Supreme Court, New York County, June 24, 2020

Blank Rome LLP, New York City, for defendant.

Dentons US, LLP, New York City, for plaintiff.

The principle that even a successful litigant pays his or her own legal expenses, absent a contractual or statutory provision to the contrary, is so ingrained in our legal system that it is referred to as the "American Rule."^[FN1] The Domestic Relations Law, which governs matrimonial proceedings in this state, contains a number of provisions enabling a court to depart from the rule and shift responsibility for legal fees from one party to another. The question presented in this postjudgment matrimonial proceeding is whether any of these statutory provisions entitle the defendant ex-husband, who has been consistently successful in the litigation but in the process has amassed more than $2.5 million in legal fees, to [*2]require the plaintiff ex-wife, who has been responsible for most of that litigation, to reimburse him for what he has had to expend. Complicating the question is the fact that while plaintiff is{**68 Misc 3d at 576} fabulously wealthy, defendant is even wealthier still. Thus, as will be discussed, defendant is in the position of seeking to recover legal fees as the "more-monied" former spouse as opposed to the more traditional "less-monied" one.

Defendant moves, pursuant to Domestic Relations Law §§ 237 and 238 (and, in his reply papers, 22 NYCRR 130-1.1), for an award against plaintiff in the sum of $2,633,162. Defendant contends that he has been forced to incur legal fees in this massive sum, most of it in postjudgment litigation, in order to combat plaintiff's obstructionist conduct and her refusal to abide by court orders and the directives of a special master appointed by the court to oversee the distribution of the marital estate.

Additionally, defendant requests that the court order plaintiff to reimburse him the sum of $150,000 as and for additional taxes, interest, and penalties incurred by him and based upon plaintiff's failure and refusal to sign the parties' 2015 joint income tax returns. He contends that plaintiff's conduct in this instance was in direct contravention of the parties' 2016 agreement (the agreement) settling the action for divorce. Plaintiff opposes the motion in its entirety.

The parties married in France in 1989 and have two emancipated children. Plaintiff is a filmmaker, writer, and photographer. Defendant is a notable and highly successful contemporary artist. In January 2014, the divorce action was commenced and then actively litigated for over 21/2 years. On August 17, 2016, the parties entered into a binding "term sheet" which, after difficulty coming to a more detailed version, became the parties' final agreement by its own terms. The term sheet was later incorporated but not merged into the judgment of divorce signed on January 26, 2017. When the parties entered into the agreement and resolved the action, defendant had every reason to believe that the litigation was over. After all, plaintiff received millions of dollars in artwork, real estate, and cash, along with spousal maintenance of $110,000 per month. The agreement also provided a detailed procedure for fairly dividing and selling much of the artworks created by defendant. That procedure was later augmented by the appointment of the Special Master. Unfortunately, the agreement and{**68 Misc 3d at 577} the subsequent judgment of divorce marked only the beginning of the hostilities, as plaintiff, who apparently felt that the settlement was insufficiently generous, embarked on a course of postjudgment litigation attacking everybody in its wake: defendant, his attorneys, the Special Master, the court, and others. Adding to the financial burden her actions imposed on defendant, plaintiff filed and perfected in little more than a year no less than three appeals to the Appellate Division, First Department. None of plaintiff's appeals were at all successful.^[FN2]

For the sake of streamlining the analysis as to whether there is any basis for shifting to plaintiff the obligation to pay fees, in whole or in part, on behalf of defendant, the court will first address three threshold issues. They are the following: (1) the legal authority cited by the parties as a basis for this court to award counsel fees under the law and facts of this case; (2) the areas in [*3]which the court is proscribed from, or in its discretion should refrain from, entertaining an award of counsel fees; and (3) what role the Special Master will take in an award of counsel fees, if any are appropriate, in this matter.

I. Legal Authority

a. Domestic Relations Law § 237 (c)

After first moving generally under Domestic Relations Law § 237 in support of his demand that plaintiff be held responsible for the legal fees he has incurred, defendant, in his reply papers and confirmed during oral argument, abandoned subdivision (a) and (b)^[FN3] and settled on subdivision (c) of the section. The language of Domestic Relations Law § 237 (c) is as follows: "In any action or proceeding for failure to obey any lawful order compelling payment of support or maintenance, or distributive award the court shall, upon a finding that such failure was{**68 Misc 3d at 578} willful, order respondent to pay counsel fees to the attorney representing the petitioner."

[1] Plaintiff maintains that this subdivision is limited only to the willful nonpayment of court-ordered money, be it in the form of support, maintenance, or distributive award. Consequently, plaintiff argues that Domestic Relations Law § 237 (c) bars defendant from seeking counsel fees for any alleged willful failure on her part to obey orders that concern the process for distributing marital property, in this case artwork, inasmuch as those orders did not "compel payment" of any kind. The court must agree.

Throughout the Domestic Relations Law, the term "distributive award" is consistently used in the context of money payments and is specifically defined in section 236 (B) (1) (b) as follows:

"The term 'distributive award' shall mean payments provided for in a valid agreement between the parties or awarded by the court, in lieu of or to supplement, facilitate or effectuate the division or distribution of property where authorized in a matrimonial action, and payable either in a lump sum or over a period of time in fixed amounts. Distributive awards shall not include payments which are treated as ordinary income to the recipient under the provisions of the United States Internal Revenue Code."

Thus, with regards to section 237 (c), the court is constrained from awarding defendant counsel fees for plaintiff's failure, even if willful, to abide by court orders in relation to the process of equitable distribution, so long as there is no failure to actually make payment in the form of a distributive award (see Rao v Rao, 74 AD3d 1556 [3d Dept 2010]). Given the clear and unequivocal language of the Domestic Relations Law and lack of First Department case law directly on point, the court will not delve into the specific distinguishability of each case cited by the parties.

b. Domestic Relations Law § 238

In relevant part Domestic Relations Law § 238 provides that in any action or proceeding to enforce any [*4]provision of a judgment or order, a court

"may in its discretion require either party to pay counsel fees and fees and expenses of experts directly to the attorney of the other party to enable{**68 Misc 3d at 579} the other party to carry on or defend the action or proceeding as, in the court's discretion, justice requires having regard to the circumstances of the case and of the respective parties. There shall be a rebuttable presumption that counsel fees shall be awarded to the less monied spouse" (emphasis added).

[2] Here, plaintiff argues, and this court again agrees, that a decidedly less-monied spouse cannot be ordered to pay counsel fees to the decidedly more-monied spouse under this section of the Domestic Relations Law. In Roddy v Roddy (161 AD3d 441 [1st Dept 2018]), the First Department reiterated that the provisions of Domestic Relations Law § 238 are intended to ensure a just resolution of the issues by creating a more level playing field with respect to the parties' respective abilities to pay counsel and focus primarily upon the paramount factor of financial need. Further, it instructed that where a party's inappropriate litigation conduct has adversely affected the other party but both are able to pay their own counsel fees, the appropriate remedy may be a sanction under 22 NYCRR 130-1.1, not an award of attorneys' fees (see also Silverman v Silverman, 304 AD2d 41 [1st Dept 2003]).

Although plaintiff is far from an indigent party, and is in fact extremely wealthy, it cannot credibly be argued (1) that she is the more-monied spouse; and (2) that defendant does not have the ability to pay his own counsel fees. Therefore, counsel fees cannot be awarded to defendant under this section of the Domestic Relations Law.^[FN4]

c. Sanctions (22 NYCRR 130-1.1)

Although sanctions may be an appropriate remedy in this matter for a variety of plaintiff's unfortunate transgressions, including one that required this court to recuse, albeit temporarily, as well as her repeated and malicious interference with the Special Master's performance of her duties, defendant{**68 Misc 3d at 580} only raised the issue of sanctions for the first time in his reply brief. Indeed, it would be reversible error to award sanctions under these circumstances where the non-movant was neither given adequate notice that such relief would be considered, nor was afforded a reasonable opportunity to be heard (see Zappin v Comfort, 146 AD3d 575 [1st Dept 2017]; Matter of Minister, Elders & Deacons of Refm. Prot. Dutch Church of City of N.Y. v 198 Broadway, 76 NY2d 411 [1990]). Therefore, without an evidentiary hearing, which the court is not inclined to schedule at this time, it will not impose sanctions on plaintiff sua sponte as defendant urges, and the issue was not otherwise properly raised in the motion.

II. Scope

a. "Frivolous" Appeals

Defendant requests that this court award him counsel fees that he expended defending [*5]plaintiff's "frivolous" appeals. In the May 17, 2019 interim order, this court chastised plaintiff for choosing to pay $500,000 to her counsel for the purpose of "filing seemingly frivolous appeals," instead of paying the Special Master fees that were outstanding. This admonition was intended primarily to compel plaintiff to pay the Special Master, not to negatively characterize the merits of plaintiff's various appeals, questionable as they may have appeared. Moreover, it would be inappropriate for a lower court to award counsel fees for matters that were not before it. Rather, the award of sanctions for frivolous appellate practice is squarely within the purview of the Appellate Division, and defendant offers no case law that would support an imposition of sanctions by the trial court for same.

b. Prejudgment Matters

The judgment of divorce in this matter was signed on January 26, 2017. As plaintiff correctly points out, any relief sought for an incident occurring before the signing of the judgment, and not specifically reserved, is deemed waived postjudgment and will not be addressed by the court here, or in any subsequent motion seeking counsel fees (see Gilmore v Gilmore, 138 AD2d 347 [2d Dept 1988]).^[FN5]

{**68 Misc 3d at 581}III. Practical Forbearance

a. Role of the Special Master

The Special Master's appointment order, which was stipulated to by the parties and so-ordered by the court on May 8, 2017, affords the Special Master significant powers and authority with regard to reallocating and awarding counsel fees. Specifically, the appointment order states that "fees charged by her . . . or her office, to be paid 60% by the defendant and 40% by the plaintiff, subject to reallocation as determined by the Special Master if she deems a party to be uncooperative in the Special Master process."

Additionally, the appointment order states that

"the Special Master shall oversee, resolve and determine appropriate remedies for the following issues: . . . (vi) any award of counsel and professional fees to a party as a result of the other party's assertion of a false or misleading claim or defense or failure to cooperate in the resolution of (i) - (iv) above."

It is this court's view that the Special Master is in a far better position to award counsel fees in this matter for either party's misconduct given her, as opposed to this court's, intimate knowledge and involvement during the division of assets process, and the express intent of the parties to agree to these provisions that are unencumbered by the technical restraints of the Domestic Relations Law. Consequently, the court will allow, and frankly urge, the Special Master to determine whether, as authorized in her appointment order, counsel and/or professional fees shall be reallocated or awarded, including fees generated by the defendant's art counsel, Patterson Belknap Webb & Tyler, LLP.

Defendant asserts that, as a result of plaintiff willfully refusing to timely sign the 2015 joint tax return as required under the agreement, he was penalized by the IRS in the amount of $150,000. Although the court agrees with defendant that the indemnification language in the agreement^[FN6] was not intended to insulate plaintiff from penalties directly arising from her subsequent refusal to timely sign the return, the facts and circumstances{**68 Misc 3d at 582} surrounding the $150,000 penalty are not made sufficiently clear in the motion papers. Consequently, there are disputed issues of material fact existing that cannot, on this record, be resolved. As a result, the request for reimbursement must be denied at this time.

There is little doubt that if we were operating under anything other than the American Rule, defendant would be entitled to recover from plaintiff a substantial portion of the millions of dollars in legal fees that he has been forced to incur. Not only has defendant consistently been the successful party, particularly in the postjudgment litigation, but the overwhelming portion of that litigation has been caused by plaintiff's bad acts. Nevertheless, as set forth above, under this set of facts, and bound by the constraints imposed by the applicable counsel fees provisions of the Domestic Relations Law, the court is unable to grant defendant the relief he seeks and, on many levels, deserves.

Accordingly, it is hereby ordered that defendant's motion is denied in all respects.