SR v. Hughes

198 A.D.3d 1170

156 N.Y.S.3d 444

Dana M. HUGHES Sr., Respondent,

v.Marianne T. HUGHES, Appellant.

532246

Supreme Court, Appellate Division, Third Department, New York.

Calendar Date: September 8, 2021

Decided and Entered: October 21, 2021

Balzer & Leary, PLLC, Albany (Gerald P. Leary of counsel), for appellant.

Leslie W. Ryan, Fort Edward, for respondent.

Before: Garry, P.J., Clark, Aarons, Reynolds Fitzgerald and Colangelo, JJ.

MEMORANDUM AND ORDER

Garry, P.J. Appeal from a judgment of the Supreme Court (Jensen, J.), entered July 28, 2020 in Saratoga County, ordering, among other things, equitable distribution of the parties’ marital property, upon a decision of the court.

Plaintiff (hereinafter the husband) and defendant (hereinafter the wife) were married in 1991. In 2018, the husband filed for divorce. Following a nonjury trial on the issues of equitable distribution and maintenance, Supreme Court determined, among other things, that money received by the wife after her mother purchased a winning lottery ticket was marital property, the marital residence and a vacation home were marital property that should be sold and divided 45% to the husband and 55% to the wife, and the husband was not required to pay the wife any spousal maintenance. The wife appeals.

The wife argues that the lottery winnings that her mother shared with her were not marital property because they were a gift. "Whether a particular asset is marital or separate property is a question of law that a trial court must initially address to ascertain the marital estate" ( Giannuzzi v. Kearney, 160 A.D.3d 1079, 1080, 74 N.Y.S.3d 123 [2018] [internal quotation marks and citations omitted]; see DeJesus v. DeJesus, 90 N.Y.2d 643, 647, 665 N.Y.S.2d 36, 687 N.E.2d 1319 [1997] ). The Domestic Relations Law defines marital property as "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, ... [and] shall not include separate property" ( Domestic Relations Law § 236[B][1][c] ). Separate property, which is not subject to equitable distribution (see Domestic Relations Law § 236[B][5][b] ), includes "property acquired by bequest, devise, or descent, or gift from a party other than the spouse" ( Domestic Relations Law § 236[B][1][d][1] ). "Property acquired during marriage is presumed to be marital unless the presumption is rebutted by the party asserting the separate property claim" ( Solomon v. Solomon, 307 A.D.2d 558, 559, 763 N.Y.S.2d 141 [2003] [citations omitted], lv dismissed 1 N.Y.3d 546, 775 N.Y.S.2d 242, 807 N.E.2d 292 [2003] ; accord Saia v. Saia, 91 A.D.3d 1110, 1110, 937 N.Y.S.2d 352 [2012] ).

It is undisputed that the wife's mother purchased a scratch-off lottery ticket that won a grand prize of $7.5 million. Documentary evidence and testimony credited by Supreme Court established that the mother shared her winnings with her five children, with each of the six individuals receiving an equal pretax share of $1.25 million. State Gaming Commission documents show that all six were considered winners, a giant check for publicity purposes listed all six names as winners, all six appeared at a public event at which the giant check was presented to them, each received a separate certificate of payment, an IRS form W–2G was issued by the Gaming Commission to each winner indicating that $1.25 million in gambling winnings was paid and the amount of taxes withheld, and equal direct deposit payments of the after-tax amount were issued to all six winners simultaneously. The wife's mother did not file any gift tax returns related to the lottery winnings received by her children. The husband and the wife claimed the $1.25 million as income on their 2014 joint federal and state income tax returns, specifically denoting that it was gambling winnings.

The Internal Revenue Code specifies that, for income tax purposes, "[g]ross income does not include the value of property acquired by gift" ( 26 USC § 102 [a]). Courts "cannot, as a matter of policy, permit parties to assert positions in legal proceedings that are contrary to declarations made under the penalty of perjury on income tax returns" ( Mahoney–Buntzman v. Buntzman, 12 N.Y.3d 415, 422, 881 N.Y.S.2d 369, 909 N.E.2d 62 [2009] ; see Giannuzzi v. Kearney, 160 A.D.3d at 1080, 74 N.Y.S.3d 123 ). By claiming the lottery winnings as income on their joint tax returns, the husband and the wife necessarily represented that such winnings were not a gift. Therefore, Supreme Court properly determined that the lottery winnings were not a gift to the wife, so they were not her separate property but were marital property subject to equitable distribution.

Most of the wife's remaining arguments are based on the assumption that the lottery winnings were her separate property, and assert that she is entitled to credits for the value of such separate property that was used to pay off marital debts or purchase other assets (see Beardslee v. Beardslee, 124 A.D.3d 969, 969, 1 N.Y.S.3d 483 [2015] ). As we have concluded that Supreme Court properly determined that the lottery winnings were marital property, these arguments necessarily fail (see Robinson v. Robinson, 133 A.D.3d 1185, 1189–1190, 21 N.Y.S.3d 392 [2015] ; Patete v. Rodriguez, 109 A.D.3d 595, 598, 971 N.Y.S.2d 109 [2013] ).

The record does not support the wife's assertions that she expressed an intent to continue residing in the marital residence and that the husband had no objection to this arrangement.

Moreover, Supreme Court repeatedly advised the parties that all marital assets would be sold if the parties could not reach an agreement on their distribution, and the record does not disclose an agreement by the parties as to any asset.¹ As the wife is not entitled to a separate property credit for paying off the mortgage on the marital residence or for the purchase of the vacation property, the court did not err in ordering the sale of these assets and an equitable distribution of the proceeds (see Sprole v. Sprole, 145 A.D.3d 1367, 1371, 45 N.Y.S.3d 233 [2016] [noting that "nothing in the decision or judgment of divorce precludes (the wife) from...