Belilos v. Rivera (App Div., 2nd Dep’t)

Plaintiff (hereafter “the wife”) and the defendant (hereafter “the husband”) entered into a judgment of divorce dated October 29, 2015. The husband appeals certain awards including (1) award to the wife of 25% of the husbands enhanced earnings capacity (“EEC”) and (2) distribution to the wife for one-half (50%) of the husband’s interests in entities known as NAPA Management Service Corporation (hereafter “NMSC”) and AP Long Island Management (hereafter “APLIM”).

The EEC calculation is no longer applicable for actions commencing on January 26, 2016 and forward. However, in this instance, the action pre-dates January 26, 2016 and was therefore subject to equitable distribution. As determined in the O’Brien v. O’Brien matter, “Enhanced earnings from degrees and professional licenses attained during a marriage are subject to equitable distribution.” Further instruction was provided in the Badwal v. Badwal matter, stating that “it is incumbent upon the nontitled party seeing a distributive share of such assets to demonstrate a substantial contribution to the titled party’s acquisition of that marital asset.” In addition to the foregoing, the nontitled spouse also has the burden of proving the value of such EEC.

In this action, the wife retained a forensic expert to establish the value of the husband’s EEC. Further, the wife was able to prove that she had substantial contribution to the husband’s attaining his advanced degrees and certifications during the marriage. Accordingly, the Appellate Court upheld the Supreme Court’s award of 25% of the husband’s EEC to the wife.

The husband appealed the Supreme Courts award of 50% equitable distribution of the value of his business interests in NMSC and APLIM to the wife. As set forth in Culen v. Culen, “The Trial court has broad discretion in selecting the dates for the valuation of marital assets and, depending on the particular circumstances of the case, may appropriately fix different valuation dates for different assets”. The Grunfeld v. Grunfeld matter also states that “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”. NMSC and APLIM perform billing services for the husband’s medical practice group. The Supreme Court determined these businesses to be passive in nature and, therefore, the Appellate Court upheld the ruling that a 50% equitable distribution award is appropriate for the wife.