Appellate Division of the Supreme Court of New York, Fourth Department · 2021 · Family Law
Family LawEquitable distributionPost-divorce escrow distributionCredits against marital sale proceedsfamily lawequitable distributionpost-divorce actionescrow account
Facts
The escrow account contained the net proceeds from the sale of a farm that the parties had owned and operated during the marriage. Under a prior court order, the proceeds were to be divided equally between the parties, subject to any credits due to either party. The wife sought approval of the accounting and distribution of the remaining escrowed funds. The trial court approved the accounting and awarded the wife certain credits without a full evidentiary hearing.
Issue
May a court determine the value of one party's claimed credits against marital sale proceeds without a full evidentiary hearing, where the opposing party has not had an opportunity to offer valuation proof, cross-examine the appraiser, or review the appraisals? Must the court explain the factors and reasons underlying its decision to grant some credits and deny others?
Rule
When a court determines the value of credits affecting distribution of marital sale proceeds, it must conduct a full evidentiary hearing that allows the parties to present proof of valuation. The court also must articulate the factors it considered and the reasons for granting, partially granting, or denying claimed credits.
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One of 10 multiple-choice questions for this case. Pick an answer to see why.
After their divorce in Rochester, Dana Mercer and Leo Mercer sold a jointly owned warehouse, and the net proceeds were placed in escrow for equal division subject to any credits due. Dana later sought a $48,000 credit for equipment she claimed was left with the property, and the trial judge awarded the credit based solely on motion papers and counsel's arguments.
Was the judge's procedure proper?
Explanation. When a court determines the value of claimed credits that affect distribution of marital sale proceeds, it must conduct a full evidentiary hearing allowing the parties to present proof of valuation. Approval of an accounting or reliance on papers alone is insufficient when valuation of disputed credits is at issue.