[*1] D.E. v P.E. 2021 NY Slip Op 50194(U) Decided on March 1, 2021 Supreme Court, Queens County Koenderman, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.
Decided on March 1, 2021
Supreme Court, Queens County
xxxx/18
Elisa S. Koenderman, J.
Plaintiff moves via Order to Show Cause to hold Defendant in contempt for failing to pay court-ordered temporary support and other expenses; for Defendant to pay Plaintiff said arrears in one lump sum, or in the alternative, for a money judgment against him; to hold Defendant in contempt for selling the parties' Florida condominium in violation of the Automatic Orders and for counsel fees as a sanction; for Defendant to pay interim counsel fees as well as counsel fees for Plaintiff's bankruptcy attorneys; for Defendant to pay for Plaintiff's forensic accountant; and to expand Defendant's parental access. Defendant opposes and cross moves to receive certain credits against his temporary support arrears based upon his post-commencement voluntary payments to Plaintiff; or in the alternative, for a downward modification of his temporary support obligations based upon a substantial change of circumstances, i.e. financial hardship. Defendant also moves for permission to sell his interest in a vacant lot at NE Place, Brooklyn, and to use the sale proceeds to pay off various debt.
ln determining the motion, the court considered Plaintiff's Order to Show Cause;[FN1] [*2]Defendant's Notice of Cross Motion;[FN2] Plaintiff's Affidavit in Further Support of Plaintiff's Order to Show Cause & in Opposition to Defendant's Cross Motion; Plaintiff's Affirmation in Further Support of Plaintiff's Order to Show Cause & in Opposition to Defendant's Cross Motion; and Defendant's Reply Affidavit in Further Support of Cross Motion (see CPLR 2219).
The court denies Plaintiff's motions to hold Defendant in contempt and for Defendant to pay for her forensic accountant but grants Plaintiff's motions for Defendant to pay interim counsel fees as well as counsel fees for her bankruptcy attorneys. The court denies Defendant's downward modification motion but awards Defendant certain credits against his temporary support arrears based upon his voluntary post-commencement payments to Plaintiff. Finally, the court grants Defendant permission to sell NE Place, Brooklyn; to use the net sale proceeds to pay off specific marital debt; to escrow fifty-percent (50%) of the surplus sale proceeds to protect Plaintiff's right to equitable distribution; to pay the adjusted temporary support arrears from the other fifty-percent (50%) of the surplus sale proceeds; and to escrow any remainder of said surplus sale proceeds after payment of temporary support arrears.
The parties were married on December 1, 2001. They have two children, N.E. and PEJ Plaintiff commenced this action for divorce on August 8, 2018.
On March 4, 2020, the court rendered a Decision and Order ["the Pendente Lite Order"] obligating Defendant to pay Plaintiff $7,000 per month in temporary maintenance for eighteen months plus $7,000 per month in temporary child support, retroactive to the date of commencement of the action. To calculate Defendant's temporary support obligations, the court attributed to Defendant an income of $891,919, including distributions from XYZ Brokerage LLC ["XYZ Brokerage"], as reported on the parties' 2017 joint income tax returns. The court attributed no income other than temporary maintenance to Plaintiff and capped the combined parental income at $500,000 for temporary child support. The court determined that Defendant owed Plaintiff $126,000 each in temporary maintenance and temporary child support arrears. After crediting Defendant with $42,000 in unallocated temporary support payments made pursuant to prior court order [FN3] ($21,000 applied to temporary maintenance arrears and $21,000 applied to temporary child support arrears), the court set Defendant's temporary maintenance and child support arrears at $105,000 each.
Accordingly, beginning March 1, 2020, the court ordered Defendant to pay Plaintiff $7,000 per month in temporary child support; $2,000 per month in temporary child support arrears; and $7,000 per month in temporary maintenance arrears, for a total of $16,000 per month. The court also ordered Defendant to pay 91% of statutory add-on expenses for the children, as well as 91% of private school tuition. Additionally, the court ordered Defendant to pay the carrying costs of the marital residence, including the mortgage, homeowner's insurance, [*3]home equity loan, utilities (alarm, electric, gas and water), landscaper and reasonably necessary repairs (see DRL § 236[B][5-a][l]) as well as the cost to lease and insure Plaintiff's car. Finally, the court ordered Defendant to pay 91% of Plaintiff's interim counsel fees.
Plaintiff now contends that Defendant has failed to pay $32,500 [FN4] in temporary support since March 1, 2020, as well as his $6,585.09 pro rata share of the children's add-on expenses and $4,415.20 in landscaping costs and reasonable repairs to the marital residence. Plaintiff asks the court to hold Defendant in contempt and to order him to pay her the total owed in one lump sum, or in the alternative for a money judgment in that amount. Plaintiff also asks the court to hold Defendant in contempt for selling the Florida condominium in violation of the Automatic Orders. Although Plaintiff does not ask for specific relief for this alleged contempt, she requests counsel fees for the instant application as a sanction.
Defendant admits he sold the parties' Florida condominium. He alleges that "as this was one of the few real estate properties with significant equity, I believed that I had no choice to liquidate this property so I could ensure economic stability for our family in the coming months, while also shedding significant expenses both directly attendant to the property (at least $4,200 per month in carrying charges) and other debts with high interest rates (at least $8,000 per month in service debt)." Defendant adds that "this is something I would have done whether we were going through a divorce or not as it is consistent with our past practice. We would often buy, sell or finance projects interchangeably or as needed." Defendant further states that he sold the condominium in an all cash transaction for $1,350,000 — $125,000 more than the appraised value — and used the net proceeds of the sale to pay down specific marital debt, including debt with the highest interest rates. Defendant submits notes payable as well as affidavits and other documentation from various lenders to substantiate this debt.[FN5]
Although Plaintiff disagrees with his prioritization of payment to certain lenders, she does not deny that Defendant used most of the condominium sale proceeds to pay off marital debt. Plaintiff primarily complains that Defendant did not use the money to to satisfy the parties' tax debt or to pay off his court-ordered support obligations to her, but rather used part of it to pay his own legal fees.
To prevail on a motion to punish a party for civil contempt, "the movant must establish by clear and convincing evidence (1) that a lawful order of the court was in effect, clearly expressing an unequivocal mandate; (2) the appearance, with reasonable certainty, that the order was disobeyed; (3) that the party to be held in contempt had knowledge of the court's order; and (4) prejudice to the right of a party to the litigation" (Shemtov v Shemtov, 153 AD3d 1295 [2d Dept 2017], citing Judiciary Law § 753[A][3]; see El-Dehdan v El-Dehdan, 26 NY3d 19, 29 [2015]; Matter of Fitzgerald, 144 AD3d 906, 907 [2d Dept 2016]; Mollah v Mollah, 136 AD3d [*4]992 [2d Dept 2016]).
Unlike criminal contempt, which seeks to redress an offense against public justice as well as to protect the dignity of the judicial system and compel respect for its mandates, civil contempt seeks to vindicate a private right of a party to litigation (see El-Dehdan, 26 NY3d at 34-35; Cutroneo v Cutroneo, 140 AD3d 1006, 1008 [2d Dept 2016]; Ruesch v Ruesch, 106 AD3d 976, 977 [2d Dept 2013]). As such, "willfulness is not an element of civil contempt" (id.). Rather, regardless of the contemnor's motive, civil contempt occurs "when disobedience of the court's order defeats, impairs, impedes or prejudices the rights or remedies of a party" (id.).
On its face, Defendant's sale of the Florida condominium is a clear violation of the Automatic Orders, which were indisputably served upon him in the instant action.[FN6] Moreover, Defendant deceived the court and counsel not only by failing to disclose the sale promptly after it occurred, but by concealing his plan and intention to sell the property. On March 4, 2020, during an extensive conference with counsel followed by an appearance with the parties, the court and counsel discussed the availability of the Florida condominium as potential lodging for Plaintiff and the children during Easter vacation. Defendant's professed objection was that the condominium was under renovation. Thus, he agreed instead to pay for their stay at the Fontainebleau Miami Beach from April 9, 2020 to April 19, 2020. He mentioned nothing about the impending sale of the condominium on April 13, 2020, which more than likely was already in the works. Indeed, the court issued an order allowing Plaintiff to inspect the premises while in Florida to ensure that its furnishings were intact. No one knew — except, seemingly, Defendant — that the parties would no longer own the condominium by that time. Hence, although not required for a finding of civil contempt (id.), Defendant's actions appear unmistakably wilful.
Despite Defendant's reproachful and grossly disrespectful conduct, however, Plaintiff has not identified the prejudice she has suffered as a result. To the contrary, because Defendant used the majority of the proceeds to pay off certain marital debt — albeit not the parties' tax debt as she might have preferred — Plaintiff actually has benefitted from the sale of the Florida condominium. Accordingly, the court declines to hold Defendant in contempt for the sale. Regardless, Plaintiff is entitled to an equitable distribution credit for her share of any sale proceeds that Defendant used to pay his own expenses, such as legal fees.
Further, the parties agree that Defendant paid Plaintiff the following amounts towards his temporary support obligations pursuant to the Pendente Lite Order: $14,000 in March 2020; $10,500 in April 2020; $7,000 in May 2020; $7,000 in June 2020; $27,000 in July 2020; $7,000 in August 2020; and $7,000 in September 2020. Plaintiff characterizes these payments as "combined support" payments but that is inexact. In fact, the court imposed one current temporary monthly support obligation upon Defendant: that is, his obligation to pay $7,000 per month in temporary child support. The balance of Defendant's temporary monthly support obligations comprised installment payments of retroactive temporary maintenance and child support (see DRL § 236[7][a] & [9][b][1]), which the court identified in the Pendente Lite Order as temporary maintenance and child support "arrears." Since Defendant consistently has paid $7,000 per month, he has satisfied his current temporary child support obligation and has [*5]accumulated no new arrears. Thus, Defendant has defaulted only on his payment of retroactive temporary maintenance and child support, or temporary maintenance and child support "arrears."
Additionally, the Defendant is entitled to a credit for the partial payments he made towards temporary maintenance and child support arrears pursuant to the Pendente Lite Order (see Burns v Burns, 84 NY2d 369, 377 [1994]; D'lorio v D'lorio, 135 AD3d 693, 697 [2d Dept 2016]). The court determines that any monthly payment which exceeds Defendant's $7,000 monthly child support obligation should apply first to the monthly arrears obligation the payment is able to satisfy in full. Since the monthly temporary child support arrears obligation is less than the monthly temporary maintenance arrears obligation, Defendant always may satisfy the former obligation before the latter. Thus, any excess payment should apply first to the $2,000 monthly temporary child support arrears obligation and next to the $7,000 monthly temporary maintenance arrears obligation. In the event that a monthly payment satisfies all Defendant's monthly temporary support obligations — current as well as retroactive — any remainder should apply equally to the balance of temporary maintenance and child support arrears.
Hence, in March 2020, wherein Defendant paid $14,000 in temporary support, the court applies $7,000 to temporary child support; $2,000 to temporary child support arrears; and $5,000 to temporary maintenance arrears. In April 2020, wherein Defendant paid $10,500 in temporary support, the court applies $7,000 to temporary child support; $2,000 to temporary child support arrears; and $1,500 to temporary maintenance arrears. In July 2020, wherein Defendant paid $27,000 in temporary support, the court applies $7,000 to temporary child support; $2,000 to temporary child support arrears; and $7,000 to temporary maintenance arrears. The court applies the $11,000 remainder equally, or $5,500 each, to the balance of temporary maintenance and child support arrears. Therefore, in addition to any other credits awarded pursuant to this Decision and Order, Defendant shall receive a total credit of $19,000 towards temporary maintenance arrears and $11,500 towards temporary child support arrears for payments made pursuant to the Pendente Lite Order (see Burns, 84 NY2d at 377).
Since Defendant's payments of temporary child support are current, and since Defendant shall satisfy the adjusted balance of temporary maintenance and child support arrears as detailed below, the court declines to hold Defendant in contempt for nonpayment of temporary support arrears. Nonetheless, Defendant shall pay Plaintiff his $6,585.09 pro rata share of the children's add-on expenses and $4,415.20 in landscaping costs and reasonable repairs to the marital residence forthwith. Pendente lite, Defendant also shall continue to pay the carrying costs of the marital residence; the cost to lease and insure Plaintiff's car; and his 91% share of the children's add-on expenses and private school tuition.
DOWNWARD MODFICATION AND TEMPORARY SUPPORT ARREARS CREDITS
Defendant cross-moves for certain credits against his temporary maintenance and child support arrears based upon his post-commencement voluntary payments to Plaintiff, or in the alternative for a downward modification of his temporary support obligations based upon a substantial change of circumstances, i.e. financial hardship.
Defendant claims that his business, AI Brokerage ["AI Brokerage"], "a retail brokerage selling policies . . . . was severely negatively impacted by the global [COVID-19] pandemic." He states that between October 2019 and October 2020, the business income declined by almost 9% [*6]and the operating profit by 66%, despite efforts to reduce expenses.[FN7] He alleges that in April 2020, his annual base salary was reduced from $208,000 to $169,000. Defendant acknowledges that in 2018 and 2019 his total gross income from AI Brokerage was approximately $550,500 per year, comprised of his base salary plus almost $350,000 in additional distributions. Defendant contends that "in light of the significant efforts made to reduce expenses, we are hopeful that AI Brokerage will be able to make some distribution at the end of [2020]" but that "based upon our current projections, it will not be anything close to the amount distributed in prior years." In any event, Defendant does not disclose the amount of any distribution he received in 2020.
As Plaintiff aptly remarks, "as history demonstrates, most of Defendant's total wages are generated through his bonus pay" and "Defendant, as a 90% shareholder in the business, is nearly entirely in charge of his own income." Plaintiff also observes that despite claiming to reduce expenses, from October 2019 to October 2020 AI Brokerage increased office salaries by $43,735.04 or 6.2% and staff bonuses by $12,624.83 or 36%. Additionally, AI Brokerage paid $24,212.50 or 332.9% more for accounting and legal expenses; $14,066.81 or 71.2% more for office supplies and printing; $6,091.84 or 199% more for furniture and fixtures; and $26,266.92 or 16.2% more in rent for the same period. Notably, AI Brokerage paid the increased rent to 123 SRH LLC, in which Defendant has a 75% interest.[FN8]
As previously stated, Defendant's only current temporary support obligation is his monthly child support payment. Because Defendant's other temporary support obligations are monthly "arrears" payments — i.e., monthly installment payments of retroactive temporary maintenance and child support determined upon Defendant's imputed income at the time of the Pendente Lite Order — a downward modification is inapplicable to them. Additionally, because Defendant has not clearly disclosed all his financial circumstances, he fails to meet his burden of demonstrating a substantial change of circumstances warranting a downward modification of temporary child support (see Rabasco v Lamar, 106 AD3d 1095, 1096-1097 [2d Dept 2013]). Nevertheless, Defendant is entitled to receive credits against his temporary maintenance and child support arrears based upon his voluntary payments to Plaintiff from his post-commencement income.
Defendant avers that between August 8, 2018 and September 5, 2019, he deposited $79,525 "for Plaintiff's sole use" into her Cross County Savings Account ["Cross County Account"]. He alleges that most of the funds comprised payments from XYZ Brokerage, income which the court previously attributed to Defendant in the Pendente Lite Order. Plaintiff asserts that Defendant "created [XYZ Brokerage] and put his 25% business interest in my name" because "it could not be in his name since he owned his own insurance brokerage firm . . . and he cannot compete with his own business." Plaintiff claims that she does "not work for this business"and that she has "never even been to the offices." Plaintiff also submits a letter from [*7]Defendant's counsel (Plaintiff's Exhibit M), in which he refers to XYZ Brokerage as a source of Defendant's income. Although Defendant argues that the court should attribute the XYZ Brokerage income to Plaintiff, he alternatively asks, if the court continues to ascribe this income to Defendant, that he receive credit against his temporary support arrears for any post-commencement payments he made to Plaintiff from XYZ Brokerage.
Defendant acknowledges that $9,500 of the $79,525 that he deposited into Plaintiff's Cross County Account came from his TD Ameritrade Account. Plaintiff contends that the source of an an additional $4,025 in deposits into the Cross County Account is unknown. Plaintiff concedes, however, that Defendant deposited $66,000 from XYZ Brokerage into her account. Moreover, Plaintiff does not dispute that these funds derived from Defendant's post-commencement income. Indeed, she declares that Defendant "draws an income from [XYZ Brokerage], paid some voluntary payments with this income, and is now seeking credit for the same." Accordingly, Defendant shall receive a credit of $66,000 against his temporary support arrears based upon his voluntary post-commencement payments to Plaintiff from his XYZ Brokerage income (see Markowitz v Markowitz, 146 AD3d 872, 874 [2d Dept 2017]; Levitt v Levitt, 97 AD3d 543 [2d Dept 2012]; Darema Rogers v Rogers, 234 AD2d 334, 335 [2d Dept 1996]). Since the source of the additional $4,025 in deposits to the account is unknown, and may have been marital funds, Defendant shall receive a 50%, or $2,012.50 credit for these deposits against his temporary support arrears, subject to reallocation after trial. Consequently, Defendant shall receive a total credit of $68,012.50 ($66,000 + $2,012.50) against his temporary support arrears for his voluntary post-commencement payments into Plaintiff's Cross County Account.
Defendant also alleges that from August 8, 2018 to September 5, 2019, he paid over $88,000 for expenses Plaintiff charged on her American Express card. He alleges that he made most of the payments with funds from his TD Checking Account, into which his post-commencement income from AI Brokerage was deposited. Defendant submits American Express statements from August 2018 to September 2019 showing thousands of dollars both in monthly charges on Plaintiff's card and payments received on the account. Excluding certain charges,[FN9] Defendant requests a credit of $75,959.03 against his temporary maintenance and child support arrears based upon such payments.
Plaintiff does not dispute that Defendant paid for expenses charged on her American Express card during the aforementioned period. Rather, she argues that Defendant "has failed to indicate the source of said payments" and alleges that "a full accounting reveals that Defendant has been using marital funds to pay some, if not all, his support obligations." She does not supply such an accounting, however. Moreover, Defendant submits statements from his TD Checking Account from September 2018 to August 2019 that show a total of $125,006.73 in deposits or credits from AI Brokerage and $67,530.70 in payments to American Express.[FN10] [*8]Further, the payments from the TD Checking Account correspond with those reflected as received on the American Express statements (Defendant's Exhibit Z). Thus, Defendant sufficiently has demonstrated the source of the funds for $67,530.70 in payments of Plaintiff's American Express charges. Accordingly, Defendant shall receive a credit against his support arrears for $67,530.70 in voluntary payments from his post-commencement income from AI Brokerage to American Express for Plaintiff's expenses. Since the source of the additional $8,428.33 ($75,959.03 — $67,530.70) in American Express payments is unknown, and may have been marital funds, Defendant shall receive a 50%, or $4,214.16, against his temporary support arrears for these payments, subject to reallocation after trial. Consequently, Defendant shall receive a total credit of $71,744.86 ($67,530.70 + $4,214.16) against his temporary support arrears for his voluntary post-commencement payments of Plaintiff's American Express charges.
Accordingly, Defendant shall receive a total credit of $139,757.36 ($68,012.50 + $71,744.86) against his temporary support arrears for voluntary payments to Plaintiff from his post-commencement income. The credit shall be applied equally, or $69,878.68 each, to his temporary maintenance and temporary child support arrears. Hence, Defendant's adjusted temporary support arrears are as follows:
a) $105,000 (temporary maintenance arrears pursuant to Pendente Lite Order) minus $19,000 (credit for payments pursuant to Pendente Lite Order) minus $69,878.68 (credit for voluntary payments post-commencement) equals $16,121.32 in temporary maintenance arrears; andb) $105,000 (temporary child support arrears pursuant to Pendente Lite Order) minus $11,500 (credit for payments pursuant to Pendente Lite Order) minus $69,878.68 (credit for voluntary payments post-commencement) equals $23,621.32 in temporary child support arrears.
Defendant shall pay Plaintiff the adjusted total combined temporary maintenance and child support arrears of $39,742.64 in full from fifty-percent (50%) of the surplus proceeds of the sale of NE Place, Brooklyn, in accordance with the provisions of this Decision and Order as set forth in the succeeding paragraphs.
SALE OF NE PLACE, BROOKLYN
Defendant also moves for permission to sell his interest in a vacant lot at NE Place, Brooklyn ["NE Place"], owned by NE Place, LLC, of which he attests he is the sole member. Defendant explains that he and AB purchased the property in 2016 as a joint venture with loans from various individuals.[FN11] Defendant maintains that while AB "is not on any documentation as a member in the LLC which owns NE Place, he nevertheless was involved in the purchase, as he has been in other ventures." Defendant further avows that his "application does not seek to reimburse Mr. B for his share of the investment from the sale of the proceeds," and that he "will resolve any issues with Mr. B separately." Defendant states that in July 2018, he obtained a cash-out refinance of the property through Eastern Savings Bank, which recorded a mortgage of $700,000 and issued Defendant a check for $655,633.33.[FN12] He alleges that the carrying charges on the property are over $8,400 per month. Defendant claims that he has been "unable to stay current with the mortgage" since October 2020 due in part to the "loss of significant liquidity." He submits a bank statement evincing the nonpayment and initiation of 16% default interest (Defendant's Exhibit R).
Defendant avers that he has received a proposed offer to purchase the property [FN13] for $1,400,000, which is $125,000 more than the appraised value, with "very favorable" terms, "i.e. $1,100,000 cash due at closing and $300,000 in a 12-month seller financing mortgage." He posits that "in light of my worsening financial condition, it has become readily apparent and imperative that this vacant property be sold, the debt associated with same be paid off to alleviate the monthly financial burden, and the remaining proceeds of the sale used to address other debts/expenses."
Defendant details his obligations with respect to various other commercial properties owned by LLCs of which he is a sole or co-member. In particular, Defendant discusses the current predicament of the property development project at Beach 96th Street, Rockaway Park ["Beach 96th Street"]. Although Defendant declares he is the sole member of AP Group, LLC, which owns Beach 96th Street, Defendant states that he and AB purchased the property in 2016 as a joint venture. Defendant alleges that he obtained a $2,500,000 "Building Loan Agreement/Mortgage" to start construction on the property in July 2018, with the principal sum due in full on February 1, 2020 (later extended to August 1, 2020) and 9% interest payments due each month. Defendant maintains that the carrying costs of the property were approximately $25,000 per month, and that he invested over $1,000,000, and AB at least $800,000, into the project. He adds that the current appraisal value of the property is $2,150,000. Defendant claims that after construction was shut down due to the pandemic in March 2020, he was unable to complete the project by the time the principal sum was due. He asserts that "between the shutdown and liquidity issues" he could not "complete the project by August 1, 2020 [or] continue to pay the monthly carrying charges of $25,000" or furnish "another $1,000,000 in [*9]capital costs." Defendant acknowledges that he had "personally guaranteed" the building loan, which was "cross-collateralized by any other properties [Plaintiff and I] owned in joint name," including the marital residence. Defendant contends that he therefore sought Plaintiff's permission to sell his "interest in [AP Group] LLC which owns the property" to avoid foreclosure or voluntary bankruptcy. Defendant avers, however, that an involuntary bankruptcy petition was filed against AP Group, LLC on July 31, 2020. Defendant opines that "based upon the current procedural posture and the appraised value of the property, it is unlikely that we will now recoup our capital investment."
Defendant further describes how the pandemic affected his liquidity. He states that on February 29, 2020, the net worth of his TD Ameritrade account was $738,883.83, or the difference between the stock value and margin loan amounts. Defendant claims that "between March 11, 2020 and March 13, 2020, virtually my entire portfolio of stocks was liquidated via margin calls when the NASDAQ plunged and the market rapidly declined . . . it happened so fast, I could not cover the margin debt . . . as a result, I lost all my liquidity." Defendant attaches his TD Ameritrade account statements from February 2020 to May 2020 to support his claim (Defendant's Exhibit U).
Finally, Defendant lists his liabilities, which include approximately $129,000 in taxes based upon the parties' 2018 joint returns; $96,000 in taxes based upon their 2019 joint returns; $500,000 to BS for his "investment in 6 AR, LLC"; $150,000 to Plaintiff's mother, SK; and $100,000 to MR. Defendant further attests that on "November 20, 2020, I was informed that IRS Revenue Officer, MV, stated that the IRS is initiating the levy process."
The "court is authorized to issue an order to preserve marital property, both in advance of, and upon, a determination of equitable distribution" (El Dehdan, 26 NY3d at 32). The court may "make such direction, between the parties, concerning the possession of property, as in the court's discretion justice requires, having regard to the circumstances of the case and of the respective parties" (DRL § 234[2]; see also Ricatto v Ricatto, 4 AD3d 514, 515 [2d Dept 2004] ["DRL § 234 permits a court to issue an order concerning the possession of real or personal property to prevent the disposition or dissipation of marital assets while a matrimonial action is pending"]). Moreover "an interim restraint on the disposition or encumbrance of property should not be imposed absent a demonstration that the party to be restrained has done, or is threatening to do, an act which would prejudice the movant's equitable distribution claim" (Rogers v Rogers, 161 AD2d 754 [2d Dept 1990]). Indeed, the court should consider the volatile nature of any asset and whether a restraint upon it "would do more harm than good" (Kahn v Kahn, 147 Misc 2d 954, 958 [Sup Ct, NY Cty 1990]).
Under the totality of the circumstances, the court determines that it is necessary and appropriate for Defendant to sell NE Place pursuant to the aforementioned November 3, 2020 purchase offer to prevent dissipation of that marital asset as well as the marital residence, which is cross-collateralized and may be subject to a tax lien. After satisfaction of the mortgage, Defendant shall pay the parties' 2018 and 2019 total tax debt of approximately $225,000 in full from the net sale proceeds. Defendant shall escrow fifty percent (50%) of the surplus sale proceeds (after payment of the mortgage and aforementioned tax debt) to protect Plaintiff's right to equitable distribution (see Hoffman v Hoffman, 81 AD3d 601, 601-602 [2d Dept 2011]; DiSanto v DiSanto, 279 AD2d 603 [2d Dept 2001]; Nebot v Nebot, 139 AD2d 635, 636 [2d Dept 1988]). From the other fifty percent (50%) of the surplus sale proceeds, Defendant shall pay Plaintiff the adjusted total combined temporary maintenance and child support arrears of [*10]$39,742.64. After such payment, Defendant shall escrow any remainder of said surplus sale proceeds.
The court denies Plaintiff's motion to expand Defendant's parental access. Both parties agree that Defendant has not exercised the parental access the court already has awarded him, despite the children's desire to see him. Indeed, Defendant has not asked for, and does not appear to want, expanded access to his children at this time. It would be unfair to the children, not to mention inconsistent with their best interests, to afford Defendant further opportunity to disappoint them.
COUNSEL AND EXPERT FEES
The court grants Plaintiff's motion for interim counsel fees. Plaintiff supports her motion with an attorney affirmation, retainer agreement, itemized invoices and an updated net worth statement (see Montoya v Montoya, 143 AD3d 865 [2d Dept 2016]; Fackelman v Fackelman, 71 AD3d 724 [2d Dept 2010]; Grald v Grald, 33 AD3d 922 [2d Dept 2006]). Pursuant to the Pendente Lite Order, Defendant shall pay 91% of Plaintiff's interim counsel fees.[FN14] For the period from March 4, 2020 through December 30, 2020, Plaintiff incurred total counsel fees in the amount of $86,693.81, including legal fees, filing fees, subpoena fees and mailing fees, but excluding interest charges. Accordingly, Defendant shall pay $78,891.37 in interim counsel fees directly to Plaintiff's attorneys, GGSM, PC.
The court also grants Plaintiff's motion for Defendant to pay for her bankruptcy attorneys. Defendant admits that he "personally guaranteed" the Building Loan Agreement on Beach 96th Street, and "cross-collateralized" the loan with the marital residence. Since an involuntary bankruptcy petition has been filed against Beach 96th Street, Plaintiff reasonably requires specialized counsel to protect her interest in the marital residence. Accordingly, Defendant shall pay $2,500 directly to Plaintiff's bankruptcy attorneys, P & M, LLC.
The court denies Plaintiff's motion for Defendant to pay for her forensic accountant, B Consulting Group. The parties are awaiting a report from the court-appointed forensic accountant, KLG. As Defendant notes, "it is premature . . . to award Plaintiff expert fees to retain another forensic accountant [to review the court-appointed expert's work] even before that expert has had the opportunity to issue a report."
The court denies any other application not specifically addressed herein.
This constitutes the Decision and Order of the court.
Dated: March 1, 2021
Queens, New York
Elisa S. Koenderman, AJSC Footnotes
Footnote 1:Plaintiff's Order to Show Cause encompasses Plaintiff's Affidavit in Support; Plaintiff's Affirmation in Support; and Plaintiff's Exhibits A — Z.
Footnote 2:Defendant's Notice of Motion encompasses Defendant's Affidavit in Support of Cross Motion & in Opposition to Plaintiff's Order to Show Cause; Defendant's Affirmation in Support of Cross Motion & in Opposition to Plaintiff's Order to Show Cause; and Defendant's Exhibits A — CC.
Footnote 3:On September 6, 2019, the court ordered Defendant to pay Plaintiff $7,000 per month in unallocated temporary support pending determination of Plaintiff's pendente lite application (Culley, J.).
Footnote 4:In her Affidavit in Further Support of Plaintiff's Order to Show Cause & in Opposition to Defendant's Cross Motion, dated December 21, 2020, Plaintiff alleges this amount has increased to $59,500.
Footnote 5:Specifically, Defendant paid $450,000 to RM (the purchaser of the property); $250,000 to CE (Defendant's father); $250,000 to PA; $50,000 to MR; $100,000 to RC; $25,000 to the IRS; $76,000 to A Ins; and $75,000 to AP Group. Defendant also paid $5,000 to JB, Esq.; $3,500 to JC, Esq.; $10,000 to AF Esqs; and $11,700 to the property appraiser. Defendant alleges that "with the remaining $33,000, I paid other debt and marital expenses."
Footnote 6:Defendant executed an Admission of Service of the "Summons and Verified Complaint, Notice of Automatic Orders and Guideline Maintenance" on August 31, 2018, which subsequently was filed with the County Clerk on September 18, 2018.
Footnote 7:Defendant attaches a copy of AI Brokerage's Profits and Loss statement from 1/1/20 — 10/31/20 (Defendant's Exhibit H) which shows the prior year comparison with the net change in dollars and percentage points.
Footnote 8:Defendant alleges that "the rent expense is higher in 2020 . . . because AI Brokerage is also paying the mortgage, maintenance and real estate taxes for 61 S Road," which 123 SRH LLC purchased on October 30, 2019.
Footnote 9:Specifically: $10,000 paid to Plaintiff's counsel; $776.14 paid to NYC Waterboard; $336 paid to X; and $1,000 paid to SL.
Footnote 10:Defendant's TD Checking Account statements (Defendant's Exhibit H) indicate the following total deposits and/or credits from AI Brokerage and total payments to American Express for the specified periods: September 4, 2018 to October 3, 2018 - $11,535.42 in AI Brokerage deposits and $5,000 in American Express payments; October 4, 2018 to November 3, 2018 - $11,535.42 in AI Brokerage deposits and $12,500 in American Express payments; December 4, 2018 to January 4, 2019 - $48,915.68 in AI Brokerage deposits and/or credits and $10,000 in American Express payments; January 4, 2019 to February 3, 2019 - $10,557.82 in AI Brokerage deposits and $8,000 in American Express payments; February 3, 2019 to March 4, 2019 - $10,557.82 in AI Brokerage deposits and $7,000 in American Express payments; April 4, 2019 to May 3, 2019 - $10,557.82 in AI Brokerage deposits and $10,000 in American Express payments; May 4, 2019 to June 3, 2019 - $10,572.25 in AI Brokerage deposits and $9,030.70 in American Express payments; and August 4, 2019 to September 3, 2019 - $10,774.50 in AI Brokerage deposits and $6,000 in American Express payments. Defendant does not submit TD Checking Account statements from November 3, 2018 to December 4, 2018; March 4, 2019 to April 3, 2019; June 4, 2019 to July 3, 2019; or July 4, 2019 to August 3, 2019.
Footnote 11:Defendant states that he received $450,000 from RM; $200,000 from MR; and $175,000 from MD. He attaches various documentation to substantiate the aforementioned loans.
Footnote 12:Defendant admits that thirteen months later, he used these funds to pay off the balloon note on the parties' Florida condominium.
Footnote 13:Defendant attaches an Offer to Purchase dated November 3, 2020 from SLw, Licensed Associate Real Estate Broker, ABC Advisors (Defendant's Exhibit S).
Footnote 14:Defendant complains that the Pendente Lite Order awarded Defendant interim counsel fees "to date," i.e., the date of the order rather than the date of the pendente lite application, and that Defendant therefore had no opportunity "to review and/or contest" any legal fees incurred after the application was filed. To the contrary, since the Pendente Lite Order directed Plaintiff to submit a "proposed [counsel fee] order along with updated invoices clearly indicating legal fees incurred to date" on notice to counsel, Defendant had the opportunity to review as well as contest such legal fees. Indeed, after Defendant protested, the court modified the proposed counsel fee order by crediting Defendant with a payment that previously had not been included.
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