Archive for the ‘Stipulations’ Category

Tracing Method of Dividing Defined Contribution Retirement Assets

Sunday, September 28th, 2014

I have previously written about division of marital retirement assets which is traditionally done by computing a time based coverture fraction pursuant to the New York Court of Appeals’ decision in Majauskas v. Majauskas, 61 N.Y.2d 481 (1984). Majauskas was the seminal New York case that decided that the portion of the spouse’s pension or a retirement plan such as 401k, earned during the marriage, is marital property subject to equitable distribution. To the extent that a pension was earned or 401k contributions were made during the marriage, they are, for purposes of New York law, are considered to be marital property. The Majauskas decision sets forth the formula that normally is to be followed in dividing retirement assets and consists of a fraction computed on the basis of duration of the marriage and duration of the party’s employment.

While Majauskas has been the prevailing law for the last 30 years, a recent decision suggests that with regard to defined contribution retirement plans such as 401k or 403b plans, or their equivalents, the trial court has discretion to utilize a tracing method of equitable distribution. According to Jennings v. Brown, 43 Misc.3d 1229(A) (Sup. Ct. Seneca Co. 2014), “a small minority of cases have started to hold that use of a time-based fraction to determine the marital share of a defined contribution plan is permitted”. Tracing would allow the court to treat appreciation on any separate property portion of such retirement assets as separate property, thereby reducing the non-titled party’s interest in the asset. The court observed that utilization of time coverture fraction methodology utilized by the Court of Appeals in Majauskas may result in overvaluation of non-vested party’s interest and tracing method would remedy that problem.

In Jennings, the plaintiff argued that the tracing method should be utilized to establish defendant’s interest in plaintiff’s 401k plan. However, while accepting tracing methodology as valid, the court held that it was constrained by the terms of the parties’ judgment of divorce which referenced Majauskas method of dividing retirement assets.

While Jennings is a trial level decision, and I question at least one of the cases it relies on, it suggests that with regard to defined contribution retirement funds, tracing method could be accepted by the trial court. Under appropriate circumstances, tracing method may greatly benefit the titled spouse. It also suggests that when the case is tried, the party seeking to utilize tracing method will need to present expert testimony on this issue. In Jennings, an affidavit of a CPA was presented to the court.  Since Jennings is a trial level decision, it remains to be seen whether the appellate courts will agree with its reasoning.

Statute of Limitations and QDROs

Saturday, June 11th, 2011

One of the questions that I was asked several times during the last year was whether there is a statute of limitations applicable to Qualified Domestic Relations Orders (QDROs)? This question usually come up in situations where one former spouse was entitled to a portion of the other former spouse’s retirement benefits, however, the QDRO was never done, and a substantial period of time has passed. If there was an applicable statute of limitations, the former spouse who has failed to act would lose his or her right to collect a portion of the former spouse’s retirement.

However, a couple of recent decisions made it clear that with respect to QDROs, there is no applicable statute of limitations and a QDRO can be submitted to the court at any time. In Denaro v. Denaro, 2011 N.Y. Slip. Op. 04409 (2nd Dept 2011), the Appellate Division, Second Department, held that “the statute of limitations does not bar issuance of the QDRO.”  Relying on Bayen v Bayen, 81 A.D.3d 865 (2nd Dept. 2011), the court held that ”[M]otions to enforce the terms of a stipulation of settlement are not subject to statutes of limitation… [B]ecause a QDRO is derived from the bargain struck by the parties at the time of the judgment of divorce, there is no need to commence a separate action in order for the court to formalize the agreement between the parties in the form of a QDRO”. Id. (citations omitted.)

While I would not recommend to anyone delaying preparing and submitting a QDRO, any such submission is not going to be barred by a statute of limitations. At the same time, any late submission is likely to cause another set of problems if the retirement asset is in pay status  and payments are being made to the other spouse.

Contempt and Enforcement of Court Orders

Wednesday, April 20th, 2011

One remedy to a failure of one party to abide by existing court orders that is available to the parties in divorce and other family law actions is contempt of court. The power to punish for contempt arises out of the inherent power of the court, which is limited by §753(A)(3) of the Judiciary Law. It provides, in part:

753. Power of courts to punish for civil contempts
A. A court of record has power to punish, by fine and imprisonment, or either, a neglect or violation of duty, or other misconduct, by which a right or remedy of a party to a civil action or special proceeding, pending in the court may be defeated, impaired, impeded, or prejudiced, in any of the following cases:
3. A party to the action or special proceeding, an attorney, counsellor, or other person, for the nonpayment of a sum of money, ordered or adjudged by the court to be paid, in a case where by law execution can not be awarded for the collection of such sum except as otherwise specifically provided by the civil practice law and rules; or for any other disobedience to a lawful mandate of the court.
8. In any other case, where an attachment or any other proceeding to punish for a contempt, has been usually adopted and practiced in a court of record, to enforce a civil remedy of a party to an action or special proceeding in that court, or to protect the right of a party.

The power of contempt is exists to punish the party who engages in an evasion or a violation of duty, or misconduct, which resulted in defeating or prejudicing the other party’s rights. There are a number of procedural requirements that have to be strictly followed in order for the court to find a party in contempt. A motion to punish for contempt will be dismissed unless on its face it contains both a notice that the purpose of the hearing is to punish for contempt and that such punishment may consist of a fine or imprisonment. Without this notice and warning, the court is without jurisdiction to punish for contempt.

The party must also be advised by the court of the right to counsel and assigned an attorney if financially unable to obtain counsel. In addition, DRL §245 requires a finding that payment cannot be enforced pursuant to DRL §243 or §244 or CPLR §5241 and §5242 and the exhaustion of these remedies or a finding that they would be ineffectual as a prerequisite to a contempt for disobeying an order requiring payment of money in a matrimonial action.  The court must find that the violation was willful and find expressly that the actions of the defaulting spouse were calculated to or actually did defeat, impair or impede or prejudice the other spouses rights or remedies. Nonpayment alone does not establish the requisite willfulness to support contempt. DRL §246(3) provides that financial inability to pay is a defense to a contempt proceeding under DRL §245. A person who asserts in an opposing affidavit financial inability to comply with the order is entitled to an evidentiary hearing to determine whether he or she has an ability to pay.

The punishment for contempt for failure to make ordered payments is imprisonment until payment is made. The defaulting spouse may pay the money due and be released. If the court finds that the party committed the offense charged and that it was calculated to or actually did defeat, impair, impede or prejudice the rights or remedies of the other spouse, the court must make a final order directing fine, imprisonment or both, as it finds necessary.

Civil Rights Law §72 limits the length of imprisonment for nonpayment of alimony, maintenance, distributive award, special relief in a matrimonial action and counsel fees in a divorce case to three months for a default of less than $500, and to six months for $500 or more. Noticeably absent is any mention of child support. If a party has an actual loss or injury because of the proven other spouse’s misconduct, a fine must be imposed sufficient to indemnify the aggrieved party and when collected, paid to the aggrieved party.

In contrast to the DRL, the Family Court Act (FCA) takes a tougher approach by providing for commitment as one of the remedies for nonpayment of support. Section 454(2) provides that where a respondent is brought before the court for failure to obey any “lawful order” of the Family Court for support and following a hearing the court is satisfied that the respondent has failed to obey the order, it may enter a money judgment, make an income deduction order, require an undertaking, make a sequestration order or suspend the respondent’s driving, professional or business license.

Here is an example of how a contempt application will be viewed by the court. In a recent case, H.S.M. v J.T.M., 2011 N.Y. Slip. Op. 50069(U) (Sup. Ct. Nassau Co. 2011), the court was asked to hold defendant in contempt of Court for his willful failure to comply with the Judgment of Divorce entered in this action , and for his willful refusal to pay the sum of $43,351.87, together with interest. The parties’ marriage was dissolved pursuant to the Judgment of Divorce, entered June 24, 2008, which incorporated but did not merge with a Stipulation of Settlement, dated December 19, 2007. The Stipulation stated in pertinent part that:

The Husband shall pay to the Wife, as and for child support, the sum of One Thousand Seven Hundred Eighty-five ($1,785.00) Dollars per month … The parties agree that the child support payments will be made through the Nassau County Support Collection Unit. [Article XXVI]

Pursuant to the Order of the Hon. Denise L. Sher, J.S.C., dated October 4, 2006, the Court ordered pendente lite relief awarding to the Wife the sum of One Thousand Four Hundred ($1,400.00) Dollars per month temporary maintenance, as well as child support in the sum of Two Thousand ($2,000.00) Dollars per month. The award was retroactive to the date of service, which was July 18, 2006. [Article XXVII]

The Husband agrees that arrears for child support and maintenance as of the date of execution of this Agreement amount to Thirty-Eight Thousand Two Hundred ($38,200.00) Dollars, and agrees to the entry of judgment for said arrears. Said arrears shall be liquidated by the Husband paying to the Wife the sum of Three Hundred ($300.00) Dollars per month until all arrears are paid. The Father further agrees that in order to liquidate arrears, the Father shall remit to the Mother his income tax return refunds that he receives commencing with the tax year 2007 and shall pay over to the Mother the entire refund by June 1, 2008, and by June 1st every year thereafter until such time as his arrears have been liquidated. [Article XXII]

The Husband shall pay to the Wife, as and for spousal maintenance, the sum of Four Hundred ($400.00) Dollars per month…through support collection. [Article XXXVI]

Pursuant to the “So-Ordered” Stipulation of the parties dated May 19, 2010, “Def[endant] agrees to pay to Pl[aintiff] as and for child support arrears the minimum sum of $1,000.00 (One Thousand and no/100) by May 26, 2010.

Wife claimed that Husband has willfully failed to i) comply with the Judgment of Divorce dated August 6, 2008, which incorporates the Stipulation; ii) comply and pay the money judgment entered on February 3, 2010, in the sum of $49,746.27; and iii) comply with the “So-Ordered” Stipulation entered into by the parties on May 19, 2010. Wife claimed that subsequent to the entry of the money judgment, she contacted the Nassau County Office of Child Support Enforcement to seek payment of the child support obligation for the parties’ three children, as well as maintenance for herself. She claimed that notwithstanding the attempts of the Child Support Enforcement Bureau, no payments have been received from the defendant or his employer. She further alleged that the total sum now due and owing is $87,864.01, and that none of it has been paid.

In February of 2010, husband testified that he has no assets nor property which could be sequestered. In support of her application, wife claimed that nothing less than a fine and incarceration will persuade the husband to comply with the Court orders and judgments. She argued that other enforcement devices, including income deduction orders, income executions or sequestration will be unsuccessful in view of husband having made himself judgment proof; moving out of the State of New York; and failing to comply with any judgment or stipulation entered into by the parties.

Wife claimed that she is attending graduate school but that in the interim, she is completely dependent on her family for her support and the support of the parties’ three children. She claimed that the last time she received any funds from husband was in March of 2010, and that since that time she has received no support payments or maintenance. She argued that based upon those facts, husband’s intentional non-compliance with the judgment, orders and “So-Ordered” Stipulation has defeated, impaired and prejudiced her rights.

The court stated that a contempt citation is a drastic remedy which should not be granted absent a clear right to such relief.  Further, to prevail on a motion to punish a party for civil contempt, the movant must demonstrate that the party charged with contempt willfully violated a clear and unequivocal mandate of a court’s order, with knowledge of that order’s terms, thereby prejudicing the movant’s rights.  The court further held that pursuant to Domestic Relations Law §245, before a defaulting party can be held in contempt for the non-payment of a sum of money, it must appear “presumptively, to the satisfaction of the Court,” that the movant exhausted the less drastic enforcement remedies available under Domestic Relations Law §§ 243, 244 and 245, CPLR §§ 5241 and 5242, or such other enforcement mechanisms that would be ineffectual.  Once the movant has made a prima facie showing that the party against whom a contempt citation is sought has failed to pay a sum of money as ordered, the burden then shifts to the obligor to adduce some competent, credible evidence of his inability to make the required payments, in order to show that the failure to pay was not willful. The court determined that wife has satisfactorily demonstrated the existence of a clear and unequivocal mandate of the court, and that husband has knowingly violated the order’s terms, thereby prejudicing her rights. The court also found that other methods of enforcement would prove ineffective in light of husband having made himself judgment proof. The court, however, determined that it must conduct a hearing to determine husband’s willfulness in violating the subject orders. In order for a non-compliant party be incarcerated for his willful violation of the court’s mandates, the movant must prove such willfulness beyond a reasonable doubt.

The above decision illustrates that while contempt is a remedy, it may require a substantial motion practice and, most likely, a hearing.  Thus, contempt motions should not be brought unless all other remedies were exhausted.

Upcoming Changes to New York’s Child Support Law and Social Services Law

Wednesday, September 8th, 2010

When New York’s Legislature finally passed the no-fault divorce law and made changes to temporary maintenance and attorneys fees awards, it also passed a number of less publicized changes to the Child Support Standards Act, and related laws, which govern child support in New York. The new legislation modified the Family Court Act, Domestic Relations Law and the Social Services Law, substantially altering the parties’ ability to modify child support awards. It also gave the Family Court additional powers in situations where the party paying child support is unemployed.

The following will describe the most significant changes included in the new legislation.

Family Court Act (FCA) §451 was amended to conform the language of the FCA provision governing the modification of child support orders to the Domestic Relations Law (DRL) so that both provisions provide for a “substantial change in circumstances” as a basis for modification of an order of child support.

This section further provides two new bases for modification of an order of child support: (1) the passage of three years since the order was entered, last modified, or adjusted; or (2) a 15 percent change in either party’s income since the order was entered, last modified or adjusted provided that any reduction in income was involuntary and the party has made diligent attempts to secure employment commensurate with his or her education, ability and experience. The parties may specifically opt out of the two new bases for modification in a validly executed agreement or stipulation. This section would provide that incarceration is not a bar to finding a substantial change in circumstances under certain conditions and also would clarify that retroactive support is paid and enforceable as provided under FCA §440.

DRL §236B(9)(b) was amended to separate out the “substantial change of circumstances” basis for modification of child support orders into its own section for clarity and would provide two new bases for the modification of an order of child support: (1) the passage of three years since the order was entered, last modified, or adjusted; or (2) a 15 percent change in either party’s income since the order was entered, last modified or adjusted provided that any reduction in income was involuntary and the party has made diligent attempts to secure employment commensurate with his or her education, ability and experience. The parties may specifically opt out of the two new bases for modification in a validly executed agreement or stipulation. This section provides that incarceration is not a bar to finding a substantial change in circumstances under certain conditions.

The bill also added a new FCA §437-a to authorize the Family Court to require the non-custodial parent of a child to seek employment, or to participate in job training, employment counseling or other programs designed to lead to employment, where such programs are available, if he or she is unemployed at the time the court is establishing the support order unless he or she is in receipt of supplemental security income (SSI) or social security disability (SSD) benefits.

Another section of the bill amended Social Services Law (SSL) §111-h to provide that if the respondent is required to participate in work programs or activities, and if the order of support is made payable on behalf of persons in receipt of public assistance, the support collection unit may not file a petition to increase the support obligation for twelve months from the date of entry of the order if the respondent’s income is derived from the work activity or program. FCA §461 was also amended to reflect the two new bases for modification of an order of child support.

Sections of the bill dealing with modification of child support only apply to child support orders which incorporate but do not merge stipulations or settlement agreements if the stipulation or agreement was executed on or after the effective date of the bill. The amendments, with exception of certain sections of the Tax Law, become effective 90 days after the passing of the bill.  The effective date of the amendments is October 14, 2010.

This bill represents a substantial change to the prior statutory provisions and case law dealing with modification of child support.  While New York’s child support orders were always subject to modification, these changes will make modification of child support easier. I do not know at this time how these provisions will apply to the orders already in place and whether the party seeking modification of child support will be able to use some of the new provisions to modify existing child support orders.

Parental Interference, Parental Alienation and Available Sanctions

Sunday, June 13th, 2010

Parental interference and parental alienation are very common problems.  Unfortunately, the courts are reluctant to punish parties responsible for such conduct and rarely sanction parties for engaging in such behavior.  However, in a recent decision, Ted R. v. Lauren R., 2010 N.Y. Slip. Op. 50931(U) (Sup. Ct. Nassau Co. 2010), the court made a civil contempt finding based on the mother’s violation of the parties’ Stipulation of Settlement where the mother attempted to undermine the relationship between the children and the father and replace him with her new husband, manipulated the father’s parenting access, engaged in “unfettered vilification” of the father with the children, falsely reported sexual misconduct, and has caused the children to fear her tirades and punishment if they embrace the relationship they want to have with their father. The Court sentenced the mother to a period of incarceration of six weekends.

In addition, while noting that the father’s request during the contempt hearing for a change in custody has provided adequate notice to the mother, the Court amends the father’s application to conform to the evidence presented at the hearing and ordered a hearing regarding modification of custody.

The court went into great detail describing the mother’s behavior toward her ex-husband. The factual findings concerning the mother’s behavior as stated in the decision are extensive and in view of the mother’s behavior, I will quote them in order to demonstrate the mother’s conduct.  The mother’s behavior included the following:

“Plaintiff intentionally scheduled their child’s (N.’s) birthday party on a Sunday afternoon during defendant’s weekend visitation, and then refused to permit defendant to attend. She demanded that N. be returned home early, in order to “prepare” for her party, but D., the other child, was enjoying the time with her father and wished to remain with him until the party began. Plaintiff castigated N. for “daring” to invite her father to take a picture of her outside her party. According to the plaintiff, “this doesn’t work for me!” Plaintiff threatened to cancel N.’s party, and warned her that her sister, too, would be punished “big time” for wanting to spend time with her father. Plaintiff’s taped temper tantrum, offered into evidence, vividly detailed one instance of how D. and N. have been made to understand that enjoying time with their father will be met with their mother’s wrath and threat of punishment.”

Mother consistently lied about father’s custody rights, including to third parties.  Specifically:

“Plaintiff conceded that when she completed N.’s registration card for XXX., she wrote that defendant is “not authorized to take them. I have custody. Please call me.” At trial, she claimed to fear that defendant would retrieve the girls directly from school. However, she later admitted that defendant had never even attempted to pick them up at school. Her testimony at trial sharply contradicted her sworn affidavit dated January 23, 2008, in which she stated that “the defendant consistently attempts to pick up the girls unannounced from their schools and activities, which disrupts not only the girls, but those in charge of the aforementioned.” In her sworn affidavit, plaintiff claimed that she completed the registration card because defendant sought to attend the end of D.’s art class and then had the audacity to drive his daughter home. The art class “incident” occurred well after the registration card was completed by the plaintiff. Moreover, nothing in the parties’ agreement prohibits the defendant from visiting the children at extra-curricular events or from driving them to or from such events. In point of fact, there was no dispute that D.’s Friday art class in Huntington ended as defendant’s alternate weekend visitation commenced.”

“Plaintiff wrote to Dr. L.1 (then the XXX. principal) and Ms. T. (N.’s fifth grade teacher), demanding that they restrict their conversations with the defendant to N.’s academics, as plaintiff is “solely responsible for her academic progress and emotional well being. Notwithstanding the nature of their joint legal custody plaintiff insisted before me that, “I have custody, he has visitation.”"

“The plaintiff made/completed an application for admission to XXX on behalf of N. in October, 2007. On the application, she checked the box “Mother has custody,” rather than the box directly below which says “Joint custody.” She identified her new husband, R. L., as N.’s “parent/guardian,” and she failed to mention the defendant. During cross examination, plaintiff insisted that she only omitted reference to the defendant for fear that his financial circumstances would adversely impact N.’s chances for acceptance. However, no financial information was requested anywhere on the application. Moreover, plaintiff acknowledged that none was required until after an applicant was invited to attend.”

“By applying to XXX without defendant’s knowledge – - but with N. completely involved in the process, plaintiff orchestrated the decision to be made, as well as alienating the child. Had the defendant not consented to N.’s attendance at XXX, after the fact, N. would be angry with him for purportedly interfering with the enrollment, even if defendant’s objections to a private school placement were sound. In no event was he consulted as to this educational decision.”

“When asked how she might handle things differently now, plaintiff did not indicate that she would first discuss the possibility of a private school with the defendant, as she is obligated to do pursuant to the Stipulation.”

“In a similar pattern of being advised “after the fact,” defendant testified that there were countless times when plaintiff deliberately scheduled theater tickets, family events and social activities for the girls during his visitation, and he was compelled to consent or risk disappointing the girls. These occurrences continued even during the time span of proceedings before me.”

Mother claimed that children didn’t want to see father, specifically:

“Plaintiff was forced to concede at trial that the defendant was prevented from enjoying his visitation rights after he returned with the girls from his niece’s Bat Mitzvah until this Court granted defendant’s emergency application to compel the plaintiff to allow the defendant to take D. and N. for the ski trip he had scheduled for his half of the Christmas recess. Plaintiff insisted that it was D. and N. who refused to see their father, because they were angry with the ‘choices” he had made on their behalf, including his objection to N. attending XXX. Defendant was made aware of the children’s position because they parroted their mother’s demands on several occasions. D. even read from a script during the brief dinners he was permitted. As plaintiff wrote in one e-mail when she was describing her role with respect to the children: “I am in charge here, not them. What I [sic] say goes. They may bring their shoes. You are responsible for the rest. End of story.”"

“In vivid testimony, the defendant recalled how the plaintiff willfully prevented him from exercising his rights to visitation with the children from November 4, 2007 through December 21, 2007. I observed the plaintiff smirk in the courtroom as defendant emotionally related how he was deprived of spending Hanukkah with his children, and was relegated to lighting a menorah and watching his daughters open their grandparents’ presents in the back of his truck at the base of plaintiff’s driveway on a December evening.”

“The fact that the children were as angry as they were with the defendant in November and December, 2007, demonstrates, in my view, that efforts to alienate the children and their father were seemingly effective. The children demanded that defendant meet “their” demands before they would permit him to visit with them again. They demanded that defendant permit N. to attend F. A., that he withdraw his objection to their participation in therapy with their mother’s therapist, and that he pay for 75% of D.’s Bat Mitzvah but limit his invitations to a handful of guests and have no role in the planning of the event. Plaintiff’s contention that she had no involvement in these children’s “demands” was belied by the very fact that the children had intimate knowledge of their mother’s position on all of these issues. The children, in effect, were evolved into plaintiff’s sub-agents and negotiators, having specific details of the financial demands of the plaintiff, and information as to the marital agreement.”

“The mother alluded to the ambivalence of the children in seeing the defendant. But such abrogation to the children’s wishes, under these circumstances, was in violation of the agreement. It was wholly improper for the mother to adhere to the children’s wishes to forego visitation with their father (see, Matter of Hughes v. Wiegman, 150 AD2d 449).”

“Plaintiff half-heartedly testified that she wants the children to have a relationship with the defendant. Her view of the defendant’s role was a numbing, desired nominality, evident by her actions that were without any semblance of involvement by the defendant – - notwithstanding the clear joint custodial provisions. At critical points in the cross-examination, plaintiff was noticeably off balance – - hesitating and defensive – - with answers that dovetailed to either narcissism, or, a poor grasp of the affects of her conduct. The plaintiff was dispassionate, sullen, and passively resistant to the alienating efforts of the plaintiff. The continued litany of instances of alienating conduct, turned repression of the defendant’s joint custodial arrangement into farce. The endurance in recounting instance upon instance of alienating conduct herein, was as daunting as it was indefensible.”

Mother’s behavior toward father in front of the children included the following:

“Plaintiff relegated the defendant to waiting endlessly at the bottom of her long driveway. When defendant drove up her driveway on October 26, 2007, so that the children would not have to walk down with their heavy bags in a torrential rain, plaintiff ran down the driveway where she had left her car, drove up the driveway and blocked defendant’s vehicle. The children watched as the police listened to their mother angrily demand that their father be arrested and, when the police refused, heard their mother scream that she is a taxpayer and the police work for her. She frequently disparaged the defendant in the presence of the children, calling him a “deadbeat,” “loser,” “scumbag,” and “f——-g asshole.” On one particular occasion, while holding N. and D. in her arms, plaintiff said to the defendant, “We all hope you die from cancer.” Just this past summer, when defendant insisted that D. retrieve her clothes from plaintiff’s home in preparation for their visit to N. on her camp visiting day, plaintiff urged to defendant that “Judge Ross will not be around forever, d___.” Before the beginning of each of defendant’s vacations with the children, the plaintiff staged prolonged and tearful farewells at the base of the driveway, during which plaintiff assured the children that they will return to “their family soon,” and if “things get too bad, they can always tell Daddy to bring them home.”"

Mother accused father of sexual abuse:

“The crescendo of the plaintiff’s conduct involved accusations of sexual abuse. Plaintiff falsely accused defendant of sexual misconduct in June, 2008, shortly after defendant moved to Huntington and the children’s friends were enjoying play dates at defendant’s home. Plaintiff testified that D. shared that she was uncomfortable when the defendant tickles her, and conceded that she knew there was nothing “sexual” involved. Undaunted by the lack of any genuine concern for D.’s safety, plaintiff pursued a campaign to report the defendant to Child Protective Services. To facilitate this, she spoke with W. M, the psychologist at the school D. attended. Plaintiff also “encouraged” D. to advise Dr. C. (the chidren’s pediatrician) that defendant inappropriately touched her – - but he saw no signs of abuse. Plaintiff also advised Dr. A., Ms. M., Dr. R. (the children’s prior psychologist) and family friends of the allegations and, ultimately, the Suffolk County Department of Social Services opened a file on June 3, 2008, and began an investigation.”

“According to the Case Narrative contained in the New York State Case Registry, a complaint was made that “On a regular basis, father inappropriately fondles 13 year old D.’s breasts. This makes D. feel very uncomfortable. Last Sunday, Father hit D. on the breast for unknown reason… ” When the caseworker and Suffolk County detectives interviewed D. on June 3, 2008, she reported only that her father tickles her on her neck and under her arms, and she categorically denied her father ever fondled her breasts. She admitted that her father was not attempting to make her uncomfortable, but that he still regards her to be a tomboy. The detectives closed their investigation.”

“Thereafter, and significantly, when the CPS caseworker met with plaintiff on August 19, 2008, plaintiff was quick to state that her ex-husband “did it again.” Plaintiff claimed that the defendant hugged D. too hard. According to the caseworker’s notes, the caseworker repeatedly cautioned the plaintiff not to bring the children into her disputes with the defendant. This warning was contained in CPS records.”

“Although unfounded child abuse reports are required to be sealed (see, Social Services Law §422[5]), such reports may be introduced into evidence,”by the subject of the report where such subject… is a plaintiff or petitioner in a civil action or proceeding alleging the false reporting of child abuse or maltreatment” (Social Services Law §422[5][b][1]). Allegations that defendant had injured the child were found to be baseless and, by making such allegations, plaintiff needlessly subjected the child to an investigation by Child Protective Services, placing her own interests above those of the child. This report was not made in “good faith” – - rather, the investigating agency warned the mother not to re-utilize the allegations and her children in her custodial litigation with the defendant.”

Mother’s behavior was not affected by pending contempt proceeding:

“The concern of a pending contempt proceeding did not affect the plaintiff’s conduct. For example, knowing that defendant had parenting access with D. on July 3, 2009, plaintiff invited D.’s close friend, C. C., to a country club for a fireworks display and advised D. of this invitation. She then instructed D. to tell her father she was invited to a friend’s party on that date. Another example occurred on June 13, 2009, when plaintiff quietly escorted D. from Alice Tulley Hall during the intermission, ignoring the instructions from the G. Y. Orchestra staff that everyone remain until the conclusion of the entire program. Plaintiff purported she was unaware that defendant attended this special program in Lincoln Center. Defendant, who was in attendance at the concert, was left waiting at the stage door with flowers for D. Plaintiff ignored his text messages questioning where his daughter was. The plaintiff, when confronted with the notion that she may have precipitously ushered her daughter away before her father was able to give her flowers, retorted to the Court that “it was not her responsibility to make plans for T.”"

In view of the mother’s behavior described above, the court held:

“The evidence before me demonstrates a pattern of willful and calculated violations of the clear and express dictates of the parties’ Stipulation of Settlement, incorporated but not merged into their Judgment of Divorce. The extensive record is replete with instances of attempts to undermine the relationship between the children and their father and replace him with her new husband, manipulation of defendant’s parenting access, utter and unfettered vilification of the defendant to the children, false reporting of sexual misconduct without any semblance of “good faith,” and her imposition upon the children to fear her tirades and punishment if they embrace the relationship they want to have with their father. The unfortunate history here also reflects the plaintiff’s hiring and firing of three different counsel, expressed disdain towards the children’s attorney, and utter disregard for the authority of the Court.”

With respect to parental alienation, the court stated:

“Differing “alienation” theories promoted by many public advocacy groups, as well as psychological and legal communities, have differing scientific and empirical foundations. However, interference with the non-custodial parent’s relationship with a child has always been considered in the context of a “parent’s ability to encourage the relationship between the non-custodial parent and a child,” a factor to be considered by the Court in custody and visitation/parental access determinations. See, Eschbach v. Eschbach, supra. Our Appellate Courts recognize such factor, as they have determined that the “interference with the non-custodial parent and child’s relationship is an act so inconsistent with the best interests of a child, as to, per se, raise a strong probability that the offending party is unfit to act as a custodial parent.”

“Where, as in the instant case, there is a finding of a willful violation of a court order demonstrated by a deliberate interference with a non-custodial parent’s right to visitation/parental access, the IAS Court, as a general rule, must schedule an evidentiary hearing before making any modification of custody.”

Judge Ross found Lauren R. in civil contempt of court and ordered her to spend every other weekend in the Nassau County Correctional Facility during June, July and August.

Judge Ross acknowleged that “An imposition of sentence upon a finding of contempt should contain a language permitting the contemnor an opportunity to purge.” However, in this case, a jail sentence was the only option available because it is no longer within the power of the plaintiff (mother) to purge since the violation was of a past court order. Furthermore, remedial intervention through counseling and parental training during the course of the trial was unsuccesful and if re-utilized, the “Court cannot release from imprisonment upon future compliance.”

The matter of approximately $165,000 in attorney fees will be the subject of another hearing.

What can we learn from this case? We can learn that it took years of inappropriate conduct, $165,000 in attorneys fees, and unquantifiable amount of damage to the relationship between the father and his daughter, before the court would punish this type of behavior. In view of the mother’s conduct, 6 weeks of weekends in jail seems inadequate. I do not know whether the court will change the residence of the children, however, it is clear that the joint custodial arrangement did not work in this situation. My guess would be that the court would likely to change custody to sole custody and grant the residence of the children to the father. The court is also likely to impose tight restrictions on the mother’s access to the children and her conduct toward the children and the father.

Divorce and Reformation of Settlement Agreement

Sunday, March 28th, 2010

I have previously written about vacating settlement agreements on the grounds of mutual mistake.  Here is a case where the court actually reformed the parties’ settlement agreement on the grounds of mutual mistake.

In Banker v. Banker, 53 A.D.3d 1105 (3rd Dept. 2008),  the parties’ oral stipulation of settlement, which was incorporated but not merged into their 2005 judgment of divorce, provided that the parties would subdivide a parcel of property located in Delaware County.  However, despite that provision, after the judgment of divorce was entered, the defendant refused to do so.  In response to a motion by plaintiff to enforce the stipulation, Supreme Court, in February 2006, ordered defendant to obtain subdivision approval from the Town.  The Planning Board denied defendant’s subsequent subdivision application after discovering that the property was encumbered by a restrictive covenant against further subdivision.  In March 2006, defendant moved to reargue and/or renew February 2006 order, and requested a hearing to determine equitable distribution.

Supreme Court reserved decision on all pending matters pertaining to the parties until an appraisal of the property was completed.  Because the parties could not agree on an appraiser, the court appointed one and directed the parties, once the appraisal was complete, to settle the matter in a private auction or buyout.  The appraiser completed the appraisal in June 2006.  By letter dated October 4, 2006, defendant requested the opportunity to offer further proof of value.  Plaintiff made a similar request and explained that the parties had not been able to settle the matter or agree on a private auction.

Plaintiff responded with a motion seeking that the parties’ interests in the property be declared in conformance with the terms set forth in the stipulation and the values established in the appraisal, as well as an order allowing her to buy out defendant’s share of the property.  Defendant opposed the motion, arguing that the appraisal should not be adopted without an opportunity by the parties to cross-examine the appraiser and submit other evidence of valuation.  Supreme Court ordered a hearing to permit the parties to cross-examine the appraiser, but made it clear that no other testimony or evidence of valuation would be permitted.

Following the hearing, at which Supreme Court again denied defendant’s request to submit further evidence, the court determined the interests of the parties in the property to be 83% for plaintiff and 17% for defendant.  The court, fixed the parties’ interests as indicated above, appointed a receiver, and ordered the   public sale of the property.  Defendant appealed.  The Appellate Division rejected defendant’s argument that Supreme Court exceeded its authority by reforming the parties’ stipulation of settlement.  Where, as here, a mutual mistake rendered a portion of the parties’ settlement agreement impossible or impracticable, “the relevant settlement provision was properly set aside”.  No dispute existed that the parties’ agreement to physically divide the property could not occur given the restrictive covenant; and even defendant was not attempting to have the parties’ stipulation enforced.  Thus, after giving the parties ample opportunity to reach a new agreement,  the trial court was correct to move forward by appointing an appraiser so that an equitable distribution of the property, in as close accordance as possible with the intent of the parties as expressed in their settlement, could be achieved.

The Appellate Division noted that to achieve reformation or recission of the stipulation of settlement, one of the parties should have commenced a plenary action, rather than proceeding by motion but, in the context of this matter, concluded the defect to be nonfatal.  However, the lower court erred in resolving this matter without a full hearing permitting the parties to offer proof of valuation.  The court is authorized to appoint an independent appraiser in a matrimonial action but, unless the parties have stipulated otherwise, the court must afford the parties the opportunity to review the appraisal, cross-examine the appraiser and offer additional evidence on valuation.  Although the record contained evidence that the parties consented to Supreme Court’s appointment of the appraiser, it did not suggest that the parties agreed to be bound by the resulting appraisal.

This is an example of a situation where the mutual mistake allowed the court to reform the parties’ settlement agreement.  While those circumstances tend to be limited, the lawyers in Banker recognized that since the property could not be subdivided, it had to be sold or one of the parties would buy out the other party’s interest.  The question of valuation was secondary to the remedy chosen by the court as a result of reformation of the agreement.  At the same time, it is rather surprising that neither divorce attorney was aware of the covenant, since both parties, presumably, had access to the real property records and the property’s abstract of title.

Child Support, Emancipation and Child’s Economic Independence

Saturday, January 30th, 2010

One of the most common questions I hear as a part of my family law practice is a question of when a child become emancipated for child support purposes.  My usual response is that emancipation of minors depends on a variety of circumstances.  The Child Support Standards Act’s provisions dealing with emancipation hold that the child becomes emancipated upon reaching the age of 21, joining military, or getting married. In addition, the child may become constructively emancipated by willingly abandons the parent and withdrawing from parental supervision and control. In addition, the child may become emancipated, assuming the child is of employable age, by becoming economically independent of the parents. If emancipation is sought for a child who is of employable age, and is working, I usually tell my client that the child has to work between 35 and 40 hours per week and generate sufficient income to be economically independent of the parents.  In some situations, however, even a full-time job may not be enough.

A recent case, Thomas B. v. Lydia D., 2009 N.Y. Slip. Op. 06789 (1st Dept. 2009), is an excellent illustration of these concepts.  In Thomas B., the Appellate Division held that two parents may not, by written agreement, terminate the child support obligation because of the child’s full-time employment, without a simultaneous showing of the economic independence of the child.

Pursuant to a stipulation of settlement entered into as part of the parties’ judgment of divorce, father was obligated to pay annual child support until the parties’ child reached the age of 21 or was otherwise “emancipated.”  The stipulation defined emancipation as “the Child’s engaging in full-time employment; full-time employment during a scheduled school recess or vacation period shall not, however, be deemed an emancipation event.”  The father brought a motion seeking to declare the child emancipated and argued that under the terms of the stipulation of settlement, the child became emancipated by reason of his full-time employment at a music store from July through December 2005.  The mother opposed the motion, arguing that during the time in question, the child was living in a halfway house as part of his treatment for substance abuse.  His employment at the music store was one of the conditions of that treatment.  She also argued that the child was not economically independent, as he received financial support from her in addition to her payment of 100% of his unreimbursed medical expenses.

The court stated that mere full time employment was not enough, and emancipation would require economic independence from the child’s parents which is not established by merely working a standard, full-time work week.  Thus, even where a child is working but still relies on a parent for significant economic support such as paying for utilities, food, car insurance, medical insurance and the like, the child cannot be considered economically independent, and thus is not emancipated. This is true even where the child is residing with neither of the parties, so long as the child is still dependent on one of the parties for a significant portion of his or her support.  Moreover, the parties cannot contract away the duty of child support.  The Appellate Division found insufficient evidence in the record to support a finding that the child was economically independent of his parents as a result of his working 35 hours per week while living in a halfway house. The child’s employment was one of the requirements of participation in the halfway house substance abuse program.  In Thomas B., it was clear, that although he was working 35 hours per week during the period of time in question, the child was not economically independent of his parents, and thus was not emancipated during that period of time.

One lesson of Thomas B. is that the lawyer dealing with this type of situation must present sufficient evidence to establish the child’s work hours and income, as well as his/her needs and expenses.  It is also critical to present testimony as to whether the other parent is meeting the child’s other financial needs, and whether such financial assistance is necessary or is merely voluntary.  If you believe that your child became emancipated due to employment, I would recommend consulting with a family law attorney.

Determining Validity of Separation Agreements

Saturday, January 23rd, 2010

I have previously written about separation agreements and their validity, here, here and here.  Periodically, I see separation agreements that are extremely one-sided or I am asked to draft a separation agreement that is very one-sided.  In those situations a divorce lawyer is usually asked if the agreement can be set aside.  My usual response is that the court’s determination whether to set aside the agreement depends on a variety of factors.

The legal standard for setting aside separation agreements states that a separation agreement in a divorce proceeding may be vacated if it is manifestly unfair to one party because of the other’s overreaching or where its terms are unconscionable, or there exists fraud, collusion, mistake, or accident.  Separation agreements may be set aside as unconscionable if their terms evidence a bargain so inequitable that no reasonable and competent person would have consented to it.  Moreover, evidence that one attorney ostensibly represented both parties to a settlement agreement raises an inference of overreaching on the part of the party who is the prime beneficiary of the assistance of the attorney. Such an inference is, rebuttable, if it appears that the separation agreement is fair and equitable or that both parties freely agreed to it with a thorough understanding of its terms.

In a recent case of Pippis v. Pippis, 2010 N.Y. Slip. Op. 00492 (2nd Dept. 2010), the Appellate Division, Second Department vacated the separation agreement holding that plaintiff was guilty of overreaching with respect to the parties’ separation agreement.  The court found that the defendant was not represented by counsel at any point during the relevant time period.  According to the plaintiff, his attorney drafted the stipulation of settlement, and only one attorney was present at the signing.  Under these circumstances, and where the terms of the stipulation “evidence a bargain so inequitable” in favor of the plaintiff “that no reasonable and competent person” would have consented to the defendant’s end of the bargain, an inference of overreaching on the part of the husband was raised.  Since the plaintiff failed to rebut the inference, the Appellate Division held that the trial court properly determined that the stipulation was the product of his overreaching, and granted the defendant’s motion to set it aside.  The Appellate Division also held that the trial court properly rejected the plaintiff’s ratification argument, since the defendant “received virtually no benefits from the agreement and thus cannot be said to have ratified it”.

While occasionally I am asked to prepare a separation agreement in a situation where the opposing party is unrepresented, I advise my client that it is in his/her best interests that the other party is represented and that the agreement is not entirely one-sided.  As a divorce lawyer, I have to advise my client that any agreement that is extremely one-sided may be vacated by the court in any pending or subsequent divorce action.  If the agreement is reviewed by counsel and conveys some benefits to the other party, the likelihood of it being overturned by the court is greatly diminished.

Vacating Settlement Agreements on Grounds of Mutual Mistake

Sunday, December 27th, 2009

In is not unusual for a party to attempt to vacate a settlement agreement.  In order to do so, a party must meet a significant burden of proof that the agreement came as a result of a material, mutual mistake, fraud, or other relevant facts.  A interesting illustration of the above principles came in a recent decision, Simkin v. Blank, Sup. Co. New York County (December 22, 2009).

In 2006, Mr. Simkin, a partner at Paul, Weiss, Rifkind, Wharton & Garrison and his wife negotiated a settlement agreement in their divorce action.  One of the marital assets was an account the parties opened during their marriage with Bernard L. Madoff Investment Securities LLC which was worth $5.4 million.  As part of a 2006 equitable distribution agreement, Mr. Simkin  paid Ms. Blank $2.7 million, which represented what he thought was his ex-wife’s fair share of their Madoff investments.

After Mr. Madoff’s arrest, Mr. Simkin attempted to reform the agreement, claiming it was based on a “material, mutual mistake” and resulted in a “windfall” for Ms. Blank. He argued that the agreement did not accomplish the parties’ goal of ensuring that each would keep approximately half of the marital assets.  Ms. Blank responded that as long as Mr. Simkin could have redeemed the account for the value that the parties agreed to on the cut-off date, he received what he bargained for. Noting that Mr. Simkin had liquidated part of his investment to fund his ex-wife’s equitable entitlement, the court pointed out that in 2006 and “the several years after that plaintiff maintained this investment,” the account “could have been redeemed for cash, presumably significantly in excess of its 2004 value.”  While Mr. Simkin claimed the Madoff account held no assets, he did not allege it had no value, the judge wrote.  “An investor’s ability to redeem an account for value, was the assumption on which the parties relied in dividing their property and in doing so they made no mistake,” the court found.

Justice Evans agreed with Ms. Blank holding that while Mr. Simkin’s decision to retain the Madoff account may have been “improvident,” that did not give the court an equitable basis to set the agreement aside. In dismissing Mr. Simkin’s complaint, Justice Evans wrote, “There is no evidence that defendant was unjustly enriched. In 2006, at the time of their agreement, each of the parties received the benefit of his and her bargain.”

The lesson of the above case is that clients and their divorce attorneys should be careful in fashioning settlement agreements.  Even when significant mistakes are made at the time the agreements are entered into, it is very difficult to set them aside, even in such extreme circumstances as described above.

Domestic Relations Law §255, Settlement Agreements and Judgments of Divorce

Sunday, September 13th, 2009

On October 9, 2009, Domestic Relations Law §255 will become effective.  DRL §255 is a replacement of DRL §177 which required:

1. Prior to accepting and entering as a judgment any stipulated agreement between the parties in the action for divorce, the judge shall insure that there is a provision in such agreement relating to health care of each individual.  Such statement shall either (a) provide for the future coverage of the individual; or (b) state that the individual is aware that he or she will no longer be covered by his or her spouse’s health insurance plan and that the individual will be responsible for his or her own health insurance coverage. Every agreement accepted by the court must contain the following statement, signed by each party, to ensure that the provisions of this subdivision are adhered to:

I, (spouse), fully understand that upon the entrance of this divorce agreement, I may no longer be allowed to receive health coverage under my former spouse’s health insurance plan. I may be entitled to purchase health insurance on my own through a COBRA plan, if available, otherwise I may be required to secure my own health insurance.

(Spouse’s signature) (Date)

2. Prior to rendering a decision in an action for divorce, the judge shall ensure that he or she notifies both parties that once the judgment is entered, a person may or may not be eligible to be covered under his or her spouse’s health insurance plan, depending on the terms of the plan. If, prior to accepting an agreement and entering the judgment thereon, the judge determines that the provisions of this section have not been met, the judge shall require the parties to comply with the provisions of subdivision one of this section and may grant a thirty day continuance to afford the parties an opportunity to procure their own health insurance coverage.

DRL§177 has been repealed to resolve the numerous practical problems it presented to the litigants.  Typical problems involved modifying previously executed separation and property settlement agreements.  Its replacement, DRL §255 provides as follows:

A Court, prior to signing a judgment of divorce or separation, or a judgment annulling a marriage or declaring the nullity of a void marriage, shall ensure that:

1. Both parties have been notified, at such time and by such means as the Court shall determine, that once the Judgment is signed, a party thereto may or may not be eligible to be covered under the other party’s health insurance plan, depending on the terms of the plan. Provided, however, service upon the defendant, simultaneous with the service of the summons, of a notice indicating that once the judgment is signed, a party thereto may or may not be eligible to be covered under the other party’s health insurance plan depending on the terms of the plan, shall be deemed sufficient notice to a defaulting defendant.

2. If the parties have entered into Stipulation of Settlement/Agreement on or after the effective date of this section resolving all of the issues between the parties, such settlement/agreement entered into between the parties shall contain a provision relating to the health care coverage of each party; and that such provision shall either (A) provide for the future coverage of each party, or (B) state that each party is aware that he or she will no longer be covered by the other party’s health insurance plan and that each party shall be responsible for his or her own health insurance coverage, and may be entitled to purchase health insurance on his or her own through a COBRA option, if available. The requirements of this subdivision shall not be waived by either party or counsel and, in the event it is not complied with, the Court shall require compliance and may grant a thirty-day continuance to afford the parties an opportunity to procure their own health insurance coverage.

As a result of its enactment, this section of the Domestic Relations Law will give judges greater discretion in insuring the time and method of notification of health insurance provisions and will eliminate DRL §177′ mandatory language, and replace with several different options that provide notification of the parties with respect to their health care coverage.   As stated in the Legislative Memorandum:

In sum, this measure should guarantee the most efficient processing of divorce actions while achieving section 177′s original objective, viz., to insure an awareness of the impact of divorce proceedings upon health insurance coverage, at less cost to and with fewer complications for the divorce litigants the statute sought to protect.

Divorce attorneys will have a greater degree of flexibility in providing appropriate notification during the course of divorce and that will certainly benefit their clients.