Macklowe v MackloweAnnotate this Case
Decided on December 13, 2018
Supreme Court, New York County
Linda Macklowe, Plaintiff,
Harry Macklowe, Defendant.
John M. Teitler, Esq., Michael F. Teitler, Esq., Alan S. Rabinowitz, Jeffrey D. Fisher, Esq., and Zachary R. Potter for Plaintiff; and Dan Rottenstreich, Esq., John O. Farley, Esq., and by Peter E. Bronstein, Esq. for Defendant.
Laura E. Drager, J.
In this divorce action the court conducted a trial to determine the equitable distribution of the marital property. The court heard testimony on 17 days, including September 6, 7, 13, 14, 15, 27, 28; October 18, 19, 20; November 30; December 6, 7, 15, 20, 21 and 22, 2017. Each party submitted a post-trial brief.
The parties married on January 4, 1959, in a religious ceremony in New Rochelle, New York. The Plaintiff ("Husband") was 21 years old, and the Defendant ("Wife") was 20 years old. They each grew up in middle class homes. Neither party had significant assets at the time they married. The Husband, who had not graduated from college, worked for Parents Magazine selling advertisements and the Wife worked as a receptionist for a publishing company.
The Husband became interested in real estate when the parties began to search for an apartment for themselves early in the marriage. He took a part-time job as a broker for a commercial leasing company while he continued selling advertisements for the magazine. However, the Husband soon gained sufficient success as a broker that he was able to work full time in real estate. By 1963 or 1964, the Husband made his first real estate investment, converting a loft at 31 East 28th Street in Manhattan into an office building with a group of investors.
The Wife continued to work outside the home until the couple's first child was born in 1960. The couple had their second child in 1968. The Wife had primary responsibility for the children's care. She worked for a brief time outside the home as a curator for Wave Hill in Riverdale, New York. Early in the Husband's real estate development career, she worked on some design aspects for his projects. However, she was never involved in the selling, building or procuring financing for any of his projects.
The Husband became one of the premier real estate developers in New York City. He displayed an ability to acquire a site, redesign an existing building or design a new structure, find [*2]investors, obtain financing, and complete a project. He has built or redeveloped some of the city's most iconic structures. His business was a financial success.
From early in the marriage, the parties invested in art. The Wife was passionate about art and educated the Husband about this interest. The Husband had his own artistic sensibilities as reflected in the design of his buildings. The couple spent weekends visiting art galleries and learning about the art world. They developed relationships with gallery owners and artists.
In the 1990s, because of a business investment backed by his personal guaranty, the Husband had to turn over some of his business properties to his lenders. The Wife claims he promised her he would never again personally guaranty financing in his real estate business.
After this reversal, the Husband rebuilt his business, amassing significant Manhattan real estate. In 2003, the Husband purchased the GM building at 767 Fifth Avenue in Manhattan. He then redesigned the lobby and retail space. Collaborating with Steve Jobs, he designed the internationally recognized Apple Cube that sits in front of the building. The property grew in value to $2.8 billion.
The cash flow from the Husband's business enabled the parties to enjoy an extraordinary lifestyle. They designed architecturally significant homes in East Hampton and at the Plaza Hotel, as well as sailing yachts. Most significantly, they continued to purchase art and developed a world-class collection.
Around 2007, to protect the parties' personal assets, the Husband claims he transferred the art collection previously held in their joint names to the Wife's name alone (the Wife claims the art was always held in her name). Other assets were also transferred to the Wife. The Wife participated in the planning and execution of these transfers.
In 2007, the Husband purchased a portfolio of prime commercial properties from Equity Office Properties ("EOP"), valued at $7 billion. The Husband personally guarantied the financing for the purchase with short-term one-year notes. He immediately reached an anticipated agreement with Deutsche Bank to have it assume the debt. However, when the financial crisis hit in 2008, Deutsche Bank was unable to proceed with the financing. As a result, the Husband had to sell certain business real estate holdings to pay his obligations. Most significantly, he sold the GM building to Boston Properties L.P. in a deal enabling the Husband to defer a nearly $1 billion capital gains tax. He also sold 305 West 50th Street to Equity Residential Properties. That sale also enabled the Husband to defer possible tax implications.
None of the parties' personal assets were sold, and the Husband avoided bankruptcy. The Wife was included in the discussions involving the sales. The Wife claims she was distraught at this turn of events and the loss of significant business assets, substantially diminishing the parties' net worth. She testified that the Husband had violated the promise he had previously made to her never to personally guarantee any loan made in connection with his business. However, she remained in the marriage.
The Husband testified that because of the sale of the commercial assets, the nature of his business changed. Revenue no longer came primarily from rent or refinancing of business properties. Instead, the Husband's business focused on development projects. The parties' tax returns support this testimony. The Husband's recent development projects provide him with fractional equity interests and payouts, commonly referred to as "promotes," as his share of the earned profits.
In resolving the financial issues of a divorce action, the court is required to distribute the [*3]marital assets and liabilities. DRL § 236B (5). To do so, the court must first identify the assets and liabilities that constitute marital property and determine the values of those assets. DRL §§ 236B (1)(c); (4) (b). Separate property is not subject to distribution. DRL § 236B (5) (b).
THE MARITAL PROPERTY
The parties collected art almost from the beginning of their marriage. They now possess an internationally renowned collection of modern and contemporary art. Although the collection is held in the Wife's name through a limited liability corporation, the art is marital property. The Wife was, and still is, passionate about art. She devoted significant time to curating the collection and maintaining relations with artists and gallery owners, but the art was purchased with funds earned by the Husband during the marriage. The Husband also enjoyed collecting art. He too developed relationships with artists and gallery owners, including assisting people in the art world with real estate transactions.
Neither party provided detailed information with respect to who held ownership of the art until 2007. It appears that at some point in time the art was placed in trusts in each party's name. In 2007, the art was titled in the Wife's name. In 2013, ownership of the art was transferred to LDBM, LLC of which the Wife is the sole member.
The collection consists of 165 pieces. Each party presented an expert witness qualified to testify to the value of the art. Christopher Gaillard of Gurr Johns testified on behalf of the Wife ("Gaillard"); Elizabeth Von Habsburg of Winston Art Group testified on behalf of the Husband ("Von Habsburg"). The experts presented a value for each piece of art and an overall value of the collection. Neither expert testified to the value of LDBM, LLC separate and apart from the art. Neither business records nor tax returns for LDBM, LLC were received in evidence. The court concludes, therefore, that apart from the value of the art, LDBM, LLC has no separate value and need not be distributed.
In valuing the art, the Husband argues that the court should determine the fair market value of each piece of art. This valuation method provides for a value based on a hypothetical arm's length sale between a willing buyer and willing seller, without consideration of the cost of the transaction or tax implications. The Wife argues that the court should determine the marketable cash value of each piece. This valuation method provides the value realized, net of expenses (e.g., commissions, shipping, insurance, etc.) by a willing seller disposing of property in a competitive and open market to a willing buyer, both being reasonably knowledgeable of all relevant facts, and neither being under constraint to buy or sell. Thus, she argues, the value of each piece in the collection is the fair market value less the expenses incurred in selling the artwork.
In support of her position, the Wife claims that using the marketable cash value is in accordance with the guidelines set forth by the Appraisers Association of America ("AAA") and is typically used in distributing marital property in a divorce action. However, explicit in the AAA definition of marketable cash value is that a sale takes place within an agreed upon timeframe. "This term is usually for equitable distribution when tangible property may be exchanged for cash or other financial arrangements or resale " (PX-39). Here, the Wife testified that she was not prepared to sell the art within any specified time. Rather, she stated that she wished to enjoy the collection and sell individual pieces only as necessary to support her standard of living. Accordingly, the court rejects the application of the marketable cash value method.
The Wife further argues that the court must account for the embedded capital gains tax by applying a net asset valuation. Dunn v. Comm'r, 301 F.3d 339 (5th Cir. 2002); Wechsler v. Wechsler, 58 AD3d 62 (1st Dept. 2008). This methodology is used to determine the value of a closely held corporation or limited liability corporation where an asset-based valuation methodology is employed, it is anticipated that the assets will not be sold, and the corporate entity will continue in operation. Thus, the application of this analysis would apply only in determining the value of LDBM, LLC.
LDBM, LLC was first created in 2013. Yet the Wife asks this court to base the embedded capital gains taxes from the dates of purchase of the art, some occurring decades before the corporate entity was created (PX-37). No evidence was presented as to what tax consequences, if any, arose when the art was transferred into LDBM, LLC, or at any of the times the art was transferred from individual names, to trusts or to prior corporate entities, if any. No evidence was presented as to why use of a purchase date prior to the creation of LDBM, LLC would be appropriate. And, as previously stated, no evidence was presented that LDBM, LLC has any value other than the art. The court rejects this argument.[FN1]
The Domestic Relations Law requires that the court consider any tax consequences to the parties in the awarding of assets, but that this occurs at the point in time that the court distributes the assets. DRL § 236B (5) (d) (11); Hartog v. Hartog, 85 NY2d 36 (1995). Thus, any tax consequence to be considered with respect to the distribution of the art is similar to consideration of the tax consequences arising from the distribution of the parties' other assets for which the parties relied on fair market values (e.g. the real property, yacht, jewelry, books). In sum, the court finds it appropriate to use fair market value to determine the value of each piece of art and will consider tax consequences in its discussion of the distribution of the art.
In conducting their respective valuations of the art, the experts each testified that they performed their valuations in accordance with the Uniform Standards of Professional Appraisal Practice ("USPAP"). (PX-40). The USPAP standards for personal property appraisals are set forth in Standard 7. The Wife argues that the Husband's expert failed to follow those standards. For instance, she claims that USPAP Standard Rule 7-3(b) requires an art appraiser to "define and analyze the appropriate market." It is the Wife's contention that to determine fair market value, only comparable sales at public auction should be used. It was therefore inappropriate for the Husband's expert to resort to retail sales (e.g. gallery sales; private sales) in determining fair market value. In addition, to the extent the Husband's expert relied on retail sales she did not fully disclose the specifics of the information she relied on. Moreover, she inappropriately and inconsistently relied on market trending "indices" obtained from Artprice.com as evidence that an artist's work was increasing or decreasing in value in the market. The Wife also objected to Von Habsburg's reference to the value ascribed to the collection for insurance purposes since replacement value is not an appropriate consideration in valuation.
In contrast, the Husband argues that Gaillard's report is a bare-bones compilation of what he deemed to be comparable auction sales without providing sufficient explanations for his [*4]reliance on any particular comparable sale. By only considering auction sales, he did not accord any significance to the reality that much art is sold through galleries or through other private deals. Consideration of insurance value in this instance is appropriate, since Christie's auction house determined in April 2015 (a year before this action began) the fair market value of the entire collection to be $937,521,000 for insurance purposes. The Christie's appraisal states, "(t)he method of valuation used to determine the insurance values is based on fair market value, which is defined as the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell having reasonable knowledge of relevant facts." (DX-DD). Thus, since the value used for setting insurance was fair market value, it is appropriate to consider that insurance valuation.
After review of USPAP Standard 7, the court concludes that the rule does not require any specific approach to valuation. The Standard mandates that the method employed be appropriate to the property being valued. Rule 7-3 (b) requires an appraisal to "define and analyze the appropriate market consistent with the type and definition of value." But equally important Rule 7-3 (c) requires the appraiser to "analyze the relevant economic conditions that exist on the effective date of the valuation, including market acceptability of the property, and supply, demand, scarcity or rarity." Moreover, Rule 7-6 requires the appraiser to "reconcile the data available and analyzed within the approach or approaches used" and to "reconcile the applicability and relevance of the approach or approaches, methods and techniques used " (PX-40, Emphases added).
Each expert agreed that it was appropriate to use the sales comparison valuation methodology, and in doing so each used public auction comparable sales of art by the artist whose work was being appraised. However, Gaillard relied solely on auction sales even if the comparable sales used were dated or not really comparable. The limitations of this rigid approach became evident when he relied solely on comparable sales from years or even decades before the appraisal date or compared sales of artwork that did not physically resemble the subject work. In addition, some of the comparable "sales" used were for art that did not sell above a set reserve price and were withdrawn. Thus, no sale occurred.
Gaillard provided no analysis in his report as to how he determined the value he ascribed to each Macklowe work of art from the values of the comparable sales he used. For some of the pieces he ascribed significantly different values to the Macklowe art from the comparable sales values (e.g. Pablo Picasso, Study for Monument to Guillaume Apollinaire; Polke, Plastik-Wannen). Although Gaillard endeavored to explain the differences in the overview of his report and in his testimony at trial, those explanations should have been in his report for each work of art. (USPAP Standards Rule 8-1).
Von Habsburg took a more nuanced approach and opined that where comparable public auction sales did not exist, it was appropriate to consider other data to determine the value of a work of art (e.g., the marketability of an artist's work at the time of valuation; information regarding private sales; consideration of values for insurance where fair market value was used by the insurance company). Although the court finds that she did not sufficiently disclose some of the data she relied on (e.g., the sources of her information regarding private sales), her approach was a reasonable attempt to address the imprecision in valuing the rare artwork owned by the parties, as well as accounting for the different markets in which art of this quality is sold.[FN2]
For each work of art, the court has considered the piece itself as displayed in the expert reports (PX-38; DX-DD); the comparable sales each expert provided in their respective reports; and the explanation by the expert for the value accorded to that work in the expert's report or testimony. Notwithstanding their different approaches, for eighty-six works of art, the experts agreed on the value or the value attributed by each expert was sufficiently close that the court finds it appropriate to value the piece at the mid-point between the two appraisals. Simply averaging expert appraisals is frowned upon unless the court can articulate its reason for doing so. Here, the court recognizes that appraisal of art is inexact and that the differences between the two values is inconsequential given the overall value attributed by each expert for that individual piece. Hoyt v. Hoyt, 166 AD2d 800 (3d Dep't 1990); Reingold v. Reingold. 143 AD2d 126 (2d Dep't 1988), lv dism, 73 NY2d 85 (1988); cf., Antinora v. Antinora, 125 AD3d 1336 (4th Dep't 2015); Robinson v. Robinson, 133 AD3d 1185 (3d Dep't).[FN3] The court also finds that for an additional fifteen pieces of art, only one party valued the work and the court accepts that valuation.[FN4] These works of art and the values the court ascribes to them are:
AbbotNew York At Night $9,500
AbbotG.E. Building with $4,000
AbbotDaily News Building$3,250
AradOh Void 2$107,500
BecherBlast Furnace Heads $175,000
BrainardIf Nancy was $3,000
EthridgeGateway Boats, Mumbai$7,000
EthridgePitch Pines $7,000
FlavinMonument for V. Tatlin$1,075,000
FrankParade — Hoboken NJ$145,000
GoberThe Floating Sink$3,000,000
GrotjahnUntitled (Full color Butterfly)$600,000
GrotjahnUntitled (Call me Jackson )$237,500
GurskyMay Day III$400,000
HorowitzCoke/Pepsi (264 cans)$32,000
HumphreyUntitled (No.4) (1973)$21,500
KoonsArt Magazine Ads$25,000
KoonsGazing Ball $1,775,000
KoonsPuppy Ceramic $8,500
KoonsArt Magazine Ads (2d work)$25,000
LeWittA Sphere Lit from the Top$39,000
Maier-AichenUntitled (towards Burbank)$10,000
Maier-AichenUntitled (towards Burbank)$100,000
MangiarottiEros Side Table$5,500
MardenSouvenir de Grece I$375,000
MardenRed Rocks (5)$12,000,000
MardenSecond Green Square$112,500
MardenCold Mountain Study$1,375,000
MartinUntitled No. 5$687,500
MiroUntitled (La Bague )$1,750
MorrelNeedle and Thread$900
MorrelUntitled: Two Works$1,200
NapieralaUntitled (Voice of the Sound)$800
NewsonChop Top Table$125,000
PicassoHeads (Ceramic Pitcher)$2,250
PicassoFace No. 197$7,250
PicassoBearded Man's Wife$25,000
PicassoSueno y Mentira de Franco$30,000
PicassoVallauris (Ceramic Plate)$3,500
PicassoWood-Owl (Ceramic Vase)$25,000
PolkeUntitled (Quetta, Pakistan)$600,000
RuschaI'm Completely Exhausted$375,000
StellaWake Island Rail$425,000
StollerTWA Terminal (walkway)$3,750
StollerTWA Terminal, Idlewild$5,250
SugimotoCascade River, Lake Superior$127,500
SugimotoCascade River, Lake Superior$30,000
SugimotoCascade River, Lake Superior$30,000
SugimotoGuggenheim Bilbao $207,500
SzekelyFine Art Coffee Table$17,500
WoodWood Grain Pot $625,000
The total value of Schedule I art is $39,963,175. [FN5]
Although both experts agreed on its value, the court classifies separately a particularly valuable piece of art:
The disparity in the valuations for the remaining art in the collection precludes this court from assigning a value to those works. Both experts agree that many of the remaining pieces in the collection are of significant value, often rare examples of that artist's work. The difference in the experts' valuations is often because there has been no recent auction sale of comparable work by the artist.
As an example, the parties own the sculpture Le Nez by Alberto Giacometti. They purchased it in 1992. There are only five versions of this sculpture in existence. Gaillard used as comparable auction sales two versions of a different sculpture by Giacometti sold in 2010 and 1990 and a sale of another version of Le Nez from 1992 with sale prices ranging from $25 million to less than $1 million. Von Habsburg used two auction sales in 2010 and 2013 of different sculptures by the artist that sold in the $50 million range. She also discussed more recent sales of other works by Giacometti at auction and by private sale ranging from $50 million to $100 million. She noted that there has been a recent surge of interest in Giacometti's work. Gaillard opined that the fair market value of the Macklowe piece is $35 million whereas Von Habsburg opined its fair market value to be, conservatively, $65 million.
In another instance, Von Habsburg found no comparable auction sales existed for the work Track Painting 1967 by Michael Heizer and noted that this artist's works are typically not sold at auction. Gaillard relied on comparable auction sales from 2009 and 1995 of entirely different forms of work by the artist. He also used as a comparable sale a piece put up for auction in 2013 that did not sell because the reserve price was not met. Gaillard valued the piece at $150,000 and Von Habsburg valued it at $1,700,000.
For a Robert Irwin piece, Untitled (1965-6), Gaillard relied on three sales, two from 2008 and one from 2006, yet gave a value more than twice the amount at which these comparable pieces sold without explanation. He valued the Macklowe piece at $2 million. Von Habsburg looked at comparable auction sales from 2008 and 1996. She also received information from the gallery that sold the piece to the Macklowes and noted that Irwin's [*5]art more often sells through galleries. She valued the work at $8,500,000.
For the Jeff Koons piece Vest with Aqualung, each appraiser used the same auction comparable sales: a 2006 sale for $4,608,000 and a 2014 sale for $11,589,000. Gaillard valued the Macklowe piece at $10 million and Von Habsburg valued it at $11 million.
Although the Husband's expert ascribed a higher value to more of the art than the Wife's expert, that was not always the case. As an example, for Number 17 by Jackson Pollock, Gaillard valued the work at $35 million whereas Von Habsburg valued the work at $15 million. For that piece Gaillard used, as his comparable sales, two auction sales from 2014 where the works sold for $8,565,000 and $11,365,000. Von Habsburg used four comparable sales, including the two used by Gaillard. Her additional sales were a 2015 auction sale for $5,178,000 and a 2001 auction sale for $7,980,750. She also noted that a painting from the same series, but half the size and not as fully developed as the Macklowe piece, traded privately in 2011 for $8 million.
Accordingly, the court cannot attribute a value to the following pieces in the Macklowe collection:
Grand Nu Charbonneux
Concetto Spaziale Attese
Le nez [*6]
Bust of Diego on Stele II
Untitled (Black Butterfly Over Blue)
Untitled (Red Butterfly)
Track Painting [*7]
Des Malers Atelier/Der Rhein
Untitled XIII [*8]
New Hoover Convertibles, New Shelton Wet/Dry Double Decker
Vest With Aqualung
Baccarat Crystal Koons
11 (to Leger) [*9]
Untitled No. 44
Untitled No. 11
Early Morning Happiness
Untitled No. 13
Study for the Monument to Guillaume Appolinaire
Rasterbild Mit Palmer [*10]
Seit Benzin-Und Heizolpreise Fallen
Sammler Mit Hund
Abstraktes Bild [*11]
Surface Veil #3
Synopsis of a Battle [*12]
Untitled (Jupiter Island)
Blue Air Mail Stamps
Hammer and Sickle
[FN6] PLAZA APARTMENT
In 2007, the parties purchased seven apartments in the world-famous Plaza Hotel. They combined these apartments into one almost 14,000 square foot apartment ("Plaza Apartment"). This asset is marital property. The Plaza Apartment is on the seventh floor. The entire length of the north side of the Plaza Apartment provides an expansive, above the tree line, view of the entirety of Central Park. On the east side, the apartment overlooks [*13]Grand Army Plaza with its fountain and the GM building across Fifth Avenue.
The Plaza Apartment was designed by the parties to meet their unique specifications. It consists of one large master bedroom suite with two bathrooms, two dressing rooms, and an office. There are two additional bedrooms, intended for staff and a guest room. Those rooms each face south, having no special city view. In addition, there is a living room/den area, music room, large dining room, library, eat-in kitchen, three additional full bathrooms, and two lavatories. The apartment has massive walls designed to display art from the parties' collection, some of which require space typically found in museums. The Plaza Apartment encompasses what had originally been the public hallway. The seventh apartment was turned into a gym with a kitchenette.
Each party offered the testimony of an expert real estate appraiser to prove the value of the Plaza Apartment. Both appraisers used the sales comparison approach, typically used in real estate appraisals. It requires the comparison of recently sold properties with similar attributes to the subject property, and then adjusting value based on whether the subject apartment or comparable properties have better or lesser attributes. They each used a Spring 2017 appraisal date.
Each appraiser recognized the unique qualities of the Plaza Apartment, arriving at very different conclusions regarding the apartment's value. The Wife's expert opined that the Plaza Apartment's value was $55 million. The Husband's expert opined that the apartment's value was $107 million.
The court concludes that the unique attributes of the Plaza Apartment created difficulties in valuing the asset. The court finds each expert overemphasized and underemphasized different qualities of the apartment, thereby affecting that expert's valuation.
The Wife's expert, Jonathan Miller of Miller Samuel Inc., found the size of the apartment to be a detriment, particularly because the apartment is located on a low floor. More typically, he opined, large luxury apartments are found on higher floors. However, the court finds that this opinion undervalued the unique qualities of the expansive views of Central Park and Grand Army Plaza provided by the Plaza Apartment, the privacy those views afforded even if on a lower floor, including the reality that new construction would never block those views. It is also of concern to the court that some of the comparable apartments relied on by the Wife's expert had no views and most of the comparable properties used were smaller in size.
However, the Wife's expert properly noted that whoever purchased the apartment would likely incur significant renovation costs. Although it is possible that a corporation, art gallery or couple with a unique art collection might find the apartment attractive as is, it is far more likely that any buyer would want to reconfigure the space that had been designed to meet the parties' specific requirements. Moreover, the apartment was constructed over ten years ago and likely requires updating. However, the court does not accept the assessment of the Wife's expert that a purchaser would likely reconvert the Plaza Apartment into separate units. Some of the comparable properties used by the expert [*14](including a townhouse and a large apartment on First Avenue) support the conclusion that a market exists for apartments of the size of the Plaza Apartment. In any event, a prospective buyer could reconfigure the Plaza Apartment by creating a large apartment with unique views and selling off smaller units to recoup some of the cost.
The comparable properties relied on by the Husband's expert, Steven Schleider of Metropolitan Valuation Services, Inc., are in buildings of similar luxury standards to the Plaza Hotel. Each of the comparable properties is a large luxury apartment with an outstanding city view. However, none of the comparable properties he used are of the size of the Plaza Apartment. The expert reached his opinion regarding the value of the Plaza Apartment first by adjusting the price per square foot of each comparable property based on a comparison of the attributes of that comparable property with those of the Plaza Apartment. After considering the range of adjusted per square foot prices of the comparable apartments, he chose a low-end price within the range to use in valuing the Plaza Apartment. As a final step, he multiplied the square footage of the Plaza Apartment by that price per square foot (13,845 sq. ft. x $7,750 = $107,298,750).
The court finds this methodology suspect since the expert did not use as a comparable property any apartment close to matching the size of the Plaza Apartment. Such properties exist and were used by the Wife's expert (albeit those properties did not have the same attributes as the Plaza Apartment). As an example, in a new construction luxury apartment, the Wife's expert found the price per square foot of a 13,554 square foot apartment was only $6,753.80.[FN7] Moreover, although the Plaza Apartment is unique, the court does not accept the opinion that the sale of the Plaza Apartment would result in the highest sale ever of a Manhattan apartment. In addition, it was conceded that since being converted into condominiums, the Plaza has undergone financial difficulties that might deter buyers.
After consideration of these factors, the court finds the value of the Plaza Apartment to be $72,000,000.
THE COMMERCIAL REAL ESTATE INTERESTS
The parties stipulated to the values of the following marital property real estate interests held by the Husband's business:
150 East 72nd Street
1143 First Avenue
737 Park Avenue
432 Park Avenue Retail Commercial And Garage — Equity
310 East 53rd Street Retail and Garage
200 East 59th Street — Equity
One Wall Street — Equity
Macklowe Operating Companies
432 Park Avenue Residential "Promote"
In 2010, the Husband sold his interest in a real estate development site at 432 Park Avenue in Manhattan to an entity owned by CIM Group ("CIM"), an investment fund. The CIM entity that entered into the sale agreement was CIM Fund III. To effectuate the sale, the Husband and CIM Fund III entered into the Contingent Purchase Price Agreement ("CPPA"). This agreement provided for the Husband (through entities he owned) to receive certain payments from CIM Fund III upon future sales of condominium units developed at 432 Park Avenue ("promote"). In 2011, the CPPA was amended to allow CIM Fund III to bring in outside equity investors to provide an infusion of additional money to complete the project. The amended agreement further provided that the Husband's promote would be calculated only on the payments that CIM Fund III received, not on 100% of the distributions from the project if other investors were brought in. Subsequently, CIM III entered into an Operating Agreement between itself and new investors. That agreement reduced to 39.41% CIM III Fund's interest in the project. The parties agree that the Husband's 432 Residential Park Avenue promote ("432 Park Avenue Residential Promote") is marital property, but they differ as to its value.
The Wife's expert posited three scenarios to value the Husband's 432 Park Avenue Residential Promote. The parties stipulated to the amounts posited by the Wife's expert. Scenario A was premised on a valuation based on CIM Fund III's 39.41% interest, resulting in the Husband's promote having a value of $2.5 million or $1.5 million (depending on the valuation date used); Scenario B values the Husband's promote at $16,600,000 (or $13,800,000) based on the assumption that the Husband's promote should be valued at 100% of the distributions from the project. Scenario C assumed that CIM III Fund did not bring in any new equity investors, financing the entire $1.3 billion project with debt resulting in the promote having a present after-tax value of $99.5 million (or $94.5 million).
The Wife argues that the court should adopt Scenario C. It is her contention that there were no outside investors brought into the project. Rather, the "outside" investors were various arms of CIM. As a result, the Husband's promote was never diluted. In support of her position, the Wife offered into evidence various filings the Husband submitted to banks as late as June 2016 (shortly before this action commenced) in which he claimed that the anticipated distributions he would receive from his promote was approximately $428 million. She contends that these filings support her position that the Husband's promote was never diluted.
The Husband responds that only Scenario A is supported by evidence, that being the [*16]CPPA. The plain language of that agreement speaks to the dilution of the Husband's interest in the promote. Kolmar Americas, Inc. v. Biversal Inc., 89 AD3d 493 (1st Dep't 2011). Citibank was hired by CIM to find investors. The investors who provided the additional funds to finish the project were unrelated to CIM. The Husband points to the deposition transcript of a witness from CIM received in evidence who denied that CIM entities were the other investors. The other scenarios posited by the Wife's experts are speculative and unsupported by any evidence. The Wife did not depose or call to testify at trial any of the outside investors, or any witness from Citibank, to support her contention. The Husband claims his bank filings that seemingly contradict the CPPA used old information from before his interest was diluted.
The Husband argues that the court should adopt the Scenario A valuation, offered by the Wife's expert. Alternatively, he proposes that the Wife receive 50% of his promote when he receives it on an "if, as and when" basis, net of taxes. The Wife rejects that approach since she believes the Husband will manipulate any payout he might receive to prevent her from receiving any of the promote if it is awarded to her "if, as and when" and she should not have to maintain a business relationship with the Husband post-divorce.
The court rejects the Scenarios B and C valuations as being speculative, since no evidence in support of these valuations was offered at trial from outside investors, CIM, CIM Fund III or Citibank. The valuation under Scenario A is based on the contractual obligations under the CPPA and the Operating Agreement between CIM Fund III and the outside investors. Although the Husband's repeated submissions to banks that the distribution he would receive from his promote was approximately $450 million raises concern, those submissions cannot outweigh the plain meaning of the contracts to this deal.[FN8] Thus, the court is persuaded that Scenario A is the appropriate value.[FN9]
The court adopts the value of this asset on the date of commencement, $2.5 million. The Husband argues that his interest in the promote is passive and that the later date is more appropriate. The court finds the evidence insufficient to make that determination.[FN10] Since the Wife rejected the Husband's proposal that she receive the distribution of this asset on an "if, as and when" basis, the court finds the value of the Husband's 432 Park Avenue Residential Promote subject to distribution to be $2.5 million.
432 Park Avenue "Retail" Promote
200 East 59th Street Promote
One Wall Street Promote
The Husband holds interests in three additional promotes structured similarly to the 432 Park Residential Promote. The parties stipulated to the values of two of these [*17]promotes as of the date of commencement of this action, but disagreed on the value of the third promote:
432 Park Avenue "Retail" Promote
$1,500,000 or $0
200 East 59th Street Promote
One Wall Street Promote
The Husband argues that these promotes are his separate property. Each of these promotes is tied to a real estate project in development. He agrees the Wife is entitled to share in the value of the Husband's equity interest in the real property underlying the promotes on the date this action commenced. However, he contends that each promote will achieve value only if the development project is completed and the units in the buildings sold. As of the day the action commenced, the development of the buildings had not been completed. For instance, only the foundation for the new construction at 200 East 59th Street had been completed. The building at One Wall Street had been gutted but funding was not yet in place to move forward with the project. The retail space and garage at 432 Park Avenue had not been completed and only one tenant secured. The Husband argues that significant risks remain with respect to financing and construction before he will receive any benefit from these promotes. The work necessary to achieve value for these promotes occurred after commencement of the action.
The Wife counters that the Husbands promotional interests came into existence during the marriage and, therefore, are marital property. The valuations performed were based on what a willing buyer would pay for the promote on the date the action commenced. The risks associated with these projects was factored in by the application of a high discount rate in performing the valuations.
The Husband responds that the valuations performed by the Wife's experts did not distinguish between the work performed during the marriage and the work that would have to be performed post-commencement. Therefore, even if the court found these assets are marital, the valuations submitted by the Wife's experts are inaccurate and must be rejected.
After reviewing the evidence, the court finds these three promotes, created during the marriage, are marital property. The issues raised by the Husband regarding the effort and risks encountered post-commencement of this action are appropriately considered in the distribution of the value of the assets.
The court finds the value of the 432 Park Avenue "Retail" Promote to be $0 based on the report filed by the Wife's expert, The Marcum Firm ("Marcum") relied on the Wife's expert Cushman and Wakefield (PX-30) in determining the value. In that same report, Marcum posited an alternative value of $1.5 million "per Macklowe Model." This number was derived from an anticipated value found in the Husband's business papers (PX-30). The Husband presented credible evidence that his business created multiple "models" to project the business's financial position. The numbers in these models changed over time. It is inappropriate to use them in determining a value for this asset. The court agrees.Moreover, reliance on a "Macklowe Model" would contradict the evidence provided by the Wife's own expert, Cushman and Wakefield.
The court accepts the stipulated values of the other two promotes: 200 East 59th Street Promote ($4,800,000) and One Wall Street Promote ($7,400,000).
Park Lane Hotel
The parties own an equity interest in the Park Lane Hotel. This entity is managed by a third-party. The parties' interest was not valued. However, since the Husband does not control this entity, the Wife is not opposed to sharing the parties' interest in this entity with the Husband. The parties agreed to share this interest "in-kind" or its value on an "if, as and when" basis with each party being responsible for 50% of all capital calls and tax consequences.
NET OPERATING LOSS
The parties agree that the Husband held a Net Operating Loss ("NOL") of approximately $275 million the date this action commenced. A NOL can be carried forward to apply against future income, thereby reducing tax liability. As a result, NOLs are recognized as valuable assets to be equitably distributed. Finkelstein v. Finkelstein, 268 AD2d 273, 274 (1st Dep't 2000) app. denied, 96 NY2d 703 (2000); Braunstein v. Braunstein, 132 AD3d 620, 624 (2d Dept. 2015). The parties agree that this asset is marital property but disagree as to its present distributable value. The Wife argues that from 2008 to 2015, the Husband used $448 million of NOLs to defray income taxes — an average rate of $64 million per year. She argues that past usage of a NOL is a sound method to predict future usage rates. The Wife's expert, Mark Harrison, of Marcum ("Harrison"), opined that he determined the value of the NOL by projecting the Husband's income for the next five years at a blended total tax rate of 48.456% to reflect the different tax rates incurred for the different sources of income the Husband would receive. He opined that the Husband would earn $55 million in taxable income over each of the next five years. Applying the NOL equally over that same period, discounting the total benefit back to its present value (using an appropriate discount rate), Harrison determined the present value of the NOL is $126 million. Since the Wife will be unable to benefit from the NOL once the parties are divorced, the Husband should receive the entirety of the $126 million value of this asset.
The Husband does not dispute the valuation methodology used by the Wife's expert. He argues, however, that the expert did not make an evidence-based projection of the Husband's income, a fact that Harrison did not deny. The Husband contends that the Wife, as the non-titled spouse, had the burden of proving the value of the NOL and that she failed because it is too speculative to predict the Husband's future income. Spathis v. Dulimof-Spathis, 103 AD3d 599, 600 (1st Dep't. 2013) lv. dism, lv. denied, 22 NY3d 913 (2013); Rubin v. Rubin, 1 AD3d 220 (1st Dep't 2003. lv denied, 2 NY3d 706 (2004); Kaye v. Kaye, 192 AD2d 365 (1st Dep't. 1993).
After review of Harrison's report and testimony, the court concludes that his opinion regarding the income the Husband would earn over the next five years is too speculative to form the basis of a determination of the value of the NOL. Harrison conceded that after reviewing every asset held by the Husband, the expert could not project a stream of future taxable income with any certainty. He could not identify any source that contributed to his claim of $55 million taxable income (9/14/17 Tr. pp. 721, 733). The Husband's expert, John Gross, of BST and Co. CPAs, LLP ("BST"), noted that the source of the Husband's income had changed. After 2007, the Husband generated significant capital gain income [*18]from the sale of properties arising from the EOP loss. Going forward, the Husband's income will be dependent on the success of his development projects. While one project may generate income, another might generate a loss, negating the use of the NOL. In addition, there is the harsh reality that given the Husband's age, the use of the NOL projected out over five years may never occur.[FN11]
After consideration of these facts, opinions and arguments, the court concludes that there is insufficient evidence and it would be too speculative to assign a value to the NOL. Rubin v. Rubin, supra.; Finkelstein, supra. Nonetheless, the court finds that both parties should benefit from the existing NOL to the extent possible and will address how that will be accomplished in the distribution of the marital property.
The parties agree that the Husband holds marital property bank debt. They dispute the value of that debt. The Husband claims that on the date this action began (June 14, 2016) he held bank debt with various entities totaling $100,561,816 (DX-LL). In support of this claim, he offered into evidence a demonstrative chart setting forth the amount of debt he claims he owed to different institutions with largely unexplained attached supporting documents consisting of Notes, checks, withdrawals and bank statements.
The Wife points out that the Husband's accountant asserted in a document submitted to a bank in October 2016, that the Husband's bank debt as of July 31, 2016 was only $69,038,603 plus additional contingent liabilities of $6,864,000. (PX- 79). Moreover, in his Statement of Proposed Disposition filed with the court on August 30, 2017, immediately before the trial commenced, he listed bank debt of $77 million. (PX-68, p. 20)
The Wife further notes that in a personal financial statement submitted by the Husband to a bank in April 2016, shortly before this action began, he certified having $29.8 million in bank debt as of December 31, 2015. (PX-63). In a different personal financial statement submitted to another bank, the Husband certified his bank debt as totaling $67.5 million as of December 31, 2015 (PX-69).
Representations by a party to a divorce action made to third parties may be considered in determining the value of an asset in a divorce action. Steinberg v. Steinberg, 59 AD3d 702 (2d Dep't. 2009); Capasso v. Capasso, 119 AD2d 268 (1st Dep't. 1986). Although the Wife contends that the court should rely on the representation by the Husband that the outstanding debt was only $29.8 million, she contends that in no event should the Court assign a value greater than $67.5 million, the highest amount submitted to a bank before commencement of this action.
The court values the bank debt at $69,038,603. The parties historically used debt to finance real estate and other investments. This is the amount of debt listed in a submission to a bank by the Husband's accountant, and which the Husband initialed, on July 31, 2016, less than two months after this action commenced.[FN12] This amount, allowing for some fluctuation, is consistent with one of the earlier bank filings from December 2015.
The court deducts $2,160,000 for the letter of credit that formerly secured the Wife's [*19]purchase of apartment 78A at 432 Park Avenue and which the sponsor released when the Wife rescinded the purchase contract. Thus, the court finds the value of the bank debt subject to distribution to be $66,878,603.
DEFERRED TAX LIABILITIES/ REIT UNITS AND CVS STORES
Between 2008 and 2010, the Husband sold or transferred certain real estate holdings so that he could pay off debt resulting from the EOP transactions. Each sale or transfer was constructed to enable the Husband to receive cash or another asset while at the same time minimizing capital gain liability.
In 2008, the GM building was sold to Boston Properties LP ("Boston Properties"), a real estate investment trust ("REIT"). REITs are an IRS approved mechanism for transferring real estate while minimizing the seller's capital gain tax liability. In effect, the real estate owner transfers the property to an operating partnership owned by the REIT. In exchange, the original owner of the real estate assumes some portion of the REIT's debt to offset gain on which the owner might otherwise be obligated to pay tax. From this deal, the Husband's company, 767 Fifth, L.P., received cash against which the parties reported some capital gain[FN13] and 102,883 Boston Property Units. A deferred tax liability was associated with these operating units to avoid the capital gain from the sale.[FN14] The Husband's forensic accounting expert, John Johnson, of BST ("Johnson"), opined that the net deferred tax liability arising from the Husband's indirect ownership interest in Boston Properties on December 31, 2015 was $302,758,786.
In 2010, a similar transaction resulting in tax deferred liability arose from the sale of 305 West 50th Street (the "Longacre" property).[FN15] Equity Residential Properties ("ERP"), a REIT, through its operating partnership ERP Operating Limited Partnership ("ERPOP") purchased 100% ownership of Longacre from Macklowe Properties, L.L.C. ("MP") and Purcell, Woodward and Ames, Inc. ("Purcell") in exchange for ERPOP Units and the assumption of debt. MP holds 186,685 ERPOP Units and Purcell holds 1,886 ERPOP Units. Johnson opined that "(t)he amount of the deferred taxable gain that is allocable to Mr. Macklowe from this transaction is approximately $16,704,004 and the deferred tax liability on this deferred taxable gain would be approximately $6,096,293" on December 31, 2015. (DX-JJJ., p. 8).
The parties have not paid any of the deferred tax liability from either transaction through the date of trial.
The Wife's expert, Harrison, opined that the deferred tax liabilities arising out of these transactions have no value.
The Wife acknowledges that a liability exists because capital gains on the sale of the GM building and Longacre were not recognized at the time of the sales. She argues, however, that the Husband failed to prove the value of the deferred tax liabilities and, in any event, there is no evidence that the liabilities will ever be realized because of the structure of the REIT transactions. Indeed, in describing the transaction involving the sale of the GM building, the Wife's expert opined that the deferred liability is more aptly considered a deferred contingent liability. He opined that determining the present value of the debt would require consideration of the probability of whether the taxes will ever have to be paid as opposed to simply determining the present value of a deferred liability where it is anticipated the taxes will be paid in the future. (PX-37, p. 4). The Wife further argues that Johnson failed to value the liability but merely calculated the impact on the marital finances as if a tax had come due on December 31, 2015, which it did not. (DX-JJJ, p.2).
The Husband counters that he has no control over Boston Properties or ERP. Decisions they make could trigger his tax liability. However, as the Wife's experts opined, it is the purpose of a REIT to enable the transfer of real estate without the seller recognizing capital gains. If a REIT fails to protect existing contributors, it will be unable to secure new assets. Since it is in the interest of REITs to continue allocating debt to avoid capital gain liability, the possibility of realizing the deferred gains (either by the REITs selling the buildings or by reducing the debt to a level that did not cover the gain) is negligible. (PX-6, p. 14-15, Richard Lipton, of Baker & McKenzie, 9/7 Tr. 204-5; PX-37, p. 5). In fact, Boston Properties recently assigned to the Husband's interest additional debt. Accordingly, the Wife's expert valued the deferred tax liabilities at zero (PX-37, p. 4-10; 9/14 Tr. 690).[FN16] The court also notes that the Husband's financial statements do not list this liability (See, PX-77; PX-63)
The Husband acknowledges that it is unlikely these deferred liabilities will ever come due during the parties' lifetimes. He argues, however, that from the BST evidence, the potential tax liability would exceed $300 million and it would be inequitable for him to have to bear this risk alone. He contends that the Wife benefitted from his careful tax planning, enabling the parties to avoid paying taxes at the time the properties were sold and she should now share the risk if the taxes come due.
The court concludes that these deferred tax liabilities are marital property, but the court cannot determine the value of these liabilities from the evidence produced. Given the unlikelihood that the taxes will ever have to be paid, the court finds it would be inequitable to base the value of the amount of tax as if it had become due as of December 31, 2015. To do so would be comparable to using market value in valuing the art collection where the sale of art was not contemplated. In fact, the Husband largely conceded the difficulty in valuing the tax liability by suggesting that no specific amount of debt be attributed to each party, but rather they should share ownership of the asset that holds the most debt (see below in discussion of distribution of the marital assets). Although certain events could [*20]trigger these liabilities causing them to become due, the court is convinced such events are unlikely to occur, particularly during the remaining lifetimes of the parties. In any event, that risk was not part of the Husband's valuation calculation, which the court finds should have been considered.
Apart from the tax liability, the Wife argues that the REIT units owned by the Husband's businesses have a value. The Husband valued his Boston Property Units in the amount of $13,121,698 on December 31, 2015 as reflected on a cash balance personal financial statement he submitted to BankUnited in April 2016. (PX-63). She asks the court to take judicial notice that the published market price for the same number of shares was $13,377,876 as of December 29, 2017 (Plaintiff's Post-Trial Memorandum, p. 55). Thus, she submits that the court should find the value of the Boston Property Units to be $13,377,876.
As noted above, Purcel holds 1,886 and MP holds 186,685 ERPOP Units. If as stated on the Husband's Net Worth Statement, the Husband holds 45% and the Wife holds 25% of MP, the Wife argues that the Husband indirectly holds 85,894 ERPOP Units and the Wife indirectly holds 46,671 ERPOP Units. The Husband valued his ERPOP Units at $7,008,112 based on a price of $81.59 per unit as of December 31, 2015 as reflected on the cash balance personal financial statement submitted to BankUnited (PX-63). By that analysis, the Wife's units were worth $3.8 million. The Wife acknowledges that the price per unit had dropped to $63.77 per share as of December 29, 2017, resulting in respective values of $5,477,460 and $2,976,210.
Finally, in 2009, a third property was transferred in an in-kind tax deferred three-party exchange, using a qualified intermediary. The transfers were between the Husband's business entities. The Husband transferred his ownership of the land and building at 140 West 57th Street in exchange for 20 CVS stores under ground leases ("CVS Stores"). The parties stipulated that the value of the CVS stores is $10.9 million without prejudice to either party arguing the tax consequences of the sale. (Court Ex. I). The Husband's expert opined that the realized gain from the transfer was $44,430,805. The Husband conceded that unlike with the Boston Property and ERP REITs, he alone controls whether a deferred tax liability is triggered and is prepared to assume responsibility for that liability. However, he objects to attributing any value to the CVS stores because of the potential tax consequences if the assets are sold.
The Wife asks the court to find the following values to be the fair market value of these assets:
Boston Property Units
The court concludes that it cannot determine the fair market value of these assets without considering the tax liability that would arise if these assets were sold. The Wife's expert noted at the time the GM building was sold the parties' accountant advised them never to sell the Boston Property Units because a sale would trigger the deferred gain which would [*21]be far greater than the fair market value of the units. Accordingly, the Wife's expert at trial assigned "zero probability" to the sale of the units because of the recognition of the gain that would be incurred if sold. (PX-37, p. 6). It would be inconsistent to ascribe a value to these assets that cannot be sold.
The parties received the value to which they were entitled when the Husband sold the GM building, Longacre and transferred 140 West 57th Street for the CVS Stores. All that remains are capital gain taxes. They have avoided paying those taxes by the transactions previously described. Although these assets have a paper value, those values are illusory.[FN17]
Thus, the court finds that just as the tax liability has no value, the Boston Property Units, the ERP Units and the CVS Stores have no value.
Bank and Brokerage Accounts
The parties stipulated to the existence of the following marital property assets and their values as of the date this action commenced. The Wife asks this court to use the date of trial values claiming she needed to use her savings for ordinary living expenses. Use of marital assets after commencement of a divorce action are subject to an automatic restraining order DRL § 236B (2) (b). Notwithstanding the restraint, marital assets may be used to pay ordinary living expenses. The court rejects the Wife's position because she presented insufficient evidence at trial to establish the amounts she paid for her expenses.[FN18] The court adopts the stipulated values as of the date this action commenced:
Signature Bank x5824
[FN19] Accounts in Wife's Name
Signature Bank x5719
Signature Bank x5761
Signature Bank x5816
Signature Bank x6859
Morgan Stanley x.9444
LDBM LLC's signature Bank x2615
Accounts in Husband's Name
Bank United x1604
Signature Bank x5700
Capital One Bank x3841
Bank of America x3537
Signature Bank x5808
First Republic x3846
First Republic x8923
Signature Securities x0839
Morgan Stanley x1444
L & H Marine
The parties agree that the Husband's $1.5 million in Israel bonds have no value because they are offset by a $1.5 million debt.
The parties agree that the following alternative investments are marital property. They agree to the value of these assets or that no value can be assigned. The court accepts the stipulated values or assigns no value in accordance with the parties' stipulation
Jointly Owned - Reservoir Capital Partners (Cayman) LP .3% interest
Alternative Investments in Wife's Name
0.8% Acquisition Fund Three LP
0.6% Acquisition Fund Four LP
1% Overseas Acquisition Fund Two LP
0.4% Venture Fund LP
1% Overseas Acquisition Fund III LP
Diversified Arbitrage Strategies LP
V Beaute LLC
1% 976 Madison Restaurant LLC
Alternative Investments in Husband's Name
1% 976 Madison Restaurant LLC
26.1% Coolidge-Custer Equities LP
100% ASRP Inc, and 99% ASRP LP
100% Corduback Realty Corp.
0.000049% profits in the Blackstone Group LP
V Beaute LLC
Rak Group LLC
The parties stipulated to the value of the following personal assets:
East Hampton House
Units 78A and 78B at 432 Park Avenue
By the commencement of this action, the Wife had contracted to purchase unit 78A and the Husband had contracted to purchase unit 78B at 432 Park Avenue. Although initially the parties may have contracted to purchase the apartments as investments, the Husband ultimately moved into 78B. The parties had stipulated to the values of the apartments. However, after entering into the stipulation, in a separate proceeding, another court allowed the Wife to rescind her contract. Thus, that asset no longer exists and has no value. The parties stipulated to a fair market value of $9,266,489 for unit 78B. The court accepts this value.
Husband's Loan Receivable from a Business Partner
The Husband acknowledges that he has a loan receivable from a business partner that is marital property valued at $5,830,980. The court accepts this value.
"Marital Waste" Claim
The parties stipulated that there exists a marital waste claim in that the Husband spent sums totaling $856,332.54 for non-marital purposes. The court accepts this stipulated value.
DISTRIBUTION OF MARITAL PROPERTY
Marital property must be distributed equitably between the parties upon consideration of the circumstances of the case and the respective parties. DRL § 236B (5) (c). This court has considered each of the factors set forth in DRL § 236B (5) (d) to the extent applicable in reaching its decision.
In this 55-year marriage during which each party made direct and indirect contributions and accumulated great wealth, the parties agree that the marital property should be distributed 50% to each party. DRL § 236B (5) (d) (1), (2) (7). They disagree on how to effect that distribution.
The Wife argues that the court should consider as wasteful dissipation of marital assets what she labels the "EOP debacle" caused by the Husband providing a personal guaranty for the purchase of commercial properties resulting in the loss of significant marital assets when he could not secure financing. She contends she had secured her Husband's promise that he would never again personally guaranty a business deal when the parties lost assets in the early 1990s. The personal guaranty he undertook in 2007 violated their understanding and was done without her knowledge. As a result, she contends that the [*23]court should award him more of the marital debt.
The court is satisfied that the EOP acquisition was a reasonable business decision. But for the recession, the value of the properties purchased would have greatly enhanced the parties' marital assets. The nature of the Husband's business necessarily entailed risks and, for the most part, the risks he undertook were well rewarded. The court will not second guess a party's reasonable business decisions made during the marriage. Mahoney-Buntzman v. Buntzman, 12 NY3d 415 (2009).
Moreover, the Wife chose to remain in the marriage for nine years after the so-called EOP Debacle notwithstanding her anger over the loss resulting from that purchase. The parties' lifestyle was unaffected, even though the country fell into a recession. The parties maintained the Plaza Apartment and home in East Hampton. They purchased at least 25 pieces of art from 2008 until this action began. They built a yacht valued at $23.5 million that was not completed until 2015. The court concludes that there is no evidence to support a finding that the Husband caused a wasteful dissipation of assets arising from the EOP sale that should affect the distribution of the marital property. DRL § 236B (5) (d) (12).
The Husband argues that the parties should share in the marital debt and some of his business assets on an "if, as and when" basis. The Wife objects to any such arrangement contending that it would be too difficult for her to monitor the Husband's business activities to know that her interests are protected. DRL § 236B (5) (d) (8), (10). The court has considered each party's argument in distributing the marital property.
THE ART COLLECTION
The Wife asks this court to award to her the art collection and award the real estate interests[FN21] to the Husband, with a cash distributive award to the Husband to equalize any discrepancy. The Husband asks that the court order the sale of the art and the profit distributed equally.
The art collection is the parties' most valuable marital property. It is an extraordinary collection and the achievement of a lifetime's effort. It is an artistic accomplishment of which both parties have the right to be proud of having achieved. However, the parties also intended the collection to be an investment. The parties hold significantly less in stocks or other investments compared to the value of the art collection. The Husband credibly testified that the art enabled diversification and was an alternative investment form. The parties engaged in extensive estate planning during the marriage and the Wife served on Boards of major museums. Yet the parties did not bequeath any of the art to a not-for-profit entity, nor did they create their own foundation to hold the art, which one might have expected if the intent was to preserve the collection. The Wife conceded that they sold art as well as bought it during the marriage. The Wife also acknowledged that it would be her intent to sell art to sustain her extraordinary standard of living. The court concludes that as much as both parties enjoyed the aesthetics of collecting art, the [*24]collection also served as a device to preserve and increase their personal wealth.
In distributing 50% of the assets to each party, given the anticipated value of the art collection, it is impossible to distribute the art entirely to one party, nor would it be equitable given each party's participation in creating their "crowning achievement" collection. Capasso v. Capasso, 129 AD2d 267, 276 (1st Dep't 1987). At the same time, the court appreciates the Wife's desire to maintain as much of the collection as possible for her enjoyment.
Upon consideration of these factors the court awards to the Wife all the art listed in Schedule I. The value of the Schedule I art is $39,963,175. The Husband shall receive a credit of $19,980,337. The art listed in Schedules II and III will be sold and the net proceeds distributed 50% to each party. The sale of the items in Schedule III is required because the court cannot determine the value of these works. In addition, the sale will provide each party with needed cash to enable them each to enjoy their lifestyles. The sale of the item listed in Schedule II is necessary because of its extraordinary value and to enable an equal distribution of the marital assets. According to the parties, the fair market value of the art to be sold ranges between $625,650,000 and $788,700,000. Thus, the sale of these pieces will enable each party to share in most of the value of their lifetime achievement. At the same time, the award of the Schedule I art to the Wife will provide her with more than half of the collection, with 17 pieces valued at more than $500,000. This collection will enable the Wife to continue to enjoy her involvement in the art community.
Given the Wife's mistrust of the Husband, the court agrees with him that appointment of a receiver to sell the art is in the parties' best interest. A receiver will enable the art to be sold efficiently at its highest value and avoid disputes. Within 45 days from the date of this Decision and Order, the parties shall submit to the court the name of an agreed upon receiver and CV or, if they cannot agree, each shall provide names and CVs of proposed receivers for the court to consider for appointment. CPLR § 5106.
NET OPERATING LOSS
The court could not determine the value of the NOL, but recognizes it is a valuable marital asset. To enable both parties to benefit from this asset, the NOL will be applied against the gains realized on the sale of the Schedules II and III art. To effectuate this result, within 75 days the parties shall submit a plan for the sale to occur in a manner that will enable each party to benefit from the NOL. If they fail to reach an agreement, each party shall submit a proposed plan and the court will decide.
After the sale of the art, any remaining value of the NOL will be applied against the sale of the East Hampton home with each party receiving 50% of the benefit. Thereafter, the Husband shall retain any remaining value of the NOL.
The court awards the Plaza Apartment, valued at $72,000,000 to the Wife. The Husband has an alternative residence. The Husband is entitled to a $36,000,000 credit.
MACKLOWE COMMERCIAL PROPERTY
In accordance with the parties' agreement, the following commercial property shall be distributed to the Husband with the Wife receiving a credit for half the value of each asset:
From these assets, the Wife receives a credit of $15,530,000.
With respect to four commercial properties, although the parties agree on the value, they disagree on the distribution. The Wife argues that these real estate entities should be distributed 100% to the Husband. The Husband argues that the Wife should share in the risks of owning commercial real estate in New York.
The Husband notes that Roofcom Associates is titled 100% in the Wife's name. He argues that she should receive this asset in its entirety. The Wife contends that although titled in her name, the Husband controlled the operation of the company and his business entities received the income from it. The stipulated value is $4 million. The court finds that, although titled in the Wife's name, this asset has always been operated by the Husband's business. His argument that the value of this asset may decline is unavailing since the court relies on the stipulated value. The Wife shall transfer title of this property to the Husband who shall retain it and she shall receive a credit of $2 million.
The parties agree that the Husband's interest in 310 East 53rd Retail and Garage is $18,900,000. The Husband argues that title to this property should be transferred to the Wife. The parties' son owns a significant percentage of this asset. The Wife has a good relationship with the son. The Wife can either manage her share of this asset or have the son manage it for her. The Wife has expressed her reluctance to be involved in any business relationship where her Husband can exert control. The court agrees that it is advisable to minimize the parties' business interactions once the divorce is finalized, nor should the Wife be dependent on the son to manage her affairs. The Husband shall retain sole ownership of this asset and the Wife shall receive a credit of $9,450,000.
The two remaining properties in issue are the Husband's equity in 432 Park Avenue Retail Commercial and Garage valued at $15,700,000 and the Husband's equity in One Wall Street valued at $12,900,000. The Husband argues that these projects are in the development stage. He alone should not have to bear the risk of such development projects. He proposes that these assets be divided equally on an "if, as and when basis."
The court disagrees. The value at issue here is the equity interest on the date this action was commenced, not the development project. Consideration of the risk of development of a project is more appropriately considered in distributing the value of the promotes. The court concludes that the Husband will retain 100% interest in the equity of these assets. The Wife will receive a credit of 50% of the value of these two assets, totaling $14,300,00 ($7,850,000+$6,450,000).
Accordingly, the Husband shall retain 100% of the equity in the marital property component of 150 East 72nd Street, 1143 First Avenue, 737 Park Avenue, Shark, 200 East [*25]59th Street — Equity, 432 Park Avenue Retail Commercial — Equity, One Wall Street -Equity, Roofcom Associates, 310 East 53rd Retail and Garage, Macklowe Operating Companies. The Wife shall cooperate in transferring her ownership interest to the Husband, if any, in these properties. The value of the properties retained by the Husband is $82,560,000. The Wife will receive a credit of $41,280,000.
Each of the promotes is marital property, having been created during the marriage. The stipulated values are the value of the promote as of the day the action commenced. However, the court recognizes that risks are inherent in the promotes. For example, the value of the Husband's interest in the 432 Park Avenue Residential Promote was diluted because of the need for additional investors. The projects for 200 East 59th Street and One Wall Street were, on the date this action commenced, in far earlier stages than the project at 432 Park Avenue. Those two projects may encounter unanticipated risks after commencement of this action, reducing the value of the Husband's interest. Although the parties agree that in total, the marital assets should be distributed 50% to each party, the court finds it appropriate to recognize the effort the Husband will have to make after commencement of this action, to sustain the value of these promotes. Accordingly, the court orders the value of the promotes will be distributed as follows:
432 Park Avenue Residential Promote
The Husband shall retain the promote and the Wife shall receive a credit of $1,250,000 representing 50% of the value of the promote on the date this action commenced ($2,500,000).
432 Park Avenue "Retail" Promote
The Husband shall retain the promote valued at $0 and the Wife shall receive no credit in that the court found this asset had no value on the date the action commenced.
200 East 59th Street Promote
The Husband shall retain the promote valued at $4,800,000 and the Wife shall receive a credit of $1,680,000 representing 35% of the value of the promote on the date this action commenced.
One Wall Street Promote
The Husband shall retain the promote and the Wife shall receive a credit of $1,480,000 representing 20% of the value of the promote ($7,400,000) on the date this action commenced.
In sum, the Wife shall receive a credit of $4,410,000 as her share of the value of the promotes.
Park Lane Hotel
The parties own an equity interest in the Park Lane Hotel. This entity is managed by a third party. Since the Husband does not control this entity, the parties agreed to share this interest "in-kind" or its value on and "if, as and when" basis with each party being responsible for 50% of all capital calls and tax consequences. Both parties agreed to this resolution and it is adopted by the court.
Joint Bank Accounts
The stipulated value of $1,379,882 for the three joint accounts shall be distributed 50% to each party. Thus, each party shall receive $689,941 from these accounts
Bank Accounts Titled in the Wife's Name
It was stipulated that the Wife has seven accounts titled in her name with a total value of $36,580,474. The Wife shall retain these accounts and the Husband shall receive a credit of $18,290,237.
Bank Accounts Titled in the Husband's Name
It was stipulated that the Husband has fourteen accounts titled in his name with a total value of $51,660,495. The Husband shall retain these accounts and the Wife shall receive a credit of $25,830,247.
The parties stipulated that the jointly-owned 0.3% interest in Reservoir Capital Partners (Caymen) LP shall be divided equally in kind.
The parties shall each retain the remaining alternative investments held in his or her name. No value is assigned to those investments for which the parties gave no value. Accordingly, the total value of the alternative investments the Wife will retain is $294,929. The total value of the alternative investments the Husband will retain is $86,584. The Husband is entitled to a credit of $104,172.
DEFERRED TAX LIABILITIES/ REIT UNITS AND CVS STORES
The court attributed no value to the deferred tax liabilities arising from the sales of the GM building and the Longacre properties. The court attributed no value to the Boston Property Units, ERP Units and CVS Stores.
Although unlikely to occur, each party should bear responsibility for at least some of the deferred liability if it comes due because of a third party's action. Although the Wife does not want to have a business relationship with the Husband where he can exercise control, she does not object to a business relationship with him controlled by a third party. Therefore, she cannot object to a tax liability that might arise due to the actions of a third party. Just as both parties will benefit from sharing the tax benefit of the NOL, each party should be responsible for the deferred tax liability if it ever comes due.
Each party has an interest in avoiding the tax liability. The Husband suggests that the court award 50% ownership to each party of 767 Fifth LP, the entity that holds the Boston Property Units and the deferred liability. This solution may be appropriate provided this corporate entity cannot be used by either party for any other purpose but to protect them from the tax liability, effectively becoming a locked box that holds the liability.[FN22] By giving equal control of this entity to each party, the Wife will be assured that the Husband cannot use this entity for his own purposes.
Within 60 days of the date of this Decision and Order, the parties shall provide to the court a plan that establishes or uses an existing corporate entity to hold the Boston Property Units and deferred tax liability in accordance with this ruling.
The deferred tax liabilities and the ERP Units and CVS stores are distributed 100% to the Husband. This distribution is without attribution of value. As already noted, the court concluded there is little likelihood that payment of the debt will be required during the Husband's life. By awarding to him 100% of the assets underlying the debt he can prevent the sale of these assets that would trigger the debt. The Husband conceded responsibility for any debt triggered by a sale of the CVS stores. The taxes that would become due as a result of a sale underlying the ERP Units is relatively small and may be offset by the Husband's business losses. The Wife will transfer any ownership rights she has to the REIT units or CVS Stores to the Husband. Since the assets have no real value, neither party should benefit from the distribution of the assets.
EAST HAMPTON HOUSE
The court awards to each party 50% of the $19,000,000 value of the East Hampton House. Neither party wishes to keep the house. The parties shall sell the house with the net value distributed equally to each party (approximately $9,500,000).
UNITS 78A and 78B AT 432 PARK AVENUE
As previously noted, since the Wife rescinded her contact to buy 78A, the value of that asset cannot be distributed. However, the Husband argues that it should affect the distribution of the value of 78B which the court found to be $9,266,489. He contends that although the Wife never intended to reside in 78A, but that it would have been a valuable investment. By rescinding her contract, both parties lost that investment opportunity. The Wife counters that she rescinded her contract when she learned that the Husband had filed plans that would diminish the value of 78A. However, even if the value was diminished, by rescinding the contract, the Wife reduced the value to the parties of 78A to zero.
The Husband shall retain 78B and the court distributes to the Husband 60% ($5,559,893) and to the Wife 40% ($3,706,596) of the value of unit 78B.
The value of this asset is $23,500,000. However, there is debt of $16,931,963 on this boat. Each party seeks ownership of the yacht. Since the Wife will receive most of the other personal property and the Plaza Apartment, the court awards the boat to the Husband. The Husband will be 100% responsible for the debt associated with the boat. The Wife will receive a credit of $3,284,019, representing 50% of the actual value of this asset less the debt ($6,568,037).
Other Personal Property
The parties agreed to the distribution of certain other personal property:
Books valued at $85,500 will be distributed to the Wife.
Jewelry valued at $3,840,000 will be distributed to the Wife.
Automobiles valued at $385,000 will be distributed to the Husband.
The parties agree on the value, but not the distribution of the silver. Each party seeks to keep the silver. The parties agreed that the value of the silver is $409,500. The court awards the silver to the Wife given the award of the yacht to the Husband.
Each party shall receive a 50% credit for the personal assets retained by the other party (Husband's credit: $2,167,500; Wife's credit: $192,500).
The total bank debt is $66,878,603. Most of the debt appears to be tied to the Husband's businesses, but the amount and specific purposes of this debt were not sufficiently explained at trial. It appears that the parties also used debt to support their personal investment expenses (e.g., the intended purchase of Unit 78A at 432 Park Avenue). Since the Wife will be receiving a benefit from both the business and personal real estate investments, she should share in the liabilities associated with those investments. However, since the Husband will retain the real estate interests, he should bear greater responsibility for and retain the debt. The Husband will be 100% responsible for this liability, but the Wife will contribute 30% of the value of the debt ($20,063,581). Thus, the Husband's distributive share of the debt is $46,815,022 (70%).
RECEIVABLE FROM HUSBAND'S BUSINESS PARTNER
The Husband agrees that the Wife should receive 50% of the loan receivable from one of his partners that totals $5,830,980. The Husband shall retain the receivable and the Wife shall receive a credit of $2,915,490.
"MARITAL WASTE" CLAIM
The parties stipulated that the Wife is entitled to a credit of 50% of the stipulated value of the marital waste claim. Thus, the Wife will receive a credit of $428,166.
EQUALIZATION OF DISTRIBUTION
After distributing the marital property for which the court awarded an equal distribution, the Wife shall pay to the Husband $2,005,324 to achieve a 50% distribution to each party of these assets.
Although the parties each proposed equal distributions of all marital property, their respective arguments do not support that position. The court finds an unequal distribution appropriate for the 200 East 59th Street Promote, One Wall Street Promote, and Unit 78B at 432 Park Avenue. The Husband will retain these assets and the Wife will receive a credit of $6,866,596. The Husband will retain the bank debt. The Wife will contribute $20,063,581 towards that debt. After offsetting the credit for these four assets against the debt, the Wife shall pay an additional $13,196,985 to the Husband. In sum the Wife shall pay to the Husband $15,202,309.[FN23]
Accordingly, it is hereby
ORDERED, that the Wife shall retain all art set forth in Schedule I of this Decision; and it is further
ORDERED, that the art set forth in Schedule II and Schedule III of this Decision shall be sold. Each party shall receive 50% of the net proceeds from the sale of this art. The court shall appoint a receiver to sell the art. Within 45 days from the date of this Decision and Order, the parties shall submit to the court the name of an agreed upon receiver and CV or, if they cannot agree, each shall provide names and CVs of proposed receivers for the court to consider for appointment; and it is further
ORDERED, that the net operating loss shall, in accordance with the following Order provisions, be distributed such that each party shall receive 50% of its benefit against the [*26]ordered sale of art. If any of the net operating loss remains after the sale of the art, it shall be applied such that each party shall receive 50% of its benefit against the sale of the East Hampton House. Thereafter, the remainder of the net operating loss, if any, is awarded to the Husband; and it is further
ORDERED, that within 45 days the parties shall submit a plan to enable the sale of the Schedule II and III art to occur in a manner that will enable each party to benefit equally from the net operating loss against the sale of the art and, if any remains, the sale of the East Hampton House; and it is further
ORDERED, that the Wife shall retain the Plaza Apartment. The Husband shall cooperate in transferring his ownership interest, if any, in this asset to the Wife; and it is further
ORDERED, that the Husband shall retain or receive 100% of the marital property equity component of 150 East 72nd Street, 1143 First Avenue, 737 Park Avenue, Shark, 200 East 59th Street — Equity, 432 Park Avenue Retail Commercial — Equity, One Wall Street -Equity, Roofcom Associates, 310 East 53rd Retail and Garage, Macklowe Operating Companies. The Wife shall cooperate in transferring her ownership interest, if any, in these properties to the Husband; and it is further
ORDERED, that the Husband shall retain 100% ownership of the marital property components of the 432 Park Avenue Residential Promote; 432 Park Avenue "Retail" Promote; 200 East 59th Street Promote; and One Wall Street Promote. The Wife shall cooperate in transferring her ownership interest, if any, in these properties to the Husband in accordance with this Decision and Order; and it is further
ORDERED, that the parties shall each receive 50% "in-kind" or 50% of the value on an "if, as and when" basis of the marital property interest in the Park Lane Hotel. Each party shall be responsible for 50% of all capital calls and tax consequences; and it is further
ORDERED, that each party shall receive $689,941, representing 50% of the value of the three joint bank accounts. The parties shall cooperate in transferring these funds into their separate names; and it is further
ORDERED, that the Wife shall retain the seven bank accounts titled in her name and the funds in those accounts; and it is further
ORDERED, that the Husband shall retain the fourteen bank accounts titled in his name and the funds in those accounts; and it is further
ORDERED, that the jointly-owned 0.3% interest in Reservoir Capital Partners (Caymen) LP shall be divided equally in kind between the parties. The parties shall cooperate to effect any necessary transfer of this asset; and it is further
ORDERED, that the Wife shall retain the alternative investments in her name; and it is further
ORDERED, that the Husband shall retain the alternative investments in his names; and it is further
ORDERED, that the Husband shall be 100% liable for the bank debt; and it is further
ORDERED, that the parties shall maintain equal ownership of the Boston PropertyUnits and shall be equally liable for any deferred debt arising from those Units caused by the actions of a third party. Within 60 days of the date of this Decision and Order, the parties shall provide to the court a plan that provides a corporate entity to hold the Boston Property Units and deferred tax liability in accordance with this Decision and Order; and it [*27]is further
ORDERED, that the ERP Units and CVS stores are distributed 100% to the Husband.The Wife shall transfer any ownership rights she has to the REIT units or CVS Stores to the Husband. The Husband shall be 100% liable for any deferred tax liability arising from these Units or entities; and it is further
ORDERED, that each party shall receive 50% of the net proceeds from the sale of the East Hampton house. If any of the net operating loss remains after sale of the art, it shall be applied against the gain from the sale of this asset; and it is further
ORDERED, that the Husband shall retain ownership of Unit 78B at 432 Park Avenue; and it is further
ORDERED, that the Husband shall retain the yacht, Unfurled, and shall be 100% responsible for the debt and all costs associated with maintaining that asset. The Wife shall transfer her ownership interest, if any in this asset; and it is further
ORDERED, that the Wife shall retain ownership of the books, jewelry and silver. The Husband shall retain ownership of the automobiles; and it is further
ORDERED, that the Husband shall retain the receivable from his business partner; and it is further
ORDERED, that the Wife shall receive a credit of $428,166 for marital waste; and it is further
ORDERED, that the Wife shall pay to the Husband $15,202,309 upon entry of the Judgment of Divorce; and it is further
ORDERED, that any relief not granted is denied.
This is opinion is the Decision and Order of the court.
Dated:December 13, 2018E N T E R:
Hon. Laura E. Drager, J.S.C. Footnotes
Footnote 1: Notably, in Dunn the corporate entity being valued had existed for many years and was an operating company with significant assets. In Wechsler, the corporate entity had been in existence for a long time as an investment company with customers. As the investment business wound down, the company continued as a holding company of the Husband's own investments that had been acquired by the company's activities. These business entities are very different from the purpose served by LDBM, LLC.
Footnote 2: The court notes that only a few pieces in the Macklowe collection were purchased at public auction.
Footnote 3: The court rejects the Wife's suggestion that value can be determined across the board for almost all of the art by averaging the differences. The court has considered the unique attributes of each work of art in the collection as well as the expert's valuations.
Footnote 4: For the work Globster by Napierala, only the Husband's expert gave an approximate value. The court values it at the mid-point of the two values given by the Husband's expert. For the work Untitled (Voice of the Sound) by Napierala, the Wife's expert valued the piece at $800. The Husband's expert gave no value but said it might be worth between $2,500 and $4,500. The court accepts the value given by the Wife's expert.
Footnote 5: The greatest difference in value for the pieces in Schedule I was $250,000. The experts differed in value for five pieces by $250,000; three pieces by $200,000; one piece by $175,000; one piece by $150,000; and one piece by $100,000. For the remaining fifty-nine works the experts disagreed no more than by $50,000.
Footnote 6: Provided to counsel and entered in the court file, but not included with the published Decision and Order, are charts setting for the expert's values and the court's calculations.
Footnote 7: Another comparable apartment used by the Wife's expert had a price per square foot of $4,239.34 with total square footage of 10,088. However, this comparable apartment was in a significantly different neighborhood and with lesser views than the Plaza Apartment.
Footnote 8: Notably, the bank filings state that the anticipated distributions are only estimates, and half of the inventory had not yet been sold. (PX-63, 65).
Footnote 9: Although not determinative, the court notes that the Scenario A value of this asset is far more in line with the stipulated values attributable to the promotes for 200 East 59th Street ($4.8 million) and One Wall Street ($7.4 million). These two assets include retail components, unlike the 432 Residential Promote. Notably, the stipulated value for the 432 Retail Promote is either $0 or $1.5 million (see, infra.).
Footnote 10: Although the Husband may have no direct involvement in the sale of the condominium units, it is hard to believe that with his marketing skills at least indirect networking efforts on his part may influence potential buyers to consider purchasing units.
Footnote 11: The NOL ceases to exist if the Husband dies. It cannot be passed on to his heirs.
Footnote 12: The same document lists $6,864,000 in contingent liabilities. However, there is no evidence that as of the valuation date any debt had accrued on these lines of credit.
Footnote 13: The parties have not paid income taxes since the 1980s. It is reasonable to assume that the taxes due arising from this 2008 transaction were offset by losses.
Footnote 14: The units are held by Fifth Avenue 58/59 Acquisition Co. L.P. which is, in turn, owned by 767 Fifth L.P.
Footnote 15: "Macklowe Properties, L.L.C. ("MP") contributed 100% of the membership interests in Purcell Woodward and Ames, L.L.C. ("PWA") to ERP Operating Limited Partnership ("ERP") in exchange for units in ERP, the assumption of a mortgage and the distribution of cash. PWA was the owner (of Longacre). The transfer of the membership interests in PWA is set forth in the Agreement for Contribution of Membership Interests dated January 29, 2010. . . . The transfer was structured as a deferred gain under IRC Section 721(a)." (DX- JJJ, p. 7).
Footnote 16: The Husband claims that one of the Wife's experts indicated that over $300 million would be due on the capital gain, but his testimony was based on his review of certain reports, including the BST Report. He was not asked whether one would have to consider the probability of it ever having to be paid and discounting to present value, at a risk-adjusted discount rate, the amount of the deferred liability.
Footnote 17: It is worth noting that although the Husband lists the value of these units on financial forms he submitted to banks, he does not list the deferred tax liability against these units, thereby adding support to the conclusion that the deferred liability has no value (PX-63).
Footnote 18: The Wife submitted an updated Net Worth Statement (PX-5). However, it is unclear from that statement what bills she paid for her own living expenses. Many of the expenses she lists came from the Husband's business records.
Footnote 19: Israel discount Bank
Footnote 20: The Husband asserts it was necessary for him to have this amount in the account to secure a loan for a project he developed at 737 Park Avenue. He claims the funds in this account are offset by a $1 million liability in connection with 737 Park Avenue. The Wife contends that there is no evidence in the record to support this claim. The parties stipulated to the value of this account and the value of the Husband's interest in 737 Park Avenue. The court accepts the Wife's position.
Footnote 21: The Wife specifically excludes the Plaza Apartment, the most valuable real estate owned by the parties, from her position.
Footnote 22: Any future listing by the Husband of the value of the Boston Property Units on financial statements would have to be accompanied by an explanation of the limits of his ownership interest in accordance with this Decision and Order.
Footnote 23: Provided to counsel and entered in the court file, but not included with the published Decision and Order, is a chart summarizing these distributions.