DIVORCE - CAN MORE - MONIED SPOUSE RECOVER LEGAL FEES

As footnote 4 below states, the Second Department may have reached a different conclusion in this case.

Condo v Condo, 2020 NY Slip Op 20142, Decided on June 24, 2020, Supreme Court, New York County, Cooper, J.:

"The principle that even a successful litigant pays his or her own legal expenses, absent a contractual or statutory provision to the contrary, is so ingrained in our legal system that it is referred to as the "American Rule."[FN1] The New York State Domestic Relations Law (DRL), which governs matrimonial proceedings in this state, contains a number of provisions enabling a court to depart from the rule and shift responsibility for legal fees from one party to another. The question presented in this post-judgment matrimonial proceeding is whether any of these statutory provisions entitle the defendant ex-husband, who has been consistently successful in the litigation but in the process has amassed more than $2.5 million dollars in legal fees, to [*2]require the plaintiff ex-wife, who has been responsible for most of that litigation, to reimburse him for what he has had to expend. Complicating the question is the fact that while plaintiff is fabulously wealthy, defendant is even wealthier still. Thus, as will be discussed, defendant is in the position of seeking to recover legal fees as the "more-monied" former spouse as opposed to the more traditional "less-monied" one.

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I. LEGAL AUTHORITY

a. DRL § 237 (c)

After first moving generally under DRL § 237 in support of his demand that plaintiff be held responsible for the legal fees he has incurred, defendant, in his reply papers and confirmed during oral argument, abandoned subsection (a) and (b)[FN3] and settled on subsection (c) of the section. The language of DRL § 237 (c) is as follows:
In any action or proceeding for failure to obey any lawful order compelling payment of support or maintenance, or distributive award the court shall, upon a finding that such failure was willful, order respondent to pay counsel fees to the attorney representing the petitioner.

Plaintiff maintains that this subsection is limited only to the willful non-payment of court-ordered money, be it in the form of support, maintenance, or distributive award. Consequently, plaintiff argues that DRL 237 (c) bars defendant from seeking counsel fees for any alleged willful failure on her part to obey orders that concern the process for distributing marital property, in this case artwork, inasmuch as those orders did not "compel payment" of any kind. The court must agree.

Throughout the DRL, the term "distributive award" is consistently used in the context of money payments and is specifically defined in § 236 B (1) (b) as follows:
The term "distributive award" shall mean payments provided for in a valid agreement between the parties or awarded by the court, in lieu of or to supplement, facilitate or effectuate the division or distribution of property where authorized in a matrimonial action, and payable either in a lump sum or over a period of time in fixed amounts. Distributive awards shall not include payments which are treated as ordinary income to the recipient under the provisions of the United States Internal Revenue Code.

Thus, with regards to § 237 (c), the court is constrained from awarding defendant counsel fees for plaintiff's failure, even if willful, to abide by court orders in relation to the process of equitable distribution, so long as there is no failure to actually make payment in the form of a distributive award (see Rao v Rao, 74 AD3d 1556 [3rd Dept 2010]). Given the clear and unequivocal language of the DRL and lack of First Department case law directly on point, the court will not delve into the specific distinguishability of each case cited by the parties.

b. DRL § 238

In relevant part DRL § 238 provides that in any action or proceeding to enforce any

provision of a judgment or order, a court: . . . may in its discretion require either party to pay counsel fees and fees and expenses of experts directly to the attorney of the other party to enable the other party to carry on or defend the action or proceeding as, in the court's discretion, justice requires having regard to the circumstances of the case and of the respective parties. There shall be a rebuttable presumption that counsel fees shall be awarded to the less monied spouse (emphasis added).

Here, plaintiff argues, and this court again agrees, that a decidedly less-monied spouse
cannot be ordered to pay counsel fees to the decidedly more-monied spouse under this section of the DRL. In Roddy v Roddy, (161 AD3d 441 [1st Dept 2018]), the First Department reiterated that the provisions of DRL § 238 are intended to ensure a just resolution of the issues by creating a more level playing field with respect to the parties' respective abilities to pay counsel and focuses primarily upon the paramount factor of financial need. Further, it instructed that where a party's inappropriate litigation conduct has adversely affected the other party but both are able to pay their own counsel fees, the appropriate remedy may be a sanction under 22 NYCRR 130-1.1, not an award of attorneys' fees (see also, Silverman v Silverman, 304 AD2d 41 [1st Dept 2003]).

Although plaintiff is far from an indigent party, and is in fact extremely wealthy, it cannot credibly be argued that (1) she is the more-monied spouse; and (2) that defendant does not have the ability to pay his own counsel fees. Therefore, counsel fees cannot be awarded to defendant under this section of the DRL.[FN4]

c. Sanctions (22 NYCRR 130-1.1)

Although sanctions may be an appropriate remedy in this matter for a variety of plaintiff's unfortunate transgressions, including one that required this court to recuse, albeit temporarily, as well as her repeated and malicious interference with the Special Master's performance of her duties, defendant only raised the issue of sanctions for the first time in his reply brief. Indeed, it would be reversable error to award sanctions under these circumstances where the non-movant was neither given adequate notice that such relief would be considered, nor was afforded a reasonable opportunity be heard (see Zappin v Comfort, 146 AD3d 575 [1st Dept 2017]; Minister, Elders & Deacons of Refm. Prots. Dutch Church v 198 Broadway, Inc., 76 NY2d 411 [1990]). Therefore, without an evidentiary hearing, which the court is not inclined to schedule at this time, it will not impose sanctions on plaintiff sua sponte as defendant urges, and the issue was not otherwise properly raised in the motion.

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Footnote 1:Under the American Rule, "attorney's fees and disbursements are incidents of litigation and the prevailing party may not collect them from the loser unless an award is authorized by agreement between the parties or by statute or court rule" (Matter of A.G. Ship Maintenance Corp. v Lezak, 69 NY2d 1, 5 [1986]).

Footnote 2:See Condo v Condo, 171 AD3d 435 (1st Dept 2019); Condo v Condo, 172 AD3d 595 (1st Dept 2019); Condo v Condo, 173 AD3d 595 (1st Dept 2019).

Footnote 3:DRL § 237 (a) permits a court to "direct either spouse to pay counsel fees directly to the attorney of the other spouse to enable the other party to carry on or defend the action or proceeding." DRL § 237 (b) permits a court to do the same "[u]pon any application to enforce, annul or modify an order or judgment for alimony, maintenance, distributive award, distribution of marital property or for custody, visitation, or maintenance of a child." Both subsections expressly provide for a rebuttable presumption that fees are to be awarded to the less monied spouse.

Footnote 4:It is acknowledged that whereas the Appellate Division, First Department, has been consistent in refusing to hold the less-monied spouse responsible for the more-monied spouse's counsel fees, irrespective of the conduct of the parties, the Second Department has been receptive to fee-shifting in the face of bad conduct on the part of the less-monied spouse (see Cravo v Diegel, 163 AD3d 920 [2d Dept 2018][court's requirement that husband pay 55% of wife's counsel fees, despite him being the less-monied spouse, affirmed as "not an improvident exercise of discretion," where husband's "obstructionist conduct unnecessarily prolonged the pretrial motion practice and the trial"])."

DIVORCE AND COLLEGE EXPENSES

Little kids, little problems; big kids, big problems - this rule also applies in matrimonial matters and in this case, the big problem is college expenses.

Tucker v Tucker, 2020 NY Slip Op 50575(U), Decided on May 13, 2020, Supreme Court, Monroe County Dollinger, J.:

"This matter revives this Court's view of a matrimonial "Civil War." At the settlement of a divorce, a couple, rather than confront future difficulties, postpones the most costly — paying for college education — until the issue reaches a crescendo as the children attend college.

Then, with large costs looming, conflict — who should pay what and what role does the child's relationship with the non-paying parent play, if any — erupts and, often times, as here, the conflict turns decidedly uncivil. In this instance, the undisputed lack of any contact between father and daughters for more than a decade moves this matter out of the "uncivil" category and into "hostile" territory.

This couple have two children: one is over 21 and the second is 19. It is undisputed that [*2]the couple always anticipated that children would attend college. In the judgment of divorce, the couple agreed that there were 529 accounts established to fund the cost of their children's college education.[FN1] The stipulation provided:

. . . there are certain accounts held by the defendant for each of the two children for the purpose of funding as much as possible the cost of their college education . . . The husband warrants and represents that he shall continue to maintain those accounts for each of the children.

The father was the trustee of the accounts and there is no evidence before this Court that anything other than marital funds were deposited into the accounts. The funds matured over time. The father also warranted that the mother would be entitled to a statement on a quarterly basis as to the status of those accounts.

The mother alleges that in 2014 the older child's account had approximately $93,000 in it. But, the mother further alleges that the father did not use the 529 accounts for strictly tuition-or-college-related expenses and withdrew more than $17,000 to finance trips for the daughters while they were in high school. In this application, the wife alleges that the older daughter's 529 account was depleted in March, 2019, but the child continued to attend college and further that the father has refused to reimburse the mother for the remainder of the older daughter's college expense. The current amount of unreimbursed educational expenses is $27,229.99. As a result of the father's failure to pay or use the 529 to pay college expenses, the mother has incurred significant debt. The mother seeks an order directing the father to pay for the children's college expenses, a full accounting of the funds withdrawn from the children's 529 accounts, reimbursement to the mother of all out-of-pocket college expenses, and other relief including an award of attorneys fees.

In response to the wife's application, the father crossed moved to dismiss the complaint or, in the alternative, to transfer the venue of this matter to Onondaga County, the site of the original divorce stipulation. In seeking dismissal, the father argues that he never agreed to pay for all four years of college or the costs associated for either daughter. The father argues that he did what he promised to do: he maintained the 529 plan accounts for 15 years and then used the money for the children's expenses for college and preparing the children to attend college. In addition he argues that he has now paid 100% of all the associated cost for his daughters college education through the 529 accounts but the mother has paid nothing.

Finally, the father argues that he has no current relationship with his children and has not had any relationship with them for more than a decade. He alleges that the cause of breakdown was the mother's persistent pattern of exclusion and derogation of his role as a parent. He claims that as a result of this pattern of alienation, the children have forfeited any claim against him for financing college costs and the mother has surrendered any claims to enforce the college cost requirements in their agreement. The mother, in reply papers, vigorously denies those allegations and claims the daughter's estrangement from their father was a self-inflicted wound caused by his own behaviors a long time ago.

Initially, this Court declines to change the venue of this action. The daughters and mother have lived in Monroe County for more than a decade and other actions, involving the parents, have been previously venued in Monroe County Family Court. There is no evidence that the convenience of witnesses would be impacted or any claim that production of documents or other information would be impaired by venue here. The father's request to change venue is denied.

Second, this Court concludes that the current dispute does not involve an interpretation of the divorce stipulation. The father rightfully notes that the stipulation did not require him to finance his daughter's college education out of his own pocket. Therefore, this Court holds that the unambiguous terms of the agreement do not require him to finance any portion of his daughter's college costs. If the parents had intended to create an independent obligation on the father's part to finance college costs, the agreement could have easily included that language. It does not. But, while there is no interpretation question before the Court, the issue of the father's compliance with his stated obligation — to maintain the 529 accounts to fund "as much as possible" of the daughter's education costs — remains. The stipulation does not permit the father to use the 529 accounts for any purpose other than to fund "as much" of the college costs as possible. The mother raises factual issues of the father's compliance with that requirement and, given disputed facts relating to withdrawals, the alleged existence of separate accounts for each daughter and the ultimate amounts remaining (if any) in the accounts, this Court needs a hearing to resolve those issues.

Third, the mother makes a claim that even if the agreement does not require the father to fund the college costs for the daughters. Pursuant to DRL § 240 (1—b)(c)(7), "[i]n certain circumstances, a parent may be required to contribute to a child's higher education expenses even in the absence of an agreement to do so' " (Reiss v Reiss, 56 AD3d 1293, 1294 [4th Dept 2008]; see DRL § 240 (1—b)(c)(7) [the court, "as justice requires," has discretion to order a parent to pay college expenses, considering "the circumstances of the case and of the respective parties and . . . the best interests of the child"]). The "circumstances of the parties" that this court considers include "the educational background of the parents, the child's academic ability and the parent's financial ability to provide the necessary funds" (McDonald v McDonald, 262 AD2d 1028, 1029 [4th Dept 1999]).
There is a little question that the facts alleged in this case could lead to a conclusion that the father, under the standards set forth above, should contribute to financing the children's college education. His career as a physician attests to his commitment to education and the mother similarly has a college degree. Generally, however, such a determination requires a hearing (see McDonald, 262 AD2d at 1029), and thus this Court declines to make any judgment on that issue in advance of such hearing.

Under these circumstances, the Court concludes:

(A) the request to order the father to fund college expenses is denied without prejudice and referred to a hearing;(B) the request for the father to provide a full accounting of the children's 529 accounts is granted and he is ordered to provide the account statements for the last five years and all records evidencing the disbursement and use of any funds withdrawn from those accounts, including where the funds were deposited and ultimately spent;(C) the request for reimbursement to the mother for college costs incurred is denied [*3]without prejudice and referred to a hearing;(D) the request to replenish 529 accounts for funds withdrawn to pay for trips by the children, the College Assistance Program or other trips is also is denied without prejudice and referred to a hearing; and,(E) the request for attorneys fees is denied without prejudice and referred to a hearing.

The father's cross-motion to dismiss the mother's application is denied as is his request to change venue to Onondaga County. His request for attorneys fees is denied without prejudice and referred to a hearing."

ANOTHER COVID CHILD CUSTODY CASE

Matter of Jennifer R. v Lauren B. 2020 NY Slip Op 20094 Decided on April 22, 2020 Family Court, Kings County Vargas, J.:

"In light of the current Pandemic, on March 14, 2020, the parties agreed in writing to temporary modify their schedule under the Agreement to alternate their parenting time with the Child to be every two weeks with each parent. In order to reduce the number of transitions between the parties' homes, the parties commenced that Modified Schedule on or about March 22, 2020. Under the Modified Schedule, the Child has been in the custody of the Mother since March 18, 2020, and the parties had agreed to exchange the Child to the Ex-Wife on April 5, 2020.

Instead, by Order to Show Cause with Immediate Relief dated April 6, 2020, Mother moves - yet again — for the immediate grant of temporary sole custody and final decision making authority to her, effectively modifying the Divorce Judgment. She argues that the Child should remain living with her in New Jersey during the Coronavirus Pandemic because her State and County pose significantly less risk of infection and transmission than New York, as reflected by Executive Orders of the New York Governor, declaring a state of emergency for entire State of New York, with its thousands of infections and deaths due to the Coronavirus. In her papers, the Mother argues that the Ex-Wife lives in the Coronavirus "hotspot" of Brooklyn which is dangerous for the Child and should "obtain shelter in New Jersey" to visit with the Child; Mother offers to return the child support payments made to her to defray Ex-Wife's travel and other expenses. In fact, the Mother refused to return the Child at the arranged date to Ex-Wife, who immediately filed a Police Incident Report against the Mother.

As a result of Mother's actions, the Ex-Wife filed an Emergency Order to Show Cause dated April 7, 2020, seeking a Writ of Habeas Corpus for the Mother to immediately return the Child to the Ex-Wife and for enforcement in accordance with their Modified Schedule, maintaining that Mother has willfully and unlawfully withheld the Child from her in violation of the Judgment of Divorce, the only order that exists between the parties concerning custody of the Child. The Ex-Wife argues that the Mother is merely using the Coronavirus risks as just the latest subterfuge to misappropriate her custody of the Child. Since the Mother threatened to file another action for the same relief in New Jersey, the Ex-Wife also applies for the Court to issue a declaration that New York is the Child's "home state" under the Uniform Child Custody Jurisdiction & Enforcement Act (see Domestic Relations Law § 76).

Given the request for a Writ, the matters were referred to the Undersigned, who signed the Order to Show Cause on April 7, 2020, granting the Writ and ordering the Mother to immediately return the Child to the Ex-Wife for the duration of her parenting time under the [*4]Modified Schedule, and deemed New York as the "home state" for jurisdictional purposes. Thereafter, the Ex-Wife filed a separate Cross Motion dated April 13, 2020, seeking a direction that the Mother shall pay reasonable counsel fees, costs and expenses to her as sanctions for her frivolous and vexatious conduct pursuant to 22 NYCRR Sec. 130-1.1.

In her Affirmation in Response, the Attorney for the Child supports the Mother's application for the Child to temporarily reside in New Jersey based on the Child's statement to her as to his preference and as a safer location during the pendency of the Coronavirus Pandemic. The Child reported to her that he was doing well, was participating in remote learning and was speaking with the Ex-Wife regularly over the phone. According to the AFC, the Child "made clear that this preference was not a reflection on his relationship with either parent, but that the current arrangement of splitting the weeks between the households leaves him feeling unsettled." These arguments notwithstanding, the Court disagrees with the Mother and the Attorney for the Child.

In order to modify an existing custody and visitation order in the absence of an agreement between the parties, "there must be a showing of a subsequent change in circumstances so that modification is required to protect the best interests of the child" (Matter of Newton v McFarlane, 174 AD3d 67 [2nd Dept. 2019], quoting Henrie v Henrie, 163 AD3d 927, 928 [2nd Dept. 2018]; see Matter of Feliciano v King, 160 AD3d 854, 855 [2nd Dept. 2018). Although "not necessarily determinative, the child's expressed preference is some indication of what is in his or her best interests and, in weighing that factor, a court must consider the age and maturity of the child as well as the potential for influence having been exerted on the child" (Matter of Nevarez v Pina, 154 AD3d 854, 856 [2nd Dept. 2017]). However, "[h]earings have been denied and modification requests dismissed, where the allegations were conclusory and unsubstantiated" (Matter of Newton v McFarlane, 174 AD3d at 77; see Matter of Feliciano v King, 160 AD3d 854 [2nd Dept. 2018]).

Applying these principles to the case at bar, the Mother's Motion for the immediate transfer of sole custody to her without a hearing must be denied. As a threshold matter, the parties were required by Judge Sattler's Divorce Judgment to engage the services of a mediator in order to resolve any dispute between them concerning the Child. It is undisputed that the Mother has failed to even attempt to follow that procedure by providing proof that she contacted the Ex-Wife in writing about her visitation concerns for mediation, or engaged the mediator to be mutually paid by the parties. That procedure was set up by the parties themselves with Judge Sattler's imprimatur, precisely to prevent the type of unrelenting and contentious litigation previously — and currently — engaged in by the parties, especially by the Mother.

Aside from failing to comply with that contractual precondition, the Mother has failed to demonstrate a change in circumstances warranting an immediate change in the custody arrangement. The Mother has failed to cite anything specific which the Ex-Wife has done to place the Child at risk of exposure to Coronavirus or otherwise. To the contrary, the parties were communicating and have developed an appropriate plan for the Child to lower his exposure of contracting the disease by reducing the number of exchanges. The Child is being transported back and forth by car, and it has been the Mother who has had the option of staying in Brooklyn, which is something she usually does when she has parenting time with the Child during week.

Although the Mother makes much of the fact that New York is a "hotspot" of Coronavirus cases, she lives in New Jersey which is second in the Nation in terms of infections and wherein the New Jersey Governor, only two days before the Governor of New York did, [*5]also declared a State of Emergency on March 9, 2020. In any event, the Court trusts the parties' judgment with respect to the Child, as evidenced by their mature March 2020 emails, and will require that they comply with the government directives in terms of enforcing social distancing, using cloth face coverings and gloves for the Child, avoiding contact with vulnerable populations, and using precautionary sanitizer practices.

Nor are the Child's wishes to remain in New Jersey controlling in this Court; they are only one of the many factors to be examined in a custody determination (see Matter of Nevarez v Pina, 154 AD3d at 856). Given the unprecedented times that we are living, the Child may be reflecting a desire for stability and peace in reaction to the Mother's unrelenting pursue of his custody by her filing of several, almost consecutive Petitions. The Child may be having a difficult time understanding the current situation and "need[s] all of the adults in their lives to behave in a cooperative, responsible and mature manner" (Tolchinsky, A. & Wertheim E., Family and Dispute Resolution in Pandemic Times, NYLJ, April 21, 2020, at 3, col 1). The parents' behavior during the Pandemic and while the case is pending in court will be relevant to the Referee in her ultimate custody determination (see Sunshine, J., COVID-19 and Future Custody Determinations, NYLJ March 27, 2020, at 3, col 1).

As recently expressed by the Appellate Division, Second Department:

The existence of custody litigation, by itself, can create trauma and uncertainty for the child, as well as trauma, uncertainty, and expense for the parents. Repetitive applications for modification brought by disgruntled litigants in order to harass or vex their former spouses or domestic partners are not unheard of. Litigation over established court-approved child custody and access arrangements can be unsettling and traumatic for children, particularly for children of sufficient age or maturity to comprehend, and worry, about potentially significant changes in their daily lives, such as what home they live in, what family members they live with, what schools they go to, what friends they have, and what activities they undertake. The prospect of having to be interviewed by a judge, consult with counsel, be examined by a forensic clinician, and deal with parents who are embroiled with each other in litigation, can create significant anxiety and stress, which, by itself, may be harmful to a child's development

(Matter of Newton v McFarlane, AD3d). Just like in that case, Mother's failure to comply with the condition precedent to commence a proceeding under the Settlement Agreement coupled with her unsubstantiated and conclusory allegations against the Ex-Wife are insufficient to warrant a temporary change of the custody and visitation arrangement (see Matter of Chichra v Chichra, 148 AD3d 883, 885 [2nd Dept. 2017]; Matter of Ali v Hines, 125 AD3d 851, 851-852). To the contrary, Judge Sattler's Judgment of Divorce appears to have been - and continues to be - in the best interests of the Child (see Matter of Henry v Tucker, 157 AD3d at 893; Matter of Torres v Ojeda, 108 AD3d 570, 571. No change is, therefore, warranted and Mother's Motion must be denied.

In accordance with the foregoing, this Court hereby denies the Mother's Order to Show Cause and grants the Ex-Wife's motion for enforcement and the immediate return of the Child in accordance with the Modified Schedule. The Writ is marked satisfied as the Child was returned to the Ex-Wife, and is hereby disposed. Insofar as the Ex-Wife additionally cross-moves for legal expenses, costs and sanctions under the Settlement Agreement, such are hereby referred for determination to the Referee who is presiding over this matter. Suffice it to say that the [*6]Settlement Agreement already provides for the payment by the victor of all reasonable counsel fees, costs and expenses. The foregoing constitutes the Decision and Order of the Court."

MORTGAGE FORECLOSURE - POST JUDGMENT ACTIONS TO SET ASIDE FORECLOSURE

Besides an appeal from the judgment of foreclosure and sale, some homeowners have tried other approaches to set aside the foreclosure. Here are two recent examples that failed.

In Monterosso v Garguilo, 2020 NY Slip Op 01488, Decided on March 4, 2020. Appellate Division, Second Department  - the homeowners commenced an action, inter alia, to impose a constructive trust upon certain real property to which they lost title in a previous foreclosure action, and for a judgment declaring that the referee's deed transferring title to the property to the defendants was void as the product of a usurious loan transaction. The defendants moved pursuant to CPLR 3211(a) to dismiss the complaint, and the Supreme Court granted the motion. The Second Department affirmed.



In Pusey v Morales, 2020 NY Slip Op 01519, Decided on March 4, 2020, Appellate Division, Second Department, after the foreclosure judgment and sale, the homeowner commenced an action against the bank and another defendant, seeking, inter alia, a judgment declaring that the assignment of mortgage was null and void and to remove the cloud on title to the premises. The court held that:

""[A] judgment of foreclosure and sale entered against a defendant is final as to all questions at issue between the parties, and concludes all matters of defense which were or might have been litigated in the foreclosure action" (SSJ Dev. of Sheepshead Bay I, LLC v Amalgamated Bank, 128 AD3d at 675 [internal quotation marks omitted]). Thus, subsequent claims are barred by the doctrine of res judicata where, as here, the granting of the requested relief "in the present action would destroy or impair the rights established by the judgment of foreclosure in the prior action" (id. at 675-676; see Chapman Steamer Collective, LLC v KeyBank N.A., 163 AD3d 760, 761-762)."