APPEAL by the plaintiff, in an action for a divorce and ancillary relief, as limited by his brief, from stated portions of a judgment of the Supreme Court (Andrew P. Bivona, J.), entered in Orange County on July 19, 2007, which, after a non-jury trial, inter alia, awarded the defendant her "Majauskas" share of the plaintiff's entire New York City Fire Department pension and directed that the plaintiff pay (a) 100% of the unreimbursed medical expenses of the parties' children and 100% of the reasonable child care expenses incurred by the defendant while she is attending school until she begins receiving her equitable share of the pension, at which time the plaintiff shall pay 64% and the defendant 36% of those expenses, and (b) 100% of the private school tuition of the parties' middle child until the child graduates from that school, and CROSS APPEAL by the defendant, as limited by her brief, from so much of the same judgment as awarded the plaintiff 100% of the remaining funds from his September 11th Victim Compensation Fund award.
The opinion of the court was delivered by: Spolzino, J.P.
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and subject to revision before publication in the Official Reports.
ROBERT A. SPOLZINO, J.P., MARK C. DILLON, ANITA R. FLORIO and DANIEL D. ANGIOLILLO, JJ.
On this appeal and cross appeal, the parties raise, principally, two significant issues related to the equitable distribution of the marital estate. The plaintiff asks us to determine that a portion of his New York City Fire Department disability pension is his separate property, despite the lack of evidence in the record by which the disability and non-disability portions of the pension can be distinguished. On the cross appeal, the defendant asks us to hold that the portion of the plaintiff's September 11th Victim Compensation Fund award that is designated as compensation for economic loss does not constitute "compensation for personal injuries" within the meaning of Domestic Relations Law § 236(B)(1)(d)(2) and is, therefore, marital property.
We conclude that, in the circumstances presented here, the disability portion of the plaintiff's pension and, consequently, his separate property interest in that pension, can be determined by the appropriate pension administrator pursuant to a properly-drawn order. Therefore, we modify the judgment accordingly. As to the cross appeal, the legislative history of the Equitable Distribution Law compels the conclusion that even so much of the plaintiff's September 11th Victim Compensation Award as is designated as compensation for economic loss is "compensation for personal injuries" within the meaning of Domestic Relations Law § 236(B)(1)(d)(2), and therefore the separate property of the plaintiff. I
The plaintiff became a New York City firefighter soon after the parties were married, and remained in that employment until approximately 16 months prior to the commencement of this action. He was disabled as a result of his service during the period immediately following September 11, 2001, and retired with a disability pension. The Supreme Court, reasoning that the plaintiff had failed to satisfy his burden of establishing the separate nature of the pension, found the entire pension to be a part of the marital estate and awarded the defendant "her Majauskas" share (see Majauskas v Majauskas, 61 NY2d 481, 490). The plaintiff argues that the lack of expert testimony or evidence in the record by which the non-disability portion of the pension can be distinguished from the disability portion is not fatal to his separate property claim, since that distinction can be made by the pension administrator in the same manner as it makes the familiar calculation of the marital pension share under Majauskas.
The manner in which disability pensions are treated for equitable distribution purposes is well established. "[P]ension benefits or vested rights to those benefits, except to the extent that they are earned or acquired before marriage or after [the] commencement of a matrimonial action, constitute marital property" (Dolan v Dolan, 78 NY2d 463, 466, citing Majauskas v Majauskas, 61 NY2d 481, 490). Thus, "to the extent that the disability pension represents deferred compensation, it is subject to equitable distribution" (Mylett v Mylett, 163 AD2d 463, 465; see Link v Link, 304 AD2d 800, 801; Beshara v Beshara, 281 AD2d 577, 578). However, "[t]o the extent that a disability pension constitutes compensation for personal injuries, that compensation is separate property' which is not subject to equitable distribution" (Mylett v Mylett, 163 AD2d at 464-465; see Link v Link, 304 AD2d at 801; Beshara v Beshara, 281 AD2d at 578; Domestic Relations Law § 236 [B][b]). "[T]he burden of distinguishing the marital property portion of a disability pension from the separate property portion has been placed on the recipient of the pension... who is resisting equitable distribution... In other words, until the contrary is demonstrated, the presumption is that the entire disability pension is marital property" (Palazzolo v Palazzolo, 242 AD2d 688, 689 [internal citation omitted]; see Pulaski v Pulaski, 22 AD3d 820, 821; Ferrugiari v Ferrugiari, 226 AD2d 498).
Despite the clarity of the language by which we have imposed this burden, however, our interest in the full and just distribution of the marital estate has tempered the harshness of its application where the evidence is weak but some other method of defining the disability portion of the pension is available. In Carney v Carney (236 AD2d 574), for example, we affirmed, as within the discretion of the Supreme Court, an order re-opening the trial to permit the firefighter-husband to introduce the evidence necessary to establish the separate portion of his disability pension. We did so based upon "the court's implicit conclusion that the deficiency of proof on this issue at the trial deprived the defendant of substantial justice" (Carney v Carney, 236 AD2d at 576). In another firefighter case, McNelis v McNelis (6 AD3d 673), we found the defendant husband's testimony to be sufficient, without more, to reverse a determination that the defendant's pension was entirely marital property. Similarly, where the issue has arisen posttrial, and the record has been insufficient to provide accurately for the proper division of the pension into disability and non-disability portions, we have remitted the matter for a hearing (see Berardi v Berardi, 54 AD3d 982; Link v Link, 304 AD2d 800).
These decisions reflect an appropriate willingness to provide for the proper distribution of a disability pension where it is possible to do so, even where the record may technically be lacking. It is an approach that also has been taken by our colleagues in the Appellate Division, Third Department (see Nichols v Nichols, 19 AD3d 775). Although this appeal challenges the limits of such an approach, we conclude that, at least on the simple facts presented here, it is possible for the separate portion of the plaintiff's disability pension to be determined, despite the limited evidence with respect to that issue in the record.
In Palazzolo v Palazzolo (242 AD2d at 689), we defined the methodology by which the disability and non-disability portions of a public employee's pension are defined by approving, as "fundamentally sound," the approach taken by the plaintiff's expert. That approach has three steps. First, the pensioner's hypothetical non-disability pension is determined by multiplying the pensioner's final average salary by the percentage of that salary to which the pensioner would likely have been entitled upon retirement had the disability not cut short his or her employment. Second, the coverture fraction is applied to determine the marital portion of the hypothetical non-disability pension. Third, the actual non-disability portion of the pension is determined by reducing the hypothetical non-disability pension by the percentage of the years of service that the pensioner actually served.
Here, the record was insufficient for the court to make this calculation. The only evidence in the record as to the nature of the plaintiff's pension was his testimony that he receives approximately $5,000 per month from a disability pension. There was no evidence of the terms of the pension plan pursuant to which the plaintiff retired and there is no statement from the plan administrator as to how the pension amount was calculated. There is nothing in the record about the plaintiff's earnings, such that a hypothetical final average salary could be determined, and there is nothing that establishes the percentage of final average salary to which the ...