Court Opinion

ID: 9741900
Source: CourtListenerOpinion
Date Created: 2023-08-26 21:03:56.057455+00
Date Added: 2024-06-11T07:24:27.071126
License: Public Domain

OPINION OF THE COURT
Graffeo, J.
We are being asked in this matrimonial case to determine whether Supreme Court erred by declining to adjust defendant’s child support obligation to account for the distributive award payments he was obligated to pay plaintiff for her share of the future enhanced earnings attributable to his medical license. We conclude that Supreme Court did not err as a matter of law and in particular, under the circumstances of this case, did not abuse its discretion in determining the distributive award or in its application of the Child Support Standards Act (CSSA).
I.
Plaintiff Amy Holterman (wife) and defendant Robert Holterman (husband) were married in 1981. At the time of the parties’ marriage, husband was a third-year student at a medical school in Philadelphia. Wife, who had a Master’s degree in business administration, was employed full time as a program analyst and her income contributed to the support of the household. Husband graduated from medical school in 1983 and obtained his license to practice medicine the following year. The parties then moved to another locale in Pennsylvania where husband began a three-year medical residency program. Shortly thereafter, wife began experiencing significant health problems and was eventually diagnosed with chronic fatigue syndrome and fibromyalgia. The parties agreed that wife would become a homemaker due, in part, to her chronic health problems. Their first child was born in 1985 and a second child was born in 1991.
Husband continued to advance his professional credentials, becoming board-certified in emergency medicine in 1987. From 1986 to 1990 he was employed as an attending staff physician at a hospital. Once husband received his license to practice *6medicine in New York, the family moved to Albany. Since that time, husband has been an emergency room physician at a hospital, earning a salary of $181,837 in 2000.
After 19 years of marriage, wife commenced an action for divorce in September 2000. Husband waived his right to answer the complaint and the parties entered into a stipulation of joint custody of their two children with wife having primary physical custody. Following the bench trial of this action, Supreme Court issued its findings of fact and conclusions of law in April 2002 and a judgment of divorce was entered in October 2002. The court dissolved the marriage based on husband’s constructive abandonment of wife; awarded wife maintenance of $35,000 per year for five years and $20,000 per year thereafter for the remainder of her life; determined that wife was entitled to $214,200 as her equitable share of husband’s enhanced earnings premised on his medical license; ordered husband to pay child support for their two children in the amount of $34,875.65 annually; distributed the marital property, including equally dividing $242,815.39 in retirement and investment accounts; gave wife title and possession of the marital residence and set husband’s half share of the parties’ equity in the marital home at $29,268.48; obligated wife to pay the mortgage, home equity loan payments and taxes on the residence (totaling about $26,500 per year); required husband to maintain certain health and life insurance policies for the benefit of wife and the children; divided equally a tax refund check and a mortgage escrow refund check; ordered husband to reimburse wife for certain expenses pertaining to the children; and directed husband to contribute $20,894 toward wife’s counsel and expert fees.
The Appellate Division affirmed, with one modification affecting husband’s obligation to maintain life insurance coverage.1 This Court granted husband’s application for leave to appeal.
*7II.
On appeal, husband raises several challenges relating to the equitable distribution of the value of his medical license, which require that we address the award in some detail. Supreme Court and the Appellate Division determined that the marital portion of husband’s medical license had a present-day value of $612,000 in accordance with testimony presented by wife’s expert, a certified public accountant.2 Husband did not challenge the methodology employed by the expert or the economic value of the license itself. In fact, he did not present any expert testimony. The court determined that wife was entitled to 35% of the value of husband’s enhanced earning capacity as a licensed physician, which amounted to $214,200. The court then deducted $29,268.48 from that figure, representing the credit due husband for the conveyance of his interest in the marital residence, thereby establishing a net distributive award of $184,931.52 owed to wife. Husband was directed to pay the award in monthly installments over a 15-year period, at six percent interest per annum from the date of commencement of the action, resulting in annual payments of $21,288. Husband contends that Supreme Court abused its discretion by awarding wife 35% of the marital portion of the enhanced earning capacity derived from his medical license and asserts that her share should be reduced to no more than 10%. We disagree.
In recognizing marriage as an economic partnership, the Domestic Relations Law mandates that the equitable distribution of marital assets be based on the circumstances of the particular case and directs the trial court to consider a number of statutory factors listed in Domestic Relations Law § 236. These factors encompass the income and property of each party at the *8time of marriage and at the time of commencement of the divorce action, the duration of the marriage, the age and health of the parties, any maintenance award, and the nontitled spouse’s direct or indirect contributions to the marriage, including “services as a spouse, parent, wage earner and homemaker” (Domestic Relations Law § 236 [B] [5] [d]).
As this Court declared in O’Brien v O’Brien (66 NY2d 576, 588 [1985]), these considerations are particularly relevant when evaluating the parties’ respective contributions to the attainment of a professional license by one spouse.3 In O’Brien, we held that a professional license is marital property subject to equitable distribution. In the 19 years since we adopted the O’Brien rule, we have adhered to the principle that both parties in a matrimonial action are entitled to fundamental fairness in the allocation of marital assets, and that the economic and noneconomic contributions of each spouse are to be taken into account. Trial courts that examine the statutory factors are granted substantial discretion in determining the extent to which the distribution of marital property, including enhanced earnings attributable to a professional license, will be equitable. Absent an abuse of discretion, this Court may not disturb the trial court’s award (see Arvantides v Arvantides, 64 NY2d 1033, 1034 [1985]).
Here, Supreme Court issued a careful, comprehensive decision addressing all relevant factors, including the parties’ 19-year marriage, wife’s employment and monetary contributions during husband’s final two years of medical school, the parties’ mutual decision that wife would forgo her career to take care of the children and home, the gross disparity in the parties’ current and probable future incomes, the fact that husband was 44 years of age and wife was 46 years of age at the time of trial and husband’s good health in contrast to wife’s chronic health difficulties. In light of these considerations, particularly wife’s economic and noneconomic contributions to husband’s acquisition of his medical license and subsequent career, the termination of wife’s career to raise the parties’ two children and maintain the marital household, wife’s absence from the job *9market for more than 17 years, the length of the marriage and wife’s long-term health problems, we cannot conclude that Supreme Court abused its discretion in awarding wife 35% as her marital portion of husband’s enhanced earning capacity as a physician practicing medicine in New York.
III.
Husband next argues that the payment of $21,288 per year—the annual installment payment of wife’s distributive award of her share of enhanced earnings from his medical license—should be deducted from the computation of his income in determining his child support obligation under the CSSA and, concomitantly, that amount should be included as income attributable to wife.4 He claims that the failure of the courts below to perform such reassignment of income results in “double dipping” from the same income stream—i.e., awarding both child support and equitable distribution of his future enhanced earnings from the same income source, his salary as a physician. He therefore claims that the courts below erred as a matter of law in violating the antiduplication principles enunciated in McSparron v McSparron (87 NY2d 275 [1995]) and Grunfeld v Grunfeld (94 NY2d 696 [2000]). We hold that husband’s proposed reallocation formula—or any formula that requires a deduction of a distributive award paid over a period of years from the licensed spouse’s income for purposes of calculating child support—is impermissible under the CSSA.5
The CSSA (see Domestic Relations Law § 240 [1-b]) was enacted in 1989 to establish a uniform method for calculating child support, recognizing that a parent’s “[responsibility for children does not end when a parent is absent from the household” (Governor’s Program Bill Mem, at 1, Bill Jacket, L 1989, ch 567). The CSSA was designed to ensure that children *10“not unfairly bear the economic burden of parental separation” (Sponsor’s Mem, Bill Jacket, at 1, L 1989, ch 567). Its aim is to maintain the children’s marital standard of living after their parents separate: “Children should be protected as much as possible from the overall decline in living standards that results from parents maintaining two households” (id.).
As we explained in Matter of Cassano v Cassano (85 NY2d 649, 652 [1995]), the CSSA provides “a precisely articulated, three-step method for determining child support.” The first step requires the computation of “combined parental income” (Domestic Relations Law § 240 [1-b] [b] [4]; [c] [1]). “The amount of ‘income’ attributed to each parent is derived by adding gross income, as reported on the most recent Federal tax return, and, to the extent not included as gross income, investment income, imputed income and other ‘income received’ by the parent from eight enumerated sources” (Matter of Graby v Graby, 87 NY2d 605, 609-610 [1996], citing Family Ct Act § 413 [1] [b] [5]).6
After computing statutory income, a limited number of deductions are allowable under Domestic Relations Law § 240 (1-b). The CSSA provides for eight categories of deductions from income, which include maintenance payments and Federal Insurance Contributions Act taxes paid (see Domestic Relations Law § 240 [1-b] [b] [5] [vii] [A]-[H]).7 Significantly, the receipt of distributive award payments is not a statutory category of income, nor is the payment of a distributive award a recognized deduction.8
*11The court next multiplies the combined parental income figure, up to a ceiling of $80,000, by a designated percentage based on the number of children to be supported, and then allocates that amount between the parents, applying each parent’s respective portion of the total income to reach the amount of each parent’s support obligation (Domestic Relations Law § 240 [l-b] [b] [3]; [c] [2]). In the final step, where combined parental income exceeds $80,000, “the court shall determine the amount of child support for the amount of the combined parental income in excess of such dollar amount through consideration of the factors set forth in paragraph (f) of [Domestic Relations Law § 240 (l-b)] and/or the child support percentage” (Domestic Relations Law § 240 [l-b] [c] [3]).
In this case, Supreme Court utilized husband’s 2000 gross income of $181,837 and deducted his maintenance obligation and FICA contribution, arriving at a combined parental income of $139,502.60, all of which was attributable to husband. Applying the child support mandated percentage of 25% for two children to this sum, the court determined that husband must pay $34,875.65 annually in child support.
Husband asserts that his annual $21,288 installment payment of wife’s distributive award should also be deducted from his income and included as income attributed to his wife for purposes of the CSSA computations. Although wife’s expert opined that a reassignment of income adjustment should be undertaken to avoid double dipping of husband’s income stream, the CSSA does not provide for the deduction of distributive awards from income, whether based on enhanced earning capacity due to a professional license or otherwise. Nor does the CSSA authorize the inclusion of a distributive award as income to the parent receiving the award. This lack of inclusion in either the list of permissible statutory deductions or the definition of income is understandable because distributive awards “reflect, not income, but a property distribution” of the marital assets (Scheinkman, New York Law of Domestic Relations § 14:36, 2003 Pocket Part, at 131 [11 West’s NY Prac Series 1996]). Indeed, the Domestic Relations Law, which defines a distributive award as “payments provided ... in lieu of or to supplement, facilitate or effectuate the division or distribution of property,” makes clear that distributive awards should not be treated *12as income for tax purposes (Domestic Relations Law § 236 [B] [1] [b] [“Distributive awards shall not include payments which are treated as ordinary income to the recipient under the provisions of the United States Internal Revenue Code”]). Had the Legislature intended to make distributive awards deductible from one parent’s income and includable in the other’s, it could easily have so provided. Simply put, it appears that the Legislature did not wish to have a child’s lifestyle and support altered based on a distributive award. In sum, husband’s proposed methodology conflicts with the plain language of the CSSA.
Even if husband could overcome the statutory construction hurdle, his proposed methodology would be unworkable in many instances because it fails to address situations where a licensed parent satisfies a distributive award obligation by making a lump-sum cash payment or transfers a noncash asset (such as interest in real property) rather than making periodic cash payments over a number of years. For instance, in this case, if a lump-sum distributive payment had been ordered, under husband’s methodology the payment would have been deducted from his income and applied to wife, offsetting all of husband’s earnings or other income for that year and shifting the entire child support burden to wife, who is not employed. Wife then would necessarily have to meet the support obligation from the proceeds of her distributive award. Likewise, if a spouse satisfies a distributive award by transferring his or her title and equity in real property to the other spouse, the value of the onetime transfer would skew the transferor’s income for CSSA purposes under husband’s proposal. The result in these scenarios would clearly be inequitable to the recipient spouse and the children. Under husband’s reassignment theory, the manner in which the distributive award is paid out would dictate whether or not it requires an adjustment in income allocation for purposes of child support. We see no reason to treat a distributive award paid in periodic installments differently than an award satisfied by the transfer of a noncash asset or lump-sum payment. Indeed, in this case the award was partially paid by transfer of husband’s interest in the marital residence to wife. However a distributive award is paid—whether in installments derived from the license holder’s income stream, by lump-sum payment or by other asset transfer—the CSSA does not permit the award to be viewed as income for the purpose of allocating combined parental income.
*13McSparron and Grunfeld do not dictate a contrary result. In McSparron, this Court warned that “care must be taken to ensure that the monetary value assigned to the license does not overlap with the value assigned to other marital assets that are derived from the license such as the licensed spouse’s professional practice,” and cautioned the lower courts to “be meticulous in guarding against duplication in the form of maintenance awards that are premised on earnings derived from professional licenses” (87 NY2d at 286 [emphasis added]).
In Grunfeld, this Court reaffirmed the McSparron prohibition against duplicative awards and noted that to avoid “double counting,” courts must reduce either the income available to make maintenance payments or the marital assets available for distribution, or some combination of the two. Specifically, we held 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, 94 NY2d at 705 [emphasis added]).9
Notably, neither McSparron nor Grunfeld discussed double counting vis-a-vis child support. Rather, in each case we held that a court may not award maintenance and the distribution of enhanced earnings attributable to a professional license from the same income stream. Unlike maintenance, child support is governed by a precise formula in the CSSA, which simply does not authorize a court to deduct a distributive award from the titled spouse’s income.
Husband also argues that Supreme Court abused its discretion by refusing to adjust his child support obligation upon its consideration of the distributive award of his medical license as a “paragraph (f)” factor with respect to parental income in excess of $80,000 (see Domestic Relations Law § 240 [1-b] [f]). In a related argument, husband claims that Supreme Court abused its discretion by failing to disregard the statutory child support formula as “unjust or inappropriate” in favor of a reduced child support award based on the distributive award.
As earlier mentioned, step three of the CSSA’s formula requires the trial court to consider the “paragraph (f)” factors *14for income in excess of $80,000. The “paragraph (f)” factors include “[t]he financial resources of the custodial and noncustodial parent,” the child’s “special needs and aptitudes,” “[t]he standard of living the child would have enjoyed” if the marriage had not ended, any tax consequences, a determination that one parent’s gross income “is substantially less than the other parent’s gross income,” and “[a]ny other factors the court determines are relevant in each case” (id.).
Moreover, after completing the three-step formula, the trial court may adjust the amount calculated only if, after examining the “paragraph (f)” factors, it finds that the noncustodial parent’s share is “unjust or inappropriate” (Domestic Relations Law § 240 [1-b] [a], [f]). Where the trial court concludes the amount calculated to be “unjust or inappropriate,” it must order the noncustodial parent to pay an amount it deems “just and appropriate” and is required to set forth in its decision the “paragraph (f)” factors it considered (Domestic Relations Law § 240 [1-b] [g]).
We agree with husband that a distributive award to be paid by one parent to the other pertains to the financial resources of the parties and therefore is an appropriate paragraph (f) factor that the trial court may consider when awarding child support. However, on this record, we cannot say that Supreme Court abused its discretion by failing to modify husband’s child support obligation based on his distributive award obligation.
Here, in carefully determining whether to apply the child support percentage of 25% to all income in excess of $80,000, Supreme Court expressly indicated that it considered the distributive award and maintenance obligations, the substantial disparity in gross income between the parties, as well as the upper middle-class lifestyle the children would have enjoyed had the parties not divorced. The family had taken frequent vacations, the children received allowances and engaged in extracurricular pursuits, and the daughter, who is musically talented, had taken private music lessons and had traveled with the Empire State Youth Orchestra. Under these circumstances, we cannot say Supreme Court abused its discretion by applying the statutory percentage of 25% to husband’s income in excess of $80,000.
Nor did Supreme Court abuse its discretion in failing to deem husband’s support obligation calculated under the three-step statutory formula “unjust or inappropriate.” Although *15Supreme Court did not—and was not required to—explicitly state that it found the statutory formula just and appropriate, it necessarily found the formula to be so, by considering the effect of the distributive award in its decision to apply the full 25% to husband’s income in excess of $80,000. Based on the aforementioned factors, including the preservation, to the extent possible, of the children’s standard of living, Supreme Court appropriately applied the statutory formula.
We are not unmindful of the financial burdens husband currently faces. We note, however, that husband’s child support obligation will substantially decrease when the parties’ older child turns 21 in April 2006 and will cease when the younger child reaches 21 in April 2012. Moreover, husband’s maintenance obligation will decrease from $35,000 to $20,000 in 2007. Thus, although husband is now paying wife approximately $91,000 a year under Supreme Court’s order, in 2006 his payments to wife will be reduced to about $80,000, and in 2007, those payments will be further diminished to approximately $67,000. When husband’s child support obligation ends, his annual payments to wife will be about $41,000, presuming she does not remarry, which would terminate her receipt of maintenance.
Moreover, although Supreme Court did not express a final computation representing husband’s annual financial obligation to wife and his children, the court certainly was aware of the extent of its detailed findings of fact and conclusions of law underlying the judgment of divorce. In the exercise of their fact-finding authority, if the trial court or Appellate Division had concluded that husband faced an unjust financial burden based on the overall economic outcome in this case, either court could have reduced husband’s maintenance obligation or wife’s equitable share of husband’s future enhanced earnings premised on his medical license. Based on the factual determinations in this case, however, it was not an error of law for the courts to decline to do so.
IV
Husband’s remaining contentions regarding attorney and expert fees are similarly without merit. Where, as here, the Appellate Division’s affirmance of an award of counsel fees and expert fees “cannot be characterized as an abuse of discretion as a matter of law, the issue is beyond our review” (O’Brien, 66 NY2d at 590).
*16Accordingly, the order of the Appellate Division should be affirmed, with costs.

. The Appellate Division modified husband’s obligation to maintain life insurance policies for the benefit of wife and the children by requiring him to keep an existing $500,000 policy, with wife as the primary beneficiary, until his obligations to pay child support, maintenance and the distributive award were satisfied, or until the expiration of the 20-year term life insurance contract, whichever first occurs. He was also directed to maintain $300,000 in life insurance coverage provided through his employer until the termination of his three payment obligations or upon his retirement from the practice of medicine, whichever occurs sooner.

. Wife’s expert testified that he arrived at this valuation by comparing the average income of a college graduate with husband’s actual income for a period of time from 2000 until 2022, when husband would reach age 65. He computed husband’s baseline earnings (his earning capacity without a medical license) at $69,000 and husband’s topline earnings (his actual earnings, measured as of the commencement date by averaging his 1999 and 2000 incomes) at $183,000. After considering federal and state income taxes, Federal Insurance Contributions Act (FICA) taxes, a real rate of 3.4% (representing the relationship between growth and discount rates) and “LPE” factors (used to calculate the risks and events that could interrupt, shorten, or lengthen an individual’s work life expectancy), the expert capitalized the difference between the adjusted baseline and topline earnings and discounted the amount to a present value of $874,000. Because husband had completed 2.1 out of 7 years of medical training before the marriage, a coverture factor of 70% (4.9/7) was applied to determine the final present value of $612,000.

. Husband did not seek to overturn the precedent established in O’Brien v O’Brien (66 NY2d 576 [1985]) in either Supreme Court or the Appellate Division. To the extent he now suggests a modification or the elimination of our holding that future enhanced earnings attributable to a professional license are subject to equitable distribution, that argument is unpreserved and therefore not properly before us for review.

. Husband cites Goodman v Goodman (195 Misc 2d 204 [Sup Ct, Nassau County 2003]) as an example of his proposed treatment of enhanced earnings awards in child support computations. Husband also observes that wife’s expert testified that such a reassignment formula should be applied in this case. For the reasons expressed in this opinion, we decline to do so.

. The dissent equates a professional license to income-producing property, such as an apartment building or stock. But where a professional license is at issue, “[t]he asset is totally indistinguishable and has no existence separate from the projected professional earnings from which it is derived” (Grunfeld v Grunfeld, 94 NY2d 696, 704 [2000]). Hence, a trial court must convert the enhanced earnings attributable to the license into a monetary marital asset to achieve equitable distribution. In contrast, a court can transfer title to real or personal property in order to equitably distribute the asset.

. Family Court Act § 413 parallels Domestic Relations Law § 240 (1-b). Both statutes were enacted as part of the CSSA (see L 1989, ch 567, §§ 7, 8). The eight enumerated sources of income received are workers’ compensation, disability benefits, unemployment insurance benefits, Social Security benefits, veterans benefits, pensions and retirement benefits, fellowships and stipends, and annuity payments (see Domestic Relations Law § 240 [1-b] [b] [5] [iii] [A]-[H]).

. Specifically, a spouse may deduct, with certain limitations and conditions: unreimbursed employee business expenses, alimony or maintenance paid to a nonparty spouse, alimony or maintenance paid to the spouse that is a party to the instant case, child support paid on behalf of any child not subject to the instant case, public assistance, supplemental security income, New York City or Yonkers income or earnings taxes and FICA taxes (see Domestic Relations Law § 240 [1-b] [b] [5] [vii] [A]-[H]).

. A parent may have other financial obligations that, from a practical standpoint, reduce the parent’s expendable income, but which are not deductible under the CSSA. For example, the Legislature decided not to allow as a *11deduction against a parent’s income a court-ordered obligation to make monthly credit card payments pertaining to expenses incurred by the other spouse.

. To the extent husband suggests Supreme Court engaged in double dipping by awarding maintenance and the equitable distribution of the medical license from the same income stream, such contention is meritless. Supreme Court properly awarded maintenance based solely on husband’s remaining income after subtraction of the amount attributable to the marital portion of the medical license.