SPERA v. SPERA (2010)

In an action for a divorce and ancillary relief, the defendant appeals, as limited by her brief, from stated portions of a judgment of the Supreme Court, Suffolk County (MacKenzie, J.), entered July 30, 2008, which, upon a decision of the same court, dated June 19, 2008, made after a nonjury trial, inter alia, (1) directed her to provide the plaintiff with records regarding the balance and/or payments and any distributions she received for an Invesco Fund and an American Express Investment Fund and to forward to the plaintiff one half of any distributions she received, and (2) directed her to pay the plaintiff the sum of $21,200 from her share of the sale of the proceeds of the marital residence, held in escrow by her counsel.

ORDERED that the judgment is modified, on the law, the facts, and in the exercise of discretion, (1) by deleting the eighth and ninth decretal paragraphs thereof regarding the Invesco Fund and American Express Investment Fund, and (2) deleting the eleventh decretal paragraph thereof directing the defendant to pay the plaintiff the sum of $21,200 from her share of the proceeds of the sale of the marital residence held in escrow and substituting therefor a provision directing the defendant to pay the plaintiff the sum of $6,700 from her share of the proceeds of the sale of the marital residence held in escrow; as so modified, the judgment is affirmed insofar as appealed from, with costs to the defendant.

“In fashioning an award of equitable distribution, the Supreme Court is required to discuss the statutory factors it relied upon in distributing marital property” (Milnes v. Milnes, 50 A.D.3d 750, 750, 857 N.Y.S.2d 168; see Payne v. Payne, 4 A.D.3d 512, 513-514, 771 N.Y.S.2d 714). Nonetheless, “[w]here it is evident that the Supreme Court considered all relevant factors and the reasons for its decision are articulated, the court is not required to specifically cite to and analyze each statutory factor” (Milnes v. Milnes, 50 A.D.3d at 750, 857 N.Y.S.2d 168, citing O'Brien v. O'Brien, 66 N.Y.2d 576, 589, 498 N.Y.S.2d 743, 489 N.E.2d 712). When, as here, the Supreme Court fails to set forth the statutory factors it considered, and it is not evident from the record that the court considered all the relevant factors, this Court may, in the interest of judicial economy, exercise its power to determine the equitable distribution of the parties' marital property (see Fanelli v. Fanelli, 215 A.D.2d 718, 720, 627 N.Y.S.2d 425; Rossi v. Rossi, 163 A.D.2d 376, 377, 558 N.Y.S.2d 108), “where the record upon which the trial court would base such a determination is fully before it” (Payne v. Payne, 4 A.D.3d at 514, 771 N.Y.S.2d 714). Under the instant circumstances, we therefore turn to the plaintiff's contentions on appeal regarding equitable distribution, rather than holding the appeal in abeyance and remitting the matter to the Supreme Court for compliance with Domestic Relations Law § 236(B)(5)(g) (see Lounsbury v. Lounsbury, 300 A.D.2d 812, 817, 752 N.Y.S.2d 103; Chasin v. Chasin, 182 A.D.2d 862, 864, 582 N.Y.S.2d 512).

Although the plaintiff presented evidence that the parties' joint Invesco Fund and American Express Investment Fund existed and had some value in 2001, he presented no evidence of their existence or value as of the date of the commencement of the action in 2005. Indeed, the plaintiff testified on direct examination that he had no knowledge whatsoever of what became of these accounts. Accordingly, the Supreme Court lacked an evidentiary basis upon which to make any award to the plaintiff with respect to these claimed investment funds (see Burtchaell v. Burtchaell, 42 A.D.3d 783, 786, 840 N.Y.S.2d 449; Seckler-Roode v. Roode, 36 A.D.3d 889, 890, 830 N.Y.S.2d 211; Massimi v. Massimi, 35 A.D.3d 400, 403, 825 N.Y.S.2d 262; Burgio v. Burgio, 278 A.D.2d 767, 770, 717 N.Y.S.2d 769).

At the time the plaintiff depleted his 401(k) savings account at the end of December 2005, the total amount of money he withdrew from the account totaled $60,767.04, of which he received a net payment of $29,654.22, after deductions for an outstanding loan and penalties. According to the plaintiff, this sum was expended for various marital “household expenses” and to pay off prior loans that he had taken against the account. However, he failed to provide any evidence of how these 401(k) funds were expended, even though he testified that the moneys were exclusively deposited into a personal account that he opened at Bank of America.

Thus, the plaintiff failed to meet his burden of tracing the use of these claimed separate funds to establish that they were used to pay for marital expenses so as to entitle him to a separate property credit (see Milnes v. Milnes, 50 A.D.3d at 751, 857 N.Y.S.2d 168; Thomas v. Thomas, 145 A.D.2d 477, 477-478, 535 N.Y.S.2d 736). Accordingly, the Supreme Court erred in crediting the plaintiff with $14,500, representing one half of the approximately $29,000 that he claimed to have expended on marital expenses from separate 401(k) savings account funds. However, the Supreme Court properly credited the plaintiff with the additional sum of $6,700, representing one half of undisputed marital expenses.

Although the defendant contends that she is entitled to an additional credit for the plaintiff's wasteful dissipation of marital funds by unnecessarily incurring taxes and early withdrawal penalties when he cashed out his 401(k) savings account, she did not submit any evidence to establish the marital nature of this asset. Indeed, at trial, the defendant did not in any way contest the separate nature of this account. Moreover, there is no evidence in the record regarding when the plaintiff first acquired the 401(k) account, or how much money, if any, was deposited into the account during the marriage (cf. Shyue v. Tarn, 6 A.D.3d 521, 521, 775 N.Y.S.2d 342). Thus, having failed to meet her burden of establishing the marital nature of the money in this account, the defendant was not entitled to a credit for the alleged wasteful dissipation of assets (see Damas v. Damas, 51 A.D.3d 709, 710, 858 N.Y.S.2d 716; Sinha v. Sinha, 17 A.D.3d 131, 134, 793 N.Y.S.2d 347).

“ ‘Property acquired during the marriage is presumed to be marital property and the party seeking to overcome such presumption has the burden of proving that the property in dispute is separate property’ ” (Massimi v. Massimi, 35 A.D.3d at 402, 825 N.Y.S.2d 262, quoting Judson v. Judson, 255 A.D.2d 656, 657, 679 N.Y.S.2d 465). “Marital property is to be viewed broadly, while separate property is to be viewed narrowly” (Steinberg v. Steinberg, 59 A.D.3d 702, 704, 874 N.Y.S.2d 230). In addition, “[s]eparate property can be transmuted into marital property when the actions of the titled spouse demonstrate his intent to transform the character of the property from separate to marital,” by, for example, depositing otherwise separate funds into a joint marital account and utilizing them for marital expenses (Imhof v. Imhof, 259 A.D.2d 666, 667, 686 N.Y.S.2d 825). “Where, as here, a party fails to trace sources of money claimed to be separate property, a court may treat it as marital property” (Steinberg v. Steinberg, 59 A.D.3d at 704, 874 N.Y.S.2d 230).

Not only did the defendant fail to establish the source of any of the funds she claimed were separate, she also deposited these funds into a marital account which was used for marital expenses. Although she produced bank statements showing what she claimed were deposits of separate funds, she introduced no evidence of the source of these funds to establish their separate nature. Under these circumstances, the defendant failed to establish any entitlement to a separate property credit.

This Court does not address the defendant's remaining contentions, regarding the provisions of the judgment addressing the parties' income tax returns and the parties' recreational vehicle, as they were raised for the first time in her reply brief (see People v. Ford, 69 N.Y.2d 775, 777, 513 N.Y.S.2d 106, 505 N.E.2d 615; Miller v. Brust, 278 A.D.2d 462, 464, 717 N.Y.S.2d 663; Sousa v. American Ref-Fuel Co. of Hempstead, 258 A.D.2d 514, 515, 685 N.Y.S.2d 279; Daly v. Messina, 228 A.D.2d 542, 542, 644 N.Y.S.2d 778; State Farm Fire & Cas. Co. v. LiMauro, 103 A.D.2d 514, 521-522, 481 N.Y.S.2d 90, affd. 65 N.Y.2d 369, 492 N.Y.S.2d 534, 482 N.E.2d 13).