On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Middlesex County.
Approved for Publication April 25, 1996.
Before Judges Michels, Villanueva, and Kimmelman. The opinion of the court was delivered by Kimmelman, J.A.D. (temporarily assigned).
The opinion of the court was delivered by: Kimmelman
The opinion of the court was delivered by
KIMMELMAN, J.A.D. (temporarily assigned).
This case has had an unfortunate and tortuous history while wending its way back and forth through the court system for the past ten years. Responsibility in no small degree must be ascribed to the less-than-forthright conduct of defendant to which we shall allude.
The parties were married in 1955, had three children, and were divorced in 1967. A property settlement agreement (agreement) of March 30, 1967, was incorporated in and made a part of the divorce decree. At that time, defendant had recently completed his medical residency and had embarked upon his career as a cardiologist in private practice.
According to the agreement, in addition to a fixed monthly amount of alimony and child support, defendant agreed to pay an additional sum by way of supplemental alimony equal to 20% of all income received by him in excess of $20,000 per year, the 20% to be allocated 55% thereof to plaintiff and 15% for each of the three children. Two years later, the parties entered into an amended agreement that defined the term "income" as the adjusted gross income of defendant less business and professional expenses as shown on his federal income tax return, but not including any income earned by his new spouse. The 20% of the excess over the adjusted gross income as defined would continue to be paid to plaintiff for herself and their children.
For eighteen years, from the time of the divorce in 1967 until 1985, defendant made supplemental alimony payments to plaintiff of amounts between $2000 and $3000 per year purportedly in compliance with the agreement. Although the agreement gave plaintiff the right to inspect defendant's financial books and records every six months, she never exercised that right because, as she says, she trusted defendant.
In 1985, after defendant had warned plaintiff that he would, on his own accord, be reducing the regular monthly alimony payments, plaintiff, for the first time, moved in court to enforce the existing property settlement agreement. Plaintiff sought to examine defendant's financial books and records for the years 1984 and prior and also sought the appointment of an accountant to evaluate whether defendant had paid plaintiff the proper amount of supplemental alimony over the past eighteen years. When plaintiff made the application, defendant had unilaterally reduced the amount he was paying to plaintiff by way of regular monthly alimony with the intent to completely eliminate alimony payments on his own over the next four years. The motion Judge at the time refused to appoint an accountant and denied plaintiff the right of discovery for the years prior to 1984, but did enforce the supplemental alimony provisions of the agreement for the year 1984 and succeeding years.
We note that, as ordered in connection with the hearing on plaintiff's initial application, defendant subsequently produced a copy of his 1984 tax return, but the "adjusted gross income" line was redacted, thus preventing plaintiff from determining whether she was paid the proper amount of supplemental alimony for 1984. Appeals by both parties from the motion Judge's ruling were dismissed as interlocutory by order of this court entered September 10, 1987.
In 1988, a different motion Judge ordered that a plenary hearing be held concerning the continued enforceability or modification of the supplemental alimony provision. In response to pre-hearing discovery requests, defendant produced only redacted copies of income tax returns for 1984 through 1987, once again making it impossible for plaintiff to determine the sufficiency of the supplemental alimony being paid to her. Fortuitously for plaintiff, during the course of the 1991 hearing held to consider defendant's application to modify the supplemental alimony requirement, defendant inadvertently produced an unredacted copy of his 1984 tax return.
Following the plenary hearing, on July 9, 1991, the trial court ordered that the supplemental alimony provision of the agreement was a valid provision, but would be retroactively unenforceable from and after November 8, 1985, due to the changed circumstances of the parties. The trial court further ordered that, due to laches on her part, plaintiff was barred from seeking financial information from defendant for the years prior to 1984. The parties again lodged appeals with this court, resulting in a decision captioned Rolnick v. Rolnick, 262 N.J. Super. 343, 621 A.2d 37 (App. Div. 1993).
In Rolnick, we affirmed that provision of the July 9, 1991, order which discontinued the payment of supplemental alimony to plaintiff due to changed circumstances. We further affirmed an order of November 7, 1991, which reduced the basic monthly alimony rather than eliminating it as defendant had urged. Nevertheless, for the reasons expressed therein, and noting that "'in a court of equity, . . . the rule of laches is never applied in favor [of the perpetrator] of a carefully designed and studied scheme of fraud,'" id. at 364 (quoting Gallagher v. New England Mut. Life Ins. Co. of Boston, 19 N.J. 14, 23, 114 A.2d 857 (1955)), we did not view plaintiff as being barred by the doctrine of laches and precluded from conducting an inquiry into whether defendant had properly calculated and paid plaintiff the correct amount of supplemental alimony in accordance with the agreement as amended. Although we made no express finding, we did note that it appeared that the supplemental alimony payment made by defendant with respect to his 1984 income was $1974, whereas the unredacted 1984 tax return, when finally uncovered, revealed that plaintiff should have received $4819. Rolnick, supra, 262 N.J. Super. at 361. Hence, as urged by plaintiff, the validity of the method used by defendant to calculate the required supplemental alimony payments for 1984 and for the years prior was called into question. We agreed with plaintiff's position and observed: "Here, defendant's alleged fraud would have prevented plaintiff from discovering that the bonus payment checks were too small." Id. at 364. We held:
remand is warranted on the issue of defendant's fraud or unclean hands. On this remand, the trial court should focus on whether or not defendant fully disclosed and reported ...