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McCarthy v. McCarthy

March 05, 1999


Before Judges Pressler, Kleiner and Steinberg.

The opinion of the court was delivered by: Pressler, P.j.a.d.


Argued February 9, 1999

On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Monmouth County.

This appeal represents the final chapter in an eight-year long post-judgment proceeding in which defendant John B. McCarthy has been attempting to obtain relief from the alimony and counsel fee orders attendant upon his divorce from plaintiff Mary E. McCarthy in 1988. Before us now is the trial court's order respecting the amount of counsel fees owed by defendant to plaintiff and its imposition of a "constructive trust" upon real estate owned by defendant's second wife, Julie A. McCarthy, to secure payment by defendant of the counsel fee award and stipulated arrearages. We affirm that portion of the order confirming the assessment of counsel fees in the amount of $16,623.05, payable in four equal annual installments, together with six percent interest on the unpaid balance, commencing June 26, 1998. *fn1 We reverse, however, the imposition of the trust. We also affirm, on plaintiff's cross appeal, that portion of the order denying her application for additional counsel fees for post-judgment representation.

This is the second time this post-judgment matter has been before us. On April 12, 1996, we filed our opinion in McCarthy v. McCarthy, under docket numbers A-4197-93T2 and A-3281-94T2, remanding to the trial court for reconsideration of the retroactive date of defendant's entitlement to a reduction in alimony and of the $16,623.05 counsel fee assessed against him as well as plaintiff's demand for reimbursement of the capital gains tax she was required to pay on the sale of the marital residence, whose proceeds were divided equally between the parties. As we had explained in that opinion, defendant, then an executive in the textile industry, had lost his high paying job in 1991, and although he become quickly reemployed in that industry, his new employer went out of business shortly thereafter. He was not able to find suitable employment at a reasonably commensurate salary. He had also remarried prior to 1991. His second wife is an interior designer and they apparently formed a business venture, McCarthy Associates. The second Mrs. McCarthy also maintained a separate business, Julie A. McCarthy ASID. It was defendant's allegation that his income, after losing his position in the textile industry, was considerably less than half of what it had been at the time of the divorce, making it impossible for him to meet the original $2,500 alimony payment to plaintiff.

Deciding the matter on the papers and without an evidential hearing, the trial Judge, in 1994, found that defendant had the ability to pay the original alimony and was $66,006.56 in arrearages. He also fixed the approximately $16,000 counsel fee and concluded that plaintiff was not entitled to reimbursement for her capital gains tax. The order entered also froze the bank accounts of both McCarthy Associates and Julie A. McCarthy ASID and appointed a special fiscal agent for those businesses. Defendant appealed and plaintiff cross appealed. While the appeal was pending and on defendant's motion, the trial Judge conducted an ability to pay hearing. As a result thereof, he found that defendant had no interest in Julie A. McCarthy ASID, which was an entirely distinct entity. He found, however, that defendant had an annual imputed income from McCarthy Associates of $40,000, which he thereafter adjusted to $32,000. By order dated March 22, 1995, the Judge reduced the alimony to $1,480 and fixed arrearages at $65,257.56. The reduction in alimony was made retroactive to December 2, 1994, although the original reduction motion had been filed in 1991. Defendant again appealed. *fn2

By our opinion, we affirmed all of the court's Dispositions with the exception of the retroactive date of the alimony reduction and the amount of the counsel fee. We remanded for reconsider-ation, pointing out that while we were expressing no view as to the ultimate outcome, the Judge should reconsider both matters in the light of defendant's now demonstrated changed circumstances. We also remanded for reconsideration of plaintiff's capital gains reimbursement claim. Following our remand, the parties, by consent order, settled all outstanding issues but for the $16,000 counsel fee. The trial Judge then reconfirmed the original counsel fee and denied plaintiff's application for additional post-judgment fees. He also imposed a "constructive trust" on the residence owned by the second Mrs. McCarthy, apparently to secure payment of the $16,000 counsel fee and the approximately $21,000 agreed-upon arrearages despite the fact that he expressly declined to rule that title to that residence, originally taken by defendant and the second Mrs. McCarthy as tenants by the entirety, had been fraudulently conveyed to the second Mrs. McCarthy as sole owner in 1991. As the Judge explained, I want to make it clear that my decision today does not in any manner cast its eye upon that transfer, and either sanction it or disapprove it. The record simply does not permit that event to occur.

Both parties appeal from the resulting order, plaintiff from the denial of additional counsel fees and defendant from the counsel fee order and the imposition of the trust.

We affirm those portions of the order appealed from assessing the quantum of the counsel fee and denying plaintiff additional fees for the reasons stated orally by the trial Judge. We are satisfied that in respect of defendant's counsel fee obligation, the Judge complied with the directive of our remand, gave reconsideration to this issue in the manner we prescribed and that his findings of fact justified his determination in accordance with the standards prescribed by Williams v. Williams, 59 N.J. 229 (1971). See also Filippone v. Lee, 304 N.J. Super. 301, 312 (App. Div. 1997); Heinl v. Heinl, 287 N.J. Super. 337, 349 (App. Div. 1996). And see N.J.S.A. 2A:34-23. We are also satisfied that the same is true of the Judge's decision to award no further counsel fees to plaintiff.

We reverse, however, the trust provision. In imposing the trust, the Judge gave this explanation:

"The case is found at 135 New Jersey 571, decided by the Supreme Court in 1994. And I also went back and reexamined the applicable statutory reference, N.J.S.A. 2A:34-23. And I did so simply because I wanted to be certain there was either legal or equitable authority for such a concept or perhaps both legal and equitable authority for the concept. . . . ."

"The question of how Jacobitti impacts is, I think, open to some question. Does Jacobitti really require the Court to make a finding of unusual or unanticipated circumstances in order to trigger equitable relief? I'm really not certain what the answer is to my question, but I am satisfied on the basis on what is before me, that there is a reason to create the constructive trust. And to some degree it lies in A) the age of Mr. McCarthy, B) some history of his being uninsurable because of medical circumstances, and lastly, C) the fact that there is, at least as I am speaking, no present likelihood that the income ability for 1997 would be substantially comparable to the income that he had secured during his employment, employments, excuse me, as a salesperson in the textile marketplace. And I'm satisfied that the combination of those coincidences, permit the constructive trust doctrine to be employed. . . . ."

In addition, although the concept of the constructive trust is being ordered today, I'm not prepared to say, again upon the record, whether that trust reaches a fee interest in the premises, or simply addresses the curtesy interest that Mr. McCarthy would have in the premises. But the order of the Court will, when properly docketed and filed, constitute a presence to the world at large of a land interest of this ...

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