Lieberman-Massoni v. Massoni, 2023

In this New York appellate court case, the appellate court affirms the trial court’s divorce opinion that the awarding of a percentage of the value of the husband’s B-unit shares rather than awarding the shares themselves was proper under the Domestic Relations Law No. 236, nor was the wife entitled to share in future distributions. The appellate court decided  three other issues that relate to support for income purposes, cash in safes, and allocation  of attorneys’ fees that are not covered in this digest. 

Evidence at the first divorce trial showed that the husband had received several grants of  shares in the company he worked for known as B units. The parties’ neutral appraiser,  

Steven Kaplan, testified to the value as of the date of the action at $1,126,000 based on a formula in the employer’s agreement less a DLOM and a DLOC. After the first trial, the wife discovered that the husband’s employer had sold one of its divisions, which yielded a distribution to the husband’s B units of $8 million. The wife moved to reopen the trial, which was granted on Dec. 4, 2014. A new trial was held in September 2017. 

“Here, the Supreme Court providently exercised its discretion in determining that the defendant’s B-Units that were granted before 2015 should be valued as of June 2017, immediately prior to the second trial.” The trial court also opined that the wife should be  awarded only a percentage of the value of the B units and not the units themselves. The trial court determined that the value of the B units was not solely attributable to his efforts.  The trial court exercised its discretion appropriately in not awarding the B units themselves  as that would have been cumbersome and burdensome. The same goes for not providing  for future distributions on those B units in part to the wife. This was a provident exercise of  discretion in light of the husband’s 2015 promotion, which placed him in a more active role  in the operations of his employer. 

The trial court also properly used its discretion in choosing the value of the B units the  husband’s experts determined since the plaintiff’s expert did not apply a DLOM and DLOC. “The valuation of a marital asset must be founded in economic reality.” (Sheehan v. Sheehan) The determination of value of a business is within the fact-finding power of the court. (Daddino v. Daddino) It is guided by testimony. It is given deference on appeal if it  rests on the credibility of expert witnesses and their methodology. In addition to the wife’s  experts not discounting the value for a DLOM and DLOC, the trial court also appropriately  in its discretion adopted the value of the husband’s experts. The trial court determined that  the husband’s expert’s formula for valuation (the formula in the employer’s agreement) more  closely aligned with fair market value than a sale of the company where there was no  indication such a sale was imminent. 

Given the wife’s indirect contribution to the husband’s business through care of the children  and maintaining the New York household while the husband worked the majority of the time  in Los Angeles, it was appropriate to award her 35% of the value of the B-unit shares and  35% of the 2014 distribution to the B units from the sale of a division of the employer.  Additionally, “the evidence showed that the B-Units granted to the defendant in 2015, three  years after the commencement of this action, were an incentive for future performance, not  compensation for work done during the marriage.” So the trial court used appropriate  discretion in awarding these B units as separate property of the husband.