On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Middlesex County.
Michels, Bilder and Wallace. The opinion of the court was delivered by Michels, P.J.A.D.
[262 NJSuper Page 349] In these consolidated appeals, plaintiff E. Christine Rolnick and defendant Jerome J. Rolnick challenge portions of post-judgment orders of the Chancery Division, Family Part entered in this protracted matrimonial action. In the first appeal (A-6083-90T5), plaintiff appeals and defendant cross-appeals from an order dated July 9, 1991. Plaintiff contends that the trial court erred in refusing to enforce the terms of the settlement agreement incorporated in the judgment of divorce, and in modifying the agreement on the basis of changed circumstances that were anticipated by the parties and provided for in advance. Specifically, plaintiff contends that (1) Lepis*fn1 should not be used to modify an agreement that sets forth in advance a fair procedure for addressing changed circumstances; (2) she lived with the detriment of the supplemental income provision of the agreement for twenty years and should not now be deprived of its benefits; (3) defendant was not entitled to the equitable remedy of modification since he did not fully disclose and report his income; (4) the trial court erred in including business losses of defendant's new wife and finding changed circumstances based thereon, and (5) the trial court erred in not awarding her counsel fees under the circumstances of this case, since defendant was represented by a personal friend, paid no counsel fees over five years of litigation, and essentially forced plaintiff to expend over $30,000 in counsel fees in order to defend court ordered agreements. Defendant, on the cross-appeal, contends that the trial court erred in failing to terminate his obligations for alimony and plaintiff's unreimbursed
medical and dental expenses. He further contends that his second wife's income or loss should not enter into the computation of his income for purposes of calculating any bonus or supplemental income payments payable to plaintiff.
In the second appeal (A-2178-91T5), defendant appeals from orders dated November 7, 1991 and December 6, 1991. Defendant contends, with respect to the November 7, 1991 order, that the trial court erred in requiring him to pay plaintiff moneys attributable to the bonus payment/escalator clause for 1984 and 1985, and thus, in essence, improperly overruled the prior order of July 9, 1991. Specifically, defendant contends that (1) the trial court, by its prior order of July 9, 1991, intended its ruling to apply to the calendar year 1984 and all subsequent years; (2) the trial court erred in not giving him a credit for tax and/or bonus moneys previously paid to plaintiff; (3) the trial court lacked jurisdiction to enter an order regarding bonus payments attributable to 1984 and 1985, and (4) the trial court took inconsistent positions on the issues of jurisdiction lying with the Appellate Division and the enforcement of judgments and orders of the trial court. With respect to the order of December 6, 1991, defendant contends that the trial court erred in denying his motion for reconsideration of the November 7, 1991 order on the basis that it was not timely filed. We consolidated these appeals and cross-appeals.
Appeal and Cross-Appeal from Order Dated July 9, 1991 (A-6083-90T5)
We first address plaintiff's appeal and defendant's cross-appeal from the order of July 9, 1991. We are satisfied from our consideration of the record and the arguments presented that, with the sole exception of the trial court's failure to consider (1) plaintiff's claim that the defendant failed to fully disclose and report his entire income and (2) the effect that this alleged failure may have had on her right to bonus payments
under the separation agreement, the order of the trial court is based on findings of fact which are adequately supported by the evidence. Moreover, all issues of law raised are clearly without merit. R. 2:11-3(e)(1)(A) and (E). Accordingly, we affirm the order of July 9, 1991 substantially for the reasons expressed by Judge Rodriquez in his oral opinion of October 25, 1991.
However, before turning to plaintiff's claim that the modification of the agreement was barred by plaintiff's failure to fully disclose and report income subject to the bonus payment provisions, further comment is appropriate with respect to some of the other contentions raised on this appeal.
Plaintiff argues that the trial court erred in modifying the support agreement on the basis of changed circumstances that were anticipated and provided for in advance by the parties. She contends that Lepis v. Lepis, 83 N.J. 139, 145, 416 A.2d 45 (1980), should not be used to modify an agreement that sets forth in advance a fair procedure for addressing changed circumstances. We disagree.
In this regard, it is well settled that "[t]he Superior Court has power to direct the specific performance of the terms of husband-wife support agreements to the extent that they are just and equitable." Schlemm v. Schlemm, 31 N.J. 557, 581-82, 158 A.2d 508 (1960). Our courts "have recognized and emphasized repeatedly that matrimonial agreements between spouses relating to alimony and support, which are fair and just, fall within the category of contracts enforceable in equity." Petersen v. Petersen, 85 N.J. 638, 642, 428 A.2d 1301 (1981); Carlsen v. Carlsen, 72 N.J. 363, 370-71, 371 A.2d 8 (1977); Berkowitz v. Berkowitz, 55 N.J. 564, 569, 264 A.2d 49 (1970); Schiff v. Schiff, 116 N.J. Super. 546, 558, 283 A.2d 131 (App.Div.1971), certif. denied, 60 N.J. 139, 286 A.2d 512 (1972).
In Berkowitz v. Berkowitz, supra, our Supreme Court specifically held:
Agreements between separated spouses executed voluntarily and understandingly for the purpose of settling the issue of support for the wife and children are specifically enforceable, but only to the extent that they are just and equitable. Schlemm v. Schlemm, 31 N.J. 557 [158 A.2d 508] (1960) (support of wife); Equitable Life Assur. Soc. of United Stated v. Huster, 75 N.J. Super. 492 [183 A.2d 473] (App.Div.1962) (support of wife and children). Therefore, the trial court has the discretion to modify the agreement upon a showing of changed circumstances. Flicker v. Chenitz, 55 N.J. Super. 273, 292 [150 A.2d 688] (App.Div.1959), certif. granted, 30 N.J. 152 [152 A.2d 171], appeal dismissed by consent, 30 N.J. 566 [154 A.2d 452] (1959). Modification is similarly proper when the separation agreement is incorporated in the judgment nisi. Schluter v. Schluter, 23 N.J. Super. 409 [93 A.2d 211] (App.Div.1952). However, when the parties and their attorneys have bargained at arm's length and there is no showing of unfairness, the trial court should not supply terms which the parties obviously considered and yet did not adopt. [55 N.J. at 569, 264 A.2d 49].
Subsequently, in addressing the discretion of trial courts to modify a separation agreement based upon changed circumstances, we held, in Schiff v. Schiff, supra, that, under the relevant principles regarding specific performance of contracts in equity, "[a] far greater showing of changed circumstances" was required in order to modify a spousal agreement, as opposed to a judicial order for alimony or support. 116 N.J. Super. at 561, 283 A.2d 131. However, this rule was later rejected by our Supreme Court in Smith v. Smith, 72 N.J. 350, 371 A.2d 1 (1977), where Justice Mountain, in the context of equitable distribution, stated:
Ever since Schlemm v. Schlemm, supra, overruled Apfelbaum v. Apfelbaum, 111 N.J. Eq. 529 [162 A. 543] (E. & A.1932), separation agreements, if found to be fair and just, have been specifically enforceable in equity. Sometimes in suits seeking such relief, the defense has been interposed that changed circumstances should preclude the granting of this always discretionary remedy. Upon other occasions a plaintiff has affirmatively sought to be relieved from making such payments upon the ground that a change in circumstances justifies such relief. The court is then called upon to examine the nature and extent of the alleged change. It has heretofore been accepted doctrine that a greater showing of changed circumstances is needed if a change is to be made when the support payments have been determined by interspousal consent than when they have been settled by court decree. The leading case is Schiff v. Schiff, 116 N.J. Super. 546 [283 A.2d 131] (App.Div.1971). There the court said,
A far greater showing of changed circumstances must be made before the court can modify a separation agreement than need be shown to warrant the court amending an order for alimony or support. [116 N.J. Super. at 561, 283 A.2d 131]
Because, as we have just pointed out, support payments are intimately related to equitable distribution, and because we feel that trial Judges should have the utmost leeway and flexibility in determining what is just and equitable in making allocations of marital assets, we think the foregoing rule should now be changed. Henceforth the extent of the change in circumstances, whether urged by plaintiff or defendant, shall be the same, regardless of whether the support payments being questioned were determined consensually or by judicial decree. In each case the court must determine what, in light of all the facts presented to it, is equitable and fair, giving due weight to the strong public policy favoring stability of arrangements. [72 N.J. at 359-60, 371 A.2d 1].
Three years later, the new rule was reaffirmed and clarified by our Supreme Court in the landmark case of Lepis v. Lepis, supra, in which "the effect of a consensual agreement upon the court's power to modify obligations of support and maintenance" was addressed. 83 N.J. at 145, 416 A.2d 45. Specifically, the Court stated:
The rule announced in Smith is fully applicable when considering post-judgment modification. Consensual agreements and judicial decrees should be subject to the same standard of "changed circumstances." Initially it might appear that this rule would diminish the advantages of separation and property settlement agreements, since they would provide no greater certainty or stability than a judicial determination. However, granting a greater degree of permanence to negotiated agreements would tend to make them a riskier arrangement for spouses who are likely to be harmed by changed circumstances. Typically, they have been spouses who are economically dependent; they generally have been wives with custody of children. Often consensual agreements would not be in their best interests if only "unconscionable" circumstances would warrant modification. As we recognized in rejecting Schiff, contract principles have little place in the law of domestic relations. See Smith, 72 N.J. at 360 [371 A.2d 1]. [ Lepis, supra, 83 N.J. at 148 [416 A.2d 45] (footnote omitted)].
Here, the provision in question was part of the parties' 1967 separation agreement, and it linked increases in plaintiff's support to increases in defendant's income as follows:
11. Jerome further agrees to pay to Christine, a su[m] equal to Twenty (20%) per cent of all income received by him in excess of $20,000.00 net per annum. Said sum to be allocated a[s] follows: Fifteen (15%) per cent of said additional Twenty (20%) per cent to each child, and fifty-five (55%) per cent of said twenty (20%) per cent to Christine. Financial books and records [of]
Jerome shall be made available for inspection by Christine at six month intervals during each calendar year. [Emphasis added].
This provision was subsequently clarified by the parties' 1969 agreement which stated that:
1. The net income shall be interpreted to mea[n] and be the same as the adjusted gross income as shown on the income tax return of Jerome J. Rolnick for the Internal Revenue Service, and the additional payments due E. Christine Rolnick for herself and the children shall be based on 20% of the excess over $20,000.00 of that adjusted gross income, if any. In the event that Jerome J. Rolnick shall file a joint return with a new spouse, the adjusted gross income referred to above shall include only income earned by Jerome J. Rolnick and shall not include any income earned by the new spouse. The said Jerome J. Rolnick shall be entitled to deductions for ordinary and necessary business and/or professional expenses which are included in itemized deductions or elsewhere on the tax return against said adjusted gross income prior to the computation of the 20% excess payment due.
It was further modified by the trial court's September 17, 1986 order, as follows: "The applicable percentage for purposes of computation of any additional alimony due to plaintiff in accordance with Paragraph 11 of the original agreement dated March 30, 1967 as modified by the ...