AS v TKAnnotate this Case
Decided on December 11, 2017
Supreme Court, Kings County
Plaintiff (Wife) is represented by Matthew Erlich, Esq.
Defendant (Husband) is represented by Frasile Stinvil, Esq.
Rachel A. Adams, J.
Recitation as required by C.P.L.R. 2219(a) of the papers considered in the review of the motion for pendente lite relief and oral argument having been heard thereon.
Wife's order to show cause and exhibits: 1-21
Defendant's affidavit in opposition and exhibits: 1-13
The Plaintiff (Wife) moves by order to show cause for an order that the Defendant (Husband) (1) pay temporary maintenance of $8,949.94 per month; (2) pay temporary child support of $7,939.58 per month; (3) pay 100% of school, camp and extracurricular expenses for the subject children; (4) pay 100% of the carrying charges on the marital residence and the Rockaway apartment; (5) secure a life insurance policy in the amount of $2,000,000 naming the Wife and children as irrevocable beneficiaries; (6) maintain health insurance and pay 100% of unreimbursed medical expenses for the Wife and children; and (7) pay pendente lite counsel fees of $75,000.[FN1] The Husband opposes the Wife's application in its entirety.
The parties were married on October 17, 2008 and the within action for divorce was commenced by the filing of the summons with notice on March 6, 2017. There are twin children of the marriage, age 6 and by so ordered stipulation dated May 23, 2017, the parties resolved custody and parental access. Accordingly, the Court sets forth only those portions of the parties' positions relating to the remaining temporary financial relief sought by the Wife.
The Wife submits that the parties' marital residence, purchased in 2009, is worth [*2]$3,000,000 and that the parties' equity is $2,000,000. The parties' Rockaway apartment, purchased in 2015, is worth $395,000 and has a small mortgage. While the Husband is renting an apartment on Prospect Park West, the Wife does not know the cost of same. The Wife submits that the Husband, a partner at Ernst & Young in the International Tax division, earned $907,202 in 2015 and she estimates that he earned $1,000,000 in 2016. The Wife works at UBS in the International Wealth Planning Division and earned $286,962 in 2015, less than one-third of the Husband's earnings in the same year. While the parties reported gross income of $1,222,218 in 2015, as of the filing of the instant application, the parties have not filed 2016 tax returns.
The Wife avers that the parties maintained a lavish lifestyle; some of their significant expenses included yearly vacations ($15,000), monthly credit card payments totaling $6,000, and preschool tuition of $15,000 per child. The children were also enrolled in summer camp at a cost of $5,000 per child. The Husband primarily financially supported the family during the marriage, although she paid for the cleaning lady and the cable bill. More recently, the Wife paid additional expenses for the children, she submits, after pressure from the Husband to contribute more financially.
The Wife refers to her counsel's affirmation for support of her request for monthly maintenance of $8,949.94 under the temporary maintenance guidelines in DRL §236B(5-a)(c) and requests that the Husband continue paying the carrying charges and expenses on both residences. Her counsel's affirmation sets out that after the Court applies the temporary maintenance guideline formula up to the income cap of $178,000, the Court should award same and then award an additional sum after consideration of the factors in DRL §236B(5-a)(h). Wife's counsel sets out the guidelines calculation based on the parties' most recently reported income (2015) and acknowledges that the application of same up to the income cap of $178,000 results in an award of $0. However, based on the parties' lifestyle, the length of the marriage, and the discrepancy in the parties' incomes, her counsel asks that the Court calculate temporary maintenance on the parties' total income, which results in an award to the Wife of $8,949.94 per month.
As to child support, the Wife refers to the Child Support Standards Act (CSSA) and submits that even on an income cap of $500,000, the Husband should pay her $7,939.58 per month. Her counsel's affirmation sets out the CSSA calculation up to the child support income cap of $143,000 which would result in an award of $2,270.69 per month representing the Husband's 76.22% pro rata share of the combined child support obligation. However, counsel argues that the Husband's income should be capped at $500,000 in applying the CSSA formula such that his obligation would be $7,939.58 per month. Counsel adds that the Court should deviate in light of the expenses set forth in the Wife's statement of net worth, the children's lifestyle, and the Husband's substantial resources as compared to the "minimal amount of liquid resources actually available" to the Wife.
To secure these temporary support obligations for her and the children, the Wife asks that the Husband obtain a life insurance policy valued at no less than $2,000,000. He should also continue to maintain the family's health insurance and meet 100% of all related costs (co-pays, deductibles, and unreimbursed expenses).
In support of pendente lite counsel fees, the Wife paid her counsel a $25,000 retainer fee and expects that the Husband's obstinate behavior will prolong the litigation. She asks the Court to level the playing field and award her counsel fees of $75,000. Wife's counsel affirms that as [*3]the less monied spouse in this action, the Wife is entitled to an award of pendente lite counsel fees under DRL §237. Annexed as an exhibit is counsel's retainer agreement setting forth an initial fee of $25,000 and an hourly rate of $525. Counsel affirms that through the date of application the Wife has incurred fees of $15,953.50.
In opposition, the Husband refers to his counsel's affirmation regarding the applicable statutes and calculations but submits that maintenance should be calculated on income up to $178,000 and that child support should be calculated on combined parental income up to $143,000. He adds that upon leaving the marital residence, he sent the Wife a check for the sum of child support up to the statutory cap and a separate check of $2,428.72 toward the principal mortgage payment on the marital residence.
The Husband submits that the Wife misrepresents her true income as she earned over $350,000 in 2016 as the head of Wealth Planning International at UBS; the Wife has her 2016 W-2 statement in her possession but did not submit it to the Court. The Husband adds that the Wife keeps duffle bags of cash in the marital residence (as much as $30,000) which he believes she deposits in Mexican banks as she travels to Latin America several times a year for work.
Contrary to the Wife's assertion, the Husband states that the family did not live lavishly. Their most significant expense is the au pair ($20,000 per year) as the children attend public school, their extracurricular activities do not cost more than $12,000 per year, and the parties do not own any vehicles. In addition to the mortgages on the marital residence and the Rockaway apartment, the Husband now pays rent of $4,900 per month and related expenses. He disputes monthly credit card payments of $6,000 and argues that the children have been covered by the Wife's health insurance since birth.
Husband's counsel submits that based on the parties' net 2015 incomes, there is no statutory award of pendente lite maintenance owed to the Wife, nor do any factors in the statute warrant an award. Counsel adds that the Wife's request for statutory maintenance as well as payment of carrying charges is contrary to the law as temporary maintenance pursuant to the Domestic Relations Law is intended to cover all of the payee spouse's reasonable expenses, including towards housing. Counsel also sets out that the parties' combined parental income is $1,103,671 of which 75% is attributable to the Husband ($829,000) and 25% is attributable to the Wife ($274,671). Counsel argues that the Husband should pay his pro rata share of CSSA child support on combined parental income up to $143,000 or $2,234 per month as well as his pro rata share of add on expenses. An award above the statutory cap, counsel argues, is not warranted considering the family's lifestyle and that under the case law a payor parent is not required to commit all of his income to meet the children's needs.
As to counsel fees, the Husband submits that the Wife has income of over $350,000 per year as well as several bank accounts in the United States and Mexico. He adds that the parties are in similar financial positions as they paid nearly equal retainer fees to their respective counsel.
Pendente Lite Maintenance
Domestic Relations Law § 236(B)(5—a)(c) sets forth formulas a court must use to determine the presumptively correct amount of temporary maintenance (see Goncalves v Goncalves, 105 AD3d 901 ; Woodford v Woodford, 100 AD3d 875 ). A court may deviate from the presumptive award only where it finds that the presumptive award "is unjust or [*4]inappropriate" (Domestic Relations Law § 236 [B][5—a][h] ). Under such circumstances, the court must "set forth, in a written decision or on the record, the guideline amount of temporary maintenance, the factors it considered, and the reasons that the court adjusted the guideline amount of temporary maintenance" (Domestic Relations Law § 236 [B][5—a][h] ). Where the court's award is in accordance with the statute, "[m]odifications of pendente lite awards should rarely be made by an appellate court and then only under exigent circumstances, such as where a party is unable to meet his or her financial obligations, or justice otherwise requires" (Rosenstock v Rosenstock, 149 AD3d 887 ; Tzu Ching Kao v Bonalle, 145 AD3d 703 ; Su v Su,128 AD3d 949 ; Malik v Malik, 66 AD3d 968 ; Levakis v Levakis, 7 AD3d 678 ).
In determining income for purposes of calculating temporary maintenance, the statute uses the same definition of income as set forth in the Child Support Standards Act (DRL § 236B [5—a][b].) The court is required to establish the parties' support obligation "as a function of the income that is, or should have been, reflected on the party's most recently filed income tax return."
While the parties' dispute the other's allegations of their 2016 income, they do not provide documentation to corroborate their respective positions. However, each submitted their joint 2015 federal tax return indicating combined income of $1,222,218 inclusive of $35,954 from income from taxable interest, ordinary dividends, taxable refunds, credits or offset of state and local income taxes and capital gains. The parties do not dispute that from employment, the Husband earned $899,302 and the Wife earned $286,962 in 2015.[FN2]
While both parties provide asserted adjusted gross incomes, neither party provided the Court with a clear explanation of same from wages/employment.[FN3] Therefore, the Court estimates the Wife's FICA deductions as a UBS employee at $23,681 and her local taxes at $10,054 such that her total adjusted gross income under the CSSA is $252,957. The Husband's income as reflected in the 2015 tax return was received as income from a partnership in Schedule E Part II totaling $907,202 before business expenses of $7,900. The Court therefore calculates his estimated FICA and local taxes on gross income before a deduction for business expenses as follows $907,202 — ($26,830 FICA) — ($33,568 local taxes) — ($7,900 business expenses) for adjusted gross income of $838,904.
Turning to pendente lite maintenance, the Husband's income is above the statutory maintenance income cap of $178,000. The DRL §236B(5-a)(c) formula as amended and effective January 23, 2016 provides that where, as here, "the payor's income exceeds the income cap, the court shall determine the guideline amount of temporary maintenance as follows: (1) the court shall perform the calculations set forth in paragraph c of this subdivision for the income of the payor up to and including the income cap; and (2) for income exceeding the cap, the amount [*5]of additional maintenance awarded, if any, shall be within the discretion of the court which shall take into consideration any one or more of the factors set forth in subparagraph one of paragraph h of this subdivision; and (3) the court shall set forth the factors it considered and the reasons for its decision in writing or on the record. Such decision, whether in writing or on the record, may not be waived by either party or counsel."
Applying the formula set forth in DRL §236B(5-a)(c) to adjusted gross income of $252,957 for the Wife and $838,904 for the Husband results in a presumptive pendente lite maintenance award of $0 to the Wife (see annexed worksheet) which the Court finds just and appropriate as discussed herein. The Court declines to issue an award of maintenance after consideration of factors set out in DRL §236B(5-a)(h)(1)(a)(b)(c)(e)(k) and (m).[FN4] Specifically, the Wife is in good health and well educated; there is no need for her to incur education or training expenses to maintain her level of earnings established in the record. Since the birth of the subject children, she has historically earned substantial income. Further, as to her future [*6]earning capacity, the Wife does not dispute in a reply affidavit the Husband's assertion that her 2016 income was on track to exceed her 2015 income of up to $330,000.[FN5] In fact, in her March 2017 affidavit, the Wife acknowledges that she received a promotion "in the last year" but does not state her 2016 income (plaintiff affidavit, p. 17).
Similarly, the Wife does not dispute in a reply affidavit the Husband's allegation that because he primarily met the family's expenses, the Wife was able to save large sums of cash from her earnings. The Wife's net worth statement indicates that she is the title owner of a savings account with a balance of $30,103 whose source of funds is her income, she has an IRA valued at $260,055, a 401K valued at $40,698, and $6,000 in cash in the marital residence.[FN6] Further, while the Wife asserts a lavish family lifestyle, including substantial monthly credit card payments, she does not annex supporting documentation and in fact, her net worth statement asserts monthly expenses of $16,412 approximately 1/3 of which represents the parties' marital residence mortgage totaling $5,250. Lastly, the Court considers as any other factor the child support award discussed below. Accordingly, after application of the formula and consideration of the factors contained in DRL §236B(5-a)(h)(1), the Court denies the Wife's application for pendente lite maintenance.
Turning to pendente lite child support, the Court is not required to calculate the child support obligation pursuant to the CSSA (Vistoco v Jardine, 116 AD3d 842 ; see also George v George, 192 AD2d 693 ; see also DRL § 236[B] ). "The Child Support Standards Act ... provides the formula to be applied to the parties' income and the factors to be considered in determining a final award of child support. Courts considering applications for pendente lite child support may, in their discretion, apply the CSSA standards and guidelines, but they are not required to do so" (Davydova v Sasonov, 109 AD3d 955 ). Should the Court determine not to apply the CSSA in calculating the pendente lite child support, the determination shall include an explanation as to why the court declined to do so and the basis for the award (see Kashman v Kashman, 147 AD3d 1034 ; see also Kaufman v Kaufman, 131 AD3d 939 ).
Here, the Court wholly rejects the Husband's position that temporary child support be calculated under the CSSA and only up to the cap of $143,000. The Husband earned adjusted gross income of $838,904 in 2015, the parties own two homes, exhibit no debt (except mortgages), and the Husband's net worth statements shows an ability to amass significant monies, including $33,256 in savings, a Fidelity account valued at $785,196, a 401K valued at $183,315, 529 accounts for the children in excess of $20,000 each, and the resources to perform $200,000 in property renovations.[FN7] While it appears that the parties did not live lavishly on a daily basis taking extravagant vacations, purchasing material goods, dining out, etc., they have had substantial resources, primarily from the Husband's income, to meet all of their daily expenses with ease and maintain financial security sufficient to fund substantial retirement accounts and accounts for the benefit of the children.
The Husband does not substantially dispute the Wife's asserted monthly expenses of approximately $16,400. In fact, he states that the parties' au pair expense alone is $20,000 per year and asserts an additional $12,000 per year in extracurricular expenses. If the Court were to cap temporary child support on combined parental income of $143,000, based on the parties' pro rata shares (76% Husband; 24% Wife), the Husband's monthly support obligation would be: [($143,000 x 25%) x 76%)]/12 = $2,264. This sum is insufficient to meet the family's undisputed expenses. In fact, the Husband's offer to pay basic child support up to the cap amounts to less than one half of the marital residence mortgage and would leave him with income of $829,713. The Court notes here that the Husband's position to cap his pendente lite child support on combined income of $143,000 does not comport with the parties' incomes or expenses where he has historically earned three-quarters of the parties' income and currently rents a separate apartment for himself for $4,900 per month.
However, applying the CSSA to the parties' total income is similarly inappropriate as such calculation results in an award in excess of the Wife's (largely undisputed) combined expenses for her and the children of $16,411 per month.
Wife's adjusted gross income:$252,957
Husband's adjusted gross income:$838,904
Parties' combined parental income:$1,091,957
Husband's child support up to $143,000:$2,264 per month (see above)
Parties' income above the cap:$948,957 [FN8]
Combined parental child support above the cap:$237,239 [FN9]
Wife's pro rata share:24%
Husband's pro rata share:76%
Husband's monthly child support above the cap:$15,025
Husband's combined child support up to and over the cap:$17,289 [FN10] Under the circumstances, the Court finds it appropriate that the parties maintain the status quo which the Court finds can be met in applying the CSSA on total combined income of $650,000 as follows and as discussed below. Setting the Husband's pendente lite child support obligation on income in excess of the statutory cap makes him a greater contributor to the fixed expenses such as the mortgage and represents the cash flow utilized by the parties during the marriage to meet the (substantially undisputed) monthly expenses.
Parties' combined parental income cap:
Husband's child support up to $143,000:
$2,264 per month (see above)
Parties' income above the cap:
Combined parental child support above the cap:
Wife's pro rata share:
[*7]Husband's pro rata share:
Husband's monthly child support above the cap:
Husband's combined child support up to and over the cap:
$10,292 per month [FN12]
The Husband does not persuasively dispute the Wife's allegations that the clear majority of the family expenses were met with his earnings, rather, he submits that she should be required to use her income as well to support the family and the Court does not disagree. The Husband's basic child support payment to the Wife on combined income of $650,000 per year is $10,292 per month. From this award, the Wife shall pay the marital residence mortgage and meet the children's basic expenses. Additionally, the parties agree that they incur a childcare expense (au pair) as well as extracurricular expenses for the children. In maintaining the status quo, the parties shall share mandatory add-on expenses pro rata (76% Husband; 24% Wife). The Husband shall pay the sum of $10,292 directly to the Wife on the 15th day of each month commencing December 15, 2017 plus $1,267 per month towards the cost of the au pair. The Husband shall also pay 76% of the children's extracurricular expenses up to a cap of $12,000 per year. For such expenses incurred by the Wife, the Husband shall reimburse his share within ten (10) days of notice of such expenses paid.
The Husband is also directed to continue paying the fixed expenses on the Rockaway apartment which he asserts is approximately $1,500 per month. An allocation of a credit to the Husband for maintaining this asset and meeting this expense will be addressed at trial or by agreement of the parties (Brinkmann v Brinkmann, 152 AD3d 637 ; Judge v Judge, 48 AD3d 424 ; Leeds v Leeds, 281 AD2d 601 ).
The Husband's retroactive support to the date of the Wife's application (March 23, 2017) amounts to $92,628 ($10,292 x 9 months). The Husband is entitled to a credit against his basic retroactive child support obligation for direct support he has paid to the Wife during the pendency of the application and for which he can provide proof. The Husband is also entitled to a credit against retroactive add-on expenses he has paid during the pendency of this action for which he can submit proof. Within fourteen (14) days of the date of the within decision, the Wife is directed to provide the Husband with an accounting of mandatory add-on expenses as well as the au pair and extracurricular expenses actually paid by her from the date of application. The Husband is directed to reimburse the Wife his pro rata share of same less a credit for any payments made during the pendency of the application. Credit for any payments made shall be agreed upon between counsel and thereafter paid in two equal lump sums, the first payment to be made on or before February 1, 2018 and the second payment to be made thirty days thereafter. Any disputed retroactive sums shall be referred to trial.
The Wife asks that the Husband maintain her and the children's health insurance benefits while the Husband asserts that they have always been covered through the Wife's employer. The Court has insufficient information to determine who currently provides this benefit. However, the parties are directed to comply with the automatic orders and maintain that coverage which was in place at the time of commencement of the action. The parties shall share unreimbursed medical expenses for the children pro rata and reimburse the other for such expense actually [*8]paid within ten days of receipt of such proof. The party responsible for this benefit shall submit proof to the other of the cost of premiums and receive a pro rata adjustment for same in the pendente lite support obligation.
The Wife asks that the Husband obtain and/or maintain a life insurance policy to secure his support obligation. To the extent that the Husband or the Wife has a policy of life insurance in place at the time of commencement, or has same available through their respective employers, they shall exchange such documentation within fourteen (14) days of the date of the within decision such that they are able to assess the sufficiency of same as relates to support obligations.
Domestic Relations Law §237 creates a "rebuttable presumption that counsel fees shall be awarded to the less monied spouse." An award of interim counsel fees ensures that the nonmonied spouse will be able to litigate the action, and do so on equal footing with the monied spouse. Such an award "is appropriate 'to prevent the more affluent spouse from wearing down or financially punishing the opposition by recalcitrance, or by prolonging the litigation'" (Gober v Gober, 282 AD2d 392, 393 ).
The Wife seeks an interim legal fee award of $75,000. The Wife paid her counsel a $25,000 retainer fee and he bills at a rate of $525 per hour as established by the retainer agreement attached to the Wife's moving papers. Similarly, the Husband paid a $20,000 retainer fee and his counsel bills at a rate of $495. The Wife argues that an award of counsel fees is appropriate as the Husband has historically earned in excess of three times her income and she expects that he will contest custody and unnecessarily.
However, the Court notes that notwithstanding that parties' comparable fees for counsel and the Husband's within support obligation, his income provides him with substantially more liquid funds from which to pay same without having to deplete his savings or retirement accounts. In determining pendente lite counsel fees, the Court also takes into consideration that since the pendency of the within motion, the Husband unilaterally decided to provide the Wife with two checks per month- one representing what he determined to be his share of child support up to a cap of $143,000 and add-ons ($3,653) and a separate check for $2,428.72 representing one half of the principal mortgage payment for the marital residence.[FN13] Since the pendency of this application, the Wife has remained in the marital residence with the subject children and been left to shoulder the balance of the families' expenses after the Husband's relatively modest contributions.
The Court balances the above considerations against the fact that the parties have since resolved all issues of custody and parental access, that discovery has remained ongoing and should be near completion and that the matter is calendared for a pretrial conference in February 2018. The Court also takes note of the Wife's earnings as well as her ability to amass her own savings as the parties met the majority of family expenses with the Husband's income. Accordingly, the Court finds that an award of $25,000 as and for pendente lite counsel fees is just and appropriate. The Husband is directed to make payment in full to the Wife's counsel on or before January 15, 2018. Upon failure to pay, counsel may enter judgment against the [*9]Husband on affirmation served on the Husband's counsel, no further notice is required.
This constitutes the decision and order of the Court. Wife's counsel is directed to serve a copy of the within decision with notice of entry on Husband's counsel within fourteen (14) days of entry in the Office of the Kings County Clerk.
Dated: December 11, 2017
HON. RACHEL A. ADAMS, J.S.C. Footnotes
Footnote 1: The parties resolved the Wife's request for exclusive use and occupancy by order dated March 23, 2017. The parties resolved custody and parental access by so ordered stipulation dated May 23, 2017 such that the Wife's request for temporary custody, a forensic evaluation and related fees is moot.
Footnote 2:The Court declines to attribute the parties' 2015 non-wage income of $35,954 to either party pendente lite. The source and allocation of those funds can be more fully explored during discovery and at trial and allocation of same at this time would have a de minimus effect on the parties' respective pendente lite support obligations in light of their substantial wage earnings.
Footnote 3:The Wife states that her and the Husband's estimated FICA deductions are $12,290.61 and $26,866.25, respectively. The Husband states that his income less FICA is $831,302 and the Wife's is $265,153. Neither party offers a deduction for local taxes.
Footnote 4:DRL §236B(5-a)(h) (1) states: the court shall order the guideline amount of temporary maintenance up to the income cap in accordance with paragraph c of this subdivision, unless the court finds that the guideline amount of temporary maintenance is unjust or inappropriate, which finding shall be based upon consideration of any one or more of the following factors, and adjusts the guideline amount of temporary maintenance accordingly based upon such consideration: (a) the age and health of the parties; (b) the present or future earning capacity of the parties, including a history of limited participation in the workforce; (c) the need of one party to incur education or training expenses; (d) the termination of a child support award during the pendency of the temporary maintenance award when the calculation of temporary maintenance was based upon child support being awarded and which resulted in a maintenance award lower than it would have been had child support not been awarded; (e) the wasteful dissipation of marital property, including transfers or encumbrances made in contemplation of a matrimonial action without fair consideration; (f) the existence and duration of a pre-marital joint household or a pre-divorce separate household; (g) acts by one party against another that have inhibited or continue to inhibit a party's earning capacity or ability to obtain meaningful employment. Such acts include but are not limited to acts of domestic violence as provided in section four hundred fifty-nine-a of the social services law; (h) the availability and cost of medical insurance for the parties; (i) the care of children or stepchildren, disabled adult children or stepchildren, elderly parents or in-laws provided during the marriage that inhibits a party's earning capacity; (j) the tax consequences to each party; (k) the standard of living of the parties established during the marriage; (l) the reduced or lost earning capacity of the payee as a result of having forgone or delayed education, training, employment or career opportunities during the marriage; and (m) any other factor which the court shall expressly find to be just and proper.
Footnote 5:The Court utilizes as the most reliable financial information the parties' 2015 income, submitted by both parties in their respective papers attaching the joint 2015 federal tax return.
Footnote 6:The Court notes that the Wife's savings account was opened in 2005.
Footnote 7:The Wife's cash saving was discussed above. The Husband's net worth states "$200,000 renovation costs paid by TK".
Footnote 8:$1,091,861 - $143,000 = $948,957.
Footnote 9:$948,957 x 25% = $237,239.
Footnote 10:$2,264 + $15,025 = $17,289.
Footnote 11:$650,000 - $143,000 = $507,000.
Footnote 12:$2,264 + $8028 = $10,292.
Footnote 13:The Husband does not state the sum of the child support check but attaches a copy of same as an exhibit.