Bombardo Richard J Attorney

New York Appeals Court Modifies Divorce Judgement on Grounds That Unprofitable Business Partnership Cannot Be Easily Divided

On August 22nd, 2019, the New York Appellate Division, Fourth Department released a decision in the case of Barrett v Barrett.


Syracuse, NY -- (ReleaseWire) -- 09/11/2019 --A matrimonial action that involved a spouse seeking a modification of a divorce judgement on the grounds that the initial ruling was unjust and ineffective.

 A Lower Court Ordered the Sale of a Partnership Interest

In the original divorce judgement, a New York trial court ordered the sale of the husband's interest in a business partnership called PEG Enterprises, LLC. The proceeds of that sale were then to be divided between him and his wife. However, the appeals court found that there were two problems with this order. 

To start, the husband was only a 33 percent member of PEG partnership — under the terms of the partnership agreement, any transfer of ownership rights required receiving consent from the other members of the entity. In addition to that, at the time the court reviewed the matter, PEG was unprofitable. The appeals court determined that these two factors made liquidation and division of the partnership interests impracticable, if not altogether impossible. 

Divorce Judgement Modification: Substitution of Another Asset

The appeals court modified the original divorce judgement by awarding the husband the entirety of the partnership interests in PEG. To account for this adjustment, the court assessed that the wife should be awarded ownership interests in another asset of similar value. Through a divorce modification, she was granted a 50 percent interest in Lake Placid, New York property that was owned by the husband. 

35 Year Marriage — A Nearly Even Split of Marital Assets is Equitable 

Finally, with respect to the other remaining marital assets, the appeals court determined that a near 50-50 split of the couple's property would constitute an equitable distribution.  As explained by Syracuse, NY divorce lawyer Richard J. Bombardo, "An equitable distribution is a fair distribution. New York courts will split up marital property and assets in a manner that is deemed to be fair to each party — considering their contribution to the marriage and their needs going forward. An equitable distribution can be, but is not always, a 50-50 division of the assets." 

In this case, the appeals court found that a near even split was especially appropriate given the fact that the couple was married for more than three decades. As a general rule, the longer a marriage lasts, the more likely it is that a 50-50 distribution of assets will be warranted.