Cite as: O.R. v. J.R., [Index Number Redacted by Court], NYLJ 1202586272203, at *1 (Sup., KI, Decided January 24, 2013)

Justice Rachel A. Adams

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Decided: January 24, 2013

Recitation as required by C.P.L.R. 2219(a) of the papers considered in the review of the motion for an updated appraisal and release of marital funds.

Papers Papers Numbered

Plaintiff's Order to Show Cause and Exhibits: 1-13

Plaintiff's Supplemental Affirmation and Exhibits: 1-3

Defendant's Affidavit in Opposition and Exhibits: 1-10

Decision and Order

 

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The Plaintiff (Husband) moves by order to show cause dated November 27, 2012 for an order directing (1) an updated appraisal of the parties' property located at 231 Bayside Avenue, Breezy Point, New York (Breezy residence); and (2) release of marital funds to repair damage to the property resulting from Hurricane Sandy.

The Defendant (Wife) opposes the Husband's application in its entirety.

BACKGROUND

The Husband commenced this matrimonial action by service of a summons with notice on January 13, 2010. This divorce action has been contested at every stage of the proceedings with the parties appearing before this Court on no less than seven motions prior to this matter being placed on the trial calendar. While the parties resolved custody and parental access during the course of the proceedings, the trial on equitable distribution commenced on or about March 15, 2012. To date, the trial has spanned over nine days, and is scheduled to continue for an

 

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additional five days.

During the course of the trial, the parties have filed four motions; the within decision addresses the most recent application, filed by the Husband on November 27, 2012 and made returnable on December 6, 2012. The parties appeared for continued trial on December 6, 2012, at which time, the Court ordered a briefing schedule whereby all papers would be submitted by December 13, 2012 and the motion would be deemed submitted. (See, order dated 12/6/12). Thereafter, the Husband's counsel requested an extension of time to submit his supplemental affidavit, which request the Court granted and extended the briefing schedule to December 20, 2012. The within decision is based upon a review of the parties' papers delineated above.

HUSBAND'S POSITION

During the course of this divorce action, the Husband has maintained exclusive use of the parties' Breezy Point property. He submits that as a result of Hurricane Sandy, the residence sustained significant damage, rendering the home uninhabitable. The Husband submits an exhaustive list of damages to the lower "crawl" space level and first floor of the home.1 He asserts that the parties do not have flood insurance but, as of the date of his original affidavit, he received FEMA funds of $2,900. The Husband estimates that repairs would take at least four to six months to complete.

The Husband's supplemental papers include an attorney affirmation and annex as exhibits eight separate repair estimates from various contractors. The estimates total $106,303.78 as follows: plumbing, piping, boiler, chimney, roof, gas line and appliance installation: $20,960; air conditioning installation and refrigeration: $16,520; deck repair: $19,600; wiring, thermostat, electrical panel circuit installation: $6,500; debris removal: $6,000; germicide application (mold removal/prevention): $6,000; sheet rock and cabinetry removal: $13,630.40; interior decorator: $17,093.38. Counsel's affirmation also states that a cabinetry and counter top restoration estimate is outstanding but will likely cost an additional $20,000.

 

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In support of his request for an updated appraisal, the Husband posits that as a result of the property damage, the value of the Breezy residence has been "radically altered" and that the court-ordered appraisal dated August 23, 2010, valuing the home at $800,000 does not represent the current value of the home based on the damage sustained and the current Breezy Point real estate market.2 In his affirmation, the Husband's counsel submits that the valuation date for a passive asset, such as real estate, should be as close to the date of trial as possible. Moreover, he argues, the Court has discretion to set a valuation date which should be tailored to the facts of this case, and which best serves the principles of equitable distribution.

Regarding the parties' February 14, 2012 stipulation that the Breezy residence is marital property and has a value of $800,000, the Husband's counsel submits that the agreement may be rescinded under the contract principle of unfairness or mutual mistake and that based on the change in circumstances, a reevaluation is necessary. Counsel's affirmation includes a list of the parties' marital assets from which he requests funds be released to make necessary repairs to the Breezy residence.

WIFE'S POSITION

In opposing the Husband's application, the Wife argues that he should not be permitted to access marital funds to maintain his pre-separation lifestyle when he has, throughout the course of the litigation, refused to comply with this Court's order of support for the Wife and children so that they may maintain their pre separation lifestyle. The Wife argues that the Husband's non compliance has necessitated the Wife filing several enforcement applications.

The Wife notes that in his supplemental affirmation, the Husband fails to state whether he received additional FEMA funds for property repairs or shelter assistance. Upon her own inquiry, the Wife obtained documentation that the Husband was approved for FEMA real property funding of $19,557.79 and had received $5,434 as a shelter allowance.3 The Wife also states that because the Husband did not provide FEMA with a copy of the insurance company

 

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letter denying coverage for the claims, she submitted same to FEMA together with an additional request for financial relief, which request is outstanding. The Wife submits that should the Husband require additional funds not provided through FEMA, he should be obligated to borrow funds as she has been forced to do.4 She notes that the Husband has applied for a "Disaster Loan", which he did not disclose to the Court, nor has he provided any proof as to efforts he took to obtain loans or other funding5.

Notwithstanding the possibility of additional FEMA funds, the Wife submits that based upon the Husband's own estimates, the FEMA funds received are sufficient to repair those damages necessary to make the residence habitable; namely, the boiler ($11,900); gas ($2,700); and electric ($6,500) for total necessary repairs of $21,100. The Wife consents to electric and heating repairs being made so that the Breezy residence is habitable for the Husband. However, she argues, the balance of the Husband's estimated repairs are "not necessary or required"6. Notably, the Wife argues, outdoor repairs such as deck construction are not necessary to make the home livable. Moreover, much of the $6,000 estimate for "handyman" work can be done by the Husband (e.g., coordinating the contractors, moving undamaged goods from the first floor to the second floor, ordering a replacement window). The Wife also finds untenable the Husband's request to release in excess of $17,000 to pay an interior decorator when, throughout the litigation, the Husband repeatedly asks the Court to accept a sudden and substantial loss of income and has failed to meet his court ordered support obligations, causing the Wife to incur significant personal debt.

The Wife also asks the Court to consider that the Husband was previously permitted to withdraw from the cash surrender value of his life insurance policy (a marital asset) approximately $67,000 to pay the children's tuition; $105,000 to pay 2009, 2010 and 2011 income taxes, and to sell a piece of the parties' real property to pay maintenance and child

 

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support arrears of $89,185, all subject to a credit at trial.7 She submits that the majority of the parties' remaining assets, which the Husband seeks to access, are retirements funds and not "liquid".

The Wife also opposes the Husband's request for an updated appraisal, as he has been consistently non compliant with this Court's orders and has not provided the Wife and children with sufficient financial support. Moreover, while the Wife was initially resistant to placing the parties' real estate on the market, she now joins in the Husband's request, made at the conclusion of his direct case that all marital real estate be sold, obviating the need for an updated appraisal. However, she asks that she and the youngest child, now 17, be permitted to reside in the marital residence until he turns 18 years old in October 2013.

DECISION

In considering the Husband's request for immediate financial relief, the Court is sympathetic to parties' current circumstances resulting from a natural disaster like Hurricane Sandy. However, as the Husband requests, the Court considers his application in the context of the specific facts in this case. While the Husband acknowledges that the Breezy residence is marital property and asks that significant marital funds be accessed to make repairs, his unilateral actions since the storm have established that the Husband ultimately views the loss to Breezy as personal only to him.

The Husband, having been permitted an additional opportunity to provide the Court with more detail and documentation regarding the damage sustained and any financial relief received, submitted only an attorney affirmation and a set of estimates from various contractors. He did not disclose, by way of an accompanying affidavit, a sworn statement as to any federal (FEMA) or other funding received or repairs made since the storm.

Rather, the Wife's supporting documents establish that as of the date of his counsel's supplemental affirmation, the Husband has received in excess of $19,000 from FEMA to make repairs to the property. In addition to withholding this information from the Court, it appears that

 

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same was also withheld from the Wife, as it was only upon her own inquiry that she received FEMA documentation as to funds the Husband received. Moreover, the Husband acknowledged that without consulting the Wife, he unilaterally spent the entirety of the FEMA funds on, inter alia, plumbing, mold removal, and septic repairs. It is this Court's position that the Husband had no authority to utilize the FEMA funds, which are marital, without the Wife's consent or order of the Court.

The Wife's papers also establish that the Husband has received FEMA funds allocated as rental assistance, which the Court notes are also marital funds. The Husband, in both his moving papers and supplemental affidavit failed to disclose where he has been residing since Hurricane Sandy. He has also failed to disclose what rent, if any, he has paid for new housing, or in the alternative, how the rental assistance FEMA funds have been utilized in the event that he has not incurred rental expenses as a result of the storm. The Wife's papers also show the possible availability of small business association loan monies.

The Court is also mindful that the estimates annexed to the Husband's supplemental affirmation indicate more than an intention to make the property habitable. Rather, estimates in excess of $17,000 for interior decorating, $16,000 for air conditioning and refrigeration, $19,000 for outside deck, and $20,000 for counter top and cabinetry restoration indicate more of an intention to restore the property to its pre-Hurricane Sandy condition. The Court does not find it provident, at this stage in the litigation, while the parties are on trial, to release approximately $100,000 of marital funds to invest in repairing a marital asset, which may or may not restore it to its 2010 appraised value. What the Court finds more provident is that the parties utilize FEMA funds and any additional loan monies for which they may qualify to make necessary repairs to make the property habitable and viable on the open real estate market. Accordingly, at this time, the Husband's application to access approximately $100,000 of marital funds to make repairs to the Breezy residence is denied.

In light of the above, the Husband is directed to: (1) produce to the Court and the Wife forthwith: (1) proof of all FEMA monies or loans received to date, including rental assistance

 

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funds; (2) submit to the Wife and the Court an accounting of all real property and rental FEMA funds or loan monies utilized, including dates, contractors, and descriptions of repairs made; (3) submit to the Court and the Wife duplicate copies of all prior, pending, and future FEMA applications, and/or other loan applications, including supporting documents, submitted to FEMA or any other lending agencies; (4) immediately disclose to the Wife any future FEMA or other funds received and consult with the Wife on all negotiations for future repairs.

In considering the Husband's request to vacate the parties' trial stipulation as to values of marital assets, and for an updated appraisal of the Breezy residence, the Court acknowledges that the parties are now faced with the reality that a substantial marital asset has been potentially devalued through no fault of their own. However, the Husband's request to update the appraisal is premature and inherently inconsistent with his request to utilize marital funds to make repairs. The Husband seeks access to significant marital funds, in excess of $100,000 to make repairs to the property to make it habitable, while simultaneously requesting an updated appraisal that sets the valuation date "as close to the newest trial date" as possible. However, in light of the circumstances set forth above, and the Husband's acknowledgment that repairs continue to be made to the property, any such ongoing repairs (to be sanctioned by both parties) would undoubtedly affect any updated appraisal issued prior to completion of repairs.

Moreover, the Court notes that at this juncture, both the Husband at the conclusion of his direct testimony, and the Wife in her opposition papers, have joined in asking the Court to sell the entirety of the parties' real estate. Again, under the circumstances of this case, specifically the potentially decreased value of one of the parties' most substantial assets, together with the significant drain on the parties' liquid assets occasioned by the Husband's non compliance with Court orders throughout this litigation, the Court must seriously consider ordering the sale of the Breezy residence as this case is presently on trial and nearing its conclusion, which would, in turn, make the Husband's request for an updated appraisal moot. (B.M. vD.M., 31 Misc3d 1211(A) [2011]).

At the outset, the Court notes that it is within this Court's discretion to select valuation

 

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dates for marital assets which are appropriate and fair under the circumstances. (See, D'Angelo v. D'Angelo, 14 AD3d 476 [2005]). Additionally, a marital residence is generally considered a passive asset, and is thus generally valued as of the date of trial (Donovan v. Szlepcsik, 52 AD3d 563 [2008]; Collins v. Donnelly-Collins, 19Ad2d 356 [2005]). However, based upon the parties' trial stipulation, this Court previously held that there was no basis to update the real estate appraisal prior to Hurricane Sandy. However, in light of the storm occurring during trial, the Court is mindful that the trial stipulation has likely left the Court with an inaccurate value upon which to base any future distributive award in the event that the Court does not direct that the property be sold.

The circumstances may also permit the Husband to reopen his direct case to address the appropriate valuation date of the Breezy residence, as well as its ability to be sold on the open market. Generally, the case law regarding active and passive assets provides insight as to whether a reappraisal is appropriate in this case. Specifically, "[t]he passive/active analysis defines passive assets as assets which appreciate in value strictly as a result of random market fluctuations or the efforts of others, and holds that passive assets should generally be valued as of the trial date so as to prevent a windfall to the titled spouse if the asset has increased in value" (Raskopf v. Raskopf, 167 Misc2d 1017 [1996] quoting Greenwald v. Greenwald, 164 AD2d 706 [1991]). While that rationale is not directly applicable to an asset that has decreased in value, the Court in Raskopf noted, "[o]f course, if through no fault of the parties, a marital asset has simply evaporated prior to trial, like an uninsured house which has burned, the court would normally take into account the current circumstances, and not grant a distributive award of an asset that no longer existed, in any form." (Raskopf at 1020). Additionally, the circumstances of this case may also require reappraisal of the residence based upon the possible decline in the real estate market. (See Wittig v. Wittig, 258 AD2d 883 [1999]). Thus, the Court may, prior to the close of trial, direct that the Breezy residence be reappraised (Bartek v. Draper, 309 AD2d 825 [2003]; Poster v. Poster, 287 AD2d 411 [2001]).

Accordingly, the Husband's request to set aside the parties' trial stipulation as to the

 

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Breezy residence value and update the real estate appraisal is denied at this time. However, after the parties utilize the funds available to make necessary repairs, as delineated above, the Husband may be permitted to reopen his direct case limited to testimony regarding the repairs made, the current real estate market in Breezy Point, and the marketability of the Breezy residence in the event that the Court direct its sale.

1. The Husband sets out damages to the following: air conditioning ducts and handles, heating system, circulating fans, air circulation unit, electrical wiring, telephone lines, screens, plumbing, front door, furnace, boiler, hot water heater, septic tank, electrical panel, kitchen cabinets, all furniture, fireplace, kitchen appliances, washer and dryer (including duct work), entertainment equipment, vacuum cleaner, pot and pans, miscellaneous kitchen and bathroom items, sheet rock, deck, outdoor furniture and barbeque, and vinyl siding.

2. In preparation for trial, the parties stipulated that the Breezy residence is marital property and that its value is $800,000. (See, 2/14/12 stipulation).

3. Annexed as an exhibit is a copy of a FEMA status update indicating the following funding approval: Real property-$19,557.79 as of 12/03/12; Rental Assistance-$2,486 as of 12/03/12; Rental Assistance-$2,948 as of 11/06/12.

4. Specifically, the Wife alleges that her parents obtained a $100,000 home equity line of credit to loan her money throughout these proceedings.

5. Annexed as an exhibit is a U.S. Small Business Administration Disaster Loan fact sheet setting out the various loans available.

6. The Wife alleges that the interior decorator informed her that the Husband told him it would be okay to pad the estimate.

7. The Wife states that the remaining cash surrender value of the Husband's life insurance policy is $50,000.