Court Opinion

ID: 2911966
Source: CourtListenerOpinion
Date Created: 2015-09-10 14:09:14.872187+00
Date Added: 2024-06-11T15:21:19.877323
License: Public Domain

State of New York
                   Supreme Court, Appellate Division
                      Third Judicial Department
Decided and Entered: September 10, 2015                   518826
________________________________

PAUL J. MULA,
                    Appellant-
                    Respondent,
     v                                      MEMORANDUM AND ORDER

JO-ANNE MULA,
                    Respondent-
                    Appellant.
________________________________

Calendar Date:   June 1, 2015

Before:   Lahtinen, J.P., Lynch, Devine and Clark, JJ.

                             __________

      Blatchly & Simonson, PC, New Paltz (Bruce D. Blatchly of
counsel), for appellant-respondent.

      Larkin, Ingrassia & Brown, LLP, Newburgh (Azra J. Khan of
counsel), for respondent-appellant.

                             __________

Clark, J.

      Cross appeal from a judgment of the Supreme Court (McGinty,
J.), entered February 12, 2014 in Ulster County, ordering, among
other things, equitable distribution of the parties' marital
property, upon a decision of the court.

      Plaintiff (hereinafter the husband) and defendant
(hereinafter the wife) were married in November 1968. The
husband is a certified public accountant (hereinafter CPA),
earning his license in 1981, and the sole proprietor of an
accounting practice that he has owned since 1997. During the
course of the marriage, the wife was primarily involved with the
upkeep of the parties' home and raising their three children, the
                              -2-                518826

first of which was born in 1973,1 while the husband was the
primary wage earner. Over the ensuing 42 years, the parties
acquired a number of assets including, in addition to the marital
residence, a home on Doris Lane in Lake Katrine, Ulster County, a
home on Newkirk Avenue in the City of Kingston, Ulster County, an
apartment in Tudor City, New York City, and two condominiums in
St. Croix.

      In January 2011, the husband commenced this divorce action
asserting an irretrievable breakdown of the parties' marriage.
The wife joined issue with a counterclaim alleging abandonment,
cruel and inhuman treatment and irretrievable breakdown of the
marriage, to which the husband replied. Subsequently, the
parties agreed that they would each withdraw their answers to the
complaint/counterclaim and would obtain a mutual divorce upon the
ground of an irretrievable breakdown. A trial on the remaining
issues ensued in May 2012, following which Supreme Court, among
other things, granted a divorce, ordered equitable distribution
of the parties' various assets and liabilities, awarded the wife
durational spousal support and declined to award either party
counsel fees. The husband appeals and the wife cross-appeals.

      Initially, the findings of fact and conclusions of law,
incorporated by reference into the judgment of divorce, read as
follows: "the [wife] consents to the [husband] retaining his CPA
practice and enhanced earning capacity, in exchange for [the
marital residence and another parcel]." In accordance with this,
the husband was awarded $255,000, representing the full value of
the CPA practice, and $39,000, representing the full value of his
enhanced earnings. Thus, per the plain language of the order,
the husband was awarded 100% of both of these assets.    However,
on appeal, both of the parties agree that the manner in which
Supreme Court allocated marital assets resulted in the wife
effectively being awarded 50% of the value of the husband's
professional practice and license,2 a distributive award that the

    1
        Child support and custody are not at issue.
    2
        In distributing the marital property, Supreme Court
awarded the wife assets that are comparable in value to the
                                 -3-             518826

husband contends was in error.

      When distributing marital property, the trial court has
"broad discretion" and is accorded "substantial flexibility in
fashioning an appropriate decree based on what it views to be
fair and equitable under the circumstances" (Mahoney-Buntzman v
Buntzman, 12 NY3d 415, 420 [2009]; see Vertucci v Vertucci, 103
AD3d 999, 1001 [2013]). The record here demonstrates that this
was a long-term marriage of over 40 years and that the wife
provided support for the husband during much of his education.
Among other things, she undertook primary responsibility for the
home and raised their three children while the husband pursued
his career. Moreover, the wife otherwise contributed to the
husband's establishment of his professional practice. Under such
circumstances, we are unpersuaded that Supreme Court's award
regarding these assets was an abuse of discretion (see Litman v
Litman, 280 AD2d 520, 522 [2001], lv denied 97 NY2d 613 [2002];
White v White, 204 AD2d 825, 827 [1994], lv dismissed 84 NY2d 977
[1994]).

      The husband also contends that Supreme Court erred in
calculating maintenance by failing to reduce the available income
to reflect the distributive award of his professional practice
and license. At issue is the rule against double counting, which
provides that, "[o]nce a court converts a specific stream of
income into an asset, that income may no longer be calculated
into the maintenance formula and payout" (Grunfeld v Grunfeld, 94
NY2d 696, 705 [2005]). The husband's solely owned accounting
firm is a service business for purposes of this rule (see Keane v
Keane, 8 NY3d 115, 122 [2006]). Without further elaboration,
Supreme Court utilized an annual income of $100,000 to calculate
the maintenance award to be paid to the wife. By comparison, the
fair market value of the husband's business was calculated using
his reported annual income from 2007 through 2010, ranging from
about $98,000 to $109,000. As such, it is evident that the court
did not make the necessary adjustment to account for the
distributive award of the business. Insofar as the license is

combined value of the husband's enhanced earnings and
professional practice.
                              -4-                518826

concerned, however, the record shows that the expert who prepared
the joint valuation allocated compensation as between profits and
payments for services rendered to avoid double counting and no
adjustment is necessary. Given that the record is sufficiently
developed, and in the interest of judicial economy, we will make
the adjustment necessary to account for the distribution of the
business (see Smith v Smith, 8 AD3d 728, 731 [2004]). Factoring
in the aforementioned adjustment and considering the equitable
distribution award as modified herein, we conclude that $50,000
should be utilized as the income available for maintenance
purposes and reduce the maintenance award to $1,000 a month.
However, inasmuch as Supreme Court properly cited several
relevant statutory factors and gave a reasoned analysis, it did
not abuse its discretion in awarding durational maintenance (see
Domestic Relations Law § 236 [B] [6] [a] [1]-[20]; Curley v
Curley, 125 AD3d 1227, 1228 [2015]; Alecca v Alecca, 111 AD3d
1127, 1129-1130 [2013]; Roberto v Roberto, 90 AD3d 1373, 1376
[2011]).

      Next, "while the method of equitable distribution of
marital property is properly a matter within the trial court's
discretion, the initial determination of whether a particular
asset is marital or separate property is a question of law"
(DeJesus v DeJesus, 90 NY2d 643, 647 [1997]; accord Whitaker v
Case, 122 AD3d 1015, 1016 [2014]). Although the record before us
supports Supreme Court's determination that the wife's investment
accounts – inherited from her father upon his death and never
transferred into a joint account – remain her separate property
(see Domestic Relations Law § 236 [B] [1] [d] [1]; Whitaker v
Case, 122 AD3d at 1016-1017), we do find error in the court's
classification of certain real property assets. Specifically, we
agree with the wife that Supreme Court erred in determining that
the Tudor City apartment and one of the St. Croix condominiums
were marital property and not her separate property. The Doris
Lane home, however, was properly classified as marital property.

      "[P]roperty acquired during the marriage is presumed to be
marital property, and the party seeking to establish that a
particular item is indeed separate property bears the burden of
proof in this regard" (Seidman v Seidman, 226 AD2d 1011, 1012
[1996]). Because the properties currently being discussed were
                              -5-                518826

all acquired during the marriage, they are presumed to be marital
in nature, and our inquiry relates solely to whether the wife met
her shifted burden of demonstrating that such properties were
separately owned by her (see Cease v Cease, 72 AD3d 1450, 1451
[2010]). To this end, "evidence that property obtained during a
marriage was a gift to only one spouse, if unrebutted, can
satisfy the donee's burden to prove that it is separate property"
(Keil v Keil, 85 AD3d 1233, 1236 [2011]; see Saia v Saia, 91 AD3d
1110, 1110 [2012]). However, evidence that property has been
conveyed to only one spouse is not necessarily dispositive as to
whether the subject property is marital or separate (see Cease v
Cease, 72 AD3d at 1451).

      Addressing the home on Doris Lane first, the wife testified
that, in 1978, her father – who jointly owned the property with
her brother – allowed the parties to live in the home in exchange
for a small monthly fee that, apparently, was used to pay the
associated property taxes. The wife's father thereafter conveyed
the property solely to her in 1997 and, consequently, only her
name was on the deed.3 The husband, on the other hand, testified
that the $250 fee that the parties paid to the wife's father each
month was in an effort to purchase the property – an effort that
was successful after approximately 10 years – and that all taxes
and utilities were paid from marital income. The husband further
explained that the home was deeded solely to the wife because, by
that point in time, he had become the sole owner of the
accounting firm and such conveyance operated to reduce personal
risk should he be sued in his professional capacity. According
due deference to Supreme Court's determination, which credited
the husband's testimony and found that the economic and
noneconomic contributions by him weighed in favor of deeming this
parcel a marital asset, we find that the wife was unable to meet
her shifted burden to rebut the marital property presumption.
Thus, the Doris Lane home was properly characterized as marital

    3
        The parties resided together in the Doris Lane home
until approximately 2000.
                              -6-                518826

property.4 However, in light of the discussion set forth above,
we nonetheless find no error in Supreme Court's determination to
award 100% of the agreed-upon value of the Doris Lane property to
the wife.

      Next, with respect to the ownership of the Tudor City
apartment, it was purchased in July 1997 with the acquisition of
certain stock in the wife's name, paid for entirely with funds
from one of her investment accounts. Because property acquired
in exchange for separate property, even when acquired during the
marriage, is indeed separate property (see Owens v Owens, 107
AD3d 1171, 1172-1173 [2013]; Chernoff v Chernoff, 31 AD3d 900,
902-903 [2006]), we find that the wife sufficiently met her
burden of overcoming the marital property presumption, and the
Tudor City apartment should have been declared her separate
property. Supreme Court erred in finding otherwise. Likewise,
documentary and testimonial evidence make it clear that one of
the St. Croix condominiums, unit J-10 specifically, was purchased
solely using the wife's separate property as collateral for a
loan and is deeded only to her. Therefore, this asset also
constitutes the wife's separate property.5 Accordingly, the
Tudor City apartment and unit J-10 need not be sold as previously
directed by Supreme Court.

      Keeping in mind that there is no requirement that each item
of marital property be distributed equally and the trial court
has discretion in fashioning a division of property (see Bellizzi
v Bellizzi, 107 AD3d 1361, 1362 [2013]), the parties should

    4
        It should be noted, however, that, because the Doris
Lane home is marital property, it was unnecessary for the husband
to provide evidence of an appreciation in the value of the home
due to his efforts before becoming entitled to an equitable share
in its value (see generally Ceravolo v DeSantis, 125 AD3d 113,
116 [2015]).
    5
        The same cannot be said for unit N-3, which was
purchased with the use of marital property as collateral.   Thus,
that parcel was properly deemed marital property.
                              -7-                  518826

retain their IRA accounts, even   despite the wife's somewhat
larger account (see Musacchio v   Musacchio, 107 AD3d 1326, 1330
[2013]). While it is true that    Supreme Court incorrectly stated
the value of the wife's account   – deeming its value to be $23,000
instead of $56,365.91 – we find   this error to be harmless.

      Finally, in light of the pertinent statutory factors, we
discern no reason to disturb Supreme Court's determination to
deny the wife's request for counsel fees (see e.g. Soles v Soles,
41 AD3d 904, 908 [2007]). The parties' remaining contentions
have been considered and have been found to be without merit.

     Lahtinen, J.P., Lynch and Devine, JJ., concur.

      ORDERED that the judgment is modified, on the law, without
costs, by reversing so much thereof as (1) awarded defendant
maintenance in the amount of $1,500 per month, (2) deemed the
Tudor City apartment and the St. Croix condominium, unit J-10, to
be marital property, and (3) ordered said properties to be sold;
defendant is awarded maintenance in the amount of $1,000 per
month and the Tudor City apartment and said St. Croix condominium
are classified as defendant's separate property; and, as so
modified, affirmed.

                             ENTER:

                             Robert D. Mayberger
                             Clerk of the Court