O'Brien v. O'Brien

• Decision Date: 26 December 1985
• Parties: , 489 N.E.2d 712, 54 USLW 2348 Michael O'BRIEN, Respondent-Appellant, v. Loretta O'BRIEN, Appellant-Respondent.
• Court: New York Court of Appeals Court of Appeals

Page 743

498 N.Y.S.2d 743

66 N.Y.2d 576, 489 N.E.2d 712, 54 USLW 2348

Michael O'BRIEN, Respondent-Appellant, v. Loretta O'BRIEN, Appellant-Respondent.

Court of Appeals of New York.

Dec. 26, 1985.

Albert J. Emanuelli, White Plains, for appellant-respondent

Willard H. DaSilva, Garden City, and Richard J. Keidel, Malverne, for respondent-appellant.

Sally Weinraub, New York City, Shirley Tolley, Larchmont, and Brynne Haines, White Plains, for Westchester Women's Bar Ass'n, amicus curiae.

OPINION OF THE COURT

SIMONS, Judge.

In this divorce action, the parties' only asset of any consequence is the husband's newly acquired license to practice medicine. The principal issue presented is whether that license, acquired during their marriage, is marital property subject to equitable distribution under Domestic Relations Law § 236(B)(5). Supreme Court held that it was and accordingly made a distributive award in defendant's favor. ^* It also granted defendant maintenance arrears, expert witness fees and attorneys' fees (114 Misc.2d 233). On appeal to the Appellate Division, a majority of that court held that plaintiff's medical license is not marital property and that defendant was not entitled to an award for the expert witness fees. It modified the judgment and remitted the case to Supreme Court for further proceedings, specifically for a determination of maintenance and a rehabilitative award (106 A.D.2d 223, 485 N.Y.S.2d 548). The matter is before us by leave of the Appellate Division.

We now hold that plaintiff's medical license constitutes "marital property" within the meaning of Domestic Relations Law § 236(B)(1)(c) and that it is therefore subject to equitable distribution pursuant to subdivision 5 of that part. That being so, the Appellate Division erred in denying a fee, as a matter of law, to defendant's expert witness who evaluated the license.

I

Plaintiff and defendant married on April 3, 1971. At the time both were employed as teachers at the same private school. Defendant had a bachelor's degree and a temporary teaching certificate but required 18 months of postgraduate classes at an approximate cost of $3,000, excluding living expenses, to obtain permanent certification in New York. She claimed, and the trial court found, that she had relinquished the opportunity to obtain permanent certification while plaintiff pursued his education. At the time of the marriage, plaintiff had completed only three and one-half years of college but shortly afterward he returned to school at night to earn his bachelor's degree and to complete sufficient premedical courses to enter medical school. In September 1973 the parties moved to Guadalajara, Mexico, where plaintiff became a full-time medical student. While he pursued his studies defendant held several teaching and tutorial positions and contributed her earnings to their joint expenses. The parties returned to New York in December 1976 so that plaintiff could complete the last two semesters of medical school and internship training here. After they returned, defendant resumed her former teaching position and she remained in it at the time this action was commenced. Plaintiff was licensed to practice medicine in October 1980. He commenced this action for divorce two months later. At the time of trial, he was a resident in general surgery.

During the marriage both parties contributed to paying the living and educational expenses and they received additional help from both of their families. They disagreed on the amounts of their respective contributions but it is undisputed that in addition to performing household work and managing the family finances defendant was gainfully employed throughout the marriage, that she contributed all of her earnings to their living and educational expenses and that her financial contributions exceeded those of plaintiff. The trial court found that she had contributed 76% of the parties' income exclusive of a $10,000 student loan obtained by defendant. Finding that plaintiff's medical degree and license are marital property, the court received evidence of its value and ordered a distributive award to defendant.

Defendant presented expert testimony that the present value of plaintiff's medical license was $472,000. Her expert testified that he arrived at this figure by comparing the average income of a college graduate and that of a general surgeon between 1985, when plaintiff's residency would end, and 2012, when he would reach age 65. After considering Federal income taxes, an inflation rate of 10% and a real interest rate of 3% he capitalized the difference in average earnings and reduced the amount to present value. He also gave his opinion that the present value of defendant's contribution to plaintiff's medical education was $103,390. Plaintiff offered no expert testimony on the subject.

The court, after considering the life-style that plaintiff would enjoy from the enhanced earning potential his medical license would bring and defendant's contributions and efforts toward attainment of it, made a distributive award to her of $188,800, representing 40% of the value of the license, and ordered it paid in 11 annual installments of various amounts beginning November 1, 1982 and ending November 1, 1992. The court also directed plaintiff to maintain a life insurance policy on his life for defendant's benefit for the unpaid balance of the award and it ordered plaintiff to pay defendant's counsel fees of $7,000 and her expert witness fee of $1,000. It did not award defendant maintenance.

A divided Appellate Division, relying on its prior decision in Conner v. Conner, 97 A.D.2d 88, 468 N.Y.S.2d 482 and the decision of the Fourth Department in Lesman v. Lesman, 88 A.D.2d 153, 452 N.Y.S.2d 935, appeal dismissed 57 N.Y.2d 956, concluded that a professional license acquired during marriage is not marital property subject to distribution. It therefore modified the judgment by striking the trial court's determination that it is and by striking the provision ordering payment of the expert witness for evaluating the license and remitted the case for further proceedings.

On these cross appeals, defendant seeks reinstatement of the judgment of the trial court. Plaintiff contends that the Appellate Division correctly held that a professional license is not marital property but he also urges that the trial court failed to adequately explain what factors it relied on in making its decision, that it erroneously excluded evidence of defendant's marital fault and that the trial court's awards for attorneys and expert witness fees were improper.

II

The Equitable Distribution Law contemplates only two classes of property: marital property and separate property (Domestic Relations Law § 236). The former, which is subject to equitable distribution, is defined broadly as "all property acquired by either or both spouses during the marriage and before the execution of a separation agreement or the commencement of a matrimonial action, regardless of the form in which title is held " (Domestic Relations Law § 236 see § 236). Plaintiff does not contend that his license is excluded from distribution because it is separate property; rather, he claims that it is not property at all but represents a personal attainment in acquiring knowledge. He rests his argument on decisions in similar cases from other jurisdictions and on his view that a license does not satisfy common-law concepts of property. Neither contention is controlling because decisions in other States rely principally on their own statutes, and the legislative history underlying them, and because the New York Legislature deliberately went beyond traditional property concepts when it formulated the Equitable Distribution Law (see generally, 2 Foster-Freed-Brandes, Law and the Family--New York ch. 33, at 917 et seq. ). Instead, our statute recognizes that spouses have an equitable claim to things of value arising out of the marital relationship and classifies them as subject to distribution by focusing on the marital status of the parties at the time of acquisition. Those things acquired during marriage and subject to distribution have been classified as "marital property" although, as one commentator has observed, they hardly fall within the traditional property concepts because there is no common-law property interest remotely resembling marital property. "It is a statutory creature, is of no meaning whatsoever during the normal course of a marriage and arises full-grown, like Athena, upon the signing of a separation agreement or the commencement of a matrimonial action. is hardly surprising, and not at all relevant, that traditional common law property concepts do not fit in parsing the meaning of 'marital property' " (Florescue, "Market Value", Professional Licenses and Marital Property: A Dilemma in Search of a Horn, 1982 N.Y.St.Bar Assn.Fam.L.Rev. 13 ). Having classified the "property" subject to distribution, the Legislature did not attempt to go further and define it but left it to the courts to determine what interests come within the terms of section 236(B)(1)(c).

We made such a determination in Majauskas v. Majauskas, 61 N.Y.2d 481, 474 N.Y.S.2d 699, 463 N.E.2d 15, holding there that vested but unmatured pension rights are marital property subject to equitable distribution. Because pension benefits are not specifically identified as marital property in the statute, we looked to the express reference to pension rights contained in section 236(B)(5)(d)(4), which deals with equitable distribution of marital property, to other provisions of the equitable distribution statute and to the legislative intent behind its enactment to determine whether pension rights are marital property or separate property. A similar analysis is appropriate here and leads to the conclusion that marital property encompasses a license to practice medicine to the extent that the license is acquired during...