Greenwald v. Greenwald

• Decision Date: 07 February 1991
• Citation: 164 A.D.2d 706,565 N.Y.S.2d 494
• Parties: Patricia B. GREENWALD, Plaintiff-Respondent, v. James L. GREENWALD, Defendant-Appellant.
• Court: New York Supreme Court — Appellate Division

Page 494

565 N.Y.S.2d 494

164 A.D.2d 706

Patricia B. GREENWALD, Plaintiff-Respondent, v. James L. GREENWALD, Defendant-Appellant.

Supreme Court, Appellate Division,

First Department.

Feb. 7, 1991.

Joan L. Ellenbogen, of counsel (Marcia C. Goldstein and Kenneth Ludman with her on the brief; Ellenbogen & Goldstein, P.C., attorneys) for plaintiff-respondent.

Irving Shafran, for defendant-appellant.

Before KUPFERMAN, J.P., and SULLIVAN, CARRO, MILONAS and SMITH, JJ.

SULLIVAN, Justice.

This appeal presents, inter alia, a challenge to the trial court's distribution of marital assets on a 50/50 basis where, according to the husband, for the seven-year period prior to the commencement of the divorce action, during which the parties had been separated, the marital assets enjoyed their greatest single period of growth, i.e., an increase in value of nearly $7 million, without contribution thereto, either direct or indirect, by the wife.

The parties, married on December 18, 1960 and the parents of a son, born February 21, 1964, separated in May 1980, when the husband left the marital home. At the time of their marriage, they lived in a rental apartment at 785 Park Avenue and neither the husband, then 33 years old nor the wife, 30, had assets of any significance. The wife was then employed full-time, earning $8,500 per year as a project director with Marplan, a market-research firm. Her employment was terminated in 1964 when she was in her seventh month of pregnancy. A few months after her son's birth she rejoined Marplan and worked full-time until 1966 when she resigned to care for her son, who was experiencing difficulties in adjusting to both parents working. She returned to work on a part-time basis in 1970, when the son entered kindergarten, and resumed working full-time in 1974 as an executive vice-president and director of research at Degarmo, an advertising agency, at an annual gross salary of approximately $75,000, which, with fringe benefits--car, garage and expense account--brought her total compensation to more than $100,000 per year. In 1980, Degarmo merged with D'Arcy, McManus, Masius, another advertising agency. Throughout the marriage, at least until their separation, the husband paid all the household bills and the wife retained her income.

At the time of the marriage, the husband was earning $13,000 per year at Katz Communications, Inc., for which he began working in 1956. He became assistant radio sales manager in 1964 and, within two years, was promoted to sales manager of the radio division. He was named executive vice-president in 1971 and, four years later, in 1975, after the parties had been married for 15 years, became president and chief executive officer. In 1979, he earned $532,624. His W-2 salary for 1988 was $1,407,975.

Since the parties worked in related fields, he in the media and she in advertising, each was involved in the other's career. She turned to him for professional guidance, and he regularly sought her advice and counsel. For instance, the wife participated in the formulation of a strategy to secure the necessary votes for him to be elected to the presidency of Katz. Even after the husband left the marital home in 1980, the parties continued to maintain a close business and social relationship. They spoke regularly by telephone and frequently met for lunch or dinner, discussing their respective careers and seeking each other's advice and guidance. In at least one instance, at the husband's request, the wife interviewed a prospective Katz employee; on another, she gave the husband a new psychographics study for use by Katz salesmen. As found by the trial court, "Aside from not cohabiting, the parties' relationship has basically remained unchanged since their separation in 1980."

At the time of the parties' separation in May 1980, the son was 16 years of age, the wife a $125,000 per year senior vice-president at D'Arcy, McManus, Masius. The son continued to live with the wife. On March 10, 1982, the son, then 18, attempted suicide; the wife took him to a residential treatment program in Houston, Texas. In November of that year, she was terminated from her executive position because of the time she was devoting to him. After his return from Texas, the son resumed living with the wife. During this period of readjustment, the wife attended daily support meetings, accompanied the son on his psychiatric visits, engaged tutors for him and helped him with his studies. He earned a high school equivalency diploma, attended Bennington College for three semesters until May 1984 and then returned to live with the wife for two and one-half years more until he moved into his own apartment in December 1986. That apartment was purchased jointly by the parties pursuant to a written agreement, which provided for equal contribution to the cost, expenses and maintenance of the apartment.

Meanwhile, the wife freelanced as a market researcher until 1984, when she and a partner formed Holtzman and Greenwald, market researchers. The company, however, was dissolved after one and one-half years and the wife returned to freelancing. In 1986, she and a former colleague formed Cox and Greenwald, an advertising agency, which was dissolved in October 1988. Since March 1989, she has been a consultant with Barham and Partners, an advertising agency. In 1989, at the time of trial, she was being paid $300 per diem.

From the time he left the marital home in May 1980, the husband voluntarily contributed to the support of the wife, who, in turn, supported the son. In April 1986, however, after learning that the wife's partner was taking a double salary and she none, he terminated all support by denying the wife access to a joint checking account. The wife commenced a support proceeding and was awarded $11,000 monthly in temporary support, which the husband has paid to date.

On August 19, 1987, 27 years after their marriage and seven years after the husband vacated the marital apartment, the wife commenced an action for divorce, alleging abandonment, which the husband did not contest. After an eight-day trial of the financial issues, conducted two years later, the trial court granted the wife a 50% interest in the marital property accumulated to the date of the commencement of the action, one-half of the shares of stock in the Katz Employee Stock Ownership Plan Trust Fund (ESOP) account held by the husband or, in the event of termination of the plan (as has happened), payment of one-half of the proceeds of the sale of such shares; evaluated the marital assets already in her control at $2,217,556 and those in his control at $11,083,529 and, in addition, directed the husband to pay her a distributive award of $4,432,986 and to transfer $434,974 to her from his individual retirement accounts to effectuate an equal distribution.

In so ruling, the court found that each party had made significant contributions to the acquisition of marital assets, although the husband had been the primary income producer. Unlike the husband, the court held, the wife had essentially maintained dual roles during the marriage. She contributed directly to the success of his career through her independent income and assistance; in her role as wife, mother, homemaker and home manager, she contributed indirectly. The court found that these contributions continued after the parties' physical separation. Even if this were not the case, the court noted, by the time of the 1980 separation, the marriage was already "long-term" and the "momentum for the appreciation of the marital assets ... already underway." Based on these circumstances and, citing Conner v. Conner, 97 A.D.2d 88, 96, 468 N.Y.S.2d 482, for the proposition that marital assets should be divided equally unless such a division would be inequitable, the court found that an equal division was "just, fair and right."

Since the court's decision was not rendered until five months after the trial's conclusion--during which time the husband allegedly suffered a substantial change in financial circumstances due to market conditions beyond his control--and was incorporated, he claimed, into the judgment without consideration of the attendant tax implications, resulting in a financial windfall to the wife well in excess of 50% of the marital assets awarded, the husband moved for renewal, reargument and reconsideration as well as a reopening of the trial and modification of the decision so as to rectify the judgment's inequities. In addition to alleging reliance on stale valuation figures from the trial notwithstanding a significant downturn in the securities market which substantially reduced the value of certain of his assets, the husband also claimed that the court evaluated his ESOP as an active asset while distributing it as a passive asset by imposition of a Qualified Domestic Relations Order (QDRO). The court denied the motion in its entirety. The husband appeals from both the judgment and order, which appeals have been consolidated. Primarily arguing that the court erred in awarding the wife a 50% participation in the distribution of all marital assets, he cites her lack of contributions to the acquisition or appreciation of assets during their seven-year separation, during which the most substantial appreciation in value of the marital assets occurred.

Pursuant to section 236B(5)(c) of the Domestic Relations Law, "[m]arital property shall be distributed equitably between the parties, considering the circumstances of the case and of the respective parties." It is axiomatic, of course, that equitable distribution does not necessarily mean equal distribution. (Rodgers v. Rodgers, 98 A.D.2d 386, 390-391, 470 N.Y.S.2d 401, app. dismd., 62 N.Y.2d 646.) Rather, courts must use the flexibility and elasticity with which they are empowered "to mold an appropriate decree because what is fair and just in one circumstance may not be so in another [citation omitted]." (Id. at 391...