Court Opinion

ID: 3218845
Source: CourtListenerOpinion
Date Created: 2016-06-30 15:08:38.497373+00
Date Added: 2024-06-11T07:39:46.999512
License: Public Domain

State of New York
                    Supreme Court, Appellate Division
                       Third Judicial Department
Decided and Entered: June 30, 2016                      520240
________________________________

MARIA LUCIA CARVALHO,
                    Appellant,
      v                                      MEMORANDUM AND ORDER

MANUEL J. CARVALHO,
                    Respondent.
________________________________

Calendar Date:   April 29, 2016

Before:    McCarthy, J.P., Egan Jr., Rose, Lynch and Aarons, JJ.

                              __________

     Thomas F. Garner, Middleburgh, for appellant.

      Law Offices of Walter Terry, Oneonta (Patricia L. Canner of
counsel), for respondent.

                              __________

Rose, J.

      Appeal from a judgment of the Supreme Court (Burns, J.),
entered February 28, 2014 in Otsego County, ordering, among other
things, equitable distribution of the parties' marital property,
upon a decision of the court.

      After 33 years of marriage and raising four emancipated
children, plaintiff (hereinafter the wife) commenced this divorce
action in September 2011. The parties were able to stipulate to
the distribution of a number of marital assets, and a trial was
held to determine how their remaining assets – the existence and
value of which were in dispute – would be equitably distributed.
Supreme Court granted the parties a judgment of divorce and
issued an order directing that all of the parties' assets were
marital property. The court found that, among other things, the
division of their assets should be equal, but that the wife had
                              -2-                520240

transferred or spent $103,000 of marital assets without
compensating defendant (hereinafter the husband). To account for
these expenditures, the court increased the husband's
distributive award by one half of this amount and reduced the
wife's distribution by the same amount. The wife appeals.

      The wife does not deny that she transferred or spent
$103,000 of the parties' assets over the course of more than two
years following the commencement of the action. Rather, she
argues that Supreme Court abused its discretion by awarding the
husband a distributive share of one half of this entire amount
because he did not establish his claim that she had wastefully
dissipated all of these funds. We must agree. When the courts
fashion an equitable distribution award involving marital assets
that are wastefully dissipated, as the husband claimed here, we
credit the other spouse for his or her distributive share of
those depleted assets (see e.g. Murray v Murray, 101 AD3d 1320,
1324-1325 [2012], lv dismissed 20 NY3d 1085 [2013]; Altieri v
Altieri, 35 AD3d 1093, 1095 [2006]; Harbour v Harbour, 227 AD2d
882, 884 [1996]). However, when the depleted marital assets have
been spent on legitimate household or living expenses, they are
not included in the equitable distribution calculus (see e.g.
Epstein v Messner, 73 AD3d 843, 846 [2010]; Waldmann v Waldmann,
231 AD2d 710, 711 [1996], lv denied 89 NY2d 809 [1997]; Harbour v
Harbour, 227 AD2d at 883-884; Brandt v Brandt, 176 AD2d 1016,
1017 [1991]; Seeley v Seeley, 135 AD2d 703, 704 [1987]).
Significantly, it was the husband's burden to "prov[e] that [the
wife] in fact wastefully dissipated any marital asset" (Unger-
Matusik v Matusik, 276 AD2d 936, 938 [2000]; see Treffiletti v
Treffiletti, 252 AD2d 635, 637 [1998]; Strang v Strang, 222 AD2d
975, 978 [1995]).

      Here, Supreme Court expressly states in its order that
there was insufficient evidence to determine how much money the
wife wastefully dissipated. Nonetheless, the court chose to
award the husband his distributive share of the full amount in
question, after stating generally, and without further
explanation, that the wife was "less than credible" and that,
therefore, all "disputes of fact" had been resolved in the
husband's favor. In our view, however, this portion of the order
dealing with the transferred $103,000 contradicts itself,
                              -3-                520240

inasmuch as its practical effect is to treat the entire amount as
having been wastefully dissipated, despite the court's finding
that the evidence was insufficient to make such a determination.
Furthermore, our own review of the record confirms the lack of
evidence to support a finding that the entire amount was
wastefully dissipated.

      At trial, the wife testified that $5,000 of the $103,000 in
marital assets that she had transferred into a personal checking
account with NBT Bank remained in that account. Supreme Court
included this $5,000 NBT Bank account balance in the credits and
reductions that it imposed after finding that the entire amount
of $103,000 had been improperly transferred. However, the court
also ordered that the $5,000 account balance be distributed to
the wife, with a corresponding distribution of other marital
assets in like amount to the husband. By awarding defendant
$5,000 worth of other marital assets to offset a distribution of
this account balance to the wife and simultaneously treating the
$5,000 as though it had been wastefully dissipated, the wife was
unfairly penalized. Accordingly, the total amount of assets that
should have been subject to the court's apparent wasteful
distribution analysis is $98,000, rather than $103,000 ($103,000-
$5,000 = $98,000). We therefore remit the matter to Supreme
Court for the purpose of increasing the wife's distributive award
by the amount of $2,500 and reducing the husband's award by the
same amount.

      When questioned about how the rest of the money – i.e.,
$98,000 – was spent, the wife admitted that she used $24,000 to
purchase a 2014 Surbaru Forester because her old vehicle – a 2010
Pontiac Vibe that was fully paid off – needed a new battery. She
also admitted that she had spent $14,000 on a landscaping project
at her residence. In reviewing this testimony, we find that the
wife's admissions constitute sufficient proof that she wastefully
dissipated $38,000 in marital assets, $24,000 of which she
needlessly spent on the new vehicle, and $14,000 of which she
spent on the landscaping project that, in our view, is beyond
what could be reasonably considered to be a normal household or
living expense. Therefore, we further find that Supreme Court
properly exercised its discretion in awarding the husband one
half of these funds – i.e., $19,000 – and reducing the wife's
                              -4-                520240

award by the same amount (see Harbour v Harbour, 227 AD2d at
884).

      As for the remaining $60,000 of the depleted $98,000 in
marital assets ($98,000-$38,000 = $60,000), the husband failed to
meet the burden imposed by his position adopted at trial and on
appeal, namely, that these funds were wastefully dissipated.
With respect to these expenditures, the wife testified that she
spent $7,000 on property and school taxes. She also explained,
albeit in general terms and with the aid of a Portugese-language
interpreter, that she used the remaining $53,000 for bills,
insurance premiums and other household and living expenses
necessary to support herself because, at age 70, she had no
personal income other than $9,000 per year in Social Security
payments. Indeed, the only evidence in the record regarding the
manner in which the wife spent these funds is her own testimony,
in which she repeatedly stated that she used the money for
legitimate household and living expenses over the course of more
than two years. Thus, the husband raised no "disputes of fact"
that called for a credibility determination with respect to these
expenditures. In our view, the only reasonable conclusion that
this evidence supports is that the wife used the remaining
$60,000 for legitimate living expenses and, further, that the
husband failed to establish that the wife wastefully dissipated
these funds (compare McGarrity v McGarrity, 211 AD2d 669, 670-671
[1995]). Accordingly, we find that Supreme Court abused its
considerable discretion by awarding the husband one half of these
funds – i.e., $30,000 – and reducing the wife's award by the same
amount, inasmuch as these funds should have been removed
altogether from the pool of marital assets. We therefore remit
the matter to Supreme Court for the additional purpose of
increasing the wife's distributive award by the amount of $30,000
and reducing the husband's award by the same amount.

      The wife also contends that Supreme Court failed to value
and distribute the proceeds of a Wells Fargo IRA in the husband's
name. Although the parties did not stipulate to this account,
the husband's June 2012 statement of net worth unambiguously
states that he had an IRA with Wells Fargo with a balance of
                              -5-                520240

$18,842.97.1 The husband also confirmed at trial that the
account had once existed, but further admitted that he had
liquidated it and deposited the funds into his checking account
with Delaware National Bank, which he then used to pay his bills
during the pendency of this action.2 Notably, however, just as
the husband did not dispute the wife's assertion that she used
certain marital assets to pay legitimate household and living
expenses, the wife did not challenge the husband's claim that he
used his Wells Fargo IRA funds in a similar manner. Thus, the
evidence confines us to the same conclusion regarding this
account, namely, that the husband spent the funds on legitimate
expenses. Accordingly, we will not disturb Supreme Court's
failure to value or distribute the proceeds of the husband's
Wells Fargo IRA among the parties (see Harbour v Harbour, 227
AD2d at 883-884; Seeley v Seeley, 135 AD2d at 704).

      The wife next argues that Supreme Court erred in failing to
value and distribute a jointly held money market account with
Delaware National Bank. Although the parties stipulated to the
existence of this account, neither party presented evidence
establishing its balance on the date of commencement of the
action. Indeed, other than the parties' statements of net worth
and their own testimony, the record is devoid of any evidence
indicating the balance of this or any other account belonging to
either party on the commencement date. This account's balance is
listed in the husband's statement of net worth as $29,370.52, and
the husband stated at trial that his plan for the account was to

    1
        We reject the husband's argument that his statement of
net worth cannot be relied upon as evidence of the existence of
this account, as he stated at trial that he had no objection to
the wife's request that Supreme Court make the parties'
statements of net worth part of the trial record (compare Halse v
Halse, 93 AD3d 1003, 1005 n 2 [2012]).
    2
        Notwithstanding Supreme Court's misidentification of the
wife as the owner of this account in the list of stipulated
assets in its decision and order, the record is clear that the
non-joint, Delaware National Bank checking account was opened in
the husband's name alone.
                              -6-                520240

close it and divide the proceeds with the wife. In light of
this, and the absence of any evidence of a different account
balance, we agree with the wife that Supreme Court should have
valued the Delaware National Bank joint money market account at
$29,370.52 and distributed it equally among the parties (see
Altomer v Altomer, 300 AD2d 927, 928, 928 n 2 [2002]; Eigenbrodt
v Eigenbrodt, 217 AD2d 752, 754 [1995]). Accordingly, we remit
the matter for this purpose as well.

      The wife next challenges Supreme Court's valuations of what
the parties refer to as the "Millennium" account, a money market
account in the husband's name located in Portugal, and their
escrow account with the accounting firm of Abbe & Lamarco.
Regarding the Millennium account, the wife stipulated to the
court's distribution of the full account balance to the husband
and, thus, her argument on appeal is limited to her contention
that the court should have addressed the discrepancy between the
€36,316.53 account balance listed on the husband's statement of
net worth and his trial testimony, in which he initially stated
that the current balance was $19,500, but later stated that he
thought the account was valued in euros, not dollars.
Significantly, however, the wife did not challenge, either at
trial or in her written summation, the husband's testimony about
the account balance, nor did she present any evidence of the
exchange rate between dollars and euros. Thus, in view of the
paucity of evidence regarding this account and the court's
"substantial discretion in setting the valuation date any time
between the commencement of the action and the date of the trial"
(Halse v Halse, 93 AD3d 1003, 1004 [2012]; see Domestic Relations
Law § 236 [B] [4] [b]; McSparron v McSparron, 87 NY2d 275, 287-
288 [1995]), we cannot say that Supreme Court abused its
discretion in crediting the husband's testimony and valuing the
Millennium account at $19,500. For the same reasons, we decline
to disturb the court's valuation of the Abbe & Lamarco escrow
account, which was also based upon the husband's undisputed
testimony that the balance of this account at the time of trial
was $7,900.3

    3
        The wife's contention on appeal that the husband
wastefully dissipated the $11,367.90 difference between this
                              -7-                520240

      We also disagree with the wife's argument that Supreme
Court improperly adopted the husband's posttrial summation as its
distribution order. As the record makes clear, the court issued
its own written findings of fact, in which it properly considered
the requisite statutory factors and "did not [otherwise] abdicate
its responsibilities by adopting the parties' findings and
conclusions wholesale" (Noble v Noble, 78 AD3d 1386, 1387 [2010];
see Winship v Winship, 115 AD3d 1328, 1328-1329 [2014]; compare
Capasso v Capasso, 119 AD2d 268, 275-276 [1986]). We have
considered the parties' remaining arguments and find them to be
unavailing.

     McCarthy, J.P., Egan Jr., Lynch and Aarons, JJ., concur.

balance and the balance reported in the husband's net worth
statement was not raised before Supreme Court and, as a result,
is unpreserved for our review (see Hildreth-Henry v Henry, 27
AD3d 419, 420 [2006]; Elkenani v Abdel-Raouf, 290 AD2d 720, 721
[2002], lv dismissed 98 NY2d 646 [2002]). We note that, by
setting the valuation date of these two marital assets as of the
time of trial, Supreme Court tacitly permitted the husband to use
them to pay his own expenses during the pendency of the action.
                              -8-                  520240

      ORDERED that the judgment is modified, on the law and the
facts, without costs, by reversing so much thereof as (1) awarded
marital assets to the respective parties so as to increase the
value of defendant's distributive share and to correspondingly
decrease plaintiff's distributive share by one half of the
$103,000 in marital assets that plaintiff transferred into a
personal checking account after the commencement of this action,
and (2) failed to value and distribute the parties' joint money
market account with Delaware National Bank; matter remitted to
the Supreme Court for further proceedings not inconsistent with
this Court's decision; and, as so modified, affirmed.

                             ENTER:

                             Robert D. Mayberger
                             Clerk of the Court