Villi v O'Caining-Villi

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[*1] Villi v O'Caining-Villi 2005 NY Slip Op 52049(U) [10 Misc 3d 1060(A)] Decided on December 16, 2005 Supreme Court, Westchester County Giacomo, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 December 16, 2005
Supreme Court, Westchester County

ROGER VILLI, Plaintiff,




William J. Giacomo, J.

In Riechers v. Riechers (178 Misc 2d 170 [Sup. Ct. Westchester Co. 1998], affd. as modified 267 AD2d 445,446 [2d Dept. 1999], lv. denied 95 NY2d 757 [2000]), the Appellate Division held that: "the trial court had the authority to determine whether assets used to create an offshore trust in the Cook Islands two years before the commencement of the divorce action were subject to equitable distribution." On cross-motions now before the Court, defendant relies upon that decision and other arguments in an effort to defeat a trust created by plaintiff and her prior to the commencement of this divorce action, and by doing so, to obtain a summary determination that she is entitled to a distributive share of the value of the parties' marital home (the Home), which is the sole asset held by that trust. Based upon this Court's analysis of the parties' arguments and the controlling law, it concludes that the trust was properly created and is irrevocable, thus the marital home transferred into the trust is not subject to equitable distribution. However, in this case an issue of fact exists as to whether the Home was validly transferred to the trust.


Plaintiff and defendant were married on March 16, 1985. They have no children, but defendant has a son from a prior marriage.

In 1993, plaintiff purchased the Home with a $30,000 loan [*2]from his parents. Initially, the Home was transferred from plaintiff to Villi Family Partners, L.P. (VFLP), a limited partnership in which plaintiff and defendant are each 49.5% owners, with defendant's son as the owner of the remaining 1% of that entity.

The Home was transferred to the Villi Family Trust on June 4, 1998 for no consideration. On that same date, a Trust Agreement (the Trust Agreement) was executed by the parties as grantors and Russell Villi and Philip Villi, as Trustees.[FN1] Under the Trust Agreement, the parties hold the position of grantors only, and are not beneficiaries of the trust.[FN2]

The Trust Agreement established a method by which the Trust Property would be managed.[FN3] Specifically, it provided that:

"The Trustee(s) shall hold the Trust Property in two separate and discreet subtrusts, (one subtrust shall be hereinafter referred to as the ROGER SUBTRUST', and the other subtrust shall be hereinafter referred to as the MARY LYNN SUBTRUST.' The foregoing subtrusts may be individually and collectively referred to as a Subtrust' or as Subtrusts,', respectively). Of the initial contribution made by the Grantors, 50% shall be placed in the ROGER SUBTRUST' and 50% shall be placed in the MARY LYNN SUBTRUST.' Of the initial contribution and any subsequent contributions made by the Grantors, 50% shall be placed in the ROGER SUBTRUST' and 50% shall be placed in the MARY LYNN SUBTRUST.' (Pl. Affid., Exh.C, p.3 [capitalization in original]).

It is undisputed that the Home was contributed to the Villi Family Trust in accordance with this provision of the Trust Agreement.

For the purposes of the motions before this Court, the two most significant aspects of the Trust Agreement are found in [*3]Section 3(b) and Section 5 (hereinafter "Section 3[b]" and "Section 5", respectively) which address the use of the Home and the nature of the trust it created, respectively. Under Section 3(b): "Notwithstanding anything herein to the contrary, so long as Residential Property is owned by this Trust, such property shall be held by this Trust solely for the benefit of the Grantors so that during their lifetimes, they will have the right to exclusive use and enjoyment of any such Residential Property (ibid.).[FN4] Section 5 provides, in relevant part, that: "This Trust and each Subtrust shall be and is irrevocable, and the Grantors hereby expressly waive all rights and powers, whether alone or in conjunction with others, and regardless of when or from what source the Grantors may heretofore or hereafter have acquired such rights or powers, to alter, amend, revoke, or terminate this Trust or either Subtrust" (id., p.6 [emphasis added]).

On January 13, 2005, plaintiff commenced this action, seeking a divorce on the ground of constructive abandonment and cruel and inhuman treatment. Subsequent to the conducting of a preliminary conference, the Court issued orders appointing neutral evaluators to determine the value of the Home and defendant's real estate license (together hereinafter "the appointment orders").[FN5] Thereafter, both parties moved for relief from the appointment orders. The Court addresses the motions in the order that they were filed by the parties.[FN6]

[*4]II. PLAINTIFF'S MOTIONOn July 25, 2005, plaintiff moved by order to show cause for vacatur of the order appointing a neutral real estate appraiser to appraise the Home (the Real Estate Appraisal Order). In the alternative he requests that the Court modify the Real Estate Appraisal Order by providing that:

"a. the Order is without prejudice to a determination that the marital residence in which [sic] is owned by an Irrevocable Trust, is not marital property and should not and cannot be equitably distributed. b. the marital residence be valued as of the date it was transferred to the Irrevocable Trust, to wit: June 4, 1998[.] c. the valuation take into consideration the fact that the property is owned by an Irrevocable Trust." (Order to Show Cause, p.2).

Relying upon Section 3(b) and Section 5, it is his position that an appraisal of the Home "is of no import" because the Home is no longer an asset that may be distributed to the parties at the conclusion of this action (Pl. Affid., par.6).

While she offers a different explanation for the transfer than that proferred by plaintiff [FN7], defendant does not deny that she approved the transfer of the Home to the Villi Family Trust. [*5]However, she asserts that after speaking with her attorney she has "a new understanding of the ramifications and implications of the Trust" (Def. Affid., par.4). Thus, in opposition to plaintiff's motion, and to bolster her cross-motion, she offers four arguments in support of her position that the Home is still subject to her equitable distribution claims in this action.

Although fashioned as a motion to vacate or modify the Real Estate Appraisal Order, to the extent that the motion seeks a ruling that the Home should not be appraised because it is not subject to equitable distribution, plaintiff is actually seeking partial summary judgment determining that the Home is not a marital asset (see Hougie v. Hougie, 261 AD2d 161,161 [1st Dept. 1999] ["Preliminarily we note that whether a particular marital asset, such as the enhanced earning capacity attributable to a particular career, is subject to equitable distribution is an issue that can be decided prior to trial"]; see also Moll v. Moll, 187 Misc 2d 770,771 [Sup. Ct. Monroe Co. 2001] ["Preliminarily, the remedy of partial summary judgment is appropriate to determine this type of issue prior to trial"]). Thus, plaintiff is entitled to vacatur of the Real Estate Appraisal Order only if there is no issue of fact to be decided by the Court with respect to the non-marital character of that item of property (see McElduff v. Mansperger, 214 AD2d 653,655 [2d Dept. 1995], appeal and motion for leave to appeal dismissed 86 NY2d 778 [1995] [Partial summary judgment was properly granted on the issue of whether the parties' joint dental practice had dissolved prior to the commencement of the divorce action where "[t]here [we]re no disputed issues of material fact in this case which would preclude partial summary judgment"]).


Defendant's first argument is that, even if the Home has been transferred to the Villi Family Trust, the Court must equitably distribute the value of the Home and any marital debt encumbering it. She rests her position entirely upon the Trial Court decision in Riechers v. Riechers (supra), as subsequently affirmed with modification by the Appellate Division.[FN8] [*6]

In Riechers, the defendant-husband, acting as general partner, had formed a limited partnership under the laws of the State of Colorado, named "the Riechers Family Partnership Limited". At the same time, the defendant, acting as settlor, established "the Riechers Family Trust", an irrevocable trust in the Cook Islands under Cook Islands law. The Riechers Family Trust was funded with 99% of the assets of the Riechers Family Partnership Limited, while the remaining 1% of those assets was owed by defendant. Although the defendant, the plaintiff-wife and their children were the named beneficiaries of the Riechers Family Trust, rather than being personally named as a beneficiary, the plaintiff was identified in a separate category as "Spouse of the Settlor". Consequently, upon entry of a judgment of divorce, plaintiff would no longer come within the definition of "Spouse of the Settlor", and would lose her rights as a beneficiary of the trust.

Faced with the potential loss of more than one million dollars if she was denied any interest in the assets held by the Riechers Family Trust, the plaintiff therein offered arguments that are obviously the foundation for those asserted at bar. Specifically, she "maintain[ed] that all the assets used to fund the limited partnership and trust were marital assets; that the trust is not irrevocable; that plaintiff did not give an informed consent to the establishment of the trust or the transfer of marital assets to the Trust; and that plaintiff is entitled to a sum of money representing plaintiff's equitable distribution from the corpus of the Trust" (id., 178 Misc 2d, at 172-173).

Having concluded that "[i]t cannot be said with any degree of certainty that the formation of the limited partnership and the Riechers Family Trust was an attempt by Dr. Riechers to avoid the consequences of equitable distribution of marital assets in contemplation of divorce by secreting marital assets or by deliberate dissipation of marital assets", the Trial Court identified the question to be answered as "whether in the absence of a finding of economic fault, as determined in the case at bar, the value of marital assets placed in an irrevocable trust, is subject to equitable distribution?" (id., 178 Misc 2d, at 173-174 [internal citations omitted]). In the view of the Trial Court: "The answer is in the affirmative" (id., 178 Misc 2d, at 174). Thus, because it recognized that it lacked jurisdiction over the corpus of the Trust, which was composed of property located in the Cook Islands, the Trial Court awarded plaintiff $2,000,000, representing one half of the value of the marital assets placed in the Trust. As noted above, the Appellate Division agreed with [*7]the Trial Court that it had the authority to make that award (id., 267 AD2d, at 446).

Defendant at bar asserts that the Home:

"... was purchased during the marriage, with marital funds. The expenses and carrying charges were paid and continue to be paid using marital funds." (Edelstein Affirm., par.6).

Arguing that the Trial Court decision in Riechers, as affirmed by the Appellate Division, is controlling in this case, defendant contends that the Court must make a distributive award to her of one-half of the value of the Home. This Court disagrees, because Riechers is factually distinguishable from the case at bar in two central aspects.

First, in Riechers, the parties were the beneficiaries of the trust established by the husband. Thus, there was some expectation that in consideration of the transfer of marital assets to the trust, the wife would receive some distributions in the future. As noted above, the definition of "beneficiary" under the Trust Agreement in this case excludes both parties, thereby denying both of them any distribution of trust assets at any time. Indeed, the only benefit of any kind received by either party under the Trust Agreement is the right to reside in the Home during their lifetimes. Consequently, defendant could not credibly expect to retain any ownership interest in the corpus of the trust or to receive any distributions or returns of any kind based upon her consent to the transfer of the Home to the Villi Family Trust.

Second, the trust attacked in Riechers gave the husband a right to receive distributions that was not extended to the wife. By virtue of the manner in which the wife's capacity under the trust was defined, upon the divorce of the parties she was no longer the "Spouse of the Settlor", and thus was no longer a beneficiary. Unlike the wife's situation, even after a divorce of the parties in Reichers, the husband remained a beneficiary who was entitled to receive distributions from the trust. That situation is clearly different from that involved at bar, where the Trust Agreement explicitly denies either party any right to receive a distribution from the Villi Family Trust under any circumstances.

Here, what the parties have accomplished by their transfer of the Home to the Villi Family Trust is akin to the making of a gift of the Home to defendant's son, subject only to the condition that both parties may continue to reside in the Home during their respective lifetimes. This is evident from the fact that they retain absolutely no control over this asset, having [*8]agreed that the Trustees shall exercise all decision-making with respect to the Home (cf. Matter of Bolin, 136 NY 177,180 [1892] ["To constitute a valid gift, there must have been the intent to give and a delivery of the thing"]).

Thus viewed, the Home no longer constitutes marital property. Consequently, unlike the situation in Riechers, this Court holds that its value may not be distributed in this matrimonial action, if it was validly transferred to the Villi Family Trust.


Defendant further argues that "the trust is revocable and can be revoked and terminated and should be revoked and terminated, in the interests of justice and because it was funded by marital assets" (Edelstein Affirm., par.15). In taking that position, she relies first upon EPTL §7-1.9(a) (hereinafter "Section 7-1.9[a]"), which provides, in pertinent part, that:

"Upon the written consent, acknowledged or proved in the manner required by the laws of this state for the recording of a conveyance of real property, of all the persons beneficially interested in a trust of property, heretofore or hereafter created, the creater [sic] of such trust may revoke or amend the whole or any part thereof by an instrument in writing acknowledged or proved in like manner, and thereupon the estate of the trustee ceases with respect to any part of such trust property, the disposition of which has been revoked."

Specifically, she declares that: "I hereby revoke and terminate the Trust Agreement and request that a distribution amounting to 50% of its value be made to me" (Def. Affid., par.9). In her view, under Section 7-1.9(a), that statement is sufficient to revoke the Villi Family Trust and return the property to the marital estate, making it subject to her equitable distribution claims.

Certainly, if defendant could obtain the consent to the revocation of that trust from both plaintiff, as the other creator of the Villi Family Trust, and her son, as the beneficiary of the trust, then notwithstanding the language of the Trust Agreement that makes the ROGER SUBTRUST and the MARY-LYNN SUBTRUST (together hereinafter "the Two Sub-trusts"), and the Villi Family Trust, irrevocable, the trust and the Two Sub-trusts would be revoked (see Warren v. Cropsey, 29 AD2d 290 [3d Dept. 1968] [Interpreting former Personal Property Law §23, now EPTL §7-1.9[a]). Here, however, even if her son would consent to the revocation sought by her, and no proof of his intent is offered by her, plaintiff expressly refuses to grant his consent. [*9]Consequently, her unilateral declaration that the Villi Family Trust is revoked is without any effect.

Obviously recognizing the inefficacy of her declaration, defendant asserts that this Court may and should order plaintiff to grant his consent, or in the alternative, should terminate the Villi Family Trust over plaintiff's objection. In support of that request, she relies upon the decision of the Court in Surasi v. Surasi (2001 WL 1607927, 2001 Slip Op. 40408[U] [Sup. Ct. Richmond Co. 2001]). The Court declines the invitation to follow either approach suggested by defendant because her reliance upon Surasi is misplaced and she offers no other support for either remedy.

As explained by the Court in Surasi, during the pendency of the divorce action, while he continued to live in New York, the defendant-husband retained a New Jersey attorney who created a family trust into which the husband placed all of his assets, including the marital residence, his commercial office cooperative unit and another house owned by him. The trust agreement named the parties' children as the beneficiaries of the trust, and although the children had never lived in Virginia, it listed that state as the beneficiaries' place of domicile.

Upon the facts presented in Surasi, the Trial Court found "that the trust created by the defendant a revocable trust which was created in an effort to defeat the plaintiff's rights regarding arrears and equitable distribution" and "is a sham and a fraud upon this court created expressly with the intent to deny the plaintiff's claims to said marital property and to thwart the jurisdiction of this court to make a distributive award" (Surasi v. Surasi, supra). Based upon those findings, that Court concluded "that the trust must be set aside by the defendant or in the alternative by his agent or representative in that all of the property contained therein is located within the jurisdiction of this court and is subject to equitable distribution", and it ordered, inter alia, that "all of the property set forth in the trust ... shall be re-transferred back into the name of the party who held such property before the creation of the trust instrument", or "[i]n the alternative, [that] the trustee on behalf of the defendant, shall directly transfer to the plaintiff title to the marital home ... to comply with the distributive award" rendered by the Court.

As is beyond credible dispute from the mere recital of the facts in Surasi, that case is entirely distinguishable from this matrimonial action. Here, the trust at issue was created years before the commencement of the action, and there is neither any proof nor even any claim that it was established to defeat defendant's equitable distribution rights. Thus, absent here is the creation of a "sham" trust, which was the foundation upon which the Surasi Court granted the remedies of revoking the trust [*10]and ordering the reconveyance of the trust assets.

Because there is no finding of fraud which would support an order revoking the Trust Agreement, and defendant has cited no authority upon which the Court may order the creator of a trust to execute a consent to its revocation, the Court rejects defendant's request to terminate the Villi Family Trust over plaintiff's objection. Accordingly, the Court agrees with plaintiff that the Villi Family Trust and the Two Sub-trusts are irrevocable.[FN9]


Next, defendant contends that, assuming, arguendo, the transfer of the Home to the Villi Family Trust was valid, "it had the effect of transferring a 50% interest in the real property to the Wife's SUBTRUST", which she "terminates and revokes ... with the consent of the beneficiary, her son" (Edelstein Affirm., par.22,25 [emphasis omitted]). Building upon that assertion, defendant argues that "[her son's] consent has the effect of causing a reversion of the 50% interest in the property held by the Wife's subtrust back to the husband's name individually" (id., par.25). Finally, she argues that "[t]he court would then have the discretion to equitably distribute the 50% marital share of the property held by the Husband individually entirely to the [*11]Wife" (id., par.26). This argument is without merit, as it is based upon a misreading of the Trust Agreement.

As set forth in the Trust Agreement, the Trustees hold the trust assets in the Two Subtrusts. Contrary to defendant's view, each subtrust does not hold an undivided one-half interest in the Home which may be transferred to either party. Rather, the use of the Two Subtrusts is simply a means of managing the trust assets, and in particular, addressing the inheritence of those assets upon the death of each party. Consequently, there is no 50% interest which may be reconveyed to plaintiff following a revocation of the MARY-LYNN SUBTRUST, and whose value may then be distributed to defendant as part of a distributive award.

Moreover, since the MARY-LYNN SUBTRUST, like the Villi Family Trust, was created by both parties, as discussed above it cannot be revoked without the consent of defendant's son and plaintiff, in addition to defendant. There being no showing that defendant's son has, in fact, given such consent, and plaintiff having refused to consent, the MARY-LYNN SUBTRUST has not been revoked, and no distribution could be made of any asset held by it for the benefit of defendant's son.


Defendant's final argument is founded upon the management of the affairs of VFLP. It is her contention that neither she nor her son consented to the transfer of the Home from plaintiff to VFLP or from that entity to the Villi Family Trust.

In response, plaintiff alleges that "[d]efendant was always involved in the formation of the limited partnership and the Trust" (Pl. Reply Affid., par.3). Additionally, he maintains that "nowhere [does defendant] indicat[e] why the consent of the limited partners to the receipt of the gift was required" (Fuchs Reply Affirm., par.13). Finally, he claims that "[t]he transfer from the limited partnership to The Villi Family Trust was a valid exercise of the general partner's powers", since "[i]t was done for perfectly valid tax and asset protection purposes, in the interest of all of the partners" (id., par.14).

Limited Liability Company Law §417(a) provides that:

"Subject to the provisions of this chapter, the members of a limited liability company shall adopt a written operating agreement that contains any provisions not inconsistent with law or its articles of organization relating to (i) the business of the limited liability company, (ii) the conduct of its affairs and (iii) the rights, powers, preferences, limitations or responsibilities of its members, managers, employees or agents, as the case may be." [*12]

As has been recognized, "[t]here is no provision in the Limited Liability Company Law imposing any type of penalty or punishment for failing to adopt a written operating agreement", and "[t]he statute does not require an operating agreement prior to the formation of this type of entity" (Matter of Spires v. Lighthouse Solutions, 4 Misc 3d 428,431 [Sup. Ct. Monroe Co. 2004]; Merrell-Benco Agency, LLC, v. HSBC Bank USA, 20 AD3d 605,607 [3d Dept. 2005] [Recognizing that there is "no requirement that an operating agreement be in effect to operate as a limited liability company"]). Rather, "[i]n the event that there is not a formal written Operating Agreement' of the company, or such agreement does not address certain business matters, then there are numerous sections in the statute that set forth default provisions", which "establish the statutory terms imposed on a limited liability company for the operation of the business, the conduct of its affairs, and the rights, powers, and responsibilities of it [sic] members" (Matter of Spires v. Lighthouse Solutions, supra, 4 Misc 3d, at 433,435).

In this case, defendant's challenge to plaintiff's actions in transferring the Home to and from VFLP raises the valid question of whether he had the authority to take either action in behalf of the limited partnership. Significantly, neither party has offered a copy of any operating agreement executed by the three members of VFLP. As a result, the Court cannot determine at this time whether plaintiff was a "manager" of the limited liability company who was authorized to manage its business affairs, or whether management was "vested in its members" (see LLC Law §401[a]). This lack of proof is fatal to plaintiff's present application, because if membership was vested in the members, either by agreement or by the default effect of the statute, plaintiff would have to prove that the requisite meeting and voting was conducted, and that a majority vote supported his transfers of the Home to and from VFLP (see LLC Law §§402,403). Absent such proof, defendant would have a valid claim that the Home was never effectively transferred, and that she is entitled to a distributive share of the value of the Home (cf. Riechers v. Riechers, supra).


For present purposes, a question of fact exists as to the validity of the transfers of the Home into and from VFLP which precludes any determination that the Home is not part of the marital estate in this action. For that reason, plaintiff's motion to vacate the Real Estate Appraisal Order is denied, without prejudice to his claim that the Home is not subject to equitable distribution.

Also denied is plaintiff's application to set the valuation date of the Home as June 4, 1998, the date of its transfer to the Villi Family Trust. Contrary to plaintiff's position, the [*13]valuation date may not be set any earlier than the commencement date of the action (Lipsky v. Lipsky, 276 AD2d 753,753-754 [2d Dept. 2000] ["It is well settled that for the purposes of equitable distribution, the valuation date of marital assets can be set at anytime from the date of commencement of the action to the date of the trial'"], quoting DRL §236[B][4][b]).

However, because the Court has determined that the trusts in issue are irrevocable, it agrees with plaintiff that the neutral appraiser should consider that factor. Accordingly, the Court grants that branch of the motion which seeks modification of the Real Estate Appraisal Order to the extent that a separate order shall issue which shall direct the neutral real estate evaluator to consider the fact that the Home is owned by an irrevocable trust.


On her cross-motion, defendant seeks relief from both of the

appointment orders. Specifically, she requests:

1. A declaration that the Home is marital property; 2. An order directing plaintiff to "revoke and/or terminate" the Villi Family Trust; and 3. A declaration that Defendant's expired real estate license is not subject to equitable distribution and vacat[ur] of the order directing that Defendant's real estate license be valued and appraised". (Notice of Cross-motion, p.2).

Plaintiff opposes the motion in all respects.


On the first branch of her motion, defendant takes the converse position from that of plaintiff in requesting a declaration that the Home is marital property. Like plaintiff's parallel application, this is a partial summary judgment motion. As discussed above, however, there is an issue of fact as to whether the Home was validly transferred to and from VTLC. Consequently, just as plaintiff is not entitled to summary judgment in his favor on this issue, so too is defendant precluded from obtaining that relief. Therefore, this branch of the motion is denied.


Defendant's second application is for an order requiring [*14]plaintiff to either revoke or terminate the Villi Family Trust. In seeking this relief, she relies upon the arguments concerning the Court's authority under Surasi v. Surasi (supra) to direct a party to revoke or terminate a trust as put forth by her in opposition to plaintiff's motion.

Her position notwithstanding, as previously discussed, this Court has determined that there is no evidence that the Villi Family Trust was fraudulently created in order to defeat defendant's equitable distribution rights, such that the Court may order the termination of that trust. Nor, as noted above, has defendant offered any other authority to support the view that a Court may order the creator of a trust to consent to its revocation. Accordingly, this application is also denied.


Finally, defendant moves for a declaration that her expired real estate license is not subject to equitable distribution, and vacatur of the order appointing a neutral financial evaluator to determine the value of her expired real estate license. In her view, there is no basis to evaluate her license because it is an asset which did not exist when the action was commenced. Defendant also contends that the evaluation is not warranted because any argument that the license may be a factor that contributed to her current employment as the President of a real estate management company "is akin to urging this Court to order a valuation of the wife's entire career, because some how the career is a thing of value', notwithstanding the fact that a license expired and is no longer in use" (Edelstein Affirm., par.32 [underlining in original]).

In opposition, plaintiff first claims that at her deposition, "[d]efendant was unable to explain why she wrote [him] a note one year ago indicating that she expected to get commissions for showing properties that week" (Fuchs Reply Affirm., par.19). It is his position that: "Given the fact that Defendant testified that although available to her, she was not interested' in a partnership in the company she runs as president, thus turning her back on a deal that was made during the marriage and that she now supposedly will take a $20,000 cut in her income [] that illusory real estate license may very well be in play'" (ibid.). Summing up his position, plaintiff maintains that: "Herein the evidence adduced so far shows that the Defendant has reached her level of success and the license cannot be discounted at this stage as a factor in that success" (id., par.23).

Like the parties' applications for a determination whether or not the Home is marital property, this request by defendant is one which constitutes a partial summary judgment motion (see Hougie v. Hougie, supra, 261 AD2d, at 161). Thus, defendant may obtain the relief sought only if there is no factual issue that [*15]must be resolved at a trial of the action (see id.).

Here, the proof submitted by plaintiff concerning defendant's expected receipt of commissions for showing real property, her rise to President of her company and her receipt of an offer of a partnership interest in that entity all support his view that there has been an enhancement of her earning capacity as a result of her obtaining the real estate license during the parties' marriage, and warrants a valuation of her license to determine the extent of that income enhancement (see Hougie v. Hougie, supra, 261 AD2d, at 162 [Series 7 securities license obtained during marriage should be taken into account in determining party's enhanced earning capacity]; cf. Spence v. Spence, 287 AD2d 447,448 [2d Dept. 2001], lv. dismissed 97 NY2d 725 [2002] [Holding that "[t]he husband's enhanced earning capacity as an investment banker [wa]s not marital property subject to equitable distribution" where he "earned his MBA, Series 7 license, and Series 63 license four years before the marriage", so that "his increased earning capacity [wa]s not attributable to a professional license or degree acquired during the marriage"]). Whether any such increased earning capacity has actually resulted is a question of fact which cannot be determined on the basis of the papers submitted on this motion. For

that reason, this application is denied, and the valuation shall proceed as ordered.

The foregoing shall constitute the decision and order of the Court.

Dated: White Plains, New York

December 16, 2005


cc:Charna L. Fuchs, Esq.

Faust, Roy, Mangold & Fuchs LLP

1 North Lexington Avenue

White Plains, New York 10601

Adam Edelstein, Esq.

The Edelsteins, Faegenburg & Brown

26 Court Street

Brooklyn, New York 11242 Footnotes

Footnote 1: Russell Villi and Philip Villi are one of plaintiff's brothers and plaintiff's father, respectively.

Footnote 2: The Trust Agreement defines "Beneficiaries" as "the heirs of the Grantors, or any one of them, other than a Spouse" (Pl. Affid., Exh.C, p.1 [emphasis added]). Clearly, this excludes either party from being a beneficiary of the trust.

Footnote 3: "Trust Property" is defined as "the property in the Trust at any given time" (Pl. Affid., Exh.C, p.2).

Footnote 4: The Trust Agreement defines "Residential Property" as "any property or property interest owned by this Trust which is used or employed as a residence by the Grantors or either of them during the term of this Trust" (Pl. Affid., Exh.C, p.2).

Footnote 5: On June 23, 2005 the Court issued an order (the first appointment order) appointing a neutral financial evaluator (the Neutral Financial) to evaluate plaintiff's medical degree and its enhanced value. Based upon correspondence later sent to the Court by the parties, on July 14, 2005 it issued an order modifying the first appointment order (the Modification Order). That order directed the Neutral Financial to determine the value of plaintiff's medical license, rather than his medical degree, and to determine the value of defendant's real estate license. It is only the latter aspect of the Modification Order that is challenged by defendant on her motion.

Footnote 6: The following papers numbered 1 to 25 were read on these cross-motions. PAPERS NUMBERED Order to Show Cause/Affirmation/Affidavit (Plaintiff) 1-3 Notice of Cross-motion/Affirmation/Affidavit (Defendant) 7-9 Reply Affirmation/Affidavit (Plaintiff) 15-16 Reply Affirmation/Affidavit (Defendant) 24-25 Exhibits 4-6,10-14,17-23

Footnote 7: Plaintiff states that: "It was my intention to protect [my step-son's] interests as I planned on being married for my lifetime to his mother and remaining in the house pursuant to the terms of the Trust" (Pl. Affid., par.4). Defendant, however, maintains that she "sign[ed] over our property to the Family Trust ... because my Husband told me it was a way of protecting and preserving our assets and because I trusted and loved him" (Def. Affid., par.9).

Footnote 8: The modification involved only the amount of the distributive award granted to the wife in Riechers. But obviously seeking to bolster her argument, defendant's counsel notes that "[t]he Court of Appeals declined to hear the matter and denied leave" (ibid). Although the Appellate Division recognized the Trial Court's authority to distribute the value of the assets used to create the trust in that case, the denial of leave by the Court of Appeals is without any additional controlling effect because it is settled law that the "denial of a motion for leave to appeal is not equivalent to an affirmance and has no precedential value" (Matter of Calandra v. Rothwax, 65 NY2d 897 [1985]).

Footnote 9: In the complaint filed by plaintiff in this action, he sought exclusive use and occupancy of the Home as one of his requests for relief. Relying upon that request, defendant argues that if plaintiff wants exclusive use and occupancy of the Home, he must either refinance the underlying mortgage on the property and pay a distributive award to her, or he must terminate the trust and sell the property. In response, plaintiff has withdrawn his request for exclusive use and occupancy and offers to share the Home with her for life, if she wishes, pursuant to their rights to reside in the home in their lifetimes. Based upon plaintiff's withdrawal of his demand for exclusive use and occupancy, neither of the approaches urged by defendant need be followed. Nor must the Court determine the value of the right to reside in the Home and award an equitable distribution share of that value to defendant, because upon the conclusion that the Villi Family Trust is not revocable, this Court may not rewrite the Trust Agreement by granting her the financial equivalent of the right to occupy the Home for life, since the only benefit that either party receives under the Trust Agreement is the right to reside in the Home, and plaintiff is not preventing defendant from exercising that right. If defendant opts not to reside in the Home, that choice will constitute a waiver of the only benefit that either party is entitled to receive under the Trust Agreement.