How Courts Handle Equitable Distribution

The equitable distribution of the appreciation in value of the separately owned or separate property marital residence raises some unique issues. Real estate is generally considered to be a “passive” asset that increases in value mainly as a result of passive market forces rather than due to the “active” efforts of either spouse. Accordingly, the passive appreciation of such an asset would likewise remain the titled spouse's separate property, not subject to equitable distribution. Nevertheless, courts often distribute a portion of the appreciation to the non-titled spouse who resided in the separately owned marital residence. Perhaps courts have done so because, were it not for the titled spouse's residence, the parties would have presumably purchased a joint residence — often one of the most valuable assets in the marital estate — and would have shared in the appreciation that accumulated during the years of their economic partnership. Thus, courts have often awarded the non-titled spouse a share of the appreciation in a separately owned marital residence even when the non-titled spouse is unable to show that any efforts on his/her part contributed directly to the increase in value. These courts also seem to recognize that the marital “home” is something to which both parties to a marriage contribute simply by virtue of their economic partnership and that the value of certain contributions are difficult if not impossible to quantify.

For these reasons, courts have grappled, often on a case-by-case basis, with the appropriate method to utilize in distributing the appreciation of a separately owned marital residence. There is often much confusion surrounding the issue, even as it relates to which party bears the burden of proving or disproving a claim for distribution of the appreciation. Consequently, courts often impose their own judgment as to what is equitable by distributing the appreciation based on contributions to the marriage in general and not specific contributions that add value to the marital residence. However, as we will discuss, some courts, when presented with real evidence in the form of financial data and expert testimony on passive market forces, have made a concerted effort to parse out and quantify that portion of the increase in value of the separately owned marital residence that was due to efforts of one party or both parties as opposed to passive market factors. This article contains an overview of the cases in which courts have endeavored to distribute the appreciation on a separate property marital residence in an equitable fashion.

Appreciation in Separate Property, Generally

D.R.L. ' 236B(1)(c) 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.” Such marital property, as opposed to statutorily defined separate property, is subject to equitable distribution. D.R.L. ' 236B(1)(d) specifically excludes from the definition of separate property — that is, includes in marital property — the appreciation in value of a party's separate property “to the extent that such appreciation is due in part to the contributions or efforts of the other spouse.” Where the contributions or efforts of the non-titled spouse to the marital economic partnership, and specifically to the separate property itself, result in an increase in value of separate property, that increase in value is marital property subject to valuation and distribution. Hartog v. Hartog, 85 NY2d 36 (1995). The New York Court of Appeals has consistently held that a broad interpretation should be given to this exclusion from separate property in favor of the inclusion of appreciation in the value of separate property as marital property. See, eg, Price v. Price, 69 NY2d 8 (1986), and Majauskas v. Majauskas, 61 NY2d 481 (1984).

Financial Contributions Accounted For

In those instances where both parties have contributed financially to the marital residence — whether it be payments toward the mortgage, renovations, or carrying charges, utilities, property taxes and the like — courts have frequently used such contributions as a basis to hold all or a portion of the appreciation on the marital residence to be marital property. For example, where marital funds were used to make renovations to a separately owned marital residence, the First Department, held that the appreciation in value of the marital residence was marital property. Zelnik v. Zelnik, 169 AD2d 317 (1st Dept. 1991). Similarly, in Falgoust v. Falgoust, 15 AD2d 612 (2d Dept. 2005), the non-titled wife was awarded 33% of the appreciation in the marital residence due in part to the husband's use of marital funds for maintaining and improving the property.

In addition, courts have taken into account the non-titled spouse's use of his or her own income for household expenses in distributing the appreciation in value of the titled spouse's property. In Robinson v. Robinson, 166 AD2d 428 (2d Dept. 1990), the court awarded the non-titled wife 28% of the appreciation in value of the separately owned marital residence because, inter alia, she turned over her entire paycheck for household expenses for the majority of the marriage. Likewise in Chan v. Chan, 267 AD2d 413 (2d Dept. 1999), in awarding 25% of the appreciation in the separate property marital residence to the non-titled wife, the court noted that in addition to her contributions as a homemaker and mother, the wife “worked outside the home and shared equally in the payment of the mortgage, carrying charges and various renovations on the residence during the marriage.” See also, Peterson v. Peterson, 133 AD2d 448 (2d Dept. 1987) (remanding the matter for a hearing to determine whether any part of the appreciation should be distributed to the husband for his payment of taxes and utilities on the property and his repairs to the residence). In Alwell v. Alwell, 98 AD2d 549 (3d Dept. 1984), not content with the lower court's equal distribution of the appreciation in the separately owned marital residence, the Third Department remitted the matter to the trial court to determine what proportion the non-titled spouse's investment bore to the total investment and to make a distribution accordingly. The Alwell court further noted that since there was “no showing that the increase in value of the property was merely the product of inflation or other market factors,” the lower court properly found the appreciation to be “due in part” to the non-titled spouse's direct contributions in reducing the mortgage debt and toward improvements. Id. at 551.

Direct, But Non-Financial, Contributions Given Credit

Where a non-titled spouse has made direct, but non-financial, contributions to the value of the separately owned marital residence, courts have allowed that spouse to share in the appreciation in value. For example, a party's services as a decorator and overseer of improvements have been credited. See Cincotta v. Cincotta, 221 AD2d 306 (2d Dept. 1995) (granting 50% of the appreciation to the non-titled wife, an interior designer, who undertook much of the supervision of improvements to the marital residence); Nell v. Nell, 166 AD2d 154 (1st Dept. 1990) (awarding wife $50,000 of approximately $500,000 in appreciation due to the wife's work and creative talents which contributed to the appreciation in value of the co-operative apartment). See also, Zelnik, supra. And, more generally, courts have allowed the non-titled spouse to share in the appreciation of a separately owned marital residence due to that spouse's contribution to the “maintenance” of the home. Lagnena v. Lagnena, 215 AD2d 445 (2d Dept. 1995) (finding that although the marital residence was separate property, husband's participation in the maintenance of the home during the marriage entitled him to 50% of the appreciation); and Imhof v. Imhof, 259 AD2d 666 (2d Dept. 1999) (granting the wife an equitable share of the appreciation in the separately owned marital residence due to her contributions to maintenance of the home during the 20-year marriage, as well as for her contributions as a homemaker and mother).

Courts have likewise awarded a share of the appreciation to the non-titled spouse without specific proof of the value of his or her direct contributions, merely acknowledging that both parties contributed “physically and financially” to the marital residence. See, eg, Cleary v. Cleary, 171 AD2d. 1076 (4th Dept. 1991) (appreciation in marital residence owned by wife prior to the marriage was marital property where both parties contributed financially and physically to the residence during the marriage; 50% to husband); and Zurner v. Zurner, 213 AD2d 906 (3d Dept. 1995) (finding that the court properly credited the husband for his contribution toward the appreciation in value of the marital residence owned by the wife since both parties contributed “physically and financially” to the marital household).

Homemaking, Child Care and Other Indirect Non-Financial Contributions

Where the non-titled spouse has served as a homemaker and caretaker for the parties' children, courts have been willing to grant the non-titled spouse a share in the appreciation of a separately owned marital residence despite the absence of any link between those services, or indirect contributions, and the appreciation in value of the residence. For example, in Anonymous v. Anonymous, 222 AD2d 305 (1st Department 1995), where the wife was a stay-at-home, financially dependent spouse, the court awarded her 50% of the appreciation in the separately owned marital residence “on the basis of her direct efforts and indirect efforts as a spouse, homemaker and caretaker of the children.” Similarly, in Robinson, supra, a homemaker-wife was awarded a share in the appreciation in the marital condominium because, the court stated, “the fruits of her labor, time and effort contributed to the appreciation,” even without a direct tie into how these efforts created the increase in value. See also, Spencer v. Spencer, 230 AD2d 645 (1st Dept. 1996) (appreciation in separately owned real estate held to be marital property where wife's household duties indirectly contributed to the appreciation).

Despite the apparent lack of causation between the acts and the increase in value, in numerous other cases the non-titled spouse's role as a homemaker has been held to be a factor in favor of awarding that spouse a share of the appreciation in the separately owned marital residence. See, eg, Sarafian v. Sarafian, 140 AD2d 801 (3d Dept. 1988) (holding that appreciation in the marital residence owned by husband was taken out of the “narrow separate property exception in the [DRL] by plaintiff's contributions as a parent, homemaker and helpmate”); Clerk v. Clerk, 132 AD2d 456 (1st Dept. 1987), appeal den. 70 NY2d 611 (wife's contributions to the marriage as a homemaker and helpmate entitled her to share in appreciation of separate property); Falgoust, supra, (non-titled wife was awarded a share of the appreciation in the marital residence in part due to her child-rearing and performance of household chores). See also, Imhof, supra and Zelnik, supra.

However, in recognition of the importance of a nexus between the appreciation and the non-titled spouse's efforts, certain courts have refused to credit the non-titled spouse with any portion of the appreciation where he or she has failed to establish such a link. See, eg, Hollis v. Hollis, 188 AD2d 960 (3d Dept. 1992) (denying wife any share in the appreciation in the marital residence as she made no financial contributions to the renovations undertaken during the course of the marriage and her non-monetary contributions were considered limited); Guarnier v. Guarnier, 155 AD2d 744 (3d Dept. 1989) (finding no support in the record for defendant's claim that her efforts as a wife, parent, wage earner and homemaker indirectly enhanced the appreciation of the marital residence, the court declined to award to wife any share of the appreciation in value).

Quantifying Value of Contributions

In a limited number of published cases, we can see the courts' efforts to quantify the non-titled spouse's contributions to the appreciation in value of the marital residence and to distribute it accordingly. In these cases, the courts have relied on presentation of expert testimony regarding the value of renovations or the impact of market forces. A notable example is found in the Second Department case of Karounos v. Karounos, 206 AD2d 407 (2d Dept. 1994) in which the court held that “[s]ince the wife only demonstrated that she contributed to the value of the house during the first three years of the [20-year] marriage, her share in the appreciation of the house should be limited to 15%, ie, 3 years out of the 20 years that the husband owned the house.” (Note that the decision is unclear as to whether the wife received 15% of the appreciation or an equitable share of said 15% — the latter being the more appropriate result.) In Harned v. Harned, 185 AD2d 226, 228 (2d Dept. 1992), the court accepted proof that 80% of appreciation of the marital residence was “due exclusively to market forces and not to any efforts or contributions from the [non-titled spouse].” Similarly, in Fish v. Fish, 161 AD2d 979 (3d Dept. 1990), the court credited the testimony of plaintiff's appraiser that a garage added to the residence during the parties' marriage accounted for 18.66% of the total appreciation in value of the marital residence. The non-titled spouse, who contributed 54% to the garage's construction, was therefore awarded 10%, or just over half of the incremental appreciation in value due to the garage.

In Sommers v. Sommers, 203 AD2d 975 (4th Dept. 1994), the court took judicial notice of government inflation statistics, holding that such records are historical data, readily and precisely verifiable and proper for the court to use as a basis for determining what portion of the appreciation was due to inflation or other market forces and hence constituted the titled spouse's separate property. See also, Kraeger v. Kraeger, 271 AD2d 657 (2d Dept. 2000) (holding that the husband should only share in $10,000 of the appreciation, and not the $107,000 of total appreciation, as that was the extent that his improvements added value to the residence). Indeed, where a lower court's decision has been imprecise in calculating the share of the appreciation that was due to the non-titled spouse's efforts, some appellate courts have remitted the matters for more precise calculations. See, eg, Nolan v. Nolan, 107 AD2d 190 (3d Dept. 1985) (appellate court remitted the matter to determine to what extent $20,000 of marital property used for renovations contributed to the more than $100,000 of appreciation in value of the marital residence); Alwell, supra.

As an alternative to tackling the difficult task of quantifying the impact of a party's contribution on the appreciation in value, some courts have held instead that the non-titled spouse should only be given credit for that amount of appreciation directly related to his or her financial contributions toward the home. See, eg, Seeley v. Seeley, 135 AD2d 703 (2d Dept. 1987) (limiting wife's distribution to one-half the amount that the parties contributed financially to home improvements); Burgio v. Burgio, 278 AD2d 767 (3d Dept. 2000) (granting non-titled spouse only her equitable share of the marital funds used to pay the mortgage on the residence). Other courts, specifically the Second Department in Butler v. Butler, 171 AD2d 89 (2d Dept. 1991), have held that, in addition to taking into consideration each party's non-financial contributions to the marriage, the appreciation should be distributed to the parties roughly proportionately to the amount of money each invested in the property. (Mrs. Butler, who had contributed 86.2% of the down payment of the residence in her name, was awarded 75% of the appreciation.)

The lack of a clear consensus among the courts in this area is evident in the various decisions addressing failure of proof. In fact, courts have specifically pointed out deficiencies in proof as a rationale either to deny the non-titled spouse any share in the appreciation of a separate property marital residence, or, in direct contrast, to determine that all of the appreciation is marital property to be distributed equally between the parties. For example, in Cincotta, supra, noting that “neither party established what portion of the appreciation in the value of the marital residence was attributable to the improvements and what portion of the appreciation was attributable to other factors such as market forces,” the Second Department held that it had no alternative but to grant each party 50% of the appreciation. In contrast, in McCann v. McCann, 142 Misc. 2d 1083 (N.Y. Sup. Ct Suffolk Co. 1989) the court refused to grant the non-titled spouse any share in the appreciation, holding that, since no evidence was proffered, it would be inappropriate for the court to randomly select a percentage of the appreciation attributable to the non-titled spouse's direct or indirect contributions.

Burden Shift?

Historically, courts have held that the non-titled spouse who is seeking to share in the appreciation of separate property has the burden of demonstrating that the appreciation was due in some part to the non-titled spouse's contributions or efforts. For example, in Fitzgibbon v. Fitzgibbon, 161 AD2d 619 (2d Dept. 1990), the Second Department, denied a share of the appreciation in a separate property marital residence to a husband who had “failed to demonstrate the manner in which his contributions resulted in the increase in value and the amount of the increase which was attributable to his efforts.” The Third Department recently reiterated this standard in London v. London, 21 AD3d 602 (3d Dept. 2005), where it held “as the non-titled spouse, plaintiff has the burden of establishing the value, if any, that was added to this property by her direct or indirect contributions during the marriage.” See also, Pelletier v. Pelletier, 242 AD2d 325 (2d Dept. 1997) (failure by the non-titled spouse to prove any appreciation in a separate property marital residence results in no distribution to the non-titled spouse); Rodgers v. Rodgers, 98 AD2d 386 (2d Dept. 1983); Michalek v. Michalek, 114 AD2d 655 (3d Dept. 1985); Bidwell v. Bidwell, 122 AD2d 364 (3d Dept. 1986); Burgio v. Burgio, 278 AD2d 767 (3d Dept. 2000) (failure by non-titled spouse to meet the burden of proof on contribution to the appreciation of the property foreclosed the court's consideration of the issue).

However, in two recent cases, appellate courts in both the First and Second Judicial Departments have placed the burden squarely on the titled spouse to demonstrate that the non-titled spouse's efforts did not contribute to the increase in value. The First Department held in Ritz v. Ritz, 21 AD3d 267 (1st Dept. 2005), that “since [the titled spouse] produced no evidence as to the amount of increase due to passive market forces as opposed to his direct efforts, we will not disturb the classification that the entire increase was marital property.” Similarly, in Parise v. Parise, 2004 Slip Op. 09484, 2004 WL 2952731 (2d Dept. 2004), the Second Department held that the husband, who was the titled spouse, failed to satisfy his burden of establishing that the wife's indirect efforts did not contribute in some degree to the appreciation in value of the separately owned marital residence.

It remains to be seen whether this burden shift is just an anomaly and was used by the courts in these two cases to avoid an otherwise undesirable result, or whether the shift reflects a new trend in the decisions in this area, generally. What these unusual decisions do show is that the determination of the marital property component of the separate property marital residence and the equitable distribution thereof continues to be an uncertain area of law with which the courts must continue to grapple. In short, the fundamental principles underlying the DRL and the nature of the economic partnership that is marriage are not simple things to decipher, and the outcome of any particular case is far from certain.

The equitable distribution of the appreciation in value of the separately owned or separate property marital residence raises some unique issues. Real estate is generally considered to be a “passive” asset that increases in value mainly as a result of passive market forces rather than due to the “active” efforts of either spouse. Accordingly, the passive appreciation of such an asset would likewise remain the titled spouse's separate property, not subject to equitable distribution. Nevertheless, courts often distribute a portion of the appreciation to the non-titled spouse who resided in the separately owned marital residence. Perhaps courts have done so because, were it not for the titled spouse's residence, the parties would have presumably purchased a joint residence — often one of the most valuable assets in the marital estate — and would have shared in the appreciation that accumulated during the years of their economic partnership. Thus, courts have often awarded the non-titled spouse a share of the appreciation in a separately owned marital residence even when the non-titled spouse is unable to show that any efforts on his/her part contributed directly to the increase in value. These courts also seem to recognize that the marital “home” is something to which both parties to a marriage contribute simply by virtue of their economic partnership and that the value of certain contributions are difficult if not impossible to quantify.

For these reasons, courts have grappled, often on a case-by-case basis, with the appropriate method to utilize in distributing the appreciation of a separately owned marital residence. There is often much confusion surrounding the issue, even as it relates to which party bears the burden of proving or disproving a claim for distribution of the appreciation. Consequently, courts often impose their own judgment as to what is equitable by distributing the appreciation based on contributions to the marriage in general and not specific contributions that add value to the marital residence. However, as we will discuss, some courts, when presented with real evidence in the form of financial data and expert testimony on passive market forces, have made a concerted effort to parse out and quantify that portion of the increase in value of the separately owned marital residence that was due to efforts of one party or both parties as opposed to passive market factors. This article contains an overview of the cases in which courts have endeavored to distribute the appreciation on a separate property marital residence in an equitable fashion.

Appreciation in Separate Property, Generally

D.R.L. ' 236B(1)(c) 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.” Such marital property, as opposed to statutorily defined separate property, is subject to equitable distribution. D.R.L. ' 236B(1)(d) specifically excludes from the definition of separate property — that is, includes in marital property — the appreciation in value of a party's separate property “to the extent that such appreciation is due in part to the contributions or efforts of the other spouse.” Where the contributions or efforts of the non-titled spouse to the marital economic partnership, and specifically to the separate property itself, result in an increase in value of separate property, that increase in value is marital property subject to valuation and distribution. Hartog v. Hartog , 85 NY2d 36 (1995). The New York Court of Appeals has consistently held that a broad interpretation should be given to this exclusion from separate property in favor of the inclusion of appreciation in the value of separate property as marital property. See, eg, Price v. Price , 69 NY2d 8 (1986), and Majauskas v. Majauskas , 61 NY2d 481 (1984).

Financial Contributions Accounted For

In those instances where both parties have contributed financially to the marital residence — whether it be payments toward the mortgage, renovations, or carrying charges, utilities, property taxes and the like — courts have frequently used such contributions as a basis to hold all or a portion of the appreciation on the marital residence to be marital property. For example, where marital funds were used to make renovations to a separately owned marital residence, the First Department, held that the appreciation in value of the marital residence was marital property. Zelnik v. Zelnik , 169 AD2d 317 (1st Dept. 1991). Similarly, in Falgoust v. Falgoust , 15 AD2d 612 (2d Dept. 2005), the non-titled wife was awarded 33% of the appreciation in the marital residence due in part to the husband's use of marital funds for maintaining and improving the property.

In addition, courts have taken into account the non-titled spouse's use of his or her own income for household expenses in distributing the appreciation in value of the titled spouse's property. In Robinson v. Robinson , 166 AD2d 428 (2d Dept. 1990), the court awarded the non-titled wife 28% of the appreciation in value of the separately owned marital residence because, inter alia , she turned over her entire paycheck for household expenses for the majority of the marriage. Likewise in Chan v. Chan , 267 AD2d 413 (2d Dept. 1999), in awarding 25% of the appreciation in the separate property marital residence to the non-titled wife, the court noted that in addition to her contributions as a homemaker and mother, the wife “worked outside the home and shared equally in the payment of the mortgage, carrying charges and various renovations on the residence during the marriage.” See also, Peterson v. Peterson , 133 AD2d 448 (2d Dept. 1987) (remanding the matter for a hearing to determine whether any part of the appreciation should be distributed to the husband for his payment of taxes and utilities on the property and his repairs to the residence). In Alwell v. Alwell , 98 AD2d 549 (3d Dept. 1984), not content with the lower court's equal distribution of the appreciation in the separately owned marital residence, the Third Department remitted the matter to the trial court to determine what proportion the non-titled spouse's investment bore to the total investment and to make a distribution accordingly. The Alwell court further noted that since there was “no showing that the increase in value of the property was merely the product of inflation or other market factors,” the lower court properly found the appreciation to be “due in part” to the non-titled spouse's direct contributions in reducing the mortgage debt and toward improvements. Id. at 551.

Direct, But Non-Financial, Contributions Given Credit

Where a non-titled spouse has made direct, but non-financial, contributions to the value of the separately owned marital residence, courts have allowed that spouse to share in the appreciation in value. For example, a party's services as a decorator and overseer of improvements have been credited. See Cincotta v. Cincotta , 221 AD2d 306 (2d Dept. 1995) (granting 50% of the appreciation to the non-titled wife, an interior designer, who undertook much of the supervision of improvements to the marital residence); Nell v. Nell , 166 AD2d 154 (1st Dept. 1990) (awarding wife $50,000 of approximately $500,000 in appreciation due to the wife's work and creative talents which contributed to the appreciation in value of the co-operative apartment). See also, Zelnik, supra. And, more generally, courts have allowed the non-titled spouse to share in the appreciation of a separately owned marital residence due to that spouse's contribution to the “maintenance” of the home. Lagnena v. Lagnena , 215 AD2d 445 (2d Dept. 1995) (finding that although the marital residence was separate property, husband's participation in the maintenance of the home during the marriage entitled him to 50% of the appreciation); and Imhof v. Imhof , 259 AD2d 666 (2d Dept. 1999) (granting the wife an equitable share of the appreciation in the separately owned marital residence due to her contributions to maintenance of the home during the 20-year marriage, as well as for her contributions as a homemaker and mother).

Courts have likewise awarded a share of the appreciation to the non-titled spouse without specific proof of the value of his or her direct contributions, merely acknowledging that both parties contributed “physically and financially” to the marital residence. See, eg, Cleary v. Cleary , 171 AD2d. 1076 (4th Dept. 1991) (appreciation in marital residence owned by wife prior to the marriage was marital property where both parties contributed financially and physically to the residence during the marriage; 50% to husband); and Zurner v. Zurner , 213 AD2d 906 (3d Dept. 1995) (finding that the court properly credited the husband for his contribution toward the appreciation in value of the marital residence owned by the wife since both parties contributed “physically and financially” to the marital household).

Homemaking, Child Care and Other Indirect Non-Financial Contributions

Where the non-titled spouse has served as a homemaker and caretaker for the parties' children, courts have been willing to grant the non-titled spouse a share in the appreciation of a separately owned marital residence despite the absence of any link between those services, or indirect contributions, and the appreciation in value of the residence. For example, in Anonymous v. Anonymous , 222 AD2d 305 (1st Department 1995), where the wife was a stay-at-home, financially dependent spouse, the court awarded her 50% of the appreciation in the separately owned marital residence “on the basis of her direct efforts and indirect efforts as a spouse, homemaker and caretaker of the children.” Similarly, in Robinson, supra , a homemaker-wife was awarded a share in the appreciation in the marital condominium because, the court stated, “the fruits of her labor, time and effort contributed to the appreciation,” even without a direct tie into how these efforts created the increase in value. See also, Spencer v. Spencer , 230 AD2d 645 (1st Dept. 1996) (appreciation in separately owned real estate held to be marital property where wife's household duties indirectly contributed to the appreciation).

Despite the apparent lack of causation between the acts and the increase in value, in numerous other cases the non-titled spouse's role as a homemaker has been held to be a factor in favor of awarding that spouse a share of the appreciation in the separately owned marital residence. See, eg, Sarafian v. Sarafian , 140 AD2d 801 (3d Dept. 1988) (holding that appreciation in the marital residence owned by husband was taken out of the “narrow separate property exception in the [DRL] by plaintiff's contributions as a parent, homemaker and helpmate”); Clerk v. Clerk , 132 AD2d 456 (1st Dept. 1987), appeal den. 70 NY2d 611 (wife's contributions to the marriage as a homemaker and helpmate entitled her to share in appreciation of separate property); Falgoust, supra, (non-titled wife was awarded a share of the appreciation in the marital residence in part due to her child-rearing and performance of household chores). See also, Imhof, supra and Zelnik, supra.

However, in recognition of the importance of a nexus between the appreciation and the non-titled spouse's efforts, certain courts have refused to credit the non-titled spouse with any portion of the appreciation where he or she has failed to establish such a link. See, eg, Hollis v. Hollis , 188 AD2d 960 (3d Dept. 1992) (denying wife any share in the appreciation in the marital residence as she made no financial contributions to the renovations undertaken during the course of the marriage and her non-monetary contributions were considered limited); Guarnier v. Guarnier , 155 AD2d 744 (3d Dept. 1989) (finding no support in the record for defendant's claim that her efforts as a wife, parent, wage earner and homemaker indirectly enhanced the appreciation of the marital residence, the court declined to award to wife any share of the appreciation in value).

Quantifying Value of Contributions

In a limited number of published cases, we can see the courts' efforts to quantify the non-titled spouse's contributions to the appreciation in value of the marital residence and to distribute it accordingly. In these cases, the courts have relied on presentation of expert testimony regarding the value of renovations or the impact of market forces. A notable example is found in the Second Department case of Karounos v. Karounos, 206 AD2d 407 (2d Dept. 1994) in which the court held that “[s]ince the wife only demonstrated that she contributed to the value of the house during the first three years of the [20-year] marriage, her share in the appreciation of the house should be limited to 15%, ie , 3 years out of the 20 years that the husband owned the house.” (Note that the decision is unclear as to whether the wife received 15% of the appreciation or an equitable share of said 15% — the latter being the more appropriate result.) In Harned v. Harned , 185 AD2d 226, 228 (2d Dept. 1992), the court accepted proof that 80% of appreciation of the marital residence was “due exclusively to market forces and not to any efforts or contributions from the [non-titled spouse].” Similarly, in Fish v. Fish , 161 AD2d 979 (3d Dept. 1990), the court credited the testimony of plaintiff's appraiser that a garage added to the residence during the parties' marriage accounted for 18.66% of the total appreciation in value of the marital residence. The non-titled spouse, who contributed 54% to the garage's construction, was therefore awarded 10%, or just over half of the incremental appreciation in value due to the garage.

In Sommers v. Sommers , 203 AD2d 975 (4th Dept. 1994), the court took judicial notice of government inflation statistics, holding that such records are historical data, readily and precisely verifiable and proper for the court to use as a basis for determining what portion of the appreciation was due to inflation or other market forces and hence constituted the titled spouse's separate property. See also, Kraeger v. Kraeger , 271 AD2d 657 (2d Dept. 2000) (holding that the husband should only share in $10,000 of the appreciation, and not the $107,000 of total appreciation, as that was the extent that his improvements added value to the residence). Indeed, where a lower court's decision has been imprecise in calculating the share of the appreciation that was due to the non-titled spouse's efforts, some appellate courts have remitted the matters for more precise calculations. See, eg, Nolan v. Nolan , 107 AD2d 190 (3d Dept. 1985) (appellate court remitted the matter to determine to what extent $20,000 of marital property used for renovations contributed to the more than $100,000 of appreciation in value of the marital residence); Alwell, supra.

As an alternative to tackling the difficult task of quantifying the impact of a party's contribution on the appreciation in value, some courts have held instead that the non-titled spouse should only be given credit for that amount of appreciation directly related to his or her financial contributions toward the home. See, eg, Seeley v. Seeley , 135 AD2d 703 (2d Dept. 1987) (limiting wife's distribution to one-half the amount that the parties contributed financially to home improvements); Burgio v. Burgio , 278 AD2d 767 (3d Dept. 2000) (granting non-titled spouse only her equitable share of the marital funds used to pay the mortgage on the residence). Other courts, specifically the Second Department in Butler v. Butler , 171 AD2d 89 (2d Dept. 1991), have held that, in addition to taking into consideration each party's non-financial contributions to the marriage, the appreciation should be distributed to the parties roughly proportionately to the amount of money each invested in the property. (Mrs. Butler, who had contributed 86.2% of the down payment of the residence in her name, was awarded 75% of the appreciation.)

The lack of a clear consensus among the courts in this area is evident in the various decisions addressing failure of proof. In fact, courts have specifically pointed out deficiencies in proof as a rationale either to deny the non-titled spouse any share in the appreciation of a separate property marital residence, or, in direct contrast, to determine that all of the appreciation is marital property to be distributed equally between the parties. For example, in Cincotta, supra, noting that “neither party established what portion of the appreciation in the value of the marital residence was attributable to the improvements and what portion of the appreciation was attributable to other factors such as market forces,” the Second Department held that it had no alternative but to grant each party 50% of the appreciation. In contrast, in McCann v. McCann , 142 Misc. 2d 1083 (N.Y. Sup. Ct Suffolk Co. 1989) the court refused to grant the non-titled spouse any share in the appreciation, holding that, since no evidence was proffered, it would be inappropriate for the court to randomly select a percentage of the appreciation attributable to the non-titled spouse's direct or indirect contributions.

Burden Shift?

Historically, courts have held that the non-titled spouse who is seeking to share in the appreciation of separate property has the burden of demonstrating that the appreciation was due in some part to the non-titled spouse's contributions or efforts. For example, in Fitzgibbon v. Fitzgibbon , 161 AD2d 619 (2d Dept. 1990), the Second Department, denied a share of the appreciation in a separate property marital residence to a husband who had “failed to demonstrate the manner in which his contributions resulted in the increase in value and the amount of the increase which was attributable to his efforts.” The Third Department recently reiterated this standard in London v. London , 21 AD3d 602 (3d Dept. 2005), where it held “as the non-titled spouse, plaintiff has the burden of establishing the value, if any, that was added to this property by her direct or indirect contributions during the marriage.” See also, Pelletier v. Pelletier , 242 AD2d 325 (2d Dept. 1997) (failure by the non-titled spouse to prove any appreciation in a separate property marital residence results in no distribution to the non-titled spouse); Rodgers v. Rodgers , 98 AD2d 386 (2d Dept. 1983); Michalek v. Michalek , 114 AD2d 655 (3d Dept. 1985); Bidwell v. Bidwell, 122 AD2d 364 (3d Dept. 1986); Burgio v. Burgio, 278 AD2d 767 (3d Dept. 2000) (failure by non-titled spouse to meet the burden of proof on contribution to the appreciation of the property foreclosed the court's consideration of the issue).

However, in two recent cases, appellate courts in both the First and Second Judicial Departments have placed the burden squarely on the titled spouse to demonstrate that the non-titled spouse's efforts did not contribute to the increase in value. The First Department held in Ritz v. Ritz , 21 AD3d 267 (1st Dept. 2005), that “since [the titled spouse] produced no evidence as to the amount of increase due to passive market forces as opposed to his direct efforts, we will not disturb the classification that the entire increase was marital property.” Similarly, in Parise v. Parise , 2004 Slip Op. 09484, 2004 WL 2952731 (2d Dept. 2004), the Second Department held that the husband, who was the titled spouse, failed to satisfy his burden of establishing that the wife's indirect efforts did not contribute in some degree to the appreciation in value of the separately owned marital residence.

It remains to be seen whether this burden shift is just an anomaly and was used by the courts in these two cases to avoid an otherwise undesirable result, or whether the shift reflects a new trend in the decisions in this area, generally. What these unusual decisions do show is that the determination of the marital property component of the separate property marital residence and the equitable distribution thereof continues to be an uncertain area of law with which the courts must continue to grapple. In short, the fundamental principles underlying the DRL and the nature of the economic partnership that is marriage are not simple things to decipher, and the outcome of any particular case is far from certain.