Michael Scheffer’s article entitled “New York Risk of Loss After Coronavirus” (NYLJ April 10, 2020, p.4) struck a marital chord that will likely reverberate through the courtroom doors of virtually every pending divorce case involving the valuation of an existing business or one that closed its doors due to the pandemic.
Unlike those cases where the New York Risk Act (General Obligations Law §5-1311), or a carefully worded risk of loss contractual provision, governs the allocation of the risk of loss between a buyer and seller of real property, in divorce actions, the risk of loss between a husband and a wife over the value of a pandemic-affected business is too often placed squarely and unfairly on the owner spouse’s shoulders. Through no fault of their own, those small business owners who settled their divorce cases based on pre-coronavirus conditions and a then-booming economy must seek to salvage what is left of a business that was already equitably distributed in part to the other spouse based upon an absurdly high value errantly opined at trial by a court-appointed expert .
