L.G. v C.G.

[*1] L.G. v C.G. 2018 NY Slip Op 50453(U) Decided on April 6, 2018 Supreme Court, Kings County Thomas, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 April 6, 2018
Supreme Court, Kings County

L.G., Plaintiff,

against

C.G., Defendant.



xxxxx/xxxx
Delores J. Thomas, J.

The following papers numbered 1 to 10 read herein: Papers Numbered

Notice of Motion/Order to Show Cause/Petition/Cross Motion and Affidavits (Affirmations) Annexed 1-4

Opposing Affidavits (Affirmations) 5-7

Reply Affidavits (Affirmations) 8-9

Transcript of July 20, 2017 Oral Argument 10

Upon the foregoing papers, in this action by plaintiff L. G. (plaintiff) against defendant C. G. (defendant) for divorce and ancillary relief, plaintiff moves, by order to show cause, under motion sequence number five, for an order: (1) vacating the note of issue filed by his prior counsel on or about June 15, 2016, and in connection therewith, setting a schedule to conduct and complete party and non-party discovery, pursuant to CPLR Article 31; (2) irrespective of the determination as to his request for relief set forth in paragraph 1, granting him leave to conduct discovery as to defendant, including, but not limited to, directing defendant to produce responsive documents to his first notice for discovery and inspection, no later than 30 days after such order, and further directing defendant to appear for an examination before trial no later than 45 days after her compliance with the first notice for discovery and inspection, and further permitting him to conduct reasonable follow-up discovery; (3) irrespective of the determination as to his request for relief set forth in paragraph 1, in the event that the court denies his motion to consolidate this action with the plenary action entitled G. v G. (Sup Ct, Kings County, Index No. xxxxxx/xxxx) (the plenary action),[FN1] granting him leave to conduct non-party discovery as to Aaron Lebovitz, 89 Macon Street LLC, All Boro Developers, Inc., Park Developers & Builders, [*2]Inc., Park Premium Enterprises, and 12 Verona LLC (collectively, the Lebovitz entities), and Thomas Torto (Torto), and as to any party relating to defendant's conveyance of the property located at 89 Macon Street, Brooklyn, New York 11216 (the 89 Macon property); (4) directing defendant to pay him, as and for non-taxable temporary maintenance, the sum of $6,500 per month, payable on the first day of each month, retroactive to the date of this application; (5) directing defendant to pay his counsel, Dobrish Michaels Gross LLP (DMG), as and for interim counsel fees, the sum of $150,000, without prejudice to further applications; (6) directing the court-appointed real estate appraiser; Scott H. Gallant & Associates (SHG) to appraise the 89 Macon property as of the present date, and to issue a report in connection therewith, with the fees for such appraisal report to be paid by defendant; (7) directing the court-appointed real estate appraiser, James W. Pase (Pase), to appraise the marital property located at xx Essington Lane, Dix Hills, New York 11746 (the Essington property) as of the present date, and to issue a report in connection therewith, with the fees for such appraisal report to be paid by defendant; (8) directing SHG to appraise each of the following real properties as of the date of the parties' marriage on October 30 or 31, 2004, the date of the commencement of this action on August 4, 2015, and the present date, and for SHG to issue reports in connection therewith, with the fees for such appraisal reports to be paid by defendant: (i) 95 Macon Street, Brooklyn, New York 11216 (the 95 Macon property); (ii) 97 Macon Street, Brooklyn, New York 11216 (the 97 Macon property); (iii) 99 Macon Street, Brooklyn, New York 11216 (the 99 Macon property); (iv) 330 Tompkins Avenue, Brooklyn, New York 11216 (the Tompkins property); and (v) 124 New York Avenue, Brooklyn, New York 11216 (the New York Avenue property); (9) appointing a business valuation expert to appraise the value of The Macon Realty, Inc. (Macon Realty) as of the date of the marriage, as of the date of the commencement of this action, and as to its present value, and to issue a report in connection therewith, with the fees for such appraisal report to be paid by defendant; (10) appointing a business valuation expert to appraise the value of defendant's political consulting business as of the date of the marriage, the date of the commencement of this action, and the present date, and to issue a report in connection therewith, with the fees for such appraisal report to be paid by defendant; and (11) appointing Plaintiff as the receiver for the marital property located at, and known as 753 Macon Street, Brooklyn, New York 11233 (the 753 Macon property), removing defendant as the receiver of the 753 Macon property in order to prevent marital waste and to preserve this marital asset, and vesting him with the ordinary and usual powers of a receiver, including the power to create a limited liability company through which title to the 753 Macon property may be transferred in order to secure the funding to satisfy the outstanding mortgage and debt in connection with the 753 Macon property, thereby removing it from the foreclosure process.[FN2]

Background And Procedural History

Plaintiff and defendant were married on October 30, 2004 in a civil ceremony in Brooklyn, New York. There are no children of the marriage and none are expected.

On August 4, 2015, plaintiff filed this action for divorce and ancillary relief against defendant. At the time he commenced this action, plaintiff was represented by Robert Anthony Evans, Jr., Esq. (Mr. Evans). On September 23, 2015, plaintiff filed a request for judicial intervention. Defendant, represented by Camille O. Russell, Esq. (Ms. Russell), filed a notice of appearance and verified answer with counterclaim on October 20, 2015.

The preliminary conference was held on December 17, 2015. In the preliminary conference stipulation and order, the parties agreed that Plaintiff would obtain a divorce on the ground of irretrievable breakdown of the marriage, and the parties indicated that only the issues of maintenance and equitable distribution were unresolved. The parties agreed to a schedule for the exchange of discovery and depositions to be completed on or before March 30, 2016, and indicated that they would need appraisals for deferred compensation and retirement assets, business interests, professional practices, and residential and commercial real estate. On December 17, 2018, the court entered an order appointing Pase as the appraiser for the Essington property. The court also appointed SHG as the appraiser for the 89 Macon property and the 753 Macon property on December 19, 2015.

On January 11, 2016, defendant filed an order to show cause to be appointed receiver of the 753 Macon Street property and other related relief, which was initially made returnable on February 4, 2016 (motion sequence no. 1). The motion was adjourned several times for the submission of opposition and reply papers, and for the parties to exchange accountings, rent rolls, and leases for any real property in their ownership or control (see orders dated February 4, 2016, March 17, 2016, April 11, 2016, and April 21, 2016).

The parties appeared for a compliance conference on April 11, 2016. At the conclusion of the conference, the parties completed the compliance conference order, which was so ordered by the court, stating that party depositions would be held on June 27, 2016 and June 29, 2016, notices for discovery and inspection were to be served within 30 days with responses due by May 10, 2016, and that any outstanding discovery from the preliminary conference order would be answered or completed by June 30, 2016. The court directed the parties to file the note of issue on or before April 25, 2016 and scheduled a further compliance conference for April 21, 2016, which, after oral argument, was further adjourned to May 26, 2016 for additional documentation.On May 26, 2016, the court held another compliance conference, and ordered plaintiff to file a note of issue within 10 days from that date, i.e., on or before June 5, 2016. The court also heard oral argument on defendant's temporary receiver motion, and granted the motion subject to the settlement of an order on notice, which was signed on August 12, 2016. After oral argument on May 26, 2016, plaintiff filed a motion to consolidate a pending Kings County Housing Court action, 89 Macon Street LLC v L. G., Index no. L & T xxxxxx-xx, with the instant matrimonial action (motion sequence no. 2). The motion was denied by order dated June 9, 2016 for nonappearance of the moving party.

On June 15, 2016, plaintiff filed the note of issue. He also filed a second motion to consolidate the Housing Court proceeding with this action (motion sequence no. 3). The motion was denied on August 4, 2016 for failure to serve the papers on opposing counsel.

By consent to change attorney dated July 29, 2016, plaintiff substituted Davis Ndanusa Ikhlas & Saleem LLP as attorneys of record for him in place and stead of Mr. Evans. A pretrial conference was held on November 16, 2016. As the parties had not settled the ancillary issues, trial dates were scheduled for July 31, 2017 through August 10, 2017. The parties were directed to file a copy of their witness lists with offers of proof on or before December 7, 2016, and to appear for a final status conference on December 7, 2016. Settlement conferences were held on December 7 and 14, 2016, and the case was adjourned to July 31, 2017 for trial.

By consent to change attorney dated February 7, 2017, plaintiff substituted Dobrish Michaels Gross LLP (DMG) as attorneys of record for him in place and stead of Davis Ndanusa Ikhlas & Saleem LLP.[FN3]

On May 9, 2017, plaintiff, now represented by DMG, filed a motion seeking to consolidate a plenary action titled L. G. v C. G. G., et al., Kings County Supreme Court Index no. xxxxxx/xxxx, with this matrimonial action. After oral argument on May 25, 2017, the court entered an order staying any warrants for eviction issued against plaintiff and enjoining 89 Macon LLC from transferring the subject property pending resolution of the motion. Upon receipt of the transcript of oral argument, the motion was submitted for written decision. By decision and order dated July 14, 2017, the court denied plaintiff's motion in its entirety and vacated the stay ordered on May 25, 2017.

On May 25, 2017, plaintiff filed his instant motion (motion sequence no. 5). Oral argument of plaintiff's motion was held on July 20, 2017. After oral argument the court entered an order vacating the 2017 trial dates. The motion was submitted for decision after receipt of the transcript of oral argument.

Vacatur Of Note Of Issue And Additional Discovery

The Parties' Contentions

Plaintiff asserts that the note of issue filed by his prior attorney, Mr. Evans, on June 15, 2016 is fatally defective as a matter of law because it was not accompanied by a certificate of readiness, as required by 22 NYCRR 202.21 (a) and 22 NYCRR 202.16 (i). He further asserts that the note of issue omits the information that would otherwise be set forth in a certificate of readiness, and only contains the information that the summons was filed on August 4, 2015, that the summons was served on September 24, 2015, that the nature of the action is a contested divorce, and that the relief sought is "Absolute Divorce."

Plaintiff points out that 22 NYCRR 202.21 (a) provides that "[n]o action or special proceeding shall be deemed ready for trial or inquest unless there is first filed a note of issue accompanied by a certificate of readiness, with proof of service on all parties entitled to notice, in the form prescribed by this section." He further points out that 22 NYCRR 202.21 (b), which sets forth the form for the note of issue and certificate of readiness and provides how they should substantially read, contains, in the form for the certificate of readiness, as item 7, which must be checked, a statement that the "discovery proceedings now known to be necessary [are] completed." Plaintiff asserts that discovery is not complete and no certificate of readiness was filed by him in compliance with this section.

Plaintiff also points to 22 NYCRR 202.16, which is applicable to contested matrimonial [*3]actions in which statements of net worth are required to be filed. 22 NYCRR 202.16 (h) provides, in paragraph 1, that the parties must exchange statements of proposed dispositions, and sets forth, in paragraph 3, that "[t]he statement referred to in paragraph (1) of this subdivision, with proof of service upon the other party, shall, with the note of issue, be filed with the court," and that "[t]he other party, if he or she has not already done so, shall file with the court a statement complying with paragraph (1) of this subdivision within 20 days of such service." At the pretrial and settlement conferences held in November and December 2016, plaintiff and defendant exchanged and filed statements of proposed disposition in compliance with this section. Plaintiff notes that 22 NYCRR 202.16 (h) (3) (i), states that "[n]o action or proceeding to which this section is applicable shall be deemed ready for trial unless there is compliance with this section by the party filing the note of issue and certificate of readiness." He asserts that there was no compliance by him with this section and that no certificate of readiness was filed.

Plaintiff argues that this case may not proceed to trial because no certificate of readiness was filed and the note of issue is defective. He maintains that the note of issue that was filed does not even need to be vacated because it is defective and, therefore, it is a nullity.

Plaintiff further contends that to the extent that the note of issue may need to be vacated, it should be vacated pursuant to 22 NYCRR 202.21 (e), which provides, in pertinent part, as follows:

"Within 20 days after service of a note of issue and certificate of readiness, any party to the action or special proceeding may move to vacate the note of issue, upon affidavit showing in what respects the case is not ready for trial, and the court may vacate the note of issue if it appears that a material fact in the certificate of readiness is incorrect, or that the certificate of readiness fails to comply with the requirements of this section in some material respect."

Plaintiff asserts that since 22 NYCRR 202.21 (e) begins by stating "within 20 days after service of a note of issue and certificate of readiness," the time requirement to move to vacate the note of issue did not even begin because no certificate of readiness was ever filed. He maintains that, therefore, the 20-day period never commenced due to his failure to file a certificate of readiness. He argues that pursuant to 22 NYCRR 202.21 (e), he is only required to submit an affidavit demonstrating why this case is not ready for trial and reiterates that discovery has not been completed.

Plaintiff points to the fact that there was a preliminary conference order and three subsequent compliance orders. He asserts that defendant's deposition was not held, that she failed to produce any documents, that she did not provide an accounting for the marital properties under her control, including the 753 Macon property, that she failed to disclose the extent of her assets, and that none of defendant's separate (non-marital) real properties nor defendant's businesses were appraised. He contends that he needs further discovery to prosecute his claims in this action. He seeks the disclosure of documents pursuant to demands, which he now sets forth in a first notice for discovery and inspection annexed to his moving papers as Exhibit A. He also seeks to depose defendant, to make reasonable follow-up document demands from defendant after her deposition, to obtain discovery from non-parties and conduct their depositions, and to have all properties owned by defendant appraised. He seeks to have updated appraisals of the three marital properties, and to have appraisals conducted of defendant's five [*4]separate properties, which, he claims, have a marital appreciation component. Plaintiff contends that he needs additional discovery, whether or not the court vacates the note of issue.

Defendant points out that Kings County Uniform Matrimonial Rules, Part J, provides as follows:

"These rules apply to all matrimonial actions . . . A Note of Issue shall be filed prior to the pre-trial conference, in accordance with the compliance conference order. A copy of the Note of Issue, showing the County Clerk's stamp, shall be filed with the Matrimonial Clerk's Office prior to the pre-trial conference."

Defendant asserts that, as discussed above, the court held a compliance conference on May 26, 2016, and made inquiries about the status of this action, and after hearing the parties, directed plaintiff to file a note of issue on or before June 5, 2016, and, thereafter, plaintiff filed his note of issue on June 15, 2016. Defendant states that note No.1 to Part J of the Kings County Matrimonial Rules provides that "[w]here rules in [matrimonial] parts differ from general rules, specialized rules shall govern." Defendant argues that, therefore, the note of issue was properly filed by plaintiff, in compliance with Kings County Uniform Matrimonial Rules, Part J, placing this matter on the trial calendar, and that this rule, rather than 22 NYCRR 202.21 (a) and 22 NYCRR 202.16 (i), is the governing provision.

Defendant contends that she disclosed all required documents to both plaintiff's first attorney, Mr. Evans, and his second attorney, Tarik Davis, Esq. (Mr. Davis), a partner in Davis Ndanusa Ikhlas & Saleem LLP. Defendant states that she produced these documents despite never receiving any formal demands from plaintiff. Defendant's attorney, Ms. Russell, a principal of the law firm of Russell Law Group, PLLC, states that not only did Mr. Evans receive the disclosed information, but Mr. Davis appeared at her office to personally retrieve the discovery materials that defendant disclosed in or about October of 2016. Plaintiff, in reply, states that the documents produced were those belonging to him which defendant improperly removed from his apartment. Plaintiff does not state that he ever served a notice for the production of any other documents, and he never moved to compel the production of any documents.

Defendant contends that Mr. Davis indicated that the only matter in dispute was the sale of the 89 Macon property, and he served a subpoena on 89 Macon Street, LLC, the buyer of the property. She states that plaintiff obtained all of the documents related to the sale of the 89 Macon property in addition to the documents that she already had disclosed.

Defendant argues that plaintiff has shown no good cause to vacate the note of issue. She asserts that she complied with the court's orders regarding discovery, and it is plaintiff who did not comply with these orders or with her attorney's discovery demands. She notes that while plaintiff now claims that Mr. Evans filed the note of issue without his knowledge or consent, plaintiff was personally in court when the court directed Mr. Evans to file the note of issue.

Defendant further states that plaintiff did not have any involvement with any of her separate assets. She supports her statement by documents from the New York State Department of Buildings and a contractor who has worked with her over the years. While plaintiff fails to submit any documentary proof of his claim that he actively contributed to these separate properties, he claims that he did so, and that he, therefore, needs to have these separate properties appraised. Plaintiff concedes, however, that he was aware of the existence of defendant's [*5]separate properties and businesses, but never sought to have these properties appraised or the businesses valuated.

Discussion

Plaintiff's contention that his note of issue should be deemed a nullity because he did not accompany it with a certificate of readiness, and that he should, therefore, be able to start the discovery process anew and make numerous discovery demands, must be rejected. This is not a case where it is the defendant who claims that the plaintiff prematurely filed his or her note of issue before discovery was completed. Rather, plaintiff was the one who filed the note of issue, and permitted this action to be placed on the trial calendar. Plaintiff made no attempt to obtain an extension of the note of issue filing deadline, nor did he ever move to compel any discovery which he now claims he needs. Plaintiff cannot benefit from his own error in failing to accompany the note of issue with a certificate of readiness by obtaining additional discovery after representing both to defendant and this court that this action was ready for trial and even setting trial dates.

Moreover, while plaintiff seeks to have his filing of his note of issue declared a nullity so that he can obtain additional discovery, where a plaintiff fails to comply with a compliance order requiring the filing of a note of issue by a certain date by either timely serving and filing a note of issue or moving to extend the period for doing so, this failure would not allow for additional discovery. Rather, plaintiff was warned in the earlier April 11, 2016 compliance order that "failure to file [the] note of issue without being excused by the court may result in sanctions." Notably, a failure to file a note of issue in compliance with a compliance order could result in dismissal of the action pursuant to CPLR 3216 (see Rocha-Silva v St. John's Hosp., 70 AD3d 1025, 1025-1026 [2d Dept 2010]; Mahler v Torres, 25 AD3d 669, 670 [2d Dept 2006]). "A case dismissed pursuant to CPLR 3216 may be restored only if the plaintiff can demonstrate both a reasonable excuse for the default and a meritorious cause of action" (Mahler, 25 AD3d at 670). Neither plaintiff nor defendant seek dismissal of this action since it is a divorce action, and both parties wish to be divorced.

Plaintiff did, in fact, file a note of issue, albeit unaccompanied by a certificate of readiness, and attended the final pretrial conference on November 16, 2016, representing that discovery had been completed and that the case was trial ready by participating in setting dates for the trial of this action. Plaintiff also complied with Kings County Uniform Matrimonial Rule, Part J. Thus, this error may be deemed inconsequential (see CPLR 2001; see generally Dunn v Dunn, 86 AD2d 772, 773 [4th Dept 1982], appeal dismissed 56 NY2d 591 [1982]).

To the extent that plaintiff acknowledges the validity of the note of issue and seeks to vacate it in order to obtain discovery, "one method of obtaining post-note discovery is to vacate the note of issue within 20 days of its service pursuant to 22 NYCRR 202.21 (e), by merely showing that discovery is incomplete and the matter is not ready for trial" (Tirado v Miller, 75 AD3d 153, 157 [2d Dept 2010]). "The second method, beyond that 20 days, requires that the movant, pursuant to 22 NYCRR 202.21 (d), meet a more stringent standard and demonstrate 'unusual or unanticipated circumstances and substantial prejudice' absent the additional discovery" (Tirado, 75 AD3d at 157, quoting Audiovox Corp. v Benyamini, 265 AD2d 135, 138 [2d Dept 2000]; see also Schroeder v IESI NY Corp., 24 AD3d 180, 181 [1st Dept 2005]; Aviles v 938 SCY Ltd., 283 AD2d 935, 936 [4th Dept 2001]). Specifically, 22 NYCRR 202.21 (d) [*6]provides, in pertinent part, as follows:

"Where unusual or unanticipated circumstances develop subsequent to the filing of a note of issue and certificate of readiness which require additional pretrial proceedings to prevent substantial prejudice, the court, upon motion supported by affidavit, may grant permission to conduct such necessary proceedings."

Here, plaintiff did not file any motion to vacate the note of issue within the 20-day deadline set forth in 22 NYCRR 202.21 (e), and it is, therefore, untimely (see Schroeder, 24 AD3d at 181). Thus, the additional discovery sought by plaintiff from defendant must meet the more stringent requirements of 22 NYCRR 202.21 (d), i.e., that the discovery is needed because of "unusual or unanticipated circumstances" and that its absence causes plaintiff "substantial prejudice" (see Tirado, 75 AD3d at 157; see also Utica Mut. Ins. Co. v P.M.A. Corp., 34 AD3d 793, 794 [2d Dept 2006]; Gomez v New York City Tr. Auth., 19 AD3d 366, 366 [2d Dept 2005]; Conrad v Conrad, 293 AD2d 442, 443 [2d Dept 2002]).

While plaintiff points to items of discovery listed in the preliminary conference order, such as conducting defendant's deposition, which was to be completed on February 29, 2016, plaintiff never pursued such discovery. "A lack of diligence in seeking discovery does not constitute unusual or unanticipated circumstances warranting post-note of issue disclosure" (Tirado, 75 AD3d at 161; see also Silverberg v Guzman, 61 AD3d 955, 956 [2d Dept 2009]; Marks v Morrison, 275 AD2d 1027, 1037 [4th Dept 2000]).

22 NYCRR 202.21 (d) does not apply where "there was no unusual or unanticipated circumstance that developed 'subsequent' to the filing of the note of issue" (Schroeder, 24 AD3d at 181; see also Tirado, 75 AD3d at 161). Where "the unusual circumstances relied upon occurred before the filing of the note of issue, not after, this method of obtaining post-note of issue disclosure is . . . unavailable" (Schroeder, 24 AD3d at 181).

Plaintiff does not assert that there were any new developments since the time that he filed his note of issue except that he is now aware of a $2.4 million mortgage loan taken out by Macon Realty, defendant's separate non-marital asset, which encumbers three real properties owned by Macon Realty, i.e., the 95 Macon property, the 97 Macon property, and the 99 Macon property. This $2.4 million in debt is being repaid at a rate of $13,177 per month. Contrary to plaintiff's argument, this mortgage debt does not constitute indicia of defendant's economic prosperity. Defendant asserts that Macon Realty incurred this debt to return it to being a positive cash-producing entity and to pay off outstanding debts. This transaction does not constitute an unusual or unanticipated circumstance to justify vacating the note of issue. Rather, it merely shows that defendant needed capital to address the growing concerns of her business.

While the court's denial of consolidation of this divorce action with the plenary action occurred on July 14, 2017, after plaintiff filed his note of issue, insofar as plaintiff seeks non-party discovery, this is inappropriately sought in this divorce action, and may be sought in the plenary action. Thus, this does not constitute an unusual or unanticipated circumstances that would require such disclosure under 22 NYCRR 202.21 (d).

While plaintiff asserts that it would be unfair for him to be denied a further opportunity for discovery because his first attorney, Mr. Evans, was suspended from the practice of law, Mr. Evans was suspended for reasons unrelated to this action, and plaintiff was also represented by a second law firm prior to retaining DMG. The fact that plaintiff has now retained a third law firm [*7]after the filing of his note of issue in this action, and, following his substitution of attorneys, has now decided that he no longer finds discovery to be complete, do not provide a sufficient basis, at this late stage of this action, for the court to vacate the note of issue and allow the substantial additional discovery now sought by plaintiff. "The substitution of new counsel or the delinquencies of predecessor counsel alone is insufficient to show the presence of unusual or unanticipated circumstances subsequent to the filing of the note of issue and certificate of readiness" that is required under 22 NYCRR 202.21 (d) (Utica Mut. Ins. Co., 34 AD3d at 794; see also Schroeder, 24 AD3d at 181; Nisselson v Hercules Constr. Corp., 269 AD2d 507, 508 [2d Dept 2000]; Lyons v Saperstein, 202 AD2d 401, 402 [2d Dept 1994]; Ward v City of Rensselaer, 106 AD2d 719, 721 [3d Dept 1984]; Ehrhart v County of Nassau, 106 AD2d 488, 488 [2d Dept 1984])."[T]he filing of a note of issue denotes the completion of discovery, not the occasion to launch another phase of it" (Arons v Jutkowitz, 9 NY3d 393, 411 [2007]). Plaintiff had an adequate opportunity to conduct discovery before the note of issue was filed, and there was a complete absence of any attempts to do so until the instant motion was filed. Plaintiff's unexplained and unexcused inaction and laxness in seeking discovery does not constitute good cause to reopen discovery on the eve of trial, and denying plaintiff such discovery would not cause him any substantial prejudice. Rather, to allow plaintiff to begin the discovery process anew at this late date would cause further delay in this action and would be prejudicial to defendant.

Thus, inasmuch as the court finds that there are no unusual or unanticipated circumstances that have developed subsequent to the filing of plaintiff's note of issue which require additional pretrial proceedings to prevent substantial prejudice, plaintiff's motion, insofar as it seeks to vacate the note of issue or, alternatively, to permit additional discovery without vacating the note of issue (i.e., the first, second, third, sixth, seventh, eighth, ninth, and tenth branches of plaintiff's motion), is denied.

Temporary Maintenance

The Parties' Contentions

Plaintiff requests temporary maintenance in the amount of $6,500 per month. He claims that in 2016, he earned commissions of just $21,000, against which he had business expenses exceeding this amount, resulting in zero income for him. He imputes an income of $300,000 to defendant and then reduces it for FICA and other deductions to $280,039. Using the temporary maintenance guidelines calculator, he uses $280,039 as defendant's income and $2,682 as his income, and arrives at a monthly temporary maintenance payment award to him of $7,045.67. He alternatively performs a calculation using his income for 2015 of $48,638. After deducting for FICA, plaintiff uses $40,782 as his income and $279,718 as defendant's imputed income, and arrives at a monthly temporary maintenance award to him of $6,313.25. Plaintiff claims that, after opening his own real estate firm in 2014, he has had inconsistent earnings from commissions. He alleges that he reported a net loss of $4,760 in 2016 after factoring business expenses against his earnings for that year, and that he had only earned $25,000 in commissions for 2017 as of the filing of his motion. He argues that he has depleted his earnings on his living expenses and counsel fees, whereas defendant continues to collect the rents from their investment properties and earn income from a separate real estate portfolio, and lives luxuriously in the former marital residence in Dix Hills, New York. Plaintiff contends that his request of $6,500 [*8]per month in temporary maintenance is reasonable with consideration for the lifestyle that the parties maintained during the marriage.

Defendant points out that it is only after hiring DMG, plaintiff's third counsel in this action, that plaintiff suddenly claims that he is in need of maintenance. She notes that plaintiff did not seek temporary maintenance in his previously filed statement of net worth. She asserts that plaintiff earns substantial income as a realtor, and submits proof of substantial real estate commissions earned by plaintiff which were not reported on his 2015 income tax returns. She also submits plaintiff's entertainment receipts to show that plaintiff has been living a very comfortable lifestyle. She argues that plaintiff's claim that his commissions were reduced to one commission of $21,000 in 2016 as a result of having only one sale that year is false and orchestrated solely for this divorce action in order to make it falsely appear that he has such a small income. In her November 16, 2016 statement of net worth, defendant lists her gross annual income as $51,300.

Discussion

With respect to plaintiff's request for temporary maintenance, in actions commenced on or after October 12, 2010, but before October 25, 2015, applications for temporary spousal maintenance must be determined by the court by employing the statutory formula set forth in Domestic Relations Law § 236 (B) (5-a). Pursuant to § 236 (B) (5-a), the court calculates the presumptive amount of temporary maintenance using the income that was or should have been reported on the parties' most recently filed income tax returns, less deductions for FICA and local taxes actually paid (see Kaufman v Kaufman, 131 AD3d 939, 940 [2d Dept 2015]; Goncalves v Goncalves, 105 AD3d 901, 902 [2d Dept 2013]; Woodford v Woodford, 100 AD3d 875, 876 [2d Dept 2012]). The court is not required to rely on a party's account of his or her finances, and is afforded considerable discretion in determining whether to impute income to a party based on the facts and circumstances presented (see Siskind v Siskind, 89 AD3d 832, 834 [2d Dept 2011]).

In calculating his need for temporary maintenance, plaintiff alleged that defendant earned approximately $280,000, and, using either -$2,682 or imputing $40,782 as his own income, estimated that he is entitled to $6,300 - $7,000 per month in temporary maintenance. However, plaintiff has not attached any evidence establishing that defendant earned anything close to $280,000. According to defendant's March 26, 2016 statement of net worth, attached as Exhibit L to plaintiff's motion, defendant reported income of $51,000, consistent with the wages reported on her 2014 income tax returns. In a review of defendant's 2014 New York State income tax return and federal Form 1040 Schedules C and E, attached as Exhibit J to plaintiff's motion, defendant reported income from multiple sources and expenses as follows:

Source of IncomeDescription of ExpenseIncome/Expense

ReportedIncome Earned

Wages$51,300.00

Real Estate & Rentals($16,732.00)

gross receipts$7,000.00

advertising($575.00)

insurance($555.00)

vehicles/machinery/equipment($6,900.00)

other business property($9,000.00)

travel($2,336.00)

deductible meals/entertainment($485.00)

auto expenses($3,056.00)

professional dues($175.00)

promotions & donations($650.00)

Political Consulting$6,453.00

gross receipts$38,000.00

legal and professional fees($2,500.00)

other business property($9,000.00)

travel($2,515.00)

deductible meals/entertainment($1,050.00)

utilities($1,053.00)

telephone($1,200.00)

auto expenses($4,070.00)

donations & promotions($9,500.00)

parking & tolls($659.00)

330 Tompkins($25,300.00)

rent received$12,000.00

insurance($1,375.00)

mortgage interest paid to banks($19,634.00)

repairs($1,200.00)

supplies($450.00)

taxes($2,226.00)

utilities($8,015.00)

pest control($900.00)

water & sewer($3,500.00)

89 Macon$2,478.00

rent received$72,200.00

cleaning and maintenance($1,800.00)

insurance($4,900.00)

legal & prof fees($1,200.00)

mortgage interest paid to banks($41,258.00)

repairs($2,970.00)

supplies($650.00)

taxes($6,624.00)

extermination($900.00)

fuel oil($7,200.00)

fuel gas($1,200.00)

electricity($1,020.00)

TOTAL INCOME$18,199.00Note, defendant's deductions for depreciation were not included in this calculation as depreciation is not an actual business expense. In her opposition, defendant did not provide a copy of her most recent tax return, but argued that plaintiff was the more monied spouse based on speculative earnings and spending practices. [*9]Using the 2014 tax return provided in plaintiff's moving papers, defendant's income for the purposes of a temporary maintenance calculation is $18,199.

Plaintiff claims that he reported a net loss of $4,760 in 2016. However, he attached the corporate tax return for his real estate business and not his personal income tax return reporting income from all sources for 2016 (see Plaintiff's Exhibit G). Plaintiff did provide his 2015 federal income tax return, attached as Exhibit F to his moving papers, reporting income and expenses as follows:

Source of Income

Description of Expense

Income/Expense Reported

Income Earned

L_____ Realty Group

$23,661.00

753 Macon

$39,356.00

rent received

$47,076.00

cleaning and maintenance

($1,284.00)

insurance

($1,500.00)

repairs

($988.00)

gas for boiler

($3,948.00)

TOTAL INCOME

$63,017.00

Again, depreciation was not included in the list of expenses for the 753 Macon because it is not an actual business expenditure. Therefore, according to Plaintiff's 2015 income tax return, he earned $63,017 in income for the purposes of a temporary maintenance calculation. Neither party provided information regarding FICA or New York City taxes actually paid for the relevant period, so none were deducted.

Based on plaintiff's own submissions, he is the more monied spouse, and not entitled to temporary maintenance. Notably, in the statements of net worth dated November 17, 2015 and October 24, 2016 and his statement of proposed disposition submitted by plaintiff prior to the retention of DMG and the filing of the instant motion, plaintiff did not request temporary maintenance. Yet for this motion, he relied on the parties' 2014 through 2016 earnings to make a claim for interim support, all of which were available to him before the November 2016 pretrial conference, indicating that this was yet another measure to delay the adjudication of this divorce action.

Upon the foregoing, plaintiff's application for temporary maintenance is denied. "The proper remedy for any perceived inequity in a pendente lite award [or the lack thereof] is a speedy trial" (Frates v Frates, 68 AD3d 813, 814 [2d Dept 2009]). The parties have already appeared for a pretrial conference was scheduled for trial prior to the filing of the instant motion. This case is trial ready and shall proceed to trial as soon as the court and the parties' schedules permit.

Interim Counsel Fees

The Parties' Contentions

Plaintiff seeks to require defendant to pay $150,000 for his interim counsel fees. Plaintiff concedes that this is his first request for attorney's fees despite the fact that this action has been pending for two years. Plaintiff nevertheless now claims that he is the less monied spouse and, therefore, is entitled to an award of interim attorney's fees pursuant to Domestic Relations Law § 237 (a).

Plaintiff's current attorney, David Elbaum, Esq. (Mr. Elbaum), a member of DMG, in his affirmation, states that as set forth in DMG's billing records, DMG's billing from February 2, 2017 to April 30, 2017 totaled $57,323.53, against which plaintiff has paid a retainer of $7,500, made another payment of $7,000, and received a credit from DMG in the amount of $5,989.55. He sets forth that plaintiff's balance with DMG as of April 30, 2017 was $36,833.98. He further sets forth that plaintiff incurred an additional $44,280.57 in legal fees and costs from May 1 through May 23, 2017, and that plaintiff's balance with DMG is $81,117.55 as of May 23, 2017. In his reply affirmation, Mr. Elbaum asserts that plaintiff has now incurred a total of $106,950 in legal fees and costs to DMG as of June 30, 2017, and that plaintiff has an outstanding balance owed to DMG in the amount of $92,450.

Mr. Elbaum sets forth his qualifications as the lead attorney on this case and a partner at DMG, who has specialized in the practice of matrimonial law since 2006. He states that his billing rate is $575 per hour, and that Nina S. Gross, Esq., who is a partner at DMG that is also involved in this case, has a billing rate of $675 per hour. Mr. Elbaum further states that plaintiff's legal fees will continue to escalate based upon his claim that plaintiff still needs substantial discovery prior to the trial.

Defendant contends that plaintiff is the monied spouse, and that he is not in need of any assistance from her to pay his attorney's fees. She has annexed evidence of real estate transactions on which plaintiff earned commissions. She also states that plaintiff has unnecessarily prolonged this action. In addition, as compared to the $150,000 sought by plaintiff for counsel fees, defendant's attorney, Ms. Russell, at oral argument, attested that defendant has incurred only $14,000 in attorney's fees. According to the retainer agreement, Ms. Russell's billing rate is $250 per hour, as compared to the $575 or $675 per hour billed by plaintiff's counsel, DMG.

Discussion

Domestic Relations Law § 237 (a) authorizes the court to direct either spouse to pay counsel fees in order to enable the other spouse "to carry on or defend the action . . . as, in the court's discretion, justice requires, having regard to the circumstances of the case and of the respective parties" (see Johnson v Chapin, 12 NY3d 461, 467 [2009]; DeCabrera v Cabrera-Rosete, 70 NY2d 879, 881 [1987]; Dodson v Dodson, 46 AD3d 305, 305 [1st Dept 2007]). Domestic Relations Law § 237 (a), as amended in 2010, creates "a rebuttable presumption that counsel fees shall be awarded to the less monied spouse."

Interim counsel fees are awarded to level the playing field and "'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 [1st Dept 2001], quoting O'Shea v O'Shea, 93 NY2d 187, 193 [1999]; see also Prichep v Prichep, 52 AD3d 61, 65 [2d Dept 2008]). "An award of interim counsel fees is designed to create parity in divorce litigation by enabling the nonmonied spouse to litigate the action on equal footing with the monied spouse" (Palmeri v Palmeri, 87 AD3d 572, 572 [2d Dept 2011]). Thus, interim fees generally will be granted "where there is a significant disparity in the financial circumstances of the parties" (Prichep, 52 AD3d at 65; see also DelDuca v DelDuca, 304 AD2d 610, 611 [2d Dept 2003]; Celauro v Celauro, 257 AD2d 588, 589 [2d Dept 1999]). An award of counsel fees lies in the sound discretion of the court, after it has taken into account the equities and circumstances of the [*10]case, including the respective financial circumstances of each party (see Domestic Relations Law § 237 [a]; Carr-Harris v Carr-Harris, 98 AD3d 548, 552 [2d Dept 2012]; Cusumano v Cusumano, 96 AD3d 988, 990 [2d Dept 2012]; Gagstetter v Gagstetter, 283 AD2d 393, 395 [2d Dept 2001]). As determined in the discussion regarding plaintiff's application for temporary maintenance, plaintiff is the more monied spouse and, therefore, is not entitled to an award of interim counsel fees pursuant to Domestic Relations Law § 237 (a).

Additionally, "'[a]n appropriate award of attorney's fees should take into account the parties' ability to pay, the nature and extent of the services rendered, the complexity of the issues involved, and the reasonableness of the fees under all of the circumstances'" (DiBlasi v DiBlasi, 48 AD3d 403, 405 [2d Dept 2008], lv denied 10 NY3d 716 [2008], quoting Grumet v Grumet, 37 AD3d 534, 536 [2d Dept 2007], lv denied 9 NY3d 818, [2008]). Here, the court considers DMG's high hourly rate, as compared to the customary fee charged for similar services, and the time and labor actually required to perform the work for which it has billed (see DiBalsi, 48 AD3d at 405). Notably, DMG also represents plaintiff in the plenary action, and it is unclear if some of the billing may represent fees for legal services in the plenary action, to which Domestic Relations Law § 237 (a) does not apply. Thus, plaintiff's application for interim counsel fees is denied.

Temporary Receiver

The Parties' Contentions

Plaintiff contends that he should be appointed as the receiver for the 753 Macon property, instead of defendant. As discussed above, defendant was appointed as the temporary receiver of the 753 Macon property by the court's August 12, 2016 order. Plaintiff states that defendant has done nothing to remove the 753 Macon property from the foreclosure process. He claims that he had been previously collecting the rent from the 753 Macon property from 2004 through 2013 and again in 2015, and that defendant became the temporary receiver in order to collect the 753 Macon property's rental income and deprive him of this cash flow.

Plaintiff asserts that the 753 Macon property had an interest-only mortgage with a balloon payment of $378,000, which became due to Wells Fargo in 2014. He states that he has attempted to secure funding to satisfy the Wells Fargo mortgage, and that he wishes to transfer title to the 753 Macon property to an LLC and have the LLC procure a "hard mortgage" from a private lender in order to pay off the Wells Fargo mortgage. He contends that he should be appointed as the receiver of the 753 Macon property so that he can attempt to secure funding to remove it from foreclosure.

Defendant asserts that she was appointed as the temporary receiver for the 753 Macon property because it was in foreclosure and plaintiff was doing nothing to address the issue. In her motion to be appointed as the temporary receiver of the 753 Macon property, defendant had argued that plaintiff had demonstrated his inability to manage it, and that she needed to be appointed as the temporary receiver in order to preserve this property. Defendant states that when she took over the management of the 753 Macon property, she was shocked and horrified by the conditions of the building.

Defendant sets forth that she has taken actions to make necessary repairs to the exterior, basement, interior, and backyard of the 753 Macon property. She lists, in detail, the repairs which have been performed. She also lists the expenses that she paid for the 753 Macon [*11]property, including the payments for repairs, insurance, the water bill, clean-up expenses, garbage removal, National Grid charges, snow removal, miscellaneous expenses, and legal fees in defending the foreclosure action. Defendant states that she has also collected rent and renewed the leases which were expiring. Defendant contends that by seeking to be appointed receiver of the 753 Macon property, plaintiff is seeking, in effect, to reargue and vacate the prior August 12, 2016 order of the court, which appointed her as the temporary receiver of this property.

Discussion

CPLR 6401 provides for the appointment of a temporary receiver "where there is danger that the property will be removed from the state, or lost, materially injured or destroyed." CPLR 6405 provides that "[u]pon motion of any party or upon its own initiative, the court which appointed a receiver may remove him [or her] at any time."

The court, in appointing defendant as the temporary receiver of the 753 Macon property, in the August 12, 2016 order, gave her the powers to collect the rent, pay the bills, execute leases, and negotiate and defend the foreclosure action. Defendant has shown that she is satisfactorily carrying out these powers. The issue of the Wells Fargo mortgage was previously raised at the oral argument of defendant's motion to be appointed as the temporary receiver. Plaintiff's then counsel, Mr. Evans, stated that plaintiff was trying to line up private lenders to pay off the mortgage. The court did not find this to be a basis to deny defendant's motion. Mr. Evans also pointed out, at that time, that there was an application for modification of the mortgage with Wells Fargo. In addition, defendant has asserted that she has paid legal fees for the foreclosure action, showing that she is acting to defend such action.

Thus, plaintiff has failed to establish any sufficient ground for the removal of defendant as the temporary receiver of the 753 Macon property (see Aebly v Lally, 140 AD3d 678 [2d Dept 2016], appeal dismissed 27 NY3d 1180 [2016]; Bank of Tokyo Trust Co. v Urban Food Malls, 229 AD2d 14, 29 [1st Dept 1996]). There is no basis to overturn the court's August 12, 2016 order. Consequently, plaintiff's motion, insofar as it seeks for him to be appointed as the receiver of the 753 Macon property instead of defendant (the eleventh branch of plaintiff's motion), must be denied.

Conclusion

Accordingly, it is hereby ordered that plaintiff's motion is denied in its entirety. Any issue raised and not addressed in this decision and order is hereby denied.

The parties shall appear for a final settlement conference on Thursday, April 26, 2018 at 2:00 p.m. If the case is not settled, trial dates will be rescheduled at that time.

This constitutes the decision and order of the court.

Dated: April 6, 2018

HON. DELORES J. THOMAS, J.S.C. Footnotes

Footnote 1:The court has denied plaintiff's motion to consolidate this action with the plenary action by its decision and order dated July 14, 2017.

Footnote 2:Plaintiff's motion also sought an order, irrespective of the court's determination of his request to vacate the note of issue as requested in paragraph 1, vacating the scheduled trial date of July 31, 2017 at 2:00 p.m. and rescheduling it to no earlier than November 1, 2017. This branch of plaintiff's motion was resolved by an order dated July 20, 2017, which set forth that after oral argument and a conference with the court, the trial dates, which were scheduled to commence on July 31, 2017, were vacated.

Footnote 3:DMG is also the law firm which represents plaintiff in the plenary action.