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Maybaum v. Maybaum

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


July 2, 2007

LAUREN A. MAYBAUM, PLAINTIFF-APPELLANT,
v.
SCOTT K. MAYBAUM, DEFENDANT-RESPONDENT.

On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Morris County, Docket No. FM-14-0134-98.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued May 31, 2007

Before Judges Lefelt, Parrillo and Sapp-Peterson.

Four to five years after entry of the dual judgment of divorce on September 5, 2001, the Family Part, in a series of orders dated April 22, 2005, October 5, 2005, March 31, 2006 and May 4, 2006, finally resolved all issues of equitable distribution and counsel fees remaining between the parties. It is from portions of these post-judgment orders that plaintiff Lauren Maybaum appeals.

The procedural history is long and complex and we mention only those facts pertinent to this appeal. Plaintiff and defendant Scott Maybaum married in June 1996 and had two children. Plaintiff filed for divorce eleven years later on July 2, 1997. At the outset of the marriage, each party acquired title to two liquor licenses from plaintiff's father, a successful businessman who owned liquor stores and a management company, Allied Management, Inc. (Allied), with real estate holdings.*fn1 Defendant became employed at Allied and eventually advanced to a management position in the company. Part of his management responsibilities entailed weekly checking of the inventory at the liquor stores, all of which, including the four stores owned by the parties, were managed by Allied for a management fee.

During the course of the marriage, plaintiff's father and an unrelated third party invested in various Dunkin' Donuts franchises. Defendant participated in the operation of these stores to some extent, but always under the auspices of plaintiff's father and Allied. By virtue of their familial relationship, the parties were joint owners of forty percent of the Dunkin' Donuts stores.

Sometime in 1996 or the early part of 1997, defendant formed his own company called Wine Country, Inc. He initially intended to open a wine store in the Scarsdale area, but later settled on and purchased property in Long Island, referred to as the "LT Purchase." However, defendant owned the Long Island property for only one year, having sold it and realized a profit of $650,000.

By the beginning of April 1997, the parties had, for all intents and purposes, decided to end their marriage. Not only did they separate their bank accounts, but defendant also gave notice to Allied that he was withdrawing the Ledgewood and Gillette stores from its management umbrella.

Following the divorce complaint on July 2, 1997, a series of pendente lite and case management orders were issued over the next several years. Orders of November 10, 1999, May 18, 2000 and June 14, 2000, addressed discovery issues relating to the LT Purchase and sale. A nineteen-day trial in 2000 resolved certain issues, but left others unresolved. An order of March 30, 2001, deferred counsel fee requests until the final judgment of divorce, and directed defendant to provide an accounting of the Gillette and Ledgewood stores and to preserve the stores' assets.

By decision of August 1, 2001, which was incorporated into a dual judgment of divorce issued on September 5, 2001, Judge Schaeffer, who presided over the nineteen-day trial, appointed William Morrison (Morrison), a certified public accountant, to value the stores and analyze the parties' income from all sources with the aid of a cash flow analysis from A.J. Wilner; appointed Charles DeFuccio (DeFuccio) as Discovery Master to facilitate discovery and assist Morrison; directed that discovery and the fiscal analysis be completed in 120 days; and stayed equitable distribution pending their completion. Another order, issued by Judge Schaeffer on November 8, 2001, granted defendant's request to sell the Gillette and Ledgewood stores, and further directed defendant to provide certain financial information and place the proceeds from sale of the Gillette and Ledgewood stores in escrow. Judge Schaeffer subsequently passed away and the case was reassigned to another Family Part judge. In April 2002, the parties cross-moved to buy-out the other's interest in the Gillette and Ledgewood stores. After hearing argument on the competing applications, on June 11, 2003, the Family Part judge entered an order granting plaintiff's motion to purchase defendant's interest in the Gillette and Ledgewood stores for $768,000 and directing that the sale be effectuated within 120 days.*fn2 The order also gave plaintiff the option to purchase the inventory on hand on the date of closing. The sale did not take place as directed and on April 20, 2004, defendant moved to enforce the June 11, 2003 order. On June 7, 2004, the judge granted defendant's motion and ordered the sale of the Gillette and Ledgewood stores to take place on or before July 7, 2004.

The July 7, 2004 deadline was not met. Instead, on August 26, 2004, plaintiff filed a motion requesting, among other things, that her payment for the Gillette and Ledgewood stores be offset by a credit for one-half of the inventory that existed in the stores on July 1, 1997, the date of the filing of the divorce complaint. Defendant countered with a cross-motion, seeking enforcement of the June 7, 2004 order directing sale of the Gillette and Ledgewood stores, and without any credit to plaintiff. On October 27, 2004, the judge ordered that a plenary hearing be held to determine, among other things, the credit, if any, due plaintiff on her share of the inventory as of July 1, 1997. In the meantime, Morrison issued his expert report on September 17, 2004.

At the plenary hearing on November 17 and 18, 2004, Morrison testified at length about inventory valuation both at time of closing, November 10, 2004, and at date of complaint, July 1, 1997:

[Plaintiff's Counsel]: Basically, would you agree that it's clear that [plaintiff] has delivered $768,000 to [defendant] in connection with the transaction?

[Morrison]: Yes.

[Plaintiff's Counsel]: With adjustments that are typical in terms of making the transfer effective on a date in the middle of the month.

[Morrison]: Yes.

[Plaintiff's Counsel]: And that subject to the Court's decision [defendant] has transferred all his interest in those businesses to [plaintiff].

[Morrison]: That's correct.

[Plaintiff's Counsel]: And would you further agree that what has happened here is that the parties took a physical count of the inventory at the two stores and calculated the dollar value of the -- what I'll call the November 10, 2004 inventory at an agreed upon figure as adjusted of $424,395.30?

[Morrison]: Yes, sir.

[Plaintiff's Counsel]: And because we didn't have an agreement it's clear that -- those funds were turned over to [plaintiff's counsel]. They're in his trust account.

[Morrison]: Yes.

[Plaintiff's Counsel]: Now what -- what is not represented here in the transaction that happened on November 10 is the credit, if any, that [plaintiff] may be entitled to in connection with the -- half the dollar value of the inventory on July 1 of 1997, correct?

[Morrison]: Correct.

[Plaintiff's Counsel]: So that as we --basically, as we look at the position of the parties at closing, let's just put ourselves back at the closing table, November 10, 19--2004, last week.

[Morrison]: Yes.

[Plaintiff's Counsel]: [Plaintiff] pays $768,000 for the business, right?

[Morrison]: Yes.

[Plaintiff's Counsel]: She has advanced, subject to credits, dollar for dollar, this $424,000 number, correct?

[Morrison]: Correct.

[Plaintiff's Counsel]: And she asked -- you understand she asks for the Court to recognize that she's entitled to a credit of 50 percent of the '97 inventory.

[Morrison]: Yes.

[Plaintiff's Counsel]: And so if we -- if we did a calculation, and we'll do it in a minute, what we're looking for -- what [plaintiff's] looking for is an adjustment off the $424,000 that's on deposit for inventory to give her a just participation in the inventory that existed in 1997.

[Morrison]: Correct.

[Plaintiff's Counsel]: The top half of P-5 for identification shows an approach to the transaction, which doesn't include the balance sheet adjustments, correct?

[Morrison]: Correct.

[Plaintiff's Counsel]: And it -- it would indicate, using also a year-end '96 figure that [plaintiff] would be entitled to a $295,736 credit against the inventory that she acquired last week, correct?

[Morrison]: Yes.

[Plaintiff's Counsel]: And so if we were doing the deal on that basis Lauren would pay, and has paid the $768,000 for the stores, and an additional 128,000 would be due for the inventory.

[Morrison]: Yes.

[Plaintiff's Counsel]: And that would be the end of the deal as you understand [plaintiff's] position.

[Morrison]: Yes.

[Plaintiff's Counsel]: So whichever way you look at this deal from [plaintiff's] position, she would pay, looking back from the vantage point of 2004 back to 1997, she'd be paying the 668,000 for the business, right?

[Morrison]: 768, sir.

[Plaintiff's Counsel]: Seven -- I misspoke. She'd be paying the $768,000 for the two businesses?

[Morrison]: Correct.

[Plaintiff's Counsel]: She would be buying the inventory as measured and calculated by agreement of the parties at 424,000?

[Morrison]: Correct.

[Plaintiff's Counsel]: She would get a credit for half of the inventory as it existed back at the date of value, and you used a number of 295,736, correct?

[Morrison]: Yes.

[Plaintiff's Counsel]: That could be a higher number if we apply, and we're not going to do that math here. It could be 32 percent higher?

[Morrison]: Yes.

[Plaintiff's Counsel]: So she would pay the difference out in order to acquire what she did acquire, which is the inventory today?

[Morrison]: Yes.

On October 5, 2005, almost one year following the conclusion of the plenary hearing, the judge issued an order stating that "[d]efendant is entitled to a credit of $768,000.00 in regard to the Ledgewood and Gillette stores, plus an inventory value of $435,000.00" In his accompanying opinion, the judge did not provide a rationale for declining to award plaintiff a credit for her one-half interest in the inventory on hand as of July 1, 1997.*fn3

Thereafter, on or about January 10, 2006, defendant moved for relief from the order of October 5, 2005; to correct plain errors therein pursuant to Rule 4:50-1(a); to hold plaintiff in violation of litigant's rights pursuant to Rule 1:10-3; and to compel equitable distribution. Plaintiff cross-moved for relief from the October 5, 2005 order and requested a stay of the judgment pending appeal. On March 31, 2006, the judge, among other things, ordered plaintiff to comply with the equitable distribution decisions; corrected errors in the October 5, 2005 order, including amending the closing inventory value to $424,935.30; held plaintiff in violation of litigant's rights; directed plaintiff to pay attorney's fees; and denied plaintiff's cross-motion.*fn4

In the interim, on January 18, 2005 plaintiff moved to require defendant to pay one-half of the income tax that came due upon the sale of the Randolph store. Defendant cross-moved to compel plaintiff to pay him $297,500 for his interest in the sale of the Randolph store. On April 22, 2005, the judge denied plaintiff's motion for taxes and granted defendant's cross motion for payment of his interest in the Randolph store, and also awarded defendant attorney's fees.

The only issue left outstanding was a $47,500 credit defendant claimed he was due under paragraph 6 of the October 5, 2005 order concerning the Hackensack store distribution, on which the trial court had reserved its decision. On May 4, 2006, the judge entered an order granting defendant's claim to the $47,500 credit.

This appeal from the trial court's orders of April 22, 2005, October 5, 2005, March 31, 2006 and May 4, 2006 follows.

On appeal, plaintiff raises the following issues for our consideration:

I. THE JUDGMENT BELOW ERRONEOUSLY NEGLECTED TO CREDIT LAUREN MAYBAUM FOR HER 50 PERCENT SHARE OF THE LEDGEWOOD AND GILLETTE STORE INVENTORIES AS OF JULY 1, 1997.

II. THE CHANCERY DIVISION'S ENHANCED VALUATION OF THE HACKENSACK BUSINESS IMPROPERLY IGNORED THE PARTIES' VALUE STIPULATIONS, IMPERMISSIBLY DEPENDED ON EVENTS LONG AFTER THE COMPLAINT FOR DIVORCE, AND UNJUSTLY ENRICHED THE DEFENDANT.

III. THE COURT BELOW IMPROPERLY AND INCONSISTENTLY DISTRIBUTED TO SCOTT MAYBAUM HALF THE PROCEEDS FROM THE RANDOLPH NOTE WITHOUT REGARD TO INCOME TAX LIABILITY.

IV. THE DISTRIBUTION OF THE LT PURCHASE PROCEEDS DISREGARDED THE EVIDENCE AND THE COURT'S PRIOR OPINION THAT THE DEFENDANT WOULD RECEIVE NO CREDIT FOR INVESTMENTS FUNDED BY OTHER MARITAL ASSETS.

V. THE MARCH 31, 2006 ENFORCEMENT ORDER EXCEEDED THE BOUNDS OF THE JUDGMENT, THE LIMITED REMAND AND RULE 1:10, AND WRONGLY PENALIZED THE PLAINTIFF, AS THE COURT BELOW ORDERED PAYMENT TO THE DEFENDANT FOR DISTRIBUTIONS BEYOND AND CONTRARY TO THOSE PREVIOUSLY ADJUDICATED, FOR HIS THEN UNDIVIDED INTEREST IN THE MARITAL HOME, AND FOR ATTORNEY'S FEES.

A. THE $47,500 CREDIT FOR HACKENSACK DISTRIBUTIONS.

B. THE LT PURCHASE, DUNKIN DONUTS AND MILESTONE ESCROWS, AND THE MARITAL HOME.

C. ATTORNEY'S FEES.

D. DISQUALIFICATION ON REMAND.

Save for the first, we deem these issues without merit. R. 2:11-3(e)(1)(A) and (E). As to the first issue, we reverse the Family Part's judgment denying plaintiff a credit for her one- half share of the July 1997 inventory and remand for a determination as to the appropriate amount due plaintiff. We affirm the judgment in all other respects.

As a threshold matter, we note that "[w]here the issue on appeal concerns which assets are available for distribution or the valuation of those assets, it is apparent that the standard of review is whether the trial judge's findings are supported by adequate credible evidence in the record." Borodinsky v. Borodinsky, 162 N.J. Super. 437, 443-44 (App. Div. 1978) (citing Rothman v. Rothman, 65 N.J. 219, 233 (1974)); see also Addesa v. Addesa, 392 N.J. Super. 58, 75 (App. Div. 1997). The role of this court "on review . . . is to determine whether the result could reasonably have been reached by the trial judge on the evidence, or whether it is clearly unfair or unjustly distorted by a misconception of law or findings of fact that are contrary to the evidence." Perkins v. Perkins, 159 N.J. Super. 243, 247 (App. Div. 1978). Moreover, "[a]n equitable distribution will be affirmed even if this court would not have made the same division of assets as the trial judge." Id. at 247-48.

(i)

Plaintiff argues the court erred in denying her a credit for the Gillette and Ledgewood stores' inventories as of July 1, 1997, and, moreover, in failing to apply a 32.1% upward adjustment to her one-half share thereof of $295,000, as set by the court's expert, Morrison. We agree only with the former claim.

In its June 11, 2003 order, the trial court established the combined value of both the Gillette and Ledgewood stores at $1,536,000.00 and therefore set plaintiff's purchase of defendant's one-half interest at $768,000, "subject to appropriate adjustments for inventory . . . ." (emphasis added). No one disputes this valuation, or the order's clear and unequivocal directive allowing for "appropriate adjustments for inventor[ies]." The order further provides that plaintiff has the right to purchase the existing inventory at time of closing "over and above 1997 levels," that is, "the amount of the inventory maintained in July 1997, the date of the filing of the Complaint for Divorce." On October 27, 2004, both parties executed a Closing Agreement in which they expressly "agreed to and accepted" that the closing inventory of the Ledgewood store was $229,171.76 and that the inventory of the Gillette store was $195,223.54, for a combined value of $424,395.

In contrast to this undisputed figure, there was no information available as to the inventory on hand on July 1, 1997 in order to determine the credit or offset due plaintiff against her purchase from defendant of the closing inventory valued at $424,395. There was, however, evidence of the inventory as of year end (December 31) 1996, namely $591,470,*fn5 of which plaintiff's one-half equitable distribution share would have been $295,736. Thus, if properly credited, plaintiff's resultant purchase of the $424,395 closing inventory would have been reduced to $128,659 ($424,395 - $295,736 = $128,659).

Plaintiff, however, was dissatisfied with the $295,736 figure and argued below, as she does on appeal, that her credit for the July 1, 1997 inventory should be increased to $390,667 to reflect a 32.1% upward adjustment from the historically low year-end store inventories. But the court-appointed expert, Morrison, considered this very issue and concluded that the appropriate valuation methodology was to average the gross value of inventories on December 31, 1996 and December 31, 1997, and from the computed "gross" figure deduct working capital adjustments to arrive at a net amount for which plaintiff would receive a credit against her closing inventory purchase price:

Thus, if computed as an average of December 31, 1996 and December 31, 1997, the balance due equals ($45,226).

After considering the inventory valuation issue, the judge, in his October 5, 2005 decision, seemed to have accepted Morrison's methodology that suggested averaging the year-end inventories for 1996 and 1997:

Mr. Morrison, the court-appointed forensic expert who has performed many business evaluations, concluded that the appropriate approach to valuing the inventory was to determine the gross value of inventory in December of 1996 and December of 1997 to approximate the real inventory in July of 1997 since no actual inventory was available. The Court accepts that Mr. Morrison is an objective court-appointed expert and that his method is reasonable and rational.

In accepting Morrison's methodology, the judge also clearly rejected plaintiff's contrary argument urging a 32.1% upward adjustment to the $295,736 figure:

[P]laintiff asserts that the inventory value should be increased by 32.1% in accordance with the testimony of [plaintiff's father] and noted on his one-page analysis, P-11 in evidence. For the following reasons, the Court . . . rejects [plaintiff's father's] recommendation of a 32.1% increase in inventory value.

The June 11, 2003 order, P-3 in evidence, sets forth a procedure by which inventory will be determined and purchased. Closing did occur and agreement was reached as to the inventory at both the Ledgewood store and the Gillette store. As reflected in the Closing Agreement, P-4 in evidence, paragraph 6, the parties agreed that the Ledgewood inventory was $229,171.76 and the Gillette inventory was $195,223.54.

Plaintiff asserts that these values must be increased by 32.1%.*fn6 The support for this proposition is the testimony of plaintiff's father, Kenneth Friedman. Mr. Friedman has been in the business of owning and managing liquor stores for his entire career. With that knowledge, he testified that in the stores with which he had experience, the inventory in June of any year averaged 32.1% higher than the inventory in December of any year. Mr. Friedman testified that any inventory as of December of any year was substantially lower than a June inventory and that the amount should be increased, therefore, to approximate the June inventory, which was the date of the filing of the complaint. He based his testimony upon his own experience in the stores he ran.

Defendant also testified. He stated that his experience owning and managing stores differed in that the inventory in June was not substantially different than the inventory in December.

P-11 prepared by Mr. Friedman demonstrates that among the nine stores about which he provided information, the range of increase from the inventory on December of 2003 compared to June of 2004 was as low as 13.8% to a high of 48.1%. Even among his own stores, there is, therefore, a wide divergence of inventory practices as demonstrated by this range of approximately 35%. The Court is satisfied that no adjustment is appropriate and accepts the report of Mr. Morrison on this issue.

The court apparently also rejected Morrison's working capital adjustments -- a determination from which defendant has not appealed -- leaving a credit due plaintiff of $295,736. Yet in its order of October 5, 2005, the court inexplicably failed to award plaintiff this credit.

We are satisfied that so much of the court's order rejecting both a 32.1% upward adjustment and Morrison's working capital adjustments is supported by adequate credible evidence in the record. Borodinsky, supra, 162 N.J. Super. at 444.

Here, the parties entered into a knowing and voluntary agreement as to the value of the Ledgewood and Gillette "closing" inventories. Thereafter, plaintiff urged an upward adjustment to those values based upon a mid-year inventory, for which no evidence of actual value was provided. Instead, plaintiff offered the testimony of her father, who stated that in his experience with other stores, the inventory in June is, on average, 32.1% higher than in December, with a range from 13.8% to 48.1%. In contrast to this account, defendant testified that, in his experience, the inventories in December and June were not drastically different. Furthermore, Morrison, an experienced forensic expert concluded that in the absence of exact figures for July inventory, the best method to approximate value was to determine the gross value of the inventory from the preceding and following December.

Having heard the case and seen and observed the witnesses, including the expert Morrison, the trial judge was in the best position to evaluate their credibility and reconcile the conflicting accounts as to the typical variance in inventory between December and June. Pascale v. Pascale, 113 N.J. 20, 33 (1988). Furthermore, due to his intimate familiarity with the record and the issues, the trial judge was best situated to determine the reliability of the expert's methodology. For these reasons, we defer to his factfinding in this regard, especially given the family court's "special jurisdiction and expertise" in such matters. Cesare v. Cesare, 154 N.J. 394, 413 (1998); see also P.B. v. T.H., 370 N.J. Super. 586, 601 (App. Div. 2004).

No such deference, however, is due the judge's failure to credit plaintiff her equitable distribution share in the inventory on hand as of July 1, 1997. There is no sound basis in the record supporting the judge's denial, especially given his earlier determinations: (1) approving Morrison's methodology of averaging the 1996 and 1997 year-end inventory valuations; and (2) declining to apply Morrison's working capital adjustments to that computed figure, a decision not challenged on this appeal. We therefore are constrained to reverse that portion of the court's orders disallowing plaintiff an inventory credit and remand for determination of an appropriate credit amount in accordance with Morrison's "averaging" methodology.

(ii)

Plaintiff next complains about the valuation of defendant's interest in the Hackensack store. She argues alternatively that: (1) the parties earlier agreed to a $90,000 amount; and (2) in any event, the amount set wrongfully considered renewal of the lease. We reject both arguments. As to her first challenge, plaintiff simply relies on a November 6, 2001 letter authored by DeFuccio, the discovery master, which states in relevant part that:

Pursuant to our Court appearance on Thursday, November 1, 2001 and our settlement discussions, the following discovery is now needed and supersedes Mr. Morrison's prior requests. Please refer to Mr. Morrison's prior letter of October 3, 2001 and the numbered paragraphs therein

1B. No further discovery is needed on the Hackensack store, as [defendant] must decide whether or not to buy or sell at the agreed price of $90,000. The previously requested five years of tax returns will not be need provided [defendant] buys or sells for $90,000.

This unsworn document evidences no agreement was ever reached on the valuation of the Hackensack store. Indeed, Morrison testified at the November 18, 2004 plenary hearing:

[T]here was never a deal consummated, although we had -- as I said, we had negotiations based upon this remaining life of the lease was the first methodology. Then I switched to using the traditional small business valuation model, discounted for the lease. And then finally I've said small business model valua-- small business valuation model without regard to the -- to the lease.

So there was nev-- the reason I'm not using the 90,000 is that it was never agreed that that would be the price. There was never a deal accepted.

. . . [M]y recollection differs . . . in that we never reached an agreement on --or not me, the parties never reached an agreement that Hackensack would be bought or sold for 90,000.

Based on the lack of competent evidence of any agreement as to valuation, the judge found similarly:

Plaintiff has raised two issues regarding the Hackensack store. In her summation, she indicates that there was an agreement between the parties that the value would be $90,000.00. The basis of that assertion lies essentially in P-7 which is a letter from Mr. DeFuccio, the appointed Discovery Master, which on page 2 states, "No further discovery is needed on the Hackensack store, as [defendant] must decide whether or not to buy at the agreed price of $90,000.00."

The Court rejects the contention that there was an agreement between the parties that the value of the Hackensack store was $90,000.00. P-7 makes clear that subsequent to the October 30, 2001 [order] of Judge Schaeffer, the parties met with the Discovery Master and settlement discussions took place. No other written documentation of the $90,000.00 alleged settlement exists. There is no consent order nor correspondence between the parties. There was also no objection to Mr. Morrison performing an evaluation of the Hackensack store, nor was there an application by either party pursuant to Harrington v. Harrington, 281 N.J. Super. 39 (App. Div. 1995) to enforce the alleged agreement.

We agree for the reasons stated by the trial judge in his October 5, 2005 oral opinion.

Plaintiff alternatively challenges the actual valuation set for equitable distribution purposes, arguing that it was error for Morrison, and ultimately the court, to consider renewal of the lease since, as an active asset, the Hackensack store should have been valued as of the date of complaint without benefit of any incremental value derived from a lease renewal realized after the cut-off date. We disagree.

In his expert report, Morrison detailed his valuation of the Hackensack store:

In April of 2003, we presented our estimate of the value of Hackensack, assuming the lease would not be renewed.

Accordingly, under this scenario, the credit to [defendant] equals $150,000. (Please note that our "initial" computation assumed the lease would terminate in the near term).

Upon further reflection, we believe we should not reduce the value for the lease term. However, should the Court determine that a lease should be reflected in our value, we would modify our computation to our original conclusion of value. This would substantially decrease the credit due to [defendant].

By way of background, [plaintiff] and an outside third-party owned the Hackensack Bottle King, Inc. as of July 1997. Each owned fifty percent (50%) of the business. The outside third-party is also the landlord of the building occupied by Hackensack Bottle King, Inc. As of April 2003, [plaintiff's father] made certain representations to us that the lease for the Hackensack store was in jeopardy of being renewed due to difficulties in reaching terms for a new lease with the properties' [sic] landlord. At that time, we decreased the [appropriate valuations] in consideration of time remaining [on] the lease.

Subsequent to our issuance of our April 2003 estimate of value of Hackensack, the business was sold to an outside party. As part of the sale, the new owner was able to secure a new lease with the same landlord.

Immediately below, we have computed the value of Hackensack, assuming a lease renewal. We followed the same methodology, as utilized in the valuations of Ledgewood and Gillette. The value of a 100% interest in Hackensack equals approximately $1,050,000. [Plaintiff's] fifty percent interest would total $525,000. Accordingly, the credit due [defendant] would then equal $262,500 ($525,000 x 50%), instead of the $150,000 computed without a lease renewal.

It is my opinion that the goodwill calculated without reduction for the lease terms ($262,500) best represents the value of the credit due to [defendant].

[(footnote omitted).]

In his October 5, 2005 opinion, the trial judge agreed:

The next issue plaintiff raises in regard to the Hackensack store relates to the valuation itself. In April of 2003, Mr. Morrison presented a value of the Hackensack store providing a credit to the defendant of $150,000.00. One of the assumptions Mr. Morrison used was that the liquor store lease was about to run out and there was no reasonable expectation of its renewal. He, therefore, included a very limited period of future operation at that site in his evaluation. He states on Page 7, "As of April 2003, Mr. Friedman (plaintiff's father) made certain representations to us that the lease for the Hackensack store was in jeopardy of not being renewed due to difficulties in reaching terms for a new lease with the property's landlord." Subsequent to this evaluation in April of 2003, Mr. Morrison learned that the store was sold and the new owner was able to secure a new lease with the same landlord. Having determined as a fact that the lease was long term, he increased the defendant's credit to $262,500.00, raising the fair market value from $300,000.00 to $525,000.00. Plaintiff objects to this more recent appraisal.

In its objection, plaintiff relies upon Painter v. Painter, 65 N.J. 196 in her assertion that a value must be affixed to the store as of the date of the filing of the complaint of divorce and that the updated appraisal violates Painter. This assertion is rejected. Valuations such as the one Mr. Morrison has performed on the Hackensack store must make certain assumptions of future events. Due to the unfortunate length of this litigation, Mr. Morrison was able to remove an assumption, the length of the lease, and replace it with a fact. It is a fact that this store now has a long term lease. His subsequent evaluation is not, therefore, in violation of Painter but is, in fact, in furtherance of Painter and must be considered the more accurate of the two appraisals. A projection or assumption initially made, the length of the lease need no longer be made because the fact of the length of the lease was known in the second report. The credit due defendant is, therefore, $262,500.00.

To be sure, where active assets are concerned "the incremental value subject to equitable distribution should be determined as of the date the complaint for divorce is filed" because "[t]he filing declares the irretrievable breakdown of the relationship and provides a precise date for the termination of the marriage." Scavone v. Scavone, 230 N.J. Super. 482, 491 (Ch. Div. 1988) (citing Brandenburg v. Brandenburg, 83 N.J. 198 (1980)), aff'd, 243 N.J. Super. 134 (App. Div. 1990). However, plaintiff fails to establish that the lease renewal was in fact an incremental value realized after the complaint for divorce was filed. In this regard, Morrison's final expert report concludes:

As of April 2003, [plaintiff's father] made certain representations to us that the lease for the Hackensack store was in jeopardy of being renewed due to difficulties in reaching terms for a new lease with the properties' [sic] landlord. At that time, we decreased the [appropriate valuations] in consideration of time remaining [on] the lease.

Therefore, prior to plaintiff's father's representation, which later proved to be inaccurate, a lease renewal was considered by Morrison to be part of the value of the Hackensack store. No sound reason has been proffered by plaintiff why Morrison, or for that matter the court, was bound by a witness's prognostication that turned out to be incorrect and furthermore, why a lease renewal is not part of the asset's value for equitable distribution purposes.

In any event, N.J.S.A. 2A:34-23.1, which governs "[e]quitable distribution criteria," permits a reviewing court to consider "[t]he present value of the property," N.J.S.A. 2A:34-23.1(k), and "[a]ny other factors which the court may deem relevant." N.J.S.A. 2A:34-23.1(p). Also, "[e]quitable distribution is not simply a matter of mechanical division of marital assets. The concept requires much more than that. The word 'equitable' itself implies the weighing of the many considerations and circumstances that are presented in each case." Stout v. Stout, 155 N.J. Super. 196, 205 (App. Div. 1977) (citations omitted). In fact, although using a consistent date such as the filing of the complaint is preferable, it is not an "absolute[] iron-clad rule" and may be modified depending upon "compelling equitable considerations." Bednar v. Bednar, 193 N.J. Super. 330, 332 (App. Div. 1984). Finally, we noted in Goldman v. Goldman, 275 N.J. Super. 452, 457 (App. Div.), certif. denied, 139 N.J. 185 (1994), when confronted with unique situations, judges are permitted to seek equitable results and "[t]he consequence of value fluctuations for purposes of equitable distribution should not, for instance, turn wholly on whether an asset is properly classified as an active or passive asset." Here, we are satisfied that the equitable result was to include lease renewal in the value of the Hackensack store.

(iii)

Plaintiff argues that the court erred when it distributed to defendant one-half of the proceeds of the Randolph store note, $297,500, without assessing defendant any income taX liability. We disagree.

Pursuant to N.J.S.A. 2A:34-23.1(j), "[i]n making an equitable distribution of property, the court shall consider . . . [t]he tax consequences of the proposed distribution to each party." However, when tax consequences are merely speculative or hypothetical they will not be assessed against the value of marital assets, but "potential tax consequences arising out of the future sale of marital assets is a factor that should be considered in the overall equitable distribution scheme." Scavone, supra, 243 N.J. Super. at 139 (citing Orgler v. Orgler, 237 N.J. Super. 342, 356 (App. Div. 1989)).

Nevertheless, "there must be an evidentiary basis for the hypothetical tax consequence 'presumably fixed by competent expert testimony' before it is considered as a factor in determining the distributive share of each party." Ibid. (quoting Orgler, supra, 237 N.J. Super. at 356); see also N.J.S.A. 2A:34-23.1 (a court shall apply the pertinent factors in distributing assets and "shall make specific findings of fact on the evidence") (emphasis added).

As Morrison's report makes clear, the expert estimated defendant's tax liability for the Randolph note using the hypothetical tax rate of forty percent. This figure, however, was not established "by competent expert testimony," Orgler, supra, 237 N.J. Super. at 356, or any other source of competent, evidentiary value. See N.J.S.A. 2A:34-23.1. Instead, it was suggested by plaintiff's counsel without any "evidentiary basis for the hypothetical tax consequence" whatsoever. Scavone, supra, 243 N.J. Super. at 139. As the trial judge noted in rejecting plaintiff's argument:

The plaintiff submits a request that I direct that the defendant absorb tax consequences, [but] doesn't in the papers define what the tax consequences are.

Really gives me no information as to why I would even entertain, at least as I view it, why would I even entertain that application? Plaintiff's counsel has the defendant's money. The parties agree that he should get the two-ninety-seven-five. So he should get the two-ninety-seven.

I think that's the simplest straightforward answer. I don't believe it's appropriate for me to affix today based on what I have the obligation for taxes of an unknown hypothetical -- hypothetical --it's no longer hypothetical, but it's certainly unknown to me.

I don't even know what the plaintiff filed if she filed anything to know whether there are tax consequences or not. So for all those reasons I'll deny the application.

This decision finds adequate support in the record. Borodinsky, supra, 162 N.J. Super. at 444. In contrast to other assets subject to equitable distribution, like the LP Purchase, for which actual income tax information was provided, similar evidence as to the Randolph note was entirely lacking.

(iv)

Plaintiff also argues that the court erred in distribution of the LT Purchase proceeds. This contention fails as well. The dual judgment of divorce, entered on September 5, 2001, awarded "plaintiff an interest equivalent to 25% of the net value of the monies received by [defendant] from [the LT Purchase] arrangement." The parties, however, could not agree as to the exact amount of net proceeds. Accordingly, in its October 7, 2003 second supplemental decision, the judge directed that:

Mr. Morrison shall calculate the amount of tax plus interest and penalties actually paid by defendant on this additional income. To do so, [Morrison] must review the documents in evidence.

Thereafter, on November 18, 2004, the second day of the plenary hearing, Morrison confirmed that defendant had sent a wide variety of financial documents relevant to the LT Purchase for review. Based upon "the materials provided by [defendant]," Morrison's final report determined that the net value received by defendant was $449,148 and that plaintiff's quarter share of that figure amounted to $112,287.

The trial court accepted Morrison's calculation in its October 5, 2005 opinion, wherein it concluded:

In this Court's second supplemental decision of October 6, 2003, the Court directed Mr. Morrison to determine the net proceeds from the LT Purchase and directed that he "review the documents in evidence" in doing so. In his report, C-4 in evidence, he refers to having reviewed "the materials provided by [defendant]." Plaintiff takes exception to this statement asserting that he has, therefore, failed to comply with the order of the Court that he review the documents in evidence. His testimony in this matter makes it clear that he did indeed review the relevant documents and based upon a review of all of the documents he felt were appropriate, issued his report. It should be noted that plaintiff did not assert that he failed to review a particular document that plaintiff thought was relevant. The Court is satisfied that Mr. Morrison reviewed the documents that one customarily reviews in issuing an opinion as he did and is satisfied, therefore, that his opinion regarding LT Purchase is consistent with this Court's order.

On appeal, plaintiff offers no specific documentation that Morrison failed to consider in his computation, or any evidence for that matter to support her challenge. We therefore accept the trial judge's finding in this regard as "supported by adequate, substantial and credible evidence." Rova Farms Resort, Inc. v. Investors Ins. Co., 65 N.J. 474, 484 (1974); see also Borodinsky, supra, 162 N.J. Super. at 444.

(v)

(a)

Plaintiff argues that the trial judge erred in finding that plaintiff was in violation of litigant's rights and in awarding defendant attorney's fees on that basis. We again disagree. Rule 1:10-3, entitled "[r]elief to litigant," governs claims of violations of litigant's rights and states in pertinent part:

Notwithstanding that an act or omission may also constitute a contempt of court, a litigant in any action may seek relief by application in the action. A judge shall not be disqualified because he or she signed the order sought to be enforced. . . . The court in its discretion may make an allowance for counsel fees to be paid by any party to the action to a party accorded relief under this rule. In family actions, the court may also grant additional remedies as provided by R. 5:3-7. An application by a litigant may be tried with a proceeding under R. 1:10-2(a) only with the consent of all parties and subject to the provisions of R. 1:10-2(c).

"[A] proceeding to enforce litigants' rights under Rule 1:10-3 is essentially a civil proceeding to coerce the defendant into compliance with the court's order for the benefit of the private litigant." Pasqua v. Council, 186 N.J. 127, 140 (2006) (internal quotation marks omitted); see also Ridley v. Dennison, 298 N.J. Super. 373, 381 (App. Div. 1997) ("Relief under R. 1:10-3, whether it be the imposition of incarceration or a sanction, is not for the purpose of punishment, but as a coercive measure to facilitate the enforcement of the court order."). "In imposing the sanction, the court must consider the offending party's ability to pay and the sanction's impact on that party in light of its income, status and objectives, as well as the sanction's impact on innocent third parties." Franklin Tp. Bd. of Educ. v. Quakertown Educ. Ass'n, 274 N.J. Super. 47, 56 (App. Div. 1994) (internal quotation marks omitted).

In finding plaintiff in violation of litigant's rights, the trial judge stated:

I am going to hold the plaintiff in violation of litigant's rights. I simply don't understand why this matter couldn't be resolved, why she felt that she didn't have to pay some money. I mean, I can understand legitimate disputes, but she owes money. It's pretty clear.

And this issue of the Valley National Bank, I don't know what could be clearer. I ordered her a year and a half ago, maybe --my memory's fuzzy -- to turn over that information. What is so hard about that? She didn't want to do that. She resisted it. I understand, but she's got to do it. That's just the bottom line. And she's got to pay the half a share. It's got to be done.

We are satisfied that the court's finding is amply supported in the record, which is replete with evidence that plaintiff has consistently failed to timely comply with the trial court's orders.

(b)

We are also satisfied that the court properly granted defendant attorney's fees of $7500 on his application. Not only are attorney's fees specifically permitted under Rule 1:10-3, but as a general rule, absent justification or injustice, they are mandated when a party fails to comply with a court order.

R. 4:23-2 ("[T]he court shall require the party failing to obey the order to pay the reasonable expenses, including attorney's fees, caused by the failure, unless the court finds that the failure was substantially justified or that other circumstances make an award of expenses unjust."). Despite plaintiff's claim that she was at all times acting in good faith to resolve legal issues raised by the orders, the trial judge found otherwise, namely that plaintiff engaged in delaying tactics designed to avoid compliance therewith.

Moreover, we find the amount set reasonable. Counsel fees and costs, authorized in matrimonial cases by Rule 4:42-9(a)(1) and N.J.S.A. 2A:34-23, may be granted at the discretion of the trial court subject to a "review [of] . . . the factors set forth in [Rule 5:3-5(c)], the financial circumstances of the parties, and the good or bad faith of either party." N.J.S.A. 2A:34-23; see also Williams v. Williams, 59 N.J. 229, 233 (1971). Rule 5:3-5(c) sets forth the following criteria:

In determining the amount of the fee award, the court should consider, in addition to the information required to be submitted pursuant to R. 4:42-9, the following factors: (1) the financial circumstances of the parties; (2) the ability of the parties to pay their own fees or to contribute to the fees of the other party; (3) the reasonableness and good faith of the positions advanced by the parties; (4) the extent of the fees incurred by both parties; (5) any fees previously awarded; (6) the amount of fees previously paid to counsel by each party; (7) the results obtained; (8) the degree to which fees were incurred to enforce existing orders or to compel discovery; and (9) any other factor bearing on the fairness of an award.

[R. 5:3-5(c).]

Here, in awarding attorney's fees at the hearing on March 31, 2006, the trial judge reasoned:

Now in terms of counsel fees, I'm going to award $7,500 [in] counsel fee[s] to the defendant, and that is to be paid within 10 days because it is absolutely clear to me that the plaintiff just simply doesn't want to do what she's been ordered to do consistently. It is time to step up to the plate.

Well, it isn't inappropriate. The bill was in excess of $10,000. I reviewed the certification of services. The standard I have to use is Rule 5:[3]-3(c) and it is the various elements, financial circumstances of the parties. Well, the plaintiff's got his money, so -- and she's got the two stores. I don't know much more than that, but certainly that doesn't suggest that she does not have the inability (sic) to pay.

She owns the house. She has the house -- I'm sorry -- rephrase that. It's still in both names. There is a house which she resides in in both names, about which there is no mortgage.

The ability of the parties to pay their own fees. I don't know much about that except neither party has been without funds during the course of this litigation, but she's got his money, as I look at it.

Reasonableness and good faith of the positions of the parties. I do not believe the plaintiff acted in good faith by saying to me, Judge, I haven't paid, it's a money judgment, I shouldn't have to pay. I don't think that's good faith within the context of a dissolution matter.

The extent of the fees incurred by both parties. I'm aware of the defendant's fees. It's not a factor, really.

Fees previously awarded. It's not a factor.

The amount of fees previously paid. Not a factor.

Results obtained. Defendant has prevailed on virtually everything [he's] brought. . . . [He's] asked me to alter an order where there were clear mistakes which only today did the plaintiff concede totally as to the mistakes. So, of course. I mean, I have no difficulty with this. This is not a difficult decision.

In both imposing counsel fees and setting the amount, the trial judge complied with the requirements of N.J.S.A. 2A:34-23 and Rule 5:3-5, and we discern no abuse of discretion.

(c)

Plaintiff next argues that the trial court erred when it awarded defendant a credit of $47,500 for the Hackensack distribution. We disagree.

Judge Schaeffer's supplemental decision, entered on May 30, 2002, originally dealt with this issue and provided in relevant part:

10. Hackensack distribution: Plaintiff testified to removing $20,000 from the Hackensack store and placing [that sum] in a bank account in her name alone. This action was pre-complaint. This Court finds Defendant shall receive a 50% credit for these funds. Post-complaint, Plaintiff withdrew $34,007 on December 22, 1997, by issuing a check made payable to her counsel (D-87), $41,000 was withdrawn from the store and deposited into Plaintiff's account (D-88), and on December 28, 1998, additional checks were drawn to Plaintiff's counsel. Defendant is to receive a 50% credit for the $41,000 and this shall be considered as contribution to a portion of Plaintiff's counsel fees.

However, in the court's October 5, 2005 order, designed to enforce Judge Schaeffer's supplemental decision, the judge newly assigned to the case mistakenly directed that "plaintiff is entitled to a credit of $47,500.00, D-1, page 7, paragraph 10." (emphasis added). Consequently, defendant moved for relief under Rule 4:50-1(a) from a mistake in the order. In support of his motion, defendant argued:

Paragraph 6 of the Order also contained a reversal of the words "Plaintiff" and "Defendant." The first such error is a reference to D-1, which was introduced into evidence at the time of the plenary hearing. D-1 was Judge Schaeffer's Supplemental Decision of May 30, 2002. . . . D-1, Page 7, Paragraph 10, of the Supplemental Decision concerned distributions from the Hackensack store taken by [plaintiff] during the pendency of the divorce action totaling $97,007. Judge Schaeffer determined [plaintiff's] withdrawals were unlawful and that I should receive a 50% credit. It is clear from D-1, Page 7, Paragraph 10, that the $47,500 credit belongs not to my former wife who is the Plaintiff in this action as indicated under the terms and provisions of the Court's October 5, 2004 Order, but is a credit belonging to me, the Defendant.

Following the March 31, 2006 oral argument, on May 4, 2006, the judge issued an order adopting defendant's position, modifying his earlier order of October 5, 2005 to reflect a credit of $47,500 due defendant from the Hackensack distribution, and incorporating the following findings of fact:

The Court concludes that in accordance with paragraph 10, the defendant is entitled to a credit of $47,500.

That amount is determined as follows: In the beginning of that paragraph, the Court concludes that Defendant should receive 50% credit for $20,000, or $10,000. . . .

The Court concludes that defendant is entitled to one-half of $41,000, or $20,500. In addition, the Court concludes that it was the intention of Judge Schaeffer that the defendant also receive 50% of $34,007, or $17,500. The Court concluded in October 2005 that Judge Schaeffer intended the defendant to receive one-half of the $34,007, as well as one-half of the $41,000. The total of those three numbers, $10,000, $17,000 and $20,500 is the $47,[5]00 referred to. It is clear that Judge Schaeffer's intention was to grant this credit to the defendant.

The Court, therefore, agrees with defendant that the decision of October 5, 2005 inadvertently reversed plaintiff and defendant as to this credit.

We reject plaintiff's contention that the court's October 5, 2005 order was not subject to correction, and are satisfied that the modification effectuated in the May 4, 2006 order is amply supported in the record.

(vi)

Plaintiff's remaining issues, including disqualification on remand, are not of sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(A) & (E). Suffice it to say, as to disqualification, nothing presented by plaintiff raises any concern that the trial judge has a potential commitment to his prior findings, N.J. Div. of Youth & Family Servs. v. A.W., 103 N.J. 591, 617 (1986), or is otherwise incapable of providing a fair and unbiased hearing and judgment. Graziano v. Grant, 326 N.J. Super. 328, 349-50 (App. Div. 1999). Moreover, plaintiff's "application for disqualification pursuant to R. 1:12-1 should initially [have been] made to the [trial] judge himself." Id. at 350.

Affirmed in part; reversed in part; and remanded for further proceedings consistent with this opinion.


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