David E. v Donna E.

[*1] David E. v Donna E. 2007 NY Slip Op 52338(U) [17 Misc 3d 1138(A)] Decided on November 15, 2007 Supreme Court, Nassau County Falanga, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on November 15, 2007
Supreme Court, Nassau County

David E., Plaintiff

against

Donna E., Defendant



xx/07

Anthony J. Falanga, J.

This is a motion by the wife for an order 1) adjudging the husband in contempt; 2) awarding her a money judgment for accrued arrears; 3) directing the husband to provide proof of insurance on his life and 4) awarding her counsel fees for costs incurred incident to the instant motion. The husband cross moves for an order 1) granting him a downward modification of his obligation to pay child support and 2) directing the immediate sale of the marital residence.

The parties were married on October 23, 1989. There are two children of the marriage, born July 9, 1991 and April 20, 1995. On February 14, 2005, the parties placed a stipulation on the record in open court. Said stipulation was so-ordered by the undersigned Justice on February 18, 2005. The stipulation provides in relevant part as follows: the parties will file a stipulation of discontinuance in the Office of the Nassau County Clerk; the husband will assume responsibility for approximately $27,000.00 in marital debt; the wife was awarded ownership of the personalty in the marital residence; the parties waived any interest in the other's retirement assets; the husband agreed to take all steps necessary to secure the discontinuance of a pending mortgage foreclosure action on the marital residence; the parties agreed to execute certain notes and mortgages to secure certain loans [ a mortgage in the sum of $43,334.00 in favor of S. T. and a mortgage in the sum of $28,000.00 in favor of Y. E.]; the husband is required to make installment interest payments on said notes; the husband is required to pay $350.00 a month for three years to S. T. to cover the cost of the wife's car lease payments; the wife was awarded exclusive use and occupancy of the marital residence until the parties' youngest child graduated from high school; the proceeds of sale are to be divided equally by the parties; the wife has the right of first refusal; during the period of the wife's exclusive occupancy, the husband shall pay certain carrying charges and repairs; the parties agreed to sell their cooperative apartment in Queens; the wife was awarded residential custody of the children; the husband was required to pay child support of $3000.00 a month for twelve months and $2500.00 a month for twelve months thereafter, $2000.00 a month in years three and four, $1750.00 a month in year five, $3500.00 for three years thereafter and then $2000.00 a month; this child support obligation during years six, seven and eight was to be satisfied by payment of the first mortgage and equity [*2]loan on the marital residence; the husband agreed to maintain health insurance and pay 100% of the children's uncovered health expenses; he is required to pay $10,000.00 a year for camp and certain tutoring expenses; and the husband is required to maintain life insurance in the sum of $400,000.00 The stipulation recites that the husband's income was $80,000.00 a year gross but that he had the ability to earn a greater amount.

In support of her instant application, the wife alleges as follows: a foreclosure action regarding the marital residence was commenced on July 9, 2007; the husband owes installments on the mortgage and note due S. T. of $6157.04; the husband has failed to effectuate necessary repairs to the bathrooms; and the husband has failed to make timely payments to S. T. of $350.00 a month for the wife's car lease and owes arrears of $700.00; and the husband has failed to provide proof of life insurance coverage.

In opposition to the wife's motion and in support of his cross motion, the husband states that the wife has not met the requirements of DRL 245; his failure to comply with the stipulation dated February 18, 2005 was not wilful; he is not in arrears on payments for the wife's car lease; his income is $98,800.00 a year gross; the jewelry store he was managing for his brother burned down in April 2007 and he is now managing a sneaker store owned by his brother; he has depleted the proceeds from the sale of the parties' cooperative apartment; and he never paid the interest on the notes due S. T.. The Court notes that according to a single pay stub presented by the husband, it appears that as of October 7, 2007, he had been employed as the manager of the sneaker store for about thirteen weeks prior to said date. It is unclear whether the husband was paid by his brother from the date the jewelry store burned down until he went to work in the sneaker store. The husband has not provided any information to the Court in this regard. He has not set forth any efforts he made to obtain employment commensurate with his contractually agreed upon "ability to earn." He has not provided an affidavit from his brother/employer setting forth the basis for the husband's salary.

Based upon all of the foregoing, the motions are decided as follows:

The law is well settled that until a lawsuit is terminated by the filing of a stipulation of discontinuance or the entry of judgment, a court retains its supervisory power to entertain a motion to enforce or modify a stipulation settling the lawsuit or to set aside said stipulation (see, Teitelbaum Holdings, Ltd. v Gold, 48 NY2d 51; Greyston Found. Inc. v Nationwide Ins. Co., 288 AD2d 438; M & B Equities,L.L.C. v Parkway Gardens Owners, Inc. 286 AD2d 755; Arguelles v Arguelles, 251 AD2d 611; Zeppelin v Zeppelin, 245 AD2d 504). In the instant action, although the parties' stipulation provided for the filing of a stipulation of discontinuance, there is no proof that same was ever filed. Accordingly, the Court has jurisdiction to entertain the instant motions. The Court notes that where an action had been discontinued, "...it is as if it had never been; everything in the action is annulled and all prior orders in the case are nullified "(Newar v Newar, 245 AD2d 353) (but see, Fotiadis v Fotiadis, 18 AD3d 699, holding payee entitled to money judgment for pendente lite arrears accrued prior to discontinuance). If a stipulation of discontinuance had been filed, the stipulation dated February 14, 2005 would have survived as a [*3]contract enforceable by means of a plenary action, but the so-ordered stipulation would have been a nullity and neither a contempt nor modification motion would be viable. The Court is cognizant of the practice by the matrimonial bar of obtaining so-ordered stipulations and then discontinuing divorce actions and has commented previously on the resulting divestiture of jurisdiction (see, John G. v Lois G., 11 Misc 3d 1060(A), 815 NYS2d 494).

With regard to the support provisions of a so-ordered stipulation, the party seeking modification has the burden of establishing an "unanticipated and unreasonable change in circumstances" (Brescia v Fitts, 56 NY2d 132; Yepes v Fichera, 230 AD2d 803; Epel v Epel, 139 AD2d 488). In the case at bar, the stipulation unequivocally states that the parties elected to deviate from child support guidelines on the ground that the husband "...has an ability to earn an amount greater than..." his reported income of $80,000.00 a year.

In determining the husband's cross motion, the fact that his income was set forth in the parties' stipulation to be in an unspecified amount greater than his reported income raises unique issues. As the support provisions herein are based on imputed income in an unspecified amount, it follows that in order to demonstrate "unanticipated and unreasonable change of circumstance" sufficient to warrant a downward modification, the husband was obligated to allege, not that his income has decreased, but rather, that his imputed income, his "ability to earn," has been unexpectedly and involuntarily reduced since the date of the stipulation. Allegations of a reduction in actual income are insufficient to support an application for a downward modification, as a matter of law, where contractual support obligations are based on a payor's "ability to earn" rather than on his or her actual income at the time of the execution of such contract (see, Anonymous SR v Anonymous GR, 17 Misc 3d 1116[A]). (In fact, the husband states that he is currently earning almost $20,000.00 a year more at the present time than his reported income as of the date of the stipulation).

While an event such as a substantial physical impairment or disability could present sufficient grounds to warrant a downward modification of a payor's support obligations (see. e.g., Bukovinsky v Bukovinsky, 299 AD2d 786), in the case at bar, the husband's alleged change of managerial positions and the annual increase in his reported remuneration of $20,000.00 a year does not, as a matter of law, constitute a substantial, unanticipated, unreasonable reduction in his "ability to earn." (The Court further notes that the husband's instant application is not supported by a current affidavit of net worth).

The law is well settled that imputed income is determined, in part, upon a party's past earnings, actual earnings, capacity to earn and educational background (see, Morrissey v Morrissey, 259 AD2d 472; Zwick v Zwick, 226 AD2d 734). A payor's obligation to pay support is not determined by his or her existing financial circumstances, but rather, by the ability to provide support (see, Ellenbogen v Ellenbogen, 6 AD3d 1026; Matter of Bouchard v Bouchard, 263 Ad2d 714; Matter of Lutsic v Lutsic, 245 AD2d 637). Here, the husband stipulated on February 14, 2005 that he had the "ability to earn" sufficient sums in excess of $80,000.00 a year to enable him to pay the contractual obligations set forth at length above, which he calculates [*4]total $6243.99 a month, not including uncovered health expenses, camp or tutoring. Clearly then, pursuant to the stipulation, the husband agreed that he had the ability to earn sufficient income to pay over $84,000.00 a year on behalf of the wife and children, and to pay the cost of his own necessaries, and he has failed to allege that he has sustained any unanticipated, unreasonable, substantial change in his "ability to earn."

Further, he has failed to demonstrate that he made diligent efforts to seek employment commensurate with his qualifications and experience (see, D'Altilio v D'Altilio, 14 AD3d 701, Douglas v Douglas, 7 AD3d 481; Beard v Beard, supra; Kefeli v Kefeli, 270 AD2d 490; Matter of Dallin v Dallin, 250 AD2d 847; Matter of Heverin v Sackel, 239 AD2d 418; Yepes v Fichera, supra; Matter of Davis v Davis, 197 AD2d 622). In reality, the husband appears to be arguing that both at the present time, and on February 14, 2005, the date of the stipulation, he lacked the ability to earn sufficient sums to meet his contractual financial obligations. He has not, however, commenced a plenary action to set aside said stipulation, and the Court is bound to enforce the agreement unless and until it is set aside.

A party is entitled to a hearing on an application for a downward modification only where he or she demonstrates that there are genuine issues of fact requiring a hearing. In the case at bar, the husband has failed to meet this obligation. Accordingly, his cross motion for a downward modification and for an order directing the sale of the former marital residence is denied in all respects.

The denial of the husband's application for a downward modification is not determinative of the wife's application for an order holding him in contempt. With regard to his cross motion for affirmative relief, the husband had the burden of demonstrating prima facie that there were genuine issues of fact with regard to a claim that he had sustained an unanticipated and unreasonable change in his "ability to earn". His failure to meet this burden resulted in nothing more than the denial of his motion on the ground that same was facially deficient. Where however, a party is subject to various sanctions, including up to six months incarceration, an affidavit filed in opposition to an application seeking a contempt adjudication should be liberally construed and drafting deficiencies should not bar the defense of such application.

To sustain a finding of civil contempt based upon a violation of a court order, a movant must demonstrate the existence of an unequivocal mandate (see, Kawar v Kawar, 231 AD2d 681; Graham v Graham, 152 AD2d 653, 654) and must establish a violation thereof by clear and convincing proof (see, Bickwid v Deutsch, 229 AD2d 533; Bulow v Bulow, 121 AD2d 423). There also must be a finding that the conduct complained of was calculated to or actually did defeat, impair or prejudice the rights or remedies of a party to a civil proceeding (see, Barkan v Barkan, 271 AD2d 466; Farkas v Farkas, 209 AD2d 316 appeal dismissed 81 NY2d 783).

Further, pursuant to DRL 245, before a defaulting party can be held in contempt for the non-payment of a sum of money, it must appear "presumptively, to the satisfaction of the Court", that payment cannot be enforced pursuant to DRL 243 (sequestration), DRL 244 (money judgment), CPLR 5241 (income execution) or CPLR 5242 (income deduction) (see, Higbie v [*5]Higbie, 260 AD2d 603; Snow v Snow, 209 AD2d 399; Wiggins v Wiggins, 121 AD2d 534).

Once a movant establishes the knowing violation of a clear mandate which impaired the movant's rights or remedies, and the movant demonstrates that resort to other means of enforcement would be futile, the burden then shifts to the defaulting party to demonstrate that the default was not willful by the presentation of evidence that he or she was financially unable to make the payments required by the order in issue (see, Matter of Powers v Powers, 86 NY2d 632; Bickwid v Deutsch, supra; Aron v Aron, 140 AD2d 697). On the issue of contempt, courts focus on whether the failure to meet the support obligation was "willful" (Doty v Doty, 262 AD2d 349).

In the case at bar, it is uncontroverted that the husband had knowledge of the so-ordered stipulation dated February 18, 2005 and he is in default thereunder. Further, as the former marital residence is in foreclosure, and as the husband has failed to provide an affidavit of net worth, and as an income execution against the husband's reported income would be insufficient to enforce the so-ordered stipulation, the wife has satisfied the requirements of DRL 245. In addition, it is clear that the husband's default has impaired and prejudiced the wife's rights. Accordingly, the burden has shifted to the husband to prove that during the period of his default, he lacked the ability to comply with the so-ordered stipulation.

As with the husband's application for a downward modification, the determination of a contempt application has unique issues in a case where the payor spouse's financial obligations are based upon a contractually agreed upon ability to pay same. What standard of proof must the husband meet to prove that his default of the stipulation was not wilful?

On February 14, 2005, the husband stipulated that he had the "ability to earn" income sufficient to pay the support obligations imposed by the parties' stipulation totaling over $84,000.00 a year. What if the he had failed to make a single payment of support subsequent to February 2005? Could he have come to the Court in March or April 2005 with the defense to a contempt application that he lacked the financial ability to comply with the so-ordered stipulation? If the so- ordered stipulation is to be of some value beyond the paper on which it was transcribed, the Court must answer this question with a resounding, "no." A party to such stipulation may not, with impunity, agree to pay support based on imputed income. A stipulation that relies on the use of imputed income or "ability to earn," often resolves a divorce action without court scrutiny of the parties' respective financial circumstances or full disclosure. Clearly, a payee spouse must be afforded the right to enforce the provision of a so-ordered stipulation relating to imputed income and the Court is obligated to enforce such stipulation, according to its terms, particularly where the only viable means of enforcement is contempt. Accordingly, having agreed on February 14, 2005 that he had the ability to comply with the terms of the stipulation, the husband can defend against the wife's instant application for contempt only by proof that he has sustained an involuntary, unanticipated diminution in his ability to earn. Although his papers submitted herein failed to allege such change in circumstance with sufficient particularity to support his cross motion seeking affirmative relief, the Court will permit the [*6]husband to adduce proof at a hearing, that he has suffered an involuntary, unanticipated and unreasonable change in his "ability to earn" since February 14, 2005 rendering him incapable of complying with the so-ordered stipulation.

It is clear to the Court, that to a certain extent, the husband's default herein was wilful.

According to the husband, he earns $5185.50 a month net ($1205.93 a week times 4.3). Yet he has paid only $2350.00 on behalf of the wife and children since April 2007, leaving himself $2835.50 per month ($34,026.00 net a year) for his own expenses. Based solely on his actual reported income, without even considering his "ability to earn," the husband had the means to pay sums on behalf of the wife and children in excess of $2350.00 a month and his failure to do so was wilful as a matter of law. However, on this record, the Court is unable to ascertain the husband's "ability to earn" between April 2007 to the present, and accordingly is unable to ascertain to what extent accrued arrears are the result of a wilful default.

The wife's application for an order adjudging the husband in contempt will be set down for a hearing. At the hearing, the wife will be required to provide testimony and or other proof to establish the amount of arrears owed by the husband. She will be entitled to a money judgment for same. She will be awarded interest at the statutory rate on the money judgment to the extent that the Court finds that the husband's default was wilful. Once the wife establishes the amount of arrears, the burden will be on the husband to prove the extent, if any, to which his default was the result of an involuntary, unanticipated and unreasonable change in his ability to earn since February 14, 2005 rendering him incapable of complying with the so-ordered stipulation.

This constitutes the decision and order of the Court. The parties and counsel shall appear for a hearing on December 6, 2007 at 9:30a.m. on the wife's application for an order adjudging the husband in contempt, awarding her a money judgment for arrears and granting her counsel fees.

E N T E R:

___________________________

Anthony J. Falanga, Justice

Supreme Court, Nassau County

Dated: November 15, 2007

Mineola, NY