Court Opinion

ID: 2750744
Source: CourtListenerOpinion
Date Created: 2014-11-13 15:05:54.551819+00
Date Added: 2024-06-11T08:00:07.738359
License: Public Domain

State of New York
                     Supreme Court, Appellate Division
                        Third Judicial Department
Decided and Entered: November 13, 2014                     516889
________________________________

BRIAN K. WHITAKER,
                      Appellant-
                      Respondent,
     v                                        MEMORANDUM AND ORDER

CAROL L. CASE,
                    Respondent-
                    Appellant.
________________________________

Calendar Date:   September 5, 2014

Before:   Stein, J.P., McCarthy, Egan Jr., Lynch and Clark, JJ.

                               __________

     Lowell R. Siegel, Altamont, for appellant-respondent.

     Cynthia Feathers, Glens Falls, for respondent-appellant.

     Alexandra Verrigni, Rexford, attorney for the children

                               __________

Lynch, J.

      Cross appeals from a judgment of the Supreme Court (Powers,
J.), entered September 17, 2013 in Schenectady County, ordering,
among other things, equitable distribution of the parties'
marital property, upon a decision of the court.

      The parties were married in September 1994 and have a
daughter (born in 1995) and a son (born in 1998). Shortly after
defendant (hereinafter the wife) left the marital residence in
April 2008, plaintiff (hereinafter the husband) commenced this
divorce action. In the ensuing litigation, Supreme Court
initially awarded the parties joint legal custody of the
children, with the husband maintaining primary physical custody.
                              -2-                516889

The court also ordered the children and the wife to engage in
therapeutic counseling, directing both parties to cooperate in
the process. Following an extended bench trial that commenced in
August 2010 and concluded in April 2011, Supreme Court issued an
order in September 2012 which, as pertinent here, granted the
parties a divorce on mutual grounds of cruel and inhuman
treatment, classified and ordered the equitable distribution of
the parties' marital property, granted the husband sole legal and
physical custody of the children without any award of visitation
to the wife, retroactively suspended the wife's obligation to pay
child support, directed that certain child support payments be
returned to the wife, and directed the husband to pay the wife
limited costs. A judgment of divorce was entered in September
2013 and both parties have appealed.1

      The wife maintains that Supreme Court erred in awarding the
husband two bank accounts he opened jointly, one with his
daughter and the other with his son, both in the principal sum of
$100,000. "[W]hile 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]; see Owens v Owens,
107 AD3d 1171, 1173 [2013]; Armstrong v Armstrong, 72 AD3d 1409,
1415 [2010]). Supreme Court determined that the husband funded
each account, at least in part, with $187,000 in funds received
and/or inherited from his aunt. The bank records, however, do
not sustain the court's findings as to the daughter's account.
The parties' joint SEFCU checking account statements show that
$100,000 was withdrawn on December 21, 2005 by transfer number
1930. Notably, the husband acknowledged this account was used as
the parties' primary checking account. That same day, $100,000
was deposited into a certificate of deposit in the name of the

    1
        Although the husband only appealed from the September
2012 order, rather than the judgment entered in September 2013,
since the order is not materially different from the judgment, we
deem the appeal to have been taken from the judgment (see CPLR
5520 [c]; Bukowski v Clarkson Univ., 86 AD3d 736, 737 n [2011],
affd 19 NY3d 353 [2012]).
                               -3-                516889

husband and his daughter by transfer number 1930. This match
verifies that marital funds were utilized to fund the joint
father/daughter account. Accordingly, we find that the wife's
distributive share should be increased by $50,000.2

      As for the joint account that the husband opened with his
son, the SEFCU statements show that, on December 21, 2005, the
husband withdrew $100,000 from an account titled in his name "as
settlor" by transfer number 1550. That same day, by transfer
number 1550, $100,000 was placed in a certificate of deposit in
the husband's name, jointly with his son. This match identifies
the settlor account as the source of funds for the joint account.
Separate property includes funds received by gift or inheritance
(see Domestic Relations Law § 236 [B] [1] [d] [1]). The husband
testified that he funded the settlor account entirely with cash
received and inherited from his aunt, which he initially stored
in a security box at home. Notably, the wife does not dispute
the fact that the husband placed funds received from his aunt in
a security box, but maintains that since she had a key, the funds
were transformed into marital property. This contention is not
convincing. On the record presented, we decline to disturb
Supreme Court's classification of this joint account as the
husband's separate property.3 The record also supports Supreme
Court's classification of various savings bonds as the husband's
separate property, purchased with funds received from his aunt.

      Next, the wife contends that Supreme Court erred in
classifying as marital property a $100,000 payment that she
received in 2003 after settling an employment discrimination
claim. Compensation received for personal injuries constitutes
separate property for purposes of equitable distribution (see

     2
        On November 21, 2008, the $100,000 was transferred into a
different joint account in the name of the husband and the
daughter from which a check in the amount of $25,000 was paid to
the husband's former attorney and an additional $5,000 was
withdrawn.
     3
        This account was closed on October 5, 2009 with a check
in the amount of $100,025.25 issued to the husband.
                              -4-                516889

Domestic Relations Law § 236 [B] [1] [d] [2]). By its terms, the
settlement agreement resolved the wife's claim of employment
discrimination without an admission of liability, specified that
no damages were being paid for any prior or future wage loss
claim and provided for the payment of her counsel fees. All
things being equal, this fund would constitute the wife's
separate property. The record shows, however, that after
initially depositing the proceeds into an individual account on
July 30, 2003, the wife created a joint account with the husband
on August 18, 2003. Thereafter, the husband withdrew the accrued
interest on the account. Although the wife testified that the
husband threatened to harm her unless she added his name to the
account, Supreme Court discredited this explanation and found
that she transmuted the funds into marital property through the
joint account. We defer to the court's credibility assessment.
The transfer of separate property, as here, into a joint bank
account raises a presumption that the funds are marital (see
Schwalb v Schwalb, 50 AD3d 1206, 1209 [2008]; Judson v Judson,
255 AD2d 656, 657 [1998]).

      The analysis, however, must proceed further given the
separate property source and the use of this account. With
limited exception, the principal in the account remained intact
until 2008 when, with Supreme Court's approval, the wife utilized
the $100,000 balance to construct a home on a 6.4-acre lot on
Pryne Road in the Town of Glen, Montgomery County. Up to that
point, the husband routinely withdrew the accrued interest to
maintain the $100,000 balance. As an exception, the SEFCU
account statements support the wife's contention that the Pryne
Road lot was purchased in 2004 with $13,000 in funds taken from
the account. An adjacent lot was also purchased, which remains
vacant. The wife explained that she utilized her workers'
compensation disability payments, which arose out of a 1996
automobile accident, to replenish the balance back to $100,000.
On this record, it is evident that the account was funded
entirely with the wife's separate property.

      Since the two lots were purchased during the marriage, they
are presumed to be marital property (see Domestic Relations Law §
236 [B] [1] [c]; Halse v Halse, 93 AD3d 1003, 1005 n 1 [2012]).
Supreme Court did not abuse its discretion in rejecting the
                              -5-                516889

parties' respective claims that separate property was utilized to
purchase the vacant lot. We find that the court properly treated
the entire property as marital property, but erred in not
recognizing a credit in the wife's favor. Notwithstanding the
fact that the settlement funds were placed in a joint account,
those funds were not commingled with other marital assets. To
the extent that principal withdrawals were made, the wife
replenished the principal balance with her own separate property.
Given this content, we find that the wife should have received a
$100,000 credit for the purchase of the Pryne Road lot and the
construction of the home (see Chernoff v Chernoff, 31 AD3d 900,
903 [2006]; Milnarik v Milnarik, 23 AD3d 960, 962-963 [2005];
Zanger v Zanger, 1 AD3d 865 [2003]; Judson v Judson, 255 AD2d at
657; compare Campfield v Campfield, 95 AD3d 1429, 1430 [2012]).
Since Supreme Court awarded the husband $69,000 based on a
cumulative value of $138,000 for the land and residence, we
reduce the award to him to $19,000. While we recognize that the
wife also secured a $20,000 loan from SEFCU and another $8,000
from relatives to complete the construction, Supreme Court duly
noted that these were postcommencement loans that the court did
not authorize.

      For his part, the husband challenges Supreme Court's
calculation of the award to the wife of an equitable share of the
parties' property located at Rynex Corners Road in
Pattersonville, Schenectady County. The parties stipulated that
this was marital property, valued at $186,000. According the
wife a $25,000 separate property credit, the court awarded the
property to the husband, with a corresponding distributive award
of $118,000 to the wife. Essentially, the husband maintains that
the court erred in calculating the wife's share by not
subtracting the credit from the total value before dividing the
remainder in half. We agree, for the credit should be applied
against the value of the marital asset acquired with the separate
property funds (see Judson v Judson, 255 AD2d at 657). Utilizing
this formula, we reduce the wife's distributive award to
$105,500.

      The husband also maintains that Supreme Court erred in
awarding the wife a 50% equitable share of the Altamont Avenue
property located in the City of Schenectady, Schenectady County.
                              -6-                516889

Since the husband acquired the property in 2003, it initially
qualified as his separate property (see Domestic Relations Law
§ 236 [B] [1] [d] [1]; Keil v Keil, 85 AD3d 1233, 1235 [2011]).
He did so, however, through a $45,000 mortgage and a $10,000 loan
from his parents. The wife testified that she was added to the
mortgage "as soon as [she] moved in," which was prior to the
marriage. Supreme Court credited her testimony that both the
mortgage and the parents' loan were paid off with marital funds,
as well as funds that the wife received from a workers'
compensation claim, and rejected the husband's contention that
the mortgage was satisfied with funds from his aunt. In
deference to the court's credibility determination, we discern no
abuse of discretion in its classification of this property as a
marital asset (see Fields v Fields, 15 NY3d 158, 162-163 [2010];
Lurie v Lurie, 94 AD3d 1376, 1378 [2012]).

      Given the absence of proof, Supreme Court aptly declined to
award either party an interest in the other's pension interest.
That being said, the court duly awarded the husband a Majauskas
share of the wife's federal Thrift Savings Plan.

      We turn next to Supreme Court's directive retroactively
suspending the wife's child support obligation and refunding
certain child support made, challenged by both the husband and
the attorney for the children.4 A noncustodial parent's duty to
support his or her children until the age of 21 (see Family Ct
Act § 413 [1] [a]) may be suspended where he or she establishes
that the custodial parent "wrongfully interfered with or withheld
visitation" (Matter of Luke v Luke, 90 AD3d 1179, 1182 [2011];
see Domestic Relations Law § 241; Usack v Usack, 17 AD3d 736,
737-738 [2005]). Here, Supreme Court's decision describes a
household rife with animosity and overtones of domestic violence.
Indeed, the protracted hostility between the parties led the
court to grant a mutual divorce pursuant to Domestic Relations
Law § 170 (1) because "both [were] batterers and BOTH [were]
victims." After one particularly abusive event, the wife left

    4
        Subsequent to the filing of this appeal, the suspension
of the wife's child support payments was lifted by order entered
April 24, 2014.
                              -7-                516889

the household and the court ordered her and the children to
engage in therapeutic visitation, with the husband's assistance.
Regrettably, these sessions failed and were discontinued in March
2010, and the children refused further contact with the wife. In
our view, while the record shows that the wife's behavior was not
above reproach, it also supports the court's finding that the
husband behaved badly in both his demeanor and his efforts to
promote therapeutic counseling. Notably, for example, the
initial therapeutic counselor asserted that he undermined the
therapeutic process, and the court-appointed psychologist went
even further, describing the husband as a "parent alienator" who
"brainwashed" the children against the wife. Accordingly, we
find a reasoned basis in this record for Supreme Court's
determination to suspend the wife's child support obligations
pending the husband's demonstration of a good faith effort to
assist in the therapeutic process undoubtedly needed to reunite
the wife with the children. Further, there is no indication that
this remedy presented any risk to the children becoming public
charges (see Usack v Usack, 17 AD3d at 740).

      Upon its finding of interference, Supreme Court was
authorized to suspend child support payments (see Domestic
Relations Law § 241; Alan D. Sheinkman, Practice Commentaries,
McKinney's Cons Laws of NY, Book 14, Domestic Relations Law § 241
at 22-23). Here, during the pendency of her application to
suspend her child support obligation, the wife paid child support
directly to the husband from November 2009 through April 22,
2011. Thereafter, pursuant to an order entered May 5, 2011, the
wife paid child support to the support collection unit to be held
pending resolution of her interference claim. Under the
circumstances presented, we perceive no abuse of discretion in
the court's determination to permit the wife's child support
payments to be held in escrow during the pendency of the issue
(see Matter of Lew v Sobel, 91 AD3d 648, 648 [2012]). Similarly,
we find that, under the circumstances, the court properly
suspended her child support obligation retroactively, but only to
the date the escrow fund was established (compare Matter of Luke
v Luke, 90 AD3d at 1182; Matter of Alexander v Alexander, 129
AD2d 882, 884 [1987]) and directed the return of the escrowed
monies to her. In contrast, we find that Supreme Court
improperly adjusted the distributive award payable to the wife to
                              -8-                516889

reimburse her for the child support payments that she actually
made to the husband for the benefit of the children during the
pendency of her application. In our view, this adjustment
violated the "strong public policy against restitution or
recoupment of support overpayments" (Johnson v Chapin, 12 NY3d
461, 466 [2009] [internal quotation marks and citation omitted];
see Katz v Katz, 55 AD3d 680, 683 [2008]). We see no reason to
depart from that policy in this case.

      Finally, given the respective financial circumstances of
the parties and the dynamics of this case, Supreme Court did not
abuse its discretion in declining the wife's request for counsel
fees, while awarding her costs incurred as a result of the
husband's misconduct (see DeCabrera v Cabrera-Rosete, 70 NY2d
879, 881 [1987]). Not to be overlooked is that the court duly
sanctioned the husband for his obstructive behavior.

     McCarthy and Egan Jr., JJ., concur.

Stein J.P. (concurring).

      While we agree with the result reached by the majority, we
are compelled to voice our concerns regarding the practical
effect of, and policy considerations surrounding, the retroactive
suspension of a noncustodial parent's obligation to pay child
support. According to the longstanding jurisprudence of this
Court, in certain circumstances, such as here, in which a
custodial parent interferes with the parental rights of the
noncustodial parent, a court may suspend the noncustodial
parent's child support obligation retroactive to the date an
application for such suspension was made (see Matter of Luke v
Luke, 90 AD3d 1179, 1182 [2011]; Matter of Alexander v Alexander,
129 AD2d 882, 884 [1987]; but see Alan D. Scheinkman, Practice
Commentaries, McKinney's Cons Laws of NY, Book 14, Domestic
Relations Law § 241 at 23). While we interpret the relevant
statutes as prohibiting the child support payor from unilaterally
discontinuing his or her payments during the pendency of a
suspension application in the absence of a court order permitting
such action, we are concerned that our previous decisions – and,
to a certain extent, the majority decision here – which apply a
                              -9-                516889

suspension of child support retroactively, could actually promote
such self-help. We, therefore, write separately to advocate for
clarification and/or a modification of our precedent on this
issue.

      In our view, as the following examples illustrate,
retroactivity of child support suspensions cannot be effectuated
as a practical matter. Where a child support payor – who makes
an application to suspend payments due to the custodial parent's
interference with the payor's parental relationship – continues
to comply with his or her child support obligation payments while
the application is pending, public policy prevents recoupment of
the payments made in the event the court ultimately makes a
finding of parental interference warranting a suspension. A
similar result occurs where the payor does not make payments
during the pendency of a suspension application, in that the
statute prohibits the court from canceling the accrued arrears
upon a subsequent finding of interference (see Domestic Relations
Law § 241; Alan D. Scheinkman, Practice Commentaries, McKinney's
Cons Laws of NY, Book 14, Domestic Relations Law § 241 at 23;
Matter of Rivera v Echavarria, 48 AD3d 578, 578 [2008]; Ledgin v
Ledgin, 36 AD3d 669, 670 [2007]; Doyle v Doyle, 198 AD2d 256, 257
[1993]; but see Matter of Alexander v Alexander, 129 AD2d at 883-
884). However, in the latter situation, the noncustodial parent
is temporarily relieved of his or her financial obligation, while
the custodial parent is deprived of support for the children
without the benefit of a judicial determination that there is at
least some arguable merit to the suspension application and a
consideration of the financial consequences to the parents and
the children. In either event, it seems that retroactivity is
but a legal concept without any practical application.

      Considering the foregoing, we are of the view that a
retroactive suspension of child support payments is appropriate
only where, as here, the child support payor has, with court
authorization, either paid child support into an escrow account
or has obtained a temporary court order suspending payments
during the pendency of the suspension application. In our
opinion, requiring that child support payments be made in escrow
is preferable, as it ensures that the noncustodial parent
fulfills his or her child support obligations if the case is
                              -10-                 516889

ultimately decided in favor of the custodial parent, while also
making certain that the financial support is readily available
for court-directed withdrawals, if necessary, for the custodial
parent to meet the needs of the children (see Alan D. Scheinkman,
Practice Commentaries, McKinney's Cons Laws of NY, Book 14,
Domestic Relations Law § 241 at 23). If, on the other hand, the
noncustodial parent prevails, a subsequent suspension of child
support can truly be retroactive and allow for the return of
monies paid into the escrow account without violating the public
policy against recoupment and without encouraging the accrual of
arrears.

     Clark, J., concurs.

      ORDERED that the judgment is modified, on the law, without
costs, by reversing so much thereof as (1) classified the joint
account of plaintiff and his daughter as separate property, (2)
failed to award defendant a separate property credit against the
acquisition of the cumulative Pryne Road property, (3)
miscalculated the separate property credit due defendant for the
Rynex Road property, and (4) ordered the refund of child support
overpayments; award defendant half of the value of said joint
account naming plaintiff and the daughter ($50,000), award
defendant a $100,000 credit for the purchase of the Pryne Road
property, resulting in a reduction of plaintiff's distributive
share for this asset from $69,000 to $19,000, reduce defendant's
distributive share in the Rynex Road property to $105,000, and
award plaintiff a refund of $25,447.85 in child support for the
period of November 2009 through April 22, 2011; and, as so
modified, affirmed.

                             ENTER:

                             Robert D. Mayberger
                             Clerk of the Court