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Costanza v. Clemente

March 27, 2006


On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Hunterdon County, FM-10-224-02.

The opinion of the court was delivered by: Parker, J.A.D.


Submitted October 19, 2005

Before Judges Stern, Parker and Grall.

In this appeal, we are faced with the untoward results of the Family Part entering a judgment of divorce before equitable distribution was resolved, contrary to R. 5:7-8. We are well aware of the pressures placed on trial judges by the court administration to dispose of dissolution matters and "clear" dockets, particularly in the Family Part. No one can dispute the value of a speedy disposition in a family matter. Premature entry of a final judgment, however, may ultimately result in a significant injustice to the parties. Moreover, when trial judges are pressured to do "bench time" without being given the time necessary to adequately research and prepare decisions, the litigants are deprived of a fair and just resolution of their disputes. Incomplete or piecemeal decisions inevitably lead to further post-judgment litigation that is both costly for the litigants and time consuming for the courts at the expense of other cases that await disposition. Case clearance is a noble goal, but we are "constitutionally entrusted with the fair and just resolution of disputes in order to preserve the rule of law and to protect the rights and liberties guaranteed by the Constitution and laws of the United States and this State." Mission Statement of the New Jersey Court System.

In this case, the judgment of divorce was amended twice:

(1) by an order entered on June 28, 2004, addressing equitable distribution; and (2) by an order entered on February 3, 2005, amending the June 28, 2004 order and vacating an order of September 9, 2004 denying reconsideration of paragraphs 4 and 5 of the June 28, 2004 order. The parties cross-appeal from the orders entered on June 28, 2004, September 9, 2004 and February 3, 2005.


The facts and procedural history relevant to this appeal are summarized as follows. The parties were married in October 1992 and had two children. In 2000, before the parties separated, they jointly exercised stock options that plaintiff received through her employment with BEA Systems, Inc. (BEA). At the time, they were unaware that exercising the options would result in a $59,285 tax liability for that year. The parties discovered their liability when preparing their 2000 tax return in 2001 but did not pay the taxes at that time because they did not have the funds to do so.

In October 2001, they separated and the complaint for divorce was filed on December 17, 2001. Shortly after the separation, plaintiff's employment with BEA was terminated, and the parties were required to exercise plaintiff's remaining stock options at that time or loose them. They hired a consultant to advise them regarding the exercise of the stock options and the unpaid 2000 tax debt. In January 2002, they agreed to exercise the remaining options, sell all the stock, and use the proceeds to pay the taxes from the 2000 stock sale as well as other stock sale taxes. After the stock was sold in February 2002, plaintiff transferred "a portion of the proceeds of the sale into a joint account and paid the total joint 2000 tax debt." In turn, the payment of the year 2000 taxes created an alternative minimum tax credit of $59,285 and they used this credit to offset the total taxes that were due.

All of the stock sales were recorded in plaintiff's name, because the stock options were part of her employment compensation package. Likewise, the stock sales were listed as income on plaintiff's W-2 form. According to plaintiff, she properly applied the alternative minimum tax credit toward the tax obligation created by the stock sales. She then paid the remaining 2002 taxes with the stock sale proceeds.

On August 4, 2003, a Judgment of Divorce was entered pursuant to a Property Settlement Agreement (Agreement) placed on the record.*fn1 The judgment states in its entirety:

A Judgment of Divorce having been granted this day and the Amended Judgment of Divorce to be submitted; and good cause appearing:

IT IS On this 4 Day of Aug, 2003: ORDERED that the parties are hereby divorced pursuant to N.J.S.A. 2A:34-1 et seq.

IT IS further ordered that the Property Settlement Agreement entered into between the parties is hereby incorporated in this judgment it being understood that the court took no testimony on this agreement nor is it ruling on the merits thereof.

The plaintiff may resume her maiden name of Karen Costanza.

On September 19, 2003, the trial court set aside the Agreement for reasons not included in the record. Nine months later, on June 15, 2004, the parties returned for a trial on the unresolved equitable distribution issues. During the trial, plaintiff sought to testify regarding "on-going and extraordinary expenses that she incurred and paid during the parties' separation from 2001 to 2003 for the maintenance of the home and support and care of the children." The issue was whether defendant was obligated to reimburse plaintiff for monies she used for household and children's expenses during the period between her termination from BEA and her re-employment. The trial judge stopped plaintiff's testimony, however, and indicated that he did not think it was "helpful to this case."

At the end of the trial, the judge directed the parties to submit memoranda regarding three disputed issues: (1) whether plaintiff's severance pay or vacation pay is subject to equitable distribution; (2) whether defendant is entitled to equitable distribution of the $59,286 alternative minimum taX credit; and (3) whether defendant is entitled to equitable distribution of the BEA stock sale proceeds in 2002.

After receiving the memoranda, the trial judge rendered his decision on the record and stated:

There were five separate items left for my determination. Number one, the defendant's claim for a credit of $4,906.00, representing his share of the pay-down of the principal on the mortgage for the marital home.

Number two, the plaintiff's claim for $20,000.00 credit, in light of Judge Herr's order, dated January 24, 2003, specifically, paragraph 13 of that order.

Number three, whether the defendant is entitled to one-half the severance pay and vacation pay, given to the defendant on November the 15th, 2001.

Number four, whether the defendant is entitled to one-half the value of the tax credit, in the amount of $29,642.56, generated by the exercise of BEA stock options that go back to the year 2000.

Number five, whether the defendant is entitled to one-half the value of BEA stock sold, as a result of plaintiff exercising stock options, and that one-half value is in the amount of $130,005.35.

The first two items did not involve testimony, but I heard oral argument from both attorneys.

Before I set forth my findings, as to equitable distribution, let me just state that I am, of course, mindful of the case of Rothman v. Rothman, 65 N.J. 219 (1974) [], and the statutory factors set forth in [N.J.S.A.] 2A:34-23.1.

In that regard, the specific property has already been identified as the five items that I have set forth. The value has been established, and as to allocation, I have decided that the allocation should be on a 50/50 basis.

The reason being that the settlement placed on the record, as to all of the other items, as well as the other certifications filed in this case, all contemplated a 50/50 division. Even where there has been disagreement as to whether or not someone's entitled to a credit, each party is seeking 50 percent credit from the other party.

Therefore, there's no reason for me to depart from that division, except for one area, which relates to the distribution of the value of BEA stock, for reasons that I'll set forth hereafter.

The judge then: (1) denied defendant's request for a $4,906 credit for payment of mortgage principal; (2) granted plaintiff's request for a $20,000 credit per the January 24, 2003 order (offsetting the $20,000 advance to the defendant to litigate the divorce); (3) denied defendant's request for a portion of plaintiff's severance and vacation pay; (4) granted defendant's request for one-half of the tax credit in the amount of $29,642.50; and (5) granted defendant's request for a credit from the sale of BEA stock in the amount of $115,257.35. This decision was memorialized in an order entered on June 28, 2004.

Plaintiff's motion for a stay of the order pending appeal was denied.

On July 14, 2004, plaintiff moved for reconsideration, disputing paragraphs 4 and 5 in the June 28, 2004 order, "ask[ing] the court to make specific findings of fact and conclusions of law" regarding those paragraphs. On ...

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