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Mani v. Mani

April 6, 2005

BRENDA MANI, PLAINTIFF-RESPONDENT,
v.
JAMES J. MANI, DEFENDANT-APPELLANT.



On certification to the Superior Court, Appellate Division.

SYLLABUS BY THE COURT

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).

The appeal in this family law case presents the issue of whether marital fault is a factor in the determination of alimony and the award of counsel fees.

Plaintiff, Brenda Mani and defendant, James Mani, met in 1970 when she went to work for him in his seasonal amusement business on the Seaside Heights boardwalk. James, a college graduate, was at the time a halfowner of the boardwalk business and a partner in a travel agency in Florida that later failed. Brenda was a college student. Brenda graduated in 1971 and taught preschool for two years while working with James at his business during the summer.

Before the parties were married in 1973, they purchased their first home in Toms River for $30,000. They jointly contributed $5,000 or $6,000 out of profits from the boardwalk business to buy the property. The balance of the purchase price was financed by a $25,000 mortgage held by Brenda's father.

After their wedding, the parties, who have no children, worked together in the boardwalk business 100 hours per week from Memorial Day through Labor Day of each year. They also worked weekends in the fall and Christmas. During the marriage, Brenda's father gave her significant gifts of money and investments in her name only. She received stock in a family-owned business that appreciated to $1.7 million by 1991. As a condition of the gift, James was required to sign a waiver stating that he was not entitled to share in the stock. Brenda also received an interest in an investment partnership formed by her father for his five children. Brenda liquidated her interest in the partnership in 1987 for just over $500,000 and invested that money in her name. Brenda's investment income was needed to pay for the couple's expenses because income from the boardwalk business was not enough to support their comfortable lifestyle.

In 1986, the parties purchased another home in Toms River for $145,000 using proceeds from Brenda's stock and $129,000 from the sale of the other house. The property, at 22 Central Avenue, was conveyed to the parties as husband and wife, although title was later transferred to Brenda. The parties razed the existing house on that lot and built another in its place, ultimately spending between $500,000 and $750,000 in improvements on a lavish new home.

In 1993, the parties retired from the boardwalk business and lived an extravagant lifestyle almost exclusively out of Brenda's investment income. James worked briefly for real estate brokers in Florida, although he earned only about $20,000 total in income.

The couple spent seven years together in retirement before Brenda discovered that her husband was having an affair with a woman with whom the parties socialized. Brenda filed a complaint for divorce alleging adultery and extreme cruelty. The trial judge granted James' motion for pendente lite relief, awarding $1,006 per week as spousal support and $7,000 as counsel fees.

By the time of trial, Brenda's investment assets were valued at $2.4 million. James' assets consisted of an IRA with a value of $80,000. He also had a partial interest in accounts held jointly by the couple and a shared interest in property from his father's estate valued at $50,000.

At trial, James sought permanent alimony of over $68,000 per year and Brenda sought to deny alimony altogether. The trial judge determined that the property at 22 Central Avenue, which at the time of trial was under contract for sale for $500,000, was subject to equitable distribution and that James was entitled to thirty percent of the net proceeds of the sale ($141,000). The judge held that Brenda's remaining assets were immune from equitable distribution. With respect to alimony, the judge awarded James $610 per week based on his economic dependency. In reaching that conclusion, the judge attributed to James the ability to earn a minimum of $25,000 annually.

James appealed, claiming that the alimony award was insufficient to maintain the marital standard. He also argued that he was entitled to half of the proceeds of the sale of the marital residence, and that he should have been awarded counsel fees. Brenda cross-appealed, arguing that James was not entitled to any alimony. She contended that James had not contributed remunerative activities to the marriage, and that his economic dependency was not occasioned by the marriage, but by his own indolence.

The Appellate Division affirmed, holding there was sufficient credible evidence in the record to support the award of permanent alimony. It reasoned that the reduction in James' standard of living was justified, in part, by the finding that Brenda had established he was adulterous and committed acts of extreme cruelty. The court observed that the parties' standard of living was not the result of their joint efforts, but solely due to gifts from Brenda's father.

The Supreme Court granted James' petition for certification on issues of alimony and counsel fees.

HELD

Marital fault is irrelevant to alimony except in two narrow instances: cases in which the fault negatively affects the economic status of the parties and cases in which the fault so violates societal norms that continuing the economic bonds between the parties would confound notions of simple justice. Marital fault is irrelevant to a counsel fee award.

1. Historically, the reason for alimony is not clear. That lack of clarity explains why, although alimony is now awarded in every jurisdiction, there is no consensus regarding its purpose. New Jersey cases have long expressed the view that alimony is neither a punishment for the payor nor a reward for the payee. (pp. 9-14)

2. N.J.S.A. 2A:34-23(b) provides that when ordering alimony, a court shall consider a non-exclusive list of enumerated factors. The words "marital fault" and "responsibility for the breakdown of the marriage" do not appear among the factors, although there is a "catch all category" that arguably permits a court to consider any other factor it "may deem relevant." N.J.S.A. 2A:34-23(g) further guides the court's determination of alimony, providing that; "[i]n all actions for divorce other than those where judgment is granted solely on the ground of separation the court may consider also the proofs made in establishing such ground in determining an amount of alimony or maintenance that is fit, reasonable and just." The genesis of that provision bears on the issue before the Court. (pp. 14-15)

3. New Jersey enacted a comprehensive divorce reform package, the Divorce Reform Act, in 1971. Before the passage of the Act, the Legislature created the Divorce Law Study Commission, which issued a Final Report that contained findings about existing divorce law in New Jersey and proposed a Divorce Reform Bill. Because New Jersey law prior to 1971 only provided for divorce on the grounds of fault, the focus of the Commission was the need for legal recognition of no-fault divorce on grounds of separation. The Commission proposed such a new ground where there is no prospect for reconciliation between the parties. The final Divorce Reform Act gave couples the right to divorce after eighteen months of separation regardless of which party caused the breakdown in the marriage. The Commission did not recommend the complete elimination of fault as a consideration in marriage termination, and the Legislature followed suit, preserving the traditional fault-based grounds for divorce. The Commission's Final Report also briefly addressed the relationship between fault and alimony, noting that where fault is asserted as a ground for relief, it would be a proper consideration in dealing with alimony and support. The Commission proposed the language that was adopted by the Legislature in N.J.S.A. 2A:34-23(g). In its comments to the proposed bill's alimony provisions, the Commission stated that as long as fault grounds for divorce are retained, it was logical that fault should affect judicial discretion in awarding alimony. (pp. 15-21)

4. Although our case law has consistently recognized that, under our statutory scheme, fault may be considered in calculating alimony, courts have declined to make wide-ranging use of fault in that context. In Kinsella v. Kinsella, The opinion of the court was delivered by: Justice Long

Argued September 13, 2004

The appeal in this family law case presents the issue of whether marital fault is a factor in the determination of alimony and the award of counsel fees. We hold that marital fault is irrelevant to alimony except in two narrow instances: cases in which the fault has affected the parties' economic life and cases in which the fault so violates societal norms that continuing the economic bonds between the parties would confound notions of simple justice. The former may be considered in the calculation of alimony and the latter in connection with the initial determination of whether alimony should be allowed at all. We likewise hold that marital fault is irrelevant to a counsel fee award.

I.

The facts and procedures that gave rise to this appeal are as follows: Plaintiff, Brenda Mani and defendant, James Mani met in 1970 when she went to work for him in his seasonal amusement business on the Seaside Heights boardwalk. James, a college graduate, was at the time, a half-owner of the boardwalk business and a partner in a travel agency in Florida that later failed; Brenda was a college student. Brenda graduated in 1971 and taught preschool for two years while working with James at his business during the summer.

Before the parties were married in 1973, they purchased their first home at 400 Lexington Avenue in Toms River for $30,000. They jointly contributed $5,000 or $6,000 out of profits from the boardwalk business to buy the property. The balance of the purchase price was financed by a $25,000 mortgage held by Brenda's father. The house was purchased in Brenda's name with the intention that it would be used as the marital home.

After their wedding, the parties, who have no children, worked full time together "side by side" at the boardwalk business 100 hours a week, from Memorial Day through Labor Day each year. They also worked weekends in the fall, over Christmas, and in the late spring but spent the remaining months at trade shows or vacationing in Florida and Mexico.

During the early years of the marriage, Brenda's father gave her and her siblings significant gifts of money and investments, including checks for $10,000 a year. Brenda also received tax-free bonds from her father, which, per her father's instructions, were always kept solely in her name.

In 1981, Brenda received a gift of stock from her father in a family-owned business, Ultimate Corporation, that later traded publicly. As a condition of the Ultimate stock gift, Brenda's father required each of his children and their spouses to sign a waiver stating that the spouses were not entitled to share in the stock. Over the years, the stock rose in value and split several times, eventually appreciating to $1.7 million in 1991. Brenda's investment income was needed to pay for the couple's expenses because income from the boardwalk business was not enough to support their comfortable lifestyle.

At some point Brenda began to sell her shares of Ultimate stock and, with the proceeds, purchased tax-free bonds in her own name. According to Brenda, she made those stock sales under the direction and advice of her father. Although she discussed her investments with James, Brenda testified that she made all final decisions about investing only after speaking with her broker and financial adviser. James, on the other hand, claimed that he was a knowledgeable investor whose ideas were the impetus for the stock sales.

In the early 1980's, Brenda's father formed a partnership called BAS for his five children and made investments of bonds and stocks in the BAS account. Every year, Brenda received roughly $40,000 from the partnership and the parties used that money for living expenses. In 1987, Brenda liquidated her interest in BAS in an amount just over $500,000, which she then placed in a stock account. Again, the parties dispute the role of James' financial advice in Brenda's decision to liquidate the stock.

In 1986, the parties purchased a second home in Toms River for $145,000 using proceeds from Brenda's Ultimate Stock and $129,000 from the sale of the Lexington Avenue house. That property, at 22 Central Avenue, was conveyed to the parties as husband and wife. Later, title was transferred to Brenda. The parties razed the existing house on that lot and built another in its place, ultimately spending between $500,000 and $750,000 in improvements on a lavish new home.

In addition to the house on Central Avenue, Brenda purchased vacation and rental properties in Florida with funds generated from her investments. She testified that the Florida properties were ultimately a financial loss and that, as a result, she sold them to pay her mortgage.

In 1993, when they were in their 40's, the parties retired from the boardwalk business and lived, in the words of the trial judge, an "extravagant" lifestyle almost exclusively out of Brenda's investment income. According to the parties, the monthly budgetary expense of their household ranged from $7,360 to $13,143. Following the conclusion of the boardwalk operation, James, who had obtained a real estate license in Florida, worked briefly for real estate brokers. Although he provided a few referrals, he never showed a property for the firms and earned only about $20,000 in income in all.

The couple spent seven years together in retirement before Brenda discovered that her husband was having an affair with a woman with whom the parties socialized. Brenda filed a complaint for divorce alleging adultery and extreme cruelty. The trial judge granted James' motion for pendente lite relief, awarding $1,006 per week as spousal support and $7,000 as counsel fees, subject to allocation at the time of the final hearing.

The case proceeded to trial. James claimed entitlement to a permanent alimony award of $68,320 per year and Brenda sought to deny alimony altogether. By the time of trial, Brenda's investment assets were valued at $2.4 million. James' assets consisted of an IRA with a value of $80,000 as of 1999. He also had a partial interest in accounts held jointly by the couple and a shared interest in property from his father's estate valued at $50,000.

The trial judge determined that the property at 22 Central Avenue, which at the time of trial was under contract for sale for $500,000, was subject to equitable distribution but that Brenda's remaining assets were immune.

With regard to Central Avenue, the judge determined that James was entitled to thirty percent of the net proceeds ($141,000). In immunizing Brenda's remaining assets from distribution, the judge found that James' investment advice was "of little significance and import" and that it did not contribute to the growth of Brenda's assets. The judge also denied James' request for counsel fees.

With respect to alimony, the judge awarded James $610 per week based "in substantial part on the defendant's economic dependency." In reaching that conclusion, the judge attributed to James the ability to earn a minimum of $25,000 annually and denominated the alimony award as necessary to maintain the marital standard of living.

James appealed, claiming that the alimony award was insufficient to maintain the marital standard. He contended that even with the additional $25,000 earning capacity attributed to him by the trial judge, he would still be $4,000 short each month in meeting his self-described budgetary needs. He also argued that the distribution of the marital residence was inequitable because he was entitled to half of the sale proceeds, and that he should have been awarded counsel fees based on his need, good faith, and Brenda's superior ability to pay.

Brenda cross-appealed, arguing that James was not entitled to any alimony and should have received no more than sixteen percent of the proceeds from the marital residence because that was the percentage of the purchase price attributable to the sale of the house on Lexington Avenue. She further contended that alimony was inappropriate because James did not contribute non remunerative activities to the marriage, and his economic dependency was not occasioned by the marriage, but by his own "indolence."

The Appellate Division affirmed and held that there was sufficient credible evidence in the record to support the trial judge's permanent alimony award; that "though the alimony award may be insufficient for defendant to maintain his relaxed marital lifestyle, the reduction in his living standard is justified, in part, by the finding that plaintiff established he was adulterous and committed acts of extreme cruelty;" that the trial judge did not abuse his discretion in allocating the parties' interests in the property at 22 Central Avenue; and that the denial of the counsel fee application was proper in light of the substantial pendente lite award and the finding of marital fault.

In reaching its conclusions, the court observed that "[t]he Manis' standard of living was not the result of the parties' joint efforts, but rather solely due to gifts from plaintiff's father." The panel also noted that although the trial court did not specifically mention adultery and extreme cruelty as factors in the alimony analysis, it did find that the Brenda had proven the grounds asserted in her complaint. According to the Appellate Division, James' adultery was significant and "his marital indiscretions warrant consideration in the amount of that award." The court also cited marital fault as a factor in the denial of counsel fees.

We granted James' petition for certification on issues of alimony and counsel fees, Mani v. Mani, 178 N.J. 453 (2004), and accorded amicus status to the New Jersey State Bar Association.

II.

James asks us to establish, as a rule of law, that in modern matrimonial practice, fault should play no part in an alimony determination or in an award of counsel fees. He contends that, as a matter of practice, courts are abiding by that rule and that the Appellate Division decision has upended the status quo by wrongly interjecting fault into the equation.

Brenda counters that N.J.S.A. 2A:34-23(b) gives courts discretion to "consider any other factors which the court may deem relevant" in arriving at an alimony decision, including marital fault. However, she candidly concedes that the present practice is to focus on the finances of the parties and rarely involves fault.

With respect to counsel fees, she acknowledges that marital fault is not a consideration and argues that the real reason for the denial of fees in this case was the $7,000 pendente lite award, the $141,000 in equitable distribution, and the failure of James to submit an Affidavit of Services.

Amicus Curiae urges us to rule that fault should not be a factor in the determination of alimony except in the most egregious circumstances and that the focus of alimony should remain, as is the present practice, on the parties' financial circumstances.

III.

We turn first to the question of whether fault should be considered in an alimony analysis.

A.

The history of alimony is instructive. In early England, two forms of marital dissolution existed. The most common was an ecclesiastical divorce from bed and board (a mensa et thoro). Robert Kirkman Collins, The Theory of Marital Residuals: Applying An Income Adjustment Calculus to the Enigma of Alimony, 24 Harv. Women's L.J. 23, 28 (2001). In reality that "divorce" was a legal separation that, in accordance with religious teaching on the indissolubility of marriage, did not terminate the marital relationship. John Witte Jr., The History and Evolution of Marriage From Sacrament to Contract: Marriage, Religion and Law in Western Tradition 156, 160-61 (1997). The other form - - a civil divorce (a vinculo matrimonii) - which literally means severing the chains of matrimony, although technically available, was extremely rare because it required an act of Parliament. 13 Halsbury's Laws of England, 245 (1975).

Alimony was granted only in the former class of cases on the theory that husband was obliged to continue to support his wife as long as they remained married. Collins, supra, 24 Harv. Women's L.J. at 28-29 (2001). Somehow, with the passage of time, the distinction between true divorce and mere separation was obliterated and alimony began to be awarded in all cases. No rationale was advanced to explain why parties, who were no longer married, remained economically bound to one another. As one legal scholar put it:

By the time that matrimonial law reform in Great Britain created universally accessible civil divorce in the mid-nineteenth century, the concept of alimony was so well-accepted that it was carried over and applied to those new cases where the marriage itself was actually ending, without apparent reflection or explanation as to why it should continue once the marital relationship had been extinguished. Section 32 of the Matrimonial Causes Act [of] 1857 gave the judge discretion to order a husband to provide for his wife even after the marriage had ended in an amount reflecting her own wealth, his own means, and their respective conduct during the marriage. Posterity was not, however, provided with a rationale.

[Ibid.]

Divorce based on the English practice was available in the American colonies from the earliest times. Maynard v. Hill, 125 U.S. 190, 206, 8 S.Ct. 723, 727, 31 L.Ed. 654, 657 (1888). The concept of alimony also carried over. Again, as had been the case in England, the reason for alimony, outside the legal separation scenario, remained an enigma. 2 Homer Harrison Clark, The Law of Domestic Relations in the United States, 257-58 (2d ed. 1988). That lack of clarity regarding the theoretical underpinning of post-divorce alimony explains why, although alimony is now awarded in every jurisdiction, Collins, supra, 24 Harv. Women's L.J. at 31, there is no consensus regarding its purpose.

Indeed, many distinct explanations have been advanced for alimony. Id. at 23. They include its characterization as damages for breach of the marriage contract, Margaret F. Brinig & June R. Carbon, The Reliance Interest in Marriage and Divorce, 62 Tul. L. Rev. 855, 882 (1988); as a share of the benefits of the marriage partnership, Rothman v. Rothman, 65 N.J. 219, 229 (1974); as damages for economic dislocation (based on past contributions), Elisabeth M. Lands, Economics of Alimony, 7 J. Legal. Stud. 35 (1978); as damages for personal dislocation (foregoing the chance to marry another), Lloyd Cohen, Marriage, Divorce, Quasi Rents; Or, "I Gave Him the Best Years of My Life," 16 J. Legal Stud. 267, 276 (1987); as compensation for certain specific losses at the time of the dissolution, A.L.I., Principles of Law of Family Dissolution: Analysis and Recommendations, 8 Duke J. Gender L. & Pol'y 1, 28 (2001); as deterrence or punishment for marital indiscretion, Brinig & Carbone, supra, 62 Tul. L. Rev. at 860-61; and as avoidance of a drain on the public fisc, Miles v. Miles, 76 Pa. 357, 358 (1874).

Obviously, some of those purposes favor consideration of fault and some disfavor it. Thus, for example, in jurisdictions that continue to consider alimony as a punishment for marital indiscretion, deterrence against bad behavior, or damages for breach of the marital contract, fault logically figures into the calculus. Contrariwise, in those jurisdictions that view alimony solely in economic terms and prohibit its characterization as punitive, fault would not likely be considered as a weight at all. In other words, the purpose that is identified by a jurisdiction as the rationale for awarding alimony is closely connected to the question whether fault should be a factor in its calculation.

New Jersey cases have long expressed the view that alimony is neither a punishment for the payor nor a reward for the payee. Aronson v. Aronson, 245 N.J. Super. 354, 364 (App. Div. 1991); Turi v. Turi, 34 N.J. Super. 313, 322 (App. Div. 1955); O'Neil v. O'Neil, 18 N.J. Misc. 82, 89 (Ch.), aff'd, 127 N.J. Eq. 278 (E. & A. 1940). Rather, it is an economic right that arises out of the marital relationship and provides the dependent spouse with "a level of support and standard of living generally commensurate with the quality of economic life that existed during the marriage." Stiffler v. Stiffler, 304 N.J. Super. 96, 99 (Ch. 1997) (quoting Koelble v. Koelble, 261 N.J. Super. 190, 192-193 (App. Div. 1992)). If that were our sole benchmark, resolving the issue whether fault should be an alimony consideration would be relatively simple. The answer would be "no." There is, however, more to consider.

B.

N.J.S.A. 2A:34-23(b) provides that in all divorce actions "the court may award one or more of the following types of alimony: permanent alimony; rehabilitative alimony; limited duration alimony or reimbursement alimony to either party." When ordering alimony, a "court shall consider" a non-exclusive list of enumerated factors:

(1) The actual need and ability of the ...


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