Patricia B. v. Steven B.

• Court: New York Supreme Court — Appellate Division
• Writing for the Court: Before BALLETTA; BALLETTA; MILLER
• Citation: Patricia B. v. Steven B., 588 N.Y.S.2d 874, 186 A.D.2d 609 (N.Y. App. Div. 1992)
• Decision Date: 13 October 1992
• Parties: PATRICIA B. (Anonymous), Respondent-Appellant, v. STEVEN B. (Anonymous), Appellant-Respondent.

Page 874

588 N.Y.S.2d 874

186 A.D.2d 609

PATRICIA B. (Anonymous), Respondent-Appellant, v. STEVEN B. (Anonymous), Appellant-Respondent.

Supreme Court, Appellate Division Second Department.

Oct. 13, 1992.

Tenzer, Greenblatt, Fallon & Kaplan, New York City (Norman S. Heller, of counsel), for appellant-respondent.

Dikman, Dikman & Botter, Jamaica (Michael Dikman, of counsel), for respondent-appellant.

Before BALLETTA, J.P., and MILLER, RITTER and COPERTINO, JJ.

MEMORANDUM BY THE COURT.

In an action for a divorce and ancillary relief, the defendant husband appeals, as limited by his notice of appeal and brief, from stated portions of a judgment of the Supreme Court, Queens County (Modugno, J.H.O.), dated December 15, 1989, which, after a nonjury trial, inter alia, equitably distributed the appreciation in value during the marriage of his periodontal practice and his Keogh and Individual Retirement Account funds, and the plaintiff wife cross-appeals, as limited by her notice of appeal and brief, from stated portions of the same judgment, which, inter alia, (1) equitably distributed only the appreciation in value of the husband's periodontal practice, (2) awarded her maintenance of only $500 per week for two years only, and (3) awarded her counsel and experts' fees of only $17,100.

ORDERED that the judgment is modified, on the facts and as a matter of discretion, by (1) deleting so much of the fourth decretal paragraph thereof as directed payment of $500 maintenance per week to the plaintiff by the defendant for a period of only two years and substituting therefor a provision directing that the maintenance payments of $500 per week be made for a period of five years, (2) deleting so much of the sixth decretal paragraph thereof as awarded the plaintiff a distributive award of $145,212 and substituting therefor a provision awarding her $103,554, (3) deleting the eighth decretal paragraph thereof, which awarded the plaintiff counsel and experts' fees in the sum of $17,100 and substituting therefor a provision awarding her $35,100, and (4) adding provisions thereto directing that (a) the distribution from the defendant's individual retirement account shall be made directly to the plaintiff's individual retirement account, and (b) the distribution of the defendant's Keogh accounts shall be made by a Qualified Domestic Relations Order; as so modified, the judgment is affirmed insofar as appealed and cross-appealed from, without costs or disbursements, and the matter is remitted to the Supreme Court, Queens County, for entry of an appropriate amended judgment and to set the time and manner of payment of the distributive award and the award of counsel and experts' fees.

Approximately two months before the parties married on December 24, 1982, the defendant, a licensed periodontist since 1977, opened a periodontal practice in Patchogue. The plaintiff worked in the defendant's practice as the office manager from 1982 until sometime in the spring 1986, a few months before she commenced the instant action on August 26, 1986.

Contrary to the plaintiff's contention, we find that the periodontal practice, an asset acquired by the defendant before the marriage, constituted separate property (see, Domestic Relations Law § 236[B][1][d][1]. In determining the increase in value of the defendant's periodontal practice during the marriage, however, we find that the court erred. The trial court's use of the time of the trial (December 31, 1988) as the date for evaluating the practice was improper. Given the nature of this asset, the success of which is almost wholly the result of the defendant's efforts and experience, the increase in value between the date of commencement of this action and the date of trial cannot be attributed to economic forces beyond his control, and, therefore, the plaintiff should not benefit from that increase (see, Price v. Price, 69 N.Y.2d 8, 511 N.Y.S.2d 219, 503 N.E.2d 684; Siegel v. Siegel, 132 A.D.2d 247, 523 N.Y.S.2d 517). Consequently, the proper date for determining the increase in value of the practice was the date of commencement of the action.

At the trial, there was conflicting evidence with respect to the increase in value of the defendant's periodontal practice between 1982 and 1986. We conclude that the court should not have accepted the analysis of the plaintiff's expert in evaluating the increase in the value of the practice, inasmuch as the valuation provided by the defendant's expert, who estimated the increase in value to be at most $127,000, was clearly more credible. This valuation, unlike that of the plaintiff's expert, was based on a review of the defendant's business records and tax returns, and interviews with both the defendant and his accountant, and included such factors as earnings, tangible assets, goodwill, and liabilities (see, e.g., Rosenberg v. Rosenberg, 155 A.D.2d 428, 547 N.Y.S.2d 90; Marcus v. Marcus, 137 A.D.2d 131, 525 N.Y.S.2d 238).

However, we believe that an additional $85,099 should be added to the $127,000 figure as the total subject to distribution. First, that the value of the practice was de minimis prior to the parties' marriage, and thus there is no basis for classifying $72,359 of the value to separate property. In addition, the record supports increasing the practice's gross receipts for 1986 by another $36,400, which represents cash income of $700 per week, drawn away as "expenses" and petty cash and utilized for purposes unrelated to the practice. The addition of this sum to gross receipts adds $12,740 to value attributable to good will. Further, although a 20% distributive award is not facially inadequate given the short duration of the marriage, under the particular circumstances of this case--which include the plaintiff's work as office manager during a period of rapid growth--we believe that the plaintiff should be awarded 33 1/3% of the practice.

In making our determination with regard to this component of the distributive award, we strongly disagree with our dissenting colleague both as to reasoning and result. We note at the outset that we have addressed the question of the proper distribution of the practice only, not marital assets in toto, inasmuch as we do not disagree with either the Supreme Court or the dissent concerning the remainder of the property division.

Contrary to the position of our dissenting colleague, there is no basis in law for beginning an analysis concerning a business or a professional practice with a presumption that the parties must divide such an asset on an equal basis subject to modification after due consideration of the factors enumerated in Domestic Relations Law § 236(B)(5). The statutory provisions and legislative history thereof do not support such a proposition, and case law, including those cases cited in the dissent, has not championed equal distribution of assets. Nor can Conner v. Conner (97 A.D.2d 88) be cited for the principle of equal division of property, especially since four of the five judges on that bench concurred in result only.

This relatively short and childless marriage was essentially over on the date that the wife served a summons and complaint commencing this action for divorce--some three and one-half years after it began. We have all agreed that the date of commencement of the action should be used to value the husband's periodontal practice. Despite this, the dissent argues that we should consider this a six and one-half year marriage because it took three years from the date this action was commenced for the trial to be concluded and final judgment entered. We do not agree.

This marriage was effectively over when the action was commenced. We recognize the plaintiff's contribution to the practice for those initial three and one-half years--a contribution which ceased thereafter--by awarding her 33 1/3% of the practice, based upon circumstances of this case. We take issue with going further based upon the factors discussed by our dissenting colleague. While the plaintiff's health, emotional difficulties, and substance abuse, as well as the defendant's knowledge of her psychological makeup prior to the marriage are not to be ignored, we are satisfied that we have fully considered these factors by increasing the maintenance awarded to the wife from $500 per week for two years, to $500 per week for five years, and by giving her a full 33 1/3% of the value of the periodontal practice rather than the 20% awarded by the trial court. Our award provides for her health concerns and employment prospects in dissolving this relatively short-term marriage.

As a final note on valuing the practice, we also find that there is no basis in the record for valuing goodwill at 45% of gross receipts, rather than the 35% figure selected by the expert. Unlike our factual finding with respect to gross receipts and actual value of the practice at the time of the marriage, the per cent of goodwill used to determine gross receipts is a matter for experts, which judges should eschew challenging, unless a mistake discernible to lay people is apparent. Inasmuch as our dissenting colleague does not disagree that the defendant's expert was the most credible and his analysis was carefully performed, his expert opinion on this question should not be disturbed.

We turn now to other portions of the judgment. While we do not consider the amount of maintenance awarded to be inadequate, such payments should be made for five years based upon the uncontroverted evidence adduced at the trial that it would take the plaintiff at least that long to become self-supporting (see, e.g., Sperling v. Sperling, 165 A.D.2d 338, 567 N.Y.S.2d 538; Rosenberg v. Rosenberg, 155 A.D.2d 428, 547 N.Y.S.2d 90, supra ). Further, the plaintiff clearly established her entitlement to counsel and expert fees in the sum of $35,100. The court's action in awarding less than half that sum was improper, since the defendant's 1988 gross...