On certification to the Superior Court, Appellate Division.
(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 Court considers whether the sale of marital real property can be ordered prior to a final judgment of divorce.
Plaintiff Laura Randazzo and defendant Joseph J. Randazzo, Jr., were married in 1954. In 1961, the parties acquired commercial property and an adjoining two-family residence. They operated an auto repair facility and a licensed used car dealership at that location. Joseph Randazzo sold and repaired cars and Laura Randazzo did the bookkeeping for the businesses, which grew to gross between $350,000 and $400,000 annually. A substantial part of that income resulted from a towing contract with the City of Clifton. The parties also leased out commercial building space. Over the years, they purchased additional properties, including a vacation home in Florida (the Florida property), and a fifty-two acre horse farm in New Jersey for raising and training race horses.
In 1997, Laura Randazzo filed for divorce. In her Case Information Statement, she listed no monthly income and $13,482.86 in monthly expenses. She also listed $2,802,190 in net assets and $440,916.32 in liabilities. After filing for divorce, Laura obtained Joseph's consent to sell the Florida property. However, Joseph then resisted the sale and Laura filed a motion seeking the sale of the property, pendente lite support, and appraisals of the properties owned by the parties. In his response, Joseph admitted that he had agreed to sign the listing agreement for the Florida property and acknowledged the need to liquidate assets. He claimed, however, that there was no money to pay for an appraisal because he had lost the towing contract with the City of Clifton, resulting in the reduction of their income and the exhaustion of their savings. Nor would there be money for pendente lite support, Joseph explained, until their assets were liquidated. The trial court found the motion to sell the Florida property "moot," presumably because Joseph had agreed to the sale. Although the court ordered Joseph, in part, to pay temporary support, he failed to do so and Laura moved for additional support and other relief. The judge required the parties to list various properties for sale and authorized Laura to sign Joseph's name to the listing agreements if necessary.
In October 1998, Laura filed an order to show cause seeking authorization to sign the agreement of sale and to execute closing documents for the Florida property, to pay delinquent taxes on all of their real estate holdings with the proceeds, and to evenly divide the balance. Joseph responded that he had signed the agreement, but would not release it until there was an understanding regarding the disbursement of the proceeds. The court granted Laura's requests regarding the closing of the sale of the property, but required any remaining proceeds to be placed in a trust account after the payment of outstanding real estate tax liens on the New Jersey real estate. Subsequently, the judge ordered additional disbursements from the sale of the Florida property to pay certain obligations.
Trial on equitable distribution and alimony occurred in 1999 and 2000. In relevant part, the court found that neither party was capable of being self-supportive at the upper-middle-class standard of living enjoyed during the marriage, both parties contributed to the acquisition of the assets, and both parties would suffer equivalent tax consequences. The court ordered the assets equally divided, but assessed Joseph a greater portion of the liabilities because he had not met his pendente lite obligations. The court also adjusted portions of the equitable distribution to account for obligations, such as liens and taxes, that should have been paid by Joseph but were not. Additionally, because Joseph had caused the loss of $20,000 in equity by his wrongful delay in selling the Florida property, the court ordered him to pay Laura $10,000, representing her share of that loss of equity. The court then applied the statutory factors and awarded Laura alimony. A final judgment of divorce was entered September 11, 2000.
Joseph Randazzo appealed. On January 2, 2001, the trial court entered an amended judgment of divorce, and Joseph filed a separate appeal from that judgment. The appeals were consolidated. Following a partial remand, the trial court held a plenary hearing regarding alimony, and issued several orders, from which Joseph also appealed.
The Appellate Division affirmed the trial court. The panel noted that the main question on appeal was whether the judge erred in ordering the pendente lite sale of the Florida property. The panel distinguished Grange v. Grange, 160 N.J. Super. 153, 158-59 (App. Div. 1978), which held that absent consent, marital assets could not be sold and distributed prior to the divorce of the parties. In respect of challenges to the trial court's award of alimony, the panel found no need to address the judge's decision, noting Joseph's waiver of the issue by failing to raise it in his first two appeals. Nonetheless, the panel considered the merits of the claim and rejected it. The panel noted also that Joseph can move for relief from payment of alimony based on changed circumstances at any time.
This Court granted Joseph Randazzo's petition for certification, limited to the questions whether the trial court erred in ordering the pendente lite sale of real property or in its disposition of the alimony issue.
HELD: A trial court has the discretion to order the sale of marital assets prior to a judgment of divorce when the circumstances of the case so justify. Although ordinarily distribution of the proceeds from the sale of a marital asset should await the final judgment of divorce, a court has the discretion to order an earlier distribution to serve the best interests of the parties.
1. Because Joseph Randazzo did not properly appeal the alimony issue, certification was improvidently granted on that issue and the Court dismisses it. (P. 11).
2. In respect of the sale of the Florida property, N.J.S.A. 2A:34-23 states, in part, that pending any matrimonial action, the court may make such order as to the alimony or maintenance of the parties and children as circumstances render fit, reasonable and just. N.J.S.A. 2A:34-23(h) authorizes the court, where a judgment of divorce is entered, to make an award to the parties that will effectuate the equitable distribution of the marital property. (Pp. 11-13).
3. In Grange, the Appellate Division interpreted N.J.S.A. 2A:34-23 to severely limit the court's authority prior to the judgment of divorce. There, a trial court authorized the sale of a condominium because the plaintiff claimed that he could not afford to maintain three residences, pay support and pay the defendant's counsel fees. On appeal, the panel reviewed N.J.S.A. 2A:34-23(h) and concluded that the trial court lacked authority to order a pre-judgment distribution of marital property absent consent of the parties. Several courts subsequently distinguished Grange on the facts. Additionally, Rule 5:3-5(c) was amended to provide, in part, that the court may direct parties to sell or encumber marital assets to fund the divorce litigation. (Pp. 13-18).
4. The Court disapproves of Grange to the extent it stands for the proposition that, absent consent, the trial court lacks authority to order the sale of a marital asset prior to the judgment of divorce. The Family Part is a court of equity. The Court reads the statutory requirement that directs equitable distribution at the time of divorce judgment to be limited by the portion of N.J.S.A. 2A:34-23 that authorizes the court in its discretion to make orders as to the alimony or maintenance of the parties, and also as to the care, custody, education and maintenance of the children. The Court concludes that, consistent with N.J.S.A. 2A:34-23 and Rule 5:3-5, the trial court may exercise its discretion to order the sale of marital assets and the utilization of the proceeds in a manner as "the case shall render fit, reasonable, and just." The Court acknowledges that in many cases the proceeds from the sale of marital assets should be placed in escrow pending final distribution, but in other cases, the proceeds may properly be used to pay marital obligations. The Court leaves to the discretion of the trial court the varying circumstances that may justify the sale of marital assets and the utilization of the proceeds prior to the divorce judgment. (Pp. 18-19).
5. Here, the Court notes that the parties had several valuable pieces of real estate but little money to meet the financial obligations on those properties, including state tax liens. The sale of the Florida property was necessary for the financial maintenance of the parties. The trial court recognized that the mounting marital obligations could be abated by the sale of the Florida property and the utilization of the proceeds to pay some of the obligations. Further, the court required that the balance of the proceeds should be held in a trust account and distributed at the time of the final hearing. The Court concludes that the trial court acted well within its discretionary powers by ordering the sale of the Florida property and that the disbursement of a portion of the proceeds to meet the pressing obligations of the parties was fit, reasonable, and just. (Pp. 19-20).
The judgment of the Appellate Division is AFFIRMED.
CHIEF JUSTICE PORITZ and JUSTICES LONG, LaVECCHIA, ZAZZALI, ALBIN and RIVERA-SOTO join in JUSTICE WALLACE's opinion.
The opinion of the court was delivered by: ...