The Spousal Share of a Marital Asset: When Two Plus Two Does Not Equal Four
It is quite possible that you may have overlooked a short recent decision in the Appellate Division, Second Department. However, this case, Peritore v. Peritore, is pregnant with implications and evidences a judicial trend to award to a non-contributing spouse a small percentage of the appraised value of a professional license, business or practice.
It is quite possible that you may have overlooked a short recent decision in the Appellate Division, Second Department. However, this case, Peritore v. Peritore , is pregnant with implications and evidences a judicial trend to award to a non-contributing spouse a small percentage of the appraised value of a professional license, business or practice.
In a twenty year childless marriage, the Appellate Court reduced an award to the wife by the trial court of forty percent of the value of the defendant’s dental practice to but fifteen percent, reflecting that under the particular circumstances of the case where the wife successfully embarked on her own full time career (which was not indicated in the decision), and made only indirect contribution to her husband’s dental practice (the indirect contribution was not noted), she was not entitled to a greater percentage. The court took pains to remind practitioners that even though a marriage is of long duration “where marital assets should be made as equal as possible,... there is no requirement that the distribution of each item of marital property be made on an equal basis” citing Griggs v. Griggs, and Chalif v. Chalif, for authority for this proposition. Unfortunately, reading these two cases, creates more complexity and less clarity.
Interestingly, in Chalif, a long term marriage, the husband had completed all but two year of neurosurgical residency when the parties married. The wife made no direct contribution to the husband’s practice, and only a modest indirect contribution to his practice and accordingly the court affirmed an award of twenty-five percent to the wife. Not surprisingly, there were no facts as to the length of the marriage reported, the number of children the parties had, or what acts of the wife constituted a “modest indirect contribution.”
Griggs, sustained an award to the wife, who had an MBA degree, of thirty-five percent of the husband’s medical practice because of the direct and indirect contributions she made ... without so much as stating what such contributions were.
The three cases are illustrative of the court’s penchant for rendering abbreviated decisions which leaves the bar and matrimonial litigants at a loss to determine what result will obtain in the next decided appeal.
However, to this writer, the above quoted rationale in Peritore, Chalif and Griggs is a classic judicial oxymoron, and recalls author George Orwell’s penetrating observation in Animal Farm that all animals are equal, but some animals are more equal than others. Unfortunately, as is most recently the practice of the appellate courts, the Peritore facts were not fully explored, there was no mention of what career the wife had embarked upon, and no hint in the decision of whether the court considered the childless marriage to be of long duration although one must postulate that twenty years would ring the bell.
Two cases cited by the court as authority to reduce the award to fifteen percent was Wagner v. Dunetz and Granade-Bustick v. Bustick . But neither these two cases shed additional light on how the court reached this ultimate conclusion. Arithmetically, the court actually reduced the award by more than sixty percent, without offering any further guidance to the bar to prognosticate future equitable distribution awards.
In Wagner, both parties were physicians. The court found that neither party made significant direct or indirect contributions (without detailing the efforts) and concluded neither was entitled to an award of enhanced earnings. However, it reduced the award to the husband from fifty percent to twenty-five percent of the wife’s medical practice because the husband made indirect contributions, without describing what such contributions were.
Granade-Bustick further brought to a boil the festering conundrum. Here, a fifty percent award of the value of the husband’s non-business properties was sustained because there was an eleven year marriage (long term?) and the wife made a non-economic contribution to the marriage (undefined) which allowed the couple to amass a substantial net worth. However, as to the husband’s law practice it reduced the award to twenty-five percent because the wife did not put the husband through law school or help support him in the earlier years of the marriage.
Unfortunately, as has been the norm from the Appellate Courts, there was no dissenting opinion in any of the cited cases. Unanimous decisions stifle dissent, and preclude the consideration of the contrary side of legal arguments. One wonders how four judges can be consistently unanimous in opinion, when it is clear that the result obtained at the trial level will vastly differ from judge to judge depending upon personal predilections and experiences, with attendant diversity in results. It is easy to speculate that if other judges in Nassau County had heard the Peritore case, a far different percentage of the dental practice, ranging from fifty percent to perhaps five percent would have been made. If this speculation be reasonable, it becomes far more difficult to accept unanimity of opinion at the appellate level.
Without a full and amplified explanation in Peritore of how the court determined to reduce an award by more than sixty percent, it becomes most difficult for counsel to evaluate any given factual pattern and predict with any degree of success or certainty, what an appellate court might do upon appeal, how to prepare your case for trial, and whether a bad settlement would be far better than a catastrophic trial or appellate review. Simply put, the tendencies to write brief unanimous decisions, actually encourages litigation and reduces settlements, a bad result in an era of overburdened judiciary, and financial uncertainty.
Another troublesome part of the Peritore decision was the recognition by the court that the value of a pension should be discounted by the amount of income tax required to be paid by a party, yet refusing to recognize the discount made by the trial judges because there was no expert testimony in the record concerning the tax impact of the award. Although recognizing this rule and citing DRL §236 B(5)(d)(10) and the De La Torre v. De La Torre , Johnson v. Johnson , Chase v. Chase , and Gluck v. Gluck , decisions, it nevertheless refused to sustain the trial court’s determination of a discount for tax consequences although it is clear that the trial court must have made its own assessment based upon the relative tax brackets of the parties. Again speculation must be made, but since net worth statements and tax returns are mandatory documents to be filed in matrimonial litigation, such speculation seems to be reasonably prudent. Because the trial court could have taken judicial notice of the tax law, it would seem that the testimony of an expert witness would have been either irrelevant or superfluous.
The problem, of course, is that without a full recitation of the facts and a discussion of how the facts are applied to the law of a given case, there can be no understanding of the court’s philosophy in deciding these several matters, or the direction of future decisions. Moreover, if dissents are the exception, rather than the rule, and cases continuously are unanimous, a dangerous practice is being countenanced which necessarily must lead to the total abdication of dissent in matrimonial litigation.
ABOUT THE AUTHOR: Elliot D. Samuelson
Elliot D. Samuelson is the senior partner in the Garden City matrimonial law firm of Samuelson, House & Samuelson, LLP and is a past president of the American Academy of Matrimonial Lawyers, New York Chapter and is included in “The Best Lawyers of America” and the “Bar Registry of Preeminent Lawyers in America.” He has appeared on both national and regional television and radio programs, including Larry King Live.
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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.