JN v. TN, 2022 NY Slip Op 22310 - NY: Supreme Court 2022:
INTRODUCTION
There are cases in which the end of the marriage does not mark the end of the abuse. This, unfortunately, is one of those cases.
On the surface, this divorce action, overall and specifically the
financial issues, should have been relatively easy work to settle or to
try. Plaintiff J.N. ("Wife") and Defendant T.N. ("Husband") did not have
a long-term marriage; they are married just under eleven years. They
have three children who are well-cared for and generally in good health.
The custody trial concluded on February 24, 2020, and the Court issued
its Decision and Order on custody on October 7, 2020. Their marital
assets are not complicated and consist largely of stocks and investments
acquired as a result of Wife's employment with [a global investment
bank, herein the investment bank]. Wife fully disclosed all of the
marital and separate property assets in her name and control and had
them valued by experts. She complied with discovery throughout this
litigation and with this Court's trial rules. She appeared ready for
trial on each day.
Yet, getting to and completing the financial trial has been neither
simple nor easy. From the start, Husband took every opportunity to delay
this matter and harm Wife, emotionally and financially. His harassing
conduct during the litigation — in and out of the courtroom — was a
continuation of his abusive conduct during the marriage. He asserted
meritless claims and employed litigation strategies admittedly meant to
run up attorney's fees and wear Wife down. He utterly failed to comply
with discovery. He took intentional and calculated actions to damage
Wife's career and professional reputation in direct violation of Court
Order. He then refused, without excuse, to show up for trial.
In determining equitable distribution of marital assets, the court considers fifteen factors, including, inter alia,
the contributions of each party to the financial partnership, wasteful
dissipation, and the impossibility of ascertaining marital assets. As of
2020, when the New York State Legislature amended DRL § 236 B
(5)(d)(14), the court now may consider domestic violence, as that term
is defined in the Social Services Law, in formulating a distributive
award. This case implicates this new provision. Indeed, this Court
cannot reach the correct equitable result on the parties' financial
matters without considering Husband's domestic violence during the
marriage, abuse throughout this litigation, and its effects.
In this regard, and by necessity, the trial record goes far beyond
purely financial matters. It includes the testimony and documents from
the custody trial, including a domestic violence finding, and an almost
exhaustive representation of Husband's post-Note of Issue motions and
other efforts to delay and sabotage the financial trial. What follows,
therefore, is a chronology of these things, all of which support the
conclusions herein.
THE CUSTODY ORDER
On October 7, 2020, following a full and fair trial including party
and forensic testimony, the Court (Hon. Lori S. Sattler, J.S.C.) issued
its Decision and Order awarding Wife custody of the parties' three minor
children with parenting time to Husband. The Court specifically found, inter alia, that Husband perpetrated domestic violence during the marriage against Wife:
The Court further makes a finding that there was domestic
violence during the marriage of an emotional nature. Plaintiff holds a
position of great authority at [the investment bank] and earns
significant amounts of money. Yet, it is clear that she capitulated
throughout the marriage toward Defendant's positions. His obsessional
style and his paranoia seeped into their day to day living. He did not
trust anyone who worked for them or any of her family members. He made
it clear that he also did not trust Plaintiff. He did not trust her to
protect the children; and he actively sought to limit her contact to the
children, even so far as making them go to sleep before she came home.
Defendant presented a narrative where he was the primary
parent, even when that could not be found to be true based on the
parties' descriptions of their use of the nannies every day. He
convinced Plaintiff that she had ADHD, that he was the beleaguered
parent, and that he was the glue that held the family together as the
only one who did not have something wrong with them. This sort of
behavior can only be viewed as a form of abuse; a case where Plaintiff
was so worn down that she gave in to Defendant repeatedly even when she
questioned some of his judgment choices; a case where she was so worn
down, she even followed his belief that she required medications when
for years she had held down a high-powered job that would have been
difficult for someone with ADHD to have effectively managed.
The Court also made note of Husband's delays from the outset of the litigation by way of, inter alia, "multiple changes of counsel" (totaling four as of October 2020) and terminating his attorney on the eve of the custody trial.
THE PARTIES' POST-NOTE OF ISSUE MOTIONS AND HUSBAND'S MERITLESS CLAIMS AND MALICIOUS CONDUCT
Discovery on the financial issues was closed on May 5, 2021.
Two months later, on July 6, 2021, Wife filed her Note of Issue and
Certificate of Readiness together with a motion to preclude Husband from
introducing evidence on financial matters for which he failed to
produce discovery and to deem certain financial issues resolved in
accordance with Wife's claims ("the motion to preclude").
One day later, on July 7, 2021, Justice Sattler held a conference
during which she set a return date for the motion to preclude; scheduled
the financial trial to commence on February 28, 2022 and continue on
several dates in March 2022[1];
and issued an Order awarding Husband $200,000 "as an advance against
his equitable distribution, to be paid directly to his incoming counsel
upon [Husband] providing the contact information for counsel to the
attorneys for [Wife]."
Husband did not engage a new attorney for the financial trial.
Rather, on July 23, 2021, he moved, as "Defendant pro se", pursuant to
22 NYCRR § 202.21 to vacate the Note of Issue and Certificate of
Readiness upon the ground that Wife failed to produce discovery ("the
motion to vacate the Note of Issue").
On September 9, 2021, Husband had the children for his parenting
time. He was late for the exchange but did not answer Wife's calls and
texts to confirm the children's whereabouts. Concerned, Wife sought the
help of the NYPD to locate the children. She called 911 and went to a
local New York City Precinct. As a result, the police called Husband and
then went to his apartment for a wellness check. Only then did Wife
learn that her children were safe.
Sometime in or prior to October 2021, Husband violated the parties'
March 15, 2019 So-Ordered Confidentiality Stipulation ("the
Confidentiality Order") by providing reporters and other third-parties
with confidential documents and information about Wife's employment with
[the investment bank]. The Confidentiality Order (paragraph D therein)
defines [the investment bank] information as "all documents and
testimony and all information contained therein" related to [the
investment bank], and Wife's employment and relationship to [the
investment bank].
On October 5, 2021, a journalist emailed Wife, advising that he had
been in communication with Husband about this divorce and her
relationship with [the investment bank]. The journalist mentioned a 2015
private evaluation report compiled by Wife's supervisors about her
performance and asked her pointed questions about her work. The
journalist also asked about the September 9, 2021 wellness check,
intimating that it undermined the Court's domestic violence finding
against Husband in the custody trial. On October 9, 2021, the journalist
published an article about these matters based solely upon Husband's
allegations and disclosure of confidential information.
At this time, Wife also learned that Husband spoke with a father's
rights activist, with whom he also shared the domestic violence finding,
his opinion that the finding was false, and his claim of harm due to
the September 9, 2021 wellness check. The activist then contacted the
Board of Directors of [a not-for-profit organization], on which Wife
sits as a member, accusing her of lying about domestic violence and
asking the Board to retract an award they recently gave her. Husband had
also discussed the children in this litigation with the reporters and
third-parties.
Consequently, on October 8 and again on October 29, 2021, Wife moved,
by separate Orders to Show Cause, for separate preliminary injunctions,
enjoining Husband from further violating the Confidentiality Order and
discussing the children in this litigation. Wife demonstrated that she
could lose certain restricted stock acquired as a result of her
employment, as well as her job itself, by Husband's lies, defamatory
statements, and disclosure of confidential information. The Court issued
an interim restraining order on Husband ("the preliminary injunction
motions").
On October 20, 2021, Ionas Sipsas, Esq. appeared for Husband on a "limited scope representation" solely for the preliminary injunction motions.
Twenty days later, on November 9, 2021, Mr. Sipsas filed an "Amended
Notice of Appearance Limited Scope Representation," expanding his
representation of Husband to include Wife's motion to preclude and
Husband's motion to vacate the Note of Issue (matters relating to the
financial trial); Justice Sattler's July 7, 2021 Order awarding Husband
attorney's fees; discovery and related issues regarding the September 9,
2021 wellness check, "including but not limited to any court
appearances, motions to renew/reargue and appeals including relief from
the Appellate Division and Court of Appeals related to above."
December 2021 was a busy month for Husband and his limited scope
attorney. In accordance with his Amended Notice, Mr. Sipsas served a
Notice to Admit as to the September 9, 2021 wellness check. He also
served documents ostensibly related to financial matters, to wit: (1) a
subpoena upon [the investment bank] for Wife's entire employment file,
including among other things "comprehensive compensation information"
and stock ownership; (2) a subpoena upon Andersen Tax LLC for, inter alia,
Wife's tax returns; and (3) a subpoena upon AMEX for Wife's credit card
statements and information. Wife moved for a protective order as to the
Notice to Admit, and then separately moved to quash the subpoenas.
Also in December 2021, Mr. Sipsas moved on behalf of Husband for another form of financial relief: additional pendente lite support in the form of rent payments ("the pendente lite
motion"). By that time, Husband had already squandered $480,000 in
temporary maintenance ($20,000 a month for 24 months) paid by Wife and a
$563,000 advance on his equitable distribution.
Mid-month, on December 14, 2021, unbowed by Justice Sattler's refusal
to sign a subpoena directing the NYPD to produce records relating to
the September 9th wellness check, Husband filed a Family Offense
Petition against Wife in New York County Family Court based upon that
event. In the petition, he alleged that on September 9, 2021 Wife
falsely reported to the police that she did not know the children's
location, causing the police to come to his home and call him, which
caused him "serious emotional and mental harm" and put him in "risk of
grave physical harm." Husband alleged that such conduct amounted to
harassment and reckless endangerment warranting the issuance of an Order
of Protection.
On February 10, 2022, this Court, by separate Decisions and Orders,
decided almost all of the Post Note of Issue motions, as follows:
— Granted Wife's motion to preclude, finding: that Husband
"utterly refused, without any reasonable excuse, to provide discovery on
his financial matters"; that he last provided "meaningful discovery in
April of 2019"; that his refusal to engage in discovery was willful,
contumacious and part of his calculated pattern of delay throughout this
litigation; that his earned income for all purposes is not less than
$500,000 per year; and that he has undisclosed investments of not less
than $550,795; and deeming the $700,000 loan from Husband's employer
listed on his Statement of Net Worth as an asset or income;
— Denied Husband's motion to vacate the Note of Issue,
finding that Wife "is not deficient in, and rather has fully complied
with, her discovery obligations," including producing "thousands of
pages of financial documents," many of which Husband relied upon in his
various motions;
— Granted Wife's motions for a protective order as to
Husband's Notice to Admit and to quash his subpoenas served on [the
investment bank], Andersen Tax LLC, and AMEX, explaining that discovery
on the custody and financial issues was closed on May 5, 2021 and
discovery requests therefore are "untimely";
— Denied Husband's request for pendente lite relief and referred all financial issues to the trial; and
— Referred the preliminary injunction motions to trial.
During an on-the-record conference that same day, this Court directed
the parties to file and serve their trial documents in accordance with
this Court's Part Rules by February 17, 2022.
On February 17, 2022, Wife filed her Second Statement of Net Worth,
Statement of Proposed Disposition, and Amended Trial Exhibit List. She
had previously filed her Amended Witness List on January 26, 2022; this
document was not further revised or amended.
Husband did not file his trial documents on February 17, 2022 in
accordance with the Court's Part Rules. Indeed, he took no action to
prepare his case. Instead, a week later, he moved to strike Wife's
Notice to Admit as to her proposed trial exhibits and to compel Wife to
produce [the investment bank] documents under a business records
certification. In support of his motion, Husband argued, in the main,
that he was concerned about the authenticity of Wife's documents based
upon alleged ethical misconduct of Wife's attorneys and the Court — a
claim which had already been addressed and dismissed on no less than
three occasions. The very next day, February 25th, he submitted for
signature twenty-one (21) separate trial subpoenas to [the investment
bank] and Wife's banking and financial institutions.
By Decision and Order dated March 2, 2022, this Court denied
Husband's motion to strike Wife's Notice to Admit and for an order as to
the [the investment bank] records. The Court found that the documents
listed in Wife's Notice to Admit were produced by the parties per Court
Order; that "[m]any, if not the lion's share, of the documents have been
procured directly from the banking, financial, and credit institutions"
at which the parties maintained their accounts and were of the type
that are admissible without the need for authenticating testimony or
business records certifications; and that Wife provided business record
certifications for the [the investment bank] Records. The Court further
found that Husband had the documents listed in the Notice to Admit "for
months if not years"; waited for the eve of trial to raise objections
thereto; and did not appear or respond to Wife's Notice of Intent, in
which he was invited to inspect the documents she intended to introduce
at trial.
This Court rejected Husband's purported concerns about the
authenticity of the documents due to purported ethical misconduct, and
his inability to defend himself:
Defendant's claim of misconduct is without merit. Justice
Sattler considered and, in her discretion, rejected Defendant's claim
that a conflict existed because her junior law clerk is the sister of
one of Plaintiff's attorneys. On January 22, 2020, Justice Sattler made
clear on the record that she fully and completely insulated and "walled
off" her junior law clerk from this case and disclosed that fact to the
parties and their counsel. Indeed, upon such disclosure, Defendant's
prior attorneys withdrew his first two recusal requests. Defendant's
assertion that a conflict existed because Plaintiff's attorneys made
contributions to Justice Sattler's judicial campaign, is equally
unavailing. Judges are absolutely prohibited from knowing who
contributed to their judicial campaign; they may not attempt to have a
list of contributors made available to them, nor seek to learn the
identity of those who contributed to their campaign. See Judicial Ethics Opinion 07-88 (September 6, 2007) (identities of those who contribute to a judicial candidate's campaign should be kept from the candidate); Judicial Ethics Opinion 02-06 (January 24, 2002); Judicial Ethics Opinion 87-27
(January 28, 1988). Defendant has failed to offer any proof that
Justice Sattler actually knew about the subject contributions — prior to
his disclosure of same — or otherwise violated the applicable rules as
to judicial campaign contributions.
Finally, Defendant may not rely on his self-represented
status, a choice he made of his own volition, to avoid engaging in
proper trial preparation and trial proceedings, which includes a review
of the documents Plaintiff seeks to introduce at trial and for which she
has served a Notice to Admit as to authenticity. It is undisputed that
as of July 2021, when the trial dates were set, Defendant had at his
disposal $200,000 to engage an attorney for the financial trial in this
matter. He chose — and continues to choose — not to do so.
THE FINANCIAL TRIAL
The financial trial commenced on March 3 and continued on March 4, 31
and April 4, 2022. Wife appeared ready for trial with her attorneys
each day.
Husband appeared on March 3 and 4 only and made his appearance as a
"self-represented" defendant, although Mr. Sipsas was present those days
and attempted to speak on his behalf. Husband purportedly sustained an
injury on his way to Court on March 10, 2022. Thus, the trial did not go
forward on that day or the following day, March 11th, but did continue
on March 31 and April 4, 2022. Husband failed to show up on March 31st
and April 4th and his absence was not excused (more on that below).
For the two days he did appear at trial, Husband made a series of
requests and persisted in objecting to Wife's exhibits and evidence upon
the ground that they had not been timely produced in discovery, all in
an attempt to delay the trial if not stop it altogether. Husband's
attempts were rejected for reasons reiterated, by that time, ad nauseum.
This Court also noted that he failed to review Wife's trial documents
despite clear invitation to do so (i.e., per the Notice of Intent) and
that he admittedly failed to read the expert reports.
To start, on March 3rd, Husband made three applications. First, he
requested permission for Mr. Sipsas, who was also in attendance, to sit
at the table as his "legal advisor" and be able to take breaks
throughout the trial to consult with him. The Court noted that Mr.
Sipsas had been part of the case "since at least October." Indeed, Mr.
Sipsas represented Husband on the parties' post-Note of Issue motions,
all of which related to the financial trial, purportedly hired an expert
for Husband as to Wife's document production and prepared subpoenas to
Wife's employers, accountant, and other banking and financial entities.
Nevertheless, when asked, Husband unequivocally stated that Mr. Sipsas
was not his "financial matrimonial attorney." Thus, Husband's request
that Mr. Sipsas sit at defendant's table was denied.
Second, Husband renewed his request for an additional $300,000 in
attorney's fees, on top of the $200,000 awarded to him on July 7, 2021.
Husband confirmed that "roughly" $100,000 of the $200,000 was still
available to him. Thus, the Court denied, without prejudice, Husband's
request for more fees upon the ground that he had $100,000 available to
pay an attorney yet had not in fact retained one to represent him at
trial.[2]
Third, he claimed that Wife committed "a significant perjury" in that
she failed to provide any K-1s and that his "financial expert provided a
sworn affidavit that no K-1s have been provided." The Court reminded
Husband that he did not have an expert, or witnesses, or exhibits, and
that his motion to vacate the Note of Issue had been denied. The Court
also noted that the issue of K-1s would likely come up during the trial,
as they were listed in Wife's Exhibit List and Notice to Admit (which
this Court sustained) and he could raise any appropriate objection when
they were admitted into evidence.
In an abundance of latitude — given Husband's failure to participate
in discovery since April 2019 and utter failure to file trial documents —
the Court entertained an offer of proof from Husband for his 21 trial
subpoenas. Husband argued that the subpoenas were "the only way I could
be assured I'm going to get a complete set of records from the various
custodians. And, you, know, they mirror that trial subpoenas that
plaintiff delivered upon my financial institutions. So, I think the
absence of them would be highly prejudicial for me." The Court declined
to sign the subpoenas, explaining "your subpoenas call for production of
documents that you've already received or that were going to be
produced pursuant to plaintiff's subpoena."
Wife moved to close the courtroom upon the ground that "a lot of this
trial is going to have to do with [the investment bank] information"
and that, pursuant to the Confidentiality Order, [the investment bank]
information is deemed confidential. Therefore, Wife requested that "at
any point when we are discussing the confidential information as defined
in paragraph D of the [Confidentiality Order], that the courtroom be
closed and the testimony sealed and not be made available." Wife pointed
out that Husband had already violated the Confidentiality Order, and
that his violation thereof was before the Court on the preliminary
injunction motions. She sought to have the courtroom closed and record
sealed upon the additional ground that Husband had provided the
transcripts of the parties' custody trial to third-parties; a claim also
raised in the preliminary injunction motions.
Husband objected to closing the courtroom upon the ground that the
parties never intended that the Confidentiality Order would result in a
closed courtroom. When asked by this Court whether he produced the
custody trial transcripts to third-parties, Husband blithely evaded the
question and said "I'm not sure, your Honor. I have to double check."
The Court denied Wife's request for a totally closed courtroom upon
the ground that it believes in open courtrooms and a case involving high
net worth parties does not automatically require a closed courtroom.
The Court also denied Husband's request for a totally open courtroom
noting its concern about Husband's "invitation to the public into the
private matters of his family" and violation of the "parties' own
agreement as to what can remain confidential and what shall not."
Instead, the Court ruled that it would make individualized
determinations on whether to close the courtroom based on the evidence
proffered.[3]
The Court noted that Wife's motion to dismiss the Family Offense
Petition was pending for decision. Husband believed that the Court
should consider his purported domestic violence claim against Wife based
on the September 9, 2021 wellness check in determining financial
issues. The Court also noted that the preliminary injunction motions
were pending and reminded Husband that he was under Court Order
restraining his disclosure of [the investment bank] information.
On March 4th, and despite this issue having been resolved the day
prior, Husband again raised the issue of production of K-1s in an
attempt to sabotage the trial. This time Mr. Sipsas, speaking for
Husband (albeit from the gallery), claimed that the K-1s were never
delivered to his office by way of electronic link or otherwise and
demanded that "this trial has to be stopped."
In response, Wife's attorneys demonstrated that they in fact produced
the K-1s to Mr. Sipsas and Husband by way of flash drive and electronic
link in December 2021 and January 2022. The attorneys established, by
submission of copies of letters and FedEx receipts, that they sent Mr.
Sipsas a flash drive containing the K-1s and that Mr. Sipsas rejected
and returned the flash drive as "improper because they exceed the scope
of my limited representation. They should have instead been directly
sent to Husband." Clearly, Mr. Sipsas overlooked the subpoenas he
himself had served on Wife's accountant and employer. In any event, at
Mr. Sipsas' direction, Wife's attorneys sent the flash drive to Husband
with copies of all the letters between them and Mr. Sipsas, and also
sent an electronic link to the K-1s.
In the face of clear and competent proof that Wife's attorneys
produced the K-1s to him, Husband boldly persisted in his blanket denial
of receipt. The Court found Husband's denial to be incredible, found
that Husband received the K-1s, admitted them into evidence, and
rejected his request to stop the trial.
Having not succeeded on his attempt to stop the trial, Husband then
requested a continuance so that his purported new attorney, who he had
not yet formally retained (although the retainer agreement was
purportedly on his phone), could appear. The Court declined the request
in the absence of a signed retainer and Notice of Appearance and noted
that there will be no adjournments of this case "not even for five
minutes."
HUSBAND'S UNEXCUSED ABSENCE FROM THE TRIAL
Undeterred from his singular goal of delaying the trial, Husband found a way to do so. He just did not show up.
At 9:52 a.m., on March 10, 2022, the third day of trial, this Court
received an email from Husband stating that he fell in the subway and
was going to the hospital. The Court responded by email at 10:07 a.m. as
follows:
The Court regrets to hear of your fall, and hopes that you are not injured.
However, we are in the middle of the trial. Please provide
proof that you have been evaluated at a hospital or other medical
facility. If you are at home today, we will continue the trial this
afternoon at 2:30 p.m. in Part 9 Virtual Courtroom, and I expect to
continue in person tomorrow at 9:15 a.m.
At 2:06 p.m. Husband sent another email advising that he had CT scans
which did not show brain or spinal damage. He later sent discharge
records from New York Presbyterian Hospital indicating that he received
some tests, all of which were clear, and that he was prescribed Tylenol
for his self-reported head injury. The records did not set forth any
injury, or any restrictions upon Husband based upon any injury. It set
forth only a self-reported head injury, with no diagnosis of any injury
by any medical professional.
At 3:30 p.m. Husband appeared, as did Wife and her attorneys, in
Virtual Part 9 Courtroom. The conference lasted at least thirty minutes.
Husband told the Court that the "advice" of the doctor who discharged
him was that "it was like a hangover that's going to get worse" and that
he "should just rest and hydrate."
The Court noted that Husband looked well. The Court also noted that
Husband did not provide any medical proof of a medical reason excusing
his appearance, and, thus, made clear that the trial was going forward
virtually on March 11th. In that regard, the Court directed everyone to
show up in Virtual Part 9 Courtroom on March 11th at 9:30 a.m. and
stated that the trial would continue in the absence of a competent
medical opinion that Husband's alleged injury prevented him from
participating. The Court also made clear that the trial would definitely
continue on March 31 and April 4, 2022 in person.
At the close of the conference, Husband reiterated his threadbare
claims that Wife's discovery is "incomplete" and that he did not receive
the K-1s. The Court pointed out that he was provided with courtesy
copies of the K-1s in Court on March 3rd and 4th. He also asked to
cancel his upcoming parenting time with the children scheduled to start
the next day, Friday March 11, 2022 after school, due to his alleged
injury. After some discussion, Husband agreed that he would be ready for
parenting time with his children on Saturday March 12th at 9:00 a.m.,
and that he would have them through Spring Break as scheduled. Wife was
going in for surgery on Monday, March 14, 2022.
On the evening on March 10, 2022, Husband emailed an unsigned ER
record from New York Presbyterian which did not provide a specific
medical condition/diagnosis excusing him from the March 11th appearance.
The Court rejected the letter and directed Husband to appear on March
11th at 9:30 a.m.
At 9:26 a.m. on March 11th, Husband emailed another letter, this time
from City MD and electronically signed, purporting to excuse him from
work until March 15, 2022 based upon a "diagnosed concussion." He also
asked to cancel his parenting time. The Court held an on-the-record
conference at 9:30 a.m., as scheduled; Husband did not appear and his
appearance was not excused. The Court noted that the letter contained
the first diagnosis of concussion, although no details were provided and
although Husband had been evaluated the day before but no concussion
found. The Court also noted that it had received a six-page letter from
Husband dated March 9, 2022, demanding that this Court report to the
appropriate ethics committees the alleged misconduct by the prior jurist
and Wife's attorneys. In his letter, Husband intimated that this
Court's failure to do so would be its own ethical violation.
The Court declined to take Husband's default on March 11th but again
noted that the trial would continue on March 31 and April 4, 2022 and
set the matter down for a conference on March 17, 2022 at 10:00 a.m. to
discuss the logistics of the continued trial and Husband's March 9th
letter. The Court provided written notice to Husband of the March 17th
conference and directed him to appear.
True to form, on March 16, 2022 at 4:08 p.m., Husband emailed a third
doctor's letter purporting to excuse his appearance at the March 17th
conference because his purported recovery was now extended for another
week to March 21, 2022. He also asked for a response to his March 9th
letter. The Court stated that his letter was insufficient to excuse him
and again directed him to appear. The Court stated that "in the absence
of competent medical proof that you have sustained a concussion or other
competent proof that you are legally incapacitated, the conference and
trial dates in this matter will go forward." On the morning of March
17th, the Court again emailed Husband advising him that if he did not
show up at the conference he would be held in default.
If nothing else, Husband is consistent in his disregard for Court
orders. He did not show up at the March 17th conference and the Court
held him in default. The Court also addressed on-the-record Husband's
March 9th letter. The Court rejected, once again, Husband's claims of
purported ethical violations by Justice Sattler and Wife's attorneys and
purported discovery deficiencies in this action, and rejected, for the
first time, his new claim of ethical misconduct by Justice Sattler and
Wife's attorneys in a totally unrelated divorce action. The Court
provided Husband notice that the trial would continue on March 31, 2022
at 9:30 a.m., in person at the courthouse.
Like clockwork, on March 31, 2022 at 7:37 a.m., Husband emailed yet
another letter from a doctor, this time purporting to excuse his
appearance until April 11, 2022 — a full month from the date of his
alleged fall for which no injury was diagnosed. The Court notified
Husband, in writing, that his appearance at the trial was not excused
and his default would be taken.
Parenthetically, also on March 31, 2022, Wife received an e-mail from
"reporters at the New York Post" stating that they are in possession of
information about Wife's "fabricated" domestic violence claims, that
[the investment bank] was aware of the claims and hired a law firm "to
prevent the information from coming to light"; and that "the judge
overseeing the case received campaign contributions" from the lawyers
representing Wife. This email came despite the clear terms of the
Confidentiality Order, Justice Sattler's Order, and this Court's
direction toHusband that he was restrained by those Orders and bound to
follow them.
Husband did not appear for trial on March 31 or April 4, 2022. He did
not provide competent medical proof of a medical injury which prevented
him from appearing at the financial trial before this Court. He did not
explain how he went from no injury on March 10, 2022 to a purported
concussion which rendered him unable to attend the trial for a month.
During the same time period, however, Husband enjoyed Spring Break
parenting time with the children and engaged in litigation before
Justice Sattler and the Appellate Division, First Department.[4]
Husband was also well enough to email Wife's attorneys on April 4,
2022, requesting that he be provided with the approximately $110,000
balance left on the July 7, 2021 $200,000 attorney fee award. The
balance was provided to him.
TRIAL TESTIMONY AND EXHIBITS
During the four-day trial, Wife put on her case by way of her own
testimony, and the testimony of her real estate expert and financial
expert, and the admission into evidence of forty-six Exhibits, inclusive
of seven Court Exhibits. Husband had any opportunity to, and did,
cross-exam Wife on March 4th. He did not refute any of Wife's proof, all
which established her claims as to child support, maintenance, separate
property, martial property and equitable distribution thereof.
The Court found Wife to be highly credible. Throughout the trial, she
testified in a consistent and straightforward manner on all matters —
material and minor. Her description of her career trajectory and present
employment with [the investment bank] was clear; she explained her
duties, responsibilities, and conditions of employment. Her testimony
about the challenges investment banking presented in raising three young
children was sincere. She explained her income and earnings and how
they were used to pay the family expenses. She testified, credibly,
about Husband's negative contribution to the marriage. She was emotional
and clearly troubled when recalling Husband's abusive conduct during
the marriage and throughout the litigation. To the extent that there
were inconsistencies in her testimony, they were as to minor issues only
and Wife addressed them by way of documentary proof.[5]
Wife's Early Life
Born in a small town in India, Wife immigrated to the United States
with her parents in 1980 when she was three years old. After Wife's
father obtained his master's degree in North Carolina, the family moved
to a small town in southern Virginia where her father was a professor in
local colleges. She has three siblings; the family is incredibly close
and enjoys a loving and supportive relationship.
Wife's intelligence and strong work ethic was apparent early: she
skipped a grade in elementary school and took college classes in high
school from which she graduated at age sixteen. Wife attended University
of Virginia, where she had three majors, various internships, as well
as worked at "odds and ends jobs." Her work with a quadriplegic
professor inspired her to pursue work in the healthcare system. Thus,
when she graduated college in 1998 at age twenty, she went into finance
"with the focus of staying in the healthcare industry." All of Wife's
siblings work in finance.
In 2005, Wife's parents developed health issues. So, she bought them a
house solely with her own earnings. The home is in North Carolina where
her parents have a big community and which is close to hospitals. Wife
pays the mortgage; her parents pay the utilities and maintenance for the
home. Wife and her siblings opened and jointly funded a bank account
for their parents with a total sum of $25,000.
Wife's Career
Wife's entire career, to date, has been in the financial industry,
specifically, healthcare investment banking. She started out on the
banking side as an investment banker, where her job was to advise
corporate clients. Between 2000 and 2006, she worked at several
financial/investment companies such as AXXX BXXXX, CXXXXX SXXXXX, and
DXXXXX BXXX. At each employer, she was quickly promoted. She obtained
each of her jobs through her own reputation and hard-work. Wife
explained that investment banking "is all about external reputation" and
success requires having the trust of the clients.
In October of 2006, Wife, then a Vice-President at DXXXXX BXXX,
received an offer to work at [the investment bank]. She took the job and
joined the firm as a Vice President in the healthcare investment
banking group. Although she was asked to take a one-year "step back"
when she joined, she advanced quickly — by 2008 she was promoted to
managing director and became a partner in 2012. According to Wife, the
employees at [the investment bank] are held to a "really high standard,"
have to be on top of their game and cannot "coast." When being
considered for partnership, the company assesses your commercial skills,
your reputation, and whether you are doing other things for the firm,
such as sitting on boards. She explained that the work atmosphere is
very competitive both inside and outside of [the investment bank] and
that you can get "de-partnered."
At present, Wife is [a global head/managing partner] in [the
investment bank's] asset management division. In essence, her job is to
invest other people's capital in healthcare funds. She explained that
she is responsible for "diligence" on any healthcare deal that gets put
into a fund that she manages. This is an active role which requires her
to sit on the board of the healthcare companies included in the funds in
which she herself invests, and to participate in management of those
companies.
In addition to her day-to-day work, Wife is the cohead of The Women's
Network; she sits on the steering committee for 1 Million Black Women;
she sits on [the investment bank's] investment committee for corporate
investing, its sustainable investment committee, and COVID committee.
She has been on the board of [a not-for-profit organization] for five
years. She also sits on multiple corporate boards: two public boards and
three private company boards.
After about eighteen years in investment banking, Wife became burnt
out. She explained that investment banking was not easy to do with three
kids. She felt guilty about not spending enough time with her children.
Her health was not good, she broke a tooth from stress, she was not
sleeping well, and she "was literally not functioning physically or
mentally." She wanted to retire.
In 2018 — and over vigorous objection by Husband (discussed more
fully below) — Wife accepted an opportunity to go from investment
banking into asset banking, a position which does not require as much
travel and gives her flexibility in her schedule. However, the role
raises "significant capital issues," as she has to borrow money to
invest in the funds she manages. She explained that "because we are
investing other people's money, they need to see that the investors are
also invested in the funds" and that if she does not make such
investments, she cannot keep her job.
The Parties and The Marriage
The parties met when they were in college; Wife was seventeen.
Husband attended Duke and as noted, Wife was close by at University of
Virginia. They dated during and after college for about eight years.
Husband graduated magna cum laude. Both pursued careers in finance,
although independently of each other, and both moved around as they
developed in their respective careers — New York, Boston, and San
Francisco. To the extent that the parties lived together prior to their
marriage, which was not often, Husband moved into Wife's apartments.
However, they did not have any financial partnership prior getting
married.
In 2006, the parties got engaged. At the time, Husband was out of
work and the funds for the engagement ring came largely from Wife's
earnings.
Husband had absolutely no role in Wife's employment and career
advancement prior to or during the marriage. In fact, Husband objected
to Wife taking the position at [the investment bank] in 2006, the
company at which she is now a successful managing director.
Throughout the marriage, Wife's earnings and income funded all if not
the lion's share of the family expenses. At the time the parties were
married in 2007, she was already employed at [the investment bank]. Her
yearly income and bonuses were deposited into the family operating
account at First Republic Bank from which bills were paid. There was
also an account at TD Bank into which she deposited some of her earnings
and from which the mortgage on her parents' home was paid. She receives
$950,000 per year pre-tax salary (approximately $35,000 to $40,000 per
month), plus a discretionary cash bonus and a discretionary equity bonus
received in January of each year. The cash bonuses would be used to pay
all family's expenses, and she also sold shares of stock "on a regular
practice basis" to cover those expenses. The parties' expenses included,
among other things, monthly rent for the marital apartment, monthly
living expenses, the children's private school tuitions, nannies and
baby-sitters, and the like. Husband purchased four vehicles during the
marriage with money earned by Wife.
On the other hand, Husband had minimal employment and earnings during
the marriage, by choice. Prior to the marriage he held several
positions in the financial industry, at times earning more than Wife and
over $1 million per year. He worked for SAC Capital as an analyst
investing in tech in the first year of the marriage. He lost that job in
2008, which was the last "outside role" he had during the marriage.
Husband stayed unemployed until after the parties' son was born in 2010,
when he told Wife that he wanted to invest her earnings in the hopes of
making a return, which he could parlay into a new investment job. Wife
wanted to help him and so conceded to his request. She had to obtain
special permission from [the investment bank] for Husband to trade in
public markets. She set up office space for him and paid the $3,000
monthly rent. She paid the $30,000 - $40,000 yearly fee for a Bloomberg
terminal. Wife never saw any statements about Husband's trading account
during the marriage, as she is prohibited from doing so due to her
employment. At some point prior to the commencement of this action, she
learned that Husband had a net operating loss of $1.2 million.[6]
Wife testified that Husband worked in the parties' bedroom if he was
not in the office that she had rented for him. She also testified that
Husband left a computer or hard-drive in the parties' bedroom running
throughout the night, which he told her not to touch. She speculated at
trial that perhaps there was bitcoin on the hard-drive and that the
hard-drive was stored in a safe in the parties' home. Husband took the
safe and hard-drive when he moved out of the marital apartment; the safe
also contained a few thousand dollars, some jewelry, and some papers.
He did not provide an inventory of the safe's contents.
Wife's testimony about the mental and emotional abuse she suffered at
the hands of Husband was clear, consistent, and credible. Husband was
controlling, verbally abusive, and threatening. His conduct began before
the marriage and continued throughout.
"Victimized" by Wife's purchase of a home for her parents in 2005,
Husband "relentlessly" harassed and berated her. According to Wife,
Husband felt that she had made a unilateral financial commitment without
his consent and that his parents did not get equal treatment. The
parties, however, were not married in 2005, did not have a financial
partnership in 2005, and Wife used her own money for the home purchase.
Nonetheless, Husband was relentless on this issue throughout the
marriage and was verbally abusive toward her for this perceived harm.
She gave in to his demands that she put his name on the deed to her
parents' home. She sought to appease his parents by renovating his
childhood home and hosting a very expensive wedding reception in
Georgia.
Consistently throughout the marriage, Husband called Wife a "bitch"
and "cunt" and then blamed his abusive conduct on her — he would tell
her that she made him do it. He would threaten her, telling her she
could continue to work and pay for everything, that she was only good
for making money, and that if she left him she would lose custody of the
children and have to support him. Anytime the parties went to therapy
to address these issues Husband would soon quit because he thought the
therapists were taking Wife's side.
Husband constantly degraded Wife's fitness to parent. During the
marriage, Wife spent as much time with the children as she could,
including one-on-one time with each child, given her work
responsibilities and commitments. She chose clients in the same
geography to make travel easier and limited. She would take "red eye"
flights to make sure she was there for the kids. She took the children
to school when not travelling. She did everything possible to stay in
their lives. On the weekends, she primarily took care of them and
brought them to activities. She found the concierge pediatrician;
participated in interviews of therapists; got a consultant to help them
pick private school; and selected their activities. All of this, on top
of being the family's primary financial support.
Nevertheless, Husband told Wife that she was "unsafe as a mother and
that I — I couldn't be trusted to take care of the kids because I had
ADHD ... and the kids weren't safe with me. So he, toward the end, said I
couldn't be around the kids by myself." Wife does not have ADHD. She
was visibly upset when testifying about this abuse at the hands of
Husband.[7]
Husband also took the position that he was the children's primary
caretaker, a claim roundly rejected by the Court on the custody trial
and fully undermined, again, by Wife's testimony before this Court.
Resentful of having to be Wife's "back-up" if she needed to work, and
not wanting to have to care for the kids himself, Husband insisted on
having childcare coverage all the time. The parties had overlapping
nannies from the time the children woke-up in the morning until 8:00 pm
at night; nannies and babysitters on the weekends and on vacations; and
back-up babysitters just in case the original caregivers cancelled, all
for a cost of hundreds of thousands of dollars per year.
Husband did not contribute anything towards Wife's career and
professional life. She could not talk to him about work. He did not like
when she spoke to his friends about work. He was dismissive of her
professional projects, such as a podcast, that she worked on. He
resented when she asked him to attend work events with her, even though
her job was "outward facing" and required client entertainment. Anytime
he attended an event, it came "always with a cost." He would cancel if
she was not on her best behavior; she was always on eggshells and never
knew what he would do.
Indeed, as noted above, Husband did not want Wife to take the job at
[the investment bank] in 2006. He thought it was an insult that they
asked her to take a one-year step-back and that she could earn more
money somewhere else. The issue caused a big fight.
Husband was not just unsupportive of Wife's career, he was abusive
and sought to undermine it. When, in 2018, Wife discussed with Husband
her opportunity to move into asset banking — a position which would give
her more flexibility and less stress — he did not want her to do it
despite knowing that she was burnt out and her health was declining in
her then role. The parties had "several very bad discussions." She told
him that she was not functioning, not well, and needed a change. In
response,
A: ... [T.] did not want me to take the job. He thought I
would make more money going to another investment bank potentially. He
thought I couldn't do this job. He was very abusive about how he
described that.
Q: Can you tell us what he said?
A: That I was stupid. I was incapable. There was no way I'll
be successful. I was putting the family at risk. It got very ugly. And
it got to a place where I — I literally, like it was — I couldn't
continue on the path I was on. I had to do something different. So I
made the decision to take the job. And it was — You know, he was not
very nice about it and it wasn't great.
Husband made Wife "jump through hoops" to justify the initial
investment for her transition to asset banking. Once the investment was
made, he said it was a bad investment and that she was "making us
broke." He called her "different flavors of you're an idiot. You're
stupid. You don't know what you're doing."
Post-Commencement Behavior
Husband expressly agreed, when asked by a reporter, that his conduct
in this litigation is akin to a "kamikaze mission." He rejected Wife's
reasonable attempts to settle with two separate mediators. He engaged in
a campaign of delay throughout the litigation and attempted to stop the
financial trial. Wife testified, sincerely and credibly, that "I have
wanted nothing but for this case to be over since the beginning."
Husband made every matter more difficult than necessary, requiring
Wife's attorneys to be involved in every issue, even routine matters for
the children. He cancels his parenting time last minute, requiring Wife
to cancel her obligations or obtain last minute childcare at a high
cost. He does not communicate with Wife directly, even on basic things
for the kids. Wife explained:
I e-mailed him, texted him. He decided that was harassment
and decided that he was no longer going to respond to any of my e-mails
or any of my texts. He turns my son's phone off. I have no way to
communicate with the kids. The only way he communicates is through my
lawyers, even though I said I have to bear that burden. I even bought
like OurFamilyWizard. I bought his subscription. I gave him access. He
refuses to use that. Instead he only goes to my attorneys, and I have to
bear those costs.
... And I've said repeatedly this is costing money. He says you can afford it. That's basically the end.
The Parties' Age and Health
As of March 3, 2022, Wife was forty-four and Husband was forty-six
years old. Wife had breast cancer in 2019, for which she underwent a
lumpectomy and radiation treatment. She continues to monitor the
situation and is screened every six months. She had ACL surgery on March
14, 2022.
By all outward appearances, and as far as this Court could tell from his limited appearances, Husband is in good health.
Child Support and Maintenance
At the time of trial, Husband had not paid a penny in basic child
support. He also had not contributed anything to the costs of the
children's school, their medical expenses, extra-curricular expenses, or
any other add-on expenses.
Wife testified, credibly, as to the children's expenses, including
tuition ($14,499 per month), summer camp, extracurriculars, and
childcare expenses. At the time of trial, Wife had paid all of the
children's expenses without any contribution from Husband.
As for child support, Wife's testified, as supported by her
Maintenance and Child Support Calculator, that considering her income
and this Court's imputation of income to Husband in the sum of no less
than $500,000 per year, Husband's pro rata share of basic child support
and add-ons should be 5.35%. She also testified that, retroactive to
August 2018 (and through January 2022), Husband's basic child support
arrears amount to $27,158.88 ($646 x 42 months), and that his add-on
arrears for the same time period (calculated at 5.35%) are: $32,579 for
school, $8,239 for camp, $2,247 for activities, and $16,131 for
childcare. In total, Husband's arrears amount to $86,354. Wife requested
that Husband's arrears be paid from his share of equitable
distribution.
Wife does not presently have a college fund for the children but expects to pay for college herself.
The family health insurance, under which Husband has been covered, is
through Wife's employment. She has two tiers of insurance — the first
is "normal insurance" which requires a deductible if care is in network,
and the second "kicks in for anything not covered by the primary
insurance." Husband makes no contributions towards the insurance
premiums. He asked for reimbursement of his uncovered medical expenses,
of course, and Wife has reimbursed him. Husband is eligible for COBRA
coverage.
Although Husband has not financially supported his children since
2018, he received $480,000 in tax-free maintenance during the course of
this litigation. He also received, in November of 2018, the entire
balance of the parties' family operating account in First Republic Bank
totaling $683,000 — representing all of the marital liquidity — and kept
his own operating accounts. Within months, he spent all of his interim
equitable distributive award, on top of which he incurred $300,000 in
debt. Among other things, Husband spent his money on rooms at the Four
Seasons Hotel during the nesting period; Wife slept on her sister's
couch when the parties nested. He spent excessively on an expensive
apartment and took no responsibility when he ran out of money, instead
playing victim. In the Custody Decision, the Court found that Husband's
victimhood was a "theme throughout the proceeding" and his "financial
decisions not only call into question his judgment, but his ability to
provide financial stability for the children."
After the First Republic Bank account balance was transferred to
Husband, Wife had to start all over again. She took loans from her
brothers as well as three separate $1 million temporary loans from [the
investment bank] against her future bonuses ($1 million loan per year
for three years).
On the other hand, after Husband spent down the over $1,000,000 he
was paid ($563,000 advance on equitable distribution plus $480,000
tax-free maintenance), he asked Wife for more.
Separate Property and Marital Property
In support of her claims for separate and marital property, Wife
prepared two Balance Sheets. Each Balance Sheet contains information
derived from the exhibits in evidence at trial, inter alia: bank
statements; investment account statements; private equity account
statements; tax returns with all schedules and attachments; Wife's K-1s;
[the investment bank] Confidential Documents (i.e., agreements and
other documents relating to Wife's employment and compensation); and
expert reports. The detailed information contained in the documentary
evidence tied into the Balance Sheets, which were also supported by the
credible testimony of Wife, her real estate expert witness Tanya
Register, and her financial expert Michael Raymond of BST & Company
CPAs LLP.
The first Balance Sheet, entitled "Exhibit 1A — Amended Marital
Balance Sheet," sets forth: each item of martial property; the marital
portion of each asset in percentages ranging from 19.9% to 100%; the
values of each asset set at date of commencement or closer to trial
(either 12/31/2021 or 1/18/2022); the tax liability impacting each
asset; and Wife's position as to the parties' respective equitable
shares of each asset. Wife initially proposed that the parties'
equitable shares of most of the assets be 80% to Wife and 20% to
Husband, with a 50/50% split as to others. During her closing statement,
however, Wife submitted an Amended Balance Sheet (entitled "Exhibit
1A-Revised — Amended Marital Balance Sheet"), which conforms to the
unrefuted proof at trial of Husband's domestic violence and negative
contribution to the marriage and proposes that Husband's 20% share of be
reduced to 15% (subject to a handful of exceptions).
The second Balance Sheet, entitled "Exhibit 1B — Amended Wife's
Separate and Post Commencement Balance Sheet," sets forth each item of
Wife's separate property and values thereof.
Husband did not submit to the Court an exhibit or witness list, as
required. He did not submit an updated Statement of Net Worth, and a
Statement of Proposed Disposition identifying separate and marital
assets and his proposed equitable share thereof. Husband did not offer a
single document identifying the bank accounts, investment accounts,
retirement accounts, and other martial and separate property in his name
and under his control and the values thereof. He submitted no paystubs
or other proof as to his employment and earnings. Husband's last
meaningful document production occurred in 2019 and the last tax return
he produced was for 2018. Any documents Wife obtained after April 2019
were produced pursuant to subpoenas that her attorneys served.
Separate Property: Wife's separate property consists of various
assets, as follows. She has two bank accounts at First Republic which
she opened in November 2018, and into which all of her post-commencement
earnings (paychecks and bonuses) are deposited and from which all of
her family's expenses are paid. She is a joint account holder with her
siblings on two Bank of America accounts for the benefit of their
parents. She has [the investment bank] stock and Restricted Stock Units
("RSUs") and various public and private equity investments, all of which
were acquired post-commencement as part of her employment with [the
investment bank]. She has a plot of land and a car, both of which she
purchased post-commencement with post-commencement earnings. There is a
portion of her 401(K) Retirement account which is her separate property,
having been earned prior to the marriage.
As to her separate property liabilities, Wife has capital commitment
obligations on her equity investments that will require her to pay
$3,944,575 to realize their value. As a senior partner, Wife has
significant future private equity capital commitments. However, she has
no savings and must constantly borrow money to meet her equity fund
investments obligations. Among other things, she has a low liquidity
line of credit against her public equities from [the investment bank] in
the sum of $988,516, which she claims as her separate liability.
Wife also has separate property liabilities such as $175,000 in
counsel fees, and $675,000 in taxes. Post-commencement, she has paid all
tax liabilities on her income and assets and any fees incurred as a
result of the sale of securities.
Marital Property: The marital estate consists of five main financial
assets, and several miscellaneous assets, with a total tax-impacted
value of $10,653,002. The five financial assets are [the investment
bank] stocks, [the investment bank] RSUs, dividends from RSUs, and
public and private equity investments, all of which were acquired as a
direct result of Wife's employment with [the investment bank] ("[the
investment bank] assets").
Both Wife and Mr. Raymond testified credibly as to [the investment
bank] assets. They explained which percentages of those assets were
marital and which were separate; they identified the assets that are
passive and those that are actively managed by Wife; they explained the
extent to which the assets are subject to "claw back" from [the
investment bank] and the extent to which they are illiquid. They
itemized the actual and potential tax implications upon the sale of the
different assets, assuming that the sales would be recognized as capital
gains and therefore taxed at the lower capital gains rate. Mr. Raymond
testified that capital gains tax impacting will favor Husband because it
increases the net value of certain assets for which he will receive a
share. Wife asks that Husband be awarded 15% of the marital portion of
each of [the investment bank] assets.
Wife explained that, as part of her compensation, she receives a
yearly equity bonus in the form of RSUs. The restricted shares are
distributed in three tranches over three years, then held in a custody
account for two years before they are delivered. Every year a tranche of
the shares get vested and 55% of the shares immediately go to pay taxes
thereon. Once the RSUs are delivered, she then pays another tax on the
incremental gain between the issue price and sale price.
During the entire five-year pre-delivery period, the RSUs are subject to "claw back" which is triggered by, inter alia,
termination of employment for any reason, failure to consider risk
around the business, and engaging in any conduct which causes the firm
financial or reputational harm. The conditions for "claw back" are
contained in a "pages long" document, and include matters such as
extortion, false statements, violating security laws, and the like. [The
investment bank] can "claw back" the RSUs in whole or in part, even if
Wife has already paid taxes on them. Wife testified that [the investment
bank] has clawed back RSUs from employees for reputational issues "in
some pretty high profile ways"; she explained that "if you step out of
line, they can take it back, and they have done it to other people."
However, she testified that although the RSUs are not guaranteed, she
"like[s] to think that I conduct myself very ethically."
[The investment bank] RSUs are only partially marital and have been valued and allocated by Wife's expert in accordance with DeJesus v DeJesus, 90 NY2d 63 (1997).
Essentially, because the RSUs are earned over a period of time and vest
over a period of time spanning both pre and post-commencement, the
portion of the RSUs that are martial varies by tranche. The value of
each RSU is also variable. Wife and Mr. Raymond testified that, given
the "at risk" status of the RSUs, Husband should be awarded his share of
the martial portion of the RSUs, tax-impacted, "if, as, and when" they
are delivered to Wife without restrictions.
The public and private equity investments consist of some passive
assets that were simple investment opportunities, and some active assets
which she manages as part of her duties in asset banking. Mr. Raymond
valued these assets at times relative to their passive/active status. In
addition, certain of the equity investments are illiquid. For this
reason, and because the value of these assets depends on the market,
their values were discounted.
The remaining marital assets are of varying types. There are three
marital bank accounts: (1) the First Republic Bank checking account.
This was the family operating account until November 2018, when the
$683,000 account balance was transferred to Husband as an advance on his
equitable distribution and part payment of temporary maintenance; (2) a
TD Bank checking account maintained for the purpose of paying the
mortgage on Wife's parents' home. Husband transferred $119,000 from this
account to the First Republic account prior to obtaining all of the
funds in the First Republic account; and (3) a Bank of America checking
account with a balance of $10,362. Wife requests that the bank accounts
be distributed 50/50%.
Husband had exclusive use of funds in the marital accounts in his
name which he used for trading. However, no documents as to these
accounts were produced at trial. Husband also had exclusive control over
investments in Azure Capital Partners LP and related entities. No
documents were produced as to this investment either.[8]
The parties each have their own retirement accounts. Wife has a
401(K) with [the investment bank] that she opened in 2006, and into
which she consolidated her 401(K) accounts from her prior employers.
Wife made automatic contributions into her 401(K) up through
commencement of this action, and the value, as per Mr. Raymond, of the
marital portion of Wife's 401(K) is $550,952. Husband has an IRA valued
at $18,207 based on documents Wife obtained pursuant to a subpoena that
her attorneys served. Husband did not produce documents about his IRA,
and Wife has no idea whether he has any other 401(K) or retirement
accounts. Wife proposes that each party retain 100% of their own
retirement accounts.
There is a "tax loss carryforward" valued by Mr. Raymond at $435,000.
The "tax loss carryforward" is identified on Husband's 2018 tax return
and was created by the $1,253,162 in losses that he sustained by his
trading activities with Wife's earnings. It is an asset that can be used
against future investment gains to reduce, whether or in whole or part,
a capital gains tax. Wife requests that the value of this asset be
distributed 50/50%.
Tanya Register, Wife's real estate appraiser, appraised Wife's
parents' North Carolina home at $885,000. After deducting the $464,363
balance of the mortgage from $885,000, leaves a net equity in the home
of $420,637. Husband did not read Ms. Register's appraisal report; would
not consent to its entry into evidence; required Ms. Register to
testify at trial; and then had no cross-examination of her and no
objection to her conclusions as to the fair market value of the home as
stated in her report. Wife requests that Husband receive 15% of the net
equity in the home, and that the deed be transferred back into her name.
She agrees to pay all expenses for the deed transfer.
The parties' 2015 Mercedes Benz S-63 is in Husband's possession and
has a fair market value of $76,990. Wife requests that the value of this
asset be distributed 50/50%.
Wife did not value, and proposes that each party keep, their respective jewelry and household furniture and items.
Credits Due to Wife
During the litigation, Wife made certain payments on behalf of
Husband for which she seeks a credit. The parties owned a condo in
Puerto Rico which they agreed to and did sell in 2020. Before they sold
it, Wife paid Husband's share of the carrying costs for the condo in the
sum of $39,015.
Husband kept all four cars purchased during the marriage. He sold
three of the cars and remains in possession of the 2015 Mercedes Benz
S-63. He provided no documents or information as to the profit he
realized from the sale of three cars. Wife seeks a credit of $25,000 as
and for her share of the estimated net sales proceeds.
Wife seeks a credit in the sum of $86,354 for basic child support
arrears and add-ons due from Husband for the period from August 2018
through January 2022. She also seeks $50,000 in attorney's fees incurred
by Husband's frivolous motion to strike her Notice to Admit and other
meritless claims and litigation strategies.
Before he absented himself from the trial, Husband had an opportunity
to, and did, cross-exam Wife on March 4th. He inquired on two issues:
the hard drive in the parties' bedroom, and the RSUs. He did not ask a
single question about her testimony as to abuse and domestic violence.
He never returned to complete his cross-examination of Wife and her
financial expert witness or to put on his own case.
Payment of Husband's Distributive Share
Wife proposes that Husband's distributive award, amounting in all to
$1,995,428, be paid by: (1) distributing certain assets to him (his IRA,
the Mercedes S-63, and the tax loss carryforward); (2) applying, as
previous part payments, the November 2018 advance on equitable
distribution in the sum of $563,000 and the July 7, 2021 $200,000
interim attorney's fee award; (3) crediting Wife for payments made on
behalf of Husband, child support arrears, her share of the net sales
proceeds of the cars, and $50,000 in attorney's fees she incurred during
the trial; and (4) providing an equalizing payment in the form of cash
or low basis saleable securities at her election. As for that part of
Husband's distributive award that is comprised of [the investment bank]
RSUs that are still at risk, Wife proposes that Husband's 15% share of
the martial portion of those RSUs be distributed "if, as, and when" they
are delivered to Wife without restrictions.
The Family Offense Petition and Preliminary Injunction Motions
By Decision and Order dated April 4, 2022, this Court dismissed
Husband's Family Offense Petition for failure to state a cause of
action.
By Decision and Order dated August 23, 2022, this Court granted Wife's preliminary injunction motions.[9]
EQUITABLE DISTRIBUTION
Before the Court can distribute marital assets, it must first determine what they are. Fields v Fields, 15 NY3d 158, 161 (2010)
("although the manner in which marital property is distributed falls
within the discretion of the trial court, `the initial determination of
whether a particular asset is marital or separate property is a question
of law, subject to plenary review on appeal'").
In order "to give effect to the `economic partnership' of the marriage," the term martial property is broadly construed. Fields v Fields, 15 NY3d at 163; DeJesus v DeJesus, 90 NY2d 643, 647 (1997) ("The statute is sweeping and `recognizes that spouses have an equitable claim to things of value
arising out of the marital relationship'"); DRL § 236 B (1)(c)
("marital property shall mean all property acquired by either or both
spouses during the marriage ... and before the commencement of a
matrimonial action, regardless of the form in which title is held").
On the other hand, separate property, which is an exception to marital property, is construed narrowly. Fields v Fields, 15 NY3d at 163. The party claiming that an asset is separate property has the burden of proof on the issue. Id.; DeJesus v DeJesus, 90 NY2d at 652
("statutory presumption that all property, unless clearly separate, is
deemed marital property and must further recognize the titled spouse's
burden to rebut that presumption."); Saasto v Saasto, 211 AD2d 708, 709 (2d Dept 1995)
("A court is not bound by a party's own account of his or her finances,
and where a party fails to trace the sources of money claimed to be
separate property, the court is justified in treating it as marital
property.").
Wife met her burden of establishing, by way of competent, admissible
proof, the precise assets which are martial and those which are her own
separate property. She fully disclosed the identity, extent, and
location of the assets held in her name or which are in her possession
and control. The value of each asset, whether marital or separate, was
derived from the hundreds of pages of bank statements, investment
account statements, private equity account statements, and other
documents, including the expert reports, all of which were admitted into
evidence.
Wife established, by way of her own credible testimony, as well as
that of her expert, that her separate property was either acquired prior
to the marriage (i.e., a portion of her 401(K); checking accounts held
with her siblings for their parents), or post-commencement with
post-commencement earnings (i.e., plot of land; car; certain [investment
bank] assets). Her expert, Mr. Raymond, traced the contributions into
Wife's 401(K) account to determine the separate/marital portions thereof
and allocated the separate/marital percentages of [the investment bank]
shares at risk and RSUs pursuant to the DeJesus formula. Having
read the reports and related documents, and heard Mr. Raymond's
testimony, there is no basis for this Court to conclude any differently
as to Wife's separate property claim. Husband, who appeared for trial on
two days, did not challenge Wife's showing as to her own separate
property.
Accordingly, Wife established, and this Court so finds, that her
separate property consists of the assets set forth in Schedule 1
[redacted here in total], all of which are not subject to equitable
distribution and shall remain in her name, possession, and control.
For the same reasons, Wife established, and this Court so finds, that
the marital estate consists of the assets set forth Schedule 2
[redacted here in total]. Again, Wife fully disclosed and was
forthcoming about the assets acquired during the marriage and held in
her name, including any bonuses (cash and stock) paid post-commencement
but earned during the marriage. Klauer v Abeliovich, 149 AD3d 617 (1st Dept 2017)
("As a general rule, bonuses paid as compensation for past services are
marital property and subject to equitable distribution."); DeJesus v DeJesus, supra.
The voluminous exhibits and credible testimony also established that
certain of the marital assets should be valued as of the date of
commencement, and others at a date closer to trial, and clearly
demonstrated those respective values. DRL § 236 B (4)(b) ("the court
shall set the date for valuation of each asset."); Mesholam v Mesholam, 11 NY3d 24, 28 (2008)
(same; noting that "economic partnership should be considered
dissolved" upon commencement of divorce action implicating equitable
distribution); McSparron v McSparron, 87 NY2d 275, 287-88 (1995)
("`active' assets should be valued only as of the date of commencement
of the action, while the valuation date for `passive' assets may be
determined more flexibly"; these "formulations ... should be regarded
only as helpful guideposts and not as immutable rules of law"). Although
not specifically reflected in Schedule 2, the marital bank accounts,
retirement accounts, North Carolina home, "tax loss carryover," jewelry,
and other miscellaneous assets have been valued at a date close to
trial as these are all passive assets. [The investment bank] assets
which are passive (i.e., dividends and stock over which Wife has no
managerial control) are also valued closer to trial, and those which are
active (i.e., the limited partnerships and equity investments which
Wife actively manages) are valued at date of commencement. These varied
valuation dates, and related values, for each distinct asset are
contained in the financial documents admitted at trial and the expert
reports and are also "tied in" to Wife's Balance Sheet for martial
property (also in evidence).
As noted above, the entire marital estate has a total tax-impacted
value of $10,653,002. Husband does not have an automatic entitlement to
half of that amount because equitable distribution does not necessarily
mean equal distribution. Arvantides v Arvantides, 64 NY2d 1033, 1034 (1985) ("there is no requirement that the distribution of each item of marital property be on an equal or 50-50 basis"); Ward v Ward, 94 AD2d 908 (3d Dept 1983)
("Marital property is to be distributed on the basis of the factors
enumerated in the equitable distribution statute, not on a simple 50-50
basis"). Instead, the Court considers "all relevant facts and
circumstances" along with the factors presented in DRL § 236 B (5)(d)
and fashions its award appropriately.
On this record, which speaks for itself, and considering the
statutory factors contained in DRL § 236 B (5)(d), a distributive award
of marital assets 85% to Wife and 15% to Husband (with some exceptions
as to a handful of assets to be distributed 50/50%) is equitable, just,
and correct. Although this Court understands that it need not engage in a
"point-by-point catechistic discussion" of each factor under DRL § 236 B
(5)(d) (Sykes v Sykes, 43 Misc 3d 1220[A] at p. 4 [Sup Ct, New
York County 2014]), given the history of this case, and Husband's
self-represented status, it finds it best to address each statutory
factor specifically, albeit somewhat out of order. We begin with the
most controlling facts and factors first.
This is not a long-term marriage. The parties were married for just
under eleven years. At the time of trial, Wife was forty-four and
Husband was forty-six. Wife had breast cancer in 2019 and underwent
lumpectomy and radiation; she has had some cancer scares since then.
Husband appeared in good health at the first two days of trial. DRL §
236 B (5)(d)(2) (age and health of parties).
The parties started off in 2007 with modest assets and promising
careers. Wife was already employed with [the investment bank]. Husband
was also employed in the financial industry as a tech analyst earning
over $1 million per year. In August 2018 (date of commencement), Wife
was still employed with [the investment bank]; Husband had not been
employed commensurate with his skills and experience since 2008. The
family lived a comfortable New York City lifestyle and paid their
expenses from Wife's earnings and yearly cash bonuses. They acquired a
portfolio of stocks and investments as a result of Wife's work and
professional reputation. Husband had trading accounts in his sole
possession and control (the extent and value of which were not produced
by Husband or otherwise provided to the Court). He may also have had
bitcoin and/or other assets. DRL § 236 B (5)(d)(1) (parties' income and
property at time of marriage and date of commencement).
As to that last fact, and as amply shown in the record, it has been
impossible to evaluate any marital assets in the name or control of
Husband. He utterly failed to participate in discovery and in the
financial trial. To the extent this Court had any information about
assets in his name, it was provided by Wife as obtained by subpoenas
served by her attorneys. DRL § 236 B (5)(d)(10) (impossibility or
difficulty of evaluating any assets, etc).
Husband made little, if any, positive contributions, whether direct
or indirect, to the acquisition or development of marital property
during the marriage. He provided little, if any, "services as a spouse,
parent, wage earner and homemaker, and to the career" of Wife. DRL § 236
B (5)(d)(7) (direct or indirect contributions to acquisition of martial
property). Husband was not a supportive husband; he was an abusive
husband. Indeed, the finding that there was "domestic violence during
the marriage of an emotional nature" is the law of the case (see People v Evans, 94 NY2d 499, 502 [2000]
[court's resolution of issue within litigation constitutes law of the
case]) and is otherwise supported by the credible evidence on the
financial trial (much more on this below). Suffice to say here that,
notwithstanding Husband's opinion, which he voiced regularly, that Wife
was "unsafe as a mother," Husband provided modest parenting support: he
refused to watch the children, requiring Wife to pay for overlapping
nannies, babysitters and back-up babysitters, and childcare on weekends
and on vacations, to the tune of hundreds of thousands of dollars.
Husband was not a wage earner. After losing his job in 2008, he
stayed unemployed until 2010. When he went back to work trading Wife's
earnings, he sustained a $1.2 million loss, while Wife continued to pay
his office rent and yearly Bloomberg terminal charges. DRL § 236 B
(5)(d)(7); see also, DRL § 236 B (5)(d)(12) (wasteful dissipation).
Husband did not support Wife's career and instead was resentful of
her success and sought to undermine it. He did not want her to take the
job at [the investment bank] in 2006 — a lucrative job which permitted
him to stay out of work essentially throughout the marriage. She could
not talk to him about work and he was dismissive of her work projects.
He did not want her to move into asset banking in 2018 and harshly
criticized her for considering it, telling her that she was stupid and
making the family broke. He refused to attend client entertainment
events necessary for Wife's job, and when he did his behavior caused her
great anxiety. For these reasons alone, an award of 15% of the marital
portion of [the investment bank] assets is warranted. See generally Gering v Tavano, 50 AD3d 299 (1st Dept 2008)
(award of 15% interest in husband's business proper "given [wife's]
failure to contribute to the business, lack of cooperation with respect
to discovery of her own assets, and receipt of temporary maintenance"); Davenport v Davenport, 199 AD3d 637, 641 (2d Dept 2021)
(upholding award of 10% of appreciated value of plaintiff's interest in
business and 25% of plaintiff's bank accounts given "brief duration of
marriage" and defendant's minimal contributions"); compare G.R. v K.R.,
68 Misc 3d 1217(A) (Sup Ct, New York County 2016) (spouse awarded 15%
of other spouse's business crediting "indirect contributions he made as a
spouse and a homemaker"); DRL § 236 B (5)(d)(7).
Husband committed acts of domestic violence, as that term is defined
in Social Services Law § 459(a), against Wife throughout the entire
marriage. DRL § 236 B (5)(d)(14). Indeed, his harassment continues to
date, has impacted her emotionally, financially, and reputationally, and
warrants the distributive award and its implementation herein.
Briefly, New York traditionally did not consider marital fault
generally, and domestic violence specifically, as a discrete factor in
equitable distribution, and instead considered marital fault only under
the prior "catch-all" provisions of DRL § 236 B (5)(d) and only where
the conduct was so "egregious" as to "shock the conscience of the
court." O'Brien v O'Brien, 66 NY2d 576, 589 (1985)
(explaining that "marital fault is inconsistent with the underlying
assumption that a marriage is in part an economic partnership and upon
its dissolution the parties are entitled to a fair share of the marital
estate" and "fault will usually be difficult to assign" and involve the
court in "collateral issues"); Howard S. v Lillian S., 14 NY3d 431 (2010) (same); Havel v Islam, 301 AD2d 339, 345 (1st Dept 2002)
(husband's attempted murder and brutal beating of wife in front of
children was "shocking and despicable" warranting distributive award to
him of 4.5% of marital assets); Linda G. v James G., 156 AD3d 25 (1st Dept 2017)
(husband's criminal conduct that "significantly disrupted the family's
stability and well-being" warranted distributive award to him of 25%
value of marital home).
The law has since changed, ostensibly in recognition of the fact that
certain fault is not difficult to assign and is also not just
collateral to the partnership. As of 2020, under amended DRL § 236 B
(5)(d)(14), a court may now consider "harassment, aggravated harassment"
and other acts of domestic violence enumerated in the Social Services
Law in awarding marital property when the spouse's act or acts resulted
in "actual ... emotional injury or have created a substantial risk of ... emotional harm to [the victim] or [the victim's] child." SSL § 459(a) (italics added).
Due to the amendment's recent enactment, there are no cases to guide
this Court's analysis. However, review of the statutory context and
legislative history reveals the amendment's "spirit and purpose" and
guides the Court in its interpretation and application. Sutka v Conners, 73 NY2d 396, 403 (1989). According to the New York Legislative Annual's 2020 publication:
[The amended statute] would require courts to specifically
consider the effects of domestic violence on future financial
circumstances of each party while determining equitable distribution of
property in a divorce. The legislation would require a court to examine
the circumstances and results of domestic violence and would allow a
court to find that a party has a diminished ability to make a living due
to acts of domestic violence committed against them by the other party.
This would enhance victims' abilities to receive equitable
distribution. New York Legislative Services, New York Legislative Annual
33 (2020).[10]
Husband's verbal and emotional abuse of Wife throughout the marriage
constituted harassment — his threats to take custody of the children and
degrading comments alarmed her, were made without provocation, and
served no legitimate purpose.[11]
The prior jurist, upon a complete trial record, expressly found that
Husband engaged in "domestic violence of an emotional nature" against
Wife, and this Court finds the same. Wife was subject to consistent,
persistent verbal and emotional abuse. Husband called her names and
degraded her in all aspects of her life. He told her to her face and in
front of her family that she was diseased and an unfit parent who could
not be around her children. He called her "bitch" and "cunt" at will and
then callously blamed her for his despicable speech. As to her
professional skills, he called her "different flavors of you're an
idiot. You're stupid. You don't know what you're doing." This conduct
continues unabated, albeit in a different form, and has the potential
for destroying Wife's ability to make a living.
This Court's finding of harassment by Husband during the marriage is
substantiated by his harassment during this litigation. The man in the
marriage is the same exact man in this litigation. He has continued his
campaign of abuse for the past four years: having lost the power to
curse and degrade her to her face at will, Husband has engaged in
extreme and harassing litigation tactics for the stated purpose of
wearing Wife down financially and emotionally. Indeed, he has said it
himself — he is on a kamikaze mission. He has engaged in "clear,
intentional, and relentless conduct in attempting to harm Wife in her
professional life" by discussing her employment and the details of this
litigation with third parties, including reporters, in direct violation
of the Confidentiality Order. He asserted manufactured and wholly
meritless claims of domestic violence against Wife. He has actively
sought to disparage and defame her to the Board of Directors of [a
not-for-profit organization on which she sits] and undermine her
employment. He caused articles to be written about her, her relationship
to [the investment bank], and this divorce, despite knowing that she
could lose assets and her job for any reason including reputational and
financial harm to her employer.
In this Court's considered view, Husband's domestic violence during
the marriage and this litigation, which threatens Wife's professional
reputation, fits squarely within what this Court is now authorized to
consider under DRL § 236 B (5)(d)(14), as amended, and resembles the
type of conduct previously recognized by courts in denying maintenance
to an abusive spouse.[12] See generally Stevens v Stevens, 107 AD2d 987, 988 (3d Dept 1985)
(maintenance award in amount exceeding that needed to keep wife from
becoming public charge constituted unjust reward for her behavior
including engaging in adulterous relationship; threatening future
affairs; repeatedly berating husband in front of his coworkers, friends,
family; physical violence); Jessica T v Keith T, 2020 NY Slip Op 50673(U)
(Sup Ct, Suffolk County 2020) (awarding wife increased maintenance due
to husband's abuse, frivolous litigation tactics, including delay,
"compulsive lying," and requests that court recuse itself).
This Court recognizes that the focus and purpose of awarding
increased maintenance to an abused spouse is different than the focus
and purpose of awarding an abused spouse a greater share of marital
property. Maintenance is meant to remedy the abused spouse's diminished
earning capacity as a result of the abuse and enable them to live a
lifestyle similar to that enjoyed in the marriage. Jessica T v Keith T, supra.
Distributive awards are meant to ensure that the equities are applied
to reflect the contributions of each spouse to the partnership and to
reach the right and just result as to marital property. Fields v Fields, 15 NY3d at 162
("fundamental purpose of the Equitable Distribution Law — the
recognition of marriage as an economic partnership in which both parties
contribute"); Havell v Islam, 301 AD2d at 344 (where marital fault exists court compelled "to invoke its equitable power to do justice between the parties").
It simply cannot be the case that the equities prohibit the Court
from taking into account the actions of an abusive spouse who is intent
on ruining the other spouse's professional reputation, career, financial
security, and health, simply because they have not yet totally
destroyed their partner. Indeed, in its first iteration of the amended
provision, the Legislature appears to have recognized the importance of
considering domestic violence in and of itself in making a distributive
award, irrespective of the financial consequences of the abuse. See FN 11; see also Havell v Islam, 301 AD2d at 345-346
(Court of Appeals, in addressing marital fault precedent under prior
statute, notes that one such precedent "does not include impairment of
economic independence" in definition of egregious and instead seeks "to
identify a harm to a significant social value" and another "invokes the
important rule in equity that a person should not be allowed to profit
from his own wrongdoing").
The fact that Wife is still gainfully employed despite Husband's
unabated harassment and abuse should not bar application of DRL § 236 B
(5)(d)(14) to this Court's analysis and conclusions as to equitable
distribution of assets. Indeed, it is clear from this record that
Husband's "main desire seems to be to inflict some sort of harm upon
[Wife] in any manner possible as displayed throughout the entirety of
this case." Jessica T v Keith T, supra.
His harassment did not stop at commencement but has continued and in
fact accelerated over the past four years. By all accounts, this is an
insidious case of domestic violence, the end of which has yet to be
reached. Consequently, this Court is empowered to, and must on this
record, find that Husband's acts resulted in "actual ... emotional injury" and has "created a substantial risk of ... emotional harm"
to Wife, and has negatively impacted her professional reputation and
career and threatened her ability to make a living. DRL § 236 B (5)(14).
In addition to the $1.2 million loss Husband sustained in trading
Wife's earnings (mitigated, somewhat, by the tax loss carryforward
incurred as a result of his losses; an asset which he is awarded), he
also caused the family to unnecessarily incur hundreds of thousands of
dollars in childcare because he did not want to be Wife's "back-up."
During this litigation, he squandered over $1 million on lavish hotel
living and an expensive apartment, causing instability for his children.
All of this amounted to wasteful dissipation. DRL § 236 B (5)(d)(12).
Husband's probable future financial circumstances are good. DRL § 236
B (5)(d)(9). He graduated magna cum laude from Duke University. He is
in good health. He has had several jobs in the financial industry,
sometimes earning over a million dollars per year. By his own account,
he is the CIO of PXXXXXXX, a company in Dubai. This Court has found that
he earns no less than $500,000 per year. He may or may not have
bitcoin. He may or may not have bank and investment accounts holding
substantial sums of money. He sold the parties' three cars and kept the
net sales proceeds.
Although Wife's future financial circumstances are also good, they
are under constant threat by reason of Husband's conduct. She built the
family's finances back up after Husband received all of the marital
liquidity in November 2018. She has substantial earnings and investments
but they are coupled with substantial liabilities against the
realization of those investments. In the meantime, Husband has
continued, unabated, in his attempts to defame and disparage Wife based
on meritless claims of domestic violence which have been rejected by
this Court, and blatant violation of the Confidentiality Order. This
conduct puts the majority of the marital assets — [the investment bank]
RSUs — and Wife's employment, at risk of loss. There is no guarantee
that Husband will stop his calculated kamikaze campaign to destroy Wife
financially and emotionally, notwithstanding the fact that Wife is the
sole support for the parties' children. Wife has not received a penny in
child support from Husband and will likely have to cover all of the
children's expenses going forward, including college tuition.
Under the post-divorce maintenance statute, the statutory guideline
maintenance amount is zero. Husband received temporary maintenance
totaling $480,000 over a period of 24 months. As discussed more fully
below, this Court declines to deviate from the guideline amount. DRL §
236 B (5)(d)(6).
As certain of [the investment bank] assets are illiquid, Wife will
make an equalizing payment to Husband to compensate him for his
equitable share of such assets (after awarding him other assets,
deducting payments already made to Husband, and applying credits due to
Wife). In addition, Husband will receive 15% of the marital portion of
[the investment bank] shares at risk and RSUs, "if, as, and when" they
are delivered to Wife free of restrictions. DRL § 236 B (5)(d)(8). Given
Husband's conduct, it is desirable that Wife retain [the investment
bank] assets "free from any claim or interference" by Husband. DRL § 236
B (5)(d)(10).
The Court has considered the tax implications of its equitable
distribution award. DRL § 236 B (5)(d)(11). As the lion's share of
Husband's award is being funded by assets already in his possession,
credits in favor of Wife, and a small equalizing payment to Husband,
each party shall bear responsibility for their equitable share in tax
consequences. This applies also to Husband's equitable share of the
marital portion of the RSUs which he will be entitled to receive "if,
as, and when" they are delivered to Wife free of restrictions. Hartog v Hartog, 85 NY2d 36, 52 (1995)
(court properly considered tax consequences and reduced wife's
distributive share of illiquid assets by her equitable share of tax
liability); Teitler v Teitler, 156 AD2d 314, 316 (1st Dept 1989)
(failure to take tax consequences into consideration "would have the
effect of inflicting a fundamental injustice upon one of the parties";
tax liability arising out of sale of asset "should properly be borne in
the same proportion as each party's share of the property"); Sogoloff v Sogoloff, 124 AD3d 539 (1st Dept 2015) (parties properly directed to pay their pro rata share of tax consequences on sale of stock).
Neither party has need to occupy or own the marital residence, as it
was a rental. DRL § 236 B (5)(d)(3). Husband will not lose pension
rights upon dissolution of the marriage; he will keep his own IRA. DRL §
236 B (5)(d)(4). Husband is entitled to COBRA benefits upon dissolution
of the marriage. DRL § 236 B (5)(d)(5).
By reason of all of the foregoing, the distribution of the parties'
marital assets 85% to Wife and 15% to Husband (subject to some assets
being distributed 50/50%), as set forth in Schedule 2, is equitable,
appropriate, and just. For the same reasons, the payment of Husband's
distributive award by awarding him assets already in his possession,
applying previous payments and credits, and making an equalizing
payment, is equitable, appropriate, and just, as is the distribution of
his interest in [the investment bank] RSUs "if, as, and when" such RSUs
are delivered to Wife free of restrictions, all as set forth in Schedule
3 [redacted here in total].
Attorney's Fees
An award of attorney's fees is a matter within the sound discretion
of the trial court given due regard for the financial circumstances of
the parties and "all the other circumstances of the case, which may
include the relative merit of the parties' positions." DeCabrera v Cabrera-Rosete, 70 NY2d 879, 881 (1987); Gordon v Gordon,
179 AD3d 402, 403 (1st Dept 2020) ("wife's obstructionist tactics in
needlessly prolonging this litigation, such as failing to disclose
assets and comply with discovery demands, and in disrupting the
courtroom during trial" supported award to husband of 60% of his total
counsel fees); Ciampa v Ciampa, 47 AD3d 745 (2d Dept 2008)
($100,000 advanced by defendant credited toward plaintiff's attorney
and expert fees to reduce defendant's equitable distribution
obligation); see generally Kaufman v Kaufman, 189 AD3d 31, 76 (2d Dept 2020)
("in the event that it is subsequently determined, after the hearing
directed herein, that the total amount paid by the defendant during the
pendency of the action on account of the plaintiff's counsel fees
exceeds his appropriate share of that expense, the court may grant the
defendant a credit in the amount of the excess against the plaintiff's
equitable distribution award").
The facts and circumstances of this case mandate that Husband must
bear the cost of his own attorney's fees incurred in this litigation and
that Wife's equitable distribution obligation be reduced by the entire
$200,000 that she advanced to Husband for attorney's fees pursuant to
the July 7, 2021 Order. Ciampa v Ciampa, supra.
From the outset, Husband engaged in harassing, obstructionist conduct,
asserted meritless claims, and took positions resulting in delay and
unnecessary litigation. The litigation will continue even after issuance
of this decision, as Husband has at least five pending appeals and will
likely appeal this decision, all of which will cost hundreds of
thousands of dollars for Wife.
Husband's conduct in this action mirrored his conduct in the
marriage. Rather than meeting his own obligations, rather than producing
his own documents and preparing his own case, he spent the entire time
attacking Wife. Each attack failed. He persisted. He resurrected the
same threadbare claims prior to and during the trial over and over
again. His attempts to delay this trial were epic, and are summarized as
follows.
Husband made several post Note of Issue motions based upon his
assertions about the purported deficiencies and infirmities in Wife's
document production, each of which were carefully considered, shown to
be without merit, and rejected. He asserted that Wife failed to produce
documents. She demonstrated that all of the documents were in fact
produced, that he had them for months if not years, and that he had, in
fact, used some of them in his various motions and submissions to the
court. Nevertheless, Husband had a running objection at trial that the
documents in evidence were not produced or were produced "late."
He argued that he could not proceed with the trial because he needed
business certifications for the documents. Wife produced the business
certifications and affidavits.
He claimed that Wife did not produce K-1s. She demonstrated that
Husband, through his "limited scope attorney," actually refused to
accept delivery of the very K-1s that said attorney sought to obtain via
subpoena in connection with his "limited scope" representation for
discovery matters. Nevertheless, he sought to stop the trial based upon
his purported failure to receive K-1s. Again, his attempt failed.
Wife invited Husband to review, before trial, each document that she
intended to offer into evidence at trial. He completely ignored the
invitation. He did not review any documents, including the expert
reports, and instead sought to use trial time to do trial preparation.
This Court did not permit it.
Husband asserted, at least five times, a claim of ethical violations
against Wife's attorneys and the prior jurist. As with his other
complaints, the assertion was carefully considered and rejected. Indeed,
in recognition of the lack of merit to this particular claim, Husband's
own attorneys withdrew his motions to recuse the prior jurist.
Nevertheless, he persisted in resurrecting the claim to this Court at
least two times in an effort to stop the trial. He did not succeed.
He utterly failed and refused to participate in trial preparation in
his own right on his own case and submit proper trial documents in
accordance with this Court's rules, arguing that he was
"self-represented." Yet, at the same time, he admitted, and the amended
notice of appearance showed, that Mr. Sipsas was engaged to and did
perform work on the financial trial including hiring a financial expert.
Having failed in his attempts to stop the trial, he just decided not to show up based upon a manufactured injury.
All of the time Husband spent drafting motions, crafting arguments,
and filing complaints could and should have been dedicated to his own
case on trial. Instead, he turned all of his attention and efforts
toward building a narrative wherein he is the victim of Wife. Sadly, it
is he who has victimized himself in his seeming endless desire to harm
his wife.
For the same reasons, Wife is entitled to an award of $50,000 in
counsel fees payable by Husband (and credited against his equitable
distributive award), an amount which is a mere fraction of the $2.6
million in legal fees she incurred just through December 2021. Gordon v Gordon, supra; Ciampa v Ciampa, supra; Kaufman v Kaufman, supra.
MAINTENANCE
Post-divorce maintenance is not appropriate in this case for at least
two reasons. First, Husband did not ask for post-divorce maintenance;
indeed, by his own default, he failed to put on any case. Second, the
record simply does not support such an award. The amount and duration of
maintenance is a matter committed to the sound discretion of the trial
court. Rennock v Rennock, 203 AD3d 675 (1st Dept 2022); Spencer v Spencer, 230 AD2d 645, 648 (1st Dept 1996).
Pursuant to DRL § 236 B (6), the Court must determine the guideline
amount of post-divorce maintenance based upon the parties' incomes and
applying the prescribed formula. Income for maintenance (and child
support) is governed by the Child Support Standards Act ("CSSA"). DRL §
240(1-b)(b)(5); DRL § 236 B (6)(b)(3). Based on her 2020 tax return,
Wife's income is $8,730,996. This Court already imputed and income of
$500,000 to Husband.[13]
After accounting for CSSA deductions, Wife's income for child support
is $8,181,101.87 and Husband's income is $462,567.68. The parties'
combined CSSA income is $8,643,669.55.
Next, the Court performs two calculations up to a cap of $203,000.
DRL § 236 B (6)(c). The lesser amount of the two calculations is the
guideline amount of maintenance. The first calculation is the difference
between 30% of the payor's income (up to the statutory cap) and 20% of
the payee's income. The second calculation is 40% of the parties'
combined incomes, less the payee's income.
Calculation 1:
$60,900.00 [30% of $203,000] - $92,513.54 [20% of $462,567.68] = -$31,613.54
Calculation 2:
$266,227.07 [40% of $665,567.68 ($203,000 + $462,567.68)] - $462,567.68 = -$196,340.61
Where the guideline amount determined by the formula is less than or
equal to zero, the guideline amount of maintenance is zero dollars. DRL §
236 B (6)(e)(1). Here, both calculations result in a number less than
zero and so the statutory guideline maintenance is zero, a result which
is neither unjust nor inappropriate.
The Court has considered the factors set forth in DRL § 236 B (6)(e)
to determine whether income above the statutory cap should be used to
set a post-divorce maintenance award and determined that no amount of
Wife's income above $203,000 should be used. These factors include,
essentially, the same or similar factors used in this Court's equitable
distribution analysis, to wit and inter alia: the parties' age
and health; earning capacity; wasteful dissipation of marital property;
acts by one party against another that inhibited or continue to inhibit a
party's earning capacity, including acts of domestic violence; tax
consequences; the standard of living of the parties established during
the marriage; the contributions and services of the payee as a spouse,
parent, wage earner and homemaker and to the career or career potential
of the other party; and any other factor which the court shall expressly
find to be just and proper.
As demonstrated in detail above — and thus unnecessary to repeat at
length here — none of the factors warrant a post-divorce maintenance
award. Briefly, Husband graduated magna cum laude from Duke
University; is presently employed and self-supporting to the tune of at
least $500,000 per year; had prior employment in the financial industry
in which he earned over $1 million per year; and wastefully dissipated
his advance on equitable distribution. Husband failed to disclose the
nature and extent of marital property in his name and control, and his
separate property. For all this Court knows, he could have substantial
wealth. Husband also received pendente lite tax-free maintenance in the sum of $480,000 over a 24-month period, a duration within guidelines. See F.L. v J.M., 173 AD3d 428, 429 (1st Dept 2019)
(court properly declined to award plaintiff post-divorce maintenance,
plaintiff had an advanced degree, was employed full-time, and received pendente lite maintenance). Husband's domestic violence and harassing conduct also undermine any post-divorce maintenance award. Jessica T. v Keith T., supra; Stevens v Stevens, supra.
CHILD SUPPORT
Wife has sole custody of the parties' three children. She is entitled
to receive child support from Husband. To date, he has paid not a penny
of support. It is unlikely, on this record, that other than the credit
for support arrears deducted from Husband's equitable distribution
award, Wife will receive child support from Husband without additional
court proceedings.
The Court must assess his child support obligation in any event and
arrive at the arrears. It is already shown that Wife's CSSA income is
$8,181,101.87, Husband's CSSA income is $462,567.68, and the parties'
combined income is $8,643,669.55. Husband's pro rata share of the
combined income is 5.35%; Wife's share is 94.65%.
Applying the statutory cap of $163,000, using 29% for one three
children, results in a basic child support obligation of $47,270 per
year or $3,939.17 per month. DRL § 240(1-b)(2); DRL § 240(1-b)(3)(i).
Husband's 5.35 % share of the monthly basic child support obligation
would be $210.68.
The guideline child support amount of $210.68 per month is unjust and
inappropriate. Therefore, the Court will deviate from the guidelines
and set child support based on income above the statutory cap,
specifically, $500,000 to which it will apply the statutory percentages.
When exceeding the statutory cap, courts have the discretion to apply
the DRL § 240(1-b)(f) factors "and/or" apply the statutory percentages
to an income above the cap. Cassano v Cassano, 85 NY2d 649, 654 (1995).
This income amount is appropriate given the financial resources of the
parties and the children's standard of living. Husband, therefore, shall
pay $646 per month in basic child support ($500,000 × 29% = $145,000
per year × 5.35% = $7,757.50 per year, or $646.46 per month).
Husband is also responsible to pay 5.35% of the children's add-on
expenses, including school, camp, extra-curricular activities, and
childcare.
Accordingly, Husband shall pay basic child support in the amount of
$646 per month and 5.35% of add-on expenses retroactive to August 20,
2018, the date of commencement of this action. At trial, Wife
established that Husband owed a total of $86,354 in child support for
the 42 months since the date of commencement (August 2018 through
January 2022). This sum consists of $27,158 for basic child support,
$32,579 for school, $8,239 for camp, $2,247 for activities $16,131 for
childcare.
ANCILLARY ISSUES
On August 23, 2022, this Court granted Wife's preliminary injunction
motions, directed Husband to comply with the terms and conditions of the
Confidentiality Order, and restrained and enjoined him from disclosing
[the investment bank] documents and information and discussing the
children in this divorce action with third-parties. The Court also
directed Husband to: (1) provide Wife with an affidavit, setting forth
the names and contact information of all persons and entities to which
he provided [the investment bank] confidential information; and (2) turn
over to Wife all [the investment bank] documents and information in his
possession, custody and/or control. As of this writing, this Court is
not aware whether he has complied with the Court's directive. In any
event, the preliminary injunction is effective until entry of the final
judgment of divorce herein and there are remedies for any failure to
comply with the Court's order.
Given Husband's abject refusal to follow Court orders, and inability
to honor even his own agreement, and in view of the recognized principle
that a person's future behavior is best predicted by his past conduct,
it is entirely reasonable to conclude that after entry of the divorce
judgment Husband will continue to disclose [the investment bank]
confidential information and documents in an attempt to harm Wife.
Indeed, it appears that he did so during the financial trial: on March
31, 2022 Wife received an email from NY Post reporters, claiming to have
information about Wife's "fabricated" domestic violence claims and [the
investment bank's] purported attempts to shield this information from
the public.
Consequently, within five days of the entry of the Judgment of
Divorce herein, Husband shall deliver to Wife's attorneys, each and
every [investment bank] document (as that term is defined in the
Confidentiality Order) in his possession and/or control. This includes,
but is not limited to, each and every [investment bank] document
produced in this litigation, whether directly by a party or via any
subpoenas, or otherwise obtained by him by any other means. The Court
notes, in passing, that its directives are not a bar to any claims Wife
may have for any past, present, or future violations of the
Confidentiality Order, or other harmful conduct, by Husband.
Accordingly, it is hereby
ORDERED that Wife is awarded all of her separate property listed in Schedule 1 of this Decision and Order; and it is further
ORDERED that the total martial estate consists of the assets listed
in Schedule 2 of this Decision and Order, with a total tax-impacted
value of $10,653,002; and it is further
ORDERED that the parties' respective equitable shares of each asset
in the marital estate are as set forth in Schedule 2; and it is further
ORDERED that Husband's equitable share of the martial estate in the
sum of $1,995,428 shall be satisfied in the manner set forth in Schedule
3 of this Decision and Order; and it is further
ORDERED that Husband is entitled to his 15% share of the martial
portion of [the investment bank] shares-at-risk and RSUs (itemized in
Schedule 2), "if, as, and when" those shares are delivered to Wife
without restrictions. Husband is responsible for all taxes on the sale
of those shares; and it is further
ORDERED that Wife shall make the equalizing payment of $167,830 due
to Husband, as shown in Schedule 3, within twenty (20) days of this
Decision and Order; and it is further
ORDERED that Husband shall sign all documents necessary to remove his
name from, and effect a transfer of title for, the deed for the North
Carolina property, within thirty (30) days of the date of this Decision
and Order. Wife shall bear the costs and expense of preparing and filing
all deed transfer documents; and it is further
ORDERED that Husband is not entitled to post-divorce maintenance; and it is further
ORDERED that Husband's basic child support obligation is, and he
shall pay, the sum of $646 per month (based on 29% for three children)
on the first of every month starting October 1, 2022. Husband's pro rata
share of add-ons for the parties' three children is 5.35%. This child
support award is retroactive to August 2018. Husband's arrears in basic
child support and add-ons for the period from August 2018 through
January 2022 is $86,354. Any child support arrears due for the period
from February 2022 through September 2022 shall be paid in full within
thirty (30) days of this Decision and Order; and it is further
ORDERED that the parties are directed to comply with the express
terms of the March 15, 2019 Confidentiality Order. In addition, within
five (5) days of the entry of the Judgment of Divorce herein, Husband
shall deliver to Wife's attorneys each and every [investment bank]
document (as that term is defined in the Confidentiality Order) in his
possession and/or control, including but not limited to: each and every
[investment bank] document produced in this litigation, whether directly
by a party or via any subpoenas, or otherwise obtained by him by any
other means, and every copy of every such document; and it is further
ORDERED that Wife shall submit to this Court for signature a Sealing
Order in accordance with the Court's rulings on this issue throughout
the financial trial, within ten (10) days of this Decision and Order;
and it is further
ORDERED that all other request for either equitable distribution or support are denied; and it is further
ORDERED that Wife shall submit to this Court for signature, upon
notice to Husband (22 NYCRR 202.48), a proposed Judgment of Divorce
within thirty (30) days of this Decision and Order.
[1] This Court vacated the February 28, 2022 date and the trial commenced on March 3, 2022.
[2]
The Court explained: "If there is a retainer that comes to pass in the
next six days of trial, and there is a demonstration that the balance
of $100,000 has been spent down, such that more attorney's fees are
needed, I will reconsider and I will do the appropriate thing." All the
while Mr. Sipsas, who worked on the financial issues since October 2021,
sat in the gallery.
[3]
As indicated in the trial transcripts, the Court sealed all testimony
about [the investment bank], [the investment bank] documents and
information, and Wife's employment with and relationship to [the
investment bank], in accordance with the Confidentiality Order. Wife's
attorneys are directed to submit to the Court, for signature, a sealing
order in accordance with the Court's rulings on sealing as indicated on
various pages throughout the Trial Transcripts (Pages 67; 90-92; 240;
373-376).
[4]
During an on-the-record conference on May 20, 2022, this Court
declined to sign Husband's motion, pursuant to CPLR 4402, for a mistrial
and recusal upon the ground that the Court failed to grant Husband a
continuance based upon his purported injury.
[5]
Although he did not testify, Husband's credibility, or lack thereof,
is relevant to the ultimate issues on this trial. The Court finds
Husband to be incredible as to matters both material and minor, based on
his statements and demeanor during the two days he appeared at trial
and his virtual appearance on March 10, as well the documents he
submitted to the Court. Husband made representations on the record as to
Wife's document production that were demonstrably false and rejected by
this Court several times. The Court found that his "blanket denial" of
receipt of Wife's K-1s "not credible." He continued to assert claims of
purported conflict of interest after they had been considered and
rejected by the prior jurist and this Court several times. He boldly and
blatantly violated Court Orders prohibiting the disclosure of Wife's
[investment bank] information and details of this litigation to
third-parties. He evaded direct questions about whether he disclosed
custody trial transcripts to third-parties. He utterly failed to produce
competent, medical proof of any injury that prevented him from
participating in the financial trial on March 10, 11, 31, and April 4,
2022, yet during this same time period he continued to have parenting
time with the three children and engaged in litigation before Justice
Sattler and the Appellate Division.
[6]
During the litigation, Husband disclosed that he was the CIO of
PXXXXXXX, a company owned by Husband's college friend who lives in
Dubai. Wife was not able to obtain by subpoena any employment and
earnings documents from PXXXXXXX.
[7]
The Custody Decision reflects that Husband held a meeting with Wife,
her parents, and his mother during which he called her diseased and
unfit before diagnosing her with ADHD.
[8]
In the February 10, 2022 Decision and Order granting Wife's motion to
preclude, this Court found that Husband had undisclosed investments in
Azure Captial and M & T Bank of not less than $550,795. At trial,
Wife pointed out that Husband had shown that the $550,795 in M & T
Bank represented the security deposit held by the parties' old landlord.
The Court hereby amends the aforesaid Decision and Order accordingly.
[9]
Husband has taken an appeal from all but one of this Court's Decision
and Orders, including the Court's on-the-record determination to decline
to sign his May 20, 2022 order to show cause for a mistrial and to
recuse, and off-the-record determination to decline to sign his January
28, 2022 order to show cause for contempt. Husband has also asked for
recusal of the prior jurist and this Court.
[10]
In 2019, the Legislature attempted to add identical language to DRL §
236 B (5)(d) as the adopted amendment and included a Sponsor's
Memorandum, reading in relevant part, "Domestic violence is a scrouge in
our society. Often times, it not only leads to the dissolution of a
marriage, but has physical, emotional, and psychological effects on the
victim. Abuse within a marriage must be considered in order to properly
adjudicate its dissolution and the financial situation established. This
bill would direct a judge to consider abuse when making an equitable
distribution decision." (Sponsor's Mem, Bill Jacket, 2019 NY
Senate-Assembly Bill S6050, A1967).
[11]
A person is guilty of harassment in the second degree when he "engages
in a course of conduct or repeatedly commits acts which alarm or
seriously annoy such other person and which serve no legitimate
purpose." Penal Law § 240.26.
[12]
The Court cites maintenance cases in its interpretation of DRL § 236 B
(5)(d)(14) because those cases employ a similar analysis of marital
fault, and because SSL § 459(a), which defines domestic violence, is
contained in both DRL § 236 B (5)(d)(14) and DRL § 236 B (5-a) and (6).
[13]
By Order dated February 10, 2022, upon Husband's contumacious refusal
to engage in financial discovery, this Court precluded Husband from
offering certain financial evidence at trial, including evidence to
challenge his income being not less than $500,000 per year.
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