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679 N.Y.S.2d 233, NYLJ, Jul. 9, 1998 (col. 5) (Sup. Ct., West. Co., N.Y., 2d Judic. Dept. 1998) Supreme Court, Westchester County, New York. Mary RIECHERS, Plaintiff, v. Roger RIECHERS, Defendant. June 30, 1998. Justice Rudolph Plaintiff maintains this action for absolute divorce, and ancillary relief to be determined by this Court after non-jury trial which began on November 5, 1997 and concluded January 27, 1998. Final submissions were made on March 17, 1998. The following constitutes this Court’s decision. Divorce Plaintiff, Mary Riechers (“wife") was married to the defendant, Roger Riechers (“husband”) on July 9, 1966. There are two emancipated children of this marriage, Matthew Riechers, (born August 26, 1970) and Christopher Riechers, (born July 4, 1975). The parties separated in December, 1993. The wife commenced this action on December 22, 1994 for divorce pursuant to Sec. 170 (2) of the Domestic Relations Law upon the grounds of Abandonment and Constructive Abandonment. Plaintiff, age 53, (born August 6, 1944) and defendant age 55 (born May 18, 1942) were both residents of the State of New York for a continuous period of more than one year prior to the commencement of this action. Plaintiff and defendant are both in good health. At the time of their marriage, plaintiff was a licensed registered nurse at St. Vincent’s Hospital and defendant was a second year medical student at New York University Medical School. Prior to the marriage, the defendant had earned a Bachelor of Arts Degree at Columbia University in 1964. The defendant received his medical degree in 1968 and obtained his license to practice medicine in 1969. The parties entered the marriage without appreciable assets. The wife’s earnings constituted the base support of the family while the husband attended school and began his residency at Mount Sinai Hospital. On August 26, 1970, the parties first child, Matthew was born. Plaintiff continued to work after her first born and contributed to the financial stability of the parties through the 1970’s. Upon completion of his residency requirements, the parties moved to White Plains where defendant began his career as an associate urologist employed by a White Plains practitioner. In 1975, defendant moved on to open his own practice in Yorktown Heights and the parties purchased their first home in Chappaqua. In these early days of defendant’s practice, the plaintiff often worked with her husband at his office and performed duties from receptionist to Registered Nurse. During this entire period of time, the plaintiff/wife worked closely with her husband and was very supportive of his career decisions, and the defendant consulted with her each step along the way. The parties differ sharply on the social and community involvement efforts of the wife towards the success of defendant’s medical practice, but it is clear that the parties worked as a team to support, promote and develop the medical practice of defendant throughout the marriage. In July 1975, the parties adopted their second child, Christopher, who was born July 4, 1975. As the strains of the responsibility of raising the children and maintaining the family structure began to conflict with the time constraints of a busy and flourishing medical practice, the seeds of marital discord began to develop in the marriage in the late ’70’s. The defendant’s practice moved from his Yorktown offices to Mount Kisco at 101 South Bedford Road, in the late 70’s. Defendant’s practice was in full bloom, and now he had multiple employees. Defendant ultimately purchased three separate condominium units at these premises to maintain his practice where he remained until joining Mt. Kisco Medical Group on May 1, 1996. In 1980, the parties purchased a second home, which is the marital residence, 48 Taylor Road, Mt. Kisco. Initially, this home was purchased as an investment, but five years later the parties sold their Chappaqua residence and moved into the marital residence. They remained in joint occupancy until April 1994 when the defendant/husband moved out. Plaintiff/wife remains in occupancy to the date hereof. During the 1980’s and until the commencement of the divorce proceeding the defendant/husband provided the plaintiff/wife with $4,000.00 a month for household and living expenses. In addition, the wife had the use of credit cards and various store charges which were separately paid by the husband. The residential mortgage and real estate tax obligations, together with other major expenses incurred during the course of the marriage, were paid by the husband. Subsequent to this divorce action, the husband, by agreement, has paid the wife $5,000.00 a month, and continues to pay mortgage and real estate tax obligations. At the same time, the wife’s credit cards and store charges were cancelled. During the 1980’s, the parties purchased a vacation home in Nantucket which was, thereafter, sold in 1996. The net proceeds of the sale have been maintained in an escrow account subject to the determination of this Court on the issue of equitable distribution. The parties have stipulated that the Nantucket escrow proceeds on deposit is $201,102.96 with accrued interest from March 1996. Throughout the marriage, and particularly in the late 70’s and 80’s, the wife and children enjoyed vacations in exotic and expensive places often accompanied by the defendant/husband. It was clearly a lifestyle proportionate to the defendant’s substantial income. In December, 1990, the seeds of marital discord had fully developed and the parties’ marriage was now in great difficulty. The defendant/husband refused to sleep with the plaintiff/wife, and refused to resume any sexual relations with the plaintiff. The credible evidence adduced at the trial of this action established by a fair preponderance that the defendant’s refusal to maintain sexual relations with the wife was wilful, and without cause or justification despite plaintiff’s repeated requests to the contrary. This refusal to maintain conjugal relations caused plaintiff great pain, anxiety and discomfort. Nevertheless, the parties did not separate or leap to divorce proceedings. Counseling efforts were begun and lasted over a period of three years with at least four different therapists. [Family reference paragraph deleted for publication purposes.] While the parties were in therapy with the last of their four therapists, the defendant/husband over the pleas of the wife to remain, vacated the main marital residence in December, 1993 and moved into a separate apartment attached to the marital home. In April, 1994, the husband moved completely from the marital residence and the parties have remained separate and apart ever since. Findings Of Fact FIRST: That plaintiff and defendant were both over the age of 18 years when this action was commenced. SECOND: That for a continuous period of at least two years immediately preceding commencement of this action, plaintiff resided in the State of New York. Plaintiff, was married to defendant on July 9, 1966. There are two emancipated children of this marriage, Matthew Riechers, (born August 26, 1970) and Christopher Riechers, (born July 4, 1975). THIRD: That no decree of divorce, separation or annulment of this marriage has been granted to either plaintiff or defendant in any Court of competent jurisdiction of this State or of any other state or territory of the United States. FOURTH: That defendant wilfully and without cause or justification and without plaintiff’s consent, commencing in or about December, 1990, and continuing to date, constructively abandoned plaintiff in that defendant failed and refused to cohabit with plaintiff or engage in marital sexual relations with plaintiff for a period of more than one year prior to the commencement of this action, despite plaintiff’s repeated requests that defendant do so. FIFTH: That plaintiff has filed a verified statement that she has taken all steps solely within her power to remove all barriers to defendant’s remarriage following the divorce. Conclusions Of Law FIRST: That jurisdiction as required by Section 230 of the Domestic Relations Law has been obtained. SECOND: Plaintiff, Mary Riechers, is entitled to a judgment of divorce dissolving her marriage to the defendant, Roger Riechers, upon the grounds of the constructive abandonment of the plaintiff by the defendant pursuant to Domestic Relations Law Sec. 170 (2). (See Diemer v. Diemer [1960] 8 NY2d 206, 203 NYS2d 829). Equitable Distribution Considering the age and health of the parties, the duration of the marriage, the parties respective contributions to their marriage, income and assets of the parties entering the marriage, the fact that plaintiff will no longer be a legatee under defendant’s last will and testament and may no longer be entitled to any distribution from the Riechers Family Trust, and in reviewing the credible evidence, and considering the legislative factors enumerated in Domestic Relations Law Sec. 236 Part B Sec. 5 (d) et seq., this Court determines that the economic and social partnership of this thirty-one year marriage requires equal distribution of all marital assets. (See Damiano v. Damiano, 1983, 94 AD2d 132 at page 138-9). Marital assets constitute all property acquired by either spouse during the marriage and before commencement of this action irrespective of title (Sorrell v. Sorrell, [1996] 233 AD2d 387 650 NYS 2d 237) except as otherwise provided by agreement. … or excluded as separate property pursuant to Domestic Relations Law Sec. 236B(b). Marital Property A. Nantucket The parties’ summer home in Nantucket, supra, was sold on March 1, 1996. At trial, the parties have stipulated that the net proceeds of the sale, $201,102.96 have been deposited in an interest bearing account subject to this Court’s ruling on equitable distribution. It is the decision of this Court that the principal balance on deposit ($201,102.96), together with accrued interest thereon, less lawful fees, if any, payable to the escrow agent, shall be paid equally to plaintiff and the defendant. B. Marital Residence The marital residence, 48 Taylor Road, Mt. Kisco, supra, is occupied exclusively by the wife. The husband presently pays the mortgage indebtedness of principal and interest, together with monthly escrow deposits for real estate taxes and insurance. The parties have stipulated that the fair market value of the marital residence is $875,000.00 and that the principal indebtedness of the mortgage obligation as of October 1997 is $504,018.86. Neither husband nor wife has testified as to a need or desire to retain possession or ownership of the marital residence. It is the decision of this Court that the residential dwelling be listed with a real estate broker, and placed upon the market until it is sold. The parties shall designate and agree upon a listing broker within thirty (30) days from the date of this decision, and the premises shall be listed for a minimum sales price of $875,000.00 unless otherwise agreed upon by the parties in writing. Failure of the parties to designate a real estate broker, as herein provided, shall be reported to the Court. In such event, the Court shall appoint a real estate broker to conduct the sale. Until the marital residence is sold, the husband shall continue to pay the mortgage indebtedness of principal and interest, together with all real estate taxes and insurance premiums. It is the decision of this Court that from the net proceeds of the sale of the marital residence, the husband shall be reimbursed all payments of the mortgage indebtedness, taxes and insurance paid from the date of this decision, (except arrears) and the balance of the net proceeds divided equally between the parties. The wife may remain in exclusive possession of the marital dwelling until sale, and during such time the wife remains in possession shall make the premises available to be shown to prospective purchasers at reasonable times subject to the wife’s daily working schedule. The wife shall keep the premises in reasonable repair and deliver the same vacant and broom clean at the time the wife moves out of the marital residence. During the period of time, from decision to sale, the parties shall share equally the costs of all repairs and upkeep of the premises. While in occupancy, the wife shall be solely responsible for the cost of all utilities and heating expenses. C. Residential Personal Property The parties have accumulated, during the course of this marriage, and now possess numerous items of personalty contained in their separate dwellings, including furniture, pictures, jewelry, paintings, rugs, lighting fixtures and the like, and the Court has been presented with an overview of these items of personalty including the retention and sale of certain properties from the Nantucket home. The record is devoid of credible evidence as to fair market value of such property. Under the circumstances presented to the trier of these facts the only reasonable disposition of this personalty is that each party shall by virtue of this decision become the absolute owner of all such personalty now in possession of that spouse, free and clear of any claim of ownership by the other spouse. Further, the wife shall become the absolute owner of the 1994 Acura presently in possession of the wife subject to existing liens, if any, and the husband shall, if necessary, execute all documents of title to the subject vehicle to permit registration and ownership in the name of the wife. The 1991 Isuzu shall be sold forthwith and the proceeds of the sale divided equally between the parties. The husband’s leased vehicle is not subject to equitable distribution and remains in his exclusive control. D. Roger Riechers, M.D. P.C. Pension Plan In the matter of Damiano v. Damiano, supra at page 139, the Appellate Division, Second Department summarized the applicable law stating, in part. … that pension benefits belonging to either spouse attributable to employment during the marriage, whether those benefits are vested or nonvested, and whether the plan is contributory or noncontributory, constitute marital property subject to equitable distribution upon divorce. The marital property, however, shall include only that portion of the pension benefits which have accrued during the marriage and prior to the commencement of the divorce action (see Domestic Relations Law, Sec. 236, part B, subd 1, par c). In determining the valuation date of the pension plan, for the purpose of equitable distribution, this Court has applied the active/passive test. (See Scheinkman New York Law of Domestic Relations Sec. 14.76 et seq [West’s New York Practice Series]). This Court adopts the reasoning of Greenwald v. Greenwald, 164 AD2d 706, at page 716 which holds that. … The corpus of the Roger Riechers M.D., P.C., pension plan is attributed to his employment during the marriage. Further, the credible evidence adduced at the trial of this action has established that the Roger Riechers, M.D., P.C. Pension Plan’s appreciation in value is not the results of the efforts of the titled spouse. Therefore, the valuation date is the date of trial. The parties have stipulated that value at date of trial is $1,085,000. It is the decision of this Court that the Roger Riechers, M.D., P.C. Pension Plan shall be divided equally between the parties and that a Qualified Domestic Relations Order (“QDRO") be entered thereon. Principal Pension contributions of the husband, if any, made subsequent to the date of trial, together with appreciation of same shall be discounted from the gross value of the pension plan prior to equal division of the asset. E. Roger Riechers IRA Roger Riechers’ IRA account, acquired during the marriage, and before the commencement of this action, is a marital asset subject to the same tests and legal conclusions as set forth with reference to Roger Riechers M.D., P.C. Pension Plan, supra. The parties are in accord that the value of Roger Riechers’ IRA account as of August 29, 1997 was $165,850.00. It is the decision of this Court that the valuation date is the date of trial, and that the principal balance as of the date of trial, less principal contributions of the husband, if any, made subsequent to the date of trial, (together with appreciation of same), shall be divided equally between the parties, and, if applicable, that a QDRO be entered thereon. F. Mary Riechers IRA Mary Riechers’ IRA account, acquired during the marriage, and before the commencement of this action, is a marital asset subject to the same tests and legal conclusions as set forth with reference to Roger Riechers M.D., P.C. Pension Plan and IRA, supra. The parties are in accord that the value of Mary Riechers’ IRA account as of October 27, 1997 was $39,000.00. It is the decision of this Court that the valuation date is the date of trial, and that the principal balance as of the date of trial, less principal contributions of the wife, if any, made subsequent to the date of trial (together with appreciation of same), shall be divided equally between the parties, and that, if applicable, a QDRO be entered thereon. G. Treasury Bills/Personal Bank Accounts The value of the separate personal bank/money market accounts of the parties, as well as the Treasury Bills acquired by Mary Riechers during the marriage reasonably offset each other, and it is the decision of this Court that each party shall retain ownership of their individual and separate personal bank/money market accounts, and further, that wife shall retain ownership of the Mary Riecher’s Treasury Bills. H. Residential Co-Op The residential co-op purchased for the use of Matthew Riechers (currently valued at $45,000.00) constitutes a marital asset, the net value of which is to be divided equally between the parties upon the sale of the co-op at such time and in such event that the premises are no longer occupied and used by Matthew Riechers. Nothing contained in this decision shall constitute a determination that said Matthew Riechers has acquired any interest in the subject co-op, and his continued right to remain in possession of the premises shall depend upon the mutual consent of the parties to this action. I. NYDIC The NYDIC investment, made during the course of this marriage with marital funds, constitutes marital property subject to equitable distribution notwithstanding the husband’s claim that the beneficial proceeds of this investment, $208,642.00, were used to pay marital debts and litigation costs. Therefore, it is the decision of this Court that the proceeds of the NYDIC investment shall be divided equally between the parties. J. Roger M. Riechers, M.D. Medical Practice A professional license is marital property for purposes of equitable distribution (O’Brien v. O’Brien, 66 NY2d 576). In fixing the valuation date of this marital asset and the valuation date of enhanced earnings, infra, [DRL Sec. 236 Part B Sec. 4(b)], it is essential to chronicle the historical and economic development of Dr. Riecher’s medical practice several years prior to the commencement of this action to the date of trial. In no other way can an award of equitable distribution achieve true equity between the parties. Dr. Riechers is a board certified urologist who conducted business as Roger Riechers, M.D.P.C., an S Corporation formed under the laws of the State of New York since 1988. In 1996, the defendant became a stockholder in the Mount Kisco Medical Group, P.C. (“MKMG") and discontinued his corporate practice. During the early years of the 90’s, in an effort to quell the tide of marital discord, supra, Dr. Riechers actively searched for an associate physician to form a medical partnership in his practice. In 1994, as a result of these efforts, defendant sold a 50 percent interest in the corporate medical practice to Dr. Warren Bromberg. In essence, that sale valued the fixed assets of the business ($160,000.00 Exhibit 18-D), established earning guidelines for Dr. Bromberg, and reserved to the defendant, all existing accounts receivable. Noticeably, the sale documents also contained certain restrictive covenants concerning Dr. Bromberg’s ability to practice medicine independent of the corporate entity within defined geographical areas, including Westchester County, for specified periods of time [Employment contract Exhibit 18 par. 11 et seq]. Dr. Riechers reacquired total ownership of this corporate entity from Dr. Bromberg during the year 1996 for nominal consideration and the release of restrictive covenants imposed upon Dr. Bromberg. At or about the same time Dr. Bromberg paid Dr. Riechers the balance of the sale consideration plus accrued interest. The evidence established that Dr. Riechers received a total of $120,000.00 from Dr. Bromberg. This re-acquisition by Dr. Riechers paved the way for both Dr. Riechers [and Dr. Bromberg] to become associated with MKMG in 1996. The value of the fixed assets determined by the Riechers/Bromberg sale ($160,000.00) is very close to the value of fixed assets established by the experts in their separate valuation formulas, infra. It is at this point, important to review the circumstances leading up to Dr. Riechers association with MKMG. The uncontroverted evidence has established that prior to his association with the MKMG the primary patient referral agency for Dr. Riechers’ medical practice was MKMG. In 1994, the defendant became a part-time employee of MKMG (Exhibit 43) while at the same time maintaining his independent practice with Dr. Bromberg. The evidence further established that between 1994 and 1996, MKMG put pressure on Dr. Riechers to join their group full time or possibly lose referrals to another urologist. Faced with the possibility of loss of his primary referral source for patient care, Dr. Riechers opted to discontinue Roger Riechers M.D.P.C., supra, and join MKMG effective March 7, 1996. Plaintiff’s and defendant’s experts, infra, both acknowledge a downward trend in earnings for the medical profession during the 1990’s while differing in their opinions on the severity of the financial impact on the earning capacity of Dr. Riechers. Nevertheless, it is clear from the credible evidence that the actual earnings of Dr. Riechers has diminished since the date of the commencement of this action; that his association with MKMG was forged out of economic necessity; and that these events have had a substantial effect on the value of Dr. Riechers’ medical practice and enhanced earnings capacity. Equity dictates that the valuation date is determined to be the date of trial. Having determined the valuation date to be the date of trial the Court now examines the testimony of the experts, the exhibits, and all other evidence on the value of the medical practice of Dr. Riechers. Gerald A. DeFeo, plaintiff’s expert, is a licensed Certified Public Accountant with expertise in valuation of professional practices and licenses. (Curriculum Vitae Exhibit 15.) In preparing his analysis of Dr. Riechers’ medical practice and enhanced earnings valuation, Mr. DeFeo has examined various tax returns, business records, fixed asset schedules and contractual agreements relating to the practice. He has considered industry trends and standards and reviewed numerous research documents and statistics. In establishing practice value, Mr. DeFeo utilized an excess earnings method. (net tangible assets plus good will). Net tangible assets were determined to be $440,000.00 as of December 31, 1994. It is important to note that John R. Johnson, defendant’s expert (Exhibit Z- 1), infra, determines the value of tangible assets as of December 22, 1994 to be $453,000.00. Thus, as between the experts, there is a very close valuation of net tangible assets. In determining the intangible asset of goodwill, Mr. DeFeo reviewed Dr. Riechers’ income and VEBA benefits for the period of 1990 thru 1995. He first subtracted replacement compensation fixed at $350,000.00 from each year’s gross income, then applied a weighted multiple to each year’s net income beginning with a factor of 5 for 1994 and a progressive reduction to 1 for the year 1990. The gross number of $13,292,721 was divided by the total factor of 15 resulting in excess earnings before return on assets of $886,181.00. From this figure, Mr. DeFeo subtracted a 12 percent return on tangible assets ($52,808.00) deriving excess earnings at $833,373.00. Using a multiple of 1, Mr. DeFeo determined goodwill to be $833,000.00. This value added to tangible assets produced a value of Dr. Riechers’ practice to be $1,273,000.00. [Exhibit 16 Schedule D] Mr. DeFeo further testified that he recognized a downward trend in the medical industry and in Dr. Riechers’ earnings, and that the value of Dr. Riechers’ practice as of the date of trial would be $1,000,000.00 caused by a reduction in excess earnings when considering the period of time between the date of commencement and date of Trial. (Exhibit 17A). In determining value as of the date of trial at $1,000,000., Mr. DeFeo determined the value of goodwill to be $280,000 applied a factor of 2 ($560,000) and added same to net tangible assets ($440,000). In determining valuation of Dr. Reichers’ enhanced earnings for assumed worklife expectancy, Mr. DeFeo again utilized physician replacement cost of $350,000., and determined baseline earning, attributable to defendant’s bachelor’s degree at $100,000. Subtracting the after tax value of baseline earnings ($64,297) from the after tax value of physician replacement cost ($202,953.), Mr. DeFeo determined the annual net benefit to be $138,656. [Exhibit 16, Schedule E]. Upon this premises, Mr. DeFeo applied a mortality percentage value and a discount rate (3%) each year from 1995 to 2006 reaching a total value for enhanced earnings to be $1,350,000. Applying the date of trial valuation to Mr. DeFeo’s calculation would result in a reduced enhanced earnings value of $1,116,000. Defendant’s expert, John R. Johnson, is a licensed Certified Public Accountant, Certified Business Appraiser and Board Certified Forensic Examiner, a member of numerous associations of Certified Public Accounts, a court appointed valuation expert, consultant, author and lecturer. (Curriculum vitae Exhibit Z-2). In preparing his evaluation reports, Mr. Johnson examined numerous documents and trade publications including defendant’s financial statements, tax returns, stockholder agreements, Riechers’ employment contract, and the nature and history of Dr. Reichers’ medical practice. As stated, Mr. Johnson has determined Net tangible assets to be $453,000. [Exhibit Z-1 page 19] Further, as did Mr. DeFeo, Mr. Johnson also applied the excess earnings method (net tangible assets plus goodwill) to determine practice value. Here, Mr. Johnson also determined goodwill to be $280,000. The difference in final value analysis is that Mr. Johnson applied a factor of one to goodwill reaching a total value of $733,000. Mr. DeFeo applied a factor of 2 in reaching trial value of $1,000,000. Mr. Johnson determined the value of defendant’s enhanced earnings capacity to be $904,000 after applying a coverture fraction of 7/9 to a gross value of $1,162,000. This Court rejects the application of coverture to the defendant’s enhanced earnings capacity based upon the unique circumstances of this case in reference to the total contributions made by the plaintiff/wife during the defendant’s educational process and the development of his practice in this thirty-year marriage. The application of coverture in this case is repugnant to the goal of achieving equity between the parties. Upon the foregoing, this Court determines the value of Dr. Riechers’ medical practice to be $733,000., and the value of Dr. Riechers’ enhanced earning capacity to be $1,162,000. While it is clear that the valuations between Mr. DeFeo and Mr. Johnson, though arrived at by somewhat different formulation, are quite close in conclusions, it is also clear that the major difference in practice value is Mr. DeFeo’s application of a multiple of 2 to the value of goodwill as of the date of trial. This multiple would add a value of $280,000. to Dr. Riechers’ practice, and that additional multiple, in the absence of a plausible explanation is rejected by the Court. It is the decision of this Court that husband shall pay to the wife the sum of $947,500 representing one-half of the value of the Roger M. Riechers, M.D. medical practice ($366,500) and one-half the value of the enhanced earning capacity ($581,000) of Roger M. Riechers, M.D. Riechers Family Trust In September 1992, the defendant, Roger M. Riechers, as general partner, formed the Riechers Family Partnership Limited, a limited partnership formed under the laws of the state of Colorado. At the same time the defendant, as settlor, established an irrevocable trust in the Cook Islands under Cook Islands Law, (see, International Trust Act 1984 (Ex. N/; see, also Exs. 14(a) (b) and Ex D). Further, the Riechers Family Trust was funded with 99 percent of the assets of the Colorado limited partnership. The remaining 1 percent of the Colorado limited partnership is owned by Dr. Riechers. The trust portfolio was valued at approximately $4,000,000 as of December 1994. The Trust beneficiaries are plaintiff, defendant and their children. However, the plaintiff is not personally named as a beneficiary. Rather, the trust instrument designates plaintiff in a separate category as “Spouse of the Settlor", the designation and the benefits thereof, plaintiff would lose on entry of a judgment of divorce. The plaintiff maintains that all the assets used to fund the limited partnership and trust were marital assets; that the trust is not irrevocable; that plaintiff did not give an informed consent to the establishment of the Trust or the transfer of marital assets to the Trust; that plaintiff is entitled to a sum of money representing plaintiff’s equitable distribution (Ex. J) from the corpus of the Trust. In separate litigation, prior to the commencement of this trial, plaintiff began an action in the High Court of Cook Islands (October 1997) naming Dr. Riechers and the trustees of the Riechers Family Trust (Southpac Trust International Inc. and Louis Meltzer) as co-defendants. The Cook Islands court, by order dated October 23, 1997 (Ex 14-A) issued a Mareva Injunction ordering, in part, that the settlor and trustees … “be restrained and an injunction be granted restraining them until trial or further order in the case … from acting or omitting to act in a manner which may have the effect of: … (c) removing from the jurisdiction of this Court, disposing of, mortgaging, assigning, pledging, charging or otherwise dealing with any of the assets purportedly disposed of or transferred to the Trust within the jurisdiction (in particular but no[t] limited to the property referred to in the affidavit of the plaintiff filed herewith); … (g) removing or substituting any beneficiary of the Trust;” It is important to review the facts and circumstances leading up to the formation of the Colorado limited partnership and the Riechers Family Trust. Dr. Riechers maintains that as a result of three (3) separate malpractice lawsuits filed against him between 1984 and 1988, he began to consider asset protection planning to preserve the family assets. While the plaintiff confirms that Dr. Riechers was very concerned about the subject malpractice litigation, Mrs. Riechers denies that she was ever consulted by the defendant in the planning or formation of the Riechers Family Partnership. Further, plaintiff maintains that she only became aware of the Riechers Family Trust after this action for divorce was commenced. It cannot be said with any degree of certainty that the formation of the limited partnership and the Riechers Family Trust was an attempt by Dr. Riechers to avoid the consequences of equitable distribution of marital assets in contemplation of divorce by secreting marital assets (Contino v. Contino, 140 AD2d 662, 1988) or by deliberate dissipation of marital assets. (Goldberg v. Goldberg, 172 AD2d 316, 1991) Assuming arguendo, that this Court had jurisdiction over the corpus of the Riechers Family Trust, which it does not, a cause of action would not lie to set aside the trust since the trust was established for the legitimate purpose of protecting family assets for the benefit of the Riechers family members. (Ciaffone v. Ciaffone, 228 AD2d 949, 953, 1996). Nevertheless, it is clear and unequivocal, that the limited partnership and the Riechers Family Trust were funded with marital assets with the exception of minimal funds attributable to moneys received by defendant from his mother offset by defendant’s 1 percent retention in the Colorado Limited Partnership. (see Exs. 19-A-19-B, inter alia). The value of the Riechers Family Trust (November 1997) is $5,463,154 (Ex. AA) as follows:
Riechers Family The question remains therefore, whether in the absence of a finding of economic fault, as determined in the case at bar, the value of marital assets placed in an irrevocable trust, are subject to equitable distribution? The answer is in the affirmative. In the case at bar, this Court has no jurisdiction over the corpus of the Cook Islands Riechers Family irrevocable trust. Nevertheless, the Court has in personam jurisdiction over the defendant. See, Alan D. Scheinkman, New York Law Domestic Relations, Section 14.15, Page 434. Marital property is marital property, irrespective of its location. If the court has personal jurisdiction over the parties, it may adjudicate as to property located out of state … (Miller v. Miller, 109 Misc.2d 982, 441, N.Y.S 2d 339 (Sup. Ct., Suffolk County, 1981). Thus, whatever property the parties have, wherever in the world located, it may be subject to equitable distribution upon divorce.” Upon the divorce of the parties, which has been granted herein, the plaintiff/wife will no longer be a beneficiary of the Riechers’ Family Trust notwithstanding the Mareva Injunction granted by the High Court of Cook Islands (1). While the ultimate determination of the entitlement to the corpus of the Trust remains with the High Court of Cook Islands, this Court awards to the plaintiff one-half of the value of the marital assets placed in the Cook Island Trust by the defendant as of December 1994, to wit: $2,000,000. This award shall not be duplicative of any award that may be made to the plaintiff by the High Court of Cook Islands, and no stay shall issue thereon. Further, this Court is not unmindful of the passive appreciation of assets placed in the Riechers Family Trust for which no award has been made to the plaintiff. In the absence of a finding of economic fault, as determined by this Court, that issue is properly before the High Court of Cook Islands. Maintenance The defendant, pursuant to pre-trial stipulation (Exhibit C December 14, 1995), has been and is paying the plaintiff $5,000.00 a month for “plaintiff’s needs" together with certain other expenses associated with the marital residence, medical insurance, and certain other non-insured medical and dental expenses. Plaintiff is gainfully employed as a registered nurse at Bedford Hills Correction Center earning approximately $25,000.00 a year. Plaintiff’s monthly expenses, at time of trial, is represented to be $7,270.00, independent of the marital residence expenses paid by the husband. Plaintiff has further testified that during the time she has lived exclusively at the marital residence, she has been able to save portions of her earned salary and increase her personal net worth. The evidence hasdemonstrated that plaintiff, independent of the cost of the maintenance of the marital residence, has been able to maintain her marital lifestyle based upon current earnings and monthly maintenance payments. It remains therefore, to determine the duration of the maintenance award and whether additional funds are to be added to the existing monthly payments of $5,000.00 to compensate for future housing expenses to be incurred after the sale of the marital residence. The Court is guided by decision of the Court of Appeals in McSparron v. McSparron, (1995) 87 NY2D 275. In particular, the Court of Appeals, McSparron, supra at page 286, cautioned that “… The courts must also be meticulous in guarding against duplication in the form of maintenance awards that are premised on earnings derived from professional licenses.” Such is the case at bar. The future maintenance award for plaintiff is derived from the defendant’s professional license as a doctor. Considering the admonitions of McSparron, supra, the award for the value of defendant’s medical license and enhanced earnings more than sufficiently offset plaintiff’s financial needs for future housing expenses. To conclude otherwise would result in a duplicative maintenance award and an unfair windfall to the plaintiff. At the same time, defendant’s base earnings permit an award to plaintiff of monthly maintenance consistent with plaintiff’s other needs and marital lifestyle. Considering plaintiff’s current earnings, her monthly expenses reported to the Court, and avoiding duplication of maintenance awards, plaintiff is awarded monthly maintenance in the sum of $5,000.00 until the defendant shall reach age sixty-five. In addition, defendant shall continue to pay the costs of plaintiff’s medical insurance currently in place (COBRA) for a period of eighteen (18) months from the date of entry of divorce herein. Counsel Fees/Expert Fees Plaintiff requests an award of counsel fees in the sum of $104,590.00, disbursements in the sum of $7,271.00, accountant fees of $30,195.00, expert witness fees of $17,332.00 and foreign counsel fees of $16,690.30. Plaintiff’s request for foreign counsel fees is denied inasmuch as that issue is properly before the High Court of Cook Islands. The determination of an award for plaintiff’s counsel fees, accountant fees and expert witness fees is properly before this Court. In the case at bar, the respective earnings of the spouses are vastly disproportionate. Nevertheless, the distribution award to the plaintiff, in excess of $3,500,000.00, eliminates this disparity between the financial conditions of the spouses to the extent that, upon payment of the distribution award, plaintiff will be able to absorb expenses incurred for attorney’s fees, accountant fees, and expert witness fees (see Maloney v. Maloney, 137 AD2d 666, appeal denied 72 NY2d 808). Upon the foregoing, this Court does not reach the issue of the overall reasonableness of plaintiff’s request for counsel fees, accountant fees and expert witness fees, and plaintiff’s request for same is denied, except to the extent of pre-trial payments made by the defendant in the sum of $19,000.00. Separate Property The following property constitutes separate property pursuant to DRL Sec. 236B(b), supra, and therefore, is not marital property subject to equitable distribution:
1. Mary Riecher’s Certificate of Deposit ($10,000.00). The foregoing constitutes the Decision and Order of the Court. Submit Judgment on Notice. All exhibits may be picked up at the Park Clerk’s Office after thirty (30) days from the date of this decision. FN1. English courts first fashioned this remedy 20 years ago and named it the ‘Mareva injunction’, … Mareva Compania Naviera S.A. v. Intl’ Bulk Carriers S.A., 1980 1 All E.R. 213 …. The Mareva injunction is based on the fundamental principle that no court should permit a defendant to take action designed to frustrate subsequent orders of the court. The injunction is tailored for recalcitrant defendants who would try to conceal or transfer assets to become ‘judgment proof.’ N.Y.L.J 6/18/98 Wm. Maguire “Freezing Assets Worldwide“ Second Circuit Approves Mareva Instruction. 7/9/98 NYLJ 30, (col. 5) |