Scher v. Scher

• Court: New York Supreme Court — Appellate Division
• Writing for the Court: REINALDO E. RIVERA
• Citation: Scher v. Scher, 91 A.D.3d 842, 938 N.Y.S.2d 317, 2012 N.Y. Slip Op. 502 (N.Y. App. Div. 2012)
• Decision Date: 24 January 2012
• Parties: Allison SCHER, appellant, v. Edward SCHER, respondent.

2012 N.Y. Slip Op. 00502

91 A.D.3d 842

938 N.Y.S.2d 317

Allison SCHER, appellant,

v.Edward SCHER, respondent.

Supreme Court, Appellate Division, Second Department, New York.

Jan. 24, 2012.

Castrovinci, Blydenburgh & Mady, Smithtown, N.Y. (Philip J. Castrovinci and Ruth Sovronsky of counsel), for appellant.

Shlimbaum and Shlimbaum, Islip, N.Y. (C. Donald Shlimbaum of counsel), for respondent.

REINALDO E. RIVERA, J.P., PETER B. SKELOS, SANDRA L. SGROI, and ROBERT J. MILLER, JJ.

In an action for a divorce and ancillary relief, the plaintiff appeals , as limited by her brief, from so much of a judgment of the Supreme Court, Suffolk County (Garguilo, J.), entered March 4, 2010, as, upon a corrected decision of the same court dated January 26, 2010, made after a nonjury trial, directed the defendant to pay her the sum of only $10,000, “ representing a distributive award for improvements made to the marital residence,” directed her to vacate the marital residence within 30 days of service of the corrected decision, in effect, awarded the defendant the appreciated value of Home Companion Services of New York, Inc., from the date of the marriage as separate property, awarded the defendant Green Fields East Holding, LLC, as separate property, awarded the defendant the funds in a certain 529 college savings plan account, awarded the defendant a separate property credit in the sum of $32,719.59 for the value of the Janney Montgomery Scott profit-sharing plan account, awarded her only 10% of the value of all the financial accounts, except the 529 college savings plan account, and declined to award her future maintenance or an attorney's fee.

ORDERED that the appeal from so much of the judgment as directed the plaintiff to vacate the martial residence within 30 days of service of the corrected decision is dismissed as academic, without costs or disbursements; and it is further, ORDERED that the judgment is modified, on the law, on the facts, and the exercise of discretion, (1) by deleting the provision thereof directing the defendant to pay the plaintiff the sum of $10,000, “representing a distributive award for improvements made to the marital residence,” and substituting therefor a provision directing the defendant to pay the plaintiff the sum of $170,000, representing a distributive award for the appreciated value of the marital residence from the date of the marriage, (2) by deleting the provision thereof, in effect, awarding the defendant the appreciated value of Home Companion Services of New York, Inc., as separate property and substituting therefor a provision directing the defendant to pay the plaintiff $229,200, representing her distributive share of the appreciated value of Home Companion Services of New York, Inc., from the date of the marriage, (3) by deleting the provision thereof awarding the defendant Green Fields East Holding, LLC, as separate property, and substituting therefor a provision directing the defendant to pay the plaintiff $55,500, representing her distributive share of the value of Green Fields East Holding, LLC, and (4) by deleting the provision thereof awarding the defendant a separate property credit in the sum of $32,719.59 for the value of the Janney Montgomery Scott profit sharing plan account; as so modified, the judgment is affirmed insofar as reviewed, without costs or disbursements.

Contrary to the determination of the Supreme Court, the plaintiff was entitled to share in the appreciated value of Home Companion Services of New York, Inc. (hereinafter Home Companion Services), which the defendant incorporated approximately three years prior to the marriage. Separate property includes “property acquired before [the] marriage” (Domestic Relations Law § 236[B][1][d][1] ), such as the business interest in Home Companion Services in this case, as well as “the increase in value of [such] separate property, except to the extent that such appreciation is due in part to the contributions or efforts of the other spouse” (Domestic Relations Law § 236[B][1][d][3] ). “[I]n order for appreciation in the value of separate property to be deemed marital property subject to equitable distribution, the nontitled spouse must demonstrate the manner in which his [or her] contributions resulted in the increase in value and the amount of the increase which was attributable to his [or her] efforts” ( Embury v. Embury, 49 A.D.3d 802, 804, 854 N.Y.S.2d 502 [citations and internal quotation marks omitted]; see Michelini v. Michelini, 47 A.D.3d 902, 903, 850 N.Y.S.2d 592; Burgio v. Burgio, 278 A.D.2d 767, 769, 717 N.Y.S.2d 769; Chan v. Chan, 267 A.D.2d 413, 414, 701 N.Y.S.2d 114; Elmaleh v. Elmaleh, 184 A.D.2d 544, 545, 584 N.Y.S.2d 857). Here, the Supreme Court improvidently exercised its discretion in finding that the plaintiff made no direct or indirect contributions to the appreciation of Home Companion Services which resulted in the increase in the value of the company. The evidence established that the plaintiff made direct contributions to the business by serving as the company bookkeeper for approximately seven years ( see Baron v. Baron, 71 A.D.3d 807, 809, 897 N.Y.S.2d 456; Hamroff v. Hamroff, 35 A.D.3d 365, 366, 826 N.Y.S.2d 389; Ventimiglia v. Ventimiglia, 307 A.D.2d 993, 994, 763 N.Y.S.2d 486). The evidence further established that the defendant's active participation in expanding the business was aided and facilitated by the plaintiff's indirect contributions as homemaker and occasional caretaker of one of his children from a prior marriage ( see Hartog v. Hartog, 85 N.Y.2d 36, 46, 623 N.Y.S.2d 537, 647 N.E.2d 749; Price v. Price, 69 N.Y.2d 8, 17–18, 511 N.Y.S.2d 219, 503 N.E.2d 684; Zaretsky v. Zaretsky, 66 A.D.3d 885, 888, 888 N.Y.S.2d 84; Chalif v. Chalif, 298 A.D.2d 348, 349, 751 N.Y.S.2d 197). Moreover, the defendant failed to establish that the plaintiff committed “wasteful dissipation” of marital assets in her role as bookkeeper ( Graves v. Graves, 307 A.D.2d 1022, 1023, 763 N.Y.S.2d 774 [internal quotation marks omitted]; see Epstein v. Messner, 73 A.D.3d 843, 846, 900 N.Y.S.2d 454; O'Sullivan v. O'Sullivan, 247 A.D.2d 597, 670 N.Y.S.2d 38; Strang v. Strang, 222 A.D.2d 975, 978, 635 N.Y.S.2d 786). In light of the plaintiff's direct and indirect contributions, the Supreme Court should have awarded her 20% of the appreciated value of Home Companion Services. As the parties stipulated that the appreciated value over the course of the marriage amounted to $1,146,000, the plaintiff was entitled to an award of $229,200.

Furthermore, contrary to the determination of the Supreme Court, the plaintiff was entitled to an equitable share of the appreciated value of the marital residence over the course of the marriage, notwithstanding that the residence was the separate property of the defendant until March 2005, when the property was transferred to the plaintiff and defendant as tenants by the entirety. The increase in the value of separate property remains separate property “except to the extent that such appreciation is due in part to the contributions or efforts of the other spouse” (Domestic Relations Law § 236 [B][1][d][3]; see Price v. Price, 69 N.Y.2d 8, 511 N.Y.S.2d 219, 503 N.E.2d 684), at which point the increase in value becomes marital property, in accordance with the rule that the definition of marital property is to be broadly construed, given the principle that a marriage is an economic partnership ( see Mesholam v. Mesholam, 11 N.Y.3d 24, 28, 862 N.Y.S.2d 453, 892 N.E.2d 846; Price v. Price, 69 N.Y.2d at 14–15, 511 N.Y.S.2d 219, 503 N.E.2d 684). The parties stipulated to a neutral appraisal which found that the marital residence had increased in value by $40,000 due to “active appreciation” in the form of physical improvements, and $300,000 due to “passive appreciation” in the form of “market forces, without regard to any improvements, except normal maintenance.” Since the record established that the $340,000 in appreciation was attributable to the efforts of both parties, the plaintiff was entitled to share equitably in that increased value ( see Mongelli v. Mongelli, 68 A.D.3d 1070, 1072, 892 N.Y.S.2d 471; Kost v. Kost, 63 A.D.3d 798, 799, 881 N.Y.S.2d 141; Kilkenny v. Kilkenny, 54 A.D.3d 816, 818–819, 863 N.Y.S.2d 807; Cincotta v. Cincotta, 221 A.D.2d 306, 307, 633 N.Y.S.2d 527). Thus, applying the plaintiff's 50% distributive share to the $340,000 in appreciation, she is entitled to an award of $170,000 for the appreciated value in the martial residence from the date of marriage. In light of the plaintiff's contributions, the Supreme Court should have awarded the parties equal shares in the increase in the value of the marital residence. However, the plaintiff's contention that the Supreme Court improperly directed her to vacate the marital residence within 30 days has been rendered academic by the passage of time.

The Supreme Court erred in finding that the interest in Green Fields East Holding, LLC (hereinafter Green Fields), which was held in the defendant's name, was the separate property of the defendant. Domestic Relations Law § 236 defines “marital property” as “all property acquired by either or both spouses during the marriage and before the execution of a separation agreement or the commencement of a matrimonial action, regardless of the form in which title is held” ( domestic relations law § 236[B][1][C] [EMPHASIs supplied]; see Fields v. Fields, 15 N.Y.3d 158, 161–162, 905 N.Y.S.2d 783, 931 N.E.2d 1039). Likewise, “[e]xpenses incurred prior to the commencement of an action for a divorce are marital debt to be equally shared by the parties upon an offer of proof that they represent marital expenses” ( Epstein v. Messner, 73 A.D.3d at 845, 900 N.Y.S.2d 454). “Where a party has paid the other party's share of what proves to be marital debt, reimbursement is required” ( id.; see Bogdan v. Bogdan, 260 A.D.2d 521, 522, 688 N.Y.S.2d 255). As the...