Court Opinion

ID: 5929521
Source: CourtListenerOpinion
Date Created: 2022-01-13 05:02:01.985331+00
Date Added: 2024-06-11T08:46:43.536947
License: Public Domain

Balletta, J.,
concurs in part and dissents in part, with the
following memorandum: The plaintiff acknowledges that the condominium in which the parties lived was purchased prior to the marriage by the defendant from his separate property. The residence was originally purchased for $31,500 and had risen to a value of $96,500 in approximately 10 years, according to an appraisal obtained in 1988 when a new mortgage was placed on the property. The majority agrees that the condominium is the separate property of the defendant but affirms the award to the wife of a distributive share of the appreciated value of the condominium. In my view, the Trial Judge erred, and the appreciated value is separate property and should not be subject to equitable distribution. Accordingly, I disagree with that portion of the majority’s decision.
In Price v Price (69 NY2d 8), the Court of Appeals set forth the rules in evaluating whether a spouse’s contributions are sufficient to warrant equitable distribution of the increase in value of separate property. The court held that where the increase in value of separate property is due in part to efforts or contributions of the spouse as homemaker and parent, the increase should be considered marital property (Price v Price, supra, at 17). However, the above rule is but the second prong of a two-prong test. The decision in Price goes on to state:
"Whether assistance of a nontitled spouse, when indirect, can be said to have contributed 'in part’ to the appreciation of an asset depends primarily upon the nature of the asset and whether its appreciation was due in some measure to the time and efforts of the titled spouse. If such efforts, as allegedly is true of defendant’s interest in Unity, were aided and the time *432devoted to the enterprise made possible, at least in part, by the indirect contributions of the nontitled spouse, the appreciation should, to the extent it was produced by efforts of the titled spouse, be considered a product of the marital partnership and hence, marital property (see, Nolan v Nolan, 107 AD2d 190, 193, where the court properly concluded that the indirect contributions of the wife as parent and homemaker entitled her to a share in the appreciation of securities which resulted, at least in part, from the time and effort that the titled spouse devoted to their management) * * *. As a general rule, however, where the appreciation is not due, in any part, to the efforts of the titled spouse but to the efforts of others or to unrelated factors including inflation or other market forces, as in the case of a mutual fund, an investment in unimproved land, or in a work of art, the appreciation remains separate property, and the nontitled spouse has no claim to a share of the appreciation.
"The question under section 236 (B) (1) (d) (3) as to. indirect contributions of the nontitled spouse as parent and homemaker is whether there was an appreciation of separate property due to the efforts of the titled spouse during the period when it is shown that those efforts were being aided or facilitated in some way by these indirect contributions. If so, the amount of appreciation during that period is considered a product of the marital partnership over which the trial court 'retains the flexibility and discretion to structure [a] distributive award equitably’ (O’Brien v O’Brien, 66 NY2d 576, 588, supra). The nature and measure of the services performed by the nontitled spouse as parent and homemaker and the degree to which they may have indirectly contributed to the appreciation of separate property, are matters to be weighed and decided by the trial court—not in making this initial determination under section 236 (B) (1) (d) (3)—but in making its distribution of the appreciation as marital property under section 236 (B) (5)” (Price v Price, supra, at 17-19 [emphasis added]).
Under Price, therefore, whether the appreciation in property is to be deemed marital property is not so much determined by calculating the contributions of the nontitled spouse but, rather, it is determined by first calculating whether the titled spouse contributed to the appreciation of the property. Once the determination is made that the titled spouse contributed to the appreciation—and that market forces were not the sole cause—then the court determines the extent to which the nontitled spouse contributed to the appreciation. Accordingly, *433the issue of the extent to which a nontitled spouse may share in the appreciation of separate property is reached only after a finding that the appreciation was a result of the efforts of the titled spouse (see also, Rider v Rider, 141 AD2d 1004, 1005).
It is clear that the Court of Appeals in Price was aware that passive assets can change in value without regard to the efforts of either party (see, Shahidi v Shahidi, 129 AD2d 627, 630; McCann v McCann, 142 Misc 2d 1083, 1085; compare, DeMarco v DeMarco, 143 AD2d 328, 331). This is particularly true of real estate, which fluctuates in a market dependent upon market forces. In the absence of improvements to the home or additions which enhance value, the change in valuation is dependent upon market forces over which the parties have no control.
Thus, where the appreciation in value of separate property simply reflected a general upturn in the real estate market, courts have declined to deem the appreciation marital property (see, Smith v Smith, 154 AD2d 365; Mahlab v Mahlab, 143 AD2d 116; Lisetza v Lisetza, 135 AD2d 20; Romano v Romano, 133 AD2d 680; Barnes v Barnes, 106 AD2d 535).
In the recent case of Fitzgibbon v Fitzgibbon (161 AD2d 619), the sole issue was whether the plaintiff husband was entitled to share in the increased value of the marital residence, which concededly was the defendant wife’s separate property. The defendant contended that he had contributed to the property’s appreciation in value by making virtually all of the mortgage payments himself, cosigning on a loan to refurbish and renovate the house, supervising the planning and renovation of the property, supervising the general maintenance of the property, managing the rental of the renovated garage, participating in the zoning process, and by being the sole breadwinner for the family during the marriage. He claimed that the property would not have appreciated without these contributions. The defendant wife’s response was that his contributions were minimal and that the appreciation in value must be deemed separate property since it came about because of market forces. This court held that in order to obtain equitable distribution of the appreciation in value of the marital residence, the plaintiff was required to demonstrate the manner in which his contribution resulted in the increase in value and the amount of the increase which was attributable to his efforts. The plaintiff failed to sustain his burden, and the testimony of the defendant, a real estate professional, indicated that the appreciation in the value of *434the property simply reflected a general upturn in the real estate market (see also, Smith v Smith, supra).
Here, the arguments are similar. The plaintiff says that she contributed in part to mortgage payments and was a homemaker and that she is, therefore, entitled to a distributive share of the appreciated value. Her claim should be rejected. Mortgage payments and utility payments do not, in themselves, increase the value of real property as do renovations or improvements. There is nothing in this case which would indicate that the plaintiff involved herself in property improvements which would have enhanced the value of the property. Nor does her contribution as a working mother enhance the value of the property. Both parties worked to support the family and pay all household expenses, which included mortgage payments, both parties lived in the home, and both parties reared the children, but none of these factors, either alone or cumulatively, had any effect whatsoever on the increased valuation of the defendant’s separate property.
The case of Ryan v Ryan (123 AD2d 679), relied upon by the majority, is distinguishable from this case. In Ryan, the wife was awarded a share of the marital home when it was sold, even though the title to the property had been acquired by the husband before the marriage. However, the court may have been overly influenced by the wife having given the husband the money to make the down payment on the house and the closing of title only 29 days before the wedding. The wife apparently was supposed to attend the closing and title was supposed to be in both names, but because of her job, she was unable to attend and title was put in the husband’s name only. Moreover, the wife apparently helped to make improvements to the property. These factors are not present in the instant case.
The plaintiff’s claim in this case must fail since she has failed to meet either test set forth in Price. Not only did she fail to show that the appreciation in value was due to anything but market forces, but she also failed to establish any causal connection between her contributions to the marital relationship and the appreciation in value of the condominium (see, Shahidi v Shahidi, 129 AD2d 627, 630, supra).
Accordingly, I would find that the appreciation in value of the condominium was the defendant’s separate property.