Archive for March, 2009

Recession and Increase in Downward Modifications Petitions

Sunday, March 29th, 2009

I read New York Times article today that closely parallels my experience over the past few months. As the economy continues to deteriorate and jobs are lost through no fault of the party paying child support, the Family Court has seen a significant increase in petitions seeling downward modification of child support. While the article discusses how the cases are handled in New York City, as opposed to Rochester and nearby counties where I practice, I see a lot of similar issues in our local Family Courts.

I have previously discussed issues related to the contents of a Family Court petition seeking a modification of child support obligation. I should note that downward modification of child support due to a loss of employment is never guaranteed, and anyone seeking downward modification should use assistance of an experienced child support lawyer. I am planning to write a more detailed post on downward modification of child support in the near future.

Long Term Separation, Maintenance and Problems of Proof

Monday, March 23rd, 2009

I have previously discussed how the courts determine maintenance amounts in divorce cases. One of the critical factors in court’s evaluation of whether maintenance is appropriate or necessary, is the parties’ standard of living. However, there are many situations where the parties have been separated for a significant period of time. Under those circumstances, in Dowd v. Dowd, 58 A.D.3d 1057 (3rd Dept. 2009), the Appellate Division, Third Department, held that where the parties were separated for a long period of time, their pre-separation standard of living should not be considered.

In Dowd, the parties were married in 1976, were separated in 1999 and were divorced in 2007. According to the court, the standard of living during marriage was not a consideration given parties’ long separation. During the separation, the wife, who was 49, was supported, in part, by her live-in boyfriend, and had sporadic employment history involved low-wage jobs. Neither party graduated from high school. By time of trial, the husband, who was 50, was earning approximately $60,000 per year, working for manufacturer of heavy equipment. The wife also received distributive award of $100,000.

Supreme Court initially awarded defendant wife $500 maintenance per month until she is eligible for Social Security retirement benefits at age 62 in 2019 and, thereafter, reduced it to $250 per month, until she is eligible for health care benefits through Medicare at age 65 in 2022. The Appellate Division reduced the duration of the maintenance award to 5 years. It held that the standard of living during marriage was not a consideration given the parties’ long separation. Further, since the purpose of maintenance is to provide financial support for recipient spouse, while spouse gains skills and employment necessary to become self-sufficient, that particular factor was not applicable in this situation since the wife should be able to support herself. The court also noted that there was no competent medical proof with respect to the health problems claimed by the wife.

It should be noted that the Appellate Division split 3 to 2 in this case. The vigorous dissent stated that the lower court did not abuse its discretion in its award of maintenance to the wife, arguing that she was suffering from several medical conditions, impairing her ability to work and making it unlikely that she would become self -supporting.

It is worth noting that Dowd may have been decided the other way, if there was admissible proof that the wife was suffering from a medical condition, or conditions, that would prevent her from being gainfully employed. Such admissible proof inevitably involves testimony of a medical professional. Any divorce lawyer who is making an argument that his or her client is unable to work for medical reasons must be ready present testimony of a medical professional. Similarly, if a claim for rehabilitative maintenance is being presented to the court, an attorney must be prepared to present testimony of a vocational expert. While experts can charge significant fees, the case may turn on such testimony.

Transmutation and Converting Separate Property to Marital Property

Monday, March 16th, 2009

One of the basic theories in equitable distribution and divorce litigation is that of transmutation. Transmutation theory holds that by their actions, the parties are able to modify the status of the property they own from separate property to marital property. In a recent decision, Fehring v. Fehring, 58 A.D.3d 1061 (3rd Dept. 2009), the Appellate Division, Third Department, has provided a perfect illustration of how transmutation may occur.

Parties were married in 1990. In August of 2005, the husband received $50,000 insurance payment. The money was related to his personal injuries and, therefore, would be initially classified as his separate property. Plaintiff deposited check in brokerage account held and used jointly by the parties. In January 2006, husband used $50,000 from account to purchase real property. The court held that transferring separate property assets into a joint account raises rebutable presumption that funds are marital property subject to equitable distribution. Rosenkranse v. Rosenkranse, 290 A.D.2d 685, 686 (3rd Dept. 2002). Presumption may be rebutted by evidence that such deposits were made as matter of convenience with no intention of creating beneficial interest. See, Chamberlain v. Chamberlain, 24 AD3d 589, 593 (2nd Dept. 2005). In Fehring, account was used by both parties for items such as credit card bills. The Appellate Division held that the husband failed to rebut presumption of marital property given commingling of funds. It held that the lower court providently exercised discretion in distributing equally the value of interest in real property purchased with funds held in joint account.

If you are contemplating divorce, be careful to avoid taking any action that converts your separate property to marital property. Once transmutation takes place, it is highly unlikely that you would be able to change the property’s status back to separate property, even with a lawyer’s assistance.

Child Support Calculation and Income Tax Refunds

Monday, March 16th, 2009

In general, the Child Support Standards Act includes all of the parties’ income for child support calculations, subject to appropriate child support limits and deductions. What happens in the situation when a party is receiving a tax refund for teh taxes paid during the previous year? In Shelby T. v. Michael L., 2009 NY Slip Op 29075 (Fam. Ct. Clinton Co. 2009), Judge Lawliss overturned the support magistrate’s decision which included the tax refund as income in the child support calculation. The court held that since the party obligated to pay child support receives a tax refund on the taxes paid in 2008, in 2009, if the court were to include the tax refund in the child support calculation, then the money earned, and taxed, in 2008, would count as income for child support purposes once again in 2009. Clearly, that was not the result contemplated by the Child Support Standards Act.

If engaged in child support litigation, a lawyer must make sure that his client’s income is counted only once and that the client receives all applicable deductions and variances.

Overpayment of Child Support and Right of Recoupment

Monday, March 9th, 2009

Periodically, I am asked about situations where an overpayment of child support has taken place. Most of the time in those situations, I, as a lawyer, have to deliver to the client the unpleasant news that the amount overpaid cannot be recovered. This is true whether the child support was being paid pusuant to a judgment of divorce, separation agreement, or an order of Family Court. With respect to child support, there is a strong public policy against restitution or recoupment of any overpayment. See Katz v. Katz, 55 A.D.3d 680 (2nd Dept. 2008). The strong public policy considerations as decided by the New York courts, prevent recoupment or refund of child support paid. However, a parent may be entitled to a credit, enabling him or her to re-coup the overpayment of the child support payments against his/her share of the statutory add-on expenses – the portion of child support intended to cover child care and a child’s educational and special needs. See Coull v. Rottman, 35 AD3d 198 (1st Dept. 2007).

There are also certain limited circumstances in which a refund of child support may take place. For example, a refund may be directed when there was a mathematical error in the calculation of the amount of support (Colicci v. Ruhm, 20 AD3d 891 (4th Dept. 2005); when the support amount in the final order of support is less than in the temporary award (Maksimyadis v. Maksimyadis, 275 AD2d 459 (1st Dept. 2000)); or when it is shown that the subject child is not the biological child of the payor and there is no finding of estoppel (Thomas v. Commissioner of Social Services, 287 AD2d 642 (2nd Dept. 2001). There may be another category of cases where a refund of child support may be ordered. In Spencer v. Spencer, previously discussed on this blog, the Court of Appeals hinted that the recoupment may be available where it is ultimately determined that New York court lacked jurisdiction to order payment of child support.

If you are in a situation where you believe that child support was or is being overpaid, speak with an experienced family law attorney and find out what your options are and what can done in your particular case.

Basics of Paternity in Family Court

Monday, March 9th, 2009

Paternity is the term which describes a father’s legally enforceable rights and responsibilities to his child. Determination of paternity in New York is governed by the Article 5 of the Family Court Act. In accordance with the Family Court Act, paternity may be established in one of three ways; by presumption, by an acknowledgment, or by court order. If the parties are married at the time of the child’s birth, New York presumes that the husband is the father of any children of the marriage. While this presumption is rebuttable, the concept of equitable estoppel, previously discussed on this blog, may also be applicable and even if the presumption is rebutted, may preserve the parties’ initial positions with respect to paternity.

If the parties were not married at the time of birth of a child, legal paternity may only be established by signing an Acknowledgment of Paternity (either at the hospital or at the local Department of Social Services, pursuant to Family Court Act §516-A) or by the Family Court entering an Order of Filiation. Once an Acknowledgement of Paternity is signed, it may not be vacated after six months of signing, unless it brought about by fraud, duress or material mistake of fact. Under those circumstances, the time is extended to one year.

If the parties are not married, and paternity is challenged, the determination of paternity will be made by the Family Court. A paternity proceeding is commenced in Family Court by the filing of a verified petition from the party seeking to establish paternity. If the woman is married, and is claiming that her husband is not the father of her child, her husband must usually be named as a party to the proceeding. Once the parties are in court, they have the option to consent to an order of paternity. If the issue of paternity is resolved by consent, i.e., agreement of the parties, DNA testing does not take place. If paternity is consented to, it becomes extremely difficult to overturn a consent order of paternity in the future.

If there is no consent order of paternity, the court will generally order a DNA test. See Family Court Act §522. Once the results of the DNA test are know, the parties once again will generally have the option to consent to an order of paternity, or request a hearing. If the case goes to a hearing, it is the party seeking to establish paternity who has the burden to prove paternity by clear and convincing evidence. If, however, the probability of paternity in the DNA test is 95% or higher, New York law presumes the man is the father, and it is now his burden to overcome this presumption. At the end of the hearing, the court will consider all properly introduced evidence, and either issue an order of paternity or dismiss the paternity petition.

Parties are not required to accept the results of the tests, and the party may challenge DNA testing by attacking either the chain of custody of the samples, or the underlying mathematics of the statistical analysis. Such challenges are very difficult, and can be very expensive.

However, as noted above, under appropriate circumstances the doctrine of equitable estoppel may prevent the child and the parent from being tested and prevent the father from denying paternity. For example, if the party has alleged paternity in some other court proceeding or document, that party may be prevented from denying paternity. Similarly, if a man has held himself out to be the father of a child, he may be estopped from denying paternity in court.

The time to commence a paternity proceeding under the Article 5 of the Family Court Act is at any time during the pregnancy of the mother, or after the child is born, but not after twenty one years, unless paternity is somehow acknowledged by the father, or he paid support.

When a DNA test is ordered, the court may direct that either party pays, both parties pay or the state pays for the costs of these tests, all depending on the resources of all parties. If the father is determined to be the father, and he is the one who filed the petition, the court will likely direct that he pays the cost of the DNA test.

Having one’s name on the birth certificate, providing emotional and/or financial support, or holding oneself as the father makes one the “putative” father. That person will be named in the New York State Putative Father Registry and requires notice to such father in the event someone tries to adopt the child, the child is placed in foster care, or if someone is seeking child custody or guardianship. However, signing the Acknowledgement of Paternity, having an Order of Filiation or having been married to the mother at the time of birth makes one the “legal” father. And although the rights and responsibilities are similar, there is a legal difference between the two.

The Right to Create Grandchildren After the Death of A Child

Wednesday, March 4th, 2009

Can someone create your biological child after your death? The Appellate Division, First Department, answered this question in the negative in Speranza v Repro Lab Inc., 2009 NY Slip Op 01543 (1st Dept. March 3, 2009).

In 1997, Mark Speranza deposited a number of semen specimens in the facility of Repro Lab, Inc., a tissue bank licensed by the State of New York. The specimens were frozen and stored in defendant’s liquid nitrogen vaults. Mark was about to undergo treatment for an illness, and was concerned about being able to conceive a child afterwards. As part of his agreement with Repro Lab, he filled in and signed a form document entitled, “Ultimate Disposition of Specimens,” which contained several options for the disposition of the specimens by the tissue bank in the event of Mark’s death. One option on the form directed that the specimens be given the depositor’s spouse, another directs that the samples be destroyed, and a third option, with the heading “Other,” leaves a blank to be filled in. Mark checked off the provision stating that in the event of his death, “I authorize and instruct Repro Lab to destroy all semen vials in its possession.” The document concluded with the statement that “[t]his agreement shall be binding on the parties and their respective assigns, heirs, executors and administrators.” Six months later, on January 28, 1998, Mark died.

Mark’s parents were named administrators of his estate, and they contacted Repro Lab about the specimens. They were then informed that Mark had deposited the specimens for his use only, in that the specimens were not screened as required for donation to a member of the public. Mark’s parents then began to seek a surrogate mother to be artificially inseminated with those semen specimens, with the hope of producing a grandchild for them. In 2005, the Speranzas contacted Repro Lab to ascertain the procedure for obtaining the specimens and were informed that the lab could not turn over the specimens. Plaintiffs, in their position as administrators of their son’s estate, then commenced an action seeking a declaration that the estate is the rightful owner of the specimens.

In its decision, the Appellate Division held that public policy interests as well as New York law preclude giving plaintiffs possession of the specimens for purposes of engendering Mark’s biological child, their grandchild, with the sperm he left behind.

The Court relied upon the regulations of the New York State Department of Health in deciding this case. These regulations define two distinct categories of semen depositors with tissue banks: depositors and donors. A “client-depositor” is “a man who deposits reproductive tissue prior to intended or potential use in artificial insemination or assisted reproductive procedures performed on his regular sexual partner” (10 NYCRR 52-8.1[d]). A “donor” is “a person who provides reproductive tissue for use in artificial insemination or assisted reproductive procedures performed on recipients other than that person or that person’s regular sexual partner, and includes directed donors” (10 NYCRR 52-8.1[f]). A “directed donor” by definition “includes a man providing semen to a surrogate, but who is not the regular sexual partner of the recipient” (10 NYCRR 52-8.1[e]).

The regulations contain extensive screening and testing requirements that apply to “donors” only, and not to “depositors” (10 NYCRR 52-8.5, 52-8.6). This required screening and testing is deemed unnecessary by the regulations only when, at the time of the deposit, the specimen was intended to be used only by the depositor or his regular sexual partner. Any other potential recipient, including a surrogate who was not the regular sexual partner of the donor, is included among those intended to be protected by these regulations, which strictly mandate thorough testing before any such use.

The regulations also contain very particularized provisions for the manner in which a tissue bank must treat deposited reproductive tissue, and require the informed consent of a tissue donor, including a statement that the donor has the right to withdraw his or her consent to donation up until a specified point in the assisted reproduction process (10 NYCRR 52-8.7, 52-8.8[a][6]).

Relying on the regulations, Repro Lab pointed out that Mark, as a “client depositor” rather than a “donor,” had not been examined and screened as directed by 10 NYCRR 52-8.5, and that his blood and semen had not been tested for the infectious diseases covered in 10 NYCRR 52-8.6; rather, his specimens were simply stored without any medical screening or testing. Therefore, the tissue bank could not properly release the specimens for insemination of a surrogate.

Notwithstanding the regulations, Mark’s parents sought to either reform or terminate Mark’s agreement with the lab so as to eliminate the applicability of the directive that the specimens be destroyed, or to otherwise claim a legal right to ownership of the specimens. Accourding to the court, the parents had no viable cause of action that would entitle them to take possession of the specimens for insemination of a surrogate to produce the child he did not create while he lived.

The court further held that the contract between Mark and Repro Lab could not be reformed since it was clear and unambiguous, finding that it represented his choice that the sperm should be available to him so he could protect his ability to procreate if he survived. It did not protect any possibility that his genetic or biological issue could be created after his death; and the directive that his semen be destroyed in the event of his death precluded such a possibility. Under applicable regulations as well as the terms of the contract between Mark and Repro Lab, the specimens were not assets of the estate over which the administrators had possessory rights.

The legal obligations with regard to the possession and handling of the semen specimens were dictated solely and completely by the applicable Department of Health regulations. The proposed use of Mark’s semen would fundamentally violate 10 NYCRR 52-8.6(g), which requires that a semen donor be “fully evaluated and tested” prior to the use of his semen “by a specific recipient, other than his current or active regular sexual partner.”

This decision further illustrates the need to pre-plan in situation where one’s health may impact future reproductive activities. While I sympathize with Mark’s parents, the court had to follow the regulations and enforce the contract.

Basics of Bankruptcy Discharge and Domestic Support Obligations

Wednesday, March 4th, 2009

On occasion, a divorce may result in one or both of the parties filing for bankruptcy, often without an adequate understanding of the limited relief available in the bankruptcy court. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (“BAPCPA”) directly addressed issues related to the dischargeability of marital debt and support obligations, as well as to the effect of the automatic stay on collection and enforcement proceedings out of divorce and family law litigation.

Under bankruptcy law, a “domestic support obligation” is any debt incurred before or after a bankruptcy filing that is owed to or recoverable by a spouse, former spouse, child or governmental unit; in the nature of alimony, maintenance or support; and established pursuant to the terms of a divorce decree, separation agreement, property settlement agreement, court order or administrative determination.

In Chapter 7 bankruptcy, essentially all marital and domestic relations obligations are not dischargeable, regardless of whether they are support in nature, property divisions or “hold harmless” agreements, provided they were incurred by the debtor in the course of a matrimonial proceeding or a divorce action which resulted in a separation agreement, divorce decree, court order or administrative determination.

A debtor’s obligation to pay marital debts directly to a third party ( ie., pay the mortgage on former marital residence) and to hold the former spouse harmless on said debts is also deemed to be non-dischargeable if the obligation has the effect of providing support to the former spouse. A debtor’s duty to pay the following expenses are usually deemed to be in the nature of support and not dischargeable: educational expenses of a minor child; medical insurance coverage for a minor child; and life insurance, with the minor children as beneficiaries.

Attorney’s fees owed by debtor to his own lawyer are clearly dischargeable in bankruptcy, but as a general rule, attorney’s fees owed by debtor to a former spouse’s attorney are not dischargeable, if the underlying legal proceeding resulted in the entry of an order or judgment directing payment of maintenance or spousal support to the former spouse.

The division of a debtor’s pension benefits during the divorce action is usually accomplished by entering a Qualified Domestic Relations Order (“QDRO”). Since division of a pension is considered to be a transfer by debtor of a present interest in his pension, and as such, it is not a debt that can be discharged in bankruptcy.

In Chapter 13 bankruptcy, past due domestic support obligations owed by a debtor are not dischargeable, unless they are paid in full over the life of the Chapter 13 plan. However, if a debt created by a separation agreement or judgment of divorce is not in the nature of support, it sometimes can be discharged in Chapter 13 without being paid in full.

For a Chapter 13 Plan to be confirmed by the Bankruptcy Court, it must: pay in full to the former spouse all domestic support obligations owed by debtor at the time of the bankruptcy filing, and the debtor must be current on all domestic support obligations incurred after the bankruptcy filing.

A Chapter 13 Plan, even if confirmed by the bankruptcy court, is subject to dismissal if the debtor fails to pay any post-petition or post-confirmation domestic support obligations, and a Chapter 13 discharge will not be entered by the bankruptcy court unless and until a debtor certifies that all domestic support obligations have been paid and that the debtor is current on such obligations.

The automatic stay created by a bankruptcy filing bars the commencement or continuation of most legal proceedings, but it has no effect on a proceeding to establish paternity; to establish or modify a child support order, determine child custody or visitation issues, or dissolve a marriage, except to the extent that such proceeding may seek to determine a division of marital property in which the bankruptcy estate also has an interest. In those situations, the divorce can be granted without first obtaining relief from the automatic stay, but the marital property cannot be divided without obtaining such relief.

The automatic stay also does not prevent the post-petition collection of domestic support obligations such as alimony or child support from any property belonging to the debtor, providing that the bankruptcy estate does not also have an interest in the same property; from automatic wage deduction orders created by a statute or judicial or administrative order; from the interception of debtor’s federal or state income tax refunds, or
from the withholding, suspension or restriction of a debtor’s driver’s license or professional or occupational license. Therefore, Bankruptcy Court does not offer much protection for someone seeking to avoid the domestic support obligations.

The above rules will apply to the proceedings in New York State courts. In Ross v. Sperow, 57 A.D.3d 1255 (3rd Dept. 2008), the Appellate Division had to address a situation where one of the parties was seeking to enforce a counsel fee award after the other party filed for bankruptcy. In Ross, multiple violation petitions had been filed by the parties over the course of several years. In August 2006, Family Court upheld mother’s motion for counsel fees and directed father to pay $5,000 of the mother’s counsel fees. Father filed for a Chapter 7 bankruptcy thereafter, and listed the award of counsel fees as an unsecured debt. Father’s bankruptcy was discharged in January 2007. Mother brought a violation petition which alleged that father failed to pay the counsel fees. Father moved to dismiss petition on ground that he discharged counsel fee award in bankruptcy. The Appellate Division stated that state and federal courts have concurrent jurisdiction over issue of dischargabilityof a particular debt and held that domestic support obligations in the nature of support are exempt from discharge in bankruptcy. While father contended that counsel fees incurred were for custody and visitation proceeding, the record reveals that mother’s initial petition commencing the proceeding raised issues of financial need and hardship. According to the Appellate Division, term “in the nature of support” is broadly interpreted in the context of discharge of debt obligations in bankruptcy and held that the award of counsel fees was in part in the nature of support, and as such, exempt from discharge in bankruptcy.