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

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.

No-Fault Divorce Becomes Law In New York

The no-fault divorce bill has been signed by the Governor Patterson and will go into effect in 60 days.  That means that starting on October 13, 2010, someone who wants to be divorced in New York will no longer be required to make allegations of martial fault by the other spouse and will only be required to swear that the relationship between husband and wife has  broken  down  irretrievably  for  a period of at least six months.  The new law will apply to the divorce actions commenced on or after such effective date.

In addition, the Governor signed legislation that will revise the process for setting awards of temporary maintenance while a divorce is pending, by creating a formula and list of factors that would presumptively govern such awards. This would allow for speedy resolution of the maintenance issue, and prevent less well-off parties to divorce proceedings from falling into poverty during litigation, because they lack the resources to obtain a temporary maintenance order. Another bill would create a presumption that a less monied spouse in a divorce case is entitled to payment of attorneys’ fees. Under current law, a party that cannot afford to secure representation in a divorce proceeding must make an application for fees at the end of the process, which can force a poor individual to proceed without a lawyer, or to surrender on important issues due to lack of means. Provisions of the Domestic Relations Law related to temporary maintenance and attorneys fees will go into effect in 60 days as well.

These are important development in New York’s family law and I think that it will take some time to assess their impact.  At the same time, I think that they will be welcomed by divorce lawyers in this state and will make divorce easier for the divorcing spouses. With respect to the bill establishing the formula for temporary maintenance, it is highly likely that any such temporary maintenance award is going to be used by the courts as a basis for a permanent maintenance award.

Dividing Photographs and Other Mementos in Divorce

While the parties are married, they tend to accumulate personal mementos such as photographs, videos, recording, pictures, drawing and other items that represent their memories of people and places.  For many people, those photographs and videos of their children are precious and irreplaceable.  For that very reason, the courts are forced to get involved in dividing such items since parties tend to have a difficult time dividing them.

In a recent case, M.R. v. E.R., 2010 N.Y. Slip. Op. 50575(U) (Sup. Ct. Nassau Co. 2010), the court demonstrated how these issues should be approached and resolved.  In M.R., the parties resolved all of the issues in their divorce by stipulation, with the sole issue left unresolved that of the right to numerous photo albums, which contain more than 7000 photos of the parties and their children which were taken during the course of their marriage.  The husband moved for an order directing that he be awarded the photo albums and the wife cross-moved for the same relief.

In a decision and order dated November 13, 2010, the court set the motion and cross motion down for a hearing after noting that the issues raised in the papers concerned equitable distribution which were not resolvable on paper submissions.  At the time that the hearing was conducted on April 6, 2010, neither party was represented by counsel.  After hearing, the court made the following findings of fact and conclusions of law with respect to the limited issues addressed therein. The court noted that the parties rejected all settlement attempts, and at the hearing, maintained their intractable and opposite positions, to wit, to each keep all photo albums.  The court also noted that the parties did previously attempt to settle the issue, and seemingly agreed that the husband would retain all photo albums and share equally in paying the cost of reproducing the photographs contained therein. The wife testified that the agreement was based on the parties’ understanding that the quality of reproduction would be satisfactory.  The parties paid more than $2,100 to scan the photographs onto disc(s), which were admitted into evidence.  As noted, other than what is described above, there was no signed or notarized agreement regarding the distribution of the photo albums.

The court found that the husband was intricately involved with taking, compiling and cataloging the thousands of photos at issue.  In this regard, the husband testified in great detail about his meticulous cataloging of photographs, love of photography; he equated his collecting of photographs of family with the hobby of collecting rare books.  The husband described the Wife’s involvement with this process as limited, and often, antagonistic.  He believed that his wife had manufactured a dispute over the photographs, not out of any real desire to obtain them for sentimental or other qualitative value, but out of some vindictive desire.

The wife gave somewhat conflicting testimony and the court found that the wife had some involvement with the compilation of photos, but that such involvement was far more limited than what she testified to at the hearing.  She testified to her dissatisfaction with the reproductions, and several photographs (printed from disc) containing imperfections/problems were admitted into evidence in support of her contentions.

The court has reviewed the photographs admitted into evidence both on disc and in photo albums.  The disc appears to contain the contents of 75 photo albums, most of which have approximately 100 photographs. The quality of photos contained on the disc is, to the court’s view, satisfactory for the most part, although it does appear that the photographs on disc are not exactly equivalent in quality to the “hard” photographs in the albums admitted into evidence.  The vast majority of photos are of the children alone, or (apparently) with relatives or friends.  Many photographs depict vacation places or sites visited by the parties themselves or with their children. On disc, and in the albums admitted into evidence, the husband is pictured in numerous photos; the wife is pictured in far less photographs. The court accepted as credible the husband’s testimony regarding the wife’s general apathy with respect to the photographic process throughout the marriage and to his greater interest in retaining the photos, and rejected the wife’s contention that the reason she does not appear in many photographs is because she was either holding the camera or did not otherwise wish to be photographed. However, the court did not conclude that the wife desired the albums, which contain many photographs of the parties’ children, for completely vindictive reasons.

Taking into account the previous agreement of the parties, and other facts, which the court considered to fall within the “catch all” factor required to be considered in making an equitable distribution award, the court hereby awards the wife 25% of the original photos; the husband is awarded 75% of the photos.  The percentages are approximate because the court held that the selection of the photos will take place in accordance with the following method, or if parties can agree any other method.  Starting with the first album, the wife shall, counting from the first page thereof, be entitled to receive every fourth original photograph in that album until reaching the end of the album.  Selection shall continue in like manner with respect to each successive album.

In my opinion, it is impressive that the court took the time to address this issue.  In general, courts’ time is limited, and most lawyers do not want to get involved with the issues dividing such personal property. Here in Rochester, a common practice is to refer the parties to the Center for Dispute Settlement to resolve any issues involving personal property and possessions.  The problem with this approach is that the Center does mediation, and, if the parties cannot agree, they are forced to come back to the court.  I generally counsel my clients that they should make every effort to resolve those disputes since it is expensive to litigate them.

Order of Protection, Divorce and Surveillance

As a divorce attorney, I am periodically asked if hiring a private investigator to follow a spouse is acceptable and whether, if found out, it would result in any negative repercussions. I usually respond that surveillance is acceptable; however, there may be some evidentiary issues with the results that may make them inadmissible during the trial. A recent decision shed some light on these issues.

In Anonymous v. Anonymous, 2010 N.Y. Slip. Op. 20024 (Sup. Ct. Orange Co. 2010), the husband has brought a motion for summary judgment seeking to dismiss the wife’s petition which alleged the husband violated an order of protection pursuant to a settlement stipulation in Family Court.  The order of protection, entered without any finding of fault against the husband, directed him to refrain from committing a family offense or criminal offense against the wife and to stay at least 1000 feet away from the residence and place of employment of the wife except for court-ordered child visitation or to attend church services on Sundays.  The wife’s violation petition alleged that the husband retained a private investigator who recorded on DVD the wife entering a motel and having an affair with a priest assigned to the Church, where the wife was employed.  The wife alleged that the husband furnished the DVD to her superiors at the Church resulting in the wife being forced to resign.  The wife contended that there was no legitimate purpose in the husband having her followed by a private detective and delivering the DVD to Church officials and that doing so was intended by the husband to cause her to lose her employment and cause her personal humiliation and suffering.  The wife claimed that such conduct constitutes a violation of the order of protection.

In opposition to the husband’s motion to dismiss the petition, the wife’s attorney alleges the husband hired the private detective after he filed his answer and counterclaims in the divorce action.  The wife’s attorney contended the husband was not legally bound to turn over the DVD to Church officials.  The wife’s attorney argued that the husband violated the order of protection by acting through an agent, the private detective he hired, to follow and record the wife’s activities, and then turning over the DVD to the church causing the wife to lose her employment.

The court held that it was not improper for the husband to retain the services of a private investigator since the hiring of a professional licensed private investigator in a matrimonial action to gather evidence is for a proper and legitimate purpose.  The husband had the right to gather evidence up to the date of trial in defense of the matrimonial action and in support of his own counterclaims.  Under the circumstances, the hiring of the private investigator, in and of itself, was not an unlawful intrusion upon the rights of the wife secured by the order or protection.

With respect to the question of whether delivering the DVD to the Church officials, which was not necessary for the husband to defend or prosecute the divorce action, raised a triable issue of fact that the husband in having the wife followed and recorded by a private investigator intended to inflict emotional and financial harm upon the wife which might constitute a violation of the order of protection.  Although harassment in the second degree often involves conduct which places a person in fear of their physical safety, the language of the statute does not limit itself to only physical threats. If the husband had the wife followed and recorded by a private investigator for the purpose of gathering embarrassing material to deliver to her employer with the intention to cause her to lose her employment such might qualify as conduct which alarms or seriously annoys another person, and serves no legitimate purpose, constituting harassment in the second degree.

The husband in his motion papers has prima facie demonstrated his entitlement to summary judgment dismissing the petition by evidence showing he did not retain the private investigator for an improper or illegitimate purpose such as harassment or stalking under the Penal Law or intend to make improper use of the private investigator’s work product DVD.  Upon the failure of the wife to demonstrate the existence of a triable issue of fact that the husband committed a crime or family offense against her or otherwise violated the order of protection, the court granted the motion for summary judgment dismissing the petition.

So, the lesson of this case can be summarized as follows.  One, surveillance in divorce cases is a legitimate means of gathering evidence.  Two, surveillance alone will not amount to a violation of an order of protection.  Three, if results of surveillance are delivered to a third party, with possible negative consequences to the party under surveillance, such act may violate an order of protection, if there was no legitimate reason for such disclosure.  If you are seeking to involve a private investigator to follow and observe your spouse or significant other, I would urge you to consult with a divorce attorney before doing so.

Determining Validity of Separation Agreements

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.

Can Social Abandonment By A Spouse Be Sufficient As Grounds For Divorce?

While New York continues to be the last state that insists upon fault-based divorce, that has not stopped various attempts to broaden present grounds for divorce available under the Domestic  Relations Law.  In a recent decision, Davis v. Davis, 2009 N.Y. Slip. Op. 08579 (2nd Dept. 2009), the Appellate Division, Second Department, held that “social abandonment” of one spouse by the other, does not meet the definition of constructive abandonment, and can not be used as grounds for divorce.  This case demonstrates why divorce lawyers and their clients, here in Rochester and elsewhere in New York, can be in situation where they cannot get their clients divorced, despite significant breakdowns in marital relationships.

In Davis, the wife alleged that the husband refused to engage in social interaction with the wife by:

refusing to celebrate with her or acknowledge Valentine’s Day, Christmas, Thanksgiving, and the wife’s birthday, by refusing to eat meals together, by refusing to attend family functions or accompany the wife to movies, shopping, restaurants, and church services, by leaving her once at a hospital emergency room, by removing the wife’s belongings from the marital bedroom, and by otherwise ignoring her.  The parties have been married for 41 years and they reside at the same address.

The above claims were included as a part of the wife’s cause of action for constructive abandonment.  The husband filed a pre-answer motion pursuant to CPLR §3211(a)(7) to dismiss the constructive abandonment cause of action and, alternatively, moved for summary judgment dismissing that cause of action. The husband, while contesting many of the wife’s factual allegations of “social abandonment,” argued that the complaint fails to state a cause of action for a divorce based on “constructive abandonment.”

Domestic Relations Law §170 sets forth six statutory grounds on which a spouse may seek to divorce another. The abandonment ground for divorce, set forth in Domestic Relations Law §170(2), provides that an action for a divorce may be maintained based upon “[t]he abandonment of the plaintiff by the defendant for a period of one or more years.”   The essence of abandonment is the refusal of one spouse to fulfill “basic obligations springing from the marriage contract”.  The court noted that a viable cause of action under Domestic Relations Law §170(2) has been recognized in three different factual forms: (1)  a defendant spouse’s actual physical departure from the marital residence that is unjustified, voluntary, without consent of the plaintiff spouse, and with the intention of the departing spouse not to return; (2) the defendant spouse locks the plaintiff spouse out of the marital residence, absent justification or consent;  (3) “constructive abandonment,” which has been defined as the refusal by a defendant spouse to engage in sexual relations with the plaintiff spouse for one or more years prior to the commencement of the action, when such refusal is unjustified, willful, and continual, and despite repeated requests for the resumption of sexual relations.

the complaint alleges that the husband refused to engage in social interaction with the wife by refusing to celebrate with her or acknowledge Valentine’s Day, Christmas, Thanksgiving, and the wife’s birthday, by refusing to eat meals together, by refusing to attend family functions or accompany the wife to movies, shopping, restaurants, and church services, by leaving her once at a hospital emergency room, by removing the wife’s belongings from the marital bedroom, and by otherwise ignoring her. The parties have been married for 41 years and they reside at the same address.
The husband filed a pre-answer motion pursuant to CPLR 3211(a)(7) to dismiss the constructive abandonment cause of action and, alternatively, moved for summary judgment dismissing that cause of action pursuant to CPLR 3212. The husband, while contesting many of the wife’s factual allegations of “social abandonment,” argued that the complaint fails to state a cause of action for a divorce based on “constructive abandonment.” The wife opposed dismissal arguing, [*2]inter alia, that social abandonment has been recognized as a ground for divorce in fairly recent trial-level decisions rendered by the Supreme Courts in Nassau, Queens, and Westchester Counties.

After analyzing the applicable case law and plain language of the statute, the Appellate Division concluded that the plaintiff’s allegations of social abandonment may appropriately be viewed as merely another way of claiming “irreconcilable differences” between spouses, that do not constitute a cognizable ground for divorce. The plaintiff’s allegations of a “social abandonment,” designed to mimic the abandonment language of Domestic Relations Law §170(2), “elevated the artificial title of the claim over the substance of the causes of action that are statutorily recognized and understood.”

The Appellate Division further noted that there are several reasons why the courts have not recognized social abandonment as a cognizable ground for divorce, including the longevity of the current definitional understanding of constructive abandonment; its concern for a judicial usurpation of legislative authority; the fact that a social abandonment of one spouse by another is a provision of the marriage contract that necessarily equates with a spouse’s refusal to engage in sexual relations.; and the practical difficulties associated with trying to define a social abandonment cause of action, and of how courts might conceptualize the cause as separate and distinct from traditional notions of constructive abandonment.  In court’s view, “social abandonment” cannot be easily defined and therefore defies consistent and easily applied definitional interpretation, resulting in the courts examining the conduct of couples on a case-by-case basis, and presenting significant variations as to “the degree of social interaction involving family events, meals, holidays, religious activities, spousal expectations, cultural differences, and communications.”

The Davis case is just one more illustration of the fact that New York needs to abandon its fault-based grounds for divorce.  No-fault divorce would significantly reduce divorce litigation and make clients’, and attorneys’, lives less frustrating.  Unfortunately, the New York Legislature has not shown much interest in this issue over the years.  What is also interesting, is that the Second Department’s position in Davis appears to be contrary to the Third Department’s position in Dunne v. Dunne, 47 A.D.3d 1056 (3rd Dept. 2008), discussed in an earlier post, which held constructive abandonment has taken place in a situation where one spouse took an uncompromising position that plaintiff choose to either adhere to the advice of his treating physicians or cease taking his anxiety medication in order to return to the marital residence, thereby risking his well-being. If forcing a party to choose between taking a medication and returning to the marital residence amounted to “an unreasonable condition as a term of their relationship,” which violated marital obligation to the husband, I believe that a refusal to participate in various activities with the spouse represents a similar violation of marital obligation.

Divorce, Equitable Distribution and Appreciation of Separate Property

One issue that comes up periodically in divorce cases has to do with appreciation of separate property brought into the marriage by one spouse.  If that separate property is a business that appreciated during the marriage, did that appreciation come as active spousal effort, which would render the appreciation marital property, or did the appreciation come as a result of passive, non-spousal effort, and therefore should be treated as separate property? In other words, what was the comparable economic contribution of each party to the appreciation of such asset?

While the courts do not utilize the terms active and passive appreciation as much as they did in the past, it is clear from the recent decisions that those concepts are still utilized.  In Smith v. Winters, 64 A.D.3d 1218 (4th Dept. 2009), the Appellate Division, Fourth Department, recently answered the above question by evaluating how much the efforts of the titled spouse increased the value of the asset in dispute, by looking at what specific efforts of the titled spouse led to the appreciation.  In Smith, the plaintiff owned a business that later on purchased another company, PNA.  PNA has appreciated significantly during the course of the marriage.  After discussing the facts related to the plaintiff’s efforts and involvement in PNA, the court stated:

With respect to PNA, the court found that the value of PNA appreciated by $20 million during the course of the marriage but that the increase in value attributable to plaintiff was minimal when compared to the increase attributable to those hired by plaintiff to run the company. The court thus determined that only 10% of the appreciation in value of PNA was marital property subject to equitable distribution.

Subsequently, the court held that the non-titled spouse was entitled to 40% of the appreciated marital value based on her contributions as a homemaker.  Thus, the titled spouse, in this case the husband, was able to retain 96% of appreciation of PNA.

The above represents continuation of the trend toward reevaluating the status of marital property on the basis of various forms of contribution by the parties to the marriage, or, perhaps, third parties as well.  The courts have long held that “an increase in the value of separate property of one spouse, occurring during the marriage and prior to the commencement of matrimonial proceedings, which is due in part to the indirect contributions or efforts of the other spouse as homemaker . . . should be considered marital property”.  See Price v Price, 69 N.Y.2d 8, 11 (1986).  However, the latest decisions in this area are refocusing on requiring  “some nexus between the titled spouse’s active efforts and the appreciation in the separate property”, when a nontitled spouse’s claim to appreciation and the other spouse’s separate property is predicated solely on the nontitled spouse’s indirect contributions.  See Hartog v. Hartog, 85 N.Y.2d 36, 46 (1995).   Therefore in Smith, the Appellate Division Fourth Department held that the trial court properly considered the “active efforts of others and any additional passive or active factors” in determining the percentage of total appreciation that constitutes marital property subject to distribution.

The above case opens various possibilities to lawyers and titled-spouses contesting an appreciation claim.  Situations similar to the one in Smith will require a divorce attorney to evaluate carefully how the asset appreciated and what role each spouse or third parties played in that appreciation.

Non-Titled Spouse, Enhanced Earnings and Substantial Contribution

I have previously written about several issues related to distribution of enhanced earnings during the equitable distribution portion of the divorce action here, here, here and here.  One of the critical issues facing a divorce lawyer, seeking seeking equitable distribution of a portion of such earnings for his/her client, is the burden of proof with respect to the non-titled spouse’s contribution to enhanced earning capacity.  The non-titled spouse seeking a distributive share of enhanced earnings must demonstrate that he/she made a substantial contribution to the titled party’s acquisition of that marital asset.

In Kriftcher v. Kriftcher, 59 A.D.3d 392 (2nd Dept. 2009,) the trial court awarded the plaintiff-wife $828,699.20 as her 40% share of the husband’s enhanced earning capacity, an attorney’s fee of $30,000, declined to award her maintenance, awarded her $1,229.71 per week in child support, and failed to award her equitable distribution of the husband’s bonus for the calendar year 2005, which the husband received in 2006.  The Appellate Division found that trial court correctly concluded that the enhanced earnings resulting from the law degree and license obtained by the husband during the marriage were marital property subject to equitable distribution.  Nevertheless, it is incumbent upon the non-titled party seeking a distributive share of such assets to demonstrate that they made a substantial contribution to the titled party’s acquisition of that marital asset, and where only modest contributions are made by the non-titled spouse toward the other spouse’s attainment of a degree or professional license, and the attainment is more directly the result of the titled spouse’s own ability, tenacity, perseverance and hard work, it is appropriate for courts to limit the distributed amount of that enhanced earning capacity.  Here, the wife’s minimal contributions to the husband’s obtaining of his degree and license entitled her to a share of only 10% in the enhanced earnings that have resulted.

In determining the appropriate amount and duration of maintenance, the court is required to consider, among other factors, the standard of living of the parties during the marriage and the present and future earning capacity of both parties.  Although the wife earned a teaching license during the course of the marriage, she was, at present, primarily a homemaker, who worked only part-time as a substitute teacher earning approximately $10,000 per year.  In sharp contrast, the husband was an attorney making approximately $500,000 per year. It held that a maintenance award of $1,000 per week for 10 years was appropriate.

The above decision is a good illustration of the recent trend where the non-titled spouse has to present evidence of his/her contribution toward creation of the other spouse’s enhanced earning capacity.  When handling such situations, divorce attorney would do well to learn everything there is to know regarding non-titled spouse’s involvement in the titled spouse’s efforts to obtain a license or degree that ultimately resulted in enhanced earning capacity.

Enforcement of Child Support Arrears and Chapter 13 Bankruptcy

Support Magistrate determined that respondent willfully failed to pay $7,814.90 in child support arrears, and referred matter to Family Court for confirmation. Respondent’s commencement of Chapter 13 bankruptcy stays all actions and proceedings to collect pre-petition claims against debtor and his property. See, 11 USC § 362[a][1]. Although Family Court is precluded from exercising its enforcement powers pursuant to FCA § 454 to recover arrears while Chapter 13 bankruptcy plan is in effect, Family Court finds that it is not prohibited to confirm finding of willful violation already made by Support Magistrate and hold enforcement in abeyance pending completion of the Chapter 13 bankruptcy plan.
In the Matter of a Support Proceeding Marcia T., Petitioner,
v.
Raymond W., Respondent.
F-01769-08/08A
Family Court, Albany County
Decided on September 1, 2009
CITE TITLE AS: Matter of Marcia T. v Raymond W.
Marcia T., Matter of, v Raymond W., 2009 NY Slip Op 51883(U). Parent and Child-Support-Bankruptcy Proceedings Not Bar to Recovery of Arrears under Prior Determination of Support Magistrate. (Fam Ct, Albany County, Sept. 1, 2009, Maney, J.)
APPEARANCES OF COUNSEL
Bixby, Crable & Stiglmeier, PLLC (Carol Stiglmeier of counsel) for Marcia T.
Jeffrey S. Berkun, Esq. for Raymond W.
OPINION OF THE COURT
Gerard E. Maney, J.
By order dated January 14, 2009, the Support Magistrate determined that respondent Raymond W. willfully failed to obey an order of the Court pursuant to Family Court Act § 156 by failing to pay $7,814.90 in child support arrears. The matter was referred to this Judge for confirmation in accordance with Family Court Act § 439 (a).
Counsel for respondent maintains that because respondent filed for Chapter 13 Bankruptcy relief in November 2008, the confirmation hearing must be stayed. Counsel argues that the bankruptcy code contains an automatic stay provision that provides that the filing of a bankruptcy petition operates as a stay of actions or proceeding to recover a claim against the debtor that arose prior to the commencement of the case. Although certain exceptions to the automatic stay provisions exist, counsel argues that none apply in the instant family court proceeding.
The court agrees with counsel that the commencement of a case under Chapter 13 of the United States Bankruptcy Code stays all actions and proceedings to collect pre-petition claims *2 against the debtor and his property (11 USC §362 [a] [1]) or to obtain possession and control of property of the estate (11 USC §362 [a] [3]). The property of the estate, which is broadly defined, specifically includes “earnings” (11 USC §541 [a] [6]; §1306 [a];). Because payments to creditors must come from the debtor’s post-petition earnings, those earning are property of the Chapter 13 estate (11 USC §1306 [a] [2]). Thus, “[t]he claimant seeking to collect arrearages in support obligations is not free to pursue the Chapter 13 debtor’s post-petition earnings” (Margaret Howard, A Bankruptcy Primer for the Family Lawyer, Family Law Quarterly, Volume 31, Number 3, Fall 1997, at 380).
Although the court finds that it is precluded from exercising its enforcement powers pursuant to Family Court Act §454 to recover arrears while the Chapter 13 bankruptcy plan is in effect, it does not find that it is prohibited by the bankruptcy laws from confirming the finding of a willful violation already made by the Support Magistrate and holding its authority to enforce such finding in abeyance pending completion of the Chapter 13 bankruptcy plan.
It is this court’s understanding that petitioner has filed a claim in the bankruptcy proceeding for the support arrears and that such arrears will be payable under the bankruptcy plan. If the payment of arrears is not satisfied when the Chapter 13 bankruptcy plan is closed, petitioner may move to restore the matter to the family court calendar to have the court exercise its enforcement powers to compel the payment of arrears.
Accordingly, after examination and inquiry into the facts and circumstances of the case and after hearing the proofs and testimony offered in relation thereto and based on evidence that a lawful order of support was in effect and respondent had the ability to pay but willfully failed to do so, it is
ADJUDGED that Raymond W. failed to obey the order of this court for the support of his children , A. W. and S. W., and that such failure was willful;
ORDERED that the determination of the Support Magistrate pursuant to Family Court Act § 156 made herein that Raymond W. willfully failed to obey an order of the court is hereby confirmed; and it is further
ORDERED that if the payment of arrears as set forth in the Support Magistrate’s January 14, 2009 order is not satisfied when respondent’s Chapter 13 bankruptcy plan is closed, petitioner may move to restore the matter to the family court calendar to have the court exercise its enforcement powers pursuant to Family Court Act §454.

I have previously written about several different situations involving interaction between New York’s Family Law and bankruptcy.  The basics of divorce and bankruptcy were addressed in this post,  the issues related to the bankruptcy court’s handling of domestic support obligations were addressed in this post, and the issues related to attorneys fees and bankruptcy were addressed in this post.  Because of the complexity of the issues involved, New York courts continue to decide cases were the family law and bankruptcy law interact.  A recent case of Marcia T. v. Raymond W., 24 Misc.3d 1245(A) (Fam. Ct. Monroe Co. 2009), addressed whether Chapter 13 bankruptcy stay prevented recovery of child support arrears and a finding of willful failure to pay.

Respondent father filed for Chapter 13 Bankruptcy relief in November 2008.  Petitioner mother brought a willful violation petition based upon the father’s failure to pay several thousand dollars in child support arrears.  Support Magistrate determined that respondent willfully failed to pay $7,814.90 in child support arrears, and referred matter to Family Court for confirmation in accordance with Family Court Act § 439(a).  Respondent’s lawyer argued that because of Chapter 13 filing, the confirmation hearing must be stayed since automatic stay prevents recovery of any claims that arose prior to the commencement of the bankruptcy case.

The Family Court held that respondent’s commencement of Chapter 13 bankruptcy and resulting automatic stay stops all actions and proceedings to collect pre-petition claims against debtor and his property.   Because payments to creditors must come from the debtor’s post-petition earnings, those earning are property of the Chapter 13 estate, pursuant to 11 U.S.C. §1306 (a)(2).  Thus, the claimant seeking to collect arrearages in support obligations is not free to pursue the Chapter 13 debtor’s post-petition earnings.  It further held that although Family Court is precluded from exercising its enforcement powers pursuant to FCA §454 to recover arrears while Chapter 13 bankruptcy plan is in effect, Family Court found that it is not prohibited to confirm finding of willful violation already made by Support Magistrate and hold enforcement in abeyance pending completion of the Chapter 13 bankruptcy plan.

The court further noted that petitioner has filed a claim in the bankruptcy proceeding for the support arrears and that such arrears will be payable under the bankruptcy plan. If the payment of arrears is not satisfied when the Chapter 13 bankruptcy plan is closed, petitioner may move to restore the matter to the family court calendar to have the court exercise its enforcement powers to compel the payment of arrears.

The above is an excellent illustration of how a Chapter 13 bankruptcy can be utilized to prevent serious problems that a finding of willful violation may present.  Further, since the typical Chapter 13 plan lasts for 5 years, this allows the party paying child support to extend payment of child support arrears over 5 years.  A family law lawyer needs to be familiar with bankruptcy law issues since it is not uncommon for these areas of law to interplay.

Division of Pension, Personal Injury Compensation and Separate Property

The court effectively delegates to a pension plan administrator the obligation to apportion a disability pension plan between the separate property component of compensation for injury and the marital property portion related to deferred compensation for past services.
2. The court holds that the economic loss component (compensation for lost wages) of an award from the 9-11 Victim Compensation Fund is separate property just as is the non-economic loss component for pain and suffering.

A recent decision of the Appellate Division, Second Department, Howe v. Howe, 2009 N.Y. Slip Op. 06804 (2nd Dept. 2009), addressed some of the issues dealing with equitable distribution of personal injury compensation.  Mr. Howe was a New York City firefighter who was injured as a result of the events of 9/11 and subsequently retired on a disability pension.  As a result of his injuries, he also received September 11th Victim Compensation Award.

The trial court found the entire pension to be a part of the marital estate and awarded the wife “her Majauskas” share. On appeal, the husband argued that the lack of expert testimony or evidence in the record by which the nondisability portion of the pension can be distinguished from the disability portion is not fatal to his separate property claim, since that distinction can be made by the pension administrator in the same manner as it makes the familiar calculation of the marital pension share under Majauskas.

The manner in which disability pensions are treated for equitable distribution purposes is well established. “[P]ension benefits or vested rights to those benefits, except to the extent that they are earned or acquired before marriage or after [the] commencement of a matrimonial action, constitute marital property”. Dolan v. Dolan, 78 NY2d 463, 466 (1991). However, “[t]o the extent that a disability pension constitutes compensation for personal injuries, that compensation is separate property’ which is not subject to equitable distribution”. Mylett v. Mylett, 163 A.D.2d 463, 464-465  (3rd Dept. 1990). According to the Second Department, the division, into two separate post-marital accounts, of what was the nondisability pension of one spouse during the marriage, is accomplished by the plan administrator, without the intervention of the court, pursuant to a qualified domestic relations order, consistent with Majauskas, which the administrator either prepares or, more frequently, approves. For that order to satisfy the relevant requirement of the Internal Revenue Code, it need only specify “the amount or percentage of the participant’s benefits to be paid by the plan to each such alternate payee, or the manner in which such amount or percentage is to be determined” (26 U.S.C. § 414[p][2][B] [emphasis supplied]).

In addition to his disability pension, the plaintiff received an award from the September 11th Victim Compensation Fund as a result of injuries he suffered. The administrator of that fund specifically designated a portion of that award, in the amount of $127,571, as compensation for economic loss. The Supreme Court held that the economic component of the award constitutes “compensation for personal injuries” within the meaning of Domestic Relations Law § 236(B)(1)(d)(2) and, on that basis, treated the award as the separate property of the plaintiff.

According to the Second Department, the phrase “compensation for personal injuries,” however, is not without ambiguity. It can be read equally clearly as encompassing the entire award in a personal injury action or as limiting the marital share of that award to the portion constituting compensation for the actual injuries, i.e., the pain and suffering component. While a definition of the term separate property as “any recovery in a personal injury action” would be clear, that is not the phrase the Legislature used and viewing the phrase “compensation for personal injuries” as including the economic component of a personal injury award and, therefore, the separate property of the injured spouse is, according to the court, was clearly inconsistent with the logic of the Equitable Distribution Law. While the logic of the Equitable Distribution Law thus suggests the conclusion that the economic portion of a personal injury award should be marital property, however, according to the Second Department, the legislative history compels the contrary result.

This particular finding that the compensation for economic loss is separate property of the party is very significant.  It is also likely to create a new set of issues that lawyers in the Fourth, Third, and First Appellate Divisions will have to address since the existing precedent in those departments runs contrary to this decision.  Because of the apparent conflict between the departments, this issue is also likely to be appealed to the Court of Appeals.