The following e-filed documents listed on NYSCEF (Motion #003) numbered 56-71, 99, 111-118 and (Cross-Motion #004) numbered 75-86, 100, 103-109 were read on these motions. Upon the foregoing documents, and on consideration of oral argument conducted on, July 20, 2022, Motion Sequence #003 and Cross-Motion #004 are resolved and therefore, it is hereby, ORDERED, that the Defendant’s request that the real property located at XXXX Avenue, Staten Island, New York and the real property located at YYYY Avenue, Staten Island, [*2]New York be determined to be subject to equitable distribution with the appropriate pro rata shares to be determined by the trial court is GRANTED and it is further; ORDERED, that the Defendant’s request that Plaintiff be determined not to have a separate property claim over the real property located at XXXX Avenue, Staten Island, New York and the real property located at YYYY Avenue, Staten Island, New York is GRANTED and it is further; ORDERED, that the Plaintiff’s request to determine his separate property acquisition credit for the real estate located at XXXX Avenue, Staten Island, New York to be $200,000.00 is DENIED and it is further; ORDERED, that the Plaintiff’s request to determine his separate property acquisition credit for the real estate located at YYYY Avenue, Staten Island, New York to be $189,900.00 is DENIED and it is further; ORDERED, that the Plaintiff’s request for the immediate listing and sale of the marital residence, located at XXXX Avenue, Staten Island, New York is DENIED and referred to the trial court and it is further; ORDERED, that the Clerk of the Court shall enter judgment accordingly. Memorandum Decision Facts and Procedural History Plaintiff J.R. and Defendant M.R. were married on XX/XX/2002. There is one child of the marriage, to wit: J.A.R., born XX/XX/2006. The Plaintiff commenced this action for divorce on or about June 25, 2020. On May 11, 2022, Defendant filed Motion Sequence #003 by Notice of Motion. The Defendant seeks (a) the equitable division of XXXX Avenue, Staten Island, New York 10304 and YYYY Avenue, Staten Island, New York 10304 as marital property; (b) the rejection of any separate property claims to XXXX Avenue, Staten Island, New York 10304 and YYYY Avenue, Staten Island, New York 10304 by the Plaintiff; and (c) such other and further relief as the Court may deem just and proper. On June 2, 2022, Plaintiff filed Cross-Motion Sequence #004 by Notice of Motion. The Plaintiff seeks (1) to have Plaintiff’s separate property acquisition credit in real estate located at XXXX Avenue, Staten Island, New York 10304 to be set at $200,000.00; (2) to have Plaintiff’s separate property acquisition credit in real estate located at YYYY Avenue, Staten Island, New York 10304 to be set at $189,900.00; (3) the immediate listing and sale of XXXX Avenue, Staten Island, New York 10304; (4) the dismissal of Defendant’s Motion Sequence #003; and (5) such other and further relief as the Court may deem just and proper. On July 13, 2022, Defendant filed opposition to Cross-Motion #004. On July 18, 2022, Plaintiff filed reply on Cross-Motion Sequence #004. Oral arguments were held on July 20, 2022 for Motion Sequence #003 and Cross-Motion Sequence #004, however, the parties were engaged in settlement discussions and a conference with the Court was scheduled for August 5, 2022. On August 5, 2022, parties informed the Court that they were unable to reach settlement and Defendant requested an opportunity to file reply on Motion Sequence #003. Despite oral arguments having been completed, the Court granted leave for reply by August 12, 2022 and sur-reply by August 26, 2022. (NY St Cts Filing [NYSCEF] Doc Nos. 111). On August 12, 2022, Defendant filed reply on Cross-Motion #003. Plaintiff filed sur-reply on August 24, 2022. Discussion I. Transmuted Property and Factors to Consider for Credit Prior to the marriage, on September 13, 1995, Plaintiff purchased an investment property located at UUU Avenue, Brooklyn, New York for $220,000.00. (NY St Cts Filing [NYSCEF] Doc Nos. 76). Plaintiff states that he lived in an apartment at the property and rented the storefront portion of the premises from 1995 until the property was sold in 2003. (see id). After the parties were married in 2002 both parties resided at UUUU Avenue, Brooklyn, New York. In late 2003, the UUUU Avenue, Brooklyn, New York property was sold by the Plaintiff for $750,000.00. (see id). “The sale was completed using the Internal Revenue Code §1031 option to acquire like-kind property with the proceeds to defer capital gains taxes.” (see id). “In order to defer recognition of capital gains, the plaintiff purchased real estate on Staten Island utilizing the funds received from the Internal Revenue Code [§] 1031 Exchange. [T]he replacement property had to be like-kind, of equal or greater value to the property located at UUUU Avenue and the exchange needed to be complete within 180 days. The Plaintiff used the 1031 Exchange proceeds to purchase two homes that would be of equal or slightly greater value combined than UUUU Avenue. The Plaintiff did locate two suitable properties which were located a mere few hundred feet from each other: XXXX Avenue, Staten Island, NY 10304 and YYYY Avenue, Staten Island, NY 10304.” (NY St Cts Filing [NYSCEF] Doc Nos. 60). In January 2004, Plaintiff purchased XXXX Avenue, Staten Island, New York for $445,000.00 with a $245,000.00 mortgage. (see id; NY St Cts Filing [NYSCEF] Doc Nos. 76). In June 2004, Plaintiff purchased YYYY Avenue, Staten Island, New York for $399,900.00 with a $210,000.00 mortgage. (see id). “Upon the initial purchase of the properties, both deeds were solely in the name of the Plaintiff.” (see id; NY St Cts Filing [NYSCEF] Doc Nos. 76). On January 23, 2006, the Plaintiff executed two new deeds granting the Defendant tenancy by the entirety in both properties. (NY St Cts Filing [NYSCEF] Doc Nos. 60; NY St Cts Filing [NYSCEF] Doc Nos. 76). On December 15, 2008, a Bargain and sale deed with covenant against grantor’s acts was executed by the parties transferring a 50 percent tenant in common interest in the property at YYYY Avenue, Staten Island, New York to the Defendant’s sister, L.T., for $10.00. (NY St Cts Filing [NYSCEF] Doc Nos. 83). In addition, parties also executed a New York State Real Property Transfer Report indicating that the transfer of the 50 percent interest in the property was a gift. (see id). The following facts are critical to this Court’s determination as to whether the Plaintiff is entitled to a credit in an amount corresponding with the equity that he contributed toward the purchase of the subject properties. [1] In February of 2007, approximately one year after the Defendant was added to the deed of XXXX Avenue, Staten Island, New York, Plaintiff and Defendant took a mortgage on the property for $55,000.00. [2] In January of 2008, the Plaintiff and Defendant took an additional mortgage in the amount of $367,000.00 on the YYYY Avenue property. [3] In February of 2008, the Plaintiff and Defendant took and additional mortgage on the XXXX Avenue property in the amount of $417,500.00. [4] In December of 2008, Plaintiff and Defendant sold a 50 percent interest in the YYYY Avenue property to Defendant’s sister, for $50,000.00. [5] In August 2012, Plaintiff and Defendant took out an additional mortgage on the XXXX Avenue property in the amount of $10,386.58. Plaintiff and Defendant have jointly utilized the equity of the subject properties to finance a variety of marital endeavors. Both parties have signed notes and mortgages representing personal liability for the funds they chose to borrow from their equity. Never was there a question as to the divisibility of the equity (as pre-marital or marital), or Plaintiff’s desire for a credit, until the instant matrimonial action was commenced. The transmutation of Plaintiffs separate property into marital property is obvious and irrefutable based on the facts and circumstances presented to this Court. “‘[M]arital property’ shall mean all property acquired by either or both spouses during the marriage and before the execution of a separation agreement or the commencement of a matrimonial action, regardless of the form in which title is held, except as otherwise provided in agreement pursuant to subdivision three of this part.” (see Domestic Relations Law §236 [B] [1] [c]). Separate property is defined as “property acquired before marriage or property acquired by bequest, devise, or descent, or gift from a party other than the spouse[.]” (see Domestic Relations Law §236 [B] [1] [d] [1]). Prior to January 23, 2006, when the deeds to XXXX Avenue, Staten Island, NY and YYYY Avenue, Staten Island, NY were modified to include the Defendant’s name, the acquisition amounts, $200,000.00 and $189,900.00 respectively, were the Plaintiff’s separate property. “Marital property is to be viewed broadly, while separate property is to be viewed narrowly[.]” (see Spera v. Spera, 71 AD3d 661 [2d Dept. 2010] citing Steinberg v. Steinberg, 59 AD3d 702 [2d Dept. 2009]). “In addition, ‘[s]eparate property can be transmuted into marital property when the actions of the titled spouse demonstrate his intent to transform the character of the property from separate to marital,’ by, for example, depositing otherwise separate funds into a joint marital account and utilizing them for marital expenses[.]” (see id quoting Imhof v. Imhof, 259 AD2d 666 [2d Dept. 1999]). “Separate property that is commingled with marital property loses its separate character[.]” (see Weiss v. Nelson, 196 AD3d 722 [2d Dept. 2021] citing Goldman v. Goldman, 131 AD3d 1107 [2d Dept. 2015]). “Separate property can be transmuted into marital property when the actions of the titled spouse demonstrate his or her intent to transform the character of the property from separate to marital[.]” (see Sherman v. Sherman, 304 AD2d 744 [2d Dept. 2003] citing Imhof v. Imhof, 259 AD2d 666 [2d Dept.1999]). If the addition of the Plaintiff to the deeds of the properties was made for some alternate reason, such as to protect the properties from third party claims and the change was not intended to change the character of the properties from separate property to marital property, the property may maintain its separate character. (see Cohen-McLaughlin v. McLaughlin, 132 AD3d 716 [2d Dept. 2015]. Plaintiff has failed to provide any evidence of an alternate reason for the transfer, other than that of a gift from one spouse to another. Plaintiff states in his affidavit, “Shortly after I purchased the Staten Island properties, the Defendant began demanding that I add her name to the deeds of both properties. Two years later, I acquiesced, and the deeds were transferred on January 23, 2006.” (NY St Cts Filing [NYSCEF] Doc Nos. 76). Plaintiff further states, “Defendant did not remit any payment in exchange for being added to the deeds. I received no financial benefit from doing so.” (see id). It is axiomatic that a gift “is the act by which the owner of a thing voluntarily transfers the title and possession of the same from himself to another person, without any consideration. It differs from a grant, sale or bargain in this, that in each of these cases there must be a consideration, and a gift, as the definition states, must be without consideration.” (see Seymour v. Seymour, 28 AD 495 [2d Dept. 1898]. The Second Department has maintained that “Gifts’ of the marital residence and “the diamond ring, made from one spouse to the other during the course of the marriage”, [are] marital property subject to equitable distribution[.]” (see Chase v. Chase, 208 AD2d 883 [2d Dept. 1994] citing Foppiano v. Foppiano, 166 AD2d 550 [2d Dept. 1990]). Plaintiff purports that he added the Defendant to the deeds of the properties located at XXXX Avenue, Staten Island, NY and YYYY Avenue, Staten Island, NY creating tenancies by the entirety in response to the Defendant’s demands to be added and without consideration. Plaintiff does not allege or provide any evidence that these transfers in ownership of the Staten Island properties were made under duress or that the transfers were made for any purpose other than as a gift to his spouse. Plaintiff’s reliance upon Philogene v. Delpe-Philogene (195 AD3d 963 [2d Dept 2021]) is instructive, but not outcome determinative. The Philogene Court held that the trial Court is vested with broad discretion in determining equitable distribution, including whether to credit a spouse who clearly transmuted real property from separate to marital property. Further, Plaintiff’s attempt to distinguish the facts of this case from Myers v. Myers, (119 AD3d 1114 [3d Dept 2014]) is misplaced, because the funds that were acquired by the parties in the several mortgage and refinance measures undertaken, the funds that were used to repay the joint mortgages came from marital income. The factors most compelling to this court are as follows: [1] the legal transfer of both parcels from the Plaintiff to the Plaintiff and Defendant with no evidence of duress; [2] the volume of mortgages and refinance of the properties during the course of the marriage after the deeds were transferred to Plaintiff and Defendant; [3] the sale of a 50 percent share of the YYYY Avenue property, which involved and required Defendant’s consent; [4] the duration of time that the Defendant has been in title prior to commencement of this action, to wit: 14 years, 5 months; [5] the level of sophistication of the parties (Plaintiff has bought and sold real property, availed himself of IRC 1031 protection from capital gains, has hired a CPA, and (based upon the pleadings herein) has only made his desire for a premarital credit known to the Defendant during the course of this action for divorce) and [6] the duration of the marriage (20 years). Plaintiff had many opportunities to protect his pre-marital separate property if he wanted to do so. Plaintiff never availed himself of a post-nuptial agreement contemporaneously with the transfers, and just as in Spencer-Forrest, here, there was no written agreement to keep the parties’ finances separate (cf. Domestic Relations Law §236[B] [1][d][4]). It was within Plaintiff’s discretion, and by his own free will, that he made the transfers to the Defendant. Plaintiff had the means and the know-how to retain counsel at or about the time of the transfers, to contemplate and implement measures that would have protected his former separate property, however he failed to do so.It is plainly obvious to this Court that the transfers in question were a gift from one spouse to another, during the course of their marriage. It is certainly in this Court’s discretion to give the Plaintiff a credit “even though the defendant changed the character of the property from separate property to marital property ” (Spencer-Forrest v. Forrest, 159 AD3d 762 [2d Dept 2018]), however, under these facts, it would be inequitable to do so. Accordingly, the Defendant’s request that the real property at located at XXXX Avenue, Staten Island, New York and the real property located at YYYY Avenue, Staten Island, New York be determined to be subject to equitable distribution with the appropriate pro rata shares to be determined at trial is GRANTED and further; Defendant’s request that Plaintiff be determined not to have a separate property claim over the real property located at XXXX Avenue, Staten Island, New York, and the real property located at YYYY Avenue, Staten Island, New York is GRANTED and further; Plaintiff’s request to determine his separate property acquisition credit for the real estate located at XXXX Avenue, Staten Island, New York to be $200,000.00 is DENIED and further; Plaintiff’s request to determine his separate property acquisition credit for the real estate located at YYYY Avenue, Staten Island, New York to be $189,900.00 is DENIED. II. Directing the Immediate Listing and Sale of XXXX Avenue, Staten Island, New York Plaintiff’s request for the immediate listing and sale of the marital residence, located at XXXX Avenue, Staten Island, New York is DENIED and referred to the trial court. Decretal Paragraphs It is hereby ORDERED, that the Defendant’s request that the real property located at XXXX Avenue, Staten Island, New York and the real property located at YYYY Avenue, Staten Island, New York be determined to be subject to equitable distribution with the appropriate pro rata shares to be determined by the trial court is GRANTED and it is further; ORDERED, that the Defendant’s request that Plaintiff be determined not to have a separate property claim over the real property located at XXXX Avenue, Staten Island, New York and the real property located at YYYY Avenue, Staten Island, New York is GRANTED and it is further; ORDERED, that the Plaintiff’s request to determine his separate property acquisition credit for the real estate located at XXXX Avenue, Staten Island, New York to be $200,000.00 is DENIED and it is further; ORDERED, that the Plaintiff’s request to determine his separate property acquisition credit for the real estate located at YYYY Avenue, Staten Island, New York to be $189,900.00 is DENIED and it is further; ORDERED, that the Plaintiff’s request for the immediate listing and sale of the marital residence, located at XXXX Avenue, Staten Island, New York is DENIED and referred to the trail court. Any relief requested, and not specifically addressed in this Decision and Order is referred to the trial court. ORDERED, that the Clerk of the Court shall enter judgment accordingly. The foregoing shall constitute the Decision and Order of this Court. Dated: August 30, 2022
