Gluckman v. Qua

Citation253 A.D.2d 267,687 N.Y.S.2d 460
Parties1999 N.Y. Slip Op. 3007 In the Matter of Deborah J. GLUCKMAN, Respondent, v. Lyman E. QUA, Appellant. Third Department
Decision Date01 April 1999
CourtNew York Supreme Court Appellate Division

Carusone & Carusone (John J. Carusone Jr. of counsel), Saratoga Springs, for appellant.

Lawrence R. Hamilton, Saratoga Springs, for respondent.

Before: MIKOLL, J.P., MERCURE, CREW III, PETERS and CARPINELLO, JJ.

CARPINELLO, J.

Appeal from an order of the Family Court of Washington County (Hemmett Jr., J.), entered July 16, 1998, which granted petitioner's application, in a proceeding pursuant to Family Court Act article 4, to modify a prior order of child support.

The parties' two-year marriage ended in divorce in December 1985. Since that time their two children, born in 1983 and 1985, respectively, have resided with petitioner and respondent has paid child support. Although initially set at $100 per week, petitioner successfully sought an upward modification of support in December 1990 resulting in an increase to $210 per week. At issue on appeal is petitioner's April 1996 petition for another upward modification of child support alleging a change of circumstances; namely, respondent's increased income, a substantial increase in the children's expenses and her recent loss of a part-time job. With respect to respondent's income, it is undisputed that it did increase significantly--from $43,088 in 1990 to $260,221 in 1995--as a result of his success as a local restauranteur.

Petitioner's application was first denied by the Hearing Examiner "for failure of proof" after a hearing. Specifically, the Hearing Examiner concluded that petitioner's expenses had decreased between 1990 and 1996, that she had voluntarily reduced her income by failing to reapply for the part-time job and that she was able to meet the children's needs. Although noting that respondent's income had indeed increased since 1990, the Hearing Examiner declined to find this single factor as an adequate basis upon which to modify his child support obligation. Petitioner filed objections with Family Court, which remitted the matter to the Hearing Examiner to calculate the parties' combined parental income and to reconsider whether child support should be modified pursuant to Matter of Cassano v. Cassano, 85 N.Y.2d 649, 628 N.Y.S.2d 10, 651 N.E.2d 878, and Matter Jones v. Reese, 227 A.D.2d 783, 642 N.Y.S.2d 378, lv. denied 88 N.Y.2d 810, 649 N.Y.S.2d 377, 672 N.E.2d 603.

Because the record before her was sufficient to make the additional findings, the Hearing Examiner then determined that the parties' combined parental income was $288,650.89 (the annual incomes of petitioner and respondent were calculated at $28,429.89 and $260,221, respectively). Although the Hearing Examiner again noted that petitioner's expenses had actually decreased and that the children's needs were being met, she nevertheless determined that an upward modification was warranted in view of the dramatic increase in respondent's income. She then applied "the appropriate child support percentage [25%] to all income, including income in excess of $80,000", on the ground that "[t]here was no proof offered as to why the Court should not or why the Court should vary" from such formula. This resulted in a $1,251 weekly ($65,052 annual) child support obligation.

Following objections by respondent, Family Court again remitted the matter to the Hearing Examiner "to make a further elaboration as to the reasons that the Child Support Standards Act percentage was applied to the parental income in excess of $80,000". In the meantime, respondent successfully moved for a rehearing on the ground that he mistakenly testified about the extent of his ownership interest in his restaurant. Following a second hearing, the Hearing Examiner determined that the parties' combined parental income was $370,558.86 (the annual incomes of petitioner and respondent were recalculated to be $37,794.50 and $332,764.36, respectively). Noting that respondent failed to establish any reason for her to vary from Family Court Act § 413(1)(f), the Hearing Examiner found that it was in the children's best interest to apply the Child Support Standards Act (hereinafter CSSA) percentage to all of the combined parental income. This resulted in a $1,600 weekly ($83,200 annual) child support obligation. Respondent again filed objections with Family Court, contending primarily that the Hearing Examiner erred in calculating his income and failed to articulate the reasons for applying the CSSA percentage to the combined parental income over $80,000. Family Court rejected these objections, prompting this appeal.

Contrary to respondent's contention, the substantial increase in his income between 1990 and 1996 provided the necessary change in circumstances warranting an upward modification of child support (see, e.g., Matter of Klein v. Klein, 251 A.D.2d 733, 734-735, 674 N.Y.S.2d 142, 144). We are persuaded, however, that the Hearing Examiner erred in calculating his income and in failing to adequately articulate the reasons for applying the CSSA percentage to the parties' combined parental income in excess of $80,000. Because the record permits, and in the interest of judicial economy, we shall exercise our discretion to determine the appropriate child support award (see, Matter of Ballard v. Davis, 248 A.D.2d 858, 860, 669 N.Y.S.2d 977, lv. denied 92 N.Y.2d 803, 677 N.Y.S.2d 73, 699 N.E.2d 433; Chasin v. Chasin, 182 A.D.2d 862, 864, 582 N.Y.S.2d 512; cf., Kimmel v. Mifflin, 240 A.D.2d 471, 659 N.Y.S.2d 785).

First, the record does not substantiate the Hearing Examiner's finding that respondent's annual income should include $87,937, representing the increased value of his stock portfolio from November 1996 through November 1997. 1 The capital gains allegedly realized by respondent during this period was "paper only" income (Orofino v. Orofino, 215 A.D.2d 997, 998-999, 627 N.Y.S.2d 460, lv. denied 86 N.Y.2d 706, 632 N.Y.S.2d 500, 656 N.E.2d 599). Respondent earns a substantial salary in connection with the operation of his restaurant (compare, McFarland v. McFarland, 221 A.D.2d 983, 634 N.Y.S.2d 290) and an award of child support based on his income excluding these unrealized gains would hardly be unjust or inappropriate (compare, Matter of Webb v. Rugg, 197 A.D.2d 777, 778-779, 602 N.Y.S.2d 716), especially since there is no evidence in the record that respondent was attempting to avoid his child support obligation through calculated investment strategies--a concern raised by the court in McFarland v. McFarland, supra, at 984, 634 N.Y.S.2d 290. Accordingly, this amount should not have been included in computing respondent's income. Thus, his income for the purpose of calculating child support is $244,827.36.

Next, we agree with respondent's contention that the Hearing Examiner failed to sufficiently articulate the reasons for applying the statutory formula to the combined parental income in excess of $80,000 (see, e.g., Manno v. Manno, 224 A.D.2d 395, 397, 637 N.Y.S.2d 743). In Matter of Cassano v. Cassano, 85 N.Y.2d 649, 628 N.Y.S.2d 10, 651 N.E.2d 878, supra, the Court of Appeals held that the language of Family Court Act § 413(1)(f) "should be read to afford courts the discretion to apply the 'paragraph (f)' factors, or to apply the statutory percentages, or to apply both in fixing the basic child support obligation on parental income over $80,000" (id., at 655, 628 N.Y.S.2d 10, 651 N.E.2d 878). However, the court emphasized that, when a court chooses to apply the statutory percentage to combined parental income over $80,000, it is required to provide "some record articulation" of its reasons in order to facilitate appellate review (id., at 655, 628 N.Y.S.2d 10, 651 N.E.2d 878). In addition to providing a record articulation for deviating or not deviating from the statutory formula, a court must relate that record articulation to the statutory factors (see, Matter of Ballard v. Davis, 229 A.D.2d 705, 707, 645 N.Y.S.2d 148).

Here, the Hearing Examiner recited the statutory factors in her decision without relating them to the ultimate facts upon which she relied. Moreover, upon our consideration of the factors outlined under the statute to the facts of this case, we conclude that the Hearing Examiner's application of the statutory 25% to the income above $80,000 was an abuse of discretion (see, Matter of Cassano v. Cassano, supra, at 655, 628 N.Y.S.2d 10, 651 N.E.2d 878), resulting in an award that was simply excessive (see, Reiss v. Reiss, 170 A.D.2d 589, 590-591, 566 N.Y.S.2d 365, appeal dismissed 78 N.Y.2d 908, 573 N.Y.S.2d 469, 577 N.E.2d 1061, lv. denied 79 N.Y.2d 758, 584 N.Y.S.2d 446, 594 N.E.2d 940). In our view, a reduced percentage of 15% to the income in excess of $80,000 bears a more reasoned corollary between the statutory factors and the parties' circumstances (compare, Orofino v. Orofino, 215 A.D.2d 997, 999, 627 N.Y.S.2d 460, supra ).

Mindful of our obligation to outline the factors we have considered in rejecting a strict application of the statutory formula to the parties' income over $80,000 (see, Matter of Cassano v. Cassano, supra, at 653, 628 N.Y.S.2d 10, 651 N.E.2d 878), we find the following. First, although respondent earns substantially more...

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