When Is an Order Not an Order?

In two reported cases addressing the enforceability of the “automatic orders”' Buoniello v. Buoniello, NYLJ, May 7, 2010, at 28, col. 3 (Sup Ct, Suffolk County), out of Suffolk County and P.S. v. R.O., 31 Misc.3d 373 (Sup Court NY County 2011, Gesmer, J.), out of New York County (which references Buoniello) ' the results were seemingly contradictory. The Suffolk County court found no enforceability while the New York County court found the administrative orders enforceable, even including a finding of contempt. A third case, LaFiosca v. LaFiosca, 31 Misc3d 973 (Supreme Court Nassau County, 2011 Bruno, J.), references a request for a contempt finding for violating the automatic orders under DRL ' 236B and referred the issue to a hearing on willfulness without analyzing or elaborating upon the efficacy of the issue.

Before the Change

Prior to the enactment of automatic orders, case law was quite clear that, in order to obtain relief, a party had to demonstrate that the other party engaged in some action evidencing an actual disposition or prospective threat to dispose of, transfer or otherwise affect the marital assets in the case. As was set forth by the Appellate Division, Second Department in Drazal v. Drazal, 122 AD2d 829 (2d Dept 1986):

In a matrimonial action, Special Term, under the proper circumstances, has the authority to issue preliminary injunctions aimed at the preservation of the marital assets pending equitable distribution (see, Monroe v. Monroe, 108 AD2d 793, 485 NYS.2d 310; Carella v. Carella, 106 AD2d 601, 603, 483 NYS2d 420; Leibowits v. Leibowits, 93 AD2d 535, 462 NYS.2d 535; Domestic Relations Law ' 234). '

The court in Reich v. Reich, [278 AD2d 214 (2d Dept. 2000)] found the trial court erred in enjoining the defendant from transferring, encumbering, selling, or disposing of any assets or property held solely in his name or jointly with others except in the ordinary course of business, and requiring the defendant to, among other things, notify the plaintiff of personal expenditures over $10,000. The relief sought by the plaintiff was not supported by proof that the defendant was attempting or threatening to dispose of marital assets so as to adversely affect her ultimate rights regarding equitable distribution (see Stanton v. Stanton, 211 AD2d 781, 621 NYS2d 676; Guttman v. Guttman, 129 AD2d 537, 514 NYS2d 382).

Unfortunately, trial courts would often ignore the issue of proof and issue a bilateral restraint despite the lack of any allegation that the moving spouse engaged in any improper conduct. Barasch v. Barasch, 166 AD2d 399 (2d Dept. 1990). Where there was exigency, often the action would be commenced simultaneously with an omnibus pendente lite application in which temporary orders were sought for restraints as well as for the maintenance of health and life insurance. Otherwise, these issues would wait for interim stipulations at the preliminary conference or a later pendente lite application. Fear of unilateral action would also usually result in the moving party “opting out” of the requirements of advance notice of the application as is governed by 22 NYCRR ' 202.7.

The creation of multiple “automatic orders” was designed to eliminate the need for motion practice and other remedies in order to prophylactically guard against an offending spouse and maintain the status quo ' but does it really?

Do the Existing Automatic Orders Legitimately Produce The Desired Effect?

The Administrative Order states that, pursuant to D.R.L. ' 236, Part B, Section 2, both spouses are bound by the following automatic orders that remain in full force during the pendency of the action unless the action is terminated, modified or amended by further order of the court, or upon written agreement between the parties. It states:

(1) Neither party shall transfer, encumber, assign, remove, withdraw or in any way dispose of, without the consent of
the other party in writing, or by order of the court, any property (including, but not limited to, real estate, personal property, cash accounts, stocks, mutual funds, bank accounts, cars and boats) individually or jointly held by the parties, except in the usual course of business, for customary and usual household expenses or for reasonable attorney's fees in connection with this action.

(2) Neither party shall transfer, encumber, assign, remove, withdraw or in any way dispose of any tax deferred funds, stocks or other assets held in any individual retirement accounts, 401K accounts, profit sharing plans, Keough accounts, or any other pension or retirement account, and the parties shall further refrain from applying for or requesting the payment of retirement benefits or annuity payments of any kind, without the consent of the other party in writing, or upon further order of the court; except that any party who is already in pay status may continue to receive such payments thereunder.

(3) Neither party shall incur unreasonable debts hereafter, including, but not limited to further borrowing against any credit line secured by the family residence, further encumbrancing any assets, or unreasonably using credit cards or cash advances against credit cards, except in the usual course of business or for customary or usual household expenses, or for reasonable attorney's fees in connection with this action.

(4) Neither party shall cause the other party or the children of the marriage to be removed from any existing medical, hospital and dental insurance coverage, and each party shall maintain the existing medical, hospital and dental insurance coverage in full force and effect.

(5) Neither party shall change the beneficiaries of any existing life insurance policies and each party shall maintain the existing life insurance, automobile insurance, homeowners and renters insurance policies in full force and effect.

The Administrative Order, issued and effective Sept. 1, 2009, also states:

The plaintiff in a matrimonial action shall cause to be served upon the defendant, simultaneous with the service of the summons, a copy of the automatic orders set forth in this section in a notice that substantially conforms to the notice contained in Appendix F. The automatic orders shall be binding upon the plaintiff immediately upon filing of the summons, or summons and complaint, and upon the defendant immediately upon service of the automatic orders with the summons.

The Administrative Order and the statute direct service of the “orders,” and state when they shall be binding on the respective parties. The primary directive, it would appear, is service of the “orders” with the summons. The orders themselves must only “substantially conform” with the form in the Appendix.

The question becomes, if the Automatic Orders are indeed “orders,” can it be said that they constitute “clear and unequivocal mandates” (see McCain v. Dinkins, 84 NY2d 216 (1994); Matter of McCormick v. Axelrod, 59 NY2d 574, 583 (1983)) upon which civil contempt under Judiciary Law ' 753 may be found? I submit not.

Two 'Conflicting' Decisions

In Buoniello v. Buoniello, NYLJ, May 7, 2010, at 28, col. 3 (Sup Ct, Suffolk County), Suffolk County Justice John C. Bivona held that a violation of the statutory orders cannot constitute civil contempt. Judiciary Law ' 753 provides that a person is guilty of civil contempt if he or she violates a “lawful mandate of the court,” which neglect or violation has the effect of “defeat[ing], impair[ing], imped[ing] or prejudice[ing]” the right of another party to the action. Therefore, in order to adjudicate a party in civil contempt, the court must first determine whether such party had knowledge of a clear and unequivocal court mandate. The Buoniello court reasoned that these automatic orders were merely statutory mandates and not mandates of the court; thus, a finding of contempt is an improper remedy. Notably, the administrative “automatic orders” were not at issue in the decision, so no distinction was made between the statute and the court rule.

Justice Ellen Gesmer, in the New York County matter P.S. v. R.O., 31 Misc.3d 373 (Sup Court NY County 2011, Gesmer, J.), declined to follow Buoniello and addressed the subject of the violation of the administrative orders. She found that contempt was available as a remedy while agreeing that violation of the statute ' a legislative enactment ' did not constitute a “court mandate” as provided by in Judiciary Law ' 753. In P.S. v. R.O., the court focused on the administrative order in reasoning that the Title 22 Rule constitutes a “court mandate”; contempt was, therefore, a proper remedy.

Justice Gesmer analyzed 22 NYCRR ' 202.16(a), noting that the rule tracks the statutory language of DRL ' 236(B)(2)(b) and requires service of a copy of the automatic orders on a defendant. The court unequivocally concluded that the Court Rules are promulgated by the Chief Administrator of the Courts on behalf of the Chief Judge of the Court of Appeals. For this reason, they constitute lawful mandates of the court that subject a litigant to a contempt finding for a willful violation. Justice Gesmer did, however, find that the wife was not in contempt because: 1) she was not properly served with the contempt application; and 2) her violation of the orders was cured by her immediate replacement of the funds taken, so there was no resulting prejudice to the husband.

It remains at issue, though, whether the court was correct in its assessment of the Administrative Code's “automatic orders” and whether they may be characterized as “unequivocal court mandates” by a court of record. This article suggests a contrary result. We will elaborate upon this issue further in next month's newsletter.

Part One of a Two-Part Article

At the recommendation of the “Matrimonial Commission” Report, which was issued in 2006, (see www.courts.state.ny.us/reports/matrimonialcommissionreport.pdf), it was deemed necessary to establish at the time of filing a motion-free way to immediately maintain the status quo regarding certain commonly occurring issues for divorcing couples. These issues generally related to the transfer or other disposition of assets, maintenance of insurance and beneficiary status, and accumulation of debt. The answer arrived at was the creation of “automatic orders,” first promulgated by an amendment to DRL '236B(2)(b) and then by Administrative Order under 22 NYCRR ' 202.16(a) (both effective Sept. 1, 2009).

As creations of administrative decree and statutory enactment, none of their provisions are reduced to a signed or oral directive from an actual sitting judge. What, though is the remedy for “violation” of these “orders”?

In two reported cases addressing the enforceability of the “automatic orders”' Buoniello v. Buoniello , NYLJ, May 7, 2010, at 28, col. 3 (Sup Ct, Suffolk County), out of Suffolk County and P.S. v. R.O. , 31 Misc.3d 373 (Sup Court NY County 2011, Gesmer, J.), out of New York County (which references Buoniello ) ' the results were seemingly contradictory. The Suffolk County court found no enforceability while the New York County court found the administrative orders enforceable, even including a finding of contempt. A third case, LaFiosca v. LaFiosca , 31 Misc3d 973 (Supreme Court Nassau County, 2011 Bruno, J.), references a request for a contempt finding for violating the automatic orders under DRL ' 236B and referred the issue to a hearing on willfulness without analyzing or elaborating upon the efficacy of the issue.

Before the Change

Prior to the enactment of automatic orders, case law was quite clear that, in order to obtain relief, a party had to demonstrate that the other party engaged in some action evidencing an actual disposition or prospective threat to dispose of, transfer or otherwise affect the marital assets in the case. As was set forth by the Appellate Division, Second Department in Drazal v. Drazal , 122 AD2d 829 (2d Dept 1986):

In a matrimonial action, Special Term, under the proper circumstances, has the authority to issue preliminary injunctions aimed at the preservation of the marital assets pending equitable distribution ( see , Monroe v. Monroe , 108 AD2d 793, 485 NYS.2d 310; Carella v. Carella , 106 AD2d 601, 603, 483 NYS2d 420; Leibowits v. Leibowits , 93 AD2d 535, 462 NYS.2d 535; Domestic Relations Law ' 234). '

The court in Reich v. Reich, [278 AD2d 214 (2d Dept. 2000)] found the trial court erred in enjoining the defendant from transferring, encumbering, selling, or disposing of any assets or property held solely in his name or jointly with others except in the ordinary course of business, and requiring the defendant to, among other things, notify the plaintiff of personal expenditures over $10,000. The relief sought by the plaintiff was not supported by proof that the defendant was attempting or threatening to dispose of marital assets so as to adversely affect her ultimate rights regarding equitable distribution ( see Stanton v. Stanton , 211 AD2d 781, 621 NYS2d 676; Guttman v. Guttman , 129 AD2d 537, 514 NYS2d 382).

Unfortunately, trial courts would often ignore the issue of proof and issue a bilateral restraint despite the lack of any allegation that the moving spouse engaged in any improper conduct. Barasch v. Barasch , 166 AD2d 399 (2d Dept. 1990). Where there was exigency, often the action would be commenced simultaneously with an omnibus pendente lite application in which temporary orders were sought for restraints as well as for the maintenance of health and life insurance. Otherwise, these issues would wait for interim stipulations at the preliminary conference or a later pendente lite application. Fear of unilateral action would also usually result in the moving party “opting out” of the requirements of advance notice of the application as is governed by 22 NYCRR ' 202.7.

The creation of multiple “automatic orders” was designed to eliminate the need for motion practice and other remedies in order to prophylactically guard against an offending spouse and maintain the status quo ' but does it really?

Do the Existing Automatic Orders Legitimately Produce The Desired Effect?

The Administrative Order states that, pursuant to D.R.L. ' 236, Part B, Section 2, both spouses are bound by the following automatic orders that remain in full force during the pendency of the action unless the action is terminated, modified or amended by further order of the court, or upon written agreement between the parties. It states:

(1) Neither party shall transfer, encumber, assign, remove, withdraw or in any way dispose of, without the consent of
the other party in writing, or by order of the court, any property (including, but not limited to, real estate, personal property, cash accounts, stocks, mutual funds, bank accounts, cars and boats) individually or jointly held by the parties, except in the usual course of business, for customary and usual household expenses or for reasonable attorney's fees in connection with this action.

(2) Neither party shall transfer, encumber, assign, remove, withdraw or in any way dispose of any tax deferred funds, stocks or other assets held in any individual retirement accounts, 401K accounts, profit sharing plans, Keough accounts, or any other pension or retirement account, and the parties shall further refrain from applying for or requesting the payment of retirement benefits or annuity payments of any kind, without the consent of the other party in writing, or upon further order of the court; except that any party who is already in pay status may continue to receive such payments thereunder.

(3) Neither party shall incur unreasonable debts hereafter, including, but not limited to further borrowing against any credit line secured by the family residence, further encumbrancing any assets, or unreasonably using credit cards or cash advances against credit cards, except in the usual course of business or for customary or usual household expenses, or for reasonable attorney's fees in connection with this action.

(4) Neither party shall cause the other party or the children of the marriage to be removed from any existing medical, hospital and dental insurance coverage, and each party shall maintain the existing medical, hospital and dental insurance coverage in full force and effect.

(5) Neither party shall change the beneficiaries of any existing life insurance policies and each party shall maintain the existing life insurance, automobile insurance, homeowners and renters insurance policies in full force and effect.

The Administrative Order, issued and effective Sept. 1, 2009, also states:

The plaintiff in a matrimonial action shall cause to be served upon the defendant, simultaneous with the service of the summons, a copy of the automatic orders set forth in this section in a notice that substantially conforms to the notice contained in Appendix F. The automatic orders shall be binding upon the plaintiff immediately upon filing of the summons, or summons and complaint, and upon the defendant immediately upon service of the automatic orders with the summons.

The Administrative Order and the statute direct service of the “orders,” and state when they shall be binding on the respective parties. The primary directive, it would appear, is service of the “orders” with the summons. The orders themselves must only “substantially conform” with the form in the Appendix.

The question becomes, if the Automatic Orders are indeed “orders,” can it be said that they constitute “clear and unequivocal mandates” ( see McCain v. Dinkins , 84 NY2d 216 (1994); Matter of McCormick v. Axelrod , 59 NY2d 574, 583 (1983)) upon which civil contempt under Judiciary Law ' 753 may be found? I submit not.

Two 'Conflicting' Decisions

In Buoniello v. Buoniello, NYLJ, May 7, 2010, at 28, col. 3 (Sup Ct, Suffolk County), Suffolk County Justice John C. Bivona held that a violation of the statutory orders cannot constitute civil contempt. Judiciary Law ' 753 provides that a person is guilty of civil contempt if he or she violates a “lawful mandate of the court,” which neglect or violation has the effect of “defeat[ing], impair[ing], imped[ing] or prejudice[ing]” the right of another party to the action. Therefore, in order to adjudicate a party in civil contempt, the court must first determine whether such party had knowledge of a clear and unequivocal court mandate. The Buoniello court reasoned that these automatic orders were merely statutory mandates and not mandates of the court; thus, a finding of contempt is an improper remedy. Notably, the administrative “automatic orders” were not at issue in the decision, so no distinction was made between the statute and the court rule.

Justice Ellen Gesmer, in the New York County matter P.S. v. R.O. , 31 Misc.3d 373 (Sup Court NY County 2011, Gesmer, J.), declined to follow Buoniello and addressed the subject of the violation of the administrative orders. She found that contempt was available as a remedy while agreeing that violation of the statute ' a legislative enactment ' did not constitute a “court mandate” as provided by in Judiciary Law ' 753. In P.S. v. R.O., the court focused on the administrative order in reasoning that the Title 22 Rule constitutes a “court mandate”; contempt was, therefore, a proper remedy.

Justice Gesmer analyzed 22 NYCRR ' 202.16(a), noting that the rule tracks the statutory language of DRL ' 236(B)(2)(b) and requires service of a copy of the automatic orders on a defendant. The court unequivocally concluded that the Court Rules are promulgated by the Chief Administrator of the Courts on behalf of the Chief Judge of the Court of Appeals. For this reason, they constitute lawful mandates of the court that subject a litigant to a contempt finding for a willful violation. Justice Gesmer did, however, find that the wife was not in contempt because: 1) she was not properly served with the contempt application; and 2) her violation of the orders was cured by her immediate replacement of the funds taken, so there was no resulting prejudice to the husband.

It remains at issue, though, whether the court was correct in its assessment of the Administrative Code's “automatic orders” and whether they may be characterized as “unequivocal court mandates” by a court of record. This article suggests a contrary result. We will elaborate upon this issue further in next month's newsletter.