JEFFREY A. GOODSTEIN, J.
PRELIMINARY STATEMENT
In an attempt to organize the facts of this case and the various requests for relief from the parties, the Court will explain the financial background and current circumstances of the parties as alleged by them and then, explain the various requests for relief sought by each party. Throughout this decision, the Plaintiff may be referred to as "Wife" or "Mother" and the Defendant may be referred to as "Husband" or "Father".
Pursuant to a Stipulation dated July 15, 2014, (the "7/15/14 Stipulation") which was So-Ordered by the undersigned, the parties resolved Husband's motion regarding cancellation of the NetJets contract (motion sequence no.: 006) as well as the Sandra Novick Note, addressed further below.
The parties were married on May 1, 2001 and have two unemancipated boys, currently ages 11 and 10 (the "Children"). This matter was commenced on May 14, 2013 and on October 8, 2013 the parties executed a custody agreement ("Custody Agreement") wherein it was agreed that the parties would share parenting time and residential custody of the Children on a 50/50 basis. It is important to note that also within the Custody Agreement, the parties agreed that the "Father shall pendente lite pay all house and home related bills consistent with the pre-separation past practices of the parties...." Further, footnote 1 on page 6 of the Custody Agreement states:
Although invested in all of these properties, the Husband alleges that the financial stability of Monday Properties was severely damaged in the real estate market crash of 2008. Husband explains that in 2011, the value of 230 Park dropped 34%, was recapitalized and all remaining interests were lost, including those of Monday Properties. He claims that if Monday Properties were sold now, there would be no profit. In addition, 1440 Broadway was recapitalized which lowered Monday Properties' interest to 20%, but this building was sold in December 2013 allegedly based upon the decision of senior joint ventures. (The alleged contempt issues involving this sale is addressed in detail below). Now, Husband argues that Monday Properties has a non-equity interest in 230 Park and only an 11% equity interest in the Rosslyn Portfolio, but also manages these buildings. As of the date of Husband's affidavit, Monday Properties also managed the Coast Guard Building, but that was set to terminate on June 30, 2014.Prior to the alleged start of the financial troubles for Monday Properties, 237 Park was sold in 2007 and the Husband and Wife realized net proceeds of $73.5 million dollars. It is undisputed that with the net proceeds the parties repaid the loan to the Helene Westreich Trust.
Nevertheless, the Wife, in her various affidavits submitted, argues that there was never an agreement to this effect and that the parties also utilized cash flow from Monday Properties.
It is safe to describe the parties' lifestyle, as one of extreme excess. Prior to purchasing their home in the Hamptons, they rented a home each summer costing approximately $100,000 dollars, until they purchased a home in 2008 for $4.262 million dollars, plus expending an additional $500,000 dollars in improvements. While in the Hamptons, they employed the same housekeepers as they had at the Old Westbury residence
In addition, all three residences have expensive items such as art work, collectibles, rugs and lighting. In fact, the Wife alleges that the parties' spent approximately $7 million dollars in renovations and collectibles combined on the three residences. The parties' Marital Residence, in Old Westbury is a 23,000 square foot brick Georgian Manor, sitting on 9.56 acres with 9 fireplaces, 9 bathrooms, 8 bedrooms and a 70 yard golf hole. She further alleges that the parties spent approximately $20,000 a year on floral arrangements
The specific requests made by the parties in their various motions shall be addressed below referring partially to the facts set forth above, and the additional facts provided in those particular sections pertaining to those issues.
MOTION SEQUENCE 003
The Husband filed this order to show cause seeking an order a) directing the Wife to return $2,053,976.35 removed from the joint account on April 12, 2013 to be utilized for the parties' living expenses; b) directing the Wife to provide a detailed accounting of $3,013,819.43 removed from her individual JP Morgan Chase account on April 15, 2013
The Wife opposes each and every request and cross moved for Pendente Lite relief.
Approximately one year prior to commencement, the Husband, at the Wife's request, transferred $1 million dollars from the 237 Park Account into the Wife's name alone
The 7/15/14 Stipulation executed by the parties and so-ordered by this Court resolved the Husband's request regarding the Sandra Novick Note. Further, the Wife, in her opposition, provided the accounting requested by the Husband, so that issue is now moot. For the reasons set forth in detail in the analysis of the Wife's request for pendente lite support (motion sequence 004), the Husband's request for an order directing the Wife to return and depositing $2,053,976.35 of the funds removed from the parties' 237 Park Account to be utilized solely by the Husband for family living expenses is hereby
MOTION SEQUENCE 004
Here, the Wife cross moves for an order, 1) directing the Husband to pay $236,138 per month in unallocated spousal and child support
The Husband opposes the Wife's motion but offers to continue to pay certain items if his initial Order to Show Cause seeking the return of the money removed by the Wife at the commencement of this action were granted.
As set forth in detail above, the Wife argues, and it is undisputed, that the parties enjoyed a very lavish lifestyle. The Wife further argues that her pendente lite request should be granted based upon the pre-separation standard of living, as outlined above. Interestingly, although the Wife acknowledges that the parties did not live off yearly earnings, but instead, paid their living expenses through liquidation events, she requests that the Husband maintain the status quo during the course of this litigation from his earnings
The Wife further argues that the Husband is not providing sufficient spousal and child support to have the "lifestyle commensurate with their pre-separation lifestyle." She argues that she has been forced to utilize her equitable distribution. She complains that the Husband has capped her American Express and JP Morgan credit cards at $10,000 each, per month, and on one occasion, a card was rejected. She further complains that the credit cards provided for and utilized by the nanny and the groundsman/driver have been capped at $2,500 each per month.
$1,900 — groceries
$1,400 — home entertainment
$2,100 — dining out
$16,500 — clothes for Wife
$594 — dry cleaning and tailoring
$7,000 — household maintenance repairs (Old Westbury)
$1,274 — home accessories, furnishings & decor (Old Westbury)
$2,000 — cleaning and household supplies (Old Westbury)
$4,288 — maintenance and repairs (NYC apartment)
$1,076 — furnishing and decor (NYC apartment)
$5,819 — Wife's 3 cars (washes, detailing, gas, parking and violations).
$2,000 — airfare
$8,200 — hotels
$1,192 — other vacation related expenses
$710 — theatrical productions
$1,050 — team sports (biking, golf, skiing, surfing)
$1,189 — Health clubs
$1,255 — sporting goods
$774 — massages
$872 — gifts
$3,094 — charitable contributions
$1,614 — fur coats ($19,368 yearly expense)
$16,211 — jewelry ($194,532 yearly expense)
$8,236 — art ($98,832 yearly expense)
With regard to earnings, although the Wife acknowledges that their lavish lifestyle was mainly funded by liquidation events and not typical yearly earnings, she alleges, as does her accountant, that the parties also utilized cash flow from Monday Properties through rent, parking fees and refinancing of buildings. With these funds, the parties paid expenses and purchased stocks and bonds. She alleges that the Husband has asked her to refinance their debt free marital residence, sell stocks and move bonds into the names of the Children, all, she alleges, as an attempt to financially strangle her. She also argues that the Husband earns $6 million dollars a year from Monday Properties.
The Husband admits that his 2012 tax return shows $6 million dollars in earnings, however, he further explains that said income is sheltered by $22 million dollars of losses from prior years. He, and his accountant, argue that such an event is not recurring and is merely a snapshot of his earnings. Husband further argues that his net cash distribution from business, not including the sale of 1440 Broadway (addressed in detail below) will be $1.27 million dollars and he no longer has any tax loss carry forwards available. He further argues that based upon the status of Monday Properties, there are no more sales or investment income coming any time soon. Wife counters that the lack of unpaid bills is because she utilized her advancement of equitable distribution to pay what the Husband refused to pay. She lists as examples, the following: the salary for Wife's housekeepers; dues at Old Westbury Golf and Country Club (their names were about to be posted in the locker room as non payers), landscaping, plumbing, pool-service and dentist bills. He believes, and contends, that his 2014 income, after taxes, at best, will be $750,000. He further contends that only legitimate business expenses are run through Monday Properties and that he has no control over liquidity events as Monday Properties now only has minority interests remaining.
In opposition to the Wife's motion, he admits that the parties "spent too freely and lived too well." He further argues that the Wife failed to provide a single unpaid bill and argues that a set schedule to utilize their various club memberships is unnecessary as she has never been denied access to any of the clubs. He also attacks the Wife's claim that his pendente lite spending remained the same as their pre-separation standard of living. Husband, after the execution of the Custody Agreement, which awarded the Wife exclusive use and occupancy of the marital residence, pendente lite, purchased a home in Roslyn Heights, for approximately $2.1 million dollars. There is currently a mortgage on that residence for $1.458 million dollars. In addition, the Husband references, as quoted above, to the fact that the Custody Agreement set forth pendente lite financial obligations for the parties. He claims that the Wife failed to seek modification or enforcement of the financial portion of the Custody Agreement, yet she completely failed to mention it, failed to provide a single unpaid bill, until her reply, and in fact, highlights the fact that her own accounting shows her lack of need. The Wife however, argues that the Custody Agreement does not provide for basic support for the Children or maintenance for the Wife, nor does it provide for payment of the Children's add-ons. He further points out that she hasn't used any of the money she removed from the joint account for any of her own living expenses and only used it for litigation purposes, (also as set forth in detail above and addressed further below). In essence, the Husband claims that the Wife's request should be denied outright as she has been, and is being, adequately supported. In addition, he argues that her request for any child support is meritless as, currently, the parties share an equal parenting time arrangement with the Children pursuant to the Custody Agreement and he is paying for all of their needs and housing, not including the new home Husband recently purchased. Husband further argues that the lifestyle of the Children has not been impacted in any way.
An award of support Pendente Lite is designed to maintain the status quo (Hills v. Hills, 281 A.D.2d 584 [1st Dept. 1992]) and provide for the reasonable needs of the parties pending the determination of the litigation. (Campion v. Campion, 264 A.D.2d 705 [2d Dept. 1999]; Rossman v. Rossman, 91 A.D.2d 1036 [2d Dept. 1983]). It is meant to tide over the more needy party, not to determine the correct ultimate amount of support. (See Jordan v. Jordan, 2 A.D.3d 687 [2d Dept. 2003]). It is not the purpose of a Pendente Lite order to permit the custodial parent and the child to merely "subsist" pending trial. (See Salerno v. Salerno, 142 AD2D 670 [2d Dept. 1988]).
The formula to determine temporary spousal maintenance that is outlined in Domestic Relations Law Sec. 236(B)(5-a)(c) is intended to cover all of a payee spouse's basic living expenses, including housing costs, the costs of food and clothing, and other usual expenses. (Khaira v. Khaira, 93 A.D.3d 194, 196 [1st Dept. 2012]. It is axiomatic that the purpose of temporary maintenance is not to finally determine the property rights of the parties, but to assure that the reasonable needs of a dependent spouse are met during the pendency of a divorce proceeding. (Zahr v. Zahr, 149 A.D.2d 504, 505 [2d Dept. 1989]). While the prior standard of living is a relevant factor in reaching a temporary award, the movant's actual financial need is also a significant factor. (Aron v. Aron, 216 A.D.2d 98 [1st Dept. 1995]). The burden is on the spouse seeking the award to establish the need for it, and the income and assets of the spouse making the application are to be considered (Van Ess v. Van Ess, 100 A.D.2d 848, 849 [2d Dept. 1984]; [internal citations omitted]). Courts have consistently recognized that temporary support awards "should reflect an accommodation between the reasonable needs of the moving spouse and the financial ability of the other spouse with due regard for the parties' pre-separation standard of living." (Fini v. Fini, 107 A.D.3d 758 [2d Dept. 2013]. See also Abramson v. Gavares, 109 A.D.3d 849 (2d Dept. 2013); Bagner v. Bagner, 207 A.D.2d 367 [2d Dept. 1994]). In Vahey v. Vahey, 940 N.Y.S.2d 824 (Sup. Ct. Nassau Co. 2012, J. Palmieri), the Court opined that "Here, there is no demonstration that the reasonable needs of the movant or of the parties' children are not being met, as all continue to reside together in the marital residence, and it is apparent that the bills are being paid."
Additionally, when a court is unable to perform the calculation established by DRL §236 (B)(5-a)(c) as a result of being "presented with insufficient evidence to determine gross income, the court shall order the temporary maintenance award based upon the needs of the payee or the standard of living of the parties prior to commencement of the divorce action, whichever is greater" (DRL §236(B)(5-a)(g)]; Davydova v. Sasonov, 109 A.D.3d 955 [2d Dept. 2013].
Pendente Lite maintenance is "designed to insure that a needy spouse is provided with funds for his or her support and reasonable needs pending trial." (Ferdinand v. Ferdinand, 215 A.D.2d 350 (2d Dept. 1995). In order to achieve this purpose, a court must make the financial need of the spouse requesting pendente lite maintenance its primary consideration (Id; See also, McCarthy v. McCarthy, 156 A.D.2d 346 [2d Dept. 1989]). In Ferdinand, the court found that certain plaintiff's monthly expenses were excessive or unnecessary, and therefore, the award of pendente lite maintenance was excessive. (Id.)
The remedy for an award of temporary maintenance claimed to be unsatisfactory is a speedy trial at which a more detailed examination of the situation of the parties may be made. (Rossman v. Rossman, 91 A.D.2d 1036 (2d Dept. 1983).
In Vistocco v. Jardine, the appellate court ruled that in light of the evidence that the plaintiff's income exceeded $500,000 and the gross disparity between the plaintiff's income and the defendant's income, the Supreme Court properly awarded additional support in the form of a directive to the plaintiff to pay the mortgage and taxes on the marital residence. (986 N.Y.S.2d 578 [2d Dept. 2014]).
Further, it cannot be disputed that courts favor voluntary arrangements for pendente lite support. (See Brody v. Brody, 88 A.D.3d 757 [2d Dept. 2011], citing Shanon v. Patterson, 294 A.D.2d 485 (2d Dept. 2002); Blink v. Blink, 55 A.D.3d 1244 [4th Dept. 2008]). Indeed, it is well settled that "in the absence of any proof that a party has failed to adequately provide for the needs of his family, there is no need for an award of temporary maintenance and child support." (Hite v. Hite, 89 A.D.2d 577 [2d Dept. 1982]). Where one spouse has been voluntarily supporting the party who seeks an award of pendente lite support, no award should be made. (See Coons v. Coons, 161 A.D.2d 924 [3d Dept. 1990]).
For purposes of calculating income under the temporary maintenance statute, annual income is defined as gross income, less FICA and New York City or Yonkers Income Taxes. (DRL §240 (1-b)(b)(5)). Here, the Wife is requesting $97,063 per month be paid directly to her to disburse for herself and the items listed in her Statement of Net Worth (many of which are listed above); $139,075 per month to third parties for items listed on her statement of net worth to be paid directly by the Husband for a total of $2,833,659 per year. Although the Husband's 2012 tax return evidences an income of $6 million dollars, the Wife argues that the Husband's "cash flow/income is not readily ascertainable from tax returns since for a real estate entrepreneur with real estate related losses and depreciation, the adjusted gross income' line of the income tax returns is functionally irrelevant for purposes of ascertaining annual cash flow/income". Wife alleges that for at least the past five years the parties have not been required to pay income taxes despite their $6 million dollar annual cash flow/income.
Domestic Relations Law §236 [B][5][c] establishes a formula and guidelines for calculating presumptive amounts of temporary spousal maintenance in matrimonial actions. Where a payor's income does not exceed the statutory "income cap" of $543,000.00 the presumptive award is the lesser of 30% of the payor's income minus 20% of the payor's income or 40% of the payor's income and the payee's income, minus the payee's income.
This Court shall order this amount, the presumptive amount of temporary maintenance, unless the Court finds it to be unjust or inappropriate. (DRL §236(5-a)(e)(1)). In that case, the Court may adjust the presumptive maintenance award considering the nineteen factors, as well as "any other factor which the Court shall expressly find to be just and proper." (DRL §236B(5-a)(c)(2)(a)). The aforementioned nineteen factors are as follows:
Acts by one party against another that have inhibited or continue to inhibit a party's earning capacity or ability to obtain meaningful employment. Such acts include but are not limited to acts of domestic violence;
The availability and cost of medical insurance for the parties;
The care of the children or stepchildren, disabled adult children or stepchildren, elderly parents or in-laws that has inhibited or continues to inhibit a party's earning capacity or ability to obtain meaningful employment;
The inability of one party to obtain meaningful employment due to age or absence from the workforce;
The need to pay exceptional additional expenses for the child or children, including, but not limited to, schooling, daycare and medical treatment;
The tax consequences to each party;
Marital property subject to distribution pursuant to subdivision 5 of this part;
The reduced or lost earning capacity of the party seeking temporary maintenance as a result of having foregone or delayed education, training, employment or career opportunities during the marriage;
The contributions and services of the party seeking temporary maintenance as a spouse, parent, wage earner and homemaker, and to the career or career potential of the other party; and
Any other factor which the Court shall expressly find to be just and proper. Where the court does in fact adjust the award, it must articulate the factors it considered and the reasons for the adjustments.
Based upon the foregoing, the Court calculated temporary maintenance based upon the statutory income cap. The payor's percentage ($543,000.00 × 30% = $162,900.00) minus the payee's percentage ($0.00 × 20% = $0.00) = $162,900.00. The Court then compared this resulting number with the following: payor's income ($543,000.00) plus payee's income ($0.00), which equals $543,000.00 × 40%, which equals $217,200.00. Next, the Court subtracted one hundred percent (100%) of the payee's income ($0.00) from $217,200.00), which equals $217,200.00. the lesser of these amounts if the "presumptive award" pursuant to statute, which is $162,900.00 per year ($13,575.00 per month).
The Court is aware of the immense disparity between the parties' incomes, and is also cognizant of the parties' pre-separation lifestyle. In addition, the Court has considered the transfer of over $2 million dollars made by the Wife from the parties' 237 Park Account. The money removed by the Wife from the 237 Park Account is an advance of the Wife's equitable distribution, regardless of the fact that the parties' both admit that they used the funds in this account, derived from the liquidation event of the sale of 237 Park Avenue, to fund their lifestyle. This is why, as addressed above, the Husband's motion seeking the return of said funds from the Wife was
The Husband, with the possibility of denial of his motion, consented to pay the following expenses, in amounts consistent with prior practice, without prejudice and on a pendente lite basis, which this Court, based upon said consent is hereby ordering. Accordingly, it is hereby
These ordered expenses to be made by the Husband cost approximately $136,000 per month on behalf of the Wife and the Children. Based upon these concessions, the Husband argues that he should not be ordered to pay any direct support to the Wife as she can utilize the funds remaining from the over $2 million dollars she removed from the 237 Park Account. This Court disagrees. Although these expenses are being paid by the Husband, the parties enjoyed a lavish pre-separation lifestyle.
The issue now to be addressed is the Wife's request of approximately $97,000 per month in direct spousal and child support. As is clear from the foregoing facts, the Court is cognizant of the fact that the parties lived a lifestyle most people can hardly fathom. The Court is also aware that the parties' pre-separation standard of living is a factor to be considered in determining temporary maintenance and maintaining the status quo of the parties, pendente lite. The Wife, in her motion papers, and through her counsel at many conferences with this Court, continues to explain the lavish lifestyle and the fact that the status quo must be maintained during this litigation.
It is this Court's belief that the legislative intent of making the status quo a factor in determining temporary maintenance was not meant for a case of this magnitude. This Court finds it difficult to believe that the legislature intended that the status quo for temporary maintenance purposes was for items such as $2,000 a month for household furnishings; $2,000 a month for airfare and $8,000 a month for hotels; $774 a month for massages; $16,000 a month for jewelry; $8,236 for art; $20,000 for a dinner party; $4,166 a month in floral arrangements. It is this Court's belief that the status quo is meant to maintain the comforts of the lifestyle to which one has become accustomed, however, there must be a limit to such comforts. The award directed below does not require the Wife to return her 2014 Mercedes, costing a lease payment of $1,400 per month, for a new, lesser valued vehicle costing only $200 per month. The award directed below does not require the Wife to move from Old Westbury, living in a 9.56 acre Georgian Manor to 3 bedroom apartment in a less affluent neighborhood. It is this Court's view that the award directed below does not limit the Wife's reasonable needs in any regard.
Accordingly, based upon the foregoing facts, law and factors considered, it is hereby
With regard to child support, it is important to note that currently, the parties share, on a 50/50 basis, parenting time with the Children
With regard to the Wife's other requests, it is hereby
DISCOVERY
The Wife also requests that this Court direct the Husband to provide the discovery requested, appear for his noticed examination before trial, and if he fails to provide the requested discovery, an order of preclusion, and deeming the issues resolved in the Wife's favor and to strike the Husband's answer. She claims that Husband has withheld, to date, production of his personal financial records, including documentation of his use of his personal credit cards as well as of his business credit cards and documentation of the payments made on his, or the family's, behalf through his businesses.
The Husband, in opposition argues that at the execution of his affidavit, he has provided the Wife with 15,000 pages of financial documents, comprising a substantial portion of the requested items in a continuing, "rolling" effort to comply with every demand. The "rolling" production for the vast documents was agreed upon between counsel in the early stages of this litigation. Husband further argues that Wife's request that Husband be "directed to appear and attend his deposition pursuant to plaintiff's Notice of Deposition, dated October 14, 2013" is disingenuous in light of the fact that Wife's counsel adjourned the deposition, and at the execution of his affidavit, failed to reschedule same.
When determining whether to impose penalties pursuant to CPLR §3126 (such as striking affirmative defenses and/or precluding the introduction of evidence at trial), courts exercise a "general policy favoring the resolution of actions on their merits." (Kinge v. State, 302 A.D.2d 667 [3d Dept. 2003]). "Before a court may impose the drastic remedy of preclusion for disclosure violations, it must determine that the offending party's lack of cooperation with disclosure was willful, deliberate and contumacious." (Tung Wa Ma v. NY City Transit Auth., 113 A.D.3d 839 [2d Dept. 2014]). Here, Wife has failed to establish that she is entitled to the discovery sanctions requested in her motion at this time. The parties are warned, however, that if discovery, as currently being exchanged through their respective counsel and accountants through the uploading and downloading of documents through a portal on a cloud is not conducted more quickly, this Court will consider the appointment of a Discovery Referee to oversee the exchanging of discovery documents on a weekly basis. Accordingly, Wife's request regarding discovery is
The Wife seeks an award of counsel fees in the amount of $850,000
DRL §237 provides that, in a matrimonial proceeding, the Court may exercise its discretion to direct either spouse to pay the counsel fees of the other spouse. In exercising its discretion, the Court shall consider the circumstances of the case. The statute further provides that, "there is a rebuttable presumption that counsel fees shall be awarded to the less monied spouse." Additionally, "an award of interim counsel fees ensures that the non-monied spouse will be able to litigate the action, and do so on equal footing with the monied spouse." (See Prichep v. Prichep, 52 A.D.3d 61 [2d Dept. 2008]). Where there is no serious dispute that one of the party's financial resources far exceed those of the other party, the latter should not be expected to exhaust all of the finite resources available to him or her in order to pay his or her attorney(s). (See Prichep v. Prichep, supra.).
Awards of interim counsel fees to a non-monied spouse are warranted where there is a significant disparity in the financial circumstances of the parties in order to avoid compromising the ability of the non-monied spouse to adequately litigate the case (see Penavic v. Penavic, 60 A.D.3d 1026 [2d Dept. 2009]).
However, the statutory "presumption" of interim counsel fees has been criticized for allowing the non-monied spouses to gain an unfair advantage over supposedly "monied" spouses. While "[a wife] should not have to deplete her assets in order to have legal representation comparable to that of [her husband]" (Lennox v. Weberman, 109 A.D.3d 703 [1st Dept. 2013]), the Court must avoid awards of interim counsel fees that could result in non-monied spouses having every incentive to engage in costly litigation, regardless of necessity, because they are shielded from responsibility for the substantial majority of litigation expenses. (See Sykes v. Sykes, 973 N.Y.S.2d 908 [Sup. Ct. NY Co. 2013]). In the instant proceeding, it is undisputed that the Husband is the monied spouse.
Counsel for both parties are among the elite in their field. However, the situation here seems not to be that the Wife needs an award to be on an equal footing with the Husband. Needless to say, the amount billed and expended for this litigation is astronomical. The Court has conducted a close evaluation of the billing statements submitted by Wife's counsel. Said evaluation shows that there have been 6 (six) firm employees billing the Wife with many of the entries redacted from the billing records. Also, many of the time entries outlining the work performed are vague. There are statements such as "busy throughout the day" and "all through the day". Further, there are a large majority of billable hours which are identical for multiple attorneys involved in this matter for the Wife. In fact, correspondence between counsel are often signed by two attorneys in Wife's counsels' firm, including the affirmations submitted by Wife's counsel. The Husband alleges that he has spent less than 40% of the Wife's counsel fees. However, the Court is aware that the Husband is the party with all the documents and knowledge and the Wife is the party who needs to review every document to obtain a better understanding of the marital assets. It is unjust and inappropriate for this Court to award the full counsel fees requested based upon these issues, as well as the support awarded herein, and the money in the exclusive possession and control of the Wife.
With regard to expert fees, the Court understands the Wife's needs for a forensic accountant to review and attempt to evaluate the true value of the parties' vast assets and the real estate appraisers. However, the only way for the Court to have a better understanding of the true extent of the parties' finances will be at the conclusion of a trial as the affidavits submitted by the parties' respective accountants, are, as expected, in direct contravention of each other.
Considering the circumstances of this case and all of the foregoing factors set forth above, the Court finds that an award of interim counsel fees in the sum of
In addition, the Husband is hereby
All payments of counsel fees and other expert fees shall be subject to reallocation at the conclusion of the trial. As the Wife continues to utilize portions of the over $2 million dollars she removed from the 237 Park Account, the Court is confident that at the conclusion of the trial, any reallocation awarded will be paid, if need be, and if warranted, through an additional distribution from the Husband's share of the parties' assets. This award of counsel and expert fees is without prejudice to future requests for additional fees from the Wife.
MOTION SEQUENCE 005
Here, the Wife brought an Order to Show Cause seeking various forms of discovery, including trust documents from the Husband's father's revocable trust to which he is a beneficiary, the appointment of receivers and contempt against the Husband for his part in the sale of 1440 Broadway, the payment of $30 million dollars back to his father's revocable trust and violation of the automatic orders based upon said sale and payment of money without notifying the Wife or the Court of same. Various immediate relief was requested in this Order to Show Cause which warranted this Court issuing the Short Form Order regarding the restraints on April 15, 2014 which limited the spending of the parties without prior approval of the other.
The Husband opposes this motion in its entirety.
CONTEMPT
Specifically, the Wife seeks an order adjudging the Husband in contempt of court for his willful violation of the automatic order in effect pursuant to DRL §236(B)(2)(b)(1-5) and 22 NYCRR §202.16-a (1-7); imposing such penalties as the Court deems appropriate to impose in order to vindicate the important purposes of the automatic orders; granting related prophylactic and compensatory relief, as set forth in the Order to Show Cause, requiring the payment by the Husband of fees in connection with this motion. Further, the Wife requested various restrictions on the Husband's business dealings, the appointment of a receiver, production of the Husband's father's revocable trust and monthly rolling details of same. The April 15, 2014 Short Form Order imposed various forms of restraints on both parties' spending. Each party sought various temporary changes to the Court's temporary Short Form Order, and although inquired by the Court, the parties do not consent to keep the restraints intact throughout this litigation. Accordingly, the Court will issue specific orders herein regarding those requests.
In December 2013, the Midtown Manhattan office building known as 1440 Broadway was sold for $528 million dollars. Husband received a total proceed amount of $54,568,436. Out of these monies, the Husband argues that he owed and paid Federal and State income taxes of at least $30.8 million dollars for the year 2013, based on calculations provided to him by his accountants. In addition, approximately $21.172 million dollars was used to re-pay to the Stanley I. Westreich Revocable Trust, a portion of the loans which he took in connection with the acquisition and financing of the entities that led to his having an interest in the property sold. The balance, approximately $2.6 million dollars, is allegedly being held for additional Federal and State taxes and other expenses and closing costs relating to the sale and for expected capital calls for the Rosslyn Portfolio. Husband further argues that if there are any remaining proceeds, they will be needed to supplement the diluted cash flow from the management companies.
The Wife argues that the Husband's actions were in clear violation of the Automatic Orders. She further argues that the Husband's transfer of $21.172 million dollars is a sham in that he has, in essence, "taken funds out of one pocket and moved them to another pocket." In Wife's initial application, she continuously refers to the Husband as the Trustee of the Stanley I. Westreich Revocable Trust. The Wife argues that the Husband has received multiple loans from said trust and allegedly told her that "he was not expected to ever repay the principal, and told her that the loans would be forgiven at the time of his father's death." Moreover, the Wife argues that the transfer of the $21.2 million dollars back to the Trust was not "in the usual course of business". The Wife further alleges that a Temporary Receiver should be appointed to oversee all the Husband's business transactions in an attempt to negate the possibility of such transfers from occurring again.
The Husband, in opposition, argues that there were seven (7) loans from the Stanley I. Westreich Trust totaling $41,925,000 and provided a Note for each loan. The Notes expressly provide for a pre-payment without any penalty in order to allow for the repayment of the loans upon the sale of the investment in order to save on the interest charges. The Husband alleges that the parties always paid interest on these loans, of approximately $400,000 per year, of which both parties benefitted from the tax break on the interest payments and therefore argues that the Wife's allegation that the principal of these loans would not need to be repaid is inaccurate. To further support this argument, the Husband states that his life insurance policies totaling $98 million dollars are at such high amounts to secure the repayment of the loans. He further alleges that the Wife acknowledged that the principal on the loans were due when they were estate planning. In fact, allegedly to alleviate some of her concerns regarding these loans the Husband created the Anthony E. Westreich Irrevocable Trust in September 2011 and secured 3 different life insurance policies. He also argues that none of the interest on these loans was paid prior to the sale of 1440 Broadway because the loans were used to invest into this building and upon the liquidation event, he paid back what he could. He further alleges that the same transaction, the pay back of a loan was conducted in 2007 upon the sale of 237 Park when he satisfied the loan from the Helene Westreich Trust. He further argues that his conduct was not contemptuous, was in the ordinary course of business, as if the notes were a mortgage on the building, and in fact, alleviated substantial marital debt for himself, and the Wife. Husband contends that the Wife was not impaired or prejudiced in any way as, $21 million dollars in debt has been eliminated along with approximately $1.5 million dollars in interest payments
The requisite elements for a finding of civil contempt are as follows: a) a lawful order of the Court expressing an unequivocal mandate; b) proof, by reasonable certainty, that the Order has been disobeyed; c) knowledge of the Court order by the alleged contemnor; and d) prejudice to the right of a party to the litigation. (See Judiciary Law §753; McCormick v. Axelrod, 59 N.Y.2d 574 [1983]). Plaintiff has the burden of proving the alleged civil contempt of a Court Order by clear and convincing evidence. (Lutz v. Goldstone, 42 A.D.3d 561 [2d Dept. 2007]); Vujovic v. Vujovic, 16 A.D.3d 490 [2d Dept. 2005]).
A finding of criminal contempt requires a finding of a "willful" disobedience of a lawful mandate, and proof of guilt must be established beyond a reasonable doubt. (Judiciary Law §750; Gomes v. Gomes, 106 A.D.3d 868 [2d Dept. 2013]). In El-Dehdan v. El-Dehdan, 114 A.D.3d 4 [2d Dept. 2013]), the Appellate Division stated that "[t]he element of prejudice to a party's rights is essential to civil contempt" It is well settled that an adjudication of civil contempt is not warranted where there is no finding that a party's actions were calculated to or actually did defeat, impair or prejudice the rights and remedies of the moving party. (See Rupp-Elmasri v. Elmasra, 205 A.D.2d 394 [2d Dept. 2013]). Whether or not the principal on these loans had to be paid back, based upon the Wife's allegations of the Husband's prior statements, is a factual dispute which this Court cannot resolve on these motion papers alone. Likewise, whether or not the payment of the $21 million dollars back to the Stanley I. Westreich Trust was in the ordinary course of business, cannot be determined by this Court on the papers alone. Accordingly, the Wife's request to hold the Husband in contempt is
The issue regarding the payment of approximately $30 million dollars in taxes was resolved when the Husband provided proof of said transfer during a conference before this Court.
The Husband, at the request of the Court, provided the undersigned with a copy of the Stanley I. Westreich Revocable Trust, which this Court reviewed and redacted and which was then provided to the Wife's counsel. It is clear from these documents that the Husband is not the trustee and is merely a beneficiary of same. Likewise, it is a revocable trust which can be altered at any time by the Husband's father, the one and only trustee of the trust. Therefore, the requests made by the Wife regarding the production of the trust are now moot, and her requests for ongoing discovery regarding Stanley I. Westreich Trust are
With regard to the Wife's request for various restraints on the Husband's transactions, the Court issued a Short Form Order pertaining to the requested Temporary Restraining Orders dated April 15, 2014 (the "4/15/14 Order"). Many of the directives set forth in the 4/15/14 Order are now moot. However, after a careful review of all the papers submitted in support and opposition of the motions, the following restrictions and orders of discovery are amended as follows and shall continue until a further order of this Court or stipulation between the parties. In addition, the 4/15/14 Order is hereby vacated. It is hereby
With regard to the appointment of a receiver, such an act is a drastic remedy that should not be lightly granted. (See DaSilva v. DaSilva, 225 A.D.2d 513 [2d Dept. 1996]). It is well settled that the appointment of a temporary receiver is an extreme remedy which can only be invoked in cases in which the moving party has made a clear evidentiary showing of the necessity for conservation of the property and protection of the interests of the movant. Similarly, such relief is typically granted upon a showing of a history of failing to comply with standing court orders directing discovery payment of support, and fees. (See, Adinolfi v. Adinolfi, 168 A.D.2d 401 [2d Dept. 1990]).
Accordingly, Wife's request to appoint a receiver over the Husband's assets of whatever kind and wherever situated, whether business or personal, is
MOTION SEQUENCE 006
The Husband brought this Order to Show Cause seeking a) the cancellation of the NetJets contracts; b) reimbursement from the Wife for the costs of maintaining the contracts from April 6, 2014 until their cancellation; and c) any refunds in connection with termination of the contract to be utilized by the Husband for the parties' living expenses (including legal fees). The parties resolved this motion pursuant to the stipulation dated July 15, 2014.
This constitutes the Decision and Order of this Court.
All other relief requested and not decided herein is
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