McSparron v. McSparron

• Decision Date: 07 December 1995
• Parties: , 662 N.E.2d 745, 64 USLW 2389 Hedy L. McSPARRON, Appellant, v. James G. McSPARRON, Respondent.
• Court: New York Court of Appeals Court of Appeals

Page 265

639 N.Y.S.2d 265

87 N.Y.2d 275, 662 N.E.2d 745, 64 USLW 2389

Hedy L. McSPARRON, Appellant, v. James G. McSPARRON, Respondent.

Court of Appeals of New York.

Dec. 7, 1995.

Jerome K. Frost, P.C., Troy (Joel R. Brandes and Jerome K. Frost, of counsel), for appellant.

Friedman and Manning, P.C., Delmar (Michael P. Friedman and Stephen L. Molinsek, of counsel), for respondent.

OPINION OF THE COURT

TITONE, Judge.

In O'Brien v. O'Brien, 66 N.Y.2d 576, 498 N.Y.S.2d 743, 489 N.E.2d 712, this Court held that a professional license acquired two months before the commencement of the matrimonial action was marital property subject to equitable distribution under Domestic Relations Law § 236(B). Since that decision, the courts of this State have struggled with the problems involved in distributing the value of older professional licenses that have been utilized in the development of their holders' careers. The primary question presented by this appeal is whether a license that has been exploited by the licensee to establish and maintain a career may be deemed to have "merged" with the career and thereby lost its character as a separate distributable asset.

I.

The parties were married in 1969. At the time of their marriage, both parties had undergraduate college degrees and neither possessed any appreciable assets. Defendant husband attended law school during the first three years of the marriage, gaining admission to the Bar in 1973. He thereafter practiced law and was earning an annual salary of $97,000 as a Deputy First Assistant Attorney-General when the parties separated in mid-1989.

Plaintiff wife acquired a master's degree in psychology during the early years of her marriage. Over the next 12 to 13 years, she worked as a school psychologist, taking time off occasionally to care for the couple's children or to attend graduate school. In 1984, plaintiff began attending medical school. She graduated in 1988 and, after completing a one-year internship, she received a license to practice medicine in July of 1989. Plaintiff commenced this matrimonial action on September 1, 1989, four months before the completion of her second internship.

By a judgment of divorce dated October 1, 1991, the Supreme Court awarded each party custody of one of the couple's two children. Defendant was ordered to pay child support and weekly maintenance and the marital property was divided equally between the parties. In determining the total value of the marital estate, the court included the value of each party's professional license as measured by the increased earning capacity it represented: $529,363 for defendant's law license and $903,406 for plaintiff's medical license. The marital estate was then divided so that each party retained the value of his or her license and pension interest. The marital residence was to be sold and the proceeds distributed equally. The other marital assets, including vehicles, investments and vacation property were also distributed. Both parties then appealed from the portions of the judgment that they deemed objectionable.

The Appellate Division modified in several important respects. On defendant's appeal, the Court held that defendant's law license should not have been treated as separate marital property available for equitable distribution because it had "long since merged into [defendant's] professional career" and was not " 'an asset * * * possess[ing] an independent identity for the purpose of computing appreciation' " (190 A.D.2d 74, 81, 597 N.Y.S.2d 743, quoting Kalisch v. Kalisch, 184 A.D.2d 751, 752, 585 N.Y.S.2d 476). Several of plaintiff's arguments regarding the distribution of marital property were rejected, but the Court agreed with her contention that her medical license had been overvalued. Based on these and other perceived problems in the divorce judgment, the Appellate Division reversed and remitted to the Supreme Court for a redistribution of the marital assets as well as for a modification of the conditions imposed in connection with defendant's visitation rights.

On the remand, Supreme Court redistributed the marital property in accordance with the Appellate Division's decision. The court also granted a defense motion to eliminate defendant's prospective maintenance because of his recent job loss. Defendant had applied for relief from his maintenance obligation during the pendency of the appeal to the Appellate Division after plaintiff had appeared at a press conference and accused him of engaging in criminal activity. The acknowledged purpose of this press conference was to embarrass defendant's employer, the then-State Attorney-General, who was campaigning for a different office. As a result of these accusations, defendant was forced to resign from his position and had been unable to find new employment. The court found that defendant's job loss was not a self-imposed hardship and that, in view of plaintiff's current annual income, defendant should not be obliged to continue paying her maintenance. Plaintiff then took a second appeal.

On that appeal, the Appellate Division affirmed, rejecting plaintiff's contentions regarding the elimination of her maintenance and the purported one-sidedness of the redistribution of marital property. The Court also declined either to exclude plaintiff's medical license from the marital estate or to reconsider its earlier conclusion that defendant's law license was improperly included. Plaintiff took the present appeal by permission of this Court.

II.

Initially, we reject plaintiff's arguments regarding the inclusion of her own medical license as an item of marital property available for equitable distribution. Contrary to plaintiff's contentions, nothing that has occurred in the 10 years since O'Brien was decided suggests a reason to overrule it. The "chaos" and "confusion" that plaintiff perceives are really nothing more than reflections of how difficult it is to achieve true fairness in the division of a married couple's tangible and intangible assets. Far from undermining O'Brien's pragmatic and theoretical worth, the decade of case law history that plaintiff cites is an example of the kind of experimentation and creative problem solving that the Domestic Relations Law and equity itself demand.

Equally unpersuasive is plaintiff's contention that O'Brien should be limited to cases in which one spouse worked and supported the family financially while the other went to school and earned a professional license. Plaintiff's emphasis on the nontitled spouse's financial subsidy to the exclusion of all other forms of contribution represents an unacceptably narrow view of the economic partnership that characterizes the institution of marriage. Here, for example, although defendant apparently did not finance plaintiff's medical education, he was the primary provider of economic support to the family while plaintiff was in school. Additionally, he prepared family meals and tended to the children's needs so that plaintiff could devote her time to her studies and work. Thus, the evidence supports the affirmed finding below that defendant "contributed to the functioning of the household while plaintiff attended medical school." Under these circumstances, inclusion of plaintiff's license as an item of distributable marital property is appropriate to fulfill the core purpose of the O'Brien rule: to assure the nontitled spouse an equitable share of the license to which that spouse's efforts contributed. Accordingly, there is no sound basis for withholding O'Brien's application here. We note that, contrary to plaintiff's contentions, there is also record support for the Appellate Division's valuation of her medical license. Consequently, the lower courts' distribution of plaintiff's professional license will not be disturbed. ^*

III.

We reach a different conclusion, however, with respect to the Appellate Division's disposition of defendant's professional license to practice law. As a threshold matter, we reject plaintiff's contention that the Appellate Division lacked the power to modify Supreme Court's decision to distribute the license's value because defendant did not specifically mention that aspect of the judgment in his notice of appeal. Contrary to plaintiff's contentions, the scope of the Appellate Division's review power was not limited by the recitations in defendant's notice of appeal. Notably, there is no indication on this record that plaintiff was prejudiced by any ambiguity or omission in the notice. Accordingly, there is no basis for this Court to interfere with the Appellate Division's discretionary choice to construe defendant's notice of appeal liberally or even to reach beyond the issues it cited.

Turning to the substantive question, we find considerable merit in plaintiff's contention that the Appellate Division erred in treating defendant's law license as having "merged" with defendant's career. The "merger" principle on which the Court's decision was based is derived from the Second Department's ruling in Marcus v. Marcus, 137 A.D.2d 131, 135 A.D.2d 216, 525 N.Y.S.2d 238, in which it was held that a professional license should not be assigned an independent value where the licensee has maintained a professional practice for a substantial period. In that situation, the Marcus Court stated, the license "should be deemed to have merged with and been subsumed by the practice itself" (id., at 139, 135 A.D.2d 216, 525 N.Y.S.2d 238). The underlying rationale is that "the equitable considerations that * * * motivated the O'Brien court are fundamentally different" where the license has been utilized for a substantial period to establish a career or professional practice and to generate tangible assets for the family (Parlow v. Parlow, 145 Misc.2d 850, 856, 548 N.Y.S.2d 373; see, Maher v. Maher, 196 A.D.2d 530, 531, 601 N.Y.S.2d 165).

In the years since the merger theory was first articulated, the lower courts...