Did the Second Department Appellate Division’s August 29, 2018 decision in Westbrook v. Westbrook, 2018 Slip Op 05956 [164 AD3d 939], continues its Keane-based assault on business owners by disregarding the economic reality of double-dipping on business income for spousal maintenance and equitable distribution or did it instead illuminate a path to avoid it?
In Westbrook, the Court declares the husband’s chimney business to be a separate tangible asset, in contrast to an intangible asset with no value other than the income it produces, because it had four employees, owned four vehicles, and had $50,000 in cash. While vehicles are admittedly tangible assets, if the existence of employees and cash are examples of tangible assets sufficient to strip a business owner of the protection against duplicative awards of maintenance and equitable distribution, then it is difficult to see how any business owner will be protected from duplication in the Second Department.
However, while addressing the duplication issue, it is puzzling that the Court points out that “The maintenance was based upon the reasonable compensation that was excluded from the excess earnings calculation.” Puzzling, because in Palydowycz v. Palydowycz, 2016 NY Slip Op 02793 [138 AD3d810], the Second Department Appellate Division held that it was an error to not make a distributive award of the husband’s medical practice and ambulatory surgery center, even though all of his income had been considered when establishing spousal maintenance. Is the Second Department saying that it is an error to not distribute assets when all income is used for maintenance, but it is permissible to distribute assets and then exclude business income when determining maintenance? If Mr. Westbrook’s maintenance was truly established based on income not used to determine the value of his chimney business, not only was there no impermissible double-counting, there was no double-counting at all.
Before declaring a victory for economic reality in the Second Department, one other possibility must be considered. If Mr. Westbrook truly escaped the injustice of Keane, perhaps it was only because Ms. Westbrook did not appeal the maintenance decision.
This divorce was commenced in 2008. Based on a 10-year marriage, the wife received spousal maintenance of $2,000 per month for 52 months (four and a half years). She received an award of 1/3rd of the value of the husband’s chimney cleaning business, which was started in 2001.