G.R.P. v L.B.P.

[*1] G.R.P. v L.B.P. 2014 NY Slip Op 51782(U) Decided on December 15, 2014 Supreme Court, Monroe County Dollinger, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 15, 2014
Supreme Court, Monroe County

G.R.P., Plaintiff, - vs -

against

L.B.P., Defendant.



E. P. Plaintiff, -vs-

against

G.R.P., L.B.P, S.N.P & CAPITAL ONE BANK (USA) N.A., Defendants.



S.N.P. ASSOCIATES RETIREMENT PLAN, INC. Plaintiff, -vs-

against

G.R.P., L.B.P, S.N.P & CAPITAL ONE BANK (USA) N.A., Defendants.



2011-08834



APPEARANCES:Gregory Mott, Esq.

Davidson & Fink LLP

Rochester, NY

Attorney for Plaintiff Husband

Charles Inclima, Esq.

Rochester, NY

Attorney for Defendant Wife

Carolyn Nussbaum, Esq.

Nixon Peabody LLP

Rochester, NY

Attorney for the Third-Party defendants

S.N.P. ASSOCIATES RETIREMENT PLAN, INC., and S.N.P. and the foreclosing plaintiff E.P.
Richard A. Dollinger, J.

In this application, the husband seeks to terminate spousal maintenance and modify his child support downward. This court, having twice written on the topics raised in this divorce, is taking a more truncated approach in response to this application. See G.R.P. v L.B.P., 41 Misc 3d 1233 (A) (Sup. Ct. Monroe Cty. 2013) ("GRP I"); G.R.P. v L.B.P., 36 Misc 3d 1217 (A) (Sup. Ct. Monroe Cty. 2012) ("GRP II").

In seeking a downward modification, the husband claims that, in contrast to the circumstances when this court first assessed child support and maintenance, he has not received any gifts from his parents during the last three years. (In the initial review of the husband's income, this court imputed a significant sum to him based on annual gifts from the parents.) In the absence of these intra-family gifts, the husband now claims that his current income is much less. Furthermore, he claims that the payment of child support and maintenance obligations have depleted his own resources, eating into his retirement and accumulated wealth. Finally, the husband notes that his oldest son is now over age twenty-one. The wife opposes the majority of the husband's application, but seeks no substantive affirmative relief.[FN1] However, her attorney, noting the substantial costs for defending the matrimonial action - and the related-foreclosure actions - seeks permission to withdraw as the wife's counsel or, in the alternative, an award of legal fees.

As a preface, this court notes that the plaintiff husband takes an unusual approach to seeking modification of his support obligations. He makes outlandish allegations against his wife's character - which have nothing to do with his requested modification - and gives short shrift to changes in his own income and earnings potential, which is the focus of any legal request for a downward modification of support obligations. Matter of O'Gorman v [*2]O'Gorman, 2014 NY Slip Op 07666 (2nd Dept. 2014) (substantial increase in the father's income, plus the mother's evidence of specific increased expenses related to the parties' children, warranted an upward modification of the father's child support obligation based upon a substantial change in circumstances); Matter of Boatman v. Boatman, 113 AD3d 951 (3rd Dept. 2014) (maintenance obligation may be changed upon a showing of a substantial change in circumstances). For example, the husband challenges his wife's lifestyle, rather than focusing on his own changed lifestyle after commencement of this action. He suggests that the only "behavior continuing in this case" is that his wife "is financially irresponsible." There is no evidence of any financial irresponsibility on the part of the wife - no evidence of expensive trips, spendthrift habits or similar conduct. Even when the facts of this application are most liberally interpreted in favor of the husband, the only substantial expense incurred by the wife during the pendency of this action is that she has incurred substantial legal fees to protect her claims to distribution of the marital estate. These legal fees were generated because of the husband's and his parents' aggressive litigation stance on the issues of the validity of the loans or gifts related to the marital residence. See GRP II, supra. The wife's accumulation of these excessive fees while defending her marital assets can hardly be labeled "irresponsible." In addition, the husband claims at one point, under oath, that the payment of spousal maintenance "propped up his wife's social life and lifestyle" and allows his wife "to keep on drinking." He offers no evidence to support these allegations, which, without any proof, are worthy only of a character assassin. At another point, the husband claims, in an off-hand comment, that his wife spent his children's college education funds on a "failed clothing business." He offers no proof of that comment either, instead disingenuously suggesting "the court should inquire why" the wife spent the child's education account. In the absence of even a hint of supporting evidence, the court declines to undertake such an inquiry, and instead casts the allegations back as a reflection of the husband's lack of veracity and undistinguished character.

As a result, this court looks somewhat askance at the husband's claim that he is entitled to a modification in his support obligations. With respect to the alleged reduction in the husband's income, this court repeats what it articulated at oral argument and in its earlier opinions in this case. The husband's income, in the original calculation of child support and maintenance, was based on an analysis of the family's expenses. See GRP I supra. The court estimated, based on sworn statements of net worth, how much the family was spending annually. The court then reasoned that the expenses were covered by the husband's modest salary and an outside source, which was reasoned to be the husband's parents. The husband admitted to receiving annual cash gifts from his parents, but disputed the amount. Given the admitted actual expenses as found by the court and the couple's lifestyle, the court's determination to include the grandparent's generous gifts into the husband's income for purposes of calculating his support obligations was never appealed and remains the law of the case. Martin v. Cohoes, 37 NY2d 162, 165 (1975).

In his application to this court, the husband makes no attempt to suggest that his lifestyle - which was the main source of the court's estimate of his income - has changed or been drastically reduced since the date of the temporary order. A brief review of the husband's financial affidavit does little to justify his factual allegations of a substantial change in his lifestyle or financial condition since the commencement of this action. He [*3]lists $3,785.25 in monthly expenses, but nearly all of them are paid by his parents. They pay for the bank mortgage ($1,738.55), medical insurance ($821.70), his car, and vacations. In his statement of net worth, the husband lists no current debts, other than those associated with his house and car. In that regard, there has been no change in the husband's daily financial circumstances since the court granted the initial application: he is dependent on his parents for virtually all of his financial needs.

The husband does claim that his interests in certain reserve accounts have been drastically reduced because he has used them to pay maintenance and child support. The accounts and their activity are mysterious, to say the least. In 2013, the husband withdrew $29,260 from these accounts, even though his support obligations totaled more than $48,000. In 2014, he withdrew more than $208,000. His affidavit before the court indicates that a substantial portion of this amount was used to pay creditors most significantly debts he owed his parents. Now, having repaid his parents - who shower him with gifts - he claims he cannot afford to pay his on-going obligations to his wife and children.[FN2] One observation is irrefutable: the husband is electing to use his separate property to favor his parents, as creditors, over his children and his wife. Under these circumstances, his hardship is caused by repaying his parents intra-family loans rather than paying to support his children and wife. The court declines to countenance this self-made poverty as a basis for modifying the husband's support obligations.

The court also declines to credit the husband's comment that his reported taxable income "represents his true earning capacity." There is no evidence that he has sought any employment during the years that this matter has been pending. Angel v O'Neill, 114 AD3d 486 (1st Dept. 2014). He has produced no resumes, applications, evidence of interviews, evidence of job searches - the type of evidence that usually substantiates a "diligent job search." Matter of Freedman v Horike, 68 AD3d 1205, 1206 (3rd Dept. 2009); Matter of Virginia S. v. Thomas S., 58 AD3d 441,443 (1st Dept. 2009) (no evidence of job search in the absence of documentation such as a resume, job applications, or a job search diary); M.M. v T.M., 35 Misc 3d 1231 (A) (Sup. Ct. Monroe Cty. 2012). There is no evidence that he has sought employment counseling or sought retraining to increase his income. In short, there is no evidence that his current income represents his "earning capacity." In this court's view, nothing has changed from the time this court first opined on the incomes - earnings and gifts - available to the husband. The husband's request for modification of his support obligation is denied.

During oral arguments on the various applications pending, the court expressed an opinion regarding the husband's use of the accounts to repay certain debts to his family members. The court, somewhat frustrated with the status of this case and its extended and expensive past, commented that the funds, utilized to repay these inter-family loans, should be returned to the husband. This court, in reflection, concludes that it lacks the authority to order the return of these funds. The wife, in her application to the court and [*4]in responsive papers, never requested this court to rule on the appropriateness of these transactions under the automatic orders issued at the time of the commencement of this action or, for that matter, under any other legal theory. The court will refrain from offering any advisory opinions regarding whether the funds were improperly removed from the marital estate or whether they should be returned.

With respect to the payment of health insurance, the husband argues that the wife has failed to pay her pro rata share of the children's health insurance costs or any unreimbursed medical or dental expenses. In a prior decision, this court ordered that the wife pay 25% of the "add-on" expenses for the children. GRP I. The court stated that the payments would be retroactive "with credits for any interim payments by the husband." Id. By using the phrase, "payments by the husband," this court intended that the obligation to reimburse these expenses would only arise if the husband paid the "add-on" expenses. This interpretation is consistent with the notion that if one parent contributes, out of pocket, to the costs of health insurance, then both should, based on their respective incomes. Beroza v Hendler, 109 AD3d 498, 500 (2nd Dept. 2013); Pistilli v. Pistilli, 53 AD3d 1138 (4th Dept. 2008). Here, it is undisputed that the husband's father pays the health insurance and unreimbursed expenses for his son and his grandchildren. The payment can only be characterized as a further gift to the husband and his family. The husband's father is not under any order to pay health insurance. In the absence of any direct evidence that the husband is paying the health insurance from his own funds - even if those funds are gifted to him by his father - the wife has no obligation to reimburse him any sums for the payment of health insurance. To do otherwise would be inconsistent with the court's prior determination and convert the wife's obligation to pay health insurance costs incurred by the children into a gift from the wife. The husband's request for an order requiring the wife to pay her proportionate share of the unreimbursed health insurance costs is denied.

The wife is entitled to an award of legal fees from the husband. An award of interim attorney's fees pursuant to Domestic Relations Law § 237 (a) is a matter within the sound discretion of the trial court. DeCabrera v. Cabrera-Rosete, 70 NY2d 879 (1987)). Awarding interim attorney fees "is controlled by the equities and circumstances of each particular case." Patete v Rodriguez, 109 AD3d 595, 599 (2nd Dept. 2013). In determining whether to award fees, the court should review the financial circumstances of the case, which may include the relative merit of the parties' positions, and whether either party has engaged in conduct or taken positions resulting in a delay of the proceedings or unnecessary litigation. Id. In 2010, the legislature made the command for an award of fees even more compelling, creating a presumption in favor of a lesser-moneyed spouse during the pendency of divorce actions. Clements v Clements, 43 Misc 3d 1211 (A), p. 29-30 (Sup. Ct. Monroe Cty. 2014) (summarizing the legislative intent to "[B]etter address today's economic and social realities and will help insure that no party to a matrimonial case is strategically at a disadvantage for want of resources to pursue or defend the case").[FN3]

In this case, the wife has expended substantial fees in seeking to protect one of the couple's major marital assets: the martial home (owned by the husband, wife, and, in part, by the husband's father). When the husband's parents, after commencement of the [*5]divorce action and after not requesting payments for years, threatened to demand payment of the mortgages or foreclose on the marital residence, the wife brought an action to invalidate the mortgages as liens against her marital interest in the property. The wife's action was unmistakenly motivated by a desire to protect the couple's interest in the marital home.

In this case, the court, in considering the first aspect justifying an award of fees, cannot ignore the support of the husband's family to their son. It is laudable that parents support their 54-year-old son and his children. At first blush, the husband has only slightly more resources than his wife, but when considering the equities that attend this case, it is readily apparent that this matrimonial action is not a dispute between the husband and wife. It is a dispute between the wife and her father-in-law over her claims for equitable distribution of the marital estate. It has never been disputed that the husband's father has substantial assets. It would be grossly unfair, unjust, and inequitable for this court to close its eyes to what is really happening in this case: the husband's father is financing litigation against his daughter-in-law to diminish claims that she has to equitable distribution of the marital residence, and to diminish his son's obligations to pay mandated child support and maintenance. As noted earlier, there is no evidence that the husband has paid a penny in legal fees through his own resources. He has stood aside and allowed his father to push the mortgage foreclosures and acceded to his father's claim - never made before this litigation - that the husband and his wife always intended to repay the debt. This despite the fact that the couple has never had income sufficient to repay even the interest, much less the principal, on these mortgages. It is an easy leap, justified by nothing other than common sense, to conclude that the husband is complicit in his father's desire to shortchange his wife of her marital share of the house. Therefore, under the first factor to consider in awarding fees, the husband's family's perpetual support warrants an interim award of fees.

The "merits of the parties' positions" similarly justifies an award of fees. Odermatt v. Odermatt, 119 AD3d 754 (2nd Dept. 2014). In considering this aspect of the requested relief, the court notes that the husband's father's attorney filed an affidavit opposing the award of legal fees, arguing that the fees, to the extent that they arise in the foreclosure-related actions, are unjustified. The father-in-law's attorney argues that the wife's representation in the foreclosure actions "has no relevance to the consideration of any award of fees on an interim or other basis." This court concedes that there is no basis on which to charge the husband's parents for any legal expenses incurred by the wife in defending the marital residence from the intra-family gifts that the parents argue are enforceable mortgages. This court has no intention of charging the husband's parents for the wife's fees in the foreclosure action. The only party against whom fees can be assessed under Section 237 (a) is the husband and, in considering his ability to pay, this court, as noted above, can consider the parent's support of their son. In this case, the wife has the "meritorious" position regarding the marital estate. By defending the mortgage foreclosure actions or, as she was all-but required to do, and initiating an action to declare the mortgages unenforceable, the wife was acting in the best interests of the marital estate. She was protecting a marital asset from an unwarranted debt, that if enforced, would reduce the marital estate. This circumstance warrants an interim award of legal fees under the provisions of the Domestic Relations Law. This court is especially mindful that any [*6]award of legal fees will, as with all other costs and expenses in this case, likely not be paid from funds that the husband earned or had at the time of the commencement of the action. This award of legal fees will, in all likelihood, be paid by the husband's father. But, it is the husband, who conceded to his father's demand that these gifts become liens enforceable against his daughter-in-law's marital interest in the property and who is complicit as a matter of law in not defending a marital asset. Because his wife is seeking to preserve their joint marital interest in the house, she is acting in the best interests of the marital estate and her fees should be paid by her husband as a matter of equity under the Domestic Relations Law.

Finally, this court, in considering a fee award, must consider the conduct of the litigants and whether positions taken by them have delayed this divorce action. McMahon v McMahon, 120 AD3d 1316 (2nd Dept. 2014). In this regard, the husband argues that his wife has refused to be deposed, and avoided further discovery, delaying resolution of the matter. However, the court notes that the wife has never violated a court order for disclosure, and there is no pending application to hold her in contempt or compel discovery. In addition, there is little need for any disclosure on any of the equitable distribution issues, other than whether the mortgages are gifts or loans. The later dispute - arising when the parents elected to demand payment on these loans after a decade of non-payment - is what has caused the delays in this action. This action, from its first conference with the court, depended on resolution of the mortgage issue, which would determine the wife's equitable share of marital residence. See GRP II, supra. This court declines to suggest that the wife, by seeking to defend her marital interest in the marital residence, has delayed the proceedings or caused unnecessary litigation. Similarly, while this court questions the motives of the husband in siding with his father against his wife and children, it declines to conclude that his conduct has caused unnecessary litigation. Neither party, by advocating their legal positions on the alleged mortgages, have acted in a manner to result in "unnecessary litigation."

The court awards the wife $20,000 in additional fees to be paid by the husband within 30 days of this order. Furthermore, the court considers this award to be appropriate regardless of the outcome of the appeal pending before the Appellate Division, Fourth Department. Even if the court's prior determination is overturned, nonetheless, the spirit of DRL § 237(a) and its presumption that legal fees should be awarded to the less-moneyed party should not leave a spouse, who is defending the marital asset in good faith with a reasoned justification, without the resources to be heard or sadly, have her voice reduced to a whimper through less-experienced counsel or, worse yet, end in virtual silence if she is reduced to representing herself. As one court noted:

When a wife's expected attorneys' fees will exhaust a large portion of her finite resources, while her husband will be able to pay his ongoing attorneys' fees without substantial impact on his estate, the court should not limit itself to inquiry into whether the wife is able to pay her attorney with the funds then in her possession.

Charpie v. Charpie, 271 AD2d 169 (1st Dept. 2000). Section 237 (a), as amended in 2010, is not a prevailing party statute. It is not designed to reward who "wins;" it is designed to give both sides a fighting chance. Bykov v. Gevargiz, 42 Misc 3d 1212 (A) (Sup. Ct. Kings [*7]Cty. 2014). Interim counsel fees are awarded to level the playing field. Rosenbaum v Rosenbaum, 55 AD3d 713, 714 (2nd Dept. 2008) (it is also well-settled that "[a]n award of interim counsel fees is designed to create parity in divorce litigation by preventing a monied spouse from wearing down a non-monied spouse on the basis of sheer financial strength). Win or lose on the ultimate question of the enforcement of the mortgages against the couple's largest marital asset, the wife in this case should not have to enter this "gun fight" with her well-healed father-in-law, deprived of the shield of a beneficent "stand-up-for-the-mother-of-our-children" husband and armed only with a blunt knife, worn down by her father in-law's deep pockets and her already depleted financial resources.[FN4] Equity, the common law theory of fundamental fairness underlying New York's marital property distribution laws, and Section 237(a), the Legislative command to level the playing field to ensure a fair fight during the pendency of action, do not allow it. This award of interim attorneys fees is without prejudice to a further award consistent with Section 237(a).

In conclusion, the husband's application to reduce the child support as a result of the emancipation of the oldest child is granted. The request for further modification of the temporary maintenance or child support is denied, as is the request for reimbursement of the health insurance and unreimbursed costs. Finally, the wife's motion for legal fees is granted in the amount of $20,000, without prejudice to a further application during the pendency of this matter. The wife's attorney's application to withdraw is granted, unless otherwise rescinded by the conclusions in this opinion.

SUBMIT ORDER.

DATED:December __, 2014________________________________Richard A. Dollinger

Acting Supreme Court Justice

Footnotes

Footnote 1:The wife does not contest that the child support should be adjusted because of the oldest child's emancipation. That portion of the requested relief is granted.

Footnote 2:This practice by the husband, repaying intra-family loans while receiving family gifts, highlights the exact problem discussed by this court in GRP II: the obvious risk that if the husband and wife have to repay the intra-family loans backed by the disputed mortgages, the paternal grandparents could simply forward the repayment to their son as gifts. This would, in essence, thwart the wife's claims for equitable distribution, and a fair share of the equity in the marital residence.

Footnote 3:In a prior decision, this court found the wife to be the lesser moneyed spouse.

Footnote 4:This common aphorism is derived from the advice of Jim Malone (Sean Connery) to Eliot Ness (Kevin Costner) in the movie The Untouchables.