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Property Purchased by Husband Upon Which a “Shell” of a House Was Constructed Prior to Marriage Should Not Have Been Deemed Marital Property/Husband’s Failure to Affirmatively Prove What Portion of His Savings Account Was Separate Property Justified Dividing It Equally/Wife’s Failure to Prove How She Contributed to the Appreciation of the Marital Residence Precluded the Award of Any Appreciation in Value to Her

The Third Department determined Supreme Court was correct in some instances but erred in other instances in its findings re: separate and marital property. The marital residence was not subject to equitable distribution because the husband purchased the land and erected a “shell” of a house prior to marriage. The property cannot thereafter be transformed into marital property by virtue of the improvements made to it.  The decision is notable for pointing out the results of failures of proof.  The husband failed to prove what portion of his savings plan was separate property, so the court correctly divided it equally.  The wife failed to prove what portion of the improvements to the husband’s separate property (their residence) was attributable to her, she therefore was not entitled to any portion of the property’s appreciation in value:

… [T]he husband’s Thrift Savings Plan … was established prior to the marriage and remains in the husband’s name. The uncontroverted proof demonstrated that contributions were also made to the plan during the marriage, so at least a portion of the plan constituted marital property. The husband did not offer any proof at trial regarding the value of the separate portion of the plan but, rather, merely indicated that the wife was ineligible to receive any portion of the plan because she had allegedly abandoned him. Inasmuch as the proof was insufficient to enable Supreme Court to determine which portion of the plan was separate and which was marital, the court was entitled to equitably distribute the entirety of the plan … .

…Supreme Court failed to properly consider what part, if any, of his pension was separate property. The record establishes the husband’s starting and ending dates of employment with the United State Postal Service and the date of the parties’ marriage, thereby allowing the court to determine which portion of the pension — a defined benefit plan — was earned prior to the marriage and is, therefore, the husband’s separate property … . Accordingly, we remit the matter to Supreme Court for a determination of the percentage of the pension that is marital property and, thus, may be equitably distributed… .

Supreme Court erred in finding that the marital residence was marital property and awarding the wife 50% of the home’s appraised value minus a $10,000 separate property credit to the husband for the purchase price of the land. Supreme Court credited the wife’s testimony that, although the husband purchased the land and constructed a “shell” of a house prior to the marriage, the construction of the residence was not complete until approximately four years after the marriage. The record demonstrates that the vast majority of the improvements occurred during the marriage due, in part, to the wife’s contributions of money, time and labor. Nevertheless, for the reasons set forth in Ceravolo v DeSantis (___ AD3d ___, ____ [decided herewith]), a parcel of real property that is separate property cannot be transformed or transmuted into marital property by the efforts and contributions of the nontitled spouse. Accordingly, the parcel was separate property (see Domestic Relations Law § 236 [B] [1] [d] [1]), which is not subject to equitable distribution … .

Appreciation in value of separate property, from the date of the marriage to the date of commencement of the divorce action, can be considered a marital asset subject to equitable distribution “if the appreciation is due to the contributions or efforts of the nontitled spouse” … . The wife, as the nontitled spouse here, bore the burden of proving that any increase in value of the husband’s separate property was at least partially due to her efforts … . The value of the parcel when the husband purchased it is irrelevant, considering that the parcel was vacant at that time but had the outer structure of a house before the marriage. Additionally, the property’s value could have increased due to market forces between the dates of purchase and marriage. Simply crediting the husband for the purchase price and dividing the remainder of the property’s value between the parties would improperly give the wife half of the value of the appreciation between the dates of purchase and marriage, despite that portion of the appreciation being separate property (see Domestic Relations Law § 236 [B] [1] [d] [3]). Although the wife could have been entitled to equitable distribution of a portion of the residence’s appreciation in value for her contributions of time, money and labor toward improving the property, she did not meet her burden by proving the real property’s increase in value, as she did not submit proof of the property’s value on the date of the marriage to compare it to the value at the time of commencement of this action … . Macaluso v Macaluso, 2015 NY Slip Op 00265, 3rd Dept 1-8-15

 

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