While the statutory language establishes the parameters within which the matrimonial court must designate the valuation date, limiting selection to the range between commencement and trial of the action, it is silent as to the point on that continuum where the choice should be made. Over the years, the courts have filled that void.

In McSparron v. McSparron, the Court of Appeals cited this provision in declaring that valuation date selection falls within the “sound discretion of the trial courts, which should make their determinations with due regard for all of the relevant facts and circumstances.”3 In commenting on how the courts might go about the process, the court stated:

In attempting to select a suitable valuation date, some courts have drawn a distinction between “active” assets (i.e., those whose value depends on the labor of a spouse) and “passive assets” (i.e., those whose value depends only on market conditions). These courts have concluded that ‘active’ assets should be valued only as of the date of the commencement of the action, while the valuation date for “passive” assets may be determined more flexibly. Such formulations, however, may prove too rigid to be useful in particular cases. Thus, they should be regarded only as helpful guideposts and not as immutable rules of law.4

The court revisited the issue in Grunfeld v. Grunfeld:

Courts have discretion to value “active” assets such as a professional practice on the commencement date, while “passive” assets such as securities, which could change in value suddenly based on market fluctuations, may be valued at the date of trial. “Such formulations, however, may prove too rigid to be useful in particular cases. Thus, they should be regarded only as helpful guideposts and not as immutable rules of law.” 5

This formulation prevents the owner from manipulating the value downward during the pendency of the litigation to the detriment of the non-titled spouse. It also ensures that any post-commencement appreciation flowing from the sweat of the titled spouse’s brow will not be captured into the marital estate.

The ‘Buntzman’ Context

The valuation issues in Buntzman rest on a complex factual footing. For ease of explication, however, simplification, without loss of import, is helpful.6

Essentially, the husband owned a business together with a partner, both of whom were active in its management. The value of business fluctuated wildly following commencement of the action, rising from $ 2.70 per share as of commencement to $ 6.21 per share as of the first day of trial. During the pendency of the litigation, the husband sold shares and options at the higher prices, yielding more than $4.5 million. Thus, he argued that the shares should be valued as of commencement, which would deprive the wife of any share of the post-commencement gains.

Burden of Proof

On the active/passive issue, the Court, in an earlier decision, placed the burden of proof on the husband, as the party claiming the post-DOC increase in value to be active:

At the outset, one of the central questions in the trial of this action is which party has the burden of establishing the character of an asset as “active” or “passive,” which, in turn, will determine whether the post-commencement appreciation in value of the main asset to be distributed between the parties is defendant’s separate property. Based upon this Court’s consideration of the limited authority on this issue, it concludes that the burden of proof is imposed upon the party claiming that the post-commencement increased value of an asset is separate property which is not subject to equitable distribution.7

This, of course, is consistent with the result-oriented jurisprudence that has permeated the Court of Appeals’ interpretation of the equitable distribution law throughout its life, favoring those constructions that expand the marital estate:

Here, a broad construction of the terms “contributions or efforts” in section 236(B)(1)(d)(3), as we have noted, results in enlarging the sum of marital property available for distribution and, thus, promotes the basic “economic partnership” concept of the statute.8

The Standard of Proof

The more intriguing question is what standard of proof must be met. In addressing this question, the trial court reviewed the prevailing authority in the Appellate Divisions of the First and Second departments and noted a critical distinction between the two courts.

In the First Department, the husband could prevail by showing that the post-commencement increase in value was substantially, though not exclusively, due to his active efforts.9 Given the husband’s active post-commencement role in the business in question in Mahoney-Buntzman, he could likely meet that standard of proof. The trial court judge in Mahoney-Buntzman, Westchester County Supreme Court Justice William J. Giacomo, discussed the First Department’s approach:

[I]t is arguable that the appropriate analysis under the active/passive dichotomy is whether the spouse seeking to have the commencement date set as the valuation date of an asset has established that the appreciation in the value of the asset was due in substantial part to his efforts, and not strictly as a result of other factors, such as market fluctuations or the efforts of other individuals. Put differently under such an analysis, the controlling consideration is that market or other influences have not driven the value of the asset, but rather, that the asset’s value was driven by the efforts of the party arguing that the asset is active in nature. 10