Keane v. Keane

In an action for a divorce and ancillary relief, the plaintiff wife appeals (1), as limited by her brief, from stated portions of a judgment of the Supreme Court, Westchester County (Spolzino, J.), dated November 14, 2003, which, after a nonjury trial, inter alia, awarded her maintenance in the sum of $1,292 per month through December 1, 2010, and $471 per month thereafter, granted her a distributive award in the sum of only $57,600, plus monthly payments of only $2,000 until September 2012, and denied her an award of an attorney’s fee, and (2) from an order of the same court (Neary, J.) entered July 23, 2004, as denied, without a hearing, her motion to vacate portions of the judgment of divorce on the ground of misrepresentation, and the defendant husband cross-appeals, as limited by his brief, from stated portions of the judgment, which, among other things, awarded the plaintiff wife maintenance, a distributive award of appreciation in certain separate property, and the furnishings contained in the marital residence.

Ordered that the judgment is modified, on the law and the facts, by (1) deleting the provision thereof awarding the plaintiff wife maintenance in the sum of $1,292 per month through December 1, 2010, and (2) deleting the provision thereof awarding the plaintiff wife the furnishings contained in the marital residence; as so modified, the judgment is affirmed insofar as appealed and cross-appealed from, without costs or disbursements, and the matter is remitted to the Supreme Court, Westchester County, to recalculate the maintenance award, and for distribution of the furnishings contained in the marital residence; and it is further,

Ordered that the order is affirmed, without costs or disbursements.

The plaintiff and the defendant in this matrimonial action were married for over 30 years and were 62 and 63 years of age, respectively, at the time of trial. The plaintiff wife was not employed during the marriage. The defendant husband was the sole shareholder of a real estate entity which held two assets, one of which was a real estate parcel leased to an automobile body repair shop which yielded monthly rental income. The only evidence of the body shop property’s value was supplied by the defendant’s appraiser, who estimated its value to be approximately $290,000, on the basis of a capitalization of income approach which took into consideration, inter aha, the monthly rental income. The appraiser estimated the body shop property’s value to be approximately $324,000 if it were valued according to the market approach. The other asset owned by the real estate entity was a mortgage note which yielded mortgage interest income. The parties stipulated that the marital property would be equally distributed between them.

In 1981 the defendant and his two siblings inherited a vacation residence located in Madison, Connecticut (hereinafter the Madison property). In 2001 the Madison property was valued at $1,050,000, which was $990,000 more than its estimated value in 1980. The evidence established that the defendant held sole title to the Madison property at the time of the commencement of the matrimonial action (see M'Crea v Purmort, 16 Wend 460 [1836]). However, contrary to the plaintiffs contention, the defendant established that he held a two-thirds interest in the Madison property as nominee of his siblings and that his original one-third interest constituted separate property based upon evidence that he acquired it through inheritance from his father (see Domestic Relations Law § 236 [B] [1] [d] [1]; M'Crea v Purmort, supra; cf. D'Angelo v D'Angelo, 14 AD3d 476, 477 [2005]).

Appreciation in the value of the defendant’s separate property due to the plaintiffs contributions or efforts constituted marital property subject to equitable distribution (see Domestic Relations Law § 236 [B] [1] [d] [3]; Price v Price, 69 NY2d 8, 17-18 [1986]). The Supreme Court correctly determined that 30% of the appreciation of the defendant’s original one-third interest in the Madison property (30% of $330,000) constituted marital property subject to equitable distribution. The balance of the appreciation in the value of the Madison property resulted from market forces rather the plaintiffs contributions or efforts.

The amount and duration of maintenance is a matter committed to the sound discretion of the trial court (see Fridman v Fridman, 301 AD2d 567 [2003]). Considering the plaintiffs age, the length of the marriage, and her limited employment history, the plaintiff was unequipped to become self supporting; accordingly, an award of non-durational maintenance was appropriate (see Kaprelian v Kaprelian, 236 AD2d 369, 371 [1997]; Loeb v Loeb, 186 AD2d 174, 175 [1992]). Further, in adjudicating the amount of maintenance, the Supreme Court properly considered the parties’ Social Security benefits (see Wheeler v Wheeler, 12 AD3d 982, 983 [2004]; Thomas v Thomas, 221 AD2d 621, 622 [1995]; Di Bella v Di Bella, 140 AD2d 292, 293 [1988]).

However, the Supreme Court improperly considered the defendant’s monthly rental income received from the body shop repair business in awarding the plaintiff maintenance of $1,292 per month through December 1, 2010. The Supreme Court valued the body shop property at full market value by utilizing the capitalization of income method supplied by the defendant’s appraiser, and included its value in calculating the plaintiffs distributive award of marital property. While the plaintiff does not challenge the method of valuation on appeal, it was proper for the Supreme Court to utilize the capitalization of income approach to value this income producing property (see Haymes v Haymes, 298 AD2d 117 [2002]). Nevertheless, the Supreme Court also included the monthly rental income from the body shop repair business until the expiration of the lease term in 2010 in fixing the maintenance award of $1,292 per month through December 1, 2010, without making an adjustment to reflect that the rental income stream was previously included in the plaintiffs distributive award.

The Supreme Court impermissibly engaged in the “double counting” of the defendant’s income by valuing the body shop property, which was equitably distributed as marital property, and by calculating the amount of maintenance to the plaintiff based upon the excess earnings of that business (see Grunfeld v Grunfeld, 94 NY2d 696 [2000]; McSparron v McSparron, 87 NY2d 275 [1995]; Murphy v Murphy, 6 AD3d 678 [2004]). “Once a court converts a specific stream of income into an asset, that income may no longer be calculated into the maintenance formula and payout” (Grunfeld v Grunfeld, supra at 705). Consequently, the Supreme Court must “reduce either the income available to make maintenance payments or the marital assets available for distribution, or some combination of the two” (id. at 705). Notably, when awarding maintenance to the plaintiff, the Supreme Court did not calculate the mortgage interest income in the maintenance formula and payout because “the value of that stream of income has already been distributed.” Therefore, we remit the matter to the Supreme Court, Westchester County, to recalculate that portion of the maintenance awarded to the plaintiff through December 1, 2010.

Our dissenting colleague’s conclusion that the Supreme Court did not engage in “double counting” inasmuch as the body shop property at issue is a discrete tangible asset with a marketable value, is misplaced. The record established that the value placed on the body shop property incorporates capitalized income that has been converted into and distributed as an asset (see Boyajian v Boyajian, 194 Misc 2d 756, 768-769 [2003]). The case law cited by the dissent, while supportive of general propositions warning against “double counting,” is not otherwise supportive of the dissent’s position, in effect, that the rental income was not accounted for in the distributive award to the plaintiff and, was therefore, properly considered in awarding maintenance.

Also upon remittitur, the Supreme Court should determine and award to the defendant those furnishings in the marital residence which constitute his separate property. Although the defendant maintained at trial that certain furnishings were bequeathed to him from his parents, the Supreme Court, without referencing such separate property, awarded to the plaintiff all of the furnishings in the marital residence.

The parties’ remaining contentions are either without merit or academic. Cozier, J.P., Krausman and Lunn, JJ., concur.