Holterman v. Holterman

• Decision Date: 10 June 2004
• Citation: 814 N.E.2d 765,3 N.Y.3d 1,781 N.Y.S.2d 458
• Parties: AMY N. HOLTERMAN, Respondent, v. ROBERT K. HOLTERMAN, Appellant.
• Court: New York Court of Appeals Court of Appeals

3 N.Y.3d 1

814 N.E.2d 765

781 N.Y.S.2d 458

AMY N. HOLTERMAN, Respondent, v. ROBERT K. HOLTERMAN, Appellant.

Court of Appeals of the State of New York.

Argued April 28, 2004.

Decided June 10, 2004.

Friedman and Molinsek, P.C., Delmar (Michael P. Friedman of counsel), for appellant.

Flaherty & O'Brien, Albany (Shawn D. Flaherty of counsel), for respondent.

Bruce J. Wagner, Albany, Kenneth David Burrows, Arnold Davis, Christopher S. Mattingly and Stanley Plesent for American Academy of Matrimonial Lawyers, New York Chapter, amicus curiae.

Chief Judge KAYE and Judges G.B. SMITH, CIPARICK and ROSENBLATT concur with Judge GRAFFEO; Judge R.S. SMITH dissents in a separate opinion in which Judge READ concurs.

OPINION OF THE COURT

GRAFFEO, J.

We are being asked in this matrimonial case to determine whether Supreme Court erred by declining to adjust defendant's child support obligation to account for the distributive award payments he was obligated to pay plaintiff for her share of the future enhanced earnings attributable to his medical license. We conclude that Supreme Court did not err as a matter of law and in particular, under the circumstances of this case, did not abuse its discretion in determining the distributive award or in its application of the Child Support Standards Act (CSSA).

I.

Plaintiff Amy Holterman (wife) and defendant Robert Holterman (husband) were married in 1981. At the time of the parties' marriage, husband was a third-year student at a medical school in Philadelphia. Wife, who had a Master's degree in business administration, was employed full time as a program analyst and her income contributed to the support of the household. Husband graduated from medical school in 1983 and obtained his license to practice medicine the following year. The parties then moved to another locale in Pennsylvania where husband began a three-year medical residency program. Shortly thereafter, wife began experiencing significant health problems and was eventually diagnosed with chronic fatigue syndrome and fibromyalgia. The parties agreed that wife would become a homemaker due, in part, to her chronic health problems. Their first child was born in 1985 and a second child was born in 1991.

Husband continued to advance his professional credentials, becoming board-certified in emergency medicine in 1987. From 1986 to 1990 he was employed as an attending staff physician at a hospital. Once husband received his license to practice medicine in New York, the family moved to Albany. Since that time, husband has been an emergency room physician at a hospital, earning a salary of $181,837 in 2000.

After 19 years of marriage, wife commenced an action for divorce in September 2000. Husband waived his right to answer the complaint and the parties entered into a stipulation of joint custody of their two children with wife having primary physical custody. Following the bench trial of this action, Supreme Court issued its findings of fact and conclusions of law in April 2002 and a judgment of divorce was entered in October 2002. The court dissolved the marriage based on husband's constructive abandonment of wife; awarded wife maintenance of $35,000 per year for five years and $20,000 per year thereafter for the remainder of her life; determined that wife was entitled to $214,200 as her equitable share of husband's enhanced earnings premised on his medical license; ordered husband to pay child support for their two children in the amount of $34,875.65 annually; distributed the marital property, including equally dividing $242,815.39 in retirement and investment accounts; gave wife title and possession of the marital residence and set husband's half share of the parties' equity in the marital home at $29,268.48; obligated wife to pay the mortgage, home equity loan payments and taxes on the residence (totaling about $26,500 per year); required husband to maintain certain health and life insurance policies for the benefit of wife and the children; divided equally a tax refund check and a mortgage escrow refund check; ordered husband to reimburse wife for certain expenses pertaining to the children; and directed husband to contribute $20,894 toward wife's counsel and expert fees.

The Appellate Division affirmed, with one modification affecting husband's obligation to maintain life insurance coverage.¹ This Court granted husband's application for leave to appeal.

II.

On appeal, husband raises several challenges relating to the equitable distribution of the value of his medical license, which require that we address the award in some detail. Supreme Court and the Appellate Division determined that the marital portion of husband's medical license had a present-day value of $612,000 in accordance with testimony presented by wife's expert, a certified public accountant.² Husband did not challenge the methodology employed by the expert or the economic value of the license itself. In fact, he did not present any expert testimony. The court determined that wife was entitled to 35% of the value of husband's enhanced earning capacity as a licensed physician, which amounted to $214,200. The court then deducted $29,268.48 from that figure, representing the credit due husband for the conveyance of his interest in the marital residence, thereby establishing a net distributive award of $184,931.52 owed to wife. Husband was directed to pay the award in monthly installments over a 15-year period, at six percent interest per annum from the date of commencement of the action, resulting in annual payments of $21,288. Husband contends that Supreme Court abused its discretion by awarding wife 35% of the marital portion of the enhanced earning capacity derived from his medical license and asserts that her share should be reduced to no more than 10%. We disagree.

In recognizing marriage as an economic partnership, the Domestic Relations Law mandates that the equitable distribution of marital assets be based on the circumstances of the particular case and directs the trial court to consider a number of statutory factors listed in Domestic Relations Law § 236. These factors encompass the income and property of each party at the time of marriage and at the time of commencement of the divorce action, the duration of the marriage, the age and health of the parties, any maintenance award, and the nontitled spouse's direct or indirect contributions to the marriage, including "services as a spouse, parent, wage earner and homemaker" (Domestic Relations Law § 236[B][5][d]).

As this Court declared in O'Brien v. O'Brien, 66 N.Y.2d 576, 588, 498 N.Y.S.2d 743, 489 N.E.2d 712 [1985], these considerations are particularly relevant when evaluating the parties' respective contributions to the attainment of a professional license by one spouse.³ In O'Brien, we held that a professional license is marital property subject to equitable distribution. In the 19 years since we adopted the O'Brien rule, we have adhered to the principle that both parties in a matrimonial action are entitled to fundamental fairness in the allocation of marital assets, and that the economic and noneconomic contributions of each spouse are to be taken into account. Trial courts that examine the statutory factors are granted substantial discretion in determining the extent to which the distribution of marital property, including enhanced earnings attributable to a professional license, will be equitable. Absent an abuse of discretion, this Court may not disturb the trial court's award (see Arvantides v. Arvantides, 64 N.Y.2d 1033, 1034, 489 N.Y.S.2d 58, 478 N.E.2d 199 [1985]

).

Here, Supreme Court issued a careful, comprehensive decision addressing all relevant factors, including the parties' 19-year marriage, wife's employment and monetary contributions during husband's final two years of medical school, the parties' mutual decision that wife would forgo her career to take care of the children and home, the gross disparity in the parties' current and probable future incomes, the fact that husband was 44 years of age and wife was 46 years of age at the time of trial and husband's good health in contrast to wife's chronic health difficulties. In light of these considerations, particularly wife's economic and noneconomic contributions to husband's acquisition of his medical license and subsequent career, the termination of wife's career to raise the parties' two children and maintain the marital household, wife's absence from the job market for more than 17 years, the length of the marriage and wife's long-term health problems, we cannot conclude that Supreme Court abused its discretion in awarding wife 35% as her marital portion of husband's enhanced earning capacity as a physician practicing medicine in New York.

III.

Husband next argues that the payment of $21,288 per year — the annual installment payment of wife's distributive award of her share of enhanced earnings from his medical license — should be deducted from the computation of his income in determining his child support obligation under the CSSA and, concomitantly, that amount should be included as income attributable to wife.⁴ He claims that the failure of the courts below to perform such reassignment of income results in "double dipping" from the same income stream — i.e., awarding both child support and equitable distribution of his future enhanced earnings from the same income source, his salary as a physician. He therefore claims that the courts below erred as a matter of law in violating the antiduplication principles enunciated in McSparron v. McSparron, 87 N.Y.2d 275, 639 N.Y.S.2d 265, 662 N.E.2d 745 [1995] and Grunfeld v. Grunfeld, 94 N.Y.2d 696, 709 N.Y.S.2d 486, 731 N.E.2d 142 [2000]. We hold that husband's proposed reallocation formula — or any formula that requires a deduction of a distributive award paid over a period of years from the licensed spouse's income for purposes of calculating child support — is...