June 27, 2007
SUSANNE G. BAKER, PLAINTIFF-APPELLANT,
GARY D. BAKER, DEFENDANT-RESPONDENT.
On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Burlington County, FM-03-001459-97.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued June 6, 2007
Before Judges Stern, A. A. Rodríguez and Sabatino.
In this post-judgment matrimonial case, the Family Part issued an order on June 30, 2006 reducing the monthly alimony obligation of defendant Gary D. Baker (the "ex-husband") from $9,500 to $7,500. Plaintiff Susanne G. Baker (the "ex-wife") appeals the alimony modification. Although we affirm the Family Part's threshold determination that the ex-husband's motion papers furnished a prima facie showing of changed circumstances, we vacate the alimony reduction, without prejudice, and remand the matter for a plenary hearing.
The parties were married in 1968. They divorced on February 2, 2000 after thirty-one years of marriage. They have two emancipated children. The ex-husband has remarried. At the time of the motion proceedings now on review, the ex-husband was sixty-three years old, and the ex-wife was age fifty-nine.
For many years, the ex-husband worked in a trucking business, Windsor Distribution, Inc. ("Windsor"), which once specialized in furniture deliveries. At the time of the divorce, the ex-husband owned a fifty percent interest in Windsor. The ex-wife did not work during the marriage. She denies working since the divorce, although she did claim a tax deduction in 2004 associated with an investment in some form of septic business.
According to his income tax returns, the ex-husband earned net income of $264,202 in 1998, the calendar year in which the ex-wife filed her divorce complaint. Pursuant to the Property Settlement Agreement (PSA) attached to the final judgment, the parties agreed in their divorce settlement to allocate substantial assets--about $944,825 to the ex-wife, and $655,700 to the ex-husband, along with the retention of his interest in his trucking company. Both parties were represented by counsel in the divorce proceedings.
As part of the terms of the divorce, the ex-husband agreed to pay the ex-wife permanent alimony of $9,500 per month. However, Article II, §7 of the PSA recites that the ex-husband's alimony "may be renegotiated at [ex-husband's] option, either upon husband's retirement from active employment or upon [exhusband's] suffering from any medically determinable physical or mental impairment that renders him unable to engage in any substantial gainful employment or significantly reduces his income."
The ex-husband argues that his right to such a renegotiation has been triggered. He notes that he has sold his interest in the trucking business, which has been on the decline since September 11, 2001, to his brother-in-law, a vice president of Windsor. The sale price was $250,000, largely payable to the ex-husband in the form of salary.*fn1 The ex-husband also asserts that the company's profits have steadily declined in recent years.
Further, the ex-husband has tendered a short unsworn*fn2 letter addressed to his counsel from a physician. The physician notes that the ex-husband has hypertension, non insulin-dependent diabetes, and cholesterol problems. The physician recommends that the ex-husband consider early retirement to reduce his stress level. The ex-husband claims that he is in the process of retiring, but does not contend that he has ceased all work.
At the outset of 2006 the ex-husband asked his ex-wife to renegotiate alimony. After she repeatedly refused, the ex-husband filed a motion in the Family Part in March 2006 seeking to terminate the alimony, or, alternatively, to reduce it.
In his certification in support of the motion, the ex-husband contended that his financial circumstances had significantly changed since the time of the February 2000 divorce. Among other things, he asserted that his earned income had dropped to $164,000 in 2004, and had further declined to $123,000 in 2005. He also alleged that Windsor has encountered cash flow difficulties, stemming from increased fuel costs and the loss of furniture delivery business to New York City, and is down to two remaining customers. The ex-husband also asserted that his medical problems have caused him to reduce his work effort. He further indicated that he would turn age sixty-five in July 2007, and that he intended to collect Social Security benefits upon full retirement.
The ex-wife opposed the motion. Her own certification asserted that the ex-husband had exaggerated his financial difficulties. She noted that the ex-husband's 2005 income tax return reflected gross income of $227,292, which she asserts was comparable to the sums he was earning before the divorce. She also questioned the bona fides of the sale price of the exhusband's shares in Windsor to his brother-in-law, and his allegations that the company was in a decline. She alleged that the ex-husband's net worth was still in excess of $1.6 million, and that she remained totally dependent upon him for support. Additionally, the ex-wife was skeptical of the ex-husband's alleged medical problems, which may be controlled with proper diet, medications, and stress relief.
In a reply certification, the ex-husband attached documentation showing that Windsor's net income had declined to under $24,000 for the first quarter of 2006. He asserted that his only regular source of income would soon be $1,966 in monthly Social Security benefits. He also insisted that the sale of his interest in Windsor was an arm's length transaction for fair market value.
Following oral argument, and after considering the competing certifications and the parties' updated Case Information Statements and tax filings, the motion judge denied the ex-husband's motion to terminate alimony. However, the judge did reduce the ex-husband's monthly alimony by $2,000, to a net amount of $7,500. The modification was ordered on June 30, 2006, without prejudice to the ex-husband's ability to seek a further reduction when he reaches the age of sixty-five and possibly fully retires. A stay of that order pending this appeal was denied.
Preliminarily, we discern no material distinction, at least for purposes of the present appeal, between the contractual standard for "renegotiation" of alimony in Article II, §7 of the parties' PSA, and the ordinary standard of "changed circumstances" for modifying support post-judgment under Lepis v. Lepis, 83 N.J. 139 (1980). The PSA envisions that the exhusband's retirement, or a physical or mental disability preventing him from being substantially employed or that significantly reduces his income, would trigger a potential reduction of his alimony. Similar events may justify a reduction of alimony under the Lepis criteria. Lepis, supra, 83 N.J. at 151-52; Halliwell v. Halliwell, 326 N.J. Super. 442, 448 (App. Div. 1999); Silvan v. Sylvan, 267 N.J. Super. 578, 581 (App. Div. 1993).
Here, we are satisfied that the motion judge had an ample basis for determining, as a threshold matter, that the exhusband's motion papers alleged factual matters sufficient to constitute a prima facie case of changed circumstances under Lepis, as well as triggering events for renegotiation under Article II, §7 of the PSA. Those matters included the alleged deterioration of Windsor's business, the sale of the exhusband's interest in Windsor as the company that employed him, his anticipated full retirement and collection of Social Security benefits, and his alleged medical limitations. Given these factors, we agree that the ex-husband presented non-frivolous grounds to reconsider his continued obligation to pay $114,000 a year in alimony. To be sure, the ex-wife raised significant questions about the strength and credibility of those assertions. However, such genuine issues of fact are best resolved in a plenary hearing. See Lepis, supra, 83 N.J. at 159; see also Isaacson v. Isaacson, 348 N.J. Super. 560, 579 (App. Div.), certif. denied, 174 N.J. 364 (2002).
At such a plenary hearing, the parties' competing assertions could be tested through cross-examination, with the judge obtaining the chance to evaluate the witnesses' demeanor and credibility. The bare numbers on the parties' financial submissions in this case, which are in several respects conflicting, are insufficient to resolve this matter fairly. In particular, the trial court would be in a far better position to assess the validity of the ex-husband's professed intent to retire, under the multi-factor standards set forth in Silvan v. Sylvan, supra, 267 N.J. Super. at 581 (specifying factors relevant to determining whether a retirement by a supporting spouse qualifies as a changed circumstance under Lepis).
We understand from the oral argument before us that the ex-husband expects to file a renewed motion in the Family Part seeking to terminate or further reduce his alimony after he attains the age of sixty-five next month in July 2007. If such a motion is indeed filed, and is not resolved despite good-faith negotiations by the parties and their counsel, we suggest that the Family Part combine any plenary hearing on the new application that may be warranted with the remand proceedings we have ordered herein concerning the ex-husband's original motion from 2006.*fn3
In remanding this matter on procedural grounds, we by no means intimate a preferred outcome. After all the proofs are duly considered, the ex-husband's alimony conceivably might remain at its original level, might be reduced, or might be terminated altogether. Additionally, although we have vacated the order reducing alimony, we direct that no arrears arising from that vacature shall be owed immediately by the ex-husband, but instead will let that potential liability be sorted out on remand.
Affirmed in part, vacated in part, and remanded for a plenary hearing. Jurisdiction is not retained.