Articles Posted in Divorce

Panorama von Monaco-La TurbieDivorce is a matter of state law in the U.S. in almost every circumstance. Each state has jurisdiction over family law disputes within its territory, but more and more people’s lives are not contained within a single state. People living in New York City might own real property in another state, and assets can cross state lines in other ways. This can create complications in a divorce case, since state courts can only exercise jurisdiction over property located in that state. New York law allows courts to distribute property located in this state after issuance of a divorce decree in another state or another country. A recent order by a Manhattan court addressed a dispute over property located in New York City, between spouses whose divorce case was pending in Monaco. THA v. MAA, No. 161488/2015, dec. order (N.Y. Sup. Ct., N.Y. Cty., Jan. 18, 2017). The order offers an idea of how and when a party to a divorce should seek a New York court’s involvement in distribution of property.

The dispute in THA involves two main legal issues: the alleged concealment of marital property and the court’s jurisdiction over property located in New York City. In a divorce matter, the spouses must make a full disclosure of all marital property in their possession or subject to their control. Intentional concealment of marital property from the other spouse or the court can result in sanctions, and can also affect how the court orders the distribution of property.

In order to bring an action in a particular court, the plaintiff or petitioner must be able to show that the court has jurisdiction over the defendant, known as in personam jurisdiction, or over a particular item of property, known as in rem jurisdiction. A New York City court might have in personam jurisdiction over the parties to a divorce if they live here, but it would lack in rem jurisdiction over property located outside of the State of New York. If a divorce decree issued by a court outside of New York affects property located in New York, § 236(B)(5) of the Domestic Relations Law (DRL) allows the courts of this state to order the distribution of such property, mostly in accordance with New York law.
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TeamworkIn any lawsuit, a plaintiff must be able to demonstrate that they have the legal capacity to file suit against the defendant. In the context of a New York divorce case, this can mean the plaintiff’s standing to sue or their competence to bring a legal claim. A recent decision by the Supreme Court in Westchester County, New York considered a defendant wife’s claim that the plaintiff husband lacked capacity to sue because of a debilitating illness and that certain of the husband’s family members were seeking a conservatorship over him. The court’s ruling in D.E. v. P.A. dealt with questions of both competence and standing. It found that the wife’s objection regarding the husband’s capacity was not timely, but it also noted that the husband’s family would lack legal capacity to pursue the divorce case if they succeeded in the conservatorship case.

Standing” refers to a person’s legal authority to file suit in a particular jurisdiction and venue against a particular defendant for a particular claim. In general, a person must be able to show direct and tangible harm allegedly caused by the defendant. In New York divorce cases, § 170 of New York’s Domestic Relations Law (DRL) establishes the basic procedure for initiating a divorce action. It specifically states that “a husband or wife” may pursue a divorce action.

Rule 3211(a)(3) of the New York Civil Practice Law & Rules (CPLR) allows a court to dismiss a lawsuit on the motion of a defendant or another party to the case if it finds that “the party asserting the cause of action has not legal capacity to sue.” This can include a lack of standing or a lack of legal competence. “Competence” derives from the principle that a person cannot take certain binding actions if they are not capable of understanding the full implications and consequences.

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jarmoluk [Public domain, CC0 1.0 (https://creativecommons.org/publicdomain/zero/1.0/deed.en)], via PixabayObtaining a divorce in New York City requires filing a lawsuit, of sorts, and obtaining a judge’s approval on a final judgment. Even if the parties are able to agree the terms of the divorce, the judge must sign a final judgment. Parties to a divorce may choose to reconcile, and therefore to discontinue the court proceeding. New York law and court rules set certain limits, however, on when a plaintiff can discontinue a divorce suit without the court’s permission. A Manhattan court recently considered a husband’s effort to unilaterally discontinue a divorce case in Marcilio v. Hennessy, ruling that his notice was untimely and barred by equitable principles.

Divorce cases in New York may proceed in much the same way as other lawsuits. One of the spouses, as plaintiff, files a complaint with the Supreme Court of their county. The plaintiff must provide notice to the other party, i.e. their spouse. In many divorce cases, the plaintiff does not formally serve their spouse with papers, in the interest of maintaining a relatively civil atmosphere.

New York recently enacted a “no-fault” divorce law, meaning that a plaintiff in a divorce case is no longer required to allege fault in the breakdown of the marriage. This has, at least somewhat, helped keep more amicable divorce cases from becoming contentious. It also allows parties to focus on resolving issues like property division and child support. Once this process is underway, New York court rules set limits on when a plaintiff can discontinue a case.
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PAR~commonswiki [Public domain], via Wikimedia CommonsIn order to file for divorce in New York, a person must establish that they, their spouse, or the circumstances of the divorce meet the state’s residency requirements. Section 230 of New York’s Domestic Relations Law identifies five scenarios in which a person may file for divorce in this state, usually based on where one or both parties reside. In some circumstances, a New York court may hear a divorce case, with a much reduced residency requirement, if a cause of action related to the divorce occurred within the state. A Manhattan court considered a claim last year in Stancil v. Stancil that “the irretrievable breakdown of the marriage,” the condition for a “no-fault” divorce, occurred in this state, even if the parties did not otherwise meet the residency requirements. The court disagreed.

The issue of residency is based on the legal doctrine of personal jurisdiction, a court’s authority to exercise power over a party. The legal issues surrounding personal jurisdiction are quite complex, but a simple way to summarize them is to say that a court cannot exercise personal jurisdiction over someone who has no connection to the state in which the court sits. A person attempting to sue a resident of Hawaii in a New York court, for example, must be able to show some connection to New York. The type of connection depends on the type of case.

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Unsplash [Public domain, CC0 1.0 (https://creativecommons.org/publicdomain/zero/1.0/deed.en)], via PixabayDivorce typically requires a near-total reorganization of one’s home, family, and personal life. In some cases, it affects the workplace too, such as when spouses are also business partners. A recent court order effectively “broke up” a pair of business owners, who had also once been a romantic couple, after finding that their personal animosity made running the business together impossible. Not all instances of businesses split up by divorce are quite so dramatic. Sometimes ex-spouses are able to continue running a business together, but New York’s business and family laws provide means for divorcing couples to complete the divorce with minimal adverse impact on the business.

In August 2015, a Delaware Court of Chancery judge issued a 106-page order in In re Shawe & Elting LLC, et al., appointing a custodian to effect the sale of a profitable business corporation. The two parties to the case, EE and PS, owned 50 and 49 percent of the stock in the company, respectively, although the court treated them as having equal shares and voting rights. They reportedly started the business in a business school dorm room in 1992. They grew it into a global provider of translation services, with millions in annual revenue.

The two became engaged in 1996, according to the court, but EE broke it off in 1997. Although the business became quite profitable over the years, the court found that the relationship between EE and PS, who essentially owned the company 50/50, had deteriorated to a point of “complete dysfunction,” resulting in “irretrievable deadlocks over significant matters” that threatened “irreparable injury” to the business. It granted EE’s motion to appoint a custodian, as permitted by Delaware law in cases of deadlocks, to sell the corporation.

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By jaredjennings [CC BY-SA 2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Wikimedia CommonsIn a New York divorce matter, a court cannot grant a final divorce until the parties have resolved a wide range of issues, including an equitable distribution of marital property. If the parties can agree on a resolution, they may ask the court to approve their agreement as the final judgment of divorce. If they cannot agree on one or more issues, however, the court must decide for them. The husband in a divorce case in Erie County sought to vacate the judgment of divorce, claiming that it did not represent his agreement on property division and therefore left certain issues unresolved. The New York Appellate Division, Fourth Department ruled in his favor earlier this year in Marshall v. Marshall, finding that he had a valid challenge to part of the divorce judgment. It vacated that part of the judgment and remanded the case to the trial court to resolve those issues.

During the divorce proceeding, according to the appellate court’s order, the wife/plaintiff’s attorney recited an oral stipulation of settlement into the record in court, stating that the parties were waiting on a proposal from a third party regarding valuation of their retirement accounts. The husband/defendant stated in court that he agreed with the oral stipulation, except for three unresolved issues relating to offsets in the valuation of the marital residence, payments on a home equity loan, and the allocation of the pension and retirement accounts. Resolving these issues depended on the valuation of the retirement accounts.

The parties agreed that they would amend their stipulation if they resolved the remaining issues, or return to court if they could not. They signed a written agreement adopting the oral stipulation. The husband then withdrew his appearance and allowed the wife to proceed by default. The parties’ attorneys reportedly received the report containing the proposal for the retirement accounts in January 2011. The husband stated that he “adamantly disagreed” with the proposal. The court, however, entered a final judgment of divorce that June.

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carl dwyer [FreeImages.com Content License (http://www.freeimages.com/license)], via FreeimagesA divorce under the laws of the state of New York requires the parties to resolve multiple issues, either by mutual agreement or by submitting the matter to the court to decide, before the court can enter a final judgment of divorce. Many parties are able to agree to the terms of their divorce, including equitable distribution of property and matters pertaining to any minor children. They can present this agreement to the court as a “stipulation of settlement” (SOS). Two recent decisions, Defilippi v. Defilippi and Jon v. Jon, address motions brought by a former spouse, after the entry of a final judgment of divorce, to rescind an SOS.

The parties in Defilippi negotiated a settlement and signed a written SOS in December 2013. They submitted it to the court in March 2014. The husband did not raise any objections at the time, and the judge signed it. The SOS distributed the parties’ property and debts, provided joint legal custody of the parties’ three minor children, and established the husband’s child support obligation.

According to the court, the husband complied with the provisions of the SOS, with some arrearages, for almost a year. He did not file an appeal or move to vacate the judgment of divorce, but in March 2015, he filed suit seeking to set aside the SOS as void. He claimed that the SOS did not meet the requirements for the correct form of an agreement under § 236(B)(3) of the New York Domestic Relations Law because it did not include acknowledgments “in the manner required to entitle a deed to be recorded.”

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By Karthikc123 (Own work) [Public domain], via Wikimedia CommonsNew York law generally categorizes property acquired during a marriage as “marital property,” meaning that the property belongs to both spouses regardless of who holds title. Property owned by one spouse before the marriage is considered that spouse’s “separate property.” In some situations in a divorce proceeding, one spouse may have an equitable claim to the other spouse’s separate property, or may be able to claim that certain separate property has become marital property over the course of the marriage. A New York appellate court recently considered a situation in which both spouses contributed to the purchase of an asset titled in the husband’s name, the marital residence, prior to the marriage. Its decision in Ceravolo v. DeSantis held that the residence remained the husband’s separate property, but it recognized that the wife may have an equitable claim for reimbursement. A dissenting justice concluded that the residence should have been deemed marital property.

The parties married in July 1996. More than two years earlier, in January 1994, they purchased the residence at issue in the appeal. The husband-to-be paid $130,000 of his own money and obtained a $100,000 loan from his father, which was secured by a note and mortgage. The future wife contributed $30,000 towards the purchase price but did not attend the closing. The husband took title to the property in his name alone, and the title remained unchanged throughout the marriage.

The wife made all payments on the mortgage, beginning shortly after closing, and continuing until the mortgagor released the lien in 2003. The wife filed for divorce in June 2010. After a trial, The Supreme Court in Albany County, New York entered a judgment of divorce in March 2013. It ruled that the wife’s mortgage payments converted the property from separate to marital property. It awarded the wife $170,000, which was one-half of the stipulated value of the residence. The husband appealed this and other parts of the divorce judgment.

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Ted Eytan [CC BY-SA 2.0 (https://creativecommons.org/licenses/by-sa/2.0/)], via FlickrThe U.S. Supreme Court’s ruling in Obergefell v. Hodges has effectively made same-sex marriage legal in all 50 states. Thirty-five states, the District of Columbia, and Guam had already given legal recognition to same-sex marriages through legislation or court order. Several more states, while refusing to issue same-sex marriage licenses, recognized out-of-state same-sex marriages. Couples who married in a state that allowed same-sex marriage but moved to a state that did not recognize their marriage had found themselves in a difficult position if they tried to file for divorce. The Obergefell ruling appears to have resolved those conflicts, although legal problems may persist in some areas.

The Supreme Court’s decision in United States v. Windsor struck down the federal Defense of Marriage Act (DOMA) in 2013. DOMA, originally passed in 1996, denied federal benefits to same-sex married couples, even if they had a lawfully issued marriage license. The Obergefell plaintiffs applied for a marriage license in Ohio after the Windsor decision came down, and they filed suit against the state when they were denied. The couple also sought to have one of them designated as the “surviving spouse” of the other, who was suffering from a terminal illness.

The plaintiffs prevailed in U.S. district court, but the Sixth Circuit reversed the ruling. The Supreme Court consolidated their case with cases from Kentucky, Michigan, and Tennessee. It held in a 5-4 ruling on June 26, 2015 that state bans on same-sex marriage violated the Equal Protection Clause of the Fourteenth Amendment. The decision overturned the Supreme Court’s 1972 action in Baker v. Nelson, when it declined to hear the appeal of a Minnesota case on the grounds that a same-sex couple’s marriage claim did not present a “substantial federal question.”

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By OptimumPx (Own work) [Public domain], via Wikimedia CommonsA New York appellate court in Brooklyn recently ruled that a woman could substitute the estate of her deceased ex-husband in a post-divorce proceeding to determine an equitable distribution of property. The executor of the estate objected, claiming that the court actions ended with the husband’s death. The trial court disagreed and granted the wife’s motion. The appellate court affirmed that order in May 2015 in Charasz v. Rozenblum.

The unusual case essentially began when the husband filed for divorce in July 2010. The wife counterclaimed for divorce soon afterwards. The parties had three children, who were approximately 13, 10, and seven at the time the divorce case started. While the case was pending, the husband was diagnosed with advanced stage brain cancer in May 2012. The court granted a divorce for the husband on the ground of constructive abandonment several months later, but it reserved the division of property and other economic issues. A lengthy trial followed, beginning in late 2012 and ending in about February 2013.

After the trial ended, the husband removed the wife and children as beneficiaries on a life insurance policy and several investment accounts, reportedly worth a total of about $5 million. He designated his mother, sister, and the executor of his estate as beneficiaries, in violation of the court’s order. On March 21, 2013, before the court entered a judgment in the case, the husband committed suicide.

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