Archive for May, 2009

Attorneys Fees Ordered in Family Court and Discharge in Chapter 7 Bankruptcy

Sunday, May 31st, 2009

I have previously written how the bankruptcy courts deal with attempted discharge of the so-called domestic support obligations. However, that post focused primarily on discharge of obligation that arose as a result of divorce proceedings and child support. Occasionally, I see an attempt to discharge an obligation arising out of Family Court proceedings, specifically, attorneys fees.

While it is clear that the child support or spousal support obligations are not dischargeable in bankruptcy as domestic support obligations, the question of attorneys fees granted in a child support or other proceeding in Family Court was less clear cut until Ross v. Sperow, 57 A.D.3d 1255 (3rd Dept. 2008), where the Appellate Division, Third Department, held that the award of counsel fees by the Family Court was, in part, “in the nature of support” and, therefore, excepted from discharge in bankruptcy.

In Ross, the mother filed a petition for violation of a prior order of custody and visitation in 2005. In response, multiple cross petitions were filed by the father alleging violations by the mother and seeking modification of custody. In an August 2006 order resolving the parties’ petitions, Family Court sustained the mother’s motion for counsel fees and ordered that the father pay $ 5,000 of her counsel fees. The father subsequently filed for bankruptcy under chapter 7 of the Bankruptcy Code and, in Schedule F of his petition, he listed the award of counsel fees as an unsecured debt. The father was discharged by order of the Bankruptcy Court in January 2007 and, shortly thereafter, the mother commenced the present proceeding in Family Court for the violation of a court order based upon the father’s failure to pay the counsel fees. Contending that the debt had been discharged in bankruptcy, the father moved to dismiss the petition. Family Court, among other things, concluded that the counsel fees awarded in its prior order were a nondischargeable domestic support obligation, denied the father’s motion and granted the mother’s petition in part, finding the father to be in violation of a prior order.

The Appellate Division noted that state and federal courts have concurrent jurisdiction over the issue of the dischargeablity of a particular debt following the discharge of the debtor in bankruptcy. It reviewed the father’s contention that the counsel fees, although awarded in the context of a Family Court proceeding regarding custody and visitation, were not “in the nature of support” for the parties’ children. The Court held that since the mother’s initial petition commencing the proceeding clearly raised issues of financial need and hardship and her motion for counsel fees, which was sustained by Family Court in the August 2006 order, proposed consideration of her circumstances as one basis for an award of counsel fees. The Court held that the term “in the nature of support” is to be given a broad interpretation in the context of the discharge of debt obligations in bankruptcy and agreed with Family Court’s determination that the award of counsel fees in its prior order was, in part, “in the nature of support” and, therefore, excepted from discharge in bankruptcy.

The real issue in this case is whether the custody petition really was in the nature of support. The mother’s lawyer was able to persuade the both the Family Court and the Appellate Division that it was. While the Appellate Division relied on the award of attorneys’ fees and the relevant standard under the Family Court Act, an argument can be made that the Court should have looked to the underlying proceeding only and that proceeding dealt exclusively with custody issues. One of the factors in any award of attorneys’ fees is ability to pay, so that can make an award of attorneys fees in any proceeding in Family Court to be in the nature of support.

Paying For Summer Camp and Child Support

Monday, May 25th, 2009

As the end of the school year approaches, parents usually begin to look at various activities their children may participate in during the summer.  One such popular option is a summer camp, which may be a day camp or a sleep-away camp.  I am often asked who is obligated to pay for it.

I have previously written that under New York’s Child Support Standards Act, the parent paying child support is typically obligated to pay a portion of child care and other expenses.  In Micciche v. Micciche, 2009 NY Slip Op 03702 (2nd Dept. 2009), the Appellate Division affirmed the principle that the cost of the summer camp is considered to be a part of the  child care expense, and as such, both parties are required to contribute their pro-rata share in accordance with their income.

If there are no contrary provisions in the parties’ separation agreement or judgment of divorce, and one of the parents refuses to contribute his or her share of summer camp, I recommend that the other party discuss this issue with an experienced family law lawyer.  Sometimes, it only takes a letter from an attorney to resolve such disputes.

New York Child Support Add-Ons and Basics of Child Support

Monday, May 25th, 2009

Under New York law, child support consists of two elements: “basic” child support and the “add-ons.”  Pursuant to Domestic Relations Law §240, New York requires that basic child support be calculated in two parts: (a) the support based on the total combined income of both parents up to $80,000; and (b) the support based on the total combined income of both parents over $80,000.  For both parents’ combined adjusted gross income over $80,000, the court has the discretion to apply the same statutory guidelines, and for all practical purposes will do so. See Cassano v. Cassano, 85 N.Y.2d 649 (1995).  The result will be the total combined basic child support attributable to both parents for the combined income in excess of $80,000.  From the combined basic child support as calculated under the statute, a pro-rata share of each parent’s income is calculated.  Each parent’s pro-rata share is a ratio equal to that parent’s adjusted gross income divided by the combined adjusted gross income for both parents.  That pro-rata share is used to calculate each parent’s share of child support add-ons.

The parent paying child support is also obligated to pay for his/her pro-rata share of the following add-ons.

Day Care

Domestic Relations Law §240 (1-b)(c)(4) and Domestic Relations Law §240 (1-b)(c)(6) provide that when a custodial parent is working, seeking work, or is in school or training which will lead to employment, reasonable day care expenses will be allocated in a ratio equal to the each parent’s income to the combined income.  Reasonable day care expenses vary and each situation should be discussed with an experienced family law lawyer to determine each party’s rights and responsibilities.

Health Care Expenses

Domestic Relations Law §240 (1)(d) provides that the cost of health care insurance shall be allocated in the same proportion as each parent’s income is to the combined parental income.  Domestic Relations Law §240 (1-b)(c)(5) provides that reasonable health care expenses not covered by insurance are allocated in the same proportion as each parent’s income is to the combined parental income.  Obviously, the parties can opt-out of the CSSA’s provisions with respect to the add-ons. Any provisions with respect to the cost of health insurance are enforceable just like child support provisions.

In Rochester and Monroe County, as well as in surrounding counties, the Supreme Court and Family Court usually require the non-custodial parent to carry health care insurance for the children.  However, similarly to child care, there may be situations where it is more beneficial financially for the custodial parent to pay for the cost of health insurance for the children and for the non-custodial parent to contribute his or her share.  The parties should be mindful of the cost of health care coverage and should discuss these issues with a family law attorney before entering into a separation agreement or agreeing to a judgment of divorce.

Educational and Extracurricular Expenses

In addition, the parents may be obligated to pay for the cost of extracurricular expenses and educational expenses, such as a private school or college.  I have previously discussed issues related to the college costs, and will address issues related to paying for a private school at a later date.

Overpayment of Pendente Lite Maintenance and Equitable Distribution

Saturday, May 16th, 2009

I have previously written that the Supreme Court has wide latitude in fashioning pendente lite (interim) maintenance awards while the divorce action is pending.  But what happens if the trial court ultimately decides that the pendente lite maintenance award was excessive?  The Court of Appeals recently addressed this issues in Johnson v. Chapin, 2009N.Y.  Slip. Op. 03630 (2009).

In Johnson, the Court of Appeals held that when a pendente lite award of maintenance is found at trial to be excessive or inequitable, the court may make an appropriate adjustment in the equitable distribution award.  Thus, the Court of Appeals held that the trial court did not abuse its discretion in giving husband a credit representing the amount of the pendente lite maintenance he paid that exceeded what he was required to pay under the final maintenance award.  In determining the temporary maintenance award, Supreme Court imputed an average salary in excess of $2 million to husband. However, at trial, it was established that his income was significantly lower. Given the disparity in the maintenance amounts, under the circumstances of this case, it was appropriate for the husband to receive a credit for excessive maintenance paid.

This decision is significant since it reaffirms the principle that pendente lite awards are temporary and are subject to adjustment.  An experienced divorce lawyer will not rest after obtaining a favorable pendente lite relief for the client, but will continue to work to make sure that the any pendente lite maintenance, or other interim award, is preserved as a part of a final decision.

Economic Support and Equitable Distribution

Sunday, May 10th, 2009

I have previously written that New York’s equitable distribution law does not require equal distribution of marital assets.  This view has been confirmed by recent case, Glassberg v. Glassberg, Index No. 24307/05, __ Misc.3d __ (Sup. Ct. Suffolk Co. 2009).  A disbarred attorney who provided “limited, sporadic, unreliable and inconsistent” support to the “economic partnership” of a 17-year marriage should receive only 35 percent of the couple’s property.  The court found that during the marriage ” the Wife provided a substantial share of the financial and day-to-day support in maintaining the household … includ[ing] working full-time, being the primary caregiver for their son and … providing for the consistent and reliable income flow the family enjoyed.”

Marc Glassberg, an English teacher who went to law school at night, married Dorene Glassberg, a special education teacher, in 1988, a second marriage for both. The parties have one child, born in 1989. Ms. Glassberg filed for divorce in October 2005.  Mr. Glassberg, who was admitted into New York Bar in 1985, testified that he “never netted more than $30,000 annually in earnings as an attorney,” except in one instance.  He  testified that he ran his practice out of his basement and his car after being unable to afford a storefront office.  He resigned from the bar and was disbarred in 2000, as the result of disciplinary proceedings against him for failing to preserve client funds from the sale of a home. Since then, he has worked in a series of jobs, including stints at Godiva Chocolates and a card store.  In 1999, he took another job teaching English at a Bronx high school, commuting six hours a day but was fired in 2001 for misconduct. A teacher in Los Angeles since 2008, Mr. Glassberg reported an income of just over $64,000 in 2008.

Ms. Glassberg, on the other hand, earned more than $118,000, according to her 2007 tax return, as a long-term teacher.  Mr. Glassberg argued that he had been involved with his family and that despite his “hard luck, misfortune and indeed a ‘reversal of fortune,’” had striven to be a parent and provider. Ms. Glassberg countered that despite working full-time, she “engaged in virtually all of the household duties with no assistance” from Mr. Glassberg, including cooking, cleaning, yard work, laundry and “always” doing homework with their son. She conceded that Mr. Glassberg coached the son’s soccer team for two years and took out the garbage.

While Mr. Glassberg “surely exercised extremely poor judgment” in getting disbarred, he “nonetheless generally (although at times inconsistently) acted to earn income during the marriage”.  However, his role in running the day-to-day household and contributing to the economic partnership was “limited, sporadic, unreliable and inconsistent,” the judge concluded.  He awarded Ms. Glassberg 65 percent of the marital estate in equitable distribution.

The wife’s attorney argued that Mr. Glassberg’s conduct in losing his law license and getting fired from his New York teaching job should be considered wasteful dissipation of marital assets, reducing his share of the couple’s property. However, the court did not address these issues and instead held that Mr. Glassberg had not contributed equally to the economic partnership of the marriage.

This case demonstrates what I have previously written.  If one spouse’s economic contribution to the marriage was significantly less than that of the other spouse, the court has discretion to distribute marital property in accordance with each spouse’s economic contribution to the marriage.  An experienced divorce lawyer should be able to evaluate each situation and determine if such argument as advanced in Glassberg is warranted.

Payments on Pre-Marital Debt and Right of Recoupment – Update

Sunday, May 10th, 2009

I have previously written about the case of Mahoney-Buntzman v. Mahoney, 51 A.D.3d 732 (2nd Dept. 2008), which stood for the proposition that that marital property used to pay one spouse’s obligations incurred either prior to the marriage, or benefitting only one spouse, could be recouped.  In Mahoney-Buntzman, the Appellate Division held that the husband’s maintenance obligation to his first wife and the boat loan constituted debts incurred by him prior to the parties’ marriage and were solely his responsibility. Accordingly, the court granted to the wife a credit for one half of the payments made.

Last week, the Court of Appeals issued its decision in Mahoney-Buntzman v. Mahoney, __ N.Y.2d __, 2009 N.Y. Slip. Op. 03629 (2009), and reversed the Appellate Division holding that that marital property used to pay maintenance and child support to the husband’s wife from a previous marriage should not be recouped to the marital estate.  The opinion used very broad language which is likely to eliminate any kind of recoupment of marital money expended for separate property purposes.  Specifically, the Court of Appeals held that:

[D]uring the life of any marriage, many payments are made, whether of debts old or new, or simply current expenses. If courts were to consider financial activities that occur and end during the course of a marriage, the result would be parties to a marriage seeking review of every debit and credit incurred. As a general rule, where the payments are made before either party is anticipating the end of the marriage, and there is no fraud or concealment, courts should not look back and try to compensate for the fact that the net effect of the payments may, in some cases, have resulted in the reduction of marital assets. Nor should courts attempt to adjust for the fact that payments out of separate property may have benefitted both parties, or even the non-titled spouse exclusively. The parties’ choice of how to spend funds during the course of the marriage should ordinarily be respected. Courts should not second-guess the economic decisions made during the course of a marriage, but rather should equitably distribute the assets and obligations remaining once the relationship is at an end.

Expenditures made during the life of the marriage towards maintenance to a former spouse, as well as payments made pursuant to a child support order, are obligations that do not enure solely to the benefit of one spouse. Payments made to a former spouse and/or children of an earlier marriage, even if made pursuant to court order, are not the type of liabilities entitled to recoupment.

This is not to say that every expenditure of marital funds during the course of the marriage may not be considered in an equitable distribution calculation. Domestic Relations Law § 236(B)(5)(d)(13) expressly and broadly authorizes the trial court to take into account “any other factor which the court shall expressly find to be just and proper” in determining an equitable distribution of marital property. There may be circumstances where equity requires a credit to one spouse for marital property used to pay off the separate debt of one spouse or add to the value of one spouse’s separate property (see e.g. Micha v Micha, 213 AD2d 956, 957-958 [3d Dept 1995]; Carney v Carney, 202 AD2d 907[3d Dept 1994]). Further, to the extent that expenditures are truly excessive, the ability of one party to claim that the other has accomplished a “wasteful dissipation of assets” (DRL 236 [B][5][d][11]) by his or her expenditures provides protection. The payment of maintenance to a former spouse, however, does not fall under either of these categories.

Thus, it is unlikely that any recoupment will be allowed by the courts in the future.  This decision makes it even more important that each marital estate is carefully scrutinized by an experienced divorce lawyer to establish the respective rights and obligations of the parties.

Separated Siblings and Their Right of Visitation

Saturday, May 2nd, 2009

I occasionally see cases involving separated siblings.  In those situations, the parents, or the guardians of the children should be aware the siblings, or half-siblings have an independent right of visitation with each other. The Family Court has the same jurisdiction as the Supreme Court to determine visitation of minors, including visitation between siblings.  Family Court Act §651, Domestic Relations Law §71.  DRL §71 provides that “where circumstances show that conditions exist which equity would see fit to intervene, a brother or sister or a person on behalf of a child, whether by half or a whole blood, may apply to the family court [for visitation rights] as the best interest of the child may require.”  Thus, in cases involving sibling visitation, like grandparent visitation, the court must first determine whether equitable considerations grant a party standing to bring a petition and then, if so, whether it is in the best interests of the children to award such visitation.  E.S. v. P.D., 8 N.Y.3d 150 (2007).  The court in such a case is charged with determining what is in the best interests of all the children involved.  State ex rel. Noonan v. Noonan, 145 Misc.2d 638 (Sup. Ct. 1989).  The importance of sibling relationships has long been recognized by the courts of this state.  Eschbach v. Eschbach, 56 N.Y.2d 167 (1989).  This is manifested not only in preferring arrangements which allow siblings to live together, but also in ensuring that half-siblings have adequate contact with each other.  Olivier A. v. Christina A., 9 Misc 3d 1104 [A] (Sup. Ct. Suffolk Co. 2005).  The State’s recognition of the importance of siblings maintaining contact with each other is also manifested in Family Court Act §1027-a, which provides that foster care placement of a child with his or her siblings or half-siblings is presumptively in the child’s best interests. See also 18 NYCRR §431.10, which provides that a social services district must make diligent efforts to place siblings or half-siblings in foster care with each other unless such placement is determined to be detrimental to their best interests.

In a recent case, Isabel R. v. Meghan Mc., 23 Misc.3d 1102(A) (Fam. Ct. Dutchess Co. 2009), the court had to decide whether the half-siblings who were living in separate households after their parents’ breakup, were entitled to visitation with each other.  The court found that the evidence demonstrated that the children did indeed have a relationship until that relationship was unilaterally terminated by the mother after she and the children’s father split up.  While the mother argued that she has an absolute and unfettered right to determine whether sibling visitation should take place and that any direction by the court for sibling visitation would violate her constitutional rights. Relying on E.S. v. P.D., supra, the court held that mother’s constitutional argument was meritless and proceeded to decide whether visitation would be in the children’s best interests.  In considering the children’s best interests, the court has considered, among other factors, their prior relationship, the reason visitation was stopped, the reasons given and basis for the respondent’s decision to deny visitation at the present time, the views of the attorneys for the children, the future benefit to the children and the content of the Court’s in camera interviews. The children wished to see each other and expressed no negative feelings about doing so; the children have fond memories of times they spent together and activities they did together.  The court held that under those circumstances, visitation would be in the children’s best interests.