A Decade Later: Are We Far Afield From 'Fields v. Fields'?
It has been just over a decade since the Court of Appeals issued its decision in Fields v. Fields, 15 N.Y.3d 158 (2010). Fields ignited a discussion about how courts would, going forward, assess separate property claims. More specifically, the decision in Fields indicated at least to some degree that perhaps some assets (namely, a marital home) are so fundamental to the concept of marriage as an economic partnership that a spouse’s separate property claim to an asset of that sort—no matter how strong—would have its limits.
The First Department’s recent decision in Gorman v. Gorman, 2020 NY Slip Op 06053 (1st Dept. 2020) affirms an unequal division of another category of assets (brokerage accounts) that, like a marital home, might seem to be part and parcel of the marital relationship regardless of a party’s separate property claims. But when you read Gorman, and the trial court’s decision that came before it, together with the decision in Fields, it becomes clear that what Justice Victoria Graffeo (who wrote the opinion in Fields) said a decade ago still holds true: “there is no single template that directs how courts are to distribute a marital asset that was acquired, in part or in whole, with separate property funds.” Fields, 15 N.Y.3d at 167-68.
The disputed issue in Fields was not revolutionary. The court was asked to determine whether or not the husband’s one-half interest in a Manhattan townhouse was marital property. The opinion written by Graffeo, however, included language indicating that a marital home is in a class by itself—a class where a spouse’s separate property claim might be limited.
Specifically, the court in Fields noted that “we have stressed that marital property should be construed broadly in order to give effect to the economic partnership concept of the marriage relationship.” Id. at 162-63. The court seemed to place importance on the fact that the type of asset in dispute was intended to be the backbone of the “marriage relationship.” Graffeo explained “Here, the property was purchased eight years into the parties’ marriage with the intent that it would be used as the marital residence where the parties would live and raise their son…Thus, the statutory presumption that a residence acquired during the marriage is marital property clearly applies in this case.” Id. at 166. The court went further:
In recognizing marriage as an economic partnership, Domestic Relations Law §236 mandates that the equitable distribution of marital assets be based on the circumstances of the particular case and directs the courts to consider a number of statutory factors. Id. at 170.
In contrast, Justice Robert Smith wrote in his dissent:
The majority seems to think it self-evident that, when a married couple buys a home, whether with separate or marital funds, any later increase in value of that home—whether due to the parties’ efforts, market forces or something else—should be shared between the parties. Fields, 15 N.Y.3d at 177.
To conclude his vigorous dissent, Smith warned of the unpredictability that might follow if courts did what Graffeo also acknowledged would be improper: “It is not for the courts to dictate what type of lifestyle a ‘normal’ marriage should reflect or how married couples should structure their marital relationships.” Id. at 168.
Justice Smith added:
When one spouse can be awarded 35% of the other’s valuable asset on a record like this, it is very hard to predict how any equitable distribution dispute will come out—except that the more sympathetic party will usually win. The result is a marked lack of predictability, and the sending of a message that the rules written in the statute books will not be followed. This is bad for litigants and bad for the law. Id. at 178.
On the subject of sympathy, Smith wrote “It is indeed easy to sympathize with the wife’s plight. She is a retired schoolteacher. Her husband, nine years younger than she, decided after a 35-year marriage that he wanted to marry another woman. The husband is the wealthier of the parties … But I think it is our court’s role to hold lower courts in check when they find highly inventive ways of reaching what seem desirable results—not to find even more inventive ways of affirming those results.” Id. at 177-78.
Against this backdrop, this author wants to examine whether or not the First Department’s recent affirmance of an unequal division of two brokerage accounts in Gorman v. Gorman is in line with the “economic partnership” concept highlighted by Justice Graffeo in Fields, the dissent of Justice Smith, or neither. Gorman affirms the 70/30 distribution of two brokerage accounts in favor of the husband, and while that may seem inimical to the concept of marriage as an economic partnership, the trial court’s decision written by Justice Laura Drager confirms what Graffeo suggested ten years ago, namely, that there is “no single template” for distributing marital property that was acquired, in whole or in part, with separate property.
As the First Department’s decision notes, the two accounts at issue were “largely funded by the husband’s separate property.” The trial court’s decision shows that while the parties married in 1986, and the action was commenced in 2010 (i.e., a 24-year marriage), they separated in 2001. Justice Drager agreed with the Report and Recommendations of Referee Marilyn Sugarman vis-a-vis an unequal distribution of marital assets: “As the referee noted, equitable distribution need not be equal especially where the parties have not functioned as an economic partnership for many years” (citations omitted).
One of the brokerage accounts contained stock that the husband “owned prior to the marriage or that he inherited from his mother, stock acquired during the marriage and cash deposits made during the marriage.” While commingling rendered the account to be presumptively marital property, an equal distribution (advocated by the wife) was rejected: “It is not disputed that a substantial portion of the assets in the account originated from the husband’s separate property.” As to the other account, the “Referee found the unequal distribution appropriate because it was the husband’s business account and in light of the lengthy separation of the parties before commencement of the action.”
In light of the above, after reading Gorman, practitioners should be wary about making blanket assumptions that brokerage accounts now presumptively lend themselves to an unequal distribution. Trial courts are empowered with discretion to determine an equitable distribution of marital property based on all facts and circumstances then obtaining. In Gorman, the facts supported an unequal distribution of brokerage accounts. There will be other cases down the road where the facts lead to an opposite conclusion.
Whether you are relying on (or challenging) Fields or Gorman, New York equitable distribution law does not lend itself to a blind application of cookie-cutter legal principles. Rather, it requires a detailed evaluation of the facts to determine what is “equitable” in the context of each marital relationship—and no two marriages are alike.
“A Decade Later: Are We Far Afield From 'Fields v. Fields'?” by Alan R. Feigenbaum was published in the New York Law Journal on January 7, 2021.
Reprinted with permission from the January 7, 2021, edition of the New York Law Journal © 2021 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited. For information, contact 877-257-3382 or reprints@alm.com or visit www.almreprints.com.