In what appears to be a case of first impression Nederlander v. Nederlander, 2013 NY Slip Op 00023 (1st Dept 2013) the Appellate Division in the First Department affirmed the lower court's order that directed that the husband must pay 50% of the mortgage arrears in the event he could not refinance or obtain an extension of the mortgage and the mortgage note. The reason for affirming the order was that the court held that the mortgage was on the marital residence, which was determined to be marital property and since this asset was to be equitably distributed the court had the duty to financially protect the value of the home. The fact that if the mortgage arrears were not paid, the marital residence would have gone into foreclosure, was another key fact to support the court's decision.
Despite the claim by the husband that he was financially unable to comply with the order, the court went on to explain that despite such claim, the husband worked for his family business, was earning but $700 a week, but had the prior ability to borrow 4 million dollars from his father which he had not repaid. In making such decision the important ruling made was that the father's ongoing financial aid to his son could be deemed either a gift or imputable as income.
Based upon these findings, the court reasoned that the husband therefore had the financially ability to pay 50% of the mortgage arrears, despite the fact that he was on the books for only $700 a week. This is a classic example of how a litigant seeks to pull the wool over the eyes of his or her spouse, and the court. Such wrongful conduct can only be viewed to be prejudicial by the court and result in the court stretching to do the right thing and make the other party whole. The courts have wide discretion in matrimonial matters, and this case indicates that it can award interim relief to protect the value of a marital asset, a very unusual result. This is not the first case to impute income to a spouse who claims financial inability to pay, but it normally arises when an award of child support or maintenance is being computed, and the spouse is involved in his own business, which he is able to control, or works for a family member. A harsh result can be avoided if full disclosure is made and some proof can be offered that shows that the family cannot or will not make any further loans or gifts. Of course, the courts are always suspicious of such position and still may not believe the testimony. That is why trial work is 90% preparation and just 10% in presentation.