107-110). The Wife testified and argues that Morgen Evan Advisory Services is "interchangeable" with Morgen Evan & Co. and Morgen Evan International. (TR 3/10/14 p. 76). A business proposal made by Morgen Evan & Co. to an entity called NewMarket was entered into evidence. It states that Morgen Evan Advisory Services is "part of the Morgen Evan family" that "focuses on cross-border business transactions between North America, North Asia and Europe." (PX 12). Thus, although the clients may be different, it is apparent that Morgen Evan Advisory Services conducts the same business that was conducted by Morgen Evan & Co. Arguably, then, Morgen Evan Advisory Services may appropriately be considered marital property.
No values were provided by either party for any of these business entities.
Chelsae Communications
The Wife lists this business entity on her 2008 Net Worth Statement. She claims she holds a 50% interest in it and that its value is "TBD". (DX I, p. 16). The Husband does not list this entity on either of his net worth statements. (DX H). No evidence was offered that this is separate property. If it exists, it is marital property.
S. Lerner & Associates
The Wife listed a business entity called S. Lerner & Associates on her 2008 Net Worth Statement. (DX I, p. 16). She claimed to own 100% of that entity, but stated it had no value. She did not indicate when it was created. During trial, the Wife testified that at the time she became a 50% owner of Morgan Even & Co., the Husband became a 50% owner of her business that was then called Financial Programming Productions. The Husband did not list S. Lerner & Associates or Financial Programming Productions on either of his net worth statements. (DX H, GG). Since the Wife offered no evidence that it is her separate property, the court finds S. Lerner & Associates is marital property.
S. Lerner & Associates Account with JPMorgan Chase Bank
The Wife listed in her 2008 Net Worth Statement an account with JPMorgan Chase Bank [*7]in the name of S. Lerner and Associates with a value of $1,800 which she characterized as an "IRA liquidation." (DX I, p.10). No evidence was presented at the hearing regarding the continued existence of this account. The Husband did not include this account in either of his net worth statements. The Wife offered no evidence that this account was her separate property. The court concludes it is marital property and its value is $1,800 as of the date this action commenced.
Commerce Bank Account in Wife's Name
The Wife's 2008 Net Worth Statement lists an account with Commerce Bank with a balance of $41 from the "sale of Kruger painting". (DX I, p. 10). The Husband did not list this account on either of his net worth statements. No further evidence of this account was offered at the hearing. No evidence was presented to indicate that this account was separate property. Therefore, the court concludes it is marital property.
1999 Mercedes Benz car
A 1999 Mercedes Benz automobile was listed in each party's 2008 Net Worth Statement. (DX I, p. 18; DX H, p.7). The Wife indicated that the value was "TBD" and the Husband listed the then current fair market value at approximately $8,000. The Husband's Bankruptcy Petition indicated the then value of the car was $7,785. (PX 22 — 3/10/14, p. 11). The Husband's 2013 Net Worth Statement indicated an estimated fair market value of $4,000 for the car, and that the Husband still possessed this asset. (DX GG, p. 10; TR 6/20/14 p. 156). The car is marital property and the court finds its value is $4,000, as of the date of trial.
Yamaha boat
A Yamaha boat was listed by each party in their 2008 net worth statements. The Wife indicated the boat's fair market value at that time was $8,000. (DX I, p.18). The Husband indicated a value of approximately $7,000. (DX H, p.7). The Husband's 2013 net worth statement indicates that the boat was sold in March 2009 for $5,000. (DX GG, p. 14). Neither party testified about the boat. The boat was marital property at the time this action commenced with a value of $8,000.
Citibank Account in Husband's Name
The Husband's 2008 Net Worth Statement lists an account with Citibank in his name with a balance of $2,000. (DX H, p. 5). The Husband's Bankruptcy Petition lists an account with Citibank with a value of $1,000. (PX 22 — 3/10/14, p. 13). The account is not listed on the Husband's 2013 Net Worth Statement. (DX GG). No evidence of the value of this account was offered at the hearing. No evidence was offered that this account is separate property. Therefore, the court concludes that it is marital property with a value of $2,000 at the date this action commenced.
Husband's IRA account with Merrill Lynch
On his 2013 Net Worth Statement, the Husband indicated an IRA account in his name at Merrill Lynch with a value of $6,000, acquired with income. (DX GG, p. 11). He does not indicate when he opened this account. Neither he nor the Wife included this account on their respective 2008 net worth statements (DX H; DX I). However, in his 2010 Bankruptcy petition, the Husband listed an IRA account at Merrill Lynch with a value at that time of $7,410.78. (PX 22 -3/10/14, p. 10). Since the Husband offered no evidence that it is his separate property, the court concludes that this account is marital property.
Household Furnishings
The Wife's 2008 Net Worth Statement listed "miscellaneous furniture" in the New York [*8]and Connecticut properties of "unknown" value. (DX I, p. 21). The Husband's 2008 Net Worth Statement listed household furnishings in the Marital Apartments with a value of $100,000 and at the Connecticut House with a value of $25,000. (DX H, p. 9). The Husband's Bankruptcy Petition listed furniture at the Connecticut House with a value of $4,000 and furniture in the Wife's possession with a value for his 50% share of $5,000. (PX 22 — 3/10/14, p. 13). The Husband's 2013 Net Worth Statement indicated no household furnishings. (DX GG, p. 11). No evidence was offered at trial as to the continued existence or value of any household furnishings. To the extent such furnishings still exist, they are marital property.
Artwork
Each of the parties listed artwork on their 2008 Net Worth Statements. The Wife listed various items of art with an approximate value of $233,000. (DX I, pp. 22-23). It also appears that she sold some art as reflected in her net worth statement in which she reported $20 in cash remaining from "sale of painting" and $41 remaining from "Sale of Kruger painting." (DX I, pp. 9-10). In his 2008 Net Worth Statement, the Husband listed art with an estimated value of $137,500, two pieces of art in the marital apartment worth approximately $50,000, and three items valued at approximately $39,000 that he claimed were removed from his office without his permission in early 2008. (DX H, Rider 2). The Husband's Bankruptcy Petition listed two photographs (one by Marjorie Marder and one by Amy Adler) with a combined estimated value of $2,500, in the Husband's possession. The Petition also indicated that the Husband received income from the sale of artwork, in the amounts of $244,334 in 2008, $107,110 in 2009 and $6,000 in 2010. The Husband testified at trial that pursuant to an order of this court, the income of $107,110 he received from art sold in 2009 was used to pay the children's school tuition. (Beeler Order, February 15, 2008). He also testified that the amount of art sold in 2008 reflected in his Bankruptcy Petition was, in fact, art sold by the Wife that year for $244,334 and that she received the proceeds. (Tr. 3/12/14 pp.100-102). The Wife did not dispute this claim at trial. Since the Wife participated in the Husband's Bankruptcy action, she was aware of his claim that most of the parties' art had been sold by 2010. The Husband's 2013 Net Worth Statement listed the Malerie Marder photograph valued at approximately $3,000, the Amy Adler photograph valued at approximately $2,000 and a Hope Atherton painting valued at approximately $5,000 as the only art still remaining in his possession. (DX GG, p. 12). The Wife did not present an updated net worth statement disclosing her continued ownership of any art. No evidence of the existence or value of any artwork was offered by either party at the hearing other than the approximate $10,000 worth of art listed in the Husband's 2013 Net Worth Statement. That art, valued at $10,000, is marital property.
Liabilities
In her 2008 Net Worth Statement, the Wife lists debt totaling $55,000 owed to relatives. She provided no note memorializing the debt. It appears that some of this debt may have been acquired post-commencement. The Wife also lists debt owed for the children's camp. Any such debt was addressed in the court's pendente lite order and contempt order. The Wife lists debt with respect to the Marital Apartments which was addressed in the parties' stipulation regarding the sale of that property. Similarly, the debt pertaining to the Connecticut Property was addressed in the foreclosure proceeding. No documents were offered at trial with respect to credit card debt. The court is aware that the Husband was twice held in contempt for failure to pay support. The Husband was discharged in Bankruptcy in 2011. He lists no debt on his 2013 Net Worth Statement. The court finds no marital debt to be distributed between the parties.
[*9]DISTRIBUTION OF ASSETS
"Marital property shall be distributed equitably between the parties, considering the circumstances of the case and of the respective parties." DRL §236(B)(5)(c). The court has considered each of the factors set forth in DRL §236(B)(5)(d) to the extent applicable in reaching its decision.
The parties were married for 17 years. The Husband is 63 and the Wife is 58 years old. Both parties appear to be in good health.[FN15] DRL§236(B)(5)(d)(2). Throughout this litigation, the Wife has complained that the Husband secreted millions of dollars in his business interests. Both at trial and in her instant motion she offers disparate pieces of information suggesting that the Husband's business is very successful. This information is contained in articles and internet postings. They often appear to be puff pieces. She also offered limited financial documents from successful businesses the Husband may be doing business with. However, she provides only limited financial documents from any of the Husband's businesses. Partial bank statements from his businesses between 2011 and 2014 were received in evidence showing no more than $57,400 in deposits in any month. Neither party offered into evidence corporate books, filings or business tax returns, nor was any forensic evaluation completed regarding the value of the Husband's business interests. The Husband's business interests were disclosed in his Bankruptcy action. No documents pertaining to them received during that proceeding, at which the Wife was represented, were offered into evidence at this trial. The Wife claimed to be an equal shareholder in Morgen Evan & Co. and had some involvement with the Husband in managing the company until after the divorce action was commenced, but the records she offered from that time period are limited and do not provide proof of the value of the business interests. DRL§236(B)(5)(d)(10).
The Wife claims that she held a 50% interest in Morgen Evan & Co., Morgen Evan International, Morgen Evan Japan and Morgen Evan Redrock. The Husband claimed in his 2013 Net Worth Statement that these entities had been or were in the process of being dissolved. He acknowledged that he created what he claims is a new business entity, Morgen Evan Advisory Services, after the commencement of this action in 2011. The Wife claims that this entity is interchangeable with Morgen Evan & Co. From the limited evidence presented, it appears that Morgen Evans Advisory Services conducts the same business that had been conducted by Morgen Evan & Co. However, the only evidence presented suggests that the new business was created not in contemplation of this divorce action, but to avoid a tax liability. DRL §236(B)(5)(d)(13).
According to the Husband's testimony, his business ventures have not been profitable since about 2005. However, the businesses continue to operate to this day. They have generated funds to enable some business travel and to pay for some of the Husband's living expenses.
Other than to assert that her business S. Lerner & Associates is insolvent, the Wife presented no financial documents to support her claim. DRL §236(B)(5)(d)(9).
The assets owned by the parties, although not inconsequential, do not support the Wife's claim that they enjoyed a particularly high lifestyle. The Husband owned the Connecticut House from prior to the marriage and stated his interest in the value of this property was $470,000 in his [*10]Bankruptcy petition. The Marital Apartments owned by the parties ultimately sold for just over $2 million. The parties owned art with a value of approximately $500,000, although no actual proof of value was provided. They owned a car and a boat, each valued at less than $10,000. It appears that neither party has a pension, nor were significant retirement accounts acquired during the marriage. The parties incurred heavy expenses for the children since each child attended a private school through high school and then attended a private college. It would appear that much of the parties' income went to support the children, although it is unclear how these costs were met in light of the Husband's claim that his businesses had been unsuccessful since 2005. DRL§§236(B)(5)(d)(1), (4).
There is no need for a custodial parent to occupy or own a martial residence since the Marital Apartments and the Connecticut House have been sold. Moreover, the three children are 20 years old or older. DRL§236(B)(5)(d)(3). The Wife will lose health insurance benefits provided by the Husband through his business. No evidence was presented at the hearing of the cost she will incur for health insurance after entry of the Judgment of Divorce. DRL§236(B)(5)(d)(5). The Wife has received maintenance as part of the pendente lite order for the past eight years, although the Husband is not in full in compliance with that order. The Wife has a judgment against the Husband for the unpaid amount. DRL §236(B)(5)(d)(6). Both parties contributed income to the marriage from their respective jobs. The Wife contends that she made monetary contributions to the Husband's business, but provided no evidence of the amount she contributed. It also appears that she was the parent who bore primary responsibility for meeting the children's needs while they were young. The court finds that both parties contributed to the marriage. DRL§236(B)(5)(d)(7). There is no evidence of any liquid assets now available for distribution. DRL §236(B)(5)(d)(8). The probable future financial circumstances of each party are unclear. The Wife testified that she is indigent and receives food stamps. However, she provided no documentary evidence to support that claim during the hearing. In her motion papers, she attaches a photocopy of a food stamp identification card and a decision denying her individual application for Supplemental Nutrition Assistance Benefits in 2013 because she was already receiving such benefits for her household. It is unclear why she did not submit these documents during the hearing or for how long she received benefits. The Husband claims his business is unsuccessful and he is hampered in running his business by the money judgment that has been entered against him for failure to pay temporary support. DRL§236(B)(5)(d)(9).
DISTRIBUTION
The Marital Apartments
Pursuant to "so ordered" stipulations (DX CC; DX L; Court Ex.V), the Marital Apartments were sold for $2,300,000 on May 5, 2010.It was further agreed that 80% of the net proceeds would be distributed to the Wife, subject to reallocation at trial, and the remaining 20% would be held in escrow by the Wife's counsel. (DX CC). In a subsequent "so ordered" Stipulation dated March 20, 2010, it was agreed that the Wife would receive 80% of the net proceeds and that "the following will be deducted to reach net proceeds from sale price of $2.3 million — broker fee, mortgage, co-op fees, Stephanie Lerner lien, Felder lien ($25,000) transfer taxes and closing costs. Plaintiff to receive separate check for lien satisfaction. Co-op fees are subject to reallocation." (CT EX. V -3-10-14).[FN16] The March 20, 2010 stipulation further [*11]provided that the Husband was to receive $135,000 from the net proceeds at closing with the remaining balance to be held in escrow by the Wife's attorney. The Wife's then attorney and her prior attorney received payments from the sale.[FN17]
Three checks were paid to the Wife at closing in the amounts of $54,727.98, $110,000 and $782,963.56. In a May 3, 2010 Order the court increased the Wife's share of the net proceeds from the sale of the Marital Apartment to 100% because the Husband was in arrears of his support obligations. (Court Ex. VI).[FN18]
At trial, each party sought re-distribution of the proceeds from the sale of the Marital Apartments. The Wife complained certain money from the proceeds should have been the Husband's responsibility. She claims that her share of the proceeds was reduced by these costs. She testified that $100,000 was paid in transfer taxes at the closing out of her share of the proceeds although the taxes were the Husband's responsibility. (TR 12/23/13 p. 61-63). However, the March 2, 2010 Stipulation provides that transfer taxes were to be deducted to reach net proceeds. (Court Ex.V — 3/10/14, §7). Moreover, the Wife did not provide evidence of the amount of transfer taxes actually paid. The Wife also argues that a penalty of $46,000 was imposed by the co-op board because the closing was not held on April 29, 2010 due to the Husband's failure to return from Europe on time. (PX 21 — 3/10/14; TR 10/28/13 pp 35-36; TR
3/10/14, pp.31-36).[FN19] The Wife did not agree that such a penalty should be deducted from her share of the sale proceeds. (TR 3/10/14 p.37). The Husband testified that he was unable to attend the closing scheduled on April 29, 2014 due to the volcanic eruption in Iceland that grounded all airfare in Europe. (PX 30; TR 10/23/13 p.114). The Wife denies the Husband's assertion that the closing was rescheduled twice at the Wife's request from February to March 2010 and from March to April 2010. (TR 3/11/14 pp. 49-59, 141-144). Neither party presented any proof from the co-op reflecting the reason for the $46,000 assessment. The court takes judicial notice that all flights from Europe were grounded in late April 2010 due to a volcanic eruption. Since both parties agree the Husband was in Europe at that time, his failure to attend the closing then was excusable. Without any further evidence regarding this assessment, the court finds that the Wife is not entitled to receive any further distribution attributable to the penalty paid to the co-op due to the delay in closing.
The Husband sought 50% of the net proceeds. The court concludes that no reallocation to the Husband of the distribution related to the Marital Apartments proceeds is warranted. The court finds that at the time of the sale of the Marital Apartments, the Husband still owned his separate property Connecticut House and controlled his businesses. He had already been found in contempt (the first time) for failing to pay pendente lite support (Order of Commitment, February 18, 2009) and was again in arrears. Pursuant to the parties' March 2, 2010 Stipulation, the Husband received 20% of the distribution. Although that amount was ultimately redistributed to the Wife, it was done to reduce the additional arrears the Husband had accumulated under the pendente lite support order. Thus, the Husband effectively received a 20% distribution. The Husband offered no compelling reason at trial for a modification.[FN20] After consideration of the statutory factors and the distribution of the remaining assets, the court finds that the distribution of the net proceeds derived from the sale of the Marital Apartments was appropriate and that no adjustment is warranted.
Connecticut House
The Connecticut House was sold in October 2012 in a mortgage foreclosure short sale for about $350,000. (DX GG, p.14; TR 3/10/14 P. 96; TR 3/12/14 p. 58). It appears that this property was the Husband's separate property. Neither party submitted evidence to explain the circumstances underlying the mortgage foreclosure, such as the amount of monthly mortgage payments and what arrears in mortgage payments, if any, had accumulated at the time of the foreclosure, or the relative contributions each party made to maintain this property during the marriage. Moreover, neither party identified any marital funds derived from this asset that remain from which to make a distributive award. The Wife argues that if the Husband re-purchased the Connecticut House, she should receive a portion of its value. She offered no evidence that he has done so. Under these circumstances, no distributive award is made with regard to the proceeds from the sale of the Connecticut House.
Morgen Evan & Company and Subsidiaries
The Husband formed Morgen Evan & Associates in 1992. The parties shared an office where the Wife had a separate business television programming company. The Wife testified that she invested money in Morgen Evan & Associates and the company was incorporated with a shareholder agreement giving each party a 50% interest. (TR 10/28/13 pp. 97-101). The name of the company was changed to Morgen Evan & Co. in 1994.
Morgen Evan & Co., as well as its subsidiaries Morgen Evan International, Morgen Evan Redrock, Inc., Morgen Evan Japan, and Morgen Evan & Company K.K. all existed during the marriage. (PX 29-A, 29-C, 31, 32, 34; DX I; TR 3/10/14 pp. 65-75, 115; TR 3/10/14 pp.139-159; TR 311/14 pp. 8-22). The Husband formed a company known as Morgen Evan Advisory Services after commencement of this action. (TR 3/12/14 pp. 25-26). The Wife claims that Morgen Evan Advisory Services and Morgen Evan & Co. are "interchangeable." (PX 12; TR 3/10/14 pp. 75-76).
The Husband still uses the Morgen Evan & Co. name on occasion (including on a website) but all of his business is conducted under the name of Morgen Evan Advisory Services. (DX R; TR 6/20/14 pp. 24-27). The Husband testified that the business had severe difficulties in 2005 and that it showed a "meaningful loss" every year from 2010 through 2013. He testified that after payment of overhead expenses, there were no funds available for distribution to officers or stockholders.[FN21] (TR 3/11/14 pp. 98-101, 104). Morgen Evan & Co. received a notice from the IRS in February 2010 that $27,610.71 was owed for unpaid withholding taxes in 2007 and 2008 for which interest and penalties would be incurred. (DX Z; TR 3/12/14 p.86-87). The Husband testified that the taxes weren't paid and "significantly more" is owed. (TR 3/11/14 p. 126). It appears from the Husband's testimony that Morgen Evan Advisory Services was formed so that payments to the business could be deposited in a bank account under a name other than Morgen Evan & Co., to avoid IRS liens. (TR 3/12/14 pp. 25-26, 107-110). The Wife's characterization that Morgen Evan & Co. and Morgen Evan Advisory Services are effectively the same entity appears to be supported by the Husband's own testimony. Although he claimed that the companies had different clients, it appears that he performed the same work under each entity.
Although neither Morgen Evan & Co. nor Morgen Evan Advisory Services have shown a profit for many years, the Husband claims he has not closed the business because he hopes he can turn it into a success. (TR 3/12/14 p. 133). The Husband testified that notwithstanding the expenses and debt incurred, he continues to maintain a business office and has two employees, because the business could not otherwise function. His two employees are paid only when there are funds, but he offered no evidence to support that claim. The Husband testified that he receives no salary. However, the business pays his personal expenses and he takes petty cash from it (discussed below in connection with the Husband's income). The Husband testified that he considered closing the business and looking for a job but his job search efforts have not been successful. (TR 3/12/14 pp. 41, 62, 130-134).
With respect to the other business entities associated with Morgan Evan & Co. and/or Morgan Evan Advisory Services, he provided no evidence regarding the continued existence of Morgen Evan & Co. K.K. He provided some evidence that Morgen Evan Redrock was dissolved in 2010. The Husband offered into evidence an agreement dated April 9, 2010, ending a joint venture between Morgen Evan International and Redrock Thinktank Advisory Ltd. in which the parties agreed to liquidate and dissolve Morgen Evan Redrock ("April 9, 2010 Agreement"). The Husband testified that Morgen Evan Redrock was dissolved, but no documentary evidence to that effect was presented.(DX BB; TR 3/11/14 P. 138; TR 3/12/14 pp. 89-90, 112-114). He claimed that Morgen Evan Japan was dissolved in 2010 or 2011 but never [*12]legally dissolved. (Tr. 3/12/14 pp.111-15).
The Husband also claimed that Morgen Evan International was "dissolved" and no longer exists. (TR 3/12/14 pp. 25-26). However, he offered no certificate of dissolution for Morgen Evan International and he testified that the legal dissolution had not occurred. (TR 3/12/14 pp.110-111). Moreover, an April 9, 2010 Agreement received in evidence provided that Morgen Evan International would receive 1,750 shares in a company known as China Grand Resorts Inc. (formerly known as Asia Premium Television Group, Inc. ["ATVG"]). An SEC Form 10-Q filed by ATVG in 2008 indicates that ATVG had assets worth $2.2 million at that time. (PX 29-D; DX BB). There is no evidence that Morgen Evan International sold its shares in China Grand Resorts, the successor of AGTV. Thus, it appears that Morgen Evan International still owns those shares. However, no evidence was presented as to the value of those shares.
Neither party presented evidence as to the value of Morgen Evan & Co., Morgen Evan Advisory Services or any of the other business entities.
The court cannot make a distributive award attributable to Morgen Evan & Co., Morgen Evan Advisory Services, Morgen Evan International or any of its subsidiaries or related businesses based on the value of these entities in the absence of evidence. Although it appears that the Husband's business continues, none of the documents offered into evidence establish the value of these entities. The court finds there was a failure to meet the burden of proving the value of these assets to afford the court a sufficient basis upon which to make a distributive award or to award an ownership interest to the Wife. Alper v. Alper, 77 AD3d 694, 696 (2d Dep't 2010). The court also finds the evidence insufficient to enable a distribution in kind. The court cannot discern the Husband's ownership interests from the testimony or available documents. Given this failure, the court declines to make a distributive award to the Wife derived from the Husband's businesses. In reaching this decision, the court has considered that the Wife received a greater share of the value of the Marital Apartments and the artwork. DRL §236B(5)(e). However, if the Wife has an ownership interest in any of the Husband's businesses reflected in shares of stock she claims to still hold, she shall retain that interest. From documents offered in her motion, it appears that the Wife may remain a 50% shareholder in Morgen Evan & Co. That company has not been legally dissolved.[FN22] If the document she provided is still effective, she retains a 50% interest in Morgen Evan & Co.
Chelsae Communications
Neither party offered evidence of what this entity is or its value. The court makes no distributive award to the Husband with respect to this entity.
S. Lerner & Associates
Financial Programming Productions
These entities are apparently the Wife's business companies. No evidence of the value of these entities was offered and the Husband does not seek a distributive award derived from these entities. The court makes no distributive award to the Husband derived from the business [*13]entities known as S. Lerner & Associates and Financial Programming Productions.
S. Lerner & Associates Account with JP Morgan Chase Bank
This account apparently is related to the Wife's business. Any funds in this account are awarded to the Wife.
Wife's Commerce Bank Account
Any remaining funds in this account were, at the time this action commenced, derived from the sale of artwork. The Husband does not seek a distribution from this account. The Wife is awarded any funds in this account.
1999 Mercedes Benz Car
The Husband is awarded ownership of the Mercedes Benz car. The Wife made no claim for ownership of the car or for a distributive award in connection with it.
Yamaha Boat
It appears that the Husband last possessed this boat and may have sold it in 2009 for $5,000. If it still exists, he is awarded the boat.
Husband's Citibank Account
This account in the Husband's name had a balance of $2,000 in 2008. If this account still exists, its value is awarded to the Husband.
Husband's Merrill Lynch IRA Account
Since the Husband offered no evidence to support a finding that this account was his separate property, the court concluded it is marital property. It's value in 2010 was $7,410.78 and $6,000 in 2013. The court awards this account to the Husband. However, the Husband shall transfer this asset to the Wife to partially satisfy the money judgment against him (Decision and Order of Civil Contempt and Arrest, June 25, 2015).
Household Furnishings
Neither party presented evidence of a description of or proof of value of any household furnishings that remain from the marriage. Each party shall retain any such furnishings presently in his or her possession.
Artwork
As of the date of trial, the Husband possessed $10,000 of marital art. The Wife had knowledge of the artwork the Husband claimed as having been sold from his Bankruptcy proceeding. The court accepts the Husband's testimony that the Wife received $244,334 from art she sold and the Husband received $113,110.00 from the art he sold. According to the Husband, he sold $107,110 in art in 2009 to pay tuition for the children. The parties were required to provide an inventory of the art in their possession. It appears that only the Husband complied with this obligation (Beeler Order, February 15, 2008). The only evidence of art still remaining is in the Husband's possession and is worth approximately $10,000. (DX GG, p. 12). Given the Wife's failure to rebut the Husband's claim that she disposed of art worth $244,334 in 2008, thus giving her a greater share of the parties' artwork, the Husband is awarded the remaining artwork in his possession.
Liabilities
As discussed above, the court finds no distribution of liabilities is warranted.
MAINTENANCE AND CHILD SUPPORT
Income of the Parties
Before awarding maintenance or child support the court must first identify the income available to each party. Income for the purpose of calculating child support under the Child [*14]Support Standards Act (the "CSSA) is defined as gross income as should have been or should be reported in the most recent federal income tax return plus investment income, deferred income and benefits. DRL §240(1-b)(b)(5)(ii). The Husband claims his business suffered a downturn in 2005. He notes, in particular, that in 2010 he lost several business clients further reducing his business opportunities. [FN23] In his 2013 and 2012 personal tax return he lists negative income of $178,980 each year, but the submitted tax returns are not complete and how he computed the loss is unclear. His 2011 tax return shows a slightly lower loss but also is not a complete document. His 2010 tax return also shows a loss. (DX R, B-1, B-2, B-3). The tax returns all indicate zero income from the S Corporations Morgen Evan & Co. and Morgen Evan Advisory Services. It appears that the reported losses may also be partly attributed to a loss carryover.[FN24]
Despite this seemingly long term lack of profitability of the business, the Husband continues to rent office space and employ two employees. (TR 3/11/14 pp. 98-101, 104). The Husband testified that he takes no salary from the business but that he regularly takes $100 from petty cash to pay for food, a MetroCard and medications. (TR 3/11/14 pp. 126-127; 3/12/14 p. 88-89). The Husband acknowledged paying personal expenses with business funds, including his car insurance, regular haircuts and some restaurant charges. (PX 30 -6/20/14, PX 33, PX38, PX 51, PX 69; TR 3/12/14 pp. 125-128; TR 6/20/14 pp. 49, 58, 71, 88, 139). The business pays over $3,000 per month for health insurance for the Husband, Wife and three children, but not the Husband's two employees. (TR 3/12/14 pp. 44-45, 66). In June 2013 the Husband paid $2,500 from his business account to Mr. Botter, his counsel in this action. (PX 76). In January 2014, the Husband paid an accountant $5,000 from his business account to prepare the Husband's personal tax return. (PX 69; TR 6/20/14 p.139). The Wife offered into evidence some statements for Morgen Evan Advisory Services showing deposits in some months from 2011 to 2014 of as much as $57,400 into a bank account. (PX 22, 25, 26, 29, 32, 38, 40, 43, 53, 59, 62, 67, 71, 72,73).
The Husband effectively admits that he started Morgen Evan Advisory Services for the purpose of evading tax liens. The Husband's most recent net worth statement indicates zero income but he listed monthly expenses in the total sum of $3,085. (DX GG).[FN25] The Husband's 2010 Bankruptcy Petition listed $2,600 as his average monthly income (a little over $30,000 annually) yet showed average monthly expenses of $13,809. (PX 22 — 3-10-14, pp. 7, 24).
In addition, the Husband and sister testified that he lives in his sister's home in New Jersey rent free and without contributing any money for utilities or other housing expenses. He [*15]acknowledged that his sister periodically gives him spending money (TR 10/28/13 pp. 106-107; TR 3/12/14 pp. 81, 89). He provided no information regarding how frequently he travels to the Far East or who pays his travel and lodging expenses. It appears that he does a significant amount of work from the United States.
Notwithstanding the claimed lack of profitability of his business, the Husband testified to making only minimal efforts to find other employment (3/12/14 pp. 41, 62, 130-134). Thus, the court concludes that between his business and the assistance he receives from his family, the Husband has more income available to him than his tax returns show.
The Wife presented no evidence of her current employment status or income. The most recent tax return she offered was from 2008 and she did not provide an updated net worth statement at the commencement of the trial. She testified that she owns a television programming business (TR 10/28/13 p.98), but gave no credible evidence regarding the present status of that company. According to an undated resume, she has extensive "project experience," creating and hosting television programs (from 1991 to 1996), radio programs (from 1998 to 2003), and financial conferences (1987 to 1991). (DX J). She also published a book that was an Amazon best seller about raising a unique child (2002-2005). She holds an MBA degree. (DX I). It is unknown if she presently works, or if she receives residuals or royalties.
Although it appears that for some time she devoted her time to raising the parties' children, they have attended school full time for well over a decade.[FN26] She gave no evidence of any efforts she has made to reactivate her career. She testified at trial that she was receiving food stamps and had filed for bankruptcy. However, she apparently never proceeded with the bankruptcy action and gave insufficient proof regarding her receipt of food stamps. Nonetheless, the Husband's 2010 Bankruptcy Petition listed the Wife's income as zero. (PX 22 — 3-10-14, pp. 7, 24).
Each of the children attended private secondary schools and private colleges. The Wife offered into evidence some financial aid documents, but they were incomplete and did not include income information. It appears that the children received significant loans. (PX 5). However, the Wife provided no information of how the children's additional college costs were met.
The court notes that the Wife received over $1 million in assets derived from the sale of the Marital Apartments and the artwork in her possession. She has also received over $360,000 in support pursuant to the pendente lite order (Order, Motion Seq. 23, July 15, 2011) and has a money judgment against the Husband arising from the second finding of contempt in an amount over $600,000 (Decision and Order of Contempt and Arrest, July 17, 2015).
Where a party's account of his/her finances is not credible, the court may impute income based on his/her past income or earning potential. See, Strella v. Ferro, 42 AD3d 544, 545 (2d Dep't 2007). The CSSA permits imputation of income to a parent, including an amount based upon the parent's former resources or income. DRL §240(1-b)(b)(5)(v).
From all of the evidence, the court imputes to the Husband income in the amount of $100,000 based on the limited income information he provided and imputes income to the Wife in the amount of $40,000 based on her earning potential.
[*16]Maintenance
In determining the amount and duration of a final maintenance award the court must consider the enumerated statutory factors as well as the marital standard of living, whether the party seeking maintenance has sufficient property or income to provide for her reasonable need and whether the other party has sufficient property or income. DRL §236(B)(6). [FN27] In this case, the marital standard of living was comfortable but not lavish. The parties owned an apartment in Manhattan and a country house in Connecticut. The three children attended private schools. It appears that the Husband's business income was reduced even prior to the commencement of this action, DRL §236(B)(6)(a)(1).
The parties were married for 17 years. DRL §236(B)(6)(a)(2). The Husband is 63 and the Wife is 58 years old. Neither party complained of health issues that prevent employment. DRL §236(B)(6)(a)(3). The children were in school full time during this litigation and are now 20 years of age or older. There is no evidence that the Wife has attempted to find employment or if she works. She had an active career until at least about 2005. She also testified that she was involved in the Husband's business during the marriage. Thus, it appears that the Wife has significant skills from which she can rebuild a career if she has not already done so. DRL §236(B)(6)(a)(5), (6). The Wife holds an MBA and it does not appear that she needs additional training to resume employment. DRL §§236(B)(6)(a)(4), (5). The Husband's tax returns report no taxable income, but the court found it appropriate to impute income to him. The Husband claims his businesses have been unsuccessful for years, yet he continues to operate them and has not found it necessary to seek new employment. The court concludes he is able to support himself. DRL §236(B)(6)(a)(3).
The Wife ultimately received 100% of the net proceeds from the Marital Apartments and a greater share of the parties' artwork for a total sum of over $1 million. DRL §236(B)(6)(a)(1). The Wife testified that she paid substantial sums for the private school and college expenses of the children. It may be that she used the bulk of the money she received from marital assets to pay these costs, but she provides no documents to support her claim or whether she received funds from other sources (apart from incomplete information about student loans). As noted above, the Wife will lose health insurance benefits, but there is no evidence of the cost of her post-divorce medical insurance. DRL §236(B)(6)(a)(1).
The Husband testified that he lives in his sister's home in New Jersey where he claims to pay no rent.[FN28] There is no evidence of the Wife's current living expenses. She failed to submit an updated net worth statement at the time of trial and did not submit any tax returns after 2008. A money judgment was entered in the Wife's favor against the Husband for $608,700 arrears in pendente lite support at the time he was found in contempt. The arrears include combined maintenance and child support. Thus, pursuant to the pendente lite award, the Wife has been [*17]entitled to receive maintenance for eight years. DRL §236(B)(6)(a)(12).[FN29]
For all of these reasons, the court finds no further maintenance award warranted.
Child Support
There is one unemancipated child of the marriage, the youngest son born in 1996. In determining an award of child support, a court shall be guided by the provisions of the Child Support Standards Act (DRL §240(1-b), (the "CSSA"). the court finds that the combined parental income is $140,000 ($100,000 + $40,000). DRL §§240(1-b)(b)(4); (c)(1). The Husband's prorated responsibility for child support is 71.4% and the Wife's prorated responsibility is 28.6%. DRL §§240(1-b)(b)(4); (c)(2). Applying a child support percentage of 17% for one child, DRL §240(1-b)(b)(3)(i), the presumptively correct amount of the Husband's basic child support obligation would be $16,993.20 or $1,416 per month.[FN30] The court finds the presumptive award neither unjust nor inappropriate. The Husband shall pay this amount through August 1, 2017.
The Husband testified that the business pays the cost of medical insurance for the child. The Husband is responsible for payment of the health insurance premiums for the unemancipated son. The Wife presented no evidence of other add on costs attributable for this child, including college costs. Thus, the court has no basis to award any other add on costs.
Effective Date of Maintenance and Child Support pursuant to this Decision and Order
The court's decision herein with respect to maintenance and child support is effective the date of this Decision and Order, without notice of entry, immediately replacing the pendente lite Order.
Arrears
The Wife was awarded arrears that accrued under the Pendente Lite Order in the sum of $608,700 through June 30, 2014, plus interest (Decision and Order dated June 25, 2015). The pendente lite Order required that the Husband pay $6,000 per month for unallocated temporary maintenance and child support, plus all housing-related costs, payment of health insurance and unreimbursed healthcare costs, automobile costs and private school tuition including arrears. (CT EX I). The Referee specifically found that the Wife's evidence with respect to tuition arrears was deficient. Furthermore, although there is no evidence that the Husband has paid any of his pendente lite support obligations since June 30, 2014, there also is no evidence that any arrears have accrued since that time. The Wife presented no additional evidence with respect to tuition arrears after the Referee issued his Contempt Report on March 2, 2015 or after this court issued its Contempt Decision and Order, dated July 17, 2015, at the hearing, or in her instant motion. The Wife was given the opportunity to present additional evidence with respect to arrears, but failed to appear at the hearing or present new evidence in the instant motion. As a result, the court cannot make an award of arrears for the period after June 30, 2014. However, its Order of contempt dated July 17, 2015 remains in effect. Moreover, although the court has distributed [*18]certain minimal assets to the Husband, the Wife may pursue any legal remedies to obtain those assets towards satisfying her money judgment against the Husband.
Counsel Fees
The Wife points to evidence that her attorneys were paid over $200,000 from the sale proceeds of the Marital Apartments, including $197,719.79 paid to Mr. Gaynor's firm to be held in escrow until resolution of the charging lien for payment to Mr. Felder and $100,000 paid to Mr. Gaynor for his services. (PX 21; TR 3/11/14 pp. 54-59). She claims that the Husband should reimburse her for those legal fees. However, the Wife did not submit any bills from the attorneys indicating the work they performed. (TR 10/28/13 pp. 72-74).
Pursuant to DRL § 237, the court is authorized to direct either spouse to pay counsel and expert fees in order to enable the other spouse to carry on or defend the action as, in the court's discretion, justice requires, having regard for the circumstances of the case and of the respective parties. Domestic Relations Law § 237(a) creates "a rebuttal presumption that counsel fees shall be awarded to the less monied spouse." The court may consider as a factor in awarding attorney fees whether a party has engaged in conduct causing delay or excessive litigation. Prichep v. Prichep, 52 AD3d 61, 64 (2d Dept 2008); Ciampa v. Ciampa, 47 AD3d 745, 748 (2d Dept 2008).
The Wife presented insufficient evidence with respect to her present financial circumstances at the time of trial, including failing to provide an updated net worth statement. She received 100% of the apartment proceeds and was awarded $608,7000 in support arrears. The Husband was discharged in bankruptcy and has no discernible fund of money with which to pay counsel fees to the Wife. Further, without her counsel's billing statements, the reasonableness of the Wife's counsel fees cannot be determined. The court also finds that the Wife has engaged in conduct causing delay in this action. For all of these reasons, the court awards no attorney fees to the Wife.
Accordingly, it is hereby:
ORDERED, that the Husband's application, Motion Sequence 48, to confirm the October 2015 Report and to dismiss this action is denied; and it is further
ORDERED, that the Wife's application, Motion Sequence 47, to reject the October 2015 Report is granted; and it is further
ORDERED, that the Wife's application to reopen the hearing is denied; and it is further
ORDERED, that the Wife's application to recuse Special Referee Hewitt is denied; and it is further
ORDERED, that, if the stock certificate is valid, the Wife shall retain her 50% interest in Morgen Evan & Company reflected in the stock certificate she presented at trial if her shareholder interest still exists and if that company has not been dissolved; and it is further
ORDERED, that, except to the extent that the Wife holds an ownership interest reflected in valid stock certificates in Morgen Evan & Company, the Husband shall retain ownership of Morgen Evan & Company, Morgen Evan Advisory Services, Morgen Evan International and any subsidiaries of those entities; and it is further
ORDERED, that the Wife shall retain ownership of Chelsae Communications, S. Lerner & Associates, and Financial Programming Productions; and it is further
ORDERED, that there shall be no redistribution of the proceeds derived from the sale of [*19]the Marital Apartments; and it is further
ORDERED, that there shall be no distribution in connection with the Connecticut House; and it is further
ORDERED, that the Wife is awarded any funds remaining in the account of S. Lerner & Associates with Chase Bank; and it is further
ORDERED, that the Wife is awarded any funds remaining in the account in her name with Commerce Bank; and it is further
ORDERED, that the Husband is awarded ownership of the Mercedes car; and it is further
ORDERED, that the Husband is awarded ownership of the Yamaha boat, if it has not been sold; and it is further
ORDERED, that the Husband is awarded any funds remaining in the account in his name with Citibank; and it is further
ORDERED, that the Husband is awarded 100% of the value of his Merrill Lynch IRA account, but shall transfer that account to the Wife in partial satisfaction of the money judgment against him (Decision and Order of Civil Contempt and Arrest, June 25, 2015); and it is further
ORDERED, that each party shall retain any household furnishings that remain from the marriage presently in his or her possession; and it is further
ORDERED, that the Husband is awarded the marital artwork that remains in his possession; and it is further
ORDERED, that there is no distributive award arising from marital liabilities; and it is further
ORDERED, that no award of maintenance is made to the Wife for the period after the date of this Decision and Order; and it is further
ORDERED, that the Husband shall pay $1,416 per month as child support from the date of this Decision and Order and on the first day of each month thereafter through August 1, 2017; and it is further
ORDERED, that the Husband is responsible for payment of the health insurance premiums for the unemancipated son until that child is 21; and it is further
ORDERED, that the order of unallocated pendente lite maintenance and child support is terminated as of the date of this Decision and Order; and it is further
ORDERED, that there is no award of counsel fees to either party; and it is further
ORDERED, that any relief not granted is denied.
This is the decision and order of the court.
Dated: December 8, 2016.ENTER:
______________________________
Laura E. Drager, J.S.C.
FootnotesFootnote 1: The Wife was previously represented by at least seven attorneys, including on one of the hearing days before the Referee.
Footnote 2: Each motion was filed in November 2015, and made returnable on January 11, 2016. Argument on the motions was adjourned to January 25, 2016 to accommodate a court scheduling conflict. On January 25, 2016 the matter was adjourned to February 1, 2016 at the Husband's request. On February 1, 2016 the Wife requested an adjournment because there was no proof that the Husband's attorney, Allan S. Botter was properly retained as the Husband's counsel and the matter was adjourned again to May 31, 2016. The Wife requested an adjournment of that date (in part because she said she could not afford to pay $125 in travel costs) and the motions were adjourned to June 27, 2016. On June 24, 2016, the Wife informed the court via email that she would not appear on June 27, 2016. Ms. Lerner was informed that no further adjournment would be granted and, if the Wife failed to appear on June 27, 2016, the motions would deemed submitted without oral argument. On June 27, 2016, neither of the parties appeared, although Mr. Botter appeared for the Husband, and the motions were marked submitted without oral argument.
Footnote 3: United Bankruptcy Court, District of Connecticut, Case No. 10-52128 (AHWS).
Footnote 4: The Wife did not obtain counsel and proceeded representing herself at that time. (TR 10/28/13 p. 3).
Footnote 5: Ultimately, the Wife did not proceed with her bankruptcy action.
Footnote 6: The Wife complains that she was not informed of the October 21, 2015 adjourned date. The Referee directed the parties to appear on October 21, 2015 by letter dated September 20, 2015. October 2015 Report, p. 4. Accordingly, the court finds that the parties each had adequate notice of the hearing scheduled for October 21, 2015.
Footnote 7: In the instant motion, the Wife seeks a copy of the Husband's retainer agreement with his attorney. Mr. Botter represented the Husband until relieved as counsel by consent on August 11, 2014. It was represented at that time that the Husband would appear pro se. On July 15, 2015, Mr. Botter served a new notice of appearance. Motion Sequence 48 was submitted by Mr. Botter on the Husband's behalf on November 17, 2015. However, a copy of Mr. Botter's July 15, 2015 notice of appearance was not filed with the County Clerk's office until June 14, 2016. The Wife repeatedly objected to Mr. Botter's re-appearance because of his failure to file a retainer agreement. The court required Mr. Botter to file the retainer agreement. On June 24, 2016, the court received a letter from Mr. Botter, copied to the Wife, enclosing a retainer agreement signed by the Husband on June 9, 2016. Thus, the Wife received a copy of the retainer agreement, albeit the agreement was filed late and was not entered until after the Husband submitted a motion. Although the court does not condone the late filing of a proper retainer agreement, the Wife fails to offer any argument of how she has been harmed by the late retention of Mr. Botter.
Footnote 8: Some of the documents, which had been obtained by subpoena, disappeared from the Referee's chambers in June or July of 2014. The Referee directed the Wife to re-issue subpoenas for the missing documents. No additional documents were delivered to the court pursuant to any re-issued subpoenas. The Wife suggests that the Referee was complicit in the disappearance of the documents. The District Attorney's office investigated the Wife's complaint that the documents were stolen. The Wife also complained to then Chief Administrative Judge A. Gail Prudenti and to "law enforcement" about the missing documents. (Wife's Moving Aff. pp 14-17). No evidence of any wrong-doing by the Referee was found.
Footnote 9: Neither party submitted a copy of the transcripts of the hearing before the Referee. As a result, the court obtained the transcripts for all hearing dates.
Footnote 10: In his 2008 Net Worth Statement, the Husband indicated that this property was marital. The evidence at trial proved otherwise. In light of the fact that the property was disposed of in foreclosure, its designation as marital or separate property is of little moment.
Footnote 11: The Husband's Bankruptcy Petition, filed on September 5, 2010, listed an outstanding mortgage against the Connecticut house in the amount of $683,348, plus a home equity line of credit of $56,000 and a second, unrecorded mortgage for $47,000. (PX 22, Sched. D). In that petition, the Husband listed his 50% interest in the house as $470,000, presumably based on an estimated value of $940,000. In a financial aid application filed by the Husband shortly before he was discharged in bankruptcy, he listed the value of the house at $700,000. (PX 19 — 12-23-13).
Footnote 12: In her motion papers, the Wife submitted photocopies of a Certificate of Incorporation for Morgen Evan & Associates, Inc. filed on April 9, 1992 and stock certificates indicating that each party owned a 50% share in that company as of April 13, 1992. The Wife also offered a corporate resolution and certificate of amendment of the certificate of incorporation of Morgen Evan & Associates, Inc., signed by each of the parties, indicating the corporate name of Morgen Evan & Associates, Inc. was changed to Morgen Evan & Company, Inc. as of July 19, 1994. These documents were not submitted into evidence during the trial before the Referee.
Footnote 13: The Bankruptcy Petition indicates that Morgen Evan International is a holding company for Morgen Evan Japan, KK (Japan) ("Morgen Evan Japan") and Morgen Evan Redrock (China) ("Morgen Evan Redrock") which "in turn owned Morgen Evan Hangyon (also China) as a subsidiary." (PX 22-3/10/14 p. 33).
Footnote 14: It is unclear if this entity is the same as Morgen Evan Japan.
Footnote 15: The Wife complained that the Husband had caused her to become ill with a chronic condition. However, she offered no proof of this condition or how it affects her financial circumstances.
Footnote 16: Because some hearing exhibits were given the same exhibit numbers on different trial days, exhibits with duplicative numbers are identified with the date entered in evidence.
Footnote 17: A charging lien in the sum of $222,719.70 had previously been granted to Raoul Felder and Associates by Order dated September 3, 2009. (CT EX. VII). Subsequently, the court directed the sum of $197,719 be held in escrow from the sale proceeds pending a legal fee dispute between Mr. Felder and the Wife. See, Order resolving Motion Sequence 15, dated September 8, 2010. The Wife testified that approximately $25,000 was reimbursed to her from those funds. (TR 3/11/14 p. 59). By Order dated August 2, 2011, it appears that the Wife received $36,995.70.
Footnote 18: The history regarding how the Wife came to receive 100% of the net proceeds from the sale of the Marital Apartments is set forth in an Order, dated July 15, 2011 that resolved Motion Sequence 23.
Footnote 19: There is no documentary proof in support of the Wife's testimony that the penalty was increased to $54,000. (TR 3/10/14 p.36).
Footnote 20: In her motion papers, the Wife argues that she should have received a credit for money she contributed from the proceeds of the sale of a prior separate property apartment she previously owned and from her business. She provided inadequate proof to support these claims. In any event, since she received a significant share of the proceeds from the sale of the Marital Apartments, no further credit to the Wife is warranted.
Footnote 21: The Husband testified that business expenses for rent, salaries, health insurance, communications, internet and offices expenses amount to between $9,000 and $15,000 per month. (TR 3/11/14/p. 98; TR 3/12/14 p. 67). The business is behind in paying the salaries to the only two salaried employees who are owed about $50,000. (TR 3/11/14 pp.88-95; TR 3/12/14 pp. 61-66). A retainer agreement with a client for payment of $45,000 per quarter expired in February 2013 and was not renewed. A one-year retainer agreement, also for $45,000 per quarter December 2013 also was not renewed. A third client is on retainer for $3,000 per month until March, 2014. (TR 3/12/14 pp. 67-69).
Footnote 22: The Wife offers only a photocopy of a certificate of incorporation and stock certificates from 1992 indicating that she had a 50% interest in the predecessor of Morgen Evan & Co. From the evidence provided, the court cannot determine the validity of her claim that she continues to owns a 50% interest in Morgen Evan & Co. A notice of dissolution of Morgen Evan & Co. has not been served on the Secretary of State. (TR 3/12/14 p. 139).
Footnote 23: The Husband's business partnership with Chinese magnate Bruno Wu known as Morgen Evan Redrock was terminated in 2010. (DX BB). The Husband testified that soon after commencing this divorce action, the Wife filed a lawsuit alleging a conspiracy to hide money from her in federal court against the Husband, several of his employees and many of his clients, including Mr. Wu and his wife. Although the federal action was dismissed after about one and one-half years, the Husband's relationship with Mr. Wu ended and two of the Husband's employees left the business. (TR 3/11/14 pp. 127-137).
Footnote 24: The 2010 tax return indicates a loss of $6,619 plus a net operating loss carryover from prior years of $147,361 for total negative income of $153,980. (DX B-2). The 2011 tax return indicates a loss of $17,000 plus a net operating loss carryover from prior years of $153,980 for total negative income of $170,980. (DX B-1). The 2012 tax return indicates a loss of $8,000 plus a net operating loss carryover from prior years of $170,980 for total negative income of $178,980. (DX B-3). The 2013 tax return indicates -0- income from either S Corporation and a net operating loss carryover from prior years of $178,980 for total negative income of $178,980. (DX-R)
Footnote 25: The Husband's initial net worth statement, dated July 21, 2008 indicates that he received a "$7,500/month draw plus commissions (various)." He listed income of approximately $40,000 from bonus, commissions and fringe benefits plus $150,000 from Partnership, royalties and sale of assets (DX H, p. 4).
Footnote 26: It appears that the parties' youngest child had special needs, but it also appears that he attended primary and secondary schools full time and now attends college.
Footnote 27: The amendments made to the maintenance provisions of the DRL in October 2015 are effective in cases filed after January 23, 2016, and therefore do not apply to this action filed in 2008.
Footnote 28: Apparently, he moved into his sister's home after being evicted from a Manhattan rental apartment for failure to pay rent.
Footnote 29: Although not applicable, the court notes that under the new maintenance law, effective January 25, 2016, the advisory guideline for the duration award of maintenance for a marriage of this length would be between 5.1 and 6.8 years.
Footnote 30: The Husband's basic child support obligation is calculated as: $140,000 x 71.4% x 17%.
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