Scher v. Scher

91 A.D.3d 842, 938 N.Y.2d 317
CourtAppellate Division of the Supreme Court of the State of New York
DecidedJanuary 24, 2012
StatusPublished
Cited by47 cases

This text of 91 A.D.3d 842 (Scher v. Scher) is published on Counsel Stack Legal Research, covering Appellate Division of the Supreme Court of the State of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Scher v. Scher, 91 A.D.3d 842, 938 N.Y.2d 317 (N.Y. Ct. App. 2012).

Opinion

[844]*844Contrary to the determination of the Supreme Court, the plaintiff was entitled to share in the appreciated value of Home Companion Services of New York, Inc. (hereinafter Home Companion Services), which the defendant incorporated approximately three years prior to the marriage. Separate property includes “property acquired before [the] marriage” (Domestic Relations Law § 236 [B] [1] [d] [1]), such as the business interest in Home Companion Services in this case, as well as “the increase in value of [such] separate property, except to the extent that such appreciation is due in part to the contributions or efforts of the other spouse” (Domestic Relations Law § 236 [B] [1] [d] [3]). “[I]n order for appreciation in the value of separate property to be deemed marital property subject to equitable distribution, the nontitled spouse must demonstrate the manner in which his [or her] contributions resulted in the increase in value and the amount of the increase which was attributable to his [or her] efforts” (Embury v Embury, 49 AD3d 802, 804 [2008] [citations and internal quotation marks omitted]; see Michelini v Michelini, AD3d 902, 903 [2008]; Burgio v Burgio, 278 AD2d 767, 769 [2000]; Chan v Chan, 267 AD2d 413, 414 [1999]; Elmaleh v Elmaleh, 184 AD2d 544, 545 [1992]). Here, the Supreme Court improvidently exercised its discretion in finding that the plaintiff made no direct or indirect contributions to the appreciation of Home Companion Services which resulted in the increase in the value of the company. The evidence established that the plaintiff made direct contributions to the business by serving as the company bookkeeper for approximately seven years (see Baron v Baron, 71 AD3d 807, 809 [2010]; Hamroff v Hamroff, 35 AD3d 365, 366 [2006]; Ventimiglia v Ventimiglia, 307 AD2d 993, 994 [2003]). The evidence further established that the defendant’s active participation in expanding the business was aided and facilitated by the plaintiffs indirect contributions as homemaker and occasional caretaker of one of his children from a prior marriage (see Hartog v Hartog, 85 NY2d 36, 46 [1995]; Price v Price, 69 NY2d 8, 17-18 [1986]; Zaretsky v Zaretsky, 66 AD3d 885, 888 [2009]; Chalif v Chalif, 298 AD2d 348, 349 [2002]). Moreover, the defendant failed to establish that the plaintiff committed “wasteful dissipation” of marital assets in her role as bookkeeper (Graves v Graves, 307 AD2d 1022, 1023 [2003] [internal quotation marks omitted]; see Epstein v Messner, 73 AD3d 843, 846 [2010]; O’Sullivan v O’Sullivan, 247 AD2d 597 [1998]; Strang v Strang, 222 AD2d 975, 978 [1995]). In light of the plaintiffs direct and indirect contributions, the Supreme Court should have awarded her 20% of the appreciated value of Home Companion Services. As the parties stipulated that the appreci[845]*845ated value over the course of the marriage amounted to $1,146,000, the plaintiff was entitled to an award of $229,200.

Furthermore, contrary to the determination of the Supreme Court, the plaintiff was entitled to an equitable share of the appreciated value of the marital residence over the course of the marriage, notwithstanding that the residence was the separate property of the defendant until March 2005, when the property was transferred to the plaintiff and defendant as tenants by the entirety. The increase in the value of separate property remains separate property “except to the extent that such appreciation is due in part to the contributions or efforts of the other spouse” (Domestic Relations Law § 236 [B] [1] [d] [3]; see Price v Price, 69 NY2d 8 [1986]), at which point the increase in value becomes marital property, in accordance with the rule that the definition of marital property is to be broadly construed, given the principle that a marriage is an economic partnership (see Mesholam v Mesholam, 11 NY3d 24, 28 [2008]; Price v Price, 69 NY2d at 14-15). The parties stipulated to a neutral appraisal which found that the marital residence had increased in value by $40,000 due to “active appreciation” in the form of physical improvements, and $300,000 due to “passive appreciation” in the form of “market forces, without regard to any improvements, except normal maintenance.” Since the record established that the $340,000 in appreciation was attributable to the efforts of both parties, the plaintiff was entitled to share equitably in that increased value (see Mongelli v Mongelli, 68 AD3d 1070, 1072 [2009]; Kost v Kost, 63 AD3d 798, 799 [2009]; Kilkenny v Kilkenny, 54 AD3d 816, 818-819 [2008]; Cincotta v Cincotta, 221 AD2d 306, 307 [1995]). Thus, applying the plaintiffs 50% distributive share to the $340,000 in appreciation, she is entitled to an award of $170,000 for the appreciated value in the marital residence from the date of marriage. In light of the plaintiffs contributions, the Supreme Court should have awarded the parties equal shares in the increase in the value of the marital residence. However, the plaintiffs contention that the Supreme Court improperly directed her to vacate the marital residence within 30 days has been rendered academic by the passage of time.

The Supreme Court erred in finding that the interest in Green Fields East Holding, LLC (hereinafter Green Fields), which was held in the defendant’s name, was the separate property of the defendant. Domestic Relations Law § 236 defines “marital property” as “all property acquired by either or both spouses during the marriage and before the execution of a separation agreement or the commencement of a matrimonial action, regardless [846]*846of the form in which title is held” (Domestic Relations Law § 236 [B] [1] [c] [emphasis supplied]; see Fields v Fields, 15 NY3d 158, 161-162 [2010]). Likewise, “[e]xpenses incurred prior to the commencement of an action for a divorce are marital debt to be equally shared by the parties upon an offer of proof that they represent marital expenses” (Epstein v Messner, 73 AD3d at 845). “Where a party has paid the other party’s share of what proves to be marital debt, reimbursement is required” (id.; see Bogdan v Bogdan, 260 AD2d 521, 522 [1999]). As the interest in Green Fields was acquired during the marriage and before the commencement of the instant action, it was marital property (see Domestic Relations Law § 236 [B] [1] [c]). Likewise, a loan in the approximate amount of $239,000 which was taken out simultaneously, was marital debt. Since the defendant established that he paid the plaintiffs share of the marital debt by satisfying the loan, reimbursement is required (see Epstein v Messner, 73 AD3d at 845; see Bogdan v Bogdan, 260 AD2d at 522). Taking the market value of the interest in Green Fields ($350,000), and applying the plaintiffs 50% distributive share thereto, she is entitled to an award of $55,500 after reimbursing the defendant the sum of $119,500 for satisfying her portion of the marital debt.

The Supreme Court erred in awarding the defendant a separate property credit in the amount of $32,719.59. Where separate property has been commingled with marital property, there is a presumption that the commingled funds constitute marital property (see Massimi v Massimi, 35 AD3d 400, 402 [2006]; Wade v Steinfeld, 15 AD3d 390, 391 [2005]; Lynch v King, 284 AD2d 309, 310 [2001]; Judson v Judson, 255 AD2d 656, 657 [1998]). However, a party may overcome this presumption “by presenting sufficient evidence that the source of the funds was separate property” (Phillips v Haralick,

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Bluebook (online)
91 A.D.3d 842, 938 N.Y.2d 317, Counsel Stack Legal Research, https://law.counselstack.com/opinion/scher-v-scher-nyappdiv-2012.